LONE STAR INDUSTRIES INC, 10-Q/A, 1994-08-17

LONE STAR INDUSTRIES INC
10-Q/A, 1994-08-17
CEMENT, HYDRAULIC

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BY EDGAR DIRECT TRANSMISSION

August 16, 1994

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549

Re: Amendment No. 1 to Quarterly Report
for the Period Ended June 30, 1994
for Lone Star Industries, Inc.

Gentlemen:

Transmitted herewith is a copy of Form 10-Q/A-1 constituting
Amendment No. 1 to Quarterly Report on Form 10-Q for the period ended
June 30, 1994 of Lone Star Industries, Inc.

The primary purpose of this Amendment is to re-transmit to the
Commission the Index of Exhibits and the Exhibits to the Form 10-Q.
The Exhibits were previously sent to the Commission on August 15th by
EDGAR direct transmission and accepted, to be held as a segment and
to be incorporated into the Form 10-Q upon its transmittal to the
Commission. When the Form 10-Q was received by the Commission later
on August 15th, for some reason the segment was not able to be
incorporated.

The Amendment also makes minor changes in Note 9 of Notes to
Unaudited Consolidated Financial Statements although in accordance
with the Commission's Regulations the entire Item 1. Financial
Statements is restated.

Sincerely yours,

John S. Johnson
JSJ:jam John S. Johnson
Attachments Vice President and
Associate General Counsel

jsj\sec.amn

FORM 10-Q/A-1

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission File Number 1-2333

LONE STAR INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

DELAWARE No. 13-0982660
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

300 First Stamford Place, P. O. Box 120014, Stamford, CT 06912-0014
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code 203-969-8600

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.

Yes X No

In December, 1990, registrant and certain of its wholly-owned, either
directly or indirectly, subsidiaries each filed voluntary petitions
for relief under Chapter 11, Title 11 of the United States Code with
the United States Bankruptcy Court for the Southern District of New
York. The Modified Amended Consolidated Plan of Reorganization of the
registrant and such subsidiaries ("Plan of Reorganization") became
effective on April 14, 1994 and on that date all of registrant's old
equity securities were cancelled and new equity securities were issued
to holders of claims in the Bankruptcy and holders of old equity
securities.

Indicate by check mark whether the registrant has filed all documents
and rights required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.

Yes X No

The number of shares outstanding of each of the registrant's classes
of new Common Stock as of August 9, 1994:

Common Stock, par value $1 per share - 11,417,670 shares

AMENDMENT NO. 1 TO QUARTERLY REPORT
ON FORM 10-Q FOR THE PERIOD
ENDED JUNE 30, 1994

The undersigned regristrant hereby amends Note 9 of Notes to Unaudited
Consolidated Financial Statements contained in Item 1 Financial Statements
of its Quarterly Report on Form 10-Q for the Period ended June 30, 1994.
As so amended Item 1 in its entirety reads as follows:

<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LONE STAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In Thousands)
<CAPTION>
Successor Company Predecessor Company

For the Three For the Three For the Three For the Six
Months Ended Months Ended Months Ended Months Ended
Consolidated Income June 30, 1994 March 31, 1994 June 30, 1993 June 30, 1993

Revenues:
Net sales $86,995 $33,709 $70,580 $103,057
Joint venture income 1,269 381 10,981 12,610
Other income, net 823 2,691 2,497 5,067
89,087 36,781 84,058 120,734
Deductions from revenues:
Cost of sales 61,403 29,694 56,827 85,328
Selling, general and administrative
expenses 7,487 9,836 10,074 20,280
Depreciation and depletio 5,979 6,688 6,577 13,161
Recovery of litigation se - (6,500) - -
Interest expense 2,219 233 428 902
77,088 39,951 73,906 119,671

Income (loss) before reorganization items and
income taxes 11,999 (3,170) 10,152 1,063
Reorganization items:
Adjustments to fair value - (133,917) - -
Loss on sale of assets - - (44,889) (44,889)
Other items - (13,396) (2,589) (5,197)
- (147,313) (47,478) (50,086)
Income (loss) before income taxes and cumulative
effect of change in accou 11,999 (150,483) (37,326) (49,023)
(Provision) credit for in (4,085) (155) 9,039 7,161

Income (loss) before cumulative effect of change in
accounting principles and 7,914 (150,638) (28,287) (41,862)
Cumulative effect of change in accounting principles:
Postretirement benefits o - - - (782)
Extraordinary item: gain on discharge of
prepetition liabilities - 127,520 - -

Income (loss) before preferr 7,914 (23,118) (28,287) (42,644)
Provision for preferred divi - (1,278) (1,278) (2,556)

Net income (loss) applicable $7,914 ($24,396) ($29,565) ($45,200)

Weighted average common shar 12,000 (a) (a) (a)

Primary and fully diluted income per common share:
Income before cumulative eff $0.62 (a) (a) (a)
accounting principles
Cumulative effect of change - (a) (a) (a)
principles
Extraordinary gain on discha - (a) (a) (a)
liabilities
Net income per common share $0.62 (a) (a) (a)

(a) Earnings per share are not meaningful due to reorganization and
revaluation entries and the issuance of 12 million shares of new common
stock.

The accompanying Notes to Unaudited Consolidated Financial Statements are an
integral part of the Financial Statements.
3
</TABLE>

LONE STAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (Unaudited)
(In Thousands)

Successor
Company Predecessor Company

For the TFor the ThreFor the Three For the Six
Months EnMonths Ended Months Ended Months Ended
June 30, March 31, 19June 30, 1993 June 30, 1993

Retained earnings, beginn $ - ($187,896) ($166,356) ($151,856)

Net income (loss) 7,914 (23,118) (28,287) (42,787)

Retained earnings (accumu 7,914 (211,014) (194,643) (194,643)

Elimination of accumulate - 211,014 - -

Retained earnings, end of $7,914 $ - ($194,643) ($194,643)

The accompanying Notes to Unaudited Consolidated Financial Statements are an
integral part of the Financial Statements.

The accompanying Notes to Unaudited Consolidated Financial Statements are an
integral part of the Financial Statements.
5

LONE STAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In Thousands)

Successor
Company Predecessor Company

For the Three For the Three For the Six
Months Ended Months Ended Months Ended
June 30, 1994 March 31, 1994June 30, 1993

Cash Flows from Operating Activities:

Income (loss) before cumulative effect of change in
accounting principles $7,914 ($150,638) ($41,862)
Adjustments to arrive at net cash provided (used)
by operating activities:
Depreciation and dep 5,979 6,688 13,161
Deferred income taxe 4,080 155 1,133
Provision for crosst - (6,500) -
Loss on sale of join - - 32,389
Changes in operating assets and liabilities:
Accounts and notes (14,997) 22,157 (12,552)
Inventories and ot 3,340 (17,189) (11,567)
Accounts payable a 2,560 (1,808) (1,190)
Unremitted earnings (1,269) 619 (872)
Adjustments to fair - 133,917 -
Other reorganization - 13,396 5,197
Other, net (1,598) (5,866) 2,272
Net cash provided (used) by operating activities
before reorganization 6,009 (5,069) (13,891)

Operating cash flows from reorganization items:
Interest received on cash accumulated
because of Chapter - 1,998 2,132
Professional fees an (5,247) (5,849) (6,235)
Professional fees escrow pursuant to the
reorganization pla - (12,431) -
Net cash used by reorgan (5,247) (16,282) (4,103)
Net cash provided (used) 762 (21,351) (17,994)

Cash Flows from Investing Activities:

Capital expenditures (5,984) (6,695) (8,968)
Proceeds from sales of a 21,829 - -
Proceeds from sales of a - 2,457 6,758
Collection of notes rece - 93 576
Advances to equity inves - - (5,000)
Other, net 41 (293) (1,602)
Proceeds from sales of assets due to Chapter 11
proceedings - - 721
Net cash provided (used) 15,886 (4,438) (7,515)

Cash Flows from Financing Activities:

Cash distribution pursuant to the reorganization
plan - (200,451) -
Transfer to liquidating - (5,010) -
Reduction of production - (1,000) (4,000)
Net cash used by financi - (206,461) (4,000)

Net increase (decrease) 16,648 (232,250) (29,509)

Cash and cash equivalent 12,147 244,397 168,605
Cash and cash equivalent $28,795 $12,147 $139,096

The accompanying Notes to Unaudited Consolidated Financial Statements are
an integral part of the Financial Statements.
6

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1

In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present
fairly the financial position of the company as of June 30, 1994, and
the results of operations for the three months ended June 30, 1994,
the three months ended March 31, 1994 and the three and six months
ended June 30, 1993 and the cash flows for the three months ended June
30, 1994, the three months ended March 31, 1994 and the six months
ended June 30, 1993. As discussed in Notes 2, 3, and 4, the company
emerged from its bankruptcy proceedings on April 14, 1994, with an
effective date for accounting purposes of March 31, 1994.
Accordingly, the March 31, 1994 accompanying consolidated balance
sheet represents the financial position of the reorganized Lone Star
as of the effective date. The financial statements contained herein
should be read in conjunction with the financial statements and
related notes in the company's annual report on Form 10-K for the year
ended December 31, 1993, and with the quarterly report on Form 10-Q,
for the quarter ended March 31, 1994. The company's operations are
seasonal and, consequently, interim results are not necessarily
indicative of the results to be expected for a full year. In
addition, having operated for over three years in bankruptcy, results
of operations prior to emergence from bankruptcy are not indicative
of results of operations outside of Chapter 11 proceedings. Also
affecting comparability are differences in the operating units of the
successor company and the predecessor company.

Note 2 - Reorganization

In November 1989, in an effort to improve the company's operating
results and to generate cash to pay maturing debt obligations, the
company implemented a restructuring program involving the sale of
certain marginal operations and facilities. Although progress was
made in implementing the restructuring program, depressed economic
conditions and the shortage of financing available to potential buyers
during 1990 impeded the company's ability to complete the sale of all
assets within the time frame and at the values estimated in 1989. In
addition, during the fourth quarter of 1990, the company was unable
to secure short-term borrowing arrangements, at acceptable terms and
conditions, following the termination of its revolving-credit
agreement and its agreement with financial institutions to sell trade
receivables in November 1990. Without such financing or other sources
of cash, the company probably would have been in default under its
long-term debt agreements in the first quarter of 1991. The company
decided to seek reorganization under Chapter 11 of Title 11 of the
United States Code ("Chapter 11") to achieve a long-term solution to
its financial, litigation and business problems. On December 10, 1990
(the "petition date"), Lone Star Industries, Inc. together with
certain of its subsidiaries (including two subsidiaries filing on
December 21, 1990) ("filed companies"), filed voluntary petitions for
reorganization under Chapter 11 in the United States Bankruptcy Court
for the Southern District of New York ("Bankruptcy Court"), and
operated their respective businesses as debtors-in-possession until
April 14, 1994.

On February 17, 1994, with the approval of all voting classes of
creditors and equity holders, the Bankruptcy Court confirmed the
Debtors Modified Amended Consolidated Plan of Reorganization dated
November 4, 1993 (as further modified on February 17, 1994) ("the
plan"). On April 14, 1994, (the "effective date") the plan became
effective, and distributions to creditors and shareholders commenced
(as provided by the plan, a reserve for approximately $40,000,000 in
disputed unresolved claims has been established). In accordance with
the plan, certain core cement, ready-mixed concrete and construction
aggregates operations constitute the reorganized Lone Star. Other
non-core assets and their associated liabilities of the company
including the Nazareth, Pennsylvania cement plant, the Santa Cruz,
California cement plant and the company's interests in the RMC
LONESTAR, Hawaiian Cement and Lone Star Falcon joint ventures, certain
surplus real estate and certain litigations have been transferred to
Rosebud Holdings, Inc., a wholly-owned liquidating subsidiary and its
subsidiaries (collectively "Rosebud") for disposition and distribution
of the proceeds of such dispositions, for the benefit of unsecured
creditors (See Note 5).

The plan provides for distributions on the effective date to claims
which were allowed at that time, and for the establishment of a
reserve for certain disputed, contingent, and unliquidated claims.
On the effective date, the escrow agent administering the reserve
received a distribution of cash and securities attributable to the
reserved claims. On the effective date, the total amount of allowed
and reserved claims was $590,944,000, which the company expects to be
reduced to approximately $584,016,000 when all claims are paid. On
the effective date, allowed and reserved secured claims aggregated
$435,000, allowed and reserved priority claims approximated
$5,676,000, and allowed and reserved convenience claims (under $5,000)
approximated $2,152,000. The plan provided that these claimants are
to receive full payment in cash. The plan also provided for allowed
and reserved unsecured claims of $575,753,000, to receive their pro
rata share of (i) $192,188,000 in cash, (ii) $78,000,000 ten year 10%
senior unsecured notes of the reorganized company, (The company's
March 31, 1994 balance sheet includes accrued interest of $1,300,000
for the period from February 1, 1994 through March 31, 1994 per the
terms of the senior unsecured notes indenture), (iii) $138,118,000
secured asset proceeds notes of Rosebud, to be paid out of the
proceeds from the disposition of its assets (See Note 5) and (iv)
85.0% of the common stock of reorganized Lone Star. The aggregate
recovery on unsecured claims will depend on the ultimate value of the
common stock, the senior unsecured notes, and the secured asset
proceeds notes (the value of the secured asset proceeds notes will
reflect the sums realized from the disposition of assets and
litigation recoveries of Rosebud).

Holders of the company's cumulative convertible preferred stock
received a pro rata share of 10.5% of the common stock of reorganized
Lone Star and 1,250,000 warrants to purchase common stock of the
reorganized Lone Star. The holders of common stock of Lone Star
received the balance of reorganized Lone Star's common equity and
2,753,333 warrants to purchase common stock in the reorganized Lone
Star. The warrants are exercisable through December 31, 2000, and
each warrant provides for the purchase of one share of the common
stock of reorganized Lone Star at a price of $18.75 per share.

In addition, in accordance with the plan, as part of the agreement
with the Pension Benefit Guaranty Corporation ("PBGC") the company
granted the PBGC a mortgage on the Oglesby, Illinois plant, and a
security interest in the Kosmos Cement Company partnership, to secure
certain contingent future pension obligations.

Note 3 - Basis of Presentation

As of the effective date of the plan, the sum of allowed claims plus
post-petition liabilities of the company exceeded the value of its
preconfirmation assets. In addition, the company experienced a change
in control as pre-reorganization equity holders received less than 50%
of the reorganized Lone Star common stock issued pursuant to the plan.
Therefore, in accordance with AICPA Statement of Position No. 90-7,
"Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code" ("SOP No. 90-7"), the company has adopted "fresh-
start" reporting which assumes that a new reporting entity has been
created and require assets and liabilities be adjusted to their fair
values as of the effective date.

Although the plan became effective on April 14, 1994, for accounting
purposes the effective date of the plan is considered to be March 31,
1994, and accordingly, the company has adopted fresh-start reporting
as of March 31, 1994. Adjustments were recorded as of March 31, 1994
to reflect the effects of the consummation of the plan and to reflect
the implementation of fresh-start reporting. The reorganization value
of the company was determined using several factors and by reliance
on various valuation methods, including discounted cash flows,
price/earnings ratios and other applicable ratios. Reorganization
value generally approximates fair value of the entity before
considering liabilities and approximates the amount a buyer would pay
for the assets of the entity after the reorganization. Based on
information from parties in interest and from Lone Star's financial
advisors, the total reorganization value of the Company was
$579,411,000. The reorganization value was then allocated to the
company's assets and liabilities in conformity with the Accounting
Principles Board Opinion No. 16, "Business Combinations" ("APB No.
16"), as specified by SOP No. 90-7. Income related to the settlement
of liabilities subject to the company's Chapter 11 proceedings is
included in the accompanying consolidated statement of operations as
an extraordinary gain on discharge of prepetition liabilities. The
gains or losses related to the adjustments of assets and liabilities
to fair value are included in reorganization items in the accompanying
consolidated statement of operations (See Note 10). The reorganization
value in excess of amounts allocable to identifiable assets is the
portion of the reorganization value of the company which was not
attributed to specific tangible or identified intangible assets of the
company.

Total equity of reorganized Lone Star under fresh-start reporting at
March 31, 1994 was less than total equity included in the plan. This
is due to the different discount rates used to value the company's
liability for postretirement benefits other than pensions, in the plan
and under generally accepted accounting principles.

Note 4 - Adjustments to Record Effects of Plan of Reorganization

The effect of the plan and the company's adoption of fresh-start
reporting on its March 31, 1994 balance sheet are as follows:

Adjustments to Record
Effectiveness of the Plan of
Reorganization
(In Thousands)

Effects Fresh
Predec- of Plan of Start Succes-
essor Reorgan- Report sor
Company ization ing Company
Assets:
Current assets:
Cash including cash
equivalents .......... $ 220,466 $(208,319) $ - $12,147
Accounts and notes
receivable, net....... 42,758 (13,047) - 29,711
Inventories............. 50,135 5,248 (10,589) 44,794
Current assets of assets
held for sale.......... 22,991 (22,991) - -
Other current assets..... 5,856 12,391 (3,120) 15,127
Total current assets 342,206 (226,718) (13,709) 101,779

Net assets of liquidating
subsidiary (See Note 5) - 208,668 (96,668) 112,000
Assets held for sale... 66,024 (66,024) - -
Notes receivable ....... 4,965 (4,860) - 105
Joint ventures.......... 89,405 (65,571) (6,334) 17,500

Property, plant and
equipment............ 397,638 (57,968) (7,407) 332,263
Reorganization value in
excess of amounts
allocable to identifiable
assets............... - - 14,372 14,372
Cost in excess of net
assets and deferred
charges.............. 9,132 - (9,132) -
Other assets and deferred
charges................ 3,038 (1,646) 1,392
Total assets.............. $912,408 $(212,473)$(120,524) $579,411

Adjustments to Record
Effectiveness of the Plan of
Reorganization
(In Thousands)
Effects Fresh
Predec- of Plan of Start Succes-
essor Reorgan- Report- sor
Company ization ing Company
Liabilities and
Shareholders' Equity:
Current liabilities:
Accounts payable..... $16,055 $ (128) $ - $ 15,927
Accrued liabilities.. 61,489 6,034 1,195 68,718
Other current
liabilities........ 2,471 523 - 2,994
Total current liabilities 80,015 6,429 1,195 87,639

Asset proceeds notes of
liquidating subsidiary - 112,000 - 112,000
(See Note 5)
Senior notes payable - 78,000 - 78,000
Production payment - 18,463 - 18,463
Deferred income taxes 3,506 - 1,494 5,000
Postretirement benefits
other than pensions... 142,715 - (17,455) 125,260
Other liabilities.... 31,565 12 5,808 37,385
Pensions - - 22,351 22,351
Liabilities subject to
Chapter 11 proceedings.. 620,942 (620,942) - -
Equity:
Predecessor Company:
Redeemable preferred
stock............... 37,500 (37,500) - -
Non-redeemable preferred
stock 244 (244) - -
Common stock....... 18,103 (18,103) - -
Additional paid-in
capital........... 239,874 291 (240,165) -
Retained earnings... (204,327) 127,229 77,098 -
Pension liability
adjustment........ (21,157) - 21,157 -
Treasury stock, at
cost.............. (36,572) 36,572 - -
Successor Company:
Common Stock...... - 12,000 - 12,000
Warrants.......... - 15,613 15,613
Additional paid-in
capital.......... - 57,707 7,993 65,700
Total liabilities and
shareholders' equity. $912,408($212,473)($120,524) $579,411

The following entries record the provisions of the plan and the
adoption of fresh-start reporting:

Entries to record debt discharge: Debit Credit

Liabilities subject to Chapter 11
proceedings $584,016,000
Cash $200,451,000
Asset proceeds notes of
liquidating subsidiary (See Note 5) 112,000,000
Senior debt 78,000,000
Common stock 10,200,000
Additional paid-in-capital 55,845,000
Gain on discharge of
prepetition liabilities 127,520,000
$584,016,000 $584,016,000

Entries to record exchange of stock for stock:

Preferred stock $ 37,744,000
Common stock (old) 18,103,000
Treasury stock $ 36,572,000
Common stock (new) 1,800,000
Warrants to purchase common stock 15,613,000
Additional paid-in-capital 1,862,000
$ 55,847,000 $ 55,847,000

Entries to record other effects of the plan:

Inventories $ 5,248,000
Net assets of liquidating
subsidiary 208,668,000
Other current assets 12,391,000
Liabilities subject to Chapter 11
proceedings 36,926,000
Reorganization expenses 291,000
Cash and marketable securities $ 7,868,000
Accounts receivable 13,047,000
Current assets of assets
held for sale 22,991,000
Assets held for sale 66,024,000
Notes receivables 4,860,000
Joint ventures 65,571,000
Property, plant & equipment 57,968,000
Accrued expenses and accounts payable 5,906,000
Other current liabilities 523,000
Production payment 18,463,000
Other liabilities 12,000
Additional paid-in capital 291,000
$263,524,000 $263,524,000
<PAGE>
Entries to record the adoption of fresh-start reporting and
to eliminate the deficit:
Debit Credit
Reorganization value in excess
of amounts allocable to
identifiable assets $14,372,000
Postretirement benefits other than
pensions 17,455,000
Gain on discharge of prepetition
liabilities 127,520,000
Additional paid-in capital 232,172,000
Inventories $10,589,000
Other current assets 3,120,000
Net assets of liquidating
subsidiary 96,668,000
Joint ventures 6,334,000
Property, plant & equipment 7,407,000
Cost in excess of net assets
and deferred charges 9,132,000
Other assets and deferred charges 1,646,000
Accrued expenses and accounts payable 1,195,000
Pensions 22,351,000
Other liabilities 5,808,000
Deferred income taxes 1,494,000
Pension liability adjustment 21,157,000
Accumulated deficit 204,618,000
$391,519,000 $391,519,000

The company's emergence from its Chapter 11 proceedings resulted in
a new reporting entity with no retained earnings or accumulated
deficit as of March 31, 1994. Accordingly, the company's consolidated
financial statements for periods prior to March 31, 1994 are not
comparable to consolidated financial statements presented on or
subsequent to March 31, 1994. A black line has been drawn on the
accompanying consolidated financial statements to distinguish between
the pre-reorganization and post-reorganization company.

Pro Forma Information

The following pro forma condensed financial information of the company
and its subsidiaries illustrates the estimated financial effects of
the implementation of the company's plan of reorganization (which
resulted in the end of the company's 1989 Restructuring Program) and
its adoption of fresh-start reporting. Pro forma statement of
operations data for the three months ended March 31, 1994 have been
presented as if the company had emerged from Chapter 11 bankruptcy
proceedings and adopted fresh-start reporting as of January 1, 1994.
The pro forma data is unaudited.

Lone Star Industries, Inc.
Pro Forma Statement of Operations (Unaudited)
For the Three Months Ended March 31, 1994
(In Millions)

Effect of Plan of
Reorganization
and Fresh Start ProForma
Historical Reporting Results

Revenues:
Net sales.....................$ 33.7 $ 11.6 $ 45.3
Joint venture income.......... 0.4 (0.3) 0.1
Other income.................. 2.7 (1.5) 1.2
36.8 9.8 46.6

Deductions from revenues:
Cost of sales................. 29.7 17.7 47.4
Recovery of litigation
settlement................... (6.5) 6.5 -
Selling, general and
administrative............... 9.9 (1.6) 8.3
Depreciation and depletion.... 6.7 (0.6) 6.1
Interest expense.............. 0.2 2.0 2.2
40.0 24.0 64.0

Loss before
reorganization items......... (3.2) (14.2) (17.4)
Reorganization items:
Adjustments to fair value..... (133.9) 133.9 -
Other......................... (13.4) 13.4 -
Total reorganization items.... (147.3) 147.3 -

Income (loss) before income
taxes and extraordinary item. (150.5) 133.1 (17.4)

Credit (provision) for income
taxes....................... (0.2) 5.4 5.2

Loss before extraordinary
item........................ (150.7) 138.5 (12.2)

Extraordinary item: gain on
discharge of prepetition
liabilities................. 127.5 (127.5) -
Loss before provision for
preferred dividends........ $ (23.2) $ 11.0 $ (12.2)

The above pro forma condensed financial information includes estimated
adjustments for the following items:

As a result of the implementation of the plan and adoption of fresh-
start reporting the company's 1989 restructuring program ended
effective as of the effective date of the plan. Operating results of
the cement plants at Pryor, Oklahoma and Maryneal, Texas, which were
formerly included in assets held for sale are included in the pro
forma consolidated operating results for the three months ended March
31, 1994 (See Note 11).

The operating results of the assets which were transferred to a
liquidating subsidiary for distribution for the benefit of unsecured
creditors, have been eliminated from the pro forma statement of
operations for the three months ended March 31, 1994.

In connection with the adjustment of the March 31, 1994 property,
plant and equipment balances to reflect the estimated values of the
assets under fresh-start reporting, the pro forma consolidated
operating results for the three months ended March 31, 1994 have been
adjusted to include the estimated change in depreciation expense
related to the new values.

Interest expense related to long-term debt, including the senior
unsecured notes of the reorganized company has been included in the
pro forma statement of operations for the three months ended March 31,
1994.

The provision for preferred dividends for the three months ended March
31, 1994 has been eliminated from the statement of operations as
common and preferred shareholders' equity of the old company has been
eliminated and replaced with common equity of the new company as of
March 31, 1994.

All Chapter 11 reorganization items included in the statement of
operations for the three months ended March 31, 1994 have been
eliminated.

The extraordinary gain on discharge of prepetition liabilities has
been eliminated.

The pro forma statement of operations has been adjusted to reflect the
reduction in expenses resulting from settlements, including
settlements reached with the Pension Benefit Guaranty Corporation and
retirees in accordance with the requirements of fresh-start reporting.

Cost of sales has been adjusted to reflect the company's change in its
method of accounting for inventory for interim reporting purposes and
the expensing of $8.4 million of deferred costs in accordance with the
adoption of fresh-start reporting. (See Note 15). In addition, cost
of sales has been adjusted to reflect $1.5 million of costs related
to its construction aggregates barges which were deferred during the
first quarter of 1994 and subsequently written-off in accordance with
fresh-start reporting. Similar costs will be incurred and expensed
in future years.

The following pro forma condensed financial information for the six
months ended June 30, 1994 illustrates the estimated operating results
as if the company had emerged from its Chapter 11 proceedings and
adopted a fresh-start reporting as of January 1, 1994 by combining the
proforma results for the three months ended March 31, 1994 and the
actual results for the three months ended June 30, 1994. Because of
the seasonality of the company's business, interim results are not
necessarily indicative of full year results.

Lone Star Industries, Inc.
Pro Forma Statement of Operations (Unaudited)
For the Six Months Ended June 30, 1994
(In Millions)

Proforma Actual Proforma
Results Results Results
for the for the for the
Three Three Six
Months Months Months
Ended Ended Ended
March 31, June 30, June 30,
1994 1994 1994

Revenues:

Net sales........................$ 45.3 $ 87.0 $ 132.3
Joint venture income............. 0.1 1.3 1.4
Other income..................... 1.2 0.8 2.0
46.6 89.1 135.7
Deductions from revenues:
Cost of sales.................... 47.4 61.4 108.8
Selling, general and
administrative................. 8.3 7.5 15.8
Depreciation and depletion....... 6.1 6.0 12.1
Interest expense................. 2.2 2.2 4.4
64.0 77.1 141.1

Income (loss) before income
taxes..........................$ (17.4) $ 12.0 (5.4)

Credit for income taxes *........ 1.6

Net (loss)....................... $ (3.8)

* The credit for income taxes is based on a pro forma tax rate of
30% for the year which includes the pro forma first quarter loss
and the effect of percentage depletion.

Note 5 - Rosebud Holdings, Inc. Liquidating Subsidiary

As part of the plan, Lone Star transferred on April 14, 1994 certain
non-core assets and their related liabilities to Rosebud Holdings,
Inc., a wholly-owned liquidating subsidiary, and its subsidiaries
(collectively "Rosebud"). The assets transferred consist of the
company's interests in the RMC LONESTAR, Lonestar Falcon and Hawaiian
Cement partnerships, cement plants located in Santa Cruz, California,
and Nazareth, Pennsylvania, certain promissory notes executed by RMC
LONESTAR, certain surplus real estate, the company's interest in any
recovery resulting from the litigation against Northeast Cement
Company and its affiliates, Lafarge Corporation, and Lafarge Canada,
Inc., certain other miscellaneous assets including a note receivable
and certain litigation and insurance claims, and a $5,000,000 cash
investment by the company to be used for working capital purposes.
The company is under no obligation to fund additional Rosebud working
capital requirements.

It was estimated by the company in connection with the plan that
disposition of the non-core assets would generate, over time, gross
proceeds of approximately $113,000,000 to $170,000,000. Lone Star's
investment in Rosebud is included in Lone Star's June 30, 1994 fresh-
start balance sheet at $116,000,000, which is the present value of
estimated net proceeds generated by the sale of assets and collection
of insurance claims and cash generated from operations, and was
determined by using the middle of the range of the proceeds contained
in the plan, discounted at 14%, plus cash, marketable securities and
escrow deposits at June 30, 1994. The increase of $4.0 million from
March 31, 1994 is primarily due to the accretion of assets reflecting
the shorter time period used in determining the present value. Other
than litigation against certain insurance companies, this amount does
not include any amount for potential recovery from any litigation
including the Northeast Cement Company litigation (See Note 19).

At the effective date of the plan, Rosebud issued asset proceeds notes
in the aggregate principal amount of $138,118,000. The asset proceeds
notes bear interest at a rate of 10% per annum payable in cash or in
additional asset proceeds notes, in semi-annual installments. The
asset proceeds notes are to be repaid as Rosebud's assets are disposed
of and proceeds, if any, are received in connection with the
litigation transferred to Rosebud. All net cash proceeds less a
$5,000,000 cash reserve are to be deposited in a cash collateral
account for distribution to the noteholders. The asset proceeds notes
mature on July 31, 1997. These notes are guaranteed, in part, by Lone
Star. In the event that, at the maturity date, the aggregate amounts
of all cash payments of principal and interest on the asset proceeds
notes is less than $88,118,000, the guarantee is payable in either
cash, notes or a combination thereof to cover the shortfall between
the actual payments and $88,118,000 dollar for dollar plus interest
provided however that the amount paid pursuant to the guarantee cannot
exceed $28,000,000. The asset proceeds notes are recorded on Lone
Star's June 30, 1994 balance sheet at an amount equal to the
investment in Rosebud of $116,000,000.

In June 1994, a subsidiary of Rosebud sold all of its interest in a
cement plant located in Santa Cruz, California for $33,063,000. The
net proceeds from the sale, after making provisions for an
environmental reserve for landfill and other costs related to the
transaction, are being used to redeem a portion of the outstanding
asset proceeds notes on a pro rata basis and to pay interest on the
redeemed notes through the date of redemption. $31,719,000 has been
transferred to the collateral agent who will make payments to note
holders on August 19, 1994.

In addition, in July 1994, Rosebud reached final agreements with all
but one insurance carrier involved in litigation related to the
reimbursement of defense costs. Rosebud will receive $5,300,000 from
the insurance carriers involved in the settlements.

Note 6 - Production Payment

As part of the plan, the company's production payment agreement terms
were revised as of April 14, 1994. In connection therewith, a new
note was issued, with an outstanding principal balance of $20,963,000
as of that date, and which bears interest at the company's option at
a rate of either prime or LIBOR plus 1.75% through December 31, 1995
and either prime plus .25% or LIBOR plus 2.5% beginning on January 1,
1996. The principal balance is payable semi-annually through July 31,
1998 in increasing installments.

Note 7 - Revolving Credit Line

Upon emergence from Chapter 11, the company entered into a three year
$35,000,000 revolving credit agreement which is collateralized by
inventory, receivables, collection proceeds and certain intangible
assets. The company's borrowings under this agreement are limited to
55% of eligible inventory plus 85% of eligible receivables. Advances
under the agreement bear interest at a rate of either prime plus 1.25%
or LIBOR plus 3%. A fee of .50% per annum is charged on the unused
portion of the credit line. There was no outstanding balance at June
30, 1994.

The company's financing agreements contain restrictive covenants
which, among other things, restrict the payment of cash dividends.

Note 8 - Senior Unsecured Notes

Upon emergence from its Chapter 11 proceedings, the company issued
$78,000,000 of ten year senior unsecured notes. The notes bear
interest at a rate of 10% per annum, payable semi-annually.

Note 9 - Stock Options

Upon emergence from Chapter 11 proceedings, the board of directors of
the company adopted the Lone Star Management Stock Option Plan
("Management Plan") and the Lone Star Industries, Inc. Directors'
Stock Option Plan ("Directors' Plan). Both plans were ratified by the
company's shareholders at the 1994 Annual Meeting. Total options
authorized for grant are 700,000 and 50,000 under the Management and
the Directors' Plans, respectively. In June 1994, options to purchase
common stock for 700,000 shares at an exercise price of $15.375 and 6,000
shares at an exercise price of $15.6875 were granted under the
Management and Directors' Plans, respectively.

Note 10 - Reorganization Items

The effects of transactions occurring as a result of the Chapter 11
filings have been segregated from ordinary operations in the
accompanying consolidated statements of operations. Such items for
the three months ended March 31, 1994 and the three and six months
ended June 30, 1993 include the following (in thousands):

For the For the For the
Three Three Six
Months Months Months
Ended Ended Ended
March 31, June 30, June 30,
1994 1993 1993
Professional fees and administrative
expenses.........................$ (15,431) $(3,578) $(7,329)
Interest income.................... 2,035 989 2,132
(13,396) (2,589) (5,197)
Loss on sale of assets............ - (44,889) (44,889)
Adjustments to fair value........ (133,917) - -
$(147,313) $(47,478) $(50,086)

Note 11 - Restructuring Program

In November 1989, the Lone Star Board of Directors approved a
restructuring program which included the proposed sale of certain
facilities and marginal businesses, interests in certain joint
ventures, an investment in preferred stock, surplus real estate, and
certain other assets. The assets held for sale, including related
current and other assets, were classified as assets held for sale in
the accompanying consolidated December 31, 1993 balance sheet at their
estimated net realizable values. As a result of the effectiveness of
the company's plan of reorganization, certain assets included in the
restructuring program have been transferred to Rosebud to be sold with
the proceeds to be used to pay off the asset proceeds notes, and other
assets are being retained by the company.

In accordance with the plan, the company will retain the Pryor,
Oklahoma and Maryneal, Texas cement plants. The results from the
operations which the company is retaining, but which were previously
classified as assets held for sale, consist of net sales of
$14,030,000, $16,831,000 and $28,060,000 for the three months ended
March 31, 1994 and the three and six months ended June 30, 1993,
respectively and pre-tax income of $1,278,000, $1,799,000 and
$2,999,000, the three months ended March 31, 1994 and the three and
six months ended June 30, 1993, respectively.

Note 12 - Kosmos Cement Company

Summarized financial information of Kosmos Cement Company, a 25% owned
partnership which produces and sells cement in Kentucky and
Pennsylvania, for the three months ended June 30, 1994 and March 31,
1994 and the three and six months ended June 30, 1993 is as follows
(in thousands):

For the For the For the For the
Three Three Three Six
Months Months Months Months
Ended Ended Ended Ended
June 30, March 31, June 30, June 30,
1994 1994 1993 1993

Net sales............. $19,619 $ 6,825 $18,626 $26,077
Gross profit.......... $ 3,956 $ 159 $ 3,319 $ 3,462
Income (loss) before
cumulative effect of
change in accounting
principles........... $ 4,284 $ (59) $ 3,431 $ 3,514
Cumulative effect of
change in accounting
principles............ $ - $ - $ - $(3,126)
Net income.(loss)...... $ 4,284 $ (59) $ 3,431 $ 388

In the first quarter of 1993, the Kosmos Cement Company partnership
adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other than
Pensions". As a result, the company recognized a charge of $782,000
representing its share of the partnership's cumulative effect of the
change in accounting principles.

Note 13 - Cash and Cash Equivalents

Cash equivalents include the company's marketable securities which are
comprised of short-term, highly liquid investments with original
maturities of three months or less. Interest paid during the three
months ended June 30, 1994, the three months ended March 31, 1994, and
the three and six months ended June 30, 1993 was $57,000, $20,000,
$31,000 and $63,000, respectively. Income taxes paid during the three
months ended June 30, 1994, the three months ended March 31, 1994 and
the three and six months ended June 30, 1993 were $57,000, $756,000,
$51,000, and $77,000, respectively.

Note 14 - Interest

Interest expense of $2,259,000, $271,000, $482,000, and $1,001,000 has
been accrued for the three months ended June 30, 1994, the three
months ended March 31, 1994 and the three and six months ended June
30, 1993 respectively. Interest capitalized during the three months
ended June 30, 1994, the three months ended March 31, 1994 and the
three and six months ended June 30, 1993 was $40,000, $38,000, $54,000
and $100,000, respectively.

The filed companies stopped accruing interest on all of their
unsecured debt as of the petition date. The amount not accrued for
the three months ended March 31, 1994 and the three and six months
ended June 30, 1993 was $7,398,000, $7,427,000 and $14,853,000
respectively.

Note 15 - Inventories

Effective April 1, 1994, the company adopted, on a prospective basis,
a change in the method of accounting for inventory for interim
reporting purposes. Under the previous method, planned capacity
variances were deferred in periods of low production and absorbed
later in the year. Under the new method, the expense resulting from
capacity variances will be recognized as incurred. Fresh-start
adjustments recorded as of March 31, 1994 included the write-off of
$8,391,000 of deferred costs related to operations included in
predecessor company results.

Note 16 - Earnings Per Share

Due to the company having common stock equivalents in excess of 20%
of the number of shares of outstanding common stock, primary and fully
diluted earnings per share of the successor company are calculated
using the modified treasury stock method in accordance with Accounting
Principles Board Opinion No. 15, "Earnings per Share", and are based
on adjusted weighted average shares outstanding of 13,774,000 and
adjusted net income of $8,585,000.

Note 17 - Sale of Florida Cement Plant

In June 1994, the company sold its interest in a cement plant located
in Florida for $21,750,000. The company did not recognize any gain
or loss on the transaction.

Note 18 - Environmental Matters

The company is subject to federal, state and local laws, regulations
and ordinances pertaining to the quality and the protection of the
environment. Such environmental regulations not only affect the
company's operating facilities but also apply to closed facilities and
previously owned and operated properties.

While it is not possible to predict with accuracy the range of future
costs for the company's program of compliance with current or future
environmental regulations or their expected impact on the company, the
capital, operating and other costs of the program could be
substantial.

In order to save on fuel costs, the company is blending and burning
hazardous waste fuels at two of its cement manufacturing plants. This
process involves obtaining permits and complying with applicable state
and federal environmental regulations. While the company believes it
is in substantial compliance with such regulations, changes in them
or in their interpretation by the relevant agencies or courts could
limit, effectively prohibit the use of, or make prohibitive the cost
of using, hazardous waste fuels, thus depriving the company of the
economic benefits of its waste fuel program. In February 1994, the
United States Court of Appeals for the District of Columbia Circuit
(i) vacated and remanded a facility-specific standard promulgated by
the U.S. Environmental Protection Agency ("U.S. EPA") for ascertaining
the presence of products of incomplete combustion designed for wet
process cement kilns that burn hazardous waste fuels, ruling that the
standard had been promulgated without sufficient notice, but (ii)
upheld related standards applicable to the industry. In April 1994,
the Circuit Court denied plaintiffs' motion to reconsider its
decision. Unless the Circuit Court's decision (from which a petition
for certiorari to the U.S. Supreme Court has been filed) is reversed
or a modification of the remanded standard is adopted by U.S. EPA, or
the company can institute operational changes which will enable it to
meet the industry standards upheld by the Circuit Court, the company's
Greencastle, Indiana cement plant may have to cease or curtail its use
of hazardous waste fuels. Meanwhile, the Circuit Court's ruling is
stayed pending the Supreme Court's decision on plaintiffs' petition
for certiorari, and the company is investigating modifications to
operations at this plant that would enable it to continue to burn
hazardous waste fuels under the surviving standards. The Circuit
Court's ruling has no impact upon the current use of hazardous waste
fuels at the company's Cape Girardeau, Missouri cement plant.

Since 1991, federal and state environmental agencies have conducted
inspections and instituted inquiries and administrative actions
regarding waste fuel operations at both of the company's waste fuel
burning facilities. In the first half of 1994 the company paid amounts
totalling approximately $402,000 representing negotiated settlements
with federal and state environmental authorities of administrative
actions that alleged violations of regulations pertaining to the
handling and burning of hazardous waste fuels at the Greencastle
plant. In March 1994, U.S. EPA, Region 7, instituted an administrative
proceeding regarding waste fuel operations at the company's Cape
Girardeau plant, seeking over $500,000 in civil penalties. The
company is holding settlement negotiations with officials of Region
7.

Cement kiln dust, ("CKD") a by-product of cement manufacturing, is
currently exempted from environmental regulation by the Bevill
Amendment to the Federal Resource Conservation and Recovery Act
pending the completion of a Congressionally-mandated study and
regulatory determination by U.S. EPA regarding the need for regulatory
controls on the management, handling and disposal of cement kiln dust.
The regulatory determination is scheduled to be made in January 1995.
It is impossible at this time to predict with accuracy what increased
costs (or range of costs), if any, changes in regulatory control of
CKD would impose on the company.

The company and certain of its subsidiaries have been identified as
parties that may be held responsible by various federal, state and
local authorities with respect to contamination at certain sites of
former operations or sites where waste materials from the company or
its subsidiaries, such as equipment containing polychlorinated
biphenyls, were deposited, including sites placed on the National
Priority List ("NPL") pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"). These include
sites located: in Utah (seven sites, including three NPL sites
discussed below); Illinois (one NPL site); Texas (two sites, including
one NPL site); Missouri (one NPL site); Washington (two NPL sites);
Minnesota (two NPL sites); Colorado (one NPL site); Florida (four
sites, including two related NPL sites and two non-NPL sites described
below); California (one non-NPL site described below); Pennsylvania
(one NPL site); and Louisiana (one NPL site).

Except for the Utah NPL sites described below, all of the NPL sites
referred to above involve numerous potentially responsible parties
("PRP's") and factual investigation indicates that in each case the
company's or subsidiary's contributions of waste were small in
comparison to those of other PRP's. Except for the Utah sites, no
timely proofs of claim were filed with the Bankruptcy Court by the
environmental regulatory agencies with respect to NPL sites, none of
which are currently owned or leased by the company or its
subsidiaries. However, a number of PRP's filed timely proofs of claim
with the Bankruptcy Court with respect to various NPL sites; these
claims have either been (i) allowed in full as de minimis, (ii)
resolved through negotiation and allowed as general unsecured claims,
or (iii) objected to and disallowed in the company's Chapter 11
proceedings.

Following are descriptions of proceedings involving certain NPL and
non-NPL sites mentioned above:

In July 1989, the company was advised by U.S. EPA, Region 8 that it
was a PRP under CERCLA with respect to three adjoining sites in Salt
Lake City, Utah on which CKD and small amounts of chrome-containing
kiln brick from the company's Utah cement plant had been deposited.
In July 1990, the U.S. EPA and the Utah Department of Health issued
a record of decision selecting a remedial action calling for removal
of the CKD, over a period of time, to a location to be selected in the
Salt Lake City vicinity where an industrial type landfill would be
constructed. The company has reached an agreement with the U.S.
Department of Justice, U.S. EPA, the U.S. Department of the Interior,
the Utah Department of Environmental Quality and Davis County, Utah
regarding a settlement pursuant to which among other things, U.S. EPA
will receive a general unsecured claim in the company's bankruptcy
proceedings in exchange for releases from further liability for
investigation and clean-up costs and natural resource damage claims
and protection against third-party claims for investigation and clean-
up costs. The agreement has been executed by the company and by the
respective governmental agencies and is subject to a CERCLA-mandated
public notice and comment period and approval by the company and the
Bankruptcy Court.

In October 1989, the company commenced an action in United States
District Court in Utah seeking contribution from the two principal
owners of these Utah NPL sites, who had also been named PRP's, for
their share of investigative clean-up costs. Following pre-trial
litigation, settlement agreements with the landowners were negotiated
and approved by the Bankruptcy Court, pursuant to which the landowners
receive general unsecured claims in the company's bankruptcy
proceedings and all their claims against the company were dismissed
with prejudice, subject to the landowners' reaching settlements with
U.S. EPA, the negotiation of which is continuing.

In a transaction in the early 1970's, the company acquired
subsidiaries that conducted woodtreating or wood-dipping operations
at two sites in Florida. Contamination from chemicals at these non-
NPL sites has been the subject of various proceedings by federal,
state or local environmental authorities, as well as lawsuits
involving private parties.

In 1992, pursuant to an Administrative Order on Consent with U.S. EPA,
Region 4, entered into prior to the company's Chapter 11 filing, a
clean up of soils and water in excavated areas at the Dania, Florida
site was completed by a subsidiary of the company and approved by U.S.
EPA in 1992. The subsidiary has entered into a stipulation approved
by the Bankruptcy Court, with the State of Florida Department of
Environmental Protection ("FDEP") (which filed a claim in the
company's bankruptcy proceedings) committing to undertake a
groundwater monitoring program and, if necessary, groundwater
treatment in settlement of the State's proof of claim it filed in the
bankruptcy proceedings. The subsidiary is currently negotiating a
consent order with FDEP setting forth the monitoring and possible
remediation efforts in detail. This site has been transferred to
Rosebud pursuant to the plan.

In 1992, pursuant to a stipulation in Florida state court, executed
prior to its Chapter 11 filing, a subsidiary of the company completed
the clean-up of soils under Florida environmental regulations at a
site in Dade County, Florida which it had leased for woodtreating
operations in the 1960's and 1970's. In settlement of the proofs of
claim filed in the company's bankruptcy proceedings, the subsidiary
has executed a stipulation with state and county environmental
authorities regarding entry into a consent order whereby the
subsidiary has committed to undertake further groundwater
investigation of the site and, if necessary, soil remediation,
groundwater treatment and groundwater monitoring programs all within
a specified monetary cap.

Prior to its Chapter 11 filing, the subsidiary filed a lawsuit in
federal district court in Florida against other PRP's, including past
and present owners of the site, for cost recovery and contribution
under CERCLA. Two of the PRP's filed counterclaims and proofs of
claim in the bankruptcy proceedings. The subsidiary has entered into
a settlement agreement, approved by the Bankruptcy Court, with the
PRP's pursuant to which they will reimburse the subsidiary for a
portion of its clean-up costs and dismiss their federal and state
court and claims filed in the bankruptcy proceedings, with prejudice
and the subsidiary will dismiss its court claims against them with
prejudice, while committing to undertake the further investigation
and, if necessary, remedial work under the Bankruptcy Court
stipulation with state and county environmental authorities described
above.

In August 1992, Santa Cruz County, California authorities served the
company with written notice that it had commenced a criminal and civil
investigation of long-term waste disposal practices at a site formerly
owned by the company and now owned by a partnership in which a
subsidiary of Rosebud holds a partnership interest. The investigation
and negotiations by the company and others with interests in the site
culminated in the resolution of the matter by the concurrent filing
of a complaint and stipulated final judgment. Pursuant to the
settlement, certain county and state authorities received an
administrative priority claim in the company's bankruptcy proceedings
totaling $150,000 and all claims raised in the complaint were released
and dismissed. Rosebud Holdings, Inc. has also committed to complete
and is presently undertaking the closure of a former waste landfill
area on the investigated site at an anticipated cost of approximately
$1,200,000, which is for the account of the Rosebud subsidiary. The
closure work is not expected to commence until 1995.

Note 19 - Litigation

Between 1983 and 1989 a Lone Star subsidiary (among those who filed
Chapter 11 petitions) manufactured and sold approximately 500,000
concrete railroad crossties to various railroads. In 1989 and early
1990 purchasers of most of the crossties sued Lone Star and such
subsidiary, alleging that the crossties were defective because of
cracking, and seeking substantial compensatory and punitive damages.
The suits by four purchasers, which sought damages of over
$200,000,000 were consolidated for pre-trial purposes in the U.S.
District Court for the District of Maryland under the Federal Courts
Multi-District Rules. In addition, an administrative proceeding was
brought by the Baltimore Mass Transit Authority ("MTA"), involving
crossties sold to the MTA, and an MTA procurement officer found Lone
Star and its subsidiary liable to the MTA for damages in an amount of
approximately $10,000,000.

Lone Star determined that it would be in the best interest of the
company to settle the proceedings brought by the railroads, and in
late 1992 Lone Star entered into separate agreements with each of the
four purchasers providing for the release of their respective claims
against the company and its subsidiaries relating to the crossties,
and for the railroads to receive in the aggregate allowed liquidated
unsecured claims in its bankruptcy proceedings of $57,200,000, for one
railroad to receive a cash payment of $5,000,000 and for the payment
of $4,384,000 to another railroad from an escrow fund established to
hold the proceeds from the sale of property by a Lone Star subsidiary
on which that railroad had obtained liens in the litigation. These
agreements have been approved by the Bankruptcy Court, and the
$9,384,000 cash payments have been made. The claims were treated in
accordance with the provisions of the company's plan.

In 1989 Lone Star and its subsidiary filed a plenary action in the
Maryland Federal District Court, and third party complaints in other
actions, against Northeast Cement Co. and its affiliates, Lafarge
Corporation and Lafarge Canada, Inc. ("Lafarge"), alleging breach of
warranties in connection with the purchase from Northeast Cement Co.
by Lone Star's subsidiary of the cement used to manufacture
substantially all of the crossties involved in the above proceedings
and claiming a fraudulent sale of defective cement. The plenary
action and the third party complaints sought compensatory damages
growing out of the various crosstie actions, including the foregoing
settlements and defense costs at approximately $15,750,000. The
plenary action brought against the cement supplier was tried before
a jury in the Maryland Federal District Court in late 1992. The jury
found that Lone Star had proven its claims of fraud, breach of certain
warranties and negligence, but Lone Star's recovery was limited to
$1,213,000 for direct lost profits due to limitations on the awarding
of damages in the trial judge's instructions to the jury. Lone Star
believed that these instructions were in error and filed a motion for
a new trial on damages based on the judge's refusal to permit the jury
to even consider certain damages. Lafarge also moved for judgment as
a matter of law and for a new trial. Following a hearing on March 5,
1993 the judge denied these motions. Lone Star consequently appealed
to the Federal Circuit Court of Appeals for the Fourth Circuit for a
new trial on the issue of damages. Lafarge also filed an appeal. On
April 7, 1994 the Fourth Circuit Court of Appeals vacated the judgment
of the District Court and remanded the case for a new trial on all
issues relating to both liability and damages and permitted the
company to amend its complaint to add a claim of violation of a
Massachusetts consumer protection law which allows for attorney fees
and doubling and trebling of damages. A request by Lafarge for a
rehearing of that decision by the Fourth Circuit Court of Appeals en
banc was denied and new trial is scheduled for October of this year.
The rights to any recovery of damages in this action have been
assigned to Rosebud pursuant to the plan.

The primary insurance carrier insuring the company has asserted that
Lone Star has only limited insurance coverage for the various crosstie
claims and, while agreeing that certain defense costs are covered by
insurance, did not agree to Lone Star's position as to the amount of
defense costs covered. Consequently, in 1989 Lone Star began an
action in the Superior Court of the State of Delaware against the
insurance companies (both primary and excess carriers) which insured
it during the 1983 to 1989 period, seeking a declaratory judgment as
to their duty under the applicable policies to indemnify Lone Star for
all damages incurred by it in the various crosstie proceedings which
includes the settlements of $66,584,000 and as to the duty of the
primary insurance carrier to pay the costs of defending those
proceedings. The Superior Court made a preliminary ruling that the
primary insurance carrier has a duty to pay certain of the costs of
the company's defense in the crosstie proceedings. With the approval
of the Bankruptcy Court, Lone Star settled its claims against the
primary insurance carrier for defense costs for payments to Lone Star
of $14,733,000 in cash; and setoffs to the carrier's claim in the
bankruptcy of approximately $4,778,000.

Lone Star, with the approval of the Bankruptcy Court, settled its
indemnity action against the primary insurance carrier in March 1994
for $6,500,000 as a set-off to a claim filed in the company's
bankruptcy proceedings by that carrier. The rights to any additional
recoveries from insurance carriers has been assigned to Rosebud
pursuant to the plan. Rosebud and certain of the remaining insurance
carriers have negotiated a settlement of the indemnity action which
provides for payments to Rosebud of $5,300,000. Pre-trial preparation
in the action was stayed by agreement of the parties during these
negotiations. Rosebud is in the process of continuing the indemnity
action against any insurance carriers as to which no settlement has
been reached and will also seek to recover the costs of the Lafarge
action.

In addition, a settlement with all parties has been reached in the
consolidated shareholders' class action lawsuits brought against the
company and certain of its past and present officers and directors.
The settlement involves the actions entitled Cohn v. Lone Star
Industries, Inc., et al. filed in November 1989 on behalf of persons
who purchased Lone Star common stock between February 8, 1988 and
November 16, 1989 and the action entitled Garbarino, et ano. v.
Stewart, et al. filed in December 1990 on behalf of persons who
purchased Lone Star common stock between November 16, 1989 and
December 9, 1990. The settlements were adopted and approved by an
order and final judgment of a magistrate judge and the order and
judgment was in turn approved and adopted by an order of the U.S.
District Court for the District of Connecticut on January 20, 1994.

The terms of the settlement agreement, which was entered into by Mr.
James E. Stewart, the former Chairman and Chief Executive Officer of
Lone Star, includes the dismissal of the claims against Mr. Stewart
and the officers and directors of Lone Star and the agreement of Lone
Star's directors and officers liability insurers to pay $40,000,000
to establish settlement funds on behalf of the plaintiff classes. In
order to participate in these settlement funds, eligible plaintiffs
were required to submit a proof of claim by July 29, 1994.
Distribution from these settlement funds is to take place on or about
October 29, 1994. Lone Star was dismissed without prejudice from the
Cohn action, the only action in which it was named as a defendant by
the plaintiffs. The settlement does not constitute an admission by
Lone Star, or any of its past and present officers, directors and
employees of any liability or wrongdoing on their part. In connection
with the company's bankruptcy proceedings, in order to resolve the
claims filed by both plaintiff classes without admitting any
liability, a claim in the aggregate of $2,500,000 was allowed to the
plaintiff classes by the company. The proceeds from the claim have
been added to the settlement funds for distribution in October 1994.

The company, along with numerous other parties, has been named a
defendant in a series of toxic tort lawsuits filed in a Texas state
court commencing in March, 1994 in which multiple plaintiffs claim to
have suffered injury from the proximity of deposits of toxic wastes
or substances at a site located near Galveston, Texas. The wastes
or substances are alleged to have been deposited at the site starting
in the 1940's. The company has retained Texas counsel and has filed,
or is in the process of filing, answers denying the allegations of the
various complaints. The company intends to contest these lawsuits
vigorously. The company's insurance carriers have been notified of
the claims but the extent of the company's insurance coverage, if any,
for these lawsuits has not yet been determined.

The undersigned registrant further hereby amends its Quarterly Report
on Form 10-Q for the Period ended June 30, 1994 by the addition of Index of
Exhibits and the Exhibits referred to in said Index, Exhibits 3(i)A to and
including Exhibit 11.

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Amendment No. 1 to be signed on its
behalf by the undersigned thereunto duly authorized.

LONE STAR INDUSTRIES, INC.
(Registrant)

By: John S. Johnson
John S. Johnson
Vice President

By: William E. Roberts
William E. Roberts
Vice President, Chief
Financial Officer and
Controller

August 16, 1994

INDEX OF EXHIBITS TO QUARTERLY REPORT ON
FORM 10-Q FOR THE QUARTERLY PERIOD
ENDING JUNE 30, 1994
OF LONE STAR INDUSTRIES, INC.

Item
No.

1) 3(i)A Amended and Restated Certificate of
Incorporation.

2) 3(i)B Certificate of Correction of Amended and Restated
Certificate of Incorporation.

3) 3(ii) By-Laws.

4) 4A Indenture dated as of March 29, 1994 between Lone
Star Industries, Inc. and Chemical Bank, as
Trustee, relating to the 10% Senior Notes Due
2003 of Lone Star Industries, Inc.

5) 4B Warrant Agreement dated April 13, 1994 between
Lone Star Industries, Inc. and Chemical Bank, as
Warrant Agent.

6) 4C Financing Agreement dated as of April 13, 1994
among Lone Star Industries, Inc., its subsidiary,
New York Trap Rock Corporation, and The CIT
Group/Business Credit, Inc.

7) 10A Indenture dated as of March 29, 1994 between
Rosebud Holdings, Inc. and its Subsidiaries and
Chemical Bank, as Trustee, relating to the 10%
Asset Proceeds Notes Due 1997 of Rosebud
Holdings, Inc.

8) 10B Guarantee Agreement dated as of March 29, 1994 by
Lone Star Industries, Inc. in favor of each and
every "Holder" of 10% Asset Proceeds Notes Due
1997 of Rosebud Holdings, Inc.

9) 10C Management Services and Asset Disposition
Agreement dated as of April 13, 1994 between Lone
Star Industries, Inc. and Rosebud Holdings, Inc.
and its subsidiaries.

10) 10D(i) Employment Agreement dated July 1, 1994 between
David W. Wallace and Lone Star Industries, Inc.

11) 10D(ii) Stock Option Agreement dated as of June 8, 1994
between David W. Wallace and Lone Star
Industries, Inc.

12) 10E(i) Employment Agreement dated July 1, 1994 between
William M. Troutman and Lone Star Industries,
Inc.

13) 10E(ii) Agreement dated April 15, 1994 between William M.
Troutman and Lone Star Industries, Inc.

14) 10E(iii) Stock Option Agreement dated as of June 8, 1994
between William M. Troutman and Lone Star
Industries, Inc.

15) 10F(i) Employment Agreement dated July 1, 1994 between
John J. Martin and Lone Star Industries, Inc.

16) 10F(ii) Stock Option Agreement dated as of June 8, 1994
between John J. Martin and Lone Star Industries,
Inc.

17) 10G Form of Indemnification Agreement entered into
between Lone Star Industries, Inc. and directors
and an executive officer.

18) 10H Form of "Change of Control" agreement for
executive officers of Lone Star Industries, Inc.

19) 10I Form of 25,000 shares stock option agreement for
executive officers of Lone Star Industries, Inc.

20) 10J Form of 75,000 shares stock option agreement for
executive officers of Lone Star Industries, Inc.

21) 10K Lone Star Industries, Inc. Rosebud Incentive
Plan.

11. Computation of earnings per common share.

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

LONE STAR INDUSTRIES, INC.

It is hereby certified that the present name of the
corporation
(hereinafter called the "corporation") is Lone Star
Industries, Inc.
The name under which the corporation was originally
incorporated is
LCE Corporation. The date of filing of the original
certificate of
incorporation with the Secretary of State of the State of
Delaware is
October 14, 1968.

The provisions of the restated certificate of
incorporation of
the corporation are hereby amended by striking out all of
the Articles
thereof and by substituting in lieu thereof the following:

FIRST: The name of the corporation is Lone Star
Industries, Inc.

SECOND: The registered office of the corporation
is to be
located at 1209 Orange Street, in the City of Wilmington,
County of
New Castle, State of Delaware. The name of its registered
agent at
that address is The Corporation Trust Company.

THIRD: The purpose of the corporation is to
engage in any
lawful act or activity for which corporations may be
organized under
the General Corporation Law of the State of Delaware.

FOURTH: The corporation shall have the authority
to issue
Twenty Five Million (25,000,000) shares of common stock, par
value one
dollar ($1.00) per share.

FIFTH: Whenever a compromise or arrangement is
proposed
between this corporation and its creditors or any class of
them and/or
between this corporation and its stockholders or any class
of them,
any court of equitable jurisdiction within the State of
Delaware may,
on the application in a summary way of this corporation or
of any
creditor or stockholder thereof or on the application of any
receiver
or receivers appointed for this corporation under the
provisions of
291 of Title 8 of the Delaware Code or on the application of
trustees in dissolution or of any receiver or receivers
appointed for
this corporation under the provisions of 279 of Title 8 of
the
Delaware Code order a meeting of the creditors or class of
creditors,
and/or of the stockholders of class of stockholders of this
corporation, as the case may be, to be summoned in such
manner as the
said court directs. If a majority in number representing
three
fourths in value of the creditors or class of creditors,
and/or of the
stockholders or class of stockholders of this corporation,
as the case
may be, agree to any compromise or arrangement and to any
reorganization of this corporation as consequence of such
compromise
or arrangement, the said compromise or arrangement and the
said
reorganization shall, if sanctioned by the court to which
the said
application has been made, be binding on all the creditors
or class
or creditors, and/or on all the stockholders or class of
stockholders,
of this corporation, as the case may be, and also on this
corporation.

SIXTH: To the fullest extent that elimination
or
limitation of the liability of directors is permitted by
law, as the
same is now or may hereafter be in effect, no director of
the
corporation shall be liable to the corporation or its
stockholders for
monetary damages for breach of his or her fiduciary duty as
a
director.

SEVENTH: The corporation shall, to the fullest
extent
permitted by law, as the same is now of may hereafter be in
effect,
indemnify each person (including the heirs, executors,
administrators
and other personal representatives of such person) against
expenses
including attorneys' fees, judgments, fines and amounts paid
in
settlement, actually and reasonably incurred by such person
in
connection with any threatened, pending or completed suit,
action or
proceeding (whether civil, criminal, administrative or
investigative
in nature or otherwise) in which such person may be involved
by reason
of the fact that he or she is or was a director or officer
of the
corporation or is or was serving any other incorporated or
unincorporated enterprise in such capacity at the request of
the
corporation.

EIGHTH: Unless, and except to the extent that
the by-laws
of the corporation shall so require, the election of
directors of the
corporation need not be by written ballot.

NINTH: The board of directors may from time to
time
adopt, amend or repeal the by-laws of the corporation,
subject to the
power of the stockholders to adopt any by-laws or to amend
or repeal
any by-laws adopted, amended or repealed by the board of
directors.

The authority for the making of this amendment and
restatement
of the certificate of incorporation is contained in a court
order
described in Section 303(c) of the Delaware General
Corporation Law.

IN WITNESS WHEREOF, this Amended and Restated
Certificate of
Incorporation has been executed and attested by the
corporation's duly
authorized officers this 13th day of April, 1994.

John J. Martin
Name: John J. Martin
Title:
Senior Vice President, General Counsel and Secretary

Attest:

John S. Johnson
Name: John S. Johnson
Title: Vice President and
Assistant Secretary

CERTIFICATE OF CORRECTION OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
LONE STAR INDUSTRIES, INC.
LONE STAR INDUSTRIES, INC., a corporation
organized and
existing under the laws of the State of Delaware (the
"Corporation"),
hereby certifies as follows:
1. The name under which the Corporation was
originally
incorporated is LCE Corporation which was changed to Lone
Star Cement
Corporation on May 28, 1969, and the name Lone Star Cement
Corporation
was changed to Lone Star Industries, Inc. on May 20, 1971.
The date
of the filing of the original Certificate of Incorporation
of the
Corporation with the Secretary of State of the State of
Delaware is
October 14, 1968. The Certificate of Incorporation was
amended and
restated on April 14, 1994.
2. The Amended and Restated Certificate of
Incorporation
was inaccurate insofar as it did not include a classified
board of
directors in Article EIGHTH thereof. The corrected Article
EIGHTH of
the Restated Certificate of Incorporation shall read in its
entirety
as follows:

EIGHTH: Unless, and except to the extent that
the by-laws
of the corporation shall so require, the election of
directors of the
corporation need not be by written ballot. The Board of
Directors
shall be divided into three classes of directors, each class
to be as
nearly equal in number of directors as possible. The
initial term of
office of each director in the first class will expire at
the annual
meeting of stockholders in 1994; the initial term of office
of each
director in the second class will expire at the annual
meeting of
stockholders in 1995; and the initial term of office of each
director
in the third class shall expire at the annual meeting of
stockholders
in 1996. At each annual election, commencing at the annual
meeting
of stockholders in 1994, the successors to the class of
directors
whose term expires at that time shall be elected to hold
office for
a term of three (3) years, and until their respective
successors shall
be elected and qualified, to succeed those directors whose
term
expires, so that the term of one class of directors will
expire each
year.
The authority for the making of this Certificate
of
Correction of the Amended and Restated Certificate of
Incorporation
is contained in a court order described in Section 303(c) of
the
Delaware General Corporation Law.
IN WITNESS WHEREOF, this Certificate of Correction
of the
Amended and Restated Certificate of Incorporation has been
executed
and attested by the corporation's duly authorized officers
this 29th
day of April, 1994.

John J. Martin
Name: John J. Martin
Title: Senior Vice President,
General Counsel and
Secretary

Attest:

John S. Johnson
Name: John S. Johnson
Title: Vice President and
Assistant Secretary

BY-LAWS

LONE STAR INDUSTRIES, INC.

ARTICLE I.
Offices.
Section 1. Principal Office. The principal
office of the
Corporation in the State of Delaware shall be in the City of
Wilmington, County of New Castle, and its resident agent
shall be The
Corporation Trust Company.
Section 2. Other Offices. The Corporation may
have offices
at any other place or places, as from time to time the Board
of
Directors may determine or the business of the Corporation
may
require.
ARTICLE II.
Meetings of Stockholders.
Section 1. Annual Meetings. The annual meeting
of the
stockholders for the election of directors and for the
transaction of
such other business as may come before the meeting shall be
held on
such date as may be fixed by the Board of Directors and
specified in
the notice thereof, or if not so fixed it shall be held on
the second
Thursday in May in each year, unless it is a legal holiday
under the
laws of the state where such meeting is to be held. If it
is a legal
holiday under the laws of that state, the meeting shall be
held on the
next succeeding business day which is not a legal holiday
under the
laws of that state.
Section 2. Special Meetings. Special meetings of
the
stockholders for any purpose or purposes, unless otherwise
prescribed
by statute, may be called at any time by the Chairman of the
Board or
by order of the Board of Directors. At any such special
meeting of
the stockholders, only such business shall be conducted as
shall have
been specified in the notice of meeting (or any supplement
thereto).
Section 3. Place of Meeting. Each meeting of
stockholders
of the Corporation shall be held at the place, within or
without the
State of Delaware, and at the hour specified in the notice
or waiver
of notice of the meeting.
Section 4. Notice of Meetings. Except as
otherwise
provided by law, notice of each meeting of the stockholders
shall be
given to each stockholder of record entitled to vote at such
meeting,
not less than ten nor more than sixty days before the day on
which the
meeting is to be held. Notice may be given by delivering a
written
or printed notice thereof to a stockholder personally, or by
mailing
such notice in a postage prepaid envelope addressed to a
stockholder
at his or her post-office appearing in the records of the
Corporation
or by transmitting notice thereof to a stockholder at such
address by
telegraph, cable, wireless, or other form of recorded
communication.
Except where expressly required by law, no publication of
any notice
of a meeting of stockholders shall be required. Notice of
any meeting
of stockholders shall not be required to be given to any
stockholder
who attends such meeting in person or by proxy without
protesting at
the beginning of the meeting that the meeting is not
lawfully called
or convened or who in person or by attorney duly authorized
to do so
waives such notice in writing or by telegraph, cable,
wireless or
other form of recorded communication, either before or after
such
meeting. Notice of any adjourned meeting of the
stockholders shall
not be required to be given, except where expressly required
by law.
Section 5. Quorum. At each meeting of the
stockholders,
except where other provision is made by law, presence in
person or by
proxy of the holders of a majority of the issued and
outstanding stock
of the Corporation entitled to vote at the meeting
constitutes a
quorum for the transaction of business. In the absence of a
quorum,
a majority in voting interest of the stockholders of the
Corporation
present in person or by proxy and entitled to vote, or, in
the absence
of all the stockholders entitled to vote, any officer
entitled to
preside at, or act as secretary of, such meeting shall have
the power
to adjourn the meeting from time to time, until stockholders
holding
the requisite amount of stock shall be present or
represented. At any
such adjourned meeting at which a quorum is present, any
business may
be transacted which might have been transacted at the
meeting as
originally called. No notice of an adjourned meeting need
by given
if the time and place are announced at the meeting at which
the
adjournment is taken unless the adjournment is for more than
30 days
or a new record date is fixed for the meeting.
Section 6. Organization. At each meeting of the
stockholders, the Chairman of the Board, or if he or she is
absent,
such person as may be designated by the Board of Directors,
or if such
person is absent, another officer of the Corporation chosen
as
chairman of such meeting by a majority in voting interest of
the
stockholders present in person or by proxy and entitled to
vote at the
meeting, or if all the officers of the Corporation are
absent, a
stockholder holding of record shares of stock of the
Corporation so
chosen, shall act as chairman of the meeting and preside at
it. The
Secretary, or if he or she is absent from such meeting or is
required
pursuant to the provisions of this Section 6 to act as
chairman of
such meeting, the person (who shall be an Assistant
Secretary, if an
Assistant Secretary is present at the meeting) whom the
chairman of
the meeting shall appoint, shall act as secretary of the
meeting and
keep the minutes of it.
Section 7. Order of Business. The order of
business at
each meeting of the stockholders shall be determined by the
chairman
of such meeting. However, such order of business may be
changed by
the vote of a majority in voting interest of those present
in person
or by proxy at such meeting and entitled to vote at it.
Section 8. Voting. Except as otherwise provided
in the
Certificate of Incorporation, each stockholder shall, at
each meeting
of the stockholders, be entitled to one vote in person or by
proxy for
each share of stock of the Corporation held by him or her
and
registered in his or her name on the books of the
Corporation on the
date fixed pursuant to the provisions of Section 7 of
Article VII of
these By-laws as the record date for the determination of
stockholders
who shall be entitled to notice of and to vote at such
meeting.
Shares of its own stock belonging to the Corporation or to
another
corporation, if a majority of the shares entitled to vote in
the
election of directors of such other corporation is held by
the
Corporation, shall not be entitled to vote. Each
shareholder entitled
to vote shall be entitled to vote in person or by proxy;
provided,
however, that the right to vote by proxy shall exist only if
the
instrument authorizing the proxy to act has been executed in
writing
by the stockholder personally or by the shareholder's
attorney duly
authorized in writing to do so, and delivered to the
Secretary of the
Corporation or to the Secretary of the meeting. However, no
proxy
shall be voted or acted upon after three (3) years from its
date,
unless the proxy shall provide for a longer period. At all
meetings
of the stockholders all matters, except where other
provision is made
by law, by the Certificate of Incorporation of the
Corporation or by
these By-laws, shall be decided by the vote of a majority in
voting
interest of the stockholders present in person or by proxy
and
entitled to vote, as long as a quorum is present. Unless
demanded by
a stockholder of the Corporation present in person or by
proxy at any
meeting of the stockholders and entitled to vote thereat or
so
directed by the chairman of the meeting, the vote on any
question need
not be by ballot. Upon a demand of any stockholder for a
vote by
ballot on any question or at the direction of the chairman
that a vote
by ballot be taken on any question, such vote shall be
taken. On a
vote by ballot each ballot shall be signed by the
stockholder voting,
or by his or her proxy, if there be such proxy, and shall
state the
number of shares voted.
Section 9. List of Stockholders. It shall be the
duty of
the Secretary or other officer of the Corporation who shall
have
charge of its stock ledger, either directly or through
another officer
of the Corporation designated by him or her or through a
transfer
agent appointed by the Board of Directors, to prepare and
make, at
least ten (10) days before every meeting of the
stockholders, a
complete list of the stockholders entitled to vote at the
meeting
arranged in alphabetical order, and showing the address of
each
stockholder and the number of shares registered in the name
of each
stockholder. Such list shall be open to the examination of
any
stockholder, for any purpose germane to the meeting, during
ordinary
business hours, for a period of at least ten (10) days prior
to said
meeting, either at a place within the city where said
meeting is to
be held, which place shall be specified in the notice of
said meeting,
or, if not so specified, at the place where said meeting is
to be
held. The list shall also be produced and kept at the time
and place
of said meeting during the whole meeting, and may be
inspected by any
stockholder who is present. The stock ledger shall be the
only
evidence as to who are the stockholders entitled to examine
the stock
ledger, such list or the books of the Corporation, or to
vote in
person or by proxy at any meeting of stockholders.
Section 10. Inspectors of Votes. At each meeting
of the
stockholders the chairman of such meeting may appoint two
Inspectors
of Votes to act at it. Each appointed Inspector of Votes
shall first
subscribe to an oath or affirmation faithfully to execute
the duties
of an Inspector of Votes at the meeting with strict
impartiality and
according to the best of his or her ability. The Inspector
of Votes,
if any, shall take charge of the ballots at the meeting and
after the
balloting on any question shall count the ballots cast and
shall make
a report in writing to the Secretary of the meeting of the
results of
the vote. An Inspector of Votes need not be a stockholder
of the
Corporation, and any officer of the Corporation may be an
Inspector
of Votes on any question other than a vote for or against
his or her
election to any position within the Corporation or on any
other
question in which he or she may be directly interested.
Section 11. Business to be Conducted.
(a) At any annual meeting of the stockholders,
only such
business shall be conducted as is properly brought before
the meeting.

In order for business to be properly brought before the
meeting, the
business must either be (1) specified in the notice of
meeting (or any
supplement thereto) given by or at the direction of the
Board of
Directors; (2) otherwise properly brought before the meeting
by or at
the direction of the Board of Directors, or (3) otherwise
properly
brought before the meeting by a stockholder. In addition to
any other
applicable requirements, for business to be properly brought
before
an annual meeting by a stockholder, the stockholder must
have given
timely notice thereof in writing to the Secretary of the
Corporation.
To be timely, a stockholder's notice must be delivered to or
mailed
and received at the principal executive offices of the
Corporation,
not more than 65 days prior to the meeting nor later than 10
business
days after the giving of notice of the meeting to the
stockholders by
the Corporation; provided, however, that in the event that
less than
15 days' notice of the date of the meeting is given to
stockholders,
notice by the stockholder to be timely must be so received
not later
than the close of business on the fifth business day
preceding the
date of the meeting. A stockholder's notice to the
Secretary shall
set forth as to each matter the stockholder proposes to
bring before
the annual meeting (1) a brief description of the business
which the
stockholder wishes to bring before the annual meeting and
the reasons
for conducting such business at the annual meeting; (2) the
name and
record address of the stockholder proposing such business;
(3) the
class and number of shares of the Corporation which are
beneficially
owned by the stockholder, and (4) any material interest of
the
stockholder in such business.
(b) Notwithstanding anything in these By-laws to
the
contrary, no business shall be conducted at the annual
meeting except
in accordance with the procedures set forth in this Section
11 of
Article II; provided, however, that nothing in this Section
11 of
Article II shall be deemed to preclude discussion by any
stockholder
of any business properly brought before the annual meeting.
(c) The Chairman of the Board or other officer
presiding
at the annual meeting shall determine whether business is
properly
brought before the meeting in accordance with the provisions
of this
Section 11 and, if not, he or she shall so declare to the
meeting and
any such business not so brought shall not be transacted.
Section 12. Stockholder Nomination of Directors.
Not more
than 65 days prior to the date of an annual meeting nor
later than 10
business days after the giving of notice thereof to the
stockholders,
any stockholder who intends to make a nomination of a
candidate for
election to the Board of Directors at such annual meeting
shall
deliver a notice to the Secretary of the Corporation setting
forth (1)
as to each nominee whom the stockholder wishes to nominate
for
election or reelection as a director (i) the name, age,
business
address and residence address of the nominee; (ii) the
principal
occupation or employment of the nominee; (iii) the class and
number
of shares of capital stock of the Corporation which are
beneficially
owned by the nominee; and (iv) any other information
concerning the
nominee that would be required, under the rules and
regulations of the
Securities and Exchange Commission, in a proxy statement
soliciting
proxies for the election of such nominee as a Director; and
(2) as to
the stockholder giving the notice (i) the name and record
address of
the stockholder and (ii) the class and number of shares of
capital
stock of the Corporation which the stockholder beneficially
owns;
provided, however, that in the event that less than 15 days'
notice
of the annual meeting is given to stockholder, notice by the
stockholder to be timely must be so delivered not later than
the close
of business on the fifth day preceding the meeting. Each
notice shall
include a signed consent to serve as a director of the
Corporation,
if elected, of each such nominee. The Corporation may
require any
proposed nominee to furnish such other information as may
reasonably
be required by the Corporation to determine the eligibility
of such
person to serve as a Director.
ARTICLE III.
Board of Directors.
Section 1. General Powers. The property,
business and
affairs of the Corporation shall be managed by or under the
direction
of the Board of Directors.
Section 2. Number, Qualification and Term of
Office.
Subject to the requirements of the laws of the State of
Delaware and
of the Certificate of Incorporation of the Corporation, the
Board of
Directors may from time to time by resolution determine the
number of
directors which shall be not less than three but not more
than
eighteen directors. Directors need not be stockholders.
Directors
shall be divided into three classes, designated Class I,
Class II and
Class III. Each class shall consist, as nearly as may be
possible,
of one third of the total number of directors constituting
the entire
Board of Directors. At each Annual Meeting of Stockholders,
successors
to the class of directors whose terms expire at that Annual
Meeting
shall be elected for a three year term. If the number of
directors
is changed, an increase or decrease shall be apportioned
among the
classes so as to maintain the number of directors in each
class as
nearly equal as possible, but in no case shall a decrease in
the
number of directors shorten the term of any incumbent
director. A
director shall hold office until the Annual Meeting of
Stockholders
for the year in which his or her term expires and until his
or her
successor is elected and qualified, subject, however, to
prior death,
resignation, retirement, disqualification or removal from
office.
Section 3. Election of Directors. At each
meeting of the
stockholders for the election of directors, the persons
receiving the
greatest number of votes, up to the number of directors to
be elected,
shall be the directors. Such election need not be by
ballot.
Section 4. Resignations. Any director may resign
at any
time by giving written notice of resignation to the
Corporation. The
resignation shall take effect at the time specified, or, if
the time
when it becomes effective is not specified, then it shall
take effect
immediately upon its receipt by the Secretary. Unless
otherwise
specified in the resignation, acceptance is not necessary to
make it
effective.
Section 5. Removal of Directors. Subject to the
rights of
the holders of any class or series of stock then
outstanding, any
director, or the entire Board of Directors, may be removed
from office
at any time, with or without cause. The vacancy in the
Board of
Directors caused by the removal of a director may be filled
by the
stockholders at any annual meeting or special meeting called
for such
purpose, or if the stockholders fail to fill the vacancy, by
the Board
of Directors as provided in Section 6 of this Article III.
The term
of a director elected to fill a vacancy caused by the
removal of a
director shall expire at the same time as the term of the
other
directors [of the class in which the vacancy occurred].
Section 6. Vacancies, etc. If there is a vacancy
in the
Board of Directors caused by the death, resignation,
disqualification
or removal of a director, or by an increase in the number of
directors, the vacancy may be filled by a majority of the
directors
then in office, although less than a quorum, or by a sole
remaining
director. The term of any director so elected by the Board
of
Directors shall expire at the same time as the term of the
other
directors [of the class for which the new directorship is
created or
in which the vacancy occurred].
Section 7. Place of Meeting etc. The Board of
Directors
may hold its meetings at any place within or without the
State of
Delaware as it may determine.
Section 8. Organization Meeting. After each
annual meeting
of stockholders at which directors are elected, and on the
same day,
the Board of Directors shall meet for the purpose of
organization and
the transaction of other business at the place where the
annual
meeting of the stockholders is held. Notice of the meeting
need not
be given. The meeting may be held at any other time or
place
designated in a notice given as hereinafter provided for
special
meetings of the Board of Directors or in a consent and
waiver of
notice of meeting signed by all the directors.
Section 9. Regular Meetings. Regular meetings of
the Board
of Directors shall be held at such times as the Board of
Directors
shall determine. If the day fixed for the regular meeting
is a legal
holiday where the meeting is to be held, then the meeting
shall be
held at the same hour on the next succeeding business day.
Except as
otherwise provided by law, notices of regular meetings need
not be
given.
Section 10. Special Meetings; Notice. Special
meetings of
the Board of Directors shall be held whenever called by the
Chairman
of the Board, the Secretary, or a majority of the directors
in office.

Notice of each such meeting shall be mailed, addressed to
each
director at the director's residence or usual place of
business, at
least two (2) days before the day on which such meeting is
to be held
or shall be sent to the director at the director's residence
or usual
place of business by telegraph, cable, wireless or other
form of
recorded communication or be delivered personally or by
telephone not
later than the day before the day on which the special
meeting is to
be held. Each notice shall state the time and place of the
meeting
but need not state the purpose thereof, except as otherwise
herein
expressly provided. Notice of any meeting of the Board of
Directors
need not, however, be given to any director, if the director
waives
notice before or after the meeting in writing or by
telegraph, cable,
wireless or other form of recorded communication, or if the
director
is present at such meeting without protest. Any meeting of
the Board
of Directors shall be a legal meeting, even if no notice has
been
given, if all the directors of the Corporation are present
at the
meeting.
Section 11. Quorum and Manner of Acting. Except
as
otherwise provided by statute or by these By-laws, one-third
of the
total number of directors constituting the whole Board (but
not less
than two) shall be required to constitute a quorum for the
transaction
of business at any meeting, and the act of a majority of the
directors
present at any meeting at which a quorum is present shall be
the act
of the Board of Directors. Members of the Board of
Directors, or any
committee designated by the Board, may participate in a
meeting of the
Board or such committee by means of conference telephone or
other
similar communications equipment by means of which all
persons
participating can hear each other and participation in a
meeting
pursuant to this provision shall constitute presence in
person at such
meeting. In the absence of a quorum, a majority of the
directors
present may adjourn any meeting until a quorum is present.
Notice of
any adjourned meeting need not be given.
Section 12. Action by Consent. Unless otherwise
restricted
by the Certificate of Incorporation or these By-laws, any
action
required or permitted to be taken at any meeting of the
Board of
Directors may be taken without a meeting if all members of
the Board
of Directors consent thereto in writing, and the writing or
writings
are filed with the minutes of proceedings of the Board of
Directors.
Section 13. Remuneration. Unless otherwise
expressly
provided by resolution adopted by the Board of Directors,
none of the
directors shall, as such, receive any stated remuneration
for his or
her service; but the Board of Directors may at any time or
from time
to time by resolution provide that a specified sum shall be
paid to
any director of the Corporation, either as his or her annual
remuneration as such director or member of any committee of
the Board
of Directors and may, in addition, provide for remuneration
for his
or her attendance at each meeting of the Board of Directors
or any
such committee. The Board of Directors may also likewise
provide that
the Corporation shall reimburse each director for any
expenses paid
by him or her on account of his or her attendance at any
meeting.
Nothing in this Section contained shall be construed to
preclude any
director from serving the Corporation or its affiliates in
any other
capacity and receiving remuneration therefor.
ARTICLE IV.
Committees.
Section 1. Standing Committees: How Constituted
and
Powers. The Board of Directors may in its discretion, by
resolution
passed by a majority of the whole Board, designate an
Executive
Committee, an Audit Committee, and a Compensation Committee,
consisting of two or more of the Directors. The members of
all
Committees shall serve at the pleasure of the Board and may
be removed
at any time, with or without cause.
Section 2.
(a) The Executive Committee. The Executive
Committee shall
have and may exercise, when the Board is not in session, the
power of
the Board of Directors in the management of the business and
affairs
of the Corporation, and shall have the power to authorize
the seal of
the Corporation to be affixed to all papers which may
require it. The
Executive Committee shall have the power and authority to
declare a
dividend and authorize the issuance of stock. However, the
Executive
Committee shall not have the power (1) to fill vacancies on
the Board
of Directors or the Executive Committee; or (2) to make or
amend or
repeal By-laws of the Corporation; or (3) to declare a
dividend or
change the dividend policy of the Corporation; to increase,
decrease,
or omit any dividend; or (4) to remove or appoint any
officer or
director of the Corporation; or (5) to recommend to the
shareholders
an amendment to the Certificate of Incorporation; or (6) to
authorize
the issuance of stock or to recommend to the shareholders
the
authorization of new securities of the Corporation; or (7)
to
recommend to the shareholders the sale, lease, or exchange
of all, or
substantially all, of the Corporation's property and assets;
or (8)
to approve any acquisition involving more than $10,000,000
in assets
or sales or purchase price; or (9) to recommend to the
shareholders
a dissolution of the Corporation or a revocation of a
dissolution, or
(10) to adopt a certificate of ownership and merger pursuant
to
Section 253 of the Delaware General Corporation Law.
(b) The Audit Committee. The Audit Committee
shall (1)
recommend the principal auditors of the Corporation; (2)
consult with
the principal auditors with regard to the plan of audit; (3)
review
the report of the audit and the accompanying management
letter; (4)
consult with the principal auditors with regard to the
adequacy of
internal controls; (5) consult with the Corporation's
internal
auditors on the above matters, and (6) have such other
duties and
responsibilities as may be delegated to it from time to
time.
(c) The Compensation Committee. The Compensation
Committee
shall approve and recommend to the Board of Directors (1)
compensation
arrangements; (2) the adoption of any compensation plans in
which
officers and directors are eligible to participate for
senior
management; (3) the granting of stock options or any
benefits under
any such plans; and shall have (4) such other duties and
responsibilities as may be delegated to it from time to
time. In
connection with the Corporation's stock option plans, the
Compensation
Committee shall have the power to determine the terms and
provisions
of the respective stock option agreements (which need not be
identical) and to make all other determinations necessary or
advisable
for the administration of such plans. The Compensation
Committee
shall have the authority to determine the persons to whom,
and the
time or times at which, options may be granted, the number
of shares
to be subject to each, the price at which the shares subject
thereto
may be purchased, the period of each option and other terms
and
conditions thereof; provided, however, that the Compensation
Committee
shall not have authority to authorize the issuance of stock
of the
Corporation.
Section 3. Organization, etc. The Chairman of a
Standing
Committee, selected by the members of the Board of
Directors, shall
act as chairman at all the meetings of the Standing
Committee and the
Secretary shall act as secretary thereof. In case the
chairman or
secretary of a Standing Committee is absent from any meeting
of a
committee, the Committee may appoint a chairman or secretary
as the
case may be, of the meeting.
Section 4. Meetings. Regular meetings of the
Standing
Committees (of which no notice shall be necessary) may be
held on any
day and at any place, fixed by a resolution adopted by a
majority of
a Committee or of the Board and communicated to all its
members.
Special meetings of a Committee shall be held whenever
called by the
Chairman of a Standing Committee, the Chairman of the Board,
the
Secretary, or a majority of the members of a Standing
Committee then
in office. Notice of each special meeting of a Committee
shall be
given by mail, telegraph, cable, or wireless or other form
of recorded
communication or be delivered personally or by telephone to
each
member of the Committee no later than the day before the day
on which
such meeting is to be held. Notice of any such meeting need
not be
given to any member of the Committee, however, if waived by
the member
in writing or by telegraph, cable, wireless, or other form
of recorded
communication, or if he or she shall be present at such
meeting
without protest. Any meeting of a Committee shall be a
legal meeting
without any notice given, if all the members of the
committee are
present at it. Subject to the provisions of this Article
IV, a
Committee, by resolution adopted by a majority of the whole
Committee,
may fix its own rules or procedures, and it shall keep a
record of its
procedures and report them to the Board of Directors at its
next
regular meeting after such procedures shall have been fixed.
All such
proceedings shall be subject to revision or alteration by
the Board
of Directors; provided, however, that third parties shall
not be
prejudiced by any such revisions or alterations.
Section 5. Quorum and Manner of Acting. A
majority of a
Standing Committee shall constitute a quorum for the
transaction of
business, and the act of the majority of those present at a
meeting
thereof at which a quorum is present shall be the act of a
Committee.
Section 6. Other Committees. The Board of
Directors, by
resolution passed by the majority of the whole Board, may
designate
other Committees, each Committee to consist of two or more
members.
Except as otherwise provided by law, the Committees shall
have and may
exercise, to the extent provided by the resolution, the
powers of the
Board in the management of the business and affairs of the
Corporation, and have the power to authorize the seal of the
Corporation to be affixed to all papers which require it.
The
Committees shall have the names determined by the Board.
Members of
the Committees may participate in meetings by conference
call, or
similar means as set forth in Section 11 of Article III.
Section 7. Action by Consent. Unless otherwise
restricted
by the Certificate of Incorporation or these By-laws, any
action
required or permitted to be taken at any meeting of a
Standing or
other Committee may be taken without a meeting if all
members of the
Committee consent in writing. The writing must then be
filed with the
minutes of the proceedings of the Committee.
Section 8. Reports. Each Committee shall report
all action
taken by such Committee to the Board at its next meeting.
ARTICLE V.
Officers.
Section 1. Number. The officers of the
Corporation shall
be a Chairman of the Board, a President, one or more
Executive Vice
Presidents, one or more Senior Vice Presidents, one or more
Vice
Presidents, a Secretary, a Treasurer, a Controller, and, any
other
officers appointed pursuant to Section 3 of this Article V.
Any two
or more offices, except those of President and Secretary,
may be held
by the same person.
Section 2. Election, Term of Office and
Qualifications.
The officers shall be elected annually by the Board of
Directors, and,
except in the case of officers appointed in accordance with
the
provisions of Section 3 of this Article V, each shall hold
office
until the next annual election of officers and until his or
her
successor has been duly elected and qualified, or until his
or her
death, or until he or she shall resign or be removed.
Section 3. Other Officers. The Corporation may
have any
other officers and agents deemed necessary by the Board of
Directors.
The other officers and agents shall be appointed in the
manner, have
the duties and hold their offices for the terms determined
by the
Board of Directors. The Board of Directors may delegate to
any
principal officer the power to appoint or remove any other
officers
or agents.
Section 4. Resignations. Any officer may resign
at any
time by giving written notice of resignation to the
Corporation. The
resignation shall take effect at the time specified or, if
the time
when it becomes effective is not specified, then it shall
take effect
immediately upon its receipt by the Secretary. Unless
otherwise
specified in the notice of resignation, the acceptance of
such is not
necessary to make it effective.
Section 5. Removal. Any officer may be removed,
with or
without cause, by a vote of a majority of the whole Board of
Directors
at a regular meeting or a special meeting called for the
purpose.
Section 6. Vacancies. A vacancy in any office
because of
death, resignation, removal or any other cause shall be
filled for the
unexpired portion of the term in the manner prescribed in
these
By-laws for election or appointment to such office.
Section 7. The Chairman of the Board. The
Chairman of the
Board (who shall be a Director) shall be the Chief Executive
Officer
of the Corporation, unless the Board otherwise directs, and
shall
preside at all meetings of stockholders. The Chairman of
the Board
shall perform such other duties and may exercise such other
powers as
from time to time may be assigned to him or her by these By-
laws or
by the Board of Directors. In the absence of the President
the
Chairman shall perform all of the duties and exercise all
powers of
the President.
Section 8. The President. The President, subject
to the
general control of the Chairman of the Board, unless the
Board
otherwise directs, shall be the Chief Operating Officer of
the
Corporation. The President shall supervise generally the
affairs of
the Corporation and shall have all powers and perform all
duties
incident to the office of a president and, unless the Board
otherwise
directs, chief operating officer of a corporation and as
provided in
these By-laws. The President shall exercise such other
powers and
perform such other duties as may be assigned to him or her
by the
Board of Directors or the Chairman of the Board.
Section 9. Executive Vice Presidents, Senior Vice
Presidents and Vice Presidents. The Executive Vice
Presidents Senior
Vice Presidents and Vice Presidents shall perform such
duties and may
exercise such powers as from time to time may be assigned to
them by
these By-laws, the Board of Directors or the Chairman of the
Board.
Section 10. The Secretary and the Assistant
Secretaries.
The Secretary shall (1) record or cause to be recorded in
books kept
for the purpose, the minutes of the meetings of the
stockholders, the
Board of Directors, the Standing Committees, and all other
committees
of the Board of Directors, if any, (2) see that all notices
are duly
given in accordance with the provisions of these By-laws and
as
required by law, (3) be custodian of all corporate records
(other than
financial) and of the seal of the Corporation and shall have
the power
to cause the seal to be affixed to all documents which are
duly
authorized to be executed on behalf of the Corporation, (4)
keep the
list of stockholders including the post-office address of
each
stockholder, and make all proper changes in the list
retaining and
filing his or her authority for all such entries, or see
that the
books, reports, statements, certificates and all other
documents and
records required by law are properly kept and filed, and (5)
in
general, perform all duties incident to the office of
Secretary and
such other duties as may, from time to time, be assigned to
him or her
by the Board of Directors, the Chairman of the Board or the
President.
At the request of the Secretary, or in his or her
absence
or disability, any Assistant Secretary shall perform any of
the duties
of the Secretary and, when so acting, shall have all the
powers of,
and be subject to all the restrictions upon, the Secretary.
Except
where by law the signature of the Secretary is required,
each of the
Assistant Secretaries shall possess the same power as the
Secretary
to sign certificates, contracts, obligations and other
instruments of
the Corporation, and to affix the seal of the Corporation to
such
instruments, and attest them.
Section 11. The Treasurer and the Assistant
Treasurers.
The Treasurer shall (1) have charge and custody of, and be
responsible
for, all funds and securities of the Corporation, and shall
deposit
all such funds in the name of the Corporation in the banks,
trust
companies or other depositaries selected in accordance with
the
provisions of these By-laws, (2) render to the Board of
Directors,
whenever the Board may require him or her so to do, and
shall present
at the annual meeting of the stockholders, if called upon so
to do,
a report of all his or her transactions as Treasurer, (3) in
general,
perform all duties incident to the office of Treasurer and
such other
duties as may, from time to time, be assigned to him or her
by the
Board of Directors, the Chairman of the Board or the
President.
If required by the Board of Directors, the
Treasurer shall
give a bond for the faithful discharge of his or her duties
in such
sum and with such surety or sureties as the Board of
Directors shall
determine.
At the request of the Treasurer, or in his or her
absence
or disability, any Assistant Treasurer may perform any of
the duties
of the Treasurer and, when so acting, shall have all the
power of, and
be subject to all the restrictions upon, the Treasurer.
Except where
by law the signature of the Treasurer is required, each of
the
Assistant Treasurers shall possess the same power as the
Treasurer to
sign all certificates, contracts, obligations and other
instruments
of the Corporation.
Section 12. The Controller. The Controller shall
be the
chief accounting officer of the Corporation, and as such
shall be in
charge of all internal audits and accounting procedures and
records.
The Controller shall render to the Board of Directors,
whenever he or
she deems it appropriate or whenever the Board may require
him or her
so to do, appropriate financial or other reports as to the
Corporation.
Section 13. Salaries. The salaries of the
Chairman of the
Board, the Chief Executive Officer and the President shall
be fixed
from time to time by the Board of Directors. The salaries
of the
other officers shall be fixed from time to time by the Chief
Executive
Officer after consultation with the Compensation Committee.
The
salaries of any officers appointed by a principal officer
pursuant to
Section 3 of this Article V shall be fixed from time to time
by the
principal officer appointing such officers. No officer
shall be
prevented from receiving such salary by reason of the fact
that he or
she is also a director of the Corporation.
ARTICLE VI.
Contracts, Checks, Loans and Deposits.
Section 1. Contracts, Checks, etc. All contracts
and
agreements authorized by the Board of Directors, and all
checks,
drafts, bills of exchange or other orders for the payment of
money,
notes, or other evidences of indebtedness issued in the name
of the
Corporation, shall be signed by the officer(s) or agent(s)
designated
by the Board of Directors. The designation may be general
or confined
to specific instances.
Section 2. Proxies in Respect of Securities of
Other
Corporations. Unless otherwise provided by resolution
adopted by the
Board of Directors, the Chairman of the Board, the President
or a Vice
President may appoint an attorney(s) or agent(s) to exercise
in the
name and on behalf of the Corporation the powers and rights
of the
Corporation as the holder of stock or other securities in
any other
corporation, to vote or to consent in respect of such stock
or other
securities. The Chairman of the Board, the President or a
Vice
President may instruct the person(s) so appointed as to the
manner of
exercising such powers and rights and the Chairman or the
Board or the
President may execute all such written proxies, powers of
attorney or
other written instruments as he or she may deem necessary
for the
Corporation to exercise such powers and rights.
ARTICLE VII.
Certificates of Stock, Books and Records.
Section 1. Form, Signature. The certificates of
stock of
the Corporation shall be numbered and shall be entered in
the books
of the Corporation as they are issued. They shall exhibit
the
holder's name and number of shares and shall be signed by
the Chairman
of the Board, the President or a Vice President and the
Secretary or
an Assistant Secretary; provided, however, that if any
certificate is
countersigned (a) by a transfer agent other than the
Corporation or
its employee or (b) by a registrar other than the
Corporation or its
employee, any other signature on the certificate may be a
facsimile.
If any officer of the Corporation who has signed, or whose
facsimile
signature has been placed upon such certificate ceases to be
such
before such certificate has been issued, the certificate may
nevertheless be issued by the Corporation with the same
effect as
though such person were such officer at the date of
issuance.
Section 2. Transfer. Transfers of stock shall be
made on
the books of the Corporation only by the person named in the
certificate or by attorney lawfully constituted in writing,
and upon
surrender of the certificate therefor.
Section 3. Closing of Transfer Books. The Board
of
Directors may close the transfer books in their discretion
for a
period not exceeding thirty days preceding any meeting of
the
stockholders, or the day appointed for the payment of a
dividend.
Section 4. Record Owner. The Corporation shall
be entitled
to treat the holder of record of any share or shares of
stock as the
holder in fact and accordingly shall not be bound to
recognize any
equitable or other claim to or interest in the share on the
part of
any other person, whether or not the Corporation has express
or other
notice of it, except as expressly provided by the laws of
Delaware.
Section 5. Lost Certificates. Any person
claiming a
certificate of stock to be lost, stolen or destroyed shall
make an
affidavit or affirmation of that fact in form satisfactory
to the
Corporation and shall if the officers so require give the
Corporation
a bond of indemnity, in form and with one or more sureties
satisfactory to the officers, in an amount which in the sole
discretion of the officers is sufficient to indemnify the
Corporation
against any claim that may be made against it on account of
the
alleged loss, theft or destruction, or the issuance of a new
certificate, whereupon a new certificate may be issued of
the same
tenor and for the same number of shares as the one alleged
to be lost,
stolen or destroyed.
Section 6. Books and Records. The books and
records of the
Corporation may be kept at such places within or without the
State of
Delaware as the Board of Directors may determine.
Section 7. Fixing Date for Determination of
Stockholders
of Record. In order that the Corporation may determine the
identity
of the stockholders entitled to notice of or to vote at any
meeting
of stockholders or any adjournment, or entitled to receive
payment of
any dividend or other distribution or allotment of any
rights, or
entitled to exercise any rights in respect of any other
change,
conversion or exchange of stock or for any other purpose,
the Board
of Directors may fix, in advance, a record date, which shall
not be
more than sixty (60) days nor less than ten (10) days before
the date
of such meeting, nor more than sixty (60) days prior to any
other
action. If, in any case involving the determination of
stockholders
for any purpose other than notice of or voting at a meeting
of
stockholders a record date is not fixed, the record date for
determining stockholders for such purpose shall be the close
of
business on the day on which the Board of Directors shall
adopt the
resolution. A determination of stockholders entitled to
notice of or
to vote at a meeting of stockholders shall apply to any
adjournment
of the meeting; provided, however, that the Board of
Directors may fix
a new record date for the adjourned meeting.
ARTICLE VIII.
Dividends.
Subject to the provisions of law and of the
Certificate of
Incorporation, the Board of Directors, at any regular or
special
meeting, may declare and pay dividends upon a share of stock
either
(a) out of its surplus as defined in and computed in
accordance with
the provisions of law or (b) in case it shall not have any
such
surplus, out of its net profits for the fiscal year in which
the
dividend is declared and/or the preceding fiscal year,
whenever and
in the amount advisable depending on the Board of Directors'
opinion
of the condition of the Corporation.
Before payment of any dividend or making any
distribution
of profits, the Board of Directors in its sole discretion
may set
aside out of the surplus or net profits of the Corporation a
sum as
a reserve fund to meet contingencies, or to equalize
dividends, or to
repair or maintain any property of the Corporation, or for
any other
purpose the directors think conducive to the interests of
the
Corporation.
ARTICLE IX.
Seal.
The corporate seal shall bear the name of the
Corporation,
the year in which the Corporation was incorporated (1968)
and the
words "CORPORATE SEAL - DELAWARE."
ARTICLE X.
Fiscal Year.
The fiscal year of the Corporation shall end on
the
thirty-first day of December in each year.
ARTICLE XI.
Indemnification.
Section 1. Action, etc. Other Than by or in the
Right of
the Corporation. The Corporation shall indemnify any person
who was
or is a party or is threatened to be made a party to any
threatened,
pending or completed action, suit or proceeding, whether
civil,
criminal, administrative or investigative (other than an
action by or
in the right of the Corporation) by reason of the fact that
he or she,
or a person of whom he or she was or is the legal
representative, is
or was a director, officer, employee, agent or member of a
management
committee of the Corporation, or is or was serving at the
request of
the Corporation as a director, officer, employee, agent or
member of
a management committee of another corporation, partnership,
joint
venture, trust or other enterprise, including service with
respect to
employee benefit plans. The indemnification shall be
against charges,
expenses (including attorneys' fees), judgments,
liabilities, ERISA
excise taxes, fines, penalties and amounts paid in
settlement actually
and reasonably incurred by him or her in connection with
such action,
suit or proceeding if he or she acted in good faith and in a
manner
he or she reasonably believed to be in or not opposed to the
best
interests of the Corporation, and, with respect to any
criminal action
or proceeding, had no reasonable cause to believe his or her
conduct
was unlawful. The termination of any action, suit or
proceeding by
judgment, order, settlement, conviction, or upon a plea of
nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in
a manner
which he or she reasonably believed to be in or not opposed
to the
best interests of the Corporation, and, with respect to any
criminal
action or proceeding, that he or she had reasonable cause to
believe
that his or her conduct was unlawful.
Section 2. Actions, etc. by or in the Right of
the
Corporation. The Corporation shall indemnify any person who
was or
is a party or is threatened to be made a party to any
threatened,
pending or completed action or suit by or in the right of
the
Corporation to procure a judgment in its favor by reason of
the fact
that he or she is or was a director, officer, employee or
agent of the
Corporation, or is or was serving at the request of the
Corporation
as a director, officer, employee, or agent of another
corporation,
partnership, joint venture, trust or other enterprise
against expenses
(including attorneys' fees) actually and reasonably incurred
by him
or her in connection with the defense or settlement of such
action or
suit if he or she acted in good faith and in a manner he or
she
reasonably believed to be in or not opposed to the best
interests of
the Corporation. However, no indemnification shall be made
in respect
of any claim, issue or matter as to which such person shall
have been
adjudged to be liable to the Corporation unless and only to
the extent
that the Court of Chancery or the court in which such action
or suit
was brought shall determine upon application that, despite
the
adjudication of liability but in view of all the
circumstances of the
case, such person is fairly and reasonably entitled to
indemnity for
such expenses which the Court of Chancery or such other
court shall
deem proper.
Section 3. Determination of Right to
Indemnification. Any
indemnification under Section 1 or 2 of this Article (unless
ordered
by a court) shall be made by the Corporation only as
authorized in the
specific case upon a determination that indemnification of
the
director, officer, employee or agent is proper in the
circumstances
because he or she has met the applicable standard of conduct
set forth
in Section 1 or 2 of this Article. This determination shall
be made
(i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action,
suit or
proceeding, or (ii) if such a quorum is not obtainable, or,
even if
obtainable and a quorum of disinterested directors so
directs, by
independent legal counsel in a written opinion, or (iii) by
the
stockholders.
Section 4. Right to Indemnification.
Notwithstanding the
other provisions of this Article, to the extent that a
director,
officer, employee or agent of the Corporation has been
successful on
the merits or otherwise in defense of any action, suit or
proceeding
referred to in Section 1 or 2 of this Article, or in defense
of any
claim, issue or matter therein, he or she shall be
indemnified against
expenses (including attorneys' fees) actually and reasonably
incurred
by him or her in connection therewith.
Section 5. Prepaid Expenses. Expenses (including
attorneys' fees) incurred by an officer or director in
defending a
civil, criminal, administrative or investigative action,
suit or
proceeding may be paid by the Corporation in advance of the
final
disposition of such action, suit or proceeding upon receipt
of an
undertaking by or on behalf of the director or officer to
repay such
amount if it shall ultimately be determined that he or she
is not
entitled to be indemnified by the Corporation as authorized
in this
Article.
Section 6. Other Rights and Remedies. The
indemnification
and advancement of expenses provided by, or granted pursuant
to, the
other subsections of this Article shall not be deemed
exclusive of any
other rights to which any person seeking indemnification or
advancement of expenses may be entitled under any By-laws,
agreement,
vote of stockholders or disinterested directors or
otherwise, both as
to action in his or her official capacity and as to action
in another
capacity while holding such office.
Section 7. Continuation of Rights. The
indemnification and
advancement of expenses provided by, or granted pursuant to,
this
Article shall, unless otherwise provided when authorized or
ratified,
continue as to a person who has ceased to be a director,
officer,
employee or agent and shall inure to the benefit of the
heirs,
executors and administrators of such a person.
Section 8. Insurance. Upon resolution passed by
the Board
of Directors, the Corporation may purchase and maintain
insurance on
behalf of any person who is or was a director, officer,
employee or
agent of the Corporation, or is or was serving at the
request of the
Corporation as a director, officer, employee or agent of
another
corporation, partnership, joint venture, trust or other
enterprise
against any liability asserted against him or her and
incurred in any
such capacity, or arising out of his or her status as such,
whether
or not the Corporation would have the power to indemnify him
or her
against the liability under the provisions of this Article.
Section 9. Expenses as a Witness. To the extent
any
director, officer, employee, member of a management
committee or agent
of the Corporation is by reason of such position, or a
position with
another entity at the request of the Corporation, a witness
in any
action, suit or proceeding, he shall be indemnified against
all costs
and expenses actually and reasonably incurred by him or her
on his or
her behalf in connection therewith.
ARTICLE XII.
Amendments.
All By-laws of the Corporation shall be subject to
alteration or repeal, and new By-laws may be made, by the
stockholders
at any annual or special meeting, or, except as otherwise
provided by
the Certificate of Incorporation, these By-laws or by law,
by the
affirmative vote of a majority of the directors then in
office given
at any regular or special meeting of the Board of Directors.

LONE STAR INDUSTRIES, INC.

AND

CHEMICAL BANK

Trustee

Indenture

Dated as of March 29, 1994

$78,000,000

10% SENIOR NOTES DUE 2003

TABLE OF CONTENTS

ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE. .
. . .
1

SECTION 1.01 Definitions . . . . . . . . . . . .
. . . .
1
SECTION 1.02 Incorporation by Reference of Trust
Indenture
Act 17
SECTION 1.03 Rules of Construction . . . . . . .
. . . .
17

ARTICLE 2. THE SECURITIES. . . . . . . . . . . . . . . .
. . . 18

SECTION 2.01 Form and Dating . . . . . . . . . .
. . . .
18
SECTION 2.02 Execution and Authentication. . . .
. . . .
18
SECTION 2.03 Registrar and Paying Agent. . . . .
. . . .
19
SECTION 2.04 Paying Agent to Hold Money in Trust
. . . .
19
SECTION 2.05 Securityholder Lists. . . . . . . .
. . . .
20
SECTION 2.06 Transfer and Exchange . . . . . . .
. . . .
20
SECTION 2.07 Replacement Securities. . . . . . .
. . . .
20
SECTION 2.08 Outstanding Securities. . . . . . .
. . . .
21
SECTION 2.09 Securities Held by the Company or
an
Affiliate 21
SECTION 2.10 Temporary Securities. . . . . . . .
. . . .
22
SECTION 2.11 Cancellation. . . . . . . . . . . .
. . . .
22
SECTION 2.12 Defaulted Interest. . . . . . . . .
. . . .
22

ARTICLE 3. REDEMPTION. . . . . . . . . . . . . . . . . .
. . . 22

SECTION 3.01 Notices to Trustee. . . . . . . . .
. . . .
22
SECTION 3.02 Selection of Securities to be
Redeemed. . .
23
SECTION 3.03 Notice of Redemption. . . . . . . .
. . . .
23
SECTION 3.04 Effect of Notice of Redemption. . .
. . . .
24
SECTION 3.05 Deposit of Redemption Price . . . .
. . . .
24
SECTION 3.06 Securities Redeemed in Part . . . .
. . . .
24
SECTION 3.07 Optional Redemption; Open Market
Purchases.
24
SECTION 3.08 Mandatory Redemption. . . . . . . .
. . . .
24
SECTION 3.09 Sinking Fund Payments . . . . . . .
. . . .
25

ARTICLE 4. COVENANTS . . . . . . . . . . . . . . . . . .
. . . 26

SECTION 4.01 Payment of Securities.. . . . . . .
. . . .
26
SECTION 4.02 Maintenance of Office or Agency . .
. . . .
26
SECTION 4.03 Corporate Existence . . . . . . . .
. . . .
26
SECTION 4.04 Payment of Taxes. . . . . . . . . .
. . . .
27
SECTION 4.05 Maintenance of Properties . . . . .
. . . .
27
SECTION 4.06 SEC Reports . . . . . . . . . . . .
. . . .
27
SECTION 4.07 Compliance Certificate. . . . . . .
. . . .
28
SECTION 4.08 Restricted Investments and
Restricted Stock
Payments 28
SECTION 4.09 Transactions with Affiliates. . . .
. . . .
30
SECTION 4.10 Certain Limitations on
Indebtedness, etc. .
30
SECTION 4.11 Conflicting Agreements. . . . . . .
. . . .
31
SECTION 4.12 Restricted Subsidiaries . . . . . .
. . . .
31
SECTION 4.13 Sales of Assets . . . . . . . . . .
. . . .
32
SECTION 4.14 Change of Control.. . . . . . . . .
. . . .
32
SECTION 4.15 Waiver of Stay, Extension or Usury
Laws . .
34
SECTION 4.16 Maintenance of Insurance and
Records,
Compliance with Law 35
SECTION 4.17 Value of Claims Represented by
Securities .
35
SECTION 4.18 Investment Company Act of 1940. . .
. . . .
35
SECTION 4.19 Notice of Default . . . . . . . . .
. . . .
36

ARTICLE 5. SUCCESSORS. . . . . . . . . . . . . . . . . .
. . . 36

SECTION 5.01 When Company May Merge, etc.. . . .
. . . .
36
SECTION 5.02 Successor Substituted . . . . . . .
. . . .
37

ARTICLE 6. DEFAULTS AND REMEDIES . . . . . . . . . . . .
. . . 37

SECTION 6.01 Events of Default . . . . . . . . .
. . . .
37
SECTION 6.02 Acceleration. . . . . . . . . . . .
. . . .
40
SECTION 6.03 Other Remedies. . . . . . . . . . .
. . . .
40
SECTION 6.04 Waiver of Past Defaults . . . . . .
. . . .
41
SECTION 6.05 Control by Majority . . . . . . . .
. . . .
41
SECTION 6.06 Limitation on Suits . . . . . . . .
. . . .
41
SECTION 6.07 Rights of Holders to Receive
Payment. . . .
42
SECTION 6.08 Collection Suit by Trustee. . . . .
. . . .
42
SECTION 6.09 Trustee May File Proofs of Claims .
. . . .
42
SECTION 6.10 Priorities. . . . . . . . . . . . .
. . . .
42
SECTION 6.11 Undertaking for Costs . . . . . . .
. . . .
43

ARTICLE 7. TRUSTEE . . . . . . . . . . . . . . . . . . .
. . . 43

SECTION 7.01 Acceptance of Trusts; Duties of
Trustee . .
43
SECTION 7.02 Rights of Trustee . . . . . . . . .
. . . .
44
SECTION 7.03 Individual Rights of Trustee. . . .
. . . .
45
SECTION 7.04 Trustee's Disclaimer. . . . . . . .
. . . .
45
SECTION 7.05 Notice of Defaults. . . . . . . . .
. . . .
45
SECTION 7.06 Reports by Trustee to Holders . . .
. . . .
45
SECTION 7.07 Compensation and Indemnity. . . . .
. . . .
45
SECTION 7.08 Replacement of Trustee. . . . . . .
. . . .
46
SECTION 7.09 Successor Trustee by Merger, etc. .
. . . .
47
SECTION 7.10 Eligibility; Disqualification . . .
. . . .
47
SECTION 7.11 Preferential Collection of Claims
Against
Company 47

ARTICLE 8. DISCHARGE OF INDENTURE. . . . . . . . . . . .
. . . 47

SECTION 8.01 Termination of Company's and
Guarantors'
Obligations 47
SECTION 8.02 Application of Trust Money. . . . .
. . . .
48
SECTION 8.03 Repayment to Company or Guarantors.
. . . .
49
SECTION 8.04 Reinstatement . . . . . . . . . . .
. . . .
49

ARTICLE 9. AMENDMENTS. . . . . . . . . . . . . . . . . .
. . . 49

SECTION 9.01 Without Consent of Holders. . . . .
. . . .
49
SECTION 9.02 With Consent of Holders . . . . . .
. . . .
50
SECTION 9.03 Compliance with Trust Indenture Act
. . . .
51
SECTION 9.04 Revocation and Effect of Consents .
. . . .
51
SECTION 9.05 Notation on or Exchange of
Securities . . .
51
SECTION 9.06 Trustee Protected . . . . . . . . .
. . . .
51

ARTICLE 10. GUARANTEE. . . . . . . . . . . . . . . . . .
. . . 52

SECTION 10.01 Guarantee. . . . . . . . . . . . .
. . . .
52
SECTION 10.02 Further Assurances . . . . . . . .
. . . .
54
SECTION 10.03 Authorization of Actions to be
Taken by the
Trustee Under the Guarantee 54
SECTION 10.04 Authorization of Receipt of Funds
by the
Trustee Under the Guarantee 54
SECTION 10.05 Termination of Guarantee . . . . .
. . . .
54
SECTION 10.06 Execution of Guarantee . . . . . .
. . . .
54

ARTICLE 11. MISCELLANEOUS. . . . . . . . . . . . . . . .
. . . 55

SECTION 11.01 Trust Indenture Act Controls . . .
. . . .
55
SECTION 11.02 Notices. . . . . . . . . . . . . .
. . . .
55
SECTION 11.03 Communication by Holders with Other
Holders
56
SECTION 11.04 Action by Securityholders. . . . .
. . . .
56
SECTION 11.05 Proof of Execution of Instruments
and of
Holding of Securities. 57
SECTION 11.06 Revocation of Consents; Future
Holders Bound
57
SECTION 11.07 Obligation to Disclose Beneficial
Ownership
of Securities. 57
SECTION 11.08 Certificate and Opinion as to
Conditions
Precedent 58
SECTION 11.09 Statements Required in Certificate
or Opinion
58
SECTION 11.10 Rules by Trustee and Agents. . . .
. . . .
58
SECTION 11.11 Legal Holidays . . . . . . . . . .
. . . .
59
SECTION 11.12 No Recourse Against Others . . . .
. . . .
59
SECTION 11.13 Duplicate Originals. . . . . . . .
. . . .
59
SECTION 11.14 Governing Law. . . . . . . . . . .
. . . .
59
SECTION 11.15 No Adverse Interpretation of Other
Agreements
59
SECTION 11.16 Successors . . . . . . . . . . . .
. . . .
59
SECTION 11.17 Separability . . . . . . . . . . .
. . . .
59
SECTION 11.18 Table of Contents, Headings, etc..
. . . .
60

ARTICLE 12. MEETINGS OF HOLDERS OF SECURITIES. . . . . .
. . . 60

SECTION 12.01 Purposes of Meetings . . . . . . .
. . . .
60
SECTION 12.02 Call of Meetings by Trustee. . . .
. . . .
60
SECTION 12.03 Call of Meetings by Company or
Securityholders 61
SECTION 12.04 Persons Entitled to Vote at
Meeting. . . .
61
SECTION 12.05 Regulations for Meeting. . . . . .
. . . .
61

CROSS-REFERENCE TABLE
TIA Indenture
Section Section

310(a)(1). . . . . . . . . . . . . . . . . . . . .
7.10
(a)(2). . . . . . . . . . . . . . . . . . . . . .
7.10
(a)(3). . . . . . . . . . . . . . . . . . . . . . Not
Applicable
(a)(4). . . . . . . . . . . . . . . . . . . . . . Not
Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . .
7.08; 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . Not
Applicable
311(a) . . . . . . . . . . . . . . . . . . . . . .
7.11
(b) . . . . . . . . . . . . . . . . . . . . . . .
7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . Not
Applicable
312(a) . . . . . . . . . . . . . . . . . . . . . .
2.05
(b) . . . . . . . . . . . . . . . . . . . . . . .
11.03
(c) . . . . . . . . . . . . . . . . . . . . . . .
11.03
313(a) . . . . . . . . . . . . . . . . . . . . . .
7.06
(b)(1). . . . . . . . . . . . . . . . . . . . . .
7.06
(b)(2). . . . . . . . . . . . . . . . . . . . . .
7.06
(c) . . . . . . . . . . . . . . . . . . . . . . .
7.06
(d) . . . . . . . . . . . . . . . . . . . . . . .
7.06
314(a) . . . . . . . . . . . . . . . . . . . . . .
4.06; 4.07
(b) . . . . . . . . . . . . . . . . . . . . . . . Not
Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . .
11.08
(c)(2). . . . . . . . . . . . . . . . . . . . . .
11.08
(c)(3). . . . . . . . . . . . . . . . . . . . . . Not
Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . Not
Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . .
11.09
(f) . . . . . . . . . . . . . . . . . . . . . . . Not
Applicable
315(a) . . . . . . . . . . . . . . . . . . . . . .
7.01
(b) . . . . . . . . . . . . . . . . . . . . . . .
7.05
(c) . . . . . . . . . . . . . . . . . . . . . . .
7.01
(d) . . . . . . . . . . . . . . . . . . . . . . .
7.01
(e) . . . . . . . . . . . . . . . . . . . . . . .
6.11
316(a)(last sentence). . . . . . . . . . . . . . .
2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . .
6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . .
6.04
(a)(2). . . . . . . . . . . . . . . . . . . . . . Not
Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . .
6.07
317(a)(1). . . . . . . . . . . . . . . . . . . . .
6.08
(a)(2). . . . . . . . . . . . . . . . . . . . . .
6.09
(b) . . . . . . . . . . . . . . . . . . . . . . .
2.04
318(a) . . . . . . . . . . . . . . . . . . . . . .
11.01
_______________________
This cross-reference tables does not constitute a part of
the
Indenture.
INDENTURE dated as of March 29, 1994 between LONE
STAR
INDUSTRIES, INC., a Delaware corporation (the "Company"),
and Chemical
Bank, a New York banking corporation (the "Trustee").

Each party agrees as follows for the benefit of
the other
party and for the equal and ratable benefit of the Holders
of the
Company's 10% Senior Notes due 2003 (the "Securities").

ARTICLE 1.

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01 Definitions.

"Actual Knowledge" has the meaning assigned to
such term in
Section 6.01 hereof.

"Adjusted Consolidated Net Income" means, with
respect to
the period commencing on the Effective Date and continuing
through the
last day of the fiscal quarter of the Company immediately
preceding
the date of determination (i) the sum of fifty percent of
the
Consolidated Net Income for each fiscal year or partial
fiscal year
in such period minus (ii) the sum of one hundred percent of
the
Consolidated Net Losses for each fiscal year or partial
fiscal year
in such period.

"Affiliate" means any Person directly or
indirectly
controlling or controlled by or under common control with
the Company
or any Guarantor, as the case may be; provided, however,
that the term
Affiliate, with respect to the Company, shall not include
any
wholly-owned Restricted Subsidiary of the Company. For this
purpose,
"control" means possession, directly or indirectly, of the
power to
direct or cause the direction of the management or policies
of a
Person, whether through the ownership of voting securities,
by
contract or otherwise.

"Affiliated Party Transaction" has the meaning
assigned to
such term in Section 4.09 hereof.

"Agent" means any Registrar, Paying Agent or Co-
Registrar.

"Average Life to Stated Maturity" means, with
respect to any
Indebtedness, at any date of determination, the quotient
obtained by
dividing (a) the sum of the products of (i) the number of
years from
such date to the date or dates of each successive scheduled
principal
payment (including, without limitation, any sinking fund
requirements)
of such Indebtedness multiplied by (ii) the amount of each
such
principal payment by (b) the sum of all such principal
payments.

"Bankruptcy Law" has the meaning assigned to such
term in
Section 6.01 hereof.

"Board of Directors" means the Board of Directors
of any
Person or any committee of the Board authorized to act for
it
hereunder.

"Business Day" has the meaning assigned to such
term in
Section 11.11 hereof.

"Capital Stock" means any shares, interests,
participations,
rights in or other equivalents (however designated) of such
Person's
capital stock, and any rights (other than debt securities
convertible
into capital stock), warrants or options exchangeable for or
convertible into such capital stock.

"Capitalized Lease" means, at the time any
determination
thereof is to be made, any lease of property, real or
personal, in
respect of which the present value of the minimum rental
commitment
would be capitalized on a balance sheet of the lessee in
accordance
with GAAP.

"Capitalized Rent" under any Capitalized Lease
shall mean,
at any time as of which the amount thereof is to be
determined, the
lesser of (i) 10 times the amount of the maximum net rent
payable
under such lease during any period of 12 consecutive months
subsequent
to the date as of which the rental obligation is to be
determined and
(ii) the lesser of (x) the aggregate amount of net rent
payable under
such lease until the expiration thereof in accordance with
its terms
and (y) the aggregate amount of net rent payable thereunder
until the
first date as of which the lessee shall have the right to
terminate
such lease, together with any other payments required on the
part of
the lessee to effect such termination. The net rent payable
under any
lease for any period shall be the total amount of the rent
payable by
the lessee with respect to such period but shall not include
amounts
required to be paid on account of maintenance and repairs,
insurance,
taxes, assessments, water rates and similar charges. The
amount to
be included in net rent for any given period with respect to
any
portion thereof which may be a variable shall be such amount
as the
Company shall in good faith determine is reasonably to be
expected to
be due as a result of such variable.

"Cash Equivalents" means, at any time: (i) any
evidence of
Indebtedness with a maturity of 180 days or less issued or
directly
and fully guaranteed or insured by the United States of
America or any
agency or instrumentality thereof (provided that the full
faith and
credit of the United States of America is pledged in support
thereof);
(ii) certificates of deposit or acceptances with a maturity
of 180
days or less of any financial institution that is a member
of the
Federal Reserve System having combined capital and surplus
and
undivided profits of not less than $500,000,000; (iii)
commercial
paper with a maturity of 180 days or less issued by a
corporation that
is not an Affiliate of the Company organized under the laws
of any
state of the United States or the District of Columbia and
rated at
least A-1 by S&P or at least P-1 by Moody's or at least an
equivalent
rating category of another nationally recognized securities
rating
agency; (iv) repurchase agreements and reverse repurchase
agreements,
in each case maturing within 180 days from the date of
acquisition,
collateralized by marketable direct obligations issued or
unconditionally guaranteed by the government of the United
States of
America or issued by any agency thereof and backed by the
full faith
and credit of the United States of America; provided that
the terms
of such agreements comply with the guidelines set forth in
the Federal
Financial Agreements of Depository Institutions With
Securities
Dealers and Others, as adopted by the Comptroller of the
Currency on
October 31, 1985; and (v) money market funds described in
clause (v)
of the definition of Permitted Investments.

"Change of Control" means (a) a sale of all or
substantially
all of the assets of the Company as an entirety to any
person (within
the meaning of Rule 13d-3 under the Exchange Act and
Sections 13(d)
and 14(d) of the Exchange Act), (b) the approval by the
stockholders
of the Company of a plan of liquidation or dissolution, or
(c) any
person or group (within the meaning of Rule 13d-5 under the
Exchange
Act and Section 13(d) and 14(d) of the Exchange Act)
becoming,
directly or indirectly, the "beneficial owner," as defined
in Rule
13d-3 under the Exchange Act (in a single transaction or in
a related
series of transactions, by way of merger, consolidation or
other
business combination or otherwise), of greater than 50% of
the total
voting power entitled to vote in the election of directors,
managers
or trustees of the Company or such other person surviving
the
transaction.

"Change of Control Offer" has the meaning assigned
to such
term in Section 4.14 hereof.

"Change of Control Purchase Date" has the meaning
assigned
to such term in Section 4.14 hereof.

"Change of Control Purchase Price" has the meaning
assigned
to such term in Section 4.14 hereof.

"Common Stock" means the common stock, par value
$1.00 per
share, of the Company or any security into which the common
stock may
be converted.

"Company" means the party named as such above
until a
successor replaces it pursuant to the applicable provision
hereof, and
thereafter means such successor.

"Computation Date" has the meaning assigned to
such term in
Section 4.08 hereof.

"Consolidated Net Income (Loss)", with respect to
any period
subsequent to the Effective Date, means net income (or loss)
of the
Company and its Subsidiaries, other than Rosebud,
Construction
Aggregates and any Subsidiary referred to in clause (A)(i)
of the
definition of Restricted Subsidiary herein, all as
consolidated
(except as expressly provided herein) and determined in
accordance
with GAAP but excluding, without duplication, (i) all
extraordinary
gains or losses (net of fees and expenses relating to the
transaction
giving rise thereto); (ii) net income (or loss) of any
Person combined
with such Person or one of its Subsidiaries on a "pooling of
interests" basis attributable to any period prior to the
date of
combination; (iii) gains or losses in respect of Sales of
Assets (net
of fees and expenses relating to the transaction giving rise
thereto
and on an after-tax basis); (iv) the net income of any
Subsidiary to
the extent that the declaration of dividends or similar
distributions
by that Subsidiary of that income is not at the time
permitted,
directly or indirectly, by operation of the terms of its
charter or
any agreement, instrument, judgment, decree, order, statute,
rule or
governmental regulations applicable to that Subsidiary or
its
stockholders; and (v) any net income of any Person who is
not a
wholly-owned Subsidiary (except to the extent of the amount
of
dividends or distributions actually paid in cash to the
Company or a
wholly-owned Subsidiary of the Company during such period,
but not in
excess of the Company's pro rata share of such Person's net
income).

"Consolidated Net Worth" means the total assets of
a Person
and its Restricted Subsidiaries minus the total liabilities
of a
Person and its Restricted Subsidiaries, as consolidated
(except for
the exclusion of Subsidiaries which are not Restricted
Subsidiaries)
and determined in accordance with GAAP; provided, however,
when
determining the Consolidated Net Worth of a Person and its
Restricted
Subsidiaries for purposes of Section 5.01(iv), New York Trap
Rock and
NYTR Transportation shall be excluded.

"Construction Aggregates" means Construction
Aggregates
Limited, a corporation organized under the laws of Nova
Scotia.

"Corporate Trust Office of the Trustee" shall be
at the
address of the Trustee specified in Section 11.02 or such
other
address as the Trustee may give notice of to the Company.

"Custodian" has the meaning assigned to such term
in Section
6.01 hereof.

"Default" means any event which is, or after
notice or
passage of time or both would be, an Event of Default.

"Dividends" means any dividends declared by a
Person on its
Capital Stock (other than (i) dividends payable to the
Company or
dividends payable by Subsidiaries of a Restricted Subsidiary
to such
Restricted Subsidiary, (ii) dividends payable solely in
Capital Stock
of the Company and (iii) dividends required under the terms
of
Preferred Stock of a Restricted Subsidiary permitted under
Section
4.10 hereof).

"EBITDA" means, in respect of any period
subsequent to the
Effective Date, the Consolidated Net Income (or Consolidated
Net
Loss), plus (i) any amounts that were deducted from revenues
in
determining such Consolidated Net Income (or Consolidated
Net Loss)
in respect of depreciation, amortization and Interest
Expense, (ii)
the aggregate amount of any provisions (or minus any
credits) for
federal, state, and local franchise, income and similar
taxes
(including taxes based on capital), and (iii) without
duplication, the
aggregate amount of all non-cash charges to Consolidated Net
Income
(or Consolidated Net Loss); minus (a) non-cash items
increasing
Consolidated Net Income and (b) interest income.

"Effective Date" means April 14, 1994.

"Employee Settlement Agreements" means settlement
agreements
in effect on the Effective Date with (i) the PBGC, (ii) the
Official
Committee of Retired Employees of the Company and its
Subsidiaries and
(iii) the Unions, and all related agreements, documents and
instruments, as amended, modified and supplemented from time
to time
to the extent permitted under Section 4.16(d) hereof.

"ERISA" means the Employee Retirement Income
Security Act
of 1974, as amended from time to time.

"ERISA Controlled Group" means a group which
includes the
Company and which is treated as a single employer under
Section 414(b)
or (c) of the Internal Revenue Code of 1986, as amended.

"Event of Default" has the meaning assigned to
such term in
Section 6.01 hereof.

"Excepted Lease" means (i) any lease existing on
the
Effective Date and renewals or extensions thereof, (ii) any
lease
between the Company or any Restricted Subsidiary (other than
New York
Trap Rock and NYTR Transportation) and the Company or any
wholly-owned
Restricted Subsidiary (other than New York Trap Rock and
NYTR
Transportation) and (iii) any lease which is a Trap Rock
Permitted
Transaction.

"Excess Net Proceeds" means at any date of
determination,
the excess of (i) all Net Proceeds received from time to
time
subsequent to the Effective Date during the Company's fiscal
year (or
portion thereof) in which such date occurs by the Company or
any
Restricted Subsidiary over (ii) $2 million.

"Exchange Act" means the Securities Exchange Act
of 1934,
as amended, and the rules and regulations of the SEC
promulgated
thereunder.

"Fair Value" means fair market value as determined
in good
faith by the Board of Directors of the Company.

"First Fiscal Year" means the first four complete
fiscal
quarters following the Effective Date.

"GAAP" means generally accepted accounting
principles in
effect from time to time.

"Guarantee" means the Guarantee set forth in
Article 10
hereof to be made for the benefit of the Securityholders
from time to
time by the Guarantors.

"Guarantee Agreement" means the Guarantee
Agreement dated
as of the date hereof between the Company and Chemical Bank,
as
trustee, pursuant to which the Company has guaranteed the
payment of
a portion of certain Asset Proceeds Notes issued by Rosebud
pursuant
to a separate Indenture, dated as of the date hereof,
between Rosebud
and Chemical Bank, as Trustee.

"Guarantor" means each Restricted Subsidiary in
existence
from time to time other than New York Trap Rock and NYTR
Transportation.

"Holder" or "Securityholder" means a Person in
whose name
a Security is registered on the Registrar's books.

"Incentive Compensation Plan" means the incentive
compensation plan for certain employees of the Company with
respect
to the sale of assets of Rosebud as in effect on the
Effective Date
and any replacement or modification thereto so long as such
replacement or modification is not materially
disadvantageous to the
Holders or the Company.

"Indebtedness" of any Person shall mean, without
duplication, (a) all indebtedness for money borrowed,
created,
incurred or assumed by such Person or guaranteed by such
Person or for
which it is otherwise liable or responsible (such as by
agreement to
purchase indebtedness of others), (b) all amounts owing by
such Person
under Purchase Money Indebtedness or other purchase money
liens or
conditional sales or other title retention agreements, (c)
all
indebtedness secured by any mortgage, pledge or other lien
or
encumbrance upon property owned by such Person, even though
such
Person has not assumed or become liable for the payment of
such
indebtedness, (d) all Capitalized Rent under any Capitalized
Lease
(other than Excepted Leases), (e) the lowest mandatory or
optional
redemption price or liquidation value of outstanding
Preferred Stock
issued by such Person, if a Restricted Subsidiary, and owned
by any
Person other than the Company or another Restricted
Subsidiary, (f)
all obligations under any agreement relating to the fixing
of interest
rates on any Indebtedness, such as an interest rate swap,
cap or
collar agreement if and to the extent the same would
constitute a
liability on the balance sheet of such Person prepared in
accordance
with GAAP and (g) all obligations in respect of standby
letters of
credit issued at the request of such Person; provided,
however, that
the term Indebtedness shall exclude (i) trade payables and
other
accrued current liabilities incurred in the ordinary course
of
business; (ii) any obligations to the Company or any wholly-
owned
Restricted Subsidiary; (iii) any obligations arising from
the
Production Payment Transaction, (iv) in the case of the
Company, any
obligations arising under the Guarantee Agreement and
(without
limitation) any obligations on any Payment Notes hereafter
issued
thereunder and (v) any particular indebtedness if, upon or
prior to
the maturity thereof, there shall have been deposited with
the proper
depository in trust money (or evidences of such indebtedness
if
permitted by the instrument creating such indebtedness) in
the
necessary amount to pay, redeem or satisfy such indebtedness
as and
when due, and thereafter such money and evidences of
indebtedness so
deposited shall not be included in any computation of the
assets of
such Person. In determining the Indebtedness of the Company
and its
Restricted Subsidiaries, any Indebtedness for which the
Company and
one or more Restricted Subsidiaries or for which two or more
Restricted Subsidiaries are obligated shall be deemed to be
Indebtedness of only one such Person.

"Indenture" means this Indenture as amended,
amended and
restated, modified or supplemented from time to time in
accordance
with the terms hereof.

"Independent Financial Advisor" means a firm of
financial
advisors (i) which does not, and whose directors, officers
and
employees or Affiliates do not, have a direct or indirect
material
financial interest in the Company and (ii) which, in the
judgment of
the Board of Directors of the Company, is otherwise
independent and
qualified to perform the task for which it is to be engaged.

"Interest Expense" means, in respect of any period
subsequent to the Effective Date, (i) all interest charges
on
Indebtedness of the Company and its Restricted Subsidiaries
(and, in
the case of Preferred Stock included in the definition of
Indebtedness, mandatory dividends thereon when payable,
regardless of
when declared, other than liquidating and similar dividends)
paid or
payable (or, with respect to any original issue discount,
accrued) in
respect of such period, including without limitation all
late charges,
funding cost adjustments, prepayment and yield protection
fees paid
or payable in respect of Indebtedness, and interest payable
on
obligations arising under the Production Payment
Transaction, during
such period and (ii) 4% of the amount of all lease payments
(other
than lease payments under Capitalized Leases) during such
period in
connection with any sale-leaseback transaction entered into
after the
date hereof.

"Interest Expense Ratio" means the ratio of (i)
the
aggregate EBITDA for the four complete fiscal quarters (or
such
smaller number of fiscal quarters as have elapsed since the
Effective
Date) immediately preceding the date of calculation to (ii)
the
aggregate Interest Expense for such four immediately
preceding fiscal
quarters (or shorter period, as the case may be); provided,
however,
that in calculating the Interest Expense Ratio for purposes
of
determining whether proposed Indebtedness may be incurred or
a
sale-leaseback transaction may be entered into (A) Interest
Expense
shall be calculated on a pro forma basis giving effect to
the
incurrence of such proposed Indebtedness or sale-leaseback
transaction
as if it were incurred on the first day of such four fiscal
quarter
period and (B) if the incurrence of such Indebtedness or the
entering
into of any sale-leaseback transaction shall relate to any
transaction proposed by the Company (and otherwise permitted
hereunder), any EBITDA, determined on a pro forma basis,
which the
Company or its Subsidiaries would have received had such
transaction
been consummated immediately prior to such four fiscal
quarter period
(calculating, in the event of an acquisition, such EBITDA,
to the
extent practicable, from actual financial results for the
appropriate
period) shall be included within the aggregate EBITDA
referenced in
clause (i) above for purposes of such calculation.

"Inventory" means finished goods, work in process,
repair
parts and supplies, fuels and packages, raw materials and
goods in
transit.

"Investment" means, other than in the ordinary
course of
business, providing any cash or assets to, or extending
credit to, or
becoming liable in respect of or otherwise providing for
payment of
any Indebtedness of, any Person, whether or not in exchange
for
securities of any Person or other consideration.

"Kosmos" means Kosmos Cement Company, a Kentucky
partnership.

"Legal Holiday" has the meaning assigned to such
term in
Section 11.11 hereof.

"Lien" means, with respect to any asset, any
mortgage, lien,
pledge, charge, security interest or similar encumbrance in
respect
of such asset, whether or not filed, recorded or otherwise
perfected
under applicable law (including any conditional sale or
other title
retention agreement, any Capitalized Lease in the nature
thereof, and
any filing of or agreement to give any financing statement
under the
Uniform Commercial Code or equivalent statutes of any
jurisdiction
other than an information filing), but does not include, in
the case
of the Company and its Restricted Subsidiaries, the lien
granted to
the Trustee under Section 7.07 hereof.

"Management Services Agreement" means the
management
services and asset disposition agreement in effect on the
Effective
Date between the Company and Rosebud and its Subsidiaries
and any
replacement or modification thereto so long as such
replacement or
modification is not materially disadvantageous to the
Holders or the
Company.

"Material Restricted Subsidiary" has the meaning
assigned
to such term in Section 6.01.

"Maturity Date" of the Securities means July 31,
2003.

"Moody's" means Moody's Investors Services, Inc.
and its
successors.

"Multiemployer Plan" means a Plan which is a
multiemployer
plan as defined in Section 4001(a)(3) of ERISA.

"Net Proceeds" with respect to any Sale of Assets,
means the
cash (in U.S. dollars or currency freely convertible into
U.S.
dollars) received from such Sale of Assets after (i)
provision for all
income or other taxes measured by or resulting from such
sale or other
disposition or the transfer of the proceeds thereof to the
Company
that are payable by the Company or any of its Subsidiaries
(as
reasonably and in good faith estimated by the Chief
Financial Officer
of the Company or such Subsidiary), (ii) payment of all
brokerage
commissions, legal and accounting fees and expenses and
other fees and
expenses related to such sale or other disposition, (iii)
deduction
of any amounts required to be paid to the lender pursuant to
any
Permitted Working Capital Loans or West Nyack Indebtedness
upon such
Sale of Assets to the extent actually paid, (iv) deduction
of amounts
provided by the Company or its Subsidiaries as a reserve on
its
regularly prepared balance sheets (or the notes thereto), in
accordance with GAAP consistently applied (including,
without
limitation, subject to the next succeeding sentence, all
amounts
escrowed, pledged or otherwise set aside to assume payment
of such
liabilities), against any liabilities associated with the
assets sold
in such Sale of Assets and retained by the Company or its
Subsidiaries, including, without limitation, trade payables,
payroll
and pension and other employment and postemployment benefit
liabilities and liabilities related to environmental
matters, or
against any indemnification obligations associated with the
sale or
other disposition, (v) deduction of amounts set aside in
good faith
for the construction, acquisition or improvement of assets
as
contemplated by clause (D) of the proviso to the definition
of "Sale
of Assets," and (vi) deduction of any amounts required to
discharge
any Permitted Liens on the assets sold, leased, conveyed or
otherwise
disposed of. Net Proceeds (i) shall not include any
proceeds from the
transfer of the Non-Core Assets pursuant to the Plan of
Reorganization
but (ii) shall include, when received in cash (x) any Net
Proceeds
from the sale or other disposition of any non-cash proceeds
received
by the Company or any of its Subsidiaries from a Sale of
Assets and
(y) any Net Proceeds released from escrow, pledge or other
set aside
pursuant to the contract, settlement or other instrument or
document
governing such aspect of the Sale of Assets and amounts no
longer
reserved or set aside as described in clause (iv) or (v),
respectively, of the immediately preceding sentence.

"New York Trap Rock" means New York Trap Rock
Corporation,
a Delaware corporation.

"Non-Core Assets" has the meaning assigned in the
Plan of
Reorganization.

"NYTR Transportation" means NYTR Transportation
Corp., a
Delaware corporation.

"Officer" means the Chairman of the Board, the
President,
any Senior Vice-President, Executive Vice-President or any
other
Vice-President, the Treasurer or the Secretary of the
Company or a
Guarantor, as the case may be.

"Officers' Certificate" means a certificate signed
by any
two Officers of the Company or a Guarantor, as the case may
be.

"Opinion of Counsel" means a written opinion from
legal
counsel who is reasonably acceptable to the Trustee. Such
counsel may
be an employee of or counsel for the Company, the Trustee or
a
Guarantor or other counsel.

"PBGC" means the Pension Benefit Guaranty
Corporation.

"Paying Agent" has the meaning assigned to such
term in
Section 2.03 hereof.

"Payment Notes" has the meaning assigned to such
term in the
Guarantee Agreement.

"Permitted Acquisitions" means (i) any acquisition
of assets
in the ordinary course of business and (ii) if approved by
the Board
of Directors of the Company, any acquisition out of the
ordinary
course of business (including by way of merger or
consolidation) of
Capital Stock or other equity interests (but not of less
than 100% of
such Capital Stock or equity interests then outstanding,
other than
director's qualifying shares), or assets of, any Person
(provided such
Capital Stock, equity interests or assets primarily relate
to a line
of business in which the Company or a Subsidiary is
operating
immediately prior to such acquisition); provided, in the
case of
either clause (i) or (ii), that neither the Company nor any
Restricted
Subsidiary of the Company (other than the acquired Person
and its
Subsidiaries) incurs any liability, contingent or otherwise,
for the
payment of any deferred portion of the purchase price
therefor, other
than Purchase Money Indebtedness, or for any Indebtedness,
obligation
or liability, contingent or otherwise, other than any such
liability,
contingent or otherwise, which the Company could incur
without
violation of this Indenture. For purposes of this
definition,
"ordinary course of business" shall exclude any acquisition
of all or
substantially all of the Capital Stock or assets of a
Person, a
division or line of business.

"Permitted Investment" means (i) any Investment in
the
Company or any wholly-owned Restricted Subsidiary (whether
or not such
Person is a Restricted Subsidiary before such Investment)
other than
New York Trap Rock and NYTR Transportation; (ii) Investments
in
obligations of, or guaranteed by the United States
government or any
agency or political subdivision thereof; (iii) Investments
in
commercial paper issued by corporations maturing within 180
days from
the date of the original issue thereof, and rated "P-1" or
better by
Moody's or "A-1" or better by S&P or an equivalent rating or
better
by any other nationally recognized securities rating agency;
(iv)
Investments in certificates of deposit issued or acceptances
accepted
by or guaranteed by any bank or trust company organized
under the laws
of the United States of America or any state thereof or the
District
of Columbia, in each case having capital, surplus and
undivided
profits totalling more than $500,000,000 maturing within one
year of
the date of purchase; (v) money market funds organized under
the laws
of the United States of America or any state thereof that
invest
substantially all of their assets in any of the types of
Investments
described in clause (ii), (iii) or (iv) above or (xii) below
including
funds held by Chemical Bank (e.g. the "Hanover Fund"); (vi)
any
additional Investments in, or purchases of additional
interests in,
Kosmos; (vii) one or more capital contributions to Rosebud
on or
before the Effective Date in a maximum aggregate amount of
$5 million
and any advance to Rosebud or its Subsidiaries or Affiliates
permitted
under the Management Services Agreement; (viii) any
Investment in
Construction Aggregates provided the aggregate amount of
such
Investments, net of cash repayments during the appropriate
period,
shall not exceed $2 million in any successive 12-month
period and
shall not when aggregated with Investments described in
clause (xiii)
below exceed $5 million in the First Fiscal Year; (ix) any
Investments
required pursuant to any agreement existing on the date
hereof; (x)
Permitted Acquisitions; (xi) non-cash consideration received
in a Sale
of Assets or series of related Sales of Assets, to the
extent
permitted in Section 4.13; (xii) Cash Equivalents; (xiii)
Investments
in any Affiliates during the First Fiscal Year in the
aggregate amount
of not more than $5 million; (xiv) other Investments
expressly
required by the Plan of Reorganization; and (xv) Trap Rock
Permitted
Transactions.

"Permitted Liens" means (i) Liens which may be
granted from
time to time to secure and/or maintain Permitted Working
Capital
Loans; (ii) Liens provided for or expressly contemplated by
the Plan
of Reorganization or existing on the Effective Date; (iii)
Liens in
favor of the Trustee on all property and funds held or
collected by
the Trustee as security for the performance by the Company
of its
obligations of payment to, and reimbursement and
indemnification of,
the Trustee for its services under the Indenture and any
similar liens
in favor of the trustee under any indenture under which the
Payment
Notes may be issued ; (iv) Liens for taxes or assessments
and similar
charges, or imposed in connection with litigation or
asserted claims,
either not delinquent or contested in good faith by
appropriate
proceedings and as to which the Company or a Subsidiary
shall have set
aside on its books such reserves as it deems adequate
(provided such
reserves shall be in accordance with GAAP); (v) Liens
incurred, or
pledges and deposits made, in connection with workers'
compensation,
unemployment insurance and other social security benefits,
or securing
the performance of leases, statutory obligations, progress
payments,
surety and appeal bonds and other obligations of like
nature, but only
to the extent any of the foregoing are incurred in good
faith in the
ordinary course of business; (vi) Liens imposed by law, such
as
mechanics', carriers', warehousemen's, materialmen's and
vendors'
Liens, incurred in good faith in the ordinary course of
business
either in respect of amounts not delinquent or contested in
good faith
by appropriate proceedings as to which the Company or a
Subsidiary
shall have set aside on its books such reserves as it deems
adequate
(provided such reserves shall be in accordance with GAAP);
(vii)
zoning restrictions, easements, licenses, covenants,
reservations,
restrictions on the use of real property or irregularities
of title
incident thereto that do not in the aggregate materially
detract from
the value of the property or assets of the Company or any of
its
Subsidiaries, as the case may be, or materially impair the
use of such
property in the operation of the Company's or any
Subsidiary's
business; (viii) Liens created by Restricted Subsidiaries of
the
Company to secure Indebtedness of such Restricted
Subsidiaries to the
Company or to any wholly-owned Restricted Subsidiaries
(other than New
York Trap Rock and NYTR Transportation) thereof; (ix) any
Lien on any
asset acquired as a part of a Permitted Acquisition (x)
Liens on the
Capital Stock or other securities of any Unrestricted
Subsidiary or
any asset (including the stock of any Subsidiary thereof) of
any
Unrestricted Subsidiary to secure Indebtedness of such
Unrestricted
Subsidiary; (xi) Liens on assets acquired in connection with
the
incurrence of Purchase Money Indebtedness in accordance with
the
definition thereof; (xii) Liens granted in connection with
the
incurrence of Refinancing Indebtedness in accordance with
the
definition thereof; (xiii) Liens securing Employee
Settlement
Agreements; (xiv) Liens required under the Production
Payment
Transaction in accordance with the definition thereof; (xv)
any Liens
on the West Nyack, New York, plant and related facilities of
the
Company and/or its Restricted Subsidiaries incurred in
connection with
West Nyack Indebtedness; (xvi) Liens under Capital Leases
and sale and
leaseback transactions, each to the extent permitted under
Section
4.10 hereof; (xvii) Liens on the Capital Stock of Rosebud to
secure
the Company's obligations under the Guarantee Agreement or
any Payment
Notes issued thereunder; (xviii) other Liens expressly
required to be
granted under the Plan of Reorganization; (xix) any other
Liens
existing from time to time securing obligations not
exceeding, in the
aggregate, $1.5 million; and (xx) Liens hereafter created to
replace
other Permitted Liens to the extent they secure the same
obligations
and are in property having an aggregate value no greater
than the
property subject to the replaced Lien.

"Permitted Working Capital Loans" means
Indebtedness for
money borrowed under committed revolving credit or similar
committed
facilities for working capital purposes, or the issuance of
letters
of credit pursuant to any such facility, which facility may
or may not
be secured by a lien on assets customary for working capital
loans
(which shall not include real property or tangible assets
(other than
Inventory) relating to physical facilities) including,
without
limitation, cash, Inventory, general intangibles,
Receivables and/or
the Capital Stock of Construction Aggregates and
Subsidiaries of the
Company (other than Rosebud and its Subsidiaries, New York
Trap Rock
and NYTR Transportation) with total assets with a book value
greater
than or equal to $500,000, and proceeds thereof, that the
Company or
any Restricted Subsidiary of the Company may have from time
to time,
to the extent that the aggregate principal amount of all
such
Indebtedness outstanding under all such facilities at any
time does
not exceed the greater of (i) $35 million or (ii) the sum of
85% of
the book value of the Receivables of the Company and its
Restricted
Subsidiaries and 60% of the book value of the Inventory of
the Company
and its Restricted Subsidiaries.

"Person" means any individual, corporation,
partnership,
joint venture, association, joint-stock company, trust,
unincorporated
organization, or government or any agency or political
subdivision
thereof.

"Plan" shall mean any employee benefit plan
covered by Title
IV of ERISA, the funding requirements of which:

(i) were the responsibility of the
Company
or a member of its ERISA Controlled Group at any time within
the five
years immediately preceding the date hereof for which the
Company or
a member of its ERISA Controlled Group reasonably could
expect to
incur liability under Section 4069 or 4212(c) of ERISA,
(ii) are currently the
responsibility of the
Company or a member of its ERISA Controlled Group, or
(iii) hereafter becomes the
responsibility of
the Company or a member of its ERISA Controlled Group,
including any
such plans as may, within the last five years prior to the
Effective
Date, have been, or may hereafter be, terminated for
whatever reason.

"Plan of Reorganization" means the Company's
Modified
Amended Consolidated Plan of Reorganization, as amended,
modified or
supplemented from time to time prior to the Effective Date.

"Preferred Stock", as applied to the stock of any
Person,
shall mean any class of stock of such Person which has a
preference
in respect of dividends of such Person or other distribution
of
assets, or in respect of amounts payable in the event of any
voluntary
or involuntary liquidation, dissolution and winding up of
such Person,
over any other class of stock of such Person.

"Production Payment Transaction" means the Second
Amended
and Restated Conveyance of Production Payments and the
Second Amended
and Restated Marketing Contract, each dated as of March 29,
1994, and
the Amended and Restated Option Agreement and the Amended
and Restated
Expense and Interest Agreement, each dated as of September
1, 1988,
all such agreements between the Company and John Fouhey, as
Trustee
for Selleck Hill Trust, and all related documents and
instruments, as
each of the foregoing may have been amended, amended and
restated or
supplemented on or prior to the Effective Date.

"Purchase Money Indebtedness" means any
Indebtedness
incurred by the Company or any of its Restricted
Subsidiaries in
connection with the acquisition or construction by the
Company or such
Restricted Subsidiary, after the Effective Date, of
equipment or other
fixed assets, including Indebtedness incurred to finance,
refinance
or refund the cost (including the cost of construction) of
such
assets; provided that (i) the principal amount of such
Indebtedness
does not exceed 75% of the Fair Value of the assets being
acquired or
the cost of construction paid by or charged to the Company
or such
Restricted Subsidiary and (ii) such Indebtedness shall not
be secured
by any assets of the Company or any Restricted Subsidiary
other than
the assets acquired or constructed with the proceeds of such
Indebtedness.

"Receivables" means all "accounts", all "chattel
paper", all
"documents", all "instruments" evidencing "accounts" and all
proceeds
thereof, as each such term is defined in the Uniform
Commercial Code
as in effect in the State of New York on the Effective Date.

"Redemption Price" has the meaning assigned to
such term in
Section 3.03 hereof.

"Refinancing Indebtedness" means Indebtedness, the
proceeds
of which are used to extend, renew, refinance or refund then
outstanding Indebtedness of the Company or its Restricted
Subsidiaries
permitted under this Indenture, if such refinancing or
refunding
Indebtedness (i) does not have a principal amount in excess
of the
principal amount of the Indebtedness being so refinanced or
refunded,
plus customary fees, expenses and costs related to the
incurrence of
such Refinancing Indebtedness; (ii) gives its holders
collateral with
no greater value (as determined by the Company's Board of
Directors)
and no more guaranties from the Company and its Subsidiaries
(other
than Unrestricted Subsidiaries) than the Indebtedness being
refinanced; (iii) has an Average Life to Stated Maturity no
shorter
than the Indebtedness being refinanced; and (iv) is at least
as junior
or no more senior in right of payment to the Securities, as
the case
may be, as the Indebtedness being refinanced (it being
understood that
the fact that such Indebtedness is secured by a Permitted
Lien or
guaranteed by an Unrestricted Subsidiary shall not cause the
Indebtedness to be excluded from the definition of
Refinancing
Indebtedness under this clause (iv)).

"Registrar" has the meaning assigned to such term
in Section
2.03 hereof.

"Reportable Event" shall have the meaning set
forth in
Section 4043(b) of ERISA other than a Reportable Event as to
which the
provision of 30 days notice to the PBGC is
waived under applicable regulations), or is the occurrence
of the
events described in Section 4068(f) or 4063(a) of ERISA.

"Restricted Stock Payments" means any payment on
account of
the purchase, redemption or other retirement of any shares
of Capital
Stock or any other distribution in respect thereof (other
than
Dividends, payments to the Company or by Subsidiaries of a
Restricted
Subsidiary to such Restricted Subsidiary, dividends payable
solely in
Capital Stock of the Company and dividends required under
the terms
of Preferred Stock of a Restricted Subsidiary permitted
under Section
4.10 hereof).

"Restricted Subsidiary" means, for any time of
determination: (A) any Subsidiary which has assets with a
book value
at such time in excess of $1,000,000 (as reflected in the
Company's
most recent audited consolidated financial statements) other
than:
(i) a Subsidiary substantially all of the physical
properties of which
are located, and substantially all of the business of which
is carried
on, outside the limits of the United States of America
(including
Alaska and Hawaii) or which is organized under the laws of
any
jurisdiction other than the United States of America, the
District of
Columbia, the Commonwealth of Puerto Rico, the States or the
possessions of the United States; (ii) a Subsidiary the
primary
business of which consists of purchasing accounts receivable
and/or
making loans secured by accounts receivable or providing
services
directly related thereto, or which is otherwise primarily
engaged in
the finance business; (iii) Rosebud, its Subsidiaries and
its and
their successors-in-interest; or (iv) Construction
Aggregates; (B) any
Subsidiary specified in clause (i), (ii), or (iv) of clause
(A) above
which the Company, by resolution of the Board of Directors,
shall have
designated as a Restricted Subsidiary; and (C) New York Trap
Rock and
NYTR Transportation.

"Rosebud" means Rosebud Holdings, Inc., a Delaware
corporation and a Subsidiary of the Company.

"S&P" means Standard & Poor's Corporation and its
successors.

"SEC" means the Securities and Exchange
Commission.

"Sale of Assets" means any sale, lease or other
conveyance
(including by way of merger or consolidation) of assets
(including the
Capital Stock of any Subsidiary of the Company but excluding
the
Capital Stock of the Company) of (i) the Company or any
Restricted
Subsidiary or (ii) any Unrestricted Subsidiary, to the
extent and
solely to the extent that the Company or any Restricted
Subsidiary
actually receives a distribution of some or all of the Net
Proceeds
of such sale, lease or conveyance; provided, however, that
the term
"Sale of Assets" shall not include (A) any consolidation or
merger
involving the Company or any Subsidiary for the purpose of
reincorporating the Company or such Subsidiary in another
jurisdiction; (B) any sale, lease, conveyance or other
disposition of
assets (including by way of merger or consolidation) (x) by
the
Company to one or more of its wholly-owned Restricted
Subsidiaries
(other than New York Trap Rock or NYTR Transportation) or
(y) by a
wholly-owned Restricted Subsidiary (other than New York Trap
Rock or
NYTR Transportation) to the Company or another wholly-owned
Restricted
Subsidiary (other than New York Trap Rock or NYTR
Transportation) or
(z) between New York Trap Rock and NYTR Transportation; (C)
any sale,
lease or conveyance required under the Production Payment
Transaction;
(D) any sale, lease, conveyance or other disposition of
assets of the
Company or any Subsidiary to the extent the proceeds thereof
are
reinvested substantially contemporaneously with their
receipt in the
construction, acquisition or improvement of assets by the
Company
and/or any Restricted Subsidiary which the Board of
Directors has in
good faith determined will be useful in the business to be
conducted
by the Company or such Restricted Subsidiary; (E) any sale
of
Receivables provided such sale is without recourse to the
Company or
its Restricted Subsidiaries or any sale of Receivables with
recourse
to the Company or its Restricted Subsidiaries provided such
sale is
Indebtedness permitted under this Indenture; (F) any sale,
assignment,
transfer, lease, conveyance or other disposition of assets
that is
governed by and permitted under the provisions of Article 5
hereof;
(G) any sale, assignment, transfer, lease, conveyance or
other
disposition of assets that is in the ordinary course of
business (it
being agreed that, for purposes of this definition,
"ordinary course
of business" shall not include any sale, assignment,
transfer, lease,
conveyance or other disposition of all or substantially all
of the
assets or Capital Stock of a Subsidiary or all or
substantially all
of the assets of a division or line of business) or (H) any
sale,
assignment, transfer, lease, conveyance or other disposition
of any
property, right or interest of the Company or any Subsidiary
to
Rosebud or any of its Subsidiaries or Affiliates as
contemplated by
the Plan of Reorganization. For purposes of this Indenture,
a
reinvestment of proceeds shall be considered substantially
contemporaneous if (1) the Board of Directors of the
appropriate
Person shall have approved the construction, acquisition or
improvement within 12 months before or 6 months after the
consummation
of the sale, lease or other conveyance of assets and (2)
such company
shall have entered into a definitive agreement for such
construction,
acquisition or improvement or shall have commenced such
construction,
acquisition or improvement within 12 months after such sale,
assignment, transfer, lease, conveyance or other
disposition.

"Securities" means the Notes issued under this
Indenture.

"Subsidiary" shall mean any Person more than 50%
of the
outstanding voting stock of which is owned, directly or
indirectly,
by the Company or by one or more other Subsidiaries. For
the purposes
of this definition, "voting stock" means stock or
partnership
interests or any other equity interest which ordinarily has
voting
power for the election of directors or, if the Person is not
a
corporation, voting power to direct the management of such
Person,
whether at all times or only so long as no senior class of
stock or
equity has such voting power by reason of any contingency.

"TIA" means the Trust Indenture Act of 1939 (15
U.S. Code
77aaa-77bbbb) as amended and as in effect on the execution
and
delivery of this Indenture, except as provided in Section
9.03.

"Termination Event" shall mean (i) a Reportable
Event, or
(ii) the initiation of any action by the Company, any member
of the
Company's ERISA Controlled Group or any ERISA Plan fiduciary
to
terminate an ERISA Plan or the treatment of an amendment to
an ERISA
Plan as a termination under Section 4041(c) of ERISA, or
(iii) the
institution of proceedings by the PBGC under Section 4042 of
ERISA to
terminate an ERISA Plan or to appoint a trustee to
administer any
ERISA Plan.

"Trap Rock Permitted Transaction" means (i) any
lease or
purchase of assets or services by or from the Company or any
Restricted Subsidiary from or by New York Trap Rock or NYTR
Transportation on terms no less favorable to the Company or
such
Restricted Subsidiary than would be obtained in an arms'
length
transaction; (ii) any borrowings by New York Trap Rock or
NYTR
Transportation directly or indirectly through the Company of
the
proceeds of Permitted Working Capital Loans or West Nyack
Indebtedness; (iii) any capital contributions, loans or
Investments
by the Company or any Restricted Subsidiary to or in New
York Trap
Rock or NYTR Transportation for purposes of repairing or
replacing its
assets or upgrading such assets for environmental or safety
purposes
or providing for winter maintenance or extending their
useful life,
provided that any such capital contribution, loan or
Investment in
excess of $1 million shall be approved by the Company's
Board of
Directors; and (iv) any transaction between New York Trap
Rock and
NYTR Transportation.

"Trust Officer" means any officer of the Trustee
assigned
by the Trustee to administer its corporate trust matters.

"Trustee" means the party named as such in this
Indenture
until a successor replaces it and thereafter means the
successor.

"U.S. Government Obligations" means direct non-
callable
obligations of, or non-callable obligations guaranteed by,
the United
States of America for the timely payment of which the full
faith and
credit of the United States of America is pledged.

"Unions" shall mean the International Brotherhood
of
Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and
Helpers;
the United Paperworkers International Union; the United
Steelworkers
of America; the International Brotherhood of Teamsters,
Chauffeurs,
Warehousemen and Helpers, Local 445; the International Union
of
Operating Engineers; the International Association of
Machinists; and
the Laborers International Union of North America, Local 60.

"Unrestricted Subsidiary" shall mean any
Subsidiary which
is not a Restricted Subsidiary.

"West Nyack Indebtedness" means the first $25
million of
principal amount of Indebtedness from time to time
outstanding (and
accrued interest thereon), including without limitation
Capitalized
Leases, sale-leaseback transactions or any other kind of
Indebtedness
incurred in connection with the West Nyack Modernization.

"West Nyack Modernization" means the proposed
modernization
of the West Nyack, New York, plant and related facilities
owned by the
Company and/or its Restricted Subsidiaries.

SECTION 1.02 Incorporation by Reference of Trust Indenture
Act.

Whenever this Indenture refers to a provision of
the TIA,
the provision is incorporated by reference in and made a
part of this
Indenture.

The following TIA terms used in this Indenture
have the
following meanings:

"indenture securities" means the Securities.

"indenture security holder" means a
Securityholder.

"indenture to be qualified" means this Indenture.

"indenture trustee" or "institutional trustee"
means the
Trustee.

"obligor" on the indenture securities means the
Company and
the Guarantors.

All other terms used in this Indenture that are
not
otherwise defined herein and are defined by the TIA, are
defined by
TIA reference to another statute, or are defined by SEC rule
under the
TIA, have the meanings so assigned to them.

SECTION 1.03 Rules of Construction.

Unless the context otherwise requires:

(1) a term has the meaning assigned to it;

(2) "or" is not exclusive;

(3) words in the singular include the plural and
in the
plural include the singular except where the context
manifestly
otherwise requires;

(4) provisions apply to successive events and
transactions;

(5) "herein", "hereof" and other words of similar
import
refer to this Indenture as a whole and not to any particular
Article,
Section or other subdivision;

(6) references to Sections or Articles herein,
unless
otherwise expressly specified, refer to Sections or Articles
hereof;

(7) references herein to any action, transaction,
condition
or circumstance permitted under a Section shall be deemed to
refer to
actions, transactions, conditions or circumstances not
prohibited by
the provisions of such Section;

(8) "wholly-owned" shall be determined without
regard to
directors' qualifying shares; and

(9) each covenant in Article 4 hereof shall be
effective
from and after the Effective Date.

ARTICLE 2.

THE SECURITIES

SECTION 2.01 Form and Dating.

The Securities, the notation thereon relating to
the
Guarantee and the Trustee's certificate of authentication
shall be
substantially in the form set forth in Exhibit A, which is
incorporated in and forms a part of this Indenture. The
Securities
may have such notations, legends or endorsements as are
required by
law, stock exchange rule or usage. Each Security shall be
dated the
date of its authentication.

SECTION 2.02 Execution and Authentication.

Two Officers shall sign the Securities for the
Company by
manual or facsimile signature. The Company's seal shall be
reproduced
on the Securities. An Officer of each of the Guarantors
shall sign
the Guarantee for that Guarantor by manual or facsimile
signature.

If an Officer whose signature is on a Security no
longer
holds that office at the time the Security is authenticated,
the
Security shall nevertheless be valid.

A Security shall not be valid until authenticated
by the
manual or facsimile signature of the Trustee. The signature
shall be
conclusive evidence that the Security has been authenticated
by the
Trustee under this Indenture.

The Trustee shall authenticate Securities for
original issue
in the aggregate principal amount of up to $78,000,000 upon
a written
order of the Company signed by two Officers or by an Officer
and an
Assistant Treasurer or Assistant Secretary of the Company.
Such order
shall specify the amount of Securities to be authenticated
and the
date on which the original issue of Securities is to be
authenticated.

The aggregate principal amount of Securities outstanding at
any time
may not exceed the amount of Securities issued pursuant to
this
paragraph except as provided in Section 2.07.

The Trustee may appoint an authenticating agent
reasonably
acceptable to the Company to authenticate Securities. An
authenticating agent may authenticate Securities whenever
the Trustee
may do so. Each reference in this Indenture to
authentication by the
Trustee includes authentication by such agent. An
authenticating
agent has the same rights as an Agent to deal with the
Company or any
Affiliate.

The Securities shall be issuable only in
registered form
without coupons and only in denominations of $1,000 and
whole
multiples thereof.

SECTION 2.03 Registrar and Paying Agent.

The Company shall maintain in the Borough of
Manhattan, The
City of New York, an office or agency where Securities may
be
presented for registration of transfer or for exchange (the
"Registrar"), and an office or agency where Securities may
be
presented for payment (the "Paying Agent"). The Registrar
shall keep
a register of the Securities and of their transfer and
exchange. The
Company may appoint or change one or more co-registrars and
one or
more additional paying agents without notice, and may act in
any such
capacity on its own behalf provided that if the Trustee is
acting as
registrar or paying agent, the Company shall give the
Trustee at least
five Business Days prior written notice of such change. The
term
"Paying Agent" includes any additional paying agent.

The Company shall enter into an appropriate agency
agreement
with any Agent not a party to this Indenture. The agreement
shall
implement the provisions of this Indenture that relate to
such Agent.
The Company shall notify the Trustee of the name and address
of any
Agent not a party to this Indenture. If the Company fails
to maintain
a Registrar or Paying Agent, the Trustee may act as such.

The Company initially appoints the Trustee as
Registrar and
Paying Agent.

SECTION 2.04 Paying Agent to Hold Money in Trust.

Each Paying Agent shall hold in trust for the
benefit of the
Securityholders or the Trustee all moneys held by the Paying
Agent for
the payment of principal of or interest on the Securities
(whether
such money has been paid to it by the Company or any
Guarantor), and
shall notify the Trustee of any default by the Company
and/or any
Guarantor in making any such payment. While any such
default
continues, the Trustee may require a Paying Agent to pay all
money
held by it to the Trustee. The Company may at any time
require a
Paying Agent to pay all money held by it to the Trustee.
Upon payment
over to the Trustee, neither the Company nor the Paying
Agent shall
have any further liability to any Securityholder or the
Trustee for
the money so paid over. If the Company acts as Paying
Agent, it shall
segregate and hold as a separate trust fund all money held
by it as
Paying Agent.

SECTION 2.05 Securityholder Lists.

The Trustee shall preserve in as current a form as
is
reasonably practicable the most recent list available to it
of the
names and addresses of Securityholders. If the Trustee is
not the
Registrar, the Company shall furnish to the Trustee not more
than 15
days after each record date a list, in such form and as of
such date
as the Trustee may reasonably require, of the names and
addresses of
Securityholders and at such other times as the Trustee may
request in
writing, within 30 days after such request, a list in
similar form and
content as of a date not more than 15 days prior to the time
such list
is furnished.

SECTION 2.06 Transfer and Exchange.

When Securities are presented to the Registrar or
a
Co-Registrar with a request to register their transfer or to
exchange
them for an equal principal amount of Securities of other
authorized
denominations accompanied by a written instrument or
instruments of
transfer, in form satisfactory to the Company and the
Registrar, duly
executed by the registered owner or by his or her attorney
duly
authorized in writing, the Registrar shall register the
transfer or
make the exchange. To permit registrations of transfer and
exchanges,
the Trustee shall authenticate Securities (accompanied by
Guarantees
duly endorsed by the Guarantors) at the Registrar's request.
The
Company or the Trustee, as the case may be, shall not be
required (i)
to issue, authenticate, register the transfer of or exchange
any
Security during a period beginning at the opening of
business 15 days
before the mailing of a notice of redemption of the
Securities
selected for redemption under Section 3.03 and ending at the
close of
business on the day of such mailing, or (ii) to register the
transfer
of or exchange any Security so selected for redemption in
whole or in
part, except the unredeemed portion of Securities being
redeemed in
part.

No service charge shall be made for any
registration of
transfer or exchange of Securities, but the Company may
require
payment of a sum sufficient to cover any tax or other
governmental
charge that may be imposed in connection with any transfer,
registration of transfer or exchange of Securities, other
than
exchanges pursuant to Sections 2.10, 3.06 or 9.05 not
involving any
transfer.

Anything in this Indenture to the contrary
notwithstanding,
but subject to the payment of interest to the Holders of the
Securities on the applicable record date, the parties hereto
and any
agent thereof may deem and treat the Holder of any
Securities, prior
to due presentment thereof for registration of transfer, as
the
absolute owner of such Securities for all purposes (whether
or not the
Securities shall be overdue and notwithstanding any notation
of
ownership or other writing thereon) and neither the Company,
the
Trustee nor any agent of the Company or the Trustee shall be
affected
by any notice to the contrary.

SECTION 2.07 Replacement Securities.

If the Holder of a Security claims that the
Security has
been mutilated, lost, destroyed or wrongfully taken, the
Company shall
execute and issue and, upon a written order of the Company
signed by
two Officers or by an Officer and an Assistant Treasurer or
Assistant
Secretary of the Company, the Trustee shall authenticate
(accompanied
by Guarantees duly endorsed by the Guarantors) and deliver a
replacement Security if their respective reasonable
requirements as
well as the requirements of applicable law are met and, in
the case
of a mutilated Security, such mutilated Security is
surrendered to the
Trustee. If required by the Trustee, any Guarantor or the
Company,
an indemnity bond must be furnished by such Holder in an
amount
sufficient in the judgment of the Trustee or the Company, as
the case
may be, to indemnify and protect the Company, each
Guarantor, the
Trustee and any other Agent and hold them harmless from any
loss which
any of them may suffer if a Security is replaced. The
Company or the
Trustee may charge for its reasonable expenses in replacing
a
Security.

If any mutilated, destroyed or wrongfully taken
Security has
become or is about to become due and payable, the Company in
its
discretion may, instead of issuing a new Security, pay such
Security
when due.

Every replacement Security is an additional
obligation of
the Company.

SECTION 2.08 Outstanding Securities.

Securities outstanding at any time are all the
Securities
authenticated by the Trustee except those canceled by it,
those
delivered to it for cancellation, and those described in
this Section
as not outstanding. Subject to Section 2.09, a Security
does not
cease to be outstanding solely because the Company or any
Guarantor
or one of their Subsidiaries or Affiliates is a Holder of
the
Security.

If a Security is replaced pursuant to Section
2.07, it
ceases to be outstanding unless the Trustee receives proof
satisfactory to it, or a court holds, that the replaced
Security is
held by a bona fide purchaser.

If the Paying Agent (if other than the Company) or
the
Trustee holds on a redemption date or the Maturity Date
money
sufficient to pay the principal of, and accrued interest on,
the
Securities payable on that date, then on and after that date
such
Securities shall be deemed to be no longer outstanding and
interest
on them shall cease to accrue.

SECTION 2.09 Securities Held by the Company or an
Affiliate.

In determining whether the Holders of the required
principal
amount of Securities have concurred in any direction,
request, waiver
or consent under this Indenture, Securities owned by the
Company or
any Guarantor or any Subsidiary or Affiliate of the Company
or a
Guarantor shall be disregarded, except that for the purposes
of
determining whether the Trustee shall be protected in
relying on any
such direction, request, waiver or consent, only Securities
which the
Trustee knows are so owned shall be so disregarded.

SECTION 2.10 Temporary Securities.

Until definitive Securities are ready for
delivery, the
Company may prepare and execute and the Trustee shall
authenticate
(accompanied by Guarantees duly endorsed by the Guarantor)
and deliver
temporary Securities. Temporary Securities shall be
substantially in
the form of definitive Securities, but may have such
variations as the
Company considers appropriate for temporary Securities. The
Company
shall prepare and execute and the Trustee shall authenticate
and
deliver definitive Securities (accompanied by Guarantees
duly endorsed
by the Guarantors) in exchange for temporary Securities
without
unreasonable delay.

SECTION 2.11 Cancellation.

The Company may at any time deliver Securities to
the
Trustee for cancellation. The Registrar and Paying Agent
shall
forward to the Trustee any Securities surrendered to them
for
registration of transfer, exchange or payment. The Trustee
shall
cancel all Securities surrendered for registration of
transfer,
exchange, payment or cancellation and shall destroy canceled
Securities and deliver a certificate of destruction to the
Company.
The Company may not issue new Securities to replace
Securities that
it has paid or delivered to the Trustee for cancellation.

SECTION 2.12 Defaulted Interest.

If and to the extent the Company defaults in a
payment of
interest on the Securities, it shall pay the defaulted
interest in any
lawful manner. It may pay the defaulted interest to the
Persons who
are Securityholders on a subsequent special record date.
The Company
shall fix such record date and payment date. At least 15
days before
the record date, the Company shall mail to Securityholders,
with a
copy to the Trustee, a notice that states the record date,
payment
date and amount of interest to be paid.

ARTICLE 3.

REDEMPTION

SECTION 3.01 Notices to Trustee.

If the Company wishes to redeem Securities
pursuant to
Section 3.07 or is required to redeem Securities pursuant to
Section
3.08, it shall notify the Trustee, by means of an Officers'
Certificate at least 60 days prior to the redemption date
(unless a
shorter notice period shall be satisfactory to the Trustee),
of the
redemption date and the principal amount of Securities to be
redeemed.

SECTION 3.02 Selection of Securities to be Redeemed.

If less than all the Securities are to be
redeemed, the
Trustee shall select the Securities to be redeemed on a pro
rata
basis, by lot or such other method as the Trustee shall deem
fair and
equitable. The Trustee shall make the selection from
Securities
outstanding and not previously called for redemption. The
Trustee may
select for redemption portions of the principal of
Securities that
have denominations larger than $1,000. The Securities and
portions
of them it selects shall be in amounts of $1,000 or whole
multiples
of $1,000. The provisions of this Indenture that apply to
Securities
called for redemption also apply to portions of Securities
called for
redemption. For purposes of any such selection the Company
will, upon
request of the Trustee, close for a period of 15 days
preceding the
mailing of any notice of redemption the registry books of
the Company
with respect to the Securities. If the Company shall so
direct,
Securities registered in the name of the Company or any
Subsidiary or
Affiliate thereof shall not be included in the Securities
selected for
redemption.

SECTION 3.03 Notice of Redemption.

At least 30 days but not more than 60 days before
a
redemption date, the Company shall mail a notice of
redemption by
first-class mail to each Holder whose Securities are to be
redeemed.

The notice shall identify the Securities and the
principal
amount thereof to be redeemed (if less than all of the
Securities are
to be redeemed) and shall state:

(1) the redemption date;

(2) that the Securities will be redeemed at a
price equal
to the principal amount to be redeemed plus accrued and
unpaid
interest to the date of redemption (the "Redemption Price");

(3) the amount of accrued interest to be paid on
the
Securities as a part of the Redemption Price;

(4) the name and address of the Paying Agent;

(5) the provisions of the Securities and this
Indenture
pursuant to which the Securities are to be redeemed;

(6) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption
Price;

(7) that interest on Securities called for
redemption
ceases to accrue on and after the redemption date unless the
Company
shall default in the payment of the Redemption Price; and

(8) the CUSIP number of the Securities.

At the Company's request, the Trustee shall give
the notice
of redemption in the Company's name and at the Company's
expense.

SECTION 3.04 Effect of Notice of Redemption.

Once a notice of redemption is mailed in
accordance with the
provisions hereof, the Securities called for redemption
become due and
payable on the redemption date at the Redemption Price and,
on and
after such redemption date (unless the Company shall default
in the
payment of the Redemption Price on the date fixed for
redemption),
such Securities shall cease to bear interest and such
Securities shall
be deemed not to be outstanding hereunder and shall not be
entitled
to any benefits hereunder, except to receive payment of the
Redemption
Price. Upon surrender to the Paying Agent, such Securities
shall be
paid at the Redemption Price.

SECTION 3.05 Deposit of Redemption Price.

On or before the Business Day immediately
preceding the
redemption date, the Company shall deposit with the Paying
Agent money
in funds immediately available on the opening of business on
the
redemption date sufficient to pay the Redemption Price of
all
Securities to be redeemed on that date.

SECTION 3.06 Securities Redeemed in Part.

Upon surrender of a Security that is redeemed in
part, the
Trustee shall authenticate for the Holder a new Security
equal in
principal amount to the unredeemed portion of the Security
surrendered.

SECTION 3.07 Optional Redemption; Open Market Purchases.

The Securities may be redeemed at the option of
the Company
in whole at any time or in part from time to time at the
Redemption
Price. The Securities may also be purchased by the Company
on the
open market from time to time, without penalty or premium.

SECTION 3.08 Mandatory Redemption.

Within forty-five days after the end of each
fiscal quarter
of the Company in which Excess Net Proceeds for the fiscal
year of the
Company in which such fiscal quarter occurs shall have been
received
by the Company or any Restricted Subsidiary, the Company
shall deposit
all Excess Net Proceeds to the extent received during such
quarter
into an account with the Trustee. All funds in such account
shall,
at the Company's written direction, from time to time, be
held in cash
in an interest-bearing account or invested in Cash
Equivalents
designated by the Company. Simultaneously with such
deposit, the
Company shall provide to the Trustee an Officers'
Certificate setting
forth (a) a calculation of the Net Proceeds received by the
Company
or any Restricted Subsidiary during such quarter, (b) a
calculation
of the amount of Excess Net Proceeds received by the Company
or any
Restricted Subsidiary and deposited with the Trustee, and
(c) if
appropriate, a statement of the reduction of the amount of
such
deposit pursuant to the last sentence of this Section 3.08.
If at any
time there is at least $5 million of Excess Net Proceeds on
deposit
with the Trustee pursuant to this Section 3.08, all money in
such
account shall be used by the Trustee upon receipt of the
Officers'
Certificate delivered pursuant to Section 3.01 hereof to
redeem
Securities at the Redemption Price. The amount of any such
required
deposit shall be reduced by the principal amount of any
Securities
that the Company has (during a period commencing with the
public
announcement that a Sale of Assets has occurred in respect
of which
a deposit of Excess Net Proceeds is expected to be made and
ending on
the earlier of (i) ninety days after the date of such
announcement or
(ii) the date on which the deposit is required to be made
under the
first sentence of this Section 3.08) optionally redeemed or
purchased
(whether through open market or other purchases) and
delivered to the
Trustee for cancellation and that have not been previously
applied to
the reduction of the Company's obligations under this
Section or to
any sinking fund payment required pursuant to Section 3.09.

SECTION 3.09 Sinking Fund Payments.

The Company shall make three payments of
$10,000,000 each
into a sinking fund account maintained with the Trustee
commencing in
the year 2000. The first such payment shall be made on or
before July
31, 2000, the second on or before July 31, 2001 and the
third on or
before July 31, 2002. All funds in such account shall, at
the
Company's written direction, from time to time, be held in
cash in an
interest-bearing account, or invested in U.S. Government
Obligations
designated by the Company with a maturity date not later
than one
Business Day before the Maturity Date ("bonds"). The funds
in the
sinking fund account shall be used to redeem Securities from
time to
time before the Maturity Date as and when directed by the
Company.
The amount of any such required sinking fund payment shall
be reduced
by the principal amount of any Securities that the Company
has
optionally redeemed or purchased and delivered to the
Trustee for
cancellation and that have not been previously applied to
the
reduction of the Company's obligations with respect to the
deposit of
Excess Net Proceeds under Section 3.08 or to any required
sinking fund
payment under this Section. For purposes of this Indenture,
funds
held by the Trustee shall be deemed held by the Paying
Agent. In the
event that, at any time, the principal amount of any
Securities
previously redeemed under this Section or delivered by the
Company to
the Trustee for cancellation under this Section plus any
cash
(together with the proceeds of the bonds, including, without
limitation, principal, interest and premium) in the sinking
fund
account at any time that the Company is not in default
hereunder
exceeds the lesser of (i) the then outstanding principal
amount of
Securities and (ii) $30,000,000, the excess shall be
returned to the
Company upon written request from the Company to the
Trustee.

ARTICLE 4.

COVENANTS

SECTION 4.01 Payment of Securities.

The Company shall pay the principal of and
interest on the
Securities on the dates and in the manner provided in the
Securities
and this Indenture. Principal and interest shall be
considered paid
on the date due if the Paying Agent (if other than the
Company) holds
on that date money sufficient to pay all principal and
interest then
due. The Company shall pay interest on overdue principal at
the rate
specified in the Securities.

SECTION 4.02 Maintenance of Office or Agency.

The Company will maintain in the Borough of
Manhattan, The
City of New York, an office or agency where Securities may
be
surrendered for registration of transfer or exchange and
where notices
and demands to or upon the Company in respect of the
Securities and
this Indenture may be served. The Company will give prompt
written
notice to the Trustee of the location, and any change in the
location,
of such office or agency. If at any time the Company shall
fail to
maintain any such required office or agency or shall fail to
furnish
the Trustee with the address thereof, such presentations,
surrenders,
notices and demands may be made or served at the Corporate
Trust
Office of the Trustee.

The Company may also from time to time designate
one or more
other offices or agencies where the Securities may be
presented or
surrendered for any or all such purposes and may from time
to time
rescind such designations; provided, however, that no such
designation
or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York, for such purposes. The
Company will
give prompt written notice to the Trustee of any such
designation or
rescission and of any change in the location of any such
other office
or agency.

The Company hereby initially designates the
Corporate Trust
Office of the Trustee as an agency of the Company in
accordance with
Section 2.03.

SECTION 4.03 Corporate Existence.

Except as permitted in Article 5, the Company
shall, and
shall cause each of its Subsidiaries (other than Rosebud and
its
Subsidiaries) to, do or cause to be done all things
necessary to
preserve and keep in full force and effect its corporate
existence;
provided, however, that the Company shall not be required to
preserve
its or cause its Subsidiaries to preserve their corporate
existence
if the Company's Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct
of the
business of the Company and its Subsidiaries as a whole and
if the
loss thereof is not disadvantageous in any material respect
to the
Holders.

SECTION 4.04 Payment of Taxes.

The Company will pay or discharge or cause to be
paid or
discharged, before the same shall become delinquent (i) all
material
taxes, assessments and governmental charges levied or
imposed upon the
Company or any Subsidiary (other than Rosebud and its
Subsidiaries)
and (ii) all lawful claims for labor, materials and supplies
which,
if unpaid, might by law become a material Lien upon the
property of
the Company or any Subsidiary (other than Rosebud and its
Subsidiaries); provided, however, that the Company shall not
be
required to pay or discharge or cause to be paid or
discharged any
such tax, assessment, charge or claim whose amount,
applicability or
validity is being contested in good faith by appropriate
proceedings
and for which it has set aside on its books such reserves as
it deems
adequate and are in accordance with GAAP.

SECTION 4.05 Maintenance of Properties.

The Company will cause the material properties
owned by the
Company or any Subsidiary (other than Rosebud and its
Subsidiaries)
for use in the conduct of its business or the business of
any such
Subsidiary to be maintained and kept in good condition,
repair and
working order (subject to ordinary wear and tear) and will
cause to
be made all necessary repairs thereof, all as in the
judgment of the
Company may be necessary so that the business carried on in
connection
therewith may be properly and advantageously conducted;
provided,
however, that nothing in this Section shall prevent the
Company from
discontinuing the maintenance or repair of any such
properties if such
discontinuance is, in the judgment of the Company, desirable
in the
conduct of its business or the business of any Subsidiary
(other than
Rosebud and its Subsidiaries) and if such discontinuance is
not
disadvantageous in any material respect to the Holders.

SECTION 4.06 SEC Reports.

Within 15 days after the Company files with the
SEC copies
of its annual and quarterly reports and other information,
documents
and reports (or copies of such portions of any of the
foregoing as the
SEC may by rules and regulations prescribe) which it is
required to
file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act,
the Company shall deliver the same to the Trustee. The
Company will
mail copies of its annual reports and quarterly reports as
filed with
the SEC, other than exhibits to any such report unless such
exhibits
are themselves incorporated by reference in such report, to
any
Securityholder upon request. If the Company shall cease to
be subject
to the requirements of Section 13 or 15(d) of the Exchange
Act, the
Company shall deliver to the Trustee and to each
Securityholder,
within 15 days after the date by which it would have been
required to
make such a filing with the SEC, audited annual financial
statements
prepared in accordance with GAAP and unaudited condensed
quarterly
financial statements, including any notes thereto, each
comparable to
that which the Company would have been required to include
in such
annual reports, information, documents or other reports if
the Company
were then subject to the requirements of Section 13 or 15(d)
of the
Exchange Act. The Company also shall comply with the other
provisions
of TIA 314(a).

If, in accordance with GAAP, any Guarantor shall
at any time
cease to be consolidated with the Company for financial
reporting
purposes, such Guarantor will, within 15 days after it files
with the
SEC copies of its annual and quarterly reports and other
information,
documents and reports (or copies of such portions of any of
the
foregoing as the SEC may by rules and regulations prescribe)
which it
is required to file with the SEC pursuant to Section 13 or
15(d) of
the Exchange Act, deliver the same to the Trustee. Such
Guarantor
will mail copies of its annual reports and quarterly reports
as filed
with the SEC, other than exhibits to any such report unless
such
exhibits are themselves incorporated by reference in such
report, to
any Securityholder upon request. If such Guarantor shall
cease to be
subject to the requirements of Section 13 or 15(d) of the
Exchange
Act, such Guarantor (to the extent it is required by the
TIA, taking
into consideration any waivers or no action positions
received by the
Company or the Guarantors from the SEC, written notice of
which shall
be provided to the Trustee) shall (i) deliver to the Trustee
and to
each Securityholder, within 15 days after the date by which
it would
have been required to make such a filing with the SEC,
audited annual
financial statements prepared in accordance with GAAP and
unaudited
condensed quarterly financial statements, including any
notes thereto,
each comparable to that which such Guarantor would have been
required
to include in such annual reports, information, documents or
other
reports if the Company were then subject to the requirements
of
Section 13 or 15(d) of the Exchange Act and (ii) comply with
the other
provisions of TIA 314(a).

SECTION 4.07 Compliance Certificate.

The Company and each Guarantor shall deliver to
the Trustee
within 120 days after the end of each fiscal year ending
after the
Effective Date of the Company and such Guarantor (which on
the date
of this Indenture both end on December 31), and within 60
days after
the end of each of the first three fiscal quarters of the
Company and
such Guarantor, an Officers' Certificate signed by the
Company's
principal financial officer, principal accounting officer or
principal
executive officer stating that, after a review of the
activities of
the Company or such Guarantor, as the case may be, during
such period
and of the Company's or such Guarantor's, as the case may
be,
performance under this 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 or such
Guarantor in
performing any of its obligations under this Indenture or
the
Securities. If the signer does know of any such Default or
Event of
Default, the certificate shall describe the Default or Event
of
Default and its status.

SECTION 4.08 Restricted Investments and Restricted Stock
Payments.

The Company will not itself, and will not permit
any
Restricted Subsidiary to, declare any Dividends or make any
Restricted
Stock Payment or Investment (other than Permitted
Investments),
unless, in the case of Dividends, such Dividends are
declared to be
payable not more than 60 days after the date of declaration
and
unless, in each case, after giving effect to the proposed
Dividend,
Restricted Stock Payment or Investment and to any other
Dividends
declared but not yet paid, at the date (hereinafter called
the
"Computation Date") of such declaration (in case of a
Dividend) or of
such Restricted Stock Payment or Investment (i) the Company
could
incur $1.00 of additional Indebtedness under Section 4.10
hereof
without taking into consideration the proviso thereto, and
(ii) there
is no outstanding Default or Event of Default and (iii) the
sum of:

(A) Adjusted Consolidated Net Income, plus:

(B) the aggregate amount of net cash proceeds to
the
Company from sales subsequent to Effective Date of shares of
its
Capital Stock (other than Preferred Stock of a Restricted
Subsidiary
permitted under Section 4.10 hereof and other than sales to
a
Subsidiary of the Company), plus:

(C) in the case of the disposition or repayment
of any
Investment (other than Permitted Investments) if such
Investment was
made by a Restricted Subsidiary or the Company after the
Effective
Date in accordance with this Section 4.08, an amount equal
to the
lesser of the return of capital to such Restricted
Subsidiary or the
Company, as the case may be, with respect to such Investment
and the
cost of such Investment, in either case, less the cost of
the
disposition of such Investment;

shall be greater than the aggregate amount of all such
Dividends
declared and Restricted Stock Payments and Investments
(other than
Permitted Investments) made during the period commencing on
the
Effective Date and continuing to and including the
Computation Date;

provided, however, that without regard to the foregoing
restrictions
of this Section, (a) the Company may retire any shares of
any class
of its Capital Stock by exchange for, or out of the proceeds
of the
substantially concurrent sale of, other shares of its
Capital Stock,
and neither any such retirement nor any such proceeds so
used shall
be included in any computation provided for in this Section
4.08 and
(b) any Restricted Subsidiary may make any required payments
(including without limitation, dividend, sinking fund, and
mandatory
redemption payments) on or in respect of any Preferred Stock
of such
Restricted Subsidiary permitted under Section 4.10 hereof.
For
purposes of this Section 4.08, the issuance of Capital Stock
upon the
conversion of any Indebtedness of the Company shall be
deemed to
constitute a sale for cash of such capital stock and the net
proceeds
of such sale shall be deemed to be an amount equal to the
principal
amount of such Indebtedness, less applicable expenses and
cash
payments for fractional shares.

For the purposes of any computation under this
Section 4.08,
the amount of any Dividend declared or Restricted Stock
Payment made
in property other than cash, and the amount of any
Investment in a
Person other than a Restricted Subsidiary made through the
transfer
to it of any such property, shall be deemed to be the Fair
Value of
such property at the time of declaration (in the case of
Dividends)
or at the time of payment or distribution or the making of
such
Investment.

SECTION 4.09 Transactions with Affiliates.

The Company will not, and will not permit any of
its
Restricted Subsidiaries to, engage in any material
transaction (an
"Affiliated Party Transaction") with any of its Affiliates
(other than
the Company or Restricted Subsidiaries) unless (i) such
transaction
is pursuant to an agreement or operating relationship
between the
Company (or such Restricted Subsidiary) and such Affiliate
in effect
or operative on the Effective Date or (ii) the Board of
Directors in
good faith determines that such transaction is in the best
interest
of the Company or such Restricted Subsidiary and such
transaction is
on terms no less favorable to the Company (or such
Restricted
Subsidiary) than would be obtained in an arms' length
transaction.
The Company will not, and will not permit any of its
Restricted
Subsidiaries (other than New York Trap Rock and NYTR
Transportation)
to, engage in any material transaction with New York Trap
Rock or NYTR
Transportation other than Trap Rock Permitted Transactions.
With
respect to any Affiliated Party Transaction, or series of
related
Affiliated Party Transactions involving aggregate payments
or value
in excess of $1 million, but less than $5 million, the
Company shall
deliver to the Trustee an Officers' Certificate stating that
such
transaction or series of transactions complies with clause
(i) or (ii)
of the immediately preceding sentence. With respect to any
Affiliated
Party Transaction, or series of related Affiliated Party
Transactions
involving aggregate payments or value of $5 million or more,
other
than an Affiliated Party Transaction or series thereof
described in
clause (i) above, the Company shall deliver to the Trustee a
written
opinion from an Independent Financial Advisor stating that
the terms
of such transaction or series of transactions are fair to
the Company
or its Restricted Subsidiary, as the case may be. Nothing
in this
Section 4.09 shall be deemed to prohibit, or require the
delivery of
any such Officers' Certificate or opinion in relation to,
(a) any
transaction specifically provided for in the Plan of
Reorganization,
including without limitation any action or transaction, or
the
performance of any obligation, under the Incentive
Compensation Plan,
Management Services Agreement or the Employee Settlement
Agreements;
(b) reasonable and customary fees and compensation paid to
and
indemnity provided on behalf of and advances or loans to
officers,
directors, employees or consultants of the Company or any
Subsidiary;
(c) Restricted Stock Payments made in accordance with
Section 4.08 to
stockholders proportionately based on their stock ownership;
(d) the
execution, delivery and performance of one or more
registration rights
agreements in respect of securities issued by the Company
and Rosebud
pursuant to the Plan of Reorganization; (e) the sale of
Common Stock
of the Company; and (f) any Trap Rock Permitted Transaction.

SECTION 4.10 Certain Limitations on Indebtedness, etc.

(a) The Company will not, and will not permit any
Restricted Subsidiary, directly or indirectly, to create,
incur or
assume or guarantee or otherwise become liable or
responsible for, any
Indebtedness, or enter into any sale-leaseback transaction
(other than
an Excepted Lease) unless immediately thereafter and after
giving
effect thereto, the Interest Expense Ratio shall be at least
equal to
2.0:1.0; provided, however, that nothing contained in this
paragraph
4.10(a) shall prevent the Company or any Restricted
Subsidiary from
creating, incurring or assuming or guaranteeing or otherwise
becoming
liable or responsible for (i) the Indebtedness evidenced by
the
Securities and this Indenture, (ii) any Refinancing
Indebtedness,
(iii) any Permitted Working Capital Loans; (iv) any West
Nyack
Indebtedness; and (v) other Indebtedness having an aggregate
outstanding principal amount of no more than $1.5 million.

For purposes of this paragraph 4.10(a) and Section
4.08:
(a) at the time that a corporation becomes a Restricted
Subsidiary it
shall be deemed to have created at such time all the
Indebtedness it
has outstanding immediately after such time, and (b) in case
any
Restricted Subsidiary shall sell, transfer or otherwise
dispose of any
Indebtedness owing by the Company or another Restricted
Subsidiary,
or in case the Capital Stock of any Restricted Subsidiary
which holds
Indebtedness owing by the Company or any other Restricted
Subsidiary
shall be sold, transferred or otherwise disposed of, such
sale,
transfer or disposition shall be deemed to constitute the
creation of
such Indebtedness.

(b) The Company will not, and will not permit any
of its
Restricted Subsidiaries to, create, incur, assume or suffer
to exist
any Lien on any asset owned by the Company or any of its
Restricted
Subsidiaries except Permitted Liens.

SECTION 4.11 Conflicting Agreements.

The Company will not, and will not permit any of
its
Restricted Subsidiaries to, enter into any agreement or
execute any
instrument that by its terms expressly prohibits or
otherwise would
have the effect of prohibiting the Company from making
mandatory
redemptions or otherwise making any required payments on or
with
respect to the Securities pursuant to their terms and the
terms of
this Indenture.

SECTION 4.12 Restricted Subsidiaries.

The Company will not suffer or permit a Restricted
Subsidiary to consolidate or merge with or into any other
Person,
except that:

(1) a Restricted Subsidiary may so
consolidate or
merge into the Company;

(2) a Restricted Subsidiary may so
consolidate or
merge with or into any other Person if, after giving effect
to the
transaction, the entity surviving such consolidation or
merger will
be a Restricted Subsidiary other than New York Trap Rock or
NYTR
Transportation;

(3) a Restricted Subsidiary may, subject to
any other
applicable provision of the Indenture, consolidate or merge
into any
other Person in connection with a Sale of Assets permitted
under this
Indenture; and

(4) New York Trap Rock may consolidate or
merge with
or into NYTR Transportation.

Promptly after the designation of a Subsidiary as
a
Restricted Subsidiary the Company will notify the Trustee in
writing
of such designation.

SECTION 4.13 Sales of Assets.

The Company shall not, and shall not permit any of
its
Restricted Subsidiaries to, consummate a Sale of Assets
unless (i) the
Company or such Restricted Subsidiary, as the case may be,
receives
consideration at the time of such Sale of Assets at least
equal to the
Fair Value of the shares or assets sold or otherwise
disposed of and
(ii) at least 80% of such consideration (including
consideration
described in clause (D)) consists of (A) cash (which shall
be deemed
to include amounts subject to post-closing adjustments or
contingencies and held in escrow or payable pursuant to a
promissory
note maturing within 60 days of consummation of such sale or
disposition), (B) Cash Equivalents, (C) readily marketable
securities
which the Company in good faith expects to liquidate
promptly
following such Sale of Assets, (D) the assumption of
liabilities by
the purchaser pursuant to such Sale of Assets (including, in
the case
of the sale of the Capital Stock of a Restricted Subsidiary,
liabilities of such Restricted Subsidiary) or (E) assets
which the
Board of Directors has in good faith determined to be a like
kind swap
or similar swap or trade arrangements involving property
intended to
produce business and/or tax benefits for the Company and its
Restricted Subsidiaries and (iii) if such Sale of Assets or
series of
related Sales of Assets involves aggregate payments or value
in excess
of $5 million, it shall be approved by a majority of the
Directors of
the Company who are not also employees of the Company.

SECTION 4.14 Change of Control.

Upon the occurrence of a Change of Control, the
Company
shall be obligated to make an offer to purchase (a "Change
of Control
Offer") and shall, subject to the provisions described
below,
purchase, on a Business Day (the "Change of Control Purchase
Date")
not more than 90 nor less than 30 days following the
occurrence of the
Change of Control, all of the then outstanding Securities at
a
purchase price (the "Change of Control Purchase Price")
equal to 100%
of the principal amount thereof plus accrued and unpaid
interest, if
any, to the Change of Control Purchase Date. The Company
shall,
subject to the provisions described below, be required to
purchase all
Securities properly tendered into the Change of Control
Offer and not
withdrawn.

Notice of a Change of Control Offer shall be
mailed by the
Company not later than the 60th day after the Change of
Control to the
Holders of Securities at their last registered addresses
with a copy
to each Guarantor, the Trustee and the Paying Agent. The
Change of
Control Offer shall remain open from the time of mailing for
at least
20 Business Days and until 5:00 p.m., New York City time, on
the
Business Day preceding the Change of Control Purchase Date.
The
notice, which shall govern the terms of the Change of
Control Offer,
shall include such disclosures as are required by law and
shall state:

(a) that the Change of Control Offer is being
made pursuant
to this Section 4.14 and that all Securities validly
tendered into the
Change of Control Offer and not withdrawn shall be accepted
for
payment;

(b) the Change of Control Purchase Price
(including the
amount of accrued interest, if any) for each Security, the
Change of
Control Purchase Date and the date on which the Change of
Control
Offer expires;

(d) that, unless the Company shall default in the
payment
of the Change of Control Purchase Price, any Security
accepted for
payment pursuant to the Change of Control Offer shall cease
to accrue
interest after the Change of Control Purchase Date;

(e) that Holders electing to have Securities
purchased
pursuant to a Change of Control Offer will be required to
surrender
their Securities to the Paying Agent at the address
specified in the
notice prior to 5:00 p.m., New York City time, on the
Business Day
preceding the Change of Control Purchase Date and must
complete any
form letter of transmittal proposed by the Company and
reasonably
acceptable to the Trustee and the Paying Agent;

(f) that Holders of Securities will be entitled
to withdraw
their election if the Paying Agent receives, not later than
5:00 p.m.,
New York City time, on the Business Day preceding the Change
of
Control Purchase Date, a facsimile transmission or letter
setting
forth the name of the Holder, the principal amount of
Securities the
Holder delivered for purchase, the Security certificate
number (if
any) and a statement that such Holder is withdrawing its
election to
have such Securities purchased;

(g) that Holders whose Securities are purchased
only in
part will be issued Securities equal in principal amount to
the
unpurchased portion of the Securities surrendered;

(h) the instructions that Holders must follow in
order to
tender their Securities; and

(i) information concerning the business of the
Company, the
most recent annual and quarterly reports of the Company
filed with SEC
pursuant to the Exchange Act (or, if the Company is not then
required
to file any such reports with the SEC, the comparable
reports prepared
pursuant to Section 4.06), a description of material
developments in
the Company's business, pro forma historical financial
information
after giving effect to such Change of Control and such other
information concerning the circumstances and relevant facts
regarding
such Change of Control and Change of Control Offer as the
Company
shall determine in its reasonable discretion would be
material to a
Holder of Securities in connection with the decision of such
Holder
as to whether or not it should tender Securities pursuant to
the
Change of Control Offer, including information regarding the
Persons
acquiring control and such Persons' business plans going
forward.

On the Change of Control Purchase Date, the
Company shall
(i) accept for payment Securities or portions thereof (but
only in
principal amounts which are integral multiples of $1,000)
validly
tendered pursuant to the Change of Control Offer, (ii) by
10:00 a.m.
New York time, deposit with the Paying Agent money, in
immediately
available funds, sufficient to pay the Change of Control
Purchase
Price of all Securities or portions thereof so tendered and
accepted,
and (iii) deliver to the Trustee the Securities so accepted
together
with an Officers' Certificate setting forth the Securities
or portions
thereof tendered to and accepted for payment by the Company.
The
Paying Agent shall promptly mail or deliver to the Holders
of
Securities so accepted payment in an amount equal to the
Change of
Control Purchase Price, and the Trustee shall promptly
authenticate
and mail or deliver to such Holders a new Security equal in
principal
amount to any unpurchased portion of the Security
surrendered. Any
Securities not so accepted shall be promptly mailed or
delivered by
the Company to the Holder thereof. The Company shall
publicly
announce the results of the Change of Control Offer not
later than the
first Business Day following the Change of Control Purchase
Date.

The Company shall not be required to make a Change
of
Control Offer upon a Change of Control if a third party
makes the
Change of Control Offer in the manner, at the times and
otherwise in
compliance with the requirements applicable to a Change of
Control
Offer made by the Company and purchases all Securities
validly
tendered and not withdrawn under such Change of Control
Offer.

The Company shall comply, to the extent
applicable, with the
requirements of Section 14c-1 of the Exchange Act, and any
other
securities laws or regulations in connection with the
repurchase of
Securities pursuant to a Change of Control Offer.

SECTION 4.15 Waiver of Stay, Extension or Usury Laws.

The Company covenants (to the extent that it may
lawfully
do so) that it will not at any time insist upon, or plead,
or in any
manner whatsoever claim or take the benefit or advantage of,
any stay
or extension law or any usury law or other law which would
prohibit
or release the Company from paying all or any portion of the
principal
of or interest on the Securities as contemplated herein,
wherever
enacted, now or at any time hereafter in force, or which may
affect
the covenants or the performance of this Indenture, and (to
the extent
that it may lawfully do so) the Company hereby expressly
waives all
benefit or advantage of any such law, and covenants that it
will not
hinder, delay or impede the execution of any power herein
granted to
the Trustee, but it will suffer and permit the execution of
every such
power as though no such law had been enacted.

SECTION 4.16 Maintenance of Insurance and Records,
Compliance with
Law.

(b) The Company shall keep, or cause to be kept,
true books
and records and accounts in which entries will be made of
all of the
business transactions of the Company and its Subsidiaries
(other than
Rosebud and its Subsidiaries) which shall be full and
correct in all
material respects and reflect in their respective financial
statements
adequate accruals and appropriate reserves, all to the
extent required
by sound business practice and GAAP.

(c) The Company shall, and shall cause its
Subsidiaries
(other than Rosebud and its Subsidiaries) to, comply with
all
statutes, laws, ordinances, or governmental rules and
regulations to
which it is subject, noncompliance with which would
materially
adversely affect the prospects, earnings, properties, assets
or
condition, financial or otherwise, of the Company and its
Subsidiaries
(other than Rosebud and its Subsidiaries) taken as a whole.

(d) Neither the Company nor any Restricted
Subsidiary shall
amend, modify or supplement an Employee Settlement Agreement
if such
amendment, modification or supplement or series of related
amendments,
modifications or supplements in any 12-month period shall
result in
additional liability to the Company or its Subsidiaries with
a net
present value in excess of $5 million.

SECTION 4.17 Value of Claims Represented by Securities.

The Company covenants and agrees that in any case
commenced
under Chapter 11 of Title 11 of the United States Code
subsequent to
the Effective Date involving the Company, the claims
represented by
the Securities shall equal the full principal amount of the
Securities, plus accrued and unpaid interest at the stated
rates set
forth in the Securities.

SECTION 4.18 Investment Company Act of 1940.

The Company will not, and will not permit any of
its
Subsidiaries to, take any action resulting in its becoming
an
"investment company" (as such term is defined in the
Investment
Company Act of 1940, as amended).

SECTION 4.19 Notice of Default.

In the event that any Default under this Indenture
shall
occur, the Company will give written notice of such Default
to the
Trustee within 5 Business Days after its occurrence,
specifying the
nature and status of such Default and the steps which the
Company or
its Subsidiaries have taken or propose to take in order to
cure such
Default.

ARTICLE 5.

SUCCESSORS

SECTION 5.01 When Company May Merge, etc.

The Company shall not consolidate or merge with or
into, or
sell, assign, transfer or lease all or substantially all of
the assets
of the Company and its Restricted Subsidiaries, taken as a
whole, to,
any Person unless after giving effect to the proposed
consolidation,
merger, sale, assignment, transfer or lease:

(i) there exists no Default or Event of Default;
and

(ii) the Person formed by or surviving any such
consolidation or merger (if other than the Company), or to
which such
sale or conveyance shall have been made, is an entity
organized and
existing under the laws of the United States, any state
thereof or the
District of Columbia; and

(iii) the Person formed by or surviving any such
consolidation or merger (if other than the Company), or to
which such
sale or conveyance shall have been made, assumes by
supplemental
indenture all the obligations of the Company under the
Securities and
this Indenture (including, without limitation, those under
Section
3.09 hereof); and

(iv) the Person formed by or surviving any such
consolidation or merger, or to which such sale or conveyance
shall
have been made, immediately thereafter (A) has Consolidated
Net Worth
no smaller than the Company immediately prior thereto and
(B) could
incur $1.00 of additional Indebtedness under Section 4.10
above
without taking into consideration the proviso thereto.

The Company shall deliver to the Trustee prior to
the
consummation of the proposed transaction an Officers'
Certificate to
the foregoing effect and an Opinion of Counsel stating that
the
proposed transaction and supplemental indenture comply with
this
Indenture.

SECTION 5.02 Successor Substituted.

Upon any consolidation or merger or transfer or
lease of all
or substantially all of the assets of the Company and its
Restricted
Subsidiaries, taken as a whole, in accordance with Section
5.01, the
successor Person formed by such consolidation or into which
the
Company is merged or to which such sale, assignment,
transfer or lease
is made shall succeed to, and be substituted for, and may
exercise
every right and power of, and shall assume every duty and
obligation
of, the Company under, this Indenture with the same effect
as if such
successor corporation had been named as the Company herein.
As of the
assumption by the successor corporation of all obligations
of the
Company hereunder, all obligations of the predecessor
corporation
shall terminate.

ARTICLE 6.

DEFAULTS AND REMEDIES

SECTION 6.01 Events of Default.

An "Event of Default" occurs if:

(1) the Company and the Guarantors default in the
payment
of interest on any Security 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 such due date;

(2) the Company and the Guarantors default in the
payment
of the principal of any Security when the same becomes due
and
payable, whether at maturity, in connection with any sinking
fund
payment obligation or redemption, by acceleration or
otherwise or
default under any purchase obligations pursuant to Section
4.14
hereof; provided, however, in the case of any such default
resulting
from a dispute as to the computation of Excess 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;

(3) the Company or any of its Restricted
Subsidiaries fails
to observe or perform any of its other covenants or
agreements in the
Securities or this Indenture, which failure continues for a
period of
30 days after the earlier of (i) 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 Securities at the time outstanding or (ii) the date
on which
the Company had Actual Knowledge of such failure;

(4) (a) the Company or any of its Restricted
Subsidiaries
fails to pay when due (whether at maturity, in connection
with any
mandatory amortization or redemption, by acceleration or
otherwise)
any principal of or interest on any Indebtedness now or
hereafter
outstanding with an aggregate outstanding principal amount
in excess
of $1 million, which default continues for any period of
grace
applicable thereto or (b) a default or event of default, as
defined
in one or more (i) indentures, agreements or other
instruments
evidencing or under which the Company or any of its
Restricted
Subsidiaries individually or collectively have, as of the
date of this
Indenture or hereafter, outstanding at least $1 million
aggregate
principal amount of Indebtedness or (ii) Employee Settlement
Agreements (which, in the case of the Employee Settlement
Agreement
with the PBGC, shall be limited to a default under Section
9.1(a)
thereof), shall occur and be continuing and as a result
thereof such
Indebtedness or the Company's or any Restricted Subsidiary's
obligations under such Employee Settlement Agreement, as the
case may
be, referred to in clause (a) or (b) above, shall have been
accelerated so that such obligations thereunder shall be due
and
payable prior to the date on which otherwise due and payable
or, in
the case of the PBGC, it has foreclosed on the collateral
securing the
Company's obligations; provided that if such default or
event of
default under such indenture or Employee Settlement
Agreement or other
instrument or agreement shall be remedied or cured by the
Company or
the Restricted Subsidiary or waived by the holders of such
Indebtedness or by the other parties to the relevant
agreement
entitled to the benefit of the defaulted obligation
thereunder, as the
case may be, prior to any acceleration thereof (or, in the
case of the
PBGC, foreclosure thereunder) then the Event of Default
under this
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
Securities;

(5) one or more final judgments against the
Company or any
of its Restricted Subsidiaries for payments of money which
in the
aggregate exceed $1 million, are entered by a court of
competent
jurisdiction and such judgments are not rescinded, annulled,
stayed
or discharged within 60 days;

(6) the Company and its Restricted Subsidiaries,
taken as
a whole, become unable generally to pay their debts as they
become
due;

(7) the Company or any of its Material Restricted
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 an involuntary case or
proceeding,

(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;

(8) a court of competent jurisdiction enters a
judgment,
decree or order for relief in respect of the Company or any
of its
Material Restricted 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

and such judgment, decree or order remains unstayed and
in effect
for a period of sixty (60) consecutive days;

(9) 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 Material Restricted
Subsidiaries
and such petition, application, case or proceeding is not
dismissed
or stayed within sixty (60) days;

(10) any Termination Event with respect to a Plan
shall
occur which could reasonably be expected to result in the
imposition
of a Lien on the assets of the Company or any Restricted
Subsidiary
under Title IV of ERISA in excess of $1,000,000;

(11) a material Lien, other than a Permitted Lien,
shall be
imposed on any assets of the Company or a member of its
ERISA
Controlled Group in favor of the PBGC or a Plan; or

(12) the Company or a member of its ERISA
Controlled Group
shall partially or completely withdraw from a Multiemployer
Plan which
withdrawal results in the imposition of withdrawal liability
in excess
of $1,000,000 which remains unpaid or shall be a "default"
(as defined
in Section 4219(c)(5) of ERISA) with respect to payments of
more than
$1,000,000 to a Multiemployer Plan resulting from the
Company's or a
member of its ERISA Controlled Group's complete or partial
withdrawal
(as described in Section 4203 or 4205 of ERISA).

The term "Bankruptcy Law" means Title 11, U.S.
Code or any
similar Federal or State law for the relief of debtors. The
term
"Custodian" means any receiver, trustee, assignee,
liquidator or
similar official under any Bankruptcy Law or similar laws
for the
enforcement of creditors' rights. The term "Actual
Knowledge" means
the actual knowledge of any Officer of the Company;
provided, however,
that each Officer of the Company shall be deemed to have
actual
knowledge of any fact that would have come to such Officer's
attention
if he or she had exercised reasonable care in performing his
or her
duties, given the nature of his or her duties and the
Company's
business and organization. The term "Material Restricted
Subsidiary"
shall mean a Restricted Subsidiary with Consolidated Net
Worth
exceeding $5 million as of the end of the most recently
completed
fiscal year or, if such Restricted Subsidiary became a
Restricted
Subsidiary after the end of the most recently completed
fiscal year,
as of the end of the fiscal period most recently preceding
the date
on which such Restricted Subsidiary became a Restricted
Subsidiary.

SECTION 6.02 Acceleration.

If an Event of Default (other than an Event of
Default
specified in Section 6.01(7), (8) or (9)) occurs and is
continuing,
the Trustee by notice to the Company and each of the
Guarantors, or
the Holders of at least 25% in principal amount of the
Securities by
notice to the Company, each of the Guarantors and the
Trustee, may
declare the principal of and accrued interest on all the
Securities
to be due and payable. Upon such declaration such principal
and
interest shall be due and payable immediately. If an Event
of Default
specified in Section 6.01(7), (8) or (9) occurs, all unpaid
principal
and accrued interest on the Securities then outstanding
shall ipso
facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any
Securityholder. The Holders of at least 66 2/3% of the
principal
amount of the Securities may rescind an acceleration and its
consequences by notice to the Trustee if the rescission
would not
conflict with any judgment or decree and if the outstanding
Events of
Default have been cured or waived except, unless theretofore
cured,
nonpayment of principal or interest that has become due
solely because
of the acceleration. No such rescission shall affect any
subsequent
Default or impair any right or remedy with respect thereto.

SECTION 6.03 Other Remedies.

Notwithstanding any other provision of this
Indenture, if
an Event of Default occurs and is continuing, the Trustee
may pursue
any available remedy by proceeding at law or in equity to
collect the
payment of principal of or interest on the Securities or to
enforce
the performance of any provision of the Securities, this
Indenture or
the Guarantee.

The Trustee may maintain a proceeding even if it
does not
possess any of the Securities or does not produce any of
them in the
proceeding. A delay or omission by the Trustee or any
Securityholder
in exercising any right or remedy accruing upon an Event of
Default
shall not impair the right or remedy or constitute a waiver
of or
acquiescence in the Event of Default. No remedy is
exclusive of any
other remedy. All remedies are cumulative.

In case the Trustee shall have proceeded to
enforce any
rights under this Indenture or the Guarantee and such
proceedings
shall have been discontinued or abandoned for any reason or
shall have
been determined adversely to the Trustee, then and in every
such case
the Company, the Trustee and the Holders shall, subject to
any
determination in such proceeding, be restored respectively
to their
former positions and rights hereunder, and all rights,
remedies and
powers of the Company, the Guarantors and the Trustee shall
continue
as though no such proceeding had been taken.

SECTION 6.04 Waiver of Past Defaults.

Subject to Sections 6.02, 6.07 and 9.02, the
Holders of at
least 66 2/3% of the principal amount of the Securities by
notice to
the Trustee may waive an existing Default or Event of
Default and its
consequences. When a Default or Event of Default is waived,
it is
cured and ceases.

SECTION 6.05 Control by Majority.

The Holders of a majority in principal amount of
the
Securities may direct the time, method and place of
conducting any
proceeding for any remedy available to the Trustee or
exercising any
trust or power conferred on it. The Trustee, however, may refuse
to
follow any direction that conflicts with law or this
Indenture, is
unduly prejudicial to the rights of any Securityholder or
would
subject the Trustee to personal liability; provided, the
Trustee may
take any other action deemed proper by the Trustee which is
not
inconsistent with such direction. A record date may be set
for
purposes of determining who may exercise such control.

SECTION 6.06 Limitation on Suits.

Except as provided in Section 6.07, a
Securityholder may
pursue a remedy with respect to this Indenture or the
Securities only
if:

(1) the Holder gives to the Trustee written
notice of a
continuing Event of Default;

(2) the Holders of at least 25% in principal
amount of the
Securities make a written request to the Trustee to pursue
the remedy;

(3) such Holder or Holders offer to the Trustee
indemnity
reasonably satisfactory to the Trustee against any loss,
liability or
expense;

(4) the Trustee does not comply with the request
within 60
days after receipt of the request and the offer of
indemnity; and

(5) during such 60-day period the Holders of a
majority in
principal amount of the Securities do not give the Trustee a
direction
inconsistent with the request.

A Securityholder may not use this Indenture to
prejudice the
rights of any other Securityholder or to obtain a preference
or
priority over any other Securityholder.

SECTION 6.07 Rights of Holders to Receive Payment.

Subject only to Section 6.02 hereof, the right of
any Holder
of a Security to receive payment of principal of and
interest on the
Security, on or after the respective due dates (prior to any
acceleration) expressed in the Security, or to bring suit
for the
enforcement of any such payment on or after such respective
dates,
shall not be impaired or affected without the consent of the
Holder.

SECTION 6.08 Collection Suit by Trustee.

If an Event of Default specified in Section
6.01(1) or (2)
occurs and is continuing, the Trustee may recover judgment
in its own
name and as trustee of an express trust against the Company
and the
Guarantors for the whole amount of principal and interest in
default.

SECTION 6.09 Trustee May File Proofs of Claims.

The Trustee may file such proofs of claim and
other papers
or documents as may be necessary or advisable in order to
have the
claims of the Trustee, any predecessor Trustee and the
Securityholders
allowed in any judicial proceedings relative to the Company,
the
Guarantors, their creditors or their property.

Nothing herein contained shall be deemed to
authorize the
Trustee to authorize or consent to or accept or adopt on
behalf of any
Holder of the Securities any plan of reorganization,
arrangement,
adjustment or composition affecting the Securities or the
rights of
any Holder thereof, or to authorize the Trustee to vote in
respect of
the claim of any Holder of the Securities in any such
proceeding.

SECTION 6.10 Priorities.

If the Trustee collects any money pursuant to this
Article,
it shall pay out the money in the following order:

First: to the Trustee for amounts due under
Section 7.07;

Second: to Securityholders for amounts due and
unpaid on
the Securities for principal and interest, ratably, without
preference
or priority of any kind, according to the amounts due and
payable on
the Securities for principal and interest, respectively; and

Third: to the Company.

The Trustee may fix a record date and payment date
for any
payment by it to Securityholders pursuant to this Section.

SECTION 6.11 Undertaking for Costs.

In any suit for the enforcement of any right or
remedy under
this Indenture or in any suit against the Trustee for any
action taken
or omitted by it as Trustee, a court in its discretion may
require any
party litigating the suit other than the Trustee to file an
undertaking to pay the costs of the suit, and the court in
its
discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit,
having due
regard to the merits and good faith of the claims or
defenses made by
the party litigant. This Section does not apply to a suit
by the
Trustee, a suit by a Holder pursuant to Section 6.07, or a
suit by
Holders of more than 10% in principal amount of the
Securities.

ARTICLE 7.

TRUSTEE

SECTION 7.01 Acceptance of Trusts; Duties of Trustee.

The Trustee hereby accepts the trusts imposed upon
it by
this Indenture and covenants and agrees to perform the same
as herein
expressed.

(a) If an Event of Default has occurred and is
continuing,
the Trustee shall exercise such of the rights and powers
vested in it
by this Indenture, and use the same degree of care and skill
in their
exercise, as a prudent Person would exercise or use under
the
circumstances in the conduct of his or her own affairs.

(b) Except during the continuance of an Event of
Default:

(1) The Trustee need perform only those
duties that
are specifically set forth in this Indenture and no others.

(2) In the absence of bad faith on its part,
the
Trustee may conclusively rely, as to the truth of the
statements and
the correctness of the opinions expressed therein, upon
certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. Where a particular
provision of this
Indenture requires delivery of certain certificates and
opinions to
the Trustee, the Trustee shall examine the certificates and
opinions
to determine whether or not they conform to the requirements
of this
Indenture.

(c) The Trustee may not be relieved from
liability for its
own negligent action, its own negligent failure to act or
its own
willful misconduct, except that:

(1) This paragraph does not limit the effect
of
paragraph (b) of this Section 7.01.

(2) The Trustee shall not be liable with
respect to
any error of judgment made in good faith by a Trust Officer,
unless
it is proved that the Trustee was negligent in ascertaining
the
pertinent facts.

(3) The Trustee shall not be liable with
respect to
any action it takes or omits to take in good faith in
accordance with
a direction received by it pursuant to Section 6.05.

(d) Every provision of this Indenture that in any
way
relates to the Trustee is subject to paragraphs (a), (b) and
(c) of
this Section 7.01.

(e) The Trustee may refuse to exercise any of its
rights
or powers under this Indenture at the request of any Holders
unless
such Holders shall have offered to the Trustee indemnity
reasonably
satisfactory to it against any loss, liability or expense.
No
provision of this Indenture shall require the Trustee to
expend or
risk its own funds or otherwise incur any financial
liability in the
performance of any of its duties hereunder, or in the
exercise of its
rights or power, if it has reasonable grounds for believing,
and does
believe in good faith, that repayment of such funds or
adequate
indemnity against such risk or liability is not reasonably
assured to
it.

(f) The Trustee shall not be liable for interest
on any
money received by it except as expressly provided with
respect to the
sinking fund account or as the Trustee may agree in writing
with the
Company. Money held in trust by the Trustee need not be
segregated
from other funds except to the extent required by law.

SECTION 7.02 Rights of Trustee.

(1) The Trustee may rely on any document believed
by it to
be genuine and to have been signed or presented by the
proper Person.
The Trustee need not investigate any fact or matter stated
in the
document.

(2) Before the Trustee acts or refrains from
acting, it may
require an Officers' Certificate and/or an Opinion of
Counsel and may
consult with its counsel. The Trustee shall not be liable
for any
action it takes or omits to take in good faith in reliance
on such
Officers' Certificate, Opinion of Counsel or advice of such
counsel.

(3) The Trustee may act through agents and shall
not be
responsible for the misconduct or negligence of any agent
appointed
with due care.

SECTION 7.03 Individual Rights of Trustee.

The Trustee in its individual or any other
capacity may
become the owner or pledgee of Securities and may otherwise
deal with
the Company, any Subsidiary or any of the Guarantors or an
Affiliate
thereof with the same rights it would have if it were not
Trustee.
Any Agent may do the same with like rights. The Trustee,
however,
must comply with Sections 7.10 and 7.11.

SECTION 7.04 Trustee's Disclaimer.

The Trustee makes no representation as to the
validity or
adequacy of this Indenture, the Guarantee or the Securities,
and it
shall not be responsible for any statement in the Securities
or the
Guarantee other than its certificate of authentication.

SECTION 7.05 Notice of Defaults.

If a Default occurs and is continuing and if it is
actually
known to the Trustee, the Trustee shall mail to each
Securityholder
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
Security or in the case of a Default in making any sinking
fund
payment, the Trustee may withhold the notice if and so long
as it in
good faith determines that withholding the notice is in the
interests
of Securityholders.

SECTION 7.06 Reports by Trustee to Holders.

Within 60 days after each May 15 beginning May 15,
1995, the
Trustee shall mail to each Securityholder a brief report
dated as of
such date in accordance with and to the extent required
under TIA
313(a). The Trustee also shall comply with TIA 313(b).

A copy of each report at the time of its mailing
to
Securityholders shall be filed by the Trustee with the SEC
and each
stock exchange, if any, on which the Securities are listed.
The
Company shall notify the Trustee when the Securities are
listed on any
stock exchange.

SECTION 7.07 Compensation and Indemnity.

The Company and each Guarantor, jointly and
severally, agree
to pay to the Trustee, from time to time, such reasonable
compensation
for all services rendered by it hereunder (which
compensation shall
not be limited by any law on compensation of a trustee of an
express
trust). The Company and each Guarantor, jointly and
severally, agree
to reimburse the Trustee upon request for all reasonable out-
of-pocket
expenses, advances and disbursements incurred or made by the
Trustee
in accordance with any provision of this Indenture
(including the
reasonable compensation and the expenses and disbursements
of its
agents and counsel), except any such expense, disbursement
or advance
as may be attributable to its negligence or bad faith.

The Company and each Guarantor, jointly and
severally, agree
to indemnify the Trustee for, and hold it harmless against,
any loss,
expense or liability (including the reasonable fees and
expenses of
agents and counsel) incurred without negligence, bad faith
or willful
misconduct on its part, in connection with the acceptance or
administration of this Indenture and the performance of its
duties
hereunder, including the costs and expenses of defending
itself
against any claim or liability in connection with the
exercise or
performance of any of its powers or duties hereunder.

To secure the Company's and each Guarantor's
payment
obligations in this Section, the Trustee shall have a lien
prior to
the Securities on all money or property held or collected by
the
Trustee except that held in trust to pay principal and
interest on
particular Securities.

When the Trustee incurs expenses or renders
services after
an Event of Default specified in Section 6.01(7), (8) or (9)
occurs,
the expenses and the compensation for services are intended
to
constitute expenses of administration under any Bankruptcy
Law.

SECTION 7.08 Replacement of Trustee.

A resignation or removal of the Trustee and
appointment of
a successor Trustee shall become effective only upon the
successor
Trustee's acceptance of appointment as provided in this
Section.

The Trustee may resign by so notifying the Company
and each
Guarantor. The Holders of a majority in principal amount of
the
Securities may remove the Trustee by so notifying the
Trustee, each
Guarantor and the Company and such Holders may appoint a
successor
Trustee with the Company's consent. The Company may remove
the
Trustee if:

(1) the Trustee fails to comply with Section
7.10;

(2) the Trustee is adjudged a bankrupt or an
insolvent;

(3) a receiver or other public officer takes
charge of the
Trustee or its property; or

(4) the Trustee becomes incapable of acting.

If the Trustee resigns or is removed or if a
vacancy exists
in the office of Trustee for any reason, the Company shall
promptly
appoint a successor Trustee. Within one year after the
successor
Trustee takes office, the Holders of a majority in principal
amount
of the Securities may appoint a successor Trustee to replace
the
successor Trustee appointed by the Company.

If a successor Trustee does not take office within
30 days
after the retiring Trustee resigns or is removed, the
retiring
Trustee, the Company or the Holders of at least 10% in
principal
amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 7.10,
any Holder
may petition any court of competent jurisdiction for the
removal of
the Trustee and the appointment of a successor Trustee.

A successor Trustee shall deliver a written
acceptance of
its appointment to the retiring Trustee, the Guarantors and
to the
Company. Thereupon the resignation or removal of the
retiring Trustee
shall become effective and the successor Trustee shall have
all the
rights, powers and duties of the Trustee under this
Indenture. The
successor Trustee shall mail a notice of its succession to
Securityholders. The retiring Trustee shall, upon payment
of all
amounts due it under Section 7.07, promptly transfer all
property held
by it as Trustee to the successor Trustee, subject to the
lien
provided for in Section 7.07.

SECTION 7.09 Successor Trustee by Merger, etc.

If the Trustee consolidates, merges or converts
into, or
transfers all or substantially all of its corporate trust
business to
another corporation, the successor corporation without any
further act
shall be the successor Trustee.

SECTION 7.10 Eligibility; Disqualification.

This Indenture shall always have a Trustee who
satisfies the
requirements of TIA 310(a)(1). The Trustee shall always
have a
combined capital and surplus of at least $50,000,000 as set
forth in
its most recent published annual report of condition. The
Trustee
shall comply with TIA 310(b), including the optional
provision
permitted by the second sentence of TIA 310(b)(9).

SECTION 7.11 Preferential Collection of Claims Against
Company.

The Trustee shall comply with TIA 311(a),
excluding any
creditor relationship listed in TIA 311(b). A Trustee who
has
resigned or been removed shall be subject to TIA 311(a) to
the
extent indicated.

ARTICLE 8.

DISCHARGE OF INDENTURE

SECTION 8.01 Termination of Company's and Guarantors'
Obligations.

All of the Company's and each Guarantor's
obligations under
this Indenture shall terminate when all Securities
previously
authenticated and delivered (other than mutilated,
destroyed, lost or
stolen Securities which have been replaced or paid) have
been
delivered to the Trustee for cancellation or if:

(1) the Securities mature within six months or
all of them
are to be called for redemption within six months and there
exists no
Default or Event of Default;

(2) the Company or any Guarantor (x) 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
the principal and interest due at maturity or the Redemption
Price at
redemption, as the case may be and (y) irrevocably instructs
the
Trustee in writing to use such money or U.S. Government
Obligations
to redeem or repay the Securities. The Company or any
Guarantor 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 hereunder as of the
date of such
deposit; and

(4) the Company has delivered to the Trustee an
Officers'
Certificate and an Opinion of Counsel stating that all
conditions
precedent provided for herein relating to the satisfaction
and
discharge of this Indenture have been complied with.

Notwithstanding the foregoing, the Company's obligations in
Sections
2.03, 2.04, 2.05, 2.06, 2.07, 4.01, 7.07, 7.08 and 8.03 (and
each
Guarantor's obligation in respect of Sections 4.01 and 7.07)
shall
survive until the Securities are no longer outstanding, and
the
Company's obligations pursuant to Sections 7.07 and 8.03
(and each
Guarantor's obligations in respect of Section 7.07) shall
survive any
such termination.

After a deposit pursuant to this Section 8.01, the
Trustee
upon request shall acknowledge in writing the discharge of
the
Company's and each Guarantor's obligations under the
Securities, the
Guarantee and this 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 Securities, 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.

SECTION 8.02 Application of Trust Money.

The Trustee shall hold in trust money or U.S.
Government
Obligations deposited with it in accordance with the
provisions
hereof. It shall apply all such deposited money, and all
money from
U.S. Government Obligations, through the Paying Agent and in
accordance with this Indenture, to the payment of principal
of and
interest on the Securities.

SECTION 8.03 Repayment to Company or Guarantors.

The Trustee and the Paying Agent shall promptly
pay to the
Company, or if deposited with the Trustee by a Guarantor, to
such
Guarantor upon request any excess money or securities held
by them at
any time. The Trustee and the Paying Agent shall pay to the
Company,
or if deposited with the Trustee by a Guarantor, to such
Guarantor,
upon request any money held by them for the payment of
principal or
interest that remains unclaimed for two years; provided,
however, that
the Trustee or such Paying Agent, before being required to
make any
such repayment, may, at the expense of the Company, cause to
be
published once in a newspaper of general circulation in The
City of
New York or cause to be mailed to each Holder, or both, a
notice
stating that such money remains and that, after a date
specified
therein, which shall not be less than 30 days from the date
of such
publication or mailing, any unclaimed balance of such money
then
remaining will be repaid to the Company. After payment to
the
Company, Securityholders entitled to the money must look to
the
Company or such Guarantor for payment as general creditors
unless an
applicable abandoned property law designates another Person.

SECTION 8.04 Reinstatement.

If the Trustee or Paying Agent is unable to apply
any money
or U.S. Government Obligations in accordance with Section
8.01 by
reason of any legal proceeding or by reason of any order or
judgment
of any court or governmental authority enjoining,
restraining or
otherwise prohibiting such application, the Company's and
each
Guarantor's obligations under this Indenture, the Guarantee
and the
Securities shall be revived and reinstated as though no
deposit has
occurred pursuant to Section 8.01 until such time as the
Trustee or
Paying Agent is permitted to apply all such money or U.S.
Government
Obligations in accordance with Section 8.01; provided,
however, that
if the Company or any Guarantor has made any payment of
interest on
or principal of any Securities because of the reinstatement
of its
obligations, the Company or such Guarantor shall be
subrogated to the
rights of the Holders of such Securities to receive such
payment from
the money or U.S. Government Obligations held by the Trustee
or Paying
Agent.

ARTICLE 9.

AMENDMENTS

SECTION 9.01 Without Consent of Holders.

The Company and the Trustee may amend or
supplement this
Indenture, the Guarantee or the Securities without notice to
or the
consent of any Securityholder:

(1) to cure any ambiguity, omission, defect or
inconsistency;

(2) to comply with Section 5.01;

(3) to provide for uncertified securities;

(4) in order to effect the granting or release of
the
Guarantee with respect to any Guarantor in accordance with
Article 10;
or

(5) to make any change that does not adversely
affect the
rights of any Securityholder.

SECTION 9.02 With Consent of Holders.

The Company, with the consent of each Guarantor
affected by
any amendment or supplement to the Guarantee, may amend or
supplement
this Indenture, the Guarantee or the Securities with the
written
consent of the Holders of at least 66 2/3% (except as
hereinafter
provided) of the principal amount of the Securities then
outstanding.
Subject to Section 6.07, the Holders of a majority (except
as
hereinafter provided) in principal amount of the Securities
may waive
compliance by the Company or any Guarantor with any
provision of this
Indenture, the Guarantee or the Securities without notice to
any
Securityholder. However, without the consent of each
Securityholder
affected, no amendment, supplement or waiver (other than as
provided
in Section 6.02 hereof), including a waiver pursuant to
Section 6.04,
may:

(1) reduce the amount of Securities whose Holders
must
consent to an amendment, supplement or waiver;

(2) reduce the rate of or change the time for
payment of
interest on any Security;

(3) reduce the principal of or change the fixed
maturity
of any Security or alter the redemption provisions with
respect
thereto;

(4) waive a default in the payment of principal
of,
premium, if any, or interest on any Security;

(5) make any Security payable in money other than
that
stated in the Security;

(6) make any change in Section 6.04, Section 6.07
or this
Section 9.02;

(7) release any Guarantor from its liability
under its
Guarantee except in accordance with the express provisions
of Article
10; or

(8) make any change in Section 4.14.

Promptly after an amendment under this Section
becomes
effective, the Company shall mail to the Securityholders a
notice
briefly describing the amendment.

It shall not be necessary for the consent of the
Holders
under this Section to approve the particular form of any
proposed
amendment or supplement, but it shall be sufficient if such
consent
approves the substance thereof.

SECTION 9.03 Compliance with Trust Indenture Act.

Every amendment to this Indenture, the Guarantee
or the
Securities shall comply with the TIA as then in effect.

SECTION 9.04 Revocation and Effect of Consents.

Until an amendment, supplement or waiver becomes
effective,
a consent to it by a Holder of a Security is a continuing
consent by
the Holder and every subsequent Holder of a Security or
portion of a
Security that evidences the same debt as the consenting
Holder's
Security, even if notation of the consent is not made on any
Security.

However, any such Holder or subsequent Holder may revoke the
consent
as to his Security or portion of a Security if the Trustee
receives
the notice of revocation before the date the amendment,
supplement or
waiver becomes effective. An amendment, supplement or
waiver becomes
effective in accordance with its terms.

After an amendment, supplement or waiver becomes
effective
with respect to the Securities, it shall bind every
Securityholder.

SECTION 9.05 Notation on or Exchange of Securities.

If an amendment, supplement or waiver changes the
terms of
a Security, the Trustee may require the Holder of the
Security to
deliver it to the Trustee. The Trustee may place an
appropriate
notation on the Security about the changed terms and return
it to the
Holder. Alternatively, if the Company or the Trustee so
determines,
the Company in exchange for the Security shall issue and the
Trustee
shall authenticate a new Security that reflects the changed
terms.

SECTION 9.06 Trustee Protected.

The Trustee need not sign any amendment,
supplement or
waiver authorized pursuant to this Article that adversely
affects the
Trustee's rights. The Trustee shall be entitled to receive
and rely
upon an Opinion of Counsel and an Officers' Certificate from
the
Company and any appropriate Guarantor that any amendment,
supplement
or waiver complies with the Indenture.

ARTICLE 10.

GUARANTEE

SECTION 10.01 Guarantee.

Subject to the provisions of this Article 10, the
Company
shall cause each Guarantor existing from time to time to
unconditionally guarantee, by supplemental indenture, (a)
the due and
punctual payment of the principal of and interest on each
Security
authenticated and delivered by the Trustee, when and as the
same shall
become due and payable, whether at maturity, by acceleration
or
otherwise and the due and punctual payment of interest on
the overdue
principal of and interest, if any, on such Securities, to
the extent
lawful, including, in each case, interest accruing after the
filing
of a petition under any Bankruptcy Law regardless of whether
such
interest is allowed as a claim against the Company, and (b)
the due
and punctual performance of any obligation to repurchase
Securities
pursuant to Section 4.14, and (c) in the case of any
extension of time
of payment or renewal of any such Securities or any of such
other
obligations, that the same will be promptly paid in full
when due or
performed in accordance with the terms of the extension or
renewal,
at stated maturity, by acceleration or otherwise. Each
Guarantor
hereby agrees that (i) it will, pursuant to a supplemental
indenture,
agree to be bound by all covenants and agreements of this
Indenture
relating to a Guarantor including, without limitation,
Sections 4.06
and 4.07 and this Article 10, and (ii) its obligations
hereunder and
under the supplemental indenture and the Guarantee shall be
absolute
and unconditional, irrespective of, and shall be unaffected
by, any
invalidity, irregularity or unenforceability of any such
Security or
this Indenture, any failure to enforce the provisions of any
such
Security or this Indenture, any waiver, modification or
indulgence
granted to the Company with respect thereto, whether by the
Holder of
such Security or the Trustee, or any other circumstances
which may
otherwise constitute a legal or equitable discharge of a
surety or
guarantor. Each Guarantor hereby waives diligence,
presentment,
filing of claims with a court in the event of merger or
bankruptcy of
the Company, any right to require a proceeding first against
the
Company, the benefit of discussion, protest or notice with
respect to
any such Security or the Indebtedness evidenced thereby and
all
demands whatsoever (except as specified above). The
respective
Guarantees of the Guarantors will not be discharged as to
any such
Security except by payment in full of the principal thereof
and
interest thereon or as the Guarantee of any Guarantor may be
discharged and terminated as provided in Section 8.01 or as
expressly
provided in this Section 10.01 below. Each Guarantor
further agrees
that, as between such Guarantor, on the one hand, and the
Holders and
the Trustee, on the other hand, (a) the maturity of the
obligations
guaranteed hereby may be accelerated as provided in Article
6 hereof
for the purposes of this Guarantee, notwithstanding any
stay,
injunction or other prohibition preventing such acceleration
in
respect of the obligations guaranteed hereby, and (b) in the
event of
any declarations of acceleration of such obligations as
provided in
Article 6 hereof, such obligations (whether or not due and
payable)
shall forthwith become due and payable by the Guarantor for
the
purpose of this Guarantee. In addition, without limiting
the
foregoing provisions, upon the effectiveness of an
acceleration under
Article 6, the Trustee shall promptly make a demand for
payment of the
Securities under the Guarantee provided for in this Article
10 and not
discharged.

In the event of (x) any insolvency, bankruptcy,
receivership, custodianship, liquidation, reorganization,
readjustment
of debt, arrangement, composition, moratorium, assignment
for the
benefit of creditors, or other similar proceedings affecting
the
Company or its property or assets, or (y) any proceeding for
voluntary
liquidation, dissolution or other winding up or bankruptcy
or other
similar proceedings affecting the Company, then and in any
such event
all amounts due to the Trustee under Section 7.07 of this
Indenture,
and all the Securities shall first be indefeasibly paid in
full before
any payment or distribution of any character, whether in
cash,
securities, obligations or other property, shall be made to
any
Guarantor. Each Guarantor hereby irrevocably waives any
claim or
other rights which it may now have or hereafter acquire
against the
Company that arise from the existence, payment, performance
or
enforcement of the Guarantor's obligations under the
Guarantee
including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right
to
participate in any claim or remedy of any Holder of
Securities against
the Company, whether or not such claim, remedy or right
arises in
equity, or under contract, statute or common law, including,
without
limitation, the right to take or receive from the Company,
directly
or indirectly, in cash or other property or by set-off or in
any other
manner, payment or security on account of such claim or
other rights.
Each Guarantor acknowledges that it will receive direct and
indirect
benefits from the financing arrangements contemplated by
this
Indenture and the waiver set forth in this Section 10.01 is
knowingly
made in contemplation of such benefits.

Upon any Sale of Assets, or any transaction which
would be
a Sale of Assets if not for the provisions of clause (D) of
the
definition of Sale of Assets herein, made in compliance with
the terms
of this Indenture which consists of a sale of all of the
Capital Stock
of a Guarantor or the sale of a Guarantor by means of any
merger or
consolidation permitted under this Indenture, such
Guarantor's
obligations in respect of the Guarantee shall, without
payment of any
consideration or any further action on the part of any
Person, be
discharged and terminated; provided, however, no such
discharge or
termination shall be effective if at the time of such
transaction,
there shall exist a Default or Event of Default.

If at any time any Guarantor shall have ceased to
be a
Restricted Subsidiary by virtue of its having had total
assets with
a book value of less than $1,000,000 on the last day of each
of any
four consecutive fiscal quarters of the Company, such
Guarantor shall
be released and discharged from its obligations under its
Guarantee
without payment of any consideration or any further action
on the part
of any Person.

Upon its receipt of an Officers' Certificate of
the Company
that a Subsidiary has ceased to have any obligations under
its
Guarantee, as provided in this Section 10.01, the Trustee,
the Company
and such Restricted Subsidiary (or former Restricted
Subsidiary) shall
execute and cause to be filed or delivered any instrument,
agreement,
indenture or document reasonably requested by the Company in
an
Officers' Certificate to fully effect each discharge and
termination.

SECTION 10.02 Further Assurances.

The Company has executed and delivered and the
Company and
all Guarantors will execute and deliver all such instruments
and
documents, and have done and will do all such acts and other
things,
at the Company's expense, as may be necessary or desirable,
or that
the Trustee may reasonably request, to give full force and
effect to
the Guarantee, in the case of the existence of an Event of
Default,
to enable the Trustee to exercise and enforce the
Securityholders'
rights and remedies with respect to the Guarantee.

SECTION 10.03 Authorization of Actions to be Taken by the
Trustee
Under the Guarantee.

The Trustee may, in its sole discretion and
without the
consent of the Securityholders take all actions it deems
necessary or
appropriate in order to (i) enforce any of the terms of the
Guarantee
and (ii) collect and receive any and all amounts payable in
respect
of the obligations of the Company and/or the Guarantors
hereunder.
The Trustee shall have power to institute and to maintain
such suits
and proceedings as it may deem expedient to preserve or
protect its
interests and the interests of the Securityholders.

SECTION 10.04 Authorization of Receipt of Funds by the
Trustee Under
the Guarantee.

The Trustee is authorized to receive any funds for
the
benefit of Securityholders distributed under the Guarantee,
and to
make further distributions of such funds to the Holders
according to
the provisions of this Indenture.

SECTION 10.05 Termination of Guarantee.

Upon the discharge of the Guarantee with respect
to any one
or more Guarantors, the Trustee shall, at the request of the
Company,
deliver a certificate to such Guarantors stating that such
obligations
have been discharged in full.

SECTION 10.06 Execution of Guarantee.

To evidence its guarantee to the Securityholders
specified
in Section 10.01, each Guarantor hereby agrees to execute
the Notation
Relating to Guarantee in the form set forth in Exhibit A
hereto on
each Security authenticated and delivered by the Trustee.
Each
Guarantor hereby agrees that its Guarantee set forth in
Section 10.01
shall remain in full force and effect notwithstanding any
failure to
endorse on each Security a notation of such Guarantee. Each
such
Guarantee shall be signed on behalf of each Guarantor by its
Chairman
of the Board, President or a Vice President, prior to the
authentication of the Security on which it is endorsed, and
the
delivery of such Security by the Trustee, after the
authentication
thereof hereunder, shall constitute due delivery of such
Guarantee on
behalf of such Guarantor. Such signatures upon the
Guarantee may be
manual or facsimile signatures of the present, past or any
future
Officers of the appropriate Guarantor and may be imprinted
or
otherwise reproduced on the Guarantee, and in case any such
Officer
who shall have signed the Guarantee shall cease to be such
Officer
before the Security on which such Guarantee is endorsed
shall have
been authenticated and delivered by the Trustee or disposed
of by the
Company, such Security nevertheless may be authenticated and
delivered
or disposed of as though the Person who signed the Guarantee
had not
ceased to be such Officer of the Guarantor.

ARTICLE 11.

MISCELLANEOUS

SECTION 11.01 Trust Indenture Act Controls.

If any provision of this Indenture or the
Guarantee limits,
qualifies or conflicts with another provision which is
required or
deemed to be included in this Indenture by the TIA, the
required or
deemed provision shall control.

SECTION 11.02 Notices.

Any notice or communication by the Company, any
Guarantor
or the Trustee to the other is duly given if in writing and
when
delivered in person, mailed by first-class mail to the
other's address
stated in this Section 11.02. The Company, any Guarantor or
the
Trustee by notice to the other may designate additional or
different
addresses for subsequent notices or communications.

Any notice or communication to a Securityholder
shall be
mailed by first-class mail to his or her address shown on
the register
kept by the Registrar. Failure to mail a notice or
communication to
a Securityholder or any defect in it shall not affect its
sufficiency
with respect to other Securityholders.

If a notice or communication is mailed to any
Securityholder, the Company or any Guarantor in the manner
provided
above within the time prescribed, it is duly given, whether
or not the
addressee receives it.

If the Company mails a notice or communication to
Securityholders, it shall mail a copy to the Trustee and
each Agent
at the same time.

All notices or communications shall be in writing.

The Company's address is:

Lone Star Industries, Inc.
300 First Stamford Place
Stamford, CT 06912-0014
Attn: Secretary
Telephone: (203) 969-8600
Facsimile: (203) 969-8686

The Guarantors' addresses are in care of the
Company.

The Trustee's address is:

Chemical Bank
450 West 33rd St.
15th Floor
New York, New York 10001
Attn: Corporate Trust Administration
Telephone: (212) 613-7655
Facsimile: (212) 613-7800

SECTION 11.03 Communication by Holders with Other Holders.

Securityholders may communicate pursuant to TIA
312(b)
with other Securityholders with respect to their rights
under this
Indenture or the Securities. The Company, the Guarantor,
the Trustee,
the Registrar and anyone else shall have the protection of
TIA
312(c).

SECTION 11.04 Action by Securityholders.

Whenever in this Indenture it is provided that the
Holders
of a specified percentage in aggregate principal amount of
the
Securities may take any action (including the making of any
demand or
request, the giving of any notice, consent or waiver or the
taking of
any other action), the fact that at the time of taking any
such action
the Holders of such specified percentage have joined therein
may be
evidenced by (a) any instrument or any number of instruments
of
similar tenor executed by Holders of Securities in person or
by agent
or proxy appointed in writing, or (b) by the record of the
Holders of
Securities in favor thereof, at any meeting of Holders duly
called and
held in accordance with the provisions of Article 12, or (c)
by a
combination of such instrument or instruments and any such
record of
such meeting of Holders, but in each case only to the extent
that the
Holders of Securities shall not have revoked such action,
consent or
vote pursuant to Section 9.04 and Section 11.06.

SECTION 11.05 Proof of Execution of Instruments and of
Holding of
Securities.

Proof of the execution of any instrument by a
Holder of
Securities or his or her agent or proxy and proof of the
holding by
any Person of any of the Securities shall be sufficient if
made in the
following manner:

(1) The fact and date of execution of any such
instrument
may be proved in any manner which the Trustee deems
sufficient.

(2) The ownership of Securities shall be proved
by the
register of such Security or by a certificate of the
Registrar
thereof.

(3) The Trustee shall not be bound to recognize
any Person
as a Securityholder unless his or her title to any Security
is proved
in the manner provided in this Article 11.

SECTION 11.06 Revocation of Consents; Future Holders Bound.

Subject to Section 9.04, at any time prior to (but
not
after) the evidencing to the Trustee, as provided in Section
11.04,
of the taking of any action by the Holders of the required
percentage
of the aggregate principal amount of the Securities
specified in this
Indenture in connection with such action, any Holder of a
Security
which is shown by the evidence to be included in the
Securities the
Holders of which have consented to such action may, by
filing written
notice with the Trustee at its principal office and upon
proof of
holding as provided in Section 11.05, revoke such action so
far as
concerns such Security. Except as aforesaid, any such
action taken
by the Holder of any Security shall be conclusive and
binding upon
such Holder and upon all future holders and owners of such
Security
and of any Security issued in exchange or substitution
therefor,
irrespective of whether or not any notation in regard
thereto is made
upon such Security. Any action taken by the Holders of the
required
percentage of the aggregate principal amount of the
Securities
specified in this Indenture in connection with such action
shall be
conclusive and binding upon the Company, the Guarantors, the
Trustee
and the holders of all the Securities.

SECTION 11.07 Obligation to Disclose Beneficial Ownership
of
Securities.

All Securities shall be held and owned upon the
express
condition that, upon demand of any regulatory agency having
jurisdiction over the Company or any Guarantor, and pursuant
to law
or regulation empowering such agency to assert such demand,
any
registered Holder shall disclose to such agency the identity
of the
beneficial owner of all Securities held thereby.

SECTION 11.08 Certificate and Opinion as to Conditions
Precedent.

Upon any request or application by the Company or
any
Guarantor to the Trustee to take any action under this
Indenture the
Company or such Guarantor shall furnish to the Trustee:

(1) an Officers' Certificate stating that, in the
opinion
of the signer, all conditions precedent, if any, provided
for in this
Indenture relating to the proposed action have been complied
with; and

(2) an Opinion of Counsel stating that, in the
opinion of
such counsel, all such conditions precedent have been
complied with.

Each signer of an Officers' Certificate or an
Opinion of
Counsel may (if so stated) rely upon an Opinion of Counsel
as to legal
matters and an Officers' Certificate as to factual matters
if such
signer reasonably and in good faith believes in the accuracy
of the
document relied upon.

SECTION 11.09 Statements Required in Certificate or
Opinion.

Each certificate or opinion with respect to
compliance with
a condition or covenant provided for in this Indenture shall
include:

(1) a statement that the Person making such
certificate or
opinion has read such covenant or condition;

(2) a brief statement as to the nature and scope
of the
examination or investigation upon which the statements or
opinions
contained in such certificate or opinion are based;

(3) a statement that, in the opinion of such
Person, he or
she has made such examination or investigation as is
necessary to
enable such Person to express an informed opinion as to
whether or not
such covenant or condition has been complied with; and

(4) a statement as to whether or not, in the
opinion of
such Person, such condition or covenant has been complied
with.

SECTION 11.10 Rules by Trustee and Agents.

The Trustee may make reasonable rules for action
by or at
a meeting of Securityholders. The Registrar or Paying Agent
may make
reasonable rules and set reasonable requirements for their
respective
functions.

SECTION 11.11 Legal Holidays.

A "Legal Holiday" is a Saturday, a Sunday or a day
on which
banking institutions are obligated by law, regulation or
executive
order to remain closed in The City of New York, in the State
of New
York or in the city in which the Trustee or any Paying Agent
under
this Indenture administers its corporate trust business. If
a payment
date is a Legal Holiday at a place of payment, payment may
be made at
that place on the next succeeding day that is not a Legal
Holiday, and
no interest shall accrue on that payment for the intervening
period.

A "Business Day" is a day other than a Legal
Holiday.

SECTION 11.12 No Recourse Against Others.

All liability of any director, officer, employee
or
stockholder, as such, of the Company or any Guarantor with
respect to
the Securities is waived and released.

SECTION 11.13 Duplicate Originals.

The parties may sign any number of copies of this
Indenture.

Each signed copy shall be an original, but all of them
together
represent the same agreement.

SECTION 11.14 Governing Law.

The laws of the State of New York, without regard
to
principles of conflicts of law, shall govern this Indenture
and the
Securities.

SECTION 11.15 No Adverse Interpretation of Other
Agreements.

This Indenture may not be used to interpret
another
indenture, loan or debt agreement of the Company, any
Guarantor or a
Subsidiary. Any such indenture, loan or debt agreement may
not be
used to interpret this Indenture.

SECTION 11.16 Successors.

All agreements of the Company and each Guarantor
in this
Indenture and the Securities shall bind its successors. All
agreements of the Trustee in this Indenture shall bind its
successors.

SECTION 11.17 Separability.

In case any provision in this Indenture or in the
Securities
shall be invalid, illegal or unenforceable, the validity,
legality and
enforceability of the remaining provisions shall not in any
way be
affected or impaired thereby and a Holder shall have no
claim therefor
against any party hereto.

SECTION 11.18 Table of Contents, Headings, etc.

The Table of Contents, Cross-Reference Table and
headings
of the Articles and Sections of this Indenture have been
inserted for
convenience of reference only, are not to be considered a
part hereof,
and shall in no way modify or restrict any of the terms or
provisions
hereof.

ARTICLE 12.

MEETINGS OF HOLDERS OF SECURITIES

SECTION 12.01 Purposes of Meetings.

A meeting of Holders of Securities may be called
at any time
and from time to time pursuant to the provisions of this
Article 12
for any of the following purposes:

(a) to give any notice to the Company, any
Guarantor or to
the Trustee, or to give any direction to the Trustee, or to
waive any
non-performance hereunder, and its consequences, or to take
any other
action authorized to be taken by Holders of Securities
pursuant to any
of the provisions of this Indenture;

(b) to remove the Trustee and appoint a successor
trustee
pursuant to the provisions of Section 7.08;

(c) to consent to the execution of an indenture
or
indentures supplemental hereto pursuant to the provisions of
Article
9; or

(d) to take any other action authorized to be
taken by or
on behalf of the Holders of any specified aggregate
principal amount
of the Securities under any other provision of this
Indenture or under
applicable law.

SECTION 12.02 Call of Meetings by Trustee.

The Trustee may at any time call a meeting of
Holders of
Securities to take any action specified in Section 12.01, to
be held
at such time and at such place in the State of New York, as
the
Trustee shall determine. Notice of each meeting of the
Holders of
Securities, setting forth the time and the place of such
meeting and,
in general terms, the action proposed to be taken at such
meeting,
shall be mailed by the Trustee to the Holders of the
Securities, not
less than 20 nor more than 60 days prior to the date fixed
for the
meeting, at their last addresses as they shall appear on the
register
of the Securities.

SECTION 12.03 Call of Meetings by Company or
Securityholders.

If at any time the Company, pursuant to a
resolution of its
Board of Directors, or the holders of at least twenty
percent in
aggregate principal amount of the Securities then
outstanding, shall
have requested the Trustee to call a meeting of Holders of
Securities
to take any action authorized in Section 12.01, by written
request
setting forth in reasonable detail the action proposed to be
taken at
the meeting, and the Trustee shall not have mailed notice of
such
meeting within twenty days after receipt of such request,
then the
Company or the Holders of Securities in the amount above
specified,
as the case may be, may determine the time and the place in
the State
of New York for such meeting, and may call such meeting by
mailing
notice thereof as provided in Section 12.02.

SECTION 12.04 Persons Entitled to Vote at Meeting.

To be entitled to vote at any meeting of Holders
of
Securities, a Person shall (a) be a Holder of Securities or
(b) be a
Person appointed by an instrument in writing as proxy by a
Holder of
Securities. The only Persons who shall be entitled to be
present or
speak at any meeting of the Holders of the Securities shall
be the
Persons entitled to vote at such meeting and their counsel
and any
representatives of the Company and its counsel.

SECTION 12.05 Regulations for Meeting.

Notwithstanding any other provisions of this
Indenture, the
Trustee may make such reasonable regulations as it may deem
advisable
for any meeting of Holders of the Securities in regard to
the
appointment of proxies, the proof of the holding of
Securities, the
appointment and duties of inspectors of votes, the
submission and
examination of proxies and other evidence of the right to
vote, and
such other matters concerning the conduct of the meeting as
it shall
think fit. Except as otherwise permitted or required by any
such
regulations, the holding of Securities shall be proved in
the manner
specified in Section 11.05 and the appointment of any proxy
shall be
proved in the manner specified in such Section 11.05 or by
having the
signature of the person executing the proxy witnessed or
guaranteed
by any bank, banker, trust company or New York Stock
Exchange, Inc.
member firm satisfactory to the Trustee.

The Trustee shall, by an instrument in writing,
appoint a
temporary chairman of the meeting, unless the meeting shall
have been
called by the Company or by Holders of the Securities as
provided in
Section 12.03, in which case the Company or the Holders of
the
Securities calling the meeting, as the case may be, shall in
like
manner appoint a temporary chairman, and a permanent
chairman and a
permanent secretary of the meeting shall be elected by vote
of the
Holders of a majority in principal amount of the Securities
represented at the meeting and entitled to vote.

At any meeting of Holders of Securities, the
presence of
persons holding or representing Securities in an aggregate
principal
amount sufficient to take action upon the business for the
transaction
of which such meeting was called shall be necessary to
constitute a
quorum; but, if less than a quorum be present, the persons
holding or
representing a majority in aggregate principal amount of the
Securities represented at the meeting may adjourn such
meeting with
the same effect, for all intents and purposes, as though a
quorum had
been present.
SIGNATURES

IN WITNESS WHEREOF, the parties hereto have caused
this
Indenture 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.

LONE STAR INDUSTRIES, INC.

By: John J. Martin
Title: Sr. Vice President

[SEAL]

Attest:

John S. Johnson
Title: Assistant Secretary

CHEMICAL BANK

By: John Generale
Title: Vice President

[SEAL]

Attest:

Sal Smith
Title: Trust Officer
EXHIBIT A
REGISTERED [Face of Security]
REGISTERED
NUMBER
DOLLARS

LONE STAR INDUSTRIES, INC
........

10% SENIOR NOTE DUE 2003

LONE STAR INDUSTRIES, INC., a Delaware corporation
(herein
called the "Company"), for value received, hereby promises
to pay to
_______________ or registered assigns, the principal sum of
_______________ Dollars on July 31,* 2003, and to pay
interest thereon
as provided on the reverse hereof, until the principal
hereof is paid
or duly provided for.

Interest Payment Dates: January 31 and July 31 of each
year,
commencing July 31, 1994.

Record Dates: January 15 and July 15 of each year,
commencing July
15, 1994.

The provisions on the back of this certificate are
incorporated as if set forth on the face hereof.

IN WITNESS WHEREOF, LONE STAR INDUSTRIES, INC. has
caused
this instrument to be duly signed under its corporate seal.

[SEAL] LONE STAR INDUSTRIES, INC.

By:

Title:

By:

Title:

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Securities referred
to in the within-mentioned Indenture.

CHEMICAL BANK
as Trustee

By: ________________________________________
Authorized Officer

Dated: _______________________________________
[REVERSE OF SECURITY]

LONE STAR INDUSTRIES, INC.

10% SENIOR NOTE DUE 2003

1. Interest. Lone Star Industries, Inc., a
Delaware
corporation (the "Company"), promises to pay interest on the
principal
amount of this Security at the rate per annum shown above.
The
Company will pay interest semiannually in arrears on July 31
and
January 31 of each year, commencing July 31, 1994. Interest
on the
Securities will accrue from the most recent date to which
interest has
been paid (or, if no interest has been paid, from February
1, 1994).
Interest on overdue principal shall accrue at the rate per
annum of
11% from the due date until paid in full. Interest shall be
computed
on the basis of a 360-day year of 12 30-day months.

2. Method of Payment. The Company will pay
interest on
the Securities (except defaulted interest) to the persons
who are
registered Holders of Securities at the close of business on
the
record date set forth on the face of this Security next
preceding the
applicable interest payment date. Holders must surrender
Securities
to a Paying Agent to collect principal payments. The
Company will pay
principal and interest in money of the United States that at
the time
of payment is legal tender for payment of public and private
debts.
However, the Company may pay principal and interest by check
payable
in such money. It may mail an interest check to a Holder's
registered
address.

3. Paying Agent and Registrar. Initially,
Chemical Bank
(the "Trustee") will act as Paying Agent and Registrar. The
Company
may change any Paying Agent, Registrar or co-registrar
without notice.

The Company may act in any such capacity.

4. Indenture. The Company has issued the
Securities under
an Indenture, dated as of March 29, 1994 (the "Indenture"),
between
the Company and the Trustee. The terms of the Securities
include
those stated in the Indenture and those made part of the
Indenture by
reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code
77aaa=77bbbb) (the "Act") as in effect on the date of the
Indenture. The Securities are subject to all such terms,
and
Securityholders are referred to the Indenture and the Act
for a
statement of such terms. The Securities are obligations of
the
Company limited to up to $78,000,000 aggregate principal
amount
(except for Securities issued in substitution for destroyed,
mutilated, lost or stolen Securities). Terms used herein
which are
defined in the Indenture have the meanings assigned to them
in the
Indenture.

5. Voluntary Prepayments or Redemption; Open
Market
Purchases. The Securities may be redeemed at the option of
the
Company in whole at any time or in part from time to time at
the
principal amount plus accrued and unpaid interest to the
date of such
optional redemption (the "Redemption Price"). The
Securities may also
be purchased by the Company on the open market from time to
time
without penalty or premium.

6. Sinking Fund. The Company must make three
payments of
$10,000,000 each into a specified sinking fund provided for
in the
Indenture. The first payment of $10,000,000 shall be made
on or prior
to July 31, 2000, the second on or prior to July 31, 2001,
and the
third on or prior to July 31, 2002. Payments pursuant to
this
paragraph shall be made to the Trustee in accordance with
the
provisions of the Indenture. The amount of any sinking fund
payment
the Company is required to make shall be reduced by the
principal
amount of any Securities that the Company has optionally
redeemed or
purchased and delivered to the Trustee for cancellation and
that have
not been previously applied against the Company's deposit
obligations
with respect to Excess Net Proceeds redemptions or required
sinking
fund payments.

7. Mandatory Redemption. Within forty-five days
after the
end of each fiscal quarter of the Company in which Excess
Net Proceeds
shall have been received by the Company or any Restricted
Subsidiary,
the Company shall deposit all Excess Net Proceeds received
during such
quarter into an account with the Trustee. Simultaneously
with such
deposit, the Company shall provide to the Trustee an
Officers'
Certificate setting forth (a) a calculation of the Net
Proceeds
received by the Company or any Restricted Subsidiary during
such
quarter, (b) a calculation of the amount of Excess Net
Proceeds
received by the Company or any Restricted Subsidiary and
deposited
with the Trustee and (c) if appropriate, a statement of the
reduction
of the amount of such deposit pursuant to the last sentence
of Section
3.08 of the Indenture. If at any time there is at least $5
million
on deposit with the Trustee pursuant to Section 3.08 of the
Indenture,
all money in such account shall be used by the Trustee upon
receipt
of the Officers' Certificate, delivered pursuant to Section
3.01 of
the Indenture, to redeem Securities at the Redemption Price.
The
amount of any such required deposit shall be reduced by the
principal
amount of any Securities that the Company has (during a
period
commencing with the public announcement that a Sale of
Assets has
occurred in respect of which a deposit of Excess Net
Proceeds is
expected to be made and ending on the earlier of (i) ninety
days after
the date of such announcement or (ii) the date on which the
deposit
is required to be made under the first sentence of Section
3.08 of the
Indenture) optionally redeemed or purchased (whether through
open
market or other purchases) and delivered to the Trustee for
cancellation and that have not been previously applied
against the
Company's deposit obligations with respect to Excess Net
Proceeds or
required sinking fund payments.

8. Offers to Purchase. Section 4.14 of the
Indenture
provides that upon the occurrence of a Change of Control,
and subject
to further limitations outlined therein, the Company shall
make an
offer to purchase the Securities in accordance with the
procedures set
forth in the Indenture.

9. Guarantee. The Securityholders may be the
beneficiaries of a Guarantee made by the Guarantors from
time to time
as provided in Article 10 of the Indenture. A
Securityholder by
accepting this Note agrees to all of the terms and
conditions of the
Guarantee.

10. Denominations, Transfer, Exchange. The
Securities are
in registered form without coupons in denominations of
$1,000 and
whole multiples of $1,000. The transfer of Securities may
be
registered and Securities may be exchanged as provided in
the
Indenture. The Registrar may require a Holder, among other
things,
to furnish appropriate endorsements and transfer documents.
No
service charge shall be made for any such registration of
transfer or
exchange, but the Company may require payment of a sum
sufficient to
cover any tax or other governmental charge payable in
connection
therewith. The Registrar need not exchange or register the
transfer
of any Security selected for redemption in whole or in part
(except
the unredeemed portion of Securities being redeemed in
part). Also,
it need not exchange or register the transfer of any
Securities for
a period of 15 days before a selection of Securities to be
redeemed.

11. Persons Deemed Owners. The registered Holder
of this
Note shall be treated as its owner for all purposes.

12. Merger or Consolidation. The Company may not
consolidate or merge with or into, or sell, assign, transfer
or lease
all or substantially all of its assets to another person
unless: (i)
there is no outstanding Default or Event of Default; (ii)
the person
formed by or surviving any such consolidation or merger (if
other than
the Company), or to which such sale or conveyance shall have
been
made, is an entity organized and existing under the laws of
the United
States, any state thereof or the District of Columbia; (iii)
such
person assumes by supplemental indenture all the obligations
of the
Company under the Securities and the Indenture; and (iv) the
person
formed by or surviving such consolidation or merger, or to
which such
sale or conveyance shall have been made, immediately
thereafter (A)
has Consolidated Net Worth no smaller than the Company
immediately
prior thereto and (B) could incur $1.00 of additional
Indebtedness
under Section 4.10 of the Indenture without taking into
consideration
the proviso thereto.

13. Amendments and Waivers. Subject to certain
exceptions,
the Indenture or the Securities may be amended with the
consent of the
Holders of at least 66 % of the principal amount of the
Securities
outstanding, and certain existing defaults may be waived
with the
consent of the Holders of at least 66 % of the principal
amount of
the Securities outstanding. Without the consent of any
Securityholder, the Indenture or the Securities may be
amended to cure
any ambiguity, omission, defect or inconsistency, to provide
for
uncertificated Securities in addition to certificated
Securities, to
comply with Section 5.01 of the Indenture or to make any
change that
does not adversely affect the right of any Securityholder.

14. Defaults and Remedies. An Event of Default
is:
default in the payment of interest on any Security 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; default in the payment of the
principal of
any Security when the same becomes due and payable, whether
at
maturity, in connection with any sinking fund obligation or
redemption, by acceleration or otherwise (provided, however,
in the
case of any such default resulting from a dispute as to the
computation of Excess 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 such default); failure by
the
Company or any Restricted Subsidiary to observe or perform
in any
material respect any of its other covenants or agreements in
the
Securities or the Indenture, which failure continues for a
period of
30 days after either notice shall have been given to the
Company or
the date on which the Company had Actual Knowledge of such
failure;
failure by the Company or any of its Restricted Subsidiaries
to pay
when due any principal or interest on any Indebtedness with
an
aggregate outstanding principal amount in excess of $1
million, which
default continues for any period of grace applicable thereto
or a
default or event of default, as defined in (i) one or more
indentures,
agreements or other instruments evidencing or under which
the Company
or any of its Restricted Subsidiaries individually or
collectively
have outstanding at least $1 million aggregate principal
amount of
Indebtedness or (ii) Employee Settlement Agreements (which,
in the
case of the Employee Settlement Agreement with the Pension
Benefit
Guaranty Corporation, shall be limited to a default under
Section
9.1(a) thereof) and such Indebtedness or Employee Settlement
Agreement
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, unless
cured or waived prior to acceleration; entry of one or more
final
judgments against the Company or any of its Restricted
Subsidiaries
for payments of money which in the aggregate exceed $1
million, by a
court of competent jurisdiction and such judgments are not
rescinded,
annulled, stayed or discharged within 60 days; the Company
and its
Restricted Subsidiaries, taken as a whole, shall become
unable
generally to pay their debts as they become due; the
commencement of
a voluntary case under the Federal Bankruptcy law; the
occurrence of
certain other events under a Bankruptcy Law, including but
not limited
to the entry of a judgment for relief in respect of the
Company or any
of its Material Restricted Subsidiaries by a court of
competent
jurisdiction which remains unstayed and in effect for 60
days; or the
occurrence of certain events relating to ERISA Plans of the
Company
and Restricted Subsidiaries.

15. Trustee Dealings with Company. Chemical
Bank, the
Trustee under the Indenture, or any banking institution
serving as
successor Trustee thereunder, in its individual or any other
capacity,
may make loans to, accept deposits from, and perform
services for the
Company, its Affiliates and Restricted Subsidiaries or the
Guarantors,
and may otherwise deal with the Company, its Affiliates and
Restricted
Subsidiaries or the Guarantors, as if it were not Trustee.

16. No Recourse Against Others. No director,
officer,
employee, or stockholder, as such, of the Company or any
Guarantor
shall have any liability for any obligations of the Company
under the
Securities or the Indenture or for any claim based on, in
respect of
or by reason of such obligations or their creation. Each
Securityholder by accepting a Security waives and releases
all such
liability. The waiver and release are part of the
consideration for
the issue of the Securities.

17. Authentication. This Security and any
related
Guarantee shall not be valid until authenticated by the
manual or
facsimile signature of the Trustee or an authenticating
agent.

18. Abbreviations. Customary abbreviations may
be used in
the name of a Securityholder or an assignee, such as: TEN
COM (=
tenants in common), TEN ENT (= tenants by the entireties,)
JT TEN
(=joint tenants with right of survivorship and not as
tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors
Act).

THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER
UPON WRITTEN
REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE.
REQUESTS MAY BE
MADE TO: LONE STAR INDUSTRIES, INC., 300 FIRST STAMFORD
PLACE,
STAMFORD, CT 06912-0014, ATTN: SECRETARY.

[If Appropriate: NOTATION RELATING TO GUARANTEE

Each of the undersigned (hereinafter referred to
as a
"Guarantor," which term includes any successor person under
the
Indenture referred to in the Security upon which this
notation is
endorsed), has unconditionally guaranteed the due and
punctual payment
of the principal of and interest on the Securities, whether
at
maturity, by acceleration or otherwise, and the due and
punctual
payment of interest on the overdue principal of and
interest, if any,
on the Securities, to the extent lawful, all in accordance
with the
terms set forth in Article 10 of the Indenture and (ii) in
case of any
extension of time of payment or renewal of any Securities or
any of
such other obligations, that the same will be promptly paid
in full
when due or performed in accordance with the terms of the
extension
or renewal, whether at stated maturity, by acceleration or
otherwise.

The obligations of each Guarantor to the Holders
of the
Securities and to the Trustee pursuant to the Guarantee and
the
Indenture are expressly set forth in Article 10 of the
Indenture and
reference is hereby made to such Indenture for the precise
terms of
the Guarantee. Under certain circumstances specified in
such Article,
Guarantors may be released from their respective obligations
under the
Guarantee without the consent of, or notice to, the Holders
of the
Securities.

No director, officer, employee or stockholder, as
such,
past, present or future, of any Guarantor or any of its
Subsidiaries
shall have any personal liability under the Guarantee by
reason of his
or its status as such.

The Guarantee shall not be valid or obligatory for
any
purpose until the certificate of authentication on the
Securities upon
which this Guarantee is noted shall have been executed by
the Trustee
under the Indenture by the manual or facsimile signature of
one of its
authorized officers or by an authenticating agent.

[GUARANTORS]

By: ]
ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to:

____________________________________________________

____________________________________________________
(Print or type assignee's name, address and zip code)

____________________________________________________

____________________________________________________
(Insert Assignee's Soc. Sec. or Tax I.D. No.)

and irrevocably appoint ___________________________
agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him or
her.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .

Date:______________ Signature(s):
________________________________________

________________________________________
(Sign exactly as your
name(s)
appear on the other side of this Security)

Signature(s) guaranteed by:
____________________________________________________
(All signatures must be guaranteed
by a
member of a national securities exchange or of the National
Association of Securities Dealers, Inc. or by a commercial
bank or
trust company located in the United States)

WARRANT AGREEMENT

WARRANT AGREEMENT dated April 13, 1994 between
LONE STAR
INDUSTRIES, INC. (the "Company"), and CHEMICAL BANK, a New
York
banking corporation, as Warrant Agent (the "Warrant Agent").

The Company proposes to issue Common Stock
Purchase
Warrants, as hereinafter described (the "Warrants"), to
purchase an
aggregate of 4,003,333 shares (subject to adjustment as
provided
herein) of its Common Stock, $1.00 par value (the "Common
Stock"),
(the shares of Common Stock issuable on exercise of the
Warrants being
referred to herein as the "Warrant Shares"), pursuant to the
Modified
Amended Consolidated Plan of Reorganization of the Company
(the
"Plan"). Each Warrant shall entitle the holder thereof to
purchase
one share (subject to adjustment as provided herein) of
Common Stock.

The Company wishes the Warrant Agent to act on
behalf of the
Company and the Warrant Agent is willing to act in
connection with the
issuance, separation, transfer, exchange and exercise of
Warrants.

In consideration of the foregoing and for the
purposes of
defining the terms and provisions of the Warrants and the
respective
rights and obligations thereunder of the Company and the
registered
owners of the Warrants (the "Holders"), the Company and the
Warrant
Agent hereby agree as follows:

SECTION 1. Appointment of Warrant Agent. The
Company
hereby appoints the Warrant Agent to act as agent for the
Company in
accordance with the instructions set forth in this
Agreement, and the
Warrant Agent hereby accepts such appointment.

SECTION 2. Transferability and Form of Warrant.

2.1 Registration. The Warrants shall be numbered
and shall
be registered in a Warrant Register as they are issued. The
Company
and the Warrant Agent shall be entitled to treat the Holder
of any
Warrant as the owner in fact thereof for all purposes and
shall not
be bound to recognize any equitable or other claim to or
interest in
such Warrant on the part of any other person.

2.2 Transfer. The Warrants shall be transferable
only on
the books of the Company maintained at the principal office
of the
Warrant Agent upon delivery thereof duly endorsed by the
Holder or by
his duly authorized attorney or representative, or
accompanied by
proper evidence of succession, assignment or authority to
transfer.
In all cases of transfer by an attorney, the original power
of
attorney, duly approved, or a copy thereof, duly certified,
shall be
deposited and remain with the Warrant Agent. In case of
transfer by
executors, administrators, guardians or other legal
representatives,
duly authenticated evidence of their authority shall be
produced, and
may be required to be deposited and remain with the Warrant
Agent in
its discretion. Upon any registration of transfer, the
Warrant Agent
shall countersign and deliver a new Warrant or Warrants to
the persons
entitled thereto.

2.3 Form of Warrant. The text of the Warrant and
the
Purchase Form shall be substantially as set forth in Exhibit
A
attached hereto. The price per Warrant Share and the number
of
Warrant Shares issuable upon exercise of each Warrant are
subject to
adjustment upon the occurrence of certain events, all as
hereinafter
provided. The Warrant shall be executed on behalf of the
Company by
its Chairman of the Board, President or one of its Vice
Presidents,
under its corporate seal reproduced thereon attested by its
Secretary
or an Assistant Secretary. The signature of any such
officers on the
Warrants may be manual or facsimile.

Warrants bearing the manual or facsimile signature
of
individuals who were at any time the proper officers of the
Company
shall bind the Company, notwithstanding that such
individuals or any
one of them shall have ceased to hold such office prior to
the
delivery of such Warrants or did not hold such offices on
the date of
this Agreement.

Warrants shall be dated as of the date of
countersignature
thereof by the Warrant Agent either upon initial issuance or
upon
division, exchange, substitution or transfer.

SECTION 3. Countersignature of Warrants. The
Warrants
shall be countersigned by the Warrant Agent (or any
successor to the
Warrant Agent then acting as warrant agent under this
Agreement) and
shall not be valid for any purpose unless so countersigned.
Warrants
may be countersigned, however, by the Warrant Agent (or by
its
successor as warrant agent hereunder) and may be delivered
by the
Warrant Agent, notwithstanding that the persons whose manual
or
facsimile signatures appear thereon as proper officers of
the Company
shall have ceased to be such officers at the time of such
countersignature, issuance or delivery. The Warrant Agent
shall, upon
written instructions of the Chairman of the Board,
President, one of
the Vice Presidents or the Secretary of the Company,
countersign,
issue and deliver Warrants entitling the Holders thereof to
purchase
not more than 4,003,333 Warrant Shares (subject to Section 7
hereof
and adjustment pursuant to Section 10 hereof) and shall
countersign
and deliver Warrants as otherwise provided in this
Agreement.

SECTION 4. Exchange of Warrant Certificates.
Each Warrant
certificate may be exchanged for another certificate or
certificates
entitling the Holder thereof to purchase a like aggregate
number of
Warrant Shares as the certificate or certificates
surrendered then
entitle such Holder to purchase. Any Holder desiring to
exchange a
Warrant certificate or certificates shall make such request
in writing
delivered to the Warrant Agent, and shall surrender,
properly
endorsed, the certificate or certificates to be so
exchanged.
Thereupon, the Warrant Agent shall countersign and deliver
to the
person entitled thereto a new Warrant certificate or
certificates, as
the case may be, as so requested.

SECTION 5. Term of Warrants; Exercise of
Warrants.

5.1 Term of Warrants. Subject to the terms of
this
Agreement, each Holder shall have the right, which may be
exercised
until the close of business on December 31, 2000, to
purchase from the
Company the number of fully paid and nonassessable Warrant
Shares
which the Holder may at the time be entitled to purchase on
exercise
of such Warrants.

5.2 Exercise of Warrants. Warrants may only be
exercised
for the purchase of whole Warrant Shares. Warrants may be
exercised
upon surrender to the Company at the principal office of the
Warrant
Agent, of the certificate or certificates evidencing the
Warrants to
be exercised (except as otherwise provided below), together
with the
form of election to purchase on the reverse thereof duly
filled in and
signed, and upon payment to the Warrant Agent for the
account of the
Company of the Warrant Price (as defined in and determined
in
accordance with the provisions of Sections 9 and 10 hereof),
for the
number of Warrant Shares in respect of which such Warrants
are then
exercised. Payment of the aggregate Warrant Price shall be
made in
cash or by certified or official bank check.

Subject to Section 6 hereof, upon such surrender
of Warrants
and payment of the Warrant Price as aforesaid, the Company
shall issue
and cause to be delivered with all reasonable dispatch to or
upon the
written order of the Holder, and in such name or names as
the Holder
may designate, a certificate or certificates for the number
of full
Warrant Shares so purchased upon the exercise of such
Warrants,
together with cash, as provided in Section 12 hereof, in
respect of
any fractional Warrant Shares otherwise issuable upon such
exercise
of Warrants. Such certificate or certificates shall be
deemed to have
been issued and any person so designated to be named therein
shall be
deemed to have become a holder of record of such Warrant
Shares as of
the date of the surrender of such Warrants and payment of
such Warrant
Price, as aforesaid; provided, however, that if, at the date
of
surrender of such Warrants and payment of such Warrant
Price, the
transfer books for the Warrant Shares or other class of
stock
purchasable upon the exercise of such Warrants shall be
closed, the
certificates for the Warrant Shares in respect of which such
Warrants
are then exercised shall be issuable as of the date on which
such
books shall next be opened (whether before or after December
31, 2000)
and until such date the Company shall be under no duty to
deliver any
certificate for such Warrant Shares; provided further,
however, that
the transfer books of record, unless otherwise required by
law, shall
not be closed at any one time for a period longer than
twenty days.
The rights of purchase represented by the Warrants shall be
exercisable, at the election of the Holders thereof, either
in full
or from time to time in part and, in the event that a
certificate
evidencing Warrants is exercised in respect of less than all
of the
Warrant Shares purchasable on such exercise at any time
prior to the
date of expiration of the Warrants, a new certificate
evidencing the
remaining Warrant or Warrants will be issued, and the
Warrant Agent
is hereby irrevocably authorized to countersign and to
deliver the
required new Warrant certificate or certificates pursuant to
the
provisions of this Section and of Section 3 hereof and the
Company,
whenever required by the Warrant Agent, will supply the
Warrant Agent
with Warrant certificates duly executed on behalf of the
Company for
such purpose.

SECTION 6. Payment of Taxes. The Company will
pay all
documentary stamp taxes, if any, attributable to the initial
issuance
of Warrant Shares upon the exercise of Warrants; provided,
however,
that the Company shall not be required to pay any tax or
taxes which
may be payable in respect of any transfer involved in the
issue or
delivery of any Warrants or certificates for Warrant Shares
in a name
other than that of the registered Holder of Warrants in
respect of
which such Warrant Shares are issued.

SECTION 7. Mutilated or Missing Warrants. In
case any of
the certificates evidencing the Warrants shall be mutilated,
lost,
stolen or destroyed, the Company shall issue, and the
Warrant Agent
shall countersign and deliver in exchange and substitution
for and
upon cancellation of the mutilated Warrant certificate, or
in lieu of
and substitution for the Warrant certificate lost, stolen or
destroyed, a new Warrant certificate of like tenor and
representing
an equivalent right or interest; but only upon receipt of
evidence
satisfactory to the Company and the Warrant Agent of such
loss, theft
or destruction of such Warrant and indemnity, if requested,
also
satisfactory to them. An applicant for such a substitute
Warrant
certificate shall also comply with such other reasonable
regulations
and pay such other reasonable charges as the Company or the
Warrant
Agent may prescribe.

SECTION 8. Reservation of Warrant Shares:
Ownership of
Warrants by Company.

8.1 Reservation of Warrant Shares. There have
been
reserved, and the Company shall at all times keep reserved,
out of its
authorized Common Stock, a number of shares of Common Stock
sufficient
to provide for the exercise of the rights of purchase
represented by
the outstanding Warrants. The Transfer Agent for the Common
Stock and
every subsequent transfer agent for any shares of the
Company's
capital stock issuable upon the exercise of any of such
rights of
purchase will be irrevocably authorized and directed at all
times to
reserve such number of authorized shares as shall be
requisite for
such purpose. The Company will keep a copy of this
Agreement on file
with the Transfer Agent or its successors and with every
subsequent
transfer agent for any shares of the Company's capital stock
issuable
upon the exercise of the rights of purchase represented by
the
Warrants. The Warrant Agent is hereby irrevocably
authorized to
requisition from time to time from the Transfer Agent or its
successors the stock certificates required to honor
outstanding
Warrants upon exercise thereof in accordance with the terms
of this
Agreement. The Company will supply such Transfer Agent or
its
successors with duly executed stock certificates for such
purposes and
will provide or otherwise make available any cash which may
be payable
as provided in Section 12 hereof. All Warrants surrendered
in the
exercise of the rights thereby evidenced shall be cancelled
by the
Warrant Agent and shall thereafter be delivered to the
Company.

8.2 Ownership of Warrants by the Company. No
provision of
this Agreement shall limit or restrict the rights of the
Company, or
any affiliate of the Company, to acquire or hold any
Warrant or
exercise any rights as a Holder thereof.

8.3 Cancellation of Warrants. In the event the
Company
shall purchase or otherwise acquire Warrants, the same shall
thereupon
be delivered to the Warrant Agent and be cancelled by it and
retired.
The Warrant Agent shall cancel any Warrants (or portions
thereof)
surrendered for exchange, substitution, transfer or exercise
in whole
or in part.

SECTION 9. Warrant Price. The price per share at
which
Warrant Shares shall be purchasable upon exercise of
Warrants (the
"Warrant Price") shall be $18.75, subject to adjustment
pursuant to
Section 10 hereof.

SECTION 10. Adjustment of Warrant Price and
Number of
Warrant Shares. The number and kind of securities
purchasable upon
the exercise of each Warrant and the Warrant Price shall be
subject
to adjustment from time to time upon the happening of
certain events,
as hereinafter defined.

10.1 Mechanical Adjustments. The number of
Warrant Shares
purchasable upon the exercise of each Warrant and the
Warrant Price
shall be subject to adjustment as follows:

(a) In case the Company shall (i) pay a
dividend in
shares of Common Stock or make a distribution in shares of
Common
Stock, (ii) subdivide its outstanding shares of Common
Stock, (iii)
combine its outstanding shares of Common Stock into a
smaller number
of shares of Common Stock or (iv) issue by reclassification
or
recapitalization of its shares of Common Stock other
securities of the
Company, the number of Warrant Shares purchasable upon
exercise of
each Warrant immediately prior thereto shall be adjusted so
that the
Holder of each Warrant shall be entitled to receive the kind
and
number of Warrant Shares or other securities of the Company
which he
or she would have owned or have been entitled to receive
after the
happening of any of the events described above, had such
Warrant been
exercised immediately prior to the happening of such event
or any
record date with respect thereto. An adjustment made
pursuant to this
paragraph (a) shall become effective immediately after the
effective
date of such event retroactive to the record date, if any,
for such
event.

(b) (i) In case the Company shall
distribute to all
holders of its shares of Common Stock evidences of its
indebtedness
or assets (excluding cash dividends or distributions payable
out of
retained earnings or surplus and dividends or distributions
referred
to in paragraph (a) above) or rights, options or warrants or
convertible or exchangeable securities containing the right
to
subscribe for or purchase shares of Common Stock, then in
each case
the number of Warrant Shares thereafter purchasable upon the
exercise
of each Warrant shall be determined by multiplying the
number of
Warrant Shares theretofore purchasable upon the exercise of
each
Warrant by a fraction, of which the numerator shall be the
then
current market price per share of Common Stock (as defined
in Section
10.1(c) hereof) on the date of the public announcement of
such
distribution and of which the denominator shall be the then
current
market price per share of Common Stock, less the then fair
value (as
determined in good faith by the Board of Directors of the
Company,
whose determination shall be conclusive) of the portion of
the assets
or evidences of indebtedness so distributed, or of such
subscription
rights, options or warrants or of such convertible or
exchangeable
securities applicable to one share of Common Stock. Such
adjustment
shall be made whenever any such distribution is made, and
shall become
effective on the date of distribution retroactive to the
record date
for the determination of stockholders entitled to receive
such
distribution.

(ii) In case the Company shall grant or
issue any
stock option, stock bonus share or other stock-related
security or
right in any case which are exercisable for or convertible
into Common
Stock (collectively, "Stock Rights") to management or
employees of the
Company or any subsidiary thereof, or to any consulting or
similar
firm, for providing management services to the Company or
any such
subsidiary, pursuant to any compensatory performance or
similar plan
or arrangement approved by the Board of Directors other than
any Stock
Rights for which an adjustment is made under Section
10.1(b)(i) or any
Stock Rights granted pursuant to the Management Stock Option
Plan and
the Directors Stock Option Plan described in the Company's
Modified
Amended Disclosure Statement dated November 4, 1993 relating
to the
Plan, and the aggregate price per share for which Common
Stock is
issuable upon exercise or conversion of such Stock Rights
(which shall
include any per share payment made to acquire such Stock
Rights) shall
be less than the current market price of Common Stock as of
the close
of business on the business day immediately preceding the
date of
grant of such Stock Rights, then, upon the exercise or
conversion of
any such Stock Rights, the number of Warrant Shares
thereafter
purchasable upon the exercise of each Warrant shall be
determined by
multiplying the number of Warrant Shares theretofore
purchasable upon
the exercise of each Warrant by a fraction, the numerator
of which
shall be the sum of (A) the number of shares of Common Stock
outstanding on the business day immediately preceding the
date of
exercise or conversion of such Stock Rights (the
"Outstanding Shares
Amount"), and (B) the number of additional shares of Common
Stock
issued upon the exercise or conversion of the Stock Rights
being
exercised (the "Additional Shares Amount") and the
denominator of
which shall be the sum of (x) the Outstanding Shares Amount,
and (y)
the Additional Shares Amount multiplied by the aggregate
price per
share for which Common Stock is issuable upon exercise or
conversion
of such Stock Rights (which shall include any per share
payment made
to acquire such Stock Rights on the date of their issuance)
divided
by the current market price per share of Common Stock as of
the close
of business on the business day immediately preceding the
date of
grant of such Stock Rights. Subject to Section 10.1(d),
such
adjustment shall be made whenever any Stock Rights referred
to in this
Section 10.1(b)(ii) are exercised or converted and shall be
effective
as of the date of such exercise or conversion.

The provisions of this Section 10.1(b)(ii) shall not
apply to any
Stock Rights granted to an underwriter or selling agent of
securities
of the Company or any subsidiary thereof in connection with
an
underwriting or sale of securities of the Company or any
such
subsidiary, and the provisions of this Section 10.1(b)(ii)
shall not
be deemed to apply to a right to purchase shares of Common
Stock which
constitutes an agreement for the purchase and sale of Common
Stock.

(c) For the purpose of any computation under
Section
10.1(b) and Section 12 hereof, the current market price per
share of
Common Stock at any date shall be the average closing price
of the
Common Stock on the New York Stock Exchange (or other
principal
national securities exchange on which the Company's Common
Stock shall
be then traded), or if not then traded on such an exchange,
the
average representative closing bid price of the Common Stock
(if then
traded in the over-the-counter market) or the average
closing price
of the Common Stock (if then traded on NASDAQ's National
Market
System) for the five consecutive trading days ending the day
prior to
the date as of which such computation is made. If the
Common Stock
is not so traded, the current market price per share of
Common Stock
shall mean: (i) for purposes of Section 12 hereof, the fair
market
value per share as determined in good faith by or pursuant
to
directions provided by the Board of Directors of the
Company; and (ii)
for purposes of Section 10.1(b) hereof, an amount determined
by a
nationally recognized investment banking firm that is, in
the judgment
of the Board of Directors of the Company, disinterested and
independent with respect to the determination for which it
is being
retained.

(d) No adjustment in the number of Warrant
Shares
purchasable hereunder shall be required unless such
adjustment would
require an increase or decrease of at least 1% in the number
of
Warrant Shares purchasable upon the exercise of each
Warrant;
provided, however, that any adjustments which by reason of
this
Section 10.1(d) are not required to be made shall be carried
forward
and taken into account in any subsequent adjustment. All
calculations
shall be made to the nearest one-thousandth of a share.

(e) Whenever the number of Warrant Shares
purchasable
upon the exercise of each Warrant is adjusted, as herein
provided, the
Warrant Price payable upon exercise of each Warrant shall be
adjusted
by multiplying such Warrant Price immediately prior to such
adjustment
by a fraction, of which the numerator shall be the number of
Warrant
Shares purchasable upon the exercise of each Warrant
immediately prior
to such adjustment, and of which the denominator shall be
the number
of Warrant Shares so purchasable immediately thereafter.

(f) For the purpose of this Section 10.1,
the term
"shares of Common Stock" shall mean (i) the class of stock
designated
as the Common Stock of the Company at the date of this
Agreement, or
(ii) any other class of stock resulting from successive
changes or
reclassification of such shares consisting solely of changes
in par
value, or from par value to no par value, or from no par
value to par
value. In the event that at any time, as a result of an
adjustment
made pursuant to paragraph (a) above, the Holders shall
become
entitled to purchase any shares of the Company other than
shares of
Common Stock, thereafter the number of such other shares so
purchasable upon exercise of each Warrant and the Warrant
Price of
such shares shall be subject to adjustment from time to time
in a
manner and on terms as nearly equivalent as practicable to
the
provisions with respect to the Warrant Shares contained in
Section
10.1(a) through Section 10.1(e), inclusive, above, and the
provisions
of Section 5 and Sections 10.2 and 10.3 hereof, with respect
to the
Warrant Shares, shall apply on like terms to any such other
shares.

10.2 Voluntary Adjustment by the Company. The
Company may
at its option, at any time during the term of the Warrants,
reduce the
then current Warrant Price to any amount deemed appropriate
by the
Board of Directors of the Company.

10.3 Notice of Adjustment. Whenever the number of
Warrant
Shares purchasable upon the exercise of each Warrant or the
Warrant
Price of such Warrant Shares is adjusted, as herein
provided, the
Company shall cause the Warrant Agent promptly to mail by
first class
mail, postage prepaid, to each Holder notice of such
adjustment or
adjustments and shall deliver to the Warrant Agent a
certificate of
a firm of independent public accountants selected by the
Board of
Directors of the Company (who may be the regular accountants
employed
by the Company) setting forth the number of Warrant Shares
purchasable
upon the exercise of each Warrant and the Warrant Price of
such
Warrant Shares after such adjustment, setting forth a brief
statement
of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Such
certificate shall
be conclusive of the correctness of such adjustment. The
Warrant
Agent shall be entitled to rely on such certificate and
shall be under
no duty or responsibility with respect to any such
certificate, except
to exhibit the same, from time to time, to any Holder
desiring an
inspection thereof during reasonable business hours. The
Warrant
Agent shall not at any time be under any duty or
responsibility to any
Holders to determine whether any facts exist which may
require any
adjustment of the Warrant Price or the number of Warrant
Shares or
other stock or property purchasable on exercise thereof, or
with
respect to the nature or extent of any such adjustment when
made, or
with respect to the method employed in making such
adjustment.

10.4 No Adjustment for Dividends. Except as
provided in
subsection 10.1, no adjustment in respect of any dividend
shall be
made during the term of a Warrant or upon the exercise of a
Warrant.

10.5 Preservation of Purchase Rights Upon
Consolidation,
etc. In case of any consolidation of the Company with or
merger of
the Company into another corporation or in case of any sale
or
conveyance to another corporation of the property of the
Company as
an entirety or substantially as an entirety, the Company or
such
successor or purchasing corporation, as the case may be, as
a
condition to the effectiveness of such transaction shall
execute with
the Warrant Agent an agreement that each Holder shall have
the right
thereafter upon payment of the Warrant Price in effect
immediately
prior to such action to purchase upon exercise of each
Warrant the
kind and amount of shares and other securities and property
which he
would have owned or have been entitled to receive after the
happening
of such consolidation, merger, sale or conveyance had such
Warrant
been exercised immediately prior to such action. The
Company shall
mail by first class mail, postage prepaid, to each Holder,
notice of
the execution of any such agreement. Such agreement shall
provide for
adjustments, which shall be as nearly equivalent as may be
practicable
to the adjustments provided for in this Section 10. The
provisions
of this Section 10.5 shall similarly apply to successive
consolidations, mergers, sales or conveyances. The Warrant
Agent
shall be under no duty or responsibility to determine the
correctness
of any provisions contained in any such agreement relating
either to
the kind or amount of shares of stock or other securities or
property
receivable upon exercise of Warrants or with respect to the
method
employed and provided therein for any adjustments.

10.6 Statement on Warrants. Irrespective of any
adjustments
in the Warrant Price or the number or kind of shares
purchasable upon
the exercise of the Warrants, Warrant certificates
theretofore or
thereafter issued may continue to express the same price and
number
and kind of shares as are stated in the Warrant certificates
initially
issuable pursuant to this Agreement.

SECTION 11. Expiration of Warrants. At 5:00 p.m.
E.S.T,
on December 31, 2000, all outstanding Warrants shall become
void and
all rights of all holders thereof and thereunder and under
this
Agreement shall cease.

SECTION 12. Fractional Interests. The Company
shall not
be required to issue fractional Warrant Shares on the
exercise of
Warrants. The number of full Warrant Shares which shall be
issuable
upon the exercise of Warrants shall be computed on the basis
of the
aggregate number of Warrant Shares purchasable on exercise
of the
Warrants so presented. If any fraction of a Warrant Share
would,
except for the provisions of this Section 12, be issuable on
the
exercise of any Warrant (or specified portion thereof), the
Company
shall pay an amount in cash equal to the then current market
price per
Warrant Share (as defined in Section 10.1(c) above)
multiplied by such
fraction.

SECTION 13. No Rights as Stockholders; Notices to
Holders.
Nothing contained in this Agreement or in any of the
Warrants shall
be construed as conferring upon the Holders or their
transferees the
right to vote or to receive dividends or to consent to or
receive
notice as stockholders in respect of any meeting of
stockholders for
the election of directors of the Company or any other
matter, or any
rights whatsoever as stockholders of the Company. If,
however, at any
time prior to the expiration of the Warrants and prior to
their
exercise, any of the following events shall occur:

(a) the Company shall declare any dividend
payable in
any securities upon its shares of Common Stock or make any
distribution (other than a cash dividend payable from
retained
earnings or surplus) to the holders of its shares of Common
Stock or
effectuate any of the other transactions described in
Sections 10.1
(a) or 10.5 hereof;

(b) the Company shall offer or grant to the
holders
of its shares of Common Stock any additional shares of
Common Stock
or securities convertible into or exchangeable for shares of
Common
Stock or any right to subscribe thereto; or

(c) a dissolution, liquidation or winding up
of the
Company (other than in connection with a consolidation,
merger, or
sale of all or substantially all of its property, assets,
and business
as an entirety) shall be proposed,

then in any one or more of said events, the Company shall
(a) give
notice in writing of such event to the Warrant Agent and the
Holders
as provided in Section 19 hereof and (b) cause notice of
such event
to be published once in The Wall Street Journal (National
Edition),
such giving of notice and publication to be completed at
least fifteen
days prior to the date fixed as a record date or the date of
closing
the transfer books for the determination of the stockholders
entitled
to such dividend, distribution, or subscription rights or to
participate in any other transaction or event described in
Section
10.1(a), or for the determination of stockholders entitled
to vote on
such proposed dissolution, liquidation or winding up or
other
transaction or event described in Section 10.5. Such notice
shall
specify such record date or the date of closing the transfer
books,
as the case may be. Failure to publish or mail such notice
or any
defect therein or in the publication or mailing thereof
shall not
affect the validity of any action taken in connection with
such
dividend, distribution or subscription rights, or proposed
dissolution, liquidation or winding up or other transaction
or event.

SECTION 14. Disposition of Proceeds on Exercise
of
Warrants; Inspection of Warrant Agreement. The Warrant
Agent shall
account promptly to the Company with respect to Warrants
exercised and
concurrently pay the Company all monies received by the
Warrant Agent
for the purchase of the Warrant Shares through the exercise
of such
Warrants.

The Warrant Agent shall keep copies of this
Agreement and
any notices given or received hereunder available for
inspection by
the Holders during normal business hours at its principal
office in
New York, New York. The Company shall supply the Warrant
Agent from
time to time with such numbers of copies of this Agreement
as the
Warrant Agent may request.

SECTION 15. Merger or Consolidation or Change of
Name of
Warrant Agent. Any corporation into which the Warrant Agent
may be
merged or with which it may be consolidated, or any
corporation
resulting from any merger or consolidation to which the
Warrant Agent
shall be a party, shall be the successor to the Warrant
Agent
hereunder without the execution or filing of any paper or
any further
act on the part of any of the parties hereto, provided that
such
corporation would be eligible for appointment as a successor
Warrant
Agent under the provisions of Section 17 hereof. In case at
the time
such successor to the Warrant Agent shall succeed to the
agency
created by this Agreement, any of the Warrants shall have
been
countersigned but not delivered, any such successor to the
Warrant
Agent may adopt the countersignature of the original Warrant
Agent and
deliver such Warrants so countersigned; and in case at that
time any
of the Warrants shall not have been countersigned, any
successor to
the Warrant Agent may countersign such Warrants either in
the name of
the predecessor Warrant Agent or in the name of the
successor Warrant
Agent; and in all such cases Warrants shall have the full
force
provided in the Warrants and in this Agreement.

In case at any time the name of the Warrant Agent
shall be
changed and at such time any of the Warrants shall have been
countersigned but not delivered, the Warrant Agent may adopt
the
countersignatures under its prior name and deliver such
Warrants so
countersigned; and in case at that time any of the Warrants
shall not
have been countersigned, the Warrant Agent may countersign
such
Warrants either in its prior name or in its changed name;
and in all
such cases such Warrants shall have the full force provided
in the
Warrants and in this Agreement.

SECTION 16. Concerning the Warrant Agent. The
Warrant
Agent undertakes the duties and obligations imposed by this
Agreement
upon the following terms and conditions, by all of which the
Company
and the Holders, by their acceptance of Warrants, shall be
bound:

16.1 Correctness of Statements. The statements
contained
herein and in the Warrants shall be taken as statements of
the Company
and the Warrant Agent assumes no responsibility for the
correctness
of any of the same except such as describe the Warrant Agent
or action
taken by it. The Warrant Agent assumes no responsibility
with respect
to the distribution of the Warrants except as herein
otherwise
provided.

16.2 Breach of Covenants. The Warrant Agent shall
not be
responsible for any failure of the Company to comply with
the
covenants contained in this Agreement or in the Warrants to
be
complied with by the Company.

16.3 Performance of Duties. The Warrant Agent may
execute
and exercise any of the rights or powers hereby vested in it
or
perform any duty hereunder either itself or by or through
its
attorneys or agents (which shall not include its employees)
and shall
not be responsible for the misconduct of any agent appointed
with due
care.

16.4 Reliance on Counsel. The Warrant Agent may
consult at
any time with legal counsel satisfactory to it (who may be
counsel for
the Company) and the Warrant Agent shall incur no liability
or
responsibility to the Company or to any Holder in respect of
any
action taken, suffered or omitted by it hereunder in good
faith and
in accordance with the opinion or the advice of such
counsel.

16.5 Proof of Actions Taken. Whenever in the
performance
of its duties under this Agreement the Warrant Agent shall
deem it
necessary or desirable that any fact or matter be proved or
established by the Company prior to taking or suffering any
action
hereunder, such fact or matter (unless other evidence in
respect
thereof be herein specifically prescribed) may be deemed
conclusively
to be proved and established by a certificate signed by the
Chairman
of the Board, the President, any Executive Vice President,
the Chief
Financial Officer, any Vice President, the Treasurer or the
Secretary
of the Company and delivered to the Warrant Agent; and such
certificate shall be full authorization to the Warrant Agent
for any
action taken or suffered in good faith by it under the
provisions of
this Agreement in reliance upon such certificate.

16.6 Compensation. The Company agrees to pay the
Warrant
Agent reasonable compensation for all services rendered by
the Warrant
Agent in the performance of its duties under this Agreement,
to
reimburse the Warrant Agent for all expenses, taxes (other
than taxes
based on income) and governmental charges and other charges
of any
kind and nature incurred by the Warrant Agent in the
performance of
its duties under this Agreement, and to indemnify the
Warrant Agent
and save it harmless against any and all liabilities,
including
judgments, costs and counsel fees, for anything done or
omitted by the
Warrant Agent in the performance of its duties under this
Agreement
except as a result of the Warrant Agent's negligence or bad
faith.

16.7 Legal Proceedings. The Warrant Agent shall
be under
no obligation to institute any action, suit or legal
proceeding or to
take any other action likely to involve expense unless the
Company or
one or more Holders shall furnish the Warrant Agent with
reasonable
security and indemnity for any costs and expenses which may
be
incurred, but this provision shall not affect the power of
the Warrant
Agent to take such action as the Warrant Agent may consider
proper,
whether with or without any such security or indemnity. All
rights
of action under this Agreement or under any of the Warrants
may be
enforced by the Warrant Agent without the possession of any
of the
Warrants or the production thereof at any trial or other
proceeding
relative thereto, and any such action, suit or proceeding
instituted
by the Warrant Agent shall be brought in its name as Warrant
Agent,
and any recovery of judgment (other than in respect of a
claim under
Section 16.6) shall be for the ratable benefit of the
Holders, as
their respective rights or interests may appear.

16.8 Other Transactions in Securities of Company.
The
Warrant Agent and any stockholder, director, officer or
employee of
the Warrant Agent may buy, sell or deal in any of the
Warrants, or
other securities of the Company or have a pecuniary interest
in any
transaction in which the Company may be interested, or
contract with
the Company or otherwise act as fully and freely as though
it were not
Warrant Agent under this Agreement. Nothing herein shall
preclude the
Warrant Agent from acting in any other capacity for the
Company or for
any other legal entity.

16.9 Liability of Warrant Agent. The Warrant
Agent shall
act hereunder solely as agent, and its duties shall be
determined
solely by the provisions hereof. The Warrant Agent shall
not be
liable for anything which it may do or refrain from doing in
connection with this Agreement except for its own negligence
or bad
faith. Anything in this Agreement to the contrary
notwithstanding,
in no event shall the Warrant Agent be liable for special,
indirect
or consequential loss or damage of any kind whatsoever
(including but
not limited to lost profits), even if the Warrant Agent has
been
advised of the likelihood of such loss or damage and
regardless of the
cause.

16.10 Reliance on Documents. The Warrant
Agent will not
incur any liability or responsibility to the Company or to
any Holder
for any action taken in reliance on any notice, resolution,
waiver,
consent, order, certificate, or other paper, document or
instrument
reasonably believed by it to be genuine and to have been
signed, sent
or presented by the proper party or parties.

16.11 Validity of Agreement, etc. The Warrant
Agent
shall not be under any responsibility in respect of the
validity of
this Agreement or the execution and delivery hereof (except
the due
execution hereof by the Warrant Agent) or in respect of the
validity
or execution of any Warrant (except its countersignature
thereof) or
in respect of the necessity or the extent of any adjustment
to the
Warrant Price or the number of Warrant Shares purchasable
under a
Warrant; nor shall the Warrant Agent by any act hereunder be
deemed
to make any representation or warranty as to the
authorization,
reservation, value or registration under securities laws of
any
Warrant Shares (or other stock) to be issued pursuant to
this
Agreement or any Warrant, or as to whether any Warrant
Shares (or
other stock) will, when issued, be validly issued, fully
paid and
nonassessable, or as to the Warrant Price or the number or
amount of
Warrant Shares or other securities or other property
issuable upon
exercise of any Warrant or the method employed in making any
adjustment to the foregoing.

16.12 Instructions from Company. The Warrant
Agent is
hereby authorized and directed to accept instructions with
respect to
the performance of its duties hereunder from the Chairman of
the
Board, the President, any Executive Vice President, the
Chief
Financial Officer, any Vice President, the Treasurer or the
Secretary
of the Company and to apply to such officers for advice or
instructions in connection with its duties, and shall not be
liable
for any action taken or suffered to be taken by it in good
faith in
accordance with instructions of any such officer or
officers.

SECTION 17. Change of Warrant Agent. The Warrant
Agent may
resign and be discharged from its duties under this
Agreement by
giving to the Company sixty days' notice in writing. The
Warrant
Agent may be removed by like notice to the Warrant Agent
from the
Company. If the Warrant Agent shall resign or be removed or
shall
otherwise become incapable of acting, the Company shall
appoint a
successor to the Warrant Agent. If the Company shall fail
to make
such appointment within a period of sixty days after such
removal or
after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Warrant Agent
or by any
Holder (who shall with such notice submit his Warrant for
inspection
by the Company), then any Holder may apply to any court of
competent
jurisdiction for the appointment of a successor to the
Warrant Agent.
Any successor warrant agent, whether appointed by the
Company or such
a court, shall be a bank or trust company, in good standing,
incorporated under the laws of the United States of America
or any
state thereof and having at the time of its appointment as
warrant
agent a combined capital and surplus of at least
$50,000,000, or a
stock transfer company. After appointment, the successor
warrant
agent shall be vested with the same powers, rights, duties
and
responsibilities as if it had been originally named as
Warrant Agent
without further act or deed; but the former Warrant Agent
shall
deliver and transfer to the successor warrant agent any
property at
the time held by it hereunder, and execute and deliver any
further
assurance, conveyance, act or deed necessary for the
purpose. Failure
to file any notice provided for in this Section 17, however,
or any
defect therein, shall not affect the legality or validity of
the
resignation or removal of the Warrant Agent or the
appointment of the
successor warrant agent, as the case may be. In the event
of such
resignation or removal, the successor warrant agent shall
mail, first
class, to each Holder, written notice of such resignation or
removal
and the name and address of such successor warrant agent.

SECTION 18. Identity of Transfer Agent.
Forthwith upon the
appointment of any subsequent transfer agent for the Common
Stock, or
any other shares of the Company's capital stock issuable
upon the
exercise of the Warrants, the Company will file with the
Warrant Agent
a statement setting forth the name and address of such
subsequent
transfer agent.

SECTION 19. Notices. Any notice pursuant to this
Agreement
by the Company or by any Holder to the Warrant Agent, or by
the
Warrant Agent or by any Holder to the Company, shall be in
writing and
shall be mailed first class, postage prepaid, or delivered
(a) to the
Company, at its offices at 300 First Stamford Place,
Stamford,
Connecticut 06912-0014 or (b) to the Warrant Agent, to
Chemical Bank,
450 West 33rd Street, 15th Floor, New York, New York 10001.
Each
party hereto may from time to time change the address to
which notices
to it are to be delivered or mailed hereunder by similar
notice in
writing to the other party.

Any notice mailed pursuant to this Agreement by
the Company
or the Warrant Agent to the Holders shall be in writing and
shall be
mailed first class, postage prepaid, or delivered to such
Holders at
their respective addresses on the books of the Warrant
Agent.

SECTION 20. Supplements and Amendments. The
Company and
the Warrant Agent may from time to time supplement or amend
this
Agreement, without the approval of any Holder in order to
cure any
ambiguity or to correct or supplement any provision
contained herein
which may be defective or inconsistent with any other
provision
herein, or to make any other provisions in regard to matters
or
questions arising hereunder which the Company and the
Warrant Agent
may deem necessary or desirable and which shall not be
inconsistent
with the provisions of the Warrants and which shall not
adversely
affect the interests of the Holders. Any supplement or
amendment to
this Agreement which would adversely affect the interests of
the
Holders may be made by the Company and the Warrant Agent
only with the
written approval of the Holders of a majority of the
outstanding
Warrants and upon such approval, such supplement or
amendment shall
be binding on all Holders; provided, however, that no
supplement or
amendment that reduces the term of the Warrants set forth in
Section
5.1, increases the Warrant Price (except for adjustments
pursuant to
Section 10 hereof), or affects the provisions of Section 10
hereof
shall be effective with respect to any Warrant without the
written
consent of the Holder of such Warrant.

SECTION 21. Successors. All the covenants and
provisions
of this Agreement by or for the benefit of the Company or
the Warrant
Agent shall bind and inure to the benefit of their
respective
successors and assigns hereunder.

SECTION 22. Merger or Consolidation of the
Company. The
Company will not merge or consolidate with or into any other
corporation unless the corporation resulting from such
merger or
consolidation (if not the Company) shall expressly assume,
by
supplemental agreement satisfactory in form to the Warrant
Agent and
executed by such resulting corporation and delivered to the
Warrant
Agent, the due and punctual performance and observance of
each and
every covenant and condition of this Agreement to be
performed and
observed by the Company.

SECTION 23. Applicable Law. This Agreement and
each Warrant
issued hereunder shall be governed by, and construed in
accordance
with, the laws of the State of New York, without giving
effect to any
principles of conflicts of law.

SECTION 24. Benefits of this Agreement. Nothing
in this
Agreement shall be construed to give any person or
corporation other
than the Company, the Warrant Agent, and the Holders any
legal or
equitable right, remedy or claim under this Agreement; but
this
Agreement shall be for the sole and exclusive benefit of the
Company,
the Warrant Agent and the Holders of the Warrants.

SECTION 25. Counterparts. This Agreement may be
executed
in any number of counterparts and each of such counterparts
shall for
all purposes be deemed to be an original, and all such
counterparts
shall together constitute but one and the same instrument.

SECTION 26. Captions. The captions of the
Sections and
subsections of this Agreement have been inserted for
convenience only
and shall not be deemed part of or used in the construction
of this
Agreement.

IN WITNESS WHEREOF, the parties hereto have
executed this
Agreement as of the date first above written.

LONE STAR INDUSTRIES, INC.

By: John J. Martin
Title: Senior Vice President

CHEMICAL BANK, as Warrant Agent

By: Raymond Puplasky
Title: Assistant Vice President
VOID AFTER 5:00 P.M.
EASTERN STANDARD TIME
DECEMBER 31, 2000

No. __________ Exhibit A

__________ Warrants

LONE STAR INDUSTRIES, INC.

Incorporated Under the Laws of The State of Delaware

COMMON STOCK PURCHASE WARRANTS

THIS CERTIFIES THAT, for value received
,
the registered holder hereof, or registered assigns (the
"Holder"),
is entitled to purchase from Lone Star Industries, Inc., a
Delaware
corporation (the "Company"), subject to the terms and
conditions
hereof and of the Warrant Agreement referred to below, at
any time on
or after the date of this Common Stock Purchase Warrant (the
"Warrant") and until 5:00 p.m. E.S.T. on December 31, 2000,
at the
purchase price of $18.75 per share (the "Warrant Price"),
the number
of shares of Common Stock, par value $1.00 per share, of the
Company
(the "Common Stock") which is initially equal to the number
of
Warrants set forth above. The number of shares purchasable
upon
exercise of this Warrant and the Warrant Price per share
shall be
subject to adjustment from time to time as set forth in the
Warrant
Agreement referred to below.

This Warrant may be exercised in whole or in part
by
presentation of this Warrant with the Purchase Form on the
reverse
side hereof duly executed and simultaneous payment of the
Warrant
Price (subject to adjustment) at the principal office of
Chemical Bank
(the "Warrant Agent"). Payment of such price shall be made
at the
option of the Holder hereof in cash, by certified or
official check
or any combination thereof.

This Warrant is one of a duly authorized issue of
Warrants
evidencing the right to purchase initially an aggregate of
up to
4,003,333 shares of Common Stock under and in accordance
with a
Warrant Agreement between the Company and the Warrant Agent
and is
subject to the terms and provisions contained in the Warrant
Agreement, to all of which the Holder of this Warrant by
acceptance
hereof consents. A copy of the Warrant Agreement may be
obtained for
inspection by the Holder hereof upon written request to the
Warrant
Agent.

Upon any partial exercise of this Warrant, there
shall be
countersigned and issued to the Holder hereof a new Warrant
in respect
of the shares of Common Stock as to which this Warrant shall
not have
been exercised. This Warrant may be exchanged at the office
of the
Warrant Agent by surrender of this Warrant properly endorsed
either
separately or in combination with one or more other Warrants
for one
or more new Warrants entitling the Holder thereof to
purchase the same
aggregate number of shares as were purchasable on exercise
of the
Warrant or Warrants exchanged. No fractional shares will be
issued
upon the exercise of this Warrant, but the Company shall pay
the cash
value of any fraction upon the exercise of one or more
Warrants. This
Warrant is transferable at the office of the Warrant Agent
in New
York, New York in the manner and subject to the limitations
set forth
in the Warrant Agreement.

The Holder hereof, until his or her transfer has
been
recorded on the books of the Company, may be treated by the
Company,
the Warrant Agent, and all other persons dealing with this
Warrant as
the absolute owner hereof for any purpose and as the person
entitled
to exercise the rights represented hereby, or to the
transfer hereof
on the books of the Company, any notice to the contrary
notwithstanding.

This Warrant does not entitle any Holder hereof to
any of
the rights of a stockholder of the Company.

This Warrant shall not be valid or obligatory for
any
purpose until it shall have been countersigned by the
Warrant Agent.

DATED:

(Corporate Seal) LONE STAR INDUSTRIES, INC.

Attest:

By:

Title:

[Secretary]

COUNTERSIGNED:

CHEMICAL BANK, as Warrant Agent

By:
Authorized Signature

Title:
LONE STAR INDUSTRIES, INC.

PURCHASE FORM

The undersigned hereby irrevocably elects to
exercise the
right of purchase represented by the within Warrant
Certificate for,
and to purchase thereunder, ___________ shares of the stock
provided
for therein, herewith makes payment in full for such shares
in the
amount of $__________ by delivery of cash and/or certified
or official
bank check, all in accordance with the terms and conditions
specified
in the within Warrant Certificate and the Warrant Agreement
therein
referred to, and requests that certificates for such shares
be issued
in the name indicated below and delivered to the address
stated below:

(Please Print Name, Address and Social Security No.)

and, if said number of shares shall not be all the shares
purchasable
thereunder, that a new Warrant Certificate for the balance
remaining
of the Warrants under the within Warrant Certificate be
registered in
the name of the undersigned Warrantholder or his or her
Assignee as
below indicated and delivered to the address stated below.

DATED:

Name of Warrantholder or Assignee:
(Please Print)

Address:

Signature:

Signature Guaranteed By:

NOTE: The above signature must correspond with the
name as
written upon the face of this Warrant Certificate in every
particular,
without alteration or enlargement or any change whatever,
unless this
Warrant has been assigned.
ASSIGNMENT

(To be signed only upon assignment of Warrant)

FOR VALUE RECEIVED, the undersigned hereby sells,
assigns
and transfers unto

(Name and Address of Assignee Must Be Printed or
Typewritten)

the within Warrant, hereby irrevocably constituting and
appointing
attorney to transfer said Warrant on the books of the
Company, with
full power of substitution in the premises.

DATED

Signature of Registered Holder

Signature Guaranteed By:

15386122.L

FINANCING AGREEMENT

Dated as of April 13, 1994

among

LONE STAR INDUSTRIES, INC.

and

NEW YORK TRAP ROCK CORPORATION,

as Borrowers

and

The CIT Group/Business Credit, Inc.,

as Lender

TABLE OF CONTENTS

Page

SECTION 1. Definitions, Etc.1

1.1 Definitions1
1.2 Accounting Terms22
1.3 Other Terms22
1.4 Construction22

SECTION 2. Conditions Precedent23

2.1 Conditions to Initial Revolving Loans
and
Letters of Credit23

(a) Lien Searches23
(b) Casualty Insurance23
(c) UCC Filings23
(d) Employee Benefit Plans23
(e) Examination & Verification23
(f) Opinions23
(g) Pledge Agreement24
(h) Additional Documents24
(i) Board Resolution24
(j) Corporate Organization24
(k) Officer's Certificate24
(l) Absence of Default24
(m) Plan of Reorganization25
(n) Reorganization; Mergers25
(o) Legal Restraints/Litigation25
(p) Disbursement Authorization25
(q) Adequate Protection Payments25
(r) Performance of Agreements26
(s) Employee Settlement Agreements26
(t) Related Documents26
(u) Confirmation Order26
(v) Default under Related Documents26
(w) Governmental Approval26
(x) Aspects of Reorganization26
(y) Cash Management System27
(z) Pension Obligations27
(aa)Additional Availability27
(bb)Financial Statements27
(cc)Intercreditor Agreement27
(dd)Borrowing Base Certificate27
(ee)Trademark Security Agreement27

2.2 Conditions to Each Revolving Loan and
Letter of Credit27

(a) Representations and Warranties; No
Event of Default28
(b) LIBOR Borrowing Notice28
(c) Disbursement Authorization28

SECTION 3. Revolving Loans28

3.1 Determination of Revolving Loans;
Notices28
3.2 Security Interest in Accounts29
3.3 Representations and Warranties
Regarding
Accounts30
3.4 Collection of Accounts 30
3.5 Account Notices32
3.6 Accounting for Payments33
3.7 Monthly Statements33
3.8 Prepayments; Termination of
Commitment33

SECTION 4. Letters of Credit34

4.1 Issuance of Letters of Credit34
4.2 Letters of Credit Guaranty34
4.3 Indemnification35
4.4 Disclaimers35
4.5 Actions with respect to Letters of
Credit36
4.6 Resolutions with respect to Letters of
Credit36
4.7 Licenses; Taxes36
4.8 Subrogation37

SECTION 5. Collateral37

5.1 Grant of Collateral37
5.2 Description38
5.3 Disposition of Collateral38
5.4 Survival of Security Interest39
5.5 Remedies39
5.6 Other Liens Held as Collateral39

SECTION 6. Representations and Warranties39

6.1 Organization39
6.2 Power; Authority; Consents40
6.3 Full Disclosure41
6.4 Margin Regulations42
6.5 Related Documents42
6.6 Compliance with Bankruptcy Code43
6.7 Solvency43
6.8 Priority; Title43
6.9 Trade Names44
6.10 Subsidiaries44
6.11 Insurance44
6.12 Locations of Offices; Records and
Inventory44
6.13 Affiliate Transactions44
6.14 Environmental Matters44
6.15 Employee Grievances45
6.16 Bank Accounts46
6.17 Returns46
6.18 Merged Subsidiaries46
6.19 Intellectual Property46

SECTION 7. Covenants46

7.1 Compliance with Bankruptcy Documents46
7.2 Books and Records; Access; Change of
Offices;
Change in Collateral47
7.3 Collateral Records47
7.4 Compliance with Applicable Laws48
7.5 Insurance48
7.6 Taxes49
7.7 Compliance with ERISA49
7.8 ERISA Notice49
7.9 Compliance with Laws; Environmental
Matters50
7.10 Public Reports51
7.11 Financial Reporting51
7.12 EBITDA54
7.13 Notice of Additional Subsidiaries;
Additional
Documents54
7.14 Prohibited Transactions55

(a) Negative Pledge55
(b) No Additional Indebtedness55
(c) Borrowing Against Collateral55
(d) Sale of Assets55
(e) Merger; Consolidation, Etc.55
(f) Guaranties55
(g) Advances; Loans; Investments56
(h) Restricted Payments57
(i) No Defeasance; Prepayment57
(j) Additional Trade Names57

7.15 Limitations on Leases and Capital
Expenditures57
7.16 Interest Coverage Ratio58
7.17 Leverage Ratio58
7.18 Notice of Environmental Matters58
7.19 Amendment or Waiver of Related
Documents
and Confirmation Order59
7.20 Account Agreements59
7.21 Locations of Collateral59
7.22 No Affiliate Transactions60
7.23 Notice of Additional Trademarks60
7.24 Notice of Rosebud Advances or
Investments60
7.25 Production Payments60

SECTION 8. Interest, Fees and Expenses61

8.1 Interest on Revolving Loans61

(a) Interest Rate61
(b) Interest Payment Dates61
(c) Eurodollar Rate Not Determinable;
Inability
to Determine Interest Rate;
Illegality or
Impropriety61
(d) Increased Costs; Capital Adequacy
Circumstances62
(e) Indemnity64
(f) Regulation D Compensation65
(g) Continuation and Conversion of
Loans65

8.2 Calculations of Interest and Fees66
8.3 Letter of Credit Fees66
8.4 Additional Letter of Credit Fees 66
8.5 Out-of-Pocket Expenses; Documentation
Fee67
8.6 Line of Credit Fee67
8.7 Loan Facility Fee67
8.8 Administration Fee67
8.9 Expenses of Lender67
8.10 Authorization to Charge Accounts67

SECTION 9. Powers. .67

SECTION 10. Events of Default and Remedies68

10.1 Event of Default68
10.2 Remedies71

SECTION 11. Termination73

SECTION 12. Miscellaneous74

12.1 Waivers74
12.2 Payments; Expenses; Taxes;
Indemnification74
12.3 Entire Agreement75
12.4 Assignments and Participations75
12.5 Maximum Rate76
12.6 Severability76
12.7 Counterparts76
12.8 Jury Trial76
12.9 Guaranty77
12.10 Notices77
12.11 Governing Law78
12.12 Confidentiality78
12.13 Releases of Collateral79

EXHIBITS

Exhibit A - Guaranty
Exhibit B - Pledge Agreement
Exhibit C - Borrowing Base Certificate
Exhibit D - Lockbox Agreement
Exhibit E - Blocked Account Agreement
Exhibit F - Depository Account Agreement
Exhibit G - Trademark Agreement
Exhibit H - Mortgage's Waiver, License and Agreement
Exhibit I - Release Certificate

SCHEDULES

Schedule 1.1A - Intentionally Omitted
Schedule 1.1B - Pledged Subsidiaries
Schedule 1.1C - Existing Liens
Schedule 1.1D - Existing Indebtedness
Schedule 1.1E - Employee Settlement Agreements
Schedule 2.1A - Searches
Schedule 2.1N - Merged Subsidiaries
Schedule 3.4A - Ready Mix Facilities
Schedule 6.9 - Trade Names
Schedule 6.10 - Subsidiaries
Schedule 6.11 - Insurance
Schedule 6.12 - Locations
Schedule 6.13 - Affiliate Transactions
Schedule 6.14 - Environmental Matters
Schedule 6.15 - Employee Grievances
Schedule 6.16 - Bank Accounts
Schedule 6.17 - Tax Suits
Schedule 6.19 - Intellectual Property
Schedule 7.7 - ERISA Disclosure
Schedule 7.14(F) - Existing Guarantees

THE CIT GROUP/BUSINESS CREDIT, INC., a New York
corporation
(hereinafter the "Lender"), with offices located at 1211
Avenue of
the Americas, New York, New York 10036, is pleased to
confirm the
terms and conditions under which the Lender shall make
revolving
loans, advances and other financial accommodations to Lone
Star
Industries, Inc., a Delaware corporation with a principal
place of
business at 300 First Stamford Place, Stamford, CT 06912-
0014
("LSI") and New York Trap Rock Corporation, a Delaware
corporation
with a principal place of business at 162 Old Mill Road,
West
Nyack, New York 10994 ("Trap Rock" and together with LSI,
each a
"Company" and collectively, the "Companies").

R E C I T A L S

WHEREAS, any term used in these recitals without
definition
is used as hereinafter defined;

WHEREAS, on December 10, 1990 and December 21, 1990,
the
Debtors filed petitions for relief under Chapter 11 of the
Bankruptcy Code, in the United States Bankruptcy Court for
the
Southern District of New York (the "Bankruptcy Court"), all
of
which cases are jointly administered;

WHEREAS, as part of the Plan of Reorganization, the
Company
will retain the Core Assets (as defined in the Plan of
Reorganization) and transfer the Non-Core Assets (as defined
in the
Plan of Reorganization) to Rosebud Holdings, Inc.
("Rosebud"), a
Delaware corporation and wholly owned subsidiary of the
Company
formed pursuant to the Plan of Reorganization (the "Asset
Transfer");

WHEREAS, the Companies have requested that the
Lender
finance the ongoing working capital requirements of the
Companies
and certain of their subsidiaries; and

WHEREAS, the Lender is willing to make funds
available for
such purposes upon the terms and subject to the conditions
set
forth herein;

NOW, THEREFORE, in consideration of the premises and
the
covenants and agreements contained herein, the parties
hereto
hereby agree as follows:

SECTION 1. Definitions, Etc.

1.1 Definitions. The following terms shall have
the
following respective meanings:

Accounts shall mean all of the Companies' now
existing and
hereafter acquired: (a) accounts and accounts receivable,
(whether
or not specifically listed on schedules furnished to the
Lender),
and any and all instruments, documents and chattel paper,
including, without limitation, all accounts created by or
arising
from all of the Companies' sales of goods or rendition of
services
to its customers, and all accounts and accounts receivable
arising
from sales or rendition of services made under any of the
Companies' trade names, or through any of the Companies'
divisions;
(b) unpaid seller's rights (including rescission, replevin,
reclamation and stoppage in transit) relating to the
foregoing or
arising therefrom; (c) rights to any goods represented by
any of
the foregoing, including rights to returned or repossessed
goods;
(d) reserves and credit balances arising hereunder; (e)
guarantees
or collateral for any of the foregoing; (f) insurance
policies or
rights relating to any of the foregoing; and (g) cash and
non-cash
proceeds of any and all the foregoing.

Affiliate shall mean, as to any Person, any other
Person
which directly or indirectly controls, is controlled by, or
is
under common control with, such Person or any Person who is
a
director or executive officer of such Person. For purposes
of this
definition, "control" shall mean the possession, directly or
indirectly, of the power to (i) vote five percent (5%) or
more of
the securities having ordinary voting power for the election
of
directors of such Person or (ii) direct or cause the
direction of
management and policies of a business, whether through the
ownership of voting securities, by contract or otherwise and
either
alone or in connection with others or any group.

Anniversary Date shall mean the first anniversary of
the
date of this Financing Agreement and the same date in every
year
thereafter.

Asset Proceeds Note Indenture shall mean the
Indenture dated
as of March 29, 1994 among Rosebud and the Asset Proceeds
Note
Indenture Trustee pursuant to which the Asset Proceeds Notes
are
issued, as such indenture may be amended, restated,
supplemented or
otherwise modified from time to time in accordance with the
provisions of Section 7.19 hereof.

Asset Proceeds Note Indenture Trustee shall mean the
Trustee
as defined in the Asset Proceeds Note Indenture, and any
successor
trustee appointed thereunder.

Asset Proceeds Notes shall mean the 10% Asset
Proceeds Notes
due 1997 issued pursuant to the Asset Proceeds Note
Indenture, as
such notes may be amended, restated or modified from time to
time
in accordance with the provisions of Section 7.19 hereof.

Asset Proceeds Notes Guaranty shall mean the
Guarantee
Agreement executed and delivered by LSI in favor of the
holders of
the Asset Proceeds Notes and dated as of March 29, 1994
pursuant to
which LSI guarantees a portion of the obligations of Rosebud
under
the Asset Proceeds Notes, as such guaranty may be amended,
restated
or otherwise modified from time to time in accordance with
the
provisions of Section 7.19 hereof.

Asset Proceeds Notes Pledge Agreement shall mean the
Pledge
Agreement executed and delivered by LSI in favor of the
Collateral
Agent for the holders of the Asset Proceeds Notes and dated
March
29, 1994, as such agreement may be amended, restated or
otherwise
modified from time to time in accordance with the provisions
of
Section 7.19 hereof.

Asset Transfer has the meaning set forth in the
recitals
hereto.

Availability shall mean, at any time, the difference
between
(i) the lesser of (a) the Borrowing Base at such time, and
(b) the
Line of Credit and (ii) the sum of (a) the aggregate
outstanding
principal amount of all Revolving Loans made to the
Companies and
(b) the aggregate undrawn and unreimbursed amounts of all
Letters
of Credit issued on behalf of LSI.

Bankruptcy Code means Title 11 of the United States
Code, or
any similar United States federal or state law for the
relief of
debtors.

Borrowing Base shall mean the difference between (i)
sum of
(A) eighty-five percent (85%) of the outstanding Eligible
Accounts
Receivable of the Companies and (B) fifty-five percent (55%)
of the
aggregate value of Eligible Inventory of the Companies as
determined at the lower of cost or market value and
excluding all
deferred fixed costs in Inventory and (ii) the Borrowing
Base
Reserve.

Borrowing Base Certificate shall have the meaning
ascribed
to it in Section 7.11(c)(i).

Borrowing Base Reserve shall mean (i) $1,000,000
prior to
July 31, 1994, (ii) $1,500,000 prior to July 31, 1995, (iii)
$2,000,000 prior to July 31, 1996, (iv) $2,500,000 prior to
July
31, 1997, (v) $3,400,000 prior to January 31, 1998, and (vi)
$4,600,000 prior to July 31, 1998.

Borrowing Date shall mean any date on which a
Revolving Loan
is made pursuant to Section 3.1, which date shall be a
Business
Day.

Business Day shall mean any day other than a
Saturday,
Sunday or other day on which banking institutions are
authorized or
obligated to close in New York, New York, provided, that
with
respect to Eurodollar Loans, Business Day shall also mean a
day on
which dealings in Dollars are carried on in the London
interbank
market.

Capital Expenditures shall mean for any period the
aggregate
of all expenditures of LSI and its Consolidated Subsidiaries
during
such period that in conformity with GAAP are required to be
included in or reflected by the property, plant and
equipment or
similar fixed asset account reflected in the Consolidated
Balance
Sheet of LSI and its Consolidated Subsidiaries, provided
that the
term "Capital Expenditures" shall exclude the Net Proceeds
of
Permitted Asset Sales which are reinvested, substantially
contemporaneously with the receipt of such proceeds, as
expenditures of LSI and its Consolidated Subsidiaries for
property,
plant and equipment. For purposes of this Financing
Agreement, a
reinvestment of Net Proceeds of Permitted Asset Sales shall
be
considered to have been made substantially contemporaneously
with
the receipt of such proceeds if (1) the Board of Directors
of the
appropriate Person shall have approved the expenditure for
property, plant and equipment within 12 months before or 6
months
after the consummation of the Permitted Asset Sale and (2)
such
Person shall have entered into a definitive agreement for
such
expenditure for property, plant and equipment or shall have
commenced to make such expenditure for property, plant and
equipment within 12 months after such Permitted Asset Sale.

Capital Lease shall mean any lease of property
(whether
real, personal or mixed) which, in conformity with GAAP, is
accounted for as a capital lease or a Capital Expenditure on
the
Consolidated Balance Sheet of LSI.

Chemical Bank Rate shall mean the interest rate per
annum
publicly announced from time to time by Chemical Bank in New
York,
New York as its prime rate, such interest rate to change
automatically from time to time effective as of the
announced
effective date of each change in the prime rate. The prime
rate is
not intended to be the lowest rate of interest charged by
Chemical
Bank to its borrowers.

Chemical Bank Rate Loan shall mean a Revolving Loan
bearing
interest at a rate determined with reference to the Chemical
Bank
Rate.

Code shall mean the Internal Revenue Code of 1986,
as
amended from time to time.

Collateral shall mean all present and future
Accounts,
Inventory, Documents of Title and General Intangibles of the
Companies and the proceeds of the foregoing, all capital
stock of
the Pledged Subsidiaries and all other property subject to
the lien
or security interest purported to be created by any
mortgage, deed
of trust, security agreement, pledge agreement, assignment
or other
security document heretofore or hereafter executed by any
Person as
security for all or any part of the Obligations.

Confirmation Order means that certain order of
confirmation
relating to Case Nos. 90 B 21276 to 90 B 21286, 90 B 21334
and
90 B 21335 (HS) in the Southern District of New York, dated
February 17, 1994, as the same may be amended or modified
from time
to time in accordance with the provisions of Section 7.19
hereof.

Consolidated Balance Sheet shall mean a consolidated
balance
sheet for LSI and its Consolidated Subsidiaries eliminating
all
inter-company accounts and prepared in accordance with GAAP.

Consolidated Subsidiary shall mean each Subsidiary
of LSI
other than Rosebud and its Subsidiaries.

Construction Aggregates shall mean Construction
Aggregates
Limited, a corporation organized under the laws of Nova
Scotia.

Core Assets has the meaning set forth in Section
1.33 of the
Plan of Reorganization.

Credit Rating Event of Default shall mean a "Credit
Rating
Event of Default" as defined in the Employee Settlement
Agreements.

Customarily Permitted Liens shall mean, as to any
Person:

(a) liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings, provided
that
adequate reserves with respect thereto are maintained on the
books
of such Person in conformity with GAAP;

(b) statutory liens of landlords and liens of
carriers,
warehousemen, mechanics, materialmen and other like liens
imposed
by law, created in the ordinary course of business and for
amounts
not yet due (or which are being contested in good faith by
appropriate proceedings or other appropriate actions which
are
sufficient to prevent foreclosure of such liens) and with
respect
to which adequate reserves or other appropriate provisions
are
being maintained to the extent required by GAAP;

(c) deposits made (and the liens thereon) in the
ordinary
course of business (including, without limitation, security
deposits for leases, surety bonds and appeal bonds) in
connection
with workers' compensation, unemployment insurance and other
types
of social security benefits or to secure the performance of
tenders, bids, contracts (other than for the repayment or
guarantee
of borrowed money or purchase money obligations), statutory
obligations and other similar obligations arising as a
result of
progress payments under government contracts; and

(d) easements (including, without limitation,
reciprocal
easement agreements and utility agreements), encroachments,
minor
defects or irregularities in title, variation and other
similar
restrictions, charges or encumbrances (whether or not
recorded)
affecting real property and which do not, individually or in
the
aggregate, detract from the value of such real property and
which
do not interfere in any material respect with the use or
enjoyment
of such real property in the ordinary course of such
Person's
business.

Debtors means, collectively, each of LSI, Trap Rock,
San-Vel
Concrete Corporation, NYTR, Lone Star Cement Inc.,
Construction
Materials Company, I.C. Materials, Inc., Lone Star Prestress
Concrete, Inc., Lone Star Properties, Inc., Southern
Aggregates,
Inc., Lone Star Transportation Corporation, Lone Star
Building
Centers, Inc. and Lone Star Building Centers (Eastern) Inc.
prior
to their reorganization at the Effective Time.

Default Rate of Interest shall mean a rate of
interest per
annum equal to the sum of: (a) two percent (2%) and (b) (i)
with
respect to Chemical Bank Rate Loans, the Chemical Bank Rate
set
forth in Section 8.1(a)(i) and (ii) with respect to
Eurodollar
Loans, the interest rate on Eurodollar Loans set forth in
Section
8.1 (a)(ii), which the Lender shall be entitled to receive
from the
Companies on all Obligations due the Lender by the Companies
to the
extent provided in Section 10.2 of this Financing Agreement.

Disclosure Statement means the Modified Amended
Disclosure
Statement regarding Debtors' Modified Amended Consolidated
Plan of
Reorganization, dated November 4, 1993, filed by the Debtors
with
the Bankruptcy Court.

Documentation Fee shall mean the Lender's standard
fees
relating to any and all modifications, waivers, releases,
amendments or additional collateral with respect to this
Financing
Agreement, the other Loan Documents, the Collateral and/or
the
Obligations.

Documents of Title shall mean all of the Companies'
present
and future warehouse receipts, bills of lading, shipping
documents,
chattel paper, instruments and similar documents, all
whether
negotiable or not and all goods and Inventory relating
thereto and
all cash and non-cash proceeds of the foregoing.

Dollar or Dollars and the symbol $ shall mean lawful
money
of the United States of America.

EBITDA shall mean, in any period, all earnings of
LSI and
its Consolidated Subsidiaries before all depreciation,
amortization
of intangibles, deferred fixed cost in Inventory, write-ups
of the
value of Inventory made in connection with the fresh start
accounting of LSI and its Consolidated Subsidiaries,
interest and
tax expense and extraordinary gains and losses of LSI and
its
Consolidated Subsidiaries for said period, determined in
accordance
with GAAP.

Effective Date means the Effective Date defined in
Section
1.38 of the Plan of Reorganization.

Effective Time means the time on the Effective Date
at which
the Plan of Reorganization becomes effective in accordance
with its
terms.

Eligible Accounts Receivable shall mean the gross
amount of
the Companies' accounts receivable that conform to the
warranties
contained herein and at all times continue to be acceptable
to the
Lender in the exercise of its reasonable business judgment
based on
those criteria customary in the commercial finance industry
generally or in the lending practices of the Lender, less,
without
duplication, the sum of (a) any returns, discounts, claims,
credits
and allowances of any nature (whether issued, owing, granted
or
outstanding) and (b) reserves for: (i) sales to the United
States
of America or to any agency, department or division thereof;
(ii)
foreign sales other than sales secured by stand-by letters
of
credit (in form and substance satisfactory to the Lender)
issued or
confirmed by, and payable at, banks having a place of
business in
the United States of America and payable in United States
currency;
(iii) accounts that remain unpaid more than four (4)
calendar
months from the original statement or billing date or two
(2)
calendar months from the original due date; (iv) contras;
(v) sales
to any Subsidiary or to any Affiliate; (vi) bill and hold
(deferred
shipment) or consignment sales; (vii) sales to any customer
which
is (A) insolvent, (B) the debtor in any bankruptcy,
insolvency,
arrangement, reorganization, receivership or similar
proceedings
under any federal or state law, (C) negotiating, or has
called a
meeting of its creditors for purposes of negotiating, a
compromise
of its debts or (D) financially unacceptable to the Lender
or has a
credit rating unacceptable to the Lender; (viii) all sales
to any
customer if fifty percent (50%) or more of the aggregate
dollar
amount of all outstanding invoices, are unpaid more than
four (4)
calendar months from the original statement or billing date
or two
(2) calendar months from the original due date; (ix) an
amount
representing, historical, returns, discounts, claims,
credits and
allowances; (x) Accounts for which payments are subject to
actual
dispute or subject to offset, defense or counterclaim
asserted or
threatened by the customer; (xi) Accounts that have been
terminated
or cancelled by customers; (xii) Accounts which do not
comply with
all Governmental Rules; (xiii) any Account in which the
Lender does
not have a perfected, first priority, exclusive lien; (xiv)
any
Account for which the customer is located in a jurisdiction
which
requires creditors to be licensed or hold a permit in order
to
perform the services or sell the items giving rise to such
Account
or to receive payments on such Account, and the Company
entitled to
receive payment on such Account is not so licensed or does
not hold
such permit; (xv) Accounts which are not fully transferable
or
assignable; and (xvi) Accounts created pursuant to
transactions in
which the Company entitled to receive payment on such
Account is
required to obtain a performance or other similar bond in
favor of
its customer, provided that prior to the date on which the
Lender
has received UCC searches or other evidence satisfactory to
the
Lender establishing the absence of any liens or other
encumbrances
against the Accounts of the Companies filed with the
Secretary of
State of the State of Connecticut and with the towns of
Stamford
and Greenwich, Eligible Accounts Receivable shall be zero.

Eligible Inventory shall mean the gross amount of
the
Companies' Inventory that conform to the warranties
contained
herein and which at all times continue to be acceptable to
the
Lender in the exercise of its reasonable business judgment
based
upon those criteria customary in the commercial finance
industry
generally or in the lending practices of the Lender, less
any
work-in-process, supplies (other than raw material), goods
not
present in the United States of America, goods located at
the
premises of third parties (other than warehouses with which
the
Lender has entered into a third-party warehouse letter
satisfactory, in form and substance, to the Lender),
Inventory in
which the Lender does not have a perfected, first priority,
exclusive lien, goods returned or rejected by the Companies'
customers (other than goods that are undamaged and resalable
in the
normal course of business), goods to be returned to the
Companies'
suppliers, goods in transit and less any reserves required
by the
Lender in its reasonable discretion for special order goods,
market
value declines and bill and hold (deferred shipment) or
consignment
sales, provided that (i) Eligible Inventory must be located
in a
jurisdiction for which the Lender has received UCC searches
or
other evidence satisfactory to the Lender establishing the
absence
of any liens or encumbrance on the Inventory of Companies in
such
jurisdiction and (ii) upon the failure of LSI to make any
semi-
annual purchase price payment for minerals pursuant to the
Production Payment Agreements in accordance with Section
7.25
hereof, the Lender may, in its sole discretion, exclude from
Eligible Inventory all or any part of the Inventory located
at
LSI's Greencastle, Indiana and Pryor, Oklahoma cement
plants.

Employee Settlement Agreements shall mean the
settlement
agreements in effect on the Effective Date with (i) the
PBGC, (ii)
the Official Committee of Retired Employees of LSI and its
Subsidiaries, and (iii) LSI's and its Subsidiaries' unions,
and all
material related agreements, documents, instruments,
mortgages,
security agreements and assignments, all as listed on
Schedule 1.1E
hereto, in each case as amended, modified and supplemented
from
time to time in accordance with the provisions of Section
7.19
hereof.

Environment shall mean soil, surface waters, ground
waters,
land, stream sediments, surface or subsurface strata and
ambient
air and structures containing asbestos.

Environmental Claim shall mean any claim,
investigation,
proceeding, action, order, directive, summons, complaint,
citation,
notice or inquiry from any Governmental Authority or any
third
person which could or does result in any Environmental
Damages.

Environmental Condition shall mean any condition
with
respect to the Environment, whether or not yet discovered,
at, on
or under any of the assets of LSI or its Subsidiaries or
resulting
from any Hazardous Substances released or transported from
any of
the assets of LSI or its Subsidiaries, which could or does
result
in any Environmental Damages to LSI, its Subsidiaries or the
Lender.

Environmental Damages shall mean all claims,
judgments,
damages (including punitive damages), losses, penalties,
fines,
liabilities, encumbrances, liens, costs and expenses of
investigation and defense of any claim of whatever kind or
nature
which are incurred as a result of (i) the existence of
Hazardous
Substances at, on or under any of the assets of LSI or its
Subsidiaries or resulting from any Hazardous Substances
released at
or threatened to be released at or transported from any of
the
assets of LSI or its Subsidiaries, or (ii) the violation of
any
Environmental Law by LSI or its Subsidiaries.

Environmental Laws shall mean all applicable
Governmental
Rules relating to the injury to, or the protection of, the
Environment.

ERISA shall mean the Employee Retirement Income
Security Act
of 1974, as amended from time to time and the rules and
regulations
promulgated thereunder from time to time.

ERISA Affiliate shall mean each person (as defined
in
Section 3(9) of ERISA) which together with LSI and any
Subsidiary
of LSI would be deemed to be a "single employer" within the
meaning
of Section 414(b) or (c) of the Code.

Eurodollar Loan shall mean a Revolving Loan bearing
interest
at a rate determined with reference to the Eurodollar Rate.

Eurodollar Rate shall mean, with respect to a
Eurodollar
Loan for the relevant Interest Period, the rate determined
by the
Lender to be the rate at which deposits in Dollars are
offered by
Chemical Bank to first-class banks in the London interbank
market
at approximately 11:00 a.m. (London time) two Business Days
prior
to the first day of such Interest Period, in the approximate
amount
of the relevant Eurodollar Loan and having a maturity equal
to such
Interest Period.

Event(s) of Default shall have the meaning provided
for in
Section 10.1 of this Financing Agreement.

Executive Officers shall mean the Chairman,
President, Chief
Executive Officer, Chief Operating Officer, Chief Financial
Officer, Executive Vice President(s), Senior Vice
President(s), any
Vice President, Treasurer, Controller and Secretary of LSI.

Final Order means an order or judgment of the
Bankruptcy
Court as entered on the docket that has not been reversed,
stayed,
modified or amended, and as to which the time to appeal,
petition
for certiorari, or seek reargument or rehearing has expired
and as
to which no appeal, reargument, petition for certiorari, or
rehearing is pending or as to which any right to appeal,
reargue,
petition for certiorari or seek rehearing has been waived in
writing in a manner satisfactory to the Lender or, if an
appeal,
reargument, petition for certiorari, or rehearing thereof
has been
sought, the order or judgment of the Bankruptcy Court has
been
affirmed by the highest court to which the order was
appealed or
from which the reargument or rehearing was sought, or
certiorari
has been denied, and the time to take any further appeal or
to seek
certiorari or further reargument has expired.

Financial Statements shall mean the financial
statements
contained in LSI's SEC Form 10-K for LSI's fiscal year ended
December 31, 1993.

GAAP shall mean generally accepted accounting
principles in
the United States of America as in effect from time to time
and for
the period as to which such accounting principles are to
apply.

General Intangibles shall have the meaning set forth
in the
UCC and shall include, without limitation, all present and
future
right, title and interest of the Companies in and to all
contract
rights, general intangibles, tradenames, trademarks
(together with
the goodwill associated therewith), patents, licenses,
customer
lists, distribution agreements, supply agreements and tax
refunds,
together with all monies and claims for monies now or
hereafter due
and payable in connection with any of the foregoing or
otherwise,
and all cash and non-cash proceeds thereof.

Governmental Authority shall mean any nation or
government,
any federal, state, city, town, municipality, county, local
or
other political subdivision thereof or thereto and any
department,
commission, board, bureau, instrumentality, agency, court or
other
judicial or quasi-judicial tribunal or other entity
exercising
executive, legislative, judicial, regulatory or
administrative
functions of or pertaining to government.

Governmental Rule shall mean any statute, law,
treaty, rule,
code, ordinance, regulation, permit, certificate or order of
any
Governmental Authority or any judgment, decree, injunction,
writ,
order or like action of any Governmental Authority (whether
or not
having the force of law).

Guarantors shall mean all Subsidiaries of LSI that
guarantee
the Obligations of the Companies pursuant to Section 7.13
hereof.

Guaranty shall mean the guaranty, in the form of
Exhibit A
hereto, made by a Subsidiary of LSI in favor of the Lender
guaranteeing the Obligations and delivered to the Lender
pursuant
to Section 7.13 hereof.

Hazardous Substances shall mean any substance: (a)
the
presence of which requires notification, investigation or
remediation under any Environmental Law; (b) which is or
becomes
defined as a "hazardous substance", "hazardous waste",
"toxic
substance", "toxic waste", or which become regulated as
hazardous
or toxic under any Environmental Law, including, without
limitation, the Comprehensive Environmental Response,
Compensation,
and Liability Act (42 U.S.C. 9601 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. 1251 et
seq.), and
the Clean Air Act (42 U.S.C. 7401 et seq.); (c) which
contains
gasoline, diesel fuel or other petroleum hydrocarbons or
volatile
organic compounds; (d) which contains polychlorinated
biphenyls or
friable asbestos or urea formaldehyde foam insulation; or
(e) which
contains or emits radon gas.

Indebtedness shall mean as to any Person, without
duplication (i) indebtedness for borrowed money; (ii)
indebtedness
for the deferred purchase price of property or services
(other than
property including Inventory and services purchased in the
ordinary
course of business); (iii) indebtedness evidenced by bonds,
debentures, notes or other similar instruments (other than
performance, surety and appeal or other similar bonds
arising in
the ordinary course of business); (iv) obligations and
liabilities
secured by a lien, claim or encumbrance, upon specific
property
owned by such Person, whether or not owing by such Person
and even
though such Person has not assumed or become liable for the
payment
thereof; (v) indebtedness directly or indirectly guaranteed
by such
Person and the reimbursement obligations of such Person with
respect to letters of credit; (vi) obligations or
liabilities
created or arising under any conditional sales contract or
other
title retention agreement with respect to property used
and/or
acquired by such Person, even though the rights and remedies
of the
lessor, seller and/or lender thereunder are limited to
repossession
of such property; (vii) obligations under Capital Leases;
and
(viii) the net obligations under interest rate swaps,
currency
swaps, options or other similar agreements.

Interest Coverage Ratio shall mean a ratio
determined as of
the relevant calculation date by dividing (i) EBITDA for the
relevant period by (ii) Interest Expense for the relevant
period.

Interest Expense shall mean total interest expense
(paid or
accrued) of LSI and its Consolidated Subsidiaries,
determined in
accordance with GAAP on a basis consistent with the latest
audited
statements of LSI and its Consolidated Subsidiaries.

Interest Period shall mean, with respect to any
Eurodollar
Loan, the period commencing on the Borrowing Date or the
date of
any continuation or conversion for such Eurodollar Loan, as
the
case may be, and ending one, three or six months thereafter
as a
Company may elect in the applicable notice given to the
Lender
pursuant to Section 3.1 and/or Section 8.1(g); provided that
(i)
any Interest Period that would otherwise end on a day that
is not a
Business Day shall be extended to the next succeeding
Business Day,
unless such Business Day falls in another calendar month, in
which
case such Interest Period shall end on the next preceding
Business
Day; (ii) any Interest Period that begins on the last
Business Day
of a calendar month or on a day for which there is no
numerically
corresponding day in the calendar month at the end of such
Interest
Period shall end on the last Business Day of the applicable
calendar month; and (iii) no Interest Period for any
Eurodollar
Loan shall end after the Termination Date. Interest shall
accrue
from and include the first date of an Interest Period but
exclude
the last day of such Interest Period.

Inventory shall mean all of the Companies' present
and
hereafter acquired merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever
located, together with all goods and materials used or
usable in
manufacturing, processing, packaging or shipping same, in
all
stages of production, from raw materials excluding limestone
and
other minerals located at LSI's facilities in Greencastle,
Indiana
and Pryor, Oklahoma, through work-in-process to finished
goods, and
all proceeds thereof of whatever sort, provided that
Inventory
shall exclude the fuel and spare parts inventory located at
LSI's
facilities in Oglesby, Illinois, Greencastle, Indiana and
Pryor,
Oklahoma.

Issuing Bank shall mean the bank issuing Letters of
Credit
for LSI.

Kosmos Partnership shall have the meaning set forth
in the
Employee Settlement Agreements.

Letter of Credit Guaranty shall mean the guaranty
delivered
by the Lender to the Issuing Bank of LSI's reimbursement
obligation
under the Issuing Bank's reimbursement agreement,
application for
letter of credit or other like document.

Letter of Credit Guaranty Fee shall mean the fee the
Lender
may charge LSI under Section 8.3 of this Financing Agreement
for:
(i) issuing the Letter of Credit Guaranty or (ii) otherwise
aiding
LSI in obtaining Letters of Credit.

Letters of Credit shall mean all letters of credit
issued
with the assistance of the Lender by the Issuing Bank for or
on
behalf of LSI.

Leverage Ratio shall mean the ratio determined by
dividing
Total Liabilities by Net Worth.

Line of Credit shall mean the commitment of the
Lender to
make loans and advances to the Companies, pursuant to
Section 3.1
of this Financing Agreement, and to assist LSI in obtaining
Letters
of Credit, pursuant to Section 4 of this Financing
Agreement, in
the aggregate amount equal to $35,000,000, as such amount
may be
reduced pursuant to the terms of this Financing Agreement.

Line of Credit Fee shall (i) mean the fee due to the
Lender
payable in arrears on the first day of each month for the
immediately preceding month for the Line of Credit, and (ii)
be
determined by multiplying (A) the difference between (x) the
Line
of Credit and (y) the sum of (1) the average aggregate daily
Revolving Loans of the Companies for said month and (2) the
average
aggregate daily amount available to be drawn under all
outstanding
Letters of Credit issued for the account of LSI for such
month by
(B) one-half of one percent (1/2 of 1%) per annum for the
number of
days in said month.

Loan Documents shall mean this Financing Agreement,
the
Pledge Agreement, the Trademark Agreement, each Guaranty and
all
other documents, agreements, guarantees, instruments,
opinions and
certificates heretofore, now or hereafter executed and
delivered in
connection with this Financing Agreement, including all
amendments,
supplements or modifications of the same.

Loan Facility Fee shall mean the fee payable to the
Lender
in accordance with, and pursuant to, the provisions of
Section 8.7
of this Financing Agreement.

Material Adverse Effect shall mean a material
adverse effect
upon (i) the business, operations, condition (financial or
otherwise) or prospects of LSI and its Consolidated
Subsidiaries,
taken as a whole, (ii) the ability of LSI and its
Consolidated
Subsidiaries, taken as a whole, to perform their obligations
hereunder or under any other Loan Document, (iii) the
legality,
validity or enforceability of this Financing Agreement or
any other
Loan Document, or the rights and remedies of the Lender
hereunder
or thereunder, or (iv) the aggregate value of the property
included
in the Borrowing Base, provided that a Material Adverse
Effect
shall not occur solely by reason of (A) the occurrence of a
Credit
Rating Event of Default or (B) a Permitted Asset Sale.

Minimum Availability Trigger Date shall mean the
first date
upon which the Availability (without giving effect to the
Line of
Credit limitation contained in clause (i) of the definition
thereof) has remained, for a period of five (5) consecutive
Business Days, below (i) $10,000,000 at any time during the
period
from January 1 through June 30 of any year or (y)
$15,000,000 at
any time during the period from July 1 through December 31
of any
year.

Net Proceeds shall mean any amount equal to the cash
proceeds received by LSI and its Consolidated Subsidiaries
from or
in respect of any Permitted Asset Sale (including any cash
received
as income or other proceeds from any non-cash consideration
received in respect of any such transaction), less (w) any
reasonable brokerage commissions, financial advisory fees,
legal
and accounting fees and other fees and expenses incurred by
LSI and
its Consolidated Subsidiaries in respect of such
transaction, (x)
any taxes paid or payable by them (as determined reasonably
and in
good faith by the chief financial officer of LSI) in respect
of
such transaction, (y) any amounts held by LSI or any of its
Consolidated Subsidiaries as a cash reserve as set forth on
its
regularly prepared balance sheets (or the notes thereto), in
accordance with GAAP consistently applied, against any
liabilities
associated with the assets sold pursuant to such Permitted
Asset
Sale and retained by LSI or any of its Consolidated
Subsidiaries,
including, without limitation, trade payables, payroll and
pension
and other employment and postemployment benefit liabilities
and
liabilities related to environmental matters, or against any
indemnification obligations associated with the sale or
other
disposition, and (z) any amounts required to discharge any
encumbrances not constituting Permitted Encumbrances on the
assets
sold, leased, conveyed or otherwise disposed of.

Net Worth shall mean, the excess of (i) the net book
value
of the assets of LSI and its Consolidated Subsidiaries after
all
appropriate adjustments in accordance with GAAP (including,
without
limitation, reserves for doubtful receivables, obsolescence,
depreciation and amortization), over (ii) Total Liabilities,
in
each case computed and consolidated in accordance with GAAP.

NYTR shall mean NYTR Transportation Corp., a
Delaware
corporation, which is a wholly-owned direct subsidiary of
Trap
Rock.

Obligations shall mean the aggregate amount of all
loans and
advances made or to be made by the Lender to the Companies
or to
others for the Companies' account; any and all indebtedness
and
obligations which may at any time be owing by a Company to
the
Lender howsoever arising, whether now in existence or
incurred by a
Company from time to time hereafter; whether secured by
pledge,
lien upon or security interest in any of the Companies'
assets or
property or the assets or property of any other Person,
firm,
entity or corporation; whether such indebtedness is absolute
or
contingent, joint or several, matured or unmatured, direct
or
indirect and whether the Companies are liable to the Lender
for
such indebtedness as principal, surety, endorser, guarantor
or
otherwise. Obligations shall also include indebtedness
owing to
the Lender by the Companies under this Financing Agreement
or under
any other agreement or arrangement now or hereafter entered
into
between a Company and the Lender; indebtedness or
obligations
incurred by, or imposed on, the Lender as a result of any
Environmental Claim (other than as a result of actions of
the
Lender constituting gross negligence or willful misconduct)
arising
out of any Company's operation, premises or waste disposal
practices or sites; any Company's liability to the Lender as
maker
or endorser on any promissory note or other instrument for
the
payment of money; any Company's liability to the Lender
under any
instrument of guaranty or indemnity, or arising under any
guaranty,
endorsement or undertaking which the Lender may make or
issue to
others for any Company's account, including any
accommodation
extended with respect to applications for Letters of Credit,
the
Lender's acceptance of drafts or the Lender's endorsement of
notes
or other instruments for a Company's account and benefit.

Old Lone Star means LSI prior to its reorganization
at the
Effective Time.

Operating Leases shall mean all leases of property
(whether
real, personal or mixed) other than Capital Leases.

Out-of-Pocket Expenses shall mean all of the
Lender's
present and future expenses, other than any syndication
expenses,
incurred in connection with this Financing Agreement,
whether
incurred heretofore or hereafter, which expenses shall
include,
without being limited to, the cost of record searches, all
costs
and expenses incurred by the Lender in opening bank
accounts,
depositing checks, receiving and transferring funds, and any
charges imposed on the Lender due to "insufficient funds" of
deposited checks and the Lender's standard fee relating
thereto,
any amounts paid by the Lender, incurred by or charged to
the
Lender by the Issuing Bank under the Letter of Credit
Guaranty or
the Issuing Bank's reimbursement agreement, application for
Letter
of Credit or other like document which pertain either
directly or
indirectly to such Letters of Credit, and the Lender's
standard
fees relating to the Letters of Credit and any drafts
thereunder,
without duplication, the fees and expenses of Schulte Roth &
Zabel
and other counsel to the Lender, the costs and expenses of
the
Lender's in-house attorneys, due diligence related expenses
and
disbursements incurred by the Lender and its professional
advisers,
fees and taxes relative to the filing of financing
statements, and
all expenses, costs and fees set forth in Section 10.2(b)
and 12.2
of this Financing Agreement.

Payment Note Indenture shall mean the indenture
substantially in the form of Exhibit A to the Asset Proceeds
Notes
Guaranty, executed and delivered by LSI pursuant to the
terms of
the Asset Proceeds Notes Guaranty, as such indenture may be
amended, restated or otherwise modified from time to time in
accordance with the provisions of Section 7.19 hereof.

Payment Notes shall mean the promissory notes,
substantially
in the form of Exhibit A to the Payment Note Indenture,
executed
and delivered by LSI pursuant to the terms of the Asset
Proceeds
Notes Guaranty, as such notes may be amended, restated or
otherwise
modified from time to time in accordance with Section 7.19
hereof.

PBGC shall mean the Pension Benefit Guaranty
Corporation.

Permitted Asset Sale shall mean any sale of assets
of LSI or
any Consolidated Subsidiary that is not prohibited by, and
made in
accordance with the terms of, Sections 7.14(d) and 12.13
hereof or
by the terms of any Related Document as in effect at the
time of
such sale.

Permitted Encumbrances shall mean (i) liens
expressly
permitted, or consented to, in writing by the Lender; (ii)
Purchase
Money Liens; (iii) Customarily Permitted Liens; (iv) liens
granted
to the Lender by the Companies; (v) liens of judgment
creditors
provided such liens do not exceed, in the aggregate, at any
time,
$1,000,000 (other than liens bonded or insured to the
reasonable
satisfaction of the Lender); (vi) liens granted to the
Collateral
Agent for the holders of the Asset Proceeds Notes pursuant
to the
Asset Proceeds Notes Pledge Agreement; (vii) liens granted
to the
PBGC pursuant to the Employee Settlement Agreements; (viii)
liens
granted to the Senior Note Indenture Trustee on property and
funds
held by or collected by the Senior Note Indenture Trustee
pursuant
to the terms of the Senior Note Indenture and any similar
liens in
favor of the trustee under the Payment Note Indenture; (ix)
liens
on the West Nyack, New York plant and related facilities
(other
than Accounts, Inventory, General Intangibles and other
Collateral)
incurred in connection with the West Nyack Transaction; (x)
liens
securing Capital Leases permitted by Section 7.15 hereof;
(xi)
liens existing on the date hereof as set forth in Schedule
1.1C
hereto; (xii) any extension of the maturity, refinancing or
other
modification of the terms of the liens permitted by clauses,
(ii),
(iii), (ix), (x) or (xi) hereof or the Indebtedness secured
by such
liens, provided, however, that such extension of maturity,
refinancing or other modification (A) does not extend the
coverage
of the lien to other property and (B) after giving effect to
the
extension, refinancing or modification of the terms thereof
or the
Indebtedness secured thereby, the amount of the Indebtedness
secured by such lien is not greater than the amount of such
Indebtedness outstanding immediately prior to the extension,
refinancing or modification; and (xiii) liens, other than
liens
permitted by clauses (i) through (xii) above and liens on
Collateral, securing Indebtedness or other obligations for
the
payment of money in an aggregate amount not in excess of
$2,000,000.

Permitted Indebtedness shall mean (i) Indebtedness
(excluding indebtedness for borrowed money) incurred in the
ordinary course of business for working capital purposes,
including
for raw materials, finished goods, supplies, equipment,
services or
labor; (ii) Indebtedness secured by the Purchase Money
Liens; (iii)
Indebtedness of the Companies which is unsecured and
subordinated
to the prior payment and satisfaction of the Companies'
Obligations
to the Lender by means of a subordination agreement in form
and
substance reasonably satisfactory to the Lender; (iv)
Indebtedness
arising under the Letters of Credit, this Financing
Agreement and
the other Loan Documents; (v) deferred taxes and other
expenses
incurred in the ordinary course of business; (vi) guarantees
of the
obligations of any Person permitted under Section 7.14(f);
(vii)
Indebtedness arising under the Asset Proceeds Notes
Guaranty, the
Payment Note Indenture and the Payment Notes; (viii)
Indebtedness
evidenced by the Senior Notes and the Senior Note Indenture;
(ix)
indebtedness arising under the Employee Settlement
Agreements; (x)
indebtedness arising under the Production Payment
Agreements; (xi)
Indebtedness incurred in connection with the West Nyack
Transaction; (xii) Indebtedness incurred in connection with
Capital
Leases permitted by Section 7.15 hereof; (xiii) Indebtedness
existing on the date hereof, as set forth in Schedule 1.1D
hereto;
(xiv) any extension of the maturity, refinancing or other
modification of the terms of the Indebtedness permitted by
clauses
(ii), (iii), (vi), (xi), (xii) or (xiii) hereof, provided,
however,
that such extension, refinancing or modification (A) is
pursuant to
terms that are not less favorable to LSI or its Consolidated
Subsidiaries than the terms of the Indebtedness being
extended,
refinanced or modified, and (B) after giving effect to the
extension, refinancing or modification of such Indebtedness,
the
amount of such Indebtedness outstanding is not greater than
the
amount of such Indebtedness outstanding immediately prior to
such
extension, refinancing or modification; and (xv)
Indebtedness,
other than the Indebtedness permitted by clauses (i) through
(xiv)
above, which Indebtedness together with the amount of all
guarantees permitted pursuant to Section 7.14(f)(v) of this
Financing Agreement do not exceed the aggregate amount of
$10,000,000 at any time outstanding.

Person shall mean and include any person, employee,
individual, sole proprietorship, partnership, joint venture,
trust,
unincorporated organization, association, corporation,
institution,
entity, party or Governmental Authority.

Plan shall mean any multiemployer or single employer
plan as
defined in Section 4001 of ERISA subject to ERISA, which (i)
is
maintained or contributed to by (or to which there is an
obligation
to contribute of), or (ii) at any time during the five
calendar
years preceding the date of any borrowing under this
Financing
Agreement was maintained or contributed to by (or to which
there
was an obligation to contribute of), LSI, a Subsidiary or an
ERISA
Affiliate.

Plan of Reorganization means that certain Debtors'
Modified
Amended Consolidated Plan of Reorganization, dated November
4,
1993, as amended on February 17, 1994.

Pledge Agreement shall mean the Pledge and Security
Agreement made by LSI in favor of the Lender, substantially
in the
form of Exhibit B hereto, securing the Obligations and
delivered to
the Lender pursuant to Section 2.1(g) hereof, as the same
may be
amended or otherwise modified from time to time.

Pledged Subsidiaries shall mean the Subsidiaries of
LSI and
LSI's interest in the joint ventures (other than the Kosmos
Partnership) listed on Schedule 1.1B hereto and all
Subsidiaries of
LSI and LSI's interest in joint ventures that from time to
time are
pledged to the Lender pursuant to Section 7.13 hereof as
collateral
for the Obligations of the Companies.

Potential Default shall mean any event or condition
which
has occurred or exists which with notice or passage of time,
or any
combination of the foregoing, would constitute an Event of
Default.

Production Payment Agreements shall mean the Second
Amended
and Restated Marketing Contract dated as of March 29, 1994
between
John Fouhey, as Trustee for Selleck Hill Trust and LSI, the
Second
Amended and Restated Conveyance of Production Payment dated
as of
March 29, 1994 of LSI to John Fouhey, as Trustee for the
Selleck
Hill Trust, the Amended and Restated Option Agreement dated
as of
September 1, 1988, as amended to the date of this Financing
Agreement between LSI and John Fouhey, as Trustee for
Selleck Hill
Trust, the Amended and Restated Expense and Interest
Agreement,
dated as of September 1, 1988, as amended to the date of
this
Financing Agreement between LSI and John Fouhey, as Trustee
for
Selleck Hill Trust and all related agreements, documents and
instruments, in each case as amended, supplemented or
otherwise
modified from time to time in accordance with the provisions
of
Section 7.19 hereof.

Purchase Money Liens shall mean liens on any
property, plant
and equipment acquired after the date of this Financing
Agreement
provided that (i) each such lien shall attach only to the
property
acquired, (ii) a description of the property so acquired is
furnished to the Lender, and (iii) the Indebtedness incurred
in
connection with such acquisitions shall not, as to LSI and
its
Consolidated Subsidiaries, exceed the aggregate amount of
$5,000,000 in any fiscal year of LSI, provided, that the
amount of
Indebtedness set forth in clause (iii) above shall not
include
Indebtedness incurred by LSI or Trap Rock in connection with
the
West Nyack Transaction.

Related Documents shall mean each of the following:
(i) the
Asset Proceeds Note Indenture, the Asset Proceeds Notes, the
Asset
Proceeds Notes Guaranty, the Senior Note Indenture, the
Senior
Notes, the Payment Notes, the Payment Note Indenture, the
Asset
Proceeds Notes Pledge Agreement, the Rosebud Management
Agreement,
the Production Payment Agreements and the Employee
Settlement
Agreements, and (ii) each other document and instrument
entered
into with respect to the above.

Reorganization means, collectively, the
reorganization of
the Debtors and the Asset Transfer, each pursuant to the
Plan of
Reorganization.

Reportable Event shall mean an event described in
Section
4043(b) of ERISA for which the 30 day period has not been
waived.

Reserve Requirement means, with respect to any
Interest
Period, the reserve percentage (expressed as a decimal)
equal to
the aggregate reserve requirement (including, without
limitation,
any marginal, basic, emergency, supplemental or other
reserves and
taking into account any transitional adjustments or other
scheduled
changes in reserve requirements) specified under regulations
issued
from time to time by the Board of Governors of the Federal
Reserve
System under Regulation D as being then applicable to assets
or
liabilities of any member bank of the Federal Reserve System
(whether or not applicable to the Lender) consisting of and
including "Eurocurrency liabilities" (as such term is from
time to
time defined in Regulation D) with maturities comparable to
such
Interest Period, but without the benefit or credit for
proration,
exemptions or offsets that might otherwise be available from
time
to time under Regulation D.

Restricted Payment shall mean (without duplication)
(i) any
dividend or other distribution, direct or indirect, on
account of
any shares of any class of stock of LSI or any of its
Consolidated
Subsidiaries, now or hereafter outstanding, (ii) any
redemption,
retirement, sinking fund or similar payment, purchase or
other
acquisition for value, direct or indirect, of (a) any shares
of any
class of stock of LSI or any of its Consolidated
Subsidiaries, (b)
any warrants, options or other rights to acquire any shares
of any
class of stock of LSI or any of its Consolidated
Subsidiaries, or
(c) any debt securities convertible into shares of any class
of
stock of LSI or any of its Consolidated Subsidiaries or
warrants,
options or other rights to acquire any such shares of stock,
now or
hereafter outstanding, other than any redemption,
retirement,
sinking fund or similar payment, purchase or other
acquisition for
value, direct or indirect, of stock owned by LSI or any of
its
wholly-owned Consolidated Subsidiaries which are Guarantors
hereunder.

Revolving Loans shall mean the loans and advances
made, from
time to time, to or for the account of the Companies by the
Lender
pursuant to Section 3.1 of this Financing Agreement.

Rosebud Management Agreement shall mean the
Management
Services and Asset Disposition Agreement dated as of April
13, 1994
between LSI, Rosebud and certain subsidiaries of Rosebud, as
such
agreement is amended, supplemented or otherwise modified
from time
to time in accordance with the provisions of Section 7.19
hereof.

SEC shall mean the Securities and Exchange
Commission or any
successor agency thereto.

Senior Note Indenture shall mean the Indenture dated
as of
March 29, 1994 among LSI and the Senior Note Indenture
Trustee
pursuant to which the Senior Notes are issued, as such
indenture
may be amended, restated, supplemented or otherwise modified
from
time to time in accordance with the provisions of Section
7.19
hereof.

Senior Note Indenture Trustee shall mean the Trustee
as
defined in the Senior Note Indenture, and any successor
trustee
appointed thereunder.

Senior Notes shall mean the 10% Senior Notes due
2003 issued
pursuant to the Senior Note Indenture, as such notes may be
amended, restated or modified from time to time in
accordance with
the provisions of Section 7.19 hereof.

Significant Consolidated Subsidiary shall mean each
of
Construction Aggregates, Trap Rock and each other
Consolidated
Subsidiary of LSI which has total assets with a book value
as
reflected in LSI's most recent audited Consolidated Balance
Sheet
(or, prior to the first Consolidated Balance Sheet after the
Effective Date, LSI's "opening" Consolidated Balance Sheet
described in Section 7.11(a) hereof) of greater than or
equal to
(i) $1,000,000 with respect to NYTR or (ii) $500,000 with
respect
to any other Consolidated Subsidiary.

Subsidiary shall mean, as to any Person, any
corporation,
partnership or other entity of which more than fifty percent
(50%)
of the outstanding securities or other ownership interests,
the
holders of which are ordinarily, in the absence of
contingencies,
entitled to elect a majority of the corporate directors (or
Persons
performing similar functions), is at the time, directly or
indirectly through one or more intermediaries, owned by such
Person
and/or one or more Subsidiaries of such Person.

Termination Date shall mean the third Anniversary of
the
date of this Financing Agreement, or such other date to
which the
Termination Date shall be extended or accelerated pursuant
to the
terms of this Financing Agreement.

Total Liabilities shall mean total liabilities of
LSI and
its Consolidated Subsidiaries determined in accordance with
GAAP,
on a basis consistent with the latest audited statements of
LSI and
its Consolidated Subsidiaries (or, prior to the first
Consolidated
Balance Sheet after the Effective Date, LSI's "opening"
Consolidated Balance Sheet described in Section 7.11(a)
hereof)
excluding any liabilities of Rosebud and its Subsidiaries.

Trademark Security Agreement shall mean the Security
Agreement and Mortgage-Trademarks made by LSI in favor of
the
Lender, substantially in the form of Exhibit G hereto,
securing the
Obligations and delivered to the Lender pursuant to Section
2.1(ee)
hereof, as the same may be amended or otherwise modified
from time
to time.

UCC shall mean the Uniform Commercial Code as in
effect in
the State of New York.

Unfunded Current Liability of any Plan shall mean
the
amount, if any, by which the actuarial present value of the
accumulated plan benefits under a Plan (excluding any
multiemployer
plans (as defined in Section 3(37) of ERISA)) as of the
close of
the most recent plan year, determined in accordance with the
Statement of Financial Accounting Standards No. 35, based
upon the
actuarial assumptions used by the Plan's actuary in the most
recent
annual valuation of the Plan, exceeds the fair market value
of the
assets allocable thereto, determined in accordance with
Section 412
of the Code.

West Nyack Transaction shall mean the proposed
modernization
of the West Nyack, New York plant and related facilities
owned by
LSI or its Consolidated Subsidiaries, including, without
limitation, the first $20,000,000 principal amount of
Indebtedness
incurred in connection with the proposed modernization.

1.2 Accounting Terms. Any accounting terms used in
this
Financing Agreement which are not specifically defined shall
have
the meanings customarily given them in accordance with GAAP.
Notwithstanding the definition of GAAP contained in this
Financing
Agreement, no change in GAAP that would affect the method or
calculation of any of the financial covenants, restrictions
or
standards or definitions of terms used herein shall be given
effect
in such calculations until such financial covenants,
restrictions
or standards or definitions are amended in a manner
satisfactory to
the Lender so as to reflect such change in GAAP.

1.3 Other Terms. Terms not otherwise defined in
this
Financing Agreement which are defined in the UCC shall have
the
meanings given them in the UCC.

1.4 Construction. Unless the context of this
Financing
Agreement otherwise clearly requires, reference to the
plural
includes the singular, the singular the plural and the part
the
whole and "or" has the inclusive meaning represented by the
phrase
"and/or." The words "hereof", "herein", "hereunder" and
similar
terms in this Financing Agreement refer to this Financing
Agreement
as a whole and not to any particular provision of this
Financing
Agreement. The section and other headings contained in this
Financing Agreement are for reference purposes only and
shall not
control or affect the construction of this Financing
Agreement or
the interpretation thereof in any respect. Section,
subsection,
exhibit and schedule references are to the Section,
subsection,
exhibit or schedule referred to in this Financing Agreement
unless
otherwise specified.

SECTION 2. Conditions Precedent

2.1 Conditions to Initial Revolving Loans and
Letters of
Credit. The obligation of the Lender to make the initial
Revolving
Loan hereunder or to assist LSI in obtaining the initial
Letter of
Credit hereunder is subject to the satisfaction of, or
waiver of,
immediately prior to or concurrently with the making of such
loan
or the issuance of such Letter of Credit, the following
conditions
precedent:

(a) Lien Searches - The Lender shall have received
tax,
judgment and UCC searches satisfactory to the Lender for all
locations presently occupied or used by LSI, its Significant
Consolidated Subsidiaries (other than Construction
Aggregates) and
the Subsidiaries set forth in Schedule 2.1(A) hereto.

(b) Casualty Insurance - LSI shall have delivered
to the
Lender evidence satisfactory to the Lender that (i)
comprehensive
general liability insurance policies, including product
liability
insurance policies, naming the Lender as additional insured
and
(ii) casualty insurance policies naming the Lender as
additional
insured and loss payee with respect to the Inventory of the
Companies are in full force and effect, all as set forth in
Section
6.11 of this Financing Agreement.

(c) UCC Filings - Any documents (including without
limitation, financing statements) required to be filed in
order to
create, in favor of the Lender, a first and exclusive
perfected
security interest in the Collateral with respect to which a
security interest may be perfected by a filing under the UCC
shall
have been properly filed in each office in each jurisdiction
required in order to create in favor of the Lender a
perfected lien
on the Collateral.

(d) Employee Benefit Plans - The Lender shall
receive true
and correct copies of the most recent annual reports (IRS
Forms
5500), including Schedules B thereto, for all employee
pension
plans (within the meaning of Section 3(2) of ERISA)
maintained or
sponsored by LSI, each Subsidiary or any ERISA Affiliate for
the
benefit of employees of LSI, each Subsidiary and any ERISA
Affiliate (the "Employee Benefit Plans").

(e) Examination & Verification - The Lender shall
have
completed to the satisfaction of the Lender an examination
and
verification of the Accounts, Inventory, books and records
of LSI
and its Consolidated Subsidiaries.

(f) Opinions - Proskauer Rose Goetz & Mendelsohn
and the
General Counsel of LSI shall have delivered to the Lender
opinions
with respect to LSI covering such matters as the Lender may
request
and in form and substance satisfactory to the Lender and its
counsel.

(g) Pledge Agreement - LSI shall (a) execute and
deliver to
the Lender the Pledge Agreement and stock powers pledging to
the
Lender as additional collateral for the Obligations of the
Companies under this Financing Agreement and the other Loan
Documents all (or 65% in the case of Pledged Subsidiaries
organized
outside of the United States) of the issued and outstanding
capital
stock of the Pledged Subsidiaries and (b) deliver to the
Lender the
original stock certificates of the Pledged Subsidiaries.

(h) Additional Documents - The Companies and each
Guarantor
shall have executed and delivered to the Lender all Loan
Documents
necessary to consummate the lending arrangement contemplated
between the Companies and the Lender in form and substance
satisfactory to the Lender.

(i) Board Resolution - The Lender shall have
received a
copy of the resolutions of the Board of Directors of each of
the
Companies authorizing the execution, delivery and
performance of
(i) this Financing Agreement and (ii) any other Loan
Documents, in
each case certified by the Secretary or Assistant Secretary
of each
of the Companies as of the date hereof, together with a
certificate
of the Secretary or Assistant Secretary of each of the
Companies as
to the incumbency and signature of the officers of each of
the
Companies executing this Financing Agreement and any other
Loan
Documents to be delivered by it pursuant hereto, together
with
evidence of the incumbency of such Secretary or Assistant
Secretary.

(j) Corporate Organization - The Lender shall have
received
(i) a copy of the Certificate of Incorporation of each of
the
Companies certified by the Secretary of State of its
incorporation,
and (ii) a copy of the By-Laws (as amended through the date
hereof)
of each of the Companies and certified by the Secretary or
Assistant Secretary of each of the Companies.

(k) Officer's Certificate - The Lender shall have
received
an executed Officer's Certificate of each of the Companies,
satisfactory in form and substance to the Lender, certifying
that
(i) the representations and warranties contained herein are
true
and correct on and as of the date hereof; (ii) each of the
Companies and each of its Consolidated Subsidiaries is in
compliance with all of the terms and provisions set forth
herein;
and (iii) no Event of Default or Potential Default has
occurred.

(l) Absence of Default - (i) No Potential Default
or Event
of Default shall have occurred and (ii) no material adverse
change
in the financial condition, business, prospects, profits,
operations or assets of LSI and/or its Consolidated
Subsidiaries
shall have occurred since December 31, 1993.

(m) Plan of Reorganization - Each of the conditions
precedent to the effectiveness of the Plan of Reorganization
shall
have been satisfied or waived (if any such waiver is not
adverse to
the interests of the Lender) and the Effective Date shall
have
occurred. The Reorganization shall concurrently become
effective
in accordance with the Confirmation Order and the Plan of
Reorganization and this Financing Agreement.

(n) Reorganization; Mergers - LSI shall have (i)
consummated all transactions, including the Asset Transfer,
contemplated by the Reorganization to be consummated on or
prior to
the Effective Date and (ii) consummated the mergers of each
of the
Subsidiaries set forth in Schedule 2.1(N) hereto into LSI
which
will be so merged on the Effective Date.

(o) Legal Restraints/Litigation - There shall be no
(x)
litigation, investigation or proceeding (judicial or
administrative) pending or threatened against LSI or its
Subsidiaries, or their assets, by any agency, division or
department of any county, city, state or federal government
(other
than (1) the continuing jurisdiction of the Bankruptcy Court
arising out of the Reorganization and (2) the investigation
by the
Justice Department into the cement industry), (y) judgment,
injunction, writ, restraining order or other restraint
restraining,
prohibiting or, in the reasonable judgment of the Lender,
imposing
materially adverse conditions upon the consummation of the
Reorganization, the transactions contemplated pursuant to
the
Reorganization or the consummation of the financing
arrangements
contemplated by this Financing Agreement, or (z) suit,
action,
investigation or proceeding (judicial or administrative)
pending
or, to the best knowledge of LSI, threatened against LSI or
its
Subsidiaries, or their assets, which are not disclosed on
Schedule
6.14 hereto and which, in the opinion of the Lender are
reasonably
likely to have a Material Adverse Effect.

(p) Disbursement Authorization - The Companies
shall have
delivered to the Lender all information necessary for the
Lender to
make the initial loans, to be made and/or assist LSI in
obtaining
the initial Letters of Credit to be issued under this
Financing
Agreement, including, but not limited to, disbursement
authorizations in form acceptable to the Lender.

(q) Adequate Protection Payments - LSI shall have
paid or
caused to be paid all amounts accrued and unpaid through and
including the Effective Time with respect to any adequate
protection provided under the Bankruptcy Code in accordance
with
the terms of, and to the extent required by, the Plan of
Reorganization.

(r) Performance of Agreements - LSI and its
Subsidiaries
shall have performed in all material respects all agreements
that
the Plan of Reorganization, this Financing Agreement and the
other
Loan Documents provide shall be performed by them on or
before the
Effective Date except in the case of any such performance
that is
waived by the party entitled to the benefits thereof, if
such
waiver is not adverse to the interests of the Lender.

(s) Employee Settlement Agreements - The Bankruptcy
Court
shall have entered orders approving the transactions
contemplated
by the Employee Settlement Agreements.

(t) Related Documents - Each of the Related
Documents shall
be in form and substance satisfactory to the Lender and
copies of
each of the Related Documents and any orders approving such
Related
Documents and the transactions contemplated by such Related
Documents shall be delivered to the Lender accompanied by a
certificate of an Executive Officer of LSI stating that each
copy
is a true and correct copy thereof.

(u) Confirmation Order - The Confirmation Order
shall have
become a Final Order.

(v) Default under Related Documents - The
consummation of
the Reorganization has not and will not result in an event
of
default, termination event or event which with the giving of
notice
or lapse of time or both would be an event of default or a
termination event under any Related Document.

(w) Governmental Approval - All necessary
governmental and
third party approvals required to be obtained by LSI or any
of its
Subsidiaries, in connection with the Reorganization
exclusive of
any Governmental Approvals required under any Environmental
Law in
connection with the Asset Transfer, have been obtained and
remain
in effect, and all applicable waiting periods have expired
without
any action being taken by any competent authority which
restrains,
prevents, impedes, delays or imposes materially adverse
conditions
upon, the consummation of the Reorganization.

(x) Aspects of Reorganization - The Lender shall be
satisfied, in its sole judgment exercised reasonably, with
all tax
aspects of the Reorganization, the corporate, capital, legal
and
management structure of LSI and its Subsidiaries immediately
after
the Reorganization, all shareholder agreements and all
financing
relating to the Reorganization, and shall be satisfied, in
its sole
judgment exercised reasonably, with the nature and status of
all
contractual obligations, securities, labor, tax, ERISA,
employee
benefit, environmental, health and safety matters, in each
case,
involving or affecting LSI or any of its Subsidiaries.

(y) Cash Management System - The cash management
system of
LSI and its Consolidated Subsidiaries shall be satisfactory
to the
Lender.

(z) Pension Obligations - Since the dates of filing
the
most recent annual reports (IRS Forms 5500) by LSI for each
Plan,
there has been no material adverse change in the funding
status of
LSI's, its Subsidiaries' or ERISA Affiliates' pension
obligations.

(aa) Additional Availability - On the earlier of
(i) the
date on which the Lender makes the initial Revolving Loan to
the
Companies under this Financing Agreement or (ii) the date on
which
LSI obtains the issuance of the initial Letter of Credit
under this
Financing Agreement, after giving effect to all Revolving
Loans
made on such date and all Letters of Credit issued on such
date,
the Availability of the Companies (without giving effect to
the
Line of Credit limitation contained in clause (i) of the
definition
thereof) shall not be less than $10,000,000.

(bb) Financial Statements - LSI shall have
delivered to
the Lender a copy of the Financial Statements.

(cc) Intercreditor Agreement - The Companies shall
have
delivered to the Lender fully executed originals of the
Mortgagee's
Waiver, License and Agreement dated as of April 13, 1994
among LSI,
the Lender and the PBGC substantially in the form of Exhibit
H
hereto.

(dd) Borrowing Base Certificate - The Companies
shall have
delivered a Borrowing Base Certificate to the Lender as of
the
close of business on March 31, 1994 together with such other
information with respect to the Accounts and the Inventory
of the
Companies as the Lender may reasonably request.

(ee) Trademark Security Agreement - LSI shall
execute and
deliver to the Lender the Trademark Security Agreement
together
with the Assignment for Security (Trademarks) and five
originals of
the Special Power of Attorney attached as exhibits thereto.

Upon the making of the initial Revolving Loan or the
issuance of
the initial Letter of Credit, all of the above conditions
precedent
shall have been deemed satisfied except as LSI and the
Lender shall
otherwise agree herein or in a separate writing.

2.W Conditions to Each Revolving Loan and Letter of
Credit.
On the date of the making of any Revolving Loan or issuance
of any
Letter of Credit, including on the earlier of the date of
the
making of the initial Revolving Loan or the issuance of the
initial
Letter of Credit, the following conditions precedent shall
be
satisfied, or waived, immediately prior to or concurrently
with the
making of such Revolving Loan or issuance of such Letters of
Credit:

(a) Representations and Warranties; No Event of
Default.
The following statements shall be true, and the submission
by a
Company to the Lender of a notice of borrowing with respect
to a
Revolving Loan and a Company's acceptance of the proceeds of
such
Revolving Loan, or a request by LSI for the Lender to join
in the
application for and/or guarantee the payment or performance
of a
Letter of Credit and the issuance of such Letter of Credit
shall be
deemed to be a representation and warranty by the Companies
on the
date of such Revolving Credit Loan or on the date of the
issuance
of such Letter of Credit that, (i) the representations and
warranties contained in Section 6 of this Financing
Agreement and
in each other Loan Document, certificate or other writing
delivered
to the Lender pursuant hereto on or prior to the date of
such
Revolving Loan or Letter of Credit are correct on and as of
such
date as though made on and as of such date, (ii) no Event of
Default or Potential Default has occurred and is continuing
or
would result from the making of the Revolving Loan to be
made on
such date or the issuance of the Letter of Credit to be
issued on
such date, and (iii) LSI has made all payments required to
be made
by LSI under the Production Payment Agreements.

(b) LIBOR Borrowing Notice - With respect to the
making of
any Eurodollar Loan, a notice in the form described in
Section 3.1,
by an Executive Officer or the cash manager of LSI, shall
have been
delivered to the Lender.

(c) Disbursement Authorization - The Companies
shall have
delivered to the Lender all information necessary for the
Lender to
make the loans and/or advances to be made and or to assist
LSI in
obtaining the Letter of Credit to be issued under this
Financing
Agreement including, but not limited to, disbursement
authorizations in form acceptable to the Lender.

SECTION 3. Revolving Loans

3.1 Determination of Revolving Loans; Notices. The
Lender
agrees, subject to the terms and conditions of this
Financing
Agreement from time to time, but subject to the Lender's
right to
make "overadvances", to make loans and advances to the
Companies on
a revolving basis (i.e. subject to the limitations set forth
herein, the Companies may borrow, repay and re-borrow
Revolving
Loans). The aggregate amount of such loans and advances
shall be
in amounts up to the lesser of (a) the Line of Credit and
(b) the
Borrowing Base then in effect, provided that the Lender
shall not
be required to make any Revolving Loan in an amount in
excess of
the Availability then in effect. Whenever a Company desires
to
borrow, an Executive Officer or the cash manager of LSI
shall
provide written or telephonic notice to the Lender of such
proposed
borrowing, each such notice to be given (i) not later than
12:00
noon (New York City time) on the date of such proposed
borrowing,
in the case of a borrowing consisting of Chemical Bank Rate
Loans,
and (ii) not later than 12:00 noon (New York City time) on
the
third Business Day before the date of such borrowing, in the
case
of a borrowing consisting of Eurodollar Loans, setting
forth: (a)
the date, which shall be a Business Day, on which such
borrowing is
to occur, (b) whether such Revolving Loan is requested to be
a
Chemical Bank Rate Loan or a Eurodollar Loan and, if a
Eurodollar
Loan, the Interest Period requested with respect thereto,
(c) the
principal amount of the Revolving Loan being borrowed, which
shall
be in a minimum amount of $1,000,000 and in multiples of
$250,000
in excess thereof in the case of Eurodollar Loans, and (d)
the
account information where such Revolving Loan is to be
received.
Should the Lender for any reason honor requests for loans or
advances in excess of the limitations set forth herein, such
advances shall be considered "overadvances" and shall be
made in
the Lender's sole discretion, subject to any additional
terms the
Lender deems necessary. All Revolving Loans shall be due
and
jointly and severally payable by the Companies on the
Termination
Date.

3.2 Security Interest in Accounts. In furtherance
of the
continuing assignment and security interest in the
Companies'
Accounts, upon the Lender's request and, in any event, after
the
occurrence of the Minimum Availability Trigger Date, the
Companies
will, upon the creation of Accounts, execute and deliver to
the
Lender on a daily basis in such form and manner as the
Lender may
reasonably require, solely for the Lender's convenience in
maintaining records of Collateral, such confirmatory
schedules of
Accounts as the Lender may reasonably request, and such
other
appropriate reports designating, identifying and describing
the
Accounts as the Lender may reasonably require. In addition,
upon
the Lender's request, the Companies shall provide the Lender
with
copies of agreements with, or purchase orders from, the
Companies'
customers, and copies of invoices to customers, proof of
shipment
or delivery and such other documentation and information
relating
to said Accounts and other Collateral as the Lender may
reasonably
require. Failure to provide the Lender with any of the
foregoing
shall in no way affect, diminish, modify or otherwise limit
the
security interests granted herein. The Companies hereby
authorize
the Lender to regard the Companies' printed name or rubber
stamp
signature on assignment schedules or invoices as the
equivalent of
a manual signature by one of the Companies' authorized
officers or
agents.

3.3 Representations and Warranties Regarding
Accounts. Each
Company hereby represents and warrants with respect to its
Accounts
that: each Account is based on an actual and bona fide sale
and
delivery of goods or rendition of services to customers made
by
such Company in the ordinary course of its business; the
goods and
Inventory being sold and the Accounts created are the
exclusive
property of such Company and are not and shall not be
subject to
any lien, consignment arrangement, encumbrance, security
interest
or financing statement whatsoever, other than the Permitted
Encumbrances; the invoices evidencing such Accounts are in
the name
of such Company or any tradename identified on Schedule 6.9
hereto;
and the customers of such Company have accepted the goods or
services, owe and are obligated to pay the full amounts
stated in
the invoices according to their terms, without dispute,
offset,
defense, counterclaim or contra, except for disputes and
other
matters arising in the ordinary course of business of which
such
Company has advised the Lender pursuant to Section 3.5.
Each
Company confirms to the Lender that any and all taxes or
fees
relating to its business, its sales, its Accounts or goods
relating
thereto, are its sole responsibility and that same will be
paid by
such Company when due unless being contested by such Company
in
good faith by appropriate proceedings and that none of said
taxes
or fees represent a lien on or claim against its Accounts
for an
amount in excess of $35,000 in the aggregate for all such
liens and
claims. Each Company also warrants and represents that it
is a
duly and validly existing corporation and is qualified in
all
states where the failure to so qualify would have a Material
Adverse Effect or adversely affect the ability of such
Company to
enforce collection of its Accounts due from customers
residing in
that state. Each Company agrees to maintain such books and
records
regarding its Accounts as the Lender may reasonably require
and
agrees that the books and records of such Company will
reflect the
Lender's interest in its Accounts. All of the books and
records of
each Company will be available to the Lender at normal
business
hours, including any records handled or maintained for a
Company by
any other company or entity.

3.4 Collection of Accounts. (a) On or prior to
June 1,
1994, LSI and Trap Rock shall (i) establish, and shall,
during the
term of this Financing Agreement, maintain, lockboxes in the
name
of the Lender identified on Schedule 6.16 hereto
(collectively, the
"Lockboxes") with the financial institutions set forth in
Schedule
6.16 or such other financial institutions selected by LSI
and
acceptable to the Lender in its sole discretion (each being
referred to as a "Lockbox Bank"), (ii) establish, and shall,
during
the term of this Financing Agreement, maintain, an account
(a
"Collection Account" and, collectively, the "Collection
Accounts")
in the name of the Lender with each Lockbox Bank, and (iii)
in the
case of the facilities and other operations of LSI set forth
in
Schedule 3.4(A) hereto (the "Ready Mix Facilities"),
establish, and
shall, during the term of this Financing Agreement maintain,
for
each Ready Mix Facility a blocked depository account in the
name of
LSI (a "Depository Account") with the financial institutions
set
forth in Schedule 6.16 or such other financial institutions
selected by LSI and acceptable to the Lender in its sole
discretion
(each being referred to as a "Depository Bank") for the
collection
of the proceeds of Accounts, Inventory and other Collateral
arising
from or related to such Ready Mix Facility. Each Company
shall
irrevocably instruct its account debtors, other than (A)
account
debtors which prior to the execution of this Financing
Agreement
have remitted all payments directly to such Company and (B)
account
debtors arising from or related to a Ready Mix Facility, to
remit
all payments to be made by checks or other drafts to the
Lockboxes
and to remit all payments to be made by wire transfer or by
Automated Clearing House, Inc. payments to be made directly
to the
Collection Accounts and shall instruct each Lockbox Bank to
deposit
all amounts received in its Lockbox to the Collection
Account at
such Lockbox Bank. Until the Lender has advised LSI to the
contrary after the earlier of (i) the occurrence of an Event
of
Default and (ii) the occurrence of a Minimum Availability
Trigger
Date, and subject to Section 3.4(b), each Company may and
will
enforce, collect and receive all amounts owing on its
Accounts for
the Lender's benefit and on the Lender's behalf, but at such
Company's expense; such privilege shall terminate, at the
election
of the Lender, upon the occurrence of any Event of Default
or a
Minimum Availability Trigger Date. All checks, drafts,
notes,
money orders, acceptances, cash and other evidences of
Indebtedness
received directly by a Company from any account debtor, as
proceeds
from Accounts, proceeds of the sale of Inventory of such
Company or
as proceeds of any other Collateral, whether in connection
with a
Ready Mix Facility or otherwise, shall be held by such
Company in
trust for the Lender and upon receipt be deposited by such
Company
in original form and on the date of receipt thereof into a
Collection Account, a Depository Account or to account
number -
03047170 maintained and owned by the Lender at NationsBank
N.A. or
another bank acceptable to the Lender in its sole discretion
(the
"CIT Concentration Account"). The Companies shall not
commingle
such collections with the Companies' own funds or with the
proceeds
of any assets not included in the Collateral or use the same
for
any other purposes.

(b) As a matter of administrative convenience, the
Lender
shall transmit all "collected funds" in the CIT
Concentration
Account on the Business Day of receipt to account number
11023131
maintained in the name of LSI at NationsBank N.A. or another
bank
acceptable to the Lender in its sole discretion (the
"Operating
Account") if received no later than 1:00 p.m., New York time
on
such Business Day; provided, that, (i) after the occurrence
and
during the continuance of an Event of Default or (ii) after
the
occurrence of a Minimum Availability Trigger Date, then,
upon
notice by the Lender, (x) all funds received in the CIT
Concentration Account shall be applied at the end of each
Business
Day to reduce the then principal balance of the Revolving
Loans,
and (y) each Company's right to enforce, collect and receive
any
amounts owing on the Accounts shall terminate immediately
upon
notice by the Lender. No checks, drafts or other instrument
received by the Lender shall constitute final payment to the
Lender
unless and until such instruments have actually been
collected.

(c) Each Company, the Lender and each Lockbox Bank
shall
enter into a three-party agreement substantially in the form
of
Exhibit D (the "Lockbox Agreement"), providing, among other
things,
for the following upon the terms and subject to the
conditions set
forth in the Lockbox Agreement: (A) all receipts received
in the
Lockboxes shall be deposited on the day of receipt by the
Lockbox
Bank in the Collection Account maintained at such Lockbox
Bank and
(B) all amounts deposited in the Collection Accounts,
whether from
the Lockboxes or directly from account debtors, shall
immediately
upon becoming good funds be transmitted to the CIT
Concentration
Account. LSI, the Lender and each Depository Bank shall
enter into
a three-party agreement, substantially in the form of
Exhibit F
(the "Depository Account Agreement"), providing for, among
other
things, that, subject to the conditions set forth in the
Depository
Agreement, all amounts deposited in the Depository Account
shall
immediately upon becoming good funds be transmitted to the
CIT
Concentration Account. Each Company, the Lender and
NationsBank
N.A. shall enter into a three-party agreement substantially
in the
form of Exhibit E (the "Blocked Account Agreement")
providing,
among other things, for the application of funds in the CIT
Concentration Account as provided in Section 3.4(b).

(d) At the election of the Lender, upon (i) the
occurrence
of any Event of Default or (ii) after the occurrence of a
Minimum
Availability Trigger Date, all account debtors of each
Company
shall be instructed to remit all payments directly to the
Lender,
the Lockbox Accounts, the Depository Accounts or the
Collection
Accounts.

3.5 Account Notices. Each Company agrees to notify
the
Lender promptly of any matters materially affecting the
value,
enforceability or collectibility of any Account and of all
material
customer disputes, offsets, defenses, counterclaims,
returns,
rejections and all reclaimed or repossessed merchandise or
goods.
Each Company agrees to issue credit memoranda promptly (with
duplicates to the Lender upon request) upon accepting
returns or
granting allowances, and may continue to do so until the
Lender has
notified LSI that an Event of Default has occurred and that
all
future credits or allowances are to be made only after the
Lender's
prior written approval.

3.6 Accounting for Payments. The Lender shall
maintain a
joint account on its books in the Companies' names in which
the
Company will be charged with loans and advances made by the
Lender
to them or for their account, and with any other
Obligations,
including any and all costs, expenses and attorney's fees
which the
Lender may incur in connection with the exercise by or for
the
Lender of any of the rights or powers herein conferred upon
the
Lender, or in the prosecution or defense of any action or
proceeding to enforce or protect any rights of the Lender in
connection with this Financing Agreement, the other Loan
Documents
or the Collateral assigned hereunder, or any Obligations
owing to
the Lender by the Companies. It is expressly understood and
agreed
by LSI and Trap Rock that the Lender shall have no
responsibility
to inquire into the correctness of the apportionment,
allocation or
disposition of the Revolving Loans made to LSI and/or Trap
Rock or
any fees, costs or expenses for which LSI and Trap Rock are
jointly
and severally obligated under this Financing Agreement. In
no
event shall prior recourse to any Accounts, Inventory or
other
security granted to or by the Companies be a prerequisite to
the
Lender's right to demand payment of any Obligation.
Further, it is
understood that the Lender shall have no obligation
whatsoever to
perform in any respect any of the Companies' contracts or
obligations relating to the Accounts.

3.7 Monthly Statements. After the end of each
month, the
Lender shall promptly send LSI a statement showing the
accounting
for the charges, loans, advances and other transactions
occurring
between the Lender and the Companies during that month. The
monthly statements shall be deemed correct and binding upon
the
Companies and shall constitute an account stated between the
Companies and the Lender unless the Lender receives a
written
statement of the exceptions within thirty (30) days of the
date of
the monthly statement and then only the items expressly
excepted
shall be deemed disputed.

3.8 Prepayments; Termination of Commitment. (a)
If at any
time the Availability of the Companies is not greater than
zero and
any Revolving Loans are outstanding to the Companies or, any
Letters of Credit are outstanding, then, an amount equal to
the
lesser of the amount of Revolving Loans outstanding to the
Companies or the amount which will result in such
Availability
becoming greater than zero shall be immediately prepaid
jointly and
severally by the Companies to the Lender and, if after the
Revolving Loans made to the Companies have all been prepaid
and
such Availability has not become greater than zero, there
shall be
pledged and delivered to the Lender cash in an amount equal
to 105%
of the undrawn and unreimbursed amount of all Letters of
Credit.
Any amounts of cash pledged and delivered to the Lender
under this
Section 3.8 shall be held by the Lender in a demand deposit
account
in the Lender's name at a bank selected by the Lender with
interest
accruing for the benefit of the Companies and added to the
cash
collateral or used to reduce the Obligations, and shall be
repaid
to the Companies on request on any Business Day on which
both (i)
the Companies have Availability that is greater than zero
and (ii)
an Event of Default has not occurred and is not continuing.

(b) Upon the occurrence of an Event of Default, the
Lender
may, upon written notice to LSI, terminate the Line of
Credit.

(c) Subject to the provisions of Sections 8.1(e)
and 11,
the Companies may prepay the Obligations, in whole or in
part, at
any time without premium or penalty.

SECTION 4. Letters of Credit

In order to assist LSI in establishing or opening
Letters of
Credit with an Issuing Bank, LSI has requested the Lender to
join
in the applications for such Letters of Credit, and/or
guarantee
payment or performance of such Letters of Credit and any
drafts or
acceptances thereunder through the issuance of the Letters
of
Credit Guaranty, thereby lending the Lender's credit to LSI
and the
Lender has agreed to do so. These arrangements shall be
handled by
the Lender subject to the terms and conditions set forth
below.

4.1 Issuance of Letters of Credit. The amount,
purpose and
extent of the Letters of Credit and changes or modifications
thereof by LSI and/or the Issuing Bank of the terms and
conditions
thereof shall in all respects be subject to the prior
approval of
the Lender in the exercise of its reasonable discretion
provided
however, that the purpose of any Letter of Credit shall be
deemed
to be acceptable to the Lender if such purpose is consistent
with
the ordinary course of business of LSI consistent with past
practice and:

(a) in no event may the aggregate undrawn and
unreimbursed
amount of all such outstanding Letters of Credit exceed at
any one
time $5,000,000,

(b) the aggregate undrawn and unreimbursed amount
of all
outstanding Letters of Credit issued on behalf of LSI, plus
the
aggregate principal amount of all Revolving Loans made to
the
Companies, may not, at any time, exceed the lesser of (x)
the Line
of Credit and (y) the Borrowing Base then in effect; and

(c) the Letters of Credit and all documentation in
connection therewith shall be in form and substance
satisfactory to
LSI, the Lender and the Issuing Bank.

4.2 Letters of Credit Guaranty. The Lender shall
have the
right, without notice to LSI, to charge the Companies'
account on
the Lender's books, without duplication, with the amount of
any and
all indebtedness, liability or obligation of any kind
incurred by
the Lender under the Letters of Credit Guaranty at the
earlier of
(a) payment by the Lender under the Letters of Credit
Guaranty, or
(b) the occurrence of an Event of Default. Any amount
charged to
Companies' loan account shall be deemed a Revolving Loan
hereunder
and shall accrue interest at the rate provided in Section
8.1(a)(i)
of this Financing Agreement.

4.3 Indemnification. LSI unconditionally
indemnifies the
Lender and holds it harmless from any and all loss, claim or
liability incurred by it arising from any transactions or
occurrences relating to Letters of Credit established or
opened for
LSI's account, the Collateral relating thereto and any
drafts or
acceptances thereunder, and all Obligations thereunder,
including
any such loss or claim due to any action taken by any
Issuing Bank,
other than for any such loss, claim or liability arising out
of the
gross negligence or willful misconduct by the Lender under
the
Letter of Credit Guaranty. LSI further agrees to hold the
Lender
harmless from any errors or omission, negligence or
misconduct by
the Issuing Bank. LSI's unconditional obligation to the
Lender
hereunder shall not be modified or diminished for any reason
or in
any manner whatsoever, other than as a result of the
Lender's gross
negligence or willful misconduct. LSI agrees that any
charges
incurred by the Lender for LSI's account by the Issuing Bank
shall
be conclusive on the Lender absent manifest error and may be
charged to LSI's account.

4.4 Disclaimers. The Lender shall not be
responsible for:
the existence, character, quality, quantity, condition,
packing,
value or delivery of the goods purporting to be represented
by any
documents; any difference or variation in the character,
quality,
quantity, condition, packing, value or delivery of the goods
from
that expressed in the documents; the validity, sufficiency
or
genuineness of any documents or of any endorsements thereon,
even
if such documents should in fact prove to be in any or all
respects
invalid, insufficient, fraudulent or forged; the time,
place,
manner or order in which shipment is made; partial or
incomplete
shipment, or failure or omission to ship any or all of the
goods
referred to in the Letters of Credit or documents; any
deviation
from instructions; delay, default, or fraud by the shipper
and/or
anyone else in connection with the Collateral or the
shipping
thereof; or any breach of contract between the shipper or
vendors
and LSI. Furthermore, without being limited by the
foregoing, the
Lender shall not be responsible for any act or omission,
other than
the Lender's gross negligence or willful misconduct, with
respect
to or in connection with any Collateral.

4.5 Actions with respect to Letters of Credit. LSI
agrees
that any action taken by the Lender, if taken in good faith,
or any
action taken by any Issuing Bank, under or in connection
with the
Letters of Credit, the guarantees, the drafts or
acceptances, or
the Collateral, shall be binding on LSI and shall not put
the
Lender in any resulting liability to LSI in the absence of
gross
negligence or willful misconduct of the Lender. In
furtherance
thereof, the Lender shall have the full right and authority
to
clear and resolve any questions of non-compliance of
documents; to
give any instructions as to acceptance or rejection of any
documents or goods; to execute any and all steamship or
airway
guaranties (and applications therefore), indemnities or
delivery
orders; to grant any extensions of the maturity of, time of
payment
for, or time of presentation of, any drafts, acceptances, or
documents; and to agree to any amendments, renewals,
extensions,
modifications, changes or cancellations of any of the terms
or
conditions of any of the applications, Letters of Credit,
drafts or
acceptances; all in the Lender's sole name, and the Issuing
Bank
shall be entitled to comply with and honor any and all such
documents or instruments executed by or received solely from
the
Lender, all without any notice to or any consent from LSI.

4.6 Resolutions with respect to Letters of Credit.
Without
the Lender's express consent and endorsement in writing, LSI
agrees: (a) not to execute any and all applications for
steamship
or airway guaranties, indemnities or delivery orders; to
grant any
extensions of the maturity of, time of payment for, or time
of
presentation of, any drafts, acceptances or documents; or to
agree
to any amendments, renewals, extensions, modifications,
changes or
cancellations of any of the terms or conditions of any of
the
applications, Letters of Credit, drafts or acceptances; and
(b)
after the occurrence of an Event of Default which is not
cured or
waived by the Lender, not to (i) clear and resolve any
questions of
non-compliance of documents, or (ii) give any instructions
as to
acceptances or rejection of any documents or goods.

4.7 Licenses; Taxes. LSI agrees that any necessary
import,
export or other licenses or certificates for the import or
handling
of the Collateral will have been promptly procured; all
foreign and
domestic governmental laws and regulations in regard to the
shipment and importation of the Collateral, or the financing
thereof will have been promptly and fully complied with
except
where the failure to so comply could not have a Material
Adverse
Effect; and any certificates in that regard that the Lender
may at
any time reasonably request will be promptly furnished. In
this
connection, LSI warrants and represents that all shipments
made
under any such Letters of Credit are in accordance with the
laws
and regulations of the countries in which the shipments
originate
and terminate, and are not prohibited by any such laws and
regulations. LSI assumes all risk, liability and
responsibility
for, and agrees to pay and discharge, all present and future
local,
state, federal or foreign taxes, duties, or levies in
connection
with such shipments. Any embargo, restriction, laws,
customs or
regulations of any country, state, city, or other political
subdivision, where the Collateral is or may be located, or
wherein
payments are to be made, or wherein drafts may be drawn,
negotiated, accepted, or paid, shall be solely LSI's risk,
liability and responsibility.

4.8 Subrogation. Upon any payments made to the
Issuing
Bank under the Letter of Credit Guaranty, the Lender shall
acquire
by subrogation, any rights, remedies, duties or obligations
granted
or undertaken by LSI to the Issuing Bank in any application
for
Letters of Credit, any standing agreement relating to
Letters of
Credit or otherwise, all of which shall be deemed to have
been
granted to the Lender and apply in all respects to the
Lender and
shall be in addition to any rights, remedies, duties or
obligations
contained herein.

SECTION 5. Collateral

5.1 Grant of Collateral. As security for the
prompt
payment in full of all loans and advances made and to be
made to
the Companies from time to time by the Lender pursuant
hereto, as
well as to secure the payment in full of all reimbursement
obligations with respect to Letters of Credit and all other
Obligations, the Companies hereby pledge and grant to the
Lender a
continuing general lien upon and security interest in all of
their:

(a) present and hereafter acquired Inventory;

(b) present and future Accounts;

(d) present and future General Intangibles, other
than (i)
all patents and copyrights of LSI and its Subsidiaries, (ii)
the
trademarks directly related to the Pyrament division of LSI,
(iii)
all contracts and marketing agreements directly relating to
the
operation of LSI's facility located in Oglesby, Illinois,
(iv)
LSI's interest in the Kosmos Partnership, (v) the proceeds
of
insurance policies covering fixed assets to the extent such
proceeds do not arise from or relate to any Collateral, and
(vi)
LSI's interest in the lease for real property related to its
Pennsuco cement plant.

5.2 Description. The security interests granted
hereunder
shall extend and attach to:

(a) All Collateral which is presently in existence
and
which is owned by a Company or in which a Company has any
interest,
whether held by a Company or others for its account;

(b) All Inventory and any portion thereof which may
be
returned, rejected, reclaimed or repossessed by either the
Lender
or a Company from such Company's customers, as well as to
all
supplies, goods, incidentals, packaging materials, labels
and any
other items which contribute to the finished goods or
products
manufactured or processed by such Company, or to the sale,
promotion or shipment thereof.

5.3 Disposition of Collateral. Each Company agrees
to
safeguard, protect and hold all Inventory for the Lender's
account
and make no disposition thereof except in the regular course
of the
business of such Company as herein provided. Until the
Lender has
given a Company notice to the contrary, as provided for
below, any
Inventory may be sold and shipped by such Company to its
customers
in the ordinary course of such Company's business, on open
account
and on terms currently being extended by such Company to its
customers or on other standard industry terms, provided that
all
proceeds of sale constituting cash, checks and other similar
proceeds are transferred, endorsed and turned over and
delivered
pursuant to the terms of Section 3.4. The Lender shall have
the
right to withdraw this permission at any time upon the
occurrence
of an Event of Default and until such time as such Event of
Default
is waived or cured to the Lender's satisfaction, in which
event no
further disposition shall be made of the Inventory by such
Company
without the Lender's prior written approval. Cash sales or
sales
of Inventory in which a lien upon, or security interest in,
Inventory is retained by a Company shall be made by such
Company
only with the approval of the Lender, and the proceeds of
such
sales or sales of Inventory for cash shall not be commingled
with
such Company's other property, but shall be segregated, held
by
such Company in trust for the Lender as the Lender's
exclusive
property, and shall be delivered immediately by such Company
to the
Lender in the identical form received by such Company by
deposit to
a Lockbox Account, a Depository Account or a Collection
Account.
Upon the sale, exchange, or other disposition of Inventory,
as
herein provided, the security interest in each Company's
Inventory
provided for herein shall, without break in continuity and
without
further formality or act, continue in, and attach to, all
proceeds,
including any instruments for the payment of money, accounts
receivable, contract rights, documents of title, shipping
documents, chattel paper and all other cash and non-cash
proceeds
of such sale, exchange or disposition. As to any such sale,
exchange or other disposition, the Lender shall have all of
the
rights of an unpaid seller, including stoppage in transit,
replevin, rescission and reclamation.

5.4 Survival of Security Interest. Subject to
Sections 11
and 12.13 of this Financing Agreement, the rights and
security
interests granted to the Lender hereunder are to continue in
full
force and effect, notwithstanding the termination of this
Financing
Agreement or the fact that the account maintained in the
Companies'
names on the books of the Lender may from time to time be
temporarily in a credit position, until the final payment in
full
to the Lender of all Obligations and the termination of this
Financing Agreement. Any delay, or omission by the Lender
to
exercise any right hereunder, shall not be deemed a waiver
thereof,
or be deemed a waiver of any other right, unless such waiver
shall
be in writing and signed by the Lender. A waiver on any one
occasion shall not be construed as a bar to or waiver of any
right
or remedy on any future occasion.

5.5 Remedies. To the extent that the Obligations
are now
or hereafter secured by any assets or property other than
the
Collateral or by the guarantee, endorsement, assets or
property of
any other Person, then the Lender shall have the right in
its sole
discretion to determine which rights, security, liens,
security
interests or remedies the Lender shall at any time pursue,
foreclose upon, relinquish, subordinate, modify or take any
other
action with respect to, without in any way modifying or
affecting
any of them, or any of the Lender's rights hereunder.

5.6 Other Liens Held as Collateral. Any reserves
or
balances to the credit of the Companies and any other
property or
assets of the Companies in the possession of the Lender may
be held
by the Lender as security for any Obligations and applied in
whole
or partial satisfaction of such Obligations when due. The
liens
and security interests granted herein and any other lien or
security interest the Lender may have in any other assets of
the
Companies, shall secure payment and performance of all now
existing
and future Obligations except if this Financing Agreement is
terminated pursuant to the terms of Section 11 hereof. The
Lender
may in its discretion charge any or all of the Obligations
to the
account of the Companies when due.

SECTION 6. Representations and Warranties

Each Company hereby represents and warrants to the
Lender on
the Effective Date and each time thereafter as required by
the
terms of this Financing Agreement that:

6.1 Organization. Each Company and each of its
Subsidiaries (a) is a corporation duly organized, validly
existing
and in good standing under the laws of the jurisdiction of
its
incorporation; (b) is duly qualified as a foreign
corporation and
in good standing under the laws of each jurisdiction in
which the
failure so to qualify has a reasonable likelihood of having
a
Material Adverse Effect; (c) has all requisite corporate
power and
authority and the legal right to own, pledge, mortgage and
operate
its properties, to lease the property it operates under
lease and
to conduct its business as now or currently proposed to be
conducted; (d) is in compliance with its certificate of
incorporation and by-laws; (e) is in compliance with all
other
applicable requirements of law except such noncompliance as
would
have no reasonable likelihood of having, individually or in
the
aggregate, a Material Adverse Effect; and (f) has all
necessary
licenses, permits, consents or approvals from or by, has
made all
necessary filings with, and has given all necessary notices
to,
each Governmental Authority having jurisdiction, to the
extent
required for such ownership, operation and conduct, except
for
licenses, permits, consents or approvals which can be
obtained by
the taking of ministerial action to secure the grant or
transfer
thereof or which the failure to have would have no
reasonable
likelihood of having, individually or in the aggregate, a
Material
Adverse Effect.

6.2 Power; Authority; Consents. (a) The
execution,
delivery and performance by each Company of this Financing
Agreement, the other Loan Documents and the Related
Documents to
which each is a party and the consummation of the
transactions
related to the financing contemplated hereby:

(i) are within such Person's corporate powers;

(ii) have been duly authorized by all necessary
corporate action, including without limitation the
consent of
stockholders where required;

(iii)do not and will not (A) contravene any of
the
Companies' or any of their Subsidiaries' respective
certificate
of incorporation, by-laws or other governing instruments,
(B)
violate any other applicable requirement of law
(including
without limitation, Regulations G, T, U and X of the
Board of
Governors of the Federal Reserve System), or any order or
decree
of any Governmental Authority or arbitrator except such
violation
as would have no reasonable likelihood of having,
individually or
in the aggregate, a Material Adverse Effect, (C) conflict
with or
result in the breach of, or constitute a default under,
or result
in or permit the termination or acceleration of, any
contractual
obligation of such Company or any of its Subsidiaries,
which
conflict, breach or default could have a Material Adverse
Effect,
or (D) result in the creation or imposition of any lien
upon any
of the property of such Company or any of its
Subsidiaries, other
than those in favor of the Lender and those described in
clauses
(vi), (vii) and (viii) of the definition of the term
Permitted
Encumbrances; and

(iv) do not require the consent, authorization
by, or
approval of, or notice to, or filing or registration
with, any
Governmental Authority or any other Person, other than
those
which have been obtained or made and copies, in the case
of those
involving a Governmental Authority, of which have been or
will be
delivered to the Lender pursuant to this Financing
Agreement,
each of which is in full force and effect.

(b) This Financing Agreement and the other Loan
Documents
have been duly executed and delivered by each Company. This
Financing Agreement and the other Loan Documents to which
either of
the Companies is a party are the legal, valid and binding
obligation of each such Person, enforceable against such
Person in
accordance with their terms.

6.3 Full Disclosure. (a) No written statement
prepared or
furnished by or on behalf of LSI or any of its Subsidiaries
in
connection with this Financing Agreement, the other Loan
Documents
or the Related Documents or the consummation of the
transactions
contemplated thereby, and the Financial Statements delivered
pursuant hereto or thereto, taken as a whole, contain any
untrue
statement of a material fact or omit to state a material
fact
necessary to make the statements contained herein or therein
not
misleading in light of the circumstances under which any
such
statement was made. There is no fact known to LSI which is
material to the financial condition, business, properties or
prospects of LSI and its Subsidiaries taken as one
enterprise or an
understanding thereof and which has not been disclosed to
the
Lender.

(b) LSI has delivered to the Lender a true,
complete and
correct copy of the Disclosure Statement. The Disclosure
Statement, as of the date it was distributed to the
creditors, at
the time of the creditor vote pursuant thereto, and as of
the
Effective Time, did not contain any untrue statement of a
material
fact or omit to state any material fact necessary in order
to make
the statements made therein, in light of the circumstances
under
which they were made, not misleading.

(c) The pro forma Consolidated Statements of
financial
condition and pro forma Consolidated Statements of
operations of
LSI and its Consolidated Subsidiaries delivered to the
Lender prior
to the Effective Date are the unaudited consolidated
financial
statements of LSI and its Consolidated Subsidiaries, as of
the
dates and for the periods specified therein, adjusted to
give
effect to the Reorganization, any financing thereof and
certain
other events and assumptions as set forth therein. Such pro
forma
financial statements (including any related schedules and
notes)
have been prepared on the basis of the statements and
assumptions
set forth in the respective notes thereto contained in the
Disclosure Statement and the projections and assumptions
expressed
therein were reasonably based on the information available
to LSI
at the time so furnished.

(d) The Plan of Reorganization has been confirmed
pursuant
to the Confirmation Order and the Confirmation Order has
become a
Final Order.

(e) The Confirmation Order is binding and effective
on the
holders of all Claims and Stock Interests (each as defined
in the
Plan of Reorganization).

(f) The Bankruptcy Court has approved the Employee
Settlement Agreements pursuant to Final Orders.

6.4 Margin Regulations. (a) No proceeds of any
Borrowing
will be used to acquire any equity security of a class which
is
registered pursuant to Section 12 of the Securities Exchange
Act of
1934, as amended.

(b) LSI and its Subsidiaries are not engaged in the
business of extending credit for the purpose of purchasing
or
carrying margin stock (within the meaning of Regulation U
issued by
the Board of Governors of the Federal Reserve System), and
no
proceeds of any borrowing made hereunder will be used to
purchase
or carry any margin stock or to extend credit to others for
the
purpose of purchasing or carrying any margin stock.

6.5 Related Documents. Since the Effective Date,
(i) none
of the Related Documents has been amended or modified in any
respect (excluding any amendment or modification to the
Settlement
Agreement with the Official Committee of Retired Employees
increasing the payments by LSI with respect to post-
retirement
welfare obligations resulting from the additional coverage
of non-
union hourly employees retiring prior to December 31, 1992
and non-
union salaried and non-union hourly employees retiring after
December 31, 1992 and prior to the Effective Date) and no
provision
therein has been waived without the written consent of the
Lender
in accordance with the provisions hereof other than
amendments,
modifications and waivers that do not increase any
Indebtedness or
other obligations of LSI or its Subsidiaries thereunder, do
not
provide for more restrictive terms and conditions to LSI or
its
Subsidiaries and are not adverse to the interests of the
Lender,
(ii) each of the representations and warranties of LSI
and/or its
Subsidiaries therein are true and correct in all material
respects
as of each date each such representation or warranty is
made, and
(iii) no default or event which with the giving of notice or
lapse
of time or both would be a default has occurred thereunder.

6.6 Compliance with Bankruptcy Code. Each of the
Debtors
has complied in all material respects with the Bankruptcy
Code, and
all other laws, rules, regulations, decrees and orders
applicable
to or arising out of the Reorganization. All lists of
creditors
and shareholders, schedules, statements of affairs and
financial
reports filed by the Debtors with the Bankruptcy Court and
all
representations, warranties or disclosures of the Debtors
made in
connection with the Reorganization are complete and accurate
in all
material respects. Notice has been given to all holders of
Claims
and Stock Interests as required by the Bankruptcy Code and
as was
directed by the Bankruptcy Court in connection with the
hearings on
the Disclosure Statement and confirmation of the Plan of
Reorganization except for any failure to give such notice
which,
together with all other failures, could not have a Material
Adverse
Effect.

6.7 Solvency. Each of the Companies hereby
represents and
warrants that after giving effect to the agreements and
transactions that the Plan of Reorganization provides for on
the
Effective Date: (i) the fair value of the assets of LSI and
its
Consolidated Subsidiaries exceeds the book value of the
liabilities
of LSI and its Consolidated Subsidiaries; (ii) LSI and its
Consolidated Subsidiaries are generally able to pay their
debts as
they become due and payable; and (iii) LSI and its
Consolidated
Subsidiaries do not have unreasonably small capital to carry
on
their businesses as they are currently conducted absent
extraordinary and unforeseen circumstances.

6.8 Priority; Title. Each Company warrants and
represents
that except for the Permitted Encumbrances, the security
interests
granted herein constitute and shall at all times constitute
the
first and only liens on the Collateral; that, except for the
Permitted Encumbrances, each Company is or will be at the
time
additional Collateral is acquired by it, the absolute owner
of the
Collateral with full right to pledge, sell, consign,
transfer and
create a security interest therein, free and clear of any
and all
claims or liens in favor of others; that no Person has any
right of
first refusal, option or other preferential right to
purchase any
Collateral or improvements thereto; that each Company will
at its
expense forever warrant and, at the Lender's request, defend
the
same from any and all claims and demands of any other Person
other
than the Permitted Encumbrances; that each Company will not
grant,
create or permit to exist, any lien upon or security
interest in
the Collateral, or any proceeds thereof, in favor of any
other
Person other than the holders of the Permitted Encumbrances.
Each
Company has good and marketable title to all its property,
including, without limitation, the Core Assets and all other
property reflected in the Financial Statements, other than
properties disposed of in any manner otherwise permitted
under this
Financing Agreement.

6.9 Trade Names. Each Company hereby represents
and
warrants that, except as set forth on the Schedule 6.9
hereto, such
Company does not use any other business or trade names.

6.10 Subsidiaries. LSI hereby represents and
warrants that
Schedule 6.10 hereto sets forth a complete and accurate list
of all
the Subsidiaries of LSI and the stockholder(s) of each such
Subsidiary and all partnership or joint venture interests
owned by
LSI. Except as set forth on Schedule 6.10 hereto, all of
the
outstanding shares of each such Subsidiary are owned of
record and
beneficially by LSI or another Subsidiary of LSI. There are
no
third parties who hold any options, warrants, or other
rights to
acquire shares of capital stock of any Subsidiary of LSI.

6.11 Insurance. LSI hereby represents and warrants
that
Schedule 6.11 hereto sets forth a complete and accurate list
of all
insurance policies in effect with respect to the assets of
LSI and
its Subsidiaries, specifying for each such policy, (a) the
amount
thereof, (b) the risks insured against, (c) the name of the
insurer
and each insured party thereunder, and (d) the policy or
other
identification number.

6.12 Locations of Offices; Records and Inventory.
Each
Company hereby represents and warrants that such Company's
principal place of business is listed on Schedule 6.12
hereto. The
books and records of each Company and all chattel paper and
all
records of Accounts of each Company are located at its
principal
place of business or such other locations listed on Schedule
6.12
hereto. There is no location at which the Companies have
any
Inventory (except for Inventory in transit) other than those
locations for each Company listed on Schedule 6.12 hereto.
Schedule 6.12 hereto contains a true, correct and complete
list of
the legal names and addresses of each warehouse at which
Inventory
of each Company is stored. None of the receipts received by
a
Company from any warehouse states that the goods covered
thereby
are to be delivered to bearer or to the order of a named
Person or
to a named Person and such named Person's assigns.

6.13 Affiliate Transactions. Except as set forth
on
Schedule 6.13 hereto, each Company hereby represents and
warrants
that such Company is not a party to any transaction
prohibited
under Section 7.22.

6.14 Environmental Matters. LSI hereby represents
and
warrants that except as set forth on Schedule 6.14 hereto
and
except as is not, reasonably likely to have a Material
Adverse
Effect:

(a) All of the current and, to the best knowledge
of LSI,
past business operations of LSI and its Subsidiaries and all
of the
assets of LSI and its Subsidiaries and their existing and,
to the
best knowledge of LSI, prior uses, operations, businesses
and
activities thereon, substantially comply with all applicable
Environmental Laws, and no lien is currently imposed on any
of such
assets by any Governmental Authority in connection with any
Environmental Condition, the violation or threatened
violation of
any Environmental Laws or the existence of any Hazardous
Substances
at, on or under any of the assets of LSI and its
Subsidiaries, or
resulting from any Hazardous Substances released or
transported
from any of the assets of LSI and its Subsidiaries. LSI and
its
Subsidiaries have obtained any and all permits, licenses and
authorizations which are required for the conduct of the
business
as presently conducted or as contemplated to be conducted
under the
Plan of Reorganization through the Core Assets under all
applicable
Environmental Laws and LSI and its Subsidiaries, their Core
Assets
and the uses, operations, businesses, and activities thereon
are in
substantial compliance with the terms and conditions of any
required permits, licenses and authorizations. To the
knowledge of
LSI, there are no Environmental Laws scheduled to become
applicable
to the assets or operations of LSI or any of its
Subsidiaries that,
when effective, would make the statement contained in the
previous
sentence untrue.

(b) Neither LSI, its Subsidiaries nor, to the best
knowledge of LSI, any prior owner, occupant or user of any
of the
assets of LSI and its Subsidiaries, has engaged in or
permitted any
operations or activities upon any of the assets of LSI and
its
Subsidiaries for the purpose of or in any way involving the
handling, manufacture, treatment, processing, storage, use,
generation, release, discharge, dumping or disposal of any
Hazardous Substances at, on or under the assets of LSI and
its
Subsidiaries, except in substantial compliance with all
applicable
Environmental Laws. The assets do not contain and, to the
best
knowledge of LSI, have not previously contained, in, on, or
under,
including, without limitation, the soil and groundwater
thereunder,
any Hazardous Substances in concentrations which violate
Environmental Laws.

(c) Neither LSI, nor its Subsidiaries, has received
any
notice of any actual or threatened Environmental Claim or
any
alleged violation of or liability under any Environmental
Laws
which has not been resolved.

6.15 Employee Grievances. Except as disclosed on
Schedule
6.15 hereto, there are no actions or proceedings pending or,
to the
knowledge of LSI, threatened against LSI or its
Subsidiaries, by or
on behalf of, or with, its respective employees, other than
employee grievances arising in the ordinary course of
business
which could, in the aggregate, have a Material Adverse
Effect.

6.16 Bank Accounts. Schedule 6.16 hereto contains
a true
and complete list of all lockbox, demand deposit and other
bank
accounts of LSI and its Consolidated Subsidiaries.

6.17 Returns. All material returns, statements,
forms and
reports for taxes (the "Returns") required to be filed by or
with
respect to the income, properties or operations of LSI
and/or any
of its Subsidiaries have been timely filed with the
appropriate
taxing authority (taking into account properly requested
extensions). The Returns accurately reflect all liability
for
taxes of LSI and its Subsidiaries for the periods covered
thereby
in all material respects. All taxes payable by LSI and each
of its
Subsidiaries which have become due other than those
contested in
good faith and for which adequate reserves have been
established
have been paid. Except as disclosed on Schedule 6.17
hereto, there
is no action, suit, proceeding, investigation, audit, or
claim now
pending or threatened by any authority regarding any taxes
relating
to LSI or any of its Subsidiaries. Except as disclosed on
Schedule
6.17 hereto, neither LSI nor any of its Subsidiaries has
entered
into an agreement or waiver or been requested to enter into
an
agreement or waiver extending any statute of limitations
relating
to the payment or collection of taxes of such Persons, and
neither
LSI nor any of its Subsidiaries is aware of any
circumstances that
could reasonably be expected to cause the taxable years or
other
taxable periods of LSI or any of its Subsidiaries not to be
subject
to the normally applicable statute of limitations. Neither
LSI nor
any of its Subsidiaries have incurred, or will incur, any
tax
liability in connection with the Reorganization which is
materially
different from that specifically reflected in the pro forma
financial statements delivered to the Lender prior to the
Effective
Date.

6.18 Merged Subsidiaries. Each of the Subsidiaries
set
forth in Schedule 2.1(N) has been merged into LSI on the
Effective
Date.

6.19 Intellectual Property. Schedule 6.19 hereto
lists all
trademarks of LSI and its Consolidated Subsidiaries and all
registrations and applications therefore, and all license
agreements in which LSI and its Consolidated Subsidiaries
grants or
receives any interest in any trademarks.

SECTION 7. Covenants

Until the termination of this Financing Agreement
and the
satisfaction of all Obligations hereunder, each Company
agrees
that:

7.1 Compliance with Bankruptcy Documents. Each
Company
will, and will cause each of its Subsidiaries to, comply at
all
times with the Plan of Reorganization, the Confirmation
Order and
each Related Document except (i) in the case of the Related
Documents, for any non-compliance that is waived by the
party
entitled to the benefits thereof, if such waiver is not
adverse to
the interests of the Lender; (ii) for any non-compliance
with
respect to personal injury claims or similar tort claims
against
the Debtors which are (A) adequately covered by insurance
and (B)
if adversely determined, could not have, in the aggregate, a
Material Adverse Effect; and (iii) the filing with the
Bankruptcy
Court of a registration rights statement required to be
filed prior
to the Confirmation Date, which failure could not have a
Material
Adverse Effect; (iv) the establishment of the Professional
Fee
Reserve (as defined in the Plan); and (v) the claim of a
former
employee of LSI as to which a disputed claim reserve has not
been
established, and which claim is not an allowed claim,
provided if
such claim is adversely determined, it could not have, a
Material
Adverse Effect.

7.2 Books and Records; Access; Change of Offices;
Change in
Collateral. Each Company will, and will cause its
Subsidiaries to,
maintain books and records pertaining to the Collateral in
such
detail, form and scope as the Lender shall reasonably
require and
such books and records will reflect the Lender's interest in
the
Accounts. Each Company agrees that the Lender may enter
upon such
Company's premises at any time during normal business hours,
and
from time to time, for the purpose of (a) inspecting the
Collateral, and inspecting and/or copying, at such
Company's
expense, any and all records pertaining thereto, (b)
verifying the
Accounts, and (c) inspecting and/or copying, at such
Company's
expense, any and all records which in the Lender's
reasonable
judgment are relevant to the monitoring of the Obligations.
Each
Company agrees to afford the Lender not less than thirty
days'
prior written notice of any change in the location of any
Collateral, other than to locations, that as of the date
hereof,
are known to the Lender and at which the Lender has filed
financing
statements and otherwise fully perfected its liens thereon.
Each
Company is also to advise the Lender promptly, in sufficient
detail, of any material adverse change relating to the type,
quantity or quality of the Collateral or on the security
interests
granted therein.

7.3 Collateral Records. Each Company agrees to
execute and
deliver to the Lender for the benefit of the Lender from
time to
time, solely for the Lender's convenience in maintaining a
record
of the Collateral, such written statements, and schedules as
the
Lender may reasonably require, designating, identifying or
describing the Collateral pledged hereunder. A Company's
failure,
however, to promptly give the Lender such statements, or
schedules
shall not affect, diminish, modify or otherwise limit the
Lender's
security interests in the Collateral.

7.4 Compliance with Applicable Laws. Each Company
agrees
to comply with the requirements of all state and federal
laws in
order to grant to the Lender valid and perfected first
security
interests in the Collateral, subject only to the Permitted
Encumbrances. The Lender is hereby authorized by each
Company to
file any financing statements covering the Collateral
whether or
not such Company's signature appears thereon. Each Company
agrees
to do whatever the Lender may reasonably request, from time
to
time, by way of: filing notices of liens, financing
statements,
amendments, renewals and continuations thereof; cooperating
with
the Lender's custodians; keeping stock records; transferring
proceeds of Collateral to the Lender's possession; and
performing
such further acts as the Lender may reasonably require in
order to
effect the purposes of this Financing Agreement.

7.5 Insurance. LSI shall and shall cause its
Consolidated
Subsidiaries to maintain insurance on the Inventory under
such
policies of insurance, with such insurance companies, in
such
reasonable amounts and covering such insurable risks as are
at all
times reasonably satisfactory to the Lender based on those
criteria
customary in the commercial finance industry generally or in
the
lending practices of the Lender. All policies covering the
Inventory are, subject to the rights of any holders of
Permitted
Encumbrances holding claims senior to the Lender, to be made
payable to the Lender, in case of loss, under a standard
non-contributory "mortgagee", "lender" or "secured party"
clause
and are to contain such other provisions as the Lender may
require
to fully protect the Lender's interest in the Inventory and
to any
payments to be made under such policies. True copies of the
policies (or original policies which are requested by the
Lender)
are to be delivered to the Lender, premium prepaid, with the
loss
payable endorsement in the case of policies covering
Inventory, in
the Lender's favor, and shall provide for not less than
thirty (30)
days prior written notice to the Lender of the exercise of
any
right of cancellation. At LSI's request, or if LSI fails to
maintain such insurance, the Lender may arrange for such
insurance,
but at LSI's expense and without any responsibility on the
Lender's
part for: obtaining the insurance, the solvency of the
insurance
companies, the adequacy of the coverage, or the collection
of
claims. Upon the occurrence of an Event of Default, the
Lender
shall, subject to the rights of any holders of Permitted
Encumbrances holding claims senior to the Lender have the
sole
right, in the name of the Lender and LSI, to file claims
under any
insurance policies, to receive, receipt and give acquittance
for
any payments that may be payable thereunder with respect to
the
Collateral, and to execute any and all endorsements,
receipts,
releases, assignments, reassignments or other documents that
may be
necessary to effect the collection, compromise or settlement
of any
claims under any such insurance policies.

7.6 Taxes. LSI agrees to pay and will cause each
of its
Subsidiaries to pay, when due, all taxes, assessments,
claims and
other charges (herein "taxes") levied or assessed upon LSI
or any
of its Subsidiaries or the Collateral and if such taxes
remain
unpaid after the date fixed for the payment thereof, unless
such
taxes are being diligently contested in good faith by LSI or
any of
its Subsidiaries by appropriate proceedings, or (x) if any
lien
shall be claimed thereunder for taxes due the United States
of
America or (y) there exists any imminent seizure or
imposition of
lien, the Lender may, on LSI's or any of its Subsidiaries'
behalf,
pay such taxes, and the amount thereof shall be an
Obligation
secured hereby and due to the Lender on demand. The
Companies
shall in all cases maintain adequate reserves with respect
to such
taxes in accordance with generally accepted accounting
principles.

7.7 Compliance with ERISA. LSI warrants and
represents
that each Plan is in substantial compliance with ERISA and
the
Code; except as disclosed on Schedule 7.7 hereto, no
Reportable
Event has occurred with respect to a Plan; no Plan is
insolvent or
in reorganization; except as disclosed on Schedule 7.7
hereto, no
Plan has an Unfunded Current Liability; no Plan has an
accumulated
or waived funding deficiency or has applied for an extension
of any
amortization period within the meaning of Section 412 of the
Code;
except as disclosed on Schedule 7.7 hereto, neither LSI, any
Subsidiary or any ERISA Affiliate has incurred any material
liability to or on account of a Plan pursuant to Section
409,
502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or
4212 of
ERISA or Section 4971 or 4975 of the Code or expects to
incur any
liability under any of the foregoing Sections with respect
to any
Plan; no proceedings have been instituted to terminate any
Plan;
except as disclosed on Schedule 7.7 hereto, no condition
exists
which presents a material risk to LSI, any Subsidiary or any
ERISA
Affiliate of incurring a liability to or on account of a
Plan
pursuant to the foregoing provisions of ERISA and the Code;
except
as disclosed on Schedule 7.7 hereto, no lien imposed under
the Code
or ERISA on the assets of LSI, any Subsidiary or any ERISA
Affiliate exists or is likely to arise on account of any
Plan;
except as disclosed on Schedule 7.7 hereto neither LSI, any
Subsidiary or any ERISA Affiliate maintains an employee
welfare
benefit plan (as defined in Section 3(1) of ERISA) which
provides
health or welfare benefits (through the purchase of
insurance or
otherwise) for any retired or former employee of LSI, any
Subsidiary or any ERISA Affiliate; and except as disclosed
on
Schedule 7.7 hereto, LSI, any Subsidiary or any ERISA
Affiliate may
terminate contributions to any other employee benefit plans
(within
the meaning of Section 3(3) of ERISA) maintained by them if
such
termination is not reasonably likely to cause a Material
Adverse
Effect.

7.8 ERISA Notice. LSI agrees that as soon as
possible and,
in any event, within 10 Business Days after LSI or any
Subsidiary
or any ERISA Affiliate knows or has reason to know of the
occurrence of any of the following, LSI will deliver to the
Lender
a certificate of the chief financial officer of LSI setting
forth
details as to such occurrence and the action, if any, which
LSI,
any Subsidiary or any ERISA Affiliate is required or
proposes to
take, together with any notices required or filed with or by
LSI,
the Subsidiary, the ERISA Affiliate, the PBGC, a Plan
participant
or the Plan administrator with respect thereto: (i) that a
Reportable Event has occurred, (ii) that an accumulated
funding
deficiency has been incurred or an application will be made
to the
Secretary of the Treasury for a waiver or modification of
the
minimum funding standard (including installment payments) or
an
extension of any amortization period under Section 412 of
the Code
with respect to a Plan, (iii) that a Plan has been or will
be
terminated under Section 4041(c) or 4042 of ERISA,
reorganized,
partitioned or declared insolvent under Title IV of ERISA,
(iv)
that a Plan has an Unfunded Current Liability giving rise to
a lien
under ERISA or the Code (excluding liens under the Employee
Settlement Agreements), (v) that proceedings are likely to
be or
have been instituted to terminate a Plan under Section
4041(c) or
4042 of ERISA, (vi) that a proceeding has been instituted
pursuant
to Section 515 of ERISA to collect a delinquent contribution
to a
Plan, (vii) that LSI, any Subsidiary or any ERISA Affiliate
will
incur any liability to or on account of the termination of
or
withdrawal from a Plan under Section 4062, 4063, 4064, 4069,
4201,
4204, or 4212 of ERISA with respect to a Plan under Section
4971 or
4975 of the Code or Section 409 or 502(i) or 502(l) of
ERISA,
(viii) that any Employee Settlement Agreement has been
amended,
modified or supplemented (and LSI will deliver copies of
such
amendment, modification or supplement to the Lender). LSI
will
deliver to the Lender a complete copy of the annual report
(IRS
Form 5500) for each Employee Benefit Plan required to be
filed with
the Internal Revenue Service and copies of each accounting
report
for postretirement benefits (other than pensions) prepared
in
accordance with Financial Accounting Standards No. 106.

7.9 Compliance with Laws; Environmental Matters.
Each
Company shall and shall cause its Subsidiaries to: (a)
comply with
all applicable Governmental Rules which the failure to
comply with
could have a Material Adverse Effect; provided that a
Company
and/or its Subsidiaries may contest or defend against
potential
liability imposed by any Governmental Rules in any
reasonable
manner which will not, in the Lender's reasonable opinion,
have a
Material Adverse Effect; and (b) to comply with all
applicable
Environmental Laws as presently existing or as adopted or
amended
in the future, applicable to the ownership and/or use of its
real
property and operation of its business, the failure to
comply with
which could have a Material Adverse Effect; provided that
LSI and
its Subsidiaries may contest or defend against potential
liability
imposed by any Environmental Law in any reasonable manner.
Each
Company shall not, and shall not permit any of their
Subsidiaries
or, to the best of each of their ability, any other Person
to,
dispose of any Hazardous Substance by placing it in or on
the
ground or waters of any property owned or leased by such
Company or
any of their Subsidiaries other than in compliance with
Environmental Laws or any permit, license or authorization
issued
thereunder. Each Company hereby jointly and severally
indemnifies
the Lender and agrees to defend and hold the Lender harmless
from
and against any and all loss, damage, claim, liability,
injury or
expense which the Lender may sustain or incur (other than as
a
result of actions of the Lender constituting gross
negligence or
willful misconduct) in connection with any Environmental
Claim
arising from or related to this Financing Agreement, the
other Loan
Documents, the exercise by the Lender of its rights and
remedies
under this Financing Agreement or the other Loan Documents
or the
transactions contemplated hereunder or any claim or expense
which
results from such Company's or its Subsidiaries' operations
(including, but not limited to, such Company's or its
Subsidiaries'
off-site disposal practices) and each Company further agrees
that
this indemnification shall survive termination of this
Financing
Agreement as well as the payment of all Obligations or
amounts
payable hereunder.

7.10 Public Reports. Promptly upon their becoming
available, LSI shall furnish to the Lender one copy of each
financial statement, report, notice or proxy statement sent
by LSI
to stockholders or noteholders generally and of each regular
or
periodic report, and any registration statement or
prospectus filed
by LSI with any securities exchange or the SEC.

7.11 Financial Reporting. Commencing on the
Effective
Date (a) LSI agrees that, unless the Lender shall have
otherwise
consented in writing, LSI will furnish to the Lender (i)
within
ninety-five (95) days after the end of each fiscal year of
LSI, an
audited Consolidated Balance Sheet as at the close of such
year,
and statements of profit and loss, cash flow and
reconciliation of
surplus of LSI and its Consolidated Subsidiaries for such
year,
audited by Coopers & Lybrand or other independent public
accountants selected by LSI and satisfactory to the Lender
and
accompanied by a schedule of deferred fixed costs in
Inventory or,
in lieu thereof, LSI shall be permitted to furnish Lender
with a
copy of its SEC Form 10-K for such fiscal year; (ii) within
sixty
(60) days after the end of each fiscal quarter (A) a
Consolidated
Balance Sheet as at the end of such period and statements of
profit
and loss, cash flow and surplus of LSI and all its
Consolidated
Subsidiaries (or, in lieu thereof, LSI shall be permitted to
furnish Lender with a copy of its SEC Form 10-Q for each of
the
first three fiscal quarters of each fiscal year) accompanied
by a
schedule of deferred fixed costs in Inventory, (B) a
schedule of
all asset sales made outside of the ordinary course of
business
during such fiscal quarter and the Net Proceeds of each such
asset
sale, (C) a schedule of all Capital Expenditures made during
such
fiscal quarter and all expenditures for property, plant and
equipment from Net Proceeds of Permitted Asset Sales that do
not
constitute Capital Expenditures, and (D) a schedule of all
payments
made with respect to the Senior Note Indenture during such
fiscal
quarter from Net Proceeds; (iii) within forty-five (45) days
after
the end of the last month of each fiscal year of LSI and
within
thirty (30) days after the end of each other month, the
monthly
management review prepared by LSI consistent with past
practice
accompanied by a schedule of deferred fixed costs in
Inventory,
provided that the monthly management review for the April
1994
fiscal month of LSI shall be preliminary; (iv) within forty-
five
(45) days after the end of the last month of each fiscal
year of
LSI and ten (10) Business Days after the end of each other
month,
(A) monthly schedules, in form and substance reasonably
satisfactory to the Lender, current as of the close of
business of
the last Business Day of such month, of all Accounts of the
Companies showing separately those which are more than one
month,
two months, three months and four months old, and a
description of
all liens, claims, encumbrances, set-offs, defenses and
counter
claims with respect thereto, reasonably satisfactory to the
Lender
and current as of the close of business on the last day of
the
month immediately prior to such date, and (B) a breakdown of
the
Inventory of the Companies by amount (which shall include
dollar
valuation by location) reasonably satisfactory to the Lender
and
current as of the close of business on the last Business Day
of
such month, together with supporting documents; (v) within
one
hundred twenty (120) days of the Effective Date an "opening"
Consolidated Balance Sheet of LSI and its Consolidated
Subsidiaries
audited by Coopers & Lybrand, and from time to time, such
further
information regarding the business affairs and financial
condition
of LSI and its Consolidated Subsidiaries as the Lender may
reasonably request, including without limitation annual cash
flow
projections in form satisfactory to the Lender; (vi) within
ninety-
five (95) days after the end of each fiscal year of Rosebud
an
audited consolidated balance sheet of Rosebud and its
Subsidiaries
as at the close of such year, and statements of profit and
loss,
cash flow and reconciliation of surplus of Rosebud and its
Subsidiaries for such year, audited by independent public
accountants selected by Rosebud or, in lieu thereof, LSI
shall be
permitted to furnish Lender with a copy of Rosebud's SEC
Form 10-K
for such fiscal year; (vii) within sixty (60) days after the
end of
each fiscal quarter of Rosebud, a consolidated balance sheet
of
Rosebud and its Subsidiaries as at the end of such period
and
statements of profit and loss, cash flow and surplus of
Rosebud and
its Subsidiaries, or in lieu thereof, LSI shall be permitted
to
furnish Lender with a copy of Rosebud's SEC Form 10-Q for
such
fiscal quarter; and (viii) promptly and in any event within
three
(3) Business Days of receipt of notice or obtaining
knowledge of a
default, event of default or event of termination or
acceleration
under any Related Document, notice to the Lender of the
nature of
such default, event of default or event of termination or
acceleration.

(b) Each Financial Statement and each other report
which
LSI is required to submit pursuant to Section 7.11(a) hereto
must
be accompanied by an officer's certificate, signed by the
President, Vice President, Controller, or Treasurer,
pursuant to
which any one such officer must certify that: (i) the
financial
statement(s) (other than SEC Forms 10-K and 10-Q and those
reports
which LSI is required to submit monthly pursuant to Sections
7.11(a)(iii) and (iv)) fairly and accurately represent(s)
LSI's and
its Consolidated Subsidiaries' financial condition at the
end of
the particular accounting period, as well as LSI's and its
Consolidated Subsidiaries' operating results during such
accounting
period, subject to year-end audit adjustments; (ii) during
the
particular accounting period: (x) there has been no
Potential
Default, Event of Default under this Financing Agreement or
default, event of default or event of termination or
acceleration
under any Related Document, provided, however, that if any
such
officer has knowledge that any such Potential Default, Event
of
Default or default, event of default or event of termination
or
acceleration under any Related Document, has occurred during
such
period, the existence of and a detailed description of same
shall
be set forth in such officer's certificate; and (y) LSI has
not
received any notice of cancellation with respect to its
property
insurance policies; and (iii) the exhibits attached to such
financial statement(s) constitute detailed calculations
showing
compliance with all financial covenants contained in this
Financing
Agreement.

(c) (i) Five Business Days after the Friday of
each week
or, if at the end of any month the billing period exceeds
five
Business Days, five Business Days after the date on which
the
billing occurs but in any event not later than seven
Business Days
after the last Friday of such month, the Companies shall
furnish to
the Lender a joint certificate ("Borrowing Base
Certificate")
substantially in the form attached hereto as Exhibit C,
executed by
an Executive Officer of LSI, setting forth the Borrowing
Base as of
the close of business on such Friday together with such
other
information with respect to the Accounts and the Inventory
of the
Companies as the Lender may reasonably request.

(ii) In the event of any dispute about the
eligibility
of any asset for inclusion in the calculation of the
Borrowing Base
or the valuation thereof, the Lender's good faith judgment
shall
control.

(iii)The Borrowing Base set forth in a
Borrowing Base
Certificate shall be effective from and including the date
such
Borrowing Base Certificate is duly received by the Lender to
but
not including the date on which a subsequent Borrowing Base
Certificate is duly received by the Lender, unless the
Lender
disputes the eligibility of any asset for inclusion in the
calculation of the Borrowing Base or the valuation thereof
by
notice of such dispute to the Company.

(iv) Each Borrowing Base Certificate shall be
accompanied by such other and further information, including
backup
schedules, as the Lender may reasonably request from time to
time.

7.12 EBITDA. LSI shall maintain at the end of each
fiscal
quarter of LSI set forth below (i) prior to January 1, 1995,
for
the period from the first day covered by the "opening"
Consolidated
Balance Sheet described in Section 7.11(a) hereof to the end
of
such fiscal quarter and (ii) after January 1, 1995, for the
four
quarters ending at the end of such fiscal quarter, EBITDA of
not
less than:

Fiscal Quarter Period EBITDA

June 1994 $ 4,000,000
September 1994 $21,000,000
December 1994 $32,000,000
March 1995 $25,000,000
June 1995 $36,000,000
September 1995 $38,000,000
and thereafter

7.13 Notice of Additional Subsidiaries; Additional
Documents. LSI agrees to (a) give the Lender written notice
within
ten (10) Business Days of the creation, establishment or
acquisition of any Subsidiary or any interest in a joint
venture
not listed on Schedule 6.10 hereto, (b) cause each such
Consolidated Subsidiary which is a Significant Consolidated
Subsidiary to execute and deliver to the Lender within ten
(10)
Business Days of the creation, establishment or acquisition
thereof
a Guaranty, guaranteeing the Obligations, (c) within ten
(10)
Business Days of the creation, establishment or acquisition
of a
Significant Consolidated Subsidiary, pledge to the Lender
pursuant
to the Pledge Agreement, or cause to be pledged to the
Lender
pursuant to a pledge agreement substantially similar to the
Pledge
Agreement, all of the issued and outstanding capital stock
of such
Significant Consolidated Subsidiary owned by the Companies,
or, if
such Subsidiary is a Subsidiary organized outside of the
United
States, sixty-five (65%) percent of the issued and
outstanding
capital stock of such Significant Consolidated Subsidiary,
together
with the delivery of all necessary stock powers and stock
certificates, (d) within ten (10) Business Days of the
creation,
establishment or acquisition of any interest in a
partnership or
joint venture or similar entity, execute and deliver to the
Lender,
or cause to be executed and delivered to the Lender, a
security
agreement, in form and substance satisfactory to the Lender,
granting to the Lender a lien on and security interest in
any such
partnership or joint venture interest or similar entity
together
with any financing statements necessary or desirable to
perfect
such lien and security interest, and (e) in connection with
each
such delivery, cause to be delivered to the Lender, in form
and
substance satisfactory to the Lender, a favorable written
opinion
of counsel, which may include LSI's General Counsel, as to
such
matters relating thereto as the Lender may reasonably
request,
together with such other agreements, instruments, approvals
or
other documents as the Lender may reasonably request.

7.14 Prohibited Transactions. Until termination
of the
Financing Agreement and payment and satisfaction of all
Obligations
due hereunder, LSI and Trap Rock agree that, without the
prior
written consent of the Lender, except as otherwise herein
provided,
each of LSI and Trap Rock will not and LSI will not permit
its
Consolidated Subsidiaries, to:

(a) Negative Pledge. Mortgage, assign, pledge,
transfer or
otherwise permit any lien, charge, security interest,
encumbrance
or judgment, (whether as a result of a purchase money or
title
retention transaction, or other security interest, or
otherwise) to
exist on any of its assets or goods, whether real, personal
or
mixed, whether now owned or hereafter acquired, except for
the
Permitted Encumbrances;

(b) No Additional Indebtedness. Incur or create
any
Indebtedness other than the Permitted Indebtedness;

C:\ Sale of Assets. Sell, lease, assign, transfer
or
otherwise dispose of (i) Collateral, or (ii) either all or a
substantial portion of the assets of either of the Companies
or any
Significant Consolidated Subsidiary, in each case except as
otherwise specifically permitted by Section 12.13 of this
Financing
Agreement or consented to in writing by the Lender;

(e) Merger; Consolidation, Etc. Except for the
transactions required to be consummated by Section 2.1(N) on
the
Effective Date merge, consolidate or otherwise alter or
modify its
corporate name, principal place of business, structure,
status or
existence, or enter into or engage in any operation or
activity
materially different from that presently being conducted by
such
Person, except as consented to in writing by the Lender,
such
consent not to be unreasonably withheld;

(f) Guaranties. Assume, guarantee, endorse, or
otherwise
become liable upon the obligations of any Person, firm,
entity or
corporation, except (i) by the endorsement of negotiable
instruments for deposit or collection or similar
transactions in
the ordinary course of business, (ii) for the Asset Proceeds
Notes
Guaranty, (iii) the guaranty of LSI for the obligations of
Trap
Rock and/or NYTR in connection with the lease or charter of
barges,
including any such guaranty for the purchase option
contained in
such lease or charter; (iv) for guaranties of indebtedness
existing
on the date hereof, as set forth on Schedule 7.14(F) hereto,
including any renewal or other modification thereof,
provided,
however, that such renewal or modification (A) is pursuant
to terms
that are not less favorable to LSI and its Consolidated
Subsidiaries than the terms of the guaranty being renewed or
modified, and (B) after giving effect to the renewal or
modification of such guaranty, the amount of the outstanding
Indebtedness guaranteed by such guaranty is not greater than
the
amount of the outstanding Indebtedness guaranteed by such
guaranty
immediately prior to such renewal or modification, or (v)
for
guaranties in an amount, together with all Indebtedness
permitted
pursuant to clause (xv) of the definition of Permitted
Indebtedness, not to exceed $10,000,000 in the aggregate
outstanding at any one time;

(g) Advances; Loans; Investments. Make any advance
or loan
to, or any investment in, any firm, entity, Person or
corporation
except (i) advances, loans or investments between the
Companies,
(ii) net advances or net loans by the Companies to or
investments
by the Companies in Construction Aggregates and/or NYTR in
an
aggregate amount not exceeding $10,000,000 in any year,
(iii)
capital contributions in Rosebud in an aggregate amount not
exceeding $5,000,000 on the Effective Date and, in addition,
if an
Event of Default has not occurred and is not continuing and
the
Payment Notes have not been issued by LSI, up to $5,000,000
in the
aggregate at any one time outstanding thereafter, (iv)
advances of
business and travel expenses to its officers and employees,
(v)
loans, reimbursements and/or guaranties, in connection with
the
relocation of its officers and employees, in an aggregate
amount
not to exceed $500,000 outstanding at any time, (vi) direct
obligations of the United States of America, or any agency
thereof,
or obligations guaranteed by the United States of America,
provided, that, such obligations mature within one year
after the
date of acquisition thereof; (vii) certificates of deposit
maturing
within one year after the date of acquisition, bankers'
acceptances, Eurodollar bank deposits, or overnight bank
deposits,
in each case issued by, created by, or with a bank or trust
company
organized under the laws of the United States or any state
thereof
having capital and surplus aggregating at least
$500,000,000;
(viii) reverse repurchase obligations with a term of not
more than
one year for underlying securities of the types described in
clauses (vi) and (vii) (whether or not such underlying
securities
have maturities less or greater than one year from the date
of such
repurchase transaction), entered into with any financial
institution meeting the qualifications specified in clause
(vii)
above, (ix) commercial paper given at least the second
highest
rating by a national credit rating agency and maturing not
more
than 270 days after the date of creation thereof; (x) money
market
funds investing substantially all of their assets in
instruments of
the types specified in clauses (vi) through (ix) above; (xi)
investments in debt or equity securities acquired from
bankrupt
account debtors; (xii) subject to Section 7.13 hereof,
investments
made substantially contemporaneously with the receipt of Net
Proceeds of a Permitted Asset Sale, provided that any
advance, loan
or investment made with such Net Proceeds is not made to or
in
Rosebud or its Subsidiaries; (xiii) subject to Section 7.13
hereof,
investments in Subsidiaries not existing on the date of this
Financing Agreement; or (xiv) subject to Section 7.13
hereof, such
other loans, advances or investment as LSI deems prudent
provided
such does not exceed, in the aggregate in any year,
$5,000,000;

(h) Restricted Payments. Directly or indirectly,
declare,
order, pay, make or set apart any sum for any Restricted
Payment;
provided, however, that (i) any Subsidiary of LSI may pay
dividends
and make other distributions to the Companies and (ii) Lone
Star
Cement, Inc. may repurchase or redeem its Class C Common
Stock for
aggregate consideration not exceeding $100,000.

(i) No Defeasance; Prepayment. Take, or permit any
Consolidated Subsidiary to take, any action that would
constitute a
defeasance under the Senior Note Indenture or the Payment
Note
Indenture. Neither LSI nor any of its Consolidated
Subsidiaries
shall prepay the Senior Notes, the Asset Proceeds Notes
Guaranty,
the Payment Notes or any other Indebtedness for borrowed
money,
including, without limitation, any redemptions or purchases
of and
any sinking fund payments with respect to such Indebtedness,
except
for (i) payments of the Obligations in accordance with the
provisions of this Financing Agreement; (ii) payments of the
Senior
Notes made by LSI (A) pursuant to Section 3.08 of the Senior
Note
Indenture with Excess Net Proceeds (as defined in the Senior
Note
Indenture), (B) sinking fund payments commencing July 31,
2000 made
pursuant to Section 3.09 of the Senior Note Indenture, and
(C)
purchases of Senior Notes pursuant to Section 4.14 of the
Senior
Note Indenture upon the occurrence of a Change of Control
(as
defined in the Senior Note Indenture); and (iii) payment of
the
Payment Notes pursuant to the terms thereof.

(j) Additional Trade Names. Sell Inventory or
create
Accounts, or permit instruments in payment of its Accounts
to be
made payable to, any trade name other than those listed on
Schedule
6.9 hereto;

7.15 Limitations on Leases and Capital
Expenditures.
Without the prior written consent of the Lender, LSI will
not and
LSI will cause its Consolidated Subsidiaries not to (i)
enter into
any Operating Lease if after giving effect thereto the
aggregate
obligations with respect to Operating Leases of LSI and its
Consolidated Subsidiaries during any fiscal year would
exceed
$10,000,000 or (ii) contract for, purchase, make
expenditures for,
lease pursuant to a Capital Lease or otherwise incur
obligations
with respect to Capital Expenditures (whether subject to a
security
interest or otherwise) in the aggregate amount in excess of
(A)
$25,000,000 for the short fiscal year of LSI ending December
31,
1994, (B) $33,000,000 for the 1995 fiscal year of LSI, and
(C)
$25,000,000 for the 1996 fiscal year of LSI and thereafter,
provided that (x) Capital Leases shall not include up to
$3,800,000
per year paid by Trap Rock and/or NYTR in connection with
the Lease
or charter of barges, (y) the amounts set forth in clause
(ii)
above shall not include the first $20,000,000 principal
amount of
Indebtedness incurred in connection with the West Nyack
Transaction, and (z) for any fiscal year set forth above an
amount
equal to the carryover amount for such fiscal year may be
carried
over to the next succeeding fiscal year (but no further
succeeding
fiscal year). As used herein, "carryover amount" means for
any
fiscal year the lesser of (a) the excess of the amount of
Capital
Expenditures permitted for such fiscal year as set forth
above over
the amount of Capital Expenditures actually made during such
fiscal
year and (b) $5,000,000.

7.16 Interest Coverage Ratio. LSI shall maintain
at the
end of each fiscal quarter of LSI set forth below (a) prior
to
January 1, 1995, for the period from the first day covered
by the
"opening" Consolidated Balance Sheet described in Section
7.11(a)
hereof to the end of such fiscal quarter and (b) after
January 1,
1995, for the four quarters of LSI ending at the end of such
fiscal
quarter, an Interest Coverage Ratio of at least:

Fiscal Quarter Ending Ratio

June 1994 1.88 to 1.0
September 1994 2.0 to 1.0
and thereafter

7.17 Leverage Ratio. LSI shall maintain commencing
on June
30, 1994 and at all times thereafter a Leverage Ratio of not
more
than 4.35 to 1.0.

7.18 Notice of Environmental Matters. LSI agrees
to advise
the Lender in writing of: (a) any expenditures (actual or
anticipated) in excess of $1,000,000 for Environmental
Claims or
Environmental Damages other than Capital Expenditures, (b)
expenditures, other than Capital Expenditures, in excess of
$1,000,000 necessary for compliance with Environmental Laws,
and
(c) any notices LSI or its Subsidiaries receives from any
Governmental Authority advising LSI or its Subsidiaries of
any
Environmental Claim or Environmental Damages or any
Environmental
Condition which could be expected to result in Environmental
Damages in excess of $1,000,000, and to provide the Lender
with
copies of all such notices if so requested by the Lender.

7.19 Amendment or Waiver of Related Documents and
Confirmation Order. LSI shall not agree to any amendment or
other
change to (or make any payment consistent with any amendment
or
other change to), or waive any of its rights under, any
Related
Document (excluding any amendment or modification to the
Settlement
Agreement with the Official Committee of Retired Employees
increasing the payments by LSI with respect to post-
retirement
welfare obligations resulting from the additional coverage
of non-
union hourly employees retiring prior to December 31, 1992
and non-
union salaried and non-union hourly employees retiring after
December 31, 1992 and prior to the Effective Date) or
refinance any
of the Indebtedness evidenced by the Senior Notes and the
Senior
Note Indenture without obtaining the prior written consent
of the
Lender to such amendment, modification, payment, waiver,
change or
refinancing, provided that (except in the case of any
refinancing
of the Indebtedness evidenced by the Senior Notes and the
Senior
Indenture) such consent shall not be required if such
amendment,
modification, waiver, change or refinancing does not
increase any
Indebtedness or obligations of LSI or any of its
Subsidiaries
thereunder, is not adverse to the interests of the Lender
and does
not provide for terms more restrictive to LSI or any of its
Subsidiaries than those terms in effect prior to such
amendment,
modification, waiver, change or refinancing. LSI shall not
agree
to any amendment, modification or other change to or waiver
of any
of its rights under the Confirmation Order without the prior
written consent of the Lender, provided that such consent
shall not
be required if such amendment, modification or other change
is not
adverse to the interests of the Lender. LSI agrees to
provide the
Lender with a copy of any amendment, modification, waiver or
change
to any Related Document or the Confirmation Order, not less
than
five (5) Business Days prior to the effective date of such
amendment, modification, waiver or change.

7.20 Account Agreements. LSI agrees and covenants
that all
proceeds of the Accounts and the Inventory and all proceeds
of
other Collateral, shall be deposited in Lockbox Accounts,
Collection Accounts, Depository Accounts or the CIT
Concentration
Account. LSI shall cause all good funds in the Lockbox
Accounts,
Collection Accounts and Depository Accounts to be promptly
transferred to the CIT Concentration Account.

7.21 Locations of Collateral. The Companies will
not
change their principal places of business or corporate
names, or
maintain any Inventory, Documents of Title, books and
records or
records of Accounts at any location other than those listed
on
Schedule 6.12 hereto or otherwise change or add to any of
such
locations, without in each case the prior written consent of
the
Lender.

7.22 No Affiliate Transactions. Except as set
forth on
Schedule 6.13 and except for the transactions contemplated
by the
Rosebud Management Agreement, neither LSI nor any of its
Subsidiaries will enter into any transaction with any
Affiliate of
LSI, other than another Subsidiary or LSI, as the case may
be, to
the extent such transaction is not prohibited by any other
provision of this Financing Agreement, except in the
ordinary
course of business and pursuant to the reasonable
requirements of
LSI's or such Subsidiary's business upon fair and reasonable
terms
no less favorable to LSI or such Subsidiary than could be
obtained
in a comparable arms-length transaction with an unaffiliated
Person.

7.23 Notice of Additional Trademarks. LSI agrees
to (a)
give the Lender written notice within ten (10) Business Days
of any
(i) acquisition of or registration or application for
registration
for any trademark by any Company (the "Additional
Trademarks") and
(ii) grant of or receipt by any Company of any license or
interest
in any trademark and (b) execute and deliver, or cause Trap
Rock to
execute and deliver, to the Lender all documents requested
by the
Lender at any time to grant, evidence, perfect, maintain,
record
and enforce the Lender's lien on and security interest in
the
Additional Trademarks.

7.24 Notice of Rosebud Advances or Loans. If LSI
makes any
advances or loans to Rosebud permitted by Section
7.14(g)(iii)
hereof, LSI agrees to (a) give the Lender written notice
within ten
(10) Business Days of such loan or advance, (b) require that
Rosebud execute and deliver to LSI its promissory note to
evidence
its obligation to repay such loan or advance, and (c) pledge
to the
Lender, pursuant to a pledge agreement, in form and
substance
satisfactory to the Lender, as security for the Obligations,
any
promissory note executed by Rosebud in favor of LSI and
deliver
such note to the Lender, together with all other documents
requested by the Lender at any time to grant, evidence,
perfect,
maintain, record and enforce the Lender's lien on and
security
interest in such promissory note.

7.25 Production Payments. Not later than five (5)
Business
Days prior to each Application Date (as defined in the
Production
Payment Agreements), LSI shall (i) request a Revolving Loan
under
this Financing Agreement or otherwise make funds available
to the
Lender in an amount sufficient to make the semi-annual
purchase
price payment for the minerals located in the quarries
adjacent to
LSI's cement plants in Greencastle, Indiana and Pryor,
Oklahoma as
required by the Production Payment Agreements and (ii)
direct the
Lender to send the proceeds of such Revolving Loan or such
other
funds directly to the PP Owner (as defined in the Production
Payment Agreements). LSI shall provide the Lender with a
calculation of the amount of such semi-annual purchase price
and
all other information requested by the Lender in connection
with
such semi-annual purchase price payment.

SECTION 8. Interest, Fees and Expenses

8.1 Interest On Revolving Loans.

(a) Interest Rate

(i) Each Chemical Bank Rate Loan shall bear
interest
at the rate per annum until paid at the Chemical Bank Rate
plus one
and one quarter percent (1-1/4%).

(ii) Each Eurodollar Loan shall bear interest
at a rate
per annum equal to the Eurodollar Rate for the Interest
Period in
effect for such Eurodollar Loan plus three percent (3%),
together
with any additional interest owing pursuant to Section 8(f)
hereof.

(b) Interest Payment Dates. The Companies shall
pay
interest on the unpaid principal amount of each Revolving
Loan from
the date of such Revolving Loan until such principal amount
shall
be paid in full, which interest shall be payable jointly and
severally (i) if such Revolving Loan is a Chemical Bank Rate
Loan,
monthly in arrears on the first Business Day of each month,
commencing May 1, 1994, and (ii) if such Revolving Loan is a
Eurodollar Loan, (A) on the last day of the Interest Period
of such
Eurodollar Loan and (B) for any Interest Period longer than
three
months, on the day that occurs during such Interest Period
every
three (3) months from the first day of such Interest Period.
After
maturity of any principal amount of any Revolving Loan (by
acceleration, at scheduled maturity or otherwise), interest
on such
amount shall be due and jointly and severally payable on
demand.

(i) If prior to the first day of any Interest
Period:

(A) the Lender shall have determined in
good
faith (which determination shall be conclusive and binding
upon the
Company absent manifest error) that adequate and reasonable
means
do not exist for ascertaining the Eurodollar Rate for such
Interest
Period, or

(B) dollar deposits in the principal
amounts of
the Eurodollar Loans to which such Interest Period is to be
applicable are not generally available in the London
interbank
market,

the Lender shall give notice to LSI by fax or telephone as
soon as
practicable thereafter. If such notice is given (1) any
Eurodollar
Loans requested to be made on the first day of such Interest
Period
shall be made as Chemical Bank Rate Loans and (2) any loans
that
were to have been converted to or continued as Eurodollar
Loans on
the first day of such Interest Period shall be converted to
or
continued as Chemical Bank Rate Loans. Until such notice
has been
withdrawn by the Lender (which shall occur on the first date
that
the Lender becomes aware that the conditions set forth in
the
preceding clauses (A) or (B) no longer exist), no Revolving
Loans
shall be made as or converted to or continued as Eurodollar
Loans.

(ii) In the event that the Lender shall have
determined
hereafter at any time that the introduction of, or any
change in,
any applicable law, rule, regulation, order or decree or in
the
interpretation or the administration thereof by any
Governmental
Authority charged with the interpretation or administration
thereof, or compliance by the Lender with any request or
directive
(whether or not having the force of law) of any such
Governmental
Authority, shall make it unlawful or improper for the Lender
or any
Affiliate of the Lender to make, maintain or fund any
Eurodollar
Loan as contemplated by this Financing Agreement, then the
Lender
shall forthwith give notice thereof to LSI describing such
illegality or impropriety in reasonable detail. Effective
immediately upon the giving of the notice, the obligation of
the
Lender to make Eurodollar Loans shall be suspended for the
duration
of such illegality or impropriety and, if and when such
illegality
or impropriety ceases to exist, such suspension shall cease,
and
the Lender shall notify LSI. If any such change shall make
it
unlawful or improper for the Lender to maintain any
outstanding
Eurodollar Loan as a Eurodollar Loan, the Lender shall, upon
the
happening of such event, notify LSI, and LSI shall
immediately, or
if permitted by applicable law, rule, regulation, order,
decree,
interpretation, request or directive, no later than the date
permitted thereby, convert each such Eurodollar Loan into a
Chemical Bank Rate Loan.

(d) Increased Costs; Capital Adequacy
Circumstances.

(i) Notwithstanding any other provision
herein, if any
change in applicable law or regulation or in the
interpretation or
administration thereof by any Governmental Authority charged
with
the interpretation or administration thereof (whether or not
having
the force of law) shall heretofore impose any tax on or
change the
basis of taxation of payments to the Lender or any Affiliate
of the
Lender of the principal of or interest on any Eurodollar
Loan made
by the Lender (other than taxes imposed on the overall net
income
of the Lender or such Affiliate of the Lender by the
jurisdiction
in which the Lender has its principal office or by any
political
subdivision or taxing authority therein), or shall impose,
modify
or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the
account of
or credit extended by the Lender or any Affiliate of the
Lender
(except any such reserve requirement that is reflected in
the
additional interest payable pursuant to Section 8(f)) or
shall
impose on the Lender or any Affiliate of the Lender any
other
condition affecting this Financing Agreement or any
Eurodollar
Loans made by the Lender, and the result of any of the
foregoing
shall be to increase the cost to the Lender or any Affiliate
of the
Lender of making or maintaining any Eurodollar Loan or to
reduce
the amount of any sum received or receivable by the Lender
hereunder (whether of principal, interest or otherwise) in
respect
thereof by an amount deemed by the Lender to be material,
then the
Companies shall jointly and severally pay to the Lender such
additional amount or amounts as will compensate the Lender
for such
additional costs incurred or reduction suffered. Any amount
or
amounts payable by the Companies to the Lender in accordance
with
the provisions of this Section 8.1(d) shall be paid jointly
and
severally by the Companies to the Lender within ten (10)
days after
receipt by LSI from the Lender of a statement setting forth
in
reasonable detail the amount or amounts due and the basis
for the
determination from time to time of such amount or amounts,
which
statement shall be conclusive and binding absent manifest
error.

(ii) If the Lender shall have determined that
the
adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in
the
interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with
the
interpretation or administration thereof, or compliance by
the
Lender, any lending office of the Lender, or any Affiliate
of the
Lender, with any request or directive regarding capital
adequacy
(whether or not having the force of law) of any such
authority,
central bank or comparable agency, in each case after the
date
hereof, has the effect of reducing the rate of return on the
Lender's capital or on the capital of the Lender's
Affiliate, as a
consequence of the Lender's obligations under this Financing
Agreement to a level below that which the Lender or the
Lender's
Affiliate, could have achieved but for such adoption, change
or
compliance (taking into consideration the Lender's policies
or the
Lender's Affiliate's policies, with respect to capital
adequacy) by
an amount deemed by the Lender to be material, then, from
time to
time, the Companies shall jointly and severally reimburse
the
Lender for such reduction. Any amount or amounts payable by
the
Companies to the Lender in accordance with the provisions of
this
8.1(d)(ii) shall be paid jointly and severally by the
Companies to
the Lender within ten (10) days after receipt by LSI from
the
Lender of a statement setting forth in reasonable detail the
amount
or amounts due and the basis for the determination from time
to
time of such amount or amounts, which statement shall be
conclusive
and binding absent manifest error.

(iii)The Lender may demand compensation for any
increased costs or reduction in amounts received or
receivable or
reduction in return on capital with respect to any period;
provided
that the Lender shall provide to LSI a certificate setting
forth
the basis on which such demand is made. The protection of
this
Section 8.1(d) shall be available to the Lender regardless
of any
possible contention of the invalidity or inapplicability of
the
law, rule, regulation, guideline or other change or
condition which
shall have occurred or been imposed.

(e) Indemnity. The Companies agree to jointly and
severally indemnify the Lender against any loss or expense
that the
Lender actually sustains or incurs as a consequence of (i)
any
failure by any Company to fulfill on the date of any
borrowing
hereunder the applicable conditions set forth in Section 2,
(ii)
any failure by a Company to borrow any Eurodollar Loan
hereunder or
to convert any Chemical Bank Rate Loan into a Eurodollar
Loan,
after notice of such borrowing or conversion has been given
pursuant to Section 3.1 or Section 8.1(g), as the case may
be,
(iii) any payment, prepayment (mandatory or optional) or
conversion
of a Eurodollar Loan required by any provision of this
Financing
Agreement or otherwise made on a date other than the last
day of
the Interest Period applicable thereto, (iv) any default in
payment
or prepayment of the principal amount of any Eurodollar Loan
or any
part thereof or interest accrued thereon, as and when due
and
payable (at the due date thereof, by notice of prepayment or
otherwise), or (v) the occurrence of any Event of Default,
including, in each such case, any actual loss or reasonable
expense
sustained or incurred in liquidating or employing deposits
from
third parties acquired to effect or maintain such Revolving
Loan or
any part thereof as a Eurodollar Loan. Such loss or
reasonable
expense shall include but not be limited to an amount equal
to the
excess, if any, as reasonably determined by the Lender, of
(x) its
cost of obtaining the funds for the Revolving Loan being
paid,
prepaid or converted or not borrowed or converted (based on
the
Eurodollar Rate applicable thereto) for the period from the
date of
such payment, prepayment, conversion or failure to borrow or
convert on the last day of the Interest Period for such
Revolving
Loan (or, in the case of a failure to borrow or convert, the
last
day of the Interest Period for such Revolving Loan that
would have
commenced on the date of such failure to borrow or convert)
over
(y) the amount of interest (as reasonably determined by the
Lender)
that would be realized by the Lender in re-employing the
funds so
paid, prepaid or converted or not borrowed or converted for
such
Interest Period. A certificate of the Lender setting forth
in
reasonable detail any amount or amounts that the Lender is
entitled
to receive pursuant to this Section 8.1(e) and the basis for
the
determination of such amount or amounts shall be delivered
to LSI
and shall be conclusive and binding absent manifest error.

(f) Regulation D Compensation. For so long as the
Lender
or any Affiliate of the Lender maintains reserves against
"eurocurrency liabilities" (or any other category of
liabilities
that includes deposits by reference to which the interest
rate on
Eurodollar Loans is determined or any category of extensions
of
credit or other assets that includes loans by a non-United
States
office of the Lender or any Affiliate of the Lender to
United
States residents), and as a result the cost to the Lender or
any
Affiliate of the Lender (or its eurodollar lending office)
of
making or maintaining its Eurodollar Loans is increased,
then such
Lender may require the Companies to jointly and severally
pay,
contemporaneously with each payment of interest on the
Eurodollar
Loans, additional interest on the related Eurodollar Loans
of the
Lender at a rate per annum up to but not exceeding the
excess of
(i) (x) the applicable Eurodollar Rate divided by (y) one
minus the
Reserve Requirement over (ii) the applicable Eurodollar
Rate. The
Lender shall so notify LSI and provide to LSI, along with
such
notice, an officer's certificate setting forth the amount to
which
the Lender is then entitled under this Section 8.1(f). Each
such
certificate provided to LSI under this Section 8.1(f) shall
be
conclusive and binding absent manifest error.

(g) Continuation and Conversion of Loans. Subject
to
Section 3.1 and Section 8.1(c) hereof, the Companies shall
have the
right, at any time, (i) on three (3) Business Days' prior
irrevocable written or telecopy notice to the Lender, to
continue
any Eurodollar Loan or any portion thereof into a subsequent
Interest Period or to convert any Chemical Bank Rate Loan or
portion thereof into a Eurodollar Loan, or (ii) on one (1)
Business
Day's prior irrevocable written or telecopy notice to the
Lender,
to convert any Eurodollar Loan or portion thereof into a
Chemical
Bank Rate Loan, subject to the following:

(A) no Event of Default or Potential Default
shall
have occurred and be continuing at the time of such
continuation or conversion;

(B) the aggregate principal amount of any
Eurodollar
Loan continued or converted shall not be less than
$1,000,000 and in multiples of $250,000 if in excess
thereof;

(C) each conversion shall be effected by the
Lender by
applying the proceeds of the new Revolving Loan to
the
Revolving Loan (or portion thereof) being converted;
accrued
interest on the Revolving Loan (or portion thereof)
being
converted shall be paid by the Company at the time
of
conversion;

(D) if the new Revolving Loan made in respect
of a
conversion shall be a Eurodollar Loan, the first
Interest
Period with respect thereto shall commence on the
date of
conversion;

(E) no portion of any Revolving Loan shall be
continued or converted to a Eurodollar Loan with an
Interest
Period ending later than the Termination Date; and

(F) if any conversion of a Eurodollar Loan
shall be
effected on a day other than the last day of an
Interest
Period, the Company shall reimburse the Lender on
demand for
any loss incurred by it in the reemployment of the
funds
released by such conversion as provided in 8.1(e)
hereof.

In the event that LSI shall not give notice to continue any
Eurodollar Loan into a subsequent Interest Period, such
Revolving
Loan (unless repaid) shall automatically become a Chemical
Bank
Rate Loan at the expiration of the then current Interest
Period.

8.2 Calculations of Interest and Fees. All
interest and
fees under this Financing Agreement shall be calculated
based on
the actual number of days elapsed and a 365 (or 366) day
year,
except that, with respect to Eurodollar Loans interest shall
be
calculated based on the actual number of days elapsed and a
360 day
year. The Lender shall be entitled to charge the Companies'
joint
account at the rate provided for herein when due until all
Obligations have been paid in full.

8.3 Letter of Credit Fees. In consideration of the
Letter
of Credit Guaranty of the Lender, LSI shall pay the Lender,
the
Letter of Credit Guaranty Fee which shall be an amount (a)
equal to
(i) with respect to each documentary Letter of Credit, one
and one-
half percent (1-1/2%) per annum and (ii) with respect to
each
standby Letter of Credit, one and three-quarters percent (1-
3/4%)
per annum and (b) payable monthly in arrears on the first
Business
Day of each month, on the face amount of each Letter of
Credit less
the amount of any and all amounts previously drawn under the
Letter
of Credit.

8.4 Additional Letter of Credit Fees. Any charges,
fees,
commissions, costs and expenses charged to the Lender for
the
Companies' account by any Issuing Bank in connection with or
arising out of Letters of Credit issued pursuant to this
Financing
Agreement or out of transactions relating thereto will be
charged
to the Companies' joint account in full when charged to or
paid by
the Lender and when made by any such Issuing Bank shall be
conclusive on the Lender.

8.5 Out-of-Pocket Expenses; Documentation Fee. The
Companies shall, upon demand, jointly and severally
reimburse or
pay the Lender as the case may be, for: (i) all Out-of-
Pocket
Expenses of the Lender and (b) any applicable Documentation
Fee.

8.6 Line of Credit Fee. Upon the first Business
Day of
each month for the immediately preceding month, commencing
with May
2, 1994, the Companies shall jointly and severally pay the
Lender
the Line of Credit Fee.

8.7 Loan Facility Fee. To induce the Lender to
enter into
this Financing Agreement and to extend to the Companies the
Revolving Loans, the Companies shall jointly and severally
pay to
the Lender a non-refundable Loan Facility Fee in the amount
of
$350,000 on the date of execution of this Financing
Agreement.

8.8 Administration Fee. The Companies shall
jointly and
severally pay to the Lender an administration fee of $75,000
per
annum for each year that the Line of Credit is available or
Obligations are outstanding, payable in full in advance upon
execution of this Financing Agreement for the first year of
this
Financing Agreement, and payable on each Anniversary Date in
advance for each year thereafter.

8.9 Expenses of Lender. The Companies shall jointly
and
severally pay the Lender's standard charges for, and the
fees and
expenses of, the Lender's personnel used by the Lender for
reviewing the books and records of the Companies and for
verifying,
testing protecting, safeguarding, preserving or disposing of
all or
any part of the Collateral.

8.10 Authorization to Charge Accounts. The
Companies
hereby authorize the Lender to charge the Companies' joint
account
with the Lender with the amount of all payments due
hereunder as
such payments become due. The Companies and the Lender
confirm
that any charges which the Lender may so make to the
Companies'
joint account as herein provided will be made as an
accommodation
to the Companies and solely at the Lender's discretion.

SECTION 9. Powers

The Companies hereby constitute the Lender or any
Person or
agent the Lender may designate as their attorney-in-fact, at
the
Companies cost and expense, to exercise all of the following
powers, which being coupled with an interest, shall be
irrevocable
until all of the Companies' Obligations have been paid in
full:

(a) To receive, take, endorse, sign, assign and
deliver,
all in the name of the Lender or any Company, any and all
checks,
notes, drafts and other documents or instruments relating to
the
Collateral;

(b) To receive, open and dispose of all mail
addressed to
any Company and to notify postal authorities to change the
address
for delivery thereof to such address as the Lender may
designate;

(c) To request from customers indebted on Accounts
at any
time, in the name of the Lender or any Company or that of
the
Lender's designee, information concerning the amounts owing
on the
Accounts;

(d) To transmit to customers indebted on Accounts
notice of
the Lender's interest therein and to notify customers
indebted on
Accounts to make payment directly to the Lender for the
Companies'
joint account; and

(e) To take or bring, in the name of the Lender of
any
Company, all steps, actions, suits or proceedings deemed by
the
Lender necessary or desirable to enforce or effect
collection of
the Accounts.

Notwithstanding anything hereinabove contained to
the
contrary, the powers set forth in (b), (d) and (e) above may
only
be exercised after the occurrence of an Event of Default and
until
such time as such Event of Default is waived or cured to the
Lender's satisfaction.

SECTION 10. Events of Default and Remedies

10.1 Event of Default. Notwithstanding anything
hereinabove to the contrary, the Lender may terminate this
Financing Agreement immediately upon the occurrence of any
of the
following (herein "Events of Default"):

(a) the cessation of the business of LSI or the
calling of
a meeting of the creditors of LSI or any Significant
Consolidated
Subsidiary for purposes of compromising the debts and
obligations
of LSI or any Significant Consolidated Subsidiary;

(b) the failure of LSI or any Significant
Consolidated
Subsidiary to generally meet debts as they mature;

(c) the commencement by or against LSI or any
Significant
Consolidated Subsidiary of any bankruptcy, insolvency,
arrangement,
reorganization, receivership or similar proceedings under
any
federal or state law;

(d) the breach by LSI or any Consolidated
Subsidiary of any
warranty, representation or covenant contained herein (other
than
those covenants referred to in subparagraph (e) below) or in
any
other Loan Document;

(e) breach by LSI or any Subsidiary of any covenant
contained in Sections 7.1, 7.2, 7.3, 7.8, 7.10, or 7.18,
provided
that any such breach by LSI shall not be deemed to be an
Event of
Default unless and until such breach shall remain unremedied
to the
Lender's satisfaction for a period of ten (10) Business Days
from
the date of such breach;

(f) failure of the Companies to pay any of the
Obligations
on the due date thereof;

(g) the Companies shall (i) except for the
transactions
described in Section I of the proposed exemption under
consideration by the Department of Labor for Lone Star
Industries,
Inc. Master Retirement Trust, et al. (Application No. D-
9295, 59
F.R. 10,832, March 8, 1994), engage, or permit any ERISA
Affiliate
to engage, in any "prohibited transaction" as defined in
ERISA or
the Code, (ii) have, or permit any ERISA Affiliate to have,
any
"accumulated funding deficiency" as defined in Section 302
of
ERISA, (iii) have, or permit any ERISA Affiliate to have,
any
Reportable Event, (iv) fail, or permit any ERISA Affiliate
to fail,
to make by its due date a required installment under Section
412(m)
of the Code with respect to any Plan or fail to make any
required
contribution to any "multiemployer plan" as defined in
Section 4001
of ERISA, (v) file, or permit any ERISA Affiliate to file, a
notice
of intent to terminate any Plan in a distress termination
described
in Section 4041(c) of ERISA, (vi) have proceedings commenced
by the
PBGC to terminate any Plan, (vii) incur, or permit any ERISA
Affiliate to incur, a complete or partial withdrawal (within
the
meaning of Sections 4203 and 4205 of ERISA) from any
"multiemployer
plan" as defined in Section 4001 of ERISA, (viii) receive,
or any
ERISA Affiliate shall receive, notice from any multiemployer
plan
that such multiemployer plan is in reorganization or
insolvency
pursuant to Sections 4241 or 4245 of ERISA or that any
multiemployer plan intends to terminate or has terminated
under
Sections 4041A or 4042 of ERISA, (ix) breach, or permit any
ERISA
Affiliate to breach, any warranty, representation or
covenant
contained in any Employee Settlement Agreement, and with
respect to
this subparagraph (g) such event or condition (x) remains
uncured
for a period of thirty (30) days from the later of the date
of
occurrence or the date of notice, and (y) could, in the
reasonable
opinion of the Lender, subject the Companies or any
Subsidiaries to
any tax, penalty, lien, or other liability that could have a
Material Adverse Effect;

(h) the Companies or any Consolidated Subsidiary of
LSI
shall fail to pay any of its Indebtedness (excluding (i)
Indebtedness evidenced by this Financing Agreement and (ii)
Indebtedness incurred in connection with the deferred
purchase
price of property or services incurred in connection with
capital
additions and improvements) in an aggregate amount in excess
of
$1,000,000, or any interest or premium thereon, when due
(whether
by scheduled maturity, required prepayment, acceleration,
demand or
otherwise) and such failure shall continue after the
applicable
grace period, if any, specified in the agreement or
instrument
relating to such Indebtedness, or any other default under
any
agreement or instrument relating to any such Indebtedness,
or any
other event, shall occur and shall continue after the
applicable
grace period, if any, specified in such agreement or
instrument, if
the effect of such default or event is to accelerate, or to
permit
the acceleration of, the maturity of such Indebtedness; or
any such
Indebtedness in excess of such amount shall be declared to
be due
and payable, or required to be prepaid (other than by a
regularly
scheduled required prepayment), prior to the stated maturity
thereof;

(i) any material provision of this Financing
Agreement
shall at any time for any reason be declared to be null and
void,
or the validity or enforceability thereof shall be contested
by the
Companies or any Subsidiary, or a proceeding shall be
commenced by
the Companies or any Subsidiary, or by any Governmental
Authority
or other regulatory body having jurisdiction over the
Companies or
any Subsidiary, seeking to establish the invalidity or
unenforceability thereof, or the Companies or any Guarantor
shall
deny that the Companies or any Guarantor has any liability
or
obligation purported to be created under this Financing
Agreement,
the Pledge Agreement or any other Loan Document, after
delivery
thereof pursuant hereto, shall for any reason fail or cease
to
create a valid and perfected and, except to the extent
permitted by
the terms hereof or thereof, first priority lien on or
security
interest in any Collateral purported to be covered thereby;

(j) one or more judgments or orders for the payment
of
money exceeding any applicable insurance coverage by more
than
$2,000,000 in the aggregate shall be rendered against LSI or
any
Consolidated Subsidiary, and either (i) enforcement
proceedings
shall have been commenced by any creditor upon any such
judgment or
order, or (ii) there shall be any period of 60 consecutive
days
during which (x) a stay of enforcement of any such judgment
or
order, by reason of a pending appeal or otherwise, shall not
be in
effect or (y) such judgment has not been bonded;

(k) except in connection with the resolution of
claims
filed against LSI and its Subsidiaries prior to the
confirmation of
the Plan of Reorganization, LSI or any of their Subsidiaries
shall
have entered into any consent or settlement decree or
agreement or
similar arrangement with a Governmental Authority or any
judgment,
order, decree or similar action shall have been entered
against LSI
or any of their Subsidiaries, in either case based on or
arising
from the violation of or pursuant to any Environmental Law,
or the
generation, storage, transportation, treatment, disposal or
release
of any Hazardous Substance and, in connection with any of
the
foregoing, LSI or any of its Subsidiaries has an obligation
for the
payment of money exceeding, in the aggregate, $2,000,000, or
one or
more third parties have a right to exercise remedies or
commence
enforcement proceedings against LSI, its Subsidiaries or
their
property for an aggregate amount in excess of $2,000,000,
which in
each case is unstayed, due and owing and not covered by
adequate
insurance;

(l) a default, event of default or event of
termination or
acceleration (other than a Credit Rating Event of Default)
shall
occur under any of the Related Documents, provided that any
such
default, event of default or event of termination or
acceleration
shall not constitute an Event of Default unless any such
default,
event of default or event of termination or acceleration
results in
(i) LSI or any of its Consolidated Subsidiaries having an
obligation to make a cash payment in excess of $1,000,000 in
the
aggregate or (ii) the exercise of remedies or the
commencement of
enforcement proceedings against LSI or any of its
Consolidated
Subsidiaries (A) seeking the payment of money in excess of
$1,000,000 in the aggregate or (B) with respect to property
of LSI
or any of its Consolidated Subsidiaries with a fair market
value in
excess of $1,000,000 in the aggregate; or

(m) a Change of Control (as defined in the Senior
Note
Indenture) shall have occurred.

10.2 Remedies. (a) Upon the occurrence of a
Potential
Default and/or an Event of Default, at the option of the
Lender,
all loans and advances provided for in Section 3.1 of this
Financing Agreement shall be thereafter in the Lender's sole
discretion and the obligation of the Lender to make
revolving loans
and/or assist LSI in opening Letters of Credit shall cease
unless
such Potential Default or Event of Default is waived or
cured to
the Lender's satisfaction, and at the option of the Lender
upon the
occurrence of an Event of Default: (i) all Obligations shall
become
immediately due and payable upon written notice from the
Lender to
LSI provided that no notice is required if the Event of
Default is
the event listed in Section 10.1(c); (ii) the Lender may
charge the
Companies the Default Rate of Interest on all then
outstanding or
thereafter incurred Obligations in lieu of the interest
provided
for in Section 8.1(a) of this Financing Agreement, provided
the
Lender has given LSI written notice of the Event of Default,
provided, further, however, that no notice is required if
the Event
of Default is the event listed in Section 10.1(c); and (iii)
the
Lender may immediately terminate this Financing Agreement
upon
notice to LSI, provided, however, that no notice of
termination is
required if the Event of Default is the event listed in
Section
10.1(c). The exercise of any option is not exclusive of any
other
option which may be exercised at any time by the Lender.

(b) Immediately upon the occurrence of any Event of
Default, the Lender may to the extent permitted by law: (a)
remove
from any premises where same may be located any and all
documents,
instruments, files and records, and any receptacles or
cabinets
containing same, relating to the Accounts, the Inventory or
the
other Collateral, or the Lender may use, at the Companies'
expense,
such of the Companies' personnel, supplies or space at the
Companies' places of business or otherwise, as may be
necessary to
properly administer and control the Accounts or the handling
of
collections and realizations thereon, the Inventory or the
other
Collateral; (b) bring suit, in the name of the Companies or
the
Lender, and generally shall have all other rights respecting
said
Accounts, including without limitation the right to:
accelerate or
extend the time of payment, settle, compromise, release in
whole or
in part any amounts owing on any Accounts and issue credits
in the
name of the Companies or the Lender; (c) sell, assign and
deliver
the Collateral and any returned, reclaimed or repossessed
merchandise, with or without advertisement, at public or
private
sale, for cash, on credit or otherwise, at the Lender's sole
option
and discretion, and the Lender may bid or become a purchaser
at any
such sale, free from any right of redemption, which right is
hereby
expressly waived by the Companies; (d) foreclose the
security
interests created herein by any available judicial
procedure, or to
take possession of any or all of the Inventory without
judicial
process, and to enter any premises where any Inventory may
be
located for the purpose of taking possession of or removing
the
same and (e) exercise any other rights and remedies provided
in
law, in equity, by contract or otherwise. The Lender shall
have
the right, without notice or advertisement, to sell, lease,
or
otherwise dispose of all or any part of the Collateral
whether in
its then condition or after further preparation or
processing, in
the name of the Companies or the Lender, or in the name of
such
other party as the Lender may designate, either at public or
private sale or at any broker's board, in lots or in bulk,
for cash
or for credit, with or without warranties or
representations, and
upon such other terms and conditions as the Lender in its
sole
discretion may deem advisable, and the Lender shall have the
right
to purchase at any such sale. If any Inventory shall
require
rebuilding, repairing, maintenance or preparation, the
Lender shall
have the right, at its option, to do such of the aforesaid
as is
necessary, for the purpose of putting the Inventory in such
saleable form as the Lender shall deem appropriate. The
Companies
agree, at the request of the Lender to assemble the
Inventory and
to make it available to the Lender at premises of the
Companies or
elsewhere and to make available to the Lender the premises
and
facilities of the Companies for the purpose of the Lender's
taking
possession of, removing or putting the Inventory in saleable
form.
However, if notice of intended disposition of any Collateral
is
required by law, it is agreed that ten (10) days notice
shall
constitute reasonable notification and full compliance with
the
law. The net cash proceeds resulting from the Lender's
exercise of
any of the foregoing rights, (after deducting all charges,
costs
and expenses, including reasonable attorneys' fees) shall be
applied by the Lender to the payment of the Companies'
Obligations,
whether due or to become due, in such order as the Lender
may
elect, and the Companies shall remain jointly and severally
liable
to the Lender for any deficiencies, and the Lender in turn
agrees
to remit to the Companies or their successors or assigns,
any
surplus resulting therefrom. The enumeration of the
foregoing
rights is not intended to be exhaustive and the exercise of
any
right shall not preclude the exercise of any other rights,
all of
which shall be cumulative.

SECTION 11. Termination

Except as otherwise permitted herein, the Lender may
terminate this Financing Agreement and the Line of Credit
only as
of the third or any subsequent Anniversary Date and then
only by
giving the other at least sixty (60) days prior written
notice of
termination. Notwithstanding the foregoing the Lender may
terminate this Financing Agreement immediately upon the
occurrence
of an Event of Default, provided, however, that if the Event
of
Default is an event listed in Section 10.1(c) of this
Financing
Agreement, the Lender may regard the Financing Agreement as
terminated and notice to that effect is not required. This
Financing Agreement, unless terminated as herein provided,
shall
automatically continue from Anniversary Date to Anniversary
Date.
Notwithstanding the foregoing, LSI may terminate this
Financing
Agreement and the Line of Credit at any time upon fifteen
(15)
days' prior written notice to the Lender. All Obligations
shall
become due and payable as of any termination under this
Section 11
hereof and, pending a final accounting, the Lender may
withhold any
balances in the Companies' joint account (unless supplied
with an
indemnity satisfactory to the Lender) to cover all of the
Companies' Obligations, whether absolute or contingent. All
of the
Lender's rights, liens and security interests shall continue
after
any termination until all Obligations for the payment of
money have
been paid in cash and satisfied in full. After such payment
and
satisfaction, the Lender will, upon the reasonable request
of LSI,
execute all documents necessary to release, without
recourse,
representation and warranty and at the expense of LSI, its
liens
and security interest granted pursuant to the terms of this
Financing Agreement and the other Loan Documents, provided
that the
Lender shall not be entitled to withhold any such releases
solely
by reason of the existence of indemnification provisions in
this
Financing Agreement if (i) no claim has been asserted or
threatened
with respect to any such indemnification or (ii) any such
claim is
asserted or threatened and the Lender determines that such
claim is
adequately covered by insurance or bonded or the Lender has
received an indemnity, from LSI or a third-party, secured or
unsecured, in all respects reasonably satisfactory to it.

SECTION 12. Miscellaneous

12.1 Waivers. The Companies hereby waive
diligence,
demand, presentment and protest and any notices thereof as
well as
notice of nonpayment. No delay or omission of the Lender or
the
Companies to exercise any right or remedy hereunder, whether
before
or after the happening of any Event of Default, shall impair
any
such right or shall operate as a waiver thereof or as a
waiver of
any such Event of Default. No single or partial exercise by
the
Lender of any right or remedy precludes any other or further
exercise thereof, or precludes any other right or remedy.

12.2 Payments; Expenses; Taxes; Indemnification.
All
payments made by the Companies or any Guarantor hereunder or
under
any Loan Document will be made without setoff, counterclaim
or
other defense. The Companies jointly and severally agree to
pay or
cause to be paid, on demand, and to save the Lender harmless
against liability for the payment of, all Out-of-Pocket
Expenses,
regardless of whether the transactions contemplated hereby
are
consummated, from time to time arising from or relating to:
(a)
the negotiation, preparation, execution, delivery,
performance,
termination and administration of this Financing Agreement
and the
other Loan Documents, (b) any requested amendments, waivers
or
consents to this Financing Agreement and the other Loan
Documents,
whether or not such documents become effective or are given,
(c)
the preservation and protection of any of the Lender's
rights under
this Financing Agreement and the other Loan Documents, (d)
the
defense of any claim or action asserted or brought against
the
Lender by any Person that arises from or relates to this
Financing
Agreement or the other Loan Documents, the Lender's claims
against
the Companies, or any and all matters in connection
therewith,
except where any such claim or action results from the
Lender's
gross negligence or willful misconduct, as judicially
determined by
a final nonappealable order, (e) the commencement or defense
of, or
intervention in, any court proceeding arising from or
related to
this Financing Agreement or the other Loan Documents, (f)
the
filing of any petition, complaint, answer, motion or other
pleading
by the Lender, or the taking of any action in respect to
Collateral
or other security, in connection with this Financing
Agreement or
the other Loan Documents, (g) the protection, collection,
lease,
sale, taking possession of or liquidation of any Collateral
or
other security in connection with this Financing Agreement
or the
other Loan Documents, (h) any attempt to enforce any lien in
any
Collateral or other security in connection with this
Financing
Agreement, (i) any attempt to collect from the Companies or
their
Subsidiaries, or (j) the receipt of any advice with respect
to any
of the foregoing. Without limitation of the foregoing, (x)
the
Companies jointly and severally agree to pay all stamp,
document,
transfer, recording or filing taxes or fees and similar
impositions
now or hereafter determined by the Lender to be payable in
connection with this Financing Agreement or the other Loan
Documents, and the Companies agree to jointly and severally
save
the Lender harmless from and against any and all present or
future
claims, liabilities or losses with respect to or resulting
from any
omission to pay or delay in paying any such taxes, fees or
impositions, and (y) if the Companies or their Subsidiaries
fail to
perform any covenant or agreement contained in this
Financing
Agreement or the other Loan Documents, the Lender may itself
perform or cause performance of such covenant or agreement,
and the
expenses of the Lender incurred in connection therewith
shall be
reimbursed on demand by the Companies. The Companies agree
to
jointly and severally indemnify and defend the Lender and
its
directors, officers, agents, employees and affiliates
(collectively
the "Indemnified Parties") from, and hold each of them
harmless
against, any and all losses, liabilities, claims, damages,
costs or
expenses of any nature whatsoever (including reasonable
attorneys'
fees and amounts paid in settlement) incurred by, imposed
upon or
asserted against any of them arising out of or by reason of
any
investigation, litigation or other proceeding brought or
threatened
relating to, or otherwise arising out of or relating to, the
execution of this Financing Agreement and the other Loan
Documents,
the transactions contemplated hereby or thereby or any
Revolving
Loan or Letter of Credit or proposed Letter of Credit
hereunder
(including, but without limitation, any use made or proposed
to be
made by the Companies or any of their Affiliates of the
proceeds of
any thereof, or the delivery or use or transfer of or the
payment
or failure to pay under any Revolving Loan or Letter of
Credit) but
excluding any such losses, liabilities, claims, damages,
costs or
expenses to the extent finally judicially determined to have
resulted from the gross negligence or willful misconduct of
the
Indemnified Parties.

12.3 Entire Agreement. This Financing Agreement,
the other
Loan Documents and the documents executed and delivered in
connection herewith and therewith constitute the entire
agreement
between the Companies and the Lender; supersede any prior
agreements; can be changed only by a writing signed by both
the
Companies and the Lender; and shall bind and benefit the
Companies
and the Lender and their respective successors and assigns.

12.4 Assignments and Participations. This
Financing
Agreement shall be binding upon and inure to the benefit of
each of
the Companies and the Lender and their respective successors
and
assigns, except that the Companies may not assign their
rights
hereunder or any interest herein without the prior written
consent
of the Lender. The Lender may assign to one or more banks
or other
financial institutions (with the prior written consent of
LSI prior
to an Event of Default or at any time after an Event of
Default)
all or any part of, or may grant participations to one or
more
banks or other entities in or to all or any part of, the
Revolving
Loans, and, to the extent of any such assignment or
participation
(unless otherwise stated therein), the assignee of such
assignment
shall have the same rights and benefits hereunder as it
would have
if it were the Lender hereunder, provided, however, that no
such
participation shall relieve the Lender of its obligations
hereunder.

12.5 Maximum Rate. In no event shall the
Companies, upon
demand by the Lender for payment of any indebtedness
relating
hereto, by acceleration of the maturity thereof, or
otherwise, be
obligated to pay interest and fees in excess of the amount
permitted by law. Regardless of any provision herein or in
any
agreement made in connection herewith, the Lender shall
never be
entitled to receive, charge or apply, as interest on any
indebtedness relating hereto, any amount in excess of the
maximum
amount of interest permissible under applicable law. If the
Lender
ever receives, collects or applies any such excess, it shall
be
deemed a partial repayment of principal and treated as such;
and if
principal is paid in full, any remaining excess shall be
refunded
to the Companies. This paragraph shall control every other
provision hereof and of any other agreement made in
connection
herewith.

12.6 Severability. If any provision hereof or of
any other
agreement made in connection herewith is held to be illegal
or
unenforceable, such provision shall be fully severable, and
the
remaining provisions of the applicable agreement shall
remain in
full force and effect and shall not be affected by such
provision's
severance. Furthermore, in lieu of any such provision,
there shall
be added automatically as a part of the applicable agreement
a
legal and enforceable provision as similar in terms to the
severed
provision as may be possible.

12.7 Counterparts. This Financing Agreement may be
executed in any number of counterparts, each of which when
so
executed and delivered shall be an original, but all of
which shall
together constitute one and the same instrument.

12.8 Jury Trial. EACH COMPANY AND THE LENDER
HEREBY WAIVES
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING
OUT OF THIS FINANCING AGREEMENT. EACH COMPANY HEREBY
IRREVOCABLY
WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE
OF
PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED.

12.9 Guaranty. Each Company unconditionally and
irrevocably agrees that it shall be jointly and severally
liable
for, and guarantees payment and performance when due,
whether at
maturity, by acceleration or otherwise, of, any and all
obligations
of the other Company under this Financing Agreement. The
foregoing
guaranty is an absolute, unconditional and continuing
guaranty of
payment and performance, is in no way conditioned upon any
attempt
to enforce payment, performance or compliance by the Company
whose
obligations are guaranteed or upon any other event or
contingency
and shall be binding upon and enforceable against each
Company
without regard to the genuineness, regularity, validity or
enforceability of the provisions herein or in any other
instrument
or document under which such guaranteed obligations were
created.
Each Company hereby waives and agrees that it will not
exercise any
right which it may acquire by way of subrogation hereunder,
by any
payment made by it hereunder or otherwise.

12.10 Notices. Except as otherwise herein
provided, any
notice or other communication required hereunder shall be in
writing, and shall be deemed to have been validly served,
given or
delivered when hand delivered or sent by facsimile and
receipt
confirmed, or three days after deposit in the United State
mails,
with proper first class postage prepaid and addressed to the
party
to be notified as follows:

(A) if to the Lender at:

The CIT Group/Business Credit, Inc.
1211 Avenue of the Americas
New York, New York 10036
Attn: Regional Manager
Telephone No. (212) 536-1269
Facsimile No. (212) 536-1295

with a copy to:

Schulte Roth & Zabel
900 Third Avenue
New York, New York 10022
Attn: Frederic L. Ragucci, Esq.
Telephone No. (212) 758-0404
Facsimile No. (212) 593-5955

(B) if to LSI at:

Lone Star Industries Inc.
300 First Stamford Place
Stamford, CT 06912-0014
Attn: Corporate Secretary
Telephone No. (203) 969-8500
Facsimile No. (203) 969-8590

New York Trap Rock Corporation
162 Old Mill Road
West Nyack, New York 10994
Attn: President
Telephone No. (914) 358-4500
Facsimile No. (914) 358-4728

or to such other address as any party may designate for
itself by
like notice.

12.11 Governing Law. THE VALIDITY, INTERPRETATION
AND
ENFORCEMENT OF THIS FINANCING AGREEMENT SHALL BE GOVERNED BY
THE
LAWS OF THE STATE OF NEW YORK.

12.12 Confidentiality. Upon delivering to the
Lender, or
permitting the Lender to inspect, any written information
pursuant
to this Financing Agreement, the Lender shall treat such
information as confidential in accordance with its customary
practices to the extent such information is conspicuously
marked
confidential or LSI has otherwise notified the Lender that
such
information is confidential. The Lender agrees to hold such
information in confidence from the date of disclosure
thereof.
Subject to the other provisions of this Section 12.12, the
Lender
may disclose confidential information to its officers,
directors,
employees, attorneys, accountants or other professionals
engaged by
the Lender in connection with the transactions contemplated
by this
Financing Agreement and then only after such third party has
agreed
to hold such information in confidence to the same extent as
if it
were the Lender. Notwithstanding the foregoing, the
provisions of
this Section 12.12 shall not apply to information within any
one of
the following categories or any combination thereof: (i)
information the substance of which, at the time of
disclosure by
the Lender, has been disclosed to or is known to any Person
other
than (A) a director, officer, employee or agent of LSI or a
professional engaged by LSI and (B) a Person who is then
under an
obligation of nondisclosure (otherwise than as a consequence
of a
wrongful act of the Lender), (ii) information which the
Lender had
in its possession prior to receipt thereof from the
disclosing
party or (iii) information received by the Lender from a
third
party having no obligations of nondisclosure with respect
thereto.
Nothing contained in this Section 12.12 shall prevent any
disclosure: (x) believed in good faith by the Lender to be
required by any law or guideline or interpretation or
application
thereof by any Governmental Authority, arbitrator or grand
jury
charged with the interpretation or administration thereof or
compliance with any request or directive of any Governmental
Authority, arbitrator or grand jury (whether or not having
the
force of law), (y) determined by counsel for the Lender to
be
necessary or advisable in connection with its obligations to
any
Governmental Authority or the enforcement or preservation of
rights
under or in connection with this Financing Agreement any
other Loan
Document or (z) of any information which has been made
public by a
Person other than the Lender. The Lender shall have the
right to
disclose any confidential information described in this
Section
12.12 to an Issuing Bank and to a participant or assignee or
prospective participant or assignee in loans hereunder,
provided
that the Lender shall have obtained from such participant or
assignee or prospective participant or assignee an agreement
to
hold such information in confidence to the same extent as if
it
were the Lender.

12.13 Releases of Collateral.

(a) Upon the request of LSI made in connection with
any
Permitted Asset Sale, which includes contract rights,
intellectual
property and other similar intangible assets as all or part
of the
assets being sold, and provided that (i) no Event of Default
or
Potential Default has occurred and is continuing both
immediately
before and immediately after such Permitted Asset Sale and
(ii) the
Lender determines, in its sole discretion exercised
reasonably,
that such contract rights, intellectual property and other
similar
intangible assets (A) do not arise from or relate to
Accounts or
Inventory, (B) are not necessary or desirable to fully
exercise the
rights and remedies granted to the Lender in this Financing
Agreement with respect to Accounts and Inventory, and (C)
are not
necessary or desirable to realize the economic benefits of
the lien
on and security interest in Accounts and Inventory granted
to the
Lender in this Financing Agreement, the Lender shall, at the
expense of LSI, release, without recourse, representation
and
warranty, its lien on and security interest in any such
contract
rights, intellectual property or intangible assets.
Notwithstanding anything to the contrary, the Lender shall
not have
any obligation to release its lien on or security interest
in (x)
any Accounts or Inventory or (y) any contract rights,
intellectual
property or other intangible assets if, with respect to
clause (y),
the Lender determines, in its sole discretion, exercised
reasonably, that the conditions of this subsection (a) of
Section
12.13 have not been satisfied.

(b) Upon the request of LSI made in connection with
any
Permitted Asset Sale, which includes any Accounts, Inventory
and/or
all (but not less than all) of the capital stock of Trap
Rock as
part of the assets being sold, and provided that (i) no
Event of
Default or Potential Default has occurred and is continuing
both
immediately before and immediately after giving effect to
such
Permitted Asset Sale, (ii) LSI makes a mandatory prepayment
with
all or a portion of the Net Proceeds from such Permitted
Asset Sale
in an amount (the "Collateral Release Payment") equal to the
lesser
of (A) the amount of the Revolving Loans outstanding
immediately
prior to such Permitted Asset Sale and (B) the product of
(x) 110%
and (y) the portion of the Borrowing Base attributable to
the
assets being sold, (iii) LSI has delivered to the Lender a
Borrowing Base Certificate calculated both immediately
before and
immediately after giving effect to the proposed release,
(iv) both
immediately before and immediately after giving effect to
the
proposed release, the Availability of the Companies (without
giving
effect to the Line of Credit limitation contained in clause
(i) of
the definition of Availability) is greater than zero, and
(v) the
Lender has determined in its sole discretion exercised
reasonably
that the Collateral remaining in the Borrowing Base after
giving
effect to the proposed release has not deteriorated beyond
recent
historical performance, the Lender shall, at the expense of
LSI,
release, without recourse, representation and warranty, its
lien on
and security interest in any such Collateral. The Lender
shall not
have any obligation to release its lien on or security
interest in
any such Collateral if the Lender determines, in its sole
discretion exercised reasonably, that the conditions of this
subsection (b) of Section 12.13 have not been satisfied.
Notwithstanding anything to the contrary, if such Permitted
Asset
Sale includes the capital stock of Trap Rock (1) Trap Rock
shall
cease to be a borrower under this Financing Agreement, (2)
all
references in this Financing Agreement to the Companies
shall be
deemed to be references solely to LSI, (3) all references in
this
Financing Agreement to Trap Rock shall be interpreted so
that Trap
Rock will not have any rights or obligations under this
Financing
Agreement, (4) the Lender shall be released from any duty,
liability or obligation with respect to Trap Rock directly
or
indirectly arising out of or relating to this Financing
Agreement
or the other Loan Documents or any transactions hereunder or
thereunder, and (5) at the request of the Lender, LSI shall
enter
into any amendment to this Financing Agreement or the other
Loan
Documents that the Lender reasonably requests to effect or
evidence
the satisfaction of any obligations to Trap Rock or the
termination
of the effectiveness as to Trap Rock of this Financing
Agreement or
any Loan Document.

(c) Upon the request of LSI made in connection with
any
Permitted Asset Sale, which includes all (but not less than
all) of
the capital stock of any Pledged Subsidiary or any other
Collateral
not subject to subsections (a) or (b) of this Section 12.13
as part
of the assets being sold, and provided that no Event of
Default or
Potential Default has occurred and is continuing both
immediately
before and immediately after such Permitted Asset Sale, the
Lender
shall, at the expense of LSI, release, without recourse
representation and warranty, its lien on and security
interest in
any such Collateral. Notwithstanding anything to the
contrary, the
Lender shall not have any obligation to release its lien on
or
security interest in any such Collateral if the Lender
determines,
in its sole discretion exercised reasonably, that the
conditions of
this subsection (c) of Section 12.13 have not been
satisfied.

(d) LSI may exercise its rights under this Section
12.13 at
any time during the term of this Financing Agreement in
connection
with a Permitted Asset Sale by delivering to the Lender, not
less
than ten (10) Business Days prior to the date of the
proposed
Permitted Asset Sale and release, a certificate
substantially in
the form of Exhibit I hereto (the "Release Certificate") of
an
Executive Officer of LSI which shall refer to this Section
12.13,
identify the assets proposed to be sold pursuant to such
Permitted
Asset Sale and any documents that LSI is requesting the
Lender to
sign in connection with any such proposed release, and be
accompanied by a counterpart of any such documents executed
and
acknowledged by all parties thereto (if any) other than the
Lender
(and in form for execution by the Lender) certifying, as of
the
date of the Release Certificate, that, both immediately
before and
immediately after giving effect to such requested release
(including any intended use of the proceeds of such released
Collateral to reduce the Revolving Loans pursuant to Section
12.13(b) hereof) (A) with respect to each of subsections
(a), (b)
and (c) of this Section 12.13, no Event of Default or
Potential
Default has occurred and is continuing, (B) with respect to
a
release requested pursuant to subsection (a) of this Section
12.13,
the Collateral that LSI proposes to release does not arise
from or
relate to Accounts or Inventory, and (C) with respect to a
release
requested pursuant to subsection (b) of this Section 12.13
(x) the
Collateral Release Payment has been made or, as a condition
to the
requested release, will be made, (y) attached to the Release
Certificate is a Borrowing Base Certificate calculated both
immediately before and immediately after giving effect to
such
Permitted Asset Sale, and (z) the Availability of the
Companies
(without giving effect to the Line of Credit limitation
contained
in clause (i) of the definition of Availability) is greater
than
zero; provided that in the event that the Release
Certificate
states that LSI is required to make a Collateral Release
Payment,
(1) such Release Certificate shall contain a calculation of
the
amount of such Collateral Release Payment and (2) prior to
the
release requested by LSI and the delivery by the Lender of
any
documents relating thereto, the Lender shall have received
such
Collateral Release Payment.

IN WITNESS WHEREOF, the parties hereto have caused
this
Financing Agreement to be executed and delivered by their
proper
and duly authorized officers as of the date set forth above.
This
Financing Agreement shall take effect as of the date set
forth
above after being accepted below by an officer of the Lender
after
which, the Lender shall forward to each of the Companies a
fully
executed original for its files.

LONE STAR INDUSTRIES, INC.

By Ramsay A. Moran
Name: Ramsay A. Moran
Title: Vice President

NEW YORK TRAP ROCK CORPORATION

By Ramsay A. Moran
Name: Ramsay A. Moran
Title: Vice President

Executed and Accepted in
New York, New York

THE CIT GROUP/BUSINESS CREDIT, INC.

By Frank A. Grimaldi
Name: Frank A. Grimaldi
Title: Assistant Vice President

EXHIBIT
A TO

FINANCING

AGREEMENT

GUARANTY

GUARANTY, dated as of ______________, 1994,
made by
_____________________, a corporation (the "Guarantor"), in
favor of
The CIT Group/Business Credit, Inc. (the "Lender").

W I T N E S S E T H

WHEREAS, Lone Star Industries, Inc., a Delaware
corporation which directly or indirectly owns a majority of
the
issued and outstanding shares of capital stock of the
Guarantor
(the "Borrower"), New York Trap Rock Corporation ("Trap
Rock") and
the Lender are parties to a Financing Agreement, dated as of
April
13, 1994 (such Agreement, as amended or otherwise modified
from
time to time, being hereinafter referred to as the
"Financing
Agreement"); and

WHEREAS, pursuant to Section 7.13 of the
Financing
Agreement, the Guarantor is required to execute and deliver
to the
Lender a guaranty guaranteeing all obligations under the
Financing
Agreement;

NOW, THEREFORE, in consideration of the
premises and
the agreements herein and in order to induce the Lender to
make and
maintain the Revolving Loans pursuant to the Financing
Agreement
and to assist the Borrower in obtaining Letters of Credit
(as
defined in the Financing Agreement), the Guarantor hereby
agrees
with the Lender as follows:

SECTION 1. Definitions. Reference is hereby
made to
the Financing Agreement for a statement of the terms
thereof. All
terms used in this Guaranty which are defined therein and
not
otherwise defined herein shall have the same meanings herein
as set
forth therein.

SECTION 2. Guaranty. The Guarantor hereby (i)
irre-
vocably, absolutely and unconditionally guarantees the
prompt
payment by the Borrower, as and when due and payable
(whether by
scheduled maturity, required prepayment, acceleration,
demand or
otherwise), of all (A) amounts now or hereafter owing in
respect of
the Financing Agreement and the other Loan Documents,
including,
without limitation, all reimbursement obligations to the
Issuing
Bank under the Financing Agreement, whether for principal,
interest, fees, expenses or otherwise, and (B) all other
indebtedness, obligations and other liabilities, direct or
indirect, absolute or contingent, now existing or hereafter
arising, of the Borrower to the Lender (the "Obligations");
and
(ii) agrees to pay any and all expenses (including
reasonable
counsel fees and expenses) incurred by the Lender in
enforcing its
rights under this Guaranty.

SECTION 3. Guarantor's Obligations
Unconditional.

(a) The Guarantor hereby guarantees that the
Obliga-
tions will be paid strictly in accordance with the terms of
the
Loan Documents to which the Borrower is a party, regardless
of any
law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of
the
Lender with respect thereto. The liability of the Guarantor
hereunder shall be absolute and unconditional irrespective
of: (i)
any lack of validity or enforceability of any Loan Document
or any
agreement or instrument relating thereto; (ii) any change in
the
time, manner or place of payment of, or in any other term in
respect of, all or any of the obligations, or any other
amendment
or waiver of or consent to any departure from any provision
of any
Loan Document other than this Guaranty; (iii) any exchange
or
release of, or non-perfection of any lien on or security
interest
in, any collateral, or any,release or amendment or waiver of
or
consent to any departure from any other guaranty, for all or
any of
the Obligations; or (iv) any other circumstance which might
otherwise constitute a defense available to, or a discharge
of, the
Borrower or any other guarantor in respect of the
Obligations or
the Guarantor in respect hereof.

(b) This Guaranty (i) is a continuing guaranty
and
shall remain in full force and effect until such date on
which all
of the Obligations and all other expenses to be paid by the
Guarantor pursuant hereto shall have been satisfied in full
after
the Termination Date and (ii) shall continue to be effective
or
shall be reinstated, as the case may be, if at any time any
payment
of any of the Obligations is rescinded or must otherwise be
returned by the Lender upon the insolvency, bankruptcy or
reorganization of the Borrower or otherwise, all as though
such
payment had not been made.

SECTION 4. Waivers. The Guarantor hereby
waives, to
the extent permitted by applicable law, (i) promptness and
diligence; (ii) notice of acceptance and notice of the
incurrence
of any Obligation by the Borrower; (iii) notice of any
actions
taken by the Lender or the Borrower under any Loan Document
or any
other agreement or instrument relating thereto; (iv) all
other
notices, demands and protests, and all other formalities of
every
kind in connection with the enforcement of the Obligations
or of
the obligations of the Guarantor hereunder, the omission of
or
delay in which, but for the provisions of this Section 4,
might
constitute grounds for relieving the Guarantor of its
obligations
hereunder; and (v) any requirement that the Lender protect,
secure,
perfect or insure any security interest or lien or any
property
subject thereto or exhaust any right or take any action
against any
Borrower or any other Person or any Collateral.

SECTION 5. Subrogation. The Guarantor hereby
waives
and agrees it will not exercise any rights which it may
acquire by
way of subrogation hereunder, by any payment made by it
hereunder
or otherwise. If any amount shall be paid to the Guarantor
on
account of such subrogation rights at any time when all of
the
Obligations and all such other expenses shall not have been
paid in
full, such amount shall be held in trust for the benefit of
the
Lender, shall be segregated from the other funds of the
Guarantor
and shall forthwith be paid over to the Lender to be applied
in
whole or in part by the Lender against the Obligations,
whether
matured or unmatured, and all such other expenses in
accordance
with the terms of the Financing Agreement.

SECTION 6. Representations and Warranties. The
Guarantor hereby represents and warrants as follows:

(a) The Guarantor (i) is a corporation duly
organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation as set forth on the first
page
hereof; and (ii) has all requisite power and authority to
execute,
deliver and perform this Guaranty and each other Loan
Document to
which the Guarantor is a party.

(b) The execution, delivery and performance by
the
Guarantor of this Guaranty and each other Loan Document to
which
the Guarantor is a party (i) have been duly authorized by
all
necessary corporate action, (ii) do not and will not
contravene its
charter or by-laws or any other applicable law, (iii) do not
and
will not violate any contractual restriction binding on or
otherwise affecting the Guarantor in respect of any
indebtedness of
the Guarantor, and (iv) do not and will not result in or
require
the creation of any lien, security interest or other charge
or
encumbrance upon or with respect to any of its properties
(other
than pursuant to any such Loan Document) pursuant to any
contractual restriction referred to in clause (iii) of this
subsection (b).

(c) No authorization, approval or other action
by, and
no notice to or filing with, any Governmental Authority or
other
regulatory body is required in connection with the due
execution,
delivery and performance by the Guarantor of this Guaranty
or any
of the other Loan Documents to which the Guarantor is a
party.

(d) Each of this Guaranty and the other Loan
Documents
to which the Guarantor is a party is a legal, valid and
binding
obligation of the Guarantor, enforceable against the
Guarantor in
accordance with its terms, except as may be limited by
applicable
bankruptcy, insolvency, reorganization, moratorium and other
similar laws and general equity principles affecting the
enforcement of creditors' rights generally.

(e) There is no pending or, to the best
knowledge of
the Guarantor, threatened action, suit or proceeding against
the
Guarantor or to which any of the properties of the Guarantor
is
subject, before any court or other Governmental Authority or
any
arbitrator (i) which challenges the validity or
enforceability of
this Guaranty or any of the other Loan Documents to which
the
Guarantor is a party, or (ii) in which there is a reasonable
likelihood of an adverse decision which would materially
adversely
affect the business, operations or financial condition of
the
Guarantor.

(f) The Guarantor now has and will continue to
have
independent means of obtaining information concerning the
affairs,
financial condition and business of the Borrower, and has no
need
of, or right to obtain from the Lender, any credit or other
information concerning the affairs, financial condition or
business
of the Borrower that may come under the control of the
Lender.

SECTION 7. Right of Set-off. Upon the
occurrence and
during the continuance of any Event of Default, the Lender
may, and
is hereby authorized to, at any time and from time to time,
without
notice to the Guarantor (any such notice being expressly
waived by
the Guarantor) and to the fullest extent permitted by law,
set-off
and apply any and all deposits (general or special, time or
demand,
provisional or final) at any time held and other
indebtedness at
any time owing by the Lender to or for the credit of the
account of
the Guarantor against any and all obligations of the
Guarantor now
or hereafter existing under this Guaranty, irrespective of
whether
or not the Lender shall have made any demand under this
Guaranty
and although such obligations may be contingent or
unmatured. The
Lender agrees to notify the Guarantor promptly after any
such set-
off and application made by the Lender, provided that the
failure
to give such notice shall not affect the validity of such
set-off
and application. The rights of the Lender under this
Section 7 are
in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Lender may
have.

SECTION 8. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing
and shall
be mailed (by certified mail, postage prepaid and return
receipt
requested), telegraphed, telexed or delivered, if to the
Guarantor,
to it at its address at if to the Lender, to it at its
address at
1211 Avenue of the Americas, New York, New York 10036; or,
as to
any such Person, at such other address as shall be
designated by
such Person in a written notice to such other Persons
complying as
to delivery with the terms of this Section 8. All such
notices and
other communications shall be effective (i) if mailed, when
received or three days after mailing, whichever first
occurs, (ii)
if telegraphed, when delivered to the telegraph company,
(iii) if
telexed, when sent, answerback received, or (iv) if
delivered, upon
delivery.

SECTION 9. Consent to Jurisdiction; Waiver of
Immunities.

(a) The Guarantor hereby irrevocably submits
to the
jurisdiction of any New York State or Federal court sitting
in New
York City in any action or proceeding arising out of or
relating to
this Guaranty, and the Guarantor hereby irrevocably agrees
that all
claims in respect of such action or proceeding may be heard
and
determined in such New York State or Federal court. The
Guarantor
hereby irrevocably appoints Proskauer Rose Goetz &
Mendelsohn (the
"Process Agent"), with an office on the date hereof at 1585
Broadway, New York, New York 10036, as its agent to receive
on
behalf of the Guarantor and its property service of copies
of the
summons and complaint and any other process which may be
served in
any such action or proceeding. Such service may be made by
mailing
(by certified or registered mail, postage prepaid and return
receipt requested) or delivering a copy of such process to
the
Guarantor in care of the Process Agent at the Process
Agent's above
address, and the Guarantor hereby irrevocably authorizes and
directs the Process Agent to accept such service on its
behalf. As
an alternative method of service, the Guarantor also
irrevocably
consents to the service of any and all process in any such
action
or proceeding by the mailing of copies of such process to
the
Guarantor at its address specified in Section 8 hereof. The
Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law.

(b) Nothing in this Section 9 shall affect the
right
of the Lender to serve legal process in any other manner
permitted
by law or affect the right of the Lender to bring any action
or
proceeding against the Guarantor or its property in the
courts of
any other jurisdictions.

SECTION 10. Miscellaneous.

(a) The Guarantor will make each payment
hereunder in
lawful money of the United States of America and in
immediately
available funds to the Lender at such address specified by
the
Lender from time to time by notice to the Guarantor.

(b) No amendment of any provision of this
Guaranty
shall be effective unless it is in writing and signed by the
Guarantor and the Lender, and no waiver of any provision of
this
Guaranty, and no consent to any departure by the Guarantor
therefrom, shall be effective unless it is in writing and
signed by
the Lender, and then such waiver or consent shall be
effective only
in the specific instance and for the specific purpose for
which
given.

(c) No failure on the part of the Lender to
exercise,
and no delay in exercising, any right hereunder or under any
other
Loan Document shall operate as a waiver thereof, nor shall
any
single or partial exercise of any right preclude any other
or
further exercise thereof or the exercise of any other right.
The
rights and remedies of the Lender provided herein and in the
other
Loan Documents are cumulative and are in addition to, and
not
exclusive of, any rights or remedies provided by law. The
rights
of the Lender under any Loan Document against any party
thereto are
not conditional or contingent on any attempt by the Lender
to
exercise any of its rights under any other Loan Document
against
such party or against any other Person.

(d) Any provision of this Guaranty which is
prohibited
or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
prohibition or
unenforceability without invalidating the remaining portions
hereof
or thereof or affecting the validity or enforceability of
such
provision in any other jurisdiction.

(e) This Guaranty shall (i) be binding on the
Guaran-
tor and its successors and assigns, and (ii) inure, together
with
all rights and remedies of the Lender hereunder, to the
benefit of
the Lender and its successors, transferees and assigns.
Without
limiting the generality of clause (ii) of the immediately
preceding
sentence, to the extent permitted by Section 12.4 of the
Financing
Agreement, the Lender may assign or otherwise transfer its
rights
under any other Loan Document, to any other Person, and such
other
Person shall thereupon become vested with all of the
benefits in
respect thereof granted to the Lender herein or otherwise.
None of
the rights or obligations of the Guarantor hereunder may be
assigned or otherwise transferred without the prior written
consent
of the Lender.

(f) This Guaranty shall be governed by and
construed
in accordance with the law of the State of New York.

IN WITNESS WHEREOF, the Guarantor has caused
this
Guaranty to be executed by an officer thereunto duly
authorized, as
of the date first above written.

[NAME OF
GUARANTOR]

By:
Name:
Title:

EXHIBIT B
TO FINANCING
AGREEMENT

PLEDGE AND SECURITY AGREEMENT dated as of April
13,
1994, made by Lone Star Industries, Inc., a Delaware
corporation
(the "Pledgor"), in favor of The CIT Group/Business Credit,
Inc.
(the "Lender").

W I T N E S S E T H:

WHEREAS, the Pledgor, New York Trap Rock
Corporation
("Trap Rock") and the Lender are parties to a Financing
Agreement
dated as of April 13, 1994 (such Agreement, as amended or
otherwise
modified from time to time, being hereinafter referred to as
the
"Financing Agreement");

WHEREAS, pursuant to the Financing Agreement
the Lender
has agreed to make Revolving Loans to the Pledgor and Trap
Rock,
and to assist the Pledgor in obtaining Letters of Credit,
upon the
terms set forth therein;

WHEREAS, it is a condition precedent to the
obligation
of the Lender to make the initial Revolving Loan or to
assist the
Pledgor in obtaining the initial Letter of Credit, that the
Pledgor
shall (a) have executed and delivered to the Lender a Pledge
Agreement and stock powers pledging to the Lender as
additional
collateral for the Obligations (as such term is defined in
the
Financing Agreement) of the Pledgor under the Financing
Agreement
and the other Loan Documents all of the issued and
outstanding
capital stock of the Pledged Subsidiaries (as such term is
defined
in the Financing Agreement) and (b) deliver to the Lender
the
original stock certificates of the Pledged Subsidiaries.

NOW, THEREFORE, in consideration of the
premises-and
the agreements herein and in order to induce the Lender to
make the
Revolving Loans and assist the Pledgor in obtaining the
Letters of
Credit, the Pledgor hereby agrees with the Lender as
follows:

SECTION 1. Definitions. All terms used in this
Agreement which are defined in the Financing Agreement or in
Article 9 of the Uniform Commercial Code (the "Code")
currently in
effect in the State of New York and which are not otherwise
defined
herein shall have the same meanings herein as set forth
therein.

SECTION 2. Pledge and Grant of Security
Interest. The
Pledgor hereby pledges and assigns to the Lender, and grants
to the
Lender a continuing security interest in, the following (the
"Pledged Collateral"):

(a) the shares of stock described in Schedule
2(a)
hereto (the "Pledged Shares") issued by the corporations
described
in such Schedule 2(a) (the "Existing Subsidiaries"), the
certificates representing the Pledged Shares, all options
and other
rights, contractual or otherwise, in respect thereof and all
dividends, cash, instruments and other property from time to
time
received, receivable or otherwise distributed in respect of
or in
exchange for any or all of the Pledged Shares;

(b) the shares of stock, at any time and from
time to
time acquired by the Pledgor, of any and all Significant
Consolidated Subsidiaries, whether now or hereafter existing
(which, when aggregated with the shares of stock described
in
paragraphs (a) above and (c) below, shall not exceed 65% of
the
outstanding capital stock of any Pledged Subsidiary
organized
outside of the United States) (such significant consolidated
Subsidiaries, together with the Existing Subsidiaries, being
hereinafter referred to collectively as the "Pledged
Subsidiaries"
and individually as a "Pledged Subsidiary"), the
certificates
representing such shares, all options and other rights,
contractual
or otherwise, in respect thereof and all dividends, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in
exchange
for any or all of such shares;

(c) all additional shares of stock, from time
to time
acquired by the Pledgor, of any Pledged Subsidiary (which,
when
aggregated with the shares of stock described in paragraphs
(a) and
(b) above, shall not exceed 65% of the outstanding capital
stock of
any Pledged Subsidiary organized outside of the United
States), the
certificates representing such additional shares, all
options and
other rights, contractual or otherwise, in respect thereof
and all
dividends, cash, instruments and other property from time to
time
received, receivable or otherwise distributed in respect of
or in
exchange for any or all of such additional shares; and

(d) all proceeds of any and all of the
foregoing;

in each case, howsoever its interest therein may arise or
appear
(whether by ownership, security interest, claim or
otherwise).

SECTION 3. Security for Obligations. The
security
interest created hereby in the Pledged Collateral
constitutes
continuing collateral security for the due performance and
observance by the Pledgor of all of its obligations from
time to
time existing in respect of the Financing Agreement and the
other
Loan Documents.

SECTION 4. Delivery of the Pledged Collateral.

(a) All certificates currently representing
the
Pledged Shares shall be delivered to the Lender on or prior
to the
execution and delivery of this Agreement. All other
certificates
and instruments constituting Pledged Collateral from time to
time
(the "Additional Shares") shall be delivered to the Lender
within
ten (10) Business Days of the receipt thereof by or on
behalf of
the Pledgor. All such certificates and instruments shall be
held
by or on behalf of the Lender pursuant hereto and shall be
delivered in suitable form for transfer by delivery or shall
be
accompanied by duly executed instruments of transfer or
assignment
in blank, all in form and substance reasonably satisfactory
to the
Lender. Within ten (10) Business Days of the receipt by
Pledgor of
the Additional Shares, a Pledge Amendment, duly executed by
the
Pledgor, in substantially the form of Schedule 4(a) hereto
(a
"Pledge Amendment") shall be delivered to the Lender, in
respect of
the Additional Shares which are to be pledged pursuant to
this
Agreement, which Pledge Amendment shall from and after
delivery
thereof constitute part of Schedule 2(a). The Pledgor
hereby
authorizes the Lender to attach each Pledge Amendment to
this
Agreement and agrees that all shares listed on any Pledge
Amendment
delivered to the Lender shall for all purposes hereunder
constitute
Pledged Collateral and shall be deemed upon delivery thereof
to
have made the representations and warranties set forth in
Section 5
with respect to such Additional Shares.

(b) If the Pledgor shall receive, by virtue of
its
being or having been an owner of any Pledged Collateral, any
(i)
stock certificate (including, without limitation, any
certificate
representing a stock dividend or distribution in connection
with
any increase or reduction of capital, reclassification,
merger,,
consolidation, sale of assets, combination of shares, stock
split,
spinoff or split-off), promissory note or other instrument,
(ii)
option or right, whether as an addition to, substitution
for, or in
exchange for, any Pledged Collateral, or otherwise, (iii)
dividends
payable in cash (except such dividends permitted to be
retained by
the Pledgor pursuant to Section 7 hereof) or in securities
or other
property or (iv) dividends or other distributions in
connection
with a partial or total liquidation or dissolution or in
connection
with a reduction of capital, capital surplus or paid-in
surplus,
the Pledgor shall receive such stock certificate, promissory
note,
instrument, option, right, payment or distribution in trust
for the
benefit of the Lender, shall segregate it from the Pledgor's
other
property and shall deliver it forthwith to the Lender in the
exact
form received, with any necessary endorsement and/or
appropriate
stock powers duly executed in blank, to be held by the
Lender as
Pledged Collateral and as further collateral security for
the
Obligations.

SECTION 5. Representations and Warranties. The
Pledgor
represents and warrants as follows:

(a) The Pledgor (i) is a corporation duly
organized,
validly existing and in good standing under the laws of the
state
of its incorporation as set forth on the first page hereof,
and
(ii) has all requisite power and authority to execute,
deliver and
perform this Agreement.

(b) The execution, delivery and performance by
the
Pledgor of this Agreement (i) have been duly authorized by
all
necessary corporate action, (ii) do not and will not
contravene its
charter or by-laws, any law applicable to Pledgor or any
contractual restriction binding on or affecting the Pledgor
or any
of its properties, and (iii) do not and will not result in
or
require the creation of any lien, security interest or other
charge
or encumbrance upon or with respect to any of its
properties.

(c) This Agreement is a legal, valid and
binding
obligation of the Pledgor, enforceable against the Pledgor
in
accordance with its terms except as may be limited by
applicable
bankruptcy, insolvency, reorganization, moratorium and other
similar laws and general equity principles affecting the
enforcement of creditors' rights generally.

(d) The Existing Subsidiaries set forth in
Schedule
2(a) hereto are the Pledgor's only Significant Consolidated
Subsidiaries existing on the date hereof. The Pledged
Shares have
been duly authorized and validly issued, are fully paid and
nonassessable and, except as noted in Schedule 2(a) hereto,
constitute 100% of the issued shares of capital stock of the
Pledged Subsidiaries or, in the case of Pledged Subsidiaries
organized outside of the United States, 65% of the issued
shares of
capital stock of such Pledged Subsidiaries. All other
shares of
stock constituting Pledged Collateral will be duly
authorized and
validly issued, fully paid and nonassessable.

(e) The Pledgor is and will be at all times
the legal
and beneficial owner of the Pledged Collateral free and
clear of
any lien, security interest, option or other charge or
encumbrance
except for the security interest created by this Agreement.

(f) The exercise by the Lender of any of its
rights
and remedies hereunder will not contravene law or any
contractual
restriction binding on or affecting the Pledgor or any of
its
properties and will not result in or require the creation of
any
lien, security interest or other charge or encumbrance upon
or with
respect to any of its properties.

(g) No authorization or approval or other
action by,
and no notice to or filing with, any governmental authority
or
other regulatory body is required for (i) the due execution,
delivery and performance by the Pledgor of this Agreement,
(ii) the
grant by the Pledgor, or the perfection, of the security
interest
purported to be created hereby in the Pledged Collateral or
(iii)
the exercise by the Lender of any of its rights and remedies
hereunder, except as may be required in connection with any
sale of
any Pledged Collateral by laws affecting the offering and
sale of
securities generally.

(h) This Agreement creates a valid security
interest in
favor of the Lender in the Pledged Collateral, as security
for the
Obligations. The Lender's having possession of the
certificates
representing the Pledged Shares and all other certificates,
instruments and cash constituting Pledged Collateral from
time to
time results in the perfection of such security interest.
Such
security interest is, or in the case of Pledged Collateral
in which
the Pledgor obtains rights after the date hereof, will be, a
perfected, first priority security interest. All action
necessary
or desirable to perfect and protect such security interest
has been
duly taken, except for the Lender's having possession of
certificates, instruments and cash constituting Pledged
Collateral
after the date hereof.

SECTION 6. Covenants as to the Pledged
Collateral. So
long as any Obligations shall remain outstanding, the
Pledgor will,
unless the Lender shall otherwise consent in writing:

(a) keep adequate records concerning the
Pledged
Collateral and permit the Lender or any agents or
representatives
thereof to examine and make copies of and abstracts from
such
records in accordance with Section 7.2 of the Financing
Agreement;

(b) at its expense, promptly deliver to the
Lender a
copy of each material notice or other communication received
by it
in respect of the Pledged Collateral;

(c) at its expense, defend the Lender's right,
title
and security interest in and to the Pledged Collateral
against the
claims of any Person;

(d) at its expense, at any time and from time
to time,
promptly execute and deliver all further instruments and
documents
and take all further action that may be necessary or
desirable or
that the Lender may reasonably request in order to (i)
perfect and
protect the security interest purported to be created
hereby, (ii)
enable the Lender to exercise and enforce its rights and
remedies
hereunder in respect of the Pledged Collateral or (iii)
otherwise
effect the purposes of this Agreement, including, without
limitation, delivering to the Lender, from and after the
occurrence
of an Event of Default, irrevocable proxies in respect of
the
Pledged Collateral;

(e) not sell, assign (by operation of law or
other-
wise), exchange or otherwise dispose of any Pledged
Collateral or
any interest therein except as permitted by Section 7(a)(i)
hereof;

(f) not create or suffer to exist any lien,
security
interest or other charge or encumbrance upon or with respect
to any
Pledged Collateral except for the security interest created
hereby;

(g) not make or consent to any amendment or
other
modification or waiver with respect to any Pledged
Collateral or
enter into any agreement or permit to exist any restriction
with
respect to any Pledged Collateral other than pursuant
hereto;

(h) not permit the issuance of (i) any
additional
shares of any class of capital stock of any Pledged
Subsidiary,
(ii) any securities convertible voluntarily by the holder
thereof
or automatically upon the occurrence or non-occurrence of
any event
or condition into, or exchangeable for, any such shares of
capital
stock or (iii) any warrants, options, contracts or other
commitments entitling any Person to purchase or otherwise
acquire
any such shares of capital stock; and

(i) not take or fail to take any action which
would in
any manner impair the value or enforceability of the
Lender's
security interest in any Pledged Collateral.

SECTION 7. Voting Rights, Dividends, Etc. in
Respect of
the Pledged Collateral.

(a) So long as no Event of Default shall have
occurred
and be continuing:

(i) the Pledgor may exercise any and all
voting
and other consensual rights pertaining to any Pledged
Collateral
for any purpose not inconsistent with the terms of this
Agreement
or the other Loan Documents; provided, however, that (A) the
Pledgor will not exercise or refrain from exercising any
such
right, as the case may be, if the Lender gives it notice
that, in
the Lender's reasonable judgment, such action would have a
material
adverse effect on the value of any Pledged Collateral and
(B) the
Pledgor will give the Lender at least five days' notice of
the
manner in which it intends to exercise, or the reasons for
refraining from exercising, any such right;

(ii) the Pledgor may receive and retain
any and
all dividends and interest paid in respect of the Pledged
Collateral; provided, however, that any and all (A)
dividends and
interest paid or payable other than in cash in respect of,
and
instruments and other property received, receivable or
otherwise
distributed in respect of or in exchange for, any Pledged
Collateral, (B) dividends and other distributions paid or
payable
in cash in respect of any Pledged Collateral in connection
with a
partial or total liquidation or dissolution or in connection
with a
reduction of capital, capital surplus or paid-in surplus and
(C)
cash paid, payable or otherwise distributed in redemption
of, or in
exchange for, any Pledged Collateral, shall be, and shall
forthwith
be delivered to the Lender to hold as, Pledged Collateral
and
shall, if received by the Pledgor, be received in trust for
the
benefit of the Lender, shall be segregated from the other
property
or funds of the Pledgor, and shall be forthwith delivered to
the
Lender in the exact form received with any necessary
endorsement
and/or appropriate stock powers duly executed in blank, to
be held
by the Lender as Pledged Collateral and as further
collateral
security for the Obligations; and

(iii) the Lender will execute and deliver
(or
cause to be executed and delivered) to the Pledgor all such
proxies
and other instruments as the Pledgor may reasonably request
for the
purpose of enabling the Pledgor to exercise the voting and
other
rights which it is entitled to exercise pursuant to
paragraph (i)
of this Section 7(a) and to receive the dividends which it
is
authorized to receive and retain pursuant to paragraph (ii)
of this
Section 7(a).

(b) Upon the occurrence and during the
continuance of
an Event of Default:

(i) all rights of the Pledgor to exercise
the
voting and other consensual rights which it would otherwise
be
entitled to exercise pursuant to paragraph (i) of subsection
(a) of
this Section 7, and to receive the dividends and interest
payments
which it would otherwise be authorized to receive -and
retain
pursuant to paragraph (ii) of subsection (a) of this Section
7,
shall cease, and all such rights shall thereupon become
vested in
the Lender which shall thereupon have the sole right to
exercise
such voting and other consensual rights and to receive and
hold as
Pledged Collateral such dividends and interest payments;

(ii) without limiting the generality of
the
foregoing, the Lender may at its option exercise any and all
rights
of conversion, exchange, subscription or any other rights,
privileges or options pertaining to any of the Pledged
Collateral
as if it were the absolute owner thereof, including, without
limitation, the right to exchange, in its discretion, any
and all
of the Pledged Collateral upon the merger, consolidation,
reorganization, recapitalization or other adjustment of any
Pledged
Subsidiary, or upon the exercise by any Pledged Subsidiary
of any
right, privilege or option pertaining to any Pledged
Collateral,
and, in connection therewith, to deposit and deliver any and
all of
the Pledged Collateral with any committee, depository,
transfer
agent, registrar or other designated agent upon such terms
and
conditions as it may determine; and

(iii) all dividends which are received
by the
Pledgor contrary to the provisions of paragraph (i) of this
Section
7(b) shall be received in trust for the benefit of the
Lender,
shall be segregated from other funds of the Pledgor, and
shall be
forthwith paid over to the Lender as Pledged Collateral in
the
exact form received with any necessary endorsement and/or
appropriate stock powers duly executed in blank, to be held
by the
Lender as Pledged Collateral and as further collateral
security for
the Obligations.

SECTION 8. Additional Provisions Concerning
the
Pledged Collateral.

(a) The Pledgor hereby authorizes the Lender
to file,
without the signature of the Pledgor where permitted by law,
one or
more financing or continuation statements, and amendments
thereto,
relating to the Pledged Collateral.

(b) The Pledgor hereby irrevocably appoints
the Lender
the Pledgor's attorney-in-fact and proxy, with full
authority in
the place and stead of the Pledgor and in the name of the
Pledgor
or otherwise, from time to time in the Lender's reasonable
discretion, to take any action and to execute any instrument
which
the Lender may deem necessary or advisable to accomplish the
purposes of this Agreement (subject to the rights of the
Pledgor
under Section 7(a) hereof), including, without limitation,
to
receive, indorse and collect all instruments made payable to
the
Pledgor representing any dividend or other distribution in
respect
of any Pledged Collateral and to give full discharge for the
same.

(c) If the Pledgor fails to perform any
agreement or
obligation contained herein, the Lender itself may perform,
or
cause performance of, such agreement or obligation, and the
expenses of the Lender incurred in connection therewith
shall be
payable by the Pledgor pursuant to Section 10 hereof.

(d) other than the exercise of reasonable care
to
assure the safe custody of the Pledged Collateral while held
hereunder, the Lender shall have no duty or liability to
preserve
rights pertaining thereto and shall be relieved of all
responsibility for the Pledged Collateral upon surrendering
it or
tendering surrender of it to the Pledgor. The Lender shall
be
deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if
the
Pledged Collateral is accorded treatment substantially equal
to
that which the Lender accords its own property, it being
understood
that the Lender shall not have responsibility for (i)
ascertaining
or taking action with respect to calls, conversions,
exchanges,
maturities, tenders or other matters relating to any Pledged
Collateral, whether or not the Lender has or is deemed to
have
knowledge of such matters, or (ii) taking any necessary
steps to
preserve rights against any parties with respect to any
Pledged
Collateral.

(e) The Lender may at any time in its
discretion (i)
without notice to the Pledgor, transfer or register in the
name of
the Lender or any of its nominees any or all of the Pledged
Collateral, subject only to the revocable rights of the
Pledgor
under Section 7(a) hereof, and (ii) exchange certificates or
instruments constituting Pledged Collateral for certificates
or
instruments of smaller or larger denominations.

SECTION 9. Remedies Upon Default. If any Event
of
Default shall have occurred and be continuing:

(a) The Lender may exercise in respect of the
Pledged
Collateral, in addition to other rights and remedies
provided for
herein or otherwise available to it, all of the rights and
remedies
of a secured party on default under the Code then in effect
in the
State of New York; and without limiting the generality of
the
foregoing and without notice except as specified below, sell
the
Pledged Collateral or any part thereof in one or more
parcels at
public or private sale, at any exchange or broker's board or
elsewhere, at such price or prices and on such other terms
as the
Lender may deem commercially reasonable. The Pledgor agrees
that,
to the extent notice of sale shall be required by law, at
least 10
days' notice to the Pledgor of the time and place of any
public
sale or the time after which any private sale is to be made
shall
constitute reasonable notification. The Lender shall not be
obligated to make any sale of Pledged Collateral regardless
of
notice of sale having been given. The Lender may adjourn
any
public or private sale from time to time by announcement at
the
time and place fixed therefor, and such sale may, without
further
notice, be made at the time and place to which it was so
adjourned.

(b) In the event that the Lender determines to
exer-
cise its right to sell all or any part of the Pledged
Collateral
pursuant to subsection (a) of this Section 9, the Pledgor
will, at
the Pledgors expense and upon request by the Lender
cooperate with
the Lender in connection with any registration statement or
release
made by or on behalf of Lender with respect to all or any
part of
the Pledged Collateral under the provisions of the
Securities Act
of 1933, as amended (the "Securities Act"), or state
securities or
"Blue Sky" laws, and do or cause to be done all such other
acts and
things as may be necessary to make such sale of such Pledged
Collateral valid and binding and in compliance with
applicable law.
The Pledgor acknowledges the impossibility of ascertaining
the
amount of damages which would be suffered by the Lender by
reason
of the failure by the Pledgor to perform any of the
covenants
contained in this Section 9(b) and, consequently, agrees
that, if
the Pledgor fails to perform any of such covenants, it shall
pay,
as liquidated damages and not as a penalty, an amount equal
to the
value of the Pledged Collateral on the date the Lender
demands
compliance with this Section 9(b); provided, however, that
the
payment of such amount shall not release the Pledgor from
any of
its obligations under any of the other Loan Documents.

(c) Notwithstanding the provisions of
subsection (b)
of this Section 9, the Pledgor recognizes that the Lender
may deem
it impracticable to effect a public sale of all or any part
of the
Pledged Shares or any other securities constituting Pledged
Collateral and that the Lender may, therefore, determine to
make
one or more private sales of any such securities to a
restricted
group of purchasers who will be obligated to agree, among
other
things, to acquire such securities for their own account,
for
investment and not with a view to the distribution or resale
thereof. The Pledgor acknowledges that any such private
sale may
be at prices and on terms less favorable to the seller than
the
prices and other terms which might have been obtained at a
public
sale and, notwithstanding the foregoing, agrees that such
private
sales shall be deemed to have been made in a commercially
reasonable manner and that the Lender shall have no
obligation to
delay sale of any such securities for the period of time
necessary
to permit the issuer of such securities to register such
securities
for public sale under the Securities Act. The Pledgor
further
acknowledges and agrees that any offer to sell such
securities
which has been (i) publicly advertised on a bona fide basis
in a
newspaper or other publication of general circulation in the
financial community of New York, New York (to the extent
that such
an offer may be so advertised without prior registration
under the
Securities Act) or (ii) made privately in the manner
described
above to not less than fifteen bona fide offerees shall be
deemed
to involve a "Public sale" for the purposes of Section 9-
504(3) of
the Code (or any successor or similar, applicable statutory
provision) as then in effect in the State of New York,
notwithstanding that such sale may not constitute a "public
offering" under the Securities Act, and that the Lender may,
in
such event, bid for the purchase of such securities.

(d) Any cash held by the Lender as Pledged
Collateral
and all cash proceeds received by the Lender in respect of
any sale
of, collection from, or other realization upon, all or any
part of
the Pledged Collateral may, in the discretion of the Lender,
be
held by the Lender as collateral for, and/or then or at any
time
thereafter applied (after payment of any amounts payable to
the
Lender pursuant to Section 10 hereof) in whole or in part by
the
Lender against, all or any part of the Obligations in such
order as
the Lender shall elect. Any surplus of such cash or cash
proceeds
held by the Lender and remaining after payment in full of
all of
the Obligations shall be paid over to the Pledgor or to such
Person
as may be lawfully entitled to receive such surplus.

(e) In the event that the proceeds of any such
sale,
collection or realization are insufficient to pay all
amounts to
which the Lender is legally entitled, the Pledgor shall be
liable
for the deficiency, together with interest thereon at the
highest
rate specified in any Loan Document for interest on overdue
principal thereof or such other rate as shall be fixed by
applicable law, together with the costs of collection and
the
reasonable fees of any attorneys employed by the Lender to
collect
such deficiency.

SECTION 10. Indemnity and Expenses.

(a) The Pledgor agrees to indemnify the Lender
from
and against any and all claims, losses and liabilities
growing out
of or resulting from this Agreement (including, without
limitation,
enforcement of this Agreement), except claims, losses or
liabilities resulting solely and directly from the Lender's
gross
negligence or willful misconduct.

(b) The Pledgor will upon demand pay to the
Lender the
amount of any and all costs and expenses, including the fees
and
disbursements of the Lender's counsel and of any experts and
agents, which the Lender may incur in connection with (i)
the
administration of this Agreement, (ii) the custody,
preservation,
use or operation of, or the sale of, collection from, or
other
realization upon, any Pledged Collateral, (iii) the exercise
or
enforcement of any of the rights of the Lender hereunder or
(iv)
the failure by the Pledgor to perform or observe any of the
provisions hereof.

SECTION 11. Notices, Etc. All notices and
other
communications provided for hereunder shall be in writing
and shall
be mailed (by certified mail, postage prepaid and return
receipt
requested), telegraphed, telexed or delivered, if to the
Pledgor,
to its address at 300 First Stamford Place, Stamford, CT
06912-
0014; and if to the Lender, to its address at 1211 Avenue of
the
Americas, New York, New York 10036; or as to either such
Person at
such other address as shall be designated by such Person in
a
written notice to such other Person complying as to delivery
with
the terms of this Section 11. All such notices and other
communications shall be effective (i) if mailed, when
received or
three days after mailing, whichever first occurs, (ii) if
telegraphed, when delivered to the telegraph company, if
telexed,
when sent, answerback received, or (iv) if delivered, upon
delivery.

SECTION 12. Miscellaneous.

(a) No amendment of any provision of this
Agreement
shall be effective unless it is in writing and signed by the
Pledgor and the Lender, and no waiver of any provision of
this
Agreement, and no consent to any departure by the Pledgor
therefrom, shall be effective unless it is in writing and
signed by
the Lender, and then such waiver or consent shall be
effective only
in the specific instance and for the specific purpose for
which
given.

(b) No failure on the part of the Lender to
exercise,
and no delay in exercising, any right hereunder or under any
other
Loan Document shall operate as a waiver thereof; nor shall
any
single or partial exercise of any such right preclude any
other or
further exercise thereof or the exercise of any other right.
The
rights and remedies of the Lender provided herein and in the
other
Loan Documents are cumulative and are in addition to, and
not
exclusive of, any rights or remedies provided by law. The
rights
of the Lender under any Loan Document against any party
thereto are
not conditional or contingent on any attempt by the Lender
to
exercise any of its rights under any other Loan Document
against
such party or against any other Person.

(c) Any provision of this Agreement which is
prohi-
bited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
prohibition or
unenforceability without invalidating the remaining portions
hereof
or thereof or affecting the validity or enforceability of
such
provision in any other jurisdiction.

(d) This Agreement shall create a continuing
security
interest in the Pledged Collateral and shall (i) remain in
full
force and effect until the payment in full or release after
the
Termination Date of the obligations and (ii) be binding on
the
Pledgor and its successors and assigns and shall inure,
together
with all rights and remedies of the Lender hereunder, to the
benefit of the Lender and its successors, transferees and
assigns.
Without limiting the generality of clause (ii) of the
immediately
preceding sentence, the Lender may assign or otherwise
transfer its
rights under any Loan Document to any other Person, and such
other
Person shall thereupon become vested with all of the
benefits in
respect thereof granted to the Lender herein or otherwise to
the
extent permitted in accordance with Section 12.4 of the
Financing
Agreement. None of the rights or obligations of the Pledgor
hereunder may be assigned or otherwise transferred without
the
prior written consent of the Lender.

(e) Upon the satisfaction in full after the
Termina-
tion Date of the Obligations, (i) this Agreement and the
security
interest created hereby shall terminate and all rights to
the
Pledged Collateral shall revert to the Pledgor, and (ii) the
Lender
will, upon the Pledgors request and at the Pledgor's
expense, (A)
return to the Pledgor such of the Pledged Collateral as
shall not
have been sold or otherwise disposed of or applied pursuant
to the
terms hereof and (B) execute and deliver to the Pledgor such
documents as the Pledgor shall reasonably request to
evidence such
termination.

(f) This Agreement shall be governed by and
construed
in accordance with the law of the State of New York, except
as
required by mandatory provisions of law and except to the
extent
that the validity and perfection or the perfection and the
effect
of perfection or non-perfection of the security interest
created
hereby, or remedies hereunder, in respect of any particular
Pledged
Collateral are governed by the law of a jurisdiction other
than the
State of New York.

IN WITNESS WHEREOF, the Pledgor has caused this
Agree-
ment to be executed and delivered by its officer thereunto
duly
authorized, as of the date first above written.

LONE STAR INDUSTRIES,
INC.

By:
_________________________

Title:
______________________

AGREED AND ACCEPTED

THE CIT GROUP/BUSINESS CREDIT, INC.

By: ________________________
Title: ______________________

SCHEDULE 2(a)

PLEDGE AND SECURITY AGREEMENT

Pledged Shares

Certificate
Name of Issuer Number of Shares Class
No(s).

SCHEDULE 4(a)

PLEDGE AND SECURITY AGREEMENT

PLEDGE AMENDMENT

This Pledge Amendment, dated _______________,
1994 is
delivered pursuant to Section 4 of the Pledge Agreement
referred to
below. The undersigned hereby agrees that this Pledge
Amendment
may be attached to the Pledge Agreement, dated April __,
1994, as
it may heretofore have been or hereafter may be amended or
otherwise modified or supplemented from time to time and
that the
shares listed on this Pledge Amendment shall be and become
part of
the Pledged Collateral referred to in said Pledge Agreement
and
shall secure all of the obligations referred to in said
Pledge
Agreement.

LONE STAR INDUSTRIES, INC.

By:
__________________________
Name:
Title:

Issuer Number of Shares Class Certificate No(s).

EXHIBIT C
TO FINANCING
AGREEMENT

BORROWING BASE CERTIFICATE

LONE STAR INDUSTRIES, INC.
and
NEW YORK TRAP ROCK CORPORATION

Reference is made to the Financing Agreement
dated
April 13, 19941:(as amended, restated, supplemented or
otherwise
modified from time to time, the "Financing Agreement"), by
and
among Lone Star Industries, Inc. ("LSI") a Delaware
corporation,
Now York Trap Rock Corporation ("Trap Rock"), a Delaware
corporation and The CIT Group/Business Credit, Inc. (the
"Lender").
Capitalized taw used herein without definition shall have
the same
meanings herein as set forth the Financing Agreement.
Pursuant to
the Financing Agreement on the undersigned certify &a
follows:

Computation Date: ___________________________

RECEIVABLES

1. Gross Accounts Receivable
$________

2. Ineligible Receivables
(sum or "2(a)" through "2(b)(xv)
$________

(a) returns, discounts, claims,
credits and allowances of any
nature (whether issued, owing,
granted or outstanding)
$________

(b)(i) reserves for sales to the United
States of America or to any
agency, department or division
thereof
$________

(b)(ii) reserves for foreign sales other
than sales secured by stand-by
letters of credit (in form and
substance satisfactory to the
Lender) issued or confirmed by,
and payable at, banks having a
place of business in the United
States of America and payable in
United States currency
$________

(b) (iii) reserves for accounts unpaid more
than four (4) calendar months from
the original statement or billing
date or two (2) calendar months
from the original due date
$________

(b)(iv) reserves for contras $________

(b)(v) reserves for sales to any
Subsidiary or any Affiliate
$________

(b)(vi) reserves for bill and hold (
deferred shipment) or consignment
sales
$________

(b)(vii) reserves for sales to customers
which are (A) insolvent, (B)
debtors in bankruptcy, insolvency,
arrangement, reorganization,
receivership or similar proceedings
under any federal or state law (C)
negotiating, or have called a
meeting of creditors for purposes
of negotiating, a compromise of
debts or (D) financially unaccept-
able to the Lender or have a credit
rating unacceptable to the Lender
$________

(b)(viii) reserves for sales to customers if
fifty percent (50%) or more of the
aggregate dollar amount of all
outstanding invoices are unpaid
more than four (4) calendar months
from the original statement date
or two (2) calendar months from
original due date
$_________

(b)(ix) reserves for Accounts for which
payments are subject to actual
dispute or subject to offset,
defense or counterclaim asserted
or threatened by customer
$_________

(b)(x) reserves for Accounts that have
been terminated or cancelled by
customers
$_________

(b)(xi) reserves for Accounts which do not
comply with all Governmental Rules
$_________

(b)(xii) reserves for Accounts in which the
Lender does not have a perfected,
first priority, exclusive lien
$_________

(b)(xiii) reserves for Accounts for which
the customer is located in a
jurisdiction which requires creditors
to be licensed or hold a permit in
order to perform the services or sell
the items giving rise to such
Account or to receive Payments on
such Account, and the Company is not
so licensed or does not hold such
permit
$_________

(b)(xiv) reserves for Accounts which are not
fully transferable or assignable
$_________

(b)(xv) reserves for Accounts created pur-
suant transactions in which the
Company entitled to receive payment
on such account is required to
obtain a performance or other similar
bond in favor of its customer
$_________

3. Unadjusted Eligible Accounts Receivable
(difference 1" minus "2")
$________

4. Dilution Percentage (amounts representing
historical returns, discounts, claims,
credits and allowances)
(percentage"3")
________%

5. Dilution Amount
(product of "3" times "4")
________%

6. Total Eligible Accounts Receivable
After Dilution
(difference of "3" minus "5")
________%

7. Adjusted Eligible Accounts Receivable
(product of "6" times 85%)
________%

INVENTORY

8. Gross Inventory (value at lower of
cost or market value and excluding
all deferred fixed costs in Inventory)
$________

9. Ineligible Inventory
(sum of "9(a)" through "9(i)")
$_________

(a) work-in-process
$_________

(b) supplies (other than raw material)
$_________

(d) goals located at the premises of
third parties (other than ware-
houses with which the lender has
entered into a third party ware-
house letter, in form and substance,
satisfactory to the Lender
$_________

(e) Inventory in which the Lender does
not have a perfected, first
priority, exclusive lien
$_________

(f) goods returned or rejected by the
Companies' customers (other than
goods that are undamaged and re-
salable in normal course of
business)
$_________

(g) goods to be returned to the
Companies' suppliers
$_________

(h) goods in transit
$_________

(i) reserves required by the Lender
in its reasonable discretion for
special order goods, market value
declines and bill and hold
(deferred shipment) or consignment
sales
$_________

10. Unadjusted Eligible Inventory
(difference of "8" minus "9")
$________

11. Adjusted Eligible inventory
(product of "10" times 55%)
$________

12. Total Borrowing Base before Borrowing Base
Reserve
(sum of "7" plus "11")
$________

13. Borrowing Base Reserve
$________

14. Total Borrowing Base
(difference of "12" minus "13")
$________

15. Aggregate Revolving Loans Outstanding
$________

16. Aggregate undrawn and unreimbursed amounts
of all Letters of Credit Outstanding
$________

17. Availability
(difference of"14" minus (sum of"15" plus "16")
$________

This certificate is furnished to the Lender
pursuant to
Section 7.11(c)(i) of the Financing Agreement. This
Borrowing Base
Certificate has been prepared in accordance with the
provisions of
the Financing Agreement. This Borrowing Base Certificate
and the
information attached hereto and the schedules, if any,
delivered
herewith represent an accurate statement of the matters
purported
to be set forth herein or therein as of the data set forth
above.
Pursuant to Section 7. 11(c)(i) of the Financing Agreement,
the
Lender is entitled to request backup schedules showing the
derivation of this Borrowing Base Certificate.

LONE STAR INDUSTRIES,
INC.

By:
_______________________
Title:
____________________

NEW YORK TRAP ROCK
CORPORATION

By:
_______________________
Title:
____________________

BORROWING BASE CERTIFICATE

LONE STAR INDUSTRIES, INC.
and
MEN YORK TRAP ROCK CoRpoRATION

Reference is made to the Financing
Agreement dated
April 13, 1994 (as amended, restated
supplemented or
otherwise modified 3.994 (as amended from time
to time,
the "Financing Agreement"), by and among Lone
Star
Industries, Inc. ("LSI") a Delaware
corporation, New
York Trap Rock Corporation ("Trap Rock"), a
Delaware
corporation and The CIT Group/Business Credit,
Inc.
(the "Lender"). Capitalized terms used herein
without
definition shall have the same meanings herein
as set
forth in the Financing Agreement. Pursuant to
the
Financing Agreement the undersigned certify as
follows:

Computation Date: _____________________

RECEIVABLES

1. Gross Account Receivable from last
Borrowing Base Certificate dated
_______________
$________

2. Sales since date of last Borrowing
Base Certificate
$_________

3. Gross Collections since date of last
Borrowing Base Certificate
$_________

4. Credit Memos
$_________

5. Total Accounts Receivable
(difference of (sum of "1" plus "2")
minus (sums of "3" plus "4"))
$_________

6. Total Ineligible Receivables from
last month and Borrowing Base
Certificate dated ___________
$_________

7. Unadjusted Eligible Accounts Receivable
(difference of "5" minus "6")
$________

8. Dilution Percentage (amounts repre-
senting historical returns, discounts,
claims, credits and allowances)
(percentage a "7")
________%

9. Dilution Amount
(product of "7" times "8")
$________

10. Total Eligible Accounts Receivable
After Dilution
(difference of "7" minus "9")
$________

11. Adjusted Eligible Accounts Receivable
(product of "10" times 85%)
$________

INVENTORY

12. Gross Inventory (value at lower of
cost or market value and excluding all
deferred fixed costs in Inventory
$________

13. Total Ineligible Inventory $_________

14. Unadjusted Eligible Inventory
(difference of "12" minus "l3")
$________

15. Adjusted Eligible Inventory
(product of "4" times 55%)
$________

16. Total Borrowing Base before Borrowing
Base Reserve
(sum of "11" plus "15")
$________

17. Borrowing Base Reserve
$________

18. Total Borrowing Base
(difference of "16" minus "17")
$________

19. Aggregate Revolving Loans Outstanding
$________

20. Aggregate undrawn and unreimbursed amounts
of all Letters of Credit Outstanding
$________

21. Availability
(difference of "18" minus (sum of "19"
plus "20"))
$_________

This certificate is furnished to the Lender
pursuant to
Section 7.11(c)(i) of the Financing Agreement. This
Borrowing Base
Certificate has been prepared in accordance with the
provisions of
the Financing Agreement. This Borrowing Base Certificate
and the
information attached hereto and the schedules, if any,
delivered
herewith represent an accurate statement of the matters
purposed to
be set forth herein or therein as of the date set forth
above.
Pursuant to Section 7. 11(c)(i) of the Financing Agreement,
the
Lender is entitled to request backup schedules showing the
derivation of this Borrowing Base Certificate.

LONE STAR INDUSTRIES, INC.

By: _______________________
Title: _____________________

NEW YORK TRAP ROCK CORPORATION

By: ________________________
Title: _____________________

EXHIBIT D TO
FINANCING
AGREEMENT

LOCKBOX AGREEMENT, dated April __, 1994 among
(the
"Depository Bank"), The CIT Group/Business Credit. Inc.
("CIT") and
Lone Star Industries, Inc. (the "Company").

W I T N E S S E T H

WHEREAS, CIT and the Company have entered into
or are
about to enter into a Financing Agreement, dated
_______________,
1994 (the "Financing Agreement"), and the Company has agreed
to
establish a lockbox and depository account system relating
to the
Company's accounts receivable and

WHEREAS, the Company has agreed to establish a
bank
account with the Depository Bank to be established and
maintained
by the Company in the name of CIT, designated as the
"Depository
Account"; and

WHEREAS, the Depository Bank has agreed to
maintain the
Depository Account pursuant to this Lockbox Agreement among
the
Depository Bank, CIT and the Company (the "Lockbox
Agreement");

NOW, THEREFORE, the parties hereto hereby agree
as
follows:

1. Depository Account. CIT shall possess all
right,
title and interest in all of the items
from time
to time in the Depository Account and
their
proceeds. The Depository Bank shall be
CIT's
agent for the purpose of holding and
collecting
such items and their proceeds. The
Depository
Account shall be under the sole dominion
and
control of CIT. Neither the Company nor
any person
or entity claiming by, through or under
the
Company shall have any right, title or
interest in
or control over the use of, or any right
to
withdraw any amount from, the Depository
Account,
except that CIT shall have the right to
withdraw
amounts from the Depository Account. The
Depository Bank shall be entitled to rely
on, and
shall act in accordance with, all
instructions
given to it by CIT with respect to the
Depository
Account.

2. Duties of the Depository Bank. The
Depository
Bank shall:

(a) Rent one or more post office boxes in
the
name of CIT relating to the Depository
Account but
without changing the name and address used
by
customers. The Depository Bank shall have
exclusive and unrestricted access, and
shall
collect the mail delivered to, such post
office
boxes (even though addressed to the
Company or
CIT) on each business day in accordance
with the
Depository collection schedule. The
Depository
Bank Bank's regular co shall give CIT and
the
Company notice of the post office box or
boxes and
shall instruct CIT and the Company how
mail
intended for the Depository Account should
be
addressed.

(b) Open all mail (even though addressed
to the
Company or CIT) and promptly endorse all
items and
remittances received in such post office
boxes and
credit such items and remittances to the
Depository Account. All such items and
remittances shall be endorsed in
substantially the
following form:

Credited without prejudice to Account No.
_________
Absence of Endorsement Guaranteed Bank".

(c) Shall prepare one photocopy of the
front of
each check, draft, note, bill of exchange,
money
order, commercial paper or other security
instrument or document (collectively, the
"checks"; individually, a "check"), with
the date
of deposit to be shown on the photocopy.
Attachments received with payments, such
as
detachable stubs, together with any
correspondence
and the individual envelope, are to be
affixed to
the photocopy of the check.

(d) Do not deposit checks which are
postdated.
Return postdated checks to the Company in
daily
lockbox package. Checks returned unpaid
because
of uncollected or insufficient funds shall
be
redeposited only after telephone advice
form the
appropriate Lone Star credit manager;
checks
returned a second time will follow the
same
procedure. Undated checks may be dated by
the
Depository Bank to agree with the postmark
date
and included in the regular deposit.
Checks
incorrectly made out, where the amount
specified
in figures and the written amount differ,
are to
be deposited for the written amount only,
except
where the figure amount agrees with the
total of
the remittance notice. Checks bearing no
signature are not to be deposited until
after
telephone approval by appropriated Lone
Star
Credit Management with notification to the
drawer
bank requesting that the signature be
obtained.
Third-party checks may be deposited into
the
Depository Account it properly endorsed.
Checks
bearing the legend "Payment in Full" or
words or
similar import, either typed or
handwritten, shall
be withheld from the clearing system and
sent to
the Company or, at any time after written
notice
by CIT to CIT. Should such an item be
cleared,
CIT and the Company hereby agree that no
liability
shall accrue to the Depository box as a
result of
such action.

(e) Apply and credit to the Depository
Account
all wire transfers directed to such
Depository
Account even though such wire transfers
may
identify the Depository account as an
account of
the company.

(f) Maintain a microfilm record of the
front and
back of each check included in the
Depository
Account. This film shall be available for
use by
CIT and the Company.

3. Transfer of Funds. On each day on which
both the
branch office of the Depository Bank at
which the
Depository Account is being maintained and
the
office of The CIT Group/Business Credit,
Inc. are
open, the Depository Bank shall transfer
all
collected funds maintaining a $40,000
balance on
deposit in the Depository Account to
Account No.
0304 7170 (Reference: Lone Star
Industries, Inc.)
of CIT maintained at said office of
NationsBank,
VA, Richmond, Va.

4. Indemnity. The Company hereby agrees to
pay,
indemnify and hold the Depository Bank
harmless
from and against any and all liabilities,
obligations, losses, damages, penalties,
actions,
judgments, suits, costs, expenses or
disbursements
of any kind or nature whatsoever
(including
without limitation, legal fees) with
respect to
the performance of this Agreement or any
procedures agreement among the Depository
Bank,
CIT and the Company, by the Depository
Bank or any
of the Depository Bank's directors,
officers,
agents or employees, unless arising from
its or
their own gross negligence or willful
misconduct.

5. Fees and Expenses. The Company hereby
agrees:

(a) Fees and charges associated with the
Depository Account as shall from time to
time be
mutually agreed upon by the Company and
the
Depository Bank shall be included on a
monthly
consolidated account analysis statement
which the
Depository Bank shall submit to the
Company. This
statement shall set forth the fees and
charges
payable for such month and be accompanied
by such
supporting documentation as the Depository
Bank
shall deem reasonable.

(b) Depository Bank expenses in
connection with
the establishment and maintenance of the
post
office boxes rented pursuant to this
Agreement
shall also be included on the analysis
statement.

(c) The depository Bank shall be entitled
to
charge the Depository Account for such
fees and
expenses as indicated by the analysis
statement.

Limitations on Liability of the Depository
Bank.
The Depository Bank undertakes to perform
those
duties as are expressly set forth herein
and the
other processing requirements as may be
covered in
any procedure agreement. Notwithstanding
any
other provisions of this Agreement, it is
agreed
by the parties hereto that the Depositary
Bank
shall not be liable for any action taken
by it or
any of its directors, officers, agents or
employees in accordance with this
Agreement except
for its or their own gross negligence or
willful
misconduct. In no event shall the
Depository Bank
be liable for losses or delays resulting
from
force majeure, computer malfunctions,
interruption
of communication facilities, labor
difficulties or
other gauses beyond the Depositary Bank's
reasonable control or for indirect,
special or
consequential damages.

7. Irrevocable Instructions. The Company
acknowledges that the agreements made by
it and
the authorizations granted in Section 2
are powers
coupled with an interest.

8. Account Information. The Depository Bank
shall
provide monthly statements summarizing the
activity in the Depository Account to each
of CIT
and the company. In addition, the
Depository Bank
will provide to each of CIT and the
Company copies
of all information reasonably requested by
any of
them. The details representing deposited
items.
adding machine tapes, etc., together with
all
other materials rejected for various
reasons, and
so marked, and one advice of credit, shall
be sent
by the Depository Bank to the Company or,
at any
time after written notice by CIT to CIT.

9. Waiver of Right.of Set-off. The
Depository Bank
waives, with respect to all of its
existing and
future claims against the Company or any
affiliate
thereof, all existing and future rights at
set-off
and banker's liens against the Depository
Account;
and all items (and proceeds thereof) that
come
into its possession in connection with the
Depository Account; provided that the
Depository
Bank retains the right to charge the
Depository
Account (a) for all items deposited in and
credited to the Depository Account after
the date
hereof and subsequently returned to the
Depository
Bank unpaid and (b) for all compensation
and
expenses with respect to the Depository
Account.

10. Representations and Warranties. The
Depository
Bank represents and warrants that:

(a) Only employees of the Depository Bank
or its
affiliates have access to the post office
boxes
provided for herein.

(b) The Depository Account is the only
account
that has been maintained by the Depository
Bank
with respect to receivables of the
Company.

11. Effectiveness; integration" Amendments.
This
Agreement shall be effective as of the
date above
written, and the Depository Bank shall be
in a
position to process remittances on that
date. To
the extent that other agreements are
inconsistent
with this Agreement, this Agreement shall
supersede any other agreement relating to
the
matters referred to herein, including any
procedures agreement and any other
agreement
between the Company and the Depository
Bank
relating to the collection of receivables
of the
Company or its predecessors. Neither this
Agreement nor any provisions hereof may be
changed, amended, modified or waived
orally, but
only by an instrument in writing signed by
the
parties hereto; provided that such
instrument need
be signed only by the Depository Bank and
CIT if
it does not change any rights or
obligations of,
or authorizations granted by, the Company
hereunder in a manner adverse to the
Company. Any
provision of this Agreement which may
prove
unenforceable under any law or regulation
shall
not affect the validity of any other
provisions
hereof.

12. Termination. (a) This Agreement shall
automatically terminate on the. date on
which all
obligations of the Company under the
Financing
Agreement have been paid in full, all
commitments
of CIT thereunder have been terminated and
no
letters of credit issued in connection
therewith
are outstanding. The Depository Bank
shall be
entitled to rely on a certificate of CIT
to such
effect.

(b) This Agreement shall be terminated by
the
Company (with the consent of CIT, which
shall not
be unreasonably withheld) or any other
party
hereto upon 15 days advance written notice
to the
other parties hereto.

13. Notices. All notices, requests or other
communications given to the Company, CIT
or the
Depository Bank shall be given in writing
(including telex, facsimile transmission
or
similar writing) at the address or telex
or
facsimile number specified below:

CIT: The CIT Group/Business
Credit, Inc.
1211 Avenue of the
Americas
New York, NY 10036
Attention: Mr. L.
Goldbrener
Vice
President/Controller
Telecopy: (212) 536-
1292

Depository Bank:

Attention:
Telecopy:

Company: Lone Star Industries,
Inc.
300 First Stamford
Place
P.O. Box 120014
Stamford, CT. 06912-
0014
Attention: Ramsay
Moran
Telecopy: (203) 969-
8590

Any party may change its address or telex or facsimile
number for
notices hereunder by notice to each other party hereunder.
Each
notice, request or other communication shall be effective
(a) if
given by telex or facsimile transmission, when such telex or
facsimile is transmitted to the telex or facsimile number
specified
in this Section and in the case of telex notice, when the
appropriate answerback is received, (b) if given by mail, 48
hours
after such communication is deposited in the mails with
first class
postage prepaid, addressed as aforesaid or (c) if given by
any
other means, when delivered at the address specified in this
Section.

14. Bankruptcy of Company. In the event that
a
bankruptcy case or receivership proceeding
is
commenced by or against the Company, CIT
agrees to
pay the fees and charges of the Depository
Bank
payable by the Company under this
Agreement from
the date of commencement of such case or
proceeding until earlier of the date of
termination of this Agreement or the date
of
dismissal or termination of such case or
proceeding to the extent that such fees
and
charges are not being paid by the Company.

15. Governing Law. Except to the extent that
the laws
of the state in which the Depository Bank
is
located govern the Depository Account,
this
Agreement shall be governed by, and
interpreted in
accordance with, the laws of the State of
New
York.

16. Counterparts. This Agreement may be
executed in
any number of counterparts which together
shall
constitute one and the same instrument.

IN WITNESS WHEREOF, each of the parties hereto
has
caused this Agreement to be executed and delivered by its
duly
authorized officer as of the date first set forth above.

________________________
By:
Title:

THE CIT
GROUP/BUSINESS
CREDIT, INC.

________________________
By: Lawrence
Goldbrener
Vice
President/Controller

LONE STAR
INDUSTRIES,
INC.

________________________
By:
Title:

EXHIBIT E
TO FINANCING
AGREEMENT

BLOCKED ACCOUNT AGREEMENT, dated April __,
1994, among
Nationbank, N.A. (the "Concentration Account Bank"), The CIT
Group/Business Credit, Inc. ("CIT") and Lone Star
Industries, Inc.
and New York Trap Rock Corporation (each a "Company" and
collectively the "Companies").

W I T N E S S E T H

WHEREAS, the Companies have entered into or are
about
to enter into a financing agreement with CIT, dated April
13, 1994
(as amended or otherwise modified from time to time, the
"Financing
Agreement"), and each of the Companies has agreed to
establish a
concentration account system relating to its accounts
receivable
and the proceeds of its inventory and other collateral
specified in
the Financing Agreement; and

WHEREAS, the Companies have agreed to establish
a bank
account with the Concentration Account Bank in the name of
and for
the benefit of CIT, designated as the "CIT/Lonestar
Concentration
Account" (the "Concentration Account"); and

WHEREAS, the Concentration Account Bank has
agreed to
maintain the Concentration Account pursuant to this Blocked
Account
Agreement;

NOW, THEREFORE, the parties hereto hereby agree
as
follows:

1. Concentration Account. Subject to Section
3," CIT
shall possess all right title and interest in all of the
items from
time to time in the Concentration Account and their
proceeds. The
Concentration Account Bank shall be CIT's agent (and not the
Agent
of any Company) for the purpose of holding and collecting
such
items and their proceeds. The Concentration Account shall
be owned
by and under the sole dominion and control of CIT and,
subject to
Section 3, CIT shall have the right to withdraw amounts from
the
Concentration Account. The Concentration Account Bank shall
be
entitled to rely on, and shall act in accordance with, all
instructions given to it by CIT with respect to the
Concentration
Account. Subject to Section 3, none of the Companies or any
person
or entity claiming by, through or under any of the Companies
shall
have any right, title or interest in, or control over the
use of,
or any right to withdraw any amount from, the Concentration
Account.

2. Transfer of Funds. Subject to Section 3,
on each
day on which both the branch office of the Concentration
Account
Bank at which the Concentration Account is being maintained
and the
office of [ ] are open, the
Concentration Account Bank shall transfer all collected
funds on
deposit in the Concentration Account to account number [
] (Reference: Lone Star) of CIT maintained at said office of
[
]. Subject to Section 3, any such funds received by CIT
in said
account shall be applied by CIT in accordance with the
Financing
Agreement to the payment of the obligations (as defined
therein)
or, if all such obligations shall have been paid in full,
made
available to the Companies.

3. Special Provisions Prior to CIT Notice.
Not
withstanding the provisions of Sections 1 and 2, until such
time as
CIT gives written notice (the "CIT Notice") to the
Concentration
Account Bank to the contrary, the Concentration Account Bank
is
authorized to disburse funds from the Concentration Account
upon
the direction of Lone Star Industries, Inc. on its behalf or
on
behalf of New York Trap Rock Corporation.

4. Indemnity. Each Company hereby jointly
and
severally agrees to pay, indemnify and hold the
Concentration
Account Bank harmless from and against any and all
liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits,
costs, expenses or disbursements of any kind or nature
whatsoever
(including without limitation, legal fees) with respect to
the
performance of this Blocked Account Agreement or any
procedures
agreement among the Concentration Account Bank, CIT and any
of the
Companies (a "Procedures Agreement"), by the Concentration
Account
Bank or any of the Concentration Account Bank's directors,
officers, agents, or employees, unless arising from its or
their
own gross negligence or willful misconduct.

5. Fees and Expenses. Each of the Companies
hereby
jointly and severally agrees:

(a) Fees and charges associated with the
Concentration Account as shall from time to
time be
mutually agreed upon by the Companies and the
Concentration Account Bank shall be included on
a
monthly consolidated account analysis statement
which
the Concentration Account Bank shall submit to
the
Companies. This statement shall set forth the
fees and
charges payable for such month and be
accompanied by
such supporting documentation as the
Concentration
Account Bank shall deem reasonable.

(b) The Concentration Account Bank shall
be
entitled to charge the Concentration Account
for such
fees and expenses as indicated by the analysis
statement.

6. Limitations on Liability of the
Concentration
Account Bank. The Concentration Account Bank undertakes to
perform
those duties as are expressly set forth herein and the other
processing requirements as may be covered in any Procedures
Agreement. Notwithstanding any other provisions of this
Blocked
Account Agreement, it is agreed by the parties hereto that
the
Concentration Account Bank shall not be liable for any
action taken
by it or any of its directors, officers, agents or employees
in
accordance with this Blocked Account Agreement, except for
its or
their own gross negligence or willful misconduct.

7. Account Information. The Concentration
Account
Bank shall provide monthly statements summarizing the
activity in
the Concentration Account to each of CIT and the Companies.
In
addition, the Concentration Account Bank will provide to
each of
CIT and the Companies copies of all information reasonably
requested by any of them. The details representing
deposited
items, adding machine tapes, etc., together with all other
materials rejected for various reasons, and so marked, and
one
advice of credit, shall be sent by the Concentration Account
Bank
to the Companies or at any time after written notice by CIT,
to the
Companies and CIT.

8. Waiver of Right of Set-Off. The
Concentration
Account Bank waives, with respect to all of its existing and
future
claims against any of the Companies or any respective
affiliates
thereof, all existing and future rights of set-off and
banker's
liens against the Concentration Account and all items (and
proceeds
thereof) that come into its possession in connection with
the
Concentration Account; provided that the Concentration
Account Bank
retains the right to charge the Concentration Account (a)
for all
items deposited in and credited to the Concentration Account
after
the date hereof and subsequently returned to the
Concentration
Account Bank unpaid and (b) for all compensation and
expenses with
respect to the Concentration Account.

9. Representations and Warranties. The
Concentration
Account Bank represents and warrants that the Concentration
Account
is the only account that has been maintained by the
Concentration
Account Bank with respect to receivables of any of the
Companies.

10. Effectiveness; Integration; Amendments.
This
Blocked Account Agreement shall be effective as of the date
above
written, and the Concentration Account Bank shall be in a
position
to process remittances on that date. To the extent that
other
agreements are inconsistent with this Blocked Account
Agreement,
this Blocked Account Agreement shall supersede any other
agreement
relating to the matters referred to herein, including any
Procedures Agreement and any other agreement between any of
the
Companies and the Concentration Account Bank relating to the
collection of funds of any of the Companies for any of their
respective predecessors. Neither this Blocked Account
Agreement
nor any provisions hereof may be changed, amended, modified
or
waived orally, but only by an instrument in writing signed
by the
parties hereto; provided that such instrument need be signed
only
by the Concentration Account Bank and CIT if it does not
change any
rights or obligations of, or authorizations granted by, the
Companies hereunder in a manner adverse to the Companies.
Any
provision of this Blocked Account Agreement which may prove
unenforceable under any law or regulation shall not affect
the
validity of any other provisions hereof.

11. Termination. This Blocked Account
Agreement shall
continue in full force and effect until termination by the
Concentration Account Bank on 60 days' prior written notice
to all
other parties. CIT may terminate this Blocked Account
Agreement at
any time, which termination shall be effective on receipt of
written notice by the Concentration Account Bank. The
Company
shall have no right to unilaterally terminate this Blocked
Account
Agreement.

12. Notices. All notices, requests or other
communications given to the Companies, CIT or the
Concentration
Account Bank shall be given in writing (including facsimile
transmission or similar writing) at the address or telex or
facsimile number specified below:

CIT: The CIT Group/Business
Credit, Inc.
1211 Avenue of the
Americas
New York, New York
10036
Attention: Regional
Manager
Telecopy: (212)
Telephone: (212)

Concentration Account Bank:

Attention:
Telecopy: (212)
Telephone: (212)

Companies: Lone Star Industries,
Inc.
300 First Stamford
Place
Stamford, Connecticut
06912-
0014
Attention:
Telecopy: (212)
Telephone: (212)

Any party may change its address or facsimile number for
notices
hereunder by notice to each other party hereunder. Each
notice,
request or other communication shall be effective (a) if
given by
facsimile transmission, when such facsimile is transmitted
to the
facsimile number specified in this Section, (b) if given by
mail,
48 hours after such communication is deposited in the mails
with
first class postage prepaid, addressed as aforesaid or (c)
if given
by any other means, when delivered at the address specified
in this
Section.

13. Governing Law. Except to the extent that
the laws
of the State in which the Concentration Account Bank is
located
govern the Concentration Account, this Blocked Account
Agreement
shall be governed by, and interpreted in accordance with,
the laws
of the State of New York.

14. Counterparts. This Blocked Account
Agreement may
be executed in any number of counterparts which together
shall
constitute one and the same instrument.

IN WITNESS WHEREOF, each of the parties hereto
has
caused this Agreement to be executed and delivered by its
duly
authorized officer as of the date first set forth above.

[CONCENTRATION ACCOUNT
BANK]

By:
___________________________
Title:
________________________

THE CIT GROUP/BUSINESS
CREDIT, INC.

By:
___________________________
Title:
________________________

LONE STAR INDUSTRIES,
INC.

By:
__________________________
Title:
________________________

NEW YORK TRAP ROCK
CORPORATION

By:
___________________________
Title:
________________________
EXHIBIT F TO
FINANCING
AGREEMENT

April __,
1994

DEPOSITORY ACCOUNT AGREEMENT

[Name and
Address of
Depository Account Bank]

Gentlemen:

We refer to the following account[s] maintained
with
you by Lone Star Industries, Inc. (the "Company"), into
which
certain monies, instruments and other property are deposited
from
time to time (collectively, the "Depository Account"). The
Company
has entered into a Financing Agreement, dated as of April
13, 1994
(as amended or otherwise modified from time to time, the
"Financing
Agreement"), with New York Trap Rock Corporation ("Trap
Rock") and
The CIT Group/Business Credit, Inc. (the "Lender"), pursuant
to
which the Lender has agreed to make loans to the Company and
Trap
Rock and assist the Company in obtaining letters of credit.
It is
a condition to the continued maintenance of the Depository
Account
with you that you agree to execute this Letter Agreement.

By signing this Letter Agreement, you agree
that from
and after the date hereof, the Depository Account shall be
under
the exclusive dominion and control of the Lender, all
monies,
instruments or other property of the Company received in
connection
therewith, whether or not deposited in the Depository
Account,
shall be held solely for the benefit of the Lender and no
officer
or agent of the Company shall have the authority to withdraw
or
transfer any funds on deposit in the Depository Account.
The
Lender shall have the sole authority to give you
instructions with
respect to the withdrawal or transfer of any funds on
deposit in
the Depository Account. You agree to:

(a) follow your usual operating procedures for
the
handling of any remittance received in the Depository
Account that
contains restrictive endorsements, irregularities, such as a
variance between the written and numerical amounts, undated
or
postdated items, missing signature, incorrect payee, etc.;

(b) indorse and process all eligible checks
and other
remittance items, not covered by subparagraph (a) above,
deposit
such checks and other remittance items in the Depository
Account
and transfer intact all amounts deposited in respect thereof
to the
CIT Concentration Account (as defined below);

(d) maintain a record of all checks and other
remittance items received in the Depository Account and, in
addition to providing the Company with photostats, vouchers,
enclosures, etc. of checks and other remittance items
received on a
daily basis, as well as a monthly statement, furnish to the
Lender
upon the request of the Lender, free of any service charge
payable
by the Lender, your regular bank statement with respect to
the
Depository Account, with the words "The CIT Group/Business
Credit,
Inc., as Lender Re: Lone Star Industries, Inc." included
thereon so
that the Lender is able to properly identify the Depository
Account.

You hereby agree to transfer in same day funds,
on each
of your business days, all collected funds on deposit in the
Depository Account, less charges for returned items received
on
such business day, to an account maintained with at:

For the account of:

Account #:

(the "CIT Concentration Account") or such other account
designated
in writing by the Lender. In order to enable the Lender to
properly reconcile the Company's records, you agree that
each such
transfer of funds by you to the CIT Concentration Account
shall not
reflect the rounding off of any funds so transferred.

You waive and agree not to assert, claim or
endeavor to
exercise, and by executing this Letter Agreement bar and
estop
yourself from asserting, claiming or exercising, any right
to
setoff, banker's lien or other purported form of claim with
respect
to the Depository Account and funds from time to time
therein. You
acknowledge that you have not heretofore received a notice
from any
other party asserting, claiming or exercising any such right
or
claim. You shall have no rights in the Depository Account
or the
funds therein. To the extent you may ever have any such
rights,
you hereby expressly subordinate all such rights to the
rights of
the Lender.

You may terminate this Letter Agreement only
upon
thirty days, prior written notice to that effect to the
Company and
the Lender, by cancelling the Depository Account maintained
with
you and transferring all funds, if any, in such Depository
Account
to the CIT Concentration Account at the address set forth
above.
After any such termination, you shall nonetheless remain
obligated
promptly to transfer to the CIT Concentration Account
anything from
time to time received in the Depository Account.

This Letter Agreement shall be governed by, and
construed in accordance with, the laws of the State of New
York.

Very truly yours,

LONE STAR INDUSTRIES,
INC.,

By:
_______________________
Name:
Title:

THE CIT GROUP/BUSINESS
CREDIT,
INC.

By:
________________________
Name:
Title:

Acknowledged and agreed to
as of the date first above
written.

[DEPOSITORY ACCOUNT BANK]

By: _______________________
Name:
Title:

EXHIBIT G TO
FINANCING
AGREEMENT

SECURITY AGREEMENT AND MORTGAGE - TRADEMARKS

AGREEMENT made this 13th day of April, 1994
between
Lone Star Industries, Inc., a Delaware corporation
("Debtor")
having an office at 300 First Stamford Place, Stamford,
Connecticut, and The CIT Group/Business Credit, Inc. (the
"Secured
Party"), having an office at 1211 Avenue of the Americas,
New York,
New York.

WHEREAS, Debtor has adopted the terms and
designs
described in Schedules A and B annexed hereto and made a
part
hereof; and

WHEREAS, as a condition to the Secured Party
making and
maintaining any loans or advances to Debtor pursuant to the
Financing Agreement dated as of April 13, 1994 (as amended,
supplemented or restated from time to time, the "Financing
Agreement") between Debtor, New York Trap Rock Corporation
("Trap
Rock") and the Secured Party, the Secured Party has required
the
execution and delivery hereof by Debtor;

NOW, THEREFORE, IT IS AGREED that, for and in
consideration of the loans and advances to be made under the
Loan
Agreement, and other good and valuable consideration, the
receipt
of which is hereby acknowledged, and as collateral security
for the
full and prompt payment and performance of all Obligations,
as
hereinafter defined, Debtor does hereby mortgage to and
pledge with
the Secured Party, and grant to the Secured Party a security
interest in, all of its right, title and interest in and to
(i)
each of the Trademarks (as hereinafter defined), and the
goodwill
of the business symbolized by each of the Trademarks, all
customer
lists and other records of Debtor relating to the
distribution of
products bearing the Trademarks and each of the
registrations and
pending applications described in Schedules A and B; (ii)
any
claims by Debtor against third parties for infringement of
the
Trademarks; and (iii) any and all proceeds of the foregoing
(collectively, the "Collateral").

1. Terms defined in the Loan Agreement and
not
otherwise defined herein, shall have the meaning set forth
in the
Loan Agreement. As used in this Agreement, unless the
context
otherwise requires:

"Trademarks" shall mean (i) all trademarks,
trade
names, trade styles, service marks, prints and labels on
which said
trademarks, trade names, trade styles and service marks have
appeared or appear, designs and general intangibles of like
nature,
now existing or hereafter adopted or acquired, all right,
title and
interest therein and thereto, and all registrations and
recordings
thereof, including, without limitation, applications,
registrations
and recordings in the United States Patent and Trademark
Office or
in any similar office or agency of the United States, any
State
thereof, or any other country or any political subdivision
thereof,
all whether now owned or hereafter acquired by Debtor,
including,
but not limited to, those described in Schedules A and B
annexed
hereto and made a part hereof, and (ii) all reissues,
extensions or
renewals thereof and all licenses thereof.

2. Debtor hereby represents, warrants,
covenants and
agrees as follows:

(a) Debtor is a corporation duly
organized and
validly existing and in good standing under the laws of the
State
of Delaware. Debtor is qualified to do business in every
jurisdiction where the nature of its business or the
ownership of
its property requires it to be so qualified and where
failure to so
qualify might materially affect its business or assets.

(b) The execution, delivery and
performance of
this Security Agreement and Mortgage-Trademarks, the Loan
Agreement, and all other documents and all and any other
instruments and documents to be delivered by Debtor
hereunder and
the creation of all liens, mortgages and security interests
provided for herein are within Debtor's corporate power,
have been
duly authorized by all necessary or proper corporate action
(including the consent of shareholders where required), are
not in
contravention of any agreement or indenture to which the
Debtor is
a party or by which the Debtor is bound, or of the
certificate of
incorporation or by-laws of the Debtor, and are not in
contravention of any provision of law and the same do not
require
the consent or approval of any governmental body, agency,
authority
or any other person which has not been obtained.

(c) Debtor has the sole, full and clear
title to
the Trademarks in the United States for the goods and
services
covered by the registrations thereof and such registrations
are
valid and subsisting and in full force and effect.

(d) No claim has been made that the use
of the
Trademarks does or may violate the rights of any third
party.

(e) Debtor has used, and will continue to
use for
the duration hereof, proper statutory notice in connection
with the
use of the Trademarks.

(f) Debtor has used, and will continue to
use for
the duration hereof, consistent standards of quality in its
manufacture of products sold under the Trademarks.

(g) To the best of Debtor's knowledge and
belief
after due inquiry, no material infringement or unauthorized
use
presently is being made of the Collateral.

(h) Debtor will perform all acts and
execute all
documents, including, without limitation, assignments for
security
in form suitable for filing with the United States Patent
and
Trademark Office, substantially in the form of Exhibit I
hereof,
requested by the Secured Party at any time to evidence,
perfect,
maintain, record and enforce the Secured Party's interest in
the
Collateral or otherwise in furtherance of the provisions of
this
Agreement, and Debtor hereby authorizes the Secured Party to
execute and file one or more financing statements (and
similar
documents) or copies thereof or of this Security Agreement
with
respect to the Collateral signed only by the Secured Party.

(i) Except to the extent that the Secured
Party,
upon prior written notice of Debtor, shall consent (which
consent
shall not be unreasonably withheld), Debtor (either itself
or
through licensees) will continue to use the Trademarks on
each and
every trademark class of goods applicable to its current
line as
reflected in its current catalogs, brochures and price lists
in
order to maintain the Trademarks in full force free from any
claim
of abandonment for nonuse and Debtor will not (and will not
permit
any licensee thereof to) do any act or knowingly omit to do
any act
whereby any Trademark may become invalidated.

(j) Debtor will promptly pay the Secured
Party
for any and all reasonable sums, costs, and expenses which
the
Secured Party may pay or incur pursuant to the provisions of
this
Agreement or in enforcing the obligations, the Collateral or
the
security interest granted hereunder, including, but not
limited to,
all filing or recording fees, court costs, collection
charges and
reasonable attorneys' fees, all of which together with
interest at
the highest rate then payable on the obligations shall be
part of
the Obligations and be payable on demand.

(k) In no event shall Debtor, either
itself or
through agent, employee, licensee or designee, (i) file an
application for the registration of any Trademark with the
United
States Patent and Trademark office or any similar office or
agency
in any other country or any political subdivision thereof or
(ii)
file any assignment of any trademark, which Debtor may
acquire from
a third party, with the United States Patent and Trademark
Office
or any similar office or agency in any other country or any
political subdivision thereof, unless Debtor shall, on or
prior to
the date of such filing, notify the Secured Party thereof,
and,
upon request of the Secured Party, execute and deliver any
and all
assignments, agreements, instruments, documents and papers
as the
Secured Party may reasonably request to evidence the Secured
Party's interest in such Trademark and the goodwill and
general
intangibles of Debtor relating thereto or represented
thereby, and
Debtor hereby constitutes the Secured Party its attorney-in-
fact to
execute and file all such writings for the foregoing
purposes, all
acts of such attorney being hereby ratified and confirmed;
such
power being coupled with an interest is irrevocable until
the
Obligations are paid in full.

(l) Debtor has the right and power to
make the
assignment and to grant the security interest herein
granted; and
the Collateral is not now, and at all times hereafter will
not be,
subject to any liens, mortgages, assignments, security
interests or
encumbrances of any nature whatsoever, except in favor of
the
Secured Party, and to the best knowledge of Debtor none of
the
Collateral is now subject to any claim.

(m) Except to the extent that Secured
Party, upon
prior written notice from Debtor, shall consent, Debtor will
not
assign, sell, mortgage, lease, transfer, pledge,
hypothecate, grant
a security interest in or lien upon, grant an exclusive or
non-
exclusive license, or otherwise dispose of any of the
Collateral,
and nothing in this Agreement shall be deemed a consent by
the
Secured Party to any such action except as expressly
permitted
herein.

(n) As of the date hereof neither Debtor
nor any
subsidiary thereof owns any Trademarks or has any Trademarks
registered in, or the subject of pending applications in,
the
United States Patent and Trademark Office or any similar
office or
agency in any other country or any political subdivision
thereof,
other than those described in Schedules A and B hereto.

(o) Debtor will take all necessary steps
in any
proceeding before the United States Patent and Trademark
Office or
any similar office or agency in any other country or any
political
subdivision thereof, to maintain each application and
registration
of the Trademarks, including, without limitation, filing of
renewals,, affidavits of use, affidavits of incontestability
and
opposition, interference and cancellation proceedings
(except to
the extent that dedication, abandonment or invalidation is
permitted under paragraph 2(i) hereof).

(p) Debtor assumes all responsibility and
liability arising from the use of the Trademarks, and Debtor
hereby
indemnities and holds Secured Party harmless from and
against any
claim, suit, loss, damage or expense (including reasonable
attorneys' fees) arising out of any alleged defect in any
product
manufactured, promoted or sold by Debtor (or any subsidiary
thereof) in connection with any Trademark or out of the
manufacture, promotion, labeling, sale or advertisement of
any such
product by Debtor (or any subsidiary thereof). Debtor
agrees that
Secured Party does not assume, and shall have no
responsibility
for, the payment of any sums due or to become due under any
agreement or contract included in the Collateral or the
performance
of any obligations to be performed under or with respect to
any
such agreement or contract by Debtor, and Debtor hereby
agrees to
indemnify and hold the Secured Party harmless with respect
to any
and all claims by any person relating thereto.

(q) Secured Party may, in its sole
discretion,
pay any amount or do any act required of Debtor hereunder or
requested by Secured Party to preserve, defend, protect,
maintain,
record or enforce Debtors obligations contained herein, the
obligations, the Collateral, or the right, title and
interest
granted Secured Party herein, and which Debtor fails to do
or pay,
and any such payment shall be deemed an advance by Secured
Party to
Debtor and shall be payable on demand together with interest
at the
highest rate then payable on the Obligations.

(r) Debtor agrees that if it, or any
subsidiary
thereof, learns of any use by any Person of any term or
design
likely to cause confusion with a Trademark, it shall
promptly
notify Secured Party of such use and, if requested by
Secured
Party, shall join with Secured Party, at its expense, in
such
action as Secured Party, in its reasonable discretion, may
deem
advisable for the protection of Secured Party's interest in
and to
the Trademarks.

(s) All licenses of Trademarks which
Debtor has
granted to third parties are set forth in Schedule C hereto.

3. Upon the occurrence of an Event of
Default
(as defined in the Loan Agreement), in addition to all other
rights
and remedies of the Secured Party, whether under law, the
Loan
Agreement or otherwise, all such rights and remedies being
cumulative, not exclusive and enforceable alternatively,
successively or concurrently, without (except as provided
herein)
notice to, or consent by, Debtor, the Secured Party shall
have the
following rights and remedies: (a) the Secured Party may, at
any
time and from time to time, upon 10 days' prior notice to
Debtor,
license, whether general, special or otherwise, and whether
on an
exclusive or nonexclusive basis, any of the Trademarks,
throughout
the world for such term or terms, on such conditions, and in
such
manner, as the Secured Party shall in its sole discretion
determine; (b) the Secured Party may (without assuming any
obligations or liability thereunder), at any time, enforce
(and
shall have the exclusive right to enforce) against any
licensee or
sublicensee all rights and remedies of Debtor in, to and
under any
one or more license agreements with respect to the
Collateral, and
take or refrain from taking any action under any thereof,
and
Debtor hereby releases the Secured Party from, and agrees to
hold
the Secured Party free and harmless from and against any
claims
arising out of, any action taken or omitted to be taken with
respect to any such license agreement; (c) the Secured Party
may,
at any time and from time to time, upon 10 days' prior
notice to
Debtor, assign, sell, or otherwise dispose of, the
Collateral or
any of it, either with or without special or other
conditions or
stipulations, with power to buy the Collateral or any part
of it,
and with power also to execute assurances, and do all other
acts
and things for completing the assignment, sale or
disposition which
the Secured Party shall, in its sole discretion, deem
appropriate
or proper; and (d) in addition to the foregoing, in order to
implement the assignment, sale or other disposal of any of
the
Collateral pursuant to subparagraph 3(c) hereof, the Secured
Party
may, at any time, pursuant to the authority granted in the
Powers
of Attorney described in paragraph 4 hereof (such authority
becoming effective on the occurrence or continuation as
hereinabove
provided of an Event of Default), execute and deliver on
behalf of
Debtor, one or more instruments of assignment of the
Trademarks (or
any application or registration thereof), in form suitable
for
filing, recording or registration in any country. Debtor
agrees to
pay when due all reasonable costs incurred in any such
transfer of
the Trademarks, including any taxes, fees and reasonable
attorneys'
fees, and all such costs shall be added to the Obligations.
The
Secured Party may apply the proceeds actually received from
any
such license, assignment, sale or other disposition to the
reasonable costs and expenses thereof, including, without
limitation, reasonable attorneys' fees and all legal and
other
expenses which may be incurred by the Secured Party, and
then to
the Obligations, in such order as to principal or interest
as the
Secured Party may desire; and Debtor shall remain liable and
will
pay the Secured Party on demand any deficiency remaining,
together
with interest thereon at a rate equal to the highest rate
then
payable on the Obligations and the balance of any expenses
unpaid.
Nothing herein contained shall be construed as requiring the
Secured Party to take any such action at any time. In the
event of
any such license, assignment, sale or other disposition of
the
Collateral, or any of it, after the occurrence or
continuation as
hereinabove provided of an Event of Default, Debtor shall
supply
its customer lists and other records relating to the
Trademarks and
to the distribution of said products, to the Secured Party
or its
designee.

4. Concurrently with the execution and
delivery
hereof, Debtor is executing and delivering to the Secured
Party,
in the form of Exhibit 2 hereto, five originals of a
Power of
Attorney for the implementation of the assignment, sale or
other
disposal of the Trademarks pursuant to paragraphs 3(c) and
(d)
hereof and Debtor hereby releases the Secured Party from any
claims, causes of action and demands at any time arising out
of or
with respect to any actions taken or omitted to be taken by
the
Secured Party under the powers of attorney granted herein,
other
than actions taken or omitted to be taken through the gross
negligence or willful misconduct of the Secured Party.
Secured
Party hereby agrees after the Termination Date and after all
obligations for the payment of money have been paid in full
in cash
to (a) deliver all originals of the Power of Attorney to the
Debtor
or (b) destroy all originals of the Power of Attorney and
deliver a
certificate to the Debtor certifying to such destruction.

5. No provision hereof shall be
modified,
altered or limited except by a written instrument expressly
referring to this Agreement and executed by the party
to be
charged. The execution and delivery of this Agreement has
been
authorized by the Board of Directors of Debtor and by any
necessary
vote or consent of stockholders thereof. This Agreement
shall be
binding upon the successors, assigns or other legal
representatives
of Debtor, and shall, together with the rights and remedies
of the
Secured Party hereunder, inure to the benefit of the Secured
Party,
its successors, assigns or other legal representatives.
This
Agreement, the Obligations and the Collateral shall be
governed in
all respects by the laws of the United States and the laws
of the
State of New York. Debtor hereby submits to the
nonexclusive
jurisdiction of the Supreme Court of the State of New York
and the
federal courts of the United States of America located in
such
State in any action or proceeding arising under this
Agreement. If
any term of this Agreement shall be held to be invalid,
illegal or
unenforceable, the validity of all other terms hereof shall
in no
way be affected thereby.

IN WITNESS WHEREOF, Debtor and the Secured
Party
have caused this Agreement to be executed by their
respective
officers thereunto duly authorized as of the day and year
first
above written.

LONE STAR INDUSTRIES,
INC.

Name:
_____________________
Title:
____________________

THE CIT GROUP/BUSINESS
CREDIT,
INC.

Name:
______________________
Title:
_____________________

EXHIBIT H TO
FINANCING AGREEMENT

MORTGAGEE'S WAIVER, LICENSE AND AGREEMENT

April 13, 1994

The CIT Group/Business Credit, Inc.
1211 Avenue of the Americas
New York, New York 10036

Re: Lone Star Industries, Inc.

Gentlemen:

Reference is made to (i) the Mortgage, Security
Agreement,
Assignment of Leases and Rents, and Financing Statement
entered
into between Lone Star Industries, Inc. ("LSI"), as
mortgagor,
and the Pension Benefit Guaranty Corporation (the "PBGC"),
as
mortgagee, dated as of April 13, 1994 (the "Mortgage"),
relating
to the real property and building and improvements thereon
commonly known as the Oglesby Cement Plant Facility as more
particularly described in Schedule A annexed hereto (the
"Premises"), (ii) the Settlement Agreement by and between
the
Lone Star Group, which group includes LSI, and the PBGC
dated as
of April 13, 1994 (the "Settlement Agreement"), and (iii)
the
Security Agreement by and among the PBGC, LSI and Lone Star
Cement Inc. (the "Security Agreement" and together with the
Mortgage, the Settlement Agreement and all related
agreements,
documents and instruments, collectively, the "PBGC
Transaction
Documents").

Reference is made to (i) the Financing Agreement dated
as of
April 13, 1994 (as amended or otherwise modified from time
to
time, being hereinafter referred to as the "Financing
Agreement")
among LSI and New York Trap Rock Corporation ("Trap Rock"
and
together with LSI, each a "Company" and collectively, the
"Companies") and The CIT Group/Business Credit, Inc. (the
"Lender") and (ii) the other Loan Documents (as defined in
the
Financing Agreement) granting collateral security to the
Lender.
(All of the foregoing, together with all related documents
or
instruments, as the same may now exist or may hereafter be
amended or supplemented, are collectively referred to herein
as
the "Loan Agreements".)

Pursuant to the terms of the PBGC Transaction
Documents, LSI
has granted to PBGC a security interest in the Kosmos
Partnership
(as defined in the Security Agreement) and the Oglesby
Complex
(as defined in the Security Agreement), which latter
definition
specifically excludes all accounts receivable (other than
accounts receivable generated (i) after the appointment of a
receiver for the Premises and (ii) from inventory not part
of the
Lender's Collateral) and all inventories other than fuel and
spare parts inventories located at LSI's facility in
Oglesby,
Illinois.

Pursuant to the terms of the Loan Agreements, the
Companies
have granted to the Lender a security interest in and a lien
on
all now owned or hereafter acquired or existing accounts
(other
than accounts receivable generated (i) after the appointment
of a
receiver for the Premises and (ii) from inventory not part
of the
Lender's Collateral), contract rights, general intangibles,
documents, instruments, chattel paper, inventory and the
proceeds
thereof as the same are defined in the Uniform Commercial
Code as
currently in effect in the State of Illinois, excluding (i)
LSI's
interest in the Kosmos Partnership (as defined in the
Security
Agreement), (ii) LSI's rights in the fuel and spare parts
inventory located at LSI's facility in Oglesby, Illinois,
(iii)
LSI's rights in contracts and marketing agreements directly
relating to LSI's facility in Oglesby, Illinois, (iv) all
patents
of LSI, and (v) the proceeds of insurance policies covering
fixed
assets to the extent such proceeds are not proceeds of the
Lender's Collateral (as hereinafter defined) (collectively,
the
"Lender's Collateral"), as security for any now existing or
hereafter arising obligations of the Companies to the
Lender,
whether pursuant to the Loan Agreements or otherwise.

Notwithstanding anything to the contrary in the PBGC
Transaction Documents or any related documents, the PBGC
hereby
acknowledges and consents to, and waives any default
otherwise
arising from, the pledge of, and the granting of a lien on
and
security interest in, the Lender's Collateral by the
Companies in
favor of the Lender.

In the event of a default or event of default by LSI
under
the PBGC Transaction Documents, the PBGC agrees to use good
faith
efforts to promptly notify the Lender in writing of such
default
and of the exercise by the PBGC of any of its rights under
the
PBGC Transaction Documents, provided that the PBGC shall not
be
subject to any liability for the inadvertent failure to
provide
such notice to the Lender.

The PBGC hereby waives the PBGC's lien, right of
distraint,
levy or execution, security interests or other interests
which
the PBGC may now or hereafter have in any of the Lender's
Collateral now or hereafter located at the Premises, whether
for
unpaid rent or otherwise and whether by virtue of the PBGC
Transaction Documents, the mortgagor-mortgagee relationship,
statute, common law doctrine, or otherwise. In no event,
including, without limitation, a default or event of default
under the PBGC Transaction Documents, shall the PBGC have
any
lien, right, interest or claim in or to the Lender's
Collateral.

To the extent the PBGC now or in the future has any
right,
claim, interest or lien in the Lender's Collateral, PBGC
hereby
waives and relinquishes in favor of the Lender, any such
right,
claim, interest and lien which the PBGC now has or may
hereafter
have in and to the Lender's Collateral. Lender's security
interest in the Lender's Collateral, to the extent perfected
and
enforceable, shall be deemed to have a priority senior to
any
mortgage or security interest the PBGC may hereafter acquire
in
the Lender's Collateral. Lender's priority in respect of
Lender's Collateral shall be irrespective of the time, order
or
method of attachment or perfection of security interests, or
the
time or order of the filing of mortgages or financing
statements,
or the giving of or failure to give notice of purchase money
security interests. Notwithstanding anything to the
contrary,
the Lender recognizes the non-exclusive license granted by
LSI to
the PBGC in the trademarks directly related to the use and
operation of the Premises pursuant to Section 3.2 of the
Security
Agreement and agrees that, upon the exercise of the Lender's
remedies with respect to the Lender's Collateral, the Lender
will
recognize and take the Lender's Collateral subject to such
non-
exclusive license.

The PBGC hereby agrees that, upon prior written notice
to
the PBGC, the Lender and its agents and representatives may
enter
the Premises for the purposes of inspecting, repossessing,
removing, selling or otherwise dealing with the Lender's
Collateral in accordance with the provisions of the Loan
Agreements, the Uniform Commercial Code and any other
applicable
law, provided that the Lender shall not interfere with the
PBGC's
use or operation of the Premises. Said license shall be
irrevocable and shall continue at the Lender's option from
the
date the Lender enters the Premises for a period not to
exceed
one hundred twenty (120) days. Use or occupancy of the
Premises
by the Lender as set forth herein shall not constitute an
assumption by the Lender of the PBGC Transaction Documents
or of
any obligations thereunder.

In the event any Lender's Collateral, or any
collections or
other proceeds thereof, shall be received by the PBGC at any
time
for any reason, the PBGC shall take all reasonable actions
to
make such Lender's Collateral and the proceeds thereof
available
to the Lender, so long as there shall be any outstanding
obligations or liabilities of the companies to the Lender.

Notice to any party hereunder shall be in writing and
shall
be sent by certified mail, return receipt requested, to the
parties at the following addresses:

To PBGC:

1200 K Street, N.W.
Washington, D.C. 20005
Attention: Director of Corporate Finance
and
Negotiation Department
Telephone No. 202-326-4070
Facsimile No. 202-842-2643

To LSI:

300 First Stamford Place
Stamford, Connecticut 06912-0014
Attention: Corporate Secretary
Telephone No. (203) 969-8500
Facsimile No. (203) 969-8590

To the Lender:

1211 Avenue of the Americas
New York, New York 10036
Attention: Regional Manager
Telephone No. (212) 526-1269
Facsimile No. (212) 526-1295

with a copy to:

Schulte Roth & Zabel 900 Third Avenue
New York, New York 10022
Attention: Frederic L. Ragucci, Esq.
Telephone No. (212) 758-0404
Facsimile No. (212) 591-5955

This Agreement shall be governed by the laws of the
State of Illinois.

This Agreement may not be changed or terminated orally
and
shall be binding upon the successors and assigns of the
parties
hereto and shall also be binding upon any successor, owner,
or
transferee of said Premises. No other person shall have any
right, benefit, priority or interest under, or because of
the
existence of, this Agreement.

IN WITNESS WHEREOF, the parties have executed and
delivered
this Agreement as of the day and year first above written.

LONE STAR INDUSTRIES, INC.

By: ______________________
Name:
Title:

PENSION BENEFIT GUARANTY
CORPORATION

By: ______________________
Name:
Title:

THE CIT GROUP/BUSINESS CREDIT,
INC.

By: ______________________
Name:
Title:

STATE OF )
)ss.:
COUNTY OF )

On this day of April 1994, before me personally came I
to me
known, who stated that he is the of Lone Star Industries,
Inc.,
the corporation described in and which executed the
foregoing
instrument; and that he signed his name thereto by order of
the
Board of Directors of said Corporation.

_______________________
Notary Public

STATE OF )
)ss.:
COUNTY OF )

On this day of April, 1994, before me personally came,
to me
known, who stated that he is the of The CIT Group/Business
Credit, Inc., the corporation described in and which
executed the
foregoing instrument; and that he signed his name thereto by
order of the Board of Directors of said Corporation.

_______________________
Notary Public

STATE OF )
)ss.:
COUNTY OF )

On this day of April, 1994, before me personally came,
to me
known, who stated that he is the of Pension Benefit Guaranty
Corporation, the corporation described in and which executed
the
foregoing instrument; and that he signed his name thereto by
order of the Board of Directors of said Corporation.

_______________________
Notary Public

EXHIBIT I
TO FINANCING
AGREEMENT

LONE STAR INDUSTRIES, INC.
Release Certificate

[Name] , (Title] of Lone
Star
Industries, Inc. ("LSI"), pursuant to the terms of Section
12.13
of the Financing Agreement, dated as of April 13, 1994 (as
amended or otherwise modified from time to time, the
"Financing
Agreement"; all capitalized terms used herein and not
otherwise
defined shall have the meanings ascribed to them in the
Financing
Agreement), among LSI, New York Trap Rock Corporation ("Trap
Rock") and together with LSI, each a "Company" and
collectively,
the "Companies") and The CIT Group/Business Credit, Inc.
(the
"Lender") does hereby certify that as of the date hereof and
as
of the date of the proposed release requested below:

1. LSI hereby requests the Lender to (i) release its
lien
on and security interest in the Collateral described in
Schedule
I hereto in connection with the sale of such Collateral on
the
terms described in Schedule I, and (ii) execute and deliver
to
LSI the documents that LSI is requesting the Lender to
execute in
connection with the proposed Release, which documents are
specified in Schedule II hereto.

2. The sale of the Collateral described in Schedule I
hereto is a Permitted Asset Sale that will occur on and is
in
compliance with the terms of the Financing Agreement.

3. The aggregate book value (net of reserves) of the
Collateral to be released is $_____________________.

4. All conditions or obligations required under the
terms
of the Financing Agreement to be satisfied or performed
before
the Lender makes the release requested hereby, including all
of
the conditions set forth in Section 12.13 of the Financing
Agreement, have been satisfied or performed or will, prior
to the
release of the Collateral described in Schedule I, be
satisfied
and performed.

5. At the time of and immediately after giving effect
to
the release of the Collateral described in Schedule I hereto
(including any intended use of the proceeds of such released
Collateral to reduce the Revolving Loans pursuant to Section
12.13(b) of the Financing Agreement and as set forth in
Schedule
III hereto), no Default or Potential Default has occurred
and is
continuing. [With respect to a release requested pursuant to
subsection (a) of Section 12.13 of the Financing Agreement,
the
Collateral that LSI proposes to release does not arise from
or
relate to Accounts or Inventory.] [With respect to a release
requested pursuant to subsection (b) of Section 12.13 of the
Financing Agreement (i) attached hereto as Schedule III is a
calculation of the Collateral Release Payment, (ii) the
Collateral Release Payment has been made or, as a condition
to
the requested release, will be made, (iii) attached hereto
as
Annex I is a Borrowing Base Certificate calculated both
immediately before and immediately after giving effect to
such
Permitted Asset Sale (including any intended use of the
proceeds
of such released Collateral to reduce the Revolving Loans
pursuant to Section 12.13(b) of the Financing Agreement),
and
(iv) both immediately before and immediately after giving
effect
to the requested release of the Collateral (including any
intended use of the proceeds of such released Collateral to
reduce the Revolving Loans pursuant to Section 12.13(b) of
the
Financing Agreement), the Availability of the Companies
(without
giving effect to the Line of Credit limitation contained in
clause (i) of the definition of Availability contained in
the
Financing Agreement) is greater than zero.]

6. [In the event that Schedule III [and/or paragraph
5]
indicates that LSI is required to make a Collateral Release
Payment, LSI[represents and warrants that such Collateral
Release
Payment has been made on or prior to the date hereof]
[covenants
that such Collateral Release Payment will be made prior to
the
release of the Collateral described in Schedule I]].

IN WITNESS WHEREOF, the undersigned has signed this
certificate as of the ____________ day of 19__.

___________________________
[Name]:
[Title]:

ROSEBUD HOLDINGS, INC.
and its Subsidiaries

AND

CHEMICAL BANK

Trustee

Indenture

Dated as of March 29, 1994

$138,118,000

10% ASSET PROCEEDS NOTES DUE 1997

TABLE OF CONTENTS

ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE. .
. . .
1

SECTION 1.01 Definitions . . . . . . . . . . . .
. . . .
1
SECTION 1.02 Incorporation by Reference of Trust
Indenture
Act 9
SECTION 1.03 Rules of Construction . . . . . . .
. . . .
9

ARTICLE 2. THE SECURITIES. . . . . . . . . . . . . . . .
. . . 10

SECTION 2.01 Form and Dating . . . . . . . . . .
. . . .
10
SECTION 2.02 Execution and Authentication. . . .
. . . .
10
SECTION 2.03 Registrar and Paying Agent. . . . .
. . . .
11
SECTION 2.04 Paying Agent to Hold Money in Trust
. . . .
12
SECTION 2.05 Securityholder Lists. . . . . . . .
. . . .
12
SECTION 2.06 Transfer and Exchange . . . . . . .
. . . .
12
SECTION 2.07 Replacement Securities. . . . . . .
. . . .
13
SECTION 2.08 Outstanding Securities. . . . . . .
. . . .
13
SECTION 2.09 Securities Held by the Company or
an
Affiliate 14
SECTION 2.10 Temporary Securities. . . . . . . .
. . . .
14
SECTION 2.11 Cancellation. . . . . . . . . . . .
. . . .
14
SECTION 2.12 Defaulted Interest. . . . . . . . .
. . . .
14
SECTION 2.13 Deemed Repayments . . . . . . . . .
. . . .
15

ARTICLE 3. REDEMPTION. . . . . . . . . . . . . . . . . .
. . . 15

SECTION 3.01 Notices to Trustee. . . . . . . . .
. . . .
15
SECTION 3.02 Selection of Securities to be
Redeemed. . .
15
SECTION 3.03 Notice of Redemption. . . . . . . .
. . . .
16
SECTION 3.04 Effect of Notice of Redemption. . .
. . . .
16
SECTION 3.05 Deposit of Redemption Price . . . .
. . . .
17
SECTION 3.06 Securities Redeemed in Part . . . .
. . . .
17
SECTION 3.07 Optional Redemption . . . . . . . .
. . . .
17
SECTION 3.08 Mandatory Redemption. . . . . . . .
. . . .
17

ARTICLE 4. COVENANTS . . . . . . . . . . . . . . . . . .
. . . 18

SECTION 4.01 Payment of Securities . . . . . . .
. . . .
18
SECTION 4.02 Maintenance of Office or Agency . .
. . . .
18
SECTION 4.03 Sale of Assets and Subsidiaries;
Corporate
Existence 19
SECTION 4.04 Payment of Taxes. . . . . . . . . .
. . . .
19
SECTION 4.05 Maintenance of Properties . . . . .
. . . .
19
SECTION 4.06 SEC Reports . . . . . . . . . . . .
. . . .
20
SECTION 4.07 Compliance Certificate. . . . . . .
. . . .
20
SECTION 4.08 Limitation on Stock Payments and
Investments
21
SECTION 4.09 Transactions with Affiliates. . . .
. . . .
21
SECTION 4.10 Limitation on Additional
Indebtedness and
Liens 21
SECTION 4.11 Conflicting Agreements. . . . . . .
. . . .
21
SECTION 4.12 Limitation on Dividends and Certain
Other
Restrictions Affecting Subsidiaries 22
SECTION 4.13 Waiver of Stay, Extension or Usury
Laws . .
22
SECTION 4.14 Maintenance of Insurance and
Records,
Compliance with Law 22
SECTION 4.15 Limitation on Redemption of Certain
Indebtedness 23
SECTION 4.16 Value of Claims Represented by
Securities .
23
SECTION 4.17 Notice of Default . . . . . . . . .
. . . .
23
SECTION 4.18 Investment Company Act of 1940. . .
. . . .
24

ARTICLE 5. RELEASE OF SUBSIDIARIES . . . . . . . . . . .
. . . 24

SECTION 5.01 Release of Subsidiary . . . . . . .
. . . .
24

ARTICLE 6. DEFAULTS AND REMEDIES . . . . . . . . . . . .
. . . 24

SECTION 6.01 Events of Default . . . . . . . . .
. . . .
24
SECTION 6.02 Acceleration. . . . . . . . . . . .
. . . .
27
SECTION 6.03 Other Remedies. . . . . . . . . . .
. . . .
27
SECTION 6.04 Waiver of Past Defaults . . . . . .
. . . .
28
SECTION 6.05 Control by Majority . . . . . . . .
. . . .
28
SECTION 6.06 Limitation on Suits . . . . . . . .
. . . .
28
SECTION 6.07 Rights of Holders to Receive
Payment. . . .
29
SECTION 6.08 Collection Suit by Trustee. . . . .
. . . .
29
SECTION 6.09 Trustee May File Proofs of Claims .
. . . .
29
SECTION 6.10 Priorities. . . . . . . . . . . . .
. . . .
29
SECTION 6.11 Undertaking for Costs . . . . . . .
. . . .
30

ARTICLE 7. TRUSTEE . . . . . . . . . . . . . . . . . . .
. . . 30

SECTION 7.01 Acceptance of Trusts; Duties of
Trustee . .
30
SECTION 7.02 Rights of Trustee . . . . . . . . .
. . . .
31
SECTION 7.03 Individual Rights of Trustee. . . .
. . . .
32
SECTION 7.04 Trustee's Disclaimer. . . . . . . .
. . . .
32
SECTION 7.05 Notice of Defaults. . . . . . . . .
. . . .
32
SECTION 7.06 Reports by Trustee to Holders . . .
. . . .
32
SECTION 7.07 Compensation and Indemnity. . . . .
. . . .
33
SECTION 7.08 Replacement of Trustee. . . . . . .
. . . .
33
SECTION 7.09 Successor Trustee by Merger, etc. .
. . . .
34
SECTION 7.10 Eligibility; Disqualification . . .
. . . .
34
SECTION 7.11 Preferential Collection of Claims
Against
Company 35

ARTICLE 8. DISCHARGE OF INDENTURE. . . . . . . . . . . .
. . . 35

SECTION 8.01 Termination of Obligor's
Obligations. . . .
35
SECTION 8.02 Application of Trust Money. . . . .
. . . .
36
SECTION 8.03 Repayment to Company. . . . . . . .
. . . .
36
SECTION 8.04 Reinstatement . . . . . . . . . . .
. . . .
36

ARTICLE 9. AMENDMENTS. . . . . . . . . . . . . . . . . .
. . . 37

SECTION 9.01 Without Consent of Holders. . . . .
. . . .
37
SECTION 9.02 With Consent of Holders . . . . . .
. . . .
37
SECTION 9.03 Compliance with Trust Indenture Act
. . . .
38
SECTION 9.04 Revocation and Effect of Consents .
. . . .
38
SECTION 9.05 Notation on or Exchange of
Securities . . .
39
SECTION 9.06 Trustee Protected . . . . . . . . .
. . . .
39

ARTICLE 10. SECURITY . . . . . . . . . . . . . . . . . .
. . . 39

SECTION 10.01 Collateral Agency Agreement, Pledge
Agreement
and Guarantee Agreement 39
SECTION 10.02 Further Assurances . . . . . . . .
. . . .
40
SECTION 10.03 Authorization of Actions to be
Taken by the
Trustee Under the Collateral Agency Agreement and the
Guarantee
Agreement 40
SECTION 10.04 Authorization of Receipt of Funds
by the
Trustee Under the Collateral Agency Agreement and the
Guarantee
Agreement 40
SECTION 10.05 Termination of Security Interest .
. . . .
41
SECTION 10.06 Security Documents . . . . . . . .
. . . .
41

ARTICLE 11. MISCELLANEOUS. . . . . . . . . . . . . . . .
. . . 41

SECTION 11.01 Trust Indenture Act Controls . . .
. . . .
41
SECTION 11.02 Notices. . . . . . . . . . . . . .
. . . .
41
SECTION 11.03 Communication by Holders with Other
Holders
42
SECTION 11.04 Action by Securityholders. . . . .
. . . .
42
SECTION 11.05 Proof of Execution of Instruments
and of
Holding of Securities 43
SECTION 11.06 Revocation of Consents; Future
Holders Bound
43
SECTION 11.07 Rules by Trustee and Agents. . . .
. . . .
44
SECTION 11.08 Certificate and Opinion as to
Conditions
Precedent 44
SECTION 11.09 Statements Required in Certificate
or Opinion
44
SECTION 11.10 Legal Holidays . . . . . . . . . .
. . . .
45
SECTION 11.11 No Recourse Against Others . . . .
. . . .
45
SECTION 11.12 Table of Contents, Headings, etc..
. . . .
45
SECTION 11.13 Duplicate Originals. . . . . . . .
. . . .
45
SECTION 11.14 Governing Law. . . . . . . . . . .
. . . .
45
SECTION 11.15 No Adverse Interpretation of Other
Agreements
46
SECTION 11.16 Successors . . . . . . . . . . . .
. . . .
46
SECTION 11.17 Separability . . . . . . . . . . .
. . . .
46

ARTICLE 12. MEETINGS OF HOLDERS OF SECURITIES. . . . . .
. . . 46

SECTION 12.01 Purposes of Meetings . . . . . . .
. . . .
46
SECTION 12.02 Call of Meetings by Trustee. . . .
. . . .
47
SECTION 12.03 Call of Meetings by Company or
Securityholders 47
SECTION 12.04 Persons Entitled to Vote at
Meeting. . . .
47
SECTION 12.05 Regulations for Meeting. . . . . .
. . . .
47

CROSS-REFERENCE TABLE
TIA Indenture
Section Section

310(a)(1). . . . . . . . . . . . . . . . . . . . .
7.10
(a)(2). . . . . . . . . . . . . . . . . . . . . .
7.10
(a)(3). . . . . . . . . . . . . . . . . . . . . . Not
Applicable
(a)(4). . . . . . . . . . . . . . . . . . . . . . Not
Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . .
7.08; 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . Not
Applicable
311(a) . . . . . . . . . . . . . . . . . . . . . .
7.11
(b) . . . . . . . . . . . . . . . . . . . . . . .
7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . Not
Applicable
312(a) . . . . . . . . . . . . . . . . . . . . . .
2.05
(b) . . . . . . . . . . . . . . . . . . . . . . .
11.03
(c) . . . . . . . . . . . . . . . . . . . . . . .
11.03
313(a) . . . . . . . . . . . . . . . . . . . . . .
7.06
(b)(1). . . . . . . . . . . . . . . . . . . . . .
7.06
(b)(2). . . . . . . . . . . . . . . . . . . . . .
7.06
(c) . . . . . . . . . . . . . . . . . . . . . . .
7.06
(d) . . . . . . . . . . . . . . . . . . . . . . .
7.06
314(a) . . . . . . . . . . . . . . . . . . . . . .
4.06; 4.07
(b) . . . . . . . . . . . . . . . . . . . . . . .
10.02
(c)(1). . . . . . . . . . . . . . . . . . . . . .
11.08
(c)(2). . . . . . . . . . . . . . . . . . . . . .
11.08
(c)(3). . . . . . . . . . . . . . . . . . . . . . Not
Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . .
10.02
(e) . . . . . . . . . . . . . . . . . . . . . . .
11.09
(f) . . . . . . . . . . . . . . . . . . . . . . . Not
Applicable
315(a) . . . . . . . . . . . . . . . . . . . . . .
7.01
(b) . . . . . . . . . . . . . . . . . . . . . . .
7.05
(c) . . . . . . . . . . . . . . . . . . . . . . .
7.01
(d) . . . . . . . . . . . . . . . . . . . . . . .
7.01
(e) . . . . . . . . . . . . . . . . . . . . . . .
6.11
316(a)(last sentence). . . . . . . . . . . . . . .
2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . .
6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . .
6.04
(a)(2). . . . . . . . . . . . . . . . . . . . . . Not
Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . .
6.07
317(a)(1). . . . . . . . . . . . . . . . . . . . .
6.08
(a)(2). . . . . . . . . . . . . . . . . . . . . .
6.09
(b) . . . . . . . . . . . . . . . . . . . . . . .
2.04
318(a) . . . . . . . . . . . . . . . . . . . . . .
11.01
_______________________
This cross-reference tables does not constitute a part of
the
Indenture.
INDENTURE dated as of March 29, 1994 between
ROSEBUD
HOLDINGS, INC., a Delaware corporation (the "Company"), and
the
Subsidiaries of the Company who are signatories to this
Indenture, and
CHEMICAL BANK, a New York banking corporation (the
"Trustee").

Each party agrees as follows for the benefit of
the other
party and for the equal and ratable benefit of the Holders
of the
Company's 10% Asset Proceeds Notes due 1997 (the
"Securities").

ARTICLE 1.

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01 Definitions.

"Actual Knowledge" has the meaning assigned to
such term in
Section 6.01 hereof.

"Affiliate" means any Person directly or
indirectly
controlling or controlled by or under common control with
the Company;
provided, however, that the term Affiliate shall not include
any
wholly-owned Subsidiary of the Company. For this purpose,
"control"
means possession, directly or indirectly, of the power to
direct or
cause the direction of the management or policies of a
Person, whether
through the ownership of voting securities, by contract or
otherwise.

"Agent" means any Registrar, Paying Agent,
Collateral Agent
or Co-Registrar.

"Bankruptcy Law" has the meaning assigned to such
term in
Section 6.01 hereof.

"Board of Directors" means the Board of Directors
of the
Company or any committee of the Board authorized to act for
it
hereunder.

"Business Day" has the meaning assigned to such
term in
Section 11.10 hereof.

"Capital Lease" means, at the time any
determination thereof
is to be made, any lease of property, real or personal, in
respect of
which the present value of the minimum rental commitment
would be
capitalized on a balance sheet of the lessee in accordance
with
generally accepted accounting principles.

"Capital Stock" means any stock of any class of a
corporation.

"Cash Collateral Account" has the meaning assigned
to the
term "Collateral Account" in the Collateral Agency
Agreement.

"Collateral Agency Agreement" means the Security,
Pledge and
Collateral Agency Agreement of even date with this Indenture
between
the Company and its Subsidiaries and Chemical Bank, as the
Collateral
Agent thereunder, as the same may be amended, amended and
restated,
modified or supplemented from time to time in accordance
with the
terms hereof and thereof.

"Collateral Agent" means the party named as such
in the
Collateral Agency Agreement until a successor replaces it,
and
thereafter means the successor.

"Common Stock" means the common stock, par value
$1.00 per
share, of the Company or any security into which the common
stock may
be converted.

"Company" means the party named as such above.

"Corporate Trust Office of the Trustee" shall be
at the
address of the Trustee specified in Section 11.02 or such
other
address as the Trustee may give notice of to the Company.

"Custodian" has the meaning assigned to such term
in Section
6.01 hereof.

"Default" means any event which is, or after
notice or
passage of time or both would be, an Event of Default.

"Effective Date" means April 14, 1994.

"Event of Default" has the meaning assigned to
such term in
Section 6.01 hereof.

"Exchange Act" means the Securities Exchange Act
of 1934,
as amended, and the rules and regulations of the SEC
promulgated
thereunder.

"Existing Agreements" means the Management
Services
Agreement; the Trademark License Agreement of even date
herewith
between the Guarantor and Nazareth Cement Corporation, a
Delaware
corporation and Subsidiary; all agreements between the
Guarantor and
one or more of the Company and the Subsidiaries relating,
among other
things, to the transfer of assets and liabilities (or the
rights to
and obligations under the Litigations) to the Company and
the
Subsidiaries; and any partnership and related agreements
relating to
the Affiliates of the Company which are partnerships or
joint
ventures, including, without limitation, the RMC Settlement
Agreement,
in each case as in effect on the Effective Date.

"Extraordinary Event" means each Sale of Assets,
any payment
received by the Company or its Subsidiaries in respect of
the
Litigation Agreement, any payments received by the Company
or the
Subsidiaries in respect of the Riedel Note, any payment
received in
respect of casualty insurance covering the Pledged
Collateral to the
extent not applied to the repair or replacement thereof and
any
payment received in respect of a taking or condemnation of
assets or
properties.

"Guarantee Agreement" means the Guarantee
Agreement of the
Guarantor of even date with this Indenture and attached
hereto as
Exhibit A and incorporated in and a part of this Indenture
where
specified, as the same may be amended, amended and restated,
modified
or supplemented from time to time in accordance with the
terms hereof
and thereof.

"Guarantee Payment" has the meaning assigned to
such term
in Section 2.13 hereof.

"Guarantor" means Lone Star Industries, Inc.,
until a
successor replaces it pursuant to the applicable provision
of the
Guarantee Agreement, and thereafter means such successor.

"Guarantor Obligations" has the meaning assigned
to such
term in the Guarantee Agreement.

"Holder" or "Securityholder" means a Person in
whose name
a Security is registered on the Registrar's books.

"Indebtedness" means, with respect to any Person
and without
duplication any liability, whether or not contingent, (i) in
respect
of borrowed money or evidenced by bonds, notes, debentures
or similar
instruments or letters of credit (or reimbursement
agreements in
respect thereof) or representing the balance deferred and
unpaid of
the purchase price of any property acquired or services
rendered
(including without limitation pursuant to Purchase Money
Indebtedness
or Capital Leases), except any such balance that constitutes
a payable
arising in the ordinary course of business, (ii) under any
agreement
related to the fixing of interest rates on any Indebtedness,
such as
an interest rate swap, cap or collar agreement if and to the
extent
the same would constitute a liability on the balance sheet
of such
Person prepared in accordance with generally accepted
accounting
principles, or (iii) in respect of letters of credit issued
at the
request of such Person, and shall also include, to the
extent not
otherwise included, all Indebtedness of any other Person for
which
such Person is or could become liable or which is secured by
a Lien
on an asset of such Person, whether or not such Indebtedness
is
assumed by such Person, and the guaranty of any of the
foregoing
items.

"Indenture" means this Indenture and, where
specified, the
Guarantee Agreement, each as amended, amended and restated,
modified
or supplemented from time to time in accordance with the
terms hereof
(or, in the case of the Guarantee Agreement, in accordance
with the
terms thereof).

"Investment" means, other than in the ordinary
course of
business, providing any cash or assets to, or extending
credit to,
becoming liable in respect of or otherwise providing for
payment of
any Indebtedness of, any Person other than the Company or a
wholly-owned Subsidiary, whether or not in exchange for
securities of
any Person or other consideration.

"Legal Holiday" has the meaning assigned to such
term in
Section 11.10 hereof.

"Lien" means, with respect to any asset, any
mortgage, lien,
pledge, charge, security interest or similar encumbrance in
respect
of such asset, whether or not filed, recorded or otherwise
perfected
under applicable law (including any conditional sale or
other title
retention agreement, any capitalized lease in the nature
thereof, and
any filing of or agreement to give any financing statement
under the
Uniform Commercial Code or equivalent statutes of any
jurisdiction,
other than an information filing), but does not include, in
the case
of the Company, the lien granted to the Trustee under
Section 7.07
hereof.

"Litigation Agreement" shall mean the agreement of
even date
herewith between the Company or its designee and the
Guarantor and
certain of the Guarantor's Subsidiaries relating to the
Litigations
as in effect on the date hereof.

"Litigations" shall mean the following: (i) Lone
Star
Industries, Inc. v. Compania Naviera Perez Companc;
S.A.C.F.I.M.F.A.,
et al., Case No. 93CIV.5480 (VLB) (United States District
Court,
Southern District of New York); (ii) any and all actions
which have
been or may be commenced by the Debtors to avoid and recover
transfers
of property pursuant to Sections 544, 547, 548 and 550 of
the
Bankruptcy Code including, without limitation, the
following: (a) Lone
Star Industries, Inc. v. Aid Association for the Lutherans,
et al.;
Ad. Pro. No. 92-5443A (United States Bankruptcy Court,
Southern
District of New York); (b) Lone Star Industries, Inc. v. The
Minnesota
Mutual Life Insurance Co., et al., Ad. Pro. No. 92-5444A
(United
States Bankruptcy Court, Southern District of New York); (c)
Lone Star
Industries, Inc. v. Farmers Group, Inc., et al., Ad. Pro.
No. 92-5445A
(United States Bankruptcy Court, Southern District of New
York); (d)
Lone Star Industries, Inc. v. Morgan Guaranty Trust Company
of New
York, et al., Ad. Pro. No. 92-5446A (United States
Bankruptcy Court,
Southern District of New York); (e) Lone Star Industries,
Inc. v. The
Prudential Insurance Company of America, Ad. Pro. No. 92-
5447A (United
States Bankruptcy Court, Southern District of New York); and
(f) Lone
Star Industries, Inc. v. Tom G. Guennewig, Ad. Pro. No. 93-
5201A
(United States Bankruptcy Court, Southern District of New
York); (iii)
Lone Star Industries, Inc., et al. v. Lafarge Corp., et al.,
Case No.
93-1505(L) and Lafarge Corp., et al. v. Lone Star
Industries, Inc.,
et al., Case No. 93-1506 (XAP) (United States Court of
Appeals for the
Fourth Circuit); (iv) Lone Star Industries, Inc. v. Liberty
Mutual
Insurance Company, et al., Civil Action No. 89C-SE-187
(Superior
Court, State of Delaware); and (v) Lone Star Industries,
Inc. v.
Arthur A. Riedel and United States National Bank of Oregon,
Case No.
93-2-27991-4 (Superior Court, County of King, State of
Washington).

"Lone Star California" means Lone Star California,
Inc., a
Delaware corporation and Subsidiary.

"Management Services Agreement" means the
management
services and asset disposition agreement of even date
herewith between
the Guarantor and the Company and the Subsidiaries in effect
on the
Effective Date and any replacement or modification thereto
so long as
such replacement or modification is not materially less
favorable to
the Holders or the Company than the Management Services
Agreement as
in effect in the Effective Date.

"Maturity Date" of the Securities means July 31,
1997.

"Net Proceeds" with respect to any Extraordinary
Event,
means the cash received by the Company or any of its
Subsidiaries from
such Extraordinary Event after (i) provision for all income
or other
taxes measured by or resulting from such Extraordinary Event
or the
transfer of the proceeds thereof to the Company that are
payable by
the Company or any of its Subsidiaries (as reasonably and in
good
faith estimated by the Chief Financial Officer of the
Company)
including, without limitation, any taxes to be paid by the
Company or
such Subsidiary pursuant to the Management Services
Agreement, (ii)
payment of all brokerage commissions, legal and accounting
fees and
expenses and other fees and expenses related to such
Extraordinary
Event, (iii) deduction of any amounts required to discharge
any
Permitted Liens senior to Liens in favor of the Trustee and
the
Holders under the Collateral Agency Agreement on any assets
sold,
leased or otherwise conveyed, and (iv) deduction of any
amounts
required to be paid to the Guarantor in respect of advances
to or for
the benefit of the Company in accordance with the Management
Services
Agreement, (v) deduction of appropriate amounts provided by
the
Company or its Subsidiaries as a reserve on its regularly
prepared
balance sheets (or the notes thereto), in accordance with
generally
accepted accounting principles consistently applied
(including,
without limitation, subject to the next succeeding sentence,
all
amounts escrowed, pledged or otherwise set aside to assume
payment of
such liabilities), against the following liabilities
associated with
the assets, properties, notes or litigation which are the
subject of
the Extraordinary Event and retained by the Company or its
Subsidiaries: (x) pension and other employment and
postemployment
benefit liabilities (other than payroll), liabilities
related to
environmental matters and related indemnification
obligations provided
all such deductions in this clause (x) (after subtracting
therefrom
any subsequent inclusion in Net Proceeds of amounts pursuant
to clause
(B) of the next succeeding sentence) do not in the aggregate
exceed
$7,000,000, and (y) payroll and trade payables and
indemnification
obligations in respect of items other than those included in
clause
(x), and (vi) in the case of proceeds of the Litigations,
any amounts
required to be paid to insurance companies in respect of
subrogation
or similar claims. Net Proceeds shall include (A) when
received in
cash, any Net Proceeds from an Extraordinary Event of any
non-cash
proceeds received by the Company or any of its Subsidiaries
from an
Extraordinary Event and (B) when received in cash, any Net
Proceeds
released from escrow, pledge or other set aside pursuant to
the
contract, settlement or other instrument or document
governing such
aspect of the Extraordinary Event and amounts no longer
reserved under
generally accepted accounting principles as described in
clause (v)
of the immediately preceding sentence.

"Obligor" means, jointly and severally, the
Company and each
of its Subsidiaries whether existing on the date hereof or
created or
acquired hereafter.

"Officers' Certificate" means a certificate signed
by any
two Officers of the Company or the Guarantor, as the case
may be.

"Paying Agent" has the meaning assigned to such
term in
Section 2.03 hereof.

"Payment Notes" has the meaning assigned to such
term in the
Guarantee Agreement.

"Permitted Indebtedness" means Indebtedness deemed
by the
Board of Directors to be appropriate to maintain the assets,
business
and operations of the Company and the Subsidiaries pending
sale of the
following types: (i) Indebtedness to the Guarantor arising
under the
Management Services Agreement; (ii) Purchase Money
Indebtedness; (iii)
Indebtedness of wholly-owned Subsidiaries of the Company to
the
Company or other wholly-owned Subsidiaries of the Company;
(iv)
Capital Leases; and (v) letters of credit in the ordinary
course of
business in the aggregate amount outstanding at any time not
to exceed
$1 million.

"Permitted Liens" means (i) Liens securing the
Securities
and the obligations of the Company hereunder; (ii) Liens
existing on
the Effective Date or thereafter created to replace such
Liens to the
extent they secure the same obligations and are in property
having an
aggregate value no greater than the property subject to the
replaced
Liens; (iii) Liens in favor of the Trustee or the Collateral
Agent on
all property and funds held or collected by the Trustee or
the
Collateral Agent as security for the performance by the
Company of its
obligations of payment to, and reimbursement and
indemnification of,
the Trustee and the Collateral Agent for their services
under the
Indenture and the Collateral Agency Agreement, respectively;
(iv)
Liens for taxes or assessments and similar charges, or
imposed in
connection with litigation or asserted claims, either not
delinquent
or contested in good faith by appropriate proceedings and as
to which
the Company or a Subsidiary thereof shall have set aside on
its books
such reserves as it deems adequate (provided such reserves
shall be
in accordance with generally accepted accounting
principles); (v)
Liens incurred, or pledges and deposits made, in connection
with
workers' compensation, unemployment insurance and other
social
security benefits, or securing the performance of leases,
statutory
obligations, progress payments, surety and appeal bonds and
other
obligations of like nature, but only to the extent any of
the
foregoing are incurred in good faith in the ordinary course
of
business; (vi) Liens imposed by law, such as mechanics',
carriers',
warehousemen's, materialmen's and vendors' Liens, incurred
in good
faith in the ordinary course of business (other than those
arising in
respect of amounts past due unless being contested by
appropriate
proceedings as to which the Company or a Subsidiary shall
have set
aside on its books such reserves as it deems adequate
(provided such
reserves shall be in accordance with generally accepted
accounting
principles)); (vii) zoning restrictions, easements,
licenses,
covenants, reservations, restrictions on the use of real
property or
irregularities of title incident thereto that do not in the
aggregate
materially detract from the value of the property or assets
of the
Company or any of its Subsidiaries, as the case may be, or
materially
impair the use of such property in the operation of the
Company's or
any Subsidiary's business; (viii) Liens created by
Subsidiaries of the
Company to secure Permitted Indebtedness of such
Subsidiaries to the
Company or to wholly-owned Subsidiaries thereof; (ix) Liens
on assets
acquired in connection with the incurrence of Purchase Money
Indebtedness in accordance with the definition thereof; and
(x)
Capital Leases.

"Plan of Reorganization" means the Company's
Modified
Amended Consolidated Plan of Reorganization, as amended,
modified or
supplemented from time to time prior to the Effective Date.

"Pledge Agreement" means the pledge agreement of
even date
herein executed and delivered by the Guarantor in accordance
with the
Guarantee Agreement.

"Pledged Collateral" shall have the meaning
assigned to such
term in the Collateral Agency Agreement.

"principal" of a debt security means the principal
of such
security plus the then applicable premium, if any, on such
security
and less the amount, if any, of any unamortized original
issue
discount.

"Purchase Money Indebtedness" means any
Indebtedness
incurred by the Company or any of its Subsidiaries in
connection with
the acquisition by the Company or such Subsidiary, after the
Effective
Date, of equipment or other fixed assets, including
Indebtedness
incurred to finance, refinance or refund the cost (including
the cost
of construction) of such assets; provided that (i) the
principal
amount of such Indebtedness does not exceed 75 percent of
the fair
market value of the assets being acquired or the cost of
construction
paid by or charged to the Company or such Subsidiary and
(ii) such
Indebtedness shall not be secured by any assets of the
Company or any
Subsidiary of the Company other than the assets with respect
to which
such Indebtedness is incurred.

"Receivables" means all "accounts", all "chattel
paper", all
"instruments" evidencing "accounts" and all proceeds
thereof, as each
such term is defined in the Uniform Commercial Code as in
effect in
the State of New York on the Effective Date.

"Redemption Price" has the meaning assigned to
such term in
Section 3.03 hereof.

"Registrar" has the meaning assigned to such term
in Section
2.03 hereof.

"Riedel Note" means a Promissory Note dated April
7, 1987
executed by Arthur Riedel in favor of the Guarantor and
subsequently
assigned to a Subsidiary of the Company.

"RMC LONESTAR" means RMC LONESTAR, a California
general
partnership.

"RMC Settlement Agreement" means the agreement
relating to
RMC LONESTAR, dated April 8, 1994, to which the Company,
Lone Star
California and the Guarantor are parties as in effect on the
Effective
Date.

"Sale of Assets" means any sale, lease or other
conveyance
of assets (including by way of merger or consolidation or
pursuant to
a sale-and-leaseback transaction) of the Company or any of
its
Subsidiaries (including the Capital Stock of any Subsidiary
of the
Company but excluding the Capital Stock of the Company), as
the case
may be; provided, however, that the term "Sale of Assets"
shall not
include (i) any sale of inventory in the ordinary course of
business
or (ii) any sales of assets in the ordinary course, other
than
inventory, to the extent that the aggregate amount received
from such
sales in any fiscal year or portion thereof after the
Effective Date
does not exceed $100,000; and (iii) any sale, lease,
conveyance or
other disposition of assets among or between the Company and
one of
its wholly-owned Subsidiaries or among or between such
wholly-owned
Subsidiaries, including, without limitation, the merger of
any such
Subsidiary with and into the Company or any other wholly-
owned
Subsidiary of the Company.

"SEC" means the Securities and Exchange
Commission.

"Securities" has the meaning assigned thereto in
the second
paragraph of this Indenture.

"TIA" means the Trust Indenture Act of 1939 (15
U.S. Cod
77aaa-77bbbb), as amended and as in effect on the date of
the
execution and delivery of this Indenture, except as provided
in
Section 9.03.

"Trustee" means the party named as such in this
Indenture
until a successor replaces it and thereafter means the
successor.

"Trust Officer" means any officer of the Trustee
assigned
by the Trustee to administer its corporate trust matters.

SECTION 1.02 Incorporation by Reference of Trust Indenture
Act.

Whenever this Indenture refers to a provision of
the TIA,
the provision is incorporated by reference in and made a
part of this
Indenture.

The following TIA terms used in this Indenture
have the
following meanings:

"indenture securities" means the Securities.

"indenture security holder" means a
Securityholder.

"indenture to be qualified" means this Indenture.

"indenture trustee" or "institutional trustee"
means the
Trustee.

"obligor" on the indenture securities means the
Guarantor
and the Obligor.

SECTION 1.03 Rules of Construction.

Unless the context otherwise requires:

(1) a term has the meaning assigned to it;

(2) an accounting term not otherwise defined has
the
meaning assigned to it in accordance with generally accepted
accounting principles in effect from time to time;

(3) "or" is not exclusive;

(4) words in the singular include the plural and
in the
plural include the singular except where the context
manifestly
otherwise requires;

(5) provisions apply to successive events and
transactions;

(6) "herein", "hereof" and other words of similar
import
refer to this Indenture as a whole and not to any particular
Article,
Section or other subdivision;

(7) references to Sections or Articles herein,
unless
otherwise expressly specified, refer to Sections or Articles
hereof;

(8) references herein to any action, transaction,
condition
or circumstance permitted under a Section shall be deemed to
refer to
actions, transactions, conditions or circumstances not
prohibited by
the provisions of such Section; and

(9) each covenant in Article 4 hereof shall be
effective
from and after the Effective Date.

ARTICLE 2.

THE SECURITIES

SECTION 2.01 Form and Dating.

The Securities, the notation thereon relating to
the
Guarantee Agreement and the Trustee's certificate of
authentication
shall be substantially in the form set forth in Exhibit B,
which is
incorporated in and forms a part of this Indenture. The
Securities
may have such notations, legends or endorsements as are
required by
law, stock exchange rule or usage. Each Security shall be
dated the
date of its authentication.

SECTION 2.02 Execution and Authentication.

Two Officers shall sign the Securities for the
Obligor by
manual or facsimile signature. The Obligor's seal shall be
reproduced
on the Securities. An Officer of the Guarantor shall sign
the
notation on the Securities relating to the Guarantee
Agreement by
manual or facsimile signature.

If an Officer whose signature is on a Security no
longer
holds that office at the time the Security is authenticated,
the
Security shall nevertheless be valid.

The Trustee shall authenticate Securities for
original issue
in the aggregate principal amount of up to $138,118,000 upon
a written
order of the Obligor signed by two Officers or by an Officer
and an
Assistant Treasurer or Assistant Secretary of the Obligor.
Such order
shall specify the amount of Securities to be authenticated
and the
date on which the original issue of Securities is to be
authenticated.
The Trustee shall thereafter, from time to time,
authenticate
additional Securities for issuance pursuant to Section 4.01
upon a
written order of the Obligor signed by two Officers or by an
Officer
and an Assistant Treasurer or Assistant Secretary of the
Obligor
specifying the amount of Securities to be authenticated and
the date
on which such later issue of Securities is to be
authenticated. The
aggregate principal amount of Securities issued pursuant to
the two
immediately preceding sentences may not exceed $192,804,000
except as
provided in Section 2.07.

The Securities shall be issuable only in
registered form
without coupons and only in denominations of $1,000 and
integral
multiples thereof; provided, however, any Securities
issuable pursuant
to Section 4.01 may be issuable in denominations of $100 and
integral
multiples thereof.

SECTION 2.03 Registrar and Paying Agent.

The Company and each Signing Subsidiary shall
enter into an
appropriate agency agreement with any Agent not a party to
this
Indenture. The agreement shall implement the provisions of
this
Indenture that relate to such Agent. The Company shall
notify the
Trustee of the name and address of any Agent not a party to
this
Indenture. If the Company fails to maintain a Registrar or
Paying
Agent, the Trustee may act as such.

The Company initially appoints the Trustee as
Registrar and
Paying Agent.

SECTION 2.04 Paying Agent to Hold Money in Trust.

Each Paying Agent shall hold in trust for the
benefit of the
Securityholders or the Trustee all moneys held by the Paying
Agent for
the payment of principal of or interest on the Securities
(whether
such money has been paid to it by the Company, any Signing
Subsidiary
or the Guarantor), and shall notify the Trustee and the
Guarantor of
any default by the Company or any Subsidiary in making any
such
payment. While any such default continues, the Trustee may
require
a Paying Agent to pay all money held by it to the Trustee.
The
Company may at any time require a Paying Agent to pay all
money held
by it to the Trustee. Upon payment over to the Trustee,
none of the
Company, the Signing Subsidiaries, the Guarantor nor the
Paying Agent
shall have any further liability to any Securityholder or to
the
Trustee for the money paid over. If the Company acts as
Paying Agent,
it shall segregate and hold as a separate trust fund all
money held
by it as Paying Agent.

SECTION 2.05 Securityholder Lists.

The Trustee shall preserve in as current a form as
is
reasonably practicable the most recent list available to it
of the
names and addresses of Securityholders. If the Trustee is
not the
Registrar, the Company shall furnish to the Trustee not
later than 15
days after each record date a list, in such form and as of
such date
as the Trustee may reasonably require, of the names and
addresses of
Securityholders and at such other times as the Trustee may
request in
writing, within 30 days after such request, a list of
similar form and
content as of a date not more than 15 days prior to the time
such list
is furnished.

SECTION olid Transfer and Exchange.

When Securities are presented to the Registrar or
Co-Registrar with a request to register their transfer or to
exchange
them for an equal principal amount of Securities of other
authorized
denominations accompanied by a written instrument or
instruments of
transfer, in form satisfactory to the Company and the
Registrar, duly
executed by the registered owner or by his or her attorney
duly
authorized in writing, the Registrar shall register the
transfer or
make the exchange. To permit registrations of transfer and
exchanges,
the Trustee shall authenticate Securities (accompanied by
notations
relating to the Guarantee Agreement duly endorsed by the
Guarantor)
at the Registrar's request. The Company or the Trustee, as
the case
may be, shall not be required (i) to issue, authenticate,
register the
transfer of or exchange any Security during a period
beginning at the
opening of business 15 days before the mailing of a notice
of
redemption of the Securities selected for redemption under
Section
3.03 and ending at the close of business on the day of such
mailing,
or (ii) to register the transfer of or exchange any Security
so
selected for redemption in whole or in part, except the
unredeemed
portion of Securities being redeemed in part.

Anything in this Indenture to the contrary
notwithstanding,
but subject to the payment of interest to the Holders of the
Securities on the applicable record date, the parties hereto
and any
agent thereof shall deem and treat the Holder of any
Securities, prior
to due presentment thereof for registration of transfer, as
the
absolute owner of such Securities for all purposes (whether
or not the
Securities shall be overdue and notwithstanding any notation
of
ownership or other writing thereon) and neither the Company,
the
Trustee nor any agent of the Company or the Trustee shall be
affected
by any notice to the contrary.

SECTION 2.07 Replacement Securities.

If the Holder of a Security claims that the
Security has
been mutilated, lost, destroyed or wrongfully taken, the
Obligor shall
execute and issue and, upon a written order of the Obligor
signed by
two Officers or by an Officer and an Assistant Treasurer or
Assistant
Secretary of the Obligor, the Trustee shall authenticate
(accompanied
by a notation relating to the Guarantee Agreement duly
endorsed by the
Guarantor) and deliver a replacement Security if their
respective
reasonable requirements as well as the requirements of
applicable law
are met and, in the case of a mutilated Security, such
mutilated
Security is surrendered to the Trustee. If required by the
Trustee,
the Guarantor or the Company, an indemnity bond must be
furnished by
such Holder in an amount sufficient in the judgment of the
Trustee or
the Company, as the case may be, to indemnify and protect
the Company,
the Guarantor, the Trustee and any other Agent and hold them
harmless
from any loss which any of them may suffer if a Security is
replaced.
The Company or the Trustee may charge for its reasonable
expenses in
replacing a Security.

Every replacement Security is an additional
obligation of
the Obligor.

SECTION 2.08 Outstanding Securities.

Securities outstanding at any time are all the
Securities
authenticated by the Trustee except those canceled by it,
those
delivered to it for cancellation, and those described in
this Section
as not outstanding. Subject to Section 2.09, a Security
does not
cease to be outstanding solely because the Company, the
Guarantor or
one of their Subsidiaries or Affiliates is a Holder of the
Security.

If the Paying Agent (if other than the Company) or
the
Trustee holds on a redemption date or Maturity Date money
sufficient
to pay the principal of, and accrued interest on, the
Securities
payable on that date, then on and after that date such
Securities
shall be deemed to be no longer outstanding and interest on
them shall
cease to accrue.

SECTION 2.09 Securities Held by the Company or an
Affiliate.

In determining whether the Holders of the required
principal
amount of Securities have concurred in any direction,
request, waiver
or consent under this Indenture, Securities owned by the
Company or
the Guarantor or any Subsidiary or Affiliate of the Company
or the
Guarantor shall be disregarded, except that for the purposes
of
determining whether the Trustee shall be protected in
relying on any
such direction, request, waiver or consent, only Securities
which the
Trustee knows are so owned shall be so disregarded.

SECTION 2.10 Temporary Securities.

Until definitive Securities are ready for
delivery, the
Company may prepare and execute and the Trustee shall
authenticate
(accompanied by a notation relating to the Guarantee
Agreement duly
endorsed by the Guarantor) and deliver temporary Securities.
Temporary Securities shall be substantially in the form of
definitive
Securities, but may have such variations as the Company
considers
appropriate for temporary Securities. The Company shall
prepare and
execute and the Trustee shall authenticate and deliver
definitive
Securities (accompanied by a notation relating to the
Guarantee
Agreement duly endorsed by the Guarantor) in exchange for
temporary
Securities without unreasonable delay.

SECTION 2.11 Cancellation.

The Company may at any time deliver Securities to
the
Trustee for cancellation. The Registrar and Paying Agent
shall
forward to the Trustee any Securities surrendered to them
for
registration of transfer, exchange or payment. The Trustee
shall
cancel all Securities surrendered for registration of
transfer,
exchange, payment or cancellation and shall destroy canceled
Securities and deliver a certificate of any such destruction
to the
Company. The Company may not issue new Securities to
replace
Securities that it has paid or delivered to the Trustee for
cancellation.

SECTION 2.12 Defaulted Interest.

If and to the extent the Obligor defaults in a
payment of
interest on the Securities, it shall pay the defaulted
interest in any
lawful manner. It may pay the defaulted interest to the
Persons who
are Securityholders on a subsequent special record date.
The Company
shall fix such record date and payment date. At least 15
days before
the record date, the Company shall mail to Securityholders,
with a
copy to the Trustee, a notice that states the record date,
payment
date and amount of interest to be paid.

SECTION 2.13 Deemed Repayments.

If the Guarantor is required to make any payment
of
Guarantor Obligations, and actually makes such payment to
the Trustee
whether in cash, Payment Notes or a combination thereof (all
such
payments, in the aggregate, "Guarantee Payments"), the
Trustee shall
thereupon immediately (and without the need for any notice
or action
on the part of any Person) be deemed to have collected the
amount of
the Guarantee Payments in respect of Securities under
Article 6
hereof, to be applied in accordance with Section 6.10. In
computing
any such deemed collection, each Payment Note issued by the
Guarantor
shall be deemed to have a value equal to the principal
amount thereof.

ARTICLE 3.

REDEMPTION

SECTION 3.01 Notices to Trustee.

If the Obligor elects to redeem Securities
pursuant to
Section 3.07 or is required to redeem Securities pursuant to
Section
3.08, it shall notify the Guarantor and the Trustee, by
means of an
Officers' Certificate at least 60 days prior to the
redemption date
(unless a shorter notice period shall be satisfactory to the
Trustee),
of the redemption date and the principal amount of
Securities to be
redeemed.

SECTION 3.02 Selection of Securities to be Redeemed.

If less than all the Securities are to be
redeemed, the
Trustee shall select the Securities to be redeemed on a pro
rata
basis, by lot or such other method as the Trustee shall deem
fair and
equitable. The Trustee shall make the selection from
Securities
outstanding and not previously called for redemption. The
Trustee may
select for redemption portions of the principal of
Securities that
have denominations larger than $1,000. The Securities and
portions
of them it selects shall be in amounts of $1,000 or whole
multiples
of $1,000. The provisions of this Indenture that apply to
Securities
called for redemption also apply to portions of Securities
called for
redemption. For purposes of any such selection the Obligor
will, upon
request of the Trustee, close for a period of 15 days
preceding the
mailing of any notice of redemption the registry books of
the Obligor
with respect to the Securities. If the Obligor shall so
direct,
Securities registered in the name of the Obligor or
Affiliate of the
Obligor shall not be included in the Securities selected for
redemption.

SECTION 3.03 Notice of Redemption.

At least 30 days but not more than 60 days before
a
redemption date, the Obligor shall mail a notice of
redemption by
first-class mail to each Holder whose Securities are to be
redeemed.

The notice shall identify the Securities and the
principal
amount thereof to be redeemed (if less than all of the
Securities are
to be redeemed) and shall state:

(1) the redemption date;

(2) that the Securities will be redeemed at a
price equal
to the principal amount to be redeemed plus accrued and
unpaid
interest to the date of redemption (the "Redemption Price");

(3) and the amount of accrued interest to be paid
on the
Securities as a part of the Redemption Price;

(4) the name and address of the Paying Agent;

(5) the provisions of the Securities and this
Indenture
pursuant to which the Securities are to be redeemed;

(6) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption
Price;

(7) that interest on Securities called for
redemption
ceases to accrue on and after the redemption date unless the
Company
shall default in the payment of the Redemption Price; and

(8) the CUSIP number of the Securities.

At the Obligor's request, the Trustee shall give
the notice
of redemption in the Obligor's name and at the Obligor's
expense.

SECTION 3.04 Effect of Notice of Redemption.

Once a notice of redemption is mailed in
accordance with the
provisions hereof, the Securities called for redemption
become due and
payable on the redemption date at the Redemption Price and,
on and
after such redemption date (unless the Obligor shall default
in the
payment of the Redemption Price on the date fixed for
redemption),
such Securities shall cease to bear interest and such
Securities shall
be deemed not to be outstanding hereunder and shall not be
entitled
to any benefits hereunder, except to receive payment of the
Redemption
Price. Upon surrender to the Paying Agent, such Securities
shall be
paid at the Redemption Price.

SECTION 3.05 Deposit of Redemption Price.

On or before the Business Day immediately
preceding the
redemption date, the Obligor shall deposit with the Paying
Agent money
in funds immediately available at the opening of business on
the
redemption date sufficient to pay the Redemption Price of
all
Securities to be redeemed on that date.

SECTION 3.06 Securities Redeemed in Part.

Upon surrender of a Security that is redeemed in
part, the
Trustee shall authenticate for the Holder a new Security
equal in
principal amount to the unredeemed portion of the Security
surrendered.

SECTION 3.07 Optional Redemption.

The Securities may be redeemed at the option of
the Obligor
in whole at any time or in part from time to time at the
Redemption
Price.

SECTION 3.08 Mandatory Redemption.

Within two Business Days after receipt of Net
Proceeds by
the Obligor, it shall deposit all Net Proceeds received in
the Cash
Collateral Account; provided, however, prior to making a
deposit of
Net Proceeds, (i) the Obligor shall set aside out of such
Net Proceeds
cash reserves sufficient to cause the Obligor to have at
least $5
million of cash; and in addition (ii) if approved by the
Board of
Directors of the Company by resolution made in good faith,
the Obligor
may retain (a) the amount specified in such resolution up to
an
aggregate $5 million of such Net Proceeds, in order to meet
the
anticipated working capital needs of the Obligor for the one-
year
period commencing on the first day following the
consummation of the
Extraordinary Event in respect of which such deposit is made
and (b)
up to $1 million of any payment received in respect of
casualty
insurance covering the Pledged Collateral to replace the
Pledged
Collateral in respect of which such insurance payment is
received.
Within 20 days after such deposit, the Obligor shall provide
to the
Trustee an Officers' Certificate setting forth (a) a
calculation of
the Net Proceeds received by the Obligor, (b) a calculation
of any
amount set aside for working capital in accordance with
clause (i)
above, (c) a copy of any Board Resolution passed in
accordance with
clause (ii) above, and (d) a calculation of the amount being
deposited
in the Cash Collateral Account. If at any time there is at
least $5
million in the Cash Collateral Account, all money in the
Cash
Collateral Account shall be paid over to the Trustee and
used, upon
receipt of the Officers' Certificate delivered pursuant to
Section
3.01, by the Trustee to redeem Securities at the Redemption
Price.

ARTICLE 4.

COVENANTS

SECTION 4.01 Payment of Securities.

The Obligor shall pay the principal of and
interest on the
Securities on the dates and in the manner provided in the
Securities
and this Indenture. Principal and interest shall be
considered paid
on the date due if the Paying Agent (if other than the
Company) holds
on that date money sufficient to pay all principal and
interest then
due. The Obligor shall pay interest on overdue principal at
the rate
specified in the Securities. At the Company's election
evidenced by
an Officers' Certificate delivered at least 30 days prior to
the
interest payment date, in lieu of providing for a cash
payment on any
interest payment date prior to the Maturity Date, the
Obligor may pay
all or any portion of the interest due on any such interest
payment
date by authorizing the Trustee by written order pursuant to
Section
2.02 hereof to authenticate and deliver as an interest
payment
additional Securities in an aggregate principal amount equal
to the
amount of such interest payment or the portion thereof not
paid in
cash. The Trustee shall distribute such Securities
authorized in lieu
of cash to Holders pro rata. Any portion of interest
payable to a
Holder which, but for the provisions of Section 2.02
relating to
authorized denominations would otherwise be payable in
additional
Securities, shall be payable in cash.

SECTION 4.02 Maintenance of Office or Agency.

The Company hereby designates the Corporate Trust
Office of
the Trustee as an agency of the Company in accordance with
Section
2.03.

SECTION 4.03 Sale of Assets and Subsidiaries; Corporate
Existence.

(a) The Company shall use all reasonable
commercial efforts
to cause, and shall conduct the business of the Company and
its
Subsidiaries in a manner calculated to cause, its assets and
the
assets and/or capital stock of its Subsidiaries
expeditiously to be
sold at the best obtainable prices to produce Net Proceeds
to be
applied to redemption and repayment of the Securities timed
in a
manner calculated to repay the Securities in full in cash on
or before
the Maturity Date.

(b) The Company will do or cause to be done all
things
necessary to preserve and keep in full force and effect its
corporate
existence and, pending its sale or liquidation, the
corporate
existence of each Subsidiary of the Company; provided,
however, that
the Company shall not be required to cause its Subsidiaries
to
preserve their corporate existence if the Board of Directors
shall
determine that the preservation thereof is no longer
desirable in the
conduct of the business of the Company and its Subsidiaries
as a whole
and if the loss thereof is not disadvantageous in any
material respect
to the Holders. The Company shall not consolidate or merge
with or
into any Person. The Subsidiaries that have executed this
Indenture
are the only Subsidiaries of the Company on the date hereof.
If at
any time hereafter the Company shall create or acquire a
Subsidiary
it shall, within two Business Days thereafter, cause such
Subsidiary,
(i) by supplemental indenture, to become obligated under
this
Indenture and the Securities jointly and severally with, and
to be
included in the definition of, the Obligor and (ii) by
supplemental
agreement, to become obligated under the Collateral Agency
Agreement,
and all documents, instruments and other writings required
thereby,
as if it were a party thereto as a Subsidiary of the Company
on the
date hereof.

SECTION 4.04 Payment of Taxes.

The Company will pay or discharge or cause to be
paid or
discharged, before the same shall become delinquent (i) all
material
taxes, assessments and governmental charges levied or
imposed upon the
Company or any Subsidiary of the Company, or any of their
properties,
and (ii) all lawful claims for labor, materials and supplies
which,
if unpaid, might by law become a material Lien upon the
property of
the Company or any Subsidiary of the Company; provided,
however, that
the Company shall not be required to pay or discharge or
cause to be
paid or discharged any such tax, assessment, charge or claim
whose
amount, applicability or validity is being contested in good
faith by
appropriate proceedings and for which it has set aside on
its books
such reserves as it deems adequate and are in accordance
with
generally accepted accounting principles.

SECTION 4.05 Maintenance of Properties.

Pending sale, the Company will cause the material
properties
owned by the Company or any Subsidiary of the Company for
use in the
conduct of its business or the business of any such
Subsidiary to be
maintained and kept in good condition, repair and working
order
(subject to ordinary wear and tear) and will cause to be
made all
necessary repairs thereof, all as in the judgment of the
Company may
be necessary so that the business carried on in connection
therewith
may be properly and advantageously conducted; provided,
however, that
nothing in this Section shall prevent the Company from
discontinuing
the maintenance or repair of any such properties if such
discontinuance is, in the judgment of the Company, desirable
in the
conduct of its business or the business of any Subsidiary or
in
connection with the sale of any of its assets or assets of
any
Subsidiary and not disadvantageous in any material respect
to the
Holders.

SECTION 4.06 SEC Reports.

At such times as the Obligor may be required to
file reports
and other information with the SEC pursuant to Section 13 or
15(d) of
the Exchange Act, the Obligor shall deliver to the Trustee,
within 15
days after the Obligor files with the SEC copies of its
annual and
quarterly reports and other information, documents and
reports (or
copies of such portions of any of the foregoing as the SEC
may by
rules and regulations prescribe) copies of such documents
which it is
required to file pursuant to such Sections. The Obligor
will mail
copies of its annual reports and quarterly reports as filed
with the
SEC, other than exhibits to any such report unless such
exhibits are
themselves incorporated by reference in such report, to any
Securityholder upon request. If the Obligor is not subject
or shall
cease to be subject to the requirements of Section 13 or
15(d) of the
Exchange Act, the Company shall commencing on January 1,
1995 deliver
to the Trustee and to each Securityholder, within 15 days
after the
date by which it would have been required to make such a
filing with
the SEC, an audited consolidated balance sheet and annual
financial
statements for the prior year or portion thereof after the
Effective
Date prepared in accordance with generally accepted
accounting
principles and unaudited condensed quarterly financial
statements,
including any notes thereto (but not including any
Management's
Discussion and Analysis of Financial Condition and Results
of
Operations or other materials), each comparable (except with
respect
to periods covered) to that which the Company would have
been required
to include in such annual reports, information, documents or
other
reports if the Company were then subject to the requirements
of
Section 13 or 15(d) of the Exchange Act. The Obligor also
shall
comply with any other applicable provisions of TIA 314(a).

SECTION 4.07 Compliance Certificate.

The Obligor shall deliver to the Trustee within
120 days
after the end of each fiscal year of such Person, and within
60 days
after the end of each of the first three fiscal quarters of
such
Person, an Officers' Certificate signed by such Person's
principal
financial officer, principal accounting officer or principal
executive
officer stating, after a review of the activities of the
Company
during such period and of the Company's performance under
this
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
this
Indenture or the Securities. If the signer does know of any
such
Default or Event of Default, the certificate shall describe
the
Default or Event of Default and its status. The Obligor
will furnish
all other opinions, certificates and other writings required
by the
TIA to the extent applicable including, without limitation,
the
opinions required under Section 314(b)(2) thereof.

SECTION 4.08 Limitation on Stock Payments and Investments.

(a) The Company will not declare any dividends on
any
Capital Stock of the Company or make any payment on account
of the
purchase, redemption or other retirement of any shares of
such stock
or make any distribution in respect thereof.

(b) The Company will not, and will not permit any
of its
Subsidiaries to, directly or indirectly, make any Investment
on or
after the Effective Date; provided, however, that, if
approved by
resolution of the Board of Directors of the Company (i) up
to 20% of
the fair market value (as determined in such resolution) of
the
consideration received in connection with any Extraordinary
Event or
series of related Extraordinary Events may be non-cash
consideration,
including without limitation securities (valued as
determined in such
resolution); and (ii) Investments may be made to the extent
required
pursuant to any Existing Agreement.

SECTION 4.09 Transactions with Affiliates.

The Company will not, and will not permit any of
its
Subsidiaries to, directly or indirectly (i) sell, lease,
exchange,
swap, transfer or otherwise dispose of any amount of their
respective
properties, assets or securities to, (ii) purchase or lease
any
property, assets or securities from, (iii) make any
Investment in, or
(iv) enter into any contract or agreement with or for the
benefit of,
an Affiliate other than the Company or a Signing Subsidiary
except for
transactions required by the Existing Agreements and except
for any
registration rights agreement with respect to any securities
issued
by the Company pursuant to the Plan of Reorganization.

SECTION 4.10 Limitation on Additional Indebtedness and
Liens.

(a) The Company will not, and will not permit any
of its
Subsidiaries to, directly or indirectly, create, incur,
issue, assume,
guarantee or otherwise become directly or indirectly liable
with
respect to any Indebtedness other than Permitted
Indebtedness.

(b) The Company will not, and will not permit any
of its
Subsidiaries to, create, incur, assume or suffer to exist
any Lien on
any asset owned by the Company or any of its Subsidiaries
except
Permitted Liens.

SECTION 4.11 Conflicting Agreements.

The Company will not, and will not permit any of
its
Subsidiaries to, enter into any agreement or execute any
instrument
(other than, in the case of clause (C) below, agreements and
instruments relating to Capital Leases or to Purchase Money
Indebtedness) that by its terms expressly prohibits or
otherwise would
have the effect of prohibiting the Company or any Subsidiary
from (A)
redeeming or otherwise making any payments on or with
respect to the
Securities, (B) granting Liens to secure the Company's
obligations
under the Securities or (C) selling its assets, in each case
pursuant
to the terms of this Indenture.

SECTION 4.12 Limitation on Dividends and Certain Other
Restrictions
Affecting Subsidiaries.

Except as otherwise provided by the terms of this
Indenture
or by the terms of the RMC Settlement Agreement, the Company
will not,
and will not permit any of its Subsidiaries to, create or
otherwise
cause or suffer to exist or to become effective any
encumbrance or
restriction on the ability of any of its Subsidiaries (i) to
pay
dividends, make loans, extend guarantees or make any other
distributions to the Company or to other Subsidiaries, or to
pay any
Indebtedness owed to the Company or a Subsidiary of the
Company; (ii)
to make loans or advances to the Company or another
Subsidiary; or
(iii) to transfer any of their respective properties or
assets to the
Company, other than such encumbrances or restrictions
existing under
or by reason of (a) applicable law, (b) customary non-
assignment
provisions of any lease governing a leasehold interest of
the Company
or any of its Subsidiaries, and (c) restrictions on the
transfer of
assets acquired in connection with the incurrence of
Purchase Money
Indebtedness or Capital Leases.

SECTION 4.13 Waiver of Stay, Extension or Usury Laws.

SECTION 4.14 Maintenance of Insurance and Records,
Compliance with
Law.

(a) Except to the extent that, in the exercise of
its good
faith business judgment, the Company believes the cost to be
incurred
in procuring and/or maintaining insurance to be excessive in
view of
the benefit to be derived therefrom, the Company shall, and
shall
cause its Subsidiaries to, maintain with financially sound
and
reputable insurers such (i) liability and property and
casualty
insurance as may be required by law and (ii) such other
insurance, to
such extent and against such hazards and liabilities (but
subject to
reduction in coverage amount appropriate in light of any
divestitures
of assets made from time to time) equivalent to the
insurance that it
currently maintains. Each such insurance policy shall name
the
Trustee as a loss payee to the extent of its interests
hereunder in
any proceeds payable under such policy and shall provide
that it may
not be cancelled without at least thirty days prior notice
to the
Trustee. Any proceeds in respect of such insurance received
by the
Trustee shall be paid to the Company for application by it
as provided
in Section 3.08; provided, however, if at the time of
receipt of such
proceeds a Default or Event of Default shall have occurred
and be
continuing, such proceeds will be deposited into the Cash
Collateral
Account by the Trustee.

(b) The Company shall keep, or cause to be kept,
true books
and records and accounts in which entries will be made of
all of the
business transactions of the Company and its Subsidiaries
which shall
be full and correct in all material respects, in accordance
with sound
business practices, and reflect in their respective
financial
statements adequate accruals and appropriate reserves, all
in
accordance with generally accepted accounting principles.

(c) The Company shall, and shall cause its
Subsidiaries to,
comply with all statutes, laws, ordinances, or governmental
rules and
regulations to which it is subject, noncompliance with which
would
materially adversely affect the prospects, earnings,
properties,
assets or condition, financial or otherwise, of the Company
and its
Subsidiaries taken as a whole.

SECTION 4.15 Limitation on Redemption of Certain
Indebtedness.

The Company will not, and will not permit any of
its
Subsidiaries to, (i) redeem pursuant to the optional
redemption
provisions thereof, or make any optional payment of
principal on, any
Permitted Indebtedness; (ii) defease Permitted Indebtedness;
or (iii)
issue to the holders of Permitted Indebtedness in exchange
therefor
any property or assets; provided, however, nothing contained
herein
will limit the Company's ability to repay the Guarantor
monies
advanced to or for the benefit of the Company in accordance
with the
Management Services Agreement.

SECTION 4.16 Value of Claims Represented by Securities.

The Obligor covenants and agrees that in any case
commenced
under Chapter 11 of Title 11 of the United States Code
subsequent to
the Effective Date involving the Obligor, the claims
represented by
the Securities shall equal the full principal amount of the
Securities, plus accrued and unpaid interest at the stated
rates set
forth in the Securities.

SECTION 4.17 Notice of Default.

In the event that any Default under this Indenture
shall
occur, the Company will give written notice of such Default
to the
Trustee within 5 Business Days after its occurrence,
specifying the
(i) date on which such Default occurred or when the Company
had Actual
Knowledge thereof and (ii) nature and status of such Default
and the
steps which the Company or its Subsidiaries have taken or
propose to
take in order to cure such Default.

SECTION 4.18 Investment Company Act of 1940.

ARTICLE 5.

RELEASE OF SUBSIDIARIES

SECTION 5.01 Release of Subsidiary.

Upon any Sale of Assets made in compliance with
the terms
of this Indenture which consists of the sale of all of the
capital
stock of a Subsidiary or the sale of a Subsidiary by means
of any
merger or consolidation, such Subsidiary's obligations in
respect of
this Indenture and the Securities shall, without payment of
any
consideration or any further action on the part of any
Person, be
discharged and terminated; provided, however, no such
discharge or
termination shall be effective if at the time of such Sale
of Assets
there exists a Default or Event of Default. Upon its
receipt of an
Officers' Certificate of the Company that a Subsidiary has
ceased to
have any obligations in respect of this Indenture and the
Securities,
the Trustee, upon payment of all amounts due it under
Section 7.07,
shall execute and cause to be filed or delivered any
instrument,
agreement, indenture or document reasonably requested by the
Company
in an Officers' Certificate to fully effect such discharge
and
termination.

ARTICLE 6.

DEFAULTS AND REMEDIES

SECTION 6.01 Events of Default.

An "Event of Default" occurs if:

(1) the Company defaults in the payment of
interest on any
Security 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;

(2) the Company defaults in the payment of the
principal
of any Security 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;

(3) 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 Securities, this Indenture or the
Collateral Agency
Agreement or any other agreement or instrument now or
hereafter
entered into creating, perfecting, or evidencing the Lien in
and on
any of the Pledged Collateral in favor of the Collateral
Agent for the
benefit of the Holders of the Securities, which failure
continues for
a period of 30 days after the earlier of (i) 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 Securities at the time outstanding or (ii) the
date on
which the Company had Actual Knowledge of such failure;

(4) (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 any
Indebtedness
referred to in clause (i) or (iii) of the definition of
Permitted
Indebtedness herein, with an aggregate outstanding principal
amount
in excess of $2 million, whether any such Indebtedness is
outstanding
as of the date of this Indenture or is hereafter
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 this Indenture or hereafter, 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 this
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
Securities;

(5) 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;

(6) the Company and its Subsidiaries, taken as a
whole,
becomes unable generally to pay its debts as they become
due;

(7) 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 an involuntary case or
proceeding,

(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;

(8) 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

and such judgment, decree or order remains unstayed and
in effect
for a period of sixty (60) consecutive days;

(9) 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;

(10) 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

(11) an "Event of Default," as defined in the
Guarantee
Agreement shall have occurred and be continuing.

SECTION 6.02 Acceleration.

If an Event of Default (other than an Event of
Default
specified in Section 6.01(7), (8) or (9)) occurs and is
continuing,
the Trustee by notice to the Company, or the Holders of at
least 25%
in principal amount of the Securities by notice to the
Company and the
Trustee, may declare the principal of and accrued interest
on all the
Securities to be due and payable. Upon such declaration
such
principal and interest shall be due and payable immediately.
If an
Event of Default specified in Section 6.01(7), (8) or (9)
occurs, all
unpaid principal and accrued interest on the Securities then
outstanding shall ipso facto become and be immediately due
and payable
without any declaration or other act on the part of the
Trustee or any
Securityholder. The Holders of at least 66 2/3% of the
principal
amount of the Securities may rescind an acceleration and its
consequences by notice to the Trustee if the rescission
would not
conflict with any judgment or decree and if the outstanding
Events of
Default have been cured or waived except for nonpayments of
any
amounts that have become due solely because of the
acceleration. No
such rescission shall affect any subsequent Default or
impair any
right or remedy with respect thereto.

SECTION 6.03 Other Remedies.

In case the Trustee shall have proceeded to
enforce any
rights under this Indenture and such proceedings shall have
been
discontinued or abandoned for any reason or shall have been
determined
adversely to the Trustee, then and in every such case the
Company, the
Trustee and the Holders shall, subject to any determination
in such
proceeding, be restored respectively to their former
positions and
rights hereunder, and all rights, remedies and powers of the
Company
and the Trustee shall continue as though no such proceeding
had been
taken.

SECTION 6.04 Waiver of Past Defaults.

Subject to Sections 6.02, 6.07 and 9.02, the
Holders of at
least 66 2/3% of the principal amount of the Securities by
notice to
the Trustee may waive an existing Default or Event of
Default and its
consequences or an existing Default or Event of Default
under the
Guarantee Agreement. When such a Default or Event of
Default is
waived, it is cured and ceases.

SECTION 6.05 Control by Majority.

The Holders of a majority in principal amount of
the
Securities may direct the time, method and place of
conducting any
proceeding for any remedy available to the Trustee or
exercising any
trust or power conferred on it under the Indenture and the
Guarantee
Agreement. The Trustee, however, may refuse to follow any
direction
that conflicts with law, this Indenture or the Guarantee
Agreement,
is unduly prejudicial to the rights of any Securityholder or
would
subject the Trustee to personal liability; provided, the
Trustee may
take any other action deemed proper by the Trustee which is
not
inconsistent with such direction. A record date may be set
for
purposes of determining who may exercise such control.

SECTION 6.06 Limitation on Suits.

Except as provided in Section 6.07, a
Securityholder may
pursue a remedy with respect to this Indenture, the
Guarantee
Agreement or the Securities only if:

(1) the Holder gives to the Trustee written
notice of a
continuing Event of Default under the Indenture or the
Guarantee
Agreement, as the case may be;

(2) the Holders of at least 25% in principal
amount of the
Securities outstanding make a written request to the Trustee
to pursue
the remedy;

(3) such Holder or Holders offer to the Trustee
indemnity
reasonably satisfactory to the Trustee against any loss,
liability or
expense;

(4) the Trustee does not comply with the request
within 60
days after receipt of the request and the offer of
indemnity; and

(5) during such 60-day period the Holders of a
majority in
principal amount of the Securities do not give the Trustee a
direction
inconsistent with the request.

A Securityholder may not use this Indenture or the
Guarantee
Agreement to prejudice the rights of any other
Securityholder or to
obtain a preference or priority over any other
Securityholder.

SECTION 6.07 Rights of Holders to Receive Payment.

Subject only to Sections 5.01 and 6.02 hereof, the
right of
any Holder of a Security to receive payment of principal of
and
interest on the Security or under the Guarantee Agreement,
on or after
the respective due dates (prior to any acceleration)
expressed in the
Security or the Guarantee Agreement, as the case may be, or
to bring
suit for the enforcement of any such payment on or after
such
respective dates, shall not be impaired or affected without
the
consent of the Holder, except that no Holder of Securities
shall have
the right to institute any such suit if and to the extent
that the
institution or prosecution thereof or the entry of judgment
therein
would, under applicable law, result in the surrender,
impairment,
waiver or loss of the Lien of the Collateral Agency
Agreement upon any
of the Pledged Collateral.

SECTION 6.08 Collection Suit by Trustee.

If an Event of Default specified in Section
6.01(1) or (2)
occurs and is continuing, the Trustee may recover judgment
in its own
name and as trustee of an express trust against the Obligor
for the
whole amount of principal and interest in default or against
the
Guarantor for the amounts provided for in the Guarantee
Agreement.

SECTION 6.09 Trustee May File Proofs of Claims.

The Trustee may file such proofs of claim and
other papers
or documents as may be necessary or advisable in order to
have the
claims of the Trustee, any predecessor Trustee and the
Securityholders
allowed in any judicial proceedings relative to the Obligor,
the
Guarantor, their creditors or their property.

SECTION 6.10 Priorities.

If the Trustee collects any money pursuant to this
Article,
it shall pay out the money in the following order:

First: to the Trustee for amounts due under
Section 7.07;

Third: to the Company.

The Trustee may fix a record date and payment date
for any
payment by it to Securityholders pursuant to this Section.

SECTION 6.11 Undertaking for Costs.

ARTICLE 7.

TRUSTEE

SECTION 7.01 Acceptance of Trusts; Duties of Trustee.

The Trustee hereby accepts the trusts imposed upon
it by
this Indenture and covenants and agrees to perform the same
as herein
expressed.

Co If an Event of Default has occurred and is
continuing,
the Trustee shall exercise such of the rights and powers
vested in it
by this Indenture, and use the same degree of care and skill
in their
exercise, as a prudent Person would exercise or use under
the
circumstances in the conduct of his or her own affairs.

(b) Except during the continuance of an Event of
Default
under this Indenture:

(1) The Trustee need perform only those duties
that are
specifically set forth in this Indenture and no others.

(2) In the absence of bad faith on its part, the
Trustee
may conclusively rely, as to the truth of the statements and
the
correctness of the opinions expressed therein, upon
certificates or
opinions furnished to the Trustee and conforming to the
requirements
of this Indenture. Where a particular provision of this
Indenture
requires delivery of certain certificates and opinions to
the Trustee,
the Trustee shall examine the certificates and opinions to
determine
whether or not they conform to the requirements of this
Indenture.

(c) The Trustee may not be relieved from
liability for its
own negligent action, its own negligent failure to act or
its own
willful misconduct, except that:

(1) This paragraph does not limit the effect of
paragraph
(b) of this Section 7.01.

(2) The Trustee shall not be liable with respect
to any
error of judgment made in good faith by a Trust Officer,
unless it is
proved that the Trustee was negligent in ascertaining the
pertinent
facts.

(3) The Trustee shall not be liable with respect
to any
action it takes or omits to take in good faith in accordance
with a
direction received by it pursuant to Section 6.05.

me Every provision of this Indenture that in any
way
relates to the Trustee is subject to paragraphs (a), (b) and
(c) of
this Section 7.01.

(e) The Trustee may refuse to exercise any of its
rights
or powers under this Indenture or the Guarantee Agreement at
the
request of any Holders unless such Holders shall have
offered to the
Trustee indemnity reasonably satisfactory to it against any
loss,
liability or expense. No provision of this Indenture or the
Guarantee
Agreement shall require the Trustee to expend or risk its
own funds
or otherwise incur any financial liability in the
performance of any
of its duties hereunder or thereunder, or in the exercise of
its
rights or power, if it has reasonable grounds for believing,
and does
believe in good faith, that repayment of such funds or
adequate
indemnity against such risk or liability is not reasonably
assured to
it.

(f) The Trustee shall not be liable for interest
on any
money received by it except as the Trustee may agree in
writing with
the Company or the Guarantor, as the case may be. Money
held in trust
by the Trustee need not be segregated from other funds
except to the
extent required by law.

SECTION 7.02 Rights of Trustee.

(2) Before the Trustee acts or refrains from
acting
hereunder or under the Guarantee Agreement, it may require
an
Officers' Certificate and/or an Opinion of Counsel from the
Company
or the Guarantor, respectively, and may consult with its
counsel. The
Trustee shall not be liable for any action it takes or omits
to take
in good faith in reliance on such Officers' Certificate,
Opinion of
Counsel or advice of such counsel.

(3) The Trustee may act hereunder or under the
Guarantee
Agreement through agents and shall not be responsible for
the
misconduct or negligence of any agent appointed with due
care.

SECTION 7.03 Individual Rights of Trustee.

The Trustee in its individual or any other
capacity may
become the owner or pledgee of Securities and may otherwise
deal with
the Company, the Guarantor or an Affiliate or Subsidiary
thereof with
the same rights it would have if it were not Trustee. Any
Agent may
do the same with like rights. The Trustee, however, must
comply with
Sections 7.10 and 7.11.

SECTION 7.04 Trustee's Disclaimer.

The Trustee makes no representation as to the
validity or
adequacy of this Indenture, the Guarantee Agreement, the
Collateral
Agency Agreement or the Securities, and it shall not be
responsible
for any statement in the Securities, this Indenture, the
Pledge
Agreement, the Collateral Agency Agreement or the Guarantee
Agreement
other than its certificate of authentication on the
Securities.

SECTION 7.05 Notice of Defaults.

If a Default under this Indenture, the Collateral
Agency
Agreement, the Pledge Agreement or under the Guarantee
Agreement
occurs and is continuing and if it is known to the Trustee,
the
Trustee shall mail to each Securityholder 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 Security or a
Default in
payment of Guarantor Obligations under the Guarantee
Agreement, the
Trustee may withhold the notice if and so long as it in good
faith
determines that withholding the notice is in the interests
of
Securityholders.

SECTION 7.06 Reports by Trustee to Holders.

Within 60 days after each May 15 beginning with
May 15,
1995, the Trustee shall mail to each Securityholder a brief
report
dated as of such date in accordance with and to the extent
required
under TIA 313(a). The Trustee also shall comply with TIA
313(b).

SECTION 7.07 Compensation and Indemnity.

The Obligor shall pay to the Trustee, from time to
time,
such reasonable compensation for all services rendered by it
hereunder
(which compensation shall not be limited by any law on
compensation
of a trustee of an express trust). The Obligor shall
reimburse the
Trustee upon request for all reasonable out-of-pocket
expenses,
advances and disbursements incurred or made by the Trustee
in
accordance with any provision of this Indenture (including
the
reasonable compensation and the expenses and disbursements
of its
agents and counsel), except any such expense, disbursement
or advance
as may be attributable to its negligence or bad faith.

The Obligor shall indemnify the Trustee for, and
hold it
harmless against, any loss, expense or liability (including
the
reasonable fees and expenses of agents and counsel) incurred
without
negligence, bad faith or willful misconduct on its part, in
connection
with the acceptance or administration of this Indenture and
the
performance of its duties hereunder, including the costs and
expenses
of defending itself against any claim or liability in
connection with
the exercise or performance of any of its powers or duties
hereunder.

To secure the Company's payment obligations in
this Section,
the Trustee shall have a lien prior to the Securities on all
money or
property held or collected by the Trustee except that held
in trust
to pay principal and interest on particular Securities.

When the Trustee incurs expenses or renders
services after
an Event of Default specified in Section 6.01(7), (8) or (9)
occurs
or under Section 6(a)(6), (7) or (8) under the Guarantee
Agreement,
the expenses and the compensation for services are intended
to
constitute expenses of administration under any Bankruptcy
Law.

SECTION 7.08 Replacement of Trustee.

A resignation or removal of the Trustee and
appointment of
a successor Trustee shall become effective only upon the
successor
Trustee's acceptance of appointment as provided in this
Section.

The Trustee may resign by so notifying the Company
and the
Guarantor. The Holders of a majority in principal amount of
the
Securities may remove the Trustee by so notifying the
Trustee, the
Guarantor and the Company and such Holders may appoint a
successor
Trustee with the Company's consent. The Company may remove
the
Trustee if:

(1) the Trustee fails to comply with Section
7.10;

(2) the Trustee is adjudged a bankrupt or an
insolvent;

(3) a receiver or other public officer takes
charge of the
Trustee or its property; or

(4) the Trustee becomes incapable of acting.

If the Trustee fails to comply with Section 7.10,
any Holder
may petition any court of competent jurisdiction for the
removal of
the Trustee and the appointment of a successor Trustee.

A successor Trustee shall deliver a written
acceptance of
its appointment to the retiring Trustee, the Guarantor and
to the
Obligor. Thereupon the resignation or removal of the
retiring Trustee
shall become effective and the successor Trustee shall have
all the
rights, powers and duties of the Trustee under this
Indenture, the
Pledge Agreement, the Collateral Agency Agreement and the
Guarantee
Agreement. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee, upon
payment of
all amounts due it under Section 7.07 hereof, shall promptly
transfer
all property held by it as Trustee to the successor Trustee,
subject
to the lien provided for in Section 7.07.

SECTION 7.09 Successor Trustee by Merger, etc.

SECTION 7.10 Eligibility; Disqualification.

SECTION 7.11 Preferential Collection of Claims Against
Company.

The Trustee shall comply with TIA 311(a),
excluding any
creditor relationship listed in TIA 311(b). A Trustee who
has
resigned or been removed shall be subject to TIA 311(a) to
the
extent indicated.

ARTICLE 8.

DISCHARGE OF INDENTURE

SECTION 8.01 Termination of Obligor's Obligations.

All of the Obligor's obligations under this
Indenture shall
terminate when Securities previously authenticated and
delivered
(other than mutilated, destroyed, lost or stolen Securities
which have
been replaced or paid) have been delivered to the Trustee
for
cancellation or if:

(1) the Securities mature within six months or
all of them
are to be called for redemption within six months;

(2) the Obligor or the Guarantor 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 the
principal and interest due at maturity or the Redemption
Price due at
redemption, as the case may be. The Obligor or the
Guarantor 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 hereunder as of the
date of such
deposit; and

Notwithstanding the foregoing, the Obligor's obligations in
Sections
2.03, 2.04, 2.05, 2.06, 2.07, 4.01, 7.07, 7.08 and 8.03
shall survive
until the Securities are no longer outstanding, and the
Company's
obligations pursuant to Sections 7.07 and 8.03 shall survive
any such
termination.

After a deposit pursuant to this Section 8.01, the
Trustee
upon request shall acknowledge in writing the discharge of
the
Obligor's obligations under the Securities and this
Indenture except
for those surviving obligations specified above.

SECTION 8.02 Application of Trust Money.

The Trustee shall hold in trust money or U.S.
Government
Obligations deposited with it pursuant to Section 8.01, 3.05
and 3.08
or pursuant to the Guarantee Agreement. It shall apply the
deposited
money and the money from U.S. Government Obligations through
the
Paying Agent and in accordance with this Indenture to the
payment of
principal of and interest on the Securities. Upon written
direction
of the Company, the Trustee shall invest monies held by it
hereunder
in U.S. Government Obligations. Any written direction of
the Company
pursuant to the immediately preceding sentence shall be such
as to
cause the Trustee to hold U.S. Government Obligations
payable as to
principal or interest on or before the applicable date of
payment on
the Securities or the Guarantee, as the case may be, in such
amounts
as will provide the money necessary to make such payment.
The Trustee
shall not be liable for any investment made in accordance
with such
written direction.

SECTION 8.03 Repayment to Company.

The Trustee and the Paying Agent shall promptly
pay to the
Company upon request any excess money or securities held by
them at
any time. The Trustee and the Paying Agent shall pay to the
Company
upon request any money held by them for the payment of
principal or
interest that remains unclaimed for two years; provided,
however, that
the Trustee or such Paying Agent, before being required to
make any
such repayment, may, at the expense of the Company, cause to
be
published once in a newspaper of general circulation in The
City of
New York or cause to be mailed to each Holder, or both, a
notice
stating that such money remains and that, after a date
specified
therein, which shall not be less than 30 days from the date
of such
publication or mailing, any unclaimed balance of such money
then
remaining will be repaid to the Company. After payment to
the
Company, Securityholders entitled to the money must look to
the
Company for payment as general creditors unless an
applicable
abandoned property law designates another Person.

SECTION 8.04 Reinstatement.

If the Trustee or Paying Agent is unable to apply
any money
or U.S. Government Obligations in accordance with Section
8.01 by
reason of any legal proceeding or by reason of any order or
judgment
of any court or governmental authority enjoining,
restraining or
otherwise prohibiting such application, the Obligor's
obligations
under this Indenture and the Securities shall be revived and
reinstated as though no deposit has occurred pursuant to
Section 8.01
until such time as the Trustee or Paying Agent is permitted
to apply
all such money or U.S. Government Obligations in accordance
with
Section 8.01; provided, however, that if the Obligor has
made any
payment of interest on or principal of any Securities
because of the
reinstatement of its obligations, the Obligor shall be
subrogated to
the rights of the Holders of such Securities to receive such
payment
from the money or U.S. Government Obligations held by the
Trustee or
Paying Agent.

ARTICLE 9.

AMENDMENTS

SECTION 9.01 Without Consent of Holders.

(1) to cure any ambiguity, omission, defect or
inconsistency;

(2) to comply with Section 5.01 or Section 4(c)
of the
Guarantee Agreement;

(3) to provide for uncertified securities; or

(4) to make any change that does not adversely
affect the
rights of any Securityholder.

SECTION 9.02 With Consent of Holders.

The Obligor, pursuant to a resolution of its Board
of
Directors evidenced by an Officers' Certificate and the
Trustee, may
amend or supplement this Indenture or the Securities and the
Guarantor, with the consent of the Trustee, may amend or
supplement
the Guarantee Agreement, in each case without notice to any
Securityholder but with the written consent of the Holders
of at least
66 2/3% (except as hereinafter provided) of the principal
amount of
the Securities. Subject to Section 6.07, the Holders of a
majority
(except as hereinafter provided) in principal amount of the
Securities
may waive compliance by the Obligor with any provision of
this
Indenture or the Securities and compliance by the Guarantor
with any
provision of the Guarantee Agreement, without notice to any
Securityholder. However, without the consent of each
Securityholder
affected, no amendment, supplement or waiver (other than as
provided
in Section 6.02 hereof), including a waiver pursuant to
Section 6.04,
may:

(1) reduce the amount of Securities whose Holders
must
consent to an amendment, supplement or waiver;

(2) reduce the rate of or change the time for
payment of
interest on any Security;

(3) reduce the principal of or change the fixed
maturity
of any Security or alter the redemption provisions with
respect
thereto;

(4) waive a default in the payment of principal
of,
premium, if any, or interest on any Security;

(5) make any Security payable in money other than
that
stated in the Security;

(6) make any change in Section 6.04, Section 6.07
or this
Section 9.02; or

(7) release the Guarantor from any obligation to
make
payments of Guarantor Obligations under the Guarantee
Agreement or to
change the definition of Guarantor Obligations.

Promptly after an amendment under this Section
becomes
effective, the Company or the Guarantor, as the case may be,
shall
mail to the Securityholders a notice briefly describing the
amendment.

SECTION 9.03 Compliance with Trust Indenture Act.

Every amendment to this Indenture or the
Securities shall
comply with the TIA as then in effect.

SECTION 9.04 Revocation and Effect of Consents.

After an amendment, supplement or waiver under
this
Indenture or the Guarantee Agreement becomes effective with
respect
to the Securities, it shall bind every Securityholder.

SECTION 9.05 Notation on or Exchange of Securities.

SECTION 9.06 Trustee Protected.

The Trustee need not sign any amendment,
supplement or
waiver under this Indenture or the Guarantee Agreement
authorized
pursuant to this Article that adversely affects the
Trustee's rights.
The Trustee shall be entitled to receive and rely upon an
Opinion of
Counsel and an Officers' Certificate that any supplemental
indenture
complies with the Indenture.

ARTICLE 10.

SECURITY

SECTION 10.01 Collateral Agency Agreement, Pledge Agreement
and
Guarantee Agreement.

The Company hereby agrees to grant and, with
respect to the
Company's outstanding Common Stock, the Guarantor has
granted pursuant
to the Pledge Agreement, to the Trustee for the benefit of
the Trustee
and the Securityholders a first priority security interest
in the
Pledged Collateral and the issued and outstanding Common
Stock,
respectively.

Each Securityholder, by accepting a Security,
agrees to all
of the terms and provisions of the Collateral Agency
Agreement
pursuant to which the Securities will be secured (including,
without
limitation, the provisions of Section 9 of the Collateral
Agency
Agreement providing for the release of the Pledged
Collateral), the
Guarantee Agreement and the Pledge Agreement, as the same
may be in
effect or may be amended from time to time pursuant to their
respective terms. The due and punctual payment of the
principal and
interest on the Securities, when and as the same shall be
due and
payable, whether on an interest payment date, at maturity,
by
acceleration, following call for redemption or otherwise,
and the
payment and performance of all other obligations of the
Obligor to the
Holders or the Trustee under this Indenture, according to
the terms
hereof, shall be secured as and to the extent (and solely to
the
extent) provided in the Collateral Agency Agreement, the
Pledge
Agreement and the Guarantee Agreement.

SECTION 10.02 Further Assurances.

The Company and its Subsidiaries have executed and
delivered, filed and recorded (to the extent that it may
currently do
so under applicable law) and will execute and deliver, file
and
record, all instruments and documents, and have done and
will do all
such acts and other things, at the Company's expense, as may
be
necessary or desirable, or that the Trustee may reasonably
request,
to subject the Pledged Collateral to the Liens intended to
be created
pursuant to the Collateral Agency Agreement (which Liens are
defined
herein as the "Security Interests"), to perfect, maintain
and protect
the Security Interests and, in the case of the existence of
an Event
of Default, to enable the Trustee to exercise and enforce
its rights
and remedies with respect to the Security Interests.

The Company shall cause (a) TIA 314(b), relating
to
Opinions of Counsel regarding the Liens created under the
Collateral
Agency Agreement and (b) TIA 314(d), relating to the
release of
Pledged Collateral from the Liens created under the
Collateral Agency
Agreement and Officers' Certificates or other documents
regarding fair
value of the Pledged Collateral, to be complied with to the
extent
applicable. Any certificate or opinion required by TIA
314(d) may
be made by an Officer of the Company to the extent permitted
by TIA
314(d).

SECTION 10.03 Authorization of Actions to be Taken by the
Trustee
Under the Collateral Agency Agreement and the Guarantee
Agreement.

Except as otherwise provided therein, the Trustee
may, in
its sole discretion and without the consent of the
Securityholders,
take all actions it deems necessary or appropriate in order
to (i)
enforce any of the terms of the Collateral Agency Agreement,
the
Pledge Agreement and the Guarantee Agreement and (ii)
collect and
receive any and all amounts payable in respect of the
obligations of
the Company thereunder. Such actions shall include, but not
be
limited to, advising, instructing or otherwise directing the
Collateral Agent in connection with enforcing or effecting
any term
or provision of the Collateral Agency Agreement or the
Guarantee
Agreement. Subject to the provisions of the Collateral
Agency
Agreement, the Pledge Agreement and the Guarantee Agreement,
the
Trustee shall have power to institute and to maintain such
suits and
proceedings as it may deem expedient to prevent any
impairment of the
collateral pledged thereunder by any acts that may be
unlawful or in
violation of the Collateral Agency Agreement, the Guarantee
Agreement,
the Pledge Agreement under the Guarantee Agreement or this
Indenture,
and such suits and proceedings as the Trustee may deem
expedient to
preserve or protect its interests and the interests of the
Securityholders in such collateral.

SECTION 10.04 Authorization of Receipt of Funds by the
Trustee Under
the Collateral Agency Agreement and the Guarantee Agreement.

The Trustee is authorized to receive any funds for
the
benefit of Securityholders distributed under the Collateral
Agency
Agreement, the Pledge Agreement or the Guarantee Agreement,
and to
make further distributions of such funds to the Holders
according to
the provisions of this Indenture.

SECTION 10.05 Termination of Security Interest.

Upon the payment in full in cash of all
obligations of the
Obligor under this Indenture and the Securities and upon
payment in
full (whether in cash, by issuance of Payment Notes, or any
combination thereof) of the obligations of the Guarantor
under the
Guarantee Agreement, the Trustee shall, at the request of
the Company
or the Guarantor, as the case may be, deliver a certificate
to the
Collateral Agent stating that such obligations have been
paid in full.

SECTION 10.06 Security Documents.

The Obligor shall take any and all actions
required to cause
the Collateral Agency Agreement to create, as security for
the
obligations under this Indenture and the Securities, a valid
and
enforceable perfected lien in and on all of the Pledged
Collateral,
in favor of the Collateral Agent for the benefit of the
Holders of the
Securities and the Trustee, superior to and prior to the
rights of all
third Persons and subject to no other Liens other than
Permitted
Liens.

ARTICLE 11.

MISCELLANEOUS

SECTION 11.01 Trust Indenture Act Controls.

If any provision of this Indenture limits,
qualifies or
conflicts with another provision which is required or deemed
to be
included in this Indenture by the TIA, the required or
deemed
provision shall control.

SECTION 11.02 Notices.

Any notice or communication by the Obligor or the
Trustee
to the other is duly given if in writing and when delivered
in person,
mailed by first-class mail to the other's address stated in
this
Section 11.02. The Obligor or the Trustee by notice to the
other may
designate additional or different addresses for subsequent
notices or
communications.

If a notice or communication is mailed to any
Securityholder
or the Obligor in the manner provided above within the time
prescribed, it is duly given, whether or not the addressee
receives
it.

If the Company mails a notice or communication to
Securityholders, it shall mail a copy to the Trustee and
each Agent
at the same time.

All notices or communications shall be in writing.

The Obligor's address is:

c/o Lone Star Industries, Inc.
300 First Stamford Place
Stamford, CT 06912-0014
Attn: Secretary
Telephone: (203) 969-8600
Facsimile: (203) 969-8686

The Trustee's address is:

Chemical Bank
450 West 33rd Street
15th Floor
New York, New York 10001
Attn: Corporate Trust Administration
Telephone: (212) 613-7655
Facsimile: (212) 613-7800

SECTION 11.03 Communication by Holders with Other Holders.

Securityholders may communicate pursuant to TIA
312(b)
with other Securityholders with respect to their rights
under this
Indenture, the Guarantee Agreement or the Securities. The
Company,
the Trustee, the Guarantor, the Registrar and anyone else
shall have
the protection of TIA 312(c).

SECTION 11.04 Action by Securityholders.

Whenever in this Indenture or the Guarantee
Agreement, it
is provided that the Holders of a specified percentage in
aggregate
principal amount of the Securities may take any action
(including the
making of any demand or request, the giving of any notice,
consent or
waiver or the taking of any other action), the fact that at
the time
of taking any such action the Holders of such specified
percentage
have joined therein may be evidenced by (a) any instrument
or any
number of instruments of similar tenor executed by Holders
of
Securities in person or by agent or proxy appointed in
writing, or (b)
by the record of the Holders of Securities in favor thereof,
at any
meeting of Holders duly called and held in accordance with
the
provisions of Article 12, or (c) by a combination of such
instrument
or instruments and any such record of such meeting of
Holders, but in
each case only to the extent that the Holders of Securities
shall not
have revoked such action, consent or vote pursuant to
Section 9.04 and
Section 11.06.

SECTION 11.05 Proof of Execution of Instruments and of
Holding of
Securities.

For purposes of this Indenture and the Guarantee
Agreement,
proof of the execution of any instrument by a Holder of
Securities or
his or her agent or proxy and proof of the holding by any
Person of
any of the Securities shall be sufficient if made in the
following
manner:

(1) The fact and date of execution of any such
instrument
shall be proved in any manner which the Trustee deems
sufficient.

(2) The ownership of Securities shall be proved
by the
register of such Security or by a certificate of the
Registrar
thereof.

(3) The Trustee shall not be bound to recognize
any Person
as a Securityholder unless his or her title to any Security
is proved
in the manner provided in this Article 11.

The Trustee may require such additional proof of
any matter
referred to in this Section 11.05 as it shall deem
necessary.

SECTION 11.06 Revocation of Consents; Future Holders Bound.

Subject to Section 9.04, at any time prior to (but
not
after) the evidencing to the Trustee, as provided in Section
11.04,
of the taking of any action under this Indenture by the
Holders of the
required percentage of the aggregate principal amount of the
Securities specified in this Indenture in connection with
such action,
any Holder of a Security which is shown by the evidence to
be included
in the Securities the Holders of which have consented to
such action
may, by filing written notice with the Trustee at its
Corporate Trust
Office and upon proof of holding as provided in Section
11.05, revoke
such action so far as concerns such Security. Except as
aforesaid,
any such action taken by the Holder of any Security shall be
conclusive and binding upon such Holder and upon all future
holders
and owners of such Security and of any Security issued in
exchange or
substitution therefor, irrespective of whether or not any
notation in
regard thereto is made upon such Security. Any action taken
under
this Indenture by the Holders of the required percentage of
the
aggregate principal amount of the Securities specified in
this
Indenture in connection with such action shall be conclusive
and
binding upon the Company, the Trustee, and the holders of
all the
Securities.

SECTION 11.07 Rules by Trustee and Agents.

The Trustee may make reasonable rules for action
by or at
a meeting of Securityholders under this Indenture. The
Registrar or
Paying Agent may make reasonable rules and set reasonable
requirements
for their respective functions under this Indenture.

SECTION 11.08 Certificate and Opinion as to Conditions
Precedent.

Upon any request or application by the Company to
the
Trustee to take any action under this Indenture, the
Guarantee
Agreement, the Collateral Agency Agreement or the Pledge
Agreement,
the Company or the Guarantor, as the case may be, shall
furnish to the
Trustee:

(1) an Officers' Certificate stating that, in the
opinion
of the signer, all conditions precedent, if any, provided
for in this
Indenture, the Guarantee Agreement, the Collateral Agency
Agreement
or the Pledge Agreement, as the case may be, relating to the
proposed
action have been complied with; and

(2) an Opinion of Counsel stating that, in the
opinion of
such counsel, all such conditions precedent have been
complied with.

SECTION 11.09 Statements Required in Certificate or
Opinion.

Each certificate or opinion with respect to
compliance with
a condition or covenant provided for in this Indenture, the
Guarantee
Agreement, the Collateral Agency Agreement or the Pledge
Agreement,
shall include:

(1) a statement that the Person making such
certificate or opinion has read such covenant or condition;

(2) a brief statement as to the nature and
scope of
the examination or investigation upon which the statements
or opinions
contained in such certificate or opinion are based;

(3) a statement that, in the opinion of such
Person,
he or she has made such examination or investigation as is
necessary
to enable such Person to express an informed opinion as to
whether or
not such covenant or condition has been complied with; and

(4) a statement as to whether or not, in the
opinion
of such Person, such condition or covenant has been complied
with.

SECTION 11.10 Legal Holidays.

A "Legal Holiday" is a Saturday, a Sunday or a day
on which
banking institutions are not obligated by law, regulation or
executive
order to remain closed in The City of New York, in the State
of New
York or in the city in which the Trustee or any Paying Agent
under
this Indenture administers its corporate trust business. If
a payment
date is a Legal Holiday at a place of payment, payment may
be made at
that place on the next succeeding day that is not a Legal
Holiday, and
no interest shall accrue on that payment for the intervening
period.

A "Business Day" is a day other than a Legal
Holiday.

SECTION 11.11 No Recourse Against Others.

All liability of any director, officer, employee
or
stockholder, as such, of the Obligor or the Guarantor with
respect to
the Securities, the Collateral Agency Agreement, the Pledge
Agreement
and the Guarantee Agreement is waived and released.

SECTION 11.12 Table of Contents, Headings, etc.

SECTION 11.13 Duplicate Originals.

The parties may sign any number of copies of this
Indenture.
Each signed copy shall be an original, but all of them
together
represent the same agreement.

SECTION 11.14 Governing Law.

The laws of the State of New York, without regard
to
principles of conflicts of law, shall govern this Indenture
and the
Securities.

SECTION 11.15 No Adverse Interpretation of Other
Agreements.

This Indenture may not be used to interpret
another
indenture, loan or debt agreement of the Company or a
Subsidiary. Any
such indenture, loan or debt agreement may not be used to
interpret
this Indenture.

SECTION 11.16 Successors.

All agreements of the Company and the Guarantor in
this
Indenture, the Guarantee Agreement and the Securities shall
bind their
successors. All agreements of the Trustee in this Indenture
and the
Guarantee Agreement shall bind its successors.

SECTION 11.17 Separability.

ARTICLE 12.

MEETINGS OF HOLDERS OF SECURITIES

SECTION 12.01 Purposes of Meetings.

A meeting of Holders of Securities may be called
at any time
and from time to time pursuant to the provisions of this
Article 12
for any of the following purposes:

(a) to give any notice to the Company or to the
Trustee,
or to give any direction to the Trustee, or to waive any
non-performance hereunder, and its consequences, or to take
any other
action authorized to be taken by Holders of Securities
pursuant to any
of the provisions of this Indenture or the Guarantee
Agreement;

(b) to remove the Trustee and appoint a successor
trustee
pursuant to the provisions of Section 7.08;

(c) to consent to the execution of an indenture
or
indentures supplemental hereto or supplemental to the
Guarantee
Agreement pursuant to the provisions of Article 9;

SECTION 12.02 Call of Meetings by Trustee.

SECTION 12.03 Call of Meetings by Company or
Securityholders.

SECTION 12.04 Persons Entitled to Vote at Meeting.

SECTION 12.05 Regulations for Meeting.

Notwithstanding any other provisions of this
Indenture or
the Guarantee Agreement, the Trustee may make such
reasonable
regulations as it may deem advisable for any meeting of
Holders of the
Securities in regard to the appointment of proxies, the
proof of the
holding of Securities, the appointment and duties of
inspectors of
votes, the submission and examination of proxies and other
evidence
of the right to vote, and such other matters concerning the
conduct
of the meeting as it shall think fit. Except as otherwise
permitted
or required by any such regulations, the holding of
Securities shall
be proved in the manner specified in Section 11.05 and the
appointment
of any proxy shall be proved in the manner specified in such
Section
11.05 or by having the signature of the Person executing the
proxy
witnessed or guaranteed by any bank, banker, trust company
or New York
Stock Exchange, Inc. member firm satisfactory to the
Trustee.

At any meeting of Holders of Securities, the
presence of
Persons holding or representing Securities in an aggregate
principal
amount sufficient to take action upon the business for the
transaction
of which such meeting was called shall be necessary to
constitute a
quorum; but, if less than a quorum be present, the Persons
holding or
representing a majority in aggregate principal amount of the
Securities represented at the meeting may adjourn such
meeting with
the same effect, for all intents and purposes, as though a
quorum had
been present.

SIGNATURES

ROSEBUD HOLDINGS, INC.

By: John J. Martin
Title: Vice President

[SEAL]

Attest:

John S. Johnson
Title: Assistant Secretary

KCOR CORPORATION

By: John J. Martin
Title: Vice President

[SEAL]

Attest:

John S. Johnson
Title: Assistant Secretary

LAS COLINAS CORPORATION

By: John J. Martin
Title: Vice President

[SEAL]

Attest:

John S. Johnson
Title: Assistant Secretary

LONE STAR CALIFORNIA, INC.

By: John J. Martin
Title: Vice President

[SEAL]

Attest:

John S. Johnson
Title: Assistant Secretary

ROSEBUD REAL PROPERTIES, INC.

By: John J. Martin
Title: Vice President

[SEAL]

Attest:

John S. Johnson
Title: Assistant Secretary

SANTA CRUZ CORPORATION

By: John J. Martin
Title: Vice President

[SEAL]

Attest:

John S. Johnson
Title: Assistant Secretary

NAZARETH CEMENT CORPORATION

By: John J. Martin
Title: Vice President
[SEAL]

Attest:

John S. Johnson
Title: Assistant Secretary

ROSEBUD FALCON CORPORATION

By: John J. Martin
Title: Vice President
[SEAL]

Attest:

John S. Johnson
Title: Assistant Secretary

ROSEBUD GENERAL CORPORATION

By: John J. Martin
Title: Vice President

[SEAL]

Attest:

John S. Johnson
Title: Assistant Secretary

CHEMICAL BANK

By: John Generale
Title: Vice President

[SEAL]

Attest:

Sal Smith
Title: Trust Officer
EXHIBIT B
REGISTERED [Face of Security]
REGISTERED
NUMBER
DOLLARS

ROSEBUD HOLDINGS, INC.
........
and Subsidiaries

10% ASSET PROCEEDS NOTE DUE 1997

ROSEBUD HOLDINGS, INC., a Delaware corporation
(herein
called the "Company") and its subsidiaries for value
received, hereby
promise to pay to _______________ or registered assigns, the
principal
sum of _______________ Dollars on July 31, 1997, and to pay
interest
thereon as provided on the reverse hereof, until the
principal hereof
is paid or duly provided for.

Interest Payment Dates: January 31 and July 31 of each year,
commencing July 31, 1994

Record Dates: January 15 and July 15 of each year,
commencing July 15,
1994

The provisions on the reverse of this certificate
are
incorporated as if set forth on the face hereof.

IN WITNESS WHEREOF, ROSEBUD HOLDINGS, INC. and its
subsidiaries have caused this instrument to be duly signed
under their
respective corporate seals.

[SEAL] ROSEBUD HOLDINGS, INC.

By:

Title:

By:

Title:

[SEAL] KCOR CORPORATION

By:

Title:

By:

Title:

[SEAL] LAS COLINAS CORPORATION

By:

Title:

By:

Title:

[SEAL] LONE STAR CALIFORNIA,
INC.

By:

Title:

By:

Title:

[SEAL] ROSEBUD REAL PROPERTIES,
INC.

By:

Title:

By:

Title:

[SEAL] SANTA CRUZ CORPORATION

By:

Title:

By:

Title:

[SEAL] NAZARETH CEMENT
CORPORATION

By:

Title:

By:

Title:

[SEAL] ROSEBUD FALCON
CORPORATION

By:

Title:

By:

Title:

[SEAL] ROSEBUD GENERAL
CORPORATION

By:

Title:

By:

Title:

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Securities referred
to in the within-mentioned Indenture.

CHEMICAL BANK
as Trustee

By:
Authorized Officer

Dated:
[REVERSE OF SECURITY]

ROSEBUD HOLDINGS, INC.
and Subsidiaries

10% ASSET PROCEEDS NOTE DUE 1997

1. Interest. ROSEBUD HOLDINGS, INC., a Delaware
corporation (the "Company"), and its Subsidiaries (with the
Company
on a joint and several basis, the "Obligor") promise to pay
interest
on the principal amount of this Security at the rate per
annum shown
above. The Obligor will pay interest semi-annually in
arrears on
January 31 and July 31 of each year, commencing July 31,
1994.
Interest on the Securities will accrue from the most recent
date to
which interest has been paid (or, if no interest has been
paid, from
March 1, 1994). Interest on overdue principal shall accrue
at the
rate per annum of 11% from the due date until paid in full.
Interest
shall be computed on the basis of a 360-day year of 12 30-
day months.

2. Method of Payment; Deemed Repayment.

(a) The Obligor will pay interest on the
Securities
(except defaulted interest) to the persons who are
registered Holders
of Securities at the close of business on the record date
set forth
on the face of this Security next preceding the applicable
interest
payment date. Holders must surrender Securities to a Paying
Agent to
collect principal payments. The Obligor will pay principal
and
interest in money of the United States that at the time of
payment is
legal tender for payment of public and private debts;
provided,
however, at the election of Company, interest may be paid,
in whole
or in part, on any interest payment date prior to the
Maturity Date
in additional Securities of like tenor with this Security in
a
principal amount equal to such interest payment amount or
part
thereof. Notwithstanding the preceding sentence, the Obligor
may pay
principal and interest by check payable in money of the
United States
mailed to a Holder's registered address.

(b) If the Guarantor is required to make any
Guarantee
Payments, and actually makes such payment to the Trustee,
whether in
cash, Payment Notes (as defined in the Guarantee Agreement)
or a
combination thereof, the Trustee shall thereupon immediately
(and
without the need for any notice or action on the part of any
Person)
be deemed to have collected the amount of such Guarantee
Payments in
respect of the Securities under Article 6 of the Indenture,
to be
applied in accordance with Section 6.10 of the Indenture.
In
computing any such deemed collection, each Payment Note
issued by the
Guarantor shall be deemed to have a value equal to the
principal
amount thereof.

3. Paying Agent and Registrar. Initially,
Chemical Bank
(the "Trustee") will act as Paying Agent and Registrar. The
Company
may change any Paying Agent, Registrar or co-registrar
without notice.
The Company may act in any such capacity.

4. Indenture. The Obligor has issued the
Securities under
an Indenture, dated as March 29, 1994 (the "Indenture"),
between the
Obligor and the Trustee. The terms of the Securities
include those
stated in the Indenture and those made part of the Indenture
by
reference to the Trust Indenture Act of 1939, as amended (15
U.S.Code
77aaa=77bbbb) (the "Act") as in effect on the date of the
Indenture. The Securities are subject to all such terms,
and
Securityholders are referred to the Indenture and the Act
for a
statement of such terms. The Securities are secured
obligations of
the Obligor limited to up to $192,804,000 aggregate
principal amount
(except for Securities issued in substitution for destroyed,
mutilated, lost or stolen Securities). Terms used herein
which are
defined in the Indenture have the meanings assigned to them
in the
Indenture.

5. Optional Redemption. The Securities may be
redeemed
at the option of the Obligor in whole at any time or in part
from time
to time at the principal amount thereof plus accrued and
unpaid
interest to the redemption date (the "Redemption Price").

6. Mandatory Redemption. Within two Business
Days after
receipt of Net Proceeds by the Obligor, it shall deposit all
Net
Proceeds received in the Cash Collateral Account; provided,
however,
prior to making a deposit of Net Proceeds, (i) the Obligor
shall set
aside out of such Net Proceeds cash reserves sufficient to
cause the
Obligor to have at least $5 million of cash; and in addition
(ii) if
approved by the Board of Directors of the Company by
resolution made
in good faith, the Obligor may retain (a) the amount
specified in such
resolution up to an aggregate $5 million of such Net
Proceeds, in
order to meet the anticipated working capital needs of the
Obligor for
the one-year period commencing on the first day following
the
consummation of the Extraordinary Event in respect of which
such
deposit is made and (b) up to $1 million of any payment
received in
respect of casualty insurance covering the Pledged
Collateral to
replace the Pledged Collateral in respect of which such
insurance
payment is received. Within 20 days after such deposit, the
Obligor
shall provide to the Trustee an Officers' Certificate
setting forth
(a) a calculation of the Net Proceeds received by the
Obligor, (b) a
calculation of any amount set aside for working capital in
accordance
with clause (i) above, (c) a copy of any Board Resolution
passed in
accordance with clause (ii) above, and (d) a calculation of
the amount
being deposited in the Cash Collateral Account. If at any
time there
is at least $5 million in the Cash Collateral Account, all
money in
the Cash Collateral Account shall be paid over to the
Trustee and
used, upon receipt of the Officers' Certificate delivered
pursuant to
Section 3.01 of the Indenture, by the Trustee to redeem
Securities at
the Redemption Price.

7. Security. Securityholders are granted a
first priority
interest in the Pledged Collateral, pursuant to the
Collateral Agency
Agreement, as more fully set forth in the Indenture. Each
Securityholder, by accepting a Security, agrees to all of
the terms
and provisions of the Collateral Agency Agreement, the
Guarantee
Agreement and the Pledge Agreement, as the same may be
amended from
time to time.

8. Denominations, Transfer, Exchange. The
Securities are
in registered form without coupons in denominations of
$1,000 and
whole multiples of $1,000 except that additional Securities
issued in
payment of interest pursuant to Section 4.01 of the
Indenture may be
issued in denominations of $100 and whole multiples of $100.
The
transfer of Securities may be registered and Securities may
be
exchanged as provided in the Indenture. The Registrar may
require a
Holder, among other things, to furnish appropriate
endorsements and
transfer documents. No service charge shall be made for any
such
registration of transfer or exchange, but the Company may
require
payment of a sum sufficient to cover any tax or other
governmental
charge payable in connection therewith. The Registrar need
not
exchange or register the transfer of any Security selected
for
redemption in whole or in part (except the
unredeemed portion of Securities being redeemed in part).
Also, it
need not exchange or register the transfer of any Securities
for a
period of 15 days before a selection of Securities to be
redeemed.

9. Persons Deemed Owners. The registered Holder
of any
of the Securities shall be treated as its owner for all
purposes.

10. No Merger or Consolidation; Release of
Subsidiaries.
The Company may not consolidate or merge with or into
another person.
Upon any Sale of Assets made in compliance with the terms of
the
Indenture which consists of the sale of all of the capital
stock of
a Subsidiary or the sale of a Subsidiary by means of any
merger or
consolidation, such Subsidiary's obligations in respect of
the
Indenture and the Securities shall, without payment of any
consideration or any further action on the part of any
Person, be
discharged and terminated; provided, however, no such
discharge or
termination shall be effective if at the time of such Sale
of assets
there is a Default or Event of Default.

11t Amendments and Waivers. Subject to certain
exceptions,
the Indenture or the Securities may be amended with the
consent of the
Holders of at least 66 % of the principal amount of the
Securities
outstanding, and certain existing defaults may be waived
with the
consent of the Holders of at least 66 % of the principal
amount of
the Securities outstanding. Without the consent of any
Securityholder, the Indenture or the Securities may be
amended to cure
any ambiguity, omission, defect or inconsistency, to provide
for
uncertificated Securities in addition to certificated
Securities, to
comply with Section 5.01 of the Indenture or to make any
change that
does not adversely affect the right of any Securityholder.

12. Defaults and Remedies. An Event of Default
is: default
in the payment of interest on any Security when the same
becomes due
and payable, whether at maturity, in connection with any
redemption,
by acceleration or otherwise, which default continues for a
period of
30 days after its due date; default in the payment of the
principal
of any Security 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); failure by
the
Company or any Subsidiaries to observe or perform in any
material
respect any of its other covenants or agreements in the
Securities,
the Indenture or the Collateral Agency Agreement or any
other
agreement or instrument now or hereafter entered into
creating,
perfecting or evidencing the Lien in and on any of the
Pledged
Collateral in favor of the Collateral Agent for the benefit
of the
Trustee and the Holders of the Securities, which failure
continues for
a period of 30 days after the earlier of (i) the date on
which written
notice shall have been given to the Company or (ii) the date
on which
the Company had Actual Knowledge of such failure; failure by
the
Company or any of its Subsidiaries to pay when due any
principal or
interest on any Indebtedness (other than Indebtedness to the
Guarantor
under the Management Services Agreement or Indebtedness of
wholly-owned Subsidiaries of the Company to the Company or
other of
its wholly-owned Subsidiaries) with an aggregate outstanding
principal
amount in excess of $2 million, which default continues for
any period
of grace applicable thereto; 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, 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 Securities; entry of one or
more
final judgments against the Company or any of its
Subsidiaries for
payments of money which in the aggregate exceed $2 million,
by a court
of competent jurisdiction and such judgments are not
rescinded,
annulled, stayed or discharged within 90 days; the Company
and its
Subsidiaries, taken as a whole, becomes unable generally to
pay its
debts as they become due; the commencement of a voluntary
case under
the Federal Bankruptcy law; the occurrence of certain other
events
under a Bankruptcy Law, including but not limited to the
entry of a
judgment for relief in respect of the Company or any of its
Subsidiaries by a court of competent jurisdiction which
remains
unstayed and in effect for 60 days; 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; 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 the
occurrence of an "Event of Default," as defined in the
Guarantee
Agreement.

13. Trustee Dealings with Company. Chemical
Bank, the
Trustee under the Indenture, or any banking institution
serving as
successor Trustee thereunder, in its individual or any other
capacity,
may make loans to, accept deposits from, and perform
services for the
Company, the Guarantor or their Subsidiaries or Affiliates,
and may
otherwise deal with the Company, the Guarantor or their
Subsidiaries
or Affiliates, as if it were not Trustee.

14. No Recourse Against Others. No director,
officer,
employee, or stockholder (except for obligations of the
Guarantor
under the Guarantee Agreement and the Pledge Agreement), as
such, of

the Obligor or the Guarantor shall have any liability for
any
obligations of the Obligor under the Securities, the
Indenture, the
Guarantee Agreement, the Collateral Agency Agreement or the
Pledge
Agreement or for any claim based on, in respect of or by
reason of
such obligations or their creation. Each Securityholder by
accepting
a Security waives and releases all such liability. The
waiver and
release are part of the consideration for the issue of the
Securities.

15. Authentication. This Security shall not be
valid until
authenticated by the manual or facsimile signature of the
Trustee or
an authenticating agent.

16. Abbreviations. Customary abbreviations may
be used in
the name of a Securityholder or an assignee, such as: TEN
COM (=
tenants in common), TEN ENT (= tenants by the entireties,)
JT TEN (=
joint tenants with right of survivorship and not as tenants
in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors
Act).

THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER
UPON WRITTEN
REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE.
REQUESTS MAY BE
MADE TO: ROSEBUD HOLDINGS, INC., c/o LONE STAR INDUSTRIES,
INC., 300
FIRST STAMFORD PLACE, STAMFORD, CT 06912-0014, Attn:
SECRETARY.

NOTATION RELATING TO
GUARANTEE AGREEMENT

The undersigned (hereinafter referred to as the
"Guarantor,"
which term includes any successor person under the Guarantee
Agreement, as defined in the Indenture referred to in the
Security
upon which this notation is endorsed), has unconditionally
guaranteed
the Guarantor Obligations, as defined in the Guarantee
Agreement.

The obligations of the Guarantor to the Holders of
the
Securities and to the Trustee pursuant to the Guarantee
Agreement and
the Indenture, to the extent specified therein, are
expressly set
forth in the Guarantee Agreement and the Indenture and
reference is
hereby made thereto for their precise terms.

No director, officer, employee or stockholder, as
such,
past, present or future, of the Guarantor or any of its
Subsidiaries
shall have any personal liability under the Guarantee
Agreement by
reason of his or its status as such.

The Guarantee Agreement shall not be valid or
obligatory for
any purpose until the certificate of authentication on the
Securities
upon which this notation is made shall have been executed by
the
Trustee under the Indenture by the manual or facsimile
signature of
one of its authorized officers or by an authenticating
agent.

LONE STAR INDUSTRIES,
INC.

By:
_____________________________

(SEAL)
ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to:

____________________________________________________

____________________________________________________
(Print or type assignee's name, address and zip code)

____________________________________________________

____________________________________________________
(Insert Assignee's Soc. Sec. or Tax I.D. No.)

and irrevocably appoint ___________________________
agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him or
her.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .

Date:______________ Signature(s):
________________________________________

________________________________________
(Sign exactly as your
name(s)
appear on the other side of this Security)

GUARANTEE AGREEMENT

This Guarantee, dated as of ____________, 1994, is
made by
LONE STAR INDUSTRIES, INC., a Delaware corporation (the
"Guarantor"),
in favor of each and every "Holder" of "Asset Proceeds
Notes," as such
terms (and all others used herein without definition) are
defined in
accordance with Section 1 below.

W I T N E S S E T H:

WHEREAS, on December 10, 1990, the Guarantor and
certain of
its affiliates (collectively, the "Debtors") filed a
voluntary
petition for relief under Chapter 11 of the U.S. Bankruptcy
Code with
the United States Bankruptcy Court for the Southern District
of New
York (the "Bankruptcy Court");

WHEREAS, on November 4, 1993, the Debtors filed a
Modified
Amended Consolidated Plan of Reorganization (such plan, as
it may be
amended from time to time, the "Plan") in the bankruptcy
proceeding
describing the means by which, and the extent to which,
claims against
the Debtors in such bankruptcy proceeding will be satisfied;

WHEREAS, on February 17, 1994, an order was
entered by the
Bankruptcy Court confirming the Plan; and

WHEREAS, it is a term of the Plan that the
Guarantor shall
execute and deliver this Guarantee, which is the
"Reorganized Lone
Star Guarantee" defined in the Plan;

NOW, THEREFORE, in consideration of the foregoing,
the
sufficiency of which consideration is hereby acknowledged by
the
Guarantor, the Guarantor does hereby covenant and agree with
the
Trustee for the ratable benefit of the Holders as follows:

1. Definitions. The following terms shall have
the
meanings set forth after each:

"Actual Knowledge" shall have the meaning ascribed
thereto
in Section 6 hereof.

"Affiliate", as to any Person, means any other
Person
directly or indirectly controlling or controlled by or under
common
control with that Person including any Subsidiary of that
Person. For
this purpose, "control" means possession, directly or
indirectly, of
the power to direct or cause the direction of the management
or
policies of a Person, whether through the ownership of
voting
securities, by contract or otherwise. Without limiting the
foregoing,
the Guarantor is an Affiliate of the Obligor for purposes
hereof.

"Asset Proceeds Notes" means the notes of the
Obligor, in
the aggregate initial principal amount of $138,118,000,
issued from
time to time by the Obligor pursuant to the Indenture
including,
without limitation, all such notes issued in respect of
interest on
other Asset Proceeds Notes, as the same may be amended,
amended and
restated, modified or supplemented from time to time
(provided,
however, in no event shall any such amendment, amendment and
restatement, modification, supplement or exchange increase
the
principal amount outstanding or any interest rate or fees,
expenses,
premiums or other payments required to be made without the
written
consent of the Guarantor).

"Bankruptcy Court" shall have the meaning ascribed
thereto
in the recitals.

"Bankruptcy Law" shall have the meaning ascribed
thereto in
Section 6 hereof.

"Business Day" means a day other than a Saturday,
Sunday or
a day on which banking institutions are not required by law,
regulation or executive order to be open in The City of New
York, in
the State of New York or in the city in which the Trustee
administers
its corporate trust business.

"Collateral Agency Agreement" shall have the
meaning
ascribed thereto in the Indenture, as the same may be
amended, amended
and restated, modified or supplemented from time to time.

"Compounding Date" means each January 31 and July
31,
commencing on the first such date following the date hereof.

"Consolidated Net Worth" means, at any date of
determination, and as to any Person, the net worth of such
Person and
its Subsidiaries on a consolidated basis determined in
conformity with
generally accepted accounting principles. If such Person
acquires a
Subsidiary or a business is acquired directly or indirectly
by such
Person or any of its Subsidiaries (an "Acquisition") at any
time when
Consolidated Net Worth is to be determined, the Consolidated
Net Worth
of such Person shall be determined so as to give pro forma
effect to
the Acquisition as if such Acquisition occurred as of the
date of
determination. Pro forma adjustments made pursuant to the
preceding
sentence shall reflect only actual transactions.

"Covered Deficiency" means a notional amount,
determined as
of the Maturity Date, equal to the sum of (i) (x)
$88,118,000 minus
(y) the aggregate amount of all payments (principal and
interest and
whether paid upon mandatory redemption, voluntary
prepayment, at
maturity or otherwise) made in cash by the Obligor under the
Asset
Proceeds Notes (such difference calculated from time to
time, the
"Unpaid Balance") plus (ii) interest on the Unpaid Balance
calculated
from time to time, accruing from the date hereof to the
Maturity Date
at the rate of 10% per annum (computed on the basis of a 360-
day year
of twelve 30-day months) and compounded on each Compounding
Date;
provided, however,
that (1) in no event shall the Covered Deficiency exceed
$28,000,000
and (2) if the Unpaid Balance shall be less than $0, the
Covered
Deficiency shall be $0.

"Custodian" shall have the meaning ascribed
thereto in
Section 6 hereof.

"Debtors" shall have the meaning ascribed thereto
in the
recitals.

"Default" means any event which is, or after
notice or
passage of time or both would be, an Event of Default.

"Event of Default" shall have the meaning ascribed
thereto
in Section 6 hereof.

"Exchange Act" shall have the meaning ascribed
thereto in
Section 4(g) hereof.

"Guarantee" means this Guarantee, and any
extensions,
modifications, renewals, restatements, reaffirmations,
supplements or
amendments hereof.

"Guarantor" shall have the meaning ascribed
thereto in the
recitals.

"Guarantor Indenture" means the indenture of even
date
herewith between the Guarantor and Chemical Bank, as
trustee, which
indenture relates to the Guarantor's 10% Senior Notes Due
2003 in the
initial principal amount of $78,000,000.

"Guarantor Obligations" means (i) all amounts due
and
payable by the Obligor under the Asset Proceeds Notes
(including,
without limitation, principal, interest and interest
accruing after
the filing of a petition under any Bankruptcy Law regardless
of
whether such interest is allowed as a claim against the
Obligor) on
the Maturity Date which shall be unpaid by the Obligor, and
not deemed
repaid pursuant to Section 2.13 of the Indenture, on the
first
Business Day following the Maturity Date, but only to the
extent not
exceeding the Covered Deficiency and (ii) all other
obligations of the
Guarantor expressly provided for pursuant to the terms of
this
Guarantee but expressly excluding any obligations under the
Payment
Notes.

"Holder" and "Holders" respectively mean each
holder of an
Asset Proceeds Note and all such holders collectively.

"Indenture" means the Indenture of even date
herewith
between the Obligor and the Trustee relating to the Asset
Proceeds
Notes, as the same may be amended, amended and restated,
modified or
supplemented (provided, however, in no event shall any such
amendment,
amendment and restatement, modification, supplement or
exchange
increase the principal amount outstanding or any interest
rate or
fees, expenses, premiums or other payments required to be
made without
the written consent of the Guarantor).

"Investment" shall have the meaning ascribed
thereto in the
Guarantor Indenture.

"Lien" means, with respect to any asset, any
mortgage, lien,
pledge, charge, security interest or similar encumbrance in
respect
of such asset, whether or not filed, recorded or otherwise
perfected
under applicable law (including any conditional sale or
other title
retention agreement, any capitalized lease in the nature
thereof, and
any filing of or agreement to give any financing statement
under the
New York Uniform Commercial Code or equivalent statutes of
any
jurisdiction other than an information filing).

"Material Restricted Subsidiary" shall have the
meaning
ascribed thereto in Section 6 hereof.

"Maturity Date" shall have the meaning ascribed
thereto in
the Indenture.

"Obligor" means Rosebud Holdings, Inc., a Delaware
corporation and wholly-owned subsidiary of the Guarantor,
and its
subsidiaries on a joint and several basis.

"Officer" means the Chairman of the Board, the
President,
any Senior Vice-President, Executive Vice-President or any
other
Vice-President, the Treasurer or the Secretary of the
Guarantor.

"Officer's Certificate" means a certificate signed
by an
Officer of the Guarantor.

"Opinion of Counsel" means a written opinion from
legal
counsel who is reasonably acceptable to the Trustee. The
counsel may
be an employee of or counsel for the Guarantor or the
Trustee.

"Payment Notes" means the promissory notes of the
Guarantor
which shall (i) be secured to the extent provided in the
Pledge
Agreement and the Collateral Agency Agreement, (ii) mature
on July 31
of the fifth calendar year following the date of issuance,
(iii) bear
interest at a rate equal to 300 basis points above the
current yield
for five-year U.S. Treasury Note obligations as of the date
of the
issuance of such Payment Notes, as set forth in the most
recent prior
weekly statistical release (or any successor release)
published by the
Federal Reserve Bank of New York and designated "H.15(519)
Selected
Interest Rates" and (iv) be issued in substantially the form
set forth
as Exhibit A to the form of Payment Note Indenture.

"Payment Note Indenture" means an indenture,
substantially
in the form of Exhibit A hereto, with such changes thereto
as shall
be required by applicable law, between the Guarantor and the
trustee
thereunder, providing for the issuance of the Payment Notes.

"Payment Notice" shall have the meaning ascribed
thereto in
Section 2 hereof.

"Permitted Investment" shall have the meaning
ascribed
thereto in the Guarantor Indenture.

"Plan" shall have the meaning ascribed thereto in
the
recitals.

"Pledge Agreement" means the pledge agreement of
even date
herewith pursuant to which the Guarantor grants a pledge of
the common
stock of the Obligor to the Trustee to secure the
Guarantor's
obligations hereunder and under the Payment Notes, as the
same may be
amended, amended and restated, modified or supplemented
from time to
time.

"Proscribed Distribution" shall have the meaning
ascribed
thereto in Section 4(a) hereof.

"Restricted Subsidiary" means, in the case of the
Guarantor
and for any time of determination: (A) any Subsidiary which
has
assets with a book value at such time in excess of
$1,000,000 (as
reflected in the Company's most recent audited consolidated
financial
statements) other than: (i) a subsidiary substantially all
of the
physical properties of which are located, and substantially
all of the
business of which is carried on, outside the limits of the
United
States of America (including Alaska and Hawaii) or which is
organized
under the laws of any jurisdiction other than the United
States of
America, the District of Columbia, the Commonwealth of
Puerto Rico or
the States or the possessions of the United States; (ii) a
Subsidiary
the primary business of which consists of purchasing
accounts
receivable and/or making loans secured by accounts
receivable or
providing services directly related thereto, or which is
otherwise
primarily engaged in the finance business; (iii)
Construction
Aggregates Limited, a corporation organized under the laws
of Nova
Scotia, or (iv) the Obligor and its Subsidiaries and its and
their
successors-in-interest; (B) any Subsidiary specified in
clause A(i),
(ii) or (iii) above which the Guarantor, by resolution of
its Board
of Directors, shall have designated as a Restricted
Subsidiary; and
(C) New York Trap Rock Corporation, a Delaware corporation,
and NYTR
Transportation Corp., a Delaware corporation.

"Restricted Stock Payment" shall have the meaning
ascribed
thereto in the Guarantor Indenture.

"SEC" shall have the meaning ascribed thereto in
Section
4(g) hereof.

"Subsidiary" means any Person more than 50% of the
outstanding voting stock of which is owned, directly or
indirectly,
by the Guarantor or by one or more other Subsidiaries. For
the
purposes of this definition, "voting stock" means stock or
partnership
interests or any other equity interest which ordinarily has
voting
power for the election of directors or, if the Person is not
a
corporation, voting power to direct the management of such
Person,
whether at all times or only so long as no senior class of
stock or
equity has such voting power by reason of any contingency.

"TIA" means the Trust Indenture Act of 1939 (15
U.S.C. Code
77aaa-77bbbb) as amended and as in effect on the date of
this
Guarantee, except as provided in Section 9.03 of the
Indenture.

"Trustee" means Chemical Bank, in its capacity as
trustee
under the Indenture.

2. Guarantor Obligations; Payment and Deemed
Repayment.

(a) The Guarantor hereby guarantees the
payment of the
Guarantor Obligations (and only the Guarantor Obligations).
Subject
to Section 6(b) hereof, the Guarantor Obligations shall
become due and
payable by the Guarantor hereunder, if at all, upon notice
(a "Payment
Notice") from the Trustee delivered not earlier than the
first
Business Day following July 31, 1997 as to the Obligor's
failure to
pay the Guarantor Obligations and the amount thereof.
Notwithstanding
any contrary provision hereof, the Guarantor Obligations
hereunder
shall be due and payable hereunder only as expressly
provided in
Section 6(b) or the immediately preceding sentence and,
irrespective
of Section 3 hereof, shall not (except as expressly so
provided) be
subject to acceleration, whether as a result of any
acceleration of
the Asset Proceeds Notes or otherwise.

(b) If any Guarantor Obligations become due
and
payable, the Guarantor shall within five Business Days after
the
Guarantor's receipt of a Payment Notice pay such amounts to
the
Trustee. Such payment may, in the discretion of the
Guarantor, be
made (i) in cash or by check; (ii) by issuance of Payment
Notes (with
such Payment Notes being valued for purposes hereof at their
initial
principal amount); or (iii) by a combination of the types of
payment
described in clauses (i) and (ii). Upon payment of the
Guarantor
Obligations in accordance with this Section 2, (x) all
obligations
under this Guarantee shall terminate in their entirety; and
(y) the
Asset Proceeds Notes shall irrevocably be deemed to be paid
in
accordance with, and to the extent provided in, Section 2.13
of the
Indenture.

(c) Any Payment Notes which the Guarantor
shall
determine to issue in accordance with this Section 2 above
shall be
issued in accordance with the provisions of the TIA and the
Payment
Note Indenture. The Guarantor shall cause the Payment Note
Indenture,
if required under applicable law to be filed in connection
with any
such issuance of Payment Notes, to be duly qualified and
filed under
the applicable provisions of the TIA.

3. Nature of Guarantee. This Guarantee is
unconditional,
irrevocable and continuing in nature. This Guarantee is a
guarantee
of payment and performance, and is not merely a guarantee of
collection.

4. Covenants of Guarantor.

(a) Neither the Guarantor nor any of its
Subsidiaries
shall directly or indirectly demand, accept or receive
payment of any
monies whatsoever by the Obligor, whether by way of
repayment of debt,
dividend, distribution, salary, consulting fee or otherwise,
if such
payment would constitute a breach of Sections 4.08 or 4.09
of the
Indenture on the part of the Obligor (any such prohibited
payment, a
"Proscribed Distribution"). If, notwithstanding the
provisions of
this Guarantee, the Guarantor or any of its Subsidiaries
receives any
Proscribed Distribution (including receipt in any bankruptcy
or
similar proceedings), the Guarantor or such Subsidiary shall
hold such
payment in trust for the Trustee and will promptly turn over
such
payment to the Trustee, in the form received, to be held by
the
Trustee in an interest-bearing trust and applied to the
Guarantor
Obligations if appropriate in accordance with the terms of
this
Guarantee. In the event of (x) any insolvency, bankruptcy,
receivership, custodianship, liquidation, reorganization,
readjustment
of debt, arrangement, composition, moratorium, assignment
for the
benefit of creditors, or other similar proceedings affecting
the
Obligor or its property or assets, or (y) any proceeding
for
voluntary liquidation, dissolution or other winding up or
bankruptcy
or other similar proceedings affecting the Obligor, then and
in any
such event the Asset Proceeds Notes and all amounts due to
the Trustee
under Section 7.07 of the Asset Proceeds Note Indenture
shall first
be (or, in accordance with the terms of the Indenture, be
deemed to
be) indefeasibly paid in cash in full before any payment or
distribution of any character, whether in cash, securities,
obligations or other property, shall be made in respect of
Proscribed
Distributions. The Guarantor hereby irrevocably waives any
claim or
other rights which it may now or hereafter acquire against
the Obligor
that arise from the existence, payment, performance or
enforcement of
the Guarantor's obligations under the Guarantee including,
without
limitation, any right of subrogation, reimbursement,
exoneration,
indemnification, and any right to participate in any claim
or remedy
of any holder of Securities against the Obligor, whether or
not such
claim, remedy or right arises in equity, or under contract,
statute
or common law, including, without limitation, the right to
take or
receive from the Obligor, directly or indirectly, in cash or
other
property or by set-off or in any other manner, payment or
security on
account of such claim or other rights. The Guarantor
acknowledges
that it will receive direct and indirect benefits from the
financing
arrangements contemplated by the Indenture and the waiver
set forth
in this Section 4(a) is knowingly made in contemplation of
such
benefits.

(b) Except as specified in Section 7 hereof
and for
sales of the Subsidiaries of Rosebud Holdings, Inc.
permitted by the
Indenture, the Guarantor shall not sell, transfer, assign,
pledge,
exchange or otherwise encumber or dispose of, or grant any
option or
warrant with respect to, or cause the Obligor to issue, or
grant any
option or warrant with respect to the issuance of, any
capital stock
of the Obligor.

(c) The Guarantor shall not cause the
Obligor to merge
or consolidate with any other Person in violation of the
Indenture.
The Guarantor shall not consolidate or merge with or into,
or sell,
assign, transfer or lease all or substantially all of the
assets of
the Guarantor and its Restricted Subsidiaries, taken as a
whole, to,
any Person unless:

(i) there is no outstanding
Default or Event
of Default; and

(ii) the Person formed by or
surviving any
such consolidation or merger (if other than the Guarantor),
or to
which such sale or conveyance shall have been made, is an
entity
organized and existing under the laws of the United States,
any state
thereof or the District of Columbia; and

(iii) the Person formed by or
surviving any
such consolidation or merger (if other than the Guarantor),
or to
which such sale or conveyance shall have been made, assumes
all the
obligations of the Guarantor under the Guarantee; and

(iv) the Person formed by or
surviving any
such consolidation or merger, or to which such sale or
conveyance
shall have been made (immediately after such transaction and
after
giving effect thereto), (A) has Consolidated Net Worth no
less than
the Consolidated Net Worth of the Guarantor and its
Restricted
Subsidiaries immediately preceding such transaction and (B)
would be
able to borrow $1 under Section 4.10 (without taking into
consideration the proviso thereto) of the Guarantor
Indenture as then
in effect (or, if not then in effect, as in effect
immediately prior
to the termination of its effectiveness).

The Guarantor shall deliver to the Trustee prior
to the
consummation of the proposed transaction an Officer's
Certificate to
the foregoing effect and an Opinion of Counsel stating that
the
proposed transaction complies with this Section 4(c). The
grant of
security interests in assets by the Guarantor in favor of
the lender
or lenders under the Permitted Working Capital Loan, as
defined in the
Guarantor Indenture, required by the Permitted Working
Capital Loan
shall not be deemed for purposes of this Section 4(c) to be
the sale,
assignment, transfer or lease of all or substantially all of
the
assets of the Guarantor and its Restricted Subsidiaries,
taken as a
whole.

(d) The Guarantor shall pay to the Trustee,
from time
to time, such reasonable compensation for all services
rendered by it
hereunder (which compensation shall not be limited by any
law on
compensation of a trustee of an express trust). The
Guarantor shall
reimburse the Trustee upon request for all reasonable out-of-
pocket
expenses, advances and disbursements incurred or made by the
Trustee
in accordance with any provision of this Guarantee
(including the
reasonable compensation, disbursements and expenses of its
agents and
counsel), except any such expense, disbursement or advance
as may be
attributable to its gross negligence or bad faith. The
Guarantor
shall indemnify the Trustee for, and hold it harmless
against, any
loss, expense or liability (including the reasonable fees
and expenses
of agents and counsel) incurred without gross negligence,
bad faith
or willful misconduct on its part, in connection with the
acceptance
or administration of this Guarantee and the performance of
its duties
hereunder, including the costs and expenses of defending
itself
against any claim or liability in connection with the
exercise or
performance of any of its powers or duties hereunder.

(e) Except as contemplated in the second
sentence of
Section 4(c) above, the Guarantor and its Restricted
Subsidiaries
shall do or cause to be done all things necessary to
preserve and keep
in full force and effect its corporate existence; provided,
however,
that the Guarantor and its Subsidiaries shall not be
required to
preserve the corporate existence of any of the Guarantor's
Subsidiaries if the Guarantor's Board of Directors shall
determine
that the preservation thereof is no longer desirable in the
conduct
of the business of the Guarantor and its Subsidiaries as a
whole and
if the loss thereof is not disadvantageous in any material
respect to
the Holders.

(f) The Guarantor will pay or discharge or
cause to
be paid or discharged, before the same shall become
delinquent (i) all
material taxes, assessments and governmental charges levied
or imposed
upon the Guarantor or any Subsidiary, and (ii) all lawful
claims for
labor, materials and supplies which, if unpaid, might by law
become
a material Lien upon the property of the Guarantor or any
Subsidiary;
provided, however, that the Guarantor shall not be required
to pay or
discharge or cause to be paid or discharged any such tax,
assessment,
charge or claim whose amount, applicability or validity is
being
contested in good faith by appropriate proceedings and for
which it
has set aside on its books such reserves as it deems
adequate and are
in accordance with generally accepted accounting principles.

(g) Within 15 days after the Guarantor files
with the
Securities and Exchange Commission (the "SEC") copies of its
annual
and quarterly reports and other information, documents and
reports (or
copies of such portions of any of the foregoing as the SEC
may by
rules and regulations prescribe) which it is required to
file with the
SEC pursuant to Section 13 or 15(d) of the Securities
Exchange Act of
1934, as amended (the "Exchange Act"), the Guarantor shall
deliver the
same to the Trustee. If the Guarantor shall cease to be
subject to
the requirements of Section 13 or 15(d) of the Exchange Act,
the
Guarantor shall deliver to the Trustee, within 15 days after
the date
by which it would have been required to make such a filing
with the
SEC, audited annual financial statements prepared in
accordance with
generally accepted accounting principles and unaudited
condensed
quarterly financial statements, including any notes thereto
(but not
including any Management's Discussion and Analysis of
Financial
Condition and Results of Operations or other Materials),
each
comparable to that which the Guarantor would have been
required to
include in such annual reports, information, documents or
other
reports if the Guarantor were then subject to the
requirements of
Section 13 or 15(d) of the Exchange Act. The Guarantor also
shall
comply with the other provisions of TIA 314(a).

(h) The Guarantor will not itself, and will
not permit
any Restricted Subsidiary to, declare any Dividends or make
any
Restricted Stock Payment or Investment (other than Permitted
Investments) in each case if and to the extent such
declaration,
payment, redemption, retirement or investment would
constitute a
breach of Section 4.08 of the Guarantor Indenture as then in
effect
(or, if the Guarantor Indenture is not then in effect, as in
effect
immediately prior to the termination of its effectiveness).

(i) The Guarantor will not itself, and will
not permit
any of its Restricted Subsidiaries to, engage in any
material
transaction with any of its Affiliates if and to the extent
such
transaction would constitute a breach of Section 4.09 of the
Guarantor
Indenture as then in effect (or, if the Guarantor Indenture
is not
then in effect, as in effect immediately prior to the
termination of
its effectiveness).

(j) The Guarantor will not, and will not
permit any
of its Subsidiaries to, enter into any agreement or execute
any
instrument that by its terms expressly prohibits or
otherwise would
have the effect of prohibiting the Guarantor from making any
payments
pursuant to the terms of this Guarantee.

(k) The Guarantor shall keep, or cause to be
kept,
true books and records and accounts in which entries will be
made of
all of the business transactions of the Guarantor and its
Restricted
Subsidiaries which shall be full and correct in all material
respects,
in accordance with sound business practices, and reflect in
their
respective financial statements adequate accruals and
appropriate
reserves, all in accordance with sound business practice and
generally
accepted accounting principles.

(l) The Guarantor shall, and shall cause its
Subsidiaries to, comply with all statutes, laws, ordinances,
or
governmental rules and regulations to which it is subject,
noncompliance with which would materially adversely affect
the
prospects, earnings, properties, assets or condition,
financial or
otherwise, of the Guarantor and its Subsidiaries taken as a
whole.

(m) In the event that any Default under this
Guarantee
shall occur, the Guarantor will give written notice of such
Default,
within 5 Business Days after the occurrence thereof, to the
Trustee,
specifying (i) the date on which such Default occurred, (ii)
the date
on which the Guarantor had Actual Knowledge thereof and
(iii) the
nature and status of such Default and the steps which the
Guarantor
or its Subsidiaries have taken or propose to take in order
to cure
such Default. The Guarantor shall deliver to the Trustee
within 120
days after the end of each fiscal year of the Guarantor, and
within
60 days after the end of each of the first three fiscal
quarters of
the Guarantor, an Officer's Certificate stating that, after
a review
of the activities of the Guarantor during such period and of
the
Guarantor's performance under this Guarantee, 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 Guarantor in
performing
any of its obligations under this Guarantee. If the signer
does know
of any such Default or Event of Default, the certificate
shall
describe the Default or Event of Default and its status.

5. Continued Effectiveness of this Guarantee.
Subject to
the proviso set forth in the definitions of "Asset Proceeds
Notes" and
"Indenture," the Guarantor hereby expressly agrees that its
obligations hereunder shall be binding irrespective of any
event or
circumstance which might otherwise constitute a legal or
equitable
discharge or defense of a guarantor, indemnitor or surety
under the
laws of any jurisdiction, including, without limitation, any
failure
of, or delay in, due and timely demand or notice, and
regardless of
any change of circumstances, whether or not foreseen or
foreseeable,
whether or not knowledge or notice thereof is imputable to
the
Guarantor, and irrespective of any present or future law or
order of
any jurisdiction (or any agency thereof) purporting to
reduce, amend
or otherwise affect any obligation of the Guarantor under
the terms
hereof or to vary the terms hereof or of the Asset Proceeds
Notes or
the Indenture or any other instrument, writing or
arrangement relating
thereto and irrespective of any other circumstance, whether
or not any
of the foregoing might in any manner or to any extent vary
the
obligations of the Guarantor under this Guarantee or
otherwise
constitute a legal or equitable discharge or defense of a
guarantor,
indemnitor or surety.

The Guarantor hereby consents that at any time and
from time
to time, without notice to the Guarantor, the performance or
observance by the Obligor of any term or covenant of the
Asset
Proceeds Notes or the Indenture or any other instrument
pertaining
thereto, or any other writing or arrangement relating to the
Asset
Proceeds Notes or the Indenture may be waived, the time of
performance
thereof extended, the time of any payment under the Asset
Proceeds
Notes accelerated or extended, and any provisions of the
Asset
Proceeds Notes or the Indenture amended (subject to the
proviso set
forth in the definitions of "Asset Proceeds Notes" and
"Indenture"),
without affecting the liability of the Guarantor hereunder.
The
Guarantor hereby waives presentment and protest of any Asset
Proceeds
Note and waives all notices of every kind which may be
required to be
given by any statute, regulation or rule of law in any
jurisdiction.
The Guarantor hereby consents in all respects to the
execution and
delivery of the Asset Proceeds Notes and the Indenture and
to all of
the terms thereof, and acknowledges receipt of an executed
counterpart
of the Indenture and a specimen of the Asset Proceeds Notes.

6. Events of Default.

(a) An "Event of Default" occurs if:

(1) the Guarantor defaults in the
payment of
Guarantor Obligations when the same become due and payable
in
accordance with Section 2 hereof;

(2) the Guarantor fails to observe or
perform any
of its other covenants or agreements in this Guarantee,
which failure
continues for a period of 30 days after the earlier of (i)
the date
on which written notice of such failure, requiring the
Guarantor to
remedy the same, shall have been given to the Guarantor by
the
Trustee, or to the Guarantor and the Trustee by the Holders
of at
least 25% in aggregate principal amount of the Asset
Proceeds Notes
at the time outstanding or (ii) the date on which the
Guarantor had
Actual Knowledge of such failure;

(3) (a) the Guarantor 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 for borrowed money with an aggregate
outstanding
principal amount in excess of $5 million, whether any such
indebtedness is outstanding as of the date of this Guarantee
or is
hereafter outstanding, which default continues for the
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 Guarantor has, as of the date of this
Guarantee or
hereafter, outstanding at least $5 million aggregate
principal amount
of indebtedness for borrowed money, shall happen and be
continuing for
the period of grace applicable thereto; provided that if
such default
or event of default under such indenture or other instrument
shall be
remedied or cured by the Guarantor or waived by the holders
of such
indebtedness (whether prior to or after acceleration
thereof), then
the Event of Default under this Guarantee 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 Asset Proceeds Notes;

(4) one or more final judgments against
the
Guarantor for payments of money which in the aggregate
exceed $5
million are entered by a court of competent jurisdiction and
such
judgments are not rescinded, annulled, stayed or discharged
within 60
days;

(5) the Guarantor and its Restricted
Subsidiaries, taken as a whole, become unable generally to
pay their
debts as they become due;

(6) the Guarantor or any of its
Material
Restricted 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 an involuntary case
or
proceeding,

(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;

(7) a court of competent jurisdiction
enters a
judgment, decree or order for relief in respect of the
Guarantor or
any of its Material Restricted 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

(8) any bankruptcy or insolvency
petition or
application is filed, or any bankruptcy case or insolvency
proceeding
is commenced against, the Guarantor or any of its Material
Restricted
Subsidiaries and such petition, application, case or
proceeding is not
dismissed or stayed within sixty (60) days.

The term "Material Restricted Subsidiary" shall
mean any
Restricted Subsidiary whose total Consolidated Net Worth
exceeds $5
million as of the end of the most recently completed fiscal
year. The
term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal
or State law for the relief of debtors. The term
"Custodian" means
any receiver, trustee, assignee, liquidator or similar
official under
any Bankruptcy Law. The term "Actual Knowledge" means the
actual
knowledge of any Officer of the Guarantor; provided,
however, that
each Officer of the Guarantor shall be deemed to have actual
knowledge
of any fact that would have come to such Officer's attention
if he or
she had exercised reasonable care in performing his or her
duties,
given the nature of his or her duties and the Guarantor's
business and
organization.

(b) If an Event of Default (other than an
Event of
Default specified in Section 6(a)(6), (7) or (8)) occurs and
is
continuing, the Trustee by notice to the Guarantor, or the
Holders of
at least 25% in principal amount of the Asset Proceeds Notes
by notice
to the Guarantor and the Trustee, may declare the Guarantor
Obligations to be accelerated. If an Event of Default
specified in
Section 6(a)(6), (7) or (8) occurs, all Guarantor
Obligations shall
ipso facto be accelerated without any declaration or other
act on the
part of the Trustee or any Holder. Upon any acceleration of
the
Guarantor Obligations (i) if the Event of Default is
specified in
Section 6(a)(1), any and all Guarantor Obligations shall be
due and
payable immediately and (ii) otherwise, the Guarantor shall
irrevocably deposit in trust with the Trustee immediately
available
funds or U.S. Government Obligations sufficient to pay all
Guarantor
Obligations on the first Business Day after the Maturity
Date. In
order to have money available on a payment date to pay
Guarantor
Obligations, 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. Such deposit shall be
made under
the terms of an irrevocable trust (in form and substance
reasonably
satisfactory to the Trustee), and this Guarantee shall
thereupon
terminate except for the Guarantor's obligations to pay any
Guarantor
Obligations to the extent provided in Section 2 hereof
(which payment
shall be made, to the extent possible, from such trust fund)
and
except that the Trustee shall be obligated to return to the
Guarantor
any amounts remaining in such trust fund after all payments
required
to be made therefrom pursuant to this Guarantee are made.
The Holders
of at least 66 2/3% of the principal amount of the Asset
Proceeds
Notes may rescind an acceleration and its consequences by
notice to
the Trustee if the rescission would not conflict with any
judgment or
decree and if the outstanding Events of Default have been
cured or
waived, except for nonpayment of (or failure to deposit, as
the case
may be) Guarantor Obligations due solely as a result of such
acceleration. No such rescission shall affect any
subsequent Event
of Default or impair any right or remedy with respect
thereto.

(c) Subject only to Section 6(b) hereof, the
right of
any Holder of an Asset Proceeds Note to receive payment
under this
Guarantee, on or after the due dates (prior to any
acceleration)
expressed in this Guarantee, or to bring suit for the
enforcement of
any such payment on or after such date, shall not be
impaired or
affected without the consent of the Holder, except that no
Holder of
Asset Proceeds Notes shall have the right to institute any
such suit
if and to the extent that the institution or prosecution
thereof or
the entry of judgment therein would, under applicable law,
result in
the surrender, impairment, waiver or loss of any Lien under
the Pledge
Agreement. Except as provided in this Section 6(c) above, a
Holder
may pursue a remedy with respect to this Guarantee only if:

(1) the Holder gives to the Trustee
written
notice of a continuing Event of Default;

(2) the Holders of at least 25% in
principal
amount of the Asset Proceeds Notes make a written request to
the
Trustee to pursue the remedy;

(3) Such Holder or Holders offer to the
Trustee
indemnity reasonably satisfactory to the Trustee against any
loss,
liability or expense;

(4) the Trustee does not comply with
the request
within 60 days after receipt of the request and the offer of
indemnity; and

(5) during such 60-day period the
Holders of a
majority in principal amount of the Asset Proceeds Notes do
not give
the Trustee a direction inconsistent with the request.

A Holder may not use this Guarantee to prejudice the rights
of any
other Holder or to obtain a preference over any other
Holder.

(d) If an Event of Default specified in
Section
6(a)(1) occurs and is continuing, the Trustee may recover
judgment in
its own name and as trustee of an express trust (which trust
shall be
established as provided in the third and fourth sentence of
Section
6(b)) against the Guarantor for the whole amount of the
Guarantor
Obligations.

(e) The Trustee may file such proofs of
claim and
other papers or documents as may be necessary or advisable
in order
to have the claims of the Trustee, any predecessor Trustee
and the
Holders allowed in any judicial proceedings relative to the
Guarantor,
its creditors or its property. Nothing herein contained
shall be
deemed to authorize the Trustee to authorize or consent to
or accept
or adopt on behalf of any Holder of the Asset Proceeds Notes
any plan
of reorganization, arrangement, adjustment or composition
affecting
the Guarantee or the rights of any Holder thereof, or to
authorize the
Trustee to vote in respect of the claim of any Holder of the
Asset
Proceeds Notes in any such proceeding.

(f) In any suit for the enforcement of any
right or
remedy under this Guarantee or in any suit against the
Trustee for any
action taken or omitted by it as Trustee, a court in its
discretion
may require any party litigating the suit other than the
Trustee to
file an undertaking to pay the costs of the suit, and the
court in its
discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit,
having due
regard to the merits and good faith of the claims or
defenses made by
the party litigant. This Section does not apply to a suit
by the
Trustee, a suit by a Holder pursuant to Section 6(c), or a
suit by
Holders of more than 10% in principal amount of the Asset
Proceeds
Notes.

7. Pledge Agreement. To secure this Guarantee,
the
Guarantor is simultaneously herewith executing and
delivering the
Pledge Agreement.

8. Notices. Any notices or other communications
required
or permitted hereunder shall be in writing, and shall be
sufficiently
given if made by hand delivery, by telecopier or registered
or
certified mail, postage prepaid, return receipt requested,
addressed
as follows:

To the Guarantor:

Lone Star Industries, Inc.
300 First Stamford Place
Stamford, Connecticut 06912-0014
Attention: Secretary
Telephone: (203) 969-8600
Facsimile: (203) 969-8686

To the Trustee:

Chemical Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Corporate Trust Administration
Telephone: (212) 613-7655
Facsimile: (212) 613-7800

Any party hereto may by notice to each other party designate
such
additional or different addresses as shall be furnished in
writing by
such party. Any notice or communication to any party hereto
shall be
deemed to have been given or made as of the date so
delivered, if
personally delivered; when receipt is acknowledged by
telecopier
confirmation, if telecopied; and five calendar days after
mailing if
sent by registered or certified mail (except that a notice
of change
of address shall not be deemed to have been given until
actually
received by the addressee). Any party hereto may give
notice to the
Holders, in the manner set forth in the Asset Proceeds Note
Indenture,
at the addresses set forth for them in the register kept by
the
Registrar under the Indenture.

9. Binding Agreement; Assignment; Obligations
Several.
This Agreement shall be binding upon and inure to the
benefit of the
parties hereto and their respective successors and permitted
assigns,
including, without limitation, and without the need for an
express
assignment or amendment, subsequent Holders of Asset
Proceeds Notes
(whether or not the Asset Proceeds Notes held by such
persons are
outstanding as of the date hereof or issued hereafter).
This
Agreement may not be assigned by the Guarantor; provided,
however,
that this Agreement shall be deemed to be automatically
assigned by
the Guarantor to any Person which is a successor to the
Guarantor, in
accordance with the terms of this Guarantee. This Guarantee
shall be
deemed to be automatically assigned by the Trustee to any
Person who
succeeds to the Trustee in accordance with the Indenture,
and such
assignee shall have all rights and powers of, and act as,
the Trustee
hereunder. Each Holder of the Asset Proceeds Notes, by its
acceptance
of any Asset Proceeds Notes, consents to and agrees to be
bound by the
provisions hereof.

10. Governing Law. This Agreement shall be
construed in
accordance with and governed by the laws of the State of New
York
without regard to its conflict of law principles, except as
otherwise
required by mandatory provisions of law.

11. Effectiveness; Termination. (a) This
Agreement shall
become effective on the date hereof. Upon the earlier of
(i) payment
in full (whether in cash, by issuance of Payment Notes or
any
combination thereof) of the Guarantor Obligations to the
Trustee in
accordance with Section 2 hereof or (ii) such time as the
Guarantor
shall deliver to the Trustee an Officer's Certificate to the
effect
that the Covered Deficiency is $0 (setting forth all
calculations in
reasonable detail), this Agreement shall terminate. If any
Holder or
the Trustee is required by any court or otherwise to return
to the
Guarantor or the Obligor or any custodian, trustee,
liquidator or
other similar official acting in relation to the Obligor or
the
Guarantor, any amount paid by the Obligor or the Guarantor
to the
Trustee or such Holder, this Guarantee, to the extent
discharged by
such payment, shall be reinstated to such extent (but to be
no more
than the amount of the Covered Deficiency).

(b) The Guarantor may terminate its
obligations under
this Guarantee by:

(i) irrevocably depositing 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 all Guarantor
Obligations on the first Business Day after the Maturity
Date.
Immediately after making the deposit, the Guarantor shall
give notice
of such event to the Holders;

(ii) delivering to the Trustee an
Opinion of
Counsel and an Officer's Certificate stating that all
conditions
precedent provided for herein relating to the satisfaction
and
discharge of this Guarantee have been complied with; and

(iii) delivering to the Trustee
either (i) an
unqualified Opinion of Counsel, stating that the Holders of
the Asset
Proceeds Notes (a) will not recognize income, gain or loss
for Federal
income tax purposes as a result of such deposit (and the
defeasance
contemplated in connection therewith) and (b) will be
subject to
Federal income tax on the same amounts and in the same
manner and at
the same times as would have been the case if such deposit
and
defeasance had not occurred, or (ii) an applicable favorable
ruling
to that effect received from or published by the Internal
Revenue
Service.

Notwithstanding the foregoing, the Guarantor's obligations
in Section
2 and 4(c) hereof and Article VII of the Indenture shall
survive until
this Guarantee terminates pursuant to Section 11(a). After
a deposit
pursuant to this Section 11(b), the Trustee upon request
shall
acknowledge in writing the discharge of the Guarantor's
obligations
under this Guarantee except for those surviving obligations
specified
above. In order to have money available on a payment date
to pay
Guarantor Obligations, 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.

(c) The Trustee shall hold in trust money or
U.S.
Government Obligations deposited with it pursuant to Section
11(b).
It shall apply the deposited money and the money from U.S.
Government
Obligations in accordance with this Guarantee to the payment
of
Guarantor Obligations.

(d) The Trustee shall promptly pay to the
Guarantor
upon written request any excess money or securities held by
it at any
time.

(e) If the Trustee is unable to apply any
money or
U.S. Government Obligations in accordance with Section 11(b)
by reason
of any legal proceeding or by reason of any order or
judgment of any
court or governmental authority enjoining, restraining or
otherwise
prohibiting such application, the Guarantor's obligations
under this
Guarantee shall be revived and reinstated as though no
deposit has
occurred pursuant to Section 11(b) until such time as the
Trustee is
permitted to apply all such money or U.S. Government
Obligations in
accordance with Section 11(b); provided, however, that if
the
Guarantor has made any payment of Guarantor Obligations
because of the
reinstatement of its obligations, the Guarantor shall be
subrogated
to the rights of the Holders of such Asset Proceeds Notes to
receive
such payment from the money or U.S. Government Obligations
held by the
Trustee or Guarantor.

12. Trust Indenture Act Controls. If any
provision of this
Guarantee limits, qualifies or conflicts with another
provision which
is required or deemed to be included in the Guarantee by the
TIA, the
required or deemed provision shall control.

13. Inconsistent Provisions. This Guarantee is a
part of
the Indenture to the extent specified therein. If any
provision of
this Guarantee shall be inconsistent with, or contrary to,
any
provision of the Indenture, such provision of the Indenture
shall be
controlling and shall supersede such inconsistent provisions
hereof
to the extent necessary to give full effect to such
provision of the
Indenture.

14. Severability. In the event that any
provision
contained in this Guarantee shall for any reason be held to
be illegal
or invalid under the laws of any jurisdiction, such
illegality or
invalidity shall in no way impair the effectiveness of any
other
provision hereof or of such provision under the laws of any
other
jurisdiction; provided, that in the construction and
enforcement of
such provision under the laws of the jurisdiction in which
such
holding of illegality or invalidity exists, and to the
extent only of
such illegality or invalidity, this Guarantee shall be
construed and
enforced as though such illegal or invalid provision had not
been
contained herein.

15. Headings. Section headings used herein are
inserted
for convenience only and shall not in any way affect the
meaning or
construction of any provision of this Agreement.

16. Counterparts. This Agreement may be executed
in any
number of counterparts, each of which when so executed and
delivered
shall be an original, and all of which shall together
constitute one
and the same instrument. A complete set of counterparts
shall be
lodged with the Trustee.

IN WITNESS WHEREOF, the Guarantor has caused this
Agreement
to be executed and delivered by its officer thereunto duly
authorized
as of the day and year first above written.

LONE STAR INDUSTRIES, INC.

By: John J. Martin
Title: Sr. Vice President

Exhibit A

GUARANTEE AGREEMENT

LONE STAR INDUSTRIES, INC.

in favor of

each and every

"Holder"

10% Asset Proceeds Notes due 1997

of ROSEBUD HOLDINGS, INC.

____________________

Dated as of ____________, 1994

____________________
TABLE OF CONTENTS

Page

1. Definitions . . . . . . . . . . . . . . . . . . . . . .
. A-4
Actual Knowledge . . . . . . . . . . . . . . . . .
. . A-4
Affiliate. . . . . . . . . . . . . . . . . . . . .
. . A-4
Asset Proceeds Notes . . . . . . . . . . . . . . .
. . A-5
Bankruptcy Court . . . . . . . . . . . . . . . . .
. . A-5
Bankruptcy Law . . . . . . . . . . . . . . . . . .
. . A-5
Business Day . . . . . . . . . . . . . . . . . . .
. . A-5
Collateral Agency Agreement. . . . . . . . . . . .
. . A-5
Compounding Date . . . . . . . . . . . . . . . . .
. . A-5
Consolidated Net Worth . . . . . . . . . . . . . .
. . A-5
Covered Deficiency . . . . . . . . . . . . . . . .
. . A-5
Custodian. . . . . . . . . . . . . . . . . . . . .
. . A-6
Debtors. . . . . . . . . . . . . . . . . . . . . .
. . A-6
Default. . . . . . . . . . . . . . . . . . . . . .
. . A-6
Event of Default . . . . . . . . . . . . . . . . .
. . A-6
Exchange Act . . . . . . . . . . . . . . . . . . .
. . A-6
Guarantee. . . . . . . . . . . . . . . . . . . . .
. . A-6
Guarantor. . . . . . . . . . . . . . . . . . . . .
. . A-6
Guarantor Indenture. . . . . . . . . . . . . . . .
. . A-6
Guarantor Obligations. . . . . . . . . . . . . . .
. . A-6
Holder . . . . . . . . . . . . . . . . . . . . . .
. . A-6
Indenture. . . . . . . . . . . . . . . . . . . . .
. . A-6
Investment . . . . . . . . . . . . . . . . . . . .
. . A-7
Lien . . . . . . . . . . . . . . . . . . . . . . .
. . A-7
Material Restricted Subsidiary . . . . . . . . . .
. . A-7
Maturity Date. . . . . . . . . . . . . . . . . . .
. . A-7
Obligor. . . . . . . . . . . . . . . . . . . . . .
. . A-7
Officer. . . . . . . . . . . . . . . . . . . . . .
. . A-7
Officer's Certificate. . . . . . . . . . . . . . .
. . A-7
Opinion of Counsel . . . . . . . . . . . . . . . .
. . A-7
Payment Notes. . . . . . . . . . . . . . . . . . .
. . A-7
Payment Note Indenture . . . . . . . . . . . . . .
. . A-7
Payment Notice . . . . . . . . . . . . . . . . . .
. . A-7
Permitted Investment . . . . . . . . . . . . . . .
. . A-8
Person . . . . . . . . . . . . . . . . . . . . . .
. . A-8
Plan . . . . . . . . . . . . . . . . . . . . . . .
. . A-8
Pledge Agreement . . . . . . . . . . . . . . . . .
. . A-8
Proscribed Distribution. . . . . . . . . . . . . .
. . A-8
Restricted Subsidiary. . . . . . . . . . . . . . .
. . A-8
Restricted Stock Payment . . . . . . . . . . . . .
. . A-8
SEC. . . . . . . . . . . . . . . . . . . . . . . .
. . A-8
Subsidiary . . . . . . . . . . . . . . . . . . . .
. . A-8
TIA. . . . . . . . . . . . . . . . . . . . . . . .
. . A-9
Trustee. . . . . . . . . . . . . . . . . . . . . .
. . A-9
U.S. Government Obligations. . . . . . . . . . . .
. . A-9

2. Guarantor Obligations; Payment and Deemed Repayment . .
. A-9

3. Nature of Guarantee . . . . . . . . . . . . . . . . . .
. A-9

4. Covenants of Guarantor. . . . . . . . . . . . . . . . .
.A-10

5. Continued Effectiveness of this Guarantee . . . . . . .
.A-13

6. Events of Default . . . . . . . . . . . . . . . . . . .
.A-14

7. Pledge Agreement. . . . . . . . . . . . . . . . . . . .
.A-18

8. Notices . . . . . . . . . . . . . . . . . . . . . . . .
.A-18

9. Binding Agreement; Assignment; Obligations Several. . .
.A-18

10. Governing Law. . . . . . . . . . . . . . . . . . . . .
.A-19

11. Effectiveness; Termination . . . . . . . . . . . . . .
.A-19

12. Trust Indenture Act Controls . . . . . . . . . . . . .
.A-20

13. Inconsistent Provisions. . . . . . . . . . . . . . . .
.A-20

14. Severability . . . . . . . . . . . . . . . . . . . . .
.A-20

15. Headings . . . . . . . . . . . . . . . . . . . . . . .
.A-21

16. Counterparts . . . . . . . . . . . . . . . . . . . . .
.A-21

MANAGEMENT SERVICES AND ASSET
DISPOSITION AGREEMENT

This Management Services and Asset Disposition
Agreement (the
"Agreement") is made as of April 13, 1994 by and between
Lone Star
Industries, Inc. a Delaware corporation ("Lone Star"), and
Rosebud
Holdings, Inc., a Delaware corporation ("Rosebud"), KCOR
CORPORATION,
a Delaware corporation, Lone Star California, Inc., a
Delaware
corporation, Rosebud Real Properties, Inc. a Delaware
corporation,
Santa Cruz Corporation, a Delaware corporation, Nazareth
Cement
Corporation, a Delaware corporation, Las Colinas
Corporation, a
Delaware corporation, Rosebud Falcon Corporation, a Delaware
corporation and Rosebud General Corporation, a Delaware
corporation
(the "Subsidiaries") (Rosebud together with the Subsidiaries
hereinafter collectively referred to as "Rosebud").

WHEREAS, Lone Star and certain of its subsidiaries
filed
voluntary petitions for reorganization under Chapter 11 of
the United
States Bankruptcy Code (Case Nos. 90 B 21276 through 90 B
21286, 90
B 21334 and 90 B 21335 (HS)). The Chapter 11 cases of Lone
Star were
consolidated procedurally and were pending in the United
States
Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court").

WHEREAS, On November 5, 1993 Lone Star filed a Revised
Amended
Consolidated Plan of Reorganization (the "Plan") dated
November 4,
1993. By order dated November 5, 1993, as amended by an
order dated
November 23, 1993, the Bankruptcy Court approved Lone Star's
Revised
Amended Disclosure Statement. The Plan was confirmed by
the
Bankruptcy Court on February 17, 1994. Terms not otherwise
defined
herein are used in this Agreement as defined in the Plan.

WHEREAS, pursuant to the terms of the Plan, Lone Star
transferred
to Rosebud all of its interests in its Non-Core Assets as
defined in
the Plan and set forth on the list attached hereto as
Exhibit "A" (the
"Rosebud Assets").

WHEREAS, Lone Star has substantial expertise in the
cement and
construction materials businesses.

WHEREAS, Lone Star has agreed to enter into this
Agreement to
provide for the management of Rosebud and the performance of
various
other administrative services relating to Rosebud.
NOW, THEREFORE, in consideration of the premises and of
the
mutual agreements hereinafter set forth and other good and
valuable
consideration, the receipt and sufficiency of which is
hereby
acknowledged, the parties hereto hereby agree as follows:

ARTICLE I
APPOINTMENT; TERM and TERMINATION

1.1 Appointment. Lone Star is hereby appointed and
authorized
by Rosebud, and Lone Star hereby accepts such appointment
and agrees,
to perform the duties provided for in this Agreement.
Rosebud is
hereby appointed and authorized by each of the Subsidiaries,
and
Rosebud hereby accepts such appointment and agrees to act as
each of
their agents, perform the duties provided for in this
Agreement and
shall have the right to amend or waive any provision of this
Agreement.

1.2 Term and Termination. The term of this Agreement
shall
commence as of the date hereof and shall continue until the
earliest
of (i) March 31, 1998; (ii) when the Board of Directors of
Rosebud
determines that the purpose of Rosebud has been fulfilled or
(iii)
Lone Star or Rosebud terminates this Agreement upon thirty
(30) days
written notice to the other party. Notwithstanding the
foregoing, (i)
Lone Star may terminate this Agreement without prior notice
to Rosebud
should Rosebud fail to pay any amounts when due and (ii) the
trustee
under the Asset Proceeds Notes Indenture may terminate this
Agreement
upon an event of default under such Indenture.

Upon termination of this Agreement, Lone Star and
Rosebud shall
remain liable for their respective obligations which have
accrued up
to and including the termination date and shall promptly pay
to the
other all amounts due the other party under the terms of
this
Agreement. Such payment shall be made as soon as
practicable
following the date of termination. Upon such payment,
neither Lone
Star nor Rosebud shall have any further claim or right
against the
other with respect to this Agreement, except as otherwise
provided
herein. Notwithstanding the termination of this Agreement,
indemnification obligations and obligations to pay any
amount then and
thereafter due under this Agreement shall survive
indefinitely.

ARTICLE II SERVICES PROVIDED BY LONE STAR

2.1 Nature of Services; Scope of Authority and Power.
Lone Star
shall provide to Rosebud such consulting services of an
executive and
managerial nature as Lone Star in its sole discretion deems
necessary
or appropriate for the conduct of Rosebud's affairs in a
manner not
inconsistent with Section 4.03 of the Asset Proceeds Notes
Indenture,
Rosebud's Certificate of Incorporation and By-Laws and the
laws of the
State of Delaware. The provision of such services shall not
constitute
any delegation of the duties by the board of directors of
Rosebud
which shall retain its full responsibility to act for the
benefit of
Rosebud. Lone Star will supervise the performance of its
personnel as
to those activities which it believes are necessary or
desirable to
provide such consulting services to Rosebud. In connection
with such
services Lone Star may market the Rosebud Assets by
preparing
financial and marketing information and contacting potential
buyers,
including cement and construction companies (both domestic
and
foreign), and, if appropriate, financial buyers. In such
connection,
Lone Star may provide to Rosebud management personnel
experienced in
the disposition of assets to actively seek to dispose of the
Rosebud
Assets on the best terms available.

The consulting services provided herein may include,
without
limitation, the following, provided that the Rosebud board
of
directors shall have approved in advance such action
involving in the
aggregate an amount in excess of $1,000,000:

(a) The right to negotiate and renegotiate any and all
contracts, documents and other legal instruments, and any
amendments
thereto, subject to approval and execution by Rosebud;

(b) The right to arrange for the sale of assets of or
for
Rosebud;

(c) The right to advise, consult, organize and
reorganize with
respect to all aspects of Rosebud's business, including,
without
limitation, all matters relating to operations, marketing
and all
administrative and financial operations;

(d) Advise as to policy and procedures with respect to
financial
receipts and expenditures; and

(e) Generally to take all action with respect to any
of the
foregoing as Lone Star deems fit.

2.2 Duties of Lone Star. Subject to Section 4.3
hereof, Lone
Star shall provide management services for Rosebud,
including, without
limitation, certain accounting, administrative, data
processing, human
resources, financial, legal, professional, sales, tax,
technical and
other services which Lone Star in its sole discretion deems
necessary
or desirable in a manner not inconsistent with Section 4.03
of the
Asset Proceeds Notes Indenture (the "Services").

2.3 Nazareth Plant and Quarry Supervisory, Operations
and Sales
Personnel. Subject to Section 4.3 hereof, Lone Star shall
use
reasonable efforts to provide the services of its existing
Nazareth
quarry and cement plant supervisory, operations and sales
staff
(consisting of both hourly and salaried employees) to
continue the
usual quarrying, manufacturing and cement distribution
operations of
the Nazareth cement plant facility, adjusting the size and
composition
of said workforce according to the operational needs of the
facility.
Nothing in this section shall constitute a limitation on the
right of
Lone Star at any time during the term of this Agreement to
discontinue
providing Lone Star employees to Rosebud, and to assist
Rosebud in the
retention of its own employees and the establishment of the
applicable
salaries, wages, benefits, hours and terms and conditions of
employment of said Rosebud retained employees. Lone Star
shall
endeavor to initially retain on the job all of its Nazareth
plant
staff, as listed in Exhibit "B" attached hereto, and to
employ such
other employees as Lone Star may determine are appropriate
for
operation of the facility (collectively "Nazareth Plant
Employees").
Lone Star shall retain its full right to manage and
supervise said
workforce, including, but not limited to the right to hire,
terminate
and or layoff the Nazareth Plant Employees and to determine
their
compensation. Upon the sale of the Nazareth cement plant
facility, the
parties hereto will make arrangements relating to the
Nazareth Plant
Employees, and the welfare and benefit plans and liabilities
relating
thereto, as will be acceptable to Lone Star in its sole
discretion,
provided however, no such arrangements will result in a
violation of
Section 3.08 of the Asset Proceeds Notes Indenture.

2.4 Provision of Insurance. Lone Star shall assist in
the
administration of the insurance coverage program (property,
casualty,
workman's compensation and general liability) for Rosebud.
Such
insurance coverage may be provided for a period (not to
include
periods prior to the Effective Date) ("Coverage Period")
through Lone
Star's insurance program, by a separate insurance program
obtained
directly for Rosebud by Lone Star or a combination thereof,
as Lone
Star shall determine. The policies for Rosebud's insurance
program
may include, but are not limited to, an incurred
retrospective rating
plan, guaranteed cost plan, other recognized method of
insurance
coverage and any combination thereof. Nothing herein shall
permit or
require Lone Star itself to act as an insurance carrier or
agent for
Rosebud or to be construed as such. All insurance covering
Rosebud
shall provide for 30 days written notice to Rosebud prior to
any
cancellation or termination of insurance coverage.

The provision of insurance by Lone Star for Rosebud
under this
Agreement may be terminated at any time by Lone Star.

2.5 Advances. If approved by the Board of Directors of
Lone Star
and Rosebud Holdings, Inc., as being in the best interest of
each such
corporation, Lone Star may make cash advances, up to an
aggregate
amount outstanding of $5 million at any one time, to Rosebud
for its
working capital purposes. Any such advance shall be made
with interest
at the then rate being paid by Lone Star for its working
capital and
evidenced by an appropriate master note in form and
substance
reasonably acceptable to Lone Star and shall be repaid by
Rosebud out
of available cash or any net proceeds (prior to the use of
any such
net proceeds for any other purposes whatsoever) received by
Rosebud
from any sale of assets, disposition of litigation or
payment under
the promissory note, dated April 7, 1987, by Arthur Riedel
in favor
of Lone Star, which has subsequently been assigned to
Rosebud.

ARTICLE IIICOMPENSATION FOR SERVICES; PAYMENT OF EXPENSES
AND
LIABILITIES
3.1 Administrative Services Fee. Rosebud shall pay
Lone Star
quarterly in arrears a fee equal to the total of .25 percent
of the
amounts set out along side each of the Rosebud Assets in the
letter
dated the date hereof and attached hereto as Exhibit "C"
from Rosebud
to Lone Star covering the administrative services fee (the
"Letter")
for each asset owned on the date of such computation. In the
event of
a sale of any such asset(s) during the quarter for which
payment is
being made the amount payable as to such asset(s) shall be
pro-rated
based on the number of days such asset(s) was owned by
Rosebud in such
quarter. Such computations shall be set out in a certificate
furnished
by Rosebud to Lone Star and reasonably acceptable to Lone
Star.

In the case of the Nazareth Cement Plant the percent
used to
compute the quarterly administrative services fee shall be
1.25.
Further as to each of the litigations set forth in the
attached
Exhibit "A", the administrative services fee shall be as set
forth in
the Letter. It is agreed that Lone Star shall pay the
Eligible
Employees (as defined in the Incentive Plan) of Lone Star
any amounts
for which such employees become entitled to under the terms
of the
Incentive Plan a copy of which is attached hereto as Exhibit
"D".

3.2 Out of Pocket Expenses. To the extent practicable,
Rosebud
will directly pay all expenses incurred by it or on its
behalf
(including expenses incurred by Lone Star). Should Lone Star
pay any
such expenses (including without limitation, income taxes),
Rosebud
shall promptly reimburse Lone Star upon receipt of a request
by Lone
Star setting forth in sufficient detail such expenses to be
reimbursed. Further to the extent Lone Star can sufficiently
anticipate expenses in advance to be incurred on behalf of
Rosebud,
Rosebud shall pay such expenses no earlier than two weeks in
advance
upon receipt of a request by Lone Star setting forth in
sufficient
detail such expenses. Lone Star shall reimburse Rosebud any
such
amounts paid in excess of the actual anticipated expenses.
Income
taxes payable by Rosebud shall include not only direct taxes
payable
by Rosebud but also any federal or state tax liability
resulting from
the filing of a consolidated, unitary or combined tax return
in which
Rosebud and Lone Star or Lone Star's other subsidiaries were
included,
apportioned based on the ratio of taxable income of each
participant
in such return to the total of the taxable income of all
companies
with taxable income included in such return.

3.3 Liabilities. Notwithstanding any other provision
of this
Agreement or the Master Transfer Agreement of even date
herewith,
between Rosebud, on one hand, and Lone Star and certain of
its
subsidiaries, on the other (the "Master Transfer
Agreement"), (x) all
indemnities of Rosebud under this Agreement and under the
Master
Transfer Agreement, including, without limitation, all
"Obligations",
as defined in the Master Transfer Agreement and all Current
Employment
Costs, in respect of actions that have taken place, or
conditions
which exist, or liabilities which have accrued, prior to the
date
hereof ("Existing Actions and Conditions"), shall be paid to
Lone Star
and its subsidiaries in cash as they become liquidated until
the
aggregate amount of all such payments equals $7 million
(provided,
however, Rosebud shall indemnify and hold harmless Lone Star
and its
subsidiaries to the extent of the value of the lien on the
Fort Worth,
Texas property in favor of Dr. Richard C. Schaffer, as
described in
the Modified Amended Disclosure Statement relating to the
Plan, and
any payments in respect of such indemnity shall not be
included in the
calculation of the aggregate $7 million of indemnity
pursuant to this
sentence); and (y) thereafter, no further payments in
respect of such
indemnities or Current Employment Costs may be made until
(i)
repayment in full of Rosebud's 10% Asset Proceeds Notes due
1997 (the
"Asset Proceeds Notes") issued pursuant to an Indenture (the
"Asset
Proceeds Note Indenture"), dated as of March 29, 1994,
between Rosebud
and Chemical Bank, as Trustee (the "Trustee"), and (ii)
repayment in
full in cash of the Payment Notes, if any, as defined in the
Asset
Proceeds Note Indenture. Subject to the first sentence of
this
Section 3.3, upon each Extraordinary Event, as defined in
the Assets
Proceeds Notes Indenture, Rosebud shall (x) to the fullest
extent
allowed pursuant this Section 3.3, pay all indemnification
obligations
and Current Employment Costs in respect of Existing Actions
and
Conditions hereunder and under the Master Transfer Agreement
to the
extent such obligations are for liquidated amounts (each of
which
liquidated amount shall be deemed to be an "advance" to or
for the
benefit of Rosebud for purposes of clause (iv) of the
definition of
"Net Proceeds" under the Asset Proceeds Notes Indenture) and
(y) to
the extent such obligations are not for liquidated amounts
and are
retained by Rosebud after the Extraordinary Event, Rosebud
shall make
appropriate reserves on its books and reserve cash therefor
(whether
through escrow arrangements or otherwise) to the fullest
extent
permissible under clause (v) of the definition of "Net
Proceeds" under
the Asset Proceeds Notes Indenture; provided, however that
Rosebud
shall not create or continue to maintain such reserves to
the extent
that the amount of indemnification obligations and Current
Employment
Costs paid in cash as set forth in clauses (x) and such
reserves in
accordance with clause (y) above at the time of
determination in the
aggregate (without duplication), would exceed $7 million,
prior to
repayment in full of the Asset Proceeds Notes and the
Payment Notes.
Nothing contained in this Section 3.3 shall affect the
payment of
indemnities hereunder in respect of any actions or
conditions other
than Current Actions and Conditions.

3.4 Costs Related to Nazareth Plant Employees.
Rosebud shall
promptly reimburse Lone Star for all employment costs
associated with
the Nazareth Plant Employees, including, but not limited to,
all
wages, benefits, vacation and severance entitlements,
employment
taxes, and other obligations arising under any Federal or
State laws,
employee pension, profit-sharing or welfare benefit plans,
corporate
policies (including any severance policies), programs or
practices,
and collectively bargained agreements ("Current Employment
Costs").

Current Employment Costs shall also include any and all
liability
and or expenses, including attorneys' fees and court costs,
accruing
to Lone Star and or any of its subsidiaries or their
respective
directors, officers, employees and or agents, arising out of
or in
connection with any Nazareth Plant Employee employment
related matter
whatsoever, including, but not limited to, any claims for
relief,
actions or causes of action, suits, administrative actions,
complaints, controversies, claims for damages, judgments and
demands,
whether in law or equity, arising out of or in connection
with the
employment relationship or the termination of that
relationship,
including any alleged violation of Title VII of the Civil
Rights Act
of 1964, the Age Discrimination in Employment Act of 1967,
the
Employee Retirement Income Security Act, the Fair Labor
Standards Act,
the National Labor Relations Act, the Equal Pay Act of 1963,
the
Pennsylvania Human Relations Act, the Pennsylvania Wage
Payment and
Collection Law, the Pennsylvania Minimum Wage Act of 1968,
and the
Pennsylvania Equal Pay Law, all as amended, or any other
local, State
or Federal laws, regulations or ordinances.

Rosebud shall promptly reimburse Lone Star for such of
the
Current Employment Costs as Lone Star shall from time to
time submit
written request. Such requests shall be made as frequently
as Lone
Star shall determine is practical under the circumstances
for the cost
item involved.

Should any dispute arise as to the amount of any
Current
Employment Costs claimed to have been incurred by Lone Star,
Rosebud
agrees to accept for settlement of dispute purposes the
certification
made by Lone Star's certified public accountant that said
Current
Employment Costs were incurred and or paid by Lone Star in
connection
with the Nazareth Plant Employees. With respect to any
Current
Employment Costs which requires actuarial calculations and
judgment,
Lone Star's certified public accountant shall consult with
and rely
upon the judgment of Lone Star's then principal actuary in
making its
own certification.

3.5 Insurance Expenses. If insurance coverage is
obtained for
Rosebud through Lone Star's insurance program, Rosebud shall
pay to
Lone Star its portion of the fixed, variable, excess,
umbrella and
other related program costs for a Coverage Period. Rosebud
shall pay
this amount to Lone Star in equal monthly installments
payable on the
first day of the month of such Coverage Period. If Rosebud
does not
pay to Lone Star the amount due on the first day of any
month, Lone
Star may advance such amount to the insurance carrier on
behalf of
Rosebud and if Lone Star does advance such amount, interest
shall
accrue and be payable on such overdue payment by Rosebud
from the due
date to the date of payment by Rosebud to Lone Star at the
prime rate
of interest charged by Morgan Guaranty Trust Company of New
York from
time to time during such overdue period.

If a separate insurance program is obtained for
Rosebud, Rosebud
will be responsible to make all payment directly to the
carriers as
required under such program.

3.6 Insurance Expenses Subsequent to a Coverage Period
Relating
to that Coverage Period. In the case of an incurred
retrospective
rating plan, Lone Star and the insurance carrier or broker
shall
determine annually following the end of a Coverage Period,
until that
Coverage Period is closed out by agreement of Lone Star and
the
insurance carrier, the actual costs of insurance coverage
for Rosebud
for that Coverage Period. To the extent that the actual
costs for
Rosebud exceed the estimated costs paid during and for such
Coverage
Period by Rosebud plus any amounts paid by Rosebud pursuant
to this
Section for such Coverage Period, Rosebud will owe to Lone
Star the
difference between the actual costs and these other amounts
and will
pay to Lone Star such amount within thirty (30) days after
receipt of
a statement therefor. To the extent that the actual costs
are less
than the estimated costs paid during and for such Coverage
Period by
Rosebud plus any amounts paid by Rosebud pursuant to this
Section for
such Coverage Period, Lone Star shall, in its sole
discretion, either
grant to Rosebud a credit against charges for the then
Coverage Period
or refund the overpayment in cash.

Upon the sale of any Rosebud Assets, the insurance
provided under
this Agreement will be terminated as to those assets and, to
the
extent the liabilities described in clause (i) and (ii)
below are not
assumed by the purchaser of such asset, Lone Star will be
paid by
Rosebud at the time of such sale an amount in cash in full
necessary
to extinguish (i) all outstanding liabilities for insurance
relating
to such assets and (ii) all future liabilities to insurance
carriers
under any incurred retrospective rating plan for all future
retrospective charges relating to such assets.

Any statement for a charge or credit shall include the
calculations upon which it is based together with the data
reasonably
necessary to support such calculations. Unless there is
manifest
error in the calculations, the determinations of Lone Star
as to a
charge or a credit shall become conclusive on the parties
ten (10)
days after delivery.

ARTICLE IVLIABILITIES, OBLIGATIONS AND INDEMNIFICATION

4.1 Obligations. Rosebud agrees that Lone Star's
obligations
hereunder are limited to using its reasonable commercial
efforts to
accomplish the objectives of this Agreement and Section 4.03
of the
Asset Proceeds Notes Indenture. Rosebud further agrees that
Lone Star
gives no guarantees, representations or warranties regarding
the
performance, success or profitability presently or in the
future of
any aspect of Rosebud businesses or the salability or prices
obtainable for the Rosebud Assets or any of them and shall
not be
liable in connection therewith or for failure to achieve any
particular results.

Lone Star shall report as to its activities hereunder,
including
but not limited to, a detailed status of Rosebud's insurance
program,
in writing, not less frequently than each calendar quarter
to the
Rosebud board of directors and if so requested by such board
of
directors Lone Star will have representatives appear at a
meeting of
the Rosebud board of directors.

4.2 Other Business Activities of Lone Star; Corporate
Opportunity. Rosebud acknowledges and understands that Lone
Star and
its affiliates are engaged in and intend to engage in the
future,
among other things, in a broad spectrum of cement, clinker
and
construction materials businesses including, but not limited
to, the
production of ready-mix concrete, sand and gravel, crushed
stone, and
precast concrete products, some of which businesses and
activities may
compete with business activities of Rosebud or entities in
which
Rosebud has an interest. Nothing contained in this Agreement
shall
limit or prevent Lone Star or its affiliates from continuing
or
commencing (alone or with others, on its own behalf or on
behalf of
others) to carry out or to engage, participate or invest in,
any
activity, business enterprise or investment of any kind
whatsoever,
including without limitation conducting such business
activities as
may currently exist or which Lone Star or its affiliates or
such other
persons may hereafter commence or acquire, in each case
including,
without limitation, those which may be in direct or indirect
competition with Rosebud. Accordingly, Rosebud acknowledges
that Lone
Star or its affiliates may locate or be approached with
regard to
opportunities, contracts, ventures, investments,
partnerships,
sponsorships or other business arrangements of any kind
whatsoever or
any participation therein ("Opportunities"), that could be
exploited
either by Lone Star or any of its affiliates directly, by
other
entities in which Lone Star or any of its affiliates is
involved,
and/or by Rosebud or its affiliates. As part of the
inducement to Lone
Star to enter into this Agreement, Rosebud hereby waives any
and all
obligations with respect to or claims against Lone Star and
its
affiliates arising from any Opportunity and agrees and
acknowledges
that Lone Star and its affiliates may individually or
collectively,
or through any other entity, exploit any Opportunity that
arises
whether or not such Opportunity might be suitable for
Rosebud.

Rosebud may enter into any contract or agreement with
Lone Star
or its affiliates in furtherance of its business operations
or
otherwise as shall be approved by the Rosebud board of
directors
provided, however, that any such contract or agreement shall
not be
inconsistent with Section 4.09 of the Senior Note Indenture
or section
4.09 of the Asset Proceeds Notes Indenture.

4.3 Limitation of Liability; Indemnity.
Notwithstanding
anything to the contrary in this Agreement, Lone Star shall
not be
liable to Rosebud for any actions taken or omitted to be
taken by Lone
Star, its directors, officers, employees and agents, except
where such
actions taken or omitted to be taken by Lone Star, its
directors,
officers, employees or the hiring of such agents are in bad
faith or
constitute gross negligence or willful misconduct. Rosebud
hereby
covenants and agrees to indemnify Lone Star, its directors,
officers,
employees and agents, and to hold them harmless against any
and all
claims, expense, liability, loss, damage and cost (including
without
limitation, reasonable legal, accounting or other
professional fees,
costs and expenses) incurred without bad faith, gross
negligence or
willful misconduct on Lone Star's part and arising out of or
in
connection with (i) Rosebud's ownership or operation of the
Rosebud
Assets subsequent to the date hereof, (ii) any business
conducted in
connection with or on the premises of the Rosebud Assets
subsequent
to the date hereof and (iii) the providing of or failure to
provide
the Services hereunder.

Notwithstanding anything to the contrary in this
Agreement, Lone
Star, its officers, directors, employees and agents shall
not be
liable to Rosebud or any third party (i) for failure to
provide
insurance coverage or gaps therein; (ii) for the actions,
non-actions,
determinations or cancellation of insurance by any carrier
providing
insurance for Rosebud; (iii) for the solvency of any carrier
providing
insurance for Rosebud or (iv) when taken in good faith, for
their own
actions unless such actions constitute gross negligence.

Rosebud agrees that if it is covered by Lone Star's
insurance
program it will not take any action directly against any
insurance
carrier providing insurance to it without Lone Star's prior
written
consent. Rosebud and each of the Subsidiaries further agree
that each
of them shall be jointly and severally liable to Lone Star
for all
amounts due to Lone Star for insurance pursuant to this
Agreement
including all future retrospective payments due under
Section 3
hereof.

4.4 Claims Procedure.

(a) Notice of Claim. If Lone Star shall determine
that an event
giving rise to a claim for indemnification hereunder shall
have
occurred or is threatened, Lone Star shall, as soon as
practicable
thereafter, execute and deliver to Rosebud a notice stating
that such
event has occurred or is threatened ("Notice of Claim").

Lone Star shall promptly deliver a Notice of Claim (i)
of any
written notice commencing legal or other proceedings in
connection
with a matter or event determined by Lone Star to give rise
to an
indemnifiable claim hereunder or (ii) of receipt of a letter
threatening the same. Lone Star's failure to deliver a
Notice of Claim
shall in no way prejudice its rights hereunder.

(b) Payment. Unless Rosebud shall dispute a claim in
accordance
with the provisions of section (c) below, Rosebud shall,
subject to
Section 3.3 hereof, pay such claim or assume the defense of
such claim
pursuant to section (d) below with respect to which it has
received
a Notice of Claim within thirty (30) days of the receipt of
such
Notice of Claim.

(c) Dispute of Claim. If Rosebud shall in good faith
dispute
the validity of all or any portion of a claim for
indemnification as
set forth in any Notice of Claim, Rosebud shall, within
thirty (30)
days of receipt of such Notice of Claim, execute and deliver
to Lone
Star a notice setting forth with particularity the grounds
and basis
upon which such claim or the amount thereof is disputed (the
"Notice
of Dispute"). To the extent that Rosebud does not dispute a
claim or
such portion of a claim, it shall, subject to Section 3.3
hereof, pay
such portion or amount as is not in dispute in accordance
with the
terms of section (b).

(d) Defense of Claim. In the event any claim for
indemnification hereunder results from or in connection with
any claim
or legal proceeding by a third party, including any
governmental
agency, Lone Star shall not settle or compromise any such
claim for
which it is allegedly entitled to indemnification without
the prior
written consent of Rosebud (which shall not be unreasonably
withheld)
unless a lawsuit or administrative proceeding shall have
been
instituted or shall be overtly threatened and Rosebud shall
not have
taken control of such suit or administrative proceeding
after
notification thereof. In the event of any claim hereunder,
Rosebud
may, at Rosebud's sole cost and expense, and upon written
notice to
Lone Star, assume and control the defense of any claim or
legal
proceeding if Rosebud acknowledges in writing to Lone Star
that
Rosebud is obligated to indemnify Lone Star with respect to
all
elements of such claim and evidence to the reasonable
satisfaction of
Lone Star an ability to satisfy any such claim. Lone Star
shall be
entitled to participate in the defense of any such action,
with its
own counsel, and at its own expense. If Rosebud does not
assume the
control and defense of any such claim or litigation arising
therefrom,
Lone Star may defend against such claim or litigation in
such manner
as it may deem appropriate, including but not limited to
settling such
claim or litigation on such terms as Lone Star may deem
appropriate
after giving notice of such proposed settlement to Rosebud.
Rosebud
shall be entitled to participate in (but not control) the
defense of
such action with its own counsel and at its own expense.

ARTICLE VMISCELLANEOUS
5.1 Amendments. This Agreement may not be amended or
otherwise
modified except in a writing signed by Lone Star and
Rosebud. This
Agreement shall not be amended in a manner inconsistent with
the Plan
or the Asset Proceeds Notes Indenture.

5.2 Covenant of Further Assurance. Lone Star and
Rosebud hereby
agree to execute such other documents and perform such other
acts as
may be necessary or desirable to carry out the purposes of
this
Agreement.

5.3 Notices and Directions. All notices and other
communications hereunder shall be in writing and shall be
given by
hand delivery, telecopy, certified mail (to an address
within the
United States) or air courier to the intended recipient
thereof at its
address specified below or to such other address as such
recipient may
hereafter specify by notice to the other parties hereto.
Each such
notice, request or other communication shall be effective
(i) if given
by mail within the United States, 72 hours after such
communication
is deposited in the mails with first class postage prepaid,
addressed
as aforesaid, (ii) if given by telecopy, on the date of
delivery
provided that receipt of such telecopy is confirmed by mail
in the
manner herein described, or (iii) if given by any other
means
(including, without limitation, by air courier), when
delivered at the
address of a person specified below.

Lone Star Industries, Inc.
300 First Stamford Place
P. O. Box 120014
Stamford, CT 06912-0014
Attention: Corporate Secretary

Rosebud Holdings, Inc.*
300 First Stamford Place
P. O. Box 120014
Stamford, CT 06912-0014
Attention: President

* Notice intended for any or all of the Subsidiaries shall
be deemed
effective if provided to Rosebud Holdings, Inc.

5.4 Severability. If any provision of this Agreement
is held
to be illegal, invalid or unenforceable, then the parties to
this
Agreement shall be relieved of all obligations arising under
such
provision, but only to the extent that such provision is
unenforceable, and this Agreement shall be deemed amended by
modifying
such provision to the extent necessary to make it
enforceable while
preserving its intent or, if that is not possible, by
substituting
another provision that is enforceable and achieves the same
objective
and economic result.

5.6 Assignability of Rights and Obligations. The
rights and
obligations of Lone Star shall not be assigned, transferred
or
delegated in any manner, either voluntarily or by operation
of law,
unless approved in writing by Rosebud; provided, however,
Lone Star
may assign its rights and obligations hereunder to another
entity
controlled by Lone Star provided it remains liable
hereunder.

5.7 Status of Lone Star. The Parties hereto
acknowledge and
agree that Lone Star is acting solely as an independent
contractor and
not as a partner, joint venturer, or employee of Rosebud and
shall
have no authority to act for, bind or obligate Rosebud in
any manner
whatsoever, except as may hereafter be authorized in writing
by
Rosebud. Lone Star has not assumed any liability of Rosebud
and shall
be liable only for its own conduct (to the extent provided
in Section
4.3 hereof) and not for any obligation now or hereafter
incurred by
Rosebud. Nothing in this Agreement shall confer upon any
person other
than a party hereto or a party's permitted successors or
assigns any
rights or remedies of any nature or kind whatsoever.

5.8 Incorporation of Exhibits. Exhibits attached hereto
are
deemed fully incorporated herein as a part of this Agreement
as if set
forth herein in full.

5.9 Counterparts. This Agreement may be executed by
the parties
hereto in separate counterparts, each of which when so
executed and
delivered shall be an original, but all such counterparts
shall
together constitute but one and the same instrument.

5.10 Headings. The headings of the various Articles
and
Sections of this Agreement are for convenience of reference
only and
shall not define or limit any of the terms or provisions
hereof.

5.11 Governing Law. The provisions of this Agreement
shall be
governed by and construed in accordance with the laws of the
State of
New York without giving effect to conflict of law rules.

IN WITNESS WHEREOF, the undersigned have executed this
Agreement
as of the day and year first above written.

LONE STAR INDUSTRIES, INC.

By John J. Martin
Title: Senior Vice President

By John S. Johnson
Title: Assistant Secretary

ROSEBUD HOLDINGS, INC.

By John J. Martin
Title: Vice President

By John S. Johnson
Title: Assistant Secretary

KCOR CORPORATION

By John J. Martin
Title: Vice President

By John S. Johnson
Title: Assistant Secretary

LONE STAR CALIFORNIA, INC.

By John J. Martin
Title: Vice President

By John S. Johnson
Title: Assistant Secretary

ROSEBUD REAL PROPERTIES, INC.

By John J. Martin
Title: Vice President

By John S. Johnson
Title: Assistant Secretary

SANTA CRUZ CORPORATION

By John J. Martin
Title: Vice President

By John S. Johnson
Title: Assistant Secretary

NAZARETH CEMENT CORPORATION

By John J. Martin
Title: Vice President

By John S. Johnson
Title: Assistant Secretary

LAS COLINAS CORPORATION

By John J. Martin
Title: Vice President

By John S. Johnson
Title Assistant Secretary

ROSEBUD FALCON CORPORATION

By John J. Martin
Title Vice President

By John S. Johnson
Title: Assistant Secretary

ROSEBUD GENERAL CORPORATION

By John J. Martin
Title: Vice President

By John S. Johnson
Title: Assistant Secretary

EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") made as of
the 1st
day of July, 1994 between David W. Wallace ("Executive") and
Lone Star
Industries, Inc., a Delaware corporation, having its
principal office
at 300 First Stamford Place, Stamford, Connecticut ("Lone
Star" or the
"Company").
WITNESSETH:
In consideration of the mutual promises,
agreements and
covenants hereby made, the mutual benefits to be derived
from this
Agreement and for other good and valuable consideration, the
receipt
and sufficiency of which are hereby acknowledged, the
parties hereto
agree and understand as follows:
1. Lone Star hereby employs Executive, and
Executive
hereby accepts employment by Lone Star, on the terms and
conditions
set forth in this Agreement for an initial term of twenty-
four (24)
consecutive months commencing as of the date hereof (the
"Initial
Term"), as Chairman and Chief Executive Officer, with such
duties as
are specified in the By-Laws of Lone Star and such other
duties
customary to the position as may be assigned to Executive
from time
to time by the Board of Directors of Lone Star. Unless
terminated
pursuant to the other terms hereof, this Agreement shall
continue in
full force and effect after the Initial Term for successive
two-year
terms (each such term, and the Initial Term, a "Term").
2. Lone Star shall pay Executive a salary
("Salary") at
the rate of $150,000 per annum until the effective date of
termination
of this Agreement. Salary shall continue to be paid to
Executive on
the currently established pay periods of Lone Star. The
Compensation
and Stock Option Committee (or such other Board committee as
shall
then be responsible for making such decisions or, if none,
the full
Board of Directors) may in its discretion consider increases
in the
Executive's Salary from time to time, and upon any such
increase
"Salary" for purposes hereof shall thereafter mean the
Executive's
salary as so increased notwithstanding any purported
subsequent
reduction thereof by any such committee or the Board. In
addition,
the Compensation and Stock Option Committee (or such other
Board
committee as shall then be responsible for making such
decisions, or
if none, the full Board of Directors) may in its discretion
consider
granting to the Executive from time to time such bonuses,
stock
options or other incentive compensation as it deems
appropriate.
3. (a) (i) Either party, by written notice to
the other
at least six months prior to the expiration of the then
current Term,
may terminate this Agreement effective at the expiration of
such Term.
(ii) Lone Star, by written notice which sets forth the
effective date
of termination (which shall not be earlier than six (6)
months after
receipt of the written notice), may terminate this Agreement
at any
time for reasons (including without limitation disability of
the
Executive) other than Cause (as hereinafter defined).
(b) In the event that this Agreement is
terminated by
the Executive pursuant to Section 4 below or Lone Star
terminates this
Agreement pursuant to Section 3(a) above, Executive shall be
entitled
to a severance payment in an amount equal to the greater of
Executive's Salary for the period from the effective date of
the
termination through the later of (i) the expiration of the
Initial
Term or (ii) the date one year (18 months, in the case of a
termination pursuant to Section 4) after the effective date
of the
termination (such period, the "Severance Period").
Severance shall
be paid in lump sum on the effective date of the
termination. In
addition, the Executive shall continue to receive medical
insurance
and other benefits provided pursuant to Sections 5 and 6
hereof during
the Severance Period. In furtherance and not in limitation
of the
immediately preceding sentence, the Executive shall be
deemed to have
continued his employment at his Salary during the Severance
Period for
purposes of vesting, eligibility and benefit accrual under
any
applicable employee benefit plan (subject, in the case of
the
Company's 401K savings plan and pension plan for salaried
employees,
to the requirements of the Internal Revenue Code of 1986, as
amended).
Severance pay pursuant to this Section shall be in lieu of
severance
pay pursuant to any Lone Star policy, except severance in
respect of
service as a director.
(c) Lone Star shall have the right to
terminate this
Agreement for Cause during the Initial Term and thereafter
and
Executive shall not be entitled to receive severance pay
pursuant to
this Section or any other policy or agreement of Lone Star
except
severance in respect of service as a director. Cause shall
be
construed to mean:
(1) The willful and continued
failure by the
Executive to substantially perform his duties with Lone Star
(other
than any such failure resulting from his disability due to
physical
or mental illness) after a written demand for performance is
delivered
which specifically identifies the manner in which he has not
substantially performed his duties, or
(2) the willful engaging by
Executive in
gross misconduct materially and demonstrably injurious to
the Company,
monetarily or otherwise, or
(3) conviction of fraud, theft of
embezzlement.
For purposes of this Section, no act, or
failure to
act, shall be considered "willful" unless done, or omitted
to be done,
not in good faith or without reasonable belief that the
action or
omission was in the best interest of the Company.
The written demand in Section (c)(1) shall be
delivered
to the Executive by the Board of Directors and shall set
forth a
reasonable period (not shorter than 30 business days) in
which
Executive is expected to comply with said demand. If
Executive does
not comply thereafter, Lone Star shall have the right to
terminate
this Agreement upon seven (7) days' written notice to
Executive.
4. (a) Lone Star hereby agrees not to: (i)
change the
Executive's duties so that a reasonable man would interpret
the change
to be a demotion; or (ii) direct the Executive to relocate
his office
to a new location which is either in a State other than
Connecticut
or more than twenty-five (25) miles from Stamford,
Connecticut
(excluding any relocation occurring prior to a Change of
Control, as
defined below, of the Executive's office (A) as a result of
a
relocation of Lone Star's operations presently located in
Stamford,
Connecticut, and (B) applicable to substantially all
officers of Lone
Star). In the event Lone Star breaches its obligations in
the
immediately preceding sentence, Executive, at his option
(and without
limiting his remedies), can (if such demotion or direction
to relocate
is not rescinded or corrected by the Company within 30 days
after
written notice by Executive to the Company, reasonably
identifying,
in the case of a demotion, the change in duties complained
of) declare
himself terminated for "Good Reason" by giving written
notice to Lone
Star, and Lone Star shall pay Executive severance pay and
benefits as
provided in Section 3(b) of this Agreement. In no event
shall
Executive be required to perform duties or to suffer
relocation
prohibited by this Section 4.
(b) In the event of the Executive's physical
or mental
incapacity, the Executive may declare himself terminated for
"Incapacity" by giving written notice to Lone Star, and Lone
Star
shall pay Executive severance pay and benefits as provided
in Section
3(b) of this Agreement. "Physical or mental incapacity"
shall mean
the inability of Executive by reason of a physical or mental
illness
to perform his duties hereunder for a period of 90
consecutive days
or a total of 120 days in any twelve month period and such
incapacity
is determined by a physician selected by Executive (or his
legal
representatives) and reasonably acceptable to the Company to
be such
as prevents Executive from performing adequately his normal
duties to
the Company. During any period that the Executive is unable
to
perform his duties by reason of physical or mental
incapacity,
Executive shall continue to receive his full compensation
and benefits
hereunder.
5. Executive shall participate in Lone Star's
employee
benefit programs and plans in the same manner as other
executive
salaried employees of Lone Star and in accordance with the
terms
thereof. Benefit programs and plans include, but are not
limited to,
life insurance, accidental death and dismemberment
insurance,
hospital, medical, surgical and major medical insurance,
dental
insurance, short and long-term disability insurance, 401K
savings plan
and pension plan for salaried employees and directors' and
officers'
liability insurance ("Employee Benefit Plans"). Executive
shall also
participate in Lone Star's vacation and holiday programs.
In addition
to and not in limitation of the foregoing, and
notwithstanding the
Company's policy with respect to other employees, the
Company shall,
during their lives and whether or not the Executive's
employment or
this Agreement terminates (for Cause or otherwise), provide
the
Executive with life and medical insurance and the
Executive's spouse
with medical insurance at no cost to the Executive or his
spouse at
least equal to the life and medical insurance provided to
senior
executive officers of the Company; provided however, the
medical
benefits provided to the Executive and his spouse shall be
at least
equal to the medical benefits described in Exhibit A;
provided
further, the annual deductible for medical coverage
described in
Exhibit A is $750 for each individual. The Executive and
his spouse
are each entitled to receive monthly reimbursement of
Medicare Part
B premiums. This paragraph shall survive any termination of
this
Agreement.
6. To the extent Executive voluntarily
terminates his
employment at the end of any Term, he shall be entitled to
participate
in Lone Star's employee benefit plans to the full extent
that they may
be provided to other retirees (and spouses, if applicable)
including
but not limited to the Pension Plan for Salaried Employees,
in the
same manner as other salaried retirees of Lone Star and in
accordance
with the terms thereof.
7. Following a Change of Control, as defined
below, the
Executive, on thirty days written notice (which notice must
be
delivered within twelve months after the Company gives the
Executive
notice of the Change of Control or the Executive has actual
knowledge
of such Change of Control), may terminate his employment
with the
Company. Upon any such termination, the Executive shall be
entitled
to severance pay in an amount equal to two years' Salary.
Severance
hereunder shall be paid in lump sum on the effective date of
the
termination. In addition, the Executive shall be deemed to
have
continued his employment at his Salary for a period of two
years
following his termination for purposes of vesting,
eligibility and
accrual of benefits under any applicable employee benefit
plan
(subject, in the case of the Company's 401K savings plan and
pension
plan for salaried employees, to the requirements of the
Internal
Revenue Code of 1986, as amended). Severance pay pursuant
to this
Section shall be in lieu of severance pay pursuant to any
Lone Star
policy or other agreement (other than severance in respect
of service
as a director) and all other obligations of the Company for
severance
pay under this Agreement. For purposes of this Agreement a
"Change
of Control" shall be deemed to have occurred upon the
occurrence of
any of the following events:
(i) Any acquisition by any individual, entity or
group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities
Exchange Act of 1934 (the "Exchange Act")) (a Person ) of
beneficial
ownership (within the meaning of Rule 13d-3 promulgated
under the
Exchange Act) of shares of common stock of the Company (the
"Common
Stock") and/or other voting securities of the Company
entitled to vote
generally in the election of directors ("Outstanding Company
Voting
Securities") after which acquisition such individual, entity
or group
is the beneficial owner of twenty percent (20%) or more of
either (1)
the then outstanding shares of Common Stock or (2) the
Outstanding
Company Voting Securities; excluding, however, the
following: (1) any
acquisition by the Company, (2) any acquisition by an
employee benefit
plan (or related trust) sponsored or maintained by the
Company or (3)
any acquisition by any corporation pursuant to a
reorganization,
merger, consolidation or similar corporate transaction (in
each case,
a Corporate Transaction), if, pursuant to such Corporate
Transaction, the conditions described in clauses (1), (2)
and (3) of
paragraph (iii) of this Section 6 are satisfied; or
(ii) A change in the composition of the Board of
Directors
of the Company such that the individuals who, as of the date
hereof,
comprise a class of directors of the Board (the members of
each class
of directors of the Board as of the date hereof shall be
hereinafter
referred to as an Incumbent Class and the members of all of
the
Incumbent Classes shall be hereinafter collectively referred
to as the
"Incumbent Board") cease for any reason to constitute at
least a
majority of the class; provided, however, for purposes of
this
subsection that any individual who becomes a member of an
Incumbent
Class subsequent to the date hereof whose election, or
nomination for
election by the Company's stockholders, was approved in
advance or
contemporaneously with such election by a vote of at least a
majority
of those individuals who are members of the Incumbent Board
and a
majority of those individuals who are members of such
Incumbent Class
(or deemed to be such pursuant to this proviso) shall be
considered
as though such individual were a member of the Incumbent
Class; but,
provided further, that any such individual whose initial
assumption
of office occurs as a result of either an actual or
threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation
14A promulgated under the Exchange Act) or other actual or
threatened
solicitation of proxies or consents by or on behalf of a
Person other
than the Board of Directors of the Company or actual or
threatened
tender offer for shares of the Company or similar
transaction or other
contest for corporate control (other than a tender offer by
the
Company) shall not be so considered as a member of the
Incumbent
Class; or
(iii) The approval by the stockholders of the
Company of
a Corporate Transaction or, if consummation of such
Corporate
Transaction is subject, at the time of such approval by
stockholders,
to the consent of any government or governmental agency, the
obtaining
of such consent (either explicitly or implicitly);
excluding, however,
such a Corporate Transaction pursuant to which (1) all or
substantially all of the individuals and entities who are
the
beneficial owners, respectively, of the outstanding shares
of Common
Stock and Outstanding Company Voting Securities immediately
prior to
such Corporate Transaction will beneficially own, directly
or
indirectly, more than eighty percent (80%) of, respectively,
the
outstanding shares of common stock of the corporation
resulting from
such Corporate Transaction and the combined voting power of
the
outstanding voting securities of such corporation entitled
to vote
generally in the election of directors, (2) no Person (other
than the
Company, any employee benefit plan (or related trust) of the
Company
or the corporation resulting from such Corporate Transaction
and any
Person beneficially owning, immediately prior to such
Corporate
Transaction, directly or indirectly, twenty percent (20%) or
more of
the outstanding shares of Common Stock or Outstanding
Company Voting
Securities, as the case may be) will beneficially own,
directly or
indirectly, twenty percent (20%) or more of, respectively,
the
outstanding shares of common stock of the corporation
resulting from
such Corporate Transaction or the combined voting power of
the then
outstanding securities of such corporation entitled to vote
generally
in the election of directors and (3) individuals who were
members of
the Incumbent Board will constitute at least a majority of
the members
of board of directors of the corporation resulting from such
Corporate
Transaction; or
(iv) The approval of the stockholders of the
Company of (1)
a complete liquidation or dissolution of the Company or (2)
the sale
or other disposition of all or substantially all of the
assets of the
Company; excluding, however, such a sale or other
disposition to a
corporation, with respect to which following such sale or
other
disposition, (A) more than eighty percent (80%) of,
respectively, the
then outstanding shares of common stock of such corporation
and the
combined voting power of the then outstanding voting
securities of
such corporation entitled to vote generally in the election
of
directors will be then beneficially owned, directly or
indirectly, by
all or substantially all of the individuals and entities who
were the
beneficial owners, respectively, of the outstanding shares
of Common
Stock and Outstanding Company Voting Securities immediately
prior to
such sale or other disposition, (B) no Person (other than
the Company
and any employee benefit plan (or related trust) of the
Company or
such corporation and any Person beneficially owning,
immediately prior
to such sale or other disposition, directly or indirectly,
twenty
percent (20%) or more of the outstanding shares of Common
Stock or
Outstanding Company Voting Securities, as the case may be)
will
beneficially own, directly or indirectly, twenty percent
(20%) or more
of, respectively, the then outstanding shares of common
stock of such
corporation and the combined voting power of the then
outstanding
voting securities of such corporation entitled to vote
generally in
the election of directors and (C) individuals who were
members of the
Incumbent Board will constitute at least a majority of the
members of
the board of directors of such corporation.
In the event of any conflict between this Section
7 and any
other Section of this Agreement (other than Section 5), the
terms of
this Section 7 shall control, so that, without limitation,
the
Executive shall be entitled to the payment and benefits
provided under
this Section 7 notwithstanding any purported termination
(whether for
Cause or otherwise) by the Company.
8. Upon presentation to Lone Star of appropriate
documentation, Executive will be entitled to reimbursement
within
guidelines established by Lone Star for all reasonable and
necessary
business expenses incurred by him for entertainment, travel
and
similar items and for costs for operating from the
Executive's
Greenwich, Connecticut office. However, the Executive shall
be
personally responsible for rental payments such office as
long as he
decides, in his discretion, to maintain such office.
9. Executive agrees that during his period of
employment
by Lone Star and thereafter he shall hold in confidence and
not
disclose to any unauthorized person any knowledge or
information
acquired and possessed by him of a confidential nature or
any trade
secret with respect to the business of Lone Star, and not to
disclose,
publish or make use of the same without the prior express
consent of
Lone Star. Executive shall be free to disclose such
information,
knowledge or trade secret in the ordinary course of his
carrying out
his duties as an officer of Lone Star, and shall be free to
disclose
such information, knowledge or trade secret during his
period of
employment by Lone Star and thereafter if such matters
become public
or if compelled by legal process.
10. Executive agrees that during the term of his
employment, he will not without the consent of Lone Star, in
any
manner, directly or indirectly, own, manage, be employed by,
operate,
join, control, participate in, be connected with, engage in,
or become
interested in any business competitive with, the business
then carried
on by Lone Star in those parts of the world where Lone Star
does
business. Ownership of publicly traded securities of a
business of
the same or similar nature to, or competitive with, that
carried on
by Lone Star, shall not violate this paragraph, provided the
Executive
does not acquire more than 5% of the voting stock of any
such
corporation. Notwithstanding any other provision of this
Agreement,
the Executive shall not be required to use his full time
efforts
hereunder and may take on outside business commitments
provided they
do not unreasonably impair his ability or capacity to serve
as the
Chairman of the Board and CEO of the Company.
11. (a) Any dispute relating to this Agreement
arising
between the Executive and the Company (or any successor or
assign)
shall be settled by arbitration in accordance with the
commercial
arbitration rules of the American Arbitration Association
("AAA").
The arbitration proceedings, including the rendering of an
award,
shall take place in Stamford, Connecticut (or such other
location
mutually agreed upon by the Company and the Executive), and
shall be
administered by the AAA.
(b) The arbitral tribunal shall be appointed
within
30 days of the notice of dispute, and shall consist of three
arbitrators, one of which shall be appointed by the Company,
one by
the Executive, and the third by both the Company and the
Executive
jointly; provided, however, that, if the Company and the
Executive do
not select the third arbitrator within such 30-day period,
such third
arbitrator shall be chosen by the AAA as soon as practicable
following
notice to the AAA by the parties of their inability to
choose such
third arbitrator.
(c) Decisions of such arbitral tribunal
shall be in
accordance with the laws of the State of Connecticut
(excluding the
conflicts of law rules which require the application of any
other
law). The award of any such arbitral tribunal shall be
final (except
as otherwise provided by the laws of the State of
Connecticut and the
Federal laws of the United States, to the extent
applicable).
Judgment upon such award may be entered by the prevailing
party in any
state or Federal court sitting in Connecticut or any other
court
having jurisdiction thereof, or application may be made by
such party
to any such court for judicial acceptance of such award and
an order
of enforcement.
(d) The Company shall reimburse the
Executive for all
costs, including reasonable attorneys' fees, in connection
with any
proceeding (whether or not in arbitration) to obtain or
enforce any
right or benefit under this Agreement in which the Executive
is the
prevailing party.
Any amounts not paid by the Company under
this
Agreement within five business days after the date they are
due shall
be paid with interest from their due date at the rate
announced from
time to time by Citibank, N.A. as its prime or similar rate
plus 3%.
12. This Agreement constitutes the entire
agreement between
the parties and may not be changed or modified except by an
agreement
in writing signed by Lone Star and the Executive. This
Agreement
supersedes the employment agreement between the Executive
and Lone
Star, dated December 12, 1990.
13. This Agreement shall be governed by and
construed in
accordance with the laws of the State of Connecticut.
14. This Agreement shall be binding upon and
inure to the
benefit of the Company, its successors and assigns,
including any
purchaser of all or substantially all of the assets of the
Company and
the surviving entity of any merger or consolidation to which
the
Company is a party and the Executive and his heirs,
executors,
administrators and legal representatives.
15. Except as provided herein, this Agreement
cannot be
assigned by Lone Star or Executive without prior written
consent.

16. All notices, communications, etc., shall be
sent to:
(a) Corporate Secretary
Lone Star Industries, Inc.
300 First Stamford Place
Stamford, CT 06912

(b) David W. Wallace
Two Greenwich Place, Ste 100
Greenwich, CT 06830

David W. Wallace
David W. Wallace

LONE STAR INDUSTRIES, INC.

By William M. Troutman
William M. Troutman,
President

By Jack R. Wentworth
Jack R. Wentworth,
Chairman of the Compensation and
Stock Option Committee

OPTION AGREEMENT PURSUANT TO
THE LONE STAR INDUSTRIES, INC.
MANAGEMENT STOCK OPTION PLAN

AGREEMENT, dated as of June 8, 1994 by and between
Lone Star
Industries, Inc. (the "Company") and David W. Wallace (the
"Participant").

Preliminary Statement

The Compensation and Stock Option Committee of the
Board of
Directors (the "Board") of the Company (the "Committee"),
pursuant to
the Company's Management Stock Option Plan, annexed hereto
as Exhibit
A (the "Plan"), granted on June 8, 1994 to the Participant,
as an
Employee (as defined in the Plan), stock options (the
"Options") to
purchase the number of shares of the Company's common stock,
par value
$1.00 per share (the "Common Stock"), set forth below. This
Agreement
sets forth the terms of the Options.

Accordingly, the parties hereto agree as follows:

1. Grant of Options. Subject in all respects to
the Plan
and the terms and conditions set forth herein and therein,
the
Participant is hereby granted 125,000 Options to purchase
from the
Company up to 125,000 shares of Common Stock, at a price per
share of
$15.375 (the "Option Price").

2. Tax Matters. 6,504 Options to acquire 6,504
shares of
Common Stock granted hereby are intended to qualify as and
are hereby
designated as "Incentive Stock Options" under Section 422 of
the
Internal Revenue Code of 1986, as amended (the "Code").
118,496
Options to acquire 118,496 shares of Common Stock are
intended to
qualify as and are hereby designated as "Non-Qualified Stock
Options"
within the meaning of Section 1.83-7 of the Income Tax
Regulations
promulgated under the Code.

3. Vesting. The Options are exercisable
immediately, in
whole or in part, prior to the expiration of the Options as
provided
herein.

4. Method of Exercise. Options may be exercised
in whole
or in part at any time during the Option term, by giving
written
notice of exercise to the Company specifying the number of
shares to
be purchased and whether such exercise is of Incentive Stock
Options
or of Non-Qualified Stock Options, or what combination of
Incentive
Stock Options and Non-Qualified Stock Options are being
exercised.
Such notice shall be accompanied by payment in full of the
Option
Price (i) in cash, by certified check or money order, or
(ii) in the
form of shares of Common Stock owned by the Participant (and
for which
the Participant has good title free and clear of any liens
and
encumbrances) based on the Fair Market Value of the shares
on the date
of exercise as determined by the Committee or (iii) in such
other
form, or pursuant to such other arrangement for the
satisfaction of
the Option Price, as the Committee may accept. For purposes
of this
Agreement, "Fair Market Value" shall mean the average of the
high and
low prices of a share of Common Stock in New York Stock
Exchange
composite market transactions, as reported by the Wall
Street Journal,
or if the Common Stock shall not have been reported on such
date, on
the first day prior thereto on which the Common Stock was
reported.
No shares of Common Stock shall be issued until payment, as
provided
herein, therefor has been made or provided for.

5. Restriction on Transfer of Options. Except
as
otherwise provided herein, the Options granted hereby are
not
transferable otherwise than by will or under the applicable
laws of
descent and distribution. Non-Qualified Stock Options may
be
transferred (i) pursuant to a qualified domestic relations
order as
defined in the Code or Title I of the Employee Retirement
Income
Security Act, or the rules thereunder or (ii) to the
Participant's
immediate family (i.e., the Employee's children,
grandchildren and
spouse), or to one or more trusts for the benefit of such
immediate
family members, or partnerships in which such family members
are the
only partners, provided that such transfer shall be
permitted only if
the Participant does not receive any consideration for such
transfer
and written notice of such proposed transfer and the details
thereof
shall have been furnished to the Committee (any Options
transferred
pursuant to this clause shall continue to be subject to the
same terms
and conditions that were applicable to such Options
immediately prior
to the transfer and a holder thereof shall be treated as a
Participant
hereunder). During the lifetime of the Participant, Options
may be
exercised only by the Participant or the Participant's
guardian or
legal representative. In addition, except to the extent
permitted by
this Agreement, the Options shall not be assigned,
negotiated, pledged
or hypothecated in any way (whether by operation of law or
otherwise),
and the Options shall not be subject to execution,
attachment or
similar process. Except to the extent permitted by this
Agreement,
upon any attempt to transfer, assign, negotiate, pledge or
hypothecate
the Options, or in the event of any levy upon the Options by
reason
of any execution, attachment or similar process contrary to
the
provisions hereof, the Options shall immediately become null
and void.

6. Termination of Employment.

A. Termination by Reason of Death or
Disability. If
a Participant's Termination of Employment (as hereinafter
defined) is
by reason of death or Disability (as defined in the Plan),
any Options
held by such Participant may be exercised, to the extent
exercisable
at the Participant's termination, by the Participant (or the
legal
representative of the Participant's estate) at any time
within a
period of one (1) year from the date of such termination or
until the
expiration of the stated term of the Option, whichever
period is the
shorter. For purposes of this Agreement, "Termination of
Employment"
means (1) a termination of service for reasons other than a
military
or personal leave of absence granted by the Company or a
transfer of
the Participant from or among the Company and its
subsidiaries, as
defined under Section 424(f) of the Code; or (2) when a
subsidiary,
with respect to which is employing a Participant, ceases to
be a
subsidiary, as defined under Section 424(f) of the Code.

(i) Any acquisition by any individual,
entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities
Exchange Act of 1934 (the "Exchange Act")) (a Person) of
beneficial
ownership (within the meaning of Rule 13d-3 promulgated
under the
Exchange Act) of shares of Common Stock and/or Outstanding
Company
Voting Securities (as defined below) after which acquisition
such
individual, entity or group is the beneficial owner of
twenty percent
(20%) or more of either (1) the then outstanding shares of
Common
Stock or (2) the combined voting power of the then
outstanding voting
securities of the Company entitled to vote generally in the
election
of directors (the Outstanding Company Voting Securities);
excluding,
however, the following: (1) any acquisition by the Company,
(2) any
acquisition by an employee benefit plan (or related trust)
sponsored
or maintained by the Company or (3) any acquisition by any
corporation
pursuant to a reorganization, merger, consolidation or
similar
corporate transaction (in each case, a Corporate
Transaction), if,
pursuant to such Corporate Transaction, the conditions
described in
clauses (1), (2) and (3) of paragraph (iii) of this Section
6 are
satisfied; or

(ii) A change in the composition of the Board
such that
the individuals who, as of July 1, 1994, comprise a class of
directors
of the Board (the members of each class of directors of the
Board as
of July 1, 1994 shall be hereinafter referred to as an
Incumbent
Class and the members of all of the Incumbent Classes shall
be
hereinafter collectively referred to as the "Incumbent
Board") cease
for any reason to constitute at least a majority of the
class;
provided, however, for purposes of this subsection that any
individual
who becomes a member of an Incumbent Class subsequent to
July 1, 1994
whose election, or nomination for election by the Company's
stockholders, was approved in advance or contemporaneously
with such
election by a vote of at least a majority of those
individuals who are
members of the Incumbent Board and a majority of those
individuals who
are members of such Incumbent Class (or deemed to be such
pursuant to
this proviso) shall be considered as though such individual
were a
member of the Incumbent Class; but, provided further, that
any such
individual whose initial assumption of office occurs as a
result of
either an actual or threatened election contest (as such
terms are
used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange
Act) or other actual or threatened solicitation of proxies
or consents
by or on behalf of a Person other than the Board or actual
or
threatened tender offer for shares of the Company or similar
transaction or other contest for corporate control (other
than a
tender offer by the Company) shall not be so considered as a
member
of the Incumbent Class; or

(iii) The approval by the stockholders of
the
Company of a Corporate Transaction or, if consummation of
such
Corporate Transaction is subject, at the time of such
approval by
stockholders, to the consent of any government or
governmental agency,
the obtaining of such consent (either explicitly or
implicitly);
excluding, however, such a Corporate Transaction pursuant to
which (1)
all or substantially all of the individuals and entities who
are the
beneficial owners, respectively, of the outstanding shares
of Common
Stock and Outstanding Company Voting Securities immediately
prior to
such Corporate Transaction will beneficially own, directly
or
indirectly, more than eighty percent (80%) of, respectively,
the
outstanding shares of common stock of the corporation
resulting from
such Corporate Transaction and the combined voting power of
the
outstanding voting securities of such corporation entitled
to vote
generally in the election of directors, (2) no Person (other
than the
Company, any employee benefit plan (or related trust) of the
Company
or the corporation resulting from such Corporate Transaction
and any
Person beneficially owning, immediately prior to such
Corporate
Transaction, directly or indirectly, twenty percent (20%) or
more of
the outstanding shares of Common Stock or Outstanding
Company Voting
Securities, as the case may be) will beneficially own,
directly or
indirectly, twenty percent (20%) or more of, respectively,
the
outstanding shares of common stock of the corporation
resulting from
such Corporate Transaction or the combined voting power of
the then
outstanding securities of such corporation entitled to vote
generally
in the election of directors and (3) individuals who were
members of
the Incumbent Board will constitute at least a majority of
the members
of board of directors of the corporation resulting from such
Corporate
Transaction; or

(iv) The approval of the stockholders of the
Company
of (1) a complete liquidation or dissolution of the Company
or (2) the
sale or other disposition of all or substantially all of the
assets
of the Company; excluding, however, such a sale or other
disposition
to a corporation, with respect to which following such sale
or other
disposition, (A) more than eighty percent (80%) of,
respectively, the
then outstanding shares of common stock of such corporation
and the
combined voting power of the then outstanding voting
securities of
such corporation entitled to vote generally in the election
of
directors will be then beneficially owned, directly or
indirectly, by
all or substantially all of the individuals and entities who
were the
beneficial owners, respectively, of the outstanding shares
of Common
Stock and Outstanding Company Voting Securities immediately
prior to
such sale or other disposition, (B) no Person (other than
the Company
and any employee benefit plan (or related trust) of the
Company or
such corporation and any Person beneficially owning,
immediately prior
to such sale or other disposition, directly or indirectly,
twenty
percent (20%) or more of the outstanding shares of Common
Stock or
Outstanding Company Voting Securities, as the case may be)
will
beneficially own, directly or indirectly, twenty percent
(20%) or more
of, respectively, the then outstanding shares of common
stock of such
corporation and the combined voting power of the then
outstanding
voting securities of such corporation entitled to vote
generally in
the election of directors and (C) individuals who were
members of the
Incumbent Board will constitute at least a majority of the
members of
the board of directors of such corporation.

For purposes of this Agreement, "Cause" means that the
Committee shall
have determined that any of the following events has
occurred: (x) The
willful and continued failure by the Participant to
substantially
perform his duties with the Company (other than any such
failure
resulting from his disability due to physical or mental
illness) after
a written demand for performance is delivered which
specifically
identifies the manner in which he has not substantially
performed his
duties, or (y) the willful engaging by the Participant in
gross
misconduct materially and demonstrably injurious to the
Company,
monetarily or otherwise or (z) conviction of fraud, theft
of
embezzlement. For purposes of this Section, no act, or
failure to
act, shall be considered "willful" unless done, or omitted
to be done,
not in good faith or without reasonable belief that the
action or
omission was in the best interest of the Company. The
written demand
in clause (x) of this Section 6 shall be delivered to the
Participant
by the Board and shall set forth a reasonable period (not
shorter than
30 business days) in which Participant is expected to comply
with said
demand. If the Participant does not comply thereafter, the
Committee
shall have the right to determine that Cause exists.

C. Other Termination. If the Participant's
Termination of Employment is for any reason other than
death,
Disability, or Cause, any Options held by the Participant
may be
exercised, to the extent exercisable at the Participant's
termination,
by the Participant at any time within a period of 3 months
from the
date of such termination or until the expiration of the
stated term
of such Option, whichever period is shorter.

8. Rights as a Stockholder. The Participant
shall have
no rights as a stockholder with respect to any shares of
Common Stock
covered by the Options until the Participant shall have
become the
holder of record of the shares of Common Stock, and no
adjustments
shall be made for dividends in cash or other property,
distributions
or other rights in respect of any such shares of Common
Stock, except
as otherwise specifically provided for in the Plan.

9. Provisions of Plan Control. This Agreement
is subject
to all the terms, conditions and provisions of the Plan,
including,
without limitation, the amendment provisions thereof, and to
such
rules, regulations and interpretations relating to the Plan
as may be
adopted by the Committee and as may be in effect from time
to time.
Any capitalized term used but not defined herein shall have
the
meaning ascribed to such term in the Plan. The annexed copy
of the
Plan is incorporated herein by reference. If and to the
extent that
this Agreement conflicts or is inconsistent with the terms,
conditions
and provisions of the Plan, the Plan shall control, and this
Agreement
shall be deemed to be modified accordingly.

10. Withholding of Taxes. The Company shall have
the right
to require, prior to the issuance or delivery of any shares
of Common
Stock, payment by the Participant of any Federal, state or
local taxes
required by law to be withheld.

The Committee may permit any such withholding
obligation to
be satisfied by reducing the number of shares of Common
Stock
otherwise deliverable or by permitting the Participant to
deliver
shares of Common Stock which the Participant owns (free and
clear of
any liens and encumbrances). If the Participant is required
to file
reports under Section 16(a) of the Securities Exchange Act
of 1934
(the "Exchange Act") with respect to securities of the
Company the
Participant may elect to have a sufficient number of shares
of Common
Stock withheld or to deliver shares of Common Stock which
the
Participant owns to fulfill such tax obligations
(hereinafter a
Withholding Election) only if the election complies with
such
conditions as are necessary to prevent the withholding or
transfer of
such shares from being subject to Section 16(b) of the
Exchange Act.
To the extent necessary under then current law, such
conditions shall
include the following: (x) the Withholding Election shall be
subject
to the disapproval of the Committee and (y) the Withholding
Election
is made (i) during the period beginning on the third
business day
following the date of release for publication of the
quarterly or
annual summary statements of sales and earnings of the
Company and
ending on the twelfth business day following such date or is
made in
advance but takes effect during such period, (ii) at least
six (6)
months prior to the date of exercise of the Option, or (iii)
during
any other period in which a Withholding Election may be made
under the
provisions of Rule 16b-3 promulgated pursuant to the
Exchange Act.
Any fraction of a share of Common Stock required to satisfy
such tax
obligations shall be disregarded and the amount due shall be
paid
instead in cash by the Participant.

11. Listing and Other Conditions.

As long as the Common Stock is listed on a
national
securities exchange or system sponsored by a national
securities
association, the issue of any shares of Common Stock
pursuant to an
Option shall be conditioned upon such shares being listed on
such
exchange or system. The Company shall have no obligation to
issue
such shares unless and until such shares are so listed, and
the right
to exercise any Option with respect to such shares shall be
suspended
until such listing has been effected.

If at any time counsel to the Company shall be of
the
opinion that any sale or delivery of shares of Common Stock
pursuant
to an Option is or may in the circumstances be unlawful or
result in
the imposition of excise taxes under the statutes, rules or
regulations of any applicable jurisdiction, the Company
shall have no
obligation to make such sale or delivery, or to make any
application
or to effect or to maintain any qualification or
registration under
the Securities Act of 1933, as amended, or otherwise with
respect to
shares of Common Stock, and the right to exercise any Option
shall be
suspended until, in the opinion of said counsel, such sale
or delivery
shall be lawful or will not result in the imposition of
excise taxes.

Upon termination of any period of suspension under
this
Section 11, any Option affected by such suspension which
shall not
then have expired or terminated shall be reinstated as to
all shares
available before such suspension and as to shares which
would
otherwise have become available during the period of such
suspension,
but no such suspension shall extend the term of any Option.
Notwithstanding anything else to the contrary contained
herein, no
shares of Common Stock shall be delivered by the Company to
the
Participant pursuant to this Agreement until a Form S-8
registration
statement (or any successor form) shall have become
effective and
shall be current with respect to the shares being sold and
delivered
hereunder.

12. Notices. Any notice or communication given
hereunder
shall be in writing and shall be deemed to have been duly
given when
delivered in person, or by United States mail, to the
appropriate
party at the address set forth below (or such other address
as the
party shall from time to time specify):

If to the Company, to:

Lone Star Industries, Inc.
300 First Stamford Place
P. O. Box 120014
Stamford, CT 06912-0014
Attn: __________________

If to the Participant, to:

the address indicated on the signature page
at the end
of this Agreement.

13. No Obligation to Continue Employment. This
Agreement
does not guarantee that the Company or any of its
subsidiaries will
employ the Participant for any specific time period, nor
does it
modify in any respect the Company's or a subsidiary's right
to
terminate or modify the Participant's employment or
compensation.

IN WITNESS WHEREOF, the parties have executed this
Agreement
on the date and year first above written.

LONE STAR INDUSTRIES, INC.

By: William M. Troutman
William M. Troutman,
President

By: Jack R. Wentworth
Jack R. Wentworth,
Chairman of the
Compensation and
Stock Option Committee

David W. Wallace
David W. Wallace
Address:
Midwood Road, Deer Park
Greenwich, CT 06830

EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") made as of
the 1st
day of July, 1994 between William M. Troutman ("Executive")
and Lone
Star Industries, Inc., a Delaware corporation, having its
principal
office at 300 First Stamford Place, Stamford, Connecticut
("Lone Star"
or the "Company").
WITNESSETH:
In consideration of the mutual promises,
agreements and
covenants hereby made, the mutual benefits to be derived
from this
Agreement and for other good and valuable consideration, the
receipt
and sufficiency of which are hereby acknowledged, the
parties hereto
agree and understand as follows:
1. Lone Star hereby employs Executive, and
Executive
hereby accepts employment by Lone Star, on the terms and
conditions
set forth in this Agreement for an initial term of twenty-
four (24)
consecutive months commencing as of the date hereof (the
"Initial
Term"), as President and Chief Operating Officer, with such
duties as
are specified in the By-Laws of Lone Star and such other
duties
customary to the position as may be assigned to Executive
from time
to time by the Board of Directors of Lone Star or its
Chairman and
Chief Executive Officer. Unless terminated pursuant to the
other
terms hereof, this Agreement shall continue in full force
and effect
after the Initial Term for successive two-year terms (each
such term,
and the Initial Term, a "Term").
2. Lone Star shall pay Executive a salary
("Salary") at
the rate of $275,000 per annum until the effective date of
termination
of this Agreement. Salary shall continue to be paid to
Executive on
the currently established pay periods of Lone Star. The
Compensation
and Stock Option Committee (or such other Board committee as
shall
then be responsible for making such decisions or, if none,
the full
Board of Directors) may in its discretion consider increases
in the
Executive's Salary from time to time, and upon any such
increase
"Salary" for purposes hereof shall thereafter mean the
Executive's
salary as so increased, notwithstanding any purported
subsequent
reduction thereof by any such committee or the Board. In
addition,
the Compensation and Stock Option Committee (or such other
Board
committee as shall then be responsible for making such
decisions, or
if none, the full Board of Directors) may in its discretion
consider
granting to the Executive from time to time such bonuses,
stock
options or other incentive compensation as it deems
appropriate.
3. (a) (i) Either party, by written notice to
the other
at least six months prior to the expiration of the then
current Term,
may terminate this Agreement effective at the expiration of
such Term.
(ii) Lone Star, by written notice which sets forth the
effective date
of termination (which shall not be earlier than six (6)
months after
receipt of the written notice), may terminate this Agreement
at any
time for reasons (including without limitation disability of
the
Executive) other than Cause (as hereinafter defined).
(b) In the event that this Agreement is
terminated by
the Executive pursuant to Section 4 below or Lone Star
terminates this
Agreement pursuant to Section 3(a) above, Executive shall be
entitled
to a severance payment in an amount equal to the greater of
Executive's Salary for the period from the effective date of
the
termination through the later of (i) the expiration of the
Initial
Term or (ii) the date one year (18 months, in the case of a
termination pursuant to Section 4) after the effective date
of the
termination (the "Severance Period"); provided, however, the
severance
payment shall be reduced in the case of the Executive's
disability,
on a dollar-for-dollar basis, by any disability pay the
Executive
receives pursuant to the Supplemental Agreement during the
Severance
Period. Severance shall be paid in lump sum on the
effective date of
the termination. In addition, the Executive shall be deemed
to have
continued his employment at his Salary during the Severance
Period for
purposes of vesting, eligibility and benefit accrual under
any
applicable employee benefit plan (subject, in the case of
the
Company's 401K savings plan and pension plan for salaried
employees,
to the requirement of the Internal Revenue Code of 1986, as
amended).
Severance pay pursuant to this Section shall be in lieu of
severance
pay pursuant to any Lone Star severance policy (except that
the
supplemental retirement benefit and all other provisions of
the
Supplemental Agreement shall remain in full force and
effect).
(c) Lone Star shall have the right to
terminate this
Agreement for Cause during the Initial Term and thereafter
and
Executive shall not be entitled to receive severance pay
pursuant to
this Section or any other policy or agreement of Lone Star
except the
Supplemental Agreement. Cause shall be construed to mean:
(1) The willful and continued
failure by the
Executive to substantially perform his duties with Lone Star
(other
than any such failure resulting from his disability due to
physical
or mental illness) after a written demand for performance is
delivered
which specifically identifies the manner in which he has not
substantially performed his duties, or
(2) the willful engaging by
Executive in
gross misconduct materially and demonstrably injurious to
the Company,
monetarily or otherwise, or
(3) conviction of fraud, theft of
embezzlement.
For purposes of this Section, no act, or
failure to
act, shall be considered "willful" unless done, or omitted
to be done,
not in good faith or without reasonable belief that the
action or
omission was in the best interest of the Company.
The written demand in Section (c)(1) shall be
delivered
to the Executive by the Board of Directors or Lone Star's
Chairman and
Chief Executive Officer and shall set forth a reasonable
period (not
shorter than 30 business days) in which Executive is
expected to
comply with said demand. If Executive does not comply
thereafter,
Lone Star shall have the right to terminate this Agreement
upon seven
(7) days' written notice to Executive.
4. Lone Star hereby agrees not to: (i) change
the
Executive's duties so that a reasonable man would interpret
the change
to be a demotion; or (ii) direct the Executive to relocate
his office
to a new location which is either in a State other than
Connecticut
or more than twenty-five (25) miles from Stamford,
Connecticut
(excluding any relocation occurring prior to a Change of
Control, as
defined below, of the Executive's office (A) as a result of
a
relocation of Lone Star's operations presently located in
Stamford,
Connecticut and (B) applicable to substantially all officers
of Lone
Star). In the event Lone Star breaches its obligations in
the
immediately preceding sentence, Executive, at his option
(and without
limiting his remedies), can (if such demotion or direction
to relocate
is not rescinded or corrected by the Company within 30 days
after
written notice by Executive to the Company, reasonably
identifying,
in the case of a demotion, the change in duties complained
of) declare
himself terminated for "Good Reason" by giving written
notice to Lone
Star, and Lone Star shall pay Executive severance pay and
benefits as
provided in Section 3(b) of this Agreement. In no event
shall
Executive be required to perform duties or to suffer
relocation
prohibited by this Section 4.
5. Executive shall participate in Lone Star's
401K savings
plan and vacation and holiday programs and other benefits in
the same
manner as other executive salaried employees of Lone Star
and in
accordance with the terms thereof. Notwithstanding the
foregoing,
nothing contained in this Agreement (including without
limitation
Section 12 below) shall affect the force and effect of the
Agreement,
dated April 15, 1994, between the Company and the Executive
relating
to certain supplemental retirement, medical insurance,
disability and
other benefits and rights, a copy of which is attached
hereto as
Exhibit A (the "Supplemental Agreement").
6. Following a Change of Control, as defined
below, the
Executive, on thirty days written notice (which notice must
be
delivered within twelve months after the Company gives the
Executive
notice of the Change of Control or the Executive has actual
knowledge
of such Change of Control), may terminate his employment
with the
Company. Upon any such termination, the Executive shall be
entitled
to severance pay in an amount equal to two years' Salary.
Severance
hereunder shall be paid in lump sum on the effective date of
the
termination. In addition, the Executive shall be deemed to
have
continued his employment at his Salary for a period of two
years
following his termination for purposes of vesting,
eligibility and
benefit accrual under any applicable employee benefit plan
(subject
in the case of the Company's 401K savings plan and pension
plan for
salaried employees, to the requirements of the Internal
Revenue Code
of 1986, as amended). Severance pay pursuant to this
Section shall
be in lieu of severance pay pursuant to any Lone Star policy
or other
agreement (except that the supplemental retirement benefit
and all
other provisions of the Supplemental Agreement shall remain
in full
force and effect) and all other obligations of the Company
for
severance pay under this Agreement. For purposes of this
Agreement
a "Change of Control" shall be deemed to have occurred upon
the
occurrence of any of the following events:
(i) Any acquisition by any individual, entity or
group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities
Exchange Act of 1934 (the "Exchange Act")) (a Person) of
beneficial
ownership (within the meaning of Rule 13d-3 promulgated
under the
Exchange Act) of shares of common stock of the Company (the
"Common
Stock") and/or other voting securities of the Company
entitled to vote
generally in the election of directors ("Outstanding Company
Voting
Securities") after which acquisition such individual, entity
or group
is the beneficial owner of twenty percent (20%) or more of
either (1)
the then outstanding shares of Common Stock or (2) the
Outstanding
Company Voting Securities; excluding, however, the
following: (1) any
acquisition by the Company, (2) any acquisition by an
employee benefit
plan (or related trust) sponsored or maintained by the
Company or (3)
any acquisition by any corporation pursuant to a
reorganization,
merger, consolidation or similar corporate transaction (in
each case,
a Corporate Transaction), if, pursuant to such Corporate
Transaction, the conditions described in clauses (1), (2)
and (3) of
paragraph (iii) of this Section 6 are satisfied; or
(ii) A change in the composition of the Board of
Directors
of the Company such that the individuals who, as of the date
hereof,
comprise a class of directors of the Board (the members of
each class
of directors of the Board as of the date hereof shall be
hereinafter
referred to as an Incumbent Class and the members of all of
the
Incumbent Classes shall be hereinafter collectively referred
to as the
"Incumbent Board") cease for any reason to constitute at
least a
majority of the class; provided, however, for purposes of
this
subsection that any individual who becomes a member of an
Incumbent
Class subsequent to the date hereof whose election, or
nomination for
election by the Company's stockholders, was approved in
advance or
contemporaneously with such election by a vote of at least a
majority
of those individuals who are members of the Incumbent Board
and a
majority of those individuals who are members of such
Incumbent Class
(or deemed to be such pursuant to this proviso) shall be
considered
as though such individual were a member of the Incumbent
Class; but,
provided further, that any such individual whose initial
assumption
of office occurs as a result of either an actual or
threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation
14A promulgated under the Exchange Act) or other actual or
threatened
solicitation of proxies or consents by or on behalf of a
Person other
than the Board of Directors of the Company or actual or
threatened
tender offer for shares of the Company or similar
transaction or other
contest for corporate control (other than a tender offer by
the
Company) shall not be so considered as a member of the
Incumbent
Class; or
(iii) The approval by the stockholders of the
Company of
a Corporate Transaction or, if consummation of such
Corporate
Transaction is subject, at the time of such approval by
stockholders,
to the consent of any government or governmental agency, the
obtaining
of such consent (either explicitly or implicitly);
excluding, however,
such a Corporate Transaction pursuant to which (1) all or
substantially all of the individuals and entities who are
the
beneficial owners, respectively, of the outstanding shares
of Common
Stock and Outstanding Company Voting Securities immediately
prior to
such Corporate Transaction will beneficially own, directly
or
indirectly, more than eighty percent (80%) of, respectively,
the
outstanding shares of common stock of the corporation
resulting from
such Corporate Transaction and the combined voting power of
the
outstanding voting securities of such corporation entitled
to vote
generally in the election of directors, (2) no Person (other
than the
Company, any employee benefit plan (or related trust) of the
Company
or the corporation resulting from such Corporate Transaction
and any
Person beneficially owning, immediately prior to such
Corporate
Transaction, directly or indirectly, twenty percent (20%) or
more of
the outstanding shares of Common Stock or Outstanding
Company Voting
Securities, as the case may be) will beneficially own,
directly or
indirectly, twenty percent (20%) or more of, respectively,
the
outstanding shares of common stock of the corporation
resulting from
such Corporate Transaction or the combined voting power of
the then
outstanding securities of such corporation entitled to vote
generally
in the election of directors and (3) individuals who were
members of
the Incumbent Board will constitute at least a majority of
the members
of board of directors of the corporation resulting from such
Corporate
Transaction; or
(iv) The approval of the stockholders of the
Company of (1)
a complete liquidation or dissolution of the Company or (2)
the sale
or other disposition of all or substantially all of the
assets of the
Company; excluding, however, such a sale or other
disposition to a
corporation, with respect to which following such sale or
other
disposition, (A) more than eighty percent (80%) of,
respectively, the
then outstanding shares of common stock of such corporation
and the
combined voting power of the then outstanding voting
securities of
such corporation entitled to vote generally in the election
of
directors will be then beneficially owned, directly or
indirectly, by
all or substantially all of the individuals and entities who
were the
beneficial owners, respectively, of the outstanding shares
of Common
Stock and Outstanding Company Voting Securities immediately
prior to
such sale or other disposition, (B) no Person (other than
the Company
and any employee benefit plan (or related trust) of the
Company or
such corporation and any Person beneficially owning,
immediately prior
to such sale or other disposition, directly or indirectly,
twenty
percent (20%) or more of the outstanding shares of Common
Stock or
Outstanding Company Voting Securities, as the case may be)
will
beneficially own, directly or indirectly, twenty percent
(20%) or more
of, respectively, the then outstanding shares of common
stock of such
corporation and the combined voting power of the then
outstanding
voting securities of such corporation entitled to vote
generally in
the election of directors and (C) individuals who were
members of the
Incumbent Board will constitute at least a majority of the
members of
the board of directors of such corporation.
In the event of any conflict between this Section
6 and any
other Section of this Agreement (other than Section 5), the
terms of
this Section 6 shall control so that, without limitation,
the
Executive shall be entitled to the payment and benefits
provided under
this Section 6 notwithstanding any purported termination
(whether for
Cause or otherwise) by the Company.
7. Upon presentation to Lone Star of appropriate
documentation, Executive will be entitled to reimbursement
within
guidelines established by Lone Star for all reasonable and
necessary
business expenses incurred by him for entertainment, travel
and
similar items.
8. Executive agrees that during his period of
employment
by Lone Star and thereafter he shall hold in confidence and
not
disclose to any unauthorized person any knowledge or
information
acquired and possessed by him of a confidential nature or
any trade
secret with respect to the business of Lone Star, and not to
disclose,
publish or make use of the same without the prior express
consent of
Lone Star. Executive shall be free to disclose such
information,
knowledge or trade secret in the ordinary course of his
carrying out
his duties as an officer of Lone Star, and shall be free to
disclose
such information, knowledge or trade secret during his
period of
employment by Lone Star and thereafter if such matters
become public
or if compelled by legal process.
9. Executive agrees that during the term of his
employment, he will not without the consent of Lone Star, in
any
manner, directly or indirectly, own, manage, be employed by,
operate,
join, control, participate in, be connected with, engage in,
or become
interested in any business of the same or similar nature to,
or
competitive with, that carried on by Lone Star during the
Executive's
employment by Lone Star, in those parts of the world where
Lone Star
does business. Ownership of publicly traded securities of a
business
of the same or similar nature to, or competitive with, that
carried
on by Lone Star, shall not violate this paragraph, provided
the
Executive does not acquire more than 5% of the voting stock
of any
such corporation.
10. The Executive agrees that any copyright or
patentable
invention that he may conceive, make, invent, suggest or
reduce to
practice during the period of his employment with Lone Star
(whether
individually or jointly with any other person or persons),
relating
in any way to the business of Lone Star shall be the sole,
exclusive
and absolute property of Lone Star.
11. Any dispute hereunder shall be resolved in
the same
manner as is provided in Section 4.1 of the Supplemental
Agreement.
Any amounts not paid by the Company hereunder within five
business
days after the date they are due shall be paid with interest
from its
due date at the rate announced from time to time by
Citibank, N.A. as
its prime or similar rate plus 3%.
12. This Agreement constitutes the entire
agreement between
the parties and may not be changed or modified except by an
agreement
in writing signed by Lone Star and the Executive. This
Agreement
supersedes the employment agreement between the Executive
and Lone
Star, dated August 20, 1992, except for Section 10 thereof,
which
shall continue in effect.
13. This Agreement shall be governed by and
construed in
accordance with the laws of the State of Connecticut.
14. This Agreement shall be binding upon an inure
to the
benefit of the Company, its successors and assigns,
including any
purchaser of all or substantially all of the assets of the
Company and
the surviving entity of any merger or consolidation to which
the
Company is a party and the Executive and his heirs,
executors,
administrators and legal representatives.
15. Except as provided herein, this Agreement
cannot be
assigned by Lone Star or Executive without prior written
consent.
16. All notices, communications, etc., shall be
sent to:
(a) Corporate Secretary
Lone Star Industries, Inc.
300 First Stamford Place
Stamford, CT 06912

(b) William M. Troutman
30 Thorp Drive
Weston, CT 06883

William M. Troutman
William M. Troutman

LONE STAR INDUSTRIES, INC.

By David W. Wallace
David W. Wallace, Chairman
of the Board

By Jack R. Wentworth
Jack R. Wentworth,
Chairman of the Compensation and
Stock Option Committee

This AGREEMENT made this 15th day of April 1994, by and
between Lone Star Industries, Inc., a corporation organized
under
the laws of the State of Delaware with its principal office
at 300
First Stamford Place, Stamford, Connecticut 06912 (the
"Corporation"), and William M. Troutman (the "Executive")
residing
at 30 Thorp Drive, Weston, Connecticut 06883 (the
"Agreement").

W I T N E S S E T H:

WHEREAS, the Executive is currently employed as
President and
Chief Operating Officer at the Corporation; and

WHEREAS, the Corporation and the Executive previously
entered
into an employment agreement, dated August 17, 1987 (the
"1987
Agreement") which provided for certain supplemental
retirement
benefits for the Executive and his spouse; and

WHEREAS, the Corporation and the Executive entered into
a
subsequent employment agreement, dated June 26, 1990 (the
"1990
Agreement") which also provided for supplemental retirement
benefits for the Executive and his spouse; and

WHEREAS, the 1987 Agreement and the 1990 Agreement also
provided the Executive, his spouse and eligible dependents
with
enhanced health and medical coverage; and

WHEREAS, on December 10, 1990 the Corporation and
certain of
its subsidiaries filed in this Court (the "Bankruptcy
Court") their
respective voluntary petitions for reorganization under
Chapter 11
of Title 11 of the United States Code; and

WHEREAS, subsequently, on December 21, 1990, Lone Star
Building Centers, Inc. and Lone Star Building Centers
(Eastern),
Inc. filed their respective voluntary petitions under
Chapter 11 of
the Bankruptcy Code; and

WHEREAS, the 1990 Agreement was rejected by the
Corporation,
with the Executives consent, by order of the U.S. Bankruptcy
Court,
dated March 28, 1991; and

WHEREAS, on or about June 26, 1991, the Executive filed
a
proof of claim against the Corporation asserting, among
other
things, contingent and unliquidated damages resulting from
the
rejection of the 1990 Agreement; and

WHEREAS, on April 14, 1994, the Bankruptcy Court
approved a
settlement with respect to the Executive's claims relating
the
supplemental retirement and medical benefits in exchange for
the
assumption of certain obligations by the Corporation; and

WHEREAS, the Corporation wishes to provide supplemental
retirement and medical benefits for the Executive under the
terms
and conditions as hereinafter provided.

NOW, THEREFORE, in consideration of the agreements
hereinafter
contained, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

1.1 "Annuity" shall mean National Home Life Assurance
Company
Policy Number N101058 (August 7, 1989).

1.2 "Boards, shall mean the Board of Directors of the
Corporation or its duly authorized committee.

1.3 "Disability" shall mean Executive's inability,
because of
physical or mental incapacity, to perform in a competent
manner
executive duties of a nature equivalent to the duties the
Executive
currently performs.

1.4 I "Discontinuation Date" shall mean the date of
the later
to occur of: (i) the death of the Executive; or (ii) the
death of
the Spouse.

1.5 "Employment Agreement" shall mean the employment
agreement between the Executive and the Corporation, dated
August
20, 1993.

1.6 "Plan" shall mean the Lone Star Industries, Inc.
Salaried
Employees Pension Plan.

1.7 "Qualified Dependents" shall mean the Executive's:
(i)
spouse, if not divorced or legally separated from the
Executive;
(ii) children under the age of (A) 19 or (B) 23 if a full-
time
student, unmarried, and not employed on a regular and full-
time
basis, and dependent on the Executive for support; provided
however, if due proof is received within 31 days of the day
the
Qualified Dependent has reached his maximum age that he is
incapable of self-sustaining employment by reason of mental
retardation or physical handicap, the child shall continue
to be
deemed a dependent after such birthday, for purposes of only
accident and health coverage; and (iii) legally adopted
children,
or children living in a parent-child relationship and
primarily
dependent on the Executive.

1.8 "Spouse" shall mean the Executive's legal spouse
on the
Termination Date.

1.9 "Termination Date" shall mean the date of the
earlier
to occur of the date the Executive: (i) attains age 65; or
(ii)
ceases full-time employment with the Corporation.

ARTICLE II

2.1 Amount of Benefits.

(a) Lone Star agrees that Executive's annual
retirement
benefits at age 65 shall be $225,000, including the sum of:
(X) the
annual retirement benefits paid to Executive pursuant to the
Plan
and (Y) the annual payments to which the Executive is
entitled
under the Annuity, whether or not payable.

(b) Except as provided below, the benefits shall
commence at
age 65 and shall continue until the Discontinuation Date.

2.2 Benefits Payable Before Age 65. Effective upon
the
Termination Date, the Executive may elect to receive the
annual
retirement benefits pursuant to Section 2.1 from the
Corporation on
or after the date the Executive attains the age of 55;
provided
however, such benefits shall be reduced by 5% for each full
year
that benefits commence prior to the attainment of age 62 by
the
Executive. No such reduction in benefits shall occur on or
after
the date the Executive attains the age of 62. The benefits
shall
be paid until the Discontinuation Date.

2.3 Benefits Payable on Disability. In the event of
Executive's Disability at any age prior to the commencement
of
retirement benefits pursuant to Sections 2.1 or 2.2, the
annual
retirement benefits pursuant to Section 2.1 shall commence
immediately and shall continue until the Discontinuation
Date.
There shall be no reduction in benefits for Executive's age
at date
of Disability.

2.4 Benefits Payable upon Death. In the event of
Executive's
death prior to the Termination Date, the annual retirement
benefits
called for by Section 2.1 shall be paid to the Spouse until
the
Discontinuation Date. Benefits paid to the Spouse shall be
reduced
by 5% for each full year that Executive's age at death is
less than
age 62.

2.5 Payment of Benefits. There shall be no reduction
in
benefits pay able under this Agreement due to the age of the
Spouse. All payments under this Agreement shall be made to
the
Executive until his death, and then to the Spouse for her
life if
she survives the Executive.

2.6 Purchase of Annuity. The Corporation agrees to
purchase
within thirty days after the Termination Date, an annuity
from a
reputable provider of annuities rated at least "AA" by
Standard &
Poors for the Executive and the Spouse which provides annual
retirement benefits to Executive and his Spouse equal to the
retirement benefits called for by this Agreement in excess
of the
benefits provided under the Plan and the Annuity. Within 30
days
after the purchase of such annuity, the Corporation shall
pay the
Executive an amount equal to the federal income taxes which
shall
be payable by the Executive upon receipt of the annuity,
said
amount to be grossed up to reflect the additional taxes
payable due
to the receipt of said payment. The retirement benefits
provided
by the annuity shall be adjusted for this payment of federal
income
taxes so that the after tax retirement benefits provided by
the
annuity are at least equal to the after tax retirement
benefits the
Executive would have received from Lone Star had Lone Star
paid the
retirement benefits directly rather than provide the
retirement
benefits through the annuity.

ARTICLE III

HEALTH AND MEDICAL BENEFITS

From the date hereof until the Discontinuation Date,
the
Corporation agrees to provide the Executive with life
insurance and
the Executive and Qualified Dependents with medical
insurance at no
cost to the Executive and Qualified Dependents at least
equal to
the life and medical insurance provided to senior elected
officers
of the Corporation; provided however, upon the earlier to
occur of
the Executive's attainment of age 65 or the Executive's
application
for a pension benefit under the Plan, the medical benefits
provided
to the Executive and Qualified Dependents shall be at least
equal
to the medical benefits described in Appendix A; provided
further,
the annual deductible for medical coverage described in
Exhibit A
is $1,000.00 for the Executive and each Qualified Dependent
prior
to each such individuals attainment of the age of 65 and
$750.00
for each individual after such individuals attainment of the
age of
65. The Executive and the Spouse are each entitled to
receive
monthly reimbursement of Medicare Part B premiums until the
Discontinuation Date.

ARTICLE IV

4.1 Dispute Resolution.

(a) The Executive hereby agrees that any dispute
relating to
this Agreement arising between the Executive (and/or the
Spouse)
and the Corporation (or any successor or assign) shall be
settled
by arbitration in accordance with the commercial arbitration
rules
of the American Arbitration Association ("AAA"). The
arbitration
proceeding, including the rendering of an award, shall take
place
in Stamford, Connecticut, (or such other location mutually
agreed
upon by the Corporation and the Executive (and/or the
Spouse)) and
shall be administered by the AAA.

(b) The arbitral tribunal shall be appointed within 30
days
of the notice of dispute, and shall consist of three
arbitrators,
one of which shall be appointed by the Company, one by the
Executive, and the third by both the Company and the
Executive
(and/or the Spouse) jointly; provided, however, that, if the
Company and the Executive (and/or the Spouse) do not select
the
third arbitrator within such 30-day period, such third
arbitrator
shall be chosen by the AAA as soon as practicable following
notice
to the AAA by the parties of their inability to choose such
third
arbitrator.

(c) Decisions of such arbitral tribunal shall be in
accordance with the laws of the State of Connecticut
(excluding the
conflicts of law rules which require the application of any
other
law). The award of any such arbitral tribunal shall be
final
(except as otherwise provided by the laws of the State of
Connecticut and the Federal laws of the United States, to
the
extent applicable). Judgement upon such award may be
entered by
the prevailing party in any state or Federal court sitting
in
Connecticut or any other court having jurisdiction thereof,
or
application may be made by such party to any such court for
judicial acceptance of such award and an order of
enforcement.

(d) The Corporation shall reimburse the Executive and
Spouse
for all costs, including reasonable attorneys' fees, in
connection
with any arbitration hereunder in which the Executive
(and/or the
Spouse) is the prevailing party.

ARTICLE V

MISCELLANEOUS

5.1 Unfunded Plan. This Agreement is unfunded and
shall at
all times remain unfunded until required pursuant to Section
2.6.
The obligations of the Corporation with respect to the
benefits
payable hereunder shall be paid out of the Corporation's
general
assets and shall not be secured. At its discretion, the
Corporation may establish one or more trusts, with such
trustees as
the Board may appoint, for the purpose of providing payment
of such
benefits. Such trust or trusts may be irrevocable, but the
assets
thereof shall be subject to the claims of the Corporation's
creditors. To the extent any benefits provided under the
Agreement
are actually paid from any such trust, the Corporation shall
have
no further obligation with regard thereto, but to the extent
not so
paid, such benefit shall remain the obligation of, and shall
be
paid by the Corporation. To the extent that any person
acquires a
right to receive payments from the Corporation under this
agreement, such right shall be no greater than the right of
any
unsecured general creditor of the Corporation.

5.2 No Effect on Employment. Nothing contained herein
shall
be construed as adversely affecting, in any manner, the
terms and
conditions of the Executive's employment including, without
limitation, the terms and conditions of the Employment
Agreement;
provided however, in the event there are any conflicts
between this
Agreement and the Employment Agreement regarding
supplemental
retirement benefits and life and medical insurance, the
terms of
this Agreement shall prevail.

5.3 Payments Not Compensation. Any compensation
payable
under this Agreement shall not be deemed salary or other
compensation to the Executive for the purposes of computing
benefits to which he may be entitled under any pension plan
or
other arrangement of the Corporation for the benefit of its
employees.

5.4 No Reduction in Plan Benefits. Nothing in this
Agreement
shall reduce the benefits to which the Executive and the
Spouse are
entitled under the Plan.

5.5 Invalidity. In case any provision of this
Agreement
shall be illegal or invalid for any reason, said illegality
or
invalidity shall not affect the remaining parts hereof, but
this
Agreement shall be construed and enforced as if such illegal
and
invalid provision never existed.

5.6 Withholding of Taxes. The Corporation shall have
the
right to make such provisions as it deems necessary or
appropriate
to satisfy any obligations it may have to withhold federal,
state
or local income or other taxes incurred by reason of
payments
pursuant to this Agreement.

5.7 Binding Affect. This Agreement shall be binding
upon and
inure to the benefit of the Corporation, its successors and
assigns, including any purchaser of all or substantially all
of the
assets of the Corporation and the surviving entity of any
merger or
consolidation to which the Corporation is a party and the
Executive
and his heirs, executors, administrators and legal
representatives.

5.8 No Assignment. Except as provided herein, the
benefits
payable under this Agreement shall not be subject to
alienation,
transfer, assignment, garnishment, execution or levy of any
kind,
and any attempt to cause any benefits to be so subjected
shall not
be recognized.

5.9 Governing Law. This Agreement shall be construed
in accordance with and governed by the laws of the State of
Connecticut.

IN WITNESS WHEREOF, the Corporation has caused this
Agreement
to be executed by its duly authorized officers and the
Executive
has hereunto set his hand and seal as of the date first
above
written.

LONE STAR INDUSTRIES,
INC.

By: David W. Wallace
David W. Wallace

William M. Troutman
William M. Troutman

APPENDIX A

THE EXECUTIVE MEDICAL PLAN

COVERAGE

(1) Provides for the full payment for medical services for
the
employee and his qualified dependents which are
recommended or
performed by a legally qualified physician.

(2) Provides for the full payment of hospital expenses.

(3) Provides for the full payment of the charges made by a
physician for the performance of a surgical operation.

(4) Provides for the full payment of examinations and
laboratory
tests taken while not confined in a hospital.

(5) Provides for the full payment of medical expenses
resulting
from an accident.

(6) Provides for the full payment of dental expenses.

(7) Provides for the full payment for prescription charges.

(8) Provides for the full payment for eye examinations and
eye
glasses.

EXCLUSIONS

The coverages set forth above are subject to the
following provisions and general exclusions:

Eligible expenses under the plan shall not include payment
of any
charge as follows:

(1) For transportation or travel other than local use of
ambulance.

(2) In connection with an injury or disease resulting from
war or
any act of war, whether declared or undeclared, which
war or
act of war occurs while an individual is insured under
this
coverage.

(3) Which are incurred on account of bodily injury arising
out of
or in the course of employment by an employer, or
disease with
respect to which any benefits are payable under any
workmen's
compensation, occupational disease, or similar law.

(4) Which is paid or payable or reimbursable by or through
any
plan or program of any government or any subdivision or
agency
thereof, other than a plan or program established for
its
civilian employees.

o Lifetime Benefit

The maximum lifetime benefit under this Executive
Medical
Plan is $1,000,000 for each participant.

o Non-Duplication of Benefits:

When benefits would be payable under another group
plan,
benefits under those plans will be coordinated to
the
extent that the total benefits under all programs
will
not exceed full reimbursement

OPTION AGREEMENT PURSUANT TO
THE LONE STAR INDUSTRIES, INC.
MANAGEMENT STOCK OPTION PLAN

AGREEMENT, dated as of June 8, 1994 by and between
Lone Star
Industries, Inc. (the
"Company") and William M. Troutman (the "Participant").

Preliminary Statement

The Compensation and Stock Option Committee of the
Board of
Directors (the "Board")
of the Company (the "Committee"), pursuant to the Company's
Management
Stock Option Plan, annexed
hereto as Exhibit A (the "Plan"), granted on June 8, 1994 to
the
Participant, as an Employee (as defined
in the Plan), stock options (the "Options") to purchase the
number of
shares of the Company's common
stock, par value $1.00 per share (the "Common Stock"), set
forth
below. This Agreement sets forth the
terms of the Options.

Accordingly, the parties hereto agree as follows:

1. Grant of Options. Subject in all respects to
the Plan
and the terms and conditions
set forth herein and therein, the Participant is hereby
granted
125,000 Options to purchase from the
Company up to 125,000 shares of Common Stock, at a price per
share of
$15.375 (the "Option Price").

2. Tax Matters. 6,504 Options to acquire 6,504
shares of
Common Stock granted
hereby are intended to qualify as and are hereby designated
as
"Incentive Stock Options" under Section
422 of the Internal Revenue Code of 1986, as amended (the
"Code").
118,496 Options to acquire
118,496 shares of Common Stock are intended to qualify as
and are
hereby designated as "Non-Qualified
Stock Options" within the meaning of Section 1.83-7 of the
Income Tax
Regulations promulgated under
the Code.

3. Vesting. The Options are exercisable
immediately, in
whole or in part, prior to
the expiration of the Options as provided herein.

4. Method of Exercise.Options may be exercised
in whole
or in part at any time
during the Option term, by giving written notice of exercise
to the
Company specifying the number of
shares to be purchased and whether such exercise is of
Incentive Stock
Options or of Non-Qualified Stock
Options, or what combination of Incentive Stock Options and
Non-Qualified Stock Options are being
exercised. Such notice shall be accompanied by payment in
full of the
Option Price (i) in cash, by
certified check or money order, or (ii) in the form of
shares of
Common Stock owned by the Participant
(and for which the Participant has good title free and clear
of any
liens and encumbrances) based on the
Fair Market Value of the shares on the date of exercise as
determined
by the Committee or (iii) in such
other form, or pursuant to such other arrangement for the
satisfaction
of the Option Price, as the
Committee may accept. For purposes of this Agreement, "Fair
Market
Value" shall mean the average of
the high and low prices of a share of Common Stock in New
York Stock
Exchange composite market
transactions, as reported by the Wall Street Journal, or if
the Common
Stock shall not have been reported
on such date, on the first day prior thereto on which the
Common Stock
was reported. No shares of
Common Stock shall be issued until payment, as provided
herein,
therefor has been made or provided for.

5. Restriction on Transfer of Options. Except
as
otherwise provided herein, the
Options granted hereby are not transferable otherwise than
by will or
under the applicable laws of descent
and distribution. Non-Qualified Stock Options may be
transferred (i)
pursuant to a qualified domestic
relations order as defined in the Code or Title I of the
Employee
Retirement Income Security Act, or the
rules thereunder or (ii) to the Participant's immediate
family (i.e.,
the Employee's children, grandchildren
and spouse), or to one or more trusts for the benefit of
such
immediate family members, or partnerships
in which such family members are the only partners, provided
that such
transfer shall be permitted only
if the Participant does not receive any consideration for
such
transfer and written notice of such proposed
transfer and the details thereof shall have been furnished
to the
Committee (any Options transferred
pursuant to this clause shall continue to be subject to the
same terms
and conditions that were applicable
to such Options immediately prior to the transfer and a
holder thereof
shall be treated as a Participant
hereunder). During the lifetime of the Participant, Options
may be
exercised only by the Participant or
the Participant's guardian or legal representative. In
addition,
except to the extent permitted by this
Agreement, the Options shall not be assigned, negotiated,
pledged or
hypothecated in any way (whether
by operation of law or otherwise), and the Options shall not
be
subject to execution, attachment or similar
process. Except to the extent permitted by this Agreement,
upon any
attempt to transfer, assign, negotiate,
pledge or hypothecate the Options, or in the event of any
levy upon
the Options by reason of any
execution, attachment or similar process contrary to the
provisions
hereof, the Options shall immediately
become null and void.

6. Termination of Employment.

A. Termination by Reason of Death or
Disability. If
a Participant's
Termination of Employment (as hereinafter defined) is by
reason of
death or Disability (as defined in the
Plan), any Options held by such Participant may be
exercised, to the
extent exercisable at the Participant's
termination, by the Participant (or the legal representative
of the
Participant's estate) at any time within
a period of one (1) year from the date of such termination
or until
the expiration of the stated term of the
Option, whichever period is the shorter. For purposes of
this
Agreement, "Termination of Employment"
means (1) a termination of service for reasons other than a
military
or personal leave of absence granted
by the Company or a transfer of the Participant from or
among the
Company and its subsidiaries, as
defined under Section 424(f) of the Code; or (2) when a
subsidiary,
with respect to which is employing
a Participant, ceases to be a subsidiary, as defined under
Section
424(f) of the Code.

(i) Any acquisition by any individual,
entity or group
(within the meaning
of Section 13(d)(3) or 14(d)(2) of the
Securities
Exchange Act of 1934
(the "Exchange Act")) (a Person) of
beneficial
ownership (within the
meaning of Rule 13d-3 promulgated under
the
Exchange Act) of shares
of Common Stock and/or Outstanding
Company Voting
Securities (as
defined below) after which acquisition
such
individual, entity or group is
the beneficial owner of twenty percent
(20%) or
more of either (1) the
then outstanding shares of Common Stock
or (2) the
combined voting
power of the then outstanding voting
securities
of the Company entitled
to vote generally in the election of
directors
(the Outstanding Company
Voting Securities); excluding, however,
the
following: (1) any
acquisition by the Company, (2) any
acquisition
by an employee benefit
plan (or related trust) sponsored or
maintained
by the Company or (3)
any acquisition by any corporation
pursuant to a
reorganization, merger,
consolidation or similar corporate
transaction (in
each case, a Corporate
Transaction), if, pursuant to such
Corporate
Transaction, the conditions
described in clauses (1), (2) and (3) of
paragraph
(iii) of this Section 6
are satisfied; or

(ii) A change in the composition of the Board
such that
the individuals who,
as of July 1, 1994, comprise a class of
directors
of the Board (the
members of each class of directors of
the Board
as of July 1, 1994 shall
be hereinafter referred to as an
Incumbent Class
and the members of
all of the Incumbent Classes shall be
hereinafter
collectively referred to
as the "Incumbent Board") cease for any
reason to
constitute at least a
majority of the class; provided,
however, for
purposes of this subsection
that any individual who becomes a member
of an
Incumbent Class
subsequent to July 1, 1994 whose
election, or
nomination for election by
the Company's stockholders, was approved
in
advance or
contemporaneously with such election by
a vote of
at least a majority of
those individuals who are members of the
Incumbent
Board and a
majority of those individuals who are
members of
such Incumbent Class
(or deemed to be such pursuant to this
proviso)
shall be considered as
though such individual were a member of
the
Incumbent Class; but,
provided further, that any such
individual whose
initial assumption of
office occurs as a result of either an
actual or
threatened election contest
(as such terms are used in Rule 14a-11
of
Regulation 14A promulgated
under the Exchange Act) or other actual
or
threatened solicitation of
proxies or consents by or on behalf of a
Person
other than the Board or
actual or threatened tender offer for
shares of
the Company or similar
transaction or other contest for
corporate control
(other than a tender
offer by the Company) shall not be so
considered
as a member of the
Incumbent Class; or

(iii) The approval by the stockholders of the
Company
of a Corporate
Transaction or, if consummation of such
Corporate
Transaction is subject,
at the time of such approval by
stockholders, to
the consent of any
government or governmental agency, the
obtaining
of such consent (either
explicitly or implicitly); excluding,
however,
such a Corporate
Transaction pursuant to which (1) all or
substantially all of the
individuals and entities who are the
beneficial
owners, respectively, of the
outstanding shares of Common Stock and
Outstanding
Company Voting
Securities immediately prior to such
Corporate
Transaction will
beneficially own, directly or
indirectly, more
than eighty percent (80%)
of, respectively, the outstanding shares
of common
stock of the
corporation resulting from such
Corporate
Transaction and the combined
voting power of the outstanding voting
securities
of such corporation
entitled to vote generally in the
election of
directors, (2) no Person (other
than the Company, any employee benefit
plan (or
related trust) of the
Company or the corporation resulting
from such
Corporate Transaction
and any Person beneficially owning,
immediately
prior to such Corporate
Transaction, directly or indirectly,
twenty
percent (20%) or more of the
outstanding shares of Common Stock or
Outstanding
Company Voting
Securities, as the case may be) will
beneficially
own, directly or
indirectly, twenty percent (20%) or more
of,
respectively, the outstanding
shares of common stock of the
corporation
resulting from such Corporate
Transaction or the combined voting power
of the
then outstanding
securities of such corporation entitled
to vote
generally in the election of
directors and (3) individuals who were
members of
the Incumbent Board
will constitute at least a majority of
the members
of board of directors of
the corporation resulting from such
Corporate
Transaction; or

(iv) The approval of the stockholders of the
Company
of (1) a complete
liquidation or dissolution of the
Company or (2)
the sale or other
disposition of all or substantially all
of the
assets of the Company;
excluding, however, such a sale or other
disposition to a corporation, with
respect to which following such sale or
other
disposition, (A) more than
eighty percent (80%) of, respectively,
the then
outstanding shares of
common stock of such corporation and the
combined
voting power of the
then outstanding voting securities of
such
corporation entitled to vote
generally in the election of directors
will be
then beneficially owned,
directly or indirectly, by all or
substantially
all of the individuals and
entities who were the beneficial owners,
respectively, of the outstanding
shares of Common Stock and Outstanding
Company
Voting Securities
immediately prior to such sale or other
disposition, (B) no Person (other
than the Company and any employee
benefit plan (or
related trust) of the
Company or such corporation and any
Person
beneficially owning,
immediately prior to such sale or other
disposition, directly or indirectly,
twenty percent (20%) or more of the
outstanding
shares of Common
Stock or Outstanding Company Voting
Securities,
as the case may be)
will beneficially own, directly or
indirectly,
twenty percent (20%) or
more of, respectively, the then
outstanding shares
of common stock of
such corporation and the combined voting
power of
the then outstanding
voting securities of such corporation
entitled to
vote generally in the
election of directors and (C)
individuals who were
members of the
Incumbent Board will constitute at least
a
majority of the members of the
board of directors of such corporation.

For purposes of this Agreement, "Cause" means that the
Committee shall
have determined that any of the
following events has occurred: (x) The willful and continued
failure
by the Participant to substantially
perform his duties with the Company (other than any such
failure
resulting from his disability due to
physical or mental illness) after a written demand for
performance is
delivered which specifically identifies
the manner in which he has not substantially performed his
duties, or
(y) the willful engaging by the
Participant in gross misconduct materially and demonstrably
injurious
to the Company, monetarily or
otherwise or (z) conviction of fraud, theft of
embezzlement. For
purposes of this Section, no act, or
failure to act, shall be considered "willful" unless done,
or omitted
to be done, not in good faith or without
reasonable belief that the action or omission was in the
best interest
of the Company. The written demand
in clause (x) of this Section 6 shall be delivered to the
Participant
by the Board or the Company's
Chairman and Chief Executive Officer and shall set forth a
reasonable
period (not shorter than 30 business
days) in which Participant is expected to comply with said
demand.
If the Participant does not comply
thereafter, the Committee shall have the right to determine
that Cause
exists.

C. Other Termination. If the Participant's
Termination of Employment is for
any reason other than death, Disability, or Cause, any
Options held
by the Participant may be exercised,
to the extent exercisable at the Participant's termination,
by the
Participant at any time within a period
of 3 months from the date of such termination or until the
expiration
of the stated term of such Option,
whichever period is shorter.

8. Rights as a Stockholder. The Participant
shall have
no rights as a stockholder with
respect to any shares of Common Stock covered by the Options
until the
Participant shall have become
the holder of record of the shares of Common Stock, and no
adjustments
shall be made for dividends in
cash or other property, distributions or other rights in
respect of
any such shares of Common Stock, except
as otherwise specifically provided for in the Plan.

9. Provisions of Plan Control. This Agreement
is subject
to all the terms, conditions
and provisions of the Plan, including, without limitation,
the
amendment provisions thereof, and to such
rules, regulations and interpretations relating to the Plan
as may be
adopted by the Committee and as may
be in effect from time to time. Any capitalized term used
but not
defined herein shall have the meaning
ascribed to such term in the Plan. The annexed copy of the
Plan is
incorporated herein by reference. If
and to the extent that this Agreement conflicts or is
inconsistent
with the terms, conditions and provisions
of the Plan, the Plan shall control, and this Agreement
shall be
deemed to be modified accordingly.

10. Withholding of Taxes. The Company shall have
the right
to require, prior to the
issuance or delivery of any shares of Common Stock, payment
by the
Participant of any Federal, state or
local taxes required by law to be withheld.

The Committee may permit any such withholding
obligation to
be satisfied by reducing
the number of shares of Common Stock otherwise deliverable
or by
permitting the Participant to deliver
shares of Common Stock which the Participant owns (free and
clear of
any liens and encumbrances). If
the Participant is required to file reports under Section
16(a) of the
Securities Exchange Act of 1934 (the
"Exchange Act") with respect to securities of the Company
the
Participant may elect to have a sufficient
number of shares of Common Stock withheld or to deliver
shares of
Common Stock which the Participant
owns to fulfill such tax obligations (hereinafter a
Withholding
Election) only if the election complies
with such conditions as are necessary to prevent the
withholding or
transfer of such shares from being
subject to Section 16(b) of the Exchange Act. To the extent
necessary
under then current law, such
conditions shall include the following: (x) the Withholding
Election
shall be subject to the disapproval of
the Committee and (y) the Withholding Election is made (i)
during the
period beginning on the third
business day following the date of release for publication
of the
quarterly or annual summary statements
of sales and earnings of the Company and ending on the
twelfth
business day following such date or is
made in advance but takes effect during such period, (ii) at
least six
(6) months prior to the date of
exercise of the Option, or (iii) during any other period in
which a
Withholding Election may be made
under the provisions of Rule 16b-3 promulgated pursuant to
the
Exchange Act. Any fraction of a share
of Common Stock required to satisfy such tax obligations
shall be
disregarded and the amount due shall
be paid instead in cash by the Participant.

11. Listing and Other Conditions.

As long as the Common Stock is listed on a
national
securities exchange or system
sponsored by a national securities association, the issue of
any
shares of Common Stock pursuant to an
Option shall be conditioned upon such shares being listed on
such
exchange or system. The Company
shall have no obligation to issue such shares unless and
until such
shares are so listed, and the right to
exercise any Option with respect to such shares shall be
suspended
until such listing has been effected.

If at any time counsel to the Company shall be of
the
opinion that any sale or delivery
of shares of Common Stock pursuant to an Option is or may in
the
circumstances be unlawful or result
in the imposition of excise taxes under the statutes, rules
or
regulations of any applicable jurisdiction, the
Company shall have no obligation to make such sale or
delivery, or to
make any application or to effect
or to maintain any qualification or registration under the
Securities
Act of 1933, as amended, or otherwise
with respect to shares of Common Stock, and the right to
exercise any
Option shall be suspended until,
in the opinion of said counsel, such sale or delivery shall
be lawful
or will not result in the imposition of
excise taxes.

Upon termination of any period of suspension under
this
Section 11, any Option affected
by such suspension which shall not then have expired or
terminated
shall be reinstated as to all shares
available before such suspension and as to shares which
would
otherwise have become available during
the period of such suspension, but no such suspension shall
extend the
term of any Option.
Notwithstanding anything else to the contrary contained
herein, no
shares of Common Stock shall be
delivered by the Company to the Participant pursuant to this
Agreement
until a Form S-8 registration
statement (or any successor form) shall have become
effective and
shall be current with respect to the
shares being sold and delivered hereunder.

12. Notices. Any notice or communication given
hereunder
shall be in writing and
shall be deemed to have been duly given when delivered in
person, or
by United States mail, to the
appropriate party at the address set forth below (or such
other
address as the party shall from time to time
specify):

If to the Company, to:

Lone Star Industries, Inc.
300 First Stamford Place
P. O. Box 120014
Stamford, CT 06912-0014
Attn: __________________

If to the Participant, to:

the address indicated on the signature page
at the end
of this Agreement.

13. No Obligation to Continue Employment. This
Agreement
does not guarantee that
the Company or any of its subsidiaries will employ the
Participant for
any specific time period, nor does
it modify in any respect the Company's or a subsidiary's
right to
terminate or modify the Participant's
employment or compensation.

IN WITNESS WHEREOF, the parties have executed this
Agreement
on the date and year
first above written.

LONE STAR INDUSTRIES, INC.

By: David W. Wallace
David W. Wallace,
Chairman of the Board

By: Jack R. Wentworth
Jack R. Wentworth,
Chairman of the
Compensation and
Stock Option Committee

William M. Troutman
William M. Troutman
Address:

EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") made as of
the 1st
day of July, 1994 between John J. Martin ("Employee") and
Lone Star
Industries, Inc., a Delaware corporation, having its
principal office
at 300 First Stamford Place, Stamford, Connecticut ("Lone
Star" or the
"Company").
WITNESSETH:
Now, therefore, in consideration of the mutual
promises,
agreements and covenants hereby made, the mutual benefits to
be
derived from this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are
hereby
acknowledged, the parties hereto agree and understand as
follows:
1. Lone Star hereby employs Employee, and
Employee hereby
accepts employment by Lone Star, on the terms and conditions
set forth
in this Agreement for a term of twenty-four (24) consecutive
months
commencing as of the date hereof (the "Term"), as President
of Rosebud
Holdings, Inc., a Delaware corporation and wholly-owned
subsidiary of
the Company ("Rosebud"), and as Senior Vice President of the
Company.
The Employee shall report to, and have such duties as may be
assigned
from time to time by, the Company's Board of Directors, its
Chairman
and Chief Executive Officer and/or its President and Chief
Operating
Officer.
2. Lone Star shall pay Employee a salary
("Salary") at the
rate of $200,000 per annum until the effective date of
termination of
this Agreement. Salary shall continue to be paid to
Employee on the
currently established pay periods of Lone Star. The
Employee shall
be entitled to participate in the Company's Rosebud
Incentive Plan,
dated April 14, 1994; provided however, that the decision of
whether
to grant any award thereunder, and the size of such award,
if any,
shall be in the sole and absolute discretion of the
Company's
Compensation and Stock Option Committee (or such other Board
committee
as shall then be responsible for making such decisions or,
if none,
the Company's full Board of Directors).
3. (a) Lone Star, by written notice which sets
forth the
effective date of termination (which shall not be earlier
than seven
(7) days after receipt of the written notice), may terminate
this
Agreement at any time for any reason without Cause or
Unsatisfactory
Performance. Subject to the next succeeding sentence below,
in the
event that this Agreement is terminated by the Employee
pursuant to
Section 4 below or Lone Star terminates this Agreement
pursuant to
this Section 3(a), Employee shall be entitled to a severance
payment
in an amount equal to the Employee's Salary for the period
from the
effective date of the termination through the expiration of
the Term
(the "Severance Period"). Notwithstanding anything to the
contrary
contained in this Agreement, but subject to Section 3(b)
below, in the
event that Lone Star terminates this Agreement pursuant to
Section
3(c), Employee shall be entitled to a severance payment (i)
if such
termination occurs prior to July 1, 1995, in an amount equal
to
$250,000, and (ii) if such termination occurs on or after
July 1,
1995, in an amount equal to the lesser of $200,000 or
Employee's
Salary through the expiration of the Term. Severance shall
be paid
in lump sum on the effective date of the termination.
Severance pay
pursuant to this Section shall be in lieu of severance pay
pursuant
to any Lone Star policy or other agreements and all
obligations of the
Company under this Agreement except as provided in Sections
6 and 7
below.
(b) Lone Star shall have the right to
terminate this
Agreement for Cause at any time and Employee shall not be
entitled,
notwithstanding anything to the contrary contained in this
Agreement,
to receive severance pay pursuant to this Agreement or any
other
policy or agreement of Lone Star. Cause shall be construed
to mean:
(1) a material default or breach by the Employee in the
performance
of any of his obligations under this Employment Agreement or
(2)
dishonesty, fraud or criminal conduct for which the Employee
would not
be entitled to indemnification under the present by-laws of
Lone Star.
(c) In the event the Board of Directors of
the Company
determines in its sole and absolute discretion that the
Employee's
performance under this Agreement has been unsatisfactory
("Unsatisfactory Performance"), Lone Star shall thereupon
have the
right to terminate this Agreement by written notice to the
Employee.
4. Lone Star hereby agrees not to: (i) change
Employee's
duties taken as a whole so that they cease to be non-
executive in
nature, or (ii) direct the Employee to relocate his office
to a new
location which is either in a State other than Connecticut
or more
than twenty-five (25) miles from Stamford, Connecticut
(excluding any
relocation of the Employee's office (A) as a result of a
relocation
of Lone Star's operations presently located in Stamford,
Connecticut
and (B) applicable to substantially all officers of Lone
Star). In
the event Lone Star breaches its obligations in the
immediately
preceding sentence, Employee, at his option (and without
limiting his
remedies), can (if such change in duties or direction to
relocate is
not rescinded or corrected by the Company within 30 days
after written
notice by Employee to the Company, reasonably identifying,
in the case
of such a change in duties, the change in duties complained
of)
declare himself terminated for "Good Reason" by giving
written notice
to Lone Star, and Lone Star shall pay Employee severance pay
and
benefits as provided in Section 3(a), 6 and 7 of this
Agreement. In
no event shall Employee be required to perform duties or to
suffer
relocation prohibited by this Section 4.
5. Employee shall participate in Lone Star's
401K savings
plan, pension plan and vacation and holiday programs and
other
benefits in the same manner as are generally made available
to other
executive salaried employees of Lone Star and in accordance
with the
terms thereof. Notwithstanding the foregoing, nothing
contained in
this Agreement including, without limitation, Section 7,
shall affect
the force and effect of the arrangements (the "Supplemental
Arrangements") provided for in the Order, dated April 14,
1994, of the
Bankruptcy Court for the Southern District of New York
relating to
certain medical insurance and other benefits and rights. A
copy of
such Order is attached hereto as Exhibit A.
6. Following termination of the Employee's
employment by
Lone Star for any reason other than Cause as defined in
Section 3(b)
or Unsatisfactory Performance as defined in Section 3(c), or
following
termination by the Employee of his employment for Good
Reason (as
defined in Section 4), Employee shall, for so long as and to
the
extent he does not receive comparable coverage from a new
employer,
continue to participate in Lone Star's employee benefit
plans subject
to the terms of such benefit plans on the same basis as is
generally
available to the Company's salaried employees, to the extent
permissible under Lone Star's pension plan for salaried
employees and
subject to the requirements of the Internal Revenue Code of
1986, as
amended, and the Employee Retirement Income Security Act of
1974, as
amended; provided that such participation shall not exceed
the period
used to calculate the severance payment pursuant to
paragraph 3(a).
If Lone Star terminates the Employee's employment for Cause
pursuant
to Section 3(b) or terminates the Employee's employment for
Unsatisfactory Performance pursuant to Section 3(c) or if
the Employee
terminates his employment without Good Reason (as defined in
Section
4), Employee only shall be entitled to receive whatever
benefits he
otherwise would be entitled to receive under law and the
benefits set
forth in Section 7.
7. Employee shall participate in Lone Star's
retiree
programs and plans including but not limited to life
insurance
(calculated as thought Employee's Salary were $250,000 per
annum), and
pension, in the same manner as is generally available to
other
salaried retirees of Lone Star and in accordance with the
terms
thereof.
8. Upon presentation to Lone Star of appropriate
documentation, Employee will be entitled to reimbursement
within
guidelines established by Lone Star for all reasonable and
necessary
business expenses incurred by him for entertainment, travel
and
similar items.
9. Employee agrees that during his period of
employment
by Lone Star and thereafter he shall hold in confidence and
not
disclose to any unauthorized person any knowledge or
information
acquired and possessed by him of a confidential nature or
any trade
secret with respect to the business of Lone Star, and not to
disclose,
publish or make use of the same without the prior express
consent of
Lone Star. Employee shall be free to disclose such
information,
knowledge or trade secret in the ordinary course of his
carrying out
his duties as an officer of Lone Star, and shall be free to
disclose
such information, knowledge or trade secret during his
period of
employment by Lone Star and thereafter if such matters
become public
or if compelled by legal process.
10. Employee agrees that during the term of his
employment,
he will not without the consent of Lone Star, in any manner,
directly
or indirectly, own, manage, be employed by, operate, join,
control,
participate in, be connected with, engage in, or become
interested in
any business of the same or similar nature to, or
competitive with,
that carried on by Lone Star during the Employee's
employment by Lone
Star, in those parts of the world where Lone Star does
business.
Ownership of publicly traded securities of a business of the
same or
similar nature to, or competitive with, that carried on by
Lone Star,
shall not violate this paragraph, provided the Employee does
not
acquire more than 5% of the voting stock of any such
corporation.
11. The Employee agrees that any copyright or
patentable
invention that he may conceive, make, invent, suggest or
reduce to
practice during the period of his employment with Lone Star
(whether
individually or jointly with any other person or persons),
relating
in any way to the business of Lone Star shall be the sole,
exclusive
and absolute property of Lone Star.
12. This Agreement constitutes the entire
agreement between
the parties and may not be changed or modified except by an
agreement
in writing signed by Lone Star and the Employee. It
supersedes all
prior employment agreements, arrangements and
understandings, each of
which (other than (i) the Supplemental Arrangements and (ii)
Section
10 of the Employment Agreement dated May 12, 1992 between
the Employee
and the Company, each of which shall continue in effect) are
hereby
terminated.
13. This Agreement shall be governed by and
construed in
accordance with the laws of the State of Connecticut.
14. This Agreement cannot be assigned by Lone
Star or
Employee without prior written consent.

15. All notices, communications, etc., shall be
sent to:

(a) William Troutman
Lone Star Industries, Inc.
300 First Stamford Place
Stamford, CT 06912

(b) John J. Martin
18 Azalea Terrace
Cos Cob, CT 06807

John J. Martin
John J. Martin

LONE STAR INDUSTRIES, INC.

By David W. Wallace

OPTION AGREEMENT PURSUANT TO
THE LONE STAR INDUSTRIES, INC.
MANAGEMENT STOCK OPTION PLAN

AGREEMENT, dated as of June 8, 1994 by
and between
Lone Star Industries, Inc. (the "Company") and
John J. Martin (the
"Participant")

Preliminary
Statement

The Compensation and Stock Option
Committee of the Board of Directors
(the "Board") of the Company (the "Committee"),
pursuant to the Company's Management
Stock Option Plan, annexed hereto as Exhibit A
(the "Plan"), granted on June 8, 1994 to the
Participant, as an Employee (as defined in the
Plan), stock options (the "Options") to
purchase the number of shares of the Company's
common stock, par value $1.00 per share
(the "Common Stock"), set forth below. This
Agreement sets forth the terms of the Options.

Accordingly, the parties hereto agree
as follows:

1. Grant of Options. Subject in all
respects to the Plan and the terms
and conditions set forth herein and therein,
the Participant is hereby granted 25,000 Options
to
purchase from the Company up to 25,000 shares of
Common Stock, at a price per share of $15.375
(the "Option Price").

2. Tax Matters. 19,512 Options to
acquire 19,512 shares of Common Stock
granted hereby are intended to qualify as and are
hereby designated as "Incentive Stock Options"
under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"). 5,488 Options
to acquire 5,488 shares of Common Stock are
intended to qualify as and are hereby designated
as
"Non-Qualified Stock Options" within the meaning
of Section 1.83-7 of the Income Tax Regulations
promulgated under the Code.

3. Vesting. The Options are
exercisable in installments as provided below,
which shall be cumulative. To the extent that
Options have become exercisable with respect to a
number of shares as provided below, the Option
may thereafter be exercised by the Participant,
in
whole or in part, at any time or from time to
time prior to the expiration of the Options as
provided herein. The following table indicates
each date (the "Vesting Date") upon which the
Participant shall
be entitled to exercise Incentive Stock Options
and Non-Qualified Stock Options with respect to
the
number of Shares indicated beside that date:

Vesting Date Number of
Shares

Incentive Stock Non-Qualified

Options Stock Options

July 1, 1994 6,504
January 1, 1995 6,504
January 1, 1996 6,504
5,488

Upon the occurrence of a Change of
Control (as hereinafter defined),
all Options shall immediately become exercisable
with respect to all shares of Common
Stock subject thereto regardless of whether the
Option has vested with respect to such shares.
For purposes of this Agreement, "Change of
Control" means the occurrence of any of the
following events:

(i) Any acquisition by any
individual, entity or group
(within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934
(the "Exhchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of
shares of Common Stock and/or Outstanding
Company Voting Securities (as defined below)
after which acquisition such individual,
entity, or group is the beneficial owner of
twenty percent (20%) or more of either (1) the
then
outstanding shares of Common Stock or (2) the
combined voting power of the then
outstanding voting securities of the Company
entitled to vote generally in the election of
directors (the "Outstanding Company Voting
Securities"); excluding, however, the following:
(1) any acquisition by the Company, (2) any
acquisition by an employee benefit plan (or
related
trust) sponsored or maintained by the Company or
(3) any acquisition by any corporation
pursuant to a reorganization, merger,
consolidation or similar corporate transaction
(in each
case, a "Corporate Transaction"), if, pursuant to
such Corporate Transaction, the conditions
described in clauses (1), (2) and (3) of
paragraph (iii) of this Section 3 are satisfied;
or

(ii) A change in the composition
of the Board such that the
individuals who, as of July 1, 1994, comprise a
class of directors of the Board (the members of
each class of directors of the Board as of July
1, 1994 shall be hereinafter referred to as an
"Incumbent Class" and the members of all of the
Incumbent Classes shall be hereinafter
collectively referred to as the "Incumbent
Board") cease for any reason to constitute at
least a
majority of the class; provided however, for
purposes of this subsection that any individual
who
becomes a member of an Incumbent Class subsequent
to July 1, 1994 whose election, or nomination
for election by the Company's stockholders, was
approved in advance or contemporaneously with
such election by a vote of at least a majority of
those individuals who are members of the
Incumbent
Board and a majority of those individuals who are
members of such Incumbent Class (or deemed to
be such pursuant to this proviso) shall be
considered as though such individual were a
member of
the Incumbent Class; but, provided further, that
any such individual whose initial assumption of
office occurs as a result of either an actual or
threatened election contest (as such terms are
used in
Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened
soliciation of proxies or consents by or on
behalf of a Person other than the Board or actual
or
threatened tender offer for shares of the Company
or similar transaction or other contest for
corporate control (other than a tender offer by
the Company) shall not be so considered as a
member
of the Incumbent Class; or

(iii) The approval by the
stockholders of the Company of a
Corporate Transaction or, if consummation of such
Corporate Transaction is subject, at
the time of such an approval by stockhodlers, to
the consent of any government or governmental
agency, the obtaining of such consent (either
explicitly or implicitly); excluding, however,
such
a Corporate Transaction pursuant to which (1) all
or substantially all of the individuals and
entities who are the beneficial owners,
respectively, of the outstanding shares of Common
Stock
and Outstanding Company Voting Securities
immediately prior to such Corporate Transaction
will beneficially own, directly or indirectly,
more than eighty percent (80%) of, respectively,
the outstanding shares of common stock of the
corporation resulting from such Corporate
Transaction
and the combined voting power of the outstanding
voting securities of such corporation entitled to
vote generally in the election of directors, (2)
no Person (other than the Company, any employee
benefit plan (or related trust) of the Company,
any employee benefit plan (or related trust) of
the
Company or the corporation resulting from such
Corporate Transaction and any Person beneficially
owning, immediately prior to such Corporate
Transaction, directly or indirectly, twenty
percent
(20%) or more of, respectively, the outstanding
shares of Common Stock or Outstanding Company
Voting Securities, as the case may be) will
beneficially own, directly or indirectly, twenty
percent
(20%) or more of, respectively, the outstanding
shares of common stock of the corporation
resulting
from such Corporate Transaction or the combined
voting power of the then outstanding securities
of
such corporation entitled to vote generally in
the election of directors and (3) individuals who
were
members of the Incumbent Board will constitute at
least a majority of the members of board of
directors of the corporation resulting from such
Corporate Transaction; or

(iv) The approval of the
stockholders of the Company of (1)
a complete liquidation or dissolution of the
Company or (2) the sale or other disposition of
all or
substantially all of the assets of the Company;
excluding, however, such a sale or other
disposition
to a corporation, with respect to which following
such sale or other disposition, (A) more than
eighty
percent (80%) of, respectively, the then
outstanding shares of common stock of such
corporation
and the combined voting power of the then
outstanding voting securities of such corporation
entitled to vote generally in the election of
directors will be then beneficially owned,
directly or
indirectly, by all or substantially all of the
individuals and entities who were the beneficial
owners,
respectively, of the outstanding shares of Common
Stock and Outstanding Company Voting
Securities immediately prior to such sale or
other disposition, (B) no Person (other than the
Company
and any employee benefit plan (or related trust)
of the Company or such corporation and any Person
beneficially owning, immediately prior to such
sale or other disposition, directly or
indirectly,
twenty percent (20%) or more of the outstanding
shares of Common Stock or Outstanding Company
Voting Securities, as the case may be) will
beneficially own, directly or indirectly, twenty
percent
(20%) or more of, respectively, the then
outstanding shares of common stock of such
corporation and
the combined voting power of the then outstanding
voting securities of such corporation entitled to
vote
generally in the election of directors and (C)
individuals who were members of the Incumbent
Board
will constitute at least a majority of the
members of the board of directors of such
corporation.

4. Method of Exercise. Options may be
exercised in whole or
in part at any time during the Option term, by
giving written notice of exercise to the Company
specifying the number of shares to be purchased
and whether such exercise is of Incentive Stock
Options or of Non-Qualified Stock Options, or
what combination of Incentive Stock Options and
Non-Qualified Stock Options are being exercised.
Such notice shall be accompanied by payment
in full of the Option Price (i) in cash, by
certified check or money order, or (ii) in the
form of
shares of Common Stock owned by the Participant
(and for which the Participant has good title
free and clear of any liens and encumbrances)
based on the Fair Market Value of the shares on
the
date of exercise as determined by the Committee
or (iii) in such other form, or pursuant to such
other
arrangement for the satisfaction of the Option
Price, as the Committee may accept. For purposes
of
this Agreement, "Fair Market Value" shall mean
the average of the high and low prices of a share
of
Common Stock in New York Stock Exchange composite
market transactions, as reported by the Wall
Street Journal, or if the Common Stock shall not
have been reported on such date, on the first day
prior
thereto on which the Common Stock was reported.
No shares of Common Stock shall be issued until
payment, as provided herein, therefor has been
made or provided for.

5. Restriction on Transfer of
Options. Except as otherwise provided herein,
the Options granted hereby are not transferable
otherwise than by will or under the applicable
laws
of descent and distribution. Non-Qualified Stock
Options may be transferred (i) pursuant to a
qualified domestic relations order as defined in
the Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder of
(ii) to the Participant's immediate family (i.e.,
the Employee's children, grandchildren and
spouse), or to one or more trusts for the benefit
of
such immediate family members, or partnerships in
which such family members are the only
partners, provided that such transfer shall be
permitted only if the Partcipant does not receive
any consideration for such transfer and written
notice of such proposed transfer and the details
thereof
shall have been furnished to the Committee (any
Options transferred pursuant to this cluase shall
continue to be subject to the same terms and
conditions that were applicable to such Options
immediately prior to the transfer and a holder
thereof shall be treated as a Participant
hereunder).
During the lifetime of the Participant, Options
may be exercised only by the Participant or the
Participant's guardian or legal representative.
In addition, except to the extent permitted by
this
Agreement, the Options shall not be assigned,
negotiated, pledged or hypothecated in any way
(whether by operation of law or otherwise), and
the Options shall not be subject to execution,
attachment or similar process. Except to the
extent permitted by this Agreement, upon any
attempt to transfer, assign, negotiate, pledge or
hypothecate the Options, or in the event of any
levy upon the Options by reason of any execution,
attachment or similar process contrary to the
provisions hereof, the Options shall immediately
become null and void.

6. Termination of Employment.

A. Termination by Reason of
Death or Disability. If a Participant's
Termination of Employment (as hereinafter
defined) is by reason of death or Disability (as
defined
in the Plan), any Options held by such
Participant may be exercised , to the extent
exercisable at
the Participant's termination, by the Participant
(or the legal representative of the Participant's
estate) at any time within a period of one (1)
year from the date of such termination or until
the
expiration of the stated terms of the Option,
whichever period is the shorter. For purposes of
this
Agreement, "Termination of Employment" means (1)
a termination of service for reasons other
than a military or personal leave of absence
granted by the Company or a transfer of the
Participant
from or among the Company and its subsidiaries,
as defined under Section 424(f) of the Code; or
(2) when a subsidiary, with respect to which is
employing a Participant, ceases to be a
subsidiary,
as defined under Section 424(f) of the Code.

C. Other Termination. If the
Participant's Termination of
Employment is for any reason other than death,
Disability, or Cause, any Options held by the
Participant may be exercised, to the extent
exercisable at the Participant's termination, by
the
Participant at any time within a period of 3
months from the date of such termination or
until the expiration of the stated term of such
Option, whichever period is shorter.

7. Termination. Unless terminated as
provided below or
otherwise pursuant to the Plan, each Incentive
Stock Option shall expire on the tenth
anniversary of this Agreement, and each Non-
Qualified Stock Option shall expire on the
tenth anniversary of the day after the date of
this Agreement. Any Options that were not
exercisable by the Participant at the time of the
Participant's Termination of Employment
shall terminate and be null and void.

8. Rights as a Stockholder. The
Participant shall have no
rights as a stockholder with respect to any
shares of Common Stock covered by the
Options until the Participant shall have become
the holder of record of the shares of
Common Stock, and no adjustments shall be made
for dividends in cash or other property,
distributions or other rights in respect of any
such shares of Common Stock, except as
otherwise specifically provided for in the Plan.

9. Provisions of Plan Control. This
Agreement is subject to
all the terms, conditions and provisions of the
Plan, including, without limitation, the
amendment provisions thereof, and to such rules,
regulations and interpretations relating
to the Plan as may be adopted by the Committee
and as may be in effect from time to
time. Any capitalized term used but not defined
herein shall have the meaning ascribed
to such term in the Plan. The annexed copy of
the Plan is incorporated herein by
reference. If and to the extent that this
Agreement conflicts or is inconsistent with the
terms, conditions and provisions of the Plan, the
Plan shall control, and this Agreement
shall be deemed to be modified accordingly.

10. Withholding of Taxes. The Company
shall have the right to
require, prior to the issuance or delivery of
any shares of Common Stock, payment by the
Participant of any Federal, state or local taxes
required by law to be withheld.

The Committee may permit any such
withholding obligation to be satisfied
by reducing the number of shares of Common Stock
otherwise deliverable or by permitting
the Participant to deliver shares of Common stock
which the Participant owns (free and
clear of any liens and encumbrances). If the
Participant is required to file reports under
Section 16(a) of the Exchange Act with respect to
securitites of the Company the Participant
may elect to have a sufficient number of shares
of Common Stock withheld or to deliver
shares of Common Stock which the Participant owns
to fulfill such tax obligations
(hereinafter a "Withholding Election") only if
the election complies with such conditions as
are neceesary to prevent the withholding or
transfer of such shares from being subject to
Section 16(b) of the Exchange Act. To the extent
necessary under then current law, such
conditions shall include the following (x) the
Withholding Election shall be subject to the
disapproval of the Committee and (y) the
Withholding Election is made (i) during the
period beginning on the third business day
following the date of release for publication of
the quarterly or annual summary statements of
sales and earnings of the Company and ending
on the twelfth business day following such date
or is made in advance but takes effect during
such period, (ii) at least six (6) months prior
to the date of exercise of the Option, or (iii)
during any other period in which a Withholding
Election may be made under the provisions
of Rule 16b-3 promulgated pursuant to the
Exchange Act. Any fraction of a share of Common
Stock required to satisfy such tax obligations
shall be disregarded and the amount due shall
be paid instead in cash by the Participant.

11. Listing and Other Conditions.

As long as the Common Stock is listed
on a national securities exchange
or system sponsored by a national securities
association, the issue of any shares of Common
Stock pursuant to an Option shall be conditioned
upon such shares being listed on such
exchange or system. The Company shall have no
obligation to issue such shares unless
and until such shares are so listed, and the
right to exercise any Option with respect to such
shares shall be suspended until such listing has
been effected.

If at any time counsel to the Company
shall be of the opinion that any
sale or delivery of shares of Common Stock
pursuant to an Option is or may in the
circumstances be unlawful or result in the
imposition of excise taxes under the statutes,
rules or regulations of any applicable
jurisdiction, the Company shall have no
obligation
to make such sale or delivery, or to make any
application or to effect or to maintain any
qualification or registration under the
Securities Act of 1933, as amended, or otherwise
with respect to shares of Common Stock, and the
right to exericse any Option shall be
suspended until, in the opinion of said counsel,
such sale of delivery shall be lawful
or will not result in the imposition of excise
taxes.

Upon termination of any period of
suspension under this Section 11,
any Option affected by such suspension which
shall not then have expired or terminated
shall re reinstated as to all shares available
before such suspension and as to shares which
would otherwise have become available during the
period of such suspension, but no
such suspension shall extend the term of any
Option. Notwithstanding anthing else
to the contrary contained herein, no shares of
Common Stock shall be delivered by
the Company to the Participant pursuant to this
Agreement until a Form S-8
registration statement (or any successor form)
shall have become effective and shall
be current with respect to the shares being sold
and delivered hereunder.

12. Notices. Any notice or
communication given hereunder shall
be in writing and shall be deemed to have been
duly given when delivered in person, or
by United States mail, to the appropriate party
at the address set forth below (or such
other address as the paty shall from time to time
specify):

If to the Company, to:

Lone Star Industries, Inc.
300 First Stamford Place
P. O. Box 120014
Stamford, CT 06912-0014
Attn: William Troutman

If to the Participant, to:

the address indicated on the
signature page at the end of
this Agreement.

13. No Obligation to Continue
Employment. This Agreement
does not guarantee that the Company or any of its
subsidiaries will employ the Participant
for any specific time period, nor does it modify
in any respect the Company's or a
subsidiary's right to terminate or modify the
Participant's employment or compensation.

IN WITNESS WHEREOF, the parties have
executed this Agreement on the
date and year first above written.

LONE STAR
INDUSTRIES, INC.

By:__________________________
Authorized
Officer

John J.
Martin_____________________________
John J. Martin
Address:
18 Azalea Terrace
Cos Cob, CT 06807

INDEMNIFICATION AGREEMENT

AGREEMENT, effective as of ______________, between Lone
Star
Industries, Inc., a Delaware corporation (the "Company"),
and
__________________ (the "Indemnitee").

WHEREAS, it is essential that the Company retain and
attract as
directors and executive officers the most capable persons
available;

WHEREAS, Indemnitee is a director or executive officer
of the
Company;

WHEREAS, both the Company and Indemnitee recognize the
increased
risk of litigation and other claims being asserted against
directors
and executive officers of public companies in today's
environment.

WHEREAS, basic protection against undue risk of
personal
liability of directors and executive officers heretofore has
been
provided through insurance coverage providing reasonable
protection
at reasonable costs, and Indemnitee has relied on the
availability of
such coverage; but as a result of substantial changes in the
marketplace for such insurance it has become increasingly
more
difficult to obtain such insurance on terms providing
reasonable
protection at reasonable cost;

WHEREAS, the By-Laws of the Company (the "By-Laws")
require the
Company to indemnify directors, officers and certain other
persons to
the full extent permitted by law and the Indemnitee has been
serving
and continues to serve as a director or executive officer of
the
Company in part in reliance on the By-Laws;

WHEREAS, in recognition of Indemnitee's need for
substantial
protection against personal liability in order to enhance
Indemnitee's
continued service to the Company in an effective manner, the
increasing difficulty in obtaining satisfactory director and
officer
liability insurance coverage, and Indemnitee's reliance on
the By-
Laws, and in part to provide Indemnitee with specific
contractual
assurance that the protection promised by the By-Laws will
be
available to Indemnitee (regardless of, among other things,
any
amendment to or revocation of the By-Laws or any change in
the
composition of the Company's Board of Directors or
acquisition
transaction relating to the Company), the Company wishes to
provide
in this Agreement for the indemnification of and the
advancing of
expenses to Indemnitee to the fullest extent (whether
partial or
complete) permitted by law and as set forth in this
Agreement, and,
to the extent insurance is maintained, for the continued
coverage of
Indemnitee under the Company's directors' and officers'
liability
insurance policies.

NOW, THEREFORE, in consideration of the premises and of
Indemnitee continuing to serve the Company directly or, at
its
request, another enterprise, and intending to be legally
bound hereby,
the parties hereto agree as follows:

1. Certain Definitions.

(a) Change in Control: shall be deemed to have
occurred if (i)
any "person" (as such term is used in Sections 13(d) and
14(d) of the
Securities Exchange Act of 1934, as amended), other than a
trustee or
other fiduciary holding securities under an employee benefit
plan of
the Company or a corporation owned directly or indirectly by
the
stockholders of the Company in substantially the same
proportions as
their ownership of stock of the Company, is or becomes the
"beneficial
owner" (as defined in Rule 13d-3 under said Act), directly
or
indirectly, of securities of the Company representing 20% or
more of
the total voting power represented by the Company's then
outstanding
Voting Securities, or (ii) during any period of two
consecutive years,
individuals who at the beginning of such period constitute
the Board
of Directors of the Company and any new director whose
election by the
Board of Directors or nomination for election by the
Company's
stockholders was approved by a vote of at least two-thirds
(2/3) of
the directors then still in office who either were directors
at the
beginning of the period or whose election or nomination for
election
was previously so approved, cease for any reason to
constitute a
majority thereof, or (iii) the stockholders of the Company
approve a
merger or consolidation of the Company with any other
corporation,
other than a merger or consolidation which would result in
the Voting
Securities of the Company outstanding immediately prior
thereto
continuing to represent (either by remaining outstanding or
by being
converted into Voting Securities of the surviving entity) at
least 80%
of the total voting power represented by the Voting
Securities of the
Company or such surviving entity outstanding immediately
after such
merger or consolidation, or the stockholders of the Company
approve
a plan of complete liquidation of the Company or an
agreement for the
sale or disposition by the Company of (in one transaction or
a series
of transactions) all or substantially all of the Company's
assets.

(b) Claim: any threatened, pending or completed
action, suit
or proceeding, or any inquiry or investigation, whether
instituted by
the Company or any other party, that Indemnitee in good
faith believes
might lead to the institution of any such action, suit or
proceeding,
whether civil, criminal, administrative, investigative or
other.

(c) Expenses: include attorneys' fees and all other
costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or
participating in
(including on appeal), or preparing to defend, be a witness
in or
participate in any Claim relating to any Indemnifiable
Event.

(d) Indemnifiable Event: any event or occurrence
related to the
fact that Indemnitee is or was a director, officer,
employee, agent
or fiduciary of the Company, or is or was serving at the
request of
the Company as director, officer, employee, trustee, agent,
partnership committee member or fiduciary of another
corporation,
partnership, joint venture, employee benefit plan, trust or
other
enterprise, or by reason of anything done or not done by
Indemnitee
in any such capacity.

(e) Independent Legal Counsel: an attorney or firm of
attorneys, selected in accordance with the provisions of
Section 3,
who shall not have otherwise performed services for the
Company or
Indemnitee within the last five years (other than with
respect to
matters concerning the rights of Indemnitee under this
Agreement, or
of other indemnitees under similar indemnity agreements).

(f) Potential Change in Control: shall be deemed to
have
occurred if (i) the Company enters into an agreement, the
consummation
of which would result in the occurrence of a Change in
Control; (ii)
any person (including the Company) publicly announces an
intention to
take or to consider taking actions which if consummated
would
constitute a Change in Control; (iii) any person, other than
a trustee
or other fiduciary holding securities under an employee
benefit plan
of the Company or a corporation owned, directly or
indirectly, by the
stockholders of the Company in substantially the same
proportions as
their ownership of stock of the Company, who is or becomes
the
beneficial owner, directly or indirectly, of securities of
the Company
representing 9.5% or more of the combined voting power of
the
Company's then outstanding Voting Securities, increases his
beneficial
ownership of such securities by five percentage points (5%)
or more
over the percentage so owned by such person; or (iv) the
Board adopts
a resolution to the effect that, for purposes of this
Agreement, a
Potential Change in Control has occurred.

(g) Reviewing Party: any appropriate person or body
consisting
of a member or members of the Company's Board of Directors
or any
other person or body appointed by the Board who is not a
party to the
particular Claim for which Indemnitee is seeking
indemnification, or
Independent Legal Counsel.

(h) Voting Securities: any securities of the Company
which vote
generally in the election of directors.

2. Basic Indemnification Arrangement. (a) In the
event
Indemnitee was, is or becomes a party to or witness or other
participant in, or is threatened to be made a party to or
witness or
other participant in, a Claim by reason of (or arising in
part out of)
an Indemnifiable Event, the Company shall indemnify
Indemnitee to the
fullest extent permitted by law as soon as practicable but
in any
event no later than thirty days after written demand is
presented to
the Company, against any and all Expenses, judgments, fines,
penalties
and amounts paid in settlement (including all interest,
assessments
and other charges paid or payable in connection with or in
respect of
such Expenses, judgments, fines, penalties or amounts paid
in
settlement) of such Claim. If so requested by Indemnitee,
the Company
shall advance (within two business days of such request) any
and all
Expenses to Indemnitee (an "Expense Advance").
Notwithstanding
anything in this Agreement to the contrary, Indemnitee shall
not be
entitled to indemnification pursuant to this Agreement in
connection
with (i) liability under Section 16(b) of the Securities
Exchange Act
of 1934, as amended or under federal or state securities
laws for
"insider trading", (ii) conduct finally adjudged as
constituting
active or deliberate dishonesty or willful fraud or
illegality, or
(iii) conduct finally adjudged as producing an unlawful
personal
benefit. Notwithstanding anything in this Agreement to the
contrary,
prior to a Change in Control, Indemnitee shall not be
entitled to
indemnification pursuant to this Agreement in connection
with any
Claim initiated by Indemnitee unless the Board of Directors
has
authorized or consented to the initiation of such Claim.

(b) Notwithstanding the foregoing, (i) the obligations
of the
Company under Section 2(a) shall be subject to the condition
that the
Reviewing Party shall not have determined (in a written
opinion, in
any case in which the Independent Legal Counsel referred to
in Section
3 hereof is involved) that Indemnitee would not be permitted
to be
indemnified under applicable law, and (ii) the obligation of
the
Company to make an Expense Advance pursuant to Section 2(a)
shall be
subject to the condition that, if, when and to the extent
that the
Reviewing Party determines that Indemnitee would not be
permitted to
be so indemnified under applicable law, the Company shall be
entitled
to be reimbursed by Indemnitee (who hereby agrees to
reimburse the
Company) for all such amounts theretofore paid; provided,
however,
that if Indemnitee has commenced or thereafter commences
legal
proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under
applicable
law, any determination made by the Reviewing Party that
Indemnitee
would not be permitted to be indemnified under applicable
law shall
not be binding and Indemnitee shall not be required to
reimburse the
Company for any Expense Advance until a final judicial
determination
is made with respect thereto (as to which all rights of
appeal
therefrom have been exhausted or lapsed). If there has not
been a
Change in Control, the Reviewing Party shall be selected by
the Board
of Directors, and if there has been such a Change in Control
(other
that a Change in Control which has been approved by a
majority of the
Company's Board of Directors who were directors immediately
prior to
such Change in Control), the Reviewing Party shall be the
Independent
Legal Counsel referred to in Section 3 hereof. If there has
been no
determination by the Reviewing Party within thirty days
after written
demand for indemnification made under Section 2(a) or if the
Reviewing
Party determines that Indemnitee substantively would not be
permitted
to be indemnified in whole or in part under applicable law,
Indemnitee
shall have the right to commence litigation in any court in
the State
of Connecticut or the State of Delaware having subject
matter
jurisdiction thereof and in which venue is proper seeking an
initial
determination by the court or challenging any such
determination by
the Reviewing Party or any aspect thereof, including the
legal or
factual bases therefor, and the Company hereby consents to
service of
process and to appear in any such proceeding. Any
determination by the
Reviewing Party otherwise shall be conclusive and binding on
the
Company and Indemnitee.

3. Change in Control. If there is a Change in Control
of the
Company (other than a Change in Control which has been
approved by a
majority of the Company's Board of Directors who were
directors
immediately prior to such Change in Control) then with
respect to all
matters thereafter arising concerning the rights of
Indemnitee to
indemnity payments and Expense Advances under the By-Laws,
this
Agreement or any other agreement or Company By-Law now or
hereafter
in effect relating to Claims for Indemnifiable Events, the
Company
shall seek legal advice only from Independent Legal Counsel
selected
by Indemnitee and approved by the Company (which approval
shall not
be unreasonably withheld). Such counsel, among other
things, shall
render its written opinion to the Company and Indemnitee as
to whether
and to what extent the Indemnitee would be permitted to be
indemnified
under applicable law. The Company shall pay the reasonable
fees of the
Independent Legal Counsel referred to above and fully
indemnify such
counsel against any and all expenses (including attorneys'
fees),
claims, liabilities and damages arising out of or relating
to this
Agreement or its engagement pursuant hereto.

4. Establishment of Trust. In the event of a
Potential Change
in Control, the Company shall, upon written request by
Indemnitee
create a trust for the benefit of Indemnitee and from time
to time
upon written request of Indemnitee shall fund such trust in
an amount
sufficient to satisfy any and all Expenses reasonably
anticipated at
the time of each such request to be incurred in connection
with
investigating, preparing for and defending any Claim
relating to an
Indemnifiable Event, and any and all judgements, fines,
penalties and
settlement amounts of any and all Claims relating to an
Indemnifiable
Event from time to time actually paid or claimed, reasonably
anticipated or proposed to be paid; provided that in no
event shall
more than $100,000 be required to be deposited in any trust
created
hereunder in excess of amounts deposited in respect of
reasonably
anticipated Expenses. The amount or amounts to be deposited
in the
trust pursuant to the foregoing funding obligation shall be
determined
by the Reviewing Party. The terms of the trust shall provide
that (i)
the trust shall be irrevocable, (ii) the trustee shall
advance, within
two business days of a request by the Indemnitee, any and
all Expenses
to the Indemnitee (and the Indemnitee hereby agrees to
reimburse the
trust under the circumstances under which the Indemnitee would be
required to reimburse the Company under Section 2(b) of this
Agreement, (iii) the trust shall continue to be funded by
the Company
in accordance with the funding obligation set forth above,
(iv) the
trustee shall promptly pay to Indemnitee all amounts for
which
Indemnitee shall be entitled to indemnification pursuant to
this
Agreement or otherwise, and (v) upon a final determination
by the
Reviewing Party or a court of competent jurisdiction, as the
case may
be, that Indemnitee has been fully indemnified under the
terms of this
Agreement, all unexpended funds in such trust shall be used
solely for
the purpose of paying premiums on directors' and officers'
liability
insurance policies maintained by the Company. The trustee
shall be
chosen by Indemnitee. Notwithstanding anything in this
Agreement to
the contrary, to the extent of the amount of funds in the
trust corpus
the Company shall have no obligation to indemnify Indemnitee
under
this Agreement.

5. Indemnification for Additional Expenses. The
Company shall
indemnify Indemnitee against any and all expenses (including
attorneys' fees) and, if requested by Indemnitee, shall
(within two
business days of such request) advance such expenses to
Indemnitee,
which are incurred by Indemnitee in connection with any
action brought
by Indemnitee for (i) indemnification or advance payment of
Expenses
by the Company under this Agreement, the By-Laws or any
other
agreement or Company By-Law now or hereafter in effect
relating to
Claims for Indemnifiable Events and/or (ii) recovery under
any
directors' and officers' liability insurance policies
maintained by
the Company, regardless of whether Indemnitee ultimately is
determined
to be entitled to such indemnification, advance expense
payment or
insurance recovery, as the case may be.

6. Partial Indemnity, Etc. If Indemnitee is entitled
under any
provision of this Agreement to indemnification by the
Company for some
or a portion of the Expenses, judgements, fines, penalties
and amounts
paid in settlement of a Claim but not, however, for all of
the total
amount thereof, the Company shall nevertheless indemnify
Indemnitee
for the portion thereof to which Indemnitee is entitled.
Moreover,
notwithstanding any other provision of this Agreement, to
the extent
that Indemnitee has been successful on the merits or
otherwise in
defense of any or all Claims relating in whole or in part to
an
Indemnifiable Event or in defense of any issue or matter
therein,
including dismissal without prejudice, Indemnitee shall be
indemnified
against all Expenses incurred in connection therewith.

7. Burden of Proof. In connection with any
determination by the
Reviewing Party or otherwise as to whether Indemnitee is
entitled to
be indemnified hereunder the burden of proof shall be on the
Company
to establish that Indemnitee is not so entitled.

8. No Presumptions. For purposes of this Agreement,
the
termination of any claim, action, suit or proceeding, by
judgement,
order, settlement (whether with or without court approval)
or
conviction, or upon a plea of nolo contendere, or its
equivalent,
shall not create a presumption that Indemnitee did not meet
any
particular standard of conduct or have any particular belief
or that
a court has determined that indemnification is not permitted
by
applicable law. In addition, neither the failure of the
Reviewing
Party to have made a determination as to whether Indemnitee
has met
any particular standard of conduct or had any particular
belief, nor
an actual determination by the Reviewing Party that
Indemnitee has not
met such standard of conduct or did not have such belief,
prior to the
commencement of legal proceedings by Indemnitee to secure a
judicial
determination that Indemnitee should be indemnified under
applicable
law shall be a defense to Indemnitee's claim or create a
presumption
that Indemnitee has not met any particular standard of
conduct or did
not have any particular belief.

9. Nonexclusivity, Etc. The rights of the Indemnitee
hereunder
shall be in addition to any other rights Indemnitee may have
under the
By-Laws or the Delaware General Corporation Law or
otherwise. To the
extent that a change in the Delaware General Corporation Law
(whether
by statute or judicial decision) permits greater
indemnification by
agreement than would be afforded currently under the By-Laws
and this
Agreement, it is the intent of the parties hereto that
Indemnitee
shall enjoy by this Agreement the greater benefits so
afforded by such
change.

10. Liability Insurance. To the extent the Company
maintains
an insurance policy or policies providing directors' and
officers'
liability insurance, Indemnitee shall be covered by such
policy or
policies, in accordance with its or their terms, to the
maximum extent
of the coverage available for any Company director or
officer.

11. Period of Limitations. No legal action shall be
brought and
no cause of action shall be asserted by or in the right of
the Company
against Indemnitee, Indemnitee's spouse, heirs, executors or
personal
or legal representatives after the expiration of two years
from the
date of accrual of such cause of action, and any claim or
cause of
action of the Company shall be extinguished and deemed
released unless
asserted by the timely filing of a legal action within such
two-year
period; provided, however, that if any shorter period of
limitations
is otherwise applicable to any such cause of action such
shorter
period shall govern.

12. Amendments, Etc. No supplement, modification or
amendment
of this Agreement shall be binding unless executed in
writing by both
of the parties hereto. No waiver of any of the provisions of
this
Agreement shall be deemed or shall constitute a waiver of
any other
provisions hereof (whether or not similar) nor shall such
waiver
constitute a continuing waiver.

13. Subrogation. In the event of payment under this
Agreement,
the Company shall be subrogated to the extent of such
payment to all
of the rights of recovery of Indemnitee, who shall execute
all papers
required and shall do everything that may be necessary to
secure such
rights, including the execution of such documents necessary
to enable
the Company effectively to bring suit to enforce such
rights.

14. No Duplication of Payments. The Company shall not
be liable
under this Agreement to make any payment in connection with
any Claim
made against Indemnitee to the extent Indemnitee has
otherwise
actually received payment (under any insurance policy, the
Company By-
Laws or otherwise) of the amounts otherwise indemnifiable
hereunder.

15. Binding Effect, Etc. This Agreement shall be
binding upon
and inure to the benefit of and be enforceable by the
parties hereto
and their respective successors, assigns, including any
direct or
indirect successor by purchase, merger, consolidation or
otherwise to
all or substantially all of the business and/or assets of
the Company,
spouses, heirs, executors and personal and legal
representatives.
This Agreement shall continue in effect regardless of
whether
Indemnitee continues to serve as an executive officer or
director of
the Company or of any other enterprise at the Company's
request.

16. Severability. The provisions of this Agreement
shall be
severable in the event that any of the provisions hereof
(including
any provision within a single section, paragraph or
sentence) is held
by a court of competent jurisdiction to be invalid, void or
otherwise
unenforceable in any respect, and the validity and
enforceability of
any such provision in every other respect and of the
remaining
provisions hereof shall not be in any way impaired and shall
remain
enforceable to the fullest extent permitted by law.

17. Governing Law. This Agreement shall be governed
by and
construed and enforced in accordance with the laws of the
State of
Delaware applicable to contracts made and to be performed in
such
state without giving effect to the principles of conflicts
of laws.

IN WITNESS WHEREOF, the parties hereto have executed
this
Agreement as of the date first above set forth.

LONE STAR
INDUSTRIES, INC.

By:______________________

Its:_____________________

_________________________
[Indemnitee]

beth\indemnif.dir

As of , 1994

Mr.

Dear Mr. :

This letter will evidence the agreement of Lone
Star
Industries, Inc. (the "Company") with you on the terms
specified
herein.
1. You may, at any time within 30 days after the
occurrence (during the effectiveness of this Agreement) of a
Change of Control, as defined below, give the Company your
written request that you be offered employment by the
Company
surviving such Change of Control which is Substantially
Comparable, as defined below, to your employment with the
Company
prior to such Change of Control. If within 30 days after
the
giving by you of such a request, such Company does not
confirm to
you in writing its offer to you of employment which is
Substantially Comparable, or if such Substantially
Comparable
employment does not continue to be tendered to you by such
Company thereafter for a period of at least one year
following
such Change of Control (whether because of a termination of
your
employment by such Company, for cause or otherwise, or
because of
a change in the terms of such employment so that it is no
longer
Substantially Comparable to your employment by the Company
prior
to the Change of Control), then you may by written notice to
the
Company (a "Default Notice") terminate your employment and
thereafter you shall be entitled to severance in an amount
equal
to your then current base salary for two years. Such
severance
shall be paid in lump sum on the effective date of the
termination of your employment. In addition, you shall
continue
to receive medical insurance and other benefits during a
period
of two years commencing upon delivery of a Default Notice
which
benefits shall be substantially comparable to those you
received
prior to the Change of Control. In furtherance and not in
limitation of the immediately preceding sentence, you shall
be
deemed to have continued your employment at your salary
effective
prior to the Change of Control during such two-year period
for
purposes of vesting, eligibility and benefit accrual under
any
applicable employee benefit plan (subject to the
requirements of
the Internal Revenue Code of 1986, as amended). Severance
pay
pursuant to this Agreement shall be in lieu of severance pay
pursuant to any other Lone Star severance policy.
2. For purposes of this Agreement (i) a "Change
of
Control" shall be deemed to have occurred upon the
occurrence of
any of the following events:
(i) Any acquisition by any individual, entity or
group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934 (the "Exchange Act")) (a
Person) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of shares of
common
stock of the Company (the "Common Stock") and/or other
voting
securities of the Company entitled to vote generally in the
election of directors ("Outstanding Company Voting
Securities")
after which acquisition such individual, entity or group is
the
beneficial owner of twenty percent (20%) or more of either
(1)
the then outstanding shares of Common Stock or (2) the
Outstanding Company Voting Securities; excluding, however,
the
following: (1) any acquisition by the Company, (2) any
acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company or (3) any
acquisition by
any corporation pursuant to a reorganization, merger,
consolidation or similar corporate transaction (in each
case, a
Corporate Transaction), if, pursuant to such Corporate
Transaction, the conditions described in clauses (1), (2)
and (3)
of paragraph (iii) of this Section 6 are satisfied; or
(ii) A change in the composition of the Board of
Directors of the Company such that the individuals who, as
of the
date hereof, comprise a class of directors of the Board (the
members of each class of directors of the Board as of the
date
hereof shall be hereinafter referred to as an Incumbent
Class
and the members of all of the Incumbent Classes shall be
hereinafter collectively referred to as the "Incumbent
Board")
cease for any reason to constitute at least a majority of
the
class; provided, however, for purposes of this subsection
that
any individual who becomes a member of an Incumbent Class
subsequent to the date hereof whose election, or nomination
for
election by the Company's stockholders, was approved in
advance
or contemporaneously with such election by a vote of at
least a
majority of those individuals who are members of the
Incumbent
Board and a majority of those individuals who are members of
such
Incumbent Class (or deemed to be such pursuant to this
proviso)
shall be considered as though such individual were a member
of
the Incumbent Class; but, provided further, that any such
individual whose initial assumption of office occurs as a
result
of either an actual or threatened election contest (as such
terms
are used in Rule 14a-11 of Regulation 14A promulgated under
the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than
the
Board of Directors of the Company or actual or threatened
tender
offer for shares of the Company or similar transaction or
other
contest for corporate control (other than a tender offer by
the
Company) shall not be so considered as a member of the
Incumbent
Class; or
(iii) The approval by the stockholders of the
Company
of a Corporate Transaction or, if consummation of such
Corporate
Transaction is subject, at the time of such approval by
stock-
holders, to the consent of any government or governmental
agency,
the obtaining of such consent (either explicitly or
implicitly);
excluding, however, such a Corporate Transaction pursuant to
which (1) all or substantially all of the individuals and
entities who are the beneficial owners, respectively, of the
outstanding shares of Common Stock and Outstanding Company
Voting
Securities immediately prior to such Corporate Transaction
will
beneficially own, directly or indirectly, more than eighty
percent (80%) of, respectively, the outstanding shares of
common
stock of the corporation resulting from such Corporate
Transaction and the combined voting power of the outstanding
voting securities of such corporation entitled to vote
generally
in the election of directors, (2) no Person (other than the
Company, any employee benefit plan (or related trust) of the
Company or the corporation resulting from such Corporate
Transaction and any Person beneficially owning, immediately
prior
to such Corporate Transaction, directly or indirectly,
twenty
percent (20%) or more of the outstanding shares of Common
Stock
or Outstanding Company Voting Securities, as the case may
be)
will beneficially own, directly or indirectly, twenty
percent
(20%) or more of, respectively, the outstanding shares of
common
stock of the corporation resulting from such Corporate
Transaction or the combined voting power of the then
outstanding
securities of such corporation entitled to vote generally in
the
election of directors and (3) individuals who were members
of the
Incumbent Board will constitute at least a majority of the
members of board of directors of the corporation resulting
from
such Corporate Transaction; or
(iv) The approval of the stockholders of the
Company
of (1) a complete liquidation or dissolution of the Company
or
(2) the sale or other disposition of all or substantially
all of
the assets of the Company; excluding, however, such a sale
or
other disposition to a corporation, with respect to which
following such sale or other disposition, (A) more than
eighty
percent (80%) of, respectively, the then outstanding shares
of
common stock of such corporation and the combined voting
power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors will
be
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the
beneficial owners, respectively, of the outstanding shares
of
Common Stock and Outstanding Company Voting Securities im-
mediately prior to such sale or other disposition, (B) no
Person
(other than the Company and any employee benefit plan (or
related
trust) of the Company or such corporation and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, twenty percent (20%) or
more
of the outstanding shares of Common Stock or Outstanding
Company
Voting Securities, as the case may be) will beneficially
own,
directly or indirectly, twenty percent (20%) or more of,
respec-
tively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then
outstanding
voting securities of such corporation entitled to vote
generally
in the election of directors and (C) individuals who were
members
of the Incumbent Board will constitute at least a majority
of the
members of the board of directors of such corporation.
For purposes of this Agreement, "Substantially
Comparable" employment shall mean employment which (a) on
balance, is at the same or a higher level of responsibility
and
title; (b) has a compensation package which, in total, is
equivalent or superior to your compensation package in
effect
prior to the Change of Control; and (c) is at a location no
more
than 25 miles from (and located in the same State as) your
then
current employment location.
3. This Agreement shall not confer upon you any
right
to continuance of employment with the Company or with any
successor or in any way interfere with the right of the
Company
or such successor to terminate such employment.
4. This Agreement constitutes the entire
agreement
between the parties and may not be changed or modified
except by
an agreement in writing signed by you and the Company. The
effectiveness of this Agreement shall commence as of
,
1994 and shall terminate on , 1999.
5. This Agreement shall be governed by and
construed
in accordance with the laws of the State of Connecticut.
6. This Agreement shall inure to the benefit of,
and
be binding upon, any successor in interest or assign of the
Company. This Agreement cannot be assigned by you without
prior
written consent of the Company.
7. a. Any dispute relating to this Agreement
arising between you and the Company (or any successor or
assign)
shall be settled by arbitration in accordance with the
commercial
arbitration rules of the American Arbitration Association
("AAA"). The arbitration proceedings, including the
rendering of
an award, shall take place in Stamford, Connecticut (or such
other location mutually agreed upon by the Company and you),
and
shall be administered by the AAA.
b. The arbitral tribunal shall be appointed
within 30 days of the notice of dispute, and shall consist
of
three arbitrators, one of which shall be appointed by the
Company, one by you, and the third by both you and the
Company
jointly; provided, however, that, if you and the Company do
not
select the third arbitrator within such 30-day period, such
third
arbitrator shall be chosen by the AAA as soon as practicable
following notice to the AAA by the parties of their
inability to
choose such third arbitrator.
c. Decisions of such arbitral tribunal
shall be
in accordance with the laws of the State of Connecticut
(excluding the conflicts of law rules which require the
application of any other law). The award of any such
arbitral
tribunal shall be final (except as otherwise provided by the
laws
of the State of Connecticut and the Federal laws of the
United
States, to the extent applicable). Judgment upon such award
may
be entered by the prevailing party in any state or Federal
court
sitting in Connecticut or any other court having
jurisdiction
thereof, or application may be made by such party to any
such
court for judicial acceptance of such award and an order of
enforcement.
d. The Company shall reimburse you for all
costs, including reasonable attorneys' fees, in connection
with
any proceeding (whether or not in arbitration) to obtain or
enforce any right or benefit under this Agreement in which
you
are the prevailing party.
8. All notices, communications, etc., shall be
sent
to:
(a) Corporate Secretary
Lone Star Industries, Inc.
300 First Stamford Place
Stamford, CT 06912

(b) Mr. Harry M. Philip
2419 Lakeshore Drive
Jackson, MO 63755

Very truly yours,

LONE STAR INDUSTRIES, INC.

Read and Agreed to:

(Form of Stock Option Agreement
for 75,000 Shares)

OPTION AGREEMENT PURSUANT TO
THE LONE STAR INDUSTRIES, INC.
MANAGEMENT STOCK OPTION PLAN

AGREEMENT, dated as of June 8, 1994 by and between
Lone
Star Industries, Inc. (the "Company") and _________________
(the
"Participant").

Preliminary Statement

The Compensation and Stock Option Committee of the
Board
of Directors (the "Board") of the Company (the "Committee"),
pursuant to the Company's Management Stock Option Plan,
annexed
hereto as Exhibit A (the "Plan), granted on June 8, 1994 to
the
Participant, as an Employee (as defined in the Plan), stock
options
(the "Options") to purchase the number of shares of the
Company's
common stock, par value $1.00 per share (the "Common
Stock"), set
forth below. This Agreement sets forth the terms of the
Options.

Accordingly, the parties hereto agree as follows:

1. Grant of Options. Subject in all respects to
the Plan
and the terms and conditions set forth herein and therein,
the
Participant is hereby granted 75,000 Options to purchase
from the
Company up to 75,000 shares of Common Stock, at a price per
share of
$15.375 (the "Option Price").

2. Tax Matters. 26,016 Options to acquire 26,016
shares
of Common Stock granted hereby are intended to qualify as
and are
hereby designated as "Incentive Stock Options" under Section
422 of
the Internal Revenue Code of 1986, as amended (the "Code").
48,984
Options to acquire 48,984 shares of Common Stock are
intended to
qualify as and are hereby designated as "Non-Qualified Stock
Options" within the meaning of Section 1.83-7 of the Income
Tax
Regulations promulgated under the Code.

3. Vesting. The Options are exercisable in
installments
as provided below, which shall be cumulative. To the extent
that
Options have become exercisable with respect to a number of
shares
as provided below, the Option may thereafter be exercised by
the
Participant, in whole or in part, at any time or from time
to time
prior to the expiration of the Options as provided herein.
The
following table indicates each date (the "Vesting Date")
upon which
the Participant shall be entitled to exercise Incentive
Stock
Options and Non-Qualified Stock Options with respect to the
number
of Shares indicated beside that date:

Vesting Date Number of Shares

Incentive Stock Non-
Qualified
Options Stock
Options

July 1, 1994 6,504 12,246
January 1, 1995 6,504 12,246
January 1, 1996 6,504 12,246
January 1, 1997 6,504 12,246

Upon the occurrence of a Change of Control (as
hereinafter
defined), all Options shall immediately become exercisable
with
respect to all shares of Common Stock subject thereto
regardless of
whether the Option has vested with respect to such shares.
For
purposes of this Agreement, "Change of Control" means the
occurrence
of any of the following events:

(i) Any acquisition by any individual,
entity or
group (within the meaning of Section
13(d)(3)
or 14(d)(2) of the Securities Exchange
Act of
1934 (the "Exchange Act")) (a "Person")
of
beneficial ownership (within the meaning
of
Rule 13d-3 promulgated under the
Exchange Act)
of shares of Common Stock and/or
Outstanding
Company Voting Securities (as defined
below)
after which acquisition such individual,
entity
or group is the beneficial owner of
twenty
percent (20%) or more of either (1) the
then
outstanding shares of Common Stock or
(2) the
combined voting power of the then
outstanding
voting securities of the Company
entitled to
vote generally in the election of
directors
(the "Outstanding Company Voting
Securities");
excluding, however, the following: (1)
any
acquisition by the Company, (2) any
acquisition
by an employee benefit plan (or related
trust)
sponsored or maintained by the Company
or (3)
any acquisition by any corporation
pursuant to
a reorganization, merger, consolidation
or
similar corporate transaction (in each
case, a
"Corporate Transaction"), if, pursuant
to such
Corporate Transaction, the conditions
described
in clauses (1), (2) and (3) of paragraph
(iii)
of this Section 3 are satisfied; or

(ii) A change in the composition of the Board
such
that the individuals who, as of July 1,
1994,
comprise a class of directors of the
Board (the
members of each class of directors of
the Board
as of July 1, 1994 shall be hereinafter
referred to as an "Incumbent Class" and
the
members of all of the Incumbent Classes
shall
be hereinafter collectively referred to
as the
"Incumbent Board") cease for any reason
to
constitute at least a majority of the
class;
provided, however, for purposes of this
subsection that any individual who
becomes a
member of an Incumbent Class subsequent
to July
1, 1994 whose election, or nomination
for
election by the Company's stockholders,
was
approved in advance or contemporaneously
with
such election by a vote of at least a
majority
of those individuals who are members of
the
Incumbent Board and a majority of those
individuals who are members of such
Incumbent
Class (or deemed to be such pursuant to
this
proviso) shall be considered as though
such
individual were a member of the
Incumbent
Class; but, provided further, that any
such
individual whose initial assumption of
office
occurs as a result of either an actual
or
threatened election contest (as such
terms are
used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or
other
actual or threatened solicitation of
proxies or
consents by or on behalf of a Person
other than
the Board or actual or threatened tender
offer
for shares of the Company or similar
transaction or other contest for
corporate
control (other than a tender offer by
the
Company) shall not be so considered as a
member
of the Incumbent Class; or

(iii) The approval by the stockholders of the
Company
of a Corporate Transaction or, if
consummation
of such Corporate Transaction is subject,
at the
time of such approval by stockholders, to
the
consent of any government or governmental
agency, the obtaining of such consent
(either
explicitly or implicitly); excluding,
however,
such a Corporate Transaction pursuant to
which
(1) all or substantially all of the
individuals
and entities who are the beneficial
owners,
respectively, of the outstanding shares
of
Common Stock and Outstanding Company
Voting
Securities immediately prior to such
Corporate
Transaction will beneficially own,
directly or
indirectly, more than eighty percent
(80%) of,
respectively, the outstanding shares of
common
stock of the corporation resulting from
such
Corporate Transaction and the combined
voting
power of the outstanding voting
securities of
such corporation entitled to vote
generally in
the election of directors, (2) no Person
(other
than the Company, any employee benefit
plan (or
related trust) of the Company or the
corporation
resulting from such Corporate Transaction
and
any Person beneficially owning,
immediately
prior to such Corporate Transaction,
directly or
indirectly, twenty percent (20%) or more
of the
outstanding shares of Common Stock or
Outstanding Company Voting Securities, as
the
case may be) will beneficially own,
directly or
indirectly, twenty percent (20%) or more
of,
respectively, the outstanding shares of
common
stock of the corporation resulting from
such
Corporate Transaction or the combined
voting
power of the then outstanding securities
of such
corporation entitled to vote generally in
the
election of directors and (3) individuals
who
were members of the Incumbent Board will
constitute at least a majority of the
members of
board of directors of the corporation
resulting
from such Corporate Transaction; or

(iv) The approval of the stockholders of the
Company
of (1) a complete liquidation or
dissolution of
the Company or (2) the sale or other
disposition
of all or substantially all of the assets
of the
Company; excluding, however, such a sale
or
other disposition to a corporation, with
respect
to which following such sale or other
disposition, (A) more than eighty percent
(80%)
of, respectively, the then outstanding
shares of
common stock of such corporation and the
combined voting power of the then
outstanding
voting securities of such corporation
entitled
to vote generally in the election of
directors
will be then beneficially owned, directly
or
indirectly, by all or substantially all
of the
individuals and entities who were the
beneficial
owners, respectively, of the outstanding
shares
of Common Stock and Outstanding Company
Voting
Securities immediately prior to such sale
or
other disposition, (B) no Person (other
than the
Company and any employee benefit plan (or
related trust) of the Company or such
corporation and any Person beneficially
owning,
immediately prior to such sale or other
disposition, directly or indirectly,
twenty
percent (20%) or more of the outstanding
shares
of Common Stock or Outstanding Company
Voting
Securities, as the case may be) will
beneficially own, directly or indirectly,
twenty
percent (20%) or more of, respectively,
the then
outstanding shares of common stock of
such
corporation and the combined voting power
of the
then outstanding voting securities of
such
corporation entitled to vote generally in
the
election of directors and (C) individuals
who
were members of the Incumbent Board will
constitute at least a majority of the
members of
the board of directors of such
corporation.

4. Method of Exercise. Options may be exercised
in whole
or in part at any time during the Option term, by giving
written
notice of exercise to the Company specifying the number of
shares to
be purchased and whether such exercise is of Incentive Stock
Options
or of Non-Qualified Stock Options, or what combination of
Incentive
Stock Options and Non-Qualified Stock Options are being
exercised.
Such notice shall be accompanied by payment in full of the
Option
Price (i) in cash, by certified check or money order, or
(ii) in the
form of shares of Common Stock owned by the Participant (and
for
which the Participant has good title free and dear of any
liens and
encumbrances) based on the Fair Market Value of the shares
on the
date of exercise as determined by the Committee, or (iii) in
such
other form, or pursuant to such other arrangement for the
satisfaction of the Option Price, as the Committee may
accept. For
purposes of this Agreement, "Fair Market Value" shall mean
the
average of the high and low prices of a share of Common
Stock in New
York Stock Exchange composite market transactions, as
reported by
the Wall Street journal, or if the Common Stock shall not
have been
reported on such date, on the first day prior thereto on
which the
Common Stock was reported. No shares of Common Stock shall
be
issued until payment, as provided herein, therefor has been
made or
provided for.

5. Restriction on Transfer of Options. Except
as
otherwise provided herein, the Options granted hereby are
not
transferable otherwise than by will or under the applicable
laws of
descent and distribution. Non-Qualified Stock Options may
be
transferred (i) pursuant to a qualified domestic relations
order as
defined in the Code or Title I of the Employee Retirement
Income
Security Act, or the rules thereunder or (ii) to the
Participant's
immediate family (i.e., the Employee's children,
grandchildren and
spouse), or to one or more trusts for the benefit of such
immediate
family members, or partnerships in which such family members
are the
only partners, provided that such transfer shall be
permitted only
if the Participant does not receive any consideration for
such
transfer and written notice of such proposed transfer and
the
details thereof shall have been furnished to the Committee
(any
Options transferred pursuant to this clause shall continue
to be
subject to the same terms and conditions that were
applicable to
such Options immediately prior to the transfer and a holder
thereof
shall be treated as a Participant hereunder). During the
lifetime
of the Participant, Options may be exercised only by the
Participant
or the Participant's guardian or legal representative. In
addition,
except to the extent permitted by this Agreement, the
Options shall
not be assigned, negotiated, pledged or hypothecated in any
way
(whether by operation of law or otherwise), and the Options
shall
not be subject to execution, attachment or similar process.
Except
to the extent permitted by this Agreement, upon any attempt
to
transfer, assign, negotiate, pledge or hypothecate the
Options, or
in the event of any levy upon the Options by reason of any
execution, attachment or similar process contrary to the
provisions
hereof, the Options shall immediately become null and void.

6. Termination of Employment.

A. Termination by Reason of Death or
Disability. If
a Participant's Termination of Employment (as hereinafter
defined)
is by reason of death or Disability (as defined in the
Plan), any
Options held by such Participant may be exercised, to the
extent
exercisable at the Participant's termination, by the
Participant (or
the legal representative of the Participant's estate) at any
time
within a period of one (1) year from the date of such
termination or
until the expiration of the stated term of the Option,
whichever
period is the shorter. For purposes of this Agreement,
"Termination
of Employment" means (1) a termination of service for
reasons other
than a military or personal leave of absence granted by the
Company
or a transfer of the Participant from or among the Company
and its
subsidiaries, as defined under Section 424(f) of the Code;
or (2)
when a subsidiary, with respect to which is employing a
Participant,
ceases to be a subsidiary, as defined under Section 424(f)
of the
Code.

B. Termination for Cause. Upon the
Termination of
Employment of the Participant for Cause, or if the Company
obtains
or discovers information after Termination of Employment
that such
Participant had engaged in conduct that would have justified
a
Termination of Employment for Cause during employment, all
outstanding Options of the Participant shall immediately be
canceled, provided, however, that the provisions of this
Section
6(B) shall cease to apply to any Options that are
outstanding at the
time of a Change of Control. For purposes of this
Agreement,
"Cause" means that the Committee shall have determined that
any of
the following events has occurred: (1) an act of fraud,
embezzlement, misappropriation of business or theft
committed by the
Participant in the course of his or her employment, or any
intentional or gross negligent misconduct of the Participant
which
injures the business or reputation of the Company; (2)
intentional
or gross negligent damage committed by the Participant to
the
property of the Company; (3) the Participant's failure or
refusal to
perform the customary duties and responsibilities of his or
her
position with the Company; (4) the Participant's breach of
fiduciary
duty, or the making of a false representation, to the
Company; (5)
the Participant's material breach of any covenant, condition
or
obligation required to be performed by him or her pursuant
to the
Plan, this Option Agreement or any other agreement between
him or
her and the Company or the Participant's intentional or
gross
negligent violation of any material written policy of the
Company;
(6) the Participant's willful failure or refusal to act in
accordance with any specific lawful instructions of a
majority of
the Board of Directors of the Company; or (7) commission by
the
Participant of a felony or a crime involving moral
turpitude.

C. Other Termination. If the Participant's
Termination of Employment is for any reason other than
death,
Disability, or Cause, any Options held by the Participant
may be
exercised, to the extent exercisable at the Participant's
termination, by the Participant at any time within a period
of 3
months from the date of such termination or until the
expiration of
the stated term of such Option, whichever period is shorter.

7. Termination. Unless terminated as provided
below or
otherwise pursuant to the Plan, each Incentive Stock Option
shall
expire on the tenth anniversary of this Agreement, and each
Non-
Qualified Stock Option shall expire on the tenth anniversary
of the
day after the date of this Agreement. Any Options that were
not
exercisable by the Participant at the time of the
Participant's
Termination of Employment shall terminate and be null and
void.

8. Rights as a Stockholder. The Participant shall
have no
rights as a stockholder with respect to any shares of Common
Stock
covered by the Options until the Participant shall have
become the
holder of record of the shares of Common Stock, and no
adjustments
shall be made for dividends in cash or other property,
distributions
or other rights in respect of any such shares of Common
Stock,
except as otherwise specifically provided for in the Plan.

9. Provisions of Plan Control. This Agreement is
subject
to all the terms, conditions and provisions of the Plan,
including,
without limitations the amendment provisions thereof, and to
such
rules, regulations and interpretations relating to the Plan
as may
be adopted by the Committee and as may be in effect from
time to
time. Any capitalized term used but not defined herein
shall have
the meaning ascribed to such term in the Plan. The annexed
copy of
the Plan is incorporated herein by reference. If and to the
extent
that this Agreement conflicts or is inconsistent with the
terms,
conditions and provisions of the Plan, the Plan shall
control, and
this Agreement shall be deemed to be modified accordingly.

10. Withholding of Taxes. The Company shall have
the
right to require, prior to the issuance or delivery of any
shares of
Common Stock, payment by the Participant of any Federal,
state or
local taxes required by law to be withheld.

The Committee may permit any such withholding
obligation
to be satisfied by reducing the number of shares of Common
Stock
otherwise deliverable or by permitting the Participant to
deliver
shares of Common Stock which the Participant owns (free and
clear of
any liens and encumbrances). If the Participant is required
to file
reports under Section 16(a) of the Exchange Act with respect
to
securities of the Company the Participant may elect to have
a
sufficient number of shares of Common Stock withheld or to
deliver
shares of Common Stock which the Participant owns to fulfil
such tax
obligations (hereinafter a "Withholding Election") only if
the
election complies with such conditions as are necessary to
prevent
the withholding or transfer of such shares from being
subject to
Section 16(b) of the Exchange Act. To the extent necessary
under
then current law, such conditions shall include the
following: (x)
the Withholding Election shall be subject to the disapproval
of the
Committee and (y) the Withholding Election is made (i)
during the
period beginning on the third business day following the
date of
release for publication of the quarterly or annual summary
statements of sales and earnings of the Company and ending
on the
twelfth business day following such date or is made in
advance but
takes effect during such period, (ii) at least six (6)
months prior
to the date of exercise of the Option, or (iii) during any
other
period in which a Withholding Election may be made under the
provisions of Rule 16b-3 promulgated pursuant to the
Exchange Act.
Any fraction of a share of Common Stock required to satisfy
such tax
obligations shall be disregarded and the amount due shall be
paid
instead in cash by the Participant

11. Listing and Other Conditions.

As long as the Common Stock is listed on a
national
securities exchange or system sponsored by a national
securities
association, the issue of any shares of Common Stock
pursuant to an
Option shall be conditioned upon such shares being listed on
such
exchange or system. The Company shall have no obligation to
issue
such shares unless and until such shares are so listed, and
the
right to exercise any Option with respect to such shares
shall be
suspended until such listing has been effected.

If at any time counsel to the Company shall be of
the
opinion that any sale or delivery of shares of Common Stock
pursuant
to an Option is or may in the circumstances be unlawful or
result in
the imposition of excise taxes under the statutes, rules or
regulations of any applicable jurisdiction, the Company
shall have
no obligation to make such sale or delivery, or to make any
application or to effect or to maintain any qualification or
registration under the Securities Act of 1933, as amended,
or
otherwise with respect to shares of Common Stock, and the
right to
exercise any Option shall be suspended until, in the opinion
of said
counsel, such sale or delivery shall be lawful or will not
result in
the imposition of excise taxes.

Upon termination of any period of suspension under
this
Section 11, any Option affected by such suspension which
shall not
then have expired or terminated shall be reinstated as to
all shares
available before such suspension and as to shares which
would
otherwise have become available during the period of such
suspension, but no such suspension shall extend the term of
any
Option. Notwithstanding anything else to the contrary
contained
herein, no shares of Common Stock shall be delivered by the
Company
to the Participant pursuant to this Agreement until a Form S-
8
registration statement (or any successor form) shall have
become
effective and shall be current with respect to the shares
being sold
and delivered hereunder.

If to the Company, to:

Lone Star Industries, Inc.
300 First Stamford Place
P. 0. Box 120014
Stamford, CT 06912-0014
Attn: Corporate Secretary

If to the Participant, to:

the address indicated on the signature page at the
end
of this Agreement

13. No Obligation to Continue Employment This
Agreement
does not guarantee that the Company or any of its
subsidiaries
will employ the Participant for any specific time period,
nor does
it modify in any respect the Company's or a subsidiary's
right to
terminate or modify the Participant's employment or
compensation.

IN WITNESS WHEREOF, the parties have executed this
Agreement on the date and year first above written.

LONE STAR INDUSTRIES, INC.

By:
Authorized Officer

[name]
[address]

(Form of Stock Option Agreement
for 75,000 Shares)

OPTION AGREEMENT PURSUANT TO
THE LONE STAR INDUSTRIES, INC.
MANAGEMENT STOCK OPTION PLAN

AGREEMENT, dated as of June 8, 1994 by and between
Lone
Star Industries, Inc. (the "Company") and _________________
(the
"Participant").

Preliminary Statement

The Compensation and Stock Option Committee of the
Board
of Directors (the "Board") of the Company (the "Committee"),
pursuant to the Company's Management Stock Option Plan,
annexed
hereto as Exhibit A (the "Plan), granted on June 8, 1994 to
the
Participant, as an Employee (as defined in the Plan), stock
options
(the "Options") to purchase the number of shares of the
Company's
common stock, par value $1.00 per share (the "Common
Stock"), set
forth below. This Agreement sets forth the terms of the
Options.

Accordingly, the parties hereto agree as follows:

3. Vesting. The Options are exercisable in
installments
as provided below, which shall be cumulative. To the extent
that
Options have become exercisable with respect to a number of
shares
as provided below, the Option may thereafter be exercised by
the
Participant, in whole or in part, at any time or from time
to time
prior to the expiration of the Options as provided herein.
The
following table indicates each date (the "Vesting Date")
upon which
the Participant shall be entitled to exercise Incentive
Stock
Options and Non-Qualified Stock Options with respect to the
number
of Shares indicated beside that date:

Vesting Date Number of Shares

Incentive Stock Non-
Qualified
Options Stock
Options

July 1, 1994 6,504 12,246
January 1, 1995 6,504 12,246
January 1, 1996 6,504 12,246
January 1, 1997 6,504 12,246

Upon the occurrence of a Change of Control (as
hereinafter
defined), all Options shall immediately become exercisable
with
respect to all shares of Common Stock subject thereto
regardless of
whether the Option has vested with respect to such shares.
For
purposes of this Agreement, "Change of Control" means the
occurrence
of any of the following events:

(ii) A change in the composition of the Board
such
that the individuals who, as of July 1,
1994,
comprise a class of directors of the
Board (the
members of each class of directors of
the Board
as of July 1, 1994 shall be hereinafter
referred to as an "Incumbent Class" and
the
members of all of the Incumbent Classes
shall
be hereinafter collectively referred to
as the
"Incumbent Board") cease for any reason
to
constitute at least a majority of the
class;
provided, however, for purposes of this
subsection that any individual who
becomes a
member of an Incumbent Class subsequent
to July
1, 1994 whose election, or nomination
for
election by the Company's stockholders,
was
approved in advance or contemporaneously
with
such election by a vote of at least a
majority
of those individuals who are members of
the
Incumbent Board and a majority of those
individuals who are members of such
Incumbent
Class (or deemed to be such pursuant to
this
proviso) shall be considered as though
such
individual were a member of the
Incumbent
Class; but, provided further, that any
such
individual whose initial assumption of
office
occurs as a result of either an actual
or
threatened election contest (as such
terms are
used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or
other
actual or threatened solicitation of
proxies or
consents by or on behalf of a Person
other than
the Board or actual or threatened tender
offer
for shares of the Company or similar
transaction or other contest for
corporate
control (other than a tender offer by
the
Company) shall not be so considered as a
member
of the Incumbent Class; or

(iii) The approval by the stockholders of the
Company
of a Corporate Transaction or, if
consummation
of such Corporate Transaction is subject,
at the
time of such approval by stockholders, to
the
consent of any government or governmental
agency, the obtaining of such consent
(either
explicitly or implicitly); excluding,
however,
such a Corporate Transaction pursuant to
which
(1) all or substantially all of the
individuals
and entities who are the beneficial
owners,
respectively, of the outstanding shares
of
Common Stock and Outstanding Company
Voting
Securities immediately prior to such
Corporate
Transaction will beneficially own,
directly or
indirectly, more than eighty percent
(80%) of,
respectively, the outstanding shares of
common
stock of the corporation resulting from
such
Corporate Transaction and the combined
voting
power of the outstanding voting
securities of
such corporation entitled to vote
generally in
the election of directors, (2) no Person
(other
than the Company, any employee benefit
plan (or
related trust) of the Company or the
corporation
resulting from such Corporate Transaction
and
any Person beneficially owning,
immediately
prior to such Corporate Transaction,
directly or
indirectly, twenty percent (20%) or more
of the
outstanding shares of Common Stock or
Outstanding Company Voting Securities, as
the
case may be) will beneficially own,
directly or
indirectly, twenty percent (20%) or more
of,
respectively, the outstanding shares of
common
stock of the corporation resulting from
such
Corporate Transaction or the combined
voting
power of the then outstanding securities
of such
corporation entitled to vote generally in
the
election of directors and (3) individuals
who
were members of the Incumbent Board will
constitute at least a majority of the
members of
board of directors of the corporation
resulting
from such Corporate Transaction; or

(iv) The approval of the stockholders of the
Company
of (1) a complete liquidation or
dissolution of
the Company or (2) the sale or other
disposition
of all or substantially all of the assets
of the
Company; excluding, however, such a sale
or
other disposition to a corporation, with
respect
to which following such sale or other
disposition, (A) more than eighty percent
(80%)
of, respectively, the then outstanding
shares of
common stock of such corporation and the
combined voting power of the then
outstanding
voting securities of such corporation
entitled
to vote generally in the election of
directors
will be then beneficially owned, directly
or
indirectly, by all or substantially all
of the
individuals and entities who were the
beneficial
owners, respectively, of the outstanding
shares
of Common Stock and Outstanding Company
Voting
Securities immediately prior to such sale
or
other disposition, (B) no Person (other
than the
Company and any employee benefit plan (or
related trust) of the Company or such
corporation and any Person beneficially
owning,
immediately prior to such sale or other
disposition, directly or indirectly,
twenty
percent (20%) or more of the outstanding
shares
of Common Stock or Outstanding Company
Voting
Securities, as the case may be) will
beneficially own, directly or indirectly,
twenty
percent (20%) or more of, respectively,
the then
outstanding shares of common stock of
such
corporation and the combined voting power
of the
then outstanding voting securities of
such
corporation entitled to vote generally in
the
election of directors and (C) individuals
who
were members of the Incumbent Board will
constitute at least a majority of the
members of
the board of directors of such
corporation.

4. Method of Exercise. Options may be exercised
in whole
or in part at any time during the Option term, by giving
written
notice of exercise to the Company specifying the number of
shares to
be purchased and whether such exercise is of Incentive Stock
Options
or of Non-Qualified Stock Options, or what combination of
Incentive
Stock Options and Non-Qualified Stock Options are being
exercised.
Such notice shall be accompanied by payment in full of the
Option
Price (i) in cash, by certified check or money order, or
(ii) in the
form of shares of Common Stock owned by the Participant (and
for
which the Participant has good title free and dear of any
liens and
encumbrances) based on the Fair Market Value of the shares
on the
date of exercise as determined by the Committee, or (iii) in
such
other form, or pursuant to such other arrangement for the
satisfaction of the Option Price, as the Committee may
accept. For
purposes of this Agreement, "Fair Market Value" shall mean
the
average of the high and low prices of a share of Common
Stock in New
York Stock Exchange composite market transactions, as
reported by
the Wall Street journal, or if the Common Stock shall not
have been
reported on such date, on the first day prior thereto on
which the
Common Stock was reported. No shares of Common Stock shall
be
issued until payment, as provided herein, therefor has been
made or
provided for.

5. Restriction on Transfer of Options. Except
as
otherwise provided herein, the Options granted hereby are
not
transferable otherwise than by will or under the applicable
laws of
descent and distribution. Non-Qualified Stock Options may
be
transferred (i) pursuant to a qualified domestic relations
order as
defined in the Code or Title I of the Employee Retirement
Income
Security Act, or the rules thereunder or (ii) to the
Participant's
immediate family (i.e., the Employee's children,
grandchildren and
spouse), or to one or more trusts for the benefit of such
immediate
family members, or partnerships in which such family members
are the
only partners, provided that such transfer shall be
permitted only
if the Participant does not receive any consideration for
such
transfer and written notice of such proposed transfer and
the
details thereof shall have been furnished to the Committee
(any
Options transferred pursuant to this clause shall continue
to be
subject to the same terms and conditions that were
applicable to
such Options immediately prior to the transfer and a holder
thereof
shall be treated as a Participant hereunder). During the
lifetime
of the Participant, Options may be exercised only by the
Participant
or the Participant's guardian or legal representative. In
addition,
except to the extent permitted by this Agreement, the
Options shall
not be assigned, negotiated, pledged or hypothecated in any
way
(whether by operation of law or otherwise), and the Options
shall
not be subject to execution, attachment or similar process.
Except
to the extent permitted by this Agreement, upon any attempt
to
transfer, assign, negotiate, pledge or hypothecate the
Options, or
in the event of any levy upon the Options by reason of any
execution, attachment or similar process contrary to the
provisions
hereof, the Options shall immediately become null and void.

6. Termination of Employment.

A. Termination by Reason of Death or
Disability. If
a Participant's Termination of Employment (as hereinafter
defined)
is by reason of death or Disability (as defined in the
Plan), any
Options held by such Participant may be exercised, to the
extent
exercisable at the Participant's termination, by the
Participant (or
the legal representative of the Participant's estate) at any
time
within a period of one (1) year from the date of such
termination or
until the expiration of the stated term of the Option,
whichever
period is the shorter. For purposes of this Agreement,
"Termination
of Employment" means (1) a termination of service for
reasons other
than a military or personal leave of absence granted by the
Company
or a transfer of the Participant from or among the Company
and its
subsidiaries, as defined under Section 424(f) of the Code;
or (2)
when a subsidiary, with respect to which is employing a
Participant,
ceases to be a subsidiary, as defined under Section 424(f)
of the
Code.

C. Other Termination. If the Participant's
Termination of Employment is for any reason other than
death,
Disability, or Cause, any Options held by the Participant
may be
exercised, to the extent exercisable at the Participant's
termination, by the Participant at any time within a period
of 3
months from the date of such termination or until the
expiration of
the stated term of such Option, whichever period is shorter.

7. Termination. Unless terminated as provided
below or
otherwise pursuant to the Plan, each Incentive Stock Option
shall
expire on the tenth anniversary of this Agreement, and each
Non-
Qualified Stock Option shall expire on the tenth anniversary
of the
day after the date of this Agreement. Any Options that were
not
exercisable by the Participant at the time of the
Participant's
Termination of Employment shall terminate and be null and
void.

8. Rights as a Stockholder. The Participant shall
have no
rights as a stockholder with respect to any shares of Common
Stock
covered by the Options until the Participant shall have
become the
holder of record of the shares of Common Stock, and no
adjustments
shall be made for dividends in cash or other property,
distributions
or other rights in respect of any such shares of Common
Stock,
except as otherwise specifically provided for in the Plan.

10. Withholding of Taxes. The Company shall have
the
right to require, prior to the issuance or delivery of any
shares of
Common Stock, payment by the Participant of any Federal,
state or
local taxes required by law to be withheld.

The Committee may permit any such withholding
obligation
to be satisfied by reducing the number of shares of Common
Stock
otherwise deliverable or by permitting the Participant to
deliver
shares of Common Stock which the Participant owns (free and
clear of
any liens and encumbrances). If the Participant is required
to file
reports under Section 16(a) of the Exchange Act with respect
to
securities of the Company the Participant may elect to have
a
sufficient number of shares of Common Stock withheld or to
deliver
shares of Common Stock which the Participant owns to fulfil
such tax
obligations (hereinafter a "Withholding Election") only if
the
election complies with such conditions as are necessary to
prevent
the withholding or transfer of such shares from being
subject to
Section 16(b) of the Exchange Act. To the extent necessary
under
then current law, such conditions shall include the
following: (x)
the Withholding Election shall be subject to the disapproval
of the
Committee and (y) the Withholding Election is made (i)
during the
period beginning on the third business day following the
date of
release for publication of the quarterly or annual summary
statements of sales and earnings of the Company and ending
on the
twelfth business day following such date or is made in
advance but
takes effect during such period, (ii) at least six (6)
months prior
to the date of exercise of the Option, or (iii) during any
other
period in which a Withholding Election may be made under the
provisions of Rule 16b-3 promulgated pursuant to the
Exchange Act.
Any fraction of a share of Common Stock required to satisfy
such tax
obligations shall be disregarded and the amount due shall be
paid
instead in cash by the Participant

11. Listing and Other Conditions.

As long as the Common Stock is listed on a
national
securities exchange or system sponsored by a national
securities
association, the issue of any shares of Common Stock
pursuant to an
Option shall be conditioned upon such shares being listed on
such
exchange or system. The Company shall have no obligation to
issue
such shares unless and until such shares are so listed, and
the
right to exercise any Option with respect to such shares
shall be
suspended until such listing has been effected.

If at any time counsel to the Company shall be of
the
opinion that any sale or delivery of shares of Common Stock
pursuant
to an Option is or may in the circumstances be unlawful or
result in
the imposition of excise taxes under the statutes, rules or
regulations of any applicable jurisdiction, the Company
shall have
no obligation to make such sale or delivery, or to make any
application or to effect or to maintain any qualification or
registration under the Securities Act of 1933, as amended,
or
otherwise with respect to shares of Common Stock, and the
right to
exercise any Option shall be suspended until, in the opinion
of said
counsel, such sale or delivery shall be lawful or will not
result in
the imposition of excise taxes.

Upon termination of any period of suspension under
this
Section 11, any Option affected by such suspension which
shall not
then have expired or terminated shall be reinstated as to
all shares
available before such suspension and as to shares which
would
otherwise have become available during the period of such
suspension, but no such suspension shall extend the term of
any
Option. Notwithstanding anything else to the contrary
contained
herein, no shares of Common Stock shall be delivered by the
Company
to the Participant pursuant to this Agreement until a Form S-
8
registration statement (or any successor form) shall have
become
effective and shall be current with respect to the shares
being sold
and delivered hereunder.

If to the Company, to:

Lone Star Industries, Inc.
300 First Stamford Place
P. 0. Box 120014
Stamford, CT 06912-0014
Attn: Corporate Secretary

If to the Participant, to:

the address indicated on the signature page at the
end
of this Agreement

IN WITNESS WHEREOF, the parties have executed this
Agreement on the date and year first above written.

LONE STAR INDUSTRIES, INC.

By:
Authorized Officer

[name]
[address]

LONE STAR INDUSTRIES, INC.

ROSEBUD INCENTIVE PLAN

ARTICLE I

Purpose

The purpose of this Rosebud Incentive
Plan (the "Plan") is to enable
Reorganized Lone Star (the "Company") to offer
key employees of the Company and
Affiliates (as defined below) incentive awards
based upon the consideration received in
connection with the disposition of assets or stock
owned, directly or indirectly, by Rosebud
Holdings, Inc. ("Rosebud"), thereby rewarding such
key employees, and strengthening
the mutuality of interests between key employees
of the Company, the Company's
shareholders and noteholders and Rosebud (and its
noteholders).

ARTICLE II
Definitions
Capitalized terms used in this Plan
shall have the following meanings:
2.1 "Affiliate" of the Company shall
mean any individual, corporation,
partnership, association, trust or unincorporated
organization that, directly or indirectly,
through one or more intermediaries, controls, is
controlled by, or is under common control
with, the Company.

2.2 "Asset Proceeds Notes" shall have
the meaning set forth in the
Modified Plan.

2.3 "Award" shall mean any award under
this Plan.

2.4 "Bankruptcy Court" shall have the
meaning set forth in the
Modified Plan.

2.5 "Board" shall mean the Board of
Directors of the Company.

2.6 "Committee" shall mean the
Compensation Committee of the Board.

2.7 "Disposition" shall mean any sale
of Rosebud stock and/or the
disposition of all or part of the Non-Core
Assets.

2.8 "Effective Date" shall have the
meaning set forth in the Modified Plan.

2.9 "Eligible Employees" shall mean the
employees of the Company
and its Affiliates who are eligible pursuant to
Article 5 to be granted Awards under this Plan.

2.10 "Modified Plan" shall mean the
Modified Amended Consolidated
Plan of Reorganization, dated November 4, 1993,
as amended, filed by the Company and
certain of its Affiliates and confirmed by the
Bankruptcy Court on February 17, 1994.

2.11 "Non-Core Assets" shall have the
meaning set forth in the
Modified Plan.

2.12 "Participant" shall mean an
Eligible Employee to whom an Award
has been made pursuant to this Plan.

2.13 "Payment" shall mean the payment in
full in cash of the
principal amount of the Asset Proceeds Notes,
together with all accrued interest thereon.

2.14 "Payment Date" shall mean the date
of the Payment.

2.15 "Reorganized Lone Star" shall have
the meaning set forth
in the Modified Plan.

2.16 "Value Pool Income" shall mean 20%
of the amount realized
on any Disposition in excess of the amount of the
Payment; provided, however, that the
value pool income may not be in excess of
$5,000,000.

ARTICLE III

Administration

3.1 The Committee. The Plan shall be
administered
and interpreted by the Committee.

3.2 Awards. The Committee shall, from
time to time, have full
authority to select Participants and grant Awards
payable from available Value Pool Income,
pursuant to the terms of this Plan. In
particular, the Committee shall have the
authority:
:

(a) to select the Eligible Employees to
whom Awards may
from time to time be granted hereunder; and

(b) to determine the terms and
conditions, not inconsistent
with the terms of this Plan, of any Award granted
hereunder (including, but not
limited to, any restriction or limitation, or any
forfeiture restrictions or waiver
thereof, regarding any Award, based on such
factors, if any, as the Committee
shall determine, in its sole discretion).

3.3 Guidelines. The Committee shall
have the authority
to adopt, alter and repeal such administrative
rules, guidelines and practices
governing this Plan and perform acts, including
the delegation of its administrative
responsibilites, as it shall, from time to time,
deem advisable; to construe and interpret
the terms and provisions of this Plan and any
Award issued under this Plan; and to
otherwise supervise the administration of this
Plan. The Committee may correct any
defect, supply any omission or reconcile any
inconsistency in this Plan in the manner
and to the extent it shall deem necessary to
carry this Plan into effect.

3.4 Decisions Final. Any decision,
interpretation or other
action made or taken by or at the direction of the
Company, the Board, or the Committee
(or any of its members) arising out of or in
connection with the Plan shall be within the
absolute discretion of all and each of them, as
the case may be, and shall be final,
binding and conclusive on the Company and all
employees and Participants and their
respective heirs, executors, administrators,
successors and assigns.

3.5 Reliance on Counsel. The Company,
the Board or the
Committee may consult with legal counsel, who may
be counsel for the Company or
other counsel, with respect to its obligations or
duties hereunder, or with respect to
any action or proceeding or any question of law,
and shall not be liable with respect
to any action taken or omitted by it pursuant to
the advice of such counsel.

ARTICLE IV
Value Pool Income Limitations

There is no limit as to the maximum
number of Awards granted
under this Plan from time to time; provided,
however, that notwithstanding anything
in this Plan to the contrary, no Participant may
receive more than 15% of the Value
Pool Income, the aggregate value of all Awards
granted under this Plan shall
not exceed the total amount of the Value Pool
Income, and no amount may be paid
under this Plan until the Payment has been made in
full in cash.

ARTICLE V
Eligibility
Key employees of the Company and its
Affiliates are eligible
to be granted Awards under this Plan, provided
that they are employed at the date of
the grant of an Award. Eligibility under this
Plan shall be determined by the Committee.

ARTICLE VI
Allocation and Payment of Value Pool
Income

Any Disposition(s) occurring in
connection with or after the
Payment Date shall result in Value Pool Income.
The Committee shall, as soon as
practicable after any such Disposition, distribute
the Value Pool Income to Participants,
subject to Section 9.4.

ARTICLE VII
Termination or Amendment of the
Plan
Notwithstanding any other provision of
this Plan, the Board
may at any time, and from time to time, amend, in
whole or in part, any or all
of the provisions of the Plan, or suspend or
terminate it entirely, retroactively or
otherwise.

ARTICLE VIII
Unfunded Plan
This Plan is intended to constitute an
"unfunded" plan for
incentive and deferred compensation. Nothing
contained herein shall give any
Participant any rights that are greater than those
of a general creditor of the Company.

ARTICLE IX
General Provisions
9.1 Other Plans. Nothing contained in
this Plan shall prevent
the Board from adopting other or additional
compensation arrangements, subject to
shareholder approval if such approval is required;
and such arrangements may be
either generally applicable or applicable only in
specific cases.

9.2 Additional Awards. Other than as
provided in Article IV
hereof, neither this Plan nor any grant of an
Award hereunder shall prevent or in any
manner limit the right of the Committee to grant
additional Awards.

9.3 No Right to Employment. Neither
this Plan nor the grant
of any Award hereunder shall give any Participant
or other employee any right with
respect to continuance of employment by the
Company or any Affiliate, nor shall they
be a limitation in any way on the right of the
Company or an Affiliate by which an
employee is employed to terminate his employment
at any time.

9.4 Withholding of Taxes. The Company
shall have the right
to deduct from any payment to be made pursuant to
this Plan, any Federal, state or
local taxes required by law to be withheld.

9.5 Successors and Assigns. The Plan
shall be binding on the
Company and its successors and assigns, including
any purchaser of all or substantially
all of the assets of the Company and the surviving
entity of any merger or consolidation
to which the Company is a party.

9.6 Governing Law. This Plan and
actions taken in connection
herewith shall be governed and construed in
accordance with the laws of the State of
New York (regardless of the law that might
otherwise govern under applicable New
York principles of conflict of laws).

9.7 Construction. Wherever any words
are used in this Plan in the
masculine gender they shall be construed as
though they were also used in the feminine
gender in all cases where they would so apply, and
wherever any words are used herein
in the singular form they shall be construed as
though they were also used in the plural
form in all cases where they would so apply.

9.8 Liability. No member of the Board,
no employee of the Company
and no member of the Committee (nor the Committee
itself) shall be liable for any act or
action hereunder, whether of omission or
commission, by any other member or employee
or by any agent to whom duties in connection with
the administration of the Plan have
been delegated or, except in circumstances
involving his bad faith, gross negligence or
fraud, for anything done or omitted to be done by
himself. Consistent with applicable
law, members of the Board and the Committee will
be entitled to indemnfication for
any act or action hereunder, whether of omission
or commission, to the fullest extent
permitted by the Company's Certificate of
Incorporation and By-Laws as now or hereinafter
in effect.

9.9 Other Benefits. No Award payment
under this Plan shall be
deemed compensation for purposes of computing
benefits under any retirement plan of the
Company or its Affiliates nor affect any benefits
under any other benefit plan now or
subsequently in effect under which the
availability or amount of benefits is related to
the
level of compensation.

9.10 Costs. The Company shall bear all
expenses included in
administering this Plan.

9.11 No Right to Same Benefits. Awards
need not be the same with
respect to each Participant.

ARTICLE X
Effective Date of Plan
The Plan shall become effective upon the
Effective Date.

ARTICLE XI
Term of Plan
No Award shall be granted pursuant to
this Plan sixty (60) days
after the later to occur of: (i) the disposition
of the stock of Rosebud; or (ii) the disposition
of all of the Non-Core Assets.

ARTICLE XII
Name of Plan
This Plan shall be known as "The Lone Star
Industries, Inc.
Rosebud Incentive Plan."

<TABLE>

EXHIBIT 11
LONE STAR INDUSTRIES, INC. AND CONSOLIDATED SUBSIDIARIES
Computation of Earnings Per Common Share (Unaudited)
(In Thousands Except Per Share Amounts)

Successor
Company Predecessor Company

For the Three For the Three For the Three For the Six
Months Ended Months Ended Months Ended Months Ended
June 30, March 31, June 30, June 30,
1994 1994 1993 1993
<S> <C> <C> <C> <C>

PER SHARE OF COMMON STOCK - PRIMARY

Income(loss) before cumulative ef $7,914 ($23,118) ($28,287) ($41,862)
Less: Provisions for preferred 0 1,278 1,278 2,556
Income(loss) before cumulative ef 7,914 (24,396) (29,565) (44,418)
Cumulative effect of change in - - - (782)
Net interest expense reduction 670 - - -
Net income(loss) applicable to co $8,584 ($24,396) ($29,565) ($45,200)

Weighted average shares outstandi 12,000 n/m n/m n/m
Options and warrants in excess 1,774 - - -
Net weighted average shares outst 13,774 n/m n/m ( n/m (2)
Income(loss) per common share:
Income(loss) before cumulative $0.62 n/m n/m n/m
Cumulative effect of change in - - - -
Net income(loss) $0.62 n/m n/m ( n/m (2)

PER SHARE OF COMMON STOCK ASSUMING FULL DILUTION

Income(loss) before cumulative ef $7,914 ($23,118) ($28,287) ($41,862)
Plus: Net interest expense redu 670 - - -
Less: Provisions for preferred - - - -
Income(loss) before cumulative ef 8,584 (23,118) (28,287) (41,862)
Cumulative effect of change in - - - (782)
Net income(loss) $8,584 ($23,118) ($28,287) ($42,644)

Common shares outstanding at begi 12,000 n/m n/m n/m
Conversion of $13.50 preferred shares outstanding
at beginning of period - n/m n/m n/m
Conversion of $4.50 preferred shares outstanding
at beginning of period - n/m n/m n/m
Options and warrants in excess of 1,774 - - -

Fully diluted shares outstanding 13,774 n/m n/m ( n/m (2)

Income(loss) per common share assuming full dilution
Income(loss) before cumulative $0.62 n/m n/m n/m
Cumulative effect of changes in - - - -
Net income(loss) $0.62 n/m n/m ( n/m (2)

(1) Due to the fact that the company's aggregate number of common stock
equivalents is in excess of 20% of its outstanding common stock,
primary and fully diluted earnings per share has been calculated using
the modified treasury stock method for the three months ended
June 30, 1994.

(2) Earnings per share are not meaningful due to reorganization and
revaluation entries and the issuance of 12 million shares of new
common stock.

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