Exhibit 4.5


 


FIRST AMENDMENT TO SECURITY AGREEMENT


 


This First
Amendment dated as of February 17, 2003 by and between the debtors signatory
hereto (each individually, a “Debtor” and collectively, the “Debtors”) and
Comerica Bank, a Michigan banking corporation, as Agent for and on behalf of
the Banks (as defined below) (“Agent”).


 


R E C I T A L S:


 


A.                                   Pursuant to that
certain Quanex Corporation Revolving Credit Agreement dated as of November 26,
2002 (as amended or otherwise modified from time to time, the “Credit
Agreement”) by and among Quanex Corporation, a Delaware corporation
(“Company”), the Banks signatory thereto and Comerica Bank, as Agent for the
Banks (in such capacity, “Agent”), Debtors executed and delivered (by Joinder
Agreement or otherwise) to the Banks that certain Security Agreement dated as
of November 26, 2002 (as amended or otherwise modified from time to time, the
“Security Agreement”).


 


B.                                     Agent and Debtors
desire to amend the Security Agreement, as set forth below.


 


NOW THERFORE,
the parties agree as follows:


 


1.                                       The
proviso at the end of Section 2.1, beginning with the words “provided, however,
that” shall be deleted in its entirety and replaced with the following:


 


“provided, however, that
‘Collateral’ shall not include (i) rights under or with respect to any General
Intangible, license, permit or authorization to the extent any such General
Intangible, license, permit or authorization, by its terms or by law, prohibits
the assignment of, or the granting of a security interest in, the rights of a
grantor thereunder or which would be invalid or unenforceable upon any such
assignment or grant; and (ii) equipment, property, or other assets of any
Debtor, to the extent (but only to the extent and so long as) such assets are
subject to a negative pledge under the documents relating to the issuance of
the industrial bonds listed below and transactions contemplated thereby:


 


(i)                                  City of Huntington,
Indiana Economic Development Refunding Revenue Bonds, Series 1996 (Quanex
Corporation Project), issued by the City of Huntington, Indiana on February 1,
1996.


 


(ii)                              Scott County, Iowa
Variable Rate Demand Industrial Waste Recycling Revenue Bonds (Nichols Aluminum
Project) Series 1999, issued by Scott County, Iowa on June 1, 1999.


 


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(iii)                          Industrial Development
Revenue Refunding Bonds, Series 1998 (Temroc Metals, Inc. Project), issued by
the City of Medina, Minnesota on September 1, 1998.


 


The pledge and grant of a security interest
in Proceeds shall not be deemed to give the applicable Debtor any right to
dispose of any of the Collateral, except as may otherwise be permitted herein
or in the Credit Agreement.”


 


2.                                       Each
of the Debtors hereby represent and warrant that, as the date of this First
Amendment, no Default or Event of Default shall have occurred and be
continuing.


 


3.                                       Except
as expressly modified hereby, all the terms and conditions of the Security  Agreement shall remain in full force and
effect. Except as expressly set forth herein, nothing set forth in this
Amendment shall constitute a waiver or release of any term or condition of the
Security Agreement or any of Agent’s rights and remedies provided thereunder or
as otherwise provided by law.  Furthermore,
this Amendment shall not affect in any manner whatsoever any rights or remedies
of the Banks with respect to any other non-compliance by the Debtors or any one
of them with the Credit Agreement or the other Loan Documents whether in the
nature of a Default or Event of Default, and whether now in existence or
subsequently arising.


 


4.                                       The
parties acknowledge and agree that, upon execution by the parties, this
Amendment shall be deemed to be effective as of November 26, 2002.


 


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IN WITNESS WHEREOF,
the undersigned Debtors have executed and delivered this First Amendment as of
February 17, 2003.


 


	
   

  	
  QUANEX CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  Its:

  	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  NICHOLS ALUMINUM ALABAMA, INC.

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  Its:

  	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  NICHOLS ALUMINUM-GOLDEN, INC.

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  Its:

  	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  IMPERIAL PRODUCTS, INC.

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  Its:

  	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  TEMROC METALS, INC.

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  Its:

  	
   

  	
   

  	 




 


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  COLONIAL CRAFT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  Its:

  	
   

  	
   

  	 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  QUANEX BAR, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  Its:

  	
   

  	
   

  	 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMERICA BANK, as Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  Its:

  	
   

  	
   

  	 




 


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