EXHIBIT 10.4
INDEMNITY JOINT ACCOUNT AGREEMENT
This INDEMNITY JOINT ACCOUNT AGREEMENT (this "Agreement") dated as of this
____ day of _____________, 2005, is made and entered into by and among OMAHA
HOLDINGS CORP., a Delaware corporation (the "Buyer"), and the parties identified
in Exhibit "A" attached hereto (the "Sellers").
RECITALS
WHEREAS, pursuant to a Share Purchase Agreement dated as of July 29, 2005,
by and between Sellers and Buyer (the "Purchase Agreement"), Sellers have agreed
to sell and Buyer has agreed to purchase all outstanding shares of common stock
of North Texas Steel Company, Inc., all in accordance with the terms and
conditions of the Purchase Agreement;
WHEREAS, Sections 1.3(c) and 9 of the Purchase Agreement provide that, at
the Closing (as defined in the Purchase Agreement), Buyer shall deliver to an
agency account established under the terms of an Indemnity Joint Account
Agreement, the sum of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00)
(the "Indemnity Joint Account Deposit");
WHEREAS, this is the Indemnity Joint Account Agreement contemplated by the
above referenced sections of the Purchase Agreement; and,
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and for other good and valuable consideration, the receipt of
which are hereby acknowledged, it is agreed as follows:
AGREEMENTS
1. Indemnity Joint Account Deposit. Upon the execution of this Agreement,
there shall be jointly established by Buyer and Seller's Representative (as
hereinafter identified in Section 3) with The Frost National Bank ("Frost") a
custodial agency agreement (the "Frost Bank Agency Agreement"), in a form
substantially as attached hereto as Exhibit "B", which shall be styled and
maintained as, and in the name of, the "North Texas Steel/Omaha Holdings
Indemnity Agency" (the "Frost Bank Agency Account") into which there shall be
deposited the Indemnity Joint Account Deposit. Throughout the term of this
Agreement, the Indemnity Joint Account Deposit, less any amounts distributed
therefrom during the term of this Agreement under Paragraph 2 hereof, shall be
maintained as a part of the Frost Bank Agency Account. Buyer and Seller's
Representative shall direct Frost, as agent under the Frost Bank Agency Account,
to invest and reinvest the Indemnity Joint Account Deposit in (i) direct
obligations of or obligations fully guaranteed by the United States of America
or any agency or instrumentality thereof which have a maturity date of 90 days
or less; and, (ii) money market funds investing primarily in the obligations
described in item (i). The parties to this Agreement understand that temporarily
uninvested funds may not earn or accrue interest.
2. Receipts and Disbursements Associated with Indemnity Joint Account
Deposit. The parties to this Agreement agree as follows:
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(a) Interest accruing on the Indemnity Joint Account Deposit, net of
fees of Frost as agent chargeable under Section 4 hereof, shall be paid to Buyer
not less frequently than annually and such interest shall be reportable to
Buyer's TIN, being 00-0000000, by way of IRS Form 1099 or other appropriate
forms.
(b) Upon the final determination of the amount of any claim payable
under the terms of the Purchase Agreement from the Indemnity Joint Account
Deposit in accordance with Section 9.3(c) of the Purchase Agreement giving rise
to the Sellers' obligation to indemnify an Indemnified Party (as that term is
defined in the Purchase Agreement), Buyer and Seller's Representative shall
jointly cause to be withdrawn from the Frost Bank Agency Account and distributed
to the Indemnified Party as a result of such determination all or a portion of
the Indemnity Joint Account Deposit (but in no event neither (i) more than the
balance of Indemnity Joint Account Deposit then on hand, nor (ii) more than the
Aggregate Cap [as that term is defined in the Purchase Agreement]) then in
effect as same may have been reduced over time as set out in Section 9.5 of the
Purchase Agreement.
(c) On January 30, 2007, the Buyer and Seller's Representative shall
jointly cause to be withdrawn from the Frost Bank Agency Account and distributed
to the Sellers all funds then comprising the Indemnity Joint Account Deposit in
excess of THREE HUNDRED THOUSAND AND NO/100 DOLLARS ($300,000.00).
(d) On July 30, 2007, the Buyer and Seller's Representative shall
jointly cause to be withdrawn from the Frost Bank Agency Account and distributed
to Sellers all funds then comprising the Indemnity Joint Account Deposit in
excess of TWO HUNDRED THOUSAND AND NO/100 DOLLARS ($200,000.00).
(e) On July 30, 2008, the Buyer and Seller's Representative shall
jointly cause to be withdrawn from the Frost Bank Agency Account and distributed
to Sellers all funds then comprising the Indemnity Joint Account Deposit in
excess of ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00).
(f) On July 30, 2009, the Buyer and Seller's Representative shall
jointly cause to be withdrawn from the Frost Bank Agency Account and distributed
to Sellers all funds then comprising the remaining balance of the Indemnity
Joint Account Deposit.
Provided, however, notwithstanding the preceding Sections 2(c)-(f), no portion
of the Indemnity Joint Account Deposit otherwise payable to Sellers that would
reduce the Indemnity Joint Account Deposit below an amount sufficient to
indemnify the Indemnified Party for Losses (as that term is defined in the
Purchase Agreement) which have been asserted and which have not been barred
pursuant to Section 9.4 of the Purchase Agreement, shall be paid to Sellers, but
instead shall be retained as a part of the Indemnity Joint Account Deposit to be
available to satisfy such Losses in accordance with the provisions of Section
2(b) hereof.
(g) Sellers agree among themselves that any portion of the Indemnity
Joint Account Deposit that is distributed to Sellers shall be so distributed on
a pro rata basis according to each Seller's ownership of stock in the Company
immediately prior to the Closing relative to the ownership of the other Sellers.
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3. Seller's Representative. Sellers hereby irrevocably appoint Xxxxxx X.
Xxxx as "Seller's Representative" for the purpose of and with authority to issue
any notice or directive and to exercise all other rights of Sellers with respect
to this Indemnity Joint Account Agreement; with Xxxxx Xxxx to serve as successor
Seller's Representative in the event of Xxxxxx X. Xxxx'x death, resignation or
inability to serve; and with Xxxxxx X. Xxxx, Xx., to serve as successor Seller's
Representative in the event of Xxxxx Xxxx'x death, resignation or inability to
serve. The last Seller's Representative serving, where there is no successor
Seller's Representative willing or able to serve, may by written instrument
appoint a successor Seller's Representative to serve in the event of the death,
resignation or inability to serve of the said last Seller's Representative; or
if no Seller's Representative is able or willing to appoint such successor, then
such successor shall be appointed by the holders of a majority of the stock of
the Company immediately prior to the Closing of the Purchase Agreement. All
actions taken by Seller's Representative shall be binding upon all Sellers.
4. Fee. Frost, as agent under the Frost Bank Agency Agreement, shall be
entitled to its customary fee charged in similar accounts at the time the
services are performed for its services thereunder, same being chargeable first
against the income accruing on the Pension Plan Joint Account Deposit, with any
excess chargeable against the Indemity Joint Account Deposit.
5. Resignation/Discharge of Agent. In the event during the term of this
Agreement, Frost should resign as agent of the parties for the Indemnity Joint
Account Deposit, a successor agent for the Indemnity Joint Account Deposit shall
be jointly selected by Seller's Representative and Buyer. By joint agreement of
Buyer and Seller's Representative, Frost may be discharged as agent for the
Indemnity Joint Account Deposit, whereupon a successor agent for the Indemnity
Joint Account Deposit shall be selected by Seller's Representative and Buyer.
6. Arbitration. Upon written request of either Seller's Representative or
Buyer, any controversy or claim between or among the parties hereto shall be
determined by binding arbitration in accordance with the Federal Arbitration Act
(or if not applicable, the applicable state law) and the Commercial Arbitration
Rules of the American Arbitration Association, unless both Seller's
Representative and Buyer, in their respective sole discretion, agree in writing
to mediate the dispute prior to submitting to binding arbitration. Judgment upon
any arbitration award may be entered in any court having jurisdiction. Any party
to this Agreement may bring an action, including a summary or expedited
proceeding, to compel arbitration of any controversy or claim to which this
agreement applies in any court having jurisdiction over such action. The party
that requests arbitration has the burden to initiate the arbitration proceedings
pursuant to and by complying with the Commercial Arbitration Rules of the
American Arbitration Association and shall pay all associated administrative and
filing fees. The arbitration shall be conducted in the City of Fort Worth,
Tarrant County, Texas, and administered by the American Arbitration Association.
7. Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (i) delivered
personally, (ii) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, (iii) sent by next-day or overnight mail or
delivery or (iv) sent by telecopy or telegram and, in any such case, addressed
as follows:
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To the Sellers or Seller's Representative:
c/o Xxxxxx X. Xxxx
00 Xxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxx 00000
with a copy to:
Xxx Xxxxx
Xxxxxx & Xxxxx, LLP
0000 X. Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Telephone: 000-000-0000
xxxxxx@xxxxxxxxxxx.xxx; and
Xxxxx X. Xxxxxxx
XxXxxxxx Xxxxxxx P.C.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Telephone: 000-000-0000
xxxxxxxx@xxxxxxxxxxx.xxx
To the Buyer:
Omaha Holdings Corp.
Attn: Xxxxxxx X. Xxxxxxxxx, III
000 Xxx Xxxx Xxxx., Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
xxx@xxxxxxxx.xxx
with a copy to:
Xxxxxx X. Xxxxxxx
Xxxxxxxx & Xxxxxxxxxx, P.C.
00000 Xxxxxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxx, XX 00000
000-000-0000
xxxxx@xxxxx.xxx
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Xxxx Xxxxxxx
Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
000-000-0000
Xxxxx X. Xxxxx
0000 Xxxxxxxx Xxxxxxx
Xxxx Xxxxx, Xxxxx 00000-0000
Xxxxxx X. Xxxxxx
000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
All such notices, requests, demands, waivers and other communications
shall be deemed to have been received (a) if by personal delivery, on the day
after such delivery, (b) if by certified or registered mail, on the seventh
business day after the mailing thereof, (c) if by next-day or overnight mail or
delivery, on the day delivered, and (d) if by telecopy or telegram, on the next
day following the day on which such telecopy or telegram was sent, provided that
a copy is also sent by certified or registered mail. Sellers must notify Buyer
of their current address within ten (10) days of any change of address. Sellers
and Buyer agree that they will timely provide to the other a copy of any notice
which they shall send to Escrow Agent hereunder.
8. Miscellaneous.
Sellers and Buyer intend for the Indemnity Joint Account Deposit (i) to be
accounted for by the Sellers in accordance with the "installment method" as
provided in Section 453 of the Internal Revenue Code of 1986, as amended, for
federal income tax purposes and (ii) to be treated as part of an installment
sale by the Sellers with none of the amounts of the Indemnity Joint Account
Deposit being treated as a "payment" to the Sellers until the conditions for the
disbursement of funds hereunder to the Sellers have been satisfied and an actual
disbursement of funds hereunder to the Sellers has been made and then only in
the amount of such disbursement received by the Sellers. Notwithstanding
anything herein to the contrary, Buyer makes no representations, warranties,
covenants or guarantees that the amounts set aside to the Indemnity Account
Deposit and any future payment to the Sellers therefrom, qualify as an
"installment method" under Section 453 of the Internal Revenue Code of 1986, as
amended, for federal (or state) income tax purposes.
This Agreement shall be deemed to be made under the laws of the State of
Texas without giving effect to the conflict of laws rules thereof, and for all
purposes shall be construed in accordance with said laws.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors and permitted assigns.
This Agreement may be executed in several counterparts, each of which
shall be deemed an original and all of which shall together constitute one and
the same instrument.
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Section headings contained in this Agreement are for purposes of
convenience only and shall not affect the meaning or interpretation of this
Agreement.
This Agreement may be modified only by a written amendment signed by
Sellers and Buyer, and no waiver of any provision hereof shall be effective
unless expressed in writing and signed by the party to be charged.
The rights and remedies conferred upon the parties hereto shall be
cumulative, and the exercise or waiver of any such right or remedy shall not
preclude or inhibit the exercise of any additional rights or remedies. The
waiver of any right or remedy shall not preclude or inhibit the subsequent
exercise of such right or remedy.
This Agreement shall terminate after the disposition of all of the
funds deposited hereunder in accordance with the terms of this Agreement.
This Agreement does not create, and shall not be construed as creating,
any rights enforceable by any person not a party to this Agreement.
This Agreement constitutes the entire agreement between the parties as
to the Indemnity Joint Account Deposit transactions contemplated hereby and
supersedes all prior discussions, understandings or agreements. It may be
executed in counterparts each of which shall be deemed an original and all of
which together shall constitute one and the same agreement.
[Signatures on following page]
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This Indemnity Joint Account Agreement is dated effective _____________ , 2005.
OMAHA HOLDINGS CORP.
By:__________________________
Name:________________________ _____________________________ _____________________________
Xxxxx Xxxxxx Xxxx Xxxxxx X. Xxxx
Title:_________________________
_____________________________ _____________________________ _____________________________
Xxxxxx X. Xxxx Xx. Xxxxx Xxxxxx Xxxx, Successor Trustee Xxxxxxxx X. Cyrus
of Trust Agreement dated August 20,
1956
_____________________________ _____________________________ _____________________________
Xxxxx X. Xxxxx Xxxxx Xxxx Trust, Xxxxx X. Xxxx, Xxxxxx Xxxx Xxxxxx
Trustee
_____________________________ _____________________________ _____________________________
Xxxxx X. Xxxxx, as Trustee of the Xxxxx Xxxx Xxxxxx Xxxxxx X. Xxxxxx as Trustee of the
Xxxxxx Family Trust, fbo Xxxxx X. Xxxxx Xxxxxx Family Trust for the benefit
of Xxxxxx X. Xxxxxx
_____________________________ _____________________________ _____________________________
Xxxxxxxx Xxxxx Xxxxx Xxxxx Xxxxxx Xxxx Xxxxxx X. Xxxxxxx
NORTH TEXAS STEEL CO., INC. PENSION
PLAN
By: The Frost National Bank,
Trustee
_____________________________ By:___________________ _____________________________
Xxxxxxx Xxxxxx Xxxxx Trust Officer Xxxxxxxx Xxxxx Xxxxxx
_____________________________
Xxxx X. Xxxxxxx
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EXHIBIT "A"
SELLERS
Xxxxxx X. Xxxxxxx
Xxxxxx Xxxx Xxxxxx
Xxxxxx X. Xxxxxx as Trustee of the Xxxxxx
Family Trust for the Benefit of Xxxxxx X. Xxxxxx
Xxxxxxxx Xxxxx Xxxxxx
Xxxxxx X. Xxxx, Xx.
Xxxxx Xxxxxx Xxxx
Xxxxx Xxxxxx Xxxx, Successor Trustee of Trust
Agreement dated August 20, 1956
Xxxxx Xxxx Trust, Xxxxx X. Xxxx, Trustee
Xxxxxx X. Xxxx
Xxxxx Xxxx Xxxxxx
Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxxx Xxxxx
Xxxxx X. Xxxxx
Xxxxx X Xxxxx, as Trustee of the Xxxxxx
Family Trust, fbo Xxxxx X. Xxxxx
Xxxxx Xxxxxx Xxxx
The Xxxxx National Bank, Trustee,
North Texas Steel Co., Inc. Pension Plan
Xxxx X. Xxxxxxx
Xxxxxxxx X. Cyrus
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EXHIBIT "B"
FORM OF AGENCY AGREEMENT
[to be attached]
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