Document:

Exhibit 10.59

 

July 16, 2003

 

Leilani Gayles

 

Los Altos, CA  94024

 

 

Dear Leilani,

 

This letter sets forth the substance of the
separation agreement (the “Agreement”) which SILICON VALLEY BANK  (the
“Bank”) is offering to you to aid in your employment transition.

 

1.             Separation.  Your last day of work at the Bank shall be December 1, 2003 (the
“Separation Date”) but you will not be required to come into the office after
July 31, 2003.   You agree that you will
take two weeks of your unused vacation prior to the Separation Date.

 

2.             Accrued Salary and Paid Time
Off.  On
November 28, 2003, the Bank will pay you all accrued salary and all accrued and
unused vacation earned through the Separation Date, subject to standard payroll
deductions and withholdings.  You are
entitled to these payments regardless of whether or not you sign this
Agreement.

 

3.             Severance Benefits.  The Bank agrees to pay $180,000, less
deductions, which is the equivalent of thirteen months of year of salary at
your current annual rate of pay.  This
payment will be made to you on the first business day following January 1,
2004, provided that you have not revoked the Employee Agreement and Release
attached hereto as exhibit A (the “Release”) within eight days following the
execution of the Release.

 

You acknowledge that this
payment shall be treated as severance pay, is subject to required payroll
deductions and is in excess of and in addition to any other compensation due
and owing to you by Bank.

 

You
acknowledge and agree that the consideration for this Agreement is not accrued
salary, wages, or vacation and that California Labor Code Section 206.5 is not
applicable to this Agreement or to the parties hereto.  That section provides in pertinent part:

 

No employer
shall require the execution of any release of any claim or right on account of
wages due, or to become due, or made as an advance on wages to be earned,
unless payment of such wages has been made.

 

4.             Group
Medical, Vision and Dental Benefits.   Through the Separation Date you may continue to participate in
the Bank’s group medical, disability, life insurance, vision and dental
benefits and you will remain responsible for the premium amounts at the
“regular employee rate” subject to the terms and conditions of the applicable
program documents.  Thereafter, you will
be eligible for healthcare continuation coverage pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1995 (COBRA).  Should you elect COBRA continuation coverage, the Bank will
continue to pay the portion of the premium provided to “regular employees” for
up to fifteen (15) months following your Separation, as long as you remain
eligible under the provisions of COBRA.

 

 

5.             Change
in Control Policy.  You will not be eligible to
receive benefits under the Bank’s Change In Control Severance Benefits Policy
following the Separation Date.

 

6.             Employee Stock Purchase Program
(“ESPP”) and  Stock Options. In accordance with the terms
of the ESPP, you may continue to participate in the ESPP through June 30,
2003.  Any contributions that you make
to the ESPP for the offering period in which the Separation Date occurs will be
refunded to you.

 

Similarly,
through the Separation Date, you may continue to participate and to vest in
your stock options in accordance with, and to the extent permitted by, the
Stock Option Plan and your option agreement(s).  Accordingly, after the Separation Date, you will have 90 days to
exercise any vested options per the Stock Option Plan provisions.

 

7.             Retirement Benefits. You are eligible to receive applicable
distributions made for the 2003 plan year under 401(k)/Employee Stock
Ownership Plan (“ESOP”).  In accordance
with the current provisions of the plans, vesting of your account will be
accelerated such that on your Separation Date, you will be fully vested in your
account balances.  Following the
Separation Date, you will not be eligible to make contributions to the 401(k)
plan or receive a contribution from the Bank to the ESOP.

 

8.             Retention Program. You
are entitled to receive applicable distributions made in January 2004 under the
Retention Programs in which you participate. 
You will not receive “Continued Participation” under any of the plans in
which you participate.

 

9.             Incentive Compensation
Program.  You will receive a $27,000.00 discretionary
bonus for your performance during 2003, payable on your Separation Date.

 

10.          Continued
Use of Bank Services and/or Equipment.  The Bank agrees, that for the six (6) month
period following your Separation Date, you may continue remote access of your
current voice mailbox, for the receipt of telephone calls related to your job
search.  The Bank also agrees that you
may keep the Bank’s laptop computer currently used by you, to further assist in
your job search.  You will also have
access to your SVB e-mail service by means of Microsoft Outlook Web Access
through your Separation Date.

 

11.          Outplacement
Benefits.  At
your request, the Bank will provide an additional $18,850 payment, in lieu of
the Severance Plan’s Outplacement program for executives, payable on your
Separation Date.

 

12.          Other Compensation or Benefits.  You acknowledge that, except as expressly
provided in this Agreement, you will not receive any additional compensation,
severance or benefits after the Separation Date.  This includes, but is not limited to, any future compensation,
severance or benefit related to the 401(k), Employee Stock Ownership Plan,
stock options, ICP, Retention Plan, the Warrant Incentive Plan, Employee Stock
Purchase Plan or CIC.

 

13.          Expense Reimbursements.  You agree that, within ten (10) days of the
Separation Date, you will submit your final documented expense reimbursement
statement reflecting all business expenses you incurred through the Separation
Date, if any, for which you seek reimbursement.  The Bank will reimburse you for these expenses pursuant to its
regular business practice.

 

 

14.          Response to Inquiries.  The Bank agrees to direct all inquiries from
prospective employers regarding your employment to Marc Verrisimo, or if he is
not immediately available, to Derek Witte.  If so contacted, the Bank
agrees to respond that, as a matter of policy, it can only confirm the dates of
your employment, your job title, and salary (if requested).  If such
contact is made after November 1, 2003, the Bank agrees to further disclose
that (1) you resigned from your employment effective November 1, 2003 and that
(2) you are “eligible for rehire” according to the Bank’s internal
records.  The Bank agrees that its Chief
Executive Officer will sign a Letter of Recommendation in the form of Exhibit C
hereto and that you may provide such Letter of Recommendation to prospective
employers.

 

15.          Return of Bank Property.  By the Separation Date, you agree to return
to the Bank all Bank documents (and all copies thereof) and other Bank property
which you have had in your possession at any time, including, but not limited
to, files, notes, drawings, records, business plans and forecasts, financial
information, specifications, computer-recorded information, tangible property (including,
but not limited to), credit cards, entry cards, identification badges and keys,
cellular phones, and, any materials of any kind which contain or embody any
proprietary or confidential information of the Bank (and all reproductions
thereof). Notwithstanding the above, you may retain the laptop computer
mentioned in paragraph 10, above.

 

16.          Proprietary Information Obligations.
Both during and after your employment you will refrain from any use or
disclosure of  the Bank’s proprietary or confidential information or
materials, including but not limited to all personnel information, all
technical and non-technical information, including patent, copyright,
trademark, and trade secrets related to the current, future, and proposed
services of the Bank, its suppliers and customers’ financial information,
customer lists, databases, business forecasts, sales, merchandising, and
marketing plans and information.

 

17.          Confidentiality.  The provisions of this Agreement shall be
held in strictest confidence by you and the Bank and shall not be publicized or
disclosed in any manner whatsoever; provided, however, that:  (a) you may disclose this Agreement to your
immediate family; (b) the parties may disclose this Agreement in confidence to
their respective attorneys, accountants, auditors, tax preparers, and financial
advisors; (c) the Bank may disclose this Agreement as necessary to fulfill
standard or legally required corporate reporting or disclosure requirements;
and (d) the parties may disclose this Agreement insofar as such disclosure may
be necessary to enforce its terms or as otherwise required by law.  In particular, and without limitation, you
agree not to disclose the terms of this Agreement to any current or former Bank
employee.

 

18.          Nondisparagement.  Both you and the Bank’s executive officers
(Ken Wilcox, Marc Verissimo, Lauren Friedman, Harry Kellogg, Jim Kochman, Derek
Witte and anyone else who may become an Executive Office between July 1, 2003
and January 1, 2004) agree not to disparage the other party, and the other
party’s officers, directors, employees, shareholders and agents, in any manner
likely to be harmful to them or their business, business reputation or personal
reputation; provided that both you and the Bank shall respond accurately and fully
to any question, inquiry or request for information when required by legal
process.

 

19.          Release.  In exchange for the payments and other
consideration under this Agreement to which you would not otherwise be
entitled, you agree to execute the Employee Agreement and Release attached
hereto and incorporated herein as Exhibit A and the Bank’s obligations under
this Agreement are all conditioned upon your not having revoked the Release
within eight days following your execution and delivery to the Bank of the
Release.  The Bank agrees to execute a
written release of you in the form of

 

 

Exhibit B attached hereto for
any and all claims, liabilities, demands, causes of action, damages, attorneys
fees, damages, indemnities and obligations of every kind and nature, in law,
equity, or otherwise, known and unknown, suspected and unsuspected, disclosed
and undisclosed, arising out of or in any way related to agreements, events,
acts or conduct at any time prior to and including the execution date of this
Agreement, including but not limited to: all such claims and demands directly
or indirectly arising out of or in any way connected with your employment with
the Bank.

 

20.          Miscellaneous.  This Agreement, including Exhibits A, B and
C constitute the complete, final and exclusive embodiment of the entire
agreement between you and the Bank with regard to this subject matter.  It is entered into without reliance on any
promise or representation, written or oral, other than those expressly
contained herein, and it supersedes any other such promises, warranties or
representations.  This Agreement may not
be modified or amended except in writing signed by both you and a duly
authorized officer of the Bank.  This
Agreement shall bind the heirs, personal representatives, successors and
assigns of both you and the Bank, and inure to the benefit of both you and the
Bank, their heirs, successors and assigns. 
If any provision of this Agreement is determined by any court to be
invalid or unenforceable, in whole or in part, this determination will not
affect any other provision of this Agreement and the provision in question
shall be modified by the court so as to be rendered enforceable.  This Agreement shall be deemed to have been
entered into and shall be construed and enforced in accordance with the laws of
the State of California as applied to contracts made and to be performed
entirely within California.  You agree
to cooperate with the Bank and execute any reasonably necessary agreements to
facilitate the purpose of this Agreement.

 

If this Agreement is acceptable
to you, please sign below and on the attached Employee Agreement and Release,
which is part of this Agreement, and return the originals of both to Leilani
Gayles by no later than the date which is 21 days after your receipt of this
Agreement.  This Agreement will
automatically expire if you fail to return the Employee Agreement and the
Release by such date.

 

Sincerely,

 

SILICON
VALLEY BANK

 

 

	
  By:

  	
  /s/  Derek Witte

  	
   

  	
  Date: July 16,
  2003

  	
   

  

 

Derek Witte

Exhibit A - Employee Agreement and Release

Exhibit B - Agreement and Release

Exhibit C – Letter of Recommendation

 

AGREED:

 

 

	
  /s/  Leilani Gayles

  	
   

  	
  Date: July 16,
  2003

  	
   

  
	
  Leilani
  GaylesExhibit 4.6

 

WAIVER
AND SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT

 

This Waiver and Second Amendment to Revolving
Credit Agreement (this “Second Amendment”) is made as of this 11th day of
March, 2004 by and among Quanex Corporation, a Delaware corporation (the
“Company”), Comerica Bank and the other banks signatory hereto and Comerica
Bank, as agent for the Banks (in such capacity, “Agent”).

 

RECITALS

 

A.            Company, Agent and the Banks entered into that certain
Quanex Corporation Revolving Credit Agreement dated as of November 26, 2002, as
amended by that certain Consent and First Amendment to Revolving Credit
Agreement dated as of December 19, 2003 (as amended, the “Credit Agreement”)
under which the Banks extended (or committed to extend) credit to the Company,
as set forth therein.

 

B.            Company has requested that Agent and
the Banks amend Section 7.7(j) of the Credit Agreement as specified below, and
Agent and the Banks are willing to do so, but only on the terms and conditions
set forth in this Second Amendment.

 

NOW, THEREFORE,
Company, Agent and Banks agree:

 

1.             Section 7.7(j) of the Credit
Agreement is hereby amended to delete “$100,000” and insert “$500,000” in its
place.

 

2.             Section
7.7(k) of the Credit Agreement is hereby deleted and the following is inserted
in its place:

 

“(k)         other
types or categories of Investments not described above in an amount not to
exceed $10,000,000 over the term of this Agreement, provided that at the time
of any such Investment, no Default or Event of Default has occurred and is
continuing.”

 

3.             The
undersigned Banks hereby consent and agree that if the Company and its
Subsidiaries are not currently or have not been in compliance with Section
7.7(j) of the Credit Agreement, any Event of Default arising from such
noncompliance is hereby waived.

 

4.             This
Second Amendment shall become effective according to the terms hereof and as of
such date (the “Second Amendment Effective Date”) that the Agent shall have
received counterpart originals of this Second Amendment, in each case duly
executed and delivered by Company and the requisite Banks, in form satisfactory
to Agent and the Banks and counterpart originals of a Reaffirmation of
Guaranty, duly executed and delivered by the Guarantors, in form satisfactory
to Agent and Banks, provided that, if the Second Amendment Effective Date shall
not have occurred on or before March 30, 2004, this Second Amendment shall not
become effective and the offer by the Agent and the Banks to amend the Credit
Agreement on the terms set forth herein shall be deemed withdrawn.

 

 

5.             The
Company for itself and each of the Guarantors hereby represents and warrants
that, after giving effect to the amendments contained herein, (a) execution and
delivery of this Second Amendment and the other Loan Documents required to be
delivered hereunder, and the performance by the Company of its obligations
under the Credit Agreement as amended hereby are within such undersigned’s
corporate powers, have been duly authorized, are not in contravention of law or
the terms of its articles of incorporation, bylaws or any other organizational
documents of the parties thereto, as applicable, and except as have been
previously obtained, do not require the consent or approval, material to the
amendment contemplated in this Second Amendment or Credit Agreement, as
amended, of any governmental body, agency or authority, and this Second
Amendment, the Credit Agreement, as amended, and the other Loan Documents
required to be delivered hereunder, will constitute the valid and binding
obligations of such undersigned parties, enforceable in accordance with its
terms, except as enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium, ERISA or similar laws affecting the
enforcement of creditors’ rights generally and by general principles of equity
(whether enforcement is sought in a proceeding in equity or at law), (b) the
representations and warranties contained in Section 5 of the Credit Agreement,
as amended are true and correct on and as of the date hereof, except to the
extent such representations and warranties speak only as of certain date, and
(c) no Default or Event of Default (other than as waived hereby) has occurred
and is continuing as of the Second Amendment Effective Date.

 

6.             Except
as specifically set forth above, this Second Amendment shall not be deemed to
amend or alter in any respect the terms and conditions of the Credit Agreement,
any of the Notes issued thereunder or any of the Loan Documents, or to
constitute a waiver by the Banks or Agent of any right or remedy under or a
consent to any transaction not meeting the terms and conditions of the Credit
Agreement, any of the Notes issued thereunder or any of the other Loan
Documents.

 

7.             Unless
otherwise defined to the contrary herein, all capitalized terms used in this
Second Amendment shall have the meaning set forth in the Credit Agreement, as
amended.

 

8.             This
Second Amendment shall be construed in accordance with and governed by the laws
of the State of Michigan.

 

9.             Any
references in the Loan Documents to the Credit Agreement shall be deemed a
reference to the Credit Agreement as amended by this Second Amendment.

 

10.           This
Second Amendment may be executed in several counterparts, and each executed
copy shall constitute an original instrument, but such counterparts shall
together constitute but one and the same instrument.

 

[signatures
follow on succeeding pages]

 

2

 

WITNESS
the due execution hereof as of the day and year first above written.

 

	
  COMERICA BANK,

  	
  QUANEX CORPORATION

  
	
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  BANK OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
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5

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