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Exhibit 4.5  


 
 

CONSENT AND FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT    
    



        This Consent and First Amendment to Revolving Credit Agreement (this "First Amendment") is made as of this 20th day of November, 2003 by and among Quanex
Corporation, a Delaware corporation (the "Company"), Comerica Bank and the other banks signatory hereto and Comerica Bank, as agent for the Banks (in such capacity, "Agent"). 


RECITALS  


        A.    Company,
Agent and the Banks entered into that certain Quanex Corporation Revolving Credit Agreement dated as of November 26, 2002 (the "Credit Agreement") under
which the Banks extended (or committed to extend) credit to the Company, as set forth therein. 


        B.    Company
has requested that Agent and the Banks (i) consent to the TruSeal Acquisition (as defined below), (ii) increase the amount of the Revolving Credit
facility concurrently with this First Amendment, and (iii) make certain other amendments to the Credit Agreement, and Agent and the Banks are willing to do so, but only on the terms and
conditions set forth in this First Amendment. 


        NOW, THEREFORE, Company, Agent and Banks agree: 



        1.     The
undersigned Banks hereby consent and agree to (i) the acquisition of all of the stock or substantially all of the assets of TruSeal Technologies, Inc.
(such acquisition, the "TruSeal Acquisition") by the Company, either directly or by a Domestic Subsidiary (if a stock purchase, TruSeal Technologies, Inc. shall be deemed a Significant Domestic
Subsidiary, and if an asset acquisition, the entity holding the TruSeal Technologies, Inc. assets shall be deemed a Significant Domestic Subsidiary following the TruSeal Acquisition), subject
to the following conditions: (a) that the Company consummate the TruSeal Acquisition on or before January 31, 2004, (b) the TruSeal Acquisition complies with the requirements set
forth in clauses (a), (e) and (f) and clauses (b) or (c) of the definition of "Permitted Acquisitions", (c) the Company delivers to Banks copies of the documents,
instruments and agreements relating to the TruSeal Acquisition (the "Acquisition Documents"), including a certificate of representations and warranties regarding the TruSeal Acquisition and the
Acquisition Documents, and such other documents as Banks may reasonably request, all in form and substance acceptable to Banks, and (d) satisfaction of the conditions of effectiveness of this
First Amendment set forth in Section 6 hereof; and (ii) extend the time period during which the Company or a Domestic Subsidiary of the Company may acquire the assets of North Star Steel
Company's Monroe, Michigan operations (which acquisition was previously consented and agreed to by the requisite Banks pursuant to those certain Consent Letters dated as of May 5, 2003 and
September 26, 2003 (collectively, the "Consent Letters")) may occur to January 31, 2004, provided, however, that the Company must satisfy
all other requirements specified in the Consent Letters in connection with such acquisition. 


        2.     Section 1
of the Credit Agreement is hereby amended as follows: 



        (a)   the
definition of "Revolving Credit Aggregate Commitment" in the Credit Agreement is deleted in its entirety, and the following is inserted in its place: 



""Revolving
Credit Aggregate Commitment" shall mean Three Hundred Ten Million Dollars ($310,000,000) subject to any reduction or termination under Section 2.13, 2.14 or 8.2 hereof." 




        (b)   the
following definition of "Net Income Adjustment" is inserted in Section 1 of the Credit Agreement in its appropriate alphabetical order: 



""Net
Income Adjustment" shall mean that amount to be added to the minimum Consolidated Tangible Net Worth required to be maintained under Section 6.10 hereof for any fiscal quarter, consisting
of an amount equal to fifty percent (50%) of the Consolidated Net Income of the Company and its Subsidiaries (but only if a positive number) for any fiscal 







 


quarter
without any deductions or adjustments for losses, commencing with the fiscal quarter ending April 30, 2004." 




        (c)   the
following definition of "Asset Adjustment" is inserted in Section 1 of the Credit Agreement in its appropriate alphabetical order: 



""Asset
Adjustment" shall mean that amount to be added to the minimum Consolidated Tangible Net Worth required to be maintained under Section 6.10 hereof for any fiscal quarter, consisting of
an amount equal to the aggregate write ups of any assets during such fiscal quarter (with respect to assets acquired solely pursuant to a Permitted Acquisition or any other acquisition of all or
substantially all of the assets or equity interests of any Person consented to by the requisite Banks) above the amounts set forth in the pro-forma balance sheet for such fiscal quarter
submitted to the Agent and delivered by Agent to the Banks in compliance with the requirements for such acquisition under this Agreement or any consent or amendment hereto." 





        3.     Section 6.10
of the Credit Agreement is hereby deleted in its entirety, and the following is inserted in its place: 




"6.10    Maintain Consolidated Tangible Net Worth.    Maintain as of the end of each fiscal quarter of Company (commencing with the
quarter ending October 31, 2003), Consolidated Tangible Net Worth of not less than the following amounts during the periods specified below, plus in each case, the Equity Offering Adjustment,
the Subordinated Debt Adjustment, the Asset Adjustment, if any, and the Net Income Adjustment: 




	Period
	 	Amount

	October 31, 2003	 	$	320,000,000
	January 31, 2004 and each quarter thereafter	 	$	217,500,000






        4.     Existing
Schedule 1.1 to the Credit Agreement is deleted in its entirety and a replacement  Schedule 1.1 in the form of Attachment
I to this First Amendment is inserted in its place. 


        5.     Existing
Schedule 1.2 to the Credit Agreement is deleted in its entirety and a replacement  Schedule 1.2 in the form of Attachment
II to this First Amendment is inserted in its place. 



        6.     This
First Amendment shall become effective according to the terms hereof and as of such date (the "First Amendment Effective Date") that the Company shall have satisfied
the following conditions: 



        (a)   Agent
shall have received: 



          (i)  counterpart
originals of this First Amendment, in each case duly executed and delivered by Company and the requisite Banks, in form satisfactory to Agent and the Banks
and counterpart originals of a Reaffirmation of Guaranty, duly executed and delivered by the Guarantors, in form satisfactory to Agent and Banks; 



         (ii)  renewal
and replacement Revolving Credit Notes (the "New Notes") substantially in the form of Exhibit B to the
Credit Agreement, payable to the order of each of the Revolving Credit Banks previously having requested Revolving Credit Notes in the face amount of each such Bank's Percentage of the Revolving
Credit as set forth in replacement Schedule 1.2 attached as Attachment II hereto 


        (iii)  certified
copies of resolutions of the Board of Directors of each of the Company and the Guarantors authorizing, as applicable, the execution and delivery of this
First Amendment, the New Notes and the other Loan Documents required under this clause (a) and the 




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performance
by the Company and the undersigned Guarantors of each of their respective obligations under the Credit Agreement, as amended by this First Amendment; and 


        (iii)  such
other documents as Agent may reasonably request, in form and substance acceptable to Banks. 




        (b)   Company
shall have paid to Agent, for distribution to the Banks as applicable, (i) all interest, Fees and other amounts, if any, owed to the Agent and the Banks
and accrued to the First Amendment Effective Date, (ii) a closing fee of $5,000 for each existing Bank which executes this First Amendment by the date stated in subparagraph (d) below,
(iii) for each Revolving Credit Bank whose stated dollar
commitment amount is increasing and each new Bank who has entered into a commitment to lend, an amendment fee of twenty (20) basis points on the amount of either the incremental increase in
commitment, or the new commitment, as applicable and (iv) a special letter of credit fee to each new Bank and each existing Bank who has increased its commitment on the Letters of Credit
outstanding on the effective date of such increase or new commitment, calculated on the basis of the Letter of Credit Fees which would be applicable to such Letters of Credit if issued on the date of
such increase or new commitment, for the period from the effective date of such increase or new commitment to the expiration date of such Letters of Credit based upon each such Bank's new commitment
or applicable incremental increase. 


        (c)   No
Default or Event of Default shall have occurred and be continuing. 


        (d)   If
the First Amendment Effective Date shall not have occurred on or before December 19, 2003, this First Amendment shall not become effective and the offer by the
Agent and the Banks to amend the Credit Agreement on the terms set forth herein shall be deemed withdrawn. 




        7.     The
Company for itself and each of the Guarantors hereby represents and warrants that, after giving effect to the amendments contained herein, (a) execution and
delivery of this First Amendment, the New Notes and the other Loan Documents required to be delivered hereunder, and the performance by the Company of its obligations under the Credit Agreement as
amended hereby are within such undersigned's corporate powers, have been duly authorized, are not in contravention of law or the terms of its articles of incorporation, bylaws or any other
organizational documents of the parties thereto, as applicable, and except as have been previously obtained, do not require the consent or approval, material to the amendment contemplated in this
First Amendment or Credit Agreement, as amended, of any governmental body, agency or authority, and this First Amendment, the Credit Agreement, as amended, the New Notes and the other Loan Documents
required to be delivered hereunder, will constitute the valid and binding obligations of such undersigned parties, enforceable in accordance with its terms, except as enforcement thereof may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium, ERISA or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity (whether
enforcement is sought in a proceeding in equity or at law), (b) the representations and warranties contained in Section 5 of the Credit Agreement, as amended are true and correct on and
as of the date hereof, except to the extent such representations and warranties speak only as of certain date, and (c) there has been no material change to the Pro Forma Projected Financial
Information most recently provided to the Agent and the Banks with respect to the TruSeal Acquisition. 


        8.     Except
as specifically set forth above, this First Amendment shall not be deemed to amend or alter in any respect the terms and conditions of the Credit Agreement, any of
the Notes issued thereunder or any of the Loan Documents, or to constitute a waiver by the Banks or Agent of any right or remedy under or a consent to any transaction not meeting the terms and
conditions of the Credit Agreement, any of the Notes issued thereunder or any of the other Loan Documents. 


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        9.     Concurrently
with the First Amendment Effective Date pursuant to Section 6 hereof, each Bank shall have (i) a Percentage equal to the percentage set forth
in replacement Schedule 1.2 attached as Attachment II hereto, and (ii) Advances under the
Revolving Credit (and participations in Letters of Credit) in its Percentage of all Advances under the Revolving Credit (and undrawn Letters of Credit) outstanding on the First Amendment Effective
Date. To facilitate the foregoing, each Bank which as a result of the adjustments to Percentages evidenced by replacement Schedule 1.2 attached
as Attachment II is to have a greater principal amount of Advances under the Revolving Credit outstanding than such Bank had outstanding under the
Credit Agreement immediately prior to the First Amendment Effective Date shall deliver to the Agent immediately available funds to cover such Advances under the Revolving Credit (and the Agent shall,
to the extent of the funds so received, disburse funds to each Bank which, as a result of the adjustment of the Percentages, is to have a lesser principal amount of Advances under the Revolving Credit
outstanding than such Bank had under the Credit Agreement immediately prior to the First Amendment Effective Date). Each Bank, upon receipt of its New Note(s) (which Notes are to be in exchange for
and not in payment of the predecessor Revolving Credit Notes) issued by the Company to such Bank, shall return its predecessor Revolving Credit Notes, and if applicable, its Swing Line Note, to the
Agent which shall stamp such Notes "exchanged" and deliver said Notes to the Company. Each Person which did not previously execute and deliver the Credit Agreement shall, upon its execution of this
First Amendment, be deemed a "Bank" under the Credit Agreement, and shall hold the Percentage set forth opposite its name in Schedule 1.2
attached as Attachment II hereto. 


        10.   Unless
otherwise defined to the contrary herein, all capitalized terms used in this First Amendment shall have the meaning set forth in the Credit Agreement, as amended. 



        11.   This
First Amendment shall be construed in accordance with and governed by the laws of the State of Michigan. 


        12.   Any
references in the Loan Documents to the Credit Agreement shall be deemed a reference to the Credit Agreement as amended by this First Amendment. 


[signatures follow on succeeding pages]


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        WITNESS the due execution hereof as of the day and year first above written. 



	COMERICA BANK,

as Agent	 	QUANEX CORPORATION
	

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SWING LINE BANK AND ISSUING BANK:	
 	
COMERICA BANK
	

 	
 	

 	
 	

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BANKS:	
 	
COMERICA BANK
	

 	
 	

 	
 	

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HARRIS TRUST & SAVINGS BANK
	

 	
 	

 	
 	

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U.S. BANK NATIONAL ASSOCIATION
	

 	
 	

 	
 	

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BANK OF AMERICA, N.A.
	

 	
 	

 	
 	

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WELLS FARGO BANK TEXAS, N.A.
	

 	
 	

 	
 	

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BNP PARIBAS
	

 	
 	

 	
 	

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UNION BANK OF CALIFORNIA, N.A.
	

 	
 	

 	
 	

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THE NORTHERN TRUST COMPANY
	

 	
 	

 	
 	

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SOUTHWEST BANK OF TEXAS, N.A.
	

 	
 	

 	
 	

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CREDIT LYONNAIS
	

 	
 	

 	
 	

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GUARANTY BANK
	

 	
 	

 	
 	

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CONSENT AND FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT