AMERICAN STONE INDUSTRIES INC, DEF 14A, 1998-05-20

AMERICAN STONE INDUSTRIES INC
DEF 14A, 1998-05-20
CUT STONE & STONE PRODUCTS

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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>

AMERICAN STONE INDUSTRIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies: .......

(2) Aggregate number of securities to which transaction applies: ..........

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............

(4) Proposed maximum aggregate value of transaction: ......................

(5) Total fee paid: .......................................................

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid: ...............................................

(2) Form, Schedule or Registration Statement No.: .........................

(3) Filing Party: .........................................................

(4) Date Filed: ...........................................................

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AMERICAN STONE INDUSTRIES, INC.
8705 Quarry Road
P.O. Box 261
Amherst, Ohio 44001

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 24, 1998

To Our Stockholders:

The Annual Meeting of Stockholders of American Stone Industries, Inc. (the
"Company") will be held at the offices of Roulston & Company, Inc., 4000 Chester
Avenue, Cleveland, Ohio on Wednesday, June 24, 1998, at 10:30 a.m. E.S.T. to:

(1) Elect six Directors, each to serve for a term of one year;

(2) Consider and act upon a proposal to adopt an amendment to the
Company's Certificate of Incorporation to complete a reverse stock split of
the Common Stock;

(3) Consider and act upon a proposal to ratify all actions relating to
the exchange by holders of Common Stock of each share of Common Stock for
one-tenth of a share of Common Stock on or about May 30, 1997;

(4) Approve and adopt the American Stone Industries, Inc. 1998
Management Stock Option Plan;

(5) Approve and adopt the American Stone Industries, Inc. 1998
Non-Employee Director Stock Option Plan; and

(6) Transact such other business as may properly come before the
meeting.

Only those holders of Common Stock of record at the close of business on
May 13, 1998 are entitled to notice of and to vote at the Annual Meeting.

By Order of the Board of Directors,

Michael J. Meier
Secretary

May 20, 1998

The Company's Annual Report for the year ended December 31, 1997 is
enclosed. The Annual Report contains financial and other information about the
Company, but is not incorporated into the Proxy Statement and is not deemed to
be a part of the proxy soliciting material.

YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU MAY HOLD.
Please sign, date and return your proxy card in the return envelope provided as
soon as possible. This will not prevent you from voting your shares in person if
you are present at the Annual Meeting.
<PAGE> 3

AMERICAN STONE INDUSTRIES, INC.
8705 Quarry Road
P.O. Box 261
Amherst, Ohio 44001

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 24, 1998

This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of American Stone Industries, Inc. ("American Stone" or
the "Company") of proxies to be used at the Annual Meeting of Stockholders of
the Company to be held on Wednesday, June 24, 1998, at 10:30 a.m. E.S.T. at the
offices of Roulston & Company, Inc., 4000 Chester Avenue, Cleveland, Ohio (the
"Annual Meeting") and at any adjournment or postponement thereof.

The accompanying proxy is solicited by the Board of Directors of the
Company and will be voted in accordance with the instructions contained therein,
if it is returned duly executed and is not revoked. If no choice is specified on
the proxy it will be voted FOR the election of the six nominees for Director
named herein, FOR the approval of the proposal to adopt an amendment to the
Company's Certificate of Incorporation to complete the reverse stock split from
1997, FOR the proposal to ratify all actions relating to the exchange by holders
of Common Stock, par value $.001 per share (the "Common Stock"), of the Company
of each share of Common Stock for one-tenth of a share of Common Stock on or
about May 30, 1997, FOR the proposal to approve and adopt the American Stone
Industries, Inc. 1998 Management Stock Option Plan, and FOR the proposal to
approve and adopt the American Stone Industries, Inc. 1998 Non-Employee Director
Stock Option Plan. Any stockholder giving a proxy pursuant to this solicitation
may revoke it by giving written notice to the Secretary of the Company at any
time prior to its exercise, by voting in person at the Annual Meeting or by
submission of a duly executed proxy bearing a later date.

This Proxy Statement and accompanying form of proxy are being mailed to
stockholders on or about May 20, 1998.

The record date for determination of stockholders entitled to vote at the
Annual Meeting was the close of business on May 13, 1998. On that date,
certificates representing 1,631,364 shares of Common Stock were outstanding and
entitled to vote. On May 30, 1997, the Company instituted an exchange of each
share of Common Stock for one-tenth of a share of Common Stock (the "Exchange").
Before that date, there were certificates representing 16,313,638 shares of
Common Stock outstanding. Holders of Common Stock are entitled to one vote for
each share held by them. The Company has no other voting securities outstanding.

At the Annual Meeting, in accordance with the Delaware General Corporation
Law and the Company's Bylaws, the inspectors of election appointed by the Board
of Directors for the Annual Meeting will determine the presence of a quorum and
will tabulate the results of stockholder voting. The holders of a majority of
the outstanding shares of the Company's Common Stock entitled to vote at the
meeting, present in person or by proxy, will constitute a quorum. The inspectors
of election intend to treat properly executed proxies that are marked, with
respect to the election of Directors, as "vote withheld" or, with respect to any
other proposals, "abstain," as shares present for purposes of determining
whether a quorum is present. Likewise, broker non-votes will be counted in
determining a quorum.

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The six nominees for Director receiving the greatest number of votes will
be elected. In the election of Directors, votes may be cast in favor or
withheld; votes that are withheld or broker non-votes will have no effect on the
outcome of the election of Directors.

In voting on matters other than the election of Directors, proposals will
be decided by the vote of holders of a majority of the outstanding shares
entitled to vote thereon present in person or by proxy at the meeting, unless
otherwise provided by law or by the Certificate of Incorporation. In voting on
such other matters, votes may be cast in favor, against or abstained.
Abstentions will count as present for purposes of the proposal on which the
abstention is noted and will have the effect of a vote against the proposal.
Broker non-votes, however, are not counted as present and entitled to vote for
purposes of determining whether a proposal has been approved and will have no
effect on the outcome of any proposal requiring the affirmative vote of the
holders of a majority of the outstanding shares present and entitled to vote.
The amendment to the Company's Certificate of Incorporation requires the
affirmative vote of a majority of the outstanding shares of Common Stock of the
Company. Consequently, broker non-votes will have the same effect as a vote
against the proposed amendment to the Certificate of Incorporation.

ELECTION OF DIRECTORS

Under the Company's Bylaws adopted by the stockholders on November 22,
1996, the authorized number of Directors of the Company shall be not less than
three, nor more than seven, as may be fixed from time to time by resolution of
the Board of Directors, and each Director shall be elected or designated to
serve and hold office until the next Annual Meeting of Stockholders. There are
currently six Directors of the Company, all of whom have been nominated to be
re-elected for one-year terms. Unless otherwise specified, all duly executed
proxies will be voted FOR the election of the nominees named below. The persons
designated as proxies, however, reserve full discretion to cast votes for other
persons if any nominee is unable to serve. All nominees have indicated their
willingness to serve as Directors, if elected, and the Company has no reason to
believe they will be unable to serve.

Information about the Director nominees is set forth in the following
paragraphs.

DIRECTOR NOMINEES FOR TERMS EXPIRING IN 1999

<TABLE>
<S> <C>
Enzo Costantino................ Mr. Costantino has served as Treasurer of the Company and as
Age 36 a Director since 1996. He has been Secretary and Treasurer
Director since 1996 of Terrazzo, Mosaic & Tile Company, Ltd. since 1994.
Terrazzo, Mosaic & Tile is a subcontractor for all hard and
soft commercial surfaces located in Toronto, Ontario. Prior
to joining Terrazzo, Mosaic & Tile, Mr. Costantino was the
controller of Daicon Contractors, a general contractor
located in Toronto, Ontario, from 1989 to 1994, and the cost
accounting manager for Canada Packers, a meat processor
located in Toronto, Ontario, from 1983 to 1989.
Glen Gasparini................. Mr. Gasparini has served as a Director since 1995 and was
Age 45 President and Chief Executive Officer of the Company from
Director since 1995 1995 to 1997. He has been President of Terrazzo, Mosaic &
Tile Company, Ltd. since 1975. Terrazzo, Mosaic & Tile is a
subcontractor for all hard and soft commercial surfaces
located in Toronto, Ontario.
</TABLE>

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<TABLE>
<S> <C>
Jacquita K. Hauserman.......... Ms. Hauserman has served as a Director of the Company since
Age 55 1997. She has been an independent consultant with American
Director since 1997 Management Systems since February 1998. She was employed by
Centerior Energy from 1982 until 1998, most recently as
Vice-President of Business Services. Previous positions with
Centerior included Vice-President of Customer Support,
Vice-President of Customer Service and Community Affairs and
Vice-President of Administration. Centerior Energy, located
in Cleveland, Ohio, was a holding company for Cleveland
Electric Illuminating and Toledo Edison electric utilities
until it was purchased by Ohio Edison in 1997. She is also a
Director and Trustee of several non-profit organizations in
the Cleveland area.
Michael J. Meier............... Mr. Meier has served as Secretary of the Company and as a
Age 43 Director since 1996. He has been Vice-President of Finance,
Director since 1996 Chief Financial Officer, Secretary and Treasurer of
Defiance, Inc. (Nasdaq NM: DEFI) since 1990. Defiance is a
supplier of tooling systems, testing services, specialty
anti-friction bearings and precision-machined products to
the U.S. transportation industry, with headquarters in
Cleveland, Ohio.
Timothy I. Panzica............. Mr. Panzica has served as a Director of the Company since
Age 43 1996. He has been Executive Vice-President of Panzica
Director since 1996 Construction Company since 1981. Panzica Construction
Company, a 42 year old firm located in Cleveland, Ohio is a
full service construction management/general contracting
organization with expertise in all aspects of commercial
construction. Panzica Construction Company is part of the
Panzica Group of Companies which specializes in real estate
development, design/build, and property management.
Thomas H. Roulston II.......... Mr. Roulston has served as Chairman of the Board of the
Age 65 Company and as a Director since 1996. He has been Chairman
Director since 1996 of Roulston & Company, Inc. since 1990. Roulston & Company
is a registered investment advisor located in Cleveland,
Ohio. Mr. Roulston is also Chairman of the Board of
Directors of Defiance, Inc. (Nasdaq NM: DEFI). Defiance is a
supplier of tooling systems, testing services, specialty
anti-friction bearings and precision-machined products to
the U.S. transportation industry, with headquarters in
Cleveland, Ohio. Mr. Roulston is also a Director of several
privately-held companies.
</TABLE>

INFORMATION REGARDING MEETINGS AND
COMMITTEES OF THE BOARD OF DIRECTORS

COMMITTEES OF THE BOARD OF DIRECTORS

The Audit Committee, established in September 1996 and consisting entirely
of nonemployee Directors, met two times in fiscal 1997. The committee reviews
the external audit plan and activities, the Company's annual financial
statements and the Company's system of internal and financial controls. The
committee also reviews all significant fees for audit, audit-related and
nonaudit services provided by the independent auditors and recommends the annual
selection of independent auditors to the Board. Members of the audit committee
are Michael J. Meier (Chairman) and Enzo Costantino.

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The Compensation Committee, established in September 1996 and consisting
entirely of nonemployee Directors, did not meet in fiscal 1997. The committee
administers the incentive plans of the Company and its subsidiaries, approves
changes in senior executive compensation and recommends changes in the Company's
incentive plans to the Board. The committee also recommends the retainer and
attendance fees for Directors. Members of the compensation committee are Timothy
I. Panzica (Chairman), Jacquita K. Hauserman and Thomas H. Roulston II.

The Executive Committee, established in September 1996 and consisting
entirely of nonemployee Directors, did not meet in fiscal 1997. The committee
acts upon matters requiring Board action during the intervals between Board
meetings and includes all the functions of the Board of Directors other than the
filling of vacancies in the Board of Directors or in any of its committees.
Members of the executive committee are Thomas H. Roulston II (Chairman) and Glen
Gasparini.

ATTENDANCE AT MEETINGS

The Board of Directors of the Company met eleven times during fiscal 1997.
During fiscal 1997 each Director attended at least 75 percent of the meetings of
the Board of Directors and any Committee of the Board of Directors on which he
or she served.

COMPENSATION OF DIRECTORS

No Directors' fees are paid to Directors. All Directors are reimbursed for
reasonable out-of-pocket expenses incurred in connection with their services as
Directors.

COMMON STOCK OWNERSHIP

BENEFICIAL OWNERSHIP OF STOCKHOLDERS
OWNING MORE THAN FIVE PERCENT

The following table sets forth beneficial owners known to the Company of
more than five percent of the Company's outstanding Common Stock as of April 30,
1998. All information with respect to beneficial ownership has been furnished by
the respective five percent beneficial holder.

<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED TOTAL SHARES
------------------- ------------------ ------------
<S> <C> <C>
Roulston Ventures Limited Partnership(1)................ 400,000 24.5%
4000 Chester Avenue Cleveland, OH 44103
TMT Masonry, Ltd.(2).................................... 400,000 24.5%
900 Keele Street Toronto, Ontario, Canada M6N 3E7
</TABLE>

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(1) Mr. Thomas H. Roulston II, Director and Chairman of the Board, is a general
partner of Roulston Ventures Limited Partnership. Refer to the table
regarding Directors and executive officers for detail.

(2) Mr. Glen Gasparini, Director, is President and 75% shareholder of TMT
Masonry, Ltd. Refer to the table regarding Directors and executive officers
for detail.

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BENEFICIAL OWNERSHIP OF DIRECTORS
AND EXECUTIVE OFFICERS

The following table sets forth the number of shares of Common Stock
beneficially owned by each Director and executive officer of the Company as of
April 30, 1998. All information with respect to beneficial ownership has been
furnished by the respective Director and executive officer. All shares shown in
the table reflect sole voting and investment power unless otherwise indicated.

<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER(1) BENEFICIALLY OWNED TOTAL SHARES(2)
------------------- ------------------ ---------------
<S> <C> <C>
Thomas H. Roulston II................................. 450,000(3) 27.6%
Glen Gasparini........................................ 409,570(4) 25.1%
David Tyrrell......................................... 48,500(5) 2.9%
Enzo Costantino....................................... 500 --
Jacquita K. Hauserman................................. -- --
Michael J. Meier...................................... -- --
Timothy I. Panzica.................................... -- --
All Directors and executive officers as a group (7
persons)............................................ 908,570(6) 54.9%
</TABLE>

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

(1) The address of each beneficial owner is c/o American Stone Industries, Inc.,
P.O. Box 261, Amherst, Ohio 44001.

(2) Based on 1,631,364 shares of Common Stock outstanding on April 30, 1998,
adjusted for shares subject to options exercisable within 60 days following
April 30, 1998 held either by the named individuals or by the group as a
whole.

(3) Includes 10,000 shares held by Mr. Roulston's wife. Mr. Roulston disclaims
beneficial ownership of these shares. Shares of Common Stock beneficially
owned by Mr. Roulston also include 400,000 shares held by Roulston Ventures
Limited Partnership, of which Mr. Roulston is a general partner and 9%
owner. Mr. Roulston's wife is also a 9% owner of Roulston Ventures Limited
Partnership. Mr. Roulston has shared voting and investment power of Roulston
Ventures Limited Partnership in a fiduciary capacity between himself and
Scott D. Roulston, his son.

(4) Shares of Common Stock beneficially owned by Mr. Gasparini include 400,000
shares held by TMT Masonry, Ltd., of which Mr. Gasparini is President and a
75% shareholder and 4,170 shares held by Terrazzo, Mosaic & Tile Company,
Ltd., of which Mr. Gasparini is President and a 75% shareholder.

(5) Includes options, exercisable within 60 days of April 30, 1998, to purchase
25,000 shares.

(6) Includes options, exercisable within 60 days of April 30, 1998, to purchase
25,000 shares.

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EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth the annual and long-term compensation for
the years ended December 31, 1997 and 1996, for the Company's Chief Executive
Officer (the "Named Executive Officer"). No other executive officers received
compensation whose annual salary and bonus exceeded $100,000 during that year.

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
--------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ---------- ------------
------------------------------------------- SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION OPTIONS COMPENSATION
------------------ ---- ------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
David Tyrrell............ 1997 $96,000 $13,733 -- -- --
President and Chief
Executive 1996 $96,000 $ 3,300 -- -- --
Officer, American Stone
Industries, Inc.(2)
</TABLE>

The Named Executive Officer did not receive personal benefits or perquisites
during fiscal 1997 or 1996 in excess of the lesser of $50,000 or 10% of his
aggregate salary and bonus.
- ---------------

(1) Based on service during the fiscal year indicated, though not paid until
after the fiscal year.

(2) All amounts are in Canadian dollars.

OPTION GRANTS IN LAST FISCAL YEAR

The Company did not grant any options during the fiscal year ended December
31, 1997.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES

The following table summarizes options which were exercised during fiscal
1997 and presents the value of unexercised options held by each of the Named
Executive Officers at fiscal year end.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT FISCAL YEAR-END(#) FISCAL YEAR-END($)(1)
SHARES ACQUIRED VALUE ----------------------------- ----------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David Tyrrell........ 0 0 25,000 0 0 0
</TABLE>

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

(1) All stock options were out of the money (the exercise price was higher than
the market price) at the fiscal year end of the Company.

PENSION AND RETIREMENT PLANS

The Company does not have a pension or retirement plan.

EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

The Company has an employment agreement with Mr. Tyrrell dated May 1996
under which he is to receive a base annual salary of $96,000 (Canadian), a
monthly car allowance of $500 (Canadian) and an annual bonus based upon the
adjusted net income of the Company's American Stone Corporation subsidiary. This
contract expires in 2001.

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The Company does not have any other agreements regarding employment, and
does not have any change-in-control arrangements.

CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS

No Director has any family relationship to any other Director of the
Company.

In 1996, Mr. Glen Gasparini, a Director of the Company, recommended that
the Company acquire two Canadian entities. When the Board declined to pursue the
transaction to concentrate their efforts in the United States, Mr. Gasparini and
Mr. Enzo Costantino, a Director of the Company, pursued the acquisition
individually with the Board's approval. The Company has received appropriate
indemnifications that it is not a party to and has no responsibility for or out
of the proposal and acquisition by Messrs. Gasparini and Costantino.

In 1996, the Company purchased from David Tyrrell all of the issued and
outstanding common shares of Tyrrell Stone Design, Ltd., an Ontario corporation.
In consideration of this transaction, Mr. Tyrrell received 20,000 shares of the
Company's Common Stock, after giving effect to the reverse stock split, options
to purchase up to 25,000 shares of Common Stock at $5.00 per share, after giving
effect to the reverse stock split, and the Company agreed to employ him as
President of the Company's American Stone Corporation subsidiary. Under the
terms of his employment agreement, Mr. Tyrrell was given a base salary of
$96,000 Canadian per year.

Terrazzo, Mosaic & Tile Company, Ltd., of which Mr. Gasparini is President
and a 75% shareholder, advanced $29,000 in January 1996 to the Company. The debt
was converted to common stock and Terrazzo, Mosaic & Tile received 11,600 shares
of Common Stock, after giving effect to the reverse stock split, in exchange for
the debt. Terrazzo, Mosaic & Tile Company, Ltd. was also owed $748,345 for
advances to the Company through August 1996. On August 28, 1996, this loan was
converted to paid-in-capital.

In February 1996, the Company purchased the operating assets of Cleveland
Quarries, L.P., a limited partnership in which American Stone Corporation was a
limited partner with a 89.1% ownership interest. Consideration included cash,
assumption of certain liabilities and other consideration totaling $2,320,259.
In negotiating this purchase price, management took into consideration, among
other things, (i) the benefit to the Company of acquiring title to the quarries
owned by Cleveland Quarries, L.P., (ii) the potential economic benefit to the
Company of securing title to these assets, especially the land and reserves of
stone, and (iii) the value of the assets to be acquired. At the time of the
transaction, the general partner of Cleveland Quarries, L.P. was Slate and Stone
Corporation of American, Ltd., which held a one percent interest in the limited
partnership.

On November 22, 1996, TMT, Roulston Ventures, Ltd. ("Roulston Ventures")
and the Company entered into a Share Purchase Option Agreement ("Agreement").
Pursuant to the terms of the Agreement, in the event that TMT or Roulston
Ventures intends to sell all or any part of their common shares of the Company,
the selling party shall first offer to the Company the opportunity to purchase
such shares and, in the event that the Company declines to purchase such shares,
shall offer such shares to the other party to the Agreement. Upon tender, the
Company has 15 days within which to accept the offer before the shares will be
made available to the other party to the Agreement. In the event that neither
the Company nor the other party buys the shares, they may be sold to a third
party.

During the year ended December 31, 1996 the Company paid a total of $22,233
for expenses such as stationery and business supplies through TMT Masonry, Ltd.,
an affiliated company. At December 31, 1996, accounts payable to TMT Masonry,
Ltd. totaled $9,735 and were satisfied in the ordinary course of business in
1997.

On November 26, 1997, the Board unanimously approved (with Mr. Panzica
abstaining) the award of a contract to Panzica Construction Company, of which
Mr. Panzica is Executive Vice President, to construct a foundation for a new
gang saw. The contract is for $62,142, and was selected by the Board from among
three
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<PAGE> 10

bids, of which Panzica Construction Company's was the lowest. The Board believes
this contract was entered into on terms as favorable to the Company as would
have been available from an unrelated party.

The Company has adopted a policy whereby in the event that management
recommends the Company, or any of its subsidiaries, enter into any business
transactions with a related party, such transactions will be reviewed by a
majority of the Board who are independent. In addition, if a Director is
affiliated with the subject related party, that Director will abstain from
voting on any such proposal.

NOMINATION OF DIRECTORS

The Board considers suitable candidates for membership on the Board from
time to time, and will consider nominees recommended by stockholders.
Stockholders wishing to submit a recommendation should write to the Board in
care of Mr. Thomas H. Roulston II, Chairman of the Board, American Stone
Industries, Inc., P.O. Box 261, Amherst, Ohio 44001.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's Directors, executive officers and
greater than ten percent stockholders to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and to furnish the
Company with copies of all such filings. Based solely on its review of copies of
these reports furnished to the Company and, where applicable, any written
representation that no reports were required, the Company believes during fiscal
1997 all Section 16(a) filing requirements were met.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee was established in September 1996 and consists
entirely of nonemployee Directors who have never been employed by the Company or
any of its subsidiaries. The committee administers the incentive plans of the
Company and its subsidiaries, approves changes in senior executive compensation
and recommends changes in the Company's incentive plans to the Board. The
committee also recommends the retainer and attendance fees for Directors.

The only executive of the Company who receives compensation is David
Tyrrell, President of the Company. Mr. Tyrrell's compensation is determined by
an employment agreement dated May 1996 under which he is to receive a base
annual salary of $96,000 (Canadian), a monthly car allowance of $500 (Canadian)
and an annual bonus based upon the adjusted net income of the Company's American
Stone Corporation subsidiary. This contract was negotiated as part of the
purchase of Tyrrell Stone Design, Ltd. by the Company in 1996, and expires in
2001.

No Directors' fees have been or are currently paid to Directors.

Respectfully submitted,

Timothy I. Panzica, Chairman
Jacquita K. Hauserman
Thomas H. Roulston II

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APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION
TO COMPLETE THE REVERSE STOCK SPLIT OF THE COMMON STOCK
AND
RATIFICATION OF ACTIONS TAKEN IN CONNECTION WITH THE EXCHANGE
BY HOLDERS OF COMMON STOCK OF EACH SHARE OF COMMON STOCK FOR
ONE-TENTH OF A SHARE OF COMMON STOCK

GENERAL

At the Annual Meeting of Stockholders held on November 22, 1996 (the "1996
Annual Meeting"), the stockholders approved a one for ten reverse stock split
(the "1996 Reverse Stock Split"). According to the language of the 1996 Reverse
Stock Split resolution approved at the 1996 Annual Meeting, the 1996 Reverse
Stock Split was to become effective on or before December 1, 1997. On June 1,
1997, pursuant to the resolution approved by the stockholders at the 1996 Annual
Meeting, each share of Common Stock was exchanged for one-tenth of a share of
Common Stock (the "Exchange"). It has recently come to the Company's attention
that the Company did not meet certain technical requirements of the Delaware
General Corporation Law necessary to effect the 1996 Reverse Stock Split.

To cure any technical deficiencies relating to the 1996 Reverse Stock
Split, the Board of Directors of the Company is hereby soliciting stockholder
approval of the Certificate of Amendment attached hereto as Exhibit A (the
"Certificate of Amendment") and incorporated herein by reference, to complete
the reverse stock split with respect to all issued shares of Common Stock (the
"Reverse Stock Split"). By unanimous written consent dated as of April 15, 1998,
the Board of Directors approved the Certificate of Amendment and declared the
Amendment advisable for the Company.

EFFECTS OF THE REVERSE SPLIT

If effected, the Reverse Stock Split will memorialize the prior reduction
of the number of outstanding shares of Common Stock from 16,313,638 shares to
1,631,364 shares of Common Stock. All outstanding options and the exercise or
conversion price thereof have been proportionately adjusted for the Reverse
Stock Split.

- Each stockholder's proportionate equity interest and voting ability in
the Company would remain the same.

- The number of authorized shares of Common Stock would remain the same.

- The par value of the shares of Common Stock would remain the same.

- Each of the rights currently accruing to holders of the Common Stock
would remain the same.

Stockholders who do not vote in favor of the Reverse Stock Split have no
appraisal rights under the Delaware General Corporation Law, the Company's
Certificate of Incorporation or the Company's Bylaws in connection with the
Reverse Stock Split.

REASONS FOR THE REVERSE SPLIT

The Board of Directors believes that completing the Reverse Stock Split is
beneficial to the Company and its stockholders as it may facilitate the
Company's satisfaction of the listing requirements of The Nasdaq SmallCap
Market, which require, among other things, that a listed security have a bid
price in excess of $4.00 per share. No assurance can be given that the Company
will eventually be able to meet the listing requirements for The Nasdaq

9
<PAGE> 12

SmallCap Market following the completion of the Reverse Stock Split. In
addition, as discussed above, the Company seeks to cure any technical
difficulties relating to the Reverse Stock Split in accordance with the
requirements of the Delaware General Corporation Law.

MECHANICS OF THE REVERSE SPLIT

If the Reverse Stock Split is approved by the requisite vote of the
Company's stockholders, the Company anticipates that the Certificate of
Amendment will be filed no later than June 26, 1998. The Board of Directors may
make any and all changes to the form of Certificate of Amendment, a copy of
which is attached hereto as Exhibit A, that it deems necessary in order to file
it with the Delaware Secretary of State and complete the Reverse Stock Split.
Because stockholders have already exchanged certificates representing each share
of Common Stock for one-tenth of a share of Common Stock, no further actions
will be necessary to carry out the Reverse Stock Split.

RATIFICATION

At the Annual Meeting, stockholders will also be asked to vote on the
ratification of all corporate actions heretofore taken by the Directors,
officers and agents of the Company in connection with the Exchange. By unanimous
written consent dated as of April 15, 1998, the Board of Directors ratified the
corporate actions taken in connection with the Exchange. Stockholder
ratification of the corporate actions taken in connection with the Exchange is
not required by law. Because the 1996 Reverse Stock Split was not effected in
accordance with the technical requirements of Delaware General Corporation Law,
however, the Board of Directors believes it appropriate to submit to the
stockholders the proposal to ratify the corporate actions taken in connection
with the Exchange. Stockholders should thus be aware that by ratifying the
Exchange, they may effectively be waiving their right to challenge any acts
taken in connection with the Exchange.

The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock of the Company present, either in person or by proxy, at the
Annual Meeting is required to approve the ratification of the Exchange. Thus,
stockholders who vote to abstain will in effect be voting against the proposal.
Broker non-votes, however, are not counted as present for determining whether
this proposal has been approved and have no effect on its outcome. The approval
of the Certificate of Amendment to effect the Reverse Stock Split requires the
affirmative vote of a majority of the outstanding shares of Common Stock of the
Company. Consequently, abstentions and broker non-votes will have the same
effect as a vote against the proposal to amend the Certificate of Incorporation.

THE BOARD OF DIRECTORS OF THE COMPANY BELIEVES THAT BOTH THE REVERSE STOCK SPLIT
AND RATIFICATION OF THE EXCHANGE ARE IN THE BEST INTERESTS OF BOTH THE COMPANY
AND ITS STOCKHOLDERS, AND RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE REVERSE
STOCK SPLIT AND THE RATIFICATION.

PROPOSAL TO APPROVE AND ADOPT THE
1998 MANAGEMENT STOCK OPTION PLAN

Stockholders will be asked at the Annual Meeting to vote on a proposal to
approve and adopt the American Stone Industries, Inc. 1998 Management Stock
Option Plan (the "Management Plan"). The Management Plan was adopted by the
Board of Directors on April 22, 1998, subject to stockholder approval. The
Compensation Committee of the Board of Directors (the "Committee") recommended
approval of the Management Plan to provide incentives to the Company's
management employees. The Management Plan provides the Compensation
10
<PAGE> 13

Committee with broad discretion to fashion appropriate awards of stock options
to individuals whose services are anticipated to aid in the long-term growth and
performance of the Company.

The full text of the Management Plan is attached hereto as Exhibit B to
this Proxy Statement. Important details about specific provisions of the
Management Plan are more fully described below, but the following summary is not
intended to be complete and it is qualified in its entirety by reference to the
Management Plan.

GENERAL

The Management Plan is a flexible plan that will give the Committee broad
discretion to fashion the terms of awards in order to provide the Company's
management employees with stock options that are appropriate under the
circumstances.

All management employees of the Company and its subsidiaries will be
eligible to be selected by the Committee for participation in the Management
Plan. The Management Plan will be administered by the Committee. Each member of
the Committee qualifies as a "non-employee director" under Rule 16b-3 of the
Exchange Act.

Authority of Committee. The Committee has authority to: (i) select the
persons who will receive awards (persons receiving awards under the Management
Plan are known as "Participants"); (ii) grant awards; (iii) determine the terms,
conditions and restrictions applicable to the awards (including the forms of
agreements for such awards); (iv) determine how the exercise price is paid; (v)
modify or replace outstanding awards within the limits of the Management Plan;
(vi) accelerate the date on which awards become exercisable; (vii) waive the
restrictions and conditions applicable to awards; (viii) defer payout on awards;
and (ix) establish rules governing the Management Plan, including special rules
applicable to awards made to employees who are foreign nationals or are employed
outside the United States.

The Management Plan generally does not establish limits on the exercise
price of awards, earn-out or vesting periods, or termination provisions in the
event of termination of employment. Instead, the Committee is given the broad
authority to establish these terms in order to best achieve the purposes of the
Management Plan.

Within certain limits, the Committee may delegate its authority under the
Management Plan to any other person or persons. Any decision made by the
Committee in connection with the administration, interpretation and
implementation of the Management Plan and of its rules and regulations will be,
to the extent permitted by law, final and binding upon all persons. Neither the
Committee nor any of its members is liable for any act taken by the Committee
pursuant to the Management Plan. No member of the Committee is liable for the
act of any other member.

Number of Shares of Common Stock. The aggregate number of shares of Common
Stock that may be subject to awards granted under the Management Plan during its
term is 300,000, subject to certain adjustments. Shares of Common Stock issued
under the Management Plan may be either newly-issued shares or treasury shares.
The assumption of obligations in respect of awards granted by an organization
acquired by the Company, or the grant of awards under the Management Plan in
substitution for any such awards, will not reduce the number of shares of Common
Stock available in any fiscal year for the grant of awards under the Management
Plan.

Shares of Common Stock subject to an award that is forfeited, terminated,
or canceled without having been exercised will generally be available again for
grant under the Management Plan, without reducing the number of shares of Common
Stock available in any fiscal year for grant of awards under the plan.

11
<PAGE> 14

In the event of a recapitalization, stock dividend, stock split,
distribution to stockholders (other than cash dividends), or similar
transaction, the Committee can adjust, in any manner that it deems equitable,
the number and class of shares that may be issued under the Management Plan and
the number and class of shares, and exercise price, applicable to outstanding
awards.

Grant of Awards. The Management Plan provides for the grant of stock
options, which may either be incentive stock options or "non-qualified" stock
options. These awards are payable in shares of Common Stock. Awards may also be
granted to replace other awards granted by the Company. If an employee pays all
or part of the exercise price or taxes associated with an award by the transfer
of shares of Common Stock, the Committee may, in its discretion, grant a new
award to replace the shares of Common Stock that were transferred. The Company
may also assume awards granted by an organization acquired by the Company or may
grant awards in replacement of any such awards.

Payment of Exercise Price. The exercise price of a stock option may be
paid in cash, by the transfer of shares of Common Stock, or by a combination of
these methods, as and to the extent permitted by the Committee. The Committee
may prescribe any other method of paying the exercise price that is determined
to be consistent with applicable law and the purpose of the Management Plan.

Taxes Associated with Awards. Prior to the payment of an award, the
Company may withhold, or require a Participant to remit to the Company, an
amount of cash sufficient to pay any federal, state, and local taxes associated
with the award. In addition, the Committee may permit participants to pay the
taxes associated with an award by the transfer of shares of Common Stock, or by
a combination of cash and the transfer of shares.

Termination of Awards. The Committee may cancel any awards if the
participant, without the Company's prior written consent, (i) renders services
for an organization, or engages in a business, that is (in the judgment of the
Committee) in competition with the Company, or (ii) discloses to anyone outside
of the Company, or uses for any purpose other than the Company's business, any
confidential information relating to the Company.

Change in Control. In the event of a change in control of the Company, as
defined in the Management Plan, the Committee shall have the right, in its sole
discretion, to (i) accelerate the exercisability of any stock options
notwithstanding any limitations set forth in the Management Plan; (ii) cancel
all outstanding stock options in exchange for the kind and amount of shares of
the surviving or new corporation, cash, securities, evidences of indebtedness,
other property or any combination thereof receivable in respect of one share of
Common Stock upon consummation of the transaction in question (the "Acquisition
Consideration") that the Participant would have received had payment therefor
been made by the Company prior to such transaction in shares of Common Stock;
(iii) cause the Participant to have the right thereafter and during the term of
the stock option to receive upon exercise thereof the Acquisition Consideration
receivable upon the consummation of such transaction by a holder of number of
shares of Common Stock that might have been obtained upon exercise of all or any
portion thereof; or (iv) take such other action as it deems appropriate to
preserve the value of the award to the Participant. Alternatively, the Committee
shall also have the right to require any purchaser of the Company's assets or
stock, as the case may be, to take any of the actions set forth in the preceding
sentence as such purchaser may determine to be appropriate or desirable.

Amendment, Effective Date, and Termination of the Management Plan. The
Board of Directors may amend, suspend, or terminate the Management Plan at any
time. Stockholder approval for any such amendment will be required if the
amendment results in: (i) an increase, subject to certain exceptions, in the
maximum number of shares of Common Stock that may be subject to awards granted
under the Management Plan; (ii) a

12
<PAGE> 15

change that would cause any incentive stock option granted under the Management
Plan not to qualify as an incentive stock option under the Code; or (iii) any
change that would eliminate the exemption from the "short-swing profits" rules
currently available to the Management Plan and to awards granted under the
Management Plan.

The Management Plan was approved by the Board of Directors on April 22,
1998, but will not be effective until its adoption by the Company's
stockholders. The Management Plan will remain in effect until June 24, 2008.

FEDERAL INCOME TAX CONSEQUENCES OF AWARDS

The anticipated income tax treatment, under current provisions of the Code,
of the grant and exercise of awards is as follows:

Incentive Stock Options. In general, within certain dollar limits, an
employee will not recognize taxable income at the time an incentive stock option
is granted or exercised provided the employee has been employed by the Company
at all times from the date of grant until the date three months before the date
of exercise (one year in the case of permanent disability). However, the excess
of the fair market value of the shares of Common Stock acquired upon exercise of
the incentive stock option over the exercise price is an item of tax preference
for purposes of the alternative minimum tax. If the employee exercises an
incentive stock option without satisfying the employment requirement, the income
tax treatment will be the same as that for a non-qualified stock option
described below. Upon disposition of the shares of Common Stock acquired upon
exercise of an incentive stock option, capital gain or capital loss will be
recognized in an amount equal to the difference between the sale price and the
exercise price, provided that the employee has not disposed of the shares of
Common Stock within two years of the date of option grant or within one year
from the date of option exercise (a "Disqualifying Disposition"). If the
employee disposes of the shares in a Disqualifying Disposition, the employee
will recognize ordinary income at the time of the Disqualifying Disposition to
the extent of the difference between the exercise price and the lesser of the
fair market value of the shares on the date the incentive stock option is
exercised or the amount realized in the Disqualifying Disposition. Any remaining
gain or loss is treated as a capital gain or capital loss.

The Company is not entitled to a tax deduction either upon the exercise of
an incentive stock option or upon the disposition of the Common Shares acquired
thereby, except to the extent that the employee recognizes ordinary income in a
Disqualifying Disposition and subject to the applicable provisions of the Code.

Non-Qualified Stock Options. In general, an employee will not recognize
taxable income at the time a stock option that does not qualify as an incentive
stock option (a "Non-qualified Stock Option") is granted. An amount equal to the
difference between the exercise price and the fair market value, on the date of
exercise, of the shares of Common Stock acquired upon exercise of the
Non-qualified Stock Option will be included in the employee's ordinary income in
the taxable year in which the Non-qualified Stock Option is exercised, and the
employee will receive a tax basis for the shares equal to the exercise price.
Upon disposition of the shares of Common Stock acquired upon exercise of the
Non-qualified Stock Option, appreciation or depreciation from the tax basis of
the acquired shares after the date of exercise will be treated as either capital
gain or capital loss.

Subject to the applicable provisions of the Code, the Company generally
will be entitled to a tax deduction in the amount of the ordinary income
realized by the employee in the year the Non-qualified Stock Option is
exercised. Any amounts includable as ordinary income to an employee in respect
of a Non-qualified Stock Option will be subject to applicable withholding for
federal income and employment taxes.

13
<PAGE> 16

The discussion set forth above does not purport to be a complete analysis
of all potential tax consequences relevant to recipients of awards under the
Management Plan or to the Company or to describe tax consequences based on
particular circumstances. It is based on United States federal income tax law
and interpretational authorities as of the date of this Proxy Statement, which
are subject to change at any time. The discussion does not address state or
local income tax consequences or income tax consequences for taxpayers who are
not subject to taxation in the United States.

NEW PLAN BENEFITS

No awards to any person have been made under the Management Plan, and no
decisions with respect to the identity of persons who may receive awards in the
future or the type or amount of such awards have been made.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE AND ADOPT
THE AMERICAN STONE INDUSTRIES, INC. 1998 MANAGEMENT STOCK OPTION PLAN.

PROPOSAL TO APPROVE AND ADOPT THE
1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

Stockholders will be asked at the Annual Meeting to vote on a proposal to
approve and adopt the American Stone Industries, Inc. 1998 Non-Employee Director
Stock Option Plan (the "Director Plan"). The Director Plan was adopted by the
Board of Directors on April 22, 1998, subject to stockholder approval. The
Committee recommended approval of the Director Plan to provide incentives to the
Company's non-employee Directors. The Director Plan provides for grants of stock
options to non-employee Directors (the "Participants") upon election or
reelection to the Board of Directors and for the Participant's attendance at
meetings of the Board of Directors or committees thereof.

The full text of the Director Plan is attached hereto as Exhibit C to this
Proxy Statement. Important details about specific provisions of the Director
Plan are more fully described below, but the following summary is not intended
to be complete and it is qualified in its entirety by reference to the Director
Plan.

GENERAL

Directors of the Company who are not employees of the Company shall be
eligible for participation in the Director Plan. The Director Plan will be
administered by the Committee. Each member of the Committee qualifies as a
"non-employee director" under Rule 16b-3 of the Exchange Act. The Committee has
authority to interpret the provisions of the Director Plan and to conclusively
decide all questions of fact arising in its application. Within certain limits,
the Committee may delegate its authority under the Director Plan to any other
person or persons. Neither the Committee nor any of its members is liable for
any act taken by the Committee pursuant to the Director Plan. No member of the
Committee is liable for the act of any other member.

14
<PAGE> 17

Number of Shares of Common Stock. The aggregate number of shares of Common
Stock that may be subject to stock options granted under the Director Plan
during its term is 300,000, subject to certain adjustments. Shares of Common
Stock issued under the Director Plan may be either newly-issued shares or
treasury shares. Shares of Common Stock subject to a stock option that is
forfeited, terminated, or canceled without having been exercised will generally
be available again for grant under the Director Plan, without reducing the
number of shares of Common Stock available in any fiscal year for grant of stock
options under this plan.

In the event of a recapitalization, stock dividend, stock split,
distribution to stockholders (other than cash dividends), or similar
transaction, the Committee can adjust, in any manner that it deems equitable,
the number and class of shares that may be issued under the Director Plan and
the number and class of shares, and exercise price, applicable to outstanding
stock options.

Grant of Stock Options. If the stockholders approve the Director Plan,
each Participant shall automatically receive an option to purchase 1,500 shares
of Common Stock on the date of each annual meeting of stockholders in which such
Participant is elected or reelected to the Company's Board of Directors,
beginning with this year's annual meeting. In addition, each Participant shall
receive an option to purchase 150 shares of Common Stock for each meeting of the
Board of Directors and each meeting of a committee of the Board of Directors
that such Participant attends. Notwithstanding the foregoing, the amount of
options received by the Chairman of the Board of Directors shall be twice the
amount received by the other Participants.

Taxes Associated with Stock Options. Prior to the exercise of a stock
option, the Company may withhold, or require a Participant to remit to the
Company, an amount of cash sufficient to pay any federal, state, and local taxes
associated with the exercise. In addition, the Committee may permit Participants
to pay the taxes associated with a exercise of a stock option by the transfer of
shares of Common Stock, or by a combination of these methods.

Change in Control. In the event of a change in control of the Company, as
defined in the Director Plan, the Committee shall have the right, in its sole
discretion, to (i) accelerate the exercisability of any stock options,
notwithstanding any limitations set forth in the Director Plan; (ii) cancel all
outstanding stock options in exchange for the kind and amount of shares of the
surviving or new corporation, cash, securities, evidences of indebtedness, other
property or any combination thereof receivable in respect of one share of Common
Stock upon consummation of the transaction in question (the "Acquisition
Consideration") that, the Participant would have received had payment therefor
been made by the Company prior to such transaction in shares of Common Stock;
(iii) cause the Participant to have the right thereafter and during the term of
the stock option, to receive upon exercise thereof the Acquisition Consideration
receivable upon the consummation of such transaction by a holder of number of
shares of Common Stock that might have been obtained upon exercise of all or any
portion thereof; or (iv) take such other action as it deems appropriate to
preserve the value of the stock option to the Participant. Alternatively, the
Committee shall also have the right to require any purchaser of the Company's
assets or stock, as the case may be, to take any of the actions set forth in the
preceding sentence as such purchaser may determine to be appropriate or
desirable.

15
<PAGE> 18

Amendment, Effective Date, and Termination of the Director Plan. The Board
of Directors may amend, suspend, or terminate the Director Plan at any time.
Stockholder approval for any such amendment will be required if the amendment
results in: (i) an increase, subject to certain exceptions, in the maximum
number of shares of Common Stock that may be subject to stock options granted
under the Director Plan; or (ii) any change that would eliminate the exemption
from the "short-swing profits" rules currently available to the Director Plan
and to awards granted under the Director Plan.

The Director Plan was approved by the Board of Directors on April 22, 1998,
but will not be effective until its adoption by the Company's stockholders. The
Director Plan will remain in effect until June 24, 2008.

FEDERAL INCOME TAX CONSEQUENCES OF STOCK OPTIONS

The anticipated income tax treatment, under current provisions of the Code,
of the grant and exercise of stock options under the Director Plan is as
follows:

The stock options granted under the Director Plan will be non-qualified
options for federal income tax purposes. A Participant to whom an option is
granted will not recognize income at the time of grant of such option. When such
Participant exercises such non-qualified option, the Participant will recognize
ordinary compensation income equal to the difference, if any, between the option
price paid and the fair market value, as of the date of option exercise, of the
shares the Participant receives. The tax basis of such shares to such
Participant will be equal to the option price paid, and the Participant's
holding period for such shares will commence on the day on which the Participant
recognized taxable income in respect of such shares. Subject to applicable
provisions of the Code and regulations thereunder, the Company generally will be
entitled to a federal income tax deduction in respect of non-qualified options
in an amount equal to the ordinary compensation income recognized by the
Participant.

The discussion set forth above does not purport to be a complete analysis
of all potential tax consequences relevant to recipients of stock options under
the Director Plan or to the Company or to describe tax consequences based on
particular circumstances. It is based on United States federal income tax law
and interpretational authorities as of the date of this Proxy Statement, which
are subject to change at any time. The discussion does not address state or
local income tax consequences or income tax consequences for taxpayers who are
not subject to taxation in the United States.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE AND ADOPT
THE AMERICAN STONE INDUSTRIES, INC. 1998 NON-EMPLOYEE DIRECTOR STOCK OPTION
PLAN.

16
<PAGE> 19

INDEPENDENT ACCOUNTANTS

The firm of Hobe & Lucas served as independent accountants for the Company
for the fiscal years ended December 31, 1997 and 1996, and have been named as
such for the current fiscal year. Representatives of Hobe & Lucas are expected
to be present at the Annual Meeting with the opportunity to make a statement if
they so desire and to be available to respond to appropriate questions.

On September 26, 1996, the Board of Directors appointed, subject to
stockholder approval, Hobe & Lucas to replace Horton & Company as the Company's
independent accountants. The stockholders approved the change in independent
auditors at the November 22, 1996 Annual Meeting of Stockholders. There were no
disagreements with the former accountants on any matter of accounting principles
or practices, or auditing scope or procedure, nor did the former accountant's
report contain any adverse opinion or disclaimer of opinion. The decision to
change accountants was made as a matter of convenience because the Company
relocated its principal place of business from Toronto to Amherst, Ohio and the
former accountants are located in New Jersey.

EXPENSES OF SOLICITATION

The Company expects to solicit proxies primarily by mail, but Directors,
officers and employees of the Company may also solicit proxies in person or by
telephone. All reasonable expenses in connection with the solicitation of
proxies will be borne by the Company. The Company will make arrangements for the
forwarding, at the Company's expense, of soliciting materials by brokers,
nominees, fiduciaries and other custodians to their principals.

STOCKHOLDERS' PROPOSALS FOR 1999 ANNUAL MEETING

Stockholder proposals to be presented at the 1999 Annual Meeting, which is
expected to be held in May 1999, must be received by the Corporate Secretary for
inclusion in the Company's Proxy Statement and form of proxy by January 13,
1999. To be eligible for inclusion in the 1999 proxy materials, such proposal
must conform to the requirements set forth in Regulation 14A promulgated under
the Exchange Act.

OTHER MATTERS

As of the date of this Proxy Statement, the management of the Company has
no knowledge of any matters to be presented for consideration at the meeting
other than those referred to above. If any other matters properly come before
the meeting, the persons named in the accompanying form of proxy intend to vote
such proxy according to their best judgment on such matters insofar as the
proxies are not limited to the contrary.

By Order of the Board of Directors,

Michael J. Meier
Secretary

May 20, 1998

17
<PAGE> 20

EXHIBIT A

PROPOSED AMENDMENT
TO THE CERTIFICATE OF INCORPORATION
OF AMERICAN STONE INDUSTRIES, INC.

AMERICAN STONE INDUSTRIES, INC. (the "Corporation"), a corporation
organized and existing under and by virtue of the Delaware General Corporation
Law, DOES HEREBY CERTIFY:

FIRST: Article FOURTH of the Certificate of Incorporation of the
Corporation is hereby deleted in its entirety and amended to read as follows:

"FOURTH. The Corporation shall be authorized to issue the following
shares:

<TABLE>
<CAPTION>
CLASS NUMBER OF SHARES PAR VALUE
- ----- ---------------- ---------
<S> <C> <C>
Common 20,000,000 $.001
</TABLE>

At the close of business on the date on which the amendment
containing this Division 1 of Article Fourth is filed, each
outstanding share of Common Stock of the Corporation shall be
converted into one-tenth (1/10) of a share of Common Stock,
without any action by the holders of such shares."

SECOND: That the Board of Directors of the Corporation, by written
consent dated as of April 15, 1998, adopted a resolution proposing and
declaring advisable the foregoing amendment to Article Fourth of the
Certificate of Incorporation of the Corporation.

THIRD: This Certificate of Amendment of Certificate of Incorporation
was duly adopted by the requisite vote of the Board of Directors of the
Corporation.

FOURTH: That at the Annual Meeting of Stockholders on June 24, 1998,
held upon notice in accordance with Sections 222 and 242 of the Delaware
General Corporation Law, the necessary number of shares as required by
statute were voted in favor of the adoption of amendment.

FIFTH: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law.

IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by its duly authorized officers this day of June, 1998.

AMERICAN STONE INDUSTRIES, INC.

By:
------------------------------------
David Tyrrell, Chief Executive
Officer and President
ATTEST:

By:
- ------------------------------------
Michael J. Meier, Secretary

A-1
<PAGE> 21

EXHIBIT B

AMERICAN STONE INDUSTRIES, INC.
1998 MANAGEMENT STOCK OPTION PLAN

SECTION 1. PURPOSE

The American Stone Industries, Inc. 1998 Management Stock Option Plan, as
the same may be amended (the "Plan"), is designed to foster the long-term growth
and performance of the Company by: (a) enhancing the Company's ability to
attract and retain highly qualified management employees and (b) motivating
management employees to serve and promote the long-term interests of the Company
and its stockholders through stock ownership and performance-based incentives.
To achieve this purpose, the Plan provides authority for the grant of Stock
Options.

SECTION 2. DEFINITIONS

(a) "Acquisition Consideration" shall be as defined in Section 12 hereof.

(b) "Affiliate" shall have the meaning ascribed to that term in Rule 12b-2
promulgated under the Exchange Act.

(d) "Award Agreement" shall mean any agreement between the Company and a
Participant that sets forth terms, conditions, and restrictions applicable to an
Award.

(e) "Board of Directors" shall mean the Board of Directors of the Company.

(f) "Change in Control" shall include, but not be limited to: (i) the first
purchase of shares by a Third Party pursuant to a tender offer or exchange
(other than a tender offer or exchange by the Company) for all or part of the
Company's Common Stock or any class of any securities convertible into such
Common Stock; (ii) the receipt by the Company of a Schedule 13D or other advice
indicating that a Third Party is the "beneficial owner" (as that term is defined
in Rule 13d-3 promulgated under the Exchange Act) of 50 percent (50%) or more of
the Company's Common Stock calculated as provided in paragraph (d) of said Rule
13d-3; (iii) the date of approval by stockholders of the Company of an agreement
providing for any consolidation or merger of the Company in which the Company
will not be the continuing or surviving corporation or pursuant to which shares
of capital stock of any class, or any securities convertible into such capital
stock, of the Company would be converted into cash, securities, or other
property, other than a merger of the Company in which the holders of common
stock of all classes of the Company immediately prior to the merger would have
the same proportion of ownership of common stock of the surviving corporation
immediately after the merger; (iv) the date of the approval by stockholders of
the Company of any sale, lease, exchange, or other transfer (in one transaction
or a series of related transactions) of all or substantially all the assets of
the Company; (v) the adoption of any plan or proposal for the liquidation (but
not a partial liquidation) or dissolution of the Company; or (vi) such other
event as the Committee shall in its sole and absolute discretion, deem to be a
"Change in Control" for purposes of this Plan or any Notice of Award or Award
Agreement entered into pursuant hereto. The manner of application and
interpretation of the foregoing provisions shall be determined by the Committee
in its sole and absolute discretion.

(g) "Code" shall mean the Internal Revenue Code of 1986, or any law that
supersedes or replaces it, as amended from time to time.

B-1
<PAGE> 22

(h) "Committee" shall mean the Compensation Committee of the Board of
Directors, or any other committee of the Board of Directors that the Board of
Directors authorizes to administer this Plan. The Committee will be constituted
in a manner that satisfies the "non-employee director" standard set forth in
Rule 16b-3.

(i) "Common Stock" shall mean shares of Common Stock, $.001 par value per
share, of American Stone Industries, Inc., including authorized and unissued
shares and treasury shares.

(j) "Company" shall mean American Stone Industries, Inc., a Delaware
corporation, and its direct and indirect subsidiaries.

(k) "Director" shall mean a director of American Stone Industries, Inc.

(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, and any
law that supersedes or replaces it, as amended from time to time.

(m) "Fair Market Value" of Common Stock shall mean the value of the Common
Stock determined by the Committee, or pursuant to rules established by the
Committee on a basis consistent with regulations under the Code.

(n) "Incentive Stock Option" shall mean a Stock Option that meets the
requirements of Section 422 of the Code.

(o) "Notice of Award" shall mean any notice by the Committee to a
Participant that advises the Participant of the grant of an Award or sets forth
terms, conditions, and restrictions applicable to an Award.

(p) "Participant" shall mean any person to whom an Award has been granted
under this Plan.

(q) "Person" shall mean an individual, partnership, corporation (including
a business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a governmental authority.

(r) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange Act,
or any rule that supersedes or replaces it, as amended from time to time.

(s) "Stock Option" shall mean an Award granted pursuant to Section 6(b)
hereof.

(t) "Third Party" shall mean any person, group or entity other than
Roulston Ventures Limited Partnership or TMT Masonry, Ltd.

SECTION 3. ELIGIBILITY

All management employees of the Company and its Affiliates, are eligible
for the grant of Awards. The selection of any such persons to receive Awards
will be within the discretion of the Committee. More than one Award may be
granted to the same person.

Notwithstanding the foregoing, (i) no member of the Committee shall be
eligible to receive Awards under the Plan during the period of his or her
service thereon and (ii) any individual that renounces in writing any right that
he or she may have to receive Awards under the Plan shall not be eligible to
receive any Awards hereunder.

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SECTION 4. SHARES OF COMMON STOCK AVAILABLE FOR AWARDS; ADJUSTMENT

(a) Number of Shares of Common Stock. The aggregate number of shares of
Common Stock that may be subject to Awards granted under this Plan during the
term of this Plan will be equal to 300,000 shares of Common Stock, subject to
any adjustments made in accordance with the terms of this Section 4.

The assumption of obligations in respect of awards granted by an
organization acquired by the Company, or the grant of Awards under this Plan in
substitution for any such awards, will not reduce the number of shares of Common
Stock available in any fiscal year for the grant of Awards under this Plan.

Shares of Common Stock subject to an Award that is forfeited, terminated,
or canceled without having been exercised will again be available for grant
under this Plan, without reducing the number of shares of Common Stock available
in any fiscal year for grant of Awards under this Plan, except to the extent
that the availability of those shares of Common Stock would cause this Plan or
any Awards granted under this Plan to fail to qualify for the exemption provided
by Rule 16b-3. In addition, any shares of Common Stock that are transferred to
the Company by a Participant to satisfy such obligations or to pay all or any
portion of the exercise price of the Award in accordance with the terms of the
Plan, the Award Agreement or the Notice of Award, may be made available for
reoffering under the Plan to any Participant, except to the extent that the
availability of those shares of Common Stock would cause this Plan or any Awards
granted under this Plan to fail to qualify for the exemption provided by Rule
16b-3.

(b) No Fractional Shares. No fractional shares of Common Stock will be
issued, and the Committee will determine the manner in which the value of
fractional shares of Common Stock will be treated.

(c) Adjustment. In the event of any change in the Common Stock by reason
of a merger, consolidation, reorganization, recapitalization, or similar
transaction, including any transaction described under Section 424(a) of the
Code, or in the event of a stock dividend, stock split, or distribution to
stockholders (other than normal cash dividends), the Committee will have
authority to adjust, in any manner that it deems equitable, the number and class
of shares of Common Stock subject to outstanding Awards, the exercise price
applicable to outstanding Awards, and the Fair Market Value of the shares of
Common Stock and other value determinations applicable to outstanding Awards,
including as may be allowed or required under Section 424(a) of the Code.

SECTION 5. ADMINISTRATION

(a) Committee. This Plan will be administered by the Committee. The
Committee will, subject to the terms of this Plan, have the authority to: (i)
select the eligible management employees who will receive Awards; (ii) grant
Awards; (iii) determine the number and types of Awards to be granted to eligible
management employees; (iv) determine the terms, conditions, vesting periods, and
restrictions applicable to Awards, including timing and price; (v) adopt, alter,
and repeal administrative rules and practices governing this Plan; (vi)
interpret the terms and provisions of this Plan and any Awards granted under
this Plan, including, where applicable, determining the method of valuing any
Award and certifying as to the satisfaction of such Awards; (vii) prescribe the
forms of any Notices of Award, Award Agreements, or other instruments relating
to Awards; and (viii) otherwise supervise the administration of this Plan.

(b) Delegation. The Committee may delegate any of its authority to any
other person or persons that it deems appropriate, provided the delegation does
not cause this Plan or any Awards granted under this Plan to fail to qualify for
the exemption provided by Rule 16b-3.

(c) Decisions Final. All decisions by the Committee, and by any other
Person or Persons to whom the Committee has delegated authority, to the extent
permitted by law, will be final and binding on all Persons.
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(d) No Liability. Neither the Committee nor any of its members shall be
liable for any act taken by the Committee pursuant to the Plan. No member of the
Committee shall be liable for the act of any other member.

SECTION 6. AWARDS

(a) Grant of Awards. The Committee will determine the type or types of
Awards to be granted to each Participant and will set forth in the related
Notice of Award or Award Agreement the terms, conditions, vesting periods, and
restrictions applicable to each Award. Awards may be granted in replacement of,
or in substitution for, other awards granted by the Company, whether or not
granted under this Plan; without limiting the foregoing, if a Participant pays
all or part of the exercise price or taxes associated with an Award by the
transfer of shares of Common Stock, the Committee may, in its discretion, grant
a new Award to replace the shares of Common Stock that were transferred. The
Company may assume obligations in respect of awards granted by any Person
acquired by the Company or may grant Awards in replacement of, or in
substitution for, any such awards.

(b) Description of Awards. A Participant who is granted an Award shall
have the right to purchase a specified number of shares of Common Stock, during
a specified period, and at a specified exercise price, all as determined by the
Committee. A Stock Option may be an Incentive Stock Option or a Stock Option
that does not qualify as an Incentive Stock Option. In addition to the terms,
conditions, vesting periods, and restrictions established by the Committee,
Incentive Stock Options must comply with the requirements of Section 422 of the
Code. The exercise price of a Stock Option that does not qualify as an Incentive
Stock Option may be more or less than the Fair Market Value of the shares of
Common Stock on the date the Stock Option is granted.

(c) Termination of Awards. Any Award granted under this Plan shall expire,
and the Participant to whom such Award was granted shall have no further rights
with respect thereto, on the fifth anniversary of the date of grant of such
Award, or on such earlier date as may be established by the Committee and
provided in the Notice of Award or Award Agreement with respect to such Award.

SECTION 7. DEFERRAL OF PAYMENT

With the approval of the Committee, the delivery of the shares of Common
Stock subject to an Award may be deferred, either in the form of installments or
a single future delivery. The Committee may also permit selected Participants to
defer the receipt of some or all of their Awards, as well as other compensation,
in accordance with procedures established by the Committee to assure that the
recognition of taxable income is deferred under the Code.

SECTION 8. PAYMENT OF EXERCISE PRICE

The exercise price of a Stock Option may be paid in cash, by the transfer
of shares of Common Stock, or by a combination of these methods, as and to the
extent permitted by the Committee. The Committee may prescribe any other method
of paying the exercise price that it determines to be consistent with applicable
law and the purpose of this Plan.

SECTION 9. TAXES ASSOCIATED WITH AWARDS

Prior to the payment of an Award or upon the exercise or release thereof,
the Company may withhold, or require a Participant to remit to the Company, an
amount sufficient to pay any federal, state, and local taxes associated with the
Award. The Committee may, in its discretion and subject to such rules as the
Committee may adopt, permit a Participant to pay any or all taxes associated
with the Award in cash, by the transfer of shares of

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<PAGE> 25

Common Stock, or by a combination of these methods. The Committee may prescribe
any other method to pay taxes that it determines to be consistent with
applicable law and the purpose of this Plan.

SECTION 10. TERMINATION OF EMPLOYMENT

If the employment of a Participant terminates for any reason, all
unexercised, deferred, and unpaid Awards may be exercisable or paid only in
accordance with rules established by the Committee or as specified in the
particular Award Agreement or Notice of Award. Such rules may provide, as the
Committee deems appropriate, for the expiration, continuation, or acceleration
of the vesting of all or part of the Awards.

SECTION 11. TERMINATION OF AWARDS UNDER CERTAIN CONDITIONS

The Committee may cancel any unexpired, unpaid, or deferred Awards at any
time if the Participant is not in compliance with all applicable provisions of
this Plan or with any Notice of Award or Award Agreement or if the Participant,
without the prior written consent of the Company, engages in any of the
following activities:

(i) Renders services for an organization, or engages in a business,
that is, in the judgment of the Committee, in competition with the Company.

(ii) Discloses to anyone outside of the Company, or uses for any
purpose other than the Company's business any confidential information or
material relating to the Company, whether acquired by the Participant
during or after employment with the Company, in a fashion or with a result
that the Committee, in its judgment, deems is or may be injurious to the
best interests of the Company.

The Committee may, in its discretion and as a condition to the exercise of
an Award, require a Participant to acknowledge in writing that he or she is in
compliance with all applicable provisions of this Plan and of any Notice of
Award or Award Agreement and has not engaged in any activities referred to in
clauses (i) and (ii) above.

SECTION 12. CHANGE IN CONTROL

In the event of a Change in Control of the Company, the Committee shall
have the right, in its sole discretion, to (i) accelerate the exercisability of
any Stock Options, notwithstanding any limitations set forth in the Plan; (ii)
cancel all outstanding Stock Options in exchange for the kind and amount of
shares of the surviving or new corporation, cash, securities, evidences of
indebtedness, other property or any combination thereof receivable in respect of
one share of Common Stock upon consummation of the transaction in question (the
"Acquisition Consideration") that the Participant would have received had the
Stock Option been exercised prior to such transaction, less the applicable
exercise price therefor; (iii) cause the Participant to have the right
thereafter and during the term of the Stock Option to receive upon exercise
thereof the Acquisition Consideration receivable upon the consummation of such
transaction by a holder of the number of shares of Common Stock that might have
been obtained upon exercise of all or any portion thereof; or (iv) take such
other action as it deems appropriate to preserve the value of the Award to the
Participant. Alternatively, the Committee shall also have the right to require
any purchaser of the Company's assets or stock, as the case may be, to take any
of the actions set forth in the preceding sentence as such purchaser may
determine to be appropriate or desirable.

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SECTION 13. AMENDMENT, SUSPENSION, OR TERMINATION OF THIS PLAN; AMENDMENT OF
OUTSTANDING AWARDS

(a) Amendment, Suspension, or Termination of this Plan. The Board of
Directors may amend, suspend, or terminate this Plan at any time; provided,
however, that in no event, without the approval of the Company's stockholders,
shall any action of the Committee or the Board of Directors result in:

(i) increasing, except as provided in Section 4(c) hereof, the maximum
number of shares of Common Stock that may be subject to Awards granted
under the Plan;

(ii) making any changes that would cause any option granted under the
Plan as an Incentive Stock Option not to qualify as an Incentive Stock
Option within the meaning of Section 422 of the Code; or

(iii) making any change that would eliminate the exemption provided by
Rule 16b-3 for this Plan and for Awards granted under this Plan.

(b) Amendment of Outstanding Awards. The Committee may, in its discretion,
amend the terms of any Award, prospectively or retroactively, but no such
amendment may impair the rights of any Participant without his or her consent.
The Committee may, in whole or in part, waive any restrictions or conditions
applicable to, or accelerate the vesting of, any Award.

SECTION 14. AWARDS TO FOREIGN NATIONALS AND EMPLOYEES OUTSIDE THE UNITED STATES

To the extent that the Committee deems appropriate to comply with foreign
law or practice and to further the purpose of this Plan, the Committee may,
without amending this Plan, (i) establish special rules applicable to Awards
granted to Participants who are foreign nationals, are employed outside the
United States, or both, including rules that differ from those established under
this Plan, and (ii) grant Awards to such Participants in accordance with those
rules.

SECTION 15. NONASSIGNABILITY

Unless otherwise determined by the Committee, (i) no Award granted under
the Plan may be transferred or assigned by the Participant to whom it is granted
other than by will, pursuant to the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined in the Code, and (ii) an
Award granted under this Plan may be exercised, during the Participant's
lifetime, only by the Participant or by the Participant's guardian or legal
representative. Notwithstanding the foregoing, no Incentive Stock Option may be
transferred or assigned pursuant to a qualified domestic relations order or
exercised, during the Participant's lifetime, by the Participant's guardian or
legal representative.

SECTION 16. TERMS OF AWARDS AND RELATED AGREEMENTS NEED NOT BE IDENTICAL

The form and substance of Awards, Award Agreements and Notices of Awards,
whether granted at the same or different times, need not be identical. Subject
only to the terms of the Plan, the Committee shall have the authority to
prescribe the terms of any Awards and the provisions of any Award Agreements,
Notices of Award or other instruments entered into with respect to the same; it
being expressly understood that the Committee shall have the authority to
include in any such Award Agreements, Notices of Award or other instruments
relating to Awards, such representations, warranties, covenants and agreements
on behalf of the Company or the Participant as it deems necessary or
appropriate, including, without limitation, covenants relating to
non-competition, non-solicitation and non-disclosure of confidential
information.

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SECTION 17. GOVERNING LAW

The interpretation, validity, and enforcement of this Plan will, to the
extent not otherwise governed by the Code or the securities laws of the United
States, be governed by the laws of the State of Delaware.

SECTION 18. NO RIGHTS AS EMPLOYEES/STOCKHOLDERS

Nothing in the Plan or in any Award Agreement or Notice of Award shall
confer upon any Participant any right to continue in the employ of the Company
or an Affiliate, or to be entitled to receive any remuneration or benefits not
set forth in the Plan or such Award Agreement or Notice of Award, or to
interfere with or limit either the right of the Company or an Affiliate to
terminate the employment of such Participant at any time. Nothing contained in
the Plan or in any Award Agreement or Notice of Award shall be construed as
entitling any Participant to any rights of a stockholder as a result of the
grant of an Award until such time as shares of Common Stock are actually issued
to such Participant pursuant to the exercise of a Stock Option.

SECTION 19. EFFECTIVE AND TERMINATION DATES

(a) Effective Date. This Plan was approved by the Board of Directors on
April 22, 1998, and becomes effective on June 24, 1998, subject to stockholder
approval of the Plan at the Annual Meeting of Stockholders to be held on June
24, 1998.

(b) Termination Date. This Plan will continue in effect until midnight on
June 24, 2008; provided, however, that Awards granted on or before that date may
extend beyond that date and restrictions and other terms and conditions imposed
on any Award granted on or before that date may extend beyond such date.

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EXHIBIT C

AMERICAN STONE INDUSTRIES, INC.
1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

SECTION 1. PURPOSE

The American Stone Industries, Inc. 1998 Non-Employee Director Stock Option
Plan, as the same may be amended (the "Plan"), is designed to attract and retain
persons of exceptional ability to serve as members of the Board of Directors of
American Stone Industries, Inc. (the "Company"), and to align the interests of
the Company's non-employee Directors with that of the stockholders in enhancing
the value of the Company's Common Stock.

SECTION 2. ELIGIBILITY

Directors of the Company who are not employees of the Company ("Eligible
Directors") and who are Directors of the Company on or after the date the Plan
is approved by a majority of the stockholders of the Company shall be eligible
to participate in the Plan. Each Eligible Director to whom options are granted
shall be a participant ("Participant") under the Plan.

SECTION 3. SHARES OF COMMON STOCK AVAILABLE UNDER THE PLAN

(a) Number of Shares of Common Stock. The aggregate number of shares of
Common Stock, par value $.001 per share (the "Common Stock"), that may be
subject to options granted under the Plan during the term of the Plan will be
equal to 300,000 shares of Common Stock, subject to any adjustments made in
accordance with the terms of this Section 3.

The assumption of obligations in respect of awards granted by an
organization acquired by the Company, or the grant of options under the Plan in
substitution for any such awards, will not reduce the number of shares of Common
Stock available in any fiscal year for the grant of options under the Plan.

Shares of Common Stock subject to an option that is forfeited, terminated,
or canceled without having been exercised will again be available for grant
under the Plan, without reducing the number of shares of Common Stock available
in any fiscal year for grant of options under the Plan, except to the extent
that the availability of those shares of Common Stock would cause the Plan or
any options granted under the Plan to fail to qualify for the exemption provided
by Rule 16b-3. In addition, any shares of Common Stock that are transferred to
the Company by a Participant to satisfy such obligations in accordance with the
terms of the Plan may be made available for reoffering under the Plan to any
Participant, except to the extent that the availability of those shares of
Common Stock would cause the Plan or any options granted under the Plan to fail
to qualify for the exemption provided by Rule 16b-3.

(b) No Fractional Shares. No fractional shares of Common Stock will be
issued, and the Committee will determine the manner in which the value of
fractional shares of Common Stock will be treated.

(c) Adjustment. In the event of any change in the Common Stock by reason
of a merger, consolidation, reorganization, recapitalization, or similar
transaction, including any transaction described under Section 424(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), or in the event of a
stock dividend, stock split, or distribution to stockholders (other than normal
cash dividends), the Committee will have authority to adjust, in any manner that
it deems equitable, the number and class of shares of Common Stock subject to
outstanding options, the exercise price applicable to outstanding options, and
the Fair Market Value (as defined in
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Section 6.2 herein) of the shares of Common Stock and other value determinations
applicable to outstanding options, including as may be allowed or required under
Section 424(a) of the Code.

SECTION 4. ADMINISTRATION

(a) Committee. The Plan shall be administered by the Compensation
Committee (the "Committee") of the Board of Directors of the Company or such
successor committee of the Board of Directors that is designated by the Board of
Directors to administer the Plan. The Committee will constituted in a manner
that satisfies the "non-employee director" standard set forth in Rule 16b-3(b)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

(b) Delegations. The Committee may delegate any of its authority to any
other person or persons that it deems appropriate, provided the delegation does
not cause the Plan or any options granted under the Plan to fail to qualify for
the exemption provided by Rule 16b-3.

(c) Decisions Final. All decisions by the Committee, and by any other
person or persons to whom the Committee has delegated authority, to the extent
permitted by law, will be final and binding on all persons.

SECTION 5. OPTION GRANTS

5.1 Options granted pursuant to the Plan shall be nonqualified stock
options that are not intended to meet the requirements of Section 422 of the
Code.

5.2 Eligible Directors shall be automatically granted nonqualified stock
options under the Plan as follows:

(a) Automatic Grant of Options. Immediately following the annual meeting
of the stockholders of the Company to be held on June 24, 1998 and at each
successive annual meeting of stockholders thereafter, each Eligible Director who
is elected or reelected to serve as a Director at such annual meeting shall
receive an option to purchase 1,500 shares of Common Stock on the date of the
annual meeting. Notwithstanding the foregoing, the Chairman of the Board of
Directors of the Company (the "Chairman") shall receive an option to purchase
3,000 shares of Common Stock at each annual meeting of stockholders, in lieu of
the amount described in the preceding sentence.

(b) Option Grants for Meeting Attendance. Each Eligible Director shall
receive an option to purchase 150 shares of Common Stock for each meeting of the
Board of Directors and each meeting of any committee of the Board of Directors
that such Eligible Director attends, which option shall be granted on the date
of such meeting. Notwithstanding the foregoing, the Chairman shall receive an
option to purchase 300 shares of Common Stock at each meeting of the Board of
Directors and any committee of the Board of Directors, in lieu of the amount
described in the preceding sentence.

SECTION 6. TERMS AND CONDITIONS OF OPTIONS

6.1 Exercise of Options.

(a) Each option granted under the Plan shall become exercisable on the
first anniversary of the date such option was granted, subject to the provisions
of Section 7 hereof.

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<PAGE> 30

(b) Notwithstanding the provisions of paragraph (a) above, an option
granted to any Participant shall become immediately exercisable in full upon the
first to occur of:

(i) the death of the Participant, in which case the option may be
exercised by the Participant's executor or administrator, or if not so
exercised, by the legatees or distributees of his or her estate or by such
other person or persons to whom the Participant's rights under the option
shall pass by will or by the applicable laws of descent and distribution;

(ii) such time as the Participant ceases to be a Director of the
Company by reason of his or her permanent disability;

(iii) such time as the Participant ceases to be a Director of the
Company as a result of retirement from the Board of Directors on or after
attaining age 65; or

(iv) such time as a Participant ceases to be eligible to participate
in the Plan by reason of his or her becoming an employee of the Company or
any of its subsidiaries.

(c) In the event that a Participant ceases to be a Director of the Company
for any reason other than those specified in paragraph 6.1(b) prior to the time
the Participant's option becomes fully exercisable, the option will terminate on
the date the Participant ceases to be a Director of the Company with respect to
the shares as to which the option is not then exercisable without further notice
or action on the part of the Company.

(d) Options granted under the Plan shall expire five years from the date on
which the option is granted, unless terminated earlier in accordance with the
Plan, subject to the following:

(i) in the event a Participant ceases to be a Director of the Company
by reason of an event described in Section 6.1(b)(i), any option granted to
such Participant hereunder shall expire one year from the date of the death
of the Participant, but in no event later than the day preceding the fifth
anniversary of the date of the grant of such option; and

(ii) In the event that a Participant ceases to be a Director of the
Company by any reason other than that described in Section 6.1(b)(i), and
his or her option has become exercisable in whole or in part, such option
shall remain exercisable in whole or in part, as the case may be, in
accordance with the terms hereof for a period of 90 days from the date the
Participant ceases to be a Director, but in no event later than the day
preceding the fifth anniversary of the date of grant of such option.

6.2 Exercise Price. The exercise price of each share of Common Stock
subject to an option shall be the "Fair Market Value" of a share of Common Stock
on the date such option is granted. "Fair Market Value" means the value
determined on the basis of the good faith determination of the Committee,
without regard to whether the Common Stock is restricted or represents a
minority interest, pursuant to the applicable method described below:

(a) If the Common Stock is listed on a national securities exchange or
quoted on The Nasdaq Stock Market ("NASDAQ"), the closing price of the Common
Stock on the relevant date, as reported by the principal national exchange on
which such shares are traded (in the case of an exchange) or by the NASDAQ, as
the case may be;

(b) If the Common Stock is not listed on a national securities exchange or
quoted on the NASDAQ but is actively traded in the over-the-counter market, the
average of the closing bid and asked prices for the Common Stock on the relevant
date, or the most recent preceding date for which such quotations are reported;
and

(c) If, on the relevant date, the Common Stock is not publicly traded or
reported as described in (a) or (b), the value determined in good faith by the
Committee.

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6.3 Payment of Exercise Price; Tax Withholding.

(a) Subject to the terms and conditions of the Plan and the documentation
of the options pursuant to Section 6.5 hereof, an option granted hereunder
shall, to the extent then exercisable, be exercisable in whole or in part by
giving written notice to the Company's Secretary stating the number of shares
with respect to which the option is being exercised, accompanied by payment in
full for such shares. Payment in full or in part may also be made by delivering
Common Stock already owned by the Participant having a total Fair Market Value
on the date of such delivery equal to the exercise price or by any combination
of the foregoing. No shares of Common Stock will be issued until full payment
therefor has been made.

(b) The Participant shall pay the Company an amount sufficient to cover
withholding required by law for any federal, state, local or foreign taxes, if
any, in connection with the exercise of an option hereunder. A Participant may
elect in lieu of paying cash to deliver shares of Common Stock or direct the
Company that shares of Common Stock be withheld to satisfy required tax
withholding, and such shares shall be valued at the Fair Market Value as of the
exercise date and the Committee shall determine the timing and other terms and
conditions in which the use of shares of Common Stock to satisfy tax withholding
may take place.

6.4 Rights as a Stockholder. No person will have any rights of a
stockholder as to shares of Common Stock subject to an option until, after
proper exercise of the option or other action required, such shares of Common
Stock have been recorded on the Company's official stockholder records as having
been issued or transferred. Upon exercise of the option or any portion thereof,
the Company will have thirty (30) days in which to issue the shares of Common
Stock, and the Participant will not be treated as a stockholder for any purpose
whatsoever prior to such issuance. No adjustment will be made for cash dividends
or other rights for which the record date is prior to the date such shares are
recorded as issued or transferred in the Company's official stockholder records,
except as provided herein or in an Stock Option Agreement (as defined below).

6.5 Documentation of Option Grants. Option grants shall be evidenced by
written instruments prescribed by the Board from time to time (each a "Stock
Option Agreement"). The instruments may be in the form of agreements to be
executed by both the Participant and the President or Secretary of the Company
or in the form of certificates, letters or similar instruments, which need not
be executed by the Participant but acceptance of which will evidence agreement
to the terms of the grant.

6.6 Nontransferability of Options. Unless otherwise determined by the
Committee, (i) no option granted under the Plan may be transferred or assigned
by the Participant to whom it is granted other than by will, pursuant to the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined in the Code, and (ii) an option granted under the Plan may be
exercised, during the Participant's lifetime, only by the Participant or by the
Participant's guardian or legal representative.

SECTION 7. CHANGE IN CONTROL

(a) In the event of a Change in Control (as defined below) of the Company,
the Committee shall have the right, in its sole discretion, to (i) accelerate
the exercisability of any options granted hereunder, notwithstanding any
limitations set forth in the Plan; (ii) cancel all outstanding options granted
hereunder in exchange for the kind and amount of shares of the surviving or new
corporation, cash, securities, evidences of indebtedness, other property or any
combination thereof receivable in respect of one share of Common Stock upon
consummation of the transaction in question (the "Acquisition Consideration")
that the Participant would have received had the option been exercised prior to
such transaction, less the applicable exercise price therefor; (iii) cause the
Participant to have the right thereafter and during the term of the option, to
receive upon exercise thereof the Acquisition Consideration receivable upon the
consummation of such transaction by a holder of the number of
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<PAGE> 32

shares of Common Stock that might have been obtained upon exercise of all or any
portion thereof; or (iv) take such other action as it deems appropriate to
preserve the value of the option to the Participant. Alternatively, the
Committee shall also have the right to require any purchaser of the Company's
assets or stock, as the case may be, to take any of the actions set forth in the
preceding sentence as such purchaser may determine to be appropriate or
desirable.

(b) "Change in Control" shall include, but not be limited to: (i) the first
purchase of shares by any person, group or entity other than Roulston Ventures
Limited Partnership or TMT Masonry, Ltd. (a "Third Party") pursuant to a tender
offer or exchange (other than a tender offer or exchange by the Company) for all
or part of the Company's Common Stock or any class of any securities convertible
into such Common Stock; (ii) the receipt by the Company of a Schedule 13D or
other advice indicating that a Third Party is the "beneficial owner" (as that
term is defined in Rule 13d-3 promulgated under the Exchange Act) of 50 percent
(50%) or more of the Company's Common Stock calculated as provided in paragraph
(d) of said Rule 13d-3; (iii) the date of approval by stockholders of the
Company of an agreement providing for any consolidation or merger of the Company
in which the Company will not be the continuing or surviving corporation or
pursuant to which shares of capital stock of any class, or any securities
convertible into such capital stock, of the Company would be converted into
cash, securities, or other property, other than a merger of the Company in which
the holders of common stock of all classes of the Company immediately prior to
the merger would have the same proportion of ownership of common stock of the
surviving corporation immediately after the merger; (iv) the date of the
approval by stockholders of the Company of any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions) of all or
substantially all the assets of the Company; (v) the adoption of any plan or
proposal for the liquidation (but not a partial liquidation) or dissolution of
the Company; or (vi) such other event as the Committee shall in its sole and
absolute discretion, deem to be a "Change in Control" for purposes of the Plan
or any Stock Option Agreement entered into pursuant hereto. The manner of
application and interpretation of the foregoing provisions shall be determined
by the Committee in its sole and absolute discretion.

SECTION 8. AMENDMENT, SUSPENSION, OR TERMINATION OF THE PLAN; AMENDMENT OF
OUTSTANDING OPTIONS

(a) Amendment, Suspension, or Termination of the Plan. The Board of
Directors may amend, suspend, or terminate the Plan at any time; provided,
however, that in no event, without the approval of the Company's stockholders,
shall any action of the Committee or the Board of Directors result in:

(i) increasing, except as provided in Section 3(c) hereof, the maximum
number of shares of Common Stock that may be subject to options granted
under the Plan; or

(ii) making any change that would eliminate the exemption provided by
Rule 16b-3 for the Plan and for options granted under the Plan.

(b) Amendment of Outstanding Options. The Committee may, in its
discretion, amend the terms of any option, prospectively or retroactively, but
no such amendment may impair the rights of any Participant without his or her
consent. The Committee may, in whole or in part, waive any restrictions or
conditions applicable to, or accelerate the vesting of, any option.

SECTION 9. SUCCESSORS AND ASSIGNS

The Plan shall be binding on all successors and permitted assigns of a
Participant, including but not limited to the estate of such Participant and the
executor, administrator or trustee of such estate, the guardian or legal
representative of the Participant.

C-5
<PAGE> 33

SECTION 10. GOVERNING LAW

The interpretation, validity, and enforcement of the Plan will, to the
extent not otherwise governed by the Code or the securities laws of the United
States, be governed by the laws of the State of Delaware.

SECTION 11. NO RIGHT TO REELECTION

Nothing in the Plan shall be deemed to create any obligation on the part of
the Board to nominate any Eligible Director for reelection by the Company's
stockholders, nor confer upon any Eligible Director the right to remain a member
of the Board for any period of time, or at any particular rate of compensation.

SECTION 12. EFFECTIVE AND TERMINATION DATES

(a) Effective Date. The Plan was approved by the Board of Directors on
April 22, 1998, and becomes effective on June 24, 1998, subject to stockholder
approval of the Plan at the Annual Meeting of Stockholders to be held on June
24, 1998.

(b) Termination Date. The Plan will continue in effect until midnight on
June 24, 2008; provided, however, that Awards granted on or before that date may
extend beyond that date and restrictions and other terms and conditions imposed
on any Award granted on or before that date may extend beyond such date.

C-6
<PAGE> 34

AMERICAN STONE INDUSTRIES, INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder of American Stone Industries, Inc. (the
"Company") hereby appoints Thomas H. Roulston II and Glen Gasparini, the proxies
of the undersigned to vote the shares of Common Stock of the undersigned at the
1998 Annual Meeting of Stockholders of the Company to be held at the offices of
Roulston & Company, Inc., 4000 Chester Avenue, Cleveland, Ohio on Wednesday,
June 24, 1998, at 10:30 a.m., local time, and at any adjournment thereof upon
the following:

THE BOARD OF DIRECTORS RECOMMENDS VOTES BE CAST FOR PROPOSALS 1, 2, 3, 4 AND 5.

(1) ELECTION OF DIRECTORS: Enzo Costantino, Glen Gasparini, Jacquita K.
Hauserman, Michael J. Meier, Timothy I. Panzica and Thomas H. Roulston II
for terms expiring in 1999.

[ ]FOR all nominees (except as marked to the contrary) [ ] WITHHOLD
AUTHORITY to vote for all nominees

(INSTRUCTION: IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEE'S NAME IN THE LIST ABOVE.)

(2) Amendment to the Certificate of Incorporation to complete the reverse stock
split of the Common Stock.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

(3) Ratification of all actions relating to the exchange by holders of Common
Stock of each share of Common Stock for one-tenth of a share of Common
Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN

(4) Approval and adoption of the American Stone Industries, Inc. 1998 Management
Stock Option Plan.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

(5) Approval and adoption of the American Stone Industries, Inc. 1998
Non-Employee Director Stock Option Plan.

[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
(Continued, and to be signed on other side)

(Continued from other side)

PROXY NO. SHARES

IF NO INSTRUCTION IS INDICATED, AUTHORITY IS GRANTED TO CAST THE VOTE OF THE
UNDERSIGNED FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR, FOR THE AMENDMENT TO
THE CERTIFICATE OF INCORPORATION, FOR THE RATIFICATION OF ALL ACTIONS RELATING
TO THE EXCHANGE BY HOLDERS OF COMMON STOCK, FOR THE APPROVAL AND ADOPTION OF THE
COMPANY'S 1998 MANAGEMENT STOCK OPTION PLAN AND FOR THE APPROVAL AND ADOPTION OF
THE COMPANY'S 1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.

Dated , 1998
-----------------

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

----------------------------
Signature if held jointly

NOTICE: When signing as
attorney, executor,
administrator, trustee or
guardian, please give your
full title as such. A proxy
given by a corporation
should be signed in the
corporate name by the
chairman of its board of
directors, its president,
vice president, secretary,
or treasurer.

PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.