LILLY INDUSTRIES, INC.

                            EXECUTIVE RETIREMENT PLAN






















                         Effective as of January 1, 1996




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                                TABLE OF CONTENTS

                                                                          Page


ARTICLE I.          ESTABLISHMENT OF PLAN....................................1

Section 1.01.              Establishment.....................................1
Section 1.02.              Purpose...........................................1
Section 1.03.              Funding...........................................1

ARTICLE II.                DEFINITIONS AND INTERPRETATION....................1

Section 2.01.              Definitions.......................................1
Section 2.02.              Construction and Governing Law....................5

ARTICLE III.               PARTICIPATION.....................................6

ARTICLE IV.                VESTING AND FORFEITURE OF BASE PENSION............6

Section 4.01.              Vesting...........................................6
Section 4.02.              Forfeiture........................................6

ARTICLE V.          PAYMENT OF BASE PENSION..................................7

Section 5.01.              Normal Retirement.................................7
Section 5.02.              Disability........................................7
Section 5.03.              Termination of Employment.........................7
Section 5.04.              Alternate Form....................................7

ARTICLE VI.                SURVIVOR BENEFIT..................................7

ARTICLE VII.               MISCELLANEOUS.....................................8

Section 7.01.              Amendments........................................8
Section 7.02.              General Administration............................8
Section 7.03.              No Employment Rights..............................8
Section 7.04.              Non-alienation....................................8
Section 7.05.              Limitation of Liability...........................8
Section 7.06.              Acceleration or Change of Payment.................9
Section 7.07.              Tax Withholding...................................9
Section 7.08.              Counterparts......................................9

                                        1

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                             LILLY INDUSTRIES, INC.
                            EXECUTIVE RETIREMENT PLAN


                                   ARTICLE I.

                              ESTABLISHMENT OF PLAN

         Section 1.01. Establishment.  Lilly Industries, Inc. ("Company") hereby
establishes  the Lilly  Industries,  Inc.  Executive  Retirement  Plan ("Plan"),
effective as of January 1, 1996.

         Section 1.02. Purpose. The sole purpose of the Plan is to ensure a base
retirement  benefit  to a select  group of  management  and  highly  compensated
employees  who devote  their full time and  attention  to the  business of their
Employer throughout their respective careers.

         Section 1.03. Funding.  The Plan is an unfunded benefit plan within the
meaning of the  Employee  Retirement  Income  Security  Act of 1974,  as amended
("ERISA"),  and the Internal Revenue Code of 1986, as amended, and corresponding
provisions of subsequent  federal  income tax laws  ("Code").  Benefits  payable
under the Plan with respect to a Participant or  beneficiary  shall be paid from
the  general  assets  of  the  Employer  of  the  Participant.  The  right  of a
Participant  or  beneficiary  to  receive  payment  under  the Plan is  merely a
contractual right to payment from the Employer of the Participant,  and the Plan
does not give Participants or beneficiaries any interest in, or right to, any of
the assets of the  Company or any  Affiliated  Employer  other than as a general
creditor of his or her Employer.

                                   ARTICLE II.

                         DEFINITIONS AND INTERPRETATION

         Section 2.01. 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:

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

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

         (b)  "Base  Pension"  means a  Single  Life  Annuity  payable  for life
beginning at the Normal Retirement Date of the Participant,  equal to fifty-five
percent (55%) of the Final Average Compensation, reduced by the Pension Offsets.

         (c)      "Board" means the board of directors of the Company.



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

                  (i)      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;

                  (ii)     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   ("Person")   which  is  not  an   Affiliated
                           Employer;

                  (iii)             the  approval  by  the  shareholders  of the
                                    Company  of one or  more  amendments  to the
                                    Articles  of  Incorporation  of the  Company
                                    which has a material  adverse  effect on the
                                    rights  of, or  control  exercised  by,  the
                                    Class B shareholders of the Company;

                  (iv)     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
                           securities of the Company; or

                  (v)      during   any   period  of  two   consecutive   years,
                           individuals  who, at the  beginning  of such  period,
                           constituted  the Board,  cease,  for any  reason,  to
                           constitute  at least a majority  thereof,  unless the
                           election  or  nomination  for  election  for each new
                           director  was  approved  by  the  vote  of  at  least
                           two-thirds of the directors  then still in office who
                           were directors at the beginning of the period.

         (e) "Code" means the Internal Revenue Code of 1986, as amended,  or any
corresponding provisions of any subsequent federal income tax law.

         (f) "Committee" means the Compensation Committee of the Board, to which
the Board has delegated  authority to  administer  and interpret the Plan and to
designate eligible participants.

         (g) "Company" means Lilly  Industries,  Inc. and any successor to Lilly
Industries, Inc.

         (h)  "Compensation"  means  the total  cash  wages  actually  paid to a
Participant  by one or more  Employers for a calendar year and includible in the
gross income of the Participant for

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such calendar year,  plus any amounts  deferred or redirected by the Participant
for such  calendar  year  which are not  includible  in the gross  income of the
Participant for such calendar year pursuant to any cash or deferred arrangements
or salary  reduction plans  maintained by the Employer under Code Section 401(k)
or Code Section 125 and reduced by any amounts which are includible in the gross
income of the Participant for such calendar year under the Replacement Plan.

         (i)  "Competition"  means any of the activities  described  within this
Subsection.  A Participant  engages in  Competition if he or she at any time (A)
directly or  indirectly  engages in any activity or business that is the same as
or  substantially  similar  to or  competitive  with that of the  Company or any
Affiliated  Employer,  (B) directly or  indirectly  engages in,  owns,  manages,
operates,  joins, controls,  lends money or other assistance to, or participates
in  or is  connected  with,  as  an  officer,  employee,  partner,  stockholder,
consultant,  or otherwise, any individual,  partnership,  firm, corporation,  or
other  business  organization  or entity  that is  engaged  in any  activity  or
business that is the same as or  substantially  similar to or  competitive  with
that of the Company or any Affiliated Employer,  or (C) discloses or uses, other
than in the normal and ordinary  performance  of service for the  Employer,  any
Confidential  Information  of the Company or any  Affiliated  Employer.  Nothing
contained in the foregoing,  however,  shall prohibit a Participant  from owning
shares of stock  representing  less  than one  percent  (1%) of the  outstanding
shares  of any  publicly-held  competitor  of  the  Company  or  any  Affiliated
Employer.

         (j) "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
and 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.

         (k)  "Disability"  means a disability as determined for purposes of any
group  disability  insurance policy of the Company in effect for the Participant
which qualifies the Participant 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  the
Participant, at intervals of not less than six (6) months.

         (l)  "Effective  Date" means January 1, 1996,  the date the Plan became
effective.

         (m)  "Employer"  means the Company and any  Affiliated  Employer  which
adopts the Plan with the consent of the Committee, and any successor thereto.

         (n) "Final Average  Compensation" means the average of the Compensation
of a  Participant  for the three (3)  consecutive  calendar  years of his or her
employment  with one or more  Employers  which produce the highest such average;
provided, however, if the

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Compensation of a Participant for the first calendar year in such three (3) year
period  includes any bonus with respect to such  calendar  year and the previous
calendar  year then the bonus for the previous  calendar  year shall be excluded
from  such   Compensation   for  purposes  of  computing   such  Final   Average
Compensation.

         (o) "Good Cause" means (i)  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 his or
her  termination  of  employment;  (ii)  engaging  in  conduct  that has  caused
demonstrable  and  material  injury to the  Company or an  Affiliated  Employer,
monetary  or  otherwise;  (iii)  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 (iv) the disclosure or use of
Confidential  Information  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 and in
its sole discretion.

         (p)  "Normal  Retirement  Date"  means  the  first  day  of  the  month
coinciding  with or immediately  following the later of the date the Participant
(i) reaches age  sixty-five  (65),  or (ii)  retires  from  employment  with the
Company.

         (q) "Participant"  means any employee of an Employer who is employed in
a key executive or managerial position, who is designated by the Committee to be
eligible  for  participation  in the  Plan,  and who  agrees  to be bound by the
provisions of the Plan on a form provided by the Committee.

         (r) "Pension Offsets" means the aggregate amount of benefits payable to
a Participant under the Pension Plan, the Savings Plan, or the Replacement Plan,
but only to the extent that such benefits are  attributable to  contributions by
the  Employer;  provided,  however,  that Pension  Offsets shall not include (i)
Employer  matching  contributions  to the Savings Plan (and investment gains and
losses thereon),  (ii) Employer  matching  contributions to the Replacement Plan
(and investment gains and losses thereon),  (iii) Participant salary redirection
contributions  to the Savings Plan (and  investment  gains and losses  thereon),
(iv) Participant salary  redirection  contributions to the Replacement Plan (and
investment  gains  and  losses  thereon),  or (v)  investment  gains  or  losses
attributable to Employer profit sharing contributions to the Savings Plan or the
Replacement  Plan.  To the extent  that any  Pension  Offsets  are  payable to a
Participant  in a form or at a time  other than in the form and at the time that
the Base Pension of the Participant is payable to him or her under the Plan, the
amount of such  Pension  Offsets  shall be adjusted as necessary to convert such
amount to an amount which,  if payable in the form and at the time that the Base
Pension of the Participant is payable under the Plan, is actuarially  equivalent
to the amount of such Pension Offsets actually payable to the Participant.

         (s)  "Pension  Plan"  means the  "Lilly  Employees'  Pension  Plan," as
amended from time to time.


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         (t)  "Plan"  means the "Lilly  Industries,  Inc.  Executive  Retirement
Plan," as set forth herein and as it may be amended from time to time.

         (u) "Plan Year" means a calendar year.

         (v) "Replacement  Plan" means the "Lilly Industries,  Inc.  Replacement
Plan," as amended from time to time.

         (w) "Savings Plan" refers  collectively to the "Lilly Industries,  Inc.
Employee  401(k)  Savings  Plan," as amended  from time to time,  and the "Lilly
Industries, Inc. Defined Contribution Plan," as amended from time to time.

         (x)  "Single  Life  Annuity"  means an annual  annuity  payable  to the
Participant  beginning  as of his or her  Normal  Retirement  Date  and on  each
subsequent  anniversary  thereof,  and ending on the anniversary date coinciding
with or immediately preceding the date of his or her death.

         (y) "Spouse"  means the spouse of the  Participant,  provided  that the
Participant and his or her spouse have been married continuously  throughout the
one-year period ending on the date of death of the Participant.

         (z) "Years of Service" means the continuous  employment  service (based
on full years and completed  months) of a  Participant  with the Company and any
Affiliated Employer;  provided,  however, that Years of Service may include such
continuous  employment  service with a prior  employer if so  designated  by the
Committee  in  writing  for  a  particular  Participant;  and  may  include  any
additional service granted under the terms of any applicable Severance Agreement
of the Participant.

         Section 2.02.  Construction and Governing Law.

         (a) The Plan shall be  construed,  enforced and  administered,  and the
validity  thereof  determined  in  accordance  with,  the  laws of the  State of
Indiana.

         (b) Words used herein in the  masculine  gender  shall be  construed to
include the  feminine  gender  where  appropriate,  and words used herein in the
singular or plural shall be  construed as being in the plural or singular  where
appropriate.

         (c) Whenever any actuarial present value or actuarial equivalency is to
be determined under the Plan, it shall be based on such actuarial assumptions as
may be provided under the Pension Plan for  comparable  situations as determined
by the Committee in its sole discretion.


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                                  ARTICLE III.

                                  PARTICIPATION

         The  Committee may  designate  from time to time which  employees of an
Employer are eligible to participate in the Plan. Any such employee shall become
a Participant  only after completing such forms and making such elections as the
Committee may prescribe,  including an agreement to be bound by all terms of the
Plan and all  determinations  of the  Committee.  A  Participant  shall remain a
Participant until all amounts to which he or she is entitled under the Plan have
been paid to him or her.

                                   ARTICLE IV.

                     VESTING AND FORFEITURE OF BASE PENSION

         Section 4.01.  Vesting. A Participant shall become vested in his or her
Base Pension as follows:

         (a) Subject to Section 4.02, the Base Pension of a Participant shall be
ten percent  (10%)  vested upon the later of the date that the  Participant  (i)
reaches age fifty-three (53), or (ii) completes  thirteen (13) Years of Service,
and shall be vested  thereafter  at the rate of ten  percent  (10%) per year for
each subsequent Year of Service.

         (b) Subject to Section 4.02, a Participant shall be one hundred percent
(100%)  vested  in his or her Base  Pension  in the event  that the  Participant
becomes Disabled.

         Section 4.02.  Forfeiture.  A Participant shall forfeit his or her Base
Pension as follows:

         (a) A  Participant  shall forfeit any and all rights he or she may have
to the  nonvested  portion of his or her Base  Pension as of the date his or her
employment with the Employer ends either  voluntarily or involuntarily,  subject
to the terms of any applicable Severance Agreement of the Participant.

         (b)  Notwithstanding  any other  provision of the Plan,  a  Participant
shall  forfeit any and all rights he or she may have to the vested or  nonvested
Base Pension of the  Participant  if (i) the  employment of the  Participant  is
involuntarily  terminated  by the Employer for Good Cause,  as determined by the
Committee in its sole  discretion,  or (ii) the  Participant,  either  before or
after any  termination  of  employment  with the  Employer  (including,  without
limitation, retirement from the Employer), engages in Competition.

         (c) If a Participant  dies before any Base Pension  becomes  payable to
him or her under the Plan, the Participant shall forfeit any and all rights that
the Participant  may have had to any Base Pension whether or not vested,  except
any survivor benefit payable pursuant to Article VI.


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                                   ARTICLE V.

                             PAYMENT OF BASE PENSION

         Section 5.01.  Normal  Retirement.  A Participant  who retires from the
Employer on or after reaching age  sixty-five  (65) shall be entitled to receive
the vested  portion of his or her Base Pension  payable as a Single Life Annuity
beginning as of his or her Normal  Retirement Date,  unless an alternate form of
benefit has been elected by the Participant as provided in Section 5.04.

         Section 5.02. Disability.  A Participant who terminates employment with
the Employer  before  reaching age  sixty-five  (65) due to Disability  shall be
entitled  to  receive  his or her full Base  Pension  payable  as a Single  Life
Annuity  beginning as of his or her Normal  Retirement Date, unless an alternate
form of benefit  has been  selected  by the  Participant  as provided in Section
5.04.

         Section 5.03.  Termination of Employment.  A Participant who terminates
employment with the Employer before reaching age sixty-five (65), other than due
to Disability and other than an involuntary termination for Good Cause, shall be
entitled to receive the vested portion of his or her Base Pension,  payable as a
Single Life Annuity beginning as of his or her Normal Retirement Date, unless an
alternate  form of benefit has been  elected by the  Participant  as provided in
Section 5.04.

         Section 5.04.  Alternate  Form. Upon becoming a Participant in the Plan
and at any time  thereafter at least one (1) year before his or her Base Pension
becomes due and payable under the Plan, a Participant may elect in writing, on a
form prescribed by the Committee,  an actuarially  equivalent  alternate form of
benefit then available under the Pension Plan; provided,  however, that any such
election  shall not become  effective  until the date that is one (1) year after
the date on which such election is approved by the Committee, which approval may
be withheld by the Committee in its sole discretion.

                                   ARTICLE VI.

                                SURVIVOR BENEFIT

         If a  married  Participant  dies  before  reaching  his or  her  Normal
Retirement Date and while still employed by the Employer, but after reaching age
fifty-five  (55), an annual survivor annuity equal to fifty percent (50%) of the
Base Pension which would have been payable to the  Participant  as a Single Life
Annuity if he or she had  retired  from the  Employer on the later of his or her
sixty-fifth  (65th)  birthday or date of death,  and assuming his or her service
with the Employer would have continued  uninterrupted  until such date, shall be
paid to the surviving Spouse of the Participant beginning as of the first day of
the  month  coinciding  with  or  next  following  the  later  of the  date  the
Participant would have reached age sixty-five (65) or the date

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of death;  provided,  however,  that the  Committee  may  determine  in its sole
discretion  to begin  payment at an earlier  date in an  actuarially  equivalent
amount.

                                  ARTICLE VII.

                                  MISCELLANEOUS

         Section  7.01.  Amendments.  The  Board  from  time to time may  amend,
suspend, or terminate the Plan or any part hereof, effective as of the beginning
of any Plan Year  commencing  on or after the date of adoption of such action by
the Board; provided, however, that no such action shall affect the rights of the
Participant or the operation of the Plan with respect to the portion of the Base
Pension of the Participant that has become payable or vested before such action;
and  provided,  further,  however,  that the Board  may not  amend,  suspend  or
terminate  the Plan or any part hereof after a Change in Control with respect to
any Participant without the written consent of the Participant.

         Section  7.02.  General   Administration.   The  Committee  shall  have
exclusive  authority  to  administer  the Plan.  The  Committee  shall  have the
exclusive right and authority to interpret the Plan and resolve any ambiguities.
The  decisions,  actions and records of the Committee  shall be  conclusive  and
binding upon the Company,  any Employer,  and all persons  having or claiming to
have any right or interest in or under the Plan.  The  Committee may delegate to
such officers,  employees or departments of the Company such authority,  duties,
and  responsibilities of the Committee as it, in its sole discretion,  considers
necessary or  appropriate  for the proper and  efficient  operation of the Plan,
including,  without limitation, (a) interpretation of the plan, (b) approval and
payment of claims, and (c) establishment of procedures for administration of the
Plan.

         Section 7.03. No Employment  Rights.  Neither the  establishment of the
Plan nor the status of an employee as a Participant  shall give any  Participant
any right to be retained in the employ of the Employer;  and no Participant  and
no person  claiming  under or through such  Participant  shall have any right or
interest in any benefit  under the Plan unless and until the terms,  conditions,
and provisions of the Plan affecting such Participant shall have been satisfied.

         Section  7.04.  Non-alienation.  The  right of any  Participant  or any
person claiming under or through such  Participant to any benefit or any payment
hereunder  shall not be  subject  in any  manner to  attachment  or other  legal
process for the debts of such  Participant or person;  and the same shall not be
subject to anticipation, alienation, sale, transfer, assignment or encumbrance.

         Section 7.05.  Limitation  of Liability.  No member of the Board or the
Committee, and no officer or employee of the Company or any Affiliated Employer,
shall be liable to any person for any action taken or omitted in connection with
the administration of the Plan, nor shall the Company or any Affiliated Employer
be liable  to any  person  for any such  action or  omission.  No person  shall,
because of the Plan, acquire any right to an accounting or to examine the books

                                      - 8 -

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or the affairs of the Company or any  Affiliated  Employer.  Nothing in the Plan
shall be construed to create any trust or any fiduciary relationship between the
Company or any Affiliated Employer and any Participant or any other person.

         Section 7.06.  Acceleration or Change of Payment.  Notwithstanding  any
provisions of the Plan to the contrary,  the Committee,  in its sole discretion,
may accelerate the time of payment of any benefit to a Participant to the extent
that it deems  equitable or desirable under the  circumstances  or, if there has
been a change in the family  circumstances of a Participant,  the Committee,  in
its  sole  discretion,  may  change  the form of  payment  of any  benefit  to a
Participant;  provided,  however,  any such change  shall not reduce the benefit
payable to an amount  which is less than the  actuarial  equivalent  of the Base
Pension payable to the Participant.

         Section  7.07.  Tax  Withholding.  The Employer  may withhold  from any
payment  due  hereunder  any taxes  required  to be  withheld  under  applicable
federal, state, or local tax laws or regulations.

         Section 7.08. Counterparts.  The Plan may be evidenced by any number of
counterparts, each of which shall constitute an original.

         The Lilly Industries,  Inc. Executive Retirement Plan has been executed
by the duly authorized officers of Lilly Industries, Inc. on this 27th day
of September, 1996.


                                       LILLY INDUSTRIES, INC.


                                       By: /s/ Douglas W. Huemme
                                          --------------------------------------

                                          Douglas W. Huemme, Chairman, President
                                                 & Chief Executive Officer

ATTEST:


By:    /s/ Kenneth L. Mills
       ------------------------------------------------
       Kenneth L. Mills


Title: Corporate Accounting Director
       ----------------------------------------------


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