Exhibit 10.1

 

FIRST AMENDMENT TO CREDIT AGREEMENT

 

This First Amendment to Credit Agreement (“Amendment”) is entered into between
TEXAS CAPITAL BANK, N.A., a national banking association, as lender, and Reef
Oil & Gas Income and Development Fund III, L.P., a Texas limited partnership, as
borrower, and is dated May 20, 2011. Terms defined in the Credit Agreement
between such lender and such borrower dated June 30, 2010, (as amended prior to
the date of this Amendment, the “Credit Agreement”), are used herein as therein
defined, unless otherwise defined herein or the context otherwise requires.

 

RECITALS:

 

WHEREAS, the Borrower has requested that the Lender amend the Credit Agreement,
waive the Borrower’s noncompliance with certain covenants in the Credit
Agreement and decrease the Borrowing Base; and

 

WHEREAS, the Lender is willing to amend the Credit Agreement and waive the
Borrower’s noncompliance with certain covenants in the Credit Agreement under
the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Borrower and the Lender hereby agree as follows:

 

1.             The following definition is hereby added to Section 1.1 of the
Credit Agreement as follows:

 

“First Amendment to Credit Agreement” means the First Amendment to Credit
Agreement dated May 20, 2011, between the Lender and the Borrower, amending the
Credit Agreement.

 

2.             The following definition located in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety as follows:

 

“Borrowing Base” means the amount most recently determined and designated by the
Lender as the Borrowing Base in accordance with Section 2.8.1, as such Borrowing
Base is reduced in accordance with Section 2.8.2. The Borrowing Base under
Section 2.8.1 is deemed to be $4,100,000 as of the date of the First Amendment
to the Credit Agreement.

 

3.             Section 2.8.2 of the Credit Agreement is hereby amended and
restated in its entirety as follows:

 

“2.8.2 The Borrowing Base shall be automatically reduced as of the first day of
each month, commencing June 1, 2011, and continuing on the first day of each
month thereafter until the Final Maturity Date. Such reductions in the Borrowing
Base each month shall be in the amount of $55,000 per month unless redetermined
as herein permitted. At the time of each new Borrowing Base determination under
Section 2.8.1,

 

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the Lender in its sole discretion may increase the amount of such monthly
reductions, and the Lender may decrease the amount of such monthly reductions.
Any decreases in the monthly reductions shall be subject to the Lender’s
complete credit approval process. There is no duty, implied or explicit, on the
Lender to ever decrease the amount of the monthly Borrowing Base reduction
amounts.

 

4.             A Section 3.8 is hereby added to the Credit Agreement as follows:

 

“3.8         Each Guarantor waives any rights such Guarantor has under, or any
requirements imposed by, (i) Section 17.001 of the Texas Civil Practice and
Remedies Code, as amended, (ii) Rule 31 of the Texas Rules of Civil Procedure,
as amended, and (iii) Sections 51.003, 51.004 and 51.005 of the Texas Property
Code, as amended.”

 

5.             A Section 3.9 is hereby added to the Credit Agreement as follows:

 

“3.9         The Borrower waives any rights the Borrower has under, or any
requirements imposed by, Sections 51.003, 51.004 and 51.005 of the Texas
Property Code, as amended.”

 

6.             The Lender hereby waives the Borrower’s noncompliance with the
provisions of  Sections 7.9.2(iii), 7.12.1, 7.12.2 and 7.15.3 of the Credit
Agreement for the fiscal periods ended on or before March 31, 2011.

 

7.             The Borrower shall pay to the Lender upon execution of this
Amendment,

 

(a)           a waiver fee in the amount of $41,000.

 

(b)           a processing fee in the amount of $2,500 pursuant to Section 2.6.6
of the Credit Agreement.

 

8.             The Borrower agrees to execute and deliver or cause the
appropriate Person to execute and deliver within five (5) Business Days of a
request therefor such certificates, mortgages, amendments to mortgages and other
security instruments as the Lender may from time to time reasonably request to
reflect the terms of this Amendment.

 

9.             All of the conditions in this Amendment and the Credit Agreement
are solely for the benefit of the Lender, and no Person other than the Lender
may rely thereon or insist on compliance therewith.

 

10.           Ratification. The Borrower hereby ratifies the Obligations and
each of the Loan Documents to which it is a party, and agrees and acknowledges
that the Credit Agreement and each of the other Loan Documents to which it is a
party shall continue in full force and effect after giving effect to this
Amendment. Nothing in this Amendment extinguishes, novates or releases any
right, claim, Lien, security interest or entitlement of the Lender created by or
contained in any of such documents nor is the Borrower released from any
covenant, warranty or obligation created by or contained therein.

 

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11.           Representations and Warranties. The Borrower hereby represents and
warrants to the Lender that (a) this Amendment has been duly executed and
delivered on behalf of the Borrower, (b) this Amendment constitutes a valid and
legally binding agreement enforceable against the Borrower in accordance with
its terms and (c) the execution, delivery and performance of this Amendment has
been duly authorized by the Borrower.

 

12.           Conditions to Effectiveness. This Amendment shall be effective
upon the execution by all parties of this Amendment and the receipt thereof by
the Lender.

 

13.           RELEASE OF CLAIMS. The Borrower for itself, its successors and
assigns and all those at interest therewith including, without limitation, each
Guarantor (collectively, the “Releasing Parties”), jointly and severally, hereby
voluntarily and forever, RELEASE, DISCHARGE AND ACQUIT the Lender and its
officers, directors, shareholders, employees, agents, successors, assigns,
representatives, affiliates and insurers (sometimes referred to below
collectively as the “Released Parties”) and all those at interest therewith of
and from any and all claims, causes of action, liabilities, damages, costs
(including, without limitation, attorneys’ fees and all costs of court or other
proceedings), and losses of every kind or nature at this time known or unknown,
direct or indirect, fixed or contingent, which the Releasing Parties, have or
hereafter may have arising out of any act, occurrence, transaction, or omission
occurring from the beginning of time to the date of execution of this Amendment
if related to the Note or the other Loan Documents (the “Released Claims”),
except that (i) the future duties and obligations of the Lender under the Loan
Documents and the rights of the Borrower to its funds on deposit with the Lender
shall not be included in the term Released Claims and (ii) the right of the
Borrower to require the correction of manifest accounting errors and similar
administrative errors shall not be included in the term Released Claims. IT IS
THE EXPRESS INTENT OF THE RELEASING PARTIES THAT THE RELEASED CLAIMS SHALL
INCLUDE ANY CLAIMS OR CAUSES OF ACTION ARISING FROM OR ATTRIBUTABLE TO THE
NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY OF THE RELEASED
PARTIES.

 

14.           Counterparts. For the convenience of the parties, this Amendment
may be executed in multiple counterparts, each of which for all purposes shall
be deemed to be an original, and all such counterparts shall together constitute
but one and the same agreement. Delivery of an executed counterpart of a
signature page of this Amendment by telecopy, e-mail, facsimile transmission,
electronic mail in “portable document format”(“.pdf”) form or other electronic
means intended to preserve the original graphic and pictorial appearance of the
item being sent shall be effective as a delivery of a manually executed
counterpart of this Amendment.

 

15.           Effect. This Amendment is one of the Loan Documents. Except as
amended hereby, the Credit Agreement shall remain unchanged and in full force
and effect, and the Borrower hereby ratifies the terms of the Credit Agreement
(as amended hereby), including, without limitation, the provisions of
Section 9.10 thereof.

 

[Signature page follows]

 

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16.           ENTIRE AGREEMENT. THIS AMENDMENT CONSTITUTES THE ENTIRE AGREEMENT
BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF. FURTHERMORE, IN
THIS REGARD, THIS AMENDMENT AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT,
COLLECTIVELY, THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF SUCH PARTIES.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.

 

IN WITNESS WHEREOF, this Amendment is deemed executed effective as of the date
first above written.

 

 

BORROWER:

 

REEF OIL & GAS INCOME AND DEVELOPMENT FUND III, L.P.

 

 

 

By:

Reef Oil & Gas Partners, LP, as General Partner

 

By:

Reef Oil & Gas Partners, GP, LLC, as General Partner

 

 

 

 

 

By:

/s/ Michael J. Mauceli

 

 

 

Michael J. Mauceli, Manager

 

 

 

 

 

LENDER:

 

TEXAS CAPITAL BANK, N.A.

 

 

 

 

 

By:

/s/ Brian J. Petet

 

Name:

Brian J. Petet

 

Title:

Senior Vice President

 

[Signature page for Guarantors follow]

 

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The Guarantor acknowledges and approves the foregoing Amendment, confirms that
its Guaranty is in full force and effect and agrees to the waiver in new
Section 3.8 of the Credit Agreement and the release of claims in paragraph 13 of
the foregoing Amendment.

 

 

GUARANTORS:

 

RCWI, L.P.

 

By:

RCWI, GP, LLC

 

 

 

 

By:

/s/ Michael J. Mauceli

 

 

 

Michael J. Mauceli, President and Manager

 

 

 

 

 

 

RCWI, GP, LLC

 

 

 

 

 

 

By:

/s/ Michael J. Mauceli

 

 

 

Michael J. Mauceli, President and Manager

 

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