CREDIT AGREEMENT
DATED AS OF JANUARY 30, 2004
AMONG
UNIT CORPORATION,
MOUNTAIN FRONT PIPELINE COMPANY, INC.,
UNIT DRILLING COMPANY,
UNIT PETROLEUM COMPANY,
PETROLEUM SUPPLY COMPANY,
SERDRILCO, INC.
and
UNIT ENERGY CANADA, INC.,
AS BORROWERS,
THE LENDERS,
BANK OF OKLAHOMA, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT FOR THE LENDERS,
and as
AS SYNDICATION AGENT
TABLE OF CONTENTS
ARTICLE I DEFINITIONS ...................................................... 2
1.1. Defined Terms .................................................... 2
1.2. Exhibits and Schedules; Additional Definitions .................. 15
1.3. Amendment of Defined Instruments..................................15
1.4. Reference and Titles............................................. 15
1.5 Accounting Terms and Determinations .............................. 15
1.6. Calculations and Determinations ................................. 16
1.7. Joint Preparation; Construction of Indemnities and Releases...... 16
ARTICLE II THE CREDITS .................................................... 16
2.1. Commitments...................................................... 16
2.2. Required Payments; Termination .................................. 16
2.3. Ratable Loans ................................................... 16
2.4. Types of Advances................................................ 16
2.5. Facility Fee; Initial Aggregate Commitment; Maximum Credit Amount;
Commitment Fee Rate ............................................. 16
2.6. Borrowing Base and Required Reserve Value ....................... 17
2.7. Minimum Amount of Each Advance .................................. 20
2.8. Principal Payments............................................... 20
2.9. Method of Selecting Types and Interest Periods for New Advances . 21
2.10. Conversion and Continuation of Outstanding Advances ............ 21
2.11. Changes in Interest Rate........................................ 22
2.12. Rates Applicable After Default ................................. 22
2.13. Method of Payment .............................................. 22
2.14. Evidence of Indebtedness ....................................... 23
2.15. Telephonic Notices.............................................. 24
2.16. Interest Payment Dates ......................................... 24
2.17. Notification of Advances, Interest Rates, and LC Requests ...... 25
2.18. Non-Receipt of Funds by the Administrative Agent ............... 25
2.19. Letters of Credit .............................................. 25
2.20. Additional Agency Fees.......................................... 29
2.21. Loan Purposes................................................... 29
ARTICLE III YIELD PROTECTION; TAXES ....................................... 29
3.1. Yield Protection ................................................ 29
3.2. Changes in Capital Adequacy Regulations ......................... 30
3.3. Taxes ........................................................... 30
3.4. Availability of Eurodollar Advances ............................. 31
3.5. Funding Indemnification.......................................... 32
ARTICLE IV CONDITIONS PRECEDENT ........................................... 32
4.1. Initial Credit Extension......................................... 32
4.2. Each Credit Extension............................................ 34
ARTICLE V REPRESENTATIONS AND WARRANTIES .................................. 34
5.1. Existence and Good Standing ..................................... 34
5.2. Authorization and Validity....................................... 35
5.3. No Conflict; Government Consent ................................. 35
5.4. Financial Statements ............................................ 35
5.5. Material Adverse Change ......................................... 35
5.6. Taxes ........................................................... 36
5.7. Litigation and Contingent Obligations ........................... 36
5.8. Subsidiaries .................................................... 36
5.9. ERISA ........................................................... 36
5.10. Accuracy of Information......................................... 36
5.11. Margin Stock ................................................... 36
5.12. Material Agreements............................................. 37
5.13. Compliance With Laws ........................................... 37
5.14. Ownership of Properties ........................................ 37
5.15. Plan Assets; Prohibited Transactions ........................... 37
5.16. Environmental Matters .......................................... 38
5.17. Names and Places of Business ................................... 39
5.18. Possession of Franchises, Licenses ............................. 39
5.19. Rate Management Transactions ................................... 39
ARTICLE VI AFFIRMATIVE COVENANTS .......................................... 39
6.1. Reports ......................................................... 39
6.2. Use of Proceeds.................................................. 41
6.3. Notice of Default................................................ 41
6.4. Conduct of Business ............................................. 41
6.5. Taxes ........................................................... 42
6.6. Insurance ....................................................... 42
6.7. Compliance With Laws............................................. 42
6.8. Maintenance of Properties ....................................... 42
6.9. Inspection....................................................... 42
6.10. Collateral Documents ........................................... 42
6.11. Deposit Accounts/Setoff ........................................ 42
6.12 Environmental Indemnities........................................ 44
ARTICLE VII NEGATIVE COVENANTS ............................................ 46
7.1. Dividends ....................................................... 46
7.2. Indebtedness..................................................... 46
7.3. Limitation on Fundamental Changes ............................... 47
7.4. Sale of Assets................................................... 47
7.5. Investments and Acquisitions .................................... 48
7.6. Liens............................................................ 49
7.7. Affiliates....................................................... 50
7.8. Sale and Leaseback Transactions and other Off-Balance Sheet
Liabilities...................................................... 50
7.9. Contingent Obligations .......................................... 50
7.10. Financial Contracts............................................. 51
7.11. Letters of Credit .............................................. 51
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7.12. Prohibited Contracts ........................................... 52
7.13. Negative Pledge ................................................ 52
ARTICLE VIII FINANCIAL COVENANTS .......................................... 52
8.1. Current Ratio.................................................... 52
8.2. Leverage Ratio .................................................. 52
8.3. Minimum Consolidated Net Worth .................................. 52
ARTICLE IX COLLATERAL AND GUARANTEES ...................................... 53
9.1. Collateral....................................................... 53
9.2. Additional Collateral............................................ 53
9.3. Rig Appraisals................................................... 53
9.4. Guarantees....................................................... 53
9.5. Further Assurances............................................... 54
9.6. Negative Pledge/Production Proceeds ............................. 54
ARTICLE X DEFAULTS ........................................................ 54
ARTICLE XI ACCELERATION; WAIVERS; AMENDMENTS AND REMEDIES ................. 57
11.1. Acceleration ................................................... 57
11.2. Amendments...................................................... 57
11.3. Preservation of Rights ......................................... 58
ARTICLE XII GENERAL PROVISIONS............................................. 58
12.1. Survival of Representations .................................... 59
12.2. Governmental Regulation ........................................ 59
12.3. Headings ....................................................... 59
12.4. Entire Agreement ............................................... 59
12.5. Several Obligations; Benefits of this Agreement ................ 59
12.6. Expenses; Indemnification....................................... 59
12.7. Severability of Provisions ..................................... 60
12.8. Nonliability of Lenders ........................................ 60
12.9. Confidentiality................................................. 60
12.10. Disclosure..................................................... 61
12.11. Place of Payment .............................................. 61
12.12. Interest ...................................................... 61
12.13. Automatic Debit of Borrowers' Operating Account ............... 62
12.14. Exceptions to Covenants ....................................... 62
12.15. Conflict with Security Instruments ............................ 62
12.16. Lost Documents................................................. 62
ARTICLE XIII THE ADMINISTRATIVE AGENT ..................................... 63
13.1. Appointment; Nature of Relationship ............................ 63
13.2. Powers ......................................................... 63
13.3. General Immunity ............................................... 63
13.4. No Responsibility for Loans, Recitals .......................... 64
13.5. Action on Instructions of Lenders .............................. 64
iii
13.6. Employment of Administrative Agents; Counsel; Reliance ......... 64
13.7. Reliance on Documents; Counsel ................................. 64
13.7. Administrative Agent's Reimbursement and Indemnification........ 65
13.8. Notice of Default .............................................. 65
13.9. Rights as a Lender.............................................. 65
13.10. Lender Credit Decision......................................... 65
13.11. Successor Administrative Agent ................................ 66
13.12. Execution of Collateral Documents ............................. 66
13.13. Collateral Releases ........................................... 66
13.14. Syndication Agent.............................................. 67
13.15 Delegation to Affiliates ....................................... 67
ARTICLE XIV BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS ............. 67
14.1. Successors and Assigns ......................................... 67
14.2. Participations ................................................. 68
14.3. Assignments .................................................... 69
14.4. Dissemination of Information ................................... 70
14.5. Tax Treatment ...................................................70
14.6. Procedure for Increases and Addition of New Lenders ............ 70
ARTICLE XV NOTICES ........................................................ 71
15.1. Notices......................................................... 71
15.2. Change of Address .............................................. 71
15.3. Consent to Amendments .......................................... 71
15.4. USA PATRIOT Act Notice.......................................... 71
ARTICLE XVI COUNTERPARTS .................................................. 72
ARTICLE XVII CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL ........................................................... 72
17.1. CHOICE OF LAW .................................................. 72
17.2. CONSENT ........................................................ 72
17.3. NO ORAL AGREEMENTS ............................................. 73
17.4. EXCULPATION PROVISIONS ......................................... 73
17.5. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES ......................... 73
iv
Exhibits
--------
Exhibit A - Form of Promissory Note
Exhibit B - Compliance Certificate
Exhibit C - Form of Assignment
Exhibit D - Form of Commitment Increase/Additional Lender
Exhibit E - Form of Subsidiary Guaranty
Schedules
---------
Schedule 1 - Pricing Schedule
Schedule 2 - Lenders Schedule
Schedule 3 - Disclosure Schedule
Schedule 4 - Security Schedule
Schedule 5 - Environmental Matters
Schedule 6 - Rate Management Transactions
Schedule 7 - Excluded Accounts
Schedule 8 - Contingent Obligations
v
CREDIT AGREEMENT
THIS LOAN AGREEMENT, dated effective as of January 30, 2004 ("Agreement"),
is entered into among UNIT CORPORATION, a Delaware corporation ("Unit"),
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, SERDRILCO, INC.,
an Oklahoma corporation and UNIT ENERGY CANADA INC., an Alberta, Canada
corporation, each with its principal place of business at 0000 Xxxxx Xxxxx,
Xxxxx 000, Xxxxx, Xxxxxxxx 00000 (collectively the "Borrowers") and BANK OF
OKLAHOMA, NATIONAL ASSOCIATION ("BOk"), BANK OF AMERICA, N.A. ("B of A"), BMO
XXXXXXX XXXXX FINANCING, INC. ("BMO"), and COMPASS BANK ("Compass") (BOk, B of
A, BMO and Compass, each being sometimes referred to herein, individually, as a
"Lender," and collectively as the "Lenders"); and BOk as agent for the Lenders
now or hereafter signatory party to this Agreement (in such capacity, herein
referred to as the "Agent").
W I T N E S S E T H:
--------------------
WHEREAS, the Borrowers, BOk, as the agent for the Existing Lenders (defined
herein), and the financial institutions named and defined therein as lenders
signatory parties thereto (collectively, the "Existing Lenders") are parties to
that certain Loan Agreement dated as of July 24, 2001 (the "Existing Credit
Agreement"), pursuant to which the Existing Lenders provided certain loans and
extensions of revolving credit to the Borrowers (all indebtedness arising and
all obligations, including contingent liabilities on letters of credit issued
pursuant to the Existing Credit Agreement are collectively called the "Existing
Indebtedness"); and
WHEREAS, Unit is a party to that certain Agreement and Plan of Merger with
PetroCorp. Incorporated ("PetroCorp"), dated as of August 14, 2003 (together
with all schedules and exhibits thereto and all amendments, supplements, addenda
and modifications, collectively the "PetroCorp Agreement") pursuant to which
Unit will become the owner of all of the outstanding capital stock of PetroCorp;
and
WHEREAS, Unit has requested the Syndication Agent to (i) arrange for the
financing of the acquisition of PetroCorp and (ii) refinance any Existing
Indebtedness; and WHEREAS, as a condition to obtaining the financing
contemplated hereby, Borrowers have agreed to refinance any Existing
Indebtedness in full with funds to be made available under this Agreement; and
WHEREAS, the parties hereto desire to appoint BOk as Administrative Agent
for the Lenders, and Borrowers desire to obtain the Commitments (i) to refinance
any Existing Indebtedness, (ii) to consummate the closing of the PetroCorp
Agreement and acquisition of PetroCorp, and (iii) for other purposes permitted
by the terms of this Agreement; and
WHEREAS, after giving effect to the refinancing of any Existing
Indebtedness and extinguishment of the Commitments of the Existing Lenders and
the replacement thereof by the
Commitments, the several (but not joint) Commitment (as herein defined) of
each Lender hereunder will be as set forth on the Lenders Schedule; and
WHEREAS, pursuant to a separate agreement among BOk and Borrowers, BOk has
been appointed Syndication Agent for the credit facilities provided in this
Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1. Defined Terms. As used in this Agreement, the following terms have the
meaning specified below or in the sections and subsections referred to below:
"Acquisition" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrowers or
any of their Subsidiaries (i) acquires, by any means, any going business or all
or substantially all of the assets of any Person or (ii) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the outstanding
ownership interests of a partnership or limited liability company.
"Administrative Agent" means BOk in its capacity as contractual agent of
the Lenders pursuant to Article XIII, and any successor Administrative Agent
under Article XIII.
"Advance" means a borrowing under Article II, (i) made by the Lenders on
the same Borrowing Date, or (ii) converted or continued by the Lenders on the
same date of conversion or continuation, consisting, in either case, of the
aggregate amount of the several Loans of the same type (either Floating Rate
Advance or Eurodollar Advance) and, in the case of Eurodollar Loans, for the
same Interest Period.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
will be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (capital stock, general or limited
partnership units or interests, limited liability company membership interests
or association or other business entity shares, participations, rights or other
equivalent ownership interests, however designated) of the controlled Person or
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies of the controlled Person, whether through ownership
of stock, by contract or otherwise.
"Agent Fee Letter" means the separate letter agreement between and among
the Borrowers and the Administrative Agent setting forth the syndication fee and
the annual agency fee arrangements.
2
"Aggregate Commitment" means the total of the Commitments of all Lenders,
as adjusted from time to time pursuant to the terms hereof; provided that the
Aggregate Commitment will never exceed the lesser of (i) the Borrowing Base, or
(ii) the Maximum Credit Amount.
"Aggregate Outstanding Credit Exposure" means, at any time, the aggregate
of the Outstanding Credit Exposure of all the Lenders.
"Agreement" means this Credit Agreement, as it may be amended, modified,
supplemented or restated and in effect from time to time.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Prime Rate for such day or (ii) the sum of the
Federal Funds Effective Rate for such day plus one-half of one percent per annum
(0.50%), based on the number of days elapsed in an actual 365-366 day year.
"Applicable Margin" means the percentage rate per annum set forth in the
Pricing Schedule.
"Authorized Officer" means any of the president, the chief financial
officer, any vice president, the treasurer or any assistant treasurer of the
Borrowers, acting singly.
"Available Aggregate Commitment" means, at any time, the Aggregate
Commitment then in effect minus the Aggregate Outstanding Credit Exposure at
such time.
"BOk" means Bank of Oklahoma, National Association, and its successors.
"Borrowers" means Unit, and its Existing Subsidiaries, and their respective
successors and assigns.
"Borrowing Base" means, at the particular time in question, either the
amount provided for in Section 2.6.1 or the amount otherwise determined in
accordance with the remaining provisions of Section 2.6.
"Borrowing Base Properties" means the Rigs and the oil and gas properties
evaluated by Lenders for purposes of establishing the Borrowing Base.
"Borrowing Base Usage Percentage" means, for any day, the percentage equal
to the quotient of (i) the Aggregate Outstanding Credit Exposure on such day,
divided by (ii) the Borrowing Base as initially set by the Lenders under Section
2.6.1 (and as subsequently set by the Lenders under Section 2.6.2 or other
provisions of Section 2.6 [excluding Section 2.6.3]).
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.9.
3
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Tulsa, Oklahoma, and New York City for the
conduct of substantially all of their commercial lending activities, interbank
wire transfers can be made on the Fedwire system and dealings in United States
dollars are carried on in the London interbank market and (ii) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in Tulsa, Oklahoma, for the conduct of substantially all of their
commercial lending activities and interbank wire transfers can be made on the
Fedwire system.
"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with GAAP.
"Cash Equivalent Investments" means (i) short-term obligations of, or fully
guaranteed by, the United States of America, (ii) commercial paper rated A-1 or
better by S&P or P-1 or better by Xxxxx'x, (iii) demand deposit accounts
maintained in the ordinary course of business, and (iv) certificates of deposit
issued by and time deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000; provided in each case that
the same provides for payment of both principal and interest (and not principal
alone or. interest alone) and is not subject to any contingency regarding the
payment of principal or interest.
"Change in Control" means the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of 30% or more of the outstanding shares of voting stock of the
Borrowers.
"Chase" means JPMorgan Chase Bank or any other financial institution that
is the primary banking subsidiary of JPMorgan Chase & Company from time to time.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral" means all Property of Borrowers and their respective
Subsidiaries in which a Lien has been granted under the Collateral Documents.
"Collateral Documents" means, collectively, the documents listed on the
Security Schedule, including the Security Agreement, and all other deeds of
trust, mortgages, assignments, security agreements, pledge agreements and other
security documents from time to time delivered to Administrative Agent to secure
the Secured Obligations.
4
"Commitment" means, for each Lender, the obligation of such Lender to make
Loans to, and participate in LCs issued on the application of, the Borrowers in
an aggregate amount not exceeding the amount set forth on the Lenders Schedule
or as set forth in any Notice of Assignment relating to any assignment that has
become effective under Section 14.3.2, as such amount may be modified from time
to time under to the terms hereof; provided that no Lender's Commitment will
ever exceed the lesser of such Lender's Pro Rata Share of (i) the Borrowing
Base, or (ii) Maximum Credit Amount.
"Commitment Fee Rate" means, at any time, the per annum percentage rate at
which commitment fees are accruing on the Available Aggregate Commitment under
Section 2.5.3 at such time at the rate set forth in the Pricing Schedule.
"Consolidated EBITDA" means Consolidated Net Income plus, to the extent
deducted from revenues in determining Consolidated Net Income, (i) Consolidated
Interest Expense, (ii) expense for income and income based taxes paid or
accrued, (iii) depreciation, depletion, amortization and impairment, including
without limitation, impairment of goodwill, and (iv) any non-cash items
associated with xxxx to market accounting, all calculated for the Borrowers and
their Subsidiaries on a consolidated basis.
"Consolidated Interest Expense" means, for any period with respect to any
Person, the amount which, in conformity with GAAP, would be set forth opposite
the caption "interest expense" or any like caption (including without
limitation, imputed interest included in payments under any Capitalized Lease)
on a consolidated income statement of such Person and the Subsidiaries for such
period excluding the amortization of any original issue discount.
"Consolidated Net Income" means, with reference to any period, the net
income (or loss) of the Borrowers and their Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated Net Worth" means the sum of (a) the par value of Unit's
consolidated capital stock (excluding treasury stock), plus (b) Unit's
consolidated additional paid-in capital, plus (c) the amount of Unit's
consolidated retained earnings.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable on, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, take-or-pay
contract or the obligations of any such Person as general partner of a
partnership with respect to the liabilities of the partnership.
"Contingent Obligations Schedule" means Schedule 8.
"Controlled Group" means all members of a controlled group of corporations
or other business entities and all trades or businesses (whether or not
incorporated) under common
5
control which, together with the Borrowers or any of their respective
Subsidiaries, are treated as a single employer under Section 414 of the Code.
"Conversion/Continuation Notice" is defined in Section 2.10.
"Credit Extension" means the making of an Advance or the issuance of a LC
hereunder.
"Credit Extension Date" means the Borrowing Date for an Advance or the
issuance date for a LC.
"Credit Parties" means, collectively, the Borrowers and the Material
Subsidiaries (including the Subsidiary Guarantors), and "Credit Party" means any
one of them.
"Default" means an event described in Article X.
"Determination Date" is defined in Section 2.6.2.
"Disclosure Schedule" means Schedule 3.
"Engineered Value" means, at the time of determination, the future net
revenues of the oil and gas portion of the Borrowing Base Properties calculated
by Administrative Agent and the Required Lenders using the pricing parameters
and discount rate currently being used by Administrative Agent.
"Engineering Report" means the Initial Engineering Report and each
engineering report delivered pursuant to Section 6.1.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to (i) the
protection of the environment, (ii) the effect of the environment on human
health, (iii) emissions, discharges or releases of pollutants, contaminants,
hazardous substances or wastes into surface water, ground water or land, or (iv)
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, hazardous substances or
wastes or the clean-up or other remediation thereof.
"Equity" means shares of capital stock or a partnership, profits, capital,
member or other equity interest, or options, warrants or any other rights to
substitute for or otherwise acquire the capital stock or a partnership, profits,
capital, member or other equity interest of any Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Eurodollar Advance" means an Advance which, except as otherwise provided
in Section 2.12, bears interest at the applicable Eurodollar Rate.
6
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period: (a) the interest rate per annum equal to the rate
determined by the Administrative Agent to be the offered rate that appears on
the page of the Telerate Screen that displays an average British Bankers'
Association Interest Settlement Rate (such page currently being page number
3750) for deposits in U.S. dollars (for delivery on the first day of such
Interest Period) as reported by any generally recognized financial information
service, determined as of approximately 11:00 a.m. (London time) three (3)
Business Days prior to the first day of such Interest Period, and having a term
equivalent to such Interest Period, provided that, in the event the rate
referenced in subsection (a) does not appear on such page or such service is not
available to the Administrative Agent, the applicable Eurodollar Base Rate for
the relevant Interest Period will instead be the rate determined by the
Administrative Agent to be the rate at which Chase or one of its Affiliate banks
offers to place deposits in U.S. dollars with first-class banks in the London
interbank market at approximately 11:00 a.m. (London time) three (3) Business
Days prior to the first day of such Interest Period, in the approximate amount
of BOk's relevant Eurodollar Loan and having a maturity equal to such Interest
Period.
"Eurodollar Loan" means a Loan which, except as otherwise provided in
Section 2.12, bears interest at the applicable Eurodollar Rate.
"Eurodollar Rate" means, with respect to any Interest Period, an interest
rate per annum equal to the sum of (i) the quotient of (a) the Eurodollar Base
Rate applicable to such Interest Period, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
(ii) the Applicable Margin, based on a 360 day year.
"Excluded Accounts" has the meaning assigned in Section 6.11(a).
"Excluded Taxes" means, in the case of each Lender and the Administrative
Agent, taxes imposed on its overall net income, and franchise taxes imposed on
it, by (i) the jurisdiction under the laws of which such Lender or the
Administrative Agent is incorporated or organized or (ii) the jurisdiction in
which the Administrative Agent's or such Lender's principal executive office is
located.
"Existing Indebtedness " has the meaning assigned to such term in the
recitals hereto.
"Existing Subsidiaries" means 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, SerDrilco, Inc., an Oklahoma corporation, and Unit Energy
Canada, Inc., an Alberta, Canada corporation
"Facility Termination Date" mean the date which is four (4) years from the
date of this Agreement, or any earlier date on which the Aggregate Commitment is
reduced to zero or otherwise terminated pursuant to the terms of this Agreement.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such
7
day (or, if such day is not a Business Day, for the immediately preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the quotations
at approximately 10:00 a.m. (Tulsa time) on such day on such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by the Administrative Agent in its sole discretion.
"Financial Contract" of a Person means (i) any exchange-traded or
over-the-counter futures, forward, swap, hedge or option contract or other
financial instrument with similar characteristics, and (ii) any Rate Management
Transaction.
"Floating Rate" means, for any day, a rate per annum equal to the Alternate
Base Rate for such day, in each case changing when and as the Alternate Base
Rate changes.
"Floating Rate Advance" means an Advance which, except as otherwise
provided in Section 2.12, bears interest at the Floating Rate.
"Floating Rate Loan" means a Loan which, except as otherwise provided in
Section 2.12, bears interest at the Floating Rate.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States, applied in a manner consistent with that used
in preparing the financial statements referred to in Section 5.4.
"Highest Lawful Rate" means, on any day with respect to each Lender to whom
Obligations are owed, the maximum nonusurious rate of interest that such Lender
is permitted under applicable law to contract for, take, charge or receive with
respect to such Obligations for such day. All determinations herein of the
Highest Lawful Rate, or of any interest rate determined by reference to the
Highest Lawful Rate, will be made separately for each Lender as appropriate to
assure that the Loan Documents are not construed to obligate any Person to pay
interest to any Lender at a rate in excess of the Highest Lawful Rate applicable
to such Lender.
"Indebtedness" of a Person means such Person's (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of Property or
services (other than accounts payable arising in the ordinary course of such
Person's business payable on terms customary in the trade), (iii) obligations,
whether or not assumed, secured by Liens or payable out of the proceeds or
production from Property now or hereafter owned or acquired by such Person
(other than Permitted Encumbrances), (iv) obligations which are evidenced by
notes, acceptances, or other instruments, (v) obligations of such Person to
purchase securities or other Property arising out of or in connection with the
sale of the same or substantially similar securities or Property, (vi)
Capitalized Lease Obligations, (vii) Contingent Obligations, (viii) Rate
Management Obligations, (ix) obligations to reimburse issuers of Letters of
Credit, (x) obligations with respect to payments received in consideration of
oil, gas, or other minerals yet to be acquired or produced at the time of
payment (including obligations under "take-or-pay" contracts to deliver gas in
return for payments already received and the undischarged balance of any
production payment created by such Person or for the creation of which such
Person directly or indirectly received payment), (xi) obligations with respect
to other obligations to deliver goods or services
8
in consideration of advance payments therefor; and (xii) any other
obligation for borrowed money or other financial accommodation which in
accordance with GAAP would be shown as a liability on the consolidated balance
sheet of such Person.
"Initial Engineering Report" means the engineering reserve report
concerning oil and gas properties of PetroCorp prepared by PetroCorp as of July
1, 2003 and the engineering reserve report concerning oil and gas properties of
Unit and the Existing Subsidiaries prepared by Unit or its Existing Subsidiaries
and audited by Xxxxx Xxxxx Company as of December 31, 2002.
"Interest Period" means, with respect to a Eurodollar Advance, a period of
one, two, three or six months commencing on a Business Day selected by Unit
pursuant to this Agreement. Such Interest Period will end on the day which
corresponds numerically to such date one, two, three or six months thereafter,
provided, however, that if there is no such numerically corresponding day in the
next, second, third or sixth succeeding month, such Interest Period will end on
the last Business Day of the next, second, third or sixth succeeding month. If
an Interest Period would otherwise end on a day which is not a Business Day,
such Interest Period will end on the next succeeding Business Day, provided,
however, that if the next succeeding Business Day falls in a new calendar month,
such Interest Period will end on the immediately preceding Business Day.
"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts receivable arising
in the ordinary course of business on terms customary in the trade) or
contribution of capital by such Person; stocks, bonds, mutual funds, partnership
interests, notes, debentures or other securities owned by such Person; any
deposit accounts and certificate of deposit owned by such Person; and structured
notes, derivative financial instruments and other similar instruments or
contracts owned by such Person.
"LC" is defined in Section 2.19.1.
"LC Application" is defined in Section 2.19.3.
"LC Fee" is defined in Section 2.19.4.
"LC Issuer" means BOk (or any subsidiary or affiliate of BOk designated by
BOk) or any other Lender in its capacity as issuer of LCs hereunder.
"LC Obligations" means, at any time, the sum, without duplication, of (i)
the aggregate undrawn stated amount under all LCs outstanding at such time plus
(ii) the aggregate unpaid amount at such time of all Reimbursement Obligations.
"LC Payment Date" is defined in Section 2.19.5.
"Lenders" means the lending institutions now or hereafter listed on the
signature pages of this Agreement and their respective successors and assigns.
"Lenders Schedule" means Schedule 2.
9
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loan" means, with respect to a Lender, that Lender's Advances made
pursuant to Article II (or any conversion or continuation thereof).
"Loan Documents" means this Agreement, the LC Applications and any Notes
issued pursuant to Section 2.14, the Collateral Documents and each Subsidiary
Guaranty.
"Long Term Debt" means all outstanding long term liabilities of the
Borrowers in accordance with GAAP excluding deferred taxes and the plugging and
abandonment accrued liabilities described in Section 7.9(v).
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrowers and their Subsidiaries taken as a whole (taking
into account the present value of any indemnification in favor of the Borrowers
or any applicable insurance coverage), (ii) the ability of any of the Borrowers
to perform their obligations under the Loan Documents to which it is a party, or
(iii) the validity or enforceability of any of the Loan Documents or the rights
or remedies of the Administrative Agent, the LC Issuer or the Lenders
thereunder.
"Material Indebtedness" means Indebtedness in an outstanding principal
amount of $1,000,000 or more in the aggregate (or the equivalent thereof in any
currency other than U.S. dollars).
"Material Indebtedness Agreement" means any agreement under which any
Material Indebtedness was created or is governed or which provides for the
incurrence of Indebtedness in an amount which would constitute Material
Indebtedness (whether or not an amount of Indebtedness constituting Material
Indebtedness is outstanding thereunder).
"Material Subsidiary" means at any time a Subsidiary of any of the
Borrowers having (i) at least ten percent (10%) of the consolidated total assets
of the Borrowers and their Subsidiaries (determined as of the last day of the
most recent fiscal quarter of the Borrowers) or (ii) at least ten percent (10%)
of the consolidated revenues of the Borrowers and their Subsidiaries for the
fiscal year of the Borrowers then most recently ended.
10
"Maximum Credit Amount" means such amount that is agreed to in writing by
the Borrowers and the Lenders as the maximum amount of Credit Extensions
available to the Borrowers under Article II of this Agreement from Lenders.
"Modify" and "Modification" are defined in Section 2.19.1.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrowers or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Note" is defined in Section 2.14.
"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Loans, all Reimbursement Obligations, all accrued and unpaid fees and all
expenses, reimbursements, indemnities and other obligations of the Borrowers to
the Lenders or to any Lender, the Administrative Agent, the LC Issuer or any
indemnified party arising under the Loan Documents.
"Other Taxes" is defined in Section 3.3(ii).
"Outstanding Credit Exposure" means, as to any Lender at any time, the sum
of (i) the aggregate principal amount of its Loans outstanding at such time,
plus (ii) an amount equal to its Pro Rata Share of the LC Obligations at such
time.
"Participants" is defined in Section 14.2.1.
"Payment Date" means the last day of each fiscal quarter of Unit (insofar
as Eurodollar Loans are concerned) and the last day of each month (insofar as
Floating Rate Loans are concerned).
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Encumbrances" means any Lien permitted by Section 7.6.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"PetroCorp" means PetroCorp Incorporated, a Texas corporation.
"PetroCorp Agreement" means the Agreement and Plan of Merger dated as of
August 14, 2003, among PetroCorp, Unit and Unit Acquisition Company, a Texas
corporation, as amended, modified or restated, together with all schedules,
exhibits and addenda thereto.
11
"Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrowers or any member of the Controlled Group may have
any liability.
"Pricing Schedule" means Schedule 1.
"Prime Rate" means a rate per annum equal to the prime rate of interest
announced from time to time by Chase (which is not necessarily the lowest rate
charged to any customer), changing when and as said prime rate changes.
"Pro Rata Share" means, with respect to a Lender, a portion equal to a
fraction the numerator of which is such Lender's Commitment and the denominator
of which is the Aggregate Commitment.
"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
"Purchasers" is defined in Section 14.3.1.
"Rate Management Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions,
supplements, replacements and modifications thereof and substitutions therefor),
under (i) any and all Rate Management Transactions, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any Rate
Management Transactions.
"Rate Management Transaction" means any transaction (including an agreement
with respect thereto) now existing or hereafter entered by the Borrowers which
is a rate swap, basis swap, hedge, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index option,
bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction or price/commodity protection device (including
any option with respect to any of these transactions) or any combination
thereof, whether linked to one or more interest rates, foreign currencies,
commodity prices, equity prices or other financial measures. Notwithstanding the
foregoing, a "Rate Management Transaction" will not include any contract for the
purchase and sale of natural gas or oil entered into in the ordinary course of
business and on customary trade terms.
"Redetermination" means a Scheduled Redetermination or a Special
Redetermination.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
12
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
"Reimbursement Obligations" means, at any time, the aggregate of all
obligations of the Borrowers then outstanding under Section 2.19 to reimburse
the LC Issuer for amounts paid by the LC Issuer in respect of any one or more
drawings under LCs.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA, with respect to which the notice requirements to the PBGC have not been
waived, provided, however, that a failure to meet the minimum funding standard
of Section 412 of the Code and of Section 302 of ERISA will be a Reportable
Event regardless of the issuance of any such waiver of the notice requirement in
accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at least 75% of
the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 75% of the Aggregate Outstanding
Credit Exposure.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"Rigs" means the drilling rigs and related equipment, machinery,
accessories and other personal property rights or interests encumbered by the
Security Documents.
"S&P" means Standard and Poor's Ratings Services, a division of The McGraw
Hill Companies, Inc.
"Sale and Leaseback Transaction" means any sale or other transfer of
Property by any Person with the intent to lease such Property as lessee.
"Scheduled Redetermination" means any redetermination of the Borrowing Base
under Sections 2.6.4 or 2.6.5 in accordance with Section 2.6.2.
"SEC" means the Securities and Exchange Commission.
"Security Schedule" means Schedule 4.
"Secured Obligations" means, collectively, (i) the Obligations and (ii) all
Rate Management Obligations owing to one or more Lenders or any affiliates of
the Lenders.
"Single Employer Plan" means a Plan maintained by the Borrowers or any
member of the Controlled Group for employees of the Borrowers or any member of
the Controlled Group.
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"Special Redetermination" means any redetermination of the Borrowing Base
pursuant to Sections 2.6.4 or 2.6.5.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which will at the time be
owned or controlled, directly or indirectly, by such Person or by one or more of
their Subsidiaries or by such Person and one or more of their Subsidiaries, or
(ii) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which will at the time be so owned or controlled,
provided that associations, joint ventures or other relationships (a) which are
established pursuant to a standard form operating agreement or similar agreement
or which are partnerships for purposes of federal income taxation only, (b)
which are not corporations or partnerships (or subject to the Uniform
Partnership Act) under applicable state applicable law, and (c) whose businesses
are limited to the exploration, development and operation of oil, gas or mineral
properties and interests owned directly by the parties in such associations,
joint ventures or relationships, will not be deemed to be "Subsidiaries" of such
Person. Unless otherwise expressly provided, all references herein to a
"Subsidiary" will mean a Subsidiary of any of the Borrowers (including
Subsidiary Guarantors).
"Subsidiary Guarantor" means PetroCorp (upon consummation of the PetroCorp
Agreement) and each other present or future Material Subsidiary and their
successors and assigns.
"Subsidiary Guaranty" means the Guaranty Agreement, substantially in the
form of Exhibit E to be executed by each Material Subsidiary in favor of the
Administrative Agent for the ratable benefit of the Lenders, with respect to the
Obligations of the Borrowers under this Credit Agreement.
"Subsidiary Guaranty Joinder Agreement" means the Joinder Agreement,
substantially in the form of Schedule 1 to the Subsidiary Guaranty, to be
executed and delivered by each new Material Subsidiary in accordance with the
provisions of Section 9.4 of this Credit Agreement.
"Syndication Agent" means BOk and its successors and assigns.
"Taxes" means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and any and all liabilities with respect to
the foregoing, but excluding Excluded Taxes and Other Taxes.
"Transferee" is defined in Section 14.4.
"Unfunded Liabilities" means the amount (if any) by which the present value
of all vested and unvested accrued benefits under all Single Employer Plans
exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans using PBGC actuarial assumptions for single employer plan terminations.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities of which will at the time be owned or controlled,
directly or indirectly, by such
14
Person or one or more Wholly-Owned Subsidiaries of such Person, or by such
Person and one or more Wholly-Owned Subsidiaries of such Person, or (ii) any
partnership, limited liability company, association, joint venture or similar
business organization 100% of the ownership interests having ordinary voting
power of which will at the time be so owned or controlled.
The foregoing definitions will be equally applicable to both the singular
and plural forms of the defined terms.
1.2. Exhibits and Schedules; Additional Definitions. All Exhibits and
Schedules attached to this Agreement are a part of this Agreement for all
purposes. Reference is hereby made to the Security Schedule for the meaning of
certain terms defined therein and used but not defined herein, which definitions
are incorporated herein by reference.
1.3. Amendment of Defined Instruments. Unless the context otherwise
requires or unless otherwise provided in this Agreement the terms defined in
this Agreement which refer to a particular agreement, instrument or document
also refer to and include all renewals, extensions, modifications, amendments
and restatements of such agreement, instrument or document, provided that
nothing in this section will be construed to authorize any such renewal,
extension, modification, amendment or restatement.
1.4. Reference and Titles. All references in this Agreement to Exhibits,
Schedules, articles, sections, subsections and other subdivisions refer to the
Exhibits, Schedules, articles, sections, subsections and other subdivisions of
this Agreement unless expressly provided otherwise. Exhibits and Schedules to
any Loan Document will be deemed incorporated by reference in such Loan
Document. References to any document, instrument, or agreement (a) will include
all exhibits, schedules, and other attachments thereto, and (b) will include all
documents, instruments, or agreements issued or executed in replacement or
restatement thereof. Titles appearing at the beginning of any subdivisions are
for convenience only and do not constitute any part of such subdivisions and
will be disregarded in construing the language contained in such subdivisions.
The words "this Agreement," "this instrument," "herein," "hereof," "hereby,"
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The phrases "this
section" and "this subsection" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "or" is not exclusive,
and the word "including" (in its various forms) means "including without
limitation." Pronouns in masculine, feminine and neuter genders will be
construed to include any other gender, and words in singular form will be
construed to include the plural and vice versa, unless the context otherwise
requires.
1.5 Accounting Terms and Determinations. Except only as otherwise expressly
provided in this Agreement, all accounting terms will be interpreted, and all
financial statements and certificates and reports as to financial matters
required to be delivered to the Administrative Agent or the Lenders under this
Agreement shall be prepared in accordance with GAAP, as applied on a consistent
basis. References to "days" will mean calendar days, unless the term "Business
Day" is used. Unless otherwise specified, references herein to any particular
Person also refer to its successors and permitted assigns.
15
1.6. Calculations and Determinations. All calculations under the Loan
Documents of interest and of fees will be made on the basis of actual days
elapsed (including the first day but excluding the last) and a year of 360 days
except only for interest accruals on Floating Rate Loans which will be based on
the number of days lapsed in a 365-366 day year. Each determination by a Lender
of amounts to be paid under Article III or any other matters which are to be
determined hereunder by a Lender (such as any Eurodollar Rate, Business Day,
Interest Period, or Reserve Requirement) will, in the absence of manifest error,
be conclusive and binding.
1.7. Joint Preparation; Construction of Indemnities and Releases. This
Agreement and the other Loan Documents have been reviewed and negotiated by
sophisticated parties with access to legal counsel and no rule of construction
will apply hereto or thereto which would require or allow any Loan Document to
be construed against any party because of its role in drafting such Loan
Document. All indemnification and release provisions of this Agreement will be
construed broadly (and not narrowly) in favor of the Persons receiving
indemnification or being released.
ARTICLE II
THE CREDITS
-----------
2.1. Commitments. From and including the date of this Agreement and up to
the Facility Termination Date, each Lender severally agrees, on the terms and
conditions of this Agreement, to (i) make Loans to the Borrowers (on a joint and
several liability basis) and (ii) participate in LCs issued on the request of
the Borrowers, provided that, after giving effect to the making of each such
Loan and the issuance of each such LC, such Lender's Outstanding Credit Exposure
does not exceed its Commitment and the Aggregate Outstanding Credit Exposure
does not exceed the Aggregate Commitment. Subject to the terms of this
Agreement, Unit, as the designated borrowing agent on behalf of all of the
Borrowers, may borrow, repay and reborrow at any time before the Facility
Termination Date. Each Lender's Commitment will expire on the Facility
Termination Date. The LC Issuer will issue LCs hereunder on the terms and
conditions set forth in Section 2.19.
2.2. Required Payments; Termination. All unpaid Obligations will be paid in
full by the Borrowers on the Facility Termination Date.
2.3. Ratable Loans. Each Advance will be made by the Lenders ratably
according to their Pro Rata Shares.
2.4. Types of Advances. The Advances may be Floating Rate Advances or
Eurodollar Advances, or a combination thereof, selected by Unit on behalf of the
Borrowers in accordance with Sections 2.9 and 2.10.
2.5. Facility Fee; Initial Aggregate Commitment; Maximum Credit Amount;
Commitment Fee Rate.
16
2.5.1. A facility fee of $451,500 will be paid at Closing to the
Administrative Agent for the Pro Rata Share benefit of each Lender.
2.5.2. The initial Aggregate Commitment is $120,000,000 and the
initial Maximum Credit Amount is $150,000,000. Any increase in either the
Aggregate Commitment or the Maximum Credit Amount requires the written
consent of all Lenders, except only for increases in the Aggregate
Commitment to an amount not more than the Maximum Credit Amount in
accordance with Section 14.6.
2.5.3. The Borrowers agree to pay to the Administrative Agent for the
Pro Rata Share of each Lender a per annum Commitment Fee Rate (as set forth
on the Pricing Schedule) on the average daily amount of the Available
Aggregate Commitment from the date of this Agreement through the Facility
Termination Date. The Commitment Fee Rate will be payable on each quarterly
Payment Date hereafter and on the Facility Termination Date. All accrued
commitment fees will be payable on the effective date of any termination of
the obligations of the Lenders to make Credit Extensions.
2.6. Borrowing Base.
2.6.1. Until the first Determination Date, the parties hereto
stipulate that the Borrowing Base preliminarily set by the Lenders is
$188,000,000 (including a stipulated $20,000,000 for the Rigs),
subject to the term, provisions and limitations hereof (the "Borrowing
Base"). Each Borrowing Base determination will include $20,000,000 as
the loan value for the Rigs.
2.6.2. By April 1 and October 1 of each year beginning April 1,
2004 Unit will furnish to each Lender all information, reports and
data that Administrative Agent has then requested concerning the
businesses and properties (including the information specified in
Sections 6.1(vii) and (viii)). The Engineering Report submitted to
each Lender by each April 1 will be audited by an independent third
party engineering firm acceptable to the Agent and dated no earlier
than December 31 of the immediately preceding calendar year. The
Engineering Report submitted to the Lenders by October 1 will be
internally prepared by Unit and dated no earlier than June 30 of such
year and:
(a) By each May 10 and November 10, commencing May 10, 2004,
the Administrative Agent will submit to the Lenders its proposed
Borrowing Base amount
(b) Any Lender who objects to the Administrative Agent's
proposed redetermination of the amount of the Borrowing Base must
notify the Administrative Agent in writing within fifteen (15)
days after it receives the Administrative Agent's notice of the
proposed redetermined Borrowing Base, or it will be deemed to
have conclusively approved such proposed redetermined Borrowing
Base. The objecting Lender will also provide the Administrative
Agent with a copy of its calculations and
17
determination of the Borrowing Base. If the Required Lenders
do not agree on the redetermined Borrowing Base, the
Administrative Agent will poll all Lenders and establish the
Borrowing Base at the largest (highest) amount approved by the
Required Lenders. Notwithstanding the foregoing, in no event will
the redetermined Borrowing Base be increased above the previously
determined Borrowing Base without the written consent of all
Lenders.
(c) The Administrative Agent will then promptly notify Unit
of the new Borrowing Base amount as determined by the Lenders.
Unless within five (5) Business Days following the Administrative
Agent's notice, Unit makes a designation permitted by Section
2.6.3, the new Borrowing Base will be effective as of the date
such notice is sent (a "Determination Date"). If Unit so
designates a lesser amount for the Borrowing Base, such
designated Borrowing Base shall become effective when the
Administrative Agent receives Unit's written designation, and in
either event, the Borrowing Base will remain in effect until but
not including the next date the Borrowing Base is redetermined
other than designations permitted by Section 2.6.3.
(d) If Borrowers do not furnish all such information,
reports and data by the date specified in this subsection,
Administrative Agent may designate the Borrowing Base at any
amount which Required Lenders determine and may redesignate the
Borrowing Base from time to time until each Lender receives all
such information, reports and data, at which time the Required
Lenders may designate a new Borrowing Base. Required Lenders will
determine the Borrowing Base based on (i) the loan value which
they in their discretion assign to the various Borrowers' oil and
gas properties being evaluated, (ii) the stipulated $20,000,000
Loan Value assigned to the Rigs, and (iii) any other credit
factors (including without limitation the assets, liabilities,
cash flow, hedged and unhedged exposure to price, foreign
exchange rate, and interest rate changes, business, properties,
prospects, management and ownership of Borrowers and their
Subsidiaries) as the Lenders deem significant. The Lenders and
the Administrative Agent have no obligation to agree on or
designate the Borrowing Base at any particular amount, whether in
relation to the Aggregate Commitment or otherwise.
2.6.3. Following the Administrative Agent's notice to Unit of the
Borrowing Base amount determined under Section 2.6.2, Unit, on behalf
of the Borrowers, may from time to time designate in writing to the
Administrative Agent a reduced Aggregate Commitment amount subject to
a minimum reduction amount of $10,000,000 (and in additional multiples
of $10,000,000). Subject to any Special Redetermination permitted by
this Section 2.6 and the provisions of this Section 2.6.3, such lesser
amount designated by Unit will be the Aggregate Commitment until the
next Scheduled Redetermination. The Administrative
18
Agent and the Lenders stipulate that Unit has initially
designated $120,000,000 as the Aggregate Commitment effective from the
date of this Agreement.
2.6.4 In addition to Scheduled Redeterminations, Required Lenders
will be permitted to make a Special Redetermination of the Borrowing
Base once between each Determination Date by notifying the
Administrative Agent and Borrowers. Such Special Redetermination by
the Lenders shall be in addition to any reduction of the Borrowing
Base by the Required Lenders under Section 7.4(iv).
2.6.5. In addition to Scheduled Redeterminations, Borrowers will
be permitted to request a Special Redetermination of the Borrowing
Base once between each Determination Date. Such request, including the
amount requested, will be submitted in writing to the to
Administrative Agent and, at the time of such request, Unit will
deliver to Administrative Agent and each Lender, any information they
may reasonably request in connection with the request for a Special
Redetermination.
2.6.6. If at any time, the Aggregate Outstanding Credit Exposure
exceeds the lesser of the Borrowing Base or the Aggregate Commitment
(a "Deficiency") because of a reduction in the Borrowing Base due to
or resulting from a redetermination in accordance with this Section
2.6, Administrative Agent may notify Unit in writing of the Deficiency
and within ten (10) days from the date of such deficiency notice, Unit
will elect one of the following options:
(a) Make a prepayment on the Notes in an amount sufficient
to reduce the aggregate unpaid principal balance of the Notes by
an amount equal to or more than the amount of such Deficiency; or
(b) Dedicate to this Agreement other oil and gas properties
or assets not then included in the Borrowing Base determinations
in form and substance satisfactory to the Required Lenders and
the Administrative Agent as additional security for the
Outstanding Credit Exposure and the Commitments (and all other
Obligations), provided that such oil and gas properties are
acceptable to the Required Lenders and are of a value, as
determined by the Administrative Agent and the Required Lenders,
that the Aggregate Outstanding Credit Exposure does not exceed
the Borrowing Base (as adjusted to include the values of the
additional oil and gas properties); or
(c) Commence monthly principal payments each equal to the
amount of the Deficiency divided by the number of whole calendar
months between date of the Deficiency notice and the next
semi-annual Scheduled Redetermination.
19
If Unit elects to (i) make a prepayment on the Notes under
clause (a) or (ii) commence monthly principal payments under
clause (c), such prepayment will be due within twenty (20) days
after the date of Unit's timely election. The prepayment or
monthly principal payments will be applied in reduction of the
principal balance of the Notes. If Unit elects to commit
additional oil and gas properties under clause (b) above, the
Borrowers will provide the Administrative Agent with descriptions
of additional oil and gas properties (together with any current
valuations and engineering reports applicable thereto which may
be requested by the Administrative Agent) and will execute,
acknowledge and deliver to the Administrative Agent any
supplemental security agreements or pledges within thirty (30)
days after the documents are tendered to the Borrowers by the
Administrative Agent for execution.
2.7. Minimum Amount of Each Advance. Each Eurodollar Advance will be in the
minimum amount of $2,000,000 (and in additional multiples of $1,000,000), and
each Floating Rate Advance will be in the minimum amount of $100,000 (and in
additional multiples of $100,000), provided, that any Floating Rate Advance may
be in the amount of the Available Aggregate Commitment.
2.8. Principal Payments.
(a) Optional Principal Payments. The Borrowers may from time to time
pay, without penalty or premium, all outstanding Floating Rate Advances,
or, in a minimum aggregate amount of $100,000 or any multiple of $100,000
in excess thereof, any portion of the outstanding Floating Rate Advances
upon notice to the Administrative Agent . The Borrowers may from time to
time pay, subject to the payment of any funding indemnification amounts
required by Section 3.5 but without penalty or premium, all outstanding
Eurodollar Advances, or, in a minimum aggregate amount of $1,000,000 or any
integral multiple of $1,000,000 in excess thereof, any portion of the
outstanding Eurodollar Advances upon three (3) Business Days' prior notice
to the Administrative Agent.
(b) Mandatory Principal Payments. If at any time a Deficiency occurs
as a result of the sale or disposition of any Borrowing Base Properties (as
opposed to a Deficiency subject to the provisions of Section 2.6.6 hereof),
Borrowers will within 30 days after Administrative Agent gives notice of
such fact to Borrowers to prepay the principal of the Loans in an aggregate
amount at least equal to such Deficiency (or, if the Loans have been paid
in full, deposit with the Administrative Agent the amount required to
eliminate the Deficiency) together with interest during the period of such
Deficiency at the Prime Rate per annum or Eurodollar Rate plus the
Applicable Margin (calculated in the Pricing Schedule) per annum. Each
payment of principal under this Section 2.8(b) will be accompanied by all
interest then accrued and unpaid on the principal so prepaid. Any principal
or interest prepaid pursuant to this section will be in addition to, and
not in lieu of, all payments otherwise required to be paid under the Loan
Documents at the time of such prepayment.
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2.9. Method of Selecting Loan Types and Interest Periods for New Advances.
Unit will select the type of Advance and, in the case of each Eurodollar
Advance, the Interest Period applicable thereto from time to time. Unit will
give the Administrative Agent irrevocable notice (a "Borrowing Notice") not
later than 12:00 noon (Tulsa time) on the same Business Day as the Borrowing
Date of each Floating Rate Advance and three Business Days before the Borrowing
Date for each Eurodollar Advance, specifying:
(i) the Borrowing Date, which will be a Business Day, of such
Advance,
(ii) the aggregate amount of such Advance,
(iii) the type (Floating Rate or Eurodollar) of Advance selected,
and
(iv) in the case of each Eurodollar Advance, the Interest Period
applicable thereto.
Not later than 1 p. m. (Tulsa, Oklahoma time) on each Borrowing Date, each
Lender will make available its Loan or Loans in funds immediately available in
Tulsa to the Administrative Agent at its address specified pursuant to Article
XV. The Administrative Agent will make the funds so received from the Lenders
available to the Borrowers at the Administrative Agent's aforesaid address.
2.10. Conversion and Continuation of Outstanding Advances. Floating Rate
Advances will continue as Floating Rate Advances unless and until such Floating
Rate Advances are converted into Eurodollar Advances pursuant to this Section
2.10 or are repaid in accordance with Section 2.8. Each Eurodollar Advance will
continue as a Eurodollar Advance until the end of the then applicable Interest
Period therefor, at which time such Eurodollar Advance will be automatically
converted into a Floating Rate Advance unless (x) such Eurodollar Advance is or
was repaid in accordance with Section 2.8 or (y) Unit will have given the
Administrative Agent a Conversion/Continuation Notice (as defined below)
requesting that, at the end of such Interest Period, such Eurodollar Advance
continue as a Eurodollar Advance for the same or another Interest Period.
Subject to the terms of Section 2.7, Unit may elect from time to time to convert
all or any part of a Floating Rate Advance into a Eurodollar Advance. Unit will
give the Administrative Agent irrevocable notice (a "Conversion/Continuation
Notice") of each conversion of a Floating Rate Advance into a Eurodollar Advance
or continuation of a Eurodollar Advance not later than 12:00 noon (Tulsa time)
at least three Business Days prior to the date of the requested conversion or
continuation, specifying:
(i) the requested date, which will be a Business Day, of such
conversion or continuation,
(ii) the aggregate amount and type of the Advance (floating Rate
Advance or Eurodollar Advance) which is to be converted or continued,
and
21
(iii) the amount of such Advance which is to be converted into or
continued as a Eurodollar Advance and the duration of the Interest
Period applicable thereto.
2.11. Changes in Interest Rate. Each Floating Rate Advance will bear
interest on the outstanding principal amount thereof, for each day from and
including the date such Advance is made or is automatically converted from a
Eurodollar Advance into a Floating Rate Advance pursuant to Section 2.10, to but
excluding the date it is paid or is converted into a Eurodollar Advance pursuant
to Section 2.10 hereof, at a rate per annum equal to the Floating Rate for such
day. Changes in the rate of interest on that portion of any Advance maintained
as a Floating Rate Advance will take effect simultaneously with each change in
the Alternate Base Rate. Each Eurodollar Advance will bear interest on the
outstanding principal amount thereof from and including the first day of the
Interest Period applicable thereto to (but not including) the last day of such
Interest Period at the interest rate determined by the Administrative Agent as
applicable to such Eurodollar Advance based upon Unit's selections under
Sections 2.9 and 2.10 and otherwise in accordance with the terms hereof. No
Interest Period may end after the Facility Termination Date.
2.12. Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.9, 2.10 or 2.11, during the continuance of a
Default the Required Lenders may, at their option, by written notice to Unit,
declare that no Advance may be made as, converted into or continued as a
Eurodollar Advance. During the continuance of a Default the Required Lenders
may, at their option, by written notice to Unit, declare that (i) each
Eurodollar Advance will bear interest for the remainder of the applicable
Interest Period at the rate otherwise applicable to such Interest Period plus an
additional 2% per annum, (ii) each Floating Rate Advance will bear interest at a
rate per annum equal to the Floating Rate in effect from time to time plus an
additional 2% per annum and (iii) the LC Fee will be increased by an additional
2% per annum, provided that, during the continuance of a Default under Section
10.6 or 10.7, the interest rates set forth in clauses (i) and (ii) above and the
increase in the LC Fee set forth in clause (iii) above will be applicable to all
Credit Extensions without any election, notice or other action on the part of
the Administrative Agent or any Lender.
2.13. Method of Payment.
2.13.1. All payments of the Obligations hereunder will be made,
without setoff, deduction, or counterclaim, in immediately available funds
to the Administrative Agent at the Administrative Agent's address specified
pursuant to Section 15.1, or at any other banking address of the
Administrative Agent specified in writing by the Administrative Agent to
Unit, by 12:00 noon (local Tulsa time) on the date when due and will
(except in the case of Reimbursement Obligations for which the LC Issuer
has not been fully indemnified by the Lenders, or as otherwise specifically
required hereunder) be applied ratably by the Administrative Agent among
the Lenders. Each payment delivered to the Administrative Agent for the
account of any Lender will be delivered promptly by the Administrative
Agent to such Lender in the same type of funds that the Administrative
Agent received at its address specified pursuant to Section 15.1 or at any
banking address specified in a notice received by the Administrative Agent
from such Lender. The
22
Administrative Agent is hereby authorized to charge the account of the
Borrowers (other than any Excluded Account) maintained with BOk for each
payment of principal, interest, Reimbursement Obligations and fees as it
becomes due hereunder. Each reference to the Administrative Agent in this
Section 2.13 will also be deemed to refer, and will apply equally, to the
LC Issuer, in the case of payments required to be made by the Borrowers to
the LC Issuer pursuant to Section 2.19.
2.13.2. When Administrative Agent collects or receives proceeds of
Collateral, Administrative Agent will distribute all money so collected or
received, and Administrative Agent and each Lender will apply all such
money so distributed, as follows:
(a) first, for the payment of all Secured Obligations which are then
due and if such money is insufficient to pay all such Secured Obligations,
first to any reimbursements due Administrative Agent under Section 12.6 and
then to the partial payment of all other Secured Obligations then due in
proportion to the amounts thereof, or as Administrative Agent and Lender
will otherwise agree;
(b) then for the prepayment of the Secured Obligations;
(c) last, for the payment or prepayment of any other indebtedness or
obligations secured by the Collateral.
All payments applied to principal or interest on any Note will be applied
first to any interest then due and payable, then to principal then due and
payable, and last to any prepayment of principal and interest in compliance with
Section 2.8. All distributions of amounts described in any of subsections (b) or
(c) above will be made by Administrative Agent pro rata to each Lender then owed
Secured Obligations described in such subsection in proportion to all amounts
owed to Administrative Agent and all Lenders which are described in such
subsection; provided that if any Lender then owes payments to LC Issuer for the
purchase of a participation under Section 2.19.5 or to Administrative Agent
under Section 13.7, any amounts otherwise distributable under this section to
such Lender will be deemed to belong to LC Issuer, or Administrative Agent,
respectively, to the extent of such unpaid payments, and Administrative Agent
will apply such amounts to make such unpaid payments rather than distribute such
amounts to such Lender.
2.14. Evidence of Indebtedness.
(i) Each Lender will maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the
Borrowers to such Lender resulting from each Loan made by such Lender
from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.
(ii) The Administrative Agent will also maintain accounts in
which it will record (a) the amount of each Loan made hereunder, the
type thereof and the Interest Period with respect thereto, (b) the
amount of any principal or interest due
23
and payable or to become due and payable from the Borrowers to
each Lender hereunder, (c) the original stated amount of each LC and
the amount of LC Obligations outstanding at any time, and (d) the
amount of any sum received by the Administrative Agent hereunder from
the Borrowers and each Lender's share thereof.
(iii) The entries maintained in the accounts maintained pursuant
to paragraphs (i) and (ii) above will be prima facie evidence of the
existence and amounts of the Obligations therein recorded; provided,
however, that the failure of the Administrative Agent or any Lender to
maintain such accounts or any error therein will not in any manner
affect the obligation of the Borrowers to repay the Obligations in
accordance with their terms.
(iv) Each Lender's Loans and interest therein will at all times
be evidenced by a promissory note in the form of Exhibit A hereto
(each a "Note") payable to the order of such Lender.
2.15. Telephonic Notices. The Borrowers hereby authorize the Lenders and
the Administrative Agent to extend, convert or continue Advances, effect
selections of types of Advances and to transfer funds based on telephonic
notices made by any person or persons the Administrative Agent or any Lender in
good faith believes to be acting on behalf of the Borrowers, it being understood
that the foregoing authorization is specifically intended to allow Borrowing
Notices and Conversion/Continuation Notices to be given telephonically. Unit
agrees to deliver promptly to the Administrative Agent a written confirmation,
if such confirmation is requested by the Administrative Agent or any Lender, of
each telephonic notice signed by an Authorized Officer. If the written
confirmation differs in any material respect from the action taken by the
Administrative Agent and the Lenders, the records of the Administrative Agent
and the Lenders will govern absent manifest error.
2.16. Interest Payment Dates. Interest accrued on each Floating Rate
Advance will be payable on each monthly Payment Date, commencing with the first
such date to occur after the date hereof, on any date on which the Floating Rate
Advance is prepaid, whether due to acceleration or otherwise, and at maturity.
Interest accrued on that portion of the outstanding principal amount of any
Floating Rate Advance converted into a Eurodollar Advance on a day other than a
Payment Date will be payable on the date of conversion. Interest accrued on each
one month (30 day), two months (60 days) or three months (90 days) Interest
Period for Eurodollar Advance will be payable on the last day of its applicable
Interest Period, on any date on which the Eurodollar Advance is prepaid, whether
by acceleration or otherwise, and at maturity. Interest accrued on each
Eurodollar Advance having an Interest Period longer than three months (i.e., six
months (180 days) Interest Period) will also be payable on the last day of each
three-month interval during such Interest Period. Interest will be payable for
the day an Advance is made but not for the day of any payment on the amount paid
if payment is received prior to noon (local time) at the place of payment. If
any payment of principal of or interest on an Advance will become due on a day
which is not a Business Day, such payment will be made on the next succeeding
Business Day and, in the case of a principal payment, such extension of time
will be included in computing interest in connection with such payment.
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2.17. Notification of Advances, Interest Rates, and LC Requests. Promptly
after receipt thereof, the Administrative Agent will notify each Lender of the
contents of each Borrowing Notice, Conversion/Continuation Notice, and repayment
notice received by it hereunder. Promptly after notice from the LC Issuer, the
Administrative Agent will notify each Lender of the contents of each request for
issuance of a LC thereunder.
2.18. Non-Receipt of Funds by the Administrative Agent. Unless Unit or a
Lender, as the case may be, notifies the Administrative Agent prior to the date
on which it is scheduled to make payment to the Administrative Agent of (i) in
the case of a Lender, the proceeds of a Loan or (ii) in the case of the
Borrowers, a payment of principal, interest or fees to the Administrative Agent
for the account of the Lenders, that it does not intend to make such payment,
the Administrative Agent may assume that such payment has been made. The
Administrative Agent may, but will not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or the Borrowers, as the case may be, have not in fact made such
payment to the Administrative Agent, the recipient of such payment will, on
demand by the Administrative Agent, repay to the Administrative Agent the amount
so made available together with interest thereon in respect of each day during
the period commencing on the date such amount was so made available by the
Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to (x) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day for the first three days and,
thereafter, the interest rate applicable to the relevant Loan or (y) in the case
of payment by the Borrowers, the interest rate applicable to the relevant Loan.
2.19. Letters of Credit.
2.19.1. Issuance. The LC Issuer hereby agrees, on the terms and
conditions set forth in this Agreement, to issue standby Letters of Credit
(each, a "LC") and to renew, extend, increase, decrease or otherwise modify
each LC ("Modify," and each such action a "Modification"), from time to
time from and including the date of this Agreement and prior to the
Facility Termination Date upon the request of the Borrowers; provided that
immediately after each such LC is issued or Modified, (i) the aggregate
amount of the outstanding LC Obligations will not exceed $15,000,000.00 at
any time and (ii) the Aggregate Outstanding Credit Exposure will not exceed
the Aggregate Commitment. No LC will have an expiry date later than one
year after the issuance thereof; provided that if such expiry date is after
the fifth Business Day prior to the Facility Termination Date, Borrowers
will deposit with the Administrative Agent on such date immediately
available funds in an amount equal to or greater than the undrawn amount of
such LC.
2.19.2. Participations. Upon the issuance or Modification by the LC
Issuer of a LC in accordance with this Section 2.19, the LC Issuer will be
deemed, without further action by any party hereto, to have unconditionally
and irrevocably sold to each Lender, and each Lender will be deemed,
without further action by any party hereto, to have unconditionally and
irrevocably purchased from the LC Issuer, a participation in such LC (and
each Modification thereof) and the related LC Obligations in proportion to
its Pro Rata Share.
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2.19.3. Notice. Subject to Section 2.19.1, Unit will give the LC
Issuer notice prior to 10:00 a.m. (Tulsa time) at least one Business Day
prior to the proposed date of issuance or Modification of each LC,
specifying the beneficiary, the proposed date of issuance (or Modification)
and the expiry date of such LC, and describing the proposed terms of such
LC and the nature of the transactions proposed to be supported thereby.
Upon receipt of such notice, the LC Issuer will promptly notify the
Administrative Agent, and the Administrative Agent will promptly notify
each Lender, of the contents thereof and of the amount of such Lender's
participation in such proposed LC. The issuance or Modification by the LC
Issuer of any LC will, in addition to the conditions precedent set forth in
Article IV (the satisfaction of which the LC Issuer will have no duty to
ascertain), be subject to the conditions precedent that such LC will be
satisfactory to the LC Issuer and that the Borrowers will have executed and
delivered such LC Application agreement and/or such other instruments and
agreements relating to such LC as the LC Issuer will have reasonably
requested (each, a "LC Application"). In the event of any conflict between
the terms of this Agreement and the terms of any LC Application, the terms
of this Agreement will control.
2.19.4. LC Fees. The Borrowers will pay to the Administrative Agent,
for the account of the Lenders ratably in accordance with their respective
Pro Rata Shares, at the time of issuance of each LC, a letter of credit fee
calculated at an amount equal to the greater of $340.00 or a per annum rate
equal to the Applicable Margin for Eurodollar Loans on the stated amount of
such LC (each such fee described in this sentence an "LC Fee"). The
Borrowers will also pay to the LC Issuer for its own account at the time of
issuance of each LC, a fronting fee in an amount equal to 0.125% per annum
of the initial stated amount, and documentary and processing charges in
connection with the issuance or Modification of and draws under LCs in
accordance with the LC Issuer's standard schedule for such charges as in
effect from time to time.
2.19.5. Administration; Reimbursement by Lenders. Upon receipt from
the beneficiary of any LC of any demand for payment under such LC, the LC
Issuer will notify the Administrative Agent and the Administrative Agent
will promptly notify the Borrowers and each other Lender as to the amount
to be paid by the LC Issuer as a result of such demand and the proposed
payment date (the "LC Payment Date"). The responsibility of the LC Issuer
to the Borrowers and each Lender will be only to determine that the
documents (including each demand for payment) delivered under each LC in
connection with such presentment will be in conformity in all material
respects with such LC. In the absence of any gross negligence or willful
misconduct by the LC Issuer, each Lender will be unconditionally and
irrevocably liable without regard to the occurrence of any Default or any
condition precedent whatsoever, to reimburse the LC Issuer on demand for
(i) such Lender's Pro Rata Share of the amount of each payment made by the
LC Issuer under each LC to the extent such amount is not reimbursed by the
Borrowers pursuant to Section 2.19.6 below, plus (ii) interest on the
foregoing amount to be reimbursed by such Lender, for each day from the
date of the LC Issuer's demand for such reimbursement (or, if such demand
is made after 11:00 a.m. (Tulsa time) on such date, from the next
succeeding Business Day) to the date on which such Lender pays the
26
amount to be reimbursed by it, at a rate of interest per annum equal
to the Federal Funds Effective Rate for the first three days and,
thereafter, at a rate of interest equal to the rate applicable to Floating
Rate Advances.
2.19.6. Reimbursement by Borrowers. The Borrowers will be irrevocably
and unconditionally obligated to reimburse the LC Issuer on or before the
applicable LC Payment Date for any amounts to be paid by the LC Issuer upon
any drawing under any LC, without presentment, demand, protest or other
formalities of any kind; provided that neither the Borrowers nor any Lender
will hereby be precluded from asserting any claim for direct (but not
consequential) damages suffered by the Borrowers or such Lender to the
extent, but only to the extent, caused by (i) the willful misconduct or
gross negligence of the LC Issuer in determining whether a request
presented under any LC issued by it complied with the terms of such LC or
(ii) the LC Issuer's failure to pay under any LC issued by it after the
presentation to it of a request strictly complying with the terms and
conditions of such LC. All such amounts paid by the LC Issuer and remaining
unpaid by the Borrowers will bear interest, payable on demand, for each day
until paid at a rate per annum equal to (x) the rate applicable to Floating
Rate Advances for such day if such day falls on or before the applicable LC
Payment Date and (y) the sum of 2% plus the rate applicable to Floating
Rate Advances for such day if such day falls after such LC Payment Date.
The LC Issuer will pay to each Lender ratably in accordance with its Pro
Rata Share all amounts received by it from the Borrowers for application in
payment, in whole or in part, of the Reimbursement Obligation in respect of
any LC issued by the LC Issuer, but only to the extent such Lender has made
payment to the LC Issuer in respect of such LC pursuant to Section 2.19.5.
Subject to the terms and conditions of this Agreement, the Borrowers may
request an Advance hereunder for the purpose of satisfying any
Reimbursement Obligation.
2.19.7. Obligations Absolute. The Borrowers' obligations under this
Section 2.19 will be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrowers may have or have had against the LC Issuer, any
Lender or any beneficiary of a LC. The Borrowers further agree with the LC
Issuer and the Lenders that the LC Issuer and the Lenders will not be
responsible for, and the Borrowers' Reimbursement Obligation in respect of
any LC will not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
fraudulent or forged, or any dispute between or among the Borrowers, any of
their Affiliates, the beneficiary of any LC or any financing institution or
other party to whom any LC may be transferred or any claims or defenses
whatsoever of the Borrowers or of any of their Affiliates against the
beneficiary of any LC or any such transferee. The LC Issuer will not be
liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any LC. The Borrowers agree that any action taken or
omitted by the LC Issuer or any Lender under or in connection with each LC
and the related drafts and documents, if done without gross negligence or
willful misconduct, will be binding upon the Borrowers and will not put the
LC Issuer or any Lender under any liability to the Borrowers. Nothing in
this Section 2.19.7 is intended to limit the right of the Borrowers
27
to make a claim against the LC Issuer for damages as contemplated by
the proviso to the first sentence of Section 2.19.6.
2.19.8. Actions of LC Issuer. The LC Issuer will be entitled to rely,
and will be fully protected in relying, upon any LC, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants and other experts
selected by the LC Issuer. The LC Issuer will be fully justified in failing
or refusing to take any action under this Agreement unless it will first
have received such advice or concurrence of the Required Lenders as it
reasonably deems appropriate or it will first be indemnified to its
reasonable satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to
take any such action. Notwithstanding any other provision of this Section
2.19, the LC Issuer will in all cases be fully protected in acting, or in
refraining from acting, under this Agreement in accordance with a request
of the Required Lenders, and such request and any action taken or failure
to act pursuant thereto will be binding upon the Lenders and any future
holders of a participation in any LC.
2.19.9. Indemnification. The Borrowers will indemnify and hold
harmless each Lender, the LC Issuer and the Administrative Agent, and their
respective directors, officers, Administrative Agents and employees from
and against any and all claims and damages, losses, liabilities, costs or
expenses which such Lender, the LC Issuer or the Administrative Agent may
incur (or which may be claimed against such Lender, the LC Issuer or the
Administrative Agent by any Person whatsoever) by reason of or in
connection with the issuance, execution and delivery or transfer of or
payment or failure to pay under any LC or any actual or proposed use of any
LC, including, without limitation, any claims, damages, losses,
liabilities, costs or expenses which the LC Issuer may incur by reason of
or in connection with (i) the failure of any other Lender to fulfill or
comply with its obligations to the LC Issuer hereunder (but nothing herein
contained will affect any rights the Borrowers may have against any
defaulting Lender) or (ii) by reason of or on account of the LC Issuer
issuing any LC which specifies that the term "Beneficiary" included therein
includes any successor by operation of law of the named Beneficiary, but
which LC does not require that any drawing by any such successor
Beneficiary be accompanied by a copy of a legal document, satisfactory to
the LC Issuer, evidencing the appointment of such successor Beneficiary;
provided that the Borrowers will not be required to indemnify any Lender,
the LC Issuer or the Administrative Agent for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent,
caused by (x) the willful misconduct or gross negligence of the LC Issuer
in determining whether a request presented under any LC complied with the
terms of such LC or (y) the LC Issuer's failure to pay under any LC after
the presentation to it of a request strictly complying with the terms and
conditions of such LC. Nothing in this Section 2.19.9 is intended to limit
the obligations of the Borrowers under any other provision of this
Agreement.
28
2.19.10. Lenders' Indemnification. Each Lender will, ratably in
accordance with its Pro Rata Share, indemnify the LC Issuer, its Affiliates
and their respective directors, officers, Administrative Agents and
employees (to the extent not reimbursed by the Borrowers) against any cost,
expense (including reasonable counsel fees and disbursements), claim,
demand, action, loss or liability (except such as result from such
indemnitees' gross negligence or willful misconduct or the LC Issuer's
failure to pay under any LC after the presentation to it of a request
strictly complying with the terms and conditions of the LC) that such
indemnitees may suffer or incur in connection with this Section 2.19 or any
action taken or omitted by such indemnitees hereunder.
2.20. Additional Agency Fees. Borrowers will pay certain additional fees to
the Administrative Agent and the Syndication Agent in the amounts and on the
terms described in the Agent Fee Letter.
2.21 Loan Purposes Advances may be requested by Unit on behalf of the
Borrowers for (i) payment in full of any Existing Indebtedness and
extinguishment of the commitments of the Existing Lenders, (ii) funds necessary
for the consummation of the PetroCorp acquisition, (iii) general working capital
requirements for (a) exploration, development, production and acquisition of oil
and gas properties and (b) contract drilling services, (iv) issuance of LCs, and
(v) general corporate purposes of the Borrowers.
ARTICLE III
YIELD PROTECTION; TAXES
-----------------------
3.1. Yield Protection. If, on or after the date of this Agreement, the
adoption of any law or any governmental or quasi-governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law), or any
change in the interpretation or administration thereof by any governmental or
quasi-governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender or
applicable banking address or the LC Issuer with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency:
(i) subjects any Lender or the LC Issuer to any Taxes, or changes
the basis of taxation of payments (other than Excluded Taxes) to any
Lender or the LC Issuer regarding its Eurodollar Loans or
participations in Eurodollar Advances, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Lender or the LC Issuer (other than reserves and
assessments taken into account in determining the interest rate
applicable to Eurodollar Advances), or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender, the interbank eurocurrency deposit
market or the LC Issuer of
29
making, funding or maintaining its Eurodollar Loans, or of
issuing or participating in LCs, or reduces any amount receivable by
any Lender, the interbank eurocurrency deposit market or the LC Issuer
in connection with its Eurodollar Loans, LCs or participations
therein, or requires any Lender, the interbank eurocurrency deposit
market or the LC Issuer to make any payment calculated by reference to
the amount of Eurodollar Loans, LCs or participations therein held or
interest or LC Fees received by it, by an amount deemed material by
such Lender or the LC Issuer as the case may be and the result of any
of the foregoing is to increase the cost to such Lender or the LC
Issuer, as the case may be, of making or maintaining its Eurodollar
Loans or Commitment or of issuing or participating in LCs or to reduce
the return received by such Lender, the interbank eurocurrency deposit
market or the LC Issuer, as the case may be, in connection with such
Eurodollar Loans, Commitment, LCs or participations therein,
then, within 15 days of demand by the Administrative Agent or the LC
Issuer, as the case may be, the Borrowers will pay the Administrative Agent for
the account of such Lender or the LC Issuer, as the case may be, such additional
amount or amounts as will compensate such Lender or the LC Issuer, as the case
may be, for such increased cost or reduction in amount received.
3.2. Changes in Capital Adequacy Regulations. If a Lender or the LC Issuer
determines, in good faith, the amount of capital required or expected to be
maintained by such Lender or the LC Issuer, or the LC Issuer, or any corporation
controlling such Lender or the LC Issuer is increased as a result of a Change,
then, within 15 days of demand by such Lender or the LC Issuer, the Borrowers
will pay such Lender or the LC Issuer the amount necessary to compensate for any
shortfall in the rate of return on the portion of such increased capital which
such Lender or the LC Issuer determined is attributable to this Agreement, its
Outstanding Credit Exposure or its Commitment to make Loans and issue or
participate in LCs, as the case may be, hereunder (after taking into account
such Lender's or the LC Issuer's policies as to capital adequacy). "Change"
means (i) any change after the date of this Agreement in the Risk-Based Capital
Guidelines or (ii) any adoption of or change in any other law, governmental or
quasigovernmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Lender or the LC Issuer or any corporation controlling any
Lender or the LC Issuer. "Risk-Based Capital Guidelines" means (i) the riskbased
capital guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing the
July 1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements and
Capital Standards," including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.
3.3. Taxes.
(i) All payments by the Borrowers to or for the account of any
Lender, the LC Issuer or the Administrative Agent hereunder or under
any Note or LC Application will be made free and clear of and without
deduction for any
30
and all Taxes. If the Borrowers are required by law to deduct any
Taxes from any payment to a Lender, the LC Issuer or the
Administrative Agent, to the extent not prohibited by applicable law,
(a) the payment will be increased so that after making all required
deductions (including deductions applicable to payments under this
Section 3.3) such Lender, the LC Issuer or the Administrative Agent
(as the case may be) receives an amount equal to the payment it would
have received had no deductions been made, (b) the Borrowers will make
such deductions, (c) the Borrowers will pay the full amount deducted
to the relevant authority in accordance with applicable law and (d)
the Borrowers will furnish to the Administrative Agent a copy of a
receipt evidencing payment within 30 days after the payment is made.
(ii) In addition, the Borrowers hereby agree to pay any present
or future stamp or documentary taxes and any other excise or property
taxes, charges or similar levies which arise from any payment made
under this Agreement or under any Note or LC Application or from the
execution or delivery of, or otherwise with respect to, this Agreement
or any Note or LC Application ("Other Taxes").
(iii) The Borrowers hereby agree to indemnify the Administrative
Agent, the LC Issuer and each Lender for the full amount of Taxes or
Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed on payments under this Section 3.3) paid by the Administrative
Agent, the LC Issuer or such Lender and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto. Payments properly due under this indemnification will be made
within 30 days following the date the Administrative Agent, the LC
Issuer or such Lender requests payment.
(iv) If the U.S. Internal Revenue Service or any other
governmental authority of the United States or any other country or
any political subdivision thereof asserts a claim that the Agent did
not properly withhold tax from payments to or for the account of any
Lender (because the appropriate form was not delivered or properly
completed, because such Lender failed to notify the Agent of a change
in circumstances which rendered its exemption from withholding
ineffective, or for any other reason), such Lender will indemnify the
Agent fully for all amounts paid, directly or indirectly, by the Agent
as tax, withholding therefor, or otherwise, including penalties and
interest, and including taxes imposed by any jurisdiction on amounts
payable to the Agent under this subsection, together with all costs
and expenses related thereto (including attorneys fees and time
charges of attorneys for the Agent, which attorneys may be employees
of the Agent). The obligations of the Lenders under this Section
3.3(iv) will survive the payment of the Obligations and termination of
this Agreement. Any liability under this subsection (iv) will not be a
liability of the Borrowers
3.4. Availability of Eurodollar Advances. If any Lender determines that
maintenance
31
of its Eurodollar Loans at a suitable banking location would violate any
applicable law, rule, regulation, or directive, whether or not having the force
of law, or if the Required Lenders determine that (i) deposits of a type and
maturity appropriate to match fund Eurodollar Advances are not available or (ii)
the interest rate applicable to Eurodollar Advances does not accurately reflect
the cost of making or maintaining Eurodollar Advances, then the Administrative
Agent will suspend the availability of Eurodollar Advances and require any
affected Eurodollar Advances to be repaid or converted to Floating Rate
Advances, subject to the payment of any funding indemnification amounts required
by Section 3.5.
3.5. Funding Indemnification. If any payment of a Eurodollar Advance occurs
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a Eurodollar Advance is not
made on the date specified by the Borrowers for any reason other than default by
the Lenders, the Borrowers will indemnify each Lender for any resulting loss or
cost incurred by it.
ARTICLE IV
CONDITIONS PRECEDENT
--------------------
4.1. Initial Credit Extension. The Lenders will not be required to make the
initial Credit Extension hereunder unless:
4.1.1. Unit has furnished to the Administrative Agent at its main
banking offices in Tulsa, Oklahoma, each of the following, duly executed
and delivered in form, substance and date satisfactory to the
Administrative Agent, with sufficient copies for all of the Lenders:
(i) Copies of the certificate of incorporation of each of the
Credit Parties, together with all amendments, and a certificate of
good standing, each certified by the appropriate governmental officer
in their respective jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or Assistant Secretary of
the Credit Parties, of their respective by-laws and of their
respective Board of Directors' resolutions and of resolutions or
actions of any other body authorizing the execution of the Loan
Documents to which each Borrower is a party.
(iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Credit Parties, which will identify by name
and title and bear the signatures of the Authorized Officers and any
other officers of the Borrower authorized to sign the Loan Documents
to which such Borrower is a party, with the Administrative Agent and
the Lenders being entitled to rely on such certificate until informed
of any change in writing by such Borrower.
(iv) A certificate, signed by the chief financial officer of Unit
(on behalf of all of the Credit Parties), stating that on the initial
Credit Extension Date
32
no Default has occurred and is continuing, that all
representations and warranties in the Loan Documents are true and
correct and that no Material Adverse Effect has occurred.
(v) A written closing opinion of outside counsel to the
Borrowers, addressed to the Administrative Agent and the Lenders in
form, scope and substance satisfactory to the Administrative Agent.
(vi) This Agreement and a Note payable to the order of each
Lender and, upon consummation of the merger contemplated by the
PetroCorp Agreement, the Subsidiary Guaranty by PetroCorp,
substantially in the form of Exhibit E of this Agreement.
(vii) Arrangements satisfactory to the Administrative Agent, the
LC Issuer and any applicable beneficiary concerning replacement or
cash collateralization of any existing PetroCorp unexpired letters of
credit at the time of the consummation of the acquisition of PetroCorp
by Unit, payment in full of any Indebtedness owing under the Existing
Credit Agreement to the Existing Lenders, including all interest
thereon and that any unexpired letters of credit issued thereunder
have been terminated or otherwise collateralized to the satisfaction
of the Administrative Agent and the LC Issuer under the Existing
Credit Agreement, including evidence satisfactory to Unit and the
Administrative Agent of the cancellation of the Commitments issued
under the Existing Credit Agreement, termination of the credit
facilities established under the Existing Credit Agreement.
(viii) The Collateral Documents described in the Security
Schedule.
(ix) A fully executed copy of the PetroCorp Agreements and
evidence satisfactory to the Administrative Agent that the acquisition
of PetroCorp has been consummated under the PetroCorp Agreement,
including without limitation, that evidence that the existing credit
facility of PetroCorp has been extinguished and fully paid and
discharged and that any Liens filed against PetroCorp will be promptly
discharged and released of record.
(x) Such other documents, certificates, instruments and
information as any Lender or its counsel may have reasonably requested
and satisfactory review by the Lenders of all environmental,
litigation, insurance and other matters deemed appropriate by the
Administrative Agent, including without limitation, summary title due
diligence data concerning the Rigs and/or the oil and gas portion of
the Borrowing Base Property (division orders, evidence of payment by
the purchaser of production, etc.) as reasonably deemed necessary by
the Administrative Agent or the Required Lenders.
(xi) All facility fees owed to the Lenders and all fees and
expenses owing by Borrowers to Administrative Agent and the
Syndication Agent will
33
have been paid, including the reasonable attorneys fees and
expenses of legal counsel for the Administrative Agent that have been
billed and submitted to the Agent as of the Closing Date.
4.2. Each Credit Extension. The Lenders will not be required to make any
Credit Extension unless on the applicable Credit Extension Date:
(i) There exists no Default and the representations and
warranties contained in Article V are then true and correct in all
material respects as of such Credit Extension Date except to the
extent a representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty will have
been true and correct on and as of such earlier date.
(ii) All legal matters incident to the making of such Credit
Extension will be satisfactory to the Administrative Agent.
(iii) No Material Adverse Effect will have occurred to, and no
event or circumstance will have occurred that could reasonably be
expected to cause a Material Adverse Effect to, Unit's consolidated
financial condition or to the Credit Parties' businesses since the
date of the financial statements most recently delivered pursuant to
Sections 6.1 (i) and (ii) hereof.
(iv) The making of such Loan or the issuance of such Letter of
Credit will not be prohibited by any Law and will not subject any
Lender or any LC Issuer to any penalty or other adverse condition
under any Law.
(v) Each Borrower and Subsidiary Guarantor will be solvent.
(vi) Administrative Agent will have received all documents and
instruments which Administrative Agent has then reasonably requested,
in addition to those described in Section 4.1, as to (i) the accuracy
and validity of or compliance with all representations, warranties,
and covenants made by any Borrower or Subsidiary Guarantor in this
Agreement in all material respects and the other Loan Documents, and
(ii) the satisfaction of all conditions contained in this Agreement.
Each Borrowing Notice or request for issuance of a LC will constitute a
representation and warranty by the Borrowers that the conditions contained in
Section 4.2 have been satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrowers represent and warrant to the Lenders that:
5.1. Existence and Good Standing. Each Credit Party is a corporation, duly
and
34
properly incorporated or organized, as the case may be, validly existing
and (to the extent such concept applies to such entity) in good standing under
the laws of its jurisdiction of incorporation or organization and has all
requisite authority to carry on its business in each jurisdiction as now
conducted.
5.2. Authorization and Validity. Each Credit Party has the power and
authority and legal right to execute and deliver the Loan Documents to which it
is a party and to perform its obligations thereunder. The execution and delivery
by each Credit Party of the Loan Documents to which it is a party and the
performance of its obligations thereunder have been duly authorized by proper
corporate proceedings. The Loan Documents to which a Credit Party is a party
constitute legal, valid and binding obligations of such Credit Party enforceable
against such Credit Party in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally.
5.3. No Conflict; Government Consent. Neither the execution and delivery by
any of the Credit Parties of the Loan Documents to which it is a party, nor the
consummation of the transactions contemplated by the Loan Documents, nor
compliance with the provisions of the Loan Documents will violate in any
material respect (i) any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Credit Parties or (ii) any of the
Credit Parties' articles or certificate of incorporation, partnership agreement,
certificate of partnership, articles or certificate of organization, by-laws, or
operating or other management agreement, as the case may be, or (iii) the
provisions of any indenture, instrument or agreement to which any of the Credit
Parties is a party or is subject, or by which it, or its Property, is bound, or
conflict with or constitute a default, or result in, or require, the creation or
imposition of any Lien in, of or on the Property of the Credit Parties pursuant
to the terms of any such indenture, instrument or agreement. No order, consent,
adjudication, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, or other action in respect of
any governmental or public body or authority, or any subdivision thereof, which
has not been obtained by the Credit Parties, is required to be obtained by the
Credit Parties in connection with the execution and delivery of the Loan
Documents, the borrowings under this Agreement, the payment and performance by
the Credit Parties of the Obligations or the legality, validity, binding effect
or enforceability of any of the Loan Documents.
5.4. Financial Statements. The audited annual and unaudited quarterly,
consolidated financial statements of Unit and its consolidated Subsidiaries
previously delivered to the Lenders were prepared in accordance with GAAP
(except that the unaudited interim financial statements were subject to normal
and recurring year-end adjustments) in effect on the date such statements were
prepared and fairly present the consolidated financial condition and operations
of the Credit Parties at such date and the consolidated results of their
operations for the period then ended.
5.5. Material Adverse Change. Since September 30, 2003, there has been no
change in the business, Property, prospects, condition (financial or otherwise)
or results of operations of the Credit Parties which could reasonably be
expected to have a Material Adverse Effect. There is no fact known to the Credit
Parties which has a Material Adverse Effect or in the future is reasonably
likely to have (so far as the Credit Parties can now foresee) a Material Adverse
Effect and which has not been set forth in this Agreement or the other
documents, certificates and
35
statements furnished to the Administrative Agent by or on behalf of the
Credit Parties prior to, or on, the Closing Date in connection with the
transactions contemplated by this Agreement.
5.6. Taxes. The Credit Parties have filed all United States federal tax
returns and all other material tax returns which are required to be filed and
have paid all taxes due pursuant to said returns or pursuant to any assessment
received by the Credit Parties or any of their Subsidiaries, except such taxes,
if any, that are being contested in good faith and as to which adequate reserves
have been provided in accordance with GAAP and which no Lien has been filed or
perfected. No tax liens have been filed and no claims are being asserted with
respect to any such taxes. The charges, accruals and reserves on the books of
the Credit Parties and their Subsidiaries in respect of any taxes or other
governmental charges are adequate.
5.7. Litigation and Contingent Obligations. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or, to
the knowledge of any of their officers, threatened against or affecting the
Credit Parties which could reasonably be expected to have a Material Adverse
Effect or which seeks to prevent, enjoin or delay the making of any Credit
Extensions. Other than any liability incident to any litigation, arbitration or
proceeding which could not reasonably be expected to have a Material Adverse
Effect, the Credit Parties have no material Contingent Obligations not provided
for or disclosed in the financial statements referred to in Section 5.4 except
as set forth on Schedule 8 of this Agreement.
5.8. Subsidiaries. The Disclosure Schedule contains an accurate list of all
Subsidiaries of Unit as of the date of this Agreement, setting forth their
respective jurisdictions of organization and the percentage of their respective
capital stock or other ownership interests owned by the Unit or the other Credit
Parties. All of the issued and outstanding shares of capital stock or other
ownership interests of the Subsidiaries have been (to the extent such concepts
are relevant with respect to such ownership interests) duly authorized and
issued and are fully paid and non-assessable.
5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans do not in
the aggregate exceed $500,000. Neither the Credit Parties nor any other member
of the Controlled Group has incurred, or is reasonably expected to incur, any
withdrawal liability to Multiemployer Plans. Each Plan complies in all material
respects with all applicable requirements of law and regulations, no Reportable
Event has occurred with respect to any Plan, neither the Credit Parties nor any
other member of the Controlled Group has withdrawn from any Plan or initiated
steps to do so, and no steps have been taken to reorganize or terminate any Plan
except as disclosed in the Disclosure Schedule.
5.10. Accuracy of Information. No information, exhibit or report furnished
by the Credit Parties to the Administrative Agent or to any Lender in connection
with the negotiation of, or compliance with, the Loan Documents contained any
material misstatement of fact or omitted to state a material fact or any fact
necessary to make the statements contained therein not misleading.
5.11. Margin Stock No part of the Loan proceeds of any Advances hereunder
will be used to purchase or carry any margin stock or to extend credit to others
for the purpose of
36
purchasing or carrying any margin stock. If requested by the Administrative
Agent or the Required Lenders, the Credit Parties will furnish to the Collateral
Agent a statement in conformity with the requirements of Federal Reserve Form
U-1, referred to in Regulation U, to the foregoing effect. No indebtedness being
reduced or retired out of the proceeds of the Advances was or will be incurred
for the purpose of purchasing or carrying any margin stock within the meaning of
Regulation U or any "margin security" within the meaning of Regulation T.
"Margin Stock" within the meaning of Regulation U does not constitute more than
25% of the value of the consolidated assets of Unit and its Subsidiaries.
5.12. Material Agreements. Unit has no actual knowledge of (i) any material
agreement or material instrument to which any Borrower is a party or (ii) any
charter or other corporate restriction, either of which (i) or (ii), under
current conditions and circumstances known to Unit, constitutes or is reasonably
expected to have a Material Adverse Effect. None of the Credit Parties is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in (i) any agreement to which it is a party,
which default could reasonably be expected to have a Material Adverse Effect or
(ii) any agreement or instrument evidencing or governing Indebtedness, which
default could reasonably be expected to have a Material Adverse Effect.
5.13. Compliance With Laws. The Credit Parties have complied with all
applicable statutes, rules, regulations, orders and restrictions of any domestic
or foreign government or any instrumentality or agency thereof having
jurisdiction over the conduct of their respective businesses or the ownership of
their respective Property except for any failure to comply with any of the
foregoing which could not reasonably be expected to have a Material Adverse
Effect.
5.14. Ownership of Properties. Unit and each of its Subsidiaries has
marketable title to all of the properties and assets reflected as owned in the
consolidated financial statements of Unit, in each case free and clear of all
Liens other than Permitted Encumbrances (including those created under the Loan
Documents described and defined in the Existing Credit Agreement) and such as do
not materially and adversely affect the value of the property and do not
materially interfere with the use made or proposed to be made of such property
by Unit or its Subsidiaries, which such total Liens do not exceed $1,000,000 in
the aggregate. The real property, improvements, equipment and personal property
held under lease by Unit or any Subsidiary of Unit are held under valid
enforceable leases, with such exceptions as are not material and do not
materially interfere with the use made or proposed to be made of such real
property, improvements, equipment or personal property by Unit or any Subsidiary
of Unit. Each of Credit Parties possesses all licenses, permits, franchises,
patents, copyrights, trademarks and trade names, and other intellectual property
(or otherwise possesses the right to use such intellectual property without
violation of the rights of any other Person) which are necessary to carry out
its business as presently conducted and as proposed to be conducted hereafter.
5.15. Plan Assets; Prohibited Transactions. Neither the execution of this
Agreement nor the making of Loans hereunder gives rise to a prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of the
Code. Since the effective date of Title IV of ERISA, no Reportable Event has
occurred with respect to any Plan. The Credit Parties and their Guarantors have
fulfilled all their obligations under the funding standards of ERISA and the
37
Code and are in compliance in all material respects with the applicable
ERISA and Code provisions with respect to each Plan. 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 Credit Parties or any of the Subsidiary Guarantors. No Borrower
has (i) sought any waiver of the minimum funding standard under Section 412 of
the Code, (ii) failed to make any contribution or payment to any Plan, or made
any amendment to any Plan, which has resulted or could result in the imposition
of a Lien or the posting of a bond or other security under ERISA or the Code, or
(iii) incurred any liability under Title IV of ERISA.
5.16. Environmental Matters. Except as set forth on Schedule 5:
(a) To the best of the Credit Parties' knowledge and belief, the
Properties owned, leased or operated by the Credit Parties do not contain,
and have not previously contained, any materials of environmental concern
in amounts or concentrations which (i) constitute or constituted a
violation of, or (ii) could give rise to liability under, any Environmental
Law except in either case insofar as such violation or liability, or any
aggregation thereof, is not reasonably likely to result in a Material
Adverse Effect.
(b) To the best of the Credit Parties' knowledge and belief, the
Properties and all operations at the Properties are in compliance in all
material respects, and have, for the lesser of the last five years or for
the duration of their ownership, lease, or operation by the Credit Parties,
been in compliance in all material respects with all applicable
Environmental Laws, and there is no contamination at, under or about the
Properties or violation of any Environmental Law with respect to the
Properties or the business operated by the Credit Parties or any of their
Subsidiaries (collectively, the "Business") which could interfere with the
continued operation of the Properties or impair the fair saleable value
thereof.
(c) None of the Credit Parties has received any notice of violation,
alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Business, nor do the Credit Parties
have knowledge or reason to believe that any such notice will be received
or is being threatened except insofar as such notice or threatened notice,
or any aggregation thereof, does not involve a matter or matters that is or
are reasonably likely to result in a Material Adverse Effect.
(d) To the best of the Credit Parties' knowledge and belief, materials
of environmental concern have not been transported or disposed of from the
Properties in violation of, or in a manner or to a location which could
give rise to liability under, any Environmental Law, nor have any materials
of environmental concern been generated, treated, stored or disposed of at,
on or under any of the Properties in violation of, or in a manner that
could give rise to liability under, any applicable Environmental Law except
insofar as any such violation or liability referred to in this paragraph,
or any aggregation thereof, is not reasonably likely to result in a
Material Adverse Effect.
38
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Credit Parties thereof are or will be named
as a party with respect to the Properties or the Business, nor are there
any consent decrees or other decrees, consent orders, administrative orders
or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties or
the Business except insofar as such proceeding, action, decree, order or
other requirement, or any aggregation thereof, is not reasonably likely to
result in a Material Adverse Effect.
(f) There has been no release or threat of release of materials of
environmental concern at or from the Properties, or arising from or related
to the operations of the Borrower in connection with the Properties or
otherwise in connection with the Business, in violation of or in amounts or
in a manner that could give rise to liability under Environmental Laws
except insofar as any such violation or liability referred to in this
paragraph, or any aggregation thereof, is not reasonably likely to result
in a Material Adverse Effect.
5.17 Names and Places of Business. No Borrower has, during the preceding
five years, had, been known by, or used any other trade or fictitious name. The
chief executive office and principal place of business of each Credit Party are
located at the address of the Credit Parties prescribed in Section 15.1.
5.18. Possession of Franchises, Licenses. The Credit Parties have in their
possession, or has timely applied for, 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, maintenance and operation of their
properties and assets, and none of the Credit Parties is in violation of any
thereof in any material respect.
5.19. Rate Management Transactions. Except as forth on Schedule 6, as of
the Closing Date, a true and complete list of all Rate Management Transactions
(including commodity price swap agreements, forward agreements or contracts of
sale which provide for prepayment for deferred shipment or delivery of oil, gas
or other commodities) of the Credit Parties, listing the counterparties thereto.
ARTICLE VI
AFFIRMATIVE COVENANTS
---------------------
During the term of this Agreement, unless the Required Lenders will
otherwise consent in writing:
6.1. Reports. Unit will maintain and furnish to the Lenders:
39
(i) Within 80 days after the close of each of its fiscal years,
the financial statements of Unit and its Subsidiaries, together with
an unqualified audit report certified by Unit's independent certified
public accountants, prepared in accordance with GAAP on a consolidated
basis, including a balance sheet as of the end of such period and
statements of operations, stockholders equity and cash flows for such
period.
(ii) Within 45 days after the close of the first three quarterly
periods of each of its fiscal years, consolidated unaudited balance
sheets as at the close of each such period and statements of
operations, stockholders equity and cash flows for the period from the
beginning of such fiscal year to the end of such quarter, all
certified by its chief financial officer.
(iii) Together with the financial statements required under
Sections 6.1(i) and (ii), copies of all certifications made by
officers of Unit to the SEC in connection with such financial
statements and a compliance certificate in substantially the form of
Exhibit B signed by Unit's chief financial officer showing the
calculations necessary to determine compliance with this Agreement and
stating that no Default exists, or if any Default exists, stating the
nature and status of such Default.
(iv) As soon as practicable and in any event within 10 days after
the Credit Parties know that any Reportable Event has occurred with
respect to any Plan, a statement, signed by the chief financial
officer of Unit, describing said Reportable Event and the action which
the Credit Parties propose to take regarding the Reportable Event.
(v) As soon as practicable and in any event within 10 days after
receipt by the Credit Parties, a copy of (a) any notice or claim to
the effect that the Credit Parties is or may be liable to any Person
as a result of the release by the Credit Parties, or any other Person
of any toxic or hazardous waste or substance into the environment, and
(b) any notice alleging any violation of any federal, state or local
environmental, health or safety law or regulation by the Credit
Parties, which, in either case, could reasonably be expected to have a
Material Adverse Effect.
(vi) Promptly on the furnishing to the stockholders of the Unit,
copies of all financial statements, reports and proxy statements so
furnished.
(vii) By April 1 of each year (commencing as of April 1, 2004),
an Engineering Report prepared as of the prior December 31, by
petroleum engineers who are employees of Credit Parties and audited by
Xxxxx Xxxxx Company, or such other firm of independent petroleum
engineers chosen by Unit and acceptable to the Administrative Agent,
concerning all oil and gas properties and interests owned by any
Credit Parties and their Subsidiaries which are located in or offshore
of the United States and which have attributable to them proved oil or
40
gas reserves. This reserve audit described above will encompass a
review of the reserves associated with oil and gas properties
comprising at least 80% of the value stated in the report. The
Engineering Report will be satisfactory to Administrative Agent, will
contain sufficient information to enable Credit Parties to meet the
reporting requirements concerning oil and gas reserves contained in
Regulations S-K and S-X promulgated by the SEC, will take into account
any "over/under produced" status under gas balancing arrangements, and
will contain information and analysis comparable in scope to that
contained in the Initial Engineering Report.
(viii) By October 1 of each year (commencing as of October 1,
2004), and promptly following notice of a Special Redetermination
under Section 2.6.4, an Engineering Report prepared as of the
preceding June 30 (or the last day of the prior calendar month in the
case of an additional redetermination) by petroleum engineers who are
employees of Borrowers, together with an accompanying report on
property sales, property purchases and changes in categories, both in
the same form and scope as the reports in (x) above.
(ix) By April 1 and October 1 of each year, beginning April 1,
2004, a report describing the gross volume of production and sales
attributable to production during the prior six-month period from the
properties described in the Engineering Report in Section 6.1(vii) or
Section 6.1(viii) and describing the related severance taxes, other
taxes, and leasehold operating expenses attributable thereto and
incurred during such month.
(x) Such other information (including non-financial information)
as the Administrative Agent or any Lender may from time to time
reasonably request.
6.2. Use of Proceeds. The Borrowers will use such proceeds of the Credit
Extensions as necessary to refinance any Existing Indebtedness with the Existing
Lenders, to fund the consummation of the PetroCorp acquisition, for general
working capital requirements for (a) exploration, development, production and
acquisition of oil and gas properties, and (b) contract drilling services, the
issuance of LCs and for general corporate purposes. The Borrower will not, nor
will they permit any Subsidiary to, use any of the proceeds of the Advances to
purchase or carry any "margin stock" (as defined in Regulations T and U).
6.3. Notice of Default. Unit will give prompt notice in writing to the
Lenders of the occurrence of any Default and of any other development, financial
or otherwise, which could reasonably be expected to have a Material Adverse
Effect.
6.4. Conduct of Business. The Credit Parties will each carry on and conduct
its business in substantially the same manner and in substantially the same
fields of enterprise as it is presently conducted and do all things necessary to
remain duly incorporated or organized, validly existing and (to the extent such
concept applies to such entity) in good standing as a domestic corporation,
partnership or limited liability company in its jurisdiction of incorporation
41
or organization, as the case may be, and maintain all requisite authority
to conduct its business in each jurisdiction in which its business is conducted.
6.5. Taxes. The Credit Parties will timely file complete and correct United
States federal and applicable foreign, state and local tax returns required by
law and pay when due all taxes, assessments and governmental charges and levies
upon it or its income, profits or Property, except those which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been provided in accordance with GAAP.
6.6. Insurance. The Credit Parties will maintain with, to the best of
Unit's knowledge and belief, financially sound and reputable insurance companies
insurance on all their Property in such amounts and covering such risks as is
consistent with their prior business practice and deemed prudent by industry
standards, and the Credit Parties will furnish to any Lender upon request full
information as to the insurance carried.
6.7. Compliance With Laws. The Credit Parties will comply, in all material
respects, with all laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject including, without
limitation, all Environmental Laws.
6.8. Maintenance of Properties. The Credit Parties will do all things
reasonably necessary to maintain, preserve, protect and keep their respective
Property in good repair, working order and condition, and make all necessary and
proper repairs, renewals and replacements so that its business carried on in
connection therewith may be conducted at all times consistent with such Credit
Party's prior business practices.
6.9. Inspection. The Credit Parties will permit the Administrative Agent
and the Lenders, by their respective representatives and Administrative Agents,
to inspect any of the Property, books and financial records of the Credit
Parties and each Subsidiary of any thereof, to examine and make copies of the
books of accounts and other financial records of the Credit Parties and each
Subsidiary of any thereof, and to discuss the affairs, finances and accounts of
the Credit Parties and each Subsidiary with, and to be advised as to the same
by, their respective officers at such reasonable times and intervals as the
Administrative Agent or any Lender may designate.
6.10. Collateral Documents. Unit Drilling Company will execute and, where
applicable, Borrowers will cause their respective Subsidiaries to execute and
deliver (and, where applicable, acknowledge and have properly notarized) all of
the Collateral Documents listed on Schedule 4 (Security Schedule) annexed
hereto, each on the number of executed counterparts as deemed necessary or
appropriate by the Administrative Agent and otherwise in form, scope and
substance satisfactory to the Administrative Agent and its legal counsel.
6.11. Deposit Accounts/Setoff.
(a) Bank Accounts; Offset. To secure the repayment of the Obligations
and the Rate Management Obligations, each Borrower grants to the
Administrative Agent and each Lender a security interest, a lien, and a
right of setoff and offset, each of which will
42
be in addition to all other interests, liens, and rights of any Lender
at common Law, under the Loan Documents, or otherwise, and each of which
will be upon and against (a) any and all moneys, securities and other
property (and the proceeds therefrom) of such Borrower now or hereafter
held or received by or in transit to any Lender from or for the account of
such Borrower, whether for safekeeping, custody, pledge, transmission,
collection or otherwise, (b) any and all deposits and deposit accounts
(general or special, time or demand, provisional or final) of such Borrower
with any Lender, and (c) any other credits and claims of such Borrower at
any time existing against any Lender, including claims under certificates
of deposit (excluding from the foregoing security interest grant and right
of set off and offset the accounts of the accounts at BOK as specified on
Schedule 7 hereto (collectively, the "Excluded Accounts"). At any time and
from time to time during the continuance of any Event of Default, each
Lender is hereby authorized to foreclose upon, or to offset against the
Obligations then due and payable (in either case without notice to any
Borrower), any and all items hereinabove referred to. The remedies of
foreclosure and offset are separate and cumulative, and either may be
exercised independently of the other without regard to procedures or
restrictions applicable to the other. ANY AND ALL RIGHTS TO REQUIRE THE
ADMINISTRATIVE AGENT OR THE LENDERS TO EXERCISE ANY RIGHTS OR REMEDIES WITH
RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE ADVANCES PRIOR TO
EXERCISING ANY RIGHT OF SET OFF WITH RESPECT TO ANY DEPOSITS, CREDITS OR
OTHER PROPERTY OF THE CREDIT PARTIES ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED
(b) Control of Collateral. Administrative Agent hereby appoints each
of the other Lenders to serve as its bailee to perfect Administrative
Agent's Liens in any Collateral in the possession of any such other
Lenders. Each Lender possessing any Collateral agrees to so act as bailee
for Administrative Agent in accordance with the terms and provisions
hereof. In furtherance of the foregoing, each Lender acknowledges that
certain of the Credit Parties maintain deposit or other accounts (all such
accounts maintained by any Credit Party with a Lender (other than the
Excluded Accounts) are collectively called the "Lender Accounts" and
individually called a "Lender Account") at one or more of the Lenders as
disclosed pursuant to this Agreement. Each Lender agrees to hold its Lender
Accounts as bailee for Administrative Agent to perfect the security
interest held for the benefit of the Lenders therein. Prior to the receipt
by a Lender of notice from Administrative Agent that it is exercising
exclusive control over any Lender Account (a "Notice of Exclusive
Control"), the Credit Parties are entitled to make withdrawals from the
Lender Accounts and make deposits into and give entitlement orders with
respect to the Lender Accounts. Once a Lender has a Notice of Exclusive
Control, which such notice will not be given until a Default or Event of
Default has occurred and is continuing, Administrative Agent will be the
only party entitled to make withdrawals from or otherwise give any
entitlement order or other direction with respect to the Lender Accounts.
To the extent not already occurring, each Lender agrees to transfer, in
immediately available funds by wire transfer to Administrative Agent, the
amount of the collected funds credited to the deposit accounts which are
Lender Accounts held by such Lender, and deliver to Administrative Agent
all moneys or
43
instruments relating to such Lender Accounts or held therein and any
other Collateral at any time Administrative Agent demands payment or
delivery thereof after a Notice of Exclusive Control has been delivered to
such Lender. Each Credit Party agrees that each Lender is authorized to
immediately deliver all the Collateral to Administrative Agent upon the
Lender's receipt of Notice of Exclusive Control from Administrative Agent.
No Lender (other than Administrative Agent acting for the benefit of the
other Lenders) will exercise any right of set-off or banker lien against
any Lender Account; provided that a Lender will be entitled to charge, or
set-off against a Lender Account and retain for its own account, any
customary fees, costs, charges and expenses owed to it in connection with
the opening, operating and maintaining such Lender Account and for the
amount of any item credited to such Lender Account that is subsequently
returned for any reason.
(c) Ratable Payments. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Outstanding Credit Exposure (other than
payments received pursuant to Article III) in a greater proportion than
that received by any other Lender, such Lender agrees, promptly upon
demand, to purchase a portion of the Aggregate Outstanding Credit Exposure
held by the other Lenders so that after such purchase each Lender will hold
its Pro Rata Share of the Aggregate Outstanding Credit Exposure. If any
Lender, whether in connection with setoff or amounts which might be subject
to setoff or otherwise, receives collateral or other protection for its
Obligations or such amounts which may be subject to setoff, such Lender
agrees, promptly upon demand, to take such action necessary such that all
Lenders share in the benefits of such collateral ratably in proportion to
their respective Pro Rata Shares of the Aggregate Outstanding Credit
Exposure. In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments will be made.
6.12 Environmental Indemnities. Each of the Credit Parties hereby agrees to
indemnify, defend and hold harmless the Lenders 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 enforcement 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 the Credit Parties contained in Section 5.16; (b) the failure of the
Credit Parties to perform any of their respective covenants contained in Section
6.7; (c) the ownership, construction, occupancy, operation, use of the Credit
Parties' 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 Collateral Documents have been released, or (ii) the Credit Parties'
properties has been sold by Agent or by the Lenders following such parties'
ownership of the Credit Parties' 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 Lenders'
activities
44
during any period of time the Agent or the Lenders acquire ownership of the
Credit Parties' properties.
The indemnities contained in this Section 6.12 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 Credit Parties' properties on or prior to the Release Date (including,
without limitation: (a) the presence on, upon or in the Credit Parties'
properties or release, discharge or threatened release on, upon or from the
Credit Parties' 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 applicable Environmental Laws and the terms "stored,"
"treated" and "disposed" shall have the meanings specified in applicable
Environmental Laws; provided, however, any broader meanings of such terms
provided by applicable laws of the State of Oklahoma shall apply.
The provisions of this Section 6.12 shall be in addition to any other
obligations and liabilities Credit Parties may have to the Agent or the Lenders
at common law and shall survive the Release Date and shall continue thereafter
in full force and effect. The Agent and the Lenders 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 Lenders may desire indemnity or defense hereunder, the Agent or the
Lenders shall give prompt written notification thereof to the Credit Parties.
Notwithstanding anything to the contrary stated herein, the indemnities
created by this Section 6.12 shall only apply to losses, liabilities, damages,
fines, penalties, costs and expenses actually incurred by the Agent or the
Lenders 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
Lenders shall act as the exclusive agent for all indemnified Persons under this
Section 6.12. With respect to any claims or demands made by such indemnified
Persons, the Agent shall notify Unit within ten (10) days after the Agent's
receipt of a writing advising 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 Unit within said ten
(10) day period shall reduce the amount of the Credit Parties' obligations and
liabilities under this Section 6.12 by an amount equal to any damages or losses
suffered by the Credit Parties resulting from any prejudice caused the Credit
Parties by such delay in notification from the Agent. Upon receipt of such
notice, the Credit Parties 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 Lenders)
and solely at Credit Parties' own cost, risk and expense; provided, that the
Agent and the Lenders, at their own cost and expense, shall have
45
the right to participate in any such contest, defense, negotiations or
settlement. The settlement of any claim or demand hereunder by the Credit
Parties, unless such settlement fully releases the Lenders from any and all
liability thereon, may be made only upon the prior approval of the Lenders of
the terms of the settlement, which approval shall not be unreasonably withheld.
ARTICLE VII
NEGATIVE COVENANTS
------------------
7.1. Dividends. The Credit Parties will not, nor will they permit any
Subsidiary to, declare or pay any dividends or make any distributions on its
capital stock (other than dividends payable in their own capital stock) or
redeem, repurchase or otherwise acquire or retire any of its capital stock at
any time outstanding, except that any (i) Subsidiary may declare and pay
dividends or make distributions to Unit or to a Wholly-Owned Subsidiary of Unit
and (ii) during any fiscal year Unit may pay cash dividends in amounts not
exceeding twenty-five percent (25%) of its Consolidated Net Income (after taxes)
for the preceding fiscal year.
7.2. Indebtedness. The Credit Parties will not create, incur or suffer to
exist any Indebtedness, except:
(i) The Loans and the Reimbursement Obligations.
(ii) Indebtedness existing on the date hereof and described in
the Disclosure Schedule.
(iii) Indebtedness arising under Rate Management Agreements
permitted by Section 7.10.
(iv) Contingent Obligations permitted by Section 7.9.
(v) Non-recourse Indebtedness in a restricted or special purpose
Subsidiary (for which consent of the Required Lenders must be
obtained) and as to which none of Credit Parties (i) provides any
guaranty or credit support of any kind (including any undertaking,
guarantee, indemnity, agreement or instrument that would constitute
Indebtedness) or (ii) is directly or indirectly liable (as a guarantor
or otherwise); provided, that after giving effect to such Indebtedness
outstanding from time to time, the Credit Parties are not in violation
of any of the financial covenants of Article VIII.
(vi) Normal and ordinary course trade debt and customary
obligations relating to the operation of oil and gas producing
properties and drilling rigs.
(vii) Unsecured senior indebtedness not in excess of $7,500,000
in the aggregate.
(viii) Lease obligations (including building and office leases
and leases
46
for equipment) not in excess of $10,000,000 in the aggregate.
(ix) usual and customary insurance premium financed in the normal
course of business.
(x) indebtedness regarding self insured liabilities, including
retentions under insurance policies.
(xi) miscellaneous items of Indebtedness not described in
subsections
(i) through (viii) above which do not in the aggregate (taking
into account all such Indebtedness of the Credit Parties) exceed
$2,000,000 at any one time outstanding.
7.3. Limitation on Fundamental Changes. Credit Parties will not enter into
any merger, consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease,
assign, transfer or otherwise dispose of, all or substantially all of its
property, business or assets, or make any material change in its present method
of conducting business, except:
(a) any Subsidiary of a Credit Party may be merged or consolidated
with or into such Credit Party (provided that such Credit Party will be the
continuing or surviving business entity or other entity) or with or into
any one or more wholly owned Subsidiaries of the Credit Party that is a
Borrower or Subsidiary Guarantor (provided that the wholly owned Borrower
or Subsidiary Guarantor will be the continuing or surviving business entity
or other entity); and
(b) any Wholly Owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to such Borrower or any other Wholly Owned Subsidiary of such
Borrower that is a Borrower or Subsidiary Guarantor.
(c) so long as no Default will exist or be caused as a result, a
Person may be merged or consolidated with or into a Borrower so long as the
Borrower is the continuing or surviving corporation.
7.4. Sale of Assets. The Credit Parties will not lease, sell or otherwise
dispose of its Property to any other Person, except:
(i) Sales of inventory in the ordinary course of business or the
sale of assets not included in the Borrowing Base during any fiscal
year in the aggregate gross amount of $2,000,000 or less.
(ii) Disposition of equipment and other personal property that is
replaced by equivalent property or consumed in the normal operation of
its Property.
47
(iii) Dispositions of a portion of its Property in connection
with operating agreements, farmouts, farmins, joint exploration and
development agreements and other agreements customary in the oil and
gas industry that are entered into for the purposes of developing its
Property and under which it receives relatively equivalent
consideration.
(iv) Leases, sales or other dispositions of its Property that,
together with all other Property of the Credit Parties and their
Subsidiaries previously leased, sold or disposed of (other than (i),
(ii) and (iii) above) as permitted by this Section during the period
since the most recent Determination Date, do not constitute more than
ten percent (10%) of the Engineered Value of the Borrowing Base
Properties as determined by Administrative Agent in its sole
discretion; further provided, however, to the extent such aggregate
consideration for all asset sales or other dispositions of Properties
exceeds five percent (5%) of the Borrowing Base during any period
between semi-annual Determination Dates, the Required Lenders will
have the option to reduce the Borrowing Base by the amount of such
proceeds and, further, provided, that any resulting Deficiency (as
defined in Section 2.6.6) must be cured by the Credit Parties in
accordance with Section 2.8(b).
(v) Interests in oil and gas properties, portions thereof, to
which no proved reserves of oil, gas or other liquid or gaseous
hydrocarbons are properly attributed.
(vi) Sale of Property by Petroleum Supply Company in the ordinary
course of its existing business operations.
7.5. Investments and Acquisitions. The Credit Parties will not make or
suffer to exist any Investments (including without limitation, loans and
advances to, and other Investments in, Subsidiaries), or commitments therefor,
or to create any Subsidiary or to become or remain a partner in any partnership
or joint venture, or to make any Acquisition of any Person, except:
(i) Cash Equivalent Investments.
(ii) Investments between Credit Parties or in any Credit Party's
Subsidiaries which are Subsidiary Guarantors or Subsidiaries of any
Credit Party with respect to which 100% of its Equity has been pledged
to Administrative Agent.
(iii) Investments in existence on the date hereof and described
on the Disclosure Schedule.
(iv) Investments in associations, joint ventures, and other
relationships (a) that are established pursuant to standard form
operating agreements or similar agreements or which are partnerships
for purposes of federal income taxation only, (b) that are not
corporations or partnerships (or subject to the Uniform
48
Partnership Act or other applicable state partnership act) under
applicable state law, or (c) whose businesses are limited to the
exploration, development and operation of oil, gas or mineral
properties and interests owned directly by the parties in such
associations, joint ventures or relationships in which the ownership
interest of any Credit Party or its Subsidiary is in direct proportion
to the amount of such Investment.
(v) Investments in Subsidiaries of the Credit Parties that are
not Material Subsidiaries which do not exceed $5,000,000 in the
aggregate during any fiscal year of Unit.
(vi) Miscellaneous items of Investments not described in clauses
(i) through (v) above which do not (taking into account all such
Investments of the Credit Parties and their Subsidiaries) exceed an
aggregate amount of $5,000,000 during any fiscal year of Unit.
7.6. Liens. The Credit Parties will not create, incur, or suffer to exist
any Lien in, of or on the Property of the Credit Parties or any of their
Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or
levies on its Property if the same will not at the time be delinquent
or thereafter can be paid without penalty, or are being contested in
good faith and by appropriate proceedings and for which adequate
reserves in accordance with GAAP will have been set aside on its
books.
(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary
course of business which secure payment of obligations not more than
90 days past due or which are being contested in good faith by
appropriate proceedings and for which adequate reserves, in accordance
with GAAP, will have been set aside on its books.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation.
(iv) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature
generally existing with respect to properties of a similar character
and which do not in any material way affect the marketability of the
same or interfere with the use thereof in the business of the Credit
Parties or their Subsidiaries.
(v) Liens existing on the date hereof and described on the
Disclosure Schedule.
(vi) Liens in favor of the Administrative Agent, for the benefit
of the Lenders, granted pursuant to any Collateral Document.
49
(vii) Liens on Property other than Collateral to secure not more
than $1,000,000 in the aggregate of the Indebtedness permitted by
Section 7.2(v).
(viii) With respect to Property subject to any Collateral
Document, Liens burdening such Property that are expressly allowed by
such Collateral Document.
(ix) Liens arising under operating agreements, unitization,
pooling agreements and other agreements customary in the oil and gas
industry securing amounts owed to operators and joint owners of oil
and gas properties that will not at the time be delinquent, or
thereafter can be paid without penalty, or are being contested in good
faith and by appropriate proceedings and for which adequate reserves
in accordance with GAAP will have been set aside on its books.
(x) Contracts, agreements, instruments, obligations, defects and
irregularities affecting the Property that individually or in the
aggregate are not such as to interfere materially with the use,
operation or value of the Property.
(xi) Any lien existing on any asset prior to its acquisition by a
Borrower or one of its Subsidiaries and not created in contemplation
of the acquisition.
(xii) Any extension, renewal or replacement (or successive
extensions, renewals or replacements), as a whole or in part, of any
Liens referred to in (i) - (xi) above for amounts not exceeding the
principal amount of the indebtednesssecured by the Lien so extended,
renewed or replaced.
7.7. Affiliates. The Credit Parties will not enter into any transaction
(including, without limitation, the purchase or sale of any Property or service)
with, or make any payment or transfer to, any Affiliate except in the ordinary
course of business and pursuant to the reasonable requirements of the Credit
Parties' or such Subsidiary's business and on fair and reasonable terms no less
favorable to the Credit Parties or such Subsidiary than the Credit Parties or
such Subsidiary would obtain in a comparable arms-length transaction.
7.8. Sale and Leaseback Transactions and other Off-Balance Sheet
Liabilities. The Credit Parties will not enter into or suffer to exist any (i)
Sale and Leaseback Transaction or (ii) any other transaction pursuant to which
it incurs or has incurred Off-Balance Sheet Liabilities, except for Rate
Management Obligations permitted to be incurred under the terms of Section 7.10.
7.9. Contingent Obligations. The Credit Parties will not make or suffer to
exist any Contingent Obligation (including, without limitation, any Contingent
Obligation with respect to the obligations of a Subsidiary), except (i) by
endorsement of instruments for deposit or collection in the ordinary course of
business, (ii) the Reimbursement Obligations, (iii) the Subsidiary Guaranty,
(iv) other Contingent Obligations not to exceed an outstanding aggregate amount
of $10,000,000 at any time, and (v) liabilities associated or accrued for
abandonment and
50
plugging of Credit Parties' oil and gas properties, and (vi) as general
partner of the limited partnerships formed annually to allow employees and
directors of Unit to participate in certain of its oil and gas exploration and
production operations.
7.10. Financial Contracts. None of Credit Parties will be a party to or in
any manner be liable on any Financial Contract except:
(a) contracts entered into with the purpose and effect of fixing
prices on oil or gas expected to be produced by the Credit Parties and
their Subsidiaries, provided that at all times: (i) no such contract fixes
a price for a term of more than 36 months; (ii) the aggregate monthly
production covered by all such contracts for any single month does not in
the aggregate exceed 80% of the aggregate Engineered Projected Production
(as defined below) of the Credit Parties and their Subsidiaries anticipated
to be sold in the ordinary course of their businesses for such month, (iii)
no such contract requires the Credit Parties or any of their Subsidiaries
to put up money, assets, letters of credit or other security against the
event of its nonperformance prior to actual default by such Credit Parties
or any of their Subsidiaries in performing their obligations thereunder
(unless such counterparty is a Lender), and (iv) each such contract is with
a counterparty or has a guarantor of the obligation of the counterparty who
(unless such counterparty is a Lender or one of its Affiliates) at the time
the contract is made has long-term obligations rated BBB+ or Baal or
better, respectively, by either Xxxxx'x or S&P. As used in this subsection,
the term "Engineered Projected Production" means the Engineered Value of
projected production of oil or gas (measured by volume unit or BTU
equivalent, not sales price) for the term of the contracts or a particular
month, as applicable, from properties and interests owned by the Credit
Parties and their Subsidiaries that are located in or offshore of the
United States and are proved developed producing reserves (as determined by
the Administrative Agent in its oil and gas lending criteria), as such
production is projected in the most recent report delivered pursuant to
Section 6.1(vii) or (viii), after deducting projected production from any
properties or interests sold or under contract for sale that had been
included in such report and after adding projected production from any
properties or interests that had not been reflected in such report but that
are reflected in a separate or supplemental reports meeting the
requirements of such Section 6.1(vii) or (viii) above and otherwise are
satisfactory to Administrative Agent;
(b) contracts entered into by Credit Parties or their Subsidiaries
with the purpose and effect of fixing interest rates on a principal amount
of indebtedness of such Credit Parties or their Subsidiaries that is
accruing interest at a variable rate, provided that no such contract will
be entered into by Credit Parties or any of their Subsidiaries for
speculative purposes; and
(c) such contracts comply with the Rate Management Transactions'
criteria disclosed in writing to the Administrative Agent.
7.11. Letters of Credit. The Credit Parties will not apply for or become
liable upon or in respect of any Letter of Credit other than LCs.
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7.12. Prohibited Contracts. Except as expressly permitted in this Agreement
or the other Loan Documents, none of Credit Parties will, directly or
indirectly, enter into, create, or otherwise allow to exist any contract or
other consensual restriction on the ability of any Subsidiary of a Borrower to:
(a) pay dividends or make other distributions to other Credit Parties, (b) to
redeem equity interests held in it by other Credit Parties, or (c) to repay
loans and other indebtedness owing by it to other Credit Parties. None of the
Credit Parties or their Subsidiaries will amend or permit any amendment to any
contract or lease which releases, qualifies, limits, makes contingent or
otherwise detrimentally affects the rights and benefits of the Administrative
Agent or any Lender under or acquired pursuant to any Collateral Documents.
7.13. Negative Pledge. Except only for Liens permitted by applicable
subsections of Section 7.6, none of the Credit Parties will cause or permit the
pledging, encumbrance, mortgaging, granting of a consensual security interest or
any other type of pledge, charge or imposition of a Lien against any of the
Credit Parties' or any Subsidiaries' (including without limitation, PetroCorps')
oil and gas mining and mineral interests, rights and properties, proved,
developed, producing or otherwise (whether now owned or hereafter created or
acquired) constituting 100% of the Engineered Value thereto, to secure any
Indebtedness (including Contingent Obligations) without the prior written
consent of the Administrative Agent and the Lenders. This covenant, to the
fullest extent permitted by applicable law, will be deemed and construed as a
"negative pledge" of all such oil and gas mining and mineral interests in favor
of the Administrative Agent for the benefit of the Lenders.
ARTICLE VIII
FINANCIAL COVENANTS
-------------------
8.1. Current Ratio. Unit will not permit the ratio, determined as of the
end of each of Unit's fiscal quarters, of (i) Unit's consolidated Current Assets
(including the then Available Aggregate Commitment) to (ii) Unit's consolidated
Current Liabilities (including the current portion of the Loans), to be less
than 1.0 to 1.0.
8.2. Leverage Ratio. Unit will not permit the ratio, determined as of the
end of each of Unit's fiscal quarters, of (i) Long Term Debt to (ii)
Consolidated EBITDA for the then mostrecently ended rolling four (4) fiscal
quarters to be greater than 3.25 to 1.0.
8.3. Minimum Consolidated Net Worth. Unit will not permit Unit's
Consolidated Net Worth to be less than Three Hundred Fifty Million Dollars
($350,000,000) as tested quarterly effective as of the close of each fiscal
quarter of Unit and annually effective as of the close of each fiscal year end,
based on the quarterly and annual financial statement reporting requirements of
Section 6.1(i) and (ii), respectively.
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ARTICLE IX
COLLATERAL AND GUARANTEES
-------------------------
9.1. Collateral. At all times the Secured Obligations will be secured by
first and prior Liens (subject only to Permitted Encumbrances) covering and
encumbering the Rigs described on Schedule 1 annexed to the Second Amended and
Restated Security Agreement dated as of even date with this Agreement from Unit
Drilling Company, as debtor, in favor of the Administrative Agent , as
collateral agent for the Lenders (the "Security Agreement"), together with all
associated equipment, machinery, tools, gear, accessions, accessories, and other
apparatus or goods with the Rigs.
9.2. Additional Collateral. Subject to the occurrence of the events
described below in Section 9.2(a) and 9.2(b), Credit Parties will grant to the
Administrative Agent as collateral agent for the Lenders a first mortgage lien
and/or deed of trust on and security interest in all of Credit Parties' oil and
gas properties and related inventory, intangibles, accounts, equipment, fixtures
and personal property (collectively referred to as the "Additional Collateral")
to secure the Obligations, by instruments satisfactory to the Administrative
Agent and the Lenders, as follows:
(a) No later than thirty (30) days after the Administrative Agent
notifies Unit in writing that the aggregate amount of Outstanding Credit
Exposure exceeds the lesser of the (i) then applicable aggregate Commitment
Amount or (ii) Borrowing Base then in effect if, by the last day of said
thirty (30) day period, Credit Parties 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, all in accordance with the provisions of Section 2.6.6(b) of this
Agreement.
(b) No later than thirty (30) days after the Administrative Agent
notifies Unit in writing that an Event of Default has occurred, unless
circumstances giving rise to such Event of Default have been cured prior to
the lapse of such thirty (30) days.
9.3. Rig Appraisals. The Administrative Agent, on behalf of the Required
Lenders, will be entitled to request that Unit obtain an updated, current
appraisal of the Rigs from Xxxxxx Xxxxx or another drilling rig appraiser
acceptable to the Administrative Agent and the Required Lenders not more
frequently than once every two (2) calendar years, commencing calendar year
2004, at Unit's sole cost and expense. Upon receipt of such written request from
the Administrative Agent, Unit will diligently engage such acceptable appraiser
and deliver a full and complete copy of the appraisal of the Rigs no later than
ninety (90) days after receipt of the Agent's written request.
9.4. Guarantees. Unit will cause each current Material Subsidiary
(consisting of PetroCorp upon the concurrent consummation of the PetroCorp
merger contemplated by the PetroCorp Agreement) and each future Material
Subsidiary to guarantee the prompt payment and performance when due of the
Obligations in accordance with the terms and provisions of the Subsidiary
Guaranty. As soon as practicable and in any event within ten (10) days after any
Person becomes a direct or indirect Material Subsidiary, Unit will provide the
Administrative
53
Agent written notice thereof and will cause such Person to execute a
Subsidiary Guaranty Joinder Agreement in substantially the same form as Schedule
1 to the Subsidiary Guaranty. Prior to any Investments being permitted to be
made in any other Subsidiary of the Credit Parties in excess of the amount
permitted by Section 7.5(v) such Subsidiary will also execute and deliver such a
Subsidiary Guaranty to the Administrative Agent for the ratable benefit of each
Lender, together with such other certificates or documents as Administrative
Agent reasonably deems necessary or appropriate to confirm such Subsidiary
Guaranty, including without limitation, closing opinions (supplementing the
closing opinion required by Section 4.1.1(v) of this Agreement) as required by
the Administrative Agent or the Required Lenders in connection with the
Subsidiary Guaranty instruments executed from time to time by Material
Subsidiaries under this Section 9.14 (including PetroCorp as the initial
Subsidiary Guarantor).
9.5. Further Assurances. Unit agrees to deliver and to cause each other
Borrower and its Subsidiaries to deliver, to further secure the Secured
Obligations whenever requested by Administrative Agent in its sole and absolute
discretion, deeds of trust, mortgages, chattel mortgages, security agreements,
financing statements and other Collateral Documents in form and substance
satisfactory to Administrative Agent for the purpose of granting, confirming,
and perfecting first and prior liens or security interests in any real or
personal property which is at such time Collateral or which was intended to be
Collateral pursuant to any Collateral Document previously executed and not then
released by Administrative Agent.
9.6. Negative Pledge/Production Proceeds. Notwithstanding that, by the
terms hereof, the Credit Parties and their Subsidiaries are granting to
Administrative Agent and Lenders a "negative pledge" of all of the "production
proceeds" accruing to the property covered thereby, so long as no Default has
occurred Credit Parties and their Subsidiaries may continue to receive from the
purchasers of production all such production proceeds. Upon the occurrence of a
Default, Administrative Agent and Lenders may exercise all rights and remedies
granted under the Collateral Documents, including the right to obtain possession
of all production proceeds then held by Credit Parties and their Subsidiaries or
to receive directly from the purchasers of production all production proceeds.
ARTICLE X
DEFAULTS
--------
The occurrence of any one or more of the following events will constitute a
Default:
10.1. Any representation or warranty made or deemed made by or on behalf of
the Credit Parties to the Lenders or the Administrative Agent under or in
connection with this Agreement, any Credit Extension, or any certificate, report
or information delivered in connection with this Agreement or any other Loan
Document is materially false on the date as of which made.
10.2. Nonpayment of principal of any Loan when due, nonpayment of any
Reimbursement Obligation within one Business Day after the same becomes due, or
nonpayment
54
of interest upon any Loan or of any commitment fee, LC Fee or other
obligations under any of the Loan Documents within ten (10) days after the same
becomes due.
10.3. The breach by the Credit Parties of any of the terms or provisions of
Section 2.21, Section 6.3, Article VII, Article VIII or Article IX of this
Agreement and failure to cure within twenty (20) days following written notice
from the Administrative Agent or any Lender to Unit.
10.4. The breach by the Credit Parties (other than a breach which
constitutes a Default under another Section of this Article X) of any of the
terms or provisions of this Agreement which is not remedied within thirty (30)
days after written notice from the Administrative Agent or any Lender to Unit.
10.5. Failure of the Credit Parties to pay when due any Material
Indebtedness; or the default by the Credit Parties in the performance (beyond
the applicable grace period with respect thereto, if any) of any term, provision
or condition contained in any Material Indebtedness Agreement, or any other
event occurs or condition exists, the effect of which default, event or
condition is to cause, or to permit the holder(s) of such Material Indebtedness
or the lender(s) under any Material Indebtedness Agreement to cause, such
Material Indebtedness to become due prior to its stated maturity or any
commitment to lend under any Material Indebtedness Agreement to be terminated
prior to its stated expiration date; or any Material Indebtedness of the Credit
Parties or any of their Subsidiaries will be declared to be due and payable or
required to be prepaid or repurchased (other than by a regularly scheduled
payment) prior to the stated maturity thereof; or the Credit Parties will not
pay, or admit in writing its inability to pay, its debts generally as they
become due.
10.6. The Credit Parties or any of their Material Subsidiaries will (i)
have an order for relief entered with respect to it under the Federal bankruptcy
laws as now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any Substantial Portion of its Property, (iv) institute any proceeding
seeking an order for relief under the Federal bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file an
answer or other pleading denying the material allegations of any such proceeding
filed against it, (v) take any corporate or partnership action to authorize or
effect any of the foregoing actions set forth in this Section 10.6 or (vi) fail
to contest in good faith any appointment or proceeding described in Section
10.7.
10.7. Without the application, approval or consent of the Credit Parties or
any of their Material Subsidiaries, a receiver, trustee, examiner, liquidator or
similar official will be appointed for the Credit Parties or any of their
Material Subsidiaries or a proceeding described in Section 10.6(iv) will be
instituted against the Credit Parties or any of their Material Subsidiaries and
such appointment continues undischarged or such proceeding continues undismissed
or unstayed for a period of 60 consecutive days.
55
10.8. Any court, government or governmental agency condemns, seizes or
otherwise appropriates, or takes custody or control of, all or any portion of
the Property of the Credit Parties and their Material Subsidiaries which, when
taken together with all other Property of the Credit Parties and their Material
Subsidiaries so condemned, seized, appropriated, or taken custody or control of,
during the twelve-month period ending with the month in which any such action
occurs, constitutes a Material Adverse Effect.
10.9. The Credit Parties or any of their Material Subsidiaries fails within
30 days to pay, bond or otherwise discharge one or more (i) judgments or orders
for the payment of money in excess of $1,000,000 (or the equivalent thereof in
currencies other than U.S. Dollars) in the aggregate, or (ii) nonmonetary
judgments or orders which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, which judgment(s), in any such case,
is/are not stayed on appeal or otherwise being appropriately contested in good
faith.
10.10. The Unfunded Liabilities of all Single Employer Plans exceeds in the
aggregate $500,000 or any material Reportable Event occurs in connection with
any Plan.
10.11. Nonpayment by the Credit Parties or any Material Subsidiary of any
Rate Management Obligation when due or the breach by the Credit Parties or any
Subsidiary of any term, provision or condition contained in any Rate Management
Transaction or any transaction of the type described in the definition of "Rate
Management Transactions," whether or not any Lender or Affiliate of a Lender is
a party thereto, after taking into account any applicable grace period, but only
if such nonpayment or breach constitutes a Material Adverse Effect.
10.12. Any Change in Control of any of the Credit Parties occurs.
10.13. The Credit Parties or any of their Material Subsidiaries (i) are the
subject of any proceeding or investigation pertaining to the release by the
Credit Parties, any of their Material Subsidiaries or any other Person of any
toxic or hazardous waste or substance into the environment, or (ii) violate any
Environmental Law, which, in the case of an event described in clause (i) or
clause (ii), could reasonably be expected to have a Material Adverse Effect.
10.14. Any Subsidiary Guaranty fails to remain in full force or effect or
any action is taken to discontinue or to assert the invalidity or
unenforceability of any Subsidiary Guaranty, or any Subsidiary Guarantor fails
to comply with any of the terms or provisions of any Subsidiary Guaranty to
which it is a party, or any Subsidiary Guarantor denies that it has any further
liability under any Subsidiary Guaranty to which it is a party, or will give
notice to such effect.
10.15. Any Collateral Document for any reason fails to create a valid and
perfected first priority security interest in any collateral purported to be
covered thereby, except as permitted by the terms of any Collateral Document, or
any Collateral Document fails to remain in full force or effect; or any action
by the Credit Parties or any of their Subsidiaries is taken to discontinue or to
assert the invalidity of unenforceability of any Collateral Document.
10.16. The Credit Parties fails to comply in any material respect with any
of the terms or provisions of any Collateral Document.
56
10.17. The representations and warranties set forth in Section 5.15 ("Plan
Assets; Prohibited Transactions") at any time are not true and correct in any
material respect.
ARTICLE XI
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
----------------------------------------------
11.1. Acceleration.
(i) If any Default described in Section 10.6 or 10.7 occurs with
respect to the Credit Parties, the obligations of the Lenders to make
Loans hereunder and the obligation and power of the LC Issuer to issue
LCs will automatically terminate and the Obligations will immediately
become due and payable without any election or action on the part of
the Administrative Agent, the LC Issuer or any Lender and the Credit
Parties will be and become thereby unconditionally obligated, without
any further notice, act or demand, to pay to the Administrative Agent
an amount in immediately available funds equal to the amount of LC
Obligations in cash or cash equivalents satisfactory to the
Administrative Agent. If any other Default occurs and is continuing,
the Required Lenders (or the Administrative Agent with the consent of
the Required Lenders) may (a) terminate or suspend the obligations of
the Lenders to make Loans hereunder and the obligation and power of
the LC Issuer to issue LCs, or declare the Obligations to be due and
payable, or both, in which event the Obligations will become
immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which the Credit Parties hereby expressly
waive, and (b) upon notice to the Credit Parties and in addition to
the continuing right to demand payment of all amounts payable under
this Agreement, make demand on the Credit Parties to pay, and the
Credit Parties will, forthwith upon such demand and without any
further notice or act, immediately pay to the Administrative Agent the
amount of such LC Obligations.
(ii) The Administrative Agent may at any time or from time to
time, after such funds are deposited with the Administrative Agent,
apply such funds to the payment of the Obligations and any other
amounts as may have become due and payable by the Credit Parties to
the Lenders or the LC Issuer under the Loan Documents.
11.2. Amendments. Subject to the provisions of this Section 11.2, the
Required Lenders (or the Administrative Agent with the consent in writing of the
Required Lenders) and the Credit Parties may enter into supplemental agreements
for the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or the Credit Parties under
this Agreement or waiving any Default under this Agreement; provided, however,
that no such supplemental agreement will, without the consent of all of the
Lenders:
57
(i) Extend the final maturity of any Loan, or extend the
expiration date of an LC to a date after the Facility Termination Date
or postpone any regularly scheduled payment of principal of any Loan
or forgive all or any portion of the principal amount thereof or any
Reimbursement Obligation related thereto, or reduce the rate or extend
the time of payment of interest or fees thereon or Reimbursement
Obligations related thereto.
(ii) Reduce the percentage specified in the definition of
Required Lenders or eliminate or delete the Borrowing Base concept of
Section 2.6 of this Agreement.
(iii) Extend the Facility Termination Date, or reduce the amount
or extend the payment date for, the mandatory principal payments
required under Section 2.8(b), or increase the (a) Maximum Credit
Amount, (b) Aggregate Commitment Amount above the Maximum Credit
Amount, (c) Borrowing Base contrary to the last sentence of Section
2.6.2(b), (d) amount of the Commitment of any Lender under this
Agreement or (e) commitment to issue LCs.
(iv) Amend this Section 11.2 or permit the Credit Parties to
assign their rights under this Agreement.
(v) Release any Subsidiary Guarantor of any Advance or, except as
provided in the Collateral Documents, release all or substantially all
of the Collateral or delete the Additional Collateral provisions of
Section 9.2. No amendment of any provision of this Agreement relating
to the Administrative Agent will be effective without the written
consent of the Administrative Agent, and no amendment of any provision
relating to the LC Issuer will be effective without the written
consent of the LC Issuer.
11.3. Preservation of Rights. No delay or omission of the Lenders, the LC
Issuer or the Administrative Agent to exercise any right under the Loan
Documents will impair such right or be construed to be a waiver of any Default
or an acquiescence in such Default, and the making of a Credit Extension
notwithstanding the existence of a Default or the inability of the Credit
Parties to satisfy the conditions precedent to such Credit Extension will not
constitute any waiver or acquiescence. Any single or partial exercise of any
such right will not preclude other or further exercise of such right or the
exercise of any other right, and no waiver, amendment or other variation of the
terms, conditions or provisions of the Loan Documents whatsoever will be valid
unless in writing signed by the Lenders required pursuant to Section 11.2, and
then only to the extent specifically set forth in writing. All remedies
contained in the Loan Documents or by law or equity afforded will be cumulative
and will be available to the Administrative Agent, the LC Issuer and the Lenders
until the Obligations have been paid in full.
ARTICLE XII
GENERAL PROVISIONS
------------------
58
12.1. Survival of Agreements. All covenants, agreements, representations
and warranties contained in this Agreement will survive the making of the Credit
Extensions during the term of this Agreement and any extensions, renewals,
supplements or restatements of this Agreement.
12.2. Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, neither the LC Issuer nor any Lender will be obligated
to extend credit to the Credit Parties in violation of any limitation or
prohibition provided by any applicable statute or regulation.
12.3. Headings. Section headings in the Loan Documents are for convenience
of reference only, and will not govern the interpretation of any of the
provisions of the Loan Documents.
12.4. Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Borrowers, the Administrative Agent, the LC Issuer and
the Lenders and supersede all prior agreements and understandings among the
Borrowers, the Administrative Agent, the LC Issuer and the Lenders relating to
the subject matter of the Loan Documents other than the Administrative Agent Fee
Letter, all of which will survive and remain in full force and effect during the
term of this Agreement.
12.5. Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
will be the partner or Administrative Agent of any other (except to the extent
to which the Administrative Agent is authorized to act in such capacity). The
failure of a Lender to perform any of its obligations hereunder will not relieve
any other Lender from any of its obligations hereunder. This Agreement will not
be construed so as to confer any right or benefit on any Person other than the
parties to this Agreement and their respective successors and assigns.
12.6. Expenses; Indemnification.
(i) The Borrowers will reimburse the Administrative Agent and the
Syndication Agent for any filing and recording fees, reasonable costs
and out-of- pocket expenses (including reasonable attorneys' fees,
time charges and expenses advanced of attorneys for the Administrative
Agent or for any of the Lenders) paid or incurred by the
Administrative Agent or the Syndication Agent in connection with the
preparation, negotiation, execution, closing, delivery, syndication,
review, amendment, waiver, consent or modification, restructure,
refinancing, Lien perfection, administration, collection and
enforcement of the Loan Documents, regardless of whether or not the
transactions provided for in this Agreement are eventually closed and
regardless of whether or not any or all sums evidenced by the Notes
are advanced to the Borrowers by the Lenders.
(ii) The Credit Parties hereby also agree to indemnify the
Administrative Agent, the Syndication Agent, the LC Issuer and each
Lender, its directors, officers and employees against all losses,
claims, damages, penalties,
59
judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor whether
or not the Administrative Agent, the Syndication Agent, the LC Issuer
or any Lender is a party to such litigation) which any of them may pay
or incur in good faith as a result of this Agreement, the other Loan
Documents, the transactions contemplated by the Loan Documents except
to the extent that they are determined in a final non-appealable
judgment by a court of competent jurisdiction to have resulted from
the gross negligence or willful misconduct of the party seeking
indemnification. The obligations of the Credit Parties under this
Section 12.6 will survive the termination of this Agreement.
12.7. Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction will,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction. The
provisions of all Loan Documents are severable.
12.8. Nonliability of Lenders. The relationship between the Borrowers on
the one hand and the Lenders, the LC Issuer and the Administrative Agent on the
other hand will, to the extent that relationship is the subject of this
Agreement, be solely that of borrowers and lenders. Neither the Administrative
Agent, the Syndication Agent, the LC Issuer nor any Lender will have any
fiduciary responsibilities to the Credit Parties. Neither the Administrative
Agent, the Syndication Agent, the LC Issuer nor any Lender undertakes any
responsibility to the Credit Parties to review or inform the Credit Parties of
any matter in connection with any phase of the Credit Parties' business or
operations. The Borrowers agree that neither the Administrative Agent, the
Syndication Agent, the LC Issuer nor any Lender will have liability to the
Credit Parties (whether sounding in tort, contract or otherwise) for losses
suffered by the Credit Parties in connection with, arising out of, or in any way
related to, the transactions contemplated and the relationship established by
the Loan Documents, or any act, omission or event occurring in connection
therewith, unless it is determined in a final non-appealable judgment by a court
of competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Neither the
Administrative Agent, the Syndication Agent, the LC Issuer nor any Lender will
have any liability with respect to, and the Credit Parties hereby waive, release
and agree not to xxx for, any special, indirect or consequential damages
suffered by the Credit Parties in connection with, arising out of, or in any way
related to the Loan Documents or the transactions contemplated thereby.
12.9. Confidentiality. Each Lender agrees to hold as confidential any
information which it may receive from the Borrowers pursuant to this Agreement
in confidence, except for disclosure (i) to its Affiliates and to other Lenders
and their respective Affiliates, (ii) to legal counsel, accountants, and other
professional advisors to such Lender or to a Transferee, (iii) to regulatory
officials, (iv) to any Person as requested pursuant to or as required by law,
regulation, or legal process, (v) to any Person in connection with any legal
proceeding to which such Lender is a party, (vi) to such Lender's direct or
indirect contractual counterparties in swap agreements or to legal counsel,
accountants and other professional advisors to such counterparties, (vii)
permitted by Section 14.4, (viii) to rating agencies if requested or required by
such agencies in
60
connection with a rating relating to the Advances, and (ix) of information
that the Credit Parties have made available to the general public.
12.10. Disclosure. The Borrowers and each Lender hereby acknowledge and
agree that BOk and/or its Affiliates from time to time may hold investments in,
make other loans to or have other relationships with the Borrowers and/or their
Subsidiaries.
12.11. Place of Payment. All amounts to be paid by the Borrowers or the
Subsidiary Guarantors under this Agreement will be paid in immediately available
funds to the Administrative Agent at its principal banking offices at Bank of
Oklahoma Tower, Xxx Xxxxxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000, Attention: Energy
Department -8th Floor, or at such other place as the Administrative Agent or the
Required Lenders will notify Unit in writing. If any interest, principal or
other payment falls due on a date other than a Business Day, then (unless
otherwise provided in this Agreement) such due date will 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.
12.12. Interest. It is the intention of the parties to this Agreement that
the Lenders conform strictly to usury laws applicable to it. Accordingly, if the
transactions contemplated by this Agreement would be usurious as to a Lender
under laws applicable to it (including the laws of the United States of America
or any other jurisdiction whose laws may be mandatorily applicable to Lenders
notwithstanding the other provisions of this Agreement), then, in that event,
notwithstanding anything to the contrary in any of the Loan Documents or any
agreement entered into in connection with or as security for the Notes, it is
agreed as follows:
(i) the aggregate of all consideration which constitutes interest
under law applicable to Lenders that is contracted for, taken,
reserved, charged or received by Lenders under any of the Loan
Documents or agreements or otherwise in connection with the Notes will
under no circumstances exceed the Highest Lawful Rate allowed by such
applicable law, and any excess will be canceled automatically and if
theretofore paid will be credited by the Administrative Agent or the
Lenders on the principal amount of the Obligations (or, to the extent
that the principal amount of the Obligations will have been or would
thereby be paid in full, refunded by Administrative Agent or the
Lenders to the Borrowers); and
(ii) in the event that the maturity of any of the Notes is
accelerated by, because of or resulting from an Event of Default under
this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes
interest under law applicable to Administrative Agent or the Lenders
may never include more than the maximum amount allowed by such
applicable law, and excess interest, if any, provided for in this
Agreement or otherwise will be canceled automatically by Lenders as of
the date of such acceleration or prepayment and, if theretofore paid,
will be credited by Administrative Agent or the Lenders on the
principal amount of the Obligations
61
(or, to the extent that the principal amount of the Obligations
will have been or would thereby be paid in full, refunded by Lenders
to the Borrowers).
All sums paid or agreed to be paid to Administrative Agent or the
Lenders for the use, forbearance or detention of sums due under this
Agreement will, to the extent permitted by law applicable to
Administrative Agent and/or the Lenders, be amortized, prorated,
allocated and spread throughout the full term of the Loans evidenced
by the Notes until payment in full so that the rate or amount of
interest on account of any Loans under this Agreement does not exceed
the Highest Lawful Rate allowed by such applicable law. If at any time
and from time to time (i) the amount of interest payable to Lenders on
any date will be computed at the highest lawful rate applicable to
Lenders pursuant to this Section 12.12; and (ii) in respect of any
subsequent interest computation period the amount of interest
otherwise payable to Lenders would be less than the amount of interest
payable to Lenders computed at the highest lawful rate applicable to
such Lenders, then the amount of interest payable to Lenders regarding
such subsequent interest computation period will continue to be
computed at the Highest Lawful Rate applicable to Lenders until the
total amount of interest payable to Lenders equals the total amount of
interest which would have been payable to Lenders if the total amount
of interest had been computed without giving effect to this Section
12.12.
None of the terms and provisions contained in this Agreement or
in any other Loan Document which directly or indirectly relate to
interest will ever be construed without reference to this Section
12.12, or be construed to create a contract to pay for the use,
forbearance or detention of money at an interest rate in excess of the
Highest Lawful Rate.
12.13. Automatic Debit of Borrowers' Operating Account. Upon Borrowers'
failure to pay all such costs and expenses owed by Borrowers under Section 12.6
of this Agreement within thirty (30) days of the Administrative Agent's
submission of invoices therefore, the Administrative Agent will pay such costs
and expenses by debit to the operating account of Borrowers with the
Administrative Agent without further or other notice to Borrowers.
12.14. Exceptions to Covenants. The Credit Parties are not permitted to
take any action or fail to take any action which is permitted as an exception to
any of the covenants contained in this Agreement or which is within the
permissible limits of any of the covenants contained in this Agreement if such
action or omission would result in the breach of any other covenant contained in
this Agreement.
12.15. Conflict with Security Instruments. To the extent the terms and
provisions of any of the Security Instruments are in conflict with the terms and
provisions hereof, this Agreement will be deemed controlling.
12.16. Lost Documents. On receipt of an affidavit of an officer of the
Administrative Agent as to the loss, theft, destruction or mutilation of the
Notes or Collateral Documents which
62
is not of public record, and, in the case of any mutilation, on the
surrender and cancellation of the Notes or Collateral Documents, the Borrowers
or any Subsidiary Guarantors will issue, in lieu thereof, a replacement Note(s)
or other Collateral Documents in the same principal amount thereof (in the case
of any of the Notes) and otherwise of like tenor.
ARTICLE XIII
THE ADMINISTRATIVE AGENT
------------------------
13.1. Appointment; Nature of Relationship. BOk is hereby appointed by each
of the Lenders as its contractual representative (herein referred to as the
"Administrative Agent") hereunder and under each other Loan Document, and each
of the Lenders irrevocably authorizes the Administrative Agent to act as the
contractual representative of such Lender with the rights and duties expressly
set forth herein and in the other Loan Documents. The Administrative Agent
agrees to act as such contractual representative upon the express conditions
contained in this Article XIII. Notwithstanding the use of the defined term
"Administrative Agent," it is expressly understood and agreed that the
Administrative Agent will not have any fiduciary responsibilities to any Lender
by reason of this Agreement or any other Loan Document and that the
Administrative Agent is merely acting as the contractual representative of the
Lenders with only those duties as are expressly set forth in this Agreement and
the other Loan Documents. In its capacity as the Lenders' contractual
representative, the Administrative Agent (i) does not hereby assume any
fiduciary duties to any of the Lenders, (ii) is a "representative" of the
Lenders within the meaning of the term "secured party" as defined in the
Oklahoma Uniform Commercial Code and (iii) is acting as an independent
contractor, the rights and duties of which are limited to those expressly set
forth in this Agreement and the other Loan Documents. Each of the Lenders hereby
agrees to assert no claim against the Administrative Agent on any agency theory
or any other theory of liability for breach of fiduciary duty, all of which
claims each Lender hereby waives.
13.2. Powers. The Administrative Agent will have and may exercise such
powers under the Loan Documents as are specifically delegated to the
Administrative Agent by the terms of each thereof, together with such powers as
are reasonably incidental thereto. The Administrative Agent has no implied
duties to the Lenders, or any obligation to the Lenders to take any action
thereunder except any action specifically provided by the Loan Documents to be
taken by the Administrative Agent.
13.3. General Immunity. Neither the Administrative Agent nor any of its
directors, officers or employees will be liable to the Credit Parties, the
Lenders or any Lender for any action taken or omitted to be taken by it or them
hereunder or under any other Loan Document or in connection herewith or
therewith except to the extent such action or inaction is determined in a final
non-appealable judgment by a court of competent jurisdiction to have arisen from
the gross negligence or willful misconduct of such Person provided that nothing
in this Section 13.3 is intended to impair or otherwise limit (i) the rights of
the Credit Parties to make claims against the LC Issuer for damages as
contemplated by either proviso (ii) to the first sentence of Section 2.19.6 or
proviso (y) to the penultimate sentence of Section 2.19.9 or (ii) the
liabilities of the LC Issuer or the Administrative Agent to the Credit Parties
based on a standard of care otherwise
63
expressly designated or stipulated to in other provisions of this Agreement.
13.4. No Responsibility for Loans, Recitals. Neither the Administrative
Agent nor any of its directors, officers or employees will be responsible for or
have any duty to ascertain, inquire into, or verify (a) any statement, warranty
or representation made in connection with any Loan Document or any borrowing
hereunder; (b) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (c) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered solely to the Administrative Agent;
(d) the existence or possible existence of any Default; (e) the validity,
enforceability, effectiveness, sufficiency or genuineness of any Loan Document
or any other instrument or writing furnished in connection therewith; (f) the
value, sufficiency, creation, perfection or priority of any Lien in any
collateral security; or (g) the financial condition of the Credit Parties or any
Subsidiary Guarantor of any of the Obligations or of any of the Credit Parties'
or any such Subsidiary Guarantor 's respective Subsidiaries. The Administrative
Agent has no duty to disclose to the Lenders information that is not required to
be furnished by the Credit Parties to the Administrative Agent at such time, but
is voluntarily furnished by the Credit Parties to the Administrative Agent
(either in its capacity as Administrative Agent or in its individual capacity).
13.5. Action on Instructions of Lenders. The Administrative Agent will in
all cases be fully protected in acting, or in refraining from acting, hereunder
and under any other Loan Document in accordance with written instructions signed
by the Required Lenders, and such instructions and any action taken or failure
to act pursuant thereto will be binding on all of the Lenders. The Lenders
hereby acknowledge that the Administrative Agent will be under no duty to take
any discretionary action permitted to be taken by it pursuant to the provisions
of this Agreement or any other Loan Document unless it is requested in writing
to do so by the Required Lenders. The Administrative Agent will be fully
justified in failing or refusing to take any action hereunder and under any
other Loan Document unless it is first indemnified to its satisfaction by the
Lenders pro rata against any and all liability, cost and expense that it may
incur by reason of taking or continuing to take any such action.
13.6. Employment of Administrative Agents; Counsel; Reliance. The
Administrative Agent may execute any of its duties as Administrative Agent
hereunder and under any other Loan Document by or through employees,
Administrative Agents, and attorneys-in-fact and is not answerable to the
Lenders, except as to money or securities received by it or its authorized
Administrative Agents, for the default or misconduct of any such Administrative
Agents or attorneys-in-fact selected by it with reasonable care. The
Administrative Agent will be entitled to advice of counsel concerning the
contractual arrangement between the Administrative Agent and the Lenders and all
matters pertaining to the Administrative Agent's duties hereunder and under any
other Loan Document. The Administrative Agent will be entitled to rely upon any
Note, notice, consent, certificate, affidavit, letter, telegram, statement,
paper or document believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons, and, in respect to legal
matters, upon the opinion of counsel selected by the Administrative Agent, which
counsel may be employees of the Administrative Agent.
64
13.7. Administrative Agent's Reimbursement and Indemnification. The Lenders
agree to reimburse and indemnify the Administrative Agent ratably in proportion
to their respective Commitments (or, if the Commitments have been terminated, in
proportion to their Commitments immediately prior to such termination) (i) for
any amounts not reimbursed by the Borrowers for which the Administrative Agent
is entitled to reimbursement by the Borrowers under the Loan Documents, (ii) for
any other expenses incurred by the Administrative Agent on behalf of the
Lenders, in connection with the preparation, execution, delivery, administration
and enforcement of the Loan Documents (including, without limitation, for any
expenses incurred by the Administrative Agent in connection with any dispute
between the Administrative Agent and any Lender or between two or more of the
Lenders) and (iii) for any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of the Loan Documents
or any other document delivered in connection therewith or the transactions
contemplated thereby (including, without limitation, for any such amounts
incurred by or asserted against the Administrative Agent in connection with any
dispute between the Administrative Agent and any Lender or between two or more
of the Lenders), or the enforcement of any of the terms of the Loan Documents or
of any such other documents, provided that (i) no Lender will be liable for any
of the foregoing to the extent any of the foregoing is found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the Administrative Agent and
(ii) any indemnification required pursuant to Section 3.3(iv) will,
notwithstanding the provisions of this Section 13.7, be paid by the relevant
Lender in accordance with the provisions thereof. The obligations of the Lenders
under this Section 13.7 will survive payment of the Obligations and termination
of this Agreement.
13.8. Notice of Default. The Administrative Agent will not be deemed to
have knowledge or notice of the occurrence of any Default under this Agreement
unless the Administrative Agent has received written notice from a Lender or the
Borrowers referring to this Agreement describing such Default and stating that
such notice is a "notice of default." In the event that the Administrative Agent
receives such a notice, the Administrative Agent will give prompt notice thereof
to the Lenders.
13.9. Rights as a Lender. In the event the Administrative Agent is a
Lender, the Administrative Agent will have the same rights and powers hereunder
and under any other Loan Document with respect to its Commitment and its Loans
as any Lender and may exercise the same as though it were not the Administrative
Agent, and the term "Lender" or "Lenders" will, at any time when the
Administrative Agent is a Lender, unless the context otherwise indicates,
include the Administrative Agent in its individual capacity. The Administrative
Agent and its Affiliates may accept deposits from, lend money to, and generally
engage in any kind of trust, debt, equity or other transaction, in addition to
those contemplated by this Agreement or any other Loan Document, with the Credit
Parties or any of their Subsidiaries in which the Credit Parties or such
Subsidiary is not restricted hereby from engaging with any other Person.
13.10. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, the
Syndication Agent or any other Lender and based on the financial statements
prepared by the Credit Parties and such other documents
65
and information as it has deemed appropriate, made its own credit analysis
and decision to enter into this Agreement and the other Loan Documents. Each
Lender also acknowledges that it will, independently and without reliance upon
the Administrative Agent, the Syndication Agent or any other Lender and based on
such documents and information as it deems appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents.
13.11. Successor Administrative Agent. The Administrative Agent may resign
at any time by giving written notice thereof to the Lenders and Unit, such
resignation to be effective upon the appointment of a successor Administrative
Agent or, if no successor Administrative Agent has been appointed, 45 days after
the retiring Administrative Agent gives notice of its intention to resign. The
Administrative Agent may be removed at any time with or without cause by written
notice received by the Administrative Agent from the Required Lenders, such
removal to be effective on the date specified by the Required Lenders. Upon any
such resignation or removal, the Required Lenders will have the right to
appoint, on behalf of the Credit Parties and the Lenders, a successor
Administrative Agent. If no successor Administrative Agent will have been so
appointed by the Required Lenders within thirty days after the resigning
Administrative Agent's giving notice of its intention to resign, then the
resigning Administrative Agent may appoint, on behalf of the Credit Parties and
the Lenders, a successor Administrative Agent. Notwithstanding the previous
sentence, the Administrative Agent may at any time without the consent of the
Credit Parties or any Lender, appoint any of its Affiliates which is a
commercial bank as a successor Administrative Agent hereunder. If the
Administrative Agent has resigned or been removed and no successor
Administrative Agent has been appointed, the Lenders may perform all the duties
of the Administrative Agent hereunder and the Borrowers will make all payments
in respect of the Obligations to the applicable Lender and for all other
purposes will deal directly with the Lenders. No successor Administrative Agent
will be deemed to be appointed hereunder until such successor Administrative
Agent has accepted the appointment. Any such successor Administrative Agent will
be a commercial bank having capital and retained earnings of at least
$100,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent will thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the resigning or removed Administrative Agent. Upon the
effectiveness of the resignation or removal of the Administrative Agent, the
resigning or removed Administrative Agent will be discharged from its duties and
obligations hereunder and under the Loan Documents. After the effectiveness of
the resignation or removal of an Administrative Agent, the provisions of this
Article XIII will continue in effect for the benefit of such Administrative
Agent in respect of any actions taken or omitted to be taken by it while it was
acting as the Administrative Agent hereunder and under the other Loan Documents.
13.12. Execution of Collateral Documents. The Lenders hereby empower and
authorize the Administrative Agent to execute and deliver to Unit on their
behalf the Security Agreement and all related agreements, documents or
instruments as will be necessary or appropriate to effect the purposes of the
Security Agreement.
13.13. Collateral Releases. The Lenders hereby empower and authorize the
Administrative Agent to execute and deliver to Unit on their behalf any
agreements, documents
66
or instruments as will be necessary or appropriate to effect any releases
of Collateral which will be permitted by the terms hereof or of any other Loan
Document or which will otherwise have been approved by the Required Lenders (or,
if required by the terms of Section 11.2, all of the Lenders) in writing.
13.14. Syndication Agent. No Lender identified in this Agreement as the
Syndication Agent will have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Lenders as such. Without limiting the foregoing, no Lender will have or be
deemed to have a fiduciary relationship with any other Lender. Each Lender
hereby makes the same acknowledgments with respect to such Lenders as it makes
with respect to the Administrative Agent in Section 13.10.
13.15 Delegation to Affiliates. The Credit Parties and the Lenders agree
that the Administrative Agent may delegate any of its duties under this
Agreement to any of its Affiliates. Any Affiliate of the Administrative Agent
which performs duties in connection with this Agreement will be entitled to the
same benefits of the indemnification, waiver and other protective provisions to
which the Administrative Agent is entitled under Articles XII and XIII.
ARTICLE XIV
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
-------------------------------------------------
14.1. Successors and Assigns. The terms and provisions of the Loan
Documents will be binding upon and inure to the benefit of the Credit Parties
and the Lenders and their respective successors and assigns permitted hereby,
except that (i) the Credit Parties will not have the right to assign their
rights or obligations under the Loan Documents without the prior written consent
of each Lender, (ii) any assignment by any Lender must be made in compliance
with Section 14.3, and (iii) any transfer by participation must be made in
compliance with Section 14.2. Any attempted assignment or transfer by any party
not made in compliance with this Section 14.1 will be null and void, unless such
attempted assignment or transfer is treated as a participation in accordance
with Section 14.3.2. The parties to this Agreement acknowledge that clause (ii)
of this Section 14.1 relates only to absolute assignments and this Section 14.1
does not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by any Lender of all or any portion of its
rights under this Agreement and any Note to a Federal Reserve Bank; provided,
however, that no such pledge or assignment creating a security interest will
release the transferor Lender from its obligations hereunder unless and until
the parties thereto have complied with the provisions of Section 14.3. The
Administrative Agent may treat the Person which made any Loan or which holds any
Note as the owner thereof for all purposes hereof unless and until such Person
complies with Section 14.3; provided, however, that the Administrative Agent may
in its discretion (but will not be required to) follow instructions from the
Person which made any Loan or which holds any Note to direct payments relating
to such Loan or Note to another Person. Any assignee of the rights to any Loan
or any Note agrees by acceptance of such assignment to be bound by all the terms
and provisions of the Loan Documents. Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the owner of the rights to any Loan (whether or not a Note has been
issued in evidence thereof), will be conclusive and binding
67
on any subsequent holder or assignee of the rights to such Loan.
14.2. Participations.
14.2.1. Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at
any time upon obtaining the prior written consent of Unit and the Required
Lenders, sell to one or more banks or other entities ("Participants")
participating interests in any Outstanding Credit Exposure of such Lender,
any Note held by such Lender, any Commitment of such Lender or any other
interest of such Lender under the Loan Documents. In the event of any such
sale by a Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents will remain unchanged, such Lender
will remain solely responsible to the other parties hereto for the
performance of such obligations, such Lender will remain the owner of its
Outstanding Credit Exposure and the holder of any Note issued to it in
evidence thereof for all purposes under the Loan Documents, all amounts
payable by the Borrowers under this Agreement will be determined as if such
Lender had not sold such participating interests, and the Borrowers and the
Administrative Agent will continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under the
Loan Documents.
14.2.2. Voting Rights. Each Lender will retain the sole right to
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than
any amendment, modification or waiver with respect to any Credit Extension
or Commitment in which such Participant has an interest which would require
consent of all of the Lenders pursuant to the terms of Section 11.2 or of
any other Loan Document.
14.2.3. Benefit of Certain Provisions. The Borrowers agree that each
Participant will be deemed to have the right of setoff provided in Section
6.11 in respect of its participating interest in amounts owing under the
Loan Documents to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under the Loan Documents,
provided that each Lender will retain the right of setoff provided in
Section 6.11 with respect to the amount of participating interests sold to
each Participant. The Lenders agree to share with each Participant, and
each Participant, by exercising the right of setoff provided in Section
6.11, agrees to share with each Lender, any amount received pursuant to the
exercise of its right of setoff, such amounts to be shared in accordance
with Section 6.11(c) as if each Participant were a Lender. The Borrowers
further agree that each Participant will be entitled to the benefits of
Sections 3.1, 3.2, 3.4 and 3.5 to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to Section 14.3,
provided that (i) a Participant will not be entitled to receive any greater
payment under Section 3.1, 3.2 or 3.5 than the Lender who sold the
participating interest to such Participant would have received had it
retained such interest for its own account, unless the sale of such
interest to such Participant is made with the prior written consent of the
Borrowers, and (ii) any Participant not incorporated under the laws of the
United States of America or any State thereof agrees to comply with the
provisions of Section 3.3 to the same extent as if it were a Lender.
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14.3. Assignments.
14.3.1. Permitted Assignments. Any Lender may, in the ordinary course
of its business and in accordance with applicable law, at any time assign
to one or more banks or other entities ("Purchasers") all or any part of
its rights and obligations under the Loan Documents. Such assignment will
be substantially in the form of Exhibit C or in such other form as may be
agreed to by the parties thereto. The consent of Unit, the Administrative
Agent and the LC Issuer will be required prior to an assignment becoming
effective with respect to a Purchaser which is not a Lender or an Affiliate
thereof; provided, however, that if a Default has occurred and is
continuing, the consent of the Credit Parties will not be required. Such
consent of the Credit Parties will not be unreasonably withheld or delayed.
Each such assignment with respect to a Purchaser which is not a Lender or
an Affiliate thereof will (unless each of the Credit Parties and the
Administrative Agent otherwise consent) be in an amount not less than the
lesser of (i) $10,000,000 or (ii) the remaining amount of the assigning
Lender's Commitment (calculated as at the date of such assignment) or
outstanding Loans (if the applicable Commitment has been terminated).
14.3.2. Effect; Effective Date. Upon (i) delivery to the
Administrative Agent of a notice of assignment, substantially in the form
attached as Exhibit I to Exhibit C (a "Notice of Assignment"), together
with any consents required by Section 14.3.1, and (ii) payment of a $500
fee to the Administrative Agent for processing such assignment, such
assignment will become effective on the effective date specified in such
Notice of Assignment. The Notice of Assignment will contain a
representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Commitment and Outstanding
Credit Exposure under the applicable assignment agreement are "plan assets"
as defined under ERISA and that the rights and interests of the Purchaser
in and under the Loan Documents will not be "plan assets" under ERISA. On
and after the effective date of such assignment, such Purchaser will for
all purposes be a Lender to this Agreement and any other Loan Document
executed by or on behalf of the Lenders and will have all the rights and
obligations of a Lender under the Loan Documents, to the same extent as if
it were an original party hereto, and no further consent or action by the
Credit Parties, the Lenders or the Administrative Agent will be required to
release the transferor Lender with respect to the percentage of the
Aggregate Commitment and Outstanding Credit Exposure assigned to such
Purchaser. Upon the consummation of any assignment to a Purchaser pursuant
to this Section 14.3.2, the transferor Lender, the Administrative Agent and
the Borrowers will, if the transferor Lender or the Purchaser desires that
its Loans be evidenced by Notes, make appropriate arrangements so that new
Notes or, as appropriate, replacement Notes are issued to such transferor
Lender and new Notes or, as appropriate, replacement Notes, are issued to
such Purchaser, in each case in principal amounts reflecting their
respective Commitments, as adjusted pursuant to such assignment.
14.3.3. Register. The Administrative Agent, acting solely for this
purpose as an Administrative Agent of the Borrowers, will maintain at its
main banking offices in
69
Tulsa, Oklahoma, a copy of each Assignment and Assumption delivered to
it and a register for the recordation of the names and addresses of the
Lenders, and the Commitments of, and principal amounts of the Loans owing
to, each Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register will be conclusive, and the
Borrowers, the Administrative Agent and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register will be available for inspection by the
Borrowers and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.
14.4. Dissemination of Information. The Credit Parties authorize each
Lender to disclose to any Participant or Purchaser or any other Person acquiring
an interest in the Loan Documents by operation of law (each a "Transferee") and
any prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Credit Parties and their Subsidiaries,
including without limitation any information contained in any reports provided
to Administrative Agent; provided that each Transferee and prospective
Transferee agrees to be bound by this Agreement.
14.5. Tax Treatment. If any interest in any Loan Document is transferred to
any Transferee which is not incorporated under the laws of the United States or
any State thereof, the transferor Lender will cause such Transferee,
concurrently with the effectiveness of such transfer, to comply with the
provisions of Section 3.3(iv).
14.6. Procedure for Increases and Addition of New Lenders. This Agreement
permits increases in existing Lenders' Commitments without the consent or
approval of the other Lenders, provided that the resulting Aggregate Commitments
do not exceed the Maximum Credit Amount. This Agreement also permits the
admission of new Lenders providing new Commitments, subject to the consent of
the Lenders. Any amendment hereto for an increase in a Lender's Commitment or
addition of a new Lender will be in the form attached hereto as Exhibit D. Only
the written consent of the Administrative Agent, Unit and the existing Lender(s)
increasing its or their Commitment(s) will be required to Exhibit D if and to
the extent the Aggregate Commitments, as increased, will not exceed the Maximum
Credit Amount. In addition, within a reasonable time after the effective date of
any increase, the Administrative Agent will, and is hereby authorized and
directed to, revise the Lenders Schedule reflecting such increase and will
distribute revised Lenders Schedule to each of the Lenders and Unit, and the
revised Lenders Schedule will replace the old Lenders Schedule and become part
of this Agreement. On the Business Day following any increase, all outstanding
Alternate Base Rate Advances will be reallocated among the Lenders (including
any newly added Lenders) in accordance with the Lenders' respective revised Pro
Rata Shares. Eurodollar Advances will not be reallocated among the Lenders prior
to the expiration of the applicable Interest Period in effect at the time of any
increase.
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ARTICLE XV
NOTICES/CONSENTS
----------------
15.1. Notices. Except as otherwise permitted by Section 2.9 with respect to
Borrowing Notices, all notices, requests and other communications to any party
hereunder will be in writing (including facsimile transmission or similar
writing) and will be given to such party: (x) in the case of the Borrowers or
the Administrative Agent, at its address or facsimile number set forth on the
signature pages hereof, (y) in the case of any Lender, at its address or
facsimile number set forth on the Lenders Schedule or (z) in the case of any
party, at such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the Administrative Agent and the Borrowers
in accordance with the provisions of this Section 15.1. Each such notice,
request or other communication will be effective (i) if given by facsimile
transmission, when transmitted to the facsimile number specified in this Section
and confirmation of receipt is received, (ii) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, or (iii) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the
Administrative Agent under Article II will not be effective until received.
15.2. Change of Address. The Borrowers, the Administrative Agent and any
Lender (i) may each change the address for service of notice upon it by a notice
in writing to the other parties hereto and (ii) will give such a notice if its
address will change.
15.3. Consent to Amendments. This Agreement and any of the other Loan
Documents may be amended, and the Borrowers may take any action herein
prohibited, or omit to perform any act herein required to be performed by it, if
the Borrowers will obtain the written consent to such amendment, action or
omission to act, of the Administrative Agent and the Lenders. Each holder of any
of the Notes at the time or thereafter outstanding will be bound by any consent
authorized by this Section 15.3, whether or not the Notes will have been marked
to indicate such consent, but any Notes issued thereafter may bear a notation
referring to any such consent. No course of dealing between the Credit Parties
and any holder of any of the Notes nor any delay in exercising any rights
hereunder or under the Notes will operate as a waiver of any rights of any
holder of any of the Notes. As used herein and in the Notes, the term "this
Agreement" and references thereto will mean this Agreement as it may from time
to time be amended, modified or supplemented.
15.4. USA PATRIOT Act Notice. IMPORTANT INFORMATION ABOUT PROCEDURES FOR
OPENING A NEW ACCOUNT. To help the government fight the funding of terrorism and
money laundering activities, federal law requires all financial institutions to
obtain, verify, and record information that identifies each person or entity
that opens an account, including any deposit account, treasury management
account, loan, other extension of credit, or other financial services product.
What this means for borrowers: When a borrower opens an account, the Bank will
ask for the borrower's name, residential address, tax identification number, and
other information that will allow the Bank to identify the borrower, including
the borrower's date of birth if the borrower is an individual. The Bank may also
ask, if the borrower is an individual, to see the borrower's driver's license or
other identifying
71
documents, and, if the borrower is not an individual, to see the borrower's
legal organizational documents or other identifying documents. The Bank will
verify and record the information the Bank obtains from the borrower pursuant to
the USA PATRIOT Act, and will maintain and retain that record in accordance with
the regulations promulgated under the USA PATRIOT Act.
ARTICLE XVI
COUNTERPARTS
------------
This Agreement may be executed in any number of counterparts, all of which
taken together will constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement will be
effective when it has been executed by the Borrowers, the Administrative Agent,
the LC Issuer and the Lenders and each party has notified the Administrative
Agent by facsimile transmission or electronic transmission (e-mail) that it has
taken such action. All closing documents will be furnished to the Administrative
Agent with sufficient counterparts so that the Administrative Agent may furnish
one to each of the Lenders.
ARTICLE XVII
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
------------------------------------------------------------
17.1. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) WILL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF OKLAHOMA, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS AND WILL BE DEEMED TO HAVE BEEN MADE OR INCURRED
UNDER THE LAWS OF THE STATE OF OKLAHOMA EXCEPT ONLY WHERE THE APPLICABLE
REMEDIAL OR PROCEDURAL LAWS OF OTHER JURISDICTIONS IN WHICH PORTIONS OF THE
COLLATERAL ARE SITUATED ARE APPLICABLE THERETO.
17.2. CONSENT TO JURISDICTION. THE BORROWERS, THE ADMINISTRATIVE AGENT AND
LENDERS HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR OKLAHOMA STATE COURT SITTING IN TULSA, OKLAHOMA IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE
BORROWERS, THE ADMINISTRATIVE AGENT AND LENDERS HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER
HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN WILL LIMIT THE
RIGHT OF THE ADMINISTRATIVE AGENT, THE LC ISSUER OR ANY LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWERS IN THE COURTS OF ANY OTHER JURISDICTION.
72
17.3. NO ORAL AGREEMENTS. THE LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT
AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER AGREEMENTS AND
UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND
THEREOF, THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
17.4. EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO SPECIFICALLY
AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT, THE NOTES AND THE COLLATERAL
DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT, THE NOTES AND THE COLLATERAL DOCUMENTS; THAT IT HAS IN FACT
READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF
THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN
REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE
NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT, THE NOTES AND THE
COLLATERAL DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING
INTO THIS AGREEMENT, THE NOTES AND THE COLLATERAL DOCUMENTS; AND THAT IT
RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT, THE NOTES AND THE
COLLATERAL DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME
ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY
FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT
CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS
AGREEMENT AND THE COLLATERAL DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE
OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT "CONSPICUOUS."
17.5. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES. THE BORROWERS, THE
ADMINISTRATIVE AGENT, THE LC ISSUER AND EACH LENDER HEREBY WAIVE TRIAL BY JURY
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MANNER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER. EACH BORROWER AND EACH LENDER HEREBY FURTHER (A) IRREVOCABLY WAIVE,
TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY SUCH LITIGATION ANY "SPECIAL DAMAGES," AS DEFINED BELOW, (B)
CERTIFY THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY
PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY
WOULD NOT, IN THE EVENT OF
73
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (C)
ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION. AS
USED IN THIS SECTION, "SPECIAL DAMAGES" INCLUDES ALL SPECIAL,
CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF
HOW NAMED), BUT DOES NOT INCLUDE ANY PAYMENTS OR FUNDS WHICH
ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR DELIVER TO
ANY OTHER PARTY HERETO.
74
IN WITNESS WHEREOF, the Borrowers, the Lenders and the Administrative Agent
have executed this Agreement as of the date first above written.
UNIT CORPORATION, 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,
SERDRILCO, INC.
an Oklahoma corporation and
UNIT ENERGY CANADA INC.,
an Alberta, Canada corporation
By_________________________________
Xxxxx X. Xxxxxxxx
President
UNIT CORPORATION,
MOUNTAIN FRONT PIPELINE
COMPANY, INC.,
UNIT PETROLEUM COMPANY,
UNIT DRILLING COMPANY,
PETROLEUM SUPPLY COMPANY,
SERDRILCO, INC. and
UNIT ENERGY CANADA INC.
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BANK OF OKLAHOMA, NATIONAL
ASSOCIATION, Individually, as LC Issuer
and as Administrative Agent
By__________________________________
Xxx Xxxxxxxxx
Senior Vice President
000 Xxxx Xxxxxx Xxxxxx
Bank of Oklahoma Tower
Xxx Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BANK OF AMERICA, N.A., a Lender
By__________________________________
Xxxxxxx X. Xxxx
Senior Vice President
000 Xxxxx Xxxxxxx
Xxxxx, Xxxxxxxx, 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BMO XXXXXXX XXXXX FINANCING, INC., a
Lender
By_________________________________
Xxxxx Xxxxxx, Vice President
000 Xxxxx XxXxxxx Xxxxxx
00xx Xxxxx Xxxx
Xxxxxxx, XXX00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(with a copy to)
Bank of Montreal
Houston Agency
000 Xxxxxxxxx Xxxxxx
0000 Xxxx xx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
COMPASS BANK, a Lender
By___________________________________
Xxxxxxxx X. Xxxxx
Vice President
00 Xxxxxxxx Xxxxx
00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
EXHIBIT A
FORM OF PROMISSORY NOTE
-----------------------
EXHIBIT B
COMPLIANCE CERTIFICATE
----------------------
Bank of Oklahoma, National Association, as
Administrative Agent
Bank of Oklahoma Tower
Xxx Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
This Compliance Certificate is delivered pursuant to Section 6.1(iii) of
that certain Credit Agreement, dated as of January 30, 2004 (as amended,
modified, supplemented or restated from time to time, the "Credit Agreement"),
by and among Unit Corporation, a Delaware corporation ("Unit") ("Unit" and the
subsidiaries thereof signatory parties to the Credit Agreement, as borrowers,
collectively the "Borrowers"), the Lenders (as therein defined), and Bank of
Oklahoma, National Association, as Administrative Agent for the Lenders.
Capitalized terms used herein and not otherwise defined have the respective
meanings assigned to them in the Credit Agreement.
As used in this Compliance Certificate (including the Schedules attached
hereto), "Quarterly Calculation Date" means the last day of the fiscal quarter
ending ___________, 200_.
The undersigned hereby certifies, represents and warrants as follows:
1. The undersigned is the chief financial officer of Unit and as such he or
she is authorized to execute and deliver this Compliance Certificate on behalf
of the Borrowers and their Subsidiaries (collectively, the "Credit Parties").
2. The undersigned has reviewed the activities of the Credit Parties with a
view to determining whether the Credit Parties have fulfilled their respective
obligations under the Loan Documents.
3. Except as set forth on Schedule I attached hereto, to the best knowledge
of the undersigned, after due inquiry:
(a) each of the Credit Parties has complied with and is in compliance with
all of the terms and provisions of each of the Loan Documents to which it is a
party;
(b) all representations and warranties made by the Borrowers in the Credit
Agreement are true and correct in all material respects as of the date hereof
(other than representations and warranties which refer solely to an earlier
specified date); and
(c) no Default has occurred and is continuing under the Credit Agreement.
4. As of the Quarterly Calculation Date, the Borrower was in compliance
with the financial covenants set forth in Sections 8.1, 8.2 and 8.3 of the
Credit Agreement, as demonstrated by the computations set forth in Schedule II
attached hereto, calculated in accordance with GAAP.
5. Schedule III attached hereto contains a complete and accurate list of
all Material Subsidiaries of the Borrowers. The Borrowers have complied with
Section 9.4 of the Credit Agreement by causing each of the Material Subsidiaries
to become a party to the Subsidiary Guaranty.
IN WITNESS WHEREOF, I have executed this Certificate this ______ day of
___________, 2004.
__________________________________
__________________________(name)
Chief Financial Officer
Unit Corporation
2
SCHEDULE I
To Compliance Certificate
-------------------------
(Disclosure of Defaults and Non-Compliance)
A. Nature of Default or terms of Loan Documents that have not been complied
with in all material respects:
B. Steps being taken to correct such Default or noncompliance:
SCHEDULE II
To Compliance Certificate
(Financial Covenant Calculations)
1. Calculation of Current Ratio (Section 8.1)
------------------------------------------
(To be calculated on a consolidated basis for Unit as of the Quarterly
Calculation Date)
Current Assets (including Available
Aggregate Commitment) $_______________________
Divided by: Current Liabilities /_______________________
Consolidated Current Ratio: = =_______________________
(must be equal to or greater
than 1.0 to 1.0)
2. Consolidated Long Term Debt-to-EBITDA Ratio (Section 8.2)
---------------------------------------------------------
(To be calculated on a consolidated basis for Unit as of the Quarterly
Calculation Date)
A. Consolidated Long Term Debt $_______________________
B. Consolidated EBITDA $_______________________
C. Consolidated Long Term Debt to EBITDA Ratio ____________ to 1.00
(Ratio of Item A to Item B)
(Must not be greater than 3.25 to 1.00)
3. Calculation of Consolidated Minimum Net Worth (Section 8.3)
-----------------------------------------------------------
(To be calculated for Unit as of the Quarterly Calculation Date)
Consolidated Net Worth: $_______________________
(must be equal to or greater
than $350,000,000)
SCHEDULE III
To Compliance Certificate
-------------------------
(Material Subsidiaries)
As of the Quarterly Calculation Date, the following constituted all of the
Material Subsidiaries of the Borrowers:
EXHIBIT C
FORM OF ASSIGNMENT
------------------
This Assignment and Assumption (the "Assignment and Assumption") is dated
as of the Effective Date set forth below and is entered into by and between
[Insert name of Assignor] (the "Assignor") and [Insert name of Assignee] (the
"Assignee"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
"Credit Agreement"), receipt of a copy of which is hereby acknowledged by the
Assignee. The Terms and Conditions set forth in Annex 1 attached hereto are
hereby agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.
The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, an interest in and to the
Assignor's rights and obligations under the Credit Agreement and the other Loan
Documents, such that after giving effect to such assignment the Assignee shall
have purchased pursuant to this Assignment Agreement the percentage interest
specified in Item 6(a) below of all outstanding rights and obligations under the
Credit Agreement and the other Loan Documents relating to the credit facility
listed in Item 5 below (the "Assigned Interest"). The aggregate Commitment
(including LC Obligations, if the applicable Commitment has been terminated)
purchased by the Assignee hereunder is set forth in Item 6 below.
In consideration for the sale and assignment of Commitments hereunder, the
Assignee shall pay the Assignor, on the Effective Date, the amount agreed to by
the Assignor and the Assignee. On and after the Effective Date, the Assignee
shall be entitled to receive all payments of principal, interest, reimbursement
obligations and fees with respect to the interest assigned hereby. The Assignee
will promptly remit to the Assignor any interest on Loans and fees received from
the Administrative Agent which relate to the portion of the Loans or LC
Obligations assigned to the Assignee hereunder and not previously paid by the
Assignee to the Assignor. In the event that either party hereto receives any
payment to which the other party hereto is entitled under this Assignment
Agreement, then the party receiving such amount shall promptly remit it to the
other party hereto.
1. Assignor: __________________________
2. Assignee: __________________________ [and is an Affiliate of
___________________________[identify Lender](1)
3. Borrowers: Unit Corporation, Mountain Front Pipeline Company, Inc., Unit
Drilling Company, Unit Petroleum Company, Petroleum Supply Company, Serdrilco,
Inc. and Unit Energy Canada, Inc.
_____________________________________
(1) Select as applicable.
4. Administrative Agent: Bank of Oklahoma, National Association, as
Administrative Agent under the Credit Agreement.
5. Credit Agreement: The $150,000,000 Credit Agreement dated as of January 30,
2004 among Borrowers, Bank of Oklahoma, National Association, as Administrative
Agent, and the Lenders signatory parties thereto.
6. Assigned Interest: ____________________
a. Assignee's percentage interest of credit facility purchased under the
Assignment Agreement __________%
b. Amount of credit facility purchased under the Assignment Agreement
$___________
c. Assignee's Loans (or LC Obligations with respect to terminated
Commitments) purchased hereunder: $___________
7. Trade Date: _________________________________(2)
8. Payment Instructions to Assignor:
Effective Date: ________________, 200__ [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER BY THE ADMINISTRATIVE AGENT.]
_____________________________________
(2) Insert if satisfaction of minimum amounts is to be determined as of the
Trade Date.
2
The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR
[name]
BY:________________________________
Title:_____________________________
ASSIGNEE
[name]
BY:________________________________
Title:_____________________________
Consented and Accepted:
BANK OF OKLAHOMA, N.A.
as Administrative Agent for the Lenders
By:_____________________________
Name: __________________________
Title: _________________________
UNIT CORPORATION
By:_______________________________
Name: ____________________________
Title: ___________________________
3
ANNEX 1
TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1 Assignor. The Assignor represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim
and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby. Neither the Assignor nor
any of its officers, directors, employees, agents or attorneys shall be
responsible for (i) any statements, warranties or representations made in
or in connection with the Credit Agreement or any other Loan Document, (ii)
the execution, legality, validity, enforceability, genuineness,
sufficiency, perfection, priority, collectibility, or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of
the Borrowers, any of their Subsidiaries or Affiliates or any other Person
obligated in respect of any Loan Document, (iv) the performance or
observance by the Borrowers, any of their Subsidiaries or Affiliates or any
other Person of any of their respective obligations under any Loan
Document, (v) inspecting any of the property, books or records of the
Borrowers, or Subsidiary Guarantor, or (vi) any mistake, error of judgment,
or action taken or omitted to be taken in connection with the Loans or the
Loan Documents.
1.2 Assignee. The Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute
and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby and to become a Lender under the Credit
Agreement, (ii) from and after the Effective Date, it shall be bound by the
provisions of the Credit Agreement as a Lender thereunder and, to the
extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (iii) agrees that its payment instructions and notice
instructions are as set forth in Item 8 above of this Assignment and
Assumption, (iv) confirms that none of the funds, monies, assets or other
consideration being used to make the purchase and assumption hereunder are
"plan assets" as defined under ERISA and that its rights, benefits and
interests in and under the Loan Documents will not be "plan assets" under
ERISA, (v) agrees to indemnify and hold the Assignor harmless against all
losses, costs and expenses (including, without limitation, reasonable
attorneys' fees) and liabilities incurred by the Assignor in connection
with or arising in any manner from the Assignee's non-performance of the
obligations assumed under this Assignment and Assumption, (vi) it has
received a copy of the Credit Agreement, together with copies of
financialstatements and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Assumption and to purchase the Assigned Interest
on the basis of which it has made such analysis and decision independently
and without reliance on the Administrative Agent or any other Lender, and
(vii) attached as Schedule 1 to this Assignment and Assumption is any
documentation required to be delivered by the Assignee with respect to its
tax status
pursuant to the terms of the Credit Agreement, exemption from backup
withholding (IRS From W-9 or successor form) on payments pursuant to the
Credit Agreement or and other Loan Document described or defined therein or
as a Lender that is not a United States person under Section 7701(a)(30) of
the Internal Revenue Code for United States federal income tax purposes,
duly completed and executed by the Assignee and (b) agrees that (i) it
will, independently and without reliance on the Administrative Agent, the
Assignor or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan Documents, and (ii)
it will perform in accordance with their terms all of the obligations which
by the terms of the Loan Documents are required to be performed by it as a
Lender.
2. Payments. The Assignee shall pay the Assignor, on the Effective Date,
the amount agreed to by the Assignor and the Assignee. From and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to but excluding the
Effective Date and to the Assignee for amounts which have accrued from and after
the Effective Date.
3. General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Assumption
by telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the laws of the State of Oklahoma.
2
SCHEDULE I
(Lender Tax Status Information)
EXHIBIT D
FORM OF AMENDMENT FOR AN INCREASED OR NEW COMMITMENT
----------------------------------------------------
This AMENDMENT is made as of the ___ day of __________, 200__, by and among
Unit Corporation, a Delaware corporation (as agent for the "Borrowers" signatory
parties to the Credit Agreement described and defined below, referred to herein
as "Unit"), Bank of Oklahoma, N.A., as administrative agent for the Lenders
signatory parties to the Credit Agreement (the "Administrative Agent"), and
_________________________ (the "Supplemental Lender").
The Borrowers (including Unit), the Administrative Agent and certain other
Lenders, as described therein, are parties to a Credit Agreement dated as of
January 30, 2004 (as amended, modified, supplemented, or restated, collectively
the "Credit Agreement"). All terms used herein and not otherwise defined shall
have the same meaning given to them in the Credit Agreement.
Pursuant to Section 14.6 of the Credit Agreement, Unit, on behalf of the
Borrowers, has the right to obtain additional Commitments upon satisfaction of
certain conditions. This Amendment requires only the signature of Unit, the
Administrative Agent and the Supplemental Lender so long as the aggregate amount
of the commitments is not increased above the Maximum Credit Amount specified in
the Credit Agreement.
The Supplemental Lender is either (a) an existing Lender which is
increasing its Commitment or (b) a new Lender which is a lending institution
whose identity the Administrative Agent will approve by its signature below.
In consideration of the foregoing, such Supplemental Lender, from and after
the date hereof shall have a Commitment of $_______________ and if it is a new
Lender, the Supplemental Lender hereby assumes all of the rights and obligations
of a Lender under the Credit Agreement.
The Borrowers have executed and delivered to the Supplemental Lender as of
the date hereof, if requested by the Supplemental Lender, a new or amended and
restated Note in the form attached to the Credit Agreement as Exhibit A to
evidence the new or increased Commitment of the Supplemental Lender.
IN WITNESS WHEREOF, the Administrative Agent, the Borrower and the
Supplemental Lender have executed this Amendment as of the date shown above.
UNIT CORPORATION
By:___________________
Xxxxx X. Xxxxxxxx,
President and Chief Financial Officer
[SUPPLEMENT LENDER]
By:_________________________________
Name: ______________________________
Title: _____________________________
BANK OF OKLAHOMA, N.A.,
Administrative Agent for the Lenders
By:_________________________________
Name: ______________________________
Title: _____________________________
2
EXHIBIT E
SUBSIDIARY GUARANTY
-------------------
THIS GUARANTY AGREEMENT ("Guaranty") is made and entered into effective as
of January 30, 2004, by the undersigned guarantor (the "Guarantor"), in favor of
(i) the Lenders from time to time parties to the Credit Agreement described
below and (ii) Bank of Oklahoma, National Association, as Administrative Agent
under the Credit Agreement.
RECITALS
--------
A. Unit Corporation, a Delaware corporation, Mountain Front Pipeline
Company, Inc., Unit Drilling Company, an Oklahoma corporation, Unit Petroleum
Company, Inc., an Oklahoma corporation, Petroleum Supply Company, an Oklahoma
corporation, SerDrilco, Inc., an Oklahoma corporation, and Unit Energy Canada,
Inc., an Alberta, Canada corporation (collectively, the "Borrowers"), the
Lenders therein named, and Bank of Oklahoma, National Association, as
Administrative Agent for the Lenders, are parties to that certain Credit
Agreement dated effective as of even date herewith (as amended, modified,
supplemented, restated and in effect from time to time, the "Credit Agreement").
B. Capitalized terms used herein and not otherwise defined herein have the
respective meanings assigned to them in the Credit Agreement.
C. Pursuant to the Credit Agreement, the Lenders have severally agreed to
establish in favor of the Borrowers certain Commitments for Advances and LC
Obligations in the Aggregate Commitment Amounts, subject to the Maximum Credit
Amount.
D. The Guarantor is a Material Subsidiary and will receive substantial and
valuable consideration and benefit from the Commitments and the Loans advanced
and the LCs issued from time to time by the Lenders and the LC Issuer,
respectively, to the Borrowers pursuant to the Credit Agreement.
D. It is a condition precedent to the closing of the Credit Agreement and
to each Extension of Credit thereunder that the Guarantor executes and delivers
this Guaranty whereby the Guarantor shall absolutely and unconditionally
guarantee the prompt and punctual payment when due of all of the Guaranteed
Obligations (as hereinafter defined).
NOW, THEREFORE, in consideration of the credit to be extended pursuant to
the Credit Agreement, and as a material inducement therefor, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby covenants and agrees as follows:
SECTION 1. Guaranty. Subject to Section 9 hereof, the Guarantor hereby
guarantees to the Lenders and the Administrative Agent, absolutely,
unconditionally and irrevocably, and without limitation as to amount, the prompt
performance and payment when due (whether at a
stated maturity or earlier by reason of acceleration or otherwise) of all
Loans, LC Obligations, Reimbursement Obligations and all other Obligations and
Outstanding Credit Exposure (as each such term is defined in the Credit
Agreement), including, without limitation, principal, interest and fees, and all
other liabilities and obligations now or hereafter owing by the Borrowers to the
Lenders under the Credit Agreement, the Notes and other relevant Loan Documents,
including, without limitation, indemnities, reasonable attorneys' fees, filing
and recording costs, out-of- pocket expenses, collection costs and other amounts
payable under the Loan Documents, including any such liabilities or obligations
incurred or accrued during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, whether or not allowed or allowable in
such proceeding (all of the foregoing liabilities and obligations being
hereinafter collectively referred to as the "Guaranteed Obligations"). This
Guaranty is a guaranty of payment and not just of collectibility and is in no
way conditioned or contingent upon any attempt to collect from the Borrowers or
upon any other event, contingency or circumstance whatsoever. If for any reason
whatsoever the Borrowers shall fail or be unable duly, punctually and fully to
pay such amounts as and when the same shall become due and payable, the
Guarantor, without demand, presentment, protest or notice of any kind, will
forthwith pay or cause to be paid such amounts to the Administrative Agent under
the terms of the Credit Agreement, any Note or other relevant Loan Document, in
lawful money of the United States, at the place specified in the Credit
Agreement, or perform or comply with the same or cause the same to be performed
or complied with, together with interest (to the extent provided for under the
Credit Agreement) on any amount due and owing from the Borrowers. The Guarantor,
promptly after demand, will pay to the Administrative Agent the reasonable costs
and expenses of collecting such amounts or otherwise enforcing this Guaranty,
including, without limitation, the reasonable fees and expenses of counsel.
Notwithstanding the foregoing, the right of recovery against the Guarantor under
this Guaranty is limited to the extent it is judicially determined with respect
to any Guarantor that entering into this Guaranty would violate Section 548 of
the United States Bankruptcy Code or any comparable provisions of any state law,
in which case such Guarantor shall be liable under this Guaranty only for
amounts aggregating up to the largest amount that would not render such
Guarantor's obligations hereunder subject to avoidance under Section 548 of the
United States Bankruptcy Code or any comparable provisions of any state law.
SECTION 2. Guarantor's Obligations Unconditional. The obligations of the
Guarantor under this Guaranty shall be primary, absolute and unconditional
obligations of the Guarantor, shall not be subject to any counterclaim, set-off,
deduction, diminution, abatement, recoupment, suspension, deferment, reduction
or defense based upon any claim the Guarantor or any other Person may have
against the Borrowers or any other Person, and to the full extent permitted by
applicable law shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected by, any circumstance or
condition whatsoever (whether or not the Guarantor or the Borrowers shall have
any knowledge or notice thereof), including:
(a) any termination, amendment or modification of or deletion from or
addition or supplement to or other change in the Credit Agreement, the Loan
Documents or any other instrument or agreement applicable to any of the
parties to any of the Loan Documents;
2
(b) any furnishing or acceptance of any security, or any release of
any security, for the Guaranteed Obligations, or the failure of any
security or the failure of any Person to perfect any interest in any
collateral;
(c) any failure, omission or delay on the part of the Borrowers to
conform or comply with any term of any of the Loan Documents or any other
instrument or agreement referred to in subsection (a) above, including,
without limitation, failure to give notice to the Guarantor of the
occurrence of a "Default" or an "Event of Default" under any Loan Document;
(d) any waiver of the payment, performance or observance of any of the
obligations, conditions, covenants or agreements contained in any Loan
Document, or any other waiver, consent, extension, indulgence, compromise,
settlement, release or other action or inaction under or in respect of any
of the Loan Documents or any other instrument or agreement referred to in
subsection (a) above or any obligation or liability of the Borrowers, or
any exercise or non-exercise of any right, remedy, power or privilege under
or in respect of any such instrument or agreement or any such obligation or
liability;
(e) any failure, omission or delay on the part of any of the
Administrative Agent or the Lenders to enforce, assert or exercise any
right, power or remedy conferred on the Administrative Agent or the Lenders
in this Guaranty, or any such failure, omission or delay on the part of the
Administrative Agent or the Lenders in connection with any Loan Document,
or any other action on the part of the Administrative Agent or the Lenders;
(f) any voluntary or involuntary bankruptcy, insolvency,
reorganization, arrangement, readjustment, assignment for the benefit of
creditors, composition, receivership, conservatorship, custodianship,
liquidation, marshaling of assets and liabilities or similar proceedings
with respect to the Borrowers, any Guarantor or any other Person or any of
their respective properties or creditors, or any action taken by any
trustee or receiver or by any court in any such proceeding;
(g) any discharge, termination, cancellation, frustration,
irregularity, invalidity or unenforceability, in whole or in part, of any
of the Loan Documents or any other agreement or instrument referred to in
subsection (a) above or any term hereof;
(h) any merger or consolidation of the Borrowers or any Guarantor into
or with any other corporation, or any sale, lease or transfer of any of the
assets of the Borrowers or any Guarantor to any other Person;
(i) any change in the ownership of any shares of capital stock of the
Borrowers or any change in the corporate relationship between the Borrowers
and the Guarantor, or any termination of such relationship;
3
(j) any release or discharge, by operation of law, of the Guarantor
from the performance or observance of any obligation, covenant or agreement
contained in this Guaranty; or
(k) any other occurrence, circumstance, happening or event whatsoever,
whether similar or dissimilar to the foregoing, whether foreseen or
unforeseen, and any other circumstance which might otherwise constitute a
legal or equitable defense or discharge of the liabilities of a guarantor
or surety or which might otherwise limit recourse against the Guarantor.
SECTION 3. Full Recourse Obligations. The obligations of the Guarantor set
forth herein constitute the full recourse obligations of the Guarantor
enforceable against them to the full extent of all their assets and properties.
SECTION 4. Waiver. The Guarantor unconditionally waives, to the extent
permitted by applicable law, (a) notice of any of the matters referred to in
Section 2 hereof, (b) notice to the Guarantor of the incurrence of any of the
Guaranteed Obligations, notice to the Guarantor or the Borrowers of any breach
or default by the Borrowers or the Guarantor with respect to any of the
Guaranteed Obligations or any other notice that may be required, by statute,
rule of law or otherwise, to preserve any rights of the Administrative Agent or
the Lenders against the Guarantor, (c) presentment to or demand of payment from
the Borrowers or the Guarantors with respect to any amount due under any Loan
Document or protest for nonpayment or dishonor, (d) any right to the
enforcement, assertion or exercise by the Administrative Agent or the Lenders of
any right, power, privilege or remedy conferred in the Credit Agreement or any
other Loan Document or otherwise, (e) any requirement of diligence on the part
of any of the Administrative Agent or the Lenders, (f) any requirement to
exhaust any remedies or to mitigate the damages resulting from any default under
any Loan Document, (g) any notice of any sale, transfer or other disposition by
any of the Lenders of any right, title to or interest in the Credit Agreement or
in any other Loan Document, and (h) any other circumstance whatsoever which
might otherwise constitute a legal or equitable discharge, release or defense of
a guarantor or surety or which might otherwise limit recourse against the
Guarantor.
SECTION 5. Subrogation, Contribution, Reimbursement or Indemnity. Until one
year and one day after all Guaranteed Obligations have been indefeasibly paid in
full, the Guarantor agrees not to take any action pursuant to any rights which
may have arisen in connection with this Guaranty to be subrogated to any of the
rights (whether contractual, under the United States Bankruptcy Code, as
amended, including Section 509 thereof, under common law or otherwise) of any of
the Lenders against the Borrowers or against any collateral security or guaranty
or right of offset held by the Administrative Agent or the Lenders for the
payment of the Guaranteed Obligations. Until one year and one day after all
Guaranteed Obligations have been indefeasibly paid in full, the Guarantor agrees
not to take any action pursuant to any contractual, common law, statutory or
other rights of reimbursement, contribution, exoneration or indemnity (or any
similar right) from or against the Borrowers which may have arisen in connection
with this Guaranty. So long as the Guaranteed Obligations remain, if any amount
shall be paid by or on behalf of the Borrowers to any Guarantor on account of
any of the rights waived in this Section 5, such amount shall be held by such
Guarantor in trust, segregated from other funds of such
4
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned
over to the Administrative Agent (duly endorsed by such Guarantor to the
Administrative Agent, if required), to be applied against the Guaranteed
Obligations, whether matured or unmatured, in such order as the Administrative
Agent may determine. The provisions of this Section 5 shall survive the term of
this Guaranty and the payment in full of the Guaranteed Obligations.
SECTION 6. Effect of Bankruptcy or Insolvency Proceedings. This Guaranty
shall continue to be effective or be automatically reinstated, as the case may
be, if at any time payment, in whole or in part, of any of the sums due to any
of the Lenders pursuant to the terms of the Credit Agreement or any other Loan
Document is rescinded or must otherwise be restored or returned by such Bank
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrowers or any other Person, or upon or as a result of the appointment of
a custodian, receiver, trustee or other officer with similar powers with respect
to the Borrowers or other Person or any substantial part of its property, or
otherwise, all as though such payment had not been made. If an event permitting
the acceleration of the maturity of the principal amount of the Notes shall at
any time have occurred and be continuing, and such acceleration shall at such
time be prevented by reason of the pendency against the Borrowers or any other
Person of a case or proceeding under a bankruptcy or insolvency law, the
Guarantor agrees that, for purposes of this Guaranty and its obligations
hereunder, the maturity of the principal amount of the Notes and all other
Guaranteed Obligations shall be deemed to have been accelerated with the same
effect as if the Lenders had accelerated the same in accordance with the terms
of the Credit Agreement or other applicable Loan Document, and the Guarantor
shall forthwith pay such principal amount and interest thereon and any other
amounts guaranteed hereunder without further notice or demand.
SECTION 7. Termination. This Guaranty shall terminate when, and only when,
all of the Guaranteed Obligations have been paid and performed in full, all in
accordance with the provisions of the Credit Agreement.
SECTION 8. Representations and Warranties. Guarantor represents and
warrants that:
(a) It (i) is duly organized, validly existing in good standing under
the laws of the jurisdiction of its incorporation or organization, (ii) has
the corporate or other necessary organizational power and authority, and
the legal right to own and operate its Properties, to lease the Properties
it operates as lessee and to conduct the business in which it is currently
engaged, (iii) is duly qualified as a foreign entity and in good standing
under the laws of each jurisdiction where its ownership, lease or operation
of Property or the conduct of its business requires such qualification,
other than in such jurisdictions where the failure to be so qualified and
in good standing has not had and could not have a Material Adverse Effect,
and (iv) is in compliance with all applicable law, except to the extent
that the failure to comply therewith has not had and could not be
reasonably expected to have a Material Adverse Effect.
(b) It has the power and authority and legal right to execute and
deliver this Guaranty and to perform its obligations hereunder. The
execution and delivery by it of this Guaranty and the performance of its
obligations hereunder have been duly authorized
5
by proper proceedings. No consent or authorization of, filing with,
notice to or other act by or in respect of, any Governmental Authority or
other Person is required in connection with its execution and delivery of
this Guaranty and performance of its obligations hereunder (other than
those which have been obtained).
(c) This Guaranty constitutes a legal, valid and binding obligation of
the Guarantor, enforceable against it in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
(d) The execution, delivery and performance of this Guaranty will not
violate any applicable law or any material agreement, instrument or
undertaking to which any Guarantor is a party or by which it or any of its
Property is bound (collectively, a "Contractual Obligation") of the
Guarantor (except those as to which waivers or consents have been obtained
and those which could not reasonably be expected to have a Material Adverse
Effect), and will not result in, or require, the creation or imposition of
any Lien on any of its Properties or revenues pursuant to any applicable
law or Contractual Obligation.
(e) It has a substantial economic interest in the Borrowers and
expects to derive benefits from transactions resulting in the creation of
the Guaranteed Obligations hereby. The Administrative Agent and the Lenders
may rely conclusively on a continuing warranty hereby made, that each
Guarantor continues to be benefited by the Lenders' extension of credit to
the Borrowers, and neither the Administrative Agent nor the Lenders shall
have any duty to inquire into or confirm the receipt of any such benefits,
and this Guaranty shall be effective and enforceable by the Administrative
Agent and the Lenders without regard to the receipt, nature or value of any
such benefits.
(f) It has received a copy of the Credit Agreement.
SECTION 9. Limitations on Obligations.
(a) The provisions of this Guaranty are severable, and in any action
or proceeding involving any state corporate law, or any state, federal or
foreign bankruptcy, insolvency, reorganization or other law affecting the
rights of creditors generally, if the obligations of any Guarantor under
this Guaranty would otherwise be held or determined to be avoidable,
invalid or unenforceable on account of the amount of such Guarantor's
liability under this Guaranty, then, notwithstanding any other provision of
this Guaranty to the contrary, the amount of such liability shall, without
any further action by such Guarantor, the Administrative Agent or the
Lenders, be automatically limited and reduced to the highest amount that is
valid and enforceable as determined in such action or proceeding (such
highest amount determined hereunder being the relevant Guarantor's "Maximum
Liability"). This Section 9(a) with respect to the Maximum Liability of any
Guarantor is intended solely to preserve the rights of the Administrative
Agent and the Lenders to the maximum extent not subject to avoidance under
applicable law, and neither
6
any Guarantor nor any other Person or entity shall have any right or
claim under this Section 9(a) with respect to the Maximum Liability, except
to the extent necessary so that the obligations of any Guarantor hereunder
shall not be rendered voidable under applicable law.
(b) The Guarantor agrees that the Guaranteed Obligations may at any
time and from time to time exceed the Maximum Liability of Guarantor, and
may exceed the aggregate Maximum Liability of any other guarantors, without
impairing this Guaranty or affecting the rights and remedies of the
Administrative Agent or the Lenders. Nothing in this Section 9(b) shall be
construed to increase any Guarantor's obligations hereunder beyond its
Maximum Liability.
(c) In the event any Guarantor (a "Paying Guarantor") shall make any
payment or payments under this Guaranty or shall suffer any loss as a
result of any realization upon any collateral granted by it to secure its
obligations under this Guaranty, any other guarantor (each a "Non-Paying
Guarantor") shall contribute to such Paying Guarantor an amount equal to
such Non-Paying Guarantor's "Pro Rata Share" of such payment or payments
made, or losses suffered, by such Paying Guarantor. For the purposes
hereof, each Non-Paying Guarantor's "Pro Rata Share" with respect to any
such payment or loss by a Paying Guarantor shall be determined as of the
date on which such payment or loss was made by reference to the ratio of
(i) such Non-Paying Guarantor's Maximum Liability as of such date (without
giving effect to any right to receive, or obligation to make, any
contribution hereunder) or, if such Non-Paying Guarantor's Maximum
Liability has not been determined, the aggregate amount of all monies
received by such Non-Paying Guarantor from the Borrowers after the date
hereof (whether by loan, capital infusion or by other means) to (ii) the
aggregate Maximum Liability of all guarantors hereunder (including such
Paying Guarantor) as of such date (without giving effect to any right to
receive, or obligation to make, any contribution hereunder), or to the
extent that a Maximum Liability has not been determined for any guarantors,
the aggregate amount of all monies received by such guarantors from the
Borrowers after the date hereof (whether by loan, capital infusion or by
other means). Nothing in this Section 9(c) shall affect any Guarantor's or
any other guarantor's several liability for the entire amount of the
Guaranteed Obligations (up to such guarantor's Maximum Liability). Each
Guarantor covenants and agrees that its right to receive any contribution
under this Guaranty from a Non-Paying Guarantor shall be subordinate and
junior in right of payment to all the Guaranteed Obligations. The
provisions of this Section 9(c) are for the benefit of the Administrative
Agent, the Lenders and the Guarantor and may be enforced by any one, or
more, or all of them in accordance with the terms hereof.
SECTION 10. Notices. Any notice, demand, request or consent required or
authorized hereunder shall be served in person or delivered by U.S. certified
mail, return receipt requested, addressed as follows:
7
If to Guarantor: c/o Unit Corporation
0000 Xxxxxxxxxx Xxxxx X,
Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: General Counsel
If to the Lenders or the
Administrative Agent: BANK OF OKLAHOMA, N.A.
Bank of Oklahoma Tower
Xxx Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attn: Energy Department - 8th Floor
Fax: (000) 000-0000
or at such other address as the Guarantor or the Administrative Agent shall
designate for such purpose in a written notice to the other parties. Notices
served in person shall be effective and deemed given when delivered; and notices
sent by certified mail shall be effective and deemed given three (3) Business
Days after being deposited in the U.S. mail, postage prepaid.
SECTION 11. Survival. All warranties, representations and covenants made by
the Guarantor herein or in any certificate or other instrument delivered by it
or on its behalf hereunder shall be considered to have been relied upon by the
Lenders and shall survive the execution and delivery of this Guaranty,
regardless of any investigation made by the Administrative Agent or any of the
Lenders. All statements in any such certificate or other instrument shall
constitute warranties and representations by the Guarantors hereunder.
SECTION 12. Severability. Any remedy or right hereby granted which shall be
found to be unenforceable as to any Person or under any circumstance, for any
reason, shall in no way limit or prevent the enforcement of such remedy or right
as to any other Person or circumstances, nor shall such unenforceability limit
or prevent enforcement of any other remedy or right hereby granted.
SECTION 13. Collection Costs. The Guarantor agrees to reimburse the
Administrative Agent upon demand for all reasonable out-of-pocket expenses
(including reasonable attorneys' fees and legal expenses) incurred by the
Administrative Agent or the Lenders arising out of or in connection with the
enforcement of the Guaranteed Obligations or arising out of or in connection
with any failure of the Guarantor to fully and timely perform their obligations
hereunder.
SECTION 14. Governing Law. This Guaranty is made under and shall be
governed by the laws of the State of Oklahoma, without giving effect to conflict
of laws principles thereof.
SECTION 15. Jurisdiction and Venue. All actions or proceedings with respect
to this Guaranty may be instituted in any state or federal court sitting in
Tulsa County, Oklahoma, and by execution and delivery of this Guaranty, the
Guarantor irrevocably and unconditionally (i) submits to the nonexclusive
jurisdiction (both subject matter and Person) of each such court, and (ii)
waives (a) any objection that the Guarantors may now or hereafter have to the
laying of
8
venue in any of such courts, and (b) any claim that any action or
proceeding brought in any such court has been brought in an inconvenient forum.
SECTION 16. Waiver of Jury Trial. The Guarantor, the Administrative Agent
and the Lenders (by their acceptance hereof) hereby voluntarily, knowingly,
irrevocably and unconditionally waive any right to have a jury participate in
resolving any dispute (whether based upon contract, tort or otherwise) betwe en
or among the Borrowers or the Guarantor and the Administrative Agent or the
Lenders arising out of or in any way related to this Guaranty. This Section 16
is a material inducement to the Lenders to provide the financing described
herein or in the Credit Agreement.
ECTION 17. Additional Guarantors. Pursuant to Section 9.4 of the Credit
Agreement, all future Material Subsidiaries of the Borrowers shall execute and
deliver to the Administrative Agent a Guaranty Joinder Agreement, the form of
which is attached hereto as Schedule I and made a part hereof. Upon the
execution of a Guaranty Joinder Agreement, the Material Subsidiary shall be
deemed to be a Guarantor for all purposes under this Guaranty and shall
subscribe to and agree to be bound by all of the terms, conditions, agreements,
covenants, and undertakings set forth in herein.
SECTION 18. Section Headings. The Section and subsection headings herein
are for convenience only and shall not be deemed part of this Guaranty.
SECTION 19. Successors and Assigns. This Guaranty shall be binding upon the
Guarantor and the Guarantor's successors and assigns and shall inure to the
benefit of the Administrative Agent and the Lenders and their successors and
assigns.
SECTION 20. Time of the Essence. The Guarantor acknowledges that time is of
the essence with respect to the Guarantors' obligations under this Guaranty.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed as of the day and year first above written.
PETROCORP INCORPORATED,
a Texas corporation
By:____________________________
Name:__________________________
Title:_________________________
9
SCHEDULE I
GUARANTY JOINDER AGREEMENT
--------------------------
THIS GUARANTY JOINDER AGREEMENT (this "Joinder"), dated as of _________,
200_, is executed by _____________________________, a ____________ ___________
(the "Additional Guarantor"), in favor of (i) the Lenders from time to time
parties to the Credit Agreement described below and (ii) Bank of Oklahoma,
National Association, as Administrative Agent under the Credit Agreement.
RECITALS
--------
A. Unit Corporation, a Delaware corporation, Mountain Frond Pipeline
Company, an Oklahoma corporation, Unit Drilling Company, an Oklahoma
corporation, Unit Petroleum Company, Inc., an Oklahoma corporation, Petroleum
Supply Company, an Oklahoma corporation, SerDrilco, Inc., an Oklahoma
corporation, and Unit Energy Canada Inc., an Xxxxxx, Canada corporation
(collectively, the "Borrowers"), the Lenders therein named, and Bank of
Oklahoma, National Association, as Administrative Agent, are parties to that
certain Credit Agreement dated effective as of January 30, 2004 (as amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"). Capitalized terms used herein and not otherwise defined herein have
the respective meanings assigned to them in the Credit Agreement.
B. A Material Subsidiary has entered into that certain Guaranty Agreement
dated effective as of January 30, 2004, in favor of the Lender and the
Administrative Agent (as amended, restated, supplemented or otherwise modified
from time to time, the "Guaranty"), pursuant to which such Material Subsidiary
absolutely and unconditionally guaranteed, the full and punctual payment and
performance of the Guaranteed Obligations, as more particularly set forth in the
Guaranty.
C. The Additional Guarantor is a Material Subsidiary of the Borrowers, and
pursuant to Section 9.4 of the Credit Agreement, the Borrowers are required to
cause the Additional Guarantor to guarantee to the Administrative Agent the
prompt payment and performance of the Guaranteed Obligations. The Additional
Guarantor desires to execute and deliver this Joinder to satisfy such
requirement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Additional Guarantor agrees as follows:
SECTION 1. Guaranty. The Additional Guarantor hereby absolutely and
unconditionally guarantees, jointly and severally, as a primary obligor and not
as surety, the full and punctual payment (whether at stated maturity, upon
acceleration or early termination or otherwise, and at all times thereafter) and
performance of the Guaranteed Obligations (as such term is defined in the
Guaranty), including, without limitation, any such Guaranteed Obligations
incurred or accrued during the pendency of any bankruptcy, insolvency,
receivership or other
similar proceeding, whether or not allowed or allowable in such proceeding.
This Guaranty is a guaranty of payment and not just of collectibility and is in
no way conditioned or contingent upon any attempt to collect from the Borrowers
or upon any other event, contingency or circumstance whatsoever. If for any
reason whatsoever the Borrowers shall fail or be unable duly, punctually and
fully to pay such amounts as and when the same shall become due and payable, the
Guarantors, without demand, presentment, protest or notice of any kind, will
forthwith pay or cause to be paid such amounts to the Administrative Agent under
the terms of the Credit Agreement, any Note or other relevant Loan Document, in
lawful money of the United States, at the place specified in the Credit
Agreement, or perform or comply with the same or cause the same to be performed
or complied with, together with interest (to the extent provided for under the
Credit Agreement) on any amount due and owing from the Borrowers.
SECTION 2. Binding Effect. This Joinder shall become effective when it
shall have been executed by the Additional Guarantor and thereafter shall be
binding upon the Additional Guarantor and shall inure to the benefit of the
Lenders. Upon the effectiveness of this Joinder, the Additional Guarantor shall
be deemed to be a Guarantor for all purposes under the Guaranty and shall
subscribe to and agree to be bound by all of the terms, conditions, agreements,
covenants, and undertakings set forth in the Guaranty, and this Joinder shall be
deemed to be a part of and shall be subject to all the terms and conditions of
the Guaranty. The Additional Guarantor shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Administrative Agent.
SECTION 3. CHOICE OF LAW. THIS JOINDER SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE
STATE OF OKLAHOMA.
IN WITNESS WHEREOF, the Additional Guarantor has caused this Joinder to be
duly executed and delivered by its duly authorized officer as of the date first
above written.
____________________________________,
a ___________________ _______________
By:__________________________________
Name:________________________________
Title: ______________________________
2
SCHEDULE 1
PRICING SCHEDULE
----------------
Applicable Level I Level II Level III
Margin Status Status Status
-------------------------------------------------------------------
Eurodollar Rate 1.00% 1.25% 1.50%
Floating Rate 0.00% 0.00% 0.00%
-------------------------------------------------------------------
Applicable Level I Level II Level III
Margin Status Status Status
-------------------------------------------------------------------
Commitment Fee 0.375% 0.375% 0.375%
Rate
-------------------------------------------------------------------
For the purposes of this Schedule, the following terms have the following
meanings, subject to the final paragraph of this Schedule:
"Level I Status" exists at any date if the Borrowing Base Usage Percentage
on such date is less than 50%.
"Level II Status" exists at any date if the Borrowing Base Usage Percentage
on such date is greater than or equal to 50% and less than 75%.
"Level III Status" exists at any date if the Borrowing Base Usage
Percentage on such date is greater than or equal to 75%.
"Status" means either Level I Status, Level II Status or Level III Status.
The Applicable Margin and Commitment Fee Rate will be determined on a daily
basis in accordance with the foregoing table based on the Borrowing Base Usage
Percentage on such day.
Letter of Credit Fees: Issuance Fees are payable quarterly in advance,
determined as of the LC issue date based on the applicable Margin (Eurodollar
Rate column) for Eurodollar Loans on the stated amount of the LC and an LC
fronting fee of 0.125% per annum will be paid to the LC Issuer concurrent with
execution.
SCHEDULE 2
LENDERS SCHEDULE
----------------
Lender Maximum Credit Amount % of Maximum
Credit Amount
--------------------------------------------------------------------
Bank of Oklahoma, N. A. 50,000,000 33.335%
Bank of America, N. A. 50,000,000 33.335%
BMO Xxxxxxx Xxxxx 35,000,000 23.330%
Financing, Inc.
Compass Bank 15,000,000 10.000%
--------------------------------------------------------------------
TOTAL MAXIMUM 150,000,000 (3) 100.00%
CREDIT AMOUNT
--------------------------------------------------------------------
____________________________
(3) Note: Borrowing Base, at Borrowers' designation, is initially reduced
$120,000,000.00 although the Borrowing Base determined by the Lenders is
$188,000,000.00.
SCHEDULE 3
DISCLOSURE SCHEDULE
-------------------
1. Section 5.8 - Subsidiaries
State/Country Ownership Interest
Name of Incorporation by Borrower
---- ---------------- ------------------
Unit Petroleum Company Oklahoma 100% UC
Unit Drilling Company Oklahoma 100% UC
Unit Texas Company Oklahoma 100% UPC
Unit Drilling and Exploration Company Delaware 100% UC
Petroleum Supply Company Oklahoma 100% UC
Mountain Front Pipeline Company, Inc. Oklahoma 100% UC
Unit Energy Canada Inc. Alberta, Canada 100% UC
Superior Pipeline Company LLC Oklahoma 40% UC
Unit Drilling Company International Cayman Islands 100% UDC
Unit Acquisition Company Texas 100% UC
Unit General LLC Oklahoma 100% UPC
Unit Limited LLC Oklahoma 100% UPC
UDC General LLC Oklahoma 100% UDC
UDC Limited LLC Oklahoma 100% UDC
SerDrilco, Inc. Oklahoma 100% UC
Eagle Energy Partners I, L.P. Texas 16.71% UC
2. Section 7.2 - Existing Indebtedness
King X. Xxxxxxxx Separation Agreement
Separation obligations under employee benefit plans
Customary gas balancing obligations
Prepayments for contract drilling services
3. Section 7.6(v) - Existing Liens
Existing liens in favor of Bank of Oklahoma on PetroCorp properties
4. Section 7.2 - Investments
Investment in Superior Pipeline Company, LLC
Investment in Eagle Energy Partners I, L.P.
Investment in public and private limited partnerships sponsored by Borrowers
SCHEDULE 4
SECURITY SCHEDULE
-----------------
Second Amended And Restated Security Agreement, dated effective as of
January 30, 2004, between and among Unit Drilling Company, an Oklahoma
corporation, as debtor, and Bank Of Oklahoma, National Association, as
collateral agent for Bank of America, N.A., BMO Xxxxxxx Xxxxx Financing, Inc.,
Compass Bank, and Bank of Oklahoma, National Association.
SCHEDULE 5
ENVIRONMENTAL MATTERS
---------------------
None. However, Borrowers are aware that the EPA takes the position that the
building of oil and gas well sites is considered "construction" activity and not
"oil and gas exploration and production operations" under the Clean Water Act
and thus not exempt from the permitting requirements of the Clean Water Act.
Borrowers believe that these activities are specifically exempted under Section
402(1)(2) of the Clean Water Act, despite the EPA's interpretation of that
exemption. To date, the EPA has not taken any steps to enforce its position.
SCHEDULE 6
RATE MANAGEMENT TRANSACTIONS
----------------------------
Oil - Hedge transaction for 1,000 bbls/day dated January 9, 2004, effective
February 1, 2004 and terminating December 31, 2004 with Bank of Oklahoma
Natural Gas - Hedge transaction for 10,000 mmBtus/day dated January 9,
2004, effective April 1, 2004 and terminating October 31, 2004 with Bank of
America.
SCHEDULE 7
EXCLUDED ACCOUNTS
-----------------
102657437 700148491
207923104 700147380
208331182 700170326
208335758 700171426
208341445 700173010
208346131 700175408
208351092 700176453
103840773 810039724
207928648 700149822
208332084 700106218
103570184 700149877
SCHEDULE 8
CONTINGENT OBLIGATIONS
----------------------
- Superior Pipeline Company LLC guarantee
- Benefits payable under Health Plans
- Benefits payable under Separation Benefit Plans
- Earn Out Agreement in connection with SerDrilco acquisition
- Benefits payable under Workers' Compensation plans
- Benefits payable under Salary Deferral Plans
