<PAGE> 1
As filed with the Securities and Exchange Commission on November 4, 1998
Registration No. 333-
---------
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
QUANEX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-1872178
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1900 West Loop South, Suite 1500 77027
Houston, Texas (Zip Code)
(Address of Principal Executive Offices)
Quanex Corporation 1997 Key Employee Stock Option Plan
Quanex Corporation 1997 Non-Employee Director Stock Option Plan
(Full title of the plan)
WAYNE M. ROSE
QUANEX CORPORATION
1900 WEST LOOP SOUTH, SUITE 1500
HOUSTON, TEXAS 77027
(Name and address of agent for service)
(713) 961-4600
(Telephone number, including area code, of agent for service)
Copies to:
HARVA R. DOCKERY, ESQ.
FULBRIGHT & JAWORSKI L.L.P.
1301 MCKINNEY, SUITE 5100
HOUSTON, TEXAS 77010-3095
(713) 651-5151
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
Proposed maximum Proposed maximum
Amount to be offering price aggregate offering Amount of
Title of securities to be registered registered per share(2) price(2) registration fee
<S> <C> <C> <C> <C>
Common Stock, $.50 par value................ 650,000(1) $16.91 $10,991,500 $3,056
------- ----------- ------
- -----------------------------------------------------------------------------------------------------------------------------------
Rights to Purchase shares of Series A
Junior Participating Preferred Stock ....... 650,000(1)
===================================================================================================================================
</TABLE>
(1) Includes 250,000 shares of Common Stock and accompanying Rights
reserved for, or issued pursuant to the Quanex Corporation 1997 Key
Employee Stock Option Plan (the "Key Employee Plan"), and 400,000
shares of Common Stock and accompanying Rights reserved for issuance
pursuant to the Quanex Corporation 1997 Non-Employee Director Stock
Option Plan (the "Director Plan"). Also includes an indeterminable
number of shares of Common Stock and accompanying Rights issuable as a
result of the anti-dilution provisions of the Key Employee Plan and the
Director Plan.
(2) Pursuant to Rule 457(h), the proposed maximum offering price is
estimated, solely for the purpose of determining the registration fee,
on the basis of the average high and low prices of the Common Stock on
the Nasdaq National Market on October 29, 1998.
================================================================================
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. Incorporation of Documents by Reference.
Quanex Corporation, a Delaware corporation (the "Company" or
"Registrant"), incorporates by reference in this Registration Statement the
following documents:
(a) The Registrant's Annual Report on Form 10-K for
the fiscal year ended October 31, 1997;
(b) The Registrant's Quarterly Reports on Form 10-Q
for the quarters ended January 31, 1998, and April 30, 1998
and July 31, 1998;
(c) The Registrant's current reports on Form 8-K
filed December 3, 1997 and December 17, 1997;
(d) All other reports filed by the Registrant
pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), since October
31, 1997;
(e) The description of the Registrant's common
stock, $.50 par value (the "Common Stock"), contained in the
Prospectus dated January 12, 1981, included in the
Registrant's Registration Statement (Registration No.
2-70313) and filed with the Securities and Exchange
Commission pursuant to Rule 424(b) of the Securities Act of
1933; and
(f) The description of the rights to purchase Series
A Junior Participating Preferred Stock (the "Rights") set
forth in the Amended and Restated Certificate of Designation,
Preferences and Rights, filed as Exhibit 1 to Amendment No.1
to the Registrant's Form 8-A dated April 28, 1989.
All documents subsequently filed by the Registrant pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after November 4,
1998 and before the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all securities then
remaining unsold, are incorporated by reference in, and constitute a part of,
the Registration Statement from the date such documents are filed.
The language in this Registration Statement modifies and
supersedes the language in any previously fled document that is incorporated by
reference in this Registration Statement. The language in any document that is
filed after November 4, 1998 that is incorporated by reference in this
Registration Statement modifies and supersedes the language in this
Registration Statement. However, such language constitutes a part of this
Registration Statement only to the extent that it modifies and supersedes this
Registration Statement.
ITEM 4. Description of Securities.
Not applicable.
ITEM 5. Interests of Named Experts and Counsel.
Not applicable.
ITEM 6. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of
Delaware provides that a corporation has the power to indemnify a director,
officer, employee or agent of the
2
<PAGE> 3
corporation and certain other persons serving at the request of the corporation
in related capacities against amounts paid and expenses incurred in connection
with an action or proceeding to which he is, or is threatened to be made, a
party by reason of such position, if such person shall have acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, in any criminal proceeding, if such person
had no reasonable cause to believe his conduct was unlawful; provided that, in
the case of actions brought by or in the right of the corporation, no
indemnification shall be made with respect to any matter as to which such
person shall have been adjudged to be liable to the corporation unless and only
to the extent that the adjudicating court determines that such indemnification
is proper under the circumstances.
The Registrant's Restated Certificate of Incorporation
eliminates the personal monetary liability of a director to the Registrant and
its stockholders for breach of his fiduciary duty of care as a director to the
extent currently allowed under the Delaware General Corporation Law. Article
XVII of the Registrant's Restated Certificate of Incorporation provides that a
director of the Registrant shall not be personally liable to the Registrant or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Registrant or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) based on the payment of an improper dividend or an improper
repurchase of the Registrant's stock under Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any transaction from
which the director derived an improper personal benefit.
The Amended and Restated Bylaws of the Registrant provide
that, under certain circumstances, the Registrant is required to indemnify any
person who was, is, or is threatened to be made a party in any action, suit or
proceeding because such person is or was a director or officer of the
Registrant. The Registrant's Amended and Restated Bylaws were amended in
February 1987 to provide for indemnification by the Registrant of its officers
and directors to the fullest extent authorized by the General Corporation Law
of the State of Delaware. This right to indemnification under the Registrant's
Amended and Restated Bylaws is a contract right, and requires the Registrant to
provide for the payment of expenses in advance of the final disposition of any
suit or proceeding brought against the director or officer of the Registrant in
his official capacity as such, provided that such director or officer delivers
to the Registrant an undertaking to repay any amounts advanced if it is
ultimately determined that such director or officer is not entitled to
indemnification. The Registrant also maintains a directors' and officers'
liability insurance policy.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been informed that in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
ITEM 7. Exemption from Registration Claimed.
Not applicable.
ITEM 8. Exhibits.
4.1 Restated Certificate of Incorporation of the Registrant, as
amended on February 27, 1997, filed as Exhibit 4.1 to the
Registrant's Registration Statement on Form S-8, Registration
No. 333-22977, and incorporated herein by reference.
4.2 Amended and Restated Bylaws of the Registrant, as amended
through December 12, 1996, filed as Exhibit 3.2 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended October 31, 1996, and incorporated herein by reference.
3
<PAGE> 4
4.3 Form of Registrant's Common Stock certificate, filed as
Exhibit 4.1 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended April 30, 1987, and incorporated herein
by reference.
4.4 Amended and Restated Rights Agreement between the Registrant
and Manufacturers Hanover Trust Company, as Rights Agent,
filed as Exhibit 1 to Amendment No. 1 to the Registrant's
Form 8-A dated April 28, 1989, and incorporated herein by
reference.
4.5 Amended and Restated Certificate of Designation, Preferences
and Rights of the Registrant's Series A Junior Participating
Preferred Stock, filed as Exhibit 1 to Amendment No. 1 to the
Registrant's Form 8-A dated April 28, 1989, and incorporated
herein by reference.
4.6 Form of Indenture relating to the Registrant's 6.88%
Cumulative Subordinated Debentures due 2007 between the
Registrant and Chemical Bank, as Trustee, filed as Exhibit
19.2 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended April 30, 1992, and incorporated herein by
reference.
4.7 $250,000,000 Revolving Credit and Term Loan Agreement dated
as of July 23, 1996, among the Registrant, Comerica Bank, as
Agent, and Harris Trust and Savings Bank and Wells Fargo Bank
(Texas), N.A., as Co-Agents, filed as Exhibit 4.1 to the
Registrant's Report on Form 8-K, dated August 9, 1996, and
incorporated herein by reference.
4.8 Quanex Corporation 1997 Key Employee Stock Option Plan.
4.9 Quanex Corporation 1997 Non-Employee Director Stock Option
Plan.
5.1 Opinion of Fulbright & Jaworski L.L.P.
23.1 Consent of Deloitte & Touche LLP.
24.1 Powers of Attorney (contained on pages 6 and 7 hereof).
As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the
Registrant has not filed with this Registration Statement certain instruments
defining the rights of holders of long-term debt of the Registrant and its
subsidiaries because the total amount of securities authorized under any of
such instruments does not exceed 10% of the total assets of the Registrant and
its subsidiaries on a consolidated basis. The Registrant agrees to furnish a
copy of any such agreements to the Securities and Exchange Commission upon
request.
ITEM 9. Undertakings.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1993, as
amended (the "Securities Act");
(ii) To reflect in the prospectus any facts
or events arising after the effective date of this
Registration Statement (or the most recent
post-effective amendment hereof) which, individually
or in the aggregate, represent a fundamental change
in the information set forth in this Registration
Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered
(if the total dollar volume of securities offered
would not exceed that which was registered) and any
deviation from the high or low end of the estimated
maximum offering
4
<PAGE> 5
range may be reflected in the form of prospectus
filed with the Securities and Exchange Commission
pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a
20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information
with respect to the plan of distribution not
previously disclosed in this Registration Statement
or any material change to such information in this
Registration Statement;
Provided, however, that paragraphs (i) and (ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section
13 or 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
B. The undersigned Registrant hereby undertakes that, for the
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference into this Registration Statement shall be deemed to
be a new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
5
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, on the 22nd day of
October, 1998.
QUANEX CORPORATION
By /s/ Vernon E. Oechsle
---------------------------------------------
Vernon E. Oechsle
Director, President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
In addition, KNOW ALL MEN BY THESE PRESENTS, that each person
whose signature appears below constitutes and appoints Robert C. Snyder, Vernon
E. Oechsle and Wayne M. Rose, and each of them, either one of whom may act
without joinder of the other, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, and each
of them, or the substitute or substitutes of any or all of them, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
========================================= ======================================= ================================
<S> <C> <C>
/s/ Robert C. Snyder Director and October 22, 1998
- ----------------------------------------- Chairman of the Board
Robert C. Snyder
/s/ Vernon E. Oschsle Director, President and
- ----------------------------------------- Chief Executive Officer October 22, 1998
Vernon E. Oechsle (Principal Execute Officer)
/s/ James H. Davis Executive Vice President and
- ----------------------------------------- Chief Operating Officer October 22, 1998
James H. Davis (Principal Operating Officer)
/s/ Donald G. Barger, Jr. Director October 22, 1998
- -----------------------------------------
Donald G. Barger, Jr.
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Susan F. Davis Director October 22, 1998
- -----------------------------------------
Susan F. Davis
/s/ Russell M. Flaum Director October 22, 1998
- -----------------------------------------
Russell M. Flaum
/s/ Carl E. Pfeiffer Director October 22, 1998
- -----------------------------------------
Carl E. Pfeiffer
/s/ Gerald B. Haeckel Director October 22, 1998
- -----------------------------------------
Gerald B. Haeckel
/s/ John D. O'Connell Director October 22, 1998
- -----------------------------------------
John D. O'Connell
/s/ Vincent R. Scorsone Director October 22, 1998
- -----------------------------------------
Vincent R. Scorsone
/s/ Michael J. Sebastian Director October 22, 1998
- -----------------------------------------
Michael J. Sebastian
Vice President - Finance and
/s/ Wayne M. Rose Chief Financial Officer October 22, 1998
- ----------------------------------------- (Principal Financial Officer)
Wayne M. Rose
/s/ Viren M. Parikh Controller October 22, 1998
- ----------------------------------------- (Principal Accounting Officer)
Viren M. Parikh
</TABLE>
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<PAGE> 8
EXHIBIT INDEX
4.1 Restated Certificate of Incorporation of the Registrant, as
amended on February 27, 1997, filed as Exhibit 4.1 to the
Registrant's Registration Statement on Form S-8, Registration
No. 333-22977, and incorporated herein by reference.
4.2 Amended and Restated Bylaws of the Registrant, as amended
through December 12, 1996, filed as Exhibit 3.2 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended October 31, 1996, and incorporated herein by reference.
4.3 Form of Registrant's Common Stock certificate, filed as
Exhibit 4.1 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended April 30, 1987, and incorporated herein
by reference.
4.4 Amended and Restated Rights Agreement between the Registrant
and Manufacturers Hanover Trust Company, as Rights Agent,
filed as Exhibit 1 to Amendment No. 1 to the Registrant's
Form 8-A dated April 28, 1989, and incorporated herein by
reference.
4.5 Amended and Restated Certificate of Designation, Preferences
and Rights of the Registrant's Series A Junior Participating
Preferred Stock, filed as Exhibit 1 to Amendment No. 1 to the
Registrant's Form 8-A dated April 28, 1989, and incorporated
herein by reference.
4.6 Form of Indenture relating to the Registrant's 6.88%
Cumulative Subordinated Debentures due 2007 between the
Registrant and Chemical Bank, as Trustee, filed as Exhibit
19.2 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended April 30, 1992, and incorporated herein by
reference.
4.7 $250,000,000 Revolving Credit and Term Loan Agreement dated
as of July 23, 1996, among the Registrant, Comerica Bank, as
Agent, and Harris Trust and Savings Bank and Wells Fargo Bank
(Texas), N.A., as Co-Agents, filed as Exhibit 4.1 to the
Registrant's Report on Form 8-K, dated August 9, 1996, and
incorporated herein by reference.
4.8 Quanex Corporation 1997 Key Employee Stock Option Plan.
4.9 Quanex Corporation 1997 Non-Employee Director Stock Option
Plan.
5.1 Opinion of Fulbright & Jaworski L.L.P.
23.1 Consent of Deloitte & Touche LLP.
24.1 Powers of Attorney (contained on pages 6 and 7 hereof).
As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the
Registrant has not filed with this Registration Statement certain instruments
defining the rights of holders of long-term debt of the Registrant and its
subsidiaries because the total amount of securities authorized under any of
such instruments does not exceed 10% of the total assets of the Registrant and
its subsidiaries on a consolidated basis. The Registrant agrees to furnish a
copy of any such agreements to the Securities and Exchange Commission upon
request.
8
<PAGE> 1
EXHIBIT 4.8
QUANEX CORPORATION
1997 KEY EMPLOYEE STOCK OPTION PLAN
<PAGE> 2
QUANEX CORPORATION
1997 KEY EMPLOYEE STOCK OPTION PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section
ARTICLE I - PLAN -------
<S> <C>
Purpose..................................................................................................1.1
Effective Date of Plan...................................................................................1.2
ARTICLE II - DEFINITIONS
Affiliate................................................................................................2.1
Board of Directors.......................................................................................2.2
Code.....................................................................................................2.3
Committee................................................................................................2.4
Company..................................................................................................2.5
Disability .......................................................................................2.6
Employee.................................................................................................2.7
Fair Market Value........................................................................................2.8
Option...................................................................................................2.9
Option Agreement........................................................................................2.10
Optionee................................................................................................2.11
Plan....................................................................................................2.12
Retire or Retirement....................................................................................2.13
Stock...................................................................................................2.14
ARTICLE III - ELIGIBILITY
ARTICLE IV - GENERAL PROVISIONS RELATING TO ALL OPTIONS
Authority to Grant Options ..............................................................................4.1
Dedicated Shares.........................................................................................4.2
Non-Transferability......................................................................................4.3
Requirements of Law......................................................................................4.4
Changes in the Company's Capital Structure...............................................................4.5
No Rights as Stockholder.................................................................................4.6
Written Agreement........................................................................................4.7
Forfeiture for Cause.....................................................................................4.8
ARTICLE V - VARIABLE PROVISIONS RELATING TO SPECIFIC OPTIONS
Option Price.............................................................................................5.1
Duration of Options......................................................................................5.2
Amount Exercisable.......................................................................................5.3
Exercise of Options......................................................................................5.4
Substitution Options.....................................................................................5.5
ARTICLE VI - ADMINISTRATION
ARTICLE VII - AMENDMENT OR TERMINATION OF PLAN
ARTICLE VIII - MISCELLANEOUS
No Employment Obligation.................................................................................8.1
</TABLE>
ii
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
Tax Withholding..........................................................................................8.2
Indemnification of the Committee and the Board of Directors..............................................8.3
Gender...................................................................................................8.4
Headings.................................................................................................8.5
Other Compensation Plans.................................................................................8.6
Other Options............................................................................................8.7
Arbitration of Disputes..................................................................................8.8
Governing Law............................................................................................8.9
</TABLE>
iii
<PAGE> 4
ARTICLE I
PLAN
1.1 PURPOSE. This Plan is a plan for key employees of the Company and
its Affiliates and is intended to advance the best interests of the Company,
its Affiliates, and its stockholders by providing those persons who are not
officers but have substantial responsibility for the management and growth of
the Company and its Affiliates with additional incentives and an opportunity to
obtain or increase their proprietary interest in the Company, thereby
encouraging them to continue in the employ of the Company or any of its
Affiliates.
1.2 EFFECTIVE DATE OF PLAN. This Plan is effective October 21, 1997.
I-1
<PAGE> 5
ARTICLE II
DEFINITIONS
The words and phrases defined in this Article shall have the meaning
set out in these definitions throughout this Plan, unless the context in which
any such word or phrase appears reasonably requires a broader, narrower, or
different meaning.
2.1 "AFFILIATE" means any parent corporation and any subsidiary
corporation. The term "parent corporation" means any corporation (other than
the Company) in an unbroken chain of corporations ending with the Company if,
at the time of the action or transaction, each of the corporations other than
the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.
The term "subsidiary corporation" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if, at
the time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in the chain.
2.2 "BOARD OF DIRECTORS" means the board of directors of the Company.
2.3 "CODE" means the Internal Revenue Code of 1986, as amended.
2.4 "COMMITTEE" means the committee designated by the Board of
Directors.
2.5 "COMPANY" means Quanex Corporation, a Delaware corporation.
2.6 "DISABILITY" means a mental or physical disability which, in the
opinion of a physician selected by the Committee, shall prevent the Employee
from earning a reasonable livelihood with the Company or any Affiliate and
which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than 12 months and which: (a) was
not contracted, suffered or incurred while the Employee was engaged in, or did
not result from having engaged in, a felonious criminal enterprise; (b) did not
result from alcoholism or addiction to narcotics; and (c) did not result from
an injury incurred while a member of the Armed Forces of the United States for
which the Employee receives a military pension.
2.7 "EMPLOYEE" means a person employed by the Company or any
Affiliate.
2.8 "FAIR MARKET VALUE" of the Stock as of any date means (a) the
closing sale price of the Stock on that date (or, if there was no sale on such
date, the next preceding date on which there was such a sale) on the principal
securities exchange on which the Stock is listed; or (b) if the Stock is not
listed on a securities exchange, an amount as determined by the Committee in
its sole discretion.
2.9 "OPTION" means a nonqualified option granted under this Plan to
purchase shares of Stock.
2.10 "OPTION AGREEMENT" means the written agreement which sets out the
terms of an Option.
2.11 "OPTIONEE" means a person who is granted an Option under this
Plan.
2.12 "PLAN" means the Quanex Corporation 1997 Key Employee Stock
Option Plan, as set out in this document and as it may be amended from time to
time.
II-1
<PAGE> 6
2.13 "RETIRE" or "RETIREMENT" means retirement in accordance with the
terms of a retirement plan that is qualified under Section 401(a) of the Code
and maintained by the Company or an Affiliate in which the employee is a
participant.
2.14 "STOCK" means the common stock of the Company, $.50 par value. In
addition, for purposes of the Plan and the Options, the term Stock shall be
deemed to include any rights to purchase the Series A Junior Participating
Preferred Stock of the Company that may then be trading with the Stock as
provided in the Rights Agreement between the Company and Chemical Bank.
II-2
<PAGE> 7
ARTICLE III
ELIGIBILITY
The individuals who shall be eligible to receive Options shall be
those key Employees, who are not officers of the Company or an Affiliate, as
the Committee shall determine from time to time.
III-1
<PAGE> 8
ARTICLE IV
GENERAL PROVISIONS RELATING TO OPTIONS
4.1 AUTHORITY TO GRANT OPTIONS. The Committee may grant Options to
those individuals as it shall from time to time determine under the terms and
conditions of this Plan. Subject only to any applicable limitations set out in
this Plan, the number of shares of Stock to be covered by any Option shall be
as determined by the Committee.
4.2 DEDICATED SHARES. The total number of shares of Stock with respect
to which Options may be granted under the Plan shall be 250,000 shares. The
shares may be treasury shares or authorized but unissued shares. The number of
shares stated in this Section 4.2 shall be subject to adjustment in accordance
with the provisions of Section 4.5. If any outstanding Option expires or
terminates for any reason or any Option is surrendered, the shares of Stock
allocable to the unexercised portion of that Option may again be subject to an
Option under the Plan.
4.3 NON-TRANSFERABILITY. Except as expressly provided otherwise in an
Optionee's Option Agreement, Options shall not be transferable by the Optionee
otherwise than by will or under the laws of descent and distribution, and shall
be exercisable, during the Optionee's lifetime, only by him.
4.4 REQUIREMENTS OF LAW. The Company shall not be required to sell or
issue any Stock under any Option if issuing that Stock would constitute or
result in a violation by the Optionee or the Company of any provision of any
law, statute, or regulation of any governmental authority. Specifically, in
connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of any Option, the Company shall not
be required to issue any Stock unless the Committee has received evidence
satisfactory to it to the effect that the holder of that Option will not
transfer the Stock except in accordance with applicable law, including receipt
of an opinion of counsel satisfactory to the Company to the effect that any
proposed transfer complies with applicable law. The determination by the
Committee on this matter shall be final, binding and conclusive. The Company
may, but shall in no event be obligated to, register any Stock covered by this
Plan pursuant to applicable securities laws of any country or any political
subdivision. In the event the Stock issuable on exercise of an Option is not
registered, the Company may imprint on the certificate evidencing the Stock any
legend that counsel for the Company considers necessary or advisable to comply
with applicable law. The Company shall not be obligated to take any other
affirmative action in order to cause the exercise of an Option and the issuance
of shares thereunder, to comply with any law or regulation of any governmental
authority.
4.5 CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. If the Company shall
effect a subdivision or consolidation of shares or other capital adjustment of,
or the payment of a dividend in capital stock or other equity securities of the
Company on, its Common Stock, or other increase or reduction of the number of
shares of the Common Stock outstanding without receiving consideration therefor
in money, services, or property, or the reclassification of its Stock, in whole
or in part, into other equity securities of the Company, then (a) the number,
class and per share price of shares of Stock subject to outstanding Options
hereunder shall be appropriately adjusted (or in the case of the issuance of
other equity securities as a dividend on, or in a reclassification of, the
Stock, the Options shall extend to such other securities) in such a manner as
to entitle an Optionee to receive, upon exercise of an Option, for the same
aggregate cash compensation, the same total number and class or classes of
shares (or in the case of a dividend of, or reclassification into, other equity
securities, such other securities) he would have held after such adjustment if
he had exercised his Option in full immediately prior to the event requiring
the adjustment, or, if applicable, the record date for determining stockholders
to be affected by such adjustment; and (b) the number and class of shares then
reserved for issuance under the Plan (or in the case of a dividend of, or
reclassification into, other equity securities, such other securities) shall be
adjusted by substituting for the total number and class of shares of Stock then
received, the number and class or classes of shares of Stock (or in the case of
a dividend on, or reclassification into, other equity securities, such other
securities) that would have been received by the owner of an equal number of
outstanding
IV-1
<PAGE> 9
shares of Stock as the result of the event requiring the adjustment. Comparable
rights shall accrue to each Optionee in the event of successive subdivisions,
consolidations, capital adjustment, dividends or reclassifications of the
character described above.
If the Company shall distribute to all holders of its shares of Stock
(including any such distribution made to non-dissenting stockholders in
connection with a consolidation or merger in which the Company is the surviving
corporation and in which holders of shares of Stock continue to hold shares of
Stock after such merger or consolidation) evidences of indebtedness or cash or
other assets (other than cash dividends payable out of consolidated retained
earnings not in excess of, in any one year period, the greater of (a) $1.00 per
share of Stock or (b) two times the aggregate amount of dividends per share
paid during the preceding calendar year and dividends or distributions payable
in shares of Stock or other equity securities of the Company described in the
immediately preceding paragraph), then in each case the Optionee's exercise
price specified in his Option Agreement ("Exercise Price") shall be adjusted by
reducing the Option Price in effect immediately prior to the record date for
the determination of stockholders entitled to receive such distribution by an
amount equal to the Fair Market Value, as determined in good faith by the Board
of Directors (whose determination shall be described in a statement filed in
the Company's corporate records and be available for inspection by any holder
of an Option) of the portion of the evidence of indebtedness or cash or other
assets so to be distributed applicable to one share of Stock; provided that in
no event shall the Option Price be less than the par value of a share of Stock.
Such adjustment shall be made whenever any such distribution is made, and shall
become effective on the date of the distribution retroactive to the record date
for the determination of the stockholders entitled to receive such
distribution. Comparable adjustments shall be made in the event of successive
transactions of the character described above.
If the Company shall make a tender offer for, or grant to all of its
holders of its shares of Stock the right to require the Company or any
subsidiary of the Company to acquire from such stockholders shares of Stock, at
a price in excess of the Current Market Price (a "Put Right") or the Company
shall grant to all of its holders for its shares of Stock the right to acquire
shares of Stock for less than the Current Market Price (a "Purchase Right"),
then, in the case of a Put Right, the Option Price shall be adjusted by
multiplying the Option Price in effect immediately prior to the record date for
the determination of stockholders entitled to receive such Put Right by a
fraction, the numerator of which shall be the number of shares of Stock then
outstanding minus the number of shares of Stock which could be purchased at the
Current Market Price for the aggregate amount which would be paid if all Put
Rights are exercised and the denominator of which is the number of shares of
Stock which would be outstanding if all Put Rights are exercised; and, in the
case of a Purchase Right, the Option Price shall be adjusted by multiplying the
Option Price in effect immediately prior to the record date for the
determination of the stockholders entitled to receive such Purchase Right by a
fraction, the numerator of which shall be the number of shares of Stock then
outstanding plus the number of shares of Stock which could be purchased at the
Current Market Price for the aggregate amount which would be paid if all
Purchase Rights are exercised and the denominator of which is the number of
shares of Stock which would be outstanding if all Purchase Rights are
exercised. In addition, the number of shares subject to the Option shall be
increased by multiplying the number of shares then subject to the Option by a
fraction which is the inverse of the fraction used to adjust the Option Price.
Notwithstanding the foregoing, if any such Put Rights or Purchase Rights shall
terminate without being exercised, the Option Price and number of shares
subject to the Option shall be appropriately readjusted to reflect the Option
Price and number of shares subject to the Option which would have been in
effect if such unexercised Rights had never existed. Comparable adjustments
shall be made in the event of successive transactions of the character
described above.
After the merger of one or more corporations into the Company, after
any consolidation of the Company and one or more corporations, or after any
other corporate transaction described in Section 424(a) of the Code in which
the Company shall be the surviving corporation, each Optionee, at no additional
cost, shall be entitled to receive, upon any exercise of his Option, in lieu of
the number of shares as to which the Option shall then be so exercised, the
number and class of shares of stock or other equity securities to which the
Optionee would have been entitled pursuant to the
IV-2
<PAGE> 10
terms of the agreement of merger or consolidation if at the time of such merger
or consolidation such Optionee had been a holder of a number of shares of Stock
equal to the number of shares as to which the Option shall then be so exercised
and, if as a result of such merger, consolidation or other transaction, the
holders of Stock are not entitled to receive any shares of Stock pursuant to
the terms thereof, each Optionee, at no additional cost shall be entitled to
receive, upon exercise of his Option, such other assets and property, including
cash to which he would have been entitled if at the time of such merger,
consolidation or other transaction he had been the holder of the number of
shares of Stock equal to the number of shares as to which the Option shall then
be so exercised. Comparable rights shall accrue to each Optionee in the event
of successive mergers or consolidations of the character described above.
After a merger of the Company into one or more corporations, after a
consolidation of the Company and one or more corporations, or after any other
corporate transaction described in Section 424(a) of the Code in which the
Company is not the surviving corporation, each Optionee shall, at no additional
cost, be entitled at the option of the surviving corporation (i) to have his
then existing Option assumed or have a new option substituted for the existing
Option by the surviving corporation to the transaction which is then employing
him, or a parent or subsidiary of such corporation, on a basis where the excess
of the aggregate fair market value of the shares subject to the Option
immediately after the substitution or assumption over the aggregate Option
Price of such option is equal to the excess of the aggregate fair market value
of all shares subject to the option immediately before such substitution or
assumption over the aggregate Option Price of such shares, provided that the
shares subject to the new option must be traded on the New York or American
Stock Exchange or quoted on the National Association of Securities Dealers
Automated Quotation System, or (ii) to receive, upon any exercise of his
Option, in lieu of the number of shares as to which the Option shall then be so
exercised, the securities, property and other assets, including cash, to which
the Optionee would have been entitled pursuant to the terms of the agreement of
merger or consolidation or the agreement giving rise to the other corporate
transaction if at the time of such merger, consolidation or other transaction
such Optionee had been the holder of the number of shares of Stock equal to the
number of shares as to which the Option shall then be so exercised.
If a corporate transaction described in Section 424(a) of the Code
which involves the Company is to take place and there is to be no surviving
corporation while an Option remains in whole or in part unexercised, it shall
be canceled by the Board of Directors as of the effective date of any such
corporate transaction but before that date each Optionee shall be provided with
a notice of such cancellation and shall have the right to exercise such Option
in full (without regard to any vesting limitations set forth in, or imposed
pursuant to, preceding provisions of this Plan or the Option Agreement) to the
extent it is then still unexercised during a 30-day period preceding the
effective date of such corporate transaction.
For purposes of this Section, Current Market Price per share of Stock
shall mean the last reported price for the Stock in the New York Stock Exchange
- -- Composite Transaction listing on the trading day immediately preceding the
first trading day on which, as a result of the establishment of a record date
or otherwise, the trading price reflects that an acquirer of Stock in the
public market will not participate in or receive the payment of any applicable
dividend or distribution; provided, however, that if there is no closing price
for the stock as so reported on that date or if, in the discretion of the
Committee, another means of determining the fair value of the shares of stock
at such date shall be necessary or advisable, the Committee may provide for
another means for determining the Current Market Price of the Stock.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Stock then
subject to outstanding Options.
IV-3
<PAGE> 11
4.6 NO RIGHTS AS STOCKHOLDER. No Optionee shall have any rights as a
stockholder with respect to Stock covered by his Option until the date a stock
certificate is issued for the Stock.
4.7 WRITTEN AGREEMENT. Each Option shall be embodied in a written
Option Agreement which shall be subject to the terms and conditions of this
Plan and shall be signed by the Optionee and by a member of the Committee on
behalf of the Committee and the Company. Each Option Agreement shall state that
the Option embodied therein is not intended to satisfy the requirements of
section 422 of the Code. The Option Agreement may contain any other provisions
that the Committee in its discretion shall deem advisable which are not
inconsistent with the terms of this Plan.
4.8 FORFEITURE FOR CAUSE. Notwithstanding any other provision of this
Plan, if the Committee finds by a majority vote, that the Optionee, before or
after termination of his employment with the Company or any Affiliate (a)
committed a fraud, embezzlement, theft, felony or an act of dishonesty in the
course of his employment by the Company which conduct damaged the Company or
(b) disclosed trade secrets of the Company, then any outstanding options which
have not been exercised by the individual and any Options which have not yet
vested will be forfeited. The decision of the Committee as to the cause of an
Optionee discharge, the damage done to the Company and the extent of the
individual's competitive activity will be final. No decision of the Committee,
however, will affect the finality of the discharge of the individual by the
Company.
IV-4
<PAGE> 12
ARTICLE V
VARIABLE PROVISIONS RELATING TO SPECIFIC OPTIONS
5.1 OPTION PRICE. The price at which Stock may be purchased under an
Option shall not be less than the greater of: (a) 100% of the Fair Market Value
of the shares of Stock on the date the Option is granted or (b) the aggregate
par value of the shares of Stock on the date the Option is granted.
5.2 DURATION OF OPTIONS. No Option shall be exercisable after 10 years
from the date the Option is granted. An Option may terminate prior to the
normal expiration date as specified below.
(a) General Rule for Severance of Employment. Except as may
be otherwise expressly provided herein, all Options shall terminate on
the earlier of the date of the expiration of the Option or one day
less than three months after the date of the severance of the
employment relationship between the Company and all Affiliates and the
Optionee, whether with or without cause, for any reason other than the
death, Disability or, Retirement of the Optionee, during which period
the Optionee shall be entitled to exercise the Option in respect of
the number of shares that the Optionee would have been entitled to
purchase had the Optionee exercised the Option on the date of such
severance of employment. Whether authorized leave of absence, or
absence on military or government service shall constitute severance
of the employment relationship between the Company and all Affiliates
and the Optionee, shall be determined by the Committee at the time
thereof.
(b) Death, Disability or Retirement of Optionee. In the event
of the death, Disability, or Retirement of an Optionee, before the
date of expiration of such Option, such Option shall continue fully in
effect, including provisions providing for subsequent vesting of such
Option, and shall terminate on the date of expiration of the Option.
After the death of the Optionee, his executors, administrators or any
person or persons to whom his 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, in
respect to the number of shares that the Optionee would have been
entitled to exercise if he were still alive.
Notwithstanding the foregoing provisions of this Section, the
Committee may provide for a different option termination date in the Option
Agreement with respect to any Option.
5.3 AMOUNT EXERCISABLE. Each Option may be exercised from time to
time, in whole or in part, in the manner and subject to the conditions the
Committee, in its sole discretion, may provide in the Option Agreement, as long
as the Option is valid and outstanding. The usual form of agreement granting an
Option shall, subject to any limitation on exercise contained in the Agreement
which is not inconsistent with this Plan, contain the following terms of
exercise:
(a) No Option granted under this Plan may be exercised until
an Optionee has completed one year of continuous employment with the
Company or any Affiliate following the date of grant;
(b) Beginning on the day after the first anniversary of the
date of grant, an Option may be exercised up to 1/3 of the shares
subject to the Option;
(c) After the expiration of each succeeding anniversary date
of the date of grant, the Option may be exercised up to an additional
1/3 of the shares subject to the Option, so that after the expiration
of the third anniversary of the date of grant, the Option shall be
exercisable in full; and
V-1
<PAGE> 13
(d) To the extent not exercised, installments shall be
cumulative and may be exercised in whole or in part until the Option
expires on the tenth anniversary of the date of the grant.
The Committee, in its discretion, may accelerate the time in which any
outstanding Option may be exercised. However, in no event shall any Option be
exercisable after the tenth anniversary of the date of the grant.
5.4 EXERCISE OF OPTIONS. Each Option shall be exercised by the
delivery of written notice to the Committee setting forth the number of shares
of Stock with respect to which the Option is to be exercised, together with:
(a) cash, check, bank draft, or postal or express money order payable to the
order of the Company for an amount equal to the option price of the shares, or
(b) Stock at its Fair Market Value on the date of exercise, and/or any other
form of payment which is acceptable to the Committee, and specifying the
address to which the certificates for the shares are to be mailed. Subject to
Section 4.4, as promptly as practicable after receipt of written notification
and payment, the Company shall deliver to the Optionee certificates for the
number of shares with respect to which the Option has been exercised, issued in
the Optionee's name. If shares of Stock are used in payment of the exercise
price, the aggregate Fair Market Value of the shares of Stock tendered must be
equal to or less than the aggregate exercise price of the shares being
purchased upon exercise of the Option, and any difference must be paid by cash,
check, bank draft, or postal or express money order payable to the Company.
Delivery of the shares shall be deemed effected for all purposes when a stock
transfer agent of the Company shall have deposited the certificates in the
United States mail, addressed to the Optionee, at the address specified by the
Optionee.
Whenever an Option is exercised by exchanging shares of Stock owned by
the Optionee, the Optionee shall deliver to the Company certificates registered
in the name of the Optionee representing a number of shares of Stock legally
and beneficially owned by the Optionee, free of all liens, claims, and
encumbrances of every kind, accompanied by stock powers duly endorsed in blank
by the record holder of the shares represented by the certificates, (with
signature guaranteed by a commercial bank or trust company or by a brokerage
firm having a membership on a registered national stock exchange). The delivery
of certificates upon the exercise of Option is subject to the condition that
the person exercising the Option provide the Company with the information the
Company might reasonably request pertaining to exercise, sale or other
disposition of an Option.
5.5 SUBSTITUTION OPTIONS. Options may be granted under this Plan from
time to time in substitution for stock options held by employees of other
corporations who are about to become employees of or affiliated with the
Company or any Affiliate as the result of a merger or consolidation of the
employing corporation with the Company or any Affiliate, or the acquisition by
the Company or any Affiliate of the assets of the employing corporation, or the
acquisition by the Company or any Affiliate of stock of the employing
corporation as the result of which it becomes an Affiliate of the Company. The
terms and conditions of the substitute Options granted may vary from the terms
and conditions set out in this Plan to the extent the Committee, at the time of
grant, may deem appropriate to conform, in whole or in part, to the provisions
of the stock options in substitution for which they are granted.
V-2
<PAGE> 14
ARTICLE VI
ADMINISTRATION
This Plan shall be administered by the Committee. All questions of
interpretation and application of this Plan and Options shall be subject to the
determination of the Committee. A majority of the members of the Committee
shall constitute a quorum. All determinations of the Committee shall be made by
a majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members shall be as effective as if it had been
made by a majority vote at a meeting properly called and held. In carrying out
its authority under this Plan, the Committee shall have full and final
authority and discretion, including but not limited to the following rights,
powers and authorities, to:
(a) determine the persons to whom and the time or times at
which Options will be made,
(b) determine the number of shares and the purchase price of
Stock covered in each Option, subject to the terms of the Plan,
(c) determine the terms, provisions and conditions of each
Option, which need not be identical,
(d) accelerate the time at which any outstanding Option may
be exercised,
(e) define the effect, if any, on an Option of the death,
Disability, or Retirement of the Optionee,
(f) prescribe, amend and rescind rules and regulations
relating to administration of this Plan, and
(g) make all other determinations and take all other actions
deemed necessary, appropriate, or advisable for the proper
administration of this Plan.
The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of this Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive
and binding on all parties.
VI-1
<PAGE> 15
ARTICLE VII
AMENDMENT OR TERMINATION OF PLAN
The Board of Directors of the Company may amend, terminate or suspend
this Plan at any time, in its sole and absolute discretion.
VII-1
<PAGE> 16
ARTICLE VIII
MISCELLANEOUS
8.1 NO EMPLOYMENT OBLIGATION. The granting of any Option shall not
constitute an employment contract, express or implied, nor impose upon the
Company or any Affiliate any obligation to employ or continue to employ any
Optionee. The right of the Company or any Affiliate to terminate the employment
of any person shall not be diminished or affected by reason of the fact that an
Option has been granted to him.
8.2 TAX WITHHOLDING. The Company or any Affiliate shall be entitled to
deduct from other compensation payable to each Optionee any sums required by
federal, state, or local tax law to be withheld with respect to the grant or
exercise of an Option. In the alternative, the Company may require the Optionee
(or other person exercising the Option) to pay the sum directly to the Company
or an Affiliate. If the Optionee (or other person exercising the Option) is
required to pay the sum directly, payment in cash or by check of such sums for
taxes shall be made on the date of exercise. The Company shall have no
obligation upon exercise of any Option until payment has been received, unless
withholding (or offset against a cash payment) as of or prior to the date of
exercise is sufficient to cover all sums due with respect to that exercise. The
Company and its Affiliates shall not be obligated to advise an Optionee of the
existence of the tax or the amount which the employer corporation will be
required to withhold.
8.3 INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS. With
respect to administration of this Plan, the Company shall indemnify each
present and future member of the Committee and the Board of Directors against,
and each member of the Committee and the Board of Directors shall be entitled
without further act on his part to indemnity from the Company for, all expenses
(including attorney's fees, the amount of judgments and the amount of approved
settlements made with a view to the curtailment of costs of litigation, other
than amounts paid to the Company itself) reasonably incurred by him in
connection with or arising out of any action, suit, or proceeding in which he
may be involved by reason of his being or having been a member of the Committee
and/or the Board of Directors, whether or not he continues to be a member of
the Committee and/or the Board of Directors at the time of incurring the
expenses--including, without limitation, matters as to which he shall be
finally adjudged in any action, suit or proceeding to have been found to have
been negligent in the performance of his duty as a member of the Committee or
of the Board of Directors. However, this indemnity shall not include any
expenses incurred by any member of the Committee and/or the Board of Directors
in respect of matters as to which he shall be finally adjudged in any action,
suit or proceeding to have been guilty of gross negligence or willful
misconduct in the performance of his duty as a member of the Committee or the
Board of Directors. In addition, no right of indemnification under this Plan
shall be available to or enforceable by any member of the Committee or the
Board of Directors unless, within 60 days after institution of any action, suit
or proceeding, he shall have offered the Company, in writing, the opportunity
to handle and defend same at its own expense. This right of indemnification
shall inure to the benefit of the heirs, executors or administrators of each
member of the Committee and the Board of Directors and shall be in addition to
all other rights to which a member of the Committee and the Board of Directors
may be entitled as a matter of law, contract, or otherwise.
8.4 GENDER. If the context requires, words of one gender when used in
this Plan shall include the others and words used in the singular or plural
shall include the other.
8.5 HEADINGS. Headings of Articles and Sections are included for
convenience of reference only and do not constitute part of this Plan and shall
not be used in construing the terms of this Plan.
8.6 OTHER COMPENSATION PLANS. The adoption of this Plan shall not
affect any other stock option, incentive or other compensation or benefit plans
in effect for the Company or any
VIII-1
<PAGE> 17
Affiliate, nor shall this Plan preclude the Company from establishing any other
forms of incentive or other compensation for employees of the Company or any
Affiliate.
8.7 OTHER OPTIONS. The grant of an Option shall not confer upon an
Optionee the right to receive any future or other Options under this Plan,
whether or not Options may be granted to similarly situated Optionees, or the
right to receive future Options upon the same terms or conditions as previously
granted.
8.8 ARBITRATION OF DISPUTES. Any controversy arising out of or
relating to the Plan or an Option Agreement shall be resolved by arbitration
conducted pursuant to the arbitration rules of the American Arbitration
Association. The arbitration shall be final and binding on the parties.
8.9 GOVERNING LAW. The provisions of this Plan shall be construed,
administered, and governed under the laws of the State of Texas.
VIII-2
<PAGE> 1
EXHIBIT 4.9
QUANEX CORPORATION
1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
<PAGE> 2
QUANEX CORPORATION
1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section
ARTICLE I - DEFINITIONS -------
<S> <C>
Board of Directors.......................................................................................1.1
Company..................................................................................................1.2
Disability...............................................................................................1.3
Fair Market Value........................................................................................1.4
Non-Employee Director....................................................................................1.5
Option...................................................................................................1.6
Option Agreement.........................................................................................1.7
Optionee.................................................................................................1.8
Plan.....................................................................................................1.9
Retire or Retirement ...................................................................................1.10
Stock...................................................................................................1.11
ARTICLE II - GENERAL PROVISIONS RELATING TO OPTIONS
Dedicated Shares.........................................................................................2.1
Non-Transferability......................................................................................2.2
Requirements of Law......................................................................................2.3
Changes in the Company's Capital Structure...............................................................2.4
Options Conditioned Upon Stockholder Approval............................................................2.5
ARTICLE III - OPTIONS
Automatic Annual Grants .................................................................................3.1
Amount Exercisable--Automatic Annual Grants..............................................................3.2
Grants for New Directors.................................................................................3.3
Amount Exercisable--Grants for New Directors.............................................................3.4
Option Price.............................................................................................3.5
Duration of Options......................................................................................3.6
Death of an Optionee.....................................................................................3.7
Exercise of Options......................................................................................3.8
Form of Options..........................................................................................3.9
Written Agreement ......................................................................................3.10
No Rights as Stockholder................................................................................3.11
ARTICLE IV - AMENDMENT OR TERMINATION OF PLAN
ARTICLE V - MISCELLANEOUS
No Retention Obligation..................................................................................5.1
Taxes....................................................................................................5.2
Gender...................................................................................................5.3
Headings.................................................................................................5.4
Other Compensation.......................................................................................5.5
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
Other Options............................................................................................5.6
Arbitration of Disputes..................................................................................5.7
Governing Law............................................................................................5.8
</TABLE>
<PAGE> 4
QUANEX CORPORATION
1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
This Quanex Corporation 1997 Non-Employee Director Stock Option Plan
(the "Plan") is adopted, subject to stockholder approval, for the benefit of
the directors of Quanex Corporation, a Delaware corporation (the "Company")
who, at the time of their service, are not employees of the Company or any of
its subsidiaries. The Plan is intended to advance the interest of the Company
by providing such directors with an additional incentive to serve the Company
by increasing their proprietary interest in the success of the Company.
<PAGE> 5
ARTICLE I
DEFINITIONS
The words and phrases defined in this Article shall have the meaning
set out in these definitions throughout this Plan, unless the context in which
any such word or phrase appears reasonably requires a broader, narrower, or
different meaning.
1.1 "BOARD OF DIRECTORS" means the board of directors of the Company.
1.2 "COMPANY" means Quanex Corporation, a Delaware corporation.
1.3 "DISABILITY" means a mental or physical disability of the Optionee
which, in the opinion of a physician selected by the President of the Company,
(i) shall prevent the Optionee from adequately performing his services as a
director of the Company and (ii) can be expected to result in death or has
lasted or can be expected to last for a continuous period of not less than 12
months.
1.4 "FAIR MARKET VALUE" of the Stock as of any date means the closing
sale price of the Stock on that date (or, if there was no sale on such date,
the next preceding date on which there was such a sale) on the principal
securities exchange on which the Stock is listed.
1.5 "NON-EMPLOYEE DIRECTOR" means a director of the Company who, while
a director, is not an employee of the Company, or a corporation, of which a
majority of voting securities is owned, directly or indirectly, by the Company.
1.6 "OPTION" means an option granted under this Plan to purchase
shares of Stock.
1.7 "OPTION AGREEMENT" means the written agreement which sets out the
terms of an Option.
1.8 "OPTIONEE" means a person who is granted an Option under this
Plan.
1.9 "PLAN" means the Quanex Corporation 1997 Non-Employee Director
Stock Option Plan, as set out in this document and as it may be amended from
time to time.
1.10 "RETIRE" or "RETIREMENT" means the cessation of an Optionee's
services as a director on the Board of Directors after completing either two
full terms or six years of service as a director on the Board of Directors.
1.11 "STOCK" means the common stock of the Company, $.50 par value. In
addition, for purposes of the Plan and the Options, the term Stock shall be
deemed to include any rights to purchase the Series A Junior Participating
Preferred Stock of the Company that may then be trading with the Stock as
provided in the Rights Agreement between the Company and Chemical Bank.
I-1
<PAGE> 6
ARTICLE II
GENERAL PROVISIONS RELATING TO OPTIONS
2.1 DEDICATED SHARES. The total number of shares of Stock with
respect to which Options may be granted under the Plan shall be 400,000 shares.
The shares may be treasury shares or authorized but unissued shares. The number
of shares stated in this Section 2.1 shall be subject to adjustment in
accordance with the provisions of Section 2.4.
If any outstanding Option expires or terminates for any reason or any
Option is surrendered, the shares of Stock allocable to the unexercised portion
of that Option may again be subject to an Option under the Plan.
2.2 NON-TRANSFERABILITY. Except as expressly provided otherwise in an
Optionee's Option Agreement, Options shall not be transferable by the Optionee
otherwise than by will or under the laws of descent and distribution, and shall
be exercisable, during the Optionee's lifetime, only by him.
2.3 REQUIREMENTS OF LAW. The Company shall not be required to sell or
issue any Stock under any Option if issuing that Stock would constitute or
result in a violation by the Optionee or the Company of any provision of any
law, statute, or regulation of any governmental authority. Specifically, in
connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of any Option, the Company shall not
be required to issue any Stock unless the Board of Directors has received
evidence satisfactory to it to the effect that the holder of that Option will
not transfer the Stock except in accordance with applicable law, including
receipt of an opinion of counsel satisfactory to the Company to the effect that
any proposed transfer complies with applicable law. The determination by the
Board of Directors on this matter shall be final, binding and conclusive. The
Company may, but shall in no event be obligated to, register any Stock covered
by this Plan pursuant to applicable securities laws of any country or any
political subdivision. In the event the Stock issuable on exercise of an Option
is not registered, the Company may imprint on the certificate evidencing the
Stock any legend that counsel for the Company considers necessary or advisable
to comply with applicable law. The Company shall not be obligated to take any
other affirmative action in order to cause the exercise of an Option and the
issuance of shares thereunder, to comply with any law or regulation of any
governmental authority.
2.4 CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. If the Company shall
effect a subdivision or consolidation of shares or other capital adjustment of,
or the payment of a dividend in capital stock or other equity securities of the
Company on, its Common Stock, or other increase or reduction of the number of
shares of the Common Stock outstanding without receiving consideration therefor
in money, services, or property, or the reclassification of its Stock, in whole
or in part, into other equity securities of the Company, then (a) the number,
class and per share price of shares of Stock subject to outstanding Options
hereunder shall be appropriately adjusted by the Board of Directors (or in the
case of the issuance of other equity securities as a dividend on, or in a
reclassification of, the Stock, the Options shall extend to such other
securities) in such a manner as to entitle an Optionee to receive, upon
exercise of an Option, for the same aggregate cash compensation, the same total
number and class or classes of shares (or in the case of a dividend of, or
reclassification into, other equity securities, such other securities) he would
have held after such adjustment if he had exercised his Option in full
immediately prior to the event requiring the adjustment, or, if applicable, the
record date for determining stockholders to be affected by such adjustment; and
(b) the number and class of shares then reserved for issuance under the Plan
(or in the case of a dividend of, or reclassification into, other equity
securities, such other securities) shall be adjusted by substituting for the
total number and class of shares of Stock then received, the number and class
or classes of shares of Stock (or in the case of a dividend on, or
reclassification into, other equity securities, such other securities) that
would have been received by the owner of an equal number of outstanding shares
of Stock as the result of the event requiring the adjustment.
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Comparable rights shall accrue to each Optionee in the event of successive
subdivisions, consolidations, capital adjustment, dividends or
reclassifications of the character described above.
If the Company shall distribute to all holders of its shares of Stock
(including any such distribution made to non-dissenting stockholders in
connection with a consolidation or merger in which the Company is the surviving
corporation and in which holders of shares of Stock continue to hold shares of
Stock after such merger or consolidation) evidences of indebtedness or cash or
other assets (other than cash dividends payable out of consolidated retained
earnings not in excess of, in any one year period, the greater of (a) $1.00 per
share of Stock or (b) two times the aggregate amount of dividends per share
paid during the preceding calendar year and dividends or distributions payable
in shares of Stock or other equity securities of the Company described in the
immediately preceding paragraph), then in each case the Optionee's exercise
price specified in his Option Agreement ("Exercise Price") shall be adjusted by
reducing the Option Price in effect immediately prior to the record date for
the determination of stockholders entitled to receive such distribution by an
amount equal to the Fair Market Value, as determined in good faith by the Board
of Directors (whose determination shall be described in a statement filed in
the Company's corporate records and be available for inspection by any holder
of an Option) of the portion of the evidence of indebtedness or cash or other
assets so to be distributed applicable to one share of Stock; provided that in
no event shall the Option Price be less than the par value of a share of Stock.
Such adjustment shall be made whenever any such distribution is made, and shall
become effective on the date of the distribution retroactive to the record date
for the determination of the stockholders entitled to receive such
distribution. Comparable adjustments shall be made in the event of successive
transactions of the character described above.
If the Company shall make a tender offer for, or grant to all of its
holders of its shares of Stock the right to require the Company or any
subsidiary of the Company to acquire from such stockholders shares of Stock, at
a price in excess of the Current Market Price (a "Put Right") or the Company
shall grant to all of its holders for its shares of Stock the right to acquire
shares of Stock for less than the Current Market Price (a "Purchase Right"),
then, in the case of a Put Right, the Option Price shall be adjusted by
multiplying the Option Price in effect immediately prior to the record date for
the determination of stockholders entitled to receive such Put Right by a
fraction, the numerator of which shall be the number of shares of Stock then
outstanding minus the number of shares of Stock which could be purchased at the
Current Market Price for the aggregate amount which would be paid if all Put
Rights are exercised and the denominator of which is the number of shares of
Stock which would be outstanding if all Put Rights are exercised; and, in the
case of a Purchase Right, the Option Price shall be adjusted by multiplying the
Option Price in effect immediately prior to the record date for the
determination of the stockholders entitled to receive such Purchase Right by a
fraction, the numerator of which shall be the number of shares of Stock then
outstanding plus the number of shares of Stock which could be purchased at the
Current Market Price for the aggregate amount which would be paid if all
Purchase Rights are exercised and the denominator of which is the number of
shares of Stock which would be outstanding if all Purchase Rights are
exercised. In addition, the number of shares subject to the Option shall be
increased by multiplying the number of shares then subject to the Option by a
fraction which is the inverse of the fraction used to adjust the Option Price.
Notwithstanding the foregoing, if any such Put Rights or Purchase Rights shall
terminate without being exercised, the Option Price and number of shares
subject to the Option shall be appropriately readjusted to reflect the Option
Price and number of shares subject to the Option which would have been in
effect if such unexercised Rights had never existed. Comparable adjustments
shall be made in the event of successive transactions of the character
described above.
After the merger of one or more corporations into the Company, after
any consolidation of the Company and one or more corporations, or after any
other corporate transaction described in Section 424(a) of the Code in which
the Company shall be the surviving corporation, each Optionee, at no additional
cost, shall be entitled to receive, upon any exercise of his Option, in lieu of
the number of shares as to which the Option shall then be so exercised, the
number and class of shares of stock or other equity securities to which the
Optionee would have been entitled pursuant to the
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<PAGE> 8
terms of the agreement of merger or consolidation if at the time of such merger
or consolidation such Optionee had been a holder of a number of shares of Stock
equal to the number of shares as to which the Option shall then be so exercised
and, if as a result of such merger, consolidation or other transaction, the
holders of Stock are not entitled to receive any shares of Stock pursuant to
the terms thereof, each Optionee, at no additional cost shall be entitled to
receive, upon exercise of his Option, such other assets and property, including
cash to which he would have been entitled if at the time of such merger,
consolidation or other transaction he had been the holder of the number of
shares of Stock equal to the number of shares as to which the Option shall then
be so exercised. Comparable rights shall accrue to each Optionee in the event
of successive mergers or consolidations of the character described above.
After a merger of the Company into one or more corporations, after a
consolidation of the Company and one or more corporations, or after any other
corporate transaction described in Section 424(a) of the Code in which the
Company is not the surviving corporation, each Optionee shall, at no additional
cost, be entitled at the option of the surviving corporation (i) to have his
then existing Option assumed or have a new option substituted for the existing
Option by the surviving corporation to the transaction which is then employing
him, or a parent or subsidiary of such corporation, on a basis where the excess
of the aggregate fair market value of the shares subject to the Option
immediately after the substitution or assumption over the aggregate Option
Price of such option is equal to the excess of the aggregate fair market value
of all shares subject to the option immediately before such substitution or
assumption over the aggregate Option Price of such shares, provided that the
shares subject to the new option must be traded on the New York or American
Stock Exchange or quoted on the National Association of Securities Dealers
Automated Quotation System, or (ii) to receive, upon any exercise of his
Option, in lieu of the number of shares as to which the Option shall then be so
exercised, the securities, property and other assets, including cash, to which
the Optionee would have been entitled pursuant to the terms of the agreement of
merger or consolidation or the agreement giving rise to the other corporate
transaction if at the time of such merger, consolidation or other transaction
such Optionee had been the holder of the number of shares of Stock equal to the
number of shares as to which the Option shall then be so exercised.
If a corporate transaction described in Section 424(a) of the Code
which involves the Company is to take place and there is to be no surviving
corporation while an Option remains in whole or in part unexercised, it shall
be canceled by the Board of Directors as of the effective date of any such
corporate transaction but before that date each Optionee shall be provided with
a notice of such cancellation and shall have the right to exercise such Option
in full (without regard to any vesting limitations set forth in, or imposed
pursuant to, preceding provisions of this Plan or the Option Agreement) to the
extent it is then still unexercised during a 30-day period preceding the
effective date of such corporate transaction.
For purposes of this Section, Current Market Price per share of Stock
shall mean the last reported price for the Stock in the New York Stock Exchange
- -- Composite Transaction listing on the trading day immediately preceding the
first trading day on which, as a result of the establishment of a record date
or otherwise, the trading price reflects that an acquirer of Stock in the
public market will not participate in or receive the payment of any applicable
dividend or distribution; provided, however, that if there is no closing price
for the stock as so reported on that date or if, in the discretion of the
Committee, another means of determining the fair value of the shares of stock
at such date shall be necessary or advisable, the Committee may provide for
another means for determining the Current Market Price of the Stock.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Stock then
subject to outstanding Options.
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<PAGE> 9
2.5 OPTIONS CONDITIONED UPON STOCKHOLDER APPROVAL OF THE PLAN. No
Option granted under the Plan will be exercisable before the stockholders of
the Company approve the Plan.
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<PAGE> 10
ARTICLE III
OPTIONS
3.1 AUTOMATIC ANNUAL GRANTS. Except for any October 31 on which he
receives an Option under the Quanex Corporation 1989 Non-Employee Director
Stock Option Plan, subject to the approval of the Plan by the stockholders of
the Company and the availability under the Plan of a sufficient number of
shares of Stock that may be issued upon the exercise of outstanding Options,
each Non-Employee Director who is a director of the Company on any October 31
while this Plan is in effect shall be granted on each such October 31 an Option
to purchase such number of shares of Stock as is determined by the Board of
Directors.
3.2 AMOUNT EXERCISABLE--AUTOMATIC ANNUAL GRANTS.
Subject to Section 2.5, each Option granted pursuant to Section 3.1 is
exercisable in full immediately upon the date of grant.
3.3 GRANTS FOR NEW DIRECTORS. Subject to the approval of the Plan by
the stockholders of the Company and the availability under the Plan of a
sufficient number of shares of Stock that may be issued upon the exercise of
outstanding options, there shall be granted under the Plan to each Non-Employee
Director who was not granted an Option under the Quanex Corporation 1987
Non-Employee Director Stock Option Plan as of the date upon which such
Non-Employee Director shall have continuously served as a director of the
Company for a period of one year an Option to purchase such number of shares of
Stock as is determined by the Board of Directors. Upon the receipt of an Option
under the Plan pursuant to this Section 3.3, the Optionee shall not be eligible
to receive another Option for new Non-Employee Directors pursuant to this
Section 3.3. Nothing in this Section 3.3 shall affect the eligibility of an
Optionee to receive an Option pursuant to Section 3.1.
3.4 AMOUNT EXERCISABLE--GRANTS FOR NEW DIRECTORS. Each Option
Agreement for an Option granted pursuant to Section 3.3 shall contain the
following terms of exercise:
(a) No Option granted under Section 3.3 of the Plan may be
exercised until the Optionee has served as a director of the Company
for one year following the date of grant;
(b) beginning on the day after the first anniversary of the date
of grant, the Option may be exercised up to 1/3 of the shares subject
to the Option;
(c) after the expiration of each succeeding anniversary date of
the date of grant, the Option may be exercised up to an additional 1/3
of the shares subject to the Option, so that after the expiration of
the third anniversary of the date of grant, the Option shall be
exercisable in full; and
(d) to the extent not exercised, installments shall be cumulative
and may be exercised in whole or in part until the Option expires on
the tenth anniversary of the date of the grant.
3.5 OPTION PRICE. The price at which Stock may be purchased under an
Option shall be equal to 100% of the Fair Market Value of the shares of Stock
on the date the Option is granted.
3.6 DURATION OF OPTIONS.
Each Option awarded, to the extent it shall not previously have
been exercised, shall terminate on the earlier of the following dates:
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(i) on the last day within the three month period
commencing on the date on which the Optionee ceases to be a
director of the Company, for any reason other than death,
Retirement or Disability; or
(ii) ten years after the date of grant of such Option.
If the Optionee ceases to be a director of the Company for any reason
other than his death, Disability or Retirement, his Option shall not continue
to vest after such cessation of service as a director. If the Optionee ceases
to be a director of the Company due to his death, Disability or Retirement, his
Option shall continue to vest after such cessation of service as a director
until the Option expires ten years after the grant of the Option.
3.7 DEATH OF AN OPTIONEE. Upon the death of an Optionee prior to the
expiration of his Option, his executors, administrators or any person or
persons to whom his Option may be transferred by will or by the laws of descent
and distribution, shall have the right, at any time prior to the expiration
date of the Option to exercise the Option with respect to the number of shares
that the Optionee would have been entitled to exercise if he were still alive.
3.8 EXERCISE OF OPTIONS. An Optionee may exercise his Option by
delivering to the Company a written notice stating (i) that he wishes to
exercise such Option on the date such notice is so delivered, (ii) the number
of shares of Stock with respect to which such Option is to be exercised and
(iii) the address to which the certificate representing such shares of Stock
should be mailed. In order to be effective, such written notice shall be
accompanied by payment of the option price of such shares of Stock. Each such
payment shall be made by cashier's check drawn on a national banking
association and payable to the order of the Company in United States dollars.
If, at the time of receipt by the Company of such written notice, (i)
the Company has unrestricted surplus in an amount not less than the option
price of such shares of Stock, (ii) all accrued cumulative preferential
dividends and other current preferential dividends on all outstanding shares of
preferred Stock of the Company have been fully paid, (iii) the acquisition by
the Company of its own shares of Stock for the purpose of enabling such
Optionee to exercise such Option is otherwise permitted by applicable law and
without any vote or consent of any stockholder of the Company, and (iv) there
shall have been adopted, and there shall be in full force and effect, a
resolution of the Board of Directors of the Company authorizing the acquisition
by the Company of its own shares of Stock for such purpose, then such Optionee
may deliver to the Company, in payment of the option price of the shares of
Stock with respect to which such Option is exercised, (x) certificates
registered in the name of such Optionee that represent a number of shares of
Stock legally and beneficially owned by such Optionee (free of all liens,
claims and encumbrances of every kind) and having a Fair Market Value on the
date of receipt by the Company of such written notice that is not greater than
the option price of the shares of Stock with respect to which such Option is to
be exercised, such certificates to be accompanied by Stock powers duly endorsed
in blank by the record holder of the shares of Stock represented by such
certificates, with the signature of such record holder guaranteed by a national
banking association, and (y) if the option price of the shares of Stock with
respect to which such Option is to be exercised exceeds such Fair Market Value,
a cashier's check drawn on a national banking association and payable to the
order of the Company in an amount, in United States dollars, equal to the
amount of such excess. Notwithstanding the provisions of the immediately
preceding sentence, the Treasurer of the Company, in his sole discretion, may
refuse to accept shares of Stock in payment of the option price of the shares
of Stock with respect to which such Option is to be exercised and, in that
event, any certificates representing shares of Stock that were received by the
Company with such written notice shall be returned to such Optionee, together
with notice by the Company to such Optionee of the refusal of the Treasurer of
the Company to accept such shares of Stock. If, at the expiration of seven
business days after the delivery to such Optionee of such written notice from
the Company, such Optionee shall not have delivered to the Company a cashier's
check drawn on a national banking association and payable to the order of the
Company in an amount, in United States dollars, equal to the option
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<PAGE> 12
price of the shares of Stock with respect to which such Option is to be
exercised, such written notice from the Optionee to the Company shall be
ineffective to exercise such Option.
As promptly as practicable after the receipt by the Company of (i)
such written notice from the Optionee and (ii) payment, in the form required by
the foregoing provisions of this Section 3.8, of the option price of the shares
of Stock with respect to which such Option is to be exercised, a certificate
representing the number of shares of Stock with respect to which such Option
has been so exercised, such certificate to be registered in the name of such
Optionee, provided that such delivery shall be considered to have been made
when such certificate shall have been mailed, postage prepaid, to such Optionee
at the address specified for such purpose in such written notice from the
Optionee to the Company.
3.9 FORM OF OPTIONS. All Options granted under this Plan will be
nonqualified stock options that are not intended to qualify as incentive stock
options under section 422 of the Internal Revenue Code of 1986, as amended.
3.10 WRITTEN AGREEMENT. Each Option shall be embodied in a written
Option Agreement which shall be subject to the terms and conditions of this
Plan and shall be signed by the Optionee and by an officer of the Company.
3.11 NO RIGHTS AS STOCKHOLDER. No Optionee shall have any rights as a
stockholder with respect to Stock covered by his Option until the date a stock
certificate is issued for the Stock.
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ARTICLE IV
AMENDMENT OR TERMINATION OF PLAN
The Board of Directors of the Company may amend or terminate this Plan
at any time, in its sole and absolute discretion; provided, however, that no
amendment shall decrease the exercise price for Options below the Fair Market
Value of the Stock at the time it is granted.
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<PAGE> 14
ARTICLE V
MISCELLANEOUS
5.1 NO RETENTION OBLIGATION. The granting of any Option shall not
impose upon the Company any obligation to continue to retain the Optionee's
services as a director of the Company.
5.2 TAXES. The Company shall not be obligated to advise an Optionee
of the existence of any tax that may apply with respect to the grant or
exercise of an Option.
5.3 GENDER. If the context requires, words of one gender when used in
this Plan shall include the others and words used in the singular or plural
shall include the other.
5.4 HEADINGS. Headings of Articles and Sections are included for
convenience of reference only and do not constitute part of this Plan and shall
not be used in construing the terms of this Plan.
5.5 OTHER COMPENSATION. The adoption of this Plan shall not affect
any other compensation in effect for the Non-Employee Directors, nor shall this
Plan preclude the Company from establishing any other forms of compensation for
Non-Employee Directors.
5.6 OTHER OPTIONS. The grant of an Option shall not confer upon an
Optionee the right to receive any future or other Options under this Plan.
5.7 ARBITRATION OF DISPUTES. Any controversy arising out of or
relating to the Plan or an Option Agreement shall be resolved by arbitration
conducted pursuant to the arbitration rules of the American Arbitration
Association. The arbitration shall be final and binding on the parties.
5.8 GOVERNING LAW. The provisions of this Plan shall be construed,
administered, and governed under the laws of the State of Texas.
V-1
<PAGE> 1
EXHIBIT 5.1
[Fulbright & Jaworski L.L.P. letterhead]
November 4, 1998
Quanex Corporation
1900 West Loop South, Suite 1500
Houston, Texas 77027
Ladies and Gentlemen:
We have acted as counsel to Quanex Corporation, a Delaware corporation
(the "Company"), in connection with the registration under the Securities Act of
1933, as amended (the "Act"), of an aggregate of 250,000 shares (the "Key
Employee Plan Shares") of the Company's common stock, $.50 par value, and
associated rights to purchase shares of the Company's Series A Junior
Participating Preferred Stock, to be offered upon the terms and subject to the
conditions set forth in the Quanex Corporation 1997 Key Employee Stock Option
Plan (the "Key Employee Plan") and 400,000 shares (together with the Key
Employee Shares, the "Shares") of the Company's common stock, $.50 par value,
and associated rights to purchase shares of the Company's Series A Junior
Participating Preferred Stock, to be offered upon the terms and subject to the
conditions set forth in the Quanex Corporation 1997 Non-Employee Director Stock
Option Plan (the "Director Plan").
In connection therewith, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the Restated
Certificate of Incorporation of the Company, as amended, the By-laws of the
Company, as amended, the Key Employee Plan, the Director Plan, records of
relevant corporate proceedings with respect to the offering of the Shares and
such other documents, instruments and corporate records as we have deemed
necessary or appropriate for the expression of the opinions contained herein.
We also have examined the Company's Registration Statement on Form S-8 dated
November 4, 1998 (the "Registration Statement"), to be filed with the Securities
and Exchange Commission with respect to the Shares.
We have assumed the authenticity and completeness of all records,
certificates and other instruments submitted to us as originals, the conformity
to original documents of all records, certificates and other instruments
submitted to us as copies, the authenticity and completeness of the originals
of those records, certificates and other instruments submitted to us as copies
and the correctness of all statements of fact contained in all records,
certificates and other instruments that we have examined.
Based on the foregoing, and having regard for such legal
considerations as we have deemed relevant, we are of the opinion that the
Shares have been duly and validly authorized for issuance and, when issued in
accordance with the terms of the Key Employee Plan or the Director Plan, as the
case may be, will be duly and validly issued, fully paid and nonassessable.
The opinions expressed herein relate solely to, are based solely upon
and are limited exclusively to the General Corporation Law of the State of
Delaware and the federal laws of the United States of America, to the extent
applicable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ FULBRIGHT & JAWORSKI L.L.P.
Fulbright & Jaworski L.L.P.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement of
Quanex Corporation on Form S-8 of our report dated December 11, 1997 appearing
in the Annual Report on Form 10-K of Quanex Corporation for the fiscal year
ended October 31, 1997.
DELOITTE & TOUCHE LLP
Houston, Texas
November 3, 1998
