SUCH TERMINATION OR REDUCTION, SPECIFYING SUCH
ELECTION AND THE EFFECTIVE DATE THEREOF.
PROMPTLY FOLLOWING RECEIPT OF ANY
NOTICE, THE ADMINISTRATIVE AGENT SHALL ADVISE THE LENDERS OF THE CONTENTS
THEREOF.
EACH NOTICE DELIVERED BY THE BORROWER PURSUANT TO THIS
SECTION 2.06(B)(II) SHALL BE IRREVOCABLE.
ANY TERMINATION OR REDUCTION OF THE
AGGREGATE MAXIMUM CREDIT AMOUNTS SHALL BE PERMANENT AND MAY NOT BE REINSTATED.
EACH REDUCTION OF THE AGGREGATE MAXIMUM CREDIT AMOUNTS SHALL BE MADE RATABLY
AMONG THE LENDERS IN ACCORDANCE WITH EACH LENDER'S APPLICABLE PERCENTAGE.
SECTION 2.07.
BORROWING BASE.
(A)
BORROWING BASE.
THE TERM "BORROWING BASE"
MEANS, AS OF THE DATE OF THE DETERMINATION THEREOF, THE DESIGNATED LOAN VALUE AS
CALCULATED BY THE LENDERS IN THEIR SOLE DISCRETION ASSIGNED TO THE DISCOUNTED
PRESENT VALUE OF FUTURE NET INCOME ACCRUING TO THE MORTGAGED PROPERTY, BASED
UPON THE LENDERS' IN-HOUSE EVALUATION OF THE MORTGAGED PROPERTY.
THE LENDERS'
DETERMINATION OF THE BORROWING BASE WILL BE MADE IN ACCORDANCE WITH THEN-CURRENT
PRACTICES, ECONOMIC AND PRICING PARAMETERS, METHODOLOGY, ASSUMPTIONS, AND
CUSTOMARY PROCEDURES AND STANDARDS ESTABLISHED BY EACH LENDER FROM TIME TO TIME
FOR ITS PETROLEUM INDUSTRY CUSTOMERS.
THE BORROWER ACKNOWLEDGES THAT THE
DETERMINATION OF THE BORROWING BASE CONTAINS AN EQUITY CUSHION (MARKET VALUE IN
EXCESS OF LOAN AMOUNT) WHICH THE BORROWER ACKNOWLEDGES TO BE ESSENTIAL FOR THE
ADEQUATE PROTECTION OF THE LENDERS.
FOR THE PERIOD FROM AND INCLUDING THE DATE
HEREOF BUT EXCLUDING THE NEXT REDETERMINATION DATE, THE AMOUNT OF THE BORROWING
BASE SHALL BE $110,500,000; PROVIDED, HOWEVER, THAT UPON THE SATISFACTION OF THE
CONDITIONS SET FORTH IN SECTION 6.03, THE AMOUNT OF THE BORROWING BASE SHALL BE
$150,000,000.
NOTWITHSTANDING THE FOREGOING, THE BORROWING BASE MAY BE SUBJECT
TO FURTHER ADJUSTMENTS FROM TIME TO TIME PURSUANT TO SECTION 8.13(C).
(B)
SCHEDULED AND INTERIM REDETERMINATIONS.
THE
BORROWING BASE SHALL BE REDETERMINED SEMI-ANNUALLY IN ACCORDANCE WITH THIS
SECTION 2.07 (A "SCHEDULED REDETERMINATION"), AND, SUBJECT TO SECTION 2.07(D),
SUCH REDETERMINED BORROWING BASE SHALL BECOME EFFECTIVE AND APPLICABLE TO THE
BORROWER, THE AGENTS, THE ISSUING BANK AND THE LENDERS ON APRIL 1ST AND
OCTOBER 1ST OF EACH YEAR, COMMENCING APRIL 1, 2008.
IN ADDITION, THE BORROWER
MAY, BY NOTIFYING THE ADMINISTRATIVE AGENT THEREOF, NOT MORE THAN TWO (2) TIMES
DURING ANY 12-MONTH PERIOD, AND THE ADMINISTRATIVE AGENT MAY AT ANY TIME, AT THE
DIRECTION OF THE MAJORITY LENDERS, BY NOTIFYING THE BORROWER THEREOF, EACH ELECT
TO CAUSE THE BORROWING BASE TO BE REDETERMINED BETWEEN SCHEDULED
REDETERMINATIONS (AN "INTERIM REDETERMINATION") IN ACCORDANCE WITH THIS
SECTION 2.07.
27
(C)
SCHEDULED AND INTERIM
REDETERMINATION
PROCEDURE.
(I)
EACH SCHEDULED REDETERMINATION AND EACH
INTERIM REDETERMINATION SHALL BE EFFECTUATED AS FOLLOWS:
UPON RECEIPT BY THE
ADMINISTRATIVE AGENT OF (A) THE RESERVE REPORT AND THE CERTIFICATE REQUIRED TO
BE DELIVERED BY THE BORROWER TO THE ADMINISTRATIVE AGENT, IN THE CASE OF A
SCHEDULED REDETERMINATION, PURSUANT TO SECTION 8.12(A) AND (C), AND, IN THE CASE
OF AN INTERIM REDETERMINATION, PURSUANT TO SECTION 8.12(B) AND (C), AND (B) SUCH
OTHER REPORTS, DATA AND SUPPLEMENTAL INFORMATION, INCLUDING, WITHOUT LIMITATION,
THE INFORMATION PROVIDED PURSUANT TO SECTION 8.12(C), AS MAY, FROM TIME