<PAGE>

                                                                   EXHIBIT 10.16

                         INTERNATIONAL WIRE GROUP, INC.
                     INSULATED WIRE DIVISION RETENTION PLAN

                             PRELIMINARY STATEMENTS

      A.    International Wire Group, Inc. (the "Company") is currently
exploring the sale of the Company's insulated wire division and, in connection
therewith, the closure of the Company's St. Louis executive offices.

      B     The purpose of this Retention Plan (the "Plan") is to encourage the
retention of key employees of the Company's insulated wire division and the St.
Louis executive offices during, and their cooperation and assistance in
connection with, the sale process by providing them with meaningful retention
incentives.

                                   ARTICLE I

                         DEFINITIONS AND INTERPRETATIONS

      1.01  Definitions. The following capitalized terms used in this Plan shall
have the following respective meanings:

            "Board" shall mean the Board of Directors of the Company.

            "Cause" shall mean (i) in the event such Participant is a party to a
      written employment agreement with the Company and such agreement provides
      a definition of "Cause," such definition as set forth therein or (ii) in
      all other cases, fraud, dishonesty, competition with the Company,
      unauthorized use of any of the Company's trade secrets or confidential
      information, or failure to properly perform the duties assigned to the
      Participant, in the reasonable judgment of the Company. A determination of
      the existence of Cause shall be made by the Board in its sole discretion.

            "Disability" shall mean, when used with reference to any
      Participant, long term disability as established under the applicable long
      term disability plan maintained by the Company under which the Participant
      is covered.

            "Dispute Notice" shall have the meaning set forth in Section 4.01.

            "Division" shall mean the insulated wire division of the Company as
      currently constituted, and a "sale of the Division" shall mean the sale or
      other disposition of subsidiary capital stock and/or assets representing a
      majority of the operations of the Division.

            "Good Reason" shall mean, when used with reference to any
      Participant, any of the following actions or failures to act, but in each
      case only if it occurs


<PAGE>

      while such Participant is employed by the Company and then only if it is
      not consented to by such Participant in writing:

                  (i)   a material adverse change in such Participant's
                        reporting responsibilities, title(s) or elected or
                        appointed office(s) in effect immediately prior to the
                        effective date of such change;

                  (ii)  a material reduction in such Participant's base salary
                        and bonus opportunity in effect immediately prior to the
                        effective date of such reduction, not including any
                        reduction resulting from changes in the market value of
                        securities or other instruments paid or payable to such
                        Participant; or

                  (iii) any change of more than 50 miles in the location of the
                        principal place of employment of such Participant
                        immediately prior to the effective date of such change.

                  For purposes of this definition, none of the actions described
                  in clauses (i) and (iii) above shall constitute "Good Reason"
                  with respect to any Participant if it was an isolated and
                  inadvertent action not taken in bad faith by the Company and
                  if it is remedied by the Company within fifteen (15) days
                  after receipt of written notice thereof given by such
                  Participant (or, if the matter is not capable of remedy within
                  fifteen (15) days, then within a reasonable period of time
                  following such fifteen (15) day period, provided that the
                  Company has commenced such remedy within said fifteen (15) day
                  period); provided that "Good Reason" shall cease to exist for
                  any action described in clauses (i) through (iii) above on the
                  thirty (30th) day following the later of the occurrence of
                  such action or the Participant's knowledge thereof, unless
                  such Participant has given the Company written notice thereof
                  prior to such date.

            "Participants" shall mean the Company St. Louis executive office
      employees identified on Annex A hereto, such persons being referred to
      herein by the titles referenced on Annex A, and the current employees of
      the Company's insulated wire division identified on Annex B hereto.

      1.02  Interpretation. In this Plan, unless a clear contrary intention
appears, (a) the words "herein," "hereof" and "hereunder" refer to this Plan as
a whole and not to any particular Article, Section or other subdivision, (b)
reference to any Article, Section or paragraph means such Article, Section or
paragraph hereof and (c) the words "including" (and with correlative meaning
"include") means including, without limiting the generality

                                       2
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of any description preceding such term. The Article, Section and paragraph
headings herein are for convenience only and shall not affect the construction
hereof.

                                   ARTICLE II

                      EXECUTIVE OFFICE EMPLOYEE INCENTIVES

      2.01  Chief Executive Officer.

            (a) Employment; Noncompetition. In consideration of the benefits
granted under this Plan and other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Chief Executive Officer
agrees as follows:

            (i) The Chief Executive Officer will continue in the employment of
the Company in his current capacity until the earlier of (1) the consummation of
the sale of the Division and (2) September 30, 2005; and

            (ii) The Chief Executive Officer will not, within two years after
leaving the employ of the Company, engage or enter into employment by, or into
self-employment or gainful occupation as, a Competing Business or act directly
or indirectly as an advisor, consultant, sales agent or broker for a Competing
Business. As used herein, "Competing Business" means (1) any business that is
engaged in the manufacture, or sale to other wire suppliers or original
equipment manufacturers, of bare or tin-plated copper wire or that otherwise
competes with the Bare Wire Division of the Company, as such operations are
currently conducted, and (2) in the event the Division is not sold, any business
that is engaged in the manufacture, or sale to other wire suppliers or original
equipment manufacturers, of insulated copper wire products for the automotive or
appliance end-user markets or that otherwise competes with the Insulated Wire
Division of the Company, as such operations are currently conducted. The Chief
Executive Officer acknowledges that the Company does not have an adequate remedy
at law in the event the Chief Executive Officer violates this provision and,
therefore, the Chief Executive Officer agrees that, in such an event, the
Company shall be entitled to equitable relief, including but not limited to,
injunctive relief. The Company, on behalf of itself and its subsidiaries,
acknowledges and agrees that this covenant is granted in substitution and
replacement for the covenant contained in Section 8 of that certain amended and
restated employment agreement, dated as of September 15, 2003, between Joseph M.
Fiamingo and the Company and the Company subsidiaries identified therein.

            (b) Retention bonus. The Chief Executive Officer will receive to the
following retention bonuses: (i) a bonus in the amount of $140,000, payable by
the Company on January 21, 2005; and (ii) a bonus in the amount of $560,000,
payable by the Company upon the earlier of (1) the date of consummation of the
sale of the Division and (2) September 30, 2005.

                                       3
<PAGE>

            (c) Transaction bonus. The Chief Executive Officer will additionally
receive a transaction bonus if the net proceeds realized from the sale of the
Division exceed $35 million. The amount of such transaction bonus shall be
calculated as follows:

            (i) Three percent (3%) of the excess of the net proceeds realized
            above $35 million, to and including net proceeds realized of $45
            million; plus

            (ii) Five percent (5%) of the excess of the net proceeds realized
            above $45 million.

The transaction bonus will be payable by the Company on the date of consummation
of the sale of the Division. For purposes of the foregoing, "net proceeds" shall
mean the sum of (1) the cash purchase price paid by the acquiror, (2) the fair
value, as determined in good faith by the Board, of any noncash consideration
paid by the acquiror, and (3) the sum of all indebtedness for borrowed money of
the Company or any Company subsidiary assumed by the acquiror, less all
transaction costs incurred by the Company in connection with the disposition of
the Division, including, without limitation, all retention and transaction
bonuses payable under this Plan.

            (d) Payment of bonuses. The bonuses payable pursuant to paragraphs
(b) and (c) above shall only be payable if the Participant is employed by the
Company on the designated date for payment, provided that such bonuses shall
nonetheless be payable if (i) the Participant has previously been terminated by
the Company other than for Cause, (ii) the Participant's employment was
previously terminated as a result of Disability or death, or (iii) the
Participant has previously terminated his employment for Good Reason.

      Section 2.02 Chief Financial Officer.

            (a) Noncompetition. In consideration of the benefits granted under
this Plan and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Chief Financial Officer agrees he will not,
within two years after leaving the employ of the Company, engage or enter into
employment by, or into self-employment or gainful occupation as, a Competing
Business or act directly or indirectly as an advisor, consultant, sales agent or
broker for a Competing Business. As used herein, "Competing Business" means (1)
any business that is engaged in the manufacture, or sale to other wire suppliers
or original equipment manufacturers, of bare or tin-plated copper wire or that
otherwise competes with the Bare Wire Division of the Company, as such
operations are currently conducted, and (2) in the event the Division is not
sold, any business that is engaged in the manufacture, or sale to other wire
suppliers or original equipment manufacturers, of insulated copper wire products
for the automotive or appliance end-user markets or that otherwise competes with
the Insulated Wire Division of the Company, as such operations are currently
conducted. The Chief Financial Officer acknowledges that the Company does not
have an adequate remedy at law in the event the Chief Financial Officer violates
this provision and, therefore, the Chief Financial Officer agrees that, in such
an event, the Company shall be entitled to

                                       4
<PAGE>

equitable relief, including but not limited to, injunctive relief. The Company,
on behalf of itself and its subsidiaries, acknowledges and agrees that this
covenant is granted in substitution and replacement for the covenant contained
in Section 8 of that certain amended and restated employment agreement, dated as
of July 16, 2001, between Glenn J. Holler and the Company and the Company
subsidiaries identified therein.

            (b) Retention bonus. The Chief Financial Officer will receive the
following retention bonuses: (i) a bonus in the amount of $150,000, payable by
the Company on December 31, 2005; and (ii) subject to and contingent upon the
Company's (1) completion of the documentation and testing of the system of
internal control, (2) identification of material weaknesses and significant
deficiencies in such system, and (3) submission to the Company's audit committee
of management's assessment of the effectiveness of such system and
recommendations for the correction of material weaknesses and significant
deficiencies no later than December 31, 2005, a bonus in the amount of $150,000,
also payable by the Company on December 31, 2005. The foregoing bonuses shall
only be payable if the Participant is employed by the Company on the designated
date for payment, provided that such bonuses shall nonetheless be payable (and
the contingency related to the payment of the bonus payable pursuant to clause
(ii) above shall be irrevocably waived) if (1) the Participant has previously
been terminated by the Company other than for Cause, (2) the Participant's
employment was previously terminated as a result of Disability or death, or (3)
the Participant has previously terminated his employment for Good Reason.

      2.03  Vice President, Business Process Control.

            (a) Retention bonus. The Vice President, Business Process Controls,
will receive a retention bonus in the amount of $150,000, payable by the Company
on December 31, 2005. The foregoing bonus shall only be payable if the
Participant is employed by the Company on the designated date for payment,
provided that such bonus shall nonetheless be payable if (i) the Participant has
previously been terminated by the Company other than for Cause, (ii) the
Participant's employment was previously terminated as a result of Disability or
death, or (iii) the Participant has previously terminated his employment for
Good Reason.

            (b) Health benefits. In the event that the employment of the Vice
President, Business Process Controls, is terminated by the Company without
Cause, or such employee terminates his employment with the Company for Good
Reason, such employee and any covered family members of such employee will
continue to receive health benefits under the health benefit plans then
maintained by the Company on the same terms as then current Company employees
for a period of six months following termination.

      2.04  Manager of Corporate Accounting.

            (a) Retention bonus. The Manager of Corporate Accounting will
receive a retention bonus in the amount of $55,890, payable by the Company on

                                       5
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December 31, 2005. The foregoing bonus shall only be payable if the Participant
is employed by the Company on the designated date for payment, provided that
such bonus shall nonetheless be payable if (i) the Participant has previously
been terminated by the Company other than for Cause, (ii) the Participant's
employment was previously terminated as a result of Disability or death, or
(iii) the Participant has previously terminated her employment for Good Reason.

            (b) Health benefits. In the event that the employment of the Manager
of Corporate Accounting is terminated by the Company without Cause, or such
employee terminates her employment with the Company for Good Reason, such
employee and any covered family members of such employee will continue to
receive health benefits under the health benefit plans then maintained by the
Company on the same terms as then current Company employees for a period of six
months following termination.

      2.05  Network Planning Supervisor.

            (a) Retention bonus. The Network Planning Supervisor will receive a
retention bonus in the amount of $56,152, payable by the Company on December 31,
2005. The foregoing bonus shall only be payable if the Participant is employed
by the Company on the designated date for payment, provided that such bonus
shall nonetheless be payable if (i) the Participant has previously been
terminated by the Company other than for Cause, (ii) the Participant's
employment was previously terminated as a result of Disability or death, or
(iii) the Participant has previously terminated his employment for Good Reason.

            (b) Health benefits. In the event that the employment of the Network
Planning Supervisor is terminated by the Company without Cause, or such employee
terminates his employment with the Company for Good Reason, such employee and
any covered family members of such employee will continue to receive health
benefits under the health benefit plans then maintained by the Company on the
same terms as then current Company employees for a period of six months
following termination.

      2.06  Executive Assistant.

            (a) Severance benefits. In the event that the employment of the
Executive Assistant is terminated by the Company without Cause, or such employee
terminates her employment with the Company for Good Reason, such employee shall
be entitled to receive from the Company monthly severance benefits in the amount
of $3,166.67 for a period of three months, such amounts to be paid in accordance
with the payroll practices of the Company.

            (b) Health benefits. In the event that the employment of the
Executive Assistant is terminated by the Company without Cause, or such employee
terminates her employment with the Company for Good Reason, such employee and
any covered family

                                       6
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members of such employee will continue to receive health benefits under the
health benefit plans then maintained by the Company on the same terms as then
current Company employees for a period of six months following termination.

                                   ARTICLE III

                          DIVISION EMPLOYEE INCENTIVES

      3.01  Retention Bonuses. Each of the current Division employees identified
on Annex B hereto will receive the retention bonus set forth opposite the title
of such employee, of which (i) 20% will be payable by the Company on January 21,
2005 and (ii) the remaining 80% will be payable by the Company sixty days after
the consummation of the sale of the Division or the Board's formal termination
of the sale process. The foregoing bonus shall only be payable if such
Participant is employed by the Company on the designated date for payment,
provided that such bonus shall nonetheless be payable if (i) the Participant has
previously been terminated by the Company other than for Cause, (ii) the
Participant's employment was previously terminated as a result of Disability or
death, or (iii) the Participant has previously terminated his or her employment
for Good Reason.

                                   ARTICLE IV

                               DISPUTE RESOLUTION

      Section 4.01 Negotiation. In case a claim, dispute or controversy shall
arise between any Participant (or any person claiming by, through or under any
Participant) and the Company (including the Board) relating to or arising out of
this Plan, either disputant shall give written notice to the other disputant
("Dispute Notice") that it wishes to resolve such claim, dispute or controversy
by negotiations, in which event the disputants shall attempt in good faith to
negotiate a resolution of such claim, dispute or controversy. All negotiations
pursuant to this Section 4.01 shall be held at the Company's principal offices
in St. Louis, Missouri (or such other place on which the disputants shall
mutually agree) and shall be treated as compromise and settlement negotiations
for the purposes of the federal and state rules of evidence and procedure.

      Section 4.02 Arbitration. Any claim, dispute or controversy arising out of
or relating to this Plan which has not been resolved by negotiations in
accordance with Section 4.01 within thirty (30) days of the effective date of
the Dispute Notice shall, upon the written request of either disputant, be
finally settled by binding arbitration by a single arbitrator selected and
conducted expeditiously in accordance with the commercial arbitration rules of
the American Arbitration Association regarding resolution of employment-related
disputes. Each party shall be entitled to depose up to three (3) relevant
witnesses and shall be entitled to reasonable access to relevant documents. Each
party shall be entitled to make an oral presentation at the hearing. The
arbitrator may, without limitation, award injunctive relief, but shall not be
empowered to award damages in excess of compensatory damages and each disputant
shall be deemed to have

                                       7
<PAGE>

irrevocably waived and relinquished any claim for damages in excess of
compensatory damages, such as punitive damages. Notwithstanding the foregoing,
the arbitrator's fees shall be assessed against the losing party. The
arbitrator's decision shall be final and legally binding on the Company and its
successors and assigns and a Participant and his or her personal or legal
representatives, executors, administrators, heirs and permitted assigns, and
judgment on the arbitrator's decision may be entered in any court of competent
jurisdiction. Each party shall pay its own fees, disbursements, and costs
relating to or arising out of any arbitration. All arbitration conferences and
hearings shall be held within a thirty (30) mile radius of St. Louis, Missouri.

                                    ARTICLE V

                            MISCELLANEOUS PROVISIONS

      Section 5.01 Benefits Cumulative. The rights and benefits provided under
this Plan are cumulative of, and are in addition to, all of the other rights and
benefits provided to each Participant under any agreement between such
Participant and the Company and any formal benefit plans maintained by the
Company on behalf of the Participants, including without limitation, (i) that
certain amended and restated employment agreement, dated as of September 15,
2003, between Joseph M. Fiamingo and the Company and the Company subsidiaries
identified therein, (ii) that certain amended and restated employment agreement,
dated as of July 16, 2001, between Glenn J. Holler and the Company and the
Company subsidiaries identified therein, and (iii) the Company Key Employee
Retention Plan adopted in connection with the Company's reorganization under
Chapter 11 of the Bankruptcy Code.

      Section 5.02 No Mitigation. No Participant shall be required to mitigate
the amount of any payment provided for in this Plan by seeking or accepting
other employment following a termination of his or her employment with the
Company or otherwise. The amount of any payment provided for in this Plan shall
not be reduced by any compensation or benefit earned by a Participant as the
result of employment by another employer or by retirement benefits. The
Company's obligations to make payments to any Participant required under this
Plan shall not be affected by any setoff, counterclaim, recoupment, defense or
other claim, right or action that the Company may have against such Participant.

      Section 5.03 Amendment or Termination. The Board may amend the Plan at any
time; provided, however, that no such amendment shall be binding on any
Participant adversely affected thereby unless such Participant consents in
writing to such amendment. The Plan shall not terminate until such time as all
of the obligations to Participants hereunder have been satisfied in full.

      Section 5.04 Successors and Assigns. This Plan shall be binding upon and
inure to the benefit of the Company and its successors and assigns. This Plan
and all rights of each Participant shall inure to the benefit of and be
enforceable by such Participant and his or her personal or legal
representatives, executors, administrators, heirs and permitted

                                       8
<PAGE>

assigns. If any Participant should die while any amounts are due and payable to
such Participant hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Plan to such Participant's
devisees, legatees or other designees or, if there be no such devisees, legatees
or other designees, to such Participant's estate. No payments, benefits or
rights arising under this Plan may be assigned or pledged by any Participant,
except under the laws of descent and distribution.

      Section 5.05 Notices. All notices and other communications provided for in
this Plan shall be in writing and shall be sent, delivered or mailed, addressed
as follows: (a) if to the Company, at the Company's principal office address or
such other address as the Company may have designated by written notice to all
Participants for purposes hereof, directed to the attention of the Chief
Executive Officer; and (b) if to any Participant, at his or her residence
address on the records of the Company or to such other address as he or she may
have designated to the Company in writing for purposes hereof. Each such notice
or other communication shall be deemed to have been duly given upon receipt or
three days after being mailed by United States certified or registered mail,
return receipt requested, postage prepaid, except that any change of notice
address shall be effective only upon receipt.

      Section 5.06 Tax Withholdings. The Company shall have the right to deduct
from any payment hereunder all taxes (federal, state or other) that the Company
is required to withhold therefrom.

      Section 5.07 No Employment Rights Conferred. This Plan shall not be deemed
to create a contract of employment between any Participant and the Company
and/or its subsidiaries. Nothing contained in this Plan shall (i) confer upon
any Participant any right with respect to continuation of employment with the
Company or any subsidiary thereof or (ii) subject to the rights and benefits of
any Participant hereunder, interfere in any way with the right of the Company or
any subsidiary thereof to terminate such Participant's employment at any time.

      Section 5.08 Severability. If any provision of the Plan is, becomes or is
deemed to be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions of this Plan shall not
be affected thereby.

      Section 5.09 Governing Law. This Plan shall be governed by and construed
in accordance with the laws of the State of Missouri, without giving effect to
its conflict of laws rules, and applicable federal law.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                       9
<PAGE>

      IN WITNESS WHEREOF, International Wire Group, Inc. has caused this Plan to
be duly executed in its name and behalf by its proper officer thereunto duly
authorized as of January ____, 2005.

                                                  INTERNATIONAL WIRE GROUP, INC.

                                                  By: /s/ Robert Hamwee
                                                      --------------------------
                                                  Name: Robert Hamwee
                                                        ------------------------
                                                  Title: Chairman
                                                         -----------------------


Joined in by the undersigned as of
the date set forth above for the
limited purposes of evidencing his
agreement to be bound by the obligations
set forth in Section 2.01(a) hereof.

/s/ JOSEPH M. FIAMINGO
-----------------------
Joseph M. Fiamingo

Joined in by the undersigned as of
the date set forth above for the
limited purposes of evidencing his
agreement to be bound by the obligations
set forth in Section 2.02(a) hereof.

/s/ GLENN J. HOLLER
-----------------------
Glenn J. Holler

                                       10
<PAGE>
                                     ANNEX A

                      ST. LOUIS EXECUTIVE OFFICE EMPLOYEES


<Table>
<Caption>
                 NAME                            TITLE
                 ----                            -----
<S>                                 <C>
       Joseph M. Fiamingo           Chief Executive Officer

       Glenn J. Holler              Chief Financial Officer

       Daris Foster                 Vice President, Business Process Control

       Teresa Eslinger              Manager of Corporate Accounting

       Timothy Board                Network Planning Supervisor

       Paula Middleton              Executive Assistant
</Table>

<PAGE>
                                     ANNEX B

                               DIVISION EMPLOYEES

<Table>
<Caption>
        EMPLOYEE                                  TITLE                         RETENTION BONUS
        --------                                  -----                         ---------------
<S>                                       <C>                                   <C>
      Roger L. Blumer                     Vice President Engineering                 $67,745

      Beverly A. Terry                    Vice President Customer Support            $55,848

      Shawn G. Bragg                      Director Cebu Operations                   $50,000

      Robert B. Emmott                    Vice President Sales                       $49,691

      Roman Pallares                      Director Mexican Operations                $44,000

      Gregg W. Pfafman                    Director North Operations                  $41,745

      Jesslyn D. Mast                     Director Human Resources                   $38,750

      John Powell                         Director of Sales                          $36,524

      Lester L. Smith                     Director Engineering Projects              $33,134

      Bradley W. Davies                   Plant Manager, Zaragosa and Inglewood      $32,552

      Joseph T. Fiamingo                  Manager Supply Chain                       $29,598

      William O. Jenkins                  Division Accounting Manager                $29,598

      John Senecal                        Director Engineering Plant                 $29,057
                                          Maintenance

      Timothy J. Theisen                  Director Sales Global Auto                 $28,995

      Tony D. Mobley                      Plant Manager Railroad                     $27,060

      Adrian M. Ostman                    IT Operations Support Manager              $25,396
</Table>