Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-05036/USCOURTS-ca10-89-05036-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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FI LED 

Uaiccd Scaces Court of Appeats 

Tenth Circuit 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

JUL 16 1990 

.ROBERT L. HOECKER 

Clerk 

UNIT CORPORATION, a Delaware ) 

Corporation, ) 

) 

Plaintiff-Appellee, ) 

) 

v. ) 

) 

MELLON BANK, N.A., a National Banking, ) 

Association ) 

) 

Defendant-Appellant. ) 

ORDER AND JUDGMENT* 

No. 89-5036 

(D.C. No. 87-C-903-E) 

(N.D. Okla.) 

Before MOORE, BRIGHT,** and BRORBY, Circuit Judges. 

**Honorable Myron H. Bright, Circuit Judge, United States Court of 

Appeals for the Eighth Circuit, sitting by designation. 

This diversity action concerns a contract dispute between 

defendant-appellant Mellon Bank (Mellon) and plaintiff-appellee 

Unit Corporation (Unit) regarding Unit's alleged obligation to pay 

Mellon a $255,000 "facility fee" under the terms of a 1987 credit 

and loan agreement negotiated by the parties (the Agreement). 

Pursuant to the Agreement, this fee was to become due upon the 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

Appellate Case: 89-5036 Document: 010110038425 Date Filed: 07/16/1990 Page: 1 
Agreement's effective date. On cross-motions for summary 

judgment, the district court held that the Agreement never became 

effective and granted summary judgment in favor of Unit . We 

reverse. 

The only issue we need address is whether the Agreement ever 

became effective. The Agreement states that its "'Effective Date' 

... shall be a date which is coincident with the date of closing 

of a Successful Offering but in any event such date shall not 

occur later than October 31, 1987." The parties do not dispute 

that the closing of the public offering referred to in the 

Agreement occurred on Friday, September 11, 1987, when Unit sold 

and delivered its common stock and warrants to Paine Webber, Inc., 

and received in return a check for more than $25.5 million. The 

sole remaining inquiry, therefore, is when the offering became 

successful, as that term is defined in the Agreement. 

The Agreement defines the term "Successful Offering:" 

"Successful Offering" shall mean the sale of common 

stock and warrants of [Unit] · as provided for and as 

proposed by Paine Webber Incorporated. . . provided 

that such sale of common stock and warrants provide 

sufficient funds to permit [Unit] to reduce the amount 

of the Existing Indebtedness as of the Effective Date to 

an amount which is at least equal to the amount of 

[Mellon's] Total Commitment under this Agreement. 

Mellon contends that the public offering was successful on 

September 11, 1987, the same day as the closing, because on that 

date Unit knew that the offering had generated between $25.5 and 

$26.5 million, more than enough to permit Unit to reduce its 

indebtedness to the amount specified in the definition of 

"Successful Offering." Unit admits that the offering generated 

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Appellate Case: 89-5036 Document: 010110038425 Date Filed: 07/16/1990 Page: 2 
sufficient funds, but argues that under the terms of the 

Agreement, the funds had to be available for the offering to 

become successful, and that because the check from Paine Webber 

was in "New York Clearinghouse (next day) Funds," the funds were 

not available until the following Monday, September 14, 1987, and 

the Agreement therefore could not become effective until that 

date. Unit further argues that because it paid off all of its 

indebtedness to Mellon on that Monday, the Agreement never became 

effective, notwithstanding the undisputed success of the public 

o ffering no later than that date. The district court accepted 

this analysis and agreed with Unit that the Agreement never became 

effective. 

We need not determine whether the offering became successful 

on Friday, September 11, because in any case, the offering was 

successful when the funds from the offering were available to Unit 

o n the following Monday, September 14. By that date, at the 

latest, the Agreement had become effective. Nothing in the 

Agreement suggests that Unit could prevent or reverse this result 

by paying off its entire existing indebtedness. In this respect, 

the district court's error lay in its failure to recognize that 

Unit's action in paying off its indebtedness had no bearing 

whatsoever on the issue of whether the Agreement became effective. 

On appeal, Unit also argues that even if the Agreement became 

effective it owes Mellon no facility fee because the facility fee 

is a percentage 

defined in the 

indebtedness Unit 

of Mellon's "Total Commitment," as that term is 

Agreement, and by paying off all of its 

elected a "Total Commitment" of zero, thus 

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Appellate Case: 89-5036 Document: 010110038425 Date Filed: 07/16/1990 Page: 3 
• 

eliminating the facility fee. This argument, as well as arguments 

concerning certain affirmative defenses raised by Unit, should be 

directed to the district court on remand. 

Accordingly, the judgment of the district court is reversed 

and the case remanded for further proceedings consistent with this 

o pinion. 

ENTERED FOR THE COURT 

PER CURIAM 

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Appellate Case: 89-5036 Document: 010110038425 Date Filed: 07/16/1990 Page: 4