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.
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 $125,000,000 (THE "INITIAL BORROWING BASE").
AS SOON AS AVAILABLE AND IN ANY EVENT BY APRIL
1 AND OCTOBER 1 OF
EACH YEAR,
BEGINNING APRIL 1, 2006, THE BORROWER SHALL DELIVER TO THE ADMINISTRATIVE AGENT
AND EACH LENDER A RESERVE REPORT, PREPARED AS OF THE IMMEDIATELY PRECEDING MARCH
1 AND SEPTEMBER 1, 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 OCTOBER 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; PROVIDED THAT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
ADMINISTRATIVE AGENT, THE BORROWER SHALL NOT REQUEST A BORROWING BASE IN AN
AMOUNT LESS THAN $50,000,000.
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 OF THE
BORROWING BASE SHALL BE SUBJECT TO THE FOLLOWING RESTRICTIONS: (A) SUCH
BORROWING BASE SHALL NOT EXCEED THE AMOUNT OF THE BORROWING BASE REQUESTED BY
THE BORROWER (UNLESS AN AMOUNT LESS THAN $50,000,000 WAS REQUESTED WITHOUT THE
PRIOR WRITTEN CONSENT OF THE ADMINISTRATIVE AGENT IN WHICH EVENT THE AMOUNT
DEEMED REQUESTED BY THE BORROWER SHALL BE $50,000,000), (B) SUCH BORROWING BASE
SHALL NOT EXCEED THE AMOUNT SET FORTH IN CLAUSE (I) OF THE DEFINITION OF
"AGGREGATE REVOLVING COMMITMENT", (C) TO THE EXTENT SUCH BORROWING BASE
REPRESENTS AN INCREASE IN THE BORROWING BASE IN EFFECT PRIOR TO SUCH
REDETERMINATION,