SECOND AMENDED AND RESTATED FINANCIAL SECURITY PLAN OF

PREAMBLE AND PURPOSE

DEFINITIONS AND CONSTRUCTION

ELIGIBILITY AND MEMBERSHIP

RETIREMENT BENEFIT AND BENEFIT UPON SEPARATION FROM SERVICE

DEATH BENEFIT

DISABILITY

SOURCE OF BENEFITS

AMENDMENT AND TERMINATION OF THE PLAN

OTHER BENEFITS AND AGREEMENTS

RESTRICTIONS ON ALIENATION OF BENEFITS

ADMINISTRATION OF THIS PLAN

NON-COMPETE

NAMED FIDUCIARY AND CLAIMS PROCEDURE

ADOPTION OF PLAN BY SUBSIDIARY, AFFILIATED OR ASSOCIATED COMPANIES

MISCELLANEOUS

1.1

Preamble. Chaparral Steel Company, a Delaware corporation (the “Company”), established that certain Financial Security Plan of Chaparral Steel Company (the “July 2005 Plan”) effective July 29, 2005 pursuant to Section 5.18(b)(i) of that certain Separation and Distribution Agreement, dated July 6, 2005, between the Company and Texas Industries, Inc. (the “Separation Agreement”) to provide for the payment of benefits as provided in the Separation Agreement which accrued prior to July 29, 2005 in the Texas Industries, Inc. Financial Security Plan (the “TXI FSP”) with respect “Chaparral Business Employees” as that term is defined in the Separation Agreement and to provide for the payment of benefits to Eligible Employees employed by the Company and its Subsidiaries on and after July 29, 2005.

1.2

Purpose. Through this Plan, the Company intends to permit the deferral of compensation and to provide certain benefits to a select group of management or highly compensated employees of the Company and its Subsidiaries.

2.1

Definitions. Capitalized terms used but not otherwise defined herein will have the meaning set forth in this Section 2.1, unless a different meaning is required by the context in which the word or phrase is used.

(a)

“Administrative Committee” means those members of the Committee appointed pursuant to Article XI for the purpose of administering this Plan with respect to Participants who are not Executive Officers of the Company.

(b)

“Beneficiary” means an individual entitled to receive benefits under this Plan upon the death of a Participant.

(c)

“Beneficiary Designation” means the form of written agreement, attached hereto as Appendix C, by which a Participant designates a Beneficiary or Beneficiaries. All Beneficiary Designations will apply to this Plan until the Participant amends or revokes such Beneficiary Designation.

(d)

“Cause” means any action involving willful malfeasance or gross negligence or material non-feasance.

(e)

“Committee” means (i) with respect to Participants who are not Executive Officers, the Administrative Committee appointed to manage and administer this Plan in accordance with the provisions of Article XI, and (ii) with respect to Participants who are Executive Officers of the Company, the Board of Directors of the Company or a committee of directors selected by the Board of Directors.

(f)

“Covered Salary” means a Participant’s base annual salary excluding bonuses or other fringe benefits, if any, which the Participant chooses in the Participant’s Plan Agreement (at a level of either fifty percent (50%) or one hundred percent (100%)) as the basis for computation of the Retirement or Death Benefit pursuant to the terms and conditions of this Plan.

(g)

“Death Benefit” means any benefit to which a Participant is entitled as described in Article V.

(h)

“Deferrals” means those amounts of Covered Salary the Participant elects to defer under this Plan as set forth in the Participant’s Election to Participate and Plan Agreement.

(i)

“Deferred Retirement Benefit” means the benefit described in Section 4.4.

(j)

“Disability” or “Disabled” means that the Participant is totally and permanently disabled within the meaning of the long-term disability plan sponsored by the Employer.

(k)

“Disability Benefit” means the benefit described in Section 6.1.

(l)

“Early Retirement Age” means age fifty-five (55). However, as required by Internal Revenue Service Notice 2006-79, a Participant who terminates employment in 2007 and is between the ages of fifty-five (55) and fifty-nine (59) is not eligible for the Early Retirement Benefit. Such a Participant’s benefits will be payable pursuant to Section 4.4.

(m)

“Early Retirement Benefit” means the benefit described in Section 4.3.

(n)

“Early Retirement Date” means the first day of any month following the month in which the Participant has attained Early Retirement Age and has Retired; provided such day occurs prior to the day the Participant attains Normal Retirement Age.

(o)

“Effective Date” means January 1, 2007.

(p)

“Election Form” means the form of written agreement attached as Appendix D entered into by the Participant irrevocably electing to delay payment of his Early Retirement Benefit or Normal Retirement Benefit for a period of five (5) years.

(q)

“Election to Participate” means the form of written agreement attached as Appendix A that will be executed and entered into between a Participant and the Employer specifying the amount of Covered Salary to be deferred under this Plan as provided in Article III. A Participant’s Election to Participate will apply to this Plan until the applicable Participant amends or revokes such Election to Participate.

(r)

“Eligible Employee” means any Employee who is hereafter selected by the Committee and who is in the regular full time employment of the Company or one of its Subsidiaries as determined by the personnel rules and practices of the Company or the Subsidiary.

(s)

“Employee” means an individual employed by the Employer in the relationship of employer and employee. The term does not include persons who are retained as consultants, leased or contract employees or other independent contractors even if such persons are determined by the Employer, the Internal Revenue Service, the Department of Labor or a court of competent jurisdiction to be common law employees of the Employer.

(t)

“Employer” means the Company or any Subsidiary who has adopted this Plan as a participating employer who has one or more Eligible Employees who have been selected by the Committee to participate in this Plan as provided in Article III. Where the context dictates, the term “Employer” as used herein refers to a particular Employer which has entered into an Election to Participate and a Plan Agreement with a specific Participant.

(u)

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

(v)

“Executive Officers” means (i) the persons designated as “Executive Officers” by the Board of Directors of the Company and (ii) those persons described in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended.

(w)

“Five Percent Owner” means a five percent (5%) owner within the meaning of section 416(i) of the Code.

(x)

“Key Employee” means a key employee within the meaning of section 416(i) of the Code.

(y)

“Late Retirement Benefit” means the benefit to be paid to a Participant pursuant to Section 4.2.

(z)

“Level of Participation” means the percentage of Covered Salary (either fifty percent (50%) or one hundred percent (100%)) selected by a Participant in connection with the Participant’s participation in this Plan.

(aa)

“Normal Retirement Age” means age sixty-five (65) except for Transfer Participants who were Texas Industries, Inc. executive officers prior to the Texas Industries, Inc. /Chaparral Steel Company merger whose Normal Retirement Age is sixty (60).

(bb)

“Normal Retirement Benefit” means the benefit described in Section 4.1.

(cc)

“Normal Retirement Date” means the first day of the month following the month in which the Participant attains Normal Retirement Age.

(dd)

“Open Enrollment Period” means the period occurring each year during which an Eligible Employee may select his or her Level of Participation and elect to defer Covered Salary for a subsequent Plan Year pursuant to Article III.

(ee)

“Original Entry Date” means with respect to Plan A, B or C Participants, the date the Participant commenced participation in the Plan and with respect to Plan D Participants, the date such Participant first became an employee of Texas Industries, Inc. or one of its subsidiaries.

(ff)

“Participant” means any Eligible Employee who was or is hereafter selected by the Committee and elected to participate in the Plan as provided in Article III.

(gg)

“Plan” means this Second Amended and Restated Financial Security Plan of Chaparral Steel Company, which will be evidenced by this instrument and by each Election to Participate and Plan Agreement. Except as otherwise required by the context, references to “this Plan” will be deemed to include the TXI FSP, the Financial Security Plan of Chaparral Steel Company effective July 29, 2005, and the Financial Security Plan of Chaparral Steel Company adopted January 12, 2006 and effective July 29, 2005.

(hh)

“Plan Agreement” means, the written agreement in the form attached hereto as Appendix B which is entered into by and between an Employer and a Participant.

(ii)

“Plan Entry Date” means, with respect to Participants who were Participants in the TXI FSP (Plan D), the date the Participant commenced participation in the TXI FSP. The Plan Entry Date is only applicable in the event this Plan is terminated and liquidated pursuant to Section 8.2(b).

(jj)

“Plan Year” means each twelve (12) month period (beginning January 1 and ending December 31) included within the term of this Plan or any predecessor plan.

(kk)

“Retirement” and “Retire” means a Participant’s separation from service with the Company and its Subsidiaries after having become fully Vested and on or after his or her attainment of Early Retirement Age or Normal Retirement Age.

(ll)

“Retirement Benefit” means any benefit to which a Participant is entitled as described in Article IV.

(mm)

“Special Enrollment Period” means the thirty (30) day period after an Eligible Employee is employed by the Employer and advised of his or her eligibility to participate in this Plan during which the Eligible Employee may select his or her Level of Participation and elect to defer his or her Covered Salary earned after such election pursuant to Article III. The Committee may also designate certain periods as Special Enrollment Periods to the extent permitted under section 409A of the Code.

(nn)

“Subsidiary” means any business organization in which the Company, directly or indirectly, owns an ownership interest, excluding ownership interests the Company may hold in its fiduciary capacity as trustee or otherwise, and any other business organization that the Board of Directors designates as a Subsidiary for purposes of this Plan.

(oo)

“TXI FSP” means the Texas Industries, Inc. Financial Security Plan.

(pp)

“Vested” or “Vesting” means the status that a Participant obtains with respect to benefits selected under this Plan that is based on either such Participant’s years of Plan participation or the occurrence of a specified event (e.g., Disability or death). Generally, a Participant will become Vested with respect to the benefits attributable to each Level of Participation selected under this Plan once he or she has completed five (5) consecutive years of Plan participation, with such status accruing at the rate of twenty percent (20%) each year. However, the Committee, in its sole and absolute discretion, may prescribe alternative conditions under which a Participant will become Vested; provided, such conditions are set forth in the Participant’s Plan Agreement.

(qq)

“Vested Percentage” means the percent to which a Participant is Vested in the benefits to be provided under this Plan (i.e., twenty percent (20%), forty percent (40%), sixty percent (60%), eighty percent (80%) or one hundred percent (100%)).

2.2

Construction. If any provision of this Plan is determined to be for any reason invalid or unenforceable, the remaining provisions of this Plan will continue in full force and effect. All of the provisions of this Plan will be construed and enforced in accordance with the laws of the State of Texas and will be administered according to the laws of such state, except as otherwise required by ERISA, the Code or other applicable federal law. Headings and subheadings of this Plan are for the purpose of reference only and are not to be considered in the construction of this Plan.

3.1

Open Enrollment Period. The Committee will have the sole discretion to determine the Eligible Employees who are eligible to become Participants in accordance with the purpose of this Plan. During the Open Enrollment Period, each Eligible Employee will be contacted and informed that he or she may select a Level of Participation and elect to defer portions of his or her Covered Salary to this Plan for the following Plan Year and will be provided with an Election to Participate and a Plan Agreement. An Eligible Employee will become a Participant by completing such forms and selecting a Level of Participation and making a Deferral election pursuant to Section 3.3.

3.2

Eligibility on Initial Employment. If an Eligible Employee is first designated by the Committee to be a Participant after the commencement of a Plan Year, then as permitted pursuant to section 409A of the Code, such Eligible Employee may elect to participate in this Plan during the Special Enrollment Period for the remainder of such Plan Year.

3.3

Level of Participation and Deferral of Covered Salary. Each Eligible Employee who elects to participate in this Plan must select a Level of Participation and must elect to defer an associated amount of Covered Salary. Such Deferral election will become effective as of the first day of the immediately following Plan Year, in the case of enrollment pursuant to Section 3.1, and effective for the remainder of the Plan Year, in the case of enrollment pursuant to Section 3.2, and will continue in force for all subsequent Plan Years unless it is modified or revoked by the Participant prior to the beginning of each Plan Year. By making a Deferral election, the Participant agrees that all amounts of Covered Salary deferred thereby will be irrevocably deferred and that the Participant will be entitled solely to the benefits provided under this Plan.

3.4

Loss of Eligibility Status. A Participant under this Plan who separates from service with the Employer prior to Retirement for a reason other than death, Disability or Cause, or who ceases to be an Eligible

4.1

Normal Retirement Benefit. An Eligible Employee will be entitled to a Normal Retirement Benefit under this Plan if he or she continues in the employment of the Employer as a Participant in this Plan until the Participant’s Normal Retirement Age (i.e., the Participant’s Election to Participate and Plan Agreement have been kept in force), has fully Vested and Retires (i.e., Retires at his or her Normal Retirement Date). Such Normal Retirement Benefit will equal the total amount specified in the Participant’s Plan Agreement as a Retirement Benefit and will be divided into a Part A Benefit and a Part B Benefit:

(a)

Part A Benefit. The Part A Benefit is a monthly Retirement Benefit which will equal the amount and will be paid for the duration of time specified in the Participant’s Plan Agreement commencing as of the first day of the month following the Participant’s Retirement subject to the provisions of Section 4.6 for Key Employees and pursuant to Section 4.5 for Participants who elect to delay payment of retirement benefits.

(b)

Part B Benefit. The Part B Benefit is a Post Retirement Death Benefit for the amount specified in the Participant’s Plan Agreement and will be paid to the Participant’s Beneficiary in a lump sum upon the death of the Participant.

4.2

Late Retirement Benefit. A Participant who satisfies the criteria set forth in Section 4.1 and who continues employment with the Employer after his or her Normal Retirement Age will be entitled to payment of his or her Normal Retirement Benefit upon his or her Retirement in accordance with Section 4.1.

4.3

Early Retirement Benefit. An Eligible Employee will be entitled to an Early Retirement Benefit under this Plan if he or she continues in the employment of the Employer as a Participant in this Plan until the Participant’s Early Retirement Age (i.e., the Participant’s Election to Participate and Plan Agreement have been kept in force), has fully vested and Retires (i.e., Retires on or after his or her Early Retirement Date but before his or her Normal Retirement Date). In such event, the Participant’s Early Retirement Benefit will be the Part A Benefit described in Section 4.1(a) multiplied by a fraction, which will not exceed one (1), the numerator of which is the number of whole years between the Participant’s Original Entry Date and the date of his or her Retirement and the denominator of which is the number of whole years between the Participant’s Original Entry Date and the Participant’s Normal Retirement Date. The said amount will be the only benefit to which such Participant will be entitled prior to his or her death and will be paid in accordance with Section 4.1(a) above.

4.4

Deferred Retirement Benefit. A Participant who ceases to be a Participant after becoming fully or partially Vested before his or her Retirement Date (other than as a result of death, Disability or separation from service for Cause), will receive a Deferred Retirement Benefit which will be payable in the manner

4.5

Election to Delay Payment of Retirement Benefit. As permitted by section 409A of the Code, the Participant may irrevocably elect (by filing with the Company an Election Form) to delay the commencement of his or her Early Retirement Benefit payable pursuant to Section 4.3 or Normal Retirement Benefit payable pursuant to Section 4.1 to the date which is five (5) years after the date such payment would have otherwise been made (i.e., the first day of the month following the Participant’s Retirement (or the date specified in the Participant’s Plan Agreement)) provided that such election is made at least twelve (12) months before the payment would have otherwise been made (i.e., is made at least twelve (12) months prior to Retirement (or the date specified in the Participant’s Plan Agreement)). For example, if a Participant makes such election at age sixty (60) and Retires at age sixty-two (62), payment of his or her Normal Retirement Benefit will not be made until age sixty-seven (67). Similarly, if a Participant makes such election and Retires at age sixty-five (65), payment of his or Normal Retirement Benefit will not commence until age seventy (70).

4.6

Termination Distributions to Key Employees. Notwithstanding the foregoing provisions of this Article IV, distributions under this Plan that are payable to a Key Employee on account of Retirement will be delayed for a period of six (6) months and one (1) day following such Participant’s Retirement. This restriction will not apply, or will cease to apply, with respect to a distribution to a Participant’s Beneficiary by reason of the death of the Participant.

4.7

De Minimis Distributions. Notwithstanding the foregoing provisions of this Article IV, in the event that a Participant ceases participation in this Plan and the Participant’s Vested Percentage in his Retirement Benefit does not exceed ten thousand dollars ($10,000) (or such other amount as may be prescribed pursuant to regulations issued under section 409A of the Code), such benefit will be paid to the Participant in the form of a lump sum cash payment upon the earlier of (a) his or her separation from service with the Company and its Subsidiaries or (b) December 31 of the fifth (5th) year after the year in which the Participant ceased participation in the Plan. Such lump sum payment will be made, subject to the provisions of Section 4.6, as soon as practicable following the date set forth above but no later than the later of December 31 of the calendar year in which the Participant separates from service or the fifteenth (15th) day of the third (3rd) month following the Participant’s separation from service. At the time the Participant receives such distribution his non-Vested Percentage in his Retirement Benefit will be forfeited and such Participant will be precluded from recommencing participation in this Plan for a period of five (5) years following the date of such distribution.

5.1

Amount and Payment of Death Benefit. If a Participant dies before Retirement and this Plan is in effect at the time, the Employer will pay or cause to be paid a Death Benefit to such Participant’s Beneficiary. The Death Benefit will be the greater of (a) the Early Retirement Benefit payable pursuant to the provisions of Section 4.3 determined as if the Participant were fully Vested or (b) one hundred percent (100%) of the Participant’s Covered Salary as set forth in the Participant’s Plan Agreement for the first twelve (12) months after such death and fifty percent (50%) of the said Covered Salary for the next one hundred and eight (108) months or until the Participant’s Normal Retirement Age, whichever is later. Such payments will commence as of the first day of the month following the date of death after notification of death has been given to the Employer.

5.2

Entitlement to Death Benefit. The obligation of the Employer to pay the Death Benefit will exist only if:

(a)

at the time of death the Participant was an Employee, Disabled, or on an authorized leave of absence;

(b)

the Plan Agreement was in force on the date of death;

(c)

the Participant’s death was not a result of suicide within two (2) years after the date of the Participant’s original Plan Agreement, or within two (2) years of the date of any subsequent Plan Agreement which is the result of additional benefits granted because of an increase in the Participant’s Covered Salary or a change in the Level of Participation, but the amount of the Death Benefit which the Employer will not be obligated to pay will be limited to additional benefits granted within two (2) years prior to the date of such suicide;

(d)

the Participant’s death was determined not to be from a bodily or mental cause or causes, the information about which was withheld, or knowingly concealed, or falsely provided by the Participant when requested by the Employer to furnish evidence of good health upon the Participant’s enrolling in this Plan or for any increase in the Participant’s Covered Salary, but the amount of the Death Benefit which the Employer will not be obligated to pay will be limited to additional benefits granted within two (2) years prior to the date of such last increment of Covered Salary; and

(e)

proof of death in such form as determined acceptable by the Committee is furnished.

5.3

Beneficiary Designation. A Participant may designate a Beneficiary by completing and filing a Designation of Beneficiary Form with the Committee. If more than one Beneficiary is named, the shares

6.1

Entitlement to Disability Benefit. A Participant who becomes Disabled while in the employ of the Employer will be entitled, subject to the provisions of Section 4.6, to payment of a Disability Benefit pursuant to this Article VI. During the first six (6) months of such Disability, the Participant’s Deferrals will continue under this Plan and such six (6) month period will be included in any calculation of the Participant’s Vested Percentage. At the end of such six (6) month period, the Participant will be deemed to have incurred a separation from service for purposes of section 409A of the Code and such Deferrals will cease. A Disability Benefit will be paid as a pro rated Normal Retirement Benefit pursuant to Section 4.1 upon (a) the Participant’s attainment of Normal Retirement Age, if the Participant becomes Disabled before attaining Early Retirement Age or (b) the first of the month following the Participant’s deemed separation from service pursuant to this Section 6.1 (i.e., the end of the first six (6) months of Disability), if the Participant becomes Disabled on or after the attainment of Early Retirement Age subject to an election made under Section 4.5).

6.2

Recovery from Disability. If a Participant recovers from his or her Disability and is reemployed by the Employer as an Eligible Employee, such Participant will not be permitted to reenter the Plan. Any benefits the Participant is receiving under the Plan during his prior period of employment will continue to be paid.

6.3

Death while Disabled. If a Participant, while Disabled, dies prior to the commencement of his or her Retirement Benefit pursuant to Article IV, the Death Benefit provided in Article V will be paid in accordance with the provisions of that Article.

7.1

Source of Benefits. Amounts payable to a Participant will be paid exclusively from the general assets of the Employer; provided, that the Employer may purchase insurance or establish a rabbi trust to serve as a source of funds for the benefits payable under this Plan. The Employer’s liability for the payment of benefits will be evidenced only by this Plan and the Plan Agreement entered into between the Employer and a Participant.

7.2

Creditor Status. Participants and their Beneficiaries will be general unsecured creditors of their respective Employer with respect to the payment of any benefit under this Plan. No Participant or Beneficiary entitled to any payment will have any claim, right, security or other interest in any particular asset of the Employer.

7.3

Evidence of Insurability. The Employer has purchased and may continue to purchase corporate owned life insurance as a source of funds for the payment of benefits under this Plan. Each Participant’s Level of Participation is (a) designed to be commensurate with the amount of insurance that may be obtained on the Participant’s life at standard rates and (b) conditioned upon the Employer being able to obtain life insurance with respect to the life of a Participant at standard rates in an amount sufficient to fund the payment of benefits under this Plan. Accordingly, the Employer may require that a Participant furnish evidence of good health when first enrolling in this Plan and upon electing any additional increment of participation.

(a)

Obligation of Participant. The Participant agrees to cooperate by furnishing such information as the Employer may require, including but not limited, to physical examination reports of any previous employer; taking such additional physical examinations as may be requested by the Employer; and doing any other act which may be requested by the Employer.

(b)

Adjustment of Participation Levels or Deferrals Prior to Enrollment. If, prior to acceptance of an Eligible Employee’s election to participate in this Plan or to increase his or her Level of Participation, the Employer makes application for life insurance on the Eligible Employee’s life and the Eligible Employee cannot provide evidence of good health at standard rates or for the amounts initially contemplated in connection with his or her contemplated Level of Participation in this Plan, the Employer may, at its sole discretion, prior to the acceptance of an Eligible Employee’s election to participate in this Plan, permit the Eligible Employee to enroll in this Plan pursuant to the requirements of Article III at a modified Level of Participation (i.e., other than fifty percent (50%) or one hundred percent (100%) of the Participant’s Covered Salary) upon such Deferral of his or her Covered Salary as the Employer may, in its sole discretion, deem appropriate.

(c)

Adjustment of Participation Levels or Deferrals After Enrollment. If, after the Participant has elected to participate in this Plan, selected a Level of Participation and commenced the Deferral of Covered Salary pursuant to Article III, the Employer makes application for life insurance on the Participant’s life and the Participant cannot provide evidence of good health at standard rates or for the amounts initially contemplated in connection with his or her selected Level of Participation in this Plan, the Committee may determine that the Participant’s participation in this Plan will be terminated for all future years, may require the Participant to increase the amount of his or her Covered Salary Deferrals for future Plan Years to enable the Participant to continue his or her previously selected Level of Participation or may reduce the Participant’s Level of Participation to an amount commensurate with the level of insurance that may be procured with respect to such Participant at standard rates.

8.1

Amendment of Plan. Both the Company, through an action of its Board of Directors or an authorized committee of such Board, and the Committee reserve the right in their sole and absolute discretion to amend the prospective application of this Plan in any respect at any time. Other than termination of this Plan and as otherwise required by law, no amendment to this Plan may materially and adversely affect the then accrued and Vested rights of a Participant.

8.2

Termination of Plan. Either the Company, through an action of its Board of Directors or an authorized committee of such Board, or the Committee may terminate this Plan in whole or in part at the end of any Plan Year. Following such termination, the benefits payable under this Plan will be paid as set forth in Section 8.2(a), unless the Company or Committee elects to liquidate this Plan pursuant to Section 8.2(b); provided, however, that, except as required to comply with section 409A of the Code in the case of the liquidation of this Plan, no termination of this Plan will affect the benefits payable to Participants who as of the date of termination have already become entitled to receive payment of benefits pursuant to this Plan (e.g., Participants who have Retired prior to the termination of this Plan, etc.).

(a)

No Early Plan Liquidation. Each Participant who is fully or partially Vested as of the date on which this Plan is terminated and who has been a Participant in this Plan for at least one (1) full calendar year will be entitled to receive a Retirement Benefit payable upon the earlier of the Participant’s death or the distribution date determined pursuant to Article IV subject to the provisions of Section 4.6 regarding distributions to Key Employees, Section 4.7 regarding de minimis payments and Article VI regarding Disability. The Part A Benefit payable to the Participant pursuant to this Section 8.2(a) will be the Part A Benefit described in Section 4.1(a) multiplied (i) by a fraction which will not exceed one (1), the numerator of which is the number of whole years between the Participant’s Original Entry Date and the date on which this Plan is terminated and the denominator of which is the number of whole years between the Participant’s Original Entry Date and the Participant’s Normal Retirement Date and by (ii) the Participant’s Vested Percentage as of the date on which this Plan is terminated and by (iii) the fraction determined under Section 4.3 if the Participate is eligible for an Early Retirement Benefit. The Part B Benefit payable to the Participant pursuant to this Section 8.2(a) will be the Part B Benefit described in Section 4.1(b) calculated in accordance with the formula as stated in this Section 8.2(a) (i.e., the Part B amount set forth in the Participant’s Plan Agreement multiplied by the fraction and Vested Percentage referenced above).

(b)

Early Liquidation of Plan. If, however, the Company or the Committee elects to liquidate this Plan in connection with such termination within the period prescribed by section 409A of the Code, each affected Participant will be entitled to a benefit the amount of which will be determined as follows: (i) if the Participant participated in this Plan for less than one (1) year, the Participant will be entitled to an amount equal to the amount of his or her Covered Salary Deferrals plus ten percent (10%) of such Covered Salary Deferrals and (ii) if the Participant participated in this Plan for more than one (1) year, the Participant will receive the present value of the amount of his or her Part A Benefit that would otherwise be payable at his or her Normal Retirement Date in accordance with Article IV determined pursuant to this Section 8.2(b) using the discount rate used by the Company in the preparation of the portion of its most recent annual financial statements describing its obligations pursuant to this Plan. Such Part A benefit will equal the Part A Benefit described in Section 4.1(a) multiplied (A) by a fraction which will not exceed one (1), the numerator of which is the number of whole years between the Participant’s Original Entry Date and the date on which this Plan is terminated and the denominator of which is the number of whole years between the Participant’s Original Entry Date and the Participant’s Normal

Retirement Date and by (B) the Participant’s Vested Percentage as of the date on which this Plan is terminated; provided, however, with respect to Participants who are Plan D Participants, when calculating the Part A Benefit payable to such a Participant, the Plan Entry Date set forth in such Plan Agreement will be substituted for the Original Entry Date in the above-fraction. The Company warrants that any such liquidation will comply with the requirements of section 409A of the Code and will not take any action that will result in the imposition of an excise tax to Participants pursuant to section 409A of the Code. Notwithstanding the foregoing, if permitted by guidance issued pursuant to section 409A of the Code, no liquidation of this Plan will affect the benefits payable to Participants who as of the date of liquidation have already become entitled to receive payment of benefits pursuant to this Plan (e.g., Participants who have retired prior to the liquidation of this Plan, etc.).

8.3

Amendment or Termination of Plan Agreement. Either the Employer or the Committee may amend a Participant’s Plan Agreement or terminate a Participant’s further participation in this Plan, subject to the requirements of section 409A of the Code regarding the cessation of Deferrals set forth in Article III; provided, that no such amendment or termination will reduce the then Vested benefits accrued by such Participant under such Plan Agreement as of the date of the amendment or termination, except as required by law.

8.4

Notice of Amendment or Termination. No action to terminate, amend, modify or supplement this Plan or terminate any Plan Agreement will be taken except upon written notice to each Participant to be affected thereby not less than thirty (30) days prior to such action or as soon as practicable thereafter if advance notification is not possible due to applicable law.

9.1

Other Benefits. The benefits provided for a Participant and a Participant’s Beneficiary under this Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Employer and this Plan will supplement and will not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided. Benefits under this Plan will not be considered compensation for the purpose of computing contributions or benefits under any plan maintained by the Company or any of its Subsidiaries which is qualified under sections 401(a) and 501(a) of the Code.

10.1

Non-Alienation of Benefits. To the extent permitted by law, benefits payable under this Plan will not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary except that a Participant may designate a Beneficiary and such Beneficiary may acquire rights under this Plan or a Plan Agreement. In addition, this Plan will recognize the division of benefits between the Participant and his or her spouse in connection with a divorce. However, no benefit awarded to the spouse pursuant to such divorce will be payable to such spouse until the time the Participant is entitled to receive a distribution of benefits from this Plan in which case such benefit will be paid to the spouse at the same time and in the same manner as the Participant.

10.2

Legal Disability. If a person entitled to any payment under this Plan is, in the sole judgment of the Committee, under a legal disability, or otherwise is unable to apply such payment to his or her own interest and advantage, the Committee, in the exercise of its discretion, may direct the Employer or payor of the benefit to make any such payment in any one or more of either directly to such person, to the Participant’s legal guardian or conservator, or to the Participant’s spouse or to any person charged with the duty of the Participant’s support, to be expended for the Participant’s benefit and/or that of the Participant’s dependents. The decision of the Committee will in each case be final and binding upon all persons in interest, unless the Committee reverses its decision due to changed circumstances.

10.3

Withholding. The Employer or its designee will withhold from any benefit payments made under this Plan, the required amounts of federal, state or local income or other applicable taxes.

11.1

Plan Administration. The general administration of this Plan, as well as construction and interpretation thereof, will be vested in the Committee. The members of the Administrative Committee will be designated and appointed from time to time by, and will serve at the pleasure of the President of the Company. Any member of the Committee may resign by notice in writing filed with the Secretary of the Committee.

11.2

Secretary of the Committee. The Committee will appoint a Secretary who need not be a member of the Committee. The Secretary will keep minutes of the proceedings of the Committee and all data, records and documents relating to the administration of this Plan by the Committee. The Committee may appoint from its number such subcommittees with such powers as the Committee will determine and may authorize one or more members of the Committee or any agent to execute or deliver any instrument or make any payment on behalf of the Committee.

11.3

Action of the Administrative Committee. All resolutions or other actions taken by the Administrative Committee will be by the vote of a majority of those present at a meeting at which a majority of the members are present, or in writing by all the members in office at the time if they act without a meeting.

11.4

Authority of the Committee. Subject to the provisions of this Plan, the Committee will have full authority from time to time to establish, modify and rescind rules, forms and procedures for the administration of this Plan, to interpret this Plan, to determine each Employee who will participate in this Plan and to determine the terms and provisions of each Plan Agreement and the form of each Plan Agreement and to decide any and all matters arising thereunder or in connection with the administration of this Plan. In addition, the Committee will have the power to compute and certify under this Plan the amount and kind of benefits from time to time payable to Participants and their Beneficiaries and to authorize all disbursements for such purposes. All decisions, actions and records of the Committee will be conclusive and binding upon the Employer, the Participants and all persons having or claiming to have any right or interest in or under this Plan.

11.5

Information and Reliance. To enable the Committee to perform its functions, the Company will supply full and timely information to the Committee on all matters relating to the Covered Salary of all Participants, their Retirement, death or other cause for separation from service or cessation of Plan participation, and such other pertinent facts as the Committee may require. The members of the Committee and the officers and directors of the Company will be entitled to rely on all certificates and reports made by any duly appointed accountants or legal counsel retained by the Company or the Committee. Such legal counsel may be counsel for the Company.

11.6

Indemnification. No member of the Administrative Committee will be liable for any act or omission of any other member of the Administrative Committee, nor for any act or omission on his or her own part, excepting only his or her own willful misconduct. The Company will indemnify and save harmless each member of the Administrative Committee, while serving on the Administrative Committee and at all times thereafter, against any and all expenses and liabilities arising out of his or her membership on the Administrative Committee, excepting only expenses and liabilities arising out of his or her own willful misconduct. Expenses against which a member of the Administrative Committee will be indemnified hereunder will include, without limitation, the amount of any settlement or judgment, costs, counsel fees and related charges reasonably incurred in connection with a claim asserted or a proceeding brought or settlement thereof. The foregoing right of indemnification will be in addition to any other rights to which any such member may be entitled as a matter of law or otherwise.

12.1

Covenant not to Compete. Each Participant agrees that, following his or her separation from service with the Employer for any reason, the Participant will not, for a period of two (2) years after the date of such separation from service, directly or indirectly, carry on or conduct, in competition with the Employer, any business of the nature in which the Employer is then engaged, and of the nature in which the Participant was employed by the Employer for any portion of the period of two (2) years immediately prior to such separation from service, in any geographic area or territory in which the Employer is then engaged in such business. Without limiting the generality of the foregoing, the Participant agrees that the solicitation or acceptance of orders outside any such geographic area or territory for shipment or delivery into any such geographic area or territory will constitute conducting or engaging in business in such geographic area or territory within the meaning of this Article XII. The Participant agrees that he or she will not conduct or engage in any such business, either as an individual on his or her own account or as a partner or joint venturer or as an employee, agent, consultant or salesman for any other person or entity, or as an officer or director of a corporation or as a stockholder in a corporation of which the Participant or Participant’s spouse or their descendants, parents or siblings will then own in the aggregate ten percent (10%) or more of any class of stock.

12.2

Remedy for Breach of Covenant. Each Participant agrees that, in the event of a breach of the terms and conditions of this Article XII by the Participant, the Employer will be entitled, if it so elects, to institute and prosecute proceedings, either in law or in equity, against the Participant, to obtain damages for any such breach or to enjoin the Participant from performing services for any competitor of the Employer in violation hereof, or to suspend or terminate any and all benefits which would otherwise be payable to the Participant and his or her Beneficiaries under the provisions of this Plan. Notwithstanding the foregoing, nothing contained herein will be deemed to require any Participant to take any action in violation of applicable legal requirements or professional ethical obligations.

13.1

Named Claim Fiduciary. The Named Fiduciary of this Plan for purposes of the claims procedure under this Agreement is the Committee. The Company will have the right to change the Named Fiduciary at any time.

13.2

Claims for Benefits.

(a)

Initial Claim. In the event that an Employee, Eligible Employee, Participant or his or her Beneficiary claims to be eligible for benefits, or claims any rights under this Plan, such claimant

must complete and submit such claim forms and supporting documentation as will be required by the Committee, in its sole and absolute discretion. Likewise, any Participant or Beneficiary who feels unfairly treated as a result of the administration of this Plan, must file a written claim, setting forth the basis of the claim, with the Committee. In connection with the determination of a claim, or in connection with review of a denied claim, the claimant may examine this Plan, and any other pertinent documents generally available to Participants that are specifically related to the claim.

A written notice of the disposition of any such claim will be furnished to the claimant within ninety (90) days after the claim is filed with the Committee. Such notice will refer, if appropriate, to pertinent provisions of this Plan, will set forth in writing the reasons for denial of the claim if a claim is denied (including references to any pertinent provisions of this Plan) and, where appropriate, will describe any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary. If the claim is denied, in whole or in part, the claimant will also be notified of this Plan’s claim review procedure and the time limits applicable to such procedure, including the claimant’s right to arbitration following an adverse benefit determination on review as provided below. All benefits provided in this Plan as a result of the disposition of a claim will be paid as soon as practicable following receipt of proof of entitlement, if requested.

(b)

Request for Review. Within ninety (90) days after receiving written notice of the Committee’s disposition of the claim, the claimant may file with the Committee, a written request for review of his or her claim. In connection with the request for review, the claimant will be entitled to be represented by counsel and will be given, upon request and free of charge, reasonable access to all pertinent documents for the preparation of his or her claim. If the claimant does not file a written request for review within ninety (90) days after receiving written notice of the Committee’s disposition of the claim, the claimant will be deemed to have accepted the Committee’s written disposition, unless the claimant was physically or mentally incapacitated so as to be unable to request review within the ninety (90) day period.

(c)

Decision on Review. After receipt by the Committee of a written application for review of a claim, the Committee will review the claim taking into account all comments, documents, records and other information submitted by the claimant regarding the claim without regard to whether such information was considered in the initial benefit determination. The Committee will notify the claimant of its decision by delivery or by certified or registered mail to his or her last known address. A decision on review of the claim will be made by the Committee at its next meeting following receipt of the written request for review. If no meeting of the Committee is scheduled within forty-five (45) days of receipt of the written request for review, then the Committee will hold a special meeting to review such written request for review within such forty-five (45) day period. If special circumstances require an extension of the forty-five (45) day period, the Committee will so notify the claimant and a decision will be rendered within ninety (90) days of receipt of the request for review. In any event, if a decision is not determined by the Committee within ninety (90) days of receipt of written submission for review, it will be deemed to be denied.

The decision of the Committee will be provided to the claimant as soon as possible but no later than five (5) days after the benefit determination is made. The decision will be in writing and will include the specific reasons for the decision presented in a manner calculated to be understood by the claimant and will contain references to all relevant Plan provisions on which the decision was based. Such decision will also advise the claimant that he or she may receive upon request, and free of charge, reasonable access to and copies of all documents, records and other information relevant to his or her claim and will inform the claimant of his or her right to arbitration in the case of an adverse decision regarding the appeal. The decision of the Committee will be final and conclusive.

13.3

Arbitration. Subject to the provisions of Section 12.2, all disputes arising under or related to this Plan or the administration of this Plan will, following exhaustion of the claims procedure set forth in Section 13.2,

13.4

Receipt and Release of Necessary Information. In implementing the terms of this Plan, the Committee, may, without the consent of or notice to any person, release to or obtain from any other insuring entity or other organization or person any information, with respect to any person, which the Committee deems to be necessary for such purposes. Any Participant or Beneficiary claiming benefits under this Plan will furnish to the Committee, such information as may be necessary to determine eligibility for and amount of benefit, as a condition of claiming and receiving such benefit.

13.5

Overpayment and Underpayment of Benefits. The Committee may adopt, in its sole and absolute discretion, whatever rules, procedures and accounting practices are appropriate in providing for the collection of any overpayment of benefits. If a Participant or Beneficiary receives an underpayment of

14.1

Adoption of Plan by Subsidiaries. Any corporation which is a Subsidiary of the Company may, with the approval of the Committee, adopt this Plan and thereby come within the definition of Employer stated in Article II hereof. A Subsidiary may evidence its adoption of this Plan either by a formal action of its governing body or by commencing Deferrals and taking other administrative actions with respect to this Plan on behalf of its Employees. An entity will cease to be an Employer as of the date such entity ceases to be a Subsidiary.

14.2

Termination of Subsidiary Participation. A Subsidiary may terminate its participation in this Plan at any time by an action of its governing body and providing written notice to the Committee. Likewise, the Committee may terminate a Subsidiary’s participation in this Plan at any time and will provide written notice to the Subsidiary. The effective date of any such termination will be the later of the date specified in the notice of the termination of participation or the date on which the Committee can administratively implement such termination. In the event that a Subsidiary’s participation in this Plan is terminated, the rights of each Participant employed by such Subsidiary to a Retirement Benefit will be determined pursuant to Article IV.

15.1

No Guarantee of Employment. Neither this Plan nor any Plan Agreement, either singly or collectively, obligates the Employer to continue the employment of a Participant or limits the right of the Employer at any time and for any reason to terminate a Participant’s employment. In no event will this Plan or the Participant’s Plan Agreement, either singly or collectively, by their terms or implications constitute an employment contract of any nature whatsoever between the Employer and a Participant.

15.2

Notice. Any notice which will or may be given under this Plan or a Plan Agreement will be in writing and will, unless provided otherwise herein, be mailed by United States mail, postage prepaid. The term “delivered to the Committee,” as used in this Plan, will include delivery to a person or persons designated by the Committee for the disbursement and the receipt of administrative forms. Delivery will be deemed to have occurred only when the form or other communication is actually received. If notice is to be given to the Company or the Committee, such notice will be addressed to Chaparral Steel Company, 300 Ward Road, Midlothian, Texas 76065-9661, marked for the attention of the Vice President—Human Resources; or, if notice to a Participant, addressed to the address shown on such Participant’s Plan Agreement. Any party may change the address to which notices will be mailed from time to time by giving written notice of such new address.

15.3

Plan Binding. This Plan will be binding upon the Company and each Subsidiary which is an Employer and their respective successors and assigns, and upon a Participant, his or her Beneficiary, assigns, heirs, executors and administrators.

(a)

Successors of Employer. The Employer will require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business and/or assets of the Employer, expressly to agree to adopt this Plan and to perform each Plan Agreement to which the Employer is a party in the same manner and to the same extent the Employer would be required to perform if no such succession had taken place. This Plan and any Plan Agreement will be binding upon and inure to the benefit of each Employer and any successor of the Employer, including without limitation any persons acquiring directly or indirectly all or substantially all of the business and/or assets of the Employer whether by purchase, merger, consolidation, reorganization or otherwise (and such successor will thereafter be deemed the “Employer,” as applicable, for the purposes of this Plan and any Plan Agreement) but will not otherwise be assignable, transferable or delegable by the Employer.

(b)

Successors of Participant. This Plan and any Plan Agreement will inure to the benefit of and be enforceable by the Participant’s Beneficiary, personal or legal representatives, executors, administrators, successors, heirs, distributors and/or legatees.

15.4

Expenses. The Employer will pay all costs and expenses incurred in operating and administering this Plan. Such costs and expenses will be paid by the Employer from its general assets or any trust established by the employer under this Plan.

TO:

Chaparral Steel Company

¨

January 1, 2     (in the case of my enrollment during the Open Enrollment Period) or

¨

            , 2     (in the case of my enrollment during a Special Enrollment Period)

Chaparral Steel Company

By:

To participate in the Plan (if selected, complete the remainder of this Agreement).

Not to participate in the Plan (if selected, do not complete the remainder of this Agreement, but sign below).

1.

Covered Salary: $                     per month.

2.

Retirement Benefit (Article IV):

(a)

Normal Retirement Benefit at age             . Payable at the Participant’s Normal Retirement Date, as specified by Section 4.1 of the Plan. (For Plan A Participants: based on the Participant’s Total Benefit which is $                    ).

(b)

Retirement After Normal Retirement Date: Late Retirement Benefit payable in accordance with Section 4.2 of the Plan.

(c)

Early Retirement Benefit: Reduced amounts to be determined and paid as specified by Section 4.3 of the Plan.

(d)

Deferred Retirement Benefit: Amounts to be determined and paid as specified in Section 4.4 of the Plan; provided, that for Plan A Participants, the Part A Benefit may not exceed 50% of Covered Salary.

3.

Death Benefit (Article V):

(a)

Death Benefit under Section 5.1

(i)

One hundred percent (100%) of Covered Salary: $             per month for the first 12 months after death, plus

(ii)

Fifty percent (50%) of Covered Salary: $             per month for the next 108 months or until the Participant’s Normal Retirement Age, whichever is later; or

(b)

Early Retirement Benefit under Section 4.3

(a)

Any rights of the Participant or any Beneficiary will be solely those of an unsecured-creditor of the Employer. If the Employer purchases an insurance policy or any other asset in connection with the liabilities assumed by it under the Plan, then, except as otherwise expressly provided, such policy or other assets will not be deemed to be held under any trust for the benefit of the Participant or his or her Beneficiary or to be collateral security for the performance of the obligations of the Employer, but will be, and remain, a general, unpledged, unrestricted asset of the Employer.

(b)

Neither the Employer, its officers, its employees nor its agents have any responsibility whatsoever for any changes made by the Participant in other personal plans or programs as a result of the Participant’s decision to participate or not to participate in the Plan, and they are fully released to such extent.

(c)

The Plan or this Plan Agreement may be amended or terminated by the Employer at any time, to the extent provided in Article VIII of the Plan.

(d)

If the Participant incurs a separation from service with the Employer or his or her participation in the Plan is terminated prior to Retirement, then except as provided in Article IV (regarding Retirement Benefits), Article V (regarding Death), Article VI (regarding Disability) and Article VIII (regarding termination of the Plan), the Participant will forfeit the right to receive any benefits under the Plan and that all Covered Salary Deferrals made by the Participant under the Plan pursuant to his or her Election to Participate or this Plan Agreement will be forfeited. Additionally, if the Participant incurs a separation from service for Cause, all rights under the Plan will be forfeited.

(e)

Any dispute or claim for benefits under this Plan must be resolved through the claims procedure set forth in Article XIII which procedure culminates in binding arbitration. By electing to participate in this Plan, the Participant hereby agrees to binding arbitration as the final means of dispute resolution with respect to the Plan.

EMPLOYER:

By:

Title:

EMPLOYEE:

Original Entry Date:

(Signature)

Plan Entry Date:

(Plan D Participants Only)

(Type or print name under signature)

(Address of Employee)

1.

Participant:                                                                                                                                                                                             

2.

Scope:

3.

COUNSEL:

4.

Identification of Beneficiaries:

A.

Primary Beneficiary:                                                                                                                                                                    

B.

Secondary Beneficiary:                                                                                                                                                                

5.

Spousal Consent: (only complete if spouse is not primary Beneficiary)

Spouse’s Signature

Date

Spouse’s Printed Name

Notary Public’s Printed Name

Notary Public’s Signature

Notary Public’s Address

Commission Expires

6.

Methods of Payment (Check One):

Alternative 1 – Beneficiary Includes Estate of Beneficiary.

Alternative 2 – Beneficiary Does not Include Estate of Beneficiary.

Alternative 3 – To Be Specified by Participant.

7.

Survivorship (Check One):

Alternative 1 – Beneficiary Must Survive Participant by 30 Days.

Alternative 2 – Spouse Deemed to Survive Participant in Certain Circumstances.

8.

Duration:

9.

Execution:

Date:

Participant:

Witness:

10.

Approval:

CHAPARRAL STEEL COMPANY

By:

¨

I hereby elect to delay payment of my Retirement Benefits pursuant to the terms of the Plan for five (5) years following my Retirement on or after my Early Retirement Date, as described above.

Participant:

Signature

Type or print name

Date:

Chaparral Steel Company

By: