S-4

As filed with the Securities and Exchange Commission on January 27, 2004

Registration No. 333-                

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Commercial Metals Company

(Exact name of registrant as specified in its charter)

Delaware	5051	75-0725338
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

  6565 N. MacArthur Blvd., Suite 800
Irving, Texas 75039
(214) 689-4300
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices) David M. Sudbury
Vice President, Secretary and General Counsel
6565 N. MacArthur Blvd., Suite 800
Irving, Texas 75039
(214) 689-4300
(Name and address, including zip code, and telephone
number, including area code, of agent for service)

Copies of communications to:

William R. Hays, III
Wm. S. Kleinman
Haynes and Boone, LLP
901 Main Street, Suite 3100
Dallas, Texas 75202
(214) 651-5000

     Approximate date of commencement of proposed sale of securities to the public: As soon as practicable after the Registration Statement becomes effective.

     If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following. o                   

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o                   

     If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o                   

CALCULATION OF REGISTRATION FEE

			Proposed Maximum			Proposed Maximum
Title of each Class	Amount to be		Offering Price			Aggregate Offering		Amount of
of Securities to be Registered	Registered		Per Unit(1)			Price(1)		Registration Fee
5.625% Senior Notes due 2013	$	200,000,000		100	%	$	200,000,000	$	16,180

(1) Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(f) of the rules and regulations under the Securities Act of 1933, as amended.

     The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information contained in this prospectus is not complete and may be changed. We may not exchange these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JANUARY 27, 2004

PRELIMINARY PROSPECTUS

Commercial Metals Company

OFFER TO EXCHANGE

$200,000,000 principal amount of its 5.625% Senior Notes due 2013
which have been registered under the Securities Act,
for any and all of its outstanding 5.625% Senior Notes due 2013

• The exchange offer expires at 5:00 p.m., Eastern Standard time, on                       , 2004, unless we extend the offer.

• We will exchange all outstanding notes, which we refer to in this prospectus as the “old notes,” that are validly tendered and not validly withdrawn for an equal principal amount of new notes that are registered under the Securities Act, which we refer to in this prospectus as the “new notes.”

• The exchange offer is not subject to any conditions other than that it not violate applicable law or any applicable interpretation of the staff of the SEC.

• You may withdraw tenders of old notes at any time before the exchange offer expires.

• The exchange of notes will not be a taxable event for U.S. federal income tax purposes.

• We will not receive any proceeds from the exchange offer.

• The terms of the new notes are substantially identical to the old notes, except for transfer restrictions, registration rights and the circumstances for the payment of additional interest relating to the old notes.

• You may tender old notes only in denominations of $1,000 and multiples of $1,000.

• Our affiliates may not participate in the exchange offer.

• No public market exists for the old notes. We do not intend to list the new notes on any securities exchange and, therefore, no active public market is anticipated.

Please refer to “Risk Factors” beginning on page 8 of this prospectus
for a description of the risks you should consider before investing in the new notes.

     We are not making this exchange offer in any state where it is not permitted.

     Each broker-dealer that receives new notes pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. If the broker-dealer acquired the old notes as a result of market making or other trading activities, such broker-dealer may be a statutory underwriter and may use this prospectus for the exchange offer, as supplemented or amended, in connection with the resale of the new notes.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the new notes or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is                              , 2004.

TABLE OF CONTENTS

	PAGE
Prospectus Summary		1
Risk Factors		8
The Exchange Offer		19
Use of Proceeds		29
Capitalization		30
Selected Financial Information and Other Data		31
Management's Discussion and Analysis of Financial Condition and Results of Operations		33
Company Overview		52
Description of Notes		53
Material U.S. Federal Income Tax Considerations		66
Plan of Distribution		67
Legal Matters		67
Experts		68
Available Information		69
Incorporation by Reference		69

ii

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

     This prospectus and the documents incorporated by reference contain “forward-looking statements” with respect to our financial condition, results of operations, cash flows and business, and our expectations or beliefs concerning future events, including net earnings, product pricing and demand, production rates, energy expense, freight expense, interest rates, inventory levels, acquisitions and general market conditions. These forward-looking statements can generally be identified by phrases such as we or our management “expects,” “anticipates,” “believes,” “plans to,” “ought,” “could,” “will,” “should,” “likely,” “appears,” “projects,” “forecasts” or other similar words or phrases. There is inherent risk and uncertainty in any forward-looking statements. Variances will occur and some could be materially different from our current opinion. Developments that could impact our expectations include the following:

• interest rate changes;

• construction activity;

• decisions by governments affecting the level of steel imports, including tariffs and duties;

• litigation claims and settlements;

• difficulties or delays in the execution of construction contracts resulting in cost overruns or contract disputes;

• metals pricing over which we exert little influence;

• increased capacity and product availability from competing steel minimills and other steel suppliers including import quantities and pricing;

• court decisions;

• industry consolidation or changes in production capacity or utilization;

• global factors including credit availability;

• currency fluctuations;

• scrap, energy, freight and supply prices; and

• the pace of overall economic activity.

     See the section entitled “Risk Factors” in this prospectus for a more complete discussion of these risks and uncertainties and for other risks and uncertainties. In addition, see our filings with the Securities and Exchange Commission, or the SEC, including our Annual Report on Form 10-K for the year ended August 31, 2003, as amended, and our Quarterly Report on Form 10-Q for the quarter ended November 30, 2003. These factors and the other risk factors described in this prospectus are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, we cannot assure you that the actual results or developments we anticipate will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us. Given these uncertainties, we caution prospective investors not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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MARKET DATA

     Market data used throughout this prospectus, including information relating to, and our relative position in, the industries we operate in, are based on the good faith estimates of management, which estimates are based upon their review of internal surveys, independent industry publications, reports or studies commissioned by companies in our industry (including us or our competitors) and other publicly available information. Although we believe that these sources are reliable, we do not guarantee the accuracy or completeness of this information, and we have not independently verified this information.

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PROSPECTUS SUMMARY

     The following summary highlights selected information about this exchange offer. It may not contain all the information that is important to you. For a more complete understanding of this exchange offer, we encourage you to read this entire document and the documents we incorporate by reference into this prospectus. Unless indicated otherwise, the term “notes” refers to both the old notes and the new notes.

Our Company

     We manufacture, recycle, market and distribute steel and metal products and related materials and services through a network of locations located throughout the United States and internationally. Steel and steel-related products represent over 75% of our business. We consider our business to be organized into three segments: manufacturing, recycling and marketing and distribution. During the fiscal year ended August 31, 2003, we derived approximately 36% of our adjusted operating profit from our manufacturing segment, approximately 26% from our recycling segment and approximately 38% from our marketing and distribution segment.

     Our management uses a non-GAAP measure, adjusted operating profit, to compare and evaluate the financial performance of our segments. Adjusted operating profit, as presented below and used in this prospectus, is the sum of our earnings before income taxes and financing costs. In the following table we are providing a reconciliation of the non-GAAP measure, adjusted operating profit (loss), to net earnings (loss) (in thousands):

					Marketing and		Corporate and
Segment	Manufacturing		Recycling		Distribution		Eliminations			Total
Three months ended November 30, 2003:
Net earnings (loss)	$	12,509	$	3,868	$	4,919	$	(8,668	)	$	12,628
Income taxes		7,745		1,846		1,271		(3,477	)		7,385
Interest expense		30		1		47		5,016			5,094
Discounts on sales of accounts receivable		41		19		30		26			116
Adjusted operating profit (loss)	$	20,325	$	5,734	$	6,267	$	(7,103	)	$	25,223

					Marketing and		Corporate and
Segment	Manufacturing		Recycling		Distribution		Eliminations			Total
Year ended August 31, 2003:
Net earnings (loss)	$	13,557	$	10,006	$	15,529	$	(20,188	)	$	18,904
Income taxes		6,477		5,104		4,753		(4,844	)		11,490
Interest expense		130		5		1,313		13,890			15,338
Discounts on sales of accounts receivable		201		91		189		103			584
Adjusted operating profit (loss)	$	20,365	$	15,206	$	21,784	$	(11,039	)	$	46,316

     We were incorporated in 1946 in the State of Delaware. Our predecessor company, a secondary metals recycling business, has existed since approximately 1915. We maintain our executive offices at 6565 N. MacArthur Boulevard, Suite 800, Irving, Texas 75039, telephone (214) 689-4300. Our website address is www.commercialmetals.com. The information on our website does not constitute part of this prospectus. Our fiscal year ends August 31 and all references to years in this prospectus refer to the fiscal year ended August 31 of that year unless otherwise noted.

1

The Exchange Offer

The Exchange Offer	We are offering to exchange the new notes for the old notes that are properly tendered and accepted. You may tender old notes only in denominations of $1,000 and multiples of $1,000. We will issue the new notes on or promptly after the exchange offer expires. As of the date of this prospectus, $200,000,000 principal amount of old notes is outstanding.
Expiration Date	The exchange offer will expire at 5:00 p.m., Eastern Standard time, on                    , 2004, unless extended, in which case the expiration date will mean the latest date and time to which we extend the exchange offer; provided, however, that the maximum period of time during which the exchange offer, including any extension thereof, may be in effect will not exceed 45 days.
Conditions to the Exchange Offer	The exchange offer is not subject to any condition other than that it not violate applicable law or any applicable interpretation of the staff of the SEC. The exchange offer is not conditioned upon any minimum principal amount of old notes being tendered for exchange.
Procedures for Tendering Old Notes	If you wish to tender your old notes for new notes pursuant to the exchange offer, you must transmit to JP Morgan Chase Bank, as exchange agent, on or before the expiration date, either:

• a computer generated message transmitted through The Depository Trust Company’s automated tender offer program system and received by the exchange agent and forming a part of a confirmation of book-entry transfer in which you acknowledge and agree to be bound by the terms of the letter of transmittal; or

• a properly completed and duly executed letter of transmittal, which accompanies this prospectus, or a facsimile of the letter of transmittal, together with your old notes (which may be delivered by book-entry transfer through the facilities of The Depository Trust Company) and any other required documentation, to the exchange agent at its address listed in this prospectus and on the front cover of the letter of transmittal.

If you cannot satisfy either of these procedures on a timely basis, then you should comply with the guaranteed delivery procedures described below. By executing the letter of transmittal, you will make the representations to us described under “The Exchange Offer-Procedures for Tendering.”

Special Procedures for Beneficial Owners

If you are a beneficial owner whose old notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your old notes in the exchange offer, you should contact the registered holder promptly and instruct the registered holder to tender on your behalf. If you wish to tender on your own behalf, you must either (1) make appropriate arrangements to register ownership of the old notes in your name or (2) obtain a properly completed bond power from the registered holder before completing and executing the letter of transmittal and delivering your old notes.

2

Guaranteed Delivery Procedures	If you wish to tender your old notes and time will not permit the documents required by the letter of transmittal to reach the exchange agent before the expiration date, or the procedure for book-entry transfer cannot be completed on a timely basis, you must tender your old notes according to the guaranteed delivery procedures described in this prospectus under the heading “The Exchange Offer-Guaranteed Delivery Procedures.”
Acceptance of the Old Notes and Delivery of the New Notes	Subject to the satisfaction or waiver of the conditions to the exchange offer, we will accept for exchange any and all old notes which are validly tendered in the exchange offer and not withdrawn before 5:00 p.m., Eastern Standard time, on the expiration date. We will deliver the new notes on or promptly after the expiration date.
Withdrawal Rights	You may withdraw the tender of your old notes at any time before 5:00 p.m., Eastern Standard time, on the expiration date, by complying with the procedures for withdrawal described in this prospectus under the heading “The Exchange Offer-Withdrawal of Tenders.”
Material U.S. Federal Tax Considerations	The exchange of notes will not be a taxable event for United States federal income tax purposes. For a discussion of certain federal tax considerations relating to the exchange of notes, see “Material U.S. Federal Income Tax Considerations.”
Exchange Agent	JP Morgan Chase Bank, the trustee under the indenture governing the old notes and the new notes, is serving as the exchange agent.
Consequences of Failure to Exchange	If you do not exchange your old notes for new notes, you will continue to be subject to the restrictions on transfer provided in the old notes and in the indenture governing the old notes. In general, the old notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. We do not currently plan to register the resale of the old notes under the Securities Act.
Registration Rights Agreement	We issued $200,000,000 aggregate principal amount of the old notes on November 12, 2003 to Goldman, Sachs & Co., Banc of America Securities LLC, ABN AMRO Incorporated and Tokyo-Mitsubishi International plc, the initial purchasers. Simultaneously with the sale of the old notes, we entered into a registration rights agreement that provides for, among other things, this exchange offer. You are entitled to exchange your old notes for new notes with substantially identical terms. This exchange offer satisfies that right. After the exchange offer is completed, you will no longer be entitled to any exchange or registration rights with respect to your old notes.

3

The New Notes

     The summary below describes the principal terms of the new notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The “Description of Notes” section of this prospectus contains a more detailed description of the terms of the new notes.

     The form and terms of the new notes are the same as the form and terms of the old notes, except that the new notes will be registered under the Securities Act and, therefore, the new notes will not generally be subject to the transfer restrictions, registration rights and provisions providing for an increase in the interest rate applicable to the old notes. The new notes will evidence the same debt as the old notes and will be governed by the same indenture as the old notes.

Issuer	Commercial Metals Company.
Notes	$200,000,000 of 5.625% Senior Notes due 2013.
Maturity	November 15, 2013.
Ranking	The notes are our senior unsecured obligations and rank equally in right of payment with all of our existing and future senior unsecured indebtedness and senior to all our existing and future subordinated debt. The notes rank junior to any of our secured debt to the extent of the assets securing such debt. In addition, the notes are structurally subordinated to all liabilities of our subsidiaries, including trade payables.
Interest Payment Dates	May 15 and November 15 of each year, beginning May 15, 2004.
Sinking Fund	None.
Optional Redemption	We may redeem the notes, in whole or in part, at any time and from time to time at the redemption price described under the heading “Description of Notes-Optional Redemption.”
Additional Issuances	We may from time to time, without notice to or the consent of the holders of any series of notes issued under the indenture, create and issue additional notes ranking equally and ratably with the notes of those series.
DTC Eligibility	The new notes will be issued in book-entry form and will be represented by one or more permanent global certificates deposited with a custodian for and registered in the name of a nominee of The Depository Trust Company, or DTC, in New York, New York. Beneficial interests in any such securities will be shown on, and transfers will be effected only through, records maintained by DTC and its direct and indirect participants. Any such interest may not be exchanged for certificated securities, except in limited circumstances. See “Description of Notes-Book-Entry System.”
Use of Proceeds	We will not receive any proceeds from the exchange offer.

4

Risk Factors

     We urge you to read the “Risk Factors” section beginning on page 8 of this prospectus so that you understand the risks associated with an investment in the new notes.

5

Summary Consolidated Financial Information and Other Data

     The summary income statement data and balance sheet data presented below are for the three months ended November 30, 2003 and 2002 and for the years ended August 31, 2003, 2002, 2001, 2000 and 1999 and as of November 30, 2003 and August 31, 2003, 2002, 2001, 2000 and 1999. The per share amounts have been adjusted to reflect a two-for-one stock split in the form of a stock dividend on our common stock effective June 28, 2002. In 2002, as reported in our Annual Report on Form 10-K for the year ended August 31, 2002, as amended, we restated the financial statements. The following information should be read in conjunction with the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes incorporated by reference in this prospectus.

	Three Months Ended				Year Ended
	November 30,				August 31,
	2003		2002		2003		2002		2001		2000		1999
					(in millions, except per share data)
Income Statement Data:
Net sales	$	830	$	636	$	2,876	$	2,480	$	2,470	$	2,661	$	2,251
Cost of goods sold		737		575		2,587		2,162		2,173		2,334		1,949
Selling, general and administrative expense		65		54		244		236		223		229		207
Interest expense		5		4		15		19		28		27		20
Loss on reacquisition of debt		3		—		—		—		—		—		—
Litigation accrual		—		—		—		—		8		—		—
Earnings before income taxes		20		3		30		63		38		71		75
Provision for income taxes		7		1		11		22		14		26		28
Net earnings	$	13	$	2	$	19	$	41	$	24	$	45	$	47
Net earnings per share (basic)	$	0.45	$	0.08	$	0.67	$	1.48	$	0.91	$	1.59	$	1.62
Net earnings per share (diluted)	$	0.44	$	0.08	$	0.66	$	1.43	$	0.90	$	1.56	$	1.61
Cash dividends paid per common share	$	0.08	$	0.08	$	0.32	$	0.275	$	0.26	$	0.26	$	0.26

	Three Months Ended						Year Ended
	November 30,						August 31,
	2003			2002			2003			2002			2001			2000			1999
	(in millions, except ratios)
Other Financial Data:
EBITDA (1)	$	40.	2	$	22.	7	$	106.	9	$	143.	4	$	133.	3	$	164.	6	$	146.	5
Ratio of earnings to fixed charges (2)		4.	20		1.	73		2.	57		3.	77		2.	19		3.	25		3.	60
Ratio of EBITDA to interest expense		7.	9		5.	7		7.	0		7.	7		4.	8		6.	0		7.	5
Ratio of total debt to EBITDA(3)		2.	3		2.	8		2.	5		1.	8		2.	0		2.	2		2.	0

	November 30,		August 31,
	2003		2003		2002		2001		2000		1999
	(in millions)
Balance Sheet Data (at end of period):
Cash and cash equivalents (4)	$	133.5	$	75.1	$	124.4	$	56.0	$	20.1	$	44.7
Total assets	$	1,419.3	$	1,275.4	$	1,230.1	$	1,081.9	$	1,170.1	$	1,079.1
Long-term debt (5)	$	362.4	$	255.0	$	256.0	$	251.6	$	261.9	$	265.6
Total debt (5)	$	375.0	$	270.6	$	256.6	$	265.7	$	363.2	$	289.8
Stockholders’ equity	$	528.5	$	506.9	$	501.3	$	433.1	$	418.8	$	418.3

(1) We have included a financial statement measure in the table above that was not derived in accordance with generally accepted accounting principles (GAAP). Earnings before interest expense, income taxes, depreciation and amortization, or EBITDA, is a non-GAAP liquidity measure. In calculating EBITDA, we exclude our largest recurring non-cash charge, depreciation and amortization. We use EBITDA as one guideline to assess our ability to pay our current debt obligations as they mature and a tool to calculate possible future levels of leverage capacity. Reconciliations to net earnings are provided below.

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	Three Months Ended				Year Ended
	November 30,				August 31,
	2003		2002		2003		2002		2001		2000		1999
					(in millions)
Net earnings	$	12.6	$	2.2	$	18.9	$	40.5	$	23.8	$	44.6	$	47.0
Interest expense		5.1		4.0		15.3		18.7		27.6		27.3		19.6
Income taxes		7.4		1.3		11.5		22.6		14.6		26.1		27.8
Depreciation and amortization		15.1		15.2		61.2		61.6		67.3		66.6		52.1
EBITDA	$	40.2	$	22.7	$	106.9	$	143.4	$	133.3	$	164.6	$	146.5

(2) For the purposes of calculating the ratio of earnings to fixed charges, earnings represents earnings before income taxes, interest expense, interest imputed on rent and amortization of capitalized interest. Fixed charges include interest expense, interest capitalized and the portion of operating rental expense that management believes is representative of the appropriate interest component of rent expense.

(3) EBITDA for the quarters ended November 30, 2003 and 2002 has been annualized for purposes of calculating the ratio. Quarterly results are not necessarily indicative of results to be expected for the entire year.

(4) Subsequent to November 30, 2003, we (a) used $51.9 million cash to purchase 71.1% of the shares of Huta Zawiercie, (b) used $48.8 million cash in connection with the Lofland acquisition and (c) acquired $4.8 million in cash in connection with the Huta acquisition.

(5) Subsequent to November 30, 2003, we assumed $46.7 million in debt upon the acquisition of Huta Zawiercie SA.

7

RISK FACTORS

     There are many risks that may affect your investment in the new notes, including those described below. You should carefully consider these risk factors together with all of the other information included in this prospectus and the documents we have incorporated by reference into this prospectus, including our financial statements and related notes and schedules. The risks described below are not the only risks facing us. Additional risks and uncertainties not currently known to us or those we currently deem to be immaterial may also materially and adversely affect our business, financial condition, results of operations or cash flows and our ability to make payment obligations on the new notes. If any of these risks actually occur, our business, financial condition, results of operations or cash flows could be materially adversely affected and you may lose all or part of your investment.

Risks Related to Our Industry

Excess capacity in our industry adversely affects prices and margins.

     Global steel-making capacity exceeds global demand for steel products. In many foreign countries steel production greatly exceeds domestic demand and these countries must export substantial amounts of steel in order to maintain high employment and production levels. Accordingly, steel manufacturers in these countries have traditionally exported steel at prices that are significantly below their home market prices. The high level of imports into the United States over the last few years has severely depressed domestic steel prices. Furthermore, this vast supply of imports can decrease the sensitivity of domestic steel prices to increases in demand. This surge of low priced imports, coupled with increases in the cost of ferrous scrap and the rise in energy prices, has resulted in an erosion of our gross margins.

In light of President Bush’s decision to rescind duties and tariffs, steel imports into the U.S. may again rise or domestic prices may fall, which would adversely affect our sales, margins and profitability.

     In recent history, the United States has been an importer of steel products. From 1987 until 1998, less than 20% of the domestic supply was imported. However, with the cumulative effect of various economic crises, including economic weakness in Asia, Russia and Latin America, foreign producers have looked to the United States as the country with the healthiest economy, the strongest currency and as the buyer of first resort. In addition, foreign governments that own steel production facilities have sought to increase output. Consequently, commencing in 1997 foreign steel products began to flood the domestic market. As a result, imports accounted for approximately 26% of domestic steel consumption in 1998 and remained above 20% through 2002.

     In 2000, our mini-mills joined other steel manufacturers in an antidumping petition filed with the United States International Trade Commission, called the ITC. The ITC determined that there was a reasonable indication of material or threatened injury to U.S. rebar manufacturers, such as us, due to unfairly priced imports of rebar from several foreign countries. In the spring of 2001, the U.S. Department of Commerce determined that dumping of rebar from eight countries had occurred, and the ITC reached a final determination that dumped imports were causing material injury to our industry. As a result, penalty duties, initially ranging from 17% to 232%, were imposed. Although adjusted annually as a result of review investigations by the Department of Commerce, dumping duties are normally in effect for five years and may be extended if, after five years, the ITC determines that removal of the duties would lead to a recurrence of injury. We benefit from these duties. If these duties are subsequently modified or reduced by the Department of Commerce, our sales, margins and profitability may decrease.

     In 2001, President Bush instituted an investigation under Section 201 of the Trade Act of 1974 to determine if increased imports of selected steel products into the United States were an actual or

8

threatened cause of serious injury to domestic manufacturers of steel products. The ITC, in October 2001, found that U.S. steel producers had been seriously injured by these imports and, in December 2001, recommended remedies to President Bush. In March 2002, President Bush announced three-year “safeguard” tariffs that cover the majority of our mini-mills’ products, ranging from 15% to 30% for the first year and declining over the next two years. Excluded from the tariffs were imports from Mexico and Canada as well as imports from developing countries identified by the World Trade Organization. These tariffs, which were applied in addition to the antidumping duties, were further strengthened by an import licensing and monitoring system and an anti-surge mechanism that have been implemented to monitor foreign trade activities in the applicable products.

     We benefited from President Bush’s decision. However, several foreign governments appealed President Bush’s decision to the World Trade Organization. In response, the World Trade Organization ruled against these tariffs. The United States government further appealed this adverse ruling; however, the World Trade Organization ruled against the U.S. appeal in November 2003. On December 4, 2003, President Bush rescinded the steel safeguard tariffs effective immediately. The rescission of the steel safeguard tariffs could result in a resurgence of steel imports, even though the antidumping duties on imports of rebar from several countries imposed by the ITC in 2001 were not changed by this decision. A surge in imports would put downward pressure on steel prices, which would have a negative impact on our sales, margins and profitability.

Our industry is affected by cyclical and regional factors.

     Many of our products are commodities subject to cyclical fluctuations in supply and demand in metal consuming industries. Periods of economic slowdown or a recession in the United States, or the public perception that a slowdown or recession may occur, could decrease the demand for our products and adversely affect our business. Our overall financial results will be dependent substantially upon the extent to which conditions in both the United States and global economies improve. A slower than expected recovery or another recession will further adversely affect our financial results. Our geographic concentration in the southern and southwestern United States as well as areas of Europe, Australia and China exposes us to the local market conditions in these regions. Economic downturns in these areas or decisions by governments that have an impact on the level and pace of overall economic activity could adversely affect our sales and profitability.

     Our business supports cyclical industries such as commercial and residential construction, energy, service center, petrochemical and original equipment manufacturing. These industries experience significant fluctuations in demand for our products based on economic conditions, energy prices, consumer demand and decisions by governments to fund infrastructure projects such as highways, schools, energy plants and airports. Many of these factors are beyond our control. As a result of the volatility in the industries we serve, we may have difficulty increasing or maintaining our level of sales or profitability. If the industries we serve suffer a prolonged downturn, then our business may be adversely affected.

     Our industry is characterized by low backlogs, which means that our results of operations are promptly affected by short-term economic fluctuations.

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Compliance with and changes in various environmental requirements and environmental risks applicable to our industry may adversely affect our results of operations and financial condition.

     Existing laws or regulations, as currently interpreted or reinterpreted in the future, or future laws or regulations, may have a material adverse effect on our results of operations and financial condition. Compliance with environmental laws and regulations is a significant factor in our business. We are subject to local, state, federal and international environmental laws and regulations concerning, among other matters, waste disposal, air emissions, waste and storm water effluent and disposal and employee health. Our manufacturing and recycling operations produce significant amounts of by-products, some of which are handled as industrial waste or hazardous waste. For example, our mini-mills generate electric arc furnace dust, or EAF dust, which the United States Environmental Protection Agency, or the EPA, and other regulatory authorities classify as hazardous waste. EAF dust requires special handling, recycling or disposal.

     In addition, the primary feed materials for the eight shredders operated by our scrap metal recycling facilities are automobile hulks and obsolete household appliances. Approximately 20% of the weight of an automobile hulk consists of unrecyclable material known as shredder fluff. After the segregation of ferrous and saleable non-ferrous metals, shredder fluff remains. Federal and state environmental regulations require shredder fluff to pass a toxic leaching test to avoid classification as a hazardous waste. We endeavor to remove hazardous contaminants from the feed material prior to shredding. As a result, we believe the shredder fluff we generate is not hazardous waste. If the laws, regulations or testing methods change with regard to EAF dust or shredder fluff, we may incur additional significant expenditures.

     Although we believe that we are in substantial compliance with all applicable laws and regulations, legal requirements are changing frequently and are subject to interpretation. New laws, regulations and changing interpretations by regulatory authorities, together with uncertainty regarding adequate pollution control levels, testing and sampling procedures, new pollution control technology and cost benefit analysis based on market conditions are all factors that may increase our future expenditures to comply with environmental requirements. Accordingly, we are unable to predict the ultimate cost of future compliance with these requirements or their effect on our operations. We cannot predict whether such costs can be passed on to customers through product price increases.

     We may also be required to clean up additional sites than we already are or take certain remediation action with regard to sites formerly used in connection with our operations. We may be required to pay for a portion of the costs of clean up or remediation at sites we never owned or on which we never operated if we are found to have arranged for treatment or disposal of hazardous substances on the sites.

Risks Related to Our Company

We may have difficulty competing with companies that have a lower cost structure than ours.

     We compete with regional, national and foreign manufacturers and traders. Some of these competitors are larger, have greater financial resources and more diverse businesses than us. Some of our foreign competitors may be able to pursue business opportunities without regard for the laws and regulations with which we must comply, such as environmental regulations. These companies may have a lower cost structure, more operating flexibility and consequently they may be able to offer better prices and more services than we can. We cannot assure you that we will be able to compete successfully with these companies.

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     Furthermore, over the past few years, many integrated domestic steel producers and secondary metal recyclers have entered bankruptcy proceedings. While in bankruptcy proceedings, these companies can forgo certain costs, giving them a competitive advantage. The companies that reorganize and emerge from bankruptcy often have more competitive capital cost structures. In addition, asset sales by these companies during the reorganization process tend to be at depressed prices, which enable the purchasers to acquire greater capacity at lower cost.

Fluctuations in the value of the United States dollar and weakness in foreign economies may adversely affect our business.

     Fluctuations in the value of the dollar can be expected to affect our business. The U.S. dollar, when strong, makes imported metal products less expensive, resulting in more imports of steel products into the U.S. by our foreign competitors. Weakness in foreign economies compared to the U.S., such as Eastern Europe, Asia and Latin America, may increase competition from foreign producers. Economic difficulties in these regions may result in lower local demand for steel products and may encourage greater steel exports to the U.S. at depressed prices. As a result, those of our products that are made in the U.S., may become relatively more expensive as compared to imported steel, which has had and in the future could have a negative impact on our sales, revenues and profitability.

     The U.S. dollar, when strong, hampers our international marketing and distribution business. Weak local currencies limit the amount of U.S. dollar denominated products that we can import for our international operations and limits our ability to be competitive against local producers selling in local currencies.

Our steel mini-mill business requires continuous capital investments that we may not be able to sustain.

     We must make regular substantial capital investments in our steel mini-mills to lower production costs and remain competitive. We cannot be certain that we will have sufficient internally generated cash or acceptable external financing to make necessary substantial capital expenditures in the future. The availability of external financing depends on many factors outside of our control, including capital market conditions and the overall performance of the economy. If funding is insufficient, we may be unable to develop or enhance our mini-mills, take advantage of business opportunities and respond to competitive pressures.

Scrap and other supplies for our businesses are subject to significant price fluctuations, which may adversely affect our business.

     We depend on obsolete steel and non-ferrous metals, called scrap, and other supplies for our businesses. Although the scrap and other supplies may be sufficient to meet our future needs, the prices of scrap and other supplies have historically fluctuated greatly. Our future profitability will be adversely affected if we are unable to pass on higher material costs to our customers. We may not be able to adjust our product prices, especially in the short-term, to recover the costs of increases in material prices.

     For example, we depend on the ready availability of scrap as feedstock for our mini-mills. Although we believe that the supply of scrap is adequate to meet future needs, the price of scrap has historically been subject to significant fluctuation. Also, the raw material used in manufacturing copper tubing is copper scrap, supplemented occasionally by virgin copper ingot. Copper scrap has generally been readily available, and a small portion of our copper scrap comes from our metal recycling yards. However, copper scrap is subject to rapid price fluctuations related to the price and supply of virgin copper. Price increases for high quality copper scrap could adversely affect our business. Finally, our Arkansas mill

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does not have melting capacity, so it is dependent on an adequate supply of competitively priced used rail. The availability of used rail fluctuates with the pace of railroad abandonments, rail replacement by railroads and demand for used rail from domestic and foreign rail rerolling mills. Price increases for used rail could adversely affect our business.

Our mini-mills consume large amounts of electricity and natural gas, and shortages or increases in the price of electricity and natural gas could adversely affect our business.

     The successful operation of our mini-mills depends on an uninterrupted supply of electricity. Accordingly, we are at risk in the event of an energy disruption. The electricity industry recently has been adversely affected by shortages and price volatility in regions outside of the locations of our mini-mills. Prolonged black-outs or brown-outs would substantially disrupt our production. Any such disruptions could adversely affect our operating results. Electricity prices can be volatile and increases would have an adverse effect on the costs of operating our mini-mills.

     Demand for natural gas depends primarily upon the worldwide number of natural gas wells being drilled, completed and re-worked and the depth and drilling conditions of these wells. The level of these activities is primarily dependent on current and anticipated natural gas prices. Many factors, such as the supply and demand for natural gas, general economic conditions, political instability or armed conflict in worldwide natural gas producing regions and global weather patterns affect these prices.

     We purchase most of our electricity and natural gas requirements in local markets for relatively short periods of time. As a result, fluctuations in energy prices can have an adverse effect on the costs of operating our mini-mills.

Unexpected equipment failures may lead to production curtailments or shutdowns.

     Interruptions in our production capabilities will adversely affect our production costs, steel available for sales and earnings for the affected period. In addition to equipment failures, our facilities are also subject to the risk of catastrophic loss due to unanticipated events such as fires, explosions or violent weather conditions. Our manufacturing processes are dependent upon critical pieces of steel-making equipment, such as our furnaces, continuous casters and rolling equipment, as well as electrical equipment, such as transformers, and this equipment may, on occasion, be out of service as a result of unanticipated failures. We have experienced and may in the future experience material plant shutdowns or periods of reduced production as a result of such equipment failures.

The availability of insurance coverage and increased cost may adversely affect profitability.

     After the events of September 11, 2001, several high profile corporate bankruptcies and the downturn in the investment markets, insurance companies tightened coverages and dramatically increased premium costs. Many insurers no longer offer certain coverages and the remaining carriers have in many instances reduced the liability they are willing to insure while raising the cost. Our profitability could be adversely affected when we renew our insurance policies due to the additional insurance expense as well as the greater exposure to risk caused by reduced coverage.

Hedging transactions may limit our potential gains or expose us to loss.

     Our product lines and worldwide operations expose us to risks associated with fluctuations in foreign currency exchange, commodity prices and interest rates. As part of our risk management program, we use financial instruments, including commodity futures or forwards, foreign currency exchange forward

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contracts and interest rate swaps. While intended to reduce the effects of the fluctuations, these transactions may limit our potential gains or expose us to loss.

     We enter into foreign currency exchange forwards as economic hedges of trade commitments or anticipated commitments denominated in currencies other than the functional currency, to mitigate the effects of changes in currency rates. Although we do not enter into these instruments for trading purposes or speculation, and although our management believes all of these instruments are economically effective as hedges of underlying physical transactions, these foreign exchange commitments are dependent on timely performance by our counterparties. Their failure to perform could result in our having to close these hedges without the anticipated underlying transaction and could result in losses if foreign currency exchange rates have changed.

Rising interest rates may increase our borrowing costs and dampen economic activity resulting in lower sales, margins and profitability.

     Our short-term financing sources include primarily the commercial paper market, the sale of certain of our accounts receivable and borrowings from banks. We also have swapped our fixed-rate interest obligation on $100 million of debt due in 2005 for a floating rate obligation. If interest rates rise, our cost of short-term borrowing will increase and lower our profitability. Higher interest rates may also adversely affect some of the markets for our products, such as housing and commercial construction, resulting in a lower level of sales, margins and profitability.

We are involved and may in the future become involved in various environmental matters that may result in fines, penalties or judgments being assessed against us or liability imposed upon us which we cannot presently estimate or reasonably foresee and which may have a material impact on our earnings and cash flows.

     Under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, called CERCLA, or similar state statutes, we may have obligations to conduct investigation and remediation activities associated with alleged releases of hazardous substances or to reimburse the EPA (or state agencies as applicable) for such activities and to pay for natural resource damages associated with alleged releases. We have been named a potentially responsible party at fourteen federal and state Superfund sites because the EPA or an equivalent state agency contends that we and other potentially responsible scrap metal suppliers are liable for the cleanup of those sites as a result of having sold scrap metal to unrelated manufacturers for recycling as a raw material in the manufacture of new products. We are involved in litigation or administrative proceedings with regard to several of these sites in which we are contesting, or at the appropriate time may contest, our liability at the sites. In addition, we have received information requests with regard to other sites which may be under consideration by the EPA as potential CERCLA sites.

     Although we are unable to estimate precisely the ultimate dollar amount of exposure to loss in connection with various environmental matters or the effect on our consolidated financial position, we make accruals as warranted. Due to inherent uncertainties, including evolving remediation technology, changing regulations, possible third-party contributions, the inherent shortcomings of the estimation process, the uncertainties involved in litigation and other factors, the amounts we accrue could vary significantly from the amounts we ultimately are required to pay.

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An inability to fully and effectively integrate acquisitions, including the Huta Zawiercie S.A. and Lofland Company acquisitions, could result in increased costs while diverting management’s attention from our core operations, and we cannot assure you that we will realize their full benefits or successfully manage our combined company, and future acquisitions may result in dilutive equity issuances or increases in debt.

     On December 3, 2003, our subsidiary Commercial Metals (International) AG purchased 71.1% of the shares of Huta Zawiercie S.A., the third largest producer of steel in Poland, from Impexmetal S.A. of Warsaw, Poland. We used approximately $47.1 million of the net proceeds (net of cash received) from the offering of the old notes to fund this acquisition. We also assumed approximately $46.7 million in debt in connection with the acquisition. On December 23, 2003, we acquired 100% of the stock of Lofland Acquisition, Inc. (Lofland), the sole stockholder of the Lofland Company and subsidiaries, which operate steel reinforcing bar fabrication and construction-related products sales facilities from 11 locations in Texas, Arkansas, Louisiana, Oklahoma, New Mexico and Mississippi. We used approximately $48.8 million of the net proceeds of the old notes to fund this acquisition. Also, as part of our ongoing business strategy we regularly evaluate and may pursue acquisitions of and investments in complementary companies. We cannot assure you that we will be able to fully or successfully integrate any pending or future acquisitions in a timely manner or at all. If we are unable to successfully integrate acquisitions, we may incur costs and delays or other operational, technical or financial problems, any of which could adversely affect our business. In addition, management’s attention may be diverted from core operations which could harm our ability to timely meet the needs of our customers and damage our relationships with those customers. To finance future acquisitions, we may need to raise funds either by issuing equity securities or incurring or assuming debt. If we incur additional debt, the related interest expense may significantly reduce our profitability.

We are subject to litigation which could adversely affect our profitability.

     We are involved in various litigation matters, including regulatory proceedings, administrative proceedings, governmental investigations, environmental matters and construction contract disputes. The nature of our operations also expose us to possible litigation claims in the future. Although we make every effort to avoid litigation, these matters are not totally within our control. We will contest these matters vigorously and have made insurance claims where appropriate, but because of the uncertain nature of litigation and coverage decisions, we cannot predict the outcome of these matters. These matters could have a material adverse effect on our financial condition and profitability. Litigation is very costly, and the costs associated with prosecuting and defending litigation matters could have a material adverse effect on our financial condition and profitability. Although we are unable to estimate precisely the ultimate dollar amount of exposure to loss in connection with litigation matters, we make accruals as warranted. However, the amounts that we accrue could vary significantly from the amounts we actually pay, due to inherent uncertainties and the inherent shortcomings of the estimation process, the uncertainties involved in litigation and other factors.

We depend on our senior management team and the loss of any member could adversely affect our operations.

     Our success is dependent on the management and leadership skills of our senior management team, including Stanley A. Rabin, our chairman of the board. If we lose any of these individuals or fail to attract and retain equally qualified personnel, then we may not be able to implement our business strategy. We have not entered into employment agreements with any of our senior management personnel other than Murray R. McClean, president of our marketing and distribution division.

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Some of our customers may default on the debts they owe to us.

     Economic conditions are not consistent in all the markets we serve. Some segments are still weak, and our customers may struggle to meet their obligations, especially if a significant customer of theirs defaults. We recorded a $5.2 million provision in fiscal 2003 for losses on receivables due to weakness in the domestic and global economies, which increased our allowance for collection losses to $9.3 million. Other factors such as management and accounting irregularities have forced some companies into bankruptcy. A weak economic recovery and corporate failures could result in higher bad debt costs.

Risks Related to Our Indebtedness

We have substantial debt and have the ability to incur additional debt. The principal and interest payment obligations of our debt may restrict our future operations and impair our ability to meet our obligations under the new notes.

     As of November 30, 2003, we had approximately $375 million of outstanding indebtedness, $528 million in stockholders’ equity, and our debt to equity ratio was 42%. Subsequent to November 30, 2003, we assumed $46.7 million in debt upon the acquisition of Huta Zawiercie, SA. In addition, the indenture governing the new notes will permit us to incur additional debt. See “Description of Notes.”

     The amount of our debt may have important consequences to you. For instance, it could:

• make it more difficult for us to satisfy our financial obligations, including those relating to the new notes;

• require us to dedicate a substantial portion of our cash flow from operations to the payment of interest and principal due under our debt, including the new notes, which will reduce funds available for other business purposes;

• increase the risk of a ratings downgrade, increasing our cost of financing and limiting our access to capital markets;

• increase the risk of a default of certain loan covenants, restricting our use of cash and financing alternatives;

• increase our vulnerability to general adverse economic and industry conditions;

• limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate;

• place us at a competitive disadvantage compared with some of our competitors that have less debt; and

• limit our ability to obtain additional financing required to fund working capital and capital expenditures, mergers and acquisitions and for other general corporate purposes.

     Our ability to satisfy our obligations and to reduce our total debt depends on our future operating performance and on economic, financial, competitive and other factors, many of which are beyond our control. Our business may not generate sufficient cash flow, and future financings may not be available to provide sufficient net proceeds, to meet these obligations or to successfully execute our business strategy.

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Credit ratings affect our ability to obtain financing and the cost of such financing.

     Credit ratings affect our ability to obtain financing and the cost of such financing. Our commercial paper program is ranked in the second highest category by Moody’s Investors Service (P-2) and Standard & Poor’s Corporation (A-2). Our senior unsecured debt is investment grade rated by Standard & Poor’s Corporation (BBB) and Moody’s Investors Service (Baa2). On November 5, 2003, Moody’s Investors Service downgraded our debt from Baa1 to Baa2 but changed its outlook from negative to stable. In determining our credit ratings, the rating agencies consider a number of both quantitative and qualitative factors. These factors include earnings, fixed charges such as interest, cash flows, total debt outstanding, off balance sheet obligations and other commitments, total capitalization and various ratios calculated from these factors. The rating agencies also consider predictability of cash flows, business strategy, industry conditions and contingencies. Lower ratings on our commercial paper program or our senior unsecured debt could impair our ability to obtain additional financing and will increase the cost of the financing that we do obtain.

The agreements governing the new notes and our other debt contain financial covenants and impose restrictions on our business.

     The indenture governing our 7.20% notes due 2005, 6.80% notes due 2007, 6.75% notes due 2009 and the old notes contains restrictions on our ability to create liens, sell assets, enter into sale and leaseback transactions and consolidate or merge. The new notes will be issued under the same indenture and will also be subject to these covenants. In addition, our credit facility contains covenants that place restrictions on our ability to, among other things:

• create liens;

• enter into transactions with affiliates;

• sell assets;

• in the case of some of our subsidiaries, guarantee debt; and

• consolidate or merge.

     Our credit facility also requires us to meet certain financial tests and maintain certain financial ratios, including a maximum debt to capitalization and interest coverage ratios. Other agreements that we may enter into in the future may contain covenants imposing significant restrictions on our business that are similar to, or in addition to, the covenants under our existing agreements. These restrictions may affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise.

     Our ability to comply with these covenants may be affected by events beyond our control, including prevailing economic, financial and industry conditions. The breach of any of these restrictions could result in a default under the indenture governing the new notes or under our other debt agreements. An event of default under our debt agreements would permit some of our lenders to declare all amounts borrowed from them to be due and payable, together with accrued and unpaid interest. If we were unable to repay debt to our secured lenders if we incur secured debt in the future, these lenders could proceed against the collateral securing that debt. In addition, acceleration of our other indebtedness may cause us to be unable to make interest payments on the new notes.

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Risks Related to the New Notes

The new notes will be effectively subordinated to our secured debt.

     Our obligations under the new notes are unsecured. As a result, the new notes will be effectively subordinated to any secured debt we incur in the future to the extent of the collateral securing that debt. As of November 30, 2003, we had no secured debt outstanding and our credit facilities were unsecured. We may, however, in the future issue secured debt. If we have secured debt in the future and are not able to repay amounts due under the terms of the secured debt, the holders of the secured debt could proceed against the collateral securing that indebtedness. In that event, any proceeds received upon a realization of the collateral securing that indebtedness would be applied first to amounts due under the terms of the secured debt before any proceeds would be available to make payments on the new notes. If we default under any secured debt, the value of the collateral on the secured debt may not be sufficient to repay both the holders of the secured debt and the holders of the new notes.

We depend in part on our subsidiaries to generate sufficient cash flow to meet our debt service obligations, including payments on the new notes.

     Although Commercial Metals Company is an operating company, a substantial part of its assets consists of the capital stock or other equity interests of its subsidiaries. As a result, we depend in part on the earnings of our subsidiaries and the availability of their cash flows to us, or upon loans, advances or other payments made by these entities to us to service our debt obligations, including the new notes. The ability of these entities to pay dividends or make other payments or advances to us will depend upon their operating results and will be subject to restrictions under agreements to which we are a party and applicable laws.

     Our ability and the ability of our subsidiaries to generate sufficient cash flow from operations to allow us to make scheduled payments on our debt, including the new notes, will depend on our and their future financial performance, which will be affected by a range of economic, competitive and business factors, many of which are outside of our control. If we and our subsidiaries do not generate sufficient cash flow from operations to satisfy our debt obligations, including payments on the new notes, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. We cannot assure you that any refinancing would be possible, that any assets could be sold, or, if sold, of the timing of the sales and the amount of proceeds realized from those sales, that additional financing could be obtained on acceptable terms, if at all, or that additional financing would be permitted under the terms of our various debt instruments then in effect. Our inability to generate sufficient cash flow to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms, would have an adverse effect on our business, financial condition and results of operations, as well as on our ability to satisfy our obligations on the new notes. The cash flows of our operating subsidiaries and the amount that is available to us, together with our cash flows, may not be adequate for us to service our debt obligations, including the new notes.

The new notes will be structurally subordinated to the debt and liabilities of our subsidiaries.

     The new notes will not be guaranteed by our subsidiaries. Payments on the new notes are required to be made only by Commercial Metals Company. We may not have direct access to the assets of our subsidiaries unless those assets are transferred by dividend or otherwise to us. The ability of our subsidiaries to pay dividends or otherwise transfer assets to us is subject to various restrictions, including restrictions under other agreements to which we are a party and under applicable law. As a result, the

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new notes will be structurally subordinated to all existing and future debt and liabilities, including trade payables, of our subsidiaries.

There is no public market for the new notes, and we cannot be sure that a market for the new notes will develop.

     The new notes are a new issue of securities for which there is no active trading market. If any of the new notes are traded, they may trade at a discount from the initial offering price of the old notes if the liquidity of the trading market in the new notes is limited. In addition, the liquidity of the trading market in the new notes and the market prices quoted for the new notes may be adversely affected by changes in the overall market for debt securities.

Volatile trading prices may require you to hold the new notes for an indefinite period of time.

     If a market develops for the new notes, they might trade at prices higher or lower than the initial offering price of the old notes. The trading price would depend on many factors, including prevailing interest rates, the market for similar securities, general economic conditions and our financial condition, performance and prospects. Historically, the market for debt has been subject to disruptions that have caused substantial fluctuations in the prices of these securities. The market for the new notes may be subject to such fluctuations, which could have an adverse effect on the price of the new notes. You should be aware that you may be required to bear the financial risk of an investment in the new notes for an indefinite period of time.

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THE EXCHANGE OFFER

Purpose of the Exchange Offer

     We issued $200,000,000 aggregate principal amount of the old notes on November 12, 2003 to Goldman, Sachs & Co., Banc of America Securities LLC, ABN AMRO Incorporated and Tokyo-Mitsubishi International plc, the initial purchasers, pursuant to a purchase agreement. The initial purchasers subsequently sold the old notes to “qualified institutional buyers,” as defined in Rule 144A under the Securities Act, in reliance on Rule 144A. As a condition to the sale of the old notes, we entered into a registration rights agreement with the initial purchasers on November 12, 2003. Pursuant to the registration rights agreement, we agreed that we would:

     (1) file an exchange offer registration statement with the SEC on or prior to February 10, 2004;

     (2) use our reasonable best efforts to have the exchange offer registration statement declared effective by the SEC on or prior to June 9, 2004;

     (3) keep the exchange offer open for a period of not less than 30 days; and

     (4) consummate the exchange offer within 45 days after the exchange offer registration statement is declared effective.

     This summary of the terms of the registration rights agreement does not contain all the information that you should consider, and we refer you to the provisions of the registration rights agreement, which has been filed as an exhibit to our Form 10-K for our fiscal year ended August 31, 2003, which is incorporated herein by reference.

Resale of the New Notes

     Based upon an interpretation by the staff of the SEC contained in no-action letters issued to third parties, we believe that you may exchange your old notes for new notes in the ordinary course of business. For further information on the SEC’s position, see Exxon Capital Holdings Corporation, available May 13, 1988, Morgan Stanley & Co. Incorporated, available June 5, 1991 and Shearman & Sterling, available July 2, 1993, and other interpretive letters to similar effect. You will be allowed to resell new notes to the public without further registration under the Securities Act and without delivering to purchasers of the new notes a prospectus that satisfies the requirements of Section 10 of the Securities Act so long as you do not participate, do not intend to participate, and have no arrangement with any person to participate, in a distribution of the new notes. However, the foregoing does not apply to you if you are a broker-dealer who purchased the new notes directly from us to resell pursuant to Rule 144A or any other available exemption under the Securities Act, or you are an “affiliate” of ours within the meaning of Rule 405 under the Securities Act.

     In addition, if you are a broker-dealer, or you acquire new notes in the exchange offer for the purpose of distributing or participating in the distribution of the new notes, you cannot rely on the position of the staff of the SEC contained in the no-action letters mentioned above and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction, unless an exemption from registration is otherwise available.

     Each broker-dealer that receives new notes for its own account in exchange for old notes, which the broker-dealer acquired as a result of market-making activities or other trading activities, must

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acknowledge that it will deliver a prospectus in connection with any resale of the new notes. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. A broker-dealer may use this prospectus, as it may be amended or supplemented from time to time, in connection with resales of new notes received in exchange for old notes which the broker-dealer acquired as a result of market-making or other trading activities.

Terms of the Exchange Offer

     Upon the terms and subject to the conditions described in this prospectus and in the letter of transmittal, we will accept any and all old notes validly tendered and not withdrawn before the expiration date. We, through the exchange agent, will issue $1,000 principal amount of new notes in exchange for each $1,000 principal amount of outstanding old notes surrendered pursuant to the exchange offer. You may tender old notes only in integral multiples of $1,000.

     The form and terms of the new notes are the same as the form and terms of the old notes except that:

• the new notes will be registered under the Securities Act and will not bear legends restricting their transfer; and

• holders of the new notes will not be entitled to any of the rights of holders of old notes under the registration rights agreement, which rights will terminate upon the completion of the exchange offer.

     The new notes will evidence the same debt as the old notes and will be issued under the same indenture, so the new notes and the old notes will be treated as a single class of debt securities under the indenture.

     As of the date of this prospectus, $200,000,000 in aggregate principal amount of the old notes is outstanding and registered in the name of Cede & Co., as nominee for The Depository Trust Company. Only registered holders of the old notes, or their legal representatives or attorneys-in-fact, as reflected on the records of the trustee under the indenture, may participate in the exchange offer. We will not set a fixed record date for determining registered holders of the old notes entitled to participate in the exchange offer.

     You do not have any appraisal or dissenters’ rights under the indenture in connection with the exchange offer. We intend to conduct the exchange offer in accordance with the provisions of the registration rights agreement and the applicable requirements of the Securities Act, the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC.

     We will be deemed to have accepted validly tendered old notes when, as and if we have given oral or written notice of acceptance to the exchange agent. The exchange agent will act as your agent for the purposes of receiving the new notes from us.

     If you tender old notes in the exchange offer, you will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of old notes pursuant to the exchange offer. We will pay all charges and expenses, other than the applicable taxes described below, in connection with the exchange offer.

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Expiration Date; Extensions; Amendments

     The term expiration date will mean 5:00 p.m., Eastern Standard time, on                    , 2004, unless we, in our sole discretion, extend the exchange offer, in which case the term expiration date will mean the latest date and time to which we extend the exchange offer; provided, however, that the maximum period of time during which the exchange offer, including any extension thereof, may be in effect will not exceed 45 days. To extend the exchange offer, we will:

• notify the exchange agent of any extension orally or in writing; and

• mail to each registered holder an announcement that will include disclosure of the approximate number of old notes deposited to date,

each before 9:00 a.m., Eastern Standard time, on the next business day after the previously scheduled expiration date. We reserve the right, in our reasonable discretion:

• to delay accepting any old notes;

• to extend the exchange offer; or

• if any conditions listed below under “-Conditions” are not satisfied, to terminate the exchange offer by giving oral or written notice of the delay, extension or termination to the exchange agent.

     We will follow any delay in acceptance, extension or termination as promptly as practicable by oral or written notice to the registered holders or by public announcement thereof. If we amend the exchange offer in a manner we determine constitutes a material change, we will promptly disclose the amendment in a prospectus supplement that we will distribute to the registered holders. Depending upon the significance of the amendment and the manner of disclosure, we will extend the exchange offer if the exchange offer would otherwise expire while we are disclosing the amendment to the registered holders.

Interest on the New Notes

     The new notes will bear interest at the same rate and on the same terms as the old notes. Consequently, the new notes will bear interest at a rate equal to 5.625% per annum (based on a 360-day year). Interest will be payable semi-annually on each November 15 and May 15, commencing on May 15, 2004.

     You will receive interest on May 15, 2004 from the date of initial issuance of the new notes, plus an amount equal to the accrued interest on the old notes from November 12, 2003 to the date of exchange. We will deem the right to receive any interest accrued on the old notes waived by you if we accept your old notes for exchange.

Procedures for Tendering

     You may tender old notes in the exchange offer only if you are a registered holder of old notes. To tender in the exchange offer, a registered holder must either comply with the procedures for a manual tender or comply with the automated tender offer procedures of DTC described below under “Tendering Through DTC’s Automated Tender Offer Program.” To complete a manual tender, you must:

• complete, sign and date the letter of transmittal or a facsimile of the letter of transmittal;

• have the signatures guaranteed if required by the letter of transmittal; and

• mail or otherwise deliver the letter of transmittal or the facsimile to the exchange agent at the address listed below under “-Exchange Agent” for receipt before the expiration date.

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     In addition, either:

• the exchange agent must receive certificates for the old notes along with the letter of transmittal; or

• the exchange agent must receive a timely confirmation of a book-entry transfer of the old notes into its account at DTC pursuant to the procedure for book-entry transfer described below before the expiration date.

     If you wish to tender your old notes and cannot comply with the requirement to deliver the letter of transmittal and your old notes (including by book-entry transfer) or use the automated tender offer program of DTC before the expiration date, you must tender your old notes according to the guaranteed delivery procedures described below.

     Your tender, if not withdrawn before the expiration date, will constitute an agreement between you and us in accordance with the terms and subject to the conditions described in this prospectus and in the letter of transmittal.

     The method of delivery of old notes and the letter of transmittal and all other required documents to the exchange agent is at your election and risk. We recommend that instead of delivery by mail, you use an overnight or hand delivery service, properly insured. In all cases, you should allow sufficient time to assure delivery to the exchange agent before the expiration date. You should not send letters of transmittal or old notes to us. You may request your respective brokers, dealers, commercial banks, trust companies or nominees to effect the transactions described above for you.

     If you are a beneficial owner of old notes whose old notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your old notes, you should contact the registered holder promptly and instruct the registered holder to tender on your behalf. If you wish to tender on your own behalf, before completing and executing the letter of transmittal and delivering the old notes you must either:

• make appropriate arrangements to register ownership of the old notes in your name; or

• obtain a properly completed bond power from the registered holder.

     The transfer of registered ownership may take considerable time. Unless the old notes are tendered:

     (1) by a registered holder who has not completed the box entitled “Special Issuance Instructions” or the box entitled “Special Delivery Instructions” on the letter of transmittal; or

     (2) for the account of: a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc.; a commercial bank or trust company having an office or correspondent in the United States; or an “eligible guarantor institution” within the meaning of Rule 17Ad-15 under the Exchange Act that is a member of one of the recognized signature guarantee programs identified in the letter of transmittal,

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an eligible guarantor institution must guarantee the signatures on a letter of transmittal or a notice of withdrawal described below under “— Withdrawal of Tenders.”

     If the letter of transmittal is signed by a person other than the registered holder, the old notes must be endorsed or accompanied by a properly completed bond power, signed by the registered holder as the registered holder’s name appears on the old notes. If the letter of transmittal or any old notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, they should so indicate when signing, and unless waived by us, they must submit evidence satisfactory to us of their authority to so act with the letter of transmittal.

     The exchange agent and DTC have confirmed that any financial institution that is a participant in the depositary’s system may utilize DTC’s automated tender offer program to tender notes. See “— Tendering Through DTC’s Automated Tender Offer Program” below.

     We will determine in our sole discretion all questions as to the validity, form, eligibility, including time of receipt, acceptance and withdrawal of tendered old notes, which determination will be final and binding. We reserve the absolute right to reject any and all old notes not properly tendered or any old notes our acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defects, irregularities or conditions of tender as to particular old notes. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, you must cure any defects or irregularities in connection with tenders of old notes within the time we determine. Although we intend to notify you of defects or irregularities with respect to tenders of old notes, neither we, the exchange agent nor any other person will incur any liability for failure to give you that notification. Unless waived, we will not deem tenders of old notes to have been made until you cure the defects or irregularities.

     While we have no present plan to acquire any old notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any old notes that are not tendered in the exchange offer, we reserve the right in our sole discretion to purchase or make offers for any old notes that remain outstanding after the expiration date. We also reserve the right to terminate the exchange offer, as described below under “-Conditions,” and, to the extent permitted by applicable law, purchase old notes in the open market, in privately negotiated transactions or otherwise. The terms of any of those purchases or offers could differ from the terms of the exchange offer.

     If you wish to tender old notes in exchange for new notes in the exchange offer, we will require you to represent that:

• you are not an affiliate of ours;

• you will acquire any new notes in the ordinary course of your business; and

• at the time of completion of the exchange offer, you have no arrangement with any person to participate in the distribution of the new notes.

Return of Old Notes

     If we do not accept any tendered old notes for any reason described in the terms and conditions of the exchange offer or if you withdraw or submit old notes for a greater principal amount than you desire to exchange, we will return the unaccepted, withdrawn or non-exchanged old notes without expense to you as promptly as practicable. In the case of old notes tendered by book-entry transfer into the exchange

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agent’s account at DTC pursuant to the book-entry transfer procedures described below, we will credit the old notes to an account maintained with DTC as promptly as practicable.

Book-Entry Transfer

     The exchange agent will make a request to establish an account with respect to the old notes at DTC for purposes of the exchange offer within two business days after the date of this prospectus, and any financial institution that is a participant in DTC’s systems may make book-entry delivery of old notes by causing DTC to transfer the old notes into the exchange agent’s account at the DTC in accordance with DTC’s procedures for transfer. However, although delivery of old notes may be effected through book-entry transfer at the DTC, you must transmit and the exchange agent must receive, the letter of transmittal or a facsimile of the letter of transmittal, with any required signature guarantees and any other required documents, at the address below under “-Exchange Agent” on or before the expiration date or pursuant to the guaranteed delivery procedures described below.

Tendering Through DTC’s Automated Tender Offer Program

     The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC’s system may use DTC’s automated tender offer program to tender its old notes. Participants in the program may transmit their acceptance of the exchange offer electronically instead of physically completing and signing the letter of transmittal and delivering it to the exchange agent. Tendering through the automated tender offer program causes DTC to transfer the old notes to the exchange agent according to its procedures for transfer. DTC will then send an agent’s message to the exchange agent.

     The term “agent’s message” means a message transmitted by DTC to and received by the exchange agent and forming part of the book-entry confirmation, stating that:

• DTC has received an express acknowledgment from a participant in DTC’s automated tender offer program that is tendering old notes that are the subject of such book-entry confirmation;

• the participant has received and agrees to be bound by the terms of the letter of transmittal or in the case of an agent’s message relating to guaranteed delivery, that the participant has received and agrees to be bound by the applicable notice of guaranteed delivery; and

• we may enforce the letter of transmittal or notice of guaranteed delivery, as applicable, against the participant.

Guaranteed Delivery Procedures

     If you wish to tender your old notes and (1) your old notes are not immediately available or (2) you cannot deliver the old notes, the letter of transmittal or any other required documents to the exchange agent before the expiration date, you may effect a tender if:

     (1) the tender is made through an eligible guarantor institution;

     (2) before the expiration date, the exchange agent receives from the eligible guarantor institution a properly completed and duly executed notice of guaranteed delivery, substantially in the form provided by us, that states your name and address, the certificate number(s) of the old notes and the principal amount of old notes tendered, states that the tender is being made by that notice of guaranteed delivery, and guarantees that, within three New York Stock Exchange trading days after the expiration date, the eligible guarantor institution will deposit with the exchange agent the letter of transmittal, together with

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the certificate(s) representing the old notes in proper form for transfer or a confirmation of a book-entry transfer, as the case may be, and any other documents required by the letter of transmittal; and

     (3) within five New York Stock Exchange trading days after the expiration date, the exchange agent receives a properly executed letter of transmittal, as well as the certificate(s) representing all tendered old notes in proper form for transfer and all other documents required by the letter of transmittal.

     Upon request, the exchange agent will send to you a notice of guaranteed delivery if you wish to tender your old notes according to the guaranteed delivery procedures described above.

Withdrawal of Tenders

     Except as otherwise provided in this prospectus, you may withdraw tenders of old notes at any time before 5:00 p.m., Eastern Standard time, on the expiration date. To withdraw a tender of old notes in the exchange offer, the exchange agent must receive a written or facsimile transmission notice of withdrawal at its address listed in this prospectus before the expiration date or you must comply with the appropriate procedures of DTC’s automated tender offer program system. Any notice of withdrawal must:

• specify the name of the person who deposited the old notes to be withdrawn;

• identify the old notes to be withdrawn, including the certificate number(s) and principal amount of the old notes; and

• be signed in the same manner as the original signature on the letter of transmittal by which the old notes were tendered, including any required signature guarantees.

     If the old notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn old notes and otherwise comply with the procedures of DTC.

     We will determine in our sole discretion all questions as to the validity, form and eligibility of the notices, and our determination will be final and binding on all parties. We will not deem any properly withdrawn old notes to have been validly tendered for purposes of the exchange offer, and we will not issue new notes with respect to those old notes, unless you validly re-tender the withdrawn old notes. You may re-tender properly withdrawn old notes by following one of the procedures described above under “-Procedures for Tendering” at any time before the expiration date.

Conditions

     Notwithstanding any other term of the exchange offer, we will not be required to accept for exchange, or exchange the new notes for, any old notes, and may terminate the exchange offer as provided in this prospectus before the acceptance of the old notes, if, in our reasonable judgment, the exchange offer violates applicable law, rules or regulations or an applicable interpretation of the staff of the SEC.

     If we determine in our reasonable discretion that any of these conditions are not satisfied, we may:

• refuse to accept any old notes and return all tendered old notes to you;

• extend the exchange offer and retain all old notes tendered before the exchange offer expires, subject, however, to your rights to withdraw the old notes; or

• waive the unsatisfied conditions with respect to the exchange offer and accept all properly tendered old notes that have not been withdrawn.

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     If the waiver constitutes a material change to the exchange offer, we will promptly disclose the waiver by means of a prospectus supplement that we will distribute to the registered holders of the old notes. Depending on the significance and the timing of the waiver, we may also decide to extend the exchange offer.

     These conditions are for our sole benefit, and we may assert them or waive them in our sole discretion. If we fail at any time to exercise any of these rights, this failure will not mean that we have waived our rights. Each right will be deemed an ongoing right that we may assert at any time or at various times, in each case, prior to the expiration of the exchange offer. In addition, we will not accept for exchange any old notes tendered and will not issue new notes in exchange for any old note, if at that time any stop order has been threatened or is in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture under the Trust Indenture Act of 1939.

Termination of Registration Rights

     All of your rights under the registration rights agreement will terminate upon consummation of the exchange offer except with respect to our continuing obligations:

• to indemnify you and parties related to you against liabilities, including liabilities under the Securities Act; and

• to provide, upon your request, the information required by Rule 144A(d)(4) under the Securities Act to permit resales of the old notes pursuant to Rule 144A.

Shelf Registration

If:

     (1) the new notes received by holders other than certain restricted holders are not freely transferable under the Securities Act due to changes in existing SEC interpretations;

     (2) the exchange offer has not been completed by July 24, 2004; or

     (3) any holder of old notes is not eligible under interpretations of the SEC to participate in the exchange offer and the holder provides notice to us,

we will file, at our cost, with the SEC a shelf registration statement to cover resales of the old notes or the new notes, as the case may be, within the later of 90 days after the issuance of the old notes or 30 days after the time the obligation to file arises. We will use our reasonable best efforts to cause the shelf registration statement to be declared effective under the Securities Act within 120 days after the shelf registration statement is filed and use our reasonable best efforts to keep the shelf registration statement effective until two years after its effective date or such shorter period ending when all resales of old notes or new notes covered by the shelf registration statement have been made. A holder selling old notes or new notes pursuant to the shelf registration statement generally would be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the exchange and registration rights agreement which are applicable to such holder, including certain indemnification obligations.

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Liquidated Damages

If:

     (1) we fail to file any of the registration statements required by the registration rights agreement on or before the date specified for such filing; or

     (2) any of such registration statements is not declared effective by the SEC on or prior to the date specified for such effectiveness; or

     (3) we fail to consummate the exchange offer within 45 days after the exchange offer registration statement is declared effective; or

     (4) the shelf registration statement or the exchange offer registration statement is declared effective but thereafter is withdrawn by us or becomes subject to an effective stop order suspending its effectiveness in connection with resales or exchanges of transfer restricted securities during the periods specified in the registration rights agreement (each such event referred to in clauses (1) through (4) above, a “registration default”);

then we will pay to each holder of the outstanding old notes, as liquidated damages, additional penalty interest for the period from the occurrence of the registration default until such time as no registration default is in effect. The amount of penalty interest would be equal to 0.25% per annum during the first 90-day period following the occurrence of such registration default, and would increase by an additional 0.25% per annum during each subsequent 90-day period while the registration default remains in effect, up to a maximum of 1.00% per annum.

Exchange Agent

     We have appointed JPMorgan Chase Bank as exchange agent for the exchange offer. You should direct questions and requests for assistance, requests for additional copies of this prospectus or the letter of transmittal and requests for a notice of guaranteed delivery to the exchange agent addressed as follows:

By Registered or Certified Mail:	By Hand Delivery:
JPMorgan Chase Bank ITS Bond Events 2001 Bryan Street, 9th Floor Dallas, TX 75201 Attention: Frank Ivins	JPMorgan Chase Bank ITS Bond Events 2001 Bryan Street, 9th Floor Dallas, TX 75201 Attention: Frank Ivins
By Overnight Delivery:	By Facsimile (for eligible institutions only):
JPMorgan Chase Bank	(214) 468-6494
ITS Bond Events	Attention: Frank Ivins
2001 Bryan Street, 9th Floor
Dallas, TX 75201	To Confirm Facsimile:
Attention: Frank Ivins	(214) 468-6464

     Delivery to an address other than the one stated above or transmission via a facsimile number other than the one stated above will not constitute a valid delivery.

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Fees and Expenses

     We will bear the expenses of soliciting tenders. We are making the principal solicitation by mail; however, our officers and regular employees may make additional solicitations by facsimile, telephone or in person.

     We have not retained any dealer manager in connection with the exchange offer and will not make any payments to brokers, dealers or others soliciting acceptances of the exchange offer. We will, however, pay the exchange agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses.

     We will pay the cash expenses incurred in connection with the exchange offer which we estimate to be approximately $300,000. These expenses include registration fees, fees and expenses of the exchange agent and the trustee, accounting and legal fees and printing costs, among others.

     We will pay all transfer taxes, if any, applicable to the exchange of notes pursuant to the exchange offer. If, however, a transfer tax is imposed for any reason other than the exchange of the old notes pursuant to the exchange offer, then you must pay the amount of the transfer taxes. If you do not submit satisfactory evidence of payment of the taxes or exemption from payment with the letter of transmittal, we will bill the amount of the transfer taxes directly to you.

Consequence of Failure to Exchange

     Participation in the exchange offer is voluntary. We urge you to consult your financial and tax advisors in making your decisions on what action to take. Old notes that are not exchanged for new notes pursuant to the exchange offer will remain restricted securities. Accordingly, those old notes may be resold only:

• to a person whom the seller reasonably believes is a qualified institutional buyer in a transaction meeting the requirements of Rule 144A;

• in a transaction meeting the requirements of Rule 144 under the Securities Act;

• outside the United States to a foreign person in a transaction meeting the requirements of Rule 903 or 904 of Regulation S under the Securities Act;

• in accordance with another exemption from the registration requirements of the Securities Act and based upon an opinion of counsel if we so request;

• to us; or

• pursuant to an effective registration statement.

     In each case, the old notes may be resold only in accordance with any applicable securities laws of any state of the United States or any other applicable jurisdiction.

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USE OF PROCEEDS

     The exchange offer satisfies an obligation under the registration rights agreement. We will not receive any proceeds from the exchange offer. In consideration for issuing the new notes as contemplated by this prospectus, we will receive the old notes in like principal amount. The old notes surrendered in exchange for the new notes will be retired and cancelled and cannot be reissued. Accordingly, the issuance of the new notes will not result in any increase in our indebtedness or capital stock.

     We used substantially all of the net proceeds from the offering of the old notes for (a) the purchase of our 7.20% notes due 2005 validly tendered and not withdrawn pursuant to the tender offer and (b) the acquisition of a 71.1% interest in Huta Zawiercie SA and the acquisition of the Lofland Company.

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CAPITALIZATION

     The following table sets forth our cash and cash equivalents, short-term debt and our consolidated capitalization at November 30, 2003. You should read this table in conjunction with the condensed consolidated financial statements and related notes that are incorporated by reference in this prospectus.

	November 30, 2003
	(dollars in thousands)
Cash and cash equivalents(1)	$	133,544
Short-term debt:
Trade financing	$	12,000
Notes payable		—
Current maturities of long-term debt		618
Total short-term debt		12,618
Long-term debt, net of current maturities:(2)
7.20% notes due 2005		11,566
6.80% notes due 2007		50,000
6.75% notes due 2009		100,000
5.625% notes due 2013		200,000
Other		799
Total long-term debt(3)		362,365
Stockholders’ equity:
Preferred stock		—
Common stock, $5.00 par value, 40,000,000 shares authorized; 28,325,301 shares outstanding at November 30, 2003(4)		161,326
Additional paid-in capital		1,966
Accumulated other comprehensive income		7,841
Retained earnings		412,254
Less treasury stock, 3,939,865 shares		(54,906	)
Total stockholders’ equity		528,481
Total capitalization	$	903,464

(1)	Subsequent to November 30, 2003, we (a) used $51.9 million cash to purchase 71.1% of the shares of Huta Zawiercie, (b) used $48.8 million cash in connection with the Lofland acquisition and (c) acquired $4.8 million in cash in connection with the Huta acquisition.
(2)	See the notes to our condensed consolidated financial statements for additional information concerning long-term debt. The 7.20% notes due 2005 include the effect of an interest rate swap valued at $566,000.
(3)	Subsequent to November 30, 2003, we assumed $46.7 million in debt upon the acquisition of Huta Zawiercie S.A.
(4)	Does not include approximately 3,508,000 shares issuable upon the exercise of options outstanding at November 30, 2003.

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SELECTED FINANCIAL INFORMATION AND OTHER DATA

     The selected income statement data and balance sheet data presented below are for the three months ended November 30, 2003 and 2002 and for the years ended August 31, 2003, 2002, 2001, 2000 and 1999 and as of November 30, 2003 and August 31, 2003, 2002, 2001, 2000 and 1999. The per share amounts have been adjusted to reflect a two-for-one stock split in the form of a stock dividend on our common stock effective June 28, 2002. In 2002, as reported in our Annual Report on Form 10-K for the year ended August 31, 2002, as amended, we restated the financial statements. The following information should be read in conjunction with the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes incorporated by reference in this prospectus.

	Three Months Ended				Year Ended
	November 30,				August 31,
	2003		2002		2003		2002		2001		2000		1999
	(in millions, except per share data)
Income Statement Data:
Net sales	$	830	$	636	$	2,876	$	2,480	$	2,470	$	2,661	$	2,251
Cost of goods sold		737		575		2,587		2,162		2,173		2,334		1,949
Selling, general and administrative expense		65		54		244		236		223		229		207
Interest expense		5		4		15		19		28		27		20
Loss on reacquisition of debt		3		—		—		—		—		—		—
Litigation accrual		—		—		—		—		8		—		—
Earnings before income taxes		20		3		30		63		38		71		75
Provision for income taxes		7		1		11		22		14		26		28
Net earnings	$	13	$	2	$	19	$	41	$	24	$	45	$	47
Net earnings per share (basic)	$	0.45	$	0.08	$	0.67	$	1.48	$	0.91	$	1.59	$	1.62
Net earnings per share (diluted)	$	0.44	$	0.08	$	0.66	$	1.43	$	0.90	$	1.56	$	1.61
Cash dividends paid per common share	$	0.08	$	0.08	$	0.32	$	0.275	$	0.26	$	0.26	$	0.26

	Three Months Ended						Year Ended
	November 30,						August 31,
	2003			2002			2003			2002			2001			2000			1999
	(in millions, except ratios)
Other Financial Data:
EBITDA (1)	$	40.	2	$	22.	7	$	106.	9	$	143.	4	$	133.	3	$	164.	6	$	146.	5
Ratio of earnings to fixed charges (2)		4.	20		1.	73		2.	57		3.	77		2.	19		3.	25		3.	60
Ratio of EBITDA to interest expense		7.	9		5.	7		7.	0		7.	7		4.	8		6.	0		7.	5
Ratio of total debt to EBITDA(3)		2.	3		2.	8		2.	5		1.	8		2.	0		2.	2		2.	0

	November 30,				August 31,
	2003		2003		2002		2001		2000		1999
	(in millions)
Balance Sheet Data (at end of period):
Cash and cash equivalents (4)	$	133.5	$	75.1	$	124.4	$	56.0	$	20.1	$	44.7
Total assets	$	1,419.3	$	1,275.4	$	1,230.1	$	1,081.9	$	1,170.1	$	1,079.1
Long-term debt (5)	$	362.4	$	255.0	$	256.0	$	251.6	$	261.9	$	265.6
Total debt (5)	$	375.0	$	270.6	$	256.6	$	265.7	$	363.2	$	289.8
Stockholders’ equity	$	528.5	$	506.9	$	501.3	$	433.1	$	418.8	$	418.3

(1) We have included a financial statement measure in the table above that was not derived in accordance with generally accepted accounting principles (GAAP). Earnings before interest expense, income

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     Table of Contents

taxes, depreciation and amortization, or EBITDA, is a non-GAAP liquidity measure. In calculating EBITDA, we exclude our largest recurring non-cash charge, depreciation and amortization. We use EBITDA as one guideline to assess our ability to pay our current debt obligations as they mature and a tool to calculate possible future levels of leverage capacity. Reconciliations to net earnings are provided below.

	Three Months Ended				Year Ended
	November 30,				August 31,
	2003		2002		2003		2002		2001		2000		1999
	(in millions)
Net earnings	$	12.6	$	2.2	$	18.9	$	40.5	$	23.8	$	44.6	$	47.0
Interest expense		5.1		4.0		15.3		18.7		27.6		27.3		19.6
Income taxes		7.4		1.3		11.5		22.6		14.6		26.1		27.8
Depreciation and amortization		15.1		15.2		61.2		61.6		67.3		66.6		52.1
EBITDA	$	40.2	$	22.7	$	106.9	$	143.4	$	133.3	$	164.6	$	146.5

(2)	For the purposes of calculating the ratio of earnings to fixed charges, earnings represents earnings before income taxes, interest expense, interest imputed on rent and amortization of capitalized interest. Fixed charges include interest expense, interest capitalized and the portion of operating rental expense that management believes is representative of the appropriate interest component of rent expense.
(3)	EBITDA for the quarters ended November 30, 2003 and 2002 has been annualized for purposes of calculating the ratio. Quarterly results are not necessarily indicative of results to be expected for the entire year.
(4)	Subsequent to November 30, 2003, we (a) used $51.9 million cash to purchase 71.1% of the shares of Huta Zawiercie, (b) used $48.8 million cash in connection with the Lofland acquisition and (c) acquired $4.8 million in cash in connection with the Huta acquisition.
(5)	Subsequent to November 30, 2003, we assumed $46.7 million in debt upon the acquisition of Huta Zawiercie SA.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist in the understanding and assessment of the trends and significant changes in our results of operations and financial condition. Historical results may not indicate future performance. Our forward-looking statements are subject to a variety of factors that could cause actual results to differ materially from those contemplated by these statements. Factors that may cause such a difference include, but are not limited to, those discussed in “Disclosure Regarding Forward-Looking Statements” and “Risk Factors.” Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and the accompanying notes incorporated by reference in this prospectus.

     We manufacture, recycle, market and distribute steel and metal products through a network of over 140 locations in the United States and internationally.

Manufacturing Operations

We conduct our manufacturing operations through a network of:

• steel mills, commonly referred to as “minimills,” that produce reinforcing bar, angles, flats, small beams, rounds, fence post sections and other shapes;

• steel fabrication and processing plants that bend, cut and fabricate steel, primarily reinforcing bar and angles;

• a copper tube mill;

• warehouses that sell or rent supplies for the installation of concrete;

• plants that produce special sections for floors and ceiling support;

• plants that produce steel fence posts;

• a plant that treats steel with heat to strengthen and provide flexibility;

• a plant that rebuilds railcars; and

• a railroad salvage company.

Recycling Operations

     We conduct our recycling operations through 44 metal processing plants located in the states of Texas, South Carolina, Florida, North Carolina, Oklahoma, Kansas, Missouri, Tennessee, Louisiana and Georgia.

Marketing and Distribution Operations

     We market and distribute steel, copper and aluminum coil, sheet and tubing, ores, metal concentrates, industrial minerals, ferroalloys and chemicals through our network of 15 marketing and distribution

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offices, 4 processing facilities and joint ventures around the world. Our customers use these products in a variety of industries.

     You should read this management’s discussion and analysis in connection with your review of our consolidated audited financial statements and the accompanying footnotes that are incorporated by reference in this prospectus.

Critical Accounting Policies and Estimates

     The following are important accounting policies, estimates and assumptions that you should understand as you review our financial statements. We apply these accounting policies and make these estimates and assumptions to prepare financial statements under generally accepted accounting principles. Our use of these accounting policies, estimates and assumptions affects our results of operations and our reported amounts of assets and liabilities. Where we have used estimates or assumptions, actual results could differ significantly from our estimates.

     Revenue Recognition. Generally, we recognize sales when title passes. For a few of our steel fabrication operations, we recognize net sales and profits from certain long-term fixed price contracts by the percentage-of-completion method. In determining the amount of net sales to recognize, we estimate the total costs and profits expected to be recorded for the contract term and the recoverability of costs related to change orders. These estimates could change, resulting in changes in our earnings.

     Contingencies. We make accruals as needed for litigation, administrative proceedings, government investigations (including environmental matters), and contract disputes. We base our environmental liabilities on estimates regarding the number of sites for which we will be responsible, the scope and cost of work to be performed at each site, the portion of costs that we expect we will share with other parties and the timing of the remediation. Where timing of expenditures can be reliably estimated, we discount amounts to reflect our cost of capital over time. We record these and other contingent liabilities when they are probable and when we can reasonably estimate the amount of loss. Where timing and amounts cannot be precisely estimated, we estimate a range, and we recognize the low end of the range without discounting. Also, see Note 9, Commitments and Contingencies, to our consolidated financial statements for the year ended August 31, 2003 incorporated by reference in this prospectus.

     Inventory Cost. We determine inventory cost for most domestic inventories by the last-in, first-out method, or LIFO. At the end of each quarter, we estimate both inventory quantities and costs that we expect at the end of the fiscal year for these LIFO calculations, and we record an amount on a pro-rata basis. These estimates could vary substantially from the actual year-end results, causing an adjustment to cost of goods sold. See Note 14, Quarterly Financial Data, to our consolidated financial statements for the year ended August 31, 2003 incorporated by reference in this prospectus. We record all inventories at the lower of their cost or market value.

     Property, Plant and Equipment. Our manufacturing and recycling businesses are capital intensive. We evaluate the value of these assets and other long-lived assets whenever a change in circumstances indicates that their carrying value may not be recoverable. Some of the estimated values for assets that we currently use in our operations utilize judgments and assumptions of future undiscounted cash flows that the assets will produce. If these assets were for sale, our estimates of their values could be significantly different because of market conditions, specific transaction terms and a buyer’s different viewpoint of future cash flows. Also, we depreciate property, plant and equipment on a straight-line basis over the estimated useful lives of the assets. Depreciable lives are based on our estimate of the assets’ economically useful lives. To the extent that an asset’s actual life differs from our estimate, there could be

34

an impact on depreciation expense or a gain/loss on the disposal of the asset in a later period. We expense major maintenance costs as incurred.

     Other Accounting Policies and New Accounting Pronouncements. See Note 1, Summary of Significant Accounting Policies, to our consolidated financial statements for the year ended August 31, 2003 incorporated by reference in this prospectus.

Consolidated Results of Operations

     Our management uses a non-GAAP measure, adjusted operating profit, to compare and evaluate the financial performance of our segments. See Note 13, Business Segments, to our consolidated financial statements for the year ended August 31, 2003 and Note J, Business Segments to our condensed consolidated financial statements for the three months ended November 30, 2003 incorporated by reference in this prospectus. We define adjusted operating profit as the sum of our earnings before income taxes and financing costs. Adjusted operating profit provides a core operational earnings measurement that compares segments without the need to adjust for federal, but more specifically, state taxes which have considerable variation between domestic jurisdictions. Tax regulations in international operations add additional complexity. Also, we exclude interest cost and discounts on the sales of accounts receivable in our calculation of adjusted operating profit. The results are, therefore, without consideration of financing alternatives of capital employed. In the following table we are providing a reconciliation of the non-GAAP measure, adjusted operating profit (loss) to net earnings (loss):

					Marketing		Corporate
					and		and
	Manufacturing		Recycling		Distribution		Eliminations			Total
	(in millions)
Three months ended November 30, 2003:
Net earnings (loss)	$	12.5	$	3.9	$	4.9	$	(8.7	)	$	12.6
Income taxes		7.7		1.8		1.3		(3.4	)		7.4
Interest expense		—		—		0.1		5.0			5.1
Discounts on sales of accounts receivable		0.1		—		—		—			0.1
Adjusted operating profit (loss)	$	20.3	$	5.7	$	6.3	$	(7.1	)	$	25.2
Three months ended November 30, 2002:
Net earnings (loss)	$	2.3	$	0.9	$	2.8	$	(3.8	)	$	2.2
Income taxes		1.4		0.5		1.5		(2.1	)		1.3
Interest expense		—		—		0.1		3.9			4.0
Discounts on sales of accounts receivable		0.1		—		—		—			0.1
Adjusted operating profit (loss)	$	3.8	$	1.4	$	4.4	$	(2.0	)	$	7.6
Year ended August 31, 2003:
Net earnings (loss)	$	13.6	$	10.0	$	15.5	$	(20.2	)	$	18.9
Income taxes		6.5		5.1		4.8		(4.9	)		11.5
Interest expense		0.1		—		1.3		13.9			15.3
Discounts on sales of accounts receivable		0.2		0.1		0.2		0.1			0.6
Adjusted operating profit (loss)	$	20.4	$	15.2	$	21.8	$	(11.1	)	$	46.3

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						Marketing		Corporate
						and		and
	Manufacturing		Recycling			Distribution		Eliminations			Total
	(in millions)
Year ended August 31, 2002:
Net earnings (loss)	$	45.0	$	3.7		$	8.1	$	(16.3	)	$	40.5
Income taxes		25.7		1.2			3.8		(8.1	)		22.6
Interest expense		0.3		—			2.0		16.4			18.7
Discounts on sales of accounts receivable		0.4		0.2			0.3		(0.1	)		0.8
Adjusted operating profit (loss)	$	71.4	$	5.1		$	14.2	$	(8.1	)	$	82.6
Year ended August 31, 2001:
Net earnings (loss)	$	34.8	$	(1.5	)	$	3.6	$	(13.1	)	$	23.8
Income taxes		21.1		(.9	)		2.1		(7.7	)		14.6
Interest expense		0.4		—			1.8		25.4			27.6
Discounts on sales of accounts receivable		0.4		0.1			0.3		0.2			1.0
Adjusted operating profit (loss)	$	56.7	$	(2.3	)	$	7.8	$	4.8		$	67.0

	Three Months Ended						Year Ended
	November 30,						August 31,
	2003			2002			2003			2002			2001
	(in millions except share data)
Net sales	$	830		$	636		$	2,876		$	2,480		$	2,470
Net earnings		12.6			2.2			18.9			40.5			23.8
LIFO effect on net earnings expense (income)		0.8			0.1			6.1			1.0			(1.1	)
Per diluted share		0.0	3		0.0	1		0.2	1		0.0	4		(0.0	4)

The following financial events were significant during the first quarter ended November 30, 2003:

• The improved market conditions that we experienced during the fourth quarter of fiscal 2003 continued during our first quarter of fiscal 2004 for most of our businesses.

• Steel group earnings increased primarily due to higher shipments, as realized product prices only kept up with the increases in input costs.

• The copper tube division reported increased gross margins due to higher volumes and improved metal spreads.

• The recycling segment continued to be very profitable primarily due to improvements in the ferrous scrap market over last year.

• Marketing and distribution’s adjusted operating profit was higher than last year’s first quarter, with improvements in a number of products’ prices.

• On November 12, 2003, we issued $200 million aggregate principal amount of 5.625% notes due 2013 following the purchase of $89 million of notes otherwise due in 2005. We incurred a $2.8 million pre-tax charge on this purchase.

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• During the three months ended November 30, 2003, we realized a pre-tax gain of $1.5 million in marketing and distribution related to the forward purchase of Polish Zlotys in connection with our December 3, 2003 acquisition of Huta Zawiercie, S.A.

Segments

     Unless otherwise indicated, all dollars below are before income taxes. Financial results for our reportable segments are consistent with the basis and manner in which we internally disaggregate financial information for making operating decisions. We have three reportable segments: manufacturing, recycling, and marketing and distribution.

     The following table shows net sales and adjusted operating profit (loss) by business segment:

	Three Months Ended				Year Ended
	November 30,				August 31,
	2003		2002		2003		2002		2001
	(in millions)
Net sales:
Manufacturing	$	379	$	296	$	1,340	$	1,366	$	1,350
Recycling		132		96		441		378		394
Marketing and distribution		340		256		1,150		777		771
Adjusted operating profit (loss):
Manufacturing	$	20.3	$	3.7	$	20.4	$	71.4	$	56.7
Recycling		5.7		1.4		15.2		5.1		(2.3	)
Marketing and distribution		6.3		4.4		21.8		14.2		7.8

Quarter Ended November 30, 2003 Compared to 2002

     Manufacturing. We include our steel group and our copper tube division in our manufacturing segment. Adjusted operating profit is equal to earnings before income taxes for our four steel minimills, our copper tube mill and the steel group’s fabrication operations. Our manufacturing segment’s adjusted operating profit for the three months ended November 30, 2003 increased $16.6 million (443%) as compared to 2002 on $82.3 million (28%) more net sales. Our steel group’s minimills and our copper tube mill reported higher adjusted operating profits due to higher selling prices and increased shipments, although higher scrap purchase and utility costs resulted in continued compressed gross margins. Our steel group’s downstream fabrication operations were more profitable due to higher shipments with stable selling prices. Slower demand for commercial construction was more than offset by demand in other construction markets. Our downstream rebar fabrication, construction related products, steel post plants, steel joist manufacturing and structural steel fabrication businesses, were profitable for the three months ended November 30, 2003.

     The table below reflects steel and scrap prices per ton:

	Three months ended
	November 30,
	2003		2002
Average mill selling price (total sales)	$	309	$	272
Average mill selling price (finished goods)		313		281
Average fabrication selling price		555		558
Average ferrous scrap purchase price		118		89

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     Minimills. Adjusted operating profit for our four steel minimills increased 408% for the three months ended November 30, 2003 compared to 2002, due to higher selling prices and shipments. Adjusted operating profits at all four mills were significantly higher. The largest increases in profitability were at SMI Texas and SMI South Carolina. Adjusted operating profits at SMI Texas increased $2.7 million (91%) for the three months ended November 30, 2003 as compared to 2002. SMI South Carolina reported $1.7 million adjusted operating profit for the three months ended November 30, 2003 as compared to a $2.3 million adjusted operating loss in 2002. The mills shipped 566,000 tons in the current quarter compared to 505,000 last year, an increase of 12%. Mill production increased as well, with tons rolled up 13% to 541,000. Tons melted increased 9% to 561,000. The average total mill selling price at $309 per ton was $37 (14%) above last year. Our mill selling price for finished goods increased $32 per ton (11%). Average scrap purchase costs were $29 per ton (33%) higher than last year. Utility expenses increased by $1.8 million as compared to last year; both natural gas and electricity costs were higher. Consequently, the increases in our steel product prices were only enough to offset the increase in these input costs, resulting in continuing restricted mill product margins. However, our metal spread (the difference between our average total mill selling price and our average scrap purchase price) was $8 per ton higher during the three months ended November 30, 2003 as compared to 2002.

     Fabrication and Other Businesses. Adjusted operating profit in the steel group’s fabrication and other businesses increased by $6.6 million (472%) for the three months ended November 30, 2003 as compared to 2002. Fabrication plant shipments totaled 280,000 tons, 29% more than last year’s first quarter shipments of 217,000 tons. The average fabrication selling price for the three months ended November 30, 2003 was approximately the same as compared to 2002. All of these lines of business were profitable for the three months ended November 30, 2003 including rebar and structural fabrication, construction-related products, steel post plants, and steel joist manufacturing. During the three months ended November 30, 2002, our structural steel fabrication and joist plants had reported adjusted operating losses. We are continuing to evaluate certain facilities which are performing under expectations or for which we are considering alternative uses. Our current estimates of cash flows do not indicate that the assets are impaired. However, these estimates and expected uses could change resulting in asset impairments.

     On December 23, 2003, we acquired Lofland for $48.8 million. Lofland is the sole stockholder of the Lofland Company and subsidiaries which operate steel reinforcing bar fabrication and construction-related products sales facilities from 11 locations in Texas, Arkansas, Louisiana, Oklahoma, New Mexico and Mississippi. The acquisition of Lofland complements our existing Texas rebar fabrication and construction-related product sales operations and expands our service areas in each of the neighboring states. See Note I, Acquisitions, to our condensed consolidated financial statements for the three months ended November 30, 2003 incorporated by reference in this prospectus.

     Copper Tube. Our copper tube division’s adjusted operating profit increased $1.9 million (695%) to $2.2 million on 32% higher net sales. Copper tube shipments increased 7% to 16.6 million pounds. Production increased 5% to 16.1 million pounds. The average selling price increased 26 cents per pound (24%) to $1.36 for the three months ended November 30, 2003 as compared to $1.10 for the three months ended November 30, 2002. The average copper scrap price increased 15 cents per pound (22%) during the three months ended November 30, 2003 as compared to 2002. Demand in our end use markets remained relatively strong, but selling prices remained constrained by over-supply of water and refrigeration tubing. Our metal spreads improved because the average copper scrap price increased less than the average product sales price.

     Recycling. Our recycling segment reported an adjusted operating profit of $5.7 million for the three months ended November 30, 2003 as compared with an adjusted operating profit of $1.4 million in 2002.

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Net sales for the three months ended November 30, 2003 were 37% higher at $132 million. Gross margins were 42% higher than the same period last year. The segment processed and shipped 430,000 tons of ferrous scrap during the three months ended November 30, 2003, 10% more than 2002. Ferrous sales prices were on average $124 per ton, or $35 (39%) higher than 2002. Nonferrous shipments were 2.5% lower at 54,000 tons. The average nonferrous scrap sales price of $1,139 per ton for the three months ended November 30, 2003 was 18% higher than in 2002. The total volume of scrap processed, including the steel group’s processing plants, was 734,000 tons, an increase of 10% from the 669,000 tons processed in 2002.

     Marketing and Distribution. Net sales in the three months ended November 30, 2003 for our marketing and distribution segment increased 33% to $340 million as compared to net sales of $256 million in 2002. Adjusted operating profit for the three months ended November 30, 2003 was $6.3 million, as compared to $4.4 million in 2002, an increase of 42%. Markets were solid in several geographic regions and product lines. Sales to and within Asia, especially China, were up significantly. Also, the economy in Australia was still strong. Sales were level in Europe and imports into the United States were mixed. A number of product prices (as expressed in U.S. dollars) improved during the three months ended November 30, 2003. Gross margins were better for steel products and industrial raw materials, but were lower for nonferrous metal products. The increased profitability in marketing and distribution was largely due to our strategy in recent years to build up our regional business around the world and to increase our downstream presence.

     On December 3, 2003, we purchased a 71.1% interest in Huta Zawiercie, S.A. in Zawiercie, Poland. Huta Zawiercie is a steel minimill, with annual capacity of about 1 million metric tons of primarily rebar and wire rod products. See Note I, Acquisitions, to our condensed consolidated financial statements for the three months ended November 30, 2003 incorporated by reference in this prospectus. During the three months ended November 30, 2003, we recognized a $1.5 million gain on our forward purchases of Polish Zlotys related to this acquisition.

     Other. During the three months ended November 30, 2003, we incurred a $2.8 million charge from the purchase of $89 million of our notes otherwise due in 2005.

2003 Compared to 2002

     Manufacturing. We include our steel group and our copper tube division in our manufacturing segment.

     Adjusted operating profit is equal to earnings before income taxes for our four steel minimills, our copper tube mill and the steel group’s fabrication operations. Our manufacturing adjusted operating profit for the year ended August 31, 2003 decreased $51.0 million as compared to 2002. The sale of SMI-Owen and a litigation settlement at the mills in 2002 accounted for $10.6 million of the decrease. Excluding these items, adjusted operating profit decreased 66% in 2003 as compared to 2002. Net sales for the year ended August 31, 2003 decreased $26.4 million (2%) as compared to 2002. Steel mill selling prices were at very low levels for much of 2003. However, scrap purchase prices were driven sharply higher by offshore demand and the weakening value of the U.S. dollar. Our steel minimills implemented higher selling prices that became partially effective during the second half of 2003. However, these price increases did not fully offset higher scrap and utility costs. Gross margins were significantly lower as a result of these conditions. Our copper tube mill’s gross margins were also lower due to increased copper scrap purchase prices and lower selling prices for its products. Our steel group’s fabrication operations were less profitable in 2003 as compared to 2002 primarily due to lower selling prices which more than offset the impact of higher shipments.

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The table below reflects steel and scrap prices per ton:

	August 31,
(dollars per ton)	2003		2002
Average mill selling price-total sales	$	278	$	269
Average mill selling price-finished goods only		287		275
Average fabrication selling price		536		608
Average ferrous scrap purchase price		97		80

     Minimills. Adjusted operating profit for our four steel minimills decreased $18.2 million (52%) for the year ended August 31, 2003 as compared to 2002. The effect of valuing inventories under the LIFO method accounted for $3.5 million (19%) of the decrease in adjusted operating profit for the year ended August 31, 2003 as compared to 2002. Also, during the year ended August 31, 2002, our steel minimills received $2.5 million from a nonrecurring graphite electrode litigation settlement. Even excluding these items, adjusted operating profit in 2003 decreased as compared to 2002 because higher shipments and average selling prices were not enough to offset higher input costs, including scrap and utilities. Our adjusted operating profit at SMI Texas decreased 25% to $19.3 million for the year ended August 31, 2003 as compared to an adjusted operating profit of $25.8 million in 2002. SMI South Carolina lost $7.1 million for the year ended August 31, 2003 as compared to a $2.8 million adjusted operating profit in 2002. Higher scrap costs, higher energy costs and a weak demand for our products were the most significant reasons for SMI South Carolina’s loss in 2003 although these factors were partially offset by price increases in the fourth quarter. SMI Arkansas reported a $160 thousand adjusted operating profit in 2003 as compared to a $3.5 million adjusted operating profit in 2002. Most of the decrease in adjusted operating profit at SMI Arkansas was attributable to LIFO expense caused by higher year end inventories of rerolling rail. However, adjusted operating profit at our SMI Alabama mill for the year ended August 31, 2003 increased 63% to $4.2 million as compared to $2.5 million in 2002. Cost reduction efforts, improved operating efficiencies, and better market conditions were the key factors in SMI Alabama’s improved profitability. Our mills shipped 2,284,000 tons in 2003, an increase of 5% as compared to 2,171,000 tons shipped in 2002, due largely to higher billet sales. Our mills rolled 1,972,000 tons, a 3% decrease as compared to 2002. Our minimills melted 2,081,000 tons during the year ended August 31, 2003, which was a decrease of 1% as compared to 2002. Our average total mill selling price at $278 per ton increased $9 (3%) as compared to 2002. Our mill selling price for finished goods increased $12 per ton (4%) in 2003 as compared to 2002. Our average scrap purchase costs in 2003 increased $17 per ton (21%) as compared to 2002. Utility expenses increased by $9.4 million for the year ended August 31, 2003 as compared to 2002. The increase in utility costs was mostly due to higher natural gas costs, although electricity expenses also increased.

     Fabrication and Other Businesses. The steel group’s fabrication and other businesses reported a combined adjusted operating profit of $6.0 million for the year ended August 31, 2003 as compared to a profit of $33.6 million in 2002. We recorded a $5.2 million gain from the sale of SMI-Owen Steel Company in March 2002. Also, prior to its sale, SMI-Owen had an adjusted operating profit of $2.9 million for the year ended August 31, 2002. Excluding these items, fabrication adjusted operating profits decreased by $19.5 million (76%) for the year ended August 31, 2003 as compared to 2002. Our fabrication plants shipped 1,028,000 tons in 2003, 4% more than the 984,000 tons shipped during 2002. Our fabricated rebar shipments increased 104,000 tons (19%) as compared to 2002. Lower structural, joist and post plant shipments partially offset this increase. The average fabrication selling price for the year ended August 31, 2003 decreased $72 per ton (12%) as compared to 2002. Our rebar fabrication, construction-related products, post and heat treating plants were profitable during the year ended August 31, 2003. Our joist and structural steel fabrication operations recorded losses during 2003 due to lower selling prices and shipments. During the year ended August 31, 2003, the joist plants reduced certain inventory stock values by $1.8 million to their estimated current market value. Also, during the year

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ended August 31, 2003, we wrote-down $711 thousand of inventory at two of our other fabrication facilities, we recognized a $998 thousand gain on the trade-in of rental forms in construction-related products, and we reduced our deferred insurance proceeds accrual by $937 thousand (see Note 9, Commitments and Contingencies to our consolidated financial statements for the year ended August 31, 2003 incorporated by reference in this prospectus). During 2003, we acquired substantially all of the operating assets of the Denver, Colorado location of Symons Corporation, E.L. Wills in Fresno, California and Dunn Del Re Steel in Chandler, Arizona. The Symons location is a concrete formwork supplier, and E.L. Wills and Dunn Del Re Steel are rebar fabrication operations. The purchase prices for these businesses totaled $14.0 million. No single one of these acquisitions was significant to our operations.

     Copper Tube. Our copper tube division reported an adjusted operating profit of $620 thousand for the year ended August 31, 2003 as compared to an adjusted operating profit of $5.1 million in 2002. Net sales were 2% lower in 2003 as compared to 2002. Our copper tube shipments increased 4% to 61.9 million pounds during 2003 as compared to 2002. However, our average net selling price for plumbing and refrigeration tube decreased by 7 cents per pound (6%) to $1.17 per pound as compared to $1.24 per pound in 2002. We increased our production to 60.7 million pounds for the year ended August 31, 2003, which was 8% more than the 56.2 million pounds that we produced in 2002. Our average copper scrap price increased 4 cents per pound (6%) during the year ended August 31, 2003 as compared to 2002. The difference between the sales price ($1.17 and $1.24 in 2003 and 2002, respectively) and copper scrap purchase cost ($0.72 and $0.68 in 2003 and 2002, respectively) are commonly referred to as “the metal spread.” The metal spread declined 21% in 2003 as compared to 2002. Although single family residential construction held up relatively well, other market sectors were weaker which put pressure on selling prices.

     Recycling. Our recycling segment reported an adjusted operating profit of $15.2 million for the year ended August 31, 2003 as compared to an adjusted operating profit of $5.1 million in 2002. All four of the geographic regions where the segment operates were substantially more profitable. Net sales for the year ended August 31, 2003 were $441.4 million, an increase of 17% as compared to our net sales of $378.1 million in 2002. Our gross margins were 24% higher in 2003 as compared to 2002, partially due to controls over costs. The segment processed and shipped 1,639,000 tons of ferrous scrap during the year ended August 31, 2003, an increase of 10% as compared to 2002. Ferrous sales prices were on average $100 per ton, 23% higher than in 2002. Greater demand from overseas markets contributed to this increase, as well as the weaker U.S. dollar.

     Nonferrous markets improved moderately during the year ended August 31, 2003. Our average nonferrous scrap sales price of $1,021 per ton was 8% higher than in 2002, although shipments were 3% lower at 231,000 tons. The total volume of scrap processed, including the steel group’s processing plants, was 2,811,000 tons, an increase of 9% from the 2,568,000 tons processed in 2002.

     Marketing and Distribution. Net sales for the year ended August 31, 2003 for our marketing and distribution segment increased $372.7 million (48%) to $1.15 billion, as compared to 2002 net sales of $777.0 million. Most of the increase related to sales outside of the United States. Adjusted operating profit for the year ended August 31, 2003 was $21.8 million, an increase of 53% as compared to 2002, due mostly to better results from our international operations. International steel prices for flat-rolled products rose and then weakened, because of decreased demand from China, during the first three quarters of 2003. However, the prices for flat-rolled steel products rose again during the fourth quarter. Prices for long products slowly increased during 2003. Our steel shipments increased, except for imports into the U.S. Our business in the U.S. was reduced because of the weak economy and the weaker U.S. dollar. Due to these factors, volumes, prices and margins for nonferrous semi-finished products were lower in 2003 as compared to 2002. However, sales and margins for ores, minerals, ferroalloys and

41

special metals were generally higher. Also, freight costs increased in 2003 as compared to 2002. Our marketing and distribution and service center operations in Australia were more profitable in 2003 as compared to 2002. Our joint venture Europickling facility in Belgium became profitable during 2003. Also, the joint venture arrangements with our 11% investee, Trinecke Zelezarny, a Czech mill, contributed to our sales in Central Europe. Sales into Asia, including China, were strong, especially during the first and second quarters of our fiscal 2003. In July 2003, our international subsidiary entered into a definitive agreement to purchase a controlling interest in Huta Zawiercie, a Polish steel minimill. This acquisition closed on December 3, 2003.

     Other. Our employees’ retirement plan expenses were 16% lower for the year ended August 31, 2003 as compared to 2002. Discretionary items such as contributions were lower for the year ended August 31, 2003 as compared to 2002. We committed less to these items because 2003 was less profitable. Interest expense for the year ended August 31, 2003 was lower as compared to 2002 due primarily to lower overall interest rates on short-term borrowings and two interest rate swaps on parts of our long-term debt which resulted in lower effective interest rates.

     During 2002, we favorably resolved all issues for our federal income tax returns through 1999. Due to the lack of any material adjustments, we reevaluated the tax accruals and, consequently, reduced the net tax expense by $1.0 million during 2002.

     On August 8, 2003, we increased our commercial paper program to permit maximum borrowings of up to $275 million, up from the prior year $174.5 million level. Commercial paper capacity is reduced by any outstanding standby letters of credit under the 2003 program which totaled $20.6 million at August 31, 2003.

Near-Term Outlook

     We expect our fiscal year ending August 31, 2004 to be significantly more profitable than 2003, primarily due to market improvements, the weakened U.S. dollar, acquisitions, internal cost reductions and productivity improvements. We expect that our second quarter, which is typically our weakest, will be relatively strong. We estimate that our net earnings (excluding any impact of adjusting our inventory valuation to the LIFO method which we are unable to estimate) will be between $7 million and $10 million for the three months ending February 29, 2004. We have noted signs of increasing demand in the U.S. manufacturing sector, and some improvement in construction. However, office, lodging and industrial construction will be slower to recover. Also, orders for capital goods are higher. Asian markets are relatively strong and European markets are partially recovering. We anticipate that our overall results will be better in the second half of 2004 as compared to the first half.

     We anticipate our profits will be higher in 2004 in our manufacturing segment as compared to 2003 because of higher metal spreads and increased production, shipments and prices. We have implemented several price increases on most of our steel minimill products. Manufacturing margins are likely to be squeezed in the short run because the benefits of higher volumes and improved pricing will be offset by continued increased raw material costs as well as higher energy and freight costs. We are expecting these price increases to become fully effective during the second half of fiscal 2004. As a result, gross margins at our steel minimills should increase. We expect the gross margins in our fabrication and other related businesses to continue at current levels during the second quarter of fiscal 2004. However, these margins should improve later this year. The weak U.S. dollar, high freight costs, and strong Asian demand will minimize the impact of the Section 201 tariff repeal.

     We anticipate that our recycling segment will continue to report significant profits, due to strong demand for steel scrap and nonferrous metal scrap and the relatively weak U.S. dollar.

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     Our marketing and distribution segment should remain consistently profitable during our fiscal 2004. We expect that our U.S. operations will be more profitable, but that our international operations will have lower profits in 2004 as compared to 2003. Overall prices and volumes should remain constant.

     We anticipate that our capital spending for 2004 will be $61 million, excluding acquisition costs for Huta Zawiercie and Lofland. Most of these expenditures will be in our manufacturing segment including a major improvement project at our SMI-Texas melt shop. We believe that our purchase of Huta Zawiercie, S.A. and Lofland will be accretive to our 2004 earnings.

Long-Term Outlook

     We believe we are well-positioned to exploit long-term opportunities. We expect stronger demand for our products due to the increased possibility of a recovery in demand throughout the major global economies as well as continued growth in developing countries. Emerging countries often have a higher growth rate for steel and nonferrous metals consumption. We believe that the demand will increase in Asia, particularly in China, as well as in Central and Eastern Europe.

     We believe that there will be further consolidation in the industries in which we participate, and we plan to continue to participate in a prudent way. The reasons for further consolidation include an inadequate return on capital for most companies, numerous bankruptcies, a high degree of fragmentation, the need to eliminate non-competitive capacity and more effective marketing.

2002 Compared To 2001

     Manufacturing. We include our steel group and our copper tube division in our manufacturing segment.

     Adjusted operating profit is equal to earnings before income taxes for our four steel minimills, our copper tube mill and the steel group’s fabrication operations. Our manufacturing adjusted operating profit in 2002 increased $14.7 million (26%) as compared to 2001 on marginally more ($12 million) net sales. We achieved this increase in adjusted operating profit for two primary reasons in 2002: (i) the nonrecurrence of the prior year litigation accrual in the amount of $8.3 million, and (ii) the current year gain on the sale of the steel group’s heavy structural fabrication operation, SMI-Owen, in the amount of $5.2 million. Excluding those items, our manufacturing segment’s adjusted operating profit was slightly higher than last year.

     Increased production and shipments at our steel group’s minimills more than offset lower selling prices, increased scrap purchase costs and lower copper tube earnings. Also, we spent less in 2002 on utilities, and we recorded lower depreciation and amortization expense. However, fiscal 2002 adjusted operating profits decreased from fiscal 2001 in the steel group’s downstream steel fabrication and related businesses due to lower profits in rebar fabrication and structural steel fabrication, excluding SMI-Owen.

     The table below reflects steel and scrap prices per ton:

	August 31,
(dollars per ton)	2002		2001
Average mill selling price-total sales	$	269	$	284
Average mill selling price-finished goods only		275		290
Average fabrication selling price		608		646
Average ferrous scrap purchase price		80		74

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     Minimills. During 2002, adjusted operating profit for our four steel minimills rose 27% compared with 2001, despite lower selling prices. SMI South Carolina had a $2.8 million adjusted operating profit in 2002 compared to a $1.6 million loss in 2001. SMI Alabama turned around as well with a $2.5 million adjusted operating profit in 2002 compared to a $2.2 million loss in 2001. Adjusted operating profits at SMI Arkansas were up 4% in the current year period. These improvements more than offset a 7% decline in adjusted operating profits at SMI Texas as compared to 2001. A major reason for the minimills’ improved profitability was a 14% increase in shipments because of continued public projects infrastructure construction. Shipments were 2,171,000 tons in 2002 compared to 1,903,000 in 2001. Mill production also increased over last year. Tons rolled were up 19% to 2,026,000 in 2002. Tons melted were up 17% to 2,100,000 in 2002. Even though demand was strong, the average total mill selling price at $269 per ton was $15 (5%) below last year. Also, in 2002, we sold more semi-finished billets, a product with a lower selling price than our average. Average scrap purchase costs were $6 per ton (8%) higher than in 2001, resulting in smaller margins. Utility expenses declined by $2.4 million as compared to 2001. Decreases in natural gas costs more than offset higher electricity costs. Also, depreciation and amortization expenses decreased by $5.2 million in 2002, primarily because SMI-South Carolina fully depreciated its mill rolls and guides as well as certain melt shop equipment. The mills also received $2.5 million from a nonrecurring graphite electrode litigation settlement in 2002.

     Fabrication and Other Businesses. Adjusted operating profit in the steel group’s fabrication and other businesses increased by $12.1 million (57%) in 2002 as compared to 2001. Excluding the 2002 gain on the sale of SMI-Owen ($5.2 million) and the 2001 litigation accrual ($8.3 million), adjusted operating profits in 2002 decreased by $1.3 million (4%) as compared to 2001.

     Near the end of fiscal 2002, we discovered two significant, but unrelated events, requiring retroactive writedowns at two rebar fabrication operations. The total amount of the adjustments required to correct the August 31, 2002 balance sheets of these two facilities was $4.6 million. These adjustments affected fiscal years from 1999 to 2002. In August 2002, we uncovered a theft and an accounting fraud which occurred over four years at a rebar fabrication plant in South Carolina. The total adjustment required to revert the accounting records to their proper balances was $2.7 million. In September 2002, we discovered accounting errors related to losses on rebar fabrication and placement jobs at one facility in California, some of which date back to its acquisition in fiscal 2000. The resulting charge was $1.9 million. The South Carolina incident resulted in a $900 thousand expense in fiscal 2002. The remaining $3.7 million for both instances was attributed $885 thousand to fiscal 2001, $2.6 million to fiscal 2000, and $227 thousand to 1999, resulting in prior period adjustments to these previously reported financial statements. We took immediate action to strengthen compliance with our internal control policies in the areas of segregation of duties, personnel and management review and oversight. Controllers at both locations were replaced as well as the general manager of the rebar fabrication plant in South Carolina. The steel group has increased the level of detail, the frequency of submission and the amount of review of its operating locations’ reporting. We have renewed emphasis on periodic and timely internal balance sheet audits at all operating locations and completed audits of all its operating locations in fiscal 2003. No major areas of noncompliance were noted. Senior management and area managers of all our locations attended internal meetings led by the CEO and CFO regarding management’s responsibility for internal control, dealing with noncompliance issues and our commitment to only the highest of ethical standards of conduct.

     Fabrication plant shipments totaled 984,000 tons, down fractionally from 986,000 tons shipped in 2001. The average fabrication selling price in 2002 decreased $38 per ton (6%) as compared to 2001. Rebar fabrication markets were softer in 2002 as a result of intense competition, and several plants reported losses. During 2002, we acquired the real estate, equipment, inventory and work in process of Varmicon, Inc. in Harlingen, Texas. We now operate this rebar fabrication facility under the name of

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SMI-Valley Steel. The steel joist operations, which includes cellular and castellated beams, were break even in 2002, an improvement over the loss in 2001. Both prices and shipments decreased, but lower operating costs and shop efficiencies helped significantly. Also, in 2001 these operations incurred $8.9 million in start-up costs. Structural steel fabrication profits, excluding SMI-Owen and the prior year litigation accrual, were down in 2002 compared to 2001. However, our concrete-related products operations were more profitable in 2002. We continued to expand this business through the acquisition of Dowel Assembly Manufacturing Company, or DAMCO, in Jackson, Mississippi. DAMCO manufactures dowel baskets and has an epoxy coating business. In 2002, the steel group started Spray Forming International, a stainless steel cladding operation located in South Carolina.

     Copper Tube. Our copper tube division’s adjusted operating profit decreased 59% with 7% less net sales as compared to 2001. Copper tube shipments increased 3% from 2001 to a record 59.3 million pounds, and production increased 5% from 2001 to a record 56.2 million pounds. However, average sales prices dropped 10% in 2002 to $1.24 per pound as compared to the average sales price in 2001 of $1.38. The biggest factor was lower apartment and hotel/motel construction. Consequently, demand for plumbing and refrigeration tube was not as strong. The 2002 product mix included increased quantities of HVAC products and line sets. In the marketplace, we continued to adapt to the consolidation among our buyers. The difference between sales price and copper scrap purchase cost (commonly referred to as “the metal spread”), declined 8% in 2002 compared to 2001. Lower raw material purchase costs did not fully compensate for the decline in selling prices.

     Recycling. Our recycling segment reported an adjusted operating profit of $5.1 million in 2002 compared with an adjusted operating loss of $2.3 million in 2001. Net sales in 2002 were 4% lower at $378 million as compared to 2001. However, gross margins were 11% above last year, primarily because we shipped 8% more total tons. Demand for ferrous scrap improved both in the U.S. and internationally. The segment processed and shipped 1,494,000 tons of ferrous scrap in 2002, 10% more than in 2001. Ferrous sales prices were on average $81 per ton, an increase of $6 from 2001. Nonferrous shipments were flat at 238,000 tons. The average 2002 nonferrous scrap sales price of $947 per ton was 9% lower than in 2001. Increased productivity, higher asset turnover and reduced costs contributed to the improved 2002 results. The total volume of scrap processed, including the steel group’s processing plants, was 2,568,000 tons, an increase of 11% from the 2,308,000 tons processed in 2001.

     In 2002, we acquired most of the transportation assets of Sampson Steel Corporation in Beaumont, Texas. These assets were combined with our existing scrap processing facility in Beaumont. Also, we closed our Midland, Texas facility, resulting in a writedown of $455,000 on certain equipment.

     Marketing and Distribution. Net sales in 2002 for our marketing and distribution segment increased 1% to $777 million as compared to 2001. Adjusted operating profit in 2002 increased 82% to $14.2 million as compared to 2001, mostly due to better results from our Australian operations. International steel prices and volumes for steel and nonferrous semifinished products improved during the second half of 2002, primarily in the distribution and processing businesses. However, depressed economies, oversupply in most markets and intense competition from domestic suppliers in the respective markets caused compressed margins for numerous steel products, nonferrous metal products and industrial raw materials and products. The U.S. dollar weakened against major currencies, a beneficial development.

     In September 2001, we completed our acquisition of Coil Steels Group, an Australian service center in which we already owned a 22% share. This acquisition provided $2.2 million of additional profits and $69.0 million in net sales during 2002. Sales and profits for the Company’s pre-existing business in Australia also improved significantly. However, this increase in net sales was more than offset by decreased sales in our U.S. operations due to fewer imports into the United States.

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     Operating profits for the U.S. divisions improved significantly due to Cometals which returned to more historical levels, and Dallas Trading which benefited from U.S. tariff legislation. Lower margins at Commonwealth on semi-finished products almost offset these improvements. Our European operations’ net sales decreased slightly in 2002 as compared to 2001, but profits improved significantly. The segment’s recent strategy of growing its downstream marketing and distribution business offset the continuing very difficult trading conditions.

     Other. Selling, general and administrative, as well as employees’ retirement plans expenses, were higher in 2002 as compared to 2001, mostly due to our acquisition of Coil Steels Group, or CSG, in 2001 and discretionary items such as bonuses and profit sharing. This increase was consistent with the improvement in our operating profitability. Interest expense decreased by $8.9 million (32%) from 2001 largely due to lower interest rates and much lower average short-term borrowings. Also, during 2002 we entered into two interest rate swaps which resulted in interest expense savings. During 2002, we favorably resolved all issues for our federal income tax returns through 1999. Due to the lack of any material adjustments, we reevaluated the tax accruals and, consequently, reduced the net tax expense by $1.0 million during 2002.

2003 Liquidity and Capital Resources

     We discuss liquidity and capital resources on a consolidated basis. Our discussion includes the sources and uses of our three operating segments and centralized corporate functions. We have a centralized treasury function and use inter-company loans to efficiently manage the short-term cash needs of our operating divisions. We invest any excess funds centrally.

     We rely upon cash flows from operating activities, and to the extent necessary, external short-term financing sources for liquidity. Our short-term financing sources include the issuance of commercial paper, sales of certain accounts receivable, short-term trade financing arrangements and borrowing under our bank credit facilities. From time to time, we have issued long-term public debt and private debt placements. Our investment grade credit ratings and general business conditions affect our access to external financing on a cost-effective basis. Depending on the price of our common stock, we may realize significant cash flows from the exercise of stock options.

     Moody’s Investors Service (P-2) and Standard & Poor’s Corporation (A-2) rate our $275 million commercial paper program in the second highest category. To support our commercial paper program, we have an unsecured, contractually committed revolving credit agreement with a group of sixteen banks. Our $275 million facility expires in August 2006. This agreement provides for borrowing in U.S. dollars with the interest rate indexed to LIBOR. The spread over LIBOR may vary between 33 basis points and 105 basis points based upon the rating of our non-credit enhanced senior unsecured long-term debt by Moody’s Investors Service and Standard & Poor’s Corporation. Actual borrowings are subject to a facility fee which may vary between 17 and 45 basis points based on the same debt ratings. In addition, if we borrow more than 33% of the authorized borrowings under the credit agreement, we will incur an additional 12.5 basis point fee on actual borrowings. No compensating balances are required. The credit agreement serves as a backup to our commercial paper program. We plan to continue our commercial paper program and the revolving credit agreements in comparable amounts to support the commercial paper program.

     For added flexibility, we may secure financing through sales of certain accounts receivable in an amount not to exceed $130 million and direct sales of accounts receivable. We may continually sell accounts receivable on an ongoing basis to replace those receivables that have been collected from our customers. Our long-term public debt was $362 million at November 30, 2003 and is investment grade rated by Standard & Poor’s Corporation (BBB) and by Moody’s Investors Service (Baa2). We believe we

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will have access to the public markets for potential refinancing or the issuance of additional long-term debt. In November 2003, we purchased $89 million of our 7.20% notes otherwise due in 2005 and issued $200 million of our 5.625% notes due 2013. See Note E, Long-term Debt, to our condensed consolidated financial statements that are incorporated by reference in this prospectus. Also, we have numerous informal, uncommitted, non-binding, short-term credit facilities available from domestic and international banks. These credit facilities are priced at bankers’ acceptance rates on a cost of funds basis.

     In order to facilitate certain trade transactions, especially international, we utilize bank letters of credit to provide assurance of payment to our suppliers. These letters of credit may be for prompt payment or for payment at a future date conditional upon the bank finding the documentation presented to be in strict compliance with all terms and conditions of the letter of credit. Our banks issue these letters of credit under informal, uncommitted, non-binding, short-term lines of credit which are in addition to the committed revolving credit agreement. In some cases, if our suppliers choose to discount the future dated obligation we may absorb the discount cost.

     Credit ratings affect our ability to obtain short- and long-term financing and the cost of such financing. If the rating agencies were to reduce our credit ratings, we would pay higher financing costs and probably would have less availability of the informal, uncommitted facilities. In determining our credit ratings, the rating agencies consider a number of both quantitative and qualitative factors. These factors include earnings, fixed charges such as interest, cash flows, total debt outstanding, off balance sheet obligations and other commitments, total capitalization and various ratios calculated from these factors. The rating agencies also consider predictability of cash flows, business strategy, industry conditions and contingencies. Maintaining our investment grade ratings is a high priority for us.

     Certain of our financing agreements include various covenants. The most restrictive of these covenants requires us to maintain an interest coverage ratio of greater than three times and a debt to capitalization ratio of 55%, as defined in the financing agreement. A few of the agreements provide that if we default on the terms of another financing agreement, it is considered a default under these agreements. We have complied with the requirements, including the covenants of our financing agreements, as of and for the three months ended November 30, 2003.

     Our revolving credit and accounts receivable securitization agreements include ratings triggers. The trigger in the revolving credit agreement is solely a means to reset pricing for facility fees and, if a borrowing occurs, on loans. Within the accounts receivable securitization agreement, the ratings trigger is contained in a “termination event,” but the trigger requires a combination of ratings actions on behalf of two independent rating agencies and is set at levels six ratings categories below our current rating.

     Our manufacturing and recycling businesses are capital intensive. Our capital requirements include construction, purchases of equipment and maintenance capital at existing facilities. We plan to invest in new operations, working capital to support the growth of our businesses, and pay dividends to our stockholders.

     We continue to assess alternative means of raising capital, including potential dispositions of under-performing or non-strategic assets. Any potential future major acquisitions could require additional financing from external sources such as the issuance of common or preferred stock.

     Cash Flows. Our cash flows from operating activities primarily result from sales of steel and related products, and to a lesser extent, sales of nonferrous metal products. We also sell and rent construction-related products and accessories. We have a diverse and generally stable customer base. We use futures or forward contracts as needed to mitigate the risks from fluctuations in foreign currency exchange rates and metals commodity prices. See Note G, Derivatives and Risk Management, to our condensed consolidated

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financial statements for the three months ended November 30, 2003 incorporated by reference in this prospectus.

     The volume and pricing of orders from our U.S. customers in the construction sector affects our cash flows from operating activities. The pace of economic expansion and retraction of major industrialized markets outside of the United States also significantly affects our cash flows from operating activities. The weather can influence the volume of products we ship in any given period. Also, the general economy, the strength of the U.S. dollar, governmental action, and various other factors beyond our control influence our volume and prices. Periodic fluctuations in our prices and volumes can result in variations in cash flows from operations. Despite these fluctuations, we have historically relied on operating activities as a steady source of cash.

     We used $59.3 million of net cash flows in our operating activities for the three months ended November 30, 2003 as compared to the $53.1 million of net cash flows used by our operating activities for the three months ended November 30, 2002. Net earnings were $10.4 million higher for the three months ended November 30, 2003 as compared to 2002. Net working capital increased to $540 million at November 30, 2003 from $399 million at August 31, 2003 primarily because of increased accounts receivable (primarily in marketing and distribution) and inventories (primarily in manufacturing and marketing and distribution).

     We invested $7.1 million in property, plant and equipment during the three months ended November 30, 2003, which was less than during 2002. We expect our capital spending for fiscal 2004 to be $61 million, excluding our acquisitions of Huta Zawiercie and Lofland. We assess our capital spending each quarter and reevaluate our requirements based upon current and expected results.

     In November 2003, we issued $200 million of long-term notes due in 2013. The proceeds from that offering were used in November 2003 to purchase $89 million of our notes otherwise due in 2005, and finance our purchases of Huta Zawiercie and Lofland in December 2003.

     At November 30, 2003, 28,325,301 common shares were issued and outstanding, with 3,939,865 held in our treasury. We paid dividends of $2.2 million during the three months ended November 30, 2003, approximately the same amount paid during 2002. During the three months ended November 30, 2002, we purchased 100,000 shares of our common stock at an average price of $16.13 per share. These shares were held in our treasury. We purchased no shares during the three months ended November 30, 2003.

     We believe that we have sufficient liquidity for fiscal 2004.

Contractual Obligations

     The following table represents our contractual obligations as of November 30, 2003 (dollars in thousands):

			Payments Due Within*
	Total		1 Year		2-3 Years		4-5 Years		After 5 Years
Contractual Obligations:
Long-term debt(1)	$	362,983	$	618	$	12,256	$	50,037	$	300,072
Operating leases(2)		32,852		8,151		10,771		5,811		8,119
Unconditional purchase obligations(3)		176,858		98,040		51,913		12,834		14,071
Total contractual cash obligations	$	572,693	$	106,809	$	74,940	$	68,682	$	322,262

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* Cash obligations herein are not discounted.

     (1) Total amounts are included in the November 30, 2003 condensed consolidated balance sheet. See Note E, Long-Term Debt, to our condensed consolidated financial statements for the three months ended November 30, 2003 incorporated by reference in this prospectus.

     (2) Includes minimum lease payment obligations for noncancelable equipment and real-estate leases in effect as of November 30, 2003.

     (3) About 73% of these purchase obligations are for inventory items to be sold in the ordinary course of business; most of the remainder are for supplies associated with normal revenue-producing activities.

Other Commercial Commitments

     We maintain stand-by letters of credit to provide support for certain transactions that our customers and suppliers request. At November 30, 2003, we had committed $20.7 million under these arrangements. All of the commitments expire within one year.

     At the request of a customer and its surety bond issuer, we have agreed to indemnify the surety against all costs the surety may incur should our customer fail to perform its obligations under construction contracts covered by payment and performance bonds issued by the surety. We are the customer’s primary supplier of steel, and steel is a substantial portion of our customer’s cost to perform the contracts. We believe we have adequate controls to monitor the customer’s performance under the contracts including payment for the steel we supply. As of November 30, 2003, the surety had issued bonds in the total amount (without reduction for the work performed to date) of $11.9 million which are subject to our guaranty obligation under the indemnity agreement.

Contingencies

     In the ordinary course of conducting our business, we become involved in litigation, administrative proceedings, government investigations including environmental matters, and contract disputes. We may incur settlements, fines, penalties or judgments because of some of these matters. While we are unable to estimate precisely the ultimate dollar amount of exposure or loss in connection with these matters, we make accruals we deem necessary. The amounts we accrue could vary substantially from amounts we pay due to several factors including the following: evolving remediation technology, changing regulations, possible third-party contributions, the inherent shortcomings of the estimation process, and the uncertainties involved in litigation. Accordingly, we cannot always estimate a meaningful range of possible exposure. We believe that we have adequately provided in our financial statements for the estimable potential impact of these contingencies. We also believe that the outcomes will not significantly affect the long-term results of operations or our financial position. However, they may have a material impact on earnings for a particular period.

     Construction Contract Disputes. See Note 9, Commitments and Contingencies, to our consolidated financial statements for the year ended August 31, 2003 that are incorporated by reference in this prospectus.

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Environmental and Other Matters

     General. We are subject to federal, state and local pollution control laws and regulations. We anticipate that compliance with these laws and regulations will involve continuing capital expenditures and operating costs.

     Our original business and one of our core businesses for over eight decades is metals recycling. In the present era of conservation of natural resources and ecological concerns, we are committed to sound ecological and business conduct. Certain governmental regulations regarding environmental concerns, however well intentioned, are contrary to the goal of greater recycling. Such regulations expose us and the industry to potentially significant risks.

     We believe that recycled materials are commodities that are diverted by recyclers, such as us, from the solid waste streams because of their inherent value. Commodities are materials that are purchased and sold in public and private markets and commodities exchanges every day around the world. They are identified, purchased, sorted, processed and sold in accordance with carefully established industry specifications.

     Environmental agencies at various federal and state levels classify certain recycled materials as hazardous substances and subject recyclers to material remediation costs, fines and penalties. Taken to extremes, such actions could cripple the recycling industry and undermine any national goal of material conservation. Enforcement, interpretation, and litigation involving these regulations are not well developed.

     Solid and Hazardous Waste. We currently own or lease, and in the past owned or leased, properties that have been used in our operations. Although we used operating and disposal practices that were standard in the industry at the time, wastes may have been disposed or released on or under the properties or on or under locations where such wastes have been taken for disposal. We are currently involved in the investigation and remediation of several such properties. State and federal laws applicable to wastes and contaminated properties have gradually become stricter over time. Under new laws, we could be required to remediate properties impacted by previously disposed wastes. We have been named as a potentially responsible party at a number of contaminated sites.

     We generate wastes, including hazardous wastes, that are subject to the federal Resource Conservation and Recovery Act (“RCRA”) and comparable state and/or local statutes where we operate. These statutes, regulations and laws may have limited disposal options for certain wastes.

     Superfund. The U.S. Environmental Protection Agency, or EPA, or an equivalent state agency notified us that we are considered a potentially responsible party, or PRP, at fourteen sites, none owned by us. We may be obligated under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, or CERCLA, or a similar state statute to conduct remedial investigation, feasibility studies, remediation and/or removal of alleged releases of hazardous substances or to reimburse the EPA for such activities. We are involved in litigation or administrative proceedings with regard to several of these sites in which we are contesting, or at the appropriate time we may contest, our liability at the sites. In addition, we have received information requests with regard to other sites which may be under consideration by the EPA as potential CERCLA sites.

     Clean Water Act. The Clean Water Act (“CWA”) imposes restrictions and strict controls regarding the discharge of wastes into waters of the United States, a term broadly defined. These controls have become more stringent over time and it is probable that additional restrictions will be imposed in the future. Permits must generally be obtained to discharge pollutants into federal waters; comparable permits

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may be required at the state level. The CWA and many state agencies provide for civil, criminal and administrative penalties for unauthorized discharges of pollutants. In addition, the EPA has promulgated regulations that may require us to obtain permits to discharge storm water runoff. In the event of an unauthorized discharge, we may be liable for penalties and costs.

     Clean Air Act. Our operations are subject to regulations at the federal, state and local level for the control of emissions from sources of air pollution. New and modified sources of air pollutants are often required to obtain permits prior to commencing construction, modification and/or operations. Major sources of air pollutants are subject to more stringent requirements, including the potential need for additional permits and to increased scrutiny in the context of enforcement. The EPA has been implementing its stationary emission control program through expanded enforcement of the New Source Review Program. Under this program, new or modified sources are required to construct what is referred to as the Best Available Control Technology. Additionally, the EPA is implementing new, more stringent standards for ozone and fine particulate matter. The EPA recently has promulgated new national emission standards for hazardous air pollutants for steel mills which will require all major sources in this category to meet the standards by reflecting application of maximum achievable control technology. Compliance with the new standards could require additional expenditures.

     In fiscal 2003, we incurred environmental expense of $11.8 million. This expense included the cost of environmental personnel at various divisions, permit and license fees, accruals and payments for studies, tests, assessments, remediation, consultant fees, baghouse dust removal and various other expenses. Approximately $4.2 million of our capital expenditures for 2003 related to costs directly associated with environmental compliance. At August 31, 2003, $2.9 million was accrued for environmental liabilities of which $1.3 million is classified as other long-term liabilities.

Dividends

     We have paid quarterly cash dividends in each of the past 40 consecutive years. We paid dividends in the three months ended November 30, 2003 and for the year ended August 31, 2003 at the rate of 8 cents per share each quarter.

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COMPANY OVERVIEW

     We manufacture, recycle, market and distribute steel and metal products and related materials and services through a network of locations located throughout the United States and internationally. Steel and steel-related products represent over 75% of our business. We consider our business to be organized into three segments: manufacturing, recycling, and marketing and distribution. During the fiscal year ended August 31, 2003, we derived approximately 36% of our adjusted operating profit from our manufacturing segment, approximately 26% from our recycling segment and approximately 38% from our marketing and distribution segment. For a reconciliation of adjusted operating profit (loss) to net earnings (loss), see “Prospectus Summary-Our Company.”

     Manufacturing Segment

     Our manufacturing segment is our dominant and most rapidly expanding segment. Our steel manufacturing capacity is approximately 2.3 million tons, and we produce reinforcing bars, light and mid-size structurals, angles, channels, beams, special bar quality rounds and flats, squares and special sections used in the construction, manufacturing, steel fabrication, warehousing and original equipment manufacturing industries. Our steel fabrication capacity is approximately 1.1 million tons. For a discussion of certain risks affecting our manufacturing business, see “Risk Factors-Risks Related to Our Industry.” Our copper tube mill has approximately 80.0 million pounds of capacity and manufactures copper water, air conditioning and refrigeration tubing.

     Recycling Segment

     Our recycling segment is one of the largest processors of scrap nonferrous metals and a major regional processor of ferrous metals in the Southeastern and Southwestern United States. Our recycling plants processed and shipped approximately 1.9 million tons of scrap metal in the year ended August 31, 2003, not including 900,000 tons processed by the manufacturing segment’s plants. Recycling metals provides substantial savings in energy compared to producing metal from virgin raw materials. The recycling segment operates 34 secondary metal processing facilities in addition to the ten recycling facilities operated by our steel group as a part of our manufacturing segment.

     Marketing and Distribution Segment

     Our marketing and distribution segment buys and sells primary and secondary metals, fabricated metals and other industrial products through a global network of offices which also provide technical information, financing, chartering of vessels, storage, insurance and hedging for our customers. Although we do engage in hedging transactions to mitigate the risks associated with certain transactions, we do not, as a matter of policy, speculate on changes in the commodities markets. This segment sold approximately 2.1 million tons of steel products during the year ended August 31, 2003.

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DESCRIPTION OF NOTES

     We issued the old notes, and will issue the new notes, under the Indenture, dated as of July 31, 1995 (the “Original Indenture Date”), between the Company and JPMorgan Chase Bank (formerly The Chase Manhattan Bank (successor to The Chase Manhattan Bank, N.A.)), as Trustee (the “Trustee”), as supplemented by the Supplemental Indenture, dated as of November 12, 2003 (as so supplemented, the “Indenture”). The new notes will evidence the same debt as the old notes, and the new notes and the old notes will be treated as a single class of debt securities under the Indenture. The terms of the notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939. The Company has in the past issued, and may from time to time in the future issue, additional series of debt securities under the Indenture. Such other debt securities may have terms and conditions that are different from the terms and conditions of the notes.

     The following description is only a summary of the material provisions of the Indenture and the notes. We urge you to read the Indenture because it, not this description, defines your rights as noteholders. You may request copies of the Indenture at our address set forth under the heading “Incorporation By Reference.” Capitalized terms not otherwise defined herein shall have the respective meanings given to them in the Indenture. In this description, the words “Company,” “we,” “us” and “our” refer only to Commercial Metals Company and not to any of its subsidiaries. In addition, the old notes are subject to restrictions on transfer as described more fully in the Indenture.

Title

     5.625% Senior Notes due 2013.

Principal Amount of Notes

     We will issue up to an aggregate principal amount of $200,000,000 of new notes in the exchange offer. We will issue the new notes in integral multiples of $1,000, through the facilities of The Depository Trust Company, and sales in book-entry form may be effected only through a participating member of DTC. See “Book-Entry System.” We may from time to time, without notice to or the consent of the noteholders, increase the aggregate principal amount of our debt under the Indenture by creating and issuing further notes under the Indenture on the same terms and conditions as the notes being offered hereby, except for issue date, issue price, preissuance accrued interest and first interest payment date. Any further notes will be consolidated and form a single series with the notes and will have the same terms as to status, redemption or otherwise as the notes. Any further notes will be issued by or pursuant to a resolution of our Board of Directors or a supplement to the Indenture.

Maturity of Notes

     The notes will mature on November 15, 2013.

Interest Rate on Notes

     The interest rate on the notes is 5.625% per annum, computed on the basis of a 360-day year consisting of twelve 30-day months.

Date Interest Begins to Accrue on New Notes

     Interest on the new notes will accrue from the date of original issuance.

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Interest Payment Dates

     We will pay interest on the notes semi-annually on each May 15 and November 15 (each an “Interest Payment Date”). Interest payable on each Interest Payment Date will include interest accrued from and including the date of original issuance, or from and including the most recent Interest Payment Date to which interest has been paid or duly provided for, to but excluding the applicable Interest Payment Date.

First Interest Payment Date

     The first interest payment date for the notes will be May 15, 2004.

Regular Record Dates for Interest

     We will pay interest payable on any Interest Payment Date to the person in whose name a note is registered at the close of business on May 1 or November 1, as the case may be, next preceding such Interest Payment Date.

Paying Agent

     The Trustee will initially be the securities registrar and paying agent and will act as such only at its offices in New York, New York. We may at any time designate additional paying agents or rescind the designations or approve a change in the offices where they act.

Ranking

     The notes are our senior unsecured obligations and rank equally in right of payment with all of our existing and future senior unsecured indebtedness. The notes rank junior to any of our secured debt to the extent of the assets securing such debt and are structurally subordinated to the indebtedness and other liabilities of our subsidiaries, including trade payables.

Optional Redemption

     The notes are redeemable in whole or in part at any time and from time to time, at our option, at a redemption price equal to the greater of:

• 100% of the principal amount of the notes to be redeemed; or

• the sum of the present values, calculated as of the redemption date, of the remaining scheduled payments of principal and interest on the notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the then current Treasury Rate plus 20 basis points.

plus, in each case, we will pay accrued and unpaid interest on the principal amount being redeemed to the date of redemption.

     “Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term (“Remaining Life”) of the notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such notes.

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     “Comparable Treasury Price” means, with respect to any redemption date, (1) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (2) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

     “Independent Investment Banker” means one of the Reference Treasury Dealers that we appoint to act as the Independent Investment Banker from time to time.

     “Reference Treasury Dealer” means each of Goldman, Sachs & Co. and Banc of America Securities LLC and their respective successors, and two other firms that are primary U.S. Government securities dealers (each a “Primary Treasury Dealer”) which we specify from time to time; provided, however, that if any of them ceases to be a Primary Treasury Dealer, we will substitute another Primary Treasury Dealer.

     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., Eastern Standard time, on the third business day preceding such redemption date.

     “Treasury Rate” means, with respect to any redemption date, the rate per year equal to: (1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue; provided that, if no maturity is within three months before or after the Remaining Life of the notes to be redeemed, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Treasury Rate shall be interpolated or extrapolated from those yields on a straight line basis, rounding to the nearest month, or (2) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per year equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. The Treasury Rate shall be calculated on the third business day preceding the redemption date.

     Notice of redemption will be mailed at least 30 but not more than 60 days before the redemption date to each holder of record of the notes to be redeemed at its registered address. The notice of redemption for the notes will state, among other things, the amount of notes to be redeemed, the redemption date, the manner of calculation of the redemption price and the place or places that payment will be made upon presentation and surrender of notes to be redeemed. Unless we default in the payment of the redemption price, interest will cease to accrue on any notes that have been called for redemption at the redemption date.

Limitation on Liens

     The Indenture provides that we may not, and may not permit any Principal Subsidiary to, incur or suffer to exist any Lien upon any Principal Property, or upon any shares of stock of any Principal Subsidiary, whether such Principal Property or shares were owned as of the Original Indenture Date or thereafter acquired, to secure any Debt without making, or causing such Principal Subsidiary to make,

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effective provision for securing the notes and other debt securities issued under the Indenture equally and ratably with, or prior to, such Debt, unless after giving effect thereto, the sum of the following:

(A)	the principal amount of Debt secured by all Liens incurred after the Original Indenture Date and otherwise prohibited by the Indenture as in effect with respect to the notes or any other debt securities of the Company issued under the Indenture; and
(B)	the Attributable Debt of all Sale and Leaseback Transactions entered into after the Original Indenture Date and otherwise prohibited by the Indenture as in effect with respect to the notes or any other debt securities of the Company issued under the Indenture does not exceed 10% of Consolidated Net Tangible Assets.

     The foregoing restrictions will not apply to Liens existing at the Original Indenture Date or to the following:

(1)	Liens securing only debt securities issued under the Indenture;
(2)	Liens in favor of only the Company;
(3)	Liens on property of a Person existing at the time such Person is merged into or consolidated with the Company or any Principal Subsidiary but only to the extent such Liens cover such property;
(4)	Liens on property existing immediately prior to the time of acquisition thereof and not in anticipation of the financing of such acquisition;
(5)	any Lien upon a Principal Property, including any property that becomes a Principal Property after acquisition thereof, to secure Debt incurred for the purpose of financing all or any part of the purchase price or the cost of construction or improvement thereof incurred within six months after the later of the purchase thereof and the completion of construction or improvements thereon;
(6)	Liens to secure Debt incurred to extend, renew, refinance or refund Debt secured by any Lien referred to in the foregoing clauses (1) to (5); and
(7)	any Lien securing Debt we owe to a wholly owned Principal Subsidiary.

     “Attributable Debt” means the present value (discounted at the per annum rate of interest publicly announced by Bank of America National Trust & Savings Association as its “Reference Rate” or “Prime Rate”, provided, that if Bank of America National Trust & Savings Association is no longer announcing a Reference Rate or Prime Rate, the per annum rate of interest shall be the Prime Rate most recently published in The Wall Street Journal, in either case compounded monthly) of the obligations for rental payments required to be paid during the remaining term of any lease of more than 12 months.

     “Capital Lease Obligation” of any Person means the obligation to pay rent or other payment amounts under a lease of, or other indebtedness arrangements conveying the right to use, real or personal property of such Person which is required to be classified and accounted for as a capital lease or a liability on the face of a balance sheet of such Person in accordance with generally accepted accounting principles. The stated maturity of such obligation, as of any date (the “measurement date”), shall be the date of the last payment of rent or any other amount due under such lease prior to the first date after the measurement date upon which such lease may be terminated by the lessee, at its sole option, without payment of a penalty.

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     “Consolidated Net Tangible Assets” means the net book value of all assets of the Company and its Consolidated Subsidiaries, excluding any amounts carried as assets for shares of capital stock held in treasury, debt discount and expense, goodwill, patents, trademarks and other intangible assets, less all liabilities of the Company and its Consolidated Subsidiaries (except Funded Debt, minority interests in Consolidated Subsidiaries, deferred taxes and general contingency reserves of the Company and its Consolidated Subsidiaries), which in each case would be included on a consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the date of determination, all as determined on a consolidated basis in accordance with generally accepted accounting principles.

     “Consolidated Tangible Net Worth” means the total stockholders’ equity of the Company and its Consolidated Subsidiaries, calculated in accordance with generally accepted accounting principles and reflected on the most recent balance sheet of the Company, excluding any amounts carried as assets for shares of capital stock held in treasury, debt discount and expense, goodwill, patents, trademarks and other intangible assets.

     “Debt” means, without duplication, with respect to any Person the following:

(1)	every obligation of such Person for money borrowed;
(2)	every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments;
(3)	every reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person; and
(4)	every obligation of the type referred to in clauses (1) through (3) of another Person the payment of which such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor, guarantor or otherwise, but only, in the case of clause (4), to the extent such Person has guaranteed or is responsible or liable for such obligations.

“Funded Debt” means the following:

(1)	all Debt of the Company and each Principal Subsidiary maturing on, or renewable or extendable at the option of the obligor to, a date more than one year from the date of the determination thereof;
(2)	Capital Lease Obligations payable on a date more than one year from the date of the determination thereof;
(3)	guarantees, direct or indirect, and other contingent obligations of the Company and each Principal Subsidiary in respect of, or to purchase or otherwise acquire or be responsible or liable for, through the investment of funds or otherwise, any obligations of the type described in the foregoing clauses (1) or (2) of others, but not including contingent liabilities on customers’ receivables sold with recourse; and
(4)	amendments, renewals, extensions and refundings of any obligations of the type described in the foregoing clauses (1), (2) or (3).

     “Lien” means, with respect to any property or assets, any mortgage or deed of trust, pledge, hypothecation, assignment, security interest, lien, encumbrance, or other security arrangement of any kind

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or nature whatsoever on or with respect to such property or assets, including any conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing.

     “Principal Property” means any facility, together with the land on which it is erected and fixtures comprising a part thereof, used primarily for manufacturing, processing, research, warehousing or distribution, owned or leased by the Company or a Subsidiary of the Company and having a net book value in excess of 3% of Consolidated Net Tangible Assets, other than any such facility or portion thereof which is a pollution control facility financed by state or local government obligations or is not of material importance to the total business conducted or assets owned by the Company and its Subsidiaries as an entirety, or any assets or properties acquired with Net Available Proceeds (defined below) from a Sale and Leaseback Transaction that are irrevocably designated by the Company or a Subsidiary as a Principal Property, which designation shall be made in writing to the Trustee.

     “Principal Subsidiary” means any Subsidiary of the Company that owns or leases a Principal Property or owns or controls stock which under ordinary circumstances has the voting power to elect a majority of the Board of Directors of a Principal Subsidiary.

     “Sale and Leaseback Transaction” of any Person means an arrangement with any lender or investor or to which such lender or investor is a party providing for the leasing by such Person of any Principal Property that within 12 months of the start of such lease and after the Reference Date, has been or is being sold, conveyed, transferred or otherwise disposed of by such Person to such lender or investor or to any Person to whom funds have been or are to be advanced by such lender or investor on the security of such property. The term of such arrangement, as of any date (the “measurement date”), shall end on the date of the last payment of rent or any other amount due under such arrangement on or prior to the first date after the measurement date on which such arrangement may be terminated by the lessee, at its sole option, without payment of a penalty. “Sale Transaction” means any such sale, conveyance, transfer or other disposition. The “Reference Date” means, for any property that becomes a Principal Property, the last day of the sixth month after the date of the acquisition, completion of construction and commencement of operation of such property.

     “Subsidiary of the Company” means any corporation of which the Company directly or indirectly owns or controls stock which under ordinary circumstances, not dependent upon the happening of a contingency, has the voting power to elect a majority of the board of directors of such corporation.

Limitation on Funded Debt of Principal Subsidiaries

     The Indenture provides that we will not permit any Principal Subsidiary to incur or assume, directly or indirectly, any Funded Debt unless immediately after giving effect thereto and the receipt and application of the proceeds thereof, the aggregate principal amount of all outstanding Funded Debt of all Principal Subsidiaries other than Funded Debt owed to us or another directly or indirectly wholly-owned Subsidiary does not exceed 30% of Consolidated Tangible Net Worth. The provisions of this limitation will not prevent the following:

(1)	any Funded Debt of a Principal Subsidiary owed to us or another Principal Subsidiary;
(2)	any Funded Debt from a mortgage permitted under the provisions described in clauses (1) through (7) in the second paragraph under “—Limitation on Liens”; or
(3)	any extension, renewal or refunding in whole or in part, without increase in amount, of any Funded Debt (a) of a Principal Subsidiary as aforementioned, (b) of a Principal Subsidiary

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outstanding at the Original Indenture Date or (c) of any corporation outstanding at the time it becomes a Principal Subsidiary.

Limitation on Sale and Leaseback Transactions

     Neither the Company nor any Principal Subsidiary may enter into any Sale and Leaseback Transaction unless:

(1)	the Company or such Principal Subsidiary could incur a mortgage on such property under the restrictions described above under “Limitations on Liens” in an amount equal to the Attributable Debt with respect to the Sale and Leaseback Transaction without equally and ratably securing the notes; or
(2)	the Company or a Principal Subsidiary, within 270 days, applies the Net Available Proceeds from the Sale and Leaseback Transaction to any combination of the following:

(a)	the retirement of its Funded Debt;
(b)	the purchase of other property or assets which will (I) constitute Principal Property and (II) have an aggregate value of at least the consideration paid for such property or assets; or
(c)	Capital Expenditures with respect to any existing Principal Property, subject to credits for certain voluntary retirements of Funded Debt.

This restriction will not apply to any Sale and Leaseback Transaction involving the taking back of a lease for a period of less than three years.

     “Net Available Proceeds” from any Sale and Leaseback Transaction by any Person means cash or readily marketable cash equivalents received (including by way of sale or discounting of a note, installment receivable or other receivable, but excluding any other consideration received in the form of assumption by the acquiree of indebtedness or obligations relating to the properties or assets that are the subject of such Sale and Leaseback Transaction or received in any other noncash form) therefrom by such Person, net of the following:

(1)	all legal, title and recording tax expenses, commissions and other fees and expenses incurred and all federal, state, provincial, foreign and local taxes required to be accrued as a liability as a consequence of such Sale and Leaseback Transaction;
(2)	all payments made by such Person or its subsidiaries on any indebtedness which is secured in whole or in part by any such properties and assets in accordance with the terms of any Lien upon or with respect to any such properties and assets or which must, by the terms of such Lien or in order to obtain a necessary consent to such Sale and Leaseback Transaction or by applicable law, be repaid out of the proceeds from such Sale and Leaseback Transaction; and
(3)	all distributions and other payments made to minority interest holders in subsidiaries of such Person or joint ventures as a result of such Sale and Leaseback Transaction.

Restrictions on Merger and Sale of Assets

     The Indenture provides that we may not consolidate with or merge into any other Person or convey, transfer or lease our properties and assets substantially as an entirety to any Person, and we may not

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permit any Person to consolidate with or merge into us or convey, transfer or lease its properties and assets substantially as an entirety to us, unless:

(1)	the Person, if other than the Company, formed by such consolidation or into which we are merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall expressly assume the due and punctual payment of the principal of and interest on all the notes and the performance or observance of every covenant of the Indenture on the part of the Company to be performed or observed;
(2)	immediately after giving effect to such transaction and treating any indebtedness which becomes our obligation or an obligation of any Principal Subsidiary as a result of such transaction as having been incurred by us or such Principal Subsidiary at the time of such transaction, no Event of Default under the Indenture, and no event which, after notice or lapse of time or both, would become an Event of Default under the Indenture, shall have happened and be continuing; and
(3)	if, as a result of any such transaction, property or assets of the Company or any Principal Subsidiary would become subject to a Lien which would not be permitted by the limitations on Liens contained in the Indenture, we or, if applicable, our successor, as the case may be, shall take such steps as shall be necessary to effectively secure the notes equally and ratably with, or prior to, the Debt secured by such Lien.

Events of Default

     Each of the following is an Event of Default for the notes:

(1)	failure to pay principal of, or premium, if any, on the notes when due;
(2)	failure to pay any interest on the notes when due, continued for 30 days;
(3)	failure to perform any other covenant of the Company in the Indenture, other than a covenant the performance of which is dealt with specifically elsewhere in the Indenture or which has been included in the Indenture solely for the benefit of series of debt securities other than the notes, continuing for 60 days after written notice as provided in the Indenture;
(4)	failure to pay when due, after applicable grace periods as provided in the Indenture, the principal of, or the acceleration of, any indebtedness for money borrowed by the Company or any Principal Subsidiary having an aggregate principal amount outstanding in excess of an amount equal to 3% of Consolidated Net Tangible Assets, if such indebtedness is not discharged, or such acceleration is not annulled, within ten days after written notice as provided in the Indenture; and
(5)	certain events of bankruptcy, insolvency or reorganization.

The notice referred to in clauses (3) and (4) may be given by the Trustee under the Indenture or by the holders of at least 25% in aggregate principal amount of the Outstanding notes. In case an Event of Default under the Indenture occurs and is continuing, then, subject to the provisions of the Indenture and the Trust Indenture Act relating to the duties of the Trustee under the Indenture, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the noteholders, unless the noteholders shall have offered to the Trustee reasonable indemnity. The holders of a majority in aggregate principal amount of the notes Outstanding shall have the right, subject to such provisions for indemnification of the Trustee to direct the time, method and place of conducting

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any proceeding for any remedy available to the Trustee under the Indenture or exercising any trust or power conferred on the Trustee with respect to the notes.

     If an Event of Default occurs and is continuing, the Trustee or the holders of not less than 25% in principal amount of the notes Outstanding may, by a notice in writing to us, and to the Trustee if given by noteholders, declare to be due and payable immediately the principal amount of the notes. However, at any time after such a declaration of acceleration of the notes has been made, but before a judgment or decree for payment of the money due has been obtained by the Trustee, the holders of a majority in the principal amount of the notes Outstanding may, subject to certain conditions, rescind and annul such acceleration. For information as to waiver of defaults, see “— Modification and Waiver” herein.

     No holder of any notes will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such holder of notes shall have previously given to the Trustee written notice of a continuing Event of Default and unless the holders of at least 25% in aggregate principal amount of the notes Outstanding shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as trustee, and the Trustee shall not have received from the holders of a majority in aggregate principal amount of the notes Outstanding a direction inconsistent with such request and failed to institute such proceeding within 60 days. However, such limitations do not apply to a suit instituted by a holder of notes for enforcement of payment of the principal of, and premium, if any, and any interest on the notes on or after the respective due dates expressed in the notes.

     We will be required to furnish to the Trustee annually a statement as to whether we are in default in the performance and observance of any of the terms, provisions and conditions of the Indenture. The Indenture provides that the Trustee may withhold notice to the noteholders of any default, except in payment of principal, any premium or interest, if it considers it in the interest of the noteholders to do so.

Modification and Waiver

     Together with the Trustee, we may modify the Indenture without the consent of the noteholders for limited purposes, including but not limited to adding to our covenants or events of default, securing the notes, establishing terms of additional notes, appointing a substitute trustee, curing ambiguities and making other changes that do not adversely affect the rights of the noteholders in any material respect. In addition, we and the Trustee may make modifications and amendments to the Indenture with the consent of the holders of a majority in aggregate principal amount of the Outstanding debt securities of each series of notes affected by such modification; provided, however, that no such modification or amendment may, without the consent of the holder of each such Outstanding debt security affected thereby,

(1)	change the stated maturity of the principal of, or any installment of principal or interest on any note,
(2)	reduce the principal amount of or the rate of interest or the premium, if any, on any note,
(3)	change the place or currency of payment of principal of or interest or the premium, if any, on any note,
(4)	impair the right to institute suit for the enforcement of any payment with respect to the notes on or after the stated maturity thereof,
(5)	reduce the above-stated percentage in principal amount of Outstanding notes the consent of whose holders is required for any such supplemental indenture or

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(6) reduce the above-stated percentage of Outstanding notes the consent of whose holders is required for waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults thereunder.

     We may, in the circumstances permitted by the Trust Indenture Act, set any day as the record date for the purpose of determining the noteholders entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action as provided or permitted by the Indenture.

     The holders of a majority in aggregate principal amount of the notes Outstanding may on behalf of the holders of all notes waive, insofar as the notes are concerned (but not as to any other series of debt securities issued under the Indenture) compliance by the Company with the covenants limiting Liens and Sale and Leaseback Transactions contained in the Indenture. The holders of a majority in aggregate principal amount of the notes Outstanding may on behalf of the holders of all notes waive any past default under the Indenture except a default in the payment of the principal of, or premium, if any, or any interest on the notes or in respect of a provision which under the Indenture cannot be modified or amended without the consent of the holder of each Outstanding note affected.

     For purposes of the Indenture, the notes “Outstanding” thereunder are deemed to exclude those held by Persons that control, are controlled by or are under common control with the Company, provided that any Person who does not own, directly or indirectly, more than 5% of the outstanding voting securities of the Company will not be deemed to control the Company.

Defeasance

     Defeasance and Discharge. The Indenture provides that the Company may elect to deposit or cause to be deposited with the Trustee as trust funds in trust, for the benefit of the holders of Outstanding notes, money and/or U.S. Government Obligations sufficient to pay and discharge the principal of, and premium, if any, and any interest on and any mandatory sinking fund payments in respect of the notes on the stated maturity of such payments in accordance with the terms of the Indenture and the notes, and thereby be discharged from its obligations with respect to Outstanding notes (hereinafter called “Defeasance”) on and after the date that, among other things, the Company provides to the Trustee certain evidence that (1) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (2) there has been a change in the applicable Federal income tax law, in each case to the effect that the noteholders will not recognize gain or loss for Federal income tax purposes as a result of the deposit, Defeasance and discharge to be effected with respect to notes and will be subject to Federal income tax on the same amount, in the same manner and at the same times as would be the case if such deposit, Defeasance and discharge were not to occur. For this purpose, such Defeasance means that the Company will be deemed to have paid and discharged the entire Indebtedness represented by such Outstanding notes and to have satisfied all its other obligations under the notes and the Indenture insofar as the notes are concerned, except for certain continuing administrative responsibilities. In the event of any such Defeasance, noteholders would be able to look only to such trust for payment of principal of, and premium, if any, and any interest on and any mandatory sinking fund payments in respect of the notes.

     Covenant Defeasance. The Indenture provides that the Company may elect to deposit or cause to be deposited with the Trustee as trust funds in trust, for the benefit of the holders of Outstanding notes, money and/or U.S. Government Obligations sufficient to pay and discharge the principal, and premium, if any, of and any interest on and any mandatory sinking fund payments in respect of the notes on the stated maturity of such payments in accordance with the terms of the Indenture and such notes, and thereby (1) be released from its obligations with respect to the notes under certain covenants in the Indenture, including the covenants relating to maintenance of properties, payment of taxes and other claims,

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limitation on Liens, limitation on Sale and Leaseback Transactions, and Merger and (2) have the occurrence of certain defaults in performance, or breach, of covenants and warranties under the Indenture and defaults under other obligations of the Company not be deemed to be or result in an Event of Default, in each case with respect to the Outstanding notes (hereinafter called “Covenant Defeasance”), on and after the date that, among other things, the Company provides to the Trustee certain evidence that the holders of Outstanding notes will not recognize gain or loss for Federal income tax purposes as a result of the deposit and Covenant Defeasance to be effected with respect to the notes and will be subject to Federal income tax on the same amount, in the same manner and at the same times as would be the case if such deposit and Covenant Defeasance were not to occur. For this purpose, such Covenant Defeasance means that the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such specified Indenture provision, whether directly or indirectly by reason of any reference elsewhere in the Indenture to any such provision or by reason of any reference in any such provision to any other provision of the Indenture or in any other document, but the remainder of the Indenture and the notes shall be unaffected thereby. The obligations of the Company under the Indenture and the notes other than with respect to the covenants referred to above and the Events of Default other than the Events of Default referred to above shall remain in full force and effect.

     The term “U.S. Government Obligations” means any security that is a direct obligation, or is subject to an unconditional guarantee, of the United States of America for the payment of which the full faith and credit of the United States of America is pledged.

Book-Entry System

     The new notes will be evidenced by global securities, which will be deposited on behalf of DTC and registered in the name of a nominee of DTC.

     The global securities are in this prospectus sometimes referred to individually as a “global security” and collectively as the “global securities.” Except as set forth below, the record ownership of the global securities may be transferred, in whole or in part, only to DTC, another nominee of DTC or to a successor of DTC or its nominee.

     Except under circumstances described below, the new notes will not be issued in definitive form. See “—Certificated Securities.” Upon the issuance of a global security, DTC will credit on its book-entry registration and transfer system the accounts of persons participating in the exchange offer with the respective principal amounts of the new notes represented by the global security. Ownership of beneficial interests in a global security will be limited to persons that have accounts with DTC or its nominee (“participants”) or persons that may hold interests through participants. Owners of beneficial interests in the new notes represented by the global securities will hold their interests pursuant to the procedures and practices of DTC. Ownership of beneficial interests in a global security will be shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominee. The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interests in a global security. DTC will have no knowledge of the actual beneficial owners of the global securities; DTC’s records reflect only the identity of the participants to whose accounts such global securities are credited, which may or may not be the beneficial owners of the global securities. The participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to participants and by participants to the beneficial owners of the global securities will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

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     Persons participating in the exchange offer may hold their interest in the global securities directly through DTC if they are DTC participants, or indirectly through organizations which are participants in DTC. Transfers between participants will be effected in the ordinary way in accordance with DTC rules and will be settled in immediately available funds.

     So long as DTC or its nominee is the registered owner of a global security, DTC or its nominee, as the case may be, will be considered the sole owner or holder of the new notes represented by that global security for all purposes under the Indenture. Except as provided below, owners of beneficial interests in a global security will not be entitled to have new notes represented by that global security registered in their names, will not receive or be entitled to receive physical delivery of new notes in definitive form and will not be considered the owners or holders thereof under the Indenture. Beneficial owners will not be holders and will not be entitled to any rights provided to the noteholders under the global securities or the Indenture. Principal payments, interest payments and liquidated damage payments, if any, on new notes registered in the name of DTC or its nominee will be made to DTC or its nominee, as the case may be, as the registered owner of the relevant global security. None of Commercial Metals Company, the Trustee or the registrar for the new notes will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial interests in a global security or for maintaining, supervising or reviewing any records relating to such beneficial interests.

     Payments of principal and interest to DTC will be the responsibility of the Company or the Trustee. The disbursement of such payments to participants shall be the responsibility of DTC. We expect that DTC or its nominee, upon receipt of any payment of principal or interest, if any, will credit immediately participants’ accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the relevant global security as shown on the records of DTC or its nominee. We also expect that payments by participants to owners of beneficial interests in a global security held through such participants will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such participants and not DTC, the Company or the Trustee, subject to any statutory or regulatory requirements as may be in effect from time to time.

     If we redeem less than all of the global security, we have been advised that it is DTC’s practice to determine by lot the amount of the interest of each participant in the global security to be redeemed.

     DTC has advised us that it is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC is owned by a number of its participants and by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc.

     DTC holds securities deposited with it by its participants and facilitates the settlement of transactions among its participants in such securities through electronic computerized book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. DTC’s participants include securities brokers and dealers (including the Initial Purchasers), banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own the depositary. Access to DTC’s book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. The rules applicable to DTC and its participants are on file with the SEC.

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     According to DTC, the foregoing information with respect to DTC has been provided to the financial community for informational purposes only and is not intended to serve as a representation, warranty or contract modification of any kind, and we take no responsibility for the accuracy or completeness of such information.

Certificated Securities

     If DTC is at any time unwilling or unable to continue as a depositary and a successor depositary is not appointed by us within 90 days or if an event of default will occur under the Indenture, we will issue new notes in definitive form in exchange for the entire global security for the new notes. In addition, we may at any time and in our sole discretion determine not to have new notes represented by a global security and, in such event, will issue new notes in definitive form in exchange for the entire global security relating to such new notes. In any such instance, an owner of a beneficial interest in a global security will be entitled to physical delivery in definitive form of new notes represented by such global security equal in principal amount to such beneficial interest and to have such new notes registered in its name. New notes so issued in definitive form will be issued as registered notes in denominations of $1,000 principal amount and integral multiples thereof, unless otherwise specified by us. The holder of a certificated new note may transfer such note by surrendering it at (1) the office or agency maintained by us for such purpose in the Borough of Manhattan, The City of New York, which initially will be the office of the Trustee maintained for such purpose or (2) the office of any transfer agent we appoint.

Same-Day Settlement and Payment

     Settlement for the new notes will be made in immediately available or same-day funds. So long as the new notes are represented by the global securities, we will make all payments of principal and interest in immediately available funds.

     So long as the new notes are represented by the global securities registered in the name of DTC or its nominee, the new notes will trade in DTC’s Same-Day Funds Settlement System. DTC will require secondary market trading activity in the new notes represented by the global securities to settle in immediately available or same-day funds on trading activity in the new notes.

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

     The following is a summary of certain material United States federal income tax considerations relating to the exchange of old notes for new notes in the exchange offer. This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), existing and proposed Treasury Regulations, revenue rulings, administrative interpretations and judicial decisions now in effect, all of which are subject to change possibly with retroactive effect. Except as specifically set forth herein, this summary deals only with notes held as capital assets within the meaning of Section 1221 of the Code. This summary does not purport to address all federal income tax considerations that may be relevant to holders in light of their particular circumstances or to holders subject to special tax rules, such as banks, insurance companies or other financial institutions, dealers in securities or foreign currencies, tax-exempt investors, or persons holding the notes as part of a hedging transaction, straddle, conversion transaction, or other integrated transaction.

     We have not sought any ruling from the Internal Revenue Service (the “IRS”) or an opinion of counsel with respect to the statements made and the conclusions reached in the following summary. As such, there can be no assurance that the IRS will agree with such statements and conclusions. Thus, all persons that exchange old notes for new notes in the exchange offer are urged to consult their own tax advisors with regard to the application of the U.S. federal income tax laws to their particular situations as well as any tax consequences arising under the laws of any state, local or foreign jurisdiction.

     As used herein, the term “U.S. Holder” means a beneficial owner of the notes who or that is, for U.S. federal income tax purposes, (i) a citizen or resident (within the meaning of Section 7701(b) of the Code) of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or of any political subdivision thereof, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. trustees or fiduciaries have the authority to control all substantial decisions of the trust. A Non-U.S. Holder means a holder of notes who or that is not, for U.S. federal income tax purposes, a U.S. Holder.

Consequences to U.S. Holders

     The exchange of old notes for new notes will not be treated as an exchange for federal income tax purposes, but, instead, will be treated as a “non-event” because the new notes will not be considered to differ materially in kind or extent from the old notes. As a result, no material federal income tax consequences will result to you from exchanging old notes for new notes.

Consequences to Non-U.S. Holders

     The exchange of old notes for new notes will not be treated as an exchange for federal income tax purposes, but, instead, will be treated as a “non-event” because the new notes will not be considered to differ materially in kind or extent from the old notes. As a result, no material federal income tax consequences will result to you from exchanging old notes for new notes.

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PLAN OF DISTRIBUTION

     Each broker-dealer that receives new notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of the new notes. Broker-dealers may use this prospectus, as it may be amended or supplemented from time to time, in connection with the resale of new notes received in exchange for old notes where the broker-dealer acquired the old notes as a result of market-making activities or other trading activities. We have agreed that after this registration statement is declared effective by the SEC and until the earlier of 180 days after the exchange offer has been completed or such time as broker-dealers no longer own any transfer restricted securities, we will make this prospectus, as amended or supplemented, available to any broker-dealer that requests it in the letter of transmittal for use in connection with any such resale.

     We will not receive any proceeds from any sale of new notes by broker-dealers or any other persons. Broker-dealers may sell new notes received by broker-dealers for their own account pursuant to the exchange offer from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the new notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to the prevailing market prices or negotiated prices. Broker-dealers may resell new notes directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any broker-dealer and/or the purchasers of the new notes. Any broker-dealer that resells new notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of the new notes may be deemed to be “underwriters” within the meaning of the Securities Act, and any profit on any resale of new notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

     We have agreed to pay all expenses incident to our performance of, or compliance with, the registration rights agreement and will indemnify the holders of the notes (including any broker-dealers) against certain liabilities under the Securities Act.

     By its acceptance of the exchange offer, any broker-dealer that receives new notes pursuant to the exchange offer agrees to notify us before using the prospectus in connection with the sale or transfer of new notes. The broker-dealer further acknowledges and agrees that, upon receipt of notice from us of the happening of any event which makes any statement in the prospectus untrue in any material respect or which requires the making of any changes in the prospectus to make the statements in the prospectus not misleading or which may impose upon us disclosure obligations that may have a material adverse effect on us, which notice we agree to deliver promptly to the broker-dealer, the broker-dealer will suspend use of the prospectus until we have notified the broker-dealer that delivery of the prospectus may resume and have furnished copies of any amendment or supplement to the prospectus to the broker-dealer.

LEGAL MATTERS

     Certain legal matters with regard to the validity of the new notes will be passed upon for us by Haynes and Boone, LLP.

67

EXPERTS

     The consolidated financial statements and the related consolidated financial statement schedules incorporated in this prospectus by reference from the Company’s Annual Report on Form 10-K for the year ended August 31, 2003 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports, which are incorporated herein by reference, and have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.

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AVAILABLE INFORMATION

     This prospectus is part of a registration statement on Form S-4 that we have filed with the SEC under the Securities Act. This prospectus does not contain all of the information set forth in the registration statement. For further information about us and the new notes, you should refer to the documents to which we refer you. Since this prospectus may not contain all of the information that you may find important, you should review the full text of these documents. We have filed these documents as exhibits to our registration statement.

     We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-888-SEC-0330 for further information on the public reference room. Our SEC filings are also available to the public from the SEC’s web site at www.sec.gov or from our website at www.commercialmetals.com. However, the information on our website does not constitute a part of this prospectus.

INCORPORATION BY REFERENCE

     In this document, we “incorporate by reference” certain information we file with the SEC, which means that we are disclosing important information to you by referring to that information. The information incorporated by reference is considered to be a part of this prospectus and later information filed with the SEC will update and supersede this information. We incorporate by reference the following information that we have filed with the SEC and any future filings that we make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 on or after the date of this prospectus until this offering is completed:

• Our Annual Report on Form 10-K for the fiscal year ended August 31, 2003 (including information specifically incorporated by reference into our Form 10-K from our definitive proxy statement for our 2004 Annual Meeting of Stockholders) filed on November 24, 2003, as amended by our Form 10-K/A filed on November 26, 2003;

• Our Quarterly Report on Form 10-Q for the quarter ended November 30, 2003, filed on January 14, 2004;

• Our Current Report on Form 8-K dated December 3, 2003; and

• Our Current Report on Form 8-K dated December 23, 2003.

     You may request a copy of these filings at no cost, by writing or telephoning us at: Commercial Metals Company, Attention: Corporate Secretary, 6565 N. MacArthur, Suite 800, Irving, Texas 75039, telephone: (214) 689-4300.

     You should rely only on the information contained or incorporated by reference into this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not offering the new notes in any jurisdiction where the offer is not permitted. You should assume that the information appearing in this prospectus is accurate as of the date hereof only. Our business, financial condition, results of operations, cash flows and prospects may change after that date.

69

Commercial Metals Company

Offer to Exchange up to $200,000,000 of its
5.625% Senior Notes due 2013
which have been registered under the Securities Act,
for up to $200,000,000 of its outstanding
5.625% Senior Notes due 2013

PROSPECTUS

                   , 2004

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers

     Section 145 of the Delaware General Corporation Law (“Delaware Law”) provides that a corporation may indemnify its directors, officers, employees and agents against expenses (including attorneys fees), judgments, fines and amounts paid in settlement in connection with certain actions, suits and proceedings (other than an action by or in the right of the corporation – a “derivative action”), if the person acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation. In the case of a criminal action, the person must have had no reasonable cause to believe his or her conduct was unlawful.

     Section 145 also provides that a Delaware corporation may indemnify its directors and officers against expenses actually and reasonably incurred in connection with the defense or settlement of any derivative action if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation. However, indemnification in derivative actions does not extend to expenses incurred with respect to any claim, issue or matter as to which the person has been found liable for negligence or misconduct, unless the court approves the indemnification. Section 145 also permits a Delaware corporation to grant its directors and officers additional rights of indemnification through bylaw provisions or other means, and to purchase indemnity insurance on behalf of its directors and officers. Indemnification is mandatory if a claim, issue or matter has been successfully defended.

     Section 102(b)(7) of the Delaware Law permits a provision in the certificate of incorporation eliminating or limiting, with certain exceptions, the personal liability of a director to the corporation or its stockholders for monetary damages for breaches of directors’ fiduciary duties.

     Our certificate of incorporation provides for indemnification of all directors, officers and agents in the manner permitted by Section 145 of Delaware Law. Our certificate of incorporation also eliminates the liability of directors to the fullest extent permitted by Delaware Law. Our directors and officers are currently covered by directors’ and officers’ liability insurance.

Item 21. Exhibits and Financial Statement Schedules.

     A list of exhibits filed with this registration statement on Form S-4 is set forth on the Exhibit Index and is incorporated in this Item 21 by reference.

Item 22. Undertakings.

(a) The undersigned registrant hereby undertakes:

     (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

          (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

          (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar

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value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

          (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

     (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

     (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the bona fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 20 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(d) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into this prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

(e) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

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SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Irving, State of Texas, on the 27th day of January, 2004.

COMMERCIAL METALS COMPANY
By:	/s/ Stanley A. Rabin Stanley A. Rabin, Chairman of the Board, President and Chief Executive Officer

     KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and directors of Commercial Metals Company, a Delaware corporation, do hereby constitute and appoint Stanley A. Rabin and David M. Sudbury, and each of them, their true and lawful attorneys-in-fact and agents or attorney-in-fact and agent, with power and authority to do any and all acts and things and to execute any and all instruments which said attorneys and agents, and any one of them, determine may be necessary or advisable or required to enable said corporation to comply with the Securities Act of 1933, as amended, and any rules and regulations or requirements of the Securities and Exchange Commission in connection with this registration statement. Without limiting the generality of the foregoing power and authority, the powers granted include the full power of substitution and resubstitution, for them and in their name, place and stead, in any and all capacities, the power and authority to sign the names of the undersigned officers and directors in the capacities indicated below to this registration statement, to any and all amendments (including any post-effective amendments) and supplements thereto, and to any and all instruments or documents filed as part or in connection with this registration statement with any regulatory authority, and each of the undersigned hereby ratifies and confirms all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. The Power of Attorney may be signed in several counterparts.

     Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons and in the following capacities on the 27th day of January, 2004.

Signature	Title
/s/ Stanley A. Rabin Stanley A. Rabin	Chairman of the Board, President, Chief Executive Officer and Director (Principal Executive Officer)
/s/ William B. Larson William B. Larson	Vice President and Chief Financial Officer (Principal Financial Officer)
/s/ Malinda G. Passmore Malinda G. Passmore	Controller (Principal Accounting Officer)

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Signature	Title
/s/ Harold L. Adams Harold L. Adams	Director
/s/ Moses Feldman Moses Feldman	Director
/s/ A. Leo Howell A. Leo Howell	Vice President and Director
/s/ Ralph E. Loewenberg Ralph E. Loewenberg	Director
/s/ Anthony A. Massaro Anthony A. Massaro	Director
/s/ Robert D. Neary Robert D. Neary	Director
/s/ Dorothy G. Owen Dorothy G. Owen	Director
/s/ Clyde P. Selig Clyde P. Selig	Chief Executive Officer — CMC Steel Group and Director
/s/ J. David Smith J. David Smith	Director
/s/ Robert R. Womack Robert R. Womack	Director

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EXHIBIT INDEX

Exhibit No.	Description
1	Purchase Agreement, dated November 7, 2003, by and among Goldman, Sachs & Co., Banc of America Securities LLC, Tokyo-Mitsubishi International plc, ABN AMRO Incorporated and Commercial Metals (Filed s Exhibit 10i(c) to Commercial Metals’ Form 10-K/A for the fiscal year ended August 31, 2003, and incorporated herein by reference).
2(a)	Share Purchase Agreement dated July 22, 2003 between Impexmetal, S.A. and Commercial Metals (International) AG (Filed as Exhibit 2.1 to Commercial Metals’ Form 10-Q for the quarter ended November 30, 2003 and incorporated herein by reference).
2(b)	Agreement and Plan of Merger among Commercial Metals Company, LAI Acquisition Company, Lofland Acquisition, Inc., The Lofland Company, E.F. Private Equity Partners (Americas) L.P., and the Texas Growth Fund — 1995 Trust, dated December 23, 2003 (filed herewith).
3(i)	Restated Certificate of Incorporation (Filed as Exhibit 3(i) to Commercial Metals’ Form 10-K/A for the fiscal year ended August 31, 2002 and incorporated herein by reference).
3(i)a	Certificate of Amendment of Restated Certificate of Incorporation dated February 1, 1994 (Filed as Exhibit 3(i)a to Commercial Metals’ Form 10-K/A for the fiscal year ended August 31, 2002 and incorporated herein by reference).
3(i)b	Certificate of Amendment of Restated Certificate of Incorporation dated February 17, 1995 (Filed as Exhibit 3(i)b to Commercial Metals’ Form 10-K/A for the fiscal year ended August 31, 2002 and incorporated herein by reference).
3(i)c	Certificate of Designation, Preferences and Rights of Series A Preferred Stock (Filed as Exhibit 2 to Commercial Metals’ Form 8-A filed August 3, 1999 and incorporated herein by reference).
3(ii)	By-Laws (Filed as Exhibit 3(ii) to Commercial Metals’ Form 10-K/A for the fiscal year ended August 31, 2002 and incorporated herein by reference).
4(i)a	Indenture between Commercial Metals and Chase Manhattan Bank dated as of July 31, 1995 (Filed as Exhibit 4.1 to Commercial Metals’ Registration Statement No. 33-60809 on July 18, 1995 and incorporated herein by reference).
4(i)b	Rights Agreement dated July 28, 1999 by and between Commercial Metals and ChaseMellon Shareholder Services, LLC, as Rights Agent (Filed as Exhibit 1 to Commercial Metals’ Form 8-A filed August 3, 1999 and incorporated herein by reference).
4(i)c	Form of Note for Commercial Metals’ 7.20% Senior Notes due 2005 (Filed as Exhibit 4(i)c to Commercial Metals’ Form 10-K/A for the fiscal year ended August 31, 2002 and incorporated herein by reference).
4(i)d	Form of Note for Commercial Metals’ 6.80% Senior Notes due 2007 (Filed as Exhibit 4(i)d to Commercial Metals’ Form 10-K/A for the fiscal year ended August 31, 2002 and incorporated herein by reference).

Exhibit No.	Description
4(i)e	Officers’ Certificate, dated August 4, 1997, pursuant to the Indenture dated as of July 31, 1995, relating to the 6.80% Senior Notes due 2007 (Filed as Exhibit 4(i)e to Commercial Metals’ Form 10-K/A for the fiscal year ended August 31, 2002 and incorporated herein by reference).
4(i)f	Form of Note for Commercial Metals’ 6.75% Senior Notes due 2009 (Filed as Exhibit 4(i)f to Commercial Metals’ Form 10-K/A for the fiscal year ended August 31, 2002 and incorporated herein by reference).
4(i)g	Officers’ Certificate, dated February 23, 1999, pursuant to the Indenture dated as of July 31, 1995, relating to the 6.75% Senior Notes due 2009 (Filed as Exhibit 4(i)g to Commercial Metals’ Form 10-K/A for the fiscal year ended August 31, 2002 and incorporated herein by reference).
4(i)h	Exchange and Registration Rights Agreement, dated November 12, 2003, by and among Goldman, Sachs & Co., Banc of America Securities LLC, Tokyo-Mitsubishi International plc, ABN AMRO Incorporated and Commercial Metals (Filed as Exhibit 4(i)h to Commercial Metals’ Form 10-K/A for the fiscal year ended August 31, 2003, and incorporated herein by reference).
4(i)i	Supplemental Indenture, dated as of November 12, 2003, to Indenture dated as of July 31, 1995, by and between Commercial Metals and JPMorgan Chase Bank (Filed as Exhibit 4(i)i to Commercial Metals’ Form 10-K/A for the fiscal year ended August 31, 2003, and incorporated herein by reference).
4(i)j	Form of Note for Commercial Metals’ 5.625% Senior Notes due 2013 (Filed herewith).
5	Legal Opinion of Haynes and Boone, LLP (Filed herewith).
12	Statement re computation of earnings to fixed charges (Filed herewith).
21	Subsidiaries of Registrant (Filed herewith).
23a	Consent of Deloitte & Touche, LLP (Filed herewith).
23b	Consent of Haynes and Boone, LLP (Included in its legal opinion filed as Exhibit 5).
24	Power of Attorney of the Officers and Directors of Commercial Metals Company (included on the signature pages of this Registration Statement).
25	Statement of Eligibility under the Trust Indenture Act of 1939 on Form T-1 of JPMorgan Chase Bank, as Trustee (Filed herewith).
99.1	Form of Letter of Transmittal (Filed herewith).
99.2	Form of Notice of Guaranteed Delivery (Filed herewith).
99.3	Form of Letter to Clients (Filed herewith).
99.4	Form of Letter to Registered Holders (Filed herewith).
99.5	Form of Instruction to Registered Holder from Beneficial Owner (Filed herewith).

EX-2.(B)

                                                                    EXHIBIT 2(b)

                          AGREEMENT AND PLAN OF MERGER


                                      among

                           COMMERCIAL METALS COMPANY,

                            LAI ACQUISITION COMPANY,

                           LOFLAND ACQUISITION, INC.,

                              THE LOFLAND COMPANY,

                 E. F. PRIVATE EQUITY PARTNERS (AMERICAS) L.P.,

                                       and

                       THE TEXAS GROWTH FUND - 1995 TRUST

                          Dated as of December 23, 2003





                                TABLE OF CONTENTS



                                                                                                       Page
                                                                                                    
ARTICLE I THE MERGER......................................................................................1

         SECTION 1.1. The Merger..........................................................................1

         SECTION 1.2. Effect of the Merger................................................................2

         SECTION 1.3. Certificate of Incorporation of the Surviving Corporation...........................2

         SECTION 1.4. Bylaws of the Surviving Corporation.................................................2

         SECTION 1.5. Board of Directors and Officers of the Surviving Corporation........................2

         SECTION 1.6. Effective Time of the Merger........................................................2


ARTICLE II CONVERSION OF SHARES...........................................................................2

         SECTION 2.1. Conversion of Capital Stock.........................................................2

         SECTION 2.2. Dissenting Shares...................................................................5

         SECTION 2.3. Purchase Price Adjustment...........................................................5

         SECTION 2.4. No Further Ownership Rights in LAI.................................................10

         SECTION 2.5. Exchange of Certificates...........................................................10


ARTICLE III REPRESENTATIONS AND WARRANTIES OF LAI AND TLC................................................11

         SECTION 3.1. Organization and Qualification.....................................................11

         SECTION 3.2. Authorization......................................................................12

         SECTION 3.3. No Violation.......................................................................12

         SECTION 3.4. Capitalization of LAI..............................................................13

         SECTION 3.5. Subsidiaries and Equity Investments................................................14

         SECTION 3.6. Consents and Approvals of Governmental Authorities and Other Persons...............15

         SECTION 3.7. Financial Statements; Other Financial Matters......................................15

         SECTION 3.8. Internal Controls..................................................................16

         SECTION 3.9. April 2000 Dividend................................................................17

         SECTION 3.10. Accounts and Notes Receivable.....................................................17

         SECTION 3.11. Inventory.........................................................................18


                                       i


                                                                                                    
         SECTION 3.12. Customers, Suppliers and Employees................................................18

         SECTION 3.13. Absence of Undisclosed Liabilities................................................19

         SECTION 3.14. Absence of Certain Changes........................................................19

         SECTION 3.15. Product Quality, Warranty Claims, Product Liability...............................21

         SECTION 3.16. Litigation........................................................................21

         SECTION 3.17. Liens.............................................................................22

         SECTION 3.18. Real Estate.......................................................................22

         SECTION 3.19. Condition of Assets; Title to Personal Property...................................23

         SECTION 3.20. Location and Sufficiency of Assets................................................23

         SECTION 3.21. Condemnations.....................................................................23

         SECTION 3.22. Claims............................................................................23

         SECTION 3.23. Certain Agreements................................................................24

         SECTION 3.24. Compensation; Employment and Other Agreements.....................................25

         SECTION 3.25. Employee Benefit Plans............................................................26

         SECTION 3.26. Labor Relations...................................................................31

         SECTION 3.27. Taxes.............................................................................31

         SECTION 3.28. Compliance with Applicable Law....................................................34

         SECTION 3.29. Brokers' Fees and Commissions.....................................................34

         SECTION 3.30. Proprietary Rights................................................................34

         SECTION 3.31. Insurance.........................................................................36

         SECTION 3.32. Environmental Matters.............................................................36

         SECTION 3.33. Books and Records.................................................................40

         SECTION 3.34. Information.......................................................................41

         SECTION 3.35. Certain Business Practices and Regulations; Potential Conflicts of Interest.......41

         SECTION 3.36. No Material Adverse Effect........................................................41

         SECTION 3.37. Agreements with Churchill and Other Debtholders...................................42


ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDERS..................................42

         SECTION 4.1. Ownership of Shares................................................................42

         SECTION 4.2. Authorization......................................................................42

         SECTION 4.3. No Violation.......................................................................43



                                       ii


                                                                                                    
         SECTION 4.4. Brokers and Finders................................................................43


ARTICLE V REPRESENTATIONS AND WARRANTIES OF CMC AND SUB..................................................43

         SECTION 5.1. Organization.......................................................................43

         SECTION 5.2. Authorization......................................................................44

         SECTION 5.3. No Violation.......................................................................44

         SECTION 5.4. Consents and Approvals.............................................................44

         SECTION 5.5. Brokers and Finders................................................................44


ARTICLE VI COVENANTS.....................................................................................45

         SECTION 6.1. Conduct of Business of each of the LAI Companies Prior to the Effective Time.......45

         SECTION 6.2. Access to Information..............................................................48

         SECTION 6.3. All Reasonable Efforts.............................................................48

         SECTION 6.4. Consents and Approvals.............................................................48

         SECTION 6.5. Public Announcements...............................................................48

         SECTION 6.6. Notice of Breaches.................................................................49

         SECTION 6.7. Exclusivity Agreement..............................................................49

         SECTION 6.8. Escrow Agreement...................................................................51

         SECTION 6.9. Waiver of Restrictions on Transfer.................................................51

         SECTION 6.10. Delivery of Financial Statements..................................................52

         SECTION 6.11. Tax Matters.......................................................................52

         SECTION 6.12. Stockholder Approval..............................................................54

         SECTION 6.13. Payment of Indebtedness by Related Persons........................................54

         SECTION 6.14. 401(k) Plan.......................................................................54

         SECTION 6.15. Environmental Insurance Policy; D&O Insurance Policy..............................55

         SECTION 6.16. Accounts Receivable Collection....................................................55

         SECTION 6.17. Opinions.  Each of TGF and EFPE agrees to use its commercially
                            reasonable efforts to deliver to CMC within 15 days after the
                            Closing an opinion of its counsel in form reasonably satisfactory
                            to CMC and TGF or EFPE, as the case may be...................................55


ARTICLE VII CLOSING CONDITIONS...........................................................................55



                                       iii


                                                                                                    
         SECTION 7.1. Conditions to Each Party's Obligations under this Agreement........................55

         SECTION 7.2. Conditions to the Obligations of CMC and Sub under this Agreement..................56

         SECTION 7.3. Conditions to the Obligations of the Sellers under this Agreement..................59


ARTICLE VIII CLOSING.....................................................................................60

         SECTION 8.1. Closing............................................................................60


ARTICLE IX TERMINATION AND ABANDONMENT...................................................................62

         SECTION 9.1. Termination........................................................................62

         SECTION 9.2. Procedure and Effect of Termination................................................63


ARTICLE X INDEMNIFICATION; REMEDIES......................................................................64

         SECTION 10.1. Survival; Right to Indemnification Not Affected by Knowledge......................64

         SECTION 10.2. Indemnification and Payment of Damages by the Sellers.............................64

         SECTION 10.3. Indemnification and Payment of Damages by CMC and Sub.............................65

         SECTION 10.4. Limitations of Liability..........................................................65

         SECTION 10.5. Environmental Indemnification and Payment of Damages by the Sellers...............67

         SECTION 10.6. Recourse Limited to Escrow Fund...................................................68

         SECTION 10.7. Procedure for Indemnification--Third Party Claims.................................68

         SECTION 10.8. Procedure for Indemnification--Other Claims.......................................70

         SECTION 10.9. Exclusive Remedy..................................................................70

         SECTION 10.10. Indemnification in Case of Strict Liability or Indemnitee Negligence.............70


ARTICLE XI MISCELLANEOUS PROVISIONS......................................................................70

         SECTION 11.1. Amendment and Modification........................................................70

         SECTION 11.2. Waiver of Compliance..............................................................70

         SECTION 11.3. Validity..........................................................................71

         SECTION 11.4. Fees and Obligations..............................................................71



                                       iv


                                                                                                    
         SECTION 11.5. Parties in Interest...............................................................71

         SECTION 11.6. Notices...........................................................................71

         SECTION 11.7. Governing Law.....................................................................74

         SECTION 11.8. Counterparts......................................................................74

         SECTION 11.9. Headings..........................................................................74

         SECTION 11.10. Entire Agreement.................................................................74

         SECTION 11.11. Assignment.......................................................................74

         SECTION 11.12. Jurisdiction and Venue...........................................................74

         SECTION 11.13. Disclosure of Tax Treatment......................................................75



Exhibits:

Exhibit A:    Certain Definitions
Exhibit B:    Form of Certificate of Merger

Exhibit C:    Form of Tangible Net Operating Assets Calculation
Exhibit D:    Form of Escrow Agreement
Exhibit E:    Form of Andrews Kurth, LLP Legal Opinion
Exhibit F:    Form of Haynes and Boone, LLP Legal Opinion
Exhibit G:    Form of Release


                                       v




                          AGREEMENT AND PLAN OF MERGER

         THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of
December 23, 2003, is made by and among Commercial Metals Company, a Delaware
corporation ("CMC"), LAI Acquisition Company, a Delaware corporation and a
wholly-owned subsidiary of CMC ("SUB"), Lofland Acquisition, Inc., a Delaware
corporation ("LAI"), The Lofland Company, a Delaware corporation and
wholly-owned subsidiary of LAI ("TLC"), EF Private Equity Partners (Americas)
L.P. ("EFPE"), and The Texas Growth Fund - 1995 Trust, a trust established by
the Constitution of the State of Texas ("TGF," and together with EFPE, the
"PRINCIPAL STOCKHOLDERS"). LAI and Sub are sometimes herein together referred to
as the "CONSTITUENT CORPORATIONS." LAI, TLC and the Principal Stockholders are
sometimes herein collectively referred to as the "SELLERS." Capitalized terms
have the meanings given to such terms on Exhibit A hereto.

                                    RECITALS:

         WHEREAS, CMC desires to acquire all of the issued and outstanding
shares of LAI's capital stock by means of a merger ("MERGER") of Sub into LAI,
pursuant to which (i) the stockholders of LAI shall receive cash payments in the
amounts set forth below, and (ii) CMC will become the sole stockholder of the
Surviving Corporation;

         WHEREAS, the respective boards of directors of CMC, Sub, LAI and TLC,
the sole stockholder of Sub, and the stockholders of LAI, have approved this
Agreement, the Merger and the transactions contemplated hereby on the terms and
conditions set forth herein and in accordance with the General Corporation Law
of the State of Delaware ("DGCL"); and

         WHEREAS, the Board of Directors of LAI has (i) determined that the
consideration to be paid to the stockholders of LAI for each share held by them
of capital stock of LAI in the Merger is fair to and in the best interests of
such stockholders, (ii) approved this Agreement and the transactions
contemplated hereby and (iii) recommended to such stockholders that they approve
the Merger and this Agreement.

         NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, the parties hereto
agree as follows:

                                    ARTICLE I

                                   THE MERGER

         SECTION 1.1. The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the applicable provisions of the DGCL, Sub shall
be merged with and into LAI as of the Effective Time. Following the Merger, the
separate existence of Sub shall cease, and LAI shall continue as the surviving
corporation in the Merger (the "SURVIVING CORPORATION") under the name "Lofland
Fabricators, Inc.".


                                       1



         SECTION 1.2. Effect of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in the Certificate of Merger attached
hereto as Exhibit B (the "CERTIFICATE OF MERGER") and the applicable provisions
of the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, except as otherwise provided herein, all the
property, rights, privileges, powers and franchises of Sub and LAI shall vest in
the Surviving Corporation, and all debts, liabilities and duties of Sub and LAI
shall become the debts, liabilities and duties of the Surviving Corporation.
From and after the Effective Time, the Surviving Corporation shall be a
wholly-owned subsidiary of CMC.

         SECTION 1.3. Certificate of Incorporation of the Surviving Corporation.
At the Effective Time and without any further action on the part of the
Constituent Corporations, the Certificate of Incorporation of LAI will be
amended and restated in the form attached as Appendix A to the Certificate of
Merger until duly further amended.

         SECTION 1.4. Bylaws of the Surviving Corporation. At the Effective Time
and without any further action on the part of the Constituent Corporations, the
Bylaws of Sub shall be the Bylaws of the Surviving Corporation until duly
further amended.

         SECTION 1.5. Board of Directors and Officers of the Surviving
Corporation. At the Effective Time, the directors of Sub and the officers of Sub
immediately prior to the Effective Time shall be the directors and initial
officers of the Surviving Corporation, respectively, each of such directors and
officers to hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.

         SECTION 1.6. Effective Time of the Merger. The Constituent Corporations
will cause the Certificate of Merger and such other documents as are required by
the DGCL to be duly filed with the Secretary of State of the State of Delaware
as early as practicable on the Closing Date. The Merger shall become effective
upon the filing of and acceptance by the Delaware Secretary of State of the
Certificate of Merger and such other documents as are required by the DGCL to be
filed (the time of such acceptance being the "EFFECTIVE TIME").

                                   ARTICLE II

                              CONVERSION OF SHARES

         SECTION 2.1. Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of the
capital stock of the Constituent Corporations:

              (a) Sub Common Stock. Each issued and outstanding share of common
stock, $.001 par value per share, of Sub (i) shall be converted into one share
of common stock of the Surviving Corporation and remain outstanding after the
Effective Time, (ii) shall continue to be owned by CMC, and (iii) shall
represent all of issued and outstanding capital stock of the Surviving
Corporation.

                                       2


              (b) Cancellation of Treasury Stock. All shares of common stock,
$0.001 par value per share, of LAI ("LAI COMMON STOCK"), all shares of Series A
Preferred Stock, $0.001 par value per share, of LAI ("LAI SERIES A PREFERRED
STOCK"), all shares of Series B Preferred Stock, $0.001 par value per share, of
LAI ("LAI SERIES B PREFERRED STOCK"), and all shares of Series C Preferred
Stock, $0.001 par value per share, of LAI ("LAI SERIES C PREFERRED STOCK," and,
collectively with LAI Series A Preferred Stock and LAI Series B Preferred Stock,
the "LAI PREFERRED STOCK," and, LAI Preferred Stock together with LAI Common
Stock, "LAI CAPITAL STOCK") that are owned directly or indirectly by LAI or by
any Subsidiary (collectively, the "TREASURY SHARES") shall be cancelled and no
consideration shall be delivered in exchange therefor.

              (c) Conversion of LAI Capital Stock. Subject to SECTION 2.2
(Dissenting Shares):

                       (i) LAI Common Stock. Each share of LAI Common Stock
issued and outstanding immediately prior to the Effective Time (other than
Treasury Shares and any Dissenting Shares) shall be automatically cancelled in
the Merger and will automatically be converted into the right to receive the
Common Per Share Amount;

                       (ii) LAI Series A Preferred Stock. Each share of LAI
Series A Preferred Stock issued and outstanding immediately prior to the
Effective Time (other than Treasury Shares and any Dissenting Shares) shall be
automatically cancelled in the Merger and will automatically be converted into
the right to receive the Series A Per Share Amount;

                       (iii) LAI Series B Preferred Stock. Each share of LAI
Series B Preferred Stock issued and outstanding immediately prior to the
Effective Time (other than Treasury Shares and any Dissenting Shares) shall be
automatically cancelled in the Merger and will automatically be converted into
the right to receive the Series B Per Share Amount;

                       (iv) LAI Series C Preferred Stock. Each share of LAI
Series C Preferred Stock issued and outstanding immediately prior to the
Effective Time (other than Treasury Shares and any Dissenting Shares) shall be
automatically cancelled in the Merger and will automatically be converted into
the right to receive the Series C Per Share Amount (the Common Per Share Amount,
Series A Per Share Amount, Series B Per Share Amount, and Series C Per Share
Amount are sometimes each generally referred to as the "PER SHARE AMOUNT").

              (d) Purchase Price; Merger Consideration. For purposes of this
Agreement, "PURCHASE PRICE" shall mean $46,961,435, subject to adjustment
pursuant to SECTION 2.3. The Purchase Price shall equal the sum of (i) the Debt
Payoff Amount plus (ii) the Merger Consideration. For purposes of this
Agreement, the following terms shall have the following meanings:

                       (i) "CHURCHILL CLOSING PAYMENT AMOUNT" means the
difference between (i) the Churchill Payoff Amount minus (ii) the Escrow Fund
Amount.

                                       3


                       (ii) "CHURCHILL HOLDBACK AMOUNT" means $2,000,000, as
adjusted pursuant to SECTION 2.3(b)(v).

                       (iii) "CHURCHILL ESCROW FUND PAYMENT AMOUNT" means
$7,000,000.

                       (iv) "CHURCHILL PAYOFF AMOUNT" means the aggregate dollar
amount necessary to (1) pay in full and indefeasibly extinguish all promissory
notes and other evidences of indebtedness and amounts outstanding under the
Churchill Loan Agreement, and under all agreements and instruments related
thereto, and (2) release all Liens on the properties or assets of the LAI
Companies and any capital stock of any of the LAI Companies held by or on behalf
of Churchill. The Churchill Payoff Amount shall equal the sum of (1) the Escrow
Fund Amount plus (2) the Churchill Closing Payment Amount and shall also equal
the difference between (1) the Debt Payoff Amount minus (2) the Senior
Obligations Payoff Amount. The Churchill Payoff Amount shall not exceed the
difference between (x) the Payoff Cap minus (y) the Senior Obligations Payoff
Amount.

                       (v) "DEBT PAYOFF AMOUNT" means the aggregate dollar
amount necessary to (1) pay in full and indefeasibly extinguish all promissory
notes and other evidences of indebtedness and amounts outstanding under the
Senior Loan Agreement and the Churchill Loan Agreement, and under all agreements
and instruments related thereto, and (2) release all Liens on the properties or
assets of the LAI Companies and any capital stock of any of the LAI Companies.
The Debt Payoff Amount shall be equal to the sum of (1) the Senior Obligations
Payoff Amount plus (2) the Churchill Payoff Amount and shall also be equal to
the difference between (1) the Purchase Price, minus (2) the Merger
Consideration.

                       (vi) "ESCROW FUND AMOUNT" means the sum of (1) the
Churchill Escrow Fund Payment Amount plus (2) the Churchill Holdback Amount.

                       (vii) "IRS PAYMENT AMOUNT" means $1,538,565.

                       (viii) "MERGER CONSIDERATION" means the aggregate amount
paid to the holders of LAI Capital Stock under SECTION 2.1(c).

                       (ix) "PAYOFF CAP" means the difference between (1) the
Purchase Price, as adjusted, minus (2) the Merger Consideration.

                       (x) "SENIOR OBLIGATIONS PAYOFF AMOUNT" means the
aggregate dollar amount necessary to (1) pay in full and indefeasibly extinguish
all promissory notes and other evidences of indebtedness and amounts outstanding
under the Senior Loan Agreement, and under all agreements and instruments
related thereto, and (2) release all Liens on the properties or assets of the
LAI Companies and any capital stock of any of the LAI Companies held by or on
behalf of the Senior Lenders, which shall be equal to the amount set forth in
the certificate described in SECTION 2.1(f). The Senior Obligations Payoff
Amount shall be equal to the difference between (1) the Debt Payoff Amount minus
(2) the Churchill Payoff Amount.


                                       4



              (e) Adjustment of Merger Consideration as a Result of
Reclassification, Etc. If, between the date of this Agreement and the Effective
Time (other than as contemplated hereby), the outstanding shares of LAI Common
Stock or LAI Preferred Stock (or any series thereof) shall have been changed
into a different number of shares or a different class or series by reason of
any reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or a stock dividend thereon shall be declared with a
record date within such period, the Per Share Amount to be received pursuant to
SECTION 2.1(c) for such class and/or series shall be adjusted as appropriate.

              (f) Payoff Amounts. Immediately prior to the Effective Time, LAI
shall deliver to CMC a certificate or instrument, satisfactory in form and
substance to CMC, executed by a duly authorized representative of the Senior
Lenders that sets forth the Senior Obligations Payoff Amount. At the Effective
Time, Sub, and immediately upon consummation of the Merger, Surviving
Corporation shall be capitalized by CMC with cash equal to the sum of (a) the
Senior Obligations Payoff Amount plus (b) the Churchill Payoff Amount.
Simultaneously with and as part of the Closing, the Surviving Corporation shall
remit (x) to the Senior Lenders by wire transfer in immediately available funds
the Senior Obligations Payoff Amount, (y) to the Escrow Agent into the Escrow
Fund the Escrow Fund Amount, and (z) to Churchill by wire transfer in
immediately available funds an amount equal to the Churchill Closing Payment
Amount. CMC shall cause the Surviving Corporation to make the foregoing
remissions and deposits.

         SECTION 2.2. Dissenting Shares. Shares of LAI Capital Stock issued and
outstanding immediately prior to the Effective Time that (a) have not been voted
for approval of this Agreement and the Merger or consented in writing thereto
pursuant to Section 228 of the DGCL and (b) with respect to which appraisal
rights have been properly perfected in accordance with Section 262 of the DGCL
(the "DISSENTING SHARES") shall not be converted into the right to receive the
applicable Per Share Amount for such class and/or series of shares of LAI
Capital Stock in accordance with this Agreement at or after the Effective Time,
unless and until the holder of such Dissenting Shares withdraws such holder's
demand for such appraisal in accordance with Section 262(k) of the DGCL or
becomes ineligible for such appraisal. If a holder of Dissenting Shares shall
withdraw in accordance with Section 262(k) of the DGCL or such holder's demand
for such appraisal shall become ineligible, then as of the later of the
Effective Time or the occurrence of such event, such holder's Dissenting Shares
shall cease to be Dissenting Shares and shall be converted into the right to
receive the applicable Per Share Amount for such class and/or series for each
share of LAI Capital Stock pursuant to SECTION 2.1(c) of this Agreement.

         SECTION 2.3. Purchase Price Adjustment.

              (a) Pre-Closing Statement.

                       (i) Accounting Principles. At least two (2) business days
prior to the Closing Date, LAI shall furnish to CMC and Sub the following
(collectively, the "PRE-CLOSING STATEMENT"): (A) a consolidated balance sheet of
LAI, prepared in accordance with GAAP applied in a manner consistent with the
1/31/03 Financial Statements as of the end of the most recently completed month
prior to the Closing Date (the "PRE-CLOSING BALANCE SHEET"); (B) a


                                       5



listing of the adjustment amounts to each of the line items on the Pre-Closing
Balance Sheet that are necessary to estimate in good faith such Pre-Closing
Balance Sheet line items immediately prior to Closing; and (C) LAI's good faith
estimate, based on the Pre-Closing Balance Sheet and such adjustments, of the
Tangible Net Operating Assets immediately prior to the Closing (the "TANGIBLE
NET OPERATING ASSETS ESTIMATE") in the form attached hereto as Exhibit C;
provided, however, that (A) the aggregate amount of the fees and expenses of the
LAI Companies incurred at or prior to the Closing in connection with this
Agreement and the consummation of the transactions contemplated hereby,
including without limitation, fees, costs and commissions of the Escrow Agent,
any investment banking, brokers, finders, accounting or legal fees, costs or
commissions, or transfer taxes, conveyance and recording fees, documentary stamp
taxes and all other similar charges shall be fully reflected or estimated as a
liability in the Tangible Net Operating Assets Estimate on the Pre-Closing
Statement, but only to the extent they have not been paid prior to the Closing
(the "LAI EXPENSES"), (B) no prepaid expense related to any LAI Expense shall be
reflected as an asset in the Tangible Net Operating Assets Estimate on the
Pre-Closing Statement, (C) the gross amount of any Change of Control Payments
(without regard to taxes or other withholdings) shall be reflected as a
liability in the Tangible Net Operating Assets Estimate on the Pre-Closing
Statement to the extent they have not been paid by LAI prior to the Closing, (D)
all interest, charges, fees, expenses and penalties, including prepayment
penalties on or which become due as a result of any voluntary payments made by
LAI under SECTION 2.1(f) or in contemplation of or in connection with the
Closing on any Debt, shall be reflected as a liability in the Tangible Net
Operating Assets Estimate on the Pre-Closing Statement to the extent any of the
foregoing have not been paid by LAI prior to the Closing, (E) all costs,
including all premium costs, of the Environmental Insurance Policy and the D&O
Insurance Policy shall be reflected as a liability in the Tangible Net Operating
Assets Adjustment on the Pre-Closing Statement, but only to the extent they have
not been paid prior to the Closing, (F) the following amount shall be reflected
as a liability in the Tangible Net Operating Assets Estimate on the Pre-Closing
Statement (the "CANCELLATION OF INDEBTEDNESS TAX"): the product of (x) 38%
multiplied by (y) the dollar amount of Tax attributes other than LAI net
operating losses incurred prior to the Effective Time, including without
limitation the Tax basis in the properties of and capital stock held by the LAI
Companies and CMC and its direct and indirect subsidiaries, that are reduced due
to the amount of cancellation of indebtedness income that is not recognized by
the LAI Companies pursuant to Code Section 108(a)(1), after giving full effect
to all reductions, if any, in the Purchase Price pursuant to SECTION 2.3, (G)
the aggregate amount of unpaid Taxes of the LAI Companies with respect to any
Pre-Effective Time Periods (except for the IRS Payment Amount), shall be
reflected as liabilities in the Tangible Net Operating Assets Estimate on the
Pre-Closing Statement, (H) the amount of any Debt of any of the LAI Companies
(other than the Debt being extinguished pursuant to SECTION 2.1(f)) shall be
reflected as a liability in the Tangible Net Operating Assets Estimate on the
Pre-Closing Statement to the extent any such Debt has not been fully and
indefeasibly paid and extinguished by LAI prior to the Closing, (I) the
aggregate amount of any unpaid withdrawal liability of the LAI Companies in
connection with any multiemployer plan described in SECTION 3.25(d) shall be
reflected as a liability in the Tangible Net Operating Assets Estimate on the
Pre-Closing Statement, and (J) the amount of Inventory on the Pre-Closing
Statement shall be adjusted to equal the Inventory Value determined under
SECTION 2.3(a)(ii) (items (A) through (J) are hereinafter referred to as
"ADJUSTED ACCOUNTING PRINCIPLES").


                                       6



                       (ii) Adjustment for Inventory.

                            (A) Inspection and Valuation. LAI and CMC agree and
covenant that after the close of business on the Friday prior to the Closing
Date and until Closing (provided such Closing occurs on the following Monday),
no inventory of any of the LAI Companies ("INVENTORY") shall be added to or
removed from any Current Facility. Commencing immediately after the close of
business on the Friday prior to Closing and continuing for so long as may be
necessary, but no longer than two (2) days, representatives of LAI and CMC shall
conduct a joint inspection and appraisal of the Inventory. LAI shall make
available such personnel and equipment as may be necessary to move and count the
Inventory in order to assure LAI and CMC that an accurate and complete physical
inventory has been taken in order to properly value the Inventory. Following the
joint inspection and appraisal, LAI and CMC shall endeavor to agree upon a
mutually acceptable value for the Inventory, which shall be the lower of average
cost or market, including freight, and determined in a manner consistent with
the 1/31/03 Financial Statements. For purposes of this Agreement, the market
value shall be the market value of such Inventory as held by the LAI Companies.
The value of such Inventory as determined in accordance with this SECTION
2.3(a)(ii)(A) or SECTION 2.3(a)(ii)(B) below is referred to as the "INVENTORY
VALUE." The Inventory Value shall be used in the calculation of Tangible Net
Operating Assets pursuant to this SECTION 2.3.

                            (B) Resolution of Inventory Valuation Disputes. In
the event LAI and CMC are unable to agree upon a mutually acceptable price and
quantity for all or any part of the Inventory prior to Closing (provided,
however, that the resolution of Inventory valuation disputes shall not delay
Closing), either such party may notify the other of that party's desire to
submit the valuation of the Inventory items in dispute to a neutral third party
familiar with the business of LAI chosen by CMC and reasonably acceptable to LAI
(the "ARBITRATOR"). In the event LAI and CMC do not agree on an Arbitrator, LAI
and CMC together shall contact the president of the Concrete Reinforcing Steel
Institute (the "CRSI") and instruct the president of the CRSI to appoint an
Arbitrator within one (1) business day of the contact by LAI and CMC. The
Arbitrator shall, within forty-eight (48) hours after designation, together with
a representative of each party, inspect the Inventory items in dispute. Prior to
the Arbitrator's inspection, representatives of LAI and CMC shall inform the
Arbitrator and each other in writing of the quantity and value placed on the
disputed Inventory items by that party. Within twenty-four (24) hours of the
inspection, the Arbitrator shall determine the valuation of the Inventory items
and advise the parties in writing of its determination. The valuation determined
by the Arbitrator shall be the valuation of the Inventory items of either LAI or
CMC, which in the sole opinion of the Arbitrator most closely approximates the
lower of the average cost or market value of the disputed Inventory items. The
valuation of the party selected by the Arbitrator shall be the valuation that
shall be used in the calculation of the Tangible Net Operating Assets pursuant
to this SECTION 2.3. All travel, out-of-pocket expenses and charges of the
Arbitrator shall be borne by LAI and shall be reflected as LAI Expenses to the
extent they are not paid prior to the Closing. If (i) an Arbitrator has been
chosen to value Inventory items, (ii) the Arbitrator has not completed the
valuation of the Inventory prior to the Closing, and (iii) all conditions to
Closing have been satisfied or waived, then CMC's valuation of the disputed
Inventory shall be used by LAI for purposes of the Pre-Closing Statement, and
the Arbitrator's valuation of the disputed Inventory items under this SECTION
2.3(a)(ii)(B) shall be used by CMC for purposes


                                       7



of the Post-Closing Statement. For purposes of this SECTION 2.3(a)(ii)(B), after
the Closing the Principal Stockholders shall act on behalf of LAI.

                       (iii) Purchase Price Adjustment. Based on the Pre-Closing
Statement, if the amount equal to the Tangible Net Operating Assets Estimate
minus $15,713,298 (the "TANGIBLE OPERATING ASSETS ADJUSTMENT") is a positive
number, then the Purchase Price shall be increased by such amount; provided,
however, that in no event shall the Purchase Price be increased by an amount in
excess of $1,000,000. If the Tangible Net Operating Assets Adjustment is a
negative number, the Purchase Price shall be reduced by such amount.

              (b) Post-Closing Statement.

                       (i) As soon as practicable, but in no event more than 100
days after the Closing Date, the Surviving Corporation shall furnish Churchill
and the Principal Stockholders, as representatives of Churchill, a statement
(the "POST-CLOSING STATEMENT") reflecting the Tangible Net Operating Assets of
LAI and its consolidated Subsidiaries immediately prior to the Closing (the
"CLOSING TANGIBLE NET OPERATING ASSETS AMOUNT"), with the line items included in
the Closing Tangible Net Operating Assets Amount being determined in accordance
with GAAP applied in a manner consistent with the 1/31/03 Financial Statements
and the Adjusted Accounting Principles (except as otherwise provided herein,
references in the Adjusted Accounting Principles to the Pre-Closing Statement
shall be deemed references to the Post-Closing Statement for purposes of
calculating the Closing Tangible Net Operating Assets Amount). The Principal
Stockholders shall have the authority to take all actions and exercise all such
discretion on behalf of Churchill as may be necessary or advisable pursuant to
this SECTION 2.3(b).

                       (ii) "CLOSING DIFFERENTIAL" as used herein shall mean the
Proposed Closing Differential with such revisions, adjustments and changes
thereto, if any, as shall be effected pursuant to this SECTION 2.3(b). "PROPOSED
CLOSING DIFFERENTIAL" as used herein shall mean, as reflected in the
Post-Closing Statement, the amount (whether a positive or negative number) equal
to the difference between (1) the Closing Tangible Net Operating Assets Amount
minus (2) the Tangible Net Operating Assets Estimate.

                       (iii) Within 30 days after the delivery of the
Post-Closing Statement to the Principal Stockholders and Churchill, the
Principal Stockholders shall either accept the amount of the Proposed Closing
Differential as reflected on the Post-Closing Statement as correct or object to
the Proposed Closing Differential, specifying in reasonable detail in writing
the nature of their objection(s). The Principal Stockholders shall not be
entitled to object to the Inventory Value used in the calculation of Tangible
Net Operating Assets as finally determined pursuant to SECTION 2.3(a)(ii) or to
the impact of the Inventory Value as so determined on the Closing Differential.
In the event the Principal Stockholders do not object to the Proposed Closing
Differential within said 30-day period, the Principal Stockholders shall
conclusively be deemed to have accepted the Proposed Closing Differential as the
Closing Differential, and the Proposed Closing Differential shall be, absent
manifest error, final and binding on the parties. In the event either Principal
Stockholder objects to the Proposed Closing Differential, then, during a 15-day
period subsequent to the receipt by the Surviving Corporation of notice of such


                                       8



objection(s), the Surviving Corporation and the objecting Principal
Stockholder(s) shall attempt in good faith to resolve the differences respecting
such Proposed Closing Differential. In the event the Surviving Corporation and
the objecting Principal Stockholder(s) are unable to resolve their differences
within said 15-day period, the Surviving Corporation shall select a firm of
certified public accountants reasonably acceptable to the objecting Principal
Stockholder(s) (which shall be one of KPMG LLP, Grant Thornton LLP or BDO
Seidman, LLP) to determine the Closing Differential pursuant to this SECTION
2.3, whose determination shall be, absent manifest error, final and binding on
the parties. If, as a result of such arbitration, it is determined that the
Closing Differential differs from the Proposed Closing Differential by an
aggregate amount greater than twelve and one-half percent (12.5%) of such
Closing Differential, CMC shall pay the cost of arbitration. Otherwise, the
Principal Stockholders shall be severally obligated to pay their proportionate
share of the cost of the arbitration. During the period from the date of
delivery of the Post-Closing Statement to the Principal Stockholders and
Churchill through the date of resolution of any dispute regarding the Proposed
Closing Differential as contemplated by this SECTION 2.3(b)(ii), CMC shall cause
the Surviving Corporation and each Subsidiary to provide the Principal
Stockholders and their agents and representatives reasonable access to the
books, records (including any work papers, supplemental schedules and other
materials prepared or used by the Surviving Corporation or auditing firm in
connection with preparation of the Post-Closing Statement and the Closing
Tangible Net Operating Assets Amount), facilities and employees of the Surviving
Corporation and each Subsidiary for purposes relevant to the review of such
Post-Closing Statement and the resolution of any related dispute.

                       (iv) Based on the Post-Closing Statement, within three
(3) days after the final determination of the Closing Differential, if the
amount of the Closing Differential is a positive amount or zero, then (x) the
Purchase Price shall be increased by the amount of any positive Closing
Differential, subject to the limitation in SECTION 2.3(a)(iii), (y) CMC or the
Surviving Corporation shall remit to Churchill an amount equal to any positive
Closing Differential, and (z) CMC and Churchill shall instruct the Escrow Agent
to remit to Churchill the Churchill Holdback Amount. CMC and Churchill agree to
give all notices and instructions to the Escrow Agent necessary to effect the
provisions of this SECTION 2.3(b)(iv).

                       (v) Based on the Post-Closing Statement, within three (3)
days after the final determination of the Closing Differential, if the amount of
the Closing Differential is a negative amount, then (x) the Purchase Price shall
be decreased by the amount of the Closing Differential pursuant to SECTION
2.3(a)(iii), and (y) CMC and Churchill shall instruct the Escrow Agent to pay to
CMC, out of the Churchill Holdback Amount, an amount equal to the Closing
Differential and to remit to Churchill the balance, if any, of the Churchill
Holdback Amount. In the event that the amount of the Closing Differential
exceeds the amount of the Churchill Holdback Amount, as adjusted pursuant to
this SECTION 2.3(b)(v), Churchill shall remit to CMC the difference between the
Closing Differential and the Churchill Holdback Amount, as adjusted; provided,
however, in no event shall Churchill be required to remit an amount greater than
the Churchill Closing Payment Amount; and provided further, that in the event
the Closing Differential exceeds the sum of the Churchill Holdback Amount plus
the Churchill Closing Payment Amount, then CMC and Churchill shall instruct the
Escrow Agent to pay to CMC, out of the Churchill Escrow Fund Payment Amount, an
amount equal to the excess


                                       9



of the Closing Differential above the sum of the Churchill Holdback Amount and
the Churchill Closing Payment Amount. CMC and Churchill agree to give all
notices and instructions to the Escrow Agent necessary to effect the provisions
of this SECTION 2.3(b)(v). The parties hereby further agree that, if the Closing
Differential exceeds the Churchill Holdback Amount and Churchill shall fail to
remit to CMC the difference between the Closing Differential and the Churchill
Holdback Amount, then CMC shall be entitled to make a claim and recover such
amount out of the Churchill Escrow Fund Payment Amount pursuant to ARTICLE X.

         SECTION 2.4. No Further Ownership Rights in LAI. At and after the
Effective Time, each holder of shares of LAI Common Stock and LAI Preferred
Stock immediately prior to the Effective Time shall cease to have any rights as
a stockholder of LAI, except for the right to surrender such stockholder's stock
certificate(s) in exchange for receipt of the Merger Consideration described in
SECTION 2.1(c), or otherwise provided by Law including any rights with respect
to the holders of Dissenting Shares. Any certificates presented after the
Effective Time for transfer shall be cancelled and exchanged for the appropriate
Merger Consideration. CMC shall have no obligation to deliver to stockholders of
LAI their portion of the Merger Consideration except to the extent that such
stockholders have caused certificates representing LAI Capital Stock (or
affidavits of lost certificate in form and substance reasonably acceptable to
CMC, if applicable and, if requested as provided below, the posting of a bond),
to be tendered to CMC.

         SECTION 2.5. Exchange of Certificates.

              (a) Establishment of Escrow Fund. As of the Effective Time, CMC
shall create a fund (the "ESCROW FUND") and CMC and, pursuant to SECTION 2.1(f),
the Surviving Corporation shall deposit or shall cause to be deposited with a
bank or trust company designated by the parties as the escrow agent ("ESCROW
AGENT") into the Escrow Fund, an amount equal to the Escrow Fund Amount, which
amount shall be held and subsequently distributed pursuant to the provisions of
SECTION 2.3(b) and the Escrow Agreement in substantially the form attached
hereto as Exhibit D (the "ESCROW AGREEMENT").

              (b) Exchange Procedures. No later than three (3) business days
after the Effective Time, CMC shall mail or cause to be mailed to each holder of
record of a certificate or certificates which immediately prior to the Effective
Time represented outstanding shares of LAI Capital Stock (the "CERTIFICATES")
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to CMC and shall be in customary form) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the applicable Merger Consideration. Upon surrender of a
Certificate for cancellation to CMC together with such letter of transmittal,
properly completed and duly executed, and such other documents as may be
reasonably required pursuant to such instructions, the holder of such
Certificate shall, subject to SECTION 2.1(b) and SECTION 2.2, be entitled to
receive the applicable Merger Consideration which such holder has the right to
receive in respect of the shares of LAI Capital Stock formerly represented by
such Certificate, and the Certificate so surrendered shall forthwith be
cancelled. In no event will interest be paid or accrued on any portion of the
Merger Consideration payable to holders of Certificates.


                                       10



              (c) Unregistered Transfer of LAI Capital Stock. In the event of a
transfer of ownership of LAI Capital Stock prior to the Effective Time which is
not registered in the transfer records of LAI, the appropriate Merger
Consideration may be issued to a transferee if the Certificate representing such
LAI Capital Stock is presented to CMC, accompanied by all documents reasonably
required by CMC, including (i) documents to evidence and effect such transfer
and by evidence that any applicable stock transfer taxes have been paid and (ii)
documents evidencing transferee's representations or warranties of ownership to
CMC.

              (d) Stock Transfer Books. At the Effective Time, the stock
transfer books of LAI shall be closed, and thereafter there shall be no further
registration of transfer of shares of LAI Capital Stock theretofore outstanding
on the records of LAI.

              (e) Withholding Rights. CMC shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of shares of LAI Capital Stock such amounts as CMC is required to
deduct and withhold with respect to the making of such payment under the Code or
any other Law. To the extent that amounts are so withheld by CMC, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to such holder in respect of which such deduction and withholding was made by
CMC.

                                   ARTICLE III

                               REPRESENTATIONS AND
                            WARRANTIES OF LAI AND TLC

         LAI and TLC, jointly and severally, warrant to each of CMC and Sub as
set forth below except as set forth in the Disclosure Schedule delivered by LAI
to CMC and Sub as of the date hereof (the "DISCLOSURE SCHEDULE"). The Disclosure
Schedule and all representations and warranties in any certificates delivered by
any of the LAI Companies to CMC or Sub pursuant to this Agreement are hereby
incorporated by reference into this ARTICLE III and shall be deemed to be
representations and warranties made in this ARTICLE III. Nothing in the
Disclosure Schedule shall be deemed to disclose an exception to a representation
or warranty made herein unless the Disclosure Schedule identifies the specific
representation or warranty by reference to the Section number in this Agreement
to which the exception applies. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
without further explanatory disclosure shall not be deemed adequate to disclose
an exception to a representation or warranty made herein (unless the
representation or warranty relates to the existence of the document or other
item itself). The Disclosure Schedule will be arranged in sections according to
the numbered and lettered sections contained in this Article.

         SECTION 3.1. Organization and Qualification. Each of LAI and its
respective Subsidiaries (collectively, the "LAI COMPANIES") is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, with all requisite corporate power and authority
to own, operate and lease its properties and to carry on its


                                       11



business as it is now being conducted, and is qualified or licensed to do
business and is in good standing in every jurisdiction where the nature of the
business conducted by it or the properties owned or leased by it requires
qualification. The jurisdictions in which the LAI Companies are qualified to
transact business are set forth in SECTION 3.1 of the Disclosure Schedule. Each
of the LAI Companies has delivered to CMC complete and correct copies of its
Certificate or Articles of Incorporation and Bylaws as amended to date (the
"CHARTER DOCUMENTS"). The Charter Documents are in full force and effect and
have not been amended, modified, revoked, terminated or canceled or in any other
manner varied from the copies delivered to CMC. LAI has delivered to CMC true,
complete and correct copies of the minute books of the LAI Companies, and the
copies thereof delivered to CMC are complete and accurate copies of all
materials included therein for the periods covered thereby. None of the LAI
Companies is in violation of any provision of its respective Charter Documents.
SECTION 3.1 of the Disclosure Schedule lists all assumed names that any of the
LAI Companies holds or uses.

         SECTION 3.2. Authorization. LAI and TLC have full corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements to
which they are a party and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Ancillary
Agreements to which they are a party by LAI and TLC, the performance by LAI and
TLC of their respective obligations hereunder and thereunder, and the
consummation by them of the transactions contemplated hereby and thereby, have
been duly and validly authorized by their respective boards of directors. The
affirmative vote of holders of a majority of the outstanding shares of LAI
Common Stock, voting together with the Series A Preferred Stock, and the holders
of sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock,
each voting as a separate class, at a meeting of such holders, or by means of
written consents in lieu of a meeting, to adopt this Agreement (the "STOCKHOLDER
APPROVAL") has been obtained and is the only vote of the holders of any class or
series of capital stock of LAI necessary to adopt this Agreement and approve the
transactions contemplated hereby. No other corporate action on the part of LAI
and TLC is necessary to authorize the execution and delivery of this Agreement,
the Ancillary Agreements to which either of them is a party or the consummation
of the transactions contemplated hereby or thereby. The Board of Directors of
LAI has duly recommended to the stockholders of LAI that they approve this
Agreement, the Merger and all of the transactions contemplated hereby. This
Agreement has been and as of the Closing Date, the Ancillary Agreements to which
LAI and TLC are a party will have been duly and validly executed and delivered
by LAI and TLC and, assuming this Agreement and the Ancillary Agreements
constitute the valid and binding obligations of CMC, Sub and any other party
thereto other than LAI and TLC, constitute legal, valid and binding obligations
of LAI and TLC, enforceable against each of them in accordance with its terms.

         SECTION 3.3. No Violation. Except as set forth in SECTION 3.3 of the
Disclosure Schedule, neither the execution and delivery of this Agreement and
the Ancillary Agreements to which they are a party by LAI and TLC and the
performance by LAI and TLC of their respective obligations hereunder and
thereunder, nor the consummation by LAI and TLC of the transactions contemplated
hereby and thereby will, directly or indirectly:


                                       12



              (a) violate, conflict with or result in any breach of (with or
without due notice or lapse of time or both) any provision of the Charter
Documents of any of the LAI Companies or be inconsistent with any resolution
adopted by the board of directors or stockholders of any of the LAI Companies
currently in effect;

              (b) violate, conflict with or result in a violation or breach of,
or constitute a default (with or without due notice or lapse of time or both)
under, or permit the termination of, or require the consent of any other party
to, or result in the acceleration of, or entitle any party to accelerate
(whether as a result of a change in control of any of the LAI Companies or
otherwise) any of the terms, conditions or provisions of any Material Contract
to which any of the LAI Companies is a party, or result in the loss of any
benefit, or give rise to the creation of any Lien upon the capital stock or any
of the properties or assets of any of the LAI Companies;

              (c) violate any Order of any court or Governmental Authority
applicable to any of the LAI Companies or any of their respective properties or
assets currently in effect;

              (d) violate any requirement of Law applicable to the LAI
Companies,

              (e) contravene, conflict with, violate or breach any of the terms
or requirements of, or give any Governmental Authority the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Permit; or

              (f) cause CMC, the Sub, the Surviving Corporation or any of the
LAI Companies to become subject to, or to become liable for the payment of, any
Tax or cause any of the assets or properties of any of the LAI Companies to be
reassessed or revalued by any Taxing authority or other Governmental Authority.

         SECTION 3.4. Capitalization of LAI. The authorized capital stock of LAI
consists of 20,000 shares of Common Stock and 19,500 shares of Preferred Stock,
of which 8,620 shares have been designated Series A Preferred Stock, 3,100
shares have been designated Series B Preferred Stock, 7,000 shares have been
designated Series C Preferred Stock, and 780 shares remain undesignated. As of
the date hereof, LAI has, in the aggregate, 6,099 shares of Common Stock
(including 38 Treasury Shares), 8,580 shares of Series A Preferred Stock
(including -0- Treasury Shares), 2,752 shares of Series B Preferred Stock
(including -0- Treasury Shares), and 6,007 shares of Series C Preferred Stock
(including -0- Treasury Shares) issued and outstanding, all of which have been
duly authorized, validly issued, are fully paid and non-assessable, and were
issued in accordance with the registration or qualification provisions of the
Securities Act of 1933, as amended (the "SECURITIES ACT") and applicable state
securities Laws or pursuant to valid exemptions therefrom. The Merger will not
entitle the LAI Preferred Stockholders to receive any liquidation preference,
preferential payment or other payment or distribution and will not entitle any
LAI Preferred Stockholder to require LAI to repurchase or redeem any shares of
LAI Preferred Stock. All preemptive rights, rights of first refusal and any
similar rights governing or binding on LAI or its Subsidiaries that may have
been applicable to the issuance of such shares were duly and validly complied
with or waived in compliance with all applicable Laws and any agreements
governing such rights. Except as set forth in SECTION 3.4 of the Disclosure
Schedule or as set forth in its Certificate of Incorporation, as amended, LAI
has no


                                       13



obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any of its equity securities or any interests therein or to pay any dividend or
make any distribution with respect thereof. SECTION 3.4 of the Disclosure
Schedule sets forth a complete and accurate listing of all holders of record of
LAI Common Stock and LAI Preferred Stock and the number of shares owned. Except
as set forth in SECTION 3.4 of the Disclosure Schedule, there are no options,
warrants, calls, subscriptions, conversion or other rights, agreements or
commitments obligating LAI to issue any additional shares of LAI Capital Stock
or any other securities convertible into, exchangeable for or evidencing the
right to subscribe for any shares of LAI Capital Stock. Immediately prior to the
Closing, no such options, warrants, calls, subscriptions, conversion or other
rights, agreements or commitments shall exist or be outstanding.

         SECTION 3.5. Subsidiaries and Equity Investments.

              (a) SECTION 3.5(a) of the Disclosure Schedule sets forth (i) the
name of each corporation of which LAI directly or indirectly owns shares of
capital stock having in the aggregate 50% or more of the total combined voting
power of the issued and outstanding shares of capital stock entitled to vote
generally in the election of directors of such corporation (individually, a
"SUBSIDIARY" and collectively, the "SUBSIDIARIES"); (ii) the name of each
corporation, partnership, joint venture or other entity (other than the
Subsidiaries) in which any of the LAI Companies have, or pursuant to any
agreement have the right to acquire at any time by any means, an equity interest
or investment; (iii) in the case of each of the Subsidiaries and such other
corporations described in the foregoing clause (i), (A) the jurisdiction of
incorporation and (B) the complete capitalization thereof and the percentage of
each class of voting stock owned by any of the LAI Companies on the date hereof;
and (iv) in the case of each of such unincorporated entities, the equivalent of
the information provided pursuant to the preceding clause (iii) with regard to
corporate entities.

              (b) All of the outstanding shares of capital stock of each
Subsidiary have been duly authorized, validly issued, are fully paid and
non-assessable, and were issued in accordance with the registration or
qualification provisions of the Securities Act and applicable state securities
Laws or pursuant to valid exemptions therefrom. All preemptive rights, rights of
first refusal and any similar rights that may have been applicable to the
issuance of such shares were duly and validly complied with or waived in
compliance with all applicable Laws and any agreements governing such rights.
None of the LAI Companies has any obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its equity securities or any
interests therein or to pay any dividend or make any distribution with respect
thereof. Except as set forth in SECTION 3.5(b) of the Disclosure Schedule, all
of the shares of capital stock of each subsidiary are owned of record and
beneficially, directly or indirectly, by LAI, free and clear of any Liens.

              (c) There are no options, warrants, calls, subscriptions,
conversion or other rights, agreements or commitments obligating any of the
Subsidiaries to issue any additional shares of capital stock of such Subsidiary
or any other securities convertible into, exchangeable for or evidencing the
right to subscribe for any shares of such capital stock.


                                       14



         SECTION 3.6. Consents and Approvals of Governmental Authorities and
Other Persons. Except as set forth in SECTION 3.6 of the Disclosure Schedule and
for any required consents, approvals, filings or registrations under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), and the filing of the Certificate of Merger with the Delaware Secretary
of State pursuant to the DGCL, no filing or registration with, no notice to, and
no Permit or consent of any Governmental Authority or other person is necessary
in connection with the execution, delivery and performance of this Agreement and
the Ancillary Agreements by LAI and TLC, or the consummation by LAI and TLC of
the transactions contemplated hereby and thereby.

         SECTION 3.7. Financial Statements; Other Financial Matters. LAI has
delivered to CMC (i) copies of the audited consolidated balance sheets of LAI
and its consolidated Subsidiaries as of January 31, 1999, January 31, 2000,
January 31, 2001, January 31, 2002 and January 31, 2003, together with the
related audited consolidated statements of income, stockholders' equity and
changes in cash flow for the fiscal years ended (eight months in the case of the
financial statements accompanying the January 31, 1999 balance sheet) on such
dates, and the notes thereto, accompanied by the reports thereon of the
applicable firm of independent public accountants (the "AUDITED FINANCIAL
STATEMENTS"), and (ii) copies of the unaudited consolidated balance sheet of LAI
as of November 30, 2003, together with the related unaudited consolidated
statements of income, stockholders' equity and changes in cash flow for the
eleven-month period ended on such date, certified by the chief financial officer
of LAI (the "INTERIM FINANCIAL STATEMENTS") (such Audited Financial Statements
and Interim Financial Statements being hereinafter referred to as the "FINANCIAL
STATEMENTS"). The Financial Statements referred to in this SECTION 3.7 reflect
and will reflect the consistent application of such accounting principles
throughout the periods involved, except as disclosed in the notes to such
Financial Statements or SECTION 3.7 of the Disclosure Schedule. Except as set
forth in SECTION 3.7 of the Disclosure Schedule, the Financial Statements,
including the notes thereto, (a) were prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods covered thereby, (b) present fairly, in all material respects, the
consolidated financial position, results of operations and changes in
stockholders' equity and cash flows of LAI and its consolidated Subsidiaries as
of such dates and for the periods then ended (subject, in the case of the
Interim Financial Statements, to normal year end audit adjustments consistent
with prior periods that would not be material, individually or in the
aggregate), and (c) in the case of the Audited Financial Statements, have been
audited in accordance with U. S. generally accepted auditing standards. SECTION
3.7 of the Disclosure Schedule lists all assets of the LAI Companies (other than
assets having a value less than $5,000 individually) not reflected in the
Interim Financial Statements or that have not been sold in the ordinary course
of business. Neither LAI nor any of its Subsidiaries has entered into any
securitization transactions or off-balance sheet arrangements (as defined in
Item 303(c) of Regulation S-K promulgated by the Securities and Exchange
Commission). The Pre-Closing Statement reflects all liabilities of the LAI
Companies required by GAAP applied on a consistent basis (as modified by the
Adjusted Accounting Principles) to be reflected on LAI's consolidated financial
statements, except for the accounts excluded by Exhibit C-2. The Pre-Closing
Statement delivered by LAI will accurately reflect all of the following items as
liabilities, to the extent that they have not been paid by LAI prior to the
Closing: (i) all LAI Expenses, (ii) the gross amount of all Change in Control
Payments (without regard to taxes or other withholdings),


                                       15



(iii) all interest, charges, fees, expenses and penalties, including prepayment
penalties on or which become due as a result of any voluntary payments made by
LAI on the Closing Date or in contemplation of the Closing on any Debt, (iv) all
costs, including all premium costs, of the Environmental Insurance Policy and
the D&O Insurance Policy, (v) the Cancellation of Indebtedness Tax, (vi) the
amount of all Debt of the LAI Companies other than (A) the Debt being
extinguished pursuant to SECTION 2.1(f) and (B) the negative account balances
included in the cash component of the Tangible Net Operating Assets Estimate and
(vii) the aggregate amount of any outstanding withdrawal liability of the LAI
Companies under any multiemployer plan described in SECTION 3.25. As of March
31, 2003, the dollar amount of Tangible Net Operating Assets was $15,713,298,
and the aggregate dollar amount of Debt of the LAI Companies was $54,486,688.
The Pre-Closing Statement delivered by LAI accurately reflects the book value of
all of the assets of the LAI Companies in accordance with GAAP applied on a
consistent basis (as modified by the Adjusted Accounting Principles) except for
accounts excluded on Exhibit C-1. As of the date of this Agreement, the
aggregate dollar amount of Debt of the LAI Companies was $58,145,035. SECTION
3.7 of the Disclosure Schedule lists the identity of each person to whom any LAI
Company owes any Debt, the respective amount of Debt owed to each such person
and the name(s) of the LAI Company or LAI Companies that are obligor(s) or
guarantor(s) with respect to such Debt; provided, however, that with respect to
negative cash balances, only the amount(s) of such balance(s) are set forth in
SECTION 3.7 of the Disclosure Schedule. The LAI Companies do not have any Debt
outstanding except for (i) Debt outstanding under the Senior Loan Agreement and
the Churchill Loan Agreement and (ii) Debt reflected as a current or long-term
liability on the Interim Financial Statements.

         SECTION 3.8. Internal Controls.

              (a) LAI maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP, to maintain asset accountability and to
provide reasonable assurance regarding the reliability of financial reporting,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
actions are taken with respect to any differences. There are no material
weaknesses in the design or operation of internal controls over financial
reporting that are reasonably likely to adversely affect LAI's ability to
record, process, summarize and report financial information.

              (b) Since January 31, 2002 no LAI Company, no officer or employee
(including any employee director) of any LAI Company, and, to the Knowledge of
the LAI Companies, no non-employee director, auditor, accountant, attorney or
representative of any of the LAI Companies has received or otherwise had or
obtained Knowledge of (i) any written complaint, allegation, assertion or claim
regarding the accounting or auditing practices, procedures, methodologies, or
methods of any of the LAI Companies or their respective internal accounting
controls, including any complaint, allegation, assertion or claim that any of
the LAI Companies has engaged in questionable accounting or auditing practices,
or (ii) any fraud, whether or not material, that involves management or other
employees of any LAI Company who have a significant role in such LAI Company's
internal controls.


                                       16



              (c) No attorney representing any of the LAI Companies, whether or
not employed by any of the LAI Companies, has reported evidence of a violation
of securities laws, breach of fiduciary duty or similar violation by any of the
LAI Companies or any of their officers, directors, employees or agents.

         SECTION 3.9. April 2000 Dividend. The $20,000,000 dividend declared by
LAI's Board of Directors on April 10, 2000 and funded on April 14, 2000 (the
"Dividend") did not violate Section 154, 170, 173, 174 or 244 of the DGCL. At
the time of the Dividend, the "surplus" of LAI (as such term is defined in and
determined under Section 154 of the DGCL) equaled or exceeded the amount of the
Dividend. Churchill and each of LAI's Senior Lenders under the Senior Loan
Agreement specifically consented, in writing, to the payment of the Dividend. No
claim, assertion or statement by any creditor of LAI or any other person has
ever been made (whether orally or in writing) to any LAI Company to the effect
that the Dividend (i) was an impermissible dividend under the DGCL, (ii)
constituted a fraudulent conveyance or a fraud on LAI's creditors or (iii) was
improper or illegal in any manner. The Dividend, at the time it was declared and
paid, did not render LAI insolvent.

         SECTION 3.10. Accounts and Notes Receivable.

              (a) All accounts receivable of the LAI Companies that are
reflected either on the Interim Financial Statements or on the accounting
records of the LAI Companies provided to CMC as of the Closing Date
(collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the LAI Companies' ordinary course of business and, in the case of Accounts
Receivable exceeding $10,000 due with respect to any one Contract of the LAI
Companies, pursuant to validly executed sales Contracts or validly executed and
approved change orders. SECTION 3.10(a) of the Disclosure Schedule separately
lists and identifies each amount of any account receivable of any LAI Company in
excess of $10,000 with respect to any one Contract of the LAI Companies that (i)
constitutes a proposed change order that has not been executed, approved and
accepted by all parties to the related Contract, or (ii) represents an advance
billing for goods or services for which revenue has not yet been recognized in
accordance with GAAP applied on a consistent basis. The respective reserves
shown on the Interim Financial Statements or on the accounting records of the
LAI Companies provided to CMC as of the Closing Date are adequate and calculated
consistent with past practice and, in the case of the reserve as of the Closing
Date, will not represent a lesser percentage of the Accounts Receivable as of
the Closing Date than the reserve reflected in the Interim Financial Statements
represented of the Accounts Receivable reflected therein and will not represent
a material adverse change in the composition of such Accounts Receivable in
terms of aging.

              (b) Each of the Accounts Receivable set forth in SECTION 3.10(b)
of the Disclosure Schedule either has been or will be collected in full, without
any set-off, within fifteen (15) months after the Closing Date.

              (c) Except as set forth in SECTION 3.10(c) of the Disclosure
Schedule or for which reserves have been established in the Financial Statements
or accounting records in


                                       17



accordance with GAAP, there is no outstanding contest, claim, or right of
set-off, other than returns or exchanges in the ordinary course of business,
under any Contract with any obligor of an Accounts Receivable relating to the
amount or validity of such Accounts Receivable, where the amount contested,
claimed or set-off exceeds $15,000 individually. SECTION 3.10(c) of the
Disclosure Schedule contains a complete and accurate list of all Accounts
Receivable as of the date of the Interim Financial Statements, which list sets
forth the aging of such Accounts Receivable, showing amounts due in 30-day aging
categories.

              (d) Each of the LAI Companies has taken all necessary action,
including, without limitation, the execution and filing of all necessary
documents with appropriate Governmental Authorities, in a timely manner to
attach and fully perfect all mechanics, materialmen's or similar Liens to secure
all Accounts Receivable of the LAI Companies where the operation of applicable
Law allows the creation of such statutory Liens and the creation of such Liens
was economically beneficial and meaningful to the LAI Companies.

         SECTION 3.11. Inventory. All inventory of the LAI Companies, whether or
not reflected in the Financial Statements, consists of a quality and quantity
usable and salable in the ordinary course of business consistent with past
practice, except for obsolete, slow-moving or non-marketable items, items whose
recommended use dates have expired, and items of below-standard quality, all of
which have been written off or written down to net realizable value in the
Interim Financial Statements or with respect to which adequate reserves have
been established in the Interim Financial Statements. All inventories not
written off have been priced at the lower of cost or market. Except as set forth
in SECTION 3.11 of the Disclosure Schedule, the LAI Companies are not in
possession of any inventory that is not owned by them, including goods already
sold. The quantities of each class of inventory (whether such class is
considered to be a component of raw materials, work-in-process, or finished
goods) are not excessive, but are reasonable in the present circumstances of the
LAI Companies and consistent with past practice.

         SECTION 3.12. Customers, Suppliers and Employees. Since January 1, 2002
there has not been any material adverse change in the business relationship of
any of the LAI Companies with any material customer or supplier, and no LAI
Company has any Knowledge that there will be any such adverse change in the
future as a result of the consummation of the transactions contemplated by this
Agreement or otherwise. None of the LAI Companies has any Knowledge that any
employee material to the business of any of the LAI Companies will resign his
employment with any of the LAI Companies as a result of the consummation of the
transactions contemplated by this Agreement. SECTION 3.12 of the Disclosure
Schedule contains a complete and accurate list of the five (5) suppliers and
five (5) customers of each of the LAI Companies that accounted for the greatest
amount of such LAI Companies' purchases and sales (measured in dollars),
respectively, (i) during each of the fiscal years ending January 31, 2002 (with
respect to customers and suppliers) and December 31, 2002 (with respect to
suppliers) and during the twelve months ended January 31, 2003 (with respect to
customers), and (ii) for the current fiscal year through October 31, 2003 (with
respect to customers and suppliers) and the aggregate dollar amount of such
purchases or sales for each such supplier or customer, respectively, for such
periods.


                                       18



         SECTION 3.13. Absence of Undisclosed Liabilities. Except for matters
relating to the transactions contemplated by the Agreement, there are no
liabilities or financial obligations of any of the LAI Companies of any kind
whatsoever (whether absolute, accrued, contingent or otherwise, and whether due
or to become due) other than liabilities and obligations: (a) accrued, provided
for or reserved against or reflected in the Interim Financial Statements, (b) of
a short-term nature (i.e., becoming due in one year or less from the date of
incurrence) arising after the date of the Interim Financial Statements in the
ordinary course of business consistent with past experience, (c) not exceeding
$25,000 individually or $150,000 in the aggregate, (d) disclosed in SECTION 3.13
of the Disclosure Schedule or (e) arising under the executory portion of the
Contracts listed on SECTION 3.23(b) of the Disclosure Schedule, provided that
all breaches and defaults of the LAI Companies and events which, after the
giving of notice or lapse of time or both, would constitute such a breach or
default under such Contracts are specifically listed on SECTION 3.23(c) of the
Disclosure Schedule.

         SECTION 3.14. Absence of Certain Changes. Except as disclosed in
SECTION 3.14 of the Disclosure Schedule, and except for matters relating to the
transactions contemplated by this Agreement and the Ancillary Agreements, since
the date of the 1/31/03 Financial Statements, each of the LAI Companies has
conducted its respective business only in the ordinary course, and there has not
occurred:

              (a) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to the
equity interests of any the LAI Companies,

              (b) any forgiveness, cancellation or waiver by any of the LAI
Companies of Debts in excess of $10,000, individually or in the aggregate, owed
to any of the LAI Companies or material claims or rights of any of the LAI
Companies against others, or any discharge by any of the LAI Companies of any
Lien in favor of the LAI Companies other than in connection with the receipt of
payment or payment by any of the LAI Companies of any liability or obligation,
other than, as relates to all of the foregoing, in the ordinary course of
business,

              (c) any grant of credit to any customer or distributor on terms
materially more favorable than the terms on which credit has been extended to
such customer or distributor in the past, nor any material change in the credit
practices of any of the LAI Companies,

              (d) (i) any increase in the rate or terms of compensation
(including termination and severance pay) payable or to become payable by any of
the LAI Companies to any of their directors, officers or employees, or any
increase in the rate or terms of any bonus, insurance, pension or other employee
benefit plan, program or arrangement made to, for or with any such directors,
officers or employees, except, in each case, increases occurring in the ordinary
course of business or as required by applicable Law, and (ii) any entry by any
of the LAI Companies into any employment, severance or termination agreement
with any such person,

              (e) any entry into any Material Contract by any of the LAI
Companies, except Contracts entered into in the ordinary course of business
consistent with past practice,


                                       19



              (f) any damage, destruction or theft or other casualty loss to the
properties or assets owned or leased by any of the LAI Companies with a book or
replacement value of $25,000 or more individually or $100,000 in the aggregate,
whether or not covered by insurance (other than damage, destruction or theft or
other casualty loss to any property or assets which property or assets have been
repaired or replaced and the cost of such repair or replacement has been
expensed by LAI),

              (g) any change by any of the LAI Companies in their financial or
tax accounting principles or methods, except insofar as may be required by a
change in GAAP, applicable Law or circumstances which did not exist as of the
date of the 1/31/03 Financial Statements,

              (h) any change made or authorized in the Charter Documents of any
of the LAI Companies, except in connection with the transactions contemplated
hereby,

              (i) any purchase, redemption, issue, sale or other acquisition or
disposition by any of the LAI Companies of any shares of capital stock or other
equity securities of any of the LAI Companies, or the grant of any options,
warrants or other rights to purchase, or convert any obligation into, shares of
capital stock or any evidence of indebtedness or other securities of any of the
LAI Companies,

              (j) any sale, lease, license or disposition by any of the LAI
Companies of any of its assets having a value of $10,000 or more individually or
$50,000 or more in the aggregate which is not in the ordinary course of
business,

              (k) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property or
rights of any of the LAI Companies or requiring consent of any party to the
transfer and assignment of any such assets, property or rights other than in the
ordinary course of business;

              (l) any breach, amendment, termination or nonrenewal of any
Contract described or required to be described in SECTION 3.23 of the Disclosure
Schedule;

              (m) any capital expenditure or commitment by any of the LAI
Companies, of $50,000 or more individually or $200,000 in the aggregate;

              (n) any creation or assumption by any of the LAI Companies of any
Lien on any LAI Company asset except (a) Permitted Liens, and (b) Liens
identified in the Financial Statements (which have not been discharged);

              (o) any change in any election made by any of the LAI Companies
with respect to any Tax Return;

              (p) revaluation (other than by means of normal depreciation taken
in the ordinary course of business in accordance with GAAP consistently
applied), by any LAI Company of any


                                       20



of its assets, including without limitation, writing off notes or accounts
receivable or inventory in any case in excess of reserves; or

              (q) any agreement by any of the LAI Companies or, to the Knowledge
of any LAI Company, any officer or employee thereof to do any of the things
described in the preceding clauses (a) through (p).

         SECTION 3.15. Product Quality, Warranty Claims, Product Liability.
Except as set forth in SECTION 3.15 of the Disclosure Schedule, all products and
services sold, rented, leased, provided or delivered by any of the LAI Companies
to its customers on or prior to the date hereof conformed to applicable
contractual commitments, express and implied warranties, product and service
specifications and quality standards other than for products manufactured by
third parties and resold by any LAI Company, and none of the LAI Companies has
any liability in excess of $10,000 individually or $50,000 in the aggregate for
replacement or repair thereof or other damages in connection therewith, except
to the extent reserved against in the Financial Statements. Except as set forth
in SECTION 3.15 of the Disclosure Schedule, no product or service sold, leased,
rented, provided, fabricated or delivered by the LAI Companies to any of their
respective customers on or prior to the date hereof is subject to any guaranty,
warranty or other indemnity (i) with any obligation that would extend beyond
twelve (12) months after the Closing, or (ii) that is not documented by a
validly executed Contract, a copy of which has been provided or made available
for CMC's review. Except as set forth in SECTION 3.15 of the Disclosure
Schedule, none of the LAI Companies has any liability (and to the Knowledge of
any Seller, no basis exists for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand against any of the
LAI Companies which reasonably could be expected to give rise to any liability)
arising out of any injury to a person or property as a result of the ownership,
possession, provision or use of any equipment, product or service sold, rented,
leased, provided, fabricated or delivered by the LAI Companies on or prior to
the Closing Date. Each product liability claim that has resulted in or
reasonably could be expected to result in damages in excess of $10,000 that has
been asserted against any of the LAI Companies since January 1, 1999, whether
covered by insurance or not and whether litigation has resulted or not, is
listed and summarized on SECTION 3.15 of the Disclosure Schedule.

         SECTION 3.16. Litigation. Except as set forth in SECTION 3.16 of the
Disclosure Schedule, there is no action, suit, inquiry, judicial or
administrative proceeding, arbitration or investigation ("LITIGATION") pending
or, to the Sellers' Knowledge, threatened against any of the LAI Companies or
any of their respective properties, assets or rights before any court arbitrator
or administrative or Governmental Authority, nor is there any Order of any court
outstanding against any of the LAI Companies. Except as set forth in SECTION
3.16 of the Disclosure Schedule, all of the Damages that are incurred by the LAI
Companies in connection with the Litigation described in SECTION 3.16 of the
Disclosure Schedule will be fully covered by the insurance policies listed in
SECTION 3.31 of the Disclosure Schedule, subject only to the deductibles listed
in SECTION 3.31 of the Disclosure Schedule. Without limiting the generality of
the foregoing, there is no Litigation pending or, to the Sellers' Knowledge,
threatened, nor has any contest or claim (including without limitation claims
for rights of set-off or against any escrow or similar fund) been asserted or to
the Knowledge of any Seller, threatened, against any of the LAI Companies,
attributable to or arising out of any acquisition or divestiture of any assets


                                       21



or capital stock, or other ownership interest, of any of the LAI Companies or
any entity formerly owned by any LAI Company, nor to the Knowledge of any
Seller, is there any reasonable basis for such Litigation, contest or claim, and
all liability and obligations whatsoever of the LAI Companies under such
acquisition or divestiture agreements have terminated in each case, except as
set forth on SECTION 3.16 of the Disclosure Schedule. LAI has provided or made
available to CMC true, correct and complete copies of all material documents
prepared or received by any LAI Company that relate to any matter disclosed in
SECTION 3.16 of the Disclosure Schedule (including without limitation copies of
all pleadings and other documents in the official record relating to such matter
and all material correspondence between (i) LAI Companies and their counsel and
(ii) the adverse parties or their counsel, on the one hand, and the LAI
Companies and their counsel on the other hand). All disputes and claims made by
or against Ambassador Steel Corporation and its Affiliates in connection with,
arising out of or related to the sale of assets of Lofland Company Midwest have
been fully and finally discharged and settled. None of the LAI Companies has any
further liability to Ambassador Steel Corporation and its Affiliates.

         SECTION 3.17. Liens. All properties and assets owned by each of the LAI
Companies are free and clear of all liens, pledges, claims, charges, security
interests, restrictions, mortgages, tenancies and other possessory interests,
conditional sale or other title retention agreements, assessments, easements,
rights of way, covenants, restrictions, rights of first refusal, defects in
title, encroachments and other burdens, options or encumbrances of any kind,
whether arising by contract or under law (collectively, "LIENS") except (a)
statutory Liens not yet delinquent or the validity of which are being contested
in good faith by appropriate actions, (b) purchase money Liens arising in the
ordinary course, (c) Liens for taxes not yet delinquent and (d) Liens
specifically identified in SECTION 3.17 of the Disclosure Schedule (such Liens
in clauses (a), (b), (c) and (d) being collectively referred to as "PERMITTED
LIENS"). Except as set forth on SECTION 3.17 of the Disclosure Schedule, all of
the property, plant and equipment of each of the LAI Companies are owned or
leased by each of the LAI Companies and are in satisfactory condition to conduct
the business of the LAI Companies as presently conducted.

         SECTION 3.18. Real Estate. Except as set forth in SECTION 3.18 of the
Disclosure Schedule, each of the LAI Companies has good and indefeasible title
in fee simple to all real properties owned by it and valid leaseholds in all
real estate leased by it, in each case, under valid and enforceable leases.
Except (a) as disclosed in SECTION 3.18 of the Disclosure Schedule or (b) in any
Title Policy (as defined below) listed in SECTION 3.18 of the Disclosure
Schedule, none of such real properties is subject to any easements, rights of
way, licenses, grants, building or use restrictions, exceptions, reservations,
limitations or other impediments which materially and adversely affect the value
thereof or which interfere with or impair the present and continued use in the
usual and normal conduct of the business of each of LAI Companies. SECTION 3.18
of the Disclosure Schedule lists (i) the street address of each parcel of real
property owned by each of the LAI Companies (the "OWNED REAL PROPERTY") and (ii)
as to each parcel of Owned Real Property, the number of the title policy, if
any, and the name of the company issuing such policy, insuring that LAI or a
Subsidiary is the fee owner of such parcel (each such policy or title commitment
listed in SECTION 3.18 of the Disclosure Schedule being referred to herein as a
"TITLE POLICY" and the insured under each such policy being referred to herein
as an "INSURED"). Except as set forth in SECTION 3.18 of the Disclosure
Schedule, the LAI Companies have delivered to CMC true and complete copies of
(a) each Title Policy and (b)


                                       22



as to each parcel of Owned Real Property, the recorded deed whereby the Insured
acquired title to such parcel. Each Title Policy is valid and binding on the
relevant insurer(s) in accordance with its terms and is in full force and
effect, and the consummation of the transactions contemplated by this Agreement
will not affect the interest of the Insured in any Title Policy.

         SECTION 3.19. Condition of Assets; Title to Personal Property. Except
as set forth in SECTION 3.19 of the Disclosure Schedule, the buildings, plants,
structures, and equipment of the LAI Companies are structurally sound, are in
good operating condition and repair, ordinary wear and tear excepted and are
adequate for the uses to which they are being put, and none of such buildings,
plants, structures, or equipment is in need of maintenance or repairs except for
ordinary, routine maintenance and repairs that are not material in nature or
cost. The buildings, plants, structures, and equipment of the LAI Companies are
sufficient for the continued conduct of the LAI Companies' businesses after the
Closing in substantially the same manner as such business has been conducted
prior to the Closing. Except as set forth in SECTION 3.19 of the Disclosure
Schedule, each of the LAI Companies owns and has good and indefeasible title to
all the machinery, equipment, furniture, fixtures, inventory, receivables and
other tangible or intangible personal property reflected on the latest balance
sheets included in the Financial Statements and all such property acquired since
the date thereof, except in each case for sales and other dispositions made in
the ordinary course of business consistent with past practices since such date.

         SECTION 3.20. Location and Sufficiency of Assets. The LAI Companies
own, lease, or license all of the rights, and properties and other assets used
in, or reasonably necessary for, the conduct of their respective businesses in
each case, in the manner and to the extent currently conducted by them. Such
assets will be adequate to enable the Surviving Corporation and its Subsidiaries
to continue to conduct their businesses in the manner and to the extent
currently conducted by the LAI Companies. All real estate and the improvements
thereon owned or leased by any of the LAI Companies are adequately served by all
necessary utilities including, without limitation, storm water systems, sanitary
sewer, water, electricity, telephone, gas and other utility services necessary
to operate such real estate and all improvements thereon in the manner and to
the extent currently operated by the LAI Companies. There are no defects or
deficiencies in or to the fixtures, improvements and structures situated or
constructed upon such real estate or fixtures of such real estate. There is no
dry rot, termite infestation or other wood destroying organisms present in any
real estate owned or leased by any of the LAI Companies. The plumbing,
electrical, mechanical or other systems of such real estate and improvements
constructed thereon are not in need of repair and are in good working order,
ordinary wear and tear excepted.

         SECTION 3.21. Condemnations. The LAI Companies have not been served
with or received notice of any condemnation proceeding or similar action
affecting any real estate or the improvements thereon owned or leased by any of
the LAI Companies, nor, to the Knowledge of any LAI Company, is there any
proceeding or similar action pending or threatened.

         SECTION 3.22. Claims. Except as set forth in the Interim Financial
Statements, neither any officer or director of any of the LAI Companies nor any
Affiliate has any claim or interest in, or any Lien on, any property or asset
owned, leased or licensed by any of the LAI Companies with respect to the
conduct of their respective businesses.


                                       23



         SECTION 3.23. Certain Agreements.

              (a) Except as described in SECTION 3.23(a) of the Disclosure
Schedule, none of the LAI Companies is a party to any oral or written agreement,
plan or arrangement with any officer, director or employee of any of the LAI
Companies (i) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of any of the transactions contemplated
by this Agreement or that contain Change in Control Payment provisions; (ii)
providing severance benefits or other benefits after the termination of
employment regardless of the reason for such termination of employment; (iii)
under which any person may receive payments subject to the tax imposed by
Section 4999 of the Code; (iv) limiting the rights of any of the LAI Companies
to terminate at will such officer, director or employee; (v) regarding services
to be rendered, including collective bargaining agreements; or (vi) any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the amount payable or other benefits of which will be calculated on
the basis of any of the transactions contemplated by this Agreement. No LAI
Company has any obligation to repurchase any shares of LAI Capital Stock under
any Stock Restriction Agreement.

              (b) All Material Contracts to which any of the LAI Companies is a
party or by which any of their assets are bound are listed on SECTION 3.23(b) of
the Disclosure Schedule. A "MATERIAL CONTRACT" means a Contract (i) the term of
which extends beyond the one-year anniversary date of this Agreement or with
respect to which any penalty, fee or damages in excess of $10,000 would result
from the termination of such Contract by such LAI Company; (ii) that provides
for $100,000 or more in expenditures or receipt of revenues of $200,000 or more
in each case in a 12-month period; (iii) with any current or former officer,
director, employee, consultant, agent or other representative of any of the LAI
Companies not previously terminated or expired and with respect to which there
is no continuing liability or obligation; (iv) with any labor union or
association representing any employees of the LAI Companies; (v) relating to any
joint venture or similar arrangement of which any LAI Company is a partner,
venturer or owner; (vi) pursuant to which any of the LAI Companies agrees to
indemnify any person; (vii) relating to any Debt; (viii) that imposes
restrictions on the business activities in which the LAI Companies may engage or
the geographic areas in which the LAI Companies may conduct operations; (ix) a
breach of which would cause a Material Adverse Effect, or; (x) that constitutes
a bid bond, payment bond or performance bond related to any Contract described
above in this Section.

              (c) Except as set forth in SECTION 3.23(c) of the Disclosure
Schedule, each Material Contract is in full force and effect and is the valid
and binding obligation of LAI (and/or the Subsidiary or Subsidiaries that are
parties to such contract) and, to the Knowledge of the respective LAI Companies
that are parties to such Material Contract, all other persons that are a party
thereto. Except with respect to Accounts Receivable, which shall be covered
exclusively by the representations in SECTION 3.10, none of the LAI Companies
are, and to the Knowledge of the LAI Companies, no other party to any Material
Contract is, in breach of or in default under the terms of any Material
Contract, and, to the Knowledge of the LAI Companies, no event has occurred
which, after the giving of notice or lapse of time or both, would constitute
such a


                                       24



breach or default by any party to any Material Contract. Except as described in
SECTION 3.23(c) of the Disclosure Schedule or for which a reserve has been made
on the Financial Statements, no contest, claim, right of set-off or deductive
change order individually exceeding $15,000 has been asserted or to the
Knowledge of any LAI Company threatened against any LAI Company under any
Material Contract, and no reasonable basis exists therefor. LAI and TLC have
provided CMC with true, complete and correct copies of or access to all written
Material Contracts and all extensions, amendments and schedules thereto, and a
written description of all Material Contracts that are not in writing. All bonds
referenced in subsection (b)(x) above are in good standing, and none of the LAI
Companies has violated, breached, or defaulted (with or without due notice or
lapse of time or both), or permitted the termination of, or acceleration of, or
entitled any party to accelerate any obligation under any of the terms,
conditions or provisions of any such payment or performance bond.

              (d) SECTION 3.23(d) of the Disclosure Schedule sets forth a
correct and complete list of all executory Material Contracts whereby any of the
LAI Companies is obligated to provide products or services to its customers
("MATERIAL CUSTOMER CONTRACTS"). SECTION 3.23(d) of the Disclosure Schedule,
which sets forth by Subsidiary the revenue recognition calculations with respect
to each such Material Customer Contract, is correct and complete in all
respects. The LAI Companies have no Knowledge that any of the LAI Companies is
likely to incur a net loss on any such Material Customer Contract; provided that
this representation shall not be construed to be a guarantee of any level of
profit on any such Material Customer Contract.

              (e) None of the LAI Companies is a party to any Material Contract
with a Governmental Authority subject to a contractual right to re-determine or
negotiate.

              (f) The Penske Agreements are in full force and effect and are the
valid and binding obligations of TLC, and to the Knowledge of TLC, all other
persons that are a party thereto. TLC is not in breach of or in default under
the terms of the Penske Agreements, and, to the Knowledge of TLC, no other party
to the Penske Agreements is in breach of or default under, and no event has
occurred which, after the giving of notice or lapse of time or both, would
constitute such a breach or default by any party to the Penske Agreements. The
"Purchase Price" (as defined in the Penske Purchase Agreement), does not exceed
$210,000. No "Sale Notice" or "Repurchase Notice" (as such terms are defined in
the Penske Purchase Agreement) has been given under the Penske Purchase
Agreement, and no party to the Penske Purchase Agreement has indicated in
writing that it intends to give such a Sale Notice or Repurchase Notice. The
Penske Lease Agreement has a remaining term of at least one year from the date
of this Agreement or is renewable for a term that ends at least one year from
the date of this Agreement and is not terminable by the party thereto other than
TLC prior to the end of such term. SECTION 3.23(f) of the Disclosure Schedule
contains a fair and accurate summary of the circumstances under which TLC may
terminate the Penske Lease Agreement. SECTION 3.23(f) of the Disclosure Schedule
lists all of the vehicles covered by the Penske Lease Agreement.

         SECTION 3.24. Compensation; Employment and Other Agreements. SECTION
3.24 of the Disclosure Schedule sets forth an accurate list of all officers,
directors, employees, sales agents, purchasing agents and consultants of or used
by the LAI Companies, as of the date hereof, all agreements currently in effect
with such persons and the rate of compensation (and the


                                       25



portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons as of (a) the date of the Interim
Financial Statements and (b) the date hereof. SECTION 3.24 of the Disclosure
Schedule sets forth (i) the name, and the current salary (or rate of pay) of and
the bonus paid during the last fiscal year and any subsequent period to each
current employee of each of the LAI Companies (which for all purposes shall
include employees leased by any of the LAI Companies from a third party only
where the aggregate amount paid to the leasing agency exceeds $25,000 for the
last fiscal year or current year to date period); (ii) any increase to become
effective or payable after the date of this Agreement in the total compensation
or rate of total compensation payable by any of the LAI Companies to each such
person; (iii) any increase to become payable after the date of this Agreement to
employees other than those specified in clause (i) above; (iv) all presently
outstanding loans and advances made by any of the LAI Companies to any of their
directors, officers, or employees as of the date of this Agreement, to be
updated as of Closing; and (v) all accrued but unpaid vacation pay owing to the
employees of the LAI Companies as of the date of the Interim Financial
Statements, to be updated as of Closing. LAI and TLC have provided or made
available to CMC true, complete and correct copies of all employment,
management, consulting, agency, severance and other compensation or benefit
Contracts with persons listed on SECTION 3.24 of the Disclosure Schedule. To the
Knowledge of any LAI Company, no employee or director of any of the LAI
Companies or any sales agent, purchasing agent or consultant utilized by any of
the LAI Companies, is a party to, or is otherwise bound by, any Contract,
including without limitation any confidentiality, noncompetition, or proprietary
rights agreement, between such person and any other person ("PROPRIETARY RIGHTS
AGREEMENT") that in any way adversely affects or will affect (i) the performance
of his duties to the Surviving Corporation or any of the LAI Companies, or (ii)
the ability of any of the LAI Companies to conduct their respective businesses,
including without limitation any Proprietary Rights Agreement that restricts the
LAI Companies' respective businesses in any particular geographic area or with
respect to any particular product. All Contracts under which Change of Control
Payments may be made will have been terminated prior to Closing without any
liability or obligation of any LAI Company except for those Change in Control
Payments that are reflected in the Pre-Closing Statement.

         SECTION 3.25. Employee Benefit Plans.

              (a) SECTION 3.25(a) of the Disclosure Schedule includes a true and
complete list as of the date hereof of: (i) all "employee benefit plans" (as
defined in Section 3(3) of ERISA), all specified fringe employee benefit plans
as defined in Section 6039D of the Code, and all other bonus, incentive
compensation, deferred compensation, profit sharing, stock option, stock
appreciation right, stock bonus, stock purchase, restricted stock, phantom
stock, employee stock ownership, savings, severance, supplemental unemployment,
layoff, worker's compensation, salary continuation, retirement, pension, health,
life insurance, dental, disability, accident, group insurance, vacation,
holiday, sick leave, fringe benefit or welfare plan, and any other employee
compensation or employee benefit plan, agreement, policy, practice, commitment,
contract or understanding (whether qualified or nonqualified, written or oral,
including any post-retirement insurance, compensation or benefits) and any
trust, escrow or other agreement related thereto (including, without limitation,
any "voluntary employees' beneficiary association," as defined in Section
501(c)(9) of the Code, annuity contract or other funding instrument), which is
currently sponsored, established, maintained or contributed to or required to be
contributed to by any of


                                       26



the LAI Companies, or for which any of the LAI Companies have any liability,
contingent or otherwise, and (ii) all "multiemployer plans" (as defined in
Section 4001 of ERISA) and all "employee benefit plans" (as defined in Section
3(3) of ERISA) that are subject to Title IV of ERISA or Section 412 of the Code
which any of the LAI Companies or any other corporation or trade or business
(whether or not incorporated) that is, or at any relevant time was, controlled
by, controlling or under common control with any of the LAI Companies (within
the meaning of Section 414 of the Code or Section 4001(a)(14) or 4001(b) of
ERISA)("ERISA AFFILIATE") has maintained or contributed to or been required to
contribute to at any time within the six (6) years immediately preceding the
Closing Date, or with respect to which, any of the LAI Companies or any ERISA
Affiliate has any liability (collectively, the "EMPLOYEE BENEFIT PLANS").

              (b) None of the LAI Companies maintains or is obligated to provide
benefits under any life, medical or health plan (other than as an incidental
benefit under any Employee Benefit Plan intended to be "qualified" within the
meaning of Section 401(a) of the Code ("QUALIFIED PLAN") which provides benefits
to retirees or other terminated employees other than benefit continuation rights
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"). An estimate of the liabilities of the LAI Companies and any ERISA
Affiliates for providing retiree life, medical and health benefits coverage has
been made and is reflected on the appropriate balance sheet and books and
records according to Statement of Financial Accounting Standards No. 106. The
LAI Companies have the right to modify and terminate benefits as to retirees
(other than pensions) with respect to both retired and active employees.

              (c) Neither any of the LAI Companies nor any ERISA Affiliate
currently maintains any "employee pension benefit plan," as defined in Section
3(2) of ERISA that is "top-heavy" within the meaning of Section 416 of the Code.

              (d) Except as set forth in SECTION 3.25(d) of the Disclosure
Schedule, none of the LAI Companies nor any ERISA Affiliate currently maintains,
contributes to, has any obligation to contribute to or has any liability
(contingent or otherwise) to or on or at any time within the six (6) years
immediately preceding the Closing Date has maintained, contributed to, had any
obligation to contribute to or had any liability (contingent or otherwise) to
any "multiemployer plan," as such term is defined in Section 3(37) or Section
4001(a)(3) of ERISA, or any single-employer Employee Benefit Plans subject to
Title IV of ERISA or Section 412 of the Code. The aggregate withdrawal liability
of the LAI Companies in connection with the multiemployer pension plan
identified in SECTION 3.25(d) of the Disclosure Schedule will not exceed
$63,500, which amount has been reserved against on the Interim Financial
Statements and will be reflected as a liability on the Pre-Closing Statement.

              (e) Each Qualified Plan has received a current, favorable opinion
letter from the IRS that considers the Uruguay Round Agreements Act, the
Uniformed Services Employment and Reemployment Rights Act of 1994, the Small
Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, the
Internal Revenue Service Restructuring and Reform Act of 1998, and the Community
Renewal Tax Relief Act of 2000 (collectively referred to as "GUST AMENDMENTS"),
and each Qualified Plan is qualified in form and operation under Section 401(a)
of the Code, and each related trust, annuity contract or other funding
instrument of each such


                                       27



Qualified Plan is exempt from federal income tax under Section 501(a) of the
Code, and no event has occurred or circumstance exists that gives rise to
disqualification or loss of tax exempt status of any such Qualified Plan or
trust, annuity contract or other funding instrument.

              (f) Except as set forth in SECTION 3.25(f) of the Disclosure
Schedule, each of the Employee Benefit Plans and its administration is currently
in compliance, in form and operation, with ERISA and the Code and all other
applicable Laws, with any applicable collective bargaining agreement in all
respects, and with its terms, and no statement, either written or oral, has been
made by any of the LAI Companies or, to the Knowledge of the LAI Companies, any
person with regard to any Employee Benefit Plan that is not in accordance with
the terms of such plan.

              (g) No Employee Benefit Plan that is an "employee welfare benefit
plan," as defined in Section 3(1) of ERISA, constitutes a self-insured "multiple
employer welfare arrangement," as such term is defined in Section 3(40) of
ERISA.

              (h) Except as disclosed in SECTION 3.25(h) of the Disclosure
Schedule, no action, suit, inquiry, judicial or administrative proceeding,
arbitration or investigation relating to any Employee Benefit Plan, including,
without limitation, any audit or investigation by the IRS or the DOL (other than
claims for benefits for which the plan administrative procedures have not been
exhausted and "qualified domestic relations orders" as defined in Section 414(p)
of the Code) is pending or, to the Knowledge of any LAI Company, threatened
against any of the LAI Companies, or any Employee Benefit Plan before any court,
arbitrator or administrative or Governmental Authority.

              (i) The LAI Companies have performed all of their obligations
under all Employee Benefit Plans, except with respect to the payment of pending
claims by Employee Benefit Plan participants made in the ordinary course of
administration of the Employee Benefit Plans, and all contributions and other
payments required to be made by the LAI Companies to any Employee Benefit Plan
with respect to any period ending before or at or including the Closing Date
have been made or reserves adequate for such contributions or other payments
have been or will be set aside therefor prior to the Closing Date and have been
or will be reflected in the LAI Companies' financial statements in accordance
with GAAP. With respect to contributions and other payments required to be made
by the LAI Companies to any Employee Benefit Plan after the Closing Date, but
attributable to periods ending before, at or including the Closing Date, the LAI
Companies have made or reserved for a pro rata contribution or payment to each
such plan for the applicable portion of the plan year or other period that
precedes the Closing Date in accordance with GAAP. Such pro rata contribution or
payment shall be determined by multiplying the liability for the entire plan
year or other period by a fraction, the numerator of which is the number of days
of such plan year or other period preceding the Closing Date, and the
denominator of which is the number of days in such plan year or other period, as
applicable.

              (j) The LAI Companies have delivered or made available to CMC true
and complete copies of the following:


                                       28



                       (i) all documents that set forth the terms of each
Employee Benefit Plan and of any related trust, annuity contract or other
funding instrument as in effect immediately prior to the Closing Date (together
with all amendments thereto that will become effective at a later date),
including (A) all plan descriptions and summary plan descriptions of Employee
Benefit Plans for which the LAI Companies are required to prepare, file, and
distribute plan descriptions and summary plan descriptions, and (B) all
summaries and descriptions furnished to participants and beneficiaries regarding
Employee Benefit Plans for which a plan description or summary plan description
is not required;

                       (ii) all personnel, payroll, and employment manuals and
policies;

                       (iii) all collective bargaining agreements pursuant to
which contributions have been made or obligations incurred (including both
pension and welfare benefits) by the LAI Companies and its ERISA Affiliates, and
all collective bargaining agreements pursuant to which contributions are being
made or obligations are owed by such entities;

                       (iv) all insurance policies which were purchased by or to
provide benefits under any Employee Benefit Plan currently in force or for which
any of the LAI Companies currently has any liability (contingent or otherwise);

                       (v) all Contracts with third party administrators,
actuaries, investment managers, consultants, and other independent contractors
that relate to any Employee Benefit Plan currently in force or for which any of
the LAI Companies currently has any liability (contingent or otherwise),
including any business associate agreements contemplated under HIPAA;

                       (vi) all reports, including all discrimination testing
reports, submitted within the three years preceding the date hereof by third
party administrators, investment managers, consultants, or other independent
contractors with respect to any Employee Benefit Plan currently in force or for
which any of the LAI Companies currently has any liability (contingent or
otherwise);

                       (vii) the form of notice used by each Employee Benefits
Plan that is a Group Health Plan (as defined in Section 607(1) of ERISA) during
the four years preceding the date hereof to employees of their rights under
Section 601 et seq. of ERISA, Section 4980B of the Code, Section 9801 et seq. of
the Code, and under all other applicable federal and state laws regulating the
notice requirements of Group Health Plans (as defined in Section 607(1) of
ERISA);

                       (viii) with respect to each Employee Benefit Plan that is
a "health plan," as defined in Section 160.103 of HIPAA, the form of privacy
notice utilized by such Employee Benefit Plan for purposes of compliance with
Section 164.520 of HIPAA, except to the extent an exemption exists with respect
to such plan and a statement is provided to that effect;


                                       29



                       (ix) the Forms 5500 filed in each of the most recent
three plan years with respect to each Employee Benefit Plan that is subject to
such filing requirement, including all schedules thereto and the opinions of
independent accountants;

                       (x) all notices or reports that were given by any of the
LAI Companies, any ERISA Affiliate, or any Employee Benefit Plan to the IRS, the
PBGC or the DOL, pursuant to statute, within the three years preceding the date
hereof;

                       (xi) all notices that were given by the IRS, the PBGC, or
the DOL to the LAI Companies, any ERISA Affiliate, or any Employee Benefit Plan
within the three years preceding the date hereof;

                       (xii) with respect to Employee Benefit Plans that are
Qualified Plans, the most recent favorable opinion letter for each such Plan;
and

                       (xiii) to the extent permitted by law, with respect to
each Employee Benefit Plan that is a "group health plan" (as defined in Section
4980B(g) of the Code), a list of the names and contact information for each
individual who: (1) is currently receiving health care continuation coverage
under COBRA, (2) is eligible to receive health care continuation coverage under
COBRA and with respect to whom the "election period" (as defined in Section
4980B(f)(5)(A) of the Code) has not expired, or (3) will otherwise be an "M&A
Qualified Beneficiary" (as such phrase is defined in Section 54.5980B-9, Q&A-4
of the Income Tax Regulations) in connection with the transactions contemplated
by this Agreement.

              (k) None of the LAI Companies, any ERISA Affiliate nor any
Principal Stockholder has engaged in or permitted to occur and, no other party
has engaged in or permitted to occur any transaction prohibited by Section 406
of ERISA or that constitutes a "prohibited transaction" under Section 4975(c) of
the Code with respect to any Employee Benefit Plan, except for any transactions
which are exempt under Section 408 of ERISA or Section 4975 of the Code. None of
the LAI Companies, ERISA Affiliates, administrators, nor any of their
predecessors, nor any fiduciary of any Employee Benefit Plan (or agent of any of
the foregoing) has engaged in any transaction or acted or failed to act in a
manner which is likely to subject any of the LAI Companies to any liability for
a breach of fiduciary or other duty under ERISA or any other applicable Law,
including any unpaid civil penalty under Section 502(1) of ERISA. The
transactions contemplated by this Agreement will not constitute or cause such a
prohibited transaction or breach of fiduciary duty;

              (l) No Qualified Plan has applied to the IRS for correction of any
defect under the Employee Plans Compliance Resolution System or any predecessor
or similar program, and no Employee Benefit Plan has applied to the DOL for
correction under the Voluntary Fiduciary Correction Program or any similar
program;

              (m) Except as disclosed in SECTION 3.25(m) of the Disclosure
Schedule, each Employee Benefit Plan can be terminated without payment of any
additional contribution or amount and, except for any vesting of benefits of a
Qualified Plan, without the vesting or acceleration of any benefits promised by
such plan;


                                       30



              (n) No event has occurred or circumstance exists relating
specifically to any of the LAI Companies (and excluding general inflationary
increases in health and welfare costs that do not relate specifically to any
circumstances at any LAI Company) that could result in an increase in premium
costs of any Employee Benefit Plan that is insured, or an increase in benefit
costs of any Employee Benefit Plan that is self-insured;

              (o) Except as disclosed in SECTION 3.25(o) of the Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not result in the payment (whether of separation pay or otherwise),
vesting, acceleration or increase in the amount of any benefit under any
Employee Benefit Plan, except to the extent that an employee incurs a
termination of employment or reduction in hours, or an Employee Benefit Plan is
terminated, in connection with the transactions contemplated by this Agreement.

         SECTION 3.26. Labor Relations. Except as listed or described on SECTION
3.26 of the Disclosure Schedule, each of the LAI Companies (a) are, and have
been for the past three years, in compliance with all applicable Laws regarding
employment and employment practices, terms and conditions of employment, wages
and hours, and plant closing, occupational safety and health and workers'
compensation and are not engaged in any unfair labor practices, (b) have no, and
have not had in the past three years any, unfair labor practice charges or
complaints pending or, to the Knowledge of LAI and TLC, threatened against any
of them before the National Labor Relations Board, (c) have no, and have not had
in the past three years any, internal contractual grievances pending or
threatened against them and (d) have no, and have not had in the past three
years any, charges pending before the Equal Employment Opportunity Commission,
the DOL, the Office of Federal Contract Compliance, the Department of Justice or
any state or local agency responsible for the prevention of unlawful employment
practices. There is no labor strike, slowdown, work stoppage or lockout actually
pending or, to the Knowledge of LAI and TLC, threatened against or affecting any
of the LAI Companies. No union organizational campaign or representation
petition is currently pending with respect to the employees of the LAI
Companies.

         SECTION 3.27. Taxes. Except in each case as set forth in SECTION 3.27
of the Disclosure Schedule:

              (a) The LAI Companies have timely filed with the appropriate
federal, state, local or foreign taxing or Governmental Authority all Tax
Returns required to be filed on behalf of the LAI Companies. All such Tax
Returns are true, correct and complete. The LAI Companies have timely paid in
full all Taxes required to have been paid. The LAI Companies have complied in
all respects with all applicable Laws, rules and regulations relating to the
filing of Tax Returns and the payment and withholding of Taxes, and have, within
the time and in the manner prescribed by law, withheld and timely paid to the
proper taxing or Governmental Authority all amounts required to be so withheld
and paid under applicable Laws. The LAI Companies have accrued or made adequate
provision for all Taxes not yet due or paid, and such accruals and reserves for
Taxes are adequate in accordance with GAAP to cover all Taxes accrued or
accruable through the Effective Time, and all such accruals and reserves will be
reflected on the Pre-Closing Statement.


                                       31



              (b) No federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of any of the LAI Companies, and none of the
LAI Companies has received a notice of any pending or proposed claims, audits or
proceedings with respect to Taxes. None of the LAI Companies has received any
notice of deficiency or assessment from any taxing or Governmental Authority for
any amount of Tax that has not been fully settled or satisfied, and, to the
Knowledge of the LAI Companies, no such deficiency or assessment has been
proposed or threatened. No claim has been made by any taxing or Governmental
Authority in a jurisdiction in which any of the LAI Companies has not filed Tax
Returns that any of such entities are, or may be, subject to taxation in such
jurisdiction. None of the LAI Companies has filed a Form 8275 or other form with
any Tax Return disclosing any positions taken therein that could result in a
substantial understatement of Taxes within the meaning of Code Section 6662 or
any similar statute or regulation under state, local and foreign Laws. There are
no Liens for Taxes upon any property or assets of the LAI Companies, except for
Liens for Taxes not yet due and payable. None of the LAI Companies has requested
an extension of time within which to file any Tax Return that has not since been
filed and no currently effective waivers, extensions, or comparable consents
regarding the application of the statute of limitations with respect to Taxes or
Tax Returns have been given by or on behalf of any of the LAI Companies. None of
the LAI Companies is a party to any agreement or understanding providing for the
allocation or sharing of Taxes. None of the LAI Companies has granted in writing
any power of attorney which is currently in force with respect to any Taxes or
Tax Returns.

              (c) None of the LAI Companies has constituted a "distributing
corporation" or a "controlled corporation" (within the meaning of Code Section
355(a)(1)(A)) in a distribution of stock to which Code Section 355 (or so much
of Code Section 356 as relates to Code Section 355) applies and which occurred
within two years of the date of this Agreement. Except as set forth in the
Financial Statements, none of the LAI Companies has agreed, or is required, to
make any adjustment under Code Section 481 affecting any taxable year ending on
or after January 1, 2000. None of the LAI Companies will be required to include
any amount in income for any taxable period (or portion thereof) ending after
the Effective Time as a result of a change in the method of accounting for a
taxable period ending prior to the Effective Time. None of the LAI Companies has
made any payments, is obligated to make any payments or is a party to any
agreement that under certain circumstances would reasonably be expected to
obligate it to make any payments that will not be deductible under Code Sections
280G or 162(m). None of the LAI Companies has made, within two years of the date
of this Agreement, any (i) redemptions, (ii) transfers or other dispositions of
property for which any of the LAI Companies did not receive adequate
consideration, or (iii) distributions to the holders of stock of any of the LAI
Companies with respect to stock other than distributions of cash in the ordinary
course of business. None of the LAI Companies has made an election under Code
Section 341(f). None of the LAI Companies has been a United States real property
holding corporation within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii). None of the LAI
Companies has been included in any "consolidated," "unitary" or "combined" Tax
Return (other than Tax Returns which include only LAI and any of its
Subsidiaries) provided for under the laws of the United States, any foreign
jurisdiction or any state or locality with respect to Taxes for any taxable year
since January 9, 1998. None of the LAI Companies


                                       32

has assets subject to a lease to a "tax exempt entity" within the meaning of
Code Section 168(h)(2). None of the LAI Companies has Tax attributes that are
subject to the limitations of Code Sections 382, 383 or 384 or Treasury
Regulation Sections 1.1502-15 or 1.1502-21(c). None of the LAI Companies is a
partner in any joint venture, partnership or other arrangement or contract that
would be treated as a partnership for federal income Tax purposes. None of the
LAI Companies is, or has been, a personal holding company within the meaning of
Code Section 542. None of the LAI Companies is a foreign person, as such term is
referred to in Code Section 1445(f)(3) and Treasury Regulation Section 1.1445-2.
None of the LAI Companies has at any time participated in or cooperated with any
international boycott as defined in Code Section 999.

              (d) Each of the LAI Companies has made available to CMC correct
and complete copies of (i) all of its Tax Returns filed within the past four
years and for all years that remain open to audit or with respect to which any
LAI Company has entered into any waivers of statutes of limitation or agreements
extending the period for assessment or collection of any Taxes, (ii) all audit
reports, letter rulings, technical advice memoranda and similar documents issued
by a taxing or Governmental Authority within the past five years relating to the
federal, state, local or foreign Taxes due from or with respect to it, and (iii)
any closing letters or agreements entered into by it with any taxing or
Governmental Authority within the past five years with respect to Taxes. No
outside tax accountant or auditor of any of the LAI Companies has withdrawn from
representing any LAI Company or been terminated in connection with a
disagreement with respect to any Tax Return of any LAI Company or the Tax
treatment of any item that would affect the amount of Tax owed by any LAI
Company.

              (e) The Pre-Closing Statement delivered by LAI will accurately
reflect all of the following items as part of the calculation of the
Cancellation of Indebtedness Tax: (i) LAI's total consolidated net operating
loss for federal income tax purposes for its current fiscal year plus any net
operating loss carryover for all prior fiscal years, (ii) the total amount of
Debt owed by any LAI Company to Churchill or other creditor that is forgiven or
canceled in connection with the Merger or that has been forgiven, canceled or
reduced within the 12 months prior to Closing, (iii) the dollar amount of tax
attributes, including the tax basis in the properties of and capital stock held
by the LAI Companies and CMC and its direct and indirect subsidiaries, that are
reduced due to the amount of cancellation of indebtedness income that is not
recognized by the LAI Companies pursuant to Code Section 108(a)(1), and (iv) the
aggregate amount of unpaid Taxes of the LAI Companies with respect to any
Pre-Effective Time Periods (except to the extent of the dollar amount of the IRS
Payment Amount, which is the aggregate amount of Taxes and related interest paid
in connection with the filing of the LAI Amended Tax Returns). Neither CMC nor
any of the LAI Companies will recognize any cancellation of indebtedness income
during any Post-Effective Periods as a result of the transactions contemplated
hereby or any third party transaction related thereto, except as will be
reflected in the adjustment to the Purchase Price under SECTION 2.3.

              (f) The LAI Amended Tax Returns adequately reflect in full all
Taxes of the LAI Companies for the periods covered thereby.

              (g) For purposes of this Agreement (i) "TAX" or "TAXES" shall mean
(1) any and all taxes, customs, duties, tariffs, imposts, charges, deficiencies,
assessments, levies or other like


                                       33



governmental charges, including, without limitation, income, gross receipts,
excise, real or personal property, ad valorem, value added, estimated,
alternative minimum, stamp, sales, withholding, social security, occupation,
use, service, service use, license, net worth, payroll, franchise, transfer and
recording taxes and charges, imposed by the IRS or any other taxing authority
(whether domestic or foreign including, without limitation, any state, county,
local or foreign government or any subdivision or taxing agency thereof
(including a United States possession)), whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term shall include
any interest, fines, penalties or additional amounts attributable to, or imposed
upon, or with respect to, any such amounts, (2) any Tax liability for the
payment of any amounts described in (1) as a result of being a member of an
affiliated, consolidated, combined, unitary, or similar group or as a result of
transferor or successor liability, and (3) any liability for the payment of any
amounts as a result of being a party to any tax sharing agreement or as a result
of any obligation to indemnify any other person with respect to the payment of
any amounts of the type described in (1) or (2), and (ii) "TAX RETURN" shall
mean any report, return, document, declaration, election or other information or
filing required to be supplied to any taxing or Governmental Authority or
jurisdiction (foreign or domestic) with respect to Taxes, including, without
limitation, information returns and any documents with respect to or
accompanying payments of estimated Taxes or requests for the extension of time
in which to file any such report, return, document, declaration or other
information.

         SECTION 3.28. Compliance with Applicable Law. Except as set forth in
SECTION 3.28 of the Disclosure Schedule, each of the LAI Companies holds all
Permits necessary for the lawful conduct of its business under and pursuant to,
and the businesses of each of the LAI Companies are not being conducted in
violation of, any provision of any Law, Order or Permit applicable to any of the
LAI Companies.

         SECTION 3.29. Brokers' Fees and Commissions. Except as set forth in
SECTION 3.29 of the Disclosure Schedule, none of the LAI Companies, their
directors or officers, or any of their respective employees or agents, has
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
the transactions contemplated by this Agreement.

         SECTION 3.30. Proprietary Rights.

              (a) SECTION 3.30(a) of the Disclosure Schedule contains an
accurate and complete list of all domestic and foreign patents, patent
applications, trade names, material unregistered trademarks and service marks,
trademark and service mark registrations and applications, copyright
registrations and applications, and domain names owned or used by any of the LAI
Companies in the operation of their businesses. SECTION 3.30(a) of the
Disclosure Schedule also contains an accurate and complete list of all
agreements that grant any of the LAI Companies licenses to third party
Intellectual Property including, without limitation, computer software licenses
other than non-material software licenses that are granted in commercially
available software sold "off the shelf," "click through" or "shrink wrap" and
that has a purchase price, individually or in the aggregate of less than $10,000
(collectively, the "LICENSED INTELLECTUAL PROPERTY").


                                       34



              (b) Except as set forth in SECTION 3.30(b) of the Disclosure
Schedule, the LAI Companies own or have the right to use pursuant to an
agreement (as listed in SECTION 3.30(b) of the Disclosure Schedule with respect
to the Licensed Intellectual Property), free and clear of all Liens, all
Intellectual Property necessary for the operation of their respective businesses
as such businesses are now conducted.

              (c) With respect to the Licensed Intellectual Property: (i) the
agreement covering the item is legal, valid, binding and enforceable and the LAI
Company a party thereto is not in default under such agreement; (ii) the
agreement does not contain any provision preventing or limiting the consummation
of the transactions contemplated hereby including any provision granting a party
a right of, or otherwise causing the, termination or modification of any
provisions as a result thereof; (iii) no consents or payments are required to
enable the LAI Companies to continue the use of such Intellectual Property under
such agreement following the Closing Date other than payments in the ordinary
course of business; and (iv) no LAI Company is, and to the Knowledge of any LAI
Company no party to such agreement is, in breach or default in any respect, no
transaction contemplated by this Agreement will result in a breach or default of
such agreement in any respect, and no event has occurred, nor will the
transactions contemplated by this Agreement cause an occurrence, which with
notice or lapse of time would constitute a breach or default by any of the LAI
Companies or permit termination, modification or acceleration under such
agreement.

              (d) Except as set forth in SECTION 3.30(d) of the Disclosure
Schedule or as may be inherent in the sale of products in the ordinary course of
business, none of the LAI Companies has granted any licenses of or other rights
to use any Intellectual Property to any third party.

              (e) No Intellectual Property used by any of the LAI Companies is
owned by any stockholder (other than another LAI Company), officer, director or
employee of any of the LAI Companies.

              (f) The LAI Companies have taken all commercially reasonable
actions to protect and preserve the confidentiality of all trade secrets and
confidential information included in the Intellectual Property used by any of
the LAI Companies in the operation of their respective businesses ("CONFIDENTIAL
INFORMATION"). To the Knowledge of the LAI Companies, no Confidential
Information material to the business of any of the LAI Companies has been
disclosed or authorized to be disclosed to any third party, other than pursuant
to a non-disclosure agreement that reasonably protects such LAI Company's
proprietary interests in and to such Confidential Information or under
circumstances in which the third party is under a legal duty not to disclose
such Confidential Information.

              (g) None of the LAI Companies has interfered with, infringed upon,
misappropriated or violated any Intellectual Property rights of third parties,
and none of the LAI Companies has received any charge, complaint, claim or
notice alleging any such interference, infringement, misappropriation or
violation. To the Knowledge of the LAI Companies, no third party has interfered
with, infringed upon, misappropriated or violated any Intellectual Property
rights owned by any of the LAI Companies.


                                       35



              (h) None of the LAI Companies has entered into any agreement to
indemnify any other person against any charge of infringement of any
Intellectual Property right other than LAI's standard warranty policy for
products or services sold or performed.

              (i) All patents, and issued trademark, service mark and copyright
registrations owned by any of the LAI Companies are valid and subsisting. There
are no past due, unpaid maintenance fees, annuities or other fees payable in
each case to a Governmental Authority on the Intellectual Property owned by any
of the LAI Companies, and no such fees or annuities are due within thirty (30)
days following the Closing Date.

         SECTION 3.31. Insurance. Each of the LAI Companies has insurance
policies in full force and effect for such amounts as are sufficient for
compliance with all requirements of applicable Law and of all Material Contracts
to which any of the LAI Companies are parties or by which they are bound. Set
forth in SECTION 3.31 of the Disclosure Schedule is a list of all fire,
liability and other forms of insurance and all fidelity bonds held by or
applicable to each of the LAI Companies or their respective businesses or
properties, setting forth in respect of each such policy the policy name, policy
number, expiration date, carrier, term, type of coverage, policy limits,
deductibles and current annual premium. Except as set forth in SECTION 3.31 of
the Disclosure Schedule, to the Knowledge of the LAI Companies, no event
relating to any of the LAI Companies or their respective businesses has occurred
which can reasonably be expected to result in a retroactive upward adjustment in
premiums under any such insurance policies or which is likely to result in a
prospective upward adjustment in such premiums. Except as set forth in SECTION
3.31 of the Disclosure Schedule, excluding insurance policies that have expired
and been replaced in the ordinary course of business, no insurance policy of any
LAI Company has been cancelled within the last three years, and to the Knowledge
of the LAI Companies, no threat has been made to cancel any insurance policy of
any of the LAI Companies during such period. Except as noted on SECTION 3.31 of
the Disclosure Schedule, all such insurance will remain in full force and effect
with respect to periods before the Closing after giving effect to the Merger and
the transactions contemplated hereby. No event has occurred, including, without
limitation, the failure by any of the LAI Companies to give any notice or
information or any of the LAI Companies giving any inaccurate or erroneous
notice or information, which limits or impairs the rights of any of the LAI
Companies under any such insurance policies.

         SECTION 3.32. Environmental Matters.

              (a) For purposes of this Agreement, the following terms shall have
the following meanings:

                      (i) "CURRENT FACILITY" means any real property,
leaseholds, or other interests, including any interests in buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) that is or was leased, owned or operated by any LAI Company on or after
January 1, 1998.

                      (ii) "ENVIRONMENTAL CLAIM" means any accusation,
allegation, notice of violation, action, claim, environmental lien, demand,
abatement, Order or direction


                                       36



(conditional or otherwise) by any Governmental Authority or any other person (1)
for personal injury (including sickness, disease, death), damage to tangible or
intangible property, damage to the environment (including natural resources),
nuisance, pollution, contamination, trespass or other adverse effects on
property or to the environment arising under any Environmental Requirement or in
connection with any Hazardous Material, or (2) for any Environmental Costs or
Liabilities or (3) for the conduct of any Remedial Action;

                      (iii) "ENVIRONMENTAL COSTS AND LIABILITIES" means any and
all losses, liabilities, obligations, damages, fines, penalties, judgments,
actions, claims, response, cost recovery or other costs and expenses (including,
without limitation, fees, disbursements and expenses of legal counsel, experts,
engineers and consultants and the costs of investigation and feasibility studies
and Remedial Action) arising from or under or resulting from or based upon (A)
the existence of a Release prior to Closing or the continuation of the existence
of a Release that occurred prior to Closing of, or exposure as a result of a
Release prior to Closing to, any Hazardous Material arising or occurring in
connection with the operation of the business of any LAI Company, any Former or
Current Facility or with any act, omission or conduct of any LAI Company or
related to any property that is or was owned, operated or leased by any LAI
Company or any activities or operations thereof; (B) prior to the Closing Date,
the transportation, storage, treatment or disposal of Hazardous Materials by or
on behalf of any LAI Company or in connection with any Former or Current
Facility or other property that is or was owned, operated or leased prior to the
Closing Date, by any LAI Company or utilized by any LAI Company in the conduct
of the business of any LAI Company or any Former or Current Facility prior to
the Closing Date; or (C) any violation of any Environmental Requirement or any
liability under any Environmental Requirement that occurred in connection with
the operation of any LAI Company or Former or Current Facility prior to the
Closing Date;

                      (iv) "ENVIRONMENTAL LAW" means any federal, state, local,
or foreign law (including common law), statute, code, ordinance, rule,
regulation or other requirement relating to the environment, natural resources,
or public or employee health and safety and includes, but is not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
42 U.S.C. Section 9601 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq., the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. Section 6901 et seq., the Clean Water Act, 33 U.S.C. Section
1251 et seq., the Clean Air Act, 33 U.S.C. Section 2601 et seq., the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq., the Federal Insecticide,
Fungicide, and Rodenticide Act, 7 U.S.C. Section 136 et seq., the Oil Pollution
Act of 1990, 33 U.S.C. Section 2701 et seq., Federal Safe Drinking Water Act, 42
U.S.C. Section 300 F et seq. and the Occupational Safety and Health Act, 29
U.S.C. Section 651 et seq., as such laws have been amended or supplemented, and
the regulations promulgated pursuant thereto, and all analogous state or local
statutes as in effect on the date hereof;

                      (v) "ENVIRONMENTAL PERMIT" means any Permit required under
any Environmental Law or Order;

                      (vi) "ENVIRONMENTAL REQUIREMENT" means any applicable
requirement under Environmental Law, any Environmental Permit or any Order;


                                       37



                       (vii) "FORMER FACILITY means any real property,
leaseholds, or other interests, including any interests in buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) that is not a Current Facility and that was leased, owned or operated by
any LAI Company prior to the date hereof.

                       (viii) "HAZARDOUS MATERIAL" means any substance, material
or waste which is regulated under any Environmental Law or which otherwise
constitutes a risk to human health or the environment and is regulated by any
Governmental Authority, including, without limitation, any material, substance
or waste which is defined as a "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous substance," "restricted hazardous
waste," "contaminant," "toxic waste" or "toxic substance" under any provision of
Environmental Law, and including, without limitation, petroleum, petroleum
products (including crude oil and any fraction thereof), asbestos,
asbestos-containing materials, urea formaldehyde and polychlorinated biphenyls;

                       (ix) "RELEASE" means any release, spill, emission,
leaking, pumping, pouring, dumping, emptying, injection, deposit, disposal,
discharge, dispersal, leaching, or migration on or into the indoor or outdoor
environment or into or out of any property (whether sudden or non-sudden,
accidental or non-accidental); and

                       (x) "REMEDIAL ACTION" means any action, including,
without limitation, any capital expenditures, required or voluntarily undertaken
to (1) clean up, remove, treat, or in any other way address any Hazardous
Material; (2) prevent the Release or threat of Release, or minimize the further
Release of any Hazardous Material; (3) perform pre-remedial studies and
investigations or post-remedial monitoring and care with respect to any
Hazardous Material; or (4) bring any Facility into compliance with any
Environmental Requirement.

              (b) Except as set forth in SECTION 3.32(b) of the Disclosure
Schedule:

                       (i) and except in compliance with Environmental Law and
in such amounts as would not give rise to restrictions, obligations or
liabilities under Environmental Law, no Current Facility has been or is being
used by the LAI Companies, and no Former Facility has been used by the LAI
Companies, and to the Knowledge of the LAI Companies, no Former or Current
Facility has ever been used by any Person, for the disposal of Hazardous
Materials;

                       (ii) no Hazardous Materials that were wastes have been
transported to any Former or Current Facility by an LAI Company or, to the
Knowledge of the LAI Companies, by any other Person;

                       (iii) no Hazardous Materials that were wastes have been
transported from any Former or Current Facility by an LAI Company or, to the
Knowledge of the LAI Companies, by any other person; as to any such Former or
Current Facility, the LAI Companies have listed on SECTION 3.32(b) of the
Disclosure Schedule a description of: the nature of the Hazardous Materials; the
location to which such materials were taken; and the time periods during which
such disposal took place;


                                       38



                       (iv) except in compliance with Environmental Law and in
such amounts as would not give rise to restrictions, obligations or liabilities
under Environmental Law, no Hazardous Materials have been Released to or from
any Current or Former Facility by an LAI Company or, to the Knowledge of the LAI
Companies, by any other Person, in amounts that could result in liability, or
obligations, under any Environmental Law;

                       (v) the business conducted by each LAI Company at each
Current Facility has been and is, and each Former Facility was, in compliance
with all applicable Environmental Requirements;

                       (vi) each LAI Company (A) has obtained and currently
maintains, and has timely filed any necessary renewal applications for, all
Environmental Permits necessary for the conduct of the business conducted by
each LAI Company, (B) has owned and operated, and owns and operates, its Current
Facilities, and to the Knowledge of LAI and TLC has owned and operated its
Former Facilities, in compliance with all requirements of those Environmental
Permits and (C) has not received any notice of (I) any requirement for any
additional Environmental Permit or (II) any threat or proceeding to revoke,
modify or otherwise affect any of those Environmental Permits;

                       (vii) there are no Environmental Claims or legal
proceedings (A) pending against any LAI Company or any Current Facility, or (B)
to the Knowledge of the LAI Companies, (I) pending against any Former Facility
or (II) threatened against any LAI Company or any Former or Current Facility,
alleging or asserting any Environmental Claim, and to the Knowledge of the LAI
Companies, there exists no reasonable basis for the assertion of such claims or
for such proceedings;

                       (viii) neither any LAI Company, nor, to the Knowledge of
the LAI Companies, any predecessor of any LAI Company or, any current owner or
any former owner or operator of any real or personal property currently owned,
leased or operated by any LAI Company, has filed any notice under any
Environmental Law reporting a Release or threatened Release of any Hazardous
Material or received any notice of any Environmental Claim with respect thereto;

                       (ix) neither any LAI Company, any Current Facility nor,
to the Knowledge of the LAI Companies, any Former Facility, is currently subject
to, or the subject of, any Order under any Environmental Law; and neither any
LAI Company, any Current Facility nor, to the Knowledge of the LAI Companies,
any Former Facility, has in the past, been subject to, or the subject of, any
such Order; and

                       (x) neither any LAI Company nor, to the Knowledge of the
LAI Companies any predecessor of any LAI Company has given any contractual
indemnity, release, or other liability shifting mechanism to any person with
respect to any actual or potential Environmental Claim or Environmental Costs
and Liabilities.


                                       39



              (c) Underground and Above Ground Storage Tanks. Except as set
forth in SECTION 3.32(c) of the Disclosure Schedule, no underground or
aboveground storage tanks containing petroleum, petroleum products, any wastes
or any Hazardous Materials are currently located on any Current Facility, and,
to the Knowledge of the LAI Companies, have been located on any Former Facility.
Except to the extent set forth in SECTION 3.32(c) of the Disclosure Schedule,
the LAI Companies have complied with all Environmental Requirements regarding
the installation, use, testing, monitoring, operation and closure of each UST or
AST. As to each such underground or aboveground storage tank identified in
SECTION 3.32(c) of the Disclosure Schedule (each a "UST" or an "AST,"
respectively), if any, the LAI Companies have listed on such Schedule and has
provided to CMC or Sub a copy of the following, if available:

                       (i) information and material, including any available
drawings and photographs, showing the location of each UST and AST, and
identifying whether any LAI Company currently owns or leases the property on
which the UST or AST is located (and if an LAI Company does not currently own or
lease such property, the dates on which it did and the current owner or lessee
of such property);

                       (ii) the date of installation and specific use or uses of
each of each listed UST or AST;

                       (iii) tank and piping tightness tests and cathodic
protection tests or similar studies or reports for each UST or AST;

                       (iv) each notice to or from a Governmental Authority
relating to each UST or AST;

                       (v) the records with regard to the UST or AST, including
without limitation repair records, release detection records, release reporting
and corrective action records, financial assurance compliance records and
records of ownership; and

                       (vi) to the extent not otherwise set forth pursuant to
the above, a summary description of instances, past or present, in which, to the
Knowledge of the LAI Companies, the UST or AST failed to meet applicable
standards and regulations for tightness or otherwise and the extent of such
failure, and any other operational or environmental problems with regard to the
UST or AST, including, without limitation, spills and Releases, including spills
and Releases in connection with delivery of materials to the UST or AST, and
soil, groundwater or surface water contamination.

         SECTION 3.33. Books and Records. The books of account, minute book, and
other corporate records of each of the LAI Companies, all of which have been
made available to CMC, are complete and correct in all material respects and
have been maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls. There are no assets
having a value in excess of $5,000, individually or in the aggregate, not
reflected in the books of account of the LAI Companies. The minute book of each
of the LAI Companies contains accurate and fair summaries of all meetings held
of, and corporation action taken by, the stockholders, the board of directors,
and committees of the board of directors of


                                       40



each of the LAI Companies, and no action taken by such stockholders, board of
directors, or committee has been held for which minutes have not been prepared
and are not contained in such minute books.

         SECTION 3.34. Information. No representation or warranty by LAI or TLC
contained in this Agreement (including the Disclosure Schedule) or in any
certificate or document furnished by LAI or TLC pursuant to this Agreement
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact necessary, in light of the circumstances
under which it was or will be made, in order to make the statements herein or
therein not misleading.

         SECTION 3.35. Certain Business Practices and Regulations; Potential
Conflicts of Interest.

              (a) The LAI Companies and the directors, officers, agents or
employees of the LAI Companies acting on behalf of the LAI Companies have not
(i) used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate funds or violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended, or (iii)
made any other unlawful payment.

              (b) Except as set forth in SECTION 3.35 of the Disclosure
Schedule, none of the stockholders, officers or directors of any of the LAI
Companies or any entity controlled by any of the foregoing (i) owns, directly or
indirectly, any equity or voting interest of at least 5% in, or is a director,
officer, employee, consultant or agent of, any person which is a lessor, lessee
or customer of, or supplier of goods or services (other than oversight and other
services provided by TGF I Management, Inc., and Electra Partners, Inc. and
their respective affiliates) to, any of the LAI Companies, (ii) owns, directly
or indirectly, in whole or in part, any real property, leasehold interests or
other property that any of the LAI Companies used to conduct its business, (iii)
has any cause of action or other suit, action or claim whatsoever against, or
owes any amount to any of the LAI Companies, (iv) has sold to, or purchased
from, any of the LAI Companies any assets or property for aggregate
consideration in excess of $5,000 since January 1, 2001, or (v) is a party to
any Contract or participates in any arrangement, written or oral, in each case
pursuant to which any of the LAI Companies provide office space or services of
any nature to any such individual or entity, except to such individual in his
capacity as an employee, officer, director or stockholder of any of the LAI
Companies. Except as set forth in SECTION 3.35 of the Disclosure Schedule, none
of the officers or directors of any of the LAI Companies or any entity
controlled by any of the foregoing owns, directly or indirectly, any significant
interest in, or is a director, officer, employee, consultant or agent of, or any
person which a competitor of, any of the LAI Companies.

         SECTION 3.36. No Material Adverse Effect. Except as set forth in
SECTION 3.36 of the Disclosure Schedule, since January 31, 2003, there has not
occurred an event or condition that, individually or when taken together with
all other events or conditions, has had or could


                                       41



reasonably be expected to have, whether before or after the Effective Time, a
Material Adverse Effect.

         SECTION 3.37. Agreements with Churchill and Other Debtholders.
Churchill has consented to this Agreement and the Escrow Agreement with respect
to the Debt owed by the LAI Companies to Churchill pursuant to the Consent to
Merger, Forbearance, Payoff Agreement and Release among the LAI Companies, CMC
and Churchill (the "CHURCHILL CONSENT AND AGREEMENT"), and the Churchill Consent
and Agreement remains in full force and effect. A true, correct and complete
copy of such consent and agreement of Churchill is included in SECTION 3.37 of
the Disclosure Schedule. Immediately prior to the Closing, subject to the
satisfaction of all conditions in the Churchill Consent and Agreement, the
amount of Debt owed by the LAI Companies to Churchill will be reduced as
provided in the Churchill Consent and Agreement. Except for the Obligations (as
such term is defined in the Churchill Loan Agreement) as reduced by the
Churchill Consent and Agreement, Churchill does not have any claims against any
of the LAI Companies, and none of the LAI Companies has any claim against
Churchill. The Senior Lenders have entered into a letter agreement with the LAI
Companies setting forth, among other things, the amount necessary to pay the
Senior Obligations Payoff Amount in full. A true, correct and complete copy of
such letter is included in SECTION 3.37 of the Disclosure Schedule. This
Agreement and the transactions contemplated hereby have either been consented to
by the holders of the outstanding 17.5% Subordinated Promissory Notes of LAI or
such notes will have been duly canceled prior to the Closing. True, correct and
complete copies of all Contracts between any LAI Company and any holder of 17.5%
Subordinated Promissory Notes of LAI with respect to the payment and settlement
thereof are attached to SECTION 3.37 of the Disclosure Schedule.

                                   ARTICLE IV

                               REPRESENTATIONS AND
                    WARRANTIES OF THE PRINCIPAL STOCKHOLDERS

         Each Principal Stockholder severally with respect to itself (and not
jointly) represents and warrants to CMC and Sub that, as of the date of this
Agreement:

         SECTION 4.1. Ownership of Shares. Such Principal Stockholder is and
will be on the Closing Date the record and beneficial owner and holder of the
number of issued and outstanding shares of LAI Capital Stock set forth opposite
such Principal Stockholder's name in SECTION 3.4 of the Disclosure Schedule free
and clear of all Liens. Except as set forth in SECTION 3.4 of the Disclosure
Schedule, such Principal Stockholder is not a party to any voting trust, proxy
or other agreement with respect to the voting of any shares of LAI Capital
Stock.

         SECTION 4.2. Authorization. Such Principal Stockholder has been duly
organized and is validly existing under the laws of the jurisdiction of its
organization. Such Principal Stockholder has full power and authority to execute
and deliver this Agreement and the Ancillary Agreements to which it is a party
and to perform the obligations of such Principal Stockholder hereunder and
thereunder. This Agreement has been, and the Ancillary Agreements to which


                                       42



such Principal Stockholder is a party will be as of the Closing, duly and
validly authorized, executed and delivered by such Principal Stockholder and,
assuming this Agreement and the Ancillary Agreements constitute the valid and
binding obligations of CMC, Sub, LAI, TLC and the other Principal Stockholder,
constitute valid and binding obligations of such Principal Stockholder,
enforceable against it in accordance with their respective terms. No other
action on the part of such Principal Stockholder is necessary to authorize the
execution and delivery of this Agreement, the Ancillary Agreements to which it
is a party or the consummation of the transactions contemplated hereby or
thereby. Except for any consents, approvals, filings or registrations that may
be required under the HSR Act and the filing of the Certificate of Merger with
the Delaware Secretary of State pursuant to the DGCL, no filing or registration
with, no notice to and no Permit or consent of any Governmental Authority is
necessary in connection with the execution, delivery and performance of this
Agreement by such Principal Stockholder, or the consummation by such Principal
Stockholder of the transactions contemplated by this Agreement.

         SECTION 4.3. No Violation. Except as set forth in SECTION 4.3 of the
Disclosure Schedule, neither the execution and delivery of this Agreement and
the Ancillary Agreements to which it is a party by such Principal Stockholder
and the performance by such Principal Stockholder of its obligations hereunder
and thereunder, nor the consummation by such Principal Stockholder of the
transactions contemplated hereby and thereby will, directly or indirectly:

              (a) violate, conflict with or result in any breach of (with or
without due notice or lapse of time or both) any provision of the organizational
documents or any resolution, statement, policy or procedure adopted by such
Principal Stockholder;

              (b) violate any Order of any court of Governmental Authority
applicable to such Principal Stockholder or any of its respective properties or
assets; or

              (c) violate any requirements of Law applicable to such Principal
Stockholder.

         SECTION 4.4. Brokers and Finders. Such Principal Stockholder has not
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
the transactions contemplated by this Agreement.

                                   ARTICLE V

                               REPRESENTATIONS AND
                            WARRANTIES OF CMC AND SUB

         CMC and Sub hereby jointly and severally represent and warrant to the
Sellers that:

         SECTION 5.1. Organization. Each of CMC and Sub is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, with all requisite power and authority to own, lease and operate its
respective properties and to carry on its respective businesses as now being
conducted. CMC and Sub have delivered to LAI complete


                                       43



and correct copies of their respective Certificates of Incorporation and Bylaws,
and such documents are in full force and effect and have not been amended,
modified, revoked, terminated or cancelled or in any manner varied from the
documents delivered to LAI.

         SECTION 5.2. Authorization. CMC and Sub have full corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements to
which they are parties and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement by CMC and Sub, the
performance by CMC and Sub of their respective obligations hereunder, and the
consummation by them of the transactions contemplated hereby, have been duly and
validly authorized by the respective boards of directors of CMC and Sub and by
the sole stockholder of Sub. No other corporate action on the part of CMC or Sub
is necessary to authorize the execution and delivery of this Agreement, the
Ancillary Agreements or to consummate the transactions contemplated hereby and
thereby. This Agreement has been, and as of the Closing Date the Ancillary
Agreements will have been, duly and validly executed and delivered by CMC and
Sub and, assuming the Agreement and the Ancillary Agreements constitute the
valid and binding obligations of each of the Sellers and any other party
thereto, will constitute valid and binding obligations of CMC and Sub,
enforceable against each of them in accordance with their respective terms.

         SECTION 5.3. No Violation. Neither the execution and delivery of this
Agreement and the Ancillary Agreements by CMC and Sub and the performance by CMC
and Sub of their obligations hereunder and thereunder nor the consummation by
CMC and Sub of the transactions contemplated hereby and thereby will directly
and indirectly (a) violate, conflict with or result in any breach (with or
without due notice or the lapse of time or both) of any provision of the
Certificate or Articles of Incorporation or Bylaws of CMC or Sub, (b) violate
any Order of any court or Governmental Authority applicable to CMC or Sub or (c)
violate any requirement of Law applicable to the CMC or Sub.

         SECTION 5.4. Consents and Approvals. Other than any consents and
approvals of or filings or registrations that may be required pursuant to the
HSR Act and the filing of Certificate of Merger with the Delaware Secretary of
State pursuant to the DGCL, no filing or registration with, no notice to and no
permit, authorization, consent or approval of any Governmental Authority is
necessary in connection with the execution, delivery and performance of this
Agreement and the Ancillary Agreements by CMC and Sub, or the consummation by
CMC or Sub of the transactions contemplated hereby and thereby.

         SECTION 5.5. Brokers and Finders. Except for amounts payable to Goldman
Sachs for advisory services in connection with the Merger, neither CMC nor Sub
has incurred any obligation or liability, contingent or otherwise, for brokerage
or finders' fees or agents' commissions or other similar payment in connection
with the transactions contemplated by this Agreement.


                                       44



                                   ARTICLE VI

                                    COVENANTS

         SECTION 6.1. Conduct of Business of each of the LAI Companies Prior to
the Effective Time.

              (a) Except as contemplated by this Agreement or the Ancillary
Agreements, during the period from the date of this Agreement and continuing
until the Effective Time, the Sellers agree that, except to the extent that CMC
shall otherwise consent in writing, LAI and TLC shall, and shall cause their
Subsidiaries to, and the Principal Stockholders shall use commercially
reasonable efforts to cause the LAI Companies to, carry on their respective
businesses in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, and shall use their commercially reasonable
efforts to:

                       (i) preserve intact their present business organization;

                       (ii) keep available the services of their present
officers and employees;

                       (iii) preserve their current relationships with
customers, suppliers, lenders and others having business dealings with them;

                       (iv) maintain their respective properties and facilities,
including those held under leases, in as good working order and condition as at
present, ordinary wear and tear excepted;

                       (v) perform in a timely manner all of their obligations
under this Agreement and all other Material Contracts relating to or affecting
any of their respective assets;

                       (vi) keep in full force and effect present insurance
policies or other comparable insurance coverage; and

                       (vii) maintain and preserve the goodwill associated with
their respective businesses.

              (b) Without limiting the generality of the foregoing, prior to the
Effective Time, and except as expressly contemplated or permitted by this
Agreement or the Ancillary Agreements, or required by applicable Law, neither
LAI nor TLC will permit, and the Principal Stockholders will not take any
affirmative action to permit, any of the LAI Companies to, without the prior
written consent of CMC, which consent will not be unreasonably withheld:

                       (i) split, combine or reclassify any shares of its
capital stock, declare, pay or set aside for payment any dividend or other
distribution in respect of its capital stock, or directly or indirectly, redeem,
purchase or otherwise acquire any shares of its capital stock or other
securities;

                       (ii) issue, sell, pledge, dispose of, encumber or deliver
(whether through the issuance or granting of any options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock of any class of any of
the LAI Companies or any securities


                                       45



convertible into or exercisable or exchangeable for shares of stock of any class
of any of the LAI Companies (other than issuance of Certificates in replacement
of lost Certificates);

                       (iii) (A) incur any liability or obligation (absolute,
accrued, contingent or otherwise) that would be considered a long-term liability
on LAI's consolidated balance sheet prepared in accordance with GAAP applied on
a consistent basis with the Financial Statements, except in accordance with the
Senior Loan Agreement, (B) incur any other liability or obligation (absolute,
accrued, contingent or otherwise) other than in the ordinary course of business
consistent with past practices, (C) incur or issue any Debt or debt securities,
or (D) assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other person;

                       (iv) make any capital expenditures in excess of $100,000
in the aggregate;

                       (v) acquire or agree to acquire (by merger, share
exchange, consolidation or acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division or
significant assets thereof or acquire, or agree to acquire, directly or
indirectly, any equity interest in any person;

                       (vi) merge, consolidate or agree to consolidate with or
into any other person;

                       (vii) amend or modify any Charter Documents (except in
accordance with SECTION 7.2(u);

                       (viii) sell, lease, license, encumber or dispose of any
of their assets, other than in the ordinary course of business consistent with
past practices;

                       (ix) except as otherwise contemplated by this Agreement,
amend, modify, terminate or enter into any Material Contract, other than in the
ordinary course of business consistent with past practices (it being expressly
understood and agreed that any amendment, modification or termination of the
Senior Loan Agreement or the Churchill Loan Agreement, or any agreement or
instrument related thereto, shall not be deemed to be in the ordinary course of
business), or commit a breach of or otherwise fail to comply with any obligation
under any Material Contract or Permit;

                       (x) make any change in financial or Tax accounting
methods, principles or practices unless required by GAAP or applicable Law;

                       (xi) extend credit in the sale of products, collection of
receivables or otherwise, other than in the ordinary course of business
consistent with past practices;

                       (xii) fail to maintain its books, accounts and records in
the usual, regular and ordinary manner on a basis consistent with prior years;

                       (xiii) fail to use its commercially reasonable efforts to
take, or omit to use its commercially reasonable efforts to take, any action
where such failure or omission would


                                       46



cause (x) any representation or warranty in ARTICLE III or ARTICLE IV hereof to
become untrue or incorrect or (y) any of the conditions to the Merger set forth
in ARTICLE VII not being satisfied;

                       (xiv) adopt or amend any collective bargaining agreement
or Employee Benefit Plan other than as required by Law;

                       (xv) grant to any employee any bonus or increase in
compensation, fringe benefit, severance or termination pay, or enter into to any
employment agreement with any employee, except as may be required under
employment or termination agreements in effect on the date of this Agreement;
provided, however, that the LAI Companies may grant normal salary and wage
increases to their employees in accordance with their payroll policies and
consistent with past practices;

                       (xvi) enter into any Contract, including a Contract to
purchase or lease assets or operating supplies, which includes an aggregate
payment or commitment on the part of any party of more than $100,000;

                       (xvii) other than in the ordinary course of business
consistent with past practices, submit any binding bid, enter into any Contract
whereby any of the LAI Companies is obligated to provide products or services to
their customers, or enter into any Contract to purchase any reinforcing bar;

                       (xviii) except as contemplated by SECTION 6.11(e), make
any changes or agree to make any changes to any federal or state income Tax
Returns filed prior to the date hereof or file any new or amended federal or
state income Tax Returns;

                       (xix) make any loans or advances to any person (other
than any of the LAI Companies) other than travel or entertainment advances in
the ordinary course of business to employees and directors;

                       (xx) directly or indirectly make or cause to be made any
payment to any Affiliate other than in accordance with existing agreements and
then only in accordance with past practices, or enter into any new agreement
with any officer, director, employee, stockholder or Affiliate of any of the LAI
Companies;

                       (xxi) permit, create or assume any Lien upon any assets
or properties whether now owned or hereafter acquired, except for Permitted
Liens;

                       (xxii) waive any material rights or material claims;

                       (xxiii) either (i) commence a Legal Proceeding other than
for routine collection of accounts receivable or (ii) settle or compromise any
claim or pending or threatened Legal Proceeding;

                       (xxiv) enter into or execute any hedging Contract,
commodity Contract or derivative Contract;


                                       47



                       (xxv) terminate or close any hedging Contract unless
LAI's obligations under the purchase or sale Contract to which the hedging
Contract relates are themselves satisfied or terminated; or

                       (xxvi) agree or commit, in writing or otherwise, to do
any of the foregoing.

         SECTION 6.2. Access to Information. Subject to applicable Law, between
the date of this Agreement and the Effective Time, upon reasonable prior notice
and at reasonable times during normal business hours without significant
disruption to the business of any of the LAI Companies, LAI and TLC will, and
the Principal Stockholders will use commercially reasonable efforts to cause
each of the LAI Companies to, (a) give CMC and its authorized representatives
reasonable access to all LAI Company personnel that LAI shall reasonably
designate, offices and other facilities, and to all books and records, of each
of the LAI Companies (including Tax returns and accounting work papers), (b)
permit CMC to make and will fully cooperate with regard to such inspections as
it may reasonably require and (c) cause its officers to furnish CMC such
financial and operating data and other information with respect to the business
and properties of each of the LAI Companies as CMC may from time to time
reasonably request.

         SECTION 6.3. All Reasonable Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done as promptly as practicable, all things necessary, proper and
advisable under applicable Laws to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement. If at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, including, without limitation, the execution
of additional instruments, the proper officers and directors of each party to
this Agreement shall take all such necessary action.

         SECTION 6.4. Consents and Approvals. The parties hereto each will
cooperate with one another and use all reasonable efforts to prepare all
necessary documentation (including, without limitation, furnishing all
information required under the HSR Act and taking all action as may be necessary
or advisable to cause early termination of any applicable waiting period under
the HSR Act), to effect promptly all necessary filings and to obtain all
necessary permits, consents, approvals, orders and authorizations of or any
exemptions by, all third parties and Governmental Authorities necessary to
consummate the transactions contemplated by this Agreement; provided that
nothing in this Agreement shall be deemed to require CMC or any Subsidiary of
CMC to agree to, or proffer to, divest or hold separate any assets or any
portion of any business of CMC, LAI or any of their respective Subsidiaries.
Each party will keep the other party apprised of the status of any inquiries
made of such party by any other Governmental Authority or members of their
respective staffs with respect to this Agreement or the transactions
contemplated hereby.

         SECTION 6.5. Public Announcements. CMC and LAI will consult with each
other and will mutually agree (the agreement of each party not to be
unreasonably withheld, conditioned or delayed) upon the content and timing of
any press release or other public statements with respect to the transactions
contemplated by this Agreement, including, without limitation, the Merger,


                                       48



and Sellers shall not issue any such press release or make any such public
statement prior to such consultation and agreement, except as may be required by
applicable Law or by obligations pursuant to any listing agreement with any
securities exchange or any stock exchange regulations, provided, however, that
CMC and Sellers will give prior written notice to the other parties of the
content and timing of any such press release or other public statement required
by applicable Law or by obligations pursuant to any listing agreement with any
securities exchange or any stock exchange regulations.

         SECTION 6.6. Notice of Breaches. Between the date of this Agreement and
the Closing, the Sellers shall give CMC prompt written notice if any of them
actually becomes aware of the occurrence of (a) any breach of representations or
warranties of any Seller, (b) any fact, event or condition that could reasonably
be expected to result in a breach of or inaccuracy in any representation or
warranty of Sellers had that representation or warranty been made as of the time
of the occurrence of such fact, event or condition, (c) any Material Adverse
Effect, or (d) any fact, event or condition that could reasonably be expected to
result in a Material Adverse Affect. During the same period, the Sellers shall
give CMC prompt written notice of any breach of any covenant in this ARTICLE VI
or if any of them actually becomes aware of the occurrence or failure to occur
of an event that may make the satisfaction of the conditions in ARTICLE VII
impossible or unlikely. Between the date of this Agreement and the Closing, CMC
and Sub shall give the Sellers prompt written notice if either of them becomes
aware of the occurrence of (a) any breach of representations or warranties of
CMC or Sub or (b) any fact, event or condition that could reasonably be expected
to result in a breach of or inaccuracy in any representation or warranty of CMC
or Sub had that representation or warranty been made as of the time of the
occurrence of such fact, event or condition.

         SECTION 6.7. Exclusivity Agreement.

              (a) From and after the date hereof, the Sellers shall not,
directly or indirectly, take (nor shall they authorize or permit any of the LAI
Companies or their respective officers, directors, employees, partners, members,
agents, attorneys or other representatives, or to the extent within their
control, other affiliates to take) any action to (i) encourage, solicit,
initiate or facilitate any Acquisition Proposal, (ii) enter into any agreement
with respect to any Acquisition Proposal, (iii) participate in any substantive
way in discussions regarding an unsolicited inquiry of any Seller by a person
unaffiliated with the Sellers with respect to an Acquisition Proposal, or (iv)
participate in any way in discussions or negotiations with, or furnish any
information to, any person in connection with, or take any other action to
facilitate any inquiries or making of any proposal that constitutes, or could
reasonably be expected to lead to, any Acquisition Proposal.

              (b) The Sellers shall, as promptly as practicable (and (i) with
respect to LAI and TLC in no event later than two business days after receipt
thereof and (ii) with respect to TGF and EFPE in no event later than two
business days after receipt thereof by Brent Humphries of TGF Management Corp.
and Peter Carnwath of EFPE, but not later than seven (7) days after receipt
thereof by any other employee of TGF Management Corp. or EFPE), advise CMC of
any inquiry or proposal received by any of them relating to any potential
Acquisition Proposal (an "INQUIRY"). At the request of CMC, the Sellers shall as
promptly as practical (i) furnish CMC with a copy of any Inquiry if it is in
writing, or a written summary if it is not in writing, (ii)


                                       49



advise CMC of the material terms of any Inquiry, including the identity of the
person and its affiliates making the Inquiry, (iii) advise CMC of any
information requested from any Seller, (iv) advise CMC of any negotiations or
discussions being sought to be initiated with any Seller, and (v) keep CMC
reasonably informed with respect to any developments relating to the Inquiry.

              (c) Notwithstanding the foregoing, at any time prior to obtaining
the Stockholder Approval, in response to a bona fide written Acquisition
Proposal that the Board of Directors of LAI determines in good faith (after
consultation with outside counsel and a financial advisor of nationally
recognized reputation) constitutes or would reasonably be expected to lead to a
Superior Proposal, and which Acquisition Proposal was not solicited after the
date hereof and was made after the date hereof and did not otherwise result from
a breach of this SECTION 6.7, LAI may, if its Board of Directors determines in
good faith (after consultation with outside counsel) that it is required to do
so in order to comply with its fiduciary duties to the stockholders of LAI under
applicable Law, and subject to compliance with SECTION 6.7(b), (x) furnish
information with respect to LAI and its Subsidiaries to the person making such
Acquisition Proposal (and its representatives) pursuant to a customary
confidentiality agreement (which need not restrict such person from making an
unsolicited Acquisition Proposal) not less restrictive of such person than the
Confidentiality Agreement, provided that all such information has previously
been provided to CMC or is provided to CMC prior to or substantially concurrent
with the time it is provided to such person, and (y) participate in discussions
or negotiations with the person making such Acquisition Proposal (and its
representatives) regarding such Acquisition Proposal.

              (d) Neither the Board of Directors of LAI nor any committee
thereof shall (i) (A) withdraw (or modify in a manner adverse to CMC), or
propose to withdraw (or modify in a manner adverse to CMC), the approval,
recommendation or declaration of advisability by such Board of Directors or any
such committee thereof of this Agreement, the Merger or the other transactions
contemplated by this Agreement or (B) recommend, adopt or approve, or propose
publicly to recommend, adopt or approve, any Acquisition Proposal (any action
described in this clause (i) being referred to as an "ADVERSE RECOMMENDATION
CHANGE") or (ii) approve or recommend, or propose to approve or recommend, or
allow LAI or any of its Subsidiaries to execute or enter into, any letter of
intent, memorandum of understanding, agreement in principle, merger agreement,
acquisition agreement, option agreement, joint venture agreement, partnership
agreement or other similar agreement constituting or related to, or that is
intended to or would reasonably be expected to lead to, any Acquisition Proposal
(other than a confidentiality agreement referred to in SECTION 6.7(c) (an
"ACQUISITION AGREEMENT"). Notwithstanding the foregoing, at any time prior to
obtaining the Stockholder Approval, the Board of Directors of LAI may (x) make
an Adverse Recommendation Change and (y) after payment of the termination fee
pursuant to SECTION 9.2(c), cause LAI to terminate this Agreement (and
concurrently with or after such termination, if it so chooses, cause LAI to
enter into an Acquisition Proposal with respect to any Superior Proposal), if in
any such case LAI's Board of Directors determines in good faith (after
consultation with outside counsel) that it is required to do so in order to
comply with its fiduciary duties to the stockholders of LAI under applicable
Law; provided, however, that no Adverse Recommendation Change may be made, and
this Agreement may not be terminated, until after the fourth business day
following CMC's receipt of written notice (a "NOTICE OF ADVERSE RECOMMENDATION")
from LAI advising CMC that


                                       50



the Board of Directors of LAI intends to take such action and specifying the
reasons therefor, including the terms and conditions of any Superior Proposal
that is the basis of the proposed action by the Board of Directors (it being
understood and agreed that any amendment to the financial terms or any other
material term of such Superior Proposal shall require a new Notice of Adverse
Recommendation and a new four business day period). In determining whether to
make a Company Adverse Recommendation Change, the Board of Directors of LAI
shall take into account any changes to the terms of this Agreement proposed by
CMC in response to a Notice of Adverse Recommendation or otherwise.

              (e) "ACQUISITION PROPOSAL" means any offer or proposal concerning
any (i) merger, consolidation, business combination, share exchange or similar
transaction involving any of the LAI Companies (ii) sale, lease or other
disposition directly or indirectly by merger, recapitalization, consolidation,
business combination, share exchange, joint venture, or otherwise of assets of
any of the LAI Companies representing 5% or more of the assets of LAI and its
Subsidiaries, taken as a whole, other than the ordinary course of business,
(iii) issuance, sale, or other disposition of (including by way of merger,
recapitalization, consolidation, business combination, share exchange, joint
venture, license or any similar transaction) securities (or options, rights or
warrants to purchase, or securities convertible into or exchangeable for, such
securities) representing 5% or more of the voting power of any of the LAI
Companies, other than pursuant to an employee stock based compensation plan,
(iv) transaction in which any person shall acquire beneficial ownership or the
right to acquire beneficial ownership, or any group shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, 5% or
more of the outstanding voting capital stock of any of the LAI Companies, or (v)
any combination of the foregoing (other than the transactions contemplated by
this Agreement).

              (f) "SUPERIOR PROPOSAL" means any bona fide offer made by a person
that is not a party to this Agreement or an Affiliate of a party to this
Agreement that if consummated would result in such person (or its stockholders)
owning, directly or indirectly, all or substantially all of the shares of LAI
Capital Stock then outstanding (or of the surviving entity in a merger or the
direct or indirect parent of the surviving entity in a merger) or all or
substantially all the assets of LAI, which the Board of Directors of LAI
determines in good faith (after consultation with counsel and a financial
advisor of nationally recognized reputation) to be (i) more favorable to the
stockholders of LAI from a financial point of view than the Merger (taking into
account all the terms and conditions of such proposal and this Agreement
(including any changes to the terms of this Agreement proposed by CMC in
response to such offer or otherwise)) and (ii) reasonably capable of being
completed, taking into account all financial, legal, regulatory and other
aspects of such proposal.

         SECTION 6.8. Escrow Agreement. At the Effective Time, CMC, Churchill
and the Escrow Agent named therein shall enter into the Escrow Agreement.

         SECTION 6.9. Waiver of Restrictions on Transfer. The Sellers agree
that, effective as of the Effective Time, all restrictions on transfer
(including any rights of first offer or rights of first refusal), if any, on LAI
Capital Stock, held by LAI's stockholders shall be waived to permit consummation
of the Merger.


                                       51



         SECTION 6.10. Delivery of Financial Statements. LAI shall deliver to
CMC within twenty (20) days after the end of each calendar month after the date
hereof, or within two (2) days after the date of preparation, whichever is
earlier, copies of the consolidated financial statements of the LAI Companies
prepared by LAI on a monthly basis for the year-to-date period and monthly
detail trial balances. Each of such financial statements shall be prepared in
accordance with GAAP applied consistently with the Financial Statements and
throughout the periods involved and shall present fairly, in all material
respects, the financial condition of LAI and its consolidated Subsidiaries as at
said dates and for such periods (subject to normal year end adjustments, which
shall not be material in the aggregate). In addition, if applicable, LAI shall
deliver to CMC such financial statements of LAI and its Subsidiaries as CMC may
reasonably request to enable CMC to comply with its filing requirements under
the Exchange Act. The fees and costs of preparing all such financial statements
pursuant to this SECTION 6.10 shall be borne by LAI and shall be deemed to be
"accounting" fees under SECTION 2.3(a)(i).

         SECTION 6.11. Tax Matters.

              (a) Liability for Taxes. The Surviving Corporation shall be liable
for all Taxes (including, specifically, for this purpose, Taxes that are due
with respect to Tax Returns that are required to be filed by the LAI Companies
for taxable periods ending on or before the Effective Time) of the LAI Companies
with respect to any and all periods, or portions thereof, ending on or before
the Effective Time ("PRE-EFFECTIVE TIME PERIODS") and for all claims, losses,
liabilities, obligations, damages, impositions, assessments, demands, judgments,
settlements, costs and expenses with respect to such Taxes. CMC shall be liable
for Taxes of the LAI Companies with respect to any and all periods, or portions
thereof, beginning after the Effective Time ("POST-EFFECTIVE TIME PERIODS") and
for any and all claims, losses, liabilities, obligations, damages, impositions,
assessments, demands, judgments, settlements, costs and expenses with respect to
such Taxes. Any and all transactions or events contemplated by this Agreement
that occur at or prior to the Effective Time shall be deemed to have occurred in
the Pre-Effective Time Periods.

              (b) Allocation of Liability for Taxes. In the case of any Taxes
that are attributable to a taxable period which begins before the Effective Time
and ends after the Effective Time, the amount of Taxes attributable to the
Pre-Effective Time Periods shall be determined as follows:

                       (i) In the case of franchise or similar Taxes imposed on
any of the LAI Companies based on capital (including net worth or long-term
debt), the number of shares of stock authorized, issued or outstanding, or ad
valorem or property taxes, the portion attributable to the Pre-Effective Time
Periods shall be the amount of such Taxes for the entire taxable period
multiplied by a fraction, the numerator of which is the number of days in the
Pre-Effective Time Periods and the denominator of which is the number of days in
the entire taxable period; provided, however, the amount of Tax attributable to
the Pre-Effective Time Periods shall not exceed the amount of Tax the LAI
Companies would have paid if the taxable period ended immediately prior to the
Effective Time.

                       (ii) In the case of all other Taxes, the portion
attributable to the Pre-Effective Time Periods shall be determined on the basis
of an interim closing of the books of the


                                       52



LAI Companies as of the Effective Time, and the determination of the
hypothetical Tax for such Pre-Effective Time Periods shall be determined on the
basis of such interim closing of the books, without annualization. The
hypothetical Tax for any period shall in no case be less than zero. Taxes
attributable to the Pre-Effective Time Periods shall be determined under the
same method of accounting used by the LAI Companies during that period.

              (c) Administration of Tax Matters. The LAI Companies shall
reasonably consult with PriceWaterhouseCoopers LLP when calculating all tax
accruals of the LAI Companies for Interim Pre-Effective Time Periods, and the
LAI Companies shall permit CMC to review PriceWaterhouseCooper's work papers and
to consult with PriceWaterhouseCoopers with respect to the calculation of such
tax accruals. The Principal Stockholders shall prepare and timely file, or cause
to be timely filed, for the LAI Companies, Tax Returns with respect to the
Pre-Effective Time Periods that are required by law to be filed after the
Effective Time including, but not limited to, federal income Tax Return(s). The
Principal Stockholders shall, at least thirty days prior to the due date of such
Tax Returns, provide a copy of such Tax Returns together with the work papers
and schedules utilized in their preparation to CMC for its consent thereto,
which shall not be unreasonably withheld, conditioned or delayed. If CMC has not
provided the Principal Stockholders with a written objection to such Tax Returns
within twenty days of receiving such Tax Returns, CMC's consent thereto shall be
deemed to have been received. In the event that CMC provides the Principal
Stockholders with a written objection to such Tax Returns within twenty days of
receiving such Tax Returns, the Principal Stockholders and CMC shall reasonably
cooperate with each other to reach a timely and mutually satisfactory solution
to the disputed matters. CMC, the LAI Companies and the Principal Stockholders
shall cooperate fully, as and to the extent reasonably requested, in connection
with the filing of Tax Returns.

              (d) Tax Audits. In the case of an audit or administrative or
judicial proceeding that relates to any Pre-Effective Time Periods and that is
commenced on or before June 30, 2007, the Principal Stockholders shall have the
right, at their own expense, to control the conduct of such audit or proceeding;
provided that (i) the Principal Stockholders shall not have the right to control
the conduct of such audit or proceeding if at the time of such audit or
proceeding the dollar amount of all Claims under Article X that have not been
satisfied exceeds the amount then held in the Escrow Fund and (ii) the Principal
Stockholders may not agree to a settlement or compromise to any such audit or
proceeding that may reasonably be expected to have an adverse effect on the Tax
liability of the LAI Companies for any Post-Effective Time Periods without the
prior written consent of CMC. CMC may also participate in any such audit or
proceeding, at its own expense, and, if the Principal Stockholders do not assume
the defense or any such audit or proceeding, CMC may defend the same in such
manner as it may deem appropriate including, but not limited to, settling such
audit or proceeding with the consent of the Principal Stockholders (whose
consent shall be required for only such audits or proceedings commenced on or
before June 30, 2007, or until the distribution of the entire Escrow fund, if
earlier), which shall not be unreasonably withheld, conditioned or delayed, and
in accordance with its right to indemnification pursuant to SECTION 10.2. CMC
shall control the conduct of any audit or administrative or judicial proceeding
that relates to any Post-Effective Time Periods. CMC, the LAI Companies and the
Principal Stockholders shall cooperate fully, as and to the extent reasonably
requested, in connection with any audit or administrative or judicial proceeding
with


                                       53



respect to Taxes and Tax Returns. Such cooperation shall include the retention,
and, upon the other party's request, the provision of records and information
that are reasonably relevant to any such audit or administrative or judicial
proceeding and making employees available on a mutually convenient basis to
provide assistance including additional information and explanation of any
material provided hereunder; provided that the party requesting such assistance
shall pay the reasonable out-of-pocket expenses incurred by the party providing
such assistance; and provided further that no party shall be required to provide
assistance at times or in amounts that would interfere unreasonably with the
business and operations of such party. CMC agrees to retain all books and
records with respect to Tax matters pertinent to the LAI Companies relating to
any Pre-Effective Time Periods and to any Tax periods beginning before the
Effective Time and ending after the Effective Time, until the expiration of any
applicable statute of limitations or extensions thereof.

              (e) Amended Tax Returns. The LAI Companies will prepare and
deliver at Closing manually and fully executed copies of the LAI Amended Tax
Returns that accurately reflect the disallowance of carrybacks of net operating
losses of an aggregate of $4,495,714. Manually and fully executed amended state
income Tax Returns for similarly affected periods will also be delivered at
Closing. The Principal Stockholders may not file any amended Tax Returns or
refund claims in respect of any taxable period of the LAI Companies ending on or
prior to the Effective Time without the prior written consent of CMC, which
consent shall not be unreasonably withheld, conditioned or delayed. CMC shall
not, and shall not permit or cause the LAI Companies to, amend any Tax Return of
the LAI Companies with respect to any taxable period of the LAI Companies ending
on or prior to the Effective Time without the prior written consent of the
Principal Stockholders, which shall not be unreasonably withheld, conditioned or
delayed.

         SECTION 6.12. Stockholder Approval. LAI shall, as soon as practicable
following the date of this Agreement, duly call, give notice of, convene and
hold a meeting of its stockholders for the purpose of approving this Agreement,
the Merger and the transactions contemplated hereby, or solicit written consents
of its stockholders in lieu of a meeting of stockholders for such purpose. LAI
shall, through its board of directors, recommend to its stockholders approval of
this Agreement, the Merger, the amendment to LAI's Certificate of Incorporation
pursuant to SECTION 7.2(u) and the transactions contemplated hereby and shall
not recommend any other Acquisition Proposal, except as permitted under SECTION
6.7(d).

         SECTION 6.13. Payment of Indebtedness by Related Persons. Except as
expressly provided in this Agreement, LAI shall cause all indebtedness owed to
any of the LAI Companies by any stockholders, officers, directors or employees
of any of the LAI Companies or any entity controlled by any of the foregoing to
be paid in full prior to the Closing.

         SECTION 6.14. 401(k) Plan. Prior to the Closing Date, LAI shall have
contributed to the 401(k) plan maintained by any of the LAI Companies in effect
on the date immediately preceding the Closing Date (the "LAI 401(k) PLAN") any
amounts required to be contributed to said plan, in accordance with the terms
thereof, including any contributions due after the Closing Date but attributable
either to a prior plan year or to that portion of the current plan year ending
on the Closing Date.


                                       54



         SECTION 6.15. Environmental Insurance Policy; D&O Insurance Policy.
Prior to Closing, LAI shall obtain an extension of the reporting period for its
Pollution Legal Liability Select Policy for at least eighteen (18) months after
Closing (the "ENVIRONMENTAL INSURANCE POLICY"). LAI shall pay all costs,
including all premium costs, to obtain such extension of the reporting period
under the Environmental Insurance Policy. Prior to Closing, LAI shall obtain a
Directors and Officers Liability Insurance Policy for the benefit of pre-Closing
and Closing officers and directors of the LAI Companies that extends for a
period of six years after Closing on terms and conditions at least as favorable
to LAI's directors and officers as LAI's existing Directors and Officers
Liability Insurance Policy issued by Chubb Insurance Company (the "D&O INSURANCE
POLICY") and that covers pre-Closing and Closing actions and/or omissions by
such officers and directors of the LAI Companies. The D&O Insurance Policy shall
provide that it will remain in full force and effect after the Merger. LAI shall
pay all costs, including all premium costs, to obtain the D&O Insurance Policy.
The D&O Insurance Policy and the insurance company issuing the D&O Insurance
Policy shall be reasonably acceptable to CMC.

         SECTION 6.16. Accounts Receivable Collection. CMC shall use
commercially reasonable efforts in the ordinary course of business and
consistent with CMC's past practices to collect all Accounts Receivable set
forth in SECTION 3.10(b) of the Disclosure Schedule. In discharging this duty,
in no event shall CMC be required to file suit, file any document with any
Governmental Authority, factor any such Accounts Receivable or sell or otherwise
assign to or employ the use of a collection agency.

         SECTION 6.17. Opinions. Each of TGF and EFPE agrees to use its
commercially reasonable efforts to deliver to CMC within 15 days after the
Closing an opinion of its counsel in form reasonably satisfactory to CMC and TGF
or EFPE, as the case may be.

                                   ARTICLE VII

                               CLOSING CONDITIONS

         SECTION 7.1. Conditions to Each Party's Obligations under this
Agreement. The respective obligations of each party under this Agreement shall
be subject to the fulfillment at or prior to the Effective Time of the following
conditions, any of which may be waived in writing, in whole or in part, by the
party for whose benefit such condition exists:

              (a) All actions by or in respect of, or filings with, any
Governmental Authority required to permit the consummation of the Merger shall
have been taken or made, and all approvals of Governmental Authorities shall
have been obtained;

              (b) Any waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated; and

              (c) No injunction, restraining Order or other ruling or Order
issued by any court of competent jurisdiction or Governmental Authority or other
legal restraint, challenge or


                                       55



prohibition preventing, delaying, making illegal or otherwise interfering with
the consummation of the Merger shall be in effect, and no Legal Proceedings
shall have been instituted by persons other than the parties to this Agreement
or their Affiliates for the purpose thereof.

         SECTION 7.2. Conditions to the Obligations of CMC and Sub under this
Agreement. The obligations of CMC and Sub under this Agreement shall be further
subject to the satisfaction, at or prior to the Effective Time, of the following
conditions, any of which may be waived by CMC and Sub in writing, in whole or in
part:

              (a) Each of the obligations of LAI and TLC required to be
performed by them at or prior to the Closing pursuant to the terms of this
Agreement and all Ancillary Agreements shall have been duly performed and
complied with in all respects;

              (b) Each of the obligations of the Principal Stockholders required
to be performed by each of them at or prior to the Closing pursuant to the terms
of this Agreement and all Ancillary Agreements to which they are a party shall
have been duly performed and complied with in all respects;

              (c) The representations and warranties of each of LAI and TLC set
forth in SECTION 3.1, SECTION 3.2, SECTION 3.4, SECTION 3.5 and SECTION 3.7, and
all representations and warranties of LAI and TLC in this Agreement and all
Ancillary Agreements that are qualified by materiality, shall be true and
correct in all respects as of the date of this Agreement and as of the Closing,
as though made at and as of the Closing (except to the extent that any such
representation or warranty speaks as of an earlier date, in which such
representation or warranty shall have been true and correct as of such date);
and all other representations and warranties of LAI and TLC contained in this
Agreement and all Ancillary Agreements shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing, as though made
at and as of the Closing (except to the extent that any such representation or
warranty speaks as of an earlier date, in which such representation or warranty
shall have been true and correct as of such date);

              (d) The representations and warranties of each of the Principal
Stockholders in this Agreement and all Ancillary Agreements that are qualified
by materiality, shall be true and correct in all respects as of the date of this
Agreement and as of the Closing, as though made at and as of the Closing (except
to the extent that any such representation or warranty speaks as of an earlier
date, in which such representation or warranty shall have been true and correct
as of such date); and all other representations and warranties of the Principal
Stockholders contained in this Agreement and all Ancillary Agreements shall be
true and correct in all material respects as of the date of this Agreement and
as of the Closing, as though made at and as of the Closing (except to the extent
that any such representation or warranty speaks as of an earlier date, in which
such representation or warranty shall have been true and correct as of such
date);

              (e) Each document required to be delivered pursuant to SECTION
8.1(a) shall have been delivered;


                                       56



              (f) CMC shall have received from Andrews Kurth LLP, counsel to LAI
and TLC, an opinion of counsel in the form attached hereto as EXHIBIT E; ("LAI
LEGAL OPINION");

              (g) CMC shall have received from Kevin Dooley, General Counsel to
Churchill, an opinion of counsel in the form and substance reasonably
satisfactory to CMC regarding Churchill's authorization to execute and deliver
the Churchill Consent and Agreement and the enforceability of such Agreement;

              (h) LAI shall have delivered to CMC a statement of LAI Expenses in
form and substance reasonably satisfactory to CMC, which shall be certified by
the Chief Financial Officer of LAI;

              (i) All officers and directors of each of the LAI Companies shall
have delivered letters of resignation effective immediately after the Effective
Time;

              (j) Each of A.B. Irwin, III and Steve Kreider shall have executed
an employment agreement with the Surviving Corporation in form and substance
satisfactory to CMC (the "EMPLOYMENT AGREEMENTS");

              (k) Any and all Permits, consents, waivers and clearances of all
third parties and any Governmental Authority which are necessary in connection
with the consummation of the Merger and the other transactions contemplated
hereby and the continuing operation of the Surviving Corporation consistent with
past practices shall have been obtained and be in full force and effect;

              (l) No Order issued by any Governmental Authority limiting or
restricting the Surviving Corporation's conduct or operation of its businesses
following the Merger shall be in effect, nor shall any proceeding brought by a
Governmental Authority seeking any such Order be pending;

              (m) CMC shall have received (i) certificates of LAI and TLC,
signed by the Chief Executive Officer of each such entity, dated as of the
Closing Date, to the effect that the conditions set forth in SECTION 7.2(a),
SECTION 7.2(c), SECTION 7.2(l), SECTION 7.2(o), SECTION 7.2(p), SECTION 7.2(q),
SECTION 7.2(r), SECTION 7.2(s), and SECTION 7.2(t) have been satisfied and (ii)
certificates of TGF and EFPE, signed by an authorized representative of each
such entity, dated as of the Closing Date, to the effect that the closing
conditions set forth in SECTION 7.2(b) and SECTION 7.2(d) have been satisfied
with respect to such party;

              (n) At or prior to the Closing, on behalf of the holders of LAI
Capital Stock, LAI shall furnish to CMC an affidavit, stating, under penalty of
perjury, that LAI is not and has not been a United States real property holding
corporation at any time during the applicable period specified in Code Section
897(c)(1)(A)(ii) and no interest in LAI constitutes a U.S. real property
interest pursuant to Section 1445(b) of the Code;

              (o) This Agreement and the Merger shall have been approved and
adopted by the affirmative vote of the holders of at least ninety-five percent
(95%) of the outstanding shares and


                                       57



voting power of LAI Capital Stock, and none of such stockholders shall have
exercised their dissenters' or appraisal rights under the DGCL, and CMC shall
have been furnished evidence of such approval reasonably satisfactory to it;

              (p) Except for claims made that are consistent with the list of
all holders of LAI Capital Stock, there must not have been made or threatened by
any person any claim asserting that such person (i) is the holder or the
beneficial owner of, or has the right to acquire or to obtain the beneficial
ownership of, any stock of, or any other voting, equity or ownership interest
in, any of the LAI Companies, or (ii) is entitled to all or any portion of the
Merger Consideration payable in respect of the shares of LAI Capital Stock;

              (q) The Shareholders Agreement, all Stock Restriction Agreements,
all Indemnification Agreements, the Joinder Agreement, all Contracts giving rise
to Change of Control Payments, all employment Contracts listed or required to be
listed in the Disclosure Schedule and all other employment Contracts other than
employment Contracts providing for "at will" employment between any of the LAI
Companies and any of their respective employees, and all agreements of the LAI
Companies relating to management services shall have been terminated without any
liability or obligation of any LAI Company whatsoever, except to the extent
fully reflected as a liability on the Pre-Closing Statement and CMC shall have
been furnished evidence of such terminations reasonably satisfactory to it;

              (r) All stock option/stock issuance plans of the LAI Companies
shall have been terminated prior to Closing, and all outstanding options,
warrants or rights to acquire any shares of LAI Capital Stock (or securities
convertible or exercisable for shares of LAI Capital Stock) shall have been
exercised and, if necessary, converted, in full or shall have been canceled and
terminated prior to the Closing.

              (s) LAI shall have obtained the Environmental Insurance Policy,
the Environmental Insurance Policy shall be in full force and effect and the
Environmental Insurance Policy shall remain in full force and effect after the
Closing; and LAI shall have obtained the D&O Insurance Policy, the D&O Insurance
Policy shall be in full force and effect and the D&O Insurance Policy shall
remain in full force in effect after the Closing;

              (t) The Debt Payoff Amount as reflected in the certificates or
instruments delivered under SECTION 2.1(f) does not exceed the sum of the Senior
Obligations Payoff amount plus the Churchill Payoff Amount and does not exceed
the Payoff Cap;

              (u) LAI shall have duly filed an amendment to its certificate of
incorporation (including any certificate of designation, if applicable) that
provides that the Merger shall not (i) be deemed to constitute a liquidation
that would entitle the LAI Preferred Stockholders to receive any liquidation
preference, preferential payment or other payment or distribution, (ii) entitle
any LAI Preferred Stockholder to require LAI to repurchase or redeem any shares
of LAI Preferred Stock, and (iii) result in any conversion of any LAI Capital
Stock into any other class or series of LAI Capital Stock;


                                       58



              (v) The LAI Companies shall have written off all Accounts
Receivable, other than those set forth in SECTION 3.10(b) of the Disclosure
Schedule, which in the reasonable judgment of LAI are uncollectible (such
written off Accounts Receivable are referred to as the "WRITTEN OFF ACCOUNTS
RECEIVABLE"), and LAI shall have delivered to CMC a complete list of such
Written Off Accounts Receivable; and

         SECTION 7.3. Conditions to the Obligations of the Sellers under this
Agreement. The obligations of the Sellers under this Agreement shall be further
subject to the satisfaction, at or prior to the Effective Time, of the following
conditions, any of which may be waived by the Sellers in writing in whole or in
part:

              (a) Each of the obligations of CMC and Sub, respectively, required
to be performed by it at or prior to the Closing pursuant to the terms of this
Agreement and all Ancillary Agreements shall have been duly performed and
complied with in all respects;

              (b) The representations and warranties of CMC and Sub contained in
this Agreement and all Ancillary Agreements that are qualified by materiality
shall be true and correct in all respects as of the date of this Agreement and
as of the Closing, as though made at and as of the Closing; and all other
representations and warranties of CMC and Sub contained in this Agreement and
all Ancillary Agreements shall be true and correct in all material respects as
of the date of this Agreement and all Ancillary Agreements and as of the
Closing, as though made at and as of the Closing;

              (c) Each document required to be delivered pursuant to SECTION
8.1(b), including without limitation the Escrow Agreement, shall have been
delivered;

              (d) Sellers shall have received a certificate signed by the Chief
Executive Officer of each of CMC and Sub, dated as of the Closing Date, to the
effect that the conditions set forth in SECTION 7.3(a) and SECTION 7.3(b) have
been satisfied;

              (e) Sellers shall have received from Haynes and Boone, LLP and/or
David M. Sudbury, General Counsel of CMC, opinions of counsel in the form
attached hereto as EXHIBIT F (the "CMC LEGAL OPINION");

              (f) Any and all Permits, consents, waivers, and clearances of all
Governmental Authorities which are necessary in connection with the consummation
of the Merger and the other transactions contemplated hereby shall have been
obtained and be in full force and effect; and

              (g) CMC and Sub shall have furnished to Sellers such additional
certificates and other documents as Sellers may have reasonably requested as to
the satisfaction of any of the conditions set forth in SECTION 7.1 and SECTION
7.3.


                                       59



                                  ARTICLE VIII

                                     CLOSING

         SECTION 8.1. Closing. The closing of the transactions contemplated by
this Agreement (the "CLOSING") shall take place at the offices of Haynes and
Boone, LLP, 901 Main Street, Dallas, Texas 75202, subject to the satisfaction or
waiver of the conditions set forth in ARTICLE VII, on the later of December 23,
2003, or the first Monday that is a business day after all conditions to the
Closing have been satisfied or waived, or at such other time and place and on
such other date as CMC and LAI shall agree (the "CLOSING DATE"). At the Closing:

              (a) The Sellers shall deliver to CMC the following:

                       (i) the certificates described in SECTION 7.2(h), SECTION
7.2(m), SECTION 7.2(n), and SECTION 7.2(t);

                       (ii) copies of the resolutions adopted by the Board of
Directors and stockholders of LAI authorizing the execution and delivery of this
Agreement and the consummation of all the transactions contemplated hereby, duly
certified as of the Closing by the Secretary of LAI;

                       (iii) corporate good standing certificate dated within
five days of the closing of LAI and all of its Subsidiaries, with respect to
each state in which LAI or any of its Subsidiaries is incorporated, does
business or is qualified to do business;

                       (iv) incumbency certificates for LAI and TLC;

                       (v) copies of all Permits, consents, waivers and
clearances provided for pursuant to SECTION 7.2(k);

                       (vi) the LAI Legal Opinion;

                       (vii) the written resignations of the directors and
officers of the LAI Companies pursuant to SECTION 7.2(i);

                       (viii) the Employment Agreements;

                       (ix) the Escrow Agreement signed by the Escrow Agent and
Churchill;

                       (x) the releases signed by each of the Principal
Stockholders and certain other LAI Stockholder in the form attached hereto as
EXHIBIT G;

                       (xi) A file-stamped copy of LAI's amendment to its
Certificate of Incorporation pursuant to SECTION 7.2(u) certified by the
Delaware Secretary of State;


                                       60



                       (xii) Releases of all Liens on any shares of capital
stock of any of the LAI Companies and on all properties and assets owned by each
of the LAI Companies, except for the Liens referred to in clauses (a), (b) and
(c) of the definition of Permitted Liens;

                       (xiii) such other documents as CMC or Sub may reasonably
request for the purpose of (A) enabling their counsel to provide the CMC Legal
Opinion, (B) evidencing the accuracy of any of the Sellers' representations and
warranties, (C) evidencing the performance by any Seller of, or the compliance
by any Seller with, any covenant or obligation required to be performed or
complied with by such party, (D) evidencing the satisfaction of any condition
referred to in SECTION 7.1 and SECTION 7.2, or (E) otherwise facilitating the
consummation or performance of any of the transactions contemplated by this
Agreement; and

                       (xiv) a schedule identifying the Written Off Accounts
Receivable by customer number, customer name, job number, invoice number and
amount.

              (b) CMC and Sub shall deliver or cause to be delivered to LAI and
the Principal Stockholders the following:

                       (i) the certificates described in SECTION 7.3(d) and
SECTION 7.3(g);

                       (ii) copies of the resolutions adopted by the Boards of
Directors of CMC and Sub authorizing the execution and delivery of this
Agreement and the Ancillary Agreements duly certified as of the Closing by the
respective Secretaries of CMC and Sub;

                       (iii) incumbency certificates for CMC and Sub;

                       (iv) The CMC Legal Opinion;

                       (v) The Escrow Agreement signed by CMC;

                       (vi) such other documents as the Sellers may reasonably
request for the purpose of (A) enabling their counsel to provide the LAI Legal
Opinion and the legal opinions described in SECTION 6.17, (B) evidencing the
accuracy of any representation or warranty of CMC or Sub, (C) evidencing the
performance by CMC or Sub of, or the compliance by CMC or Sub with, any covenant
or obligation required to be performed or complied with by CMC or Sub, (D)
evidencing the satisfaction of any condition referred to in SECTION 7.1 or
SECTION 7.3, or (E) otherwise facilitating the consummation of any of the
transactions contemplated by this Agreement;

                       (vii) all other previously undelivered documents required
to be delivered by CMC to the Sellers at or prior to the Closing pursuant to the
terms of this Agreement; and

                       (viii) Confirmation that all payments required by ARTICLE
II hereof shall have been made and received.


                                       61



                                   ARTICLE IX

                           TERMINATION AND ABANDONMENT

         SECTION 9.1. Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time:

              (a) by mutual consent of LAI and CMC; or

              (b) by either LAI or CMC:

                       (i) if there shall have been a material breach of any
representation, warranty, covenant or agreement on the part of CMC or Sub on the
one hand, or any Seller on the other, set forth in this Agreement (for such
purpose, each such representation and warranty shall be read without regard and
without giving effect to any "materiality" or "Material Adverse Effect" standard
of qualification contained in such representation or warranty and as if such
standard or qualification were deleted from such representation or warranty),
and, if such breach can be cured, such breach has not been cured within ten (10)
days after notice of such breach is given by the non-breaching party to the
breaching party; or

                       (ii) if a court of competent jurisdiction or Governmental
Authority shall have issued an Order or taken any other action (which Order the
parties hereto shall use their reasonable efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such Order or other action shall have become
final and nonappealable; or

                       (iii) if the Effective Time shall not have occurred on or
before January 5, 2004; provided, however, that the right to terminate this
Agreement shall not be available to any party whose breach of this Agreement has
been the principal cause of, or principally resulted in, the failure of the
Merger to occur on or before such date; or

              (c) (i) by CMC if any of the conditions to its obligations in
ARTICLE VII has not been satisfied as of the Closing Date or if satisfaction of
such a condition is or becomes impossible (other than through the failure of CMC
to comply with its obligations under this Agreement) and CMC has not waived such
condition on or before the Closing Date; or (ii) by Sellers, if any of the
conditions to their respective obligations in ARTICLE VII has not been satisfied
as of the Closing Date or if satisfaction of such condition is or becomes
impossible (other than through the failure of Sellers to comply with their
obligations under this Agreement) and Sellers have not waived such condition on
or before the Closing Date; or

              (d) by CMC:

                       (i) upon the occurrence of a Material Adverse Effect or
an event which could reasonably be expected to have a Material Adverse Effect;
or


                                       62



                       (ii) in the event that (x) an Adverse Recommendation
Change shall have occurred or (y) the Board of Directors of LAI fails to
reaffirm its recommendation to its stockholders of this Agreement, the Merger or
the other transactions contemplated by this Agreement within ten business days
of receipt of a written request by CMC to provide such reaffirmation following
an Acquisition Proposal; or

              (e) by LAI pursuant to SECTION 6.7(d).

         Each party's right of termination under SECTION 9.1 is in addition to
any other rights it may have under this Agreement or otherwise, and the exercise
of a right of termination will not be an election of remedies.

         SECTION 9.2. Procedure and Effect of Termination. In the event of
termination and abandonment of the Merger pursuant to SECTION 9.1, written
notice thereof shall forthwith be given to the other parties to this Agreement
and this Agreement shall terminate and the Merger shall be abandoned, without
further action by any of the parties hereto. If this Agreement is terminated as
provided herein:

              (a) upon request therefor, each party will redeliver all
documents, work papers and other material of any other party relating to the
transactions contemplated hereby, whether obtained before or after the execution
hereof, to the party furnishing the same; and

              (b) no party hereto shall have any liability or further obligation
to any other party to this Agreement resulting from such termination except (i)
that the provisions of this ARTICLE IX, SECTION 6.5, ARTICLE X, and ARTICLE XI
shall remain in full force and effect, and (ii) no party waives any claim or
right against a breaching party resulting from the breach by a party hereto of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.

              (c) In the event that (i) this Agreement is terminated by CMC
pursuant to clause (ii) of SECTION 9.1(d), (ii) this Agreement is terminated by
LAI pursuant to SECTION 9.1(e) or (iii) (A) an Acquisition Proposal shall have
been made to LAI or shall have been made directly to the stockholders of LAI
generally or shall have otherwise become known or any person shall have
announced an intention (whether or not conditional) to make an Acquisition
Proposal, (B) thereafter this Agreement is terminated pursuant to clause (iii)
of SECTION 9.1(b) and (C) within 12 months after such termination, LAI enters
into a definitive agreement to consummate, or consummates, the transactions
contemplated by any Acquisition Proposal, then LAI shall pay CMC a fee equal to
$1,697,500 plus all of CMC's out-of-pocket fees and expenses (including without
limitation, fees and expenses of its advisors, accountants and counsel) incurred
in connection with this Agreement and the transactions contemplated hereby (the
"TERMINATION FEE") by wire transfer of same-day funds on the first business day
following (x) in the case of a payment required by clause (i) or (ii) above, the
date of termination of this Agreement and (y) in the case of a payment required
by clause (iii) above, the date of the first to occur of the events referred to
in clause (iii)(C) of this SECTION 9.2(c).


                                       63



                                    ARTICLE X

                            INDEMNIFICATION; REMEDIES

         SECTION 10.1. Survival; Right to Indemnification Not Affected by
Knowledge. All representations, warranties, covenants, and obligations in this
Agreement, the Disclosure Schedule, and all Ancillary Agreements will survive
the Effective Time; provided that (i) the representations and warranties in this
Agreement other than in SECTION 3.27 shall survive the Effective Time for a
period of eighteen (18) months and (ii) the representations and warranties in
SECTION 3.27 (including SECTION 3.27 of the Disclosure Schedule and any subparts
thereof) shall survive until the expiration of the applicable statutes of
limitation. A claim for indemnification under this ARTICLE X and arising during
the applicable survival period must be made within 30 days after the end of the
applicable survival period in the immediately preceding sentence. The right to
indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation. The waiver of any condition based on the accuracy of
any representation or warranty as of the time such representation or warranty
was made, or on the performance of or compliance with any covenant or
obligation, will not affect the right to indemnification, payment of Damages, or
other remedy based on such representations, warranties, covenants and
obligations.

         SECTION 10.2. Indemnification and Payment of Damages by the Sellers.
Prior to the Closing, subject to SECTION 10.4 and SECTION 10.6, LAI and TLC,
jointly and severally, will, and after the Closing, each Principal Stockholder,
severally and not jointly, will, indemnify and hold harmless CMC, Sub and
Surviving Corporation for, and will pay to such indemnified parties the amount
of, any loss, cost, liability, claim, damage (including incidental and
consequential damages), expense (including costs of investigation and defense
and reasonable attorneys' fees) or diminution of value, whether or not involving
a third-party claim (collectively, "DAMAGES"), arising, directly or indirectly,
from or in connection with:

              (a) any breach of any representation or warranty (or any alleged
breach of a representation or warranty, if any third party alleges facts that,
if true, would constitute a breach of such representation or warranty) made by
any of the Sellers in this Agreement, the Disclosure Schedule, any Ancillary
Agreement (other than the Employment Agreements), or any other certificate or
document delivered by any of the LAI Companies or the Principal Stockholders
pursuant to this Agreement;

              (b) any breach by any of the Sellers of any covenant or obligation
in this Agreement;

              (c) any misrepresentation or willful nondisclosure by any LAI
Company in connection with the application for or obtaining of the Environmental
Insurance Policy or the


                                       64



D&O Insurance Policy that causes any such insurance policy to become void or
causes a loss of coverage under any such insurance policy.

              (d) any matter disclosed in SECTION 3.3 (Item (f) only), SECTION
3.13, SECTION 3.15, SECTION 3.16, SECTION 3.25, (Items (a)(32), (a)(33) (f),
(h), (m) and (o) only) SECTION 3.26, SECTION 3.27, SECTION 3.28, SECTION 3.29,
SECTION 3.32 or SECTION 3.36 of the Disclosure Schedule.

              (e) the filing of all Form 5500s necessary under ERISA with
respect to the LAI Companies' Employee Benefit Plans or such other actions as
may be necessary to bring all Employee Benefit Plans into compliance with ERISA.

Notwithstanding the foregoing, (i) the Sellers shall not have any obligation to
indemnify CMC, Sub or Surviving Corporation for any Damages incurred by CMC, Sub
or Surviving Corporation under the Worker Adjustment and Retraining Notification
Act ("WARN") or similar state laws due to CMC's, Sub's or Surviving
Corporation's termination of the employment of any of the employees of the LAI
Companies after the Closing, (ii) the Sellers shall not have any obligation to
indemnify CMC or the Surviving Corporation after the Closing for breaches of the
representations contained in the first and last sentences of SECTION 3.11 and
(iii) the Sellers shall not have any obligation to indemnify CMC or the
Surviving Corporation after the Closing for breaches of the representations and
warranties contained in the last sentence of SECTION 3.10(a). If a breach of
SECTION 3.27(e) occurs and a related reduction in Tax attributes occurs, CMC's
Damages shall include an amount equal to (i) 38% multiplied by (ii) the dollar
amount, if any, of the Tax attributes except for LAI net operating losses
incurred prior to the Effective Time, including without limitation the Tax basis
in the properties of and capital stock held by the LAI Companies and CMC and its
direct and indirect subsidiaries, that are reduced due to the amount of any
cancellation of indebtedness income to which such breach relates, after giving
full effect, if any, to all reductions in the Purchase Price.

         SECTION 10.3. Indemnification and Payment of Damages by CMC and Sub.
CMC and Sub, jointly and severally, will, prior to the Closing, indemnify and
hold harmless LAI and the Principal Stockholders for, and will after the
Closing, indemnify and hold harmless the Principal Stockholders for, and will
pay to such indemnified parties the amount of, any Damages arising, directly or
indirectly, from or in connection with:

              (a) any breach of any representation or warranty (or any alleged
breach of a representation or warranty, if any third party alleges facts that,
if true, would constitute a breach of such representation or warranty) made by
CMC or Sub in or pursuant to this Agreement or in any certificate or document
delivered by CMC or Sub pursuant to this Agreement, or

              (b) any breach by CMC or Sub of any covenant or obligation of CMC
or Sub in this Agreement.

         SECTION 10.4. Limitations of Liability. Anything to the contrary
contained in this ARTICLE X notwithstanding, except as provided below in this
SECTION 10.4, no party shall be entitled to recover under SECTION 10.2(a),
SECTION 10.3(a) and SECTION 10.5 from the


                                       65



applicable parties unless and until the total of all claims thereunder for
Damages exceeds $300,000 (the "INDEMNIFICATION THRESHOLD"). Indemnifiable
Damages shall accumulate until such time as they exceed the Indemnification
Threshold, whereupon the party to be indemnified shall be entitled to seek
indemnification for all Damages; provided, however, notwithstanding anything to
the contrary in this Agreement, after the Effective Time, no holder of LAI
Capital Stock shall be liable for any Damages under SECTION 10.2 or SECTION 10.5
or any other provision of this Agreement except to the extent of (and only from)
the Churchill Escrow Fund Payment Amount (the "INDEMNIFICATION CAP") (i.e., all
indemnification obligations of the Sellers and the LAI Stockholders shall be
satisfied solely by recourse to the Escrow Fund). Notwithstanding the foregoing,
(i) the indemnities under SECTION 10.2(a) arising from a breach of SECTION
3.10(b) and SECTION 3.27 shall not be subject to the Indemnification Threshold,
and (ii) all Damages suffered by CMC, Sub and the Surviving Corporation under
SECTION 10.2(a) arising from a breach of SECTION 3.10(b) shall not be
recoverable unless and until the total of all claims thereunder for Damages
exceeds the amount of the Accounts Receivable Threshold as of the time the
related Claim for indemnification is made under this ARTICLE X, whereupon the
party to be indemnified shall be entitled to indemnification for all Damages in
excess of the amount of the Accounts Receivable Threshold as of the time such
Claim is made. In addition to any other limitations that may apply, CMC, Sub and
Surviving Corporation shall not be entitled to indemnification hereunder for
Damages if and to the extent such Damages or the economic effect thereof (e.g.,
levels of Inventory and Accounts Receivable) have been taken into account in
calculating the Post-Closing Statement. If a party is entitled to
indemnification under more than one clause or subclause of SECTION 10.2, SECTION
10.3, or SECTION 10.5 with respect to Damages, then such party shall be entitled
to only one indemnification or recovery of such Damages to the extent it arises
out of the same circumstances and events, it being understood that this sentence
is solely to preclude a duplicate recovery by such party. The amount of Damages
that an indemnified party may recover under this ARTICLE X shall be net of (i)
any amounts which such indemnified party actually recovers and collects from
third parties or is otherwise actually reimbursed in connection with such
Damages, and (ii) any insurance proceeds actually received by such indemnified
party, less any deductibles or retention amounts, co-payments, related premium
increases or other payment obligations that directly result from any Damage
(including reasonable attorneys' fees and other costs of collection to the
extent not payable or reimbursable by third parties) that relate to or arise
from the making of the claim for indemnification. CMC, Sub and Surviving
Corporation shall not after the Effective Date have any indemnification
obligations or other liabilities to the Sellers arising under any Contract
entered into prior to the date hereof except for this Agreement, the Ancillary
Agreements and the Confidentiality Agreement. The Sellers shall not after the
Effective Date have any indemnification obligations or other liabilities to CMC,
Sub and Surviving Corporation arising under any Contract entered into prior to
the date hereof except for this Agreement, the Ancillary Agreements, the
Confidentiality Agreement and the Non-Released Contracts. The parties hereby
agree that the limitations set forth in this SECTION 10.4 shall not apply to (i)
the indemnification obligations of any party in the event of fraud, willful
misrepresentation, misrepresentation of a party when such party making the
misrepresentation has actual, conscious knowledge of such misrepresentation, or
willful intent to deceive or mislead on the part of such party and (ii) the
indemnification obligations of any party with respect to any Damages that have
resulted proximately from the fraud or willful misconduct of such party. In
determining whether there has been a breach of representation or warranty for
the purposes of this Article and the


                                       66



amount of any Damages pursuant to this Article, each representation and warranty
shall be read without regard and without giving effect to any "materiality" or
"Material Adverse Effect" standard of qualification contained in such
representation or warranty (i.e., as if such standard or qualification were
deleted from such representation or warranty).

         SECTION 10.5. Environmental Indemnification and Payment of Damages by
the Sellers. In addition to (and without duplication of) the indemnification
already provided by SECTION 10.2, prior to the Closing, subject to SECTION 10.4
and SECTION 10.6, LAI and TLC, jointly and severally, will, and after the
Closing, each Principal Stockholder, severally and not jointly, will, indemnify
and hold harmless CMC, Sub and Surviving Corporation for, and will pay to such
indemnified parties the amount of, any Damages arising, directly or indirectly,
from, or in connection with:

              (a) any breach of any environmental representation or warranty (or
any alleged breach of a representation or warranty, if any third party alleges
facts that, if true, would constitute a breach of such representation or
warranty) made by any of the Sellers in SECTION 3.32 or in SECTION 3.32 of the
Disclosure Schedule;

              (b) any condition related to any unlawful presence of or to any
Release of Hazardous Material at any Former or Current Facility first occurring
on or prior to Closing, but only to the extent that Damages result from such
pre-Closing presence or Release; and

              (c) any Environmental Claim, Environmental Costs and Liabilities
or any other obligation under Environmental Law arising from acts, omissions or
conditions first occurring on or prior to Closing, including without limitation,
disposal at offsite locations, but only to the extent that Damages result from
such pre-Closing acts, omissions or conditions.

With respect to any investigation, remediation, or other action by indemnitee,
prior to the submittal of any plans to any Governmental Authority that relate to
the indemnification under this SECTION 10.5, indemnitee will provide
indemnifying party a copy of any such submittals or plans. Indemnifying party
will have no more than five (5) working days to comment on such submittals and
plans. If indemnitee rejects any of indemnifying party's comments, indemnitee
will provide notice to indemnifying party of the reasons for rejection.
Indemnitee will provide copies to indemnifying party of all final submittals to
any Governmental Authority that relate to the indemnification under this SECTION
10.5, at the time at which it files those submittals. Indemnitee will notify
indemnifying party of any telephone conferences and meeting dates with any
Governmental Authority that relate to the indemnification under this SECTION
10.5, at least five (5) working days prior to such dates (unless shorter notice
is required under applicable Law, in which event indemnitee will provide prompt
telephonic notice to indemnifying party), and will afford indemnifying party the
right to participate for informational purposes only. Indemnifying party will
not contact or otherwise negotiate with any Governmental Authority or any other
person on any matter that may affect indemnitee in any way, unless required by
Environmental Law, without the prior written consent of indemnitee.


                                       67



         SECTION 10.6. Recourse Limited to Escrow Fund. All post-Closing
indemnification and other obligations of the Sellers and the LAI Stockholders
under this ARTICLE X or any other provision of this Agreement shall be satisfied
solely by recourse to the Escrow Fund.

         SECTION 10.7. Procedure for Indemnification--Third Party Claims.

              (a) Promptly after receipt by an indemnified party under SECTION
10.2, SECTION 10.3 or SECTION 10.5 of notice of the commencement of any
proceeding against it, such indemnified party will, if a Claim is to be made
against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such Claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of any liability
that it may have to any indemnified party, except to the extent that the
indemnifying party demonstrates that the defense of such action is materially
prejudiced by the indemnifying party's failure to give such notice. Such notice
shall describe the Claim and the basis for indemnification sought, shall
indicate the amount (if reasonably ascertainable) of the Damages that have been
or may be sustained by the indemnitee and shall be accompanied by supporting
documentation, if reasonably available.

              (b) If any proceeding referred to in SECTION 10.7(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such proceeding, the indemnifying party will, unless (x) the
Claim involves Taxes or matters under SECTION 10.5, or (y) at the time the
indemnified party gives notice to the indemnifying party of the Claim in
question the dollar amount of all Claims (including such Claim in question) that
have not been satisfied exceeds the amount then held in the Escrow Fund, be
entitled to participate in such proceeding and, to the extent that it wishes
(unless (i) the indemnifying party is also a party to such proceeding and the
indemnified party determines in good faith that joint representation would be
inappropriate as a result of a conflict in the interests of the indemnified and
indemnifying parties, or (ii) the indemnifying party fails to provide reasonable
assurance to the indemnified party of its financial capacity to defend such
proceeding and provide indemnification with respect to such proceeding), to
assume the defense of such proceeding with counsel reasonably satisfactory to
the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election (which election must be given by the 60th day
after the indemnified party has given notice under SECTION 10.7(a) of the
commencement of a Claim) to assume the defense of such proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this ARTICLE X for any fees of other
counsel or any other expenses with respect to the defense of such proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a proceeding, (i) it will be
conclusively established for purposes of this Agreement that the Claims made in
that proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such Claims may be effected by the indemnifying
party without the indemnified party's consent, such consent not to be
unreasonably withheld, conditioned or delayed, unless (A) there is no finding or
admission of any violation of Law or any violation of the legal rights of any
person and no effect on any other Claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying party from the Escrow Fund; and (iii) the
indemnified party


                                       68



will have no liability with respect to any compromise or settlement of such
Claims effected without its consent, which consent shall not be unreasonably
withheld, conditioned or delayed. If notice is given to an indemnifying party of
the commencement of any proceeding and the indemnifying party does not, by the
60th day after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such proceeding, the
indemnifying party will be bound by any determination made in such proceeding or
any compromise or settlement effected by the indemnified party.

              (c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
proceeding may adversely affect it or its Affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such proceeding,
whether or not the indemnifying party has assumed the defense, but the
indemnifying party will not be bound by any compromise or settlement effected
without its consent (which may not be unreasonably withheld, conditioned or
delayed).

              (d) Subject to SECTION 11.12, the Sellers hereby consent to the
non-exclusive jurisdiction of any court in which a proceeding is brought against
any indemnified party for purposes of any claim that an indemnified party may
have under this Agreement with respect to such proceeding or the matters alleged
therein, and agree that process may be served on the Principal Stockholders with
respect to such a claim anywhere in the world; provided that this provision
shall not be deemed to subject TGF to the jurisdiction of any court outside the
State of Texas if TGF's submission to such jurisdiction is prohibited by
applicable Law.

              (e) CMC shall send to Churchill copies of all notices it gives to
the Principal Stockholders pursuant to SECTION 10.7(a) or SECTION 10.7(c).

              (f) With respect to any third party Claim subject to
indemnification under this ARTICLE X: (i) both the indemnified party and the
indemnifying party, as the case may be, shall, where the other person is not
represented by its own counsel, provide such person with copies of all pleadings
and all correspondence between opposing parties or counsel in any Litigation or
threatened Litigation and shall provide notice to such person of all court
proceedings; and (ii) the parties agree (each at its own expense) to render to
each other such assistance as they may reasonably require of each other and to
cooperate in good faith with each other in order to ensure the proper and
adequate defense of any third party Claim; provided that no party shall be
obligated to disclose any information protected by an attorney-client or
work-product privilege. With respect to any third party Claim subject to
indemnification under this ARTICLE X, the parties agree to cooperate in such a
manner as to preserve in full (to the extent possible) the confidentiality of
all confidential information and the attorney-client and work-product
privileges. In connection therewith, each party agrees that: (i) it will use its
best efforts, in respect of any third party Claim in which it has assumed or
participated in the defense, to avoid production of confidential information
(consistent with applicable law and rules of procedure) and to request the
issuance of protective orders from a court that will protect the confidentiality
of any confidential information that is required to be disclosed during
discovery; and (ii) all communications between any party hereto and counsel
responsible for or participating


                                       69



in the defense of any third party Claim shall, to the extent possible, be made
so as to preserve any applicable attorney-client or work-product privilege.

         SECTION 10.8. Procedure for Indemnification--Other Claims. A Claim for
indemnification for any matter not involving a third-party Claim may be asserted
by notice to the party from whom indemnification is sought.

         SECTION 10.9. Exclusive Remedy. The parties hereby acknowledge and
agree that the indemnification provided by SECTION 10.2, SECTION 10.3 and
SECTION 10.5, as subject to the provisions of SECTION 10.4, shall, after the
Effective Time, be the sole and exclusive remedy of the parties for claims of
any kind arising out of this Agreement, and the parties hereby waive any and all
other remedies under law or in equity. The parties acknowledge and agree that
one purpose of the representations and warranties in this Agreement is to
allocate risk among the parties and to give an aggrieved party the right to be
indemnified pursuant to this ARTICLE X. Accordingly, the parties acknowledge and
agree that breaches of such representations and warranties shall not necessarily
be deemed to constitute fraud or a knowing misrepresentation or willful intent
to deceive the other parties.

         SECTION 10.10. Indemnification in Case of Strict Liability or
Indemnitee Negligence. THE INDEMNIFICATION PROVISIONS IN THIS ARTICLE X SHALL BE
ENFORCEABLE REGARDLESS OF WHETHER THE LIABILITY IS BASED UPON PAST, PRESENT OR
FUTURE ACTS, CLAIMS OR LEGAL REQUIREMENTS (INCLUDING ANY PAST, PRESENT OR FUTURE
ENVIRONMENTAL LAW (INCLUDING, WITHOUT LIMITATION, CERCLA), FRAUDULENT TRANSFER
ACT, OCCUPATIONAL SAFETY AND HEALTH LAW OR PRODUCTS LIABILITY, SECURITIES OR
OTHER LEGAL REQUIREMENT) AND REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE
PERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES THE SOLE,
CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING
INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON THE
PERSON SEEKING INDEMNIFICATION.

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

         SECTION 11.1. Amendment and Modification. This Agreement may be amended
by a written instrument signed by the parties hereto and, as applicable,
approved by action taken by their respective Boards of Directors, at any time,
but no amendment shall be made which by Law requires further approval by the
stockholders of LAI without such further approval.

         SECTION 11.2. Waiver of Compliance. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party or parties
entitled to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist


                                       70



upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.

         SECTION 11.3. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.

         SECTION 11.4. Fees and Obligations. If any party shall be required to
employ attorneys to enforce or defend its rights hereunder, the prevailing party
shall be entitled to recover its reasonable attorneys' fees in addition to any
other remedies to which it may be entitled. The filing fees incurred in
connection with any filings or registrations pursuant to the HSR Act, if so
required, shall be borne equally by CMC and LAI.

         SECTION 11.5. Parties in Interest. This Agreement shall be binding upon
and, except as provided below, inure solely to the benefit of each party hereto,
and, nothing in this Agreement, except as set forth below, express or implied,
is intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement, except (i) as expressly
provided in ARTICLE X and (ii) that Churchill is intended to be a third party
beneficiary of ARTICLE II and SECTION 11.6 of this Agreement.

         SECTION 11.6. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given upon the earlier of delivery
thereof if by hand or upon receipt if sent by mail (registered or certified
mail, postage prepaid, return receipt requested) or on the second next business
day after deposit if sent by a recognized overnight delivery service or upon
transmission if sent by telecopy or facsimile transmission (with written
confirmation of receipt) as follows:

                  (a)      If to CMC or Sub, to:

                           Commercial Metals Company
                           6565 N. MacArthur Blvd.
                           Irving, Texas  75039
                           Attention:  Stanley A. Rabin
                           Facsimile No.:  214/689-4326

                           with copies to (which shall not constitute notice):

                           David M. Sudbury
                           General Counsel
                           Commercial Metals Company
                           6565 N. MacArthur Blvd.
                           Irving, Texas  75039
                           Facsimile No.:  214/689-4326


                                       71



                           and

                           Haynes and Boone, L.L.P.
                           901 Main Street
                           Dallas, Texas 75202
                           Attention:  William R. Hays, III
                           Facsimile No.:  214/200-0467

                  (b)      If to LAI, to:

                           Lofland Acquisition, Inc.
                           2920 N. Stemmons Freeway
                           Dallas, Texas 75247
                           Attention:A. Blake Irwin, Chief Executive Officer
                           Facsimile No.:  214/638-4205

                           with a copy to (which shall not constitute notice):

                           Andrews Kurth LLP
                           1717 Main Street, Suite 3700
                           Dallas, Texas 75201
                           Attention:  Joseph A. Hoffman
                           Facsimile No.: 214/659-4861

                  (c)      If to TLC, to:


                           The Lofland Company
                           2920 N. Stemmons Freeway
                           Dallas, Texas 75247
                           Attention:  A. Blake Irwin, Chief Executive Officer
                           Facsimile No.: 214/638-4205

                           with a copy to (which shall not constitute notice):

                           Andrews Kurth LLP
                           1717 Main Street, Suite 3700
                           Dallas, Texas 75201
                           Attention:  Joseph A. Hoffman
                           Facsimile No.: 214/659-4861


                                       72



                  (d)      If to the Principal Stockholders, to:

                           EF Private Equity Partners (Americas) L.P.
                           c/o Electra Partners, Inc.
                           708 Third Avenue, 21st Floor
                           New York, New York 10017
                           Attention:Peter Carnwath
                           Facsimile No.:  212-818-0010

                           with a copy to (which shall not constitute notice):

                           Willkie Farr & Gallagher
                           787 Seventh Avenue
                           New York, New York 10019-6099
                           Attention:Peter Hanlon
                           Facsimile No.: 212-728-8111

                           and

                           The Board of Trustees of the Texas Growth Fund,
                             as Trustee for the Texas Growth Fund - 1995 Trust
                           c/o TGF I Management Corp.
                           111 Congress Avenue, Suite 2900
                           Austin, Texas  78701
                           Attention:J. Brent Humphries
                           Facsimile No.:  512-322-3101

                           with copies to (which shall not constitute notice):

                           Vinson & Elkins
                           2801 Via Fortuna, Suite 100
                           Austin, Texas 78746
                           Attention:  Barry Burgdorf
                           Facsimile No.: 512-236-3246



                                       73




                  (e)      If to Churchill, to:

                           Churchill Capital Partners III, L.P.
                           333 South Seventh Street, Suite 2400
                           Minneapolis, Minnesota 55402-2435
                           Attention:Mark McDonald
                           Facsimile No.:  612-673-6630

                           with a copy to (which shall not constitute notice):

                           Faegre & Benson LLP
                           90 South Seventh Street
                           Minneapolis, Minnesota 55402-3901
                           Attention:  Lyle Ward
                           Facsimile No.: 612-766-1600

         SECTION 11.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Texas without regard to
the conflicts-of-laws rules thereof.

         SECTION 11.8. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

         SECTION 11.9. Headings. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not affect in any way the meaning or
interpretation of this Agreement.

         SECTION 11.10. Entire Agreement. This Agreement (and the Disclosure
Schedule and Exhibits hereto), the Confidentiality Agreement, the Environmental
Access Agreements, the Escrow Agreement and the other documents delivered
pursuant hereto and referenced herein constitute the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein or therein. There are no agreements, representations, warranties or
covenants other than those expressly set forth herein or therein. This Agreement
(and the Disclosure Schedule and Exhibits hereto) supersede all prior agreements
and understandings between the parties with respect to such subject matter.

         SECTION 11.11. Assignment. This Agreement shall not be assigned by
operation of Law or otherwise.

         SECTION 11.12. Jurisdiction and Venue. The parties hereto agree that
any suit, action or proceeding arising out of or relating to this Agreement
shall be instituted only in the state or federal courts in Dallas County, Texas.
Each party waives any objection it may have now or hereafter to the laying of
the venue of any such suit, action or proceeding, and irrevocably submits to the
jurisdiction of any such court in any such suit, action or proceeding.


                                       74



         SECTION 11.13. Disclosure of Tax Treatment. Notwithstanding anything
set forth herein to the contrary or in any other agreement to which a party
hereto is bound, the parties hereto are hereby expressly authorized to disclose
the "tax treatment" and "tax structure" (as those terms are defined in Treas.
Reg. Section 1.6011-4(c)(8) and (9), respectively) of the Merger; provided,
however, that the foregoing authorization shall apply only to the extent
necessary such that the Merger will not constitute a "confidential transaction"
within the meaning of Treas. Reg. Section 1.6011-4(b)(3).

                            [Signature Pages Follow]


                                       75



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

                                    COMMERCIAL METALS COMPANY

                                    By:      /s/ Stanley A. Rabin
                                             Name:  Stanley A. Rabin
                                                    ----------------------------
                                             Title: Chairman, President and
                                                    Chief Executive Officer
                                                    ----------------------------

                                    LAI ACQUISITION COMPANY

                                    By:      /s/ Russell B. Rinn
                                             -----------------------------------
                                             Name:  Russell B. Rinn
                                                    ----------------------------
                                             Title: President
                                                    ----------------------------

                                    LOFLAND ACQUISITION, INC.

                                    By:      /s/ A. Blake Irwin
                                             -----------------------------------
                                             Name:  A. Blake Irwin
                                                    ----------------------------
                                             Title: Chief Executive Officer
                                                    ----------------------------

                                    THE LOFLAND COMPANY

                                    By:      s/ A. Blake Irwin
                                             -----------------------------------
                                             Name:  A. Blake Irwin
                                                    ----------------------------
                                             Title: Chief Executive Officer
                                                    ----------------------------




                 SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER










                                                EF PRIVATE EQUITY PARTNERS
                                                (AMERICAS) L.P.

Address:

c/o Electra Partners, Inc.
708 Third Avenue, 21st Floor
New York, New York 10017

                                                By:  /s/ Peter A. Carnwath
                                                     ---------------------------
                                                Name: Peter A. Carnwath
                                                      --------------------------
                                                Title: Authorized Signatory
                                                       -------------------------



                                             THE BOARD OF TRUSTEES OF THE TEXAS
                                             GROWTH FUND II, ON BEHALF OF THE
                                             TEXAS GROWTH FUND - 1995 TRUST

                                             By: TGF I Management Corp., as
                                                 Executive Director

Address:

111 Congress Avenue, Suite 2900
Austin, Texas 78701                             By:  /s/ J. Brent Humphries
                                                     ---------------------------
                                                Name: J. Brent Humphries
                                                      --------------------------
                                                Title: Managing Director
                                                       -------------------------



                 SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER




                                    EXHIBIT A

                                   DEFINITIONS

"1/31/03 FINANCIAL STATEMENTS" means the Financial Statements as of and for the
12 months ended January 31, 2003.

"ACCOUNTS RECEIVABLE" has the meaning set forth in SECTION 3.9.

"ACCOUNTS RECEIVABLE THRESHOLD" means the sum of (i) $227,470 plus (ii) the
dollar amount of Written Off Accounts Receivable actually collected by any LAI
Company after the Closing.

"ACQUISITION AGREEMENT" has the meaning set forth in SECTION 6.7(d)

"ACQUISITION PROPOSAL" has the meaning set forth in SECTION 6.7(e).

"ADJUSTED ACCOUNTING PRINCIPLES" has the meaning set forth in SECTION 2.3(a)(i)

"ADVERSE RECOMMENDATION CHANGE" has the meaning set forth in SECTION 6.7(d).

"AFFILIATE" shall mean a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
another person.

"AGREEMENT" has the meaning set forth in the preamble to this Agreement.

"ANCILLARY AGREEMENTS" means the Escrow Agreement, the Employment Agreements,
the releases referred to in SECTION 8.1(a)(x) and all other instruments executed
in connection with this Agreement.

"ARBITRATOR" has the meaning set forth in SECTION 2.3(a)(ii).

"AST" has the meaning set forth in SECTION 3.32(c).

"AUDITED FINANCIAL STATEMENTS" has the meaning set forth in SECTION 3.7.

"CANCELLATION OF INDEBTEDNESS TAX" has the meaning set forth in SECTION
2.3(a)(i).

"CERCLA" has the meaning set forth in SECTION 3.32(a)(iv).

"CERTIFICATES" has the meaning set forth in SECTION 2.5(b).

"CERTIFICATE OF MERGER" has the meaning set forth in SECTION 1.2.

"CHANGE OF CONTROL PAYMENTS" means (i) all payments, other than payment of the
Merger Consideration, to which any officer, director, employee, stockholder,
option or warrant holder of any LAI Company is or would be entitled to receive
in connection with the transactions contemplated hereby and (ii) all amounts
payable to third parties under any Contract as a result of or in connection with
the entry into or consummation of the transactions contemplated hereby.



                                   Exhibit A-1




The costs associated with terminating any Contract or settling any matter
pursuant to SECTION 7.2(n) shall be considered Change in Control Payments.

"CHARTER DOCUMENTS" has the meaning set forth in SECTION 3.1.

"CHURCHILL" means Churchill Capital Partners III, L.P.

"CHURCHILL CLOSING PAYMENT AMOUNT" has the meaning set forth in SECTION 2.1(d).

"CHURCHILL CONSENT AND AGREEMENT" has the meaning set forth in SECTION 3.37.

"CHURCHILL ESCROW FUND PAYMENT AMOUNT" has the meaning set forth in SECTION
2.1(d).

"CHURCHILL HOLDBACK AMOUNT" has the meaning set forth in SECTION 2.1(d).

"CHURCHILL LOAN AGREEMENT" means the Amended and Restated Note Purchase
Agreement dated as of March 29, 2002, as it may have been amended to the date of
this Agreement.

"CHURCHILL PAYOFF AMOUNT" has the meaning set forth in SECTION 2.1(d).

"CLAIMS" means claims for indemnification under ARTICLE X.

"CLOSING" has the meaning set forth in SECTION 8.1.

"CLOSING DATE" has the meaning set forth in SECTION 8.1.

"CLOSING DIFFERENTIAL" had the meaning set forth in SECTION 2.3(b)(ii).

"CLOSING TANGIBLE NET OPERATING ASSETS AMOUNT" has the meaning set forth in
SECTION 2.3(b)(i).

"CMC" has the meaning set forth in the preamble to this Agreement.

"CMC LEGAL OPINION" has the meaning set forth in SECTION 7.3(e).

"COBRA" has the meaning set forth in SECTION 3.25(j)(xiii).

"CODE" means the Internal Revenue Code of 1986, as amended.

"COMMON PER SHARE AMOUNT" means $0.01.

"CONFIDENTIAL INFORMATION" has the meaning set forth in SECTION 3.30(f).

"CONFIDENTIALITY AGREEMENT" means the Mutual Confidentiality Agreement dated as
of July 30, 2003 among certain of the parties to the Agreement.

"CONSTITUENT CORPORATIONS" has the meaning set forth in the preamble to this
Agreement.


                                   Exhibit A-2



"CONTRACT" means any contract, agreement, binding bid, indenture, note, bond,
loan, instrument, lease, conditional sales contract, mortgage, license,
franchise, insurance policy, commitment or other arrangement or agreement.

"CRSI" has the meaning set forth in SECTION 2.3(a)(ii)(B).

"CURRENT FACILITY" has the meaning set forth in SECTION 3.32(a).

"D&O INSURANCE POLICY" has the meaning set forth in SECTION 6.15.

"DAMAGES" has the meaning set forth in SECTION 10.2.

"DEBT" means, as to any of the LAI Companies, as of any date of determination,
(i) all indebtedness of such person for borrowed money or any obligation of any
of the LAI Companies issued in substitution for or exchange of indebtedness for
borrowed money, or for the deferred purchase of property; (ii) all amounts owed
by such person to banks or other persons in respect of reimbursement obligations
under letters of credit, surety bonds and other similar instruments guaranteeing
payment or other performance of obligations by such person; (iii) all
indebtedness for borrowed money or for the deferred purchase price of property
or services secured by any Lien on any property owned by such person, to the
extent attributable to such person's interest in such property, even though such
person has not assumed or become liable for the payment thereof, (iv) lease
obligations of such person which, in accordance with GAAP, should be
capitalized; (v) guarantees by any of the LAI Companies of obligations of a
person that is not one of the LAI Companies, (vii) negative cash balances after
giving effect to all unpaid checks, drafts or promises or undertakings to pay
amounts due, and (viii) all accrued and unpaid interest attributable to the
foregoing.

"DEBT PAYOFF AMOUNT" has the meaning set forth in SECTION 2.1(d).

"DIVIDEND" has the meaning set forth in SECTION 3.9.

"DGCL" has the meaning set forth in the recitals to this Agreement.

"DISCLOSURE SCHEDULE" has the meaning set forth in the preamble to ARTICLE III.

"DISSENTING SHARES" has the meaning set forth in SECTION 2.2.

"DOL" means the Department of Labor.

"EFFECTIVE TIME" has the meaning set forth in SECTION 1.6.

"EFPE" has the meaning set forth in the preamble to this Agreement.

"EMPLOYEE BENEFIT PLANS" has the meaning set forth in SECTION 3.25(a).

"EMPLOYMENT AGREEMENTS" has the meaning set forth in SECTION 7.2(j).


                                   Exhibit A-3



"ENVIRONMENTAL ACCESS AGREEMENTS" means the Access Assignment for Phase I
Environmental Site Assessment dated August ___, 2003 among certain of the
parties to the Agreement and the Access Agreement for Phase II Environmental
Site Assessment dated September 29, 2003 among certain of the parties to the
Agreement.

"ENVIRONMENTAL CLAIM" has the meaning set forth in SECTION 3.32(a)(ii).

"ENVIRONMENTAL COSTS AND LIABILITIES" has the meaning set forth in SECTION
3.32(a)(iii).

"ENVIRONMENTAL INSURANCE POLICY" has the meaning set forth in SECTION 6.15.

"ENVIRONMENTAL LAW" has the meaning set forth in SECTION 3.32(a)(iv).

"ENVIRONMENTAL PERMIT" has the meaning set forth in SECTION 3.32(a)(v).

"ENVIRONMENTAL REQUIREMENT" has the meaning set forth in SECTION 3.32(a)(vi).

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

"ERISA AFFILIATE" has the meaning set forth in SECTION 3.25(a).

"ESCROW AGENT" has the meaning set forth in SECTION 2.5(a).

"ESCROW AGREEMENT" has the meaning set forth in SECTION 2.5(a).

"ESCROW FUND" has the meaning set forth in SECTION 2.5(a).

"ESCROW FUND AMOUNT" has the meaning set forth in SECTION 2.1(d).

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

"FINANCIAL STATEMENTS" has the meaning set forth in SECTION 3.7.

"FORMER FACILITY" has the meaning set forth in SECTION 3.32(a).

"GAAP" has the meaning set forth in SECTION 3.7.

"GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof and an entity exercising executive, legislative,
judicial, regulatory or administrative function of or pertaining to government.

"GUST AMENDMENTS" has the meaning set forth in SECTION 3.25(e).

"HAZARDOUS MATERIAL" has the meaning set forth in SECTION 3.32(a)(viii).

"HIPAA" means the Health Insurance and Portability and Privacy Act of 1996, as
amended.

"HSR ACT" had the meaning set forth in SECTION 3.6.


                                   Exhibit A-4




"INDEMNIFICATION CAP" has the meaning set forth in SECTION 10.4.

"INDEMNIFICATION THRESHOLD" has the meaning set forth in SECTION 10.4.

"INSURED" has the meaning set forth in SECTION 3.18.

"INQUIRY" has the meaning set forth in SECTION 6.7(b).

"INTELLECTUAL PROPERTY" means domestic and foreign patents, patent applications,
Know-how, trade names, trademarks, service marks, trademark registrations and
applications, service mark registrations and applications, copyrights, copyright
registrations and applications, trade secrets, confidential information, domain
names and other proprietary rights.

"INTERIM FINANCIAL STATEMENTS" has the meaning set forth in SECTION 3.7.

"INVENTORY" has the meaning set forth in SECTION 2.3(a)(ii).

"INVENTORY VALUE" has the meaning set forth in SECTION 2.3(a)(ii).

"IRS" means the Internal Revenue Service.

"IRS PAYMENT AMOUNT" has the meaning set forth in SECTION 2.1(d).

"JOINDER AGREEMENT" means the Joinder Agreement effective April 11, 2001 among
LAI and the party thereto, as amended by the First Amendment to Shareholders
Agreement.

"KNOW-HOW" shall mean laboratory journals, know-how (including, without
limitation, product know-how and use and application know-how), formulae,
product formulations, recipes, processes, product designs, specifications,
quality control, procedures, manufacturing, engineering and other drawings,
computer data bases and software, technology, other intangibles, technical
information, safety information, engineering data and design and engineering
specifications, research records, market surveys and all promotional literature,
customer and supplier lists and similar data.

"KNOWLEDGE" of a person that is an entity shall mean the actual knowledge of any
officer or director of such entity, or persons holding similar positions, after
due inquiry.

"LAI" has the meaning set forth in the preamble to this Agreement.

"LAI 401(k) PLAN" has the meaning set forth in SECTION 6.14.

"LAI AMENDED TAX RETURNS" means the federal income tax returns of LAI for the
Tax years ended September 30, 1997 and January 31, 2000.

"LAI CAPITAL STOCK" has the meaning set forth in SECTION 2.1(b).

"LAI COMMON STOCK" has the meaning set forth in SECTION 2.1(b).

"LAI COMPANIES" has the meaning set forth in SECTION 3.1.


                                   Exhibit A-5




"LAI EXPENSES" has the meaning set forth in SECTION 2.3(a)(i).

"LAI LEGAL OPINION" has the meaning set forth in SECTION 7.2(f).

"LAI PREFERRED STOCK" has the meaning set forth in SECTION 2.1(b).

"LAI SERIES A PREFERRED STOCK" has the meaning set forth in SECTION 2.1(b).

"LAI SERIES B PREFERRED STOCK" has the meaning set forth in SECTION 2.1(b).

"LAI SERIES C PREFERRED STOCK" has the meaning set forth in SECTION 2.1(b).

"LAI STOCKHOLDERS" means the holders of LAI Capital Stock.

"LAW" means any law, principle of common law, statute, code, regulation,
ordinance, constitution, treaty or rule enacted or promulgated by any
Governmental Authority.

"LEGAL PROCEEDINGS" means any judicial, administrative or arbitral actions,
suits, proceedings (public or private) or governmental proceedings.

"LICENSED INTELLECTUAL PROPERTY" has the meaning set forth in SECTION 3.30(a).

"LIEN" or "LIENS" has the meaning set forth in SECTION 3.17.

"LITIGATION" has the meaning set forth in SECTION 3.16.

"MATERIAL ADVERSE EFFECT" means a material adverse effect on the business,
operations, liabilities, results of operations, properties, foreseeable
prospects, assets or financial condition of, in the case of LAI, the LAI
Companies taken as a whole; provided, however, that changes or effects that are
caused by the conditions affecting the United States economy as a whole or
affecting the industry in which LAI competes, which conditions do not affect LAI
in a disproportionate manner, shall not be considered a Material Adverse Effect.

"MATERIAL CONTRACT" has the meaning set forth in SECTION 3.23.

"MATERIAL CUSTOMER CONTRACT" has the meaning set forth in SECTION 3.23.

"MERGER" has the meaning set forth in the recitals to this Agreement.

"MERGER CONSIDERATION" has the meaning set forth in SECTION 2.1(d).

"NON-RELEASED CONTRACTS" means the Contracts to which CMC, a direct or indirect
subsidiary or Affiliate of CMC or a joint venture involving CMC or such
subsidiary or Affiliate is a party that were entered into in connection with the
DFW Airport Terminal D Parking Structure project and the UT Southwestern Medical
Center - Phase 4 project.

"NOTICE OF ADVERSE RECOMMENDATION" has the meaning set forth in SECTION 6.7(d).


                                   Exhibit A-6



"ORDER" means any order, writ, injunction, judgment, decree, ruling, assessment
or arbitration award.

"OWNED REAL PROPERTY" has the meaning set forth in SECTION 3.18.

"PAYOFF CAP" has the meaning set forth in SECTION 2.1(d).

"PBGC" means the Pension Benefit Guaranty Corporation.

"PENSKE AGREEMENTS" means collectively the Penske Purchase Agreement and the
Penske Lease Agreement.

"PENSKE LEASE AGREEMENT" means the Vehicle Lease Service Agreement dated as of
August 4, 1993 between TLC and Penske Truck Leasing Co., L.P., as amended, and
each Contract related to or entered into in connection with such agreement.

"PENSKE PURCHASE AGREEMENT" means the Purchase, Sale and Development Agreement
dated as of November 5, 1993 between TLC and Penske Truck Leasing Co., L.P., as
amended.

"PERMITTED LIEN" has the meaning set forth in SECTION 3.17.

"PERMITS" shall mean permits, tariffs, authorizations, licenses, certificates,
concessions, agreements, variances, interim permits, approvals, registrations,
franchises and rights under any Law or otherwise issued or required by any
Governmental Authority and any applications for the foregoing which are
necessary for the LAI Companies to own or hold their properties or to engage in
their businesses pursuant to applicable Law.

"PERSON" shall mean an individual, corporation, limited liability company,
partnership, joint venture, association, trust, unincorporated organization or,
as applicable, any other entity.

"PER SHARE AMOUNT" has the meaning set forth in SECTION 2.1(c)(iv).

"PRE-CLOSING BALANCE SHEET" has the meaning set forth in SECTION 2.3(a)(i).

"PRE-CLOSING STATEMENT" has the meaning set forth in SECTION 2.3(a)(i).

"PRE-EFFECTIVE TIME PERIODS" has the meaning set forth in SECTION 6.11(a).

"POST-CLOSING STATEMENT" has the meaning set forth in SECTION 2.3(b)(i).

"POST-EFFECTIVE TIME PERIODS" has the meaning set forth in SECTION 6.11(a).

"PRINCIPAL STOCKHOLDERS" has the meaning set forth in the preamble to this
Agreement.

"PROPRIETARY RIGHTS AGREEMENT" has the meaning set forth in SECTION 3.24.

"PROPOSED CLOSING DIFFERENTIAL" has the meaning set forth in SECTION 2.3(b)(ii).


                                   Exhibit A-7




"PURCHASE PRICE" has the meaning set forth in SECTION 2.1(d).

"QUALIFIED PLAN" has the meaning set forth in SECTION 3.25(b).

"RCRA" has the meaning set forth in SECTION 3.32(a)(iv).

"RELEASE" has the meaning set forth in SECTION 3.32(a)(ix).

"REMEDIAL ACTION" has the meaning set forth in SECTION 3.32(a)(x).

"SECURITIES ACT" has the meaning set forth in SECTION 3.4.

"SELLERS" has the meaning set forth in the preamble to this Agreement.

"SENIOR LENDERS" means Fleet Capital Corporation, U. S. Bank National
Association and Heller Financial, Inc.

"SENIOR LOAN AGREEMENT" means the Loan and Security Agreement dated April 12,
2000 among LAI and the Senior Lenders as it may have been amended to the date of
this Agreement.

"SENIOR OBLIGATIONS PAYOFF AMOUNT" has the meaning set forth in SECTION 2.1(d).

"SERIES A PER SHARE AMOUNT" means $0.01.

"SERIES B PER SHARE AMOUNT" means $0.01.

"SERIES C PER SHARE AMOUNT" means $0.01.

"SHAREHOLDERS AGREEMENT" means the Shareholders Agreement dated January 9, 1998,
as amended by the First Amendment to Shareholders Agreement dated April 11,
2001, the Second Amendment to Shareholders Agreement made and entered into
effective as of November 26, 2002, and the Third Amendment to Shareholders
Agreement, made and entered into effective as of November 26, 2002, among
Lofland Acquisition, Inc., William J. Hughes III, Alton Tipps, EF Private Equity
Partners (Americas) LP, Donald Bazhaw, Kevin Brisco, Elizabeth Lloyd, Richard
Teague, Russel Jackson, Texas Growth Fund - 1995 Trust, Daniel B. Stuart, Chas.
A. Neal & Company, John A. Sadden, Jr., Paradigm Partners, L.P., Daniel B.
Stuart, Jr., A. Blake Irwin III, Mary Lou Harris, Keith Wright, Larry E.
Ciarkowski, Robert Tipton, Mark T. McClain and Jill Gamboa and the related
Registration Rights Agreement.

"STOCKHOLDER APPROVAL" has the meaning set forth in SECTION 3.2.

"STOCK RESTRICTION AGREEMENTS" means those Stock Restriction Agreements dated
January 8, 1998 between Lofland Acquisition, Inc. and each of A. Blake Irwin
III, Russel K. Jackson, Larry E. Ciarkowski, Mark T. McClain, Keith Wright,
William J. Hughes III, Mary Lou Harris, Kevin Brisco and Alton Tipps.

"STOCKHOLDERS' CLOSING DOCUMENTS" has the meaning set forth in SECTION 4.2.


                                   Exhibit A-8




"SUB" has the meaning set forth in the preamble to this Agreement.

"SUBSIDIARY" has the meaning set forth in SECTION 3.5(a).

"SUPERIOR PROPOSAL" has the meaning set forth in SECTION 6.7(f).

"SURVIVING CORPORATION" has the meaning set forth in SECTION 1.1.

"TANGIBLE NET OPERATING ASSETS" means at a particular date the aggregate amount
calculated in accordance with EXHIBIT C, with the line items comprising such
calculation being determined in conformity with GAAP applied in a manner
consistent with the 1/31/03 Financial Statements.

"TANGIBLE NET OPERATING ASSETS ADJUSTMENT" has the meaning set forth in SECTION
2.3(a)(iii).

"TANGIBLE NET OPERATING ASSETS ESTIMATE" has the meaning set forth in SECTION
2.3(a)(i).

"TAX" or "TAXES" has the meaning set forth in SECTION 3.27(g).

"TAX RETURN" has the meaning set forth in SECTION 3.27(g).

"TERMINATION FEE" has the meaning set forth in SECTION 9.2(c).

"TGF" has the meaning set forth in the preamble to this Agreement.

"TITLE POLICY" has the meaning set forth in SECTION 3.18.

"TLC" has the meaning set forth in the preamble to this Agreement.

"TREASURY SHARES" has the meaning set forth in SECTION 2.1(b).

"UST" has the meaning set forth in SECTION 3.32(c).

"WARN" has the meaning set forth in SECTION 10.2.

"WRITTEN OFF ACCOUNTS RECEIVABLE" has the meaning set forth in SECTION 7.2(v).


                                   Exhibit A-9





Note: The remaining exhibits to the Agreement have been omitted in accordance
with Rule 601(b)(2) of Regulation S-K. The Registrant agrees to furnish
supplementally a copy of any omitted exhibit to the Commission upon request.

EX-4.(I)J

                                                                 EXHIBIT 4(i)(j)

                         [FORM OF FACE OF EXCHANGE NOTE]

                           [Global Securities Legend]

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITORY"), TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY, ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

         UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL
SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY.

                            COMMERCIAL METALS COMPANY

                           5.625% SENIOR NOTE DUE 2013


No.
    --------
CUSIP No.:                                                            $
           ---------------                                             --------


         Commercial Metals Company, a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to CEDE & CO., or registered assigns, the
principal sum of _______________ DOLLARS ($____________) on November 15, 2013,
and to pay interest thereon from November 12, 2003 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on May 15 and November 15 in each year, commencing on May 15,
2004, at the rate of 5.625% per annum, until the principal hereof is paid or
made available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the May 1 or November 1 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the



payment of such Defaulted Interest to be fixed by the Trustee, as described in
the Indenture, notice whereof shall be given to Holders of Notes not less than
10 days prior to such Special Record Date, or may be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed and upon such notice as may be
required by such exchange, if such manner of payment shall be deemed practical
by the Trustee, all as more fully provided in the Indenture.

         Payment of the principal of (and premium if any) and any such interest
on this Security will be made at the office or agency of the Company maintained
for that purpose in New York, New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.

         Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

         Unless the certificate of authenticity hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

         IN WITNESS WHEREOF, the Company has caused this instrument to be
executed under its corporate seal.

Dated:                                         COMMERCIAL METALS COMPANY
       ----------------

                                               By:
                                                   ----------------------------
                                                   Name:
                                                   Title:

Attest

- ---------------------------------------
Name:
Title:

Trustee's Certificate of Authentication


This is one of the Notes of the series designated therein referred to in the
within-mentioned Indenture.


JPMORGAN CHASE BANK, as Trustee


By:
    ---------------------------
    Authorized Officer


                                        2


                             [Reverse Side of Note]

1. General.

         This Security is one of the duly authorized issue of debt securities of
the Company (hereinafter called the "Securities"), issued or to be issued in one
or more series under and pursuant to an Indenture dated as of July 31, 1995, as
supplemented by the Supplemental Indenture dated as of November 12, 2003
(collectively, together with any applicable subsequent amendments or
supplements, herein called the "Indenture"; capitalized terms used and not
defined herein shall have the meaning ascribed to such terms in the Indenture),
between the Company and JPMorgan Chase Bank (successor by merger to The Chase
Manhattan Bank, N.A.), a New York banking corporation, as trustee (herein called
the "Trustee," which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Securities and of
the terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face hereof,
which series is unlimited in amount. After giving effect to the issuance of
Securities of such series on the date of the Supplemental Indenture,
$200,000,000 aggregate principal amount of Securities of such series were issued
and outstanding.

         No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, and any premium and any
interest on, this Security at the place, rate and respective times and in the
coin or currency herein prescribed.

2. Redemption.

         The Securities are subject to redemption, as a whole or in part, at any
time and from time to time, at the election of the Company, at a Redemption
Price equal to the greater of (1) 100% of the principal amount of the Securities
being redeemed and (2) the sum of the present values, calculated as of the
Redemption Date, of the remaining scheduled payments of principal and interest
on the Securities to be redeemed (exclusive of interest accrued to the
Redemption Date) discounted to the Redemption Date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the then current
Treasury Rate (as defined in the Indenture) plus 20 basis points, plus, in each
case, accrued and unpaid interest on the principal amount being redeemed to the
Redemption Date.

         Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each Holder of the Securities to be
redeemed. In the event of redemption of this Security in part only, a new
Security or Securities of this series and of like tenor for the unredeemed
portion hereof will be issued in the name of the Holder hereof upon cancellation
hereof.

                                        3



3. Indenture.

         The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the
"TIA"). The Securities are subject to all such terms, and Holders are referred
to the Indenture and the TIA for a statement of those terms. The Securities
issued under the Indenture are senior unsecured obligations of the Company and
rank equally in right of payment with all of the Company's existing and future
senior unsecured indebtedness.

4. Paying Agent and Security Registrar.

         The Company shall maintain in the Borough of Manhattan, The City of New
York, an office or agency where the Securities may be surrendered for
registration of transfer or exchange and an office or agency where the
Securities may be presented for payment or for exchange. The Company has
initially appointed the Trustee, JPMorgan Chase Bank, as its Paying Agent and
Security Registrar. The Company reserves the right at any time to vary or
terminate the appointment of any Paying Agent or Security Registrar, to appoint
additional or other Paying Agents or other Security Registrars and to approve
any change in the office through which any Paying Agent or Security Registrar
acts.

5. Default.

         If an Event of Default with respect to the Securities shall occur and
be continuing, the principal of the Securities may be declared due and payable
in the manner and with the effect provided in the Indenture.

6. Sinking Fund.

         The Notes will not be subject to any sinking fund.

7. Denominations; Transfer; Exchange

         As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registerable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more
Securities of this series and of like tenor, of authorized denominations and for
the same aggregate principal amount, will be issued to the designated transferee
or transferees.

         The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000 in excess thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.


                                        4



         No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.

8. Persons Deemed Owners.

         Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security is overdue, and neither the Company, the
Trustee nor any agent shall be affected by notice to the contrary.

9. Amendment; Supplement; Waiver.

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange hereof or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.

10. Proceedings.

         As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any interest hereof on or
after the respective due dates expressed herein.


                                        5



11.      Holders' Compliance with Registration Rights Agreement.

         The Holder of this Security, by acceptance hereof, acknowledges and
agrees to the provisions of the Registration Rights Agreement, including the
obligations of the Holder with respect to a registration and the indemnification
of the Company to the extent provided therein.

12. Governing Law.

         The Securities shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to any conflict of law
principles of such state that would require the application of the laws of
another jurisdiction.



                                       6


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

                                 ASSIGNMENT FORM

         To assign this Note, fill in the form below:

         I or we assign and transfer this Note to

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


- --------------------------------------------------------------------------------
                  (Insert assignee's soc. sec. or tax I.D. No.)


         and irrevocably appoint ________________________ agent to transfer this
         Note on the books of the Company. The agent may substitute another to
         act for him.

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

         Date:                    Your Signature:
               ------------------                 ------------------

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

         Sign exactly as your name appears on the other side of this Note.



         Signature Guarantee:
                              --------------------------------------
                                       (Signature must be guaranteed)

                  Signatures must be guaranteed by an "eligible guarantor
         institution" meeting the requirements of the Registrar, which
         requirements include membership or participation in the Security
         Transfer Agent Medallion Program ("STAMP") or such other "signature
         guarantee program" as may be determined by the Registrar in addition
         to, or in substitution for, STAMP, all in accordance with the
         Securities Exchange Act of 1934, as amended.





                        [TO BE ATTACHED TO GLOBAL NOTES]

                SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

         The following increases or decreases in this Global Note have been
made:



                                                   Principal          Signature of
             Amount of          Amount of          amount of this     authorized
             decrease in        increase in        Global Note        officer of
             Principal          Principal          following such     Trustee or
Date of      amount of this     amount of this     decrease or        Notes
Exchange     Global Note        Global Note        increase           Custodian
- --------     --------------     --------------     --------------     ------------
                                                          

EX-5

                                                                       EXHIBIT 5

January 27, 2004



Commercial Metals Company
6565 N. MacArthur Blvd., Suite 800
Irving, Texas  75039

Ladies and Gentlemen:

         We have acted as special counsel to Commercial Metals Company, a
Delaware corporation (the "COMPANY"), in connection with the public offering of
up to $200,000,000 aggregate principal amount of the Company's 5.625% senior
notes due 2013 (the "NEW NOTES"). The New Notes are to be issued under an
indenture dated as of July 31, 1995, as supplemented by that certain
supplemental indenture dated as of November 12, 2003 (collectively with such
supplemental indenture, the "INDENTURE"), among the Company and JPMorgan Chase
Bank, formerly known as The Chase Manhattan Bank (the "TRUSTEE"), pursuant to an
exchange offer (the "EXCHANGE OFFER") in exchange for a like principal amount of
the Company's issued and outstanding 5.625% senior notes due 2013 (the "OLD
NOTES," and collectively with the New Notes, the "NOTES"). The New Notes are
being registered pursuant to a Registration Statement on Form S-4 (as amended or
supplemented, the "REGISTRATION STATEMENT") filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended.

         This opinion is limited to the laws of the State of New York, the
federal laws of the United States of America and, to the extent relevant to the
opinions expressed herein, the Delaware General Corporation Law (the "DGCL"), as
currently in effect. The Indenture and the Notes are governed by the laws of the
State of New York. We express no opinion as to (i) the subject matter
jurisdiction of the United States courts located in New York to adjudicate any
controversy relating to the Notes or the Indenture and (ii) the enforceability
of the choice of New York law or whether any court would give effect to such
choice of law.

         In connection therewith, we have examined and relied upon the original,
or copies certified to our satisfaction, of (i) the Restated Certificate of
Incorporation of the Company, as amended; (ii) the Restated Bylaws of the
Company, as amended; (iii) the minutes and records of the corporate proceedings
of the Company with respect to the issuance by the Company of the Notes; (iv)
the Registration Statement and all exhibits thereto; (v) the Indenture; (vi) the
form of the New Notes; and (vii) such other documents and instruments as we have
deemed necessary and advisable for the expression of the opinions contained
herein.

         In making the foregoing examinations, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted to us
as certified or photostatic copies thereof and the authenticity of the originals
of such latter documents. As to all questions of fact



Commercial Metals Company
January 27, 2004
Page 2


material to this opinion, where such facts have not been independently
established, and as to the content and form of certain minutes, records,
resolutions or other documents or writings of the Company, we have relied, to
the extent we have deemed reasonably appropriate, upon representations or
certificates of officers of the Company or governmental officials.

         Based upon and subject to the foregoing and the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that when the New Notes (in the form examined by us) have been duly
executed and authenticated (to the extent required) in accordance with the terms
of Indenture and have been delivered upon consummation of the Exchange Offer
against receipt of the Old Notes surrendered in exchange therefore in accordance
with the terms of the Exchange Offer, the New Notes will be valid and binding
obligations of the Company, except as the same may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, rearrangement, liquidation,
conservatorship or similar laws of general application now or hereafter in
effect relating to or affecting the rights of creditors generally, (ii) general
equitable principles (whether or not such enforceability is considered in a
proceeding at law or in equity) and (iii) the fact that a court may not grant
specific performance or any other equitable remedy with respect to enforcement
of any provision contained in the New Notes or the Indenture.

         We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Exchange Offer and to the reference to
our firm under the caption "Legal Matters" in the prospectus constituting a part
of the Registration Statement.

         This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by or furnished to any other person without our prior written
consent.

                                               Very truly yours,

                                               /s/ Haynes and Boone, LLP

                                               Haynes and Boone, LLP

EX-12

                                                                      EXHIBIT 12

                       RATIO OF EARNINGS TO FIXED CHARGES

                                CMC CONSOLIDATED
                          DEBT RATIOS TO FIXED CHARGES
                      (DOLLARS IN THOUSANDS, EXCEPT RATIOS)




                                                THREE MONTHS ENDED
                                                    NOVEMBER 30,                     YEAR ENDED AUGUST 31,
                                                -------------------   ----------------------------------------------------
                                                  2003       2002       2003       2002       2001       2000       1999
                                                --------   --------   --------   --------   --------   --------   --------
                                                                                             
EARNINGS:
   Earnings before taxes ....................   $ 20,013   $  3,499   $ 30,394   $ 63,138   $ 38,415   $ 70,660   $ 74,803
   Interest expense .........................      5,094      3,994     15,338     18,708     27,608     27,319     19,650
   Interest imputed on rent .................      1,209      1,198      4,476      3,925      3,828      3,555      3,033
   Amortization of capitalized interest .....        340        335      1,437      1,307      1,370      1,367        602
                                                --------   --------   --------   --------   --------   --------   --------
        Total Earnings ......................   $ 26,656   $  9,026   $ 51,645   $ 87,078   $ 71,221   $102,901   $ 98,088
                                                ========   ========   ========   ========   ========   ========   ========

FIXED CHARGES:
   Interest expense .........................   $  5,094   $  3,994   $ 15,338   $ 18,708   $ 27,608   $ 27,319   $ 19,650
   Interest capitalized .....................         48         27        254        447      1,111        808      4,547
   Interest imputed on rent .................      1,209      1,198      4,476      3,925      3,828      3,555      3,033
                                                --------   --------   --------   --------   --------   --------   --------
        Total Fixed Charges .................   $  6,351   $  5,219   $ 20,068   $ 23,080   $ 32,547   $ 31,682   $ 27,230
                                                ========   ========   ========   ========   ========   ========   ========

Ratio of Earnings to Fixed Charges ..........       4.20       1.73       2.57       3.77       2.19       3.25       3.60

EX-21

                                                                               .
                                                                               .
                                                                               .
                                                                      EXHIBIT 21

                           SUBSIDIARIES OF THE COMPANY



                                                           JURISDICTION OF
NAME OF SUBSIDIARY                                         INCORPORATION
- ------------------                                         ---------------
                                                        
AHT, Inc.                                                  Pennsylvania
Centrozlom-Katowice Sp.z o.o.                              Poland
Centrum Zawiercie Sp.z o.o.                                Poland
CMC (Australia) Pty., Limited                              Australia
CMC Concrete Accessories, Inc.                             Texas
CMC (Europe) AG                                            Switzerland
CMC Fareast Limited                                        Hong Kong
CMC (International) AG                                     Switzerland
CMC International (S.E. Asia) Pte., Limited                Singapore
CMC Oil Company                                            Texas
CMC Receivables, Inc.                                      Delaware
CMC Steel Holding Company                                  Delaware
CMC Steel Fabricators, Inc.                                Texas
CMC Steel IPH Company                                      Delaware
CMC Trinec Stahlhandel GmbH                                Germany
CMC (UK) Limited                                           England
Coil Steel (Aust) Pty Limited                              Australia
Coil Steels Group Pty Limited                              Australia
Coil Steels Properties Pty Limited                         Australia
Coil Steels (Qld) Pty Limited                              Australia
Coil Steels Trading Pty Limited                            Australia
Cometals China, Inc.                                       Texas
Cometals Far East, Inc.                                    Texas
Cometals (Tianjin) International Trade Co., Limited        China
Commercial Metals - Austin, Inc.                           Texas
Commercial Metals Deutschland GmbH                         Germany
Commercial Metals (International) AG                       Switzerland
Commercial Metals Overseas Export (FSC) Corp.              US Virgin Islands
Commercial Metals SF/JV Company                            Tennessee
Construction Materials, Inc.                               Louisiana
Elserw Sp.z o.o.                                           Poland
Energomedia Sp.z o.o.                                      Poland
Europickling S.A.                                          Belgium
Howell Metal Company                                       Virginia
Huta Zawiercie SA                                          Poland
Hutsprzet Sp.z o.o.                                        Poland
HZ Format Sp.z o.o.                                        Poland
HZ Service Sp.z o.o.                                       Poland
Kolhut Sp.z o.o.                                           Poland
Lofland Company Dallas                                     Texas
Lofland Company Midwest                                    Delaware
Lofland Fabricators, Inc.                                  Delaware
Melbourne Slitting Company Pty. Ltd.                       Australia
Owen Electric Steel Company of South Carolina              South Carolina
Owen Industrial Products, Inc.                             South Carolina
Owen Joist Corporation                                     South Carolina








                                                           JURISDICTION OF
NAME OF SUBSIDIARY                                         INCORPORATION
- ------------------                                         ---------------
                                                        
Owen Joist of Florida, Inc.                                Florida
Owen of Georgia, Inc.                                      Georgia
Perth Steels Pty. Limited                                  Australia
Putex Sp.z o.o.                                            Poland
Pyrosteel Pty., Ltd.                                       Australia
Queensland Slitting Company Pty Limited                    Australia
Regency Advertising Agency, Inc.                           Texas
Scrapena S.A.                                              Poland
Scrap-Service Sp.z o.o.                                    Poland
SMI-Owen Steel Company, Inc.                               South Carolina
SMI Rebar Coating JV, Inc.                                 North Carolina
SMI Steel Fabricators of Florida Inc.                      Florida
SMI Steel Fabricators of North Carolina Inc.               North Carolina
SMI Steel Inc.                                             Alabama
Sydney Slitting Company Pty Limited                        Australia
Steel Products de Mexico, S.A. de C.V.                     Mexico
Structural Metals, Inc.                                    Texas
The Lofland Company                                        Delaware
The Lofland Company of Mississippi                         Delaware
The Lofland Company of New Mexico                          Delaware
The Lofland Company of Oklahoma                            Delaware
The Lofland Company of Texas                               Texas
Trinec CMC UK Ltd.                                         United Kingdom
Trinecke Zelezamy a. s.                                    Czech Republic
Zenith Finance and Construction Company                    Texas

EX-23.A

                                                                     EXHIBIT 23a


                          INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Registration Statement of
Commercial Metals Company on Form S-4 of our reports dated November 5, 2003
(November 13, 2003 as to Note 15), appearing in the Annual Report on Form 10-K
of Commercial Metals Company for the year ended August 31, 2003 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.


Dallas, Texas
January 27, 2004

EX-25

                                                                      EXHIBIT 25

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

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                            -------------------------

                                    FORM T-1

                            STATEMENT OF ELIGIBILITY
                    UNDER THE TRUST INDENTURE ACT OF 1939 OF
                   A CORPORATION DESIGNATED TO ACT AS TRUSTEE
                   -------------------------------------------
               CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
                A TRUSTEE PURSUANT TO SECTION 305(b)(2)
                                                        --------
                    ----------------------------------------

                               JPMORGAN CHASE BANK
               (Exact name of trustee as specified in its charter)

NEW YORK                                                             13-4994650
(State of incorporation                                        (I.R.S. employer
if not a national bank)                                     identification No.)

270 PARK AVENUE
NEW YORK, NEW YORK                                                        10017
(Address of principal executive offices)                             (Zip Code)

                               William H. McDavid
                                 General Counsel
                                 270 Park Avenue
                            New York, New York 10017
                               Tel: (212) 270-2611
            (Name, address and telephone number of agent for service)
                  --------------------------------------------
                           COMMERCIAL METALS COMPANY
               (Exact name of obligor as specified in its charter)

TEXAS                                                                75-0725338
(State or other jurisdiction of                                (I.R.S. employer
incorporation or organization)                              identification No.)


6565 NORTH MACARTHUR BLVD., SUITE 800
IRVING, TEXAS                                                             75039
(Address of principal executive offices)                             (Zip Code)
                    ----------------------------------------
                                 DEBT SECURITIES
                       (Title of the indenture securities)




                                     GENERAL

Item 1.  General Information.

         Furnish the following information as to the trustee:

         (a)      Name and address of each examining or supervising authority to
which it is subject.

                  New York State Banking Department, State House, Albany, New
                  York 12110.

                  Board of Governors of the Federal Reserve System, Washington,
                  D.C., 20551

                  Federal Reserve Bank of New York, District No. 2, 33 Liberty
                  Street, New York, N.Y.

                  Federal Deposit Insurance Corporation, Washington, D.C.,
                  20429.


         (b)      Whether it is authorized to exercise corporate trust powers.

                  Yes.


Item 2. Affiliations with the Obligor and Guarantors.

         If the obligor or any Guarantor is an affiliate of the trustee,
describe each such affiliation.

         None.

                                      - 2 -


Item 16. List of Exhibits

         List below all exhibits filed as a part of this Statement of
Eligibility.

         1. A copy of the Restated Organization Certificate of the Trustee dated
March 25, 1997 and the Certificate of Amendment dated October 22, 2001 (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement No.
333-76894, which is incorporated by reference).

         2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference). On November 11,
2001 in connection with the merger of The Chase Manhattan Bank and Morgan
Guaranty Trust Company of New York, the surviving corporation was renamed
JPMorgan Chase Bank.

         3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.

         4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-76894, which is
incorporated by reference.).

         5. Not applicable.

         6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference). On November 11, 2001, in
connection with the merger of The Chase Manhattan Bank and Morgan Guaranty Trust
Company of New York, the surviving corporation was renamed JPMorgan Chase Bank.

         7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.

         8. Not applicable.

         9. Not applicable.


                                   SIGNATURE

         Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, JPMorgan Chase Bank, a corporation organized and existing under the
laws of the State of New York, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 17th day of December, 2003.

                                               JPMORGAN CHASE BANK



                                               By /s/ William G. Keenan
                                                  -----------------------------
                                                      William G. Keenan
                                                       Vice President



                              Exhibit 7 to Form T-1


                                Bank Call Notice

                             RESERVE DISTRICT NO. 2
                       CONSOLIDATED REPORT OF CONDITION OF

                               JPMorgan Chase Bank
                  of 270 Park Avenue, New York, New York 10017
                     and Foreign and Domestic Subsidiaries,
                     a member of the Federal Reserve System,

                   at the close of business June 30, 2003, in
        accordance with a call made by the Federal Reserve Bank of this
        District pursuant to the provisions of the Federal Reserve Act.



                                                              DOLLAR AMOUNTS
                     ASSETS                                    IN MILLIONS
                                                           
Cash and balances due from depository institutions:
     Noninterest-bearing balances and
     currency and coin ......................................   $ 22,657
     Interest-bearing balances ..............................     10,600
Securities:
Held to maturity securities .................................        268
Available for sale securities ...............................     76,771
Federal funds sold and securities purchased under
     agreements to resell ...................................
     Federal funds sold in domestic offices .................      3,844
     Securities purchased under agreements to resell ........     86,290
Loans and lease financing receivables:
     Loans and leases held for sale .........................     31,108
     Loans and leases, net of unearned income ...............   $166,046
     Less: Allowance for loan and lease losses ..............      3,735
     Loans and leases, net of unearned income and
     allowance ..............................................    162,311
Trading Assets ..............................................    186,546
Premises and fixed assets (including capitalized leases) ....      6,142
Other real estate owned .....................................        133
Investments in unconsolidated subsidiaries and
     associated companies ...................................        696
Customers' liability to this bank on acceptances
     outstanding ............................................        225
Intangible assets
        Goodwill ............................................      2,201
        Other Intangible assets .............................      3,058
Other assets ................................................     68,983
TOTAL ASSETS ................................................   $661,833
                                                                ========








                                                              DOLLAR AMOUNTS
                 LIABILITIES                                   IN MILLIONS
                                                           
Deposits
     In domestic offices ....................................   $189,571
     Noninterest-bearing ....................................   $ 82,747
     Interest-bearing .......................................    106,824
     In foreign offices, Edge and Agreement
     subsidiaries and IBF's .................................    125,990
     Noninterest-bearing ....................................   $  6,025
     Interest-bearing .......................................    119,965

Federal funds purchased and securities sold under
agreements to repurchase:
     Federal funds purchased in domestic offices ............      4,978
     Securities sold under agreements to repurchase .........    114,181
Trading liabilities .........................................    129,299
Other borrowed money (includes mortgage indebtedness
     and obligations under capitalized leases) ..............     10,186
Bank's liability on acceptances executed and outstanding ....        225
Subordinated notes and debentures ...........................      8,202
Other liabilities ...........................................     41,452
TOTAL LIABILITIES ...........................................    624,084
Minority Interest in consolidated subsidiaries ..............        104

                 EQUITY CAPITAL

Perpetual preferred stock and related surplus ...............          0
Common stock ................................................      1,785
Surplus  (exclude all surplus related to preferred stock) ...     16,304
Retained earnings ...........................................     18,426
Accumulated other comprehensive income ......................      1,130
Other equity capital components .............................          0
TOTAL EQUITY CAPITAL ........................................     37,645
                                                                --------
TOTAL LIABILITIES, MINORITY INTEREST, AND EQUITY CAPITAL ....   $661,833
                                                                ========



I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.

                               JOSEPH L. SCLAFANI

We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the in- structions
issued by the appropriate Federal regulatory authority and is true and correct.



                                                WILLIAM B. HARRISON, JR.)
                                                HANS W. BECHERER        )
                                                FRANK A. BENNACK, JR.   )

EX-99.1

                                                                    EXHIBIT 99.1

                             LETTER OF TRANSMITTAL
                                       TO
                              TENDER FOR EXCHANGE
                          5.625% SENIOR NOTES DUE 2013
                             CUSIP NO. 201723 AE 3
                                       OF
                            COMMERCIAL METALS COMPANY

       PURSUANT TO THE EXCHANGE OFFER PROSPECTUS DATED             , 2004.
                                                       ------------

- ------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN
STANDARD TIME, ON _________, 2004 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE
OFFER IS EXTENDED, IN WHICH CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE
LATEST TIME AND DATE TO WHICH THE EXCHANGE OFFER IS EXTENDED. TENDERS MAY BE
WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
- ------------------------------------------------------------------------------


                             The Exchange Agent is:
                               JPMORGAN CHASE BANK

     By Registered or Certified Mail,                   By Regular Mail
        or Overnight Delivery After                 (REGISTERED OR CERTIFIED
     4:30 p.m. on the Expiration Date:                 MAIL RECOMMENDED)
            JPMorgan Chase Bank                       JPMorgan Chase Bank
              ITS Bond Events                           ITS Bond Events
       2001 Bryan Street, 9th Floor                      P. O. Box 2320
             Dallas, TX 75201                           Dallas, TX 75221
          Attention: Frank Ivins

                        By Facsimile Transmission Number
                          (eligible institutions only):
                                 (214) 468-6494
                             Attention: Frank Ivins

                              Confirm by Telephone:
                                 (214) 468-6464



         DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.

         The undersigned acknowledges receipt of the Prospectus dated , 2004
(the "Prospectus") of Commercial Metals Company (the "Company") and this Letter
of Transmittal (the "Letter of Transmittal"), which, together with the
Prospectus, constitutes the Company's offer (the "Exchange Offer") to exchange
$1,000 principal amount of its 5.625% Senior Notes due 2013 (the "New Notes"),
which have been registered under the Securities



Act of 1933, as amended (the "Securities Act"), for each $1,000 principal amount
of its outstanding 5.625% Senior Notes due 2013 (the "Old Notes"). Recipients of
the Prospectus should read the requirements described in such Prospectus with
respect to eligibility to participate in the Exchange Offer. Capitalized terms
used but not defined herein have the meaning given to them in the Prospectus.

         The undersigned hereby tenders the Old Notes described in the box
entitled "Description of Old Notes" below pursuant to the terms and conditions
described in the Prospectus and this Letter of Transmittal. The undersigned is
the registered owner of all the Old Notes and the undersigned represents that it
has received from each beneficial owner of Old Notes ("Beneficial Owners") a
duly completed and executed form of "Instruction to Registered Holder from
Beneficial Owner" accompanying this Letter of Transmittal, instructing the
undersigned to take the action described in this Letter of Transmittal.

         This Letter of Transmittal is to be used only by a holder of Old Notes
(i) if certificates representing Old Notes are to be forwarded herewith or (ii)
if delivery of Old Notes is to be made by book-entry transfer to the Exchange
Agent's account at The Depository Trust Company (the "Depositary"), pursuant to
the procedures set forth in the section of the Prospectus entitled "The Exchange
Offer -- Procedures for Tendering." If delivery of the Old Notes is to be made
by book-entry transfer to the account maintained by the Exchange Agent at the
Depositary, tenders of the Old Notes may be effected in accordance with the
procedures mandated by the Depositary's Automated Tender Offer Program ("ATOP")
and the procedures set forth in the Prospectus under the caption "The Exchange
Offer -- Tendering Through DTC's Automated Tender Offer Program." In such case,
an agent's message may be delivered in lieu of this Letter of Transmittal. An
agent's message is a message, transmitted to the Exchange Agent's account at the
Depositary and received by the Exchange Agent and forming part of the book-entry
confirmation, which states that such participant has received and agrees to be
bound by the Letter of Transmittal and the Company may enforce this Letter of
Transmittal against such participant.

         The undersigned hereby represents and warrants that the information set
forth in the box entitled "Beneficial Owner(s)" is true and correct.

         Any Beneficial Owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder of Old Notes promptly and
instruct such registered holder of Old Notes to tender on behalf of the
Beneficial Owner. If such Beneficial Owner wishes to tender on its own behalf,
such Beneficial Owner must, prior to completing and executing this Letter of
Transmittal and delivering its Old Notes, either make appropriate arrangements
to register ownership of the Old Notes in such Beneficial Owner's name or obtain
a properly completed bond power from the registered holder of Old Notes. The
transfer of record ownership may take considerable time and may not be completed
prior to the Expiration Date.

         In order to properly complete this Letter of Transmittal, a holder of
Old Notes must (i) complete the box entitled "Description of Old Notes," (ii) if
appropriate, check and complete the boxes relating to book-entry transfer,
guaranteed delivery, Special Issuance Instructions, Special Delivery
Instructions and Beneficial Owner(s), (iii) sign the Letter of Transmittal by
completing the box entitled "Sign Here" and (iv) complete the Substitute Form
W-9. Each holder of Old Notes should carefully read the detailed instructions
below prior to completing the Letter of Transmittal.

         Holders of Old Notes who desire to tender their Old Notes for exchange
and (i) whose Old Notes are not immediately available, (ii) who cannot deliver
their Old Notes and all other documents required hereby to the Exchange Agent on
or prior to the Expiration Date or (iii) who are unable to complete the
procedure for book-entry transfer on a timely basis, must tender their Old Notes
pursuant to the guaranteed delivery procedures set forth in the section of the
Prospectus entitled "The Exchange Offer -- Guaranteed Delivery Procedures." See
Instruction 2 of the Instructions beginning on page 9 hereof.

         Holders of Old Notes who wish to tender their Old Notes for exchange
must, at a minimum, complete columns (1), (2), if applicable (see footnote 1
below), and (3) in the box below entitled "Description of Old Notes" and sign
the box on page 8 under the words "Sign Here." If only those columns are
completed, such holder of Old Notes will have tendered for exchange all Old
Notes listed in column (3) below. If the holder of Old Notes wishes to


                                       2


tender for exchange less than all of such Old Notes, column (4) must be
completed in full. In such case, such holder of Old Notes should refer to
Instruction 5 on page 10.



- -----------------------------------------------------------------------------------------------------------
                                            DESCRIPTION OF OLD NOTES
- -----------------------------------------------------------------------------------------------------------
                       (1)                                   (2)            (3)                 (4)
- --------------------------------------------------     --------------    ----------     -------------------
                                                                                          PRINCIPAL AMOUNT
                                                                                            TENDERED FOR
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) OF                                        EXCHANGE (ONLY IF
   OLD NOTE(S), EXACTLY AS NAME(S) APPEAR(S) ON          OLD NOTE                         DIFFERENT AMOUNT
CERTIFICATE(S) FOR OLD NOTE OR AS THE NAME OF THE         NUMBER(S)                       FROM COLUMN (3))
  PARTICIPANT APPEARS ON THE BOOK-ENTRY TRANSFER          (ATTACH         AGGREGATE         (MUST BE IN
       FACILITY'S SECURITY POSITION LISTING            SIGNED LIST IF     PRINCIPAL     INTEGRAL MULTIPLES
           (PLEASE FILL IN, IF BLANK)                   NECESSARY)(1)      AMOUNT          OF $1,000)(2)
- --------------------------------------------------     --------------    ----------     -------------------
                                                                               
- --------------------------------------------------     --------------    ----------     -------------------

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

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

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

(1)  Column (2) need not be completed by holders of Old Notes tendering Old
     Notes for exchange by book-entry transfer. Please check the appropriate box
     on the next page and provide the requested information.

(2)  Column (4) need not be completed by holders of Old Notes who wish to tender
     for exchange the principal amount of Old Notes listed in column (3).
     Completion of column (4) will indicate that the holder of Old Notes wishes
     to tender for exchange only the principal amount of Old Notes indicated in
     column (4).
- -----------------------------------------------------------------------------------------------------------


[ ]  CHECK HERE IF OLD NOTES ARE ENCLOSED HEREWITH.

[ ]  CHECK HERE IF OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE
     TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DEPOSITARY AND
     COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS (AS HEREINAFTER
     DEFINED) ONLY):

     Name of Tendering Institution:
                                    -------------------------------------------
     Account Number:
                    -----------------------------------------------------------
     Transaction Code Number:
                             --------------------------------------------------

[ ]  CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
     OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING (FOR
     USE BY ELIGIBLE INSTITUTIONS ONLY):

     Name of Registered Holder of Old Note(s):
                                              ---------------------------------
     Date of Execution of Notice of Guaranteed Delivery:
                                                        -----------------------
     Window Ticket Number (if available):
                                         --------------------------------------
     Name of Institution which Guaranteed Delivery:
                                                   ----------------------------
     Account Number (if delivered by book-entry transfer):
                                                          ---------------------

                                       3


- -------------------------------------------------------------------------------
                   ATTENTION BROKER-DEALERS: IMPORTANT NOTICE
                 CONCERNING YOUR ABILITY TO RESELL THE NEW NOTES

IF THE COMPANY OR THE EXCHANGE AGENT DOES NOT RECEIVE ANY LETTERS OF TRANSMITTAL
FROM BROKER-DEALERS REQUESTING ADDITIONAL COPIES OF THE PROSPECTUS FOR USE IN
CONNECTION WITH RESALES OF THE NEW NOTES, THE COMPANY INTENDS TO TERMINATE THE
EFFECTIVENESS OF THE REGISTRATION STATEMENT AS SOON AS PRACTICABLE AFTER THE
CONSUMMATION OR TERMINATION OF THE EXCHANGE OFFER. IF THE EFFECTIVENESS OF THE
REGISTRATION STATEMENT IS TERMINATED, YOU WILL NOT BE ABLE TO USE THIS
PROSPECTUS IN CONNECTION WITH RESALES OF NEW NOTES AFTER SUCH TIME.
- --------------------------------------------------------------------------------

[ ]  CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
     COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
     THERETO FOR USE IN CONNECTION WITH RESALES OF NEW NOTES:

     Name:
          ---------------------------------------------------------------------

     Address:
             ------------------------------------------------------------------

     Telephone No. (                         )

     If you requested additional copies of the prospectus, YOU MUST MAIL OR
     SEND A PHOTOCOPY OF THIS PAGE to:

               By Mail:                                 By Facsimile:
               Commercial Metals Company          or    (214) 689-4326
               6565 N. MacArthur Blvd, Suite 800        Attn: General Counsel
               Irving, Texas 75039
               Attn:  General Counsel

DO NOT SEND THE LETTER OF TRANSMITTAL TO THE ABOVE ADDRESS AS IT WILL NOT
CONSTITUTE A VALID TENDER OF OLD NOTES UNDER THE TERMS OF THE EXCHANGE OFFER.
CONSULT THE PROSPECTUS FOR PROPER DELIVERY PROCEDURES.
- --------------------------------------------------------------------------------


                                       4


- ---------------------------------------------------------
              SPECIAL ISSUANCE INSTRUCTIONS
            INSTRUCTIONS 1, 6, 7 AND 8)

         To be completed ONLY (i) if the New Notes
issued in exchange for Old Notes (or if certificates for
Old Notes not tendered for exchange for New Notes)
to be issued in the name of someone other than the
undersigned or (ii) if Old Notes tendered by book-
entry transfer which are not exchanged are to be
returned by credit to an account maintained at the
Depositary.


Issue to:

Name
     --------------------------------------------------
                     (Please Print)

Address
        -----------------------------------------------

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

  -----------------------------------------------------
                   (Include Zip Code)


  -----------------------------------------------------
       (Tax Identification or Social Security No.)

         Credit Old Notes not exchanged and
delivered by book-entry transfer to the Depositary
account set forth below:


  -----------------------------------------------------
                    (Account Number)

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


- ---------------------------------------------------------
             SPECIAL DELIVERY INSTRUCTIONS (SEE
               (SEE INSTRUCTIONS 1, 6, 7 AND 8)

         To be completed ONLY if the New Notes
issued in exchange for Old Notes (or if certificates
are for Old Notes not tendered for exchange for New
Notes) are to be mailed or delivered (i) to someone
other than the undersigned or (ii) to the undersigned
at an address other than the address shown below the
undersigned's signature.

Mail or deliver to:


Name
     --------------------------------------------------
                     (Please Print)

Address
        -----------------------------------------------

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

  -----------------------------------------------------
                   (Include Zip Code)


  -----------------------------------------------------
       (Tax Identification or Social Security No.)




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




- ------------------------------------------------------------------------------------------
                               BENEFICIAL OWNER(S)

- -----------------------------------------------     --------------------------------------
STATE OF PRINCIPAL RESIDENCE OF EACH BENEFICIAL     PRINCIPAL AMOUNT OF OLD NOTES HELD FOR
            OWNER OF OLD NOTES                          ACCOUNT OF BENEFICIAL OWNER(S)
- -----------------------------------------------     --------------------------------------
                                                 

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

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

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

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


     If delivery of Old Notes is to be made by book-entry transfer to the
account maintained by the Exchange Agent at the Depositary, then tenders of Old
Notes may be effected in accordance with the procedures mandated by the
Depositary's Automated Tender Offer Program and the procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Tendering Through DTC's
Automated Tender Offer Program."


                                       5



                        SIGNATURES MUST BE PROVIDED BELOW
               PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY


Ladies and Gentlemen:

         Pursuant to the offer by Commercial Metals Company (the "Company") upon
the terms and subject to the conditions set forth in the Prospectus dated , 2004
(the "Prospectus") and this Letter of Transmittal (the "Letter of Transmittal"),
which, together with the Prospectus, constitutes the Company's offer (the
"Exchange Offer") to exchange $1,000 principal amount of its 5.625% Senior Notes
due 2013 (the "New Notes"), which have been registered under the Securities Act
of 1933, as amended (the "Securities Act"), for each $1,000 principal amount of
its outstanding 5.625% Senior Notes due 2013 (the "Old Notes"), the undersigned
hereby tenders to the Company for exchange the Old Notes indicated above.

         By executing this Letter of Transmittal and subject to and effective
upon acceptance for exchange of the Old Notes tendered for exchange herewith,
the undersigned (i) acknowledges and agrees that the Company has fully performed
all of its obligations under that certain Exchange and Registration Rights
Agreement dated as of November 12, 2003, among the Company and the initial
purchasers party thereto, (ii) will have irrevocably sold, assigned and
transferred to the Company, all right, title and interest in, to and under all
of the Old Notes tendered for exchange hereby, and (iii) hereby appoints
JPMorgan Chase Bank (the "Exchange Agent") as the true and lawful agent and
attorney-in-fact (with full knowledge that the Exchange Agent also acts as agent
of the Company) of such holder of Old Notes with respect to such Old Notes, with
full power of substitution, to (x) deliver certificates representing such Old
Notes, or transfer ownership of such Old Notes on the account books maintained
by The Depository Trust Company (the "Depositary") (together, in any such case,
with all accompanying evidences of transfer and authenticity), to the Company,
(y) present and deliver such Old Notes for transfer on the books of the Company,
and (z) receive all benefits and otherwise exercise all rights and incidents of
ownership with respect to such Old Notes, all in accordance with the terms of
the Exchange Offer. The power of attorney granted to the Exchange Agent in this
paragraph shall be deemed to be irrevocable and coupled with an interest.

         The undersigned hereby represents and warrants that (i) the undersigned
has full power and authority to tender, exchange, assign and transfer the Old
Notes, and (ii) when such Old Notes are accepted for exchange by the Company,
the Company will acquire good and marketable title thereto, free and clear of
all liens, restrictions, charges and encumbrances and not subject to any adverse
claims. The undersigned will, upon receipt, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the exchange, assignment and transfer of the Old Notes
tendered for exchange hereby.

         The undersigned hereby further represents to the Company that (i) the
New Notes to be acquired pursuant to the Exchange Offer will be acquired in the
ordinary course of business of the person acquiring the New Notes, whether or
not such person is the undersigned, (ii) neither the undersigned nor any person
receiving any New Notes directly or indirectly from the undersigned pursuant to
the Exchange Offer (if not a broker-dealer referred to in the last sentence of
this paragraph) is engaging or intends to engage in the distribution of the New
Notes and none of them have any arrangement or understanding with any person to
participate in the distribution of the New Notes, (iii) the undersigned and each
person receiving any New Notes directly or indirectly from the undersigned
pursuant to the Exchange Offer acknowledge and agree that any person
participating in the Exchange Offer for the purpose of distributing the New
Notes (x) must comply with the registration and prospectus delivery requirements
of the Securities Act of 1933, as amended (the "Securities Act"), in connection
with a secondary resale transaction of the New Notes acquired by such person and
(y) cannot rely on the position of the staff of the Securities and Exchange
Commission (the "Commission") set forth in the Exxon Capital Holdings
Corporation no-action letter (available May 13, 1988) or similar letters, (iv)
the undersigned and each person receiving any New Notes directly or indirectly
from the undersigned pursuant to the Exchange Offer understand that a secondary
resale transaction described in clause (iii) above should be covered by an
effective registration statement containing the selling security holder
information required by Item 507 of Regulation S-K of the Commission and (v)
neither the undersigned nor any person receiving any New Notes directly or
indirectly from the undersigned pursuant to the Exchange Offer is an "affiliate"
of the Company, as defined under Rule 405 under the Securities Act. If the
undersigned is a broker-dealer that will receive New Notes for its own account
in exchange for Old Notes that were acquired as a result of market-making or
other trading activities, it acknowledges that it will deliver a prospectus
meeting the requirements of the


                                       6


Securities Act in connection with any resale of such New Notes received in
respect of such Old Notes pursuant to the Exchange Offer; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.

         The undersigned acknowledges that, (i) for purposes of the Exchange
Offer, the Company will be deemed to have accepted for exchange, and to have
exchanged, validly tendered Old Notes, if, as and when the Company gives oral or
written notice thereof to the Exchange Agent and (ii) any Old Notes tendered by
the undersigned and not accepted for exchange will be returned to the
undersigned at the address set forth above unless otherwise indicated in the box
above entitled "Special Delivery Instructions."

         The undersigned acknowledges that the Company's acceptance of Old Notes
validly tendered for exchange pursuant to any one of the procedures described in
the section of the Prospectus entitled "The Exchange Offer" and in the
instructions hereto will constitute a binding agreement among the undersigned
and the Company upon the terms and subject to the conditions of the Exchange
Offer.

         Unless otherwise indicated in the box entitled "Special Issuance
Instructions," please return any Old Notes not tendered for exchange in the
name(s) of the undersigned. Similarly, unless otherwise indicated in the box
entitled "Special Delivery Instructions," please mail any certificates for Old
Notes not tendered or exchanged (and accompanying documents, as appropriate) to
the undersigned at the address shown below the undersigned's signature(s). In
the event that either "Special Issuance Instructions" or "Special Delivery
Instructions" are completed, please issue the certificates representing the New
Notes issued in exchange for the Old Notes accepted for exchange in the name(s)
of, and return any Old Notes not tendered for exchange or not exchanged to, the
person(s) so indicated. The undersigned recognizes that the Company has no
obligation pursuant to the "Special Issuance Instructions" and "Special Delivery
Instructions" to transfer any Old Notes from the name of the holder of Old
Note(s) thereof if the Company does not accept for exchange any of the Old Notes
so tendered for exchange or if such transfer would not be in compliance with any
transfer restrictions applicable to such Old Note(s).

         In order to validly tender Old Notes for exchange, holders of Old Notes
must complete, execute and deliver this Letter of Transmittal.

         Except as stated in the Prospectus, all authority herein conferred or
agreed to be conferred shall survive the death or incapacity of the undersigned,
and any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Except as
otherwise stated in the Prospectus, this tender for exchange of Old Notes is
irrevocable.


                                       7


- --------------------------------------------------------------------------------
                                    SIGN HERE

  ---------------------------------------------------------------------------
                           (SIGNATURE(S) OF OWNER(S))

Date:                      , 2004

         MUST BE SIGNED BY THE REGISTERED HOLDER(S) OF OLD NOTES EXACTLY AS
NAME(S) APPEAR(S) ON CERTIFICATE(S) REPRESENTING THE OLD NOTES OR ON A SECURITY
POSITION LISTING OR BY PERSON(S) AUTHORIZED TO BECOME REGISTERED OLD NOTE
HOLDER(S) BY CERTIFICATES AND DOCUMENTS TRANSMITTED HEREWITH. IF SIGNATURE IS BY
TRUSTEES, EXECUTORS, ADMINISTRATORS, GUARDIANS, ATTORNEYS-IN-FACT, OFFICERS OF
CORPORATIONS OR OTHERS ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE
PROVIDE THE FOLLOWING INFORMATION. (SEE INSTRUCTION 6).

Name(s):
         ----------------------------------------------------------------------

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

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

                                 (PLEASE PRINT)

Capacity (Full title):
                       --------------------------------------------------------

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

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

Address:
         ----------------------------------------------------------------------

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

- -------------------------------------------------------------------------------
                               (INCLUDE ZIP CODE)

Area Code and Telephone No:
                            ---------------------------------------------------

Tax Identification or Social Security Nos:
                                           ------------------------------------
                                           PLEASE COMPLETE SUBSTITUTE FORM W-9

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


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

                            GUARANTEE OF SIGNATURE(S)
         (SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 1)

Authorized Signature:
                     ----------------------------------------------------------

Dated:
      -------------------------------------------------------------------------

Name and Title:
                ---------------------------------------------------------------
                                 (PLEASE PRINT)

Name of Firm:
              -----------------------------------------------------------------

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


                                       8


                                  INSTRUCTIONS

         FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER

         1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by an institution
which is an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended, and is a member of one of
the following recognized Signature Guarantee Programs (an "Eligible
Institution"):

              a. The Securities Transfer Agents Medallion Program (STAMP)

              b. The New York Stock Exchange Medallion Signature Program (MSP)

              c. The Stock Exchange Medallion Program (SEMP)

Signatures on this Letter of Transmittal need not be guaranteed (i) if this
Letter of Transmittal is signed by the registered holder(s) of the Old Notes
tendered herewith and such registered holder(s) have not completed the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (ii) if such Old Notes are
tendered for the account of an Eligible Institution. IN ALL OTHER CASES, ALL
SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.

         2. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed by holders of
Old Notes (i) if certificates are to be forwarded herewith or (ii) if tenders
are to be made pursuant to the procedures for tender by book-entry transfer or
guaranteed delivery set forth in the sections of the Prospectus entitled "The
Exchange Offer--Book Entry Transfer" and "The Exchange Offer--Guaranteed
Delivery Procedures." Certificates for all physically tendered Old Notes or any
confirmation of a book-entry transfer (a "Book-Entry Confirmation"), as well as
a properly completed and duly executed copy of this Letter of Transmittal or
facsimile hereof, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at its address set forth on
the cover of this Letter of Transmittal prior to the Expiration Date. Holders of
Old Notes who elect to tender Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver the Letter of Transmittal, Old
Notes or other required documents to the Exchange Agent prior to the Expiration
Date or (iii) who are unable to complete the procedure for book-entry transfer
on a timely basis, may have such tender effected if: (a) such tender is made by
or through an Eligible Institution, (b) prior to the Expiration Date, the
Exchange Agent has received from such Eligible Institution a properly completed
and duly executed Letter of Transmittal (or a facsimile thereof) and Notice of
Guaranteed Delivery substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery) setting forth the name and
address of the holder of such Old Notes, the certificate number(s) of such Old
Notes and the principal amount of Old Notes tendered for exchange, stating that
tender is being made thereby and guaranteeing that, within three New York Stock
Exchange trading days after the date of execution of the Notice of Guaranteed
Delivery, this Letter of Transmittal (or a manually executed facsimile thereof),
properly completed and duly executed, the certificates representing such Old
Notes (or a Book-Entry Confirmation), in proper form for transfer, and any other
documents required by this Letter of Transmittal, will be deposited by such
Eligible Institution with the Exchange Agent, and (c) a properly completed and
duly executed Letter of Transmittal (or a manually executed facsimile thereof)
with certificates for all tendered Old Notes, or a Book-Entry Confirmation, and
any other documents required by this Letter of Transmittal are received by the
Exchange Agent within three New York Stock Exchange trading days after the date
of execution of the Notice of Guaranteed Delivery.

         THE METHOD OF DELIVERY OF OLD NOTES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDER OF
OLD NOTES. EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. NEITHER THIS LETTER OF TRANSMITTAL NOR ANY OLD NOTES SHOULD BE SENT
TO THE COMPANY.

         No alternative, conditional or contingent tenders will be accepted. All
tendering holders of Old Notes, by execution of this Letter of Transmittal (or
facsimile hereof, if applicable), waive any right to receive notice of the
acceptance of their Old Notes for exchange.

                                       9



         3. INADEQUATE SPACE. If the space provided in the box entitled
"Description of Old Notes" above is inadequate, the certificate numbers and
principal amounts of the Old Notes being tendered should be listed on a separate
signed schedule affixed hereto.

         4. WITHDRAWALS. A tender of Old Notes may be withdrawn at any time
prior to the Expiration Date by delivery of a written or an ATOP electronic
transmission notice of withdrawal to the Exchange Agent at the address set forth
on the cover of this Letter of Transmittal. To be effective, a notice of
withdrawal of Old Notes must (i) specify the name of the person who tendered the
Old Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be
withdrawn (including the certificate number or numbers and aggregate principal
amount of such Old Notes), (iii) be signed by the holder of Old Notes in the
same manner as the original signature on the Letter of Transmittal by which such
Old Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee under the
Indenture register the transfer of such Old Notes into the name of the person
withdrawing the tender, (iv) specify the name in which any such Old Notes are to
be registered, if different from that of the Depositor, and (v) be received by
the Exchange Agent prior to the Expiration Date. Withdrawals of tenders of Old
Notes may not be rescinded, and any Old Notes withdrawn will thereafter be
deemed not validly tendered for purposes of the Exchange Offer, and no New Notes
will be issued with respect thereto unless the Old Notes so withdrawn are
validly retendered. Properly withdrawn Old Notes may be retendered by following
one of the procedures described in the section of the Prospectus entitled "The
Exchange Offer -- Procedures for Tendering" at any time prior to the Expiration
Date.

         5. PARTIAL TENDERS. (Not applicable to holders of Old Notes who tender
Old Notes by book-entry transfer). Tenders of Old Notes will be accepted only in
integral multiples of $1,000 principal amount. If a tender for exchange is to be
made with respect to less than the entire principal amount of any Old Notes,
fill in the principal amount of Old Notes which are tendered for exchange in
column (4) of the box entitled "Description of Old Notes" on page 3, as more
fully described in the footnotes thereto. In case of a partial tender for
exchange, new certificate(s), in fully registered form, for the remainder of the
principal amount of the Old Notes, will be sent to the holders of Old Notes
unless otherwise indicated in the appropriate box on this Letter of Transmittal
as promptly as practicable after the expiration or termination of the Exchange
Offer.

         6. SIGNATURES ON THIS LETTER OF TRANSMITTAL, POWERS OF ATTORNEY AND
ENDORSEMENTS.

              (a) The signature(s) of the holder of Old Notes on this Letter of
         Transmittal must correspond with the name(s) as written on the face of
         the Old Notes without alteration, enlargement or any change whatsoever.

              (b) If tendered Old Notes are owned of record by two or more joint
         owners, all such owners must sign this Letter of Transmittal.

              (c) If any tendered Old Notes are registered in different names on
         several certificates, it will be necessary to complete, sign and submit
         as many separate copies of this Letter of Transmittal and any necessary
         or required documents as there are different registrations.

              (d) When this Letter of Transmittal is signed by the holder of the
         Old Notes listed and transmitted hereby, no endorsements of Old Notes
         or separate powers of attorney are required. If, however, Old Notes not
         tendered or not accepted are to be issued or returned in the name of a
         person other than the holder of Old Notes, then the Old Notes
         transmitted hereby must be endorsed or accompanied by appropriate
         powers of attorney in a form satisfactory to the Company, in either
         case signed exactly as the name(s) of the holder of Old Notes appear(s)
         on the Old Notes. Signatures on such Old Notes or powers of attorney
         must be guaranteed by an Eligible Institution (unless signed by an
         Eligible Institution).

              (e) If this Letter of Transmittal or Old Notes or powers of
         attorney are signed by trustees, executors, administrators, guardians,
         attorneys-in-fact, officers of corporations or others acting in a
         fiduciary or representative capacity, such persons should so indicate
         when signing, and proper evidence satisfactory to the Company of their
         authority so to act must be submitted.

                                       10



              (f) If this Letter of Transmittal is signed by a person other than
         the registered holder of Old Notes listed, the Old Notes must be
         endorsed or accompanied by appropriate powers of attorney, in either
         case signed exactly as the name(s) of the registered holder of Old
         Notes appear(s) on the certificates. Signatures on such Old Notes or
         powers of attorney must be guaranteed by an Eligible Institution
         (unless signed by an Eligible Institution).

         7. TRANSFER TAXES. Except as set forth in this Instruction 7, the
Company will pay all transfer taxes, if any, applicable to the transfer and
exchange of Old Notes pursuant to the Exchange Offer. If issuance of New Notes
is to be made to, or Old Notes not tendered for exchange are to be issued or
returned in the name of, any person other than the registered holder of the Old
Notes tendered, or if a transfer tax is imposed for any reason other than the
exchange of Old Notes pursuant to the Exchange Offer, and satisfactory evidence
of payment of such taxes or exemptions from taxes therefrom is not submitted
with this Letter of Transmittal, the amount of any transfer taxes payable on
account of any such transfer will be imposed on and payable by the tendering
holder of Old Notes prior to the issuance of the New Notes.

         8. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If the New Notes, or if
any Old Notes not tendered for exchange, are to be issued or sent to someone
other than the holder of Old Notes or to an address other than that shown above,
the appropriate boxes on this Letter of Transmittal should be completed. Holders
of Old Notes tendering Old Notes by book-entry transfer may request that Old
Notes not accepted be credited to such account maintained at the Depositary as
such holder of Old Notes may designate.

         9. IRREGULARITIES. All questions as to the form of documents and the
validity, eligibility (including time of receipt), acceptance and withdrawal of
Old Notes will be determined by the Company, in its sole discretion, whose
determination shall be final and binding. The Company reserves the absolute
right to reject any or all tenders for exchange of any particular Old Notes that
are not in proper form, or the acceptance of which may, in the opinion of the
Company (or its counsel), be unlawful. The Company reserves the absolute right
to waive any defect, irregularity or condition of tender for exchange with
regard to any particular Old Notes. The Company's interpretation of the terms
of, and conditions to, the Exchange Offer (including the instructions herein)
will be final and binding. Unless waived, any defects or irregularities in
connection with the Exchange Offer must be cured within such time as the Company
shall determine. Neither the Company, the Exchange Agent nor any other person
shall be under any duty to give notice of any defects or irregularities in Old
Notes tendered for exchange, nor shall any of them incur any liability for
failure to give such notice. A tender of Old Notes will not be deemed to have
been made until all defects and irregularities with respect to such tender have
been cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering holders,
unless otherwise provided in this Letter of Transmittal, as soon as practicable
following the Expiration Date.

         10. WAIVER OF CONDITION. The Company reserves the absolute right to
waive, amend or modify any of the specified conditions described under "The
Exchange Offer -- Extensions, Delays in Acceptance, Termination or Amendment" in
the Prospectus in the case of any Old Notes tendered (except as otherwise
provided in the Prospectus).

         11. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. If a holder of Old
Notes desires to tender Old Notes pursuant to the Exchange Offer, but any of
such Old Notes has been mutilated, lost, stolen or destroyed, such holder of Old
Notes should contact the Exchange Agent at the address set forth on the cover of
this Letter of Transmittal for further instructions.

         12. REQUESTS FOR INFORMATION OR ADDITIONAL COPIES. Requests for
information or for additional copies of the Prospectus and this Letter of
Transmittal may be directed to the Exchange Agent at the address or telephone
number set forth on the cover of this Letter of Transmittal.

         IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF, IF
APPLICABLE) TOGETHER WITH CERTIFICATES, OR CONFIRMATION OF BOOK-ENTRY TRANSFER
OR THE NOTICE OF GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS MUST BE
RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., EASTERN STANDARD TIME, ON THE
EXPIRATION DATE.


                                       11


                            IMPORTANT TAX INFORMATION

         Under current federal income tax law, a holder of Old Notes whose
tendered Old Notes are accepted for exchange may be subject to backup
withholding unless the holder provides the Company (as payor), through the
Exchange Agent, with either (i) such holder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 attached hereto, certifying that the
holder is a U.S. person, that the TIN provided on Substitute Form W-9 is correct
(or that such holder of Old Notes is awaiting a TIN) and that (A) the holder of
Old Notes has not been notified by the Internal Revenue Service that he or she
is subject to backup withholding as a result of a failure to report all interest
or dividends or (B) the Internal Revenue Service has notified the holder of Old
Notes that he or she is no longer subject to backup withholding, or (ii) an
adequate basis for exemption from backup withholding. If such holder of Old
Notes is an individual, the TIN is such holder's social security number. If the
Exchange Agent is not provided with the correct TIN, the holder of Old Notes may
be subject to certain penalties imposed by the Internal Revenue Service.

         Certain holders of Old Notes (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements with respect to interest payments. Exempt holders of Old
Notes should indicate their exempt status on Substitute Form W-9. A foreign
individual may qualify as an exempt recipient by submitting to the Exchange
Agent a properly completed Internal Revenue Service Form W-8BEN, Form W-8ECI or
Form W-8IMY, as applicable, (the terms of which the Exchange Agent will provide
upon request) signed under penalty of perjury, attesting to the holder's exempt
status. See the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 (the "Guidelines") for additional instructions.

         If backup withholding applies, the Company is required to withhold 28%
of any payment made to the holder of Old Notes or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.

         The holder of Old Notes is required to give the Exchange Agent the TIN
(e.g., social security number or employer identification number) of the record
owner of the Old Notes. If the Old Notes are held in more than one name or are
not held in the name of the actual owner, consult the enclosed Guidelines for
additional guidance regarding which number to report.


                                       12



                                                                                            
- ----------------------------------------------------------------------------------------------------------------------------------
                                              PAYER'S NAME: JPMORGAN CHASE BANK
- ----------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE             PART 1 - PLEASE PROVIDE YOUR TIN IN THE BOX AT                                 ----------------------
                       RIGHT AND CERTIFY BY SIGNING AND DATING BELOW                                  Social Security Number
FORM W-9
                                                                                                                or

                                                                                                  ------------------------------
                                                                                                  Employer Identification Number
                       --------------------------------------------------------------------       ------------------------------
                       PART 2 - CERTIFICATION - Under Penalties of Perjury, I certify that:        PART 3 -

DEPARTMENT OF                                                                                      Awaiting TIN              [ ]
THE TREASURY           (1) The number shown on this form is my correct taxpayer
INTERNAL REVENUE           identification number (or I am waiting for a number to be
SERVICE                    issued to me); and

PAYER'S REQUEST        (2) I am not subject to backup withholding because I am exempt
FOR TAXPAYER from          backup withholding, I have not been notified by the
IDENTIFICATION             Internal Revenue Service (the "IRS") that I am subject to
NO. ("TIN")                backup withholding as a result of a failure to report all interest
                           or dividends, or the IRS has notified me that I am no longer
                           subject to backup withholding.

                       (3)  I am a U.S. person.
- ----------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE INSTRUCTIONS -

You must cross out item (2) in Part 2 above if you have been notified by the IRS that you are subject to backup withholding
because you have failed to report all interest or dividends on your tax return. However, if after being notified by the IRS that
you are subject to backup withholding you received another notification from the IRS stating that you are no longer subject to
backup withholding, do not cross out item (2).

SIGNATURE                                                                      DATE:
          --------------------------------------------------------------             ---------------------------------------
NAME
     -----------------------------------------------------------------------------------------------------------------------
ADDRESS
        --------------------------------------------------------------------------------------------------------------------
CITY                                     STATE                                     ZIP CODE
     -------------------------------           ---------------------------------            --------------------------------

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

NOTE:  FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
       OF 28% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE OFFER.
       PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
       IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

       YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECK THE BOX IN
       PART 3 OF SUBSTITUTE FORM W-9.


- ----------------------------------------------------------------------------------------------------------------------------------
                                                PAYER'S NAME: JPMORGAN CHASE BANK
- ----------------------------------------------------------------------------------------------------------------------------------
                                     CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

       I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have
mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service
Center or Social Security Administration Office or (b) I intend to mail or deliver such an application in the near future. I
understand that if I do not provide a taxpayer identification number with sixty (60) days, 28% of all reportable payments
made to me thereafter will be withheld until I provide such a number.

Signature:                                                                       Date:
          ----------------------------------------------------------------------       -------------------------------------------

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



         FOR ANY QUESTIONS REGARDING THIS LETTER OF TRANSMITTAL OR FOR ANY
ADDITIONAL INFORMATION, YOU MAY CONTACT THE EXCHANGE AGENT BY TELEPHONE AT (214)
468-6464 OR BY FACSIMILE AT (214) 468-6494.


                                       13

EX-99.2

                                                                    EXHIBIT 99.2
                          NOTICE OF GUARANTEED DELIVERY
                                 WITH RESPECT TO
                          5.625% SENIOR NOTES DUE 2013
                             CUSIP NOS. 201723 AE 3
                                       OF
                            COMMERCIAL METALS COMPANY


         This form must be used by a holder of 5.625% Senior Notes due 2013 (the
"Old Notes") of Commercial Metals Company, a Delaware corporation (the
"Company"), who wishes to tender Old Notes to the Exchange Agent in exchange for
5.625% Senior Notes due 2013 (the "New Notes"), which have been registered under
the Securities Act of 1933, as amended, pursuant to the guaranteed delivery
procedures described in the "The Exchange Offer -- Guaranteed Delivery
Procedures" of the Prospectus, dated ____________, 2004 (the "Prospectus"), and
in Instruction 2 to the related Letter of Transmittal. Any holder who wishes to
tender Old Notes pursuant to such guaranteed delivery procedures must ensure
that the Exchange Agent receives this Notice of Guaranteed Delivery prior to the
Expiration Date of the Exchange Offer. Capitalized terms not defined herein have
the meanings ascribed to them in the Prospectus or the Letter of Transmittal.


- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN
STANDARD TIME, ON _________, 2004 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE
OFFER IS EXTENDED, IN WHICH CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE
LATEST TIME AND DATE TO WHICH THE EXCHANGE OFFER IS EXTENDED. TENDERS MAY BE
WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
- --------------------------------------------------------------------------------

                             To: JPMorgan Chase Bank
                             (the "Exchange Agent")

     By Registered or Certified Mail,                       By Regular Mail
        or Overnight Delivery After                     (REGISTERED OR CERTIFIED
     4:30 p.m. on the Expiration Date:                     MAIL RECOMMENDED)
            JPMorgan Chase Bank                           JPMorgan Chase Bank
              ITS Bond Events                               ITS Bond Events
       2001 Bryan Street, 9th Floor                          P. O. Box 2320
             Dallas, TX 75201                               Dallas, TX 75221
          Attention: Frank Ivins

                             By Facsimile Transmission Number
                               (eligible institutions only):
                                      (214) 468-6494
                                  Attention: Frank Ivins

                                   Confirm by Telephone:
                                      (214) 468-6464

DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS SET FORTH IN THIS
NOTICE OF GUARANTEED DELIVERY AND IN THE LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS NOTICE OF GUARANTEED DELIVERY AND THE LETTER OF
TRANSMITTAL ARE COMPLETED.

         This form is not to be used to guarantee signatures. If a signature on
the Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.





Ladies and Gentlemen:

         The undersigned hereby tenders to the Company, upon the terms and
subject to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Notes set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus and in Instruction 2 of the Letter of Transmittal.

         The undersigned understands that tenders of Old Notes will be accepted
only in authorized denominations. The undersigned understands that tenders of
Old Notes pursuant to the Exchange Offer may not be withdrawn after the
Expiration Date. Tenders of Old Notes may be withdrawn at any time prior to the
Expiration Date or if the Exchange Offer is terminated or as otherwise provided
in the Prospectus.

         All authority herein conferred or agreed to be conferred by this Notice
of Guaranteed Delivery shall survive the death or incapacity of the undersigned
and every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.

         The undersigned hereby tenders the Old Notes listed below:




- -----------------------------------------------------------------------------------------------------
  CERTIFICATE NUMBER(S) (IF KNOWN) OF OLD NOTES OR
IF OLD NOTES WILL BE DELIVERED BY BOOK-ENTRY TRANSFER     AGGREGATE PRINCIPAL     AGGREGATE PRINCIPAL
 AT THE DEPOSITORY TRUST COMPANY, INSERT ACCOUNT NO.      AMOUNT REPRESENTED       AMOUNT TENDERED
- -----------------------------------------------------     -------------------     -------------------
                                                                            
- -----------------------------------------------------     -------------------     -------------------

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

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



                                             
- ------------------------------------------------------------------------------------------------
                                 PLEASE SIGN AND COMPLETE
- ------------------------------------------------------------------------------------------------
Signatures of Registered Holder(s) or
Authorized Signatory:                           Date:                            , 2004
                      ---------------------           ---------------------------

- -------------------------------------------     Address:
                                                         --------------------------------------

Name of Registered Holder(s):
                             --------------     -----------------------------------------------

                                                Area Code and Telephone No.:
- -------------------------------------------                                  ------------------

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



                                       2



- --------------------------------------------------------------------------------
         This Notice of Guaranteed Delivery must be signed by the holder(s)
exactly as the name(s) appear(s) on certificates for Old Notes or on a security
position listing as the owner of Old Notes, or by person(s) authorized to become
holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.

                    Please print name(s) and address(es)

Name(s):
         -----------------------------------------------------------------------

- --------------------------------------------------------------------------------
Capacity (Full Title):
                       ---------------------------------------------------------
Address(es):
             -------------------------------------------------------------------

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

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


- --------------------------------------------------------------------------------
                                    GUARANTEE
                    (NOT TO BE USED FOR SIGNATURE GUARANTEE)

         The undersigned, a firm which is a member of a recognized signature
guarantee medallion program and is an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, hereby guarantees deposit with the Exchange Agent of the Letter of
Transmittal (or facsimile thereof), together with the Old Notes tendered hereby
in proper form for transfer (or confirmation of the book-entry transfer of such
Old Notes into the Exchange Agent's account at the Depository Trust Company
pursuant to the procedures described in the Prospectus under the caption "The
Exchange Offer -- Guaranteed Delivery Procedures" and in the Letter of
Transmittal) and any other required documents, all by 5:00 p.m., eastern
standard time, on the third New York Stock Exchange trading day following the
date of execution of this Notice of Guaranteed Delivery.

Name of Firm:
             ------------------------     --------------------------------------
                                          Authorized Signature
Address:
         ----------------------------
                                          Name:
- -------------------------------------           --------------------------------
Area Code and Telephone No.:              Title:
                            ---------            -------------------------------
                                          Date:                           , 2004
                                                  ------------------------

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

            DO NOT SEND OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF
             OLD NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED
                     BY, AN EXECUTED LETTER OF TRANSMITTAL.


                                       3



                 INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY

         1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed
and duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by the
Exchange Agent at its address set forth herein prior to the Expiration Date. The
method of delivery of this Notice of Guaranteed Delivery and any other required
documents to the Exchange Agent is at the election and sole risk of the holder,
and the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. As an alternative to delivery by mail, the
holders may wish to consider using an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. For a
description of the guaranteed delivery procedures, see Instruction 2 of the
Letter of Transmittal.

       2. SIGNATURES ON THIS NOTICE OF GUARANTEED DELIVERY. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Old Notes
referred to herein, the signature must correspond with the name(s) written on
the face of the Old Notes without alteration, enlargement, or any change
whatsoever. If this Notice of Guaranteed Delivery is signed by a participant of
the Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of Old Notes, the signature must correspond with the name
shown on the security position listing as the owner of the Old Notes.

       If this Notice of Guaranteed Delivery is signed by a person other than
the registered holder(s) of any Old Notes listed or a participant of the
Book-Entry Transfer Facility, this Notice of Guaranteed Delivery must be
accompanied by appropriate bond powers, signed as the name of the registered
holder(s) appears on the Old Notes or signed as the name of the participant
shown on the Book-Entry Transfer Facility's security position listing.

       If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and submit with the Notice of Guaranteed Delivery evidence
satisfactory to the Company and the Guarantor of such person's authority to so
act.

       3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.


                                       4

EX-99.3

                                                                    EXHIBIT 99.3

                            COMMERCIAL METALS COMPANY
                             OFFER TO EXCHANGE UP TO
                    $200,000,000 5.625% SENIOR NOTES DUE 2013
                                       FOR
                    $200,000,000 5.625% SENIOR NOTES DUE 2013
           THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933

To Our Clients:

         We are enclosing herewith (i) a Prospectus dated ________, 2004 of
Commercial Metals Company (the "Company"), (ii) a related Letter of Transmittal
(which together constitute the "Exchange Offer) relating to the offer by the
Company to exchange up to $200,000,000 aggregate principal amount of its 5.625%
Senior Notes due 2013 (the "New Notes"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), for $200,000,000
aggregate principal amount of its outstanding 5.625% Senior Notes due 2013 (the
"Old Notes"), upon the terms and subject to the conditions set forth in the
Exchange Offer and (iii) a Letter of Instruction to Registered Holder from
Beneficial Owner (the "Instruction Letter").

         PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., EASTERN
STANDARD TIME, ON ________, 2004, UNLESS EXTENDED BY THE COMPANY IN ITS SOLE
DISCRETION. THE EXCHANGE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF OLD
NOTES BEING TENDERED.

         We are the holder of record of Old Notes for your account. A tender of
such Old Notes can be made only by us as the record holder pursuant to your
instructions. The Letter of Transmittal is furnished to you for your information
only and cannot be used by you to tender Old Notes held by us for your account.

         We request instructions as to whether you wish to tender any or all of
the Old Notes held by us for your account pursuant to the terms and conditions
of the Exchange Offer. We also request that you confirm that we may make on your
behalf the representations and warranties contained in the Letter of
Transmittal. In this regard, please complete the enclosed Instruction Letter and
return it to us as soon as practicable.

         Pursuant to the Letter of Transmittal, each holder of Old Notes (a
"Holder") will represent to the Company that (i) the New Notes to be acquired
pursuant to the Exchange Offer will be acquired in the ordinary course of
business of the person acquiring the New Notes, whether or not such person is
the Holder, (ii) neither the Holder nor any person receiving any New Notes
directly or indirectly from the Holder pursuant to the Exchange Offer (if not a
broker-dealer referred to in the last sentence of this paragraph) is engaging or
intends to engage in the distribution of the New Notes and none of them have any
arrangement or understanding with any person to participate in the distribution
of the New Notes, (iii) the Holder and each person receiving any New Notes
directly or indirectly from the Holder pursuant to the Exchange Offer
acknowledge and agree that any person participating in the Exchange Offer for
the purpose of distributing the New Notes (x) must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction of the New Notes acquired by such person and (y)
cannot rely on the position of the staff of the Securities and Exchange
Commission (the "Commission") set forth in the Exxon Capital Holdings
Corporation no-action letter (available May 13, 1988) or similar letters, (iv)
the Holder and each person receiving any New Notes directly or indirectly from
the Holder pursuant to the Exchange Offer understand that a secondary resale
transaction described in clause (iii) above should be covered by an effective
registration statement containing the selling security holder information
required by Item 507 of Regulation S-K of the Commission and (v) neither the
Holder nor any person receiving any New Notes directly or indirectly from the
Holder pursuant to the Exchange Offer is an "affiliate" of the Company, as
defined under Rule 405 under the Securities Act. If the Holder is a
broker-dealer that will receive New Notes for its own account in exchange for
Old Notes that were acquired as a result of market-making or other trading
activities, it acknowledges that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Notes received in respect of such Old Notes pursuant to the Exchange Offer;
however, by so acknowledging and by delivering a prospectus, the Holder will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.

                                               Very truly yours,

EX-99.4

                                                                    EXHIBIT 99.4

                            COMMERCIAL METALS COMPANY
                             OFFER TO EXCHANGE UP TO
                    $200,000,000 5.625% SENIOR NOTES DUE 2013
                                       FOR
                    $200,000,000 5.625% SENIOR NOTES DUE 2013
           THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933

To Registered Holders:

     We are enclosing herewith the material listed below relating to the offer
(the "Exchange Offer") by Commercial Metals Company (the "Company") to exchange
up to $200,000,000 aggregate principal amount of its 5.625% Senior Notes due
2013 (the "New Notes"), which have been registered under the Securities Act of
1933, as amended (the "Securities Act"), for $200,000,000 aggregate principal
amount of its outstanding 5.625% Senior Notes due 2013 (the "Old Notes"), upon
the terms and subject to the conditions set forth in the Prospectus dated
__________, 2004 and the related Letter of Transmittal.

     Enclosed herewith are copies of the following documents:

         1. Prospectus dated _________, 2004;

         2. Letter of Transmittal;

         3. Notice of Guaranteed Delivery;

         4. Instruction to Registered Holder from Beneficial Owner; and

         5. Letter to Clients, which may be sent to your clients for whose
     account you hold Old Notes in your name or in the name of your nominee, to
     accompany the instruction form referred to above, for obtaining such
     client's instruction with regard to the Exchange Offer.

         WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE
EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME, ON
____________, 2004 UNLESS EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION.

     The Exchange Offer is not conditioned upon any minimum number of Old Notes
being tendered.

     Pursuant to the Letter of Transmittal, each holder of Old Notes (a
"Holder") will represent to the Company that (i) the New Notes to be acquired
pursuant to the Exchange Offer will be acquired in the ordinary course of
business of the person acquiring the New Notes, whether or not such person is
the Holder, (ii) neither the Holder nor any person receiving any New Notes
directly or indirectly from the Holder pursuant to the Exchange Offer (if not a
broker-dealer referred to in the last sentence of this paragraph) is engaging or
intends to engage in the distribution of the New Notes and none of them have any
arrangement or understanding with any person to participate in the distribution
of the New Notes, (iii) the Holder and each person receiving any New Notes
directly or indirectly from the Holder pursuant to the Exchange Offer
acknowledge and agree that any person participating in the Exchange Offer for
the purpose of distributing the New Notes (x) must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction of the New Notes acquired by such person and (y)
cannot rely on the position of the staff of the Securities and Exchange
Commission (the "Commission") set forth in the Exxon Capital Holdings
Corporation no-action letter (available May 13, 1988) or similar letters, (iv)
the Holder and each person receiving any New Notes directly or indirectly from
the Holder pursuant to the Exchange Offer understand that a secondary resale
transaction described in clause (iii) above should be covered by an effective
registration statement containing the selling security holder information
required by Item 507 of Regulation S-K of the Commission and (v) neither the
Holder nor any person receiving any New Notes directly or indirectly from the
Holder pursuant to the Exchange Offer is an "affiliate" of the Company, as
defined under Rule 405 under the Securities Act. If the Holder is a
broker-dealer that will receive New Notes for its own



account in exchange for Old Notes that were acquired as a result of
market-making or other trading activities, it acknowledges that it will deliver
a prospectus meeting the requirements of the Securities Act in connection with
any resale of such New Notes received in respect of such Old Notes pursuant to
the Exchange Offer; however, by so acknowledging and by delivering a prospectus,
the Holder will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.

      The enclosed Instruction to Registered Holder from Beneficial Owner
contains an authorization by beneficial owner of Old Notes held by you to make
the foregoing representations and warranties on behalf of such beneficial owner.

      The Company will not pay any fee or commissions to any broker or dealer or
to any other persons (other than the exchange agent for the Exchange Offer) in
connection with the solicitation of tenders of Old Notes pursuant to the
Exchange Offer. The Company will pay all transfer taxes, if any, applicable to
the exchange of Old Notes pursuant to the Exchange Offer, on the transfer of Old
Notes to it, except as otherwise provided in Instruction 7 of the enclosed
Letter of Transmittal.

      Any inquiries you may have with respect to the Exchange Offer may be
addressed to, and additional copies of the enclosed materials may be obtained
from, the Exchange Agent at:

                               JPMorgan Chase Bank
                                 ITS Bond Events
                          2001 Bryan Street, 9th Floor
                                Dallas, TX 75201
                             Attention: Frank Ivins
                          By Facsimile: (214) 468-6494
                          By Telephone: (214) 468-6464

                                               Very truly yours,



                                               COMMERCIAL METALS COMPANY


NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE
YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF
EITHER OF THEM IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED HEREIN.

EX-99.5

                                                                    EXHIBIT 99.5

                        INSTRUCTION TO REGISTERED HOLDER
                              FROM BENEFICIAL OWNER
                                       OF
                          5.625% SENIOR NOTES DUE 2013
                                       OF
                            COMMERCIAL METALS COMPANY


To Registered Holder:

     The undersigned hereby acknowledges receipt of the Prospectus dated
________, 2004 (the "Prospectus") of Commercial Metals Company (the "Company"),
and accompanying Letter of Transmittal (the "Letter of Transmittal"), which,
together with the Prospectus, constitute the Company's offer (the "Exchange
Offer") to exchange $1,000 principal amount of its 5.625% Senior Notes due 2013
(the "New Notes"), which have been registered under the Securities Act of 1933,
as amended (the "Securities Act"), for each $1,000 principal amount of its
outstanding 5.625% Senior Notes due 2013 (the "Old Notes"). Capitalized terms
used herein but not defined herein have the meanings ascribed to them in the
Prospectus.

     This will instruct you, the registered holder, as to the action to be taken
by you relating to the Exchange Offer with respect to the Old Notes held by you
for the account of the undersigned.

     The aggregate face amount of the Old Notes held by you for the account of
the undersigned is (fill in amount): $___________

     With respect to the Exchange Offer, the undersigned hereby instructs you
(check one of the following boxes):

     [ ] To TENDER the following Old Notes held by you for the account of the
         undersigned (insert principal amount of Old Notes to be tendered (if
         any)):

     $___________ of Old Notes.*

                                       or

     [ ] NOT to TENDER any Old Notes held by you for the account of the
         undersigned.

     *   New Notes and the untendered portion of Old Notes must be in minimum
         denominations of integral multiples of $1,000.

     If the undersigned instructs you to tender Old Notes held by you for the
account of the undersigned, it is understood that you are authorized to make on
behalf of the undersigned (and the undersigned, by its signature below, hereby
makes to you), the representations and warranties contained in the Letter of
Transmittal that are to be made with respect to the undersigned as a beneficial
owner, including but not limited to the representations that (i) the New Notes
to be acquired pursuant to the Exchange Offer will be acquired in the ordinary
course of business of the person acquiring the New Notes, whether or not such
person is the undersigned, (ii) neither the undersigned nor any person receiving
any New Notes directly or indirectly from the undersigned pursuant to the
Exchange Offer (if not a broker-dealer referred to in the last sentence of this
paragraph) is engaging or intends to engage in the distribution of the New Notes
and none of them have any arrangement or understanding with any person to
participate in the distribution of the New Notes, (iii) the undersigned and each
person receiving any New Notes directly or indirectly from the undersigned
pursuant to the Exchange Offer acknowledge and agree that any person
participating in the Exchange Offer for the purpose



of distributing the New Notes (x) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction of the New Notes acquired by such person and (y)
cannot rely on the position of the staff of the Securities and Exchange
Commission (the "Commission") set forth in the Exxon Capital Holdings
Corporation no-action letter (available May 13, 1988) or similar letters, (iv)
the undersigned and each person receiving any New Notes directly or indirectly
from the undersigned pursuant to the Exchange Offer understand that a secondary
resale transaction described in clause (iii) above should be covered by an
effective registration statement containing the selling security holder
information required by Item 507 of Regulation S-K of the Commission and (v)
neither the undersigned nor any person receiving any New Notes directly or
indirectly from the undersigned pursuant to the Exchange Offer is an "affiliate"
of the Company, as defined under Rule 405 under the Securities Act. If the
undersigned is a broker-dealer that will receive New Notes for its own account
in exchange for Old Notes that were acquired as a result of market-making or
other trading activities, it acknowledges that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such New Notes received in respect of such Old Notes pursuant to the Exchange
Offer; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.


                                    SIGN HERE

Name of beneficial owner(s) (please print)
                                           -------------------------------------
Signature(s):
              ------------------------------------------------------------------
Address:
         -----------------------------------------------------------------------
Telephone Number:
                  --------------------------------------------------------------
Taxpayer identification or Social Security Number:
                                                   -----------------------------
Date:
     ---------------------------------------------------------------------------