Exhibit 10.26
SUBORDINATION AND NOMINEE AGREEMENT
This Subordination and Nominee Agreement (this "Agreement") is made as of
the 21st day of February, 2003, by and between The Xxxxxxx X. Xxxxx and Xx Xxxxx
1988 Charitable Unitrust (the "Unitrust"), Xxxxxxxxx Family, L.L.C.
("Xxxxxxxxx"), B&M Limited, a Partnership ("B&M"), and McElmo Dome Nominee, LLC,
a limited liability company ("Nominee").
Whereas, The Xxxxx Company (the "Company") has executed and delivered to
Xxxxxxx X. Xxxxx and Xx Xxxxx, as Trustees of the Unitrust that certain
Promissory Note in the original principal amount of $3,000,000, dated as of
October 3, 2002 (the "Unitrust Note"), evidencing, in part, a renewal and
extension of indebtedness previously evidenced by that certain Promissory Note
executed by the Company and payable to Unitrust, dated February 28, 2002 (the
"Prior Unitrust Note"); and
Whereas, the Unitrust, the Nominee, and certain purchasers (the "2002
Noteholders") of the Company's 10% Subordinated Notes (the "2002 Notes") due
September 30, 2003 have previously entered into a Nominee Agreement dated May
16, 2002 (the "2002 Nominee Agreement") under which the Nominee has agreed to
act as agent and nominee on behalf of Unitrust and the 2002 Noteholders under
that certain Deed of Trust, Assignment of Production, Security Agreement, and
Financing Statement, dated as of May 16, 2002 (the "2002 Deed of Trust"),
executed by the Company, covering certain properties owned by the Company and
located in Montezuma County and Xxxxxxx County, Colorado (collectively, the
"2002 Collateral") and securing payment of the Prior Unitrust Note and the 2002
Notes; and
Whereas, under the 2002 Nominee Agreement, following the occurrence of
certain events, the rights of the Unitrust and the 2002 Noteholders to proceeds
of enforcement of the 2002 Deed of trust are pari passu, and any recovery under
the 2002 Deed of Trust is to be allocated 1200/2843 to the 2002 Noteholders and
1643/2843 to the Unitrust; and
Whereas, contemporaneously with the execution and delivery of this
Agreement, and pursuant to a $600,000 Private Placement Memorandum dated January
21, 2003, B&M and Xxxxxxxxx have made loans to the Company in the amount of
$50,000 and $550,000, respectively, and in connection therewith the Company has
executed and delivered certain Promissory Notes in such amounts dated as of
February 7, 2003 and February 21, 2003, respectively (collectively, the "2003
Notes"); and
Whereas, to secure payment of the loans evidenced by the 2002 Notes, the
2003 Notes, and the Unitrust Note the Company has executed and delivered that
certain Deed of Trust, Assignment of Production, Security Agreement, and
Financing Statement, dated as of February 21, 2003 (the "2003 Deed of Trust"),
covering the 2002 Collateral and other properties described therein (the "2003
Collateral"), for the benefit of the Nominee under the terms of this Agreement;
and
Whereas, the Unitrust and the 2003 Noteholders , for themselves and for the
benefit of the 2002 Noteholders, desire to enter into this Agreement to provide
for the orderly enforcement of the rights of the 2002 Noteholders, the 2003
Noteholders, and the Unitrust (collectively, the "Noteholders") in the liens
(the "Liens") created under the 2002 Deed of Trust and the 2003 Deed of Trust
(collectively, the "Deeds of Trust") in the 2002 Collateral and the 2003
Collateral (collectively, the "Collateral") and to set forth the priority as
among all Noteholders of all proceeds from the foreclosure, deed-in-lieu of
foreclosure, or other sale or disposition of the Collateral or the rights of the
Nominee under the Deeds of Trust, or of any other recovery resulting from or
under the Deeds of Trust ("Proceeds") ; and
Whereas, as a condition of making the loan to the Company, the 2003
Noteholders require that, with respect to the Proceeds, the 2003 Noteholders be
entitled to the priority held by the Unitrust under the 2002 Nominee Agreement
to the extent of the principal indebtedness held by the 2003 Noteholders, and
interest thereon, and that the Unitrust's priority with respect to Proceeds be
subordinated to the priority of the 2003 Noteholders; and
Whereas, a portion of the proceeds from the sale of the 2003 Notes have
been or will be used to pay down the Unitrust Note, and to facilitate such
transaction the Unitrust has agreed to enter into this Agreement and to
subordinate the Unitrust's priority with respect to Proceeds as provided herein.
Now, therefore, in consideration of the foregoing premises, the mutual
covenants and agreements contained in this Agreement, and other good and
valuable considerations, the receipt and adequacy of which are hereby
acknowledged, the Unitrust and the 2003 Noteholders hereby designate and appoint
Nominee as their agent to act on behalf of all Noteholders in holding the
beneficial interest granted under the 2003 Deed of Trust, and in enforcing any
and all rights of the beneficiary under the 2003 Deed of Trust as provided
herein, and Nominee hereby accepts such designation and appointment and agrees
to hold such interest and act with respect to such interest in accordance with
the terms and conditions of this Agreement.
For the considerations stated above, the Unitrust, the 2003 Noteholders,
and Nominee hereby further agree as follows:
1. 2002 Nominee Agreement. The Unitrust hereby waives any and all
conditions precedent and other requirements (including, without limitation, the
requirement that a Triggering Event, as defined in the 2002 Nominee Agreement,
shall have occurred) and agrees that from and after the date of this Agreement,
the 2002 Noteholders shall be deemed "Lienholders" under the under the 2002
Nominee Agreement and beneficiaries under the 2002 Deed of Trust.
2. Nominee. Nominee shall act as the Noteholders' agent and shall hold
title as nominee to the Liens and the Collateral for the benefit of all
Noteholders.
3. Enforcement of Deeds of Trust. Nominee shall not transfer, sell, pledge,
hypothecate, encumber, or otherwise exercise any incident of ownership with
respect to the Liens or the Collateral held by it as nominee, except as directed
by the all Noteholders, except as follows:
a. At all times prior to payment in full of the 2002 Notes, Nominee
shall execute and deliver such instruments and shall take such actions or
refrain from taking such actions as the 2002 Noteholders holding a
majority-in-interest of the 2002 Notes may require for purposes of enforcing the
rights of the Noteholders under the Deeds of Trust. For purposes of this
Agreement, the term "majority-in-interest" shall refer to the holders of the
promissory notes evidencing greater than fifty percent (50%) of the principal
amount of the then outstanding 2002 Notes.
b. At all times following payment in full of the 2002 Notes, but prior
to payment in full of the Unitrust Note, Nominee shall execute and deliver such
instruments and shall take such actions or refrain from taking such actions as
the Unitrust may require for purposes of enforcing the rights of the Noteholders
under the Deeds of Trust.
4. Disposition of Collateral. All Proceeds shall be applied as described in
the attached Exhibit A, and as more fully described below, in the following
order:
a. First, to the expenses incurred in enforcement of the Deeds of
Trust, the obligations secured thereby, and collection of such obligations;
b. Second, to the 2002 Noteholders to the extent necessary to pay
$438,223 in principal and interest accrued thereon under the 2002 Notes and to
the 2003 Noteholders to the extent necessary to pay $600,000 in principal and
interest accrued thereon under the 2003 Notes, with the rights of the 2002
Noteholders and the 2003 Noteholders to be pari passu, with such Proceeds to be
allocated between the 2002 Noteholders and the 2003 Noteholders pro rata the
principal amounts to be paid under this paragraph 4b. As among all 2002
Noteholders, the rights of each of the 2002 Noteholders with respect to Proceeds
received under this Section 4b shall be pari passu and the 2002 Noteholders
shall share in any such Proceeds pro rata the unpaid principal of the 2002
Notes. As among all 2003 Noteholders, the rights of each of the 2003 Noteholders
with respect to Proceeds received under this Section 4b shall be pari passu and
the 2003 Noteholders shall share in any such Proceeds pro rata the unpaid
principal of the 2003 Notes;
c. Third, to the 2002 Noteholders to the extent necessary to pay the
$761,777 balance of the 2002 Notes and interest accrued thereon and to the
Unitrust to the extent necessary to pay $1,043,000 in principal and interest
accrued thereon under the Unitrust Note, with the rights of the 2002 Noteholders
and the Unitrust to be pari passu, with such Proceeds to be allocated between
the 2002 Noteholders and the Unitrust pro rata the principal amounts to be paid
under this paragraph 4b. As among all 2002 Noteholders, the rights of each of
the 2002 Noteholders with respect to Proceeds received under this Section 4b
shall be pari passu and the 2002 Noteholders shall share in any such Proceeds
pro rata the unpaid principal of the 2002 Notes; and
d. Fourth, to the Unitrust to the extent necessary to pay the balance
of the Unitrust Note and interest accrued thereon; and
e. Fifth, as required by law and by the Deeds of Trust.
5. Notice to Noteholders. The Nominee may, at any time, notify any
Noteholder of the status of the obligations secured by the Deeds of Trust and
the enforcement thereof, including any notice or instruction received by the
Nominee by any Noteholder.
6. Binding Effect. This Agreement shall be binding upon the respective
successors and assigns of the parties hereto.
7. Termination. This Agreement may not be terminated without the written
consent of the Noteholders; provided, that following payment in full of the 2003
Notes, no such consent shall be required of the 2003 Noteholders, and following
payment in full of the 2002 Notes, no such consent shall be required of the 2002
Noteholders. In the event of termination, Nominee agrees to take such action and
execute such documents as the Noteholders shall request to cause the Liens or
the Collateral to be conveyed to the Noteholders, or as otherwise directed by
the Noteholders.
8. Governing Law. The provisions of this Agreement shall be construed in
accordance with the laws of the State of Oklahoma.
9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed as original, but all of which
together shall constitute one and the same agreement.
"UNITRUST" THE XXXXXXX X. XXXXX AND XX
XXXXX 1988 CHARITABLE UNITRUST
By XXXXXXX XXXXX
Xxxxxxx Xxxxx, Trustee
"NOMINEE" MCELMO DOME NOMINEE, LLC, an Oklahoma
limited liability company
By XXXXXXX XXXXX
Xxxxxxx Xxxxx, Member
By XXXXX X. XXXXXX
Xxxxx X. Xxxxxx, Member
"2003 NOTEHOLDERS" XXXXXXXXX FAMILY L.L.C., an Oklahoma
limited liability company
By XXXXX XXXXXXXXX
Xxxxx Xxxxxxxxx, , Manager
B&M LIMITED, an Oklahoma general partnership
By XXXX XXX, XX.
Xxxx Xxx, Xx., General Partner
By XXXXXXX XXXXX
Xxxxxxx Xxxxx, General Partner
ACKNOWLEDGED by The Xxxxx Company this 21st day of February, 2003.
XXXX XXX
Xxxx Xxx, Xx., President
STATE OF OKLAHOMA )
) SS.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this ______ day of
______________________, 2003, by Xxxxxxx Xxxxx, Trustee of The Xxxxxxx X. Xxxxx
and Xx Xxxxx 1988 Charitable Unitrust.
Notary Public
My Commission Expires: Commission No. ___________________
_____________________
(SEAL)
STATE OF OKLAHOMA )
) SS.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this ______ day of
______________________, 2003, by Xxxxxxx Xxxxx, Member of McElmo Dome Nominee
LLC, an Oklahoma limited liability company, on behalf of the limited liability
company.
Notary Public
My Commission Expires: Commission No. ___________________
_____________________
(SEAL)
STATE OF OKLAHOMA )
) SS.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this ______ day of
______________________, 2003, by Xxxxx X. Xxxxxx, Member of McElmo Dome Nominee
LLC, an Oklahoma limited liability company, on behalf of the limited liability
company.
Notary Public
My Commission Expires: Commission No. ___________________
_____________________
(SEAL)
STATE OF OKLAHOMA )
) SS.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this ______ day of
______________________, 2003, by Xxxxx Xxxxxxxxx, Manager of Xxxxxxxxx Family
L.L.C., an Oklahoma limited liability company, on behalf of the limited
liability company.
Notary Public
My Commission Expires: Commission No. ___________________
_____________________
(SEAL)
STATE OF OKLAHOMA )
) SS.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this ______ day of
______________________, 2003, by Xxxx Xxx, Xx., general partner of B&M Limited,
an Oklahoma general partnership, on behalf of the partnership.
Notary Public
My Commission Expires: Commission No. ___________________
_____________________
(SEAL)
STATE OF OKLAHOMA )
) SS.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this ______ day of
______________________, 2003, by Xxxxxxx Xxxxx, general partner of B&M Limited,
an Oklahoma general partnership, on behalf of the partnership.
Notary Public
My Commission Expires: Commission No. ___________________
_____________________
(SEAL)
STATE OF OKLAHOMA )
) SS.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this ______ day of
______________________, 2003, by Xxxx Xxx, Xx., President of The Xxxxx Company,
an Oklahoma corporation, on behalf of the corporation.
Notary Public
My Commission Expires: Commission No. ___________________
_____________________
(SEAL)
