TAX MATTERS AGREEMENT

Exhibit 10.2

TAX MATTERS AGREEMENT

QUANEX CORPORATION,

QUANEX BUILDING PRODUCTS LLC

AND

QUANEX BUILDING PRODUCTS CORPORATION

Dated as of December 19, 2007

Section 1.      Definition and Construction			2
Section 1.1.      Definitions of Capitalized Terms			2
Section 1.2.      Construction			10
Section 2.      Indemnification; Allocation of Responsibility for Taxes			10
Section 2.1.      Indemnification			10
Section 2.2.      Allocation of Federal Income Taxes			11
Section 2.3.      Allocation of State Income Taxes			11
Section 2.4.      Foreign Income Taxes			12
Section 2.5.      Allocation of Other Taxes			12
Section 2.6.      Distribution Taxes; Restructuring Taxes; Additional Taxes			13
Section 3.      Proration of Tax Items; Allocation of Tax Assets			14
Section 3.1.      Proration of Tax Items			14
Section 3.2.     Allocation of Tax Assets			14
Section 3.3.     Quanex Equity Awards			14
Section 4.      Preparation and Filing of Tax Returns			15
Section 4.1.     Quanex’ Responsibility			15
Section 4.2.     The Surviving Entity’s Responsibility			16
Section 4.3.     Tax Accounting Practices			16
Section 4.4.     Right to Review Combined Tax Returns			18
Section 4.5.     Adjustment Requests; Carrybacks; Utilization of Tax Assets			18
Section 5.      Payments Under this Agreement			19
Section 5.1.      Tax Payments With Respect to Combined Tax Returns and Spinco Separate Returns 19
Section 5.2.      Payments to Tax Authorities			23
Section 5.3.      Timing of Payments			23
Section 5.4.      Tax Treatment of Payments			23
Section 5.5.      Interest			23
Section 6.     Assistance and Cooperation; Retention of Tax Records			24
Section 6.1.      Assistance and Cooperation			24
Section 6.2.      Retention of Tax Records			24
Section 7.     Tax Contests			25
Section 7.1.      Notice			25
Section 7.2.      Control of Tax Contests			25

Section 7.3.      Reimbursement of Expenses			26
Section 8.     Covenants Relating to Taxes			26
Section 9.      Dispute Resolution			26
Section 10.      General Provisions			27
Section 10.1.      Effectiveness; Termination of Prior Tax Allocation Agreements			27
Section 10.2.      Survival of Obligations			27
Section 10.3.      Addresses and Notices			27
Section 10.4.      Binding Effect			29
Section 10.5.      Waiver			29
Section 10.6.      Invalidity of Provisions			29
Section 10.7.      Further Action			29
Section 10.8.      Integration			30
Section 10.9.      Construction			30
Section 10.10.      No Double Recovery			30
Section 10.11.      Setoff			30
Section 10.12.      Counterparts			30
Section 10.13.      No Third Party Rights			30
Section 10.14.      Governing Law			31

TAX MATTERS AGREEMENT

This Tax Matters Agreement (this “ Agreement ”) is entered into as of December 19, 2007, by and among Quanex Corporation, a Delaware corporation (“ Quanex ”), Quanex Building Products LLC, a Delaware limited liability company and a wholly-owned subsidiary of Quanex (“ Spinco ”), and Quanex Building Products Corporation, a Delaware corporation and a wholly-owned subsidiary of Spinco (“ Spinco Sub ”).

Recitals

Whereas , as of the date hereof, Quanex is the common parent corporation of an affiliated group (as defined in Section 1504 of the Code) of corporations (the “ Quanex Consolidated Group ”) that has elected to file consolidated U.S. federal income tax returns;

Whereas , the Quanex Consolidated Group currently includes the eligible domestic Spinco Group Members;

Whereas , after the Cutoff Date and prior to the Distribution Date, Quanex intends, pursuant to the terms of the Distribution Agreement and subject to conditions set forth therein, to transfer or cause to be transferred to Spinco all of the Spinco Assets, which represent substantially all of the assets comprising the Building Products Business, and Spinco intends to assume all of the Spinco Liabilities, as contemplated by the Distribution Agreement (the “ Contribution ”);

Whereas , after the Contribution and prior to the Distribution Date, Quanex may cause one or more of the Spinco Group Members that are corporations to convert into, merge with and into or otherwise transfer all of their assets, subject to all of their liabilities, to limited liability companies, of which Quanex or another Spinco Group Member will be the sole member (collectively, such transactions are the “ Conversions ”);

Whereas, either before or after the Distribution, Spinco will merge with and into Spinco Sub (the “ Spinco Merger ”) pursuant to the Spinco Merger Agreement;

Whereas , on the Distribution Date and pursuant to the terms of the Distribution Agreement and subject to conditions set forth therein, Quanex will distribute (the “ Distribution ”) on a pro rata basis to the holders as of the Record Date of the outstanding Quanex Common Stock (the “ Quanex Stockholders ”) either (a) all of the limited liability company interest (the “ Membership Interest ”) of Spinco (if the Spinco Merger occurs after the Distribution) or (b) the shares of Spinco Sub stock (if the Spinco Merger occurs prior to the Distribution); and

Whereas , in contemplation of the Conversions, the Contribution, the Distribution and the Spinco Merger, the Companies desire to enter into this Agreement (a) to provide for the allocation between them of the liabilities for Taxes arising prior to, as a result of and subsequent to the Distribution and (b) to provide for and agree upon other matters relating to Taxes;

AGREEMENTS

Now, Therefore , in consideration of the mutual agreements contained herein, the Companies hereby agree as follows:

Section 1. Definition and Construction .

Section 1.1. Definitions of Capitalized Terms .

For purposes of this Agreement (including the recitals hereof), the following capitalized terms shall have the meanings set forth below:

“ Accounting Cutoff Date ” means, with respect to any Spinco Group Member, any date as of the end of which there is a closing of its financial accounting records.

“ Additional Tax ” means:

(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.

For purposes of this Agreement, the term “ Additional Tax ” does not include any Distribution and Restructuring Taxes.

“ Adjustment Request ” means any formal or informal claim or request filed with any Tax Authority, or with any administrative agency or court, for the adjustment, refund or credit of Taxes, including (a) any amended Tax Return claiming adjustment to the Taxes as reported on the Tax Return or, if applicable, as previously adjusted, or (b) any claim for refund or credit of Taxes previously paid.

“ Affiliate ” means any Person that directly or indirectly is “controlled” by the other Person in question. For purposes of the term “ Affiliate ”, the term “controlled” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. Except as otherwise provided herein, the term “ Affiliate ” shall refer to Affiliates of a Person as determined after the Distribution.

 

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“ Agreement ” shall have the meaning provided in the preamble.

“ Building Products Business ” means the building products business conducted by Quanex through the Spinco Group.

“ Carryback Item ” means any net operating loss, net capital loss, excess tax credit or other similar Tax item which may or must be carried from a Tax Period to a previous Tax Period under the Code or other applicable Tax Law.

“ Code ” means the Internal Revenue Code of 1986, as amended, or any successor law.

“ Combined Tax Return ” means, with respect to any Tax, a Tax Return filed on a combined, consolidated or unitary basis that includes one or more Quanex Group Members and one or more Spinco Group Members or in which Tax Items of one or more Quanex Group Members may be combined with or offset against the Tax Items of one or more Spinco Group Members.

“ Companies ” means Quanex, Spinco and Spinco Sub, collectively, and “ Company ” means, as the context requires, Quanex, Spinco or Spinco Sub.

“ Controlling Company ” shall have the meaning provided in Section 7.3 .

“ Contribution ” shall have the meaning provided in the recitals to this Agreement.

“ Conversions ” shall have the meaning provided in the recitals to this Agreement.

“ Cutoff Date ” means October 31, 2007.

“ Default Rate ” means a rate of interest equal to the underpayment rate provided in Section 6621(c) of the Code, determined as of the date any applicable payment required to be made under this Agreement is due.

“ Distributed Corporation ” shall have the meaning provided in Section 4.3(b)(2)(ii) .

“ Distribution ” shall have the meaning provided in the recitals to this Agreement.

“ Distribution Agreement ” means that certain Distribution Agreement dated December 19, 2007, as amended from time to time, among Quanex, Spinco and Spinco Sub setting forth the corporate transactions required to effect the Distribution, and to which this Agreement is attached as an exhibit.

“ Distribution Date ” means the Distribution Date as that term is defined in the Distribution Agreement.

“ Distribution and Restructuring Taxes ” means (i) any Taxes, calculated without regard to any Tax Assets of the Quanex Group, imposed on any Quanex or Spinco Group Member resulting from, or arising in connection with, the Distribution (for the avoidance of doubt, including any liability for Taxes, withholding taxes or other Taxes arising from a failure to properly withhold Taxes in respect of the Distribution) or (ii) any and all Taxes imposed on or attributable to any Quanex or Spinco Group Member that arise from or are attributable to such Group Member’s distribution, transfer, assignment, other disposition, receipt, purchase or other acquisition of the Spinco Assets pursuant to the Restructuring, however effected.

“ Election Statement ” shall have the meaning provided in Section 4.3(b)(2)(ii) .

“ Entity ” means a partnership (whether general or limited), a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or any other entity, without regard to whether it is treated as a disregarded entity for U.S. federal tax purposes.

“ Equity Award ” means any equity-based incentive compensation award, grant or agreement that provides for the delivery of shares of Quanex stock to any Person as compensation for services, including, but not limited to, an option to acquire shares of Quanex stock (or other equity-based incentives, the economic value of which is designed to mirror that of an option, including incentive stock options, non-qualified stock options, discounted non-qualified stock options, cliff options and tandem stock options), restricted stock, restricted stock units, stock appreciation rights, phantom stock units, performance shares, dividend equivalents, stock payments, deferred stock payments, performance-based awards or warrants granted under any plan, agreement or arrangement to the extent shares of Quanex stock are issued, issuable or transferred (as opposed to cash compensation).

“ Federal Income Tax ” means any Tax imposed by Subtitle A or F of the Code.

“ Final Determination ” means the final resolution of liability for any Tax, which resolution may be for a specific issue or adjustment or for a Taxable Period, (a) by IRS Form 870 or 870-AD (or any successor forms thereto), on the date of acceptance by or on behalf of the Controlling Company, or by a comparable form under the Tax Laws of a state, local or foreign taxing jurisdiction, except that a Form 870 or 870-AD or comparable form shall not constitute a Final Determination to the extent that it reserves (whether by its terms or by operation of law) the right of the Controlling Company to file a claim for refund or the right of the Tax Authority to assert a further deficiency in respect of such issue or adjustment or for such Taxable Period (as the case may be); (b) by a decision, judgment, decree, or other order by a court of competent jurisdiction, which has become final and unappealable; (c) by a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the Tax Laws of a state, local or foreign taxing jurisdiction; (d) by any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund may be recovered (including by way of offset) by the jurisdiction imposing such Tax; (e) by a final settlement resulting from a treaty-based competent authority determination; or (f) by any other final disposition, including by reason of the expiration of the applicable statute of limitations.

“ Foreign Income Tax ” means any Tax imposed by any foreign country or any possession of the United States, or by any political subdivision of any foreign country or possession of the United States, which is an “income tax” as defined in Treasury Regulations Section 1.901-2.

“ Group ” means the Quanex Group or the Spinco Group, as the context requires, and the term “ Groups ” means the Quanex Group and the Spinco Group.

“ Group Member ” means, as the context requires, any Quanex Group Member or any Spinco Group Member.

“ Income Tax ” means each of any Federal Income Tax, State Income Tax or Foreign Income Tax, as the context requires.

“ Income Tax Return ” means any Tax Return filed or required to be filed with any Tax Authority with respect to an Income Tax.

“ Indemnification Expenses ” shall have the meaning provided in Section 7.3 .

“ Indemnified Company ” means (a) Quanex, in cases where it is entitled to be indemnified for Losses by the Surviving Entity under this Agreement, and (b) the Surviving Entity, in cases where it is entitled to be indemnified for Losses by Quanex under this Agreement.

“ Indemnifying Company ” means (i) Quanex, in cases where it is obligated to indemnify the Surviving Entity for Losses under this Agreement, and (ii) the Surviving Entity, in cases where it is obligated to indemnify Quanex for Losses under this Agreement.

“ Independent Firm ” means a nationally recognized accounting firm; provided , however , that such term shall not include any accounting firm that performs or has performed audit services with respect to any Company.

“ IRS ” means the Internal Revenue Service.

“ Loss ” means any loss, cost, fine, penalty, fee, damage, obligation, liability, payment in settlement, Tax or other expense of any kind, including reasonable attorneys’ fees and costs, but excluding any consequential, special, punitive or exemplary damages.

“ Membership Interest ” shall have the meaning provided in the recitals to this Agreement.

“ Other Tax ” means any Tax that is not an Income Tax, and specifically includes any value added tax, any real or personal property Tax, any flat minimum dollar Tax, any withholding Tax or any capital duty tax.

“ Payment Period ” shall have the meaning provided in Section 5.5 .

“ Person ” means an individual, any Entity or a governmental entity or any department, agency or political subdivision thereof.

“ Post-Cutoff Period ” means, with respect to any Income Tax, any Tax Period beginning after the Cutoff Date, and, in the case of any Straddle Period, the portion of such Straddle Period beginning on the day after the Cutoff Date.

“ Pre-Cutoff Period ” means, with respect to any Income Tax, any Tax Period ending on or before the Cutoff Date, and, in the case of any Straddle Period, the portion of such Straddle Period ending on and including the Cutoff Date.

“ Preparing Company ” shall have the meaning provided in Section 5.1(c) .

“ Prior Tax Allocation Agreements ” means any written or oral agreement or any other arrangements relating to the allocation of Taxes existing between or among any Quanex Group Member and any Spinco Group Member as of the Cutoff Date (other than this Agreement).

“ Quanex ” shall have the meaning provided in the preamble to this Agreement.

“ Quanex Combined Tax Return ” means a Combined Tax Return that a Quanex Group Member is responsible for filing under applicable Tax Law.

“ Quanex’ Combined Tax Return Estimated Income Tax Payment ” shall have the meaning provided in Section 5.1(a)(1)(ii) .

“ Quanex’ Combined Tax Return Separate Income Tax Liability ” shall have the meaning provided in Section 5.1(b)(1)(ii) .

“ Quanex Consolidated Group ” shall have the meaning provided in the recitals to this Agreement.

“ Quanex’ Estimated Income Tax Payment ” shall have the meaning provided in Section 5.1(a)(2) .

“ Quanex Filed Returns ” shall have the meaning provided in Section 4.1(a) .

“ Quanex Group ” means, collectively, Quanex and its direct and indirect Subsidiaries, but excluding any Spinco Group Member.

“ Quanex Group Member ” means, individually, each member of the Quanex Group, and the term “ Quanex Group Members ” means, collectively, as the context requires, all or less than all of the members of the Quanex Group.

“ Quanex Indemnitees ” shall have the meaning provided in Section 2.1(b) .

“ Quanex Separate Return ” means, with respect to any Tax, a Tax Return that includes only Quanex Group Members.

“ Quanex’ Separate Income Tax Liability ” shall have the meaning provided in Section 5.1(b)(2) .

“ Quanex Stockholders ” shall have the meaning provided in the recitals to this Agreement.

“ Receiving Company ” shall have the meaning provided in Section 5.1(c) .

“ Record Date ” means the Record Date as that term is defined in the Distribution Agreement.

“ Reimbursement Statement ” shall have the meaning provided in Section 7.3 .

“ Restructuring ” means the restructuring by Quanex of the Spinco Assets related to the Building Products Business to cause the Spinco Assets to be held by the Spinco Group, including the Conversions, but does not include the Distribution.

“ Revised Tax Payment ” shall have the meaning provided in Section 5.1(d) .

“ Revised Tax Schedule ” shall have the meaning provided in Section 5.1(d) .

“ Section 336(e) Election ” shall have the meaning provided in Section 4.3(b)(2)(ii) .

“ Separate Company Tax ” means any Tax computed by reference to the assets and activities of a member or members of a single Group.

“ Spinco ” shall have the meaning provided in the preamble to this Agreement.

“ Spinco Assets ” means the Spinco Assets as that term is defined in the Distribution Agreement.

“ Spinco Combined Tax Return ” means a Combined Tax Return that a Spinco Group Member is responsible for filing under applicable Tax Law.

“ Spinco’s Estimated Income Tax Payment ” shall have the meaning provided in Section 5.1(a)(1)(i) .

“ Spinco Filed Returns ” shall have the meaning provided in Section 4.2 .

“ Spinco Group ” means, collectively, Spinco, Spinco Sub and the Entities listed on Schedule 1.1 and each successor to any such Entity and each Entity to which the assets and liabilities of any such Entity are transferred and assumed, respectively, as a result of the Conversions; provided , that if any Entity listed on Schedule 1.1 is not a Subsidiary of Spinco immediately after the Distribution, such Entity shall cease to be included in the Spinco Group immediately prior to the Distribution.

“ Spinco Group Member ” means, individually, each member of the Spinco Group, and the term “ Spinco Group Members ” means, collectively, as the context requires, all or less than all of the members of the Spinco Group.

“ Spinco Indemnitees ” shall have the meaning provided in Section 2.1(a) .

“ Spinco Liabilities ” means the Spinco Liabilities as that term is defined in the Distribution Agreement.

“ Spinco Merger ” shall have the meaning provided in the recitals to this Agreement.

“ Spinco Merger Agreement ” means the Agreement and Plan of Merger to be entered into by and between Spinco and Spinco Sub prior to the Distribution Date.

“ Spinco’s Separate Income Tax Liability ” shall have the meaning provided in Section 5.1(b)(1)(i) .

“ Spinco Separate Return ” means a Tax Return that includes one or more Spinco Group Members and does not include any Quanex Group Member, including any such Tax Return filed for Federal Income Tax purposes by an affiliated group (as defined in Section 1504 of the Code) of corporations the common parent of which is a Spinco Group Member or any other corporation that is not a Quanex Group Member.

“ Spinco Sub ” shall have the meaning provided in the preamble to this Agreement.

“ State Income Tax ” means any Tax imposed by any state of the United States, the District of Columbia or any political subdivision of the foregoing, which is imposed on or measured, in whole or in part, by income, including franchise Taxes based on income.

“ Straddle Period ” means any Tax Period that begins on or before and ends after the Cutoff Date.

“ Stub Period ” means the Tax Period, or the portion of any Tax Period, that begins on the day after the Cutoff Date and ends on the Distribution Date.

“ Subsidiary ” means, with respect to any Person, each Entity that such Person directly or indirectly owns, beneficially or of record (a) an amount of voting securities of other interests in such Entity that is sufficient to enable such Person to elect at least a majority of the members of such Entity’s board of directors or other governing body or (b) at least 50% of the outstanding equity or financial interests of such Entity.

“ Surviving Entity ” means (a) Spinco prior to the effective time of the Spinco Merger and (b) Spinco Sub at and after the effective time of the Spinco Merger.

“ Tax ” or “ Taxes ” means any income, gross income, gross receipts, profits, capital stock, capital duty, franchise, withholding, payroll, social security, workers compensation, unemployment, disability, property, ad valorem, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, value added, alternative minimum, estimated or other similar tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax) imposed by any Tax Authority, and any interest, penalties, additions to tax or additional amounts in respect of the foregoing.

“ Tax Asset ” means any Tax Item that has accrued for Tax purposes, but has not been used during a Taxable Period, and that could reduce a Tax in another Tax Period, including a net operating loss, net capital loss, investment tax credit, foreign tax credit, research and experimentation credit, charitable deduction or credit related to alternative minimum tax or any other Tax credit, but does not include the tax basis of an asset.

 

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“ Tax Authority ” means, with respect to any Tax, the governmental entity or political subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such governmental entity or political subdivision, including the IRS.

“ Tax Benefit ” means any refund received, credit or other reduction of a Tax liability (including any reduction in estimated Taxes) as a result of a Tax Item.

“ Tax Contest ” means an audit, review, examination or any other administrative or judicial proceeding with the purpose or effect of redetermining Taxes of any member of any Group (including any administrative or judicial review of any claim for refund) for any Tax Period.

“ Tax Detriment ” means an increase in the Tax liability of any Group Member for any Tax Period or a decrease in a Tax Asset of any Group Member. Except as otherwise provided in this Agreement, a Tax Detriment shall be deemed to have been realized from a Tax Item in a Tax Period only if and to the extent that the Tax liability of the Group Member for such Tax Period, after taking into account the effect of the Tax Item on the Tax liability of such Group Member in the current Tax Period and all prior Tax Periods, is more than it would have been if such Tax liability were determined without regard to such Tax Item.

“ Tax Item ” means, with respect to any Tax, any item of income, gain, loss, deduction or credit, or other attribute that may have the effect of increasing or decreasing any Tax.

“ Tax Law ” means the law of any Tax Authority, including the Code and any controlling judicial or administrative interpretations of such law relating to any Tax.

“ Tax Payment ” means any payment by the Surviving Entity to Quanex or by Quanex to the Surviving Entity, as the case may be, that is contemplated in Section 5.1 .

“ Tax Period ” means, with respect to any Tax, the period for which the Tax is reported as provided under the Code or other applicable Tax Law.

“ Tax Records ” means Tax Returns, Tax Return workpapers, documentation relating to any Tax Contests and any other books of account or records required to be maintained under the Code or other applicable Tax Laws or under any record retention agreement with any Tax Authority.

“ Tax Return ” means any report, return, declaration, statement, form or other information required to be filed with or submitted to any Tax Authority in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Tax Law relating to any Tax, including any attachments, exhibits or other materials submitted with any of the foregoing, and including any amendments or supplements to any of the foregoing.

“ Tax Schedule ” shall have the meaning provided in Section 5.1(c) .

“ Treasury Regulations ” means the regulations promulgated from time to time under the Code as in effect for the relevant Tax Period.

Other capitalized terms defined elsewhere in this Agreement shall have the meanings given them.

Section 1.2. Construction .

Unless the context otherwise requires: (a) references to a Section (other than in connection with the Code or the Treasury Regulations) refer to a section of this Agreement; (b) the word “including” shall mean “including, but not limited to”; and (c) words used in the singular shall also denote the plural, and words used in the plural shall also denote the singular. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 2. Indemnification; Allocation of Responsibility for Taxes .

Section 2.1. Indemnification .

(a) Quanex’ Indemnity of the Surviving Entity .

Quanex shall indemnify the Surviving Entity, each other Spinco Group Member and their respective directors, managers, officers and employees (collectively, the “ Spinco Indemnitees ”), and hold them harmless from and against any and all Losses that arise from or are attributable to:

(1) any and all Taxes that do not relate or are not attributable to the Building Products Business (for the avoidance of doubt, other than Taxes arising out of the Spinco Group’s operations after the Cutoff Date);

(2) any and all Taxes that are specifically allocated to or are the responsibility of Quanex under this Agreement;

(3) any failure by Quanex to make a payment required by this Agreement to the Surviving Entity when due;

(4) any breach or nonperformance, as appropriate, by Quanex of any of its representations, warranties or covenants contained in this Agreement; and

(5) except as provided in Section 2.1(b) , any Taxes of Quanex or any member of the Quanex Consolidated Group imposed on any Spinco Group Member by reason of being severally liable for such Taxes pursuant to Treasury Regulations Section 1.1502-6 or any analogous provision of Tax Law.

(b) The Surviving Entity’s Indemnity of Quanex .

The Surviving Entity shall indemnify Quanex, each other Quanex Group Member and their respective directors, officers and employees (collectively, the “ Quanex Indemnitees ”), and hold them harmless from and against any and all Losses that arise from or are attributable to:

(1) any and all Taxes that are specifically allocated to or are the responsibility of the Surviving Entity under this Agreement;

(2) any failure by the Surviving Entity to make a payment required by this Agreement to Quanex when due; and

(3) any breach or nonperformance, as appropriate, by Spinco or Spinco Sub of any of its representations, warranties or covenants contained in this Agreement.

Section 2.2. Allocation of Federal Income Taxes .

Except as provided in Section 2.6 , the responsibility for Federal Income Taxes, including any adjustment to such Federal Income Taxes as a result of a Final Determination, imposed on or attributable to the Building Products Business shall be allocated between Quanex and the Surviving Entity as follows:

(a) Quanex’ Responsibility for Federal Income Taxes .

Quanex shall be responsible for any and all Federal Income Taxes to the extent such Federal Income Taxes are imposed on or are attributable to the Building Products Business for any Pre-Cutoff Period.

(b) The Surviving Entity’s Responsibility for Federal Income Taxes .

Except as provided in Section 2.2(a) , the Surviving Entity shall be responsible for any and all Federal Income Taxes that are imposed on or are attributable to the Building Products Business.

Section 2.3. Allocation of State Income Taxes .

Except as provided in Section 2.6 , the responsibility for any and all State Income Taxes, including any adjustment to such State Income Taxes as a result of a Final Determination, imposed on or attributable to the Building Products Business shall be allocated between Quanex and the Surviving Entity as follows:

(a) Quanex’ Responsibility for State Income Taxes .

Quanex shall be responsible for any and all State Income Taxes to the extent such State Income Taxes are imposed on or are attributable to the Building Products Business for any Pre-Cutoff Period.

(b) The Surviving Entity’s Responsibility for State Income Taxes .

Except as provided in Section 2.3(a) , the Surviving Entity shall be responsible for any and all State Income Taxes that are imposed on or are attributable to the Building Products Business.

Section 2.4. Foreign Income Taxes .

Except as provided in Section 2.6 , the responsibility for Foreign Income Taxes, including any adjustment to such Foreign Income Taxes as a result of a Final Determination, imposed on or attributable to the Building Products Business shall be allocated between Quanex and the Surviving Entity as follows:

(a) Quanex’ Responsibility for Foreign Income Taxes .

Quanex shall be responsible for any and all Foreign Income Taxes to the extent such Foreign Income Taxes are imposed on or are attributable to the Building Products Business for any Pre-Cutoff Period.

(b) The Surviving Entity’s Responsibility for Foreign Income Taxes .

Except as provided in Section 2.4(a) , the Surviving Entity shall be responsible for any and all Foreign Income Taxes that are imposed on or are attributable to the Building Products Business.

Section 2.5. Allocation of Other Taxes .

Except as provided in Section 2.6 , the responsibility for Other Taxes, including any adjustment to such Other Taxes as a result of a Final Determination, imposed on or attributable to the Building Products Business shall be allocated between Quanex and the Surviving Entity as follows:

(a) Quanex’ Responsibility for Other Taxes .

Quanex shall be responsible for any and all Other Taxes imposed on or attributable to the Building Products Business to the extent that such Other Taxes are due and payable on or prior to the Cutoff Date.

(b) The Surviving Entity’s Responsibility for Other Taxes .

The Surviving Entity shall be responsible for any and all Other Taxes imposed on or attributable to the Building Products Business to the extent that such Other Taxes are due and payable after the Cutoff Date.

Section 2.6. Distribution Taxes; Restructuring Taxes; Additional Taxes .

(a) Distribution and Restructuring Taxes .

Notwithstanding any other provision of this Agreement to the contrary, the responsibility for Distribution and Restructuring Taxes shall be allocated between Quanex and the Surviving Entity as follows:

(1)  Quanex’ Responsibility for Distribution and Restructuring Taxes . Quanex shall be responsible for any and all Distribution and Restructuring Taxes to the extent the amount of the Distribution and Restructuring Taxes do not exceed $85 million. If the Distribution and Restructuring Taxes do not exceed $85 million, Quanex shall pay to the Surviving Entity an amount equal to the amount by which $85 million exceeds the amount of the Distribution and Restructuring Taxes.

(2)  The Surviving Entity’s Responsibility for Distribution and Restructuring Taxes . The Surviving Entity shall be responsible for any and all Distribution and Restructuring Taxes to the extent the amount of the Distribution and Restructuring Taxes exceeds $85 million. If the amount of the Distribution and Restructuring Taxes exceeds $85 million, the Surviving Entity shall pay to Quanex an amount equal to the amount by which the amount of the Distribution and Restructuring Taxes exceeds $85 million.

(3)  Adjustments to Distribution and Restructuring Taxes . If there is any increase to Distribution and Restructuring Taxes described in this Section 2.6(a) (for the avoidance of doubt, including as a result of a failure to properly withhold Taxes in respect of the Distribution), whether as a result of a Tax Contest, Adjustment Request or otherwise, the Surviving Entity shall pay to Quanex the amount of such increase not more than 15 days after such adjustment is made. If there is a decrease to Distribution and Restructuring Taxes described in this Section 2.6(a) , whether as a result of a Tax Contest, Adjustment Request or otherwise, Quanex shall pay to the Surviving Entity the amount of such decrease not more than 15 days after the refund from the relevant Tax Authority relating to such adjustment is made.

(b) Additional Taxes .

Except as provided in Section 2.6(a) , but notwithstanding any other provision of this Agreement to the contrary:

(1) Quanex’ Responsibility for Additional Taxes . Quanex shall be responsible for any and all Additional Taxes imposed on any Group Member that result or arise, in whole or in part, from Quanex’ br