Document:

exv10w7

 

Exhibit 10.7

QUANEX BUILDING PRODUCTS CORPORATION

DEFERRED COMPENSATION PLAN

 

 

TABLE
OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	ARTICLE I	 	DEFINITIONS	 	 	I-1	 
	 
	 	 	 	 	 	 	 	 
	 
	 	1.1	 	“Account”	 	 	I-1	 
	 
	 	1.2	 	“Affiliate”	 	 	I-1	 
	 
	 	1.3	 	“Applicable Covered Employee”	 	 	I-1	 
	 
	 	1.4	 	“Beneficiary”	 	 	I-1	 
	 
	 	1.5	 	“Board”	 	 	I-1	 
	 
	 	1.6	 	“Change of Control”	 	 	I-1	 
	 
	 	1.7	 	“Change of Control Value”	 	 	I-3	 
	 
	 	1.8	 	“Code”	 	 	I-3	 
	 
	 	1.9	 	“Committee”	 	 	I-3	 
	 
	 	1.10	 	“Common Stock”	 	 	I-3	 
	 
	 	1.11	 	“Common Stock Fund”	 	 	I-3	 
	 
	 	1.12	 	“Company”	 	 	I-3	 
	 
	 	1.13	 	“Company Match”	 	 	I-3	 
	 
	 	1.14	 	“Covered Employee”	 	 	I-3	 
	 
	 	1.15	 	“Deferred Compensation Ledger”	 	 	I-3	 
	 
	 	1.16	 	“Director”	 	 	I-3	 
	 
	 	1.17	 	“Director Fees”	 	 	I-3	 
	 
	 	1.18	 	“Disability”	 	 	I-3	 
	 
	 	1.19	 	“Effective Date”	 	 	I-4	 
	 
	 	1.20	 	“Incentive Bonus”	 	 	I-4	 
	 
	 	1.21	 	“Investment Fund”	 	 	I-4	 
	 
	 	1.22	 	“Normal Retirement Date”	 	 	I-4	 
	 
	 	1.23	 	“NYSE”	 	 	I-4	 
	 
	 	1.24	 	“Omnibus Compensation”	 	 	I-4	 
	 
	 	1.25	 	“Participant”	 	 	I-4	 
	 
	 	1.26	 	“Plan”	 	 	I-4	 
	 
	 	1.27	 	“Plan Year”	 	 	I-4	 
	 
	 	1.28	 	“Sponsor”	 	 	I-4	 
	 
	 	1.29	 	“Rabbi Trust”	 	 	I-4	 
	 
	 	1.30	 	“Restricted Period”	 	 	I-4	 
	 
	 	1.31	 	“Retirement”	 	 	I-5	 
	 
	 	1.32	 	“Retirement Plan”	 	 	I-5	 
	 
	 	1.33	 	“Securities Act”	 	 	I-5	 
	 
	 	1.34	 	“Separation From Service”	 	 	I-5	 
	 
	 	1.35	 	“Stock Fund Unit”	 	 	I-5	 
	 
	 	1.36	 	“Subsidiary”	 	 	I-5	 
	 
	 	1.37	 	“Term of Deferral”	 	 	I-5	 
	 
	 	1.38	 	“Valuation Date”	 	 	I-5	 
	 
	 	1.39	 	“Voting Securities”	 	 	I-5	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II
	 	ELIGIBILITY	 	 	II-1
	 
	 	 	 	 	 	 	 	 
	ARTICLE III
	 	DEFERRALS AND COMPANY CONTRIBUTIONS	 	 	III-1
	 
	 	 	 	 	 	 	 	 
	 
	 	3.1	 	Deferral Election	 	 	III-1
	 
	 	3.2	 	Change of Election	 	 	III-2
	 
	 	3.3	 	Special 409A Transition Election	 	 	III-2

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TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	3.4	 	Company Match	 	III-3
	 
	 	3.5	 	Mandatory. Deferral	 	III-3
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV
	 	ACCOUNT	 	IV-1
	 
	 	 	 	 	 	 	 	 
	 
	 	4.1	 	Establishing a Participant’s Account	 	IV-1
	 
	 	4.2	 	Credit of the Participant’s Deferral and the Company’s Match	 	IV-1
	 
	 	4.3	 	Crediting of Dividends and Distributions on Common Stock	 	IV-1
	 
	 	4.4	 	Crediting of Earnings and Losses	 	IV-1
	 
	 	4.5	 	Common Stock Conversion Election	 	IV-2
	 
	 	4.6	 	Conversion and Cash-Out Upon a Change of Control	 	IV-3
	 
	 	 	 	 	 	 	 	 
	ARTICLE V	 	VESTING AND EVENTS CAUSING FORFEITURE	 	 	V-1
	 
	 	 	 	 	 	 	 	 
	 
	 	5.1	 	Vesting	 	 	V-1
	 
	 	5.2	 	Forfeiture for Cause	 	 	V-1
	 
	 	5.3	 	Forfeiture for Competition	 	 	V-1
	 
	 	5.4	 	Full Vesting in the Event of a Change of Control	 	 	V-2
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI
	 	DISTRIBUTIONS	 	VI-1
	 
	 	 	 	 	 	 	 	 
	 
	 	6.1	 	Form of Distributions or Withdrawals	 	VI-1
	 
	 	6.2	 	Death	 	VI-1
	 
	 	6.3	 	Disability	 	VI-2
	 
	 	6.4	 	Expiration of Term of Deferral	 	VI-2
	 
	 	6.5	 	Unforeseeable Emergency Withdrawals	 	VI-2
	 
	 	6.6	 	Valuation	 	VI-2
	 
	 	6.7	 	Mandatory Immediate Lump Sum Payment	 	VI-3
	 
	 	6.8	 	Payment Restrictions on Any Portion of a Benefit Determined Not to Be Deductible	 	VI-3
	 
	 	6.9	 	Responsibility for Distributions and Withholding of Taxes	 	VI-3
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII
	 	ADMINISTRATION	 	VII-1
	 
	 	 	 	 	 	 	 	 
	 
	 	7.1	 	Committee Appointment	 	VII-1
	 
	 	7.2	 	Committee Organization and Voting	 	VII-1
	 
	 	7.3	 	Powers of the Committee	 	VII-1
	 
	 	7.4	 	Committee Discretion	 	VII-2
	 
	 	7.5	 	Annual Statements	 	VII-2
	 
	 	7.6	 	Reimbursement of Expenses	 	VII-2
	 
	 	7.7	 	Limitation on Liability	 	VII-2
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII
	 	ADOPTION BY SUBSIDIARIES	 	VIII-1
	 
	 	 	 	 	 	 	 	 
	 
	 	8.1	 	Procedure for and Status After Adoption	 	VIII-1
	 
	 	8.2	 	Termination of Participation by Adopting Subsidiary	 	VIII-1
	 
	 	 	 	 	 	 	 	 
	ARTICLE IX
	 	AMENDMENT AND/OR TERMINATION	 	IX-1
	 
	 	 	 	 	 	 	 	 
	 
	 	9.1	 	Amendment or Termination of the Plan	 	IX-1
	 
	 	9.2	 	No Retroactive Effect on Awarded Benefits	 	IX-1
	 
	 	9.3	 	Effect of Termination	 	IX-1
	 
	 	 	 	 	 	 	 	 
	ARTICLE X	 	FUNDING	 	 	X-1

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TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	10.1	 	Payments Under This Agreement Are the Obligation of the Company	 	 	X-1
	 
	 	10.2	 	Agreement May Be Funded Through Rabbi Trust	 	 	X-1
	 
	 	10.3	 	Reversion of Excess Assets	 	 	X-1
	 
	 	10.4	 	Participants Must Rely Only on General Credit of the Company	 	 	X-2
	 
	 	 	 	 	 	 	 	 
	ARTICLE XI
	 	MISCELLANEOUS	 	XI-1
	 
	 	 	 	 	 	 	 	 
	 
	 	11.1	 	Limitation of Rights	 	XI-1
	 
	 	11.2	 	Distributions to Incompetents or Minors	 	XI-1
	 
	 	11.3	 	Nonalienation of Benefits	 	XI-1
	 
	 	11.4	 	Expenses Incurred in Enforcing the Plan	 	XI-1
	 
	 	11.5	 	Reliance Upon Information	 	XI-2
	 
	 	11.6	 	Severability	 	XI-2
	 
	 	11.7	 	Notice	 	XI-2
	 
	 	11.8	 	Gender and Number	 	XI-2
	 
	 	11.9	 	Governing Law	 	XI-2
	 
	 	11.10	 	Section 409A	 	XI-2
	 
	 	11.11	 	Amendment and Restatement of the Plan	 	XI-3

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QUANEX BUILDING PRODUCTS CORPORATION

DEFERRED COMPENSATION PLAN

          This agreement by Quanex Building Products Corporation (the “Sponsor”),

W I T N E S S E T H :

          WHEREAS, Quanex Corporation (“Quanex”) previously established the Quanex Corporation Deferred
Compensation Plan (the “Prior Plan”) effective October 1, 1981, which provides a mechanism by which
certain highly compensated management personnel may defer certain prior to such compensation being
earned and directors may defer their director’s fees prior to their being earned;

          WHEREAS, Quanex amended and restated the Prior Plan effective October 12, 1995, June 1, 1999,
November 1, 2001 and July 1, 2004;

          WHEREAS, in connection with the transactions contemplated by the Distribution Agreement dated
as of December 19, 2007 among Quanex Corporation, Quanex Building Products Corporation LLC, and
Quanex Building Products Corporation (the “Distribution Agreement”), Quanex, Quanex Building
Products Corporation LLC (the “LLC”) and the Sponsor desire to spin-off from the Prior Plan a
mirror image pension plan for the exclusive benefit of employees previously employed by Quanex in
connection with its Building Products businesses and the employees of the corporate office of
Quanex who are employed by the LLC or the Sponsor at or after the “Distribution” (as defined in the
Distribution Agreement);

          WHEREAS, subsequent to the Distribution, the Sponsor shall assume the sponsorship of the
spun-off portion of the Prior Plan

          NOW, THEREFORE, effective as of, and contingent upon, the closing of the Distribution (the
“Effective Date”), the LLC and the Sponsor agree that the spun-off portion of the Prior Plan shall
be amended and restated as the “Quanex Building Products Deferred Compensation Plan” as set forth
as follows:

 

 

ARTICLE I

DEFINITIONS

     1.1 “Account” means a Participant’s account in the Deferred Compensation Ledger maintained by
the Committee which reflects the benefits a Participant is entitled to under the Plan.

     1.2 “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 the Sponsor.

     1.3 “Applicable Covered Employee” means any of the following:

     (a) a Covered Employee of the Sponsor;

     (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 the Sponsor or an Affiliate.

     1.4 “Beneficiary” means a person or entity designated by the Participant under the terms of
the Plan to receive any amounts distributed under the Plan upon the death of the Participant.

     1.5 “Board” means the board of directors of the Sponsor.

     1.6 “Change of Control” means the occurrence of one or more of the following events after the
Effective Date of the Plan:

     (a) the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Act) (a “Covered Person”) of beneficial
ownership (within the meaning of rule 13d-3 promulgated under the Securities Act) of
20 percent (20%) or more of either (i) the then outstanding shares of the common stock of
the Sponsor (the “Outstanding Quanex BP Common Stock”), or (ii) the combined voting power of
the then outstanding voting securities of the Sponsor entitled to vote generally in the
election of directors (the “Outstanding Quanex BP 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 Sponsor: (i) any acquisition directly from the
Sponsor, (ii) any acquisition by the Sponsor, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Sponsor or any entity controlled by
the Sponsor, 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

I-1

 

     (b) individuals who, as of the Effective Date, 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 the Effective Date, whose
election, or nomination for election by the Sponsor’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
Sponsor 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 Quanex BP Common Stock and Outstanding Quanex BP Voting
Securities immediately prior to such Business Combination beneficially own, direct or
indirectly, more than 80 percent (80%) 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 Sponsor or all or substantially
all of the Sponsor’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 Quanex BP Common Stock and Outstanding Quanex BP Voting
Securities, as the case may be, (ii) no Covered Person (excluding any employee benefit plan
(or related trust) of the Sponsor or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20 percent (20%) 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 of Directors, providing for such Business Combination; or

     (d) the approval by the stockholders of the Sponsor of a complete liquidation or
dissolution of the Sponsor.

          Notwithstanding the foregoing, for purposes of a distribution from the Plan, including upon
termination of the Plan, the term “Change of Control” means a “change in the ownership or effective
control” of the Sponsor, or a “change in the ownership of a substantial portion of the assets” of
the Sponsor as described in section 409A of the Code.

I-2

 

     1.7 “Change of Control Value” means the amount determined in clause (i), (ii) or (iii),
whichever is applicable, as follows: (i) the per share price offered to stockholders of the
Sponsor in the merger, consolidation, reorganization, sale of assets or dissolution transaction
that constitutes a Change of Control, (ii) the price per share offered to stockholders of the
Sponsor in any tender offer or exchange offer that constitutes a Change of Control, or (iii) if a
Change of Control occurs other than a Change of Control specified in clause (i) or (ii), the fair
market value per share of the Common Stock on the date of the Change of Control, based on the
closing quotation as described in Section 4.2, on that day. If the consideration offered to
stockholders of the Company in any transaction described above consists of anything other than
cash, the Committee shall determine the cash equivalent of the fair market value of the portion of
the consideration offered that is other than cash.

     1.8 “Code” means the Internal Revenue Code of 1986, as amended from time to time.

     1.9 “Committee” means the persons who are from time to time serving as members of the
committee administering the Plan.

     1.10 “Common Stock” means the Sponsor’s common stock, $0.01 par value (or such other par value
as may be designated by the vote of the Sponsor stockholders or such other equity securities of the
Sponsor into which such common stock may be converted, reclassified or exchanged).

     1.11 “Common Stock Fund” means an Investment Fund which is invested exclusively in Common
Stock and which is accounted for as a unitized stock fund.

     1.12 “Company” means the Sponsor and any Subsidiary adopting the Plan.

     1.13 “Company Match” means the 20 percent (20%) match which the Company makes to the amount
deferred by a Participant under the Plan for three or more Plan Years and deemed credited in the
form of Stock Fund Units during a Plan Year.

     1.14 “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.

     1.15 “Deferred Compensation Ledger” means the ledger maintained by the Committee for each
Participant which reflects the amount of compensation deferred for the Participant under the Plan,
the Company match, and the amount of income or losses credited on each of these amounts.

     1.16 “Director” means any person serving as a member of the Board of Directors.

     1.17 “Director Fees” means any amount paid to a Director for services in such capacity.

     1.18 “Disability” means 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

I-3

 

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.

     1.19 “Effective Date” has the meaning ascribed to it in the Preamble of the Plan.

     1.20 “Incentive Bonus” means a bonus awarded or to be awarded to the Participant under the
Quanex Building Products Management Incentive Program (or its successor plan).

     1.21 “Investment Fund” means a mutual fund or other investment option that is designated by
the Committee for purposes of determining the amount of the Company’s deferred compensation
obligation to a Participant under the Plan.

     1.22 “Normal Retirement Date” means the first day of the month that coincides with or next
follows the date on which the Participant or former Participant (a) attains age 65 or (b) in the
case of a Director, completes either two full terms or six years of service as a Director.

     1.23 “NYSE” means the New York Stock Exchange.

     1.24 “Omnibus Compensation” means compensation earned under an annual incentive award, long
term incentive award or other cash-based award granted under the Quanex Building Products
Corporation 2008 Omnibus Incentive Plan (or any successor plan(s) making awards of this type), as
each award is defined under such plan.

     1.25 “Participant” means an employee or director of a Company who is participating in the
Plan.

     1.26 “Plan” means the Quanex Building Products Corporation Deferred Compensation Plan set
forth in this document, as amended from time to time.

     1.27 “Plan Year” means a one-year period that coincides with the fiscal year of the Sponsor,
which begins on the first day of November of each calendar year and ends on October 31 of the next
ensuing calendar year.

     1.28 “Sponsor” means the Quanex Building Products Corporation, the sponsor of the Plan.

     1.29 “Rabbi Trust” means the Quanex Building Products Corporation Deferred Compensation Trust,
which agreement was entered into between the Sponsor and Bank of America.

     1.30 “Restricted Period” means, for any qualified defined benefit plan sponsored by the
Sponsor or an Affiliate, any period during which the plan is in at-risk status as described in
section 409A of the Code.

I-4

 

     1.31 “Retirement” means a Participant’s Separation From Service that meets the requirements of
retirement from any Company covered by the Plan under the terms of the Retirement Plan or, in the
case of a Director, after completing either two full terms or six years of service as a Director.

     1.32 “Retirement Plan” means the Quanex Building Products Group Salaried and Nonunion Employee
Pension Plan (or its successor), or if the Participant does not participate in that plan, the
defined contribution plan maintained by the Company that is intended to satisfy the requirements of
section 401(a) of the Code in which the Participant participates.

     1.33 “Securities Act” means the Securities Exchange Act of 1934, as amended from time to time.

     1.34 “Separation From Service” means a Participant’s complete separation from service with the
Company and of its Affiliates. The determination of whether a Participant incurs a Separation From
Service will be determined in accordance with section 409A of the Code.

     1.35 “Stock Fund Unit” means each unit of the Common Stock Fund, which unit shall be equal in
value to a share of Common Stock.

     1.36 “Subsidiary” means any wholly-owned subsidiary of the Sponsor.

     1.37 “Term of Deferral” means the period of deferral chosen by the Participant under the
election procedure established in Section 3.1 or by the Committee which pertains to that portion of
the Incentive Bonus, Omnibus Compensation or Director Fees for each given Plan Year and its
accumulated income accrued that has been deferred under an election made prior to the commencement
of the period during which it is earned.

     1.38 “Valuation Date” means the date as of which an Investment Fund is valued for purposes of
the Plan. Until the Committee determines otherwise, the Valuation Dates shall be each business
day. The Valuation Date for purposes of a distribution shall be determined as set forth in
Section 6.6.

     1.39 “Voting Securities” means any security which ordinarily possesses the power to vote in
the election of the Board without the happening of any precondition or contingency.

I-5

 

ARTICLE II

ELIGIBILITY

          Except as specified below, all Directors, executive officers of the Sponsor and all members of
the Sponsor’s Business Leader’s Council will be eligible to participate in the Plan. The Committee
retains the right to establish such additional eligibility requirements for participation in the
Plan as it may determine are appropriate or necessary from time to time and has the right to
determine, in its sole discretion, that any one or more persons who meet the eligibility
requirements will not be eligible to participate for one or more Plan Years beginning after the
date they are notified of this decision by the Committee.

II-1

 

ARTICLE III

DEFERRALS AND COMPANY CONTRIBUTIONS

     3.1 Deferral Election. A Participant may elect during the election period(s) established by
the Committee prior to the beginning of any Plan Year or calendar year, as applicable (except in
the cases of Incentive Bonus or Omnibus Compensation that is performance-based), or, in the case of
a newly eligible Participant, within 30 days of notification that he is eligible to participate in
the Plan:

     (1) the percentage of his Incentive Bonus earned during and relating to the
ensuing Plan Year which is to be deferred under the Plan;

     (2) the percentage of his Omnibus Compensation earned during the performance
period that begins during the ensuing Plan Year which is to be deferred under the
Plan;

     (3) the percentage of his Director Fees earned during and relating to the
ensuing calendar year which is to be deferred under the Plan;

     (4) the percentage of the amount deferred, if any, to be deferred and deemed
credited in the form of Stock Fund Units and the percentages, if any, to be deferred
in the form of cash and deemed credited to the Investment Funds;

     (5) the length of the period of deferral, if any amount has been elected to be
deferred (which amount shall include any corresponding matching contributions for
such Plan Year), which deferral shall be:

     A. to a date certain, or

     B. to Separation From Service with the Company.

     (6) the form of payment of the amount that has been elected to be deferred for
such Plan Year (and earnings thereon) – a lump sum, or quarterly or annual
installment payments of the principal amount adjusted for earnings and losses
accrued after the distribution date, or last installment paid, if later, over no
less than three nor more than 20 years.

          In the case of any Omnibus Compensation that is performance-based and based on services
performed over a period of at least 12 months, an initial deferral election may be made during the
election period established by the Committee which may occur prior to or after the beginning of any
Plan Year or calendar year, provided, that such election must be made no later than six months
before the end of the performance period.

          If a Participant elects a deferral period to a date certain, the deferral period shall end
upon the Participant’s death, Disability or Separation From Service, if earlier.

III-1

 

          In the event a Participant fails to make a time of payment election under Section 3.1(6) with
respect to any amounts deferred under the Plan, such amounts shall be distributed upon the earlier
of the Participant’s death, Disability or Separation from Service and such distribution shall be
made in the form of a lump sum payment.

          The deferrals deemed credited to the Common Stock Fund in Stock Fund Units as elected by
Participants in any Plan Year must not exceed three percent (3%) of the shares of Common Stock
outstanding on the first day of the Plan Year. In the event this maximum would be exceeded, each
Participant who is an employee of a Company and elected to defer in the form of Stock Fund Units
shall have his election reduced on a pro rata basis as compared to all Participants who elected to
defer in the form of Stock Fund Units until those deferrals in the aggregate for that Plan Year
equal the maximum and the portion of his Incentive Bonus and Omnibus Compensation which would have
been deferred in the form of Stock Fund Units shall instead be distributed to the Participant as
provided in the Quanex Building Products Management Incentive Program and the Quanex Building
Products Corporation 2008 Omnibus Incentive Plan, as applicable (or their successor plans).

          The election to participate in the Plan for a given Plan Year will be effective only upon
receipt by the Committee or its designee of the Participant’s properly executed election on such
form or in accordance with such procedures as will be determined by the Committee from time to
time. If the Participant does not exercise his right to defer, the Participant will be deemed to
have elected not to defer any part of his Incentive Bonus, Omnibus Compensation or Director Fees
for that Plan Year and all of his Incentive Bonus, Omnibus Compensation and Director Fees will be
paid in cash.

     3.2 Change of Election. Once an election has been made it becomes irrevocable for that Plan
Year, except that a Participant may change his deemed investment selections in accordance with
Section 4.5 and procedures established by the Committee and may change the election of the time and
form of payment he previously elected under Section 3.1(5) or 3.1(6); provided that all changes of
election of a Participant’s time or form of payment shall be effective only if the election change
is received by the Committee or its designee in proper form 12 months prior to the event which
would require a distribution under the Plan, such election change does not provide for a payment or
commencement of payment that is earlier than five (5) years after the date on which such payment
would otherwise have been made, and during the 12-month period prior to the effective date of such
election change, the last effective election made by the Participant shall continue to remain in
force; provided further, that with respect to amounts deferred and vested on or before December 31,
2004, all changes of election of a Participant’s time or form of payment with respect to such
amounts shall be effective only if the election change is received by the Committee or its designee
in proper form during the 30-day period ending 12 months prior to the event which would require a
distribution under the Plan.

     3.3 Special 409A Transition Election. Pursuant to, and in accordance with, the transition
guidance issued by the Internal Revenue Service under section 409A of the Code, and as such
guidance was modified by I.R.S. Notice 2007-86, the directors and executive officers of the Company
who participate in the Plan may elect during 2008, at such time(s) as determined by the management
of the Company after consultation with the Compensation Committee of the

III-2

 

Company, to change the time and form of payment of the compensation such directors and
officers previously elected to defer under the Plan, including amounts deferred and vested prior to
January 1, 2005; provided, that any such election may not permit the payment of any such
compensation that is payable during 2008 to be deferred to a subsequent year or any such
compensation that is otherwise payable during a year subsequent to 2008 to be paid in 2008.

     3.4 Company Match. For each Participant who makes an election under the Plan to defer a
portion of his annual incentive award Omnibus Compensation or Director Fees in the form of Stock
Fund Units for a period of three full years or more from the effective date of the deferral
election, the Company will credit to the Account of such Participant additional Stock Fund Units
equal to 20 percent (20%) of the amount which is deferred in the form of Stock Fund Units.

     3.5 Mandatory. Deferral. If a Participant becomes entitled to a cash payment of part or all
of an Incentive Bonus or his Omnibus Compensation because the Participant did not elect to defer
all of his Incentive Bonus or Omnibus Compensation and the Company determines that section 162(m)
of the Code may not allow the Company to take a deduction for part or all of the Incentive Bonus or
Omnibus Compensation, then, unless a Change of Control has occurred after the Effective Date, the
payment of the Incentive Bonus or Omnibus Compensation otherwise payable hereunder will be delayed
to the extent any such payment would not be deductible by the Company by reason of section 162(m)
of the Code. The Committee may waive the mandatory deferral required by this Section 3.5 with
respect to a Participant who is not a member of the Committee but such waiver shall only be made on
an individual basis. In accordance with procedures established by the Committee, a Participant
whose Incentive Bonus or Omnibus Compensation is in whole or in part mandatorily deferred pursuant
to this Section 3.5 shall be permitted to have the amount of such mandatory deferral deemed
invested in the Common Stock Fund or the Investment Funds in such proportions as he shall
designate.

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ARTICLE IV

ACCOUNT

     4.1 Establishing a Participant’s Account. The Committee will establish an Account for each
Participant in a special Deferred Compensation Ledger which will be maintained by the Company. The
Account will reflect the amount of the Company’s obligation to the Participant at any given time.

     4.2 Credit of the Participant’s Deferral and the Company’s Match. Upon completion of the Plan
Year or quarter, as applicable, the Committee will determine, as soon as administratively
practicable, the amount of a Participant’s annual incentive award Omnibus Compensation or Director
Fees that has been deferred for that Plan Year or quarter, as applicable, and the amount of the
Company Match, if any, and will credit that or those amounts to the Participant’s Account as of the
end of the Plan Year or quarter, as applicable, during which the annual incentive award Omnibus
Compensation or Director Fees were earned. If the Participant elected his deferral to be in Stock
Fund Units, the number of full and fractional Stock Fund Units credited to his Account shall be the
number of full and fractional shares of Common Stock that could have been purchased with the dollar
amount deferred and the related Company Match, if any, without taking into account any brokerage
fees, taxes or other expenses which might be incurred in such a transaction, based upon the closing
quotation on the NYSE, or if not traded on the NYSE, the principal market in which the Common
Stock is traded on the date the amount would have been paid had it not been deferred pursuant to
Article III.

     4.3 Crediting of Dividends and Distributions on Common Stock. When dividends are declared and
paid, or other distributions, whether stock, property, cash or other rights, are made with respect
to the Common Stock, those dividends and other distributions shall be accrued in a Participant’s
Account based upon the number of Stock Fund Units credited to his Account. The dividends or other
distributions on shares of Common Stock shall be credited to the Participant’s Account as
additional Stock Fund Units. The number of additional Stock Fund Units credited to the
Participant’s Account shall be the number of full and fractional shares of Common Stock that could
have been purchased with the dollar amount of the dividend or other distribution, without taking
into account any brokerage fees, taxes or other expenses which might be incurred in such a
transaction, based upon the closing quotation at the NYSE or if not traded on the NYSE, the
principal market in which the Common Stock is traded, on the date of the dividend or other
distribution.

     4.4 Crediting of Earnings and Losses. Each Participant shall be awarded by the Committee
earnings and losses on his deferred compensation as part of his total deferred compensation under
the Plan equal to the amount which is deemed to be earned and lost on his bookkeeping Account
established to enable the Company to determine its obligations under the Plan. For the purpose of
determining the earnings and losses to be credited to the Participant’s Account under the Plan, the
Committee shall assume that the Participant’s Account is invested in units or shares of the
Investment Funds in the proportions selected by the Participant in accordance with procedures
established by the Committee. This amount accrued by the Committee as deferred compensation shall
be a part of the Company’s obligation to the

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Participant and payment of it shall be a general obligation of the Company. The determination
of earnings and losses based on the income and appreciation of the Participant’s Account shall in
no way affect the ability of the general creditors of the Company to reach the assets of the
Company or the Rabbi Trust in the event of the insolvency or bankruptcy of the Company or place the
Participants in a secured position ahead of the general creditors of the Company. Although a
Participant’s investment selections made in accordance with the terms of the Plan and such
procedures as may be established by the Committee shall be relevant for purposes of determining the
Company’s obligation to the Participant under the Plan, there is no requirement that any assets of
the Company (including those held in the Rabbi Trust) shall be invested in accordance with the
Participant’s investment selections.

          Earnings and losses will be accrued on each Valuation Date on each portion of a Participant’s
Account deemed invested in an Investment Fund from the later of (a) the time the amount is deemed
credited to the Investment Fund or (b) the last previous Valuation Date.

     4.5 Common Stock Conversion Election. At any time during a period of three years prior to the
earliest time a Participant who is an employee of a Company could retire under the Retirement Plan
and ending on that Participant’s Normal Retirement Date, a Participant who is an employee of a
Company may elect a Retirement date under the Retirement Plan and may elect to have all or a
portion of the Stock Fund Units in his Account converted to cash and deemed to be invested in any
Investment Fund(s) selected by him. In that event, all such Stock Fund Units shall be converted on
the date notice is received by the Company based upon the closing quotation as described in
Section 4.2, on that day, unless the Participant has specified no more than five different dates
after the date of the notice on which the Participant desires all or a portion of the Stock Fund
Units to be converted and the percentage of units to be converted on each date. If the Participant
has specified dates for and the percentage of units to be converted, then the designated percentage
of Stock Fund Units to be converted on each date shall be converted on the specified date based on
the closing quotation as described in Section 4.2 on such specified dates.

          At any time that is at least three years after a Stock Fund Unit is credited to his Account
pursuant to Section 4.2, a Participant may elect to have such Stock Fund Unit converted to cash and
deemed to be invested in any Investment Fund(s) selected by him. In that event, all such Stock
Fund Units specified by the Participant in a written notice to the Company which have been credited
to the Participant’s Account for at least three years prior to the giving of such notice shall be
converted on the date notice is received by the Company based upon the closing quotation as
described in Section 4.2, on that day.

          A Participant may elect at any time to have each Stock Fund Unit that is credited to his
Account pursuant to Section 4.3 converted to cash and deemed to be invested in any Investment
Fund(s) selected by him. In that event, all such Stock Fund Units specified by the Participant in
a written notice to the Company which were credited to the Participant’s Account pursuant to
Section 4.3 shall be converted on the date notice is received by the Company based upon the closing
quotation as described in Section 4.2, on that day.

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     4.6 Conversion and Cash-Out Upon a Change of Control. Notwithstanding any other provision of
the Plan, including but not limited to Section 6.6, immediately upon the occurrence of a Change of
Control, all Stock Fund Units credited to a current or former Participant’s Account shall be
converted to cash based on the Change of Control Value of such Stock Fund Units. If such Change of
Control meets the requirements of a “change of control” as defined by section 409A of the Code,
within five days after the date on which such Change of Control occurs, all current and former
Participants shall be paid in cash lump sum payments the balances credited to their Accounts. If
such Change of Control does not meet the requirements of a “change of control” as defined by
section 409A of the Code, no payments shall be made to the current and former Participants in the
Plan as a result of such Change of Control.

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ARTICLE V

VESTING AND EVENTS CAUSING FORFEITURE

     5.1 Vesting.

     (a) Deferrals. All deferrals of the Incentive Bonus, Omnibus Compensation and Director
Fees and all income accrued on the deferrals will be 100 percent (100%) vested except for
the events of forfeiture described in Sections 5.2 and 5.3.

     (b) Company Match and Dividends. Except as provided in Sections 5.2 and 5.3, each
Stock Fund Unit accrued under Section 3.4 as a Company Match and credited to the
Participant’s account pursuant to Section 4.2 (including any dividends or other property or
rights accumulated because of such Unit and credited on such Stock Fund Unit under Section
4.3) shall vest on the earlier to occur of (i) the third anniversary of the date on which
such Stock Fund Unit was credited to the Participant’s account, (ii) the Participant’s
death, (iii) the Participant’s Separation From Service due to a Disability, or (iv) the
Participant’s Retirement. If a Participant ceases to be an employee or director, other than
due to death, Disability or Retirement, within three years after a Company Matching accrual
of Stock Fund Units is credited to the Participant’s account, such Company Matching accruals
(including any dividends or other property or rights accumulated because of those Stock Fund
Units) shall be immediately forfeited.

     5.2 Forfeiture for Cause. If the Committee finds, after full consideration of the facts
presented on behalf of both the Company and a former Participant, that the Participant was
discharged by the Company for fraud, embezzlement, theft, commission of a felony, proven dishonesty
in the course of his employment by the Company which damaged the Company, or for disclosing trade
secrets of the Company, the entire amount credited to his Account, exclusive of an amount equal to
the total balance of deferrals of the Participant, will be forfeited. The decision of the
Committee as to the cause of a former Participant’s discharge and the damage done to the Company
will be final. No decision of the Committee will affect the finality of the discharge of the
Participant by the Company in any manner.

     5.3 Forfeiture for Competition. If at the time a distribution is being made or is to be made
to a Participant or former Participant, the Committee finds after full consideration of the facts
presented on behalf of the Company and the Participant or former Participant, that the Participant
or former Participant at any time within two years from his Separation From Service from the
Company, and without written consent of the Company, directly or indirectly owns, operates,
manages, controls or participates in the ownership, management, operation or control of or is
employed by, or is paid as a consultant or other independent contractor by a business which
competes or at any time did compete with the Company by which he was formerly employed in a trade
area served by the Company at the time distributions are being made or to be made and in which the
Participant or former Participant had represented the Company while employed by it; and, if the
Participant or former Participant continues to be so engaged 60 days after written notice has been
given to him, the Committee will forfeit all amounts otherwise due

V-1

 

the Participant or former Participant, exclusive of an amount equal to the total balance of
deferrals of the Participant or former Participant.

     5.4 Full Vesting in the Event of a Change of Control. The forfeitures created by
Sections 5.1(b), 5.2 and 5.3 shall not apply with respect to any amounts credited to the Accounts
of current or former Participants after the occurrence of a Change of Control.

V-2

 

ARTICLE VI

DISTRIBUTIONS

     6.1 Form of Distributions or Withdrawals. Upon a distribution or withdrawal, the number of
Stock Fund Units credited to the Participant’s Account, if any, and the amounts credited to the
Participant’s Account and deemed invested in the Investment Funds, if any, required to be
distributed shall be distributed in cash, whether the distribution or withdrawal is in a lump sum
or in installments. For this purpose, the amount per unit in the Company Stock Fund deemed
credited to Participant’s Account shall equal the closing quotation for the Common Stock on the
NYSE (or if not traded on the NYSE, the principal market in which the Common Stock is traded) on
the third business day prior to the date of distribution. If the distribution is in installments,
all dividends and other property or rights accumulating on the shares still undistributed will be
credited as provided in Section 4.3 and distributed with the next installment. A lump sum or
installment distribution of amounts deemed invested in an Investment Fund shall be based upon the
value of the Investment Fund as of the close of the Valuation Date immediately preceding such
distribution.

     6.2 Death. Upon the death of a Participant prior to the expiration of the Term of Deferral,
the Participant’s Beneficiary or Beneficiaries will receive in cash as required by Section 6.1 the
balance then credited to the Participant’s Account in the Deferred Compensation Ledger. The lump
sum distribution or the first installment of the periodic distribution will be made 90 days after
the Participant’s death, or, if later, as soon as administratively practicable following the
Participant’s death.

          Each Participant, upon making his initial deferral election, will file with the Committee or
its designee a designation of one or more Beneficiaries to whom distributions otherwise due the
Participant will be made in the event of his death prior to the complete distribution of the amount
credited to his Account in the Deferred Compensation Ledger. The designation will be effective
upon receipt by the Committee or its designee of a form which the Committee has approved for that
purpose and which has been completed in accordance with procedures approved by the Committee. The
Participant may from time to time revoke or change any designation of Beneficiary by filing another
approved Beneficiary designation form with the Committee or its designee. If there is no valid
designation of Beneficiary on file with the Committee or its designee at the time of the
Participant’s death, or if all of the Beneficiaries designated in the last Beneficiary designation
have predeceased the Participant or otherwise ceased to exist, the Beneficiary will be the
Participant’s spouse, if the spouse survives the Participant, or otherwise the Participant’s
estate. A Beneficiary must survive the Participant by 60 days in order to be considered to be
living on the date of the Participant’s death. If any Beneficiary survives the Participant but
dies or otherwise ceases to exist before receiving all amounts due the Beneficiary from the
Participant’s Account, the balance of the amount which would have been paid to that Beneficiary
will, unless the Participant’s designation provides otherwise, be distributed to the individual
deceased Beneficiary’s estate or to the Participant’s estate in the case of a Beneficiary which is
not an individual. Any Beneficiary designation which designates any person or entity other than
the Participant’s spouse must be consented to in a form and in accordance with procedures
acceptable to the Committee in order to be effective.

VI-1

 

     6.3 Disability. Upon the Disability of a Participant prior to the expiration of the Term of
Deferral, the Participant will receive in cash as required by Section 6.1 the balance then credited
to the Participant’s Account. The lump sum distribution or the first installment of the periodic
distribution will be made 90 days after the Participant is determined to be disabled, or, if later,
as soon as administratively practicable following such date.

     6.4 Expiration of Term of Deferral. Upon the expiration of the Term of Deferral, the
Participant shall be entitled to receive in cash as required by Section 6.1 the balance credited to
the Participant’s Account. Except as provided below, the lump sum distribution or the first
installment of the periodic distribution will be made 90 days after the expiration of the Term of
Deferral, or, if later, as soon as administratively practicable following such expiration, without
regard to whether the Participant is still employed by the Company or not. Payments due to the
Separation From Service of a Participant who is an employee of a Company, excluding a Separation
From Service due to death or Disability but including due to Retirement, shall be made on the first
business day following the six-month anniversary of the Participant’s Separation From Service or as
soon as administratively practicable thereafter.

     6.5 Unforeseeable Emergency Withdrawals. Any Participant who is in the employ of a Company
and is not entitled to a distribution from the Plan may request an unforeseeable emergency
withdrawal. No unforeseeable emergency withdrawal can exceed the lesser of the amount credited to
the Participant’s Account or the amount reasonably needed to satisfy the unforeseeable emergency
need. Whether an unforeseeable emergency exists and the amount reasonably needed to satisfy the
unforeseeable emergency need will be determined by the Committee based upon the evidence presented
by the Participant and the rules established in this Section. If a hardship withdrawal is approved
by the Committee it will be made in cash as required in Section 6.1 within ten days of the
Committee’s determination. An unforeseeable emergency for this purpose is a severe financial
hardship to the Participant resulting from an illness or accident of the Participant, the
Participant’s spouse, or a dependent (as defined in section 152(a)) of the Participant, loss of the
Participant’s property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Participant. The
circumstances that will constitute an unforeseeable emergency will depend upon the facts of each
case, but, in any case, payment under this Section shall not be made to the extent that such
emergency is or may be relieved: (i) through reimbursement or compensation by insurance; (ii) by
liquidation of the Participant’s assets, to the extent the liquidation of such assets would not
itself cause a severe financial hardship; or (iii) by cessation of deferrals under this Plan and
any other plan in which the Participant participates. Such foreseeable needs for funds as the need
to send a Participant’s child to college or the desire to purchase a home will not be considered to
be an unforeseeable emergency.

     6.6 Valuation.

     (a) For purposes of a distribution under Sections 6.2, 6.3 or 6.5, the Valuation Date
shall be the first business day coincident with or immediately preceding the date of the
distribution.

VI-2

 

     (b) For purposes of a distribution under Section 6.4, the Valuation Date shall be as
follows:

     (1) the first business day following the date which is 90 days following the
expiration of the Term of Deferral or

     (2) in the case of a distribution due to a Separation From Service of an
employee, the date which is the six-month anniversary of such Separation From
Service or

     (3) in the case of a distribution due to a Separation From Service that occurs
within three years after a Change of Control, which Change of Control did not meet
the requirements of a “change of control” as defined by section 409A of the Code,
the first business day coincident with or following the date of the closing of such
Change of Control, but only if the value of the Participant’s account on such
Valuation Date would be greater than the value as determined under clause (2) above.

     6.7 Mandatory Immediate Lump Sum Payment. Notwithstanding any other provisions of the Plan,
if the balance then credited to the Participant’s Account on the date the Participant would
commence payment of his benefits under Sections 6.2, 6.3. or 6.4 is less than or equal to
$10,000.00, the benefit shall be paid in the form of a lump sum payment.

     6.8 Payment Restrictions on Any Portion of a Benefit Determined Not to Be Deductible. Except
for hardship withdrawals under Section 6.5, if a Participant has a benefit that is due during a
Plan Year and the Committee determines that section 162(m) of the Code could affect the Company’s
deduction on the amount paid, the distribution of his benefit will be delayed until December 1
following the end of the Plan Year. Then on such December 1 if the Company’s deduction is
determined by the Committee not to be affected, the benefit in total will be distributed
immediately. However, if the Committee determines that some portion of the benefit is still
affected, then only that portion of the benefit which is deductible by the Company shall be
distributed on such December 1 and the distribution of the remaining portion of the benefit will be
delayed to the first day of the first complete month of the Plan Year or Years on which a portion
or all of the remaining distribution can be made and deducted by the Company on its federal income
tax return. The Committee may waive the mandatory deferral required by this Section 6.8 with
respect to a Participant who is not a member of the Committee, but such waiver shall only be made
on an individual basis and at the time the distribution is to be made.

     6.9 Responsibility for Distributions and Withholding of Taxes. The Committee or its designee
will furnish information to the Company last employing the Participant, concerning the amount and
form of distribution to any Participant entitled to a distribution so that the Company may make or
cause the Rabbi Trust to make the distribution required. It will also calculate the deductions
from the amount of the benefit paid under the Plan for any taxes required to be withheld by
federal, state or local government and will cause them to be withheld. If a Participant has
deferred compensation under the Plan while in the service of more than one Company, each Company
for which the Participant was working will reimburse the disbursing

VI-3

 

agent for the amount attributable to compensation deferred while the Participant was in the
service of that Company if it has not already provided that funding to the disbursing agent.

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ARTICLE VII

ADMINISTRATION

     7.1 Committee Appointment. The Committee will be appointed by the Board. The initial
Committee members will be Compensation Committee of the Board. Each Committee member will serve
until his or her resignation or removal. The Board will have the sole discretion to remove any one
or more Committee members and appoint one or more replacement or additional Committee members from
time to time.

     7.2 Committee Organization and Voting. The Committee will select from among its members a
chairman who will preside at all of its meetings and will elect a secretary without regard to
whether that person is a member of the Committee. The secretary will keep all records, documents
and data pertaining to the Committee’s supervision and administration of the Plan. A majority of
the members of the Committee will constitute a quorum for the transaction of business and the vote
of a majority of the members present at any meeting will decide any question brought before the
meeting. In addition, the Committee may decide any question by vote, taken without a meeting, of a
majority of its members. If a member of the Committee is ever appointed who is or becomes a
Participant, that Committee member will not vote or act on any matter relating solely to himself.

     7.3 Powers of the Committee. The Committee will have the exclusive responsibility for the
general administration of the Plan according to the terms and provisions of the Plan and will have
all powers necessary to accomplish those purposes, including but not by way of limitation the
right, power and authority:

     (a) to make rules and regulations for the administration of the Plan;

     (b) to construe all terms, provisions, conditions and limitations of the Plan;

     (c) to correct any defect, supply any omission or reconcile any inconsistency that may
appear in the Plan in the manner and to the extent it deems expedient to carry the Plan into
effect for the greatest benefit of all parties at interest;

     (d) to designate the persons eligible to become Participants and to establish the
maximum and minimum amounts that may be elected to be deferred;

     (e) to determine all controversies relating to the administration of the Plan,
including but not limited to:

     (1) differences of opinion arising between the Company and a Participant except
when the difference of opinion relates to the entitlement to, the amount of or the
method or timing of a distribution of a benefit affected by a Change of Control, in
which event it shall be decided by judicial action; and

     (2) any question it deems advisable to determine in order to promote the
uniform administration of the Plan for the benefit of all parties at interest;

VII-1

 

     (f) to select the menu of Investment Funds available for purposes of determining the
amount of the Company’s obligation to any Participant under the Plan; and

     (g) to delegate by written notice those duties of the Committee, as it deems necessary
or advisable for the proper and efficient administration of the Plan.

     7.4 Committee Discretion. The Committee, in exercising any power or authority granted under
the Plan or in making any determination under the Plan, shall perform or refrain from performing
those acts using its sole discretion and judgment. Any decision made by the Committee or any
refraining to act or any act taken by the Committee in good faith shall be final and binding on all
parties. The Committee’s decision shall never be subject to de novo review. Notwithstanding the
foregoing, the Committee’s decision, refraining to act or acting is to be subject to judicial
review for those incidents occurring during the Plan Year in which a Change of Control occurs and
during the next three succeeding Plan Years.

     7.5 Annual Statements. The Committee will cause each Participant to receive an annual
statement as soon as administratively possible after the conclusion of each Plan Year containing
the amounts deferred, the Company match, if any, and the income accrued on the deferred and matched
amounts.

     7.6 Reimbursement of Expenses. The Committee will serve without compensation for their
services but will be reimbursed by the Sponsor for all expenses properly and actually incurred in
the performance of their duties under the Plan.

     7.7 Limitation on Liability. Neither the Committee nor its designees will be liable for any
decision or action taken in good faith in connection with the administration of the Plan. Without
limiting the generality of the foregoing, any decision or action taken by the Committee when it
relies upon information supplied it by any officer of the Company, the Company’s legal counsel, the
Company’s independent accountants or other advisors in connection with the administration of the
Plan will be deemed to have been taken in good faith. None of the Company, the Committee or any
designee of the Committee shall bear any liability with respect to the investment performance of
any of the Investment Funds and none of them are under any obligation to furnish the Participants
any financial information concerning the Investment Funds. Each Participant is solely responsible
for the results of any investment selections and none of the Company, the Committee or any designee
of the Committee makes any representations concerning the advisability of investing or refraining
from investing in any particular Investment Fund.

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ARTICLE VIII

ADOPTION BY SUBSIDIARIES

     8.1 Procedure for and Status After Adoption. Any Subsidiary may, with the approval of the
Committee, adopt the Plan by appropriate action of its board. The terms of the Plan will apply
separately to each Subsidiary adopting the Plan and its Participants in the same manner as is
expressly provided for the Sponsor and its Participants except that the powers of the Board and the
Committee under the Plan will be exercised by the Board alone. The Sponsor and each Subsidiary
adopting the Plan will bear the cost of providing plan benefits for its own Participants. It is
intended that the obligation of the Sponsor and each Subsidiary with respect to its Participants
will be the sole obligation of the Company that is employing the Participant and will not bind any
other Company.

     8.2 Termination of Participation by Adopting Subsidiary. Any Subsidiary adopting the Plan
may, by appropriate action of its board of directors, terminate its participation in the Plan. The
Committee may, in its discretion, also terminate a Subsidiary’s participation in the Plan at any
time. The termination of the participation in the Plan by a Subsidiary will not, however, affect
the rights of any Participant who is working or has worked for the Subsidiary as to amounts or
Stock Fund Units previously standing to his credit in his Account or reduce the income accrued on
amounts deferred by him or matched by the Company and credited to his Account whether in cash or in
Stock Fund Units, prior to the distribution of the benefit to the Participant without his consent.

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ARTICLE IX

AMENDMENT AND/OR TERMINATION

     9.1 Amendment or Termination of the Plan. The Board may amend or terminate the Plan at any
time by an instrument in writing without the consent of any adopting Company; provided, however,
that no amendment of the Plan shall apply to amounts deferred and vested on or before December 31,
2004, unless the instrument explicitly states that the amendment shall apply to such amounts.

     9.2 No Retroactive Effect on Awarded Benefits. No amendment will affect the rights of any
Participant to the amounts, whether deemed invested in the Company Stock Fund or the Investment
Funds, then standing to his credit in his Account, to change the method of calculating the income
already accrued or to accrue in the future on amounts already deferred by him or matched by the
Company prior to the date of the amendment or to change a Participant’s right under any provision
relating to a Change of Control after a Change of Control has occurred, without the Participant’s
consent. However, the Board shall retain the right at any time to change in any manner the method
of calculating the match by the Company and the income to accrue on all amounts to be deferred in
the future by a Participant and/or to be matched in the future by the Company after the date of the
amendment if it has been announced to the Participants.

     9.3 Effect of Termination. If the Plan is terminated, all amounts, whether deemed invested in
the Company Stock Fund or the Investment Funds, deferred by Participants and matched by the Company
will continue to be held under the terms of the Plan until all amounts have been distributed
according to the elections made by the Participants or the directives made by the Committee prior
to the deferrals. The forfeiture provisions of Sections 5.1(b), 5.2 and 5.3 and the restriction
set out in Section 6.8 would continue to apply throughout the period after the termination of the
Plan but prior to the completed distribution of all benefits. The Board may terminate the Plan
within the 30 days preceding or the 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 value of the Participants’ Accounts to Participants in the manner and at the time determined by
the Committee, in its sole discretion, subject to Section 9.2 and as permitted by section 409A of
the Code.

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ARTICLE X

FUNDING

     10.1 Payments Under This Agreement Are the Obligation of the Company. The Company will
distribute the benefits due the Participants under the Plan; however, should it fail to do so when
a benefit is due and the funding trust contemplated by Section 10.2 exists, the benefit will be
distributed by the trustee of that funding trust. In any event, if the trust fails to distribute a
benefit for any reason, the Company still remains liable for all benefits provided by the Plan.

     10.2 Agreement May Be Funded Through Rabbi Trust. It is specifically recognized by both the
Company and the Participants that the Company may, but is not required to transfer any funds,
shares of Common Stock or other assets that it finds desirable to a trust established to accumulate
assets sufficient to fund the obligations of all of the Companies signatory to the Plan. However,
under all circumstances, the Participants will have no rights to any of those assets; and likewise,
under all circumstances, the rights of the Participants to the assets held in the trust will be no
greater than the rights expressed in this agreement. Nothing contained in the trust agreement
which creates the funding trust will constitute a guarantee by any Company that assets of the
Company transferred to the trust will be sufficient to fund all benefits under the Plan or would
place the Participant in a secured position ahead of general creditors should the Company become
insolvent or bankrupt. Any trust agreement prepared to fund the Company’s obligations under this
agreement must specifically set out these principles so it is clear in that trust agreement that
the Participants in the Plan are only unsecured general creditors of the Company in relation to
their benefits under the Plan.

          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.

     10.3 Reversion of Excess Assets. Any adopting Company may, at any time, request the actuary,
who last performed the annual actuarial valuation of the Quanex Building Products Corporation
Employees’ Pension Plan, to determine the present Account balance, assuming the accrual rate for
income not to be reduced (whether it actually is or not), as of the month end coincident with or
next preceding the request, of all Participants and Beneficiaries of deceased Participants for
which all Companies are or will be obligated to make benefit distributions under the Plan. If the
fair market value of the assets held in the trust, as determined by the Trustee as of that same
date, exceeds the total of the Account balances of all Participants and Beneficiaries by 25 percent
(25%), any Company may direct the trustee to return to each Company its proportionate part of the
assets which are in excess of 125 percent (125%) of the Account balances. Each Company’s share of
the excess assets will be the Participants’ Accounts accrued while in the employ of that Company as
compared to the total of the Account balances accrued by all Participants under the Plan times the
excess assets. If there has been a Change of Control,

X-1

 

for the purpose of determining if there are excess funds, all contributions made prior to the
Change of Control will be subtracted from the fair market value of the assets held in the trust as
of the determination date but before the determination is made.

     10.4 Participants Must Rely Only on General Credit of the Company. It is also specifically
recognized by both the Company and the Participants that the Plan is only a general corporate
commitment and that each Participant must rely upon the general credit of the Company for the
fulfillment of its obligations under the Plan. Under all circumstances the rights of Participants
to any asset held by the Company will be no greater than the rights expressed in this agreement.
Nothing contained in this agreement will constitute a guarantee by the Company that the assets of
the Company will be sufficient to distribute any benefits under the Plan or would place the
Participant in a secured position ahead of general creditors of the Company. Though the Company
may establish or become a signatory to a Rabbi Trust, as indicated in Section 10.1, to accumulate
assets to fulfill its obligations, the Plan and any such trust will not create any lien, claim,
encumbrance, right, title or other interest of any kind in any Participant in any asset held by the
Company, contributed to any such trust or otherwise designated to be used in fulfillment of any of
its obligations created in this agreement. No specific assets of the Company have been or will be
set aside, or will in any way be transferred to the trust or will be pledged in any way for the
performance of the Company’s obligations under the Plan which would remove such assets from being
subject to the general creditors of the Company.

X-2

 

ARTICLE XI

MISCELLANEOUS

     11.1 Limitation of Rights. Nothing in the Plan will be construed:

     (a) to give any employee of any Company any right to be designated a Participant in the
Plan;

     (b) to give a Participant any right with respect to the compensation deferred, the
Company match or the income accrued and credited in the Deferred Compensation Ledger except
in accordance with the terms of the Plan;

     (c) to limit in any way the right of the Company to terminate a Participant’s
employment with the Company at any time;

     (d) to evidence any agreement or understanding, expressed or implied, that the Company
will employ a Participant in any particular position or for any particular remuneration; or

     (e) to give a Participant or any other person claiming through him any interest or
right under the Plan other than that of any unsecured general creditor of the Company.

     11.2 Distributions to Incompetents or Minors. Should a Participant become incompetent or
should a Participant designate a Beneficiary who is a minor or incompetent, the Committee is
authorized to distribute the benefit due to the parent of the minor or to the guardian of the minor
or incompetent or directly to the minor or to apply those assets for the benefit of the minor or
incompetent in any manner the Committee determines in its sole discretion.

     11.3 Nonalienation of Benefits. No right or benefit provided in the Plan will be transferable
by the Participant except, upon his death, to a named Beneficiary as provided in the Plan. No
right or benefit under the Plan will be subject to anticipation, alienation, sale, assignment,
pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge,
encumber, or charge the same will be void. No right or benefit under the Plan will in any manner
be liable for or subject to any debts, contracts, liabilities or torts of the person entitled to
such benefits. If any Participant or any Beneficiary becomes bankrupt or attempts to anticipate,
alienate, sell, assign, pledge, encumber or charge any right or benefit under the Plan, that right
or benefit will, in the discretion of the Committee, cease. In that event, the Committee may have
the Company hold or apply the right or benefit or any part of it to the benefit of the Participant
or Beneficiary, his or her spouse, children or other dependents or any of them in any manner and in
any proportion the Committee believes to be proper in its sole and absolute discretion, but is not
required to do so.

     11.4 Expenses Incurred in Enforcing the Plan. The Company will, in addition, pay a
Participant for all legal fees and expenses incurred by him in contesting or disputing his
termination or in seeking to obtain or enforce any benefit provided by the Plan if the termination
occurs in the Plan Year in which a Change of Control occurs or during the next three succeeding

XI-1

 

Plan Years following the Plan Year in which a Change of Control occurs except to the extent
that the payment of those fees or expenses are restricted under Section 6.8.

     11.5 Reliance Upon Information. The Committee will not be liable for any decision or action
taken or not taken in good faith in connection with the administration of the Plan. Without
limiting the generality of the foregoing, any decision or action taken or not taken by the
Committee when it relies upon information supplied it by any officer of the Company, the Company’s
legal counsel, the Company’s independent accountants or other advisors in connection with the
administration of the Plan will be deemed to have been taken in good faith.

     11.6 Severability. If any term, provision, covenant or condition of the Plan is held to be
invalid, void or otherwise unenforceable, the rest of the Plan will remain in full force and effect
and will in no way be affected, impaired or invalidated.

     11.7 Notice. Any notice or filing required or permitted to be given to the Committee or a
Participant will be sufficient if in writing and hand-delivered or sent by U.S. mail to the
principal office of the Company or to the residential mailing address of the Participant. Notice
will be deemed to be given as of the date of hand-delivery or if delivery is by mail, as of the
date shown on the postmark.

     11.8 Gender and Number. If the context requires it, words of one gender when used in the Plan
will include the other genders, and words used in the singular or plural will include the other.

     11.9 Governing Law. The Plan will be construed, administered and governed in all respects by
the laws of the State of Texas.

     11.10 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 shall 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

XI-2

 

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.

     11.11 Amendment and Restatement of the Plan. Except as specifically provided, the amendment
and restatement of the Prior Plan effective as of January 1, 2005, and this Plan effective as of
the Effective Date shall apply only to amounts deferred and vested on or after January 1, 2005.
The provisions of the Prior Plan prior to its amendment and restatement effective as of January 1,
2005 shall apply to any amounts that were earned and vested under the Prior Plan on or before
December 31, 2004. The amendment and restatement of the Plan is not intended to be a material
modification of the Plan or Prior Plan with respect to amounts deferred and vested on or before
December 31, 2004, and, any provision of the Plan that is considered to be a material modification
of the Plan or Prior shall be retroactively amended to the extent required to prevent such
provision from being considered a material modification of the Plan with respect to such amounts.

XI-3exv10w8

 

Exhibit 10.8

QUANEX BUILDING PRODUCTS CORPORATION

RESTORATION PLAN

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE I

	 	DEFINITIONS AND DESIGNATIONS
	 	I-1
	 
	 	 	 	 
	1.01

	 	“Accrued Benefit Ledger”
	 	I-1
	1.02

	 	“Actuarial Equivalent”
	 	I-1
	1.03

	 	“Affiliate”
	 	I-1
	1.04

	 	“Applicable Covered Employee”
	 	I-1
	1.05

	 	“Beneficiary”
	 	I-1
	1.06

	 	“Board of Directors”
	 	I-1
	1.07

	 	“Cash Balance Participant”
	 	I-1
	1.08

	 	“Code”
	 	I-1
	1.09

	 	“Committee”
	 	I-1
	1.10

	 	“Company”
	 	I-1
	1.11

	 	“Covered Employee”
	 	I-1
	1.12

	 	“Deferred Retirement Date”
	 	I-2
	1.13

	 	“Early Retirement Date”
	 	I-2
	1.14

	 	“Employee”
	 	I-2
	1.15

	 	“Normal Retirement Date”
	 	I-2
	1.16

	 	“Participant”
	 	I-2
	1.17

	 	“Plan”
	 	I-2
	1.18

	 	“Plan Year”
	 	I-2
	1.19

	 	“Qualified Plan”
	 	I-2
	1.20

	 	“Qualified Plan Benefit”
	 	I-2
	1.21

	 	“Restricted Period”
	 	I-2
	1.22

	 	“Retirement Date”
	 	I-2
	1.23

	 	“Separates From Service”
	 	I-2
	1.24

	 	“Separation From Service”
	 	I-2
	1.25

	 	“Service”
	 	I-3
	 
	 	 	 	 
	ARTICLE II

	 	ELIGIBILITY
	 	II-4
	 
	 	 	 	 
	ARTICLE III

	 	RETIREMENT BENEFITS
	 	III-1
	 
	 	 	 	 
	3.01

	 	Normal Retirement Benefit
	 	III-1
	3.02

	 	Deferred Retirement Benefit
	 	III-1
	3.03

	 	Early Retirement Benefit
	 	III-1
	3.04

	 	Deferred Vested Benefit
	 	III-1
	3.05

	 	Cash Balance Participant Benefit
	 	III-1
	3.06

	 	Time of Payment of Benefit
	 	III-1
	3.07

	 	Special 409A Transition Election
	 	III-2
	 
	 	 	 	 
	ARTICLE IV

	 	DEATH BENEFITS
	 	IV-1
	 
	 	 	 	 
	4.01

	 	Death Prior to Payment of Plan Benefit
	 	IV-1
	4.02

	 	Designation of Beneficiary
	 	IV-1
	 
	 	 	 	 
	ARTICLE V

	 	FORFEITURE FOR CAUSE
	 	V-1
	 
	 	 	 	 
	ARTICLE VI

	 	PLAN COMMITTEE
	 	VI-1

-i-

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	 	 	Page
	6.01

	 	Committee
	 	VI-1
	6.02

	 	General Rights, Powers and Duties of Plan Committee
	 	VI-1
	6.03

	 	Rules and Decisions
	 	VI-1
	6.04

	 	Committee Organization and Voting
	 	VI-2
	6.05

	 	Committee Discretion
	 	VI-2
	6.06

	 	Authorization of Benefit Payments
	 	VI-2
	6.07

	 	Application and Forms of Benefits
	 	VI-2
	6.08

	 	Facility of Payment
	 	VI-2
	6.09

	 	Claims Procedure
	 	VI-2
	 
	 	 	 	 
	ARTICLE VII

	 	AMENDMENT AND TERMINATION
	 	VII-1
	 
	 	 	 	 
	7.01

	 	Amendment
	 	VII-1
	7.02

	 	Right to Terminate Plan
	 	VII-1
	 
	 	 	 	 
	ARTICLE VIII

	 	FUNDING
	 	VIII-1
	 
	 	 	 	 
	8.01

	 	Unfunded Arrangement
	 	VIII-1
	8.02

	 	Participants Must Rely Only on General Credit of the Company
	 	 VIII-1
	 
	 	 	 	 
	ARTICLE IX

	 	MISCELLANEOUS
	 	IX-1
	 
	 	 	 	 
	9.01

	 	Limitation of Rights
	 	IX-1
	9.02

	 	Distributions to Incompetents or Minors
	 	IX-1
	9.03

	 	Nonalienation of Benefits
	 	IX-1
	9.04

	 	Reliance Upon Information
	 	IX-1
	9.05

	 	Severability
	 	IX-2
	9.06

	 	Notice
	 	IX-2
	9.07

	 	Gender and Number
	 	IX-2
	9.08

	 	Governing Law
	 	IX-2
	9.09

	 	Section 409A
	 	IX-2
	9.10

	 	Amendment and Restatement of the
Plan	 	IX-3

-ii-

 

QUANEX BUILDING PRODUCTS CORPORATION

RESTORATION PLAN

     This agreement by Quanex Building Products Corporation (the “Company”),

W I T N E S S E T H :

     WHEREAS, Quanex Corporation (“Quanex”) previously established the Quanex Corporation
Supplemental Salaried Employees’ Pension Plan (the “Prior Plan”) to provide a retirement pay
supplement for a select group of management or highly compensated employees so as to retain their
loyalty and to offer a further incentive to them to maintain and increase their standard of
performance;

     WHEREAS, in connection with the transactions contemplated by the Distribution Agreement dated
as of December 19, 2007 among Quanex Corporation, Quanex Building Products Corporation LLC, and
Quanex Building Products Corporation (the “Distribution Agreement”), Quanex, Quanex Building
Products Corporation LLC (the “LLC”) and the Company desire to spin-off from the Prior Plan a
mirror image pension plan for the exclusive benefit of employees previously employed by Quanex in
connection with its Building Products businesses and the employees of the corporate office of
Quanex who are employed by the LLC or the Company at or after the “Distribution” (as defined in the
Distribution Agreement);

     WHEREAS, subsequent to the Distribution, the Company shall assume the sponsorship of the
spun-off portion of the Prior Plan

     NOW, THEREFORE, effective as of, and contingent upon, the closing of the Distribution, the LLC
and the Company agree that the spun-off portion of the Prior Plan shall be amended and restated as
the “Quanex Building Products Corporation Restoration Plan” as set forth as follows:

 

 

ARTICLE I

DEFINITIONS AND DESIGNATIONS

     1.01 “Accrued Benefit Ledger” shall mean the ledger maintained by the Committee for each
Participant which reflects the amounts credited by the Company under this Plan on behalf of each
Participant.

     1.02 “Actuarial Equivalent” shall mean a benefit of equivalent value computed on the basis of
the mortality assumptions and interest rate assumptions in effect under the Qualified Plan
immediately prior to the Participant’s Separation From Service with the Company.

     1.03 “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 the Company.

     1.04 “Applicable Covered Employee” means any of the following:

     (a) a Covered Employee of the Company;

     (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 the Company or an Affiliate.

     1.05 “Beneficiary” shall mean a person or entity designated by the Participant under the terms
of this Plan to receive any amounts distributed under the Plan upon the death of the Participant.

     1.06 “Board of Directors” shall mean the Board of Directors of the Company.

     1.07 “Cash Balance Participant” shall mean a Participant who is a Cash Balance Member in the
Qualified Plan.

     1.08 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

     1.09 “Committee” shall mean the Committee established under Article VI to administer the Plan.

     1.10 “Company” shall mean Quanex Building Products Corporation.

     1.11 “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.

I-1

 

     1.12 “Deferred Retirement Date” shall mean the first day of the month following the month in
which a Participant retires pursuant to the provisions of Section 3.02.

     1.13 “Early Retirement Date” shall mean the first day of any month after a Participant’s
attainment of age 55 and the completion of five years of Service.

     1.14 “Employee” shall mean a person who is in a select group of management or a highly
compensated employee of the Company.

     1.15 “Normal Retirement Date” shall mean the first day of the month coincident or next
following a Participant’s 65th birthday.

     1.16 “Participant” shall mean an Employee of the Company designated by the Board of Directors
as eligible for participation in the Plan, and who meets the requirements of Article II.

     1.17 “Plan” shall mean the Quanex Building Products Corporation Restoration Plan.

     1.18 “Plan Year” shall mean the 12-month period commencing on November 1 and ending on the
following October 31.

     1.19 “Qualified Plan” shall mean the Quanex Building Products Group Salaried and Nonunion
Employee Pension Plan (or its predecessor or successor plan) maintained by the Company which is
intended to qualify under section 401 of the Code.

     1.20 “Qualified Plan Benefit” shall mean the actuarial equivalent of the Participant’s benefit
under the Qualified Plan assuming that the Participant’s entire benefit under the Qualified Plan
will be paid in a lump sum cash payment. The amount of a Participant’s Qualified Plan Benefit
shall be determined based on the provisions of the Qualified Plan (including provisions relating to
interest and mortality assumptions) as in effect on the date his benefits under this Plan are
determined.

     1.21 “Restricted Period” means, for any qualified defined benefit plan sponsored by the
Company or an Affiliate, any period during which the plan is in at-risk status as described in
section 409A of the Code.

     1.22 “Retirement Date” shall mean a Participant’s Normal Retirement Date, Early Retirement
Date, or Deferred Retirement Date, as the case may be.

     1.23 “Separates From Service” shall mean a Participant incurs a Separation From Service.

     1.24 “Separation From Service” shall mean a Participant’s complete separation from service
with the Company and all of its Affiliates. The determination of whether an Participant Separates
From Service will be determined in accordance with section 409A of the Code.

     1.25 “Service” shall have the same meaning as given that term under the Qualified Plan. All
Service taken into account under the Qualified Plan will be taken into account under this Plan.

I-2

 

ARTICLE II

ELIGIBILITY

     The Employees who shall be eligible to participate in the Plan shall be those Employees as the
Committee shall determine from time to time. An Employee will become a Participant effective as of
the date specified in writing by the Committee.

II-3

 

ARTICLE III

RETIREMENT BENEFITS

     3.01 Normal Retirement Benefit. If a Participant other than a Cash Balance Participant
Separates From Service on or after his Normal Retirement Date, he will be entitled to the lump sum
Actuarial Equivalent of a monthly benefit payable to the Participant for life only in an amount
equal to:

     (a) the amount of the Participant’s Qualified Plan Benefit that would be payable if the
applicable limitation under section 401(a)(17) of the Code for each fiscal year of the
Qualified Plan commencing on or after November 1, 1994, was not in effect, less

     (b) the Participant’s Qualified Plan Benefit.

     3.02 Deferred Retirement Benefit. If a Participant other than a Cash Balance Participant
Separates From Service after his Normal Retirement Date, 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 3.01. The benefit will not be actuarially increased to
reflect the later benefit payment date or his shorter life expectancy.

     3.03 Early Retirement Benefit. If a Participant other than a Cash Balance Participant
Separates From Service on or after his Early Retirement Date but before age 65, he shall 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 3.01 as of his Early Retirement
Date.

     3.04 Deferred Vested Benefit. If a Participant other than a Cash Balance Participant
Separates From Service 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, commencing on his Normal Retirement Date, determined in
accordance with the provisions of Section 3.01.

     3.05 Cash Balance Participant Benefit. If a Cash Balance Participant Separates From Service,
he will be entitled to:

     (a) the amount of the Participant’s Qualified Plan Benefit that would be payable if the
applicable limitation under section 401(a)(17) of the Code for each fiscal year of the
Qualified Plan commencing on or after November 1, 1994, was not in effect, less

     (b) the Participant’s Qualified Plan Benefit.

     3.06 Time of Payment of Benefit. Upon a Participant’s Normal Retirement, Deferred Retirement,
Early Retirement or other Separation From Service, the Participant shall be paid a lump sum cash
payment of his Plan benefit as determined under Section 3.01, 3.02, 3.03 or 3.05 on the first
business which is at least six (6) months after the date of such Employee’s Separation

III-1

 

From Service, or as soon as is administratively practicable thereafter. A terminated
Participant’s deferred vested benefit as determined under Section 3.04 shall be paid on the
90th day after his attainment of age 55 or as soon as administratively practicable
thereafter in a lump sum cash payment but not earlier than the first business which is at least six
(6) months after the date of such Employee’s Separation From Service.

     3.07 Special 409A Transition Election. Pursuant to, and in accordance with, the transition
guidance issued by the Internal Revenue Service under section 409A of the Code, and as such
guidance was modified by I.R.S. Notice 2007-86, the directors and executive officers of the Company
who participate in the Plan may elect during 2008, at such time(s) as determined by the management
of the Company after consultation with the Compensation Committee of the Company, to change the
time and form of payment of the compensation such directors and officers previously elected under
the Plan, including amouns deferred and vested on or before January 1, 2005; provided, that any
such election may not permit the payment of any such compensation that is payable during 2008 to be
deferred to a subsequent year or any such compensation that is otherwise payable during a year
subsequent to 2008 to be paid in 2008.

III-2

 

ARTICLE IV

DEATH BENEFITS

     4.01 Death Prior to Payment of Plan Benefit. If a Participant’s death occurs before his Plan
benefit has begun to be paid to him, the following rules shall apply:

     (a) Participants Other Than Cash Balance Participants. The Beneficiary of a
Participant other than a Cash Balance Participant shall be entitled to receive a lump sum
benefit Actuarially Equivalent to the Plan benefit payable at the time of death, determined
in accordance with the provisions of Section 3.01. In calculating the lump sum death
benefit under this Section, the benefit shall be reduced in the same manner it is reduced in
Section 3.03 or 3.04, whichever is applicable, for payment earlier than Normal Retirement
Date. Such lump sum payment shall be made on the 90th day after the death of the
Participant or as soon as administratively practicable thereafter.

     (b) Cash Balance Participants. The Beneficiary of a Cash Balance Participant shall be
entitled to receive a lump sum benefit of such Participant’s benefit payable at the time of
death, determined in accordance with the provisions of Section 3.05. Such lump sum payment
shall be made on the 90th day after the death of the Participant or as soon as
administratively practicable thereafter.

     4.02 Designation of Beneficiary. In the event of the death of a Participant prior to the
distribution of the amount credited on his behalf in the Accrued Benefit Ledger, the distribution
otherwise due the Participant shall be made to his or her Beneficiary(ies). The Participant’s
Beneficiary(ies) under the Plan shall be the Participant’s beneficiary(ies) designated under the
Qualified Plan or, if none, as determined under the terms and provisions of the Qualified Plan.

IV-1

 

ARTICLE V

FORFEITURE FOR CAUSE

     If the Committee finds, after full consideration of the facts presented on behalf of both the
Company and a former Participant, that the Participant was discharged by the Company for fraud,
embezzlement, theft, commission of a felony, proven dishonesty in the course of his employment by
the Company which damaged the Company, or for disclosing trade secrets of the Company, the entire
amount credited on his behalf in the Accrued Benefit Ledger shall be forfeited. The decision of
the Committee as to the cause of a former Participant’s discharge and the damage done to the
Company will be final. No decision of the Committee will affect the finality of the discharge of
the Participant by the Company in any manner.

V-1

 

ARTICLE VI

PLAN COMMITTEE

     6.01 Committee. The Plan shall be administered by a Committee which shall have at least three
members appointed by the Board of Directors. Any person may resign from the Committee upon 30
days’ prior notice to the Board of Directors. The Board of Directors may remove any member of the
Committee at any time.

     6.02 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, accounts 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.

     6.03 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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     6.04 Committee Organization and Voting. The Committee shall select from among its members a
chairman who shall preside at all of its meetings and shall elect a secretary without regard to
whether that person is a member of the Committee. The secretary shall keep all records, documents
and data pertaining to the Committee’s supervision and administration of the Plan. A majority of
the members of the Committee shall constitute a quorum for the transaction of business and the vote
of a majority of the members present at any meeting shall decide any question brought before the
meeting. In addition, the Committee may decide any question by vote, taken without a meeting, of a
majority of its members. A member of the Committee who is also a Participant shall not vote or act
on any matter relating solely to himself.

     6.05 Committee Discretion. The Committee in exercising any power or authority granted under
this Plan or in making any determination under this Plan shall perform or refrain from performing
those acts using its sole discretion and judgment. Any decision made by the Committee or any
refraining to act or any act taken by the Committee in good faith shall be final and binding on all
parties. The Committee’s decision shall never be subject to de novo review.

     6.06 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.

     6.07 Application and Forms of Benefits. The Committee may require a 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 current mailing
address.

     6.08 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.

     6.09 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, spouse or retired Participant (collectively referred to herein as
“Claimant”) shall be stated in writing by the Committee and 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

VI-2

 

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 a 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 may include in his request a request for 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.

VI-3

 

ARTICLE VII

AMENDMENT AND TERMINATION

     7.01 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 and
each beneficiary of a deceased Participant. No such amendment however shall have the effect of
reducing that portion of the benefit the Participant ultimately becomes entitled to below that
amount he would have received to the date of the amendment under the formula set out in the Plan
prior to the amendment . In addition, no such amendment shall apply to amounts accrued and vested
on or before December 31, 2004, unless the amendment instrument explicitly states that the
amendment shall apply to such amounts.. An amendment to the Plan shall be made by a written
instrument executed by an officer of the Company. The Board of Directors of the Company must
authorize the amendment in order for the amendment to be effective.

     7.02 Right to Terminate Plan. The Company intends to maintain the Plan for an indefinite
period of time, but necessarily must, and hereby does, reserve the right to terminate the Plan at
any time. The Company shall not have any further financial obligations under the Plan from and
after such termination of the Plan except those that have accrued up to the date of termination and
have not been satisfied. Upon termination of the Plan, any benefits vested under the Plan shall be
payable at the time and in the manner provided hereunder; provided, however, that the Board may
terminate the Plan within the 30 days preceding or 12 months following a change in control, as
defined by section 409A of the Code, or as otherwise permitted under section 409A of the Code, and
distribute the Participants’ accrued vested benefits to Participants in the manner and the time as
determined by the Committee, in its sole discretion, as permitted by section 409A of the Code. The
termination of the Plan shall be accomplished by a resolution of the Board of Directors of the
Company and shall be evidenced by a written instrument executed by an officer of the Company.

VII-1

 

ARTICLE VIII

FUNDING

     8.01 Unfunded Arrangement. It is intended that this Plan shall be unfunded for tax purposes
and for purposes of Title 1 of the Employee Retirement Income Security Act of 1974, as amended.
The Committee will establish a bookkeeping account for each Participant in a special Accrued
Benefit Ledger which shall be maintained by the Company.

     8.02 Participants Must Rely Only on General Credit of the Company. It is specifically
recognized by both the Company and the Participants that this Plan is only a general corporate
commitment and that each Participant must rely upon the general credit of the Company for the
fulfillment of its obligations hereunder. Under all circumstances the rights of Participants to
any asset held by the Company will be no greater than the rights expressed in this agreement.
Nothing contained in this agreement shall constitute a guarantee by the Company that the assets of
the Company will be sufficient to pay any benefits under this Plan or would place the Participant
in a secured position ahead of general creditors of the Company; the Participants are only
unsecured creditors of the Company with respect to their Plan benefits and the Plan constitutes a
mere promise by the Company to make benefit payments in the future. No specific assets of the
Company have been or shall be set aside, or shall in any way be transferred to the trust or shall
be pledged in any way for the performance of the Company’s obligations under this Plan which would
remove such assets from being subject to the general creditors of the Company.

     In addition, 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.

VIII-1

 

ARTICLE IX

MISCELLANEOUS

     9.01 Limitation of Rights. Nothing in this Plan shall be construed:

     (a) to give any employee of the Company any right to be designated a Participant in the
Plan;

     (b) to give a Participant any right with respect to the amounts and interest credited
in the Accrued Benefit Ledger on behalf of the Participant, except in accordance with the
terms of this Plan;

     (c) to limit in any way the right of the Company to terminate a Participant’s
employment with the Company at any time;

     (d) to evidence any agreement or understanding, expressed or implied, that the Company
will employ a Participant in any particular position or for any particular remuneration; or

     (e) to give a Participant or any other person claiming through him any interest or
right under this Plan other than that of an unsecured general creditor of the Company.

     9.02 Distributions to Incompetents or Minors. Should a Participant become incompetent or
should a Participant designate a Beneficiary who is a minor or incompetent, the Committee is
authorized to pay the funds due to the parent of the minor or to the guardian of the minor or
incompetent or directly to the minor or to apply those funds for the benefit of the minor or
incompetent in any manner the Committee determines in its sole discretion.

     9.03 Nonalienation of Benefits. No right or benefit provided in this Plan shall be
transferable by the Participant except, upon his death, to a named Beneficiary as provided in this
Plan. No right or benefit under this Plan shall be subject to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Participant or the Participant’s Beneficiary. Any attempt to anticipate, alienate, sell, assign,
pledge, encumber, or charge the same shall be void. No right or benefit under this Plan shall in
any manner be liable for or subject to any debts, contracts, liabilities or torts of the person
entitled to such benefits. If any Participant or any Beneficiary becomes bankrupt or attempts to
anticipate, alienate, sell, assign, pledge, encumber or charge any right or benefit under this
Plan, that right or benefit shall, in the discretion of the Committee, cease. In that event, the
Committee may have the Company hold or apply the right or benefit or any part of it to the benefit
of the Participant or Beneficiary, his or her spouse, children or other dependents or any of them
in any manner and in any proportion the Committee believes to be proper in its sole and absolute
discretion, but is not required to do so.

     9.04 Reliance Upon Information. The Committee shall not be liable for any decision or action
taken in good faith in connection with the administration of this Plan. Without limiting

IX-1

 

the generality of the foregoing, any decision or action taken by the Committee when it relies
upon information supplied it by any officer of the Company, the Company’s legal counsel, the
Company’s independent accountants or other advisors in connection with the administration of this
Plan shall be deemed to have been taken in good faith.

     9.05 Severability. If any term, provision, covenant or condition of the Plan is held to be
invalid, void or otherwise unenforceable, the rest of the Plan shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.

     9.06 Notice. Any notice or filing required or permitted to be given to the Committee or a
Participant shall be sufficient if in writing and hand delivered or sent by U.S. mail to the
principal office of the Company or to the residential mailing address of the Participant. Notice
will be deemed to be given as of the date of hand delivery or if delivery is by mail, as of the
date shown on the postmark.

     9.07 Gender and Number. If the context requires it, words of one gender when used in this
Plan will include the other genders, and words used in the singular or plural will include the
other.

     9.08 Governing Law. The Plan will be construed, administered and governed in all respects by
the laws of the State of Texas.

     9.09 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.

IX-2

 

     9.10 Amendment and Restatement of the Plan. Except as specifically provided, the amendment
and restatement of the Prior Plan effective as of January 1, 2005, and this Plan effective as of
the Effective Date shall apply only to amounts deferred and vested on or after January 1, 2005.
The provisions of the Prior Plan prior to its amendment and restatement effective as of January 1,
2005 shall apply to any amounts that were earned and vested under the Prior Plan on or before
December 31, 2004. The amendment and restatement of the Plan is not intended to be a material
modification of the Plan or Prior Plan with respect to amounts deferred and vested on or before
December 31, 2004, and, any provision of the Plan that is considered to be a material modification
of the Plan or Prior shall be retroactively amended to the extent required to prevent such
provision from being considered a material modification of the Plan with respect to such amounts.

IX-3

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