**Exhibit10.5**

 

**UNITEDSTATES BANKRUPTCY COURTSOUTHERN DISTRICT OF TEXASHOUSTON DIVISION**

 
| In re:                     | § |                                            |       |
|----------------------------|--------|-------------------------------------------------|------------|
|                       | § | Jointly Administered Case No. 01-42530-H4-11    |       |
| Metals USA,  Inc., et al., | § |                                            |       |
|                       | § | Case Nos. 01-42530-H4-11 through 01-42573-H4-11 |       |
| Debtors.                   | § |                                            |       |
|                       | § |                                            | Chapter 11 |   |
|                            |        |                                                 |            |  |

 

----

 

**ORDER GRANTING DEBTORS’ EXPEDITED MOTION FOR APPROVAL OF KEY EMPLOYEE RETENTION PLAN [DKT. NO. 1139]**

 

Upon considerationof the Debtors’ Expedited Motion for Approval of Key Employee Retention Plan(the “Motion”), filed by the above-captioned debtors and debtors-in-possession(the “Debtors”); and after finding that good and sufficient notice having beengiven; and that no other or further notice is necessary; and after duedeliberation and sufficient cause therefore; and the Court having determinedthat the relief sought in the Motion is in the best interest of the Debtors,their estates, their creditors and all parties-in-interest; the Court herebyGRANTS the Debtors’ Motion in its entirety for the reasons set forth therein;it is THEREFORE

 

ORDERED thatDebtors may implement the Key Employee Retention Plan (as defined in theMotion) as follows:

 

(a)    Debtorsare authorized and directed to pay the seven (7) key corporate executives inGroup 1 under the Retention Plan, Retention Compensation equal to 25% of theircurrent annual Base Salary, at the time of the filing of the Motion, (“BaseSalary”) on the earlier of: termination of such person by Debtors withoutcause; or, the entry of an order by this Court approving the adequacy of aDisclosure Statement.  For purposes ofthis Order, an employee shall be considered “terminated without cause” if hisor her employment is terminated for any reason other than the following: (1)Employee’s material breach of his or her employment agreement, if applicable,or

 

1

----

 

anypolicies adopted by the Debtors; (2) Employee’s gross negligence in theperformance or intentional nonperformance of any of Employee’s duties andresponsibilities; (3) Employee’s dishonesty, fraud or misconduct with respectto the business or affairs of the Debtors; (4) Employee’s conviction of afelony crime; or (5) Employee’s confirmed positive illegal drug testresult.  The maximum cost of the RetentionCompensation for Group 1 is $500,000.

 

(b)   Debtors areauthorized and directed to pay the seven Group 1 Key Executives the followingTiming Performance Bonuses on the effective date of a reorganization plan forDebtors (the “Effective Date”), if the Effective Date occurs in the followingmonths:

 
| **If the  Effective Date  Occurs in the Month of:** |   | **Percentage of Base Salary payable  as Timing Performance Bonus:** |   |
|-----------------------------------------------------|--------|---------------------------------------------------------------------|--------|
|                                                |   |                                                                |   |
| November 2002                                       |   | 25                                                                  | %      |
|                                                |   |                                                                |   |
| December 2002                                       |   | 20                                                                  | %      |
|                                                |   |                                                                |   |
| January 2003                                        |   | 15                                                                  | %      |
|                                                |   |                                                                |   |
| February 2003                                       |   | 10                                                                  | %      |
|                                                |   |                                                                |   |
| March 2003                                          |   | 5                                                                   | %      |
|                                                |   |                                                                |   |
| April 2003 or  thereafter                           |   | 0                                                                   | %      |

 

The maximum cost of the Timing Performance Bonuses forGroup 1 is $500,000.

 

(c)    Any Group1 executive who is terminated without cause as defined in the Motion prior tothe Effective Date will be entitled to receive a pro rata share of the TimingPerformance Bonus.  The pro rata sharewill be calculated by determining (1) the number of days the Group 1 executivecontinued to be employed after the entry of the order approving this Motion, dividedby (2) the number of days between the entry of the order approving this Motionand the Effective Date, multiplied by (3) the Group 1 executive’s applicableTiming Performance Bonus as calculated above. Pro rata shares, if any, due to Group 1 executives will be paid on theEffective Date

 

2

----

 

(d)   As afurther incentive for Debtors to meet or exceed their financial projections andthus enhance its reorganization efforts and the value of the estate for thebenefit of creditors, Debtors propose to pay Group 1 Key Executives on theEffective Date an EBITDA Performance Bonus of 25% of their Base Salary.  The EBITDA Performance Bonus will be paidonly if the Debtors have met or exceeded the Debtors’ projected 12 monthtrailing consolidated EBITDA measured through the last complete month prior tothe Effective Date.  EBITDA will bemeasured in accordance with Debtors’ post-petition loan agreement dated January2, 2002.  The maximum cost of the EBITDAPerformance Bonus for Group 1 is $500,000.

 

(e)    Debtorsare authorized and directed to pay the seven (7) key corporate executives inGroup 1, on the Effective Date, a Distribution Performance Bonus equal to onehalf percent (1/2 %) of their Base Salary for each percentage in excess of a50% recovery to the unsecured creditor class based on the Debtors’ estimates inthe Plan of Reorganization of the payments to be made to the estimated allowedunsecured claims.  DistributionPerformance Bonuses will be capped at a maximum of 25% of the Group 1 KeyExecutive’s Base Salary.  Payment ofDistribution Performance Bonuses, if any, shall occur 75 days after theEffective Date and be made in the same form of consideration received by theunsecured creditors.  Any securitiespaid as part of a Distribution Performance Bonus shall be valued based upontheir average price over any twenty consecutive trading days during the firstsixty days after the Effective Date. The maximum cost of the Distribution Performance Bonus for Group 1 is$500,000.

 

(f)    Debtorsare authorized and directed to pay the seven (7) key corporate executives inGroup 1 under the Retention Plan, Severance Compensation equal to 25% of theirBase Salary if the executive is terminated without cause at any time prior to 6months after the Effective Date. The maximum cost of the Severance Compensationfor Group 1 is $500,000.  Receipt of

 

3

----

 

Severance Compensation shall be in lieu of anyadditional severance pay the Group 1 Executive may have been entitled to underan employment contract or under existing Metals USA employment policies orpractices.  Prior to receipt of theSeverance Compensation payment, the Group 1 Executive shall sign a writtenrelease waiving any claims that executive may have relating to his or heremployment or termination, including any claims arising under his or heremployment contract, other than claims for unpaid salary, bonus or expensereimbursement.

 

(g)   Debtors areauthorized and directed to pay to the one hundred and forty (140) keymanagerial and operational staff in the Group 2 subcategories described in theMotion, Retention Compensation in the following amounts:

 

(i)                                                             75%of the respective Base Salaries of the twenty (20) key managerial andoperational staff in Group 2a.

 

(ii)                                                          50%of the respective Base Salaries of the nineteen (18) key managerial andoperational staff in Group 2b.

 

(iii)                                                       30%of the respective Base Salaries of the seventy-one (74) key managerial andoperational staff in Group 2c.

 

(iv)                                                      20%of the respective Base Salaries of the twenty-seven (28) key managerial andoperational staff in Group 2d.

 

(h)   The totalof all Retention Compensation for Group 2 Key Managerial and Operational Staffshall not exceed $5.6 million dollars, and shall be paid according to the followingschedule:

 

(i)                                                             Onepayment equal to 12.5% of each Group 2 employees’ applicable RetentionCompensation****will be paid promptly after entry of this Order;

 

(ii)                                                          Oneach ninety day (90) anniversary of the entry of this Order, Group 2 employeeswill be paid an additional 12.5% of their Retention Compensation until theyhave received 100% of their Retention Compensation or until: (A) the individualis terminated without cause (as defined in paragraph (a) of this Order); or (B)the Effective Date;

 

4

----

 

(iii)                                                       Onthe Effective Date, or should an individual be terminated without cause priorto the Effective Date, the Group 2 employees shall be paid any outstandingportion of their Retention Compensation not yet received.

 

(iv)                                                      Shoulda Debtor company be sold, Group 2 employees of that Debtor will be entitled topayment, within 14 days of the closing of the sale, of any outstanding portionof their Retention Compensation not yet received.

 

ThisOrder shall be effective immediately upon entry.

 

 

SIGNED this 5thday of June, 2002.

 

 
|   | /s/ WILLIAM  GREENDYKE          |   |
|--------|---------------------------------|--------|
|   | UNITED STATES  BANKRUPTCY JUDGE |   |

 

5

----