Document:

Exhibit 10.1

 

QUANEX CORPORATION

EMPLOYEE STOCK PURCHASE PLAN

(Amended And Restated Effective
February 26, 2004)

 

1.             The Quanex Corporation Employee Stock Purchase Plan (the
“Plan”)
which is to be administered by any transfer agent Quanex Corporation (“Quanex”)
may appoint (“Bank”) is set out in this document.

 

2.             To participate in the Plan, an individual:

 

A.            Must be a regular full-time employee
of Quanex or any of its subsidiaries;

 

B.            Must submit a Payroll Withholding
Authorization (“Withholding Authorization”) to the local Human Resources
Department on or before the first day of the month in which the individual
wishes to participate, authorizing Quanex to make the payroll deductions
specified by the employee, subject to any minimum deduction set by Quanex; and

 

C.            Must submit to the Bank (through the
local Human Resources Department) an Investment Authorization Card (“Investment
Authorization”), authorizing the Bank to act as agent for the
employee for purposes set out in Section 3.

 

3.             The Bank will establish an account under the Plan (an “Account”)
as agent for each individual who fulfills the conditions in Section 2 (a “Participant”)
and will credit the following sources of cash to the Account for the purchase
of full and fractional shares of Quanex Common Stock (“Plan Shares”) for each
Participant’s Account:

 

A.            Employee payroll deductions received
from Quanex;

 

B.            An amount from Quanex equal to 15
percent of each Participant’s payroll deductions made on or after January 1,
1995 (“Quanex
Contribution”);

 

C.            Cash dividends received from Quanex
on all Plan Shares in a Participant’s Account at the time a dividend is paid;
and

 

D.            Cash resulting from the sale of any
Rights accruing to Plan Shares in the Participant’s Account under
Section 11.

 

The minimum contribution
that an employee may make to his account is $10.00 per pay period.  Notwithstanding any other provision of the
Plan to the contrary, no employee payroll deductions described in
Section 3.A. above or Quanex Contributions described in Section 3.B.
above shall be made on or after the First Day of the Final Plan Month (as that
term is defined in Section 23).

 

4.             The Bank will apply the cash credited to the
Participant’s Account under Section 3 to the purchase of full and
fractional Plan Shares and will credit them to the Participant’s Account.  In making these purchases the Bank may
commingle the cash credited to all Participant’s Accounts.  The price at which the Bank is deemed to
have acquired Plan Shares for a Participant’s Account

 

 

will be the average price,
excluding brokerage and other costs of purchase, of all Plan Shares purchased
by the Bank for all Participants in the Plan during the calendar month.

 

5.             Participants may elect to add to their Account any
shares of Quanex Common Stock credited to their account under any plan that is
similar to the Plan, whether offered to Quanex employees before or after the
creation of the Plan.  All shares will
be held in the name of the Bank or its nominee as Plan Shares subject to the
terms and conditions of the Plan.

 

6.             The Bank will make reasonable efforts to apply the cash
described in Section 3 that it receives as agent for the Participant to
the purchase of Plan Shares on or promptly after the first day of the following
month after receipt by the Bank, except as described in this Section 6 and
in Section 7.  Dividends received
on Plan Shares and other amounts of cash credited to the Account will be
aggregated with the employee payroll deductions received and amounts
contributed by Quanex received during the calendar month and applied to the
purchase of Plan Shares. 
Notwithstanding any other provision of the Plan to the contrary, the
Bank shall not use any funds from a Participant’s payroll deductions described
in Section 3.A. above or Quanex Contributions described in
Section 3.B. above to purchase Plan Shares under the Plan on or after the
Ten Year Limit Date (as that term is defined in Section 23).  If any such funds remain credited to a
Participant’s Account on the Ten Year Limit Date for any reason (including a
suspension of trading described in Section 7) the Bank will remit to the
Participant, promptly after the Ten Year Limit Date, all cash credited to the
Participant’s Account attributable to the Participant’s payroll deductions and
will remit to Quanex, promptly after the Ten Year Limit Date, all cash credited
to the Participant’s Account attributable to Quanex Contributions.

 

7.             The Bank will purchase Plan Shares in negotiated
transactions or on any securities exchange where Quanex Common Stock is traded
from time to time.  The purchases will
be on terms as to price, delivery and other matters, and will be executed
through those brokers or dealers, as the Bank may determine.  Under certain circumstances, observance of
the rules and regulations of the Securities and Exchange Commission may require
temporary suspension of purchases by the Bank or may require that a purchase be
spread over a longer period than indicated in Section 6.  In that event, subject to the limitations
set out in Section 6, purchases will be made or resumed when permitted by
the rules and regulations.  In that
event the Bank will not be accountable for its inability to make all purchases
within the applicable period.  If any
Securities and Exchange Commission suspension of trading in Quanex Common Stock
remains effective for 90 consecutive days, the Bank will remit to each
Participant, promptly after the end of the period, all cash in the
Participant’s Account attributable to the Participant’s payroll deductions,
cash dividends paid to all Quanex stockholders and any sale of Rights pursuant
to Section 11.

 

8.             As soon as practicable after the cash credited to the
Participant’s Account has been applied to the purchase of Plan Shares (but in
no event later than 20 calendar days after the purchase) the Bank will mail a
statement (“Statement”)
to the Participant summarizing the transactions in the Participant’s Account
since the last Statement. The Bank will hold the Plan Shares of all
Participants in its name or in the name of its nominee evidenced by as many or
as few certificates as the Bank determines. 
No certificate representing Plan Shares purchased for a Participant’s
Account will be issued to the Participant unless he or she makes a request in
writing or until his or her Account is terminated and he or she makes the
election described in

 

2

 

Section 16.  Certificates will not be issued for less
than 10 shares unless the Account is terminated.

 

9.             Quanex will pay all service charges, brokerage, costs of
mailing and other charges incurred because of the purchase of Plan Shares.

 

10.           Each Participant is responsible for all taxes (whether
local, state or federal) due because of the Quanex Contribution, because of the
payment of a dividend or because of the sale of Plan Shares credited to him or
her.  The Bank will timely prepare and
forward to the Internal Revenue Service, the appropriate state and local
authorities and the Participants the information returns required by the Internal
Revenue Code and Regulations and all state statutes, presently Forms 1099-Div
and 1099-B.  All Quanex Contributions
will constitute taxable income to the Participant to whose Account it is
credited.

 

11.           Any stock dividends and any shares received as a result of
a stock split on any Plan Shares accumulated in a Participant’s Account will,
when received by the Bank, be credited to the Participant’s Account.  If Quanex makes available to the holders of
Plan Shares (a) rights to purchase additional shares of stock, convertible
debentures or other securities of Quanex or (b) securities of any other issuer
((a) and (b) collectively “Rights”), the Bank will sell those Rights
received on Plan Shares credited to the Participant’s Account as soon as
practicable and apply the proceeds to the purchase of additional Plan Shares
for the Participant’s Account unless the Participant directs the Bank prior to
the payment date for the Rights to transfer to the Participant all whole Rights
accruing to the Plan Shares for the Participant’s Account; provided that the
Bank will not sell any such Rights until they have become separated from Plan
Shares, if applicable, and their sale is permitted under the terms of the
Rights and under applicable law.  The
price at which the Bank will be deemed to have sold any given set of Rights for
a Participant’s Account will be the average price, excluding commissions and
other costs of the sale, of all of that given set of Rights sold by it for all
Participants.

 

12.           If a tender offer or exchange offer is commenced for
Quanex Common Stock, the Bank, upon receipt of information with respect thereto
as the holder of record of the Plan Shares, will either (a) forward, or arrange
for the forwarding of, information provided by the offeror to holders of record
of Quanex Common Stock to each Participant or (b) provide to the offeror
the name and mailing address of each Participant as reflected on the records of
the Bank with instructions to mail such material to each Participant.  The Bank will tender all or part of a
Participant’s Plan Shares in response to written instructions from the
Participant in such form as the Bank may reasonably require and only if such
instructions are received by the Bank at least five days (or such shorter
period as may be required by law) prior to the termination of the offer.  Unless the Bank has received instructions in
accordance with the previous sentence, it will not tender a Participant’s Plan
Shares.  Except to the extent disclosure
is required to tender Plan Shares pursuant to proper written instructions, the
Bank will maintain the confidentiality of a Participant’s election to tender or
not tender Plan Shares.

 

13.           Participants may not add any shares of Quanex Common Stock
held in their name to their Account except as permitted by Section 5.

 

3

 

14.           The Bank will vote the Participant’s Plan Shares as
instructed by the Participant on a form to be furnished by and returned to the
Bank at least five days (or such shorter period as the law may require) before
the meeting at which they are to be voted. 
The Bank will not vote Plan Shares for which no instructions are
received.

 

15.           A Participant may request that the Bank sell (a) all
or any part of his or her Plan Shares acquired before July 17, 2003, at
any time, (b) all or any part of his or her Plan Shares acquired on or
after July 17, 2003, and before March 15, 2004, at any time after
they have been held in his or her Account for at least 180 days, provided,
however, that if the Participant is employed by or in connection with a
division or subsidiary of Quanex immediately before Quanex sells or otherwise
disposes of that division or subsidiary and after such sale or other
disposition the Participant is no longer employed by Quanex or a subsidiary
owned by Quanex such 180-day restriction shall not apply after the date Quanex
consummates the sale or other disposition of such division or subsidiary, and
(c) all or any part of his or her Plan Shares acquired on or after March 15,
2004, at any time after they have been held in his or her Account for at least
one year, provided, however, that if the Participant is employed by or in
connection with a division or subsidiary of Quanex immediately before Quanex
sells or otherwise disposes of that division or subsidiary and after such sale
or other disposition the Participant is no longer employed by Quanex or a
subsidiary owned by Quanex such one year restriction shall not apply after the
date Quanex consummates the sale or other disposition of such division or
subsidiary.  A Participant who wishes to
sell any part of his or her Plan Shares may do so by giving notice to the local
Human Resources Department, who will then forward the notice to Quanex’s
corporate office.  Quanex will inform
the Bank of the Participant’s election to sell Plan Shares within five business
days of the receipt by Quanex’s corporate office of a notice from the
employee.  Upon receipt of the notice,
the Bank, as the Participant’s agent, will sell the number of Plan Shares
specified in the Participant’s notice within three business days of receipt by
the Bank of instructions to sell the Plan Shares, and will deliver to the
Participant the proceeds of the sale, less a handling charge, brokerage
commissions, and other costs of sale. 
Whole and fractional shares may be aggregated and sold with those of
other Participants, in which case the proceeds for each Participant will be
based on the average sales price of all shares aggregated and sold.  Any sale may, but need not, be made by
purchase for other Accounts in which case the price will be the mean of the
high and low selling price of Quanex Common Stock as reported on the principal
stock exchange on which the stock is traded on the date of receipt by the Bank of
the notice of the Participant’s desire to sell Plan Shares or, if the stock is
not traded on the date of receipt, the mean on the next prior date that it was
so traded.  Any fractional shares that
are not sold will be paid for in cash at a price equal to the mean of the high
and low selling prices of Quanex Common Stock as reported on the principal
stock exchange on which Quanex Common Stock is traded on the date of receipt by
the Bank of the notice of the Participant’s desire to sell Plan Shares or, if the
stock is not traded on the date of receipt, the mean on the next prior date
that it was traded.  If a Participant
elects to sell all of his or her Plan Shares, that Participant will be deemed
to have terminated participation in the Plan, and the provisions of
Section 16 will apply.

 

16.           Participation in the Plan may be terminated by
Participants at any time by giving notice to the local Human Resources
Department, who will then forward the notice to Quanex’s corporate office.  Quanex will inform the Bank of any
Participant’s election to terminate participation within five business days of
the receipt by Quanex’s corporate office of the notice from the employee.  Upon receipt of the notice, unless a
Participant makes a contrary election in

 

4

 

written response to the Bank’s
notice of his Account, the Bank will send to him at no charge a certificate or
certificates representing the full Plan Shares accumulated in his Account and a
check for the net proceeds of any fractional share in his Account.  If a Participant elects to terminate, he or
she may not rejoin the Plan for a period of six months from the date of the
termination.  In any case of
termination, the Bank will, if the Participant elects, sell, as the Participant’s
agent, all or part of his shares within three business days of receipt by the
Bank of instructions to sell his Plan Shares, and will deliver to him the
proceeds of the sale, less a handling charge, brokerage commissions, and other
costs of sale; provided that the Bank may not sell (a) any Plan Shares
acquired on or after July 17, 2003, and before March 15, 2004, if
they have not yet been held in the Participant’s Account for at least
180 days and (b) any Plan Shares acquired on or after March 15,
2004, if they have not yet been held in the Participant’s Account for at least
one year, provided, however, that if the Participant is employed by or in
connection with a division or subsidiary of Quanex immediately before Quanex
sells or otherwise disposes of that division or subsidiary and after such sale
or other disposition the Participant is no longer employed by Quanex or a
subsidiary owned by Quanex such 180 day or one year restriction, as
originally applicable, shall not apply after the date Quanex consummates the
sale or other disposition of such division or subsidiary.  Whole and fractional shares may be
aggregated and sold with those of other Participants, in which case the
proceeds for each Participant will be based on the average sales price of all
shares aggregated and sold.  Any sale
may, but need not, be made by purchase for other Accounts in which case the
price will be the mean of the high and low selling price of Quanex Common Stock
as reported on the principal stock exchange on which the stock is traded on the
date of receipt by the Bank of the notice of termination or, if the stock is
not traded on the date of receipt, the mean on the next prior date that it was
so traded.  On termination, fractional
shares accumulated in a Participant’s Account which are not aggregated and sold
will be paid for in cash at a price equal to the mean of the high and low
selling prices of Quanex Common Stock as reported on the principal stock
exchange on which Quanex Common Stock is traded on the date of receipt by the
Bank of the notice of termination or, if the stock is not traded on the date of
receipt, the mean on the next prior date that it was traded.

 

17.           Quanex may amend the Plan at any time and the Bank may,
with the consent of Quanex, amend the Plan. 
Quanex may terminate the Plan by giving the Bank 30 days written notice
of termination.  The Bank may terminate
the Plan by giving Quanex 90 days written notice of termination.  In addition the Bank may, with the consent
of Quanex, or shall, if requested to do so by Quanex, appoint a successor to
serve as agent for the Participants under the Plan.  In any case the Bank and Quanex will cause a notice of the action
to be mailed to each Participant.  No
action will have a retroactive effect that would prejudice the interests of the
Participants.  The terms and conditions
of the Plan as in effect on the effective date of the appointment of the
successor will be binding upon the successor.

 

18.           Any notice, instruction, request, election or direction
which, by any provision of the Plan, is required or permitted to be given or
made by a Participant to the Bank must be in writing and should be given to the
Participant’s local Human Resources Department, which will then forward the
notice to Quanex’s corporate office; Quanex will then provide the Bank with the
notice, instruction, request, election or direction within five business days
of its receipt by Quanex’s corporate office. 
Any notice, instruction, request, election or direction intended for the
Bank will be deemed to be given or made when received by the Bank.  Any notice or certificate which, by

 

5

 

any provision of the Plan, is
required or permitted to be given by the Bank to a Participant, must be in
writing and will be deemed to have been given or made when received by the
Participant, or five business days after it has been mailed to the
Participant’s address as it last appears on the Bank’s records.

 

19.           The Bank will not be liable for any action which is in
compliance with the terms and conditions of the Plan taken or omitted in good
faith, including without limitation, any claim of liability:

 

A.            Arising out of failure to terminate
a Participant’s Account upon the Participant’s death or otherwise prior to the
receipt of written notice of the event causing termination, accompanied by
documentation deemed satisfactory by the Bank;

 

B.            With respect to the prices at which
Plan Shares are purchased or Plan Shares or Rights are sold for a Participant’s
Account and the timing and terms on which the purchase or sale is made; or

 

C.            For the market value, or any
fluctuation in the market value, after purchase of the Plan Shares or sale of
Plan Shares or Rights for a Participant’s Account.

 

20.           Except as is expressly provided in the Plan, no
Participant can sell, pledge, hypothecate or otherwise assign or transfer his
Account, any interest in his Account or any cash or stock credited to his
Account.  Any attempt to sell, pledge,
hypothecate, assign or transfer his Account, any interest in his Account or any
cash or stock credited to his Account will be void.

 

21.           A Participant who receives a financial hardship
distribution from a qualified cash or deferred arrangement described in
Section 401(k) of the Internal Revenue Code of 1986, as amended, that is
maintained by Quanex or any of its affiliates may not contribute to the Plan
for a period of 12 months after receipt of the financial hardship
distribution.  The Participant must submit
a new Withholding Authorization to the Human Resources Department in order to
recommence contributions to the Plan after he or she has received the financial
hardship distribution.

 

22.           The Withholding Authorization, the Investment
Authorization, and the Plan and its operation will be governed by and construed
in accordance with the laws of the State of New York.

 

23.           For all purposes of the Plan, the term “Ten Year
Limit Date” shall mean February 26, 2014, the date that is ten
years after February 26, 2004, the date the Plan as amended and restated
was ratified by the stockholders of Quanex; provided, however, that if after
February 26, 2004, and before February 26, 2014, the terms of the
Plan are ratified again by the stockholders of Quanex, the term “Ten Year
Limit Date” shall mean the date that is ten years after the date the
shareholders of Quanex ratify again the terms of the Plan.  For all purposes of the Plan, the term “First Day of
the Final Plan Month” shall mean (a) the first day of the month
in which occurs the “Ten Year Limit Date” if the “Ten Year Limit Date” occurs
on or after the tenth calendar day of a calendar month or (b) the first
day of the month preceding the month in which occurs the “Ten Year Limit Date”
if the “Ten Year Limit Date” occurs before the tenth calendar day of a calendar
month.

 

6

 

IN WITNESS WHEREOF, effective
February 26, 2004, Quanex Corporation has adopted this amendment and
restatement on the 26th day of February 2004.

 

	
   

  	
  QUANEX CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:Exhibit 10.2

 

QUANEX CORPORATION

SUPPLEMENTAL BENEFIT PLAN

 

 

Amended and Restated

Effective January 1,
2004

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  Section

  
	
  ARTICLE  I - NAME AND PURPOSE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II - DEFINITIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Actuarial Equivalent

  	
   

  	
  2.01

  
	
  Board

  	
   

  	
  2.02

  
	
  Change of Control

  	
   

  	
  2.03

  
	
  Code

  	
   

  	
  2.04

  
	
  Committee

  	
   

  	
  2.05

  
	
  Company

  	
   

  	
  2.06

  
	
  Disability

  	
   

  	
  2.08

  
	
  Early Retirement Date

  	
   

  	
  2.10

  
	
  Earnings

  	
   

  	
  2.11

  
	
  Employee

  	
   

  	
  2.12

  
	
  Final Average Earnings

  	
   

  	
  2.13

  
	
  Forfeiting Act

  	
   

  	
  2.14

  
	
  Incentive Bonus or Incentive Bonuses

  	
   

  	
  2.15

  
	
  Normal Retirement Date

  	
   

  	
  2.16

  
	
  Participant

  	
   

  	
  2.17

  
	
  Plan

  	
   

  	
  2.18

  
	
  Plan Year

  	
   

  	
  2.19

  
	
  Qualified Plan

  	
   

  	
  2.20

  
	
  Qualified Plan Benefit

  	
   

  	
  2.21

  
	
  Service

  	
   

  	
  2.23

  
	
  Social Security Benefit

  	
   

  	
  2.24

  
	
  Termination of Employment

  	
   

  	
  2.25

  
	
   

  	
   

  	
   

  
	
  ARTICLE III - PARTICIPATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Eligibility

  	
   

  	
  3.01

  
	
  Reemployment

  	
   

  	
  3.02

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV - RETIREMENT BENEFITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Normal Retirement

  	
   

  	
  4.01

  
	
  Deferred Retirement

  	
   

  	
  4.02

  
	
  Early Retirement

  	
   

  	
  4.03

  
	
  Disability Benefit

  	
   

  	
  4.04

  
	
  Deferred Vested Benefit

  	
   

  	
  4.05

  
	
  Change of Control Benefit

  	
   

  	
  4.06

  
	
  Forms of Payment

  	
   

  	
  4.07

  
	
  Forms of Payment Elections

  	
   

  	
  4.08

  
	
  Lump Sum Payment of Small Amounts

  	
   

  	
  4.09

  
	
  Time of Payment of Benefit

  	
   

  	
  4.10

  

 

i

 

	
  ARTICLE V - DEATH BENEFITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  In General

  	
   

  	
  5.01

  
	
  Death During Employment

  	
   

  	
  5.02

  
	
  Death After Termination of Employment

  	
   

  	
  5.03

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI - BENEFICIARIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Designation of Beneficiary

  	
   

  	
  6.01

  
	
  Payment of Benefits Upon Death

  	
   

  	
  6.02

  
	
  Minors and Persons Under Legal Disability

  	
   

  	
  6.03

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII - FORFEITURE FOR CAUSE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII - AGREEMENT FUNDED THROUGH
  RABBI TRUST

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX - PLAN COMMITTEE PROCEDURE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Committee

  	
   

  	
  9.01

  
	
  General Rights, Powers and Duties of Plan
  Committee

  	
   

  	
  9.02

  
	
  Rules and Decisions

  	
   

  	
  9.03

  
	
  Committee Procedures

  	
   

  	
  9.04

  
	
  Authorization of Benefit Payments

  	
   

  	
  9.05

  
	
  Application and Forms of Benefits

  	
   

  	
  9.06

  
	
  Facility of Payment

  	
   

  	
  9.07

  
	
  Claims Procedure

  	
   

  	
  9.08

  
	
  Responsibility

  	
   

  	
  9.09

  
	
   

  	
   

  	
   

  
	
  ARTICLE X - AMENDMENT AND TERMINATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Amendment

  	
   

  	
  10.01

  
	
  Right to Terminate Plan

  	
   

  	
  10.02

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI - MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Inalienability of Benefits

  	
   

  	
  11.01

  
	
  No Implied Rights

  	
   

  	
  11.02

  
	
  Actions by Company

  	
   

  	
  11.03

  
	
  Binding Effect

  	
   

  	
  11.04

  
	
  Number and Gender

  	
   

  	
  11.05

  
	
  Governing Law

  	
   

  	
  11.06

  

 

ii

 

ARTICLE I

 

NAME
AND PURPOSE

 

This plan, as
adopted effective February 28, 1980 and amended and restated October 22, 1981,
November 1, 1988, June 1, 1999, and January 1, 2004, shall be known as the
Quanex Corporation Supplemental Benefit Plan (the “Plan”).

 

The Plan
provides retirement benefits for certain designated management employees in
addition to those provided under the benefit plans for salaried employees of
Quanex Corporation, as in effect from time to time.

 

The purpose of
the Plan is to supplement those retirement benefits that a Participant may be
entitled to receive as a salaried employee of Quanex Corporation. Except as may
be otherwise provided herein, the terms used in the Plan shall have the
meanings specified in the Quanex Corporation Employees’ Pension Plan.

 

I-1

 

ARTICLE
II

 

DEFINITIONS
AND DESIGNATIONS

 

2.01 ”Actuarial Equivalent”  means equality in value of the aggregate
amounts expected to be received under different forms of payment calculated
utilizing the mortality and interest rate assumptions specified in the
Qualified Plan at the time of the calculation.

 

2.02 ”Board” means the Board of Directors of
the Company.

 

2.03 ”Change of Control”  means the occurrence of one or more of the
following events:

 

(a)           the acquisition by
any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a “ Covered Person”) of beneficial ownership
(within the meaning of rule 13d-3 promulgated under the Exchange Act) of 20
percent or more of either (i) the then outstanding shares of the common stock
of (the “Outstanding Company Common Stock”), or (ii) the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this subsection (a)
of this Section, the following acquisitions shall not constitute a Change of
Control of the Company: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any entity
controlled by the Company, or (iv) any acquisition by any corporation pursuant
to a transaction which complies with clauses (i), (ii) and (iii) of subsection
(c) of this Section; or

 

(b)           individuals who, as
of June 1, 1999, constitute the Board 
(the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual
becoming a director subsequent to June 1, 1999 
whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Covered Person other than the Board; or

 

(c)           the consummation of
(xx) a reorganization, merger or consolidation or sale of the Company  or (yy) a disposition of all or
substantially all of the assets of the Company (a “Business Combination”), in
each case, unless, following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, direct or indirectly, more than 80 percent of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of

 

II-1

 

directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately prior to such
Business Combination of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (ii) no Covered Person
(excluding any employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20 percent  or
more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation, except to
the extent that such ownership existed prior to the Business Combination, and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination, were members of the
Incumbent Board at the time of the execution of the initial agreement, or of
the action of the Board, providing for such Business Combination; or

 

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

 

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

 

2.05 “Committee” means the Committee
established under Article IX to administer the Plan.

 

2.06 “Company” means Quanex Corporation, a
Delaware corporation.

 

2.07 “Disability” means physical or mental condition which,
during the first 24 months of the existence of the condition totally prevents
the Participant from performing each and every duty of his own job.
Subsequently, the disabling physical or mental condition must totally and  permanently prevent the Participant from
engaging for remuneration or profit in any equivalent occupation for which he
is reasonably qualified by education, training, or experience. Proof of total
and permanent disability must be based upon a medical examination or other
evidence submitted in a statement by a licensed physician or clinic.
Notwithstanding any other provision, the Participant will not qualify for
disability benefits as defined herein if the disability results from chronic
alcoholism, self-addiction to narcotics or other drugs, a willfully
self-inflicted

 

II-2

 

injury, an injury as the result of engaging in a felonious or criminal
act or enterprise; injury or disease sustained during and arising out of
employment by anyone other than the Company, or service in the Armed Forces of
the United States which entitles the Participant to a veteran’s disability
pension.

 

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

 

2.09 “Earnings” means all wages as defined in
section 3401 of the Code (for purposes of income tax withholding) for services
rendered in the course of employment with the Company; modified by excluding
reimbursements or other expense allowances, fringe benefits (cash and noncash),
moving expenses, deferred compensation, welfare benefits, BeneFlex dollars
under the Quanex Corporation Medical Reimbursement Plan, Incentive Bonuses and
restricted stock awards and stock options; and modified further by including
elective contributions under a cafeteria plan maintained by the Company that is
governed by section 125 of the Code and elective contributions to any plan
maintained by the Company that contains a qualified cash or deferred
arrangement under section 401(k) of the Code.

 

2.10 “Employee” means any person hired by the
Company who is receiving remuneration in the form of a salary for personal
services rendered to the Company.

 

2.11 “Final Average Earnings”
means the highest monthly average of a Participant’s Earnings which is produced
by averaging his Earnings and Incentive Bonuses over any 36 consecutive month
period during the 60 consecutive month period immediately preceding the date of
the Participant’s Termination of Employment. 
However, for the purposes of this definition, no more than three
Incentive Bonuses shall be taken into account in calculating a Participant’s
earnings over any 36 consecutive month period.

 

II-3

 

2.12 “Forfeiting Act”
means the Participant’s fraud, dishonesty, willful destruction of Company
property, committing of a felony, revealing Company trade secrets, acts of
competition against the Company or acts in aid of a competitor of the Company.

 

2.13 “Incentive Bonus” or “Incentive Bonuses” means compensation
earned under the Quanex Corporation Executive Incentive Compensation Plan,
whether or not deferred under the Quanex Corporation Deferred Compensation
Plan.

 

2.14 “Normal Retirement Date”  means the first day of the month coincident
with or next following a Participant’s 65th birthday.

 

2.15 “Participant”
means an Employee designated by the Board as eligible for participation in the
Plan, and who meets the requirements of Article III.

 

2.16 “Plan” means the Quanex Corporation
Supplemental Benefit Plan.

 

2.17 “Plan Year” means the period commencing on
November 1 and ending on October 31.

 

2.18 “Qualified Plan”
means the Quanex Corporation Employees’ Pension Plan maintained by the Company.

 

2.19 “Qualified Plan Benefit”
means the aggregate of all benefits which would be payable to the Participant
from the Qualified Plan payable on or after his Normal Retirement Date.  In calculating the amount of the Qualified
Plan Benefit, for the purposes of the Plan the following shall apply:

 

(a)           If the normal form
of benefit of the Qualified Plan is other than a straight life annuity, the
benefit shall be expressed in the form of a straight life annuity by using the
actuarial assumptions contained in the Qualified Plan.

 

(b)           If benefits under
the Qualified Plan are paid or are payable to the Participant prior to the date
his benefits commence under the Plan, the Actuarial Equivalent of such benefits
as of his Normal Retirement Date (as defined in the Qualified Plan) shall be
used.

 

II-4

 

(c)           The amount of a
Participant’s Qualified Plan Benefit shall be determined based on the
provisions of the Qualified Plan as in effect on the date his benefits under
the Plan are determined.

 

(d)           The amount of a
Participant’s Qualified Plan Benefit shall be determined by disregarding any
offset for benefits payable under a terminated retirement plan that was
previously maintained by the Company or one of its affiliates.

 

2.20 “Service” means service for purposes of
the Qualified Plan. In determining a Participant’s Service, all  years of Service after the Participant’s
date of hire shall be taken into account.

 

2.21 “Social Security Benefit”
means, for all purposes other than determining the Disability benefit, the
monthly amount payable commencing on the later of the Participant’s 65th
birthday or the date of his Termination of Employment under the provisions of
Title II of the Social Security Act. Such benefit shall be determined based on
(1) the Participant’s average monthly wage or indexed earnings (as defined in
the Social Security Act, as amended) on the date of his Termination of
Employment, computed under the Social Security Act as in effect on the January
1 of the calendar year in which benefits are determined and using the
Participant’s annual total wages from the Company for the prior calendar year,
as defined in section 3121(b), assuming his wages increased prior thereto at
the rate of increase in the average per worker total wages reported by the
Social Security Administration, and assuming continuation of such wages without
increase thereafter until his Termination of Employment  (with no wages thereafter); and (2) the
Table of Primary Social Security Benefits under the Social Security Act as in
effect on the January 1 of the calendar year in which his Termination of
Employment actually occurs. “Social Security Benefit” means, for purposes of
determining a Disability benefit, any actual disability benefit for which the
Participant is eligible under Title II of the Social Security Act.

 

II-5

 

2.22 “Termination of Employment”
means the complete severance of the employment relationship between the Company
and every entity that is required to be treated as a single employer together
with the Company for certain employee benefit purposes pursuant to section 414
of the Code.

 

II-6

 

ARTICLE III

 

PARTICIPATION

 

3.01 Eligibility
to Participate. An Employee shall become eligible to become a
Participant in the Plan by designation of the Board. The Committee shall notify
each Participant of his eligibility. 
Each designated Employee shall furnish such information and perform such
acts as the Committee may require prior to becoming a Participant.

 

3.02 Reemployment.
Any person who terminates employment with the Company shall not be eligible to
participate in the Plan upon his reemployment by the Company unless the Board
so determines. In such event, the Board shall specify whether and under what
conditions the person shall receive credit for all or any of his Service
completed prior to reemployment.

 

III-1

 

ARTICLE IV

 

RETIREMENT
BENEFITS

 

4.01 Normal
Retirement Benefit. Subject to Article VIII, if a Participant
terminates employment with the Company on or after his Normal Retirement Date,
he will be entitled to a monthly benefit payable to the Participant for life
only in an amount equal to:

(a)           2.75 percent of his
Final Average Earnings multiplied by his years of Service (not in excess of 20
years), less

 

(b)           the sum of:

(1)           the Participant’s
Qualified Plan Benefit, and

(2)           one-half of the
Participant’s Social Security Benefit multiplied by a fraction (which shall not
exceed one) the numerator of which is the Participant’s number of years of
Service and the denominator of which is 20.

 

Notwithstanding
any other provision of the Plan, a Participant’s monthly benefit under this
Section 4.01 shall not be less than his monthly benefit accrued as of the date
of the execution of this Agreement.

 

4.02 Deferred Retirement
Benefit. If a Participant terminates employment with the Company
on or after his Normal Retirement Date, he will be entitled to a monthly
benefit payable to the Participant for life only determined in accordance with
the provisions of Section 4.01. The benefit will not be actuarially increased
to reflect the later benefit payment date or his shorter life expectancy. In
determining a Participant’s deferred retirement benefit, his Service subsequent
to his Normal Retirement Date and the computation of his Final Average Earnings
shall take into account his Service after his Normal Retirement Date.

 

4.03 Early
Retirement Benefit. If a Participant terminates employment with
the Company on or after his Early Retirement Date but before age 65, he shall
be entitled to a monthly benefit payable to the Participant for life only
determined in accordance with the

 

IV-1

 

provisions of Section 4.01 based upon his years of Service and Final
Average Earnings on the date of his Termination of Employment. The monthly
amount shall be reduced by five percent for each year (and fractional year)
that the Participant’s benefit commencement precedes the Participant’s 65th
birthday.

 

4.04 Disability
Benefit. If a Participant who has completed six months of
Service terminates employment with the Company prior to his Early Retirement
Date due to his Disability, he shall receive a monthly Disability benefit, for
so long as he has a Disability but no longer than his Normal Retirement Date
(on which date the Participant shall be treated as a retiree entitled to
benefits under Section 4.01), in an amount equal to:

 

(a)           50 percent of the
sum of his monthly Earnings in effect at the date of his Disability and the
monthly equivalent of the average of his Incentive Bonuses for the prior three
Plan Years, less

 

(b)           the sum of:

 

(1)           the Participant’s
Qualified Plan Benefit;

 

(2)           the Participant’s
Social Security Benefit;

 

(3)           the Participant’s
benefit under the Company’s group long-term disability insurance plan;

 

(4)           the Participant’s
benefit under an individual disability policy provided by the Company, and;

 

(5)           the Participant’s
benefit under the Company’s wage continuation policy plan.

 

Upon the occurrence of the Normal Retirement Date of a former
Participant with a Disability, he will be entitled to a monthly benefit payable
to him for life only determined in accordance with the provisions of Section
4.01.  In determining his benefit
payable upon the occurrence of his Normal Retirement Date, his Final Average
Earnings and his years of Service shall be determined as of the date of his
Disability.

 

IV-2

 

4.05 Deferred
Vested Benefit. If a Participant terminates employment with the
Company prior to his Early Retirement Date but has five or more years of
Service, he will upon attaining age 55 be entitled to the lump sum Actuarial
Equivalent of a monthly benefit payable to the Participant for life only
determined in accordance with the provisions of Section 4.01 based upon his
years of Service and Final Average Earnings at his Termination of Employment.
The benefit calculated under Section 4.01 however, shall be reduced, using the
factors described in Section 4.03.  If
the Participant has fewer than five years of Service when he terminates
employment prior to his Early Retirement Date, he shall not be entitled to any
benefits under the Plan.

 

4.06 Change of
Control Benefit. 
Notwithstanding any other provisions of the Plan, if a Participant’s
Termination of Employment occurs after a Change of Control, he will be entitled
to the lump-sum Actuarial Equivalent of a monthly benefit payable to the
Participant for life only determined in accordance with the provisions of
Section 4.01 based upon his years of Service and Final Average Earnings at his
Termination of Employment.  The benefit
calculated under Section 4.01 shall not be reduced because of the Participant’s
age or early payment of his benefit under the Plan.  Any benefit paid pursuant to this Section 4.06 shall be in lieu
of any other benefit otherwise payable to the Participant under the Plan.

 

4.07         Forms of Payment. 
Subject to the provisions of Section 4.09, a Participant who
is entitled to a benefit under Section 4.01, 4.02 or 4.03 may elect, in
accordance with procedures established by the Committee, to have his benefit
paid in one of the following forms, each of which shall be the Actuarial
Equivalent of the Participant’s benefit accrued under Section 4.01, 4.02, or
4.03, as applicable:

 

(a)           A lump sum payment.

 

IV-3

 

(b)           An optional form of
payment permitted under the Qualified Plan.

 

(c)           Monthly, quarterly,
or annual installment payments for a specified number of years (not in excess
of 20).  Such payments shall be made to
the Participant while he is alive, and the balance of the payments shall be
paid on an installment basis to his designated beneficiary if he dies prior to
the payment of all the installment payments.

 

If a Participant fails to make a valid election concerning the form of
his payment, his benefit shall be paid in the form of a lump sum.

 

All payments under the Plan shall be made in cash.

 

4.08         Forms of Payment Elections.  In order to be valid, a Participant’s form
of payment election must be made in accordance with procedures established by
the Committee and must be filed with the Committee at least 12 months prior to
the date on which the Participant’s Plan benefit is to be paid or commence to
be paid.  In accordance with procedures
established by the Committee, a Participant may make a one-time irrevocable
election to change the form of payment he previously selected.  In order to be effective, any such change
election must be filed with the Committee at least 12 months prior to the date
on which the Participant’s Plan benefit is to be paid or commence to be paid.

 

4.09         Lump Sum Payment Of Small Amounts.  Notwithstanding any other provision of the
Plan, if the present value of a benefit payable under Section 4.01, 4.02 or
4.03 of the Plan is less than or equal to $20,000, such benefit shall be paid
in the form of a lump sum in cash.

 

4.10         Time of Payment of Benefit.  The payments provided for Normal Retirement,
Deferred Retirement, and Early Retirement shall be paid or commence to be paid
on the 90th day after the Participant’s Termination of Employment.  The monthly Disability benefit shall
commence being paid on the first day of the month coincident with or next
following the

 

IV-4

 

Participant’s Termination of Employment  due to Disability and shall cease with the last payment prior to
his recovery or attainment of his Normal Retirement Date.  If a former Participant who terminated
employment with the Company due to Disability continues to have a Disability
until his Normal Retirement Date, the lump sum payment then due shall be paid
on his Normal Retirement Date.  A
Participant’s Change of Control benefit shall be payable on the 90th day after
the  later of his attainment of age 55
or the date of his Termination of Employment. 
A Participant’s deferred vested benefit shall be payable on the 90th
day after the Participant’s Termination of Employment.

 

IV-5

 

ARTICLE V

 

DEATH
BENEFITS

 

5.01 In General. The benefits
under the Plan payable subsequent to a Participant’s or former Participant’s
death shall be limited to those contained in this Article, and shall in any
case be subject to Article VII.

 

5.02 Death During
Employment. If a Participant’s death occurs while he is in the
employ of the Company, no death benefit shall be payable under the Plan with
respect to the Participant.

 

5.03 Death After Termination of Employment.

 

(a)           In General. Except as
provided in this Section, no benefits shall be payable to or on behalf of a
Participant or former Participant whose death occurs subsequent to his
Termination of Employment.

 

(b)           Before Benefits Commence.
If a former Participant dies before his benefit is paid or commences to be paid
but after his Termination of Employment on or after his Normal Retirement Date,
his Early Retirement Date or a Change of Control, or after he has become
entitled to a deferred vested benefit under Section 4.05, his designated
beneficiary, if any, shall be entitled to receive a lump sum benefit equal to
the benefit which he would have received had he lived to the date his benefit
would have been paid out. If a former Participant dies before his benefit
commences to be paid and he was eligible for a Disability benefit, his
designated beneficiary, if any, shall be entitled to receive a lump sum benefit
which is Actuarially Equivalent to a survivor annuity equal to the survivor
portion of a qualified joint and 50 percent survivor annuity as if the former
Participant had been entitled to elect and had elected such survivor annuity on
the day before his death. The survivor lump sum death benefit shall be payable
on the 90th day following the date of the Former Participant’s death.  In calculating the survivor portion for the
survivor lump sum benefit, the benefit shall be reduced in the same manner it
is reduced under Section 4.03, 4.04 or 4.05, whichever is applicable, for
payment earlier than Normal Retirement Date. 
In the event of a Participant’s Termination of Employment after a Change
of Control, the death benefits payable under this Section 5.03 on his behalf
will not be reduced for payment before the Participant’s Normal Retirement
Date.

 

(c)           After Disability Benefits Commence.
If a former Participant who is receiving a Disability benefit dies prior to
reaching his Normal Retirement Date but while he still has a Disability, his
designated beneficiary shall receive a lump sum benefit which is Actuarially
Equivalent to the survivor portion of a qualified joint and 50 percent survivor
annuity as if the

 

V-1

 

former Participant had been entitled to elect and had elected such
survivor annuity on the day before his death. Such benefit shall be payable on
the 90th day after his death.

 

(d)           After Benefits Under Section 4.01, 4.02
or 4.03 Commence.  If a
former Participant dies after receiving payments pursuant to Section 4.01,
4.02, or 4.03 of the Plan, his designated beneficiary shall be entitled to
receive any death benefit payable under the optional form of payment selected
by the former Participant.

 

V-2

 

ARTICLE VI

 

BENEFICIARIES

 

6.01 Designation
of Beneficiary. Each Participant or former Participant shall
designate as his beneficiary the person or persons who shall, upon his death,
receive the death benefits, if any, payable pursuant to Article V. The
designation shall be in such form as the Committee requires and may include
contingent beneficiaries. A beneficiary designation shall be effective when
filed with the Committee during the Participant’s or former Participant’s life,
and shall cancel and revoke all prior designations.

 

6.02 Payment of
Benefits Upon Death. If a Participant’s or former Participant’s
death occurs prior to payment of his benefit, the benefit payable upon his
death, if any, shall be paid to the persons or persons designated as his
primary beneficiary, but if the primary beneficiary does not survive him, then
to the person or persons designated as the contingent beneficiary.  If no primary or contingent beneficiary
survives him or if no beneficiary designation is in effect upon his death, then
the benefit under Article V shall be paid to his spouse.  If his spouse does not survive him, then the
benefit shall be paid to his descendants who survive him by right of
representation, and if no descendants of the Participant or former Participant
survive him, then to his estate.

 

6.03 Minors and Persons Under Legal Disability.
Payments to a minor or a person under a legal disability shall be made by the
Company at the direction of the Committee as follows:

 

(a)           to the natural or
adoptive parents or legal guardian or conservator of such person, or to any
other person in loco parentis;

 

(b)           to a custodian for
such person under the Uniform Gifts to Minors Act or Gifts of Securities to
Minors Act; or

 

VI-1

 

(c)           by expending amounts
directly for the education and support of such person.

 

VI-2

 

ARTICLE VII

 

FORFEITURE
FOR CAUSE

 

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

 

VII-1

 

ARTICLE
VIII

 

AGREEMENT
FUNDED THROUGH RABBI TRUST

 

The Company shall pay the benefits due the Participants and former
Participants under the Plan; however, should it fail to do so when a benefit is
due, such benefit shall be paid by the trustee of that certain Trust Agreement
entered into, by and between the Company and Fleet National Bank  (the “Trust”). In any event, if the Trust
fails to pay for any reason, the Company still remains liable for the payment
of all benefits provided by the Plan. The Company may contribute at any time
and from time to time such assets to the Trust as it, in its sole discretion,
shall determine and shall have the right at any time and from time to time to
borrow from the Trust the fair market value of assets held in the Trust which
are in excess of the net present value of the largest benefit all Participants
and former Participants are entitled to under the Plan as of the beginning of
the Plan Year during which the loan is made (exclusive of any Disability or
death benefit).  Any such loan shall be
evidenced by an instrument in writing, shall bear interest at such rate as the
Company would be required to pay to its prime lender under the same terms
(except for the security), shall provide a repayment schedule which would repay
but only to the extent of the funds so borrowed, such amount as is necessary to
maintain at the beginning of each Plan Year during the existence of the loan,
non-borrowed funds in the Trust at a level at least equal to the net present
value of all benefits calculated under the preceding sentence and shall provide
for prepayment at the Company’s election, without penalty. The above
calculations shall use the same actuarial factors set out in the definition of
Actuarial Equivalent under Section 2.01. All assets contributed shall be held
in and administered according to the terms of the Trust which are incorporated
by reference in the Plan for all purposes. However, in no event shall the
rights of Participants and former Participants in the assets held by the Trust
be greater than the

 

VIII-1

 

rights of unsecured creditors of the Company. Nothing contained in the
Plan or the Trust constitutes a secured promise by the Company that the assets
of the Company will be sufficient to pay any benefit to any person.

 

VIII-2

 

ARTICLE IX

 

PLAN
COMMITTEE

 

9.01 Committee.
The Plan shall be administered by the Committee, which shall have three
members designated in writing by the Company. Any person may resign from the
Committee upon 30 days’ prior notice to the Company and to any other member of
the Committee. The Company may remove any member of the Committee by written
notice to him and to any other member of the Plan Committee. The Company shall
fill any vacancy and shall give written notice thereof to the other members of
the Committee. In the interim, the other member(s) of the Committee shall have
full authority to act. If, at any time, there are no members of the Committee,
then the Board  shall serve as the
Committee.

 

9.02 General
Rights, Powers and Duties of Plan Committee. The
Committee shall be responsible for the management, operation and administration
of the Plan. In addition to any powers, rights and duties set forth elsewhere
in the Plan, it shall have the following powers and duties:

 

(a)           to adopt such rules
and regulations consistent with the provisions of the Plan as it deems
necessary for the proper and efficient administration of the Plan;

 

(b)           to enforce the Plan
in accordance with its terms and any rules and regulations it establishes;

 

(c)           to maintain records
concerning the Plan sufficient to prepare reports, returns and other
information required by the Plan or by law;

 

(d)           to construe and
interpret the Plan and to resolve all questions arising under the Plan;

 

(e)           to direct the
Company to pay benefits under the Plan, and to give such other directions and
instructions as may be necessary for the proper administration of the Plan;

 

(f)            to employ or retain
agents, attorneys, actuaries, accountants or other persons, who may also be
employed by or represent the Company, and

 

IX-1

 

(g)           to be responsible
for the preparation, filing and disclosure on behalf of the Plan of such
documents and reports as are required by any applicable federal or state law.

 

The Committee shall have no power to add to, subtract from or modify
any of the terms of the Plan, or to change or add to any benefits provided by
the Plan, or to waive or fail to apply any requirements of eligibility for
benefits under the Plan.

 

9.03 Rules and
Decisions. The Committee may adopt such rules and actuarial
tables as it deems necessary, desirable or appropriate. All rules and decisions
of the Committee shall be uniformly and consistently applied to all
Participants in similar circumstances. When making a determination or
calculation, the Committee shall be entitled to rely upon information furnished
to it by a Participant or beneficiary, the Company, and the legal counsel,
actuary and accountant for the Company.

 

9.04 Committee
Procedures. The Committee may act at a meeting or in writing
without a meeting. The Committee shall elect one of its members as chairman and
appoint a secretary, who may or may not be a Committee member.  The Secretary shall keep a record of all
meetings and forward all necessary communications to the Company.  The Committee may adopt such bylaws and
regulations as it deems desirable for the conduct of its affairs. All decisions
of the Committee shall be made by the vote of the majority, including actions
in writing taken without a meeting. A dissenting Committee member who, within a
reasonable time after he has knowledge of any action or failure to act by the
majority, registers his dissent in writing delivered to the other Committee
members and the Company, shall not, to the extent permitted by law, be
responsible for any such action or failure to act.

 

9.05 Authorization
of Benefit Payments. The Committee shall issue directions to the
Company concerning all benefits which are to be paid pursuant to the provisions
of the Plan. The

 

IX-2

 

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, Termination of Employment and the reason
therefor, leave of absence, reemployment, years of Service, Earnings, and Final
Average Earnings. Participants and their beneficiaries shall furnish to the
Committee such evidence, data, or information, and execute such documents, as
the Committee requests.

 

9.06 Application
and Forms of Benefits. The Committee may require a Participant
or former Participant to complete and file with the Committee an application
for retirement benefits and all other forms approved by the Committee, and to
furnish all pertinent information requested by the Committee. The Committee may
rely upon all such information so furnished it, including the Participant’s or
former Participant’s current mailing address.

 

9.07 Facility of
Payment. Whenever, in the Committee’s opinion, a person entitled
to receive any payment of a benefit or installment thereof hereunder is under a
legal disability or is incapacitated in any way so as to be unable to manage
his financial affairs, the Committee may direct the Company to make payments to
such person or to his legal representative or to a relative or friend of such
person for his benefit, or the Committee may direct the Company to apply the
payment for the benefit of such person in such manner as the Committee
considers advisable. Any payment of a benefit or installment thereof in
accordance with the provisions of this Section shall be a complete discharge of
any liabilities for the making of such payment under the provisions of the
Plan.

 

9.08 Claims
Procedure. The Committee shall make all determinations as to the
right of any person to receive benefits under the Plan. Any denial by the
Committee of a claim for benefits under the Plan by a Participant, former
Participant beneficiary of a former Participant

 

IX-3

 

(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 claim and the claim shall thereafter be paid
on the 180th day after the date of receipt of the initial claim.  Such notice shall set forth the specific
reasons for the denial, specific reference to pertinent provisions of the Plan
upon which the denial is based, a description of any additional material or
information necessary for the Claimant to perfect his claim with an explanation
of why such material or information is necessary, and an explanation of claim
review procedures under the Plan written to the best of the Committee’s ability
in a manner that may be understood without legal or actuarial counsel. A
Claimant whose claim for benefits has been wholly or partially denied by the
Committee may, within 90 days following the date of such denial, request a
review of such denial in writing addressed to the Committee. The Claimant shall
be entitled to submit such issues or comments, in writing or otherwise, as he
shall consider relevant to a determination of his claim, and he may request a
hearing in person before the Committee. Prior to submitting his request, the
Claimant shall be entitled to review such documents as the Committee shall
agree are pertinent to his claim. The Claimant may, at all stages of review, be
represented by counsel, legal or otherwise, of his choice, provided that the
fees and expenses of such counsel shall be borne by the Claimant. All requests
for review shall be promptly resolved. The Committee’s decisions with respect
to any such review shall be set forth in writing and shall be mailed to the
Claimant on the 60th day following receipt by the Committee of the Claimant’s
request unless special circumstances, such as the need to hold a

 

IX-4

 

hearing, require an extension of time for processing, in which case the
Committee’s decision shall be so mailed on the 120th day after receipt of such
request.

 

9.09 Responsibility.
No member of the Committee or of the Board shall be liable to any person for
any action taken or omitted in connection with the administration of the Plan
unless attributable to his own fraud or willful misconduct; nor shall the
Company be liable to any person for any such action unless attributable to
fraud or willful misconduct on the part of a director, officer or employee of
the Company.

 

IX-5

 

ARTICLE
X

 

AMENDMENT
AND TERMINATION

 

10.01 Amendment. The Plan may
be amended in whole or in part by the Company at any time. Notice of any such
amendment shall be given in writing to the Committee and to each Participant,
former Participant, and beneficiary of a deceased former Participant. No such
amendment, however, shall have the effect of reducing that portion of the
benefit the Participant or former Participant ultimately becomes entitled to
below that amount he would have received for Service to the date of the
amendment under the formula set out in the Plan prior to the amendment.

 

10.02 Right to
Terminate Plan. The Company reserves the right to terminate the
accrual or vesting of additional benefits under the Plan by any or all
Participants at any time by written notice to the Committee. The Committee
shall notify any Participant affected by such termination of such action and
its effective date within 30 days after it receives notice from the Company. A
Participant whose accrual of additional benefits is terminated shall not lose
any previously earned and vested benefits, and, subject to Article VII, any
such vested benefits shall be payable at the time and in the manner provided
hereunder.

 

X-1

 

ARTICLE XI

 

MISCELLANEOUS

 

11.01 Inalienability
of Benefits. The right of any Participant, former Participant or
beneficiary to any benefit or payment under the Plan shall not be subject to
voluntary or involuntary transfer, alienation, pledge, assignment, garnishment,
sequestration or other legal or equitable process. Any attempt to transfer,
alienate, pledge, assign or otherwise dispose of such right or any attempt to
subject such right to attachment, execution, garnishment, sequestration or
other legal or equitable process shall be null and void.

 

11.02  No Implied Rights. Neither the establishment of the
Plan nor any modification thereof shall be construed as giving any Participant,
former Participant beneficiary or other person any legal or equitable right
unless such right shall be specifically provided for in the Plan or conferred
by affirmative action of the Company in accordance with the terms and
provisions of the Plan.

 

11.03 Actions By
Company. All actions by the Company under the Plan shall be
taken by the Board or by a person or persons designated by the Board.

 

11.04 Binding
Effect. The provisions of the Plan shall be binding on the
Company, the Committee, and all persons entitled to benefits under the Plan,
together with their respective heirs, legal representatives and successors in
interest.

 

11.05 Number and
Gender. Wherever appropriate, the singular shall include the
plural, the plural shall include the singular, and the masculine shall include
the feminine or neuter.

 

11.06 Governing  Law. The Plan shall be
construed and administered according to the laws of the State of Texas.

 

XI-1

 

IN WITNESS WHEREOF, effective January 1, 2004, the Company has adopted
this amendment and restatement of the Plan on the
           day of
                          ,
2004.

 

	
   

  	
  QUANEX CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

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