Exhibit 4.10


 


Execution Copy


 


$125,000,000


 


QUANEX CORPORATION


 


2.50% Convertible Senior Debentures
due May 15, 2034


 


REGISTRATION RIGHTS AGREEMENT


 


May 5, 2004


 


Credit Suisse First
Boston LLC


Bear, Stearns & Co.
Inc.


Robert W. Baird & Co.
Incorporated


KeyBanc Capital Markets,
A Division of McDonald Investments Inc.


c/o Credit Suisse First
Boston LLC


Eleven Madison Avenue


New York, New York
10010-3629


 


Ladies and Gentlemen:


 


Quanex Corporation, a
Delaware corporation (the “Company”), proposes to issue and sell to
Credit Suisse First Boston LLC, Bear, Stearns & Co. Inc., Robert W. Baird
& Co. Incorporated and KeyBanc Capital Markets, A Division of McDonald
Investments Inc. (collectively, the “Initial Purchasers”), upon the terms set
forth in a purchase agreement of even date herewith (the “Purchase Agreement”),
$100,000,000 aggregate principal amount (plus up to an additional $25,000,000
principal amount pursuant to an option granted thereunder) of its 2.50% Convertible Senior Debentures due May 15,
2034 (the “Initial Securities”).  The Initial Securities will be convertible
into shares of common stock, par value $.50 per share, of the Company (the “Common Stock”) at the conversion price set
forth in the Offering Circular dated April 29, 2004.  The Initial Securities will be issued
pursuant to an Indenture, dated as of May 5, 2004 (the “Indenture”), between the
Company and Union Bank of California, N.A., as trustee  (the “Trustee”). 
As an inducement to the Initial Purchasers to enter into the Purchase
Agreement, the Company agrees with the Initial Purchasers, for the benefit of
(i) the Initial Purchasers and (ii) the holders of the Initial Securities and
the Common Stock issuable upon conversion of the Initial Securities
(collectively, the “Securities”)
from time to time until such time as such Securities have been sold pursuant to
a Shelf Registration Statement (as defined below) (each of the foregoing a “Holder” and collectively the “Holders”),
as follows:


 


1.  Shelf Registration.  (a) 
The Company shall, at its cost, prepare and, as promptly as practicable
(but in no event more than 90 days after so required or requested pursuant to
this Section 1) file with the Securities and Exchange Commission (the “Commission”) and thereafter use its
reasonable best efforts to cause to be declared effective as soon as
practicable, but not later than 180 days after the first date of original
issuance of the Initial Securities, a registration statement on Form S-3 (the “Shelf
Registration  Statement” relating to the offer and sale
of the Transfer Restricted Securities (as defined in Section 5 hereof) by
the Holders thereof from time to time in accordance with the methods of
distribution set forth in the Shelf Registration Statement and Rule 415
under the Securities Act of 1933, as amended (the “Securities Act”) (hereinafter, the “Shelf Registration”); provided,
however, that no Holder (other than an


 

















 


Initial Purchaser) shall
be entitled to have the Securities held by it covered by such Shelf
Registration Statement unless such Holder agrees in writing to be bound by all
the provisions of this Agreement applicable to such Holder.


 


(b) The Company shall use
its reasonable best efforts to keep the Shelf Registration Statement
continuously effective in order to permit the prospectus included therein (the
“Prospectus”) to be lawfully
delivered by the Holders of the relevant Securities, for a period of two years
(or for such longer period if extended pursuant to Section 2(h) below)
from the date of its effectiveness or such shorter period that will terminate
when all the Securities covered by the Shelf Registration Statement (i) have
been sold pursuant thereto or (ii) are no longer restricted securities (as
defined in Rule 144(k) under the Securities Act, or any successor rule thereof),
assuming for this purpose that the Holders thereof are not affiliates of the
Company (in any such case, such period being called the “Shelf Registration Period”).  The Company shall be deemed not to have used
its reasonable best efforts to keep the Shelf Registration Statement effective
during the requisite period if it voluntarily takes any action that would
result in Holders of Securities covered thereby not being able to offer and
sell such Securities during that period, unless such action is (i) required by
applicable law or (ii) taken by the Company in good faith and contemplated by
Section 2(b)(v) below, and the Company thereafter complies with the
requirements of Section 2(h).


 


(c)  Notwithstanding any other provisions of this
Agreement to the contrary, the Company shall cause the Shelf Registration
Statement and the Prospectus and any amendment or supplement thereto, as of the
effective date of the Shelf Registration Statement, amendment or supplement,
(i) to comply in all material respects with the applicable requirements of the
Securities Act and the rules and regulations of the Commission and (ii) not to
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading.


 


2.  Registration Procedures.  In connection with the Shelf Registration
contemplated by Section 1 hereof, the following provisions shall apply:


 


(a)  The Company shall (i) furnish to each
Initial Purchaser, prior to the filing thereof with the Commission, a copy of
the Shelf Registration Statement and each amendment thereof and each
supplement, if any, to the prospectus included therein and, in the event that
an Initial Purchaser (with respect to any portion of an unsold allotment from
the original offering) is participating in the Shelf Registration Statement,
shall use its reasonable best efforts to reflect in each such document, when so
filed with the Commission, such comments as such Initial Purchaser reasonably
may propose; and (ii) include the names of the Holders who propose to sell
Securities pursuant to the Shelf Registration Statement as selling
securityholders.


 


(b)  The Company shall give written notice to the
Initial Purchasers and the Holders of the Securities (which notice pursuant to
clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the
use of the Prospectus until the requisite changes have been made):


 


(i) when the Shelf
Registration Statement or any amendment thereto has been filed with the
Commission and when the Shelf Registration Statement or any post-effective
amendment thereto has become effective;


 


(ii) of any
request by the Commission for amendments or supplements to the Shelf
Registration Statement or the prospectus included therein or for additional
information;


 


(iii) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Shelf Registration Statement or the initiation of any proceedings for that
purpose;


 


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(iv) of the
receipt by the Company or its legal counsel of any notification with respect to
the suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose;
and


 


(v) of the
happening of any event that requires the Company to make changes in the Shelf
Registration Statement or the Prospectus in order that the Shelf Registration
Statement or the Prospectus does not contain an untrue statement of a material fact
nor omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.


 


(c)  The Company shall make every reasonable
effort to obtain the withdrawal at the earliest possible time of any order
suspending the effectiveness of the Shelf Registration Statement.


 


(d)  Upon request in writing, the Company shall
furnish to each Holder of Securities included within the coverage of the Shelf
Registration, without charge, at least one copy of the Shelf Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, and, if the Holder so requests, all exhibits thereto
(including those, if any, incorporated by reference).


 


(e)  The Company shall, during the Shelf Registration
Period, deliver to each Holder of Securities included within the coverage of
the Shelf Registration, without charge, as many copies of the Prospectus
(including each preliminary prospectus) included in the Shelf Registration
Statement and any amendment or supplement thereto as such person may reasonably
request.  The Company consents, subject
to the provisions of this Agreement, to the use of the Prospectus or any
amendment or supplement thereto by each of the selling Holders of the
Securities in connection with the offering and sale of the Securities covered
by the Prospectus, or any amendment or supplement thereto, included in the
Shelf Registration Statement.


 


(f)  Prior to any public offering of the
Securities pursuant to the Shelf Registration Statement, the Company shall
register or qualify or cooperate with the Holders of the Securities included
therein and their respective counsel in connection with the registration or
qualification of the Securities for offer and sale under the securities or
“blue sky” laws of such states of the United States as any Holder of the
Securities reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable the offer and sale in such
jurisdictions of the Securities covered by such Registration Statement; provided,
however, that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction where it is not then so qualified
or (ii) take any action which would subject it to general service of process
or to taxation in any jurisdiction where it is not then so subject.


 


(g)  The Company shall cooperate with the Holders
of the Securities to facilitate the timely preparation and delivery of
certificates representing the Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such
denominations and registered in such names as the Holders may request a
reasonable period of time prior to sales of the Securities pursuant to the
Shelf Registration Statement.


 


(h)  Upon the occurrence of any event
contemplated by paragraphs (ii) through (v) of Section 2(b) above
during the period for which the Company is required to maintain an effective
Shelf Registration Statement, the Company shall promptly prepare and file a post-effective
amendment to the Shelf Registration Statement or an amendment or supplement to
the Prospectus and any other required document so that, as thereafter delivered
to Holders or purchasers of the Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading.  If the Company notifies the
Initial Purchasers and the Holders in accordance with paragraphs (ii) through
(v) of Section 2(b) above to suspend the use of the Prospectus until the
requisite changes to the Prospectus have been made, then the Initial Purchasers
and the Holders shall suspend use of such prospectus, and the period of
effectiveness of the Shelf Registration


 


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Statement provided for in
Section 1(b) above shall be extended by the number of days from and
including the date of the giving of such notice to and including the date when
the Initial Purchasers and the Holders shall have received such amended or
supplemented prospectus pursuant to this Section 2(h).


 


(i)  Not later than the effective date of the
Shelf Registration Statement, the Company will provide CUSIP numbers for the
Initial Securities and the Common Stock registered under the Shelf Registration
Statement, and provide the Trustee with printed certificates for the Initial
Securities, in a form eligible for deposit with The Depository Trust Company.


 


(j)  The Company will comply with all rules and
regulations of the Commission to the extent and so long as they are applicable
to the Shelf Registration and will make generally available to its security
holders (or otherwise provide in accordance with Section 11(a) of the
Securities Act and Rule 158 thereunder) an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act, no later than the date
that the next Form 10-K or Form 10-Q is required to be filed after the end of
the 12-month period beginning with the first month of the Company’s first
fiscal quarter commencing after the effective date of the Shelf Registration
Statement.


 


(k)  The Company shall cause the Indenture to be
qualified under the Trust Indenture Act of 1939, as amended, (the “Trust Indenture Act”) in a timely manner
and containing such changes, if any, as shall be necessary for such
qualification.  In the event that such
qualification would require the appointment of a new trustee under the
Indenture, the Company shall appoint a new trustee thereunder pursuant to the
applicable provisions of the Indenture.


 


(l)  The Company may require each Holder of
Securities to be sold pursuant to the Shelf Registration Statement to furnish
to the Company such information regarding the Holder and the distribution of
the Securities as the Company may from time to time reasonably require for
inclusion in the Shelf Registration Statement, and the Company may exclude from
such registration the Securities of any Holder that unreasonably fails to
furnish such information within a reasonable time after receiving such
request.  After the Shelf Registration
Statement has become effective, the Company shall (A) after the date
information regarding a Holder whose Securities are not registered is delivered
to the Company, prepare and file with the Commission (x) a supplement to the
Prospectus as promptly as practicable or, if required by applicable law, a
post-effective amendment to the Shelf Registration Statement or an additional
Shelf Registration Statement as promptly as practicable after the filing of
each Form 10-K or Form 10-Q of the Company and (y) any other document required
by applicable law, so that the Holder is named as a selling securityholder in a
Shelf Registration Statement and is permitted to deliver the Prospectus to
purchasers of such Holder’s Securities in accordance with applicable law, and
(B) if the Company shall file a post-effective amendment to the Shelf
Registration Statement, or an additional Shelf Registration Statement, use its
reasonable best efforts to cause such post-effective amendment or such
additional Shelf Registration Statement to become effective under the
Securities Act as promptly as is practicable.


 


(m)  The Company shall enter into such customary
agreements (including, if requested, an underwriting agreement in customary
form) and take all such other actions, if any, as any Holder shall reasonably
request in order to facilitate the disposition of the Securities pursuant to
the Shelf Registration.


 


(n)  In connection with an underwritten offering
for the resale of at least $25 million of Securities (an “Underwritten Offering”), the Company shall
(i) make reasonably available for inspection by the Holders, any
underwriter participating in any disposition pursuant to the Shelf Registration
Statement and any attorney, accountant or other agent retained by the Holders
or any such underwriter, all relevant financial and other records, pertinent
corporate documents and properties of the Company and (ii) cause the
Company’s officers, directors, employees and use its reasonable best efforts to
cause the Company’s accountants and auditors to supply all relevant information
reasonably requested by the Holders or any such underwriter, attorney,
accountant or agent in connection with the Shelf Registration Statement, in
each case,


 


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as shall be reasonably
necessary to enable such persons, to conduct a reasonable investigation within
the meaning of Section 11 of the Securities Act; provided, however,
that (x) the Company and its officers, directors, employees, accountants and
auditors shall in no event be required to make available information which the
Company believes, in its sole judgment, constitutes material non-public
information (including but not limited to proprietary or sensitive business
information the disclosure of which the Company believes would be harmful to
its business) and (y) the foregoing inspection and information gathering shall
be coordinated on behalf of the Initial Purchasers by you and on behalf of the
other parties, by one counsel designated by and on behalf of such other parties
as described in Section 3 hereof.


 


(o)  In connection with an Underwritten Offering,
the Company, if requested by any Holder of Securities covered by the Shelf
Registration Statement, shall cause (i) its counsel to deliver an opinion
and updates thereof relating to the Securities in customary form addressed to
such Holders and the managing underwriters, if any, thereof, and dated, in the
case of the initial opinion, the effective date of such Shelf Registration
Statement (it being agreed that the matters to be covered by such opinion shall
include, without limitation, the due incorporation and good standing of the
Company, MACSTEEL Monroe
and TruSeal Technologies, Inc.
and any other subsidiaries of the Company that meet the definition of
“significant subsidiary” as defined in Rule 1-02(w) of Regulation S-X
(collectively, the “Significant Subsidiaries”);
the qualification of the Company and its Significant Subsidiaries to transact
business as foreign corporations; the due authorization, execution and delivery
of the relevant agreement of the type referred to in Section 2(m) hereof
by the Company; the due authorization, execution, authentication and issuance
by the Company, and the validity and enforceability against the Company, of the
Securities; the absence of material legal or governmental proceedings involving
the Company and its subsidiaries; the absence of governmental approvals
required to be obtained in connection with the Shelf Registration Statement,
the offering and sale of the Securities, or any agreement of the type referred
to in Section 2(m) hereof; the compliance as to form of the Shelf
Registration Statement and any documents incorporated by reference therein and
of the Indenture with the requirements of the Securities Act and the Trust
Indenture Act, respectively; and, as of the date of the opinion and as of the
effective date of the Shelf Registration Statement or most recent
post-effective amendment thereto, as the case may be, the absence from the
Shelf Registration Statement and the prospectus included therein, as then
amended or supplemented, and from any documents incorporated by reference
therein of an untrue statement of a material fact or the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading (in the case of any such documents, in the
light of the circumstances existing at the time that such documents were filed
with the Commission under the Exchange Act of 1934, as amended (the “Exchange Act”)); (ii) its officers to
execute and deliver all customary documents and certificates and updates
thereof requested by any underwriters of the Securities and (iii) its
independent public accountants and the independent public accountants with
respect to any other entity for which financial information is provided in the
Shelf Registration Statement to provide to the selling Holders of the
applicable Securities and any underwriter therefor a comfort letter in
customary form and covering matters of the type customarily covered in comfort
letters in connection with primary underwritten offerings, subject to receipt
of appropriate documentation as contemplated, and only if permitted, by
Statement of Auditing Standards No. 72.


 


(p)  In connection with an Underwritten Offering,
the Company will use its reasonable best efforts to (a) if the Initial
Securities have been rated prior to the initial sale of such Initial
Securities, confirm such ratings will apply to the Securities covered by a
Registration Statement, or (b) if the Initial Securities were not
previously rated, cause the Securities covered by a Registration Statement to
be rated with the appropriate rating agencies, if so requested by holders of a
majority in aggregate principal amount of Securities covered by the Shelf
Registration Statement, or by the managing underwriters, if any.


 


(q)                                 In
the event that any broker-dealer registered under the Exchange Act shall
underwrite any Securities or participate as a member of an underwriting
syndicate or selling group or “assist in the distribution” (within the meaning
of the Conduct Rules (the “Rules”) of the National Association of


 


5

















 


Securities Dealers, Inc.
(“NASD”))
thereof, whether as a Holder of such Securities or as an underwriter, a
placement or sales agent or a broker or dealer in respect thereof, or
otherwise, in connection with an Underwritten Offering, the Company will assist
such broker-dealer in complying with the requirements of such Rules, including,
without limitation, by (i) if such Rules, including Rule 2720, shall
so require, engaging a “qualified independent underwriter” (as defined in
Rule 2720) to participate in the preparation of the Shelf Registration
Statement relating to such Securities, to exercise usual standards of due
diligence in respect thereto and, if any portion of the offering contemplated
by such Registration Statement is an underwritten offering or is made through a
placement or sales agent, to recommend the yield of such Securities,
(ii) indemnifying any such qualified independent underwriter to the extent
of the indemnification of underwriters provided in Section 5 hereof and
(iii) providing such information to such broker-dealer as may be required
in order for such broker-dealer to comply with the requirements of the Rules.


 


(r)  The Company shall use its reasonable best
efforts to take all other steps necessary to effect the registration of the Securities
covered by a Registration Statement contemplated hereby.


 


3.  Registration Expenses.  (a) All expenses of the Company incident to
its performance of and compliance with this Agreement will be borne by the
Company, regardless of whether a Registration Statement is ever filed or
becomes effective, including without limitation;


 


(i)  all registration and filing fees and
expenses;


 


(ii) all fees
and expenses of compliance with federal securities and state “blue sky” or
securities laws;


 


(iii) all
expenses of printing (including printing certificates for the Securities to be
issued and printing of Prospectuses), messenger and delivery services;


 


(iv) all fees
and disbursements of counsel for the Company;


 


(v) all
application and filing fees in connection with listing the Securities on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and


 


(vi) all fees
and disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters required by or
incident to such performance).


 


The Company will bear its
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expenses
of any annual audit and the fees and expenses of any person, including special
experts, retained by the Company.


 


(b)  In connection with the Shelf Registration
Statement required by this Agreement, the Company will reimburse the Initial
Purchasers and the Holders of Securities covered by the Shelf Registration
Statement, for the reasonable fees and disbursements of not more than one
counsel, designated by the Holders of a majority in principal amount of the
Securities covered by the Shelf Registration Statement (provided that Holders
of Common Stock issued upon the conversion of the Initial Securities shall be
deemed to be Holders of the aggregate principal amount of Initial Securities
from which such Common Stock was converted) to act as counsel for the Holders
in connection therewith.


 


4.  Indemnification.  (a)  The Company agrees to
indemnify and hold harmless each Holder and each person, if any, who controls
such Holder within the meaning of the Securities Act or the Exchange Act (each
Holder, and such controlling persons are referred to collectively as the “Indemnified
Parties”)
from and against any losses, claims, damages or liabilities, joint or several,
or any actions in respect thereof


 


6

















 


(including, but not
limited to, any losses, claims, damages, liabilities or actions relating to
purchases and sales of the Securities) to which each Indemnified Party may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Shelf Registration Statement or prospectus including any
document incorporated by reference therein, or in any amendment or supplement
thereto or in any preliminary prospectus relating to the Shelf Registration, or
arise out of, or are based upon, the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse, as incurred, the
Indemnified Parties for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage, liability
or action in respect thereof; provided, however, that
(i) the Company shall not be liable in any such case to the extent that
such loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
the Shelf Registration Statement or prospectus or in any amendment or
supplement thereto or in any preliminary prospectus relating to the Shelf
Registration in reliance upon and in conformity with written information pertaining
to such Holder and furnished to the Company by or on behalf of such Holder
specifically for inclusion therein and (ii) with respect to any untrue
statement or omission or alleged untrue statement or omission made in any
preliminary prospectus relating to the Shelf Registration Statement, the
indemnity agreement contained in this subsection (a) shall not inure to
the benefit of any Holder from whom the person asserting any such losses,
claims, damages or liabilities purchased the Securities concerned, to the
extent that a prospectus relating to such Securities was required to be
delivered by such Holder under the Securities Act in connection with such
purchase and any such loss, claim, damage or liability of such Holder results
from the fact that there was not sent or given to such person, at or prior to
the written confirmation of the sale of such Securities to such person, a copy
of the final prospectus; provided  further, however, that
this indemnity agreement will be in addition to any liability which the Company
may otherwise have to such Indemnified Party. 
The Company shall also indemnify underwriters, their officers and
directors and each person who controls such underwriters within the meaning of
the Securities Act or the Exchange Act to the same extent as provided above
with respect to the indemnification of the Holders of the Securities if
requested by such Holders.


 


(b)  Each Holder, severally and not jointly, will
indemnify and hold harmless the Company, its officers and directors and each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act from and against any losses, claims, damages or
liabilities or any actions in respect thereof, to which the Company or any such
controlling person may become subject under the Securities Act, the Exchange
Act or otherwise, insofar as such losses, claims, damages, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Shelf Registration Statement or
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus relating to the Shelf Registration, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or omission or alleged untrue statement
or omission was made in reliance upon and in conformity with written
information pertaining to such Holder and furnished to the Company by or on
behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Company for any legal or other expenses reasonably incurred by
the Company or any such controlling person in connection with investigating or
defending any loss, claim, damage, liability or action in respect thereof.  This indemnity agreement will be in addition
to any liability that such Holder may otherwise have to the Company or any of
its controlling persons.


 


(c)  Promptly after receipt by an indemnified
party under this Section 4 of notice of the commencement of any action or
proceeding (including a governmental investigation), such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 4, notify the indemnifying party of the commencement
thereof; but the failure to notify the indemnifying party shall not relieve it
from any liability that it may have under subsection (a) or (b) above
except to the extent


 


7

















 


that it has been
materially prejudiced (through the forfeiture of substantive rights or
defenses) by such failure; and provided further that the failure to notify the
indemnifying party shall not relieve it from any liability that it may have to
an indemnified party otherwise than under subsection (a) or (b)
above.  In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party (who shall not, except with
the consent of the indemnified party, be counsel to the indemnifying party),
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof the indemnifying party will not be
liable to such indemnified party under this Section 4 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof.  No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement (i) includes an unconditional release
of such indemnified party from all liability on any claims that are the subject
matter of such action, and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.


 


(d)  If the indemnification provided for in this
Section 4 is unavailable or insufficient to hold harmless an indemnified
party under subsections (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to in subsection (a) or (b) above in such proportion as is
appropriate to reflect the relative fault of the indemnifying party or parties
on the one hand and the indemnified party on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations.  The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or such Holder or such other
indemnified party, as the case may be, on the other, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.  The amount
paid by an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (d) shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d).  Notwithstanding any other provision of this
Section 4(d), the Holders shall not be required to contribute any amount
in excess of the amount by which the net proceeds received by such Holders from
the sale of the Securities pursuant to the Shelf Registration Statement exceeds
the amount of damages which such Holders have otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission.  No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. 
For purposes of this paragraph (d), each person, if any, who controls
such indemnified party within the meaning of the Securities Act or the Exchange
Act shall have the same rights to contribution as such indemnified party and
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act shall have the same rights to contribution
as the Company.


 


(e)  The agreements contained in this
Section 4 shall survive the sale of the Securities pursuant to the Shelf
Registration Statement and shall remain in full force and effect, regardless of
any termination or cancellation of this Agreement or any investigation made by
or on behalf of any indemnified party.


 


5.  Additional Interest and Additional Amounts Under
Certain Circumstances. 
(a)  Additional interest as specified in this Section 5
(the “Additional
Interest”)
with respect to the Initial Securities and additional amounts as specified in
this Section 5 (the “Additional Amounts”)
with respect to Common


 


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Stock issued upon
conversion of Initial Securities shall be assessed as follows if any of the
following events occur (each such event in clauses (i) through (iv) below
being herein called a “Registration Default”):


 


(i)  the Shelf Registration Statement has not
been filed with the Commission by the 90th day after the first date
of original issuance of the Initial Securities;


 


(ii)  the Shelf Registration Statement has not
been declared effective by the Commission by the 180th day after the
first date of original issue of the Initial Securities;


 


(iii)  the Shelf Registration Statement is declared
effective by the Commission but (A) the Shelf Registration Statement
thereafter ceases to be effective or (B) the Shelf Registration Statement
or the Prospectus ceases to be usable in connection with resales of Transfer
Restricted Securities (as defined below) during the periods specified herein
because either (1) any event occurs as a result of which the Prospectus
forming part of such Shelf Registration Statement would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein in the light of the circumstances under which they
were made not misleading, or (2) it shall be necessary to amend such Shelf
Registration Statement or supplement the related prospectus, to comply with the
Securities Act or the Exchange Act or the respective rules thereunder; or


 


(iv)  the Company has failed to timely comply with
any of its obligations set forth in Section 2(l) hereof.


 


Each of the foregoing
will constitute a Registration Default whatever the reason for any such event
and whether it is voluntary or involuntary or is beyond the control of the
Company or pursuant to operation of law or as a result of any action or
inaction by the Commission.


 


Additional Interest shall
accrue on the Initial Securities over and above the interest set forth in the
title of the Initial Securities from and including the date on which any such
Registration Default shall occur to but excluding the date on which all such
Registration Defaults have been cured, at a rate of 0.50% per annum  (the “Additional Interest Rate”) and Additional
Amounts shall accumulate on any Common Stock issued upon conversion of Initial
Securities at an equivalent rate (the “Additional
Amounts Rate”).


 


(b)  After the effectiveness of the initial Shelf
Registration Statement, the Company may suspend the availability of any Shelf
Registration Statement and the use of any prospectus by written notice to the
Holders for a period or periods not to exceed an aggregate of 45 calendar days
in any 90-calendar day period, and not to exceed 90 calendar days in any
twelve-month period (each such period, a “Deferral
Period”) without incurring Additional Interest or Additional Amounts
if:


 


(i)                                     an
event has occurred and is continuing as a result of which the Shelf
Registration Statement would, in the Company’s reasonable judgment, contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and


 


(ii)                                  the
Company determines in good faith that the disclosure of such event at such time
would have a material adverse effect on the Company and its subsidiaries taken
as a whole and is not otherwise then required by law to be disclosed;


 


provided,
that in the event the disclosure relates to a proposed or pending material
business transaction that is previously not disclosed publicly, the disclosure
of which would, in the Company’s judgment, impede the Company’s ability to
consummate such transaction, the Company may extend a Deferral Period from 45
calendar days to 60 calendar days in any 90-day calendar day period without
incurring Additional Interest


 


9

















 


or Additional Amounts; provided,
however, that any such extension of a Deferral Period shall be included
in calculating the 90 calendar days referred to above.


 


(c)  Any amounts of Additional Interest due on
the Initial Securities pursuant to Section 5(a) will be payable in cash on the
regular interest payment dates with respect to the Initial Securities.  Any Additional Amounts due on Common Stock
issued upon conversion of Initial Securities pursuant to Section 5(a) will be
payable in cash on any regular dividend payment date or if no dividend is
otherwise payable on Common Stock, on the regular interest payment dates with
respect to the Initial Securities.  With
respect to the Initial Securities, the amount of Additional Interest will be
determined by multiplying the applicable Additional Interest Rate by the
principal amount of the Initial Securities, further multiplied by a fraction,
the numerator of which is the number of days such Additional Interest Rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months), and the denominator of which is 360.  With respect to Common Stock issued upon
conversion of Initial Securities, the Additional Amounts payable per share of
Common Stock will be determined by multiplying the applicable Additional
Amounts Rate by the Applicable Conversion Price, further multiplied by a fraction,
the numerator of which is the number of days such Additional Amounts Rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months), and the denominator of which is 360.


 


(d)  “Transfer Restricted Securities” means each
Security until (i) the date on which the resale of such Security has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement or (ii) the date on which such
Security is distributed to the public pursuant to Rule 144 under the
Securities Act or is saleable pursuant to Rule 144(k) under the Securities
Act.


 


(e)  “Applicable
Conversion Price” means, as of any date of determination, $1,000
divided by the Conversion Rate (as defined in the Indenture) then in effect as
of the date of determination or, if no Initial Securities are then outstanding,
the Conversion Rate that would have been in effect were the Initial Securities
then outstanding.


 


6.  Rules 144 and 144A.  The Company shall use its reasonable best
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act in a timely manner and, if at any time the Company is not
required to file such reports, it will, upon the request of any Holder, make
publicly available other information so long as necessary to permit sales of
their securities pursuant to Rules 144 and 144A.  The Company covenants that it will take such further action as
any Holder may reasonably request, all to the extent required from time to time
to enable such Holder to sell Transfer Restricted Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)).  The Company will provide a copy of this
Agreement to prospective purchasers of Securities identified to the Company by
the Initial Purchasers upon request. 
Upon the request of any Holder, the Company shall deliver to such Holder
a written statement as to whether it has complied with such requirements.  Notwithstanding the foregoing, nothing in
this Section 6 shall be deemed to require the Company to register any of
its securities pursuant to the Exchange Act.


 


7.  Underwritten Registrations.  If any of the Transfer Restricted Securities
covered by the Shelf Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
administer the offering (“Managing Underwriters”) will be selected by
the holders of a majority in aggregate principal amount of such Transfer
Restricted Securities to be included in such offering (provided that holders of
Common Stock issued upon conversion of the Initial Securities shall not be
deemed holders of Common Stock, but shall be deemed to be holders of the
aggregate principal amount of Initial Securities from which such Common Stock
was converted).


 


No person may participate
in any underwritten registration hereunder unless such person (i) agrees to
sell such person’s Transfer Restricted Securities on the basis reasonably
provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements and (ii) completes


 


10

















 


and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.


 


8.  Miscellaneous.


 


(a)  Remedies. 
The Company acknowledges and agrees that any failure by the Company to
comply with its obligations under Section 1 hereof may result in material
irreparable injury to the Initial Purchasers or the Holders for which there is
no adequate remedy at law, that it will not be possible to measure damages for
such injuries precisely and that, in the event of any such failure, the Initial
Purchasers or any Holder may obtain such relief as may be required to
specifically enforce the Company’s obligations under Sections 1 hereof.  The Company further agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.


 


(b)  No Inconsistent Agreements.  The Company will not on or after the date of
this Agreement enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof.  The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders
of the Company’s securities under any agreement in effect on the date hereof.


 


(c)  Amendments and Waivers.  The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Company and the written
consent of the holders of a majority in principal amount of the Securities
affected by such amendment, modification, supplement, waiver or consents
(provided that holders of Common Stock issued upon conversion of Initial
Securities shall not be deemed holders of Common Stock, but shall be deemed to
be holders of the aggregate principal amount of Initial Securities from which
such Common Stock was converted). 
Without the consent of the Holder of each Security, however, no
modification may change the provisions relating to the payment of Additional
Interest.


 


(d)  Notices. 
All notices and other communications provided for or permitted hereunder
shall be made in writing by hand delivery, first-class mail, facsimile
transmission, or air courier which guarantees overnight delivery:


 


(1)  if to a Holder of the Securities, at the
most current address given by such Holder to the Company.


 


(2)  if to the Initial Purchasers;


 


	
   

  	
   

  	
  Credit Suisse First
  Boston LLC

  
	
   

  	
   

  	
  Eleven Madison Avenue

  
	
   

  	
   

  	
  New York, NY 10010-3629

  
	
   

  	
   

  	
  Fax No.:  (212) 325-8278

  
	
   

  	
   

  	
  Attention:  Transactions Advisory Group

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Simpson Thacher &
  Bartlett LLP

  
	
   

  	
   

  	
  425 Lexington Avenue

  
	
   

  	
   

  	
  New York, NY  10017

  
	
   

  	
   

  	
  Fax No.:  (212) 455-2502

  
	
   

  	
   

  	
  Attention:  Andrew R. Keller, Esq.

  



 


11

















 


	
  (3)

  	
   

  	
  if to the Company, at
  its address as follows:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Quanex Corporation

  
	
   

  	
   

  	
  1900 West Loop South

  
	
   

  	
   

  	
  Suite 1500

  
	
   

  	
   

  	
  Houston, TX  77027

  
	
   

  	
   

  	
  Fax No.:  (713) 626-7549

  
	
   

  	
   

  	
  Attention:  

  	
  Kevin P. Delaney, Esq.

  
	
   

  	
   

  	
   

  	
  General
  Counsel

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fulbright &
  Jaworksi LLP

  
	
   

  	
   

  	
  1301 McKinney

  
	
   

  	
   

  	
  Suite 5100

  
	
   

  	
   

  	
  Houston, TX  77010

  
	
   

  	
   

  	
  Fax No.:  (713) 651-5246

  
	
   

  	
   

  	
  Attention:  Harva Dockery, Esq.

  



 


All such notices and communications
shall be deemed to have been duly given: 
at the time delivered by hand, if personally delivered; three
business days after being deposited in the mail, postage prepaid, if
mailed; when receipt is acknowledged by recipient’s facsimile machine operator,
if sent by facsimile transmission; and on the day delivered, if sent by
overnight air courier guaranteeing next day delivery.


 


(e) Third Party Beneficiaries.  The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right
to enforce such agreements directly to the extent they may deem such
enforcement necessary or advisable to protect their rights or the rights of
Holders hereunder.


 


(f)  Successors and Assigns.  This Agreement shall be binding upon the
Company and its successors and assigns.


 


(g)  Counterparts.  This Agreement may be executed in any number of counterparts and
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.


 


(h)  Headings. 
The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.


 


(i)  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.


 


By the execution and
delivery of this Agreement, the Company submits to the nonexclusive jurisdiction
of any federal or state court in the State of New York.


 


(j)  Severability.  If any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.


 


12

















 


(k)  Securities Held by the Company.  Whenever the consent or approval of Holders
of a specified percentage of principal amount of Securities is required
hereunder, Securities held by the Company or its affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be affiliates
solely by reason of their holdings of such Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.


 


13

















 


If the foregoing is in
accordance with your understanding of our agreement, please sign and return to
the Company a counterpart hereof, whereupon this instrument, along with all
counterparts, will become a binding agreement among the several Initial
Purchasers and the Company in accordance with its terms.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  QUANEX CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


 


The foregoing
Registration


Rights Agreement is
hereby confirmed


and accepted as of the
date first


above written.


 


CREDIT SUISSE FIRST BOSTON
LLC


BEAR, STEARNS & CO.
INC.


ROBERT W. BAIRD & CO.
INCORPORATED


KEYBANC CAPITAL MARKETS,
A DIVISION OF MCDONALD INVESTMENTS INC.


 


 


	
  By:  CREDIT SUISSE FIRST BOSTON LLC

  
	
   

  
	
   

  
	
  by

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


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