TAX SHARING AND INDEMNIFICATION AGREEMENT

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:

          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:

          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:

           3.3.           Payment of Allocable Taxes .