##### 



Exhibit 2.1
 Execution Copy
 AGREEMENT AND PLAN OF MERGER
 Among
 GERDAU S.A.
 (as Parent),
 GERDAU DELAWARE, INC.
 (as Merger Sub)
 and
 QUANEX CORPORATION
 (as the Company)
 Dated November 18, 2007




---



##### 



TABLE OF CONTENTS
 PageARTICLE I THE MERGER; CLOSING; EFFECTIVE TIME
    
    
    11.1 The Merger
    
    
    11.2 Closing
    
    
    11.3 Effective Time
    
    
    2ARTICLE II CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING ENTITY
    
    
    22.1 Certificate of Incorporation
    
    
    22.2 Bylaws
    
    
    2ARTICLE III DIRECTORS AND OFFICERS OF THE SURVIVING ENTITY
    
    
    23.1 Directors
    
    
    23.2 Officers
    
    
    2ARTICLE IV EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT ENTITIES;EXCHANGE OF CERTIFICATES
    
    

24.1 Effect on Capital Stock
    
    
    24.2 Exchange of Shares for Merger Consideration
    
    
    34.3 Return and Investment of Exchange Fund
    
    
    44.4 Further Ownership Rights in Shares
    
    
    44.5 Lost Certificates
    
    
    44.6 Withholding Rights
    
    
    54.7 Closing of the Company Transfer Books
    
    
    54.8 Dissenters Shares
    
    
    54.9 Company Options
    
    
    5ARTICLE V REPRESENTATIONS AND WARRANTIES
    
    
    65.1 Representations and Warranties of the Company
    
    
    65.2 Representations and Warranties of Parent and Merger Sub
    
    
    23ARTICLE VI COVENANTS
    
    
    266.1 Interim Operations
    
    
    266.2 Acquisition Proposals
    
    
    306.3 Proxy Statement
    
    
    336.4 Company Stockholders Meeting
    
    
    346.5 Filings; Other Actions; Notification; Access
    
    
    34




---



##### 



TABLE OF CONTENTS
 Page6.6 Publicity
    
    
    366.7 Employee Benefits/Labor Matters
    
    
    376.8 Expenses
    
    
    386.9 Indemnification; Directors and Officers Insurance
    
    
    386.10 Other Actions by the Company and Parent
    
    
    406.11 Spin-Off and Related Intercompany Matters
    
    
    406.12 Financing Assistance
    
    
    416.13 Stock Exchange De-listing
    
    
    426.14 Director Resignations
    
    
    426.15 Rule 16b-3
    
    
    42ARTICLE VII CONDITIONS
    
    
    437.1 Conditions to Each Partys Obligation to Effect the Merger
    
    
    437.2 Conditions to Obligations of Parent and Merger Sub
    
    
    437.3 Conditions to Obligation of the Company
    
    
    44ARTICLE VIII TERMINATION
    
    
    448.1 Termination by Mutual Consent
    
    
    448.2 Termination by Either Parent or the Company
    
    
    448.3 Termination by the Company
    
    
    458.4 Termination by Parent
    
    
    458.5 Effect of Termination and Abandonment
    
    
    46ARTICLE IX MISCELLANEOUS AND GENERAL
    
    
    479.1 Survival
    
    
    479.2 Modification or Amendment
    
    
    479.3 Waiver of Conditions
    
    
    479.4 Counterparts
    
    
    479.5 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL
    
    
    479.6 Notices
    
    
    489.7 Entire Agreement; NO OTHER REPRESENTATIONS
    
    
    499.8 No Third Party Beneficiaries
    
    
    499.9 Obligations of Parent and of the Company
    
    
    50




---



##### 



TABLE OF CONTENTS
 Page9.10 Severability
    
    
    509.11 Interpretation; Construction
    
    
    509.12 Assignment
    
    
    509.13 Knowledge
    
    
    51
 LIST OF EXHIBITS




---



##### 



INDEX TO DEFINED TERMS
 Defined Term
    
    PageAcquisition Proposal
    
    
    32Actions
    
    
    13Adverse Recommendation Notice
    
    
    31Agreement
    
    
    1Alternative Acquisition Agreement
    
    
    31Bankruptcy and Equity Exception
    
    
    9Building Products Business
    
    
    1Bylaws
    
    
    2Cancelled Shares
    
    
    3Certificate of Incorporation
    
    
    2Certificates
    
    
    3Change in Company Recommendation
    
    
    31CIC Agreements
    
    
    38Closing
    
    
    1Closing Date
    
    
    1Code
    
    
    5Company
    
    
    1Company Accounts
    
    
    40Company Balance Sheet Date
    
    
    13Company Board
    
    
    9Company Common Stock
    
    
    3Company Compensation and Benefit Plan
    
    
    13Company Disclosure Letter
    
    
    6Company ERISA Affiliate
    
    
    14Company Health Plan
    
    
    37Company Material Adverse Effect
    
    
    6Company Option
    
    
    5Company Reports
    
    
    11Company Stockholder Approval
    
    
    9Company Stockholders Meeting
    
    
    34Confidentiality Agreement
    
    
    31Constituent Entities
    
    
    1Continuing Employees
    
    
    37Contracts
    
    
    10Convertible Debentures
    
    
    8Costs
    
    
    38Current Premium
    
    
    39Current Year
    
    
    37D&O Insurance
    
    
    39Debt Commitment
    
    
    26Debt Commitment Letter
    
    
    26Delaware Certificate of Merger
    
    
    2DGCL
    
    
    1




---



##### 



INDEX
TO DEFINED TERMS
 Defined Term
    
    PageDissenters Shares
    
    
    5Distribution Agreement
    
    
    6Effective Time
    
    
    2Environmental Law
    
    
    18ERISA
    
    
    13Exchange Act
    
    
    9Exchange Fund
    
    
    3Excluded Shares
    
    
    3GAAP
    
    
    11Government Antitrust Entity
    
    
    35Governmental Entity
    
    
    9Hazardous Substance
    
    
    18HSR Act
    
    
    8Indemnified Parties
    
    
    38IP Rights
    
    
    22IRS
    
    
    14Knowledge of Parent
    
    
    51Knowledge of the Company
    
    
    51Laws
    
    
    17Lazard
    
    
    9Lender
    
    
    26Lien
    
    
    27Material Contract
    
    
    11Merger
    
    
    1Merger Consideration
    
    
    3Merger Sub
    
    
    1Notice Period
    
    
    31NYSE
    
    
    8Order
    
    
    43Parent
    
    
    1Parent Board
    
    
    24Parent Disclosure Letter
    
    
    23Parent SEC Reports
    
    
    25Past Service
    
    
    37Paying Agent
    
    
    3PBGC
    
    
    15Permits
    
    
    17Person
    
    
    8Potential Superior Proposal
    
    
    30Preferred Shares
    
    
    7Retained Business
    
    
    6Rights
    
    
    8




---



##### 



INDEX
TO DEFINED TERMS
 Defined Term
    
    PageRights Agreement
    
    
    8RSU
    
    
    6Sarbanes-Oxley Act
    
    
    12SEC
    
    
    11SEC Reports
    
    
    6Securities Act
    
    
    9Series A Preferred Shares
    
    
    7Share or Shares
    
    
    3Spinco
    
    
    1Spinco Accounts
    
    
    41Spin-Off
    
    
    1Spin-Off Agreements
    
    
    40Stock Plans
    
    
    8Subsidiary
    
    
    6Superior Proposal
    
    
    33Supplemental Financial Statements
    
    
    12Surviving Entity
    
    
    1Takeover Statute
    
    
    17Tax
    
    
    19Tax Return
    
    
    19Taxes
    
    
    19Termination Date
    
    
    45Termination Fee
    
    
    46Trade Secrets
    
    
    22Transferee
    
    
    4Voting Debt
    
    
    8WARN
    
    
    21




---



##### 



AGREEMENT AND PLAN OF MERGER
 Agreement Parent Merger Sub Company Constituent Entities
 RECITALS
 Merger
 Spin-Off Building Products Business Spinco
   ARTICLE I
 The Merger; Closing; Effective Time
 The Merger Surviving
Entity Articles II III IV DGCL
 Closing Closing Closing Date




---



##### 



Effective Time Delaware Certificate of Merger Effective Time
 ARTICLE II
 Certificate of Incorporation and
Bylaws of the Surviving Entity
 Certificate of Incorporation Certificate of Incorporation
 Bylaws Bylaws
 ARTICLE III
 Directors and Officers of the Surviving Entity
 Directors
 Officers
 ARTICLE IV
 Effect of the Merger on the Capital Stock
of the Constituent Entities; Exchange of Certificates
 Effect on Capital Stock




---



##### 



Merger Sub
 Excluded Shares Company Common Stock Cancelled Shares Excluded
Shares
 Conversion of Company Common Stock Share Shares Merger Consideration
 Exchange of Shares for Merger Consideration
 Exchange of Certificates Paying Agent Certificates Exchange Fund Section 4.1(c)
 Exchange Procedures
  Article IV




---



##### 



Transferee Section
4.2(b) Article IV Article IV
 Return and Investment of Exchange Fund
 Article IV
  Further Ownership Rights in Shares
 Lost Certificates Section 4.1




---



##### 



Withholding Rights Code
 Closing of the Company Transfer Books Article IV
 Dissenters Shares Dissenters Shares
 Company Options.
 Company Option




---



##### 



Distribution
Agreement
 RSUs
 ARTICLE V
 Representations and Warranties
 Representations and Warranties of the Company Section
5.1 Retained Business Company Disclosure Letter SEC Reports
 Organization, Good Standing and Qualification
 Subsidiary Company Material Adverse Effect




---



##### 



Capital Structure Preferred Shares Series A Preferred Shares




---



##### 



Plan
    
    Shares Reserved for Issuance2006 Omnibus Incentive Plan
    
    328,581 Shares1996 Employee Stock Option and Restricted Stock Plan
    
    967,578 Shares1997 Key Employee Stock Plan
    
    86,116 Shares1997 Non-Employee Director Stock Option Plan
    
    45,000 Shares
 Stock Plans Convertible Debentures Rights Rights Agreement Section
5.1(b)(i) NYSE Person Voting Debt HSR Act Section 5.1(b)(ii)




---



##### 



Corporate Authority; Approval and Fairness
 Company Stockholder Approval Bankruptcy and Equity
Exception
 Company Board Section 6.2 Lazard
 Governmental Filings; No Violations; Certain Contracts, Etc
 Section 1.3 Exchange
Act Securities Act Governmental
Entity




---



##### 



Contracts




---



##### 



SEC Material Contract
  Company Reports; Financial Statements
 Company Reports GAAP Section 5.1(e) Supplemental Financial Statements




---



##### 



Sarbanes-Oxley Act
  Absence of Certain Changes Section 6.1
 -12-




---



##### 



Company Balance Sheet Date
 Litigation and Liabilities
 Actions
  Employee Benefits
 Section 3.1(h)(i) Company
Compensation and Benefit Plan ERISA
 -13-




---



##### 



Section 3.1(h)(i)
   IRS
        Company ERISA Affiliate
 -14-




---



##### 



PBGC
      -15-




---



##### 



-16-




---



##### 



Compliance with Laws; Permits Laws Section 6.5 Permits
 Takeover Matters Takeover Statute
 -17-




---



##### 



Environmental Matters
 Environmental Law Hazardous
Substance
 Taxes
 -18-




---



##### 



Tax Taxes Tax
Return
 -19-




---



##### 



Labor Matters
        -20-




---



##### 



WARN
   Insurance
 Intellectual Property
  -21-




---



##### 



IP Rights Section 5.1(o)
     Section 5.l(o)
 Trade Secrets
 Owned and Leased Properties
 -22-




---



##### 



Section 5.1(p)
 Brokers and Finders
 Rights Agreement
 Affiliate Transactions
 Representations and Warranties of Parent and Merger Sub Parent Disclosure Letter
 Organization, Good Standing and Qualification
 -23-




---



##### 



Authority
  Parent Board
 Governmental Filings; No Violations; Certain Contracts; Etc
 Section 1.3
  -24-




---



##### 



Parent Financial Statements Parent SEC Reports
 Litigation
 Compliance with Laws; Permits Section 6.5
 Operations of Merger Sub
 -25-




---



##### 



Brokers and Finders
 Ownership of Shares
 Financing Debt Commitment Letter Lender Debt
Commitment
 ARTICLE VI
 Covenants
 Interim Operations Section
6.1 Section 6.11 Section 6.1
 -26-




---



##### 



Section 6.11 Section
6.1
     Lien
  -27-




---



##### 



Section 6.2(a)
      -28-




---



##### 



Section 6.2 Section 8.3(a)
 -29-




---



##### 



Acquisition Proposals
      Potential
Superior Proposal
 -30-




---



##### 



Confidentiality Agreement
 No Change in Company Recommendation or Alternative Acquisition Agreement
 Section 6.2
 Alternative Acquisition Agreement Section 6.2(a)
 Section 6.2
 Change in Company Recommendation Notice Period Adverse Recommendation Notice
 -31-




---



##### 



Section 6.2(b) Section 6.2(b)
 Certain Permitted Disclosure
 Definitions
 Acquisition Proposal Section 6.2
 -32-




---



##### 



Superior Proposal Section 6.2(a)
 Proxy Statement
   -33-




---



##### 



Company Stockholders Meeting Company Stockholders Meeting Section 6.2(b)
 Filings; Other Actions; Notification; Access
  -34-




---



##### 



Section 6.5 Government Antitrust Entity
 -35-




---



##### 



Section 6.5(e) Section 6.5(e) Section 6.5(e)
 Publicity
 -36-




---



##### 



Section 6.6
 Employee Benefits/Labor Matters.
 Continuing Employees Past Service Company Health Plan Current Year
 -37-




---



##### 



Section
5.1(h)(i)
  Section
6.7(d) CIC Agreements
  Expenses Section 8.5(b)
 Indemnification; Directors and Officers Insurance
 Indemnified Parties Costs
 -38-




---



##### 



Section 6.9
 D&O Insurance Section 6.9(c) Current Premium Section 6.9
 Section 6.9
 -39-




---



##### 



Section 6.9
 Other Actions by the Company and Parent
 Rights
 Takeover Statute
 Convertible Debentures
 Spin-Off and Related Intercompany Matters
 Spin-Off Agreements
  Company Accounts
 -40-




---



##### 



Spinco Accounts
   Financing Assistance provided
 -41-




---



##### 



Stock Exchange De-listing
 Director Resignations
 Rule 16b-3
 -42-




---



##### 



ARTICLE VII
 Conditions
 Conditions to Each Partys Obligation to Effect the Merger
 Stockholder Approval
 Regulatory Consents Section 1.3
 Litigation Order
 Conditions to Obligations of Parent and Merger Sub
 Representations and Warranties Sections 5.1(b) 5.1(q)
 -43-




---



##### 



Section 7.2(a) Section 7.2(a)
 Performance of Obligations of the Company
  Conditions to Obligation of the Company
 Representations and Warranties Section 7.3(a) Section 7.3(a)
 Performance of Obligations of Parent and Merger Sub
 ARTICLE VIII
 Termination
 Termination by Mutual Consent
 Termination by Either Parent or the Company
 -44-




---



##### 



Termination
Date provided however provided further however Section 8.2(a)
   Termination by the Company
 Section 8.5
 Section 7.3(a) 7.3(b) provided Section 7.2(a) Section 7.2(b)
 Termination by Parent
  -45-




---



##### 



Section 7.2(a) 7.2(b) provided Section 7.3(a) Section 7.3(b)
 Effect of Termination and Abandonment
 Article VIII Section 9.1
 Termination Fee
 Sections 8.2(a), 8.2(b) 8.4(b) Sections 8.2(a) 8.2(b) Section 6.2(d) )
 Section 8.3(a)
 Section 8.4(a)
  -46-




---



##### 



Section 8.5(b)
 ARTICLE IX
 Miscellaneous and General
 Survival Article IX Article IV Sections 6.7 6.8 6.9 Article IX Section 6.8 Section
8.5
 Modification or Amendment
 Waiver of Conditions
 Counterparts
 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL
  -47-




---



##### 



Section 9.6
 SECTION 9.5
 Notices
 if to the Company
 
 -48-




---



##### 



with a copy to
 
 if to Parent or Merger Sub
 
 with a copy to
 
  Entire Agreement; NO OTHER REPRESENTATIONS
 No Third Party Beneficiaries Section 6.9
 -49-




---



##### 



Sections 4.1(c) 4.9 6.9
 Obligations of Parent and of the Company
 Severability
 Interpretation; Construction.
    Assignment
 -50-




---



##### 



Knowledge
 -51-




---



##### 



GERDAU S.A.
 By:
    /s/ Osvaldo Burgos SchirmerOsvaldo Burgos SchirmerExecutive Vice President and
Chief Financial Officer GERDAU DELAWARE, INC.
 By:
    s/ Osvaldo Burgos SchirmerOsvaldo Burgos SchirmerPresident QUANEX CORPORATION
 By:
    /s/ Raymond A. JeanRaymond A. JeanChairman and Chief Executive Officer -52-




---



##### 



Exhibits A and B have been
intentionally omitted.




---



##### 



Exhibit C-1
 DISTRIBUTION AGREEMENT
 DATED AS OF  , 2007
 AMONG
 QUANEX CORPORATION,
 [SPINCO],
 AND
 [SPINCO SUB]




---



##### 



TABLE OF CONTENTS
 PageARTICLE I DEFINITIONS
    
    
    1ARTICLE II PRELIMINARY TRANSACTIONS
    
    
    8Section 2.1 Business Separation
    
    
    8Section 2.2 Conveyancing and Assumption Agreements
    
    
    9Section 2.3 Governing Documents
    
    
    9Section 2.4 Issuance of Spinco Equity
    
    
    10Section 2.5 Other Agreements
    
    
    10Section 2.6 Transfers Not Effected Prior to the Distribution; Transfers Deemed
Effective as of the Distribution Date
    
    
    10Section 2.7 Allocation of Corporate Overhead
    
    
    10Section 2.8 Responsibility for Costs Associated with Conversion of Quanex
Convertible Debentures
    
    
    10ARTICLE III THE DISTRIBUTION
    
    
    11Section 3.1 Record Date and Distribution Date
    
    
    11Section 3.2 The Agent
    
    
    11Section 3.3 The Distribution
    
    
    11Section 3.4 Actions in Connection with the Distribution
    
    
    12Section 3.5 Fractional Shares
    
    
    12Section 3.6 The Spinco Merger
    
    
    13ARTICLE IV SURVIVAL AND INDEMNIFICATION
    
    
    13Section 4.1 Survival of Agreements
    
    
    13Section 4.2 Indemnification
    
    
    13Section 4.3 Procedures for Indemnification
    
    
    14Section 4.4 Reductions for Insurance Proceeds and Other Recoveries
    
    
    15Section 4.5 Specific Performance
    
    
    16Section 4.6 Remedies Exclusive
    
    
    16Section 4.7 Tax Treatment of Indemnity and Other Payments
    
    
    16Section 4.8 Survival of Indemnities
    
    
    16ARTICLE V CERTAIN ADDITIONAL COVENANTS
    
    
    16Section 5.1 Notices to Third Parties
    
    
    16Section 5.2 Licenses and Permits
    
    
    17




---



##### 



TABLE OF CONTENTS
  PageSection 5.3 Intercompany Agreements
    
    
    17Section 5.4 Further Assurances
    
    
    17Section 5.5 Guarantee Obligations, Liens and Other Obligations
    
    
    18Section 5.6 Insurance
    
    
    18Section 5.7 Cash Separation
    
    
    20ARTICLE VI ACCESS TO INFORMATION
    
    
    21Section 6.1 Provision of Corporate Records
    
    
    21Section 6.2 Access to Information
    
    
    22Section 6.3 Production of Witnesses
    
    
    23Section 6.4 Retention of Records
    
    
    23Section 6.5 Confidentiality
    
    
    23Section 6.6 Cooperation with Respect to Government Reports and Filings
    
    
    24Section 6.7 Tax Matters Agreement
    
    
    24ARTICLE VII REPRESENTATIONS AND WARRANTIES
    
    
    24Section 7.1 No Representations or Warranties
    
    
    24Section 7.2 Operations, No Liabilities
    
    
    24Section 7.3 Solvency
    
    
    25Section 7.4 Organization, Good Standing, Authorization
    
    
    25Section 7.5 Financial Statements
    
    
    25ARTICLE VIII MISCELLANEOUS
    
    
    26Section 8.1 Conditions to the Distribution
    
    
    26Section 8.2 Complete Agreement
    
    
    26Section 8.3 Expenses
    
    
    27Section 8.4 Governing Law
    
    
    27Section 8.5 Notices
    
    
    27Section 8.6 Amendment and Modification
    
    
    28Section 8.7 Successors and Assigns; No Third-Party Beneficiaries
    
    
    28Section 8.8 Counterparts
    
    
    28Section 8.9 Interpretation
    
    
    28




---



##### 



TABLE OF CONTENTS
  PageSection 8.10 Severability
    
    
    28Section 8.11 References; Construction
    
    
    29Section 8.12 Termination
    
    
    29Section 8.13 Consent to Jurisdiction and Service of Process
    
    
    29Section 8.14 Waivers
    
    
    29Section 8.15 Specific Performance
    
    
    29Section 8.16 Waiver of Jury Trial
    
    
    29Section 8.17 Use of Name
    
    
    29




---



##### 



DISTRIBUTION AGREEMENT
 Quanex Spinco Spinco Sub
  Conversions
 Contribution
 Spinco Merger
 Distribution Quanex Common Stock Spinco Interest Spinco Sub Common Stock
   ARTICLE I
 DEFINITIONS
  1




---



##### 



Affiliate
 Agent
 Agreement
 Assets
 Business
 Business Day
 Cash Inflows
 Cash Outflows
 Claims Administration
 Claims Made Policies Section 5.6(a)
 Contribution
 Distribution
 Distribution Date
 Employee Matters Agreement
 2




---



##### 



Environmental Law
 Exchange
 Exchange Act
 Form 10 Registration Statement
 Governmental Entity
 Group
 Hazardous Substance
 Indemnifiable Losses
 Indemnifying Party
 Indemnitee
 Information
 Law Laws
 Liability Liabilities
 3




---



##### 



Litigation Matters
 Merger Agreement
 Occurrence Basis Policies Section 5.6(a)
 Person
 Policies
 Privileged Information
 Qualifying Liabilities
 Quanex
 Quanex Assets
 Quanex Business
 Quanex Common Stock
 4




---



##### 



Quanex Group
 Quanex Indemnitees
 Quanex Liabilities
 Quanex Subsidiaries
           Record Date
 Representative
 SEC
 Securities Act
 Separation Period
 Shares
 5




---



##### 



Solvent
 Spinco
 Spinco Assets
 Schedule 1(a)
 Schedule 1(b)
 Schedule 1(c) Contracts
 Section 6.1 Schedule 1(d)
    6




---



##### 



Spinco Business
 Spinco Equity
 Spinco Group
 Spinco Indemnitees
 Spinco Interests
 Spinco Liabilities
 Spinco Merger
 Spinco Sub
 Spinco Sub Common Stock
 Spinco Subsidiaries
     7




---



##### 



Subsidiary
 Surviving Entity
 Tax Matters Agreement
 Taxes
 Third-Party Claim
 Transaction Agreements
 Transition Services Agreement
 ARTICLE II
 PRELIMINARY TRANSACTIONS
 Business Separation
  8




---



##### 



Section 2.6
 Section 5.3 Section 2.6
 Conveyancing and Assumption Agreements Section 2.1
 Governing Documents
 9




---



##### 



Issuance of Spinco Equity
 Other Agreements
 Transfers Not Effected Prior to the Distribution; Transfers Deemed Effective as of
the Distribution Date Article II Article II
 Allocation of Corporate Overhead
 Responsibility for Costs Associated with Conversion of Quanex Convertible
Debentures.
 10




---



##### 



Debentures Conversion Costs
 Quanex Responsibility for Conversion Costs
 The Surviving Entitys Responsibility for Conversion Costs
  ARTICLE III
 THE DISTRIBUTION
 Record Date and Distribution Date Section 8.1
 The Agent Article III
 The Distribution.
 11




---



##### 



Actions in Connection with the Distribution.
   Fractional Shares.
 12




---



##### 



The Spinco Merger
   ARTICLE IV
 SURVIVAL AND INDEMNIFICATION
 Survival of Agreements
 Indemnification.
 Section 5.5(a)
 Section 5.5(b)
 13




---



##### 



Article IV
 Procedures for Indemnification
 Article IV
 Section 4.3
 14




---



##### 



Reductions for Insurance Proceeds and Other Recoveries Article
IV
 15




---



##### 



Specific Performance
 Remedies Exclusive Article IV
 Tax Treatment of Indemnity and Other Payments
 Survival of Indemnities Article IV
 ARTICLE V
 CERTAIN ADDITIONAL COVENANTS
 Notices to Third Parties Section
5.2
 16




---



##### 



Licenses and Permits
 Intercompany Agreements
 Further Assurances
 17




---



##### 



Guarantee Obligations, Liens and Other Obligations.
   Insurance.
 Rights Under Policies Occurrence Basis Policies
 18




---



##### 



Claims Made Policies Section 5.6(c)
 Assistance by Quanex Section 5.6(a)
 Quanex Actions Section 5.6(a) Section 4.7
 Administration
 19




---



##### 



Insurance Premiums Section 5.6(a)
 Agreement for Waiver of Conflict and Shared Defense
 Section 5.6
 Cash Separation.
 Quanex Accounts
 Spinco Accounts
  20




---



##### 



ARTICLE VI
 ACCESS TO INFORMATION
 Provision of Corporate Records
 21




---



##### 



Access to Information Section 6.2
     22




---



##### 



Production of Witnesses Section 6.2
 Retention of Records
 Confidentiality Section 6.2 Section 6.5
 23




---



##### 



Section 6.5
 Cooperation with Respect to Government Reports and Filings
 Tax Matters Agreement Article VI
 ARTICLE VII
 REPRESENTATIONS AND WARRANTIES
 No Representations or Warranties
 Operations, No Liabilities
 24




---



##### 



Solvency
 Organization, Good Standing, Authorization.
       Financial Statements
 Schedule 7.5 Supplemental Financial Statements
 25




---



##### 



ARTICLE VIII
 MISCELLANEOUS
 Conditions to the Distribution
       Complete Agreement
 26




---



##### 



Expenses
 Governing Law
 Notices.
  
   
  
 27




---



##### 



Amendment and Modification
 Successors and Assigns; No Third-Party Beneficiaries Sections 4.2 4.3
 Counterparts
 Interpretation
 Severability
 28




---



##### 



References; Construction
 Termination
 Consent to Jurisdiction and Service of Process
 Waivers
 Specific Performance
 Waiver of Jury Trial
 Use of Name
 29




---



##### 



Quanex CorporationByName:Title:
 [SPINCO]ByName:Title:
 [SPINCO SUB]ByName:Title:
 30




---



##### 



Exhibit C-2
 TRANSITION SERVICES AGREEMENT
 Agreement Quanex  Spinco
 Distribution Agreement
 Transaction Agreements
 Quanex
Group Spinco Group Services
  SECTION 1. SERVICES
 Services Provided by Quanex Group to Spinco Group Exhibit A Exhibit A Exhibit A Exhibit A Exhibit A




---



##### 



Services Provided by Spinco Group to Quanex Group Exhibit B Exhibit B Exhibit B Exhibit B Exhibit B
 SECTION 2. PERFORMANCE OF SERVICES
 Manner of Performance
 Provision of Information
 Termination of Any Service
 Laws and Regulations
 Modification of Service Levels
 - 2 -




---



##### 



No Warranty .
 Use of Subcontractors provided that
 SECTION 3. CHARGES FOR SERVICES
 Exhibit A Exhibit B
 SECTION 4. PAYMENT OF CHARGES AND REIMBURSEMENTS
 Exhibit C
 SECTION 5. RECORDS AND AUDITS
 Records Maintenance and Audits
 - 3 -




---



##### 



Disputed Amounts
 Undisputed Amounts
 Set Off
 SECTION 6.  CONFIDENTIALITY
  - 4 -




---



##### 



SECTION 7.  TERM OF AGREEMENT
  SECTION 8.  TERMINATION
 Termination of Agreement
 Termination of Services provided however
 SECTION 9.  MISCELLANEOUS
 Force Majeure
 - 5 -




---



##### 



Limitation of Liability
 Indemnification
 Independent Contractor
 Complete Agreement
 - 6 -




---



##### 



Governing Law
 Notices
  
  
  
  
 - 7 -




---



##### 



Amendment and Modification
 Successors and Assigns; No Third-Party Beneficiaries
 Counterparts
 Interpretation
 Severability
 References; Construction
 Termination
 - 8 -




---



##### 



Consent to Jurisdiction and Service of Process
 Waivers
 Specific Performance
 Waiver of Jury Trial
 - 9 -




---



##### 



Quanex CorporationBy:Name:Title:
 [SPINCO]By:Name:Title:
 - 10 -




---



##### 



EXHIBIT A
 SERVICES PROVIDED BY QUANEX GROUP TO SPINCO GROUP
AND
APPLICABLE RATES, FEES AND CHARGES
  [to come]
 - 11 -




---



##### 



EXHIBIT B
 SERVICES PROVIDED BY SPINCO GROUP TO QUANEX GROUP
AND
APPLICABLE RATES, FEES AND CHARGES
  [to come]
 - 12 -




---



##### 



EXHIBIT C
 PAYMENT INSTRUCTIONS
 Quanex
  
 Spinco
  
 - 13 -




---



##### 



Exhibit C-3
 TAX MATTERS AGREEMENT
 BY AND AMONG
 QUANEX CORPORATION,
 [SPINCO]
 AND
 [SPINCO SUB]
 Dated as of November  , 2007




---



##### 



Section 1. Definition and Construction
    
    
    2Section 1.1. Definitions of Capitalized Terms
    
    
    2Section 1.2. Construction
    
    
    9Section 2. Indemnification; Allocation of Responsibility for Taxes
    
    
    10Section 2.1. Indemnification
    
    
    10Section 2.2. Allocation of Federal Income Taxes
    
    
    11Section 2.3. Allocation of State Income Taxes
    
    
    11Section 2.4. Foreign Income Taxes
    
    
    11Section 2.5. Allocation of Other Taxes
    
    
    12Section 2.6. Distribution Taxes; Restructuring Taxes; Additional Taxes
    
    
    12Section 3. Proration of Tax Items; Allocation of Tax Assets
    
    
    13Section 3.1. Proration of Tax Items
    
    
    14Section 3.2. Allocation of Tax Assets
    
    
    14Section 3.3. Quanex Equity Awards
    
    
    14Section 4. Preparation and Filing of Tax Returns
    
    
    15Section 4.1. Quanex Responsibility
    
    
    15Section 4.2. The Surviving Entitys Responsibility
    
    
    16Section 4.3. Tax Accounting Practices
    
    
    16Section 4.4. Right to Review Combined Tax Returns
    
    
    18Section 4.5. Adjustment Requests; Carrybacks; Utilization of Tax Assets
    
    
    18Section 5. Payments Under this Agreement
    
    
    19Section 5.1. Tax Payments With Respect to Combined Tax Returns and Spinco Separate
Returns
    
    
    19Section 5.2. Payments to Tax Authorities
    
    
    22Section 5.3. Timing of Payments
    
    
    23Section 5.4. Tax Treatment of Payments
    
    
    23Section 5.5. Interest
    
    
    23Section 6. Assistance and Cooperation; Retention of Tax Records
    
    
    23Section 6.1. Assistance and Cooperation
    
    
    23Section 6.2. Retention of Tax Records
    
    
    24Section 7. Tax Contests
    
    
    24Section 7.1. Notice
    
    
    24Section 7.2. Control of Tax Contests
    
    
    24




---



##### 



Section 7.3. Reimbursement of Expenses
    
    
    25Section 8. Covenants Relating to Taxes
    
    
    25Section 9. Dispute Resolution
    
    
    26Section 10. General Provisions
    
    
    26Section 10.1. Effectiveness; Termination of Prior Tax Allocation Agreements
    
    
    26Section 10.2. Survival of Obligations
    
    
    26Section 10.3. Addresses and Notices
    
    
    27Section 10.4. Binding Effect
    
    
    27Section 10.5. Waiver
    
    
    27Section 10.6. Invalidity of Provisions
    
    
    27Section 10.7. Further Action
    
    
    28Section 10.8. Integration
    
    
    28Section 10.9. Construction
    
    
    28Section 10.10. No Double Recovery
    
    
    28Section 10.11. Setoff
    
    
    28Section 10.12. Counterparts
    
    
    28Section 10.13. No Third Party Rights
    
    
    28Section 10.14. Governing Law
    
    
    29




---



##### 



TAX MATTERS AGREEMENT
 Agreement Quanex Spinco Spinco
Sub
 Recitals
 Whereas Quanex
Consolidated Group
 Whereas
 Whereas Conversions
 Whereas Contribution
 Whereas, Spinco Merger
 Whereas Distribution Quanex Stockholders Membership Interest
 Whereas
 1




---



##### 



AGREEMENTS
 Now, Therefore
    Accounting Cutoff Date
 Additional Tax
 (a)
    
    with respect to any Tax imposed on or attributable to any Group
Member for which Quanex or the Surviving Entity, as applicable, is otherwise
responsible under this Agreement, an amount equal to the excess (if any) of (1)
the cumulative amount of Tax for which Quanex or the Surviving Entity, as
applicable, is otherwise responsible under this Agreement determined after
taking into account any and all actions described in Section 2.6(b),
over (2) the cumulative amount of Tax that Quanex or the Surviving Entity, as
applicable, would otherwise be responsible for under this Agreement determined
without taking into account any actions described in Section 2.6(b);
and(b)
    
    subject to clause (a) and without duplication, with respect to
any action described in Section 2.6(b) that affects a Tax Asset of any
Group Member, an amount equal to the Tax Benefits from such Tax Asset that
Quanex or the Surviving Entity, as applicable, would have otherwise recognized
if such action had not occurred.
 Additional Tax
 Adjustment Request
 Affiliate Affiliate
 2




---



##### 



Affiliate
 Agreement
 Building Products Business
 Carryback Item
 Code
 Combined Tax Return
 Companies Company
 Controlling Company Section 7.3
 Contribution
 Conversions
 Cutoff Date
 Default Rate
 Distribution
 Distribution Agreement
 Distribution Date
 Distribution and Restructuring Taxes
 3




---



##### 



Entity
 Equity Award
 Federal Income Tax
 Final Determination
 Foreign Income Tax
 Group Groups
 4




---



##### 



Group Member
 Income Tax
 Income Tax Return
 Indemnification Expenses Section 7.3
 Indemnified Company
 Indemnifying Company
 Independent Firm provided however
 IRS
 Loss
 Membership Interest
 Merger Agreement
 Other Tax
 Payment Period Section 5.5
 Person
 Post-Cutoff Period
 5




---



##### 



Pre-Cutoff Period
 Preparing Company Section 5.1(c)
 Prior Tax Allocation Agreements
 Quanex
 Quanex Combined Tax Return
 Quanex Combined Tax Return Estimated Income Tax Payment Section 5.1(a)(1)(ii)
 Quanex Combined Tax Return Separate Income Tax Liability Section 5.1(b)(1)(ii)
 Quanex Consolidated Group
 Quanex Estimated Income Tax Payment Section
5.1(a)(2)
 Quanex Filed Returns Section 4.1(a)
 Quanex Group
 Quanex Group Member Quanex Group Members
 Quanex Indemnitees Section 2.1(b)
 Quanex Separate Return
 Quanex Separate Income Tax Liability Section
5.1(b)(2)
 Quanex Stockholders
 Receiving Company Section 5.1(c)
 6




---



##### 



Record Date
 Reimbursement Statement Section 7.3
 Restructuring
 Revised Tax Payment Section 5.1(d)
 Revised Tax Schedule Section 5.1(d)
 Separate Company Tax
 Spinco
 Spinco Assets
 Spinco Combined Tax Return
 Spincos Estimated Income Tax Payment Section
5.1(a)(1)(i)
 Spinco Filed Returns Section 4.2
 Spinco Group Schedule 1.1 provided Schedule 1.1
 Spinco Group Member Spinco Group Members
 Spinco Indemnitees Section 2.1(a)
 Spinco Liabilities
 Spinco Merger
 Spinco Merger Agreement
 7




---



##### 



Spincos Separate Income Tax Liability Section 5.1(b)(1)(i)
 Spinco Separate Return
 Spinco Sub
 State Income Tax
 Straddle Period
 Stub Period
 Subsidiary
 Surviving Entity
 Tax Taxes
 Tax Asset
 Tax Authority
 8




---



##### 



Tax Benefit
 Tax Contest
 Tax Detriment
 Tax Item
 Tax Law
 Tax Payment Section 5.1
 Tax Period
 Tax Records
 Tax Return
 Tax Schedule Section 5.1(c)
 Treasury Regulations
  9




---



##### 



Construction
  Indemnification; Allocation of Responsibility for Taxes.
 Indemnification.
 Quanex Indemnity of the Surviving Entity
 Spinco
Indemnitees
     Section 2.1(b)
 The Surviving Entitys Indemnity of Quanex
 Quanex Indemnitees
   10




---



##### 



Allocation of Federal Income Taxes
 Section 2.6
 Quanex Responsibility for Federal Income Taxes
  The Surviving Entitys Responsibility for Federal Income Taxes
 Section 2.2(a)
 Allocation of State Income Taxes
 Section 2.6
 Quanex Responsibility for State Income Taxes
  The Surviving Entitys Responsibility for State Income Taxes
 Section 2.3(a)
 Foreign Income Taxes
 Section 2.6
 11




---



##### 



Quanex Responsibility for Foreign Income Taxes
  The Surviving Entitys Responsibility for Foreign Income Taxes
 Section 2.4(a)
 Allocation of Other Taxes
 Section 2.6
 Quanex Responsibility for Other Taxes
  The Surviving Entitys Responsibility for Other Taxes
  Distribution Taxes; Restructuring Taxes; Additional Taxes
 Distribution and Restructuring Taxes
  Quanex Responsibility for Distribution and Restructuring Taxes
 The Surviving Entitys Responsibility for Distribution and Restructuring Taxes
 12




---



##### 



Adjustments to Distribution and Restructuring Taxes Section 2.6(a) Section 2.6(a)
 Additional Taxes
 Section 2.6(a)
 Quanex Responsibility for Additional Taxes Section 6.1 Section 6.2
 The Surviving Entitys Responsibility for Additional Taxes Section
6.1 Section 6.2
 Proration of Tax Items; Allocation of Tax Assets
  13




---



##### 



Proration of Tax Items
 General Method
 Section 3.1(b)
 Restructuring Tax Items
  Allocation of Tax Assets
  Quanex Equity Awards
  14




---



##### 



Section 3.3 Section 3.3 Section 3.3
 Preparation and Filing of Tax Returns.
 Quanex Responsibility.
 Quanex Filed Returns
 Quanex
Filed Returns Section 6 Section 6
 Election to Join in Quanex Combined Tax Returns
  Appointment as Agent
  15




---



##### 



The Surviving Entitys Responsibility
 Spinco Filed Returns
 Spinco Filed Returns Section 6 Section 6
 Election to Join in Spinco Combined Tax Returns
  Appointment as Agent
  Tax Accounting Practices
 In General
 Section 4.3(b)
 16




---



##### 



Reporting of Distribution Tax Items
 Tax Consequences of the Distribution
 Disregarded Entities
   Reporting of Distribution Section
4.3(b)(1) provided provided Section 4.3(b)(2) Section
 17




---



##### 



9
 Right to Review Combined Tax Returns
 Section 4.4
 Adjustment Requests; Carrybacks; Utilization of Tax Assets
 Adjustment Requests and Carrybacks Requiring Quanex Consent
  Carrybacks to Pre-Cutoff Periods
 Section 4.5(a)
 18




---



##### 



Other Adjustment Requests Permitted
  Utilization of Tax Assets
 Section 5.1
 Payments Under this Agreement
 Tax Payments With Respect to Combined Tax Returns and Spinco Separate
Returns
 Estimated Income Tax Payments
 Combined Tax Returns
 Quanex Combined Tax Returns Section 3.1 Spincos Estimated Income Tax Payment provided
 Spinco Combined Tax Returns
 19




---



##### 



Section 3.1 Quanex Combined Tax Return Estimated
Income Tax Payment provided
 Spinco Separate Return Section 3.1 Quanex Estimated Income Tax Payment provided
 Income Tax Liability
 Combined Tax Returns
 Quanex Combined Tax Returns Section 3.1 Spincos Separate Income Tax Liability
 20




---



##### 



Spinco Combined Tax Returns Section 3.1 Quanex Combined Tax Return Separate Income
Tax Liability
 Spinco Separate Returns Section 3.1
 21




---



##### 



Quanex Separate Income Tax Liability
 Timing of Tax Payments
 Section 5.1 Preparing Company Tax
Schedule Receiving Company
 Adjustments to Tax Payments
 Section 5.1(b) Section 5.1(b) Revised Tax Payment Revised Tax Schedule Section 5.1(b) Section
5.1(b)
 22




---



##### 



Payments to Tax Authorities
  Timing of Payments
  Tax Treatment of Payments
 Section
4.5(a) Section 5.5
 Interest
 Payment
Period Section 5.4
 Assistance and Cooperation; Retention of Tax Records.
 Assistance and Cooperation.
  23




---



##### 



Section 6
 Retention of Tax Records
 Section
6.2
 Tax Contests
 Notice
 provided however
 Control of Tax Contests
 Tax Contests Relating to Tax Returns
 Section 4
 24




---



##### 



Distribution and Restructuring Taxes
 Section 7.2(b)
 Other Taxes
 Section 2.5
 Reimbursement of Expenses
 Section 7.2 Controlling Company Indemnification
Expenses Reimbursement Statement
 25




---



##### 



Covenants Relating to Taxes
 provided
 Dispute Resolution
 provided however Section 9 Section 9
 General Provisions
 Effectiveness; Termination of Prior Tax Allocation Agreements
  26




---



##### 



Survival of Obligations
  Addresses and Notices
   
  
  
  Binding Effect
  Waiver
  27




---



##### 



Invalidity of Provisions
  Further Action
 Section 7
 Integration
  Construction
  No Double Recovery
  Setoff
  Counterparts
  28




---



##### 



No Third Party Rights
  Governing Law
  [Signature Page Follows]
 29




---



##### 



In Witness Whereof
 Quanex CorporationBy:Name:Title:[SPINCO]By:Name:Title:[SPINCO SUB]By:Name:Title:
 30




---



##### 



Schedule 1.1




---



##### 



Exhibit C-4
 EMPLOYEE MATTERS AGREEMENT
 DATED AS OF NOVEMBER ___, 2007
 BETWEEN
 QUANEX CORPORATION
 AND
 SPINCO*




---



##### 



TABLE OF CONTENTS
 PageArticle I DEFINITIONS
    
    
    1Article II COLLECTIVE BARGAINING AGREEMENTS
    
    
    6Article III EMPLOYEES; ASSUMPTION OF LIABILITIES
    
    
    7Section 3.1 Employees
    
    
    7Section 3.2 Assumption of Liabilities
    
    
    7Section 3.3 Transfer of Assets
    
    
    8Section 3.4 Non-Solicitation of Employees
    
    
    8ARTICLE IV CHANGE IN CONTROL ARRANGEMENTS
    
    
    9Section 4.1 Waiver and Release Agreements
    
    
    9Section 4.2 Change in Control Agreements
    
    
    9Section 4.3 Spinco Severance Agreements
    
    
    9Section 4.4 True-Up of Certain Change in Control Payments
    
    
    9Article V SPINCO PLANS GENERALLY
    
    
    11Section 5.1 Establishment of Spinco Plans
    
    
    11Section 5.2 Terms of Participation by Spinco Employees
    
    
    11Section 5.3 Service Recognition
    
    
    11Section 5.4 Transition Services
    
    
    12ARTICLE VI QUALIFIED DEFINED BENEFIT PLANS
    
    
    13Section 6.1 Establishment of Spinco Pension Plan
    
    
    13Section 6.2 Spinco Pension Plan Participants
    
    
    13ARTICLE VII QUALIFIED DEFINED CONTRIBUTION PLANS
    
    
    17Section 7.1 Quanex Savings Plan and Quanex Bargaining Unit Employee Savings Plan
    
    
    17Section 7.2 Quanex Hourly Savings Plan
    
    
    17Section 7.3 Spinco Savings Plan
    
    
    17Section 7.4 Employer Securities
    
    
    18Section 7.5 Contributions as of the Distribution Time
    
    
    18ARTICLE VIII HEALTH AND WELFARE PLANS
    
    
    19Section 8.1 Health And Welfare Plans Maintained By Quanex Prior To The Distribution Date
    
    
    19Section 8.2 Leave of Absence Programs
    
    
    21Section 8.3 Time-Off Benefits
    
    
    21




---



##### 



TABLE OF CONTENTS
 PageARTICLE IX NONQUALIFIED PENSION PLANS
    
    
    22Section 9.1 Generally
    
    
    22Section 9.2 Quanex Corporation Deferred Compensation Plan
    
    
    22Section 9.3 Quanex Corporation Supplemental Salaried Employees Pension Plan
    
    
    23Section 9.4 Quanex Corporation Supplemental Benefit Plan
    
    
    24Section 9.5 Quanex Director Plan
    
    
    25ARTICLE X LONG-TERM INCENTIVE AWARDS
    
    
    26Section 10.1 Quanex Options
    
    
    26Section 10.2 Quanex Restricted Stock
    
    
    26Section 10.3 Quanex Restricted Stock Units
    
    
    27Section 10.4 Amendments
    
    
    27Section 10.5 SEC Registration
    
    
    27ARTICLE XI ADDITIONAL COMPENSATION MATTERS
    
    
    28Section 11.1 Quanex Stock Purchase Plan
    
    
    28Section 11.2 Incentive Awards
    
    
    28Section 11.3 Severance Plans
    
    
    29Section 11.4 Director, Officer and Key Man Life Insurance
    
    
    30Section 11.5 Quanex Vacation Policy
    
    
    30Section 11.6 Sections 162(m)/409A
    
    
    30Section 11.7 Payroll Taxes and Forms W-2
    
    
    30Article XII GENERAL
    
    
    31Section 12.1 Approval by Quanex As Sole Stockholder
    
    
    31Section 12.2 Sharing of Employee Information
    
    
    31Section 12.3 Reasonable Efforts/Cooperation
    
    
    31Section 12.4 Employer Rights
    
    
    31Section 12.5 Effect on Employment
    
    
    31Section 12.6 Consent Of Third Parties
    
    
    32Section 12.7 Access To Employees
    
    
    32Section 12.8 Beneficiary Designation/Release Of Information/Right To Reimbursement
    
    
    32Section 12.9 Effect if Distribution Does Not Occur
    
    
    32Section 12.10 Relationship of Parties
    
    
    32Section 12.11 Affiliates
    
    
    33Section 12.12 Survival
    
    
    33Section 12.13 Notices
    
    
    33Section 12.14 Interpretation
    
    
    33




---



##### 



TABLE OF CONTENTS
 PageSection 12.15 Governing Law
    
    
    33Section 12.16 Fiduciary Matters
    
    
    33Section 12.17 Consent to Jurisdiction and Service of Process
    
    
    33Section 12.18 Waiver of Jury Trial
    
    
    34Section 12.19 Force Majeure
    
    
    34Section 12.20 Authorization
    
    
    34Section 12.21 Specific Performance
    
    
    34Section 12.22 Assignment
    
    
    34Section 12.23 Successors and Assigns/No Third Party Beneficiary
    
    
    35Section 12.24 No Amendment of Plans
    
    
    35Section 12.25 Amendment
    
    
    35Section 12.26 Entire Agreement
    
    
    35Section 12.27 Severability
    
    
    35Section 12.28 Exhibits and Schedules
    
    
    36Section 12.29 Waivers
    
    
    36Section 12.30 Termination
    
    
    36Section 12.31 Counterparts
    
    
    36Section 12.32 Construction
    
    
    36




---



##### 



EMPLOYEE MATTERS AGREEMENT
 Agreement  Quanex  Spinco
 Contribution
 Spinco Common Stock Distribution Quanex Common Stock
 Distribution Agreement




---



##### 



ARTICLE I
 DEFINITIONS
                   1




---



##### 



2




---



##### 



3




---



##### 



4




---



##### 



5




---



##### 



ARTICLE II
 COLLECTIVE BARGAINING AGREEMENTS
 Schedule 2 Spinco CBAs
 6




---



##### 



ARTICLE III
 EMPLOYEES; ASSUMPTION OF LIABILITIES
 Employees.
 General
 No Quanex Severance Payment
 Termination of Participation in Quanex Plans
 Assumption of Liabilities
 Assumption by Spinco. Spinco
Employee Liabilities
 Liabilities Retained and Assumed by Quanex.
 7




---



##### 



Quanex Employee Liabilities
 Transfer of Assets
  Non-Solicitation of Employees.
 provided
 8




---



##### 



ARTICLE IV
 CHANGE IN CONTROL ARRANGEMENTS
 Waiver and Release Agreements
 Waiver and Release
Agreements
 Change in Control Agreements
 Exhibit
A
 Spinco Severance Agreements
 Exhibit B
 True-Up of Certain Change in Control Payments.
  Quanex Responsibility for Change in Control Payments
 9




---



##### 



Spincos Responsibility for Change in Control Payments
 10




---



##### 



ARTICLE V
 SPINCO PLANS GENERALLY
 Establishment of Spinco Plans
 Spinco Mirror Plans
 Terms of Participation by Spinco Employees
 provided, however
  Service Recognition
 Pre-Distribution Service Credit provided that
 Post-Distribution Reciprocal Service Crediting
 11




---



##### 



Service Crediting Date
     Transition Services
  12




---



##### 



ARTICLE VI
 QUALIFIED DEFINED BENEFIT PLANS
 Establishment of Spinco Pension Plan Spinco Pension Plan
Participants
 Spinco Pension Plan Participants
 Assumption of Quanex Employees Pension Plan Liabilities
 Transfer of Quanex Employees Pension Plan Assets
 l l i.e. Schedule 6.2(b) Estimated Pension Plan Transfer Amount
 Initial Transfer Amount
 13




---



##### 



Schedule 6.2(b) Revised Pension Plan Transfer Amount provided, that Schedule 6.2(b) provided, that Schedule 6.2(b) provided, further Final Pension Plan Transfer Amount
 Final
Transfer Date True-Up Amount provided, that
 14




---



##### 



Form 5310-A
 Continuation of Elections
 Terminated Non-Vested Employees
 Certain Annuities Schedule 6.2(f)
 15




---



##### 



Schedule 6.2(f)
 16




---



##### 



ARTICLE VII
 QUALIFIED DEFINED CONTRIBUTION PLANS
 Quanex Savings Plan and Quanex Bargaining Unit Employee Savings Plan
 provided, however
 Quanex Hourly Savings Plan.
 Spinco Hourly Savings Plan
 Spinco Savings Plan
 Establishment of Spinco Savings Plan Spinco Savings Plan
 Transfer of Quanex Savings Plan Assets
 17




---



##### 



l l
 Continuation of Elections
 Form 5310-A
 Employer Securities.
 Spinco Common Stock
 Quanex Common Stock Parent Merger Agreement
 Contributions as of the Distribution Time
 18




---



##### 



ARTICLE VIII
 HEALTH AND WELFARE PLANS
 Health And Welfare Plans Maintained By Quanex Prior To The Distribution Date
 Establishment of the Spinco Welfare Plans Quanex
Welfare Plans Spinco Welfare
Plans
 Terms of Participation in Spinco Welfare Plans
 Reimbursement Account Plan Spinco Reimbursement Account Plan Quanex Reimbursement Account Plan
  19




---



##### 



Continuation of Elections
 COBRA and HIPAA provided, that
 Liabilities
 Insured Benefits
 20




---



##### 



Self-Insured Benefits
 Incurred Claim Definition
 Treatment of Other Liabilities, Recoveries and Adjustments
 Claim Experience
 Leave of Absence Programs.
  Time-Off Benefits
  21




---



##### 



ARTICLE IX
 NONQUALIFIED PENSION PLANS
 Generally
  Quanex Corporation Deferred Compensation Plan
 Establishment of Spinco Deferred Compensation Plan Spinco Deferred Compensation Plan
 Deemed Investments in Quanex Common Stock.
 Vesting
 Transfer of Rabbi Trust Assets
 22




---



##### 



Quanex Rabbi
Trust
 Quanex Corporation Supplemental Salaried Employees Pension Plan
 Establishment of Spinco Supplemental Pension Plan Spinco Supplemental Pension
Plan
 Continuation of Elections
 No Vesting
 23




---



##### 



Quanex Corporation Supplemental Benefit Plan
 Establishment of Spinco Supplemental Benefit Plan Spinco Supplemental Benefit Plan
 Continuation of Elections
 No Vesting
 Transfer of Quanex SERP Rabbi Trust Assets Quanex SERP Rabbi Trust
 Quanex Director Plan
  24




---



##### 



25




---



##### 



ARTICLE X
 LONG-TERM INCENTIVE AWARDS
 Quanex Options
 Cancellation and Payment
 Stock Option True-Up of Payments. Option Payments
 Quanex Responsibility for Option Payments
 Spincos Responsibility for Option Payments
 Quanex Restricted Stock
 Unrestricted Quanex Common Stock
  26




---



##### 



Quanex Restricted Stock Units
  Amendments
  SEC Registration
  27




---



##### 



ARTICLE XI
 ADDITIONAL COMPENSATION MATTERS
 Quanex Stock Purchase Plan
 Final Offering Period Ending Date
 Incentive Awards
 Quanex Assumption or Retention of Incentive Liability Schedule 11.2
 Special Bonus Provisions
 Quanex Corporation Long Term Incentive Plan Bonuses provided, however
 Quanex Corporation Management Incentive Plan provided, however
  28




---



##### 



Quanex Corporation 2006 Omnibus Incentive Plan provided, however
   Time of Payment
 Severance Plans
 Establishment of Spinco Severance Plans Spinco Severance Plans
 Assumption of Severance and Retention Liabilities
 29




---



##### 



Director, Officer and Key Man Life Insurance.
 Schedule 11.4 Schedule 11.4
 Quanex Vacation Policy.
  Sections 162(m) /409A
  Payroll Taxes and Forms W-2
  30




---



##### 



ARTICLE XII
 GENERAL
 Approval by Quanex As Sole Stockholder
  Sharing of Employee Information
  Reasonable Efforts/Cooperation
  Employer Rights
  Effect on Employment
  31




---



##### 



Consent Of Third Parties
  Access To Employees
  Beneficiary Designation/Release Of Information/Right To Reimbursement
  Effect if Distribution Does Not Occur
  Relationship of Parties
  32




---



##### 



Affiliates
  Survival
  Notices
  Interpretation
  Governing Law
  Fiduciary Matters
  Consent to Jurisdiction and Service of Process
  33




---



##### 



Waiver of Jury Trial
  Force Majeure
  Authorization
  Specific Performance
  Assignment.
 provided, that provided, further
 34




---



##### 



Successors and Assigns/No Third Party Beneficiary
  No Amendment of Plans.
  Amendment
  Entire Agreement
  Severability
  Exhibits and Schedules
  35




---



##### 



Waivers
  Termination
  Counterparts
  Construction
  36




---



##### 



Quanex CorporationBy:Name:Title:SPINCO*By:Name:Title: