Document:

TAX SHARING AND INDEMNIFICATION AGREEMENT

 Exhibit 10.2 
  
 TAX SHARING AND INDEMNIFICATION AGREEMENT 
  
 This Tax Sharing and Indemnification Agreement (this “Agreement”) is entered into as of the Distribution
Date by and between Texas Industries, Inc., a Delaware corporation (“Distributing”), on behalf of itself and each Distributing Affiliate, and Chaparral Steel Company, a Delaware corporation (“Controlled”), and their
respective successors. 
  
 RECITALS 
  
 WHEREAS, Distributing is the common parent of an affiliated group of
corporations within the meaning of section 1504(a) of the Code, and currently files consolidated income Tax Returns with the Controlled Affiliates and the Distributing Affiliates; 
  
 WHEREAS, Distributing, along with Distributing Affiliates, conducts the cement, aggregate and concrete products business,
which consists of cement production facilities, sand and gravel and other aggregate operations, and ready-mix concrete operations (the “Cement Business”); 
  
 WHEREAS, Controlled, a first-tier subsidiary of Distributing, along with Controlled Affiliates, conducts the steel products
business, which manufactures structural steel products and steel bar products, as more fully described in the Form 10 filed with the Securities and Exchange Commission on March 5, 2005 (the “Steel Business”); 
  
 WHEREAS, Distributing has agreed to transfer and assign, or cause to be
transferred and assigned, to Controlled all of the assets and liabilities of, and Subsidiaries that conduct, the Steel Business (the “Contribution”) pursuant to that certain Separation and Distribution Agreement dated
                , 2005 (the “Separation Agreement”); 
  
 WHEREAS, the Board of Directors of Distributing has determined that it would be advisable and in the best interests of Distributing and its shareholders
for Distributing to distribute on a pro rata basis to the holders of record of Distributing common stock, par value $1.00 per share, without any consideration being paid by such holders, all of the outstanding shares of Controlled common stock, par
value $0.01 per share, owned directly by Distributing (the “Distribution”); 
  
 WHEREAS, as part of the Contribution and Distribution, Controlled will declare and pay a cash dividend of approximately $341 million to TXI, which TXI will use to pay its unrelated creditors (the
“Dividend”); 
  
 WHEREAS, Distributing and
Controlled intend that the Contribution and the Distribution qualify as tax-free to Distributing and its shareholders under sections 355, 361 and 368(a)(1)(D) of the Code; 
  
 WHEREAS, Distributing, the Controlled Affiliates, and the Distributing Affiliates are parties to an amended and restated tax
sharing agreement dated as of June 1, 2005 (the “Existing Tax Sharing Agreement”), which currently governs the parties’ respective responsibilities for Taxes; 
  
 WHEREAS, pursuant to the Distribution, the Controlled Affiliates will cease to be members of the Distributing Consolidated
Group; 
  
 WHEREAS, the parties hereto are entering into this
Agreement: to ensure the tax-free status of the Contribution and the Distribution; to provide certain indemnities; and to provide for various administrative matters relating to Taxes, including: (1) the preparation and filing of Tax Returns along
with the payment or refund of Taxes due and payable or receivable thereon; (2) the retention and maintenance of relevant records necessary to prepare and file appropriate Tax Returns, as well as the provision for appropriate access to those records
by the parties to this Agreement; (3) the conduct of audits, examinations, and proceedings by appropriate governmental entities that could result in a redetermination of Taxes; and (4) the cooperation of all parties with one another in order to
fulfill their duties and responsibilities under this Agreement and under the Code and other applicable law; 

 WHEREAS, the parties desire to set forth their respective responsibilities for Taxes, including any Taxes
that could be incurred in connection with the Distribution; and 
  
 WHEREAS, the parties hereto intend to incorporate the principles from the Existing Tax Sharing Agreement into this Agreement. 
  
 AGREEMENT 
  
 NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements set forth below, the parties do hereby agree as
follows: 
  
 ARTICLE I 
 DEFINITIONS 
  
 Unless otherwise defined in this Agreement, capitalized terms shall have the meanings ascribed thereto in the Separation Agreement. As used in this
Agreement, the following terms shall have the following meanings: 
  
 1.1. “2005 Year” is defined at Section 3.3(a). 
  
 1.2. “2006 Year” is defined at Section 3.3(a). 
  
 1.3. “Adjustment” means any proposed or final change in the taxable income or Tax Liability of a taxpayer by a Taxing Authority.

  
 1.4. “Affiliate” means, when used with
respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with such Person. 
  
 1.5. “Agreement” has the meaning set forth in the Preamble to this Agreement. 
  
 1.6. “Cement Business” has the meaning set forth in the
Recitals to this Agreement. 
  
 1.7. “Change
Month” is defined at Section 2.4. 
  
 1.8.
“Code” means the Internal Revenue Code of 1986, as amended. 
  
 1.9. “Combined State Tax” means, with respect to each United States state or local taxing jurisdiction, any income, franchise or similar tax payable to such state or local taxing jurisdiction in which
any Controlled Affiliate files Returns with a Distributing Affiliate, on a consolidated, combined or unitary basis for purposes of such Tax. 
  
 1.10. “Combined State Tax Return” means any Return with respect to any Combined State Tax that includes any Pre-Distribution Tax Period.

  
 1.11. “Contribution” has the meaning set
forth in the Recitals to this Agreement and includes Distributing’s receipt of the Dividend. 
  
 1.12. “Controlled” has the meaning set forth in the Preamble to this Agreement. 
  
 1.13. “Controlled Affiliate” means Controlled and any
Affiliate of Controlled after the Distribution Date. 
  
 1.14.
“Controlled Change in Control Tax” means any Tax imposed by reason of Code section 355(e) or any comparable provision of state or local law as a result of one or more persons acquiring, directly or indirectly, stock representing a
50% or greater interest in Controlled or a successor to Controlled. 
  

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 1.15. “Controlled Indemnified Party” is defined at Section 7.2. 
  
 1.16. “Controlled Indemnifying Parties” is defined at
Section 7.1. 
  
 1.17. “Controlled Separate
Return” means any state or local Tax Return of any Controlled Affiliate, other than any Combined State Tax Return, that includes any Pre-Distribution Tax Period. 
  
 1.18. “Controlled Separate Tax Liability” means an amount equal to the Tax Liability that Controlled and
each Controlled Affiliate would have incurred if they had filed a consolidated return, combined return or a separate return, as the case may be, separate from the members of the Distributing Consolidated Group, for the relevant Tax period, and such
amount shall be computed by Distributing in a manner consistent with the Existing Tax Sharing Agreement. 
  
 1.19. “Designated Officers” is defined at Section 9.1(b). 
  
 1.20. “Disputes” is defined at Section 9.1(a). 
  
 1.21. “Distributing” has the meaning set forth in the
Preamble to this Agreement. 
  
 1.22. “Distributing
Affiliate” means Distributing and any Affiliate of Distributing (other than a Controlled Affiliate) before, on or after the Distribution Date, as applicable. 
  
 1.23. “Distributing Consolidated Group” means the group of companies filing a consolidated Federal Tax
Return or Combined State Tax Return, as the case may be, that includes Distributing. 
  
 1.24. “Distributing Consolidated Return” means any consolidated Federal Tax Return or Combined State Tax Return of the Distributing Consolidated Group that includes any Pre-Distribution Tax Period.

  
 1.25. “Distributing Indemnified Party” is
defined at Section 7.1. 
  
 1.26. “Distributing
Indemnifying Parties” is defined at Section 7.2. 
  
 1.27. “Distribution” has the meaning set forth in the Recitals to this Agreement. 
  
 1.28. “Distribution Date” has the meaning set forth in the Separation Agreement. 
  
 1.29. “Dividend” has the meaning set forth in the Recitals
to this Agreement. 
  
 1.30. “Existing Tax Sharing
Agreement” has the meaning set forth in the Recitals to this Agreement. 
  
 1.31. “Federal Tax” means any Tax imposed under the Code, including any interest, penalty or other additions to Tax imposed under Subtitle F of the Code. 
  
 1.32. “Federal Tax Return” means any Return with respect to
any Federal Taxes that includes any Pre-Distribution Tax Period. 
  
 1.33. “Final Determination” means the final resolution of any Tax matter. A Final Determination shall result from the first to occur of: 
  
 (a) the expiration of 30 days after the IRS’s acceptance of a Waiver of Restrictions on Assessment and
Collection of Deficiency in Tax and Acceptance of Overassessment on Form 870 or 870-AD (or any successor comparable form) (the “Waiver”), except as to reserved matters specified therein, or the expiration of 30 days after acceptance
by any other Taxing Authority of a comparable agreement or form under the laws of any other jurisdiction, including state, local, and foreign jurisdictions; unless, within such period, the 

  

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taxpayer gives notice to the other party to this Agreement of the taxpayer’s intention to attempt to recover all or part of any amount paid pursuant to
the Waiver by the filing of a timely claim for refund; 
  
 (b) a decision, judgment, decree, or other order by a court of competent jurisdiction that is not subject to further judicial review (by appeal or otherwise) and that has become final; 
  
 (c) the execution of a closing agreement under Code section
7121, or the acceptance by the IRS of an offer in compromise under Code section 7122, or comparable agreements under the laws of any other jurisdiction, including state, local, and foreign jurisdictions; except as to reserved matters specified
therein; 
  
 (d) the expiration of the time for
filing a claim for refund or for instituting suit in respect of a claim for refund that was disallowed in whole or part by the IRS or any other Taxing Authority; 
  
 (e) the expiration of the applicable statute of limitations; or 
  
 (f) an agreement by the parties hereto that a Final
Determination has been made. 
  
 1.34. “Indemnified
Liability” is defined at Section 7.3. 
  
 1.35.
“Indemnified Parties” is defined at Section 7.2. 
  
 1.36. “Indemnifying Parties” is defined at Section 7.2. 
  
 1.37. “Initial Mediation Period” is defined at Section 9.1(b). 
  
 1.38. “Intercompany Accounts” means the intercompany receivable and payable accounts that were maintained before the Distribution between
Distributing and Controlled or between Distributing and the relevant Controlled Affiliate. 
  
 1.39. “IRS” means the Internal Revenue Service. 
  
 1.40. “IRS Interest Rate” means the rate of interest imposed from time to time on underpayments of income tax pursuant to Code section
6621(a)(2). 
  
 1.41. “Opinion Documents” means
(i) the Spin-Off Opinion, (ii) the officer’s certificates issued by Distributing and Controlled to Thompson & Knight LLP in connection with the Spin-Off Opinion and (iii) all other documents provided by Distributing and Controlled to
Thompson & Knight LLP and on which Thompson & Knight LLP relied in issuing the Spin-Off Opinion. 
  
 1.42. “Person” means any natural person, corporation, business trust, joint venture, association, company, partnership, or government or
any agency or political subdivision thereof. 
  
 1.43.
“Pre-Distribution Tax Period” means (i) any tax period beginning and ending before or on the Distribution Date, and (ii) with respect to a tax period that begins on or before and ends after the Distribution Date, such portion of the
tax period that begins before the Distribution Date and ends at the close of the Distribution Date. 
  
 1.44. “Private Letter Ruling” means a private letter ruling from the IRS to the effect that a transaction does not prevent the
Contribution or the Distribution from qualifying for tax-free treatment for Distributing or its shareholders under Code Sections 355, 361 or 368(a)(1)(D) and any other applicable sections of the Code, 

  

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assuming that the Distribution would have qualified for tax-free treatment if such transaction did not occur, which ruling is in form and substance
reasonably satisfactory to Distributing. Such a ruling may rely upon, and may assume the accuracy of, any representations given in any Opinion Document, and any customary representations or assumptions. 
  
 1.45. “Post-Distribution Tax Period” means (i) any tax
period ending after the Distribution Date, and (ii) with respect to a tax period that begins on or before the Distribution Date and ends after the Distribution Date, such portion of the tax period that begins on the day after the Distribution Date.

  
 1.46. “Proceeding” is defined at Section
8.2(a). 
  
 1.47. “Return” means any return,
declaration, report, claim for refund, or information or return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. 
  
 1.48. “Separation Agreement” has the meaning set forth in the Recitals to this Agreement. 
  
 1.49. “Separation Tax” means any Tax (other than any
Controlled Change in Control Tax) imposed on any Distributing Affiliate or Controlled Affiliate in connection with the Contribution and Distribution that would not have occurred had the Contribution and Distribution not occurred. 
  
 1.50. “Short Period” is defined at Section 3.3(b).

  
 1.51. “Spin-Off Opinion” means the opinion
received from Thompson & Knight LLP to the effect that the Distribution and the Contribution will qualify as tax-free to Distributing and its shareholders under sections 355, 361 and 368(a)(1)(D) of the Code. 
  
 1.52. “Steel Business” has the meaning set forth in the
Recitals to this Agreement. 
  
 1.53.
“Subsidiary” means with respect to Distributing or Controlled, any Person of which Distributing or Controlled, respectively, controls or owns, directly or indirectly, more than 50% of the stock or other equity interest entitled to
vote on the election of members to the board of directors or similar governing body. 
  
 1.54. “Substantial Negotiations” means discussions of significant economic terms (for example, the exchange ratio in a merger) by one or more officers, directors, or controlling shareholders of any
Distributing Affiliate or Controlled Affiliate or another person or persons with the implicit or explicit permission of one or more officers, directors, or controlling shareholders of any Distributing Affiliate or Controlled Affiliate. This
definition shall be interpreted consistently with the definition of “substantial negotiations” contained in Treasury Regulation section 1.355-7(h)(1). 
  

1.55. “Tax Asset” means any Tax Item that may have the effect of producing a Tax Benefit. 
  
 1.56. “Tax Benefit” means a reduction in the Tax Liability
of a taxpayer (whether a Distributing Affiliate or a Controlled Affiliate) for any taxable period. Except as otherwise provided in this Agreement, a Tax Benefit shall be deemed to have been realized or received from a Tax Item in a taxable period
only if and to the extent that the Tax Liability of the taxpayer for such period, after taking into account the effect of the Tax Item on the Tax Liability of such taxpayer in all prior periods, is less than it would have been if such Tax Liability
were determined without regard to such Tax Item. 
  
 1.57.
“Taxes” means all federal, state, local and foreign gross or net income, gross receipts, withholding, payroll, franchise, transfer, sales, use, value added, estimated or other taxes of any kind whatsoever or similar charges and
assessments, including all interest, penalties and additions imposed with respect to such amounts which any Distributing Affiliate or any Controlled Affiliate is required to pay, collect or withhold, together with any interest and any penalties,
additions or additional amounts imposed with respect thereto, and “Tax” means any of the Taxes. 
  

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 1.58. “Taxing Authority” means the IRS or any other governmental authority or any
subdivision, agency, commission or authority thereof or any quasi-governmental or private body having jurisdiction pursuant to applicable law over the assessment, determination, collection or imposition of any Tax. 
  
 1.59. “Tax Item” means any item of income, gain, loss,
deduction, credit, recapture of credit, or any other item (including basis) which may have the effect of increasing or decreasing Taxes paid or payable. 
  
 1.60. “Tax Liability” means the net amount of Taxes due and paid or payable for any taxable period, determined after applying all tax
credits and all applicable carrybacks or carryovers for net operating losses, net capital losses, unused general business tax credits, or any other Tax Items arising from a prior or subsequent taxable period, and all other relevant adjustments.

  
 1.61. “Tax Returns” means all reports,
estimates, declarations of estimated tax, information statements and returns relating to, or required to be filed in connection with any Taxes, including information returns or reports with respect to backup withholding and other payments to third
parties. 
  
 1.62. “Unqualified Tax Opinion”
means an unqualified “will” opinion of tax counsel to the effect that a transaction does not prevent the Contribution or the Distribution from qualifying for tax-free treatment for Distributing or its shareholders under Code sections 355,
361 or 368(a)(1)(D) and any other applicable sections of the Code, assuming that the Distribution would have qualified for tax-free treatment if such transaction did not occur, which opinion is in form and substance reasonably satisfactory to
Distributing. An Unqualified Tax Opinion may rely upon, and may assume the accuracy of, any representations given in any Opinion Document, and any customary representations contained in an officer’s certificate delivered by an officer of
Distributing or Controlled to such counsel. 
  
 ARTICLE II

 PREPARATION AND FILING OF TAX RETURNS. 
  
 2.1. Designation of Agent. With regard to each Distributing Consolidated Return, each Controlled Affiliate hereby irrevocably authorizes and
designates Distributing as its agent, coordinator, and administrator, for the purpose of taking any and all actions (including the execution of waivers of applicable statutes of limitation) necessary or incidental to the filing of any such Tax
Return or other Tax proceedings, and for the purpose of making payments to, or collecting refunds from, any Taxing Authority, provided that Controlled may continue to participate in any such Tax proceedings as provided herein. 
  
 2.2. Distributing Consolidated Returns. Distributing will prepare all
Distributing Consolidated Returns. Distributing shall have the exclusive right to (a) file, prosecute, compromise, or settle any claim for refund, and (b) determine whether any refunds to which the Distributing Consolidated Group may be entitled
shall be received by way of refund or credit against the Tax Liability of the Distributing Consolidated Group. 
  
 2.3. Taxable Period Ends on Distribution Date. Unless prohibited by applicable law, any taxable period of any Controlled Affiliate that is included
in a Distributing Consolidated Return that includes the Distribution Date shall end on the Distribution Date. 
  
 2.4. Allocation. The books of each Controlled Affiliate shall be closed (a) at the end of the month preceding the month that includes the
Distribution Date and (b) at the end of the month that includes the Distribution Date (the “Change Month”). Items of income and deduction of each Controlled Affiliate for the Change Month will be ratably allocated on a daily basis
consistent with Treasury Regulation section 1.1502-76(b)(2)(iii), except that extraordinary items within the meaning of Treasury Regulation section 1.1502-76(b)(2)(ii)(C) are not subject to proration. Rather, extraordinary items will be allocated to
the day they are taken into account. 
  
 2.5. Controlled
Separate Returns. Controlled shall be solely responsible for the preparation and filing of all Controlled Separate Returns. Controlled shall be responsible for paying to the applicable Taxing Authorities all Taxes shown as due from any
Controlled Affiliate on the Controlled Separate Returns. 
  

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 2.6. Post-Distribution Conduct of Controlled. On or after the Distribution Date, Controlled will
not, nor will it permit any Controlled Affiliate to, make or change any accounting method, change its taxable year, amend any Return or take any Tax position on any Return, take any other action, omit to take any action, or enter into any
transaction, that may reasonably be expected to result in, or does result in, any increased Tax Liability or reduction of any Tax Asset of the Distributing Consolidated Group or any Distributing Affiliate. 
  
 ARTICLE III 
 TAX SHARING 
  
 3.1. Controlled’s Liability for Taxes. Controlled and each Controlled Affiliate shall be jointly and severally liable for the following Taxes, and shall be entitled to receive and retain all refunds of Taxes previously incurred
by Controlled or the Steel Business with respect to such Taxes: 
  
 (a) all Taxes incurred with respect to all Distributing Consolidated Returns to the extent that such Taxes are related to (i) a Controlled Separate Tax Liability or (ii) the Steel Business for any taxable period;

  
 (b) all Taxes related to Controlled Separate
Returns as provided for in Section 2.5 of this Agreement; and 
  
 (c) all Taxes incurred with respect to Controlled and any Controlled Affiliate for any Post-Distribution Tax Period. 
  
 3.2. Distributing’s Liability for Taxes. Distributing and each Distributing Affiliate shall be jointly and severally liable for the following
Taxes, and shall be entitled to receive and retain all refunds of Taxes previously incurred by Distributing with respect to such Taxes: 
  
 (a) except as provided for in Section 3.1(a), all Taxes incurred with respect to all Distributing Consolidated Returns; and 
  
 (b) all Taxes incurred with respect to Distributing and any
Distributing Affiliate for any Post-Distribution Tax Period. 
  
 3.3. Payment of Allocable Taxes. 
  
 (a)
Within ten (10) days before the date that Distributing files the Distributing Consolidated Return for the taxable year ending May 31, 2005 (the “2005 Year”), Controlled shall pay (or shall cause the relevant Controlled Affiliate to
pay) to Distributing an amount equal to the Controlled Separate Tax Liability for the 2005 Year, if any, minus any taxes paid by or credited to Controlled or any Controlled Affiliate with respect to the 2005 Year (including estimated tax payments
and any amounts for such taxes reflected in the Intercompany Accounts). This Section 3.3(a) shall also apply with respect to the Distributing Consolidated Return for the portion of the taxable year ending May 31, 2006 (the “2006
Year”) that ends on the Distribution Date, applying the principles of Section 2.4. 
  
 (b) If Controlled or a Controlled Affiliate generates a net operating loss for federal income tax purposes on a stand-alone basis as
determined pursuant to the Existing Tax Sharing Agreement and past practice rather than a Controlled Separate Tax Liability for the taxable period ending on the Distribution Date (the “Short Period”) or the 2005 Year, Distributing
shall pay to Controlled an amount equal to the product obtained by multiplying 35% by the amount of such loss. Distributing shall pay such amount to Controlled within ten (10) days before the date that Distributing files the Distributing
Consolidated Return for the 2006 Year or 2005 Year, whichever is applicable. Distributing shall not, however, make any such payment to the extent that (i) any portion of Distributing’s consolidated net operating loss for federal income tax
purposes from the 2005 Year or the Short Period is carried over to the first Post-Distribution Tax Period of 

  

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Controlled or a Controlled Affiliate or (ii) Distributing has previously paid Controlled or a Controlled Affiliate (via adjustment of Intercompany Accounts,
this Section 3.3, or otherwise). 
  
 (c) If any
Tax Return for a Pre-Distribution Tax Period is examined by a Taxing Authority and such examination results in additional Controlled Separate Return Liability or a reduction in a net operating loss for which Distributing previously paid Controlled
or a Controlled Affiliate (via adjustment of Intercompany Accounts, this Section 3.3, or otherwise), Controlled (or a Controlled Affiliate, if appropriate) shall pay (or cause the Controlled Affiliate to pay) to Distributing an amount equal to
either the increase in Controlled Separate Return Liability or the product of (i) the decrease in net operating loss and (ii) 35%, as applicable, within thirty (30) days after a Final Determination. 
  
 (d) If any Tax Return for a Pre-Distribution Tax Period is
examined by a Taxing Authority and such examination results in a lower Controlled Separate Return Liability or a higher net operating loss of Controlled or a Controlled Affiliate that is utilized in a Distributing Consolidated Return, Distributing
shall pay to Controlled an amount equal to either the decrease in Controlled Separate Return Liability or the product of (i) the increase in net operating loss and (ii) 35%, within thirty (30) days after a Final Determination. 
  
 (e) If a deduction reported by a TXI Affiliate is allocated,
in whole or in part, to a Controlled Affiliated pursuant to a Final Determination, then (i) Section 3.3(d) will not apply, and (ii) Controlled will promptly pay to TXI 35% times the amount of such deduction to the extent such deduction created or
increased a net operating loss for a Controlled Affiliate for a Pre-Distribution Tax Period which a Controlled Affiliated carried over to a Post-Distribution Tax Period. 
  
 (f) The provisions of this Section 3.3 are intended to conform to the Existing Tax Sharing Agreement and the
parties’ usual course of dealing and past practice and shall be interpreted consistently therewith. 
  
 3.4. Separation Taxes. Notwithstanding anything in this Agreement to the contrary, Controlled shall indemnify and hold harmless each Distributing
Affiliate against liability for (i) any Controlled Change in Control Tax and (ii) any Separation Tax for which Controlled or its Affiliates has an obligation to indemnify Distributing under any provision of this Agreement. Distributing shall
indemnify and hold harmless each Controlled Affiliate against liability for all other Separation Taxes. 
  
 ARTICLE IV 
 COOPERATION AND EXCHANGE OF INFORMATION; AUDITS AND ADJUSTMENTS 

 
 4.1. Tax Return Information. 
  
 (a) Controlled shall, and shall cause each appropriate
Controlled Affiliate to, provide Distributing with all information and other assistance reasonably requested by Distributing to enable the Distributing Affiliates to prepare and file Distributing Consolidated Returns required to be filed by them
pursuant to this Agreement. 
  
 (b) Distributing
shall, and shall cause each appropriate Distributing Affiliate to, provide Controlled with all information and other assistance reasonably requested by Controlled to enable the Controlled Affiliates to prepare and file Controlled Separate Returns
required to be filed by them pursuant to this Agreement. 
  
 4.2.
Audits and Adjustments. 
  
 (a) Whenever a
Distributing Affiliate or Controlled Affiliate receives in writing from the IRS or any other Taxing Authority notice of an Adjustment that may give rise to a payment from the other party under this Agreement or otherwise affect the other
party’s 

  

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Taxes, Distributing or Controlled, as the case may be, shall give written notice of the Adjustment to the other party in accordance with the terms of Article
VIII. The audit shall be controlled and settled pursuant to the terms of that article. 
  
 (b) Controlled agrees to cooperate reasonably, and shall cause each Controlled Affiliate to cooperate reasonably, with Distributing in the
negotiation, settlement, or litigation of any liability for Taxes of any Distributing Affiliate. 
  
 (c) Distributing agrees to cooperate reasonably, and to cause each Distributing Affiliate to cooperate reasonably, with Controlled in the
negotiation, settlement, or litigation of any liability for Taxes of any Controlled Affiliate. 
  
 (d) Distributing will reasonably promptly notify Controlled in writing of any Adjustment involving a change in the tax basis of any asset
of any Controlled Affiliate, specifying the nature of the change so that such Controlled Affiliate will be able to reflect the revised basis on its tax books and records for periods beginning on or after the Distribution Date. 
  
 4.3. Controlled Carrybacks. Whenever permitted to do so by applicable
law, and unless agreed otherwise by Distributing, Controlled shall elect to relinquish any carryback period which would include any Pre-Distribution Tax Period. 
  

For purposes of this Article IV, the term “party’ shall refer to any Distributing Affiliate and any Controlled Affiliate, as the case may be.

  
 ARTICLE V 
 RETENTION OF RECORDS 
  
 5.1. Retention of Records. Distributing and Controlled agree to retain the appropriate records that may affect the determination of the liability
for Taxes of any Controlled Affiliate or Distributing Affiliate, respectively, until such time as there has been a Final Determination with respect to such liability for Taxes. A party may satisfy its obligations under the preceding sentence by
allowing the other party to duplicate records at such second party’s request and expense. 
  
 5.2. Statute of Limitations. Distributing and Controlled will notify each other in writing of any waivers or extensions of the applicable statute of limitations that may affect the period for which any
materials, records, or documents must be retained. 
  
 ARTICLE VI

 COVENANTS 
  
 6.1. Distributing Covenants. Distributing covenants to Controlled that no Distributing Affiliate will take any action or fail to take any action
that would cause the Contribution or the Distribution to fail to qualify as tax-free under Code sections 355, 361 and 368(a)(1)(D) or any corresponding provision of state or local law. Without limiting the foregoing, Distributing covenants to
Controlled that: 
  
 (a) During the six-month
period following the Distribution Date, no Distributing Affiliate will liquidate, merge, or consolidate with any Person or enter into any Substantial Negotiations, agreements, understandings, or arrangements with respect to any such transaction.

  
 (b) During the six-month period following the
Distribution Date, no Distributing Affiliate will sell, exchange, distribute, or otherwise dispose of assets to any Person or enter into any Substantial Negotiations, agreements, understandings, or arrangements with respect to any such transaction,
except in the ordinary course of business. 
  

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 (c) Following the Distribution, Distributing and its Subsidiaries will, for at least two
years, continue the active conduct of the Cement Business. 
  
 (d) No Distributing Affiliate will take any action inconsistent with the information and representations in the Opinion Documents. 
  
 (e) For two years following the Distribution, no Distributing Affiliate will repurchase stock of
Distributing in a manner contrary to the requirements of Revenue Procedure 96-30 or in a manner contrary to the representations made in the Opinion Documents. 
  

(f) No Distributing Affiliate will permit its agents to take any of the actions described in items (a) through (e) above on its behalf.

  
 6.2. Controlled Covenants. Controlled covenants to
Distributing that no Controlled Affiliate will take any action or fail to take any action, which action or failure to act would cause the Contribution or the Distribution to fail to qualify as tax-free under sections 355, 361 and 368(a)(1)(D) of the
Code or any corresponding provision of state or local law. Without limiting the foregoing, Controlled covenants to Distributing that: 
  
 (a) During the six-month period following the Distribution Date, no Controlled Affiliate will liquidate, merge, or consolidate with any
Person, or enter into any Substantial Negotiations, agreements, understandings, or arrangements with respect to any such transaction. 
  
 (b) During the six-month period following the Distribution Date, no Controlled Affiliate will sell, exchange, distribute, or otherwise
dispose of assets to any Person, or enter into any Substantial Negotiations, agreements, understandings, or arrangements with respect to any such transaction, except in the ordinary course of business. 
  
 (c) Following the Distribution, Controlled and its
Subsidiaries will, for a minimum of two years, continue the active conduct of the Steel Business. 
  
 (d) No Controlled Affiliate will take any action inconsistent with the information and representations in the Opinion Documents.

  
 (e) For two years following the Distribution,
no Controlled Affiliate will repurchase stock of Controlled in a manner contrary to the requirements of Revenue Procedure 96-30 or in a manner contrary to the representations made in the Opinion Documents. 
  
 (f) No Controlled Affiliate will permit its agents to take
any of the actions described in items (a) through (e) above on its behalf. 
  
 6.3. Exceptions. Other than with respect to the matters described in Section 6.2(a) or Section 6.2(b), any Distributing Affiliate or Controlled Affiliate may take actions inconsistent with the covenants
contained in Article VI if Distributing or Controlled, as the case may be, obtains an Unqualified Tax Opinion or a Private Letter Ruling, it being understood that each party hereto agrees to cooperate with the party seeking such opinion or ruling
and to use its reasonable best efforts to assist the party seeking such opinion or ruling in its attempting to obtain, as expeditiously as possible, any opinion or ruling described in this Section 6.3. 
  

 Page 10 

 ARTICLE VII 
 INDEMNITY OBLIGATIONS 
  
 7.1.
Controlled Indemnity. Each Controlled Affiliate (collectively, jointly and severally, the “Controlled Indemnifying Parties”) will jointly and severally indemnify each Distributing Affiliate (each a “Distributing
Indemnified Party”) against and hold them harmless from: 
  
 (a) any Tax incurred with respect to all Distributing Consolidated Returns to the extent that such Taxes are related to (i) a Controlled Separate Tax Liability or (ii) the Steel Business for any taxable period, but
excluding (for purposes of this Section 7.1(a)) any Separation Taxes; 
  
 (b) any separate state and local Tax of any Controlled Affiliate; 
  
 (c) any Separation Taxes resulting from a breach by a Controlled Indemnifying Party of (i) any representation or covenant in an Opinion
Document (as such representation is modified, qualified or elaborated in any subsequent Opinion Document), (ii) any representation, covenant or other agreement set forth in this Agreement, or (iii) any agreements or covenants between a Distributing
Affiliate and a Controlled Affiliate pertaining to Tax matters; 
  
 (d) any Controlled Change in Control Tax; 
  
 (e) any Tax Liability arising from an Adjustment for which Controlled is responsible under Section 3.3; 
  
 (f) any Tax imposed on a Distributing Affiliate as a result of Controlled’s failure to cooperate with Distributing under Article
VIII; and 
  
 (g) any Tax imposed on a
Distributing Affiliate resulting from Controlled’s adoption of a position inconsistent with the allocation set out in Section 2.4. 
  
 7.2. Distributing Indemnity. Each Distributing Affiliate (collectively, jointly and severally, the “Distributing Indemnifying
Parties” and, together with Controlled Indemnifying Parties, the “Indemnifying Parties”) will jointly and severally indemnify each Controlled Affiliate (each a “Controlled Indemnified Party” and, together
with the Distributing Indemnified Parties, the “Indemnified Parties”) against and hold them harmless from: 
  
 (a) any Distributing Consolidated Group Taxes, excluding any such Taxes for which Controlled is required to indemnify Distributing under
Section 7.1 of this Agreement, and (for purposes of this Section 7.2) any Separation Taxes; 
  
 (b) any separate state or local Tax and any foreign Tax of any Distributing Affiliate; 
  
 (c) any liability or damage arising from the breach by any
Distributing Affiliate of (i) any representation or covenant in an Opinion Document (as such representation is modified, qualified or elaborated in any subsequent Opinion Document), (ii) any representation, covenant or other agreement set forth in
this Agreement, or (iii) any agreements or covenants between a Distributing Affiliate and a Controlled Affiliate pertaining to Tax matters; 
  
 (d) any Separation Taxes (other than such Taxes for which Controlled is required to indemnify Distributing under Section 7.1); 

 
 (e) any Tax liability arising from an Adjustment for
which Distributing is responsible under Section 3.3; and 
  
 (f) any Tax imposed on a Controlled Affiliate (other than a Separation Tax) as a result of Distributing’s failure to cooperate with Controlled under Article VIII. 
  

 Page 11 

 7.3. Amount of Indemnity. The amount of Tax included in any item described in Section 7.1 or 7.2
(each an “Indemnified Liability”) that is incurred by any Indemnified Party shall be determined pursuant to Section 3.3. If Section 3.3 does not address the amount of an Indemnified Liability, in the case of a Tax based or
determined with reference to income for any year, be the difference between (x) the actual Tax incurred by the Indemnified Party for such year and (y) the amount of Tax that the Indemnified Party would have paid in such year absent the Tax Items (or
adjustments thereto) in that year or any prior year giving rise to the Indemnified Liability. For the avoidance of doubt, if an adjustment to any Tax Item would have resulted in additional Tax paid but for the availability of net operating losses or
tax credits, the Indemnifying Party shall indemnify the Indemnified Party when, as, and to the extent that such loss or credit carryforward would otherwise have been available to reduce any Tax. 
  
 7.4. Tax Consequences of Payments. All amounts payable under this
Agreement shall be treated as adjustments to the amount of the Contribution, provided that if any Taxing Authority determines that the amounts received by an Indemnified Party nevertheless are taxable, then the Indemnifying Party shall make
additional payments to the Indemnified Party so that the Indemnified Party is made whole on an after-tax basis. For this purpose, the amount of Taxes imposed on the payments shall be determined based on the taxing jurisdiction’s highest
marginal Tax rate applicable to taxable income of corporations such as the Indemnified Party on income of the character subject to tax and indemnified against under this Article VII for the taxable period in which the Distribution occurs (net of any
federal Tax Benefit from state and local Taxes). 
  
 ARTICLE VIII

 PROCEDURAL ASPECTS OF INDEMNITY 
  
 8.1. General. 
  
 (a) If either any Indemnified Party or any Indemnifying Party receives any written notice of deficiency, claim or adjustment or any other
written communication from any Taxing Authority that may result in an Indemnified Liability, the party receiving such notice or communication shall promptly give written notice thereof to the other party, provided that any delay by an Indemnified
Party in so notifying an Indemnifying Party shall not relieve the Indemnifying Party of any liability hereunder, except to the extent (i) such delay restricts the ability of the Indemnifying Party to contest the resulting Indemnified Liability
administratively or in the courts in accordance with section 8.2 and (ii) the Indemnifying Party is materially and adversely prejudiced by the delay. 
  
 (b) The parties hereto undertake and agree that from and after such time as they obtain knowledge that any representative of a Taxing
Authority has begun to investigate or inquire into the Distribution (whether or not such investigation or inquiry is a formal or informal investigation or inquiry), the party obtaining such knowledge shall (i) notify the other party thereof,
provided that any delay by an Indemnified Party in so notifying an Indemnifying Party shall not relieve the Indemnifying Party of any liability hereunder (except to the extent (A) such delay restricts the ability of the Indemnifying Party to contest
the resulting Indemnified Liability administratively or in the courts in accordance with section 8.2 and (B) the Indemnifying Party is materially and adversely prejudiced by such delay), (ii) consult with the other party from time to time as to the
conduct of such investigation or inquiry, (iii) provide the other party with copies of all correspondence with such Taxing Authority or any representative thereof pertaining to such investigation or inquiry, and (iv) arrange for a representative of
the other party to be present at all meetings with such Taxing Authority or any representative thereof pertaining to such investigation or inquiry. 
  
 8.2. Contests. 
  
 (a) Provided that (i) an Indemnifying Party shall furnish the Indemnified Party with evidence reasonably satisfactory to the Indemnified
Party of the Indemnifying Party’s ability to pay the full amount of the Indemnified Liability and (ii) such Indemnifying Party acknowledges in writing that the asserted liability is an Indemnified Liability, such 

  

 Page 12 

 
Indemnifying Party may assume and direct the defense or settlement of any tax examination, administrative appeal, hearing, arbitration, suit or other
proceeding (each a “Proceeding”) commenced, filed or otherwise initiated or convened to investigate or resolve the existence and extent of such liability. 
  
 (b) If the Indemnified Liability is grouped with other unrelated asserted liabilities or issues in the
Proceeding, the parties shall use their respective best efforts to cause the Indemnified Liability to be the subject of a separate proceeding. If such severance is not possible, the Indemnifying Party shall assume and direct and be responsible only
for the matters relating to the Indemnified Liability. The Indemnified Party may settle, partially settle, or otherwise resolve any controversy involving the Indemnified Party’s Tax Return to which the particular Adjustment relates, so long as
the Indemnified Party does not settle, partially settle, or otherwise resolve the controversy in a manner inconsistent with the Indemnifying Party’s position, without prior written consent, which may not be unreasonably withheld, from the
Indemnifying Party. 
  
 (c) Notwithstanding the
foregoing, if at any time during a Proceeding controlled by an Indemnifying Party pursuant to Section 8.2(a) such Indemnifying Party fails to provide evidence reasonably satisfactory to the Indemnified Party of its ability to pay the full amount of
the Indemnified Liability or the Indemnified Party reasonably determines, after due investigation, that such Indemnifying Party could not pay the full amount of the Indemnified Liability, then the Indemnified Party may assume control of the
Proceedings after the expiration of seven (7) days after the giving of written notice to the Indemnifying Party notifying such party of the Indemnified Party’s intent to assume control of the Proceedings. 
  
 (d) In addition to amounts referred to in Section 3.3,
Section 7.1, or Section 7.2, an Indemnifying Party shall pay all reasonable out-of-pocket expenses and other costs related to the Indemnified Liability, including but not limited to fees for attorneys, accountants, expert witnesses or other
consultants retained by such Indemnifying Party and/or the Indemnified Party. To the extent that any such expenses and other costs have been or are paid by an Indemnified Party, the Indemnifying Party shall promptly reimburse the Indemnified Party
therefor. 
  
 (e) An Indemnifying Party shall not
pay (unless otherwise required by a proper notice of levy and after prompt notification to the Indemnified Party of receipt of notice and demand for payment), settle, compromise or concede any portion of the Indemnified Liability without the written
consent of the Indemnified Party, which consent shall not be unreasonably withheld. An Indemnifying Party shall, on a timely basis, keep the Indemnified Party informed of all developments in the Proceeding and provide the Indemnified Party with
copies of all pleadings, briefs, orders, and other written papers. 
  
 (f) Any Proceeding that is not controlled or which is no longer controlled by an Indemnifying Party pursuant to this Section 8.2 shall be controlled and directed exclusively by the Indemnified Party, and any related
reasonable out-of-pocket expenses and other costs incurred by the Indemnified Party, including but not limited to fees for attorneys, accountants, expert witness or other consultants, shall be reimbursed by the Indemnifying Party. An Indemnified
Party will not be required to pursue the claim in federal district court, the Court of Federal Claims or any state or foreign court if, as a prerequisite to such court’s jurisdiction, the Indemnified Party is required to pay the asserted
liability, unless the funds necessary to invoke such jurisdiction are provided by the Indemnifying Party. 
  
 8.3. Time and Manner of Payment. An Indemnifying Party shall pay to the Indemnified Party the amount of the Indemnified Liability and any expenses
or other costs indemnified against (less any amount paid directly by an Indemnifying Party to the Taxing Authority) no less than seven (7) days prior to the date payment of the Indemnified Liability is to be made to the Taxing Authority. Such
payment shall be paid by wire transfer of immediately available funds to an account designated by the Indemnified Party by written notice given to the 

  

 Page 13 

 
Indemnifying Party at least three (3) days prior to the due date of such payment. If an Indemnifying Party delays making payment beyond the due date
hereunder, such party shall pay interest on the amount unpaid at the IRS Interest Rate for each day and the actual number of days for which any amount due hereunder is unpaid. 
  
 8.4. Refunds. In connection with this Agreement, if an Indemnified Party receives a refund in respect of amounts paid
by an Indemnifying Party to any Taxing Authority on its behalf, or should any such amounts that would otherwise be refundable to the Indemnifying Party be applied by the Taxing Authority to obligations of the Indemnified Party unrelated to an
Indemnified Liability, then such Indemnified Party shall, promptly following receipt (or notification of credit), remit such refund and any related interest to such Indemnifying Party. 
  
 8.5. Cooperation. The parties shall cooperate with one another in a timely manner in any administrative or judicial
proceeding involving any matter that may result in an Indemnified Liability. 
  
 8.6. Affiliates. Distributing agrees and acknowledges that Distributing shall be responsible for the performance of the obligations of each Distributing Affiliate under this Agreement. Controlled agrees and
acknowledges that Controlled shall be responsible for the performance of the obligations of each Controlled Affiliate under this Agreement. 
  
 8.7. Application to Present and Future Subsidiaries. This Agreement is being entered into by Distributing and Controlled on behalf of themselves
and each Distributing Affiliate and each Controlled Affiliate, respectively. This Agreement shall constitute a direct obligation of each such affiliate and shall be deemed to have been readopted and affirmed on behalf of any corporation or other
entity that becomes a Distributing Affiliate or a Controlled Affiliate in the future. 
  
 ARTICLE IX 
 DISPUTE RESOLUTION 
  
 9.1. Disputes. 
  
 (a) Resolution of any and all disputes arising from or in connection with this Agreement, whether based on contract, tort, statute, or
otherwise, including, but not limited to, disputes in connection with claims by third parties (collectively, “Disputes”) shall be subject to the provisions of this Section 9.1; provided, however, that nothing contained herein shall
preclude either party from seeking or obtaining (i) injunctive relief or (ii) equitable or other judicial relief to enforce the provisions hereof or to preserve the status quo pending resolution of Disputes hereunder. 
  
 (b) Either party may give the other party written notice of
any Dispute not resolved in the normal course of business. The parties shall attempt in good faith to resolve any Dispute promptly by negotiation between executives of the parties who have authority to settle the controversy and who are at a higher
level of management than the persons with direct responsibility for administration of this Agreement. Within 30 days after the giving of the notice, the foregoing executives of both parties shall meet at a mutually acceptable time and place, and
thereafter as often as they reasonably deem necessary for a period not to exceed 15 days, to attempt to resolve the Dispute. All reasonable requests for information made by one party to the other will be honored. If the parties do not resolve the
Dispute within such 15-day period (the “Initial Mediation Period”), the parties shall attempt in good faith to resolve the Dispute by negotiation between (a) in the case of Distributing, the Chief Financial Officer, and (b) in the
case of Controlled, the Chief Financial Officer (collectively, the “Designated Officers”). Such officers shall meet at a mutually acceptable time and place (but in any event no later than 15 days following the expiration of the
Initial Mediation Period) and thereafter as often as they reasonably deem necessary for a period not to exceed 15 days, to attempt to resolve the Dispute. 
  

 Page 14 

 (c) If the Dispute has not been resolved by negotiation within 75 days of the giving of
the first party’s notice, or if the parties failed to meet within 30 days of the first party’s giving of notice, or if the Designated Officers failed to meet within 60 days of the first party’s giving of notice, either party may
commence any litigation or other procedure allowed by law. 
  
 ARTICLE X 
 GENERAL 
  
 10.1. Term of the Agreement. This Agreement shall become effective as of the Distribution Date, and except as expressly provided herein, shall
continue in full force and effect indefinitely. 
  
 10.2.
Injunctions. The parties acknowledge that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or were otherwise breached. The parties hereto shall
be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court having jurisdiction, such remedy being in addition to any other remedy to
which they may be entitled at law or in equity. 
  
 10.3.
Assignment. Neither of the parties may assign or delegate any of its rights or duties under this Agreement without the prior written consent of the other party, which consent will not be unreasonably withheld. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their respective successors and permitted assigns. 
  
 10.4. Further Assurances. Subject to the provisions hereof, the parties hereto shall make, execute, acknowledge and deliver such other instruments
and documents, and take all such other actions, as may be reasonably required in order to effectuate the purposes of this Agreement and to consummate the transactions contemplated hereby. Subject to the provisions hereof, each party shall, in
connection with entering into this Agreement, performing its obligations hereunder and taking any and all actions relating hereto, comply with all applicable laws, regulations, orders, and decrees, and promptly provide the other party with all such
information as it may reasonably request in order to be able to comply with the provisions of this sentence. 
  
 10.5. Waivers. No failure or delay on the part of the parties in exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, preclude any other or further exercise thereof or the exercise of any other right or power. No
modification or waiver of any provision of this Agreement or consent to any departure by the parties therefrom shall in any event be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. 
  
 10.6.
Change of Law. If, due to any change in applicable law, regulation, or interpretation thereof by any court of law or other governing body having jurisdiction subsequent to the date of this Agreement, performance of any provision of this
Agreement or any transaction contemplated hereby shall become impracticable or impossible, the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that
contemplated by such provision. 
  
 10.7. Confidentiality.
Subject to any contrary requirement of law and the rights of each party to enforce its rights hereunder in any legal action, each party agrees that it shall keep strictly confidential, and shall cause its employees and agents to keep strictly
confidential, any information that it or any of its employees or agents may require pursuant to, or in the course of performing its obligations under, any provision of this Agreement. 
  
 10.8. Headings. Descriptive headings are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement. 
  

 Page 15 

	10.9.	Counterparts. For the convenience of the parties, any number of counterparts of this Agreement may be executed by the parties hereto, and each such executed counterpart shall
be, and shall be deemed to be, an original instrument. 

  

	10.10.	Notices. All notices, requests, claims and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made
upon receipt) by delivery by hand, by reputable overnight courier service, by facsimile transmission, or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this Section 10.10) listed below: 

  

			
		
	 Distributing at:
	  	 Texas Industries, Inc.
 1341 W. Mockingbird Lane
 Dallas, Texas 75247
 Attn: General Counsel
 Phone: (972) 647-6700
 Fax: (972) 647-3320

		
	 Controlled at:
	  	 Chaparral Steel Company
 300 Ward Road
 Midlothian, Texas 76065
 Attn: General Counsel
 Phone: (972) 775-8241
 Fax: (972) 775-1930

  
 or to such other address as any party
may, from time to time, designate in a written notice delivered in a like manner. Notice delivered by hand shall be deemed given when received by the recipient. Notice delivered by mail as set out above shall be deemed given three (3) business days
after the date the same have been deposited in a United States post office. Notice delivered by reputable overnight courier shall be deemed given on the next following business day after the same have been deposited with a reputable overnight
courier (e.g., Federal Express). Notice given by facsimile transmission shall be deemed given on the day of transmission if such transmission is sent prior to 5:00 P.M. central standard time and if telephone confirmation of receipt is
obtained promptly thereafter. 
  
 10.11. Pre-Distribution
Earnings and Profits. Distributing and Controlled agree to allocate earnings and profits of Distributing between Distributing and Controlled in accordance with Treasury Regulation section 1.312-10. 
  
 10.12. Costs and Expenses. Unless specifically provided herein, each
party agrees to pay its own costs and expenses resulting from the fulfillment of its respective obligations hereunder. 
  
 10.13. Entire Agreement. This Agreement shall constitute the entire agreement between the parties hereto with respect to the subject matter hereof
and shall supersede all prior agreements and undertakings, both written and oral, between the parties with respect to the subject matter hereof and thereof. On or prior to the Distribution Date, all agreements (other than this Agreement) providing
for the allocation or sharing of Taxes to which any Controlled Affiliate would otherwise be bound following the Distribution shall have no further force and effect. 
  
 10.14. Interest on Late Payments. If a party delays making any payment beyond the due date hereunder, such party
shall pay interest on the amount unpaid at the IRS Interest Rate for each day and the actual number of days for which any amount due hereunder is unpaid. 
  
 10.15. Amendments. This Agreement may not be amended or modified except (a) by an instrument in writing signed by, or on behalf of, the parties or
(b) by a waiver in accordance with Section 10.5. 
  
 10.16. No
Third-Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their respective present and future Subsidiaries, and nothing herein, express or 

  

 Page 16 

 
implied, is intended to or shall confer upon any third parties any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of
this Agreement. 
  
 10.17. Governing Law and Severability.
This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, including the provisions of such laws relating to conflict of laws. If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any law or public policy, all other terms 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 any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto 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 in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible. 
  
 IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed by their respective officers, each of whom is duly authorized, all as of the Distribution Date. 
  

			
	 TEXAS INDUSTRIES, INC.

		
	BY:	 	 
	 	 	 Name:
 Title:

	
	 CHAPARRAL STEEL COMPANY

		
	BY:	 	 
	 	 	 Name:
 Title:

  

 Page 17Employment agreement dated as of June 7, 2005

 Exhibit 10.1 
  
 EMPLOYMENT AGREEMENT 
  
 THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of June 7, 2005 by and among SPRINT CORPORATION, a Kansas corporation
(“SPRINT”), SPRINT/UNITED MANAGEMENT COMPANY, a Kansas corporation and Subsidiary of SPRINT (“SUMC”) (SPRINT, SUMC and their Subsidiaries are collectively referred to herein as the “Company”; prior
to the Spin-Off, “Company” may refer to SPRINT individually or to SPRINT, SUMC and their Subsidiaries collectively, as the context may require; after the Spin-Off, “Company” shall refer to SpinCo individually or to
SpinCo and its Subsidiaries collectively), and Daniel R. Hesse (“Executive”) (certain capitalized terms used herein being defined in Article 7). 
  
 WHEREAS, the Board desires to employ Executive in the position and on the terms and conditions set forth below, and
Executive desires to accept such employment; and 
  
 WHEREAS, the
Company and Executive desire to enter into this Agreement embodying the terms of such employment; 
  
 NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements of the parties set forth in this Agreement, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: 
  

ARTICLE 1 
 POSITION;
TERM OF AGREEMENT 
  
 Section 1.01. Position. (a) On June 7, 2005, Executive shall commence service as Chief Executive Officer of Sprint’s Local Telecommunications Division, reporting directly to the Chief Executive Officer of Sprint (such
commencement date, the “Effective Date”). Immediately following the Spin-Off, Executive shall serve as President and Chief Executive Officer of SpinCo reporting directly to the Board and shall be a member of the Board. The
Company’s headquarters in the Kansas City, Kansas greater metropolitan area shall be Executive’s principal job location. 
  
 (b) As Chief Executive Officer of SpinCo, Executive shall have such duties and authority, consistent with such position, as shall be determined from time
to time by the Board and as is customary for the position of chief executive officer of a company of the size and nature of the business of SpinCo; provided, however, that Executive shall be the highest ranking Senior Officer of SpinCo
and that prior to the Spin-Off Executive shall report to the Chief Executive Officer of Sprint and following the Spin-Off, Executive shall report only to the Board, provided, further, that following the Spin-Off all employees of SpinCo shall
report, directly or indirectly, to Executive. 
  

 (c) Starting on the Effective Date, during the Employment Term Executive will devote substantially all of
his business time to the performance of his duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise without the prior written consent of the Board; provided that nothing herein shall
be deemed to preclude Executive, subject to the prior written consent of the Board, from serving on any business, civic or charitable board, as long as such activities do not materially interfere with the performance of Executive’s duties
hereunder. The Board shall be deemed to have consented from the Effective Date through the Spin-Off to Executive’s continuing to serve on the business, civic and charitable boards set forth on Exhibit A hereto. Following the Spin-Off, such
service shall be subject to the further consent of the Board. 
  
 Section 1.02. Term. Executive shall be employed by the Company for a period commencing on the Effective Date and, subject to earlier termination or extension as provided herein, ending on June 30, 2008 (the “Employment
Term”). On June 30, 2008 and each June 30 thereafter, the Employment Term shall automatically be extended for one additional year unless not later than 90 days prior to such date the Company or Executive shall have given written notice of
its or his intention not so to extend the Employment Term. Notification requirements for a termination shall be subject to the provisions set forth in the definition of “Termination Date” as set forth in Article 7. 
  
 ARTICLE 2 
 COMPENSATION AND BENEFITS 
  
 Section 2.01. Base Salary. Starting on the Effective Date, the Company shall pay Executive an annual base salary at the initial annual rate of
$900,000, payable in equal monthly installments or otherwise in accordance with the payroll and personnel practices of the Company from time to time. Base Salary shall be reviewed annually by the Board or a committee thereof to which the Board may
from time to time have delegated such authority (the “Committee”) for possible increase (but not decrease) in the sole discretion of the Board or the Committee, as the case may be. “Base Salary” shall mean
Executive’s annual base salary as it may be increased from time to time. 
  
 Section 2.02. Bonus. Subject in each case to Executive’s continued employment as contemplated hereby: 
  
 (a) (i) With respect to each fiscal year in the Employment Term, Executive shall be eligible to participate in the Company’s Short-Term Incentive
Plan, with an annual target bonus opportunity of at least 120% of Base Salary (the “Basic Target Bonus Amount”) and a maximum bonus payout not to exceed 200% of Basic Target Bonus Amount. Basic Target Bonus Amount shall be reviewed
annually by the Board or the Committee for possible increase (but not decrease) in the sole discretion of the Board or the Committee, as the case may be. Except as provided in Section 2.02(a)(ii) or as may be payable pursuant to Article 3, Executive
is not guaranteed the payment of any annual bonus. 
  

 2 

 (ii) Notwithstanding the foregoing, Executive shall be entitled to a minimum annual bonus
for 2005 of a pro-rata portion, based on the number of days Executive is employed with the Company in 2005, of the greater of $1,050,000 or the actual annual bonus payable based on Company performance for 2005 with respect such an annual target
bonus opportunity under the Short-Term Incentive Plan. In the event Executive’s employment terminates prior to January 1, 2006, the payment of such bonus shall be subject to the provisions of Article 3; provided, however, that otherwise,
such bonus shall be paid at the same time as annual bonuses for 2005 are paid to other Senior Officers (but not later than March 15, 2006). 
  
 Section 2.03. Initial Option and Restricted Stock Unit Grants.  
  
 (a) As of the Effective Date, the Company shall cause the grant to Executive of nonqualified stock options under the
Company’s 1997 Long-Term Stock Incentive Program (the “1997 Program”) to purchase 408,000 shares of FON Common Stock, at an exercise price equal to the Fair Market Value of a share of FON Common Stock on the Effective Date (the
“Initial Options”). Subject to the Executive’s continued employment with the Company, the Initial Options shall become exercisable as to 25% of the shares subject thereto on each of the first four anniversaries of the Effective
Date. The Initial Options shall otherwise have the standard terms set forth in, and shall be subject to, the 1997 Program except that the Initial Options shall contain provisions which are consistent with the provisions of this Agreement, including
without limitation Sections 3.02 and 3.05 hereof. 
  
 (b) As of
the Effective Date, the Company shall cause the grant to Executive under the 1997 Program of 157,000 restricted stock units relating to and payable on a one-for-one basis in FON Common Stock (the “Initial RSUs”). The initial RSUs
shall vest in full, subject to Executive’s continued employment with the Company, on the third anniversary of the Effective Date. Unless Executive elects in the time and manner specified by the Company to defer the payment of all or a portion
of the vested Initial RSUs, upon vesting such vested Initial RSUs shall be converted into shares of FON Common Stock, which shares shall be promptly distributed to Executive. Except as otherwise set forth in this Agreement, the Initial RSUs shall
have the standard terms set forth in, and shall be subject to, the 1997 Program except that the Initial RSUs shall contain provisions which are consistent with the provisions of this Agreement, including without limitation Sections 3.02 and 3.05
hereof. 
  
 (c) (i) In connection with the Spin-Off, the Initial
Options shall be adjusted into options relating to Sprint and/or SpinCo equity securities in such manner as may be equitably determined by the Committee. 
  
 (ii) In connection with the Spin-Off, the Initial RSUs shall be converted into restricted stock units relating to SpinCo common stock
having a value equivalent to the Initial RSUs as of the Spin-Off. 
  
 (iii) All such adjusted options and converted restricted stock units shall contain provisions which are consistent with the provisions of this Agreement, including without limitation Sections 3.02 and 3.05 hereof.

  

 3 

 (d) The Initial Option and Initial RSU award shall contain provisions consistent with those contained in,
and shall be substantially in the form of, Exhibit B hereto. 
  
 Section 2.04. Sign-on Bonus and First Annual Equity Award. (a) On the Effective Date, the Company shall pay Executive a sign-on bonus of $600,000 in cash in a lump sum. 
  
 (b) The first annual long-term equity incentive award by the Company to Executive following the grant of the Initial Options
and Initial RSUs shall be made in 2006 at the same time as such grants are made to other executives of the Company designated to be transferred to SpinCo and may consist of one or more grants, having such terms and conditions, including performance
conditions, as the Committee may determine; provided, however, that such award shall contain provisions which are consistent with the provisions of this Agreement, including without limitation Sections 3.02 and 3.05 hereof., and shall have an
aggregate grant date value as determined by the Committee of not less than $7,000,000 (the “First Annual Award”). To the extent that the First Annual Award consists of stock options or restricted stock units, it shall contain
provisions which are consistent with the provisions of Exhibit B hereto (subject to the provisions of Article 3 hereof) as well as any performance conditions as the Committee may determine. Provided that Executive is continuously employed by the
Company through the earlier of (w) the date on which such grants are made to other executives of the Company designated to be transferred to SpinCo and (x) March 15, 2006, the First Annual Award shall be granted to Executive not later than the
earlier of (y) December 31, 2006 and (z) immediately prior to the first to occur of the termination of Executive’s employment (i) without Cause, (ii) for Good Reason or (iii) for Constructive Discharge. In connection with the Spin-Off, the
First Annual Award shall be converted into an award relating to Sprint and/or SpinCo equity securities in such manner as may be equitably determined by the Committee. 
  
 Section 2.05. Employee Benefits. (a) During the Employment Term Executive shall be eligible to participate in
compensation programs and to receive employee benefits, perquisites, vacation and indemnification on terms and conditions no less favorable than those made available generally to the Senior Officers designated to be transferred to SpinCo, as such
compensation programs, benefits, perquisites, vacation and indemnification arrangements shall be in effect from time to time. 
  
 Section 2.06. Business Expenses and Relocation. (a) Reasonable travel, entertainment and other business expenses incurred by Executive in the
performance of his duties hereunder shall be reimbursed by the Company in accordance with Company policies as in effect from time to time. 
  
 (b) Executive shall be required to relocate to the greater Kansas City metropolitan area promptly after the Effective Date. In connection with such
relocation, Executive shall be eligible to participate in Sprint’s Executive – New Employee Relocation Program, exceptions to which shall be administered in a manner consistent with Sprint’s normal exception process thereunder subject
in each case to approval by the Chief Executive Officer of Sprint, including with respect to the purchase of Executive’s home, interim living arrangements, and transportation and storage of belongings. 
  

 4 

 ARTICLE 3 
 CERTAIN BENEFITS 
  
 Section 3.01. Certain Events. (a) A “Qualifying Event” means the involuntary termination of Executive’s employment by the Company other than (x) for Cause, or (y) by reason of
Executive’s death or Disability. 
  
 (b) A “Severance
Event” means any of the following events: (i) Executive’s voluntary termination of employment for Good Reason, provided the event or events constituting Good Reason occur during the Employment Term and within the 24 month period
following a Change in Control or (ii) a Qualifying Event occurring during such 24-month period. 
  
 (c) A “Separation Event” means any of the following events: (i) Executive’s voluntary termination of employment for Constructive
Discharge; provided (x) the event or events constituting a Constructive Discharge occur during the Employment Term and other than during the 24-month period beginning on the date of a Change in Control and (y) such termination occurs within 90 days
after the occurrence of an event constituting a Constructive Discharge; or (ii) a Qualifying Event occurring other than during the 24-month period beginning on the date of a Change in Control. 
  
 (d) In the event of any termination of employment during the Employment Term,
Executive shall be entitled to receive from the Company, subject to Executive’s execution of a release in form and substance reasonably acceptable to Executive and Company, either the Severance Benefits to the extent and as described in Section
3.03, the relevant Separation Benefits to the extent and as described in Section 3.04, or the benefits to the extent and as described in Section 3.05, as the case may be. 
  
 Section 3.02. Treatment of Equity-Based Awards. (a) Notwithstanding the provisions of the 1997 Program, in the event
that a Severance Event occurs during the Employment Term, or in the event of a Separation Event within two months following Abandonment of the Spin-Off, subject to Executive’s not being in willful and material breach of subsections (b)-(h) of
Section 6.15 the Initial Options, Initial RSUs and First Annual Award (collectively, “Awards”) shall continue to vest during the Continuation Period and to the extent not vested on the last day of the Continuation Period, shall
become immediately vested and nonforfeitable (and to the extent such Awards are options, exercisable) on that day. Subject to Executive’s compliance with Section 6.15, such options shall remain exercisable until the expiration of six months
following the last day of the Continuation Period (the “Option Termination Date”). All other equity-based awards made to Executive during the Employment Term shall be governed by their terms upon such a termination. 
  
 (b) Notwithstanding the provisions of the 1997 Program, in the event that a
Separation Event occurs during the Employment Term other than as described in Section 3.02(a), subject to Executive’s not being in willful and material breach of subsections (b)-(h) of Section 6.15, unvested Awards held by Executive shall
continue to vest during the Continuation Period and to the extent not vested on the last day of the Continuation Period, the Initial Options and Initial 

  

 5 

 
RSUs shall vest on that day and any unvested portion of the First Annual Award shall be forfeited. To the extent Awards becoming so vested are options, the
vested Initial Options shall remain exercisable until the Option Termination Date and the vested option portion of the First Annual Award shall remain exercisable until three months following the last day of the Continuation Period. All other
equity-based awards made to Executive during the Employment Term shall be governed by their terms upon such a termination. 
  
 (c) Except as otherwise provided herein, in the event of the termination of Executive’s employment for Cause the treatment of Awards shall be
governed by the standard terms set forth in the 1997 Program and in the event of Executive’s death or Disability during the Employment Term, the treatment of Awards shall be governed by Section 3.05 hereof. 
  
 (d) In the event of Executive’s voluntary termination of employment
other than upon a Constructive Discharge or for Good Reason or upon the lapse of this Agreement pursuant to a notice of non-renewal by Executive under Section 1.02, all unvested Awards shall be immediately forfeited and to the extent that Awards are
options that were exercisable immediately prior to such termination of employment, subject to Executive’s not being in willful and material breach of subsections (b)-(h) of Section 6.15, such vested options shall remain exercisable until the
expiration of three months following the date of such termination. 
  
 Section 3.03. Other Severance Benefits. Except to the extent provided in Section 6.07 and Section 6.08, Executive shall be entitled to the following benefits (the “Severance Benefits”) upon a Severance Event:

  
 (a) (i) The Company shall pay Executive as soon as practicable
a lump sum, in cash, equal to Executive’s earned but unpaid Base Salary and any other earned but unpaid cash entitlements for the period through and including the date of termination of Executive’s employment, including unused earned
vacation pay and unreimbursed documented business expenses (collectively, “Accrued Compensation”). 
  
 (ii) The Company shall pay to Executive as soon as practicable an amount in cash equal to the product of (x) the greater of
Executive’s target bonus opportunity for the year in which the Change in Control occurred and the year in which the Severance Event occurs (such greater amount, the “CIC Bonus Amount”) times (y) a fraction, the numerator of
which is the number of days in the year of termination through the Termination Date and the denominator of which is 365. 
  
 (iii) In addition, Executive shall be entitled to any other vested benefits earned by Executive for the period through and including the
date of termination of Executive’s employment under any other employee benefit plans, policies, practices, programs and arrangements maintained by the Company, in accordance with their terms, except as modified herein (collectively,
“Accrued Benefits”). 
  
 (b) The Company shall
pay Executive compensation during the Continuation Period at an annual rate equal to the sum of the amounts set forth in Clauses (i) and (ii) below, payable in 

  

 6 

 
equal monthly installments (each such installment, the “Severance Amount”) during the Continuation Period in accordance with the applicable
Company payroll system: 
  
 (i) Executive’s
Base Salary at its highest annual rate in effect during the period beginning immediately prior to the date of the Change in Control to which such Severance Event relates and ending on the date of such Severance Event; and 
  
 (ii) the CIC Bonus Amount. 
  
 (c) Except as otherwise provided herein, during the Continuation Period the
Company will provide Executive with all applicable executive perquisites that Executive was receiving or was entitled to receive on the Termination Date (the “Additional Benefits”). 
  
 Section 3.04. Other Separation Benefits. (a) Except to the extent
provided in Section 6.07 and Section 6.08, upon a Separation Event Executive shall be entitled to the benefits set forth below (the “Separation Benefits”): 
  
 (i) The Accrued Compensation; 
  
 (ii) The Accrued Benefits; 
  
 (iii) An amount in cash equal to the product of (x) Executive’s actual annual bonus under the
Short-Term Incentive Plan for the year in which Executive’s employment terminates based on the actual performance for such year, times (y) a fraction, the numerator of which is the number of days in such year through the Termination Date and
the denominator of which is 365 (the “Pro-Rata Bonus Amount”). The Pro-Rata Bonus Amount shall be paid to Executive at the time benefits under the Short-Term Incentive Plan for such year are paid to other participants therein and it
shall not be a requirement that Executive be employed by the Company at the time such benefits are payable to other participants; and 
  
 (iv) Compensation during the Continuation Period at an annual rate equal to the sum of (i) the Base Salary as in effect at the time of
such termination and (ii) Executive’s target bonus opportunity under the Short-Term Incentive Plan for the year in which the Separation Event occurs, payable in equal monthly installments (each such installment, the “Separation
Amount”) during the Continuation Period in accordance with the applicable Company payroll system. 
  
 (b) During the Continuation Period, except as otherwise provided herein the Company will provide Executive with the Additional Benefits. 
  
 Section 3.05. Other Terminations. Upon termination of Executive’s
employment by reason of death or Disability or upon termination of Executive’s employment for Cause, Executive shall be entitled to: 
  
 (i) The Accrued Compensation; and 
  

 7 

 (ii) The Accrued Benefits. 
  
 For the avoidance of doubt, upon termination of Executive’s employment due to death or Disability, the Initial Options,
the Initial RSUs, and, if applicable, the First Annual Award shall fully vest and, in the case of death, any options attributable to the Awards shall continue to be exercisable for 12 months following death and, in the case of disability, shall
continue to be exercisable for 60 months following the date of Disability. Anything herein, or in any other plan, program or arrangement of the Company, notwithstanding, the entitlements set forth in the preceding sentence shall apply whether death
or Disability occurs during or following the first 12 months from the date of any such Award grant. 
  
 ARTICLE 4 
 CERTAIN TAX REIMBURSEMENT
PAYMENTS 
  
 Section 4.01. Initial
Determinations By Accounting Firm. In the event that a Change in Control or Severance Event occurs such that Executive is entitled to any payments or benefits related thereto or the Executive receives payments or benefits from the Company which
are subject to the excise tax imposed by Section 4999 of the Code, the Company shall retain a national accounting firm selected by the Company and reasonably acceptable to Executive (the “Accounting Firm”) to perform the calculations
contemplated by this Article 4. The Accounting Firm shall have discretion to retain an independent appraiser with adequate expertise (the “Appraiser”) to provide any valuations necessary for the Accounting Firm’s calculations
hereunder. The Company shall pay all the fees and costs associated with the work performed by the Accounting Firm and any Appraiser retained by the Accounting Firm. If the Accounting Firm has performed services for any person, entity or group in
connection with the related Change in Control, Executive may select an alternative national accounting firm to be the Accounting Firm. If the Appraiser otherwise performs work for any of the entities involved in the Change in Control or their
affiliates (or has performed work for any such entity within the three years preceding the calculations hereunder), then Executive may select an alternative appraiser of national stature with adequate expertise to be the Appraiser. The Accounting
Firm shall provide promptly to both the Company and Executive a written report setting forth the calculations required under this Agreement, together with a detail of all relevant supportive data, valuations and calculations. All determinations of
the Accounting Firm shall be binding on Executive and the Company. When making the calculations required hereunder, Executive shall be deemed to pay: (x) Federal income taxes at the highest applicable marginal rate of Federal income taxation for the
taxable year for which any such calculation is made; and (y) any applicable state and local income taxes at the highest applicable marginal rate of taxation for the taxable year for which any such calculation is made, net of the maximum reduction in
Federal income taxes which could be obtained from deduction of such state and local taxes. 
  
 The Accounting Firm shall determine (the “Initial Determination”) the aggregate amount of all payments, benefits and distributions provided to Executive or for Executive’s benefit, whether paid or
payable or distributed or distributable pursuant to the terms of the Agreement or any other agreement, plan or arrangement of the Company or otherwise (other than any payment 

  

 8 

 
pursuant to this Article 4) which are in the nature of compensation and contingent upon such Change in Control or other event which results in such
compensation being subject to the excise tax imposed by Section 4999 of the Code (valued pursuant to Section 280G of the Code) (collectively the “Payments”). 
  
 Section 4.02. Initial Treatment of Payments. Executive shall be entitled to receive the full amount of the Payments
and, if the amount of the Payments exceeds the maximum amount of the Payments Executive would be entitled to receive without being subject to the excise tax imposed by Section 4999 of the Code (such excise tax, together with any interest or
penalties with respect to such excise tax, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to Executive an additional payment (a “Gross-Up Payment”) in an amount such that after payment
by Executive of all taxes (including any interest and penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments. All determinations required to be made as to whether a Gross-Up Payment is required and the amount of such Gross-Up Payment shall be made by the Accounting Firm. 
  
 Section 4.03. Redeterminations Based on IRS or Court Ruling. If after the date of the Initial Determination (a)
Executive becomes entitled to receive additional Payments (including, without limitation, severance) contingent upon the same Change in Control or other event which results in such compensation being subject to the excise tax imposed by Section 4999
of the Code or (b) Executive becomes subject to the terms of any final binding agreement between Executive and the Internal Revenue Service or any decision of a court of competent jurisdiction which is not appealable or for which the time to appeal
has lapsed (a “Final Determination”) and which is contrary to the Initial Determination, then based upon such additional Payments or such Final Determination (as the case may be), the Accounting Firm shall recalculate: (i) the aggregate
Payments (such recalculated amount, the “Redetermined Payments”); and (ii) the related excise tax, if any, imposed by Section 4999 of the Code (such excise tax, together with any interest or penalties with respect to such excise tax, are
hereinafter referred to as the “Redetermined Excise Tax”). 
  
 Section 4.04. Reconciliations Based on Redeterminations. If the aggregate value of the Redetermined Excise Tax exceeds the Excise Tax, then the Company shall pay to Executive an additional payment (a “Supplemental Gross-Up
Payment”) in an amount such that after payment by Executive of all taxes (including any interest and penalties imposed with respect to such taxes), including any Redetermined Excise Tax, imposed on the Supplemental Gross-Up Payment Executive
retains an amount of the Supplemental Gross-Up Payment equal to the Redetermined Excise Tax; provided that if Executive has previously received a Gross-Up Payment, the amount of the Supplemental Gross-Up Payment shall be reduced by the amount
of the Gross-Up Payment Executive previously received, so that Executive will be fully reimbursed, but will not receive duplicative reimbursements. If, however, the Excise Tax exceeds the Redetermined Excise Tax, the excess Gross-Up Payment that has
been paid to Executive shall be repaid by Executive to the Company. Notwithstanding the foregoing, in the event any portion of the Gross-Up Payment to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment
thereof shall not be required until actual refund or credit of such 

  

 9 

 
portion has been made to Executive, and interest payable to the Company shall not exceed interest received or credited to Executive by such tax authority for
the period it held such portion. Executive and the Company shall mutually agree upon the course of action to be pursued (and the method of allocating the expenses thereof) if Executive’s good faith claim for refund or credit is denied.

  
 Section 4.05. Procedures with Respect to IRS Claims.
(a) Executive shall notify the Company in writing of any claim by the Internal Revenue Service relating to any unpaid excise tax applicable to the Payments. Such notification shall be given as soon as practicable but no later than ten business
days after Executive knows of such claim and shall apprise the Company of the nature of such claim, any assessment under such claim and the date on which such assessment is requested to be paid. Executive shall not pay such claim prior to the
expiration of the thirty day period following the date on which Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). 
  
 (b) If the Company notifies Executive in writing prior to the expiration of
such period that it desires to contest such claim, Executive shall: 
  
 (i) give the Company any information reasonably requested by the Company relating to such claim, 
  
 (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time
including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, 
  
 (iii) cooperate with the Company in good faith in order effectively to contest such claim, and 
  
 (iv) permit the Company to participate in any proceedings
relating to such claim; 
  
 provided, however, that the Company
shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax, Redetermined Excise
Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing, the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct
Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one
or more appellate courts, as the Company shall determine; provided, however, that if the Company directs Executive to 

  

 10 

 
pay such claim and sue for a refund, the Company shall provide the amount of such payment to Executive and shall indemnify and hold Executive harmless, on an
after-tax basis, from any Excise Tax, Redetermined Excise Tax or income tax, including interest and penalties with respect thereto, imposed with respect to such payment or with respect to any imputed income with respect to such payment; and further
provided that any extension of the statue of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the
Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority. 
  
 (c) If after
the receipt by Executive of an amount from the Company pursuant to the foregoing, Executive becomes entitled to receive any refund with respect to such claim, Executive shall (subject to the Company’s complying with the requirements above with
respect to any contest of an excise tax claim) promptly after such refund or credit has been made to Executive pay to the Company the amount of such refund (together with any interest paid or credited thereon by the taxing authority after deducting
any taxes applicable thereto). If, after the receipt by Executive of an amount from the Company hereunder, a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Company does not notify
Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty days after such determination, then Executive shall have no obligation to repay such amount and the amount of such payment shall offset, to the
extent thereof, the amount of the Supplemental Gross-Up Payment required to be paid hereunder and shall be considered part of the Supplemental Gross-Up Payment and subject to gross-up for any taxes (including interest or penalties) associated
therewith. 
  
 (d) Anything in this Agreement or the 1997 Program
to the contrary notwithstanding, in no event shall the vesting of any equity award made to Executive under the 1997 Program, if otherwise subject to acceleration by its terms upon a change in control, be cut back because of tax consequences under
Code Section 280G. 
  
 ARTICLE 5 
 SUCCESSORS AND ASSIGNMENTS 
  
 Section 5.01. Successors. (a) The Company will require any successor (whether by reason of a Change in Control,
direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform the obligations under this Agreement in the same manner and to
the same extent that the Company would be required to perform such obligations if no such succession had taken place. This Agreement shall not be assignable by the Company except (i) as contemplated by Section 5.01(b), or (ii) to another Person
acquiring all or substantially all of the business and/or assets of the Company. 
  

 11 

 (b) Upon the consummation of the Spin-Off, SpinCo shall assume this Agreement and shall enjoy, succeed to
and be solely responsible for the rights, obligations and duties of the Company hereunder and from and after the Spin-Off all references herein to the Company and to Sprint, in each case, shall be deemed to refer to SpinCo and its Subsidiaries.

  
 Section 5.02. Assignment By Executive. This Agreement
shall inure to the benefit of and be enforceable by Executive’s personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If Executive should die or become disabled while any amount
is owed but unpaid to Executive hereunder, all such amounts, unless otherwise provided herein, shall be paid to Executive’s legal guardian or to his devisee, legatee or other designee, as the case may be, or if there is no such designee, to
Executive’s estate. Executive’s rights hereunder shall not otherwise be assignable. Executive’s obligations and responsibilities hereunder shall not be assignable under any circumstances and any such assignment or attempted assignment
shall be null, void and of no effect. 
  
 ARTICLE 6 
 MISCELLANEOUS 
  
 Section 6.01. Notices. Any notice required to be delivered hereunder shall be in writing and shall be addressed 
  
 if to the Company, to: 
  
 6200 Sprint Parkway 
 Overland Park, KS 66251 
 Fax:
    913-523-7700 
 Attn:    General Counsel 
  
 Copies to: 
  
 Davis Polk & Wardwell 
 450 Lexington
Avenue 
 New York, NY 10017 
 Fax:     212-450-4800 
 Attn:    Beverly F. Chase 
  
 if to Executive, to Executive’s last known address as
reflected on the books and records of the Company 
  
 Copies to
the Offices of Joseph E. Bachelder: 
  
 780 Third Avenue

 29th
Floor 
 New York, NY 10017 
 Fax:
    212-319-3070 
 Attn:    Joseph E. Bachelder 
  

 12 

 or such other address as such party may hereafter specify for the purpose by written notice to the other party hereto.
Any such notice shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a business day in the place of receipt. Otherwise, any such notice shall be deemed not to
have been received until the next succeeding business day in the place of receipt. 
  
 Section 6.02. Legal Fees And Expenses. Each party shall be responsible for such parties’ legal fees and expenses incurred in connection with the negotiation and execution of this Agreement. 
  
 Section 6.03. Arbitration. Section 6.12 notwithstanding, all disputes,
claims, or controversies arising under or in connection with this Agreement, other than those contemplated by Section 6.16, shall be settled exclusively by binding arbitration pursuant to the Federal Arbitration Act administered by JAMS/Endispute in
the greater Kansas City area in accordance with the then existing JAMS/Endispute Arbitration Rules and Procedures for Employment Disputes, except that the parties agree that the arbitrator is not authorized or empowered to impose punitive damages on
either of the parties. If it is determined that any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced, the arbitrator shall have the authority to modify the provision or term to the minimum extent required
to permit enforcement. In the event of such an arbitration proceeding, the Administrator of JAMS/Endispute will appoint the arbitrator. 
  
 Section 6.04. Unfunded Agreement. The obligations of the Company under this Agreement represent an unsecured, unfunded promise to pay benefits to
Executive and/or Executive’s beneficiaries, and shall not entitle Executive or such beneficiaries to a preferential claim to any asset of the Company. 
  
 Section 6.05. Non-exclusivity Of Benefits. Unless specifically provided herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish Executive’s rights as an employee of the Company, whether existing now or hereafter, under any compensation and/or benefit plans (qualified or nonqualified), programs,
policies, or practices provided by the Company, for which Executive may qualify; provided, however, that the Separation Benefits and the Severance Benefits shall be in lieu of any severance benefits under any such plans, programs,
policies or practices. 
  
 Section 6.06. Employment Status.
Nothing herein contained shall interfere with the Company’s right to terminate Executive’s employment with the Company at any time, with or without Cause, subject to the Company’s obligation, if any, to provide Severance Benefits
or Separation Benefits. Executive shall also have the right to terminate his employment with the Company at any time without liability, subject only to Executive’s obligations hereunder. 
  

 13 

 Section 6.07. Mitigation. (a) In no event shall Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement or under any other plan, program or arrangement of the Company nor, except as provided below, shall the amount of any
payment or benefit hereunder be reduced by any compensation earned by Executive as a result of employment by another subsequent employer. 
  
 (b) In the event that, during a Continuation Period Executive becomes eligible for health or other welfare benefits from a new employer which are
comparable to and of substantially equivalent value to Executive’s benefits under the Company’s Medical Plans or other welfare plans, Executive’s benefits hereunder shall be appropriately reduced or terminated, in the Company’s
sole discretion, to the extent of such comparable benefits available to Executive. 
  
 Section 6.08. Entire Agreement. This Agreement represents the entire agreement between Executive and the Company and its affiliates with respect to the subject matter hereof, and supersedes all prior
discussions, negotiations, and agreements concerning such tights; provided, however, that any amounts payable to Executive hereunder shall be reduced by any duplicative amounts paid to Executive which are required by any applicable
local law in connection with any termination of Executive’s employment. In the event of an inconsistency between the terms of this Agreement and the terms of any other Company plan, policy, arrangement or agreement with Executive, the
provisions of this Agreement shall govern. 
  
 Section 6.09.
Tax Withholding. Notwithstanding anything in this Agreement to the contrary, the Company shall withhold from any amounts payable in connection with Executive’s employment hereunder all federal, state, city, or other taxes as are legally
required to be withheld. 
  
 Section 6.10. Waiver Of Rights.
The waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a continuing waiver or as a consent to or waiver of any subsequent breach hereof. 
  
 Section 6.11. Severability. In the event any provision of this
Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Agreement, and the Agreement shall be construed and enforced as if the illegal or invalid provision had not been
included. 
  
 Section 6.12. Governing Law. This Agreement
shall be governed by and construed in accordance with the laws of the State of Kansas without reference to principles of conflict of laws. 
  
 Section 6.13. Counterparts. This Agreement may be signed in several counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were on the same instrument. 
  

 14 

 Section 6.14. Representations and Warranties. 
  
 (a) By the Executive. 
  
 Executive represents and warrants (i) that Executive has the right and
capacity to enter into this Agreement and to be legally bound by it and (ii) that Executive is not a party to any contract or agreement, is not otherwise obligated in any way and is not subject to any rules or regulations, whether governmentally
imposed or otherwise, which do or may restrict Executive’s ability to enter into and fully perform Executive’s duties and responsibilities under this Agreement. 
  
 (b) By the Company. 
  
 The Company represents and warrants that (i) the execution, delivery and performance of this Agreement (and Exhibit B) by the Company has been fully and
validly authorized by all necessary corporate action, (ii) the officer signing this Agreement (and Exhibit B) on behalf of the Company is duly authorized to do so, (iii) the execution, delivery and performance of this Agreement (and Exhibit B) does
not violate any applicable law, regulation, order, judgment or decree or any agreement or plan to which the Company is a party or by which it is bound and (iv) upon execution and delivery of this Agreement (and Exhibit B) by the parties hereto, each
will be a valid and binding obligation of the Company enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally. 
  
 Section 6.15.
Executive’s Covenants.  
  
 (a) Principles of Business
Conduct. 
  
 Executive shall adhere in all respects to the
Company’s Principles of Business Conduct (or any successor code of conduct) as in effect on the Effective Date and as they may from time to time be established, amended, or terminated. 
  
 (b) Proprietary Information. 
  
 Executive acknowledges that during the course of his employment he will learn
or develop Proprietary Information. Executive further acknowledges that unauthorized disclosure or use of such Proprietary Information, other than in discharge of Executive’s duties, will cause the Company irreparable harm. Except in the course
of his employment with the Company under this Agreement, in the pursuit of the business of the Company, or as otherwise required in employment with the Company, Executive shall not, during the course of his employment or at any time following
termination of his employment, directly or indirectly, disclose, publish, communicate, or use on his behalf or another’s behalf, any Proprietary Information. If during or after his employment Executive has any questions about whether particular
information is Proprietary Information he shall consult with the Company’s General Counsel. Anything herein to the contrary notwithstanding, this Section 6.15(b) shall not apply (i) if disclosure is required 

  

 15 

 
by law or by any court, arbitrator, or administrative or legislative body (including any committee thereof) with apparent jurisdiction to order Executive to
disclose or make available such information, provided, however that Executive will promptly notify the Company in writing upon receiving a request for such information and, if the Company requests, reasonably cooperate with the Company at the
Company’s expense in seeking a protective order or other appropriate protection of such information or (ii) with respect to any litigation or arbitration involving this Agreement; provided, however, that Executive shall be obligated
under this Section 6.15(b)(ii) to take all such actions and precautions as may be reasonably necessary or advisable to ensure that such Proprietary Information is disclosed only to the limited extent required with respect thereto. 
  
 Executive also agrees to disclose promptly to the Company any information,
ideas, or inventions made or conceived by him that result from or are suggested by services performed by him for the Company under this Agreement, and to assign to the Company all rights pertaining to such information, ideas, or inventions.
Knowledge or information of any kind disclosed by Executive to the Company shall be deemed to have been disclosed without obligation on the part of the Company to hold the same in confidence, and the Company shall have the full right to use and
disclose such knowledge and information without compensation to Executive beyond that specifically provided in this Agreement; provided, however, that this Agreement shall not apply to an invention for which no equipment, supplies,
facility or trade secret information of the Company was used and which was developed entirely on Executive’s own time, unless: (i) the invention relates directly to the business of the Company or to the Company’s actual or demonstrably
anticipated research or development; or (ii) the invention results from any work performed by Executive for the Company. 
  
 (c) Non-Competition. 
  
 (i) During Executive’s employment with the Company and during the Non-Compete Period, Executive shall not engage in Competitive
Employment, whether paid or unpaid and whether as a consultant, employee, or otherwise. If Executive ceases to be employed by the Company as a result of a Severance or Separation Event or because of the sale, divestiture, or other disposition by the
Company of a subsidiary, division, or other divested unit employing Executive, this provision shall continue to apply during the Non-Compete Period, except that Executive’s continued employment by the subsidiary, division, or other divested
unit disposed of by the Company shall not be deemed a violation of this provision. If a court or arbitrator determines that this Section 6.15(c) or the definitions of Non-Compete Period, Competitive Employment or Competitor are too broad, Executive
and the Company agree that the court or arbitrator should modify the applicable provision or provisions to the extent (but not more than is) necessary to make such provision or provisions enforceable. 
  
 (ii) In the event that following Abandonment of the Spin-Off
Executive elects in a prior written notice delivered to the Company to forego his rights to payment of future Severance Amounts or Separation Amounts, as the case may be, in consideration of the Company’s agreement to a reduction in the
Non-Compete Period, the parties agree that Executive will not be in breach of the covenant contained in this Section 6.15(c) in respect of 

  

 16 

 
activities commenced after the Company’s receipt of such notice, and in each such case the Company’s obligation to pay Severance Amounts or
Separation Amounts, as the case may be, shall cease on the date Executive commences the employment contemplated by such election. 
  
 (d) Inducement of Employees, Customers and Others. 
  
 During the course of carrying out his duties hereunder during Executive’s employment with the Company, and during the Non-Compete Period, Executive
may not directly or indirectly solicit, induce, or encourage any employee, consultant, agent, customer, vendor, or other parties doing business with the Company to terminate their employment, agency, or other relationship with the Company or to
render services for or transfer business to any Competitor, and Executive shall not initiate discussion with any such person for any such purpose or authorize or knowingly cooperate with the taking of any such actions by any other individual or
entity on behalf of the Competitor. 
  
 (e) No Adverse Actions.

  
 During the Non-Compete Period, Executive shall not, without
the prior written consent of the Company, in any manner, solicit, request, advise, or assist any other person or entity to (a) undertake any action that would be reasonably likely to, or is intended to, result in a Change in Control or (b) seek to
control in any material manner the Board. 
  
 (f) Return of
Property. 
  
 Executive shall, upon his Termination Date, return
to the Company all property of the Company in his possession, including all notes, reports, sketches, plans, published memoranda or other documents, whether in hard copy or in electronic form, created, developed, generated, received, or held by
Executive during his employment, concerning or related to the Company’s business, whether containing or relating to Proprietary Information or not. Executive shall not remove, by e-mail, by removal of computer discs or hard drives, or by other
means, any of the above property containing Proprietary Information, or reproductions or copies thereof, or any apparatus from the Company’s premises without the Company’s written consent. Anything herein to the contrary notwithstanding,
nothing in this Section 6.15(f) will prevent Executive from retaining a personal home computer and papers and other materials of a personal nature, including personal diaries, calendars and personal rolodexes, personal information relating to
Executive’s compensation or relating to the reimbursement of expenses, personal information that Executive reasonably believes are needed for tax purposes and copies of the Company’s compensatory plans, programs and agreements relating to
Executive’s compensation as an employee. 
  
 (g) Mutual
Nondisparagement. 
  
 Executive agrees to refrain from making any
public statements about the Company or its officers or directors that would disparage, or reflect unfavorably upon the image or reputation of the Company or any such officer or director. The Company agrees to refrain from making any 

  

 17 

 
public statements about Executive that would disparage, or reflect unfavorably upon the image or reputation of Executive. For the avoidance of doubt, it is
understood that the casual expression of opinions in a social setting shall not be considered disparagement. 
  
 (h) Assistance with Claims. 
  
 Executive agrees that, consistent with Executive’s business and personal affairs, during and after his employment by the Company, he will assist the
Company in the defense of any claims or potential claims that may be made or threatened to be made against it in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative (a “Proceeding”) and will
assist the Company in the prosecution of any claims that may be made by the Company in any Proceeding, to the extent that such claims may relate to Executive’s services provided under this Agreement. Executive agrees, unless precluded by law,
to promptly inform the Company if Executive is asked to participate (or otherwise become involved) in any Proceeding involving such claims or potential claims. Executive also agrees, unless precluded by law, promptly to inform the Company if
Executive is asked to assist in any investigation (whether governmental or private) of the Company (or its actions), regardless of whether a lawsuit has then been filed against the Company with respect to such investigation. The Company agrees to
reimburse Executive for all of Executive’s reasonable out-of-pocket expenses associated with such assistance, including travel expenses and any attorneys’ fees. 
  
 Section 6.16. Material Inducement; Specific Performance; Forfeiture.  
  
 (a) If any provision of Section 6.15 is determined by a court of competent
jurisdiction not to be enforceable in the manner set forth in this Agreement, the Company and Executive agree that it is the intention of the parties that such provision should be enforceable to the maximum extent possible under applicable law and
that such court shall reform such provision to make it enforceable in accordance with the intent of the parties. 
  
 (b) (i) Executive acknowledges that a material part of the inducement for the Company to provide the salary and benefits evidenced hereby is
Executive’s covenants set forth in Section 6.15 and that the covenants and obligations of Executive with respect to nondisclosure and nonsolicitation relate to special, unique and extraordinary matters and that a violation of any of the terms
of such covenants and obligations will cause the Company irreparable injury for which adequate remedies are not available at law. Therefore, Executive agrees that, if Executive shall materially and willfully breach any of those covenants following
termination of employment, the Company shall be entitled to an injunction, restraining order or such other equitable relief (without the requirement to post a bond) restraining Executive from committing any violation of the covenants and obligations
contained in Section 6.15 and if Executive shall materially and willfully breach any of subsections (b) - (h) of Section 6.15 the Company shall have no further obligation to pay Executive any benefits otherwise payable hereunder. The remedies in the
preceding sentence are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity as an arbitrator (or court) shall reasonably determine. 
  

 18 

 (ii) In the event of Executive’s material and willful breach of any provision of
subsections (b)-(h) of Section 6.15 or in the event that any representation and warranty contained in Section 6.14 is not true: (x) Executive shall have no right to any Severance or Separation Benefits yet to be paid or provided hereunder; and (y)
all then outstanding Awards shall immediately terminate and be of no force or effect. 
  
 Section 6.17. Section 409A. The intent of the parties is that the compensation arrangements under this Agreement will be in full compliance with Section 409A of the Code (“409A”) and the
parties agree that to the extent any provision hereof would be in violation thereof it will be adjusted in such manner as the parties will mutually agree to be in compliance with 409A and to maintain the intent hereof to the maximum extent possible.

  
 ARTICLE 7 
 DEFINITIONS 
  
 For purposes of this Agreement, the following terms shall have the meanings set forth below. 
  
 “Abandonment of the Spin-Off” means the formal announcement by SPRINT in (i) a press release issued by
SPRINT or (ii) an Exchange Act filing with the Securities and Exchange Commission, in either case that Sprint has determined not to proceed with the Spin-Off. 
  

“Accounting Firm” has the meaning accorded such term in Section 4.01. 
  
 “Accrued Benefits” has the meaning accorded such term in Section 3.03. 
  
 “Accrued Compensation” has the meaning accorded such term in
Section 3.03. 
  
 “Additional Benefits” has the
meaning accorded such term in Section 3.03. 
  
 “Affiliate” and “Associate” have the respective meanings accorded to such terms in Rule 12b-2 under the Exchange Act as in effect on the Effective Date. 
  
 “Agreement” has the meaning accorded such term in the
introductory paragraph of this Agreement. 
  
 “Appraiser” has the meaning accorded such term in Section 4.01. 
  
 “Awards” has the meaning set forth in Section 3.02. 
  
 “Base Salary” has the meaning accorded such term in Section 2.01. 
  
 “Basic Target Bonus Amount” has the meaning accorded such term in Section 2.02. 
  

 19 

 “Beneficial Ownership” A Person shall be deemed the “Beneficial Owner” of, and
shall be deemed to “beneficially own,” securities pursuant to Rule 13d-3 under the Exchange Act as in effect on the Effective Date. 
  
 “Board” means the Board of Directors of SPRINT prior to the Spin-Off and the Board of Directors of SpinCo after the Spin-Off, as the case
may be. 
  
 “Cause” means termination upon (A)
the willful and continued failure by Executive to substantially perform his duties with the Company (other than any such failure resulting from Executive’s incapacity due to physical or mental illness) after a written demand for substantial
performance is delivered to Executive by the Board, which demand specifically identifies the manner in which the Board believes that Executive has not substantially performed his duties, or (B) the willful engaging by Executive in conduct that is a
serious violation of the Company’s Principles of Business Conduct, (C) the willful engaging by Executive in conduct that is demonstrably and materially injurious to the Company or (D) discovery that any representation and warranty of Executive
contained in Section 6.14 is untrue. For purposes of this definition, and for all purposes of this Agreement, no act, or failure to act, on Executive’s part shall be deemed “willful” unless done, or omitted to be done, by Executive
not in good faith and without reasonable belief that Executive’s action or omission was in the best interest of the Company. Failure to meet performance expectations, unless willful, continuing, and substantial shall not be considered
“Cause.” 
  
 “Change in Control” means
the occurrence of any of the following events: 
  
 (i) the acquisition, directly or indirectly, by any “person” or “group” (as those terms are used in Sections 13(d), and 14(d) of the Exchange Act including, without limitation, Rule 13d-5(b)) of “beneficial
ownership” (as determined pursuant to Rule 13d-3 under the Exchange Act) of securities entitled to vote generally in the election of directors (“voting securities”) of SPRINT that represent 30% or more of the combined voting
power of SPRINT then outstanding voting securities, other than 
  
 (A) an acquisition by a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by SPRINT or any person controlled by SPRINT or by any employee benefit
plan (or related trust) sponsored or maintained by SPRINT or any person controlled by SPRINT, or 
  
 (B) an acquisition of voting securities by SPRINT or a Person owned, directly or indirectly, by the holders of at least 50% of the voting
power of SPRINT’s then outstanding securities in substantially the same proportions as their ownership of the stock of SPRINT, or 
  
 (C) an acquisition of voting securities pursuant to a transaction described in clause (iii) below that would not be a Change in Control
under clause (iii); 
  

 20 

 (ii) a change in the composition of the Board that causes less than a majority of the
directors of SPRINT to be directors that meet one or more of the following descriptions: 
  
 (A) a director who has been a director of SPRINT for a continuous period of at least 24 months, or 
  
 (B) a director whose election or nomination as director was
approved by a vote of at least two-thirds of the then directors described in clauses (ii)(A), (B), or (C) by prior nomination or election, but excluding, for the purpose of this subclause (B), any director whose initial assumption of office occurred
as a result of an actual or threatened (y) election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person or group other than the Board or (z)
tender offer, merger, sale of substantially all of SPRINT’s assets, consolidation, reorganization, or business combination that would be a Change in Control under clause (iii) on consummation thereof, or 
  
 (C) who were serving on the Board as a result of the
consummation of a transaction described in clause (iii) that would not be a Change in Control under clause (iii); 
  
 (iii) the consummation by SPRINT (whether directly involving SPRINT or indirectly involving SPRINT through one or more intermediaries) of
(x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of SPRINT’s assets or (z) the acquisition of assets or stock of another entity, in each case, other than in a
transaction 
  
 (A) that results in SPRINT’s
voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of SPRINT or the person that, as a result of the transaction, controls, directly
or indirectly, SPRINT or owns, directly or indirectly, all or substantially all of SPRINT’s assets or otherwise succeeds to the business of SPRINT (SPRINT or such person, the “Successor Entity”)) directly or indirectly, at
least 50% of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction or 
  
 (B) after which more than 50% of the members of the board of directors of the Successor Entity were members of the Board at the time of
the Board’s approval of the agreement providing for the transaction or other action of the Board approving the transaction (or whose election or nomination was approved by a vote of at least two-thirds of the members who were members of the
Board at that time), and 
  

 21 

 (C) after which no person or group beneficially owns voting securities representing 30%
or more of the combined voting power of the Successor Entity; provided, however, no person or group shall be treated for purposes of this clause (C) as beneficially owning 30% or more of combined voting power of the Successor Entity
solely as a result of the voting power held in SPRINT prior to the consummation of the transaction; or 
  
 (iv) a liquidation or dissolution of SPRINT other than in connection with a transaction described in (iii) above that would not be a
Change in Control thereunder. 
  
 For purposes of clarification,
(x) a change in the voting power of SPRINT voting securities based on the relative trading values of SPRINT’s then outstanding securities as determined pursuant to SPRINT’s Articles of Incorporation or (y) an acquisition of SPRINT
securities by SPRINT that, in either case, by itself (or in combination only with the other event listed in this sentence) causes the SPRINT voting securities beneficially owned by a person or group to represent 30% or more of the combined voting
power of SPRINT then outstanding voting securities is not to be treated as an “acquisition” by any person or group for purposes of clause (i) above. For purposes of clause (i) above, SPRINT makes the calculation of voting power as if the
date of any relevant acquisition were a record date for a vote of SPRINT’s shareholders, and for purposes of clause (iii) above, SPRINT makes the calculation of voting power as if the date of the consummation of the transaction were a record
date for a vote of SPRINT’s shareholders. For the avoidance of doubt, from and after the Spin-Off references to SPRINT in this definition of Change in Control shall be deemed references to SpinCo. 
  
 “CIC Bonus Amount” has the meaning accorded such term in
Section 3.03. 
  
 “Code” means the Internal
Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. 
  
 “Committee” has the meaning accorded such term in Section 2.01. 
  
 “Company” has the meaning accorded such term in the introductory paragraph of this Agreement. 
  
 “Compensation” has the meaning accorded such term in Section
2.05. 
  
 “Competitive Employment” means the
direct or indirect performance of duties or responsibilities, whether as an employee or otherwise for a Competitor, including, without limitation, the ownership of any interest in, the provision of any financing, management or advisory services to,
any connection with or being a principal, partner or agent of any Competitor; provided that Executive may passively own less than 1% of the outstanding shares of any Competitor whose shares are traded in the public market. 
  

 22 

 “Competitor” means (i) after the Spin-off, any business that competes with any material
portion of the business of SpinCo as its business (including its geographic scope) exists from time to time and (ii) before the Spin-off, the following businesses: 
  
 Alltel Corporation 
 BellSouth Corporation 
 CenturyTel, Inc. 
 Citizens Communications 
 Qwest Communications International 
 SBC Communications Inc. 
 Verizon
Communications Inc. 
  
 “Constructive Discharge”
means the occurrence of any of the following circumstances without Executive’s prior written consent unless the circumstances are fully corrected before the Termination Date specified in the notice of termination given in respect thereof: (i)
the removal of Executive from his position as Chief Executive Officer of Sprint’s Local Telecommunications Division; (ii) a reduction in the aggregate amount of Executive’s Base Salary and Basic Target Bonus Amount (other than an
across-the-board reduction similarly affecting all Senior Officers); (iii) the Company’s requiring that Executive be based anywhere other than the Kansas City metropolitan area (or any other location to which the Executive has consented to be
relocated), except for required travel on business; (iv) the Abandonment of the Spin-Off; or (v) following the Spin-Off, any executive of SpinCo other than Executive serving as Chairman of the Board. 
  
 “Continuation Period” means, except as provided by Section
6.15(c)(ii), the 18 month period following a Separation Event or the 24 month period following a Severance Event, as the case may be. 
  
 “Disability” means termination of employment under circumstances that would make Executive eligible to receive benefits under the Company
long-term disability plan. 
  
 “Dividend
Equivalents” has the meaning accorded such term in the 1997 Program. 
  
 “Division” means any distinct group or unit organized as a segment or portion of a Person that is devoted to the production, provision, or management of a common product or service or group of related
products or services, regardless of whether the group is organized as a legally distinct entity. 
  
 “Effective Date” has the meaning accorded such term in Section 1.01. 
  
 “Employment Term” has the meaning accorded such term in Section 1.02. 
  
 “Exchange Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder. 
  
 “Excise Tax” has the meaning accorded such term in Section 4.01. 
  

 23 

 “Executive” has the meaning accorded such term in the introductory paragraph of this
Agreement. 
  
 “409A” has the meaning set forth
in Section 6.17. 
  
 “Fair Market Value” has the
meaning accorded such term in the 1997 Program. 
  
 “Final
Determination” has the meaning accorded such term in Section 4.03. 
  
 “First Annual Award” has the meaning accorded such term in Section 2.04. 
  
 “FON Common Stock” means the Company’s FON Common Stock, Series 1, $2.00 par value per share. 
  
 “Good Reason” means without the Executive’s express
written consent, the occurrence of any of the following circumstances unless such circumstances are fully corrected prior to the Termination Date specified in the notice of termination given in respect thereof; 
  
 (i) the assignment to Executive of any duties inconsistent
with Executive’s status as provided under the provisions of Section 1.01(a) or 1.01(b), as applicable, or a substantial adverse alteration in the nature or status of Executive’s responsibilities or organizational reporting relationships
from those in effect immediately before the Change in Control or any downgrading of Executive’s title or position from that in effect immediately before the Change in Control; 
  
 (ii) a reduction by the Company in Executive’s Base Salary or Basic Target Bonus Amount as in effect on
the Effective Date or as the same may be increased from time to time, except for across-the-board salary or bonus reductions similarly affecting all officers of the Company and all officers of any business entity or entities in control of the
Company; 
  
 (iii) the failure by the Company,
without Executive’s consent, to pay to Executive any portion of Executive’s current compensation within 7 days of the date it is due, except pursuant to an across-the-board compensation deferral similarly affecting all officers of the
Company and all officers of any business entity or entities in control of the Company; 
  
 (iv) (A) the relocation of the Company’s principal executive offices without Executive’s consent to a location outside the
metropolitan area in which such offices are located immediately before the Change in Control; or (B) the Company’s requiring Executive to be based anywhere other than the Company’s principal executive offices except for required travel on
the Company’s business. 
  
 (v) a
substantial and involuntary adverse alteration in the physical conditions under or in which Executive is expected to perform Executive’s duties, other than an alteration similarly affecting all officers of the Company and all officers of any
person in control of the Company; 
  

 24 

 (vi) the Company’s failure to continue in effect any compensation plan in which
Executive participated immediately before the Change in Control and that is material to Executive’s total compensation, including but not limited to the 1997 Program, the Short-Term Incentive Plan or any substitute plans adopted before the
Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to the plan providing compensation substantially comparable in the aggregate, or the Company’s failure to
continue Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of Executive’s participation relative to other
Senior Officers, as existed at the time of the Change in Control; 
  
 (vii) the Company’s failure to continue to provide Executive with benefits substantially similar in the aggregate to those he enjoyed under any of the Company’s employee benefit plans in which Executive was
participating at the time of the Change in Control; the taking of any action by the Company that would directly or indirectly materially reduce any of such benefits or deprive Executive of any material fringe benefit enjoyed by Executive at the time
of the Change in Control; or the failure by the Company to provide Executive with the number of paid vacation days to which Executive is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation
policy in effect at the time of the Change in Control; unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such benefits; 
  
 (viii) the Company’s failure to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 5.01 hereof; 
  
 (ix) the Company’s attempt to terminate Executive’s employment without complying with the procedures set forth in Section 1.02;
any such attempt shall not be effective; 
  
 (x)
the Abandonment of the Spin-Off; or 
  
 (xi)
following the Spin-Off, any executive of SpinCo other than Executive serving as Chairman of the Board. 
  
 “Gross-Up Payment” has the meaning accorded such term in Section 4.02. 
  
 “Initial Options” has the meaning accorded such term in Section 2.03. 
  
 “Initial RSUs” has the meaning accorded such term in Section
2.03. 
  
 “Medical Plans” means the medical care
plans (or any successor medical plans adopted by the Company) in which Executive participates, as in effect immediately prior to the relevant event (subject to changes in coverage levels applicable to all employees generally covered by such Plans).

  
 “1997 Program” has the meaning accorded such
term in Section 2.03. 
  

 25 

 “Non-Compete Period” means, except as provided by Section 16.15(c)(ii), the 18-month
period beginning on the Termination Date. If the Executive breaches or violates any of the covenants or provisions of this Agreement, the running of the Non-Compete Period shall be tolled during the period the breach or violation continues.

  
 “Option Termination Date” has the meaning
accorded such term in Section 3.02. 
  
 “Payments” has the meaning accorded such term in Section 4.01. 
  
 “Person” means an individual, corporation, partnership, association, trust or any other entity or organization. 
  

“Proceeding” has the meaning accorded such term in Section 6.15. 
  
 “Proprietary Information” means trade secrets (such as customer information, technical and non-technical
data, a formula, pattern, compilation, program, device, method, technique, drawing, process) and other confidential and proprietary information concerning the products, processes, or services of the Company or the Company’s affiliates,
including but not limited to: computer programs, unpatented or unpatentable inventions, discoveries or improvements; marketing, manufacturing, or organizational research and development results and plans; business and strategic plans; sales
forecasts and plans; personnel information, including the identity of other employees of the Company, their responsibilities, competence, abilities, and compensation; pricing and financial information; current and prospective customer lists and
information on customers or their employees; information concerning purchases of major equipment or property; and information about potential mergers or acquisitions; provided such information described above in the definition of Proprietary
Information: (i) has not been made known generally to the public (other than as a result of Executive’s breach of this Agreement); (ii) is useful or of value to the current or anticipated business, or research or development activities of the
Company or of any customer or supplier of the Company, or (iii) has been identified in writing to Executive as confidential by the Company. 
  
 “Pro-Rata Bonus Amount” has the meaning accorded such term in Section 3.04. 
  
 “Qualifying Event” has the meaning accorded such term in Section 3.01. 
  
 “Redetermined Excise Tax” has the meaning accorded such term
in Section 4.03. 
  
 “Redetermined Payments” has
the meaning accorded such term in Section 4.03. 
  
 “Senior Officer” means any person who is an officer of SPRINT within the meaning of Section 16 of the Exchange Act (or any successor statute or statutes thereto), and the rules and regulations promulgated thereunder.

  
 “Separation Amount” has the meaning accorded
such term in Section 3.04. 
  
 “Separation
Benefits” has the meaning accorded such term in Section 3.04. 
  

 26 

 “Separation Event” has the meaning accorded such term in Section 3.01. 
  
 “Severance Amount” has the meaning accorded such term in
Section 3.03. 
  
 “Severance Benefits” has the
meaning accorded such term in Section 3.03. 
  
 “Severance
Event” has the meaning accorded such term in Section 3.01. 
  
 “Short-Term Incentive Plan” means the Company’s Management Incentive Plan and any other successor plans specifically approved for this purpose by the Board or the Committee, as the case may be. 
  
 “Spin-Off” means the spin-off resulting in a single
publicly-traded entity which owns, directly or indirectly, all or substantially all of the local telecommunications businesses of Sprint as contemplated by the Agreement and Plan of Merger entered into as of December 15, 2004 by and among Sprint
Corporation, a Kansas corporation, Nextel Communications, Inc., a Delaware corporation and S-N Merger Sub, a Delaware corporation wholly owned by Sprint. For purposes of the preceding sentence, “publicly-traded entity” means an entity all
or substantially all of the Voting Securities of which are traded on the New York Stock Exchange, NASDAQ or other nationally recognized stock exchange and not more than 30% of the Voting Securities of which are owned immediately following the
Spin-Off, by any “person” or “group” (as those terms are used in Sections 13(d), and 14(d) of the Exchange Act including, without limitation, Rule 13d-5(b)) (ownership for this purpose meaning “beneficial ownership” (as
determined pursuant to Rule 13d-3 under the Exchange Act)). 
  
 “SpinCo” means the business entity which following the Spin-Off owns the businesses spun off in the Spin-Off and its Subsidiaries. 
  
 “SPRINT” has the meaning accorded such term in the introductory paragraph of this Agreement. Anything herein to the contrary
notwithstanding, from and after the Spin-Off, where appropriate to the intention of the parties, references to SPRINT shall be deemed references to SpinCo. 
  
 “Subsidiary” of any Person means any other Person of which securities or other ownership interests having voting power to elect a
majority of the board of directors or other Persons performing similar functions are at the time directly or indirectly owned by such Person. 
  
 “Successor Entity” has the meaning accorded such term in the definition of Change in Control. 
  
 “SUMC” has the meaning accorded such term in the
introductory paragraph of this Agreement. 
  
 “Supplemental Gross-up Payment” has the meaning accorded such term in Section 4.04. 
  

 27 

 “Termination Date” means (i) in the case of a termination of Executive’s employment
by reason of Executive’s death, the date of Executive’s death, (ii) in the case of a termination of Executive’s employment without Cause, for disability or for Good Reason, the date which is thirty (30) days after the date notice of
termination is given, and (iii) in all other cases, the date given in the notice of termination but in no event later than the 60th day after the date on which such notice is given; provided, however, that no prior notice is required for a
termination for Cause. 
  
 “Voting securities”
has the meaning accorded such term in the definition of Change in Control. 
  

 28 

 IN WITNESS WHEREOF, the Company and Executive have executed this Agreement, to be effective as set forth
in Section 1.01. 
  

									
	 EXECUTIVE
	 	 	 	 SPRINT CORPORATION

				
	 /s/ Daniel R. Hesse
	 	 	 	By:	 	 /s/ James G. Kissinger

	 Daniel R. Hesse
	 	 	 	 	 	 Name:
	 	 James G. Kissinger

	 	 	 	 	 	 	 Title:
	 	 Senior Vice President-Human Resources

			
	 	 	 	 	 SPRINT/UNITED MANAGEMENT COMPANY

				
	 	 	 	 	By:	 	 /s/ James G. Kissinger

	 	 	 	 	 	 	 Name:
	 	 James G. Kissinger

	 	 	 	 	 	 	 Title:
	 	 Senior Vice President-Human Resources

  

 29 

  
 EXHIBIT A 

 
 Business, Civic and Charitable Boards 
  
 Nokia Corporation 
  
 VF Corporation 
  
 The National Governorship of the Boys and Girls Clubs of America 
  

 30 

  
 EXHIBIT B 

 
 Form of 
 Award Agreement 
  
 THIS AWARD AGREEMENT (the “Agreement”) is entered into as of June 7, 2005 (the “Grant Date”), by and between
SPRINT CORPORATION, a Kansas corporation (together with its direct and indirect subsidiaries, “Sprint”) and Daniel R. Hesse (the “Executive”), an employee of Sprint, for
the grant of options and restricted stock units with respect to Sprint’s FON Common Stock, par value $2.00 per share (“FON Stock”). 
  
 IN CONSIDERATION of the mutual covenants and agreements set forth in this Agreement, the parties agree to the following.

  
 Defined Terms Incorporated from 1997 Long-Term Stock Incentive Program

  
 Capitalized terms used in this Award Agreement and not
defined herein shall have the meanings set forth in Sprint’s 1997 Long-Term Stock Incentive Program (the “Program”) or in an employment agreement, dated as of June 7, 2005 by and among Sprint, Sprint/United
Management Company, a Kansas corporation and subsidiary of Sprint, and Executive (the “Employment Agreement”), except that if the same capitalized term is defined in both the Program and the Employment Agreement, such
capitalized term shall have the meaning set forth in the Employment Agreement. 
  
 Grant of Stock Options 
  
 Sprint hereby grants
to Executive under the Program options to buy 408,000 shares of FON Stock at an exercise price equal to the Fair Market Value per share on the Grant Date (the “Option”). The Option becomes exercisable on each of the first four
anniversaries of the Grant Date at a rate of 25% of the total number of shares subject to the Option and expires on the 10th anniversary of the Grant Date. The Option is governed by, and this Agreement hereby incorporates, the Standard Terms of Options set forth in Section 6(g) of the Program except as provided under the caption “Terms Different from
Standard Terms” below. 
  
 Grant of Restricted Stock Units 

 
 Sprint hereby grants to Executive under the Program 157,000 FON
restricted stock units (the “RSUs”). Each RSU represents the unsecured right to require Sprint to deliver to Executive one share of FON Stock. With respect to 100% of the RSUs, the “vesting date” and “delivery
date” is on the third anniversary of the Grant Date. The RSUs are governed by, and this Agreement hereby incorporates, the Standard Terms of Other Stock Unit Awards set forth in Section 9(c) of the Program except as provided under the caption
“Terms Different from Standard Terms” below. 
  
 Terms Different from
Standard Terms 
  
 (a) The Grant Date of the Option
and the RSUs shall be the Effective Date under the Employment Agreement. 
  

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 (b) Notwithstanding the provisions of the Program, in the event that a Severance Event or a
Separation Event occurs during the Employment Term, subject to Executive’s not being in willful and material breach of subsections (b)-(h) of Section 6.15 of the Employment Agreement the Option and RSUs shall continue to vest during the
Continuation Period and, to the extent not vested on the last day of the Continuation Period, shall become immediately vested and non-forfeitable (and, in the case of the Option, exercisable) on that day. Subject to Executive’s not being in
willful and material breach of subsections (b)-(h) of Section 6.15 of the Employment Agreement, the Option shall remain exercisable until the expiration of six months following the last day of the Continuation Period. For the avoidance of doubt, in
the event of a Change in Control the entitlements set forth in the two preceding sentences shall apply whether the Change in Control occurs during or after the first year following the Grant Date. 
  
 (c) For the avoidance of doubt, upon termination of Executive’s
employment by reason of death or Disability, the Option and RSUs shall fully vest and, in the case of death, the Option shall continue to be exercisable for 12 months following death and, in the case of Disability, the Option shall continue to be
exercisable for 60 months following the date of Disability. The entitlements set forth in the preceding sentence shall apply whether death or Disability occurs during or following the first 12 months from the Grant Date. 
  
 (d) The limitation on acceleration of vesting under Section 6(g)(viii) and
Section 9(c)(iv) of the Program, relating to payments or benefits contingent on a change in control within the meaning of Code Section 280G, does not apply to the Option or RSUs. 
  
 (e) In connection with the Spin-Off, (i) the Option shall be adjusted into options relating to the Company and/or SpinCo
equity securities in such manner as may be equitably determined by the Committee and (ii) the RSUs shall be converted into restricted stock units of SpinCo having a value equivalent to the RSUs as of the Spin-Off. 
  
 (f) If and to the extent that any provision with respect to the Option or the
RSUs which is contained in the Employment Agreement is inconsistent with any provision of the Program or this Award Agreement, the provision contained in the Employment Agreement shall govern and such provision shall be deemed incorporated herein as
fully as if set forth herein. 
  
 (g) The occurrence of the
Spin-Off shall not constitute the termination of Executive’s employment, the cessation of Executive’s employment or the interruption of Executive’s continuous employment for purposes of the Option, the RSUs or this Award Agreement,
provided Executive becomes a full-time employee of SpinCo at the time of the Spin-Off as contemplated by the Employment Agreement. 
  
 (h) The Committee shall have no authority whatsoever to cancel or suspend the Option or the RSUs pursuant to Section 14(f) of the Program, and neither the
Option nor the RSUs shall be cancelled or suspended pursuant to said Section 14(f), provided that Executive does not commit a material and willful (as that term is defined in the Employment Agreement) breach of any provision of subsections (b)-(h)
of Section 6.15 of the Employment Agreement.  
  
 Plan Information

  
 Executive hereby acknowledges having read the 1997
Long-Term Stock Incentive Program Plan Information Statement dated February 2005 available on line at 

  

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http://ppld.corp.sprint.com/hr/comp/ec.html. To the extent not inconsistent with the provisions of this Agreement, the terms of such information statement
and the Program are hereby incorporated by this reference. 
  
 IN WITNESS WHEREOF, Sprint has caused this Agreement to be executed by its duly authorized officer and the Executive has executed the same as of the Grant Date. 
  

			
	 SPRINT CORPORATION

		
	By:	 	 
	 	 	 Authorized Officer

  

			
		
	 	 	 
	 	 	 Daniel R. Hesse, “Executive”

  

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