Document:

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                                                                   EXHIBIT 10.9

                               QUANEX CORPORATION
                            SUPPLEMENTAL BENEFIT PLAN

                              AMENDED AND RESTATED
                             EFFECTIVE JUNE 1, 1999

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                 SECTION
<S>                                                              <C>
ARTICLE  I - NAME AND PURPOSE

ARTICLE II - DEFINITIONS

         Actuarial Equivalent.......................................2.01
         Board......................................................2.02
         Change of Control..........................................2.03
         Code.......................................................2.04
         Committee..................................................2.05
         Company....................................................2.06
         Disability.................................................2.08
         Early Retirement Date......................................2.10
         Earnings...................................................2.11
         Employee...................................................2.12
         Final Average Earnings.....................................2.13
         Forfeiting Act.............................................2.14
         Incentive Bonus or Incentive Bonuses.......................2.15
         Normal Retirement Date.....................................2.16
         Participant................................................2.17
         Plan.......................................................2.18
         Plan Year..................................................2.19
         Qualified Plan.............................................2.20
         Qualified Plan Benefit.....................................2.21
         Service....................................................2.23
         Social Security Benefit....................................2.24

ARTICLE III - PARTICIPATION

         Eligibility................................................3.01
         Reemployment...............................................3.02

ARTICLE IV - RETIREMENT BENEFITS

         Normal Retirement..........................................4.01
         Deferred Retirement........................................4.02
         Early Retirement...........................................4.03
         Disability Benefit.........................................4.04
         Deferred Vested Benefit....................................4.05
         Change of Control Benefit..................................4.06
         Time of Payment of Benefit.................................4.07

</TABLE>

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<TABLE>
<S>                                                                <C>
ARTICLE V - DEATH BENEFITS

         In General.................................................5.01
         Death During Employment....................................5.02
         Death After Termination of Employment......................5.03

ARTICLE VI - BENEFICIARIES

         Designation of Beneficiary.................................6.01
         Payment of Benefits Upon Death.............................6.02
         Minors and Persons Under Legal Disability..................6.03

ARTICLE VII - FORFEITURE FOR CAUSE

ARTICLE VIII - AGREEMENT FUNDED THROUGH RABBI TRUST

ARTICLE IX - PLAN COMMITTEE PROCEDURE

         Committee..................................................9.01
         General Rights, Powers and Duties of Plan Committee........9.02
         Rules and Decisions........................................9.03
         Committee Procedures.......................................9.04
         Authorization of Benefit Payments..........................9.05
         Application and Forms of Benefits..........................9.06
         Facility of Payment........................................9.07
         Claims Procedure...........................................9.08
         Responsibility.............................................9.09

ARTICLE X - AMENDMENT AND TERMINATION

         Amendment.................................................10.01
         Right to Terminate Plan...................................10.02

ARTICLE XI - MISCELLANEOUS

         Inalienability of Benefits................................11.01
         No Implied Rights.........................................11.02
         Actions by Company........................................11.03
         Binding Effect............................................11.04
         Number and Gender.........................................11.05
         Governing Law.............................................11.06

</TABLE>

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                                    ARTICLE I

                                NAME AND PURPOSE

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

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

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

                                      I-1
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                                   ARTICLE II

                          DEFINITIONS AND DESIGNATIONS

     2.01 "ACTUARIAL EQUIVALENT" means a benefit of equivalent value computed on
the basis of the UP-84 mortality tables and an eight percent rate of interest
for purposes of determining lump sum benefits and the value of Trust assets.

     2.02 "BOARD" means the Board of Directors of the Company.

     2.03 "CHANGE OF CONTROL" means the occurrence of one or more of the
following events after June 1, 1999.

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

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

     (c) the consummation of (xx) a reorganization, merger or consolidation or
sale of the Company or (yy) a disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding

                                      II-1

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

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

     2.04 "CODE" means the Internal Revenue Code of 1986, as amended from time
to time.

     2.05 "COMMITTEE" means the Committee established under Article IX to
administer the Plan.

     2.06 "COMPANY" means Quanex Corporation, a Delaware corporation.

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

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

     2.08 "EARLY RETIREMENT DATE" means the first day of any month after a
Participant's attainment of age 55 and the completion of five years of Service.

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

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

     2.11 "FINAL AVERAGE EARNINGS" means the highest monthly average of a
Participant's Earnings which is produced by averaging his Earnings and Incentive
Bonuses over any 36 consecutive month period during the 60 consecutive month
period immediately preceding the date of the Participant's termination of
employment with the Company. However, for the purposes of this

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definition, no than three Incentive Bonuses shall be taken into account in
calculating a Participant's earnings over any 36 consecutive month period.

     2.12 "FORFEITING ACT" means the Participant's fraud, dishonesty, willful
destruction of Company property, committing of a felony, revealing Company trade
secrets, acts of competition against the Company or acts in aid of a competitor
of the Company.

     2.13 "INCENTIVE BONUS" or "INCENTIVE BONUSES" means compensation earned
under the Quanex Corporation Executive Incentive Plan, whether or not deferred
under the Quanex Corporation Deferred Compensation Plan.

     2.14 "NORMAL RETIREMENT DATE" means the first day of the month coincident
with or next following a Participant's 65th birthday.

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

     2.16 "PLAN" means the Quanex Corporation Supplemental Benefit Plan.

     2.17 "PLAN YEAR" means the period commencing on November 1 and ending on
October 31.

     2.18 "QUALIFIED PLAN" means the Quanex Corporation Salaried Employees'
Pension Plan maintained by the Company.

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

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

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

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

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

     2.20 "SERVICE" means service for purposes of the Qualified Plan. In
determining a Participant's Service, all Years of Service after the
Participant's date of hire shall be taken into effect.

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

                                      II-5

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                                   ARTICLE III

                                  PARTICIPATION

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

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

                                      III-1

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                                   ARTICLE IV

                               RETIREMENT BENEFITS

     4.01 NORMAL RETIREMENT BENEFIT. Subject to Article VIII, if a Participant
terminates employment with the Company on or after his Normal Retirement Date,
he will be entitled to the lump-sum Actuarial Equivalent of a monthly benefit
payable to the Participant for life only in an amount equal to:

     (a) 2.75 percent of his Final Average Earnings multiplied by his years of
Service (not in excess of 29.09 years), less

     (b) the sum of:

         (1)    the Participant's Qualified Plan Benefit, and
         (2)    the Participant's Social Security Benefit.

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

     4.03 EARLY RETIREMENT BENEFIT. If a Participant terminates employment with
the Company on or after his Early Retirement Date but before age 65, he shall be
entitled to the lump-sum Actuarial Equivalent of a monthly benefit payable to
the Participant for life only determined in accordance with the provisions of
Section 4.01 based upon his years of Service and Final Average Earnings on the
date of his termination of employment with the Company. The monthly amount

                                      IV-1

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shall be reduced by a fraction, the numerator of which is the Participant's
actual years of Service as of the date of his termination of employment with the
Company and the denominator of which is the number of years of Service the
Participant would have if he continued to be employed by the Company until the
date of his 65th birthday.

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

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

     (b) the sum of:

     (1) the Participant's Qualified Plan Benefit;

     (2) the Participant's Social Security Benefit;

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

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

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

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

                                      IV-2

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     4.05 DEFERRED VESTED BENEFIT. If a Participant terminates employment with
the Company prior to his Early Retirement Date but has five or more years of
Service, he will upon attaining age 55 be entitled to the lump-sum Actuarial
Equivalent of a monthly benefit payable to the Participant for life only
determined in accordance with the provisions of Section 4.01 based upon his
years of Service and Final Average Earnings at his termination of employment.
The benefit calculated under Section 4.01 however, shall be actuarially reduced,
using the factors described in Section 2.01 for the definition of Actuarial
Equivalent, because of the younger age and earlier commencement for all
Participants entering the Plan on or after June 1, 1988, and shall be reduced
because of the younger age and earlier commencement for all Participants who
were in the Plan on May 31, 1988 by a fraction, the numerator of which is the
Participant's years of Service he would have had had he continued to work until
his Early Retirement Date and the denominator of which is the number of years of
Service the Participant would have had had he continued to work until his Normal
Retirement Date. If the Participant has fewer than five years of Service when he
terminates employment prior to his Early Retirement Date, he shall not be
entitled to any benefits under the Plan.

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

                                      IV-3

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     4.07 TIME OF PAYMENT OF BENEFIT. The lump sum payments provided for Normal
Retirement, Deferred Retirement, and Early Retirement, shall be paid on the 90th
day after the Participant's termination of employment with the Company. The
monthly Disability benefit shall commence being paid on the first day of the
month coincident with or next following the Participant's termination of
employment with the Company due to Disability and shall cease with the last
payment prior to his recovery or attainment of his Normal Retirement Date. If a
former Participant who terminated employment with the Company due to Disability
continues to have a Disability until his Normal Retirement Date, the lump sum
payment then due shall be paid on his Normal Retirement Date. A Participant's
deferred vested benefit or Change of Control benefit shall be payable on the
90th day after his attainment of age 55.

                                      IV-4

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                                    ARTICLE V

                                 DEATH BENEFITS

     5.01 IN GENERAL. The benefits under the Plan payable subsequent to a
Participant's or former Participant's death shall be limited to those contained
in this Article, and shall in any case be subject to Article VIII.

     5.02 DEATH DURING EMPLOYMENT. If a Participant's death occurs while he is
in the employ of the Company, an Actuarially Equivalent lump sum benefit shall
be payable as hereinafter provided in this Section. The designated beneficiary
of a Participant shall be entitled to receive a lump-sum benefit that is
Actuarially Equivalent to 50 percent of the sum of the Participant's monthly
Earnings in effect at the date of his death and the monthly equivalent of the
average of his Incentive Bonuses for the prior three Plan Years, payable monthly
until the later of completion of 120 monthly payments or the date the
Participant would have attained his Normal Retirement Date. The lump-sum payment
shall be made on the 90th day after the death of the Participant. The designated
beneficiary of a Participant shall be determined under Article VI.

     5.03 DEATH AFTER TERMINATION OF EMPLOYMENT.

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

     (b) Before Benefit is Paid. If a former Participant dies before his benefit
is paid but after his termination of employment with the Company on or after his
Normal Retirement Date, his Early Retirement Date or a Change of Control, his
designated beneficiary, if any, shall be entitled to receive a lump-sum benefit
equal to the benefit which he would have received had he lived to the date his
benefit would have been paid out. If a former Participant dies before his
benefit is paid and he was eligible for a Disability benefit or he terminated
employment with the Company prior to a Change of Control and he was entitled to
a deferred vested benefit under Section 4.05, his designated beneficiary, if
any, shall be entitled to receive a lump-sum benefit which is Actuarially
Equivalent to a survivor annuity equal to the survivor portion of a qualified
joint and 50 percent survivor annuity as if the former Participant had been
entitled to elect and had elected such survivor annuity

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on the day before his death. The survivor lump-sum death benefit shall be
payable on the 90th day following the date of the Former Participant's death. In
calculating the survivor portion for the survivor lump-sum benefit, the benefit
shall be reduced in the same manner it is reduced under Section 4.03, 4.04 or
4.05, whichever is applicable, for payment earlier than Normal Retirement Date.
In the event of a Participant's termination of employment with the company after
a Change of Control, the death benefits payable under this Section 5.03 on his
behalf will not be reduced for payment before the Participant's Normal
Retirement Date.

     (c) After Disability Benefits Commence. If a former Participant who is
receiving a Disability benefit dies prior to reaching his Normal Retirement Date
but while he still has a Disability, his designated beneficiary shall receive a
lump-sum benefit which is Actuarially Equivalent to the survivor portion of a
qualified joint and 50 percent survivor annuity as if the former Participant had
been entitled to elect and had elected such survivor annuity on the day before
his death. Such benefit shall be payable on the 90th day after his death.

                                       V-2

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                                   ARTICLE VI

                                  BENEFICIARIES

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

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

     6.03 MINORS AND PERSONS UNDER LEGAL DISABILITY. Payments to a minor or a
person under a legal disability shall be made by the Company at the direction of
the Committee as follows:

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

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

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

                                      VI-1

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                                   ARTICLE VII

                              FORFEITURE FOR CAUSE

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

                                      VII-1

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                                  ARTICLE VIII

                      AGREEMENT FUNDED THROUGH RABBI TRUST

     The Company shall pay the benefits due the Participants and former
Participants under the Plan; however, should it fail to do so when a benefit is
due, such benefit shall be paid by the Trustee of that certain Trust Agreement
entered into contemporaneously with this Amendment, by and between the Company
and Norstar Trust Company, a New York banking corporation (the "Trust"). In any
event, if the Trust fails to pay for any reason, the Company still remains
liable for the payment of all benefits provided by the Plan. The Company may
contribute at any time and from time to time such assets to the Trust as it, in
its sole discretion, shall determine and shall have the right at any time and
from time to time to borrow from the Trust the fair market value of assets held
in the Trust which are in excess of the net present value of the largest benefit
all Participants and former Participants are entitled to under the Plan as of
the beginning of the Plan Year during which the loan is made (exclusive of any
Disability or death benefit). Any such loan shall be evidenced by an instrument
in writing, shall bear interest at such rate as the Company would be required to
pay to its prime lender under the same terms (except for the security), shall
provide a repayment schedule which would repay but only to the extent of the
funds so borrowed, such amount as is necessary to maintain at the beginning of
each Plan Year during the existence of the loan, non-borrowed funds in the Trust
at a level at least equal to the net present value of all benefits calculated
under the preceding sentence and shall provide for prepayment at the Company's
election, without penalty. The above calculations shall use the same actuarial
factors set out in the definition of Actuarial Equivalent under Section 2.01.
All assets contributed shall be held in and administered according to the terms
of the Trust which are incorporated by reference in the Plan for all purposes.
However,

                                     VIII-1

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in no event shall the rights of Participants and former Participants in the
assets held by the Trust be greater than the rights of unsecured creditors of
the Company. Nothing contained in the Plan or the Trust constitutes a secured
promise by the Company that the assets of the Company will be sufficient to pay
any benefit to any person.

                                     VIII-2

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                                   ARTICLE IX

                                 PLAN COMMITTEE

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

     9.02 GENERAL RIGHTS, POWERS AND DUTIES OF PLAN COMMITTEE. The Committee
shall be responsible for the management, operation and administration of the
Plan. In addition to any powers, rights and duties set forth elsewhere in the
Plan, it shall have the following powers and duties:

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

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

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

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

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

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

                                      IX-1

<PAGE>   22

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

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

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

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

                                      IX-2

<PAGE>   23

     9.05 AUTHORIZATION OF BENEFIT PAYMENTS. The Committee shall issue
directions to the Company concerning all benefits which are to be paid pursuant
to the provisions of the Plan. The Company shall furnish the Committee such data
and information as it may require. The records of the Company shall be
determinative of each Participant's period of employment, termination of
employment and the reason therefor, leave of absence, reemployment, years of
Service, Earnings, and Final Average Earnings. Participants and their
beneficiaries shall furnish to the Committee such evidence, data, or
information, and execute such documents, as the Committee requests.

     9.06 APPLICATION AND FORMS OF BENEFITS. The Committee may require a
Participant or former Participant to complete and file with the Committee an
application for retirement benefits and all other forms approved by the
Committee, and to furnish all pertinent information requested by the Committee.
The Committee may rely upon all such information so furnished it, including the
Participant's or former Participant's current mailing address.

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

                                      IX-3

<PAGE>   24

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

                                      IX-4

<PAGE>   25

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.

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

                                      IX-5

<PAGE>   26

                                    ARTICLE X

                            AMENDMENT AND TERMINATION

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

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

                                       X-1

<PAGE>   27

                                   ARTICLE XI

                                  MISCELLANEOUS

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

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

     11.03 ACTIONS BY COMPANY. All actions by the Company under the Plan shall
be taken by the Board or by a person or persons designated by the Board.

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

     11.05 NUMBER AND GENDER. Wherever appropriate, the singular shall include
the plural, the plural shall include the singular, and the masculine shall
include the feminine or neuter.

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

                                      XI-1

<PAGE>   28

     IN WITNESS WHEREOF, effective June 1, 1999, the Company has adopted this
amendment and restatement of the Plan on the 18th day of June, 1999.

                                  QUANEX CORPORATION

                                  By:          /s/ PAUL GIDDENS
                                     ----------------------------------------

                                  Title:  Vice President - Human Resources
                                        -------------------------------------<PAGE>   1
                                                                   EXHIBIT 10.10

                           CHANGE IN CONTROL AGREEMENT

         THIS AGREEMENT between Quanex Corporation, a Delaware corporation (the
"Company"), and _________________________________ (the "Executive") is effective
as of___________________ (the "Effective Date"). Certain capitalized terms used
herein are defined in Section 21.

                              W I T N E S S E T H:

         WHEREAS, the Company considers it to be in the best interests of its
stockholders to encourage the continued employment of certain key employees of
the Company notwithstanding the possibility, threat or occurrence of a Change in
Control of the Company (as that phrase is defined in Section 2); and

         WHEREAS, the Executive is a key employee of the Company; and

         WHEREAS, the Company believes that the possibility of the occurrence of
a Change in Control of the Company may result in the termination by the
Executive of the Executive's employment by the Company or in the distraction of
the Executive from the performance of his duties to the Company, in either case
to the detriment of the Company and its stockholders; and

         WHEREAS, the Company recognizes that the Executive could suffer adverse
financial and professional consequences if a Change in Control of the Company
were to occur; and

         WHEREAS, the Company wishes to enter into this Agreement to protect the
Executive if a Change in Control of the Company occurs, thereby encouraging the
Executive to remain in the employ of the Company and not to be distracted from
the performance of his duties to the Company by the possibility of a Change in
Control of the Company;

         NOW, THEREFORE, the parties agree as follows:

         Section 1.        Other Employment Arrangements.

         (a) This Agreement does not affect the Executive's existing or future
employment arrangements with the Company unless a Change in Control of the
Company shall have occurred before the expiration of the term of this Agreement.
The Executive's employment with the Company shall continue to be governed by the
Executive's existing or future employment agreements with the Company, if any,
or, in the absence of any employment agreement, shall continue to be at the will
of the Board of Directors or, if the Executive is not an officer of the Company
at the time of the termination of the Executive's employment with the Company,
the will of the Chief Executive Officer of the Company, except that if (i) a
Change in Control of the Company shall have occurred before the expiration of
the term of this Agreement, and (ii) the Executive's employment with the Company
is terminated (whether by the Executive or the Company or automatically as
provided in Section 3) after the occurrence of that Change in Control of the
Company, then the Executive shall be entitled to receive certain benefits as
provided in this Agreement.

<PAGE>   2

         (b) Notwithstanding anything contained in this Agreement to the
contrary, if following the commencement of any discussion with a third person
that ultimately results in a Change in Control of the Company, (i) the
Executive's employment with the Company is terminated, (ii) the Executive is
removed from any material duties or position with the Company, (iii) the
Executive's Base Salary is reduced, or (iv) the Executive's annual bonus is
reduced to an amount less than the Benchmark Bonus, then for all purposes of
this Agreement, such Change in Control of the Company shall be deemed to have
occurred on the date immediately prior to the date of such termination, removal,
or reduction.

         (c) Nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any plan, program, policy or practice of
or provided by the Company or any of its Affiliates and for which the Executive
may qualify, nor shall anything herein limit or otherwise affect such rights as
the Executive may have under any contract or agreement with the Company or any
of its Affiliates. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, program, policy or practice of or
provided by, or any contract or agreement with, the Company or any of its
Affiliates at or subsequent to the date of termination of the Executive's
employment with the Company shall be payable or otherwise provided in accordance
with such plan, program, policy or practice or contract or agreement except as
explicitly modified by this Agreement.

         Section 2. Change in Control of the Company. For purposes of this
Agreement, a "Change in Control of the Company" shall mean the occurrence of any
of the following after the Effective Date:

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

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

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

                                      -2-
<PAGE>   3

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

         (d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.

         Section 3 . Term of This Agreement. The term of this Agreement shall
begin on the Effective Date and, unless automatically extended pursuant to the
second sentence of this Section 3, shall expire on the first to occur of:

                  (i) the Executive's death or the Executive's Disability, which
         events shall also be deemed automatically to terminate Executive's
         employment by the Company;

                  (ii) the termination by the Executive or the Company of the
         Executive's employment by the Company; or

                  (iii) the end of the last day (the "Expiration Date") of:

                                 (x) the three-year period beginning on the
                        Effective Date (or any period for which the term of
                        this Agreement shall have been automatically extended
                        pursuant to the second sentence of this Section 3) if
                        no Change in Control of the Company shall have
                        occurred during that three-year period (or any period
                        for which the term of this Agreement shall have been
                        automatically extended pursuant to the second
                        sentence of this Section 3); or

                                 (y) if one or more Changes in Control of the
                        Company shall have occurred during the three-year
                        period beginning on the Effective Date (or any period
                        for which the term of this Agreement shall have been
                        automatically extended pursuant to the second
                        sentence of this Section 3), the three-year period
                        beginning on the date on which the last Change in
                        Control of the Company occurred.

If (i) the term of this Agreement shall not have expired as a result of the
occurrence of one of the events described in clause (i) or (ii) of the
immediately preceding sentence, and (ii) the Company shall not have given notice
to the Executive at least ninety (90) days before the Expiration Date that the
term of this Agreement will expire on the Expiration Date, then the term of this
Agreement shall be automatically

                                      -3-
<PAGE>   4

extended for successive one-year periods (the first such period to begin on the
day immediately following the Expiration Date) unless the Company shall have
given notice to the Executive at least ninety (90) days before the end of any
one-year period for which the term of this Agreement shall have been
automatically extended that such term will expire at the end of that one-year
period. The expiration of the term of this Agreement shall not terminate this
Agreement itself or affect the right of the Executive or the Executive's legal
representatives to enforce the payment of any amount or other benefit to which
the Executive was entitled before the expiration of the term of this Agreement
or to which the Executive became entitled as a result of the event (including
the termination, whether by the Executive or the Company or automatically as
provided in this Section 3, of the Executive's employment by the Company) that
caused the term of this Agreement to expire.

         Section 4. Event of Termination for Cause. An "Event of Termination for
Cause" shall have occurred if, after a Change in Control of the Company, the
Executive shall have committed:

                  (i) gross negligence or willful misconduct in connection with
         his duties or in the course of his employment with the Company;

                  (ii) an act of fraud, embezzlement or theft in connection with
         his duties or in the course of his employment with the Company;

                  (iii) intentional wrongful damage to property of the Company;

                  (iv) intentional wrongful disclosure of secret processes or
         confidential information of the Company; or

                  (v) an act leading to a conviction of a felony or a
         misdemeanor involving moral turpitude.

For purposes of this Agreement, no act, or failure to act, on the part of the
Executive shall be deemed "intentional" if it was due primarily to an error in
judgment or negligence, but shall be deemed "intentional" only if done, or
omitted to be done, by the Executive not in good faith and without reasonable
belief that his action or omission was in the best interest of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated as a result of an "Event of Termination for Cause" hereunder unless
and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the Board of Directors then in office at a meeting of the Board of Directors
called and held for such purpose (after reasonable notice to the Executive and
an opportunity for the Executive, together with his counsel, to be heard before
the Board of Directors), finding that, in the good faith opinion of the Board of
Directors, the Executive had committed an act set forth above in this Section 4
and specifying the particulars thereof in detail. Nothing herein shall limit the
right of the Executive or his legal representatives to contest the validity or
propriety of any such determination.

         Section 5. An Event of Termination for Good Reason. An "Event of
Termination for Good Reason" shall have occurred if, after a Change in Control
of the Company, the Company shall:

                  (i) assign to the Executive any duties inconsistent with the
         Executive's position (including offices, titles and reporting
         requirements), authority, duties or responsibilities with the Company
         in effect immediately before the occurrence of the first Change in
         Control of the Company or otherwise make any change in any such
         position, authority, duties or responsibilities;

                                      -4-
<PAGE>   5

                  (ii) remove the Executive from, or fail to re-elect or appoint
         the Executive to, any duties or position with the Company or any of its
         Affiliates that were assigned or held by the Executive immediately
         before the occurrence of the first Change in Control of the Company,
         except that a nominal change in the Executive's title that is merely
         descriptive and does not affect rank or status shall not constitute
         such an event;

                  (iii) take any other action that results in a material
         diminution in such position, authority, duties or responsibilities or
         otherwise take any action that materially interferes therewith;

                  (iv) reduce the Executive's annual base salary as in effect
         immediately before the occurrence of the first Change in Control of the
         Company or as the Executive's annual base salary may be increased from
         time to time after that occurrence (the "Base Salary");

                  (v) reduce the Executive's annual bonus (x) to an amount less
         than $_______________ at any time on or prior to the third anniversary
         of the Effective Date, or (y) to an amount less than the average of the
         two annual bonuses earned by such Executive with respect to the two
         preceding years at any time after the third anniversary of the
         Effective Date (the amount determined pursuant to clause (x) or (y), as
         applicable, is referred to herein as the "Benchmark Bonus");

                  (vi) relocate the Executive's principal office outside of the
         portion of the metropolitan area of the City of Houston, Texas that is
         located within the highway known as "Beltway 8";

                  (vii) fail to (x) continue in effect any bonus, incentive,
         profit sharing, performance, savings, retirement or pension policy,
         plan, program or arrangement (such policies, plans, programs and
         arrangements collectively being referred to herein as "Basic Benefit
         Plans"), including, but not limited to, any deferred compensation,
         supplemental executive retirement or other retirement income, stock
         option, stock purchase, stock appreciation, or similar policy, plan,
         program or arrangement of the Company, in which the Executive was a
         participant immediately before the occurrence of the first Change in
         Control of the Company, or any substitute plan adopted by the Board of
         Directors and in which the Executive was a participant immediately
         before the occurrence of the last Change in Control of the Company,
         unless an equitable and reasonably comparable arrangement (embodied in
         a substitute or alternative benefit or plan) shall have been made with
         respect to such Basic Benefit Plan promptly following the occurrence of
         the last Change in Control of the Company, or (y) continue the
         Executive's participation in any Basic Benefit Plan (or any substitute
         or alternative plan) on substantially the same basis, both in terms of
         the amount of benefits provided to the Executive (which are in any
         event always subject to the terms of any applicable Basic Benefit Plan)
         and the level of the Executive's participation relative to other
         participants, as existed immediately before the occurrence of the first
         Change in Control of the Company;

                  (viii) fail to continue to provide the Executive with benefits
         substantially similar to those enjoyed by the Executive under any of
         the Company's other Executive benefit plans, policies, programs and
         arrangements, including, but not limited to, life insurance, medical,
         dental, health, hospital, accident or disability plans, in which the
         Executive was a

                                      -5-
<PAGE>   6

         participant immediately before the occurrence of the first Change in
         Control of the Company;

                  (ix) take any action that would directly or indirectly
         materially reduce any other non-contractual benefits that were provided
         to the Executive by the Company immediately before the occurrence of
         the first Change in Control of the Company or deprive the Executive of
         any material fringe benefit enjoyed by the Executive immediately before
         the occurrence of the first Change in Control of the Company;

                  (x) fail to provide the Executive with the number of paid
         vacation days to which the Executive was entitled in accordance with
         the Company's vacation policy in effect immediately before the
         occurrence of the first Change in Control of the Company;

                  (xi) fail to continue to provide Executive with office space,
         related facilities and support personnel (including, but not limited
         to, administrative and secretarial assistance) (y) that are both
         commensurate with Executive's responsibilities to and position with the
         Company immediately before the occurrence of the first Change in
         Control of the Company and not materially dissimilar to the office
         space, related facilities and support personnel provided to other
         Executives of the Company having comparable responsibility to the
         Executive, or (z) that are physically located at the Company's
         principal executive offices;

                  (xii) require the Executive to perform a majority of his
         duties outside the Company's principal executive offices for a period
         of more than 21 consecutive days or for more than 90 days in any
         calendar year;

                  (xiii) fail to honor any provision of any employment agreement
         Executive has or may in the future have with the Company or fail to
         honor any provision of this Agreement;

                  (xiv) give effective notice of an election to terminate at the
         end of the term or extended the term of any employment agreement
         Executive has or may in the future have with the Company in accordance
         with the terms of any such agreement; or

                  (xv) purport to terminate the Executive's employment by the
         Company unless notice of that termination shall have been given to the
         Executive pursuant to, and that notice shall meet the requirements of,
         Section 6.

         Section 6. Notice of Termination. If a Change in Control of the Company
shall have occurred before the expiration of the term of this Agreement, any
subsequent termination by the Executive or the Company of the Executive's
employment by the Company, or any determination of the Executive's Disability,
shall be communicated by notice to the other party that shall indicate the
specific paragraph of Section 7 pursuant to which the Executive is to receive
benefits as a result of the termination. If the notice states that the
Executive's employment by the Company has been automatically terminated as a
result of the Executive's Disability, the notice shall (i) specifically describe
the basis for the determination of the Executive's Disability, and (ii) state
the date of the determination of the Executive's Disability, which date shall be
not more than ten (10) days before the date such notice is given. If the notice
is from the Company and states that the Executive's employment by the Company is
terminated by the Company as a result of the occurrence of an Event of
Termination for Cause, the notice shall specifically describe the action or
inaction of the Executive that the Company believes constitutes an Event of
Termination for Cause and shall be accompanied by a copy of the resolution
satisfying Section 4. If the notice is from the Executive and states

                                      -6-
<PAGE>   7

that the Executive's employment by the Company is terminated by the Executive as
a result of the occurrence of an Event of Termination for Good Reason, the
notice shall specifically describe the action or inaction of the Company that
the Executive believes constitutes an Event of Termination for Good Reason. Each
notice given pursuant to this Section 6 (other than a notice stating that the
Executive's employment by the Company has been automatically terminated as a
result of the Executive's Disability) shall state a date, which shall be not
fewer than thirty (30) days nor more than sixty (60) days after the date such
notice is given, on which the termination of the Executive's employment by the
Company is effective. The date so stated in accordance with this Section 6 shall
be the "Termination Date". If a Change in Control of the Company shall have
occurred before the expiration of the term of this Agreement, any subsequent
purported termination by the Company of the Executive's employment by the
Company, or any subsequent purported determination by the Company of the
Executive's Disability, shall be ineffective unless that termination or
determination shall have been communicated by the Company to the Executive by
notice that meets the requirements of the foregoing provisions of this Section 6
and the provisions of Section 9.

         Section 7. Benefits Payable on Change in Control and Termination.(a)If
(x) a Change in Control of the Company shall have occurred before the expiration
of the term of this Agreement, and (y) the Executive's employment by the Company
is terminated (whether by the Executive or the Company or automatically as
provided in Section 3) after the occurrence of that Change in Control of the
Company, the Executive shall be entitled to the following benefits:

                  (i) If the Executive's employment by the Company is terminated
         (x) by the Company as a result of the occurrence of an Event of
         Termination for Cause, or (y) by the Executive before the occurrence of
         an Event of Termination for Good Reason, then the Company shall pay to
         the Executive the Base Salary accrued through the Termination Date but
         not previously paid to the Executive, and the Executive shall be
         entitled to any other amounts or benefits provided under any plan,
         policy, practice, program, contract or arrangement of or with the
         Company, including, but not limited to, the Basic Benefit Plans and the
         Other Benefit Plans, which shall be governed by the terms thereof
         (except as explicitly modified by this Agreement).

                  (ii) If the Executive's employment by the Company is
         automatically terminated as a result of the Executive's death or the
         Executive's Disability, then (x) the Company shall pay to the Executive
         the Base Salary accrued through the date of the occurrence of that
         event but not previously paid to the Executive, and (y) the Executive
         shall be entitled to any other amounts or benefits provided under any
         plan, policy, practice, program, contract or arrangement of or with the
         Company, including, but not limited to, the Basic Benefit Plans and the
         Other Benefit Plans, which shall be governed by the terms thereof
         (except as explicitly modified by this Agreement).

                  (iii) If the Executive's employment by the Company is
         terminated (x) by the Company otherwise than as a result of the
         occurrence of an Event of Termination for Cause, or (y) by the
         Executive after the occurrence of an Event of Termination for Good
         Reason, then the Executive shall be entitled to the following:

                           (1) the Company shall pay to the Executive the Base
                  Salary and compensation for earned but unused vacation time
                  accrued through the Termination Date but not previously paid
                  to the Executive;

                                      -7-
<PAGE>   8

                           (2) the Company shall pay to the Executive an amount
                  equal to the product of (A) the greater of (I) the Executive's
                  target performance bonus for the Fiscal Year in which the
                  Termination Date occurs and (II) the Executive's performance
                  bonus for the Fiscal Year preceding the Fiscal Year in which
                  the Termination Date occurs (including any deferred portion
                  thereof) (the greater of the amounts described in clauses (I)
                  and (II) of this Section 7(a)(iii)(2)(A) being referred to
                  herein as the "Highest Bonus"), and (B) a fraction, the
                  numerator of which is the number of days in the current Fiscal
                  Year through the Termination Date and the denominator of which
                  is 365;

                           (3) the Company shall pay to the Executive, as a lump
                  sum, an amount (the "Severance Payment") equal to three (3)
                  times the sum of:

                                    (A) the amount (including any deferred
                           portion thereof) of the Base Salary that would have
                           been paid to the Executive during the Fiscal Year in
                           which the Termination Date occurs based on the
                           assumption that the Executive's employment by the
                           Company had continued throughout that Fiscal Year at
                           the Base Salary rate in effect in the Fiscal Year in
                           which the Termination Date occurs, or in the
                           immediately preceding Fiscal Year, whichever is
                           higher;

                                    (B) the amount of the Highest Bonus;

                           (4) the Company (at its sole expense) shall take the
                  following actions:

                                    (A) throughout the Relevant Period, the
                           Company shall maintain in effect, and not materially
                           reduce the benefits provided by, each of the Other
                           Benefit Plans in which the Executive was a
                           participant immediately before the Termination Date;
                           and

                                    (B) the Company shall arrange for the
                           Executive's uninterrupted participation throughout
                           the Relevant Period in each of such Other Benefit
                           Plans,

                  provided that if the Executive's participation after the
                  Termination Date in any such Other Benefit Plan is not
                  permitted by the terms of that Other Benefit Plan, then
                  throughout the Relevant Period, the Company (at its sole
                  expense) shall provide the Executive with substantially the
                  same benefits that were provided to the Executive by that
                  Other Benefit Plan immediately before the Termination Date;
                  and

                           (5) the Executive shall be entitled to any other
                  amounts or benefits provided under any plan, policy, practice,
                  program, contract or arrangement of or with the Company,
                  including, but not limited to, the

                                      -8-
<PAGE>   9

                  Basic Benefit Plans and the Other Benefit Plans, which shall
                  be governed by the terms thereof (except as explicitly
                  modified by this Agreement).

         (b) Each payment required to be made to the Executive pursuant to the
foregoing provisions of this Section 7(a) above (i) shall be made by check drawn
on an account of the Company at a bank located in the United States of America,
and (ii) shall be paid (x) if the Executive's employment by the Company was
terminated as a result of the Executive's death or the Executive's Disability,
not more than thirty (30) days immediately following the date of the occurrence
of that event, and (y) if the Executive's employment by the Company was
terminated for any other reason, not more than ten (10) days immediately
following the Termination Date.

         (c) The following shall occur immediately upon the occurrence of a
Change in Control of the Company:

                           (i) all options to acquire Voting Stock and all stock
                  appreciation rights pertaining to Voting Stock held by the
                  Executive immediately prior to a Change in Control of the
                  Company shall become fully exercisable, regardless of whether
                  or not the vesting conditions set forth in the relevant stock
                  option agreements have been satisfied in full; and

                           (ii) all restrictions on any restricted Voting Stock
                  granted to the Executive prior to a Change in Control of the
                  Company shall be removed and the stock shall be freely
                  transferable, regardless of whether the conditions set forth
                  in the relevant restricted stock agreements have been
                  satisfied in full.

         Section 8. Successors. If a Change in Control of the Company shall have
occurred before the expiration of the term of this Agreement,

                  (i) the Company shall not, directly or indirectly, consolidate
         with, merge into or sell or otherwise transfer its assets as an
         entirety or substantially as an entirety to, any person, or permit any
         person to consolidate with or merge into the Company, unless
         immediately after such consolidation, merger, sale or transfer, the
         Successor shall have assumed in writing the Company's obligations under
         this Agreement; and

                  (ii) not fewer than ten (10) days before the consummation of
         any consolidation of the Company with, merger by the Company into, or
         sale or other transfer by the Company of its assets as an entirety or
         substantially as an entirety to, any person, the Company shall give the
         Executive notice of that proposed transaction.

         Section 9. Notice. Notices required or permitted to be given by either
party pursuant to this Agreement shall be in writing and shall be deemed to have
been given when delivered personally to the other party or when deposited with
the United States Postal Service as certified or registered mail with postage
prepaid and addressed:

                  (i) if to the Executive, at the Executive's address last shown
         on the Company's records, and

                                       -9-
<PAGE>   10

                  (ii) if to the Company, at 1900 West Loop West, Suite 1500,
         Houston, Texas 77027, directed to the attention of the Chief Financial
         Officer.

or, in either case, to such other address as the party to whom or which such
notice is to be given shall have specified by notice given to the other party.

         Section 10. Withholding Taxes. The Company may withhold from all
payments to be paid to the Executive pursuant to this Agreement all taxes that,
by applicable federal or state law, the Company is required to so withhold.

         Section 11. Certain Additional Payments by the Company.

         (a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by, or benefit
from, the Company or any of its Affiliates to or for the benefit of the
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (any such payments, distributions or
benefits being individually referred to herein as a "Payment," and any two or
more of such payments, distributions or benefits being referred to herein as
"Payments"), would be subject to the excise tax imposed by Section 4999 of the
Code (such excise tax, together with any interest thereon, any penalties,
additions to tax, or additional amounts with respect to such excise tax, and any
interest in respect of such penalties, additions to tax or additional amounts,
being collectively referred herein to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment or payments (individually
referred to herein as a "Gross-Up Payment" and any two or more of such
additional payments being referred to herein as "Gross-Up Payments") in an
amount such that after payment by the Executive of all taxes (as defined in
Section 11(k)) imposed upon the Gross-Up Payment, the Executive retains an
amount of such Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.

         (b) Subject to the provisions of Section 11(c) through (i), any
determination (individually, a "Determination") required to be made under this
Section 11(b), including whether a Gross-Up Payment is required and the amount
of such Gross-Up Payment, shall initially be made, at the Company's expense, by
nationally recognized tax counsel mutually acceptable to the Company and the
Executive ("Tax Counsel"). Tax Counsel shall provide detailed supporting legal
authorities, calculations, and documentation both to the Company and the
Executive within 15 business days of the termination of the Executive's
employment, if applicable, or such other time or times as is reasonably
requested by the Company or the Executive. If Tax Counsel makes the initial
Determination that no Excise Tax is payable by the Executive with respect to a
Payment or Payments, it shall furnish the Executive with an opinion reasonably
acceptable to the Executive that no Excise Tax will be imposed with respect to
any such Payment or Payments. The Executive shall have the right to dispute any
Determination (a "Dispute") within 15 business days after delivery of Tax
Counsel's opinion with respect to such Determination. The Gross-Up Payment, if
any, as determined pursuant to such Determination shall, at the Company's
expense, be paid by the Company to the Executive within five business days of
the Executive's receipt of such Determination. The existence of a Dispute shall
not in any way affect the Executive's right to receive the Gross-Up Payment in
accordance with such Determination. If there is no Dispute, such Determination
shall be binding, final and conclusive upon the Company and the Executive,
subject in all respects, however, to the provisions of Section 11(c) through (i)
below. As a result of the uncertainty in the application of Sections 4999 and
280G of the Code, it is possible that Gross-Up Payments (or portions thereof)
which will not have been made by the Company should have been made
("Underpayment"), and if upon any reasonable written request from the Executive
or the Company to Tax Counsel, or upon Tax Counsel's own initiative, Tax
Counsel, at the Company's expense, thereafter determines that the Executive is
required to make a payment of any Excise Tax or any additional Excise Tax,

                                      -10-
<PAGE>   11

as the case may be, Tax Counsel shall, at the Company's expense, determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to the Executive.

         (c) The Company shall defend, hold harmless, and indemnify the
Executive on a fully grossed-up after tax basis from and against any and all
claims, losses, liabilities, obligations, damages, impositions, assessments,
demands, judgements, settlements, costs and expenses (including reasonable
attorneys', accountants', and experts' fees and expenses) with respect to any
tax liability of the Executive resulting from any Final Determination (as
defined in Section 11(j)) that any Payment is subject to the Excise Tax.

         (d) If a party hereto receives any written or oral communication with
respect to any question, adjustment, assessment or pending or threatened audit,
examination, investigation or administrative, court or other proceeding which,
if pursued successfully, could result in or give rise to a claim by the
Executive against the Company under this Section 11 ("Claim"), including, but
not limited to, a claim for indemnification of the Executive by the Company
under Section 11(c), then such party shall promptly notify the other party
hereto in writing of such Claim ("Tax Claim Notice").

         (e) If a Claim is asserted against the Executive ("Executive Claim"),
the Executive shall take or cause to be taken such action in connection with
contesting such Executive Claim as the Company shall reasonably request in
writing from time to time, including the retention of counsel and experts as are
reasonably designated by the Company (it being understood and agreed by the
parties hereto that the terms of any such retention shall expressly provide that
the Company shall be solely responsible for the payment of any and all fees and
disbursements of such counsel and any experts) and the execution of powers of
attorney, provided that:

                  (i) within 30 calendar days after the Company receives or
         delivers, as the case may be, the Tax Claim Notice relating to such
         Executive Claim (or such earlier date that any payment of the taxes
         claimed is due from the Executive, but in no event sooner than five
         calendar days after the Company receives or delivers such Tax Claim
         Notice), the Company shall have notified the Executive in writing
         ("Election Notice") that the Company does not dispute its obligations
         (including, but not limited to, its indemnity obligations) under this
         Agreement and that the Company elects to contest, and to control the
         defense or prosecution of, such Executive Claim at the Company's sole
         risk and sole cost and expense; and

                  (ii) the Company shall have advanced to the Executive on an
         interest-free basis, the total amount of the tax claimed in order for
         the Executive, at the Company's request, to pay or cause to be paid the
         tax claimed, file a claim for refund of such tax and, subject to the
         provisions of the last sentence of Section 11(g), sue for a refund of
         such tax if such claim for refund is disallowed by the appropriate
         taxing authority (it being understood and agreed by the parties hereto
         that the Company shall only be entitled to sue for a refund and the
         Company shall not be entitled to initiate any proceeding in, for
         example, United States Tax Court) and shall indemnify and hold the
         Executive harmless, on a fully grossed-up after tax basis, from any tax
         imposed with respect to such advance or with respect to any imputed
         income with respect to such advance; and

                  (iii) the Company shall reimburse the Executive for any and
         all costs and expenses resulting from any such request by the Company
         and shall indemnify and hold the Executive harmless, on fully
         grossed-up after-tax basis, from any tax imposed as a result of such
         reimbursement.

                                      -11-
<PAGE>   12

         (f) Subject to the provisions of Section 11(e) hereof, the Company
shall have the right to defend or prosecute, at the sole cost, expense and risk
of the Company, such Executive Claim by all appropriate proceedings, which
proceedings shall be defended or prosecuted diligently by the Company to a Final
Determination; provided, however, that (i) the Company shall not, without the
Executive's prior written consent, enter into any compromise or settlement of
such Executive Claim that would adversely affect the Executive, (ii) any request
from the Company to the Executive regarding any extension of the statute of
limitations relating to assessment, payment, or collection of taxes for the
taxable year of the Executive with respect to which the contested issues
involved in, and amount of, the Executive Claim relate is limited solely to such
contested issues and amount, and (iii) the Company's control of any contest or
proceeding shall be limited to issues with respect to the Executive Claim and
the Executive shall be entitled to settle or contest, in his sole and absolute
discretion, any other issue raised by the Internal Revenue Service or any other
taxing authority. So long as the Company is diligently defending or prosecuting
such Executive Claim, the Executive shall provide or cause to be provided to the
Company any information reasonably requested by the Company that relates to such
Executive Claim, and shall otherwise cooperate with the Company and its
representatives in good faith in order to contest effectively such Executive
Claim. The Company shall keep the Executive informed of all developments and
events relating to any such Executive Claim (including, without limitation,
providing to the Executive copies of all written materials pertaining to any
such Executive Claim), and the Executive or his authorized representatives shall
be entitled, at the Executive's expense, to participate in all conferences,
meetings and proceedings relating to any such Executive Claim.

         (g) If, after actual receipt by the Executive of an amount of a tax
claimed (pursuant to an Executive Claim) that has been advanced by the Company
pursuant to Section 11(e)(ii) hereof, the extent of the liability of the Company
hereunder with respect to such tax claimed has been established by a Final
Determination, the Executive shall promptly pay or cause to be paid to the
Company any refund actually received by, or actually credited to, the Executive
with respect to such tax (together with any interest paid or credited thereon by
the taxing authority and any recovery of legal fees from such taxing authority
related thereto), except to the extent that any amounts are then due and payable
by the Company to the Executive, whether under the provisions of this Agreement
or otherwise. If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 11(e)(ii), a determination is made by the
Internal Revenue Service or other appropriate taxing authority that the
Executive shall not be entitled to any refund with respect to such tax claimed
and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of any Gross-Up Payments and other payments required to be paid
hereunder.

         (h) With respect to any Executive Claim, if the Company fails to
deliver an Election Notice to the Executive within the period provided in
Section 11(e)(i) hereof or, after delivery of such Election Notice, the Company
fails to comply with the provisions of Section 11(e)(ii) and (iii) and (f)
hereof, then the Executive shall at any time thereafter have the right (but not
the obligation), at his election and in his sole and absolute discretion, to
defend or prosecute, at the sole cost, expense and risk of the Company, such
Executive Claim. The Executive shall have full control of such defense or
prosecution and such proceedings, including any settlement or compromise
thereof. If requested by the Executive, the Company shall cooperate, and shall
cause its Affiliates to cooperate, in good faith with the Executive and his
authorized representatives in order to contest effectively such Executive Claim.
The Company may attend, but not participate in or control, any

                                      -12-
<PAGE>   13

defense, prosecution, settlement or compromise of any Executive Claim controlled
by the Executive pursuant to this Section 11(h) and shall bear its own costs and
expenses with respect thereto. In the case of any Executive Claim that is
defended or prosecuted by the Executive, the Executive shall, from time to time,
be entitled to current payment, on a fully grossed-up after tax basis, from the
Company with respect to costs and expenses incurred by the Executive in
connection with such defense or prosecution.

         (i) In the case of any Executive Claim that is defended or prosecuted
to a Final Determination pursuant to the terms of this Section 11(i), the
Company shall pay, on a fully grossed-up after tax basis, to the Executive in
immediately available funds the full amount of any taxes arising or resulting
from or incurred in connection with such Executive Claim that have not
theretofore been paid by the Company to the Executive, together with the costs
and expenses, on a fully grossed-up after tax basis, incurred in connection
therewith that have not theretofore been paid by the Company to the Executive,
within ten calendar days after such Final Determination. In the case of any
Executive Claim not covered by the preceding sentence, the Company shall pay, on
a fully grossed-up after tax basis, to the Executive in immediately available
funds the full amount of any taxes arising or resulting from or incurred in
connection with such Executive Claim at least ten calendar days before the date
payment of such taxes is due from the Executive, except where payment of such
taxes is sooner required under the provisions of this Section 11(i), in which
case payment of such taxes (and payment, on a fully grossed-up after tax basis,
of any costs and expenses required to be paid under this Section 11(i) shall be
made within the time and in the manner otherwise provided in this Section 11(i).

         (j) For purposes of this Agreement, the term "Final Determination"
shall mean (A) a decision, judgment, decree or other order by a court or other
tribunal with appropriate jurisdiction, which has become final and
non-appealable; (B) a final and binding settlement or compromise with an
administrative agency with appropriate jurisdiction, including, but not limited
to, a closing agreement under Section 7121 of the Code; (C) any disallowance of
a claim for refund or credit in respect to an overpayment of tax unless a suit
is filed on a timely basis; or (D) any final disposition by reason of the
expiration of all applicable statutes of limitations.

         (k) For purposes of this Agreement, the terms "tax" and "taxes" mean
any and all taxes of any kind whatsoever (including, but not limited to, any and
all Excise Taxes, income taxes, and employment taxes), together with any
interest thereon, any penalties, additions to tax, or additional amounts with
respect to such taxes and any interest in respect of such penalties, additions
to tax, or additional amounts.

         Section 12. Expenses of Enforcement. If a Change in Control of the
Company shall have occurred before the expiration of the term of this Agreement,
then, upon demand by the Executive made to the Company, the Company shall
reimburse the Executive for the reasonable expenses (including attorneys' fees
and expenses) incurred by the Executive in enforcing or seeking to enforce the
payment of any amount or other benefit to which the Executive shall have become
entitled pursuant to this Agreement, including those incurred in connection with
any arbitration initiated pursuant to Section 20. To the extent that any such
reimbursement would be subject to the Excise Tax, then the Executive shall be
entitled to receive Gross-Up Payments in an amount such that after payment by
the Executive of all taxes imposed on such Gross-Up Payments, the Executive
retains an amount equal to the Excise Tax imposed upon the reimbursement, and
the other provisions of Section 11 hereof shall also apply to such circumstance
unless the context thereof otherwise indicates.

                                      -13-
<PAGE>   14

         Section 13. Employment by Wholly Owned Entities. If, at or after the
Effective Date, the Executive is or becomes an Executive of one or more
corporations, partnerships, limited liability companies or other entities that
are, directly or indirectly, wholly owned by the Company ("Wholly Owned
Entities"), references in this Agreement to the Executive's employment by the
Company shall include the Executive's employment by any such Wholly Owned
Entity.

         Section 14. No Obligation to Mitigate; No Rights of Offset.

         (a) The Executive shall not be required to mitigate the amount of any
payment or other benefit required to be paid to the Executive pursuant to this
Agreement, whether by seeking other employment or otherwise, nor shall the
amount of any such payment or other benefit be reduced on account of any
compensation earned by the Executive as a result of employment by another
person.

         (b) The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others.

         Section 15. Amendment and Waiver. No provision of this Agreement may be
amended or waived (whether by act or course of conduct or omission or otherwise)
unless that amendment or waiver is by written instrument signed by the parties
hereto. No waiver by either party of any breach of this Agreement shall be
deemed a waiver of any other or subsequent breach.

         Section 16. Governing Law. The validity, interpretation, construction
and enforceability of this Agreement shall be governed by the laws of the State
of Texas.

         Section 17. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

         Section 18. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together will constitute the same instrument.

         Section 19. Assignment. This Agreement shall inure to the benefit of
and be enforceable by the Executive's legal representative. The Company may not
assign any of its obligations under this Agreement unless (i) such assignment is
to a Successor and (ii) the requirements of Section 8 are fulfilled.

         Section 20. Arbitration. Except as otherwise explicitly provided in
Section 11, any dispute between the parties arising out of this Agreement,
whether as to this Agreement's construction, interpretation or enforceability or
as to any party's breach or alleged breach of any provision of this Agreement,
shall be submitted to arbitration in accordance with the following procedures:

                  (i) Either party may demand such arbitration by giving notice
         of that demand to the other party. The notice shall state (x) the
         matter in controversy, and (y) the name of the arbitrator selected by
         the party giving the notice.

                  (ii) Not more than 15 days after such notice is given, the
         other party shall give notice to the party who demanded arbitration of
         the name of the arbitrator selected by the other party. If the other
         party shall fail to timely give such notice, the arbitrator that the
         other party was entitled to select shall be named by the Arbitration
         Committee of the

                                      -14-
<PAGE>   15

         American Arbitration Association. Not more than 15 days after the
         second arbitrator is so named, the two arbitrators shall select a third
         arbitrator. If the two arbitrators shall fail to timely select a third
         arbitrator, the third arbitrator shall be named by the Arbitration
         Committee of the American Arbitration Association.

                  (iii) The dispute shall be arbitrated at a hearing that shall
         be concluded within ten days immediately following the date the dispute
         is submitted to arbitration unless a majority of the arbitrators shall
         elect to extend the period of arbitration. Any award made by a majority
         of the arbitrators (x) shall be made within ten days following the
         conclusion of the arbitration hearing, (y) shall be conclusive and
         binding on the parties, and (z) may be made the subject of a judgment
         of any court having jurisdiction.

                  (iv) All expenses of the arbitration shall be borne by the
         Company.

The agreement of the parties contained in the foregoing provisions of this
Section 20 shall be a complete defense to any action, suit or other proceeding
instituted in any court or before any administrative tribunal with respect to
any dispute between the parties arising out of this Agreement.

         Section 21. Interpretation.

         (a) As used in this Agreement, the following terms and phrases have the
indicated meanings:

                  (i) "Affiliate" and "Affiliates" mean, when used with respect
         to any entity, individual, or other person, any other entity,
         individual, or other person which, directly or indirectly, through one
         or more intermediaries controls, or is controlled by, or is under
         common control with such entity, individual or person.

                  (ii) "Base Salary" has the meaning assigned to that term in
         Section 5.

                  (iii) "Basic Benefit Plans" has the meaning assigned to that
         term in Section 5.

                  (iv) "Benchmark Bonus" has the meaning assigned to that term
         in Section 5.

                  (v) "Board of Directors" means the Board of Directors of the
         Company.

                  (vi) "Business Combination" has the meaning assigned to that
         term in Section 2.

                  (vii) "Change in Control of the Company" has the meaning
         assigned to that phrase in Section 2.

                  (viii) "Claim" has the meaning assigned to such term in
         Section 11.

                  (ix) "Code" means the Internal Revenue Code of 1986, as
         amended from time to time.

                  (x) "Commission" means the United States Securities and
         Exchange Commission or any successor agency.

                                      -15-
<PAGE>   16

                  (xi) "Company" has the meaning assigned to that term in the
         preamble to this Agreement. The term "Company" shall also include any
         Successor, whether the liability of such Successor under this Agreement
         is established by contract or occurs by operation of law.

                  (xii) "Covered Person" has the meaning assigned to that term
         in Section 2.

                  (xiii) "Determination" has the meaning assigned to that term
         in Section 11.

                  (xiv) "Dispute" has the meaning assigned to that term in
         Section 11.

                  (xv) "Effective Date" has the meaning assigned to that term in
         the preamble to this Agreement.

                  (xvi) "Election Notice" has the meaning assigned to such term
         in Section 11.

                  (xvii) "Executive" has the meaning assigned to such term in
         the preamble to this Agreement.

                  (xviii) "Executive Claim" has the meaning assigned to such
         term in Section 11.

                  (xix) "Executive's Disability" means:

                           (A) if no Change in Control of the Company shall have
                  occurred before the date of determination, the physical or
                  mental disability of the Executive determined in accordance
                  with the disability policy of the Company at the time in
                  effect and generally applicable to its salaried Executives;
                  and

                           (B) if a Change in Control of the Company shall have
                  occurred at that date, the physical or mental disability of
                  the Executive determined in accordance with the disability
                  policy of the Company in effect immediately before the
                  occurrence of the first Change in Control of the Company and
                  generally applicable to its salaried Executives.

         The Executive's Disability, and the automatic termination of the
         Executive's employment by the Company by reason of the Executive's
         Disability, shall be deemed to have occurred on the date of
         determination, provided that if (1) a Change in Control of the Company
         shall have occurred before the expiration of the term of this
         Agreement, (2) the Company shall have subsequently given notice
         pursuant to Section 6 of the Company's determination of the Executive's
         Disability, and (3) the Executive shall have given notice to the
         Company that the Executive disagrees with that determination, then (A)
         whether the Executive's Disability shall have occurred shall be
         submitted to arbitration pursuant to Section 20, and (B) if a majority
         of the arbitrators decide that the Executive's Disability had not
         occurred, at the date of determination by the Company, then (I) the
         Executive's Disability, and the automatic termination of the
         Executive's employment by the Company by reason of the Executive's
         Disability, shall be deemed not to have occurred, and (II) on demand by
         the Executive made to the Company, the Company shall reimburse the
         Executive for the reasonable expenses (including attorneys' fees and
         expenses) incurred by the Executive in obtaining that decision.

                                      -16-
<PAGE>   17

                  (xx) "Event of Termination for Good Reason" has the meaning
         assigned to that phrase in Section 5.

                  (xxi) "Event of Termination for Cause" has the meaning
         assigned to that phrase in Section 4.

                  (xxii) "Exchange Act" means the Securities Exchange Act of
         1934, as amended from time to time.

                  (xxiii) "Excise Tax" has the meaning assigned to that term in
         Section 11.

                  (xxiv) "Expiration Date" has the meaning assigned to that term
         in Section 3.

                  (xxv) "Final Determination" has the meaning assigned to such
         term in Section 11.

                  (xxvi) "Fiscal Year" means the fiscal year of the Company.

                  (xxvii) "Gross-Up Payment" has the meaning assigned to that
         term in Section 11.

                  (xxviii) "Other Benefit Plan" means any employee welfare
         benefit plan (within the meaning of section 3(1) of the Employee
         Retirement Income Security Act of 1974, as amended) maintained by the
         Company.

                  (xxix) "Outstanding Company Common Stock" has the meaning
         assigned to that term in Section 2.

                  (xxx) "Outstanding Company Voting Securities" has the meaning
         assigned to that term in Section 2.

                  (xxxi) "Payment" has the meaning assigned to that term in
         Section 11.

                  (xxxii) "person" means any individual, corporation,
         partnership, joint venture, association, joint-stock company, limited
         partnership, limited liability company, trust, unincorporated
         organization, government, or agency or political subdivision of any
         government.

                  (xxxiii) "Relevant Period" means a period beginning on the
         Termination Date and ending on the first to occur of (x) the third
         anniversary of the Termination Date, or (y) the date on which the
         Executive becomes employed on a full-time basis by another person.

                  (xxxiv) "Severance Payment" has the meaning assigned to that
         term in Section 7.

                  (xxxv) "Successor" means a person with or into which the
         Company shall have been merged or consolidated or to which the Company
         shall have transferred its assets as an entirety or substantially as an
         entirety.

                  (xxxvi) "Tax" has the meaning assigned to that term in Section
         11.

                                      -17-
<PAGE>   18

                  (xxxvii) "Tax Claim Notice" has the meaning assigned to that
         term in Section 11.

                  (xxxviii) "Tax Counsel" has the meaning assigned to that term
         in Section 11.

                  (xxxix) "Termination Date" has the meaning assigned to that
         term in Section 6.

                  (xl) "This Agreement" means this Change in Control Agreement
         as it may be amended from time to time in accordance with Section 15.

                  (xli) "Underpayment" has the meaning assigned to that term in
         Section 11.

                  (xlii) "Wholly Owned Entities" has the meaning assigned to
         that term in Section 13.

         (b) In the event of the enactment of any successor provision to any
statute or rule cited in this Agreement, references in this Agreement to such
statute or rule shall be to such successor provision.

         (c) The headings of Sections of this Agreement shall not control the
meaning or interpretation of this Agreement.

         (d) References in this Agreement to any Section are to the
corresponding Section of this Agreement unless the context otherwise indicates.

         IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the Effective Date.

                                    COMPANY:

                                    QUANEX CORPORATION

                                    By:
                                        ----------------------------------------
                                    Name:
                                          --------------------------------------
                                    Title:
                                           -------------------------------------

                                    EXECUTIVE:

                                    --------------------------------------------
                                    Name:
                                         ---------------------------------------

                                      -18-

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