different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder (subject to the
provisions of Section 11.6) to another of its offices, branches or affiliates,
if, in the judgment of such Lender, such designation or assignment (i) would
eliminate or materially reduce amounts payable pursuant to any such Section, as
the case may be, in the future, (ii) would not subject such Lender to any
unreimbursed cost or expense and (iii) would not otherwise be disadvantageous to
such Lender (as determined in its sole discretion).
Without limitation of the
provisions of Section 9.1, Borrower hereby agrees to pay all reasonable costs
and expenses incurred by any Lender in connection with any such designation or
assignment.
SECTION 2.16
BORROWING BASE.
(A)
INITIAL BORROWING BASE.
THE BORROWING BASE SHALL BE $110,000,000
DURING THE PERIOD FROM THE CLOSING DATE UNTIL THE FIRST DETERMINATION DATE UNDER
SECTION 2.16(B) UNLESS THE BORROWING BASE IS OTHERWISE SUBJECT TO A SPECIAL
DETERMINATION UNDER SECTION 2.16(C).
(B)
SCHEDULED DETERMINATIONS OF BORROWING BASE.
PRIOR TO MARCH 1 AND
SEPTEMBER 1 OF EACH YEAR, BEGINNING MARCH 1, 2008, BORROWER SHALL FURNISH TO
ADMINISTRATIVE AGENT ALL INFORMATION, REPORTS AND DATA REQUESTED BY
ADMINISTRATIVE AGENT CONCERNING CREDIT PARTIES' BUSINESSES AND PROPERTIES
(INCLUDING THEIR OIL AND GAS PROPERTIES AND THE RESERVES AND PRODUCTION RELATING
THERETO), TOGETHER WITH, AS APPLICABLE, THE MOST RECENT RESERVE REPORT DELIVERED
PURSUANT TO SECTION 4.1(I) OR (J).
WITHIN 30 DAYS, OR AS SOON THEREAFTER AS IS
REASONABLY PRACTICAL, THE BORROWING BASE SHALL BE REDETERMINED AS PROVIDED
HEREIN.
PROMPTLY AFTER RECEIVING SUCH
36
INFORMATION, REPORTS AND DATA, ADMINISTRATIVE AGENT SHALL DETERMINE AND DELIVER
TO EACH LENDER THE PROPOSED BORROWING BASE FOR THE NEXT BORROWING BASE PERIOD.
PROMPTLY AFTER LENDERS RECEIPT THEREOF EACH LENDER SHALL NOTIFY ADMINISTRATIVE
AGENT WHETHER OR NOT IT AGREES WITH SUCH PROPOSED BORROWING BASE. IF REQUIRED
LENDERS HAVE NOT APPROVED THE PROPOSED BORROWING BASE, ADMINISTRATIVE AGENT
SHALL POLL LENDERS TO ASCERTAIN THE HIGHEST BORROWING BASE ACCEPTABLE TO
REQUIRED LENDERS WHICH AMOUNT SHALL THEN BECOME THE BORROWING BASE.
ADMINISTRATIVE AGENT SHALL BY NOTICE TO BORROWER DESIGNATE SUCH AMOUNT AS THE
NEW BORROWING BASE AVAILABLE TO BORROWER HEREUNDER, WHICH DESIGNATION SHALL TAKE
EFFECT ON THE DATE SUCH NOTICE IS SENT (HEREIN CALLED A "DETERMINATION DATE")
AND SHALL REMAIN IN EFFECT UNTIL THE NEXT DETERMINATION DATE.
THE BORROWING
BASE SHALL BE DETERMINED BASED UPON THE LOAN COLLATERAL VALUE WHICH
ADMINISTRATIVE AGENT AND REQUIRED LENDERS IN THEIR DISCRETION ASSIGN TO THE
DISCOUNTED NET PRESENT VALUE OF THE VARIOUS OIL AND GAS PROPERTIES INCLUDED IN
THE COLLATERAL AT THE TIME OF DETERMINATION AND BASED UPON SUCH OTHER CREDIT
FACTORS (INCLUDING WITHOUT LIMITATION THE ASSETS, LIABILITIES, CASH FLOW, HEDGED
AND UNHEDGED EXPOSURE TO PRICE, FOREIGN EXCHANGE RATE, AND INTEREST RATE
CHANGES, BUSINESS, PROPERTIES, PROSPECTS, MANAGEMENT AND OWNERSHIP OF CREDIT
PARTIES AND THEIR AFFILIATES) AS THEY IN THEIR REASONABLE DISCRETION DEEM
APPROPRIATE.
IT IS EXPRESSLY UNDERSTOOD THAT LENDERS AND ADMINISTRATIVE AGENT
HAVE NO OBLIGATION TO AGREE UPON OR DESIGNATE THE BORROWING BASE AT ANY
PARTICULAR