Document:

Exhibit
10.5

 

UNITED
STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF TEXAS

HOUSTON 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 consideration
of 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 been
given; and that no other or further notice is necessary; and after due
deliberation and sufficient cause therefore; and the Court having determined
that 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 hereby
GRANTS the Debtors’ Motion in its entirety for the reasons set forth therein;
it is THEREFORE

 

ORDERED that
Debtors may implement the Key Employee Retention Plan (as defined in the
Motion) as follows:

 

(a)    Debtors
are authorized and directed to pay the seven (7) key corporate executives in
Group 1 under the Retention Plan, Retention Compensation equal to 25% of their
current annual Base Salary, at the time of the filing of the Motion, (“Base
Salary”) on the earlier of: termination of such person by Debtors without
cause; or, the entry of an order by this Court approving the adequacy of a
Disclosure Statement.  For purposes of
this Order, an employee shall be considered “terminated without cause” if his
or 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

 

any
policies adopted by the Debtors; (2) Employee’s gross negligence in the
performance or intentional nonperformance of any of Employee’s duties and
responsibilities; (3) Employee’s dishonesty, fraud or misconduct with respect
to the business or affairs of the Debtors; (4) Employee’s conviction of a
felony crime; or (5) Employee’s confirmed positive illegal drug test
result.  The maximum cost of the Retention
Compensation for Group 1 is $500,000.

 

(b)   Debtors are
authorized and directed to pay the seven Group 1 Key Executives the following
Timing Performance Bonuses on the effective date of a reorganization plan for
Debtors (the “Effective Date”), if the Effective Date occurs in the following
months:

 

	
  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 for
Group 1 is $500,000.

 

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

 

2

 

(d)   As a
further incentive for Debtors to meet or exceed their financial projections and
thus enhance its reorganization efforts and the value of the estate for the
benefit of creditors, Debtors propose to pay Group 1 Key Executives on the
Effective Date an EBITDA Performance Bonus of 25% of their Base Salary.  The EBITDA Performance Bonus will be paid
only if the Debtors have met or exceeded the Debtors’ projected 12 month
trailing consolidated EBITDA measured through the last complete month prior to
the Effective Date.  EBITDA will be
measured in accordance with Debtors’ post-petition loan agreement dated January
2, 2002.  The maximum cost of the EBITDA
Performance Bonus for Group 1 is $500,000.

 

(e)    Debtors
are authorized and directed to pay the seven (7) key corporate executives in
Group 1, on the Effective Date, a Distribution Performance Bonus equal to one
half percent (1/2 %) of their Base Salary for each percentage in excess of a
50% recovery to the unsecured creditor class based on the Debtors’ estimates in
the Plan of Reorganization of the payments to be made to the estimated allowed
unsecured claims.  Distribution
Performance Bonuses will be capped at a maximum of 25% of the Group 1 Key
Executive’s Base Salary.  Payment of
Distribution Performance Bonuses, if any, shall occur 75 days after the
Effective Date and be made in the same form of consideration received by the
unsecured creditors.  Any securities
paid as part of a Distribution Performance Bonus shall be valued based upon
their average price over any twenty consecutive trading days during the first
sixty days after the Effective Date. 
The maximum cost of the Distribution Performance Bonus for Group 1 is
$500,000.

 

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

 

3

 

Severance Compensation shall be in lieu of any
additional severance pay the Group 1 Executive may have been entitled to under
an employment contract or under existing Metals USA employment policies or
practices.  Prior to receipt of the
Severance Compensation payment, the Group 1 Executive shall sign a written
release waiving any claims that executive may have relating to his or her
employment or termination, including any claims arising under his or her
employment contract, other than claims for unpaid salary, bonus or expense
reimbursement.

 

(g)   Debtors are
authorized and directed to pay to the one hundred and forty (140) key
managerial and operational staff in the Group 2 subcategories described in the
Motion, Retention Compensation in the following amounts:

 

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

 

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

 

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

 

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

 

(h)   The total
of all Retention Compensation for Group 2 Key Managerial and Operational Staff
shall not exceed $5.6 million dollars, and shall be paid according to the following
schedule:

 

(i)                                                             One
payment equal to 12.5% of each Group 2 employees’ applicable Retention
Compensation  will be paid promptly after entry of this Order;

 

(ii)                                                          On
each ninety day (90) anniversary of the entry of this Order, Group 2 employees
will be paid an additional 12.5% of their Retention Compensation until they
have received 100% of their Retention Compensation or until: (A) the individual
is terminated without cause (as defined in paragraph (a) of this Order); or (B)
the Effective Date;

 

4

 

(iii)                                                       On
the Effective Date, or should an individual be terminated without cause prior
to the Effective Date, the Group 2 employees shall be paid any outstanding
portion of their Retention Compensation not yet received.

 

(iv)                                                      Should
a Debtor company be sold, Group 2 employees of that Debtor will be entitled to
payment, within 14 days of the closing of the sale, of any outstanding portion
of their Retention Compensation not yet received.

 

This
Order shall be effective immediately upon entry.

 

 

SIGNED this 5th
day of June, 2002.

 

 

	
   

  	
  /s/ WILLIAM
  GREENDYKE

  	
   

  
	
   

  	
  UNITED STATES
  BANKRUPTCY JUDGE

  	
   

  

 

5Exhibit

10.37

 

AMENDMENT NO. 1 TO

 

VITAL

IMAGES, INC.

AND

TOSHIBA

CORPORATION

 

MARKETING

AND DISTRIBUTION AGREEMENT

 

THIS AMENDMENT NO. 1 TO MARKETING AND DISTRIBUTION AGREEMENT (the

“Amendment”), is made and entered into this 9th day of January, 2003

by and between Vital Images, Inc., a Minnesota corporation having its principal

place of business at 3300 Fernbrook Lane N., Suite 200, Plymouth, Minnesota

55447 USA (“Vital Images”) and Toshiba Corporation, Medical Systems Company,

having its place of business at 1385, Shimoishigami, Otawara-Shi, Tochigi

324-8550, Japan (“Toshiba”).

 

RECITALS:

 

WHEREAS, Vital Images and Toshiba

previously executed that certain Marketing and Distribution Agreement (the

“Agreement”) dated January 21, 2002, and effective October 1, 2001; and

 

WHEREAS, Section 14.1 of the Agreement provides that the term of the

Agreement would expire on September 30, 2002; and

 

WHEREAS, Vital Images and  Toshiba

now desire to extend the term of the Agreement to September 30, 2003 and amend

certain terms of the Agreement effective October 1, 2002 as set forth below.

 

AGREEMENT:

 

NOW, THEREFORE, in consideration of the

premises and the mutual covenants and agreements hereinafter contained and

other good and valuable consideration, the receipt and sufficiency of which are

hereby acknowledged, the parties agree as follows:

 

1.             Article

1 of the Agreement is hereby amended by adding new Sections 1.8 and 1.9, such

new sections to read as follows:

 

1.8                                 First Level Installation. “First Level Installation” shall

mean unloading, assembling and powering up the applicable computer

workstation(s) sourced from a third party, installing the Products onto such

computer workstation(s) and integrating such computer workstation(s) onto the

customer’s computer network.

 

 

1.9                                 Second Level Installation. 

“Second Level Installation” shall mean working with the customer and

non-Toshiba OEM’s to link non-Toshiba equipment to the computer workstation(s)

on which the Products have been installed.

 

2.             Section

1.2 of the Agreement is hereby amended by deleting the first sentence of said

Section 1.2 and replacing it with the following:

 

“First Level

Maintenance” shall mean electronic or telephone response, or on-site

maintenance, to deal with any problem or software bug in the Product which is

provided by Toshiba or the Dealer Associates to customers in the Territory who

have installed the Products that are under Vital Images’ standard warranty or

standard software maintenance program. 

Only in the U.S., First Level Maintenance shall not include any on-site

maintenance provided by Toshiba or the Dealer Associates.

 

3.             Section

3.1(b) of the Agreement is hereby amended by deleting said Section 3.1(b) and

replacing it with the following:

 

(b)           To perform the First Level

Installation for customers in the Territory with respect to the Products, and

to ensure that only authorized versions of the Products are installed as

supplied by Vital Images for customers in the Territory.

 

4.             Section

3.1(c) of the Agreement is hereby amended by deleting said Section 3.1(c) and

replacing it with the following:

 

(c)           To promptly respond to all inquiries

or complaints from customers; to provide all necessary and appropriate First

Level Maintenance; and to cooperate with Vital Images in the provision of the Second

Level Maintenance.

 

5.             Section

3.1(f) of the Agreement is hereby amended by deleting said Section 3.1(f) and

replacing it with the following:

 

(f)            To maintain an adequately trained and

staffed sales and technical support group for the marketing and distribution of

the Products, and for the First Level Installation and First Level Maintenance.

 

6.             Section

3.6 of the Agreement is hereby amended by adding to the end of the first

paragraph the following:

 

In addition, in

the U.S., in the event Toshiba or the Dealer Associate and Vital Images agree

to send a Vital Images representative to Toshiba’s, the Dealer Associate’s or a

customer’s location for providing the First Level Installation, Toshiba or the

Dealer Associates shall pay the sum of                            ($       )

per instance to Vital Images for such service. 

Outside the U.S., in the event Toshiba or the Dealer Associate and Vital

Images agree to send a Vital Images

 

2

 

representative to Toshiba’s,

the Dealer Associate’s or a customer’s location for providing the First Level

Installation, the amount paid by Toshiba or the Dealer Associates for such

service shall be negotiated on a case-by-case basis.

 

7.             Section

4.5 of the Agreement is hereby amended by deleting the second paragraph of said

Section 4.5 and replacing it with the following:

 

Quarterly Vitreaâ  2 software purchases above the minimums set forth in the Commitment may be

applied to reduce or  satisfy the next

two (2) quarterly purchase commitments, and Toshiba may portion out such excess

purchase amount within such next two (2) quarterly purchase commitments in any

manner it deems appropriate. 

Furthermore, for every one and one-half (1-1/2)  Vitreaâ  2 software purchase orders received from Toshiba or a non-U.S. Dealer

Associate (excluding TMSJ) above the applicable quarterly Commitment,  the quarterly TAMS Commitment shall be

reduced by one (1) Vitreaâ  2 software unit.  Similarly, for

every one (1)  Vitreaâ  2 software purchase order received from TAMS above the applicable quarterly

Commitment, the quarterly non-U.S. (excluding TMSJ) Commitment shall be reduced

by one and one-half (1-1/2)  Vitreaâ  2 software units.

 

8.             Section

4.7 of the Agreement is hereby amended by deleting said Section 4.7 and

replacing it with the following:

 

4.7           Installation of Products.  Unless otherwise agreed in writing by Vital

Images, all deliveries of the Products shall be directly to Toshiba or the

Dealer Associates, and Toshiba and the Dealer Associates shall then have the

sole responsibility for the First Level Installation of such Products into a

customer’s computer system in the Territory in accordance with the standards

and specifications established by Vital Images from time to time and provided to

Toshiba and the Dealer Associates hereunder. 

If the Products need to be integrated with non-Toshiba equipment, Vital

Images will perform the Second Level Installation, upon request from Toshiba,

the Dealer Associates or the customers at no additional charge to Toshiba, to

ensure proper integration.

 

9.             Section

5.2 of the Agreement is hereby amended by deleting said Section 5.2 and

replacing it with the following:

 

5.2           First Level Maintenance Service.   In accordance with their technical ability,

and based upon their prior experience and training by Vital Images, Toshiba

and/or the Dealer Associates shall use their reasonable best efforts to provide

the First Level Maintenance; provided, however, that any and all on-site

maintenance in the U.S. which is excluded from First Level Maintenance shall be

provided by Vital Images.  If Vital

Images requests on-site assistance from Toshiba or the Dealer Associates in the

U.S., such assistance will be provided at a      

discount off of Toshiba’s or the Dealer Associate’s prevailing labor rates.

 

3

 

10.           Section

5.3 of the Agreement is hereby amended by deleting said Section 5.3 and

replacing it with the following:

 

5.3           Second Level Maintenance Service.   In accordance with its technical ability,

Vital Images shall provide the Second Level Maintenance.   In accordance with their technical ability,

and based upon their prior experience and training by Vital Images, Toshiba

and/or the Dealer Associates shall use their reasonable best efforts to assist

Vital Images in providing the Second Level Maintenance for the benefit of

customers in the Territory.

 

11.           Section

5.4 of the Agreement is hereby amended by substituting “Section 5.3” for

“Section 5.2” in the first sentence thereof.

 

12.           Exhibit

E to the Agreement, setting forth Product Prices, is hereby amended and

restated as set forth on attached Exhibit E to this Amendment.

 

13.           Exhibit

F to the Agreement, setting forth Product Commitments, is hereby amended

and restated as set forth on attached Exhibit F to this Amendment.

 

14.           Notwithstanding

Section 14.1 of the Agreement, setting forth the Term of the Agreement, this

Amendment shall extend the Term of the Agreement until September 30, 2003.

 

15.           This

Amendment shall take effect retroactively as of October 1, 2002.

 

16.           Except as amended hereby, the Agreement shall

remain in full force and effect in accordance with its original terms.  The amended portions of the Agreement shall

be read, wherever reasonable to do so, to be consistent with the portions not

so amended; provided that the amended portions shall be deemed to control and

any conflict shall be resolved in favor of such amended portions.

 

IN WITNESS WHEREOF, the parties hereto have

executed this Amendment effective the day and year first above written.

 

	

  VITAL IMAGES, INC.

  	

  TOSHIBA CORPORATION

  MEDICAL SYSTEMS COMPANY

  
	

   

  	

   

  
	

   

  	

   

  
	

  By

  	

  /s/ Jay D. Miller

  	

   

  	

  By

  	

  /s/ Kenichi Komatsu

  	

   

  
	

   

  	

   

  
	

  Name

  	

  Jay D. Miller

  	

   

  	

  Name

  	

  Kenichi Komatsu

  	

   

  
	

   

  	

   

  
	

  Title

  	

  President & CEO

  	

   

  	

  Title

  	

  Chief Technology Executive

  	

   

  
										

 

4

 

VITAL IMAGES, INC. AND TOSHIBA CORPORATION

MARKETING AND

DISTRIBUTION AGREEMENT

 

EXHIBIT E

PRODUCT PRICE LIST (EFFECTIVE FROM OCTOBER 1, 2002)

 

	

  License

  	

   

  	

  Platform Configuration

  Required

  	

   

  	

  Pricing

  	

   

  	

  Annual Software

  Maintenance Pricing

  	

   

  
	

  U.S.(1)

  	

   

  	

  Non-U.S.(2)

  	

  U.S.(3)

  	

   

  	

  Non-U.S.(3)

  
	

  Vitreaâ 2

  	

   

  	

  Windows Platform

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  VScoreÔ

  option

  	

   

  	

  Windows Platform

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  VScore

  with EKG GateÔ option

  	

   

  	

  Windows Platform

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  VScore with AutoGateÔ option

  	

   

  	

  Windows Platform

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  3D Angiography Option

  	

   

  	

  Windows Platform

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  CT

  Perfusion Option

  	

   

  	

  Windows Platform

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  CT

  Colongraphy Option

  	

   

  	

  Windows Platform

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Automated

  Vessel Measurements Option

  	

   

  	

  Windows Platform

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  

 

(1)  Includes

warranty pursuant to Section 8.1(a) of the Agreement, end user training, and,

subject to Section 3.6 of the Agreement, the Second Level Installation.

 

(2) Includes

warranty pursuant to Section 8.1(a) of the Agreement, the CT Colonography

Option, the Automated Vessel Measurements Option, and, subject to Section 3.6

of the Agreement, the Second Level Installation.

 

(3)  Prices shown are for one-year maintenance

contracts.  If multi-year contracts are

sold, the following discounts shall apply:

 

    

discount for 2-year contract

    

discount for 3-year contract

    

discount for 4-year contract

    

discount for 5-year contract

 

5

 

EXHIBIT F

PRODUCT COMMITMENTS

 

Toshiba and/or its Dealer

Associates shall purchase from Vital Images during the twelve (12) month period

ended September 30, 2003 the following Vitrea  â 2 Software License minimums:

 

YEAR 1

 

	

   

  	

   

  	

  Commitment

  	

   

  	

  Cumulative

  Total

  	

   

  
	

   

  	

   

  	

  U.S.

  	

   

  	

  Non-U.S.

  	

   

  	

  U.S.

  	

   

  	

  Non-U.S.

  	

   

  
	

  QUARTER 4

  Oct. 1, 2002 - Dec. 31, 2002

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  

 

YEAR 2

 

	

   

  	

   

  	

  Commitment

  	

   

  	

  Cumulative

  Total

  	

   

  
	

   

  	

   

  	

  U.S.

  	

   

  	

  Non-U.S.

  	

   

  	

  U.S.

  	

   

  	

  Non-U.S.

  	

   

  
	

  QUARTER 1

  Jan. 1, 2003 - Mar. 31, 2003

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  QUARTER 2

  April 1, 2003 - June 30, 2003

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  QUARTER 3

  July 1, 2003 - Sept. 30, 2003

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  

 

Any purchases made by Toshiba and/or its Dealer Associates pursuant to

Sections 3.2 and 3.3 of this Agreement shall not be credited against the

Commitment.

 

6

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