Document:

Exhibit 10.1

 

METALS USA, INC.

 

2002 LONG-TERM
INCENTIVE PLAN

 

1.                                       PURPOSE.  The purpose of this 2002 Long-Tem incentive
Plan (the “Plan”) of Metals USA, Inc., a Delaware corporation (the “Company”),
is to advance the interests of the Company and its stockholders by providing a
means to attract, retain and reward executive officers, other key employees,
directors and consultants of and service providers to the Company and its
subsidiaries, and to enable such persons to acquire or increase a proprietary
interest in the Company, thereby promoting a closer identity of interests
between such persons and the Company’s stockholders.

 

2.                                       DEFINITIONS.  The definitions of awards under the Plan,
including Options, SARs (including Limited SARs), Restricted Stock, Performance
Shares, Deferred Stock, Stock granted as a bonus or in lieu of other awards,
Dividend Equivalents and Other Stock-Based Awards are set forth in Section 6 of
the Plan.  Such awards, together with
any other right or interest granted to a Participant under the Plan, are termed
“Awards.” For purposes of the Plan, the following additional terms shall be
defined as set forth below:

 

(a)                                  “Award
Agreement” means any written agreement, contract, notice or other instrument or
document evidencing an Award.

 

(b)                                 “Beneficiary”
shall mean the person, persons, trust or trusts which have been designated by a
Participant in his or her most recent written beneficiary designation filed
with the Committee to receive the benefits specified under the Plan upon such
Participant’s death or, if there is no designated Beneficiary or surviving
designated Beneficiary, then the person, persons, trust or trusts entitled by
will or the laws of descent and distribution to receive such benefits.

 

(c)                                  “Board” means
the Board of Directors of the Company.

 

(d)                                 A “Change in
Control” shall be deemed to have occurred if:

 

(i)                                     any Person is or becomes the “Beneficial Owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
(not including in the securities Beneficially Owned by such Person any
securities acquired directly from the Company) representing 50% or more of the
total voting power of the Company’s then outstanding voting securities,
excluding the Company or an employee benefit plan of the Company and any Person who becomes such a Beneficial Owner in connection with a
transaction described in clause (1) of clause (iii) below or who becomes a
Beneficial Owner pursuant to the Reorganization Plan;

 

(ii)                                  the following individuals cease for any reason to constitute a majority
of the number of directors then serving: 
individuals who, on the Effective Date, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for election
by the Company’s stockholders was approved or

 

 

recommended
by a vote of at least two-thirds (2/3) of the directors then still in office
who either were directors on the Effective Date or whose appointment, election,
or nomination for election was previously so approved or recommended;

 

(iii)                               there is consummated a merger or consolidation of the Company with any
other corporation other than (1) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior to such
merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity or any parent thereof) at least 50% of the combined voting power of the
voting securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (2) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Company) representing 50% or more of the combined voting power of the
Company’s then outstanding voting securities; or

 

(iv)                              the stockholders of the Company approve a plan of complete liquidation
or dissolution of the Company or there is consummated an agreement for the sale
or disposition by the Company of all or substantially all of the Company’s
assets, other than a sale or disposition by the Company of all or substantially
all of the Company’s assets to an entity at least 50% of the combined voting
power of the voting securities of which are owned by Persons in substantially
the same proportions as their ownership of the Company immediately prior to
such sale.

 

(e)                                  “Code” means
the Internal Revenue Code of 1986, as amended from time to time.  References to any provision of the Code
shall be deemed to include regulations thereunder and successor provisions and
regulations thereto.

 

(f)                                    “Committee”
means the Compensation Committee of the Board, or such other Board committee as
may be designated by the Board to administer the Plan.  Any such Committee that is authorized to
grant Awards to Participants subject to Section 16 of the Exchange Act (a
“Section 16 Committee”) shall, to the extent necessary to comply with Rule
16b-3, be comprised of two or more “nonemployee directors” within the meaning
of Rule 16b-3 or shall constitute the entire Board, and any such Committee that
is authorized to grant Awards to executive officers of the Company (which may
or may not be the same Committee as the Section 16 Committee) shall, to the
extent necessary to comply with Section 162(m) of the Code, be comprised of two
or more “outside directors” within the meaning of Section 162(m); provided,
however, that no director who is also an employee of the Company may sit on any
Committee (other than the full Board when it is sitting as the Section 16
Committee).

 

(g)                                 “Disability”
means:  (a) in the case of a Participant
whose employment with is subject to the terms of an employment agreement, which
agreement includes a definition of “Disability,” the term “Disability” as used
in this Plan or any Award Agreement shall have the meaning set forth in such
employment agreement during the period that such employment agreement remains
in effect; or (b) the term “Disability” as used in the long-term disability
plan, if any; or (c) if there is no such plan, the term “Disability” as used in
this Plan or any Award

 

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Agreement shall mean a
physical or mental infirmity which impairs the Participant’s ability to perform
substantially his or her duties for a period of one hundred eighty (180)
consecutive days.

 

(h)                                 Effective Date means the effective date for the Reorganization Plan (as
defined in the Reorganization Plan).

 

(i)                                     “Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to time.  References to any provision of the Exchange
Act shall be deemed to include rules thereunder and successor provisions and
rules thereto.

 

(j)                                     “Fair Market
Value” means, with respect to Stock, Awards, or other property, the fair market
value of such Stock, Awards, or other property determined by such methods or
procedures as shall be established from time to time by the Committee,
PROVIDED, HOWEVER, that if the Stock is listed on a national securities
exchange or quoted in an interdealer quotation system, the Fair Market Value of
such Stock on a given date shall be based upon the last sales price or, if
unavailable, the average of the closing bid and asked prices per share of the
Stock on such date (or, if there was no trading or quotation in the Stock on
such date, on the next preceding date on which there was trading or quotation)
as reported in the WALL STREET JOURNAL (or other reporting service approved by
the Committee).

 

(k)                                  “ISO” means any
Option intended to be and designated as an incentive stock option within the
meaning of Section 422 of the Code.

 

(l)                                     “Nonqualified
Stock Option” means an Option that is not an ISO.

 

(m)                               “Participant”
means a person who, at a time when eligible under Section 5 hereof, has been
granted an Award under the Plan.

 

(n)                                 “Person” shall
have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and
used in Sections 13(d) and 14(d) thereof, except that such term shall not
include:  (i) the Company or any of its
subsidiaries; (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates; (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities; or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.

 

(o)                                 “Reorganization Plan” means the plan of reorganization for the Company and
certain of its subsidiaries and affiliates dated September 18, 2002 which was
confirmed pursuant to an order of the Bankruptcy Court dated October 18, 2002.

 

(p)                                 “Rule 16b-3”
means Rule 16b-3, as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.

 

(q)                                 “Stock” means
the Common Stock, $.01 par value, of the Company and such other securities as
may be substituted for Stock or such other securities pursuant to
Section 4.

 

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(r)                                    “Ten-Percent
Stockholder” means a Participant, who, at the time an Incentive Stock Option is
to be granted to him or her, owns (within the meaning of Section 422(b)(6) of
the Code) Stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company, or of a “parent” or
“subsidiary” (as such terms are defined in Section 6(b)(3) hereof).

 

3.                                       ADMINISTRATION.

 

(a)                                  AUTHORITY OF
THE COMMITTEE.  The Plan shall be
administered by the Committee.  The
Committee shall have full and final authority to take the following actions, in
each case subject to and consistent with the provisions of the Plan:

 

(i)                                     to select
persons to whom Awards may be granted;

 

(ii)                                  to determine
the type or types of Awards to be granted to each such person;

 

(iii)                               to determine
the number of Awards to be granted, the number of shares of Stock to which an
Award will relate, the terms and conditions of any Award granted under the Plan
(including, but not limited to, any exercise price, grant price or purchase
price, any restriction or condition, any schedule for lapse of restrictions or
conditions relating to transferability or forfeiture, exercisability or
settlement of an Award, and waivers or accelerations thereof, performance
conditions relating to an Award (including performance conditions relating to
Awards not intended to be governed by Section 7(e) and waivers and
modifications thereof), based in each case on such considerations as the
Committee shall determine), and all other matters to be determined in
connection with an Award;

 

(iv)                              to determine
whether, to what extent and under what circumstances an Award may be settled,
or the exercise price of an Award may be paid, in cash, Stock, other Awards, or
other property, or an Award may be canceled, forfeited, or surrendered;

 

(v)                                 to determine
whether, to what extent and under what circumstances cash, Stock, other Awards
or other property payable with respect to an Award will be deferred either
automatically, at the election of the Committee or at the election of the
Participant;

 

(vi)                              to prescribe
the form of each Award Agreement, which need not be identical for each
Participant;

 

(vii)                           to adopt,
amend, suspend, waive and rescind such rules and regulations and appoint such
agents as the Committee may deem necessary or advisable to administer the Plan;

 

(viii)                        to correct any
defect or supply any omission or reconcile any inconsistency in the Plan and to
construe and interpret the Plan and any Award, rules and regulations, Award
Agreement or other instrument hereunder; and

 

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(ix)                                to make all
other decisions and determinations as may be required under the terms of the
Plan or as the Committee may deem necessary or advisable for the administration
of the Plan.

 

(b)                                 MANNER OF
EXERCISE OF COMMITTEE AUTHORITY.  Unless
authority is specifically reserved to the Board under the terms of the Plan,
the Company’s Certificate of incorporation or Bylaws, or applicable law, the
Committee shall have sole discretion in exercising authority under the
Plan.  Any action of the Committee with
respect to the Plan shall be final, conclusive and binding on all persons,
including the Company, subsidiaries of the Company, Participants, any person
claiming any rights under the Plan from or through any Participant and stockholders,
except to the extent the Committee may subsequently modify, or take further
action not consistent with, its prior action. 
If not specified in the Plan, the time at which the Committee must or
may make any determination shall be determined by the Committee, and any such
determination may thereafter by modified by the Committee (subject to Section
8(e)).  The express grant of any
specific power to the Committee, and the taking of any action by the Committee,
shall not be construed as limiting any power or authority of the
Committee.  The Committee may delegate
to officers or managers of the Company or any subsidiary of the Company the
authority, subject to such terms as the Committee shall determine, to perform
administrative functions and, with respect to Participants not subject to
Section 16 of the Exchange Act, to perform such other functions as the
Committee may determine, to the extent permitted under Rule 16b-3, if
applicable, and other applicable law.

 

(c)                                  LIMITATION OF
LIABILITY.  Each member of the Committee
shall be entitled to, in good faith, rely or act upon any report or other
information furnished to him by any officer or other employee of the Company or
any subsidiary, the Company’s independent certified public accountants or any
executive compensation consultant, legal counsel or other professional retained
by the Company to assist in the administration of the Plan.  No member of the Committee, nor any officer
or employee of the Company acting on behalf of the Committee, shall be personally
liable for any action, determination or interpretation taken or made in good
faith with respect to the Plan, and all members of the Committee and any
officer or employee of the Company acting on its behalf shall, to the extent
permitted by law, be fully indemnified and protected by the Company with
respect to any such action, determination or interpretation.

 

4.                                       STOCK SUBJECT
TO PLAN.

 

(a)                                  AMOUNT OF STOCK
RESERVED.  The total amount of Stock
that may be delivered pursuant to Awards granted under the Plan shall not
exceed 2,015,000 shares of Stock. 
Notwithstanding the foregoing, the number of shares that may be
delivered upon the exercise of ISOs shall not exceed 2,015,000, subject in each
case to adjustment as provided in Section 4(c), and the number of shares that
may be delivered as Restricted Stock and Deferred Stock (other than pursuant to
an Award granted under Section 7(e)) shall not in the aggregate exceed
2,015,000, provided, however, that shares subject to Options, Restricted Stock
(including Performance Shares) or Deferred Stock Awards shall not be deemed
delivered if such Awards are forfeited, expire or otherwise terminate without
delivery of shares to the Participant. 
To the extent that an Award is only to be paid in cash or is paid in
cash, any shares of Stock subject to such Award shall again be available for
the grant of an Award.  Any shares of
Stock delivered

 

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pursuant to an Award may
consist, in whole or in part, of authorized and unissued shares, treasury
shares or shares acquired in the market for a Participant’s account.

 

(b)                                 ANNUAL
PER-PARTICIPANT LIMITATIONS.  During any
calendar year, no Participant may be granted Awards that may be settled by
delivery of more than 500,000 shares of Stock, subject to adjustment as
provided in Section 4(c).  In addition,
with respect to Awards that may be settled in cash (in whole or in part), no
Participant may be paid during any calendar year cash amounts relating to such
Awards that exceed the greater of the Fair Market Value of the number of shares
of Stock set forth in the preceding sentence at the date of grant or the date
of settlement of Award.  This provision
sets forth two separate limitations, so that Awards that may be settled solely
by delivery of Stock will not operate to reduce the amount of cash-only Awards,
and vice versa; nevertheless, Awards that may be settled in Stock or cash must
not exceed either limitation.

 

(c)                                  ADJUSTMENTS.  In the event that the Committee shall
determine that any dividend or other distribution (whether in the form of cash,
Stock or other property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase or
exchange of Stock or other securities, liquidation, dissolution, or other
similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Participants under the Plan, then the Committee shall, in such manner
as it may deem equitable, adjust any or all of (i) the number and kind of
shares of Stock reserved and available for Awards under Section 4(a), including
shares reserved for the ISOs and Restricted and Deferred Stock, (ii) the number
and kind of shares of Stock specified in the Annual Per-Participant Limitations
under Section 4(b), (iii) the number and kind of shares of outstanding
Restricted Stock or other outstanding Award in connection with which shares
have been issued, (iv) the number and kind of shares that may be issued in
respect of other outstanding Awards and (v) the exercise price, grant price or
purchase price relating to any Award (or, if deemed appropriate, the Committee
may make provision for a cash payment with respect to any outstanding Award).  In addition, the Committee is authorized to
make adjustments in the terms and conditions of, and the criteria included in,
Awards in recognition of unusual or nonrecurring events (including, without
limitation, events described in the preceding sentence) affecting the Company
or any subsidiary or the financial statements of the Company or any subsidiary,
or in response to changes in applicable laws, regulations, or accounting
principles.  The foregoing notwithstanding,
no adjustments shall be authorized under this Section 4(c) with respect to ISOs
or SARs in tandem therewith to the extent that such authority would cause the
Plan to fail to comply with Section 422(b)(I) of the Code, and no such
adjustment shall be authorized with respect to Options, SARs or other Awards
subject to Section 7(e) to the extent that such authority would cause such
Awards to fail to qualify as “qualified performance-based compensation” under
Section 162(m)(4)(C) of the Code.

 

5.                                       ELIGIBILITY.  Executive officers, other key employees of
the Company and its subsidiaries and the Company’s directors,, and persons who
provide consulting or other services to the Company deemed by the Committee to
be of substantial value to the Company, are eligible to be granted Awards under
the Plan.  In addition, a person who has
been offered employment by the Company or its subsidiaries is eligible to be
granted an Award under the Plan, provided that such Award shall be cancelled if
such person fails to commence such

 

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employment, and no payment
of value may be made in connection with such Award until such person has
commenced such employment.

 

6.                                       SPECIFIC TERMS
OF AWARDS.

 

(a)                                  GENERAL.  Awards may be granted on the terms and
conditions set forth in this Section 6. 
In addition, the Committee may impose on any Award or the exercise
thereof such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment or
service of the Participant.  Except as
provided in Section 6(f), 6(h), or 7(a), or to the extent required to comply
with requirements of the Delaware General Corporation Law that lawful
consideration be paid for Stock, only services may be required as consideration
for the grant (but not the exercise) of any Award.

 

(b)                                 OPTIONS.  The Committee is authorized to grant Options
(including “reload” options automatically granted to offset specified exercises
of Options) on the following terms and conditions (“Options”):

 

(i)                                     EXERCISE
PRICE.  The exercise price per share of
Stock purchasable under an Option shall be determined by the Committee;
PROVIDED, HOWEVER, that, that, except as provided in Section 7(a), such
exercise price shall be not less than the Fair Market Value of a share on the
date of grant of such Option, and further PROVIDED, that the exercise price per
share shall not be less than 110% of the Fair Market Value on the date of grant
in the case of an ISO granted to a Ten-Percent Stockholder.

 

(ii)                                  TIME AND METHOD
OF EXERCISE.  The Committee shall
determine the time or times at which an Option may be exercised in whole or in
part, the methods by which such exercise price may be paid or deemed to be paid,
the form of such payment, including, without limitation, cash, Stock, other
Awards or awards granted under other Company plans or other property (including
notes or other contractual obligations of Participants to make payment on a
deferred basis, such as through “cashless exercise” arrangements, to the extent
permitted by applicable law), and the methods by which Stock will be delivered
or deemed to be delivered to Participants.

 

(iii)                               ISOS.  The terms of any ISO granted under the Plan
shall comply in all respects with the provisions of Section 422 of the Code,
including but not limited to the requirement that no ISO shall be granted more
than ten years after the Effective Date of the Plan.  An ISO shall not be exercisable after the expiration of ten (10)
years from the date it is granted (five (5) years in the case of an ISO granted
to a Ten-Percent Stockholder).  An
Option shall be treated as an ISO only to the extent that the aggregate Fair
Market Value (determined at the time the Option is granted) of the shares with
respect to which all ISOs held by a Participant (under the Plan and all other
plans of the Company, its “parent corporation” or “subsidiary corporation” (as
such terms are defined under Sections 424(e) and 424(f) of the Code,
respectively)), become exercisable for the first time during any calendar year
does not exceed $100,000.  This
limitation shall be applied by taking Options into account in the order in
which they were granted.  To the extent
this limitation is exceeded, an Option shall be treated as a Nonqualified Stock
Option regardless of its designation as an ISO. Should any ISO remain
exercisable after three months

 

7

 

after employment terminates
for any reason other than Disability or death, or after one year if employment
terminates due to Disability, the Option shall immediately be converted to a
Nonqualified Stock Option.  In order to
obtain the benefits of an ISO under the Code, no sale or other disposition may
be made of any shares upon exercise of such Option until the later of one year
from the date of transfer of the shares acquired pursuant to the exercise of
the Option, or two years from the grant date of the Option.  The Company shall have no liability in the
event it is determined that any Option intended to be an ISO fails to qualify
as such, whether such failure is a result of a disqualifying disposition or the
terms of this Plan or any governing Agreement.

 

(iv)                              TERMINATION OF
EMPLOYMENT OR OTHER SERVICE.  Unless
otherwise determined by the Committee, upon termination of a Participant’s
employment or other service with the Company and its subsidiaries, such
Participant may exercise any Options during the three-month period following
such termination of employment or other service, but only to the extent such
Option was exercisable immediately prior to such termination of
employment.  Notwithstanding the
foregoing, if the Committee determines that such termination is for cause, all
Options held by the Participant shall terminate as of the termination of
employment or other service.

 

(c)                                  STOCK
APPRECIATION RIGHTS.  The Committee is
authorized to grant SARS on the following terms and conditions (“SARs”):

 

(i)                                     RIGHT TO
PAYMENT.  An SAR shall confer on the
Participant to whom it is granted a right to receive, upon exercise thereof,
the excess of (A) the Fair Market Value of one share of Stock on the date of
exercise (or, if the Committee shall so determine in the case of any such right
other than one related to an ISO, the Fair Market Value of one share at any
time during a specified period before or after the date of exercise), over (B)
the grant price of the SAR as determined by the Committee as of the date of
grant of the SAR, which, except as provided in Section 7(a), shall be not less
than the Fair Market Value of one share of Stock on the date of grant.

 

(ii)                                  OTHER
TERMS.  The Committee shall determine
the time or times at which an SAR may be exercised in whole or in part, the
method of exercise, method of settlement, form of consideration payable in
settlement, method by which Stock will be delivered or deemed to be delivered
to Participants, whether or not an SAR shall be in tandem with any other Award,
and any other terms and conditions of any SAR. 
Limited SARS that may only be exercised upon the occurrence of a Change
in Control may be granted on such terms, not inconsistent with this Section
6(c), as the Committee may determine. 
Limited SARs may be either freestanding or in tandem with other Awards.

 

(d)                                 RESTRICTED
STOCK.  The Committee is authorized to
grant Restricted Stock on the following terms and conditions (“Restricted
Stock”), including those with respect to which the restrictions lapse upon the
achievement of performance goals under Section 7(e) hereof (“Performance
Shares”):

 

(i)                                     GRANT AND
RESTRICTIONS.  Restricted Stock shall be
subject to such restrictions on transferability and other restrictions, if any,
as the Committee may impose, which restrictions may lapse separately or in
combination at such times, under such

 

8

 

circumstances (including
those set forth in Section 7(e)), in such installments, or otherwise, as the
Committee may determine.  Except to the
extent restricted under the terms of the Plan and any Award Agreement relating
to the Restricted Stock or Performance Shares, a Participant granted Restricted
Stock or Performance Shares shall have all of the rights of a stockholder
including, without limitation, the right to vote the Restricted Stock or Performance
Shares, and the right to receive dividends thereon.

 

(ii)                                  FORFEITURE.  Except as otherwise determined by the
Committee, upon termination of employment or other service (as determined under
criteria established by the Committee) during the applicable restriction
period, Restricted Stock and Performance Shares that are at that time subject
to restrictions shall be forfeited and reacquired by the Company; PROVIDED,
HOWEVER, that the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that restrictions or
forfeiture conditions relating to Restricted Stock will be waived in whole or
in part in the event of termination resulting from specified causes; provided,
however, that no such determinations shall be made with respect to an Award of
Performance Shares after the grant thereof if the Committee’s discretion to
make such determination shall result in the Award not being qualified as
performance-based pursuant to Section 7(e) hereof and Section 162(m) of the
Code.

 

(iii)                               CERTIFICATES
FOR STOCK.  Restricted Stock and
Performance Shares granted under the Plan may be evidenced in such manner as
the Committee shall determine.  If
certificates representing Restricted Stock and Performance Shares are registered
in the name of the Participant, such certificates may bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, the Company may retain physical possession of the
certificate, and the Participant shall have delivered a stock power to the
Company, endorsed in blank, relating to the Restricted Stock or Performance
Shares.

 

(iv)                              DIVIDENDS.  Dividends paid on Restricted Stock shall be
either paid at the dividend payment date in cash or in shares of unrestricted
Stock having a Fair Market Value equal to the amount of such dividends, or the
payment of such dividends shall be deferred and/or the amount or value thereof
automatically reinvested in additional Restricted Stock, other Awards, or other
investment vehicles, as the Committee shall determine or permit the Participant
to elect.  Stock distributed in
connection with a Stack split or Stock dividend, and other property distributed
as a dividend, shall be subject to restrictions and a risk of forfeiture to the
same extent as the Restricted Stock with respect to which such Stock or other
property has been distributed, unless otherwise determined by the
Committee.  An Award of Performance
Shares shall provide that Dividends shall only be payable with respect to such
Award at such time and under such conditions that payment thereof will not
cause the Award or payment of the Dividends to qualify as performance-based
compensation pursuant to Section 7(e) hereof and Section 162(m) of the Code.

 

(e)                                  DEFERRED
STOCK.  The Committee is authorized to
grant Deferred Stock subject to the following terms and conditions (“Deferred
Stock”):

 

(i)                                     AWARD AND
RESTRICTIONS.  Delivery of Stock will
occur upon expiration of the deferral period specified for an Award of Deferred
Stock by the

 

9

 

Committee (or, if permitted
by the Committee, as elected by the Participant).  In addition, Deferred Stock shall be subject to such restrictions
as the Committee may impose, if any, which restrictions may lapse at the
expiration of the deferral period or at earlier specified times, separately or
in combination, in installments or otherwise, as the Committee may
determine.  Subject to any rules that
may be established by the Board with respect to compensation for directors who
are not also employees, such directors may be permitted to defer shares of
Stock in lieu of receipt of payment of fees or shares to which they may be
entitled for service as directors.

 

(ii)                                  FORFEITURE.  Except as otherwise determined by the
Committee, upon termination of employment or other service (as determined under
criteria established by the Committee) during the applicable deferral period or
portion thereof to which forfeiture conditions apply (as provided in the Award
Agreement evidencing the Deferred Stock), all Deferred Stock that is at that
time subject to such forfeiture conditions shall be forfeited; PROVIDED,
HOWEVER, that the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that restrictions or
forfeiture conditions relating to Deferred Stack will be waived in whole or in
part in the event of termination resulting from specified causes.

 

(f)                                    BONUS STOCK AND
AWARDS IN LIEU OF CASH OBLIGATIONS.  The
Committee is authorized to grant Stock as a bonus, or to grant Stock or other
Awards in lieu of Company obligations to pay cash under other plans or
compensatory arrangements.  Stock or
Awards granted hereunder shall be subject to such other terms as shall be
determined by the Committee.  Subject to
any rules that may be established by the Board with respect to compensation for
directors who are not also employees, such directors may be permitted to elect
to receive shares of Stock in lieu of receipt of payment of fees to which they
may be entitled for service as directors.

 

(g)                                 DIVIDEND
EQUIVALENTS.  The Committee is
authorized to grant Dividend Equivalents entitling the Participant to receive
cash, Stock, other Awards or other property equal in value to dividends paid
with respect to a specified number of shares of Stock (“Dividend
Equivalents”).  Dividend Equivalents may
be awarded on a free-standing basis or in connection with another Award.  The Committee may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to
have been reinvested in additional Stock, Awards or other investment vehicles,
and subject to such restrictions on transferability and risks of forfeiture, as
the Committee may specify.

 

(h)                                 OTHER
STOCK-BASED AWARDS.  The Committee is
authorized, subject to limitations under applicable law, to grant such other
Awards that may be denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, Stock and factors that may
influence the value of Stock, as deemed by the Committee to be consistent with
the purposes of the Plan, including, without limitation, convertible or
exchangeable debt securities, other rights convertible or exchangeable into
Stock, purchase rights for Stock, Awards with value and payment contingent upon
performance of the Company or any other factors designated by the Committee and
Awards valued by reference to the book value of Stock or the value of
securities of or the performance of specified subsidiaries (“Other Stock Based
Awards”).  The Committee shall determine
the terms and conditions of such Awards. 
Stock issued pursuant to an Award in the nature of a purchase right
granted under this Section 6(h)

 

10

 

shall be purchased for such
consideration, paid for at such times, by such methods, and in such forms,
including, without limitation, cash, Stock, other Awards, or other property, as
the Committee shall determine.  Cash
awards, as an element of or supplement to any other Award under the Plan, may
be granted pursuant to this Section 6(h).

 

7.                                       CERTAIN
PROVISIONS APPLICABLE TO AWARDS

 

(a)                                  STAND-ALONE,
ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS. 
Awards granted under the Plan may, in the discretion of the Committee,
be granted either alone or in addition to, in tandem with or in substitution
for, any other Award granted under the Plan or any award granted under any
other plan of the Company, any subsidiary or any business entity to be acquired
by the Company or a subsidiary, or any other right of a Participant to receive
payment from the Company or any subsidiary. 
Awards granted in addition to or in tandem with other Awards or awards
may be granted either as of the same time as or a different time from the grant
of such other Awards or awards.

 

(b)                                 TERM OF
AWARDS.  The term of each Award shall be
for such period as may be determined by the Committee; PROVIDED, HOWEVER, that
in no event shall the term of any Award exceed a period of ten years from the
date of its grant (or, the case of any ISO or SAR granted in tandem therewith,
such shorter period as may be applicable under Section 422 of the Code).

 

(c)                                  FORM OF PAYMENT
UNDER AWARDS.  Subject to the terms of
the Plan and any applicable Award Agreement, payments to be made by the Company
or a subsidiary upon the grant, exercise or settlement of an Award may be made
in such forms as the Committee shall determine, including, without limitation,
cash, Stock, other Awards or other property, and may be made in a single
payment or transfer, in installments or on a deferred basis.  Such payments may include, without
limitation, provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of Dividend
Equivalents in respect of installment or deferred payments denominated in
Stock.

 

(d)                                 LOAN
PROVISIONS.  With the consent of the
Committee, and subject at all times to, and only to the extent, if any,
permitted under and in accordance with, laws and regulations and other binding
obligations or provisions applicable to the Company, the Company may make,
guarantee or arrange for a loan or loans to a Participant with respect to the
exercise of any Option or other payment in connection with any Award, including
the payment by a Participant of any or all federal, state or local income or
other taxes due in connection with any Award. 
Subject to such limitations, the Committee shall have full authority to
decide whether to make a loan or loans hereunder and to determine the amount,
terms and provisions of any such loan or loans, including the interest rate to
be charged in respect of any such loan or loans, must be full recourse against
the borrower, the terms on which the loan is to be repaid and conditions, if
any, under which the loan or loans may be forgiven.  Notwithstanding the foregoing, the Company shall not make any
loans to any director or executive officer of the Company.

 

(e)                                  PERFORMANCE-BASED
AWARDS.  The Committee may, in its
discretion, designate any Award the exercisability or settlement of which is
subject to the achievement of performance conditions as a performance-based
Award subject to this Section 7(e),

 

11

 

in order to qualify such
Award as “qualified performance-based compensation” within the meaning of Code
Section 162(m) and regulations thereunder. 
The performance objectives for an Award subject to this Section 7(e)
shall consist of one or more business criteria and a targeted level or levels
of performance with respect to such criteria, as specified by the Committee but
subject to this Section 7(e). 
Performance objectives shall be objective and shall otherwise meet the
requirements of Section 162(m)(4)(C) of the Code.  Business criteria used by the Committee in establishing
performance objectives for Awards subject to this Section 7(e) shall be
selected exclusively from among the following:

 

(1)                                  Annual
return on capital;

 

(2)                                  Net
earnings;

 

(3)                                  Annual
earnings per share;

 

(4)                                  Annual
cash flow provided by operations;

 

(5)                                  Changes
in annual revenues;

 

(6)                                  Earnings before
interest, taxes, depreciation and amortization (“EBITDA”);

 

(7)                                  Funds
from operations;

 

(8)                                  Funds
from operations per share;

 

(9)                                  Operating
income;

 

(10)                            Pre
or after tax income;

 

(11)                            Cash
available for distribution;

 

(12)                            Cash
available for distribution per share;

 

(13)                            Return
on equity;

 

(14)                            Return
on assets;

 

(15)                            Share
price performance;

 

(16)                            Improvements
in the Company’s attainment of expense levels;

 

(17)                            Implementation
or completion of critical projects;

 

(18)                            Improvement
in cash-flow or (before or after tax).earnings and/or

 

(19)                            Attainment of strategic
business criteria, consisting of one or more objectives based on meeting
specified revenue, market penetration,

 

12

 

geographic business expansion goals, cost targets, and goals relating
to acquisitions or divestitures.

 

The levels of
performance required with respect to such business criteria may be expressed in
absolute or relative levels. 
Achievement of performance objectives with respect to such Awards shall
be measured over a period of not less than one year nor more than five years,
as the Committee may specify. 
Performance objectives may differ for such Awards to different
Participants.  The Committee shall
specify the weighting to be given to each performance objective for purposes of
determining the final amount payable with respect to any such Award.  The Committee may, in its discretion, reduce
the amount of a payout otherwise to be made in connection with an Award subject
to this Section 7(e), but may not exercise discretion to increase such amount,
and the Committee may consider other performance criteria in exercising such
discretion.  All determinations by the
Committee as to the achievement of performance objectives shall be in
writing.  The Committee may not delegate
any responsibility with respect to an Award subject to this Section 7(e).

 

(f)                                    ACCELERATION
UPON A CHANGE OF CONTROL. 
Notwithstanding anything contained herein to the contrary, unless
otherwise provided by the Committee in an Award Agreement, all conditions and
restrictions relating to an Award, including limitations on exercisability,
risks of forfeiture and conditions and restrictions requiring the continued
performance of services or the achievement of performance objectives with
respect to the exercisability or settlement of such Award, shall immediately
lapse upon a Change in Control.

 

8.                                       GENERAL
PROVISIONS.

 

(a)                                  COMPLIANCE WITH
LAWS AND OBLIGATIONS.  The Company shall
not be obligated to issue or deliver Stock in connection with any Award or take
any other action under the Plan in a transaction subject to the registration
requirements of the Securities Act of 1933, as amended, or any other federal or
state securities law, any requirement under any listing agreement between the
Company and any national securities exchange or automated quotation system or
any other law, regulation or contractual obligation of the Company until the
Company is satisfied that such laws, regulations, and other obligations of the
Company have been complied with in full. 
Certificates representing shares of Stock issued under the Plan will be
subject to such stop-transfer orders and other restrictions as may be applicable
under such laws, regulations and other obligations of the Company, including
any requirement that a legend or legends be placed thereon.

 

(b)                                 LIMITATIONS ON
TRANSFERABILITY.  No Option shall be
transferable by a Participant otherwise than by will or by the laws of descent
and distribution or, in the case of an Option other than an ISO, pursuant to a
domestic relations order (within the meaning of Rule 16a-12 promulgated under
the Exchange Act), and an Option shall be exercisable during the lifetime of
such Participant only by the Participant or his or her guardian or legal
representative.  Notwithstanding the
foregoing, the Committee may set forth in the Agreement evidencing an Option
(other than an ISO) at the time of grant or thereafter, that the Option may be
transferred to members of the Participant’s immediate family, to trusts solely
for the benefit of such immediate family members and to partnerships in which
such family members and/or trusts are the only partners, and for purposes of
this Plan, a transferee of an

 

13

 

Option shall be deemed to be
the Participant.  For this purpose,
immediate family means the Participant’s spouse, parents, children,
stepchildren and grandchildren and the spouses of such parents, children,
stepchildren and grandchildren.  The
terms of an Option shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of the
Participant.  Until all restrictions
upon the shares of Restricted Stock or any other Award awarded to a Participant
shall have lapsed or such other Awards shall have vested, shares subject to
such Awards shall not be sold, transferred or otherwise disposed of, shall not
be pledged or otherwise hypothecated., and shall not be subject to the claims
of creditors.

 

(c)                                  NO RIGHT TO
CONTINUED EMPLOYMENT OR SERVICE. 
Neither the Plan nor any action taken hereunder shall be construed as
giving any employee or other person the right to be retained in the employ or
service of the Company or any of its subsidiaries, nor shall it interfere in
any way with the right of the Company or any of its subsidiaries to terminate
any employee’s employment or other person’s service at any time.

 

(d)                                 TAXES.  The Company and any subsidiary is authorized
to withhold from any Award granted or to be settled, any delivery of Stock in
connection with an Award, any other payment relating to an Award or any payroll
or other payment to a Participant amounts of withholding and other taxes due or
potentially payable in connection with any transaction involving an Award, and
to take such other action as the Committee may deem advisable to enable the
Company and Participants to satisfy obligations for the payment of withholding
taxes and other tax obligations relating to any Award.  This authority shall include authority to
withhold or receive Stock or other property and to make cash payments in
respect thereof in satisfaction of a Participant’s tax obligations.

 

(e)                                  CHANGES TO THE
PLAN AND AWARDS.  The Board may amend,
alter, suspend, discontinue or terminate the Plan or the Committee’s authority
to grant Awards under the Plan without the consent of stockholders or
Participants, except that any such action shall be subject to the approval of
the Company’s stockholders at or before the next annual meeting of stockholders
for which the record date is after such Board action if such stockholder
approval is required by any federal or state law or regulation or the rules of
any stock exchange or automated quotation system on which the Stock may then be
listed or quoted, and the Board may otherwise, in its discretion, determine to
submit other such changes to the Plan to stockholders for approval; PROVIDED,
HOWEVER, that, without the consent of an affected Participant, no such action
may materially impair the rights of such Participant under any Award
theretofore granted to him.  The
Committee may waive any conditions or rights under, or amend, alter, suspend,
discontinue, or terminate, any Award theretofore granted and any Award
Agreement relating thereto; PROVIDED, HOWEVER, that, without the consent of an
affected Participant, no such action may materially impair the rights of such
Participant under such Award.  Notwithstanding
this Section 8(e) or any other provision of the Plan, no Option granted
hereunder may be “repriced” at a lower exercise price, and no modification or
amendment of any outstanding Option (including the cancellation of such Option
for a new Option at a lower exercise price) is permitted hereunder if such
modification or amendment would qualify as a “repricing.”

 

(f)                                    NO RIGHTS TO
AWARDS; NO STOCKHOLDER RIGHTS.  No
Participant or employee shall have any claim to be granted any Award under the
Plan, and there

 

14

 

is no obligation for
uniformity of treatment of Participants and employees.  No Award shall confer on any Participant any
of the rights of a stockholder of the Company unless and until Stock is duly
issued or transferred and delivered to the Participant in accordance with the
terms of the Award or, in the case of an Option, the Option is duly exercised.

 

(g)                                 UNFUNDED STATUS
OF AWARDS; CREATION OF TRUSTS.  The Plan
is intended to constitute an “unfunded” plan for incentive and deferred
compensation.  With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained
in the Plan or any Award shall give any such Participant any rights that are
greater than those of a general creditor of the Company; PROVIDED, HOWEVER,
that the Committee may authorize the creation of trusts or make other
arrangements to meet the Company’s obligations under the Plan to deliver cash,
Stock, other Awards, or other property pursuant to any Award, which Trusts or
other arrangements shall be consistent with the “unfunded” status of the Plan
unless the Committee otherwise determines with the consent of each affected
Participant.

 

(h)                                 NONEXCLUSIVITY
OF THE PLAN.  Neither the adoption of
the Plan by the Board nor its submission to the stockholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board to adopt such other compensatory arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or
only in specific cases.

 

(i)                                     NO FRACTIONAL
SHARES.  No fractional shares of Stock
shall be issued or delivered pursuant to the Plan or any Award.  The Committee shall determine whether cash,
other Awards, or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.

 

(j)                                     COMPLIANCE WITH
CODE SECTION 162(M).  It is the intent
of the Company that employee Options, SARs and other Awards designated as
Awards subject to Section 7(e) shall constitute “qualified performance-based
compensation” within the meaning of Code Section 162(m).  Accordingly, if any provision of the Plan or
any Award Agreement relating to such an Award does not comply or is
inconsistent with the requirements of Code Section 162(m), such provision shall
be construed or deemed amended to the extent necessary to conform to such
requirements, and no provision shall be deemed to confer upon the Committee or
any other person discretion to increase the amount of compensation otherwise
payable in connection with any such Award upon attainment of the performance
objectives.

 

(k)                                  GOVERNING
LAW.  The validity, construction and
effect of the Plan, any rules and regulations relating to the Plan and any
Award Agreement shall be determined in accordance with the laws of the State of
Delaware, without giving effect to principles of conflicts of laws, and
applicable federal law.

 

(l)                                     EFFECTIVE DATE;
PLAN TERMINATION.  This Plan shall become effective on the Effective Date of the
Reorganization Plan.  Stockholder
approval of the Plan shall be obtained through the vote on the Reorganization
Plan followed by entry of an order confirming the Reorganization Plan.  The Plan shall terminate on the day
preceding the tenth anniversary of the Effective Date and no Award may be
granted thereafter; provided, however,

 

15

 

that the Board shall have
the right to earlier terminate the Plan provided that no such termination
shall:  (i) impair or adversely alter
any Awards theretofore granted under the Plan, except with the consent of the
Participant, or (ii) deprive any Participant of any Shares which he or she may
have acquired through or as a result of the Plan.

 

16Exhibit
10.2(a)

 

FIRST AMENDMENT TO

 

LOAN AND SECURITY
AGREEMENT

 

THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”)
is entered into as of and effective as of October 31, 2002, (the “Effective
Date”), by and among BANK OF AMERICA, NATIONAL ASSOCIATION, as
administrative agent (“Administrative Agent”) for the other lenders
identified on the signature pages hereof (the “Lenders”), and METALS
USA, INC. and each of its subsidiaries (the “Subsidiaries”) which are
parties hereto (collectively, the “Borrowers”).

 

RECITALS

 

(a)                                  Borrowers,
Administrative Agent and the Lenders are parties to that certain Loan and
Security Agreement dated as of October 31, 2002 (as amended through the
date hereof, the “Agreement”; terms defined in the Agreement and not
otherwise defined herein shall be used herein as defined in the Agreement).

 

(b)                                 Borrowers,
Administrative Agent, and the Lenders desire to amend the Agreement to provide
for certain modifications as set forth herein, all subject to the terms and
conditions contained herein.

 

NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are all hereby acknowledged, the parties
hereto covenant and agree as follows:

 

1.                                       AMENDMENT
TO THE AGREEMENT.  Effective as of
the Effective Date, the Agreement is hereby amended as follows:

 

1.1                                 Amendment
to Section 1.1 of the Agreement.  Section
1.1 of the Agreement is amended as follows:

 

(a)                                  The
following definition of Material Adverse Change is added as a new definition to
Section 1.1 of the Agreement:

 

“Material
Adverse Change” means any of the following occurrences, whether singularly,
or together:

 

(1)                                  Any
deterioration in the consolidated net worth of the Borrowers that exceeds
twenty five percent (25%) of the net worth reflected on the consolidated
Financial Statements delivered by the Borrowers to the Agent in respect of the
previous reporting period.

 

(2)                                  In
any calendar year, the loss by the Borrowers of a customer, the sales to whom
for the immediately preceding calendar year

 

 

 

accounted
for ten percent (10%) or more of the Borrowers’ total sales volume for the
immediately preceding calendar year.

 

(3)                                  The
occurrence of a labor strike, walkout, work stoppage, or similar labor dispute,
which affects, without duplication, fifteen percent (15%) or more of the
combined workforce of the Borrowers.

 

(4)                                  The
rate of product return (as a result of product defect) relating to sales for
the Borrowers (taken as a whole) for any month exceeds ten percent (10%) of
Borrowers’ gross sales for the same month; provided, however, if such
rate of product return (as a result of product defect) for any month exceeds
ten percent (10%) of Borrowers’ gross sales for the same month because of
defective product delivered by Borrowers, or any Borrower, to an individual
customer (as opposed to multiple customers), such an event will not constitute
a Material Adverse Change.

 

(5)                                  Any
of the President, Chief Executive Officer, Chief Financial Officer, or Chief
Operating Officer of the Parent is convicted of a criminal offense related to
actions taken (or omitted to be taken) by such officer in such officer’s
capacity as an officer of the Parent.

 

(6)                                  A
force majeure event occurs which results in a loss of ten percent (10%) or more
of Borrowers’ gross revenues if such loss of revenues is not fully covered by
insurance (exclusive of any deductibles).

 

(b)                                 The
existing definition of “Material Adverse Effect” is restated in its entirety to
read as follows:

 

“Material
Adverse Effect” means (a) a Material Adverse Change, (b) the inability of
the Borrowers, taken as a whole, to meet the debt service obligations known to
mature within sixty (60) days of any determination date, under any financing
agreements to which they are a party, wherein such debt service obligations
exceeds the average Availability of the Borrowers taken as a whole over the ten
(10) Business Days immediately preceding the determination date, or (c) a
ruling by a court of competent jurisdiction which upholds a claim contesting
the legality, validity, binding effect, or enforceability against any Borrower
of any material Loan Document to which it is a party.

 

1.2                                 Amendment
to Section 2.2(i)(i) of the Agreement.  Section 2.2(i)(i) of the Agreement is amended and
restated in its entirety to read as set forth below:

 

(i)                                     Subject
to the limitations set forth in the provisos contained in this Section 2.2(i)
and Section 13.2, the Agent is hereby authorized by the Borrowers

 

2

 

and the Lenders, from time to time in the Agent’s sole discretion,
(A) after the occurrence of a Default or an Event of Default, or
(B) at any time that any of the other applicable conditions precedent set
forth in Article 10 have not been satisfied, to make Base Rate
Revolving Loans to any Borrower on behalf of the Lenders which the Agent, in
its reasonable business judgment, deems necessary or desirable (1) to
preserve or protect the Collateral, or any portion thereof, (2) to enhance
the likelihood of, or maximize the amount of, repayment of the Revolving Loans
and other Obligations, or (3) to pay any other amount chargeable to the
Borrowers pursuant to the terms of this Agreement, including costs, fees, and
expenses as described in Section 15.7 (any of the advances
described in this Section 2.2(i) being hereinafter referred to as “Agent
Advances”); provided that Agent Advances outstanding and unpaid at
no time will exceed $10,000,000 in the aggregate, and provided further
that the Required Lenders may at any time revoke the Agent’s authorization
contained in this Section 2.2(i) to make Agent Advances, any such
revocation to be in writing and to become effective prospectively upon the
Agent’s receipt thereof;

 

1.3                                 Amendment
to Section 2.3(h)(i) of the Agreement. 
Section 2.3(h)(i) of the Agreement is amended and restated in its
entirety to read as set forth below:

 

(i)                                     Indemnification.  IN ADDITION TO AMOUNTS PAYABLE AS ELSEWHERE
PROVIDED IN THIS SECTION 2.3, EACH BORROWER HEREBY AGREES TO
PROTECT, INDEMNIFY, PAY, AND SAVE THE LENDERS AND THE AGENT HARMLESS FROM AND
AGAINST ANY AND ALL CLAIMS, DEMANDS, LIABILITIES, DAMAGES, LOSSES, COSTS,
CHARGES, AND EXPENSES (INCLUDING ATTORNEYS COSTS) WHICH ANY LENDER OR THE AGENT
(OTHER THAN THE BANK IN ITS CAPACITY AS THE LETTER OF CREDIT ISSUER) MAY INCUR
OR BE SUBJECT TO AS A CONSEQUENCE, DIRECT OR INDIRECT, OF THE ISSUANCE OF ANY
LETTER OF CREDIT OR THE PROVISION OF ANY CREDIT SUPPORT OR ENHANCEMENT IN
CONNECTION THEREWITH (INCLUDING SUCH CLAIMS, DEMANDS, LIABILITIES, DAMAGES,
LOSSES, COSTS, CHARGES AND EXPENSES RESULTING FROM THE NEGLIGENCE OF SUCH
LENDER OR THE AGENT, BUT EXCLUDING, HOWEVER, ANY SUCH CLAIMS, DEMANDS,
LIABILITIES, DAMAGES, LOSSES, COSTS, CHARGES, AND EXPENSES RESULTING FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH LENDER OR THE AGENT).  THE AGREEMENT IN THIS SECTION 2.3(h)(i)
SHALL SURVIVE PAYMENT OF ALL OBLIGATIONS. 
NOTHING CONTAINED IN THIS AGREEMENT IS INTENDED TO LIMIT ANY BORROWER’S
RIGHTS, IF ANY, WITH RESPECT TO THE LETTER OF CREDIT ISSUER WHICH ARISE AS A
RESULT OF THE LETTER OF CREDIT APPLICATION AND RELATED DOCUMENTS EXECUTED BY
AND BETWEEN ANY BORROWER AND THE LETTER OF CREDIT ISSUER.

 

3

 

1.4                                 Amendment
to Section 4.6 of the Agreement. 
Section 4.6 of the Agreement is amended and restated in its entirety to
read as set forth below:

 

Section 4.6                                      Apportionment,
Application, and Reversal of Payments. 
Except as otherwise expressly provided by this Agreement, aggregate
principal and interest payments shall be apportioned ratably among the Lenders
(according to the unpaid principal balance of the Revolving Loans to which such
payments relate held by each Lender) and payments of the fees shall, as
applicable, be apportioned ratably among the Lenders.  All payments shall be remitted to the Agent and all such payments
not relating to principal or interest of specific Revolving Loans, or not
constituting payment of specific fees, and all proceeds of any Borrower’s
Accounts or any other Collateral received by the Agent, shall be applied,
ratably, subject to the provisions of this Agreement, first, to pay any
fees, indemnities, or expense reimbursements, then due to the Agent from the
Borrowers; second, to pay any fees or expense reimbursements then due to
the Lenders from the Borrowers; third, to pay interest due in respect of
the Revolving Loans; fourth, to pay or prepay principal of the Non-Ratable
Loans and the Agent Advances; fifth, to pay or prepay principal of the
Revolving Loans (other than the Non-Ratable Loans and the Agent
Advances), unpaid reimbursement obligations in respect of Letters of Credit and
Credit Support; and sixth, to the payment of any other Obligation due to
the Agent or any Lender by the Borrowers. 
Notwithstanding anything to the contrary contained in this Agreement,
unless so directed by a Borrower, or unless an Event of Default is in
existence, neither the Agent nor any Lender shall apply any payment which it
receives to any LIBOR Rate Revolving Loan except (a) on the expiration
date of the Interest Period applicable to any such LIBOR Rate Revolving Loan,
or (b) in the event, and only to the extent, that there are no outstanding
Base Rate Revolving Loans.  The Agent
shall promptly distribute to each Lender, pursuant to the applicable wire
transfer instructions received from each Lender in writing, such funds as it
may be entitled to receive, subject to a Settlement delay as provided for in Section 2.2(j).  The Agent and the Lenders shall have the
continuing and exclusive right to apply and reverse and reapply any and all
such proceeds and payments to any portion of the Obligations.

 

1.5                                 Amendment
to Section 9.14 of the Agreement. 
Section 9.14 of the Agreement is amended and restated in its
entirety to read as follows:

 

Section 9.14  Prepayment of Debt.  No Borrower shall voluntarily prepay any
Funded Debt, except the Obligations in accordance with the terms of this
Agreement, provided that for so long as no Default is in existence or
would result therefrom, and so long as before and after giving effect to such
prepayment, the Availability (calculated for purposes hereof utilizing 100% of
the total Borrowing Base, without applying the Maximum Revolver Amount limit)
is greater than or equal to $20,000,000 (a) a Borrower may voluntarily prepay
Debt owing by such Borrower to another Borrower, (b) if the Fixed Charge
Coverage Ratio is greater

 

4

 

than or equal to 1.0 to 1.0, a Borrower may voluntarily prepay Capital
Leases and other purchase money Funded Debt, (c) a Borrower may voluntarily
prepay Capital Leases and other purchase money Funded Debt in connection with
any refinancing of such Capital Leases and other purchase money Funded Debt or
replacement of the Fixed Assets subject to such prepaid financing with new
Fixed Assets usable in such Borrower’s business and subject to additional
Capital Leases or other purchase money Funded Debt; and (d) a Borrower may
voluntarily prepay Debt secured by assets sold.

 

1.6                                 Amendment
to Section 15.11(a) of the Agreement. 
Section 15.11(a) of the Agreement is amended and restated in its
entirety to read as follows:

 

(a)                                  EACH
BORROWER AGREES TO DEFEND, INDEMNIFY, AND HOLD THE AGENT-RELATED PERSONS
AND EACH LENDER AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
COUNSEL, AGENTS, AND ATTORNEYS-IN-FACT (EACH, AN “INDEMNIFIED PERSON”)
HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, CHARGES, EXPENSES, AND
DISBURSEMENTS (INCLUDING ATTORNEY COSTS) OF ANY KIND OR NATURE WHATSOEVER WHICH
MAY AT ANY TIME (INCLUDING AT ANY TIME FOLLOWING REPAYMENT OF THE REVOLVING
LOANS AND THE TERMINATION, RESIGNATION, OR REPLACEMENT OF THE AGENT OR
REPLACEMENT OF ANY LENDER) BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST ANY
SUCH PERSON IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY
DOCUMENT CONTEMPLATED BY OR REFERRED TO HEREIN, OR THE TRANSACTIONS
CONTEMPLATED HEREBY, OR ANY ACTION TAKEN OR OMITTED BY ANY SUCH PERSON UNDER OR
IN CONNECTION WITH ANY OF THE FOREGOING, INCLUDING WITH RESPECT TO ANY
INVESTIGATION, LITIGATION, OR PROCEEDING (INCLUDING ANY INSOLVENCY PROCEEDING
OR APPELLATE PROCEEDING) RELATED TO OR ARISING OUT OF THIS AGREEMENT, ANY OTHER
LOAN DOCUMENT, OR THE REVOLVING LOANS OR THE USE OF THE PROCEEDS THEREOF,
WHETHER OR NOT ANY INDEMNIFIED PERSON IS A PARTY THERETO INCLUDING ANY SUCH
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, CHARGES, EXPENSES AND REIMBURSEMENTS RESULTING FROM THE
NEGLIGENCE OF SUCH INDEMNIFIED PERSON (ALL THE FOREGOING, COLLECTIVELY, THE “INDEMNIFIED
LIABILITIES”); PROVIDED THAT THE BORROWERS SHALL HAVE NO OBLIGATION
HEREUNDER TO ANY INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES
RESULTING SOLELY FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
INDEMNIFIED PERSON OR ITS RESPECTIVE AFFILIATES.

 

5

 

THE AGREEMENTS IN THIS SECTION 15.11 SHALL SURVIVE PAYMENT
OF ALL OTHER OBLIGATIONS.

 

2.                                       ACKNOWLEDGMENT
OF THE BORROWERS.  The Borrowers
acknowledge and agree that the Lenders executing this Amendment have done so in
their sole discretion and without any obligation to consent to any other or
future amendments to the Agreement.  The
Borrowers further acknowledge and agree that any action taken or not taken by
the Lenders or the Administrative Agent prior to, on or after the date hereof
shall not constitute a waiver or modification of any term, covenant or
provision of any Loan Document.

 

3.                                       REPRESENTATIONS
AND WARRANTIES.  By its execution
and delivery hereof, the Borrowers represent and warrant to the Lenders that,
as of the date hereof the representations and warranties contained in the
Agreement and the other Loan Documents are true and correct on and as of the
date hereof as if made on and as of such date, and no event has occurred and is
continuing which constitutes a Default or an Event of Default.

 

4.                                       CONDITIONS
OF EFFECTIVENESS.  This Amendment
shall be effective as of the Effective Date upon execution by the Majority
Lenders and the other parties hereto, so long as all corporate actions of
Borrowers taken in connection herewith and the transactions contemplated hereby
shall be satisfactory in form and substance to Administrative Agent and
Lenders, and Administrative Agent shall have received such other documents,
certificates, and instruments as Administrative Agent shall reasonably require
prior to the Agent’s receipt of this Amendment executed by the Majority Lenders
and the other parties hereto.

 

5.                                       REFERENCE
TO AGREEMENT.  Upon the
effectiveness of this Amendment, each reference in the Agreement to “this
Agreement,” “hereunder,” or words of like import shall mean and be a reference
to the Agreement, as affected and amended by this Amendment.

 

6.                                       COUNTERPARTS;
EXECUTION VIA FACSIMILE.  This
Amendment may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.  This Amendment may be
validly executed and delivered by facsimile or other electronic transmission.

 

7.                                       GOVERNING
LAW: BINDING EFFECT.  This Amendment
shall be governed by and construed in accordance with the laws of the State of
Texas and shall be binding upon the Borrower, the Administrative Agent, each
Lender and their respective successors and assigns.

 

8.                                       HEADINGS.  Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.

 

9.                                       LOAN
DOCUMENT.  This Amendment is a Loan
Document and is subject to all provisions of the Agreement applicable to Loan
Documents, all of which are incorporated in this Amendment by reference the
same as if set forth in this Amendment verbatim.

 

6

 

10.                                 ACKNOWLEDGEMENT
OF LENDERS.  Each Lender
acknowledges that as of the date of this Amendment, and giving effect to this
Amendment, it’s respective Commitment is as set forth opposite its respective
signature to this Amendment.

 

11.                                 FEES
AND EXPENSES.  Borrowers agree to
pay all reasonable out-of-pocket fees and expenses in connection with the Loan
Documents, including this Amendment, including without limitation, appraisal
fees, filing and recording fees, legal and other professional fees and
expenses, if any, incurred on or prior to the date of this Amendment by
Administrative Agent, including, without limitation, the fees and expenses of
Winstead Sechrest & Minick P.C.

 

12.                                 NO
ORAL AGREEMENTS.  THIS WRITTEN
AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. 
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

7

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
the date first above written.

 

	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  METALS
  USA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  TERRY L. FREEMAN

  
	
   

  	
  Name:

  	
  Terry L.
  Freeman

  
	
   

  	
  Title:

  	
  Senior
  Vice President and

  
	
   

  	
   

  	
  Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AGENT:

  
	
   

  	
   

  
	
   

  	
  BANK
  OF AMERICA, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  ROBERT SCALZITTI

  
	
   

  	
  Name:

  	
  Robert
  Scalzitti

  
	
   

  	
  Title:

  	
  Vice
  President

  
				

 

8

 

	
   

  	
  ALLMET
  BUILDING PRODUCTS, L.P.

  
	
   

  	
   

  	
  By:

  	
  Allmet
  GP, Inc., its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ALLMET
  GP, INC.

  
	
   

  	
  ALLMET
  LP, INC.

  
	
   

  	
  CORNERSTONE
  BUILDING PRODUCTS, INC.

  
	
   

  	
  CORNERSTONE
  METALS CORPORATION

  
	
   

  	
  CORNERSTONE
  PATIO CONCEPTS, L.L.C.

  
	
   

  	
   

  	
  By:

  	
  Metals
  USA, Inc., its sole Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  INTERSTATE
  STEEL SUPPLY CO. OF MARYLAND,

  
	
   

  	
   

  	
  INC.

  	
   

  
	
   

  	
  INTSEL
  GP, INC.

  
	
   

  	
  INTSEL
  LP, INC.

  
	
   

  	
  i-SOLUTIONS
  DIRECT, INC.

  
	
   

  	
  JEFFREYS
  REAL ESTATE CORPORATION

  
	
   

  	
  LEVINSON
  STEEL GP, INC.

  
	
   

  	
  LEVINSON
  STEEL LP, INC.

  
	
   

  	
  METALS
  RECEIVABLES CORPORATION

  
	
   

  	
  METALS
  USA BUILDING PRODUCTS SOUTHEAST,

  
	
   

  	
   

  	
  INC.

  	
   

  
	
   

  	
  METALS
  USA CARBON FLAT ROLLED, INC.

  
	
   

  	
  METALS
  USA FINANCE CORP.

  
	
   

  	
  METALS
  USA FLAT ROLLED CENTRAL, INC.

  
	
   

  	
  METALS
  USA MANAGEMENT CO., L.P.

  
	
   

  	
   

  	
  By:

  	
  MUSA
  GP, Inc., its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  METALS
  USA PLATES AND SHAPES, NORTHEAST, L.P.

  
	
   

  	
   

  	
  By:

  	
  Levinson
  Steel GP, Inc., its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  METALS
  USA PLATES AND SHAPES SOUTHCENTRAL,

  
	
   

  	
   

  	
  INC.

  	
   

  
	
   

  	
  METALS
  USA PLATES AND SHAPES SOUTHEAST, INC.

  
	
   

  	
  METALS
  USA PLATES AND SHAPES SOUTHWEST,

  
	
   

  	
  LIMITED
  PARTNERSHIP

  
	
   

  	
   

  	
  By:

  	
  Intsel
  GP, Inc., its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  METALS
  USA REALTY COMPANY

  
	
   

  	
  METALS
  USA SPECIALTY METALS NORTHCENTRAL, INC.

  
	
   

  	
  MUSA
  GP, INC.

  
	
   

  	
  MUSA
  LP, INC.

  
	
   

  	
  NATIONAL
  MANUFACTURING, INC.

  
	
   

  	
  QUEENSBORO,
  L.L.C.

  
	
   

  	
   

  	
  By:

  	
  Metals
  USA Plates and Shapes Southeast, Inc.,

  
	
   

  	
   

  	
   

  	
  its
  sole Member

  
	
   

  	
   

  
	
   

  	
  TEXAS
  ALUMINUM INDUSTRIES, INC.

  
	
   

  	
  VALLEY
  ALUMINUM CO.

  
	
   

  	
  VALLEY
  ALUMINUM OF NEVADA, INC.

  
	
   

  	
  WESTERN
  AWNING COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  TERRY L. FREEMAN

  
	
   

  	
  Name:

  	
  Terry L.
  Freeman

  
	
   

  	
  Title:

  	
  Vice
  President of each of the above-listed entities

  
					

 

9

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