Document:

Exhibit 10.4

TAX SHARING AND INDEMNIFICATION AGREEMENT

          This Tax Sharing and Indemnification Agreement (this “Agreement”) is entered into as of the Distribution Date by and between Texas Industries, Inc., a Delaware corporation (“Distributing”), on behalf of itself and each Distributing Affiliate, and Chaparral Steel Company, a Delaware corporation (“Controlled”), and their respective successors.

RECITALS

          WHEREAS, Distributing is the common parent of an affiliated group of corporations within the meaning of section 1504(a) of the Code, and currently files consolidated income Tax Returns with the Controlled Affiliates and the Distributing Affiliates;

          WHEREAS, Distributing, along with Distributing Affiliates, conducts the cement, aggregate and concrete  products business, which consists of cement production facilities, sand and gravel and other aggregate operations, and ready-mix concrete operations (the “Cement Business”);

          WHEREAS, Controlled, a first-tier subsidiary of Distributing, along with Controlled Affiliates, conducts the steel products business, which manufactures structural steel products and steel bar products (the “Steel Business”), as more fully described in the Form 10 initially filed with the Securities and Exchange Commission (“SEC”) on May 6, 2005, as amended by Amendment No. 1 filed with the SEC on June 10, 2005, and as amended by Amendment No. 2 filed with the SEC on June 27, 2005 (the “Form 10”); 

          WHEREAS, Distributing has agreed to transfer and assign, or cause to be transferred and assigned, to Controlled all of the assets and liabilities of, and Subsidiaries that conduct, the Steel Business (the “Contribution”) pursuant to that certain Separation and Distribution Agreement dated July 6, 2005 (the “Separation Agreement”);

          WHEREAS, the Board of Directors of Distributing has determined that it would be advisable and in the best interests of Distributing and its shareholders for Distributing to distribute on a pro rata basis to the holders of record of Distributing common stock, par value $1.00 per share, without any consideration being paid by such holders, all of the outstanding shares of Controlled common stock, par value $0.01 per share, owned directly by Distributing (the “Distribution”);

          WHEREAS, as part of the Contribution and Distribution, Controlled will declare and pay a cash dividend of approximately $341 million to Distributing, which Distributing will use to pay its unrelated creditors (the “Dividend”);

          WHEREAS, Distributing and Controlled intend that the Contribution and the Distribution qualify as tax-free to Distributing and its shareholders under sections 355, 361 and 368(a)(1)(D) of the Code;

          WHEREAS, Distributing, the Controlled Affiliates, and the Distributing Affiliates are parties to an amended and restated tax sharing agreement dated as of June 1, 2002 (the “Existing Tax Sharing Agreement”), which currently governs the parties’ respective responsibilities for Taxes;

          WHEREAS, pursuant to the Distribution, the Controlled Affiliates will cease to be members of the Distributing Consolidated Group;

          WHEREAS, the parties hereto are entering into this Agreement: to ensure the tax-free status of the Contribution and the Distribution; to provide certain indemnities; and to provide for various administrative matters relating to Taxes, including: (1) the preparation and filing of Tax Returns along with the payment or refund of Taxes due and payable or receivable thereon; (2) the retention and maintenance of relevant records necessary to prepare and file appropriate Tax Returns, as well as the provision for appropriate access to those records by the parties to this Agreement; (3) the conduct of audits, examinations, and proceedings by appropriate governmental entities that could result in a redetermination of Taxes; and (4) the cooperation of all parties with one another in order to fulfill their duties and responsibilities under this Agreement and under the Code and other applicable law;

          WHEREAS, the parties desire to set forth their respective responsibilities for Taxes, including any Taxes that could be incurred in connection with the Distribution; and

          WHEREAS, the parties hereto intend to incorporate the principles from the Existing Tax Sharing Agreement into this Agreement.

AGREEMENT

          NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements set forth below, the parties do hereby agree as follows:

ARTICLE I
 DEFINITIONS

          Unless otherwise defined in this Agreement, capitalized terms shall have the meanings ascribed thereto in the Separation Agreement.  As used in this Agreement, the following terms shall have the following meanings:

          1.1.          “2005 Year” is defined at Section 3.3(a).

          1.2.          “2006 Year” is defined at Section 3.3(a).

          1.3.          “Adjustment” means any proposed or final change in the taxable income or Tax Liability of a taxpayer by a Taxing Authority.

          1.4.          “Affiliate” means, when used with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with such Person.

          1.5.          “Agreement” has the meaning set forth in the Preamble to this Agreement.

          1.6.          “Cement Business” has the meaning set forth in the Recitals to this Agreement.  

          1.7.          “Change Month” is defined at Section 2.4.  

          1.8.          “Code” means the Internal Revenue Code of 1986, as amended.

          1.9.          “Combined State Tax” means, with respect to each United States state or local taxing jurisdiction, any income, franchise or similar tax payable to such state or local taxing jurisdiction in which any Controlled Affiliate files Returns with a Distributing Affiliate, on a consolidated, combined or unitary basis for purposes of such Tax.

          1.10.        “Combined State Tax Return” means any Return with respect to any Combined State Tax that includes any Pre-Distribution Tax Period.

          1.11.        “Contribution” has the meaning set forth in the Recitals to this Agreement and includes Distributing’s receipt of the Dividend.

          1.12.        “Controlled” has the meaning set forth in the Preamble to this Agreement.  

          1.13.        “Controlled Affiliate” means Controlled and any Affiliate of Controlled after the Distribution Date.

          1.14.        “Controlled Change in Control Tax” means any Tax imposed by reason of Code section 355(e) or any comparable provision of state or local law as a result of one or more persons acquiring, directly or indirectly, stock representing a 50% or greater interest in Controlled or a successor to Controlled.

          1.15.        “Controlled Indemnified Party” is defined at Section 7.2.  

          1.16.        “Controlled Indemnifying Parties” is defined at Section 7.1.

          1.17.        “Controlled Separate Return” means any state or local Tax Return of any Controlled Affiliate, other than any Combined State Tax Return, that includes any Pre-Distribution Tax Period.

          1.18.        “Controlled Separate Tax Liability” means an amount equal to the Tax Liability that Controlled and each Controlled Affiliate would have incurred if they had filed a consolidated return, combined return or a separate return, as the case may be, separate from the members of the Distributing Consolidated Group, for the relevant Tax period, and such amount shall be computed by Distributing in a manner consistent with the Existing Tax Sharing Agreement.

          1.19.        “Designated Officers” is defined at Section 9.1(b).

          1.20.        “Disputes” is defined at Section 9.1(a).  

          1.21.        “Distributing” has the meaning set forth in the Preamble to this Agreement. 

          1.22.        “Distributing Affiliate” means Distributing and any Affiliate of Distributing (other than a Controlled Affiliate) before, on or after the Distribution Date, as applicable.

          1.23.        “Distributing Consolidated Group” means the group of companies filing a consolidated Federal Tax Return or Combined State Tax Return, as the case may be, that includes Distributing.

          1.24.        “Distributing Consolidated Return” means any consolidated Federal Tax Return or Combined State Tax Return of the Distributing Consolidated Group that includes any Pre-Distribution Tax Period.

          1.25.        “Distributing Indemnified Party” is defined at Section 7.1.  

          1.26.        “Distributing Indemnifying Parties” is defined at Section 7.2.  

          1.27.         “Distribution” has the meaning set forth in the Recitals to this Agreement.  

          1.28.         “Distribution Date” has the meaning set forth in the Separation Agreement.

          1.29.        “Dividend” has the meaning set forth in the Recitals to this Agreement.

          1.30.        “Existing Tax Sharing Agreement” has the meaning set forth in the Recitals to this Agreement.

          1.31.        “Federal Tax” means any Tax imposed under the Code, including any interest, penalty or other additions to Tax imposed under Subtitle F of the Code.

          1.32.        “Federal Tax Return” means any Return with respect to any Federal Taxes that includes any Pre-Distribution Tax Period.

          1.33.        “Final Determination” means the final resolution of any Tax matter.  A Final Determination shall result from the first to occur of:

	
  
 
  	
  
 
  	
  
          (a)          the   expiration of 30 days after the IRS’s acceptance of a Waiver of Restrictions   on Assessment and Collection of Deficiency in Tax and Acceptance of   Overassessment on Form 870 or 870-AD (or any successor comparable form) (the   “Waiver”),   except as to reserved matters specified therein, or the expiration of 30 days   after acceptance by any other Taxing Authority of a comparable agreement or   form under the laws of any other jurisdiction, including state, local, and   foreign jurisdictions; unless, within such period, the taxpayer gives notice   to the other party to this Agreement of the taxpayer’s intention to attempt   to recover all or part of any amount paid pursuant to the Waiver by the   filing of a timely claim for refund;
  

	
  
 
  	
  
 
  	
  
          (b)          a   decision, judgment, decree, or other order by a court of competent   jurisdiction that is not subject to further judicial review (by appeal or   otherwise) and that has become final;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (c)          the   execution of a closing agreement under Code section 7121, or the acceptance   by the IRS of an offer in compromise under Code section 7122, or comparable   agreements under the laws of any other jurisdiction, including state, local,   and foreign jurisdictions; except as to reserved matters specified therein;
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
          (d)          the   expiration of the time for filing a claim for refund or for instituting suit   in respect of a claim for refund that was disallowed in whole or part by the   IRS or any other Taxing Authority;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (e)          the   expiration of the applicable statute of limitations; or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (f)          an   agreement by the parties hereto that a Final Determination has been made.
  

          1.34.        “Indemnified Liability” is defined at Section 7.3.  

          1.35.        “Indemnified Parties” is defined at Section 7.2.

          1.36.        “Indemnifying Parties” is defined at Section 7.2.

          1.37.        “Initial Mediation Period” is defined at Section 9.1(b).  

          1.38.        “Intercompany Accounts” means the intercompany receivable and payable accounts that were maintained before the Distribution between Distributing and Controlled or between Distributing and the relevant Controlled Affiliate.

          1.39.        “IRS” means the Internal Revenue Service.

          1.40.        “IRS Interest Rate” means the rate of interest imposed from time to time on underpayments of income tax pursuant to Code section 6621(a)(2).

          1.41.        “Opinion Documents” means (i) the Spin-Off Opinion, (ii) the officer’s certificates issued by Distributing and Controlled to Thompson & Knight LLP in connection with the Spin-Off Opinion and (iii) all other documents provided by Distributing and Controlled to Thompson & Knight LLP and on which Thompson & Knight LLP relied in issuing the Spin-Off Opinion.

          1.42.        “Person” means any natural person, corporation, business trust, joint venture, association, company, partnership, or government or any agency or political subdivision thereof.

          1.43.        “Post-Distribution Tax Period” means (i) any tax period ending after the Distribution Date, and (ii) with respect to a tax period that begins on or before the Distribution Date and ends after the Distribution Date, such portion of the tax period that begins on the day after the Distribution Date. 

          1.44.        “Pre-Distribution Tax Period” means (i) any tax period beginning and ending before or on the Distribution Date, and (ii) with respect to a tax period that begins on or before and ends after the Distribution Date, such portion of the tax period that begins before the Distribution Date and ends at the close of the Distribution Date.

          1.45.        “Private Letter Ruling” means a private letter ruling from the IRS to the effect that a transaction does not prevent the Contribution or the Distribution from qualifying for tax-free treatment for Distributing or its shareholders under Code Sections 355, 361 or 368(a)(1)(D) and any other applicable sections of the Code, assuming that the Distribution would have qualified for tax-free treatment if such transaction did not occur, which ruling is in form and substance reasonably satisfactory to Distributing.  Such a ruling may rely upon, and may assume the accuracy of, any representations given in any Opinion Document, and any customary representations or assumptions.

          1.46.         “Proceeding” is defined at Section 8.2(a).

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

          1.48.        “SEC” has the meaning set forth in the Recitals to this Agreement.

          1.49.        “Separation Agreement” has the meaning set forth in the Recitals to this Agreement.  

          1.50.        “Separation Tax” means any Tax (other than any Controlled Change in Control Tax) imposed on any Distributing Affiliate or Controlled Affiliate in connection with the Contribution and Distribution that would not have occurred had the Contribution and Distribution not occurred.

          1.51.        “Short Period” is defined at Section 3.3(a).

          1.52.        “Spin-Off Opinion” means the opinion received from Thompson & Knight LLP to the effect that the Distribution and the Contribution will qualify as tax-free to Distributing and its shareholders under sections 355, 361 and 368(a)(1)(D) of the Code.

          1.53.         “Steel Business” has the meaning set forth in the Recitals to this Agreement.  

          1.54.        “Subsidiary” means with respect to Distributing or Controlled, any Person of which Distributing or Controlled, respectively, controls or owns, directly or indirectly, more than 50% of the stock or other equity interest entitled to vote on the election of members to the board of directors or similar governing body.

          1.55.        “Substantial Negotiations” means discussions of significant economic terms (for example, the exchange ratio in a merger) by one or more officers, directors, or controlling shareholders of any Distributing Affiliate or Controlled Affiliate or another Person or Persons with the implicit or explicit permission of one or more officers, directors, or controlling shareholders of any Distributing Affiliate or Controlled Affiliate.  This definition shall be interpreted consistently with the definition of “substantial negotiations” contained in Treas. Reg. § 1.355-7(h)(1).

          1.56.        “Tax Asset” means any Tax Item that may have the effect of producing a Tax Benefit.

          1.57.        “Tax Benefit” means a reduction in the Tax Liability of a taxpayer (whether a Distributing Affiliate or a Controlled Affiliate) for any taxable period.  Except as otherwise provided in this Agreement, a Tax Benefit shall be deemed to have been realized or received from a Tax Item in a taxable period only if and to the extent that the Tax Liability of the taxpayer for such period, after taking into account the effect of the Tax Item on the Tax Liability of such taxpayer in all prior periods, is less than it would have been if such Tax Liability were determined without regard to such Tax Item.

          1.58.        “Taxes” means all federal, state, local and foreign gross or net income, gross receipts, withholding, payroll, franchise, transfer, sales, use, value added, estimated or other taxes of any kind whatsoever or similar charges and assessments, including all interest, penalties and additions imposed with respect to such amounts which any Distributing Affiliate or any Controlled Affiliate is required to pay, collect or withhold, together with any interest and any penalties, additions or additional amounts imposed with respect thereto, and “Tax” means any of the Taxes.

          1.59.        “Taxing Authority” means the IRS or any other governmental authority or any subdivision, agency, commission or authority thereof or any quasi-governmental or private body having jurisdiction pursuant to applicable law over the assessment, determination, collection or imposition of any Tax.

          1.60.        “Tax Item” means any item of income, gain, loss, deduction, credit, recapture of credit, or any other item (including basis) which may have the effect of increasing or decreasing Taxes paid or payable.

          1.61.        “Tax Liability” means the net amount of Taxes due and paid or payable for any taxable period, determined after applying all tax credits and all applicable carrybacks or carryovers for net operating losses, net capital losses, unused general business tax credits, or any other Tax Items arising from a prior or subsequent taxable period, and all other relevant adjustments.

          1.62.        “Tax Returns” means all reports, estimates, declarations of estimated tax, information statements and returns relating to, or required to be filed in connection with any Taxes, including information returns or reports with respect to backup withholding and other payments to third parties.

          1.63.        “Unqualified Tax Opinion” means an unqualified “will” opinion of tax counsel to the effect that a transaction does not prevent the Contribution or the Distribution from qualifying for tax-free treatment for Distributing or its shareholders under Code sections 355, 361 or 368(a)(1)(D) and any other applicable sections of the Code, assuming that the Distribution would have qualified for tax-free treatment if such transaction did not occur, which opinion is in form and substance reasonably satisfactory to Distributing.  An Unqualified Tax Opinion may rely upon, and may assume the accuracy of, any representations given in any Opinion Document, and any customary representations contained in an officer’s certificate delivered by an officer of Distributing or Controlled to such counsel.

ARTICLE II
 PREPARATION AND FILING OF TAX RETURNS.

          2.1.          Designation of Agent.  With regard to each Distributing Consolidated Return, each Controlled Affiliate hereby irrevocably authorizes and designates Distributing as its agent, coordinator, and administrator, for the purpose of taking any and all actions (including the execution of waivers of applicable statutes of limitation) necessary or incidental to the filing of any such Tax Return or other Tax proceedings, and for the purpose of making payments to, or collecting refunds from, any Taxing Authority, provided that Controlled may continue to participate in any such Tax proceedings as provided herein.

          2.2.          Distributing Consolidated Returns.  Distributing will prepare all Distributing Consolidated Returns.  Distributing shall have the exclusive right to (a) file, prosecute, compromise, or settle any claim for refund, and (b) determine whether any refunds to which the Distributing Consolidated Group may be entitled shall be received by way of refund or credit against the Tax Liability of the Distributing Consolidated Group.

          2.3.          Taxable Period Ends on Distribution Date.  Unless prohibited by applicable law, any taxable period of any Controlled Affiliate that is included in a Distributing Consolidated Return that includes the Distribution Date shall end on the Distribution Date.

          2.4.          Allocation.  The books of each Controlled Affiliate shall be closed (a) at the end of the month preceding the month that includes the Distribution Date and (b) at the end of the month that includes the Distribution Date (the “Change Month”).  Items of income and deduction of each Controlled Affiliate for the Change Month will be ratably allocated on a daily basis consistent with Treasury Regulation section 1.1502-76(b)(2)(iii), except that extraordinary items within the meaning of Treasury Regulation section 1.1502-76(b)(2)(ii)(C) are not subject to proration.  Rather, extraordinary items will be allocated to the day they are taken into account.

          2.5.          Controlled Separate Returns.  Controlled shall be solely responsible for the preparation and filing of all Controlled Separate Returns. Controlled shall be responsible for paying to the applicable Taxing Authorities all Taxes shown as due from any Controlled Affiliate on the Controlled Separate Returns.

          2.6.          Post-Distribution Conduct of Controlled.  On or after the Distribution Date, Controlled will not, nor will it permit any Controlled Affiliate to, make or change any accounting method, change its taxable year, amend any Return or take any Tax position on any Return, take any other action, omit to take any action, or enter into any transaction, that may reasonably be expected to result in, or does result in, any increased Tax Liability or reduction of any Tax Asset of the Distributing Consolidated Group or any Distributing Affiliate.

          2.7          Allocation of Consolidated Alternative Minimum Tax.  Distributing shall allocate a portion of the consolidated alternative minimum tax credit of the Distributing Consolidated Group, if any, to Controlled.  Distributing, in its sole discretion, shall apply any reasonable method consistent with the purposes of the alternative minimum tax credit to make such allocation, including the allocation method currently provided under Prop. Treas. Reg. § 1.1502-55(h)(6).

          2.8          Allocation of Pre-Distribution Earnings and Profits.  Distributing and Controlled agree to allocate earnings and profits of Distributing between Distributing and Controlled in accordance with Treas. Reg. § 1.312-10.

ARTICLE III
 TAX SHARING

          3.1.          Controlled’s Liability for Taxes.  Controlled and each Controlled Affiliate shall be jointly and severally liable for the following Taxes, and shall be entitled to receive and retain all refunds of Taxes previously incurred by Controlled or the Steel Business with respect to such Taxes:

	
  
 
  	
  
 
  	
  
          (a)          all   Taxes incurred with respect to all Distributing Consolidated Returns to the   extent that such Taxes are related to (i) a Controlled Separate Tax Liability   or (ii) the Steel Business for any taxable period;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (b)          all   Taxes related to Controlled Separate Returns as provided for in Section 2.5   of this Agreement; and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (c)          all   Taxes incurred with respect to   Controlled and any Controlled Affiliate for any Post-Distribution Tax Period.
  

          3.2.          Distributing’s Liability for Taxes.  Distributing and each Distributing Affiliate shall be jointly and severally liable for the following Taxes, and shall be entitled to receive and retain all refunds of Taxes previously incurred by Distributing with respect to such Taxes:

	
  
 
  	
  
 
  	
  
          (a)          except   as provided for in Section 3.1(a), all Taxes incurred with respect to all   Distributing Consolidated Returns; and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (b)          all   Taxes incurred with respect to Distributing and any Distributing Affiliate   for any Post-Distribution Tax Period.
  

          3.3.          Payment of Allocable Taxes.

	
  
 
  	
  
 
  	
  
          (a)          Within   ten (10) days before the date that Distributing files the Distributing   Consolidated Return for the taxable year ending May 31, 2005 (the “2005 Year”),   Controlled shall pay (or shall cause the relevant Controlled Affiliate to   pay) to Distributing an amount equal to the Controlled Separate Tax Liability   for the 2005 Year, if any, minus any Taxes paid by or credited to Controlled   or any Controlled Affiliate with respect to the 2005 Year (including   estimated tax payments and any amounts for such Taxes reflected in the   Intercompany Accounts).  This Section   3.3(a) shall also apply with respect to the Distributing Consolidated Return   for the portion of the taxable year ending May 31, 2006 (the “2006 Year”)   that ends on the Distribution Date (the “Short Period”),
applying the principles   of Section 2.4.
  

	
  
 
  	
  
 
  	
  
          (b)          If   Controlled or a Controlled Affiliate generates a net operating loss for   federal income tax purposes rather than a Controlled Separate Tax Liability   on a stand-alone basis as determined pursuant to the Existing Tax Sharing   Agreement and past practice for the Short Period or the 2005 Year,   Distributing shall pay to Controlled an amount equal to the product obtained   by multiplying 35% by the amount of such loss.  Distributing shall pay such amount to Controlled within ten   (10) days before the date that Distributing files the Distributing   Consolidated Return for the 2006 Year or 2005 Year, whichever is   applicable.  Distributing shall not,   however, make any such payment to the extent that (i) any portion of   Distributing’s consolidated net operating loss for federal income tax   purposes from the 2005 Year or
the Short Period is carried over to the first   Post-Distribution Tax Period of Controlled or a Controlled Affiliate or (ii)   Distributing has previously paid Controlled or a Controlled Affiliate (via   adjustment of Intercompany Accounts, this Section 3.3, or otherwise).
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (c)          If   any Tax Return for a Pre-Distribution Tax Period is examined by a Taxing   Authority and such examination results in additional Controlled Separate   Return Liability or a reduction in a net operating loss for which   Distributing previously paid Controlled or a Controlled Affiliate (via   adjustment of Intercompany Accounts, this Section 3.3, or otherwise),   Controlled (or a Controlled Affiliate, if appropriate) shall pay (or cause   the Controlled Affiliate to pay) to Distributing an amount equal to either   the increase in Controlled Separate Return Liability or the product of (i)   the decrease in net operating loss and (ii) 35%, as applicable, within thirty   (30) days after a Final Determination.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (d)          If   any Tax Return for a Pre-Distribution Tax Period is examined by a Taxing   Authority and such examination results in a lower Controlled Separate Return   Liability or a higher net operating loss of Controlled or a Controlled   Affiliate that is utilized in a Distributing Consolidated Return,   Distributing shall pay to Controlled an amount equal to either the decrease   in Controlled Separate Return Liability or the product of (i) the increase in   net operating loss and (ii) 35%, within thirty (30) days after a Final   Determination.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (e)          If   a deduction reported by a Distributing Affiliate is allocated, in whole or in   part, to a Controlled Affiliated pursuant to a Final Determination, then (i)   Section 3.3(d) will not apply, and (ii) Controlled will promptly pay to   Distributing 35% times the amount of such deduction to the extent such   deduction created or increased a net operating loss for a Controlled   Affiliate for a Pre-Distribution Tax Period which a Controlled Affiliated   carried over to a Post-Distribution Tax Period.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (f)          The   provisions of this Section 3.3 are intended to conform to the Existing Tax   Sharing Agreement and the parties’ usual course of dealing and past practice   and shall be interpreted consistently therewith.
  

          3.4.          Separation Taxes.  Notwithstanding anything in this Agreement to the contrary, Controlled shall indemnify and hold harmless each Distributing Affiliate against liability for (i) any Controlled Change in Control Tax and (ii) any Separation Tax for which Controlled or its Affiliates has an obligation to indemnify Distributing under any provision of this Agreement.  Distributing shall indemnify and hold harmless each Controlled Affiliate against liability for all other Separation Taxes.

ARTICLE IV
 COOPERATION AND EXCHANGE OF INFORMATION; AUDITS AND ADJUSTMENTS

          4.1.          Tax Return Information.

	
  
 
  	
  
 
  	
  
          (a)          Controlled   shall, and shall cause each appropriate Controlled Affiliate to, provide   Distributing with all information and other assistance reasonably requested   by Distributing to enable the Distributing Affiliates to prepare and file   Distributing Consolidated Returns required to be filed by them pursuant to   this Agreement.
  

	
  
 
  	
  
 
  	
  
          (b)          Distributing   shall, and shall cause each appropriate Distributing Affiliate to, provide   Controlled with all information and other assistance reasonably requested by Controlled   to enable the Controlled Affiliates to prepare and file Controlled Separate   Returns required to be filed by them pursuant to this Agreement.
  

          4.2.          Audits and Adjustments.

	
  
 
  	
  
 
  	
  
          (a)          Whenever   a Distributing Affiliate or Controlled Affiliate receives in writing from the   IRS or any other Taxing Authority notice of an Adjustment that may give rise   to a payment from the other party under this Agreement or otherwise affect   the other party’s Taxes, Distributing or Controlled, as the case may be,   shall give written notice of the Adjustment to the other party in accordance   with the terms of Article VIII.  The   audit shall be controlled and settled pursuant to the terms of that article.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (b)          Controlled   agrees to cooperate reasonably, and shall cause each Controlled Affiliate to   cooperate reasonably, with Distributing in the negotiation, settlement, or   litigation of any liability for Taxes of any Distributing Affiliate.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (c)          Distributing   agrees to cooperate reasonably, and shall cause each Distributing Affiliate   to cooperate reasonably, with Controlled in the negotiation, settlement, or   litigation of any liability for Taxes of any Controlled Affiliate.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (d)          Distributing   will reasonably promptly notify Controlled in writing of any Adjustment   involving a change in the tax basis of any asset of any Controlled Affiliate,   specifying the nature of the change so that such Controlled Affiliate will be   able to reflect the revised basis on its tax books and records for periods   beginning on or after the Distribution Date.
  

          4.3.          Controlled Carrybacks.  Whenever permitted to do so by applicable law, and unless agreed otherwise by Distributing, Controlled shall elect to relinquish any carryback period which would include any Pre-Distribution Tax Period.

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

ARTICLE V
 RETENTION OF RECORDS

          5.1.          Retention of Records.  Distributing and Controlled agree to retain the appropriate records that may affect the determination of the liability for Taxes of any Controlled Affiliate or Distributing Affiliate, respectively, until such time as there has been a Final Determination with respect to such liability for Taxes.  A party may satisfy its obligations under the preceding sentence by allowing the other party to duplicate records at such second party’s request and expense.

          5.2.          Statute of Limitations.  Distributing and Controlled will notify each other in writing of any waivers or extensions of the applicable statute of limitations that may affect the period for which any materials, records, or documents must be retained.

ARTICLE VI

  COVENANTS

           6.1.          Distributing Covenants.  Distributing covenants to Controlled that no Distributing Affiliate will take any action or fail to take any action that would cause the Contribution or the Distribution to fail to qualify as tax-free under Code sections 355, 361 and 368(a)(1)(D) or any corresponding provision of state or local law.  Without limiting the foregoing, Distributing covenants to Controlled that:

	
   
  	
  
 
  	
  
          (a)          During   the six-month period following the Distribution Date, no Distributing   Affiliate will liquidate, merge, or consolidate with any Person.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (b)          During   the six-month period following the Distribution Date, no Distributing   Affiliate will sell, exchange, distribute, or otherwise dispose of assets to   any Person, except in the ordinary course of business.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (c)          Following   the Distribution, Distributing and its Subsidiaries will, for at least two   years, continue the active conduct of the Cement Business.
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
          (d)          No   Distributing Affiliate will take any action inconsistent with the information   and representations in the Opinion Documents.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (e)          For   two years following the Distribution, no Distributing Affiliate will   repurchase stock of Distributing in a manner contrary to the requirements of   Revenue Procedure 96-30 or in a manner contrary to the representations made   in the Opinion Documents.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (f)          No   Distributing Affiliate will permit its agents to take any of the actions   described in items (a) through (e) above on its behalf.
  

          6.2.          Controlled Covenants.  Controlled covenants to Distributing that no Controlled Affiliate will take any action or fail to take any action, which action or failure to act would cause the Contribution or the Distribution to fail to qualify as tax-free under Code sections 355, 361 and 368(a)(1)(D) or any corresponding provision of state or local law.  Without limiting the foregoing, Controlled covenants to Distributing that:

	
  
 
  	
  
 
  	
  
          (a)          During   the six-month period following the Distribution Date, no Controlled Affiliate   will liquidate, merge, or consolidate with any Person, or enter into any   Substantial Negotiations, agreements, understandings, or arrangements with   respect to any such transaction.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (b)          During   the six-month period following the Distribution Date, no Controlled Affiliate   will sell, exchange, distribute, or otherwise dispose of assets to any   Person, or enter into any Substantial Negotiations, agreements,   understandings, or arrangements with respect to any such transaction, except   in the ordinary course of business.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (c)          Following   the Distribution, Controlled and its Subsidiaries will, for a minimum of two   years, continue the active conduct of the Steel Business.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (d)          No   Controlled Affiliate will take any action inconsistent with the information   and representations in the Opinion Documents.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (e)          For   two years following the Distribution, no Controlled Affiliate will repurchase   stock of Controlled in a manner contrary to the requirements of Revenue   Procedure 96-30 or in a manner contrary to the representations made in the   Opinion Documents.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (f)          No   Controlled Affiliate will permit its agents to take any of the actions   described in items (a) through (e) above on its behalf.
  

          6.3.          Exceptions.  Other than with respect to the matters described in Section 6.2(a) or Section 6.2(b), any Distributing Affiliate or Controlled Affiliate may take actions inconsistent with the covenants contained in Article VI if Distributing or Controlled, as the case may be, obtains an Unqualified Tax Opinion or a Private Letter Ruling, it being understood that each party hereto agrees to cooperate with the party seeking such opinion or ruling and to use its reasonable best efforts to assist the party seeking such opinion or ruling in its attempting to obtain, as expeditiously as possible, any opinion or ruling described in this Section 6.3. 

ARTICLE VII
 INDEMNITY OBLIGATIONS

          7.1.          Controlled Indemnity.  Each Controlled Affiliate (collectively, jointly and severally, the “Controlled Indemnifying Parties”) will jointly and severally indemnify each Distributing Affiliate (each a “Distributing Indemnified Party”) against and hold them harmless from:

	
  
 
  	
  
 
  	
  
          (a)          any   Tax incurred with respect to all Distributing Consolidated Returns to the   extent that such Taxes are related to (i) a Controlled Separate Tax Liability   or (ii) the Steel Business for any taxable period, but excluding (for   purposes of this Section 7.1(a)) any Separation Taxes;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (b)          any   separate state and local Tax of any Controlled Affiliate;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (c)          any   Separation Taxes resulting from a breach by a Controlled Indemnifying Party   of (i) any representation or covenant in an Opinion Document (as such   representation is modified, qualified or elaborated in any subsequent Opinion   Document), (ii) any representation, covenant or other agreement set forth in   this Agreement, or (iii) any agreements or covenants between a Distributing   Affiliate and a Controlled Affiliate pertaining to Tax matters;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (d)          any   Controlled Change in Control Tax;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (e)          any   Tax Liability arising from an Adjustment for which Controlled is responsible   under Section 3.3;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (f)          any   Tax imposed on a Distributing Affiliate as a result of Controlled’s failure   to cooperate with Distributing under Article VIII; and
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (g)          any   Tax imposed on a Distributing Affiliate resulting from Controlled’s adoption   of a position inconsistent with the allocation set out in Section 2.4.
  

          7.2.          Distributing Indemnity.  Each Distributing Affiliate (collectively, jointly and severally, the “Distributing Indemnifying Parties” and, together with Controlled Indemnifying Parties, the “Indemnifying Parties”) will jointly and severally indemnify each Controlled Affiliate (each a “Controlled Indemnified Party” and, together with the Distributing Indemnified Parties, the “Indemnified Parties”) against and hold them harmless from:

	
  
 
  	
  
 
  	
  
          (a)          any   Distributing Consolidated Group Taxes, excluding any such Taxes for which   Controlled is required to indemnify Distributing under Section 7.1 of this   Agreement, and (for purposes of this Section 7.2) any Separation Taxes;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (b)          any   separate state or local Tax and any foreign Tax of any Distributing   Affiliate;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (c)          any   liability or damage arising from the breach by any Distributing Affiliate   of (i) any representation or covenant in an Opinion Document (as such   representation is modified, qualified or elaborated in any subsequent Opinion   Document), (ii) any representation, covenant or other agreement set forth in   this Agreement, or (iii) any agreements or covenants between a Distributing   Affiliate and a Controlled Affiliate pertaining to Tax matters;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (d)          any   Separation Taxes (other than such Taxes for which Controlled is required to   indemnify Distributing under Section 7.1);
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (e)          any   Tax liability arising from an Adjustment for which Distributing is   responsible under Section 3.3; and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
          (f)          any   Tax imposed on a Controlled Affiliate (other than a Separation Tax) as a   result of Distributing’s failure to cooperate with Controlled under Article   VIII.
  

          7.3.          Amount of Indemnity.  The amount of Tax included in any item described in Section 7.1 or 7.2 (each an “Indemnified Liability”) that is incurred by any Indemnified Party shall be determined pursuant to Section 3.3.  If Section 3.3 does not address the amount of an Indemnified Liability, in the case of a Tax based or determined with reference to income for any year, the amount of Tax included in any item described in Section 7.1 or 7.2 shall be the difference between (x) the actual Tax incurred by the Indemnified Party for such year and (y) the amount of Tax that the Indemnified Party would have paid in such year absent the Tax Items (or adjustments thereto) in that year or any prior year giving rise to the Indemnified Liability.  For the avoidance of doubt, if an Adjustment to any Tax Item would have
resulted in additional Tax paid but for the availability of net operating losses or tax credits, the Indemnifying Party shall indemnify the Indemnified Party when, as, and to the extent that such loss or credit carryforward would otherwise have been available to reduce any Tax.  

          7.4.          Tax Consequences of Payments.  All amounts payable under this Agreement shall be treated as adjustments to the amount of the Contribution, provided that if any Taxing Authority determines that the amounts received by an Indemnified Party nevertheless are taxable, then the Indemnifying Party shall make additional payments to the Indemnified Party so that the Indemnified Party is made whole on an after-tax basis.  For this purpose, the amount of Taxes imposed on the payments shall be determined based on the taxing jurisdiction’s highest marginal Tax rate applicable to taxable income of corporations such as the Indemnified Party on income of the character subject to tax and indemnified against under this Article VII for the taxable period in which the Distribution occurs (net of any federal Tax Benefit from state and
local Taxes).

ARTICLE VIII
 PROCEDURAL ASPECTS OF INDEMNITY

          8.1.          General.

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

          8.2.          Contests.

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

          8.3.          Time and Manner of Payment.  An Indemnifying Party shall pay to the Indemnified Party the amount of the Indemnified Liability and any expenses or other costs indemnified against (less any amount paid directly by an Indemnifying Party to the Taxing Authority) no less than seven (7) days prior to the date payment of the Indemnified Liability is to be made to the Taxing Authority.  Such payment shall be paid by wire transfer of immediately available funds to an account designated by the Indemnified Party by written notice given to the Indemnifying Party at least three (3) days prior to the due date of such payment.  If an Indemnifying Party delays making payment beyond the due date hereunder, such party shall pay interest on the amount unpaid at the IRS Interest Rate for each day and the actual number of days for which
any amount due hereunder is unpaid.

          8.4.          Refunds.  In connection with this Agreement, if an Indemnified Party receives a refund in respect of amounts paid by an Indemnifying Party to any Taxing Authority on its behalf, or should any such amounts that would otherwise be refundable to the Indemnifying Party be applied by the Taxing Authority to obligations of the Indemnified Party unrelated to an Indemnified Liability, then such Indemnified Party shall, promptly following receipt (or notification of credit), remit such refund and any related interest to such Indemnifying Party.

          8.5.          Cooperation.  The parties shall cooperate with one another in a timely manner in any administrative or judicial Proceeding involving any matter that may result in an Indemnified Liability.

          8.6.          Affiliates.  Distributing agrees and acknowledges that Distributing shall be responsible for the performance of the obligations of each Distributing Affiliate under this Agreement.  Controlled agrees and acknowledges that Controlled shall be responsible for the performance of the obligations of each Controlled Affiliate under this Agreement.

          8.7.          Application to Present and Future Subsidiaries.  This Agreement is being entered into by Distributing and Controlled on behalf of themselves and each Distributing Affiliate and each Controlled Affiliate, respectively.  This Agreement shall constitute a direct obligation of each such affiliate and shall be deemed to have been readopted and affirmed on behalf of any corporation or other entity that becomes a Distributing Affiliate or a Controlled Affiliate in the future.

ARTICLE IX
 DISPUTE RESOLUTION

          9.1.          Disputes.

	
  
 
  	
  
 
  	
  
          (a)          Resolution   of any and all disputes arising from or in connection with this Agreement,   whether based on contract, tort, statute, or otherwise, including, but not   limited to, disputes in connection with claims by third parties   (collectively, “Disputes”) shall be subject to the provisions of this   Section 9.1; provided, however, that nothing contained herein shall preclude   either party from seeking or obtaining (i) injunctive relief or (ii)   equitable or other judicial relief to enforce the provisions hereof or to   preserve the status quo pending resolution of Disputes hereunder.
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
          (b)          Either   party may give the other party written notice of any Dispute not resolved in   the normal course of business.  The   parties shall attempt in good faith to resolve any Dispute promptly by   negotiation between executives of the parties who have authority to settle   the controversy and who are at a higher level of management than the persons   with direct responsibility for administration of this Agreement.  Within 30 days after the giving of the   notice, the foregoing executives of both parties shall meet at a mutually   acceptable time and place, and thereafter as often as they reasonably deem   necessary for a period not to exceed 15 days, to attempt to resolve the   Dispute.  All reasonable requests for   information made by one party to the other will be honored.  If the parties do not resolve the Dispute
within such 15-day period (the “Initial Mediation Period”), the parties   shall attempt in good faith to resolve the Dispute by negotiation between (a)   in the case of Distributing, the Chief Financial Officer, and (b) in the case   of Controlled, the Chief Financial Officer (collectively, the “Designated   Officers”).  Such officers   shall meet at a mutually acceptable time and place (but in any event no later   than 15 days following the expiration of the Initial Mediation Period) and   thereafter as often as they reasonably deem necessary for a period not to   exceed 15 days, to attempt to resolve the Dispute.
  

	
  
 
  	
  
 
  	
  
          (c)          If   the Dispute has not been resolved by negotiation within 75 days of the giving   of the first party’s notice, or if the parties failed to meet within 30 days   of the first party’s giving of notice, or if the Designated Officers failed   to meet within 60 days of the first party’s giving of notice, either party   may commence any litigation or other procedure allowed by law.
  

ARTICLE X
 GENERAL

          10.1.          Term of the Agreement.  This Agreement shall become effective as of the Distribution Date, and except as expressly provided herein, shall continue in full force and effect indefinitely.

          10.2.          Injunctions.  The parties acknowledge that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or were otherwise breached.  The parties hereto shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court having jurisdiction, such remedy being in addition to any other remedy to which they may be entitled at law or in equity.

          10.3.          Assignment.  Neither of the parties may assign or delegate any of its rights or duties under this Agreement without the prior written consent of the other party, which consent will not be unreasonably withheld. This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and permitted assigns.

          10.4.          Further Assurances.  Subject to the provisions hereof, the parties hereto shall make, execute, acknowledge and deliver such other instruments and documents, and take all such other actions, as may be reasonably required in order to effectuate the purposes of this Agreement and to consummate the transactions contemplated hereby.  Subject to the provisions hereof, each party shall, in connection with entering into this Agreement, performing its obligations hereunder and taking any and all actions relating hereto, comply with all applicable laws, regulations, orders, and decrees, and promptly provide the other party with all such information as it may reasonably request in order to be able to comply with the provisions of this sentence.

          10.5.          Waivers.  No failure or delay on the part of the parties in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  No modification or waiver of any provision of this Agreement or consent to any departure by the parties therefrom shall in any event be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.

          10.6.          Change of Law.  If, due to any change in applicable law, regulation, or interpretation thereof by any court of law or other governing body having jurisdiction subsequent to the date of this Agreement, performance of any provision of this Agreement or any transaction contemplated hereby shall become impracticable or impossible, the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such provision.

          10.7.          Confidentiality.  Subject to any contrary requirement of law and the rights of each party to enforce its rights hereunder in any legal action, each party agrees that it shall keep strictly confidential, and shall cause its employees and agents to keep strictly confidential, any information that it or any of its employees or agents may require pursuant to, or in the course of performing its obligations under, any provision of this Agreement.

          10.8.          Headings.  Descriptive headings are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.

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

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

	
  
 
  	
  
Distributing   at:
  	
  
Texas   Industries, Inc.
  
	
  
 
  	
  
 
  	
  
1341 W.   Mockingbird Lane
  
	
  
 
  	
  
 
  	
  
Dallas,   Texas  75247
  
	
   
  	
  
 
  	
  
Attn:  General Counsel
  
	
  
 
  	
  
 
  	
  
Phone:  (972) 647-6700
  
	
  
 
  	
  
 
  	
  
Fax:  (972) 647-3320
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
Controlled   at:
  	
  
Chaparral   Steel Company
  
	
  
 
  	
  
 
  	
  
300 Ward   Road
  
	
  
 
  	
  
 
  	
  
Midlothian,   Texas  76065
  
	
  
 
  	
  
 
  	
  
Attn:  General Counsel
  
	
   
  	
  
 
  	
  
Phone:  (972) 775-8241
  
	
  
 
  	
  
 
  	
  
Fax:  (972) 775-1930
  

or to such other address as any party may, from time to time, designate in a written notice delivered in a like manner. Notice delivered by hand shall be deemed given when received by the recipient.  Notice delivered by mail as set out above shall be deemed given three (3) business days after the date the same have been deposited in a United States post office.  Notice delivered by reputable overnight courier shall be deemed given on the next following business day after the same have been deposited with a reputable overnight courier (e.g., Federal Express).  Notice given by facsimile transmission shall be deemed given on the day of transmission if such transmission is sent prior to 5:00 P.M. central standard time and if telephone confirmation of receipt is obtained promptly thereafter.    

          10.11.        Costs and Expenses.  Unless specifically provided herein, each party agrees to pay its own costs and expenses resulting from the fulfillment of its respective obligations hereunder.

          10.12.        Entire Agreement.  This Agreement shall constitute the entire agreement between the parties hereto with respect to the subject matter hereof and shall supersede all prior agreements and undertakings, both written and oral, between the parties with respect to the subject matter hereof and thereof.  On or prior to the Distribution Date, all agreements (other than this Agreement) providing for the allocation or sharing of Taxes to which any Controlled Affiliate would otherwise be bound following the Distribution shall have no further force and effect.

          10.13.        Interest on Late Payments.  If a party delays making any payment beyond the due date hereunder, such party shall pay interest on the amount unpaid at the IRS Interest Rate for each day and the actual number of days for which any amount due hereunder is unpaid.

          10.14.        Amendments.  This Agreement may not be amended or modified except (a) by an instrument in writing signed by, or on behalf of, the parties or (b) by a waiver in accordance with Section 10.5.

          10.15.        No Third-Party Beneficiaries.  This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their respective present and future Subsidiaries, and nothing herein, express or implied, is intended to or shall confer upon any third parties any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

          10.16.        Governing Law and Severability.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, including the provisions of such laws relating to conflict of laws.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in
an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

[Signature Pages Follow]

          IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed by their respective officers, each of whom is duly authorized, all as of the Distribution Date.

	
  
 
  	
  
DISTRIBUTING:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
TEXAS INDUSTRIES, INC.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ RICHARD M. FOWLER
  
	
   
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Richard M.   Fowler
  
	
  
 
  	
  
Title:
  	
  
Executive   Vice President – Finance and Chief Financial Officer
  

          IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed by their respective officers, each of whom is duly authorized, all as of the Distribution Date.

	
  
 
  	
  
CONTROLLED:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
CHAPARRAL STEEL   COMPANY
  
	
   
  	
   
  	
   
  
	
   
  	
  By:
  	
  /s/ J. CELTYN HUGHES
  
	
   
  	
   
  	
  

  
	
   
  	
  Name:
  	
  J. Celtyn   Hughes
  
	
   
  	
  Title:
  	
  Vice   President and Chief Financial OfficerExhibit 10.5

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 Texas Industries, Inc., a Delaware corporation (the “Borrower”), entered into the Credit Agreement dated as of June 30, 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 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 the 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

          1.1.          Definitions.  For purposes of this Agreement:

          “Accession” 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 accession (as defined in the UCC), and (whether or not included in that definition), a good that is physically united with another good in such a manner that the identity of the original good is not lost.

          “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.

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          “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, (b) Accessions,  (c) Chattel Paper, (d) Commercial Tort Claims, including but not limited to the specific Commercial Tort Claims described on Schedule 7, (e) Commodity Accounts, (f) Commodity Contracts, (g) Deposit Accounts, (h) Documents, (i) Equipment, (j) Financial Assets, (k) General Intangibles, (l) Goods, (m) Intellectual Property, (n) Instruments, (o) Inventory,  (p) Investment Property, (q) Letters of Credit, (r) Letter-of-Credit Rights, (s) Payment Intangibles, (t) Permits, (u) Securities, (v) Securities Accounts, (w) Security Entitlements, (x) Software, (y) supporting obligations, (z) cash and cash accounts, (aa) Proceeds, (ab) products, (ac) Collateral Records,
(ad) Insurance, (ae) Money, and (af) Pledged Equity Interests.

          “Collateral Records” shall mean books, records, ledger cards, files, correspondence, customer lists, blueprints, technical specifications, manuals, computer software, computer printouts, tapes, disks and related data processing software and similar items that at any time evidence or contain information relating to any of the Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon.

          “Commercial Tort Claim” 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 commercial tort claim (as defined in the UCC), and (whether or not included in such definition), all claims arising in tort with respect to which the claimant (a) is an organization, or (b) an individual and the claim (i) arose in the course of the claimant’s business or profession, and (ii) does not include damages arising out of personal injury to or the death of an individual.

          “Commodity 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 a commodity account (as defined in the UCC), and (whether or not included in such definition), an account maintained by a Commodity Intermediary in which a Commodity Contract is carried for a Commodity Customer.

          “Commodity Contract” 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 commodity future contract, an option on a commodity futures contract, a commodity option, or any other contract if the contract or option is (a) traded on or subject to the rules of a board of trade that has been designated as a contract market for such a contract pursuant to the federal commodities Laws, or (b) traded on a foreign commodity board of trade, exchange, or market, and is carried on the books of a Commodity Intermediary for a Commodity Customer.

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          “Commodity Customer” means a Person for whom a Commodity Intermediary carries a Commodity Contract on its books.

          “Commodity Intermediary” means (a) a Person that is registered as a futures commission merchant under the federal commodities Laws or (b) a Person that in the ordinary course of its business provides clearance or settlement services for a board of trade that has been designated as a contract market pursuant to federal commodities Laws.

          “Copyright License” means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to any written agreement, now or hereafter in effect, granting any right to any third party under any Copyright now or hereafter owned by each such Grantor or which each such Grantor otherwise has the right to license, or granting any right to each such Grantor under any Copyright now or hereafter owned by any third party, and all rights of each such Grantor under any such agreement.

          “Copyrights” 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) all copyright rights in any work subject to the copyright Laws of any Governmental Authority, whether as author, assignee, transferee, or otherwise set forth on Schedule 5(d), (b) all registrations and applications for registration of any such copyright in any Governmental Authority, including registrations, recordings, supplemental registrations, and pending applications for registration in any jurisdiction, and (c) all rights to use and/or sell any of the foregoing.

          “Deposit 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 a deposit account (as defined in the UCC), and (whether or not included in such definition), a demand, time, savings, passbook, or similar account maintained at a bank (as defined in the UCC).

          “Document” 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 document (as defined in the UCC), and (whether or not included in such definition), a document of title, bill of lading, dock warrant, dock receipt, warehouse receipt, or order for the delivery of Goods.

          “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.

          “Entitlement Holder” means a Person identified in the records of a Securities Intermediary as the Person having a Security Entitlement against the Securities Intermediary. If a Person acquires a Security Entitlement by virtue of Section 8.501(b)(2) or (3) of the UCC, such Person is the Entitlement Holder.

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          “Equipment” means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to equipment (as defined in the UCC), and (whether or not included in such definition), all Goods other than Inventory or consumer goods, and all improvements, accessions, or appurtenances thereto.  

          “Financial Asset” 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 financial asset (as defined in the UCC), and (whether or not included in such definition), (a) a Security, (b) an obligation of a Person or a share, participation or other interest in a Person or in property or an enterprise of a Person, that is, or is of a type, dealt in or traded on financial markets or that is recognized in any area in which it is issued or dealt in as a medium for investment, or (c) any property that is held by a Securities Intermediary for another Person in a Securities Account if the Securities Intermediary has expressly agreed with the other Person that the property is to be treated as a financial asset under Chapter 8 of the UCC. As the context requires, “Financial Asset” means
either the interest itself or the means by which a Person’s claim to it is evidenced, including a certificated or uncertificated Security, a certificate representing a Security, or a Security Entitlement.

          “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.

          “Insurance” shall mean all right, title and interest to insurance policies covering any or all of the Collateral (regardless of whether the Secured Party is the loss payee thereof).

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          “Intellectual Property” means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to all Patents, Copyrights, Licenses, Trademarks, Trade Secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, Software and databases and all embodiments or fixations thereof and related documentation, registrations and franchises, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing.

          “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.

          “Investment Property” means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to investment property (as defined in the UCC), and (whether or not included in such definition), a Security (whether certificated or uncertificated), a Security Entitlement, Securities Account, and Pledged Debt.

          “Letter of Credit” 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 letter of credit (as defined in the UCC).  

          “Letter-of-Credit Right” 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 letter-of-credit right (as defined in the UCC), and (whether or not included in such definition), (a) a right to payment or performance under a letter of credit, whether or not the beneficiary has demanded or is at the time entitled to demand payment or performance, and (b) the right of a beneficiary to demand payment or performance under a letter of credit.

          “License” means any Patent License, Trademark License, Copyright License, or other similar license or sublicense.

          “Money” shall mean “money” as defined in the UCC.

          “Patent License” means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to any written agreement, now or hereafter in effect, granting to any third party any right to make, use or sell any invention on which a Patent, now or hereafter owned by each such Grantor or which each such Grantor otherwise has the right to license, is in existence, or granting to each such Grantor any right to make, use or sell any invention on which a Patent, now or hereafter owned by any third party, is in existence, and all rights of each such Grantor under any such agreement.

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          “Patents” 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) all letters patent of any Governmental Authority set forth on Schedule 5(b), all registrations and recordings thereof, and all applications for letters patent of any Governmental Authority set forth on Schedule 5(c), and (b) all reissues, continuations, divisions, continuations-in-part, renewals, or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.

          “Payment 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 payment intangible (as defined in the UCC), and (whether or not included in such definition), a General Intangible under which the Account Debtor’s principal obligation is a monetary obligation.

          “Permit”  means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to any authorization, consent, approval, permit, license or exemption of, registration or filing with, or report or notice to, any Governmental Authority.

          “Pledged Debt” shall mean all indebtedness owed to such Grantor, the instruments evidencing such indebtedness, and all interest, cash, instruments 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 indebtedness.

          “Pledged Equity Interests” shall mean all Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust Interests, provided, however, notwithstanding 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 such Grantor.

          “Pledged LLC Interests” shall mean, with respect to each Grantor, all interests of such Grantor in any limited liability company 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 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 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 such Grantor.

          “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 and the certificates, if any, representing such partnership interests and any interest of such Grantor on the books and records of such partnership 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 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.

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          “Pledged Stock” shall mean, with respect to each Grantor, all shares of capital stock 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 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 (other than TXI Capital Trust I) 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.

          “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.

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          “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 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 to which a Financial Asset is or may be credited in accordance with an agreement under which the Person maintaining the account undertakes to treat the Person for whom the account is maintained as entitled to exercise rights that comprise the Financial Asset.

          “Securities Collateral” has the meaning specified in Section 4.5.

          “Securities Intermediary” means (a) a clearing corporation, or (b) a Person, including a bank or broker, that in the ordinary course of its business maintains securities accounts for others and is acting in that capacity.

          “Security” means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to any obligations of an issuer or any shares, participations or other interests in an issuer or in property or an enterprise of an issuer which (a) are represented by a certificate representing a security in bearer or registered form, or the transfer of which may be registered upon books maintained for that purpose by or on behalf of the issuer, (b) are one of a class or series or by its terms is divisible into a class or series of shares, participations, interests or obligations, and (c)(i) are, or are of a type, dealt with or traded on securities exchanges or securities markets or (ii) are a medium for investment and by their terms expressly provide that they are a security governed by Chapter 8 of the UCC.

          “Security Entitlements” means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to the rights and property interests as and of an Entitlement Holder with respect to a Financial Asset.

          “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), a computer program (including both source and object code) and any supporting information provided in connection with a transaction relating to the program.

          “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.

          “Trade Secrets” means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to trade secrets, all know-how, inventions, processes, methods, information, data, plans, blueprints, specifications, designs, drawings, engineering reports, test reports, materials standards, processing standards and performance standards, and all Software directly related thereto, and all Licenses or other agreements to which such Grantor is a party with respect to any of the foregoing.

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          “Trademark License” means all right, title, and interest of each Grantor (in each case whether now or hereafter existing, owned, arising, or acquired) in and to any written agreement, now or hereafter in effect, granting to any third party any right to use any Trademark now or hereafter owned by such Grantor or which such Grantor otherwise has the right to license, or granting to such Grantor any right to use any Trademark now or hereafter owned by any third party, and all rights of such Grantor under any such agreement.

          “Trademarks” 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) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, all registrations and recordings thereof set forth on Schedule 5(a), and all registration and recording applications filed with any Governmental Authority in connection therewith, and all extensions or renewals thereof, (b) all goodwill associated therewith or symbolized thereby, (c) all other assets, rights and interests that uniquely reflect or embody such goodwill, (d) all rights to use and/or sell any of the foregoing, and (e) the portion of the business to
which each trademark pertains.

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

          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).

          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 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.

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ARTICLE II

GRANT OF SECURITY INTEREST

          2.1.          Assignment and Grant of Security Interest. 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   and to enable Administrative Agent to exercise its rights and remedies with   respect to the Collateral as Administrative Agent reasonably deems necessary   or appropriate.
  

          The Collateral shall not include any agreement, license or permit which by Law or 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.

          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 therein 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.

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          2.3.          Delivery of Pledged Equity Interests.  All certificates or 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

          3.1.          Representations and Warranties.  Each Grantor represents and warrants to each Secured Lender 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 takes 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 a UCC-1 financing statements for
such Grantor, 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 Schedule 1, Section (g),   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 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, or a valid leasehold interest in,   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 any 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 is any
Collateral   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), Chattel Paper,   promissory notes, or Payment Intangibles, or consigned any of its Inventory.
  

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               (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 settlor, 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 1   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 1, Section (a) states the jurisdiction   of organization of each Guarantor.  Schedule 1,   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.  Except as set forth   in Schedule 1, 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 1   and 2 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 1, 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 1,   Section (e) states the Federal Taxpayer Identification Number of each   Grantor.  Schedule 1, Section (f)   states the corporate or other organizational number of each Grantor.
  

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                 (e)          As   of the Closing Date, the chief executive office of each Grantor is located at   the address stated on Schedule 2, Section (a).  Schedule 2, 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 2, Section (c)   states all locations where each Grantor maintains any Equipment or   Inventory.  As of the Closing Date, Schedule 2,   Section (d) states all the places of business of each Grantor or   other locations of Collateral not identified in Schedule 2, Sections 2(a),   (b),
or (c). As of the Closing Date, Schedule 2, Section (e)   states the names and addresses of all Persons other than each Grantor who   have possession of any of the Collateral or other property of each such   Grantor.
  
	
   
 	
   
 
	
   
 	
  
               (f)          As   of the Closing Date, all Accounts have been originated by each Grantor and   all Inventory has been acquired by each Grantor in the ordinary course of   business.
  
	
   
 	
   
 
	
   
 	
  
               (g)          As   of the Closing Date, each Grantor has exclusive possession and control of the   Equipment and Inventory pledged by it hereunder, other than Equipment   temporarily out of service or out for repair and Inventory in the hands of   third party processors, transporters or storage providers.
  
	
   
 	
   
 
	
   
 	
                 (h)          As   of the Closing Date, Schedule 3 is a complete and correct list of   all the issued and outstanding stock, partnership interests, limited   liability company membership interests, or other equity interest owned by   each Grantor and the record and beneficial owners of such stock, partnership   interests, membership interests or other equity interests.  Also set forth on Schedule 3   is each equity investment of each Grantor that represents 50% or less of the   equity of the entity in which such investment was made as of the Closing   Date.
  
	
   
 	
   
 
	
   
 	
  
               (i)          As   of the Closing Date, Schedule 4 is a complete and correct list of   each promissory note and other instruments evidencing indebtedness owed to   and held by each Grantor (excluding all intercompany notes and other   instruments between each Grantor and each Subsidiary, and each Subsidiary and   each other Subsidiary).
  
	
   
 	
   
 
	
   
 	
  
               (j)          As   of the Closing Date, Schedule 5(a) is a complete and correct list   of each material Trademark registration and material Trademark application in   which each Grantor has any interest (whether as owner, licensee, or   otherwise), including the name of the registered owner and the nature of each   Grantor’s interest if not owned by the Grantor, the registered or applied for   Trademark, the Trademark application serial and/or registration number, the   date of the Trademark application and/or registration, and the country or   state registering the Trademark or with which the Trademark application was   filed.
  
	
   
 	
   
 
	
   
 	
                 (k)         As   of the Closing Date, Schedule 5(b) is a complete and correct list   of each material Patent in which each Grantor has any interest (either as   owner or licensee), including the name of the registered owner and the nature   of Grantor’s interest if not owned by Grantor, the Patent number, the date of   Patent issuance, and the country issuing the Patent.
  

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               (l)          As   of the Closing Date, Schedule 5(c) is a complete and correct list   of each material Patent application in which each Grantor has any interest   (either as owner or licensee), including the name of the Person applying to   be the registered owner and the nature of each Grantor’s interest if not   owned by the Grantor, the Patent application number, the date of Patent   application filing, and the country with which the Patent application was   filed.
  
	
   
 	
   
 
	
   
 	
  
               (m)        As   of the Closing Date, Schedule 5(d) is a complete and correct list   of each material Copyright (including the related registration and Copyright   application, if any) in which each Grantor has any interest (either as owner   or licensee), including the name of the registered owner and the nature of   Grantor’s interest if the Grantor is not the owner, the title of the work   which is the subject of the registered or applied for Copyright, the date of   Copyright issuance, the registration number (if applicable) and the country   issuing the Copyright or with which the Copyright application was filed.
  
	
   
 	
   
 
	
   
 	
                 (n)         As   of the Closing Date, Schedule 5(e) is a complete and correct list   of all allegations of use under Section 1(c) or 1(d) of the Trademark   Act (15 U.S.C. §1051, et seq.)   filed by each Grantor.
  
	
   
 	
   
 
	
   
 	
  
               (o)         As   of the Closing Date, Schedule 6 is a complete and correct list of   all material Software (other than non-custom generally available Software) in   which each Grantor has any interest (either as owner or licensee), including   the name of the licensor and the escrow agent under the applicable Software   escrow agreement (if any).
  
	
   
 	
   
 
	
   
 	
  
               (p)         As   of the Closing Date, Schedule 7 is a complete and correct list of   all Commercial Tort Claims in which each Grantor has any interest, including   the complete case name or style, the case number, and the court or other   tribunal in which the case is pending.
  
	
   
 	
   
 
	
   
 	
  
               (q)         As   of the Closing Date, except as set forth on Schedule 8, 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.
  
	
   
 	
   
 
	
   
 	
                 (r)          As   of the Closing Date, Schedule 9 is a complete and correct list of   all insurance policies covering losses with respect to Collateral for which   each Grantor is a named insured.
  

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ARTICLE IV

COVENANTS

          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 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, or otherwise to render this   Agreement and the Intellectual Property effective, 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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          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 1, Section (a),   its type of entity from the type of entity specified in Schedule 1,   Section (b), or its name from the name specified in Schedule 1,   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 2, 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 2,   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.
  

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          4.3.          Patents, Trademarks, and Copyrights.

	
   
 	
  
               (a)          Each   Grantor shall ensure that an acknowledgment (approved in form and substance   by Administrative Agent) containing a description of all Collateral   consisting of Intellectual Property shall have been received and recorded by   the United States Patent and Trademark Office within one month after the   execution of this Agreement with respect to United States Patents and   Trademarks and by the United States Copyright Office within one month after   the execution of this Agreement with respect to United States registered   Copyrights pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060   or 17 U.S.C. § 205, and otherwise as may be required by   Administrative Agent pursuant to the Laws of any other necessary jurisdiction   to the extent that the revenue generated and/or
received by the Grantors in   any foreign jurisdiction during any year exceeds $100,000, to protect the   validity of and to establish a legal, valid, and perfected security interest   in favor of Secured Party in respect of all Collateral consisting of Patents,   Trademarks, and Copyrights in which a security interest may be perfected by   filing, recording, or registration in the United States and its territories   and possessions, or in such other jurisdictions as may be required by   Administrative Agent, and no further or subsequent filing, refiling,   recording, rerecording, registration, or reregistration is necessary (other   than such actions as are necessary to perfect the security interest with   respect to any Collateral consisting of Patents, Trademarks, and Copyrights   (or registration or application for registration thereof) acquired or   developed after the date hereof).
  
	
   
 	
   
 
	
   
 	
                 (b)          No   Grantor (either itself or through licensees or sublicensees) will do any act,   or omit to do any act, whereby any Patent may become invalidated or dedicated   to the public, and shall continue to mark any products covered by a Patent   with the relevant patent number as necessary and sufficient to establish and   preserve its maximum rights under Applicable Laws.
  
	
   
 	
   
 
	
   
 	
  
               (c)          Each   Grantor (either itself or through licensees or sublicensees) will, for each   registered Trademark, (i) maintain such Trademark in full force free   from any claim of abandonment or invalidity for non-use; (ii) maintain   the quality of products and services offered under such Trademark,   (iii) display such Trademark with notice of United States federal or   foreign registration to the extent necessary and sufficient to establish and   preserve its maximum rights under Applicable Law, and (iv) not use or   permit the use of such Trademark in violation of any third party rights.
  
	
   
 	
   
 
	
   
 	
  
               (d)          Each   Grantor (either itself or through licensees or sublicensees) will, for each   work covered by a Copyright, continue to publish, reproduce, display, adopt,   and distribute the work with appropriate copyright notice as necessary and   sufficient to establish and preserve its maximum rights under Applicable   Laws.
  
	
   
 	
   
 
	
   
 	
                 (e)          Each   Grantor shall notify Administrative Agent immediately if it knows that any   Patent, Trademark, or Copyright may become abandoned, lost, or dedicated to   the public, or of any adverse determination or development (including the   institution of, or any such determination or development in, any proceeding   in the United States Patent and Trademark Office, United States Copyright   Office, or any Governmental Authority in any jurisdiction) regarding   Grantor’s ownership of any Patent, Trademark, or Copyright, its right to   register the same, or to keep and maintain the same.
  

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               (f)          In   no event shall any Grantor, either itself or through any agent, employee,   licensee, or designee, file an application for any Patent, Trademark, or   Copyright (or for the registration of any Trademark or Copyright) with the   United States Patent and Trademark Office, United States Copyright Office, or   any Governmental Authority in any jurisdiction, unless it informs   Administrative Agent within 15 Business Days of such filing, and, upon   request of Administrative Agent, executes and delivers any and all   agreements, instruments, documents, and papers as Administrative Agent may   request to evidence Administrative Agent’s and Secured Lenders’ security   interest in such Patent, Trademark, or Copyright, and each Grantor hereby   appoints Administrative Agent as its attorney-in-fact to execute
and file   such writings for the foregoing purposes.
  
	
   
 	
   
 
	
   
 	
                 (g)          Each   Grantor will take all necessary steps that are consistent with the practice   in any proceeding before the United States Patent and Trademark Office,   United States Copyright Office, or any Governmental Authority in any other   jurisdiction as may be required by Administrative Agent, to maintain and   pursue each application relating to the Patents, Trademarks, and/or   Copyrights (and to obtain the relevant grant or registration), and to   maintain each issued Patent and each registration of the Trademarks and   Copyrights, including timely filings of applications for renewal, affidavits   of use, affidavits of incontestability and payment of maintenance fees, and,   if consistent with good business judgment, to initiate opposition, interference,   and cancellation proceedings against third
parties.
  
	
   
 	
   
 
	
   
 	
  
               (h)          If   any Grantor has reason to believe that any Collateral consisting of a Patent,   Trademark, or Copyright has been or is about to be infringed,   misappropriated, or diluted by a third party, each such Grantor promptly   shall notify Administrative Agent and shall, if consistent with good business   judgment, unless such Grantor shall reasonably determine that such Patent,   Trademark or Copyright is in no way material to the conduct of its business   or operations, promptly sue for infringement, misappropriation, or dilution   and to recover any and all damages for such infringement, misappropriation,   or dilution, and take such other actions as are appropriate under the circumstances   to protect such Collateral.
  
	
   
 	
   
 
	
   
 	
                 (i)          If   an Event of Default exists, each Grantor shall use its best efforts to obtain   all requisite consents or approvals by the licensor of each Copyright   License, Patent License, or Trademark License to effect the collateral   assignment of all of each Grantor’s right, title, and interest thereunder to   Administrative Agent or its designee.
  
	
   
 	
   
 
	
   
 	
  
               (j)          In   no event shall any Grantor acquire or purchase any patent, registered   trademark, or registered copyright which any Grantor, in its reasonable   discretion, determines is material to the business operations of such Grantor   unless it informs Administrative Agent within 15 Business Days of such   purchase or acquisition, and, upon request of Administrative Agent, executes   and delivers any and all agreements, instruments, documents, and papers as   Administrative Agent may reasonably request to evidence Administrative   Agent’s and Secured Lenders’ security interest in such purchased or acquired   patent, registered trademark, or registered copyright.  Each Grantor hereby appoints   Administrative Agent as its attorney-in-fact to execute and file any evidence   of Administrative Agent’s
security interest and Lien in any such patent,   registered trademark, or registered copyright (or for the application for any   patent or registration of any copyright) with the United States Patent and   Trademark Office, United States Copyright Office, or any Governmental   Authority in any other jurisdiction as may be reasonably required by   Administrative Agent, in connection with such purchase or acquisition of any   such patent, registered trademark, or registered copyright.
  

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               (k)         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.
  
	
   
 	
   
 
	
   
 	
  
               (l)          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.
  
	
   
 	
   
 
	
   
 	
                 (m)         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).
  

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               (n)         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 upon and after any realization upon Collateral.
  
	
   
 	
   
 
	
   
 	
  
               (o)          Notwithstanding   any other provisions of this Agreement, nothing herein obligates any Grantor   to pursue registration or other protection of, and any Grantor may abandon,   relinquish, withdraw or release, any Intellectual Property determined by such   Grantor as not in any way material to the conduct of its business or   operations.
  

          4.4.          Rights to Dividends and Distributions.  With respect to any certificates, bonds, or other Instruments or Securities constituting a part of the Collateral, 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.  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 Collateral, whether as an addition to, in substitution of, as a conversion of, or in exchange for any of the Collateral, 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
Collateral.  Unless an Event of Default exists, each Grantor shall be entitled to receive all cash dividends and distributions paid in respect of any of the Collateral (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 Collateral, 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 Collateral 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.

          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.

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          4.6.          Insurance.  All policies of insurance required to be maintained pursuant to Section 6.07 of the Credit Agreement insuring the Equipment and Inventory 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 Equipment and
Inventory, 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.

          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.

          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;
  

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               (c)          to   receive, indorse, and collect any drafts or other Instruments, Documents, and   Chattel Paper, in connection therewith; and
  
	
   
 	
   
 
	
   
 	
  
               (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.
  

          4.9.          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.

          4.10.        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 as (a) 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.  

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ARTICLE V

RIGHTS AND POWERS OF SECURED PARTIES.

          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 5.6.

          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.

          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.
  

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                 (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).
  
	
   
 	
   
 
	
   
 	
  
               (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   Collateral 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 Collateral at private   sale, subject to an investment letter, or in any other manner which will not   require the Collateral, 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 Collateral.  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 Collateral 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   Collateral 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.
  

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               (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.
  
	
   
 	
   
 
	
   
 	
                 (g)          For   the purpose 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) to use, license, or   sub-license, if an Event of Default exists, any of the Collateral consisting   of Intellectual Property and wherever the same may be located, and including   in such license reasonable access to all media in which any of the licensed   items may be recorded or stored and to all Software used for the use,   compilation, or printout thereof.  In   connection therewith, each Grantor shall    execute and deliver a license
agreement to Administrative Agent to   evidence the grant of such license.  The use of such license by Administrative Agent shall be   exercised, at the option of Administrative Agent, if an Event of Default   exists; provided that any license, sub-license, or other transaction   entered into by Administrative Agent in accordance herewith shall be binding   upon each Grantor notwithstanding any subsequent cure of an Event of Default;   provided further, Administrative Agent shall use reasonable efforts to   limit the duration of each such license or sub-license to the time period   ending upon the cure of such Event of Default in accordance with the Loan   Documents.
  

          5.4.          Appointment of Receiver or Trustee.  In connection with the exercise of Secured Lenders’ rights under this Agreement or any other Loan Document, Administrative Agent may, if an Event of Default exists resulting in the acceleration of any of the Secured Obligations or following any Loan Party’s failure to pay any of the Secured Obligations at maturity, obtain the appointment of a receiver or trustee to assume, upon receipt of all necessary judicial or other Governmental Authority consents or approvals, control of or ownership of any Permits.  Such receiver or trustee shall have all rights and powers provided to it by Law or by court order or provided to Administrative Agent under this Agreement or any other Loan Document.  Upon the appointment of such trustee or receiver, each Grantor shall cooperate, to the
extent necessary or appropriate, in the expeditious preparation, execution, and filing of an application to any Governmental Authority or for consent to the transfer of control or assignment of each Grantor’s Permits to the receiver or trustee. 

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          5.5.          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.
  
	
   
 	
   
 
	
   
 	
                 (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

          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.  

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          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 other security, 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.

          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.

          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.

          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 or authorize such
Grantor to file 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 or on   behalf of Administrative Agent hereunder.
  

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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 Secured 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 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.
  

          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 OTHER 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.
  

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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 OTHER   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 OTHER 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 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 OTHER 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.
  

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          6.7.          Administrative Agent’s Right to Use Agents.  Administrative Agent may exercise its rights under this Agreement through an agent or other designee.

          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.

          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 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.

          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;
  

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               (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.
  

          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.

          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.

          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.

          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.

          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,

31

(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.

          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.

32

          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.

	
   
 	
  
TEXAS INDUSTRIES,   INC.
  
	
   
 	
   
 	
   
 
	
   
 	
  
By:
  	
  
/s/ MEL G. BREKHUS
  
	
   
 	
   
 	
  

  
	
   
 	
   
 	
  Mel G. Brekhus
  
	
   
 	
   
 	
  
President and Chief Executive Officer
  

Schedule 9 - 1

	
   
 	
  
BROOKHOLLOW CORPORATION
  
	
   
 	
  
BROOK HOLLOW   PROPERTIES, INC.
  
	
   
 	
  
BROOKHOLLOW OF ALEXANDRIA,   INC.
  
	
   
 	
  
BROOKHOLLOW OF VIRGINIA,   INC.
  
	
   
 	
  
SOUTHWESTERN FINANCIAL   CORPORATION
  
	
   
 	
  CREOLE CORPORATION
  
	
   
 	
  
PARTIN LIMESTONE   PRODUCTS, INC.
  
	
   
 	
  
RIVERSIDE CEMENT   HOLDINGS COMPANY
  
	
   
 	
  
TXI AVIATION, INC.
  
	
   
 	
  
TEXAS CEMENT   COMPANY
  
	
   
 	
  
TXI RIVERSIDE INC.
  
	
   
 	
  
TXI TRANSPORTATION COMPANY
  
	
   
 	
  
TXI CALIFORNIA INC.
  
	
   
 	
   
 	
   
 
	
   
 	
  By:
  	
  
/s/ RICHARD M. FOWLER
  
	
   
 	
   
 	
  

  
	
   
 	
   
 	
  
Richard M. Fowler
  
	
   
 	
   
 	
  
Vice President - Finance
  

Schedule 9 - 2

	
   
 	
  
PACIFIC CUSTOM   MATERIALS, INC.
  
	
   
 	
  
TXI POWER COMPANY
  
	
   
 	
   
 	
   
 
	
   
 	
  By:
  	
  
/s/ KENNETH R. ALLEN
  
	
   
 	
   
 	
  

  
	
   
 	
   
 	
  
Kenneth R. Allen
  
	
   
 	
   
 	
  
Vice President - Treasurer
  

Schedule 9 - 3

	
   
 	
  
RIVERSIDE CEMENT   COMPANY
  
	
   
 	
   
 	
   
 
	
   
 	
  
By:
  	
  
/s/ KENNETH R. ALLEN
  
	
   
 	
   
 	
  

  
	
   
 	
   
 	
  Kenneth R. Allen
  
	
   
 	
   
 	
  
Assistant General Manager - Treasurer
  

Schedule 9 - 4

	
   
 	
  
TEXAS INDUSTRIES   HOLDINGS, LLC
  
	
   
 	
  
TEXAS INDUSTRIES   TRUST
  
	
   
 	
  
TXI LLC
  
	
   
 	
   
 	
   
 
	
   
 	
  
By:
  	
  
/s/ RICHARD M. FOWLER
  
	
   
 	
   
 	
  

  
	
   
 	
   
 	
  Richard M. Fowler
  
	
   
 	
   
 	
  
President
  
	
   
 	
   
 	
   
 
	
   
 	
  
TXI OPERATING TRUST
  
	
   
 	
   
 	
   
 
	
   
 	
  
By:
  	
  
/s/ RICHARD M. FOWLER
  
	
   
 	
   
 	
  

  
	
   
 	
   
 	
  
Richard M. Fowler
  
	
   
 	
   
 	
  
Vice President and Chief Financial Officer
  
	
   
 	
   
 	
   
 
	
   
 	
  TXI OPERATIONS, LP
  
	
   
 	
   
 	
   
 
	
   
 	
  
By:
  	
  
TXI OPERATING TRUST,   its general partner
  
	
   
 	
   
 	
   
 
	
   
 	
   
 	
   
 
	
   
 	
  
By:
  	
  
/s/ RICHARD M. FOWLER
  
	
   
 	
   
 	
  

  
	
   
 	
   
 	
  
Richard M. Fowler
  
	
   
 	
   
 	
  
Vice President and Chief Financial Officer
  

Schedule 9 - 5

	
   
 	
  
SECURED PARTY:
  
	
   
 	
   
 	
   
 
	
   
 	
  
BANK OF AMERICA,   N.A., as Administrative Agent
  
	
   
 	
   
 	
   
 
	
   
 	
  
By:
  	
  
/s/ PAUL FOLINO
  
	
   
 	
   
 	
  

  
	
   
 	
  
Name:
  	
  
Paul Folino
  
	
   
 	
  
Title:
  	
  
Assistant Vice President
  

Schedule 9 - 6

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