OF ANY SUCH ASSIGNMENT
RESULTING FROM A CLAIM FOR COMPENSATION UNDER SECTION 2.16 OR PAYMENTS REQUIRED
TO BE MADE PURSUANT TO SECTION 2.18, SUCH ASSIGNMENT WILL RESULT IN A REDUCTION
IN SUCH COMPENSATION OR PAYMENTS. A LENDER SHALL NOT BE REQUIRED TO MAKE ANY
SUCH ASSIGNMENT AND DELEGATION IF, PRIOR THERETO, AS A RESULT OF A WAIVER BY
SUCH LENDER OR OTHERWISE, THE CIRCUMSTANCES ENTITLING THE BORROWER TO REQUIRE
SUCH ASSIGNMENT AND DELEGATION CEASE TO APPLY OR, IN THE CASE OF A DEFAULTING
LENDER, SUCH LENDER IS NO LONGER A DEFAULTING LENDER.
Article III
Borrowing Base
SECTION 3.01.
RESERVE REPORT; PROPOSED BORROWING
BASE. DURING THE PERIOD FROM THE EFFECTIVE DATE UNTIL THE FIRST REDETERMINATION
AFTER THE EFFECTIVE DATE, THE BORROWING BASE SHALL BE $1,300,000,000 (THE
"INITIAL BORROWING BASE"). AS SOON AS AVAILABLE AND IN ANY EVENT BY MARCH 1 AND
SEPTEMBER 1 OF EACH YEAR, BEGINNING SEPTEMBER 1, 2007, THE BORROWER SHALL
DELIVER TO THE ADMINISTRATIVE AGENT AND EACH LENDER A RESERVE REPORT, PREPARED
AS OF THE IMMEDIATELY PRECEDING DECEMBER 31 AND JUNE 30, RESPECTIVELY, IN FORM
AND SUBSTANCE REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT AND PREPARED
BY AN APPROVED PETROLEUM ENGINEER (OR, IN THE CASE OF THE RESERVE REPORT DUE ON
SEPTEMBER 1 OF EACH YEAR, BY PETROLEUM ENGINEERS EMPLOYED BY THE BORROWER), SAID
RESERVE REPORT TO UTILIZE ECONOMIC AND PRICING PARAMETERS ESTABLISHED FROM TIME
TO TIME BY THE ADMINISTRATIVE AGENT, TOGETHER WITH SUCH OTHER INFORMATION,
REPORTS AND DATA CONCERNING THE VALUE OF THE BORROWING BASE PROPERTIES AS THE
ADMINISTRATIVE AGENT SHALL DEEM REASONABLY NECESSARY TO DETERMINE THE VALUE OF
SUCH BORROWING BASE PROPERTIES. SIMULTANEOUSLY WITH THE DELIVERY TO THE
ADMINISTRATIVE AGENT AND THE LENDERS OF EACH RESERVE REPORT, THE
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BORROWER SHALL SUBMIT TO THE ADMINISTRATIVE AGENT AND EACH LENDER THE BORROWER'S
REQUESTED AMOUNT OF THE BORROWING BASE AS OF THE NEXT REDETERMINATION DATE.
PROMPTLY AFTER THE RECEIPT BY THE ADMINISTRATIVE AGENT OF SUCH RESERVE REPORT
AND BORROWER'S REQUESTED AMOUNT FOR THE BORROWING BASE, THE ADMINISTRATIVE AGENT
SHALL SUBMIT TO THE LENDERS A RECOMMENDED AMOUNT OF THE BORROWING BASE TO BECOME
EFFECTIVE FOR THE PERIOD COMMENCING ON THE NEXT REDETERMINATION DATE.
SECTION 3.02.
SCHEDULED REDETERMINATIONS OF THE
BORROWING BASE; PROCEDURES AND STANDARDS. BASED IN PART ON THE RESERVE REPORTS
MADE AVAILABLE TO THE ADMINISTRATIVE AGENT AND THE LENDERS PURSUANT TO SECTION
3.01, THE LENDERS SHALL REDETERMINE THE BORROWING BASE ON OR PRIOR TO THE NEXT
REDETERMINATION DATE (OR SUCH DATE PROMPTLY THEREAFTER AS REASONABLY POSSIBLE
BASED ON THE ENGINEERING AND OTHER INFORMATION AVAILABLE TO THE LENDERS). ANY
BORROWING BASE WHICH BECOMES EFFECTIVE AS A RESULT OF ANY REDETERMINATION SHALL
BE SUBJECT TO THE FOLLOWING RESTRICTIONS: (A) SUCH BORROWING BASE SHALL NOT
EXCEED THE MAXIMUM FACILITY AMOUNT, (B) TO THE EXTENT SUCH BORROWING BASE
REPRESENTS AN INCREASE IN THE BORROWING BASE IN EFFECT PRIOR TO SUCH
REDETERMINATION, SUCH BORROWING BASE MUST BE APPROVED BY ALL LENDERS, AND (C) TO
THE EXTENT SUCH BORROWING BASE REPRESENTS A DECREASE IN THE BORROWING BASE IN
EFFECT PRIOR TO SUCH REDETERMINATION OR