LONE STAR INDUSTRIES INC, T-3, 1994-10-14

LONE STAR INDUSTRIES INC
T-3, 1994-10-14
CEMENT, HYDRAULIC

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<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 14, 1994.
REGISTRATION NO. 022-
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM T-3

FOR APPLICATIONS FOR QUALIFICATION OF INDENTURES
UNDER THE TRUST INDENTURE ACT OF 1939

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

ROSEBUD HOLDINGS, INC.
(Name of Applicant)

c/o Lone Star Industries, Inc.
300 FIRST STAMFORD PLACE
Stamford, Connecticut 06912-0014
(Address of Principal Executive Offices)

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

SECURITIES TO BE ISSUED UNDER THE
INDENTURE TO BE QUALIFIED

Title of Class Amount
-------------- ------
10% Asset Proceeds Notes Due 1997 . . . . . . . . . . up to $138,118,000*
Guarantee of Asset Proceeds Notes . . . . . . . . . . . up to $28,000,000

------------------
* In addition, interest on these notes may be paid in additional notes.

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

The Applicant hereby amends this application for qualification on such date or
dates as may be necessary to delay its effectiveness
until (i) the 20th day after the filing of an amendment which specifically
states that it shall supersede this filing, or (ii) such
date as the Commission, acting pursuant to Section 307(c) of the Act, may
determine upon the written request of the obligor.

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

<TABLE>
<S> <C>
Approximate date of proposed exchange: Occurred on April 14, 1994*.

Name and Address of Agent for Service: John J. Martin, Esq., Vice President and Secretary
c/o Lone Star Industries, Inc.
300 First Stamford Place
Stamford, Connecticut 06912-0014
</TABLE>
================================================================================
* See Introductory Note below.
<PAGE> 2
Introductory Note.
- ------------------

The Indenture described herein has been qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), pursuant to a Form T-3 filed by
the Applicant (Registration No. 022-22173) as amended (the "Previously Filed
T-3"). The filing of this Form T-3 will not negate that qualification. It is
anticipated that, if certain exemptive relief is granted by the Securities and
Exchange Commission ("SEC") pursuant to Section 304 of the TIA, the Indenture
will be supplemented pursuant to a supplement (the "Supplement") to be executed
and delivered by the Applicant and its subsidiaries. The Indenture and the
Supplement are described herein. If the SEC does not grant the exemptive
relief, the Supplement will not be entered into, and this Form T-3 will be
withdrawn, with the result that the Indenture will continue to be qualified
under the Previously Filed T-3.

GENERAL

ITEM 1. GENERAL INFORMATION

(a) Form of Organization.

Corporation.

(b) State or other sovereign power under the laws of which organized.

Delaware.

ITEM 2. SECURITIES ACT EXEMPTION APPLICABLE

State briefly the facts relied upon by the applicant as a basis for
the claim that registration of the Indenture Securities under the Securities
Act of 1933 is not required.

Rosebud Holdings, Inc. (the "Company") and each of its subsidiaries,
jointly and severally, has issued, as part of the Modified Amended Consolidated
Plan of Reorganization of Lone Star Industries, Inc., the Company's sole
stockholder ("Lone Star"), dated November 4, 1993, pursuant to Section 1121(a)
of the United States Bankruptcy Code (the "Plan of Reorganization"), the
Company's 10% Asset Proceeds Notes Due 1997 (the "Notes"), a portion of which
are guaranteed by Lone Star. The Company was organized to be a successor to
certain of Lone Star's assets and liabilities upon consummation of the Plan of
Reorganization. The Notes were issued to discharge in part claims of existing
creditors of Lone Star and certain of its affiliates in the Bankruptcy
Proceeding described below. Lone Star filed with the United States Bankruptcy
Court for the Southern District of New York (the "Bankruptcy Court") a Modified
Amended Disclosure Statement (the "Disclosure Statement") for the purpose of
soliciting votes of holders of claims or stock interests in Lone Star and
certain of its affiliates for acceptance or rejection of the Plan of
Reorganization (Case Nos. 90 B 21276 to 90 B 21286, 90 B 21334 and 90 B 21335
(HS)). At a hearing held on December 7, 1993, the Bankruptcy Court approved
the Disclosure Statement. At a hearing held on February 16 and 17, 1994, the
Bankruptcy Court confirmed the Plan of Reorganization. A copy of the
Disclosure Statement, with the Plan of Reorganization annexed thereto as an
exhibit, is incorporated herein by reference at Exhibit T3E. The Notes were
issued under an indenture (the "Indenture") between the Company and its
subsidiaries and Chemical Bank, a form of which is attached hereto as Exhibit
T3C. Certain other securities of Lone Star were also issued pursuant to the
Plan of Reorganization under indentures separate from the one qualified
hereunder and are the subject of a separate Form T-3 filed with the Securities
and Exchange Commission.

The issuance of the Notes and the related guarantee was exempt from
the registration requirements of the Securities Act of 1933 (the "Securities
Act") pursuant to Section 1145 of the United States Bankruptcy
<PAGE> 3
Code. Section 1145 exempts from the registration requirements of the
Securities Act "the offer or sale under a plan of a security of the debtor . .
. or a successor to the debtor under the plan . . . in exchange for a claim
against, an interest in, or a claim for an administrative expense in the case
concerning, the debtor. . ." The Company and its subsidiaries issued the Notes
and Lone Star granted its guarantee pursuant to the Plan of Reorganization
solely in exchange for the claims of certain existing creditors of Lone Star
and certain of its affiliates. There were no sales of Notes by or through an
underwriter, as that term is defined in Section 1145(b) of the Bankruptcy Code,
in connection with the Plan of Reorganization.

AFFILIATIONS

ITEM 3. AFFILIATES

Furnish a list or diagram of all affiliates of the applicant and
indicate the respective percentages of voting securities or other bases of
control.

The Company is a wholly-owned subsidiary of Lone Star. Additional
affiliates of the Company may be deemed to include the following:

1. Hawaiian Cement, a Hawaiian general partnership in which the
Company indirectly has a 50% interest.

2. Kosmos Cement Company, a Kentucky general partnership in which the
Company indirectly has a 25% interest.

3. Lone Star-Falcon, a Texas general partnership in which the Company
indirectly has a 50% interest.

4. RMC LONESTAR, a California general partnership in which the
Company indirectly has a 50% interest.

Based on information provided to the Company, the following persons
own in excess of ten percent of Lone Star's voting securities:

A. The TCW Group, Inc. and affiliates: 21.1% of Lone Star's Common
Stock.

B. Metropolitan Life Insurance Company and Metropolitan Insurance and
Annuity Company: an aggregate of 16.7% of Lone Star's Common Stock.

Attached hereto as Annex A are lists of the subsidiaries of Lone Star
and the Company.

3
<PAGE> 4
MANAGEMENT AND CONTROL

ITEM 4. DIRECTORS AND EXECUTIVE OFFICERS

List the names and complete mailing addresses of all directors or
executive officers of the applicant and all persons chosen to become directors
or executive officers. Indicate all offices with the applicant held or to be
held by each person named.

<TABLE>
<CAPTION>
Name Address Office(s)
- ------------------------------ -------------------------------- ----------------------------
<S> <C> <C>
William M. Troutman Lone Star Industries Inc. Director, President and
300 First Stamford Place Chairman
Stamford, CT 06912-0014

John J. Martin Same Director, President, Chief
Executive Officer and
Secretary

William E. Roberts Same Director, Vice President and
Chief Financial Officer
</TABLE>

ITEM 5. PRINCIPAL OWNERS OF VOTING SECURITIES

Furnish the following information as to each person owning 10 percent
or more of the voting securities of the applicant.

<TABLE>
<CAPTION>
Percentage of
Title of Class Voting Securities
Names and Complete Mailing Address Owned Amount Owned Owned
- ------------------------------------------ -------------- ------------ -----------------
<S> <C> <C> <C>
Lone Star Industries, Inc. Common Stock 100 shares 100%
300 First Stamford Place
Stamford, CT 06912-0014
</TABLE>

UNDERWRITERS

ITEM 6. UNDERWRITERS

Give the name and complete mailing address of (a) each person who,
within three years prior to the date of filing the application, acted as an
underwriter of any securities of the obligor which were outstanding on the date
of filing the application, and (b) each proposed principal underwriter of the
securities proposed to be offered. As to each person specified in (a), give
the title of each class of securities underwritten.

(a) None

(b) None

4
<PAGE> 5
CAPITAL SECURITIES

ITEM 7. CAPITALIZATION

(a) Furnish the following information as to each authorized class of
securities of the applicant.

<TABLE>
<CAPTION>
Title of Class Amount Authorized Amount Outstanding
- ----------------------------------------------------------------- ----------------- ------------------
<S> <C> <C>
Common Stock, $1.00 par value per share . . . . . . . . . . . . 1,000 shares 100 shares
10% Asset Proceeds Notes Due 1997* . . . . . . . . . . . . . . . $138,118,000 $106,399,000
</TABLE>

- --------------------
* In addition, interest on the Notes may be paid in additional Notes.

(b) Give a brief outline of the voting rights of each class of voting
securities referred to in paragraph (a) above.

Title of Class Voting Rights
----------------- -----------------------
Common Stock One vote per share

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

INDENTURE SECURITIES

ITEM 8. ANALYSIS OF INDENTURE*

Insert at this point the analysis of indenture provisions required under
Section 305(a)(2) of the Act.

(a) Events of Default and Notice of Default

An Event of Default occurs under the Indenture if: (i) the Obligor
defaults in the payment of interest on any Note when the same becomes due and
payable, whether at maturity, in connection with any redemption, by
acceleration or otherwise, and such default continues for a period of 30 days
after its due date; (ii) the Obligor defaults in the payment of the principal
of any Note when the same becomes due and payable, whether at maturity, in
connection with any redemption, by acceleration or otherwise; provided,
however, in the case of any such default resulting from a dispute as to the
computation of Net Proceeds, that such default shall have remained uncured for
a period of 30 days from the date of notice to the Company from the Trustee as
to the existence of, and specifying the basis for, such default; (iii) the
Company or any of its Subsidiaries fails to observe or perform in any material
respect any of its other covenants or agreements in the Notes, the Indenture or
the Collateral Agency Agreement or other agreement relating to liens for the
benefit of Holders, which failure continues for a period of 30 days after the
earlier of (a) the date on which written notice of such failure, requiring the
Company to remedy the same, shall have been given to the Company by the
Trustee, or to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Notes at the time outstanding or (b) the date

- ----------------------------------
* All capitalized terms used in this Item 8 shall have the same meaning,
unless otherwise defined, as that provided in the Indenture.

5
<PAGE> 6
on which the Company had Actual Knowledge of such failure; (iv) (a) the Company
or any of its Subsidiaries fails to pay when due (whether at maturity, in
connection with any mandatory amortization or redemption, by acceleration or
otherwise) any principal or interest on any Indebtedness, other than certain
Permitted Indebtedness, with an aggregate outstanding principal amount in
excess of $2 million, whether any such Indebtedness is outstanding as of the
date of the Indenture or is thereafter outstanding, which default continues for
any period of grace applicable thereto or (b) a default or event of default, as
defined in one or more indentures, agreements or other instruments evidencing
or under which the Company or any of its Subsidiaries individually or
collectively have, as of the date of the Indenture or thereafter, outstanding
at least $2 million aggregate principal amount of Indebtedness, shall happen
and be continuing and such Indebtedness shall have been accelerated so that it
is due and payable prior to the date on which it would otherwise have become
due and payable; provided that if such default or event of default under such
indenture or other instrument shall be remedied or cured by the Company or the
Subsidiary or waived by the holders of such Indebtedness, then the Event of
Default under the Indenture by reason thereof shall be deemed likewise to have
been thereupon remedied, cured or waived without further action upon the part
of either the Trustee or any of the holders of Notes; (v) one or more final
judgments against the Company or any of its Subsidiaries for payments of money
which in the aggregate exceed $2 million, are entered by a court of competent
jurisdiction and such judgments are not rescinded, annulled, stayed or
discharged within 60 days; (vi) the Company and its Subsidiaries, taken as a
whole, becomes unable generally to pay its debts as they become due; (vii) the
Company or any of its Subsidiaries, pursuant to or within the meaning of any
Bankruptcy Law: (a) commences a voluntary case, (b) consents to the entry of a
judgment, decree or order for relief against it in any involuntary case or
proceeding, (c) consents to the appointment of a Custodian for all or
substantially all of its property, (d) makes a general assignment for the
benefit of its creditors, or (e) applies for, consents to or acquiesces in the
appointment of, or taking possession by, a Custodian; (viii) a court of
competent jurisdiction enters a judgment, decree or order for relief in respect
of the Company or any of its Subsidiaries in an involuntary case or proceeding
under any Bankruptcy Law which shall (a) approve as properly filed a petition
seeking reorganization, arrangement, adjustment or composition, (b) appoint a
Custodian for any part of its property, or (c) order the winding up or
liquidation of its affairs, and such judgment, decree or order remains unstayed
and in effect for a period of sixty (60) consecutive days; or (ix) any
bankruptcy or insolvency petition or application is filed, or any bankruptcy
case or insolvency proceeding is commenced against, the Company or any of its
Subsidiaries, and such petition, application, case or proceeding is not
dismissed or stayed within sixty (60) days; or (x) the entry of a final
judgment, decree or order by a court of competent jurisdiction holding the
Guarantee Agreement, the Pledge Agreement or the Collateral Agency Agreement to
be invalid or unenforceable in any material respect; or the Guarantor or the
Obligor, or any Person acting on behalf of the foregoing, shall assert, in any
pleading filed in such a court, that the Guarantee Agreement, the Pledge
Agreement or the collateral Agency Agreement is invalid or unenforceable in any
material respect; or (xi) an "Event of Default," as defined in the Guarantee
Agreement shall have occurred and be continuing.

If a Default occurs and is continuing and if it is known to the Trustee,
the Trustee shall mail to each holder of the Notes a notice of the Default
within 90 days after it occurs. Except in the case of a Default in payment of
principal of or interest on any Note, the Trustee may withhold the notice if
and so long as it in good faith determines that withholding notice is in the
interests of the Holders of the Notes.

(b) Authentication and Delivery of Notes and Application of Proceeds
Thereof

A Note shall not be valid until authenticated by the manual or facsimile
signature of the Trustee. The signature of the Trustee shall be conclusive
evidence that the Note has been authenticated under the Indenture. The Trustee
may appoint an authenticating agent acceptable to the Company to authenticate
the Notes.

6
<PAGE> 7
The Trustee authenticated Notes for original issue in the aggregate
principal amount of $138,118,000. In addition, interest on the Notes may be
paid in additional Notes. Such order shall specify the amount of Notes to be
authenticated and the date on which the original issue of Notes is to be
authenticated.

The Notes shall be issuable only in registered form without coupons and
only in denominations of $1,000 and integral multiples thereof, except that
Notes used to pay interest may be issued in denominations of $100 and integral
multiples thereof.

Until the Notes are paid, the Company has agreed that it will use
reasonable commercial efforts to sell its assets at the best obtainable prices.
Unless an Event of Default has occurred and is continuing, the Company or any
Subsidiary may, subject to compliance with the Trust Indenture Act of 1939, as
amended, dispose of any of the Pledged Collateral in any transaction or series
of transactions not prohibited by the Indenture, and any Pledged Collateral so
disposed of shall, upon such disposition and, if required, the deposit of funds
in accordance with Section 3.08 of the Indenture, ipso facto be released from
the security interests created under the Collateral Agency Agreement. Certain
proceeds shall be Pledged Collateral and certain cash proceeds shall be
deposited in the Collateral Account and used to redeem Notes.

(d) Satisfaction and Discharge of Indenture

The Obligor may terminate all of its obligations under the Indenture if all
Notes previously authenticated and delivered (other than mutilated, destroyed,
lost or stolen Notes which have been replaced or paid) have been delivered to
the Trustee for cancellation or if: (1) the Notes mature within six months or
all of them are to be called for redemption within six months; (2) the Company
irrevocably deposits in trust with the Trustee, pursuant to an irrevocable
trust and security agreement in form and substance reasonably satisfactory to
the Trustee, money or U.S. Government Obligations sufficient to pay principal
of and interest on the Notes to maturity or redemption, as the case may be, and
all other sums payable by the Company to the holders of the Notes thereunder.
The Company may make the deposit only during the six-month period. Immediately
after making the deposit, the Company shall give notice of such event to the
holders; (3) the Company has paid or caused to be paid all sums then payable by
the Company to the Trustee thereunder as of the date of such deposit; and (4)
the Company has delivered to the Trustee an Officers' Certificate stating that
all conditions precedent provided for in the Indenture relating to the
satisfaction and discharge of the Indenture have been complied with.

However, the Obligor's obligations under the Indenture with respect to the
Registrar and Paying Agent, securityholder lists, transfers and exchanges,
replacement securities, payment on the Notes, compensation, indemnity and
replacement of the Trustee, and repayment of amounts paid to the Company as
excess money upon discharge of the Indenture shall survive until the Notes are
no longer outstanding. Thereafter, the obligations with respect to
compensation and indemnity of the Trustee and repayment of amounts paid to the
Company as excess money shall survive.

After a deposit pursuant to these provisions, the Trustee upon request
shall acknowledge in writing the discharge of the Obligor's obligations under
the Notes and the Indenture except for those surviving obligations specified
above.

In order to have money available on a payment date to pay principal or
interest on the Notes, the U.S. Government Obligations shall be payable as to
principal or interest on or before such payment date in such amounts as will
provide the necessary money.

7
<PAGE> 8
(e) Evidence Required to be Furnished by Obligor to Trustee

The Company shall deliver to the Trustee within 120 days after the end of
each fiscal year of the Company, and within 60 days after the end of each of
the first three fiscal quarters of the Company, an Officer's Certificate
stating that, after a review of the activities of the Company during such
period and of the Company's performance under the Indenture, whether or not, to
the best knowledge of the signer thereof based on such review, there has been
any Default or Event of Default by the Company in performing any of its
obligations under the Indenture or the Notes. If the signer does not know of
any such Default or Event of Default, the Certificate shall describe the
Default or Event of Default and its status.

(f) Terms of Supplement

If certain exemptive relief is granted by the SEC, the Company and each of
its subsidiaries will execute and deliver to the Trustee the Supplement which
will provide that no less frequently than semi-annually the Company will
provide to the Trustee an Officers' Certificate, as defined in the Indenture,
to the effect that (A) during such semi-annual period all sales of inventory
and collections and other dispositions of accounts receivable, chattel paper,
documents and instruments in respect of which Section 314(d) was not complied
with pursuant to exemptive relief granted by the SEC were disposed of in the
ordinary course of business and all proceeds from such disposition were used
(or retained) by the Obligor in connection with its business and in accordance
with the Indenture and (B) all other dispositions of assets securing the Notes
were effectuated in accordance with TIA Section 314 to the extent it is
applicable.

ITEM 9. OTHER OBLIGORS

Give the name and complete mailing address of any person, other than the
applicant, who is an obligor upon the indenture securities.

A portion of the Notes will be guaranteed by Lone Star. In addition, to
avoid holders of the Notes being structurally subordinated to creditors of the
Company's subsidiaries, each such subsidiary (all of which are directly or
indirectly wholly-owned by the Company) has agreed to be jointly and severally
obligated under the Notes. A list of the Subsidiaries of the Company is
included in Annex A.

CONTENTS OF APPLICATION FOR QUALIFICATION

This application for qualification comprises:

(a) Pages numbered 1 to 9, consecutively;

(b) Annex A consisting of one page;

(c) The Statement of Eligibility and Qualification on Form T-1
(incorporated by reference to the Previously Filed T-3); and

(d) the following exhibits in addition to those filed as a part of the
Statement of Eligibility and Qualification of the Trustee:

Exhibit T3A. The form of the Company's Certificate of Incorporation is
attached as Exhibit P to the Disclosure Statement
(incorporated by reference at Exhibit T3E).

Exhibit T3B. The form of the Company's By-Laws is attached as Exhibit Q
to the Disclosure Statement (incorporated by reference at
Exhibit T3E).

8
<PAGE> 9
Exhibit T3C. Form of Indenture between the Company and Chemical Bank
(incorporated by reference to Exhibit T3C to the Previously
Filed T-3).

Exhibit T3C(a). Form of Supplement (filed herewith).

Exhibit T3D. Not applicable.

Exhibit T3E. A copy of the Disclosure Statement regarding the Plan of
Reorganization, with certain exhibits thereto, incorporated
by reference to Exhibit T3E of Lone Star Industries, Inc.
Form T-3 with respect to certain Senior Notes due 2003,
filed on January 14, 1994 (Registration No. 022-22175).

Exhibit T3E(a) A copy of the Modification of Debtors' Plan of
Reorganization, incorporated by reference to Exhibit T3E(a)
of Lone Star Industries, Inc. Amendment to Form T-3
(Registration No. 022-22175) filed March 24, 1994.

Exhibit T3F. A cross reference sheet showing the location in the
Indenture of the provisions inserted therein pursuant to
Sections 310 through 318(a), inclusive, of the Trust
Indenture Act of 1939, included in the Indenture which is
incorporated by reference at Exhibit T3C.

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, the
applicant, Rosebud Holdings, Inc., a corporation organized and existing under
the laws of Delaware, has duly caused this application to be signed on its
behalf by the undersigned, thereunto duly authorized, and its seal to be
hereunto affixed and attested all in The City of New York, and State of New
York, on the 30th day of September, 1994.

[Seal]

ROSEBUD HOLDINGS, INC.

By /s/ John J. Martin
-------------------------------
Name: John J. Martin
Title: President and Secretary

Attest: By /s/ John S. Johnson
-------------------------------
Name: John S. Johnson
Title: Assistant Secretary

9
<PAGE> 10
ANNEX A

LONE STAR INDUSTRIES, INC. SUBSIDIARIES
(Wholly owned unless otherwise indicated;
indentation indicates level of ownership)

<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
---- --------------
<S> <C>
Lone Star Industries, Inc. Delaware
Coastline Petroleum Company, Inc. Texas
Construction Aggregates Limited Nova Scotia
Diamond Building Materials, Inc. California
Lone Star Building Centers, Inc. Minnesota
Lone Star Building Centers (Eastern) Inc. Delaware
G. M. Stewart Lumber Company, Inc. Minnesota
Lone Star Cement Inc. (99% ownership) New Jersey
Lone Star Hawaii, Inc. Delaware
Lone Star Hawaii Cement Corporation Hawaii
Lone Star Hawaii Properties, Inc. Hawaii
Lone Star Prestress Concrete, Inc. Texas
Lone Star Properties, Inc. Delaware
Lone Star Wyoming, Inc. Delaware
New York Trap Rock Corporation Delaware
Cornell Steamboat Company New York
Gotham Suffolk Stone Corporation New York
NYTR Transportation Corp Delaware
Plastibeton Canada Inc. Canada
Rosebud Holdings, Inc. Delaware
KCOR CORPORATION Delaware
Las Colinas Corporation Delaware
Lone Star California, Inc. Delaware
Santa Cruz Corporation Delaware
Rosebud Real Properties, Inc. Delaware
Nazareth Cement Corporation Delaware
Rosebud Falcon Corporation Delaware
Rosebud General Corporation Delaware
San-Vel Concrete Corporation Kansas
Utah Portland Quarries, Inc. Utah
</TABLE>
<PAGE> 11
EXHIBIT INDEX

Exhibit No. Description
------------ -----------

Exhibit T3C(a). Form of Supplement (filed herewith).

<PAGE> 1
EXHIBIT T3C(a)

FIRST INDENTURE SUPPLEMENT

This FIRST INDENTURE SUPPLEMENT is dated as of this ____ day of
________, 1994, and supplements the Indenture, dated as of March 29, 1994 (the
"Indenture"), by and between Rosebud Holdings, Inc. and its Subsidiaries, as
defined in the Indenture (the Company and such Subsidiaries referred to herein
jointly and severally as the "Obligor"), and Chemical Bank (the "Trustee").

A. Pursuant to Section 9.01 of the Indenture, the Indenture is hereby
supplemented by adding the following new covenant of the Obligor:

SECTION 10.07 New Collateral.

(a) The Nazareth Accounts and Receivables and Excluded Checks, as such
terms are defined in the Collateral Agency Agreement, and Cash
Proceeds described in clause 3(a)(xi)(B) of the Collateral Agency
Agreement (collectively, the "New Collateral"), are hereby
included in the term "Pledged Collateral" for purposes of the
Collateral Agency Agreement.

(b) Any disposition of New Collateral without delivery by the Company
of the certificates and opinions required by Section 314(d) of the
TIA as a result of the exemptive relief granted by the SEC as
contemplated by the Collateral Agency Agreement will be of the
following types and the following types only:

i) the disposition of inventory relating to the Nazareth Facility
in the ordinary course of business ("Inventory Collateral");

ii) the collection, liquidation or other disposition of accounts
receivable, chattel paper, documents and instruments of the
Nazareth Facility in the ordinary course of business
("Receivables Collateral"); or

iii) the utilization of cash in connection with the business of the
Company and its subsidiaries in a manner which is not
prohibited by the Indenture or the Security Agreement.

(c) Within 60 days after each June 30 and December 31, commencing
December 31, 1994, the Company will provide to the Trustee an
Officers' Certificate to the effect that during the six-month
period ending on the June 30 or December 31, as may be the case,
immediately prior to the delivery of the Officers' Certificate,
all dispositions of Inventory Collateral and all collections,
liquidations or other dispositions of Receivables Collateral were
in the ordinary course of business and no releases, withdrawals or
utilizations of cash during such six-month period were prohibited
by the Indenture or the Collateral Agency Agreement.

(d) If the Company fails to provide to the Trustee the Officers'
Certificate required by Section 10.07(c) above for a period of 30
days following written notice from the Trustee that such Officers'
Certificate has not been delivered timely, then (unless it results
from an event or occurrence which would otherwise be a Default or
Event of Default) such failure shall not be deemed a Default or
Event of Default hereunder, and all New Collateral shall,
effective immediately after such 30th day, automatically and
without further action on the part of the Obligor or the Trustee
become fully subject to the TIA to the same extent it would have
been had the Exemptive Relief not been granted.

B. No other terms or provisions of the Indenture or the Collateral Agency
Agreement shall be affected by this First Indenture Supplement and all such
terms and provisions shall remain in full force and effect.

C. The laws of the State of New York, without regard to principles of
conflicts of law, shall govern this First Indenture Supplement.
<PAGE> 2

D. The recitals contained herein shall be taken as the statements of the
Obligor, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representation as to the validity or sufficiency of this First
Indenture Supplement.

IN WITNESS WHEREOF, the parties hereto have caused this First
Indenture Supplement to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.

ROSEBUD HOLDINGS, INC.

By:
-------------------------------
Title: President

[SEAL]

Attest: