AGREEMENT AND PLAN OF MERGER



                                  BY AND AMONG



                               FINISHMASTER, INC.,


                              LDI AUTOPAINTS, INC.


                                       AND


                             LACY DISTRIBUTION, INC.




                          Dated as of February 16, 1998




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                                TABLE OF CONTENTS


                                                                            Page

ARTICLE I            THE MERGER................................................1
         SECTION 1.1  The Merger...............................................1
         SECTION 1.2  Effective Time...........................................1
         SECTION 1.3  Effects of the Merger....................................1
         SECTION 1.4  Articles of Incorporation and By-Laws....................1
         SECTION 1.5  Directors................................................1
         SECTION 1.6  Officers.................................................1
         SECTION 1.7  Conversion of Shares.....................................1
         SECTION 1.8  Reorganization...........................................2

ARTICLE II           REPRESENTATIONS AND WARRANTIES OF AP AND
                     DISTRIBUTION..............................................2
         SECTION 2.1  Organization.............................................2
         SECTION 2.2  Capitalization...........................................2
         SECTION 2.3  Authority Relative to This Agreement.....................2
         SECTION 2.4  No Violation.............................................3
         SECTION 2.5  Financial Statements.....................................3
         SECTION 2.6  Information.  ...........................................4
         SECTION 2.7  Absence of Certain Changes; 
                         No Undisclosed Liabilities............................4
         SECTION 2.8  Litigation...............................................4
         SECTION 2.9  Compliance with Applicable Law...........................4
         SECTION 2.10  Taxes...................................................5
         SECTION 2.11  Termination, Severance and Employment Agreements........6
         SECTION 2.12  Employee Benefit Plans; ERISA...........................6
         SECTION 2.13  Environmental Matters...................................7
         SECTION 2.14  Assets, Real Property, Intellectual Property............7
         SECTION 2.15  Labor Matters...........................................8
         SECTION 2.16  Certain Fees............................................8
         SECTION 2.17  No Default..............................................8

ARTICLE III          REPRESENTATIONS AND WARRANTIES OF FMST....................9
         SECTION 3.1  Organization.............................................9
         SECTION 3.2  Authority Relative to This Agreement.....................9
         SECTION 3.3  No Violation.............................................9
         SECTION 3.4   Proxy Statement, Other Information.....................10
         SECTION 3.5  Certain Fees............................................10

ARTICLE IV           COVENANTS................................................10
         SECTION 4.1  Conduct of Business of AP...............................10
         SECTION 4.2  Access to Information...................................12


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         SECTION 4.3  Shareholders' Meeting...................................12
         SECTION 4.4  Cooperation.............................................13
         SECTION 4.5  Notification of Certain Matters.........................13
         SECTION 4.6  Public Announcements....................................13

ARTICLE V            CONDITIONS TO CONSUMMATION OF THE MERGER.................14
         SECTION 5.1  Conditions to Each Party's Obligation 
                         To Effect the Merger.................................14

ARTICLE VI           TERMINATION; AMENDMENT; WAIVER...........................14
         SECTION 6.1  Termination.............................................14
         SECTION 6.2  Fees and Expenses.......................................15
         SECTION 6.3  Effect of Termination...................................15
         SECTION 6.4  Amendment...............................................15
         SECTION 6.5  Extension; Waiver.......................................16

ARTICLE VII          MISCELLANEOUS............................................16
         SECTION 7.1  Non-Survival of Representations, 
                         Warranties and Agreements............................16
         SECTION 7.2  Indemnification.........................................16
         SECTION 7.3  Entire Agreement; Assignment............................16
         SECTION 7.4  Validity................................................16
         SECTION 7.5  Notices.................................................17
         SECTION 7.6  Governing Law...........................................18
         SECTION 7.7  Interpretation..........................................18
         SECTION 7.8  Parties in Interest.....................................18
         SECTION 7.9  Counterparts............................................18
         SECTION 7.10  Expenses...............................................18
         SECTION 7.11  Obligation of Distribution.............................18



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                          AGREEMENT AND PLAN OF MERGER


         This  AGREEMENT  AND PLAN OF MERGER  (the  "Agreement")  is dated as of
February ___,  1998,  by and among  FinishMaster,  Inc., an Indiana  corporation
("FMST"),  LDI  AutoPaints,  Inc.,  an  Indiana  corporation  ("AP"),  and  Lacy
Distribution, Inc., an Indiana corporation ("Distribution").

                                    ARTICLE I
                                   THE MERGER

         SECTION  1.1 The Merger.  Upon the terms and subject to the  conditions
hereof, and in accordance with the Indiana Business Corporation Law ("IBCL"), AP
shall be  merged  with and  into  FMST  (the  "Merger")  as soon as  practicable
following the  satisfaction  of the  conditions set forth in Section 6.1 hereof.
Following  the Merger,  FMST shall  continue as the surviving  corporation  (the
"Surviving Corporation") and the separate corporate existence of AP shall cease.

         SECTION 1.2 Effective  Time. The Merger shall be consummated by filing,
and shall be  effective  at the time of  acceptance  for  filing by the  Indiana
Secretary  of State of,  articles of merger (the  "Articles  of Merger") in such
form as is required by, and executed in accordance with, the relevant provisions
of the IBCL, and such other  documents as shall be required by the provisions of
the IBCL (the time of such filing being the "Effective Time").

         SECTION 1.3 Effects of the  Merger.  The Merger  shall have the effects
set forth in the IBCL.

         SECTION 1.4  Articles of  Incorporation  and  By-Laws.  The Articles of
Incorporation  and Amended and Restated  Code of By-Laws of FMST as in effect at
the Effective Time shall be the articles of incorporation and code of by-laws of
the Surviving Corporation.

         SECTION 1.5  Directors.  The  directors of FMST at the  Effective  Time
shall be the  directors  of the  Surviving  Corporation,  until the next  annual
shareholders'  meeting of the Surviving  Corporation and until their  successors
shall be elected or appointed and shall duly qualify.

         SECTION 1.6 Officers.  The officers of FMST at the Effective Time shall
be the  officers  of the  Surviving  Corporation  and will hold  office from the
Effective Time until their  respective  successors are duly elected or appointed
and qualify in the manner provided in the articles of incorporation  and code of
by-laws of the Surviving Corporation, or as otherwise provided by law.

         SECTION 1.7  Conversion of Shares.  At the Effective  Time,  all of the
issued  and  outstanding  shares  of AP  (the  "Shares")  and the  Four  Million
Forty-Five  Thousand One Hundred  (4,045,100) shares of the common stock of FMST
owned by AP immediately  prior to the Effective  Time,  shall,  by virtue of the
Merger and without any action on the part of the holder  thereof,  be  cancelled
and

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converted  into the right to receive (i) Four  Million  Forty-Five  Thousand One
Hundred  (4,045,100)  shares of common  stock of FMST,  issued in respect of the
Shares owned by AP which were cancelled in connection with the Merger,  and (ii)
One Million Five Hundred  Forty-Two  Thousand Four Hundred  Sixteen  (1,542,416)
additional  shares  of the  common  stock  of  FMST  (collectively  the  "Merger
Consideration").

         SECTION 1.8 Reorganization.  The parties intend that the transaction to
be effected under this Agreement  will be and is a  "reorganization"  within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended,  and
each of the  provisions  of this  Agreement  shall be limited and construed in a
manner consistent with that intention and result.

                                   ARTICLE II
              REPRESENTATIONS AND WARRANTIES OF AP AND DISTRIBUTION

         Distribution represents and warrants to FMST as follows:

         SECTION 2.1  Organization.  Distribution and AP are  corporations  duly
organized and validly existing under the laws of the State of Indiana.  AP is in
good standing as a foreign corporation in each jurisdiction where the properties
owned,  leased or  operated,  or the  business  conducted,  by it  require  such
qualification  and where  failure to be in good  standing or to so qualify would
have  a  material  adverse  effect  on  the  financial  condition,   results  of
operations,  business or prospects  of AP or on the ability of AP to  consummate
the transaction  contemplated  by this Agreement  (which for all purposes hereof
consists solely of the Merger) (a "Company  Material  Adverse  Effect").  AP has
made available to FMST true and correct copies of its articles of  incorporation
and code of by-laws.

         SECTION 2.2  Capitalization.

         (a) AP  Capitalization.  The  authorized  shares of AP  consists of One
Thousand  (1,000) shares of common stock.  As of the date hereof,  there are One
Hundred (100) shares issued and outstanding. Since December 31, 1997 through the
date hereof, no shares have been issued. There are not now, and at the Effective
Time there will not be, any existing options, warrants, calls, subscriptions, or
other  rights,  or other  agreements  or  commitments,  obligating  AP to issue,
transfer or sell any shares of AP. All issued and outstanding Shares are validly
issued, fully paid, nonassessable and free of preemptive rights.

         SECTION 2.3  Authority Relative to This Agreement.

         (a)  Approvals.  The  execution  and  approval  of  this  Agreement  by
Distribution and AP and the consummation of the transaction  contemplated hereby
have been duly authorized by the Board of Directors of Distribution  and AP, and
by  Distribution  in its  capacity  as the  sole  shareholder  of AP.  No  other
corporate  proceedings on the part of  Distribution  or AP are necessary for the
execution  and  delivery of this  Agreement  by AP and the  consummation  of the
transactions contemplated hereby.

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This Agreement has been duly executed and delivered by AP and Distribution  and,
assuming this Agreement constitutes a valid and binding obligation of FMST, this
Agreement  constitutes  a valid and  binding  agreement  of AP and  Distribution
enforceable  against AP and Distribution in accordance with its terms, except to
the extent  that its  enforceability  may be limited by  applicable  bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors'
rights generally or by equitable principles.

         (b)  Other  Authorizations.  Other  than  in  connection  with,  or  in
compliance  with,  applicable  requirements  of the  IBCL  with  respect  to the
transaction  contemplated  hereby, no authorization,  consent or approval of, or
filing with,  any court or any public body or  authority  is  necessary  for the
consummation by AP of the transaction  contemplated by this Agreement other than
authorizations,  consents and  approvals  the failure to obtain,  or filings the
failure to make, which would not, in the aggregate, cause or result in a Company
Material Adverse Effect.

         SECTION 2.4 No  Violation.  Neither the  execution  or delivery of this
Agreement by AP, the  performance  by AP of its  obligations  hereunder  nor the
consummation by AP of the transaction  contemplated hereby will (a) constitute a
breach or violation of any provision of the articles of incorporation or code of
by-laws of AP,  (b)  constitute  a breach,  violation  or default  (or any event
which,  with notice or lapse of time or both, would constitute a default) under,
or result in the termination  of, or accelerate the performance  required by, or
result in the creation of any lien or encumbrance  upon any of the properties or
assets of AP under, any note, bond, mortgage, indenture, deed of trust, license,
agreement  or other  instrument  to which AP is a party or by which it or any of
its  respective  properties or assets is bound or (c)  constitute a violation of
any order, writ, injunction, decree, statute, rule or regulation of any court or
governmental  authority  applicable  to AP, or any of its  properties or assets,
other than, in the case of clauses (b) and (c) above, such breaches, violations,
defaults,  terminations,  accelerations  or creation  of liens and  encumbrances
which, in the aggregate,  would not have a Company Material  Adverse Effect.  No
representation  or warranty is made regarding  whether or not any consent may be
required in respect of any AP site lease.

         SECTION 2.5 Financial  Statements.  The audited financial statements of
LDI AutoPaints - Florida  Division as of December 31, 1997 have been prepared in
accordance with generally accepted  accounting  principles ("GAAP") applied on a
consistent  basis  (except as  otherwise  stated in such  financial  statements,
including  the related  notes) and fairly  present in all material  respects the
financial  position of LDI AutoPaints - Florida  Division as of the date thereof
and the results of its operations and cash flows for the period then ended.  The
unaudited  financial  statements of AP as of January 31, 1998 have been prepared
in  accordance  with GAAP  applied on a  consistent  basis  (except as otherwise
stated in such financial  statements,  including the related  notes,  and except
that such  financial  statements do not contain all of the footnote  disclosures
required by GAAP) and fairly presents,  in all material respects,  the financial
position of AP as of the date thereof.  The unaudited  balance sheet of AP as of
January 31, 1998 excludes  certain assets and  liabilities of AP which have been
distributed to and assumed by  Distribution as of January 31, 1998 (which assets
and  liabilities  were not, as of December  31,  1997,  a part of the assets and
liabilities  of LDI  AutoPaints  -  Florida),  and are  not,  at the time of the
execution of this  Agreement,  and will not be, at the Effective Time, a part of
the assets

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or  liabilities  of AP. The assets and  liabilities  of AP shown on such balance
sheet  of AP as of  January  31,  1998  consist  of (1)  all of the  assets  and
liabilities of LDI AutoPaints - Florida Division, and (2) the Four Million Forty
Five Thousand One Hundred (4,045,100) shares of FMST owned by AP. Neither AP nor
any of its  assets,  businesses,  or  operations,  is a party to, or is bound or
affected by, or receives  benefits under, any material  contract or agreement or
amendment  thereto,  except those contracts and agreements  copies of which have
been made available to FMST.

         SECTION 2.6 Information. None of the information supplied in writing by
AP  specifically  for  inclusion  or  incorporation  by  reference  in the Proxy
Statement, if any, or any other document filed or to be filed by or on behalf of
FMST  with the SEC or any  other  governmental  entity  in  connection  with the
transaction  contemplated  by this  Agreement,  contains,  or will contain,  any
untrue  statement  of a  material  fact or  omits,  or will  omit,  to state any
material  fact  required to be stated  therein or necessary in order to make the
statements  made therein,  in light of the  circumstances  under which they were
made, not misleading.

         SECTION 2.7 Absence of Certain  Changes;  No  Undisclosed  Liabilities.
Since December 31, 1997,  there has not been a Company  Material Adverse Effect.
Since  December  31,  1997,  AP has not (i)  except  in the  ordinary  course of
business,  incurred any liabilities or obligations of any nature, whether or not
accrued,  contingent  or otherwise,  or suffered any event or occurrence  which,
individually or in the aggregate,  would have a Company  Material Adverse Effect
or (ii) made any material changes in accounting methods, principles or practices
or (iii) declared, set aside or paid any dividend or other the distribution with
respect to its shares other than the distribution to Distribution, as of January
31, 1998, of all assets and liabilities of AP other than (x) the business of LDI
AutoPaints - Florida  Division and (y) the Four Million  Forty Five Thousand One
Hundred  (4,045,100) shares of FMST owned by AP. Since December 31, 1997, AP has
conducted its operations in the ordinary course of business consistent with past
practice in all material respects.

         SECTION 2.8 Litigation. There is no suit, claim, action, proceeding, or
investigation  pending or  threatened  in writing  or, to the  knowledge  of AP,
otherwise  threatened  against AP or any of its  properties or assets before any
court or governmental entity which, individually or in the aggregate,  could, if
determined adversely,  reasonably be expected to have a Company Material Adverse
Effect  or  delay  the  consummation  of the  transaction  contemplated  by this
Agreement in any material respect.  AP is not subject to any outstanding  order,
writ,  injunction  or  decree  which,  insofar  as can be  reasonably  foreseen,
individually  or in the aggregate,  in the future would have a Company  Material
Adverse Effect or would delay the  consummation of the transaction  contemplated
hereby in any material respect.

         SECTION 2.9  Compliance  with  Applicable  Law.  AP holds all  permits,
licenses,  variances,  exemptions,  orders  and  approvals  of all  governmental
entities  necessary for the lawful  conduct of its  businesses,  if any (the "AP
Permits"), except where such failures to hold such permits, licenses, variances,
exemptions,  orders and approvals  would not,  individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect.  AP is in
compliance  with the terms of the AP  Permits,  except  where the  failure so to
comply would not, individually or in the aggregate,

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reasonably  be  expected to result in a Company  Material  Adverse  Effect.  The
business of AP is not being  conducted  in  violation  of any law,  ordinance or
regulation  of  any  governmental  entity  except  for  violations  or  possible
violations which individually or in the aggregate are not reasonably expected to
result in a Company Material  Adverse Effect.  No investigation or review by any
governmental  entity with respect to AP is pending or  threatened in writing or,
to the knowledge of AP,  otherwise  threatened,  other than, in each case, those
which would not,  individually  or in the  aggregate,  reasonably be expected to
result in a Company Material Adverse Effect.

         SECTION 2.10 Taxes. AP has filed,  or caused to be filed,  all federal,
state,  local and foreign  income and other tax returns  required to be filed by
it, has paid or  withheld,  or caused to be paid or  withheld,  all taxes of any
nature whatsoever, with any related penalties,  interest and liabilities (any of
the foregoing  being referred to herein as a "Tax"),  that are shown on such tax
returns as due and payable,  or otherwise  required to be paid,  other than such
Taxes as are being  contested  in good  faith and for which  reserves  have been
established  in accordance  with GAAP except where the failure so to file or pay
would not, individually or in the aggregate, reasonably be expected to result in
a Company Material  Adverse Effect.  AP has or will have paid all Taxes due with
respect to any period  ending on or prior to the  Effective  Time,  or where the
payment of Taxes is not yet due, have or will have established,  or with respect
to Taxes  incurred  after the date hereof,  will timely  establish in accordance
with past  practices,  an adequate  accrual in  accordance  with GAAP except for
failures  to pay or accrue  that would not,  individually  or in the  aggregate,
reasonably be expected to have a Company Material  Adverse Effect.  There are no
claims,  assessments  or audits  pending or  threatened  in writing,  or to AP's
knowledge  otherwise  threatened,  against AP for any alleged  deficiency in any
Tax, and AP does not know of any Tax claims or assessments threatened against AP
which if upheld could, individually or in the aggregate,  reasonably be expected
to have a Company  Material  Adverse Effect (after giving effect to any reserves
maintained  by AP).  AP has not  filed a  consent  under  Section  341(f) of the
Internal  Revenue Code of 1986,  as amended (the  "Code").  There is no material
inter-company  item which would be taken into account by, or excess loss account
which  would be  includable  in income  of,  AP as a result  of the  transaction
contemplated by this Agreement pursuant to the Treasury Regulations  promulgated
under  Section  1502 of the Code.  There are no  waivers  or  extensions  of any
applicable statute of limitation to assess any Taxes. All returns filed by or on
behalf  of AP with  respect  to  Taxes  are  true and  correct  in all  material
respects.  There are no  outstanding  requests by AP for any  extension  of time
within  which to file any return  (except for normal  automatic  extensions)  or
within which to pay any Taxes shown to be due on any return.  There are no liens
for any Taxes upon the assets of AP (other  than  statutory  liens for Taxes not
yet due and  payable and liens for real estate  taxes  being  contested  in good
faith) which  individually  or in the  aggregate  could have a Company  Material
Adverse  Effect.  AP is not a party  to,  is not  bound  by or does not have any
obligation  under, a tax sharing or tax allocation  agreement or arrangement for
the allocation, apportionment, sharing, indemnification or payment of taxes. The
cancellation of the 4,045,100 shares of FMST held by AP, and the issuance in the
Merger  of a like  number  of  shares  to  Distribution  as part  of the  Merger
Consideration,  will not  result  in an  adverse  tax  consequence  to FMST of a
magnitude greater than $50,000.


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         SECTION 2.11 Termination,  Severance and Employment Agreements.  AP has
provided to FMST a complete and accurate  list of each  employment  or severance
agreement of any officer of LDI AutoPaints - Florida not terminable by the terms
thereof  without  material  liability  or  obligation  (either  individually  or
collectively) on 60 days' or less notice.

         SECTION 2.12 Employee Benefit Plans; ERISA.

         (a) Except as  previously  disclosed  to the FMST in writing,  (i) each
"employee  benefit plan" (as defined in Section 3(3) of the Employee  Retirement
Income  Security  Act of 1974,  as amended  ("ERISA")),  and all other  employee
benefit,  bonus,  incentive,  stock option (or other equity- based),  severance,
change  in  control,   welfare  (including   post-retirement  medical  and  life
insurance) and fringe benefit plans (whether or not subject to ERISA) maintained
or sponsored by AP or any member of Distribution's  controlled group of entities
(within the meaning of Code Sections  414(b),  (c), (m) or (o)) (each, an "ERISA
Affiliate"),  for the benefit of any employee or former employee of AP or any of
its ERISA Affiliates (individually, a "Plan," and collectively, the "Plans") is,
and has been operated in accordance with its terms and in compliance  (including
the making of governmental  filings) with all applicable  laws,  including ERISA
and the applicable  provisions of the Code,  except for failures that would not,
individually or in the aggregate,  have a Company Material Adverse Effect,  (ii)
each of the Plans  presently  maintained  by AP and  intended to be  "qualified"
within  the  meaning of Section  401(a) of the Code has been  determined  by the
Internal  Revenue  Service to be so qualified,  (iii) no "reportable  event," as
such term is defined in  Section  4043(c) of ERISA (for which the 30-day  notice
requirement to the Pension Benefit  Guaranty  Corporation  ("PBGC") has not been
waived),  has  occurred  with respect to any Plan that is subject to Title IV of
ERISA which  presents a risk of  liability to any  governmental  entity or other
person which,  individually  or in the aggregate,  may reasonably be expected to
have a  Company  Material  Adverse  Effect,  and (iv)  there are no  pending  or
threatened in writing or to AP's knowledge otherwise  threatened,  claims (other
than routine claims for benefits) by, on behalf of or against,  any of the Plans
or any trust related thereto which would, individually or in the aggregate, have
a Company Material Adverse Effect. No Plan is a "multiemployer plan" (within the
meaning of ERISA) nor to the knowledge of AP has AP or any ERISA  Affiliate ever
contributed or been required to contribute to any multiemployer plan.

         (b)  (i)  No  Plan  has  incurred  a  material   "accumulated   funding
deficiency"  (as  defined  in Section  302 of ERISA or Section  412 of the Code)
whether or not waived and (ii) neither AP nor any ERISA  Affiliate  has incurred
any liability  under Title IV of ERISA except for required  premium  payments to
the PBGC,  which  payments  have been made when due, and no events have occurred
which are  reasonably  likely to give  rise to any  liability  of AP or an ERISA
Affiliate  under Title IV of ERISA or which could  reasonably be  anticipated to
result in any claims being made against AP by the PBGC, in any such case,  which
presents a risk of liability which would, individually or in the aggregate, have
a Company Material Adverse Effect.

         (c) With respect to each Plan,  if any,  that is subject to Title IV of
ERISA, (i) AP has provided to FMST copies of the most recent actuarial valuation
report  prepared  for such Plan  prior to the date  hereof,  (ii) the assets and
liabilities in respect of the accrued benefits as set forth in the

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most recent  actuarial  valuation  report  prepared by the Plan's actuary fairly
presented  the funded  status of such Plan in all material  respects,  and (iii)
since the date of such valuation  report there has been no adverse change in the
funded status of any such Plan which would,  individually  or in the  aggregate,
have a Company Material Adverse Effect.

         (d)  Neither  AP nor  any  ERISA  Affiliate  has  failed  to  make  any
contribution  or payment to any Plan which has  resulted or could  result in the
imposition of a lien or the posting of a bond or other  security  under ERISA or
the Code which would have a Company Material Adverse Effect.

         (e) AP has not sponsored, maintained, administered or contributed to or
participated in a Plan subject to Title VI of ERISA within the last seven years.

         SECTION  2.13  Environmental   Matters.  AP  has  obtained  and  is  in
substantial  compliance  with the terms and conditions of all required  permits,
licenses  and  other  authorizations   required  under  Environmental  Laws  (as
hereinafter  defined),  except for  failures  or  noncompliance  which would not
reasonably  be expected to,  individually  or in the  aggregate,  have a Company
Material  Adverse  Effect.  AP is in substantial  compliance with all applicable
Environmental  Laws, except for failures to comply which would not reasonably be
expected to,  individually or in the aggregate,  have a Company Material Adverse
Effect.  AP has  disclosed  past and present  noncompliance  with,  or liability
under,  Environmental  Laws  and  discharges,   emissions,  leaks,  releases  or
disposals of any substance or waste regulated under or defined by  Environmental
Laws that have formed the basis of any claim, action, suite, proceeding, hearing
or  investigation  under any applicable  Environmental  Laws which,  in any such
case,  individually or in the aggregate,  would have a Company  Material Adverse
Effect.  AP has not received notice of any past or present  events,  conditions,
circumstances,  activities,  practices,  incidents,  actions  or plans that have
resulted in any common law or legal  liability,  or otherwise  form the basis of
any material  liability under, any applicable  Environmental  Laws, which would,
individually or in the aggregate,  have a Company Material  Adverse Effect.  For
purposes of this Section 2.13, (a) "Environmental Laws" mean applicable federal,
and local laws,  regulations  and codes  relating in any respect to pollution or
protection of the  environment and (b) "Hazardous  Substances"  means any toxic,
caustic,  or  otherwise  dangerous  substance  (whether or not  regulated  under
federal, state or local environmental statutes,  rules, ordinances,  or orders),
including (i) "hazardous  Substance" as defined in 42 U.S.C.  ss. 9601, and (ii)
petroleum products, derivatives, byproducts and other hydrocarbons.

         SECTION 2.14  Assets, Real Property, Intellectual Property.

         (a) AP owns or has rights to use all assets  necessary  to permit AP to
conduct its business as it is currently being conducted except where the failure
to own or have the right to use such assets  would not,  individually  or in the
aggregate, have a Company Material Adverse Effect.

         (b) Except as previously disclosed to FMST, AP has, (i) good, valid and
marketable or indefeasible  title to all real property  material to its business
operations,  free and clear of any liens,  encumbrances,  mortgages and security
interests other than Permitted Liens (as hereinafter defined),

                                                         7

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or (ii) rights by lease or other  agreement to use all such real  property.  The
term "Permitted  Liens" shall mean (i) liens or encumbrances  for water,  sewage
and similar charges and current taxes and assessments not yet due and payable or
being contested in good faith, (ii) mechanics', carriers', workers', repairers',
materialmen's, warehousemen's and other similar liens or encumbrances arising or
incurred  in  the  ordinary  course  of  business,  (iii)  liens,  encumbrances,
mortgages and security  interests  arising or resulting from any action taken by
FMST, (iv) liens,  encumbrances,  mortgages and security  interests of record or
securing indebtedness, (v) liens, encumbrances, mortgages and security interests
incurred in the  ordinary  course of business  since  December  31,  1997,  (vi)
easements,   rights  of  way,   restrictions   and  other  similar   charges  or
encumbrances,  and  any  other  liens,  encumbrances,   mortgages  and  security
interests,  that do not materially  interfere with the ordinary  conduct of AP's
business.  All real property leases under which AP is a lessee or lessor are, as
of the date hereof,  valid,  binding and  enforceable  in accordance  with their
terms, and there are not existing defaults thereunder which would,  individually
or in the aggregate, have a Company Material Adverse Effect.

         (c) As presently used by AP, none of the Intellectual Property owned by
AP  is  infringed  or  challenged   or   threatened  in  any  way,   except  for
infringements,  challenges  or threats  which would not  individually  or in the
aggregate, have a Company Material Adverse Effect. "Intellectual Property" means
trademarks,  trade names,  service  marks,  service names,  mark  registrations,
logos,  assumed names,  copyright  registrations,  patents and all  applications
therefor and all other similar proprietary rights.

         SECTION 2.15 Labor Matters.  AP has not (i) been subject to, threatened
in writing, or to AP's knowledge otherwise threatened,  with any strike, lockout
or other labor  dispute the result of which had or could  reasonably be expected
to have or  constitute,  a Company  Material  Adverse  Effect,  or (ii) received
written  notice of any pending  petition for  certification  before the National
Labor  Relations  Board with respect to any group of employees of AP who are not
currently  organized.  AP is not a party to any collective  bargaining agreement
with a labor union.

         SECTION  2.16  Certain  Fees.  Neither  AP nor  any  of  its  officers,
directors  or  employees  has  employed  any  broker or finder or  incurred  any
liability for any financial advisory,  brokerage or finder's fees or commissions
in connection with the transaction contemplated herein.

         SECTION 2.17 No Default.  Except for defaults or violations  which,  in
the aggregate, would not reasonably be expected to constitute a Company Material
Adverse  Effect,  AP is not in default or  violation  (and no event has occurred
which  with  notice  or lapse of time or both  would  constitute  a  default  or
violation) of any material  term,  condition or provision of (i) its articles of
incorporation,  code of by-laws,  or other governing  documents,  (ii) any note,
mortgage,  indenture  or other  evidence of  indebtedness,  guarantee,  license,
agreement or other contract, instrument or contractual obligation to which AP is
now a party or by which  it or any of its  assets  may be  bound,  or (iii)  any
order, writ, injunction, decree, statute, rule or regulation applicable to AP on
the date hereof.


                                                         8

<PAGE>



                                   ARTICLE III
                     REPRESENTATIONS AND WARRANTIES OF FMST

         FMST represents and warrants to AP and Distribution as follows:

         SECTION 3.1  Organization.  FMST is a  corporation  duly  organized and
validly  existing under the laws of the State of Indiana and is in good standing
as a foreign  corporation in each other jurisdiction where the properties owned,
leased or operated, or the business conducted,  by it require such qualification
and where  failure to be in good standing or so to qualify would have a material
adverse effect on the financial  condition,  results of operations or businesses
of FMST.

         SECTION 3.2  Authority Relative to This Agreement.

         (a) Approvals.  FMST has full corporate  power and authority to execute
and deliver this Agreement and,  subject to obtaining the necessary  approval of
this Agreement by its  shareholders  to the extent required by applicable law or
the NASDAQ  National  Market  System  ("NMS"),  to  consummate  the  transaction
contemplated  hereby.  The execution and delivery of this  Agreement by FMST and
the  consummation  of  the  transactions  contemplated  hereby  have  been  duly
authorized by the Board of Directors of FMST, and no other corporate proceedings
on the  part of FMST  are  necessary  for the  execution  and  delivery  of this
Agreement by FMST and,  subject to the filing of the Articles of Merger pursuant
to Section 1.2 and obtaining the necessary  approvals of FMST's  shareholders to
the extent required by applicable law or the NMS, the performance by FMST of its
obligations   hereunder  and  the  consummation  by  FMST  of  the  transactions
contemplated hereby. This Agreement has been duly executed and delivered by FMST
and, assuming this Agreement  constitutes a valid and binding obligation of each
of AP and Distribution, this Agreement constitutes a valid and binding agreement
of FMST,  enforceable  against FMST in accordance with its terms,  except to the
extent  that  its  enforceability  may  be  limited  by  applicable  bankruptcy,
insolvency,  reorganization or other laws affecting the enforcement of creditors
rights generally or by general equitable principles.

         (b)  Other  Authorizations.  Other  than  in  connection  with,  or  in
compliance  with  applicable  requirements  of  the  IBCL  with  respect  to the
transaction  contemplated  hereby,  the Exchange Act, the securities laws of the
various states,  no  authorization,  consent or approval of, or filing with, any
court or any public body or authority is necessary for the  consummation by FMST
of the  transactions  contemplated by this Agreement other than  authorizations,
consents and  approvals of which the failure to obtain,  or filings of which the
failure to make, would not, in the aggregate,  have a material adverse effect on
the  financial  condition,  results of  operations or business of FMST or on the
ability of FMST to consummate the transaction contemplated hereby.

         SECTION 3.3 No  Violation.  Neither the  execution  or delivery of this
Agreement  by  FMST,  the  performance  by  FMST of its  respective  obligations
hereunder nor the consummation by it of the transaction contemplated hereby will
(a) constitute a breach or violation under the Articles of Incorporation or Code
of By-Laws of FMST or (b)  constitute  a breach,  violation  or default  (or any
event which,  with notice or lapse of time or both,  would constitute a default)
under, or result in the

                                                         9

<PAGE>



termination  of, or  accelerate  the  performance  required by, or result in the
creation of any lien or encumbrance upon any of the properties or assets of FMST
under, any note,  bond,  mortgage,  indenture,  deed of trust,  license,  lease,
agreement or other  instrument  to which either FMST is a party or by which they
or any of their  properties or assets are bound or (c) constitute a violation of
any order, writ, injunction, decree, statute, rule or regulation of any court or
governmental  authority applicable to FMST or any of their properties or assets,
other than, in the case of clauses (b) and (c) above, such breaches. violations,
defaults,  terminations,  accelerations  or creation of liens and encumbrances
which,  in the  aggregate,  would  not have a  material  adverse  effect  on the
financial condition,  results of operations or business of FMST taken as a whole
or on the ability of FMST to consummate the transaction contemplated hereby.

         SECTION 3.4 Proxy Statement, Other Information. No document filed or to
be filed by or on behalf of FMST with the SEC or any other  governmental  entity
in connection  with the transaction  contemplated  by this Agreement,  contained
when filed, or will contain, at the respective times filed with the SEC or other
governmental  entity,  any untrue  statement of a material fact or omit to state
any material  fact  required to be stated  therein or necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading; provided that the foregoing shall not apply to information
supplied  by AP in  writing  specifically  for  inclusion  or  incorporation  by
reference in any such document.  None of the information  supplied in writing by
FMST  specifically  for  inclusion  or  incorporation  by reference in the Proxy
Statement, if any, or any other document filed or to be filed by or on behalf of
FMST  with the SEC or any  other  governmental  entity  in  connection  with the
transaction  contemplated  by this  Agreement,  contains,  or will contain,  any
untrue  statement  of a  material  fact or  omits,  or will  omit,  to state any
material  fact  required to be stated  therein or necessary in order to make the
statements  made therein,  in light of the  circumstances  under which they were
made, not misleading.

         SECTION 3.5 Certain Fees.  Neither FMST nor its officers,  directors or
employees  has employed any broker or finder or incurred any  liability  for any
financial advisory, brokerage or finder's fees or commissions in connection with
the  transaction  contemplated  herein  for which AP could  have any  liability,
except  for the  financial  advisory  fee  payable  to  McDonald  &  Company  in
connection  with  the  rendering  of its  fairness  opinion  to the  Independent
Committee.

                                   ARTICLE IV
                                    COVENANTS

         SECTION 4.1 Conduct of Business of AP. Except as  contemplated  by this
Agreement, as previously disclosed to FMST or as otherwise agreed by the parties
hereto, during the period from the date of this Agreement to the Effective Time,
AP will conduct its operations in accordance  with its ordinary and usual course
of business and consistent with past practice in all material respects.  Without
limiting the generality of the  foregoing,  and except as  contemplated  by this
Agreement or as previously  disclosed to FMST,  prior to the Effective  Time, AP
will not,  without  the prior  written  consent of FMST (such  consent not to be
unreasonably withheld):


                                                        10

<PAGE>



         (a) issue,  sell or  repurchase,  or authorize or propose the issuance,
sale  or  repurchase  of  any  shares  of  common  stock  of AP,  or  securities
convertible into such shares, or any rights, warrants or options to acquire such
shares or other convertible securities;

         (b)      declare or pay any dividend or distribution on its shares;

         (c) except for such  transactions in the ordinary course of business or
fees and expenses related to the transaction  contemplated hereby,  authorize or
enter into any agreement  with respect to any  commitment or  transaction  which
requires AP to pay in excess of $50,000 in the aggregate;

         (d) except in the  ordinary  course of  business  consistent  with past
practice  and except as  previously  disclosed  to FMST or as may be required by
law,  adopt or amend in any material  respect or terminate  any profit  sharing,
compensation,   stock  option,  pension,   retirement,   deferred  compensation,
employment or other employee benefit plan, agreement, trust, plan, fund or other
arrangement (collectively,  "Compensation Plans"), or grant, or become obligated
to grant, any general increase in the compensation of executive  officers or any
increase  in the  compensation  payable or to become  payable  to any  executive
officer or institute any material new welfare program or  Compensation  Plan, or
make any material change in any Compensation Plan;

         (e)  except  as  required  by  the  consummation  of the  Merger,  pay,
discharge or satisfy any material claims,  liabilities or obligations (absolute,
accrued,   contingent  or  otherwise)  other  than  the  payment,  discharge  or
satisfaction in the ordinary course of business;

         (f) except for  transactions  in the  ordinary  course of business  (i)
incur,  assume or prepay  any  long-term  or  short-term  debt or issue any debt
securities except for borrowing under existing lines of credit or prepayments or
other  borrowings  not  to  exceed  $100,000  in  the  aggregate;  (ii)  assume,
guarantee,  endorse or otherwise become liable or responsible (whether directly,
contingently  or otherwise)  for any material  obligations  of any other person;
(iii) make any loans,  advances or capital  contributions to, or investments in,
any other  person  (other than  advances to  customers  in amounts not to exceed
$25,000 in the  aggregate,  or  customary  loans to  employees  in  amounts  not
material to the maker of such loan); (iv) pledge or otherwise encumber shares of
AP;  or (v)  mortgage  or  pledge  any  of  its  material  assets,  tangible  or
intangible, or create or suffer to exist any lien thereupon, excluding Permitted
Liens;

         (g) propose or adopt any amendments to its article of  incorporation or
code of by-laws;

         (h)  except  for  transactions  in the  ordinary  course  of  business,
contemplated  hereby or otherwise  disclosed  herein,  acquire,  sell,  lease or
dispose of any  assets  which in the  aggregate  are  material  to AP taken as a
whole, or enter into or modify,  amend,  terminate or waive any rights under any
commitments,  contracts, agreements or transactions which would, individually or
in the aggregate, be material to AP taken as a whole;


                                                        11

<PAGE>



         (i) acquire  (by  merger,  consolidation,  or  acquisition  of stock or
assets) any corporation,  partnership or other business organization or division
thereof or any equity interest therein;

         (j) make any material tax election or settle or compromise any material
federal,  state or local  tax  liability  or  assent  to the  assessment  of any
federal, state or local tax;

         (k) authorize any new capital expenditure or expenditures not reflected
in the capital  expenditure  budget  provided to FMST and which in the aggregate
are in excess of $25,000; or

         (1)  agree,  in  writing  or  otherwise,  to take any of the  foregoing
actions.

         SECTION 4.2 Access to  Information.  So long as this  Agreement has not
been  terminated,  between the date of this Agreement and the Effective Time, AP
will give FMST and its authorized  representatives access during normal business
hours to all stores,  offices,  warehouses and other facilities and to all books
and  records,  will permit FMST to make such  inspections  as it may  reasonably
require and will cause its officers and use reasonable best efforts to cause its
accountants  promptly to furnish FMST with such financial and operating data and
other  information with respect to the business and properties of AP as FMST may
from time to time reasonably request.

         SECTION 4.3 Shareholders' Meeting.

         (a) Shareholder  Approval of FMST. If required by applicable law or the
NMS in order to  consummate  the  Merger,  FMST,  acting  through  its  Board of
Directors,  shall,  in accordance  with its articles of  incorporation  and such
requirements:

                  (i) duly call,  give notice of,  convene and hold a meeting of
         its  shareholders  as soon as  practicable  after the execution of this
         Agreement or to take such  actions  necessary to cause the Merger to be
         considered at its next annual meeting of shareholders;

                  (ii) subject to its fiduciary  duties under  applicable law as
         advised by counsel,  include in the Proxy Statement the  recommendation
         of its Board of Directors  that  shareholders  of FMST vote in favor of
         the approval and adoption of this Agreement; and

                  (iii)  use its  reasonable  best  efforts  (x) to  obtain  and
         furnish  the  information  required  to be  included by it in the Proxy
         Statement,  to respond  promptly to any  comments  made by the SEC with
         respect to the Proxy Statement and any preliminary  version thereof and
         to cause the Proxy  Statement to be mailed to its  shareholders  at the
         earliest practicable time following the execution of this Agreement and
         (y) subject to its fiduciary  duties under applicable law as advised by
         counsel,  to  obtain  the  necessary  approval  of  the  Merger  by its
         shareholders.


                                                        12

<PAGE>



         (b)  Voting of Shares by AP. AP  agrees  that,  at the  meeting  of the
shareholders  of  FinishMaster  at which the  Merger is  considered,  all of the
shares of FinishMaster owned by AP will be voted in favor of the Merger.

         SECTION 4.4  Cooperation.  Subject to the terms and  conditions  herein
provided and to the fiduciary  duties of FMST's  directors as advised by counsel
to FMST,  each of the parties hereto agrees to use its  reasonable  best efforts
(and to use its reasonable best efforts to cause its affiliates) (a) to take, or
cause to be  taken,  all  action,  and to do,  or cause to be done,  all  things
necessary,  proper  or  advisable  under  applicable  laws  and  regulations  to
consummate and make  effective the  transaction  contemplated  by this Agreement
including, without limitation, (i) promptly making any filings that are required
to be made or seeking any consents,  approvals,  permits or authorizations  that
are required to be obtained under any federal, state or other law or regulation,
(ii) using its reasonable best efforts to respond  promptly and fully to any and
all inquiries of government officials or agencies and to endeavor to resolve any
inquiries or objections made by any such officials or agencies,  and (iii) using
its reasonable best efforts to prevent or ameliorate the effects of any Order or
Injunction to refrain from taking,  directly or indirectly,  any action contrary
to or inconsistent with the provisions of this Agreement, including action which
would impair such party's  ability to consummate the  transactions  contemplated
hereby.  In case at any time  before or after  the  Effective  Time any  further
action is necessary  or  desirable to carry out the purposes of this  Agreement,
the proper  officers  and  directors of each party to this  Agreement  shall use
their respective reasonable best efforts to take all such necessary action.

         SECTION 4.5 Notification of Certain Matters. Each of the parties hereto
shall give the others prompt notice of (i) the occurrence, or non-occurrence, of
any event which causes or has caused any representation or warranty of any party
contained in this  Agreement to be untrue or inaccurate in any material  respect
at any time from the date hereof to the  Effective  Time,  and (ii) any material
failure of AP or FMST, as the case may be, or any officer,  director,  employee,
representative  or  agent  thereof,  to  comply  with or  satisfy  any  material
covenant,  condition  or  agreement  to be  complied  with  or  satisfied  by it
hereunder;  provided,  however, that the delivery of any notice pursuant to this
Section 4.5 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.

         SECTION 4.6 Public  Announcements.  FMST and AP will  consult with each
other before issuing any press release or otherwise making any public statements
with  respect to the  Merger and shall not issue any such press  release or make
any such public statement prior to such  consultation  except as may be required
by law or any securities exchange or similar authority.  The parties agree that,
upon  execution of this  Agreement,  they will cause to be  disseminated a joint
press release.



                                                        13

<PAGE>



                                    ARTICLE V
                    CONDITIONS TO CONSUMMATION OF THE MERGER

         SECTION 5.1 Conditions to Each Party's Obligation To Effect the Merger.
The respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where legally  permissible,  prior to the Effective Time
of the following conditions:

         (a) This Agreement shall have been adopted by the requisite vote of the
shareholders of FMST in accordance  with applicable law and the  requirements of
NMS, if such vote is required by applicable law or the NMS;

         (b) No statute,  rule,  regulation,  order,  decree or injunction shall
have been enacted, entered, promulgated or enforced by any court or governmental
authority  of  competent  jurisdiction  which  restrains,  enjoins or  otherwise
prohibits the consummation of the Merger;  provided,  however,  that AP and FMST
shall  use their  reasonable  best  efforts  to have any such  order,  decree or
injunction  vacated and otherwise take all actions required  pursuant to Section
4.4;

         (c) delivery of fairness  opinion rendered by McDonald & Company to the
Independent Directors; and

         (d) the  representations  and warranties of AP and Distribution  (which
may be waived by FMST) and of FMST (which may be waived by  Distribution)  shall
be true and correct in all material respects.

                                   ARTICLE VI
                         TERMINATION; AMENDMENT; WAIVER

         SECTION 6.1  Termination.  This  Agreement  may be  terminated  and the
Merger  contemplated  hereby may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the shareholders of FMST:

         (a)  by  mutual  written  consent  duly  authorized  by the  boards  of
directors of AP, Distribution and FMST (including,  if required, the Independent
Committee);

         (b) by FMST,  Distribution  or AP if the Effective  Time shall not have
occurred  on or  before  June 30,  1998;  provided,  however,  that the right to
terminate this Agreement  pursuant to this Section 6.1(b) shall not be available
to any party whose failure to fulfill any  obligation  under this  Agreement has
been the cause of, or resulted in, the failure of the Effective Time to occur on
or before such date;

         (c) by FMST,  Distribution or AP if any court of competent jurisdiction
in the United States or other United States  governmental body shall have issued
an order, decree or ruling or taken

                                                        14

<PAGE>



any other action restraining,  enjoining or otherwise prohibiting the Merger and
such  order,  decree,  ruling  or other  action  shall  have  become  final  and
nonappealable;

         (d) by FMST if (i) there shall have been a breach of any representation
or warranty on the part of the AP or Distribution  under this Agreement having a
Company  Material  Adverse  Effect,  which shall not have been cured prior to 10
days  following  notice of such breach  (provided,  however,  that if any of the
representations   and  warranties  is  already   qualified  in  any  respect  by
materiality  or as to the Company  Material  Adverse Effect for purposes of this
Section  6.1(d)  such   materiality  or  the  Company  Material  Adverse  Effect
qualification  will be in all  respects  ignored  (but  subject  to the  overall
standard as to materiality set forth  immediately  prior to this  proviso)),  or
(ii) there shall have been a material  breach of any  covenant or  agreement  in
this Agreement on the part of the AP or Distribution, which materially adversely
affects the  consummation of the Merger which shall not have been cured prior to
10 days following notice of such breach;

         (e) by AP or  Distribution if (i) there shall have been a breach of any
representation  or  warranty  in  this  Agreement  on the  part  of  FMST  which
materially  adversely  affects the  consummation of the Merger,  which shall not
have been cured  prior to 10 days  following  notice of such  breach  (provided,
however,  that if any of the representations and warranties is already qualified
in any respect by materiality or as to a material adverse effect for purposes of
this Section 6.1(e) such  materiality or material  adverse effect  qualification
will be in all  respects  ignored  (but  subject to the  overall  standard as to
materiality set forth immediately  prior to this proviso)),  or (ii) there shall
have been a material  breach of any covenant or  agreement in this  Agreement on
the part of FMST which  materially  adversely  affects the  consummation  of the
Merger which shall not have been cured prior to 10 days following notice of such
breach.

         SECTION 6.2 Fees and Expenses.  Except as set forth in this  Agreement,
whether or not the Merger is consummated, all legal and other costs and expenses
incurred in connection  with this  Agreement and the  transactions  contemplated
hereby shall be paid by the party incurring such costs and expenses.

         SECTION 6.3 Effect of Termination.  In the event of the termination and
abandonment  of this  Agreement  pursuant to Section 6.1 hereof,  this Agreement
shall  forthwith  become void and have no effect,  without any  liability on the
part of any party or its  directors,  officers or  shareholders,  other than the
provisions of Sections 4.7, 6.2 and 7.9.  Nothing  contained in this Section 6.3
shall relieve AP or Distribution, or FMST, from liability for any breach of this
Agreement.

         SECTION 6.4 Amendment.  To the extent permitted by applicable law, this
Agreement may be amended by action taken by AP,  Distribution  and FMST (and the
shareholders of FMST, if required by applicable law) at any time before or after
adoption of this Agreement by the  shareholders  of FMST, but no amendment shall
be made which increases the consideration,  changes the form of consideration to
be  received  by the  holder of the  Shares in the  Merger,  or which  adversely
affects the rights of  shareholders  of FMST  hereunder  without the approval of
such shareholders and, if required,

                                                        15

<PAGE>



the  Independent  Committee.  This  Agreement  may not be  amended  except by an
instrument in writing signed on behalf of all the parties.

         SECTION 6.5 Extension; Waiver. At any time prior to the Effective Time,
the  parties  may  (a)  extend  the  time  for  the  performance  of  any of the
obligations  or  other  acts  of  the  other  parties  hereto,   (b)  waive  any
inaccuracies in the  representations  and warranties  contained herein or in any
document,  certificate  or  writing  delivered  pursuant  hereto  or  (c)  waive
compliance  with any of the  agreements  or conditions  contained  herein unless
waiver is unlawful or specifically prohibited.  Any agreement on the part of any
party to any such  extension  or waiver  shall be valid  only if set forth in an
instrument in writing signed on behalf of such party.

                                   ARTICLE VII
                                  MISCELLANEOUS

         SECTION 7.1 Non-Survival of Representations, Warranties and Agreements.
The  representations  and  warranties  made herein shall  terminate on the first
anniversary of the Effective  Time or the earlier  termination of this Agreement
pursuant  to  Section  6.1 as the case may be;  provided,  however,  that if the
Merger is consummated, the representation and warranty contained in Section 2.10
shall survive for a period equal to the applicable  statute of  limitations  for
tax  matters  (each of the  above  referenced  time  periods  being  hereinafter
referred to as a "Survival Period").

         SECTION 7.2  Indemnification.  During the Survival Period applicable to
that certain  representation and warranty,  Distribution agrees to indemnify and
hold harmless FMST from any and all claims, action,  damages,  losses, costs and
expenses (including  reasonably  attorneys' fees) incurred by FMST in connection
with any  representation  or warranty  made by  Distribution  in this  agreement
having been untrue in any material respect at the time made. During the Survival
Period  applicable  to that certain  representation  and  warranty,  FMST hereby
agrees to  indemnify  and hold  harmless  Distribution  from any and all claims,
actions,  damages,  losses, costs and expenses (including  reasonably attorneys'
fees) incurred by Distribution in connection with any representation or warranty
made by FMST in this agreement  having been untrue in any material respect as of
the date made.

         SECTION  7.3  Entire   Agreement;   Assignment.   This   Agreement  (a)
constitutes  the entire  agreement among the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings,  both
written and oral,  among the parties or any of them with  respect to the subject
matter hereof and (b) shall not be assigned by operation of law or otherwise.

         SECTION  7.4  Validity.  The  invalidity  or  unenforceability  of  any
provision of this Agreement shall not affect the validity or  enforceability  of
any other  provisions  of this  Agreement,  which shall remain in full force and
effect.



                                                        16

<PAGE>



         SECTION 7.5  Notices.  All notices and other  communications  among the
parties shall be in writing and shall be deemed to have been duly given when (i)
delivered  in person,  or (ii) one  business  day after  delivery to a reputable
overnight  courier service (e.g.  Federal Express),  postage pre-paid,  or (iii)
delivered by telecopy and promptly  confirmed by telephone  and by delivery of a
copy in person or overnight  as  aforesaid,  in each case with postage  prepaid,
addressed as follows:

                  If to FMST:

                              FinishMaster, Inc.
                              54 Monument Circle
                              Indianapolis, Indiana 46204
                              Telecopy:    (317) 237-5430
                              Attention:   Andre B. Lacy, Chairman of the Board

                  with a copy to:

                              Barnes & Thornburg
                              11 S. Meridian Street, Suite 1300
                              Indianapolis, Indiana 46204
                              Telecopy:    (317) 231-7433
                              Attention:   Robert H. Reynolds, Esquire

                  and

                              Sommer & Barnard
                              111 Monument Circle, Suite 4000
                              Indianapolis, Indiana 46204
                              Telecopy:    (317) 236-9802
                              Attention:   James A. Strain, Esquire

                  If to AP or Distribution:

                              LDI AutoPaints, Inc.
                              54 Monument Circle
                              Indianapolis, Indiana 46204
                              Telecopy:    (317) 237-5430
                              Attention:   Andre B. Lacy, Chairman of the Board


                                                        17

<PAGE>



                  with a copy to:

                              Barnes & Thornburg
                              11 S. Meridian Street, Suite 1300
                              Indianapolis, Indiana 46204
                              Telecopy:    (317) 231-7433
                              Attention:   Robert H. Reynolds, Esquire

or to such  other  address  as the  person  to whom  notice  is  given  may have
previously  furnished  to the others in  writing  in the manner set forth  above
(provided  that  notice of any change of address  shall be  effective  only upon
receipt thereof).

         SECTION 7.6  Governing  Law.  This  Agreement  shall be governed by and
construed in accordance with the laws of the State of Indiana, regardless of the
laws that might  otherwise  govern under  applicable  principles of conflicts of
laws thereof.

         SECTION 7.7 Interpretation.  When a reference is made in this Agreement
to the "knowledge of AP," such reference shall mean the actual  knowledge of the
Chief  Executive  Officer or President of AP. For purposes of this  Agreement AP
shall not be deemed to be an affiliate of FMST.  The headings  contained in this
Agreement  are for  reference  purposes only and shall not affect in any way the
meaning or  interpretation  of this  Agreement.  If an  ambiguity or question of
intent or  interpretation  arises,  then this  Agreement will be construed as if
drafted jointly by the parties to this  Agreement,  and no presumption or burden
of proof will arise  favoring  or  disfavoring  any party to this  Agreement  by
virtue of the authorship of any of the provisions of this Agreement.

         SECTION 7.8 Parties in Interest.  This Agreement  shall be binding upon
and inure  solely to the  benefit  of each  party  hereto,  and  except  for the
provisions  of Section 1.7 and 4.7,  which are intended to be for the benefit of
the persons referred to therein and their  beneficiaries (and may be enforced by
such persons as intended third-party beneficiaries),  nothing in this Agreement,
express or implied,  is  intended to confer upon any other  person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.

         SECTION 7.9 Counterparts. This Agreement may be executed in two or more
counterparts,  each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.

         SECTION 7.10  Expenses.  All costs and expenses  incurred in connection
with the transactions  contemplated by this Agreement shall be paid by the party
incurring such expenses.

         SECTION  7.11  Obligation  of  Distribution.  Whenever  this  Agreement
requires AP to take any action,  such  requirement  will be deemed to include an
undertaking on the part of Distribution to cause AP to take such action.


                                                        18

<PAGE>


         IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized,  all as of the
day and year first above written.

                                        FINISHMASTER, INC.
                                        ("FMST")

                                        By:      /s/ Andre B. Lacy
                                             ---------------------------------
                                        Name:    Andre B. Lacy
                                        Title:   Chairman of the Board & CEO

                                        LDI AUTOPAINTS, INC. (" AP ")

                                        By:      /s/ Andre B. Lacy
                                             ---------------------------------
                                        Name:    Andre B. Lacy
                                        Title:   Chairman of the Board & CEO

                                        LACY DISTRIBUTION, INC.
                                        ("Distribution")

                                        By:      /s/ Andre B. Lacy
                                             ---------------------------------
                                        Name:    Andre B. Lacy
                                        Title:   Chairman of the Board & CEO