Document:

Security Agreement, dated July 6, 2005

 EXHIBIT 10.3 
  
 SECURITY AGREEMENT 
  
 SECURITY AGREEMENT (this “Agreement”), dated as of July 6, 2005, made by each of the signatories party hereto (including
any permitted successors and assigns, collectively, the “Grantors” and each a “Grantor”), in favor of Bank of America, N.A., as Administrative Agent (“Administrative Agent”), for the ratable benefit
of each Secured Lender (as hereinafter defined) (the Administrative Agent in said capacity, herein also referred to, from time to time, as the “Secured Party”). 
  
 BACKGROUND. 
  
 A. Bank of America, N.A., as the Administrative Agent, Swing Line Lender and L/C Issuer, the Lenders party thereto, and Chaparral Steel
Company, a Delaware corporation (the “Borrower”) entered into the Credit Agreement dated as of June 16, 2005 (said Credit Agreement, as it may be amended, restated, extended, supplemented or otherwise modified in writing from time
to time, being the “Credit Agreement”). 
  
 B. It is the intention of the parties hereto that this Agreement create a first priority security interest in certain property of the Grantors in favor of the Secured Party for the ratable benefit of the Secured
Lenders securing the payment and performance of the Secured Obligations. 
  
 C. It is a condition precedent to effectiveness of the Credit Agreement that the Grantors shall have executed and delivered this Agreement. 
  
 AGREEMENT. 
  
 NOW, THEREFORE, in consideration of the premises set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce certain of the Secured Lenders to make the Loans and L/C Issuer to issue Letters of Credit under the Credit Agreement and to extend other credit accommodations under the Loan
Documents, each Grantor hereby agrees with the Secured Party, for the ratable benefit of the Secured Lenders, as follows: 
  
 ARTICLE I. 
  
 DEFINITIONS 
  
 Section 1.1 Definitions. For purposes of this Agreement: 
  
 “Account” means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to an account (as defined in
the UCC), and (whether or not included in such definition), a right to payment of a monetary obligation, whether or not earned by performance for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, and for
service rendered or to be rendered, and all right, title, and interest in any returned property, together with all rights, titles, securities, and guarantees with respect thereto, including any rights to stoppage in transit, replevin, reclamation,
and resales, and all related Liens whether voluntary or involuntary. 

 “Account Debtor” means any Person who is or who may become obligated to
each Grantor under, with respect to or on account of an Account. 
  
 “Chattel Paper” means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to chattel paper (as defined in the UCC), and
(whether or not included in such definition), a Record or Records that evidence both a monetary obligation and a security interest in specific Goods, a security interest in specific Goods and Software used in the Goods, or a lease of specific Goods.

  
 “Collateral” means all (a)
Accounts and all Software used in the management thereof, (b) Chattel Paper and Instruments related to or arising out of the disposition of Accounts or Inventory, (c) Inventory, (d) all contract rights relating to the lease, sale or other
disposition of Accounts and Inventory, (e) all General Intangibles related to or arising out of the disposition of Accounts or Inventory, (f) Pledged Equity Interests, and (g) Proceeds of the foregoing. 
  
 “Electronic Chattel Paper” means all right,
title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to electronic chattel paper (as defined in the UCC), and (whether or not included in such definition), chattel paper evidenced
by a Record or Records consisting of information stored in electronic medium. 
  
 “General Intangible” means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to a general intangible (as defined in
the UCC), and (whether or not included in such definition) all personal property, including things in action, other than Accounts, Chattel Paper, commercial tort claims, deposit accounts, documents, Goods, Instruments, investment property,
letter-of-credit rights, letters of credit, money, and oil, gas or other minerals before extraction. 
  
 “Goods” means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to goods (as defined in the
UCC), and (whether or not included in such definition), all things that are movable when a security interest attaches. 
  
 “Governmental Authority” means any nation or government, any state or other political subdivision thereof, any agency,
authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. 
  
 “Instrument” means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned,
arising, or acquired) in and to an instrument (as defined in the UCC), and (whether or not included in such definition), a negotiable instrument or any other writing that evidences a right to the payment of a monetary obligation, is not itself a
security agreement or lease, and is of a type that in ordinary course of business is transferred by delivery with any necessary indorsement or assignment. 
  

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 “Insurance” means all insurance policies covering any or all of the
Collateral (regardless of whether the Secured Party is the loss payee thereof). 
  
 “Intellectual Property” means with respect to each Grantor, such Grantor’s copyrights, trademarks, trademark registrations and applications for registration, trade names,
corporate names, trade styles, service marks, logos, other source and business identifying marks, together with goodwill associated therewith, such Grantor’s Software, any written agreement granting such Grantor any right to use any copyright,
trademark, trademark application or registration (other than such rights that cannot be licensed by such Grantor), any written agreement granting such Grantor any right to use any Software (other than such rights that cannot be licensed by such
Grantor), and books and records used in connection with any of the foregoing, but in each case limited solely to the extent necessary for the disposition of any Inventory pursuant to the terms of this Agreement. 
  
 “Inventory” means all right, title, and
interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to inventory (as defined in the UCC), and (whether or not included in such definition), Goods that (a) are leased by a Person as lessor,
(b) are held by a Person for sale or lease or to be furnished under a contract of service, (c) are furnished by a Person under a contract of service, or (d) consist of raw materials, work in process, or materials used or consumed in a business,
including packaging materials, scrap material, manufacturing supplies and spare parts, and all such Goods that have been returned to or repossessed by or on behalf of such Person. 
  
 “Pledged Equity Interests” shall mean all Pledged Stock, Pledged LLC Interests, Pledged
Partnership Interests and Pledged Trust Interests; provided, however, not withstanding anything herein to the contrary, the amount of pledged equity interests of any Foreign Subsidiary pledged by any Grantor shall be limited to 66% of
the issued and outstanding equity interests of such Foreign Subsidiary owned by any such Grantor. 
  
 “Pledged LLC Interests” shall mean, with respect to each Grantor, all interests of such Grantor in any limited liability
company that is a Subsidiary of the Borrower and listed on Schedule 1 as owned by such Grantor and the certificates, if any, representing such limited liability company interests and any interest of such Grantor on the books and records of
such limited liability company or on the books and records of any securities intermediary pertaining to each such limited liability company interest, and all dividends, distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such limited liability company interests; provided, however, notwithstanding anything herein to
the contrary, the amount of pledged limited liability company interests of any Foreign Subsidiary pledged by any Grantor shall be limited to 66% of the issued and outstanding limited liability company interests of such Foreign Subsidiary owned by
any such Grantor. 
  

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 “Pledged Partnership Interests” shall mean, with respect to each
Grantor, all interests of such Grantor in any general partnership, limited partnership, limited liability partnership or other partnership that is a Subsidiary of the Borrower and listed on Schedule 1 as owned by such Grantor, and the
certificates, if any, representing such partnership interests and any interest of such Grantor on the books and records of each such partnership or on the books and records of any securities intermediary pertaining to such partnership interests and
all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such partnership
interests; provided, however, notwithstanding anything herein to the contrary, the amount of pledged general partnership, limited partnership, limited liability partnership or other partnership interests of any Foreign Subsidiary
pledged by any Grantor shall be limited to 66% of the issued and outstanding general partnership, limited partnership, limited liability partnership or other partnership interests of such Foreign Subsidiary owned by such Grantor. 
  
 “Pledged Stock” shall mean, with respect to
each Grantor, all shares of capital stock listed of Schedule 1 as owned by such Grantor and the certificates, if any, representing such shares and any interest of such Grantor on the books of the issuer of such shares identified on
Schedule 1 or on the books of any securities intermediary pertaining to such shares, and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all of such shares; provided, however, notwithstanding anything herein to the contrary, the amount of pledged capital stock of any Foreign Subsidiary pledged
by any Grantor shall be limited to 66% of the issued and outstanding capital stock of such Foreign Subsidiary owned by such Grantor. 
  
 “Pledged Trust Interests” shall mean, with respect to each Grantor, all interests of such Grantor in a business trust or
other trust that is a Subsidiary of the Borrower and listed on Schedule 1 as owned by such Grantor, and the certificates, if any, representing such trust interests and any interest of such Grantor on the books and records of such trust or on
the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such trust interests. 
  
 “Proceeds” means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to proceeds (as defined in
the UCC), and (whether or not included in such definition), (a) whatever is acquired upon the sale, lease, license, exchange, or other disposition of the Collateral, (b) whatever is collected on, or distributed on account of, the Collateral, (c)
rights arising out of the Collateral, (d) claims arising out of the loss, nonconformity, or interference with the use of, defects or infringement of rights in, or damage to the Collateral, (e) insurance payable by reason of the loss or nonconformity
of, defects or infringement of rights in, or damage to the Collateral, and (f) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral. 
  

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 “Record” means information that is inscribed on a tangible medium or
that is stored in an electronic or other medium and is retrievable in perceivable form. 
  
 “Release Date” means the date upon which all of the Secured Obligations are paid in full, the Commitment of each Lender is terminated and all Letters of Credit have expired or
terminated. 
  
 “Secured Lender”
or “Secured Lenders” means (a) Administrative Agent, (b) Lenders, (c) L/C Issuer, (d) Swing Line Lender, (e) any Affiliate of any Lender that is a party to any Swap Contract (provided that such Lender was a Lender at the time such
Swap Contract was entered into) with any Grantor or any other Subsidiary of the Borrower, and (f) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document. 
  
 “Secured Obligations” means, collectively,
(a) the Obligations, and (b) any and all out-of-pocket expenses (including, without limitation, expenses and counsel fees and expenses of any Secured Lender) incurred by any Secured Lender in enforcing its rights under this Agreement. 
  
 “Securities Collateral” has the meaning
specified in Section 4.5. 
  
 “Software” means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to software (as defined in the UCC), and (whether or not included in such
definition), and computer program (including source and object code) and any supporting information provided in connection with a transaction relating to the programs, in each case subject to the terms of applicable licenses and only to the extent
used in the management of Accounts. 
  
 “Tangible Chattel Paper” means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to tangible chattel paper (as defined in the UCC), and
(whether or not included in such definition), chattel paper evidenced by a Record or Records consisting of information that is inscribed on a tangible medium. 
  

“UCC” means Chapters 8 and 9 of the Uniform Commercial Code as in effect from time to time in the State of Texas.

  
 Section 1.2 Other Definitional
Provisions. Capitalized terms not otherwise defined herein have the meaning specified in the Credit Agreement, and, to the extent of any conflict, terms as defined in the Credit Agreement shall control (provided, that a more expansive or
explanatory definition shall not be deemed a conflict). 
  
 Section 1.3 Construction. Unless otherwise expressly provided in this Agreement or the context requires otherwise, (a) the singular shall include the plural, and vice versa, (b) words of a gender include the other gender, (c)
monetary references are to Dollars, (d) time references are to Dallas time, (e) references to “Articles,” “Sections,” “Exhibits,” and “Schedules” are to the Articles, Sections, Exhibits, and Schedules of and
to this Agreement, (f) headings used in this Agreement are for convenience only and shall not be used in connection with the interpretation 

  

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of any provision hereof, (g) references to any Person include that Person’s heirs, personal representatives, successors, trustees, receivers, and
permitted assigns, that Person as a debtor-in possession, and any receiver, trustee, liquidator, conservator, custodian, or similar party appointed for such Person or all or substantially all of its assets, (h) references to any Law include every
amendment or restatement to it, rule and regulation adopted under it, and successor or replacement for it, (i) references to a particular Loan Document include each amendment or restatement to it made in accordance with the Credit Agreement and such
Loan Document, and (j) the inclusion of Proceeds in the definition of “Collateral” shall not be deemed a consent by the Secured Lenders to any sale or other disposition of any Collateral not otherwise specifically permitted by the terms of
the Credit Agreement or this Agreement. This Agreement is a Loan Document. 
  
 ARTICLE II. 
  
 GRANT OF
SECURITY INTEREST AND LICENSE 
  
 Section 2.1
Assignment and Grant of Security Interest; Grant of License. As security for the payment and performance, as the case may be, in full of the Secured Obligations, each Grantor hereby assigns to, and pledges and grants to Secured Party, for its
benefit and the ratable benefit of the other Secured Lenders: 
  
 (a) a security interest in the entire right, title, and interest of Grantor in and to all Collateral of each such Grantor, whether now or hereafter existing, owned, arising or acquired (provided, the amount of
Equity Interests of any Foreign Subsidiary pledged by such Grantor hereunder shall be limited to 66% of the issued and outstanding Equity Interests of such Foreign Subsidiary owned by such Grantor); and 
  
 (b) an irrevocable royalty-free right and license to use,
upon the occurrence and during continuance of an Event of Default, the Intellectual Property worldwide including, without limitation, the Intellectual Property identified in Schedule 2, and to enable Administrative Agent to exercise its
rights and remedies with respect to the Collateral, including, without limitation, the right to use the Intellectual Property on or in connection with the disposition, maintenance or further production, manufacturing or processing of the Inventory
and the collection of Accounts as Administrative Agent reasonably deems necessary or appropriate in the exercise of its rights and remedies with respect to Inventory and Accounts. 
  
 The Collateral shall not include any agreement, license or permit which by Law or by its terms validly
prohibits the granting of a security interest therein unless a consent to the security interest and pledge hereunder has been obtained; provided that the foregoing limitation shall not affect, limit, restrict, or impair the grant by each
Grantor of a security interest pursuant to this Agreement in any such Collateral to the extent that an otherwise applicable prohibition on such grant is rendered ineffective by the UCC or other applicable Law. Collateral shall not include any
general intangibles to the extent the grant by such Grantor of a security interest pursuant to this Agreement in such general intangibles is expressly prohibited or restricted, unless such prohibition or restriction is rendered ineffective pursuant
to Section 9.408 of the UCC, provided that the foregoing limitation shall not affect, limit, restrict or impair the grant by such Grantor of a security interest pursuant to this Agreement in any money or other amounts due or sums due in respect of
such general intangible under Section 9.408 of the UCC. 
  

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 Section 2.2 Grantor Remains Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and agreements included in such Grantor’s Collateral to the extent set forth herein to perform all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by any Secured Lender of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in such Grantor’s Collateral,
and (c) no Secured Lender shall have any obligation or liability under the contracts and agreements included in such Grantor’s Collateral by reason of this Agreement, nor shall any Secured Lender be obligated to perform any of the obligations
or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. 
  
 Section 2.3 Delivery of Pledged Equity Interests. All certificates or other Instruments constituting or evidencing the Pledged
Equity Interests shall be delivered to and held by or on behalf of Administrative Agent pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by undated and duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to Administrative Agent. If an Event of Default exists, Administrative Agent has the right, without notice to any Grantor, to transfer to or to register in the name of
Administrative Agent or any of its nominees any or all of such Collateral. In addition, Administrative Agent has the right at any time with the consent of the Borrower prior to an Event of Default to exchange certificates or instruments representing
or evidencing Pledged Equity Interests for certificates or instruments of smaller or larger denominations. 
  
 ARTICLE III. 
  
 REPRESENTATIONS AND WARRANTIES 
  
 Section 3.1 Representations and Warranties. Each Grantor represents and warrants to each Secured Lender severally with respect to itself and the Collateral owned by it that: 
  
 (a) This Agreement and the grant of the security interest
pursuant to this Agreement in the Collateral create a valid first priority security interest (other than such Collateral that would require the execution of a control agreement or would require that the Secured Party take possession of for such
first priority security interest) in favor of the Secured Party for the ratable benefit of the Secured Lenders in the Collateral (subject to Permitted Liens), securing the payment and performance of the Secured Obligations, and all filings and other
actions necessary to perfect and protect such security interest and such priority have been duly taken (or will be taken upon each Grantor obtaining rights in Collateral after the date hereof) and, upon the filing of all UCC-1 financing statements
for such Grantor on Schedule 3 hereto, in the form delivered by such Grantor to the Administrative Agent on or prior to the Closing Date and in the filing offices listed on such Schedule 3, and delivery to and continuing possession by
the Administrative Agent of all certificates evidencing the Pledged Equity Interests (together with executed stock powers), all filings and other actions necessary to perfect and protect such 

  

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security interest and such priority (subject to execution of a control agreement or possession by the Secured Party) have been duly taken (or will be taken
upon any Grantor obtaining rights in Collateral after the date hereof), subject, however, with respect to Proceeds, to the provisions of Section 9.315 of the UCC. 
  
 (b) Each Grantor has good and indefeasible title to all of the Collateral free and clear of any Lien, except
for Permitted Liens. No Grantor has granted a security interest or other Lien in or made an assignment of any of the Collateral, except for Permitted Liens. No Grantor has entered into nor is it or any of its property subject to any agreement
limiting the ability of such Grantor to grant a Lien in any property of such Grantor, or the ability of such Grantor to agree to grant or not grant a Lien in property of such Grantor (in each case, except as permitted by the Credit Agreement). None
of the Collateral is consigned Goods or subject to any agreement of repurchase, except in the ordinary course of business, nor subject to any dispute, defense, or counterclaim. No effective financing statement or other similar document used to
perfect and preserve a security interest or other Lien under the Laws of any jurisdiction covering all or any part of the Collateral is on file in any recording office, except such as may have been filed (i) pursuant to this Agreement or other Loan
Document, (ii) relating to Permitted Liens, or (iii) pursuant to the Existing Credit Agreement. Except as permitted under the Credit Agreement, each Grantor has not sold any interest in any of its Accounts (other than past due or doubtful Accounts
assigned to third parties for collection), or consigned any of its Inventory. 
  
 (c) All of the Pledged Equity Interests have been duly and validly issued, and the Pledged Stock is fully paid and nonassessable. All of the Pledged Equity Interests consisting of certificated
securities have been delivered to the Administrative Agent. Other than Pledged Partnership Interests, Pledged LLC Interests and Pledged Trust Interests constituting General Intangibles, there are no Pledged Equity Interests other than that
represented by certificated securities in the possession of the Administrative Agent. There are no restrictions in any Organization Document governing any Pledged Equity Interest or any other document related thereto which would limit or restrict
(i) the grant of a Lien in the Pledged Equity Interests, (ii) the perfection of such Lien or (iii) the exercise of remedies in respect of such perfected Lien in the Pledged Equity Interests as contemplated by this Agreement that have not been
waived. Upon the exercise of remedies in respect of Pledged Partnership Interests, Pledged LLC Interests and Pledged Trust Interests, a transferee or assignee of a partnership interest, a membership interest or a trust interest, as the case may be,
of such partnership, limited liability company or trust, as the case may be, shall become a partner, member, trustee, beneficiary or settler, as the case may be, of such partnership, limited liability company or trust, as the case may be, entitled
to participate in the management thereof to the extent such partnership, membership or trust interest would otherwise permit such transferee or assignee to participate in management and upon the transfer of the entire interest of such Grantor, such
Grantor ceases to be a partner, member, trustee, beneficiary or settlor, as the case may be. 
  
 (d) Schedule 4 states the exact name of each Grantor, as such name appears in its currently effective organizational documents as filed with the appropriate authority of the jurisdiction
of each Grantor’s organization. Schedule 4, Section (a) states the jurisdiction of organization of each Grantor. Schedule 4, Section (b) sets forth the type of entity and each other name each Grantor has had in the
past two years, together with the date of the relevant change. 

  

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Except as set forth in Schedule 4, Section (c), each Grantor has not changed its identity or type of entity in any way within the past two
years. Changes in identity or type of entity include mergers, consolidations, acquisitions (including both equity and asset acquisitions), and any change in the form, nature or jurisdiction of organization. Schedules 4 and 5 contain
the information required by this Section as to each acquiree or constituent party to a merger, consolidation, or acquisition within the preceding two years. Schedule 4, Section (d) states all other names (including trade, assumed, and
similar names) used by each Grantor or any of its divisions or other business units at any time during the past two years. Schedule 4, Section (e) states the Federal Taxpayer Identification Number of each Grantor. Schedule 4,
Section (f) states the corporate or other organizational number of each Grantor. 
  
 (e) As of the Closing Date, the chief executive office of each Grantor is located at the address stated on Schedule 5, Section (a). Schedule 5, Section (b) states all
locations where each Grantor maintains any books or records relating to all Accounts (with each location at which Chattel Paper, if any, is kept being indicated by an “*”). As of the Closing Date, Schedule 5, Section (c)
states all locations where each Grantor maintains any Inventory. As of the Closing Date, Schedule 5, Section (d) states all the places of business of each Grantor or other locations of Collateral not identified in Schedule 5,
Sections (a), (b), or (c). As of the Closing Date, Schedule 5, Section (e) states the names and addresses of all Persons other than each Grantor who have possession of any of the Collateral of each such Grantor.
 
  
 (f) All Accounts have been originated
by each Grantor and all Inventory has been acquired by each Grantor in the ordinary course of business. 
  
 (g) Each Grantor has exclusive possession and control of the Inventory pledged by it hereunder, other than Inventory in the hands of third
party processors, transporters or storage providers. 
  
 (h) As of the Closing Date, Schedule 6 is a complete and correct list of all insurance policies covering losses with respect to the Collateral for which each Grantor is a named insured. 
  
 (i) Each Grantor represents and warrants that it is the owner
of the material Intellectual Property identified in Schedule 2 and has the right to grant the rights and license granted herein. 
  
 (j) As of the Closing Date, except as set forth on Schedule 7, no consent of any other Person and no authorization, approval or
other action by, and no notice to or filing with, any Governmental Authority is required (i) for the pledge by each Grantor of the Collateral pledged by it hereunder, for the grant by each Grantor of the security interest granted hereby, or for the
execution, delivery, or performance of this Agreement by each Grantor, (ii) for the perfection or maintenance of the pledge, assignment, and security interest created hereby (including the first priority nature of such pledge, assignment, and
security interest) or (iii) for the enforcement of remedies by the Administrative Agent or any other Secured Lenders. 
  

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 ARTICLE IV. 
  
 COVENANTS 
  
 Section 4.1 Further Assurances. 
  
 (a) Each Grantor will, from time to time and at each Grantor’s expense, promptly execute and deliver such financing or continuation
statements, or amendments thereto and such patent or trademark office filings and promptly deliver such certificated securities, as may be necessary, or as Administrative Agent may request, in order to perfect and preserve the pledge, assignment,
and security interest granted or purported to be granted hereby, and take all further action in connection with the filing of such financing or continuation statements or amendments thereto, and such patent or trademark office filings that
Administrative Agent may reasonably request, in order to perfect and protect any pledge, assignment, or security interest granted or purported to be granted hereby, and the priority thereof, or to enable Administrative Agent to exercise and enforce
Administrative Agent’s and other Secured Lenders’ rights and remedies hereunder with respect to any Collateral. 
  
 (b) In addition to such other information as shall be specifically provided for herein, each Grantor shall furnish to Administrative Agent
such other information with respect to the Collateral as Administrative Agent may reasonably request. 
  
 (c) Each Grantor authorizes Administrative Agent to file one or more financing or continuation statements and amendments thereto and any
patent and trademark filings, relating to all or any part of the Collateral without the authentication of any Grantor where permitted by Law. A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or
any part thereof shall be sufficient as a financing statement where permitted by Law. Each Grantor ratifies its execution and delivery of, and the filing of, any financing statement describing any of the Collateral which was filed prior to the date
of this Agreement. 
  
 (d) Each Grantor will not,
and will not permit any Person to, revise, modify, amend, or restate the Organization Documents of any Person the Equity Interests in which is Pledged Equity Interests in a manner that adversely affects the security interest of the Secured Party
therein except as permitted by the Credit Agreement, or terminate, cancel, or dissolve any such Person except as permitted by the Credit Agreement. 
  
 (e) Each Grantor shall cooperate to determine what may or shall be required to satisfy the Laws throughout the world with respect to the
recordation and validation of the license of Intellectual Property granted pursuant to Section 2.1(b), or otherwise to render this Agreement and the license of Intellectual Property granted pursuant to Section 2.1(b) effective for the
purposes granted, and shall execute all documents which Administrative Agent reasonably determines to be necessary or desirable to implement this subsection, including registered user statements or other documents suitable for filing with the
appropriate Governmental Authorities. 
  

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 Section 4.2 Place of Perfection; Records; Collection of Accounts, Chattel Paper and
Instruments. 
  
 (a) No Grantor shall change
the jurisdiction of its organization from the jurisdiction specified in Schedule 4, Section (a), its type of entity from the type of entity specified in Schedule 4, Section (b), or its name from the name specified in
Schedule 4, unless the appropriate Grantor has delivered to Administrative Agent 30 days prior written notice and taken such actions as Administrative Agent may reasonably require with respect to such change. Each Grantor shall keep its chief
executive office at the address specified in Schedule 5, Section (a) and the office where it keeps its records concerning the Accounts, and the originals of all Chattel Paper and Instruments, at the address specified in Schedule
5, Section (b), unless the appropriate Grantor has delivered to Administrative Agent 30 days prior written notice and taken such actions as Administrative Agent may reasonably require with respect to such change. Each Grantor will hold
and preserve such records and Chattel Paper and Instruments and will permit representatives of Administrative Agent at any time during normal business hours to inspect and make abstracts from and copies of such records and Chattel Paper and
Instruments. 
  
 (b) Except as otherwise provided
in this Section 4.2(b), each Grantor shall continue to collect, at its own expense, all amounts due or to become due each Grantor under the Accounts, Chattel Paper, and Instruments. In connection with such collections, each Grantor may take
(and, at Administrative Agent’s direction, shall take) such action as each such Grantor or Administrative Agent may deem necessary or advisable to enforce collection of the Accounts, Chattel Paper, and Instruments; provided,
however, that Administrative Agent shall have the right, if an Event of Default exists and is continuing, without notice to any Grantor, to notify the Account Debtors or obligors under any Accounts, Chattel Paper, and Instruments of the
assignment of such Accounts, Chattel Paper, and Instruments to Administrative Agent and to direct such Account Debtors or obligors to make payment of all amounts due or to become due to each Grantor thereunder directly to Administrative Agent and,
at the expense of each Grantor, to enforce collection of any such Accounts, Chattel Paper, and Instruments, and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as each Grantor might have done
or as Administrative Agent deems appropriate. If any Event of Default has occurred and is continuing and upon notice to the Borrower and the applicable Grantor, all amounts and proceeds (including Instruments) received by each Grantor in respect of
the Accounts, Chattel Paper, and Instruments shall be received in trust for the benefit of Administrative Agent hereunder, shall be segregated from other funds and property of each Grantor and shall be forthwith paid or delivered over to
Administrative Agent in the same form as so received (with any necessary indorsement) to be held as cash collateral thereafter to be applied as provided in the Credit Agreement. Each Grantor shall not adjust, settle, or compromise the amount or
payment of any Account, Chattel Paper, or Instrument, release wholly or partly any Account Debtor or obligor thereof, or allow any credit or discount thereon, except in the ordinary course of business. 
  
 Section 4.3 Inventory. 
  
 Each Grantor shall keep substantially all of its Inventory
(other than Inventory subject to Dispositions permitted under Section 7.05 of the Credit Agreement,) at the addresses specified in Schedule 5 or at such other places if all action required by Section 4.1(a) shall have been taken with
respect to the Inventory so located at any new location and if the Administrative Agent is notified of such new location not more than thirty days after any such Inventory first becomes located at such new location. 
  

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 Section 4.4 Rights to Dividends and Distributions. With respect to any Pledged
Equity Interests, Administrative Agent shall have authority if an Event of Default exists and is continuing, either to have the same registered in Administrative Agent’s name or in the name of a nominee, and, with or without such registration,
to demand of the issuer thereof, and to receive and receipt for, any and all dividends (including any stock or similar dividend or distribution) payable in respect thereof, whether they be ordinary or extraordinary. The Administrative Agent shall
send to the respective Grantor notice of Administrative Agent’s election to take any action described in the preceding sentence; provided any failure of any Grantor to receive any such notice shall not invalidate any action taken by
Administrative Agent or impair any of its rights. If any Grantor shall become entitled to receive or shall receive any interest in or certificate (including, without limitation, any interest in or certificate representing a dividend or a
distribution in connection with any reclassification, increase, or reduction of capital, or issued in connection with any reorganization), or any option or rights arising from or relating to any of the Pledged Equity Interests, whether as an
addition to, in substitution of, as a conversion of, or in exchange for any of the Pledged Equity Interests, or otherwise, each Grantor agrees to accept the same as Administrative Agent’s agent and to hold the same in trust on behalf of and for
the benefit of Administrative Agent, and to deliver the same immediately to Administrative Agent in the exact form received, with appropriate undated stock or similar powers, duly executed in blank, to be held by Administrative Agent, subject to the
terms hereof, as Pledged Equity Interests. Unless an Event of Default exists, each Grantor shall be entitled to receive all cash dividends and distributions paid in respect of the Pledged Equity Interests, (subject to the restrictions of any other
Loan Document). Administrative Agent shall be entitled to all dividends and distributions, and to any sums paid upon or in respect of any Pledged Equity Interests, upon the liquidation, dissolution, or reorganization of the issuer thereof (except
those constituting Dispositions permitted under the Credit Agreement) which shall be paid to Administrative Agent to be held by it as additional collateral security for and application to the Secured Obligations at the discretion of Administrative
Agent. All dividends paid or distributed in respect of the Pledged Equity Interests which are received by any Grantor in violation of this Agreement shall, until paid or delivered to Administrative Agent, be held by each Grantor in trust as
additional Collateral for the Secured Obligations. 
  
 Section 4.5 Right of Administrative Agent to Notify Issuers. If an Event of Default exists and is continuing and at such other times as Administrative Agent is entitled to receive dividends and other property in respect of or
consisting of any Collateral which is or represents an equity or ownership interest in any Person (“Securities Collateral”), Administrative Agent may notify issuers of the Securities Collateral to make payments of all dividends and
distributions directly to Administrative Agent and Administrative Agent may take control of all Proceeds of any Securities Collateral. Until Administrative Agent elects to exercise such rights, if an Event of Default exists, each Grantor, as agent
of Administrative Agent, shall collect and segregate all dividends and other amounts paid or distributed with respect to the Securities Collateral. 
  

 12 

 Section 4.6 Insurance. All policies of insurance required to be maintained
pursuant to Section 6.07 of the Credit Agreement covering Collateral shall be written for the benefit of Administrative Agent, for itself and the other Secured Lenders and each Grantor, as their interests may appear, and shall provide for at
least thirty Business Days’ prior written notice of cancellation to Administrative Agent. Upon reasonable request by Administrative Agent, each Grantor shall promptly furnish to Administrative Agent evidence of such insurance in form and
content satisfactory to Administrative Agent. If any Grantor fails to perform or observe any applicable covenants as to insurance, Administrative Agent may at its option obtain insurance on only Secured Lenders’ interest in the Collateral, any
premium thereby paid by Administrative Agent to become part of the Secured Obligations, bear interest prior to the existence of an Event of Default, at the then applicable Base Rate, and during the existence of an Event of Default, at the lesser of
(i) the Highest Lawful Rate and (ii) the Default Rate. If Administrative Agent maintains such substitute insurance, the premium for such insurance shall be due on demand and payable by the applicable Grantor to Administrative Agent. Each Grantor
grants and appoints Administrative Agent its attorney-in-fact to, if an Event of Default exists, endorse any check or draft that may be payable to each such Grantor in order to collect any payments in respect of insurance, including any refunds of
unearned premiums in connection with any cancellation, adjustment, or termination of any policy of insurance. Any such sums collected by Administrative Agent shall be credited, except to the extent applied to the purchase by Administrative Agent of
similar insurance, to any amounts then owing on the Secured Obligations in accordance with the Credit Agreement. 
  
 Section 4.7 Transfers and Other Liens. No Grantor shall (a) Dispose of any of the Collateral, except as permitted under the Credit
Agreement and the other Loan Documents, or (b) create or permit to exist any Lien upon or with respect to any of the Collateral, except for Permitted Liens. 
  
 Section 4.8 Administrative Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints Administrative Agent
Grantor’s attorney-in-fact, with full authority in the place and stead of each Grantor and in the name of each Grantor or otherwise to take any action and to execute any instrument which Administrative Agent may deem reasonably necessary or
advisable to accomplish the purposes of this Agreement, including, without limitation (provided that the actions listed in each clause below other than the obtainment of insurance may only be taken or exercised if an Event of Default exists):

  
 (a) to obtain and adjust insurance required
to be paid to Administrative Agent pursuant to Section 4.6; 
  
 (b) to ask, demand, collect, sue for, recover, compromise, receive, and give acquittance and receipts for moneys due and to become due under or in connection with the Collateral; 
  
 (c) to receive, indorse, and collect any drafts or other
Instruments, documents, and Chattel Paper, in connection therewith; and 
  

 13 

 (d) to file any claims or take any action or institute any proceedings which
Administrative Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce compliance with the terms and conditions of any Collateral or the rights of Administrative Agent with respect to any of the
Collateral. EACH GRANTOR HEREBY IRREVOCABLY GRANTS TO ADMINISTRATIVE AGENT EACH SUCH GRANTOR’S PROXY (EXERCISABLE ONLY IF AN EVENT OF DEFAULT EXISTS) TO VOTE ANY SECURITIES COLLATERAL AND APPOINTS ADMINISTRATIVE AGENT EACH SUCH
GRANTOR’S ATTORNEY-IN-FACT TO PERFORM ALL OBLIGATIONS OF GRANTOR UNDER THIS AGREEMENT AND TO EXERCISE ALL OF ADMINISTRATIVE AGENT’S AND EACH OTHER SECURED PARTY’S RIGHTS HEREUNDER. THE PROXY AND EACH POWER OF ATTORNEY HEREIN GRANTED,
AND EACH STOCK POWER AND SIMILAR POWER NOW OR HEREAFTER GRANTED (INCLUDING ANY EVIDENCED BY A SEPARATE WRITING), ARE COUPLED WITH AN INTEREST AND ARE IRREVOCABLE PRIOR TO FINAL PAYMENT IN FULL OF THE SECURED OBLIGATIONS. 
  
 Section 4.9 Intellectual Property. 
  
 (a) The parties acknowledge and agree that the Intellectual
Property is the sole and exclusive property of each applicable Grantor, subject to the terms and conditions stated in this Agreement. Other than in connection with any security interest in the Intellectual Property that any Grantor has granted to
Secured Party, or any rights and remedies of Secured Lenders under Applicable Law, neither Administrative Agent nor any other Secured Lender shall challenge any Grantor’s ownership of the Intellectual Property. Each Grantor expressly retains
all rights, prior to the occurrence of an Event of Default, to license third parties to use the Intellectual Property for any purpose whatsoever not in violation of the Loan Documents and which are not exclusive as to prevent Administrative Agent
from using any of the Intellectual Property. 
  
 (b) The license granted to Administrative Agent hereunder shall include the right of Administrative Agent to grant sublicenses to others to use the Intellectual Property if an Event of Default exists, and to enable such sublicensees to
exercise any rights and remedies of Secured Lenders with respect to the Collateral, as Administrative Agent reasonably deems necessary or appropriate in the exercise of the rights and remedies of Secured Lenders. In any country where sublicenses are
incapable of registration or where registration of a sublicense will not satisfactorily protect the rights of Grantor and Administrative Agent, Administrative Agent shall also have the right to designate other parties as direct licensees of Grantor
to use the Intellectual Property if an Event of Default exists and to enable such direct licensees to exercise any rights and remedies of Secured Lenders as such licensees reasonably deem necessary or appropriate and Grantor agrees to enter into
direct written licenses with the parties as designated on the same terms as would be applicable to a sublicense, and any such direct license may, depending on the relevant local requirements, be either (a) in lieu of a sublicense or
(b) supplemental to a sublicense. In either case, the parties hereto shall cooperate to determine what shall be necessary or appropriate in the circumstances. For each sublicense to a sublicensee and direct license to a licensee, Grantor appoints
Administrative Agent its agent for the purpose of exercising quality control over the sublicensee. Grantor shall execute this Agreement in any form, content and language suitable for recordation, notice and/or registration in all available and
appropriate agencies of foreign countries as Administrative Agent may require. 
  

 14 

 (c) In connection with the assignment or other transfer (in whole or in part) of its
obligations to any other Person, Administrative Agent may assign the license granted herein without Grantor’s consent and upon such assignment or transfer such other Person shall thereupon become vested with all rights and benefits in respect
thereof granted to Administrative Agent under this Agreement (to the extent of such assignment or transfer). 
  
 (d) The parties hereto shall take reasonable action to preserve the confidentiality of the Intellectual Property; provided, that
Administrative Agent shall not have any liability to any Person for any disclosure of the Intellectual Property related to Collateral upon and after any realization upon such Collateral. 
  
 Section 4.10 Dilution of Ownership. As to any Pledged Equity Interests, unless otherwise permitted by
the Credit Agreement, no Grantor will consent to or approve of the issuance of (a) any additional shares of any class of Equity Interests of such issuer (unless immediately upon issuance additional Equity Interests are pledged and delivered to the
Administrative Agent pursuant to the terms hereof to the extent necessary to give Secured Party a security interest after such issuance in at least the same percentage of such issuer’s outstanding securities or other equity interest as Secured
Party had before such issuance), (b) any instrument convertible voluntarily by the holder thereof or automatically upon the occurrence or non-occurrence of any event or condition into, or exchangeable for, any such securities or other equity
interests, or (c) any warrants, options, contracts or other commitments entitling any third party to purchase or otherwise acquire any such securities or other equity interests. The foregoing shall not apply to any Equity Interests in Borrower.

  
 Section 4.11 Restrictions on
Securities. No Grantor will enter into any agreement creating, or otherwise permit to exist, any restriction or condition upon the transfer, voting or control of any Pledged Equity Interests, except (a) as consented to in writing by the Secured
Party, (b) required by provisions of applicable Securities Laws or state securities Laws (which provisions are subject to Laws that expressly prohibit waiver of such provision), or (c) otherwise permitted by the Credit Agreement. No issuer of any
Pledged Equity Interests, which is either a partnership or limited liability company, shall amend or restate its partnership agreement or certificate of organization or operating agreement, respectively, or other governance document, to provide that
any Equity Interest of such Issuer is a security governed by Chapter 8 of the Code or permit any Equity Interest of such issuer to be evidenced by a certificate or other instrument. 
  
 ARTICLE V. 
  
 RIGHTS AND POWERS OF SECURED PARTY. 
  
 Section 5.1 Administrative Agent May Perform. If any Grantor fails to perform any agreement contained herein, Administrative Agent
may itself perform, or cause performance of, such agreement, and the expenses of Administrative Agent incurred in connection therewith shall be payable by each such Grantor under Section 5.5. 
  

 15 

 Section 5.2 Administrative Agent’s Duties. The powers conferred on
Administrative Agent hereunder are solely to protect Secured Lenders’ interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by Secured Lenders hereunder, neither Administrative Agent nor any other Secured Lender shall have any duty as to any Collateral, as to ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders, or other matters relative to any Collateral, whether or not Administrative Agent or any other Secured Lender has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which Administrative Agent
accords its own property. Except as provided in this Section 5.2, neither Administrative Agent nor any other Secured Lender shall have any duty or liability to protect or preserve any Collateral or to preserve rights pertaining thereto.
Nothing contained in this Agreement shall be construed as requiring or obligating Administrative Agent or any other Secured Lender, and neither Administrative Agent nor any other Secured Lender shall be required or obligated, to (a) present or file
any claim or notice or take any action, with respect to any Collateral or in connection therewith or (b) notify any Grantor of any decline in the value of any Collateral. 
  
 Section 5.3 Remedies. If an Event of Default exists: 
  
 (a) Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or otherwise available to it or any other Secured Lender pursuant to any Applicable Law, all the rights and remedies of a secured party on default under the UCC (whether or not
the UCC applies to the affected Collateral), and also may require each Grantor to, and each Grantor will at its expense and upon request of Administrative Agent forthwith, assemble all or part of the Collateral as directed by Administrative Agent
and make it available to Administrative Agent at a place to be designated by Administrative Agent which is reasonably convenient to both parties at public or private sale, at any of Administrative Agent’s offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as Administrative Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by Law, ten days’ notice to each Grantor of the time and
place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. Administrative Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given.
Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. 
  
 (b) All cash proceeds received by Administrative Agent upon
any sale of, collection of, or other realization upon, all or any part of the Collateral shall be applied as set forth in Section 8.03 of the Credit Agreement. 
  
 (c) All payments received by each Grantor under or in connection with any Collateral shall be received in
trust for the benefit of Administrative Agent, shall be segregated from other funds of each such Grantor, and shall be forthwith paid over to Administrative Agent in the same form as so received (with any necessary indorsement). 
  

 16 

 (d) Because of the Securities Act of 1933, as amended (“Securities
Act”), and other Laws, including without limitation state “blue sky” Laws, or contractual restrictions or agreements, there may be legal restrictions or limitations affecting Administrative Agent in any attempts to dispose of the
Pledged Equity Interests and the enforcement of rights under this Agreement. For these reasons, Administrative Agent is authorized by each Grantor, but not obligated, if any Event of Default exists, to sell or otherwise dispose of any of the Pledged
Equity Interests at private sale, subject to an investment letter, or in any other manner which will not require the Pledged Equity Interests, or any part thereof, to be registered in accordance with the Securities Act, or any other Law.
Administrative Agent is also hereby authorized by each Grantor, but not obligated, to take such actions, give such notices, obtain such consents, and do such other things as Administrative Agent may deem required or appropriate under the Securities
Act or other securities Laws or other Laws or contractual restrictions or agreements in the event of a sale or disposition of any Pledged Equity Interests. Each Grantor understands that Administrative Agent may in its discretion approach a
restricted number of potential purchasers and that a sale under such circumstances may yield a lower price for the Pledged Equity Interests than would otherwise be obtainable if same were registered and/or sold in the open market. No sale so made in
good faith by Administrative Agent shall be deemed to be not “commercially reasonable” because so made. Each Grantor agrees that if an Event of Default exists, and Administrative Agent sells the Pledged Equity Interests or any portion
thereof at any private sale or sales, Administrative Agent shall have the right to rely upon the advice and opinion of appraisers and other Persons, which appraisers and other Persons are acceptable to Administrative Agent, as to the best price
reasonably obtainable upon such a private sale thereof. In the absence of bad faith or gross negligence, such reliance shall be prima facie evidence that Administrative Agent and the other Secured Lenders handled such matter in a commercially
reasonable manner under Applicable Law. 
  
 (e)
After notice to Grantor, Administrative Agent and such Persons as Administrative Agent may reasonably designate shall have the right, at Grantor’s own cost and expense, to verify under reasonable procedures, the validity, amount, quality,
quantity, value, condition, and status of, or any other matter relating to, the Collateral, including, in the case of Accounts or Collateral in the possession of any third person, by contacting Account Debtors or the third person possessing such
Collateral for the purpose of making such a verification. Administrative Agent shall have the absolute right to share any information it gains from such inspection or verification with any Secured Lender. 
  
 (f) For purposes of enabling Administrative Agent to exercise
rights and remedies under this Agreement, each Grantor grants (to the extent not otherwise prohibited by a license with respect thereto) to Administrative Agent an irrevocable, nonexclusive license (exercisable without payment of royalty or other
compensation to any Grantor or any other Person, provided, that if the license granted to Administrative Agent is a sublicense, each Grantor shall be solely responsible for, and indemnify Administrative Agent against, any royalty or other
compensation payable to Grantor’s licensor or other Person) to use, if an Event of Default exists, all of Grantor’s Software, and including in such license reasonable access to all media in which any of the licensed items may be recorded
and all related manuals. 
  

 17 

 (g) Administrative Agent may dispose of any Inventory and any other manufactured products
under any of the Intellectual Property licensed hereby, provided the Inventory and any other manufactured products so disposed of by it or any other Person acting on behalf of licensee shall comply in any material respect with (i) quality standards
and specifications, including labeling specifications, employed by Grantor in commerce prior to the occurrence of the relevant Event of Default, or, where no such standards and specifications exist, a level of quality comparable to the quality
standards generally accepted for other leading competitive brands of the same item of Inventory in the same markets from time to time; or (ii) a level of quality comparable to that which may be adopted by Grantor for its or its other licensees’
products. 
  
 (h) The license granted with respect
to any Intellectual Property may be terminated only upon the event that the Secured Obligations which are secured in part by the Collateral of Grantor and by the license granted herein, are finally and fully satisfied and paid in accordance with all
terms and conditions of the Loan Documents at the time of such termination. If after termination of this Agreement, there occurs a rescission of payment of any of the Secured Obligations or the restoration of such payments by Administrative Agent,
any Lender or any other Person upon the insolvency, bankruptcy or reorganization of Grantor or any other Person, this Agreement shall be reinstated as though such payment had not been made and remain in full force and effect in accordance with the
terms of the preceding sentence. 
  
 Section 5.4
INDEMNITY AND EXPENSES. 
  
 (a) EACH GRANTOR SHALL INDEMNIFY (WHICH SHALL BE PAYABLE FROM TIME TO TIME ON DEMAND) SECURED LENDERS FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES, AND LIABILITIES (INCLUDING REASONABLE ATTORNEYS’ FEES) GROWING OUT OF OR RESULTING FROM
THIS AGREEMENT (INCLUDING ENFORCEMENT OF THIS AGREEMENT), EXPRESSLY INCLUDING SUCH CLAIMS, LOSSES, OR LIABILITIES ARISING OUT OF MERE NEGLIGENCE OF ANY SECURED PARTY, EXCEPT CLAIMS, LOSSES, OR LIABILITIES RESULTING FROM ANY SECURED LENDER’S
(i) GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OR (ii) BREACH IN BAD FAITH OF ITS OBLIGATIONS HEREUNDER. 
  
 (b) EACH GRANTOR WILL UPON DEMAND PAY TO ADMINISTRATIVE AGENT (AND EACH SUB-AGENT THEREOF) AND THEIR RESPECTIVE RELATED
PARTIES THE AMOUNT OF ANY AND ALL REASONABLE EXPENSES, INCLUDING THE REASONABLE FEES AND EXPENSES OF ITS COUNSEL AND OF ANY EXPERTS AND AGENTS, WHICH ADMINISTRATIVE AGENT (AND EACH SUB-AGENT THEREOF) AND THEIR RESPECTIVE RELATED PARTIES MAY INCUR IN
CONNECTION WITH THE ADMINISTRATION OF THIS AGREEMENT. 
  

 18 

 (c) EACH GRANTOR WILL UPON DEMAND PAY TO ADMINISTRATIVE AGENT (AND EACH
SUB-AGENT THEREOF), EACH OTHER SECURED LENDER AND THEIR RESPECTIVE RELATED PARTIES THE AMOUNT OF ANY AND ALL EXPENSES, INCLUDING THE FEES AND EXPENSES OF ITS COUNSEL AND OF ANY EXPERTS AND AGENTS, WHICH ADMINISTRATIVE AGENT (AND EACH SUB-AGENT
THEREOF), SUCH OTHER SECURED LENDER AND THEIR RESPECTIVE RELATED PARTIES MAY INCUR IN CONNECTION WITH (I) THE CUSTODY, PRESERVATION, USE OR OPERATION OF, OR THE SALE OF, COLLECTION FROM, OR OTHER REALIZATION UPON, ANY OF THE COLLATERAL, (II) THE
EXERCISE OR ENFORCEMENT OF ANY OF THE RIGHTS OF ANY SECURED LENDER HEREUNDER, OR (III) THE FAILURE BY GRANTOR TO PERFORM OR OBSERVE ANY OF THE PROVISIONS HEREOF. 
  
 ARTICLE VI. 
  
 MISCELLANEOUS 
  
 Section 6.1 Maximum Liability. Anything in this Agreement to the contrary notwithstanding, the obligations of each Grantor (other
than Borrower) hereunder shall be limited to a maximum aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the
United States Code or any applicable provisions of comparable Law (collectively, the “Fraudulent Transfer Laws”), in each case after giving effect to all other liabilities of each Grantor, contingent or otherwise, that are relevant
under the Fraudulent Transfer Laws (specifically excluding, however, any liabilities of each Grantor in respect of intercompany indebtedness to other Loan Parties or Affiliates of other Loan Parties to the extent that such indebtedness would be
discharged in an amount equal to the amount paid or property conveyed by each Grantor under the Loan Documents) and after giving effect as assets, subject to Section 6.2, to the value (as determined under the applicable provisions of the
Fraudulent Transfer Laws) of any rights to subrogation or contribution of each Grantor pursuant to (a) Applicable Law or (b) any agreement providing for an equitable allocation among each Grantor and other Loan Parties of obligations arising under
the Loan Documents. 
  
 Section 6.2 Waiver of
Subrogation. No Grantor shall assert, enforce, or otherwise exercise (a) any right of subrogation to any of the rights or Liens of any Secured Lender or any other beneficiary against any other Loan Party or any Collateral, or (b) any right of
recourse, reimbursement, contribution, indemnification, or similar right against any other Loan Party on all or any part of the Obligations or any other Loan Party, and each Grantor hereby waives any and all of the foregoing rights and the benefit
of, and any right to participate in, and Collateral or other security given to or for the benefit of any Secured Lender or any other beneficiary to secure payment of the Obligations. This Section 6.2 shall survive the termination of this
Agreement, and any satisfaction and discharge of each Grantor by virtue of any payment, court order, or Law. 
  

 19 

 Section 6.3 Cumulative Rights. All rights of Administrative Agent and each other
Secured Lender under the Loan Documents are cumulative of each other and of every other right which Administrative Agent and each other Secured Lender may otherwise have at Law or in equity or under any other agreement. The exercise of one or more
rights shall not prejudice or impair the concurrent or subsequent exercise of other rights. 
  
 Section 6.4 Amendments; Waivers. Any term, covenant, agreement, or condition of this Agreement may be amended, and any right under this Agreement may be waived, if, but only if, such
amendment or waiver is in writing and is signed by Administrative Agent and, in the case of an amendment, by each Grantor. Unless otherwise specified in such waiver, a waiver of any right under this Agreement shall be effective only in the specific
instance and for the specific purpose for which given. No election not to exercise, failure to exercise or delay in exercising any right, nor any course of dealing or performance, shall operate as a waiver of any right of any Secured Lender under
this Agreement or Applicable Law, nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right of any Secured Lender under this Agreement or Applicable Law. 

 
 Section 6.5 Continuing Security Interest.

  
 (a) This Agreement creates a continuing
security interest in the Collateral and shall (x) remain in full force and effect until the Release Date, (y) be binding upon each Grantor, its successors and assigns, and (z) inure to the benefit of, and be enforceable by, Administrative Agent and
its successors, transferees and assigns. Upon the Release Date, this Agreement and all obligations (other than those expressly stated to survive such termination) of Administrative Agent and each Grantor hereunder shall terminate, all without
delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the granting parties and Administrative Agent will, at Grantor’s expense, execute and deliver to each Grantor such documents
(including without limitation UCC termination statements) as each such Grantor shall reasonably request to evidence such termination and shall deliver to such Grantor any Collateral held by Administrative Agent hereunder. Each Grantor agrees that to
the extent that Administrative Agent or any other Secured Lender receives any payment or benefit and such payment or benefit, or any part thereof, is subsequently invalidated, declared to be fraudulent or preferential, set aside or is required to be
repaid to a trustee, receiver, or any other Person under any Debtor Relief Law, common law or equitable cause, then to the extent of such payment or benefit, the Obligations or part thereof intended to be satisfied shall be revived and continued in
full force and effect as if such payment or benefit had not been made and, further, any such repayment by Administrative Agent or any other Secured Lender, to the extent that Administrative Agent or any other Secured Lender did not directly receive
a corresponding cash payment, shall be added to and be additional Obligations payable upon demand by Administrative Agent or any other Secured Lender and secured hereby, and, if the Lien and security interest hereof shall have been released, such
Lien and security interest shall be reinstated with the same effect and priority as on the date of execution hereof all as if no release of such Lien or security interest had ever occurred. 
  
 (b) In connection with any sale or other disposition of
Collateral permitted by the Credit Agreement, the Lien pursuant to this Agreement on such sold or disposed of Collateral 

  

 20 

 
shall be automatically released. In connection with the sale or other disposition of Collateral permitted under the Credit Agreement, Administrative Agent
shall, upon receipt from the Borrower of a written request for the release of such Collateral subject to such sale or other disposition, identifying such Collateral, deliver to such Grantor, as the case may be, such Collateral held by Administrative
Agent hereunder and execute and deliver to the relevant Grantor (at the sole cost and expense of such Grantor) or authorize such Grantor to file all releases or other documents (including without limitation UCC termination statements) necessary or
reasonably desirable for the release of Liens created hereby on such Collateral as such Grantor may reasonably request. 
  
 Section 6.6 GOVERNING LAW; WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION AND SERVICE OF PROCESS. 
  
 (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE AND APPLICABLE FEDERAL LAW. 
  
 (b) EACH GRANTOR, THE SECURED PARTY AND EACH SECURED LENDER, BY ACCEPTANCE HEREOF, IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS SITTING IN DALLAS COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE NORTHERN DISTRICT OF TEXAS, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH GRANTOR, THE SECURED PARTY AND EACH OTHER SECURED LENDER IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH TEXAS STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH GRANTOR, THE SECURED PARTY AND EACH OTHER SECURED LENDER BY
ACCEPTANCE HEREOF, AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER
LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE SECURED PARTY, ANY SECURED LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY GRANTOR OR ITS PROPERTIES IN THE
COURTS OF ANY JURISDICTION. 
  
 (c) EACH GRANTOR,
THE SECURED PARTY AND EACH SECURED LENDER, BY ACCEPTANCE HEREOF, IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE 

  

 21 

 
OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS
SECTION. EACH GRANTOR, THE SECURED PARTY AND EACH OTHER SECURED LENDER, BY ACCEPTANCE HEREOF, HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT. 
  
 (d) EACH
GRANTOR, THE SECURED PARTY AND EACH OTHER SECURED LENDER, BY ACCEPTANCE HEREOF, IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02 OF THE CREDIT AGREEMENT. NOTHING IN THIS AGREEMENT WILL AFFECT THE
RIGHT OF EACH GRANTOR, THE SECURED PARTY AND EACH OTHER SECURED LENDER, TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. 
  
 (e) EACH GRANTOR, THE SECURED PARTY AND EACH OTHER SECURED LENDER, BY ACCEPTANCE HEREOF, HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN
DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH GRANTOR, THE SECURED PARTY AND EACH SECURED LENDER, BY ACCEPTANCE HEREOF, HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 
  
 Section 6.7 Administrative Agent’s Right to Use Agents. Administrative Agent may exercise its rights under this Agreement through an agent or other designee. 
  
 Section 6.8 No Interference, Compensation or Expense.
Administrative Agent may exercise its rights under this Agreement (a) without resistance or interference by any Grantor and (b) without payment of any rent, license fee, or compensation of any kind to any Grantor. 
  
 Section 6.9 Waivers of Rights Inhibiting Enforcement.
Each Grantor waives (a) any claim that, as to any part of the Collateral, a private sale, should Administrative Agent elect so to proceed, is, in and of itself, not a commercially reasonable method of sale for such Collateral, (b) except as
otherwise provided in this Agreement, TO THE FULLEST EXTENT NOT PROHIBITED BY APPLICABLE LAW, NOTICE OR JUDICIAL HEARING IN CONNECTION WITH ADMINISTRATIVE AGENT’S DISPOSITION OF ANY OF THE COLLATERAL INCLUDING ANY AND ALL PRIOR NOTICE AND
HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT 

  

 22 

 
EACH GRANTOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, AND ALL OTHER REQUIREMENTS AS TO THE TIME,
PLACE AND TERMS OF SALE OR OTHER REQUIREMENTS WITH RESPECT TO THE ENFORCEMENT OF SECURED LENDERS’ RIGHTS HEREUNDER and (c) all rights of redemption, appraisement or valuation. 
  
 Section 6.10 Obligations Not Affected. To the fullest extent not prohibited by Applicable Law, the
obligations of each Grantor under this Agreement shall remain in full force and effect without regard to, and shall not be impaired or affected by: 
  
 (a) any amendment, addition, or supplement to, or restatement of any Loan Document or any instrument delivered in connection therewith or
any assignment or transfer thereof; 
  
 (b) any
exercise, non-exercise, or waiver by Secured Party or any other Secured Lender of any right, remedy, power, or privilege under or in respect of, or any release of any guaranty, any collateral, or the Collateral or any part thereof provided pursuant
to, this Agreement or any Loan Document; 
  
 (c)
any waiver, consent, extension, indulgence, or other action or inaction in respect of this Agreement or any Loan Document or any assignment or transfer of any thereof; 
  
 (d) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation, or the
like of any Loan Party or any other Person, whether or not each Grantor shall have notice or knowledge of any of the foregoing; or 
  
 (e) any other event which may give a Grantor or any other Loan Party a defense to, or a discharge of, any of its obligations under any
Loan Document. 
  
 Section 6.11 Notices and
Deliveries. All notices and other communications provided for hereunder shall be effectuated in the manner provided for in Section 10.02 of the Credit Agreement, provided that if a notice or communication hereunder is to a Grantor other
than the Borrower, said notice shall be addressed to such Grantor, in care of the Borrower at the Borrower’s then current address (or facsimile number) for notice under the Credit Agreement. 
  
 Section 6.12 Severability. If any provision of this
Agreement is held to be illegal, invalid, or unenforceable under present or future Laws during the term thereof, (a) such provision shall be fully severable, this Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part hereof, and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance herefrom and (b)
the parties shall endeavor in good faith negotiations to replace the illegal, invalid, or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid, or unenforceable
provisions. 
  

 23 

 Section 6.13 Successors and Assigns. All of the provisions of this Agreement shall
be binding and inure to the benefit of the parties hereto and their respective successors and assigns (including, as to each Grantor, all Persons who may become bound as a debtor or a new debtor to this Agreement); provided, each Grantor may
not assign any of its rights or obligations under this Agreement, except as a result of the consummation of a transaction permitted under Section 7.04 of the Credit Agreement. 
  
 Section 6.14 Counterparts. This Agreement may be executed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto were upon the same instrument. 
  
 Section 6.15 Waiver. To the extent not prohibited by Applicable Law, each Grantor, which is a partner in any partnership in which
any Pledged Partnership Interests are being pledged hereunder, a member in any limited liability company in which any Pledged Membership Interests are being pledged hereunder, or a trustee, settlor or beneficiary of any trust in which Pledged Trust
Interests are being pledged hereunder, hereby agrees that any provision of any Organization Document, the Delaware Limited Liability Company Act (as it may be amended or restated) or any other governance document that in any manner restricts,
prohibits or provides conditions to (a) the grant of a Lien on any interest in such partnership, limited liability company or trust, (b) any transfer of any interest in such partnership, limited liability company or trust, (c) any change in
management or control of such partnership, limited liability company or trust, or (d) any other exercise by the Administrative Agent of any rights pursuant to this Agreement, any other Loan Document or Law shall not apply to (i) the grant of any
Lien hereunder, (ii) the execution, delivery and performance of this Agreement by any such Grantor, or (iii) the foreclosure or other realization upon any interest in any Pledged Equity Interest. Furthermore, each such Grantor agrees that it will
not permit any amendment to or restatement of any Organization Document or any other governance document in any manner to adversely affect the Administrative Agent’s ability to foreclose on any Pledged Equity Interest or which conflicts with
the provisions of this Section 6.15 without the prior written consent of the Administrative Agent. 
  
 Section 6.16 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. 
  
 THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK. 
  

 24 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their respective duly authorized officers as of the date first above written. 
  

			
	 GRANTORS:

	
	 CHAPARRAL STEEL COMPANY

		
	 By:
	 	 /s/ Tommy A. Valenta

	 	 	 Tommy A. Valenta

	 	 	 President and Chief Executive Officer

  

 Security Agreement Signature Page 

			
	 CHAPARRAL STEEL INVESTMENTS, INC.

	 CHAPARRAL (VIRGINIA) INC.

		
	 By:
	 	 /s/ Richard M. Fowler

	 	 	 Richard M. Fowler

	 	 	 Vice President - Finance

  
  

 Security Agreement Signature Page 

			
	AMERICAN MATERIALS TRANSPORT, INC.
		
	 By:
	 	 /s/ J. Celtyn Hughes

	 	 	 J. Celtyn Hughes

	 	 	 Vice President – Finance

  
  

 Security Agreement Signature Page 

			
	 CHAPARRAL STEEL HOLDINGS, LLC

	 CHAPARRAL STEEL TRUST

		
	 By:
	 	 /s/ Richard M. Fowler

	 	 	 Richard M. Fowler

	 	 	 President

	
	 CHAPARRAL STEEL TEXAS, LLC

		
	 By:
	 	 /s/ Richard M. Fowler

	 	 	 Richard M. Fowler

	 	 	 Vice President and Chief Financial Officer

	
	 CHAPARRAL STEEL MIDLOTHIAN, LP

		
	 By:
	 	 Chaparral Steel Texas, LLC, its general partner

		
	 By:
	 	 /s/ Richard M. Fowler

	 	 	 Richard M. Fowler

	 	 	 Vice President and Chief Financial Officer

	
	 TXI STAR RECYCLING LP

		
	 By:
	 	 Chaparral Steel Texas, LLC, its general partner

		
	 By:
	 	 /s/ Richard M. Fowler

	 	 	 Richard M. Fowler

	 	 	 Vice President and Chief Financial Officer

  
  

 Security Agreement Signature Page 

			
	 SECURED PARTY:

	
	 BANK OF AMERICA, N.A., as administrative Agent

		
	 By:
	 	 /s/ David A. Johanson

	 Name:
	 	 David A. Johanson

	 Title:
	 	 Vice President

  

 Security Agreement Signature Page 

 SCHEDULE 1 
  

Pledged Equity Interests 
  
 Except as noted in the notes below, each entity owns beneficially and of record 100% of the equity interest in each entity in the indented list below it

  

			
	 Name of Entity

	  	Number of Shares Outstanding

	 Chaparral Steel Company
	  	22,728,000
	 Chaparral Steel Investments, Inc
	  	1,000
	 Chaparral Steel Holdings, LLC
	  	—  
	 Chaparral Steel Texas, LLC
	  	—  
	 Chaparral Steel Trust
	  	—  
	 Chaparral (Virginia) Inc.
	  	1,000
	 American Materials Transport, Inc.
	  	1,000
	 Chaparral Steel Midlothian, LP (1)
	  	—  
	 TXI Star Recycling LP (1)
	  	—  
	 Aceros Chaparral, S. de R. L. de C. V. (2)
	  	—  
	 Servicios Chaparral, S. de R. L. de C. V. (3)
	  	—  

	 (1)
	 Delaware limited partnership: Chaparral Holdings, LLC, general partner (1% interest); Chaparral Steel Trust, limited partner (99% interest).

	 (2)
	 Mexico limited liability company: Chaparral Investments, Inc. (50% interest) and Chaparral Steel Midlothian, LP (50% interest), owners.

	 (3)
	 Mexico limited liability company: Aceros Chaparral, S. de R. L. de C. V. (99.97% interest) and Chaparral Steel Midlothian, LP (0.03% interest), owners.

  
 THE REMAINDER OF THIS PAGE IS INTENTIONALLY
LEFT BLANK. 
  

 Schedule 1 - Page 1 

 SCHEDULE 2 
  

Intellectual Property 
  

	 A.
	 Material Proprietary Rights – None necessary to conduct operations of Grantors. 

  
 Computer technology used in association with Accounts
Receivable processing: 
  

	 	 1.
	 Computer Operating System: 

  
 Grantors run on a SUN computer with a Solaris operating system 
  
 Yearly maintenance and support is paid to
Akibia. 
  

	 	 2.
	 Database 

  
 All of the Grantors A/R data is stored in an Oracle database. 
  
 Yearly maintenance and support is paid to
Oracle. 
  

	 	 3.
	 Application(s): 

  

	 	 a.
	 A/R application was originally purchased from Avalon. As part of the agreement, a source code was purchased which has since been heavily modified. Grantors have
the right to use the A/R system, but would not be permitted to sell to others. Grantors’ modifications are proprietary, but not marketable. 

  

	 	 b.
	 A/R data is summarized and fed into two separate ledger systems that are supported by maintenance contracts 

  

	 	 i.
	 CAC uses the CMIC ledger 

  

	 	 ii.
	 Steel uses the Ross ledger 

  

 Schedule 2 - Page 1 

 SCHEDULE 3 
  

Filing Offices 
  

			
	 Grantor

	 	 Filing Office

	 Chaparral Steel Company
	 	 Secretary of State of Delaware

	 Chaparral (Virginia) Inc.
	 	 Secretary of State of Delaware

	 American Materials Transport, Inc.
	 	 Secretary of State of Delaware

	 Chaparral steel Investments, Inc.
	 	 Secretary of State of Delaware

	 Chaparral Steel Texas, LLC
	 	 Secretary of State of Delaware

	 Chaparral steel Holdings, LLC
	 	 Secretary of State of Delaware

	 Chaparral Steel Trust
	 	 Secretary of State of Delaware

	 Chaparral Steel Midlothian, LP
	 	 Secretary of State of Delaware

	 TXI Star Recycling LP
	 	 Secretary of State of Delaware

  
  

 Schedule 3 - Page 1 

 SCHEDULE 4 
  

Organization and Names 
  

													
	 Grantor

	  	 Section (a)
 Jurisdiction

	  	 Section (b)
 Type /
 Other
 Names

	  	 Section (c)
 Changes of
 identity or
 type

	  	 Section (d)
 Other
 names

	  	 Section (e)
 Federal
Taxpayer
 ID

	  	 Section (f)
 Organizational
Number

	 Chaparral Steel
 Company
	  	 Delaware
	  	 corporation
	  	 	  	 	  	20-2373478	  	3931965
							
	 Chaparral (Virginia)
 Inc.
	  	 Delaware
	  	 corporation
	  	 	  	 	  	52-2072718	  	2838415
							
	 American Materials
 Transport, Inc.
	  	 Delaware
	  	 corporation
	  	 	  	 	  	20-2841873	  	3966488
							
	 Chaparral Steel
 Investments, Inc.
	  	 Delaware
	  	 corporation,
 formerly
 Chaparral
 Steel
 Company
	  	 formerly
 Chaparral
Steel
 Company
	  	 formerly
 Chaparral
Steel
 Company
	  	75-1424624	  	0793199
							
	 Chaparral Steel
 Texas,
LLC
	  	 Delaware
	  	 LLC, formerly
 Chaparral
Steel
 Texas, Inc.
	  	 formerly
 Chaparral
Steel
 Texas, Inc.
	  	 formerly
 Chaparral
Steel
 Texas, Inc.
	  	75-2634421	  	2591812
							
	 Chaparral Steel
 Holdings, LLC
	  	 Delaware
	  	 LLC, formerly
 Chaparral
Steel
 Holdings, Inc
	  	 formerly
 Chaparral
Steel
 Holdings, Inc
	  	 formerly
 Chaparral
Steel
 Holdings, Inc
	  	51-0373557	  	2594370
							
	 Chaparral Steel
 Trust
	  	 Delaware
	  	 statutory trust
	  	 	  	 	  	51-0373225	  	2598064
							
	 Chaparral Steel
 Midlothian, LP
	  	 Delaware
	  	 limited
 partnership
	  	 	  	 	  	75-2634662	  	2594451

  

 Schedule 4 - Page 1 

													
	 Grantor

	  	 Section (a)
 Jurisdiction

	  	 Section (b)
 Type /
 Other
 Names

	  	 Section (c)
 Changes of
 identity or
 type

	  	 Section (d)
 Other
 names

	  	 Section (e)
 Federal
Taxpayer
 ID

	  	 Section (f)
 Organizational
Number

	 TXI Star
 Recycling LP
	  	 Delaware
	  	 limited
 partnership,
 formerly Star
 2000 LP
	  	 formerly Star
 2000
LP
	  	 formerly Star
 2000
LP
	  	 75-2676328
	  	 2671449

  
  

 Schedule 4 - Page 2 

 SCHEDULE 5 
  

Addresses 
  

	 (a)
	 Chief Executive Office of all Grantors: 

  
 300 Ward Road 
  
 Midlothian, Texas 76065 
  

	 (b)
	 Locations where books and records of all Grantors relating to Accounts are kept: 

  
 300 Ward Road 
  
 Midlothian, Texas 76065 
  

	 (c)
	 Locations where Inventory is kept: 

  

	 	 1.
	 Chaparral Steel Company 

  
 300 Ward Road 
 Midlothian, Texas 76065 
  

	 	 2.
	 Chaparral Steel (Virginia) 

  
 25801 Hofheimer Way 
 Petersburg, Virginia 23803 
  

	 	 3.
	 Reload, Inc. 

  
 4703 W. Pasadena Avenue 
 Glendale, Arizona 85301 
  

	 	 4.
	 Mid-Columbia Warehouses 

  
 P.O. Box 1050 
 1810 E. Ainsworth 
 Pasco, Washington 99301 
  

 Schedule 5 - Page 1 

	 	 5.
	 Niagara-Southwest 

  
 1291 South Highway 67 
 Midlothian, Texas 76065 
  

	 	 6.
	 Super Steel Treating Co. 

  
 6227 Rinke 
 Warren, Michigan 48091 
  

	 	 7.
	 Conam 

  
 600 Kaiser Drive, Bldg. 241 
 Heath, Ohio 43056 
  

	 	 8.
	 Narstco, Inc. 

  
 300 Ward Road 
 Narstco Building 
  
 Midlothian, Texas
76065 
  

	 	 9.
	 Bar Processing 

  
 4527 Columbia 
 Hammond, Indiana 46327 
  

	 (d)
	 All other places of business not listed above: None. 

  

	 (e)
	 Persons (other than the Grantors) who have possession of Collateral: None other than as noted in section (c) above. 

  
 THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK. 
  

 Schedule 5 - Page 2 

 SCHEDULE 6 
  

Insurance 
  
 See Certificates of Insurance attached hereto. 
  
 THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK. 
  

 Schedule 6 - Page 1 

 SCHEDULE 7 
  

Required Consents 
  
 Grantors are unaware of any required consents. 
  
 THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK. 
  

 Schedule 7 - Page 1Separation and Distribution Agreement, dated July 6, 2005

 Exhibit 10.4 
  
 [EXECUTION] 
  
 SEPARATION AND DISTRIBUTION AGREEMENT 
  
 Dated as of July 6, 2005 
  
 Between 
  
 TEXAS INDUSTRIES, INC. 
  
 and 
  
 CHAPARRAL STEEL
COMPANY 

 TABLE OF CONTENTS 
  

					
	 Section

	 	 	  	Page No.

	 ARTICLE I DEFINITIONS
	  	 
	 1.1
	 	 Definitions
	  	1
	 1.2
	 	 Interpretation
	  	7
		
	 ARTICLE II BUSINESS SEPARATION
	  	 
	 2.1
	 	 Separation of Chaparral Business
	  	8
	 2.2
	 	 Retained Assets
	  	9
	 2.3
	 	 Assumption of Liabilities
	  	10
	 2.4
	 	 Retained Liabilities
	  	11
	 2.5
	 	 Sequencing of Separation of Chaparral Business
	  	11
	 2.6
	 	 New Agreements
	  	12
	 2.7
	 	 Termination of Existing Intercompany Agreements
	  	12
	 2.8
	 	 Shared Contracts and Liabilities
	  	12
	 2.9
	 	 No TXI Representations or Warranties
	  	13
		
	 ARTICLE III THE DISTRIBUTION
	  	 
	 3.1
	 	 Issuance and Delivery of Chaparral Shares
	  	13
	 3.2
	 	 Distribution of Chaparral Shares
	  	13
	 3.3
	 	 TXI Board Action
	  	14
	 3.4
	 	 Additional Approvals
	  	14
		
	 ARTICLE IV BUSINESS SEPARATION CLOSING MATTERS
	  	 
	 4.1
	 	 Delivery of Instruments of Conveyance
	  	14
	 4.2
	 	 Delivery of Other Agreements
	  	14
	 4.3
	 	 Provision of Corporate Records
	  	14
		
	 ARTICLE V EMPLOYEE MATTERS
	  	 
	 5.1
	 	 Employment
	  	14
	 5.2
	 	 Severance
	  	15
	 5.3
	 	 Employment Solicitation
	  	15
	 5.4
	 	 Personnel Records
	  	15
	 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
	  	17
	 5.10
	 	 Past Credit for Amounts Paid
	  	17
	 5.11
	 	 Disability
	  	17
	 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
	  	18
	 5.15
	 	 Workers’ Compensation
	  	19
	 5.16
	 	 Accrued Days Off
	  	20
	 5.17
	 	 Leaves of Absence
	  	20
	 5.18
	 	 Defined Contribution and Defined Benefit Plans
	  	20
	 5.19
	 	 Past Service Credit
	  	21
	 5.20
	 	 Reimbursement and Indemnification
	  	22
	 5.21
	 	 Further Cooperation
	  	22

  

 ii 

					
	 ARTICLE VI CERTAIN COVENANTS
	  	 
	 6.1
	 	 Commercially Reasonable Efforts
	  	22
	 6.2
	 	 Non-Assignable Contracts
	  	22
	 6.3
	 	 Novation of Assumed Liabilities; Release of Guarantees
	  	23
	 6.4
	 	 Further Assurances
	  	23
	 6.5
	 	 Collection of Accounts Receivable
	  	24
	 6.6
	 	 Election of Chaparral Board of Directors
	  	24
	 6.7
	 	 Late Payments
	  	24
	 6.8
	 	 Registration and Listing
	  	25
	 6.9
	 	 No Noncompetition
	  	25
	 6.10
	 	 Litigation
	  	25
	 6.11
	 	 Signs; Use of Company Name
	  	25
	 6.12
	 	 Transition Services
	  	26
		
	 ARTICLE VII CONDITIONS TO THE DISTRIBUTION
	  	 
	 7.1
	 	 Consummation of Pre-Distribution Transactions
	  	26
	 7.2
	 	 Effectiveness of Registration Statement; No Stop Order
	  	26
	 7.3
	 	 Approval of NASDAQ Listing Application
	  	26
	 7.4
	 	 Approval by TXI Board of Directors
	  	26
	 7.5
	 	 Receipt of Tax Opinion
	  	27
	 7.6
	 	 Consents
	  	27
	 7.7
	 	 No Other Events
	  	27
	 7.8
	 	 No Actions
	  	27
	 7.9
	 	 Compliance with State and Foreign Securities and “Blue Sky” Laws
	  	27
	 7.10
	 	 Resignations
	  	27
	 7.11
	 	 Dissemination of Information to TXI Stockholders
	  	27
	 7.12
	 	 Ancillary Agreements
	  	27
	 7.13
	 	 Satisfaction of Conditions
	  	27
		
	 ARTICLE VIII INSURANCE MATTERS
	  	 
	 8.1
	 	 Insurance Prior to the Distribution Date
	  	28
	 8.2
	 	 Ownership of Existing Policies and Programs
	  	28
	 8.3
	 	 Maintenance of Insurance for Chaparral
	  	28
	 8.4
	 	 Acquisition and Maintenance of Post-Distribution Insurance by Chaparral
	  	28
	 8.5
	 	 Property Damage and Business Interruption Insurance Claims Administration for Pre-Distribution Claims
	  	28
	 8.6
	 	 Liability and Workers Compensation Insurance Claims Administration for Pre-Distribution Claims
	  	28
	 8.7
	 	 Non-Waiver of Rights to Coverage
	  	29
	 8.8
	 	 Scope of Affected Policies of Insurance
	  	29
		
	 ARTICLE IX EXPENSES
	  	 
	 9.1
	 	 Allocation of Expenses
	  	29
		
	 ARTICLE X INDEMNIFICATION
	  	 
	 10.1
	 	 Release of Pre-Distribution Claims
	  	30
	 10.2
	 	 Indemnification by Chaparral
	  	31
	 10.3
	 	 Indemnification by TXI
	  	31
	 10.4
	 	 Applicability of and Limitation on Indemnification
	  	32
	 10.5
	 	 Adjustment of Indemnifiable Losses
	  	32
	 10.6
	 	 Procedures for Indemnification of Third Party Claims
	  	32
	 10.7
	 	 Procedures for Indemnification of Direct Claims
	  	34
	 10.8
	 	 Contribution
	  	34
	 10.9
	 	 Remedies Cumulative
	  	34
	 10.10
	 	 Survival
	  	35

  

 iii 

					
	 ARTICLE XI DISPUTE RESOLUTION
	  	 
	 11.1
	 	 Escalation and Mediation
	  	35
	 11.2
	 	 Continuity of Service and Performance
	  	35
	 11.3
	 	 Choice of Forum
	  	35
	 11.4
	 	 Ability to Pursue Other Legal Remedies
	  	35
		
	 ARTICLE XII ACCESS TO INFORMATION AND SERVICES
	  	 
	 12.1
	 	 Agreement for Exchange of Information
	  	35
	 12.2
	 	 Ownership of Information
	  	36
	 12.3
	 	 Compensation for Providing Information
	  	36
	 12.4
	 	 Retention of Records
	  	36
	 12.5
	 	 Limitation of Liability
	  	36
	 12.6
	 	 Production of Witnesses
	  	36
	 12.7
	 	 Confidentiality
	  	37
	 12.8
	 	 Privileged Matters
	  	37
		
	 ARTICLE XIII MISCELLANEOUS
	  	 
	 13.1
	 	 Entire Agreement
	  	38
	 13.2
	 	 Choice of Law and Forum
	  	38
	 13.3
	 	 Amendment
	  	38
	 13.4
	 	 Waiver
	  	38
	 13.5
	 	 Partial Invalidity
	  	39
	 13.6
	 	 Execution in Counterparts
	  	39
	 13.7
	 	 Successors and Assigns
	  	39
	 13.8
	 	 Third Party Beneficiaries
	  	39
	 13.9
	 	 Notices
	  	39
	 13.10
	 	 Performance
	  	40
	 13.11
	 	 No Public Announcement
	  	40
	 13.12
	 	 Termination
	  	40
	 13.13
	 	 Limitation of Liability
	  	40

  
 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 Leases

	 2.1(b)(ii)
	    	 TXI Real Estate Leases

	 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 as of July 6, 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 Tax Sharing Agreement, the TXI Real Estate Leases, the Chaparral Real Estate Leases, an Environmental Monitoring and Management Agreement, a
Preliminary Single Property Designation Agreement, a Software License 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 Leases”
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. 
  

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 “Contracts” has the meaning set forth in Section 2.1(a)(vi). 

 
 “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. 
  

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 “Intellectual Property License Agreements” means licenses relating to
the Patents and patent disclosures set forth on Schedule 2.1(a)(v). 
  
 “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. 
  

 4 

 “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. 
  
 “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 Business
Employee” means 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 Retained Business 
  
 “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). 

  

 6 

 “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. 
  
 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; 

  

 7 

	 	 (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.

  
 (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 has caused or, prior to the Distribution, shall cause the TXI Parties to convey, assign,
transfer, contribute and set over to the Chaparral Parties, and Chaparral has caused or 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 Steel 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”); 

  

 8 

	 	 (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, to the extent they are legally assignable to Chaparral; 

  

	 	 (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 to the extent it relates 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 principally 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 principally 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)
	 Those certain real estate leases from Chaparral, as lessor, to TXI, as lessee, set forth on Schedule 2.1(b)(i) (the “Chaparral Real Estate Leases”) and
any and all improvements, fixtures, machinery, equipment and other property located on the premises demised under the Chaparral Real Estate Leases; 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, the following shall be transferred to TXI or the
appropriate TXI Party, if owned or held by a Chaparral Party, and included in the Retained Assets: 
  
 (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; 
  

 9 

 (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; 
  
 (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 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 hereby does, and shall cause the Chaparral Parties to, assume on a joint and several basis, and 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 involving the health or safety of persons or the protection of the environment or natural resources to the extent arising out of 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 to the extent that they assert 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; 
  

 10 

 (f) Letters of Credit. Any Liabilities incurred by TXI relating to any
letter of credit posted by TXI for the benefit of a Chaparral Party, including letter of credit fees paid by TXI to the issuer of the letters of credit; 
  
 (g) 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; 
  
 (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. The Parties acknowledge that on or before the date hereof, the corporate restructuring transactions
set forth on Schedule 2.5(a) have been completed by TXI and its appropriate Subsidiaries. 
  
 (b) Transfers. After the consummation of the transactions set forth in Section 2.5(a), TXI contributed to Chaparral as an additional contribution to capital the capital stock provided in
Section 2.1(a)(i), and TXI shall, and shall cause the TXI parties to, transfer all of TXI’s right, title and interest in and to the other Transferred Assets to the appropriate Chaparral Parties. 
  
 (c) Assumption. In consideration for and simultaneous
with the consummation of the transactions described in Section 2.5(b), the Chaparral Parties shall, and hereby do, 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), TXI shall contribute to the capital of Chaparral (Virginia) Inc. all but $25 million of its intercompany receivable from Chaparral (Virginia) Inc., and 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. 
  

 11 

 (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 10 1/4% Senior Notes due 2011. 
  
 (g) Contribution. Immediately before the Distribution, TXI will contribute to the capital of Chaparral (Virginia) Inc. any the remaining amount of its intercompany receivable from Chaparral (Virginia) Inc.

  
 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; 

  

	 	 (c)
	 The Chaparral Real Estate Leases; 

  

	 	 (d)
	 The Environmental Monitoring and Management 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; 

  

 12 

	 	 (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 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 
  

 13 

 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. 
  
 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, easements, licenses, rights of first refusal, 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. 
  

 14 

 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 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. 
  

 15 

 (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 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 
  

 16 

 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 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. 
  

 17 

 (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 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 Chaparral 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. 
  

 18 

 “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
TXI 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. 
  
 (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. 
  
 (f) 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. 
  

 19 

 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 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, the TXI 401(k) Plan will be split-up into the
portion composed of the assets allocable to the TXI Business Employees, and the portion composed of assets allocable to the Chaparral Business Employees. The portion of the TXI 401(k) Plan composed of assets allocable to the Chaparral Business
Employees will then be merged into the Chaparral 401(k) Plan. The assets which will be transferred in the merger to the Chaparral 401(k) Plan will include applicable TXI stock and Chaparral stock, and promissory notes evidencing outstanding loan
balances of Chaparral Business Employees, all in accordance with section 414(l) of the Code. Without limiting the generality of the foregoing, the transferred assets will remain subject to applicable qualified domestic relations orders (as defined
in section 414(p) of the Code). 

  

	 	 (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. 

  

 20 

	 	 (b)
	 Financial Security Plan and Other Deferred Compensation. 

  

	 	 (i)
	 Establishment of Chaparral Financial Security Plan. TXI maintains four plans that provide retirement benefits to a select group of management or
highly paid employees, including both TXI Business Employees and Chaparral Business Employees, collectively the “TXI Financial Security Plan” or “TXI FSP”. The TXI FSP has been adopted by Chaparral for the benefit if its
pre-Distribution Date employees, and Chaparral has full liability and responsibility to provide the benefits promised under the TXI FSP to such employees. Effective as of the Distribution Date, Chaparral shall withdraw from the TXI FSP, shall
establish a form of Financial Security Plan (the “Chaparral FSP”) that is substantially similar to the form of TXI FSP except that it shall provide benefits solely for Chaparral Business Employees. Effective on the Distribution Date TXI
shall amend the TXI FSP to exclude Chaparral Business Employees and to provide that the TXI FSP will provide benefits solely for the TXI Business Employees. 

  

	 	 (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 the Chaparral FSP’s covering any Chaparral Business Employees and the administration thereof. 

  

	 	 (iii)
	 Transfer of Insurance Policies. As soon as administratively practicable after the Distribution Date, TXI shall transfer to Chaparral the life
insurance policies on the lives of Chaparral Business Employees who have benefits under the Chaparral FSP. In addition, Chaparral shall transfer to TXI any life insurance policies in which Chaparral is the beneficiary on the lives of TXI Business
Employees whose TXI FSP obligations are retained by TXI. 

  

	 	 (iv)
	 Directors’ Deferred Compensation. TXI permits each of its directors (“TXI Director”) to annually defer a portion of his or her
director fees pursuant to a Deferred Compensation Agreement (“TXI Director’s Agreement”), and to, in effect, convert the amount of the deferred compensation into hypothetical TXI shares, with a corresponding number of actual TXI
shares distributed upon the applicable distribution date set froth in each such TXI Director’s Agreement. Effective on the Distribution Date, Chaparral shall assume and thereafter be solely responsible for all then existing or future
Liabilities and administrative responsibilities arising from or related to all TXI Director’s Agreements to which any TXI Director who becomes a Chaparral director (“Chaparral Director”) is a party, and such assumed TXI
Director’s Agreements are hereafter referred to as “Chaparral Director’s Agreements”. All of the Agreements will be amended, effective on the Distribution Date, to provide that (i) the additional hypothetical Chaparral shares
credited under each TXI Director’s Agreement as a result of the Distribution shall be converted to an equivalent value of TXI shares, and (ii) the hypothetical TXI shares credited under each Chaparral Director’s Agreement shall be
converted to an equivalent value of hypothetical Chaparral shares. As a result of such conversions, on the applicable distribution dates TXI Directors will receive only TXI shares and Chaparral Directors will receive only Chaparral shares.

  
 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 
  

 21 

 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 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

  

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 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. 
  
 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 
  

 23 

 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 principally in and reasonably necessary to the conduct of the Chaparral Business is
not transferred to the applicable Chaparral Party, or any asset used principally 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, 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, 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 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. 
  

 24 

 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). 
  
 (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, Chaparral 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 
  

 25 

 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. Such removal shall be at the expense of the Party that owns the signs. 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, 2006. 
  
 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 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. 
  

 26 

 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 10 1/4% Senior Notes due 2011 (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. 
  
 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. 
  

 27 

 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 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

  

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 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. 
  
 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. 
  

 29 

 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. 

 
 (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. 
  

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 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 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; 
  

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 (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 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. 
  

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 (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 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. 
  

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 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 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. 
  

 34 

 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. 
  
 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 seven 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 
  

 35 

 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. 
  
 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. 
  

 36 

 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. 
  
 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 
  

 37 

 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. 
  
 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. 
  

 38 

 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 
 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 
  

 39 

 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. 
  

 40 

 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
	 	 /s/ Mel G. Brekhus

	 Name:
	 	 Mel G. Brekhus

	 Title:
	 	 President and Chief Executive Officer

	
	 CHAPARRAL STEEL COMPANY

		
	 By
	 	 /s/ J. Celtyn Hughes

	 Name:
	 	 J. Celtyn Hughes

	 Title:
	 	 Vice President and Chief Financial Officer

  

 41

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