Document:

EXHIBIT 10.3

 

 

QUANEX CORPORATION

 

DIRECTOR STOCK OPTION
AGREEMENT

 

<<Full
Name>>

Grantee

 

	
  Date of Grant:

  	
   

  	
  <<                         >>

  
	
   

  	
   

  	
   

  
	
  Total Number of Shares Relating to the Options Granted:

  	
   

  	
  <<                         >>

  
	
   

  	
   

  	
   

  
	
  Exercise
  Price per Share

  (the Exercise Price
  per Share is equal to the last per share sales price of the common stock of
  Quanex Corporation for the Date of Grant and, if the stock was not traded on
  the Date of Grant, the first trading day immediately preceding the Date of
  Grant, as reported in the New York Stock Exchange Composite Transactions)

  	
   

  	
  <<$                       >>

  
	
   

  	
   

  	
   

  
	
  Expiration Date:

  	
   

  	
  <<                         >>

  
	
   

  	
   

  	
   

  
	
  General Vesting Schedule:

  	
   

  	
  [100%
  exercisable on Date of Grant.]

   

  [3 years, with vesting in installments of 33
  1/3% on the anniversary date of the Date of Grant in each of the years                  ,
                   
  and                  .]

  [100% exercisable on the [first][second][third]
  anniversary date of the Date of Grant. 0% exercisable prior to the
  [first][second][third] anniversary of the Date of Grant.]

  

 

GRANT OF OPTION

 

1.                                      GRANT OF OPTION. Quanex Corporation, a Delaware corporation
(the “Company”), pursuant to the
Quanex Corporation 2006 Omnibus Incentive Plan (the “Plan”), hereby grants to you, the above-named Grantee,
effective as of the Date of Grant set forth above, a nonqualified stock option
to purchase the total number of shares set forth above of the Company’s common
stock, $0.50 par value per share, at the exercise price set forth above for
each share subject to this option, subject to adjustment as provided in the
Plan. The option is exercisable in installments in accordance with the Vesting
Schedule set forth above with the exercise price payable at the time of
exercise. To the extent not exercised, installments shall be cumulative and may
be exercised in whole or in part until the option terminates. The option may
not be exercised after the Expiration Date, or the applicable date following
your termination of membership on the Board of Directors of the Company
specified in this Stock Option Agreement (this “Agreement”).

 

Director

[Cliff Vesting]—[Graded Vesting]—[Immediate Vesting]

 

 

2.                                      TERMINATION OF MEMBERSHIP/CHANGE
IN CONTROL. The following
provisions will apply in the event you cease to be a member of the Board of
Directors of the Company (the “Board”),
or “a change in the ownership or effective control of the corporation” or a “change
in the ownership of a substantial portion of the assets of the corporation” (“Change in Control”) occurs before the
Expiration Date set forth in the Agreement:

 

2.1           Termination
Generally. If you cease to be a member of the Board before the Expiration
Date for any reason other than one of the reasons described in
Sections 2.2 through 2.4 below, all of your rights in the option shall
terminate and become null and void on the earlier of the Expiration Date or 90
days after the date your membership on the Board terminates. Except as specified
in Sections 2.2 through 2.4 below, the option shall not continue to vest in the
event you cease to be a member of the Board for any reason.

 

2.2           Change in Control.
If a Change in Control occurs on or before the Expiration Date, then your
rights under the option that have not then vested shall vest on the effective date
of the Change in Control. All rights in the option shall terminate and become
null and void on the earlier of the Expiration Date or three years after the
date of the Change in Control.

 

2.3           Retirement or Disability. If you cease to be a member of the Board
due to your Retirement or Disability, then your option shall continue to vest
after such termination of employment until the earlier of the Expiration Date
or three (3) years after the date you cease to be a member of the Board as a
result of Retirement or a Disability. For purposes of
this Section 2.3, the term “Retirement”
means your voluntary cessation of your membership as a director with the
Company on or after the later of (a) the date on which you attain age 70 or (b)
the date your term as a director expires if you attain age 70 during such term;
provided, that that with respect to any person who was a director on
November 1, 1996, the reference to “70 years” shall be changed to “72
years.”

 

2.4           Death. If you
cease to be a member of the Board due to your death, then your option shall
continue to vest after such termination of employment until the earlier of the Expiration
Date or three years after the date of your death. After your death, your
executors, administrators or any person or persons to whom your option may be
transferred by will or by the laws of descent and distribution, shall have the
right, at any time prior to the termination of the option to exercise the
option.

 

3.                                      CASHLESS EXERCISE. Cashless exercise, in accordance with the
terms of the Plan, shall be available to you for the shares subject to the
option.

 

4.                                      NONTRANSFERABILITY. Except as specified in this Agreement, the
option and the Agreement are not transferable or assignable by you other than
by will or the laws of descent and distribution, and shall be exercisable
during your lifetime only by you. You may transfer this option to a member or
members of your immediate family, a trust under which your immediate family
members are the only beneficiaries and a partnership of which your immediate
family members are the only partners. For this purpose, “immediate family”
means your spouse, children, stepchildren, grandchildren, parents,
grandparents, siblings (including half brothers and sisters), and individuals
who are family members by adoption. Notwithstanding any other provision of this
Agreement, such a transferee of the option granted under this Agreement may
exercise the option during your lifetime. None of the Company, its employees or
directors makes any representations or guarantees concerning the tax
consequences associated with the inclusion of this provision in this Agreement,
your transfer of the option granted under this Agreement or the transferee’s
exercise of the option. It is your sole responsibility to seek advice from your
own tax advisors concerning those tax consequences. You are entitled to rely
upon only the tax advice of his own tax advisors.

 

2

 

5.                                      CAPITAL ADJUSTMENTS AND
REORGANIZATIONS. The
existence of the option shall not affect in any way the right or power of the
Company or any company the stock of which is issued pursuant to the Agreement
to make or authorize any adjustment, recapitalization, reorganization or other
change in its capital structure or its business, engage in any merger or
consolidation, issue any debt or equity securities, dissolve or liquidate, or
sell, lease, exchange or otherwise dispose of all or any part of its assets or
business, or engage in any other corporate act or proceeding.

 

6.                                      NO RIGHTS AS A STOCKHOLDER. You shall not have any rights as a
stockholder of the Company with respect to any shares covered by the option
until the date of the issuance of such shares following exercise of the option
pursuant to this Agreement and payment for the shares.

 

7.                                      SECURITIES ACT LEGEND. If you are an officer or affiliate of the
Company under the Securities Act of 1933, you consent to the placing on any
certificate for the Shares of an appropriate legend restricting resale or other
transfer of the Shares except in accordance with such Act and all applicable
rules thereunder.

 

8.                                      LIMIT OF LIABILITY. Under no circumstances will the Company be
liable for any indirect, incidental, consequential or special damages
(including lost profits) of any form incurred by any person, whether or not
foreseeable and regardless of the form of the act in which such a claim may be
brought, with respect to the Plan.

 

9.                                      REGISTRATION. The Shares that may be issued under the Plan
are registered with the Securities and Exchange Commission under a Registration
Statement on Form S-8.

 

10.                               SALE OF SECURITIES. The Shares that may be issued under this
Agreement may not be sold or otherwise disposed of in any manner that would
constitute a violation of any applicable federal or state securities laws. You
also agree that (a) the Company may refuse to cause the transfer of the
Shares to be registered on the stock register of the Company if such proposed
transfer would in the opinion of counsel satisfactory to the Company constitute
a violation of any applicable federal or state securities law and (b) the
Company may give related instructions to the transfer agent, if any, to stop
registration of the transfer of the Shares.

 

11.                               MISCELLANEOUS. The Agreement and the option are awarded
pursuant to and is subject to all of the provisions of the Plan, which are
incorporated by reference herein, including all amendments to the Plan, if any.
In the event of a conflict between this Agreement and the Plan provisions, the
Plan provisions will control. Capitalized terms that are not defined herein
shall have the meanings ascribed to such terms in the Plan or this Agreement.

 

By your acceptance of the option, you agree that the option is granted
under, governed by and subject to the terms of the Plan and this Agreement.

 

	
   

  	
  QUANEX CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Raymond
  Jean – Chief Executive Officer

  

 

3EXHIBIT 10.4

 

 

QUANEX CORPORATION

 

EMPLOYEE RESTRICTED STOCK AWARD AGREEMENT

 

<<Full Name>>

Grantee 

 

	
  Date of Award:

  	
   

  	
  <<                         >>

  
	
   

  	
   

  	
   

  
	
  Number of Shares:

  	
   

  	
  <<                         >>

  
	
   

  	
   

  	
   

  
	
  General
  Vesting Schedule/Restriction Period:

  	
   

  	
  [3
  years, with vesting in installments of 33 1/3% on the anniversary date of the
  Date of Award in each of the years                 ,
                  
  and                   .]

   

  [100% exercisable on the [first][second][third] anniversary of the
  Date of Award. 0% exercisable prior to the [first][second][third] anniversary
  of the Date of Award.]

  

 

AWARD OF RESTRICTED
STOCK

 

1.                                      GRANT OF RESTRICTED STOCK AWARD. The Compensation Committee (the “Committee”) of the Board of Directors of
Quanex Corporation, a Delaware corporation (the “Company”), pursuant to the Quanex Corporation 2006 Omnibus
Incentive Plan (the “Plan”),
hereby awards to you, the above-named Grantee, effective as of the Date of
Award set forth above (the “Date of Award”),
that number of shares (the “Shares”)
of the Company’s common stock, $0.50 par value per share (the “Common Stock”), set forth above as
Restricted Stock on the following terms and conditions:

 

During the
Restricted Period, the Shares of Restricted Stock will be evidenced by entries
in the stock register of the Company reflecting that such Shares of Restricted
Stock have been issued in your name. For purposes of this Agreement, the term “Restricted Period” means the period
designated by the Committee during which the Shares may not be sold, assigned,
transferred, pledged, or otherwise encumbered.

 

The Shares that
are awarded hereby to you as Restricted Stock shall be subject to the
prohibitions and restrictions set forth herein with respect to the sale or
other disposition of such Shares and the obligation to forfeit and surrender
such Shares to the Company (the “Forfeiture
Restrictions”). The Restricted Period and all Forfeiture
Restrictions on the Restricted Stock covered hereby shall lapse as to those
shares when the shares become vested and you meet all other terms and
conditions of this Agreement.

 

2.                                      TERMINATION OF
EMPLOYMENT. The
following provisions will apply in the event your employment with the Company
and all Affiliates (collectively, the “Company
Group”) terminates before the third anniversary of the Date of Award
(the “Third Anniversary Date”)
under the Agreement:

 

2.1           Termination Generally. Except
as specified in Sections 2.2 or 2.3 below, if your employment with the Company
Group terminates on or before the Third Anniversary Date, the Forfeiture
Restrictions then applicable to the Shares of Restricted Stock shall not lapse
and the number of Shares of Restricted Stock then subject to the Forfeiture
Restrictions shall be forfeited to the Company on the date your employment terminates.

 

Employee

[Cliff Vesting]—[Graded
Vesting]

 

 

2.2           Disability. Notwithstanding
any other provision of this Agreement to the contrary, if you incur a
Disability before the Third Anniversary Date and while in the active employ of
one or more members of the Company Group, all remaining Forfeiture Restrictions
shall lapse on a prorated basis determined by dividing the number of days
during the period commencing on the [last anniversary vesting
date][Date of Grant] and ending on
the date of your Disability by 1095.

 

2.3           Death. Notwithstanding any
other provision of this Agreement to the contrary, if you die before the Third
Anniversary Date and while in the active employ of one or more members of the
Company Group, all remaining Forfeiture Restrictions shall lapse on a prorated
basis determined by dividing the number of days during the period commencing on
the [last anniversary vesting date][Date of Grant] and ending on the date of your death by
1095.

 

3.                                      TAX WITHHOLDING. To the extent that the receipt of the
Shares of Restricted Stock or the lapse of any Forfeiture Restrictions results
in income, wages or other compensation to you for any income, employment or
other tax purposes with respect to which the Company has a withholding
obligation, you shall deliver to the Company at the time of such receipt or
lapse, as the case may be, such amount of money as the Company may require to
meet its obligation under applicable tax laws or regulations, and, if you fail
to do so, the Company is authorized to withhold from the Shares awarded hereby
or from any cash or stock remuneration or other payment then or thereafter
payable to you any tax required to be withheld by reason of such taxable
income, wages or compensation sufficient to satisfy the withholding obligation
based on the last per share sales price of the Common Stock for the trading day
immediately preceding the date that the withholding obligation arises, as
reported in the New York Stock Exchange Composite Transactions.

 

4.                                      NONTRANSFERABILITY. This Agreement is not transferable by you
otherwise than by will or by the laws of descent and distribution. The Shares
of Restricted Stock awarded hereby may not be sold, assigned, pledged,
exchanged, hypothecated or otherwise transferred, encumbered or disposed of (other
than by will or the applicable laws of descent and distribution) to the extent
then subject to the Forfeiture Restrictions. Any such attempted sale,
assignment, pledge, exchange, hypothecation, transfer, encumbrance or
disposition in violation of this Agreement shall be void and the Company Group
shall not be bound thereby.

 

Further, the
Shares awarded hereby that are no longer subject to Forfeiture Restrictions may
not be sold or otherwise disposed of in any manner that would constitute a
violation of any applicable federal or state securities laws. You also agree
that (a) the Company may refuse to cause the transfer of the Shares to be
registered on the stock register of the Company if such proposed transfer would
in the opinion of counsel satisfactory to the Company constitute a violation of
any applicable federal or state securities law and (b) the Company may
give related instructions to the transfer agent, if any, to stop registration
of the transfer of the Shares. Upon the lapse of the Forfeiture Restrictions
with respect to Shares awarded hereby such Shares shall be transferable by you
(except to the extent that any proposed transfer would, in the opinion of
counsel satisfactory to the Company, constitute a violation of applicable
federal or state securities law).

 

5.                                      CAPITAL ADJUSTMENTS AND
REORGANIZATIONS. The
existence of the Shares of Restricted Stock shall not affect in any way the
right or power of the Company or any company the stock of which is awarded
pursuant to this Agreement to make or authorize any adjustment,
recapitalization, reorganization or other change in its capital structure or
its business, engage in any merger or consolidation, issue any debt or equity
securities, dissolve or liquidate, or sell, lease, exchange or otherwise dispose
of all or any part of its assets or business, or engage in any other corporate
act or proceeding.

 

6.                                      RIGHTS REGARDING
DISTRIBUTIONS MADE BY THE COMPANY DURING THE RESTRICTED PERIOD. During the Restricted Period,
(a) any securities of the Company distributed by the Company in respect of
the Shares of Restricted Stock will be evidenced by entries in the appropriate
securities register of the Company reflecting that such securities of the
Company, if any, have been issued in your name (the “Retained Company Securities”) and (b) any securities of
any company other than the Company or any other property (other than regular
cash dividends) distributed by the Company in respect of the Shares of
Restricted Stock will be evidenced 

 

2

 

in your name by
such certificates or in such other manner as the Company determines (the “Retained Other Securities and Property”)
and may bear a restrictive legend to the effect that ownership of such Retained
Other Securities and Property and the enjoyment of all rights appurtenant
thereto, are subject to the restrictions, terms, and conditions provided in the
Plan and this Agreement. The Retained Company Securities and the Retained Other
Securities and Property (collectively, the “Retained
Distributions”) shall be subject to the same restrictions, terms and
conditions as are applicable to the Shares of Restricted Stock.

 

7.                                      RIGHTS WITH RESPECT TO
SHARES OF RESTRICTED STOCK AND RETAINED DISTRIBUTIONS DURING RESTRICTED PERIOD. You shall have the right to vote the
Shares of Restricted Stock awarded to you and to receive and retain all regular
cash dividends (which will be paid currently and in no case later than the end
of the calendar year in which the dividends are paid to the holders of the
Common Stock or, if later, the 15th day of the third month following the date
the dividends are paid to the holders of the Common Stock), and to exercise all
other rights, powers and privileges of a holder of the Common Stock, with
respect to such Shares of Restricted Stock, with the exception that
(a) you shall not be entitled to have custody of such Shares of Restricted
Stock until the Forfeiture Restrictions applicable thereto shall have lapsed,
(b) the Company shall retain custody of all Retained Distributions made or
declared with respect to the Shares of Restricted Stock until such time, if
ever, as the Forfeiture Restrictions applicable to the Shares of Restricted
Stock with respect to which such Retained Distributions shall have been made,
paid, or declared shall have lapsed, and such Retained Distributions shall not
bear interest or be segregated in separate accounts and (c) you may not
sell, assign, transfer, pledge, exchange, encumber, or dispose of the Shares of
Restricted Stock or any Retained Distributions during the Restricted Period. During
the Restricted Period, the Company may, in its sole discretion, issue
certificates for some or all of the Shares of Restricted Stock, in which case
all such certificates shall be delivered to the Corporate Secretary of the
Company or to such other depository as may be designated by the Committee as a
depository for safekeeping until the forfeiture of such Shares of Restricted
Stock occurs or the Forfeiture Restrictions lapse. When requested by the
Company, you shall execute such stock powers or other instruments of assignment
as the Company requests relating to transfer to the Company of all or any
portion of such Shares of Restricted Stock and any Retained Distributions that
are forfeited in accordance with the Plan and this Agreement.

 

8.                                      EMPLOYMENT RELATIONSHIP.
For purposes of
this Agreement, you shall be considered to be in the employment of the Company
Group as long as you have an employment relationship with the Company Group. The
Committee shall determine any questions as to whether and when there has been a
termination of such employment relationship, and the cause of such termination,
under the Plan and the Committee’s determination shall be final and binding on
all persons.

 

9.                                      SECTION 83(B) ELECTION. You shall not exercise the election
permitted under Section 83(b) of the Code with respect to the Shares of
Restricted Stock without the written approval of the Chief Financial Officer or
General Counsel of the Company.

 

10.                               NOT AN EMPLOYMENT AGREEMENT. This Agreement is not an employment
agreement, and no provision of this Agreement shall be construed or interpreted
to create an employment relationship between you and the Company or any
Affiliate or guarantee the right to remain employed by the Company or any
Affiliate for any specified term.

 

11.                               SECURITIES ACT LEGEND. If you are an officer or affiliate of the
Company under the Securities Act of 1933, you consent to the placing on any
certificate for the Shares of an appropriate legend restricting resale or other
transfer of the Shares except in accordance with such Act and all applicable
rules thereunder.

 

12.                               REGISTRATION. The Shares that may be issued under the
Plan are registered with the Securities and Exchange Commission under a
Registration Statement on Form S-8.

 

13.                               LIMIT OF LIABILITY. Under no circumstances will the Company
or any Affiliate be liable for any indirect, incidental, consequential or
special damages (including lost profits) of any form incurred by any person,
whether or not foreseeable and regardless of the form of the act in which such
a claim may be brought, with respect to the Plan.

 

3

 

14.                               MISCELLANEOUS. This Agreement is awarded pursuant to
and is subject to all of the provisions of the Plan, including amendments to
the Plan, if any. In the event of a conflict between this Agreement and the
Plan provisions, the Plan provisions will control. The term “you” and “your”
refer to the Grantee named in the Agreement. Capitalized terms that are not
defined herein shall have the meanings ascribed to such terms in the Plan or this
Agreement.

 

In accepting the award of
Shares of Restricted Stock set forth in this Agreement you accept and agree to
be bound by all the terms and conditions of the Plan and this Agreement.

 

	
   

  	
  QUANEX CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Raymond
  Jean – Chief Executive Officer

  

 

4

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