Document:

FORM OF RIGHTS AGREEMENT

 EXHIBIT 4.1 
  

CHAPARRAL STEEL COMPANY 
 AND 
                     , RIGHTS AGENT 

 
 FORM OF 
  
 RIGHTS AGREEMENT 
  
 DATED AS OF 
                     , 2005 

 TABLE OF CONTENTS 
  

					
	 Section 1.
	 	 Certain Definitions
	  	1
	 Section 2.
	 	 Appointment of Rights Agent
	  	3
	 Section 3.
	 	 Issue of Right Certificates.
	  	3
	 Section 4.
	 	 Form of Right Certificates
	  	5
	 Section 5.
	 	 Countersignature and Registration
	  	5
	 Section 6.
	 	Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates	  	5
	 Section 7.
	 	 Exercise of Rights: Purchase Price; Final Expiration Date of Rights.
	  	6
	 Section 8.
	 	 Cancellation and Destruction of Right Certificates
	  	7
	 Section 9.
	 	 Reservation and Availability of Shares of Preferred Stock
	  	7
	 Section 10.
	 	 Preferred Stock Record Date
	  	8
	 Section 11.
	 	 Adjustment of Purchase Price, Number of Shares or Number of Rights
	  	8
	 Section 12.
	 	 Certificate of Adjusted Purchase Price or Number of Shares
	  	14
	 Section 13.
	 	 Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
	  	15
	 Section 14.
	 	 Fractional Rights and Fractional Shares.
	  	17
	 Section 15.
	 	 Rights of Action
	  	18
	 Section 16.
	 	 Agreement of Right Holders
	  	18
	 Section 17.
	 	 Right Certificate Holder Not Deemed a Stockholder
	  	18
	 Section 18.
	 	 Concerning the Rights Agent
	  	19
	 Section 19.
	 	 Merger or Consolidation or Change of Name of Rights Agent
	  	19
	 Section 20.
	 	 Duties of Rights Agent
	  	20
	 Section 21.
	 	 Change of Rights Agent
	  	22
	 Section 22.
	 	 Issuance of New Right Certificates
	  	22
	 Section 23.
	 	 Redemption.
	  	23
	 Section 24.
	 	 Exchange.
	  	23
	 Section 25.
	 	 Notice of Certain Events
	  	24
	 Section 26.
	 	 Notices
	  	25
	 Section 27.
	 	 Supplements and Amendments
	  	26
	 Section 28.
	 	 Successors
	  	26
	 Section 29.
	 	 Benefits of this Agreement
	  	26
	 Section 30.
	 	 Severability
	  	26
	 Section 31.
	 	 Governing Law
	  	26
	 Section 32.
	 	 Counterparts
	  	26
	 Section 33.
	 	 Descriptive Headings
	  	27
			
	 Exhibit A
	 	 	  	 
	 Certificate of Designations
	  	1
			
	 Exhibit B
	 	 	  	 
	 Form of Right Certificate
	  	1
	 Form of Assignment
	  	4
	 Form of Election to Purchase
	  	5
			
	 Exhibit C
	 	 	  	 
	 Summary of Rights to Purchase Preferred Stock
	  	1

  
  

 RIGHTS AGREEMENT 
  

This RIGHTS AGREEMENT (this “Agreement”), dated as of
                    , 2005, between CHAPARRAL STEEL COMPANY, a Delaware corporation (the “Company”), and
                            , a
            
                                        
(the “Rights Agent”). 
  
 W I T N E S S E T H:

  
 WHEREAS, on
                    , 2005, the Board of Directors of the Company authorized and declared a dividend distribution (the
“Distribution”) of one preferred share purchase right (a “Right”) for each share of the Common Stock, $0.01 par value, of the Company outstanding at the close of business on
                    , 2005, after giving effect to the distribution of shares of Common Stock by Texas Industries, Inc. to its stockholders
(the “Record Date”), and authorized the issuance of one Right in respect of each share of Common Stock of the Company issued between the Record Date and the earlier of the Distribution Date and the Final Expiration Date (as such terms are
hereinafter defined) and under certain other circumstances, each Right representing the right to purchase one one-thousandth (1/1,000th) of one share of Series A Junior Participating Preferred Stock of the Company having the rights and preferences
set forth in the form of Certificate of Designations attached hereto as Exhibit A, upon the terms and subject to the conditions hereinafter set forth; and 
  
 NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows: 
  
 Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated: 
  
 (a)
“Acquiring Person” shall mean any Person (as such term is hereinafter defined) who or which, together with all Affiliates (as such term is hereinafter defined) and Associates (as such term is hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter defined) of 15% or more of the shares of Common Stock of the Company then outstanding, but shall not include any employee benefit plan of the Company or of any subsidiary of the Company, or any
entity organized, appointed or established pursuant to the terms of any such plan, or the Company or any subsidiary of the Company. Notwithstanding the foregoing, no Person shall become an “Acquiring Person” as the result of an acquisition
of Common Stock of the Company by the Company which, by reducing the number of such shares outstanding, increases the proportionate number of shares beneficially owned by such Person to 15 percent or more of the Common Stock of the Company then
outstanding; provided, however, that if a Person shall become the Beneficial Owner of 15 percent or more of the Common Stock of the Company then outstanding by reason of share purchases by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional Common Stock of the Company, then such Person shall be deemed to be an “Acquiring Person.” 
  
 (b) “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 

 (c) A Person shall be deemed the “Beneficial Owner” of and shall be deemed to
“beneficially own” any securities: 
  
 (i) which such Person, or any of such Person’s Affiliates or Associates, beneficially owns, directly or indirectly; 
  
 (ii) which such Person or any of such Person’s Affiliates or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering
of securities), or upon the exercise of conversion rights, exchange rights, rights (other than these Rights), warrants or options, or otherwise, provided, however, that a Person shall not be deemed the “Beneficial Owner” of, or to
“beneficially own,” securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for purchase or exchange; or (B) the right
to vote pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to “beneficially own,” any security under this clause (B) if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and (2) is
not then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); or 
  
 (iii) which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person’s
Affiliates or Associates has any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in clause (B) of subparagraph (ii) of this paragraph (c)) or disposing of any securities of the Company. 
  
 Notwithstanding anything in this definition of Beneficial Ownership to the contrary, the phrase “then
outstanding”, when used with reference to a Person’s Beneficial Ownership of Securities of the Company, shall mean the number of such securities then issued and outstanding together with the number of such securities not then actually
issued and outstanding which such Person would be deemed to own beneficially hereunder. 
  
 (d) “Business Day” shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in the State of New York or the State of Texas are authorized or obligated by law or executive
order to close. 
  

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 (e) “close of business” on any given date shall mean 5:00 p.m., Dallas, Texas time, on such
date; provided, however, that if such date is not a Business Day it shall mean 5:00 P.M., Dallas, Texas time, on the next succeeding Business Day. 
  
 (f) “Common Stock” when used with reference to the Company shall mean the Common Stock, $0.01 par value (or as such par value may be changed
from time to time), of the Company and, when used with reference to any Person other than the Company, shall mean the capital stock (or equity interest) with the greatest voting power of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such first-mentioned Person. 
  
 (g) “Final Expiration Date” shall have the meaning set forth in Section 7 hereof. 
  
 (h) “Person” shall mean any individual, firm, corporation or other entity, and shall include any successor (by merger or otherwise) of such
entity. 
  
 (i) “Preferred Stock” shall mean the Series
A Junior Participating Preferred Stock of the Company having the rights and preferences set forth in the form of Certificate of Designations attached hereto as Exhibit A. 
  
 (j) “Redemption Date” shall have the meaning set forth in Section 7 hereof. 
  
 (k) “Shares Acquisition Date” shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has become such. 
  
 (l) “Subsidiary” of a Person shall mean any corporation or other entity of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by such
Person. 
  
 Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution Date also be the holders of the Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such Co-Rights Agents as it may deem necessary or desirable. 
  
 Section 3. Issue of Right Certificates. 
  
 (a) Until the earlier of (i) the tenth day after the Shares Acquisition Date or (ii) the tenth Business Day (or such later
date as may be determined by action of the Board of Directors of the Company prior to such time as any Person becomes an Acquiring Person) after the date of the commencement of, or first public announcement of the intent to commence, by any Person
(other than the Company, any wholly-owned Subsidiary of the Company, or any employee benefit plan of the Company or of any Subsidiary of the Company or any entity holding shares of Common Stock for or pursuant to the terms of any such plan), a
tender or exchange offer the consummation of which would result in any Person becoming an Acquiring 

  

 3 

 
Person (including any such date which is after the date of this Agreement and prior to the issuance of the Rights; the earlier of the dates in subsections
(i) and (ii) hereof being herein referred to as the “Distribution Date”), (x) the Rights will be evidenced by the certificates for the Common Stock registered in the names of the holders thereof (which certificates shall be deemed also to
be Right Certificates) and not by separate Right Certificates, and (y) the right to receive Right Certificates will be transferable only in connection with the transfer of the Common Stock. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the Company will send or cause to be sent (and the Rights Agent will, if requested, send), by first class, insured, postage-prepaid mail, to each record holder of the Common
Stock as of the close of business on the Distribution Date, at the address of such holder shown on the records of the Company, a Right Certificate, in substantially the form of Exhibit B hereto, evidencing one Right for each share of the Common
Stock so held. As of the Distribution Date, the Rights will be evidenced solely by such Right Certificates. 
  
 (b) The Company will make available, as promptly as practicable following the Record Date, a copy of a Summary of Rights, in substantially the form
attached as Exhibit C, to any holder of Rights who may so request from time to time prior to the Final Expiration Date. With respect to certificates for the Common Stock outstanding as of the Record Date, or issued subsequent to the Record Date,
until the Distribution Date, the Rights will be evidenced by such certificates registered in the names of the holders thereof. Until the earlier of the Distribution Date or the Final Expiration Date, the surrender for transfer of any certificate
representing shares of Common Stock in respect of which Rights have been issued shall also constitute the transfer of the Rights associated with such shares of Common Stock. 
  
 (c) Certificates for the Common Stock issued after the Record Date but prior to the earliest of the Distribution Date, the
Redemption Date and the Final Expiration Date shall have impressed on, printed on, written on or otherwise affixed to them the following legend: 
  
 This certificate also evidences and entitles the holder hereof to certain Rights as set forth in a Rights Agreement between CHAPARRAL STEEL COMPANY and
                             (the “Rights Agent”), dated as of
            , 2005 (the “Rights Agreement”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive
offices of CHAPARRAL STEEL COMPANY Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. The Rights Agent will mail to the
holder of this certificate a copy of the Rights Agreement without charge after receipt of a written request therefor. Under certain circumstances, as set forth in the Rights Agreement, Rights issued to any Person who becomes an Acquiring Person (as
defined in the Rights Agreement) may become null and void. 
  
 With respect to
such certificates containing the foregoing legend, until the Distribution Date, the Rights associated with the Common Stock represented by such certificates shall be evidenced by such certificates alone, and the surrender for transfer of any of such
certificates shall also constitute the transfer of the Rights associated with the Common Stock represented by such certificates. In the event that the Company purchases or acquires any shares of Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with such shares 

  

 4 

 
of Common Stock shall be deemed cancelled and retired so that the Company shall not be entitled to exercise any Rights associated with the shares of Common
Stock which are no longer outstanding. 
  
 Section 4. Form of
Right Certificates. The Right Certificates (and the forms of election to purchase shares and of assignment to be printed on the reverse thereof) shall be substantially the same as Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule
or regulation made pursuant thereto or with any rule or regulation of any stock exchange or automated quotations system on which the Rights may from time to time be listed, or to conform to usage. Subject to the provisions of Section 22 hereof, the
Right Certificates, in each case, on their face shall entitle the holders thereof to purchase such number of shares of the Preferred Stock as shall be set forth therein at the price per share set forth therein (the “Purchase Price”), but
the number of such shares and the Purchase Price shall be subject to adjustment as provided herein. 
  
 Section 5. Countersignature and Registration. 
  
 (a) The Right Certificates shall be executed on behalf of the Company in the manner provided in the By-Laws of the Company for Common Stock Certificates.
The Right Certificates shall be manually countersigned by the Rights Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Right Certificates shall cease to be such
officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the Rights Agent, issued and delivered with the same force and effect as
though the person who signed such Right Certificates had not ceased to be such officer of the Company; and any Right Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Right Certificate,
shall be a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Rights Agreement any such person was not such an officer. 
  
 (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its principal offices, books for
registration and transfer of the Right Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right Certificates and
the date of each of the Right Certificates. 
  
 Section 6.
Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. 
  
 (a) Subject to the provisions of Section 14 hereof, at any time after the close of business on the Distribution Date, and prior to the close of business
on the earlier of the Redemption Date or the Final Expiration Date, any Right Certificate or Right Certificates (other than Right Certificates representing Rights that have become void pursuant to paragraph (a)(ii) of Section 11 hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up, combined or exchanged for another Right Certificate or Right Certificates, 

  

 5 

 
entitling the registered holder to purchase a like number of shares of the Preferred Stock as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Right Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or exchanged at the principal office of the Rights Agent. Thereupon, the Rights Agent shall countersign and deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right
Certificates. 
  
 (b) Upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and, in the case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the
Company’s request, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will make and deliver
a new Right Certificate of like tenor to the Rights Agent for delivery to the registered owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated. 
  
 Section 7. Exercise of Rights: Purchase Price; Final Expiration Date of Rights. 
  
 (a) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at any time after the Distribution Date upon surrender of the Right Certificate, with the form of election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the offices of the Rights Agent in Dallas, Texas, together with payment of the Purchase Price for each one one-thousandth of one share of the Preferred Stock as to which the Rights are exercised, at or prior to the earliest of (i)
the close of business on                     , 2015 (the “Final Expiration Date”), or (ii) the time at which the Rights are redeemed
as provided in Section 23 (“Redemption Date”), or (iii) the time at which such Rights are exchanged as provided for in Section 24 hereof. 
  
 (b) The Purchase Price for each one one-thousandth of one share of the Preferred Stock pursuant to the exercise of a Right shall initially be
$             , shall be subject to adjustment from time to time as provided in Sections 11 and 13 hereof, and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below. 
  
 (c) Upon receipt of a
Right Certificate representing exercisable Rights, with the form of election to purchase duly executed, accompanied by payment of the Purchase Price for shares to be purchased and an amount equal to any applicable transfer tax required to be paid by
the holder of such Right Certificate in accordance with Section 9 hereof in cash, or by certified check or cashier’s check payable to the order of the Company, the Rights Agent shall thereupon (i) (A) promptly requisition from any transfer
agent of the Preferred Stock of the Company certificates for the number of shares of the Preferred Stock to be purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) requisition from the
depositary agent depositary receipts representing such number of one one-thousandths of a share of Preferred Stock as are to be purchased (in which case certificates 

  

 6 

 
for the shares of Preferred Stock represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company hereby
directs the depositary agent to comply with such request, (ii) when appropriate, promptly requisition from the Company the amount of cash to be paid in lieu of issuance of fractional shares in accordance with Section 14 hereof, (iii) after receipt
of such certificates or depositary receipts, promptly cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder, and (iv) when
appropriate, after receipt, promptly deliver such cash to or upon the order of the registered holder of such Right Certificate. 
  
 (d) In case the registered holder of any Right Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent to the registered holder of such Right Certificate or to his duly authorized assigns, subject to the provisions of Section 14 hereof. 
  
 Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form, or, if
surrendered to the Rights Agent, shall be cancelled by it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Rights Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled Right Certificates
to the Company, or shall, at the written request of the Company, destroy such cancelled Right Certificates, and in such case shall deliver a certificate of destruction thereof to the Company. 
  
 Section 9. Reservation and Availability of Shares of Preferred Stock.

  
 (a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Stock or its authorized and issued Preferred Stock held in its treasury, the number of shares of the Preferred Stock that will be sufficient to permit the exercise in full of
all outstanding Rights in accordance with Section 7 hereof. 
  
 (b) So long as the Preferred Stock issuable upon the exercise of Rights may be listed on any national securities exchange or automated quotations system, the Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be listed or admitted for trading on such exchange or automated quotations system upon official notice of issuance upon such exercise. 
  
 (c) The Company covenants and agrees that it will take all such action as may
be necessary to ensure that all shares of the Preferred Stock delivered upon exercise of Rights shall, at the time of delivery of the certificates for such (subject to payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares. 
  

 7 

 (d) The Company further covenants and agrees that it will pay when due and payable any and all federal
and state transfer taxes and charges which may be payable in respect of the issuance or delivery of the Right Certificates or of any shares of the Preferred Stock upon the exercise of Rights. The Company shall not, however, be required (a) to pay
any transfer tax which may be payable in respect of any transfer involved in the transfer or delivery of Right Certificates or the issuance or delivery of certificates for the Preferred Stock in a name other than that of the registered holder of the
Right Certificate evidencing Rights surrendered for exercise or (b) to issue or deliver any certificates for shares of the Preferred Stock upon the exercise of any Rights until any such tax shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or until it has been established to the Company’s satisfaction that no such tax is due. 
  
 Section 10. Preferred Stock Record Date. Each person in whose name any certificate for shares of the Preferred Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the Preferred Stock represented thereby on, and such certificate shall be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made; provided, however, that if the date of such surrender and payment is a date upon which the Preferred Stock transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares on, and such certificate shall be dated, the next succeeding business day on which the Preferred Stock transfer books of the Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate shall not be entitled to any rights of a stockholder of the Company with respect to shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends
or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein. 
  
 Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights. The Purchase Price, the number of shares of
Preferred Stock covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11. 
  
 (a) (i) In the event the Company shall at any time after the date of this Agreement (A) declare a dividend on the Preferred Stock payable in Preferred
Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of shares of Preferred Stock or (D) issue any shares of its capital stock in a reclassification of the Preferred Stock (including
any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a), the Purchase Price in effect at the time of the record date
for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of capital stock issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number and kind of shares of capital stock which, if such Right had been exercised immediately prior to such date and at a time when the Preferred Stock transfer books of the Company were
open, he would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, 

  

 8 

 
combination or reclassification; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of Preferred Stock issuable upon exercise of one Right. If an event occurs which would require an adjustment under both Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii). 
  
 (ii) Subject to Section 24 of this Agreement, in the event any Person becomes an Acquiring Person, each holder of a Right shall thereafter
have a right to receive, upon exercise thereof at a price equal to the then current Purchase Price multiplied by the number of one one-thousandths of a share of Preferred Stock for which a Right is then exercisable, in accordance with the terms of
this Agreement and in lieu of shares of Preferred Stock, such number of shares of Common Stock as shall equal the result obtained by (x) multiplying the then current Purchase Price by the number of one one-thousandths of a share of Preferred Stock
for which a Right is then exercisable and dividing that product by (y) 50% of the then current per share market price of the Company’s Common Stock (determined pursuant to Section 11(d) hereof) on the date of the occurrence of such event;
provided, however, that if the transaction that would otherwise give rise to the adjustment is also subject to the provisions of Section 13, then only the provisions of Section 13 shall apply and no adjustment shall be made pursuant to this Section
11(a)(ii). In the event that any Person shall become an Acquiring Person and the Rights shall then be outstanding, the Company shall not take any action which would eliminate or diminish the benefits intended to be afforded by the Rights.

  
 From and after the occurrence of such event,
any Rights that are or were acquired or beneficially owned by any Acquiring Person (or any Associate or Affiliate of such Acquiring Person) shall be void and any holder of such Rights shall thereafter have no right to exercise such Rights under any
provision of this Agreement. No Right Certificate shall be issued pursuant to Section 3 that represents Rights beneficially owned by an Acquiring Person whose Rights would be void pursuant to the preceding sentence or any Associate or Affiliate
thereof; no Right Certificate shall be issued at any time upon the transfer of any Rights to an Acquiring Person whose Rights would be void pursuant to the preceding sentence or any Associate or Affiliate thereof or to any nominee of such Acquiring
Person, Associate or Affiliate; and any Right Certificate delivered to the Rights Agent for transfer to an Acquiring Person or any Associate or Affiliate whose Rights would be void pursuant to the preceding sentence shall be cancelled. 

 
 (iii) In the event that there shall not be sufficient
Common Stock issued but not outstanding or authorized but unissued to permit the exercise in full of the Rights in accordance with the foregoing subparagraph (ii), the Company shall take all such action as may be necessary to authorize additional
Common Stock for issuance upon exercise of the Rights. In the event the Company shall, after 

  

 9 

 
good faith effort, be unable to take all such action as may be necessary to authorize such additional Common Stock, the Company shall substitute, for each
share of Common Stock that would otherwise be issuable upon exercise of a Right, a number of shares of Preferred Stock or fractions thereof such that the current per share market price of one share of Preferred Stock multiplied by such number or
fraction is equal to the current per share market price of one share of Common Stock as of the date of issuance of such shares of Preferred stock or fractions thereof. 
  
 (b) In case the Company shall fix a record date for the issuance of rights, options or warrants to all holders of Preferred
Stock entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Preferred Stock (or shares having the same rights, privileges and preferences as the Preferred Stock (“equivalent preferred
stock”)) or securities convertible into Preferred Stock or equivalent preferred stock at a price per share of Preferred Stock or equivalent preferred stock (or having a conversion price per share, if a security convertible into Preferred Stock
or equivalent preferred stock) less than the current per share market price of the Preferred Stock (as defined in Section 11(d)) on such record date, the Purchase Price to be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Preferred Stock outstanding on such record date plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock and/or equivalent preferred stock so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current market
price and the denominator of which shall be the number of shares of Preferred Stock outstanding on such record date plus the number of additional shares of Preferred Stock and/or equivalent preferred stock to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially convertible); provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of
Preferred Stock issuable upon exercise of one Right. In case such subscription price may be paid in consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent. Shares of Preferred Stock owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a record date is fixed; and in the event that such rights or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed. 
  
 (c) In case the
Company shall fix a record date for the making of a distribution to all holders of Preferred Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of
indebtedness or assets (other than (i) a regular periodic cash dividend the record date for which occurs at a time when there is no Acquiring Person or (ii) a regular periodic cash dividend, the record date for which occurs at a time when there is
an Acquiring Person, at a rate not in excess of 125% of the rate of the last cash dividend theretofore paid or (iii) a dividend payable in Preferred Stock) or subscription rights or warrants (excluding those referred to in Section 11(b)), the
Purchase Price to be in effect after such record date shall be determined by multiplying the 

  

 10 

 
Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the current per share market price of the
Preferred Stock (as defined in Section 11(d)) on such record date, less the fair market value (as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent)
of the portion of the assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to one share of Preferred Stock and the denominator of which shall be such current per share market price of the
Preferred Stock; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of Preferred Stock issuable upon exercise of one Right. Such adjustments shall
be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase Price which would then be in effect if such record date had not been
fixed. 
  
 (d) (i) For the purpose of any computation hereunder,
the “current market price per share” of any security (a “Security”) on any date shall be deemed to be the average of the daily closing prices per share of such Security for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however, that in the event that the current market price per share of the Security is determined during the period following the announcement by the issuer of such Security of (A) a
dividend or distribution on such Security payable in shares of such Security or securities convertible into shares of such Security, or (B) any sub-division, combination or reclassification of such Security, and prior to the expiration of 30 Trading
Days after the ex- dividend date for such dividend or distribution, or the record date for such sub-division, combination or reclassification, then, and in each such case, the current market price per share shall be appropriately adjusted to take
into account ex- dividend trading. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Security is not listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Security is listed or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated
Quotation System (“NASDAQ”) or such other system then in use, or, if on any such date the Security is not quoted by such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a
market in the Security selected by the Board of Directors of the Company. The term “Trading Day” shall mean a day on which the principal national securities exchange on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to trading on any national securities exchange, a Business Day. 
  

 11 

 (ii) For the purpose of any computation hereunder, the “current market price”
per share of Preferred Stock shall be determined in the same manner as set forth above for Common Stock in clause (i) of this Section 11(d). If the Preferred Stock is not publicly traded or if the current market price per share of Preferred Stock
cannot be determined in the manner provided above, the “current market price” per share of Preferred Stock shall be conclusively deemed to be the current market price per share of Common Stock (appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof), multiplied by one thousand. If neither the Common Stock nor the Preferred Stock is publicly held or so listed or traded, “current market price” shall mean the
fair value per share as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent. 
  
 (e) No adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at
least 1% in the Purchase Price; provided, however, that any adjustments which by reason of this section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of a share of Common Stock or other share (other than Preferred Stock) or one-millionth of a share of Preferred stock, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (A) three years from the date of the transaction which mandates such adjustment or (B) the date of the expiration of the right to
exercise any Rights. 
  
 (f) If as a result of an adjustment made
pursuant to Section 11(a), the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock of the Company other than shares of the Preferred Stock, thereafter the number of such other shares so receivable
upon exercise of any Right shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10 and 13 with respect to the shares of the Preferred Stock shall apply on like terms to any such other shares. 
  
 (g) All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at
the adjusted Purchase Price, the number of one one-thousandths of a share of the Preferred Stock purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein. 
  
 (h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at
the adjusted Purchase Price per one one-thousandths of a share of Preferred Stock, that number of one one-thousandths of a share of Preferred Stock (calculated to the nearest one-millionth) obtained by (i) multiplying (x) the number of one
one-thousandths of a share of Preferred Stock covered by a Right immediately 

  

 12 

 
prior to this adjustment by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price. 
  
 (i) The Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in substitution for any adjustment
in the number of one one-thousandths of a share of the Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for the number of one one-thousandths
of a share of Preferred Stock for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest
one-millionth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after the adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the record date for the adjustment to be made and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Right Certificates have been issued, shall be at least 10 days later than the date of the public announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights pursuant
to this Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Right Certificates on such record date Right Certificates evidencing, subject to Section 14 hereof, the additional Rights to which
such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof, if required by the Company, new Right Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be registered in the names of the holders of record of Right Certificates on the record date specified in the public announcement. 
  
 (j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-thousandths of a share of the Preferred Stock issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price per one one-thousandth of a share of
Preferred Stock and the number of one one-thousandths of a share which were expressed in the initial Right Certificates issued hereunder. 
  
 (k) Before taking any action that would cause an adjustment reducing the Purchase Price below one one-thousandth of the then par value, if any, of the
shares of the Preferred Stock issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and
nonassessable shares of such Preferred Stock at such adjusted Purchase Price. 
  
 (l) In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date the shares of Preferred Stock and other capital stock or securities of the 

  

 13 

 
Company, if any, issuable upon such exercise over and above the shares of the Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to
receive such additional shares upon the occurrence of the event requiring such adjustment. 
  
 (m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as
and to the extent that it in its sole discretion shall determine to be advisable in order that any consolidation or subdivision of the Preferred Stock, issuance wholly for cash of any shares of the Preferred Stock at less than the current market
price, issuance wholly for cash of any shares of the Preferred Stock or securities which by their terms are convertible into or exchangeable for Preferred Stock, dividends on the Preferred Stock payable in Preferred Stock or issuance of rights,
options or warrants referred to hereinabove in this Section 11, hereafter made by the Company to holders of its Preferred Stock shall not be taxable to such stockholders. 
  
 (n) In the event that at any time after the date of this Agreement and prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on the Common Stock payable in Common Stock or (ii) effect a subdivision, combination or consolidation of the Common Stock (by reclassification or otherwise than by payment of dividends in Common Stock) into a greater or
lesser number of shares of Common Stock, then in any such case (i) the number of one one-thousandths of a share of Preferred Stock purchasable after such event upon proper exercise of each Right shall be determined by multiplying the number of one
one- thousandths of a share of Preferred Stock so purchasable immediately prior to such event by a fraction, the numerator of which is the number of Common Stock outstanding immediately before such event and the denominator of which is the number of
Common Stock outstanding immediately after such event, and (ii) each share of Common Stock outstanding immediately after such event shall have issued with respect to it that number of Rights which each share of Common Stock outstanding immediately
prior to such event had issued with respect to it. The adjustments provided for in this Section 11(n) shall be made successively whenever such a dividend is declared or paid or such a subdivision, combination or consolidation is effected. If an
event occurs which would require an adjustment under Section 11(a)(ii) and this Section 11(n), the adjustments provided for in this Section 11(n) shall be in addition and prior to any adjustment required pursuant to Section 11(a)(ii). 
  
 Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the Company shall (a) promptly prepare a certificate setting forth such adjustment, and a brief statement of the facts accounting for such adjustment, (b) promptly file with
the Rights Agent and with each transfer agent for the Common Stock and the Preferred Stock a copy of such certificate and (c) mail a brief summary thereof to each holder of a Right Certificate in accordance with Section 25 hereof. 
  

 14 

 Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. 
  
 (a) In the event that, following the Distribution Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any other Person, (y) any Person shall consolidate with or merge with and into the Company and the Company shall be the continuing or surviving corporation of such merger
and, in connection with such merger, all or part of the Common Stock shall be changed into or exchanged for stock or other securities of any other Person (or the Company) or cash or any other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its subsidiaries shall sell or otherwise transfer), in one or more transactions, assets or earning power aggregating more than 50% of the assets or earning power of the Company and its subsidiaries (taken as a whole) to
any other Person (other than the Company or one or more of its wholly-owned subsidiaries), then, and in each such case, proper provision shall be made so that (i) each holder of a Right (except as otherwise provided herein) shall thereafter have the
right to receive, upon the exercise thereof at the then-current Purchase Price multiplied by the number of one one-thousandths of a share of Preferred Stock for which a right is then exercisable, in accordance with the terms of this Agreement and in
lieu of shares of Preferred Stock, such number of shares of validly issued, fully paid, non-assessable and freely tradable Common Stock of the Principal Party (as hereinafter defined) (including the Company as successor thereto or as the surviving
corporation), unencumbered and not subject to any liens, encumbrances, rights of call or first refusal or other adverse claims, as shall be equal to the result obtained by (A) multiplying the then current Purchase Price by the then number of one
one-thousandths of share of Preferred Stock for which a Right is then exercisable and dividing that Product by (B) 50% of the current market price per share of the Common Stock of such Principal Party (determined in the manner described in Section
11(d)) on the date of consummation of such consolidation, merger, sale or transfer; (ii) the Principal Party shall thereafter be liable for, and shall assume, by virtue of such consolidation, merger, sale or transfer, all the obligations and duties
of the Company pursuant to this Agreement; (iii) the term “Company” shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof shall apply to such Principal Party
following the occurrence of such consolidation, merger, sale or transfer; and (iv) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of shares of its Common Stock in accordance with
Section 9) in connection with such consummation as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to the shares of its Common Stock thereafter deliverable upon the
exercise of the Rights. 
  
 (b) “Principal Party” shall
mean 
  

	 	(1)	In the case of any transaction described in (x) or (y) of the first sentence of Section 13(a), the Person that is the issuer of any securities into which shares of Common Stock of
the Company are converted in such merger or consolidation, and if no securities are so issued, the Person that is the other party to the merger or consolidation; and 

  

	 	(2)	 in the case of any transaction described in (z) of the first sentence in this Section 13(a), the Person that is the other party to such 

  

 15 

	 	 
transaction or, if more than one, the Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to such
transaction; 

  
 provided, however, that in any such case, (x)
if the Common Stock of such Person is not at such time and has not been continuously over the preceding 12-month period registered under Section 12 of the Securities Exchange Act of 1934, and such Person is a direct or indirect Subsidiary of another
Person the Common Stock of which is and has been so registered, “Principal Party” shall refer to such other Person; (y) in case such Person is a subsidiary, directly or indirectly, of more than one Person, the Common Stocks of all of which
are and have been so registered, “Principal Party” shall refer to whichever of such Persons is the issuer of the Common Stock having the greatest aggregate market value of shares held by the public, and (z) in case such Person is owned,
directly or indirectly, by a joint venture formed by two or more Persons that are not owned, directly or indirectly, by the same Person, the rules set forth in (x) and (y) above shall apply to each of the chains of ownership having an interest in
such joint venture as if such party were a “Subsidiary” of both or all of such joint venturers and the Principal Parties in each such chain shall bear the obligations set forth in this Section 13 in the same ratio as their direct or
indirect interests in such Person bear to the total of such interests. 
  
 (c) The Company shall not consummate any such consolidation, merger, sale or transfer unless prior thereto the Company and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in paragraphs (a) and (b) of this Section 13 and further providing that, as soon as practicable after the date of any consolidation, merger or sale or transfer of assets mentioned in paragraph (a) of this Section 13, the Principal
Party will 
  
 (i) prepare and file a
registration statement under the Securities Act of 1933, as amended (the “Act”) with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, will use its best efforts (A) to cause such
registration statement to become effective as soon as practicable after such filing, (B) to cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act) until the date of expiration of
the Rights, and (C) to similarly comply with applicable state securities laws, and use its best efforts to list (or continue the listing of) the rights and the securities purchasable upon exercise of the rights on a national securities exchange; and

  
 (ii) will deliver to holders of the Rights
historical financial statements for the Principal Party and each of its Affiliates which comply in all respects with the requirements for registration on Form 10 (or any successor form) under the Securities Exchange Act of 1934, as amended.

  
 The Company shall not enter into any transaction of the kind referred to in
this Section 13 if at the time of such transaction there are any rights, warrants, instruments or securities outstanding or any agreements or arrangements which, as a result of the consummation of such transaction, would eliminate or substantially
diminish the benefits intended to be afforded by the Rights. The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. 
  

 16 

 Section 14. Fractional Rights and Fractional Shares. 
  
 (a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the Right Certificates with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole Right. For the purposes of this Section 14(a), the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior
to the date on which such fractional Rights would have been otherwise issuable. The closing price for any day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Rights are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading or,
if the Rights are not listed or admitted to trading on-any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights, selected by the Board of
Directors of the Company. If on any such date no such market maker is making a market in the Rights the fair market value of the Rights on such date as determined in good faith by the Board of Directors of the Company shall be used. 
  
 (b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other than
fractions which are integral multiples of one one-thousandth of a share of Preferred Stock). Fractions of shares of Preferred Stock in integral multiples of one one-thousandth of a share of Preferred Stock may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement between the Company and a depositary selected by it, provided that such agreement shall provide that the holders of such depositary receipts shall have all the rights, privileges
and preferences to which they are entitled as beneficial owners of shares of Preferred Stock. In lieu of fractional shares that are not integral multiples of one one-thousandth of a share of Preferred Stock, the Company may pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of a share of the Preferred Stock. For purposes of this Section 14(b), the current market
value of a share of the Preferred Stock shall be the closing price of a share of the Preferred Stock (as determined pursuant to the second sentence of Section 11(d)(i) for the Trading Day immediately prior to the date of such exercise. 

 

 17 

 (c) The holder of a Right by the acceptance of the Right expressly waives his right to receive any
fractional Rights or any fractional shares upon exercise of a Right (except as above provided). 
  
 Section 15. Rights of Action. All rights of action in respect of this Agreement are vested in the respective registered holders of the Right Certificates
(and, prior to the Distribution Date, the registered holders of the Common Stock); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of the Common Stock), may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by such Right Certificate in the manner provided in such Right Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and will be entitled to specific performance of the obligations under, and injunctive relief against actual
or threatened violations of, the obligations of any Person subject to this Agreement. 
  
 Section 16. Agreement of Right Holders. Every holder of a Right by accepting the same consents and agrees with the Company and the Rights Agent and with every other holder of a Right that: 
  
 (a) prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Common Stock; 
  
 (b) after
the Distribution Date, the Right Certificates are transferable only on the registry books of the Rights Agent if surrendered at the principal office of the Rights Agent, duly endorsed or accompanied by a proper instrument of transfer; and

  
 (c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution Date, the associated Common Stock certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated Common Stock certificates made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the
contrary. 
  
 Section 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the Preferred Stock or any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a stockholder of the Company or any right to
vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate shall have been exercised in accordance with the provisions hereof. 
  

 18 

 Section 18. Concerning the Rights Agent. 
  
 (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, or expense, incurred without negligence, bad faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights
Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim of liability in the premises. 
  
 (b) The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this Agreement in reliance upon any Right Certificate or certificate for the Preferred Stock or for other securities of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate, statement; or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper person or persons or
otherwise upon the advice of counsel as set forth in Section 20 hereof. In no case shall the Rights Agent be liable for special, indirect, incidental or consequential loss or damage of any kind whatsoever (including but not limited to lost profits),
even if the Rights Agent has been advised of the possibility of such loss or damage. 
  
 Section 19. Merger or Consolidation or Change of Name of Rights Agent. 
  
 (a) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the corporate trust business of the Rights Agent or any successor Rights Agent shall be the
successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign
such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this
Agreement. 
  
 (b) In case at any time the name of the Rights
Agent shall be changed and at such time any of the Right Certificates shall have been countersigned but not delivered, the 

  

 19 

 
Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and in all such cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement. 
  
 Section 20. Duties of
Rights Agent. The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound:

  
 (a) The Rights Agent may consult with the legal counsel (who
may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion. 

 
 (b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate. 
  
 (c) The Rights Agent shall be liable hereunder only for its own negligence,
bad faith or willful misconduct. 
  
 (d) The Rights Agent shall
not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are
and shall be deemed to have made by the Company only. 
  
 (e) The
Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Right Certificate; nor shall it be responsible for any change in the
exercisability of Rights (including any Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights (including the manner, method or amount thereof) provided for in Section 3, 11, 13, 23, or 24 hereof, or
the ascertaining of the existence of facts that would require any such change or adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after actual notice that such change or adjustment is required); nor shall it
by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of the Preferred Stock to be issued pursuant to this Agreement or any Right Certificate or as to whether any shares of the
Preferred Stock will, when issued, be validly authorized and issued, fully paid and nonassessable. 
  

 20 

 (f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.

  
 (g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from any one of the Chairman of the Board, the President, any Vice President, the Secretary or the Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer or for any delay in acting while waiting for those
instructions. 
  
 (h) The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend
interested money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal
entity. 
  
 (i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, provided reasonable care was exercised in the selection and continued employment thereof. 
  
 (j) If, with respect to any Right Certificate surrendered to the Rights Agent
for exercise or transfer, the certificate attached to the form of assignment or form of election to purchase, as the case may be, has either not been completed or indicates that the Rights are beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof, the Rights Agent shall not take any further action with respect to such requested exercise or transfer without first consulting with the Company. 
  
 (k) The Rights Agent shall have no responsibility to the Company, any holders of Rights or any holders of shares of
Preferred Stock or other securities for interest or earnings on any monies held by the Rights Agent pursuant to this Agreement, except as otherwise specifically agreed in a separate writing by the Company and the Rights Agent. 
  
 (l) The Rights Agent shall not be required to take notice or be deemed to
have notice of any event or condition hereunder, including, but not limited to, a Distribution Date, a Redemption Date, any adjustment of the Purchase Price of the Preferred Stock, the existence of an Acquiring Person or any other event or condition
that may require action by the Rights Agent, unless the Rights Agent shall be specifically notified in writing of such event or condition by the Company, and all notices or other instruments required by this Agreement to be delivered to the Rights
Agent must, in order to be effective, be received by the Rights Agent as specified in Section 26 hereof, and in the absence of such notice so delivered, the Rights Agent may conclusively assume no such event or condition exists. 
  

 21 

 Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days’ notice in writing mailed to the Company and to each transfer agent of the Common Stock and the Preferred Stock by registered or certified mail, and to the holders of the Right
Certificates by first class mail. The Company may remove the Rights Agent or any successor Rights Agent upon 30 days’ notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and the Preferred Stock by registered or certified mail, and to the holders of the Rights Certificates by first class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of 30 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall, with such notice, submit his Right Certificate for inspection by the Company), then the registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a corporation (or an affiliate of such a corporation) organized and doing business under the laws of
the United States or of the State of Texas or New York (or of any other state of the United States so long as such corporation is authorized to do business as a banking institution in the State of Texas or New York), in good standing, having a
principal office in the State of Texas or the State of New York, which is authorized under such laws to exercise corporate trust powers or stock transfer powers and is subject to supervision or examination by federal or state authority and which has
at the time of its appointment as Rights Agent a combined capital and surplus of at least $50 million. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock or Preferred
Stock, and mail a notice thereof in writing to the registered holders of the Rights Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. 
  
 Section 22. Issuance of New Right Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company, at
its option, may issue new Right Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Purchase Price per share and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in accordance with the provisions of this Agreement. 
  

 22 

 Section 23. Redemption. 
  
 (a) The Board of Directors of the Company may, at its option, at any time prior to 5:00 P.M., Dallas, Texas time, on the
earliest of (x) the Shares Acquisition Date, (y) the tenth business day (or such later date as may be determined by action of the Board of Directors of the Company prior to such time as any Person becomes an Acquiring Person) after the date of the
commencement of, or first public announcement of the intent to commence, by any Person (other than the Company, any wholly-owned subsidiary of the Company, or any employee benefit plan of the Company or any Subsidiary of the Company or any entity
holding shares of Common Stock for or pursuant to the terms of any such plan) a tender offer or exchange offer the consummation of which would result in any Person becoming an Acquiring Person (including any such date which is after the date of this
Agreement and prior to the issuance of the Rights), or (z) the Final Expiration Date, redeem all but not less than all of the then outstanding Rights at a redemption price of $.001 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the “Redemption Price”). 
  
 (b) Immediately upon the action of the Board of Directors of the Company ordering the redemption of the Rights pursuant to paragraph (a) of this Section
23 and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price. The Company shall promptly give public notice
of any such redemption; provided, however, that the failure to give, or any defect in, any such notice shall not affect the validity of such redemption. Within 10 days after such action of the Board of Directors ordering the redemption of the
Rights, the Company shall mail a notice of redemption to all the holders of the then outstanding Rights at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent for the Common Stock. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 23 or in Section 24
hereof, and other than in connection with the repurchase of Common Stock prior to the Distribution Date. 
  
 Section 24. Exchange. 
  
 (a) The Board of Directors of the Company may, at its option, at any time after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have become void pursuant to the provisions of Section 11(a)(ii) hereof) for shares of Common Stock at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such exchange ratio being hereinafter referred to as the “Exchange Ratio”). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after any Person (other than the Company, any Subsidiary of the Company, any employee benefit Plan of the Company or any such Subsidiary, or any entity holding shares of Common Stock for or
pursuant to the terms of any such plan), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of the voting power of the shares of Common Stock then outstanding. 
  

 23 

 (b) Immediately upon the action of the Board of Directors of the Company ordering the exchange of any
Rights pursuant to paragraph (a) of this Section 24 and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of
shares of Common Stock equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly give public notice of any such exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly shall mail a notice of any such exchange by first class mail to all of the holders of such Rights at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become void pursuant to the provisions of
Section 11(a)(ii) hereof) held by each holder of Rights. 
  
 (c)
In the event that there shall not be sufficient Common Stock issued but not outstanding or authorized but unissued to permit any exchange of Rights as contemplated in accordance with this Section 24, the Company shall take all such action as may be
necessary to authorize additional shares of Common Stock for issuance upon exchange of the Rights. In the event the Company shall, after good faith effort, be unable to take all such action as may be necessary to authorize such additional shares of
Common Stock, the Company shall substitute, for each share of Common Stock that would otherwise be issuable upon exchange of a Right, a number of shares of Preferred Stock or fraction thereof such that the current per share market price of one share
of Preferred Stock multiplied by such number or fraction is equal to the current per share market price of one share of Common Stock as of the date of issuance of such shares of Preferred Stock or fraction thereof. 
  
 (d) The Company shall not be required to issue fractions of shares of Common
Stock or to distribute certificates which evidence fractional shares of Common Stock. In lieu of such fractional shares, the Company shall pay to the registered holders of the Right Certificates with regard to which such fractional shares would
otherwise be issuable an amount in cash equal to the same fraction of the current market value of a whole share of Common Stock. For purposes of this paragraph (d), the current market value of a whole share of Common Stock shall be the closing price
of a share of Common Stock (as determined pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange pursuant to this Section 24. 
  
 Section 25. Notice of Certain Events. In case the Company shall propose at
any time following the Distribution Date (a) to pay any dividend payable in stock of any class to the holders of its Preferred Stock or to make any other distribution to the holders of its Preferred Stock (other than a regular periodic cash dividend
at a rate not in excess of 125% of the rate of the last cash dividend theretofore paid), or (b) to offer to the holders of its Preferred Stock rights 
  

 24 

 
or warrants to subscribe for or to purchase any additional shares of the Preferred Stock or shares of stock of any class or any other securities, rights or
options, or (c) to effect any reclassification of its Preferred Stock (other than a reclassification involving only the subdivision of outstanding Preferred Stock), or (d) to effect any consolidation or merger into or with, or to effect any sale or
other transfer (or to permit one or more of its subsidiaries to effect any sale or other transfer), in one or more transactions, of more than 50% of the assets or earning power of the Company and its subsidiaries (taken as a whole) to, any other
Person, (e) to effect the liquidation, dissolution or winding up of the Company, or (f) to declare or pay any dividend on the shares of Common Stock payable in shares of Common Stock or to the effect a subdivision, combination or consolidation of
the shares of Common Stock (by reclassification or otherwise than by payment of dividends in shares of Common Stock), then, in each such case, the Company shall give to each holder of a Right Certificate, in accordance with Section 26, a notice of
such proposed action, which shall specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or
winding up is to take place and the date of participation therein by the holders of the Common Stock and/or the Preferred Stock, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (a) or
(b) above at least ten days prior to the record date for determining holders of the Preferred Stock for purposes of such action, and in the case of any such other action, at least ten days prior to the date of the taking of such proposed action or
the date of participation therein by the holders of the Common Stock and/or the Preferred Stock, whichever shall be the earlier. In case the event set forth in Section 11(a)(ii) of this Agreement shall occur, then, the Company shall as soon as
practicable thereafter give to each holder of a Right, in accordance with Section 26, a notice of the occurrence of such event, which shall specify the event and the consequences of the event to holders of Rights under Section 11(a)(ii). 

 
 Section 26. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right Certificate to or on the Company shall be sufficiently given or made if sent by first class mail, postage prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows: 
  
 Chaparral Steel Company

 300 Ward Road 
 Midlothian, Texas 756065 
 Attention: _______________ 
  
 Subject to the provisions of Section 21 hereof, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be sufficiently given or made if sent by first class mail, postage prepaid, addressed (until another address is filed in writing
with the Company) as follows: 
  
 ______________

 ______________ 
 ______________ 
 ______________ 
 Attention: _______________ 
  

 25 

 Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of
any Right Certificate shall be sufficiently given or made if sent by first class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company. 
  
 Section 27. Supplements and Amendments. The Company and the Rights Agent may
from time to time supplement or amend this Agreement without the approval of any holders of Right Certificates in order (i) to cure any ambiguity, or (ii) to correct or supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, or (iii) to change or supplement the provisions hereunder in any manner which the Company may deem necessary or desirable, any such supplement or amendment to be evidenced by a writing signed by the Company and the
Rights Agent; provided, however, that from and after such time as any Person becomes an Acquiring Person, this Agreement shall not be changed or supplemented in any manner which would adversely affect the interests of the holders of Right
Certificates in any way (other than pursuant to clauses (i) and (ii) above). Upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or amendment. 
  
 Section 28. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns
hereunder. 
  
 Section 29. Benefits of this Agreement. Nothing in
this, Agreement shall be construed to give to any Person other than the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock). 
  
 Section 30.
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions
of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 
  
 Section 31. Governing Law. This Agreement and each Right Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State. 
  
 Section 32. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 
  

 26 

 Section 33. Descriptive Headings. Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. 
  
 [Signature page follows.] 
  

 27 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and their
respective seals to be hereunto affixed and attested, all as of the day and year first above written. 
  

							
	 Attest:
	  	CHAPARRAL STEEL COMPANY
				
	 By:
	 	  

	  	By:	  	

	 Title:
	 	  

	  	Title:	  	

			
	 Attest:
	 	 	  	[RIGHTS AGENT]
				
	 By:
	 	  

	  	By:	  	

	 Title:
	 	  

	  	Title:	  	

  

 28 

 Exhibit A 
  
 CERTIFICATE OF DESIGNATIONS 
 of 
 SERIES A JUNIOR PARTICIPATING PREFERRED STOCK 
 of 
 CHAPARRAL STEEL COMPANY 
  
 It is hereby certified that: 
  
 1. The name of the corporation (hereinafter called the “Corporation”) is Chaparral Steel Company 
  
 2. The following resolution was duly adopted on
                    , 2005 by the Board of Directors of the Corporation pursuant to Section 151 of the General Corporation Law of the State of
Delaware and in accordance with Article FOURTH of the Corporation’s Certificate of Incorporation, as amended: 
  
 RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of this Corporation (hereinafter called the “Board of
Directors” or the “Board”) in accordance with the provisions of the Corporation’s Certificate of Incorporation, as amended (the “Certificate of Incorporation”), the Board of Directors hereby creates a series of
Preferred Stock of the Corporation and hereby states the designation and number of shares, and fixes the relative rights and preferences thereof (in addition to the provisions set forth in the Certificate of Incorporation which are applicable to the
Preferred Stock of all classes and series) as follows: 
  
 SERIES A
JUNIOR PARTICIPATING PREFERRED STOCK 
  
 I. Designation and
Amount. The shares of such series shall be designated as “Series A Junior Participating Preferred Stock” (the “Series A Preferred Stock”) and the number of shares constituting such series shall be 25,000. Such number of shares
may be increased or decreased by resolution of the Board of Directors, provided, that no decrease shall reduce the number of shares of Series A Preferred Stock to a number less than that of the shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series A Preferred Stock. 
  
 II. Dividends and Distributions. 
  
 (A) Subject to the prior and superior rights of the holders
of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Preferred Stock and with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of Common Stock, par
value $0.01 per share (or as such par value may be changed from time to time), of the Corporation (the “Common Stock”) and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on the last day of January, April, July and October in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), 

  

 1 

 
commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount
per share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common
Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event the
Corporation shall at any time on or after the Distribution Date (as such term is defined in the Rights Agreement dated as of
                    , 2005 between the Corporation and
                                        ,
as Rights Agent) declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment
of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause
(b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event. 
  
 (B) The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. 
  
 (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from
the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of 

  

 2 

 
holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof. 
  
 III. Voting Rights. The holders of shares of Series A Preferred Stock shall have the following voting rights: 
  
 (A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 1,000 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time on or after the Distribution Date declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the number of votes per share to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 
  
 (B) Except as otherwise provided herein, in the Certificate
of Incorporation, in any other Certificate of Designations creating a series of Preferred Stock, or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation. 
  
 (C) Except as set forth herein, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. 
  
 IV. Certain Restrictions. 
  
 (A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in Section II are
in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not: 
  
 (i) declare or pay dividends on or make any other
distributions on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock; 
  
 (ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends 

  

 3 

 
paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to
which the holders of all such shares are then entitled; 
  
 (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to
the Series A Preferred Stock; or 
  
 (iv) redeem
or purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. 
  
 (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of this Section IV, purchase or otherwise acquire such shares at such time and in such manner. 
  
 V. Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred
Stock subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation, or in any other Certificate of Designations creating a series of Preferred Stock or any similar stock or as otherwise required by
law. 
  
 VI. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A Preferred Stock-shall have received $1,000.00 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be distributed
per share to holders of Common Stock, or (2) to the holders of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the 

  

 4 

 
event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate
amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 
  
 VII. Consolidation, Merger, etc. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Preferred Stock
shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 
  
 VIII. No Redemption. The shares of Series A Preferred Stock shall not be redeemable. 
  
 IX. Rank. The Series A Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all other series of the Preferred Stock unless the terms of any such series shall provide otherwise. 
  
 X. Amendment. The Certificate of Incorporation shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so as to affect them adversely without the affirmative vote of the holders of two-thirds of the outstanding shares of Series A Preferred Stock, voting together as a single series.

  
 3. The Certificate of Incorporation of the Corporation is
amended so that the designation and number of shares of the class and series acted upon in the foregoing resolution, and the relative rights and preferences of such class and series, are as stated in the resolution. 
  

 5 

 IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf of the Corporation by its
                                        
as of             , 2005. 
  

			
	 CHAPARRAL STEEL COMPANY

		
	 By:
	 	  

	 Title:
	 	  

	
	 ATTEST:

		
	 By:
	 	  

	 Title:
	 	  

  

 6 

 Exhibit B 
  
 [Form of Right Certificate] 
  

			
	 Certificate No. R-
	  	                     Rights

  
 NOT EXERCISABLE AFTER
                    , 2015 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT, AT THE OPTION OF THE COMPANY, TO REDEMPTION AT
$0.001 PER RIGHT OR TO EXCHANGE, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS DEFINED IN SECTION 1 OF THE RIGHTS AGREEMENT) OR
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. 
  
 Right Certificate 
  
 CHAPARRAL STEEL COMPANY 

 
 This certifies that
                     or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights Agreement dated as of             , 2005 (the “Rights Agreement”) between CHAPARRAL STEEL COMPANY, a
Delaware corporation (the “Company”), and                     , a
                                  (the “Rights Agent”), to
purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M. Dallas, Texas time on             , 2015 at
the office of the Rights Agent, or its successors as Rights Agent, in Dallas, Texas, one one-thousandth of one fully paid and non-assessable share of the Series A Junior Participating Preferred Stock (the “Preferred Stock”) of the Company,
at a purchase price of $     per one one-thousandth of one share (the “Purchase Price”), upon presentation and surrender of this Right Certificate with the Form of Election to Purchase duly executed. The number
of Rights evidenced by this Right Certificate (and the number of one one-thousandths of a share of Preferred Stock which may be purchased upon exercise thereof) set forth above, and the Purchase Price per share set forth above, are the number and
Purchase Price as of             , 2005, based on the shares of the Preferred Stock of the Company as constituted at such date. 
  
 As provided in the Rights Agreement, the Purchase Price and the number of one
one-thousandths of a share of the Preferred Stock which may be purchased upon the exercise of the Rights evidenced by this Right Certificate are subject to modification and adjustment upon the happening of certain events. 
  
 This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder 

  

 1 

 
of the Rights Agent, the Company and the holders of the Right Certificates. Copies of the Rights Agreement are on file at the principal executive offices of
the Company and the above-mentioned office of the Rights Agent. 
  
 This Right Certificate, with or without other Right Certificates, upon surrender at the principal office of the Rights Agent, may be exchanged for another Right Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of shares of the Preferred Stock as the Rights evidenced by the Right Certificate or Right Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate shall
be exercised in part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not exercised. 
  
 Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may, but are not required to, be
(i) redeemed by the Company at its option at a redemption price of $0.001 per Right or (ii) may be exchanged by the Company in whole or in part for shares of Preferred Stock or Common Stock, $0.01 par value, of the Company. 
  
 No fractional shares of the Preferred Stock will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are integral multiples of one one-thousandth of one share of Preferred Stock, which may, at the election of the Company, be evidenced by depositary receipts), but in lieu thereof a
cash payment will be made, as provided in the Rights Agreement. 
  
 No holder of this Right Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of the Preferred Stock or of any other securities of the Company which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in the Rights Agreement), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate shall have been exercised as provided in the Rights Agreement. 
  
 This Right Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights
Agent. 
  

 2 

 WITNESS the facsimile signature of the proper officers of the Company and its corporate seal. 

 
 Dated as of
                                       
 . 
  

							
	 ATTEST:
	 	 CHAPARRAL STEEL COMPANY

				
	 	 	 	 	 By:
	 	  

	 	 	 	 	 Title:
	 	  

	 Countersigned:
	 	 	 	 
	  

	 	 	 	 
	 By:
	 	  

	 	 	 	 
	 	 	 Authorized Signature
	 	 	 	 

  

 3 

 [Form of Reverse Side of Right Certificate] 
  
 FORM OF ASSIGNMENT 
  
 (To be executed by the registered holder if such 
 holder desires to transfer the Right Certificate.) 
  
 FOR VALUE RECEIVED_______________________________________________________________ hereby sells, assigns and transfers unto____________________________________________________________________________________________
 (Please print name and address of transferee) 
 this Right
Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ____________________Attorney, to transfer the within right Certificate on the books of the within- named Company, with full power of
substitution. 
  

			
	 Dated:__________,___
	 	 
	 	 	  

	 	 	 Signature

		
	 	 	(Signature must conform in all respects to the name of holder as written upon the face of this Right Certificate, without alteration or enlargement or any change whatsoever.)

  
 Signature Guaranteed: 
  
 Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States. 
  

	
	

	(to be completed if applicable)

  
 The undersigned hereby certifies that
the Rights evidenced by this Right Certificate are not beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement). 
  

			
	 	  	  

 

  

 4 

 FORM OF ELECTION TO PURCHASE 
  
 (To be executed by the registered holder if such holder desires to exercise the Right Certificate.) 
  
 TO:     CHAPARRAL STEEL COMPANY

  
 The undersigned hereby irrevocably elects to exercise
_____________________Rights represented by this Right Certificate to purchase the shares of the Preferred Stock issuable upon the exercise of such Rights and requests that certificates for such shares be issued in the name of: 
  

			
	 [Please insert social security or other identifying number]
	 	  

  

	
	  

 (Please print name
and address)

  
 __________________________________________If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance remaining of such Rights shall be registered in the name of and
delivered to: 
  

			
	 [Please insert social security or other identifying number]
	 	  

  

	
	  

	(Please print name and address)

  

			
	 Dated: ____________, ___
	 	 
	 	 	  
  

	 	 	 Signature

		
	 	 	(Signature must conform in all respects to the name of holder as written on the face of this Right Certificate, without alteration or enlargement or any change whatsoever.)

  

 5 

 Signature Guaranteed: 
  
 Signatures must be guaranteed by a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in the United States. 
  

	
	  

	(to be completed if applicable)

  
 The undersigned hereby certifies that
the Rights evidenced by this Right Certificate are not beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement). 
  

	
	

	 Signature

  

 6 

 Exhibit C 
  
 SUMMARY OF RIGHTS TO PURCHASE 
 PREFERRED STOCK

  
 On
                    , 2005, the Board of Directors of CHAPARRAL STEEL COMPANY (the “Company”) declared a dividend distribution of
one preferred stock purchase right (a “Right”) for each outstanding share of Common Stock, $0.01 par value (the “Common Stock”), of the Company. The distribution is payable to the stockholders of record on
                    , 2005. Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of the
Company’s Series A Junior Participating Preferred Stock (the “Preferred Stock”) at a price of $             per one one-thousandth of a share of Preferred Stock (the
“Purchase Price”), subject to adjustment. The description and terms of the Rights are set forth in a Rights Agreement (the “Rights Agreement”) between the Company and
                                        ,
as Rights Agent (the “Rights Agent”). 
  
 Until the
earlier to occur of (i) the tenth day following a public announcement that a person or group of affiliated or associated persons (an “Acquiring Person”) acquired beneficial ownership of 15% or more of the outstanding shares of the Common
Stock (the “Shares Acquisition Date”) or (ii) the tenth business day (or such later date as may be determined by action of the Board of Directors prior to such time as any person or group of affiliated or associated persons becomes an
Acquiring Person) after the commencement of, or announcement of an intention to commence, a tender offer or exchange offer the consummation which would result in any person becoming an Acquiring Person (the earlier of such dates being called the
“Distribution Date”), the Rights will be evidenced, with respect to any of the Common Stock outstanding as of                     ,
2005, by such Common Stock certificate containing a notation incorporating the Rights Agreement by reference. 
  
 The Rights Agreement provides that, until the Distribution Date (or earlier redemption or expiration of the Rights), the Rights will be transferred with
and only with the Common Stock. Until the Distribution Date (or earlier redemption or expiration of the Rights), the surrender for transfer of any of the Common Stock certificates outstanding as of
                    , 2005, will also constitute the transfer of the Rights associated with the Common Stock represented by such certificate.
As soon as practicable following the Distribution Date, separate certificates evidencing the Rights (“Right Certificates”) will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights. 
  
 The Rights are not exercisable until the Distribution Date. The Rights will expire on                     , 2015, (the “Final
Expiration Date”) unless the Final Expiration Date is extended or unless earlier redeemed or exchanged by the Company, in each case, as described below. 
  
 Shares of Preferred Stock purchasable upon exercise of the Rights will not be redeemable. Each share of Preferred Stock will have a minimum preferential
quarterly dividend rate of $1.00 per share, but will be entitled to an aggregate dividend of 1,000 times the dividend declared on one share of the Common Stock. In the event of liquidation, the holders of the 

 
Preferred Stock will receive a preferential liquidation payment of $1,000 per share, but will be entitled to receive an aggregate liquidation payment equal
to 1,000 times the payment made on one share of Common Stock. Each share of Preferred Stock will have 1,000 votes voting together with the Common Stock. Finally, in the event of any merger, consolidation or other transaction in which shares of
Common Stock are exchanged, each share of Preferred Stock will be entitled to receive 1,000 times the amount received per one share of Common Stock. The Rights are protected by customary anti-dilution provisions. Because of the nature of the
Preferred Stock dividend, liquidation and voting rights, the value of the one one-thousandth interest in a share of Preferred Stock purchasable upon exercise of each Right should approximate the value of one share of Common Stock. 
  
 The Purchase Price payable, and the number of shares of the Preferred Stock
or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of the Preferred Stock,
(ii) upon the grant to holders of the Preferred Stock of certain rights or warrants to subscribe for shares of the Preferred Stock or convertible securities at less than the then-current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding regular periodic cash dividends out of earnings or retained earnings at a rate not in excess of 125% of the rate of the last cash dividend theretofore
paid or dividends payable in the Preferred Stock) or of subscription rights or warrants (other than those referred to above). 
  
 The number of outstanding Rights and the number of one one-thousandths of a share of Preferred Stock issuable upon exercise of each Right are also subject
to adjustment in the event of a stock split of the Common Stock or a stock dividend on the Common Stock payable in shares of Common Stock or subdivisions, consolidations or combinations as of the Common Stock occurring, in any such case, prior to
the Distribution Date. 
  
 In the event that the Company is
acquired in a merger or other business combination transaction or that 50% or more of its assets or earning power are sold after a person or group has become an Acquiring Person, proper provision will be made so that each holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the then current exercise price of the Right, that number of shares of common stock of the acquiring company which at the time of such transaction would have a market value of two
times the exercise price of the Right. Subject to certain exchange rights that may be exercised by the Board, in the event that any person or group of affiliated or associated person becomes an Acquiring Person, proper provision will be made so that
each holder of a Right, other than Rights that were or are beneficially owned by the Acquiring Person (which will thereafter be void), will thereafter have the right to receive upon exercise that number of shares of the Common Stock having a market
value of two times the exercise price of the Right. 
  
 With
certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1% in such Purchase Price. No fractional shares of Preferred Stock will be issued (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock, which may, at the election of the Company, be evidenced by depositary receipts) and, in lieu thereof, an adjustment in cash will be made based on the market price of the
Preferred Stock on the last trading date prior to the date of exercise. 
  

 2 

 At any time after any person or group becomes an Acquiring Person and prior to the acquisition by such
person or group of 50% or more of the outstanding shares of Common Stock, the Board of Directors of the Company may exchange the Rights (other than Rights owned by such person or group which will have become void) in whole or in part, at an exchange
ratio of one share of Common Stock, or one one-thousandth of a Preferred Share per Right (subject to adjustment) (the “Exchange Right”). Notwithstanding the above, the Board of Directors may not exercise the Exchange Rights after any
person, together with any associate or affiliate of such person, has become the beneficial owner of 50% or more of the voting power of the shares of Common Stock. 
  
 At any time prior to 5:00 P.M. Dallas, Texas time on the earliest of (i) the Shares Acquisition Date, (ii) the tenth
business day (or such later date as may be determined by action of the Board of Directors prior to such time as any person or group of affiliated or associated persons becomes an Acquiring Person) after the commencement of, or announcement of an
intention to commence, a tender offer or exchange offer the consummation of which would result in any person becoming an Acquiring Person, or (iii) the Final Expiration Date, the Board of Directors of the Company may redeem the Rights in whole, but
not in part, at a price of $.001 per Right (the “Redemption Price”). 
  
 Immediately upon the action of the Board of Directors of the Company electing to redeem or exchange the Rights, the Company shall make announcement thereof, and upon such election, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive the Redemption Price, or the shares of Common Stock or Preferred Stock exchangeable for the Rights, as applicable. 
  
 The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, except that from and after such time as any person or group becomes an Acquiring Person, no such amendment may adversely affect the interests of the holders of the Rights. 
  
 Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. 
  
 A copy of the Rights Agreement is available free of charge from the Rights Agent,
                            . This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is hereby incorporated herein by reference. 
  

 3FORM OF SEPARATION AND DISTRIBUTION AGREEMENT

 Exhibit 10.1 
  
 FORM OF 
  
 SEPARATION AND DISTRIBUTION AGREEMENT 
  
 Dated as of                     , 2005

  
 Between 
  
 TEXAS INDUSTRIES, INC. 
  
 and 
  
 CHAPARRAL STEEL COMPANY 

  
 TABLE OF CONTENTS

  

					
	Section

	  	 	  	Page No.

	1.1	  	 Definitions
	  	1
	1.2	  	 Interpretation
	  	7
			
	2.1	  	 Separation of Chaparral Business
	  	8
	2.2	  	 Retained Assets
	  	9
	2.3	  	 Assumption of Liabilities
	  	10
	2.4	  	 Retained Liabilities
	  	10
	2.5	  	 Sequencing of Separation of Chaparral Business
	  	11
	2.6	  	 New Agreements
	  	11
	2.7	  	 Termination of Existing Intercompany Agreements
	  	12
	2.8	  	 Shared Contracts and Liabilities
	  	12
	2.9	  	 No TXI Representations or Warranties
	  	12
			
	3.1	  	 Issuance and Delivery of Chaparral Shares
	  	13
	3.2	  	 Distribution of Chaparral Shares
	  	13
	3.3	  	 TXI Board Action
	  	13
	3.4	  	 Additional Approvals
	  	13
			
	4.1	  	 Delivery of Instruments of Conveyance
	  	14
	4.2	  	 Delivery of Other Agreements
	  	14
	4.3	  	 Provision of Corporate Records
	  	14
			
	5.1	  	 Employment
	  	14
	5.2	  	 Severance
	  	14
	5.3	  	 Employment Solicitation
	  	14
	5.4	  	 Personnel Records
	  	14
	5.5	  	 Cessation of Participation in TXI Welfare Plans
	  	15
	5.6	  	 Chaparral’s Welfare Plans
	  	15
	5.7	  	 Welfare Plan Liabilities
	  	15
	5.8	  	 Flexible Spending Accounts
	  	16
	5.9	  	 TXI Assets
	  	16
	5.10	  	 Past Credit for Amounts Paid
	  	16
	5.11	  	 Disability
	  	16
	5.12	  	 Cessation of Participation in TXI Non-ERISA Benefit Arrangements
	  	17
	5.13	  	 Assumption of Certain Employee Related Obligations
	  	17
	5.14	  	 Equity Compensation Plans
	  	17
	5.15	  	 Workers’ Compensation
	  	19
	5.16	  	 Accrued Days Off
	  	19
	5.17	  	 Leaves of Absence
	  	19
	5.18	  	 Defined Contribution and Defined Benefit Plans
	  	19
	5.19	  	 Past Service Credit
	  	21
	5.20	  	 Reimbursement and Indemnification
	  	21
	5.21	  	 Further Cooperation
	  	21
			
	6.1	  	 Commercially Reasonable Efforts
	  	21
	6.2	  	 Non-Assignable Contracts
	  	21
	6.3	  	 Novation of Assumed Liabilities; Release of Guarantees
	  	22
	6.4	  	 Further Assurances
	  	23
	6.5	  	 Collection of Accounts Receivable
	  	23
	6.6	  	 Election of Chaparral Board of Directors
	  	24

  

 ii 

					
	6.7	  	 Late Payments
	  	24
	6.8	  	 Registration and Listing
	  	24
	6.9	  	 No Noncompetition
	  	24
	6.10	  	 Litigation
	  	24
	6.11	  	 Signs; Use of Company Name
	  	25
	6.12	  	 Transition Services
	  	25
			
	7.1	  	 Consummation of Pre-Distribution Transactions
	  	25
	7.2	  	 Effectiveness of Registration Statement; No Stop Order
	  	25
	7.3	  	 Approval of NASDAQ Listing Application
	  	26
	7.4	  	 Approval by TXI Board of Directors
	  	26
	7.5	  	 Receipt of Tax Opinion
	  	26
	7.6	  	 Consents
	  	26
	7.7	  	 No Other Events
	  	26
	7.8	  	 No Actions
	  	26
	7.9	  	 Compliance with State and Foreign Securities and “Blue Sky” Laws
	  	26
	7.10	  	 Resignations
	  	26
	7.11	  	 Dissemination of Information to TXI Stockholders
	  	27
	7.12	  	 Ancillary Agreements
	  	27
	7.13	  	 Satisfaction of Conditions
	  	27
			
	8.1	  	 Insurance Prior to the Distribution Date
	  	27
	8.2	  	 Ownership of Existing Policies and Programs
	  	27
	8.3	  	 Maintenance of Insurance for Chaparral
	  	27
	8.4	  	 Acquisition and Maintenance of Post-Distribution Insurance by Chaparral
	  	27
	8.5	  	 Property Damage and Business Interruption Insurance Claims Administration for Pre-Distribution Claims
	  	27
	8.6	  	 Liability and Workers Compensation Insurance Claims Administration for Pre-Distribution Claims
	  	28
	8.7	  	 Non-Waiver of Rights to Coverage
	  	28
	8.8	  	 Scope of Affected Policies of Insurance
	  	28
			
	9.1	  	 Allocation of Expenses
	  	29
			
	10.1	  	 Release of Pre-Distribution Claims
	  	29
	10.2	  	 Indemnification by Chaparral
	  	30
	10.3	  	 Indemnification by TXI
	  	30
	10.4	  	 Applicability of and Limitation on Indemnification
	  	31
	10.5	  	 Adjustment of Indemnifiable Losses
	  	31
	10.6	  	 Procedures for Indemnification of Third Party Claims
	  	32
	10.7	  	 Procedures for Indemnification of Direct Claims
	  	33
	10.8	  	 Contribution
	  	33
	10.9	  	 Remedies Cumulative
	  	34
	10.10	  	 Survival
	  	34
			
	11.1	  	 Escalation and Mediation
	  	34
	11.2	  	 Continuity of Service and Performance
	  	34
	11.3	  	 Choice of Forum
	  	34
	11.4	  	 Ability to Pursue Other Legal Remedies
	  	34
			
	12.1	  	 Agreement for Exchange of Information
	  	35
	12.2	  	 Ownership of Information
	  	35
	12.3	  	 Compensation for Providing Information
	  	35
	12.4	  	 Retention of Records
	  	35
	12.5	  	 Limitation of Liability
	  	36
	12.6	  	 Production of Witnesses
	  	36

  

 iii 

					
	12.7	  	 Confidentiality
	  	36
	12.8	  	 Privileged Matters
	  	37
			
	13.1	  	 Entire Agreement
	  	37
	13.2	  	 Choice of Law and Forum
	  	37
	13.3	  	 Amendment
	  	38
	13.4	  	 Waiver
	  	38
	13.5	  	 Partial Invalidity
	  	38
	13.6	  	 Execution in Counterparts
	  	38
	13.7	  	 Successors and Assigns
	  	38
	13.8	  	 Third Party Beneficiaries
	  	38
	13.9	  	 Notices
	  	38
	13.10	  	 Performance
	  	39
	13.11	  	 No Public Announcement
	  	39
	13.12	  	 Termination
	  	39
	13.13	  	 Limitation of Liability
	  	39

  

			
	Schedule	  	 
	2.1(a)(ii)	  	 Owned Real Property

	2.1(a)(iii)	  	 Personal Property Leases

	2.1(a)(iv)	  	 TXI Transportation Company Assets

	2.1(a)(v)	  	 Intellectual Property

	2.1(a)(vi)	  	 Contracts

	2.1(b)(i)	  	 Chaparral Real Estate Lease

	2.1(b)(ii)	  	 TXI Real Estate Leases

	2.2(g)	  	 Retained Assets

	2.4(d)	  	 Retained Liabilities

	2.5(a)	  	 Restructuring Transactions

	2.7	  	 Non-Terminated Intercompany Agreements

	2.8	  	 Shared Contracts

	6.6	  	 Director Nominees

	6.10(a)	  	 Assumed Actions

	6.10(b)	  	 Transferred Actions

  

 iv 

  
 SEPARATION AND
DISTRIBUTION AGREEMENT 
  
 THIS AGREEMENT is made on
                    , 2005 by and between Texas Industries, Inc. (“TXI”), a Delaware corporation, and Chaparral Steel Company
(“Chaparral”), a Delaware corporation, and, as of the date hereof, a wholly-owned subsidiary of TXI. 
  
 WHEREAS, TXI, through certain subsidiaries, is engaged in the business of manufacturing and selling steel products (the “Chaparral
Business”). 
  
 WHEREAS, the Board of Directors of TXI
has determined that it would be advisable and in the best interests of TXI and its stockholders for TXI to transfer and assign, or cause to be transferred and assigned, to Chaparral the business, operations, assets and liabilities related to the
Chaparral Business; 
  
 WHEREAS, TXI has agreed to transfer,
assign or lease, or cause to be transferred, assigned or leased, to the Chaparral Parties (as hereinafter defined) substantially all of the assets and properties of the Chaparral Business, and Chaparral has agreed to the transfer, assignment or
lease of such assets and to assume, or cause to be assumed, substantially all of the liabilities and obligations arising out of or relating to the Chaparral Business (the “Contribution”); 
  
 WHEREAS, the Board of Directors of TXI has determined that it would be
advisable and in the best interests of TXI and its stockholders for TXI to distribute on a pro rata basis to the holders of TXI’s common stock, par value $1.00 per share (“TXI Common Stock”), without any consideration being
paid by the holders of such TXI Common Stock, all of the outstanding shares of Chaparral common stock, par value $0.01 per share (together with the preferred share purchase rights associated therewith, the “Chaparral Common Stock”),
then owned by TXI (the “Distribution”); 
  
 WHEREAS, for federal income tax purposes, the Contribution and Distribution are intended to qualify for tax-free treatment under Sections 355, 361 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the
“Code”); and 
  
 WHEREAS, it is appropriate and
desirable to set forth the principal transactions required to effect the Contribution and Distribution and certain other agreements that will govern the relationship of TXI and Chaparral following the Distribution. 
  
 NOW, THEREFORE, in consideration of the mutual promises contained herein, the
parties hereto hereby agree as follows: 
  
 ARTICLE I

 DEFINITIONS 
  
 SECTION 1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.1. 
  
 “Actions” means any action, claim, demand, suit,
arbitration, inquiry, subpoena, discovery request, proceeding or investigation by or before any court or grand jury, any governmental or other regulatory or administrative entity, agency or commission or any arbitration tribunal, domestic or
foreign. 
  
 “Affiliate” means, with respect to
any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person. For the purpose of this definition, the term “control” means the power to direct the management of an entity,
directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the term “controlled” has the meaning correlative to the foregoing. After the Distribution, Chaparral and TXI shall not be deemed to
be under 

  

 
common control for purposes hereof due solely to the fact that Chaparral and TXI have stockholders in common. 
  
 “Agent” means Mellon Investor Services, LLC, the
distribution agent appointed by TXI to distribute shares of Chaparral Common Stock pursuant to the Distribution. 
  
 “Ancillary Agreements” means the the Tax Sharing Agreement, the TXI Real Estate Leases, the Chaparral Real Estate Lease, the Joint
Control Zone Agreement and any other agreement regarding the ongoing business and service relationships between the TXI Parties and Chaparral Parties. 
  
 “Assumed Actions” has the meaning set forth in Section 6.10(a). 
  
 “Assumed Liabilities” has the meaning set forth in Section 2.3. 
  
 “Cessation Time” has the meaning set forth in Section 5.5.

  
 “Chaparral” has the meaning set forth in the
first paragraph of this Agreement. 
  
 “Chaparral 401(k)
Plan” has the meaning set forth in Section 5.18(a)(i). 
  
 “Chaparral Business” has the meaning set forth in the recitals. 
  
 “Chaparral Business Employee” means (i) any individual employed at any time on or prior to the Distribution Date by TXI or any of its Subsidiaries who has, as of the Distribution Date, or who,
immediately prior to his or her termination of employment by TXI or any of its Subsidiaries, had employment duties primarily related to the Chaparral Business, and (ii) any other individual employed prior to the Distribution Date by TXI or any of
its Subsidiaries who accepts an offer to become an employee of Chaparral on the Distribution Date. 
  
 “Chaparral Common Stock” has the meaning set forth in the recitals. 
  
 “Chaparral Distributable Share” means for each holder of record of TXI Common Stock as of the close of
business on the Record Date one share of Chaparral Common Stock for every share of TXI Common Stock outstanding and held of record by such holder at such time. 
  

“Chaparral FSP” has the meaning set forth in Section 5.18(b)(i). 
  
 “Chaparral Indemnified Parties” has the meaning set forth in Section 10.3. 
  
 “Chaparral Parties” means Chaparral, the direct or indirect
Subsidiaries acquired by Chaparral as part of the Transferred Assets and any Subsidiaries formed or acquired after the date hereof. 
  
 “Chaparral Real Estate Lease” has the meaning set forth in Section 2.1(b)(i). 
  
 “Chaparral Share(s)” mean(s) each share of Chaparral Common
Stock. 
  
 “COBRA” means the Consolidated Omnibus
Budget Reconciliation Act of 1985, as codified at Part 6 of Subtitle B of Title I of ERISA and at section 4980B of the Code. 
  
 “Code” has the meaning set forth in the Recitals. 
  
 “Contracts” has the meaning set forth in Section 2.1(a)(vi). 
  

 2 

 “Contribution” has the meaning set forth in the Recitals. 
  
 “Conveyancing Instruments” has the meaning set forth in
Section 4.1. 
  
 “Copyrights” means United States
and foreign copyrights, both registered and unregistered, along with the registrations and applications to register any such copyrights. 
  
 “Credit Facility” means a $150 million senior secured revolving credit facility to be entered into by Chaparral. 
  
 “Debt Issuance Costs” means the underwriting commitment and
syndication fees and any other fees and expenses under the Credit Facility and the Note Offering, plus all rating agency fees, plus all counsel and accounting fees (including the fees of lenders’ counsel relating to the Credit Facility) and
other costs relating to the Credit Facility and Note Offering. 
  
 “Distribution” has the meaning set forth in the Recitals. 
  
 “Distribution Date” means the date determined by the Board of Directors of TXI as the date on which the Distribution is payable to holders of TXI Common Stock on the Record Date. 
  
 “ERISA” means the Employee Retirement Income Security Act of
1974, as amended, 29 U.S.C. §1001, et. seq. 
  
 “Escalation Notice” has the meaning set forth in Section 11.1(a). 
  
 “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
  
 “Expenses” means any and all expenses incurred in connection with investigating, defending or asserting any claim, action, suit or
proceeding incident to any matter indemnified against hereunder (including court filing fees, court costs, arbitration fees or costs, witness fees, and reasonable fees and disbursements of legal counsel, investigators, expert witnesses, consultants,
accountants and other professionals). 
  
 “Governmental
Authority” means any foreign, federal, state, local or other government, governmental, statutory or administrative authority, regulatory body or commission or any court, tribunal or judicial or arbitral body. 
  
 “Indemnified Party” has the meaning set forth in Section
10.5(a). 
  
 “Indemnifying Party” has the meaning
set forth in Section 10.5(a). 
  
 “Indemnity Payment”
has the meaning set forth in Section 10.5(a). 
  
 “Information” has the meaning set forth in Section 12.1(a). 
  
 “Information Statement” has the meaning set forth in Section 6.8(a). 
  
 “Insurance Charges” has the meaning set forth in Section 8.6. 
  
 “Intellectual Property License Agreements” means licenses relating to the Patents and patent disclosures
set forth on Schedule 2.1(a)(v). 
  

 3 

 “Intercompany Agreements” means any contract, agreement or lease between a TXI Party and
a Chaparral Party entered into prior to the Distribution excluding this Agreement and the Ancillary Agreements. 
  
 “IRS” means the U.S. Internal Revenue Service. 
  

“Liability” means any and all debts, liabilities and obligations, absolute or contingent, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever arising (unless otherwise specified in this Agreement), including all costs and expenses relating thereto, and including, without limitation, those debts, liabilities and obligations
arising under any law, rule, regulation, Action, threatened Action, order or consent decree of any Governmental Authority or any award of any arbitrator of any kind, and those arising under any contract, commitment or undertaking. 
  
 “Losses” means any and all losses, costs, obligations,
Liabilities, settlement payments, awards, judgments, fines, penalties, damages, fees, expenses, deficiencies, claims or other charges, absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown
(including, without limitation, the costs and Expenses of any and all Actions, threatened Actions, demands, assessments, judgments, settlements and compromises relating thereto and attorneys’ fees and any and all Expenses whatsoever reasonably
incurred in investigating, preparing or defending against any such Actions or threatened Actions). 
  
 “Material Governmental Approvals and Consents” means any material notices, reports or other filings to be made with or to, or any
material consents, registrations, approvals, permits, clearances or authorizations to be obtained from, any Governmental Authority. 
  
 “Non-ERISA Benefit Arrangement” means each contract, agreement, policy, practice, program, plan, trust or arrangement, other than a
Pension Plan or Welfare Plan, providing for benefits, perquisites or compensation of any nature to any Chaparral Business Employee, or to any family member, dependent or beneficiary of any such Chaparral Business Employee, including, without
limitation, disability, severance, health, dental, life, accidental death and dismemberment, travel and accident, tuition reimbursement, supplemental unemployment, vacation, sick, personal or bereavement days, holidays, retirement, deferred
compensation, profit sharing, bonus, stock-based compensation or other forms of incentive compensation. 
  
 “Non-Permitted Names” has the meaning set forth in Section 6.11. 
  
 “Note Offering” means the offering by Chaparral pursuant to Rule 144A and Regulation S under the Securities
Act of 1933, as amended, of senior unsecured notes of Chaparral in the aggregate principal amount of up to $300 million. 
  
 “Offering Memorandum” means Chaparral’s offering memorandum relating to the Note Offering. 
  
 “Owned Real Property” has the meaning set forth in Section
2.1(a)(ii). 
  
 “Party” means the TXI Parties or
the Chaparral Parties. 
  
 “Patents” means United
States and foreign patents and applications for patents, including any continuations, continuations-in-part, divisions, renewals, reissues and extensions thereof. 
  
 “Pension Plan” means any pension plan as defined in section 3(2) of ERISA, without regard to sections
4(b)(4) or 4(b)(5) of ERISA. 
  

 4 

 “Person” means any individual, corporation, partnership, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated organization or Governmental Authority. 
  
 “Personal Property Leases” has the meaning set forth in Section 2.1(a)(iii). 
  
 “Prime Rate” means the rate that Bank of America (or any
successor thereto or other major money center commercial bank agreed to by the Parties) announces from time to time as its prime lending rate, as in effect from time to time. 
  
 “Privilege” has the meaning set forth in Section 12.8(a). 
  
 “Privileged Information” has the meaning set forth in
Section 12.8(a). 
  
 “Record Date” means the date
determined by the Board of Directors of TXI as the record date for the Distribution. 
  
 “Registration Statement” has the meaning set forth in Section 6.8(a). 
  
 “Retained Assets” means all of the TXI Parties’ assets other than the Transferred Assets. 
  
 “Retained Business” means the business of the TXI Parties
other than the Chaparral Business. 
  
 “Retained
Liabilities” means all of the TXI Parties’ Liabilities other than the Assumed Liabilities. 
  
 “SEC” means the United States Securities and Exchange Commission. 
  
 “Shared Contract” means a contract, agreement or lease with a third Person that directly benefits both a
TXI Party and a Chaparral Party. 
  
 “Software”
means computer software programs, in source code and object code form, including, without limitation, all related source diagrams, flow charts, specifications, documentation and all other materials and documentation necessary to allow a
reasonably skilled third party programmer or technician to maintain, support or enhance the Software. 
  
 “Subsidiary” means, when used with reference to any Person, any corporation or other organization whether incorporated or unincorporated
of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries; provided, however, that no Person that is not directly or indirectly
wholly-owned by any other Person shall be a Subsidiary of such other Person unless such other Person controls, or has the right, power or ability to control, that Person. After the Distribution, Chaparral and TXI shall not be deemed to be under
common control for purposes hereof due solely to the fact that Chaparral and TXI have stockholders in common. 
  
 “Tax Benefit” means a reduction in the tax liability of a taxpayer for any taxable period. A Tax Benefit shall be deemed to have been
realized or received 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 relevant item on the tax liability of such taxpayer in all prior periods, is less
than it would have been if such liability were determined without regard to such item. 
  

 5 

 “Tax Cost” means an increase in the tax liability of a taxpayer for any taxable period.
A Tax Cost shall be deemed to arise 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 relevant item on the tax liability of such taxpayer in all prior
periods, is greater than it would have been if such tax liability were determined without regard to such item. 
  
 “Substitute Option” has the meaning set forth in Section 5.14(a). 
  
 “Tax Sharing Agreement” means the Tax Sharing and Indemnification Agreement, dated the date hereof, between
TXI and Chaparral. 
  
 “Third Party Claim” has
the meaning set forth in Section 10.6(a). 
  
 “Third Party
Consents” has the meaning set forth in Section 6.1. 
  
 “Trademarks” means all United States, state and foreign trademarks, service marks, logos, trade dress and trade names, whether registered or unregistered, including all goodwill associated with the foregoing, and all
registrations and pending applications to register the foregoing. 
  
 “Transferred Actions” has the meaning set forth in Section 6.10(b). 
  
 “Transferred Assets” has the meaning set forth in Section 2.1. 
  
 “Transferred Intellectual Property” has the meaning set forth in Section 2.1(a)(v). 
  
 “TXI” has the meaning set forth in the first paragraph of
this Agreement. 
  
 “TXI 401(k) Plan” has the
meaning set forth in Section 5.18(a)(i). 
  
 “TXI Common
Stock” has the meaning set forth in the Recitals. 
  
 “TXI FSP” has the meaning set forth in Section 5.18(b)(i). 
  
 “TXI Indemnified Parties” has the meaning set forth in Section 10.2. 
  
 “TXI Option” has the meaning set forth in Section 5.14(a). 
  
 “TXI Parties” means TXI and its direct and indirect Subsidiaries (including those formed or acquired after
the date hereof), other than the Chaparral Parties. 
  
 “TXI Policies” has the meaning set forth in Section 8.2. 
  
 “TXI Real Estate Leases” has the meaning set forth in Section 2.1(b)(ii).  
  
 “Welfare Plan” means any employee welfare plan as defined in section 3(1) of ERISA, without regard to sections 4(b)(4) or 4(b)(5) of
ERISA. 
  

 6 

 SECTION 1.2 Interpretation. 
  
 (a) In this Agreement, unless the context clearly indicates otherwise: 
  

	 	(i)	words used in the singular include the plural and words used in the plural include the singular; 

  

	 	(ii)	reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement;

  

	 	(iii)	reference to any gender includes the other gender; 

  

	 	(iv)	the word “including” means “including but not limited to”; 

  

	 	(v)	reference to any Article, Section, Exhibit or Schedule means such Article or Section of, or such Exhibit or Schedule to, this Agreement, as the case may be, and references in any
Section or definition to any clause means such clause of such Section or definition; 

  

	 	(vi)	the words “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and
not to any particular Section or other provision hereof; 

  

	 	(vii)	reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent
permitted by the provisions thereof and by this Agreement; 

  

	 	(viii)	reference to any law (including statutes and ordinances) means such law (including all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in
whole or in part, and in effect at the time of determining compliance or applicability; 

  

	 	(ix)	relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through”
means “through and including”; 

  

	 	(x)	accounting terms used herein shall have the meanings historically ascribed to them by TXI based upon TXI’s internal financial policies and procedures in effect prior to the
date of this Agreement; 

  

	 	(xi)	if there is any conflict between the provisions of the body of this Agreement and the Exhibits or Schedules hereto, the provisions of the body of this Agreement shall control unless
explicitly stated otherwise in such Exhibit or Schedule; 

  

	 	(xii)	the titles to Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect
the meaning or interpretation of this Agreement; 

  

	 	(xiii)	any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to
cause its relevant Subsidiaries to take such action or refrain from taking such action, as the case may be; and 

  

	 	(xiv)	unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in respect of lawful currency of the United States. 

  

 7 

 (b) Any rule of construction or interpretation otherwise requiring this Agreement to be construed or
interpreted against either Party shall not apply to any construction or interpretation hereof. 
  
 ARTICLE II 
 BUSINESS SEPARATION 
  
 SECTION 2.1 Separation of Chaparral Business. 
  
 (a) Transfer of Assets. Subject to the terms and conditions of this Agreement and the Ancillary Agreements, prior to
the Distribution, TXI shall cause the TXI Parties to convey, assign, transfer, contribute and set over to the Chaparral Parties, and Chaparral shall cause the Chaparral Parties to accept and receive, all right, title and interest of the TXI Parties
in and to the following assets (all of such assets being hereinafter referred to as the “Transferred Assets”), including the following: 
  

	 	(i)	Capital Stock. All of the capital stock of Chaparral Investments, Inc. and Chaparral Steel (Virginia) Inc.; 

  

	 	(ii)	Owned Real Property. Those certain parcels of land described on Schedule 2.1(a)(ii) (the “Owned Real Property”) and any and all improvements, fixtures,
machinery, equipment and other property described in such Schedule and located on such Owned Real Property; 

  

	 	(iii)	Personal Property Leases. Those certain machinery, equipment or other tangible personal property leases (the “Personal Property Leases”) set forth on
Schedule 2.1(a)(iii); 

  

	 	(iv)	Transportation Assets. The assets of TXI Transportation Company set forth on Schedule 2.1(a)(iv); 

  

	 	(v)	Intellectual Property. (i) All Trademarks, Copyrights, Patents and Software that are used solely in the Chaparral Business, including those set forth on Schedule
2.1(a)(v); (ii) all business and technical information, nonpatented inventions, including the patent disclosures set forth on Schedule 2.1(a)(v), discoveries, processes, formulations, trade secrets, know-how and technical data used solely in the
Chaparral Business made or conceived by employees, consultants or contractors of TXI or its Subsidiaries as to which the TXI Parties have rights under any agreement or otherwise relating to the foregoing; (iii) all business and technical
information, nonpatented inventions, discoveries, processes, formulations, trade secrets, know-how and technical data used solely in the Chaparral Business made or conceived by third parties as to which the TXI Parties have rights pursuant to
executory agreements with said third parties relating to the foregoing; and (iv) all permits, grants, contracts, agreements and licenses running to or from a TXI Party relating to the foregoing; and all rights that are associated with the foregoing
(collectively, the “Transferred Intellectual Property”); 

  

	 	(vi)	Contracts. All of the contracts set forth on Schedule 2.1(a)(vi) (the “Contracts”); 

  

	 	(vii)	Permits and Licenses. All permits, approvals, licenses, franchises, authorizations or other rights granted by any Governmental Authority held or applied for by a TXI
Party and that are used solely in the Chaparral Business or that relate solely to the Transferred Assets; 

  

 8 

	 	(viii)	Claims and Indemnities. All rights, claims, demands, causes of action, judgments, decrees and rights to indemnity or contribution, whether absolute or contingent,
contractual or otherwise, in favor of a TXI Party relating solely to the Chaparral Business, including the right to sue, recover and retain such recoveries and the right to continue in the name of a TXI Party any pending actions relating to the
foregoing, and to recover and retain any damages therefrom, but only to the extent relating to the Chaparral Business; 

  

	 	(ix)	Books and Records. All books and records (including all records pertaining to customers, suppliers and personnel), wherever located, that are related solely to the
Chaparral Business; 

  

	 	(x)	Tax Credits. Any right, title or interest in any tax refund, credit or benefit to which any of the Chaparral Parties is entitled in accordance with the terms of the
Tax Sharing Agreement; and 

  

	 	(xi)	Other Assets. All other assets, tangible or intangible, including all goodwill, that are used solely in the Chaparral Business, including, without limitation, domain
names and websites, or which TXI has agreed to transfer pursuant to the terms of this Agreement or any Ancillary Agreement or Conveyancing Instrument. 

  
 (b) Leases of Real Property. Subject to the terms and conditions of this Agreement and the Ancillary Agreements,
prior to the Distribution the Parties shall enter into the following leases of real property: 
  

	 	(i)	That certain real estate lease from Chaparral, as lessor, to TXI, as lessee, set forth on Schedule 2.1(b)(i) (the “Chaparral Real Estate Lease”) and any and all
improvements, fixtures, machinery, equipment and other property located on the premises demised under the Chaparral Real Estate Lease; and 

  

	 	(ii)	Those certain real estate leases from TXI, as lessor, to Chaparral, as lessee, set forth on Schedule 2.1(b)(ii) (the “TXI Real Estate Leases”) and any and all
improvements, fixtures, machinery, equipment and other property located on the premises demised under the TXI Real Estate Leases. 

  
 SECTION 2.2 Retained Assets. Notwithstanding anything to the contrary herein, neither TXI nor any of the TXI Parties shall transfer the Retained
Assets, including the following: 
  
 (a) Cash. Cash
and cash equivalents, any cash on hand or in bank accounts, certificates of deposit, commercial paper and similar securities owned or held by any TXI Party or Chaparral Party as of the close of business on the Distribution Date, except for deposits
securing leases and other obligations related solely to the Chaparral Business; 
  
 (b) Tax Refunds. Any right, title or interest in and to any tax refund, credit or benefit to which any of the TXI Parties is entitled in accordance with the terms of the Tax Sharing Agreement;

  
 (c) Accruals. Any amounts accrued on the books
and records of TXI or a TXI Party with respect to any Retained Liabilities; 
  
 (d) Employee Benefits. Except as provided in Article V, assets relating primarily to the provision of benefits to present or former employees of the Chaparral Business; 
  

 9 

 (e) Insurance Premiums and Refunds. Any right, title or interest in and to any prepaid
insurance premiums or premium refunds for the TXI Policies; 
  
 (f) Intellectual Property Rights. All email addresses and all Trademarks, Copyrights, Patents, Software and other intellectual property rights that are not used solely in the Chaparral Business; and 
  
 (g) Other Assets. All assets set forth on Schedule 2.2(g) and
all assets which TXI has agreed to retain pursuant to the terms of this Agreement or any Ancillary Agreement or Conveyancing Instrument. 
  
 SECTION 2.3 Assumption of Liabilities. In connection with the transactions contemplated by Section 2.1, and except as set forth in Section 2.4,
Chaparral shall, and shall cause the Chaparral Parties to, assume on a joint and several basis, and to pay, comply with and discharge in accordance with their terms all Liabilities of the TXI Parties arising out of the ownership or use of the
Transferred Assets or the operation of the Chaparral Business, whether existing on the date hereof or arising at any time after the date hereof, whether based on circumstances, events or actions arising heretofore or hereafter, whether or not such
Liabilities shall have been disclosed herein, and whether or not reflected on the books and records of the TXI Parties or the Chaparral Parties (all of such Liabilities being hereinafter referred to as the “Assumed Liabilities”),
including: 
  
 (a) Environmental. All Liabilities
of the TXI Parties in connection with environmental claims that arise out of or are related to the Chaparral Business or the Transferred Assets; 
  
 (b) Leases and Contracts. All Liabilities of the TXI Parties under or related to the Personal Property Leases and the Contracts, such
assumption to occur as (i) assignee if such Personal Property Leases and Contracts are assignable and are assigned or otherwise transferred to the Chaparral Parties, or (ii) subcontractor, sublessee or sublicensee as provided in Section 6.2 if such
assignment of such Personal Property Leases and Contracts and/or proceeds thereof is prohibited by law, by the terms thereof or not permitted by the other contracting party; 
  
 (c) Employees. All Liabilities of the TXI Parties in connection with claims of past or current employees of
the Chaparral Business, except as otherwise expressly provided in this Agreement; 
  
 (d) Actions. All Liabilities of the TXI Parties related to (i) any Actions asserting a claim arising out of the operation of the Chaparral Business or the ownership or use of the Transferred Assets,
whether before or after the Distribution Date, and (ii) Assumed Actions; 
  
 (e) Tax Liabilities. All Liabilities for which any Chaparral Party is liable in accordance with the terms of the Tax Sharing Agreement; 
  
 (f) Other Liabilities. All other Liabilities of the TXI Parties which Chaparral has agreed to assume pursuant
to the terms of this Agreement or any Ancillary Agreement or Conveyancing Instrument. 
  
 SECTION 2.4 Retained Liabilities. Notwithstanding anything to the contrary in this Agreement, neither Chaparral nor any of the other Chaparral Parties shall assume the Retained Liabilities, including the
following: 
  
 (a) Benefit Plans. Except as
provided in Article V, the Liabilities under the TXI employee benefit plans; 
  

 10 

 (b) Tax Liabilities. All Liabilities for which TXI is liable in accordance with the terms
of the Tax Sharing Agreement; 
  
 (c) Retained
Business. All Liabilities arising out of the ownership or use of the Retained Assets or the operation of the Retained Business; and 
  
 (d) Other Liabilities. The Liabilities set forth on Schedule 2.4(d) and all Liabilities which TXI has agreed to retain pursuant to the terms
of this Agreement or any Ancillary Agreement or Conveyancing Instrument. 
  
 SECTION 2.5 Sequencing of Separation of Chaparral Business. The separation of the Chaparral Business shall be effected as follows: 
  
 (a) Corporate Restructuring. On or after June 1, 2005, the corporate restructuring transactions set forth on Schedule
2.5(a) shall have been completed by TXI and its appropriate Subsidiaries in accordance with the timetable set forth therein. 
  
 (b) Transfers. After the consummation of the transactions set forth in Section 2.5(a), TXI shall contribute to Chaparral as an additional
contribution to capital all of TXI’s right, title and interest in and to the Transferred Assets, and the appropriate TXI Parties and Chaparral Parties shall enter into the TXI Real Estate Leases and the Chaparral Real Estate Lease. 

 
 (c) Assumption. In consideration for and simultaneous with the
consummation of the transactions described in Section 2.5(b), the Chaparral Parties shall assume on a joint and several basis, and discharge in accordance with their respective terms, all of the Assumed Liabilities. 
  
 (d) Financing Transactions. After the consummation of the
transactions set forth in Sections 2.5(a) through (c), Chaparral shall and shall cause the other Chaparral Parties to (i) enter into the Credit Facility and related agreements, (ii) consummate the Note Offering, and (iii) and borrow sufficient funds
under the Credit Facility to permit Chaparral to pay the dividend as provided in Section 2.5(e). 
  
 (e) Dividend. Immediately following the consummation of the transactions described in Section 2.5(a) through (d), Chaparral shall pay to TXI, as a
dividend, approximately $341 million in cash, the exact amount thereof to be determined by subtracting the Debt issuance Costs from $350 million. TXI shall use the entire amount of the dividend to pay creditors who are not Affiliates of TXI.

  
 (f) Releases. Upon consummation of the transactions
described in Sections 2.5(a) through (e), TXI shall cause the Chaparral Parties to be released from their guarantees of TXI’s obligations under TXI’s 101⁄4% Senior Notes due 2011. 
  
 Notwithstanding the foregoing, TXI may elect in its sole discretion at any time prior to the
Distribution to omit or modify any of the transactions set forth in Sections 2.1 through 2.5 or to include additional transactions. 
  
 SECTION 2.6 New Agreements. Immediately following the consummation of the transactions described in Section 2.5, the appropriate TXI Parties and
Chaparral Parties shall execute and deliver the following agreements, which shall thereafter become binding agreements between the parties thereto in accordance with their terms: 
  
 (a) The Tax Sharing Agreement; 
  
 (b) The TXI Real Estate Leases; 
  

 11 

 (c) The Chaparral Real Estate Lease; 
  
 (d) Joint Control Zone Agreement; and 
  
 (e) All other Ancillary Agreements. 
  

SECTION 2.7 Termination of Existing Intercompany Agreements. Except for this Agreement and the Ancillary Agreements and as otherwise expressly
provided in this Agreement, the Ancillary Agreements or as set forth on Schedule 2.7, all Intercompany Agreements and all other intercompany arrangements and courses of dealings, whether or not in writing and whether or not binding, in effect
immediately prior to the Distribution Date, shall be terminated and be of no further force and effect from and after the Distribution Date. 
  
 SECTION 2.8 Shared Contracts and Liabilities. 
  
 (a) Liabilities that relate to any Shared Contract set forth in Schedule 2.8 or that arose on or before the Distribution Date but do not relate primarily
to the Chaparral Business or to any other business of TXI (“Shared Liabilities”) shall be allocated between the TXI Parties, on the one hand, and the Chaparral Parties on the other hand, as follows: 
  

	 	(i)	first, if the Shared Liability is incurred exclusively in respect of a benefit received by one Party, the Party receiving such benefit shall be responsible for such Shared
Liability; 

  

	 	(ii)	second, if the Shared Liability relates to a Shared Contract but cannot be so allocated under clause (i), such Shared Liability shall be allocated between the Parties based on the
relative proportions of total benefit received (over the term of the Shared Contract, measured as of the date of the allocation) under the relevant Shared Contract. Notwithstanding the foregoing, each Party shall be responsible for any and all
Shared Liabilities arising out of or resulting from its breach of the relevant Shared Contract; 

  

	 	(iii)	third, if the Shared Liability does not relate to a Shared Contract and cannot be so allocated under clause (i), such Shared Liability shall be allocated between the Parties based
on the relative proportions of total benefit received in connection with the matter pursuant to which the Shared Liability arose; and 

  

	 	(iv)	fourth, if the Shared Liability cannot be so allocated under clauses (i) through (iii), such Shared Liability shall be allocated evenly between the Parties.

  
 (b) If any of the TXI Parties, on the one hand,
or any of the Chaparral Parties, on the other hand, receive any benefit or payment under any Shared Contract that was intended for the other Party, the Party receiving such benefit or payment will use commercially reasonable efforts to deliver,
transfer or otherwise afford such benefit or payment to the other Party. 
  
 (c) The TXI Parties shall have the sole right, responsibility and authority for administration of pre-Distribution claims that relate to or affect any Shared Liability. The expenses of such administration shall be
treated as Shared Liabilities. 
  
 SECTION 2.9 No TXI
Representations or Warranties. Except as expressly set forth herein or in any Ancillary Agreement, TXI does not represent or warrant in any way (i) as to the value or freedom from encumbrance of, or any other matter concerning, any of the
Transferred Assets or Assumed Liabilities or (ii) as to the legal sufficiency to convey title to any of the Transferred Assets on the execution, delivery and filing of the Conveyancing Instruments. ALL SUCH ASSETS ARE BEING TRANSFERRED ON AN
“AS IS, WHERE IS” BASIS (AND IN THE CASE OF THE OWNED REAL PROPERTY, BY MEANS OF A QUITCLAIM OR SIMILAR FORM OF DEED OR CONVEYANCE) WITHOUT ANY 

  

 12 

 
REPRESENTATION OR WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, MARKETABILITY, TITLE, VALUE, FREEDOM FROM ENCUMBRANCE OR ANY OTHER
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, and the Chaparral Parties shall bear the economic and legal risks that any conveyances of such assets shall prove to be insufficient or that the Chaparral Parties’ title to any such assets shall
be other than good and marketable and free of encumbrances. Except as expressly set forth in this Agreement or in any Ancillary Agreement, TXI does not represent or warrant that the obtaining of the consents or approvals, the execution and delivery
of any amendatory agreements and the making of the filings and applications contemplated by this Agreement shall satisfy the provisions of all applicable agreements or the requirements of all applicable laws or judgments, and, subject to Section
6.3, the Chaparral Parties shall bear the economic and legal risk that any necessary consents or approvals are not obtained or that any requirements of law or judgments are not complied with. Notwithstanding the foregoing, the Parties shall fully
cooperate and use commercially reasonable efforts to obtain all consents and approvals, to enter into all amendatory agreements and to make all filings and applications that may be required for the consummation of the transactions contemplated by
this Agreement. 
  
 ARTICLE III 
 THE DISTRIBUTION 
  
 SECTION 3.1 Issuance and Delivery of Chaparral Shares. Chaparral shall issue to TXI the number of Chaparral Shares required so that the total
number of Chaparral Shares held by TXI immediately prior to the Distribution is equal to the total number of Chaparral Shares distributable pursuant to Section 3.2. TXI shall deliver to the Agent one or more stock certificates representing all
Chaparral Shares then issued and outstanding, together with one or more stock power(s) endorsed in blank and, with respect to any uncertificated shares to be distributed pursuant to Section 3.2, shall take such steps as are necessary to permit such
shares to be distributed in the manner described in Section 3.2. In its capacity as Chaparral’s transfer agent, the Agent will distribute such shares in the manner described in Section 3.2. 
  
 SECTION 3.2 Distribution of Chaparral Shares. TXI shall instruct the
Agent to (i) distribute the Chaparral Distributable Share to each holder of record of TXI Common Stock at the close of business on the Record Date, and (ii) after completing the transactions described in Section 3.3, deliver to Chaparral as a
contribution to Chaparral, all remaining Chaparral Shares, if any, then held by the Agent. Any such returned Chaparral Shares shall be immediately cancelled by Chaparral and shall not constitute treasury shares. Each distributed Chaparral Share
shall be validly issued, fully paid and nonassessable and free of preemptive rights. The shares of Chaparral Common Stock distributed shall be distributed as uncertificated shares registered in book-entry form through the direct registration system.
Except as required by applicable law, no certificates therefor shall be distributed. The Agent shall deliver an account statement to each holder of Chaparral Common Stock reflecting such holder’s ownership interest in shares of Chaparral Common
Stock. 
  
 SECTION 3.3 TXI Board Action. The TXI Board of
Directors shall, in its discretion, establish the Record Date and the Distribution Date and all appropriate procedures in connection with the Distribution. The Board of Directors of TXI also shall have the right to adjust the Chaparral Distributable
Share at any time prior to the Distribution. The consummation of the transactions provided for in this Article III shall only be effected after the Distribution has been declared by the TXI Board of Directors. 
  
 SECTION 3.4 Additional Approvals. TXI shall cooperate with Chaparral
in effecting, and if so requested by Chaparral, TXI shall, as the sole stockholder of Chaparral prior to the Distribution, ratify any actions which are reasonably necessary or desirable to be taken by Chaparral to effectuate the transactions
referenced in or contemplated by this Agreement in a manner consistent with the terms hereof, including the preparation and implementation of appropriate plans, agreements and arrangements for employees of the Chaparral Business and non-employee
members of Chaparral’s board of directors. 
  

 13 

 ARTICLE IV 
 BUSINESS SEPARATION CLOSING MATTERS 
  
 SECTION 4.1 Delivery of Instruments of Conveyance. In order to effectuate the transactions contemplated by Article II, the Parties shall execute and deliver, or cause to be executed and delivered, prior to or
as of the Distribution such deeds, bills of sale, instruments of assumption, instruments of assignment, stock powers, certificates of title and other instruments of assignment, transfer, assumption and conveyance (collectively, the
“Conveyancing Instruments”) as the Parties shall reasonably deem necessary or appropriate to effect such transactions. 
  
 SECTION 4.2 Delivery of Other Agreements. Prior to or as of the Distribution, the Parties shall execute and deliver, or shall cause to be executed
and delivered, each of the Ancillary Agreements. 
  
 SECTION
4.3 Provision of Corporate Records. Prior to or as promptly as practicable after the Distribution, TXI shall deliver to Chaparral all corporate books and records of Chaparral Parties and copies of all corporate books and records of the TXI
Parties relating to the Chaparral Business, including in each case all active agreements, litigation files and government filings. 
  
 ARTICLE V 
 EMPLOYEE MATTERS

  
 SECTION 5.1 Employment. On or before the
Distribution Date, one of the Chaparral Parties shall employ or continue to employ each Chaparral Business Employee who, as of the day immediately prior thereto is employed by TXI or any of its Affiliates or Subsidiaries, including any such employee
who is then an inactive employee on approved medical, non-medical or short-term disability, long-term disability or weekly indemnity leave of absence or absent from active employment due to occupational illness or injury covered by workers’
compensation. The terms and conditions of employment with Chaparral (x) shall be communicated to each such Chaparral Business Employee prior to the Distribution Date in a form mutually satisfactory to Chaparral and TXI, (y) shall include credit, for
all purposes, for all years of service credited by TXI and its Subsidiaries and Affiliates, and (z) may include a requirement to execute a confidentiality and non-compete agreement between such Chaparral Business Employee and Chaparral. 

 
 SECTION 5.2 Severance. It is not intended that any Chaparral
Business Employee will be eligible for termination or severance payments or benefits from TXI or its Subsidiaries or Affiliates as a result of the transfer or change of employment from TXI to Chaparral or their respective Subsidiaries or Affiliates.
Notwithstanding the preceding sentence, in the event that any such termination or severance payments or benefits become payable on account of such transfer, change or the refusal of a Chaparral Business Employee to accept employment with Chaparral,
Chaparral shall indemnify the TXI Parties and their Affiliates, for the amount of such termination or severance payments or benefits. Chaparral shall be liable, and indemnify the TXI Parties and their Affiliates, for any termination or severance
obligations owed to Chaparral Business Employees on or after the Distribution Date, including obligations to Chaparral Business Employees whose employment ceased prior to the Distribution Date. 
  
 SECTION 5.3 Employment Solicitation. For a period of three (3) years
following the Distribution Date, neither the TXI Parties nor the Chaparral Parties may, and will not permit any of their respective Affiliates or agents to, solicit or recruit for employment any then current exempt salaried, managerial or
supervisory employees of the other, without the prior written consent of the other. Nothing in this Section 5.3 shall be construed so as to (i) prohibit the hiring by either the TXI Parties or the Chaparral Parties of any exempt salaried, managerial
or supervisory employee of the other who in good faith is believed to be actively seeking employment on his/her own initiative without prior contact initiated by any employee or agent of the company where employment is sought, or (ii) prohibit the
hiring of any person who applied for employment with either company in response to any public advertising medium. 
  
 SECTION 5.4 Personnel Records. Subject to applicable law, all information and records regarding employment and personnel matters of Chaparral
Business Employees will be Transferred Assets and shall be retained after the Distribution Date by Chaparral in accordance with all laws relating to the 

  

 14 

 
collection, storage, retention and disclosure of such records. Access to such records after the Distribution Date will be provided to TXI in accordance with
Section 12.1. Notwithstanding the foregoing, TXI shall retain reasonable access to those records necessary to TXI’s continued administration of any plans or programs on behalf of Chaparral Business Employees after the Distribution Date for so
long as said administration continues pursuant to this Agreement. TXI shall also retain copies of all confidentiality and non-compete agreements with any Chaparral Business Employee in which TXI has an interest. 
  
 SECTION 5.5 Cessation of Participation in TXI Welfare Plans. Except as
otherwise provided in this Agreement or as required by the terms of any TXI Welfare Plan or by COBRA or any comparable state law, participation in the TXI Welfare Plans by all Chaparral Business Employees will cease as of 11:59 p.m. on the
Distribution Date (the “Cessation Time”). 
  
 SECTION
5.6 Chaparral’s Welfare Plans. Effective as of the Cessation Time, Chaparral shall have in place for the benefit of Chaparral Business Employees and their respective eligible dependents, health (including medical, vision and dental), life,
accidental death and dismemberment, disability and other Welfare Plans substantially similar to the Welfare Plans maintained by TXI or any of its Subsidiaries or Affiliates in which such individuals participated immediately prior to the Cessation
Time. Chaparral Business Employees shall be eligible to participate in the Chaparral Welfare Plans immediately following the Cessation Time on the same basis on which they were eligible to participate in the TXI Welfare Plans immediately prior to
the Cessation Time. 
  
 SECTION 5.7 Welfare Plan Liabilities.

  
 (a) Chaparral Liabilities. Except as provided in
this Agreement, as of the Cessation Time, Chaparral shall assume, and be solely responsible for all Welfare Plan Liabilities incurred by any Chaparral Business Employee or his or her dependents after the Cessation Time. 
  
 (b) TXI Liabilities. TXI shall continue to be responsible after the
Cessation Time for employer Liabilities under its Welfare Plans with respect to the following: 
  

	 	(i)	Terminated Employees. Any Chaparral Business Employee whose employment terminated prior to the Cessation Time for any reason and who elected or is eligible to elect,
pursuant to a TXI-sponsored continuation plan or rights under COBRA or any comparable state law, to continue participation in any Welfare Plan in which he/she was enrolled on the applicable date of termination. 

  

	 	(ii)	Dependents. Any dependent of a Chaparral Business Employee whose employment terminated prior to the Cessation Time who elected, or is eligible to elect pursuant to
rights under COBRA or any comparable state law continuation coverage under TXI’s Welfare Plans as of the Cessation Time. 

  

	 	(iii)	Retirees. Any Chaparral Business Employee whose employment terminated prior to the Cessation Time due to retirement and who elected or is eligible to elect, pursuant
to a TXI-sponsored continuation plan or rights under COBRA, or any comparable state law, to continue participation in any Welfare Plan. 

  

	 	(iv)	Disabled Persons. Any Chaparral Business Employee who is not on TXI’s payroll and is receiving long-term disability benefits as of the Cessation Time who is
eligible to elect, pursuant to a TXI-sponsored continuation plan or rights under COBRA, or any comparable state law, to continue participation in any Welfare Plan. 

  

	 	(v)	 Pre-Distribution Claims. Except as provided in Sections 5.2, 5.8 and 5.11, all claims for self-insured welfare benefits incurred by Chaparral Business

  

 15 

	 	 
Employees prior to the Cessation Time, whether such claims have been paid or remain unpaid as of such date. Claims incurred by Chaparral Business Employees
prior to the Cessation Time pursuant to the terms of a fully insured plan maintained by TXI or Chaparral shall be paid pursuant to such plan. Claims for health benefits shall be considered to be incurred prior to the Cessation Time if the services
related to such claims were provided prior to the Cessation Time. Claims for all other welfare benefits shall be considered to be incurred prior to the Cessation Time if the date of loss occurred prior to the Cessation Time.

  
 SECTION 5.8 Flexible Spending Accounts.
Effective as of the Cessation Time, Chaparral shall have in place a flexible spending account plan in which Chaparral Business Employees shall maintain their existing eligibility and participation status under the flexible spending account plan
maintained by TXI. Salary reduction elections made by Chaparral Business Employees under the TXI flexible spending account plan shall continue to apply with respect to the Chaparral flexible spending account plan at least through the end of the 2005
calendar year. As of the Cessation Time, Chaparral shall credit or debit (as applicable), or cause to be credited or debited, the account of each Chaparral Business Employee under the Chaparral flexible spending account plan with an amount equal to
the positive or negative balance of such Chaparral Business Employee’s flexible spending accounts under the TXI flexible spending account plan immediately prior to the Cessation Time. For purposes of this Section, the balance of a Chaparral
Business Employee’s flexible spending account shall be determined as the amount of the Chaparral Business Employee’s contributions for the 2005 calendar year to the account as of the Cessation Time minus the amount of his or her
reimbursements for the 2005 calendar year from the account as of the Cessation Time. TXI shall pay, or cause to have paid, to Chaparral any net positive balance of the amounts credited to the flexible spending accounts of Chaparral Business
Employees as of the Cessation Time, and Chaparral shall pay, or cause to have paid, to TXI any net negative balance of the amounts credited to such accounts. Any such payments shall be made as soon as administratively practicable after the Cessation
Time. Chaparral shall assume and be solely responsible for (i) all claims which have been submitted by Chaparral Business Employees under the TXI flexible spending account plan but not yet paid as of the Cessation Time, and (ii) all claims submitted
under the Chaparral flexible spending account plan after the Cessation Time. TXI shall provide Chaparral with copies of any records available to TXI to document the claims described in clause (i) above. 
  
 SECTION 5.9 TXI Assets. Except as provided in Section 5.8 above, TXI
shall retain all claim reserves, bank accounts, trust funds or other balances maintained by or on behalf of TXI’s Welfare Plans. 
  
 SECTION 5.10 Past Credit for Amounts Paid. Chaparral shall credit Chaparral Business Employees with any amounts paid under the TXI Welfare Plans
toward satisfaction of applicable deductible amounts and copayments, coinsurance and out-of-pocket maximums under the corresponding Welfare Plans maintained by Chaparral to the extent such payments would have been taken into account under the TXI
Welfare Plans. TXI shall provide Chaparral with copies of any records available to TXI to document such payments. 
  
 SECTION 5.11. Disability. 
  
 (a) Short-Term Disability Benefits. Chaparral shall be responsible for all claims for short-term disability benefits payable to Chaparral Business
Employees on or after the Distribution Date. TXI shall continue to be responsible after the Distribution Date to fund all claims for short-term disability benefits incurred by a Chaparral Business Employee prior to the Distribution Date. 

 
 (b) Long-Term Disability Benefits. Chaparral shall continue to be
responsible after the Cessation Time for all claims for long-term disability incurred prior to the Cessation Time by any Chaparral Business Employee who is absent from active employment due to a total disability, as defined in the Chaparral
disability plan, on or prior to the Cessation Time. Chaparral shall also assume and be responsible for long-term disability benefits for any Chaparral Business Employee who is receiving short-term disability benefits as of the Cessation Time and who
becomes eligible 

  

 16 

 
for long-term disability benefits thereafter. Chaparral shall assume and be solely responsible for all other claims for long-term disability payable after
the Cessation Time with respect to any Chaparral Business Employee. 
  
 SECTION 5.12 Cessation of Participation in TXI Non-ERISA Benefit Arrangements. Except as otherwise provided in this Agreement or as required by the terms of any TXI Non-ERISA Benefit Arrangement, participation in TXI Non-ERISA
Benefit Arrangements will cease for all Chaparral Business Employees as of the Cessation Time. 
  
 SECTION 5.13 Assumption of Certain Employee Related Obligations. Effective as of the Cessation Time, the Chaparral Parties shall assume, and none of the TXI Parties or any of their Affiliates shall have any
further Liability for, the following agreements, obligations and Liabilities; provided, however, that if any such agreement, obligation or Liability cannot be assumed by the Chaparral Parties for a reason beyond the control of the parties hereto,
including the refusal of a third party to agree to such an assumption, then the Chaparral Parties shall indemnify the TXI Parties and their Affiliates and hold them harmless with respect to such agreement, obligation or Liability, as though it had
been assumed by the Chaparral Parties. 
  
 (a) Agreements entered
into between TXI, its Subsidiaries or Affiliates and Chaparral Business Employees. 
  
 (b) Agreements entered into between TXI, its Subsidiaries or Affiliates and independent contractors providing services to the Chaparral Business. 
  
 (c) All confidentiality and non-compete agreements between TXI, its Subsidiaries or Affiliates and Chaparral Business
Employees. 
  
 (d) All wages, salary, incentive compensation,
commissions and bonuses payable to Chaparral Business Employees after the Cessation Time except that TXI shall retain Liability for amounts payable to Chaparral Business Employees under all incentive plans for the 2005 fiscal year. 
  
 (e) Any severance payments owed, but not yet paid, to any Chaparral Business
Employee whose employment terminated prior to the Cessation Time. 
  
 (f) All moving expenses incurred by Chaparral Business Employees in connection with the Distribution. 
  
 (g) All Liabilities and obligations whatsoever of the Chaparral Business with respect to claims made by or with respect to Chaparral Business Employees or
any other persons who at any time prior to the Distribution Date had employment duties primarily related to the Chaparral Business relating to Non-ERISA Benefit Arrangements with respect to the Chaparral Business and not otherwise retained or
assumed by TXI pursuant to this Agreement, including such liabilities relating to actions or omissions of or by Chaparral or any officer, director, employee or agent thereof prior to the Distribution Date. 
  
 SECTION 5.14 Equity Compensation Plans. 
  
 (a) Unexercisable Options. Each outstanding option to purchase TXI
Common Stock that is held by a Chaparral Business Employee (a “TXI Option”) shall, to the extent such TXI Option is not exercisable as of the Cessation Time, be cancelled and replaced with a substitute option granted by Chaparral to
purchase from Chaparral shares of Chaparral Common Stock (a “Substitute Option”). The number of shares of Chaparral Common Stock subject to each 

  

 17 

 
Substitute Option and the exercise price per share will be calculated in accordance with the following formulas: 
  
 Number of Substitute Options Shares = Number of TXI Option
Shares / (Post-Spin Chaparral Closing Price / Pre-Spin TXI Closing Price) 
  
 Exercise Price per Share = Post-Spin Chaparral Closing Price x Closing Price Ratio 
  
 where 
  
 “Number of Substitute Option Shares” is the number of shares of Chaparral Common Stock subject to a Substitute Option that will
be granted by Chaparral to a Chaparral Business Employee. Any fractional number will be rounded down to the next whole number. 
  
 “Number of TXI Option Shares” is the number of shares of TXI Common Stock subject to an unvested TXI Option held by a Chaparral
Business Employee at the Cessation Time. 
  
 “Post-Spin Chaparal Closing Price” is the closing price of Chaparral Common Stock sold in the regular way on the first business day after the Distribution Date. 
  
 “Pre-Spin TXI Closing Price” is the closing price of TXI Common Stock sold in the regular way on
the Distribution Date. 
  
 “Exercise Price
per Share” is the exercise price per share of a Substitute Option that will be granted by Chaparral to a Chaparral Business Employee. 
  
 “Closing Price Ratio” is the exercise price per share of an unvested TXI Option divided by the Pre-Spin TXI Closing Price.

  
 Employment or service credited by TXI and its Subsidiaries
and Affiliates and Chaparral shall be taken into account in determining when such substitute options become exercisable, and when they terminate. Except as otherwise provided herein, each substitute option shall be exercisable upon the same terms
and conditions as were applicable under the related Option immediately prior to the Cessation Time. 
  
 (b) Exercisable Options. Each outstanding TXI Option that is, or is scheduled to be, exercisable as of the Cessation Time shall remain exercisable
following the Distribution Date, pursuant to its terms, only for the period during which such TXI Option remains exercisable following the holder’s termination of employment with TXI, its Subsidiaries or Affiliates, provided that the number of
shares of TXI Common Stock subject to each such TXI Option and the exercise price per share shall be adjusted in the same manner as TXI adjusts options to purchase TXI Common Stock held by its other employees. 
  
 (c) Restricted Stock. In connection with the Distribution, the
restrictions on each outstanding share of restricted stock held by a director of TXI who becomes a director of Chaparral shall lapse in accordance with the terms of the applicable TXI equity compensation plan and award agreement. 
  

 18 

 (d) Chaparral Performance Share Plan. On the Distribution Date, Chaparral shall assume and be
solely responsible for all obligations and Liabilities under any outstanding Chaparral Steel Company Performance Share Agreement and Plan. 
  
 (e) TXI Common Stock Award Plan. On the Distribution Date, Chaparral shall assume and be solely responsible for all obligations and Liabilities
under any outstanding award under the Texas Industries, Inc. Common Stock Award Plan to Tommy A. Valenta and William H. Dickert. Such awards to Mr. Valenta and Mr. Dickert shall be adjusted in the same manner as unexercisable stock options are
adjusted pursuant to Section 5.14(a). TXI will retain sole responsibility for all obligations and Liabilities under any other outstanding award under the Texas Industries, Inc. Common Stock Award Plan. 
  
 (d) Other Equity Awards. Except as provided in Sections 5.14(a)
through (e), all outstanding equity compensation awards held by Chaparral Business Employees under the TXI equity compensation plans shall be subject to the terms of such plans and applicable award agreements. 
  
 SECTION 5.15 Workers’ Compensation. Except as provided herein,
Chaparral shall be solely responsible for all claims for workers’ compensation reported by a Chaparral Business Employee on or after the Distribution Date. TXI shall continue to be responsible after the Distribution Date for administering all
claims for workers’ compensation reported by a Chaparral Business Employee prior to the Distribution Date under the terms of any TXI workers’ compensation policy or plan; however, Chaparral shall reimburse, and shall indemnify TXI, or its
Subsidiaries or Affiliates, for any amounts payable under such claims. In accordance with Sections 5.20 and 8.6, TXI shall transfer, or cause to be transferred, to Chaparral any accrued, unpaid liabilities related to such incurred claims or incurred
but not reported claims which have been accrued by TXI, its Subsidiaries or Affiliates prior to the Distribution Date. Such accruals are intended to reflect claims cost within the specified deductible amount stipulated in each relevant insurance
policy for several past years with open claims. Any adjustments to the accruals required after the Distribution Date are the sole responsibility of Chaparral and will be remitted as required by this Agreement in Sections 5.20 and 8.6. 
  
 SECTION 5.16 Accrued Days Off. Chaparral shall recognize and assume
all Liability for all vacation, holiday, flex days and personal days off, including banked vacation, accrued by Chaparral Business Employees as of the Cessation Time, and Chaparral shall credit each Chaparral Business Employee with such days off
accrual. 
  
 SECTION 5.17 Leaves of Absence. Chaparral
shall establish leave of absence policies which are substantially similar to the leave of absence policies maintained by TXI and will continue to apply such policies to inactive Chaparral Business Employees who are on an approved leave of absence as
of the Distribution Date. Chaparral Business Employees shall be eligible for leaves of absence after the Distribution Date to the same extent they would have been had they remained employed by TXI, its Subsidiaries or Affiliates. Leaves of absence
taken by Chaparral Business Employees prior to the Distribution Date shall be deemed to have been taken as employees of Chaparral. 
  
 SECTION 5.18 Defined Contribution and Defined Benefit Plans. 
  

	 	(a)	Employees’ Retirement Plan. 

  

	 	(i)	 Establishment of Chaparral 401(k) Plan. Effective as of the Distribution Date, Chaparral shall adopt, establish and maintain a Pension Plan and trust
qualified under section 401(a) and section 501(a) of the Code (the “Chaparral 401(k) Plan”) that is substantially similar to the TXI Retirement Plan and trust (the “TXI 401(k) Plan”). Chaparral shall assume and thereafter be
solely responsible for all then existing or future employer Liabilities arising from or related to the 

  

 19 

	 	 
Chaparral 401(k) Plan and the administration thereof. As soon as practicable after the adoption of the Chaparral 401(k) Plan, Chaparral shall submit an
application to the IRS for a determination regarding the qualification of the Chaparral 401(k) Plan and shall take any actions not inconsistent with Chaparral’s other general commitments contained in this Agreement and make any amendments
necessary to receive a favorable determination letter. 

  

	 	(ii)	Transfer of Account Balances. As soon as administratively practicable after the Distribution Date, there shall be transferred to the Chaparral 401(k) Plan assets
having a value as of the applicable valuation date that are equal to the value of the account balances of, and Liabilities with respect to, all Chaparral Business Employees who have an account balance under the TXI 401(k) Plan as of such valuation
date and who are employed by a Chaparral Party immediately after the Cessation Time. The assets in such accounts, including TXI stock and Chaparral stock and any promissory notes evidencing outstanding loan balances of Chaparral Business Employees,
shall be transferred in accordance with section 414(l) of the Code. Liabilities under any qualified domestic relations orders (as defined in section 414(p) of the Code) received with respect to any assets transferred to the Chaparral 401(k) Plan
shall be transferred to Chaparral at the time such assets are transferred. 

  

	 	(iii)	Company Contributions. Chaparral shall assume and be responsible for making the employer contributions to the Chaparral 401(k) Plan accounts of Chaparral Business
Employees for all calendar years beginning with 2005. The employer contributions for calendar year 2005 shall be calculated on the basis of Chaparral Business Employees’ income and contributions for calendar year 2005, regardless of whether
earned or paid before or after the Cessation Time. 

  

	 	(b)	Financial Security Plan and Other Deferred Compensation. 

  

	 	(i)	Establishment of Chaparral Financial Security Plan. Effective as of the Distribution Date, Chaparral shall adopt, establish and maintain a form of Financial Security
Plan (the “Chaparral FSP”) that is substantially similar to the form of TXI Financial Security Plan (the “TXI FSP”). Chaparral shall assume and thereafter be solely responsible for all employer Liabilities arising from or related
to the Chaparral FSP’s and the administration thereof. 

  

	 	(ii)	Assumption of Existing Plans. Effective on the Distribution Date, Chaparral shall assume and thereafter be solely responsible for all then existing or future employer
Liabilities arising from or related to TXI FSP’s covering any Chaparral Business Employees (including Chaparral Business Employees whose employment terminated prior to the Cessation Time for any reason) and the administration thereof.

  

	 	(iii)	Transfer of Insurance Policies. As soon as administratively practicable after the Distribution Date, there shall be transferred to Chaparral the life insurance
policies on the lives of Chaparral Business Employees whose TXI FSP obligations were assumed by Chaparral. 

  

	 	(iv)	 Directors’ Deferred Compensation. Effective on the Distribution Date, Chaparral shall assume and thereafter be solely responsible for all then
existing or future Liabilities arising from or related to any deferred compensation agreement covering any TXI director who becomes a Chaparral director and the administration thereof; provided, however, the terms of any such agreement may 

  

 20 

	 	 
be amended to denominate the value thereof in shares of Chaparral Common Stock and to adjust the number of such shares so that the value of the deferred
account immediately after the Distribution is not affected by the Distribution. TXI shall retain sole responsibility for all then existing or future Liabilities arising from or related to any deferred compensation agreement covering other TXI
directors, whether the deferred compensation was earned as a director or as an executive officer. 

  
 SECTION 5.19 Past Service Credit. With respect to all Chaparral Business Employees, Chaparral shall recognize all service, plan participation and
membership recognized under TXI’s Welfare Plans, Non-ERISA Benefit Arrangements, retirement plans and programs including the TXI 401(k) Plan and the TXI FSP for purposes of determining benefit eligibility, participation, vesting, and
calculation of benefits under Chaparral’s Welfare Plans, Non-ERISA Benefit Arrangements, retirement plans and programs including the Chaparral 401(k) Plan, the Chaparral FSP. TXI will provide to Chaparral copies of any records available to TXI
to document such service, plan participation and membership and cooperate with Chaparral to resolve any discrepancies or obtain any missing data for purposes of determining benefit eligibility, participation, vesting and calculation of benefits with
respect to such Chaparral Business Employees. 
  
 SECTION 5.20
Reimbursement and Indemnification. The parties hereto agree to reimburse each other, within 30 days of receipt from the other party of appropriate verification, for all costs and expenses which each may incur on behalf of the other as a result
of any of the Welfare Plans, Pension Plans and Non-ERISA Benefit Arrangements and, as contemplated by Section 5.2, any termination or severance payments or benefits. All Liabilities retained, assumed or indemnified against by Chaparral pursuant to
this Article V shall be deemed Assumed Liabilities, and all Liabilities retained, assumed or indemnified against by TXI pursuant to this Article V shall be deemed Retained Liabilities. 
  
 SECTION 5.21 Further Cooperation. The parties shall provide each other such records and information as may be
necessary or appropriate to carry out their obligations under this Article V or for the purposes of administering the Chaparral plans described herein, and they will cooperate in the filing of documents required by the transfer of assets and
liabilities described herein. 
  
 ARTICLE VI 
 CERTAIN COVENANTS 
  
 SECTION 6.1 Commercially Reasonable Efforts. Upon the terms and subject to the conditions set forth in this Agreement, each of the Parties agrees
to use all commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, and to assist and cooperate with the other Parties in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement, including (i) the obtaining of all necessary actions or non-actions, waivers, consents and approvals from Governmental Authorities and the making
of all necessary registrations and filings (including filings with Governmental Authorities) and the taking of all reasonable steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental
Authority, (ii) the obtaining of all necessary consents, approvals or waivers from third parties (“Third Party Consents”), (iii) the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this
Agreement, the Ancillary Agreements or the consummation of the transactions contemplated hereby or thereby, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Authority vacated or reversed
and (iv) the execution and delivery of any additional instruments necessary to consummate the transactions contemplated by this Agreement. 
  
 SECTION 6.2 Non-Assignable Contracts. If and to the extent that any TXI Party is unable to obtain any consent, approval or amendment necessary for
the transfer or assignment to any Chaparral Party of any Contract or other rights relating to the Chaparral Business that would otherwise be transferred or assigned to such Chaparral Party as contemplated by this Agreement or any other agreement or
document 

  

 21 

 
contemplated hereby, (i) such TXI Party shall continue to be bound thereby and the purported transfer or assignment to such Chaparral Party shall
automatically be deemed deferred until such time as all legal impediments are removed and all necessary consents have been obtained, and (ii) unless not permitted by the terms thereof or by law, the Chaparral Parties shall pay, perform and discharge
fully all of the obligations of the TXI Parties thereunder from and after the Distribution, or such earlier time as such transfer or assignment would otherwise have taken place, and indemnify the TXI Parties for all indemnifiable Losses arising out
of such performance by such Chaparral Party. The TXI Parties shall, without further consideration therefor, pay and remit to the applicable Chaparral Party promptly all monies, rights and other considerations received in respect of such performance.
The TXI Parties shall exercise or exploit their rights and options under all such Contracts and other rights, agreements and documents referred to in this Section 6.2 only as reasonably directed by Chaparral and at Chaparral’s expense. If and
when any such consent, approval or amendment shall be obtained or such Contract or other right or agreement shall otherwise become transferable or assignable or be able to be novated, the TXI Parties shall promptly assign or transfer and novate (to
the extent permissible) all of their rights and obligations thereunder to the applicable Chaparral Party without payment of further consideration, and the Chaparral Party shall, without the payment of any further consideration therefor, assume such
rights and obligations. To the extent that the transfer or assignment of any Contract or other right (or the proceeds thereof) pursuant to this Section 6.2 is prohibited by law or the terms thereof, this Section 6.2 shall operate to create a
subcontract with the applicable Chaparral Party to perform each relevant Contract or other right, agreement or document at a subcontract price equal to the monies, rights and other considerations received by the TXI Parties with respect to the
performance by such Chaparral Party. 
  
 SECTION 6.3 Novation
of Assumed Liabilities; Release of Guarantees. 
  
 (a) Except
as otherwise specifically provided in Section 2.8 with respect to Shared Contracts and elsewhere in this Agreement, it is expressly understood and agreed to by the Parties that upon the assumption by the Chaparral Parties of the Assumed Liabilities,
the TXI Parties and their respective officers, directors and employees shall be released unconditionally by the Chaparral Parties from any and all Liability, whether joint, several or joint and several, for the discharge, performance or observance
of any of the Assumed Liabilities, so that the Chaparral Parties will be solely responsible for such Assumed Liabilities. 
  
 (b) The Chaparral Parties, at the reasonable request of any TXI Party, shall use commercially reasonable efforts to obtain, or cause to be obtained, any
consent, approval, release, substitution or amendment required to novate (including with respect to any federal government contract) or assign all obligations under the Assumed Liabilities, or to obtain in writing the unconditional release of all
parties to such arrangements other than the Chaparral Parties. 
  
 (c) If a Chaparral Party is unable to obtain any such required consent, approval, release, substitution or amendment, the applicable TXI Party shall continue to be bound by such Assumed Liability and, unless not permitted by law or the
terms thereof, the Chaparral Parties shall, as agent or subcontractor for the TXI Parties, pay, perform and discharge fully all of the obligations or other Liabilities of the TXI Parties thereunder from and after the date hereof. The Chaparral
Parties shall indemnify and hold harmless the TXI Parties against any Liabilities arising in connection with such Assumed Liability. Except as otherwise set forth in this Agreement, the TXI Parties shall, without further consideration, pay and
remit, or cause to be paid or remitted, to the applicable Chaparral Party promptly the after-tax amount of all money, rights and other consideration received by it in respect of such performance (unless any such consideration is a Retained Asset).
If and when any such consent, approval, release, substitution or amendment shall be obtained or such Assumed Liability shall otherwise become assignable or be able to be novated, the applicable TXI Party shall thereafter assign, or cause to be
assigned, all of their rights, obligations and other Liabilities thereunder to the applicable Chaparral Party without payment of further consideration, and the Chaparral Parties shall, without the payment of any further consideration, assume such
rights and obligations. 
  

 22 

 SECTION 6.4 Further Assurances. 
  
 (a) In addition to the actions specifically provided for elsewhere in this Agreement, each of the Parties shall use
commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable laws, regulations and agreements to consummate and make effective the
Distribution and the other agreements and documents contemplated hereby. Without limiting the generality of the foregoing, each Party shall cooperate with the other Party to execute and deliver, or use commercially reasonable efforts to cause to be
executed and delivered, all instruments, including instruments of conveyance, assignment and transfer, and to make all filings with, and to obtain all consents, approvals or authorizations of, any Governmental Authority or any other Person under any
permit, license, Contract or other instrument, and to take all such other actions as such Party may reasonably be requested to take by the other Party from time to time, consistent with the terms of this Agreement, in order to confirm the title of
the Chaparral Parties to all of the Transferred Assets and the Chaparral Business, to put the applicable Chaparral Party in actual possession and operating control thereof and to permit the applicable Chaparral Party to exercise all rights with
respect thereto and to effectuate the provisions and purposes of this Agreement and the other agreements and documents contemplated hereby or thereby. 
  
 (b) If any asset used solely in and reasonably necessary to the conduct of the Chaparral Business is not transferred to the applicable Chaparral Party, or
any asset used in and reasonably necessary to the conduct of the Retained Business is transferred to any Chaparral Party, TXI and Chaparral shall negotiate in good faith after the Distribution to determine whether such asset should be transferred to
a Chaparral Party or to a TXI Party, as the case may be, and the terms and conditions upon which such asset shall be made available to a Chaparral Party or to a TXI Party, as the case may be. Unless expressly provided to the contrary in this
Agreement or any Ancillary Agreement, if any Liability arising out of or relating to the Chaparral Business is retained by any TXI Party, or any Liability arising out of or relating to the Retained Business is assumed by any Chaparral Party, TXI and
Chaparral shall negotiate in good faith after the Distribution to determine whether such Liability should be transferred to a Chaparral Party or a TXI Party, as the case may be, and/or the terms and conditions upon which any such Liability shall be
transferred. 
  
 SECTION 6.5 Collection of Accounts
Receivable. 
  
 (a) Following the Distribution, the TXI
Parties shall be entitled to control all collection actions related to the Retained Business and the Chaparral Parties shall be entitled to control all collection actions related to the Chaparral Business, in each case including the determination of
what actions are necessary or appropriate and when and how to take any such action. 
  
 (b) If, after the Distribution, any Chaparral Party shall receive any remittance from any account debtors with respect to the accounts receivable arising out of the Retained Business or other amounts due any TXI Party
in respect of services rendered by any TXI Party after the Distribution, or any TXI Party shall receive any remittance from any account debtors with respect to the accounts receivable arising out of the Chaparral Business or other amounts due any
Chaparral Party in respect of services rendered by any Chaparral Party after the Distribution, such Party shall receive and deposit such remittance and hold the same for the benefit of the other Party. The Parties shall reconcile any amounts held
under this Section 6.5 on a weekly basis, with the difference between the amounts held by each Party for the benefit of the other being settled by a cash payment to be made as soon as practicable following such reconciliation and, in any event, no
later than five business days following the completion of such reconciliation. 
  
 (c) Each Party shall deliver to the other such schedules and other information with respect to accounts receivable as each shall reasonably request from time to time in order to permit such Parties to reconcile their
respective records and to monitor the collection of all accounts 

  

 23 

 
receivable. Each Party shall afford the other reasonable access to its books and records relating to any accounts receivable. 
  
 SECTION 6.6 Election of Chaparral Board of Directors. Prior to the
Distribution, TXI agrees to vote all shares of Chaparral Common Stock held by it in favor of the nominees to the Board of Directors of Chaparral, as set forth on Schedule 6.6. 
  
 SECTION 6.7 Late Payments. Except as expressly provided to the contrary in this Agreement or in any Ancillary
Agreement, any amount not paid when due pursuant to this Agreement or any Ancillary Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within 30 days of the date of such bill, invoice or other
demand) shall accrue interest at a rate per annum equal to the Prime Rate. 
  
 SECTION 6.8 Registration and Listing. Prior to the Distribution: 
  
 (a) TXI and Chaparral shall cooperate with respect to the preparation of the registration statement on Form 10, including such amendments or supplements
thereto as may be necessary (together, the “Registration Statement”), to effect the registration of the Chaparral Common Stock under the Exchange Act. The Registration Statement shall include or incorporate by reference an information
statement to be sent by TXI to its stockholders in connection with the Distribution (the “Information Statement”). Chaparral and TXI shall use commercially reasonable efforts to cause the Registration Statement to become and remain
effective under the Exchange Act as soon as reasonably practicable. As soon as practicable, after the Record Date, TXI shall mail the Information Statement to the holders of TXI Common Stock. 
  
 (b) The Parties shall use commercially reasonable efforts to take all such
action as may be necessary or appropriate under state and foreign securities and “Blue Sky” laws in connection with the transactions contemplated by this Agreement. 
  
 (c) TXI and Chaparral shall prepare, and Chaparral shall file and seek to make effective, an application for the listing of
the Chaparral Common Stock on the NASDAQ National Market, subject to official notice of issuance. TXI shall, to the extent commercially reasonable, give notice of the Record Date in compliance with Rule 10b-17 of the Securities Exchange Act of 1934,
as amended. 
  
 (d) The Parties shall cooperate in preparing,
filing with the SEC and causing to become effective any registration statements or amendments thereto that are necessary or appropriate in order to effect the transactions contemplated hereby or to reflect the establishment of, or amendments to, any
employee benefit plans contemplated hereby. 
  
 SECTION 6.9 No
Noncompetition. After the Distribution, either Party may, except as otherwise provided in the Ancillary Agreements, (i) engage in the same or similar activities or lines of business as the other Party or (ii) do business, or refrain from doing
business, with any potential or actual supplier or customer of the other Party. 
  
 SECTION 6.10 Litigation. 
  
 (a) As of the Distribution, the Chaparral Parties shall assume and, except as provided in Article VIII, pay all Liabilities that may result from the Assumed Actions and all fees and costs relating to the defense of the Assumed Actions,
including attorneys’ fees and costs incurred after the Distribution. “Assumed Actions” means those cases, claims and investigations (in which any TXI Party or any Affiliate of a TXI Party, other than a Chaparral Party, is a defendant
or the party against whom the claim or investigation is directed) primarily related to the Chaparral Business, including those listed on Schedule 6.10(a). 
  

 24 

 (b) The TXI Parties shall transfer the Transferred Actions to Chaparral, and Chaparral shall receive and
have the benefit of all of the proceeds of such Transferred Actions. “Transferred Actions” means those cases and claims (in which any TXI Party or any of its Affiliates is a plaintiff or claimant) primarily relating to the Chaparral
Business, including those listed on Schedule 6.10(b). 
  
 (c)
Each Party agrees that at all times from and after the Distribution, if an Action is commenced by a third party naming both Parties as defendants thereto and with respect to which one Party is a nominal defendant, then the other Party shall use
commercially reasonable efforts to cause such nominal defendant to be removed from such Action. 
  
 SECTION 6.11 Signs; Use of Company Name. Prior to December 31, 2005, the Parties, at Chaparral’s expense, shall remove (or, if necessary, on
an interim basis cover up) any and all exterior and interior signs and identifiers on the Transferred Assets that refer or pertain to TXI, any TXI Party or the Retained Business, in the case of Chaparral, or that refer or pertain to Chaparral, any
Chaparral Party or the Chaparral Business on the Retained Assets, in the case of TXI. After such period, (i) the Chaparral Parties shall not use or display the names “Texas Industries”, “TXI” or any variations thereof, or other
Trademarks, trade names, logos or identifiers using any of such names or otherwise owned by or licensed to any TXI Party that have not been assigned or licensed to a Chaparral Party, and (ii) the TXI Parties shall not use or display the name
“Chaparral” or any variations thereof, or other Trademarks, trade names, logos or identifiers using any of such names or otherwise owned by or licensed to any Chaparral Party that have not been assigned or licensed to a TXI Party
(collectively, the “Non-Permitted Names”), without the prior written consent of the other Party; provided, however, that notwithstanding the foregoing, nothing contained in this Agreement shall prevent either Party from using the
other’s name in public filings with Governmental Authorities, materials intended for distribution to either Party’s stockholders or any other communication in any medium that describes the relationship between the Parties, including
materials distributed to employees relating to the transition of employee benefit plans; provided further that Chaparral shall be permitted to use its inventories of packaging and promotional materials and other supplies existing on the date hereof
that bear the TXI name or logo until June 30, 2005. 
  
 SECTION
6.12 Transition Services. Although neither Party is aware of any transition services that either Party will be required to provide to the other after the Distribution, for a period of one year after the Distribution if either Party discovers
that it requires the continuation of any service that had been provided by the other Party prior to the Distribution, each Party will negotiate in good faith an agreement to provide such services. Such agreement will provide that such services will
be provided for up to two years after the Distribution at a price and on terms that could be obtained on an arms length basis from an independent third party. Such services may include the licensing of any intellectual property rights owned by one
Party and used by the other Party prior to the Distribution. 
  
 ARTICLE VII 
 CONDITIONS TO THE DISTRIBUTION 
  
 The obligation of TXI to effect the Distribution is subject to the satisfaction or the waiver by TXI of each of the following conditions:

  
 SECTION 7.1 Consummation of Pre-Distribution
Transactions. The pre-Distribution transactions contemplated by Article II of this Agreement shall have been consummated in all material respects. 
  
 SECTION 7.2 Effectiveness of Registration Statement; No Stop Order. The Registration Statement shall have been declared effective by the SEC, and
no stop order suspending the effectiveness of 

  

 25 

 
the Registration Statement shall have been initiated or, to the knowledge of either of the Parties, threatened by the SEC. 
  
 SECTION 7.3 Approval of NASDAQ Listing Application. The Chaparral
Common Stock to be distributed in the Distribution shall have been approved for listing on the NASDAQ National Market, subject to official notice of issuance. 
  

SECTION 7.4 Approval by TXI Board of Directors. This Agreement and the transactions contemplated hereby, including the declaration of the
Distribution and a determination that TXI has sufficient surplus for the dividend in accordance with Section 170 of the Delaware General Corporation Law, shall have been duly approved by the Board of Directors of TXI in accordance with applicable
law and the Restated Certificate of Incorporation, as amended, and By-Laws of TXI. 
  
 SECTION 7.5 Receipt of Tax Opinion. TXI’s Board of Directors shall have received an opinion satisfactory to it of its tax counsel which shall not have been rescinded, substantially to the effect that the
Contribution will qualify as a tax-free transaction for federal income tax purposes under Section 368(a)(1)(D) of the Code, that the Distribution will qualify as a tax-free distribution for federal income tax purposes under Section 355 of the Code,
and that no income, gain or loss will be recognized by TXI, Chaparral or the TXI stockholders as a result of the Contribution or the Distribution. 
  
 SECTION 7.6 Consents. 
  
 (a) All Material Governmental Approvals and Consents required to permit the valid consummation of the Distribution shall have been obtained without any
conditions being imposed that would have a material adverse effect on TXI or Chaparral. 
  
 (b) TXI shall have obtained the Third Party Consents that shall be required in connection with the Distribution or Contribution, including any consents required from holders of TXI’s 101⁄4% Senior Notes (to
the extent not theretofore repaid), except those for which the failure to obtain such consents, approvals or waivers would not, in the reasonable opinion of TXI, individually or in the aggregate have a material adverse effect on TXI, Chaparral or
the consummation of the Distribution or Contribution. 
  
 SECTION 7.7 No Other Events. No other events or developments shall have occurred that, in the judgment of the TXI Board of Directors, would result in the Distribution having a material adverse effect on TXI or its stockholders.

  
 SECTION 7.8 No Actions. No action, suit or proceeding
shall have been instituted or threatened by or before any court or quasi-judicial or administrative agency of any federal, state, local or foreign jurisdiction or before any arbitrator to restrain, enjoin or otherwise prevent the Distribution or the
other transactions contemplated by this Agreement (including a stop order with respect to the effectiveness of the Registration Statement), and no order, injunction, judgment, ruling or decree issued by any court of competent jurisdiction shall be
in effect restraining the Distribution or such other transactions. 
  
 SECTION 7.9 Compliance with State and Foreign Securities and “Blue Sky” Laws. The Parties shall have taken all such action as may be necessary or appropriate under state and foreign securities and “blue sky” laws
in connection with the Distribution. 
  
 SECTION 7.10
Resignations. Prior to the Distribution, all of TXI’s designees shall have resigned or been removed as officers and from all Boards of Directors or similar governing bodies of all Chaparral Parties and all of Chaparral’s designees
shall have resigned or been removed as officers and from all Boards of Directors or similar governing bodies of all TXI Parties. 
  

 26 

 SECTION 7.11 Dissemination of Information to TXI Stockholders. Prior to the Distribution, the
Parties shall have prepared and mailed to the holders of TXI Common Stock such information concerning Chaparral, its business, operations and management, the Distribution and such other matters as TXI shall reasonably determine and as may be
required by law. 
  
 SECTION 7.12 Ancillary Agreements.
Each of the Ancillary Agreements shall have been executed and delivered, and each of such agreements shall be in full force and effect. 
  
 SECTION 7.13 Satisfaction of Conditions. The satisfaction of the foregoing conditions are for the sole benefit of TXI and shall not give rise to or
create any duty on the part of TXI or the TXI Board of Directors to waive or not waive any such condition, to effect the Distribution or in any way limit TXI’s power of termination set forth in Section 13.12. 
  
 ARTICLE VIII 
 INSURANCE MATTERS 
  
 SECTION 8.1 Insurance Prior to the Distribution Date. Except as may otherwise be expressly provided in this Article VIII, the TXI Parties and their Affiliates shall not have any Liability whatsoever as a result
of the insurance policies and practices of TXI and its Subsidiaries and Affiliates in effect at any time prior to the Distribution Date, including as a result of the level or scope of any such insurance, the creditworthiness of any insurance
carrier, the terms and conditions of any policy and the adequacy or timeliness of any notice to any insurance carrier with respect to any claim or potential claim or otherwise. 
  
 SECTION 8.2 Ownership of Existing Policies and Programs. TXI or one or more of the other TXI Parties shall continue
to own all property damage and business interruption, and liability insurance policies and programs, including, without limitation, primary and excess general liability, executive liability, automobile, workers’ compensation, property damage
and business interruption, crime and surety insurance policies, in effect on or before the Distribution Date (collectively, the “TXI Policies” and individually, a “TXI Policy”). Subject to the provisions of this Agreement, the
TXI Parties shall retain all of their respective rights, benefits and privileges, if any, under the TXI Policies. Nothing contained herein shall be construed to be an attempted assignment of or a change to any part of the ownership of the TXI
Policies. With respect to any claim relating to the Chaparral Business or the Transferred Assets, TXI shall have sole responsibility for claims administration and financial administration of the TXI Policies and such administration shall be governed
solely by the terms of Sections 8.5 and 8.6. 
  
 SECTION 8.3
Maintenance of Insurance for Chaparral. Through the Distribution Date, TXI will maintain in full force and effect its existing insurance to the extent that it applies to the Transferred Assets or the Chaparral Business. 
  
 SECTION 8.4 Acquisition and Maintenance of Post-Distribution Insurance by
Chaparral. Commencing on and as of the Distribution Date, Chaparral shall be responsible for establishing and maintaining separate property damage and business interruption and liability insurance policies and programs (including, primary and
excess general liability, executive liability, automobile, workers’ compensation, property damage and business interruption, crime, surety and other similar insurance policies) for activities and claims involving any Chaparral Party or any of
their Affiliates, the Chaparral Business and the Transferred Assets, in each case with commercially reasonable limits and deductibles. Each of the Chaparral Parties and its Affiliates, as appropriate, shall be responsible for all administrative and
financial matters relating to insurance policies established and maintained by the Chaparral Parties for such claims relating to any period on or after the Distribution. 
  
 SECTION 8.5 Property Damage and Business Interruption Insurance Claims Administration for Pre-Distribution Claims.
For property damage and business interruption losses related to the Transferred Assets or the Chaparral Business which occur prior to the Distribution Date, TXI 

  

 27 

 
shall have the sole right, responsibility and authority to prepare and process claims, including claims that are to be paid by the TXI Parties in whole or in
part because of insurance or reinsurance in support of property damage and business interruption insurance maintained by TXI prior to the Distribution Date. Any amounts received by TXI with respect to any such unresolved claims in existence on the
Distribution Date that are settled subsequent to the Distribution Date shall be paid to Chaparral within five (5) business days of receipt thereof by TXI. 
  
 SECTION 8.6 Liability and Workers Compensation Insurance Claims Administration for Pre-Distribution Claims. The TXI Parties shall have the sole
right, responsibility and authority for liability and workers compensation claims administration and financial administration of pre-Distribution claims that relate to or affect the TXI Policies or that are uninsured due to the terms of the TXI
Policies. Upon notification by a Chaparral Party of a claim relating to a Chaparral Party under one or more of the TXI Policies, TXI shall cooperate with Chaparral in asserting and pursuing coverage and payment for such claim by the appropriate
insurance carrier(s). In asserting and pursuing such coverage and payment, and subject to Section 10.6, TXI shall have sole power and authority to make binding decisions, determinations, commitments and stipulations on its own behalf and on behalf
of the Chaparral Parties, which decisions, determinations, commitments and stipulations shall be final and conclusive if reasonably made to maximize the overall economic benefit of the TXI Policies. The Chaparral Parties shall assume responsibility
for, and shall pay to the appropriate insurance carriers or other Persons, any premiums, retrospectively-rated premiums, defense costs, indemnity payments, deductibles, retentions or uninsured costs arising from liability or workers compensation
Losses which are uninsured because of coverage terms or conditions of the policies covering such Losses, or other charges (collectively, “Insurance Charges”) whenever arising, which shall become due and payable under the terms and
conditions of any applicable TXI Policy in respect of any Liabilities, Losses, claims, Actions or occurrences, whenever arising or becoming known, arising out of the ownership, use or operation of any of the assets, businesses, operations or
Liabilities of any Chaparral Party or any of its Affiliates, when the same relate to the period prior to, on or after the Distribution Date. To the extent that the terms of any applicable TXI Policy provide that any TXI Party shall have an
obligation to pay or guarantee the payment of any Insurance Charges relating to any Chaparral Party, TXI shall be entitled to demand that Chaparral make such payment directly to the Person entitled thereto. In connection with any such demand, TXI
shall submit to Chaparral a copy of any invoice or listing of claims received by TXI pertaining to such Insurance Charges together with appropriate supporting documentation. In the event that Chaparral fails to pay any such Insurance Charges when
due and payable, whether at the request of the Person entitled to payment or upon demand by TXI, the TXI Parties may (but shall not be required to) pay such Insurance Charges for and on behalf of the Chaparral Parties and, thereafter, Chaparral
Parties shall forthwith reimburse TXI for such payment within 30 days. Subject to the other provisions of this Article VIII, the retention by TXI of the TXI Policies and the responsibility for claims administration and financial administration of
such policies are in no way intended to limit, inhibit or preclude any right of Chaparral, TXI or any other insured to insurance coverage for any insured claims under the TXI Policies. 
  
 SECTION 8.7 Non-Waiver of Rights to Coverage. An insurance carrier that would otherwise be obligated to pay any claim
shall not be relieved of the responsibility with respect thereto, or, solely by virtue of the provisions of this Article VIII, have any subrogation rights with respect thereto. No insurance carrier or any third party shall be entitled to a benefit
(i.e. a benefit they would not be entitled to receive had no Distribution occurred or in the absence of the provisions of this Article VIII) by virtue of the provisions hereof. 
  
 SECTION 8.8 Scope of Affected Policies of Insurance. The provisions of this Article VIII relate solely to matters
involving property, damage and business interruption, and liability insurance policies and programs, including, without limitation, primary and excess general liability, executive liability, automobile, workers’ compensation, property damage
and business interruption, crime and surety insurance policies, and shall not be construed to affect any obligation of or impose any obligation on the Parties with respect to any life, health and accident, dental or medical or any other insurance
policies applicable to any of the officers, directors, employees or other representatives of the Parties or their Affiliates. 
  

 28 

 ARTICLE IX 
 EXPENSES 
  
 SECTION 9.1
Allocation of Expenses. Except as otherwise provided in this Agreement or any other agreement contemplated hereby, or as otherwise agreed to in writing by the Parties, all fees and expenses incurred in connection with the transactions
contemplated hereby or thereby, other than the Debt Issuance Costs, shall be paid by TXI. Specifically, (i) TXI shall absorb all of the costs associated with the dedication of internal resources and personnel to the transactions contemplated hereby
at all times prior to the Distribution Date, and (ii) TXI shall pay all fees and expenses that are related directly to the implementation of the Distribution transactions on or prior to the Distribution Date. Chaparral shall pay all Debt Issuance
Costs. All fees and expenses incurred after the Distribution Date shall be paid by the party incurring such fees and expenses. 
  
 ARTICLE X 
 INDEMNIFICATION

  
 SECTION 10.1 Release of Pre-Distribution Claims.

  
 (a) Except as provided in Section 10.1(b), effective as of
the Distribution Date, each Party does hereby, on behalf of itself and its respective Subsidiaries and Affiliates, successors and assigns and all Persons who at any time prior to the Distribution Date have been shareholders, directors, officers,
agents or employees of either Party (in each case, in their respective capacities as such), remise, release and forever discharge the other Party, its respective Subsidiaries and Affiliates, successors and assigns and all Persons who at any time
prior to the Distribution Date have been shareholders, directors, officers, agents or employees of such Party (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from
any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or
failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Date, including in connection with the transactions and all other activities to implement the
Distribution. 
  
 (b) Nothing contained in Section 10.1(a) shall
impair any right of any Person identified in Section 10.1(a) to enforce this Agreement, any Ancillary Agreement or any agreements, arrangements, commitments or understandings that are specified in Section 2.7 or the Schedule thereto not to terminate
as of the Distribution Date, in each case in accordance with its terms. Nothing contained in Section 10.1(a) shall release any Person from: 
  

	 	(i)	any Liability provided in or resulting from any agreement of the Parties that is specified in Section 2.7 or the Schedule thereto as not to terminate as of the Distribution Date, or
any other Liability specified in Section 2.7 as not to terminate as of the Distribution Date; 

  

	 	(ii)	any Liability, contingent or otherwise, assumed, transferred, assigned, retained or allocated to a Party, its Subsidiaries or Affiliates in accordance with, or any other Liability
of any Party, its Subsidiaries or Affiliates under this Agreement; 

  

	 	(iii)	any Liability that any Indemnified Party may have with respect to indemnification or contribution pursuant to this Agreement for claims brought against the Parties or their
respective Subsidiaries or Affiliates by third Persons, which Liability shall be governed by the provisions of this Article X and, if applicable, the appropriate provisions of the Ancillary Agreements. 

  

 29 

 (c) Neither Party shall make, nor permit any of its Subsidiaries or Affiliates to make, any claim or
demand, or commence any Action asserting any claim or demand, including any claim of contribution or indemnification, against the other Party, or any other Person released pursuant to Section 10.1(a), with respect to any Liability released pursuant
to Section 10.1(a). 
  
 (d) It is the intent of each of the
Parties by virtue of the provisions of this Section 10.1 to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have
failed to occur and all conditions existing or alleged to have existed on or before the Distribution Date, between the Parties (including any contractual agreements or arrangements existing or alleged to exist between the Parties on or before the
Distribution Date), except as expressly set forth in Section 10.1(b). At any time, at the reasonable request of either Party, the other Party shall execute and deliver releases reflecting the provisions hereof. 
  
 SECTION 10.2 Indemnification by Chaparral. Except as provided in
Section 10.5 and except as expressly provided in the Ancillary Agreements, Chaparral shall, and shall cause each of the other Chaparral Parties to, indemnify, defend and hold harmless the TXI Parties and each of their Affiliates, directors,
officers, employees and agents, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “TXI Indemnified Parties”), from and against any and all Expenses or Losses incurred or suffered by one or
more of the TXI Indemnified Parties, in connection with, relating to, arising out of or due to, directly or indirectly, any of the following items: 
  
 (a) any claim that the information relating to a Chaparral Party included in the Registration Statement, the Information Statement or the Offering
Memorandum is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which
they were made, not misleading, regardless of whether the occurrence, action or other event giving rise to the applicable matter took place prior to or subsequent to the Distribution Date; 
  
 (b) the Chaparral Business as conducted before, on or after the Distribution
Date; 
  
 (c) the Transferred Assets; 
  
 (d) the Assumed Liabilities; and 
  
 (e) the breach by any Chaparral Party of any covenant or agreement set forth
in this Agreement, any Ancillary Agreement or any Conveyancing Instrument, 
  
 in each case, regardless of when or where the loss, claim, accident, occurrence, event or happening giving rise to the Expense or Loss took place, or whether any such loss, claim, accident, occurrence, event or
happening is known or unknown, or reported or unreported. 
  
 SECTION 10.3 Indemnification by TXI. Except as provided in Section 10.5 and except as expressly provided in the Ancillary Agreements, TXI shall indemnify, defend and hold harmless the Chaparral Parties and each of their Affiliates,
directors, officers, employees and agents, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “Chaparral Indemnified Parties”), from and against any and all Expenses or Losses incurred or
suffered by one or more of the Chaparral Indemnified Parties in connection with, relating to, arising out of or due to, directly or indirectly, any of the following items: 
  
 (a) any claim that the information relating to TXI (but excluding information relating to Chaparral) included in the
Registration Statement, the Information Statement or the Offering Memorandum is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make
the statements 

  

 30 

 
therein, in light of the circumstances under which they were made, not misleading, regardless of whether the occurrence, action or other event giving rise to
the applicable matter took place prior to or subsequent to the Distribution Date; 
  
 (b) the business (other than the Chaparral Business) conducted by the TXI Parties or predecessors before, on or after the Distribution Date; 
  
 (c) the assets owned by the TXI Parties other than the Transferred Assets; 
  
 (d) the Liabilities (including the Retained Liabilities) of the TXI Parties
other than the Assumed Liabilities; 
  
 (e) the breach by any TXI
Party of any covenant or agreement set forth in this Agreement, any Ancillary Agreement or any Conveyancing Instrument; 
  
 regardless of when or where the loss, claim, accident, occurrence, event or happening giving rise to the Expense or Loss took place, or whether any such
loss, claim, accident, occurrence, event or happening is known or unknown, or reported or unreported. 
  
 SECTION 10.4 Applicability of and Limitation on Indemnification. EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE INDEMNITY OBLIGATION UNDER THIS ARTICLE X
SHALL APPLY NOTWITHSTANDING ANY INVESTIGATION MADE BY OR ON BEHALF OF ANY INDEMNIFIED PARTY AND SHALL APPLY WITHOUT REGARD TO WHETHER THE LOSS, LIABILITY, CLAIM, DAMAGE, COST OR EXPENSE FOR WHICH INDEMNITY IS CLAIMED HEREUNDER IS BASED ON STRICT
LIABILITY, ABSOLUTE LIABILITY, ANY OTHER THEORY OF LIABILITY OR ARISES AS AN OBLIGATION FOR CONTRIBUTION. 
  
 SECTION 10.5 Adjustment of Indemnifiable Losses. 
  
 (a) The amount that any Party or any of its Affiliates (an “Indemnifying Party”) is required to pay to any Person entitled to indemnification
hereunder (an “Indemnified Party”) shall be reduced by any insurance proceeds and other amounts actually recovered by or on behalf of such Indemnified Party in reduction of the related Expense or Loss. If an Indemnified Party receives a
payment (an “Indemnity Payment”) required by this Agreement from an Indemnifying Party in respect of any Expense or Loss and subsequently actually receives Insurance Proceeds or other amounts in respect of such Expense or Loss, then such
Indemnified Party shall pay to the Indemnifying Party a sum equal to the lesser of (1) the after-tax amount of such Insurance Proceeds or other amounts actually received or (2) the net amount of Indemnity Payments actually received previously. The
Indemnified Party agrees that the Indemnifying Party shall be subrogated to such Indemnified Party under any insurance policy. 
  
 (b) An insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto, or, solely by virtue of
the indemnification provisions hereof, have any subrogation rights with respect thereto. 
  
 (c) Indemnity Payments (i) shall be increased to take into account any Tax Costs incurred by the Indemnified Party arising from any Indemnity Payments from the Indemnifying Party and (ii) shall be reduced to take into
account any Tax Benefit received by the Indemnified Party arising from the incurrence or payment of any Indemnity Payment. 
  
 (d) Amounts paid by TXI to or for the benefit of Chaparral, or by Chaparral to or for the benefit of TXI, under this Article X (and under other specified
provisions of this Agreement) shall 

  

 31 

 
be treated by the Parties, for all applicable tax purposes, as adjustments to the amount of Transferred Assets. 
  
 SECTION 10.6 Procedures for Indemnification of Third Party Claims.

  
 (a) If any third party shall make any claim or commence any
arbitration proceeding or suit (collectively, a “Third Party Claim”) against any one or more of the Indemnified Parties with respect to which an Indemnified Party intends to make any claim for indemnification against any Chaparral Party
under Section 10.2 or against TXI Party under Section 10.3, such Indemnified Party shall promptly give written notice to the Indemnifying Party describing such Third Party Claim in reasonable detail. Notwithstanding the foregoing, the failure of any
Indemnified Party to provide notice in accordance with this Section 10.6(a) shall not relieve the related Indemnifying Party of its obligations under this Article X, except to the extent that such Indemnifying Party is actually prejudiced by such
failure to provide notice. 
  
 (b) The Indemnifying Party shall
have 30 days after receipt of the notice referred to in Section 10.6(a) to notify the Indemnified Party that it elects to conduct and control the defense of such Third Party Claim. If the Indemnifying Party does not give the foregoing notice, the
Indemnified Party shall have the right to defend, contest, settle or compromise such Third Party Claim in the exercise of its exclusive discretion subject to the provisions of Section 10.6(c), and the Indemnifying Party shall, upon request from any
of the Indemnified Parties, promptly pay to such Indemnified Parties in accordance with the other terms of this Section 10.6(b) the amount of any Expense or Loss resulting from their Liability to the third party claimant. If the Indemnifying Party
gives the foregoing notice, the Indemnifying Party shall have the right to undertake, conduct and control, through counsel reasonably acceptable to the Indemnified Party, and at its sole expense, the conduct and settlement of such Third Party Claim,
and the Indemnified Party shall cooperate with the Indemnifying Party in connection therewith, provided that (i) the Indemnifying Party shall not thereby permit any lien, encumbrance or other adverse charge to thereafter attach to any asset of any
Indemnified Party; (ii) the Indemnifying Party shall not thereby permit any injunction against any Indemnified Party; (iii) the Indemnifying Party shall permit the Indemnified Party and counsel chosen by the Indemnified Party and reasonably
acceptable to the Indemnifying Party to monitor such conduct or settlement and shall provide the Indemnified Party and such counsel with such information regarding such Third Party Claim as either of them may reasonably request (which request may be
general or specific), but the fees and expenses of such counsel chosen by the Indemnified Party (including allocated costs of in-house counsel and other personnel) shall be borne by the Indemnified Party unless (A) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or (B) the named parties to any such Third Party Claim include the Indemnified Party and the Indemnifying Party and in the reasonable opinion of counsel to the Indemnified
Party representation of both parties by the same counsel would be inappropriate due to actual or likely conflicts of interest between them, in either of which cases the reasonable fees and disbursements of counsel for such Indemnified Party
(including allocated costs of in-house counsel and other personnel) shall be paid by the Indemnified Party; and (iv) the Indemnifying Party shall agree promptly to reimburse to the extent required under this Article X the Indemnified Party for the
full amount of any Expense or Loss resulting from such Third Party Claim and all related expenses incurred by the Indemnified Party. In no event shall the Indemnifying Party, without the prior written consent of the Indemnified Party, settle or
compromise any claim or consent to the entry of any judgment that does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the Indemnified Party a release from all Liability in respect of such claim.

  
 If the Indemnifying Party shall not have
undertaken the conduct and control of the defense of any Third Party Claim as provided above, the Indemnifying Party shall nevertheless be entitled through counsel chosen by the Indemnifying Party and reasonably acceptable to the Indemnified Party
to monitor the conduct or settlement of such claim by the Indemnified Party, and the Indemnified Party shall provide the Indemnifying Party and such counsel with such 

  

 32 

 
information regarding such Third Party Claim as either of them may reasonably request (which request may be general or specific), but all costs and expenses
incurred in connection with such monitoring shall be borne by the Indemnifying Party. 
  
 (c) So long as the Indemnifying Party is contesting any such Third Party Claim in good faith, the Indemnified Party shall not pay or settle any such Third Party Claim. Notwithstanding the foregoing, the Indemnified
Party shall have the right to pay or settle any such Third Party Claim, provided that in such event the Indemnified Party shall waive any right to indemnity therefor by the Indemnifying Party, and no amount in respect thereof shall be claimed as an
Expense or a Loss under this Article X. 
  
 If
the Indemnified Party determines in its reasonable good faith judgment that the Indemnifying Party is not contesting such Third Party Claim in good faith, the Indemnified Party shall have the right to undertake control of the defense of such Third
Party Claim upon five days written notice to the Indemnifying Party and thereafter to defend, contest, settle or compromise such Third Party Claim in the exercise of its exclusive discretion. 
  
 If the Indemnified Party shall have undertaken the conduct
and control of the defense of any Third Party Claim as provided above, the Indemnified Party, on not less than 45 days prior written notice to the Indemnifying Party, may make settlement (including payment in full) of such Third Party Claim, and
such settlement shall be binding upon the Parties for the purposes hereof, unless within said 45-day period the Indemnifying Party shall have requested the Indemnified Party to contest such Third Party Claim at the expense of the Indemnifying Party.
In such event, the Indemnified Party shall promptly comply with such request and the Indemnifying Party shall have the right to direct the defense of such claim or any litigation based thereon subject to all of the conditions of Section 10.6(b).
Notwithstanding anything in this Section 10.6(c) to the contrary, if the Indemnified Party, in the good-faith belief that a claim may materially and adversely affect it other than as a result of money damages or other money payments, advises the
Indemnifying Party that it has determined to settle a claim, the Indemnified Party shall have the right to do so at its own cost and expense, without any requirement to contest such claim at the request of the Indemnifying Party, but without any
right under the provisions of this Article X for indemnification by the Indemnifying Party. 
  
 (d) To the extent that, with respect to any claim governed by the Tax Sharing Agreement, there is any inconsistency between the provisions of the Tax Sharing Agreement and this Section 10.6, the provisions of the Tax
Sharing Agreement shall control with respect to such claim. 
  
 SECTION 10.7 Procedures for Indemnification of Direct Claims. Any claim for indemnification on account of an Expense or a Loss made directly by the Indemnified Party against the Indemnifying Party and that does not result from a
Third Party Claim shall be asserted by written notice from the Indemnified Party to the Indemnifying Party specifically claiming indemnification hereunder. Such Indemnifying Party shall have a period of 45 days after the receipt of such notice
within which to respond thereto. If such Indemnifying Party does not respond within such 45-day period, such Indemnifying Party shall be deemed to have accepted responsibility to make payment and shall have no further right to contest the validity
of such claim. If such Indemnifying Party does respond within such 45-day period and rejects such claim in whole or in part, such Indemnified Party shall be free to pursue resolution as provided in Article XI. 
  
 SECTION 10.8 Contribution. If the indemnification provided for in this
Article X is unavailable to an Indemnified Party in respect of any Expense or Loss arising out of or related to information contained in the Registration Statement, the Information Statement or the Offering Memorandum, then the Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Expense or Loss in such proportion as is appropriate to reflect the relative fault of the Chaparral
Indemnified Parties, on the 

  

 33 

 
one hand, or the TXI Indemnified Parties, on the other hand, in connection with the statements or omissions that resulted in such Expense or Loss. The
relative fault of any Chaparral Indemnified Party, on the one hand, and of any TXI Indemnified Party, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission of a material fact relates to information supplied by the Chaparral Business or a Chaparral Indemnified Party, on the one hand, or by the Retained Business or a TXI Indemnified Party, on the other hand. 

 
 SECTION 10.9 Remedies Cumulative. The remedies provided in this
Article X shall be cumulative and, subject to the provisions of Article XI, shall not preclude assertion by an Indemnified Party of any other rights or the seeking of any and all other remedies against any Indemnifying Party. 
  
 SECTION 10.10 Survival. All covenants and agreements of the Parties
contained in this Agreement, including those relating to indemnification, shall survive the Distribution Date indefinitely, unless a specific survival or other applicable period is expressly set forth herein. 
  
 ARTICLE XI 
 DISPUTE RESOLUTION 
  
 SECTION 11.1 Escalation and Mediation. 
  
 (a) The Parties agree to use commercially reasonable efforts to resolve expeditiously any dispute, controversy or claim between them with respect to the matters covered hereby that may arise from time to time on a
mutually acceptable negotiated basis. In furtherance of the foregoing, any Party involved in a dispute, controversy or claim may deliver a notice (an “Escalation Notice”) demanding an in-person meeting involving representatives of the
Parties at a senior level of management of the Parties. A copy of any such Escalation Notice shall be given to the General Counsel, or like officer or official, of each Party involved in the dispute, controversy or claim (which copy shall state that
it is an Escalation Notice pursuant to this Agreement). Any agenda, location or procedures for such discussions or negotiations between the Parties may be established by the Parties from time to time; provided, however, that the Parties shall use
commercially reasonable efforts to meet within 30 days of the Escalation Notice. 
  
 (b) The Parties may agree to retain a mediator, acceptable to both Parties, to aid the Parties in their discussions and negotiations by informally providing advice to the Parties. Any opinion expressed by the mediator
shall be strictly advisory and shall not be binding on the Parties, nor shall any opinion expressed by the mediator be admissible in any action or proceeding. The mediator shall be selected by the Party that did not deliver the applicable Escalation
Notice from the list of individuals to be supplied to the Parties by the American Arbitration Association or such other entity as may be mutually agreeable to the Parties. Costs of the mediator shall be borne equally by the Parties involved in the
matter, except that each Party shall be responsible for its own expenses. 
  
 SECTION 11.2 Continuity of Service and Performance. Unless otherwise agreed in writing, the Parties will continue to provide service and honor all other commitments under this Agreement and each Ancillary
Agreement during the course of dispute resolution pursuant to the provisions of this Article XI with respect to all matters not subject to such dispute, controversy or claim. 
  
 SECTION 11.3 Choice of Forum. Any mediation hereunder shall take place in Dallas, Texas, unless otherwise agreed in
writing by the Parties. 
  
 SECTION 11.4 Ability to Pursue
Other Legal Remedies. For the avoidance of doubt, nothing in this Article XI shall prevent any Party from pursuing any and all remedies available to it in connection with a dispute relating to this Agreement or any of the Ancillary Agreements.

  

 34 

 ARTICLE XII 
 ACCESS TO INFORMATION AND SERVICES 
  
 SECTION 12.1 Agreement for Exchange of Information. 
  
 (a) At all times from and after the Distribution Date for a period of ten years, as soon as reasonably practicable after written request: (i) the TXI Parties shall afford to the Chaparral Parties and their authorized
accountants, counsel and other designated representatives reasonable access during normal business hours, at Chaparral’s expense and provide copies of, all records, books, contracts, instruments, data, documents and other information
(collectively, “Information”) in the possession or under the control of the TXI Parties immediately following the Distribution Date that relates to Chaparral, the Chaparral Business, the Chaparral Business Employees or tax returns required
to be filed by Chaparral; and (ii) the Chaparral Parties shall afford to the TXI Parties and their authorized accountants, counsel and other designated representatives reasonable access during normal business hours to, or, at TXI’s expense,
provide copies of, all Information in the possession or under the control of the Chaparral Parties immediately following the Distribution Date that relates to TXI, the Retained Business, the employees of TXI or tax returns required to be filed by
TXI; provided, however, that in the event that either Party determines that any such provision of or access to Information could violate any law or agreement or waive any attorney-client privilege, the Parties shall take all reasonable measures to
permit the compliance with such obligations in a manner that avoids any such harm or consequence. 
  
 (b) Either Party may request Information under Section 12.1(a): (i) to comply with reporting, disclosure, filing or other requirements imposed on the
requesting party (including under applicable securities or tax laws) by a Governmental Authority having jurisdiction over the requesting party, (ii) for use in any other judicial, regulatory, administrative, tax or other proceeding or in order to
satisfy audit, accounting, claims defense, regulatory filings, litigation, tax or other similar requirements, (iii) for use in compensation, benefit or welfare plan administration or other bona fide business purposes or (iv) to comply with its
obligations under this Agreement or any Ancillary Agreement. 
  
 SECTION 12.2 Ownership of Information. Any Information owned by one Party that is provided to a requesting Party pursuant to Section 12.1 shall be deemed to remain the property of the providing Party. Unless specifically set forth
herein, nothing contained in this Agreement shall be construed to grant or confer rights of license or otherwise in any such Information. 
  
 SECTION 12.3 Compensation for Providing Information. The Party requesting Information agrees to reimburse the providing Party for the reasonable
costs, if any, of creating, gathering and copying such Information, to the extent that such costs are incurred for the benefit of the requesting Party. Except as otherwise specifically provided in this Agreement, such costs shall be computed in
accordance with the providing Party’s standard methodology and procedures. 
  
 SECTION 12.4 Retention of Records. To facilitate the possible exchange of Information pursuant to this Article XII after the Distribution Date, the Parties agree to use commercially reasonable efforts to retain
all Information in their respective possession or control on the Distribution Date in accordance with the policies and procedures of TXI as in effect on the Distribution Date or such other procedures as may reasonably be adopted by the applicable
Party after the Distribution Date. No party will destroy, or permit any of its Subsidiaries or Affiliates to destroy, any Information that the other Party may have the right to obtain pursuant to this Agreement prior to the seventh anniversary of
the date hereof, and thereafter without first using commercially reasonable efforts to notify the other Party of the proposed destruction and giving the other Party the opportunity to take possession of such Information prior to such destruction;
provided, however, that in the case of any Information relating to taxes, the provisions of the Tax Sharing Agreement shall apply. 
  

 35 

 SECTION 12.5 Limitation of Liability. No Party shall have any Liability to the other Party (i) if
any Information exchanged or provided pursuant to this Agreement that is an estimate or forecast, or that is based on an estimate or forecast, is found to be inaccurate, in the absence of gross negligence or willful misconduct by the Party providing
such Information, or (ii) if any Information is destroyed after commercially reasonable efforts to comply with the provisions of Section 12.4. 
  
 SECTION 12.6 Production of Witnesses. At all times from and after the Distribution Date, each Party shall use commercially reasonable efforts to
make available to the other Party (without cost other than reimbursement of actual out-of-pocket expenses to, and upon prior written request of, the other Party) its directors, officers, employees and agents as witnesses to the extent that the same
may reasonably be required by the other Party in connection with any legal, administrative or other proceeding in which the requesting Party may from time to time be involved with respect to the Chaparral Business, the Retained Business or any
transactions contemplated hereby. 
  
 SECTION 12.7
Confidentiality. 
  
 (a) From and after the Distribution
Date, each of TXI and Chaparral shall hold, and shall cause their respective Subsidiaries, Affiliates, directors, officers, employees, agents, consultants, advisors and other representatives to hold, in strict confidence, with at least the same
degree of care that applies to TXI’s confidential and proprietary information pursuant to policies in effect as of the Distribution Date or such other procedures as may reasonably be adopted by the applicable Party after the Distribution Date,
all non-public information concerning or belonging to the other Party or any of its Subsidiaries or Affiliates obtained by it prior to the Distribution Date, accessed by it pursuant to Section 12.1, or furnished to it by the other Party or any of
its Subsidiaries or Affiliates pursuant to this Agreement or any agreement or document contemplated hereby, including, without limitation, any trade secrets, technology, know-how and other non-public, proprietary intellectual property rights
licensed pursuant to the Intellectual Property License Agreements and shall not release or disclose such information to any other Person, except their representatives, who shall be bound by the provisions of this Section 12.7; provided, however,
that TXI and Chaparral and their Subsidiaries, Affiliates, respective directors, officers, employees, agents, consultants, advisors and other representatives may disclose such information if, and only to the extent that, (i) a disclosure of such
information is compelled by judicial or administrative process or, in the opinion of such Party’s counsel, by other requirements of law (in which case the disclosing Party will provide, to the extent practicable under the circumstances, advance
written notice to the other Party of its intent to make such disclosure), or (ii) such Party can show that such information (A) is published or is or otherwise becomes available to the general public or is in the public domain without breach of this
Agreement; (B) has been furnished or made known to the recipient without any obligation to keep it confidential by a third party under circumstances which are not known to the recipient to involve a breach of the third party’s obligations to a
Party hereto; (C) was developed independently of information furnished to the recipient under this Agreement; or (D) in the case of information furnished after the Distribution Date, was not known to the recipient at the time of the Distribution but
became known to the recipient prior to the time of receipt thereof from the other Party. 
  
 (b) Each Party acknowledges that the other Party would not have an adequate remedy at law for the breach by the acknowledging Party of any one or more of the covenants contained in this Section 12.7 and agrees that,
in the event of such breach, the other Party may, in addition to the other remedies that may be available to it, apply to a court for an injunction to prevent breaches of this Section 12.7 and to enforce specifically the terms and provisions of this
Section. Notwithstanding any other Section hereof, the provisions of this Section 12.7 shall survive the Distribution Date indefinitely. 
  

 36 

 SECTION 12.8 Privileged Matters. 
  
 (a) Each of TXI and Chaparral agrees to maintain, preserve and assert all privileges, including, without limitation,
privileges arising under or relating to the attorney-client relationship (which shall include without limitation the attorney-client and work product privileges), not heretofore waived, that relate to the Chaparral Business, the Retained Business,
the Assumed Liabilities, the Retained Liabilities, the Transferred Assets and the Retained Assets for any period prior to the Distribution Date (“Privilege” or “Privileges”). Each Party acknowledges and agrees that any costs
associated with asserting any Privilege shall be borne by the Party requesting that such privilege be asserted. Each Party agrees that it shall not waive any Privilege that could be asserted under applicable law without the prior written consent of
the other Party. The rights and obligations created by this Section 12.8 shall apply to all information as to which, but for the Distribution, either Party would have been entitled to assert or did assert the protection of a Privilege
(“Privileged Information”), including without limitation, (i) any and all information generated prior to the Distribution Date but which, after the Distribution, is in the possession of either Party; and (ii) all information generated,
received or arising after the Distribution Date that refers to or relates to Privileged Information generated, received or arising prior to the Distribution Date. 
  
 (b) Upon receipt by either Party of any subpoena, discovery or other request that may call for the production or disclosure
of Privileged Information or if either Party obtains knowledge that any current or former employee of a TXI Party or a Chaparral Party has received any subpoena, discovery or other request that may call for the production or disclosure of Privileged
Information, such Party shall notify promptly the other Party of the existence of the request and shall provide the other Party a reasonable opportunity to review the information and to assert any rights it may have under this Section 12.8 or
otherwise to prevent the production or disclosure of Privileged Information. Each Party agrees that it will not produce or disclose any information that may be covered by a Privilege under this Section 12.8 unless (i) the other Party has provided
its written consent to such production or disclosure (which consent shall not be unreasonably withheld), or (ii) a court of competent jurisdiction has entered a final, nonappealable order finding that the information is not entitled to protection
under any applicable Privilege. 
  
 (c) TXI’s transfer of
books and records and other information to Chaparral, and TXI’s agreement to permit Chaparral to possess Privileged Information existing or generated prior to the Distribution Date, are made in reliance on Chaparral’s agreement, as set
forth in Sections 12.7 and 12.8, to maintain the confidentiality of Privileged Information and to assert and maintain all applicable Privileges. The access to information being granted pursuant to Section 12.1, the agreement to provide witnesses and
individuals pursuant to Section 12.6 and the transfer of Privileged Information to Chaparral pursuant to this Agreement shall not be deemed a waiver of any Privilege that has been or may be asserted under this Section 12.8 or otherwise. Nothing in
this Agreement shall operate to reduce, minimize or condition the rights granted to TXI in, or the obligations imposed upon Chaparral by, this Section 12.8. 
  
 ARTICLE XIII 
 MISCELLANEOUS

  
 SECTION 13.1 Entire Agreement. This Agreement and
the Ancillary Agreements, including the Schedules and Exhibits referred to herein and therein and the documents delivered pursuant hereto and thereto, constitute the entire agreement between the Parties with respect to the subject matter contained
herein or therein, and supersede all prior agreements, negotiations, discussions, understandings, writings and commitments between the Parties with respect to such subject matter. 
  
 SECTION 13.2 Choice of Law and Forum. This Agreement shall be governed by and construed and enforced in accordance
with the substantive laws of the State of Texas and the federal laws of the United States of America applicable therein, as though all acts and omissions related hereto occurred in Texas. 
  

 37 

 SECTION 13.3 Amendment. Prior to the Distribution Date, this Agreement and the Ancillary
Agreements may be amended or supplemented by TXI in its sole discretion. After the Distribution Date, this Agreement and the Ancillary Agreements shall not be amended or supplemented except by a written instrument signed by an authorized
representative of each of the Parties. 
  
 SECTION 13.4
Waiver. Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the Party or Parties entitled to the benefit thereof. Any such waiver shall be validly and sufficiently given for the purposes of
this Agreement if, as to any Party, it is in writing signed by an authorized representative of such Party. The failure of any Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, or in
any way to affect the validity of this Agreement or any part hereof or the right of any Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach. 
  
 SECTION 13.5 Partial Invalidity.
Wherever possible, each provision hereof shall be interpreted in such a manner as to be effective and valid under applicable law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such provision or provisions shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable. 
  
 SECTION 13.6 Execution in Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original instrument, but all of which shall be considered one and the same agreement, and shall
become binding when one or more counterparts have been signed by and delivered to each of the Parties. 
  
 SECTION 13.7 Successors and Assigns. This Agreement and each Ancillary Agreement shall be binding upon and inure to the benefit of the Parties
hereto and thereto, respectively, and their successors and permitted assigns; provided, however, that the rights of either Party under this Agreement and each Ancillary Agreement shall not be assignable by such Party without the prior written
consent of the other Party. The successors and permitted assigns hereunder shall include, without limitation, any permitted assignee as well as the successors in interest to such permitted assignee (whether by merger, liquidation (including
successive mergers or liquidations) or otherwise). 
  
 SECTION
13.8 Third Party Beneficiaries. Except to the extent otherwise provided in Article X or in any Ancillary Agreement, the provisions of this Agreement and each Ancillary Agreement are solely for the benefit of the Parties and their respective
Affiliates, successors and permitted assigns and shall not confer upon any third Person any remedy, claim, Liability, reimbursement or other right in excess of those existing without reference to this Agreement or any Ancillary Agreement. Nothing in
this Agreement or any Ancillary Agreement shall obligate TXI or Chaparral to assist any Chaparral Business Employee to enforce any rights such employee may have with respect to any of the employee benefits described in this Agreement. 
  
 SECTION 13.9 Notices. All notices, requests, claims, demands and other
communications required or permitted hereunder shall be in writing and shall be deemed given or delivered (i) when delivered personally, (ii) if transmitted by facsimile when confirmation of transmission is received, (iii) if sent by registered or
certified mail, postage prepaid, return receipt requested, on the third business day after mailing or (iv) if sent by private courier when received; and shall be addressed as follows: 
  
 If to TXI, to: 
  
 TXI Industries, Inc. 
 1341 W. Mockingbird
Lane 
 Dallas, Texas 75247 
  

 38 

 Attention: General Counsel 
 Facsimile: 972/647-3320 
  
 If to
Chaparral, to: 
  
 Chaparral Steel Company 
 300 Ward Road 
 Midlothian, Texas 76065

 Attention: General Counsel 
 Facsimile: 972/775-1930 
  
 or to such other address as such Party may
indicate by a notice delivered to the other Party. 
  
 SECTION
13.10 Performance. Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such Party. 
  
 SECTION 13.11 No Public Announcement. Neither TXI nor Chaparral shall,
without the approval of the other, make any press release or other public announcement concerning the transactions contemplated by this Agreement, except as and to the extent that any such Party shall be so obligated by law or the rules of any stock
exchange or quotation system, in which case the other Party shall be advised and the Parties shall use commercially reasonable efforts to cause a mutually agreeable release or announcement to be issued; provided, however, that the foregoing shall
not preclude communications or disclosures necessary to implement the provisions of this Agreement or to comply with the accounting and SEC disclosure obligations or the rules of any stock exchange. 
  
 SECTION 13.12 Termination. Notwithstanding any provisions hereof, this
Agreement may be terminated and the Distribution abandoned at any time prior to the Distribution Date by and in the sole discretion of the Board of Directors of TXI without the prior approval of any Person. In the event of such termination, this
Agreement shall forthwith become void and no Party shall have any Liability to any Person by reason of this Agreement. 
  
 SECTION 13.13 Limitation of Liability. In no event shall any TXI Party be liable to any Chaparral Party or any Chaparral Party be liable to any TXI
Party for any special, consequential, indirect, incidental or punitive damages or lost profits, however caused and on any theory of liability (including negligence) arising in any way out of this Agreement, whether or not such party has been advised
of the possibility of such damages; provided, however, that the foregoing limitations shall not limit each Party’s indemnification obligations for Liabilities to third parties as set forth in Article X. 
  
 IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their authorized representatives as of the date first above written. 
  

			
	TEXAS INDUSTRIES, INC.
		
	By	 	 
	 Name:
	 	 Mel G. Brekhus

	 Title:
	 	 President and Chief Executive Officer

  

 39 

			
	CHAPARRAL STEEL COMPANY
		
	By	 	 
	 Name:
	 	 Tommy A. Valenta

	 Title:
	 	 President and Chief Executive Officer

  

 40

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}]]