THE CASE 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 $1,000,000,000 (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 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