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 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.
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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 th
