EXECUTIVE SEVERANCE AGREEMENT

                             Eljer Industries, Inc.

                                   July, 1995





<PAGE>



                             Eljer Industries, Inc.
                          Executive Severance Agreement

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
     Article              Section                                                                                       Page

        <S>              <C>            <C>                                                                             <C>       
        1                                   Definitions                                                                   2
                                            -----------

        2                                  Severance Benefits

                         2.1             Right to Severance Benefits                                                      9
                         2.2             Services During Certain Events                                                   9
                         2.3             Qualifying Termination                                                          10
                         2.4             Description of Severance Benefits                                               10
                         2.5             Termination for Total and Permanent
                                         Disability                                                                      11
                         2.6             Termination for Retirement or Death                                             12
                         2.7             Termination for Cause or by the
                                         Executive Other Than for Good Reason                                            12
                         2.8             Notice of Termination                                                           12


        3                                  Form and Timing of Severance Benefits
                                           -------------------------------------

                         3.1             Form and Timing of Severance Benefits                                           13
                         3.2             Withholding of Taxes                                                            13


        4                                   Tax Indemnity

                         4.1             Limitation on Termination Payment                                               13
                         4.2             Subsequent Imposition of Excise Tax                                             15


        5                                   The Company's Payment Obligation

                         5.1             Payment Obligations Absolute                                                    16
                         5.2             Contractual Rights to Benefits                                                  17


        6                                   Term of Agreement                                                            17
                                            -----------------


        7                                   Legal Remedies



<PAGE>




                         7.1             Payment of Legal Fees                                                           17
                         7.2             Arbitration                                                                     18


        8                                   Successors                                                                   18
                                            ----------

</TABLE>

<PAGE>


<TABLE>
<CAPTION>
     Article              Section                                                                                          Page

        <S>              <C>            <C>                                                                             <C>       
        9                                   Miscellaneous

                         9.1             Employment Status                                                               19
                         9.2             Beneficiaries                                                                   20
                         9.3             Entire Agreement                                                                20
                         9.4             Gender and Number                                                               20
                         9.5             Severability                                                                    20
                         9.6             Modification                                                                    20
                         9.7             Applicable Law                                                                  21
</TABLE>




      
<PAGE>


                             Eljer Industries, Inc.
                          Executive Severance Agreement

         THIS  AGREEMENT  is made and  entered  into as of this 1st day of July,
1995, by and between Eljer Industries, Inc., a Delaware corporation (hereinafter
referred to as the "Company") and [NAME OF OFFICER] (hereinafter  referred to as
the "Executive").

                              W I T N E S S E T H:

         WHEREAS, the Board of Directors of the Company has approved the Company
entering into severance agreements with certain key executives of the Company;

         WHEREAS, the Executive is a key executive of the Company;

         WHEREAS,  should the possibility of a Change-in-Control  of the Company
arise, the Board believes it imperative that the Company and the Board should be
able to rely  upon the  Executive  to  continue  in his  position,  and that the
Company  should be able to receive and rely upon his advice,  if it requests it,
as to the best  interests of the Company and its  shareholders  without  concern
that he might be distracted by the personal  uncertainties  and risks created by
the possibility of a Change-in-Control;

         WHEREAS,  should  the  possibility  of a  Change-in-Control  arise,  in
addition to the Executive's  regular duties,  he may be called upon to assist in
the  assessment of such possible  Change-in-Control,  advise  management and the
Board as to whether such Change-in-Control would be in the best interests of the
Company and its shareholders,  and to take such other actions as the Board might
determine to be appropriate; and

         WHEREAS, the Executive and  the  Company  desire that the terms of this
Agreement,  with  the  terms  of  the Eljer Industries, Inc. Long-Term Executive
Incentive  Compensation  Plan  and the Eljer Industries 1991 Long-Term Incentive
Plan, to the extent

                                      - 1 -

<PAGE>



that the  Executive  has an award  under  either  or both of such  plans,  shall
constitute the entire  understanding  of the parties  regarding the  Executive's
entitlement  to  payment  and  benefits  following  a Change in  Control  of the
Company;

         NOW  THEREFORE,  to assure the Company that it will have the  continued
dedication  of the  Executive  and the  availability  of his advice and  counsel
notwithstanding the possibility, threat, or occurrence of a Change-in-Control of
the Company, and to induce the Executive to remain in the employ of the Company,
and for other good and  valuable  consideration,  the Company and the  Executive
agree as follows:

                             Article 1. Definitions

         Whenever used in this  Agreement,  the  following  terms shall have the
meanings set forth below and, when the meaning is intended,  the initial  letter
of the word is capitalized:

         (a)      "Agreement" means this Executive Severance Agreement.

         (b)      "Base Salary" means the salary of record paid to the Executive
                  as annual salary,  excluding  amounts received under incentive
                  or other bonus plans, whether or not deferred.

         (c)      "Beneficial  Owner"  shall have the  meaning  ascribed to such
                  term in Rule 13d-3 of the General Rules and Regulations  under
                  the Exchange Act.

         (d)      "Beneficiary" means the persons or entities designated or
                  deemed designated by the Executive pursuant to Section 9.2
                  herein.

         (e)      "Board" means the Board of Directors of the Company.


                                      - 2 -

<PAGE>



         (f)      "Cause" shall be determined by the  Committee,  in exercise of
                  good  faith  and  reasonable  judgment,  and  shall  mean  the
                  occurrence of any one or more of the following:

                       (i.)         The willful and continued failure by the
                                    Executive to substantially perform his
                                    duties (other than any such failure
                                    resulting from the Executive's Disability),
                                    after a written demand for substantial
                                    performance is delivered by the Committee to
                                    the Executive that specifically identifies
                                    the manner in which the Committee believes
                                    that the Executive has not substantially
                                    performed his duties, and the Executive
                                    has failed to remedy the situation within
                                    thirty (30) calendar days of receiving such
                                    notice; or

                      (ii.)         The Executive's conviction for committing an
                                    act of fraud, embezzlement, theft, or other
                                    act constituting a felony; or

                     (iii.)         The  willful  engaging by the  Executive  in
                                    gross misconduct materially and demonstrably
                                    injurious to the Company,  as  determined by
                                    the Committee. However, no act or failure to
                                    act,  on  the  Executive's   part  shall  be
                                    considered "willful" unless done, or omitted
                                    to be  done,  by the  Executive  not in good
                                    faith and without reasonable belief that his
                                    action or omission was in the best  interest
                                    of the Company.

         (g)      "Change-in-Control"  of the  Company  shall be  deemed to have
                  occurred  as of the  first  day  that  any  one or more of the
                  following conditions shall have been satisfied:


                                      - 3 -

<PAGE>



                       (i.)         Any Person (other than those Persons in
                                    control of the Company as of the Effective
                                    Date, or other than a trustee or other
                                    fiduciary holding securities under an
                                    employee benefit plan of the Company, or a
                                    corporation owned directly or indirectly by
                                    the stockholders of the Company in
                                    substantially the same proportions as their
                                    ownership of stock of the Company), becomes
                                    the Beneficial Owner, directly or
                                    indirectly, of securities of the Company
                                    representing twenty-five percent (25%) or
                                    more of the combined voting power of
                                    the Company's then outstanding securities;
                                    or

                      (ii.)         During any period of two (2) consecutive
                                    years (not including any period prior to the
                                    execution of this Agreement), individuals
                                    who at the beginning of such period
                                    constitute the Board (and any new Director,
                                    whose election by the Company's stockholders
                                    was approved by a vote of at least
                                    two-thirds (2/3) of the Directors then
                                    still in office who either were Directors at
                                    the beginning of the period or whose
                                    election or nomination for election was so
                                    approved), cease for any reason to
                                    constitute a majority thereof; or

                     (iii.)         The stockholders of the Company approve:
                                    (A)  a plan of complete liquidation of the
                                    Company; or (B)  an agreement for the sale
                                    or disposition of all or substantially all
                                    the Company's assets; or (C)  a merger,
                                    consolidation, or reorganization of the
                                    Company with or involving any other
                                    corporation, other than a merger,
                                    consolidation, or reorganization that would
                                    result in the voting securities of the
                                    Company outstanding immediately
                                    prior thereto continuing to represent
                                    (either by remaining outstanding or by
                                    being converted into voting securities of
                                    the

                                      - 4 -

<PAGE>



                                    surviving  entity),  at least fifty  percent
                                    (50%) of the  combined  voting  power of the
                                    voting  securities  of the  Company (or such
                                    surviving  entity)  outstanding  immediately
                                    after   such   merger,   consolidation,   or
                                    reorganization.

                  However,  in no event shall a  Change-in-Control  be deemed to
                  have occurred, with respect to the Executive, if the Executive
                  is  part  of  a  purchasing   group  which   consummates   the
                  Change-in-Control  transaction.  The Executive shall be deemed
                  "part of a  purchasing  group" for  purposes of the  preceding
                  sentence  if the  Executive  is an equity  participant  in the
                  purchasing company or group (except for: (i) passive ownership
                  of less than three percent (3%) of the stock of the purchasing
                  company;  or (ii)  ownership  of equity  participation  in the
                  purchasing   company   or  group   which  is   otherwise   not
                  significant, as determined prior to the Change-in-Control by a
                  majority of the nonemployee continuing Directors).

         (h)      "Code" means the Internal Revenue Code of 1986, as amended.

         (i)      "Committee" means the Compensation Committee of the Board, or
                  any other committee appointed by the Board to perform the
                  functions of the Compensation Committee.

         (j)      "Company" means Eljer Industries, Inc., a Delaware corporation
                  (including any and all subsidiaries), or any successor thereto
                  as provided in Article 8 herein.

         (k)      "Disability" means permanent and total disability,  within the
                  meaning  of  Code  Section  22(e)(3),  as  determined  by  the
                  Committee  in  the  exercise  of  good  faith  and  reasonable
                  judgment, upon receipt of and in reliance on sufficient

                                      - 5 -

<PAGE>



                  competent   medical  advice  from  one  or  more  individuals,
                  selected  by  the   Committee,   who  are  qualified  to  give
                  professional medical advice.

         (l)      "Effective  Date" means the date this Agreement is approved by
                  the Board,  or such other date as the Board shall designate in
                  its resolution approving this Agreement.

         (m)      "Effective  Date of  Termination"  means  the  date on which a
                  Qualifying  Termination  occurs which  triggers the payment of
                  Severance Benefits hereunder.

         (n)      "Exchange Act" means the Securities Exchange Act of 1934, as
                  amended.

         (o)      "Executive" means [NAME OF OFFICER].

         (p)      "Good Reason" means,  without the Executive's  express written
                  consent,  the  occurrence  after  a  Change-in-Control  of the
                  Company of any one or more of the following:

                       (i.)         The assignment of the Executive to duties
                                    materially inconsistent with the Executive's
                                    authorities, duties, responsibilities, and
                                    status (including offices, titles, and
                                    reporting requirements) as an officer of the
                                    Company, or a reduction or alteration in the
                                    nature or status of the Executive's
                                    authorities, duties, or responsibilities
                                    from those in effect as of ninety (90) days
                                    prior to the Change-in-Control, other than
                                    an insubstantial and inadvertent act that is
                                    remedied by the Company promptly after
                                    receipt of notice thereof given by the
                                    Executive, and other than any such
                                    alteration primarily

                                      - 6 -

<PAGE>



                                    attributable to the fact that the Company
                                    may no longer be a public company;

                      (ii.)         The Company's  requiring the Executive to be
                                    based at a location in excess of thirty-five
                                    (35)   miles  from  the   location   of  the
                                    Executive's principal job location or office
                                    immediately prior to the  Change-in-Control;
                                    except for required  travel on the Company's
                                    business   to   an   extent    substantially
                                    consistent  with  the  Executive's   present
                                    business obligations;

                     (iii.)         A reduction by the Company of the
                                    Executive's Base Salary as in effect on the
                                    Effective Date, or as the same shall be
                                    increased from time to time.

                      (iv.)         The failure of the Company to continue in
                                    effect any of the Company's short- and/or
                                    long-term incentive compensation plans,
                                    or employee benefit or retirement plans,
                                    policies, practices, or arrangements in
                                    which the Executive participates, or the
                                    failure by the Company to continue the
                                    Executive's participation therein on
                                    substantially the same basis, both in
                                    terms of the amount of benefits provided and
                                    the level of the Executive's participation
                                    relative to other participants, as
                                    existed immediately prior to the Change-in-
                                    Control of the Company;

                       (v.)         The failure of the Company to obtain a
                                    satisfactory agreement from any successor to
                                    the Company to assume and agree to perform
                                    the Company's obligations under this
                                    Agreement, as contemplated in Article 8
                                    herein; and


                                      - 7 -

<PAGE>



                      (vi.)         Any purported  termination by the Company of
                                    the  Executive's   employment  that  is  not
                                    affected pursuant to a Notice of Termination
                                    satisfying the  requirements  of Section 2.8
                                    herein,  and for purposes of this Agreement,
                                    no  such  purported   termination  shall  be
                                    effective.

                  The Executive's right to terminate  employment for Good Reason
                  shall not be affected  by the  Executive's  incapacity  due to
                  physical  or  mental  illness.   The   Executive's   continued
                  employment  shall not  constitute  consent  to, or a waiver of
                  rights with  respect to, any  circumstance  constituting  Good
                  Reason herein.

         (q)      "Person"  shall  have the  meaning  ascribed  to such  term in
                  Section 3(a)(9) of the Exchange Act and used in Sections 13(d)
                  and 14(d)  thereof,  including a "group" as defined in Section
                  13(d).

         (r)      "Qualifying  Termination" means any of the events described in
                  Section 2.3  herein,  the  occurrence  of which  triggers  the
                  payment of Severance Benefits hereunder.

         (s)      "Severance Benefits" means the payment of severance
                  compensation as provided in Section 2.4 herein.

                          Article 2. Severance Benefits

         2.1 Right to Severance  Benefits.  The  Executive  shall be entitled to
receive from the Company Severance  Benefits as described in Section 2.4 herein,
if there has been a Change-in-Control  of the Company and if, within twenty-four
(24) calendar months  thereafter,  the  Executive's  employment with the Company
shall end for any reason  specified  in Section 2.3 herein as being a Qualifying
Termination.

                                      - 8 -

<PAGE>



         The Executive shall not be entitled to receive Severance Benefits if he
is  terminated  for Cause,  or if his  employment  with the Company  ends due to
death,  Disability,  retirement (as defined under the then established  rules of
the Company's tax-qualified  retirement plan), or due to a voluntary termination
of employment by the Executive without Good Reason.

         2.2.  Services  During  Certain  Events.  In the event a Person  begins
tender or exchange offer,  circulates a proxy to shareholders of the Company, or
takes other steps seeking to effect a  Change-in-Control,  the Executive  agrees
that he will not  voluntarily  leave the employ of the  Company  and will render
services  until such Person has  abandoned or  terminated  his or its efforts to
effect a  Change-in-Control,  or until six (6) months after a  Change-in-Control
has occurred;  provided,  however,  that the Company may terminate the Executive
for Cause at any time,  and the Executive may terminate his  employment any time
after the Change-in-Control for Good Reason.


         2.3.     Qualifying Termination.  The occurrence of any one or more of
the following events within twenty-four (24) calendar months after a Change-in-
Control of the Company shall trigger the payment of Severance Benefits to the
Executive under this Agreement:

         (a)      A termination of the  Executive's  employment with the Company
                  for reasons other than death,  Disability,  normal  retirement
                  (as such term is defined under the then  established  rules of
                  the  Company's  tax-qualified  retirement  plan),  a voluntary
                  termination  of  employment  by  the  Executive  without  Good
                  Reason,  or termination of the  Executive's  employment by the
                  Company for Cause;

         (b)      A successor company fails or refuses to assume the Company's
                  obligations under this Agreement, as required by Article 8
                  herein; or


                                      - 9 -

<PAGE>



         (c)      The Company or any successor company breaches any of the
                  provisions of this Agreement.

         2.4. Description of Severance Benefits. In the event that the Executive
becomes entitled to receive Severance Benefits,  as provided in Sections 2.1 and
2.3 herein, and subject to the limits set forth in Article 4 herein, the Company
shall pay to the Executive and provide him with the following:

         (a)      An  amount  equal to two (2)  times  the  highest  rate of the
                  Executive's annual Base Salary in effect at any time up to and
                  including the Effective Date of Termination.

         (b)      An  amount  equal to two (2)  times the  greater  of:  (i) the
                  Executive's  average  annual  bonus earned over the last three
                  (3) years;  or (ii) the Executive's  target bonus  established
                  for the bonus  plan year in which  the  Executive's  Effective
                  Date of Termination occurs.

         (c)      An amount  equal to the  Executive's  unpaid  Base  Salary and
                  accrued   vacation   pay   through  the   Effective   Date  of
                  Termination.

         (d)      A continuation of all benefits pursuant to any and all welfare
                  benefit plans under which the Executive and/or the Executive's
                  family is eligible to receive benefits and/or coverage as of
                  the effective date of the Change-in-Control, including, but
                  not limited to, group life insurance, hospitalization,
                  disability, medical, dental, pension, and profit sharing.  
                  These benefits shall be provided by the Company to the
                  Executive immediately upon the Effective Date of Termination
                  and shall continue to be provided for two (2) full
                  calendar years from the Effective Date of Termination.  Such
                  benefits shall be provided to the Executive at the same
                  premium cost, and at the same

                                     - 10 -

<PAGE>



                  coverage level, as in effect as of the Executive's Effective
                  Date of Termination.

                  The welfare benefits described in this Subsection 2.4(d) shall
                  continue for two (2) full years  following the Effective  Date
                  of Termination; provided, however, that such benefits shall be
                  discontinued  prior to the end of the two (2) year  period  in
                  the  event  the  Executive  receives   substantially   similar
                  benefits  from a subsequent  employer,  as  determined  by the
                  Committee.

         2.5.  Termination  for  Total and  Permanent  Disability.  Following  a
Change-in- Control of the Company,  if the Executive's  employment is terminated
due to  Disability,  the  Executive  shall  receive his Base Salary  through the
Effective Date of Termination,  at which point in time the Executive's  benefits
shall be determined in accordance with the Company's retirement,  insurance, and
other applicable plans and programs then in effect.

         2.6. Termination for Retirement or Death. Following a Change-in-Control
of the Company,  if the  Executive's  employment  is terminated by reason of his
retirement  (as  defined  under  the then  established  rules  of the  Company's
tax-qualified  retirement  plan), or death,  the  Executive's  benefits shall be
determined in accordance  with the Company's  retirement,  survivor's  benefits,
insurance, and other applicable programs of the Company then in effect.

         2.7.  Termination  for Cause or by the  Executive  Other  Than for Good
Reason.  Following  a  Change-in-Control  of the  Company,  if  the  Executive's
employment is terminated  either:  (i) by the Company for Cause;  or (ii) by the
Executive  other than for Good Reason,  the Company  shall pay the Executive his
full Base Salary and accrued vacation through the Effective Date of Termination,
at the rate then in effect,  plus all other  amounts to which the  Executive  is
entitled under any compensation plans of the Company,  at the time such payments
are due,  and the Company  shall have no further  obligations  to the  Executive
under this Agreement.

                                     - 11 -

<PAGE>



         2.8. Notice of Termination. Any termination by the Company for Cause or
by the Executive for Good Reason shall be  communicated by Notice of Termination
to the other party.  For purposes of this  Agreement,  a "Notice of Termination"
shall mean a written  notice  which  shall  indicate  the  specific  termination
provision  in this  Agreement  relied  upon,  and shall set forth in  reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.



                                     - 12 -

<PAGE>



                Article 3. Form and Timing of Severance Benefits

         3.1.  Form and Timing of Severance  Benefits.  The  Severance  Benefits
described in Sections 2.4(a), 2.4(b), and 2.4(c) herein shall be paid in cash to
the  Executive  in a  single  lump  sum as soon  as  practicable  following  the
Effective Date of Termination, but in no event beyond thirty (30) days from such
date.

         3.2.     Withholding of Taxes.  The Company shall withhold from any
amounts payable under this Agreement all federal, state, city, or other taxes as
legally shall be required.

                            Article 4. Tax Indemnity

         4.1.     Limitation on Termination Payment.

                  (a)      Determination of Termination Payment Limit.  
                           ------------------------------------------
                           Notwithstanding any other provision of this
                           Agreement, if any portion of the Severance Benefits
                           Benefits or any other payment under this Agreement,
                           or under any other agreement with or plan of the
                           Company (in the aggregate "Total Payments") would
                           constitute an "excess parachute payment," then
                           the payments to be made to the Executive under this
                           Agreement shall be reduced such that the value of the
                           aggregate Total Payments that the Executive is
                           entitled to receive shall be one dollar ($1) less
                           than the maximum amount which the Executive may
                           receive without becoming subject to the tax imposed
                           by Section 4999 of the Code, or which the Company may
                           pay without loss of deduction under Section
                           280G(a) of the Code.

                           However,  the  payments  to be made to the  Executive
                           under this Agreement  shall be reduced if and only if
                           so reducing the payments

                                     - 13 -

<PAGE>



                           results  in the  Executive  receiving  a greater  net
                           benefit  than he would have  received had a reduction
                           not occurred and an excise tax been paid  pursuant to
                           Code Section 4999.

                           For  purposes of this  Agreement,  the terms  "excess
                           parachute  payment" and  "parachute  payments"  shall
                           have the meanings assigned to them in Section 280G of
                           the  Code,  and such  "parachute  payments"  shall be
                           valued as provided therein.

                  (b)      Procedure for Establishing Limitation on Termination
                           ----------------------------------------------------
                           Payment.
                           --------
                           Within sixty (60) days following delivery of the
                           Notice of Termination (as described in Section 2.8
                           herein) or notice by the Company to the Executive of
                           its belief that there is a payment or benefit due the
                           Executive which will result in an "excess parachute
                           payment" as defined in Section 280G of the Code, the
                           Executive and the Company, at the Company's expense,
                           shall obtain the opinion of such legal counsel, which
                           need not be unqualified, as the Executive may choose,
                           which sets forth:  (i)  the amount of the Executive's
                           "annualized includible compensation for the base
                           period" (as defined in Code Section 280G(d)(1));
                           (ii)  the present value of the Total Payments; and
                           (iii)  the amount and present value of any "excess
                           parachute payment."  The opinion of such legal
                           counsel shall be supported by the opinion of a
                           certified public accounting firm and, if necessary,
                           a firm of recognized executive compensation
                           consultants. Such opinion shall be binding upon the
                           Company and the Executive.

                           In the event that such opinion  determines that there
                           would be an "excess parachute payment," the Severance
                           Benefits hereunder or any other payment determined by
                           such counsel to be includible in Total Payments shall
                           be reduced or eliminated as specified by the

                                     - 14 -

<PAGE>



                           Executive in writing  delivered to the Company within
                           thirty (30) days of his receipt of such opinion,  or,
                           if the Executive fails to so notify the Company, then
                           as the Company shall  reasonably  determine,  so that
                           under  the  basis of  calculations  set forth in such
                           opinion, there will be no "excess parachute payment."

                           The provisions of this Section 4.1(b),  including the
                           calculations,   notices,  and  opinion  provided  for
                           herein shall be based upon the conclusive presumption
                           that: (i) the compensation and benefits  provided for
                           in   Section   2.4   herein;   and  (ii)  any   other
                           compensation  earned prior to the  Effective  Date of
                           Termination   by  the   Executive   pursuant  to  the
                           Company's  compensation  programs  (if such  payments
                           would have been made in the future in any event, even
                           though the timing of such payment is triggered by the
                           Change-in- Control), are reasonable.

         4.2.   Subsequent   Imposition  of  Excise  Tax.  If,   notwithstanding
compliance  with the provisions of Sections  4.1(a),  and 4.1(b)  herein,  it is
ultimately  determined  by a court or pursuant to a final  determination  by the
Internal Revenue Service that any portion of the Total Payments is considered to
be a "parachute  payment," subject to excise tax under Section 4999 of the Code,
which was not  contemplated  to be a "parachute  payment" at the time of payment
(so as to accurately  determine whether a limitation should have been applied to
the Total Payments to maximize the net benefit to the Executive,  as provided in
Section 4.1(b)  hereof),  the Executive  shall be entitled to receive a lump sum
cash  payment  sufficient  to place  the  Executive  in the  same net  after-tax
position,  computed  by using the  "Special  Tax  Rate" as such term is  defined
below,  that the Executive  would have been in had such payment not been subject
to such excise tax, and had the Executive  not incurred any interest  charges or
penalties  with  respect to the  imposition  of such excise tax. For purposes of
this Agreement, the "Special Tax Rate" shall be the highest effective

                                     - 15 -

<PAGE>



federal and state marginal tax rates  applicable to the Executive in the year in
which the payment contemplated under this Section 4.2 is made.

                   Article 5. The Company's Payment Obligation

         5.1. Payment Obligations Absolute. The Company's obligation to make the
payments  and the  arrangements  provided  for  herein  shall  be  absolute  and
unconditional,  and  shall  not be  affected  by any  circumstances,  including,
without  limitation,  any offset,  counterclaim,  recoupment,  defense, or other
right which the  Company may have  against the  Executive  or anyone  else.  All
amounts payable by the Company hereunder shall be paid without notice or demand.
Each and every  payment made  hereunder by the Company  shall be final,  and the
Company  shall  not seek to  recover  all or any part of such  payment  from the
Executive  or  from  whomsoever  may  be  entitled  thereto,   for  any  reasons
whatsoever.

         The  Executive  shall not be  obligated  to seek  other  employment  in
mitigation of the amounts  payable or  arrangements  made under any provision of
this Agreement, and the obtaining of any such other employment shall in no event
effect any  reduction  of the  Company's  obligations  to make the  payments and
arrangements  required  to be made  under this  Agreement,  except to the extent
provided in Section 2.4(d) herein.

         5.2.  Contractual  Rights to Benefits.  This Agreement  establishes and
vests  in the  Executive  a  contractual  right to the  benefits  to which he is
entitled hereunder. However, nothing herein contained shall require or be deemed
to  require,  or prohibit or be deemed to  prohibit,  the Company to  segregate,
earmark,  or  otherwise  set  aside  any  funds  or  other  assets,  in trust or
otherwise, to provide for any payments to be made or required hereunder.

                          Article 6. Term of Agreement


                                     - 16 -

<PAGE>



         This  Agreement  will commence on the Effective Date and shall continue
in effect for two (2) full  calendar  years,  the last day of which shall be the
"Expiration Date." However, at the end of such two-year period and, if extended,
at the end of each additional year thereafter,  the term of this Agreement shall
be extended  automatically  for one (1)  additional  year,  unless the Committee
delivers  written  notice  three (3) months  prior to the end of such  term,  or
extended  term, to the Executive,  that the Agreement  will not be extended.  In
such case,  the  Agreement  will  terminate at the end of the term,  or extended
term, then in progress.

         However, in the event a Change-in-Control occurs during the original or
any extended  term,  this Agreement will remain in effect for the longer of: (i)
twenty-four  (24)  months  beyond  the  month  in which  such  Change-in-Control
occurred;  or (ii) until all  obligations  of the  Company  hereunder  have been
fulfilled,  and  until all  benefits  required  hereunder  have been paid to the
Executive.

                            Article 7. Legal Remedies

         7.1. Payment of Legal Fees. To the extent permitted by law, the Company
shall pay all legal fees, costs of litigation,  prejudgment interest,  and other
expenses  incurred in good faith by the  Executive as a result of the  Company's
refusal  to  provide  the  Severance  Benefits  to which the  Executive  becomes
entitled under this  Agreement,  or as a result of the Company's  contesting the
validity, enforceability, or interpretation of this Agreement, or as a result of
any conflict between the parties pertaining to this Agreement.

         7.2.  Arbitration.  The  Executive  shall  have the right and option to
elect (in lieu of litigation)  to have any dispute or controversy  arising under
or in connection with this Agreement settled by arbitration,  conducted before a
panel of three (3) arbitrators  sitting in a location  selected by the Executive
within  fifty (50)  miles  from the  location  of his job with the  Company,  in
accordance  with  the  rules of the  American  Arbitration  Association  then in
effect.

                                     - 17 -

<PAGE>



         Judgment  may be  entered on the award of the  arbitrator  in any court
having proper jurisdiction. All expenses of such arbitration, including the fees
and expenses of the counsel for the Executive, shall be borne by the Company.

                              Article 8. Successors

         The Company will require any successor (whether direct or indirect,  by
purchase,  merger,  consolidation,  or otherwise) of all or substantially all of
the  business  and/or  assets of the Company or of any  division  or  subsidiary
thereof to expressly assume and agree to perform the Company's obligations under
this  Agreement in the same manner and to the same extent that the Company would
be required to perform them if no such  succession  had taken place.  Failure of
the Company to obtain such  assumption and agreement prior to the effective date
of any such succession shall be a breach of this Agreement and shall entitle the
Executive  to  compensation  from the Company in the same amount and on the same
terms as he would be entitled to hereunder if he had  terminated  his employment
with the  Company  voluntarily  for Good  Reason.  Except  for the  purposes  of
implementing  the  foregoing,  the date on which  any  such  succession  becomes
effective shall be deemed the Effective Date of Termination.

         This Agreement  shall inure to the benefit of and be enforceable by the
Executive's  personal  or  legal  representatives,   executors,  administrators,
successors, heirs, distributees, devisees, and legatees. If the Executive should
die while any amount would still be payable to him hereunder had he continued to
live,  all such amounts,  unless  otherwise  provided  herein,  shall be paid in
accordance with the terms of this Agreement, to the Executive's Beneficiary.  If
the  Executive has not named a  Beneficiary,  then such amounts shall be paid to
the Executive's  devisee,  legatee,  or other  designee,  or if there is no such
designee, to the Executive's estate.

                            Article 9. Miscellaneous


                                     - 18 -

<PAGE>



         9.1. Employment Status. The Executive and the Company acknowledge that,
except as may be provided  under any other  agreement  between the Executive and
the Company,  the  employment of the Executive by the Company is "at will," and,
prior to the effective date of a Change-in-Control,  may be terminated by either
the Executive or the Company at any time.  Upon a termination of the Executive's
employment by the Company or the Executive or by reason of the Executive's death
before the  occurrence of a Change in Control,  there shall be no further rights
under this  Agreement;  provided,  however,  that if the Company  terminates the
Executive's  employment  for any  reason  other  than  Disability  or  Cause  in
connection with, or in anticipation  of, a proposed Change in Control,  then the
Executive's  rights under this Agreement shall be the same as if the termination
had occurred within twenty-four (24) calendar months after a Change in Control.

         9.2.     Beneficiaries.  The Executive may designate one or more
persons or entities as the primary and/or contingent Beneficiaries of any
Severance Benefits owing to the Executive under this Agreement.  Such
designation must be in the form of a signed writing acceptable to the Committee.
The Executive may make or change such designation at any time.

         9.3. Entire Agreement. Except as described in the following sentence of
this Section  9.3,  this  Agreement  contains  the entire  understanding  of the
Company  and the  Executive  with  respect  to the  Executive's  entitlement  to
payments and benefits arising as a result of a Change in Control of the Company.
Nothing in this Agreement shall,  however,  negate or impair any rights that the
Executive  may  have  under  the  Eljer  Industries,  Inc.  Long-Term  Executive
Incentive  Compensation  Plan or the Eljer  Industries 1991 Long-Term  Incentive
Plan, or both, upon the occurrence of a Change in Control of the Company.

         9.4.     Gender and Number.  Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular, and the singular shall include the plural.


                                     - 19 -

<PAGE>



         9.5.  Severability.  In the event any provision of this Agreement shall
be held illegal or invalid for any reason,  the  illegality or invalidity  shall
not affect the remaining  parts of the  Agreement,  and the  Agreement  shall be
construed  and  enforced  as if the  illegal or invalid  provision  had not been
included. Further, the captions of this Agreement are not part of the provisions
hereof and shall have no force and effect.

         9.6.     Modification.  No provision of this Agreement may be modified,
waived, or discharged unless such modification, waiver, or discharge is agreed
to in writing and signed by the Executive and by an authorized member of the
Committee, or by the respective parties' legal representatives and successors.

         9.7.     Applicable Law.  To the extent not preempted by the laws of
the United States, the laws of the state of Texas shall be the controlling law
in all matters relating to this Agreement.

         IN WITNESS  WHEREOF,  the parties have executed this  Agreement on this
______ day of August, 1995.



                                                       ------------------------
                                                              Signature


ATTEST:                    
                              Eljer Industries, Inc.

(Corporate Seal)



By:



                                     - 20 -