EXHIBIT 10.16

 

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QUANEX CORPORATION

 

[STOCK-][CASH-]SETTLED
STOCK APPRECIATION RIGHT AGREEMENT

 

<<Full Name>>
Grantee

 

Date of Grant:

 

<<                        >>

 

 

 

Total Number of Shares Relating to the SARs Granted:

 

<<                        >>

 

 

 

Grant Price per Share          
(the Grant Price per Share is equal to the last per share sales price of the
common stock of Quanex Corporation for the Date of Grant and, if the stock was
not traded on the Date of Grant, the first trading day immediately preceding the
Date of Grant, as reported in the New York Stock Exchange Composite
Transactions)

 

<<$                      >>

 

 

 

Expiration Date:

 

<<                       >>

 

 

 

General Vesting Schedule:

 

[100% exercisable on the [first][second][third] anniversary of the Date of
Grant. 0% exercisable prior to the [first][second][third] anniversary of the
Date of Grant.]

[3 years, with vesting in installments of 33 1/3% on the anniversary date of the
Date of Grant in each of the years                 ,                    and
              .]

 

The following terms and conditions are applicable to a stock appreciation right
(a “SAR”) granted pursuant to the Quanex Corporation 2006 Omnibus Incentive Plan
(the “Plan”) and are incorporated as part of the Stock Appreciation Right
Agreement setting forth the terms of such SAR (the “Agreement”).

 

1.                                      GRANT OF STOCK APPRECIATION RIGHT  THE
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF QUANEX CORPORATION, A
DELAWARE CORPORATION (THE “COMPANY”), PURSUANT TO THE QUANEX CORPORATION 2006
OMNIBUS INCENTIVE PLAN (THE “PLAN”), HEREBY GRANTS TO YOU, THE ABOVE-NAMED
GRANTEE, EFFECTIVE AS OF THE DATE OF GRANT SET FORTH ABOVE, A STOCK APPRECIATION
RIGHT (“SAR”) THAT ENTITLES YOU TO RECEIVE, UPON EXERCISE HEREOF, [THE NUMBER OF
SHARES OF THE COMPANY’S COMMON STOCK][CASH PAYMENT(S) FROM THE COMPANY IN AN
AMOUNT] DETERMINED BY MULTIPLYING THE EXCESS OF THE FAIR MARKET VALUE OF A SHARE
OF THE COMPANY’S COMMON STOCK ON THE DATE OF EXERCISE OVER THE GRANT PRICE PER
SHARE SET FORTH ABOVE BY THE NUMBER OF SHARES OF THE COMPANY’S COMMON STOCK WITH
RESPECT TO WHICH THE SAR IS EXERCISED[ AND DIVIDING THE RESULTING PRODUCT BY THE
FAIR MARKET VALUE OF A SHARE OF

 

Employee
[Cliff Vesting]—[Graded Vesting]
[Stock Settled]—[Cash Settled]

 

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THE COMPANY’S COMMON STOCK ON THE DATE OF EXERCISE]. THE SAR IS EXERCISABLE IN
INSTALLMENTS IN ACCORDANCE WITH THE VESTING SCHEDULE SET FORTH ABOVE BY GIVING
WRITTEN NOTICE TO THE COMPANY AS SPECIFIED IN THIS AGREEMENT. TO THE EXTENT NOT
EXERCISED, INSTALLMENTS SHALL BE CUMULATIVE AND MAY BE EXERCISED IN WHOLE OR IN
PART UNTIL THE SAR TERMINATES. THE SAR MAY NOT BE EXERCISED AFTER THE EXPIRATION
DATE, OR THE APPLICABLE DATE FOLLOWING YOUR TERMINATION OF EMPLOYMENT SPECIFIED
IN THIS AGREEMENT.

 

2.                                      TERMINATION OF EMPLOYMENT. THE FOLLOWING
PROVISIONS WILL APPLY IF YOUR EMPLOYMENT WITH THE COMPANY AND ALL AFFILIATES OF
THE COMPANY (COLLECTIVELY, THE “COMPANY GROUP”) TERMINATES BEFORE THE EXPIRATION
DATE SET FORTH IN THIS AGREEMENT:

 

2.1           GENERALLY. IF YOUR EMPLOYMENT WITH THE COMPANY GROUP TERMINATES
BEFORE THE EXPIRATION DATE FOR ANY REASON OTHER THAN ONE OF THE REASONS
DESCRIBED IN SECTIONS 2.2 OR 2.3 BELOW, ALL OF YOUR RIGHTS IN THE SAR SHALL
TERMINATE AND BECOME NULL AND VOID ON THE EARLIER OF THE EXPIRATION DATE OR 90
DAYS AFTER THE DATE YOUR EMPLOYMENT WITH THE COMPANY GROUP TERMINATES. EXCEPT AS
SPECIFIED IN SECTIONS 2.2 OR 2.3 BELOW, IF YOUR EMPLOYMENT WITH THE COMPANY
GROUP TERMINATES FOR ANY REASON, THE SAR SHALL NOT CONTINUE TO VEST AFTER SUCH
TERMINATION OF EMPLOYMENT.

 

2.2           RETIREMENT OR DISABILITY. IF YOUR EMPLOYMENT WITH THE COMPANY
GROUP TERMINATES DUE TO YOUR RETIREMENT OR DISABILITY, THEN YOUR RIGHTS UNDER
THE SAR THAT HAVE NOT THEN VESTED SHALL VEST ON THE EFFECTIVE DATE OF YOUR
RETIREMENT OR TERMINATION OF EMPLOYMENT DUE TO DISABILITY. ALL OF YOUR RIGHTS IN
THE SAR SHALL TERMINATE AND BECOME NULL AND VOID ON THE EARLIER OF THE
EXPIRATION DATE OR THREE (3) YEARS AFTER THE DATE YOUR EMPLOYMENT WITH THE
COMPANY GROUP TERMINATES AS A RESULT OF RETIREMENT OR A DISABILITY  FOR PURPOSES
OF THIS SECTION, THE TERM “RETIREMENT” MEANS THE VOLUNTARY TERMINATION OF YOUR
EMPLOYMENT RELATIONSHIP WITH THE COMPANY GROUP ON OR AFTER THE DATE ON WHICH
(A) YOU ARE AGE 65 OR (B) YOU ARE AGE 55 AND HAVE FIVE YEARS OF SERVICE WITH THE
COMPANY GROUP.

 

2.3           DEATH. IF YOUR EMPLOYMENT WITH THE COMPANY GROUP TERMINATES DUE TO
YOUR DEATH, THEN YOUR RIGHTS UNDER THE SAR THAT HAVE NOT THEN VESTED SHALL VEST
ON THE DATE OF YOUR DEATH. ALL RIGHTS IN THE SAR SHALL TERMINATE AND BECOME NULL
AND VOID ON THE EARLIER OF THE EXPIRATION DATE OR THREE (3) YEARS AFTER THE DATE
OF YOUR DEATH. AFTER YOUR DEATH, YOUR EXECUTORS, ADMINISTRATORS OR ANY PERSON OR
PERSONS TO WHOM YOUR SAR MAY BE TRANSFERRED BY WILL OR BY THE LAWS OF DESCENT
AND DISTRIBUTION, SHALL HAVE THE RIGHT, AT ANY TIME PRIOR TO THE TERMINATION OF
THE SAR TO EXERCISE THE SAR.

 

3.                                      EXERCISE. SUBJECT TO THE TERMS AND
PROVISIONS OF THE PLAN AND THIS AGREEMENT, THE SAR MAY BE EXERCISED IN WHOLE OR
IN PART FROM TIME TO TIME BY THE DELIVERY OF TIMELY WRITTEN NOTICE PERSONALLY
DELIVERED OR SENT BY FIRST CLASS MAIL OR FACSIMILE TRANSMISSION TO THE ATTENTION
OF THE GENERAL COUNSEL OR CHIEF FINANCIAL OFFICER OF THE COMPANY STATING (1) THE
DATE YOU WISH TO EXERCISE SUCH SAR, (2) THE NUMBER OF SHARES OF STOCK WITH
RESPECT TO WHICH THE SAR IS TO BE EXERCISED AND (3) THE [ADDRESS OR
ACCOUNT][ADDRESS] TO WHICH [THE SHARES OF THE COMPANY’S COMMON STOCK][ANY
PAYMENT], LESS ANY APPLICABLE WITHHOLDING, SHOULD BE MAILED[ OR TRANSMITTED].
NOTICE UNDER THIS PARAGRAPH SHALL BE ADDRESSED AS FOLLOWS:  ATTN: GENERAL
COUNSEL AND/OR CHIEF FINANCIAL OFFICER, QUANEX CORPORATION, 1900 WEST LOOP
SOUTH, SUITE 1500, HOUSTON, TEXAS 77027 OR 713.439.1016 (IF VIA FACSIMILE
TRANSMISSION). THE COMPANY MAY PROVIDE A DELEGATE TO RECEIVE SUCH NOTICE OR
ALTERNATE PROCEDURES FOR COMPLYING WITH THE EXERCISE AND NOTICE REQUIREMENTS OF
THIS SECTION. THE EXERCISE DATE SHALL BE THE LATER OF THE DATE SPECIFIED IN SUCH
NOTICE OR THE DATE SUCH NOTICE IS ACTUALLY RECEIVED BY THE COMPANY OR ITS
DELEGATE.

 

4.                                      TAX WITHHOLDING. TO THE EXTENT THAT THE
RECEIPT OF THE SAR OR THIS AGREEMENT, THE VESTING OF THE SAR OR THE EXERCISE OF
THE SAR RESULTS IN INCOME TO YOU FOR FEDERAL, STATE OR LOCAL INCOME, EMPLOYMENT

 

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OR OTHER TAX PURPOSES WITH RESPECT TO WHICH THE COMPANY GROUP HAS A WITHHOLDING
OBLIGATION, YOU SHALL DELIVER TO THE COMPANY AT THE TIME OF SUCH RECEIPT,
VESTING OR EXERCISE, AS THE CASE MAY BE, SUCH AMOUNT OF MONEY AS THE COMPANY
GROUP MAY REQUIRE TO MEET ITS OBLIGATION UNDER APPLICABLE TAX LAWS OR
REGULATIONS, AND, IF YOU FAIL TO DO SO, THE COMPANY GROUP IS AUTHORIZED TO
WITHHOLD FROM THE [SHARES][PAYMENT] SUBJECT TO THE SAR OR FROM ANY CASH OR STOCK
REMUNERATION THEN OR THEREAFTER PAYABLE TO YOU ANY TAX REQUIRED TO BE WITHHELD
BY REASON OF SUCH TAXABLE INCOME, SUFFICIENT TO SATISFY THE WITHHOLDING
OBLIGATION BASED ON THE LAST PER SHARE SALES PRICE OF THE COMMON STOCK OF THE
COMPANY FOR THE TRADING DAY IMMEDIATELY PRECEDING THE DATE THAT THE WITHHOLDING
OBLIGATION ARISES, AS REPORTED IN THE NEW YORK STOCK EXCHANGE COMPOSITE
TRANSACTIONS.

 

5.                                      NONTRANSFERABILITY. EXCEPT AS SPECIFIED
IN THIS AGREEMENT, THE SAR AND THE AGREEMENT ARE NOT TRANSFERABLE OR ASSIGNABLE
BY YOU OTHER THAN BY WILL OR THE LAWS OF DESCENT AND DISTRIBUTION, AND SHALL BE
EXERCISABLE DURING YOUR LIFETIME ONLY BY YOU. YOU MAY TRANSFER THIS SAR TO A
MEMBER OR MEMBERS OF YOUR IMMEDIATE FAMILY, A TRUST UNDER WHICH YOUR IMMEDIATE
FAMILY MEMBERS ARE THE ONLY BENEFICIARIES AND A PARTNERSHIP OF WHICH YOUR
IMMEDIATE FAMILY MEMBERS ARE THE ONLY PARTNERS. FOR THIS PURPOSE, “IMMEDIATE
FAMILY” MEANS YOUR SPOUSE, CHILDREN, STEPCHILDREN, GRANDCHILDREN, PARENTS,
GRANDPARENTS, SIBLINGS (INCLUDING HALF BROTHERS AND SISTERS), AND INDIVIDUALS
WHO ARE FAMILY MEMBERS BY ADOPTION. NOTWITHSTANDING ANY OTHER PROVISION OF THIS
AGREEMENT, SUCH A TRANSFEREE OF THE SAR GRANTED UNDER THIS AGREEMENT MAY
EXERCISE THE SAR DURING YOUR LIFETIME. NONE OF THE COMPANY, ITS EMPLOYEES OR
DIRECTORS MAKES ANY REPRESENTATIONS OR GUARANTEES CONCERNING THE TAX
CONSEQUENCES ASSOCIATED WITH THE INCLUSION OF THIS PROVISION IN THIS AGREEMENT,
YOUR TRANSFER OF THE SAR GRANTED UNDER THIS AGREEMENT OR THE TRANSFEREE’S
EXERCISE OF THE SAR. IT IS YOUR SOLE RESPONSIBILITY TO SEEK ADVICE FROM YOUR OWN
TAX ADVISORS CONCERNING THOSE TAX CONSEQUENCES. YOU ARE ENTITLED TO RELY UPON
ONLY THE TAX ADVICE OF HIS OWN TAX ADVISORS.

 

6.                                      CAPITAL ADJUSTMENTS AND REORGANIZATIONS.
THE EXISTENCE OF THE SAR SHALL NOT AFFECT IN ANY WAY THE RIGHT OR POWER OF THE
COMPANY OR ANY COMPANY THE STOCK OF WHICH IS ISSUED PURSUANT TO THIS AGREEMENT
TO MAKE OR AUTHORIZE ANY ADJUSTMENT, RECAPITALIZATION, REORGANIZATION OR OTHER
CHANGE IN ITS CAPITAL STRUCTURE OR ITS BUSINESS, ENGAGE IN ANY MERGER OR
CONSOLIDATION, ISSUE ANY DEBT OR EQUITY SECURITIES, DISSOLVE OR LIQUIDATE, OR
SELL, LEASE, EXCHANGE OR OTHERWISE DISPOSE OF ALL OR ANY PART OF ITS ASSETS OR
BUSINESS, OR ENGAGE IN ANY OTHER CORPORATE ACT OR PROCEEDING.

 

7.                                      EMPLOYMENT RELATIONSHIP. FOR PURPOSES OF
THIS AGREEMENT, YOU SHALL BE CONSIDERED TO BE IN THE EMPLOYMENT OF THE COMPANY
GROUP AS LONG AS YOU HAVE AN EMPLOYMENT RELATIONSHIP WITH THE COMPANY GROUP. THE
COMMITTEE SHALL DETERMINE ANY QUESTIONS AS TO WHETHER AND WHEN THERE HAS BEEN A
TERMINATION OF SUCH EMPLOYMENT RELATIONSHIP, AND THE CAUSE OF SUCH TERMINATION,
UNDER THE PLAN AND THE COMMITTEE’S DETERMINATION SHALL BE FINAL AND BINDING ON
ALL PERSONS.

 

8.                                      NO RIGHTS AS A STOCKHOLDER. YOU SHALL
NOT HAVE ANY RIGHTS AS A STOCKHOLDER OF THE COMPANY WITH RESPECT TO ANY SHARES
OF COMMON STOCK RELATING TO THE SAR[ UNTIL THE DATE OF THE ISSUANCE OF THE
SHARES FOLLOWING EXERCISE OF THE SAR PURSUANT TO THIS AGREEMENT AND THE PAYMENT
OF ANY REQUIRED WITHHOLDING].

 

9.                                      NOT AN EMPLOYMENT AGREEMENT. THIS
AGREEMENT IS NOT AN EMPLOYMENT AGREEMENT, AND NO PROVISION OF THIS AGREEMENT
SHALL BE CONSTRUED OR INTERPRETED TO CREATE AN EMPLOYMENT RELATIONSHIP BETWEEN
YOU AND THE COMPANY OR ANY OF ITS AFFILIATES OR GUARANTEE THE RIGHT TO REMAIN
EMPLOYED BY THE COMPANY OR ANY OF ITS AFFILIATES FOR ANY SPECIFIED TERM.

 

10.                               [SECURITIES ACT LEGEND. IF YOU ARE OR BECOME
AN OFFICER OR AFFILIATE OF THE COMPANY UNDER THE SECURITIES ACT OF 1933, YOU
CONSENT TO THE PLACING ON ANY CERTIFICATE FOR THE SHARES OF AN APPROPRIATE

 

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LEGEND RESTRICTING RESALE OR OTHER TRANSFER OF THE SHARES EXCEPT IN ACCORDANCE
WITH SUCH ACT AND ALL APPLICABLE RULES THEREUNDER.]

 

11.                               LIMIT OF LIABILITY. UNDER NO CIRCUMSTANCES
WILL THE COMPANY GROUP BE LIABLE FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR
SPECIAL DAMAGES (INCLUDING LOST PROFITS) OF ANY FORM INCURRED BY ANY PERSON,
WHETHER OR NOT FORESEEABLE AND REGARDLESS OF THE FORM OF THE ACT IN WHICH SUCH A
CLAIM MAY BE BROUGHT, WITH RESPECT TO THE PLAN.

 

12.                               MISCELLANEOUS. THIS AGREEMENT AND THE SAR ARE
AWARDED PURSUANT TO AND ARE SUBJECT TO ALL OF THE PROVISIONS OF THE PLAN, WHICH
ARE INCORPORATED BY REFERENCE HEREIN, INCLUDING ALL AMENDMENTS TO THE PLAN, IF
ANY. IF THERE IS A CONFLICT BETWEEN THIS AGREEMENT AND THE PLAN PROVISIONS, THE
PLAN PROVISIONS WILL CONTROL. CAPITALIZED TERMS THAT ARE NOT DEFINED HEREIN
SHALL HAVE THE MEANINGS ASCRIBED TO SUCH TERMS IN THE PLAN.

 

By your acceptance of the SAR, you agree that the SAR is granted under, governed
by and subject to the terms of the Plan and this Agreement.

 

 

QUANEX CORPORATION

 

 

 

 

 

 

 

 

Raymond Jean – Chief Executive Officer

 

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