SUBORDINATION AND NOMINEE AGREEMENT
This Subordination and Nominee Agreement (this "Nominee Agreement") is made
as of the 22nd day of July, 2005 ("Effective Date"), by and among Xxxxxxx X.
Xxxxx and Xx Xxxxx, as Trustees of The Xxxxxxx X. Xxxxx and Xx Xxxxx 1988
Charitable Unitrust ("Unitrust"), Xxxxxxxxx Family, L.L.C. ("Xxxxxxxxx"), and
McElmo Dome Nominee, LLC, a limited liability company ("Nominee").
Whereas, The Xxxxx Company (the "Company") has executed and delivered to
Unitrust that certain Promissory Note dated March 26, 2004 in the original
principal amount of $2,785,000 (the "Prior Unitrust Note"), upon which, as of
the Effective Date, the unpaid principal balance is $2,782,900.59 and the
accrued unpaid interest is $59,095.66; and
Whereas, Unitrust has previously executed and delivered to Xxxxxxxxx that
certain Promissory Note (the "Unitrust Xxxxxxxxx Note") dated May 21, 2004, in
the original principal amount of $500,000, upon which, as of the Effective Date,
the unpaid principal balance is $388,817.92 ("Assumed Balance") and all accrued
interest has been paid in full; and
Whereas, the Company has previously executed and delivered to Unitrust that
certain 10% Participating Note, dated May 21, 2004, in the original principal
amount of $500,000.00 (the "Company Unitrust Note"), upon which, as of the
Effective Date, the unpaid principal balance is $384,101.80 and all accrued
interest has been paid in full; and
Whereas, Unitrust used the proceeds of the Unitrust Xxxxxxxxx Note to make
the loan to the Company evidenced by the Company Unitrust Note, and in
consideration of such loan and to secure payment of the loans evidenced by the
Prior Unitrust Note and the Unitrust Xxxxxxxxx Note (collectively, the "Notes")
the Company has executed and delivered to the public trustees of Montezuma
County and Xxxxxxx County, Colorado, that certain Deed of Trust, Assignment of
Production, Security Agreement, and Financing Statement, dated as of May 21,
2004, (the "2004 Deed of Trust"), covering certain oil, gas, and mineral
interests (collectively, the "Collateral"), for the benefit of the Nominee; and
Whereas, Unitrust, Xxxxxxxxx, and certain other parties have previously
entered into a Subordination and Nominee Agreement dated May 21, 2004 (the "2004
Nominee Agreement") under which (i) the Nominee agreed to act as agent and
nominee on behalf of Unitrust, Xxxxxxxxx, and such other parties under the 2004
Deed of Trust, and (ii) the parties have agreed to certain priorities among the
parties with respect to proceeds of the Collateral; and
Whereas, the Company has assumed and promised to pay the Assumed Balance of
the Unitrust Xxxxxxxxx Note; and
Whereas, in consideration of the renewal and extension of the Assumed
Balance and payment in cash of the amount of $1,182.08, the Company has executed
and delivered to Xxxxxxxxx the Company's 12% Convertible Subordinated Note due
August 31, 2009, in the principal amount of $390,000.00 (the "Company Xxxxxxxxx
Note"); and
Whereas, under the terms of the 2004 Nominee Agreement, Xxxxxxxxx holds
first priority with respect to proceeds of the Collateral to the extent of the
indebtedness evidenced by the Unitrust Xxxxxxxxx Note, and the Unitrust's
priority with respect to proceeds of the Collateral is subordinated to the
priority of Xxxxxxxxx; and
Whereas, to secure payment of the loans evidenced by the Prior Company Note
and the Company Xxxxxxxxx Note, the Company has executed and delivered two
certain deeds of trust (collectively, the "2005 Deed of Trust"), each dated July
22, 2005 and titled Deed of Trust, Assignment of Production, Security Agreement
and Financing Statement, one such deed of trust to the public trustee of
Montezuma County, Colorado and one such deed of trust to the public trustee of
Xxxxxxx County, Colorado, covering the Collateral; and
Whereas, the parties desire to provide for the orderly enforcement of the
rights of Unitrust and Xxxxxxxxx (collectively, the "Noteholders") in the lien
(the "Lien") created in the Collateral under the 2005 Deed of Trust and to set
forth the priority as among the 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 2005 Deed of Trust, or of any
other recovery resulting from or under the 2005 Deed of Trust ("Proceeds"); and
Whereas, Unitrust, Xxxxxxxxx, and certain other parties previously entered
into a Subordination and Nominee Agreement dated February 21, 2003 (the "2003
Nominee Agreement") under which Nominee agreed to act as agent and nominee on
behalf of Unitrust, Xxxxxxxxx, and such other parties under that certain Deed of
Trust, Assignment of Production, Security Agreement, and Financing Statement,
dated as of February 21, 2003 (the "2003 Deed of Trust"), executed by the
Company for the benefit of Nominee, covering the Collateral and securing payment
of the certain indebtedness of the Company now evidenced by the Prior Unitrust
Note and certain other indebtedness described in the 2003 Nominee Agreement.
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, Unitrust and Xxxxxxxxx hereby designate and appoint Nominee as
their agent to act on behalf of all Noteholders in holding the beneficial
interest granted under the 2005 Deed of Trust, and in enforcing any and all
rights of the beneficiary under the 2005 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, Xxxxxxxxx, and Nominee
hereby further agree as follows:
1. Nominee. Nominee shall act as the Noteholders' agent and shall hold
title to the Lien and the Collateral as nominee for the benefit of all
Noteholders.
2. Enforcement of Deed of Trust. Nominee shall not transfer, sell, pledge,
hypothecate, encumber, or otherwise exercise any incident of ownership with
respect to the Lien or the Collateral held by it as nominee, except as follows:
a. At all times prior to payment in full of the Assumed Balance of the
Company Xxxxxxxxx Note, plus interest accrued thereon, and after payment in
full of the Prior Unitrust Note, Nominee shall execute and deliver such
instruments and shall take such actions or refrain from taking such actions
as Xxxxxxxxx may require for purposes of enforcing the rights of the
Noteholders under the Deeds of Trust.
b. At all times following payment in full of the Assumed Balance of
the Company Xxxxxxxxx Note, plus interest accrued thereon, but prior to
payment in full of the Prior 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.
3. Disposition of Collateral. All Proceeds shall be applied in the
following order:
a. First, to the expenses incurred in enforcement of the 2005 Deed of
Trust, the obligations secured thereby, and collection of such obligations;
b. Second, to Xxxxxxxxx to the extent necessary to pay the Company
Xxxxxxxxx Note, in an amount not to exceed the Assumed Balance, plus
accrued interest thereon;
c. Third, to the Unitrust to the extent necessary to pay the Prior
Unitrust Note, principal and interest;
d. Fourth, to Xxxxxxxxx to the extent necessary to satisfy the
remaining balance of principal and interest under the Company Xxxxxxxxx
Note; and
e. Fifth, as required by law and by the 2005 Deed of Trust.
4. Notice to Noteholders. The Nominee may, at any time, notify any
Noteholder of the status of the obligations secured by the Deed of Trust and the
enforcement thereof, including any notice or instruction received by the Nominee
by any Noteholder.
5. Binding Effect. This Agreement shall be binding upon the respective
successors and assigns of the parties hereto.
6. Termination. This Agreement may not be terminated without the written
consent of the Noteholders; provided, that following payment in full of the
Company Xxxxxxxxx Note, no such consent shall be required of Xxxxxxxxx. In the
event of termination, Nominee agrees to take such action and execute such
documents as the Noteholders shall request to cause the Lien or the Collateral
to be conveyed to the Noteholders, or as otherwise directed by the Noteholders.
7. Governing Law. The provisions of this Agreement shall be construed in
accordance with the laws of the State of Oklahoma.
8. 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.
9. Subordination of Prior Deeds of Trust. It is the intent of the parties
that the 2003 Deed of Trust, the liens created thereunder, and all of Nominee's
rights thereunder, be renewed and extended and incorporated within the 2004 Deed
of Trust, and that the 2004 Deed of Trust, the liens created thereunder, and all
of Nominee's rights thereunder, be renewed and extended and incorporated within
the 2005 Deed of Trust. To the extent, if any, that the 2003 Deed of Trust or
the 2004 Deed of Trust remains separately enforceable, the 2003 Deed of Trust
and the 2004 Deed of Trust are, and shall be, at all times prior to payment in
full of the Unitrust Xxxxxxxxx Note, subordinate and inferior to the 2005 Deed
of Trust.
"UNITRUST" THE XXXXXXX X. XXXXX AND XX XXXXX 1988
CHARITABLE UNITRUST
By /s/ Xxxxxxx X. Xxxxx
Xxxxxxx Xxxxx, Trustee
By /s/ Xx Xxxxx
Xx Xxxxx, Trustee
"NOMINEE" MCELMO DOME NOMINEE, LLC, an Oklahoma
limited liability company
By /s/ Xxxxxxx X. Xxxxx
Xxxxxxx Xxxxx, Member
By: XXXXXXXXX FAMILY L.L.C., Member
By /s/ Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx, Manager
"XXXXXXXXX" XXXXXXXXX FAMILY L.L.C., an Oklahoma
limited liability company
By /s/ Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx, Manager
ACKNOWLEDGED by The Xxxxx Company this 22nd day of July, 2005.
/s/ Xxxx Xxx, Xx.
Xxxx Xxx, Xx., President
STATE OF OKLAHOMA )
) SS.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this 21st day of July,
2005, by Xxxxxxx Xxxxx, Trustee of The Xxxxxxx X. Xxxxx and Xx Xxxxx 1988
Charitable Unitrust.
/s/ Xxxxx Xxxxx
Notary Public
My Commission Expires: Commission No. 02017703
10/30/2006
(SEAL)
STATE OF OKLAHOMA )
) SS.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this 21st day of July,
2005, by Xx Xxxxx, Trustee of The Xxxxxxx X. Xxxxx and Xx Xxxxx 1988 Charitable
Unitrust.
/s/ Xxxxx Xxxxx
Notary Public
My Commission Expires: Commission No. 02017703
10/30/2006
(SEAL)
STATE OF OKLAHOMA )
) SS.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this 21st day of July,
2005, by Xxxxxxx Xxxxx, Member of McElmo Dome Nominee LLC, an Oklahoma limited
liability company, on behalf of the limited liability company.
/s/ Xxxxx Xxxxx
Notary Public
My Commission Expires: Commission No. 02017703
10/30/2006
(SEAL)
STATE OF OKLAHOMA )
) SS.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this 22nd day of July,
2005, by Xxxxx Xxxxxxxxx, as Manager of XXXXXXXXX FAMILY L.L.C., as member of
McElmo Dome Nominee LLC, an Oklahoma limited liability company, on behalf of the
limited liability company.
/s/ Xxxxx Xxxxx
Notary Public
My Commission Expires: Commission No. 02017703
10/30/2006
(SEAL)
STATE OF OKLAHOMA )
) SS.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this 22nd day of July,
2005, by Xxxxx Xxxxxxxxx, Manager of Xxxxxxxxx Family L.L.C., an Oklahoma
limited liability company, on behalf of the limited liability company.
/s/ Xxxxx Xxxxx
Notary Public
My Commission Expires: Commission No. 02017703
10/30/2006
(SEAL)
STATE OF OKLAHOMA )
) SS.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this 22nd day of July,
2005, by Xxxx Xxx, Xx., President of The Xxxxx Company, an Oklahoma corporation,
on behalf of the corporation.
/s/ Xxxxx Xxxxx
Notary Public
My Commission Expires: Commission No. 02017703
10/30/2006
(SEAL)
