10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-4197

United States Lime & Minerals, Inc.

(Exact name of Registrant as specified in its charter)

Texas	75-0789226
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

13800 Montfort Drive, Suite 330, Dallas, Texas	75240
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (972) 991-8400

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of Each Class Name of Each Exchange on
Which Registered

None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

Common Stock, $0.10 par value

     Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes  o No  þ

     Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Exchange Act.

Yes  o No  þ

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

Yes  þ No  o

     Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment of this Form 10-K.  o

     Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

                     Large Accelerated Filer  o            Accelerated Filer  o            Non-accelerated Filer  þ

     Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o No  þ

     The aggregate market value of Common Stock held by non-affiliates computed as of the last business day of the Registrant’s quarter ended June 30, 2005: $28,047,365.

     Number of shares of Common Stock outstanding as of March 13, 2006: 6,143,070.

DOCUMENTS INCORPORATED BY REFERENCE

     Part III incorporates information by reference from the Registrant’s definitive Proxy Statement to be filed for its 2006 Annual Meeting of Shareholders. Part IV incorporates certain exhibits by reference from the Registrant’s previous filings.

TABLE OF CONTENTS

	PAGE
PART I		1
ITEM 1. BUSINESS		1
General		1
Business and Products		1
Product Sales		1
Order Backlog		1
Seasonality		1
Limestone Reserves		2
Mining		2
Plants and Facilities		3
Employees		3
Competition		3
Impact of Environmental Laws and Liabilities		4
ITEM 1A. RISK FACTORS		5
ITEM 1B. UNRESOLVED STAFF COMMENTS		6
ITEM 2. PROPERTIES		6
ITEM 3. LEGAL PROCEEDINGS		6
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		6
PART II		6
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES		6
ITEM 6. SELECTED FINANCIAL DATA		7
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS		7
OVERVIEW		7
RESTATEMENT OF REVENUES AND COST OF REVENUES		9
CRITICAL ACCOUNTING POLICIES		9
RESULTS OF OPERATIONS		10
FINANCIAL CONDITION		11
NEW ACCOUNTING PRONOUNCEMENTS		16
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		17
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA		18
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE		40

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	PAGE
ITEM 9A. CONTROLS AND PROCEDURES		17
ITEM 9B. OTHER INFORMATION		40
PART III		40
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT		40
ITEM 11. EXECUTIVE COMPENSATION		40
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS		41
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		41
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES		41
PART IV		41
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES		41
SIGNATURES		45
Stock Purchase Agreement
Subsidiaries
Consent of Independent Registered Public Accounting Firm
Consent of Independent Registered Public Accounting Firm
Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer
Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer
Section 1350 Certification by Chief Executive Officer
Section 1350 Certification by Chief Financial Officer

iii

PART I

ITEM 1. BUSINESS.

     General. The business of United States Lime & Minerals, Inc. (the “Company,” the “Registrant” OR “We”), which was incorporated in 1950, is the production and sale of lime and limestone products. The Company extracts high-quality limestone from its quarries and processes it for sale as pulverized limestone, quicklime, hydrated lime and lime slurry. These operations were conducted during 2005 by five wholly-owned subsidiaries of the Company: Arkansas Lime Company, Colorado Lime Company, Texas Lime Company, U.S. Lime Company – Houston and U.S. Lime Company - Shreveport. On December 28, 2005, the Company acquired U.S. Lime Company – St. Clair, which has lime and limestone operations in Oklahoma.

     The Company’s principal corporate office is located at 13800 Montfort Drive, Suite 330, Dallas, Texas 75240. The Company’s telephone number is (972) 991-8400, and its internet address is www.uslm.com. The Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge on or through the Company’s website as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the Securities and Exchange Commission.

     Business and Products. The Company extracts high-quality limestone from its open-pit and underground quarries and then processes it for sale as pulverized limestone, quicklime, hydrated lime and lime slurry. Pulverized limestone (also referred to as ground calcium carbonate) is a dried product ground to granular and finer sizes. Quicklime (calcium oxide) is produced by heating limestone to very high temperatures in kilns in a process called calcination. Hydrated lime (calcium hydroxide) is produced by reacting quicklime with water in a controlled process. Lime slurry (milk of lime) is a suspended solution of calcium hydroxide produced by mixing quicklime with water in a lime slaker.

     Pulverized limestone is used primarily in the production of construction materials such as roofing shingles and asphalt paving, as an additive to agriculture feeds, in the production of glass, as a soil enhancement and for mine safety dust in coal mining operations. Quicklime is used primarily in metal processing, the flue gas desulphurization process for utilities, soil stabilization for highway and building construction, the manufacturing of paper products and in sanitation and water treatment systems. Hydrated lime is used primarily in municipal sanitation and water treatment, in soil stabilization for highway and building construction, in the production of chemicals and in the production of construction materials such as stucco, plaster and mortar. Lime slurry is used primarily in soil stabilization for highway and building construction.

     Product Sales. In 2005, the Company sold most of its products in the states of Arkansas, Colorado, Indiana, Kansas, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, Pennsylvania, Tennessee, Texas and West Virginia. Sales are made primarily by the Company’s nine sales employees who call on potential customers and solicit orders which are generally made on a purchase-order basis. The Company also receives orders in response to bids that it prepares and submits to potential customers.

     Principal customers for the Company’s lime and limestone products are highway, street and parking lot contractors, steel producers, municipal sanitation and water treatment facilities, paper manufacturers, chemical producers, roofing shingle manufacturers, poultry and cattle feed producers and glass manufacturers. During 2005, the strongest demand for the Company’s lime and limestone products was from highway, street and parking lot contractors, steel producers and roofing shingle manufacturers.

     Approximately 675 customers accounted for the Company’s sales of lime and limestone products during 2005. No single customer accounted for more than 10% of such sales. The Company is generally not subject to significant customer risks as its customers are considerably diversified as to geographic location and industrial concentration. However, given the nature of the lime and limestone industry, the Company’s profits are very sensitive to changes in sales volume.

     Lime and limestone products are transported by truck and rail to customers generally within a radius of 400 miles of each of the Company’s processing plants. All of the Company’s sales are made within the United States.

     Order Backlog. The Company does not believe that backlog information accurately reflects anticipated annual revenues or profitability from year to year.

     Seasonality. The Company’s sales have historically reflected seasonal trends, with the largest percentage of total annual shipments and revenues being realized in the second and third quarters. Lower seasonal demand normally results in reduced shipments and revenues in the first and fourth quarters. Inclement weather conditions

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generally have a negative impact on the demand for lime and limestone products supplied to construction related customers, as well as on the Company’s open-pit mining operations.

     Limestone Reserves. The Company has two subsidiaries that extract limestone from open-pit quarries: Texas Lime Company (“Texas Lime”), which is located 14 miles from Cleburne, Texas, and Arkansas Lime Company (“Arkansas Lime”), which is located near Batesville, Arkansas. U.S. Lime Company – St. Clair (“St. Clair”), acquired by the Company on December 28, 2005, extracts limestone from an underground quarry located near Marble City, Oklahoma. Colorado Lime Company (“Colorado Lime”) owns limestone resources at Monarch Pass located 15 miles west of Salida, Colorado. No mining took place on the Colorado property in 2005. Existing crushed stone stockpiles on the property were used to provide feedstock to the plant in Salida. Access to all locations is provided by paved roads.

     Texas Lime operates upon a tract of land containing approximately 470 acres, including the Cleburne Quarry, and owns approximately 2,700 acres adjacent to the Quarry. Both the Quarry and the adjacent land contain known high-quality limestone reserves in a bed averaging 28 feet in thickness, with an overburden that ranges from 0 to 50 feet. Texas Lime also has mineral interests in approximately 560 acres of land adjacent to the northwest boundary of its property. The calculated reserves, as of December 31, 2005, were approximately 33,000,000 tons of proven reserves plus approximately 91,000,000 tons of probable reserves. Assuming the current level of production and recovery rate is maintained, the Company estimates that these reserves are sufficient to sustain operations for approximately 75 years.

     Arkansas Lime operates the Batesville Quarry and has hydrated lime and limestone production facilities on a second site linked to the quarry by its own standard-gauge railroad. The active quarry operations cover approximately 725 acres of land containing a known deposit of high-quality limestone. The average thickness of the high-quality limestone deposit is approximately 70 feet, with an average overburden thickness of 35 feet. Arkansas Lime also owns approximately 325 additional acres containing high-quality limestone deposits adjacent to the present quarry, but separated from it by a public highway. The average thickness of this second high-quality limestone deposit is approximately 55 feet, with an average overburden of 20 feet. The calculated reserves, as of December 31, 2005, were approximately 43,000,000 tons of proven reserves. During 2005, the Company also acquired approximately 2,500 acres of land in nearby Izard County, Arkansas. The calculated reserves as of December 31, 2005, were approximately 150,000,000 tons of proven reserves on these 2,500 acres. Assuming the current level of production and recovery rate is maintained, and the additional production from a third kiln currently being constructed, the Company estimates that reserves are sufficient to sustain operations for more than 100 years.

     St. Clair operates an underground quarry located on approximately 700 acres it owns containing high-quality limestone deposits. It also has the right to mine the high-quality limestone contained in approximately 1,500 adjacent acres pursuant to long-term leases. The calculated probable reserves, as of December 31, 2005 were approximately 28,000,000 tons on both the owned and leased land. Assuming the current level of production and recovery rate is maintained, the Company estimates that these reserves are sufficient to sustain operations for approximately 25 years.

     Colorado Lime acquired the Monarch Pass Quarry in November 1995 and has not carried out any mining on the property. A review of the potential limestone resources has been completed by independent geologists; however, the Company has not initiated a drilling program. Consequently, it is not possible to identify and categorize reserves. The Monarch Pass Quarry, which had been operated for many years until its closure in the early 1990s, contains a mixture of limestone types, including high-quality calcium limestone and dolomite. The Company expects to continue to utilize remaining crushed stone stockpiles on the property to supply its processing plant in nearby Salida and its Delta, Colorado facility acquired in an asset purchase in September 2005.

     Mining. The Company extracts limestone by the open-pit method at its Texas and Arkansas quarries. Monarch Pass is also an open-pit quarry, but is not being mined at this time. The open-pit method consists of removing any overburden comprising soil, trees and other substances, including inferior limestone, and then extracting the exposed high-quality limestone. Open-pit mining is generally less expensive than underground mining. The principal disadvantage of the open-pit method is that operations are subject to inclement weather. The limestone is extracted by drilling and blasting, utilizing standard mining equipment. At its Oklahoma underground quarry, the Company mines limestone using the room and pillar mining method with front-end loaders and haul trucks.

     After extraction, limestone is crushed, screened and ground in the case of pulverized limestone, or further processed in kilns and hydrators in the case of quicklime and hydrated lime, before shipment. The Company has no knowledge of any recent changes in the physical quarrying conditions on any of its properties which have materially affected its mining operations, and no such changes are anticipated.

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     Plants and Facilities. The Company produces lime and/or limestone products at four plants, one slurry and one terminal facility:

     The Cleburne, Texas plant has an annual capacity of approximately 470,000 tons of quicklime from rotary kilns. The plant also has pulverized limestone equipment which, depending on the product mix, has the capacity to produce approximately 1,000,000 tons of pulverized limestone annually.

     The Arkansas plant is situated at the Batesville Quarry. The plant’s limestone and hydrating facilities are situated on a tract of 290 acres located approximately two miles from the Batesville Quarry, to which it is connected by a Company-owned, standard-gauge railroad. Utilizing two rotary kilns, including a new preheater rotary kiln completed in the first quarter 2004, this plant has an annual capacity of approximately 420,000 tons of quicklime. The plant also has two grinding systems which, depending on the product mix, have the capacity to produce 400,000 tons of pulverized limestone annually.

     In 2005, the Company began construction of a third preheater kiln at the its Arkansas facilities. The third kiln will be substantially identical to the existing two kilns and will increase quicklime production capacity at the Arkansas facilities by approximately 50%. The project, which will also include certain crushing and stone handling enhancements, and additional finished goods silos and load outs, is currently expected to be complete in summer 2006 and cost approximately $26,000,000.

     The St. Clair Marble City, Oklahoma plant has an annual capacity of approximately 180,000 tons of quicklime from two rotary kilns. The plant also has pulverized limestone equipment which has the capacity to produce approximately 150,000 tons of pulverized limestone annually.

     The Company maintains lime hydrating equipment and limestone drying and pulverizing equipment at the Texas, Arkansas and Oklahoma plants. Storage facilities for lime and pulverized limestone products at each plant consist primarily of cylindrical tanks, which are considered by the Company to be adequate to protect its lime and limestone products and to provide an available supply for customers’ needs at the existing volume of shipments. Equipment is maintained at each plant to load trucks, and at the Arkansas and Oklahoma plants to load railroad cars.

     Colorado Lime Company operates a limestone drying, grinding and bagging facility, with an annual capacity of approximately 50,000 tons, on eight acres of land in Salida, Colorado. The property is leased from the Union Pacific Railroad for a five-year term, ending June 2009, with a renewal option for an additional five years. This plant’s facilities also include a small rotary lime kiln which is permitted for operation, but is presently dormant. A mobile stone crushing and screening plant is also situated at the Monarch Pass Quarry to produce agricultural grade limestone, with an annual capacity of up to 40,000 tons. In September 2005, Colorado Lime Company acquired a new limestone grinding and bagging facility with an annual capacity of approximately 125,000 tons, located on approximately three and one-half acres of land in Delta, Colorado, to process mine safety dust used in coal mining operations.

     U.S. Lime Company-Houston commenced operations in March 2004 and services the Greater Houston area construction market. This facility uses quicklime to produce lime slurry.

     U.S. Lime Company-Shreveport operates from a distribution terminal in Shreveport, Louisiana, which is connected to a railroad, to provide lime storage, hydrating and distribution capacity to service markets in Louisiana and East Texas. This terminal began operations in December 2004.

     The Company believes that its processing plants are adequately maintained and insured. Both the Texas and Arkansas plants have recently been modernized and expanded. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition.”

     Employees. The Company employed, at December 31, 2005, 292 persons, 32 of whom are engaged in administrative and management activities, and nine of whom are engaged in sales activities. Of the Company’s 251 production employees, 121 are covered by two collective bargaining agreements. The agreement for the Arkansas facility expires in January 2008, and the agreement for the Texas facility expires in November 2008.

     Competition. The lime industry is highly regionalized and competitive, with quality, price, ability to meet customer demand, proximity to customers, personal relationships and timeliness of deliveries being the prime competitive factors. The Company’s competitors are predominantly private companies.

     The lime industry is characterized by high barriers to entry, including: the scarcity of high-quality limestone deposits on which the required zoning and permits for extraction can be obtained; the need for lime plants to be located close to markets and railroad networks to enable cost-effective production and distribution; clean air and anti-pollution legislation which has made it more difficult to obtain permitting for new sources of

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emissions, such as lime kilns; and the high capital cost of the facilities. These considerations reinforce the premium value of operations having permitted, long-term, high-quality mineral reserves and good locations relative to markets.

     Producers tend to be concentrated on known limestone formations where competition takes place on a regional basis. The industry as a whole has expanded its customer base and, while the steel industry is still the largest market sector, it also counts environmental-related users, chemical users and other industrial users, including pulp and paper producers and road builders, among its major customers.

     There is a continuing trend of consolidation in the lime and limestone industry, with the three largest lime companies now accounting for more than two-thirds of North American lime production capacity. In addition to the consolidations, and often in conjunction with them, many lime producers have undergone modernization and expansion projects to upgrade their processing equipment in an effort to improve operating efficiency. The Company’s Texas and Arkansas modernization and expansion projects, including the construction of the third kiln at Arkansas, and its recent acquisition of the St. Clair operations in Oklahoma should allow it to continue to remain competitive, protect its markets and position itself for the future. In addition, the Company will continue to evaluate additional external opportunities for expansion. However, the Company may have to revise its strategy, or otherwise find ways to enhance the value of the Company, including entering into strategic partnerships, mergers, acquisitions, or other transactions.

     Impact of Environmental Laws and Liabilities. The Company owns or controls large areas of land, upon which it operates limestone quarries, mines, and/or processing plants, with inherent environmental responsibilities and environmental compliance costs, including capital, maintenance and operating costs with respect to pollution control facilities, the cost of ongoing monitoring programs and other similar costs.

     The Company’s operations are subject to various federal, state, and local laws and regulations relating to environment, health and safety, and other regulatory matters including the Clear Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, and the Comprehensive Environmental Response, Compensation, and Liability Act, as well as the Toxic Substances Control Act, and in Oklahoma, state laws regulating mining and quarrying activities (“Environmental Laws”). These Environmental Laws grant the United States Environmental Protection Agency (“EPA”) and state governmental agencies the authority to promulgate regulations that could result in substantial expenditures on pollution control and waste management. The rate of change of Environmental Laws has been rapid over the last decade, and compliance can require significant expenditures. For example, federal legislation required Texas Lime Company and Arkansas Lime Company to obtain “Title V” operating permits that have significant ongoing compliance monitoring costs. In addition to the Title V permits, other environmental operating permits are required for the Company’s operations, and such permits are subject to modification, renewal and revocation. Also, raw materials and fuels used to manufacture quicklime and calcium contain chemicals and compounds, such as trace metals, that may be classified as toxic or hazardous substances. The EPA implemented the maximum achievable control technology (“MACT”) regulations on January 5, 2004 to control emissions of hazardous air pollutants from lime plants. Existing plants must determine how the rules apply, then develop and implement a plan to be in compliance by January 5, 2007. The MACT regulations will require additional performance testing, monitoring of operations, reporting, and development and implementation of startup, shutdown and malfunction plans for the Company’s lime plants.

     Carbon dioxide (“CO₂”) emission reductions remain an issue for the Company and other similar manufacturing companies. The consequences of CO₂ reduction measures are potentially significant, as the production of CO₂ is inherent in the manufacture of quicklime (calcination of limestone) and some other products, such as cement. The Company and other lime manufacturers, through the National Lime Association, the leading industry trade association, committed to the Department of Energy (“DOE”) and EPA to reduce the production of greenhouse gases, such as CO₂. The commitment focuses on achieving energy-related reductions in emissions intensity, as it was understood that the lime industry cannot reduce emissions from the calcination of limestone, which process removes CO₂ from limestone (Ca CO₃) to manufacture quicklime (CaO). Although the DOE’s and EPA’s current efforts to decrease greenhouse gas emissions are voluntary, there is no assurance that a change in the law will not be adopted that would have a material adverse effect on the Company’s financial condition, results of operations, cash flows or competitive position.

     In part in response to requirements of environmental regulatory agencies, the Company incurred capital expenditures related to environmental compliance of approximately $390,000 in 2005 and $410,000 in 2004. The Company’s recurring costs associated with managing and disposing of potentially hazardous substances (such as fuels and lubricants used in operations) and maintaining pollution control equipment amounted to approximately $455,000 in 2005 and $590,000 in 2004. The Company has not been named as a potentially responsible party in any federal superfund cleanup site or state-lead cleanup site.

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     We recognize legal reclamation and remediation obligations associated with the retirement of long-lived assets at their fair value at the time that the obligations are incurred (“Asset Retirement Obligations” or “AROs”). Over time, the liability for AROs is recorded at its present value each period through accretion expense, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, we either settle the ARO for its recorded amount or recognize a gain or loss. We estimate our AROs based on studies, our process knowledge and estimates, and discount them using an appropriate interest rate. The AROs are adjusted when further information warrants an adjustment. We believe that our accrual for AROs at December 31, 2005 is reasonable.

ITEM 1A. RISK FACTORS.

     During the last few years, we have borrowed additional money to pay for our modernization and expansion projects and the acquisitions of St. Clair and the Delta, Colorado facilities. Therefore we have increased our total indebtedness compared to prior years.

     As of December 31, 2005, our total consolidated bank debt was $55,000,000. Our indebtedness represented 48.6% of our total capitalization at December 31, 2005.

     As a result of our total indebtedness, a large portion of our cash flows from operations will be dedicated to the payment of principal and interest on indebtedness. Our ability to service our debt and to comply with the financial and restrictive covenants contained in our new credit facilities is subject to financial, economic, competitive and other factors. Many of these factors are beyond our control. In particular, our ability to service our indebtedness will depend upon our ability to sustain current levels of revenues and cash flows from operations as a result of the modernization and expansion of the Texas and Arkansas plants and the successful integration of our newly acquired Oklahoma operations.

     During 2006, we will need to borrow additional money to complete the third kiln at our Arkansas facilities. Funds available under our $30,000,000 new revolving credit facility and funds generated from operations should allow us to meet current liquidity demands, including building the third kiln, which we estimate will cost approximately $26,000,000. However, should our cash flows from operations deteriorate, or we incur material additional costs or delays in the construction of the third kiln at Arkansas, we may have to obtain additional financing, and there is no assurance that we will be able to do so at favorable rates, given our current levels of indebtedness.

     In the normal course of our business operations, we face various business and financial risks that could have a material adverse effect on our financial position, results of operations, cash flows and competitive position. Not all risks are foreseeable or within our ability to control.

     These risks arise from factors including, but not limited to, fluctuating demand for lime and limestone products, our ability to produce and store quantities of lime and limestone products sufficient in amount and quality to meet customer demands, the success of our modernization and expansion strategies, including our ability to execute the strategies and complete projects on time and within budget, our ability to integrate, refurbish and/or improve acquired facilities, our access to capital, increasing costs, especially natural gas and other energy prices, inclement weather, and the effects of seasonal trends.

     We incur environmental compliance costs, including capital costs, maintenance and operating costs with respect to pollution control facilities, the cost of ongoing monitoring programs, the cost of reclamation and remediation efforts and other similar costs and liabilities relating to our compliance with Environmental Laws, and we expect these cost and liabilities to continue to increase.

     The rate of change of Environmental Laws has been rapid over the last decade, and compliance can require significant expenditures. We believe that our expenditure requirements for future environmental compliance will continue to increase as operational and reporting standards increase. Discovery of currently unknown conditions and unforeseen liabilities could require additional expenditures.

     We intend to comply with all Environmental Laws and believe that our accrual for environmental costs at December 31, 2005 is reasonable. Because many of the requirements are subjective and therefore not quantifiable or presently determinable, or may be affected by future legislation and rulemaking, it is not possible to accurately predict the aggregate future costs of compliance and their effect on our financial condition, results of operations, cash flows or competitive position.

     In order to maintain our competitive position, we need to continue to expand our operations and production capacity and to sell the resulting increased production.

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     We may initiate various capital projects and acquisitions. These would most likely require that we incur additional debt. Notwithstanding current demand for lime and limestone products, we cannot guarantee that any such project or acquisition would be successful, that we will be able to sell any resulting increased production or that any such sales will be profitable.

     The lime industry is highly regionalized and competitive.

     Our competitors are predominately private companies. The primary competitive factors in the lime industry are quality, price, ability to meet customer demand, proximity to customers, personal relationships and timeliness of deliveries, with varying emphasis on these factors depending upon the specific product application. To the extent that one or more of our competitors becomes more successful with respect to any key competitive factor, our financial condition, results of operations, cash flows or competitive position could be materially adversely affected. Although demand and prices for lime and limestone have been improving in recent years, we are unable to predict future demand and prices, and cannot provide any assurance that current levels of demand and prices will continue or that any future increases in demand or price can be sustained.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

     Not Applicable

ITEM 2. PROPERTIES.

     Reference is made to Item 1 of this Report for a description of the properties of the Company, and such description is hereby incorporated by reference in answer to this Item 2. As discussed in Note 4 of Notes to Consolidated Financial Statements, the Company’s plant facilities and mineral reserves are subject to encumbrances to secure the Company’s loans.

ITEM 3. LEGAL PROCEEDINGS.

     Information regarding legal proceedings is set forth in Note 10 of Notes to Consolidated Financial Statements and is hereby incorporated by reference in answer to this Item 3.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     The Company did not submit any matters to a vote of security holders during the fourth quarter 2005.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

     The Company’s common stock is quoted on the Nasdaq National Market^® under the symbol “USLM.” As of March 13, 2006, the Company had approximately 500 stockholders of record. The Company did not pay any dividends during 2005, and does not plan on paying dividends in 2006.

     As of March 13, 2006, the Company had 500,000 shares of $5.00 par value preferred stock authorized; however, none has been issued.

     The low and high sales prices for the Company’s common stock for the periods indicated were:

	2005				2004
	Market Price				Market Price
	Low		High		Low		High
First Quarter	$	10.15	$	19.49	$	6.95	$	10.97
Second Quarter	$	11.91	$	19.32	$	7.50	$	11.90
Third Quarter	$	15.56	$	35.97	$	8.05	$	11.83
Fourth Quarter	$	23.00	$	35.35	$	8.61	$	11.35

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ITEM 6. SELECTED FINANCIAL DATA.

	Years Ended December 31,
	2005		2004		2003		2002		2001
	(dollars in thousands, except per share amounts)
Operating results
Revenues – 2004 through 2001 as restated (1)	$	81,085		71,231		57,432		49,976		50,923
Gross profit	$	19,366		17,020		13,062		9,508		10,465
Operating profit	$	13,844		11,980		8,574		5,539		6,390
Income before taxes	$	9,772		7,713		4,804		671		2,189
Net income	$	7,948		6,329		3,860		636		1,773
Net income per share of common stock:
Basic	$	1.34		1.08		0.67		0.11		0.32
Diluted	$	1.31		1.07		0.67		0.11		0.32

	As of December 31,
	2005			2004		2003		2002		2001
Total assets	$	123,024	(2)		100,339		99,500		84,519		89,409
Long-term debt, excluding current installments	$	51,667			41,390		47,886		37,500		40,833
Stockholders’ equity per outstanding common share	$	9.66			8.25		7.22		6.60		6.64
Cash dividends per common share	$	—			—		0.05		0.10		0.10
Employees		292			211		201		198		200

(1)

Revenues for prior periods presented above have been restated to include external freight billed to customers with related costs included in costs of revenues resulting in no change in gross profit, operating profit or net income. Revenues for 2004, 2003, 2002 and 2001 have been increased for such external freight by $15,552, $12,176, $10,814 and $11,170, respectively. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Restatement of Revenues and Cost of Revenues,” and Note 2 of Notes to Consolidated Financial Statements.

(2)

Includes the assets of St. Clair acquired on December 28, 2005.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

FORWARD-LOOKING STATEMENTS.

     Any statements contained in this Report that are not statements of historical fact are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this Report, including without limitation statements relating to management’s plans, strategies, objectives, expectations, intentions and adequacy of resources, are identified by such words as “will,” “could,” “should,” “believe,” “expect,” “intend,” “plan,” “schedule,” “estimate,” “anticipate” and “project.” We undertake no obligation to publicly update or revise any forward-looking statements. We caution that forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from expectations, including without limitation the following: (i) our plans, strategies, objectives, expectations and intentions are subject to change at any time in our discretion; (ii) our plans and the results of our operations will be affected by our ability to manage our growth and integrate, refurbish and/or improve acquired facilities; (iii) our ability to meet short-term and long-term liquidity demands, including servicing our debt; (iv) inclement weather conditions; (v) increased fuel costs; (vi) unanticipated delays or additional cost overruns in completing construction projects; (vii) reduced demand for our products; and (viii) other risks and uncertainties set forth above or indicated from time to time in our filings with the Securities and Exchange Commission.

OVERVIEW.

     We produce and sell pulverized limestone, quicklime, hydrated lime and lime slurry. The principal factors affecting our success are the level of demand for our products, and whether we are able to maintain sufficient production levels and product quality while controlling costs.

     Inclement weather conditions generally reduce the demand for lime and limestone products supplied to construction-related customers that account for a significant amount of our revenues. Inclement weather also

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interferes with our open-pit mining operations and can disrupt our plant production, as in the case of flooding and winter ice storms in Texas in recent years.

     Demand for our products in our market areas is also affected by general economic conditions, the pace of home construction and the demand for steel, as well as the level of governmental funding for highway construction. In recent years, the demand and prices for lime and limestone products have continued to improve, although demand by the steel industry declined beginning in mid-May 2005 and through the end of the year. Demand by the steel industry has improved in 2006.

     In August 2005, President Bush signed the Safe, Accountable, Flexible, and Equitable Transportation Equity Act (“SAFETEA”) which reauthorizes the federal highway, public transportation, highway safety, and motor carrier safety programs for fiscal years 2005 through 2009. SAFETEA provides nearly a 40% increase in funding over the Transportation Equity Act for the 21st Century. As a result, we believe there will be a continuing strong level of demand for lime and limestone products used in highway construction for the next several years.

     Our recent modernization and expansion projects in Texas and Arkansas, including the construction of a third kiln at Arkansas that should be completed in summer 2006, and our December 28, 2005 acquisition of St. Clair have positioned us to meet the increasing demand for high-quality lime and limestone products in our markets, with our lime out-put capacity more than doubling and our limestone production capacity increasing more than 50% since 1998. Our modernization and expansion projects have also equipped us with up-to-date, fuel-efficient plant facilities, which should result in lower production costs and greater operating efficiencies, thus enhancing our competitive position. In order for our plants to operate at peak efficiency, we must meet operational challenges that arise from time to time, including bringing new facilities on line and refurbishing and/or improving newly acquired facilities, such as St. Clair, as well as operating existing facilities efficiently.

     Our primary variable cost is energy. Natural gas prices remain high, and solid fuel and electric costs have also increased significantly. In addition, due to delivery problems, we sometimes have to purchase higher priced coal from sources other than our normal provider. We have been able to mitigate to some degree the adverse impact of these cost increases by varying the mixes of fuel used in our kilns, and by passing on some of our increased energy costs to our customers through higher prices and/or surcharges on certain products. We have not, to date, engaged in any significant hedging activity in an effort to control our energy costs. In the past, we have, however, entered into forward purchase contracts for natural gas for the winter months in order to provide greater predictability to this cost component, and we may do so again in the future.

     We financed our Texas and Arkansas modernization and expansion projects through a combination of a common stock rights offering to our shareholders, debt financing, including the issuance in August 2003 of $14,000,000 of unsecured subordinate notes, which have been fully repaid, and cash flows from operations. We financed our $14,000,000 acquisition cost for the St. Clair acquisition primarily from a new long-term loan. During 2006, we will need to borrow additional money to complete the third kiln at Arkansas, which we estimate will cost approximately $26,000,000. Given our increased level of debt, we must generate sufficient cash flows to cover ongoing capital and debt service needs. All of our long-term debt becomes due in 2015.

     As a result of our Texas and Arkansas modernization and expansion projects, our yearly depreciation, depletion and amortization expense included in cost of revenues increased from $2,788,000 in 1998 to $7,881,000 in 2005, while our gross profit increased from $7,061,000 to $19,366,000 over the same period. Our construction of the third kiln at Arkansas and the acquisitions of St. Clair and the Delta, Colorado facilities will further increase our depreciation expense. In addition, since 1998, our interest expense has increased from $26,000 to $4,173,000 in 2005 (excluding approximately $9,000 of interest capitalized in 2005), as the amount of our borrowings has increased. During 2004 and 2005, we refinanced our bank debt, reducing our interest rate to approximately 6.49% from approximately 9.25%, and prepaid the $14,000,000 of subordinated notes, which bore a 14% interest rate. However, we expect our interest expense in 2006 to be higher due to our increased debt levels.

     In order for us to continue to increase our profitability in the face of these increased fixed and variable costs, we must maintain our revenues and cash flows and continue to control our operational and selling, general and administrative expenses, including new corporate governance compliance costs resulting from the Sarbanes-Oxley Act of 2002 and associated regulatory requirements. We also continue to explore ways to expand our operations and production capacity through additional capital projects and acquisitions.

     As of May 2004, we entered into an oil and gas lease agreement with EOG Resources, Inc. (“EOG”) with respect to oil and gas rights on our Cleburne, Texas property, that will continue so long as EOG is continuously developing the leased property as set forth in the lease. Pursuant to the lease, we received lease bonus payments totaling $1,328,000, which are reflected in other income for 2004. In addition, we retained a 20% royalty interest in oil and gas produced from any successful wells drilled on the leased property and an option to participate in any

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well drilled on the leased property as a 20% working interest owner, provided we elect to participate prior to the commencement of each well.

     During the fourth quarter 2005, drilling of the first well under the Company’s oil and gas lease was completed, and gas production began in February 2006. In addition to our 20% royalty interest, we elected to participate as a 20% working interest owner in this well. No reserves or production specifics for the well will be known until sufficient production has been logged. We have also elected to participate as a 20% working interest owner in the next two wells the operator drilled in January and February 2006. Estimated drilling costs for our 20% working interest are approximately $450,000 per well.

     We believe the enhanced production capacity resulting from our modernization and expansion efforts at the Texas and Arkansas plants, including the third kiln at Arkansas, our recent acquisition of St. Clair in Oklahoma, and the operational strategies that we have implemented have allowed us to increase production, improve product quality, better serve existing customers, attract new customers and control our costs. There can be no assurance, however, that demand and prices for our lime and limestone products will remain strong, that our production will not be adversely affected by weather-related or other operational problems, that we can successfully integrate, refurbish and improve our newly acquired Oklahoma operations, that our results will not be adversely affected by continued increases in energy costs or new environmental requirements, or that our production capacity, revenues, net income and cash flows will continue to be strong.

RESTATEMENT OF REVENUES AND COST OF REVENUES.

     Revenues for 2004 and 2003 have been restated to include external freight billed to customers with related costs in costs of revenues, resulting in no change in gross profit, operating profit or net income. Revenues and cost of revenues for 2004 and 2003 have both been increased for such external freight by $15,552 and $12,176, respectively.

CRITICAL ACCOUNTING POLICIES.

     The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent liabilities, at the date of our financial statements. Actual results may differ from these estimates and judgments under different assumptions or conditions.

     Critical accounting policies are defined as those that are reflective of significant management judgments and uncertainties, and potentially result in materially different results under different assumptions and conditions. We believe the following critical accounting policies require the most significant management estimates and judgments used in the preparation of our consolidated financial statements.

     Accounts receivable. We are required to estimate the collectability of our trade receivables. A considerable amount of judgment is required in assessing the ultimate realization of these receivables and determining our allowance for doubtful accounts. The majority of our trade receivables are unsecured. Payment terms for our trade receivables are based on underlying purchase orders, contracts or purchase agreements. Credit losses relating to these receivables consistently have been within management expectations.

     Revenue recognition. We recognize revenue in accordance with the terms of purchase orders, contracts or purchase agreements, which are generally upon shipment, and payment is considered probable. Revenues include external freight billed to customers with related costs included in cost of revenues.

     Long-lived assets. We review long-term assets for impairment in accordance with the guidelines of Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). SFAS 144 requires that, when events or circumstances indicate that the carrying amount of an asset may not be recoverable, we should determine if impairment of value exists. If the estimated undiscounted future net cash flows are less than the carrying amount of the asset, an impairment exists and an impairment loss must be calculated and recorded. If an impairment exists, the impairment loss is calculated based on the excess of the carrying amount of the asset over the asset’s fair value. Any impairment loss is treated as a permanent reduction in the carrying value of the asset.

     Deferred tax assets. We consider future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need, if any, for a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. In the event that we determine that all or part of the net deferred tax assets

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would not be realizable in the future, an adjustment to deferred tax assets would be charged to income in the period such determination was made.

     Environmental costs. We record environmental accruals, based on studies and estimates, when it is probable that we have incurred a reasonably estimable liability. The accruals are adjusted when further information warrants an adjustment. Environmental expenditures that extend the life, increase the capacity or improve the safety or efficiency of Company-owned assets or are incurred to mitigate or prevent future possible environmental contamination are capitalized. Other environmental costs are expensed when incurred.

     Contingencies. We are party to proceedings, lawsuits and claims arising in the normal course of business relating to environmental, labor, product and other matters. We are required to estimate the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue, including coverage under our insurance policies. This determination may change in the future because of new developments.

     Derivatives. We record the fair value of gas forward purchase contracts on our balance sheet, with the offsetting entry to other operating expense. Any subsequent mark-to-market adjustments result in an increase or decrease of other operating expense. We record the fair value of our interest rate hedge on our balance sheet and include any changes in fair value in other comprehensive income/loss.

     Warrant share put liability. Prior to its waiver in August 2005, we estimated the fair value of our warrant share put liability quarterly based on the per share average closing price of our common stock for the last 30 days of the quarter compared to the $3.84 per share exercise price. The difference between the fair value and the carrying value of the warrant share put liability was being accreted, and the effect on fair value of future changes in the repurchase price for each share was accreted or decreted, over the five-year period from the date of issuance to August 5, 2008, after which the warrant holders could have required us to repurchase any or all shares acquired through exercise of the warrants. Therefore, prior to the waiver, increases in our per share common stock prices resulted in an increased liability and increased interest expense from accretion.

     Pension plan. We have one noncontributory defined benefit pension plan. All benefits for participants in the plan were frozen as of July 31, 1997. Our costs, credits and funded status for this plan are developed from actuarial valuations. Inherent in these valuations are key assumptions, including discount rates and expected long-term return on plan assets. Future costs, credits and funded status for this plan may change should conditions warrant changes in the assumptions.

RESULTS OF OPERATIONS.

     The following table sets forth certain financial information expressed as a percentage of revenues for the periods indicated:

	Year Ended December 31,
	2005			2004			2003
Revenues (1)		100.0	%		100.0	%		100.0	%
Cost of revenues
Labor and other operating expenses (1)		(66.4	)		(65.7	)		(66.7	)
Depreciation, depletion and amortization		(9.7	)		(10.4	)		(10.6	)
Gross profit		23.9			23.9			22.7
Selling, general and administrative expenses		(6.9	)		(7.1	)		(7.8	)
Operating profit		17.0			16.8			14.9
Other (expense) income:
Interest expense		(5.1	)		(7.9	)		(8.0	)
Other, net		0.1			1.9			1.4
Income tax expense		(2.2	)		(1.9	)		(1.6	)
Net income		9.8	%		8.9	%		6.7	%

(1) Revenues for 2004 and 2003 have been restated to include external freight billed to customers with related costs included in cost of revenues — labor and other operating expenses resulting in no change in gross profit, operating profit or net income.

2005 vs. 2004

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     Revenues increased to $81,085,000 in 2005 from $71,231,000 in 2004, an increase of $9,854,000, or 13.8%. Revenues for 2004 have been restated to include external freight billed to customers, with a corresponding increase in costs of revenues. (See Note 2 of Notes to Consolidated Financial Statements.) The increase in revenues for 2005 compared to 2004 was primarily due to average price increases for our products of 9.0%, and increased sales volumes to our construction customers during the fourth quarter 2005 due in part to unseasonably dry weather in the South Central Region. In addition, higher than normal levels of rainfall in our Texas market area in the third quarter 2004 resulted in reduced construction demand for products from our Cleburne, Texas plant. These 2005 improvements were partially offset by reduced sales volumes in 2005 compared to 2004 to our steel customers and to our largest Colorado customer, a coal mine, which was shut down due to a methane fire for most of the fourth quarter 2005 and January 2006.

     Our gross profit increased to $19,366,000 for 2005 from $17,020,000 for 2004, an increase of $2,346,000, or 13.8%, while gross profit margin as a percentage of revenues was 23.9% for both years. Compared to 2004, gross profit increased in 2005 primarily due to the 9.0% average price increases for the Company’s products, partially offset by increased fuel, electric and transportation costs in 2005 compared to 2004 and a $458,000 increase in depreciation, primarily attributable to depreciation on the Shreveport facilities which began operations in December 2004 and a full year of depreciation on the second Arkansas kiln which came on line in late February 2004.

     Selling, general and administrative expenses (“SG&A”) increased to $5,522,000 in 2005 from $5,040,000 in 2004, an increase of $482,000, or 9.6%. As a percentage of sales, SG&A declined to 6.9% in 2005 from 7.1% in 2004. The increase in SG&A in 2005 was primarily attributable to increases in employee compensation and benefits, and increased audit and other professional fees.

     Interest expense in 2005 decreased to $4,173,000 from $5,630,000 in 2004, a decrease of $1,457,000, or 25.9%. Interest expense decreased in 2005 principally due to our August 2004 debt refinancing which resulted in reduced interest rates for all of 2005, as well as a $235,000 prepayment penalty and the expensing of $632,000 unamortized prepaid financing costs included in 2004 interest expense. Interest expense in 2005 was negatively impacted by a $280,000 prepayment penalty and the expensing of approximately $164,000 of unamortized prepaid financing costs and $92,000 of unaccreted debt discount, all of which resulted from the prepayment in August 2005 of the then-remaining $7,000,000 principal amount of our subordinated notes (the “Sub Notes”). The decrease in interest expense would have been greater except for the fact that $445,000 of interest expense was capitalized in 2004 as part of our Arkansas expansion project compared to only $9,000 of capitalized interest in 2005.

     Also, due to an increase of more than 95% in the per share average closing price of the Company’s common stock for the last 30 trading days ended August 30, 2005, compared to the last 30 trading days ended December 31, 2004, interest expense in 2005 included a $798,000 non-cash charge to interest expense for a mark-to-market adjustment on the Company’s warrant share put liability, compared to a $210,000 charge in 2004. Effective August 31, 2005, the holders of our warrants agreed to waive their warrant share put rights. The warrant share put liability was $1,337,000 as of August 31, 2005, which was eliminated by the waiver agreements. Pursuant to accounting requirements, we increased stockholders’ equity by the $1,337,000, which represented non-cash charges to interest expense previously expensed, including the $798,000 charged in 2005.

     Other, net was $101,000 in 2005, compared to $1,363,000 in 2004. In 2004, the receipt of oil and gas lease bonus payments totaling $1,328,000 ($1,090,000, or $0.18 per share diluted, net of income taxes) for the lease of our oil and gas rights on our Cleburne, Texas property was the primary other income.

     Income tax expense increased to $1,824,000 in 2005 from $1,384,000 in 2004, an increase of $440,000, or 31.8%, primarily due to the increase in income before taxes.

     Net income increased to $7,948,000 ($1.31 per share diluted) in 2005 from net income of $6,329,000 ($1.07 per share diluted) for 2004, an increase of $1,619,000, or 25.6%.

2004 vs. 2003

     Revenues increased to $71,231,000 in 2004 from $57,432,000 in 2003, an increase of $13,799,000, or 24.0%. Revenues for 2004 and 2003 have been restated to include external freight billed to customers, with a corresponding increase in cost of revenues. (See Note 2 of Notes to Consolidated Financial Statements.) For 2004, the increases in revenues primarily resulted from increased sales resulting from lime production from the new kiln at our Arkansas plant, which came on line in late February 2004. Prices for our products increased approximately 2.5%, on average, in 2004 compared to 2003. Revenues increased in 2004 in spite of higher than normal levels of rainfall in our Texas market area in the third quarter which resulted in reduced construction demand for products from our Cleburne, Texas plant.

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     Due in part to continuing lime shortages principally in the eastern half of the United States, we sold substantially all of the increased lime production at Arkansas during 2004. These shortages were primarily due to increased consumption of lime for steel-related uses and the closing of three lime plants in the Midwest in 2003.

     Our gross profit increased to $17,020,000 for 2004 from $13,062,000 for 2003, an increase of $3,958,000, or 30.3%. Compared to 2003, gross profit and gross profit margins increased in 2004 primarily due to the increase in lime sales volume, partially offset by a $1,320,000 increase in depreciation primarily attributable to depreciation of the new Arkansas kiln. Gross profit margin as a percentage of revenues increased to 23.9% in 2004 compared to 22.7% in 2003, primarily due to the 24.0% increase in sales volume, reducing our per unit production costs by spreading our fixed costs over larger production volumes.

     SG&A increased to $5,040,000 in 2004 from $4,488,000 in 2003, an increase of $552,000, or 12.3%. As a percentage of sales, SG&A declined to 7.1% in 2004 from 7.8% in 2003. The increase in SG&A in 2004 was primarily attributable to increases in employee compensation and benefits, increased reserves for bad debts and increased audit and other professional fees.

     Interest expense in 2004 increased to $5,630,000 from $4,577,000 in 2003, an increase of $1,053,000, or 23.0%. The increase in interest expense in 2004 primarily resulted from the $235,000 prepayment penalty and the expensing of $632,000 unamortized prepaid financing costs, both of which resulted from our debt refinancing in August 2004, and the private placement of the $14,000,000 of Sub Notes in August 2003. In 2004, interest expense related to the Sub Notes, including non-cash interest costs and net of capitalized interest, was approximately $1,765,000 compared to approximately $582,000 in 2003. These were partially offset by the $7,500,000 of net repayments of our debt during 2004 and reduced interest rates resulting from the August 2004 debt refinancing. Approximately $445,000 of interest was capitalized in 2004 as part of the Arkansas Phase II expansion project, compared to approximately $308,000 capitalized in 2003.

     Other, net was $1,363,000 in 2004, compared to $807,000 in 2003. In 2004, the receipt of oil and gas lease bonus payments totaling $1,328,000 ($1,090,000, or $0.18 per share diluted, net of income taxes) for the lease of our oil and gas rights on our Cleburne, Texas property was the primary other income. Other, net in 2003 consisted of interest, other income and $769,000 for embezzlement-related recoveries net of embezzlement-related costs ($608,000, or $0.11 per share diluted, net of income taxes). (See Note 3 of Notes to Consolidated Financial Statements.)

     Income tax expense increased to $1,384,000 in 2004 from $944,000 in 2003, an increase of $440,000, or 46.6%, primarily due to the increase in income before taxes.

     Net income increased to $6,329,000 ($1.07 per share diluted) in 2004 from net income of $3,860,000 ($0.67 per share diluted) for 2003, an increase of $2,469,000, or 64.0%.

FINANCIAL CONDITION.

     Capital Requirements. We require capital primarily for seasonal working capital needs, normal recurring capital and re-equipping projects, expansion projects and acquisitions. Our capital needs are met principally from cash flows from operations, our $30,000,000 revolving credit facility and our long-term debt.

     Cash Flows From Operations. Net cash provided by operating activities was $17,158,000 in 2005, compared to $15,110,000 in 2004, an increase of $2,048,000, or 13.6%. In 2005, our cash provided by operating activities was principally comprised of our $7,948,000 net income and $8,202,000 of depreciation, depletion and amortization (“DD&A”). The improvement in 2005 compared to 2004 was primarily the result of the $1,619,000 increase in net income. Our cash provided by operating activities is composed of net income, DD&A, other non-cash items included in net income and changes in working capital. Other than DD&A, the primary non-cash expense in 2005 was non-cash interest expenses of $1,153,000, including $798,000 for accretion of repurchase liability – warrant shares. In 2004, non-cash interest expenses totaled $1,482,000, primarily for amortization of financing costs, including $632,000 expensed as a result of our August 2004 debt refinancing. In addition, non-cash expenses in 2004 included deferred income tax expense of $1,832,000 that resulted primarily from bonus depreciation for tax purposes on the second kiln at Arkansas and other capital additions during 2004. The most significant increases in working capital items during 2005 were a $1,238,000 increase in inventories and a $1,040,000 increase in accounts payable and accrued expenses, both primarily resulting from our expanded operations. The largest changes in working capital items in 2004 were a $2,507,000 increase in trade receivables, primarily resulting from increased sales resulting from increased lime production from the second kiln at Arkansas which came on line in late February 2004, and a $1,549,000 increase in accounts payable and accrued expenses.

     Banking Facilities and Debt. On October 19, 2005, we entered into an amendment to our credit agreement (the “Amendment”) primarily to increase the loan commitments and extend the maturity dates. As a

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result of the Amendment, our credit agreement now includes a ten-year $40,000,000 term loan (the “New Term Loan”), a ten-year $20,000,000 multiple draw term loan (the “Draw Term Loan”) and a five-year $30,000,000 revolving credit facility (the “New Revolving Facility”) (collectively, the “New Credit Facilities”). The proceeds from the New Term Loan were used primarily to repay the outstanding balances on our term loan and revolving credit facility under our credit agreement prior to the Amendment. In December 2005, we drew down $15,000,000 on the Draw Term Loan to acquire U.S. Lime Company – St. Clair (described below). We have not yet made any draws on the New Revolving Facility.

     The New Term Loan requires quarterly principal payments of $833,333 beginning March 31, 2006, which equates to a 12-year amortization, with a final principal payment of $7,500,000 due on December 31, 2015. The Draw Term Loan will require quarterly principal payments, based on a 12-year amortization, of the principal outstanding thereon on January 1, 2007, beginning March 31, 2007, with a final principal payment on December 31, 2015 equal to any remaining principal then-outstanding. The New Revolving Facility is scheduled to mature on October 20, 2010. The maturity of the New Term Loan, the Draw Term Loan and the New Revolving Facility can be accelerated if any event of default, as defined under the New Credit Facilities, occurs.

     The New Credit Facilities continue to bear interest, at our option, at either LIBOR plus a margin of 1.25% to 2.50%, or the Bank’s Prime Rate plus a margin of minus 0.50% to plus 0.50%. The margins are determined quarterly in accordance with a defined rate spread based upon the ratio of our average total funded senior indebtedness for the preceding four quarters to EBITDA for the twelve months ended on the last day of the most recent calendar quarter. There were no material changes to the covenants and restrictions contained in our credit agreement as a result of the Amendment.

     In conjunction with the Amendment, we terminated our existing hedge and rolled its value into a new hedge (the “New Term Loan Hedge”) to buy down the fixed interest rate. The New Term Loan Hedge fixes LIBOR at 4.695% on the $40,000,000 New Term Loan for the period December 30, 2005 through its maturity date, resulting in an interest rate of 6.44% based on the current LIBOR margin of 1.75%. Effective December 30, 2005, we also entered into a hedge that fixes LIBOR at 4.875% on the $15,000,000 balance outstanding on the Draw Term Loan through its maturity date, resulting in an interest rate of 6.625% based on the LIBOR margin of 1.75%. We designated both hedges as cash flow hedges, and as such, changes in the fair market value will be included in other comprehensive income or loss. We will be exposed to credit losses in the event of non-performance by the counterparty of the hedges.

     On August 25, 2004, we entered into a credit agreement with a bank (the “Lender”) that, prior to the amendment, included a five-year $30,000,000 term loan (the “Term Loan”), and a three-year $30,000,000 revolving credit facility (the “Revolving Credit Facility”) (collectively, the “Credit Facilities”). At the closing of the Credit Facilities, we borrowed $37,780,000 (the entire Term Loan, and $7,780,000 on the Revolving Credit Facility) to repay the outstanding balances, including a prepayment penalty and accrued interest, on our previous bank term loan and revolving credit facility. Pursuant to a security agreement, also dated August 25, 2004 (the “Security Agreement”), the Credit Facilities were, and the New Credit Facilities are, secured by our existing and hereafter acquired tangible assets, intangible assets and real property. We paid the Lender an origination fee equal to 0.25% of the total amount committed under the Credit Facilities.

     The Term Loan required a principal payment of $200,000 on September 30, 2004 and quarterly principal payments of $625,000 thereafter, which equated to a 12-year amortization, with a final principal payment of $17,925,000 due on August 25, 2009.

     The Credit Facilities bore interest at rates determined under the same provisions as described above for the New Credit Facilities. The margins were 1.75% for LIBOR and 0.0% for Prime Rate loans during 2004. From August 25 to December 31, 2004, the weighted average interest rate on our borrowings under the Credit Facilities was approximately 5.00%. In conjunction with the Credit Facilities, we entered into a hedge to fix the LIBOR rate for the Term Loan at 3.87% on $25,000,000 for the period September 1, 2004 through the maturity date, and on the remaining principal balance of approximately $4,700,000 for the period December 31, 2004 through the maturity date, resulting in an interest rate of 5.62% for the Term Loan based on the then-existing margin of 1.75%. The hedges were designated as cash flow hedges, and as such, changes in the fair market value were included in other comprehensive income or loss. The fair market value of the hedges at December 31, 2004 was a liability of $57,461, which was included in other liabilities on the December 31, 2004 Consolidated Balance Sheet.

     The New Credit Facilities and Security Agreement contain, as did the Credit Facilities, covenants that restrict the incurrence of debt, guaranties and liens, and place restrictions on investments and the sale of significant assets. We are also required to meet a minimum debt service coverage ratio and not exceed specified leverage ratios. The New Credit Facilities provide that we may pay annual dividends, not to exceed $1,500,000, so long as

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after such payment, we remain solvent and the payment does not cause or result in any default or event of default as defined under the New Credit Facilities.

     As a result of entering into the Credit Facilities and borrowings thereunder on August 25, 2004, we repaid all of the $35,556,000 then-outstanding debt under our previous $50,000,000 Senior Secured Term Loan (the “Old Term Loan”) and terminated the associated credit agreement that had been entered into on April 22, 1999 with a consortium of commercial banks. The Old Term Loan was repayable over a period of approximately eight years, maturing on March 30, 2007, and required monthly principal payments of $278,000, which began April 30, 2000, with a final principal payment of $26,944,000 on March 30, 2007, which equated to a 15-year amortization. The interest rate on the first $30,000,000 borrowed under the Old Term Loan was 8.875% and the blended rate for the additional $20,000,000 was 9.84%.

     Upon the prepayment of the Old Term Loan, we were required to pay a prepayment penalty of approximately $235,000, which was included in interest expense in the third quarter 2004. Also, approximately $632,000 of unamortized financing costs relating to the Old Term Loan was included in interest expense in the third quarter 2004.

     On August 25, 2004, we also terminated our previous $6,000,000 revolving credit facility and repaid the $1,750,000 then-outstanding principal balance. In addition, the Company had a $2,000,000 equipment line of credit (available for financing or leasing large mobile equipment used in its operations) from the bank that had issued the revolving credit facility, of which approximately $234,000 of operating lease obligations remained at December 31, 2005. The revolving credit facility was secured by our accounts receivable and inventories, provided for an interest rate of LIBOR plus 2.75% and matured on April 1, 2005.

     On August 5, 2003, we sold $14,000,000 of Sub Notes in a private placement under Section 4(2) of the Securities Act of 1933 to three accredited investors, one of which is an affiliate of Inberdon Enterprises Ltd., the Company’s majority shareholder (“Inberdon”), and another of which is an affiliate of Robert S. Beall, who owns approximately 12% of our outstanding shares. We believe that the terms of the private placement were more favorable to the Company than proposals previously received. Frost Securities, Inc. (“Frost”) provided an opinion to our Board of Directors that, from a financial point of view, the private placement was fair to the unaffiliated holders of our common stock in relation to other potential subordinated debt transactions then available to us. We paid Frost an aggregate of $381,000 for its advice, placement services and opinion.

     The net proceeds of approximately $13,450,000 from the private placement were primarily used to fund the Phase II expansion of our Arkansas facilities. Terms of the Sub Notes included: a maturity date of August 5, 2008, subject to acceleration upon a change in control; no mandatory principal payments prior to maturity; an interest rate of 14% (12% paid in cash and 2% paid in cash or in kind at our option); and, except as discussed below, no optional prepayment prior to August 5, 2005 and a 4% prepayment penalty (2% in certain specified circumstances prior to August 5, 2005) if repaid before maturity. The terms of the Sub Notes were identical to one another, except that the Sub Note for the affiliate of Inberdon did not prohibit prepayment prior to August 5, 2005 and did not require a prepayment penalty if repaid before maturity, resulting in a weighted average prepayment penalty of approximately 2.4% if the Sub Notes were repaid before maturity. The Sub Notes require compliance with our other debt agreements and restrict the sale of significant assets.

     The private placement also included six-year detachable warrants, providing the Sub Note investors the right to purchase an aggregate of 162,000 shares of our common stock, at 110% of the average closing price of one share of common stock for the trailing 30 trading days prior to closing, or $3.84. The fair value of the warrants was recorded as a reduction of the carrying value of the Sub Notes and was accreted over the term of the Sub Notes, resulting in an effective annual interest rate of 14.44%. After August 5, 2008, or upon an earlier change in control, the investors could require us to repurchase any or all shares acquired through exercise of the warrants (the “Warrant Shares”). The repurchase price for each Warrant Share was equal to the average closing price of one share of our common stock for the 30 trading days preceding the date the Warrant Shares were put back to us. Changes in the repurchase price for each Warrant Share were accreted or decreted to interest expense over the five-year period from the date of issuance to August 5, 2008. The investors are also entitled to certain registration rights for the resale of their Warrant Shares.

     Effective August 31, 2005, the holders of the warrants agreed to waive their Warrant Share put rights. Our Warrant Share put liability was $1,337,000 as of August 31, 2005, which was eliminated by the waiver agreements. Pursuant to accounting requirements, we increased stockholders’ equity by the $1,337,000, which represented non-cash charges to interest expense previously expensed, including a $798,000 charge to interest expense in the first eight months 2005. As a result of this waiver, we no longer have any liability to repurchase any Warrant Shares and will have no further charges or credits to interest expense for fluctuations in the price of our common stock.

- 14 -

     In October 2005, R.S. Beall Capital Partners L.P. (the “Holder”) elected to exercise its warrant for 34,714 shares pursuant to the cashless exercise option. The market value on the exercise date was $32.541, resulting in the issuance of 30,617 shares of our common stock to the Holder. The remaining warrants were exercised for approximately $489,000 cash in February 2006 resulting in the issuance of 127,286 shares of our common stock.

     We made principal prepayments on the Sub Notes totaling $7,000,000 during 2004, including full prepayment of the Sub Note held by the affiliate of Inberdon. Pursuant to the terms of the Sub Notes, a $30,000 prepayment penalty was paid on $1,500,000 of the principal prepayments in 2004. In August 2005, we prepaid the then-remaining $7,000,000 principal amount of the Sub Notes and a $280,000 prepayment penalty.

     As of December 31, 2005, we had $55,000,000 in total principal amount of debt outstanding, compared to approximately $44,000,000 at December 31, 2004, an increase of approximately $11,000,000, or 25.0%, primarily due the acquisition of St. Clair.

     Capital Expenditures. We completed the modernization and expansion project at our Cleburne, Texas facility at the end of 1998. In addition, during the fourth quarter 2000, we commissioned a new line for the production of pulverized limestone (“PLS”) at our Cleburne facility and, in 2003, constructed an additional storage facility there. The lack of reliability of a single PLS production line had been a restraining factor on sales to several large customers requiring “around-the-clock” availability. These investments have allowed us to better serve existing customers and to pursue new business opportunities, resulting in new PLS customers.

     The first of two phases of the Arkansas modernization and expansion project began in the fourth quarter 1999. Phase I involved the redevelopment of the quarry plant, rebuilding of the railroad to standard gauge, the purchase of a facility to establish an out-of-state terminal in Shreveport, Louisiana, the installation of a rotary kiln with preheater and increased product storage and loading capacity. We completed Phase I in the second quarter 2001.

     Phase II doubled the Arkansas plant’s quicklime production capacity through the installation of a second preheater rotary kiln and additional kiln-run storage capacity substantially identical to the kiln system built in Phase I. Construction of the second kiln system commenced in the third quarter 2003 and was completed with lime production from the new kiln beginning in late February 2004. Phase II also included refurbishing the distribution terminal in Shreveport, Louisiana, which is connected to a railroad, to provide lime storage, hydrating and distribution capacity to service markets in Louisiana and East Texas. This terminal began operations in December 2004.

     As of October 18, 2005, we entered into the initial contract for the construction of a third kiln at the Company’s Arkansas facilities. The third kiln will be similar to the existing two kilns and will increase quicklime production capacity at the Arkansas facilities by approximately 50%. The project, which will also include certain crushing and stone handling enhancements, and additional finished goods silos and load outs, is currently expected to be completed in summer 2006 and cost approximately $26,000,000, which will be funded from draws on the Draw Term Loan and/or the New Revolving Facility and funds generated from operations. As of December 31, 2005, we had contractual commitments of approximately $15,000,000 for the third kiln at Arkansas.

     We invested $10,962,000 in capital expenditures in 2005, compared to $13,608,000 in 2004. Capital expenditures in 2005 included approximately $2,268,000 related to the refurbishing of the Shreveport, Louisiana terminal and the installation of a new kiln baghouse at our Cleburne, Texas plant, of which $1,367,000 was accrued at December 31, 2004 and paid in 2005, approximately $2,420,000 for the acquisition of land near our Arkansas facilities for possible future expansion, and $938,000 related to the construction of the third kiln at Arkansas. In September 2005, we spent approximately $2,821,000 for the acquisition, in an asset purchase, of a new limestone grinding and bagging facility located in Delta, Colorado to process mine safety dust used in coal mining operations. Approximately $7,700,000 of our 2004 capital expenditures related to the Arkansas Phase II expansion project in 2004. In 2004, capital expenditures also included approximately $1,800,000 for the installation of a new kiln baghouse at our Texas plant.

     On December 28, 2005, we acquired all of the issued and outstanding capital stock of O-N Minerals (St. Clair) Company, renamed U.S. Lime Company – St. Clair, from a wholly-owned subsidiary of Oglebay Norton Company (OTC Bulletin Board: OGBY) for $14,000,000 in cash, plus transaction costs. The purchase price is subject to a working capital adjustment which is expected to be approximately $820,000. As of December 31, 2005, including transaction costs, we had paid $14,159,000 and had accrued approximately $212,000. We funded the St. Clair purchase with an advance from our Draw Term Loan.

     We expect to spend approximately $5,000,000 per year over the next several years for normal recurring capital, environmental compliance and re-equipping projects at the plant facilities to maintain or improve efficiency, ensure compliance with Environmental Laws and reduce costs.

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     Contractual Obligations. The following table sets forth our contractual obligations as of December 31, 2005:

	Payments Due by Period (dollars in thousands)
									More than
Contractual Obligations	Total		1 Year		2-3 Years		4-5 Years		5 Years
Long-Term Debt, including current installments	$	55,000		3,333		9,167		9,167		33,333
Operating Leases(1)	$	2,425		897		1,079		448		—
Purchase Obligations(2)	$	19,000		19,000		—		—		—
Other Liabilities (3)	$	1,271		297		368		144		462
Total	$	77,696		23,527		10,614		9,759		33,795

(1)	Includes approximately $2,362 for operating leases for mobile equipment, railcars and corporate office lease.
(2)	Approximate amount of open equipment and construction orders for the construction of a third kiln at our Arkansas plant. Approximately $176 of these obligations are recorded on the Consolidated Balance Sheet at December 31, 2005 in current liabilities.
(3)	Does not include $427 unfunded projected benefit obligation for a defined benefit pension plan. Future required contributions, if any, are subject to actuarial assumptions and future earnings on plan assets. (See Note 8 of Notes to Consolidated Financial Statements.)

     Liquidity. At December 31, 2005, we had made no draws on our $30,000,000 New Revolving Credit Facility. We believe that cash on hand, funds generated from operations and amounts available under the New Revolving Credit Facility will be sufficient to meet our operating needs, ongoing capital needs and debt service for 2006. Additionally, with our increase in cash flows from operations following the completion of our modernization and expansion projects, including the third kiln at Arkansas, and the acquisition of St. Clair, and funds available from our $30,000,000 New Revolving Credit Facility, we believe we will have sufficient capital resources to meet our liquidity needs for the near future.

     Off-Balance Sheet Arrangements. We do not utilize off-balance sheet financing arrangements; however we lease some of our equipment used in our operations under non-cancelable operating lease agreements. As of December 31, 2005, the total future lease payments under various operating leases totaled $2,425 and are due in payments through 2010 as summarized in the table above.

NEW ACCOUNTING PRONOUNCEMENTS.

     Stock Options. On December 16, 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payments” (“SFAS 123(R)”) which is a revision of SFAS 123. SFAS 123(R) supersedes Accounting Principles Board Opinion No. 25 “Accounting for Stock Issued to Employees” and amends SFAS No. 95, “Statement of Cash Flows”. Generally, the approach in SFAS 123(R) is similar to the approach described in SFAS 123, “Accounting for Stock-based Compensation (“SFAS 123”). However, SFAS 123(R) will require all share-based payments to employees, including grants of employee stock options, to be recognized in the our Consolidated Statements of Income based on their fair values. Pro forma disclosure will no longer be an alternative.

     SFAS 123(R) must be adopted no later than the annual period beginning after June 15, 2005 and permits public companies to adopt its requirements using one of two methods:

     (1) A “modified prospective” method, in which compensation cost is recognized beginning with the effective date based on the requirements of SFAS 123(R) for all share-based payments granted after the adoption date and based on the requirements of SFAS 123 for all awards granted to employees prior to the effective date of SFAS 123(R) that remain unvested on the adoption date.

     (2) A “modified retrospective” method, which includes the requirements of the modified prospective method described above but also permits entities to restate either all prior periods presented or prior interim periods of the year of adoption based on the amounts previously recognized under SFAS 123 for purposes of pro forma disclosures.

     We adopted the provisions of SFAS 123(R) on January 1, 2006 using the modified prospective method.

     As permitted by SFAS 123 and noted above, we accounted for share-based payments to employees using the intrinsic value method prescribed by APB 25 and related interpretations. As such, we generally have not

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recognized compensation expenses associated with employee stock options through December 31, 2005. Accordingly, the adoption of SFAS 123(R)’s fair value method could have an adverse impact on our future results of operations, although it will have no material impact on our overall financial condition. Had we adopted SFAS 123(R) in prior periods, the impact would have approximated the impact of SFAS 123 as described in the pro forma net income and earnings per share disclosures in Note 1(n) of Notes to Consolidated Financial Statements. We estimate that the adoption of SFAS 123(R), based on the outstanding unvested stock options at December 31, 2005, will result in an additional compensation expense in 2006 of $162,000, net of income tax benefit.

     Stripping Costs in the Mining Industry. The FASB Emerging Issues Task Force (“EITF”) reached a consensus that stripping costs incurred after a mine begins production are costs of production and therefore should be accounted for as a component of inventory costs (EITF Issue No. 04-6). We currently capitalize certain stripping costs as deferred stripping costs, attribute them to the reserves that have been exposed and amortize them into cost of revenues using the units-of-production method. As of December 31, 2005 and 2004, we had $740,000 and $435,000, respectively, of capitalized deferred stripping costs. The EITF stated that the new required accounting for stripping costs would be effective for years beginning after December 15, 2005. As a result of adopting this accounting change, we will expense the $740,000 capitalized deferred stripping costs in the first quarter 2006.

     Inventory Costs. In December 2004, the FASB issued SFAS No. 151, “Inventory Costs, an Amendment of ARB No. 43, Chapter 4.” This amendment requires abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) to be recognized as current-period charges. This standard also requires that the allocation of fixed production overhead to the cost of conversion be based on the normal capacity of the production facilities. This standard is effective for fiscal years beginning after June 15, 2005. We do not believe that compliance with this new pronouncement will have a material effect on our financial condition, results of operations, cash flows or competitive position.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

COMMODITY PRICE RISK.

     We are exposed to commodity price risk related to the price volatility of natural gas utilized at our plants. From time to time, we enter into forward purchase contracts for the delivery of a portion of our natural gas requirements. At December 31, 2005, we had committed to purchase 35,000 MMBTU for January 2006 at a price of $9.49 per MMBTU. As of December 31, 2005, the market price for deliveries for January 2006 was approximately $11.225 per MMBTU. We recorded a mark-to-market adjustment resulting in a decrease of approximately $61,000 in labor and other operating expenses at December 31, 2005. (See Note 1(o) of Notes to Consolidated Financial Statements.)

INTEREST RATE RISK.

     We are exposed to changes in interest rates, primarily as a result of floating interest rates on our New Term Loan, Draw Term Loan and New Revolving Credit Facility. At December 31, 2005, we had $55,000,000 of indebtedness outstanding under floating rate debt. We have entered into interest rate swap agreements to swap floating rates for fixed rates at 4.695% and 4.875%, plus the applicable LIBOR margin, through maturity on the New Term Loan balance of $40,000,000, and the Draw Term Loan balance of $15,000,000, respectively. Any borrowings under the New Revolving Credit Facility would be subject to interest rate risk. (See Note 4 of Notes to Consolidated Financial Statements.)

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Index to Consolidated Financial Statements.

Reports of Independent Registered Public Accounting Firms	19
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 2005 and 2004	21
Consolidated Statements of Income for the Years Ended December 31, 2005, 2004 and 2003	22
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2005, 2004 and 2003	23
Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003	24
Notes to Consolidated Financial Statements	25

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
United States Lime & Minerals, Inc.

We have audited the consolidated balance sheet of United States Lime & Minerals, Inc. and subsidiaries as of December 31, 2005, and the related consolidated statements of income, stockholders’ equity and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of United States Lime & Minerals, Inc. and subsidiaries as of December 31, 2005, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Dallas, Texas
March 8, 2006

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
United States Lime & Minerals, Inc.

We have audited the consolidated balance sheet of United States Lime & Minerals, Inc. and subsidiaries as of December 31, 2004, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of United States Lime & Minerals, Inc. and subsidiaries as of December 31, 2004, and the consolidated results of their operations and their cash flows for each of the two years in the period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 2 to the consolidated financial statements, revenues and cost of revenues for 2004 and 2003 have been restated to correct an error in accounting for external freight billed to customers.

ERNST & YOUNG LLP

Dallas, Texas
March 17, 2005,
except for Note 2, as to which the date is
March 8, 2006

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United States Lime & Minerals, Inc.

Consolidated Balance Sheets

(dollars in thousands, except share data)

	December 31,
	2005			2004
ASSETS
Current assets:
Cash and cash equivalents	$	1,312			227
Trade receivables, net		11,360			9,466
Inventories		7,705			5,113
Prepaid expenses and other assets		1,617			996
Total current assets		21,994			15,802
Property, plant and equipment:
Mineral reserves and land		10,367			4,071
Buildings and building improvements		2,527			1,724
Machinery and equipment		144,994			130,565
Furniture and fixtures		1,192			1,100
Automotive equipment		881			662
		159,961			138,122
Less accumulated depreciation		(60,660	)		(54,581	)
Property, plant and equipment, net		99,301			83,541
Deferred tax assets, net		290			108
Other assets, net		1,439			888
Total assets	$	123,024			100,339
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of debt	$	3,333			2,500
Accounts payable		4,522			4,176
Accrued expenses		3,600			2,993
Total current liabilities		11,455			9,669
Debt, excluding current installments		51,667			41,390
Other liabilities		1,681			1,057
Total liabilities		64,803			52,116
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $5.00 par value; authorized 500,000 shares; none issued or outstanding		—			—
Common stock, $0.10 par value; authorized 15,000,000 shares; 6,013,784 and 5,845,338 shares issued and outstanding at December 31, 2005 and 2004, respectively		601			584
Additional paid-in capital		12,401			10,516
Accumulated other comprehensive loss		(215	)		(363	)
Retained earnings		45,434			37,486
Total stockholders’ equity		58,221			48,223
Total liabilities and stockholders’ equity	$	123,024			100,339

See accompanying notes to consolidated financial statements.

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United States Lime & Minerals, Inc.

Consolidated Statements of Income

(dollars in thousands, except per share amounts)

	Years Ended December 31,
	2005			2004			2003
				As Restated			As Restated
Revenues	$	81,085			71,231			57,432
Cost of revenues:
Labor and other operating expenses		53,838			46,788			38,267
Depreciation, depletion and amortization		7,881			7,423			6,103
		61,719			54,211			44,370
Gross profit		19,366			17,020			13,062
Selling, general and administrative expenses		5,522			5,040			4,488
Operating profit		13,844			11,980			8,574
Other (income) expense:
Interest expense		4,173			5,630			4,577
Other, net		(101	)		(1,363	)		(807	)
		4,072			4,267			3,770
Income before income taxes		9,772			7,713			4,804
Income tax expense		1,824			1,384			944
Net income	$	7,948			6,329			3,860
Net income per share of common stock:
Basic	$	1.34			1.08			0.67
Diluted	$	1.31			1.07			0.67

See accompanying notes to consolidated financial statements.

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United States Lime & Minerals, Inc.

Consolidated Statements of Stockholders’ Equity

(dollars in thousands)

Years Ended December 31, 2005, 2004 and 2003

								Accumulated
	Common Stock				Additional			Other
	Shares				Paid-In			Comprehensive			Retained
	Outstanding		Amount		Capital			Income (Loss)			Earnings			Total
Balances at December 31, 2002		5,799,845	$	580		10,392			(254	)		27,588			38,306
Stock options exercised		15,751		2		66			—			—			68
Common stock dividends		—		—		—			—			(291	)		(291	)
Net income		—		—		—			—			3,860			3,860
Minimum pension liability adjustment, net of $11 tax expense		—		—		—			17			—			17
Comprehensive income															3,877
Balances at December 31, 2003		5,815,596	$	582		10,458			(237	)		31,157			41,960
Stock options exercised		29,742		2		58			—			—			60
Net income		—		—		—			—			6,329			6,329
Minimum pension liability adjustment, net of $43 tax benefit		—		—		—			(69	)		—			(69	)
Mark to market of interest rate hedge		—		—		—			(57	)		—			(57	)
Comprehensive income															6,203
Balances at December 31, 2004		5,845,338	$	584		10,516			(363	)		37,486			48,223
Stock options exercised including $125 tax benefit		137,829		14		551			—			—			565
Warrants exercised		30,617		3		(3	)		—			—			—
Extinguishment of warrant shares repurchase obligation		—		—		1,337			—			—			1,337
Net income		—		—		—			—			7,948			7,948
Minimum pension liability adjustment, net of $54 tax benefit		—		—		—			(89	)		—			(89	)
Mark to market of interest rate hedge				—		—			237			—			237
Comprehensive income															8,096
Balances at December 31, 2005		6,013,784	$	601		12,401			(215	)		45,434			58,221

See accompanying notes to consolidated financial statements.

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United States Lime & Minerals, Inc.

Consolidated Statements of Cash Flows

(dollars in thousands)

	Years Ended December 31,
	2005			2004			2003
OPERATING ACTIVITIES:
Net income	$	7,948			6,329			3,860
Adjustments to reconcile net income to net cash provided by operations:
Depreciation, depletion and amortization		8,202			7,697			6,390
Amortization of financing costs		245			1,101			317
Accretion of debt discount		110			171			25
Accretion of repurchase liability – warrant shares		798			210			22
Deferred income taxes		(182	)		1,832			449
Loss on sale of assets		61			148			48
Changes in operating assets and liabilities, net of acquisition of businesses:
Trade receivables		(43	)		(2,507	)		(1,757	)
Inventories		(1,238	)		(377	)		173
Prepaid expenses		254			(275	)		(459	)
Other assets		(559	)		(49	)		(109	)
Accounts payable and accrued expenses		915			1,549			718
Tax benefit related to exercise of stock options		125			—			—
Other liabilities		522			(719	)		(156	)
Total adjustments		9,210			8,781			5,661
Net cash provided by operations	$	17,158			15,110			9,521
INVESTING ACTIVITIES:
Purchase of property, plant and equipment	$	(11,010	)		(13,608	)		(12,014	)
Acquisitions of businesses		(16,932	)		—			—
Proceeds from sale of property, plant and equipment		429			60			11
Net cash used in investing activities	$	(27,513	)		(13,548	)		(12,003	)
FINANCING ACTIVITIES:
Payment of common stock dividends	$	—			—			(291	)
(Repayments of) proceeds from revolving credit facilities, net		(7,825	)		7,825			(1,263	)
Proceeds from term loans, net of $270 issuance costs in 2004		27,700			29,730			—
Proceeds from subordinate debt, net of $550 issuance costs		—			—			13,450
Repayments of term loans		(1,875	)		(38,325	)		(3,333	)
Repayment of subordinated debt		(7,000	)		(7,000	)		—
Proceeds from exercise of stock options		440			60			68
Net cash provided by (used in) financing activities	$	11,440			(7,710	)		8,631
Net increase (decrease) in cash and cash equivalents	$	1,085			(6,148	)		6,149
Cash and cash equivalents at beginning of year		227			6,375			226
Cash and cash equivalents at end of year	$	1,312			227			6,375

See accompanying notes to consolidated financial statements.

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United States Lime & Minerals, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share amounts)

Years Ended December 31, 2005, 2004 and 2003

(1) Summary of Significant Accounting Policies

(a)	Organization
	United States Lime & Minerals, Inc. (the “Company”) is a manufacturer of lime and limestone products, supplying primarily the construction, steel, municipal sanitation and water treatment, paper and agriculture industries. The Company is headquartered in Dallas, Texas and operates lime and limestone plants and distribution facilities in Arkansas, Colorado, Louisiana, Oklahoma and Texas through its wholly owned subsidiaries, Arkansas Lime Company, Colorado Lime Company, Texas Lime Company, U.S. Lime Company – Houston, U.S. Lime Company – Shreveport and U.S. Lime Company – St. Clair.
(b)	Principles of Consolidation
	The consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated.
(c)	Use of Estimates
	The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates and judgments.
(d)	Statements of Cash Flows
	For purposes of reporting cash flows, the Company considers all certificates of deposit and highly-liquid debt instruments, such as U.S. Treasury bills and notes, with maturities, at the time of purchase, of three months or less to be cash equivalents. Cash equivalents are carried at cost plus accrued interest, which approximates fair market value.
	Supplemental cash flow information is presented below:

	Year Ended December 31,
	2005		2004		2003
Cash paid during the year for:
Interest	$	3,020		4,593		4,507
Income taxes	$	852		165		218

(e)	Revenue Recognition
	The Company recognizes revenue in accordance with the terms of its purchase orders, contracts or purchase agreements, which are generally upon shipment, and when payment is considered probable. Revenues include external freight billed to customers with related costs in cost of revenues. (See Note 2.) The Company’s returns and allowances are minimal. External freight billed to customers included in revenues was $16,902, $15,552 and $12,176 for 2005, 2004 and 2003, respectively, which approximates the amount of external freight billed to customers included in cost of revenues.
(f)	Fair Values of Financial Instruments
	The carrying values of cash and cash equivalents, trade receivables, other current assets, accounts payable and accrued expenses approximate fair value due to the short maturity of these instruments. See Note 4 for discussion of debt fair values. The Company’s gas forward

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	purchase contracts and interest rate hedges are carried at market value at December 31, 2005 and 2004. See Notes 1(o) and 4.
	The holders of the Company’s subordinated debt could require the Company to repurchase any or all of the 162,000 shares that may be purchased upon exercise of the Company’s outstanding warrants at an exercise price of $3.84 per share. Effective August 31, 2005, the holders of the warrants agreed to waive this right. The repurchase price for each share was equal to the average closing price of one share of the Company’s common stock for the 30 trading days preceding the date the shares were put back to the Company. At August 31, 2005, the fair value of the warrant share put obligation was estimated to be $2,779, prior to the waiver based on the $20.994 per share average closing price for the last 30 trading days ending August 30, 2005. The fair value of the warrant share put liability was estimated to be $1,126 at December 31, 2004 based on the $10.792 per share average closing price for the last 30 trading days of 2004. The difference between the fair value and the carrying value of the warrant share put liability was being accreted, and the effect on fair value of future changes in the repurchase price for each share was accreted or decreted, over the five-year period from the date of issuance to August 5, 2008, resulting in an increase or decrease in interest expense.
(g)	Concentration of Credit Risk and Trade Receivables
	Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and cash equivalents, trade receivables and derivative financial instruments. The Company places its cash and cash equivalents with high credit quality financial institutions and its derivative financial instruments with financial institutions and other firms that management believes have high credit ratings. For a discussion of the credit risks associated with the Company’s derivative financial instruments, see Derivative Instruments and Hedging Activities in Note 1(o) and Banking Facilities and Other Debt in Note 4.
	The majority of the Company’s trade receivables are unsecured. Payment terms for all trade receivables are based on the underlying purchase orders, contracts or purchase agreements. Credit losses relating to trade receivables consistently have been within management expectations. Trade receivables are presented net of the related allowance for doubtful accounts, which totaled $312 and $310 at December 31, 2005 and 2004, respectively.
(h)	Inventories
	Inventories are valued principally at the lower of cost, determined using the average cost method, or market. Costs for finished goods include materials, labor, and production overhead.
	A summary of inventories is as follows:

	December 31,
	2005		2004
Lime and limestone inventories:
Raw materials	$	3,177		1,913
Finished goods		1,331		756
		4,508		2,669
Service parts inventories		3,197		2,444
	$	7,705		5,113

In December 2004, the Financial Accounting Standards Board (the “FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 151, “Inventory Costs, an Amendment of ARB No. 43, Chapter 4” (“SFAS 151”). SFAS 151 requires abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) to be recognized as current-period charges. SFAS 151 also requires that the allocation of fixed production overhead to the cost of conversion be based on the normal capacity of the production facilities. SFAS 151 is effective for fiscal years beginning after June 15, 2005. The Company does not believe that compliance with this new pronouncement will have a material effect on its financial condition, results of operations, cash flows or competitive position.

(i)

Property, Plant and Equipment

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For major constructed assets, the capitalized cost includes the cash price paid by the Company for labor and materials plus interest and internal and external project management costs that are directly related to the constructed assets. Total interest costs of $9, $445 and $308 were capitalized for the years ended December 31, 2005, 2004 and 2003, respectively. Depreciation of property, plant and equipment is being provided for by the straight-line method over estimated useful lives as follows:

Buildings and building improvements	3 - 20 years
Machinery and equipment	3 - 20 years
Furniture and fixtures	3 - 10 years
Automotive equipment	3  - 8  years

	Maintenance and repairs are charged to expense as incurred; renewals and betterments are capitalized. When units of property are retired or otherwise disposed of, their cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to income.
	The Company reviews its long-lived assets for impairment in accordance with the guidelines of Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). SFAS 144 requires that, when events or circumstances indicate that the carrying amount of an asset may not be recoverable, the Company should determine if impairment of value exists. If the estimated undiscounted future net cash flows are less than the carrying amount of the asset, an impairment exists and an impairment loss must be calculated and recorded. If an impairment exists, the impairment loss is calculated based on the excess of the carrying amount of the asset over the asset’s fair value. Any impairment loss is treated as a permanent reduction in the carrying value of the asset. Through December 31, 2005, no events or circumstances have arisen which would require the Company to record a provision for impairment of its long-lived assets.
(j)	Asset Retirement Obligations
	In accordance with the guidelines of Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations,” the Company recognizes legal obligations for reclamation and remediation associated with the retirement of long-lived assets at their fair value at the time that the obligations are incurred (“AROs”). Over time, the liability for AROs is recorded at its present value each period through accretion expense, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, the Company either settles the AROs for the recorded amount or recognizes a gain or loss. As of December 31, 2005 and 2004, the Company’s AROs included in other liabilities were $1,079 and $500, respectively. An ARO of $618 was recorded upon the acquisition of St. Clair (see Note 11), with no related asset. The remaining related asset associated with the Company’s AROs has been fully depreciated. During 2005, the Company spent $39 on its AROs.
	The AROs were estimated based on studies, the Company’s process knowledge and estimates, and are discounted using an appropriate interest rate. The AROs are adjusted when further information warrants an adjustment. The Company estimates annual expenditures of approximately $280 in 2006 and 2007 and $50 in years 2008 through 2010 relating to its AROs.
(k)	Other Assets
	Other assets consist of the following:

	December 31,
	2005		2004
Deferred stripping costs	$	740		435
Intangible assets		301		—
Deferred financing costs		218		448
Interest rate hedges		180		—
Other		—		5
	$	1,439		888

Through December 31, 2005, the Company capitalized certain stripping costs as deferred stripping costs, all of which related to Arkansas Lime Company, which were attributed to

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	reserves that had been exposed and amortized using the units-of-production method. Deferred financing costs are expensed over the life of the debt.
	The FASB Emerging Issues Task Force (“EITF”) reached a consensus that stripping costs incurred after a mine begins production are costs of production and therefore should be accounted for as a component of inventory costs (EITF Issue No. 04-6). The EITF stated that the new required accounting for stripping costs would be effective for years beginning after December 15, 2005, with early adoption permitted. As a result of adopting the new standard, the Company will expense $740 of previously capitalized deferred stripping costs in the first quarter 2006.
(l)	Environmental Expenditures
	Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the costs can be reasonably estimated. Generally, the timing of these accruals will coincide with completion of a feasibility study or the Company’s commitment to a formal plan of action.
	In part in response to requirements of environmental regulatory agencies, the Company incurred capital expenditures related to environmental matters of approximately $390 in 2005 and $410 in 2004.
(m)	Income Per Share of Common Stock
	The following table sets forth the computation of basic and diluted income per common share:

	Year Ended December 31,
	2005		2004		2003
Numerator:
Net income for basic income per common share	$	7,948		6,329		3,860
Warrant interest adjustment		—		21		22
Net income for diluted income per common share	$	7,948		6,350		3,882
Denominator:
Denominator for basic net income per common share – weighted-average shares		5,926,984		5,834,039		5,801,917
Effect of dilutive securities:
Warrants		28,358		23,703		10,752
Employee stock options		128,726		75,276		12,438
Denominator for diluted net income per common share – adjusted weighted- average shares and assumed exercises		6,084,068		5,933,018		5,825,107
Basic net income per common share	$	1.34		1.08		0.67
Diluted net income per common share	$	1.31		1.07		0.67

(n)

Stock Options

The Company has elected to follow Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), in accounting for its employee and director stock options. Under APB 25, if the exercise price of the employee’s or director’s stock option equals or exceeds the market price of the underlying stock on the date of grant, no compensation expense is recognized. Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), requires companies that elect to apply the

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provisions of APB 25 to provide pro forma disclosures for employee stock-based compensation awards as if the fair-value-based method defined in SFAS 123 had been applied. See Note 9.

The following table illustrates the effect on net income and net income per share of common stock if the Company had applied the fair value recognition provisions of SFAS 123 instead of APB 25’s intrinsic value method to account for stock-based employee and director compensation:

	Year Ended December 31,
	2005			2004			2003
Net income as reported	$	7,948			6,329			3,860
Pro forma stock-based employee and director compensation expense, net of income taxes, under the fair value method	$	(466	)		(170	)		(61	)
Pro forma net income	$	7,482			6,159			3,799
Basic net income per common share, as reported	$	1.34			1.08			0.67
Diluted net income per common share, as reported	$	1.31			1.07			0.67
Pro forma basic net income per common share	$	1.26			1.06			0.65
Pro forma diluted net income per common share	$	1.23			1.04			0.65

The fair value for these options was estimated at the date of grant using the Black-Scholes option valuation model, with the following weighted average assumptions for the 2005, 2004 and 2003 grants: risk-free interest rates of 3.39% to 4.39% in 2005, 1.94% to 3.23% in 2004 and 2.00% in 2003; a dividend yield of 0%; and a volatility factor of .472 to .610 in 2005, .456 to .469 in 2004 and 0.310 in 2003. In addition, the fair value of these options was estimated based on an expected life of three years.

On December 16, 2004, the FASB issued Statement of Financial Accounting Standards 123(R) “Share-Based Payments” (“SFAS 123(R)”), which is a revision of SFAS 123. SFAS 123(R) supersedes APB 25 and amends Statement of Accounting Standards No. 95, “Statement of Cash Flows”. Generally, the approach in SFAS 123(R) is similar to the approach described in SFAS 123. However, SFAS 123(R) will require all share-based payments to employees and directors, including grants of stock options, to be recognized in the Company’s Consolidated Statements of Income based on their fair values. Pro forma disclosure will no longer be an alternative.

SFAS 123(R) must be adopted for fiscal years beginning after June 15, 2005 and permits public companies to adopt its requirements using one of two methods:

(1) A “modified prospective” method, in which compensation cost is recognized beginning with the effective date based on the requirements of SFAS 123(R) for all share-based payments granted after the adoption date and based on the requirements of SFAS 123 for all awards granted prior to the effective date of SFAS 123(R) that remain unvested on the adoption date.

(2)  A “modified retrospective” method, which includes the requirements of the modified prospective method described above, but also permits entities to restate either all prior periods presented or prior interim periods of the year of adoption based on the amounts previously recognized under SFAS 123 for purposes of pro forma disclosures.

The Company has adopted the provisions of SFAS 123(R) on January 1, 2006 using the modified prospective method.

As permitted by SFAS 123 and noted above, the Company currently accounts for share-based payments using the intrinsic value method prescribed by APB 25 and related interpretations. As such, the Company generally has not recognized compensation expenses associated with stock options. Accordingly, the adoption of SFAS 123(R)’s fair value method could have an adverse impact on the Company’s future results of operations, although it will have no material impact on the Company’s overall financial condition. Had the Company adopted SFAS 123(R) in prior periods, the impact would have approximated the impact of

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	SFAS 123 as described in the pro forma net income and earnings per share disclosures above. The Company estimates that the adoption of SFAS 123(R), based on the outstanding unvested stock options at December 31, 2005, will result in an additional compensation expense in 2006 of $162, net of income tax benefit.
(o)	Derivative Instruments and Hedging Activities
	The Company follows Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended (“SFAS 133”), which requires that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded on the balance sheet as either an asset or liability measured at its fair value. SFAS 133 requires that changes in the derivative’s fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The Company estimates fair value based on quotes obtained from the counterparties to the derivative contract. The fair value of derivative contracts that expire in less than one year are recognized as current assets or liabilities. Those that expire in more than one year are recognized as long-term assets or liabilities. Derivative financial instruments that are not accounted for as hedges are adjusted to fair value through income. If the derivative is designated as a cash flow hedge, changes in fair value are recognized in other comprehensive income/loss until the hedged item is recognized in earnings. See Note 4.
	From time to time, the Company has entered into forward purchase contracts for the delivery of a portion of the natural gas requirements of its plants. All such contracts are recorded on the balance sheet at their respective fair values. The Company is exposed to credit losses in the event of non-performance by the counterparties of its financial instruments. Collateral or other security to support financial instruments subject to credit risk is not required, but management monitors the credit standing of the counterparties. The Company has elected not to designate these forward purchase contracts as hedges for accounting purposes. The costs of natural gas delivered under these contracts is included in labor and other operating expenses during the month of delivery.
	As of December 31, 2005, the Company had a commitment to purchase 35 MMBTU in January 2006 at $9.49 per MMBTU. The market price in dollars for delivery in January 2006, as of December 31, 2005, was $11.225 per MMBTU. Accordingly, the Company recorded a mark-to-market adjustment, resulting in a $61 decrease in labor and other operating expenses at December 31, 2005, which is included in other current assets on the balance sheet. The Company had a commitment to purchase 20MMBTU in January 2005 at $6.49 per MMBTU. The market price in dollars for delivery in January 2005 as of December 31, 2004 was $6.213 per MMBTU. Accordingly, the Company recorded a mark-to-market adjustment, resulting in a $5 increase in labor and other operating expenses at December 31, 2004, which is included in accrued expenses on the balance sheet. As of December 31, 2003, the Company had commitments to purchase, under two forward purchase contracts, a total of 20MMBTU per month for the months of January, February and March 2004. The delivery prices in dollars for these volumes averaged $5.20 per MMBTU. The market prices in dollars for deliveries in these months as of December 31, 2003 were $6.15 per MMBTU for January deliveries, $6.19 per MMBTU for February deliveries and $6.00 per MMBTU for March deliveries. Accordingly, the Company recorded a mark-to-market adjustment, resulting in a $55 reduction of labor and other operating expenses at December 31, 2003.
(p)	Income Taxes
	The Company utilizes the asset and liability approach in its reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
(p)	Comprehensive Income (Loss)
	The Company follows Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive Income” (“SFAS 130”), which provides standards for reporting and displaying

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comprehensive income. Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events from non-owner sources. See Notes 4, 5 and 8.

(2) Restatement of Revenues and Cost of Revenues

     Revenues and cost of revenues for 2004 and 2003 have been restated to correct an error in accounting for external freight billed to customers (“External Freight”). Revenues for 2004 and 2003 were increased by $15,552 and $12,176, respectively, to include External Freight. The increases in revenues for both years were entirely offset by a corresponding increase in cost of revenues, resulting in no change in previously reported gross profit, operating profit or net income for the 2004 and 2003 periods.

(3) Embezzlement Matter

     The Company’s former Vice President – Finance, Controller, Treasurer and Secretary, Larry Ohms (the “Former VP Finance”), over a period of four years beginning in 1998, embezzled approximately $2,179 from the Company. In 2002, the Former VP Finance pleaded guilty to one count of wire fraud and one count of making a false statement to the Securities and Exchange Commission (the “SEC”), and on March 24, 2003 was sentenced to a term in federal prison and ordered to pay $2,179 in restitution to the Company.

     The Company obtained a judgment against the Former VP Finance, including compensatory and punitive damages. The Former VP Finance has claimed not to have any funds. Recoveries from third parties were recognized in the quarters in which the recoveries were realized, and the costs of the internal investigation, cooperation with the SEC, NASDAQ and criminal authorities in their investigations and recovery efforts were expensed as incurred. During 2003, the Company recorded recoveries of $770, net of income taxes ($971 gross), and embezzlement-related costs of $162, net of income tax benefits ($202 gross). The Company does not anticipate any future material embezzlement-related costs or recoveries.

(4) Banking Facilities and Other Debt

     On October 19, 2005, the Company entered into an amendment to our credit agreement (the “Amendment”) primarily to increase the loan commitments and extend the maturity dates. As a result of the Amendment, our credit agreement now includes a ten-year $40,000 term loan (the “New Term Loan”), a ten-year $20,000 multiple draw term loan (the “Draw Term Loan”) and a five-year $30,000 revolving credit facility (the “New Revolving Facility”) (collectively, the “New Credit Facilities”). The proceeds from the New Term Loan were used primarily to repay the outstanding balances on the term loan and revolving credit facility under the credit agreement prior to the Amendment. In December 2005, the Company drew down $15,000 on the Draw Term Loan to acquire U.S. Lime Company – St. Clair (described below). The Company has not yet made any draws on the New Revolving Facility.

     The New Term Loan requires quarterly principal payments of $833 beginning March 31, 2006, which equates to a 12-year amortization, with a final principal payment of $7,500 due on December 31, 2015. The Draw Term Loan will require quarterly principal payments, based on a 12-year amortization, of the principal outstanding thereon on January 1, 2007, beginning March 31, 2007, with a final principal payment on December 31, 2015 equal to any remaining principal then-outstanding. The New Revolving Facility is scheduled to mature on October 20, 2010. The maturity of the New Term Loan, the Draw Term Loan and the New Revolving Facility can be accelerated if any event of default, as defined under the New Credit Facilities, occurs.

     The New Credit Facilities continue to bear interest, at the Company’s option, at either LIBOR plus a margin of 1.25% to 2.50%, or the Bank’s Prime Rate plus a margin of minus 0.50% to plus 0.50%. The margins are determined quarterly in accordance with a defined rate spread based upon the ratio of our average total funded senior indebtedness for the preceding four quarters to EBITDA for the twelve months ended on the last day of the most recent calendar quarter. There were no material changes to the covenants and restrictions contained in the credit agreement as a result of the Amendment.

     In conjunction with the Amendment, the Company terminated the existing hedge and rolled its value into a new hedge (the “New Term Loan Hedge”) to buy down the fixed interest rate. The New Term Loan Hedge fixes LIBOR at 4.695% on the $40,000 New Term Loan for the period December 30, 2005 through its maturity date, resulting in an interest rate of 6.44% based on the current LIBOR margin of 1.75%. Effective December 30, 2005, the Company also entered into a hedge that fixes LIBOR at 4.875% on the $15,000 balance outstanding on the Draw Term Loan through its maturity date, resulting in an interest rate of 6.625% based on the LIBOR margin of 1.75%. The Company designated both hedges as cash flow hedges, and as such, changes in the fair market value

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will be included in other comprehensive income or loss. The Company will be exposed to credit losses in the event of non-performance by the counterparty of the hedges.

     On August 25, 2004, the Company entered into a credit agreement with a bank (the “Lender”) that, prior to the amendment, included a five-year $30,000 term loan (the “Term Loan”), and a three-year $30,000 revolving credit facility (the “Revolving Credit Facility”) collectively, the “Credit Facilities”). At the closing of the Credit Facilities, the Company borrowed $37,780 (the entire Term Loan, and $7,780 on the Revolving Credit Facility) to repay the outstanding balances, including a prepayment penalty and accrued interest, on the Company’s previous bank term loan and revolving credit facility. Pursuant to a security agreement, also dated August 25, 2004 (the “Security Agreement”), the Credit Facilities were, and the New Credit Facilities are, secured by the Company’s existing and hereafter acquired tangible assets, intangible assets and real property. The Company paid the Lender an origination fee equal to 0.25% of the total amount committed under the Credit Facilities.

     The Term Loan required a principal payment of $200 on September 30, 2004 and quarterly principal payments of $625 thereafter, which equated to a 12-year amortization, with a final principal payment of $17,925 due on August 25, 2009.

     The Credit Facilities bore interest at rates determined under the same provisions as described above for the New Credit Facilities. The margins were 1.75% for LIBOR and 0.0% for Prime Rate loans during 2004. From August 25 to December 31, 2004, the weighted average interest rate on our borrowings under the Credit Facilities was approximately 5.00%. In conjunction with the Credit Facilities, the Company entered into a hedge to fix the LIBOR rate for the Term Loan at 3.87% on $25,000 for the period September 1, 2004 through the maturity date, and on the remaining principal balance of approximately $4,700 for the period December 31, 2004 through the maturity date, resulting in an interest rate of 5.62% for the Term Loan based on the then-existing margin of 1.75%. The hedges were designated as cash flow hedges, and as such, changes in the fair market value were included in other comprehensive income or loss. The fair market value of the hedges at December 31, 2004 was a liability of $57, which was included in other liabilities on the December 31, 2004 Consolidated Balance Sheet.

     The New Credit Facilities and Security Agreement contain, as did the Credit Facilities, covenants that restrict the incurrence of debt, guaranties and liens, and place restrictions on investments and the sale of significant assets. The Company is also required to meet a minimum debt service coverage ratio and not exceed specified leverage ratios. The New Credit Facilities provide that the Company may pay annual dividends, not to exceed $1,500, so long as after such payment, the Company remains solvent and the payment does not cause or result in any default or event of default as defined under the New Credit Facilities.

     As a result of entering into the Credit Facilities and borrowings thereunder on August 25, 2004, the Company repaid all of the $35,556 then-outstanding debt under our previous $50,000 Senior Secured Term Loan (the “Old Term Loan”) and terminated the associated credit agreement that had been entered into on April 22, 1999 with a consortium of commercial banks. The Old Term Loan was repayable over a period of approximately eight years, maturing on March 30, 2007, and required monthly principal payments of $278, which began April 30, 2000, with a final principal payment of $26,944 on March 30, 2007, which equated to a 15-year amortization. The interest rate on the first $30,000 borrowed under the Old Term Loan was 8.875% and the blended rate for the additional $20,000 was 9.84%.

     Upon the prepayment of the Old Term Loan, the Company was required to pay a prepayment penalty of approximately $235, which was included in interest expense in the third quarter 2004. Also, approximately $632 of unamortized financing costs relating to the Old Term Loan was included in interest expense in the third quarter 2004.

     On August 25, 2004, the Company also terminated its previous $6,000 revolving credit facility and repaid the $1,750 then-outstanding principal balance. In addition, the Company had a $2,000 equipment line of credit (available for financing or leasing large mobile equipment used in its operations) from the bank that had issued the revolving credit facility, of which approximately $234 of operating lease obligations remained at December 31, 2005. The revolving credit facility was secured by our accounts receivable and inventories, provided for an interest rate of LIBOR plus 2.75% and matured on April 1, 2005.

     On August 5, 2003, the Company sold $14,000 of Sub Notes in a private placement under Section 4(2) of the Securities Act of 1933 to three accredited investors, one of which is an affiliate of Inberdon Enterprises Ltd., the Company’s majority shareholder (“Inberdon”), and another of which is an affiliate of Robert S. Beall, who owns approximately 12% of our outstanding shares. The Company believes that the terms of the private placement were more favorable to the Company than proposals previously received. Frost Securities, Inc. (“Frost”) provided an opinion to our Board of Directors that, from a financial point of view, the private placement was fair to the

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unaffiliated holders of our common stock in relation to other potential subordinated debt transactions then available to us. The Company paid Frost an aggregate of $381 for its advice, placement services and opinion.

     The net proceeds of approximately $13,450 from the private placement were primarily used to fund the Phase II expansion of our Arkansas facilities. Terms of the Sub Notes included: a maturity date of August 5, 2008, subject to acceleration upon a change in control; no mandatory principal payments prior to maturity; an interest rate of 14% (12% paid in cash and 2% paid in cash or in kind at our option); and, except as discussed below, no optional prepayment prior to August 5, 2005 and a 4% prepayment penalty (2% in certain specified circumstances prior to August 5, 2005) if repaid before maturity. The terms of the Sub Notes were identical to one another, except that the Sub Note for the affiliate of Inberdon did not prohibit prepayment prior to August 5, 2005 and did not require a prepayment penalty if repaid before maturity, resulting in a weighted average prepayment penalty of approximately 2.4% if the Sub Notes were repaid before maturity. The Sub Notes require compliance with our other debt agreements and restrict the sale of significant assets.

     The private placement also included six-year detachable warrants, providing the Sub Note investors the right to purchase an aggregate of 162,000 shares of the Company’s common stock, at 110% of the average closing price of one share of common stock for the trailing 30 trading days prior to closing, or $3.84. The fair value of the warrants was recorded as a reduction of the carrying value of the Sub Notes and was accreted over the term of the Sub Notes, resulting in an effective annual interest rate of 14.44%. After August 5, 2008, or upon an earlier change in control, the investors could require the Company to repurchase any or all shares acquired through exercise of the warrants (the “Warrant Shares”). The repurchase price for each Warrant Share was equal to the average closing price of one share of the Company’s common stock for the 30 trading days preceding the date the Warrant Shares were put back to the Company. Changes in the repurchase price for each Warrant Share were accreted or decreted to interest expense over the five-year period from the date of issuance to August 5, 2008. The investors are also entitled to certain registration rights for the resale of their Warrant Shares.

     Effective August 31, 2005, the holders of the warrants agreed to waive their Warrant Share put rights. The Company’s Warrant Share put liability was $1,337 as of August 31, 2005, which was eliminated by the waivers. Pursuant to accounting requirements, the Company increased stockholders’ equity by the $1,337, which represented non-cash charges to interest expense previously expensed by the Company, including a $798 charge to interest expense in the first eight months 2005. As a result of this waiver, the Company no longer has any liability to repurchase any Warrant Shares and will have no further charges or credits to interest expense for fluctuations in the price of the Company’s common stock.

     In October 2005, R.S. Beall Capital Partners L.P. (the “Holder”) elected to exercise its warrant for 34,714 shares pursuant to the cashless exercise option. The market value on the exercise date was $32.541, resulting in the issuance of 30,617 shares of the Company’s common stock to the Holder.

     The Company made principal prepayments on the Sub Notes totaling $7,000 during 2004, including full prepayment of the Sub Note held by the affiliate of Inberdon. Pursuant to the terms of the Sub Notes, a $30 prepayment penalty was paid on $1,500 of the principal prepayments in 2004. In August 2005, the Company prepaid the then-remaining $7,000 principal amount of the Sub Notes and a $280 prepayment penalty.

     A summary of outstanding debt at the dates indicated is as follows (in thousands of dollars):

	December 31,		December 31,
	2005		2004
Term Loans		40,000		29,175
Draw Term Loan		15,000		—
Sub Notes		—		7,000
Discount on Sub Notes		—		(110	)
Revolving Credit Facility		—		7,825
Subtotal		55,000		43,890
Less current installments		3,333		2,500
Debt, excluding current installments	$	51,667		41,390

     The Company estimated the fair value of the Sub Notes at December 31, 2004 was $7,400. This estimate was based on interest rates available for debt instruments with similar terms as of the valuation date. As the Company’s other debt instruments bear interest at floating rates, the Company estimates that the carrying value of these debt instruments at December 31, 2005 and 2004 approximates fair value.

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     Principal amounts payable on the Company’s long-term debt outstanding as of December 31, 2005 are as follows (in thousands of dollars):

Total	2006		2007		2008		2009		2010		Thereafter
$55,000		3,333		4,583		4,584		4,583		4,584		33,333

(5) Accumulated Other Comprehensive Loss

     The $215 and $363 accumulated other comprehensive loss (“AOCL”) at December 31, 2005 and 2004, respectively resulted from $452 and $306 for unfunded projected benefit obligations for a defined benefit pension plan at December 31, 2005 and 2004, respectively. The December 31, 2005 AOCL also included $180 for the mark-to-market asset for the Company’s interest rate hedges, while the December 31, 2004 AOCL also included $57 for the mark-to-market liability. See Notes 1(o), 4 and 8.

(6) Income Taxes

     Income tax expense for the years ended December 31, 2005, 2004 and 2003 is as follows:

	2005			2004			2003
Current income tax expense (benefit)	$	1,952			(448	)		495
Deferred income tax (benefit) expense		(128	)		1,832			449
Income tax expense	$	1,824			1,384			944

     A reconciliation of income taxes computed at the federal statutory rate to income tax expense, net for the years ended December 31, 2005, 2004 and 2003, is as follows:

	2005						2004						2003
				Percent						Percent						Percent
				of pretax						of pretax						of pretax
	Amount			Income			Amount			income			Amount			Income
Income taxes computed at the federal statutory rate	$	3,322			34.0	%	$	2,622			34.0	%	$	1,634			34.0	%
(Reduction) increase in taxes resulting from:
Statutory depletion in excess of cost depletion		(1,053	)		(10.8	)		(946	)		(12.3	)		(764	)		(15.9	)
State income taxes, net of federal income tax benefit		92			1.0			95			1.2			73			1.5
Recognition of previously reserved deferred tax assets		(1,002	)		(10.3	)		(218	)		(2.8	)		(50	)		(1.0	)
Interest expense for warrant share put liability		343			3.5			—			—			—			—
Other		122			1.3			(169	)		(2.2	)		51			1.0
Income tax expense	$	1,824			18.7		$	1,384			17.9	%	$	944			19.6	%

     Generally, the provisions of Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS 109”) require deferred tax assets to be reduced by a valuation allowance if, based on the weight of available evidence, it is “more likely than not” that some portion or all of the deferred tax assets will not be realized. SFAS 109 requires an assessment of all available evidence, both positive and negative, to determine the amount of any required valuation allowance.

     At December 31, 2005, the Company had deferred tax assets of $6,361 and deferred tax liabilities of $6,071. The principal deferred tax assets were alternative minimum tax (“AMT”) credit carryforwards of $5,342, benefit for federal net operating loss (“NOL”) carryforwards of $519, and other of $500 . The principal temporary difference related to the deferred tax liabilities was $5,949 for property and other of $122.

     At December 31, 2004, the Company had deferred tax liabilities of $5,690, a valuation allowance of $1,002 and deferred tax assets of $6,800. The principal temporary difference related to the deferred tax liabilities was property. The principal deferred tax assets were AMT credit carryforwards of $3,602 and $2,636 for federal NOL carryforwards.

     The Company had federal NOL carryforwards of approximately $1,500 and $7,800 at December 31, 2005 and 2004, respectively, with the earliest expiring in 2022. The Company also had state NOL carryforwards of approximately $3,000 at December 31, 2005 and 2004, with the earliest expiring in 2006.

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     Due to uncertainties about realizing its AMT credit carryforwards in other deferred tax assets, the Company established a valuation allowance as of December 31, 2004 for excess deferred tax assets which may not have been realizable in future years. At December 31, 2005, the Company had no valuation allowance based on its recent income history and expectations of income in the future.

(7) Oil and Gas Lease

     As of May 2004, the Company entered into an oil and gas lease agreement with EOG Resources, Inc. (“EOG”) with respect to oil and gas rights on it’s Cleburne, Texas property, that will continue so long as EOG is continuously developing the leased property as set forth in the lease. Pursuant to the lease, the Company received lease bonus payments totaling $1,328, which are reflected in other income for 2004. In addition, the Company retained a 20% royalty interest in oil and gas produced from any successful wells drilled on the leased property and an option to participate in any well drilled on the leased property as a 20% working interest owner, provided the Company elects to participate prior to the commencement of each well.

     During the fourth quarter 2005, drilling of the first well under the Company’s oil and gas lease was completed, and gas production began in February 2006. In addition to the 20% royalty interest, the Company elected to participate as a 20% working interest owner in this well. No reserves or production specifics for the well will be known until sufficient production has been logged.

     The Company will follow the successful-efforts method to account for oil and gas exploration and development expenditures. Under this method, drilling costs for productive wells will be capitalized and depleted using the units-of-production method.

(8) Employee Retirement Plans

     The Company has a noncontributory defined benefit pension plan (the “Corson Plan”) that covers substantially all union employees previously employed by its wholly-owned subsidiary, Corson Lime Company. In 1997, the Company sold substantially all of the assets of Corson Lime Company and all benefits for participants in the plan were frozen. During 1997 and 1998, the Company made contributions to the Corson Plan that were intended to fully fund the benefits earned by the participants. The Company made no contributions to the Corson Plan from 1999 through 2002. In recent years, significant declines in the financial markets have unfavorably impacted plan asset values, resulting in an unfunded projected benefit obligation of $427 and $270 at December 31, 2005 and 2004, respectively. As a result, the Company made contributions of $18 and $212 to the Corson Plan in 2005 and 2004, respectively, and recorded other comprehensive loss of $89, net of $54 tax benefit, and $69, net of $43 tax benefit for the years ended December 31, 2005 and 2004, respectively. The Company anticipates making a $28 contribution in 2006.

     In consultation with the investment advisor for the Corson Plan, the administrative committee, consisting of management employees appointed by the Company’s Board of Directors, establishes the investment objective for the plan’s assets. The investment advisor makes all specific investment decisions. Historically, Corson Plan assets have been allocated approximately 50% to 70% to equity securities with a goal of providing long-term growth of at least 9.0% per year. Due to reduced returns on assets during the last few years, the Company reduced its expected average future long-term rate of return for the Corson Plan assets to 7.75% (8.25% in 2004) based on an asset allocation policy of 50% to 70% to common equities with the remainder allocated to fixed income securities. The Company’s long-term rate of return expectations are based on past performance of equity and fixed income securities and the Corson Plan’s asset allocations.

     The following table sets forth the asset allocation for the Corson Plan at November 30 (measurement date):

	2005			2004
Equity securities and funds		61.6	%		58.7	%
Institutional bond funds		36.4			39.8
Cash and cash equivalents		2.0			1.5
		100.0	%		100.0	%

     The following table sets forth the funded status of the Corson Plan accrued pension benefits at November 30 (measurement date):

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	2005			2004
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	1,702			1,589
Interest cost		102			106
Actuarial loss		125			124
Benefits paid		(114	)		(117	)
Projected benefit obligation at end of year	$	1,815			1,702
Change in plan assets:
Fair value of plan assets at beginning of year	$	1,432			1,252
Employer contribution		18			212
Actual gain on plan assets		52			85
Benefits paid		(114	)		(117	)
Fair value of plan assets at end of year	$	1,388			1,432
Underfunded status	$	(427	)		(270	)
Accumulated benefit obligation	$	1,815			1,702

     The net liability recognized in the consolidated balance sheets at December 31 consists of the following:

	2005		2004
Accrued benefit cost	$	427		270

     The weighted average assumptions used in the measurement of the Corson Plan benefit obligation at December 31 are as follows:

	2005			2004
Discount rate		5.75	%		6.25	%
Expected long-term return on plan assets		7.75	%		8.25	%

     The following table provides the components of the Corson Plan net periodic benefit cost:

	Year Ended December 31,
	2005			2004			2003
Interest cost	$	102			106			111
Expected return on plan assets		(114	)		(110	)		(96	)
Amortization of net actuarial loss		44			38			37
Net periodic benefit cost	$	32			34			52

     The Company expects benefit payments of $120 in 2006, $117 in 2007, $113 in 2008, $129 in 2009, $128 in 2010 and $662 for years 2011-2015.

     The Company has a contributory retirement (401(k)) savings plan for nonunion employees. Company contributions to the plan were $70 during 2005, $64 during 2004 and $57 during 2003. The Company also has contributory retirement (401(k)) savings plans for union employees of Arkansas Lime Company and Texas Lime Company. The Company contributions to these plans were $45 in 2005, $42 in 2004 and $35 in 2003.

(9) Stock Option Plans

     On April 27, 2001, the Company implemented the 2001 Long-Term Incentive Plan (the “2001 Plan”) that replaced the 1992 Stock Option Plan, as Amended and Restated (the “1992 Plan”). In addition to stock options, the 2001 Plan, unlike the 1992 Plan, provides for the grant of stock appreciation rights, restricted stock, deferred stock and other stock-based awards to officers and employees. The 2001 Plan also makes directors and consultants eligible for grants of stock options and other awards. The 1992 Plan only provided for grants to key employees. As a result of the adoption of the 2001 Plan, no further grants will be made under the 1992 Plan, but the terms of the 1992 Plan will continue to govern options that remain outstanding under the 1992 Plan.

     The number of shares of common stock that may be subject to outstanding awards granted under the 2001 Plan (determined immediately after the grant of any award) may not exceed 475,000. In addition, no individual may receive awards in any one calendar year relating to more than 100,000 shares of common stock. The options

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under both the 2001 Plan and 1992 Plan expire ten years from the date of grant and generally become exercisable, or vest, over a period of one to three years from the grant date.

     As of December 31, 2005, the number of shares remaining available for future grant under the 2001 Plan was 140,500. A summary of the Company’s stock option activity and related information for the years ended December 31, 2005, 2004 and 2003 is as follows:

	2005					2004					2003
				Weighted					Weighted					Weighted
				Average					Average					Average
	Options			Exercise Price		Options			Exercise Price		Options			Exercise Price
Outstanding at beginning of year		379,000		$	7.21		319,500		$	5.62		225,000		$	6.55
Granted		77,500			20.73		106,000			9.32		114,500			3.65
Exercised		(164,800	)		6.21		(46,000	)		5.04		(20,000	)		4.75
Forfeited		(13,500	)		21.80		(500	)		7.00		—			—
Outstanding at end of year		278,200		$	11.97		379,000		$	7.21		319,500		$	5.62
Exercisable at end of year		182,756		$	10.22		225,857		$	6.69		213,000		$	6.59
Weighted average fair value of options granted during the year				$	8.42				$	3.15				$	0.86
Weighted average remaining contractual life in years					7.36					6.53					6.58

     The following table summarizes information about options outstanding at December 31, 2005:

	Outstanding						Exercisable
Range of	Weighted Avg. Remaining		Number of		Weighted Avg.		Number of		Weighted Avg.
Exercise Prices	Contractual Life (Years)		Shares		Exercise Price		Shares		Exercise Price
$  3.26 - $  3.85		7.23		63,000	$	3.55		43,500	$	3.40
$  7.00 - $  8.56		5.76		117,700	$	8.06		75,033	$	7.81
$11.35 - $13.31		9.08		65,000	$	12.34		38,000	$	11.76
$26.47 - $28.08		9.97		32,500	$	26.59		26,223	$	26.47
				278,200				182,756

(10) Commitments and Contingencies

     The Company leases some of the equipment used in its operations under operating leases. Generally, the leases are for periods varying from one to five years and are renewable at the option of the Company. The Company also has a lease for corporate office space. Total lease and rent expense was $733 for 2005, $737 for 2004, and $561 for 2003. As of December 31, 2005, future minimum payments under noncancelable operating leases were $789 for 2006, $581 for 2007, $282 for 2008, $268 for 2009, $137 for 2010 and $0 thereafter.

     Prior to the August 2005 waiver, the Sub Note investors could require the Company to repurchase, at the per share price equal to the average closing price for the preceding 30 trading days, any or all of the 162,000 shares that could be purchased by exercising the warrants. The liability recognized in the consolidated balance sheets for this potential repurchase obligation was $539 at December 31, 2004 and $1,337 as of August 31, 2005, which was eliminated by the waiver.

     The Company is party to lawsuits and claims arising in the normal course of business, none of which, in the opinion of management, is expected to have a material adverse effect on the Company’s financial condition, results of operation, cash flows or competitive position.

     The Company is not contractually committed to any planned capital expenditures until actual orders are placed for equipment or services. At December 31, 2005, the Company had approximately $19,000 for open equipment and construction orders related to the construction of a third kiln at its Arkansas facilities. In addition, the Company had $642 in accounts payable and accrued expenses related to capital expenditures incurred late in the year. At December 31, 2004, the Company had commitments for approximately $701 of open equipment and

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construction orders and approximately $1,367 included in accounts payable and accrued expenses related to the refurbishing of the Shreveport terminal and the Texas kiln baghouse projects.

(11) Acquisitions

     In September 2005 the Company acquired the assets of a new limestone grinding and bagging facility located on approximately three and one-half acres of land in Delta, Colorado for approximately $2,821, to expand its Colorado business of processing mine safety dust used in coal mining operations.

     On December 28, 2005, the Company acquired all of the issued and outstanding capital stock of O-N Minerals (St. Clair) Company (“St. Clair”) from a wholly-owned subsidiary of Oglebay Norton Company for $14,000 in cash, plus transaction costs. The purchase price is subject to a working capital adjustment estimated to be $821. The Company funded the St. Clair purchase with a $15,000 advance from its ten-year $20,000 Draw Term Loan. The Company acquired St. Clair to increase its lime and limestone operations and for anticipated synergistic benefits with its Texas and Arkansas facilities to expand its market reach and better serve its customers.

     The purchase price, including transaction costs and the estimated working capital adjustment, of which approximately $212 is in accounts payable and accrued expenses at December 31, 2005, to be allocated is as follows:

Cash	$	14,000
Estimated working capital adjustment		(821	)
Transaction costs		323
Total purchase price to be allocated	$	13,502

     Using the purchase method of accounting for business combinations, the purchase price was allocated first to the fair values of current assets acquired and liabilities assumed, with the remainder of the purchase price allocated to long-lived assets on the basis of their relative fair values as follows:

Current assets, including accounts receivable and inventories	$	3,259
Property, plant and equipment		11,632
Current liabilities, including accounts payable and accrued Expenses		(771	)
Reclamation liability		(618	)
Total purchase price allocated	$	13,502

     These assets and liabilities are reflected in the Company’s December 31, 2005 Consolidated Balance Sheet.

     The following unaudited pro forma selected financial information (the “Pro Formas”) has been derived from the historical financial statements of the Company and St. Clair. The Pro Formas are presented as if the acquisition of St. Clair had occurred as of the beginning of each period presented and do not reflect any operating efficiencies or cost savings that the Company may achieve with respect to the acquisition. They also do not reflect any future increases in prices for St. Clair’s products that may be attained by the Company. The Pro Formas were prepared in accordance with the purchase method of accounting for business combinations.

     The Pro Formas are not necessarily indicative of the operating results that would have occurred had the acquisition been consummated as of the beginning of each period presented, nor the consolidated results of future operations.

	2005		2004
	Unaudited		Unaudited
Revenues	$	97,423		85,906
Operating profit	$	13,156		11,318
Net Income (loss)	$	6,904		5,302
Income per share of common stock:
Basic	$	1.16		0.90
Diluted	$	1.14		0.90

(12) Subsequent Events (unaudited)

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	(a) Exercises of Warrants
	On February 3, 2006, Credit Trust S.A.L., an affiliate of Inberdon, exercised for cash its Warrant to acquire 63,643 shares of the Company’s common stock, par value $0.10 per share (the “Common Stock”). The exercise price was $3.84 per share of Common Stock, and Credit Trust paid the Company $244. The Company issued 63,643 shares of Common Stock to Credit Trust pursuant to Section 4(2) of the Securities Act of 1933.
	On February 13, 2006, ABB Finance Inc. exercised for cash its Warrant to acquire 63,643 shares of the Common Stock. The exercise price was $3.84 per share of Common Stock, and ABB Finance Inc. paid the Company $244. The Company issued 63,643 shares of Common Stock to ABB Finance Inc. pursuant to Section 4(2) of the Securities Act of 1933.
	(b)  Oil and Gas Lease
	In addition to a 20% royalty interest, the Company elected in January 2006 and March 2006 to participate as a 20% working interest owner in the second and third wells and the fourth well, respectively, to be drilled under the Company’s oil and gas lease. (See Note 7.) Estimated drilling and completion costs for the 20% working interest are approximately $450 per well. The second and third wells have been completed with gas production scheduled to begin shortly.
(13)	Summary of Quarterly Financial Data (unaudited)

	2005
	March 31,		June 30,		September 30,		December 31,
Revenues – as restated (1)	$	19,772		21,375		20,064		19,875
Gross profit		4,389		5,764		5,281		3,932
Net income	$	1,495		2,909		1,943		1,601
Basic income per common share	$	0.26		0.49		0.33		0.27
Diluted income per common share	$	0.25		0.49		0.31		0.26

⁽¹⁾ Revenues for the quarters ended March 31, June 30 and September 30, 2005 have been restated to include External Freight of $4,306, $4,251 and $4,160, respectively. (See Note 2.)

	2004
	March 31,		June 30,			September 30,		December 31,
Revenues – as restated (1)	$	15,234		18,621			20,187		17,189
Gross profit		3,415		4,605			5,159		3,841
Net income	$	830		2,452	(2)		1,730		1,317
Basic income per common share	$	0.14		0.42			0.30		0.23
Diluted income per common share	$	0.14		0.42			0.29		0.22

(1)	Revenues for the quarters ended March 31, June 30, September 30 and December 31, 2004 have been restated to include External Freight billed to customers of $3,159, $3,869, $4,417 and $4,107, respectively. (See Note 2.)
(2)	Includes an oil gas lease bonus payment of $1,192 ($954, or $0.16 per diluted share, net of income taxes).

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

NONE

ITEM 9A. CONTROLS AND PROCEDURES.

     The Company’s management, with the participation of the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the CEO and CFO concluded the Company’s disclosure controls and procedures as of the end of the period covered by this report were not effective. In connection with the acquisition and consolidation of St. Clair, management became aware that, historically, the Company had not been properly accounting for external freight billed to customers. The Company’s management initiated a review of the matter and has determined that both revenues and cost of revenues should include external freight. Accordingly, the Company has restated its prior financial statements in this Report on Form 10-K to show increased revenues and cost of revenues. There has been no change in the gross profit, operating profit or net income for the periods restated.

     In connection with its review of this matter, the Company’s management has initiated various improvements and enhancements in the Company’s disclosure controls and procedures. The Company has changed its revenue recognition policy and improved internal procedures used by the Company to track revenues, including external freight billed to customers, and cost of revenues. The Audit Committee of the Company’s Board of Directors has concurred with the Company’s changes in revenue recognition policy.

     The Company acquired St. Clair on December 28, 2005 and has not encountered any significant issues to date in integrating the St. Clair operations into the Company’s disclosure controls and procedures.

     No change in the Company’s internal control over external financial reporting occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

NOT APPLICABLE

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     The information appearing under “Election of Directors”, “Nominees for Director”, “Executive Officers Who Are Not Also Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Corporate Governance” in the definitive Proxy Statement for the Company’s 2006 Annual Meeting of Shareholders (the “2006 Proxy Statement”) is hereby incorporated by reference in answer to this Item 10. The Company anticipates that it will file the 2006 Proxy Statement with the Securities and Exchange Commission on or before April 8, 2006.

ITEM 11. EXECUTIVE COMPENSATION.

     The information appearing under “Executive Compensation” in the 2006 Proxy Statement is hereby incorporated by reference in answer to this Item 11.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

     The information appearing under “Voting Securities and Principal Shareholders”, “Shareholdings of Company Directors and Executive Officers” and “Executive Compensation” in the 2006 Proxy Statement is hereby incorporated by reference in answer to this Item 12.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information appearing under “Certain Transactions” in the 2006 Proxy Statement is hereby incorporated by reference in answer to this Item 13.

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

     The information appearing under “Independent Auditors” in the 2006 Proxy Statement is hereby incorporated by reference in answer to this Item 14.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)	1.	The following financial statements are included in Item 8:
		Reports of Independent Registered Public Accounting Firms
		Consolidated Financial Statements:
			Consolidated Balance Sheets as of December, 31, 2005 and 2004;
			Consolidated Statements of Income for the Years Ended December 31, 2005, 2004 and 2003;
			Consolidated Statements of Stockholders’ Equity for the Years Ended December, 31, 2005, 2004 and 2003;
			Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003; and
			Notes to Consolidated Financial Statements.
	2.	All financial statement schedules are omitted because they are not applicable, or are immaterial, or the required information is presented in the consolidated financial statements or the related notes.
	3.	The following documents are filed with or incorporated by reference into this Report:

3.1	Articles of Amendment to the Articles of Incorporation of Scottish Heritable, Inc. dated as of January 25, 1994 (incorporated by reference to Exhibit 3(a) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993, File Number 000-4197).
3.2	Restated Articles of Incorporation of the Company dated as of May 14, 1990 (incorporated by reference to Exhibit 3(b) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993, File Number 000-4197).
3.3	Composite Copy of Bylaws of the Company dated as of December 31, 1991 (incorporated by reference to Exhibit 3(b) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1991, File Number 000-4197).
10.1	United States Lime & Minerals, Inc. 1992 Stock Option Plan, as Amended and Restated (incorporated by reference to Exhibit 10(c) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, File Number 000-4197).
10.2	United States Lime & Minerals, Inc. 2001 Long-Term Incentive Plan (incorporated by reference to Exhibit B to the Company’s definitive Proxy Statement for its Annual Meeting of Shareholders held on April 27, 2001, File Number 000-4197).
10.3	Loan and Security Agreement dated December 30, 1997 among United States Lime & Minerals, Inc., Arkansas Lime Company and Texas Lime Company and CoreStates Bank, N.A. (incorporated by reference to Exhibit 10(l) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997, File Number 000-4197).
10.4	First Amendment to Amended and Restated Loan and Security Agreement dated August 31, 1998 among United States Lime & Minerals, Inc., Arkansas Lime Company and Texas Lime Company and First Union National Bank (incorporated by reference to Exhibit 10(a) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September, 30, 1998, File Number 000-4197).

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10.5	Employment Agreement dated as of October 11, 1989 between the Company and Billy R. Hughes (incorporated by reference to Exhibit 10(a) to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, File Number 000-4197).
10.6	Employment Agreement dated as of April 17, 1997 between the Company and Johnney G. Bowers (incorporated by reference to Exhibit 10(o) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997, File Number 000-4197).
10.7	Employment Agreement dated as December 8, 2000 between the Company and Timothy W. Byrne (incorporated by reference to Exhibit 10(s) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000, File Number 000-4197).
10.7.1	Amended and Restated Employment Agreement dated as of May 2, 2003 between the Company and Timothy W. Byrne (incorporated by reference to Exhibit 10.8.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003, File Number 000-4197).
10.8	Credit Agreement dated April 22, 1999 among United States Lime & Minerals, Inc., Arkansas Lime Company, Texas Lime Company, the Lenders who are, or may become, a party to the Agreement, and First Union National Bank (incorporated by reference to Exhibit 10(a) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, File Number 000-4197).
10.9	Second Amendment to Amended and Restated Loan and Security Agreement dated as of April 22, 1999 among United States Lime & Minerals, Inc., Arkansas Lime Company, Texas Lime Company, and First Union National Bank (incorporated by reference to Exhibit 10(b) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, File Number 000-4197).
10.10	Letter Agreement dated as of May 31, 2000 among United States Lime & Minerals, Inc., Arkansas Lime Company, Texas Lime Company and First Union National Bank (incorporated by reference to Exhibit 10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, File Number 000-4197).
10.11	Third Amendment to Amended and Restated Loan and Security Agreement dated as of April 26, 2001 among United States Lime & Minerals, Inc., Arkansas Lime Company, Texas Lime Company, and First Union National Bank (incorporated by reference to Exhibit 10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2001, File Number 000-4197).
10.12	Fourth Amendment to Amended and Restated Loan and Security Agreement dated as of December 31, 2001 among United States Lime & Minerals, Inc., Arkansas Lime Company, Texas Lime Company, and First Union National Bank (incorporated by reference to Exhibit 10(u) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001, File Number 000-4197).
10.13	First Amendment to Credit Agreement dated as of December 27, 2000 among United States Lime & Minerals, Inc., Arkansas Lime Company, Texas Lime Company, the Lenders who are, or may become, a party to the Agreement, and First Union National Bank (incorporated by reference to the Company’s Current Report on Form 8-K dated January 18, 2001, File Number 000-4197).
10.14	Second Amended and Restated Note dated April 26, 2001 among United States Lime & Minerals, Inc., Arkansas Lime Company, Texas Lime Company, the Lenders who are, or may become, a party to the Agreement, and First Union National Bank (incorporated by reference to Exhibit 10(x) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002, File Number 000-4197).
10.15	Fifth Amendment to Amended and Restated Loan and Security Agreement dated as of May 31, 2002 among United States Lime & Minerals, Inc., Arkansas Lime

- 42 -

	Company, Texas Lime Company and Wachovia Bank, f/k/a First Union National Bank (incorporated by reference to Exhibit 10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, File Number 000-4197).
10.16	Sixth Amendment to Amended and Restated Loan and Security Agreement dated as of January 31, 2003 among United States Lime & Minerals, Inc., Arkansas Lime Company, Texas Lime Company and Wachovia Bank. (incorporated by reference to Exhibit 10(s) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002, File Number 000-4197).
10.17	Loan and Security Agreement dated March 3, 2003 among United States Lime & Minerals, Inc., Texas Lime Company, Arkansas Lime Company and National City Bank (incorporated by reference to Exhibit 10(t) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002, File Number 000-4197).
10.18	Note and Warrant Purchase Agreement dated as of August 5, 2003 by and among United States Lime & Minerals, Inc. and Credit Trust S.A.L., ABB Finance Limited and R.S. Beall Capital Partners, LP (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, File Number 000-4197).
10.19	Form of 14% Subordinated PIK Note due 2008 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, File Number 000-4197).
10.20	Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, File Number 000-4197).
10.21	Registration Rights Agreement dated as of August 5, 2003 by and among United States Lime & Minerals, Inc. and Credit Trust S.A.L., ABB Finance Limited and R.S. Beall Capital Partners, LP (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, File Number 000-4197).
10.22	Third Amendment to Credit Agreement dated as of August 5, 2003 among United States Lime & Minerals, Inc., Arkansas Lime Company, Texas Lime Company, the Lenders who are, or may become, a party to the Agreement, and National City Bank (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, File Number 000-4197).
10.23	First Amendment to Loan and Security Agreement dated August 5, 2003 among United States Lime & Minerals, Inc., Texas Lime Company, Arkansas Lime Company and National City Bank (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, File Number 000-4197).
10.24	Second Amendment to Loan and Security Agreement dated as of December 29, 2003 among United States Lime & Minerals, Inc., Texas Lime Company, Arkansas Lime Company and National City Bank (incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002, File Number 000-4197).
10.25	Oil and Gas Lease Agreement dated as of May 28, 2004 between Texas Lime Company and EOG Resources, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, File Number 000-4197).
10.26	Credit Agreement dated as of August 25, 2004 among United States Lime & Minerals, Inc., each Lender from time to time a party thereto, and Wells Fargo Bank, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 31, 2004, File Number 000-4197).

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10.27	Security Agreement dated as of August 25, 2004 among United States Lime & Minerals, Inc., Arkansas Lime Company, Colorado Lime Company, Texas Lime Company and U. S. Lime Company – Houston, in favor of Wells Fargo Bank, N. A., as Administrative Agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated August 31, 2004, File Number 000-4197).
10.28	Stock Purchase Agreement dated as of December 28, 2005 by and among Oglebay Norton Company, O-N Minerals Company, O-N Minerals (Lime) Company and Unite States Lime & Minerals, Inc.
10.29	Schedule of Non-Employee Director Compensation (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 24, 2005, File Number 000-4197).
10.30	Second Amendment to Credit Agreement dated as of October 19, 2005 among United States Lime & Minerals, Inc., each Lender from time to time a party thereto, and Wells Fargo Bank, N.A., as Administrative Agent. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated October 20, 2005, File Number 000-4197).
10.31	Termination Agreement effective October 14, 2005 entered into by and between United States Lime & Minerals, Inc. and Wells Fargo Bank, N.A. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated August 24, 2005, File Number 000-4197).
10.32	Amended and Restated Confirmation dated October 14, 2005 entered into by and between United States Lime & Minerals, Inc. and Wells Fargo Bank, N.A. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated August 24, 2005, File Number 000-4197).
21	Subsidiaries of the Company.
23.1	Consent of Independent Registered Public Accounting Firm.
23.2	Consent of Independent Registered Public Accounting Firm.
31.1	Rule 13a-14(a)/15d-14(a)Certification by Chief Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a)Certification by Chief Financial Officer.
32.1	Section 1350 Certification by Chief Executive Officer.
32.2	Section 1350 Certification by Chief Financial Officer.

Exhibits 10.1, 10.2, 10.5 through 10.7.1 and 10.29 are management contracts or compensatory plans or arrangements required to be filed as exhibits.

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SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

UNITED STATES LIME & MINERALS, INC.

Date: March 13, 2006	By:	\s\ Timothy W. Byrne
		Timothy W. Byrne, President and
		Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Date: March 13, 2006	By:	\s\ Timothy W. Byrne
		Timothy W. Byrne, President,
		Chief Executive Officer, and Director
		(Principal Executive Officer)
Date: March 13, 2006	By:	\s\ M. Michael Owens
		M. Michael Owens, Vice President
		and Chief Financial Officer
		(Principal Financial and Accounting Officer)
Date: March 13, 2006	By:	\s\ Edward A. Odishaw
		Edward A. Odishaw, Director
Date: March 13, 2006	By:	\s\ Antoine M. Doumet
		Antoine M. Doumet, Director and
		Chairman of the Board
Date: March 13, 2006	By:	\s\ Wallace G. Irmscher
		Wallace G. Irmscher, Director
Date: March 13, 2006	By:	\s\ Richard W. Cardin
		Richard W. Cardin, Director

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EX-10.28

Exhibit 10.28

CONFIDENTIAL

STOCK PURCHASE AGREEMENT

Among

OGLEBAY NORTON COMPANY,

O-N MINERALS COMPANY,

O-N MINERALS (LIME) COMPANY

and

UNITED STATES LIME & MINERALS, INC.

Dated

December ____, 2005

TABLE OF CONTENTS

	Page
ARTICLE I DEFINITIONS; CONSTRUCTION	1
1.1 Definitions	1
1.2 Construction	7
ARTICLE II THE SALE AND PURCHASE	8
2.1 Closing	8
2.2 Sale and Purchase of Sale Shares	8
2.3 Purchase Price	8
2.4 Closing Matters	8
2.5 Purchase Price Working Capital Adjustment	9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS	11
3.1 Organization and Authority	11
3.2 Authorization; Enforceability	11
3.3 Shares; Capitalization	11
3.4 No Violation of Laws or Agreements; Consents	12
3.5 Financial Statements; Books and Records	12
3.6 No Changes	13
3.7 Taxes	14
3.8 Owned and Leased Property; Condition of Assets	16
3.9 Condition of Assets	17
3.10 No Pending or Threatened Litigation	17
3.11 Compliance With Law; Permits	17
3.12 Intellectual Property Rights	18
3.13 Labor Matters	18
3.14 Employees: Employee Related Agreements and Plans; ERISA	19
3.15 Environmental Matters	21
3.16 Bank Accounts	22
3.17 Material Contracts	22
3.18 Brokers, Finders, Etc	23
3.19 Insurance	23
3.20 Inventories	24
3.21 Product Liability	24
3.22 Significant Customers and Suppliers	24
3.23 Accounts Receivable	24
3.24 Disclosure	24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER	25
4.1 Organization	25
4.2 Authorization; Enforceability	25

i
 

	Page
4.3 No Violation of Laws; Consents		25
4.4 No Pending Litigation or Proceedings		25
4.5 Brokers, Finders, Etc		25
4.6 Investment		25
4.7 Financial Ability		26
ARTICLE V [Intentionally Left Blank]		26
ARTICLE VI ADDITIONAL AGREEMENTS		26
6.1 Use of Names		26
6.2 Tax Matters		26
6.3 Employees and Plans		29
6.4 Insurance		31
6.5 No Public Announcement		31
6.6 Expenses		31
6.7 Covenant Not to Compete		31
6.8 Further Assurances and Cooperation		32
6.9 Regarding Accounting, Financial Statements, and SEC Reporting		32
6.10 Indemnification		33
6.11 Consents		33
6.12 Groundwater Monitoring Program		33
6.13 Accounts Receivable		33
6.14 Infringement Liability		33
6.15 Trapezoid Parcel		34
6.16 Master Lease and License Arrangements		34
6.17 Defense of Certain Disclosed Litigation and Claims		34
ARTICLE VII CONDITIONS TO CLOSING		35
7.1 Conditions Precedent to Obligation of Buyer		35
7.2 Conditions Precedent to Obligation of Sellers		35
ARTICLE VIII INDEMNIFICATION		35
8.1 Survival of Representations, Warranties, Covenants and Agreements		35
8.2 General Indemnification		36
8.3 Procedures		37
8.4 Consequential Damages		40
8.5 Sole Remedy		40
8.6 Costs		40
ARTICLE IX MISCELLANEOUS		40
9.1 Books and Records		40
9.2 Notices		41
9.3 Assignment; Governing Law		42
9.4 Amendment and Waiver; Cumulative Effect		43
9.5 No Third Party Beneficiaries		43

ii
 

	Page
9.6 Severability		43
9.7 Multiple Counterparts		44
9.8 Joint Drafting		44
9.9 Entire Agreement		44

iii
 

LIST OF SCHEDULES

Note: Schedules Omitted. Registrant agrees to furnish supplementally a copy of any omitted Schedules to the Commission upon request.

Schedule 1.1A -	Closing Net Working Capital
Schedule 1.1B -	Permitted Encumbrances
Schedule 3.3 -	Shares; Capitalization
Schedule 3.4(a) -	No Violation of Laws or Agreements
Schedule 3.4(b) -	Consents
Schedule 3.5 -	Financial Statements; Books and Records
Schedule 3.6 -	No Changes
Schedule 3.7 -	Taxes
Schedule 3.8(a) -	Owned Real Property
Schedule 3.8(b) -	Leases of Real Property
Schedule 3.8(d) -	Shared Facilities
Schedule 3.8(e) -	Rights in the Assets
Schedule 3.9 -	Condition of Assets
Schedule 3.10 -	No Pending or Threatened Litigation
Schedule 3.11(a) -	Compliance With Law
Schedule 3.11(b) -	Permits
Schedule 3.12(a) -	Intellectual Property Agreements
Schedule 3.12(b)(i) -	Rights in Intellectual Property
Schedule 3.12(b)(ii) -	Patents
Schedule 3.12(b)(iii) - -	Marks
Schedule 3.13-	Labor Matters
Schedule 3.14(a) -	List of Plans
Schedule 3.14(b) -	Status of Plans
Schedule 3.14(c) -	Liabilities
Schedule 3.14(d) -	Contributions
Schedule 3.14(f)(i) -	Employees
Schedule 3.14(f)(ii) -	Employees
Schedule 3.15-	Environmental Matters
Schedule 3.15(c) -	Permits
Schedule 3.16-	Bank Accounts
Schedule 3.17-	Material Contracts
Schedule 3.18-	Brokers, Finders, Etc.
Schedule 3.19(a) -	Insurance Policies
Schedule 3.19(b) -	Insurance Claims
Schedule 3.20-	Inventories
Schedule 3.21-	Product Liability
Schedule 3.22-	Significant Customers and Suppliers
Schedule 3.23 -	Accounts Receivable

IV
 

List of Exhibits

Note: Exhibits Omitted. Registrant agrees to furnish supplementally a copy of any omitted Exhibits to the Commission upon request.

Exhibit A	Opinion of Sellers’ Counsel
Exhibit B	Escrow Agreement

V
 

STOCK PURCHASE AGREEMENT

     This STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of the 28^th day of December, 2005, by and among OGLEBAY NORTON COMPANY, an Ohio corporation (“Parent”), O-N MINERALS COMPANY, an Ohio corporation (“O-N Minerals”), O-N MINERALS (LIME) COMPANY, a Georgia corporation (“O-N Lime”, and together with Parent and O-N Minerals, “Sellers”), and UNITED STATES LIME & MINERALS, INC., a Texas corporation (“Buyer”).

INTRODUCTORY STATEMENTS

A. Sellers directly or indirectly own all of the issued and outstanding capital stock of O-N Minerals (St. Clair) Company, a Delaware corporation (the “Sale Shares” and the “Company,” respectively).

B. On the terms and subject to the conditions set forth in this Agreement, O-N Lime desires to sell to Buyer, and Buyer desires to purchase from O-N Lime, the Sale Shares.

     In consideration of the representations, warranties, covenants and agreements contained herein, Sellers and Buyer, each intending to be legally bound hereby, agree as set forth below.

ARTICLE I
DEFINITIONS; CONSTRUCTION

     1.1 Definitions. As used in this Agreement, the following terms have the meanings specified in this Section 1.1.

     “Accounts Receivable” has the meaning given that term in Section 3.23.

     “Affected Employees” has the meaning given that term in Section 6.3(a).

     “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such Person.

     “Affiliated Group” has the meaning given that term in Section 3.7(a).

     “Agreement” means this Stock Purchase Agreement, as it may be amended from time to time.

     “Applicable Contract” means any material Contract to which the Company is a party.

     “ATF” has the meaning given that term in Section 3.15(c).

     “Balance Sheet” has the meaning given that term in Section 3.5(a).

     “Balance Sheet Date” has the meaning given that term in Section 3.5(a).

     “Business” means the production and sale of limestone, quicklime, hydrated lime, chemical limestone, blended lime, sized limestone, and related filler products operated out of the Company’s facility located in Marble City, Oklahoma.

     “Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in Cleveland, Ohio are authorized or required by law to close.

     “Buyer” has the meaning given that term in the preamble of this Agreement.

     “Buyer Benefit Programs” has the meaning given that term in Section 6.3(a).

     “Closing” has the meaning given that term in Section 2.1.

     “Closing Balance Sheet” means the Closing Balance Sheet delivered pursuant to Section 2.5(a), as adjusted, if at all, pursuant to Section 2.5(b).

     “Closing Date” has the meaning given that term in Section 2.1.

     “Closing Net Working Capital” means the excess of the current assets of the Company as of the close of business on the Closing Date over the current liabilities of the Company as of the close of business on the Closing Date, determined in accordance with GAAP and adjusted in accordance with Schedule 1.1A.

     “COBRA” has the meaning given that term in Section 3.14(c)(ii).

     “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the applicable rulings and regulations thereunder.

     “Company” has the meaning given that term in the Introductory Statements of this Agreement.

     “Company Share Transfer” has the meaning given that term in Section 2.2.

     “Competitive Business” has the meaning given that term in Section 6.7.

     “Contract” and “Contracts” means any agreement, written or oral, note, letter of credit, indenture, financial instrument, lease or license to which the Company is a party or by which it is bound.

     “DEQ” has the meaning given that term in Section 6.12.

     “Earnest Money Deposit” means the sum of $50,000, being the amount paid by Buyer to O-N Lime prior to the date hereof as an earnest money deposit.

     “Encumbrance” means any mortgage, deed of trust, pledge, security interest, claim, easement, lien, charge, option, restriction on transfer, conditional sale or other title retention agreement, defect in title or other restriction of a similar kind.

     “Environmental Law” means all Laws (other than mining Laws applicable to the reclamation of Lime Kiln Dust) in effect on the Closing Date relating to (i) the control of any Hazardous Substance or the protection of the environment (including air, water, land, flora, and fauna), (ii) the possession, generation, manufacture, processing, use, handling, management, treatment, storage, disposal, release, distribution, or transportation of any Hazardous Substance or Lime Kiln Dust; and (iii) the acquisition or beneficial use of surface water or groundwater.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the applicable rulings and regulations thereunder.

     “ERISA Affiliate” means, with respect to the Company, any other entity or trade or business that, at the relevant time, is a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes the Company or that is a member of the same “controlled group” as the Company pursuant to Section 4001(a)(14) of ERISA.

     “Escrow Agent” has the meaning given that term in Section 2.4(h).

     “Escrow Agreement” has the meaning given that term in Section 2.4(h).

     “Escrow Amount” has the meaning given that term in Section 2.4(h).

     “Expenses” means any and all reasonable expenses incurred in connection with any claim, action, suit or proceeding incident to any matter indemnified against hereunder, including court filing fees, court costs, arbitration fees or costs, costs of appeal including necessary supercedeas and other bonds, witness fees and reasonable fees and disbursements of legal counsel, investigators, expert witnesses, accountants and other professionals.

     “Financial Statements” has the meaning given that term in Section 3.5(a).

     “GAAP” means United States generally accepted accounting principles, consistently applied.

     “Governing Documents” means, with respect to any Person that is not a natural Person, the certificate or articles of incorporation, bylaws or regulations, deed of trust, formation or governing agreement and other charter documents or organizational or governing documents or instruments of such Person.

     “Governmental Authority” means any court or government (federal, state, local, foreign or provincial) or any political subdivision thereof, including without limitation, any department, commission, board, bureau, agency or other regulatory, administrative or Governmental Authority or instrumentality.

     “Hazardous Substance” means any solid, liquid or gaseous substance or material that (i) is defined as a “hazardous material,” “pollutant,” “contaminant,” “hazardous waste,” or “hazardous substance” under any Environmental Law or (ii) is toxic, explosive, corrosive, infectious, radioactive, carcinogenic or mutagenic or otherwise hazardous and is regulated under Environmental Laws, including gasoline, diesel fuel or other petroleum hydrocarbons, polychlorinated biphenyls or asbestos.

     “Income Tax” means any Tax on net or gross income, profits or receipts, together with any interest or penalties, imposed by any Governmental Authority.

     “Indebtedness” means any obligation for borrowed money of the Company, any capitalized lease obligation of the Company, any obligation properly classified as indebtedness or debt under GAAP, or any guarantee of the Company in respect of any indebtedness or obligation for borrowed money of any Person (other than the endorsement of negotiable instruments for deposit or collection in the ordinary course of business.)

     “Indemnified Party” has the meaning given that term in Section 8.2(a).

     “Indemnifying Party” has the meaning given that term in Section 8.2(a).

     “Independent Auditors” has the meaning given that term in Section 2.5(c).

     “Intellectual Property Assets” means: (i) all trademarks and service marks which are registered or have applications to register pending and unregistered trademarks and service marks of the Company (collectively, “Marks”) and, subject to the provisions of Section 6.1, the corporate name of the Company and all fictional business names and trading names currently used by the Company, (ii) all issued patents and patent applications of the Company (collectively, “Patents”), (iii) all copyrights of the Company in both published works and unpublished works including any registrations and applications appurtenant thereto, (iv) all Internet domain names used by the Company and (v) all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans, drawings and blue prints of the Company.

     “IP Liability” has the meaning given that term in Section 6.14.

     “Knowledge” of a fact or matter, when used in relation to an individual, means: (a) such individual is actually aware of such fact or other matter; or (b) a reasonable individual in such Person’s position would be aware of such fact or other matter.

     “Law” means any applicable statute, law, ordinance, rule, regulation, order, judgment or decree enacted, adopted, issued or promulgated by any Governmental Authority.

     “Leased Real Property” means those properties identified in Section 3.8(b).

     “Lime Kiln Dust” means lime kiln dust and materials derived therefrom in the operation of the Business by the Company, including scrubber sludge.

     “Litigation” means any action, suit, arbitration or proceeding of any nature or kind whatsoever, whether civil, criminal or administrative, at law or in equity, by or before any Governmental Authority or arbitrator.

     “Losses” means, without duplication, any and all losses, costs, obligations, liabilities, settlement payments, fines, penalties, damages, diminution in value (meaning a dollar-for-dollar loss occurring as a result of a claim that is not a third party claim), Expenses or other charges, as such term is further described in Section 8.2(c).

     “Marks” has the meaning given that term in the definition of “Intellectual Property Assets” above.

     “Master Leases and Licenses” means the leases and licenses with General Electric Capital Corporation, Associates Leasing, Inc., JWS Corporation and Datastream Systems, Inc. entered into on a group basis by Sellers, as more particularly described in Schedule 3.4(b).

     “Material Adverse Effect” means a material adverse effect on the results of operations, financial condition or assets of the Company other than changes (i) relating to generally applicable economic conditions or events, (ii) the industry in which the Company operates in general or (iii) resulting from the announcement by O-N Lime of its intention to sell the Company.

     “Multiemployer Plan” means a multiemployer plan within the meaning of Section 4001 of ERISA.

     “Non-Competition Party” means Parent and each Affiliate thereof.

     “Non-Competition Period” means the period commencing on the Closing Date and continuing until the fifth anniversary of the Closing Date.

     “Non-Competition Products” means limestone, quicklime, hydrated lime, chemical limestone, blended lime and sized limestone lime slurry, excluding lime used in the production of autoclaved air entrained concrete.

     “Objection Notice” has the meaning given that term in Section 2.5(b).

     “O-N Minerals” has the meaning given that term in the preamble of this Agreement.

     “Owned Real Property” has the meaning given that term in Section 3.8(a).

     “O-N Lime” has the meaning given that term in the preamble of this Agreement

     “OPDES” has the meaning given that term in Section 6.12.

     “Parent” has the meaning given that term in the preamble of this Agreement.

     “Party” means each of Sellers and Buyer.

     “Patents” has the meaning given that term in the definition of “Intellectual Property Assets” above.

     “Peg Amount” means Three Million Four Hundred Thousand Dollars ($3,400,000).

     “Permits” has the meaning given that term in Section 3.11(b).

     “Permitted Encumbrances” means (i) liens securing obligations of less than $10,000 (ii) liens for Taxes and other governmental charges and assessments that are not yet due and payable, (iii) liens of landlords and of carriers, warehousemen, mechanics, materialmen and repairmen

and other similar liens arising in the ordinary course of business for sums not yet due and payable, (iv) liens reflected in the Financial Statements, (v) liens for purchase money security interests, (vi) other liens on, or imperfections of title with respect to, property that are not material in amount and do not materially detract from the value of or materially impair the existing use of the property affected by such lien or imperfection and (vi) Encumbrances set forth on Schedule 1.1B.

     “Person” means and includes a natural person, a corporation, an association, a partnership, a limited liability company, a trust, a joint venture, an unincorporated organization or a Governmental Authority.

     “Pre-Closing Period” has the meaning given that term in Section 3.7(c).

     “Proceedings” has the meaning given that term in Section 8.2(a).

     “Purchase Price” has the meaning given that term in Section 2.3.

     “Related Party” means (i) any Affiliate of a Party or (ii) any officer or director of a Party or of any Person identified in clause (i) preceding.

     “Remedial Action” has the meaning given that term in Section 8.3(g)(i).

     “Reserved Names” has the meaning given that term in Section 6.1.

     “Sale Shares” has the meaning given that term in the Introductory Statements of this Agreement.

     “Schedules” means the disclosure schedules attached to this Agreement.

     “Section 338(h)(10) Election” has the meaning given that term in Section 6.2(g).

     “Securities Act” has the meaning given that term in Section 4.6.

     “SEC” has the meaning given that term in Section 6.9(a).

     “Sellers” has the meaning given that term in the preamble of this Agreement.

     “Sellers’ 401(k) Plan” means Oglebay Norton Company Investment Savings and Stock Ownership Plan.

     “Sellers’ Employee Benefit Plan” means any (i) “employee benefit plan,” within the meaning of Section 3(3) of ERISA or (ii) stock option, stock purchase, restricted stock, profit sharing, pension, retirement, deferred compensation, incentive, fringe benefit, severance, medical, life, disability, accident, salary continuation, sick pay, sick leave, supplemental retirement and unemployment benefit plans or programs (whether or not insured), that has been established, maintained, sponsored or contributed to by Sellers or the Company for the benefit of any active, retired or former employee or director of the Company or for which the Company

otherwise may have any liability; provided, that “Sellers’ Employee Benefit Plan” shall not include any Multiemployer Plan.

     “Sellers’ Knowledge” means the Knowledge of Karl Everett, Joseph Ferrell, Thomas Giordani, Kurt Klutz, James Underwood, Richard Calhoun and Wilber Ferris.

     “Settlement Date” means the date on which the Closing Balance Sheet is finally determined pursuant to Section 2.5(b).

     “Straddle Period” has the meaning given that term in Section 3.7(c).

     “Tax” means taxes of any kind, levies or other like assessments, customs, duties, imposts, charges or fees, including income, gross receipts, ad valorem, value added, excise, real or personal property, asset, sales, use, license, payroll, transaction, capital, net worth and franchise taxes, estimated taxes, withholding, employment, social security, workers compensation, utility, severance, production, unemployment compensation, occupation, premium, windfall profits, transfer and gains taxes or other governmental taxes imposed by or payable to any Governmental Authority including all applicable penalties and interest.

     “Tax Matters” has the meaning given that term in Section 6.2(c)(i).

     “Tax Return” means any return, declaration, form, report, claim for refund, or information return or statement relating to any Tax, including any schedule or attachment thereto, and including any amendment thereof.

     “Territory” means the states of Arkansas, Kansas, Louisiana, Missouri, Oklahoma and Texas.

     “Title Company” has the meaning given that term in Section 2.4(h).

     “Title Policy” has the meaning given that term in Section 2.4(h).

     “Trapezoid Parcel” means the parcel of land more particularly described in Schedule 3.8(e) as to which the Company does not possess legal title on the date hereof.

     “WARN Act” means the Federal Workers’ Adjustment and Retraining Notification Act.

     “Working Capital Adjustment Amount” has the meaning given that term in Section 2.5(d).

     1.2 Construction.

          (a) Unless the context otherwise requires, as used in this Agreement: (i) an accounting term not otherwise defined herein has the meaning currently ascribed to it in accordance with GAAP; (ii) “or” is not exclusive; (iii) “including” and its variants mean “including, without limitation” and its variants; (iv) words defined in the singular have the parallel meaning in the plural and vice versa; (v) references to “written” or “in writing” include in electronic form; (vi) the terms “hereof”, “herein”, “hereby”, “hereto”, and derivative or similar

words refer to this entire Agreement, including the Schedules hereto; and (vii) all Sections, Articles and Schedules referred to herein are, respectively, Sections and Articles of, and Schedules to, this Agreement.

          (b) Headings as to the contents of particular Articles and Sections are for convenience only and are in no way to be construed as part of this Agreement.

          (c) Any reference to “days” means calendar days unless Business Days are expressly specified.

          (d) A reference to any Person includes such Person’s successors and permitted assigns.

          (e) The Schedules to this Agreement are incorporated herein by reference and made a part hereof for all purposes.

ARTICLE II
THE SALE AND PURCHASE

     2.1 Closing. Subject to the satisfaction or waiver of all of the conditions set forth in Article VII, the closing of the purchase and sale of the Sale Shares contemplated hereby (the “Closing”) shall take place at the offices of Thompson Hine llp, One Chase Manhattan Plaza, 58th Floor, New York, New York 10005-1401, at 10:00 a.m. local time on the date of this Agreement, (the “Closing Date”).

     2.2 Sale and Purchase of Sale Shares. Upon the terms and subject to the conditions of this Agreement and in consideration of the Purchase Price, at the Closing, O-N Lime hereby sells, assigns, transfers and delivers to Buyer (such sale, assignment, transfer and delivery, the “Company Share Transfer”), and Buyer hereby purchases and takes delivery of the Sale Shares, free and clear of all Encumbrances. The certificate representing the Sale Shares has been duly endorsed or accompanied by a stock power duly endorsed by O-N Lime for transfer to Buyer.

     2.3 Purchase Price. The aggregate consideration hereunder paid by Buyer to O-N Lime with respect to the Sale Shares (the “Purchase Price”) is (a) Fourteen Million Dollars ($14,000,000) plus or minus (b) the Working Capital Adjustment Amount. The Purchase Price is being paid as provided in Section 2.4(a) and (g) and 2.5(d).

     2.4 Closing Matters. At the Closing:

          (a) Buyer shall pay the difference between (i) that part of the Purchase Price stated in Section 2.3(a), and (ii) the sum of (A) the Earnest Money Deposit and (B) the Escrow Amount, by wire transfer of immediately available funds to an account designated by O-N Lime.

          (b) Sellers shall apply the Earnest Money Deposit against the Buyer’s obligation to pay the Purchase Price.

          (c) Sellers shall pay and discharge, or cause to be paid and discharged, all outstanding Indebtedness of the Company by wire transfer of immediately available funds.

          (d) Sellers shall deliver or cause to be delivered to Buyer pay-off letters, releases and lien discharges (or agreements therefor) reasonably satisfactory to Buyer from each creditor to whom any Indebtedness is owed by the Company.

          (e) O-N Lime shall deliver and cause to be delivered the Sale Shares.

          (f) Sellers shall cause to be delivered an opinion of counsel for Sellers in form and substance as set forth in Exhibit A, hereto.

          (g) Buyer and Sellers will enter into an escrow agreement in the form of Exhibit B (the “Escrow Agreement”) with an escrow amount of Eight Hundred Thousand Dollars ($800,000) (the “Escrow Amount”) and The Bank of New York (the “Escrow Agent”) as escrow agent and Buyer shall pay the Escrow Amount to the Escrow Agent.

          (h) Sellers shall, at their expense, deliver to Buyer:

                         (i) Endorsements to Owner’s Policy of Title Insurance #37 0080 106 4499, dated December 22, 1995, issued by Chicago Title Insurance Company (the “Title Company”), insuring the interest of Global Stone St. Clair Inc., a Delaware corporation, in the described property (the “Title Policy”), which shall (i) change the effective date of the Title Policy to Closing Date and reflect only Permitted Exceptions, if any, and (ii) contain the agreement of the Title Company not to assert the provisions of Exclusions from Coverage 3(a), (b) or (e) (commonly called a Non-Imputation Endorsement); and

                         (ii) An Aerial Photographic Overlay Survey showing the legal descriptions of the Owned Real Property and the Leased Real Property superimposed thereon, dated no earlier than December 15, 2005, prepared by Smith Roberts Baldischwiler, LLC, of Oklahoma City, Oklahoma.

          (i) Sellers shall deliver to Buyer executed resignations of all officers and directors of the Company.

          (j) The Parties shall deliver to each other the documents required to be delivered at the Closing pursuant to this Agreement.

     2.5 Purchase Price Working Capital Adjustment. Following the Closing Date, the Purchase Price shall be adjusted, if at all, as set forth below:

     (a) Sellers shall prepare and deliver to Buyer, within forty-five (45) days after the Closing Date, an unaudited balance sheet of the Company as of the close of business on the Closing Date (the “Closing Balance Sheet”) which shall set forth a calculation of the Closing Net Working Capital. The Closing Balance Sheet and the calculation of the Closing Net Working Capital shall be prepared in a manner consistent with the preparation of the Balance Sheet and Schedule 1.1A. During such forty-five (45) day period, Sellers shall provide Buyer with reasonable access to their books, records and personnel. Seller shall thereafter provide to

Buyer such supporting work papers or other supporting information relating to the Closing Balance Sheet and the calculation of the Closing Net Working Capital as may be reasonably requested by Buyer.

          (b) On or prior to the 30th day following Sellers’ delivery of the Closing Balance Sheet, Buyer may give Sellers a written notice stating in reasonable detail Buyer’s objections (an “Objection Notice”) to the Closing Balance Sheet. Any Objection Notice shall specify in reasonable detail the dollar amount of any objection and the basis therefor. Any determination set forth on the Closing Balance Sheet which is not specifically objected to in the Objection Notice shall be deemed accepted and shall be final and binding upon the parties upon delivery of the Objection Notice. If Buyer does not give Sellers an Objection Notice within such 30-day period, then the Closing Balance Sheet shall be final and binding upon the Parties for purposes of calculating the Purchase Price under this Agreement.

          (c) Following Sellers’ receipt of any Objection Notice, Sellers and Buyer shall attempt to negotiate in good faith to resolve such dispute. In the event that Sellers and Buyer fail to agree on any of Buyer’s proposed adjustments set forth in the Objection Notice within thirty (30) days after Sellers receive the Objection Notice, Sellers and Buyer agree that a mutually acceptable accounting firm of nationally recognized standing (the “Independent Auditors”) shall, within the 30-day period immediately following referral of the Closing Balance Sheet and/or the calculation of the Closing Net Working Capital to the Independent Auditors, make the final determination thereon in accordance with the terms of this Agreement. Sellers and Buyer each shall provide the Independent Auditors with their respective determinations of the Closing Net Working Capital. The Independent Auditors shall make an independent determination of the Closing Net Working Capital that, assuming compliance with the previous clause, shall be final and binding on Sellers and Buyer if such independent determination shall be within the range proposed by Sellers and Buyer in the Closing Net Working Capital and the Objection Notice. If the Independent Auditors’ determination of any adjustment is outside of the range proposed by Sellers and Buyer in the Closing Net Working Capital and the Objection Notice, then the Closing Net Working Capital proposed by the Party whose adjustment was closer to that of the Independent Auditors shall be final and binding on Sellers and Buyer. The fees, costs and expenses of the Independent Auditors shall be paid equally by the Parties.

          (d) Promptly after the Closing Balance Sheet and the calculation of the Net Working Capital are finally determined and become final and binding on the Parties under this Section 2.5, Sellers and Buyer or the Independent Auditors (if applicable) shall recalculate the Purchase Price by giving effect to such final and binding determinations. To the extent the Closing Net Working Capital exceeds the Peg Amount, Buyer shall pay to O-N Lime an amount equal to the excess. To the extent the Closing Net Working Capital is less than the Peg Amount, O-N Lime shall pay to Buyer an amount equal to the shortfall. Any such payment shall be made by wire transfer of immediately available funds to an account designated by the Party entitled to payment within two (2) Business Days following the Settlement Date. The foregoing payment shall be referred to herein as the “Working Capital Adjustment Amount”.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS

     Sellers, jointly and severally, represent and warrant to Buyer, the following representations and warranties, which Buyer has relied upon.

     3.1 Organization and Authority. Sellers are corporations duly organized, validly existing and in good standing under the Laws of their respective states of incorporation. Each Seller has all corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The Company is duly organized, validly existing and in good standing under the Laws of the State of Delaware and has all corporate power and authority to own, operate or lease its properties and carry on the Business as now conducted. The Company is duly qualified to do business and is in good standing in the State of Oklahoma. The Company is duly qualified to do business and is in good standing in each other jurisdiction in which the character of the properties owned, operated or leased by it or the nature of the activities conducted by it make such qualification and good standing necessary, except where the failure to be so qualified or in good standing could not reasonably be expected to have a Material Adverse Effect.

     3.2 Authorization; Enforceability. This Agreement has been duly executed and delivered by and constitutes the legal, valid and binding obligation of each Seller, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other Laws of general application relating to or affecting creditors’ rights and to general principles of equity. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate proceedings on the part of each Seller.

     3.3 Shares; Capitalization.

          (a) Sale Shares. The authorized capital stock of the Company and the number of shares of capital stock issued, outstanding and held in treasury are listed on Schedule 3.3. All of the Sale Shares are owned of record and beneficially by O-N Lime and are free and clear of any and all Encumbrances. All of the Sale Shares have been duly authorized and validly issued and are fully paid and nonassessable. The Company has no outstanding options, warrants, rights or subscriptions, nor has it entered into or incurred any other binding commitment or obligation which remains enforceable to issue or sell any shares of its capital stock, or any securities or obligations convertible into or exchangeable for any shares of its capital stock, nor has it granted to any Person any right which is outstanding to subscribe for or acquire from it any shares of its capital stock, and no such securities, obligations or rights are outstanding.

          (b) Transfer of Title. Upon delivery of the Sale Shares hereunder, Buyer shall acquire title thereto, free and clear of any and all Encumbrances.

     3.4 No Violation of Laws or Agreements; Consents.

          (a) No Violation of Laws or Agreements. Except as set forth on Schedule 3.4(a), neither the execution and delivery by Sellers of this Agreement, the consummation of the transactions contemplated hereby, nor the compliance with or fulfillment of the terms, conditions or provisions hereof by Sellers:

               (i) violates any provision of the Governing Documents of a Seller or the Company;

               (ii) conflicts with, breaches, constitutes a default or an event of default under any of the terms of, results in the termination of, accelerates the maturity of or creates any Encumbrance on the Sale Shares or any asset or property of the Company or under any Applicable Contract;

               (iii) violates any Law to which the Company is subject or by which any asset of the Company is bound or affected;

               (iv) will cause the Company to become subject to, or to become liable for, the payment of any Tax that it is not subject to on the date hereof;

               (v) will contravene, conflict with or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate to maturity a performance of, or to cancel, terminate, or modify any Applicable Contract; and

               (vi) neither Sellers nor the Company are required to give notice to or to obtain any consent from any Person or Governmental Authority in connection with the execution and delivery of this Agreement or the consummation or performance of the terms hereof.

          (b) Consents. Except as set forth on Schedule 3.4(b), no material consent, approval or authorization of, or registration or filing with, any Person is required in connection with the execution or delivery by each Seller of this Agreement or the consummation by each Seller of the transactions contemplated hereby.

3.5 Financial Statements; Books and Records.

          (a) The balance sheets of the Company as of December 31, 2003 and 2004 and the income statements of the Company for the two one year periods ended on such dates and the unaudited balance sheet and income statement for the Company as of June 30, 2005 (collectively, the “Financial Statements”) have been delivered to Buyer and are attached hereto as Schedule 3.5. The Financial Statements (i) have been prepared in accordance with GAAP, except as set forth on Schedule 3.5, and (ii) present fairly in all material respects the financial condition and results of operations, changes in stockholders’ equity, and cash flow of the Company at the dates and for the relevant periods indicated. The unaudited balance sheet of the Company as of June 30, 2005 included in the Financial Statements shall be referred to herein as the “Balance Sheet,” and June 30, 2005 shall be referred to herein as the “Balance Sheet Date”. Except as set forth in Schedule 3.5, the Company has no liability required to be disclosed in the

Financial Statements except for liabilities reflected or reserved against in the Balance Sheet and current liabilities incurred in the ordinary course of business of the Company since the Balance Sheet Date.

          (b) The books of account, minute books, stock record books, and other records of the Company, all of which have been made available to Buyer, are complete and correct and have been maintained in accordance with sound business practices, including the maintenance of an adequate system of internal controls. The minute books of the Company contain accurate and complete records of all meetings held of, and corporate action taken by, the stockholders, the Board of Directors, and committees of the Board of Directors of the Company. At the Closing, all of those books and records will be placed in the possession of the Company. Buyer agrees that Sellers shall have reasonable access thereto after the Closing. There are no minutes for meetings of the Board of Directors or the stockholders of the Company that are not included in the minute books of the Company.

     3.6 No Changes. Except as set forth on Schedule 3.6, since the Balance Sheet Date there has been no material adverse change in the business, operations, properties, assets, contractual relationships or condition of the Company, the Company has conducted the Business only in the ordinary course and there has not been:

          (a) any change in the financial condition, assets or liabilities of the Company other than in the ordinary course of business;

          (b) any material damage or destruction to or loss of any asset of the Company, whether or not covered by insurance;

          (c) any commitment by the Company to provide benefits payable to or for the benefit of any employee of the Company upon the occurrence of a change in control or to pay a deal bonus to any employee of the Company;

          (d) any material increase in the salary, wage or bonus payable by the Company to any employee of the Company;

          (e) any change in any method of accounting;

          (f) any sale or other disposition of assets or operations identifiable with a product line of the Company, or any acquisition of another business, whether through the purchase of assets, stock or otherwise, except in the ordinary course of business;

          (g) any sale, lease or other disposition of any material assets of the Company (other than inventory in the ordinary course of business), or any condemnation or expropriation or other taking of any assets of the Company, or known threat thereof, by any Governmental Authority;

          (h) any issuance, sale or disposition of capital stock or any other securities or grant of any option, warrant or other right to subscribe for or purchase any capital stock or any other securities of the Company;

          (i) any declaration or payment of any dividend or distribution with respect to the capital stock of the Company or any redemption, purchase or acquisition of the capital stock of the Company;

          (j) any write-offs, write-downs or write-ups of the value of any of the inventory or other assets of the Company;

          (k) any mortgage or pledge of any material assets of the Company, except for Permitted Encumbrances or arising in the ordinary course of business;

          (l) any creation or assumption of any Indebtedness, except for Indebtedness incurred in the ordinary course of business or pursuant to Contracts disclosed on Schedule 3.6, entered into in the ordinary course of business;

          (m) any guarantee of any liability (whether directly, contingently or otherwise) for the obligations of any other Person except in the ordinary course of business and except for the endorsement of negotiable instruments by the Company in the ordinary course of business;

          (n) any Tax election made, any Tax liability settled or compromised, or any waiver or extension of the statute of limitations with respect to any Taxes; or

          (o) any agreement or commitment to do any of the foregoing.

     3.7 Taxes.

          (a) Affiliated Group. The Company is a member of an “affiliated group” (the “Affiliated Group”) within the meaning of Section 1504(a) of the Code, and Oglebay Norton Company is the “common parent” of the Affiliated Group.

          (b) Liabilities. Except as set forth in Schedule 3.7, each of the Company or one or more of the Sellers, on the Company’s behalf, has:

               (i) duly and timely filed with the appropriate federal, state, local or other taxing authorities all Tax Returns required to be filed by or on behalf of the Company, and

               (ii) duly and timely paid all Taxes with respect to the Company whether or not such Taxes are shown or required to be shown to be due on a Tax Return. Any Tax Return or Taxes for which an extension to file or pay has been obtained will be deemed to be timely if filed and paid by the date provided by any such extension. Schedule 3.7 sets forth all Tax Returns for which an extension to file or pay is currently outstanding.

          (c) Straddle Periods. Except as set forth on Schedule 3.7 and except for Income Taxes, all Taxes and Tax liabilities of the Company (x) for all Tax periods ending on or prior to the Closing Date or (y) with respect to any taxable year or period beginning before and ending after the Closing Date (a “Straddle Period”), the portion of such Straddle Period ending on and including the Closing Date (each such year or period or portion thereof ending on or before the Closing Date, a “Pre-Closing Period”) to the extent due and payable have been paid or are being contested in good faith.

          (d) Audits; Examinations. Except as set forth on Schedule 3.7:

               (i) (A) no audit or other examination of Taxes is currently pending with respect to the Affiliated Group or the Company, or to Sellers’ Knowledge, threatened against the Company or the Affiliated Group; and (B) no such audit or examination has been conducted with respect to which there is any outstanding Tax liability of the Company, including the Taxes of any Person for which the Company may be liable under Treasury Regulation §1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by Contract or otherwise;

               (ii) the Company has not received any written notice of any state, local or foreign income Tax deficiency outstanding, proposed or assessed against or allocable to it; and

               (iii) as of the Closing Date, no statute of limitations will remain open as a result of its having been waived or extended with respect to the payment or collection of Taxes of the Affiliated Group or the Company.

          (e) Agreements. Except as disclosed in Schedule 3.7, there are no tax sharing, allocation, indemnification or similar agreements in effect as between the Company and any other Person (except for customary agreements to indemnify lenders or security holders in respect of Taxes).

          (f) Consolidated Returns. Except with respect to the Affiliated Group or as set forth on Schedule 3.7, the Company has not been included (nor has it been required to be included) in any “consolidated”, “unitary” or “combined” Tax Return provided for under any Law with respect to Taxes for which the Company may be liable for any taxable period for which the statute of limitations has not expired.

          (g) All Taxes that the Company is required by law to withhold or collect, including without limitation, sales and use taxes, and amounts required to be withheld for Taxes of employees, have been duly withheld or collected and, to the extent required, have been paid over to the proper Governmental Authority or are held in separate bank accounts for such purpose.

          (h) The Company has not received written notice of a claim made by any taxing authority in a jurisdiction where it does not file Tax Returns that it is or may be subject to Tax in such jurisdiction and, to the best knowledge of the Company, it is not required to file Tax Returns in any jurisdiction other than those set forth in Schedule 3.7.

          (i) In the twenty four (24) months preceding the Closing Date, there have been no Tax rulings, requests for rulings or closing agreements with any taxing authority with respect to the Company other than those set forth on Schedule 3.7.

          (j) Neither the Company nor the Affiliated Group has deferred income reportable for a current Tax period (or portion thereof) or a period (or portion thereof) beginning after the Closing Date but that is attributable to a transaction (e.g., an installment sale) occurring in a period (or portion thereof) ending on or prior to the Closing Date.

          (k) The Company has not distributed the stock of any corporation in a transaction satisfying the requirements of Section 355 of the Code since April 16, 1997. No stock of the Company has been distributed in a transaction satisfying the requirements of Section 355 of the Code since April 16, 1997.

          (l) The Affiliated Group has disclosed on its federal income Tax Returns all positions taken therein that would reasonably be expected to result in any “substantial understatement of federal income tax” within the meaning of Section 6662 of the Code.

          (m) No member of the Affiliated Group, including the Company, has engaged in any “reportable transaction” within the meaning of Treasury Regulation section 1.6011-4(b)(2).

          (n) The capital stock of the Company does not constitute a U.S. real property interest within the meaning of Section 897 of the Code.

          (o) There are no Encumbrances for Taxes upon any of the assets of the Company other than Permitted Encumbrances.

          (p) No power of attorney with respect to any matter relating to Taxes of the Company will be in effect after the Closing Date other than those set forth on Schedule 3.7.

          (q) The Company has not made any payments, is not obligated to make any payments, or is a party to any Contract that would reasonably be expected to obligate it to make any payments that will not be deductible by reason of Section 162(m) or 280G of the Code.

          (r) The charges, accruals and reserves for Taxes for all Tax periods ending on or before the date of this Agreement are adequate and are at least equal to the Company’s liabilities for Taxes.

     3.8 Owned and Leased Property; Condition of Assets.

          (a) Owned Real Property. Schedule 3.8(a) sets forth a complete and accurate list of all real property owned as of the date hereof by the Company (the “Owned Real Property”). Except as set forth on Schedule 3.8(a), the Company has good and marketable title to its Owned Real Property, free and clear of all Encumbrances, except for Permitted Encumbrances.

          (b) Leases of Real Property. Schedule 3.8(b) sets forth a complete and accurate list of all leases of real property to which the Company is a party on the date hereof. Except as set forth on Schedule 3.8(b), the Company, as lessee under each lease set forth on Schedule 3.8(b), is in possession of the real property covered thereby, and (1) each such lease is (A) a valid and binding obligation of the Company and (B) to Sellers’ Knowledge, a valid and binding obligation of each other party thereto, and (2) (A) the Company is not in material breach thereof or material default thereunder (and to Sellers’ Knowledge, no event or circumstance has occurred that with notice or lapse of time or both, would constitute such an event of default) and (B) to Sellers’ Knowledge, no other party to any such lease is in material breach thereof or material default thereunder.

          (c) Personal Property. The Company owns or holds under valid leases all material plant, machinery, equipment and other tangible personal property used for the conduct of the Business, free and clear of all Encumbrances of Sellers other than Permitted Encumbrances.

          (d) Shared Facilities. There is no office or other facility shared by the Company with Sellers or any of Sellers’ Affiliates, except as set forth on Schedule 3.8(d). Except for any such shared facilities, neither Sellers nor any of Sellers’ Affiliates owns any material assets used in the Business.

          (e) Rights in the Assets. Except as set forth on Schedule 3.8(e), the Company owns or controls or has valid contractual rights to use all of the assets required to enable it to collectively operate the Business after the Closing Date in substantially the same manner as the Business is presently conducted.

     3.9 Condition of Assets. Except as set forth on Schedule 3.9, the buildings, plant, structures, and equipment of the Company are structurally sound, are in reasonable and customary operating condition and repair, fair wear and tear and ordinary and routine maintenance excepted, and are adequate for the uses to which they are being put. The nature and extent of the buildings, plant, structures, and equipment of the Company are sufficient for the continued conduct of the Company’s Business after closing in substantially the same manner as immediately before.

3.10 No Pending or Threatened Litigation. Except as set forth on Schedule 3.10,

          (a) no Litigation is pending or, to Sellers’ Knowledge, threatened against the Company;

          (b) there is no outstanding judgment, decree, or order of any Governmental Authority against or affecting the Company; and

          (c) since the date the Company became an Affiliate of Parent and, to Sellers’ Knowledge, prior to that date, the Company has not been given written notice of, served in connection with or, named as a defendant in, any civil lawsuit in which any plaintiff asserted any claim for injury or damage allegedly caused by exposure to asbestos or silica.

     3.11 Compliance With Law; Permits.

          (a) Compliance With Law. Except (i) as set forth on Schedule 3.11(a) and (ii) with regard to environmental matters (which the Parties agree shall be dealt with solely pursuant to Section 3.15), the Company complies in all material respects with all applicable Laws.

          (b) Permits. Except (i) as set forth on Schedule 3.11(b) and (ii) with regard to environmental matters (which the Parties agree shall be dealt with solely pursuant to Section 3.15), the Company owns, holds, possesses or has applied for all governmental licenses, permits, and other authorizations (collectively, “Permits”) that are required under applicable Laws to entitle it to own or lease, operate and use its assets and to carry on and conduct the Business as

currently conducted by it, and all such Permits are valid and in effect, except in any such case where the failure to own, hold, possess or apply for such Permits, or maintain them as valid and in effect, would not have a Material Adverse Effect.

     3.12 Intellectual Property Rights.

          (a) Intellectual Property Agreements. Schedule 3.12(a) sets forth a complete and accurate list of all material agreements relating to the Intellectual Property Assets to which the Company is a party on the date hereof or by which the Company is bound on the date hereof, except for (i) any license implied by the sale of a product and (ii) perpetual, paid-up licenses for software programs with an individual value of less than $10,000 per license under which the Company is the licensee. There are no outstanding or, to Sellers’ Knowledge, threatened disputes with respect to any such agreement. No such agreement permits termination by the other party in the event of a change in the control of Seller.

          (b) Rights in Intellectual Property.

               (i) In General. Except as set forth on Schedule 3.12(b)(i), neither Sellers nor any of their Affiliates, nor, to Sellers’ Knowledge, any other Person owns or controls any Intellectual Property Assets that are material to the operation of the Business as presently conducted by the Company. Except as set forth on Schedule 3.12(b)(i), the Company is the owner of all right, title and interest in, or the licensee of, or otherwise has the right to use, without payment to a third party, the Intellectual Property Assets, free and clear of all Encumbrances (other than Permitted Encumbrances), except for those payments expressly set forth in the relevant licenses.

               (ii) Patents. Schedule 3.12(b)(ii) sets forth a complete and accurate list of all Patents. Except as set forth on Schedule 3.12(b)(ii), no Patent has been or is now involved in any interference, reissue or reexamination proceeding. Except as set forth on Schedule 3.12(b)(ii), to Sellers’ Knowledge, the Business, as conducted by Seller, does not infringe upon or misappropriate the Intellectual Property Rights of any third party.

               (iii) Marks. Schedule 3.12(b)(iii) sets forth a complete and accurate list of all Marks. All Marks that have been registered with the United States Patent and Trademark Office are currently in compliance with all formal legal requirements (including the timely post-registration filing of affidavits of use and renewal applications). Except as set forth on Schedule 3.12(b)(iii), no Mark has been or is now involved in any opposition or cancellation proceeding, and, to Sellers’ Knowledge, no such action is threatened with respect to any of the Marks. Except as set forth on Schedule 3.12(b)(iii), to Sellers’ Knowledge, no Mark is being infringed by any third party. To Sellers’ Knowledge, none of the Marks used by the Company infringes any trade name, trademark or service mark of any third party

     3.13 Labor Matters. To Sellers’ Knowledge, the Company is in material compliance with all Laws applicable to it respecting employment and employment practices, terms and conditions of employment and wages and hours. Except as set forth on Schedule 3.13, there is no collective bargaining agreement which is binding on the Company, and to Sellers’ Knowledge, there is no union organizing effort underway, pending or threatened with respect to

the Company’s employees. There are no strikes, slowdowns or work stoppages pending between the Company and its employees. The Company has not engaged in any unfair labor practices as defined in the National Labor Relations Act and there is no unfair labor practice charge or complaint against the Company pending or, to Sellers’ Knowledge, threatened before the National Relations Board or any similar agency.

     3.14 Employees; Employee Related Agreements and Plans; ERISA.

          (a) List of Plans. Set forth on Schedule 3.14(a) is an accurate and complete list of all Sellers’ Employee Benefit Plans.

          (b) Status of Plans. Each Sellers’ Employee Benefit Plan (including any related trust) complies in form and is operating in accordance with the requirements of all applicable Laws, including ERISA and the Code, and each Sellers’ Employee Benefit Plan (in each case, including any related trust) has been maintained and operated in substantial compliance with its terms. Except as set forth on Schedule 3.14(b), no complete or partial termination (described in Section 411(d)(3) of the Code) of any Sellers’ Employee Benefit Plan has occurred or is expected to occur. No Sellers’ Employee Benefit Plan is a plan described in Section 4063(a) of ERISA.

          (c) Liabilities.

               (i) Schedule 3.14(c) identifies each Sellers’ Employee Benefit Plan that constitutes a “defined benefit plan” as defined in Section 3(35) of ERISA. Neither the Company nor any ERISA Affiliate thereof has incurred any liability under Title IV of ERISA, including, without limitation, arising in connection with the termination of any such defined benefit plan of the Company or any ERISA Affiliate thereof currently or previously covered by Title IV of ERISA, and the Pension Benefit Guaranty Corporation has not instituted proceedings to terminate any such defined benefit plan nor do any conditions exist that present a risk of such occurrence. With respect to each Sellers’ Employee Benefit Plan subject to Title IV of ERISA, Sellers have made available to Buyer the most recent actuarial report showing the present value of accrued benefits under such plan, based upon the actuarial assumptions used for funding purposes with respect to such plan. No Sellers’ Employee Benefit Plan or any trust established thereunder has incurred any “accumulated funding deficiency” (as defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of the last day of the most recent fiscal year of each such plan ended prior to the date hereof; and all contributions required to be made with respect thereto (whether pursuant to the terms of any Sellers’ Employee Benefit Plan or otherwise) on or prior to the date hereof have been timely made.

               (ii) Each Sellers’ Employee Benefit Plan which is a “group health plan” (as such term is defined in Section 5000(b)(1) of the Code or Section 607(1) of ERISA) has been administered and operated in substantial compliance with the applicable requirements of Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code (“COBRA”), and the Company is not subject to any liability, including additional contributions, fines, taxes, penalties or loss of tax deduction as a result of the administration and operation of any such Sellers’ Employee Benefit Plan. No Sellers’ Employee Benefit Plan which is such a group health plan is a “multiple employer welfare arrangement,” within the meaning of Section 3(40) of ERISA.

Each Sellers’ Employee Benefit Plan that is intended to meet the requirements of Section 125 of the Code meets such requirements in all material respects, and each program of benefits for which employee contributions are provided pursuant to elections under any Sellers’ Employee Benefit Plan meets the requirements of the Code applicable thereto.

               (iii) Except as disclosed on Schedule 3.14(c), no Sellers’ Employee Benefit Plan (other than a plan qualified under Section 401(a) of the Code) provides for post-employment or retiree health, life insurance and/or other welfare benefits, and the Company has no obligation under any Sellers’ Employee Benefit Plan to provide any such benefits to any retired or former employees or active employees following such employees’ retirement or termination of service, except as required by COBRA or any similar state law. The Company has no unfunded liabilities pursuant to any Sellers’ Employee Benefit Plan that is not intended to be qualified under Section 401(a) of the Code.

               (iv) The Company has not incurred any liability or civil penalty under Section 409, 502(i) or 502(l) of ERISA or liability for any tax or excise tax arising under Chapter 43 or Section 6652 of the Code with respect to any Sellers’ Employee Benefit Plan and no event has occurred and no condition or circumstance exists that could reasonably be expected to give rise to any such liability with respect to any Sellers’ Employee Benefit Plan.

               (v) There are no actions, suits or claims pending or, to Sellers’ Knowledge, threatened against or with respect to any Sellers’ Employee Benefit Plan or the assets of any such plan (other than routine claims for benefits and appeals of denied routine claims). No civil or criminal action brought pursuant to the provisions of Title I, Subtitle B, Part 5 of ERISA is pending or, to Sellers’ Knowledge, threatened against the Company or, to Sellers’ Knowledge, any fiduciary of any Sellers’ Employee Benefit Plan with respect to any Sellers’ Employee Benefit Plan. Sellers have not received any notice that any Sellers’ Employee Benefit Plan or any fiduciary thereof is presently the direct or indirect subject of an audit, investigation or examination by any Governmental Authority.

               (vi) Except as shown on Schedule 3.14(c), the Company has no liabilities (actual or contingent) with respect to any Sellers’ Employee Benefit Plan.

          (d) Contributions. Except as set forth on Schedule 3.14(d), the Company has made full and timely payment of all amounts required to be paid by it as contributions or premiums to any Sellers’ Employee Benefit Plan.

          (e) Tax Qualification. Each Sellers’ Employee Benefit Plan intended to be qualified under Section 401(a) of the Code, as currently in effect, is the subject of a favorable determination letter issued by the Internal Revenue Service and the remedial amendment period described in Section 401(b) of the Code applicable to any amendment of any such Sellers’ Employee Benefit Plan adopted after the date of such letter has not expired. Each trust established in connection with any Sellers’ Employee Benefit Plan which is intended to be exempt from federal income taxation under Section 501(a) of the Code, as currently in effect, is the subject of a favorable determination letter issued by the Internal Revenue Service and the remedial amendment period described in Section 401(b) of the Code applicable to any amendment of any such Sellers’ Employee Benefit Plan adopted after the date of such letter has

not expired. Since the date of each most recent determination letter referred to in this paragraph (e), no event has occurred and no condition or circumstance exists that has resulted or is reasonably likely to result in the revocation of any such determination letter or that is reasonably likely to adversely affect the qualified status of any such Sellers’ Employee Benefit Plan or the exempt status of any such trust.

          (f) Employees.

               (i) Schedule 3.14(f)(i) lists (A) all employees of the Company as of the date noted on such Schedule (which includes any leased employees, contract employees and independent contract employees), (B) each such employee’s current rate of compensation and (C) each such employee’s job title. Schedule 3.14(f)(i) also indicates any such person who is absent from work due to a work-related injury, military service or is on leave under the Family and Medical Leave Act, or is receiving workers’ compensation or disability compensation.

               (ii) Except as listed in Schedule 3.14(f)(ii): (A) all officers and employees of the Company are employees at-will, terminable without penalty; (B) there are no outstanding agreements or arrangements with respect to severance payments; and (C) there are no agreements requiring the Company to make any payment to any officer, director or employee of the Company as a result of the transactions contemplated by this Agreement, including any “change in control” provisions or agreements. Schedule 3.14(f)(ii) lists (x) all employees of the Company that provide services to any other business conducted by Sellers or their Affiliates and (y) all employees of the Company whose primary place of employment is not at the principal facility of the Company.

               (iii) Sellers shall make all payments required under the retention agreements and management incentive plan listed on Schedule 3.14(f)(ii).

          (g) No Multiemployer Plans. Neither the Company nor any ERISA Affiliate thereof contributes to or is obligated to contribute, to any Multiemployer Plan or has contributed, or had an obligation to contribute, to any such plan during the six-year period ending on the Closing Date.

     3.15 Environmental Matters. Except as provided on Schedule 3.15:

          (a) Compliance. (i) The Company is in compliance in all material respects with all applicable Environmental Laws, (ii) there are no conditions on the Owned Real Property or the Leased Real Property that require Remedial Action under any Environmental Law, and (iii) the Company did not cause or contribute to any conditions on any other property that the Company previously owned, leased, or otherwise operated (as defined by Environmental Law)or on which the Company disposed of or arranged for the disposal of Hazardous Substances or Lime Kiln Dust, that require Remedial Action.

          (b) Claims. There are no pending or, to Sellers’ Knowledge, threatened actions, suits, claims or proceedings by or before any Governmental Authority or by any Person directed against the Company that pertain to (i) any Permits, obligations or liabilities under any Environmental Law or (ii) violations of any Environmental Law.

          (c) Permits. All Permits required under all applicable Environmental Laws to entitle the Company to operate and use its assets and to carry on and conduct the Business as currently conducted by it have been duly obtained or have been applied for and are listed on Schedule 3.15(c), and the Company has been informed by the Bureau of Alcohol, Tobacco, and Firearms (“ATF”) that it is authorized by the ATF to continue to possess, purchase, and use explosives in the manner previously authorized pending re-issuance of the Company’s ATF license/permit.

          (d) Notice. In the three (3) years preceding the date hereof, or if unresolved, any previous years, the Company (i) has not received written notice that any existing Permit that was obtained under any Environmental Law is to be revoked or suspended by any Governmental Authority, (ii) has not received any written notice of violation of any Environmental Law, or (iii) is not currently operating or required to be operating under, or subject to, any outstanding compliance order, decree or agreement pertaining to matters regulated by any Environmental Law.

          (e) Listed Properties. None of the Owned Real Property, Leased Real Property, or, to Sellers’ Knowledge, other property that the Company previously owned, leased, or otherwise operated (as defined by Environmental Law) is listed on the National Priorities List pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act, or on an equivalent state list of sites required to be investigated or cleaned up under an Environmental Law.

          (f) Hazardous Substances. No Person has treated, stored, disposed of, transported to, or released (as defined by Environmental Law) any Hazardous Substances or Lime Kiln Dust on or under any Owned Real Property or Leased Real Property except in material compliance with applicable Environmental Laws. The Company has not treated, stored, disposed of, arranged for disposal of, transported to, or released any Hazardous Substance or Lime Kiln Dust on or under any property other than Owned Real Property or Leased Real Property except in material compliance with then applicable Environmental Laws.

          (g) Required Notice or Consent. No notice or other filing, consent or approval is required under any Environmental Law as a prerequisite to the transfer of the Sale Shares to Buyer.

     3.16 Bank Accounts. Schedule 3.16 lists all bank, money market, savings and similar accounts and safe deposit boxes of the Company, specifying the account numbers and the authorized signatories or persons having access to such accounts or safe deposit boxes.

     3.17 Material Contracts. Schedule 3.17 sets forth a list of all currently effective Applicable Contracts of the Company, including those in the following categories: (a) each Contract providing for a partnership, joint venture, teaming or similar arrangement between the Company and any other person or entity or entities to share in the profits or losses of any parties thereto, (b) each Contract (i) under which the Company has created, incurred, assumed or guaranteed Indebtedness or (ii) whereby the Company has an obligation to make an investment in or loan to any Person, (c) each Contract for the purchase by the Company of goods and/or services involving total annual payments in excess of $10,000, (d) each Contract for the sale by

the Company of goods and/or services involving total annual revenues in excess of $10,000, (e) each Contract, containing covenants materially restricting or limiting the freedom of the Company to engage in any line of business, (f) each Contract that includes “take or pay”, “meet or release”, “most favored nations” or similar pricing or delivery arrangements involving annual payments or receipts in excess of $10,000, (g) each Contract that was entered into outside the ordinary course of business, (h) each Contract that extends for a term more than twelve (12) months from the Closing Date (unless terminable without payment or penalty upon no more than thirty (30) days notice), or (i) each Contract between the Company and an Affiliate that cannot be terminated by the Company on thirty (30) days or less notice without penalty. Except as set forth on Schedule 3.17, (1) each such Contract is (A) a valid and binding obligation of the Company and (B) to Sellers’ Knowledge, a valid and binding obligation of each other party thereto, and (2)(A) the Company is not in material breach thereof or material default thereunder (and to Sellers’ Knowledge, no event or circumstance has occurred that with notice or lapse of time or both, would constitute an event of default) and (B) to Sellers’ Knowledge, no other party to any such Contract is in material breach thereof or material default thereunder. The Company has not agreed to indemnify any director, officer, or employee, whether by agreement, charter provision, bylaw provision or resolution, against any Loss or liability whatsoever, pursuant to which the Company may be liable to any such individual.

     3.18 Brokers, Finders, Etc. Except as set forth on Schedule 3.18, neither Sellers nor any Affiliate of Sellers has employed, nor is any of them subject to any valid claim of liability or obligation to, any broker, finder, consultant or other intermediary in connection with the transactions contemplated by this Agreement who might be entitled to a fee or commission in connection therewith. Sellers are solely responsible for any payment, fee or commission that may be due to the parties listed on Schedule 3.18 in connection with the transactions contemplated hereby.

     3.19 Insurance.

          (a) Policies. Schedule 3.19(a) sets forth a list of the policies of insurance currently maintained by or on behalf of the Company or O-N Minerals with respect to the products, properties, assets, operations and business of the Company (including any policies of insurance maintained for purposes of providing benefits such as workers’ compensation and employers’ liability coverage). Subject to Section 6.4, all such policies are in full force and effect. All premiums due on such policies have been paid and no notice of cancellation or termination or intent to cancel has been received by Sellers or the Company with respect to such policies.

          (b) Claims. Schedule 3.19(b) sets forth a list of all pending claims (including with respect to insurance obtained but not currently maintained) and the claims history for the Company during the three (3) years preceding the date hereof.

          (c) Post-Closing Litigation and Claims Costs. Sellers’ general liability insurance provider has not denied coverage for the litigation listed on Schedule 3.10 and has taken up and, to Sellers’ Knowledge, will continue, the defense of the two cases listed on such Schedule. Sellers workers compensation insurance provider is providing coverage for the workers compensation claims listed on Schedule 3.19(b) and, to Sellers’ Knowledge, will

continue to do so. Except to the extent covered by accruals in current liabilities for the calculation of Closing Net Working Capital, Sellers and Buyer agree that any moneys reasonably required to be paid by the Company or the Buyer after the Closing Date relating to the defense and/or settlement (including insurance deductibles) of the litigation listed on Schedule 3.10 or the claims listed on Schedule 3.19(b), will be reimbursed by Sellers to Buyer within ten (10) Business Days after Buyer presents proof of such payments or, in the event Sellers fail to make any such payment, Buyer may make a claim for such amounts pursuant to the Escrow Agreement.

     3.20 Inventories. Except as disclosed on Schedule 3.20, the inventories reflected in the Financial Statements were classified as current assets in accordance with GAAP. Except as disclosed on Schedule 3.20, all items of inventory reflected on the Balance Sheet, or thereafter acquired by the Company (and not subsequently disposed of in the ordinary course of business or appropriately reserved for on the Balance Sheet), are of a quality and quantity which are saleable and/or useable in the ordinary course of business within one year of the Closing Date. Except as indicated on Schedule 3.20, no inventories of the Company have been consigned to the Company or are otherwise owned by a third party.

     3.21 Product Liability. Except as set forth on Schedule 3.21, there is no currently pending, or to Sellers’ Knowledge threatened, material claim for product liability, warranty, material backcharge, material additional work, field repair or other claims against the Company by any third party arising from: (a) services rendered by the Company, (b) the sale or distribution of products by the Company or (c) the manufacture of products by the Company.

     3.22 Significant Customers and Suppliers. Except as set forth in Schedule 3.22, none of the fifteen (15) largest customers or suppliers of the Company (measured by value of net sales or purchases, respectively) during the period ended on the Closing Date has terminated, canceled or limited or made any materially adverse modification or change in, its business relationship with the Company or, to Sellers’ Knowledge, threatened to do so.

     3.23 Accounts Receivable. All accounts receivable of the Company that are reflected on the Balance Sheet or on the Closing Balance Sheet (collectively, the “Accounts Receivable”) represent valid obligations arising from sales actually made or services actually performed in the ordinary course of business. Schedule 3.23 contains a complete and accurate list of all Accounts Receivable as of November 30, 2005, which list sets forth the aging of such accounts receivable.

     3.24 Disclosure. No representation or warranty of Sellers in this Agreement and no statement in the Schedules hereto omits to state a material fact necessary to make the statements herein or therein, in light of the circumstances in which they were made, not misleading.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER

     As an inducement to Sellers to enter into this Agreement and consummate the transactions contemplated hereby, Buyer represents and warrants to Sellers, as follows:

     4.1 Organization. Buyer is a corporation validly existing and in good standing under the Laws of its state of incorporation or formation, and has the corporate power and authority to own, operate or lease its properties, carry on its business, enter into this Agreement and to perform its obligations hereunder.

     4.2 Authorization; Enforceability. This Agreement has been duly and validly authorized by all necessary corporate and other actions by Buyer and constitutes the legal, valid and binding obligations of Buyer enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other Laws of general application relating to or affecting creditors’ rights and to general principles of equity.

     4.3 No Violation of Laws; Consents. Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby nor the compliance with or fulfillment of the terms, conditions or provisions hereof by Buyer will: (i) violate any provision of the Governing Documents of Buyer or (ii) violate any Law to which Buyer is subject or by which any of its assets may be bound or affected the result of which would have a Material Adverse Effect on the financial condition, operation or business of Buyer. No consent, approval or authorization of, or registration or filing with, any Person is required in connection with the execution or delivery by Buyer of this Agreement or the consummation by Buyer of the transactions contemplated hereby.

     4.4 No Pending Litigation or Proceedings. No Litigation is pending against or affecting or, to the knowledge of Buyer, threatened against Buyer in connection with any of the transactions contemplated by this Agreement. There is presently no outstanding judgment, decree or order of any Governmental Authority against or affecting Buyer in connection with the transactions contemplated by this Agreement.

     4.5 Brokers, Finders, Etc. Neither Buyer nor any of its Affiliates have employed, nor are any of them subject to any valid claim of liability or obligation to, any broker, finder, consultant or other intermediary in connection with the transactions contemplated by this Agreement who might be entitled to a fee or commission in connection therewith.

     4.6 Investment. Buyer is purchasing the Sale Shares for investment for its own account, and not with a view to, or for the offer or sale in connection with, any distribution thereof. Buyer acknowledges that the Sale Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities Laws, and that the Sale Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act and any applicable state securities Laws or pursuant to an applicable exemption therefrom.

     4.7 Financial Ability Buyer has the financial ability to consummate the transactions contemplated by this Agreement without any delay or restriction which would adversely impact the certainty of Buyer’s ability to so consummate. Buyer has furnished to Seller all documentation or other evidence of such financial ability that has been requested by Seller.

ARTICLE V
[Intentionally Left Blank]

ARTICLE VI
ADDITIONAL AGREEMENTS

     6.1 Use of Names. Notwithstanding any provision of Section 3.12 to the contrary, except for the name “St. Clair”, which O-N Lime hereby assigns, and delivers to Buyer, no Seller is conveying any ownership rights to Buyer or the Company for, or licensing Buyer or the Company to use, any of the trade names, trademarks or Internet domain names of Sellers or any of their respective Affiliates, including the rights to the name “Oglebay Norton”, “ONCO”, “O-N”, “Global Stone” or any derivation or variation thereof or any corporate name which includes the foregoing names, including those names (all such names together the “Reserved Names”) and after the Closing:

          (a) Buyer shall promptly (but in no event later than sixty (60) days after the Closing) destroy all stocks of written, printed or other graphic materials in its possession or control that use or embody any names or marks of Sellers or any of its Affiliates, including the Reserved Names, or modify such materials to remove or cover over any such names or marks;

          (b) Buyer shall promptly (but in no event later than thirty (30) days after the Closing) remove or cause to be removed any links from the Company’s websites on the World Wide Web to any website maintained by or on behalf of Sellers or its Affiliates and cease the use of any metatags utilizing any Reserved Name or any confusingly similar word or phrase to direct traffic to a website not owned by the owner of the Reserved Names; and

          (c) Buyer shall promptly (but in no event later than seven (7) days after the Closing) (i) file the change of corporate name of the Company (which new name shall not include any Reserved Names) with the appropriate Governmental Authorities and (ii) promptly thereafter file requests to have the Permits issued or re-issued in such new corporate name of the Company.

     6.2 Tax Matters.

          (a) Liability for Taxes.

               (i) Sellers shall be liable for and, pursuant to Article VIII, Sellers shall indemnify and hold harmless the Buyer and the Company against all Taxes (whether assessed or unassessed) applicable to the Company (1) attributable to a Pre-Closing Period, including the portion of any Straddle Period ending on the Closing Date or (2) pursuant to Treas. Reg. §1.1502-6 (or any comparable provision under state or local Law imposing several liability upon members of a consolidated, combined, affiliated or unitary group) for any Pre-Closing Period; provided, however, that Sellers shall not be liable for (w) any Taxes (other than Income Taxes)

to the extent accrued on the Closing Balance Sheet; (x) any Taxes imposed on the Company as a result of transactions occurring on the Closing Date that are properly allocable to the portion of the Closing Date after the Closing; (y) any interest or penalties attributable to the negligence, delay or bad faith of Buyer or its Affiliates; and (z) any interest or penalties imposed or assessed, or losses incurred, to the extent attributable to Buyer’s or its Affiliates’ late filing of any Tax Return or late payment of any Taxes. Sellers shall be entitled to any refund of (or credit for) Taxes allocable to any Pre-Closing Period. Buyer or the Company shall pay over to Sellers any such refund or the amount of any credit within fifteen (15) days after receipt.

               (ii) Buyer shall be liable for and, pursuant to Article VIII, Buyer shall indemnify and hold harmless Sellers and its Related Parties against all Taxes (whether assessed or unassessed) applicable to the Company (A) attributable to (1) taxable years or periods beginning after the Closing Date, (2) transactions occurring on the Closing Date that are properly allocable to the portion of the Closing Date after the Closing, and (3) with respect to any Straddle Period, the portion of such Straddle Period beginning after the Closing Date or (B) to the extent such Taxes (other than Income Taxes) are accrued on the Closing Balance Sheet. Except as otherwise provided herein, Buyer shall be entitled to any refund of (or credit for) Taxes allocable to any taxable year or period that begins after the Closing Date and, with respect to any Straddle Period, the portion of such Straddle Period beginning after the Closing Date.

               (iii) For purposes of Section 6.2(a)(i) and Section 6.2(a)(ii), whenever it is necessary to determine the liability for Taxes for a Straddle Period, the determination of the Taxes for the portion of the Straddle Period ending on and including, and the portion of the Straddle Period beginning after, the Closing Date shall be determined by assuming that the Straddle Period consisted of two taxable years or periods, one which ended at the close of the Closing Date and the other of which began at the beginning of the day following the Closing Date, and items of income, gain, deduction, loss or credit for the Straddle Period shall be allocated between such two (2) taxable years or periods by assuming that the relevant books were closed at the close of the Closing Date; provided, however, that (A) transactions occurring on the Closing Date that are properly allocable to the portion of the Closing Date after the Closing shall be allocated to the taxable year or period that is deemed to begin at the beginning of the day following the Closing Date, and (B) exemptions, allowances or deductions that are calculated on an annual basis, such as the deduction for depreciation, shall be apportioned between such two (2) taxable years or periods on a daily basis and Taxes that are computed on a periodic basis, such as property Taxes, shall also be so apportioned on a daily basis. Sales and use Taxes shall be deemed to accrue in accordance with GAAP.

               (iv) Sellers or Buyer, as the case may be, shall provide reimbursement for any Tax paid by one Party all or a portion of which is the responsibility of the other Party in accordance with the terms of this Section 6.2(a). Within a reasonable time prior to the payment of any such Tax, the Party paying such Tax shall give written notice to the other Party of the Tax payable and the portion which is the liability of each Party, although failure to do so will not relieve the other Party from its liability hereunder.

          (b) Tax Returns.

               (i) Sellers shall prepare, execute and timely file, or cause to be prepared, executed and timely filed in a manner consistent with past practice, all federal and state income Tax Returns of the Company with respect to any taxable period ending prior to or ending on and including the Closing Date.

               (ii) Except as provided in Section 6.2(b)(i), Buyer shall have the exclusive authority and obligation to prepare and timely file, or cause to be prepared and timely filed, all Tax Returns for the Company that relate to taxable periods ending after the Closing Date. With respect to any such Tax Return which includes a Pre-Closing Period for which Sellers may be required to indemnify Buyer under Article VIII, Buyer shall provide Sellers with draft copies of such Tax Returns and an opportunity to review and comment on such Tax Returns at least thirty (30) days prior to the date for filing such Tax Returns. Buyer shall in good faith take into account such comments in its preparation of such Tax Returns.

          (c) Tax Audits.

               (i) Buyer shall promptly notify Sellers in writing upon receipt by Buyer or any of its Affiliates of notice of any pending or threatened federal, state or local Tax audits, examinations, notices of deficiency or other adjustments, assessments or redeterminations (“Tax Matters”) relating to a Pre-Closing Period for which Sellers may be liable to indemnify Buyer under Article VIII. In the event that Buyer fails to notify Seller with respect to a Tax Matter in accordance with the provisions of this Section 6.2(c)(i), Seller shall not be obligated to indemnify Buyer under Article VIII of this Agreement with respect to such Tax Matter to the extent that such failure to notify Seller adversely affects Seller’s ability to adequately defend against such Tax Matter.

               (ii) Sellers shall have the sole right to control, contest, resolve and defend against any Tax Matters or initiate any claim for refund or amend any Tax Return relating to the Income Taxes of the Company for Pre-Closing Periods, in each case provided Sellers are obligated to indemnify Buyer for such Income Taxes (or a portion of such Income Taxes with respect to a Straddle Period) under Article VIII, and to employ counsel of its choice at its own expense; provided, however, that (A) Sellers shall keep Buyer informed with respect to the commencement, status and nature of any such Tax Matter, (B) neither Sellers nor the ultimate parent entity filing the consolidated return that is the subject of such Tax Matter nor any of their respective Affiliates shall enter into any settlement of or otherwise compromise any such Tax Matter which adversely affects the Tax liability of Buyer, the Company or any Affiliate of either of them (to the extent Buyer, the Company or any Affiliate of either of them may be required to make any payment for such Tax liability that is not fully indemnified by Sellers pursuant to the terms hereof) without the prior written consent of Buyer, which consent shall not be unreasonably withheld or delayed, and (C) Sellers may decline to control any Tax Matters by providing Buyer with written notice of such decision.

               (iii) Except as otherwise provided in Section 6.2(c)(ii) and except with respect to federal or state Income Taxes, Buyer shall have the sole right to control any Tax Matters relating to the Company, and to employ counsel of its choice at its own expense;

provided, however, that (A) Buyer shall keep Sellers informed with respect to the commencement, status and nature of any Tax Matter for which Sellers may be liable pursuant to Article VIII, and (B) neither Buyer nor any of its Affiliates shall enter into any settlement of or otherwise compromise any Tax Matter for which Sellers are required to indemnify Buyer hereunder without the prior written consent of Sellers, which consent shall not be unreasonably withheld or delayed.

     (d) Assistance and Cooperation. After the Closing Date, each of Seller and Buyer shall (and shall cause their respective Affiliates, including the Company, to):

               (i) assist the other Party in preparing any Tax Returns which such other Party is responsible for preparing and filing in accordance with Section 6.2(b);

               (ii) upon reasonable notice and without undue interruption to the business of such Party or the Company, provide access during normal business hours to the books and records of such Party relating to the Taxes of the Company prior to the Closing Date;

               (iii) furnish the other with copies of all correspondence received from any taxing authority in connection with any Tax Matter or information request with respect to any taxable period for which the other may have a liability under this Section 6.2; and

               (iv) timely provide to the other powers of attorney or similar authorizations reasonably necessary to carry out the purposes of this Section 6.2.

          (e) Disputes. If the Parties disagree as to the calculation of any amount relating to Taxes governed by this Section 6.2, the Parties shall promptly consult with each other in an effort to resolve the disagreement. If any such disagreement is not resolved within 30 days after either Party gives the other written notice that it cannot be resolved, the Parties shall jointly select a firm of nationally recognized independent accountants to resolve the disagreement. Such firm’s determination shall be final, binding and conclusive on the Parties, and any expenses relating to the engagement of such firm shall be shared equally by the Parties.

          (f) Purchase Price Adjustment. Any payment by Buyer or Sellers to or on behalf of the other under this Section 6.2 will be an adjustment to the Purchase Price.

          (g) Section 338 Election. At the option of Buyer, Sellers and the Company shall join with Buyer in making an election under Section 338(h)(10) of the Code with respect to the purchase and sale of the Sale Shares hereunder (a “Section 338(h)(10) Election”). Buyer shall be responsible for, and control, the preparation and filing of such election. The Company and Sellers shall execute and deliver to Buyer such documents or forms as Buyer reasonably shall request or as are required by Law for an effective Section 338(h)(10) Election. Buyer, the Company and the Sellers shall report the purchase and sale of the Sale Shares consistent with such election and shall take no position contrary thereto on any Tax Return.

     6.3 Employees and Plans.

          (a) Notice to Employees. Subject to the provisions of this Section 6.3, on or prior to the Closing Date, Buyer and Sellers shall jointly give notice to all employees who are

then employed by the Company (the “Affected Employees”) that all benefits previously provided to the Affected Employees under the Sellers’ Employee Benefit Plans are discontinued on the Closing Date with respect to such Affected Employees and will be replaced by the employee benefit plans of the Buyer (the “Buyer Benefit Programs”). Effective as of the Closing Date, Sellers shall cause the Company to withdraw from and cease to be an employer under each Sellers’ Employee Benefit Plan.

          (b) Credit for Prior Service. Buyer agrees that the Affected Employees shall be credited with their length of service with the Company and Sellers and its Affiliates under the policies of the Buyer and for all purposes under the Buyer Benefit Programs (other than for purposes of benefit accrual under a pension plan as defined in Section 3(2) of ERISA and early retirement subsidies under a defined benefit plan as defined in Section 3(35) of ERISA) after the Closing.

          (c) Vacation. Buyer shall take responsibility for and cause to be paid in the normal course of business the vacation pay of all Affected Employees for all days of vacation to which each such employee was entitled under Sellers’ or the Company’s vacation pay policy as of the Closing Date. For purposes of computing eligibility for and the amount of vacation or holiday pay of Affected Employees to be accrued after the Closing under Buyer’s vacation and holiday policies, employment of such employees by the Company or Sellers or any of its Affiliates prior to Closing shall be taken into account to the same extent as if it had been employment by the Company or Buyer.

          (d) Existing Claims. Sellers shall retain the responsibility for payment of all covered medical and dental claims or expenses actually incurred by any employee (or covered dependent of any employee) of the Company prior to the Closing Date and Buyer shall not assume nor shall Buyer or the Company be responsible for any liability with respect to such claims or expenses.

          (e) COBRA. From and after the Closing, Sellers shall be responsible for providing any employee or former employee of the Company and any “qualified beneficiaries” of any such person with COBRA continuation coverage to the extent required by Law for the Company employee, former employee or qualified beneficiary, if the qualifying event of such a Person occurs before the Closing Date.

          (f) Disability. Buyer will assume the responsibility for any short-term or long-term disability benefits for all Affected Employees actively at work as of the Closing Date. Sellers shall retain responsibility for any long-term disability benefits for any employee of the Company who had qualified for long-term disability benefits as of the Closing Date and for any long-term disability benefits for any employee of the Company who had qualified for short-term disability benefits as of the Closing Date and who subsequently qualifies for long-term disability benefits as a consequence of the same injury or disability.

          (g) WARN Act. Buyer shall be responsible for all liabilities or obligations under the WARN Act resulting from Buyer’s or the Company’s actions following the Closing.

          (h) Sellers 401(k) Plan. Upon the withdrawal of the Company from the Sellers 401(k) Plan, Sellers shall cause the balances of all such participants in the Sellers 401(k) Plan who are Affected Employees to be fully vested and distributions of the vested balances of all such participants shall be made in accordance with ERISA and the Code and the terms of the Sellers’ 401(k) Plan. Sellers and Buyer agree to provide each other with such records and information as they may reasonably request relating to this Section 6.3 or the administration of the Sellers 401(k) Plan.

     6.4 Insurance.

          (a) Termination by Sellers. Effective as of the Closing Date, Sellers shall cause the termination of all insurance coverage relating to the Company (other than any reclamation bonds purchased), the Business and the Company’s current or former employees and directors under applicable policies of insurance. Buyer shall cause any reclamation bonds in place on the Closing Date to be replaced within forty five (45) days after the Closing Date. Sellers shall provide reasonable assistance to enable Buyer to do so. Twenty (20) days after the Closing Date, if such reclamation bonds have not been replaced by Buyer, Buyer shall compensate O-N Lime for any costs and expenses, including related interest expenses, incurred by any Seller in connection with such reclamation bonds.

          (b) Information. To the extent that after the Closing a Party requires any information from another Party regarding claim data, payroll or other information in order to make filings with insurance carriers or self-insurance regulators, such other Party shall promptly supply such information.

     6.5 No Public Announcement. Neither Buyer, Sellers nor their respective Affiliates shall, without the written approval of the other Party, make any press release or other public announcement concerning the transactions contemplated by this Agreement, except as and to the extent that any such Person shall be so obligated by Law, in which case the other Party to this Agreement shall be advised and the Parties shall use their best efforts to cause a mutually agreeable release or announcement to be issued; provided, however, that the foregoing shall not preclude communications or disclosures necessary to implement the provisions of this Agreement or to comply with applicable accounting and disclosure obligations of any Governmental Authority or the rules of any securities exchange.

     6.6 Expenses. Each of the Parties shall bear all of their own expenses in connection with the negotiation and closing of this Agreement and the transactions contemplated hereby, including the fees, expenses and disbursements of its counsel, investment bankers and independent public accountants.

     6.7 Covenant Not to Compete; Covenant Not to Solicit.

          (a) During the Non-Competition Period, the Non-Competition Parties and their respective Affiliates, whether currently or in the future in that relationship, shall not (and shall cause each other Non-Competition Party not to), directly or indirectly own, manage, operate or control any business engaged in the sale of the Non-Competition Products in the Territory in competition with the business activities conducted by the Company (a “Competitive

Business”); provided, however, that the foregoing covenants shall not prohibit, or be interpreted as prohibiting, any Non-Competition Party from:

               (i) entering into any relationship with a Person not owned, managed, operated or controlled by any Non-Competition Party for purposes unrelated to a Competitive Business; or

               (ii) making equity investments in publicly owned companies which conduct a Competitive Business, provided such investments do not confer control of any such Competitive Business upon any Non-Competition Party.

     If a Seller and an Affiliate thereof terminate their relationship that causes one to cease to be an Affiliate of the other, such Seller shall obtain an agreement in writing with the Affiliate that such Affiliate will adhere to the terms of this Section after such termination.

          (b) Until the second anniversary of the Closing Date, neither Sellers nor any of their respective Affiliates shall, directly or indirectly, solicit for employment, or induce or encourage to leave employment with the Company, whether as an employee, consultant, contractor or otherwise, any employee of Company on the date hereof; provided, however, that the foregoing provision will not prevent Sellers or any of their respective Affiliates from (i) with the consent of Buyer, employing any such employee in response to a general solicitation of employment made by Sellers or such Affiliate in a trade journal or other publication not specifically targeted at any employee of the Company, or (ii) hiring James Underwood upon the expiration of six (6) months from the date hereof.

     6.8 Further Assurances and Cooperation. Sellers shall, at any time and from time to time on and after the Closing Date, upon request by Buyer and without further consideration, take or cause to be taken such actions and execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such instruments, documents, transfers and conveyances as may be required for the better conveying, transferring, assigning and delivering of the Sale Shares to Buyer.

     6.9 Regarding Accounting, Financial Statements, and SEC Reporting. After the Closing:

          (a) Sellers shall (and shall cause their respective Affiliates to) provide reasonable assistance to the Buyer and the Company in preparing the 2005 audited financial statements of the Company as necessary for or required by Securities and Exchange Commission (“SEC”) rules and regulations, which Buyer is responsible for preparing and filing;

          (b) Sellers shall (and shall cause their respective Affiliates to) upon reasonable notice, provide to Buyer access during normal business hours to the books, records, and financial statements of the Sellers (and their respective Affiliates) and the Company relating to the Company for the calendar year period prior to and including the Closing Date; and

          (c) Buyer shall (and shall cause its Affiliates, including the Company, to) upon reasonable notice, provide to Sellers access during normal business hours to the books,

records, and financial statements of the Company relating to the period prior to and including the Closing Date for any legitimate business purpose.

     6.10 Indemnification. Each Seller agrees that the Company’s Governing Documents shall be amended, to the extent necessary, so that no indemnification or advancement or payment of expenses shall thereafter be required to be paid by the Company to Sellers and/or their Affiliates for events or matters that occurred before or occur after the Closing Date. Each Seller agrees to maintain in effect insurance to the extent that it is now carried payable to such Persons for such events or matters and to indemnify and hold harmless Buyer and the Company and their Affiliates for any damages, costs, or expenses arising therefrom.

     6.11 Consents. Subject to any specific limitation herein described, Sellers and Buyer shall each use their reasonable best efforts to obtain and to cooperate with each other in order to obtain all consents, approvals and authorizations, and to make all registrations and filings (including, without limitation, all filings with any Governmental Authorities) lawfully required to be obtained from or filed with all applicable Governmental Authorities in connection with Sellers’ and Buyer’s execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

     6.12 Groundwater Monitoring Program. Sellers shall be liable for and, pursuant and subject to Article VIII, shall indemnify and hold harmless Buyer against all Losses of the Company associated with any corrective action required by the Oklahoma Department of Environmental Quality (“DEQ”) in response to the groundwater monitoring program the DEQ is requiring as a condition to issuance of the Oklahoma Pollutant Discharge Elimination System (“OPDES”) wastewater discharge permit; provided, however, that Buyer shall assume liability (a) for the costs of developing and installing the groundwater monitoring plan, (b) for performing monitoring of the groundwater in compliance with the OPDES wastewater discharge permit, and (c) arising from Buyer’s failure to comply with Law or the terms of such permit after the Closing Date. The Company’s continued use of the surface impoundments in substantially the same manner as currently conducted shall not be deemed a failure to comply with Law or the terms of such permit.

     6.13 Accounts Receivable. Sellers will promptly pay over to Buyer when received all monies received by Sellers (or any applicable Affiliate) after the Closing with respect to any Accounts Receivable.

     6.14 Infringement Liability. Seller shall be liable for and, pursuant to Article VIII, Seller shall indemnify and hold harmless the Buyer against all Losses related to the Company’s liability or obligations under any intellectual property law (“IP Liability”) (whether assessed or unassessed) arising from or in connection with:

     (a) IP Liability arising out of or relating to the ownership or operation of the Business by Seller at any time on or prior to the Closing Date.

     (b) Seller and Buyer agree to cooperate in connection with any indemnification claims under this Section 6.14 and Article VIII.

     6.15 Trapezoid Parcel. Sellers at their expense, shall use their commercial best efforts to obtain good and marketable title in the Company’s name to the Trapezoid Parcel. If such title is not obtained prior to the second anniversary of the Closing Date, then $25,000 shall immediately be distributed under the Escrow Agreement to Buyer without offset (whether such amount is paid to Buyer pursuant to this provision or under Article VIII hereof), which amount shall be in full and final settlement of all claims by Buyer against Sellers in respect of title to the Trapezoid Parcel, other than those dealt with in the remaining sentences of this Section. In the event that, after the payment of such amount to Buyer, the Company obtains good and marketable title to the Trapezoid Parcel, Buyer shall return such amount to Sellers, less Buyer’s costs of obtaining title. Sellers shall indemnify and hold harmless Buyer (without offset or reduction under Article VIII hereof) against all Losses incurred by the Company in connection with any formal written request initiated by a third party seeking the removal of Lime Kiln Dust from the Trapezoid Parcel deposited prior to the Closing Date. Buyer shall (a) be liable for any Losses arising from such deposits made after the Closing Date and (B) cooperate and assist Sellers in a reasonable manner in the identification and potential use of an appropriate disposal site for such Lime Kiln Dust, including making available, without charge, any appropriate disused mine or other redundant property of the Company.

     6.16 Master Lease and License Arrangements. Anything in this Agreement to the contrary notwithstanding, this Agreement and the transactions contemplated hereby shall not constitute an agreement to convey any rights under the Master Leases and Licenses or any claim or right or any benefit arising thereunder or resulting therefrom, without the consent of the applicable financing party or lessor thereto, if such agreement would constitute a breach or other contravention of the Master Leases and Licenses or in any way adversely affect the rights of Sellers (or the applicable Affiliate of Sellers) thereunder. Prior to the date hereof, Buyer has sought, and expects to obtain in the near future, satisfactory terms for the continued use by the Company of the assets subject to the Master Leases and Licenses and pending the execution of the definitive documents embodying such terms, Sellers and Buyer will cooperate in a mutually agreeable arrangement under which the Company would obtain the benefits and assume the obligations under the Master Leases and Licenses in accordance with this Agreement, including subcontracting, sublicensing, or subleasing to the Company, or under which Sellers (or the applicable Affiliate) would enforce for the benefit of the Company, with Buyer assuming Sellers’ (or the applicable Affiliate’s) obligations, and any and all rights of Sellers (or the applicable Affiliate) against the applicable financing party or lessor. After the Closing, Buyer shall indemnify and hold harmless Sellers from any failure of the Company to discharge any liability or obligation to Sellers under the foregoing arrangement. Buyer agrees to use its best efforts to promptly obtain the consent of the applicable financing party or lessor under the Master Leases and Licenses to the continued use by the Company of the underlying assets subject thereto.

     6.17 Defense of Certain Disclosed Litigation and Claims. Sellers will be responsible for coordinating the defense for the two litigation cases listed on Schedule 3.10, including consultation and coordination with the Sellers’ general liability insurance provider, and Buyer will provide cooperation as reasonably requested by Sellers. Sellers will provide advance notice to Buyer of any settlement or other hearings involving such litigation cases for which it is anticipated that settlement costs would exceed $25,000. After the Closing Date, Buyer will be responsible for the defense of all the workers’ compensation claims listed on Schedule 3.19(b), including consultation and coordination with the Sellers’ workers compensation insurance

provider, and Sellers will provide cooperation as reasonably requested by Buyer. Buyer will provide full written information to Sellers relating to such matters in advance of any settlement or other hearings of any such claims for which it is anticipated that settlement costs would exceed $25,000. No such claim shall be settled or compromised for an amount in excess of $25,000 without the written consent of Sellers, which consent shall not be unreasonably withheld.

ARTICLE VII
CONDITIONS TO CLOSING

     7.1 Conditions Precedent to Obligation of Buyer. The obligation of Buyer to proceed with the Closing under this Agreement is subject to the fulfillment prior to or at the Closing of the following conditions, any one or more of which may be waived in whole or in part by Buyer:

          (a) Orders; Litigation. No statute, regulation or order of any Governmental Authority shall be in effect that restrains or prohibits the transactions contemplated hereby, and no proceeding shall have been commenced that restrains or prohibits the consummation of all or any portion of the transactions contemplated hereby.

          (b) Share Certificates and Instruments of Transfer. Sellers shall have delivered to Buyer stock certificates representing all of the Sale Shares and shall have executed, acknowledged and delivered to Buyer such instruments of transfer of the Sale Shares as shall be reasonably requested by Buyer to vest in Buyer all right, title and interest in and to the Sale Shares.

          (c) Other Documents. Sellers shall have delivered to Buyer all other documents referenced hereunder.

     7.2 Conditions Precedent to Obligation of Sellers. The obligation of Sellers to proceed with the Closing under this Agreement is subject to the fulfillment prior to or at Closing of the following conditions, any one or more of which may be waived in whole or in part by Sellers:

          (a) Orders; Litigation. No statute, regulation or order of any Governmental Authority shall be in effect that restrains or prohibits the transactions contemplated hereby, and no proceeding shall have been commenced that restrains or prohibits the consummation of all or any portion of the transactions contemplated hereby.

ARTICLE VIII
INDEMNIFICATION

     8.1 Survival of Representations, Warranties, Covenants and Agreements. Subject to the provisions of this Article VIII, the representations and warranties of Sellers contained in Article III and those of the Buyer contained in Article IV and the covenants and agreements of the Parties contained in this Agreement shall survive the Closing (and any

investigation by the Parties with respect to such representations and warranties) but shall terminate and be of no further force or effect upon the expiration of twenty-four (24) months from the Closing Date and no claims shall be made by any Indemnified Party (as hereinafter defined) under this Section 8.1 thereafter. Notwithstanding the foregoing, (a) any such representation or warranty as to which a claim relating thereto is asserted in writing (which states with specificity the basis therefor) in accordance with Section 8.3 during such survival period shall, with respect to such claim, continue in force and effect beyond such survival period pending resolution of such claim, (b) the representations and warranties of Sellers set forth in the second sentence of Section 3.2 (Authorization), Section 3.3(a) (Capitalization), and Section 3.3(b) (Title), shall survive forever, (c) the representations and warranties of Sellers set forth in Section 3.7 (Taxes), the covenants of Sellers and Buyer set forth in Section 6.2 (Taxes) and Section 3.14 (Employees; Employee Related Agreements and Plans; ERISA) shall survive until the expiration of the relevant statutory period of limitations applicable to the underlying claims (provided, however, that neither Buyer nor the Company may extend such period by giving any waiver or agreeing to any extension thereof without the express prior written consent of Sellers), (d) the representations and warranties of Sellers set forth in Section 3.15 (Environmental Matters) and the covenants and agreements in Section 6.12 shall survive until the expiration of six (6) years from the Closing Date, (e) the covenants and agreements in this Article VIII shall survive the Closing and shall remain in full force and effect for such period as is necessary to resolve any claim made with respect to any representation, warranty, covenant or agreement contained in this Agreement during the survival period thereof, and (f) the remaining covenants and agreements of the Parties contained in Article VI of this Agreement shall survive the Closing without any contractual limitation on the period of survival unless a limitation on time is contained in the relevant section, in which case such covenant shall survive for the period of time so specified. The right to indemnification, payment of Expenses or other remedies based on any representation, warranty, covenant or agreement contained herein 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 or compliance with any such representation, warranty, covenant or agreement. It is hereby stipulated that Buyer has relied on each and every representation, warranty, covenant, and agreement contained herein, as qualified by the Schedules hereto.

     8.2 General Indemnification. Subject to the provisions of Section 8.1:

          (a) Indemnification by Sellers and Buyer. Each of Buyer and each Seller, jointly and severally, hereby agrees (in such capacity, an “Indemnifying Party” provided, that, the Sellers, collectively, shall be regarded as one Indemnifying Party hereunder), from and after the Closing, to indemnify, hold harmless and defend the other Party and its Related Parties (in such capacity, an “Indemnified Party”) against any Losses that such Indemnified Party shall actually incur, to the extent that such Losses (or claims, actions, suits or proceedings in respect thereof and any appeals therefrom, “Proceedings”):

               (i) arise out of or in connection with any breach of or inaccuracy in any representation or warranty made herein in Article III for the benefit of the Buyer or in Article IV for the benefit of Sellers; or

               (ii) arise out of or in connection with any failure to perform any covenant made herein by the Indemnifying Party for the benefit of the Indemnified Party.

          Notwithstanding the foregoing, the Indemnifying Party shall not have any liability to the Indemnified Party under this Section 8.2(a) unless and until the aggregate amount of all Losses exceed one percent (1.0%) of the Purchase Price, in which event only the amount in excess of one-half of one percent (0.5%) of the Purchase Price shall be recoverable; and the liability of the Indemnifying Party under this Section 8.2(a) shall not exceed forty percent (40%) of the Purchase Price in the aggregate; provided, however, that the limitations set forth in this sentence shall not apply with respect to Sellers’ liability to Buyer (x) for Taxes of the Company for Pre-Closing Periods as set forth in Section 6.2(a) (Taxes) or arising out of breaches of the representations and warranties in the second sentence of Section 3.2 (Authorization), Section 3.3(a) (Capitalization), Section 3.3(b) (Title), Section 3.18 (Brokers and Finders), Buyer’s failure to pay the Purchase Price, or a willful failure to comply with a covenant made herein. All indemnity payments made under this Article VIII shall be treated as adjustments to the Purchase Price. For the purposes of determining the amount of Losses incurred by an Indemnified Party in accordance with this Article VIII, such Losses shall be offset by the proceeds of any insurance received by the Indemnified Party with respect thereto.

          (b) Limitations. Sellers shall not be liable for any Losses resulting from a breach of any of the representations, warranties and covenants set forth in Article III of this Agreement or any of the covenants set forth in Article VI of this Agreement to the extent that:

               (i) the liability for such breach occurs or is increased as a result of the adoption or imposition of any Law not in force at the date of this Agreement or as a result of any increase in rates of taxation after the date of this Agreement; or

               (ii) the Losses would not have arisen but for a change in accounting policy or practice of the Buyer or the Company after the Closing.

          (c) Losses. To the extent that any breach of or inaccuracy in any representation or warranty made herein by Sellers results from the NEGLIGENCE of Sellers or the Company or from the imposition of STRICT LIABILITY against one or more of them, the term “Losses” shall not be interpreted to exclude any liability or loss incurred by Buyer for breach of or inaccuracy in any representation or warranty arising out of or connected therewith; provided, however, that the foregoing provision shall not imply that the remedies of Buyer hereunder (as limited by Section 8.5) are extended to include claims against Sellers for negligence or strict liability.

     8.3 Procedures.

          (a) An Indemnified Party seeking indemnification under Section 8.1 shall give prompt written notice to the Indemnifying Party of the assertion of any claim that does not involve a Proceeding brought by a third party. The notice shall describe in reasonable detail the nature of the claim, an estimate of the amount of Losses attributable to the claim to the extent feasible and the basis of the request for indemnification under this Agreement.

          (b) If an Indemnified Party receives notice of a Proceeding brought by a third party for which the Indemnified Party intends to assert an indemnification claim under Section 8.1 against the Indemnifying Party, then the Indemnified Party shall give notice of the Proceeding to the Indemnifying Party no later than thirty (30) Business Days before the answer or other response to the Proceeding is required to be made. The Indemnifying Party shall assume the defense of any Proceeding by notice to the Indemnified Party no later than fifteen (15) Business Days prior to the date by which an answer or other response to the Proceeding is required to be made. Any failure by either Party to give the requisite notice within the time specified in this Section 8.3(b) shall not relieve the Indemnifying Party of the obligation to indemnify the Indemnified Party or the obligation to allow the Indemnifying Party to defend pursuant to this Section 8.3(b) except to the extent that the defense of any Proceeding is materially prejudiced by the delay. The Indemnifying Party shall utilize counsel reasonably satisfactory to the Indemnified Party.

          (c) Notwithstanding the foregoing, if an Indemnified Party shows that a Proceeding will materially adversely affect it or its Affiliates in the operation of their respective businesses other than as a result of monetary damages for which it would be entitled to indemnification under this Article or if the Proceeding involves an assessment of Taxes solely against the Indemnified Party, the Indemnified Party may, by notice to the Indemnifying Party, assume the exclusive right to defend, but not compromise or settle, such Proceeding. If a compromise or settlement will adversely affect the Indemnifying Party, and subject to the terms hereof, any compromise or settlement of such a Proceeding may only be made with the consent of the Indemnifying Party.

          (d) If the Indemnifying Party assumes the defense of a Proceeding pursuant to Section 8.3(b), then the Indemnifying Party may defend and conduct any proceedings or negotiations in connection with the Proceeding, take all other required steps or proceedings to settle or defend any Proceeding, and to employ counsel to contest any Proceeding in the name of the Indemnified Party or otherwise; provided, however, (i) no compromise or settlement of any Proceeding may be effected by the Indemnifying Party without the Indemnified Party’s consent unless (A) there is no violation of the 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 in fact paid in full by the Indemnifying Party and (ii) the Indemnified Party will have no liability with respect to any compromise or settlement of such Proceeding effected without its consent.

          (e) If the Indemnifying Party does not assume the defense of (having been given a proper opportunity to do so), or if after so assuming the Indemnifying Party fails properly to defend, any Proceeding, then the Indemnified Party may defend against any claim or Proceeding in a manner reasonably appropriate and the Indemnified Party may settle any claim or Proceeding on such terms as are reasonable in the circumstances (but subject to the provisions of this Article VIII, including Section 8.3(f)).

          (f) The Indemnified Party shall have the right to participate in the defense of any Proceeding related to any indemnified Losses at its sole cost and expense and the cost and expense of that participation shall not be Losses subject to indemnification.

          (g) In connection with any and all environmental matters for which Sellers must indemnify Buyer under this Article VIII, including, without limitation, claims relating to the presence or removal of Lime Kiln Dust on the Trapezoid Parcel for which Sellers must indemnify Buyer under Section 6.15 and/or Section 8.2(a):

               (i) Subject to the last two sentences of this Section 8.3(g)(i), Buyer shall have the right to conduct and retain control over any action to investigate, evaluate, assess, test, monitor, remove, respond to, treat, abate, remedy, correct, clean-up or otherwise remediate the release or presence of any Hazardous Substance or Lime Kiln Dust, correction of noncompliance or other action (collectively, “Remedial Action”), including the right to (A) investigate any suspected contamination or noncompliance, (B) conduct and obtain any tests, reports, surveys and investigations, (C) contact, negotiate or otherwise deal with Governmental Authorities, (D) prepare any plan for such Remedial Action and (E) conduct or direct any such Remedial Action; provided that Buyer shall consult with Sellers in good faith, including providing Sellers the opportunity to review and comment on any plan for Remedial Action prior to submittal to any Governmental Authority and the opportunity to participate in meetings with any Governmental Authority regarding Remedial Actions. Prior to incurring an obligation or material proposed expenditure for any Remedial Action under this Article VIII, Buyer will provide Seller with notice of its intention to do so (with adequate information relating to such proposed expenditure), and Seller shall have the right to consent to such expenditure, which consent shall not unreasonably be withheld. Buyer shall apprise Sellers of any information regarding the undertaking, scheduling and execution of any Remedial Action and shall provide Seller with copies that it receives of all written reports associated with any Remedial Action. Neither Buyer nor any Affiliate of Buyer (including the Company) shall initiate any Remedial Action other than (a) as required by applicable Environmental Laws, (b) in connection with reasonable responses to any spill or emergency situation occurring within a reasonable period of time following such spill or emergency situation, or (c) reasonable Remedial Actions taken in good faith following the receipt of information that would lead a reasonable and responsible corporate citizen to believe that Remedial Action is advisable in the circumstances; provided, however, that following notice of the Remedial Action by Buyer to Sellers as required above, Buyer shall follow any commercially reasonable recommendations of Sellers which are designed to mitigate the risks of Environmental Liabilities resulting from such Remedial Actions. Notwithstanding any other provision of this Agreement to the contrary, neither Buyer nor any Affiliate of Buyer (including the Company) shall initiate any Remedial Action in connection with Lime Kiln Dust unless required to do so under any Environmental Law.

               (ii) Sellers and Buyer agree that any Remedial Action shall be the most cost-effective, commercially reasonable method under the circumstances and based upon the understanding that the Owned Real Property and Leased Real Property is and will continue to be used for industrial purposes. Any Remedial Action shall make maximum use of institutional controls, including, without limitation, deed restrictions, signs, fencing, buffers and controls, to the extent permitted by Governmental Authorities; provided that such institutional controls shall not unreasonably restrict or limit the industrial activities being performed by Buyer or the Company on the Owned Real Property or Leased Real Property.

               (iii) Sellers and Buyer mutually agree to cooperate in connection with any indemnification claims.

               (iv) Buyer shall not contact or importune any Governmental Authority in connection with any matter that will or could become the subject of a claim under Section 8.2(a), unless required by Environmental Law.

The rights and remedies for claims under Section 8.1(a) as set forth in this Agreement shall be the exclusive remedy of Buyer with respect to environmental claims.

     8.4 Consequential Damages. In no event shall any Party be liable for punitive, consequential, special, incidental or similar damages, including lost profits, under or in connection with this Agreement or the transactions contemplated hereby, regardless of whether a claim is based on contract, tort, strict liability or any other legal or equitable principle, and each Party releases the other from liability for any such damages. No Party shall be entitled to rescission of this Agreement as a result of breach of any other Party’s representations, warranties, covenants or agreements, or for any other matter.

     8.5 Sole Remedy. From and after the Closing, the provisions of this Article VIII shall be the sole and exclusive remedy of each Party for (a) any breach of a Party’s representations or warranties contained in this Agreement, (b) subject to the last sentence of this Section 8.5, any breach of a Party’s covenants or other agreements contained in this Agreement or (c) any other matters relating to this Agreement other than claims for fraud. Buyer and Sellers and their respective Related Parties are the only Persons entitled to exercise any remedy provided by this Article VIII. Nothing set forth in this Article VIII shall be deemed to prohibit or limit the other Party’s right to seek injunctive or other equitable relief for the failure of (i) Buyer to perform any covenant set forth in Section 6.1 (Reserved Names) or (ii) Sellers to perform any covenant set forth in Section 6.7 (Covenant not to Compete; Covenant not to Solicit).

     8.6 Costs. The prevailing party shall be entitled to be paid by the non-prevailing party all Expenses incurred in enforcing the terms of this Agreement.

ARTICLE IX
MISCELLANEOUS

     9.1 Books and Records. From and after the Closing Date, Buyer shall cause the Company to maintain copies of all books and records in the possession of the Company at the time of the Closing and shall prevent the Company from destroying any of such books and records for a period of five (5) years following the Closing Date without first allowing Sellers, at Sellers’ expense, to make copies of the same. During that period, Buyer shall cause the Company (a) to grant to Sellers and their representatives reasonable cooperation, access and staff assistance at all reasonable times and upon reasonable notice to all of such books and records relating to the period prior to the Closing (including work papers and correspondence with taxing authorities) that are not otherwise protected by legal privilege, (b) to afford Sellers and their representatives the right, at Sellers’ expense, to take extracts therefrom and to make copies thereof and (c) to have access to the employees of the Company, all to the extent reasonably necessary or appropriate for general business purposes, including the preparation of Tax returns and the handling of Tax audits, disputes and litigation; provided, however, that such requested cooperation, access and assistance shall not unreasonably interfere with the normal operations of Buyer or the Company.

     9.2 Notices. All notices, requests, demands, claims and other communications hereunder shall be in writing. Any notice, request, demand, claim or other communication hereunder shall be deemed duly given: (a) if personally delivered, when so delivered; (b) if mailed, two (2) Business Days after having been sent by first class, registered or certified U.S. mail, return receipt requested, postage prepaid and addressed to the intended recipient as set forth below; (c) if given by facsimile, once such notice or other communication is transmitted to the facsimile number specified below, provided that: (i) the sending facsimile machine generates a transmission report showing successful completion of such transaction and (ii) such notice or other communication is promptly thereafter mailed in accordance with the provisions of clause (b) above; and provided, further, that if such facsimile is sent after 5:00 p.m. local time at the location of the receiving facsimile machine, or is sent on a day other than a Business Day, such notice or communication shall be deemed given as of 9:00 a.m. local time at such location on the next succeeding Business Day, or (d) if sent through a nationally-recognized overnight delivery service which guarantees next-day delivery, the Business Day following its delivery to such service in time for next day-delivery:

if to Buyer, to:

United States Lime & Minerals, Inc.
13800 Montfort Drive, Suite 330
Dallas, Texas 75240
Attention: Timothy W. Byrne,
                  President & CEO
Facsimile: (972) 385-1340

with a required copy to:

Thompson & Knight
1700 Pacific Avenue, Suite 3300
Dallas, Texas 75201
Attention: Steven K. Cochran, Esq.
Facsimile: (214) 969-1751

If to any Seller, to:

Oglebay Norton Company
North Point Tower
1001 Lakeside Avenue, 15th Floor
Cleveland, OH 44114-1151
Attention: Chief Executive Officer
Facsimile: (216) 861-2313

with a required copy to:

Oglebay Norton Company
North Point Tower
1001 Lakeside Avenue, 15th Floor

Cleveland, OH 44114-1151
Attention: Legal Department
Facsimile: (216) 861-2313

or such other address or facsimile number as shall be designated from time to time by written notice in accordance with this Section 9.2 by the Person entitled to such notice. To the extent any notice provision in any other agreement, instrument or document required to be executed or executed by the Parties in connection with the transactions contemplated herein contains a notice provision which is different from the notice provision contained in this Section 9.2, with respect to matters arising under such other agreement, instrument or document, the notice provision in such other agreement, instrument or document shall control.

     9.3 Assignment; Governing Law.

          (a) Assignment. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof nor any of the documents executed in connection herewith may be assigned by any Party without the consent of the other Party, which consent shall not be unreasonably withheld or delayed; provided, however, that any transferee shall agree to assume all obligations under this Agreement of the transferor. Nothing contained herein, express or implied, is intended to confer upon any Person other than the Parties and their successors in interest and permitted assignees any rights or remedies under or by reason of this Agreement unless so stated herein to the contrary.

          (b) Governing Law. THE VALIDITY, INTERPRETATION AND PERFORMANCE OF THIS AGREEMENT AND ANY DISPUTE CONNECTED HEREWITH SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (OTHER THAN THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF).

          (c) Consent to Jurisdiction; Service of Process. EACH PARTY HERETO HEREBY AGREES THAT ANY SUIT, ACTION OR PROCEEDING IN RESPECT THEREOF SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT HAVING JURISDICTION SITTING IN THE STATE OF DELAWARE; AND EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND ANY APPELLATE COURT THEREOF FOR THE PURPOSE OF ANY SUIT, ACTION, PROCEEDING (AND WAIVES FOR SUCH PURPOSE ANY DEFENSE BASED ON LACK OF PERSONAL JURISDICTION). EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT BROUGHT IN ANY SUCH COURT, AND HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. Each Party irrevocably consents to the service of process in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such Party, at its address for notices set forth in Section 9.2 of this Agreement, such service to become effective ten (10) days after such mailing. Each Party hereby irrevocably waives any objection to such service of process and further irrevocably waives and agrees not to

plead or claim in any action or proceeding commenced hereunder or under any other documents contemplated hereby that service of process was in any way invalid or ineffective. Subject to Section 9.3(d) of this Agreement, the foregoing shall not limit the rights of any Party to serve process in any other manner permitted by law. The foregoing consents to jurisdiction shall not constitute general consents to service of process for any purpose except as provided above and shall not be deemed to confer rights on any Person other than the Parties.

          (d) Waivers. Each of the Parties hereby waives any right it may have under the laws of any jurisdiction to commence by publication any legal action or proceeding with respect to this Agreement. To the fullest extent permitted by applicable Law, each of the Parties hereby irrevocably waives the objection which it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or relating to this Agreement in any of the courts referred to in Section 9.3(c) of this Agreement and hereby further irrevocably waives and agrees not to plead or claim that any such court is not a convenient forum for any such suit, action or proceeding.

          (e) Enforcement. The Parties agree that any judgment obtained by either Party or its permitted successors or assigns in any action, suit or proceeding referred to above may, in the discretion of such Party (or its permitted successors or assigns), be enforced in any jurisdiction, to the extent permitted by applicable Law.

          (f) Deemed Acceptance. Each Related Party of Buyer or Sellers, as the case may be, seeking the benefit of Article VIII of this Agreement shall be deemed to have accepted and agreed to the provisions of this Section 9.3 as a condition to obtaining any benefits under Article VIII as if such Person was one of the Parties.

     9.4 Amendment and Waiver; Cumulative Effect. To be effective, any amendment or waiver under this Agreement must be in writing and be signed by the Party against whom enforcement of the same is sought. Neither the failure of either Party to exercise any right, power or remedy provided under this Agreement or to insist upon compliance by the other Party with its obligations hereunder, nor any custom or practice of the Parties at variance with the terms hereof shall constitute a waiver by such Party of its right to exercise any such right, power or remedy or to demand such compliance. The rights and remedies of the Parties are cumulative and not exclusive of the rights and remedies that they otherwise might have now or hereafter, at law, in equity, by statute or otherwise.

     9.5 No Third Party Beneficiaries. Except for Persons indemnified hereunder, no Person not a party to this Agreement shall have rights under this Agreement as a third party beneficiary or otherwise.

     9.6 Severability. If any term or other provision of this Agreement is held by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced under any rule of Law in any particular respect or under any particular circumstances, such term or provision shall nevertheless remain in full force and effect in all other respects and under all other circumstances, and all other terms, conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either

Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.

     9.7 Multiple Counterparts. This Agreement may be executed in a number of identical counterparts. If so executed, each of such counterparts is to be deemed an original for all purposes and all such counterparts shall, collectively, constitute one agreement, but, in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart.

     9.8 Joint Drafting. The Parties have been represented by counsel in the negotiations and preparation of this Agreement; therefore, this Agreement shall be deemed to be drafted by each of the Parties, and no rule of construction shall be invoked respecting the authorship of this Agreement.

     9.9 Entire Agreement. This Agreement supersedes all prior agreements, representations, warranties, and covenants, whether written or oral, between the parties with respect to its subject matter (including any letter of intent and any confidentiality agreement between Buyer and Sellers) and constitutes (along with the Schedules, Exhibits and other documents delivered pursuant to this Agreement) a complete and exclusive statement of the terms of the agreement, representations, warranties and covenants between the parties with respect to its subject matter.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year first above written.

BUYER:

UNITED STATES LIME & MINERALS, INC.

By:                                                                                

Name:                                                                           

Title:                                                                             

SELLERS:

OGLEBAY NORTON COMPANY

By:                                                                                

Name:                                                                           

Title:                                                                             

O-N MINERALS COMPANY

By:                                                                          

Name:                                                                     

Title:                                                                       

O-N MINERALS (LIME) COMPANY

By:                                                                         

Name:                                                                    

Title:                                                                      

Signature Page – Stock Purchase Agreement

EX-21

Exhibit 21

SUBSIDIARIES OF THE COMPANY

Arkansas Lime Company, an Arkansas Corporation
Colorado Lime Company, a Colorado Corporation
Texas Lime Company, a Texas Corporation
U.S. Lime Company – Houston, a Texas Corporation
U.S. Lime Company – Shreveport, a Louisiana Corporation
U.S. Lime Company – St. Clair, a Delaware Corporation
U.S. Lime Company – O & G LLC, a Texas Corporation
ACT Holdings, Inc., a Texas Corporation

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated March 8, 2006, accompanying the consolidated financial statements included in the Annual Report of United States Lime & Minerals, Inc. on Form 10-K for the year ended December 31, 2005. We hereby consent to the incorporation by reference of said report in the Registration Statements of United States Lime & Minerals, Inc. on Forms S-8 (File No. 033-58311, effective April 18, 1995, File No. 333-101290, effective November 19, 2002, and File No. 333-90876, effective June 20, 2002).

/s/ GRANT THORNTON LLP

Dallas, Texas
March 8, 2006

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements pertaining to the United States Lime & Minerals, Inc. 1992 Stock Option Plan, as Amended and Restated, (Form S-8 Nos. 33-58311 and 333-101290) and in the Registration Statement pertaining to the United States Lime & Minerals, Inc. 2001 Long-Term Incentive Plan (Form S-8 No. 333-90876), of our report dated March 17, 2005, except for Note 2 as to which the date is March 8, 2006, with respect to the consolidated financial statements of United States Lime & Minerals, Inc. and subsidiaries included in this Annual Report on Form 10-K for the year ended December 31, 2005.

Ernst & Young LLP

Dallas, Texas
March 8, 2006

EX-31.1

EXHIBIT 31.1

RULE 13a-14(a)/15d-14(a) CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER

I, Timothy W. Byrne, certify that:

1. I have reviewed this annual report on Form 10-K of United States Lime & Minerals, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: March 13, 2006	/s/ Timothy W. Byrne
	Timothy W. Byrne
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

RULE 13a-14(a)/15d-14(a) CERTIFICATION BY THE CHIEF FINANCIAL OFFICER

I, M. Michael Owens, certify that:

1. I have reviewed this annual report on Form 10-K of United States Lime & Minerals, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: March 13, 2006	/s/ M. Michael Owens
	M. Michael Owens
	Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

SECTION 1350 CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER

     I, Timothy W. Byrne, Chief Executive Officer of United States Lime & Minerals, Inc. (the “Company”), hereby certify that, to my knowledge:

(1)	The Company’s Annual Report on Form 10-K for the year ended December 31, 2005 (the “Form 10-K”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)	The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 13, 2006	/s/ Timothy W. Byrne
	Timothy W. Byrne
	President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

SECTION 1350 CERTIFICATION BY THE CHIEF FINANCIAL OFFICER

     I, M. Michael Owens, Chief Financial Officer of United States Lime & Minerals, Inc. (the “Company”), hereby certify that to my knowledge:

(1)	The Company’s Annual Report on Form 10-K for the year ended December 31, 2005 (the “Form 10-K”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)	The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 13, 2006	/s/ M. Michael Owens
	M. Michael Owens
	Vice President and Chief Financial Officer