Exhibit 10.4
QUANEX CORPORATION
SUPPLEMENTAL BENEFIT PLAN
Amended and Restated
Effective as of January 1, 2005

 

 

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TABLE OF CONTENTS

                                  Page
 
                ARTICLE I   NAME AND PURPOSE   I-1
 
                ARTICLE II   DEFINITIONS AND DESIGNATIONS   II-1
 
    2.01     “Actuarial Equivalent”   II-1
 
    2.02     “Affiliate”   II-1
 
    2.03     “Applicable Covered Employee”   II-1
 
    2.04     “Board”   II-1
 
    2.05     “Change of Control”   II-1
 
    2.06     “Code”   II-3
 
    2.07     “Committee”   II-3
 
    2.08     “Company”   II-3
 
    2.09     “Covered Employee”   II-3
 
    2.10     “Disability”   II-3
 
    2.11     “Early Retirement Date”   II-3
 
    2.12     “Earnings”   II-3
 
    2.13     “Employee”   II-3
 
    2.14     “Final Average Earnings”   II-3
 
    2.15     “Forfeiting Act”   II-3
 
    2.16     “Incentive Bonus” or “Incentive Bonuses”   II-4
 
    2.17     “Normal Retirement Date”   II-4
 
    2.18     “Participant”   II-4
 
    2.19     “Plan”   II-4
 
    2.20     “Plan Year”   II-4
 
    2.21     “Qualified Plan”   II-4
 
    2.22     “Qualified Plan Benefit”   II-4
 
    2.23     “Restricted Period”   II-4
 
    2.24     “Service”   II-5
 
    2.25     “Social Security Benefit”   II-5
 
    2.26     “Separation From Service”   II-5
 
                ARTICLE III   PARTICIPATION   III-1
 
    3.01     Eligibility to Participate   III-1
 
    3.02     Reemployment   III-1
 
                ARTICLE IV   RETIREMENT BENEFITS   IV-1
 
    4.01     Normal Retirement Benefit   IV-1
 
    4.02     Deferred Retirement Benefit   IV-1
 
    4.03     Early Retirement Benefit   IV-1
 
    4.04     Disability Benefit   IV-1
 
    4.05     Deferred Vested Benefit   IV-2
 
    4.06     Change of Control Benefit   IV-2
 
    4.07     Forms of Payment   IV-2
 
    4.08     Forms of Payment Elections   IV-3
 
    4.09     Lump Sum Payment Of Small Amounts   IV-3
 
    4.10     Time of Payment of Benefit   IV-3
 
               

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TABLE OF CONTENTS
(continued)

                                  Page
 
                ARTICLE V   DEATH BENEFITS   V-1
 
    5.01     In General   V-1
 
    5.02     Death During Employment   V-1
 
    5.03     Death After Separation From Service   V-1
 
                ARTICLE VI   BENEFICIARIES   VI-1
 
    6.01     Designation of Beneficiary   VI-1
 
    6.02     Payment of Benefits Upon Death   VI-1
 
    6.03     Minors and Persons Under Legal Disability   VI-1
 
                ARTICLE VII   FORFEITURE FOR CAUSE   VII-1
 
                ARTICLE VIII   AGREEMENT FUNDED THROUGH RABBI TRUST   VIII-1
 
                ARTICLE IX   PLAN COMMITTEE   IX-1
 
    9.01     Committee   IX-1
 
    9.02     General Rights, Powers and Duties of Plan Committee   IX-1
 
    9.03     Rules and Decisions   IX-1
 
    9.04     Committee Procedures   IX-2
 
    9.05     Authorization of Benefit Payments   IX-2
 
    9.06     Application and Forms of Benefits   IX-2
 
    9.07     Facility of Payment   IX-2
 
    9.08     Claims Procedure   IX-2
 
    9.09     Responsibility   IX-3
 
                ARTICLE X   AMENDMENT AND TERMINATION   X-1
 
    10.01     Amendment   X-1
 
    10.02     Right to Terminate Plan   X-1
 
                ARTICLE XI   MISCELLANEOUS   XI-1
 
    11.01     Inalienability of Benefits   XI-1
 
    11.02     No Implied Rights   XI-1
 
    11.03     Actions By Company   XI-1
 
    11.04     Binding Effect   XI-1
 
    11.05     Number and Gender   XI-1
 
    11.06     Governing Law   XI-1
 
    11.07     Section 409A   XI-1

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ARTICLE I
NAME AND PURPOSE
This plan, as adopted effective February 28, 1980 and amended and restated
October 22, 1981, November 1, 1988, June 1, 1999, January 1, 2004 and January 1,
2005, shall be known as the Quanex Corporation Supplemental Benefit Plan (the
“Plan”).
The Plan provides retirement benefits for certain designated management
employees in addition to those provided under the benefit plans for salaried
employees of Quanex Corporation, as in effect from time to time.
The purpose of the Plan is to supplement those retirement benefits that a
Participant may be entitled to receive as a salaried employee of Quanex
Corporation. Except as may be otherwise provided herein, the terms used in the
Plan shall have the meanings specified in the Quanex Corporation Employees’
Pension Plan.

 

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ARTICLE II
DEFINITIONS AND DESIGNATIONS
2.01 “Actuarial Equivalent” means equality in value of the aggregate amounts
expected to be received under different forms of payment calculated utilizing
the mortality and interest rate assumptions specified in the Qualified Plan at
the time of the calculation.
2.02 "Affiliate” means all business organizations which are members of a
controlled group of corporations (within the meaning of section 414(b) of the
Code), or which are trades or businesses (whether or not incorporated) which is
under common control (within the meaning of section 414(c) of the Code), or
which are members of an affiliated service group of employers (within the
meaning of section 414(m) of the Code), which related group of corporations,
businesses or employers includes Quanex.
2.03 “Applicable Covered Employee” means any of the following:
(a) a Covered Employee of Quanex;
(b) a Covered Employee of an Affiliate; and
(c) a former employee who was a Covered Employee at the time of termination of
employment with Quanex or an Affiliate.
2.04 “Board” means the Board of Directors of the Company.
2.05 “Change of Control” means the occurrence of one or more of the following
events:
(a) the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Covered Person”) of
beneficial ownership (within the meaning of rule 13d-3 promulgated under the
Exchange Act) of 20 percent or more of either (i) the then outstanding shares of
the common stock of (the “Outstanding Company Common Stock”), or (ii) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this
subsection (a) of this Section, the following acquisitions shall not constitute
a Change of Control of the Company: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any entity controlled by the Company, or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (c) of this Section; or

 

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(b) individuals who, as of June 1, 1999, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to June 1,
1999 whose election, or nomination for election by the Company’s stockholders,
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Covered Person other than the Board; or
(c) the consummation of (xx) a reorganization, merger or consolidation or sale
of the Company or (yy) a disposition of all or substantially all of the assets
of the Company (a “Business Combination”), in each case, unless, following such
Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, direct or indirectly, more than
80 percent of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (ii) no
Covered Person (excluding any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20 percent or more of, respectively,
the then outstanding shares of common stock of the corporation resulting from
such Business Combination or the combined voting power of the then outstanding
voting securities of such corporation, except to the extent that such ownership
existed prior to the Business Combination, and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination, were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or
(d) the approval by the stockholders of Quanex of a complete liquidation or
dissolution of Quanex.
Notwithstanding the foregoing, for purposes of a distribution from the Plan,
including upon a termination of the Plan, the term “Change of Control” shall
means a change in the ownership or effective control of the Company, or a change
in the ownership of a substantial portion of the assets of the Company as
described in Section 409A of the Code.

 

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2.06 “Code” means the Internal Revenue Code of 1986, as amended from time to
time.
2.07 “Committee” means the Committee established under Article IX to administer
the Plan.
2.08 “Company” means Quanex Corporation, a Delaware corporation.
2.09 "Covered Employee” means an individual (i) described in section 162(m)(3)
of the Code or (ii) subject to the requirements of Section 16(a) of the
Securities Act.
2.10 “Disability” shall mean the Participant (i) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, or (ii) is, by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits for a period
of not less than three months under an accident and health plan covering
employees of the Participant’s employer.
2.11 “Early Retirement Date” means the first day of any month after a
Participant’s attainment of age 55 and the completion of five years of Service.
2.12 “Earnings” means all wages as defined in section 3401 of the Code (for
purposes of income tax withholding) for services rendered in the course of
employment with the Company; modified by excluding reimbursements or other
expense allowances, fringe benefits (cash and noncash), moving expenses,
deferred compensation, welfare benefits, BeneFlex dollars under the Quanex
Corporation Medical Reimbursement Plan, Incentive Bonuses and restricted stock
awards and stock options; and modified further by including elective
contributions under a cafeteria plan maintained by the Company that is governed
by section 125 of the Code and elective contributions to any plan maintained by
the Company that contains a qualified cash or deferred arrangement under section
401(k) of the Code.
2.13 “Employee” means any person hired by the Company who is receiving
remuneration in the form of a salary for personal services rendered to the
Company.
2.14 “Final Average Earnings” means the highest monthly average of a
Participant’s Earnings which is produced by averaging his Earnings and Incentive
Bonuses over any 36 consecutive month period during the 60 consecutive month
period immediately preceding the date of the Participant’s Separation From
Service. However, for the purposes of this definition, no more than three
Incentive Bonuses shall be taken into account in calculating a Participant’s
earnings over any 36 consecutive month period.
2.15 “Forfeiting Act” means the Participant’s fraud, dishonesty, willful
destruction of Company property, committing of a felony, revealing Company trade
secrets, acts of competition against the Company or acts in aid of a competitor
of the Company.

 

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2.16 “Incentive Bonus” or “Incentive Bonuses” means compensation earned under
the Quanex Corporation Executive Incentive Compensation Plan or the Quanex
Corporation Omnibus Incentive Plan, whether or not deferred under the Quanex
Corporation Deferred Compensation Plan.
2.17 “Normal Retirement Date” means the first day of the month coincident with
or next following a Participant’s 65th birthday.
2.18 “Participant” means an Employee designated by the Board as eligible for
participation in the Plan, and who meets the requirements of Article III.
2.19 “Plan” means the Quanex Corporation Supplemental Benefit Plan.
2.20 “Plan Year” means the period commencing on November 1 and ending on
October 31.
2.21 “Qualified Plan” means the Quanex Corporation Employees’ Pension Plan
maintained by the Company.
2.22 “Qualified Plan Benefit” means the aggregate of all benefits which would be
payable to the Participant from the Qualified Plan payable on or after his
Normal Retirement Date. In calculating the amount of the Qualified Plan Benefit,
for the purposes of the Plan the following shall apply:
(a) If the normal form of benefit of the Qualified Plan is other than a straight
life annuity, the benefit shall be expressed in the form of a straight life
annuity by using the actuarial assumptions contained in the Qualified Plan.
(b) If benefits under the Qualified Plan are paid or are payable to the
Participant prior to the date his benefits commence under the Plan, the
Actuarial Equivalent of such benefits as of his Normal Retirement Date (as
defined in the Qualified Plan) shall be used.
(c) The amount of a Participant’s Qualified Plan Benefit shall be determined
based on the provisions of the Qualified Plan as in effect on the date his
benefits under the Plan are determined.
(d) The amount of a Participant’s Qualified Plan Benefit shall be determined by
disregarding any offset for benefits payable under a terminated retirement plan
that was previously maintained by the Company or one of its Affiliates.
2.23 "Restricted Period” means, for any qualified defined benefit plan sponsored
by Quanex or an Affiliate, any period during which the plan is in at-risk status
as described in section 409A of the Code.

 

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2.24 “Service” means service for purposes of the Qualified Plan. In determining
a Participant’s Service, all years of Service after the Participant’s date of
hire shall be taken into account.
2.25 “Social Security Benefit” means, for all purposes other than determining
the Disability benefit, the monthly amount payable commencing on the later of
the Participant’s 65th birthday or the date of his Separation From Service under
the provisions of Title II of the Social Security Act. Such benefit shall be
determined based on (1) the Participant’s average monthly wage or indexed
earnings (as defined in the Social Security Act, as amended) on the date of his
Separation From Service, computed under the Social Security Act as in effect on
the January 1 of the calendar year in which benefits are determined and using
the Participant’s annual total wages from the Company for the prior calendar
year, as defined in section 3121(b), assuming his wages increased prior thereto
at the rate of increase in the average per worker total wages reported by the
Social Security Administration, and assuming continuation of such wages without
increase thereafter until his Separation From Service (with no wages
thereafter); and (2) the Table of Primary Social Security Benefits under the
Social Security Act as in effect on the January 1 of the calendar year in which
his Separation From Service actually occurs. “Social Security Benefit” means,
for purposes of determining a Disability benefit, any actual disability benefit
for which the Participant is eligible under Title II of the Social Security Act.
2.26 “Separation From Service” means a Participant’s complete separation from
service with the Company and all of its Affiliates. The determination of whether
an Participant incurs a Separation From Service will be determined in accordance
with section 409A of the Code.

 

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ARTICLE III
PARTICIPATION
3.01 Eligibility to Participate. An Employee shall become eligible to become a
Participant in the Plan by designation of the Board. The Committee shall notify
each Participant of his eligibility. Each designated Employee shall furnish such
information and perform such acts as the Committee may require prior to becoming
a Participant.
3.02 Reemployment. Any person who Separates From Service with the Company shall
not be eligible to participate in the Plan upon his reemployment by the Company
unless the Board so determines. In such event, the Board shall specify whether
and under what conditions the person shall receive credit for all or any of his
Service completed prior to reemployment.

 

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ARTICLE IV
RETIREMENT BENEFITS
4.01 Normal Retirement Benefit. Subject to Article VIII, if a Participant
Separates From Service with the Company on or after his Normal Retirement Date,
he will be entitled to a monthly benefit payable to the Participant for life
only in an amount equal to:
(a) 2.75 percent of his Final Average Earnings multiplied by his years of
Service (not in excess of 20 years), less
(b) the sum of:
(1) the Participant’s Qualified Plan Benefit, and
(2) one-half of the Participant’s Social Security Benefit multiplied by a
fraction (which shall not exceed one) the numerator of which is the
Participant’s number of years of Service and the denominator of which is 20.
Notwithstanding any other provision of the Plan, a Participant’s monthly benefit
under this Section 4.01 shall not be less than his monthly benefit accrued as of
the date of the execution of this Agreement.
4.02 Deferred Retirement Benefit. If a Participant Separates From Service with
the Company on or after his Normal Retirement Date, he will be entitled to a
monthly benefit payable to the Participant for life only determined in
accordance with the provisions of Section 4.01. The benefit will not be
actuarially increased to reflect the later benefit payment date or his shorter
life expectancy. In determining a Participant’s deferred retirement benefit, his
Service subsequent to his Normal Retirement Date and the computation of his
Final Average Earnings shall take into account his Service after his Normal
Retirement Date.
4.03 Early Retirement Benefit. If a Participant Separates From Service with the
Company on or after his Early Retirement Date but before age 65, he shall be
entitled to a monthly benefit payable to the Participant for life only
determined in accordance with the provisions of Section 4.01 based upon his
years of Service and Final Average Earnings on the date of his Separation From
Service. The monthly amount shall be reduced by five percent for each year (and
fractional year) that the Participant’s benefit commencement precedes the
Participant’s 65th birthday.
4.04 Disability Benefit. If a Participant who has completed six months of
Service Separates From Service with the Company prior to his Early Retirement
Date due to his Disability, he shall receive a monthly Disability benefit, for
so long as he has a Disability but no longer than his Normal Retirement Date (on
which date the Participant shall be treated as a retiree entitled to benefits
under Section 4.01), in an amount equal to:

 

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(a) 50 percent of the sum of his monthly Earnings in effect at the date of his
Disability and the monthly equivalent of the average of his Incentive Bonuses
for the prior three Plan Years, less
(b) the sum of:
(1) the Participant’s Qualified Plan Benefit;
(2) the Participant’s Social Security Benefit;
(3) the Participant’s benefit under the Company’s group long-term disability
insurance plan;
(4) the Participant’s benefit under an individual disability policy provided by
the Company, and;
(5) the Participant’s benefit under the Company’s wage continuation policy plan.
Upon the occurrence of the Normal Retirement Date of a former Participant with a
Disability, he will be entitled to a monthly benefit payable to him for life
only determined in accordance with the provisions of Section 4.01. In
determining his benefit payable upon the occurrence of his Normal Retirement
Date, his Final Average Earnings and his years of Service shall be determined as
of the date of his Disability.
4.05 Deferred Vested Benefit. If a Participant Separates From Service with the
Company prior to his Early Retirement Date but has five or more years of
Service, he will upon attaining age 55 be entitled to the lump sum Actuarial
Equivalent of a monthly benefit payable to the Participant for life only
determined in accordance with the provisions of Section 4.01 based upon his
years of Service and Final Average Earnings at his Separation From Service. The
benefit calculated under Section 4.01 however, shall be reduced, using the
factors described in Section 4.03. If the Participant has fewer than five years
of Service when he Separates From Service prior to his Early Retirement Date, he
shall not be entitled to any benefits under the Plan.
4.06 Change of Control Benefit. Notwithstanding any other provisions of the
Plan, if a Participant’s Separation From Service occurs after a Change of
Control, he will be entitled to the lump-sum Actuarial Equivalent of a monthly
benefit payable to the Participant for life only determined in accordance with
the provisions of Section 4.01 based upon his years of Service and Final Average
Earnings at his Separation From Service. The benefit calculated under
Section 4.01 shall not be reduced because of the Participant’s age or early
payment of his benefit under the Plan. Any benefit paid pursuant to this
Section 4.06 shall be in lieu of any other benefit otherwise payable to the
Participant under the Plan.
4.07 Forms of Payment. Subject to the provisions of Section 4.09, a Participant
who is entitled to a benefit under Section 4.01, 4.02, or 4.03 may elect, in
accordance with procedures established by the Committee, to have his benefit
paid in one of the following forms, each of which shall be the Actuarial
Equivalent of the Participant’s benefit accrued under Section 4.01, 4.02, or
4.03, as applicable:
(a) A lump sum payment.
(b) An optional form of payment permitted under the Qualified Plan.
(c) Monthly, quarterly, or annual installment payments for a specified number of
years (not in excess of 20). Such payments shall be made to the Participant
while he is alive, and the balance of the payments shall be paid on an
installment basis to his designated beneficiary if he dies prior to the payment
of all the installment payments.

 

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If a Participant fails to make a valid election concerning the form of his
payment as required under Section 4.08, his benefit shall be paid in the form of
a lump sum.
All payments under the Plan shall be made in cash.
4.08 Forms of Payment Elections. Except as provided below, any election under
Sections 4.07 with respect to the form of payment of Plan benefits (an “Initial
Payment Election”) by a Participant who became a Participant on or before
December 31, 2006 must be made in accordance with procedures established by the
Committee and must be received by the Committee no later than December 31, 2006.
A newly eligible Participant may make an Initial Payment Election within the
30-day period after he becomes eligible to participate in the Plan. The last
timely Initial Payment Election received by the Committee shall be irrevocable,
unless changed in accordance with this Section. Any Initial Payment Election
that is not timely received shall be treated as not having been made and the
Participant shall be deemed to have elected a lump sum payment of his or her
benefit under the Plan.
A Participant may elect to change the form of payment of his or her Plan
benefits if such election is received by the Committee at least 12 months prior
to the date payment of the benefit will be made or commence. Such an election
change shall not take effect until at least 12 months after the date on which
the change in payment election is received by the Committee and the payment may
not be made or commence no earlier than five years following the date on which
the payments would otherwise have been made or commenced. A change from one form
of an annuity to another form of annuity that is Actuarially Equivalent shall
not constitute a change in form of payment and may be made at any time before
the payment is to be made or commence.
4.09 Lump Sum Payment Of Small Amounts. Notwithstanding any other provision of
the Plan, if the present value of a benefit payable under Section 4.01, 4.02, or
4.03 of the Plan is less than or equal to $20,000, such benefit shall be paid in
the form of a lump sum in cash.
4.10 Time of Payment of Benefit. The payments provided for Normal Retirement,
Deferred Retirement, and Early Retirement shall be paid or commence to be paid
on the 90th day after the Participant’s Separation From Service. The monthly
Disability benefit shall commence being paid on the first day of the month
coincident with or next following the Participant’s Separation From Service due
to Disability and shall cease with the last payment prior to his recovery or
attainment of his Normal Retirement Date. If a former Participant who terminated
employment with the Company due to Disability continues to have a Disability
until his Normal Retirement Date, the lump sum payment then due shall be paid on
his Normal Retirement Date. A Participant’s Change of Control benefit shall be
payable on the 90th day after the later of his attainment of age 55 or the date
of his Separation From Service. A Participant’s deferred vested benefit shall be
payable on the 90th day after the Participant’s Separation From Service.
Notwithstanding anything to the contrary in this Plan, payments due to the
Separation From Service of an Employee, excluding due to death or Disability but
including due to Retirement, may not be made before the date which is six
(6) months after the date of such Employee’s Separation From Service (a
“Six-Month Delay”). In the event of a Six-Month Delay, the benefits that would
have been paid during such delay if the delay had not been imposed, shall be
paid in a lump sum as soon as is administratively practicable following the
expiration of the Six-Month Delay and any other benefits to be paid after the
end of the Six Month Delay shall be paid in accordance with the terms of the
Plan.

 

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ARTICLE V
DEATH BENEFITS
5.01 In General. The benefits under the Plan payable subsequent to a
Participant’s or former Participant’s death shall be limited to those contained
in this Article, and shall in any case be subject to Article VII.
5.02 Death During Employment. If a Participant’s death occurs while he is in the
employ of the Company, no death benefit shall be payable under the Plan with
respect to the Participant.
5.03 Death After Separation From Service.
(a) In General. Except as provided in this Section, no benefits shall be payable
to or on behalf of a Participant or former Participant whose death occurs
subsequent to his Separation From Service.
(b) Before Benefits Commence. If a former Participant dies before his benefit is
paid or commences to be paid but after his Separation From Service on or after
his Normal Retirement Date, his Early Retirement Date or a Change of Control, or
after he has become entitled to a deferred vested benefit under Section 4.05,
his designated beneficiary, if any, shall be entitled to receive a lump sum
benefit equal to the benefit which he would have received had he lived to the
date his benefit would have been paid out. If a former Participant dies before
his benefit commences to be paid and he was eligible for a Disability benefit,
his designated beneficiary, if any, shall be entitled to receive a lump sum
benefit which is Actuarially Equivalent to a survivor annuity equal to the
survivor portion of a qualified joint and 50 percent survivor annuity as if the
former Participant had been entitled to elect and had elected such survivor
annuity on the day before his death. The survivor lump sum death benefit shall
be payable on the 90th day following the date of the Former Participant’s death.
In calculating the survivor portion for the survivor lump sum benefit, the
benefit shall be reduced in the same manner it is reduced under Section 4.03,
4.04, or 4.05, whichever is applicable, for payment earlier than Normal
Retirement Date. In the event of a Participant’s Separation From Service after a
Change of Control, the death benefits payable under this Section 5.03 on his
behalf will not be reduced for payment before the Participant’s Normal
Retirement Date.
(c) After Disability Benefits Commence. If a former Participant who is receiving
a Disability benefit dies prior to reaching his Normal Retirement Date but while
he still has a Disability, his designated beneficiary shall receive a lump sum
benefit which is Actuarially Equivalent to the survivor portion of a qualified
joint and 50 percent survivor annuity as if the former Participant had been
entitled to elect and had elected such survivor annuity on the day before his
death. Such benefit shall be payable on the 90th day after his death.
(d) After Benefits Under Section 4.01, 4.02 or 4.03 Commence. If a former
Participant dies after receiving payments pursuant to Section 4.01, 4.02, or
4.03 of the Plan, his designated beneficiary shall be entitled to receive any
death benefit payable under the optional form of payment selected by the former
Participant.

 

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ARTICLE VI
BENEFICIARIES
6.01 Designation of Beneficiary. Each Participant or former Participant shall
designate as his beneficiary the person or persons who shall, upon his death,
receive the death benefits, if any, payable pursuant to Article V. The
designation shall be in such form as the Committee requires and may include
contingent beneficiaries. A beneficiary designation shall be effective when
filed with the Committee during the Participant’s or former Participant’s life,
and shall cancel and revoke all prior designations.
6.02 Payment of Benefits Upon Death. If a Participant’s or former Participant’s
death occurs prior to payment of his benefit, the benefit payable upon his
death, if any, shall be paid to the persons or persons designated as his primary
beneficiary, but if the primary beneficiary does not survive him, then to the
person or persons designated as the contingent beneficiary. If no primary or
contingent beneficiary survives him or if no beneficiary designation is in
effect upon his death, then the benefit under Article V shall be paid to his
spouse. If his spouse does not survive him, then the benefit shall be paid to
his descendants who survive him by right of representation, and if no
descendants of the Participant or former Participant survive him, then to his
estate.
6.03 Minors and Persons Under Legal Disability. Payments to a minor or a person
under a legal disability shall be made by the Company at the direction of the
Committee as follows:
(a) to the natural or adoptive parents or legal guardian or conservator of such
person, or to any other person in loco parentis;
(b) to a custodian for such person under the Uniform Gifts to Minors Act or
Gifts of Securities to Minors Act; or
(c) by expending amounts directly for the education and support of such person.

 

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ARTICLE VII
FORFEITURE FOR CAUSE
Except with respect to persons whose Separations From Service with the Company
occur after a Change of Control, notwithstanding any other provision of the Plan
to the contrary, in all cases where a written document is executed by the
Company expressly making acts of competition against the Company or acts in aid
of a competitor of the Company by the Participant or former Participant a
Forfeiting Act, if the Participant commits one or more Forfeiting Acts during
his employment with the Company or following his Separation From Service, any
and all unpaid benefits due the Participant or his designated beneficiary shall
be forfeited. This provision shall apply regardless of the date the Company
first learns of the occurrence of a Forfeiting Act.

 

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ARTICLE VIII
AGREEMENT FUNDED THROUGH RABBI TRUST
The Company shall pay the benefits due the Participants and former Participants
under the Plan; however, should it fail to do so when a benefit is due, such
benefit shall be paid by the trustee of that certain Trust Agreement entered
into, by and between the Company and Fleet National Bank (the “Trust”). In any
event, if the Trust fails to pay for any reason, the Company still remains
liable for the payment of all benefits provided by the Plan. The Company may
contribute at any time and from time to time such assets to the Trust as it, in
its sole discretion, shall determine and shall have the right at any time and
from time to time to borrow from the Trust the fair market value of assets held
in the Trust which are in excess of the net present value of the largest benefit
all Participants and former Participants are entitled to under the Plan as of
the beginning of the Plan Year during which the loan is made (exclusive of any
Disability or death benefit). Any such loan shall be evidenced by an instrument
in writing, shall bear interest at such rate as the Company would be required to
pay to its prime lender under the same terms (except for the security), shall
provide a repayment schedule which would repay but only to the extent of the
funds so borrowed, such amount as is necessary to maintain at the beginning of
each Plan Year during the existence of the loan, non-borrowed funds in the Trust
at a level at least equal to the net present value of all benefits calculated
under the preceding sentence and shall provide for prepayment at the Company’s
election, without penalty. The above calculations shall use the same actuarial
factors set out in the definition of Actuarial Equivalent under Section 2.01.
All assets contributed shall be held in and administered according to the terms
of the Trust which are incorporated by reference in the Plan for all purposes.
However, in no event shall the rights of Participants and former Participants in
the assets held by the Trust be greater than the rights of unsecured creditors
of the Company. Nothing contained in the Plan or the Trust constitutes a secured
promise by the Company that the assets of the Company will be sufficient to pay
any benefit to any person.
Notwithstanding the foregoing, no assets shall be set aside or reserved
(directly or indirectly) in a trust (or other arrangement as determined by the
Internal Revenue Service), or transferred to a trust or other arrangement
established to fund the Company’s obligations under the Plan during any
Restricted Period for purposes of paying benefits to an Applicable Covered
Employee. The rule contained in the preceding sentence does not apply to assets
set aside, reserved or transferred before or after a Restricted Period.

 

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ARTICLE IX
PLAN COMMITTEE
9.01 Committee. The Plan shall be administered by the Committee, which shall
have three members designated in writing by the Company. Any person may resign
from the Committee upon 30 days’ prior notice to the Company and to any other
member of the Committee. The Company may remove any member of the Committee by
written notice to him and to any other member of the Plan Committee. The Company
shall fill any vacancy and shall give written notice thereof to the other
members of the Committee. In the interim, the other member(s) of the Committee
shall have full authority to act. If, at any time, there are no members of the
Committee, then the Board shall serve as the Committee.
9.02 General Rights, Powers and Duties of Plan Committee. The Committee shall be
responsible for the management, operation and administration of the Plan. In
addition to any powers, rights and duties set forth elsewhere in the Plan, it
shall have the following powers and duties:
(a) to adopt such rules and regulations consistent with the provisions of the
Plan as it deems necessary for the proper and efficient administration of the
Plan;
(b) to enforce the Plan in accordance with its terms and any rules and
regulations it establishes;
(c) to maintain records concerning the Plan sufficient to prepare reports,
returns and other information required by the Plan or by law;
(d) to construe and interpret the Plan and to resolve all questions arising
under the Plan;
(e) to direct the Company to pay benefits under the Plan, and to give such other
directions and instructions as may be necessary for the proper administration of
the Plan;
(f) to employ or retain agents, attorneys, actuaries, accountants or other
persons, who may also be employed by or represent the Company, and
(g) to be responsible for the preparation, filing and disclosure on behalf of
the Plan of such documents and reports as are required by any applicable federal
or state law.
The Committee shall have no power to add to, subtract from or modify any of the
terms of the Plan, or to change or add to any benefits provided by the Plan, or
to waive or fail to apply any requirements of eligibility for benefits under the
Plan.
9.03 Rules and Decisions. The Committee may adopt such rules and actuarial
tables as it deems necessary, desirable or appropriate. All rules and decisions
of the Committee shall be uniformly and consistently applied to all Participants
in similar circumstances. When making a determination or calculation, the
Committee shall be entitled to rely upon information furnished to it by a
Participant or beneficiary, the Company, and the legal counsel, actuary and
accountant for the Company.

 

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9.04 Committee Procedures. The Committee may act at a meeting or in writing
without a meeting. The Committee shall elect one of its members as chairman and
appoint a secretary, who may or may not be a Committee member. The Secretary
shall keep a record of all meetings and forward all necessary communications to
the Company. The Committee may adopt such bylaws and regulations as it deems
desirable for the conduct of its affairs. All decisions of the Committee shall
be made by the vote of the majority, including actions in writing taken without
a meeting. A dissenting Committee member who, within a reasonable time after he
has knowledge of any action or failure to act by the majority, registers his
dissent in writing delivered to the other Committee members and the Company,
shall not, to the extent permitted by law, be responsible for any such action or
failure to act.
9.05 Authorization of Benefit Payments. The Committee shall issue directions to
the Company concerning all benefits which are to be paid pursuant to the
provisions of the Plan. The Company shall furnish the Committee such data and
information as it may require. The records of the Company shall be determinative
of each Participant’s period of employment, Separation From Service and the
reason therefor, leave of absence, reemployment, years of Service, Earnings, and
Final Average Earnings. Participants and their beneficiaries shall furnish to
the Committee such evidence, data, or information, and execute such documents,
as the Committee requests.
9.06 Application and Forms of Benefits. The Committee may require a Participant
or former Participant to complete and file with the Committee an application for
retirement benefits and all other forms approved by the Committee, and to
furnish all pertinent information requested by the Committee. The Committee may
rely upon all such information so furnished it, including the Participant’s or
former Participant’s current mailing address.
9.07 Facility of Payment. Whenever, in the Committee’s opinion, a person
entitled to receive any payment of a benefit or installment thereof hereunder is
under a legal disability or is incapacitated in any way so as to be unable to
manage his financial affairs, the Committee may direct the Company to make
payments to such person or to his legal representative or to a relative or
friend of such person for his benefit, or the Committee may direct the Company
to apply the payment for the benefit of such person in such manner as the
Committee considers advisable. Any payment of a benefit or installment thereof
in accordance with the provisions of this Section shall be a complete discharge
of any liabilities for the making of such payment under the provisions of the
Plan.
9.08 Claims Procedure. The Committee shall make all determinations as to the
right of any person to receive benefits under the Plan. Any denial by the
Committee of a claim for benefits under the Plan by a Participant, former
Participant beneficiary of a former Participant (collectively referred to herein
as “Claimant”) shall be stated in writing by the Committee and

 

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delivered or mailed to the Claimant on the 90th day after receipt of the claim,
unless special circumstances require an extension of time for processing the
claim. If such an extension of time is required, written notice of the extension
shall be furnished to the Claimant on the 90th day after receipt of the claim
and the claim shall thereafter be paid on the 180th day after the date of
receipt of the initial claim. Such notice shall set forth the specific reasons
for the denial, specific reference to pertinent provisions of the Plan upon
which the denial is based, a description of any additional material or
information necessary for the Claimant to perfect his claim with an explanation
of why such material or information is necessary, and an explanation of claim
review procedures under the Plan written to the best of the Committee’s ability
in a manner that may be understood without legal or actuarial counsel. A
Claimant whose claim for benefits has been wholly or partially denied by the
Committee may, within 90 days following the date of such denial, request a
review of such denial in writing addressed to the Committee. The Claimant shall
be entitled to submit such issues or comments, in writing or otherwise, as he
shall consider relevant to a determination of his claim, and he may request a
hearing in person before the Committee. Prior to submitting his request, the
Claimant shall be entitled to review such documents as the Committee shall agree
are pertinent to his claim. The Claimant may, at all stages of review, be
represented by counsel, legal or otherwise, of his choice, provided that the
fees and expenses of such counsel shall be borne by the Claimant. All requests
for review shall be promptly resolved. The Committee’s decisions with respect to
any such review shall be set forth in writing and shall be mailed to the
Claimant on the 60th day following receipt by the Committee of the Claimant’s
request unless special circumstances, such as the need to hold a hearing,
require an extension of time for processing, in which case the Committee’s
decision shall be so mailed on the 120th day after receipt of such request.
9.09 Responsibility. No member of the Committee or of the Board shall be liable
to any person for any action taken or omitted in connection with the
administration of the Plan unless attributable to his own fraud or willful
misconduct; nor shall the Company be liable to any person for any such action
unless attributable to fraud or willful misconduct on the part of a director,
officer or employee of the Company.

 

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ARTICLE X
AMENDMENT AND TERMINATION
10.01 Amendment. The Plan may be amended in whole or in part by the Company at
any time. Notice of any such amendment shall be given in writing to the
Committee and to each Participant, former Participant, and beneficiary of a
deceased former Participant; provided, however, that no such amendment shall
have the effect of reducing that portion of the benefit the Participant or
former Participant ultimately becomes entitled to below that amount he would
have received for Service to the date of the amendment under the formula set out
in the Plan prior to the amendment.
10.02 Right to Terminate Plan. The Company reserves the right to terminate the
accrual or vesting of additional benefits under the Plan by any or all
Participants at any time by written notice to the Committee. The Committee shall
notify any Participant affected by such termination of such action and its
effective date within 30 days after it receives notice from the Company. A
Participant whose accrual of additional benefits is terminated shall not lose
any previously accrued and vested benefits, and, subject to Article VII, any
such vested benefits shall be payable at the time and in the manner provided
hereunder. The Board may terminate the Plan within the 30 days preceding or
12 months following a Change of Control, as defined by section 409A of the Code,
or as otherwise permitted under section 409A of the Code, and distribute the
accrued vested benefits of the Participants’ to Participants in the manner and
the time as determined by the Committee, in its sole discretion, subject to the
preceding sentence and as permitted by section 409A of the Code.

 

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ARTICLE XI
MISCELLANEOUS
11.01 Inalienability of Benefits. The right of any Participant, former
Participant or beneficiary to any benefit or payment under the Plan shall not be
subject to voluntary or involuntary transfer, alienation, pledge, assignment,
garnishment, sequestration or other legal or equitable process. Any attempt to
transfer, alienate, pledge, assign or otherwise dispose of such right or any
attempt to subject such right to attachment, execution, garnishment,
sequestration or other legal or equitable process shall be null and void.
11.02 No Implied Rights. Neither the establishment of the Plan nor any
modification thereof shall be construed as giving any Participant, former
Participant beneficiary or other person any legal or equitable right unless such
right shall be specifically provided for in the Plan or conferred by affirmative
action of the Company in accordance with the terms and provisions of the Plan.
11.03 Actions By Company. All actions by the Company under the Plan shall be
taken by the Board or by a person or persons designated by the Board.
11.04 Binding Effect. The provisions of the Plan shall be binding on the
Company, the Committee, and all persons entitled to benefits under the Plan,
together with their respective heirs, legal representatives and successors in
interest.
11.05 Number and Gender. Wherever appropriate, the singular shall include the
plural, the plural shall include the singular, and the masculine shall include
the feminine or neuter.
11.06 Governing Law. The Plan shall be construed and administered according to
the laws of the State of Texas.
11.07 Section 409A. The Plan is intended to be a nonqualified deferred
compensation arrangement and is not intended to meet the requirements of section
401(a) of the Code. The Plan is intended to meet the requirements of section
409A of the Code and may be administered in a manner that is intended to meet
those requirements and shall be construed and interpreted in accordance with
such intent. To the extent that a deferral, accrual, vesting or payment of an
amount under the Plan is subject to section 409A of the Code, except as the
Committee otherwise determines in writing, the amount will be deferred, accrued,
vested or paid in a manner that will meet the requirements of section 409A of
the Code, including regulations or other guidance issued with respect thereto,
such that the deferral, accrual, vesting or payment shall not be subject to the
excise tax applicable under section 409A of the Code. Any provision of the Plan
that would cause the deferral, accrual, vesting or payment of an amount under
the Plan to fail to satisfy section 409A of the Code shall be amended (in a
manner that as closely as practicable achieves the original intent of the Plan)
to comply with section 409A of the Code on a timely basis, which may be made on
a retroactive basis, in accordance with regulations and other guidance issued
under section 409A of the Code. In the event additional regulations or other
guidance is issued under section 409A of the Code or a court of competent
jurisdiction provides additional authority concerning the application of section
409A of the Code with respect to the distributions under the Plan, then the
provisions of the Plan regarding distributions shall be automatically amended to
permit such distributions to be made at the earliest time permitted under such
additional regulations, guidance or authority that is practicable and achieves
the intent of the Plan prior to its amendment to comply with section 409A of the
Code.

 

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IN WITNESS WHEREOF, effective January 1, 2005, the Company has adopted this
amendment and restatement of the Plan on the 21st day of November, 2006.

              QUANEX CORPORATION
 
       
 
  By:                       /s/ Kevin P. Delaney
 
       
 
  Title:   Senior Vice President — General Counsel and Secretary