EXHIBIT 10.1.20
LOAN AGREEMENT
Dated as of
August 3, 1995
between
UNIT CORPORATION
UNIT DRILLING AND EXPLORATION COMPANY
MOUNTAIN FRONT PIPELINE COMPANY, INC.
UNIT DRILLING COMPANY
UNIT PETROLEUM COMPANY
PETROLEUM SUPPLY COMPANY
ROUNDUP RESOURCES, INC.
"Borrowers"
and
BANK OF OKLAHOMA, NATIONAL ASSOCIATION
THE FIRST NATIONAL BANK OF BOSTON
BANK IV OKLAHOMA, N.A.
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF SHAWNEE
"Banks"
and
BANK OF OKLAHOMA, NATIONAL ASSOCIATION
"Agent"
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of August 3, 1995 ("Agree-
ment"), is entered into among UNIT CORPORATION, a Delaware corpora-
tion ("Unit"), UNIT DRILLING AND EXPLORATION COMPANY, a Delaware
corporation, MOUNTAIN FRONT PIPELINE COMPANY, INC., an Oklahoma
corporation, UNIT DRILLING COMPANY, an Oklahoma corporation, UNIT
PETROLEUM COMPANY, an Oklahoma corporation, PETROLEUM SUPPLY
COMPANY, an Oklahoma corporation, and ROUNDUP RESOURCES, INC., a
Delaware corporation, each with its principal place of business at
1000 Galleria Tower 1, 7130 South Lewis, Tulsa, Oklahoma 74136
(collectively the "Borrowers") and BANK OF OKLAHOMA, NATIONAL
ASSOCIATION, a national banking association, with principal offices
at Bank of Oklahoma Tower, 7 East 2nd Street, Tulsa, Oklahoma 74172
("BOK"); THE FIRST NATIONAL BANK OF BOSTON, a national banking
association, with principal offices at 100 Federal Street, Boston,
Massachusetts 02110 ("Bank of Boston"); BANK IV OKLAHOMA, N.A., a
national banking association, formerly known as The Fourth National
Bank of Tulsa, with principal offices at 515 South Boulder, Tulsa,
Oklahoma, 74119 ("BANK IV"); and AMERICAN NATIONAL BANK AND TRUST
COMPANY OF SHAWNEE, a national banking association, with principal
offices at 201 N. Broadway, Shawnee, Oklahoma 74801 ("ANB") (BOK,
Bank of Boston, BANK IV and ANB each being sometimes referred to
herein, individually, as a "Bank", and collectively as the
"Banks"); and BOK as Agent for the Banks (in such capacity, herein
referred to as the "Agent").
WITNESSETH:
WHEREAS, the Borrowers have applied to the Banks for a
certain revolving line of credit (the "Line Commitment") in the
maximum principal amount of SEVENTY FIVE MILLION AND NO/100 DOLLARS
($75,000,000) to be evidenced by Borrowers' joint and several
promissory notes dated as of even date herewith for the purposes of
(i) paying off the aggregate unpaid balance of the existing loan
owing by the Borrowers to BOK, BANK IV and ANB, (ii) funding future
oil and gas property acquisitions and development drilling expenses
(iii) the issuance of standby letters of credit from time to time
in accordance with and subject to the terms, provisions and
conditions hereof, (iv) funding general working capital require-
ments and (iv) funding drilling equipment expenditures;
WHEREAS, pursuant to the terms and provisions hereof, the
unpaid principal balance of the Line Commitment will be converted
to a forty-eight (48) month term payment (the "Term Commitment")
(the Line Commitment and the Term Commitment are sometimes
collectively referred to herein as the "Commitments"); and
WHEREAS, the Banks are willing to extend the Commitments to
the Borrowers upon the terms and conditions herein set forth, all
of which are material to the Banks and without which the Banks
would not be willing to extend any of the loan commitments
described above.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other good and valuable consid-
eration, receipt of which is acknowledged by the parties hereto,
the parties agree, as follows:
ARTICLE I
CERTAIN DEFINITIONS
When used herein, the following terms shall have the follow-
ing meanings:
1.1 "Applicable Prime Rate" shall mean the annual rate of
interest announced by Chase Manhattan Bank (National Association)
New York, New York ("Chase") from time to time as its prime or base
rate, which shall be the rate used by Chase as a base or standard
for pricing purposes and which shall not necessarily be its "best"
or lowest rate. Should Chase cease to announce a prime or base
rate, or should it be merged, consolidated, liquidated or dissolved
in such a manner that it loses its separate corporate or banking
identity, then the Applicable Prime Rate shall be the Prime Rate
published by the Wall Street Journal in its "Money Rates" column,
or a similar rate if such rate ceases to be published. Any change
in the Applicable Prime Rate shall be effective as of the date of
the change.
1.2 "Business Day" shall mean a day other than a Saturday,
Sunday or a day upon which banks in the State of Oklahoma are
closed to business generally.
1.3 "CERCLA" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended,
together with all regulations and rulings promulgated with respect
thereto.
1.4 "Closing Date" shall mean the effective date of this
Agreement.
1.5 "Collateral" shall mean the Current Collateral and the
Additional Collateral, as defined herein in Article IV.
1.6 "Commitment Termination Date" shall mean August 31, 1997
unless the Commitment is terminated at an earlier date pursuant to
the terms of this Agreement.
1.7 "Commitments" shall mean the Line Commitment and the
Term Commitment.
1.8 "Consolidated Tangible Net Worth" shall mean the sum of
(a) the par value of Unit's consolidated capital stock (excluding
treasury stock), (b) Unit's consolidated paid-in capital, and (c)
the amount of Unit's consolidated retained earnings minus any
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consolidated intangible assets such as organization costs or
goodwill, all as reflected in the financial statements furnished to
the Banks under this Agreement.
1.9 "Corresponding Source of Funds" shall mean in the case
of any Libor Rate Funding Segment of the Libor Rate Portion, the
proceeds of hypothetical receipts by the Agent through a branch,
subsidiary or affiliate of one or more Dollar deposits in the
interbank eurodollar market at the beginning of the Libor Rate
Funding Period corresponding to such Libor Rate Funding Segment,
having maturities approximately equal to such Libor Rate Funding
Period and in an aggregate amount approximately equal to such Libor
Rate Funding Segment.
1.10 "Current Assets" shall mean the total amount of Unit's
current assets determined in accordance with GAAP on a consolidated
basis.
1.11 "Current Liabilities" shall mean the total amount of
Unit's current liabilities determined in accordance with GAAP on a
consolidated basis, excluding, however (i) current maturities of
indebtedness of the Borrowers to the Banks as provided in this
Agreement, and (ii) liabilities associated with gas purchase
prepayments.
1.12 "Current Maturities of Long Term Debt" shall mean
obligations under Long Term Debt due within one year or less, as
reflected on Unit's financial statements furnished to the Banks
pursuant to this Agreement.
1.13 "Current Ratio" shall mean the ratio of Current Assets
to Current Liabilities.
1.14 "Default Rate" shall mean the Applicable Prime Rate plus
five percentage points (5.0%) per annum.
1.15 "Dollar", "Dollars" and the symbol "$" shall mean lawful
money of the United States of America.
1.16 "Environmental Laws" shall mean Laws, including without
limitation federal, state or local Laws, ordinances, rules,
regulations, interpretations and orders of courts or administrative
agencies or authorities relating to pollution or protection of the
environment (including, without limitation, ambient air, surface
water, groundwater, land surface and subsurface strata), including
without limitation CERCLA, SARA, RCRA, HSWA, OPA, HMTA, TSCA and
other Laws relating to (i) Polluting Substances or (ii) the
manufacture, processing, distribution, use, treatment, handling,
storage, disposal or transportation of Polluting Substances.
1.17 "ERISA" shall mean the Federal Employee Retirement
Income Security Act of 1974, as amended, together with all regu-
lations and rulings promulgated with respect thereto.
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1.18 "Event of Default" shall mean any of the events speci-
fied in Section 8.1 of this Agreement, and "Default" shall mean any
event, which together with any lapse of time or giving of any
notice, or both, would constitute an Event of Default.
1.19 "GAAP" shall mean generally accepted accounting princi-
ples applied on a consistent basis in all material respects to
those applied in the preceding period. Unless otherwise indicated
herein, all accounting terms will be defined according to GAAP.
1.20 "hereby", "herein", "hereof", "hereunder" and similar
such terms shall mean and refer to this Agreement as a whole and
not merely to the specific section, paragraph or clause in which
the respective word appears.
1.21 "HMTA" shall mean the Hazardous Materials Transportation
Act, as amended, together with all regulations and rulings
promulgated with respect thereto.
1.22 "HSWA" shall mean the Hazardous and Solid Waste Amend-
ments of 1984, as amended, together with all regulations and
rulings promulgated with respect thereto.
1.23 "Indebtedness" shall mean and include any and all: (i)
indebtedness, obligations and liabilities of the Borrowers to the
Banks and the Agent incurred or which may be incurred hereafter
pursuant to the terms of this Agreement or any of the other Loan
Documents, and any extensions, renewals, substitutions, amendments
and increases in amount thereof, including such amounts as may be
evidenced by the Notes and all lawful interest, letters of credit
fees, service fees, commitment fees and other charges, and all
reasonable costs and expenses incurred in connection with the
preparation, filing and recording of the Loan Documents, including
attorneys fees; (ii) all reasonable costs and expenses, including
attorneys' fees, paid or incurred by the Banks or the Agent in
enforcing or attempting to enforce collection of any Indebtedness
and in enforcing or realizing upon or attempting to enforce or
realize upon any collateral or security for any Indebtedness and in
protecting and preserving the Banks' interest in the Indebtedness
or any collateral or security for any Indebtedness in any bank-
ruptcy or reorganization proceeding, including interest on all sums
so expended by the Banks or the Agent accruing from the date upon
which such expenditures are made until paid, at an annual rate
equal to the Default Rate; (iii) sums expended by the Banks in
curing any Event of Default or Default of the Borrowers under the
terms of the Loan Documents or any other security agreement or
other writing evidencing or securing the payment of the Notes
together with interest on all sums so expended by the Banks or the
Agent accruing from the date upon which such expenditures are made
until paid, at an annual rate equal to the Default Rate; and (iv)
all "Indebtedness" or "Secured Indebtedness" as said terms are
defined in each of the Loan Documents.
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1.24 "Intercreditor Agreement" shall mean the Intercreditor
Agreement dated of even date herewith among BOK, BANK IV, Bank of
Boston, ANB and the Agent.
1.25 "Laws" shall mean all statutes, laws, ordinances,
regulations, orders, writs, injunctions, or decrees of the United
States, any state or commonwealth, any municipality, any foreign
country, any territory or possession, or any Tribunal.
1.26 "Letters of Credit" shall mean any and all letters of
credit issued by BOK pursuant to the request of any of the
Borrowers in accordance with the provisions hereof which at any
time remain outstanding and subject to draw by the beneficiary,
whether in whole or in part.
1.27 "Libor Rate" shall mean for any day the rate per annum
of interest (rounded upwards, if necessary, to the nearest 1/16 of
1%) (which shall be the same for each day in the Libor Rate Funding
Period selected) determined pursuant to the following formula:
Rate
Libor Rate = 1.00 - Libor Reserve Percentage
The Libor Rate for any Libor Rate Funding Period for the Libor Rate
Option will be determined by the Agent on the basis of the Libor
Reserve Percentage in effect two (2) London Business Days prior to
the first day of a Libor Rate Funding Period and the applicable
Rate as described below. "Rate" means for any day the rate per
annum of interest (rounded upwards, if necessary, to the nearest
1/16 of 1%) quoted for the "London Interbank Offered Rates (LIBOR)"
by Agent's Capital Markets Division for the selected Libor Rate
Funding Period available hereunder for the Libor Rate Option two
(2) London Business Days prior to the first day of such Libor Rate
Funding Period. "Libor Reserve Percentage" means, relative to any
Libor Rate Funding Period available hereunder for the Libor Rate
Option, the reserve percentage (expressed as a decimal) equal to
the maximum aggregate reserve requirements (including all basic,
emergency, supplemental, marginal and other reserves and taking
into account any transitional adjustments or other scheduled
changes in reserve requirements) specified under regulations issued
from time to time by the Federal Reserve System Board and then
applicable to assets or liabilities consisting of and including
"Eurocurrency Liabilities", as currently defined in Regulation D of
the Federal Reserve System Board, having a term approximately equal
or comparable to such Libor Rate Funding Period. The Agent shall
give prompt notice to the Borrowers of the Libor Rate so determined
or adjusted, which determination or adjustment shall be conclusive
if made in good faith absent manifest or demonstrable error.
1.28 "Libor Rate Funding Period" shall have the meaning
assigned to that term or described in Section 2.5(b) hereof.
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1.29 "Libor Rate Funding Segment" shall mean that portion of
the outstanding principal amount of the Notes to which a Libor Rate
Option applies for the applicable Libor Rate Funding Period begin-
ning on a particular day and ending on another particular day.
1.30 "Libor Rate Option" shall have the meaning assigned to
that term in Section 2.5(a) hereof.
1.31 "Lien" shall mean any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any lease in the nature thereof,
and the filing of or agreement to give any financing statement or
other similar form of public notice under the Laws of any juris-
diction).
1.32 "Lien Notice" shall mean notice received or obtained by
the Agent or the Banks or knowledge obtained by the Agent or the
Banks of any Lien being claimed (whether valid or not) by any
Person, other than the Agent or the Banks or a trustee on behalf of
the Agent or the Banks, with respect to the Borrowers' assets and
properties.
1.33 "Line Loan" shall have the meaning ascribed to it in
Section 2.1 of this Agreement.
1.34 "Loan Documents" shall mean this Agreement, the Notes,
the Security Instruments and all other documents, instruments and
certificates executed and delivered to the Banks and the Agent by
the Borrowers pursuant to the terms of this Agreement.
1.35 "Loan Value" shall have the meaning assigned to that
term or described in Section 3.1(b) hereof.
1.36 "London Business Day" shall mean a day for dealing in
deposits in Dollars by and among banks in the London interbank mar-
ket which is also a Business Day.
1.37 "Long Term Debt" shall mean all obligations of Unit and
its consolidated subsidiaries reflected on the consolidated
financial statements furnished to the Banks that are due in more
than one year, excluding, however, liabilities associated with gas
purchase prepayments.
1.38 "Majority Banks" shall mean the Agent and either one or
both of Bank of Boston or BANK IV.
1.39 "Mineral Interests" shall mean all of the Borrowers'
mineral and leasehold interests.
1.40 "Notes" shall have the meaning ascribed to it in Section
2.2 of this Agreement together with each and every extension,
renewal, modification, replacement, substitution and change in form
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thereof which may be from time to time and for any term or terms
effected.
1.41 "OPA" shall mean the Oil Pollution Act of 1990, as
amended, together with all regulations and rulings promulgated with
respect thereto.
1.42 "Official Body" shall mean any government or political
subdivision or any agency, authority, bureau, central bank,
commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or
domestic.
1.43 "Options" shall mean the Prime Rate Option and the Libor
Rate Option, as the case may be.
1.44 "Person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, an unincor-
porated organization, and a government or any department, agency or
political subdivision thereof.
1.45 "Polluting Substances" shall mean all pollutants,
contaminants, chemicals or industrial, toxic or hazardous sub-
stances or wastes and shall include, without limitation, any
flammable explosives, radioactive materials, oil, hazardous
materials, hazardous or solid wastes, hazardous or toxic substances
or related materials defined in CERCLA/SARA, RCRA/HSWA and in the
HMTA; provided, in the event either CERCLA/SARA, RCRA/HSWA or HMTA
is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the
effective date of such amendment and, provided further, to the
extent that the Laws of any State or other Tribunal establish a
meaning for "hazardous substance," "hazardous waste," "hazardous
RCRA/HSWA material," "solid waste" or "toxic substance" which is
broader than that specified in CERCLA/SARA or HMTA, such broader
meaning shall apply.
1.46 "Prime Rate Option" shall have the meaning assigned to
that term in Section 2.5(a) hereof.
1.47 "Pro Rata Share" shall mean for each of the Banks the
percentage determined from time to time by dividing the principal
amount outstanding under such Bank's respective Note by the
aggregate principal amount outstanding under all of the Banks'
Notes. Initially, BOK's Pro Rata Share is 47%, BANK IV's Pro Rata
Share is 40%, Bank of Boston's Pro Rata Share is 10% and ANB's Pro
Rata Share is 3%.
1.48 "RCRA" shall mean the Resource Conservation and Recovery
Act of 1976, as amended, together with all regulations and rulings
promulgated with respect thereto.
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1.49 "Redetermination Date" shall mean May 1 and November 1
of each year.
1.50 "SARA" shall mean the Superfund Amendments and Re-
authorization Act of 1987, as amended, together with all regu-
lations and rulings promulgated with respect thereto.
1.51 "Security Agreement" shall have the meaning assigned to
that term in Article IV of this Agreement.
1.52 "Security Instruments" shall mean the Security Agreement
and all other financing statements, mortgages, assignments,
security agreements, documents or writings of any and all amend-
ments and supplements thereto, granting, conveying, assigning,
transferring or in any manner providing the Agent with a security
interest or mortgage lien in any property as security for the
repayment of all or any part of the Indebtedness.
1.53 "Taxes" shall mean all taxes, assessments, fees, or
other charges or levies from time to time or at any time imposed by
any Laws or by any Tribunal.
1.54 "Term Loan" shall have the meaning ascribed to it in
Section 2.4(a) of this Agreement.
1.55 "Total Liabilities" shall mean the total amount of all
liabilities of Unit, as reflected on the consolidated financial
statements, including capitalized leases and excluding liabilities
associated with gas purchase prepayments.
1.56 "Tribunal" shall mean any municipal, state, common-
wealth, Federal, foreign, territorial or other sovereign, govern-
mental entity, governmental department, court, commission, board,
bureau, agency or instrumentality.
1.57 "TSCA" shall mean the Toxic Substances Control Act, as
amended, together with all regulations and rulings promulgated with
respect thereto.
1.58 "Working Capital Provided from Operations" shall mean
Unit's consolidated net income plus (minus) Unit's consolidated
depreciation, noncurrent deferred income taxes, and other nonwork-
ing capital charges (credits), as such items are reflected in the
financial statements furnished to the Banks pursuant to this
Agreement.
ARTICLE II
LOANS
2.1 Revolving Line of Credit. Each of the Banks agrees,
severally and not jointly, upon the terms and subject to the
8
conditions hereinafter set forth, to establish a combined revolving
line of credit and make loans (the "Line Loan") to the Borrowers
administered by the Agent from the Closing Date until August 31,
1997 (the "Commitment Termination Date"), in such amounts as the
Borrowers may from time to time request and BOK will issue letters
of credit on Borrowers' account so long as the aggregate unpaid
principal amount of the Line Loan advanced, outstanding and unpaid
at any time under the Notes as cash advances thereon (including the
unfunded portions of outstanding Letters of Credit issued pursuant
to Section 2.3(b) hereof) does not exceed the lesser of (a)
$75,000,000 (or such lesser amount as may be established from time
to time pursuant to Section 2.7 hereof) (the "Commitment Amount")
or (b) the Borrowing Base (as determined in accordance with Section
3.1 hereof). In no event shall any of the Banks be obligated to
make advances under this Agreement in excess of the stated princi-
pal amount of each Bank's respective Note.
2.2 Notes. The Borrowers' obligation to repay the Line Loan
made by the Banks, together with interest accruing thereon, shall
be evidenced by Borrowers' four (4) joint and several promissory
notes of even date herewith, in the form of Exhibits A-1, A-2, A-3
and A-4 attached hereto (which promissory notes, together with all
extensions, renewals, substitutions, replacements, rearrangements
and changes in form thereof are each sometimes hereinafter referred
to, individually, as a "Note", and, collectively, as the "Notes").
2.3 Advances; Letters of Credit.
(a) Advances. Subject to the terms, conditions and
limitations set forth in this Agreement, each Bank severally,
and not jointly, agrees to advance its Pro Rata Share of each
advance.
Except for advances to reimburse BOK for drafts paid
under Letters of Credit, the Banks shall not be obligated to
make any advance which is (i) in an amount less than $100,000
or, if greater than $100,000, in an amount not an integral
multiple of $50,000, (ii) requested on or after the Commit-
ment Termination Date, or (iii) requested to be made while
any Event of Default is in existence, or when the making of
such advance would cause an Event of Default to occur.
Within such limitations and the limitations set forth in this
Agreement, Borrowers may borrow, repay and reborrow under the
Line Loan until the Commitment Termination Date.
Borrowers shall give Agent notice by telephone at or
before 12:00 o'clock noon (Tulsa time) on the proposed date
of any advance. Each such advance shall be made at the
office of the Agent by crediting the amount of the advance to
Unit's demand deposit account with the Agent styled as
follows: Unit Corporation Account No. 209907163 (the
"General Account"). In consideration of Banks and the Agent
permitting Borrowers to make requests for advances by
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telephone, Borrowers jointly state that they are fully aware
of the risks attendant thereto, and agree to accept all such
risks and to hold Banks and the Agent harmless from any loss
which any Borrowers may incur by reason of any such
nonwritten request, other than such as result from a Bank's
or the Agent's gross negligence or wanton disregard.
(b) Letters of Credit. Upon the Borrowers' application
from time to time by use of BOK's standard form Letter of
Credit Application Agreement and subject to the terms and
provisions therein and herein set forth, BOK agrees to issue
standby letters of credit on behalf of the Borrowers under
the Line Commitment, provided that (i) any letters of credit
issued on behalf of or on the account of Borrowers with an
expiry date later than the Commitment Termination Date, will,
at the Banks' sole option, be fully secured and collateral-
ized by cash or cash equivalent acceptable to the Banks in
their sole discretion and held thereby from and after
maturity, until expiration or cancellation of such letter(s)
of credit or payment of all draws thereon on demand of the
Banks, (ii) no letter of credit will be issued on behalf of
or for the account of the Borrowers if at the time of
issuance the outstanding amount of the unpaid Line Loan
(including the aggregate outstanding and unfunded amount of
unexpired letters of credit then existing) under the Line
Commitment as evidenced by the Notes plus the maximum amount
of such Letter of Credit then being requested would exceed
the Borrowing Base, and (iii) in no event shall the aggregate
amount of such outstanding letters of credit exceed
$10,000,000. If any letter of credit is drawn upon at any
time, each amount drawn, whether a full or partial draw
thereon, shall be paid by wire transfer and reflected by the
Banks as an advance on the Notes, based on the Banks' Pro
Rata Share, effective as of the date the sight draft is
honored and such letter of credit shall be cancelled immedi-
ately, or partially reduced, as may be appropriate, upon such
wire transfer. In consideration of BOK's agreement to issue
letters of credit hereunder, the Borrowers agree to pay to
the Agent letter of credit fees equal to one and one-half
percent (1 1/2%) per annum on the face amount of each letter
of credit plus normal processing fees, which such fees shall
be paid to the Agent at the time of issuance of each applica-
ble letter of credit by an automatic debit in such amount to
the General Account (the "Letter of Credit Fees"). All
letters of credit issued by BOK pursuant to this Agreement
shall specify the volume, source and delivery period pertain-
ing to the transaction.
2.4 Principal. The principal balance of the Notes shall be
paid as follows:
(a) The principal balance of the Notes remaining unpaid
as of the Commitment Termination Date shall be payable in
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forty-eight (48) monthly installments, commencing on Septem-
ber 1, 1997, and continuing on the first (1st) day of each
month thereafter through August 1, 2001 (the "Maturity"), as
more fully described in the Notes (the "Term Loan").
(b) Except as herein provided, Borrowers may from time
to time prepay, without penalty or premium, all or any part
of the Notes. Amounts so prepaid prior to the Commitment
Termination Date or amounts of the Line Commitment otherwise
unused (subject to the other provisions of this Agreement)
shall be available to re-advance or advance, as the case may
be, as one or more advances under the Line Loan. Prepayments
made on or after the Commitment Termination Date shall be
applied first to interest and then to the outstanding
principal balance of and principal installments due under the
Notes in the inverse order of maturity. Each payment made
pursuant to this Section 2.4(b) shall be in addition to, and
not in lieu of, all other payments of principal, interest,
fees, costs, expenses and other amounts otherwise required by
the Notes. Nothing in this Section 2.4(b) shall affect the
rights of the Agent or the Banks to require payment in full
of the Notes prior to Maturity due to an acceleration of the
Notes upon an Event of Default.
(c) If at any time the aggregate amount of advances
outstanding under the Line Loan plus the aggregate liability
of the Banks under Letters of Credit outstanding at such time
shall exceed the Borrowing Base then in effect, Borrowers
shall, within thirty (30) days after the Agent gives Borrow-
ers written notice of such excess, (a) pay the principal
balance of the Notes in an amount which is equal to or
greater than such excess, together with interest on the
amount so paid, or (b) comply with the requirements of
Section 4.2(a) hereof. If such payment is not received by
the Agent on or before the last day of said thirty (30) day
period, then notwithstanding Borrowers' compliance with
clause (b) above within ninety (90) days after the end of
said thirty (30) day period, Borrowers shall pay the amount
of such excess, as increased or decreased since the last
calculation thereof, together with interest on the amount so
paid. Any payment made pursuant to the first two (2)
sentences of this Section 2.4(c) shall be in addition to, and
not in lieu of, all other payments of principal, interest,
fees, costs, expenses and other amounts otherwise required
and shall be applied first to interest and then to principal
and, if such payment is made on or after the Commitment
Termination Date, such payment shall be applied to principal
installments due under the Notes, in the inverse order of
their maturity. In the event the Agent does not receive such
payment in full on or before the last day of said ninety (90)
day period: (x) if such day occurs prior to the Commitment
Termination Date, then, notwithstanding the terms of the
Notes and this Agreement, all obligations of the Banks to
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make advances under the Line Loan and the obligation of BOK
to issue Letters of Credit shall immediately terminate, and
the aggregate principal balance of the Notes outstanding on
the last day of said ninety (90) day period shall be payable
in forty-eight (48) equal monthly installments, commencing on
the first (1st) day of the month immediately following the
month in which the end of said ninety (90) day period occurs
and continuing on the first (1st) day of each month thereaf-
ter until paid, and (y) if such day occurs on or after the
Commitment Termination Date, then such nonpayment shall
constitute an Event of Default.
2.5 Interest. The Notes shall bear interest and be payable
as follows:
(a) Available Options. Except as hereinafter provided,
during the period commencing on August 1, 1995 and continuing
through the Commitment Termination Date, interest shall
accrue on any past due interest and on that portion of the
aggregate principal amount of the Notes from time to time
outstanding (collectively the "Debt") according to the
following matrix:
Percentage that
the Debt Bears
to the Borrowing Base Rate of Interest
Less than 50% Applicable Prime Rate or
Libor Rate plus 1.75%
50% - up to but Applicable Prime Rate or
not including 75% Libor Rate plus 2.00%
75% or more Applicable Prime Rate or
Libor Rate plus 2.25%
Except as hereinafter provided, during the period commencing
on September 1, 1997, and continuing through Maturity,
interest shall accrue on the Debt according to the following
matrix:
Percentage that
the Debt Bears
to the Borrowing Base Rate of Interest
Less than 50% Applicable Prime Rate plus .25%
or Libor Rate plus 2.00%
50% - up to but Applicable Prime Rate plus .25%
not including 75% or Libor Rate plus 2.25%
75% or more Applicable Prime Rate plus .25%
or Libor Rate plus 2.50%
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In determining the percentage that the Debt bears to the
Borrowing Base, the "Debt" and the "Borrowing Base" shall be
the average of such respective amounts during the most recent
calendar month preceding such determination. The Applicable
Prime Rate option described above in the matrices is herein-
after referred to as the "Prime Rate Option" and the Libor
Rate interest option described above in the matrices is here-
inafter referred to as the "Libor Rate Option". The Prime
Rate Option shall be computed on the basis of a year of 365
or 366 days, as the case may be and the Libor Rate Option
shall be based on a year of 360 days and actual days elapsed.
(b) Operation of Options. At the end of any applicable
Libor Rate Funding Period, the Borrowers may either: (i)
repay all outstanding balances of principal and interest to
which such Libor Rate Funding Period applies; or (ii) select
the Prime Rate Option or the Libor Rate Option to apply to a
portion or all of such amounts affected by such Libor Rate
Funding Period. During an applicable Libor Rate Funding
Period, the Borrowers may not prepay in part or in whole the
outstanding principal balance of the Note to which such Libor
Rate Option applies and the applicable Libor Rate Funding
Period shall continue until the end of such period.
If the Prime Rate Option is selected with respect to all
or a portion of the Debt, then at any time, Unit, on behalf
of the Borrowers may notify the Agent that the Borrowers wish
to convert all or a portion of the Debt to the Libor Rate
Option. In such event, such designated outstanding balances
of principal on the Notes shall convert to the Libor Rate
Option. As provided below in Section 2.5(g)(i), the Borrow-
ers may prepay in part or in whole without premium or penalty
the outstanding principal balance of the Notes to which such
Prime Rate Option applies.
At any time when the Borrowers shall select, convert to
or renew the Libor Rate Option to apply to a portion or all
of the Debt, it shall fix one or more periods of 30, 60, 90
or 180 days during which such Option shall apply (the "Libor
Rate Funding Period") provided, that each Libor Rate Funding
Period shall begin on a London Business Day.
In order to select, convert to or renew the Libor Rate
Option, Borrowers shall provide the Agent with the date,
which shall be a Business Day, on which the Libor Rate Option
is to be effective, which date shall not be less than two (2)
Business Days after the date on which the Agent is so
notified.
(c) Interest Payment Dates. Interest shall be payable
on the Debt to which the Prime Rate Option applies on the
first (1st) day of each calendar month, commencing on
September 1, 1995. Interest shall be payable on the Debt to
13
which a Libor Rate Option applies at the conclusion of the
applicable Libor Rate Funding Period, provided, however, that
in the event that a Libor Rate Period of 180 days is select-
ed, interest shall be payable no less frequently than
quarterly.
(d) Interest Rate After Maturity. Notwithstanding the
provisions of Sections 2.5(a), 2.5(b) and 2.5(c) hereof,
after Maturity, whether by acceleration or otherwise, the
Debt shall bear interest at the fluctuating per annum rate
equal to the sum of five percent (5%) per annum plus the
Applicable Prime Rate and shall be payable on demand.
(e) Libor Rate Unascertainable - Impracticability. If
(i) on any date on which a Libor Rate would
otherwise be set the Agent shall have in good faith
determined (which determination shall be conclusive)
that:
(A) adequate and reasonable means do not
exist for ascertaining such Libor Rate,
(B) a contingency has occurred which mate-
rially and adversely affects the interbank euro-
dollar market, or
(C) the effective cost to the Banks of fund-
ing a proposed Libor Rate Option from a Corre-
sponding Source of Funds shall exceed the Libor
Rate applicable to such Libor Rate Funding Period,
or
(ii) at any time the Banks shall have determined
in good faith (which determination shall be conclusive)
that the making, maintenance or funding of the Libor
Rate Option has been made impracticable or unlawful by
compliance by the Banks in good faith with any Law or
guideline or interpretation or administration thereof by
any Official Body charged with the interpretation or
administration thereof or with any request or directive
of any such Official Body (whether or not having the
force of law);
then, and in any such event, the Agent may notify the
Borrowers of such determination. Upon such date as
shall be specified in such notice (which shall not be
earlier than the date such notice is given) the obliga-
tion of the Agent to allow the Borrowers to select,
convert to or renew the Libor Rate Option shall be
suspended until the Agent shall have later notified the
Borrowers of the Banks' determination in good faith
(which determination shall be conclusive) that the
14
circumstances giving rise to such previous determination
no longer exists.
If the Agent notifies the Borrowers of a determi-
nation under subsection (ii) of this Section 2.5(e), the
Borrowers shall, as to the Libor Rate on the date speci-
fied in such notice either convert the designated por-
tion of the Debt covered by any Libor Rate Option to the
Prime Rate Option in accordance with Section 2.5(f)
hereof or prepay such amount in accordance with Section
2.5(g) hereof. Absent due notice from the Borrowers of
conversion or prepayment, the Libor Rate automatically
shall be converted to the Prime Rate Option upon such
specified date.
If at the time the Agent or the Banks make a
determination under subsection (i) or (ii) of this
Section 2.5(e) the Borrowers have previously notified
the Agent that they wish to select, convert to or renew
the Libor Rate Option with respect to a portion or all
of the Debt but such Option has not yet gone into
effect, such notification shall be deemed to provide for
selection of, conversion to or renewal of the Prime Rate
Option instead of the Libor Rate Option.
(f) Conversion or Renewal of Interest Rate Options.
(i) Subject to the provisions of subsection
2.5(h) below, Borrowers shall have the right to desig-
nate or convert their option in accordance with the
provisions hereof. Borrowers may elect to have an
alternative option apply or continue to apply to all or
a portion of the Debt. Each change in options shall be
a conversion of the rate of interest applicable to the
specified portion of the Debt. The option shall be
designated or converted in the following manner:
(A) at the expiration of any Libor Rate
Funding Period with respect to any Libor Rate
Option, or
(B) on the date specified in a notice by the
Agent pursuant to Section 2.5(e) hereof with
respect to conversions from the Libor Rate Option.
Whenever the Borrowers desire to convert or renew any
interest rate option, the Borrowers shall provide the
Agent with the following information:
(C) the date, which shall be a Business Day,
on which the proposed conversion or renewal is to
be made which date shall not be less than two (2)
15
Business Days after the date on which Agent is so
notified; and
(D) the then applicable Option selected in
accordance with Section 2.5(a) hereof.
Notice having been so provided, after the date specified
in such notice (telephonic or where applicable, in writ-
ing) interest shall be calculated upon the designated
portion of the Debt as so converted or renewed.
(ii) Absent due notice from the Borrowers of
conversion or renewal in the circumstances described in
Section 2.5(f)(i)(A) hereof, the Libor Rate for which
such notice is not received shall be converted automati-
cally to the Prime Rate Option on the last day of the
expiring fund period.
(g) Prepayments. Subject to the provisions of Section
2.5(h) hereof, the Borrowers shall have the right at their
option from time to time to prepay the Notes in whole or part
without premium or penalty:
(i) at any time with respect to the Prime Rate
Option,
(ii) at the expiration of any Libor Rate Funding
Period with respect to prepayment of the Libor Rate Op-
tion, or
(iii) on the date specified in a notice by the
Agent pursuant to Section 2.5(e) hereof with respect to
the Libor Rate Option.
Whenever the Borrowers desire to prepay any part of the Debt,
they shall provide notice to the Agent in writing setting
forth the following information:
(iv) the date, which shall be a Business Day, on
which the proposed prepayment is to be made; and
(v) the aggregate principal amount of such
prepayment, which shall be an integral multiple of
$100,000.
(h) Additional Compensation in Certain Circumstances.
With respect to the portion of the Debt covered by the Libor
Rate Option, if any:
(i) if any Law or guideline or interpretation or
application thereof by any Official Body charged with
the interpretation or administration thereof or compli-
16
ance with any request or directive of any Official Body
(whether or not having the force of law):
(A) subjects the Banks to any tax or changes
the basis of taxation with respect to this Agree-
ment, the Notes, the Line Commitment or payments
by the Borrowers of principal, interest or other
amounts due from the Borrowers hereunder or under
the Notes (except for taxes on the overall net
income of the Banks imposed by the jurisdiction in
which the Banks' principal office is located),
(B) imposes, modifies or deems applicable
any reserve, special deposit or similar require-
ment against assets held by, credit extended by,
deposits with or for the account of, or other
acquisition of funds by, the Banks (other than
requirements expressly included herein in the
determination of the Libor Rate hereunder), or
(C) imposes upon the Banks any other condi-
tion or expense with respect to this Agreement,
the Notes or its making, maintenance or funding of
any part of the Line Commitment, the Notes or any
security therefor,
and the result of any of the foregoing is to increase
the cost to, reduce the income receivable by or impose
any expense (including loss of margin) upon the Agent or
the Banks with respect to this Agreement, the Notes or
the funding of any part of the Line Commitment by an
amount which the Banks deem to be material (the Banks
being deemed for this purpose to have made, maintained
or funded each funding period of the applicable Libor
Rate Option from a Corresponding Source of Funds), the
Agent shall from time to time notify the Borrowers of
the amount determined in good faith by the Banks (which
determination shall be conclusive absent manifest or
demonstrable error) to be necessary to compensate the
Banks for such increase in cost, reduction in income or
additional expense. Such amount shall be due and
payable by the Borrowers to the Banks ten (10) Business
Days after such notice is given.
(ii) In addition to the compensation required by
subsection (i) of this Section 2.5(h), the Borrowers
shall indemnify the Banks against any loss or expense
(including loss of margin) which the Banks have sus-
tained or incurred as a consequence of any:
(A) payment, prepayment or conversion of
the applicable Libor Rate Option on a day other
than the last day of the Libor Rate Funding Period
17
(whether or not such payment, prepayment or con-
version is mandatory or automatic and whether or
not such payment or prepayment is then due), or
(B) attempt by the Borrowers to revoke (ex-
pressly, by later inconsistent notices or other-
wise) in whole or part any notice stated herein to
be irrevocable (the Agent having in its sole
discretion the options (A) to give effect to such
attempted revocation and obtain indemnity under
this Section 2.5(h) or (B) to treat such attempted
revocation as having no force or effect, as if
never made).
If the Banks sustain or incur any such loss or expense,
the Agent shall from time to time notify the Borrowers
of the amount determined in good faith by the Banks
(which determination shall be conclusive absent manifest
or demonstrable error) to be necessary to indemnify the
Banks for such loss or expense (the Banks being deemed
for this purpose to have made, maintained or funded each
Libor Rate Funding Segment of the applicable Libor Rate
Option from a Corresponding Source of Funds). Such
amount shall be due and payable by the Borrowers to the
Agent for the benefit of the Banks ten (10) Business
Days after such notice is given.
2.6 Commitment Fees. Borrowers jointly and severally agree
to pay the Agent on behalf of the Banks, within ten (10) days of
their receipt of the invoice therefor, commitment fees ("Commitment
Fee" or "Commitment Fees"), payable in arrears. The Commitment
Fees payable with respect to any Period shall be determined by
applying the rate of one-half of one percent (1/2 of 1%) per annum
to an amount which is equal to the unused portion of the lesser of
(a) the Commitment Amount which is in effect during such Period or
(b) the Borrowing Base. In the event the Commitment Amount is
reduced during any Period, then the higher Commitment Fee shall be
deemed to be in effect through the last day of the month in which
such reduction occurs, and the reduced Commitment Fee shall be
deemed to be in effect for the remainder of such Period. For
purposes of this Section 2.6, the term "Period" shall mean each
calendar quarter ending before the Commitment Termination Date.
Commitment Fees shall be calculated on the basis of the actual
number of days elapsed (365 or 366) in a year of 365 days.
2.7 Reductions in Commitment Amount. Borrowers may from
time to time prior to the Commitment Termination Date but no more
frequently than once per calendar quarter, upon at least five (5)
days' prior written notice to the Agent signed by Unit on behalf of
Borrowers, permanently reduce the Commitment Amount, but only upon
repayment of the amount, if any, plus the interest accrued and
unpaid thereon, by which the aggregate unpaid principal balance of
18
the Notes exceeds the reduced Commitment Amount. Any such change
shall be in the amount of $100,000 or an integral multiple thereof.
2.8 Payments. All payments and prepayments of principal,
interest, Commitment Fees and Letter of Credit Fees, shall be made
as and when due hereunder by Borrowers to the Agent and applied by
the Agent as set forth in the Intercreditor Agreement.
ARTICLE III
BORROWING BASE
3.1 Determination of Borrowing Base. The Borrowing Base
shall be an amount equal to the following:
(a) For the period beginning on the Closing Date and
continuing through October 31, 1995: Fifty Million Dollars
($50,000,000); and
(b) during each subsequent period beginning on a
Redetermination Date, commencing with November 1, 1995 and
ending on the day immediately preceding the next occurring
Redetermination Date, the Loan Value, as hereinafter defined,
as of the Redetermination Date which is the first day of such
period. Ten (10) days prior to each Redetermination Date,
the Agent shall make a determination of the loan value of the
Current Collateral and the loan value of the Mineral Inter-
ests (collectively, the "Loan Value"), subject to the
approval of the other Banks as provided in this Section, and
upon such determination the Agent shall promptly notify the
other Banks in writing of its determination of the Loan
Value. The determination of Loan Value made by the Agent
shall be made by the Agent in the exercise of its sole
discretion in accordance with the Agent's customary practices
and standards for loans of this type. The other Banks may
approve the Agent's determination of the Loan Value by
written notice to the Agent within three (3) days of the
Agent's notification of its determination of the new Loan
Value and the Agent shall promptly notify the Borrowers of
the Loan Value approved by the other Banks. If the other
Banks fail to respond or fail to approve any such determina-
tion of the Loan Value made by the Agent hereunder within
such three (3) days, then the Loan Value shall be determined
within an additional five (5) days by all of the Banks in
their sole discretion in accordance with their respective
customary practices and standards for loans of this type,
which determination shall be in writing.
3.2 Increase in Borrowing Base. Unit may, at any time, on
behalf of the Borrowers, submit a written request to the Agent that
the Borrowing Base be increased to take into account assets
acquired or proposed to be acquired by any of the Borrowers since
19
the then most recent determination of the Borrowing Base pursuant
to Section 3.1 of this Agreement or this Section 3.2. Following
receipt of such request and such descriptions, reports and other
information the Banks may reasonably request with respect to such
assets, such assets will be evaluated and a determination will be
made whether to increase the Loan Value, and if so, by what amount,
due to the acquisition or proposed acquisition of assets by the
Borrowers using the method described above in Section 3.1(b).
An increase in the Borrowing Base to a sum greater than the
Commitment Amount shall not increase the Line Commitment without
the separate and explicit approval of all of the Banks nor increase
the individual commitment of any of the Banks without the prior
approval of such Bank. Borrowers acknowledge that any increase in
the Borrowing Base as a result of a proposed acquisition of assets
shall not be effective until all of the Banks shall be reasonably
satisfied that the condition of title to and the value of those
assets is consistent with the descriptions, reports and other
information provided by Unit or Borrowers with respect thereto, and
Borrowers or Unit have, by contract or otherwise, obtained the
right to acquire such assets.
3.3 Reduction of the Borrowing Base Upon Sales of Mineral
Interests or Collateral. In the event of a sale, transfer,
assignment, lease or other conveyance of any of the Collateral or
Mineral Interests as permitted under this Agreement, the Borrowing
Base may be reduced by an amount to be determined by the Agent with
the approval of the other Banks in accordance with their respective
customary standards for loans of this type on account of such sale,
transfer, assignment, lease or other conveyance.
ARTICLE IV
SECURITY
4.1 Current Collateral. As security for the Indebtedness
including Notes and the obligations of the Borrowers to reimburse
BOK for drafts paid under Letters of Credit, Unit Drilling Co.
hereby grants to the Agent as nominee and collateral agent for the
Banks a continuing first priority security interest in, among other
property described in the Security Agreement from Unit Drilling Co.
to the Agent and dated as of even date herewith (the "Security
Agreement"), (a) all of the drilling rigs and related equipment,
inventory, parts, drill pipe, equipment, tools and supplies
identified in Schedule 1 attached thereto, (b) all drilling rigs
and related equipment acquired by Unit Drilling Co. after the date
hereof and reflected on financial statements of Unit Drilling Co.
as fixed assets, together with (c) all related parts, drill pipe,
equipment, tools and supplies, (d) all additions and accessions
thereto and replacements and substitutions thereof, and (e) all
proceeds of any of the foregoing (collectively, the "Current
Collateral").
20
4.2 Additional Collateral. Subject to the occurrence of the
events described below in Section 4.2(a) and 4.2(b), Borrowers
shall grant to the Agent as nominee and collateral agent for the
Banks a first mortgage lien on and security interest in all of
Borrowers' Mineral Interests and related inventory, intangibles,
accounts, equipment, fixtures and personal property (collectively
referred to herein as the "Additional Collateral") to secure the
Indebtedness, by instruments satisfactory to the Agent and the
Banks, as follows:
(a) No later than thirty (30) days after the Agent
notifies Borrowers in writing that the aggregate amount of
advances of the Line Loan outstanding at one time, plus the
aggregate liability of BOK under Letters of Credit outstand-
ing at such time, exceeds the Borrowing Base then in effect
if, by the last day of said thirty (30) day period, Borrowers
have not made a payment on the aggregate balance of the Notes
in an amount equal to such excess, plus the unpaid accrued
interest on the amount so paid as of the date of such
payment.
(b) No later than thirty (30) days after the Agent
notifies Borrowers in writing that an Event of Default has
occurred, unless the circumstances giving rise to such Event
of Default have been cured prior to the lapse of such thirty
(30) days.
ARTICLE V
CONDITIONS PRECEDENT TO LOANS
5.1 Conditions Precedent. The obligation of the Banks to
make any advance under this Agreement and convert the same to the
Term Loan on the Commitment Termination Date is subject to the
satisfaction of all of the following conditions (in addition to the
other terms and conditions set forth herein):
(a) No Default. There shall exist no Event of Default
or Default on the Closing Date.
(b) Representations and Warranties. The representa-
tions, warranties and covenants set forth in Article VII
shall be true and correct on and as of the Closing Date and
the Commitment Termination Date, respectively, with the same
effect as though made on and as of the Closing Date and the
Commitment Termination Date, respectively.
(c) Certificates. Each of the Borrowers shall have
delivered to the Agent a Certificate, dated as of the Closing
Date, and signed by its President or Vice President and its
Secretary or Assistant Secretary certifying (i) to the
matters covered by the conditions specified in subsections
21
(a) and (b) of this Section 5.1, (ii) that it has performed
and complied with all agreements and conditions required to
be performed or complied with by it prior to or on the
Closing Date, (iii) to the name and signature of each officer
authorized to execute and deliver the Loan Documents and any
other documents, certificates or writings and to borrow under
this Agreement, and (iv) to such other matters in connection
with this Agreement which the Banks shall reasonably deter-
mine to be advisable. The Banks may conclusively rely on
such Certificate until they receive notice in writing to the
contrary.
(d) Proceedings. On or before the Closing Date, all
corporate proceedings of each of the Borrowers shall have
been taken in connection with the transactions contemplated
by the Loan Documents and shall be satisfactory in form and
substance to the Agent and its counsel; and the Banks shall
have received certified copies, in form and substance satis-
factory to the Agent and its counsel, of the Articles or
Certificate of Incorporation and Bylaws of the Borrowers and
the resolutions of the Board of Directors of the Borrowers,
as adopted, authorizing the execution and delivery of the
Loan Documents and the borrowings under this Agreement.
(e) Loan Documents/Security Instruments. The Borrowers
shall have delivered to the Agent this Loan Agreement and the
Security Agreement, each appropriately executed by the
appropriate parties and, where applicable, acknowledged to
the satisfaction of the Banks and dated as of the Closing
Date, together with such financing statements, transfer
orders, letters in lieu and other documents as shall be
necessary and appropriate to perfect the security interests
in the Current Collateral covered by said Security Instru-
ments.
(f) Notes. The Borrowers shall have delivered the
Notes to the order of the Banks, appropriately executed.
(g) Other Information. The Banks shall have received
such other information, certificates, resolutions, documents
and assurances as shall be reasonably requested by the Banks.
ARTICLE VI
COVENANTS
The Borrowers covenant and agree with the Banks that from the
date hereof and so long as this Agreement is in effect (by exten-
sion, amendment or otherwise) and until payment in full of all
Indebtedness and the performance of all other obligations of the
Borrowers under this Agreement, unless the Banks shall otherwise
consent in writing:
22
6.1 Payment of Taxes and Claims. The Borrowers will pay and
discharge or cause to be paid and discharged all Taxes imposed upon
the income or profits of the Borrowers or upon the property, real,
personal or mixed, or upon any part thereof, belonging to Borrowers
before the same shall be in default, and all lawful claims for
labor, rentals, materials and supplies which, if unpaid, might
become a Lien upon its property or any part thereof in excess of
$500,000 in the aggregate at any time; provided however, that the
Borrowers shall not be required to pay and discharge or cause to be
paid or discharged any such Tax, assessment or claim so long as the
validity thereof shall be contested in good faith by appropriate
proceedings, and adequate book reserves shall be established with
respect thereto, and the Borrowers shall pay such Tax, charge or
claim before any property subject thereto shall become subject to
execution.
6.2 Maintenance of Existence. Each of the Borrowers will
use its best efforts to preserve and keep in full force and effect
its corporate existence, rights and franchises and will continue to
conduct and operate its business substantially as being conducted
and operated presently. Each of the Borrowers will become and
remain qualified to conduct business in each jurisdiction where the
nature of the business or ownership of property by such Borrowers
may require such qualification. Notwithstanding the provisions of
this Section, the Banks acknowledge that Roundup Resources, Inc.
may be merged into Unit Petroleum Company and consent to such
merger.
6.3 Preservation of Property. Each of the Borrowers will
use its best efforts at all times to maintain, preserve and protect
all of its properties which are used or useful in the conduct of
its respective businesses whether owned in fee or otherwise, or
leased, in good repair and operating condition; from time to time
make, or cause to be made, all needful and proper repairs,
renewals, replacements, betterments and improvements thereto so
that the business carried on in connection therewith may be
properly and advantageously conducted at all times; and comply with
all material leases to which it is a party or under which it
occupies property so as to prevent any material loss or forfeiture
thereunder.
6.4 Insurance. To the extent possible, each of the
Borrowers will keep or cause to be kept adequately insured by
financially sound and reputable insurers Borrowers' property of a
character usually insured by businesses engaged in the same or
similar businesses, including the Collateral. Upon demand by the
Agent or any of the Banks any insurance policies covering the
Collateral shall be endorsed to provide for payment of losses to
the Agent as its interest may appear, to provide that such policies
may not be canceled, reduced or affected in any manner for any
reason without thirty (30) days prior notice to the Banks.
23
6.5 Compliance with Applicable Laws. Each of the Borrowers
will comply in all material respects with the requirements of all
applicable Laws and orders of any Tribunal and obtain any licenses,
permits, franchises or other governmental authorizations necessary
to the ownership of Borrowers' properties or to the conduct of
Borrowers' businesses.
6.6 Environmental Covenants. Upon its receipt, each of the
Borrowers will immediately notify the Agent of and provide the
Agent with copies of any notifications of discharges or releases or
threatened releases or discharges of a Polluting Substance on,
upon, into or from properties owned by Borrowers which are given or
required to be given by or on behalf of the Borrowers to any
federal, state or local Tribunal if any of the foregoing may
materially and adversely affect Borrowers or any material part of
their properties, and such copies of notifications shall be
delivered to the Agent at the same time as they are delivered to
the Tribunal. Borrowers further agree to promptly undertake and
diligently pursue to completion any appropriate and legally
required or authorized remedial containment and cleanup action in
the event of any release or discharge or threatened release or dis-
charge of a Polluting Substance on, upon, into or from the
Borrowers' Mineral Interests which are under the control of
Borrowers. To the extent required by applicable law, each of the
Borrowers will maintain and retain complete and accurate records of
all releases, discharges or other disposal of Polluting Substances
on, onto, into or from Borrowers' Mineral Interests which are under
the control of Borrowers, including, without limitation, records of
the quantity and type of any Polluting Substances disposed of on or
off such properties.
6.7 Environmental Indemnities. Each of the Borrowers hereby
agree to indemnify, defend and hold harmless the Banks and their
respective officers, directors, employees, agents, consultants,
attorneys, contractors and their respective affiliates, successors
or assigns, or transferees from and against, and reimburse said
Persons in full with respect to, any and all loss, liability,
damage, fines, penalties, costs and expenses, of every kind and
character, including reasonable attorneys' fees and court costs,
known or unknown, fixed or contingent, occasioned by or associated
with any claims, demands, causes of action, suits and/or enforce-
ment actions, including any administrative or judicial proceedings,
and any remedial, removal or response actions ever asserted,
threatened, instituted or requested by any Persons, including any
Tribunal, arising out of or related to: (a) the breach of any
representation or warranty of Borrowers contained in Section 7.7
set forth herein; (b) the failure of Borrowers to perform any of
their respective covenants contained in Section 6.5 or 6.6
hereunder; (c) the ownership, construction, occupancy, operation,
use of the Borrowers' properties prior to the earlier of the date
on which (i) the Indebtedness and obligations secured hereby have
been paid and performed in full and the Security Instruments have
been released, or (ii) the Borrowers' properties has been sold by
24
Agent or by the Banks following such parties' ownership of the
Borrowers' properties by way of foreclosure of the Liens granted
pursuant hereto, deed in lieu of such foreclosure or otherwise (the
"Release Date"); provided, however, this indemnity shall not apply
with respect to matters caused by or arising solely from the
Agent's or the Banks' activities during any period of time the
Agent or the Banks acquire ownership of the Borrowers' properties.
The indemnities contained in this Section 6.7 apply, without
limitation, to any violation on or before the Release Date of any
Environmental Laws and any liability or obligation relating to the
environmental conditions on, under or about the Borrowers'
properties on or prior to the Release Date (including, without
limitation: (a) the presence on, upon or in the Borrowers'
properties or release, discharge or threatened release on, upon or
from the Borrowers' properties of any Polluting Substances
generated, used, stored, treated, disposed of or otherwise released
prior to the Release Date, and (b) any and all damage to real or
personal property or natural resources and/or harm or injury
including wrongful death, to persons alleged to have resulted from
such release of any Polluting Substances regardless of whether the
act, omission, event or circumstances constituted a violation of
any Environmental Law at the time of its existence or occurrence).
The term "release" shall have the meaning specified in CERCLA/SARA
and the terms "stored," "treated" and "disposed" shall have the
meanings specified in RCRA/HSWA; provided, however, any broader
meanings of such terms provided by applicable laws of the State of
Oklahoma shall apply.
The provisions of this Section 6.7 shall be in addition to
any other obligations and liabilities Borrowers may have to the
Agent or the Banks at common law and shall survive the Release Date
and shall continue thereafter in full force and effect.
The Agent and the Banks agree that in the event that such
claim, suit or enforcement action is asserted or threatened in
writing or instituted against them or any of their officers,
employers, agents or contractors or any such remedial, removal or
response action is requested of them or any of their officers,
employees, agents or contractors for which the Agent or the Banks
may desire indemnity or defense hereunder, the Agent or the Banks
shall give written notification thereof to the Borrowers.
Notwithstanding anything to the contrary stated herein, the
indemnities created by this Section 6.7 shall only apply to losses,
liabilities, damages, fines, penalties, costs and expenses actually
incurred by the Agent or the Banks as a result of claims, demands,
actions, suits or proceedings brought by Persons who are not the
beneficiaries of any such indemnity. The Agent or the Banks shall
act as the exclusive agent for all indemnified Persons under this
Section 6.7. With respect to any claims or demands made by such
indemnified Persons, the Agent shall notify the Borrowers within
thirty (30) days after the Agent's receipt of a writing advising
25
the Agent of such claim or demand. Such notice shall identify (i)
when such claim or demand was first made, (ii) the identity of the
Person making it, (iii) the indemnified Person and (iv) the
substance of such claim or demand. Failure by the Agent to so
notify the Borrowers within said thirty (30) day period shall
reduce the amount of the Borrowers' obligations and liabilities
under this Section 6.7 by an amount equal to any damages or losses
suffered by the Borrowers resulting from any prejudice caused the
Borrowers by such delay in notification from the Agent. Upon
receipt of such notice, the Borrowers shall have the exclusive
right and obligation to contest, defend, negotiate or settle any
such claim or demand through counsel of their own selection (but
reasonably satisfactory to the Agent and the Banks) and solely at
Borrowers' own cost, risk and expense; provided, that the Agent and
the Banks, at their own cost and expense, shall have the right to
participate in any such contest, defense, negotiations or settle-
ment. The settlement of any claim or demand hereunder by the
Borrowers, unless such settlement fully releases the Banks from any
and all liability thereon, may be made only upon the prior approval
of the Banks of the terms of the settlement, which approval shall
not be unreasonably withheld.
6.8 Financial Statements and Reports. The Borrowers shall
deliver the following to each of the Banks:
(a) As soon as available and in any event within forty-five (45) days
after the end of each of the first three
fiscal quarters of each fiscal year of Unit,
(i) Unaudited balance sheets of Unit and its
consolidated subsidiaries, prepared on a consolidated
basis, as of the end of such quarterly period; and
(ii) Unaudited statements of income of Unit and
its consolidated subsidiaries, prepared on a consolidat-
ed basis, for the portion of such fiscal year ended with
such quarterly period setting forth in detail, in each
case, figures derived on a consistent basis and present-
ed in comparative form for the corresponding periods of
the previous fiscal year.
(b) As soon as available and in any event within one
hundred twenty (120) days following the close of each fiscal
year of Unit:
(i) Audited balance sheets of Unit and its
consolidated subsidiaries, prepared on a consolidated
basis, as of the end of such year;
(ii) Audited statements of income of Unit and its
consolidated subsidiaries, prepared on a consolidated
basis, for the year then ended; and
26
(iii) Audited statements of shareholders' equity
and cash flows of Unit and its consolidated subsidiar-
ies, prepared on a consolidated basis, for such year
setting forth, in each case, figures derived on a
consistent basis and presented in comparative form for
the previous fiscal year.
(c) Concurrently with the furnishing of the annual
audited financial statements pursuant to Section 6.8(b), (i)
a separate certificate of the independent certified public
accountants (such certified public accountants must be
nationally recognized) who audited and prepared such state-
ments, stating that the statements were prepared in conformi-
ty with GAAP on a consistent basis (except for such varia-
tions as are noted and approved by such independent certified
public accountants), and fairly present the consolidated
financial condition of Unit and its consolidated subsidiar-
ies, which certificate shall not be qualified or limited
because of restricted or limited examination by such accoun-
tants of any material portion of the records of Unit or any
of its subsidiaries; and (ii) written computations, signed by
the Controller or Treasurer of Unit, of the ratios and
amounts described in Sections 6.18(A), 6.20, 6.23, 6.24,
6.25, 6.26 and 6.27 hereof; and five (5) copies of the 10-K
statement of Unit and its consolidated subsidiaries filed
with the Securities and Exchange Commission for such fiscal
year.
(d) Concurrently with the furnishing of the quarterly
statements pursuant to Section 6.8(a) hereof, there shall be
furnished to each of the Banks: (a) a certificate signed by
the Treasurer or Controller of Unit stating to the best of
his knowledge after performance of due diligence: (i) that
the statements were prepared (subject to year-end audit
adjustments) in conformity with GAAP, applied on a consistent
basis (except for adjustments with which the independent
certified public accountants preparing such annual audited
financial statements concur); (ii) that a review of the
activities of each of the Borrowers for the period covered by
the financial statements has been made under his supervision
with a view to determining whether each of the Borrowers has
kept, observed, performed and fulfilled all its obligations
under the Agreement, the Notes and other Loan Documents to
which it is a party; and (iii) that each of the Borrowers has
kept, observed and fulfilled each and every obligation under
this Agreement, the Notes and other Loan Documents to which
it is a party, and is not at that time in default in the
observance, performance or fulfillment of any such obliga-
tions, or if any of the Borrowers shall be in default,
specifying in said certificate such default and the nature,
period of existence and status thereof; (b) a written report
(i) naming the operator and the location (state and county)
of each drilling rig included in the Collateral as of the end
27
of such quarter, and (ii) describing in reasonable detail any
material disposition or substitution of any of the Collater-
al; (c) computations of the ratios and amounts described in
Sections 6.18(A), 6.20, 6.23, 6.24, 6.25, 6.26 and 6.27
hereof; and (d) five (5) copies of the 10-Q statement of Unit
and its consolidated subsidiaries filed with the Securities
and Exchange Commission with respect to such quarter.
(e) As soon as available but in no event later than
March 31 of each year, Borrowers shall deliver to each of the
Banks one copy of a report, prepared by Borrowers' in-house
engineers, in form and substance satisfactory to Agent (and,
if requested in writing by the Agent at the direction of the
Majority Banks), audited by an independent petroleum engineer
selected by Borrowers and satisfactory to the Majority Banks,
setting forth the proven oil and gas reserves of Borrowers'
Mineral Interests, the projection of the rate of production
and net operating income with respect thereto, as of December
31 of the immediately preceding year. As soon as available,
Borrowers shall deliver to each of the Banks a copy of a
report, prepared by Borrowers' in-house engineers, in form
and substance satisfactory to Agent and based on the best
information available to Borrower at the time, setting forth
information regarding any over-balancing or under-balancing
of natural gas that totals 50,000 or more mcf per well and a
statement as to the aggregate amount of over-balancing or
under-balancing for all of Borrowers' wells.
6.9 Notice of Default. With reasonable promptness after the
happening of any condition or event which constitutes an Event of
Default or Default, Unit will give the Agent a written notice
thereof specifying the nature and period of existence thereof and
what actions, if any, the Borrowers are taking and propose to take
with respect thereto.
6.10 Notice of Litigation. With reasonable promptness after
becoming aware of the existence of any action, suit or proceeding
at law or in equity before any Tribunal, an adverse outcome in
which would (i) materially impair the ability of any of the
Borrowers to carry on their business substantially as now conduct-
ed, (ii) materially and adversely affect the condition (financial
or otherwise) of any of the Borrowers, or (iii) result in monetary
damages in excess of $1,000,000, the Borrowers will give the Agent
a written notice specifying the nature thereof and what actions, if
any, the Borrowers are taking and propose to take with respect
thereto.
6.11 Requested Information. With reasonable promptness, the
Borrowers will give the Agent or the Banks such other data and
information as from time to time may be reasonably requested by the
Agent or any of the Banks.
6.12 Inspection. Borrowers will keep complete and accurate
books and records with respect to the Collateral and their other
properties, business and operations and will permit employees and
28
representatives of the Banks, upon reasonable notice, to audit,
inspect and examine all such books and records, with the exception
of the portion thereof covered by an attorney-client privilege or
constituting attorney work product, and to make copies thereof and
extracts therefrom during normal business hours. Upon any Default
or Event of Default of the Borrowers, they will surrender all of
such records relating to the Collateral to the Agent or the Banks
upon receipt of any request therefor from the Agent or the Banks.
6.13 Maintenance of Employee Benefit Plans. The Borrowers
will maintain each employee benefit plan as to which they may have
any liability or responsibility in compliance with ERISA and all
other Laws applicable thereto.
6.14 Limitation on Liens. Borrowers will not create or
suffer to exist any Lien upon any of their properties or assets
except (i) Liens in favor of the Agent securing the Indebtedness;
(ii) pledges, deposits or Liens not delinquent under workmen's
compensation, unemployment insurance or similar statutes,
mechanics', landlords', workmen's, repairmen's, materialmen's,
carriers' liens and liens of operators of, and participants in, any
oil, gas or mineral properties of any of the Borrowers or other
similar liens arising in the ordinary course of business (includ-
ing, without limitation, Liens in existence as of the date hereof
which arose in connection with gas purchase settlements), or
deposits or pledges to obtain the release of any such Liens so long
as such Liens do not include any deposits, advances, borrowed money
or the deferred purchase price of property or services; (iii) Liens
for taxes, assessments, governmental charges or levies, not yet due
or delinquent or which can thereafter be paid without penalty, and
statutory liens which do not and will not materially impair the use
of the property of any of the Borrowers or the value of such
property for the purposes of its business unless, as to all Liens
described above for amounts due and owing, such Liens are being
contested in good faith by appropriate proceedings in such a manner
as not to permit the foreclosure of such Liens and Liens, judgments
or awards pending appeal, if, as to all the preceding matters
referred to in this Section 6.14(iii), in the opinion of the Banks
adequate reserves are set aside and maintained with respect
thereto; and (iv) Liens expressly permitted to exist under the
terms of any of the Security Instruments; and (v) consensual liens
or security interests in gas compressor equipment of Borrowers.
6.15 Disposition/Negative Pledge Regarding Encumbrance of
Collateral and Other Assets. Borrowers will not sell or encumber
any of the Current Collateral or any of the Additional Collateral
pledged or mortgaged to the Agent as provided in Section 4.2 of
this Agreement and Borrowers will not sell, lease, transfer, scrap
or otherwise dispose of or mortgage, pledge, grant a security
interest in or otherwise encumber any of Borrowers' other proper-
ties or assets, whether for replacement or not, unless such sale or
disposition shall be in the ordinary course of business and for a
reasonable value, without obtaining the prior consent of the Banks.
29
In no event shall Borrowers cause or permit the voluntary pledge,
mortgage or other encumbrance, attachment or levy of or against any
of the properties or assets of whatsoever nature or type to any
Person (financial institution or otherwise).
6.16 Other Agreements. Borrowers will not enter into or
permit to exist any agreement (i) which would cause an Event of
Default or a Default hereunder; or (ii) which contains any
provision which would be violated or breached by the performance of
Borrowers' obligations hereunder or under any of the other Loan
Documents.
6.17 Limitation on Other Indebtedness. The Borrowers will
not create, incur, assume, become or be liable in any manner in
respect of, or suffer to exist, any indebtedness whether evidenced
by a note, bond, debenture, agreement, letter of credit or similar
or other obligation, or accept any deposits or advances of any
kind, except (i) plugging bonds, surface damage bonds, bonds with
respect to self insured workers compensation insurance or bonds,
undertakings or contracts and obligations for trade payables and
current indebtedness (other than for borrowed money) incurred in,
and deposits and advances accepted in, the ordinary course of
business; (ii) indebtedness not to exceed $200,000 per calendar
year incurred for the acquisition of assets secured by purchase
money security interests; (iii) usual and customary insurance
premiums financed in the normal course of business; and (iv) the
Indebtedness.
6.18 Contingent Liabilities; Advances. Except for (A)
guarantees by Unit of indebtedness of a Person or Persons up to the
aggregate amount of $200,000; (B) guarantees for the repayment of
any indebtedness owed by one of the Borrowers to another one of the
Borrowers; (C) the obligation of any Borrower to repurchase any
property or interests under any partnership agreement under which
any of the Borrowers serves as general partner up to the aggregate
annual amount of $500,000 or (D) Unit's $2,000,000 guarantee of the
$6,000,000 line of credit of GED Gas Services, L.L.C. established
with F&M Bank and Trust Company; the Borrowers will not either
directly or indirectly, (i) guarantee, become surety for, discount,
endorse, agree (contingently or otherwise) to purchase, repurchase
or otherwise acquire or supply or advance funds in respect of, or
otherwise become or be contingently liable upon the indebtedness,
obligation or liability of any Person, (ii) guarantee the payment
of any dividends or other distributions upon the stock of any
corporation, (iii) discount or sell with recourse or for less than
the face value thereof, any of its notes receivable, accounts
receivable or chattel paper; (iv) loan, agree to loan, or advance
money to any Person; or (v) enter into any agreement for the
purchase or other acquisition of any goods, products, materials or
supplies, or for the making of any shipments or for the payment of
services, if in any such case payment therefor is to be made
regardless of the non-delivery of such goods, products, materials
or supplies or the non-furnishing of the transportation of
30
services; provided, however that the foregoing shall not be applic-
able to endorsement of negotiable instruments presented to or
deposited with a bank for collection or deposit in the ordinary
course of business.
6.19 Merger, Consolidation, Acquisition. None of the Bor-
rowers will merge or consolidate with or into any other Person with
the exception of a merger of Roundup Resources, Inc. into Unit
Petroleum Company; or permit any other Person to consolidate with
or merge into any of the Borrowers; or adopt or effect any plan of
reorganization, recapitalization, liquidation or dissolution;
provided, however, Borrowers may enter into letter(s) of intent
pertaining to merger, consolidation or acquisition subject to
obtaining the Banks' written consent thereto prior to consummation
of the transactions contemplated by such letter(s) of intent.
6.20 Dividends. The Borrowers will not permit Unit to pay
dividends (other than stock dividends) on or make any other
distribution on account of any class of its capital stock or
purchase or retire any class of its capital stock, unless such
purchase or retirement is made by substituting another class of
capital stock, whether now or hereafter existing, except cash
dividends of not more than twenty-five percent (25%) of Unit's
consolidated after-tax profits, as reflected in the financial
statements furnished to the Agent pursuant to this Agreement for
Unit's immediately preceding fiscal year, and only if Working
Capital Provided from Operations during said year is equal to or
greater than 175% of Current Maturities of Long Term Debt at the
end of such year.
6.21 Articles of Incorporation and By-Laws. The Borrowers
will not amend, alter, modify or restate their Articles or
Certificates of Incorporation or By-Laws in any way which would in
any manner adversely affect the Borrowers' obligations or covenants
to the Banks hereunder.
6.22 Assumed Names. The Borrowers promptly shall advise the
Agent if any of the Borrowers amend, alter, modify or restate their
Articles or Certificates of Incorporation or Bylaws in any way
which would change the corporate name or adopt a trade name for any
of the Borrowers.
6.23 Current Ratio. The Borrowers will not permit the
Current Ratio to be less than 1.0 to 1.0 on any quarterly or annual
reporting date.
6.24 Minimum Tangible Net Worth. The Borrowers will not
permit the Consolidated Tangible Net Worth to be less than Forty
Eight Million Dollars ($48,000,000).
6.25 Minimum Cash Flow. The Borrowers will not permit
Working Capital provided from Operations during any fiscal year to
be less than Twelve Million Dollars ($12,000,000).
31
6.26 Long Term Debt to Consolidated Tangible Net Worth Ratio.
The Borrowers will not permit the ratio of the Long Term Debt to
Consolidated Tangible Net Worth to exceed 1.0 to 1.0 on any
quarterly or annual reporting date.
6.27 Total Liabilities to Consolidated Tangible Net Worth
Ratio. The Borrowers will not permit the ratio of Total Liabili-
ties to Consolidated Tangible Net Worth to exceed 1.25 to 1.00 on
any quarterly or annual reporting date.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement and to make
the Line Loan and the Term Loan to the Borrowers under the
provisions hereof, and in consideration thereof, the Borrowers
represent, warrant and covenant as follows:
7.1 Organization and Qualification. Each of the Borrowers
is duly organized, validly existing, and in good standing under the
Laws of its respective jurisdiction of incorporation, and is duly
licensed and in good standing as a foreign corporation in each
jurisdiction in which the nature of the business transacted or the
property owned is such as to require licensing or qualification as
such, except where failure to be licensed or in good standing would
not have a material adverse affect on any of the Borrowers.
7.2 Litigation. There is no action, suit, investigation or
proceeding threatened or pending before any Tribunal against or
affecting any of the Borrowers or any properties or rights of the
Borrowers, which, if adversely determined, would result in a
liability of greater than $1,000,000 or would otherwise result in
any material adverse change in the business or condition, financial
or otherwise, of Borrowers that is not otherwise covered by
adequate insurance. None of the Borrowers is in default with
respect to any judgment, order, writ, injunction, decree, rule or
regulation of any Tribunal.
7.3 Conflicting Agreements and Other Matters. None of the
Borrowers is in default in any material respect in the performance
of any obligation, covenant, or condition in any agreement to which
it is a party or by which it is bound. None of the Borrowers is a
party to any contract or agreement or subject to any charter or
other restriction which materially and adversely affects its
business, property or assets, or financial condition, other than
permitted under this Agreement. None of the Borrowers is a party
to or otherwise subject to any contract or agreement which
restricts or otherwise affects the right or ability of the Bor-
rowers to execute the Loan Documents or the performance of any of
their respective terms. Neither the execution nor delivery of any
of the Loan Documents nor fulfillment of nor compliance with their
32
respective terms and provisions will conflict with, or result in a
breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the
creation of any Lien (except those created by the Loan Documents)
upon any of the properties or assets of the Borrowers pursuant to,
or require any consent, approval or other action by or any notice
to or filing with any Tribunal (other than routine filings after
the Closing Date with the Securities and Exchange Commission, any
securities exchange and/or state blue sky authorities) pursuant to
the Charter or By-Laws of any of the Borrowers, any award of any
arbitrator, or any agreement, instrument or Law to which any of the
Borrowers is subject.
7.4 Financial Statements. The Borrowers' most recent
unaudited financial statements which have been furnished to the
Banks have been prepared in conformity with GAAP, show all material
liabilities, direct and contingent, and fairly present the
financial condition of the Borrowers and the results of their
operations for the periods then ended, and since such date there
has been no material adverse change in the business, financial
condition or operations of the Borrowers.
7.5 Corporate Authorization. The Boards of Directors of the
Borrowers have duly authorized the execution and delivery of each
of the Loan Documents and the performance of their respective
terms. No other consent of any other Person, except for the Banks,
is required as a prerequisite to the validity and enforceability of
the Loan Documents.
7.6 Title to Properties; Authority. Each of the Borrowers
has full power, authority and legal right to own and operate the
properties which it now owns and operates, and to carry on the
lines of business in which it is now engaged, and Unit Drilling
Company has good and marketable title to the Current Collateral
subject to no Lien of any kind except Liens permitted by this
Agreement. Borrowers have full power, authority and legal right to
execute and deliver and to perform and observe the provisions of
this Agreement and the other Loan Documents.
7.7 Environmental Representations. To the best of Bor-
rowers' knowledge:
(a) None of the Borrowers is subject to any liability
or obligation relating to (i) the environmental conditions
on, under or about their properties, including, without
limitation, the soil and ground water conditions at the
location of any of the Borrowers' properties, or (ii) the
use, management, handling, transport, treatment, generation,
storage, disposal, release or discharge of any Polluting Sub-
stance that would or may reasonably be expected to result in
a liability in the amount of $1,000,000 or more;
33
(b) The Borrowers have been issued and are in compli-
ance with all material permits, licenses or similar authori-
zations to construct, occupy, operate or use any buildings,
improvements, facilities, fixtures and equipment forming a
part of their properties by reason of any Environmental Laws;
(c) Each of the Borrowers has taken all steps necessary
to determine and has determined that no Polluting Substances
have been disposed of or otherwise released on, onto, into,
or from their operated Mineral Interests (the term "release"
shall have the meanings specified in CERCLA/SARA, and the
term "disposal" or "disposed" shall have the meanings speci-
fied in RCRA/HSWA) which singly has, or in the aggregate have
resulted in, or may reasonably be expected to result in a
liability in the amount of $1,000,000 or more; provided, in
the event either CERCLA/SARA or RCRA/HSWA is amended so as to
broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such
amendment and provided further, to the extent that the laws
of any State or Tribunal establish a meaning for "release,"
"disposal" or "disposed" which is broader than that specified
in CERCLA/SARA, RCRA/HSWA or other Environmental Laws, such
broader meaning shall apply);
(d) There are no PCB's or asbestos-containing materi-
als, whether in the nature of thermal insulation products
such as pipe boiler or breech coverings, wraps or blankets or
sprayed-on or trowelled-on products in, on or upon the
properties owned by Borrowers; and
(e) There is no urea formaldehyde foam insulation
("UFFI") in, on or upon the properties owned by Borrowers.
7.8 Purposes. None of the Borrowers is engaged principally,
or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System) and no part of the proceeds of any
borrowing hereunder will be used to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing
or carrying any margin stock. If requested by the Agent or any of
the Banks, the Borrowers will furnish to the Agent or such Bank a
statement in conformity with the requirements of Federal Reserve
Form U-1, referred to in Regulation U, to the foregoing effect.
None of the Borrowers nor any agent acting on their behalf has
taken or will take any action which might cause this Agreement or
the Notes to violate any regulation of the Board of Governors of
the Federal Reserve System (including Regulations G, T, U and X) or
to violate any Securities Laws, state or federal, in each case as
in effect now or as the same may hereafter be in effect.
7.9 Compliance with Applicable Laws. Each of the Borrowers
is in compliance in all material respects with all Laws, ordinanc-
34
es, rules, regulations and other legal requirements applicable to
it and the business conducted thereby, the violation of which could
or would have a material adverse effect on its business condition,
financial or otherwise.
7.10 Possession of Franchises, Licenses. Each of the Bor-
rowers possesses all franchises, certificates, licenses, permits
and other authorizations from governmental political subdivisions
or regulatory authorities, free from burdensome restrictions, that
are necessary in any material respect for the ownership, mainte-
nance and operation of its properties and assets, and none of the
Borrowers is in violation of any thereof in any material respect.
7.11 Leases, Easements and Rights of Way. Each of the
Borrowers enjoys peaceful and undisturbed possession of all leases,
easements and rights of way necessary in any material respect for
the operation of its respective properties and assets. All such
leases, easements and rights of way are valid and subsisting and
are in full force and effect.
7.12 Taxes. Borrowers have filed all Federal, state and
other income tax returns which are required to be filed and have
paid all Taxes, as shown on said returns, and all Taxes due or
payable without returns and all assessments received to the extent
that such Taxes or assessments have become due. All Tax liabili-
ties of the Borrowers are adequately provided for on the books of
the Borrowers, including any interest or penalties. No income tax
liability of a material nature has been asserted by taxing
authorities for Taxes in excess of those already paid.
7.13 Disclosure. Neither this Agreement nor any other Loan
Document or writing furnished to the Agent or the Banks by or on
behalf of the Borrowers in connection herewith contains any untrue
statement of a material fact nor do such Loan Documents and writ-
ings, taken as a whole, omit to state a material fact necessary in
order to make the statements contained herein and therein not
misleading. There is no fact known to Borrowers and not reflected
in the financial statements provided to the Banks which materially
adversely affects their assets or in the future may materially
adversely affect the business, properties, assets or financial
condition of Borrowers which has not been set forth in this
Agreement, in the Loan Documents or in other documents furnished to
the Banks by or on behalf of the Borrowers prior to the date hereof
in connection with the transactions contemplated hereby.
7.14 Investment Company Act Representation. None of the
Borrowers is an "investment company" or a company "controlled" by
an "investment company", within the meaning of the Investment
Company Act of 1940, as amended.
7.15 ERISA. Since the effective date of Title IV of ERISA,
no Reportable Event has occurred with respect to any Plan. For the
purposes of this section the term "Reportable Event" shall mean an
35
event described in Section 4043(b) of ERISA. For the purposes
hereof the term "Plan" shall mean any plan subject to Title IV of
ERISA and maintained for employees of the Borrowers, or of any
member of a controlled group of corporations, as the term "con-
trolled group of corporations" is defined in Section 1563 of the
Internal Revenue Code of 1986, as amended (the "Code"), of which
any of the Borrowers is a part. Each Plan established or main-
tained by any of the Borrowers is in material compliance with the
applicable provisions of ERISA, and the Borrowers have filed all
reports required by ERISA and the Code to be filed with respect to
each Plan. The Borrowers have met all requirements with respect to
funding Plans imposed by ERISA or the Code. Since the effective
date of Title IV of ERISA there have not been any nor are there now
existing any events or conditions that would permit any Plan to be
terminated under circumstances which would cause the lien provided
under Section 4068 of ERISA to attach to the assets of the
Borrowers. The value of each Plan's benefits guaranteed under
Title IV of ERISA on the date hereof does not exceed the value of
such Plan's assets allocable to such benefits on the date hereof.
7.16 Fiscal Year. The fiscal years of the respective Bor-
rowers end as of December 31 of each year.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Events of Default. The occurrence of any one or more of
the following events shall constitute an Event of Default (whether
such occurrence shall be voluntary or involuntary or come about or
be effected by operation of Law or otherwise):
(a) The Borrowers shall fail to make any payment due on
any of the Notes within ten (10) Business Days after the same
shall become due and payable (whether by extension, renewal,
acceleration, maturity or otherwise) or the Borrowers shall
fail to pay any other sums due to the Banks hereunder within
ten (10) Business Days after the same shall become due and
payable; or
(b) Any representation or warranty of the Borrowers
made herein or in any writing furnished in connection with or
pursuant to any of the Loan Documents shall have been false
or misleading in any material respect on the date when made;
or
(c) Any of the Borrowers shall fail to duly observe,
perform or comply with any covenant, agreement or term (other
than payment provisions which are governed by Section 8.1(a)
hereof) contained in this Agreement or any of the Loan
Documents and such default or breach shall have not been
36
cured or remedied within the earlier of thirty (30) days
after any of the Borrowers shall know (or should have known)
of its occurrence or thirty (30) days following receipt of
notice thereof from the Bank; or
(d) Any of the Borrowers shall default in the payment
of principal or of interest on any other obligation for money
borrowed or received as an advance (or any obligation under
any conditional sale or other title retention agreement, or
any obligation issued or assumed as full or partial payment
for property whether or not secured by purchase money Lien,
or any obligation under notes payable or drafts accepted
representing extensions of credit) beyond any grace period
provided with respect thereto, or shall default in the
performance of any other agreement, term or condition
contained in any agreement under which such obligation is
created (or if any other default under any such agreement
shall occur and be continuing beyond any period of grace
provided with respect thereto) if the effect of such default
is to cause, or to permit the holder or holders of such
obligation (or a trustee on behalf of such holder or holders)
to cause such obligation to become due prior to its date of
maturity; or
(e) Any of the following: (i) any of the Borrowers
shall become insolvent or unable to pay its debts as they
mature, make an assignment for the benefit of creditors or
admit in writing its inability to pay its debts generally as
they become due or fail generally to pay its debts as they
mature; or (ii) an order, judgment or decree is entered
adjudicating any of the Borrowers insolvent or an order for
relief under the United States Bankruptcy Court is entered
with respect to any of the Borrowers within sixty (60) days
of the date of its entry; or (iii) any of the Borrowers shall
petition or apply to any Tribunal for the appointment of a
trustee, receiver, custodian or liquidator of any of the
Borrowers or of any substantial part of the assets of any of
the Borrowers, or shall commence any proceedings relating to
any of the Borrowers under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debts,
dissolution, or liquidation Law of any jurisdiction, whether
now or hereafter in effect; or (iv) any such petition or
application shall be filed, or any such proceedings shall be
commenced, of a type described in subsection (iii) above,
against any of the Borrowers and any of the Borrowers by any
act shall indicate its approval thereof, consent thereto or
acquiescence therein, or an order, judgment or decree shall
be entered appointing any such trustee, receiver, custodian
or liquidator, or approving the petition in any such proceed-
ings, and such order, judgment or decree shall remain
unstayed and in effect, if being vigorously contested, for
more than sixty (60) days; or (v) any order, judgment or
decree shall be entered in any proceedings against any of the
37
Borrowers decreeing the dissolution of any of the Borrowers
and such order, judgment or decree shall remain unstayed and
in effect for more than thirty (30) days; or (vi) any final
order, judgment or decree shall be entered in any proceedings
against any of the Borrowers decreeing a split-up of any of
the Borrowers which requires the divestiture of a substantial
part of the assets of any of the Borrowers, and such order,
judgment or decree shall remain unstayed and in effect for
more than sixty (60) days; or (vii) any of the Borrowers
shall fail to make timely payment or deposit of any amount of
tax required to be withheld by any of the Borrowers and paid
to or deposited to or to the credit of the United States of
America pursuant to the provisions of the Internal Revenue
Code of 1986, as amended, in respect of any and all wages and
salaries paid to employees of the Borrowers; or
(f) Any final judgment on the merits for the payment of
money in an amount in excess of $500,000 shall be outstanding
against any of the Borrowers and such judgment shall remain
unstayed and in effect and unpaid for more than thirty (30)
days; or
(g) Any Reportable Event described in Section 7.15
hereof which the Banks determine in good faith might consti-
tute grounds for the termination of a Plan therein described
or for the appointment by the appropriate United States
District Court of a trustee to administer any such Plan shall
have occurred and be continuing thirty (30) days after
written notice to such effect shall have been given to any of
the Borrowers by the Agent or the Banks, or any such Plan
shall be terminated, or a trustee shall be appointed by a
United States District Court to administer any such Plan or
the Pension Benefit Guaranty Corporation shall institute
proceedings to terminate any such Plan or to appoint a
trustee to administer any such Plan; or
(h) Any default or event of default occurs and is
continuing beyond any cure period with respect thereto under
any of the other Loan Documents.
8.2 Remedies. Upon the occurrence of any Event of Default
referred to in Section 8.1(e), the Line Commitment (to the extent
on or prior to the Commitment Termination Date) shall immediately
and automatically terminate and the Notes (whether before or after
the Conversion Date) and all other Indebtedness shall be immediate-
ly due and payable, without notice of any kind. Upon the occur-
rence of any other Event of Default, and without prejudice to any
right or remedy of the Banks under this Agreement or the Loan
Documents or under applicable Law or under any other instrument or
document delivered in connection herewith, the Agent or the Banks
may (i) declare the Commitments terminated or (ii) declare both of
the Commitments terminated and declare the Notes and the other
Indebtedness, or any part thereof, to be forthwith due and payable,
38
whereupon the Notes and the other Indebtedness, or such portion as
is designated by the Banks shall forthwith become due and payable,
without presentment, demand, notice or protest of any kind, all of
which are hereby expressly waived by the Borrowers. No delay or
omission on the part of the Agent or the Banks in exercising any
power or right hereunder or under the Notes, the Loan Documents or
under applicable law shall impair such right or power or be
construed to be a waiver of any default or any acquiescence
therein, nor shall any single or partial exercise by the Agent or
the Banks of any such power or right preclude other or further
exercise thereof or the exercise of any other such power or right
by the Agent or the Banks. In the event that all or part of the
Indebtedness becomes or is declared to be forthwith due and payable
as herein provided, the Banks shall have the right to set off the
amount of all the Indebtedness of the Borrowers owing to the Banks
against, and shall have a lien upon and security interest in, all
property of the Borrowers in the Banks' possession at or subsequent
to such default, regardless of the capacity in which the Banks
possess such property, including but not limited to any balance or
share of any deposit, demand, collection or agency account, subject
to Section 9.3 hereof. At any time after the occurrence of any
Event of Default, the Banks may, at their option, cause an audit of
any and/or all of the books, records and documents of the Borrow-
ers, with the exception of the portion thereof covered by an
attorney-client privilege or constituting attorney work product, to
be made by auditors satisfactory to the Banks. The Banks also
shall have, and may exercise, each and every right and remedy
granted to them for default under the terms of the other Loan
Documents.
ARTICLE IX
MISCELLANEOUS
9.1 Notices. Unless otherwise provided herein, all notices,
requests, consents and demands shall be in writing and shall be
either hand-delivered (by courier or otherwise), sent by fax or
telecopy to the respective fax or telecopy number specified below
or mailed by certified mail, postage prepaid, to the respective
addresses specified below, or, as to any party, to such other
address as may be designated by it in written notice to the other
parties:
If to the Borrowers, to:
1000 Galleria Tower 1
7130 South Lewis
Tulsa, Oklahoma 74172
FAX NO: (918) 493-7711
39
If to BOK, to:
Bank of Oklahoma, National Association
P. O. Box 2300
101 East 2nd Street
Tulsa, Oklahoma 74192
Attention: Energy Department
FAX NO: (918) 588-6880
If to BANK IV, to:
BANK IV Oklahoma, N.A.
P. O. Box 2360
515 South Boulder
Tulsa, Oklahoma 74101-2360
Attention: Energy Department
FAX NO: (918) 591-8487
If to Bank of Boston, to:
The First National Bank of Boston
P.O. Box 2016
100 Federal Street
Energy & Utility Division 01-08-02
Boston, Massachusetts 02110
Attention: Ms. Carol Holley
FAX NO: (617) 434-3652
If to ANB, to:
American National Bank and Trust Company of Shawnee
P.O. Box 1089
Shawnee, Oklahoma 74801-1089
Attention: Tony M. McMurry, Executive Vice President
FAX NO: (405) 275-9240
If to the Agent, to:
Bank of Oklahoma, National Association
P. O. Box 2300
101 East 2nd Street
Tulsa, Oklahoma 74192
Attention: Energy Department
FAX NO: (918) 588-6880
All notices, requests, consents and demands hereunder will be
effective when hand-delivered to the applicable notice addresses of
any party hereto or when sent by fax or telecopy to the applicable
fax or telecopy numbers of any party hereto or when mailed by
certified mail, postage prepaid, addressed as aforesaid by any
party hereto.
40
9.2 Place of Payment. All sums payable hereunder shall be
paid in immediately available funds to the Agent, at its principal
banking offices at Bank of Oklahoma Tower, 101 East Second Street,
One Williams Center in Tulsa, Oklahoma, or at such other place as
the Agent shall notify the Borrowers in writing. If any interest,
principal or other payment falls due on a date other than a
Business Day, then (unless otherwise provided herein) such due date
shall be extended to the next succeeding Business Day, and such
extension of time will in such case be included in computing
interest, if any, in connection with such payment.
9.3 Setoff. Any indebtedness owing from any of the Banks to
any of the Borrowers, including, without limitation, any general or
special deposit account (excluding, however, the following accounts
at BOK; Account Nos. 1-01174868, 1-022-5426-5, 1-026-5743-7, 1-035-7018-4, 1-
035-9028-1, 1-038-4862-7, 1-038-4077-3, 2-042-1333-2, 2-043-5134-9, 2-060-0786-
1, 2-078-9622-0, 2-079-1080-6, 2-079-1154-3, 2-079-1087-2, 2-079-2793-3, 2-079-
2310-4, 2-079-2353-3, 2-079-2860-4, 2-079-2861-5, 2-079-2862-6, 2-079-2864-8, 2-
079-3738-2 and 2-083-0274-7), may be set off or otherwise applied by the Banks
under
a general lien and security interest covering such indebtedness
which is hereby granted on any indebtedness or liability of
Borrowers under any Loan Document to the Banks, at any time and
from and after the occurrence of an Event of Default, either before
or after Maturity, and without demand or notice to anyone. It is
understood any of the Banks may sell participations in the Notes to
an affiliate of such Bank, and Borrowers agree that any such
participant shall have the right of setoff or other application
under the general lien as herein granted to the Banks; provided,
however, it is specifically acknowledged by the Banks that any
other participation shall require the written prior approval of
Unit on behalf of each of the Borrowers.
9.4 Survival of Agreements. All covenants, agreements,
representations and warranties made herein shall survive the
execution and the delivery of Loan Documents. All statements
contained in any certificate or other instrument executed and
delivered by the Borrowers hereunder shall be deemed to constitute
representations and warranties by the Borrowers.
9.5 Parties in Interest. All covenants, agreements and
obligations contained in this Agreement shall bind and inure to the
benefit of the respective successors and assigns of the parties
hereto, except that the Borrowers may not assign their rights or
obligations hereunder without the prior written consent of the
Banks. Each of the Banks may sell participations in its interest
hereunder and under its Note without the prior written consent of
the Borrowers or sell, assign or transfer such interests with such
prior consent, provided that no such consent shall be required in
the case of a sale, transfer or assignment to any affiliate of any
of the Banks. Notwithstanding anything to the contrary provided
herein, each Bank may, at any time, without the consent of the
Borrowers, assign all or any portion of its rights under this
41
Agreement and its Note to a Federal Reserve Bank, provided that no
such assignment shall release any Bank from its obligations
hereunder.
9.6 Governing Law. This Agreement, the Notes and the
Security Instruments shall be deemed to have been made or incurred
under the Laws of the State of Oklahoma and shall be construed and
enforced in accordance with and governed by the Laws of Oklahoma.
9.7 SUBMISSION TO JURISDICTION. THE BORROWERS HEREBY
CONSENT TO THE JURISDICTION OF ANY OF THE STATE AND FEDERAL COURTS
LOCATED WITHIN TULSA COUNTY, OKLAHOMA AND WAIVE ANY OBJECTION WHICH
BORROWERS MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS
TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT.
9.8 Maximum Interest Rate. Regardless of any provision
herein, the Agent and the Banks shall never be entitled to receive,
collect or apply, as interest on the Indebtedness any amount in
excess of the maximum rate of interest permitted to be charged by
the Banks by applicable Law, and, in the event the Agent or the
Banks shall ever receive, collect or apply, as interest, any such
excess, such amount which would be excessive interest shall be
applied to other Indebtedness and then to the reduction of
principal; and, if the other Indebtedness and principal are paid in
full, then any remaining excess shall forthwith be paid to the
Borrowers.
9.9 No Waiver; Cumulative Remedies. No failure to exercise,
and no delay in exercising, on the part of the Agent or any of the
Banks, any right, power or privilege hereunder or under any other
Loan Document or applicable Law shall preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege of the Agent or any of the Banks. The rights and
remedies herein provided are cumulative and not exclusive of any
other rights or remedies provided by any other instrument or by
law. No amendment, modification or waiver of any provision of this
Agreement or any other Loan Document shall be effective unless the
same shall be in writing and signed by the Agent and the Banks. No
notice to or demand on the Borrowers in any case shall entitle the
Borrowers to any other or further notice or demand in similar or
other circumstances.
9.10 Costs. The Borrowers agree to pay to the Agent for the
benefit of the Banks on demand all recording fees and filing costs
and all reasonable attorneys fees and legal expenses incurred or
accrued by the Banks in connection with the preparation, negotia-
tion, closing, administration of the Loan Documents and the filing
and recording of the Security Instruments or any amendment, waiver,
consent or modification to and of the Loan Documents. In any
action to enforce or construe the provisions of this Agreement or
any of the Loan Documents, the prevailing party shall be entitled
to recover its reasonable attorneys' fees and all costs and
expenses related thereto.
42
9.11 Change of Agent. Upon receipt of notice of the name and
address of a new Agent, duly executed by the Banks, the Borrowers
shall thereafter direct to the new Agent all reports, payments and
other information required to be delivered to the Agent pursuant to
the terms of this Agreement and all other Loan Documents.
9.12 Headings. The article and section headings of this
Agreement are for convenience of reference only and shall not
constitute a part of the text hereof nor alter or otherwise affect
the meaning hereof.
9.13 Severability. The unenforceability or invalidity as
determined by a Tribunal of competent jurisdiction, of any
provision or provisions of this Agreement shall not render un-
enforceable or invalid any other provision or provisions hereof.
9.14 Counterparts and Execution. This Agreement may be
executed in any number of counterparts, all of which taken together
shall constitute one and the same instrument. Notwithstanding the
single execution of this Agreement by the President of each of the
Borrowers, each of the Borrowers is jointly and severally bound by
the terms of this Agreement.
43
IN WITNESS WHEREOF, the Borrowers have caused this Agreement
to be executed and delivered to the Banks in Tulsa, Oklahoma as of
the day and year first above written by the undersigned duly
authorized corporate officer thereof.
"Borrowers"
UNIT CORPORATION, a Delaware corporation
UNIT DRILLING AND EXPLORATION
COMPANY, a Delaware corporation
MOUNTAIN FRONT PIPELINE COMPANY,
INC., an Oklahoma corporation
UNIT PETROLEUM COMPANY, an Oklahoma
corporation
UNIT DRILLING COMPANY, an Oklahoma
corporation
PETROLEUM SUPPLY COMPANY, an Oklahoma
corporation
ROUNDUP RESOURCES, INC., a Delaware
corporation
By_________________________________
John G. Nikkel, President of UNIT
CORPORATION, UNIT DRILLING AND
EXPLORATION COMPANY, MOUNTAIN
FRONT PIPELINE COMPANY, INC., UNIT
PETROLEUM COMPANY, UNIT DRILLING
COMPANY, PETROLEUM SUPPLY COMPANY,
ROUNDUP RESOURCES, INC.
44
"Banks"
BANK OF OKLAHOMA, NATIONAL
ASSOCIATION
By_____________________________
Pam Schloeder, Vice President
P. O. Box 2300
Tulsa, Oklahoma 74192
"Agent"
BANK OF OKLAHOMA, NATIONAL
ASSOCIATION
By____________________________
Pam Schloeder, Vice President
P. O. Box 2300
Tulsa, Oklahoma 74192
45
THE FIRST NATIONAL BANK OF BOSTON
By___________________________________
________________, _______________
P.O. Box 2016
100 Federal Street
Energy & Utility Division 01-08-02
Boston, Massachusetts 02110
46
BANK IV OKLAHOMA, N.A.
By______________________
Glenn A. Elrod
Senior Vice President
P. O. Box 2360
Tulsa, Oklahoma 74101-2360
47
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF SHAWNEE
By_______________________
Tony M. McMurry
Executive Vice President
P. O. Box 1089
Shawnee, Oklahoma 74801-1089
48
EXHIBIT "A-1"
PROMISSORY NOTE
$25,000,000 August 3, 1995
Tulsa, Oklahoma
FOR VALUE RECEIVED, the undersigned, UNIT CORPORATION, a
Delaware corporation, UNIT DRILLING AND EXPLORATION COMPANY, a
Delaware corporation, MOUNTAIN FRONT PIPELINE COMPANY, INC., an
Oklahoma corporation, UNIT DRILLING COMPANY, an Oklahoma corpora-
tion, UNIT PETROLEUM COMPANY (formerly Sunshine Development Corpor-
ation), an Oklahoma corporation, PETROLEUM SUPPLY COMPANY, an Okla-
homa corporation, and ROUNDUP RESOURCES, INC., a Delaware corpora-
tion, (individually and collectively the "Borrowers"), jointly and
severally promise to pay to the order of BANK OF OKLAHOMA, NATIONAL
ASSOCIATION ("BOK"), with interest, the principal sum of TWENTY
FIVE MILLION and no/100ths DOLLARS ($25,000,000) or, if less, the
aggregate principal amount of all advances made by BOK to Borrowers
pursuant to the Loan Agreement dated as of August 3, 1995 among
Borrowers, BOK, BANK IV Oklahoma, N.A., The First National Bank of
Boston and American National Bank and Trust Company of Shawnee
(collectively the "Banks"), with BOK as Agent (the "Loan Agree-
ment"), which are outstanding as of August 31, 1997 (the "Commit-
ment Termination Date"). Such outstanding principal shall be
payable in forty-eight (48) consecutive monthly installments
commencing September 1, 1997, and continuing on the first (1st) day
of each month thereafter through August 1, 2001 ("Maturity"). Each
of the first forty-seven (47) of such principal installments shall
be in the amount derived by dividing the principal amount hereof
outstanding on the Commitment Termination Date by forty-eight (48).
The forty-eighth (48th) and final installment shall be in the
amount of the remaining principal balance of this Note at Maturity
plus all accrued but unpaid interest hereon.
Except as hereinafter provided in connection with a default,
interest shall accrue on the outstanding principal balance hereof
and on any past due interest through Maturity at the rate or rates
per annum determined pursuant to the Loan Agreement, payable as
provided therein, and shall be calculated as provided in the Loan
Agreement.
The rate of interest payable upon the indebtedness evidenced
by this Note shall not at any time exceed the maximum rate of
interest permitted under the laws of the State of Oklahoma or
federal laws to the extent they apply for loans of the type and
character evidenced by this Note.
All payments under this Note shall be made in legal tender of
the United States of America or in other immediately available
funds at the offices of the Agent at Bank of Oklahoma Tower, 7 East
2nd Street, Tulsa, Oklahoma 74172, and no credit shall be given for
any payment received by check, draft or other instrument or item
until such time as the Agent or the holder hereof shall have
received credit therefor from the Agent's or the holder's collect-
ing agent or, in the event no collecting agent is used, from the
bank or other financial institution upon which said check, draft or
other instrument or item is drawn. If any payment is due upon a
Saturday or Sunday or upon any other day on which state or national
banks in the State of Oklahoma are closed for business by virtue of
a legal holiday for such banks, such payment shall be due and
payable on the next succeeding Business Day, and interest shall
accrue to such day.
Prior to the Commitment Termination Date, the Borrowers may
borrow, repay and reborrow hereunder at any time and from time to
time as provided in the Loan Agreement. From and after the
Commitment Termination Date, the Borrowers may prepay this Note in
whole or in part, subject to the prepayment limitations contained
in the Loan Agreement; provided, however, that any partial
prepayment shall be applied first to accrued interest, then to
unpaid principal installments in the inverse order of maturity.
From time to time the Borrowers and the Banks may agree to
extend the maturity date of this Note or to renew this Note, in
whole or in part, or a new note of different form may be substitut-
ed for this Note and/or the rate of interest may be changed, or
changes may be made in consideration of loan extensions, and the
holder, from time to time, may waive or surrender, either in whole
or in part, any rights, guarantees, security interests, or liens
given for the benefit of the holder in connection with the payment
and the securing the payment of this Note; but no such occurrences
shall in any manner affect, limit, modify or otherwise impair any
rights, guarantees or security of the holder not specifically
waived, released or surrendered in writing, nor shall the Borrowers
or any guarantor, endorser or any other person who is or might be
liable hereon, either primarily or contingently, be released from
such liability by reason of the occurrence of any such event. The
holder hereof, from time to time, shall have the unlimited right to
release any person who might be liable hereon; and such release
shall not affect or discharge the liability of any other person who
is or might be liable hereon.
If any payment required by this Note to be made is not made
within ten (10) Business Days after the same shall become due and
payable, or if any default occurs under the Loan Agreement, the
Security Agreement or under the provisions of any mortgage, deed of
trust, security agreement, assignment, pledge or other document or
agreement which provides security for the indebtedness evidenced by
this Note, the holder hereof may, at its option, without notice or
demand, declare this Note in default and all indebtedness due and
owing hereunder immediately due and payable. In the event of a
default the entire unpaid balance shall be immediately due and
payable, together with any past due interest at the rate of five
percentage points (5%) per annum above the Applicable Prime Rate
("Default Rate"). The Borrowers and all endorsers, guarantors and
2
sureties hereby severally waive protest, presentment, demand, and
notice of protest and nonpayment in case this Note or any payment
due hereunder is not paid when due; and they agree to any renewal
of this Note or to any extension, acceleration or postponement of
the time of payment, or any other indulgence, to any substituting,
exchange or release of collateral and to the release of any party
or person primarily or contingently liable hereon without prejudice
to the holder and without notice to the Borrowers or any endorser,
guarantor or surety. In the event of any controversy, claim or
dispute between the parties affecting or relating to the subject
matter or performance of this Note, the prevailing party shall be
entitled to recover from the non-prevailing party all of its
reasonable costs, expenses, including reasonable attorneys' and
accountants' fees. In the event the Agent or BOK is the prevailing
party, the Borrowers, and any guarantor, endorser, surety or any
other person who is or may become liable hereon, will, on demand,
pay all such costs and expenses.
Upon the occurrence of any default hereunder, BOK shall have
the right, immediately and without further action by it, to set off
against this Note all money owed by BOK in any capacity (except for
balances in the following accounts with BOK: Account Nos. 1-01174868,
1-022-5426-5, 1-026-5743-7, 1-035-7018-4, 1-035-9028-1, 1-038-4862-7,
1-038-4077-3, 2-042-1333-2, 2-043-5134-9, 2-060-0786-1, 2-078-9622-0,
2-079-1080-6, 2-079-1154-3, 2-079-1087-2, 2-079-2793-3, 2-079-2310-4,
2-079-2353-3, 2-079-2860-4, 2-079-2861-5, 2-079-2862-6, 2-079-2864-8,
2-079-3738-2 and 2-083-027 4-7), to each or any of the Borrowers, guarantor,
endorser or any other person who is or might be liable for payment hereof,
whether or not due, and also to set off against all other liabilities of
each of the Borrowers to BOK all money owed by BOK in any capacity to each or
any of the Borrowers; and BOK shall be deemed to have exercised such right of
setoff and to have made a charge against such money immediately upon the
occurrence of such default even though such charge is made or entered into the
books of BOK subsequently thereto.
This Note is issued pursuant to and subject to the terms of
the Loan Agreement and is secured by the Collateral described in
the Loan Agreement, which provides, among other things, for
prepayment of this Note upon the occurrence of certain events and
for limitations on advances which may be made hereunder. This Note
is a renewal, extension, substitution and replacement in that
certain promissory note dated June 1, 1995, payable by Borrowers to
the order of BOK in the original principal amount of $25,000,000.
Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to them in the Loan Agreement.
This Note shall be governed by and construed in accordance
with the laws of the State of Oklahoma. Borrowers agree that all
suits or proceedings arising from or related to this Note or the
Loan Agreement may be litigated in courts, state or federal,
3
sitting in the State of Oklahoma. In furtherance of this provi-
sion, Borrowers hereby waive any objection to such venue.
Notwithstanding the single execution of this Note by the
President of each of the Borrowers, each of the Borrowers is
jointly and severally bound by the terms of this Note.
"Borrowers"
UNIT CORPORATION, a Delaware
corporation
UNIT DRILLING AND EXPLORATION
COMPANY, a Delaware corporation
MOUNTAIN FRONT PIPELINE COMPANY,
INC., an Oklahoma corporation
UNIT PETROLEUM COMPANY, an Oklahoma
corporation
UNIT DRILLING COMPANY, an Oklahoma
corporation
PETROLEUM SUPPLY COMPANY, an Oklahoma
corporation
ROUNDUP RESOURCES, INC., a Delaware
corporation
By___________________________________
John G. Nikkel, President of UNIT
CORPORATION, UNIT DRILLING AND
EXPLORATION COMPANY, MOUNTAIN FRONT
PIPELINE COMPANY, INC., UNIT PETRO-
LEUM COMPANY, UNIT DRILLING COMPA-
NY, PETROLEUM SUPPLY COMPANY,
ROUNDUP RESOURCES, INC.
Due: August 31, 1997
(subject to conversion
to Term Loan payout on
August 31, 1997 per
Loan Agreement)
4
EXHIBIT "A-2"
PROMISSORY NOTE
$23,500,000 August 3, 1995
Tulsa, Oklahoma
FOR VALUE RECEIVED, the undersigned, UNIT CORPORATION, a
Delaware corporation, UNIT DRILLING AND EXPLORATION COMPANY, a
Delaware corporation, MOUNTAIN FRONT PIPELINE COMPANY, INC., an
Oklahoma corporation, UNIT DRILLING COMPANY, an Oklahoma corpora-
tion, UNIT PETROLEUM COMPANY (formerly Sunshine Development Corpor-
ation), an Oklahoma corporation, PETROLEUM SUPPLY COMPANY, an Okla-
homa corporation, and ROUNDUP RESOURCES, INC., a Delaware corpora-
tion, (individually and collectively the "Borrowers"), jointly and
severally promise to pay to the order of THE FIRST NATIONAL BANK OF
BOSTON ("Bank of Boston"), with interest, the principal sum of
TWENTY THREE MILLION FIVE HUNDRED THOUSAND and no/100ths DOLLARS
($23,500,000) or, if less, the aggregate principal amount of all
advances made by Bank of Boston to Borrowers pursuant to the Loan
Agreement dated as of August 3, 1995 among Borrowers, Bank of
Boston, Bank of Oklahoma, National Association ("BOK"), BANK IV
Oklahoma, N.A. and American National Bank and Trust Company of
Shawnee (collectively the "Banks"), with BOK as Agent (the "Loan
Agreement"), which are outstanding as of August 31, 1997 (the
"Commitment Termination Date"). Such outstanding principal shall
be payable in forty-eight (48) consecutive monthly installments
commencing September 1, 1997, and continuing on the first (1st) day
of each month thereafter through August 1, 2001 ("Maturity"). Each
of the first forty-seven (47) of such principal installments shall
be in the amount derived by dividing the principal amount hereof
outstanding on the Commitment Termination Date by forty-eight (48).
The forty-eighth (48th) and final installment shall be in the
amount of the remaining principal balance of this Note at Maturity
plus all accrued but unpaid interest hereon.
Except as hereinafter provided in connection with a default,
interest shall accrue on the outstanding principal balance hereof
and on any past due interest through Maturity at the rate or rates
per annum determined pursuant to the Loan Agreement, payable as
provided therein, and shall be calculated as provided in the Loan
Agreement.
The rate of interest payable upon the indebtedness evidenced
by this Note shall not at any time exceed the maximum rate of
interest permitted under the laws of the State of Oklahoma or
federal laws to the extent they apply for loans of the type and
character evidenced by this Note.
All payments under this Note shall be made in legal tender of
the United States of America or in other immediately available
funds at the offices of the Agent at Bank of Oklahoma Tower, 7 East
2nd Street, Tulsa, Oklahoma 74172, and no credit shall be given for
any payment received by check, draft or other instrument or item
until such time as the Agent or the holder hereof shall have
received credit therefor from the Agent's or the holder's collect-
ing agent or, in the event no collecting agent is used, from the
bank or other financial institution upon which said check, draft or
other instrument or item is drawn. If any payment is due upon a
Saturday or Sunday or upon any other day on which state or national
banks in the State of Oklahoma are closed for business by virtue of
a legal holiday for such banks, such payment shall be due and
payable on the next succeeding Business Day, and interest shall
accrue to such day.
Prior to the Commitment Termination Date, the Borrowers may
borrow, repay and reborrow hereunder at any time and from time to
time as provided in the Loan Agreement. From and after the
Commitment Termination Date, the Borrowers may prepay this Note in
whole or in part, subject to the prepayment limitations contained
in the Loan Agreement; provided, however, that any partial
prepayment shall be applied first to accrued interest, then to
unpaid principal installments in the inverse order of maturity.
From time to time the Borrowers and the Banks may agree to
extend the maturity date of this Note or to renew this Note, in
whole or in part, or a new note of different form may be substitut-
ed for this Note and/or the rate of interest may be changed, or
changes may be made in consideration of loan extensions, and the
holder, from time to time, may waive or surrender, either in whole
or in part, any rights, guarantees, security interests, or liens
given for the benefit of the holder in connection with the payment
and the securing the payment of this Note; but no such occurrences
shall in any manner affect, limit, modify or otherwise impair any
rights, guarantees or security of the holder not specifically
waived, released or surrendered in writing, nor shall the Borrowers
or any guarantor, endorser or any other person who is or might be
liable hereon, either primarily or contingently, be released from
such liability by reason of the occurrence of any such event. The
holder hereof, from time to time, shall have the unlimited right to
release any person who might be liable hereon; and such release
shall not affect or discharge the liability of any other person who
is or might be liable hereon.
If any payment required by this Note to be made is not made
within ten (10) Business Days after the same shall become due and
payable, or if any default occurs under the Loan Agreement, the
Security Agreement or under the provisions of any mortgage, deed of
trust, security agreement, assignment, pledge or other document or
agreement which provides security for the indebtedness evidenced by
this Note, the holder hereof may, at its option, without notice or
demand, declare this Note in default and all indebtedness due and
owing hereunder immediately due and payable. In the event of a
default the entire unpaid balance shall be immediately due and
payable, together with any past due interest at the rate of five
percentage points (5%) per annum above the Applicable Prime Rate
2
("Default Rate"). The Borrowers and all endorsers, guarantors and
sureties hereby severally waive protest, presentment, demand, and
notice of protest and nonpayment in case this Note or any payment
due hereunder is not paid when due; and they agree to any renewal
of this Note or to any extension, acceleration or postponement of
the time of payment, or any other indulgence, to any substituting,
exchange or release of collateral and to the release of any party
or person primarily or contingently liable hereon without prejudice
to the holder and without notice to the Borrowers or any endorser,
guarantor or surety. In the event of any controversy, claim or
dispute between the parties affecting or relating to the subject
matter or performance of this Note, the prevailing party shall be
entitled to recover from the non-prevailing party all of its
reasonable costs, expenses, including reasonable attorneys' and
accountants' fees. In the event the Agent or Bank of Boston is the
prevailing party, the Borrowers, and any guarantor, endorser,
surety or any other person who is or may become liable hereon,
will, on demand, pay all such costs and expenses.
Upon the occurrence of any default hereunder, Bank of Boston
shall have the right, immediately and without further action by it,
to set off against this Note all money owed by Bank of Boston in
any capacity, to each or any of the Borrowers, guarantor, endorser
or any other person who is or might be liable for payment hereof,
whether or not due, and also to set off against all other liabili-
ties of each of the Borrowers to Bank of Boston all money owed by
Bank of Boston in any capacity to each or any of the Borrowers; and
Bank of Boston shall be deemed to have exercised such right of
setoff and to have made a charge against such money immediately
upon the occurrence of such default even though such charge is made
or entered into the books of Bank of Boston subsequently thereto.
This Note is issued pursuant to and subject to the terms of
the Loan Agreement and is secured by the Collateral described in
the Loan Agreement, which provides, among other things, for
prepayment of this Note upon the occurrence of certain events and
for limitations on advances which may be made hereunder. Capital-
ized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Loan Agreement.
This Note shall be governed by and construed in accordance
with the laws of the State of Oklahoma. Borrowers agree that all
suits or proceedings arising from or related to this Note or the
Loan Agreement may be litigated in courts, state or federal,
sitting in the State of Oklahoma. In furtherance of this provi-
sion, Borrowers hereby waive any objection to such venue.
3
Notwithstanding the single execution of this Note by the
President of each of the Borrowers, each of the Borrowers is
jointly and severally bound by the terms of this Note.
"Borrowers"
UNIT CORPORATION, a Delaware
corporation
UNIT DRILLING AND EXPLORATION
COMPANY, a Delaware corporation
MOUNTAIN FRONT PIPELINE COMPANY,
INC., an Oklahoma corporation
UNIT PETROLEUM COMPANY, an Oklahoma
corporation
UNIT DRILLING COMPANY, an Oklahoma
corporation
PETROLEUM SUPPLY COMPANY, an Oklahoma
corporation
ROUNDUP RESOURCES, INC., a Delaware
corporation
By___________________________________
John G. Nikkel, President of UNIT
CORPORATION, UNIT DRILLING AND
EXPLORATION COMPANY, MOUNTAIN FRONT
PIPELINE COMPANY, INC., UNIT PETRO-
LEUM COMPANY, UNIT DRILLING COMPA-
NY, PETROLEUM SUPPLY COMPANY,
ROUNDUP RESOURCES, INC.
Due: August 31, 1997
(subject to conversion
to Term Loan payout on
August 31, 1997 per
Loan Agreement)
4
EXHIBIT "A-3"
PROMISSORY NOTE
$25,000,000 August 3, 1995
Tulsa, Oklahoma
FOR VALUE RECEIVED, the undersigned, UNIT CORPORATION, a
Delaware corporation, UNIT DRILLING AND EXPLORATION COMPANY, a
Delaware corporation, MOUNTAIN FRONT PIPELINE COMPANY, INC., an
Oklahoma corporation, UNIT DRILLING COMPANY, an Oklahoma corpora-
tion, UNIT PETROLEUM COMPANY (formerly Sunshine Development Corpor-
ation), an Oklahoma corporation, PETROLEUM SUPPLY COMPANY, an Okla-
homa corporation, and ROUNDUP RESOURCES, INC., a Delaware corpora-
tion, (individually and collectively the "Borrowers"), jointly and
severally promise to pay to the order of BANK IV OKLAHOMA, N.A.
("BANK IV"), with interest, the principal sum of TWENTY FIVE
MILLION and no/100ths DOLLARS ($25,000,000) or, if less, the
aggregate principal amount of all advances made by BANK IV to
Borrowers pursuant to the Loan Agreement dated as of August 3, 1995
among Borrowers, BANK IV, Bank of Oklahoma, National Association
("BOK"), The First National Bank of Boston and American National
Bank and Trust Company of Shawnee (collectively the "Banks"), with
BOK as Agent (the "Loan Agreement"), which are outstanding as of
August 31, 1997 (the "Commitment Termination Date"). Such out-
standing principal shall be payable in forty-eight (48) consecutive
monthly installments commencing September 1, 1997, and continuing
on the first (1st) day of each month thereafter through August 1,
2001 ("Maturity"). Each of the first forty-seven (47) of such
principal installments shall be in the amount derived by dividing
the principal amount hereof outstanding on the Commitment Termina-
tion Date by forty-eight (48). The forty-eighth (48th) and final
installment shall be in the amount of the remaining principal
balance of this Note at Maturity plus all accrued but unpaid
interest hereon.
Except as hereinafter provided in connection with a default,
interest shall accrue on the outstanding principal balance hereof
and on any past due interest through Maturity at the rate or rates
per annum determined pursuant to the Loan Agreement, payable as
provided therein, and shall be calculated as provided in the Loan
Agreement.
The rate of interest payable upon the indebtedness evidenced
by this Note shall not at any time exceed the maximum rate of
interest permitted under the laws of the State of Oklahoma or
federal laws to the extent they apply for loans of the type and
character evidenced by this Note.
All payments under this Note shall be made in legal tender of
the United States of America or in other immediately available
funds at the offices of the Agent at Bank of Oklahoma Tower, 7 East
2nd Street, Tulsa, Oklahoma 74172, and no credit shall be given for
any payment received by check, draft or other instrument or item
until such time as the Agent or the holder hereof shall have
received credit therefor from the Agent's or the holder's collect-
ing agent or, in the event no collecting agent is used, from the
bank or other financial institution upon which said check, draft or
other instrument or item is drawn. If any payment is due upon a
Saturday or Sunday or upon any other day on which state or national
banks in the State of Oklahoma are closed for business by virtue of
a legal holiday for such banks, such payment shall be due and
payable on the next succeeding Business Day, and interest shall
accrue to such day.
Prior to the Commitment Termination Date, the Borrowers may
borrow, repay and reborrow hereunder at any time and from time to
time as provided in the Loan Agreement. From and after the
Commitment Termination Date, the Borrowers may prepay this Note in
whole or in part, subject to the prepayment limitations contained
in the Loan Agreement; provided, however, that any partial
prepayment shall be applied first to accrued interest, then to
unpaid principal installments in the inverse order of maturity.
From time to time the Borrowers and the Banks may agree to
extend the maturity date of this Note or to renew this Note, in
whole or in part, or a new note of different form may be substitut-
ed for this Note and/or the rate of interest may be changed, or
changes may be made in consideration of loan extensions, and the
holder, from time to time, may waive or surrender, either in whole
or in part, any rights, guarantees, security interests, or liens
given for the benefit of the holder in connection with the payment
and the securing the payment of this Note; but no such occurrences
shall in any manner affect, limit, modify or otherwise impair any
rights, guarantees or security of the holder not specifically
waived, released or surrendered in writing, nor shall the Borrowers
or any guarantor, endorser or any other person who is or might be
liable hereon, either primarily or contingently, be released from
such liability by reason of the occurrence of any such event. The
holder hereof, from time to time, shall have the unlimited right to
release any person who might be liable hereon; and such release
shall not affect or discharge the liability of any other person who
is or might be liable hereon.
If any payment required by this Note to be made is not made
within ten (10) Business Days after the same shall become due and
payable, or if any default occurs under the Loan Agreement, the
Security Agreement or under the provisions of any mortgage, deed of
trust, security agreement, assignment, pledge or other document or
agreement which provides security for the indebtedness evidenced by
this Note, the holder hereof may, at its option, without notice or
demand, declare this Note in default and all indebtedness due and
owing hereunder immediately due and payable. In the event of a
default the entire unpaid balance shall be immediately due and
payable, together with any past due interest at the rate of five
percentage points (5%) per annum above the Applicable Prime Rate
("Default Rate"). The Borrowers and all endorsers, guarantors and
2
sureties hereby severally waive protest, presentment, demand, and
notice of protest and nonpayment in case this Note or any payment
due hereunder is not paid when due; and they agree to any renewal
of this Note or to any extension, acceleration or postponement of
the time of payment, or any other indulgence, to any substituting,
exchange or release of collateral and to the release of any party
or person primarily or contingently liable hereon without prejudice
to the holder and without notice to the Borrowers or any endorser,
guarantor or surety. In the event of any controversy, claim or
dispute between the parties affecting or relating to the subject
matter or performance of this Note, the prevailing party shall be
entitled to recover from the non-prevailing party all of its
reasonable costs, expenses, including reasonable attorneys' and
accountants' fees. In the event the Agent or BANK IV is the
prevailing party, the Borrowers, and any guarantor, endorser,
surety or any other person who is or may become liable hereon,
will, on demand, pay all such costs and expenses.
Upon the occurrence of any default hereunder, BANK IV shall
have the right, immediately and without further action by it, to
set off against this Note all money owed by BANK IV in any
capacity, to each or any of the Borrowers, guarantor, endorser or
any other person who is or might be liable for payment hereof,
whether or not due, and also to set off against all other liabili-
ties of each of the Borrowers to BANK IV all money owed by BANK IV
in any capacity to each or any of the Borrowers; and BANK IV shall
be deemed to have exercised such right of setoff and to have made
a charge against such money immediately upon the occurrence of such
default even though such charge is made or entered into the books
of BANK IV subsequently thereto.
This Note is issued pursuant to and subject to the terms of
the Loan Agreement and is secured by the Collateral described in
the Loan Agreement, which provides, among other things, for
prepayment of this Note upon the occurrence of certain events and
for limitations on advances which may be made hereunder. Capital-
ized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Loan Agreement.
This Note shall be governed by and construed in accordance
with the laws of the State of Oklahoma. Borrowers agree that all
suits or proceedings arising from or related to this Note or the
Loan Agreement may be litigated in courts, state or federal,
sitting in the State of Oklahoma. In furtherance of this provi-
sion, Borrowers hereby waive any objection to such venue.
3
Notwithstanding the single execution of this Note by the
President of each of the Borrowers, each of the Borrowers is
jointly and severally bound by the terms of this Note.
"Borrowers"
UNIT CORPORATION, a Delaware
corporation
UNIT DRILLING AND EXPLORATION
COMPANY, a Delaware corporation
MOUNTAIN FRONT PIPELINE COMPANY,
INC., an Oklahoma corporation
UNIT PETROLEUM COMPANY, an Oklahoma
corporation
UNIT DRILLING COMPANY, an Oklahoma
corporation
PETROLEUM SUPPLY COMPANY, an Oklahoma
corporation
ROUNDUP RESOURCES, INC., a Delaware
corporation
By___________________________________
John G. Nikkel, President of UNIT
CORPORATION, UNIT DRILLING AND
EXPLORATION COMPANY, MOUNTAIN FRONT
PIPELINE COMPANY, INC., UNIT PETRO-
LEUM COMPANY, UNIT DRILLING COMPA-
NY, PETROLEUM SUPPLY COMPANY,
ROUNDUP RESOURCES, INC.
Due: August 31, 1997
(subject to conversion
to Term Loan payout on
August 31, 1997 per
Loan Agreement)
4
EXHIBIT "A-4"
PROMISSORY NOTE
$1,500,000 August 3, 1995
Tulsa, Oklahoma
FOR VALUE RECEIVED, the undersigned, UNIT CORPORATION, a
Delaware corporation, UNIT DRILLING AND EXPLORATION COMPANY, a
Delaware corporation, MOUNTAIN FRONT PIPELINE COMPANY, INC., an
Oklahoma corporation, UNIT DRILLING COMPANY, an Oklahoma corpora-
tion, UNIT PETROLEUM COMPANY (formerly Sunshine Development Corpor-
ation), an Oklahoma corporation, PETROLEUM SUPPLY COMPANY, an Okla-
homa corporation, and ROUNDUP RESOURCES, INC., a Delaware corpora-
tion, (individually and collectively the "Borrowers"), jointly and
severally promise to pay to the order of AMERICAN NATIONAL BANK AND
TRUST COMPANY OF SHAWNEE ("ANB"), with interest, the principal sum
of ONE MILLION FIVE HUNDRED THOUSAND and no/100ths DOLLARS
($1,500,000) or, if less, the aggregate principal amount of all
advances made by ANB to Borrowers pursuant to the Loan Agreement
dated as of August 3, 1995 among Borrowers, ANB, Bank of Oklahoma,
National Association ("BOK") and The First National Bank of Boston,
BANK IV Oklahoma, N.A. (collectively the "Banks"), with BOK as
Agent (the "Loan Agreement"), which are outstanding as of August
31, 1997 (the "Commitment Termination Date"). Such outstanding
principal shall be payable in forty-eight (48) consecutive monthly
installments commencing September 1, 1997, and continuing on the
first (1st) day of each month thereafter through August 1, 2001
("Maturity"). Each of the first forty-seven (47) of such principal
installments shall be in the amount derived by dividing the
principal amount hereof outstanding on the Commitment Termination
Date by forty-eight (48). The forty-eighth (48th) and final
installment shall be in the amount of the remaining principal
balance of this Note at Maturity plus all accrued but unpaid
interest hereon.
Except as hereinafter provided in connection with a default,
interest shall accrue on the outstanding principal balance hereof
and on any past due interest through Maturity at the rate or rates
per annum determined pursuant to the Loan Agreement, payable as
provided therein, and shall be calculated as provided in the Loan
Agreement.
The rate of interest payable upon the indebtedness evidenced
by this Note shall not at any time exceed the maximum rate of
interest permitted under the laws of the State of Oklahoma or
federal laws to the extent they apply for loans of the type and
character evidenced by this Note.
All payments under this Note shall be made in legal tender of
the United States of America or in other immediately available
funds at the offices of the Agent at Bank of Oklahoma Tower, 7 East
2nd Street, Tulsa, Oklahoma 74172, and no credit shall be given for
any payment received by check, draft or other instrument or item
until such time as the Agent or the holder hereof shall have
received credit therefor from the Agent's or the holder's collect-
ing agent or, in the event no collecting agent is used, from the
bank or other financial institution upon which said check, draft or
other instrument or item is drawn. If any payment is due upon a
Saturday or Sunday or upon any other day on which state or national
banks in the State of Oklahoma are closed for business by virtue of
a legal holiday for such banks, such payment shall be due and
payable on the next succeeding Business Day, and interest shall
accrue to such day.
Prior to the Commitment Termination Date, the Borrowers may
borrow, repay and reborrow hereunder at any time and from time to
time as provided in the Loan Agreement. From and after the
Commitment Termination Date, the Borrowers may prepay this Note in
whole or in part, subject to the prepayment limitations contained
in the Loan Agreement; provided, however, that any partial
prepayment shall be applied first to accrued interest, then to
unpaid principal installments in the inverse order of maturity.
From time to time the Borrowers and the Banks may agree to
extend the maturity date of this Note or to renew this Note, in
whole or in part, or a new note of different form may be substitut-
ed for this Note and/or the rate of interest may be changed, or
changes may be made in consideration of loan extensions, and the
holder, from time to time, may waive or surrender, either in whole
or in part, any rights, guarantees, security interests, or liens
given for the benefit of the holder in connection with the payment
and the securing the payment of this Note; but no such occurrences
shall in any manner affect, limit, modify or otherwise impair any
rights, guarantees or security of the holder not specifically
waived, released or surrendered in writing, nor shall the Borrowers
or any guarantor, endorser or any other person who is or might be
liable hereon, either primarily or contingently, be released from
such liability by reason of the occurrence of any such event. The
holder hereof, from time to time, shall have the unlimited right to
release any person who might be liable hereon; and such release
shall not affect or discharge the liability of any other person who
is or might be liable hereon.
If any payment required by this Note to be made is not made
within ten (10) Business Days after the same shall become due and
payable, or if any default occurs under the Loan Agreement, the
Security Agreement or under the provisions of any mortgage, deed of
trust, security agreement, assignment, pledge or other document or
agreement which provides security for the indebtedness evidenced by
this Note, the holder hereof may, at its option, without notice or
demand, declare this Note in default and all indebtedness due and
owing hereunder immediately due and payable. In the event of a
default the entire unpaid balance shall be immediately due and
payable, together with any past due interest at the rate of five
percentage points (5%) per annum above the Applicable Prime Rate
2
("Default Rate"). The Borrowers and all endorsers, guarantors and
sureties hereby severally waive protest, presentment, demand, and
notice of protest and nonpayment in case this Note or any payment
due hereunder is not paid when due; and they agree to any renewal
of this Note or to any extension, acceleration or postponement of
the time of payment, or any other indulgence, to any substituting,
exchange or release of collateral and to the release of any party
or person primarily or contingently liable hereon without prejudice
to the holder and without notice to the Borrowers or any endorser,
guarantor or surety. In the event of any controversy, claim or
dispute between the parties affecting or relating to the subject
matter or performance of this Note, the prevailing party shall be
entitled to recover from the non-prevailing party all of its
reasonable costs, expenses, including reasonable attorneys' and
accountants' fees. In the event the Agent or ANB is the prevailing
party, the Borrowers, and any guarantor, endorser, surety or any
other person who is or may become liable hereon, will, on demand,
pay all such costs and expenses.
Upon the occurrence of any default hereunder, ANB shall have
the right, immediately and without further action by it, to set off
against this Note all money owed by ANB in any capacity, to each or
any of the Borrowers, guarantor, endorser or any other person who
is or might be liable for payment hereof, whether or not due, and
also to set off against all other liabilities of each of the
Borrowers to ANB all money owed by ANB in any capacity to each or
any of the Borrowers; and ANB shall be deemed to have exercised
such right of setoff and to have made a charge against such money
immediately upon the occurrence of such default even though such
charge is made or entered into the books of ANB subsequently
thereto.
This Note is issued pursuant to and subject to the terms of
the Loan Agreement and is secured by the Collateral described in
the Loan Agreement, which provides, among other things, for
prepayment of this Note upon the occurrence of certain events and
for limitations on advances which may be made hereunder. Capital-
ized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Loan Agreement.
This Note shall be governed by and construed in accordance
with the laws of the State of Oklahoma. Borrowers agree that all
suits or proceedings arising from or related to this Note or the
Loan Agreement may be litigated in courts, state or federal,
sitting in the State of Oklahoma. In furtherance of this provi-
sion, Borrowers hereby waive any objection to such venue.
3
Notwithstanding the single execution of this Note by the
President of each of the Borrowers, each of the Borrowers is
jointly and severally bound by the terms of this Note.
"Borrowers"
UNIT CORPORATION, a Delaware
corporation
UNIT DRILLING AND EXPLORATION
COMPANY, a Delaware corporation
MOUNTAIN FRONT PIPELINE COMPANY,
INC., an Oklahoma corporation
UNIT PETROLEUM COMPANY, an Oklahoma
corporation
UNIT DRILLING COMPANY, an Oklahoma
corporation
PETROLEUM SUPPLY COMPANY, an Oklahoma
corporation
ROUNDUP RESOURCES, INC., a Delaware
corporation
By___________________________________
John G. Nikkel, President of UNIT
CORPORATION, UNIT DRILLING AND
EXPLORATION COMPANY, MOUNTAIN FRONT
PIPELINE COMPANY, INC., UNIT PETRO-
LEUM COMPANY, UNIT DRILLING COMPA-
NY, PETROLEUM SUPPLY COMPANY,
ROUNDUP RESOURCES, INC.
Due: August 31, 1997
(subject to conversion
to Term Loan payout on
August 31, 1997 per
Loan Agreement)
4