Exhibit 10.1
[JPMorgan Chase Bank
Letterhead]
March 21, 2007
Our L/C No.: XXXX-XXXXXX
Merrill Lynch
Capital, a division of Merrill Lynch
Business
Financial Services Inc., as Administrative Agent,
its successors
and assigns (“Beneficiary”)
222 North
LaSalle Street, 15 th Floor
Ladies and
Gentlemen:
We hereby
establish our Irrevocable Transferable Letter of Credit in
Beneficiary’s favor for the account of Clayton Williams
Energy, Inc. for the account of Larclay, L.P.
(“Applicant”), 6 Desta Drive, Suite 6500, Midland,
Texas 79705, in the aggregate amount of USD $5,000,000.00,
effective immediately and expiring at our office with the close of
business on the Expiry Date.
This Credit
cannot be modified or revoked without Beneficiary’s
consent.
Funds under
this Credit are available to Beneficiary against presentation to
us, by tested telex or authenticated SWIFT, in person, by mail, by
messenger delivery or by facsimile transmission, to our offices at
300 South Riverside Plaza, Mail Code IL1-0236, Chicago, IL
60606-0236, Attn:
Standby Letter
of Credit Dept., of Beneficiary’s sight draft marked
“Drawn Under JPMorgan Chase Bank, N.A., Letter of Credit
No. XXX-XXXXXX Dated ___________” and
Beneficiary’s signed and dated statement reading as
follows: “We hereby certify that the amount of the
drawing represents indebtedness owed or other right to draw on as
has occurred under that certain Term Loan and Security Agreement
dated April 21, 2006 (the “Loan Agreement”) among
Larclay, LP, as Borrower, the Lenders from time to time party to
the Loan Agreement, and Merrill Lynch Capital, a division of
Merrill Lynch Business Financial Services, Inc., as
Administrative Agent for Lenders”.
Drawings
presented by telefacsimile (“fax”) to fax number
312-954-0203, or alternately to fax number 312-954-2457 are
acceptable, under telephone pre-advice to 312-954-1910, or
alternately to 1-800-634-1969, Option 1; provided that such fax
presentation
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