EXHIBIT 10.1

 

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QUANEX CORPORATION

 

EMPLOYEE STOCK OPTION AGREEMENT

 

<<Full Name>>
Grantee

 

Date of Grant:

 

<<                   >>

 

 

 

Total Number of Shares Relating to the Options Granted:

 

<<                   >>

 

 

 

Exercise Price per Share

(the Exercise 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:

 

[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
                   .]

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

 

GRANT OF OPTION

 

1.                                      GRANT OF OPTION. 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 NONQUALIFIED STOCK OPTION
TO PURCHASE THE TOTAL NUMBER OF SHARES SET FORTH ABOVE OF THE COMPANY’S COMMON
STOCK, $0.50 PAR VALUE PER SHARE, AT THE EXERCISE PRICE SET FORTH ABOVE FOR EACH
SHARE SUBJECT TO THIS OPTION, SUBJECT TO ADJUSTMENT AS PROVIDED IN THE PLAN. THE
OPTION IS EXERCISABLE IN INSTALLMENTS IN ACCORDANCE WITH THE VESTING SCHEDULE
SET FORTH ABOVE WITH THE EXERCISE PRICE PAYABLE AT THE TIME OF EXERCISE. TO THE
EXTENT NOT EXERCISED, INSTALLMENTS SHALL BE CUMULATIVE AND MAY BE EXERCISED IN
WHOLE OR IN PART UNTIL THE OPTION TERMINATES. THE OPTION MAY NOT BE EXERCISED
AFTER THE EXPIRATION DATE, OR THE APPLICABLE DATE FOLLOWING YOUR TERMINATION OF
EMPLOYMENT SPECIFIED IN THIS STOCK OPTION AGREEMENT (THIS “AGREEMENT”).

 

Employee

[Cliff Vesting]

[Graded Vesting]

 

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

 

2.1           TERMINATION GENERALLY. IF YOUR EMPLOYMENT WITH THE COMPANY GROUP
TERMINATES BEFORE THE EXPIRATION DATE FOR ANY REASON OTHER THAN ONE OF THE
REASONS DESCRIBED IN SECTION 2.2 OR SECTION 2.3 BELOW, ALL OF YOUR RIGHTS IN THE
OPTION 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 SECTION 2.2 OR SECTION 2.3 BELOW, IN THE
EVENT YOUR EMPLOYMENT WITH THE COMPANY GROUP TERMINATES, THE OPTION 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 OPTION SHALL
CONTINUE TO VEST AFTER SUCH TERMINATION OF EMPLOYMENT UNTIL 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 2.2, 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 OPTION SHALL CONTINUE TO VEST AFTER SUCH TERMINATION OF
EMPLOYMENT UNTIL THE EARLIER OF THE EXPIRATION DATE OR THREE YEARS AFTER THE
DATE OF YOUR DEATH. AFTER YOUR DEATH, YOUR EXECUTORS, ADMINISTRATORS OR ANY
PERSON OR PERSONS TO WHOM YOUR OPTION 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 OPTION, TO EXERCISE THE OPTION.

 

3.                                      CASHLESS EXERCISE. CASHLESS EXERCISE, IN
ACCORDANCE WITH THE TERMS OF THE PLAN, SHALL BE AVAILABLE TO YOU FOR THE SHARES
SUBJECT TO THE OPTION.

 

4.                                      TAX WITHHOLDING. TO THE EXTENT THAT THE
RECEIPT OF THE OPTION OR THE AGREEMENT, THE VESTING OF THE OPTION OR THE
EXERCISE OF THE OPTION RESULTS IN INCOME TO YOU FOR FEDERAL, STATE OR LOCAL
INCOME, EMPLOYMENT 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 SUBJECT TO THE OPTION 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 OPTION 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
OPTION 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 OPTION GRANTED UNDER THIS
AGREEMENT MAY EXERCISE THE OPTION DURING YOUR LIFETIME. NONE OF THE COMPANY, ITS

 

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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 OPTION GRANTED UNDER THIS AGREEMENT OR THE
TRANSFEREE’S EXERCISE OF THE OPTION. 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 OPTION SHALL NOT AFFECT IN ANY WAY THE RIGHT OR POWER OF
THE COMPANY OR ANY COMPANY THE STOCK OF WHICH IS ISSUED PURSUANT TO THE
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
THE 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 COVERED BY THE OPTION UNTIL THE DATE OF THE ISSUANCE OF THE
SHARES FOLLOWING EXERCISE OF THE OPTION PURSUANT TO THIS AGREEMENT AND PAYMENT
FOR THE SHARES.

 

9.                                      NOT AN EMPLOYMENT AGREEMENT. THE
AGREEMENT IS NOT AN EMPLOYMENT AGREEMENT, AND NO PROVISION OF THE 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 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 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.                               REGISTRATION. THE SHARES THAT MAY BE ISSUED
UNDER THE PLAN ARE REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER
A REGISTRATION STATEMENT ON FORM S-8.

 

13.                               SALE OF SECURITIES. THE SHARES THAT MAY BE
ISSUED UNDER THIS AGREEMENT MAY NOT BE SOLD OR OTHERWISE DISPOSED OF IN ANY
MANNER THAT WOULD CONSTITUTE A VIOLATION OF ANY APPLICABLE FEDERAL OR STATE
SECURITIES LAWS. YOU ALSO AGREE THAT (A) THE COMPANY MAY REFUSE TO CAUSE THE
TRANSFER OF THE SHARES TO BE REGISTERED ON THE STOCK REGISTER OF THE COMPANY IF
SUCH PROPOSED TRANSFER WOULD IN THE OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY CONSTITUTE A VIOLATION OF ANY APPLICABLE FEDERAL OR STATE SECURITIES LAW
AND (B) THE COMPANY MAY GIVE RELATED INSTRUCTIONS TO THE TRANSFER AGENT, IF ANY,
TO STOP REGISTRATION OF THE TRANSFER OF THE SHARES.

 

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14.                               MISCELLANEOUS. THE AGREEMENT AND THE OPTION
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. IN THE EVENT OF A CONFLICT BETWEEN THIS AGREEMENT AND THE PLAN
PROVISIONS, THE PLAN PROVISIONS WILL CONTROL. CAPITALIZED TERMS THAT ARE NOT
DEFINED HEREIN OR IN THE AGREEMENT SHALL HAVE THE MEANINGS ASCRIBED TO SUCH
TERMS IN THE PLAN.

 

By your acceptance of the option, you agree that the option 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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