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                                                                    EXHIBIT 10.5

                               FIRST AMENDMENT TO
                               QUANEX CORPORATION
                           DEFERRED COMPENSATION PLAN

         THIS AGREEMENT by Quanex Corporation (the "Company"),

                              W I T N E S S E T H:

         WHEREAS, on September 29, 1999, the Company executed the Plan known as
"Quanex Corporation Deferred Compensation Plan" (the "Plan"); and

         WHEREAS, the Company retained the right in Section 9.1 of the Plan to
amend the Plan from time to time; and

         WHEREAS, the Board of Directors of the Company approved resolutions on
the 7th day of December, 1999, to amend the Plan;

         NOW, THEREFORE, the Company agrees that, effective as of December 7,
1999, Section 3.3 of the Plan is amended in its entirety to read as follows:

                  3.3 MANDATORY DEFERRAL. If (1) a Participant becomes entitled
         to a cash payment of part or all of an Incentive Bonus because the
         Participant did not elect to defer all of the Incentive Bonus, (2) 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 and,
         (3) effective June 1, 1999, a Change of Control has not occurred, then,
         the payment of the amount of the Incentive Bonus that is not deductible
         by the Company will be delayed and deferred under the provisions of the
         Plan until the 76th day following the end of the Plan Year in which the
         Incentive Bonus was earned, on which date the total Incentive Bonus
         will be paid immediately. The Committee may waive the mandatory
         deferral required by this Section 3.3 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 Incentive Bonus is determined
         and awarded.

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         IN WITNESS WHEREOF, the Company has executed this Agreement this 7th
day of December, 1999.

                                                     QUANEX CORPORATION

                                                     By /s/ PAUL GIDDENS
                                                       -------------------------
                                                     Title  Vice President
                                                            Human Resources
                                                          ----------------------

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                                                                    EXHIBIT 10.8

                               QUANEX CORPORATION

                      EXECUTIVE INCENTIVE COMPENSATION PLAN

                              AMENDED AND RESTATED
                           EFFECTIVE OCTOBER 12, 1995

                                    ARTICLE I
                            ESTABLISHMENT AND PURPOSE

                  Establishment of the Plan. Quanex Corporation herewith
establishes an incentive compensation plan for executives as herein set forth,
which shall be known as the Quanex Corporation Executive Incentive Compensation
Plan that shall become effective as of November 1, 1981.

                  1.1 Purpose. The purpose of the Plan is to provide executives
of the Company with competitive levels of total compensation and incentive
earning opportunities commensurate with results achieved and individual
performance.

                                   ARTICLE II
                                   DEFINITIONS

                  Company. "Company" means Quanex Corporation and any
successor. In addition, the term "Company" shall include any other corporation
in which Quanex Corporation owns more than 50% of the outstanding voting stock
and adopts this Plan.

                  2.1 Committee. "Committee" means those directors appointed by
the Board of Directors to administer this Plan.

                  2.2 Consolidated Financial Statements. "Consolidated Financial
Statements" means for each year, the consolidated balance sheet, statement of
earnings, and shareholders' equity prepared by the independent certified public
accountants engaged by the Company's Board of Directors to audit the financial
statements of the Company, as set forth and certified in the annual report to
stockholders of the Company.

                  2.3 Corporate Performance Goal. "Corporate Performance Goal"
means the level of EBITDA/Sales, Group EBITDA/Sales, Group Return on
Controllable Investment, Return on Equity and Return on Investment for the Plan
Year, approved annually by the Committee. The Committee, in its discretion, may
select other Corporate Performance Goals provided such goals are

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set forth in writing and approved no later than 60 days after the beginning of
the Plan Year for which such goals are to apply.

                  2.4 EBITDA/Sales. "EBITDA/Sales" for any Plan Year means the
Company's annual operating income plus depreciation and amortization divided by
net sales for such year.

                  2.5 Group EBITDA/Sales. "Group EBITDA/Sales" for any Plan Year
for a business group of the Company selected by the Committee means the annual
operating income of such business group plus depreciation and amortization for
such group divided by net sales for such group for such year.

                  2.6 Group Return on Controllable Investment. "Group Return on
Controllable Investment" for a business group of the Company selected by the
Committee for any Plan Year means Group annual operating income plus
depreciation and amortization less the capital use charge on working capital
imposed by the Company on the group, less taxes thereon at the effective tax
rate for such Group for such Plan Year, divided by equity and non-current
liabilities attributable to such group.

                  2.7 Incentive Award. "Incentive Award" means the amount due a
Participant in accordance with Article IV of this Plan.

                  2.8 Individual Incentive Target. "Individual Incentive Target"
means the anticipated Incentive Award to be paid to a Participant in the event
the Corporate Performance Goals assigned to such Participant are met and the
individual performance of the Participant is fully proficient and satisfactory.
Individual Incentive Targets shall be a percentage of Salary as determined by
the Committee and the Committee may assign such weight to each of a
Participant's Corporate Performance Goals for purposes of determining whether an
Individual Incentive Target is met as the Committee, in its sole discretion,
shall determine.

                  2.9 Participant. "Participant" means an employee of the
Company selected by the Committee to be considered for an Incentive Award under
this Plan. The mere selection as a Participant shall not convey any rights as to
the eventual receipt of an award.

                  2.10 Plan. "Plan" means the Quanex Corporation Executive
Incentive Compensation Plan.

                  2.11 Plan Year. "Plan Year" means the period from November 1
to October 31 each year.

                  2.12 Return on Equity. "Return on Equity" for any Plan Year
means the annual net income of the Company less preferred dividends divided by
average common shareholders' equity. For purposes hereof average common
shareholders' equity shall be the sum of common

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equity as of the beginning of each fiscal quarter of the Plan Year and as of the
end of the Plan Year divided by five.

                  2.13 Return on Investment. "Return on Investment" for any Plan
Year means the annual net income of the Company plus interest expense (net of
the income tax benefit thereof at the effective tax rate of the Company for such
Plan Year) divided by total investment. For purposes hereof total investment
shall be the sum of shareholders' equity plus long term debt as of the beginning
of each fiscal quarter of the Plan Year and as of the end of the Plan Year
divided by five.

                  2.14 Salary. "Salary" means the amounts paid by the Company to
a Participant during the Plan Year as regular compensation for services,
exclusive of bonuses, awards, reimbursement of expenses and all indirect
payments or other additional amounts paid or credited to or on behalf of the
Participant by the Company.

                  In determining any Corporate Performance Goal, the Committee,
in its sole discretion, may exclude from long-term debt that part of the debt
which the Committee considers not available for production of earnings and may
adjust annual operating income and expenses for those items the Committee deems
extraordinary, unusual or infrequent and for changes in accounting standards. In
addition, the Committee, in its discretion, may determine that portions of
long-term debt and additional equity arising from a public offering of the
capital stock of the Company are to be phased into the debt and equity accounts
over a period of time, not exceeding 36 months, as the Committee shall determine
appropriate, giving consideration to the fact that the debt and equity may not
be available, or may be only partially available for production of earnings.

                                   ARTICLE III
                          ELIGIBILITY AND PARTICIPATION

                  Eligibility and Participation. Eligibility for participation
in the Plan will be limited to those key executive personnel who, by the nature
and scope of their position, regularly and directly make or influence policy
decisions which significantly impact the overall results or success of the
Company.

                  3.1 Participation. Participants will be selected by the
Committee not later than the beginning of each Plan Year. Each person selected
to be a Participant will be notified in writing. The notice shall inform the
Participant of his selection and of the Corporate Performance Goals established
for the Plan Year and the Individual Incentive Targets for the Participant.

                  3.2 Cessation of Participants. The Committee may withdraw its
approval of an executive's participation at any time during the Plan Year.

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                                   ARTICLE IV
                               AWARD DETERMINATION

                  Assignment of Individual Incentive Targets. Each year the
Committee will assign an Individual Incentive Target for each Participant. This
Individual Incentive Target will be expressed as a percentage of the
Participant's Salary. The Committee shall have the power to adjust Individual
Incentive Targets at any time during the Plan Year.

                  4.1 Corporate Performance Goals. Prior to the beginning of
each Plan Year the Committee will establish Corporate Performance Goals for each
Participant that, if no adjustment were made for individual Participant's
performance, would result in 100% of the Individual Incentive Target being
earned. In addition, the Committee will establish for each Plan Year levels of
Corporate Performance Goals for each Participant that, if no adjustment were
made for individual Participant's performance, would result in amounts greater
or lesser than the Individual Incentive Target being earned.

                  To establish the Corporate Performance Goals for each
Participant for each Plan Year, the Committee will use any information it
considers relevant regarding the likely performance of the Company. The
Corporate Performance Goals, together with related schedules, will be
communicated to Participants as soon as practicable following its determination
by the Committee.

                  4.2 Award Determination. As soon as possible after the end of
the Plan Year, the Committee shall determine the Incentive Award payable to each
Participant on the basis of the Corporate Performance Goals achieved based on
the Consolidated Financial Statements for the Plan Year. The Incentive Award so
determined shall be subject to adjustment to reflect individual performance in
accordance with Section 4.4.

                  4.3 Individual Performance Adjustments. The Committee shall
have the power to adjust awards as determined under Section 4.3, to reflect the
individual performance of the Participant or to better relate the Incentive
Award to the performance of the Company or to one of the business groups. In
making adjustments to reflect excellent or superior individual performance the
Committee is only limited by the maximum Incentive Award that can be earned by
the Participant.

                  4.4 Participation in Other Incentive Plans. Notwithstanding
the preceding, for each Participant who is also a Participant under another
incentive compensation plan of the Company, the Committee may specify that
incentive compensation shall be based on the compensation payable under the
other plan to the maximum amount payable under that plan and additional
incentive compensation shall be payable to the Participant under the provisions
of this

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Plan only to the extent that compensation under this Plan would exceed
compensation under the other plan.

                  4.5 Maximum Individual Awards. The Committee shall determine
for each Participant a maximum Incentive Award that can be earned for each Plan
Year, expressed as a percentage of the Participant's Salary. The maximum
Incentive Award cannot be exceeded regardless of the level of corporate and
individual performance achieved.

                                    ARTICLE V
                            FORM AND TIMING OF AWARDS

                  Payment of Individual Awards. Except as provided in Section
5.2, Incentive Awards to be paid to Participants in accordance with the
provisions of Article IV shall be paid in cash as soon as practicable following
the release of the Company's Consolidated Financial Statements for the Plan
Year.

                  5.1 Participant Election to Defer Payments. For each Plan
Year, a Participant may elect to defer all or any part of the Incentive Award
which may be earned under this Plan, and otherwise become payable to the
Participant. That election to defer shall be made in accordance with the Quanex
Corporation Deferred Compensation Plan. If the Participant fails to make an
election to defer a part or all of his Incentive Award and the payment of a part
or all of the Incentive Award would cause the Company to loose a part or all of
its deduction because of Section 162(m) of the Code, the payment of the
Incentive Award will be delayed under the Quanex Corporation Deferred
Compensation Plan. Under this circumstance, the provisions of the Quanex
Corporation Deferred Compensation Plan shall then become controlling as to the
terms of payment of the Incentive Award.

                                   ARTICLE VI
                            TERMINATION OF EMPLOYMENT

                  In the event the employment of a Participant is terminated for
cause, the right of the Participant to receive any Incentive Award under the
Plan with respect to the Plan Year during which the termination occurred shall
be forfeited. In the event the employment of a Participant is terminated for any
reason other than for cause, the Participant or his or her other beneficiaries
shall be entitled to receive a prorated Incentive Award for the portion of the
Plan Year prior to his termination of employment.

                                   ARTICLE VII
                          DESIGNATION OF BENEFICIARIES

                  A Participant shall designate a Beneficiary or Beneficiaries
who are to receive upon his death the distributions that otherwise would have
been paid to the Participant. All designations shall be in writing and shall be
effective only if and when delivered to the Committee during the

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lifetime of the Participant. If a Participant designates a Beneficiary without
providing in the designation that the Beneficiary must be living at the time of
each distribution, the designation shall vest in the Beneficiary all of the
distributions whether payable before or after the Beneficiary's death, and any
distributions remaining upon the Beneficiary's death shall be made to the
Beneficiary's estate. A Participant may, from time to time, during his lifetime,
change his Beneficiary or Beneficiaries by a written instrument delivered to the
Committee. In the event a Participant does not designate a Beneficiary or
Beneficiaries, or if for any reason the designation is ineffective, in whole or
in part, the distribution that otherwise would have been paid to the Participant
shall be paid to his estate and in that event the term "Beneficiary" shall
include his estate.

                  Once an Incentive Award is held under the terms of the Quanex
Corporation Deferred Compensation, the designation of Beneficiaries shall become
controlled by its terms and any designation of a Beneficiary under this Plan
will become ineffective.

                                  ARTICLE VIII
                                 ADMINISTRATION

                  Committee Appointment. The Committee will be appointed by the
Board of Directors from their members who are not salaried officers of the
Company and are not eligible to participate in the Plan. Each Committee member
will serve until his or her resignation or removal. The Board of Directors 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.

                  8.1 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.

                  8.2 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;

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                           (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;

                           (d) to designate the persons eligible to become
                  Participants and to establish the Corporate Performance Goal,
                  and the Individual Incentive Target for each Participant, a
                  maximum for each Incentive Award, and all other matters
                  necessary to make this Plan operative;

                           (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; and

                                    (2)     any question it deems advisable to
                           determine in order to administer the Plan; and

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

                  8.3 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.

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

                                   ARTICLE IX
                            ADOPTION BY SUBSIDIARIES

                  Procedure for and Status After Adoption. Any subsidiary
corporation in which Quanex Corporation owns more than 50% of the outstanding
voting stock may, with the approval of the Committee, adopt this Plan by
appropriate action of its board of directors. The terms of the

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Plan will apply separately to each Company adopting the Plan and its
Participants in the same manner as is expressly provided for Quanex Corporation
and its Participants except that the powers of the Board of Directors and the
Committee under the Plan will be exercised by the Board of Directors of Quanex
Corporation alone. Each Company will bear the cost of providing Plan benefits
for its own Participants. It is intended that the obligation of each Company
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.

                  9.1 Termination of Participation By Adopting Company. Any
Company 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 Company's participation in the Plan at any time.

                                    ARTICLE X
                          AMENDMENT AND/OR TERMINATION

                  Amendment and/or Termination. The Committee, in its sole
discretion, without notice, at any time and from time to time, may modify or
amend, in whole or in part, any or all of the provisions of this Plan, or
suspend or terminate it entirely.

                  10.1 No Retroactive Effect. No modification, amendment,
suspension, or termination, may without the consent of a Participant (or his
Beneficiary in the case of the death of the Participant) reduce the right of a
Participant (or his Beneficiary as the case may be) to a payment or distribution
under this Plan to which he is entitled in accordance with the provisions
contained in Article IV of this Plan.

                                   ARTICLE XI
                    MERGER, CONSOLIDATION, AND SALE OF ASSETS

                  Notwithstanding anything in this Plan to the contrary, in the
event that the Company consolidates with, merges into, or transfers all or
substantially all of its assets to another corporation, the obligations of the
Company under this Plan shall be binding on that corporation or other entity.

                                   ARTICLE XII
                                  MISCELLANEOUS

                  Limitation of Rights.  Nothing in this Plan will be construed:

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

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                           (b) to give a Participant any right with respect to
                  the Incentive Award 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 any unsecured general creditor of the
                  Company.

                  12.1 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.

                  Nonalienation of Benefits. No right or benefit provided in
this Plan will 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
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
this 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 this 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.

                  12.3 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 this 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 this Plan will be deemed to have been
taken in good faith.

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                  12.4 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.

                  12.5 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.

                  12.6 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.

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

                  12.8 Effective Date. This amendment and restatement of the
Plan will be operative and effective on October 12, 1995.

                  IN WITNESS WHEREOF, the Committee has executed this document
on this 9th day of November, 1995, as authorized by Section 9.1 of the
Plan prior to this Amendment and Restatement.

                                THE COMMITTEE FOR THE
                                QUANEX CORPORATION INCENTIVE
                                COMPENSATION PLAN

                                By         /s/ DONALD J. MORFEE
                                  ---------------------------------------------
                                  Chairman

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