CODE OF BY-LAWS
                                       OF
                             Lilly Industries, Inc.

                   AS COMPLETELY RESTATED ON JANUARY 31, 1992
                      As further amended on April 22, 1993,
                     As further amended on October 1, 1993,
                       As further amended on June 21, 1996


<PAGE>



                                TABLE OF CONTENTS


ARTICLE 1 - DEFINITION OF CERTAIN TERMS......................................  1

         Section 1.01.             Act.......................................  1
         Section 1.02.             Articles of Incorporation.................  1
         Section 1.03.             Board.....................................  1
         Section 1.04.             By-Laws...................................  1
         Section 1.05.             Class A Stock.............................  1
         Section 1.06.             Class B Stock.............................  1
         Section 1.07.             Corporation...............................  1
         Section 1.08.             Director..................................  1
         Section 1.09.             Officers..................................  1
         Section 1.10.             Principal and Registered Office and
                                   Registered Agent..........................  2
         Section 1.11.             Shareholders..............................  2
         Section 1.12.             Stock Register............................  2

ARTICLE 2 - CAPITAL STOCK....................................................  2

         Section 2.01.             Amount and Classes........................  2
         Section 2.02.             Stock Register............................  2
         Section 2.03.             Issuance and Transfer of Class A Stock,
                                    Class B Stock and Escrow Receipts........  2
                  Clause 2.031.             Class A Stock....................  2
                  Clause 2.032.             Class B Stock....................  3
                  Clause 2.033.             Escrow Receipts..................  3
         Section 2.04.             Lost, Stolen or Destroyed Certificates
                                   and Escrow Receipts.......................  3
         Section 2.05.             Issue and Consideration for Shares........  4
         Section 2.06.             Certificates for Class A Shares...........  4
         Section 2.07.             Certificates for Class B Shares...........  6
         Section 2.08.             Certificates for Escrow Receipts..........  9
         Section 2.09.             Certificates Issued Prior to Payment...... 13
         Section 2.10.             Transfer Regulations...................... 13

ARTICLE 3 - THE SHAREHOLDERS................................................. 13

         Section 3.01.             Annual Meeting............................ 13
         Section 3.02.             Special Meetings.......................... 13
         Section 3.03.             Place of Meetings......................... 14
         Section 3.04.             Record Date............................... 14
         Section 3.05.             Notice of Meetings........................ 14
         Section 3.06.             Waiver of Notice.......................... 15
         Section 3.07.             Addresses of Shareholders................. 15
         Section 3.08.             Shareholders Lists........................ 15
         Section 3.09.             Proxies................................... 15
         Section 3.10.             Quorum.................................... 16

ARTICLE 4  - THE BOARD OF DIRECTORS.......................................... 16


                                       -i-

<PAGE>



         Section 4.01.             Number of Members......................... 16
         Section 4.02.             Qualification of Members.................. 16
         Section 4.03.             Election of Members....................... 16
         Section 4.04.             Vacancies................................. 17
         Section 4.05.             Removal of Members........................ 17
         Section 4.06.             Resignation of Members.................... 17
         Section 4.07.             Annual Meeting............................ 17
         Section 4.08.             Regular Meetings.......................... 17
         Section 4.09.             Special Meetings.......................... 18
         Section 4.10.             Meeting by Telephone, Etc................. 18
         Section 4.11.             Quorum.................................... 18
         Section 4.12.             Action Without Meeting.................... 19
         Section 4.13.             Powers of Directors....................... 19
         Section 4.14.             Dividends................................. 19
         Section 4.15.             Compensation of Directors................. 19

ARTICLE 5 - COMMITTEES OF THE BOARD OF DIRECTORS............................. 19

         Section 5.01.             Creation of Committees.................... 19
         Section 5.02.             Powers of a Committee..................... 20
         Section 5.03.             Meetings; Procedure; Quorum; Etc.......... 20

ARTICLE 6 - THE OFFICERS..................................................... 20

         Section 6.01.             Number of Officers........................ 20
         Section 6.02.             Qualifications of Officers................ 20
         Section 6.03.             Election and Appointment of Officers...... 20
         Section 6.04.             Removal of Officers....................... 21
         Section 6.05.             Resignation of Officers................... 21
         Section 6.06.             Vacancies................................. 21
         Section 6.07.             The Chairman of the Board................. 21
         Section 6.08.             The Chairman of the Executive Committee... 21
         Section 6.09.             The President............................. 22
         Section 6.10.             The Vice-Presidents....................... 22
         Section 6.11.             Assistant Vice-Presidents................. 22
         Section 6.12.             The Secretary............................. 22
         Section 6.13.             Assistant Officers........................ 22
         Section 6.14.             Function of Offices....................... 23
         Section 6.15.             Delegation of Authority................... 23
         Section 6.16.             Compensation of Officers.................. 23

ARTICLE 7 - LIMITATION OF LIABILITY.......................................... 23

         Section 7.01.             General Limitation........................ 23
         Section 7.02.             Savings Clause............................ 23


ARTICLE 8 - INDEMNIFICATION.................................................. 24

         Section 8.01.             Indemnification of Officers and
                                   Employees................................. 24
         Section 8.02.             Indemnification Procedure................. 24

                                      -ii-

<PAGE>



         Section 8.03.             Good Faith Defined........................ 25
         Section 8.04.             Payment of Expenses in Advance............ 25
         Section 8.05.             Rights Not Exclusive...................... 26
         Section 8.06.             Vested Right to Indemnification........... 26
         Section 8.07.             Additional Definitions.................... 26
         Section 8.08.             Payments as a Business Expense............ 27

ARTICLE 9 - MISCELLANEOUS MATTERS............................................ 27

         Section 9.01.             Fiscal Year............................... 27
         Section 9.02.             Place of Keeping Corporate Books and
                                   Records................................... 27
         Section 9.03.             Seal...................................... 28
         Section 9.04.             Execution of Negotiable Instruments....... 28
         Section 9.05.             Execution of Deeds, Contracts, Etc........ 28
         Section 9.06.             Ordinary Contracts and Agreements......... 29
         Section 9.07.             Endorsement of Certificates for Shares.... 29
         Section 9.08.             Voting of Shares Owned by Corporation..... 29

ARTICLE 10 - AMENDMENTS...................................................... 29


                                      -iii-

<PAGE>



                                 CODE OF BY-LAWS
                                       OF
                             Lilly Industries, Inc.

                   AS COMPLETELY RESTATED ON JANUARY 31, 1992
                      As further amended on April 22, 1993,
                     As further amended on October 1, 1993,
                       As further amended on June 21, 1996

                                    ARTICLE 1

                           DEFINITION OF CERTAIN TERMS


         Section  1.01.   Act.  The  term  "Act"  means  the  Indiana   Business
Corporation Law, as amended from time to time.

         Section 1.02. Articles of Incorporation.  The term "Articles" means the
Amended and Restated  Articles of Incorporation  of the Corporation,  filed with
and  certified by the Secretary of State of Indiana on April 21, 1988, as now in
force or hereafter amended.

         Section 1.03.  Board.  The term "Board" means the Board of Directors of
the Corporation.

         Section 1.04.  By-Laws.  The term "By-Laws" means this Code of By-Laws,
as now in force or hereafter amended.

         Section 1.05.  Class A Stock. The term "Class A Stock" means the shares
of Class A Common Stock of the  Corporation  which the Corporation is authorized
to issue pursuant to the Articles.

         Section 1.06.  Class B Stock. The term "Class B Stock" means the shares
of Class B Common Stock of the  Corporation  which the Corporation is authorized
to issue pursuant to the Articles.

         Section  1.07.   Corporation.   The  term  "Corporation"   means  Lilly
Industries, Inc.

         Section  1.08.  Director.  The term  "Director"  means a member  of the
Board.

         Section 1.09. Officers.  The term "Officers" means the duly elected and
appointed  officers  of the  Corporation.  The terms  "Chairman  of the  Board,"
"Chairman of the Executive Committee," "President," "Vice-President," "Assistant
Vice-President,"  "Secretary,"  "Assistant  Secretary,"  and the titles of other
Officers   chosen  in  accordance   with  Section  6.01  of  the  By-Laws  mean,
respectively,  the individuals serving as the duly elected, qualified and acting
officers of the Corporation,  from time to time, in their respective  capacities
as such.

         Section 1.10. Principal and Registered Office and Registered Agent. The
terms "Principal Office,"  "Registered  Office," and "Registered Agent" mean the
offices and agent of the Corporation stated in Article 4 of the Articles,  or if
one or


<PAGE>



more statements of change indicating a change in the location of any such office
or the name of such agent has been filed in accordance  with the Act, the office
or agent, respectively set forth in the most recently filed of such statements.

         Section 1.11.  Shareholders.  The term "Shareholders" means the persons
shown by the  records  of the  Corporation  (or its  Transfer  Agent)  to be the
holders of the duly authorized,  issued and outstanding  shares of Class A Stock
and Class B Stock, unless otherwise indicated.

         Section 1.12. Stock Register. The term "Stock Register" means the Stock
Register of the Corporation to which reference is made in Section 2.02 hereof.


                                    ARTICLE 2

                                  CAPITAL STOCK


         Section 2.01. Amount and Classes.  The authorized  capital stock of the
Corporation  is divided into  48,500,000  shares of Class A Stock and  1,500,000
shares  of  Class B  Stock.  The  designations,  relative  rights,  preferences,
qualifications,  limitations,  and  restrictions  of the  capital  stock  of the
Corporation are as set forth in the Articles.

         Section 2.02.  Stock  Register.  The Secretary  shall  maintain a Stock
Register in which shall be registered each  transaction  involving the issuance,
transfer and cancellation of shares of Class B Stock, and the issuance, split-up
and cancellation of Escrow Receipts.

         Section 2.03. Issuance and Transfer of Class A Stock, Class B Stock and
Escrow  Receipts.  The Class A Stock,  Class B Stock and Escrow  Receipts of the
Corporation shall be issued and transferred as follows:

                  Clause 2.031. Class A Stock. Bank One,  Indianapolis,  N A., a
national banking association, is appointed the agent of the Corporation with the
title  "Transfer  Agent" (and  Registrar for Class A Stock) and the authority to
effect the issue,  transfer,  and registration of the certificates  representing
48,500,000 shares of Class A Stock when signed by the Chairman of the Board, the
President or a Vice-President, and the Secretary or an Assistant Secretary, with
the seal of the Corporation or a facsimile  thereof thereunto  affixed,  stating
the name of the registered holder and the number of shares represented  thereby.
If such certificate is  countersigned  by the written  signature of the Transfer
Agent,  the signatures of the officers of the Corporation may be facsimiles.  If
the person who signed (either  manually or in facsimile) a certificate no longer
holds office when the  certificate is issued,  the  certificate is  nevertheless
valid. All certificates presented for transfer shall be properly

                                        2

<PAGE>



endorsed  by the  registered  holder  or by his duly  authorized  attorney  (and
guaranteed as required by the Transfer  Agent),  and shall be accompanied by any
additional  documents required by the Indiana Uniform Commercial Code, as now in
force or hereafter amended.

                  Clause 2.032.  Class B Stock. The Corporation is authorized to
effect the issue,  transfer,  and registration of the certificates  representing
1,500,000  shares of Class B Stock when signed by the Chairman of the Board, the
President or a Vice-  President,  and the  Secretary or an Assistant  Secretary,
with the seal of the  Corporation  or a  facsimile  thereof  thereunto  affixed,
stating the name of the registered  holder and the number of shares  represented
thereby,  subject,  nevertheless,  to compliance with the provisions of Sections
6.2, 6.3, and 6.4 of the Articles. All certificates presented for transfer shall
be  properly  endorsed  by  the  registered  holder  or by his  duly  authorized
attorney,  and shall be accompanied by any additional  documents required by the
Indiana Uniform Commercial Code, as now in force or hereafter amended.

                  Clause 2.033.  Escrow Receipts.  The Corporation is authorized
to effect the issue, split-up and cancellation of the certificates  representing
Escrow Receipts for Certificates  Representing  Class B Stock when signed by the
Chairman of the Board, the President or a  Vice-President,  and the Secretary or
an Assistant Secretary,  with the seal of the Corporation or a facsimile thereof
thereunto  affixed,  stating the name of the registered holder and the number of
shares of Class B Stock covered by each Escrow Receipt,  subject,  nevertheless,
to  compliance  with  the  provisions  of  Section  6.2  of  the  Articles.  All
certificates  for Escrow  Receipts  presented  for  split-up  shall be  properly
endorsed by the registered holder or by his duly authorized  attorney,  and such
endorsement or endorsements  shall be witnessed by one witness.  The requirement
for such witnessing may be waived,  in writing,  upon the form of endorsement by
the Chairman of the Board, the President, a Vice-President,  or the Secretary of
the Corporation.

         Section  2.04.  Lost,  Stolen  or  Destroyed  Certificates  and  Escrow
Receipts.  Upon the  presentation  of a  proper  requisition  conforming  to the
requirements  of the  Transfer  Agent,  the Transfer  Agent shall  deliver a new
certificate  representing  Class A Stock in lieu of a lost,  stolen or destroyed
certificate  representing  Class A Stock.  The  Corporation  may,  pursuant to a
resolution  duly  adopted  by its Board,  deliver  in lieu of a lost,  stolen or
destroyed  certificate  representing Class B Stock, or in lieu of a lost, stolen
or destroyed Escrow Receipt, a new certificate for Class B Stock or a new Escrow
Receipt (as the case may be).

         Section 2.05. Issue and Consideration for Shares. The Board shall cause
the  Corporation  to issue shares of capital stock of the  Corporation  for such
consideration  as shall have been fixed by the Board,  subject to the provisions
of the

                                        3

<PAGE>



Articles.  The adequacy of the  consideration  is to be determined by the Board,
and  that   determination   is  conclusive   insofar  as  the  adequacy  of  the
consideration  for the shares relates to whether the shares are validly  issued,
fully paid, and nonassessable.  Once the Corporation  receives the consideration
for which the Board authorized the issuance of the shares,  the shares are fully
paid and  nonassessable.  If the  consideration for certain shares issued by the
Board is to be paid in installments,  such shares may not be voted in any matter
if one or more of such installments is due and unpaid.

         Section 2.06.  Certificates for Class A Shares.  Each holder of Class A
Stock shall be entitled to a  certificate,  signed by the Chairman of the Board,
the President or a Vice-President,  and the Secretary or an Assistant Secretary,
with the seal of the  Corporation,  or a facsimile  thereof,  affixed to it. The
certificate shall state the name of the registered  holder, the number of shares
represented by the certificate, and whether such shares have been fully paid and
are not  liable  to any  further  call or  assessment.  If such  certificate  is
countersigned by the written  signature of the Transfer Agent, the signatures of
the Officers of the Corporation may be facsimiles.  Such  certificates  shall be
substantially in the following form:


                         (Form for Face of Certificate)

                       INCORPORATED UNDER THE LAWS OF THE
                                STATE OF INDIANA


------------------------------                  --------------------------------
         Number                                               Shares


                                  {Lilly Logo}

                             Lilly Industries, Inc.
                         CLASS A STOCK WITHOUT PAR VALUE

                                                                    Cusip Number

         THIS CERTIFIES That ________________________________ is the
registered holder of _________________________________ SHARES OF
CLASS A STOCK, WITHOUT PAR VALUE, OF

                             Lilly Industries, Inc.

fully paid and not liable to any further call or  assessment,  and  transferable
only on the books of the  Corporation in person or by duly  authorized  attorney
upon surrender of this certificate  properly  endorsed.  This certificate is not
valid unless countersigned and registered by the Transfer Agent and Registrar of
the Corporation.


                                        4

<PAGE>



         WITNESS  the  facsimile  seal  of the  Corporation  and  the  facsimile
signatures of its duly authorized officers.

         Dated ____________________

         --------------------------                -----------------------------
         Secretary                                 President

         (FACSIMILE SEAL)
                           (Legend to appear on face of certificate.)

         Countersigned and Registered:

                          Bank One, Indianapolis, N.A.
                              Indianapolis, Indiana
                          Transfer Agent and Registrar,


By           ______________________________________________
                               Authorized Officer

                         (Form for Back of Certificate)

         The Corporation will furnish the holder of record, upon written request
and without  charge,  a full  statement of the  designations,  relative  rights,
interests,  preferences,  limitations, and restrictions of the Class A Stock and
Class B Stock of the Corporation.

         The following  abbreviations,  when used in the inscription on the face
of this certificate,  shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM --     as tenants in common            UNIF GIFT MIN ACT --
                                               ______Custodian______
TEN ENT --     as tenants by                   (Cust)                  (Minor)
               entireties                      under Uniform Gifts to
                                               Minors
JT TEN  --     as joint tenants with
               right of survivorship           Act________________
               and not as tenants in                  (State)
               common

         Additional abbreviations may also be used though not in the above list.

         FOR VALUE RECEIVED, _____ HEREBY SELL, ASSIGN AND TRANSFER
UNTO   ___________________________________________________________

-----------------------------------------------------------------
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE)

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

                                        5

<PAGE>




-----------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP
CODE OF ASSIGNEE)

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

___________________________________________________________SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY
CONSTITUTE AND APPOINT  __________________________________________,
ATTORNEY TO TRANSFER THE SAID SHARES ON THE BOOKS OF THE WITHIN
NAMED CORPORATION WITH FULL POWER OF SUBSTITUTION IN THE
PREMISES.

Dated ________________________




                                                  ------------------------------
                                                  SIGNATURE OF REGISTERED HOLDER


         NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE, IN
EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY
CHANGE WHATEVER.

         Section 2.07. Certificates for Class B Shares. Each holder of the Class
B Stock shall be entitled to a certificate, signed by the Chairman of the Board,
the President or a Vice-President,  and the Secretary or an Assistant Secretary,
with the seal of the  Corporation,  or a facsimile  thereof,  affixed to it. The
certificate shall state the name of the registered  holder, the number of shares
represented by the certificate, and whether such shares have been fully paid and
are not liable to any further call or  assessment.  Such  certificates  shall be
substantially in the following form:

                         (Form for Face of Certificate)

                       INCORPORATED UNDER THE LAWS OF THE
                                STATE OF INDIANA


  ------------------------------                --------------------------------
         Number                                               Shares

                             Lilly Industries, Inc.

                                  CLASS B STOCK

         THIS CERTIFIES That  ______________________ is the registered holder of
____________________________ shares of Class B Stock, without par value, of


                                        6

<PAGE>



                             Lilly Industries, Inc.

fully paid and not liable to any further call or  assessment,  and  transferable
only on the books of the  Corporation in person or by duly  authorized  attorney
upon surrender of this certificate properly endorsed.

         A  statement  of  the   designations,   relative   rights,   interests,
preferences,  qualifications,  limitations  or  restrictions,  and of the voting
rights,  of the Class A Stock and Class B Stock of the  Corporation,  including,
particularly the limitations upon alienation of the title to the shares of Class
B Stock,  will be furnished by the  Corporation  to the  registered  holder upon
written request without charge.

         This certificate and the shares represented hereby are issued and shall
be held subject to all of the provisions of the Articles of Incorporation of the
Corporation, as the same may be now or hereafter amended. A copy of the complete
provisions of the Articles of Incorporation,  as now or hereafter amended,  will
be kept on file, and open for inspection by  shareholders,  in the office of the
Secretary  of the  Corporation;  and  the  holder  of  this  certificate  by the
acceptance hereof assents to all such provisions.

         WITNESS  the seal of the  Corporation  and the  signatures  of its duly
authorized officers.



         Dated ____________________



                                                     ---------------------------
                                                     President

In the presence of



-------------------------
   Secretary


                  (SEAL)


                         (Form for Back of Certificate)

         The following  abbreviations,  when used in the inscription on the face
of this certificate,  shall be construed as though they were written out in full
according to applicable laws or regulations:


                                        7

<PAGE>



TEN COM --   as tenants in common               UNIF GIFT MIN ACT --
                                                ______Custodian______
TEN ENT --   as tenants by                      (Cust)                  (Minor)
             entireties                         under Uniform Gifts to
                                                Minors
JT TEN  --   as joint tenants with
             right of survivorship              Act________________
             and not as tenants in                     (State)
             common


         Additional abbreviations may also be used though not in the above list.

         FOR VALUE RECEIVED, _______ HEREBY SELL, ASSIGN AND TRANSFER
UNTO ___________________________________________________________

----------------------------------------------------------------
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE)

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

----------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP
CODE OF ASSIGNEE)

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

__________________________________________________________SHARES
REPRESENTED BY THE WITHIN CERTIFICATE,  AND DO HEREBY IRREVOCABLY CONSTITUTE AND
APPOINT_______________________________,  ATTORNEY TO TRANSFER THE SAID SHARES ON
THE BOOKS OF THE WITHIN NAMED CORPORATION WITH FULL POWER OF SUBSTITUTION IN THE
PREMISES.


Dated ________________________


                                                --------------------------------
                                                SIGNATURE OF REGISTERED HOLDER


NOTICE:  THE  SIGNATURE  TO THIS  ASSIGNMENT  MUST  CORRESPOND  WITH THE NAME AS
         WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR,  WITHOUT
         ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.


         Section  2.08.  Certificates  for Escrow  Receipts.  Each holder of the
Class  B  Stock  shall  be  entitled  to an  "Escrow  Receipt  for  Certificates
Representing  Class B Stock" of the  Corporation  signed by the  Chairman of the
Board,  the  President or a Vice  President,  and the  Secretary or an Assistant
Secretary, with the seal of the Corporation, or facsimile thereof, affixed

                                        8

<PAGE>



to it. The Escrow Receipt shall state the name of the registered  holder and the
number  of shares  of Class B Stock  covered  by the  Escrow  Receipt;  subject,
nevertheless,  to compliance with the provisions of Section 6.2 of the Articles.
Such  certificates  for Escrow Receipts shall be  substantially in the following
form:

                        (Form for Face of Escrow Receipt)

                       INCORPORATED UNDER THE LAWS OF THE
                                STATE OF INDIANA

Number __________                                             __________  Shares


                             Lilly Industries, Inc.

                                 ESCROW RECEIPT
                   FOR CERTIFICATES REPRESENTING CLASS B STOCK

         THIS  IS  TO  CERTIFY  THAT  ___________________________,  who  is  the
registered  holder of shares of Class B Stock,  without  par value  (hereinafter
referred to as the "Subject  Shares"),  of Lilly Industries,  Inc.  (hereinafter
referred to as the "Corporation"), represented by certificate(s) No(s). ________
(hereinafter  referred to as the "Subject  Certificate"),  has duly endorsed the
Subject  Certificate  in blank and has delivered the same to the  Corporation as
Escrow Agent for Key Person  Holders of Shares of Class B Stock,  for deposit by
it in the  Safety  Deposit  Box  for  Certificates  Representing  Class  B Stock
maintained for the purpose under the name "Lilly Industries,  Inc., Escrow Agent
for Key Person  Holders of Shares of Class B Stock," at the Principal  Office of
the  Corporation  or at a bank duly  designated by the Board of Directors of the
Corporation; and that such registered holder has been issued this Escrow Receipt
to evidence such endorsement, delivery and deposit.

         Upon the happening of any one or more of the following events:

                  i. The death of the registered  holder,  and the conclusion of
         administration of his estate;

                  ii. The discharge of the registered holder, if an employee, by
         the Corporation or one of its Subsidiaries;

                  iii. The retirement of the registered  holder, if an employee,
         from the active service of the Corporation or one of its  Subsidiaries,
         whether pursuant to a retirement plan or not;

                  iv. The termination by the registered  holder, if an employee,
         of his employment by the Corporation or one of its Subsidiaries;


                                        9

<PAGE>



                          v. The  decision of the  registered  holder to sell or
         otherwise  dispose of the above shares of Class B Stock  registered  in
         his name;  or the  decision  of a pledgee or other  transferee  of this
         "Escrow Receipt for Certificates Representing Class B Stock" to sell or
         otherwise  dispose of the shares of Class B Stock  represented  by this
         Escrow Receipt

         (hereinafter referred to as the "Events of Exchange"),  the Corporation
         shall be entitled and obligated to issue and deliver, and the holder of
         this Escrow Receipt (including the registered holder,  pledgee or other
         transferee)  shall be entitled and  obligated to receive a  certificate
         representing  the  same  number  of  shares  of  Class A  Stock  of the
         Corporation  in lieu of the Subject  Shares  represented by the Subject
         Certificate; and the Corporation shall upon the happening of any one or
         more of such  Events of  Exchange  be  entitled  to remove the  Subject
         Certificate from the Safety Deposit Box for  Certificates  Representing
         Class B Stock and transfer the same into a new  certificate for Class B
         Stock standing in the name of the Corporation.

         A  statement  of  the   designations,   relative   rights,   interests,
preferences,  qualifications,  limitations  or  restrictions,  and of the voting
rights,  of the Class A Stock and  Class B Stock of the  Corporation,  including
particularly the limitations upon alienation of the title to the shares of Class
B Stock represented by this Escrow Receipt, will be furnished by the Corporation
to the registered holder upon written request without charge.

         This  Escrow  Receipt and the  Subject  Shares and Subject  Certificate
represented hereby are issued and shall be held subject to all of the provisions
of the Articles of  Incorporation  of the Corporation and Code of By-Laws of the
Corporation, as the same may be now or hereafter amended. A copy of the complete
provisions of the Articles of  Incorporation,  as now or hereafter  amended,  as
well as a copy of the Code of By-Laws of the  Corporation,  as now or  hereafter
amended,  will be kept on file,  and open for  inspection  by  holders of Escrow
Receipts,  in the office of the Secretary of the Corporation;  and the holder of
this  Escrow  Receipt,  (including  the  registered  holder,  pledgee  or  other
transferee), by the acceptance hereof, assents to all such provisions.

         This Escrow Receipt is negotiable by endorsement  upon the back hereof,
and,  except as otherwise  provided in the Articles of  Incorporation,  any such
negotiation  shall vest any holder of this Escrow  Receipt with the same rights,
and subject him to the same obligations, as the registered holder; but no holder
(including the registered  holder,  pledgee or other transferee hereof) shall be
entitled to re-registration hereof.

         IN WITNESS  WHEREOF,  the Corporation has caused this Escrow Receipt to
be executed for and on its behalf as Escrow Agent for

                                       10

<PAGE>



Key Person  Holders of Shares of Class B Stock by its  President and its seal to
be affixed hereto and attested by its Secretary,  this ____ day of ____________,
19_____

                                      Lilly Industries, Inc.

         (SEAL)                       Escrow Agent for Key Person
                                      Holders of Shares of Class B Stock

                                      By _______________________________
                                            President

Attest:

-------------------------
Secretary



                         (Form for Back of Certificate)

         The following  abbreviations,  when used in the inscription on the face
of this certificate,  shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM --    as tenants in common              UNIF GIFT MIN ACT --
                                                ______Custodian______
TEN ENT --    as tenants by                     (Cust)                  (Minor)
              entireties                        under Uniform Gifts to
                                                Minors
JT TEN  --    as joint tenants with
              right of survivorship             Act________________
              and not as tenants in                    (State)
              common

         Additional abbreviations may also be used though not in the above list.

         FOR VALUE RECEIVED, ______ HEREBY SELL, ASSIGN AND TRANSFER
UNTO __________________________________________________________

----------------------------------------------------------------
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE)

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

----------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP
CODE OF ASSIGNEE)

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

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

                                       11

<PAGE>




__________________________________________________________SHARES
REPRESENTED BY THE WITHIN CERTIFICATE,  AND DO HEREBY IRREVOCABLY CONSTITUTE AND
APPOINT _______________________________, ATTORNEY TO TRANSFER THE SAID SHARES ON
THE BOOKS OF THE WITHIN NAMED CORPORATION WITH FULL POWER OF SUBSTITUTION IN THE
PREMISES.


Dated ___________________


                                            -----------------------------------
                                            SIGNATURE OF REGISTERED HOLDER


NOTICE:  THE  SIGNATURE  TO THIS  ASSIGNMENT  MUST  CORRESPOND  WITH THE NAME AS
         WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR,  WITHOUT
         ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.

         Section 2.09.  Certificates Issued Prior to Payment. If any certificate
representing  shares of the capital stock of the  Corporation  is issued but the
shares  represented  thereby  are not fully paid up, such  certificate  shall be
legibly  stamped  to  indicate  the per  centum  which has been paid up,  and as
further payments are made thereon, the certificate shall be stamped accordingly.

         Section  2.10.  Transfer  Regulations.  The Board shall have the power,
without the assent or vote of the Shareholders, to adopt "Regulations Respecting
Issue,  Transfer  and  Registration  of the Capital  stock of Lilly  Industries,
Inc.,"  which may also  include  regulations  respecting  Escrow  Receipts  (the
"Transfer Regulations").  The Board shall also have the power to alter, amend or
repeal the Transfer Regulations from time to time.


                                    ARTICLE 3

                                THE SHAREHOLDERS


         Section 3.01. Annual Meeting.  The annual meeting of Shareholders shall
be held in  April  of each  year.  Failure  to hold the  annual  meeting  at the
designated  time or  designated  place  does  not  affect  the  validity  of any
corporate action.  The annual meeting shall be held for the purposes of electing
individuals to each position upon the Board and acting upon such other questions
and matters as may properly come before the meeting. The annual meeting shall be
called by the Board.

         Section 3.02.  Special Meetings.  Special meetings,  for any purpose or
purposes (unless  otherwise  prescribed by law), may be called by the Board, the
Chairman of the Board or the  President,  and shall be called by the Chairman of
the Board, the President or any  Vice-President at (a) the request,  in writing,
of a

                                       12

<PAGE>



majority of the Board, or (b) at the written demand, delivered to the Secretary,
of  Shareholders  holding of record not less than 25% of the voting power of all
the  shares of the  Corporation  issued  and  outstanding  and  entitled  by the
Articles to vote on the business proposed to be transacted thereat. All requests
or demands for special meetings shall state the purpose or purposes thereof, and
the business transacted at such meeting shall be confined to the purposes stated
in the call and matters germane thereto.

         Section 3.03. Place of Meetings.  All meetings of Shareholders shall be
held at such place,  within or without the State of Indiana, as may be specified
in the respective notices or waivers of notice thereof,  or proxies to represent
Shareholders thereat.

         Section  3.04.   Record  Date.  For  the  purpose  of  determining  the
Shareholders  entitled  to  notice  of,  or to  vote  at,  any  meeting  of  the
Shareholders,  for the  purpose of  determining  the  Shareholders  entitled  to
receive  payment  of any  dividend  or other  distribution,  for the  purpose of
demanding  a  special  meeting  of  the  Shareholders,  or in  order  to  make a
determination of the Shareholders for any other corporate purpose, the Board may
fix in  advance  a record  date.  A record  date  determining  the  Shareholders
entitled  to notice  of a  meeting  of the  Shareholders,  to vote,  to demand a
special meeting, or to take other action may not be more than 70 days before the
meeting or action requiring the determination of Shareholders. If no record date
is fixed for the determination of the Shareholders  entitled to notice of, or to
vote at, a meeting of the Shareholders, then the date 45 days before the date of
the meeting  shall be the record date of the meeting.  A new record date must be
fixed if a meeting of  Shareholders  is  adjourned  to a date more than 120 days
after the date fixed for the  original  meeting.  If no record date is fixed for
the determination of the Shareholders  entitled to receive payment of a dividend
or other  distribution,  then the date upon  which the  resolution  of the Board
declaring the dividend or other distribution is adopted shall be the record date
for the determination of the Shareholders. The Shareholders upon any record date
shall be the Shareholders as of the close of business on that record date.

         Section 3.05. Notice of Meetings. A written or printed notice,  stating
the place, day and hour of each annual and special meeting of Shareholders, and,
in the case of a special meeting or when otherwise  required by any provision of
the Act,  the Articles or these  By-Laws,  the purpose or purposes for which the
meeting is  called,  shall be  delivered  or mailed by the  Secretary  or by the
persons calling the meeting to each Shareholder at the time entitled to vote, at
such address as appears on the records of the  Corporation,  at least 10 and not
more than 60 days before the date of the meeting.  Notice of any special meeting
called at the written demand of Shareholders shall be delivered or mailed within
60 days of the  Secretary's  receipt of such demand.  Notice given in accordance
with these

                                       13

<PAGE>



By-Laws  is  effective  when  mailed.  Each  Shareholder  who has in the  manner
provided  in  Section  3.06 of these  By-Laws  waived  notice  of a  meeting  of
Shareholders,  or who  personally  attends  a  meeting  of  Shareholders,  or is
represented  thereat by a duly authorized  proxy complying with the requirements
hereinafter  set forth,  shall be  conclusively  presumed to have been given due
notice of such meeting.

         Section 3.06. Waiver of Notice. Notice of any annual or special meeting
of Shareholders may be waived in writing by any Shareholder  before or after the
date and time of the meeting specified in the notice thereof by a written waiver
delivered  to the  Corporation  for  inclusion in the minutes or filing with the
corporate  records.  A  Shareholder's  attendance at any meeting in person or by
proxy  shall  constitute  a waiver of (a)  notice of such  meeting,  unless  the
Shareholder  at the  beginning  of the meeting  objects to the holding of or the
transaction of business at the meeting, and (b) consideration at such meeting of
any business that is not within the purpose or purposes described in the meeting
notice,  unless the  Shareholder  objects to  considering  the matter when it is
presented.

         Section 3.07. Addresses of Shareholders.  The address of each holder of
Class A Stock  shall be deemed to be the same  address as the latest  address of
such Shareholder  appearing on the records maintained by the Transfer Agent. The
address of each holder of Class B Stock  shall be deemed to be the same  address
as the latest address of such Shareholder appearing on the records maintained by
the Secretary of the Corporation.

         Section 3.08.  Shareholders Lists. Before each meeting of Shareholders,
a complete list of the Shareholders entitled to notice of such meeting, arranged
in  alphabetical  order by class of shares,  and showing the address of, and the
number of shares entitled to vote held by, each Shareholder  (the  "Shareholders
Lists"), shall be prepared.  Beginning five business days before the meeting and
continuing  throughout the meeting,  the Shareholders  Lists shall be on file at
the Principal  Office or at the place  identified  in the meeting  notice in the
city where the meeting will be held,  and shall be available  for  inspection by
any  Shareholders  entitled to vote at the meeting.  On written demand,  made in
good faith and for a proper purpose and describing with reasonable particularity
the Shareholder's  purpose, and if the Shareholders Lists are directly connected
with the Shareholder's  purpose, a Shareholder (or such  Shareholder's  agent or
attorney  authorized  in  writing)  shall be entitled to inspect and to copy the
Shareholders  Lists,  during  regular  business  hours and at the  Shareholder's
expense,  during the period the Shareholders Lists are available for inspection.
The  Shareholders  Lists  shall  be the  only  evidence  as to the  Shareholders
entitled  to examine  the  Shareholders  Lists or to vote at any  meeting of the
Shareholders.

         Section 3.09.  Proxies.  A Shareholder  entitled to vote at any meeting
may vote either in person or by proxy executed in

                                       14

<PAGE>



writing  by  the  Shareholder  or a duly  authorized  attorney-in-fact  of  such
Shareholder.  For purposes of this Section, a proxy granted by telegram,  telex,
telecopy or other document  transmitted  electronically  for or by a Shareholder
shall be deemed "executed in writing by the Shareholder." The general proxy of a
fiduciary  shall be given  the same  effect  as the  general  proxy of any other
Shareholder.  No proxy shall be valid after  eleven  months from the date of its
execution  unless a longer or shorter time is  expressly  provided  therein.  An
appointment of a proxy is revocable by a Shareholder unless the appointment form
conspicuously  states that it is irrevocable and the appointment is coupled with
an interest.

         Section 3.10. Quorum. At any meeting of Shareholders,  the holders of a
majority  of the  outstanding  shares  which may be voted on the  business to be
transacted,  represented  thereat  in  person or by proxy,  shall  constitute  a
quorum,  and a  majority  vote  of  such  quorum  shall  be  necessary  for  the
transaction of such business at the meeting, unless a greater number is required
by the Articles, these By-Laws, the Act, or any other applicable laws. In case a
quorum of a voting  group  shall not be present at any  meeting,  the holders of
record of a  majority  of such  shares of that  group so present in person or by
proxy may adjourn  the meeting  from time to time,  without  notice,  other than
announcement at the meeting,  unless the date of the adjourned  meeting requires
that the Board fix a new  record  date  therefor,  in which  case  notice of the
adjourned  meeting  shall be given.  At any such  adjourned  meeting  at which a
quorum shall be present or  represented,  any business may be  transacted  which
might have been transacted at the meeting as originally scheduled. If the matter
to be voted on at a meeting  requires  the  affirmative  vote of holders of both
Class A Stock and Class B Stock voting separately as two groups,  action on that
matter is taken only when voted upon by each group.  A matter may be voted on by
one voting  group at a meeting  even though no vote is taken by the other voting
group.


                                    ARTICLE 4

                             THE BOARD OF DIRECTORS


         Section  4.01.  Number of  Members.  The  business  and  affairs of the
Corporation shall be managed under the direction of a Board of 11 Directors.

         Section 4.02. Qualification of Members. Each Director shall be an adult
individual.  Members  of the  Board  need  not be  Shareholders  and need not be
residents of the State of Indiana. At least a majority of the Directors shall be
citizens of the United States.

         Section  4.03.  Election  of  Members.  At each  annual  meeting of the
Shareholders, the Shareholders shall elect Directors in

                                       15

<PAGE>



accordance  with the Articles.  Each Director shall be elected for a term of one
year and  shall  hold  office  until  the next  ensuing  annual  meeting  of the
Shareholders  or until his successor shall have been duly elected and qualified.
Each Director  shall be deemed to have  qualified as such upon his election.  No
decrease in the number of  Directors  at any time  provided  for by these ByLaws
shall have the effect of shortening the term of any incumbent Director.

         Section 4.04. Vacancies.  Any vacancy occurring in the Board, including
a vacancy  resulting from an increase in the number of Directors,  may be filled
by the Board, or if the Directors  remaining in office  constitute  fewer than a
quorum of the  Board,  they may fill the  vacancy by the  affirmative  vote of a
majority of all the Directors remaining in office. Each Director so chosen shall
hold office until the  expiration of the term of the  Director,  if any, whom he
has been  chosen to  succeed,  or, if none,  until  the  expiration  of the term
designated by the Board for the  directorship  to which he has been elected,  or
until his earlier removal, resignation, death, or other incapacity.

         Section 4.05. Removal of Members. Any Director may be removed,  with or
without cause, at any meeting of the  Shareholders by the affirmative  vote of a
majority in number of shares of the  Shareholders of record present in person or
by proxy and  entitled to vote for the election of such  Director,  if notice of
the  intention  to act upon such  matter  shall  have been  given in the  notice
calling such meeting.  If the notice calling such meeting shall so provide,  the
vacancy caused by the removal may be filled at the meeting by vote of a majority
of the Shareholders present and entitled to vote for such Director.

         Section 4.06.  Resignation  of Members.  Any Director may resign at any
time by delivering  written notice of his resignation to the Board, the Chairman
of the Board, or the Secretary.  The  resignation  shall take effect at the time
specified in the written notice or when it is delivered,  and, unless  otherwise
specified in the written notice,  the acceptance of the resignation shall not be
necessary to make it effective.

         Section  4.07.   Annual  Meeting.   The  Board  shall  meet  each  year
immediately  after the annual  meeting of the  Shareholders  for the  purpose of
electing  officers  and  considering  any other  business  that may  properly be
brought  before the meeting.  No notice of any kind shall be  necessary  for the
holding of this annual  meeting.  If such meeting is not held as  provided,  the
election of Officers may be held at any subsequent duly  constituted  meeting of
the Board.

         Section 4.08. Regular Meetings. Regular quarterly meetings of the Board
may be held with  notice by letter,  telegram  or cable,  or without  any notice
whatever,  and at such places and times as may be fixed from time to time by the
Board.


                                       16

<PAGE>



         Section 4.09.  Special  Meetings.  Special meetings of the Board may be
called at any time,  or from  time to time,  and shall be called on the  written
request of at least two Directors,  the Chairman of the Board, or the President,
by causing the  Secretary or any Assistant  Secretary to give to each  Director,
either personally or by mail,  telephone,  telegraph,  teletype or other form of
wire or wireless  communication  at least two days notice of the date,  time and
place of such meeting. Special meetings shall be held at the Principal Office or
at such  other  place,  within  or  without  the State of  Indiana,  as shall be
specified in the respective notices or waivers of notice thereof. A Director may
waive  notice of any special  meeting of the Board  before or after the date and
time stated in the notice by a written  waiver  signed by the Director and filed
with  the  minutes  or  corporate  records.   A  Director's   attendance  at  or
participation in a special meeting waives any required notice to the Director of
the meeting  unless the  Director at the  beginning  of the meeting (or promptly
upon the  Director's  arrival)  objects to holding  the  meeting or  transacting
business  at the meeting  and does not  thereafter  vote for or assent to action
taken at the meeting.

         Section 4.10.  Meeting by Telephone,  Etc. Any or all of the members of
the Board  may  participate  in a meeting  of the  Board,  or  conduct a meeting
through  the  use  of,  any  means  of   communication   by  which  all  persons
participating  may  simultaneously  hear each  other  during  the  meeting,  and
participation in a meeting using these means  constitutes  presence in person at
the meeting.

         Section 4.11.  Quorum.  At all meetings of the Board, a majority of the
number  of  Directors  designated  for the  full  Board  shall be  necessary  to
constitute a quorum for the transaction of any business, except (a) that for the
purpose of filling of  vacancies  of the Board a majority of  Directors  then in
office shall  constitute a quorum,  and (b) that a lesser number may adjourn the
meeting from time to time until a quorum is present.  The affirmative  vote of a
majority  of the  Directors  present  at a meeting  at which a quorum is present
shall be the act of the Board, unless the act of a greater number is required by
the Articles,  these By-Laws,  the Act, or any other applicable laws. A Director
who is present at a meeting of the Board at which action on any corporate matter
is taken  shall be deemed to have  assented to the action  taken  unless (a) his
dissent shall be  affirmatively  stated by him at and before the  adjournment of
such  meeting (in which event the fact of such  dissent  shall be entered by the
Secretary  of the  meeting in the  minutes of the  meeting),  or (b) he delivers
written  notice of his  dissent or  abstention  to the  chairman  of the meeting
before its adjournment or to the Secretary of the Corporation  immediately after
adjournment of the meeting.  The right of dissent or abstention  provided for by
either Clause (a) or Clause (b) of the immediately  preceding sentence shall not
be available,  in respect of any matter acted upon at any meeting, to a Director
who voted at the  meeting  in favor of such  matter  and did not change his vote
prior to the time that the result of the vote on such  matter was  announced  by
the chairman of the meeting.

                                       17

<PAGE>




         Section 4.12. Action Without Meeting.  Any action required or permitted
to be taken at any  meeting  of the Board may be taken  without a meeting if the
action is taken by all members of the Board. The action must be evidenced by one
or more written consents  describing the action taken,  signed by each member of
the Board,  and  included  in the  minutes or filed with the  corporate  records
reflecting  the action taken.  Action taken under this section is effective when
the last  member  of the Board  signs a  written  consent,  unless  the  consent
specifies a different prior or subsequent effective date.

         Section  4.13.  Powers of Directors.  The Board shall  exercise all the
powers of the Corporation,  subject to the restrictions imposed by the Articles,
these By-Laws, the Act or any other applicable laws.

         Section  4.14.  Dividends.  The Board shall have power,  subject to any
restrictions  contained in the Articles,  the Act, or any other applicable laws,
to declare and pay  dividends  upon Class A Stock and Class B Stock.  Before the
payment of any dividend,  or the  distribution of any profits,  there may be set
aside  out of the  net  profits  of the  Corporation  such  sum or  sums  as the
Directors,  from time to time, in their absolute  discretion,  think proper as a
reserve fund to meet  contingencies  or for  equalizing  dividends,  or for such
other  purpose  as  the  Directors  think  conducive  to  the  interests  of the
Corporation.

         Section 4.15.  Compensation  of  Directors.  The Board is empowered and
authorized to fix and determine the  compensation of Directors for attendance at
meetings of the Board and for any  additional  services any of the Directors may
perform for the Corporation.


                                    ARTICLE 5

                      COMMITTEES OF THE BOARD OF DIRECTORS


         Section 5.01. Creation of Committees.  The Board may create one or more
committees  (including an executive  committee) and appoint members of the Board
to serve on them. Each committee may have one or more members,  who serve at the
pleasure of the Board. The creation of a committee and appointment of members to
it must be approved by the  greater of: (a) a majority of all the  Directors  in
office when the action is taken; or (b) the number of Directors  required by the
Articles or these By-Laws to take action under the Act.

         Section  5.02.  Powers of a Committee.  To the extent  specified by the
Board,  each  committee may exercise the authority of the Board. A committee may
not,  however (a) authorize  distributions,  except a committee (or an executive
officer of the  Corporation  designated by the Board) may authorize or approve a
reacquisition of shares or other distribution if done according

                                       18

<PAGE>



to a formula or method, or within a range,  prescribed by the Board; (b) approve
or propose to  Shareholders  action  that the Act  requires  to be  approved  by
Shareholders;  (c) fill vacancies on the Board or on any of its committees;  (d)
adopt,  amend, or repeal any of these By-Laws;  (e) approve a plan of merger not
requiring  Shareholder  approval;  or (f)  authorize  or approve the issuance or
sale,  or a contract for sale,  of shares,  or  determine  the  designation  and
relative  rights,  preferences,  and limitations of a class or series of shares,
except  that the Board may  authorize  a  committee  of the Board (or  executive
officer designated by the Board) to take the action described in this Clause (f)
within limits prescribed by the Board.

         Section 5.03.  Meetings;  Procedure;  Quorum;  Etc. The  principles set
forth in Sections  4.08  through 4.12 of these  ByLaws  dealing  with  meetings,
action  without a meeting,  notice  and waiver of notice,  and quorum and voting
requirements of the Board apply to the committees and their members as well.


                                    ARTICLE 6

                                  THE OFFICERS


         Section 6.01. Number of Officers. The Officers of the Corporation shall
consist  of  the   Chairman   of  the  Board,   the   President,   one  or  more
Vice-Presidents,  a Secretary,  and such other  Officers as may be chosen by the
Board or by an Officer duly authorized by the Board to choose other Officers, at
such  time and in such  manner  and for such  terms  as the  Board or such  duly
authorized  Officer may  determine.  Any two or more  offices may be held by the
same person.  The Officers of the Corporation may also include a Chairman of the
Executive Committee, if there be such a Committee.

         Section  6.02.   Qualifications  of  Officers.   Each  Officer  of  the
Corporation  shall  be an adult  individual.  The  Chairman  of the  Board,  the
Chairman  of the  Executive  Committee,  if there be such a  Committee,  and the
President  shall each be a duly elected and qualified  member of the Board.  The
officers of the Corporation  need not be Shareholders  and need not be residents
of the State of Indiana or citizens of the United States of America.

         Section 6.03. Election and Appointment of Officers.  The Officers shall
be chosen by the Board or by an  Officer  duly  elected  or  appointed  and duly
authorized  by the Board.  Each Officer shall hold office until his successor is
chosen,  until his death,  until he shall have resigned,  or until he shall have
been removed in the manner hereinafter provided. Each Officer shall be deemed to
have qualified as such upon his election or appointment.

         Section  6.04.  Removal of Officers.  Any Officer may be removed at any
time, with or without cause, by the Board by vote

                                       19

<PAGE>



of a majority of the actual number of Directors elected and qualified, from time
to time (or by the Officer who appointed him if he was appointed by an Officer),
whenever in its or his judgment the best  interests of the  Corporation  will be
served  thereby,  but such  removal  shall be without  prejudice to the contract
rights, if any, of the person so removed.

         Section 6.05.  Resignation of Officers.  Any Officer of the Corporation
may resign at any time by delivering  written  notice of his  resignation to the
Board, the Chairman of the Board, the Secretary, or to the Officer who appointed
him if he was appointed by an Officer.  The  resignation  shall take effect when
delivered,  unless the notice specifies a later effective date. If a resignation
is made  effective  at a later  date  and the  Corporation  accepts  the  future
effective  date, the Board (or the Officer who appointed the resigning  Officer,
if he was  appointed  by an  Officer)  may fill the pending  vacancy  before the
effective date if the successor  does not take office until the effective  date.
Unless  otherwise  specified  in  the  written  notice,  the  acceptance  of the
resignation shall not be necessary to make it effective.

         Section  6.06.  Vacancies.  Any vacancy in any  office,  for any cause,
shall be filled for the unexpired  portion of the term in the manner  prescribed
in these By-Laws for election or appointment to such office.

         Section  6.07.  The  Chairman of the Board.  The  Chairman of the Board
shall be a  Director.  He shall  preside  at all  meetings  of the Board and the
Shareholders and shall have general  supervision and direction over the business
and affairs of the  Corporation,  subject to the control of the Board. He shall,
in general,  discharge all the duties which devolve upon a presiding officer and
perform all duties incident to the office of Chairman of the Board. The Chairman
of the Board is hereby  authorized  to choose  Vice-Presidents,  Assistant  Vice
Presidents and Assistant Secretaries, in addition to those elected by the Board.
He shall also perform  such other duties as, from time to time,  may be assigned
to him by the Board.

         Section 6.08. The Chairman of the Executive Committee.  The Chairman of
the Executive  Committee,  if any, shall be chosen from among the Directors.  He
shall have general  supervision  and direction  over the business and affairs of
the Executive Committee,  subject,  however, to the control of the Board and the
Executive  Committee.  He shall, in general,  perform all duties incident to the
office of the Chairman of the Executive Committee and such other duties as, from
time to time, may be assigned to him by the Board or the Executive Committee.

         Section 6.09.  The  President.  The President  shall be a Director.  He
shall have active  executive  management  of the  operation of the  Corporation,
subject,  however,  to the control of the Board,  the Chairman of the Board, the
Executive  Committee,  if any, and the Chairman of the Executive  Committee,  if
any. He

                                       20

<PAGE>



shall,  in general,  perform all duties  incident to the office of President and
such other  duties as,  from time to time,  may be assigned to him by the Board,
the Chairman of the Board, the Executive  Committee,  if any, or the Chairman of
the Executive Committee, if any.

         Section 6.10. The  Vice-Presidents.  Each of the Vice- Presidents shall
have such powers and perform  such duties as are  implicit in the  portfolio  to
which he is elected and as the Board or the Chairman of the Board may, from time
to time, prescribe or as the President may, from time to time, delegate to him.

         Section  6.11.  Assistant   Vice-Presidents.   One  or  more  Assistant
Vice-Presidents  may be appointed by the Chairman of the Board or the  President
and shall perform such duties as are from time to time  delegated to him or them
by the Chairman of the Board, the President or the Board.

         Section 6.12. The Secretary. The Secretary shall attend all meetings of
the  Shareholders and of the Board, and shall keep or cause to be kept in a book
provided for the purpose a true and complete  record of the  proceedings of such
meetings,  and shall  perform a like duty,  when  required,  for all  committees
created  by the Board.  The  Secretary  shall  authenticate  the  records of the
Corporation  when necessary and shall exercise and perform such other powers and
duties as these By-Laws,  the Board, the Chairman of the Board, or the President
may prescribe.  The Secretary shall give all notices of the Corporation  and, in
case of the Secretary's absence, negligence, or refusal so to do, any notice may
be given by a person so directed by the  Chairman of the Board or the  President
or by the requisite  number of Directors or Shareholders  upon whose request the
meeting is called as provided by these By-Laws.

         Section  6.13.  Assistant  Officers.  The  Board  or  an  Officer  duly
appointed by the Board may from time to time  designate  assistant  Officers who
shall  exercise and perform such powers and duties as the Officers whom they are
elected to assist shall specify and delegate to them,  and such other powers and
duties  as  these  By-Laws,  the  Board,  its  Chairman,  or the  President  may
prescribe.  An  Assistant  Secretary  may, in the absence or  disability  of the
Secretary, attest the execution of all documents by the Corporation.

         Section 6.14.  Function of Offices.  The offices of the Corporation are
established in order to facilitate the day to day  administration of the affairs
of the  Corporation  in the  ordinary  course of its  business and to provide an
organization  capable of executing and carrying out the decisions and directions
of the Board of  Directors.  The  officers  of the  Corporation  shall have such
powers and perform  such duties as may be  necessary or desirable to conduct and
effect  all  transactions  in  the  ordinary  course  of  the  business  of  the
Corporation  without  further  authorization  by the Board of Directors and such
further powers

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<PAGE>



as are  granted  by these  By-Laws  or are  otherwise  granted  by the  Board of
Directors.

         Section 6.15.  Delegation  of Authority.  In case of the absence of any
Officer  of the  Corporation,  or for any other  reason  that the Board may deem
sufficient,  the Board may  delegate the powers or duties of such Officer to any
other Officer or to any Director, for the time being.

         Section  6.16.   Compensation  of  Officers.   The  salaries  or  other
compensation of the Officers of the Corporation shall be fixed from time to time
by the Board,  by a committee of Board members duly  designated by the Board, or
in the  case of an  Officer  appointed  by a duly  designated  Officer,  by such
Officer.


                                    ARTICLE 7

                             LIMITATION OF LIABILITY


         Section 7.01. General  Limitation.  No Officer or General Manager shall
be liable  for any loss or damage  suffered  by the  Corporation  because of any
action taken or not taken by such Officer or General  Manager,  as such,  if, in
taking or omitting to take any action  causing  such loss or damage,  either (a)
such Officer or General  Manager  acted (1) in good faith,  (2) with the care an
ordinarily  prudent person in a like position would have exercised under similar
circumstances,  and (3) in a manner such Officer or General  Manager  reasonably
believed was in the best interests of the Corporation,  or (b) such Officer's or
General  Manager's  breach of or failure to act in accordance with the standards
of conduct set forth in Clause (a) hereof did not constitute  willful misconduct
or recklessness.

         Section 7.02. Savings Clause.  This Article 7 shall not be construed to
subject any person to liability to the  Corporation  for loss or damage suffered
by the  Corporation  because of any action taken or not taken by such person for
which  such  person  would not  otherwise  be liable  to the  Corporation  under
applicable common and statutory law.



                                    ARTICLE 8

                                 INDEMNIFICATION

         Section  8.01.   Indemnification   of  Officers  and   Employees.   The
Corporation  shall,  to the extent to which it is empowered to do so by the Act,
or any other  applicable  laws,  as from time to time in effect,  indemnify  any
Officer or employee of the  Corporation  who was or is a party, or is threatened
to be made a party,  to any  threatened,  pending or completed  action,  suit or
proceeding, whether civil, criminal, administrative or

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<PAGE>



investigative  and whether  formal or informal (an  "Action"),  by reason of the
fact that he is or was an Officer or employee of the  Corporation  or who, while
serving as such Officer or employee of the Corporation, is or was serving at the
request of the Corporation as a director, officer, partner, trustee, employee or
agent (an  "Authorized  Capacity") of another  corporation,  partnership,  joint
venture,  trust, employee benefit plan, or other enterprise,  whether for profit
or not (individually,  "Another Entity"), against expenses, including attorney's
fees ("Expenses"),  judgments, penalties, fines (including excise taxes assessed
with respect to employee benefit plans) and amounts paid in settlement  actually
and  reasonably  incurred by him in  connection  with such Action if such person
acted in good  faith  and in a manner  he  reasonably  believed,  in the case of
conduct in his official capacity,  was in the best interests of the Corporation,
and  in  all  other  cases,  was  not  opposed  to  the  best  interests  of the
Corporation,  and, with respect to any criminal Action, he either had reasonable
cause to believe his conduct  was lawful or no  reasonable  cause to believe his
conduct  was  unlawful.  The  termination  of any  Action  by  judgment,  order,
settlement or conviction,  or upon a plea of nolo  contendere or its equivalent,
shall not,  of  itself,  create a  presumption  that the person did not meet the
prescribed standards of conduct.

         Section 8.02. Indemnification Procedure. Unless ordered by a court, any
indemnification  of  any  person  under  Section  8.01  shall  be  made  by  the
Corporation  only as authorized in the specific case upon a  determination  that
indemnification of such person is proper in the circumstances because he met the
applicable  standards of conduct.  Such  determination  shall be made (a) by the
Board, by a majority vote of a quorum consisting of Directors who are not at the
time parties to the Action  involved  ("Parties"),  or (b) if a quorum cannot be
obtained under Clause (a), by a majority vote of a committee duly  designated by
the Board (in which  designation  Directors  who are Parties  may  participate),
consisting  solely of two or more Directors who are not at the time Parties,  or
(c) by written  opinion of special  legal counsel (1) selected by the Board or a
committee  composed  of  Directors  duly  designated  by the  Board  as  such (a
"Committee") in the manner  prescribed in Clauses (a) or (b),  respectively,  or
(2) if a quorum cannot be obtained and a Committee  cannot be  designated  under
Clauses (a) and (b), respectively,  selected by a majority of the full Board, in
which  selection  Directors  who  are  Parties  may  participate,  or (d) by the
Shareholders  who are not at the  times  Parties,  voting  together  as a single
class; and provided, further, that shares owned by or voted under the control of
Directors  who are at the time  Parties  may not be voted on the  determination.
Authorization  of  indemnification  and evaluation as to the  reasonableness  of
Expenses  shall  be  made  in  the  same  manner  as  the   determination   that
indemnification  is  permissible,  except that if the  determination  is made by
special legal counsel,  authorization  of  indemnification  and evaluation as to
reasonableness  of Expenses  shall be made by those entitled under Clause (c) to
select counsel.


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<PAGE>



         Section 8.03.  Good Faith  Defined.  For purposes of any  determination
under Section 8.01, an Officer or employee of the Corporation shall be deemed to
have acted in good faith and to have  otherwise met the  applicable  standard of
conduct  set  forth in  Section  8.01 if his  action  is  based on  information,
opinions,  reports,  or  statements,  including  financial  statements and other
financial data, prepared or presented by (a) one or more Officers, employees, or
agents of the Corporation or another  enterprise whom he reasonably  believes to
be reliable and competent in the matters  presented;  (b) legal counsel,  public
accountants,  appraisers or other  persons as to matters he reasonably  believes
are within the person's  professional or expert competence;  or (c) a Committee,
or a committee  of the board of directors  of another  enterprise,  of which the
person is not a member,  if he  reasonably  believes the Committee or committee,
respectively,  merits confidence.  The term "another enterprise" as used in this
Section 8.03 shall mean Another  Entity of which such Officer or employee of the
Corporation is or was serving at the request of the Corporation in an Authorized
Capacity.  The  provisions  of this  Section  8.03  shall  not be  deemed  to be
exclusive  or to limit in any way the  circumstances  in  which  an  Officer  or
employee of the Corporation  may be deemed to have met the applicable  standards
of conduct set forth in Section 8.01.

         Section  8.04.  Payment of  Expenses in  Advance.  Expenses  reasonably
incurred  in  connection  with any  Action by any  Officer  or  employee  of the
Corporation may be paid or reimbursed by the Corporation in advance of the final
disposition of such Action as authorized in the specific case in the same manner
described  in  Section  8.03  upon  receipt  of a  written  affirmation  of such
Officer's  or  employee's  good faith  belief that he has met the  standards  of
conduct  described in Section 8.01 and upon receipt of a written  undertaking by
or on  behalf of such  Officer  or  employee  to repay  such  amount if it shall
ultimately  be  determined  that he did not meet  the  applicable  standards  of
conduct and a  determination  is made under the  procedure  set forth in Section
8.03 that the facts  then  known to those  making  the  determination  would not
preclude  indemnification  under this Article 8. Such an undertaking  must be an
unlimited  general  obligation  of the person making it, but need not be secured
and may be  accepted  by the  Corporation  without  reference  to such  person's
financial ability to make repayment.

         Section 8.05.  Rights Not Exclusive.  The  indemnification  provided in
this Article 8 (a) shall not be deemed  exclusive of any other rights to which a
person  seeking  indemnification  may be  entitled  under  (1) any law,  (2) the
Articles, (3) any resolution of the Board or of the Shareholders,  (4) any other
authorization,  whenever adopted, after notice, by a majority vote of all shares
entitled  to  vote  thereon,   (5)  any   contract,   or  (6)  the  articles  of
incorporation,  code of by-laws or other governing documents,  or any resolution
of or other authorization by the directors,  shareholders,  partners,  trustees,
members,  owners or governing  body, of Another  Entity;  (b) shall inure to the
benefit of the

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<PAGE>



heirs,  executors and administrators of such a person; and (c) shall continue as
to  any  such  person  who  has  ceased  to be an  Officer  or  employee  of the
Corporation or to be serving in an Authorized Capacity for Another Entity.

         Section 8.06. Vested Right to Indemnification.  The right of any person
to indemnification  under this Article 8 shall vest at the time of occurrence or
performance  of any event,  act or omission  giving rise to the Action for which
indemnification  is sought,  and, once vested,  shall not later be impaired as a
result of any amendment,  repeal, alteration or other modification of any or all
of these provisions. Notwithstanding the foregoing, the indemnification afforded
under this Article 8 shall be  applicable to all alleged prior acts or omissions
of any person  seeking  indemnification  hereunder,  regardless of the fact that
such alleged prior acts or omissions may have occurred  prior to the adoption of
this Article 8. To the extent such prior acts or  omissions  cannot be deemed to
be covered by this  Article 8, the right of any  individual  to  indemnification
shall be governed  by the  indemnification  provisions  in effect at the time of
such prior acts or omissions.

         Section 8.07. Additional  Definitions.  For purposes of this Article 8,
references  to  the   "Corporation"   shall  include  any  domestic  or  foreign
predecessor  entity of the Corporation in a merger or other transaction in which
the predecessor's existence ceased upon consummation of the transaction.

         For purposes of this Article 8, serving an employee benefit plan at the
request of the  Corporation  shall include any service as an Officer or employee
of the Corporation which imposes duties on, or involves services by such Officer
or employee  with respect to an employee  benefit  plan,  its  participants,  or
beneficiaries.  A person who acted in good  faith and in a manner be  reasonably
believed to be in the best interests of the participants and beneficiaries of an
employee  benefit plan shall be deemed to have acted in a manner "not opposed to
the best interest of the Corporation" referred to in this Article 8.

         For purposes of this Article 8, "party"  includes any individual who is
or was a plaintiff,  defendant or respondent in any action,  suit or proceeding,
or who is threatened  to be made a named  defendant or respondent in any action,
suit or proceeding.

         For purposes of this  Article 8,  "official  capacity,"  when used with
respect to an Officer, employee of the Corporation, or agent of the Corporation,
shall mean the office in the  Corporation  held by the Officer or the employment
or agency  relationship  undertaken  by the  employee  or agent on behalf of the
Corporation.  "Official Capacity" does not include service for any other foreign
or domestic  corporation  or any  partnership,  joint venture,  trust,  employee
benefit plan, or other enterprise, whether for profit or not.


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<PAGE>



         Section 8.08. Payments as a Business Expense.  Any payments made to any
indemnified   party   under  this   Article  8  or  under  any  other  right  to
indemnification shall be deemed to be an ordinary and necessary business expense
of the Corporation, and payment thereof shall not subject any person responsible
for the  payment,  or the Board,  to any action  for  corporate  waste or to any
similar action.


                                    ARTICLE 9

                              MISCELLANEOUS MATTERS

         Section 9.01.  Fiscal Year.  The fiscal year of the  Corporation  shall
begin on the first day of December of each year and shall end on the last day of
November next ensuing.

         Section  9.02.  Place of  Keeping  Corporate  Books  and  Records.  The
Corporation  shall keep at its  Principal  Office a copy of (a) the Articles and
all amendments  thereto currently in effect;  (b) the By-Laws and all amendments
thereto currently in effect;  (c) resolutions  adopted by the Board with respect
to the shares of the Corporation and fixing their relative rights,  preferences,
and limitations, if shares issued pursuant to these resolutions are outstanding;
(d) minutes of all meetings of the Shareholders and records of all actions taken
by the Shareholders without a meeting (collectively, "Shareholders Minutes") for
the prior three years; (e) all written  communications by the Corporation to the
Shareholders, including the financial statements furnished by the Corporation to
the Shareholders for the prior three years; (f) a list of the names and business
addresses of the current  Directors of the Corporation;  and (g) the most recent
Annual  Report  of the  Corporation  as  filed  with the  Secretary  of State of
Indiana.  The Corporation  shall also keep and maintain at its Principal Office,
or at such other  place or places  within or without the State of Indiana as may
be provided, from time to time, in these By-Laws, (a) minutes of all meetings of
the Board and of each  committee,  and records of all actions taken by the Board
and  by  each  committee  without  a  meeting;  (b)  Shareholders  Minutes;  (c)
appropriate  accounting  records  of the  Corporation;  and (d) a record  of the
Shareholders  in a form  that  permits  preparation  of a list of the  names and
addresses of all the  Shareholders,  in  alphabetical  order by class of shares,
stating  the number  and class of shares  held by each  Shareholder.  All of the
records of the  Corporation  described in this Section  shall be  maintained  in
written form or in another form capable of conversion into written form within a
reasonable time.

         Section 9.03.  Seal. The seal of the  Corporation  shall be circular in
form and mounted upon a metal die,  suitable for impressing the same upon paper.
About the upper periphery of the seal shall appear the words "Lilly  Industries,
Inc." and about the lower  periphery  thereof  the word  "Indianapolis."  In the
center of the seal shall appear the words and figures "Lilly," encircled with an
ellipse, and "Since 1865."

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<PAGE>




         Section 9.04. Execution of Negotiable Instruments.  All checks, drafts,
bills of exchange and orders for the payment of money by the Corporation  shall,
unless otherwise  directed by the Board, or unless otherwise required by law, be
signed by any two of the  following  Officers:  The  Chairman of the Board,  the
President,  any  Vice-President  or  the  Secretary.  The  Board  may,  however,
authorize  any one or more of the  Officers  to sign  checks,  drafts,  bills of
exchange  and orders  for the  payment  of money by the  Corporation  singly and
without  necessity of  countersignature;  and the Board may  designate any other
employee  or  employees  of  the  Corporation,  who  may,  in  the  name  of the
Corporation,  execute  checks,  drafts,  bills of  exchange  and  orders for the
payment of money by the Corporation or in its behalf.

         Section 9.05.  Execution of Deeds,  Contracts,  Etc. All deeds,  notes,
bonds and mortgages made by the Corporation and all other written  contracts and
agreements,  other than those  executed in the ordinary  course of business,  to
which the  Corporation  shall be a party  shall be  executed  in its name by the
Chairman of the Board, the President,  a Vice-President  or by any other Officer
so  authorized  by the Board,  acting by  resolution;  and,  the  Secretary,  or
Assistant  Secretary,  when  necessary or required,  shall attest the  execution
thereof.

         Section 9.06. Ordinary Contracts and Agreements.  All written contracts
and  agreements  (including  checks)  into which the  Corporation  enters in the
ordinary  course of business  operations  shall be executed by any Officer or by
any other employee of the Corporation  designated by the Board,  the Chairman of
the Board, the President,  or any  Vice-President  to execute such contracts and
agreements.

         Section 9.07.  Endorsement of Certificates for Shares. Unless otherwise
directed by the Board,  any share or shares issued by any  corporation and owned
by the Corporation  (including  reacquired  shares of the Corporation)  may, for
sale or transfer,  be endorsed in the name of the Corporation by the Chairman of
the Board, the President or a Vice-President,  and the Secretary or an Assistant
Secretary, when necessary or required, shall attest such endorsement.

         Section 9.08.  Voting of Shares Owned by Corporation.  Unless otherwise
directed by the Board,  any share or shares issued by any other  corporation and
owned or controlled by the Corporation may be voted at any shareholders' meeting
of such other  corporation by the Chairman of the Board,  the  President,  or in
their absence by a Vice-President or the Secretary. Whenever, in the judgment of
the Chairman of the Board or the President,  it is desirable for the Corporation
to  execute a proxy or give a  Shareholder's  consent in respect to any share or
shares issued by any other corporation and owned by the Corporation,  such proxy
or consent shall be executed in the name of the  Corporation  by the Chairman of
the Board,  the President,  a  Vice-President,  or the Secretary.  Any person or
person  designated  in the  manner  above  stated as the proxy or proxies of the
Corporation shall have full

                                       27

<PAGE>


right,  power and  authority  to vote the share or shares  issued by such  other
corporation  and owned by the  Corporation  in the same  manner as such share or
shares might be voted by the Corporation.


                                   ARTICLE 10

                                   AMENDMENTS

         The power to make,  alter,  amend or repeal these  By-Laws is vested in
the Board, but the affirmative vote of a number of Directors equal to a majority
of the number who would constitute a full Board at the time of such action shall
be necessary to take any action for the making, alteration,  amendment or repeal
of these By-Laws.













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