EX-10.4 33 v025583_ex10-4.txt 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: Page 1 (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 20-3223488, 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. Page 2 3. Seller's Representative. Sellers hereby irrevocably appoint Robert P. Judd 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 Janet Judd to serve as successor Seller's Representative in the event of Robert P. Judd's death, resignation or inability to serve; and with Robert P. Judd, Jr., to serve as successor Seller's Representative in the event of Janet Judd's 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: Page 3 To the Sellers or Seller's Representative: c/o Robert P. Judd 37 Chelsea Drive Fort Worth, Texas 76134 with a copy to: Dan Sykes Gordon & Sykes, LLP 1320 S. University Drive, Suite 806 Fort Worth, TX 76107 Telephone: 817-338-0724 dsykes@gordonsykes.com; and Kevin D. Kuenzli McDonald Sanders P.C. 777 Main Street, Suite 1300 Fort Worth, Texas 76102 Telephone: 817-336-8651 kkuenzli@mcdonaldlaw.com To the Buyer: Omaha Holdings Corp. Attn: William N. Plamondon, III 450 Las Olas Blvd., Suite 1100 Fort Lauderdale, Florida 33301 Telephone: 954-764-4774 wnp@riheller.com with a copy to: Virgil K. Johnson Erickson & Sederstrom, P.C. 10330 Regency Parkway Drive Suite 100 Omaha, NE 68114 402-390-7104 vjohn@eslaw.com Page 4 Eric Hellige Pryor Cashman Sherman & Flynn LLP 410 Park Avenue, 10th Floor New York, New York 10022 212-421-4100 Jerre W. Tracy 2734 Colonial Parkway Fort Worth, Texas 76109-1211 Claude A. Wilson 259 Creekside Drive Florence, Alabama 35630 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. Page 5 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] Page 6 This Indemnity Joint Account Agreement is dated effective _____________ , 2005. OMAHA HOLDINGS CORP. By:__________________________ Name:________________________ _____________________________ _____________________________ Janet Howard Judd Robert P. Judd Title:_________________________ _____________________________ _____________________________ _____________________________ Robert P. Judd Jr. Janet Howard Judd, Successor Trustee Michelle W. Cyrus of Trust Agreement dated August 20, 1956 _____________________________ _____________________________ _____________________________ Jerre W. Tracy Janet Judd Trust, Janet H. Judd, Claude Alan Wilson Trustee _____________________________ _____________________________ _____________________________ Jerre W. Tracy, as Trustee of the David Alan Wilson Claude A. Wilson as Trustee of the Wilson Family Trust, fbo Jerre W. Tracy Wilson Family Trust for the benefit of Claude A. Wilson _____________________________ _____________________________ _____________________________ Jennifer Diann Tracy Haley Wilson Gray Robert L. Lindsey NORTH TEXAS STEEL CO., INC. PENSION PLAN By: The Frost National Bank, Trustee _____________________________ By:___________________ _____________________________ Bradley Wilson Tracy Trust Officer Lorraine Velte Wilson _____________________________ Mary R. Janezic
Page 7 EXHIBIT "A" SELLERS Robert L. Lindsey Claude Alan Wilson Claude A. Wilson as Trustee of the Wilson Family Trust for the Benefit of Claude A. Wilson Lorraine Velte Wilson Robert P. Judd, Jr. Janet Howard Judd Janet Howard Judd, Successor Trustee of Trust Agreement dated August 20, 1956 Janet Judd Trust, Janet H. Judd, Trustee Robert P. Judd David Alan Wilson Bradley Wilson Tracy Jennifer Diann Tracy Jerre W. Tracy Jerre W Tracy, as Trustee of the Wilson Family Trust, fbo Jerre W. Tracy Haley Wilson Gray The Frost National Bank, Trustee, North Texas Steel Co., Inc. Pension Plan Mary R. Janezic Michelle W. Cyrus Page 8 EXHIBIT "B" FORM OF AGENCY AGREEMENT [to be attached] Page 9