Document:

exv10w5

 

Exhibit 10.5

QUANEX CORPORATION

SUPPLEMENTAL SALARIED EMPLOYEES’ PENSION PLAN

Amended and Restated

Effective as of January 1, 2005

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 
	ARTICLE I	 	DEFINITIONS AND DESIGNATIONS	 	I-1
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.01	 	 	“Actuarial Equivalent”
	 	I-1
	 

	 	 	1.02	 	 	“Affiliate”
	 	I-1
	 

	 	 	1.03	 	 	“Applicable Covered Employee”
	 	I-1
	 

	 	 	1.04	 	 	“Beneficiary”
	 	I-1
	 

	 	 	1.05	 	 	“Board of Directors”
	 	I-1
	 

	 	 	1.06	 	 	“Cash Balance Participant”
	 	I-1
	 

	 	 	1.07	 	 	“Code”
	 	I-1
	 

	 	 	1.08	 	 	“Committee”
	 	I-1
	 

	 	 	1.09	 	 	“Company”
	 	I-1
	 

	 	 	1.10	 	 	“Covered Employee”
	 	I-1
	 

	 	 	1.11	 	 	“Deferred Compensation Ledger”
	 	I-1
	 

	 	 	1.12	 	 	“Deferred Retirement Date”
	 	I-2
	 

	 	 	1.13	 	 	“Early Retirement Date”
	 	I-2
	 

	 	 	1.14	 	 	“Employee”
	 	I-2
	 

	 	 	1.15	 	 	“Normal Retirement Date”
	 	I-2
	 

	 	 	1.16	 	 	“Participant”
	 	I-2
	 

	 	 	1.17	 	 	“Plan”
	 	I-2
	 

	 	 	1.18	 	 	“Plan Year”
	 	I-2
	 

	 	 	1.19	 	 	“Qualified Plan”
	 	I-2
	 

	 	 	1.20	 	 	“Qualified Plan Benefit”
	 	I-2
	 

	 	 	1.21	 	 	“Restricted Period”
	 	I-2
	 

	 	 	1.22	 	 	“Retirement Date”
	 	I-2
	 

	 	 	1.23	 	 	“Separates From Service”
	 	I-2
	 

	 	 	1.24	 	 	“Separation From Service”
	 	I-2
	 

	 	 	1.25	 	 	“Service”
	 	I-2
	 
	 	 	 	 	 	 	 	 
	ARTICLE II	 	ELIGIBILITY	 	II-4
	 
	 	 	 	 	 	 	 	 
	ARTICLE III	 	RETIREMENT BENEFITS	 	III-1
	 
	 	 	 	 	 	 	 	 
	 

	 	 	3.01	 	 	Normal Retirement Benefit
	 	III-1
	 

	 	 	3.02	 	 	Deferred Retirement Benefit
	 	III-1
	 

	 	 	3.03	 	 	Early Retirement Benefit
	 	III-1
	 

	 	 	3.04	 	 	Deferred Vested Benefit
	 	III-1
	 

	 	 	3.05	 	 	Cash Balance Participant Benefit
	 	III-1
	 

	 	 	3.06	 	 	Time of Payment of Benefit
	 	III-1
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV	 	DEATH BENEFITS	 	IV-1
	 
	 	 	 	 	 	 	 	 
	 

	 	 	4.01	 	 	Death Prior to Payment of Plan Benefit
	 	IV-1
	 

	 	 	4.02	 	 	Designation of Beneficiary
	 	IV-1
	 
	 	 	 	 	 	 	 	 
	ARTICLE V	 	FORFEITURE FOR CAUSE	 	V-1
	 
	 	 	 	 	 	 	 	 

-i-

 

 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI	 	PLAN COMMITTEE	 	VI-1
	 

	 	 	6.01	 	 	Committee
	 	VI-1
	 

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

	 	 	6.03	 	 	Rules and Decisions
	 	VI-1
	 

	 	 	6.04	 	 	Committee Organization and Voting
	 	VI-2
	 

	 	 	6.05	 	 	Committee Discretion
	 	VI-2
	 

	 	 	6.06	 	 	Authorization of Benefit Payments
	 	VI-2
	 

	 	 	6.07	 	 	Application and Forms of Benefits
	 	VI-2
	 

	 	 	6.08	 	 	Facility of Payment
	 	VI-2
	 

	 	 	6.09	 	 	Claims Procedure
	 	VI-2
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII	 	AMENDMENT AND TERMINATION	 	VII-1
	 
	 	 	 	 	 	 	 	 
	 

	 	 	7.01	 	 	Amendment
	 	VII-1
	 

	 	 	7.02	 	 	Right to Terminate Plan
	 	VII-1
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII	 	FUNDING	 	VIII-1
	 
	 	 	 	 	 	 	 	 
	 

	 	 	8.01	 	 	Unfunded Arrangement
	 	VIII-1
	 

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

	 	 	9.01	 	 	Limitation of Rights
	 	IX-1
	 

	 	 	9.02	 	 	Distributions to Incompetents or Minors
	 	IX-1
	 

	 	 	9.03	 	 	Nonalienation of Benefits
	 	IX-1
	 

	 	 	9.04	 	 	Reliance Upon Information
	 	IX-1
	 

	 	 	9.05	 	 	Severability
	 	IX-2
	 

	 	 	9.06	 	 	Notice
	 	IX-2
	 

	 	 	9.07	 	 	Gender and Number
	 	IX-2
	 

	 	 	9.08	 	 	Governing Law
	 	IX-2
	 

	 	 	9.09	 	 	Effect of Amendment and Restatement Effective As of January 1, 2005
	 	IX-2
	 

	 	 	9.10	 	 	Section 409A
	 	IX-2

-ii-

 

 

 

QUANEX CORPORATION

SUPPLEMENTAL SALARIED EMPLOYEES’ PENSION PLAN

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

WHEREAS, the Plan is required to be amended to comply with the requirements of new section
409A of the Internal Revenue Code of 1986, as amended by the American Jobs Creation Act of 2004;

WHEREAS, it has been determined that the Plan should now be completely amended, restated and
continued without a gap or lapse in coverage, time or effect which would cause any Participant to
be entitled to a distribution in order to fundamentally change the purpose and provisions of the
Plan;

WHEREAS, it has been determined that the amendment and restatement of the Plan shall apply
only to amounts earned and vested on or after January 1, 2005, and that the provisions of the Plan
prior to this amendment and restatement shall apply to any amounts that were earned and vested
under the Plan on or before December 31, 2004;

WHEREAS, Quanex Corporation desires to amend and restate the Plan effective as of January 1,
2005.

NOW, THEREFORE, Quanex Corporation amends and restates the Plan as follows:

 

 

 

ARTICLE I

DEFINITIONS AND DESIGNATIONS

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

1.02 “Affiliate” means all business organizations which are members of a controlled group of
corporations (within the meaning of section 414(b) of the Code), or which are trades or businesses
(whether or not incorporated) which is under common control (within the meaning of section 414(c)
of the Code), or which are members of an affiliated service group of employers (within the meaning
of section 414(m) of the Code), which related group of corporations, businesses or employers
includes Quanex.

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

(a) a Covered Employee of Quanex;

(b) a Covered Employee of an Affiliate; and

(c) a former employee who was a Covered Employee at the time of termination of
employment with Quanex or an Affiliate.

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

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

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

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

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

1.09 “Company” shall mean Quanex Corporation, a Delaware corporation.

1.10 “Covered Employee” means an individual (i) described in section 162(m)(3) of the Code or
(ii) subject to the requirements of Section 16(a) of the Securities Act.

1.11 “Deferred Compensation Ledger” shall mean the ledger maintained by the Committee for each
Participant which reflects the amounts credited by the Company under this Plan to the account of
each Participant.

 

I-1

 

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

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

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

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

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

1.17 “Plan” shall mean the Quanex Corporation Supplemental Salaried Employees’ Pension Plan.

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

1.19 “Qualified Plan” shall mean the Quanex Corporation Salaried Employees Pension Plan
maintained by the Company which is intended to qualify under section 401 of the Code.

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

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

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

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

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

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

 

I-2

 

ARTICLE II

ELIGIBILITY

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

 

II-1

 

ARTICLE III

RETIREMENT BENEFITS

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

(a) the amount of the Participant’s Qualified Plan Benefit that would be payable if the
applicable limitation under section 401(a)(17) of the Code for each fiscal year of the
Qualified Plan commencing on or after November 1, 1994, was $235,840 (not indexed for
increases in the cost of living), less

(b) the Participant’s Qualified Plan Benefit.

3.02 Deferred Retirement Benefit. If a Participant other than a Cash Balance Participant
Separates From Service after his Normal Retirement Date, he will be entitled to the lump sum
Actuarial Equivalent of a monthly benefit payable to the Participant for life only determined in
accordance with the provisions of Section 3.01. The benefit will not be actuarially increased to
reflect the later benefit payment date or his shorter life expectancy.

3.03 Early Retirement Benefit. If a Participant other than a Cash Balance Participant
Separates From Service on or after his Early Retirement Date but before age 65, he shall be
entitled to the lump sum Actuarial Equivalent of a monthly benefit payable to the Participant for
life only determined in accordance with the provisions of Section 3.01 as of his Early Retirement
Date.

3.04 Deferred Vested Benefit. If a Participant other than a Cash Balance Participant
Separates From Service prior to his Early Retirement Date but has five or more years of Service, he
will upon attaining age 55 be entitled to the lump sum Actuarial Equivalent of a monthly benefit
payable to the Participant for life, commencing on his Normal Retirement Date, determined in
accordance with the provisions of Section 3.01.

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

(a) the amount of the Participant’s Qualified Plan Benefit that would be payable if the
applicable limitation under section 401(a)(17) of the Code for each fiscal year of the
Qualified Plan commencing on or after November 1, 1994, was $235,840 (not indexed for
increases in the cost of living), less

(b) the Participant’s Qualified Plan Benefit.

3.06 Time of Payment of Benefit. Upon a Participant’s Normal Retirement, Deferred Retirement,
Early Retirement or other Separation From Service, the Participant shall be paid a lump sum cash
payment of his Plan benefit as determined under Section 3.01, 3.02, 3.03 or 3.05 on the first
business which is at least six (6) months after the date of such Employee’s Separation
From Service, or as soon as is administratively practicable thereafter. A terminated
Participant’s deferred vested benefit as determined under Section 3.04 shall be paid on the
90th day after his attainment of age 55 or as soon as administratively practicable
thereafter in a lump sum cash payment but not earlier than the first business which is at least six
(6) months after the date of such Employee’s Separation From Service.

 

III-1

 

ARTICLE IV

DEATH BENEFITS

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

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

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

4.02 Designation of Beneficiary. Each Participant, upon becoming eligible to participate in
the Plan, shall file with the Committee a designation of one or more Beneficiaries to whom the
distribution otherwise due the Participant shall be made in the event of his death prior to the
distribution of the amount credited on his behalf in the Deferred Compensation Ledger. The
designation will be effective upon receipt by the Committee of a properly executed form which the
Committee has approved for that purpose. The Participant may from time to time revoke or change
any designation of Beneficiary by filing another approved Beneficiary designation form with the
Committee. If there is no valid designation of Beneficiary on file with the Committee at the time
of the Participant’s death, or if all of the Beneficiaries designated in the last Beneficiary
designation have predeceased the Participant or otherwise ceased to exist, the Beneficiary shall be
the Participant’s spouse, if the spouse survives the Participant, or otherwise the Participant’s
estate. If any Beneficiary survives the Participant but dies or otherwise ceases to exist before
receiving all amounts due the Beneficiary under the Plan, the balance of the amount which would
have been paid to that Beneficiary shall, unless the Participant’s designation provides otherwise,
be distributed to the individual deceased Beneficiary’s estate or to the Participant’s estate in
the case of a Beneficiary which is not an individual. Any Beneficiary designation which designates
any person or entity other than the Participant’s spouse must be consented to in writing by the
spouse in a form acceptable to the Committee to be effective.

 

IV-1

 

ARTICLE V

FORFEITURE FOR CAUSE

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

 

V-1

 

ARTICLE VI

PLAN COMMITTEE

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

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

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

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

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

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

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

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

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

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

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

 

VI-1

 

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

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

6.06 Authorization of Benefit Payments. The Committee shall issue directions to the Company
concerning all benefits which are to be paid pursuant to the provisions of the Plan. The Company
shall furnish the Committee such data and information as it may require. The records of the
Company shall be determinative of each Participant’s period of employment, Separation From Service
and the reason therefor, leave of absence, reemployment, years of Service, Earnings, and Final
Average Earnings. Participants and their beneficiaries shall furnish to the Committee such
evidence, data, or information, and execute such documents, as the Committee requests.

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

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

6.09 Claims Procedure. The Committee shall make all determinations as to the right of any
person to receive benefits under the Plan. Any denial by the Committee of a claim for benefits
under the Plan by a Participant, spouse or retired Participant (collectively referred to herein as
“Claimant”) shall be stated in writing by the Committee and delivered or mailed to the Claimant on
the 90th day after receipt of the claim, unless special circumstances require an
extension of time for processing the claim. If such an extension of time is required, written
notice of the extension shall be furnished to the Claimant on the 90th day after receipt
of the claim and the claim shall thereafter be paid on the 180th day after the date of receipt of the
initial claim. Such notice shall set forth the specific reasons for the denial, specific reference
to pertinent provisions of the Plan upon which the denial is based, a description of any additional
material or information necessary for the Claimant to perfect his claim with an explanation of why
such material or information is necessary, and an explanation of claim review procedures under the
Plan written to the best of the Committee’s ability in a manner that may be understood without
legal or actuarial counsel. A Claimant whose claim for benefits has been wholly or partially
denied by the Committee may, within 90 days following the date of such denial, request a review of
such denial in a writing addressed to the Committee. The Claimant shall be entitled to submit such
issues or comments, in writing or otherwise, as he shall consider relevant to a determination of
his claim, and may include in his request a request for a hearing in person before the Committee.
Prior to submitting his request, the Claimant shall be entitled to review such documents as the
Committee shall agree are pertinent to his claim. The Claimant may, at all stages of review, be
represented by counsel, legal or otherwise, of his choice, provided that the fees and expenses of
such counsel shall be borne by the Claimant. All requests for review shall be promptly resolved.
The Committee’s decisions with respect to any such review shall be set forth in writing and shall
be mailed to the Claimant on the 60th day following receipt by the Committee of the Claimant’s
request unless special circumstances, such as the need to hold a hearing, require an extension of
time for processing, in which case the Committee’s decision shall be so mailed on the 120th day
after receipt of such request.

 

VI-2

 

ARTICLE VII

AMENDMENT AND TERMINATION

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

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

 

VII-1

 

ARTICLE VIII

FUNDING

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

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

In addition, no assets shall be set aside or reserved (directly or indirectly) in a trust (or
other arrangement as determined by the Internal Revenue Service), or transferred to a trust or
other arrangement established to fund the Company’s obligations under the Plan during any
Restricted Period for purposes of paying benefits to an Applicable Covered Employee. The rule
contained in the preceding sentence does not apply to assets set aside, reserved or transferred
before or after a Restricted Period.

 

VIII-1

 

ARTICLE IX

MISCELLANEOUS

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

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

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

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

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

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

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

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

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

 

IX-1

 

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

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

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

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

9.09 Effect of Amendment and Restatement Effective As of January 1, 2005. Unless otherwise
explicitly provided herein, the amendment and restatement of the Plan effective as of January 1,
2005 shall apply only to amounts earned and vested on or after January 1, 2005. The provisions of
the Plan prior to this amendment and restatement shall apply to any amounts that were earned and
vested under the Plan on or before December 31, 2004. The amendment and restatement of the Plan is
not intended to be a material modification of the Plan with respect to amounts accrued and vested
on or before December 31, 2004, and any provision of the Plan that is considered to be a material
modification of the Plan shall be retroactively amended to the extent required to prevent such
provision from being considered a material modification of the Plan with respect to such amounts.

9.10 Section 409A. The Plan is intended to be a nonqualified deferred compensation
arrangement and is not intended to meet the requirements of section 401(a) of the Code. The Plan
is intended to meet the requirements of section 409A of the Code and may be administered in a
manner that is intended to meet those requirements and shall be construed and interpreted in
accordance with such intent. To the extent that a deferral, accrual, vesting or payment of an
amount under the Plan is subject to section 409A of the Code, except as the Committee otherwise
determines in writing, the amount will be deferred, accrued, vested or paid in a manner that will
meet the requirements of section 409A of the Code, including regulations or other guidance issued
with respect thereto, such that the deferral, accrual, vesting or payment shall not be subject to
the excise tax applicable under section 409A of the Code. Any provision of the Plan that would
cause the deferral, accrual, vesting or payment of an amount under the Plan to fail to satisfy
section 409A of the Code shall be amended (in a manner that as closely as practicable achieves the
original intent of the Plan) to comply with section 409A of the Code on a timely basis, which may
be made on a retroactive basis, in accordance with regulations and other guidance issued under
section 409A of the Code. In the event additional regulations or other guidance is issued under
section 409A of the Code or a court of competent jurisdiction provides additional authority
concerning the application of section 409A of the Code with
respect to the distributions under the Plan, then the provisions of the Plan regarding
distributions shall be automatically amended to permit such distributions to be made at the
earliest time permitted under such additional regulations, guidance or authority that is
practicable and achieves the intent of the Plan prior to its amendment to comply with section 409A
of the Code.

 

IX-2

 

IN WITNESS WHEREOF, the Company has amended and restated this Plan on the 21st day of November
2006.

	 	 	 	 	 
	 	 	QUANEX CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	                    /s/ Kevin P. Delaney
	 

	 	 	 	 
	 

	 	Title:
	 	Senior Vice President — General Counsel and Secretaryexv10w6

 

Exhibit 10.6

NICHOLS-HOMESHIELD

SUPPLEMENTAL 401(k) SAVINGS PLAN

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 
	ARTICLE I	 	DEFINITIONS	 	I-1
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.1	 	 	Account
	 	I-1
	 

	 	 	1.2	 	 	Affiliate
	 	I-1
	 

	 	 	1.3	 	 	Applicable Covered Employee
	 	I-1
	 

	 	 	1.4	 	 	Beneficiary
	 	I-1
	 

	 	 	1.5	 	 	Board of Directors
	 	I-1
	 

	 	 	1.6	 	 	Code
	 	I-1
	 

	 	 	1.7	 	 	Committee
	 	I-1
	 

	 	 	1.8	 	 	Company
	 	I-1
	 

	 	 	1.9	 	 	Covered Employee
	 	I-1
	 

	 	 	1.10	 	 	Deferred Compensation Ledger
	 	I-1
	 

	 	 	1.11	 	 	Disability
	 	I-2
	 

	 	 	1.12	 	 	Participant
	 	I-2
	 

	 	 	1.13	 	 	Plan
	 	I-2
	 

	 	 	1.14	 	 	Plan Year
	 	I-2
	 

	 	 	1.15	 	 	Restricted Period
	 	I-2
	 

	 	 	1.16	 	 	Separation From Service
	 	I-2
	 

	 	 	1.17	 	 	Valuation Date
	 	I-2
	 
	 	 	 	 	 	 	 	 
	ARTICLE II	 	ELIGIBILITY	 	II-1
	 
	 	 	 	 	 	 	 	 
	ARTICLE III	 	CREDITS TO PARTICIPANTS’ ACCOUNTS	 	III-1
	 
	 	 	 	 	 	 	 	 
	 

	 	 	3.1	 	 	Establishing a Participant’s Account
	 	III-1
	 

	 	 	3.2	 	 	Crediting of Deferred Compensation
	 	III-1
	 

	 	 	3.3	 	 	Crediting of Interest
	 	III-1
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV	 	VESTING	 	IV-1
	 
	 	 	 	 	 	 	 	 
	ARTICLE V	 	DISTRIBUTIONS	 	V-1
	 
	 	 	 	 	 	 	 	 
	 

	 	 	5.1	 	 	Death
	 	V-1
	 

	 	 	5.2	 	 	Disability
	 	V-1
	 

	 	 	5.3	 	 	Separation From Service Prior to Death or Disability
	 	V-1
	 

	 	 	5.4	 	 	Forfeiture For Cause
	 	V-2
	 

	 	 	5.5	 	 	Responsibility for Withholding of Taxes
	 	V-2
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI	 	ADMINISTRATION	 	VI-1
	 
	 	 	 	 	 	 	 	 
	 

	 	 	6.1	 	 	Committee Appointment
	 	VI-1
	 

	 	 	6.2	 	 	Committee Organization and Voting
	 	VI-1
	 

	 	 	6.3	 	 	Powers of the Committee
	 	VI-1
	 

	 	 	6.4	 	 	Committee Discretion
	 	VI-2
	 

	 	 	6.5	 	 	Annual Statements
	 	VI-2
	 

	 	 	6.6	 	 	Reimbursement of Expenses
	 	VI-2
	 

	 	 	6.7	 	 	Claims Procedure
	 	VI-2
	 
	 	 	 	 	 	 	 	 

-i-

 

 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII	 	AMENDMENT AND/OR TERMINATION	 	VII-1
	 

	 	 	7.1	 	 	Amendment or Termination of the Plan
	 	VII-1
	 

	 	 	7.2	 	 	No Retroactive Effect on Awarded Benefits
	 	VII-1
	 

	 	 	7.3	 	 	Effect of Termination
	 	VII-1
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII	 	FUNDING	 	VIII-1
	 
	 	 	 	 	 	 	 	 
	 

	 	 	8.1	 	 	Unfunded Arrangement
	 	VIII-1
	 

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

	 	 	9.1	 	 	Limitation of Rights
	 	IX-1
	 

	 	 	9.2	 	 	Distributions to Incompetents or Minors
	 	IX-1
	 

	 	 	9.3	 	 	Nonalienation of Benefits
	 	IX-1
	 

	 	 	9.4	 	 	Reliance Upon Information
	 	IX-1
	 

	 	 	9.5	 	 	Severability
	 	IX-2
	 

	 	 	9.6	 	 	Notice
	 	IX-2
	 

	 	 	9.7	 	 	Gender and Number
	 	IX-2
	 

	 	 	9.8	 	 	Governing Law
	 	IX-2
	 

	 	 	9.9	 	 	Section 409A
	 	IX-2
	 

	 	 	9.10	 	 	Effect of Amendment and Restatement of the Plan
	 	IX-2

-ii-

 

 

 

NICHOLS-HOMESHIELD

SUPPLEMENTAL 401(k) SAVINGS PLAN

WHEREAS, Quanex Corporation established the Nichols-Homeshield Supplemental 401(k) Savings
Plan (the “Plan”) to provide a retirement pay supplement for a select group of management or highly
compensated employees so as to retain their loyalty and to offer a further incentive to them to
maintain and increase their standard of performance;

WHEREAS, the Plan is required to be amended to comply with the requirements of new section
409A of the Internal Revenue Code of 1986, as amended by the American Jobs Creation Act of 2004;

WHEREAS, it has been determined that the Plan should now be completely amended, restated and
continued without a gap or lapse in coverage, time or effect which would cause any Participant to
be entitled to a distribution in order to fundamentally change the purpose and provisions of the
Plan;

WHEREAS, it has been determined that the amendment and restatement of the Plan shall apply
only to amounts earned and vested on or after January 1, 2005, and that the provisions of the Plan
prior to this amendment and restatement shall apply to any amounts that were earned and vested
under the Plan on or before December 31, 2004;

WHEREAS, Quanex Corporation desires to amend and restate the Plan effective as of January 1,
2005.

NOW, THEREFORE, Quanex Corporation amends and restates the Plan as follows:

 

1

 

ARTICLE I

DEFINITIONS

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

1.2 Affiliate. “Affiliate” means all business organizations which are members of a controlled
group of corporations (within the meaning of section 414(b) of the Code), or which are trades or
businesses (whether or not incorporated) which is under common control (within the meaning of
section 414(c) of the Code), or which are members of an affiliated service group of employers
(within the meaning of section 414(m) of the Code), which related group of corporations, businesses
or employers includes Quanex.

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

(a) a Covered Employee of Quanex;

(b) a Covered Employee of an Affiliate; and

(c) a former employee who was a Covered Employee at the time of termination of
employment with Quanex or an Affiliate.

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

1.5 Board of Directors. “Board of Directors” means the Board of Directors of the Company.

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

1.7 Committee. “Committee” means the persons who are serving as members of the Committee
administering this Plan.

1.8 Company. “Company” means Quanex Corporation.

1.9 Covered Employee. “Covered Employee” means an individual (i) described in section
162(m)(3) of the Code or (ii) subject to the requirements of Section 16(a) of the Securities Act.

1.10 Deferred Compensation Ledger. “Deferred Compensation Ledger” means the ledger maintained
by the Committee for each Participant which reflects the amounts credited by the Company under this
Plan to the account of each Participant.

 

I-1

 

1.11 Disability. “Disability” means the Participant (i) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a continuous period of not
less than 12 months, or (ii) is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a period of not less
than three months under an accident and health plan covering employees of the Participant’s
employer.

1.12 Participant. “Participant” means an employee of the Company who has been designated by
the Committee as participating in the Plan.

1.13 Plan. “Plan” means the Nichols-Homeshield Supplemental 401(k) Savings Plan set forth in
this document, as amended from time to time.

1.14 Plan Year. “Plan Year” means the twelve-month period which ends on December 31.

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

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

1.17 Valuation Date. “Valuation Date” means the last day of each Plan Year, or, if earlier,
the date on which the Participant terminates employment, incurs a Disability or dies. Effective
January 1, 2007, “Valuation Date” means the last day of the Plan Year, the last day of the month in
which the Participant’s or former Participant’s Separation From Service occurs or the last day of
the month immediately preceding the date of a lump sum distribution of a former Participant’s Plan
benefit, as applicable.

 

I-2

 

ARTICLE II

ELIGIBILITY

The individuals who shall be eligible to participate in the Plan shall be those individuals as
the Committee shall determine from time to time. The Board of Directors may designate one or more
individuals who shall not be eligible to participate in the Plan. An individual will become a
Participant effective as of the date specified in writing by the Committee.

Each individual who was participating in the Plan on December 31, 2006 shall be eligible to
participate in the Plan on or after January 1, 2007. No other individual shall be eligible to
participate in the Plan on or after January 1, 2007.

Once an individual has become a Participant, he will continue to participate in the Plan until
he is no longer a common law employee of the Company or the Committee determines that he is no
longer in a select group of management or a highly compensated employee of the Company.

 

II-1

 

ARTICLE III

CREDITS TO PARTICIPANTS’ ACCOUNTS

3.1 Establishing a Participant’s Account. The Committee shall establish a bookkeeping Account
for each Participant in a special Deferred Compensation Ledger which shall be maintained by the
Company. The Account shall reflect the amount of the Company’s obligation to the Participant as of
each Valuation Date.

3.2 Crediting of Deferred Compensation. For each Plan Year, the Board of Directors shall
determine the amount, if any, to be allocated to a Participant’s Plan Account and will credit that
amount to the Participant’s Account in the Deferred Compensation Ledger as of the end of the Plan
Year. The amount, if any, credited by the Company on behalf of a Participant need not be the same
as the amount credited by the Company on behalf of any other Participant. The fact that a
Participant receives a credit to his Account in the Deferred Compensation Ledger for deferred
compensation in one Plan Year does not mean that he shall receive a credit for deferred
compensation in a subsequent Plan Year. Until the Board of Directors determines otherwise, the
amount that shall be credited to a Participant’s Account as of the end of the Plan Year is the
amount equal to (A) minus (B) where (A) is the amount that would have been credited to the
Participant’s account under the Nichols-Homeshield 401(k) Savings Plan for the Plan Year as a
Company profit sharing contribution if the applicable limitation under section 401(a)(17) of the
Code for the Plan Year was $235,840 (not indexed for increases in the cost of living), and (B) is
the amount that was actually credited to the Participant’s account under the Nichols-Homeshield
401(k) Savings Plan for the Plan Year as a Company profit sharing contribution.

Effective January 1, 2007, no additional amounts shall be credited to a Participant’s Account
under this Section of the Plan.

3.3 Crediting of Interest. As of the last day of each calendar quarter of each Plan Year in
which an individual is a Participant, after deferred compensation has been credited under Section
3.2, the Committee shall credit the balance of the Participant’s Account in the Deferred
Compensation Ledger with interest as specified in this Section. This amount credited by the
Committee shall be a part of the Company’s obligation to the Participant. Interest will be accrued
on the last day of each calendar quarter on each Participant’s Account at a rate equal to (x) the
rate of interest announced by Chase Manhattan Bank, N.A., or its successor, if applicable as its
prime rate of interest on the last business day preceding the last day of the calendar quarter
divided by (y) four. Interest so accrued on the last day of each calendar quarter shall be
credited to the Participant’s Account and shall thereafter accrue interest. Interest will continue
to be credited on the balance in the Participants Account until the entire cash balance has been
distributed.

 

III-1

 

ARTICLE IV

VESTING

Except for the event of forfeiture described in Section 5.4, Participant shall have a
nonforfeitable interest in amounts credited to his Account to the extent that he has a
nonforfeitable interest in the amounts credited to his account under the Nichols-Homeshield 401(k)
Savings Plan or, effective January 1, 2007, the Quanex Corporation Employees 401(k) Savings Plan.

 

IV-1

 

ARTICLE V

DISTRIBUTIONS

5.1 Death. Upon the death of a Participant, the Participant’s Beneficiary or Beneficiaries
shall receive the balance credited to the Participant’s Account in the Deferred Compensation Ledger
as of the Valuation Date coincident with or next preceding the date of death. The death benefit
shall be paid in a lump sum cash payment 30 days after the Participant’s death or, if later, as
soon as administratively practicable following the Participant’s death..

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

5.2 Disability. Upon the Disability of a Participant, the Participant shall receive the
entire amount credited to the Participant’s Account in the Deferred Compensation Ledger as of the
Valuation Date coincident with or next preceding the date of Disability. The Disability benefit
shall be paid in a lump sum cash payment 30 days after the Participant’s Disability or, if later,
as soon as administratively practicable following the Participant’s Disability.

5.3 Separation From Service Prior to Death or Disability. Upon a Participant’s Separation
From Service prior to Death or Disability, subject to Section 5.4, the Participant shall receive
his vested interest in the amount credited to his Account in the Deferred Compensation Ledger as of
the Valuation Date coincident with or next preceding the date of Separation From Service in a lump
sum cash payment. The benefit shall be paid in a lump sum cash payment 30 days after the
Participant’s Separation From Service or, if later, as soon as administratively practicable
following the Participant’s Separation From Service. Any amounts not vested upon the Participant’s
Separation From Service will be forfeited.

 

V-1

 

Notwithstanding anything to the contrary in this Plan, payments due to the Separation From
Service of an Employee, excluding due to death or Disability but including due to Retirement, may
not be made before the date which is six (6) months after the date of such Employee’s Separation
From Service (a “Six-Month Delay”). In the event of a Six-Month Delay, the benefits that would
have been paid during such delay if the delay had not been imposed, shall be paid in a lump sum as
soon as is administratively practicable following the expiration of the Six-Month Delay and any
other benefits to be paid after the end of the Six Month Delay shall be paid in accordance with the
terms of the Plan.

5.4 Forfeiture For Cause. If the Committee finds, after full consideration of the facts
presented on behalf of both the Company and a former Participant, that the Participant was
discharged by the Company for fraud, embezzlement, theft, commission of a felony, proven dishonesty
in the course of his employment by the Company which damaged the Company, or for disclosing trade
secrets of the Company, the entire amount credited to his Account in the Deferred Compensation
Ledger shall be forfeited, even though it may have been previously vested under Article IV. The
decision of the Committee as to the cause of a former Participant’s discharge and the damage done
to the Company will be final. No decision of the Committee will affect the finality of the
discharge of the Participant by the Company in any manner.

5.5 Responsibility for Withholding of Taxes. The Committee will calculate the deductions from
the amount of the benefit paid under the Plan for any taxes required to be withheld by federal,
state or local government and shall cause them to be withheld.

 

V-2

 

ARTICLE VI

ADMINISTRATION

6.1 Committee Appointment. The Committee shall be appointed by the Board of Directors. Each
Committee member will serve until his or her resignation or removal. The Board of Directors shall
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.

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

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

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

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

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

(d) to designate the persons eligible to become Participants;

(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 promote the
uniform administration of the Plan for the benefit of all parties at interest; 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.

 

VI-1

 

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

6.5 Annual Statements. The Committee shall cause each Participant to receive an annual
statement as of each Valuation Date as soon as administratively feasible after the conclusion of
each Plan Year. The statement shall indicate the credit by the Company to the Participant’s
Account for that Plan Year; credits for all prior Plan Years, if any, and the interest applicable
to those amounts; the total Account balance of the Participant in the Deferred Compensation Ledger,
and the amount vested as of the end of that Plan Year.

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

6.7 Claims Procedure. The Committee shall make all determinations as to the right of any
person to receive benefits under the Plan. Any denial by the Committee of a claim for benefits
under the Plan by a Participant, spouse or retired Participant (collectively referred to herein as
“Claimant”) shall be stated in writing by the Committee and delivered or mailed to the Claimant on
the 90th day after receipt of the claim, unless special circumstances require an
extension of time for processing the claim. If such an extension of time is required, written
notice of the extension shall be furnished to the Claimant on the 90th day after receipt
of the claim, and the claim shall thereafter be paid on the 180th day after the date of
receipt of the initial claim. Such notice shall set forth the specific reasons for the denial,
specific reference to pertinent provisions of the Plan upon which the denial is based, a
description of any additional material or information necessary for the Claimant to perfect his
claim with an explanation of why such material or information is necessary, and an explanation of
claim review procedures under the Plan written to the best of the Committee’s ability in a manner
that may be understood without legal or actuarial counsel. A Claimant whose claim for benefits has
been wholly or partially denied by the Committee may, within 90 days following the date of such
denial, request a review of such denial in a writing addressed to the Committee. The Claimant
shall be entitled to submit such issues or comments, in writing or otherwise, as he shall consider
relevant to a determination of his claim, and may include in his request a request for a hearing in
person before the Committee. Prior to submitting his request, the Claimant shall be entitled to
review such documents as the Committee shall agree are pertinent to his claim. The Claimant may,
at all stages of review, be represented by counsel, legal or otherwise, of his choice, provided
that the fees and expenses of such counsel shall be borne by the Claimant. All requests for review
shall be promptly resolved. The Committee’s decisions with respect to any such review shall be set
forth in writing and shall be mailed to the Claimant on the 60th day following receipt by the
Committee of the Claimant’s request unless special circumstances, such as the need to hold a
hearing, require an extension of time for processing, in which case the Committee’s decision shall
be so mailed on the 120th day after receipt of such request.

 

VI-2

 

ARTICLE VII

AMENDMENT AND/OR TERMINATION

7.1 Amendment or Termination of the Plan. The Company may amend or terminate this Plan at any
time. Any amendment or termination shall be made by an instrument in writing executed by an
authorized officer of the Company, and shall be supported by a resolution of the Board of
Directors; provided, however, that no amendment of the Plan shall apply to amounts deferred and
vested on or before December 31, 2004, unless the instrument explicitly states that the amendment
shall apply to such amounts.

7.2 No Retroactive Effect on Awarded Benefits. No amendment shall affect the rights of any
Participant to the amounts then credited to his Account in the Deferred Compensation Ledger or
change the method of calculating the interest applicable to such amounts. However, the Board of
Directors shall retain the right at any time to change in any manner the method of calculating the
interest to accrue to amounts of deferred compensation credited after the date of an amendment, if
it has been announced to the Participants.

7.3 Effect of Termination. If the Plan is terminated, all amounts credited to the Account of
each Participant shall immediately vest. No interest shall be applied to the Account after the date
the Plan terminated. Payment of the Participant’s Account balance would be made in accordance with
the terms of the Plan. The Board may terminate the Plan within the 30 days preceding or 12 months
following a change in control, as defined by section 409A of the Code, or as otherwise permitted
under section 409A of the Code, and distribute the value of the Participants’ Accounts to
Participants in the manner and the time as determined by the Committee, in its sole discretion, as
permitted by section 409A of the Code.

 

VII-1

 

ARTICLE VIII

FUNDING

8.1 Unfunded Arrangement. It is intended that this Plan shall be unfunded for tax purposes
and for purposes of Title 1 of the Employee Retirement Income Security Act of 1974, as amended.

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

In addition, no assets shall be set aside or reserved (directly or indirectly) in a trust (or
other arrangement as determined by the Internal Revenue Service), or transferred to a trust or
other arrangement established to fund the Company’s obligations under the Plan during any
Restricted Period for purposes of paying benefits to an Applicable Covered Employee. The rule
contained in the preceding sentence does not apply to assets set aside, reserved or transferred
before or after a Restricted Period.

 

VIII-1

 

ARTICLE IX

MISCELLANEOUS

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

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

(b) to give a Participant any right with respect to the amounts and interest credited
in the Deferred Compensation Ledger to Participant’s Account, except in accordance with the
terms of this Plan;

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

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

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

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

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

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

 

IX-1

 

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

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

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

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

9.9 Section 409A. The Plan is intended to be a nonqualified deferred compensation
arrangement and is not intended to meet the requirements of section 401(a) of the Code. The Plan
is intended to meet the requirements of section 409A of the Code and may be administered in a
manner that is intended to meet those requirements and shall be construed and interpreted in
accordance with such intent. To the extent that a deferral, accrual, vesting or payment of an
amount under the Plan is subject to section 409A of the Code, except as the Committee otherwise
determines in writing, the amount will be deferred, accrued, vested or paid in a manner that will
meet the requirements of section 409A of the Code, including regulations or other guidance issued
with respect thereto, such that the deferral, accrual, vesting or payment shall not be subject to
the excise tax applicable under section 409A of the Code. Any provision of the Plan that would
cause the deferral, accrual, vesting or payment of an amount under the Plan to fail to satisfy
section 409A of the Code shall be amended (in a manner that as closely as practicable achieves the
original intent of the Plan) to comply with section 409A of the Code on a timely basis, which may
be made on a retroactive basis, in accordance with regulations and other guidance issued under
section 409A of the Code. In the event additional regulations or other guidance is issued under
section 409A of the Code or a court of competent jurisdiction provides additional authority
concerning the application of section 409A of the Code with respect to the distributions under the
Plan, then the provisions of the Plan regarding distributions shall be automatically amended to
permit such distributions to be made at the earliest time permitted under such additional
regulations, guidance or authority that is practicable and achieves the intent of the Plan prior to
its amendment to comply with section 409A of the Code.

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

 

IX-2

 

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

	 	 	 	 	 
	 	 	QUANEX CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	                    /s/ Kevin P. Delaney
	 

	 	 	 	 
	 

	 	Title:
	 	Senior Vice President — General Counsel and Secretary

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