SEPARATION AND DISTRIBUTION AGREEMENT

Exhibit 10.4

[EXECUTION]

SEPARATION AND DISTRIBUTION AGREEMENT

Dated as of July 6, 2005

Between

TEXAS INDUSTRIES, INC.

and

CHAPARRAL STEEL COMPANY

TABLE OF CONTENTS

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Schedule

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SEPARATION AND DISTRIBUTION AGREEMENT

THIS AGREEMENT is made as of July 6, 2005 by and between Texas Industries, Inc. (“ TXI ”), a Delaware corporation, and Chaparral Steel Company (“ Chaparral ”), a Delaware corporation, and, as of the date hereof, a wholly-owned subsidiary of TXI.

WHEREAS, TXI, through certain subsidiaries, is engaged in the business of manufacturing and selling steel products (the “ Chaparral Business ”).

WHEREAS, the Board of Directors of TXI has determined that it would be advisable and in the best interests of TXI and its stockholders for TXI to transfer and assign, or cause to be transferred and assigned, to Chaparral the business, operations, assets and liabilities related to the Chaparral Business;

WHEREAS, TXI has agreed to transfer, assign or lease, or cause to be transferred, assigned or leased, to the Chaparral Parties (as hereinafter defined) substantially all of the assets and properties of the Chaparral Business, and Chaparral has agreed to the transfer, assignment or lease of such assets and to assume, or cause to be assumed, substantially all of the liabilities and obligations arising out of or relating to the Chaparral Business (the “ Contribution ”);

WHEREAS, the Board of Directors of TXI has determined that it would be advisable and in the best interests of TXI and its stockholders for TXI to distribute on a pro rata basis to the holders of TXI’s common stock, par value $1.00 per share (“ TXI Common Stock ”), without any consideration being paid by the holders of such TXI Common Stock, all of the outstanding shares of Chaparral common stock, par value $0.01 per share (together with the preferred share purchase rights associated therewith, the “ Chaparral Common Stock ”), then owned by TXI (the “ Distribution ”);

WHEREAS, for federal income tax purposes, the Contribution and Distribution are intended to qualify for tax-free treatment under Sections 355, 361 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “ Code ”); and

WHEREAS, it is appropriate and desirable to set forth the principal transactions required to effect the Contribution and Distribution and certain other agreements that will govern the relationship of TXI and Chaparral following the Distribution.

NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1 Definitions . As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.1.

“Actions” means any action, claim, demand, suit, arbitration, inquiry, subpoena, discovery request, proceeding or investigation by or before any court or grand jury, any governmental or other regulatory or administrative entity, agency or commission or any arbitration tribunal, domestic or foreign.

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person. For the purpose of this definition, the term “control” means the power to direct the management of an entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the term “controlled” has the meaning correlative to the foregoing. After the Distribution, Chaparral and TXI shall not be deemed to be under common control for purposes hereof due solely to the fact that Chaparral and TXI have stockholders in common.

“Agent” means Mellon Investor Services, LLC, the distribution agent appointed by TXI to distribute shares of Chaparral Common Stock pursuant to the Distribution.

“Ancillary Agreements” means the Tax Sharing Agreement, the TXI Real Estate Leases, the Chaparral Real Estate Leases, an Environmental Monitoring and Management Agreement, a Preliminary Single Property Designation Agreement, a Software License and any other agreement regarding the ongoing business and service relationships between the TXI Parties and Chaparral Parties.

“Assumed Actions” has the meaning set forth in Section 6.10(a).

“Assumed Liabilities” has the meaning set forth in Section 2.3.

“Cessation Time” has the meaning set forth in Section 5.5.

“Chaparral” has the meaning set forth in the first paragraph of this Agreement.

“Chaparral 401(k) Plan” has the meaning set forth in Section 5.18(a)(i).

“Chaparral Business” has the meaning set forth in the recitals.

“Chaparral Business Employee” means (i) any individual employed at any time on or prior to the Distribution Date by TXI or any of its Subsidiaries who has, as of the Distribution Date, or who, immediately prior to his or her termination of employment by TXI or any of its Subsidiaries had, employment duties primarily related to the Chaparral Business, and (ii) any other individual employed prior to the Distribution Date by TXI or any of its Subsidiaries who accepts an offer to become an employee of Chaparral on the Distribution Date.

“Chaparral Common Stock” has the meaning set forth in the recitals.

“Chaparral Distributable Share” means for each holder of record of TXI Common Stock as of the close of business on the Record Date one share of Chaparral Common Stock for every share of TXI Common Stock outstanding and held of record by such holder at such time.

“Chaparral FSP” has the meaning set forth in Section 5.18(b)(i).

“Chaparral Indemnified Parties” has the meaning set forth in Section 10.3.

“Chaparral Parties” means Chaparral, the direct or indirect Subsidiaries acquired by Chaparral as part of the Transferred Assets and any Subsidiaries formed or acquired after the date hereof.

“Chaparral Real Estate Leases” has the meaning set forth in Section 2.1(b)(i).

“Chaparral Share(s)” mean(s) each share of Chaparral Common Stock.