Exhibit 10.1
Execution Version
 
Second Amended And Restated
Credit Agreement
Dated as of
March 30, 2010
among
Resolute Energy Corporation
as Borrower,
Certain of its Subsidiaries,
as Guarantors
Wells Fargo Bank, National Association,
as Administrative Agent,
Bank of Montreal,
as Syndication Agent,
Deutsche Bank Securities Inc., UBS Securities LLC
and Union Bank, N.A.,
as Co-Documentation Agents,
and
The Lenders Party Hereto
Wells Fargo Securities, LLC
and BMO Capital Markets
as Joint Bookrunners and Joint Lead Arrangers
 

 

--------------------------------------------------------------------------------

 

Table Of Contents

                Page:  
 
       
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
 
       
Section 1.01 Terms Defined Above
    1  
Section 1.02 Certain Defined Terms
    1  
Section 1.03 Types of Loans and Borrowings
    23  
Section 1.04 Terms Generally; Rules of Construction
    23  
Section 1.05 Accounting Terms and Determinations; GAAP
    24  
 
       
ARTICLE II
THE CREDITS
 
       
Section 2.01 Commitments
    24  
Section 2.02 Loans and Borrowings
    24  
Section 2.03 Requests for Borrowings
    25  
Section 2.04 Interest Elections
    26  
Section 2.05 Funding of Borrowings
    28  
Section 2.06 Changes in the Aggregate Maximum Credit Amounts
    28  
Section 2.07 Borrowing Base
    29  
Section 2.08 Letters of Credit
    31  
Section 2.10 Defaulting Lenders
    37  
 
       
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES
 
       
Section 3.01 Repayment of Loans
    39  
Section 3.02 Interest
    39  
Section 3.03 Alternate Rate of Interest
    40  
Section 3.04 Prepayments
    40  
Section 3.05 Fees
    42  
 
       
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS
 
       
Section 4.02 Presumption of Payment by the Borrower
    45  
Section 4.03 Certain Deductions by the Administrative Agent
    45  
Section 4.04 Disposition of Proceeds
    45  

Resolute Energy Corporation
Second Amended & Restated Credit Agreement

i

--------------------------------------------------------------------------------

 

                Page:  
ARTICLE V
INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY
 
       
Section 5.01 Increased Costs
    45  
Section 5.02 Break Funding Payments
    47  
Section 5.03 Taxes
    47  
Section 5.04 Mitigation Obligations
    48  
Section 5.05 Illegality
    49  
 
       
ARTICLE VI
CONDITIONS PRECEDENT
 
       
Section 6.01 Effective Date
    50  
Section 6.02 Each Credit Event
    52  
 
       
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
 
       
Section 7.01 Organization; Powers
    53  
Section 7.02 Authority; Enforceability
    53  
Section 7.03 Approvals; No Conflicts
    53  
Section 7.04 Financial Condition; No Material Adverse Change
    54  
Section 7.05 Litigation
    54  
Section 7.06 Environmental Matters
    55  
Section 7.07 Compliance with the Laws and Agreements; No Defaults
    56  
Section 7.08 Investment Company Act
    56  
Section 7.09 [Reserved]
    56  
Section 7.10 Taxes
    56  
Section 7.11 ERISA
    56  
Section 7.12 Disclosure; No Material Misstatements
    58  
Section 7.13 Insurance
    58  
Section 7.14 Restriction on Liens
    58  
Section 7.15 Subsidiaries
    58  
Section 7.16 Location of Business and Offices
    59  
Section 7.17 Properties; Titles, Etc
    59  
Section 7.18 Maintenance of Properties
    60  
Section 7.19 Gas Imbalances, Prepayments
    60  
Section 7.20 Marketing of Production
    60  
Section 7.21 Hedging Agreements
    61  
Section 7.22 Use of Loans and Letters of Credit
    61  
Section 7.23 Solvency
    61  
 
       
ARTICLE VIII
AFFIRMATIVE COVENANTS
 
       
Section 8.01 Financial Statements; Ratings Change; Other Information
    62  
Section 8.02 Notices of Material Events
    64  

Resolute Energy Corporation
Second Amended & Restated Credit Agreement

ii

--------------------------------------------------------------------------------

 

                Page:  
Section 8.03 Existence; Conduct of Business
    65  
Section 8.04 Payment of Obligations
    65  
Section 8.05 Performance of Obligations under Loan Documents
    65  
Section 8.06 Operation and Maintenance of Properties
    65  
Section 8.07 Insurance
    66  
Section 8.08 Books and Records; Inspection Rights
    66  
Section 8.09 Compliance with Laws
    66  
Section 8.10 Environmental Matters
    66  
Section 8.11 Further Assurances
    67  
Section 8.12 Reserve Reports
    68  
Section 8.13 Title Information
    69  
Section 8.14 Additional Collateral; Additional Guarantors
    70  
Section 8.15 ERISA Compliance
    71  
Section 8.16 Unrestricted Subsidiaries
    72  
Section 8.17 Patriot Act
    72  
 
       
ARTICLE IX
NEGATIVE COVENANTS
 
       
Section 9.01 Financial Covenants
    72  
Section 9.02 Debt
    73  
Section 9.03 Liens
    73  
Section 9.04 Restricted Payments
    74  
Section 9.05 Investments
    74  
Section 9.06 Nature of Business; International Operations
    75  
Section 9.07 Limitation on Operating Leases
    75  
Section 9.08 Proceeds of Notes/Loans
    76  
Section 9.09 ERISA Compliance
    76  
Section 9.10 Sale or Discount of Receivables
    77  
Section 9.11 Mergers, Etc
    77  
Section 9.12 Sale of Properties
    77  
Section 9.13 Environmental Matters
    79  
Section 9.14 Transactions with Affiliates
    79  
Section 9.15 Subsidiaries
    79  
Section 9.16 [Reserved]
    79  
Section 9.17 Negative Pledge Agreements; Dividend Restrictions
    79  
Section 9.18 Take-or-Pay or Other Prepayments
    80  
Section 9.19 Hedging Agreements
    80  
Section 9.20 Designation and Conversion of Restricted and Unrestricted
Subsidiaries
    81  
 
       
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
 
       
Section 10.01 Events of Default
    82  
Section 10.02 Remedies
    83  

Resolute Energy Corporation
Second Amended & Restated Credit Agreement

iii

--------------------------------------------------------------------------------

 

                Page:  
ARTICLE XI
THE AGENTS
 
       
Section 11.01 Appointment; Powers
    85  
Section 11.02 Duties and Obligations of Administrative Agent
    85  
Section 11.03 Action by Administrative Agent
    85  
Section 11.04 Reliance by Administrative Agent
    86  
Section 11.05 Subagents
    86  
Section 11.06 Resignation or Removal of Agents
    87  
Section 11.07 Agents as Lenders
    87  
Section 11.08 No Reliance
    87  
Section 11.09 Authority to Release Guarantors, Collateral and Liens
    88  
Section 11.10 The Arrangers and Agents
    88  
Section 11.11 Filing of Proofs of Claim
    88  
 
       
ARTICLE XII
MISCELLANEOUS
 
       
Section 12.01 Notices.
    89  
Section 12.02 Waivers; Amendments.
    90  
Section 12.03 Expenses, Indemnity; Damage Waiver.
    91  
Section 12.04 Successors and Assigns.
    94  
Section 12.05 Survival; Revival; Reinstatement.
    96  
Section 12.06 Counterparts; Integration; Effectiveness.
    97  
Section 12.07 Severability
    98  
Section 12.08 Right of Setoff
    98  
Section 12.09 Governing Law; Jurisdiction; Consent to Service of Process.
    98  
Section 12.10 Headings
    99  
Section 12.11 Confidentiality
    99  
Section 12.12 EXCULPATION PROVISIONS
    100  
Section 12.13 No Third Party Beneficiaries
    101  
Section 12.14 Collateral Matters; Hedging Agreements; Treasury Management
Agreements
    101  
Section 12.15 US Patriot Act Notice
    101  
Section 12.16 Existing Credit Agreement; Existing Facility Termination.
    101  
Section 12.17 No Fiduciary Duty.
    101  

ANNEXES, EXHIBITS AND SCHEDULES

     
Annex I
  Maximum Credit Amounts
 
   
Exhibit A
  Form of Note
Exhibit B
  Form of Borrowing Request
Exhibit C
  Form of Interest Election Request

Resolute Energy Corporation
Second Amended & Restated Credit Agreement

iv

--------------------------------------------------------------------------------

 

     
Exhibit D
  Form of Compliance Certificate
Exhibit E
  Form of Assignment and Assumption
Exhibit F
  [Reserved]
Exhibit G
  Security Instruments
Exhibit H
  Account Designation Letter
 
   
Schedule 1.02
  Approved Counterparties
Schedule 2.08
  Existing Letters of Credit
Schedule 7.03
  Post Closing Consents
Schedule 7.05
  Litigation
Schedule 7.15
  Subsidiaries and Partnerships
Schedule 7.16
  Locations, Jurisdictions of Organization and Organization Numbers
Schedule 7.17
  Properties
Schedule 7.19
  Gas Imbalances
Schedule 7.20
  Marketing Contracts
Schedule 7.21
  Hedging Agreements
Schedule 9.05
  Investments

Resolute Energy Corporation
Second Amended & Restated Credit Agreement

v

--------------------------------------------------------------------------------

 

     This SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 30,
2010, is among RESOLUTE ENERGY CORPORATION, a Delaware corporation (the
“Borrower”), certain subsidiaries of the Borrower as guarantors, each of the
Lenders from time to time party hereto, WELLS FARGO BANK, NATIONAL ASSOCIATION,
successor-by-merger to Wachovia Bank, National Association, as administrative
agent for the Lenders (in such capacity, together with its successors in such
capacity, the “Administrative Agent”), BANK OF MONTREAL, as syndication agent
for the Lenders (in such capacity, together with its successors in such
capacity, the “Syndication Agent”), and DEUTSCHE BANK SECURITIES INC., UBS
SECURITIES LLC AND UNION BANK, N.A., as co-documentation agents for the Lenders
(in such capacity, together with their successors in such capacity, the
“Co-Documentation Agents”).
R E C I T A L S
     A. Resolute Aneth (as defined below), an indirect Subsidiary (as defined
below) of the Borrower, previously entered into that certain Amended and
Restated Credit Agreement, dated as of April 14, 2006, among Resolute Aneth, the
guarantors party thereto, Wachovia Bank, National Association, as administrative
agent, and the other agents and lenders party thereto (as amended, restated,
supplemented and otherwise modified from time to time, the “Existing Credit
Agreement”).
     B. The Borrower and Resolute Aneth have requested that the Lenders amend
and restate the Existing Credit Agreement to, among other things, replace
Resolute Aneth with the Borrower as the borrower hereunder and make Resolute
Aneth a Guarantor (as defined below).
     C. The Lenders have agreed to amend and restate the Existing Credit
Agreement and to make loans and extensions of credit subject to the terms and
conditions of this Agreement.
     D. In consideration of the mutual covenants and agreements herein contained
and of the loans, extensions of credit and commitments hereinafter referred to,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
     Section 1.01 Terms Defined Above. As used in this Agreement, each term
defined above has the meaning indicated above.
     Section 1.02 Certain Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
     “ABR”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

1

--------------------------------------------------------------------------------

 

     “Account Designation Letter” means the Notice of Account Designation Letter
dated the date hereof from the Borrower to the Administrative Agent in
substantially the form attached hereto as Exhibit H.
     “Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/100 of one percent (1%)) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.
     “Administrative Agent” has the meaning assigned to such term in the
introductory paragraph.
     “Administrative Questionnaire” means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
     “Affected Loans” has the meaning assigned to such term in Section 5.05.
     “Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
     “Agents” means, collectively, the Administrative Agent, the Syndication
Agent and the Co-Documentation Agents; and “Agent” shall mean any of them, as
the context requires.
     “Aggregate Maximum Credit Amounts” at any time shall equal the sum of the
Maximum Credit Amounts, as the same may be reduced or terminated pursuant to
Section 2.06. The initial Aggregate Maximum Credit Amount of the Lenders is
$500,000,000.
     “Agreement” means this Second Amended and Restated Credit Agreement, as the
same may from time to time be amended, modified, supplemented or restated.
     “Alternate Base Rate” means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds
Effective Rate in effect on such day plus one half of one percent (1/2 of 1%),
and (c) the Adjusted LIBO Rate for a one month Interest Period beginning on such
day (or if such day is not a Business Day, the immediately preceding Business
Day) plus one percent (1%). Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO
Rate shall be effective from and including the effective date of such change in
the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate,
respectively.
     “Applicable Margin” means, for any day, with respect to any ABR Loan or
Eurodollar Loan, or with respect to the Commitment Fee Rate, as the case may be,
the rate per annum set forth in the Borrowing Base Utilization Grid below based
upon the Borrowing Base Utilization Percentage then in effect:
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

2

--------------------------------------------------------------------------------

 

                                  Borrowing Base Utilization Grid              
                                        Borrowing BaseUtilizationPercentage  
≤50%     >50%, but ≤75%     >75%, but ≤90%     >90%  
ABR Loans
    1.250 %     1.500 %     1.750 %     2.000 %
Eurodollar Loans
    2.250 %     2.500 %     2.750 %     3.000 %
Commitment Fee
    0.500 %     0.500 %     0.500 %     0.500 %

     Each change in the Applicable Margin shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change; provided,
however, that if at any time the Borrower fails to deliver a Reserve Report
pursuant to Section 8.12(a), then the “Applicable Margin” means the rate per
annum set forth on the grid when the Borrowing Base Utilization Percentage is at
its highest level; provided further that the Applicable Margin shall revert to
the previous Applicable Margin upon the Borrower’s delivery of such Reserve
Report.
     “Applicable Percentage” means, with respect to any Lender, the percentage
of the Aggregate Maximum Credit Amounts represented by such Lender’s Maximum
Credit Amount.
     “Approved Counterparty” means (a) any Lender or any Affiliate of a Lender,
(b) any other Person whose long term senior unsecured debt rating at the time of
entry into the applicable Hedging Agreement is A-/A3 by S&P or Moody’s (or their
equivalent) or higher, or (c) with regard to Hedging Agreements in respect of
commodities, and subject to the conditions set forth therein, any other Person
listed on Schedule 1.02.
     “Approved Fund” means (a) a CLO and (b) with respect to any Lender that is
a fund which invests in bank loans and similar extensions of credit, any other
fund that invests in bank loans and similar extensions of credit and is managed
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
     “Approved Petroleum Engineers” means Netherland Sewell & Associates, Inc.
or such other independent petroleum engineers proposed by the Borrower and
reasonably acceptable to the Administrative Agent.
     “Arrangers” means Wells Fargo Securities, LLC and BMO Capital Markets, in
their capacities as joint lead bookrunners and joint lead arrangers hereunder.
     “Assignment and Assumption” means an assignment and assumption entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 12.04(b)), and accepted by the Administrative Agent, in the
form of Exhibit E or any other form approved by the Administrative Agent.
     “Availability Period” means the period from and including the Effective
Date to but excluding the Termination Date.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

3

--------------------------------------------------------------------------------

 

     “Board” means the Board of Governors of the Federal Reserve System of the
United States of America or any successor Governmental Authority.
     “Borrower” has the meaning assigned to such term in the introductory
paragraph.
     “Borrowing” means Loans of the same Type, made, converted or continued on
the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.
     “Borrowing Base” means at any time an amount equal to the amount determined
in accordance with Section 2.07, as the same may be adjusted from time to time
pursuant to Section 8.13(d), Section 9.12 or Section 9.19.
     “Borrowing Base Hedging Contracts” has the meaning assigned to such term in
Section 9.19.
     “Borrowing Base Properties” has the meaning assigned to such term in
Section 9.12.
     “Borrowing Base Utilization Percentage” means, as of any day, the fraction
expressed as a percentage, the numerator of which is the sum of the Credit
Exposures of the Lenders on such day, and the denominator of which is the
Borrowing Base in effect on such day.
     “Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
     “Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York, New York, are authorized or required by law
to remain closed; and if such day relates to a Borrowing or continuation of, a
payment or prepayment of principal of or interest on, or a conversion of or
into, or the Interest Period for, a Eurodollar Loan or a notice by the Borrower
with respect to any such Borrowing or continuation, payment, prepayment,
conversion or Interest Period, any day which is also a day on which dealings in
dollar deposits are carried out in the London interbank market.
     “BWNR” means BWNR, LLC, a Delaware limited liability company.
     “Capital Leases” means, in respect of any Person, all leases that shall
have been, or should have been, in accordance with GAAP, recorded as capital
leases on the balance sheet of the Person liable (whether contingent or
otherwise) for the payment of rent thereunder.
     “Casualty Event” means any loss, casualty or other insured damage to, or
any nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of, any Property of the Loan Parties having a fair market
value in excess of $5,000,000.
     “Change in Control” means (a) a majority of the board of directors of the
Borrower ceases to be composed of individuals (i) who were members of such board
on the Effective Date, (ii) whose election or nomination to such board was
approved by individuals referred to in clause (i) above constituting at the time
such election or nomination at least a majority of such board, or (iii) whose
election or nomination to such board was approved by individuals referred to in
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

4

--------------------------------------------------------------------------------

 

clause (i) or (ii) above constituting at the time of such election or nomination
at least a majority of such board or (b) any “person” or “group” (as such terms
are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but
excluding any employee benefit plan of such person or its subsidiaries and any
person or entity acting in its capacity as trustee, agent or other fiduciary or
administrator of such plan) shall acquire beneficial ownership (within the
meaning of Rule 13d-3 and 13d-5 of the SEC under the Securities Exchange Act of
1934, as amended, and including holding proxies to vote for the election of
directors other than proxies held by the Borrower’s management or their
designees to be voted in favor of persons nominated by the Borrower’s board of
directors) of thirty-five percent (35%) or more of the outstanding voting
securities of the Borrower, measured by voting power (including both common
stock and any preferred stock or other equity securities entitling the holders
thereof to vote with the holders of common stock in the elections for directors
of the Borrower).
     “Change in Law” means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender or any Issuing Bank
(or, for purposes of Section 5.01(b)), by any lending office of such Lender or
by such Lender’s or such Issuing Bank’s holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
     “CLO” means any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an Affiliate of such
Lender.
     “Co-Documentation Agents” has the meaning assigned to such term in the
introductory paragraph.
     “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
     “Collateral” means any Property of a Loan Party that is subject to the
Liens now or hereafter existing under the terms of one or more Security
Instruments.
     “Commitment” means, with respect to each Lender, the commitment of such
Lender to make Loans and to acquire participations in Letters of Credit
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender’s Credit Exposure hereunder, as such commitment may be (a) modified
from time to time pursuant to Section 2.06 and (b) modified from time to time
pursuant to assignments by or to such Lender pursuant to Section 12.04(b), and
“Commitments” means the aggregate amount of the Commitments of all the Lenders.
The amount representing each Lender’s Commitment shall at any time be the lesser
of (i) such Lender’s Maximum Credit Amount and (ii) such Lender’s Applicable
Percentage of the then effective Borrowing Base.
     “Commitment Fee Rate” has the meaning assigned to such term in the
definition of “Applicable Margin”.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

5

--------------------------------------------------------------------------------

 

     “Consolidated Net Income” means with respect to the Borrower and its
Consolidated Restricted Subsidiaries, for any period, the aggregate of the net
income (or loss) of the Borrower and its Consolidated Restricted Subsidiaries
after allowances for taxes for such period determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded from such net income
(to the extent otherwise included therein) the following: (a) the net income of
any Person in which the Borrower or its Consolidated Restricted Subsidiaries has
an interest (which interest does not cause the net income of such other Person
to be consolidated with the net income of the Borrower and its Consolidated
Restricted Subsidiaries in accordance with GAAP), except to the extent of the
amount of dividends or distributions actually paid in cash during such period by
such other Person to the Borrower or any Consolidated Restricted Subsidiary;
(b) the net income (but not loss) during such period of any Consolidated
Restricted Subsidiary to the extent that the declaration or payment of dividends
or similar distributions or transfers or loans by that Consolidated Restricted
Subsidiary is not at the time permitted by operation of the terms of its charter
or any agreement, instrument (other than the Loan Documents) or Governmental
Requirement applicable to such Consolidated Restricted Subsidiary or is
otherwise restricted or prohibited, in each case determined in accordance with
GAAP; (c) the net income (or loss) of any Person acquired in a
pooling-of-interests transaction for any period prior to the date of such
transaction; (d) any extraordinary gains or losses during such period; (e) the
cumulative effect of a change in accounting principles and any gains or losses
attributable to writeups or writedowns of assets; (f) any writeups or writedowns
of non-current assets; and (g) non-cash gain and loss under FAS133; and provided
further that if the Borrower or any of its Consolidated Restricted Subsidiaries
shall acquire or dispose of any Property during such period, then Consolidated
Net Income shall be calculated after giving pro forma effect to such acquisition
or disposition, as if such acquisition or disposition had occurred on the first
day of such period.
     “Consolidated Restricted Subsidiaries” means any Restricted Subsidiaries
that are Consolidated Subsidiaries.
     “Consolidated Subsidiaries” means each Subsidiary of the Borrower (whether
now existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of the
Borrower in accordance with GAAP.
     “Control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. For the
purposes of this definition, and without limiting the generality of the
foregoing, any Person that owns directly or indirectly twenty percent (20%) or
more of the Equity Interests having ordinary voting power for the election of
the directors or other governing body of a Person (other than as a limited
partner of such other Person) will be deemed to “control” such other Person.
“Controlling” and “Controlled” have meanings correlative thereto.
     “Cooperative Agreement” means that certain Cooperative Agreement between
Resolute Aneth and NNOG, dated October 22, 2004, as amended by that certain
First Amendment to Cooperative Agreement, dated October 21, 2005, as the same
may, from time to time, be amended, modified, supplemented or restated as
permitted by the terms of such agreement.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

6

--------------------------------------------------------------------------------

 

     “Credit Exposure” means, with respect to any Lender at any time, the sum of
the outstanding principal amount of such Lender’s Loans, its LC Exposure and its
Swingline Exposure at such time.
     “Debt” means, for any Person, the sum of the following (without
duplication): (a) all obligations of such Person for borrowed money or evidenced
by bonds, bankers’ acceptances, debentures, notes or other similar instruments;
(b) all obligations of such Person (whether contingent or otherwise) in respect
of letters of credit and similar instruments; (c) all accounts payable and all
accrued expenses, liabilities or other obligations of such Person to pay the
deferred purchase price of Property or services (excluding accounts payable
incurred in the ordinary course of business which are not greater than ninety
(90) days past the date of invoice or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP); (d) all obligations under Capital Leases; (e) all
obligations under Synthetic Leases; (f) all Debt (as defined in the other
clauses of this definition) of others secured by a Lien on any Property of such
Person, whether or not such Debt is assumed by such Person; (g) all Debt (as
defined in the other clauses of this definition) of others guaranteed by such
Person or in respect of which such Person otherwise assures a creditor against
loss of the Debt (howsoever such assurance shall be made) to the extent of the
lesser of the amount of such Debt and the maximum stated amount of such
guarantee or assurance against loss; (h) all obligations or undertakings of such
Person to maintain or cause to be maintained the financial position or condition
of others or to purchase the Debt or Property of others for such purpose; (i)
obligations to deliver commodities, goods or services, including, without
limitation, Hydrocarbons, in consideration of one or more advance payments,
other than gas balancing arrangements in the ordinary course of business;
(j) any Debt of a partnership for which such Person is liable either by
agreement, by operation of law or by a Governmental Requirement but only to the
extent of such liability; (k) Disqualified Capital Stock; and (l) the
undischarged balance of any production payment created by such Person or for the
creation of which such Person directly or indirectly received payment. The Debt
of any Person shall include all obligations of such Person of the character
described above to the extent such Person remains legally liable in respect
thereof notwithstanding that any such obligation is not included as a liability
of such Person under GAAP.
     “Default” means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
     “Defaulting Lender” means any Lender, as determined by the Administrative
Agent, that has (a) failed to fund any portion of its Loans or participations in
Letters of Credit or Swingline Loans within three (3) Business Days of the date
required to be funded by it hereunder, (b) notified the Borrower, the
Administrative Agent, the Issuing Bank, the Swingline Lender or any Lender in
writing that it does not intend to comply with any of its funding obligations
under this Agreement or has made a public statement to the effect that it does
not intend to comply with its funding obligations under this Agreement,
(c) otherwise failed to pay over to the Administrative Agent or any other Lender
any other amount required to be paid by it hereunder within three (3) Business
Days of the date when due, unless the subject of a good faith dispute, or (d)
(i) become or is insolvent or has a parent company that has become or is
insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding,
or has had a receiver, conservator, trustee or custodian
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

7

--------------------------------------------------------------------------------

 

appointed for it, or has taken any action in furtherance of, or indicating its
consent to, approval of or acquiescence in any such proceeding or appointment or
has a parent company that has become the subject of a bankruptcy or insolvency
proceeding, or has had a receiver, conservator, trustee or custodian appointed
for it, or has taken any action in furtherance of, or indicating its consent to,
approval of or acquiescence in any such proceeding or appointment; provided that
the Administrative Agent shall provide written notice to any Lender determined
by the Administrative Agent to be a Defaulting Lender hereunder (and shall
provide a copy of such written notice to the Borrower). In the event that the
Administrative Agent, the Borrower, the Swingline Lender and the Issuing Bank
each agrees that a Defaulting Lender has adequately remedied all matters that
caused such Lender to be a Defaulting Lender, such Lender shall cease to be a
Defaulting Lender.
     “Disqualified Capital Stock” means any Equity Interest that, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is one year after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans, LC
Exposure or other obligations hereunder outstanding and all of the Commitments
are terminated.
     “dollars” or “$” refers to lawful money of the United States of America.
     “Domestic Subsidiary” means any Subsidiary that is organized under the laws
of the United States of America or any state thereof or the District of
Columbia.
     “EBITDA” means, for any period, the sum of (a) Consolidated Net Income for
such period, plus (b) the following expenses or charges to the extent deducted
from Consolidated Net Income in such period: (i) interest, (ii) income and
franchise taxes, and (iii) depreciation, depletion, amortization, and other
non-cash charges, minus (c) all non-cash income added to Consolidated Net
Income; provided that EBITDA shall equal (x) $15,361,605 for the fiscal quarter
ended March 31, 2009, (y) $17,679,546 for the fiscal quarter ended June 30,
2009, and (z) $17,669,000 for the fiscal quarter ended September 30, 2009.
     “Effective Date” means the date on which the conditions specified in
Section 6.01 are satisfied (or waived in accordance with Section 12.02).
     “Engineering Reports” has the meaning assigned to such term in Section
2.07(c)(i).
     “Environmental Laws” means any and all Governmental Requirements pertaining
in any way to health, safety, the environment or the preservation or reclamation
of natural resources, in effect in any and all jurisdictions in which any Loan
Party or any Subsidiary is conducting or at any time has conducted business, or
where any Property of any Loan Party or any Subsidiary is located, including
without limitation, the Oil Pollution Act of 1990 (“OPA”), as amended, the Clean
Air Act, as amended, the Comprehensive Environmental, Response, Compensation,
and
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

8

--------------------------------------------------------------------------------

 

Liability Act of 1980 (“CERCLA”), as amended, the Federal Water Pollution
Control Act, as amended, the Occupational Safety and Health Act of 1970, as
amended, the Resource Conservation and Recovery Act of 1976 (“RCRA”), as
amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Act, as amended, and other
environmental conservation or protection Governmental Requirements. For the
purposes of this definition, Section 7.06 and Section 8.10, the term “oil” shall
have the meaning specified in OPA, the terms “hazardous substance” and “release”
(or “threatened release”) shall have the meanings specified in CERCLA, the terms
“solid waste” and “disposal” (or “disposed”) shall have the meanings specified
in RCRA and the term “oil and gas waste” shall have the meaning specified in
Section 91.1011 of the Texas Natural Resources Code (“Section 91.1011”);
provided, however, that (a) in the event either OPA, CERCLA, RCRA or
Section 91.1011 is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective date of
such amendment and (b) to the extent the laws of the state or other jurisdiction
in which any Property of any Loan Party or any Subsidiary is located establish a
meaning for “oil,” “hazardous substance,” “release,” “solid waste,” “disposal”
or “oil and gas waste” which is broader than that specified in either OPA,
CERCLA, RCRA or Section 91.1011, such broader meaning shall apply.
     “Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
Equity Interest.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statutes, and all regulations and guidances
promulgated thereunder.
     “ERISA Affiliate” means each trade or business (whether or not
incorporated) which together with a Loan Party would be deemed to be a “single
employer” within the meaning of section 4001(b)(1) of ERISA or subsections (b),
(c), (m) or (o) of section 414 of the Code.
     “ERISA Event” means (a) a “Reportable Event” described in section 4043 of
ERISA, other than a Reportable Event as to which the provisions of thirty
(30) days notice to the PBGC is expressly waived under applicable regulations,
(b) the withdrawal of a Loan Party or any ERISA Affiliate from a Plan during a
plan year in which it was a “substantial employer” as defined in section
4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or
the treatment of a Plan amendment as a termination under section 4041 of ERISA,
(d) the institution of proceedings to terminate a Plan by the PBGC, (e) receipt
of a notice of withdrawal liability pursuant to Section 4202 of ERISA or (f) any
other event or condition which might constitute grounds under section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan.
     “Eurodollar”, when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.
     “Event of Default” has the meaning assigned to such term in Section 10.01.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

9

--------------------------------------------------------------------------------

 

     “Excepted Liens” means: (a) Liens for Taxes, assessments or other
governmental charges or levies which are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (b) Liens in connection with
workers’ compensation, unemployment insurance or other social security, old age
pension or public liability obligations which are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (c) landlord’s liens,
operators’, vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’,
suppliers’, workers’, materialmen’s, construction or other like Liens arising in
the ordinary course of business or incident to the exploration, development,
operation and maintenance of Oil and Gas Properties each of which is in respect
of obligations that are not delinquent or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP; (d) contractual Liens that arise in the ordinary course
of business under operating agreements, joint venture agreements, oil and gas
partnership agreements, oil and gas leases, farm-out agreements, division
orders, contracts for the sale, transportation or exchange of oil and natural
gas, unitization and pooling declarations and agreements, area of mutual
interest agreements, overriding royalty agreements, marketing agreements,
processing agreements, net profits agreements, development agreements, gas
balancing or deferred production agreements, injection, repressuring and
recycling agreements, salt water or other disposal agreements, seismic or other
geophysical permits or agreements, and other agreements which are usual and
customary in the oil and gas business and are for claims which are not
delinquent or which are being contested in good faith by appropriate action and
for which adequate reserves have been maintained in accordance with GAAP,
provided that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by a Loan Party or materially impair the value of such
Property subject thereto; (e) Liens arising solely by virtue of any statutory,
customary or common law provision relating to banker’s liens, rights of set-off
or similar rights and remedies and burdening only deposit accounts or other
funds maintained with a creditor depository institution, provided that no such
deposit account is a dedicated cash collateral account in favor of the
depository institution or is subject to restrictions against access by the
depositor in excess of those set forth by regulations promulgated by the Board
and no such deposit account is intended by a Loan Party to provide collateral to
the depository institution; (f) easements, restrictions, servitudes, permits,
conditions, covenants, exceptions or reservations in any Property of the
Borrower or any Subsidiary for the purpose of roads, pipelines, transmission
lines, transportation lines, distribution lines for the removal of gas, oil,
coal or other minerals or timber, and other like purposes, or for the joint or
common use of real estate, rights of way, facilities and equipment, which in the
aggregate do not materially impair the use of such Property for the purposes of
which such Property is held by the Borrower or any Subsidiary or materially
impair the value of such Property subject thereto; (g) Liens on cash or
securities pledged to secure performance of tenders, surety and appeal bonds,
government contracts, performance and return of money bonds, bids, trade
contracts, leases, statutory obligations, regulatory obligations and other
obligations of a like nature incurred in the ordinary course of business;
(h) judgment and attachment Liens not giving rise to an Event of Default,
provided that any appropriate legal proceedings which may have been duly
initiated for the review of such judgment shall not have been finally terminated
or the period within which such proceeding may be initiated shall not have
expired and no legal action to enforce such Lien has been commenced; and
(i) Liens arising from Uniform
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

10

--------------------------------------------------------------------------------

 

Commercial Code financing statement filings regarding operating leases
(including Synthetic Leases) entered into by the Borrower and the Subsidiaries
in the ordinary course of business covering only the Property under lease;
provided further that no intention to subordinate the first priority Lien
granted in favor of the Administrative Agent and the Lenders is to be hereby
implied or expressed by the permitted existence of such Excepted Liens.
     “Excluded Taxes” means, with respect to any Agent, any Lender, any Issuing
Bank or any other recipient of any payment to be made by or on account of any
obligation of a Loan Party hereunder or under any other Loan Document,
(a) income or franchise taxes (however denominated) imposed on (or measured by)
its net income by the United States of America or such other jurisdiction under
the laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable lending office
is located, (b) any branch profits taxes imposed by the United States of America
or any similar tax imposed by any other jurisdiction in which a Loan Party is
located and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Borrower under Section 5.04(b)), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office) or
is attributable to such Foreign Lender’s failure to comply with Section 5.03(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts with respect to such withholding tax pursuant to
Section 5.03(a) or Section 5.03(c).
     “Existing Credit Agreement” has the meaning assigned to such term in the
recitals.
     “Existing Letters of Credit” means the letters of credit issued under the
Existing Credit Agreement and described on Schedule 2.08.
     “Exploration Subsidiaries” means BWNR and WYNR.
     “Federal Funds Effective Rate” means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of one percent (1%)) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, New York or, if
such rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of one percent (1%)) of the
quotations for such day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.
     “Fee Letters” means (a) that certain letter agreement, dated as of
March 11, 2010 among the Borrower, Wells Fargo Securities, LLC, Wells Fargo and
Wachovia, related to the payment of certain fees by the Borrower, and (b) that
certain letter agreement, dated as of March 11, 2010 among the Borrower, BMO
Capital Markets and Bank of Montreal, related to the payment of certain fees by
the Borrower.
     “Financial Officer” means, for any Person, the chief financial officer or
chief accounting officer of such Person. Unless otherwise specified, all
references herein to a Financial Officer means a Financial Officer of the
Borrower.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

11

--------------------------------------------------------------------------------

 

     “Financial Statements” means the financial statement or statements of the
Borrower and its Subsidiaries referred to in Section 7.04(a).
     “First Redetermination Date” means the date that the first redetermination
of the Borrowing Base becomes effective.
     “Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
     “Foreign Subsidiary” means any Subsidiary that is not a Domestic
Subsidiary.
     “Funded Debt” means as of any date of determination all Debt of the
Borrower and its Consolidated Restricted Subsidiaries (including any Debt
proposed to be incurred on such date and excluding all Debt to be paid on such
date with the proceeds thereof); provided that Debt identified in clauses (b),
(f), (g), (h) or (j) (unless such Debt benefits or supports the debt or
obligations of an Unrestricted Subsidiary) or in clause (c) of the definition
thereof shall be excluded.
     “GAAP” means generally accepted accounting principles in the United States
of America as in effect from time to time subject to the terms and conditions
set forth in Section 1.05.
     “Governmental Authority” means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government over the Loan Parties, any Subsidiary, any of their Properties, any
Agent, any Issuing Bank or any Lender.
     “Governmental Requirement” means any applicable law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other directive or
requirement, whether now or hereinafter in effect, including, without
limitation, Environmental Laws, energy regulations and occupational, safety and
health standards or controls, of any Governmental Authority.
     “Guarantors” means each Domestic Subsidiary of the Borrower that guarantees
the Indebtedness pursuant to Section 8.14(b).
     “Guaranty and Collateral Agreement” means the Guaranty and Collateral
Agreement executed by the Loan Parties, in a form reasonably approved by the
Administrative Agent and its counsel unconditionally guarantying, on a joint and
several basis by the Guarantors, payment of the Indebtedness, as the same may be
amended, modified or supplemented from time to time.
     “Hedging Agreement” means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement, whether
exchange traded, “over-the-counter” or otherwise, involving, or settled by
reference to, one or more rates, currencies,
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

12

--------------------------------------------------------------------------------

 

commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions; provided that
no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Loan Parties shall be a Hedging Agreement.
     “Hedging Agreement Restructuring” means, collectively, each Unwind of a
Borrowing Base Hedging Contract and the replacement Hedging Agreements (if any)
entered into by the end of the Business Day immediately succeeding the day on
which such Unwind occurs.
     “Highest Lawful Rate” means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws, which may
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than applicable laws allow as of the date hereof.
     “Hydrocarbon Interests” means all rights, titles, interests and estates now
or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases,
or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding
royalty and royalty interests, net profit interests and production payment
interests, including any reserved or residual interests of whatever nature.
     “Hydrocarbons” means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.
     “Indebtedness” means any and all amounts owing or to be owing (including
interest accruing at any post-default rate and interest accruing after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to any Loan Party, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
by a Loan Party (whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising): (a) to any Agent, any Issuing Bank or any Lender under any
Loan Document; (b) to any Secured Hedging Provider under any Hedging Agreement,
including any Hedging Agreement in existence prior to the date hereof, but
excluding any additional transactions or confirmations entered into (i) after
such Secured Hedging Provider ceases to be a Lender or an Affiliate of a Lender
or (ii) by another Secured Hedging Provider that is not a Lender or an Affiliate
of a Lender after assignment by a Secured Hedging Provider to such other Secured
Hedging Provider that is not a Lender or an Affiliate of a Lender; (c) to any
Secured Treasury Management Counterparty under any Treasury Management
Agreement; and (d) all renewals, extensions and/or rearrangements of any of the
above whether (except in the case of clause (c)) such Person (or in the case of
its Affiliate, the Person affiliated therewith) remains a Lender hereunder.
     “Indemnified Taxes” means Taxes other than Excluded Taxes.
     “Indemnitee” has the meaning assigned to such term in Section 12.03(b).
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

13

--------------------------------------------------------------------------------

 

     “Information” has the meaning assigned to such term in Section 12.11.
     “Initial Reserve Report” means the report dated as of January 1, 2010,
prepared by the Borrower and audited by Netherland Sewell & Associates, Inc.,
with respect to certain Oil and Gas Properties of the Loan Parties as of
January 1, 2010.
     “Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.04.
     “Interest Payment Date” means (a) with respect to any ABR Loan (other than
a Swingline Loan), the last day of each March, June, September and December,
(b) with respect to any Eurodollar Loan (other than a Swingline Loan), the last
day of the Interest Period applicable to the Borrowing of which such Loan is a
part and, in the case of a Eurodollar Borrowing with an Interest Period of more
than three (3) months’ duration, each day prior to the last day of such Interest
Period that occurs at intervals of three (3) months’ duration after the first
day of such Interest Period, and (c) with respect to a Swingline Loan, the day
that such Loan is required to be repaid pursuant to Section 2.09(a).
     “Interest Period” means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
(or, with the consent of each Lender, nine or twelve months) thereafter, as the
Borrower may elect; provided, that (a) if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (b) any Interest Period pertaining to a
Eurodollar Borrowing that commences on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. For purposes of this
definition, the date of a Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.
     “Interim Redetermination” means any redetermination of the Borrowing Base
under Section 2.07(b)(ii).
     “Interim Redetermination Date” means the date on which a Borrowing Base
that has been redetermined pursuant to an Interim Redetermination becomes
effective as provided in Section 2.07(d).
     “Investment” means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests of any other
Person or any commitment to make any such acquisition (including, without
limitation, any “short sale” or any sale of any securities at a time when such
securities are not owned by the Person entering into such short sale) or any
capital contribution to any other Person; (b) the making of any deposit with, or
advance, loan or capital contribution to, assumption of Debt of, purchase or
other acquisition of any other Debt or equity participation or interest in, or
other extension of credit to, any other Person (including the purchase of
Property from another Person subject to an understanding or
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

14

--------------------------------------------------------------------------------

 

agreement, contingent or otherwise, to resell such Property to such Person);
(c) the entering into of any guarantee of, or other contingent obligation
(including the deposit of any Equity Interests to be sold, and including the
issuance of a letter of credit for the account of such Person) with respect to,
Debt of any other Person or with respect to Debt or other liability of any
Unrestricted Subsidiary and (without duplication) any amount committed to be
advanced, lent or extended to such other Person; or (d) the purchase or
acquisition (in one or a series of transactions) of Property of another Person
that constitutes a business unit of such other Person.
     “Issuing Bank” means Wells Fargo (including as successor-by-merger to
Wachovia) and each Lender that agrees to act as an issuer of Letters of Credit
hereunder at the request of the Borrower, in each case, in its capacity as the
issuer of Letters of Credit hereunder, and its successors in such capacity as
provided in Section 2.08(i). Any Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of such Issuing
Bank, in which case the term “Issuing Bank” shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.
     “LC Commitment” means, at any time, $25,000,000.
     “LC Disbursement” means a payment made by any Issuing Bank pursuant to a
Letter of Credit issued by such Issuing Bank.
     “LC Exposure” means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Lender at any time shall be
its Applicable Percentage of the total LC Exposure at such time.
     “Lenders” means the lenders signatory to this Agreement and any Person that
shall have become a party hereto pursuant to an Assignment and Assumption, other
than any such Person that ceases to be a party hereto pursuant to an Assignment
and Assumption.
     “Letter of Credit” means any letter of credit issued pursuant to this
Agreement and each of the Existing Letters of Credit.
     “Letter of Credit Agreements” means all letter of credit applications and
other agreements (including any amendments, modifications or supplements
thereto) submitted by the Borrower, or entered into by the Borrower, with any
Issuing Bank relating to any Letter of Credit issued by such Issuing Bank.
     “LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service
(or on any successor or substitute page of such service, or any successor to or
substitute for such service, providing rate quotations comparable to those
currently provided on such page of such service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

15

--------------------------------------------------------------------------------

 

rate is not available at such time for any reason, then the “LIBO Rate” with
respect to such Eurodollar Borrowing for such Interest Period shall be the rate
at which dollar deposits of $1,000,000 and for a maturity comparable to such
Interest Period are offered by the principal London office of the Administrative
Agent in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period.
     “Lien” means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes, (b) production payments and the like payable out of Oil
and Gas Properties, and (c) easements, restrictions, servitudes, permits,
conditions, covenants, encroachments, exceptions or reservations. For the
purposes of this Agreement, any Loan Party shall be deemed to be the owner of
any Property which it has acquired or holds subject to a conditional sale
agreement, or leases under a financing lease or other arrangement pursuant to
which title to the Property has been retained by or vested in some other Person
in a transaction intended to create a financing.
     “Loan Documents” means this Agreement, the Notes, the Letter of Credit
Agreements, the Letters of Credit, the Security Instruments, the Resolute
Assignment and Assumption Agreement and the Fee Letters.
     “Loan Parties” means, without duplication, the Borrower, each Guarantor and
each Restricted Subsidiary.
     “Loans” means the loans made by the Lenders to the Borrower pursuant to
this Agreement, including any Swingline Loans.
     “Majority Lenders” means, at any time while no Loans or LC Exposure is
outstanding, Lenders having greater than fifty percent (50%) of the Aggregate
Maximum Credit Amounts; and at any time while any Loans or LC Exposure is
outstanding, Lenders holding greater than fifty percent (50%) of the outstanding
aggregate principal amount of the Loans (other than Swingline Loans) and
participation interests in Letters of Credit and Swingline Loans (without regard
to any sale by a Lender of a participation in any Loan under Section 12.04(c));
provided that the Aggregate Maximum Credit Amounts and the principal amount of
the Loans and participation interests in Letters of Credit and Swingline Loans
of the Defaulting Lenders (if any) shall be excluded from the determination of
Majority Lenders to the extent set forth in Section 2.10(b).
     “Material Adverse Effect” means a material adverse effect on (a) the
business, operations, Property, liabilities (actual or contingent) or condition
(financial or otherwise) of the Loan Parties taken as a whole, (b) the ability
of any Loan Party to perform any of its obligations under any Loan Document,
(c) the validity or enforceability of any Loan Document or (d) the rights and
remedies of or benefits available to the Administrative Agent, any other Agent,
any Issuing Bank or any Lender under any Loan Document.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

16

--------------------------------------------------------------------------------

 

     “Material Debt” means Debt (other than the Loans and Letters of Credit) or
obligations in respect of one or more Hedging Agreements, of any one or more of
the Loan Parties in an aggregate principal amount exceeding $5,000,000. For
purposes of determining Material Debt, the “principal amount” of the obligations
of a Loan Party in respect of any Hedging Agreement at any time shall be the
aggregate amount (giving effect to any netting agreements) that the Loan Party
would be required to pay if such Hedging Agreement were terminated at such time.
     “Maturity Date” means March 30, 2014.
     “Maximum Credit Amount” means, as to each Lender, the amount set forth
opposite such Lender’s name on Annex I hereto under the caption “Maximum Credit
Amounts”, as the same may be (a) reduced or terminated from time to time in
connection with a reduction or termination of the Aggregate Maximum Credit
Amounts pursuant to Section 2.06(b) or (b) modified from time to time pursuant
to any assignment permitted by Section 12.04(b).
     “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto
that is a nationally recognized rating agency.
     “Mortgage” means each mortgage, deed of trust or any other document
creating and evidencing a Lien on real or immovable Property and other Property
to secure the Indebtedness, which shall be in a form reasonably satisfactory to
the Administrative Agent, as the same may be amended, modified, supplemented or
restated from time to time in accordance with the Loan Documents.
     “Mortgaged Property” means any real Property and associated personal
Property owned by a Loan Party that is subject to a Mortgage.
     “Multiemployer Plan” means a Plan which is a multiemployer plan as defined
in section 3(37) or 4001 (a)(3) of ERISA.
     “New Borrowing Base Notice” has the meaning assigned to such term in
Section 2.07(d).
     “NNOG” means Navajo Nation Oil and Gas Company, a federally chartered
corporation.
     “Notes” means the promissory notes of the Borrower described in Section
2.02(d) and being substantially in the form of Exhibit A, together with all
amendments, modifications, replacements, extensions and rearrangements thereof.
     “Oil and Gas Properties” means (a) Hydrocarbon Interests; (b) the
Properties now or hereafter pooled or unitized with Hydrocarbon Interests;
(c) all presently existing or future unitization, pooling agreements and
declarations of pooled units and the units created thereby (including without
limitation all units created under orders, regulations and rules of any
Governmental Authority) which may affect all or any portion of the Hydrocarbon
Interests; (d) all operating agreements, contracts and other agreements,
including production sharing contracts and agreements, which relate to any of
the Hydrocarbon Interests or the production, sale, purchase, exchange or
processing of Hydrocarbons from or attributable to such Hydrocarbon Interests;
(e) all Hydrocarbons in and under and which may be produced and saved or
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

17

--------------------------------------------------------------------------------

 

attributable to the Hydrocarbon Interests, including all oil in tanks, and all
rents, issues, profits, proceeds, products, revenues and other incomes from or
attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment, rental equipment or other personal Property which
may be on such premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil wells, gas wells, injection wells
or other wells, buildings, structures, fuel separators, liquid extraction
plants, plant compressors, pumps, pumping units, field gathering systems, tanks
and tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements
and servitudes together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing. As used herein,
“proved Oil and Gas Properties” means Oil and Gas Properties to which, as of the
time in question, proved reserves of oil or gas have been attributed in the then
most recent Reserve Report.
     “Organizational Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-US jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement or limited liability
company agreement; and (c) with respect to any partnership, joint venture, trust
or other form of business entity, the partnership, joint venture or other
applicable agreement of formation or organization and any agreement, instrument,
filing or notice with respect thereto filed in connection with its formation or
organization with the applicable Governmental Authority in the jurisdiction of
its formation or organization and, if applicable, any certificate or articles of
formation or organization of such entity.
     “Other Taxes” means any and all present or future stamp or documentary
taxes or any other excise or Property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement and any other Loan Document.
     “Participant” has the meaning assigned to such term in Section 12.04(c)(i).
     “Patriot Act” has the meaning assigned to such term in Section 12.15.
     “PBGC” means the Pension Benefit Guaranty Corporation, or any successor
thereto.
     “Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
     “Plan” means any employee pension benefit plan, as defined in section 3(2)
of ERISA, which is subject to Title IV of ERISA and which (a) is currently or
hereafter sponsored, maintained or contributed to by a Loan Party or an ERISA
Affiliate or (b) was at any time during
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

18

--------------------------------------------------------------------------------

 

the six calendar years preceding the date hereof, sponsored, maintained or
contributed to by a Loan Party or a Subsidiary or an ERISA Affiliate.
     “Prime Rate” means the rate of interest per annum publicly announced from
time to time by Wells Fargo as its prime rate in effect at its office in
Charlotte, North Carolina; each change in the Prime Rate shall be effective from
and including the date such change is publicly announced as being effective.
Such rate is set by the Administrative Agent as a general reference rate of
interest, taking into account such factors as the Administrative Agent may deem
appropriate; it being understood that many of the Administrative Agent’s
commercial or other loans are priced in relation to such rate, that it is not
necessarily the lowest or best rate actually charged to any customer and that
the Administrative Agent may make various commercial or other loans at rates of
interest having no relationship to such rate.
     “Property” means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, including, without
limitation, cash, securities, accounts and contract rights.
     “Proposed Borrowing Base” has the meaning assigned to such term in Section
2.07(c)(i).
     “Proposed Borrowing Base Notice” has the meaning assigned to such term in
Section 2.07(c)(ii).
     “Redemption” means with respect to any Debt, the repurchase, redemption,
prepayment, repayment or defeasance (or the segregation of funds with respect to
any of the foregoing) of such Debt. “Redeem” has the correlative meaning
thereto.
     “Redetermination Date” means, with respect to any Scheduled Redetermination
or any Interim Redetermination, the date that the redetermined Borrowing Base
related thereto becomes effective pursuant to Section 2.07(d).
     “Register” has the meaning assigned to such term in Section 12.04(b)(iv).
     “Regulation D” means Regulation D of the Board, as the same may be amended,
supplemented or replaced from time to time.
     “Related Parties” means, with respect to any specified Person, such
Person’s Affiliates and the respective directors, officers, employees, agents
and advisors (including attorneys, accountants and experts) of such Person and
such Person’s Affiliates.
     “Remedial Work” has the meaning assigned to such term in Section 8.10(a).
     “Required Lenders” means, at any time while no Loans or LC Exposure is
outstanding, Lenders having at least sixty-six and two thirds percent (66 2/3%)
of the Aggregate Maximum Credit Amounts; and at any time while any Loans or LC
Exposure is outstanding, Lenders holding at least sixty-six and two thirds
percent (66 2/3%) of the outstanding aggregate principal amount of the Loans
(other than Swingline Loans) and participation interests in Letters of Credit
and Swingline Loans (without regard to any sale by a Lender of a participation
in any Loan
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

19

--------------------------------------------------------------------------------

 

under Section 12.04(c)); provided that the Aggregate Maximum Credit Amounts and
the principal amount of the Loans and participation interests in Letters of
Credit and Swingline Loans of the Defaulting Lenders (if any) shall be excluded
from the determination of Required Lenders to the extent set forth in
Section 2.10(b).
     “Reserve Report” means a report, in form and substance reasonably
satisfactory to the Administrative Agent, setting forth, as of each January 1st
or July 1st (or such other date in the event of an Interim Redetermination) the
oil and gas reserves attributable to the proved Oil and Gas Properties of the
Loan Parties (or as for Interim Redeterminations, the proved Oil and Gas
Properties of the Loan Parties acquired since the last redetermination of the
Borrowing Base), together with a projection of the rate of production and future
net income, taxes, operating expenses, transportation expenses and capital
expenditures with respect thereto as of such date, based upon assumptions
consistent with SEC reporting requirements.
     “Resolute Aneth” means Resolute Aneth, LLC, a Delaware limited liability
company.
     “Resolute Assignment and Assumption Agreement” means the Assignment and
Assumption Agreement, dated as of the date hereof, between Resolute Aneth and
the Borrower.
     “Resolute Wyoming” means Resolute Wyoming, Inc., a Delaware corporation
(f/k/a Primary Natural Resources, Inc., a Delaware corporation).
     “Responsible Officer” means, as to any Person, the Chief Executive Officer,
the Chief Operating Officer, the President, any Financial Officer or any Senior
Vice President of such Person. Unless otherwise specified, all references to a
Responsible Officer herein shall mean a Responsible Officer of the Borrower.
     “Restricted Payment” means any dividend or other distribution (whether in
cash, securities or other Property) with respect to any Equity Interests in a
Loan Party or a Subsidiary, any return of capital to the owners of such Equity
Interests in a Loan Party or a Subsidiary, or any payment (whether in cash,
securities or other Property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such Equity Interests in a Loan Party or a Subsidiary or any
option, warrant or other right to acquire any such Equity Interests in a Loan
Party or a Subsidiary.
     “Restricted Subsidiaries” means all Subsidiaries of the Borrower that are
not Unrestricted Subsidiaries.
     “RNRC” means Resolute Natural Resources Company, LLC, a Delaware limited
liability company (f/k/a Resolute Natural Resources Company, a Delaware
corporation).
     “RNRC Holdings” means RNRC Holdings, Inc., a Delaware corporation.
     “Scheduled Redetermination” has the meaning assigned to such term in
Section 2.07(b)(i).
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

20

--------------------------------------------------------------------------------

 

     “Scheduled Redetermination Date” means the date on which a Borrowing Base
that has been redetermined pursuant to a Scheduled Redetermination becomes
effective as provided in Section 2.07(d).
     “SEC” means the U.S. Securities and Exchange Commission or any successor
Governmental Authority.
     “Secured Hedging Provider” means any (a) Person that is or was a Lender or
an Affiliate of a Lender, that is a party to a Hedging Agreement with a Loan
Party, and that entered into such Hedging Agreement while such Person was or
before such Person becomes a Lender or an Affiliate of a Lender, whether or not
such Person at any time ceases to be a Lender or an Affiliate of a Lender, as
the case may be, or (b) assignee of any Person described in clause (a) above so
long as such assignee is an Approved Counterparty.
     “Secured Treasury Management Counterparty” means each Lender or Affiliate
of a Lender that enters into a Treasury Management Agreement; provided that if
such Person at any time ceases to be a Lender or an Affiliate of a Lender, as
the case may be, such Person shall no longer be a Secured Treasury Management
Counterparty.
     “Security Instruments” means any Guaranty and Collateral Agreement,
Mortgages, security agreements, pledge agreements, deposit account control
agreements and securities account control agreements, the Subordination
Agreement and any and all other agreements, instruments, certificates or
certificates now or hereafter executed and delivered by any Loan Party or any
other Person (other than Hedging Agreements with the Lenders or any Affiliate of
a Lender or participation or similar agreements between any Lender and any other
lender or creditor with respect to any Indebtedness pursuant to this Agreement)
to guarantee or provide security for the payment or performance of the
Indebtedness, the Notes, this Agreement, or reimbursement obligations under the
Letters of Credit, as such agreements may be amended, modified, supplemented or
restated from time to time.
     “S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.
     “Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject, with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

21

--------------------------------------------------------------------------------

 

     “Subordination Agreement” means that certain Subordination Agreement, dated
as of April 14, 2006, among the Administrative Agent (acting on behalf of the
Lenders), Resolute Aneth and NNOG in which NNOG subordinates certain of its
rights under the Cooperative Agreement to the rights of the Lenders under the
Loan Documents, as ratified by the Ratification of Subordination Agreement
(First Lien), dated as of June 27, 2007, and the Ratification of Subordination
Agreement, dated as of March 30, 2010, and as the same may, from time to time,
be amended, modified, supplemented or restated as permitted by the terms of this
Agreement.
     “Subsidiary” means, with respect to any Person (the “parent”), any Person
of which at least a majority of the outstanding Equity Interests having by the
terms thereof ordinary voting power to elect a majority of the board of
directors, manager or other governing body of such Person or, in the case of a
partnership, constituting a majority of the outstanding voting general
partnership interests of such Person (in each case irrespective of whether or
not at the time Equity Interests of any other class or classes of such Person
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by the
parent or one or more Subsidiaries of the parent or by the parent and one or
more of the Subsidiaries of the parent. Unless otherwise specified, references
herein to any “Subsidiary” refer to a Subsidiary of the Borrower.
     “Swingline Exposure” means, at any time, the aggregate principal amount of
all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.
     “Swingline Lender” means Wells Fargo, or any other Lender appointed by the
Administrative Agent and acceptable to the Borrower, in each case, in its
capacity as a lender of Swingline Loans hereunder.
     “Swingline Loan” means a Loan made pursuant to Section 2.09.
     “Syndication Agent” has the meaning assigned to such term in the
introductory paragraph.
     “Synthetic Leases” means, in respect of any Person, all leases which, in
accordance with GAAP, have been, or should have been, treated as operating
leases on the financial statements of the Person liable (whether contingently or
otherwise) for the payment of rent thereunder and which have been, or should
have been, properly treated as indebtedness for borrowed money for purposes of
U.S. federal income taxes.
     “Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
     “Termination Date” means the earlier of the Maturity Date and the date of
termination of the Commitments.
     “Transactions” means the execution, delivery and performance of this
Agreement and each other Loan Document, the borrowing of Loans under this
Agreement, the use of the
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

22

--------------------------------------------------------------------------------

 

proceeds of such Loans, the issuance of Letters of Credit hereunder, and the
grant of Liens on Collateral and other Properties pursuant to the Security
Instruments.
     “Transfer” has the meaning assigned to such term in Section 9.12.
     “Treasury Management Agreement” means any agreement governing the provision
of treasury or cash management services, including deposit accounts, funds
transfer, automated clearinghouse, auto-borrow, zero balance accounts, returned
check concentration, controlled disbursement, lockbox, account reconciliation
and reporting and trade finance services provided by a Secured Treasury
Management Counterparty for the benefit of the Borrower or a Restricted
Subsidiary.
     “Type”, when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Alternate Base Rate or the Adjusted LIBO Rate.
     “UCC” has the meaning assigned to such term in Section 2.08(j).
     “Unrestricted Subsidiary” means any Subsidiary of the Borrower designated
as such on Schedule 7.15 or which the Borrower has designated in writing to the
Administrative Agent to be an Unrestricted Subsidiary pursuant to Section 9.20.
     “Unwind” has the meaning assigned to such term in Section 9.19.
     “Wachovia” means Wachovia Bank, National Association.
     “Wells Fargo” means Wells Fargo Bank, National Association.
     “Wholly-Owned Subsidiary” means any Subsidiary of which all of the
outstanding Equity Interests (other than any directors’ qualifying shares
mandated by applicable law), on a fully-diluted basis, are owned by the Borrower
or one or more of the Wholly-Owned Subsidiaries of the Borrower or by the
Borrower and one or more of its Wholly-Owned Subsidiaries.
     “WYNR” means WYNR, LLC, a Delaware limited liability company.
     Section 1.03 Types of Loans and Borrowings. For purposes of this Agreement,
Loans and Borrowings, respectively, may be classified and referred to by Type
(e.g., a “Eurodollar Loan” or a “Eurodollar Borrowing”).
     Section 1.04 Terms Generally; Rules of Construction. The definitions of
terms herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”. The word “will” shall be construed to have the same meaning and
effect as the word “shall”. Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document
as from time to time amended, supplemented or
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

23

--------------------------------------------------------------------------------

 

otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (b) any reference herein to any law shall be
construed as referring to such law as amended, modified, codified or reenacted,
in whole or in part, and in effect from time to time, (c) any reference herein
to any Person shall be construed to include such Person’s successors and assigns
(subject to the restrictions contained herein), (d) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof,
(e) with respect to the determination of any time period, the word “from” means
“from and including” and the word “to” means “to and including” and (f) any
reference herein to Articles, Sections, Annexes, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Annexes, Exhibits and
Schedules to, this Agreement. No provision of this Agreement or any other Loan
Document shall be interpreted or construed against any Person solely because
such Person or its legal representative drafted such provision.
     Section 1.05 Accounting Terms and Determinations; GAAP. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Agents or the Lenders hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent with the
audited Financial Statements delivered pursuant to Section 7.04(a)(i) except for
changes in which Borrower’s independent certified public accountants concur and
which are disclosed to Administrative Agent on the next date on which financial
statements are required to be delivered to the Lenders pursuant to
Section 8.01(a); provided that, unless the Borrower and the Majority Lenders
shall otherwise agree in writing, no such change shall modify or affect the
manner in which compliance with the covenants contained herein is computed such
that all such computations shall be conducted utilizing financial information
presented consistently with prior periods.
ARTICLE II
THE CREDITS
     Section 2.01 Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans to the Borrower during the Availability
Period in an aggregate principal amount that will not result in (a) such
Lender’s Credit Exposure exceeding such Lender’s Commitment or (b) the total
Credit Exposures exceeding the total Commitments. Within the foregoing limits
and subject to the terms and conditions set forth herein, the Borrower may
borrow, repay and reborrow the Loans.
     Section 2.02 Loans and Borrowings.
          (a) Borrowings; Several Obligations. Each Loan shall be made as part
of a Borrowing consisting of Loans made by the Lenders ratably in accordance
with their respective Commitments. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments are several and no Lender shall be
responsible for any other Lender’s failure to make Loans as required.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

24

--------------------------------------------------------------------------------

 

          (b) Types of Loans. Subject to Section 3.03, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith. Each Lender at its option may make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement.
          (c) Minimum Amounts; Limitation on Number of Borrowings. At the
commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $5,000,000. At the time that each ABR Borrowing is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $500,000 and not less than $2,500,000; provided that an ABR
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.08(e).
Borrowings of more than one Type may be outstanding at the same time; provided
that there shall not at any time be more than a total of ten (10) Eurodollar
Borrowings outstanding. Notwithstanding any other provision of this Agreement,
the Borrower shall not be entitled to request, or to elect to convert or
continue, any Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date.
          (d) Notes. Any Lender may request that Loans made by it be evidenced
by a single promissory note. In such event, the Borrower shall prepare, execute
and deliver to such Lender a promissory note payable to such Lender in
substantially the form of Exhibit A, dated, in the case of (i) any Lender party
hereto as of the date of this Agreement, as of the date of this Agreement and
(ii) any Lender that becomes a party hereto pursuant to an Assignment and
Assumption, as of the effective date of the Assignment and Assumption, payable
to such Lender in a principal amount equal to its Maximum Credit Amount as in
effect on such date, and otherwise duly completed. If any Lender’s Maximum
Credit Amount is decreased for any reason (whether pursuant to Section 2.06,
Section 12.04(b) or otherwise), the Borrower shall upon request deliver or cause
to be delivered on the effective date of such decrease, a new Note payable to
any Lender who requested a Note hereunder in a principal amount equal to its
Maximum Credit Amount after giving effect to such decrease, and otherwise duly
completed, and such Lender agrees to promptly thereafter return the previously
issued Note held by such Lender marked canceled or otherwise similarly defaced.
The date, amount, Type, interest rate and, if applicable, Interest Period of
each Loan made by each Lender that receives a Note, and all payments made on
account of the principal thereof, shall be recorded by such Lender on its books
for its Note, and, prior to any transfer, may be endorsed by such Lender on a
schedule attached to such Note or any continuation thereof or on any separate
record maintained by such Lender. Failure to make any such notation or to attach
a schedule shall not affect any Lender’s or the Borrower’s rights or obligations
in respect of such Loans or affect the validity of such transfer by any Lender
of its Note.
     Section 2.03 Requests for Borrowings. To request a Borrowing, the Borrower
shall notify the Administrative Agent of such request by telephone or by written
Borrowing Request in substantially the form of Exhibit B and signed by the
Borrower (a “written Borrowing Request”): (a) in the case of a Eurodollar
Borrowing, not later than 2:00 p.m., New York, New York time,
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

25

--------------------------------------------------------------------------------

 

three (3) Business Days before the date of the proposed Borrowing or (b) in the
case of an ABR Borrowing, not later than 1:00 p.m., New York, New York time, on
the Business Day of the proposed Borrowing; provided that no such notice shall
be required for any deemed request of an ABR Borrowing to finance the
reimbursement of an LC Disbursement as provided in Section 2.08(e). Each
telephonic and written Borrowing Request shall be irrevocable and each
telephonic Borrowing Request shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.02:
               (i) the aggregate amount of the requested Borrowing;
               (ii) the date of such Borrowing, which shall be a Business Day;
               (iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
               (iv) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by the
definition of the term “Interest Period”;
               (v) the amount of the then effective Borrowing Base, the current
total Credit Exposures (without regard to the requested Borrowing) and the pro
forma total Credit Exposures (giving effect to the requested Borrowing); and
               (vi) the location and number of the Borrower’s account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.05.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month’s duration. Each Borrowing
Request shall constitute a representation that the amount of the requested
Borrowing shall not cause the total Credit Exposures to exceed the total
Commitments (i.e., the lesser of the Aggregate Maximum Credit Amounts and the
then effective Borrowing Base). Promptly following receipt of a Borrowing
Request in accordance with this Section 2.03, the Administrative Agent shall
advise each Lender of the details thereof and of the amount of such Lender’s
Loan to be made as part of the requested Borrowing.
     Section 2.04 Interest Elections.
          (a) Conversion and Continuance. Each Borrowing initially shall be of
the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section 2.04. The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

26

--------------------------------------------------------------------------------

 

each such portion shall be considered a separate Borrowing. This Section 2.04
shall not apply to Swingline Borrowings, which may not be converted or
continued.
          (b) Interest Election Requests. To make an election pursuant to this
Section 2.04, the Borrower shall notify the Administrative Agent of such
election by telephone or by a written Interest Election Request in substantially
the form of Exhibit C and signed by the Borrower (a “written Interest Election
Request”) by the time that a Borrowing Request would be required under
Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting
from such election to be made on the effective date of such election. Each
telephonic and written Interest Election Request shall be irrevocable and each
telephonic Interest Election Request shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent.
          (c) Information in Interest Election Requests. Each telephonic and
written Interest Election Request shall specify the following information in
compliance with Section 2.02:
               (i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing (in
which case the information to be specified pursuant to Section 2.04(c)(iii) and
(iv) shall be specified for each resulting Borrowing);
               (ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
               (iii) whether the resulting Borrowing is to be an ABR Borrowing
or a Eurodollar Borrowing; and
               (iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term “Interest
Period”.
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.
          (d) Notice to Lenders by the Administrative Agent. Promptly following
receipt of an Interest Election Request, the Administrative Agent shall advise
each Lender of the details thereof and of such Lender’s portion of each
resulting Borrowing.
          (e) Effect of Failure to Deliver Timely Interest Election Request and
Events of Default on Interest Election. If the Borrower fails to deliver a
timely Interest Election Request with respect to a Eurodollar Borrowing prior to
the end of the Interest Period applicable thereto, then, unless such Borrowing
is repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing: (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing
(and any Interest Election Request that requests the conversion of any Borrowing
to, or continuation of any Borrowing as, a Eurodollar
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

27

--------------------------------------------------------------------------------

 

Borrowing shall be ineffective) and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.
     Section 2.05 Funding of Borrowings.
          (a) Funding by Lenders. Each Lender shall make each Loan to be made by
it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 2:00 p.m., New York, New York time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders; provided that Swingline Loans shall be made by the time
specified in Section 2.09(c). The Administrative Agent will make such Loans
available to the Borrower by promptly crediting or wire transferring the amounts
so received, in like funds, to one or more accounts designated by the Borrower
in the applicable Borrowing Request; provided that ABR Loans made to finance the
reimbursement of an LC Disbursement as provided in Section 2.08(e) shall be
remitted by the Administrative Agent to the Issuing Bank that made such LC
Disbursement.
          (b) Presumption of Funding by the Lenders. Unless the Administrative
Agent shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Administrative Agent
such Lender’s share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with
Section 2.05(a) and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to ABR Loans. If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender’s Loan included in such Borrowing.
     Section 2.06 Changes in the Aggregate Maximum Credit Amounts.
          (a) Scheduled Termination of Commitments. Unless previously
terminated, the Commitments shall terminate on the Maturity Date. If at any time
the Aggregate Maximum Credit Amounts or the Borrowing Base is terminated or
reduced to zero, then the Commitments shall terminate on the effective date of
such termination or reduction.
          (b) Optional Termination and Reduction of Aggregate Credit Amounts.
               (i) The Borrower may at any time terminate, or from time to time
reduce, the Aggregate Maximum Credit Amounts; provided that (A) each reduction
of the Aggregate Maximum Credit Amounts shall be in an amount that is an
integral multiple of $1,000,000 and not less than $5,000,000 and (B) the
Borrower shall not terminate or reduce the Aggregate Maximum Credit Amounts if,
after giving effect to any concurrent prepayment of the
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

28

--------------------------------------------------------------------------------

 

Loans in accordance with Section 3.04(c), the total Credit Exposures would
exceed the total Commitments.
               (ii) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Aggregate Maximum Credit Amounts under
Section 2.06(b)(i) at least three (3) Business Days prior to the effective date
of such termination or reduction, specifying such election and the effective
date thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section 2.06(b)(ii) shall be irrevocable. Any
termination or reduction of the Aggregate Maximum Credit Amounts shall be
permanent. Each reduction of the Aggregate Maximum Credit Amounts shall be made
ratably among the Lenders in accordance with each Lender’s Applicable
Percentage.
     Section 2.07 Borrowing Base.
          (a) Initial Borrowing Base. For the period from and including the
Effective Date to but excluding the First Redetermination Date, the amount of
the Borrowing Base shall be $260,000,000. Notwithstanding the foregoing, the
Borrowing Base may be subject to further adjustments from time to time pursuant
to Section 8.13(d) or Section 9.12.
          (b) Scheduled and Interim Redeterminations.
               (i) The Borrowing Base shall be redetermined semi-annually in
accordance with this Section 2.07 (a “Scheduled Redetermination”), and, subject
to Section 2.07(d), such redetermined Borrowing Base shall become effective and
applicable to the Borrower, the Agents, each Issuing Bank and the Lenders on
April 1st and October 1st of each year, commencing with October 1, 2010.
               (ii) The Administrative Agent may, at the direction of the
Required Lenders, by notifying the Borrower thereof, (A) one time during any
six-month period (not counting any redetermination pursuant clause (B) hereof),
and (B) at any time upon the issuance of Debt by any Loan Party pursuant to
Section 9.02(f), elect to cause the Borrowing Base to be redetermined between
Scheduled Redeterminations in accordance with this Section 2.07.
               (iii) The Borrower may elect to redetermine the Borrowing Base in
connection with any acquisition by any Loan Party of proved Oil and Gas
Properties or any Person owning proved Oil and Gas Properties (in each such
case, if the fair market value of such proved Oil and Gas Properties or such
Person is in excess of $10,000,000) permitted hereunder in accordance with this
Section 2.07; provided that such redetermination of the Borrowing Base shall not
occur more than twice between Scheduled Redeterminations.
          (c) Scheduled and Interim Redetermination Procedure.
               (i) Each Scheduled Redetermination and each Interim
Redetermination shall be effectuated as follows: Upon receipt by the
Administrative Agent of (A) the Reserve Report and the certificate required to
be delivered by the Borrower, in the case of a Scheduled Redetermination,
pursuant to Section 8.12(a) and (c), and, in the case of an
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

29

--------------------------------------------------------------------------------

 

Interim Redetermination, pursuant to Section 8.12(b) and (c), and (B) such other
reports, data and supplemental information, including, without limitation, the
information provided pursuant to Section 8.12(c), as may, from time to time, be
reasonably requested by the Administrative Agent or the Required Lenders (the
Reserve Report, such certificate and such other reports, data and supplemental
information being the “Engineering Reports”), the Administrative Agent shall
evaluate the information contained in the Engineering Reports and shall, in good
faith, propose a new Borrowing Base (the “Proposed Borrowing Base”) based upon
such information and such other information (including, without limitation, the
status of title information with respect to the proved Oil and Gas Properties as
described in the Engineering Reports and the existence of any other Debt) as the
Administrative Agent deems appropriate in its sole discretion and consistent
with its normal oil and gas lending criteria as it exists at the particular
time. In no event shall the Proposed Borrowing Base exceed the Aggregate Maximum
Credit Amounts.
               (ii) The Administrative Agent shall notify the Borrower and the
Lenders of the Proposed Borrowing Base (the “Proposed Borrowing Base Notice”):
                    (A) in the case of a Scheduled Redetermination (1) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then on or before March 15th and September 15th of such year
following the date of delivery or (2) if the Administrative Agent shall not have
received the Engineering Reports required to be delivered by the Borrower
pursuant to Section 8.12(a) and (c) in a timely and complete manner, then
promptly after the Administrative Agent has received complete Engineering
Reports from the Borrower and have had a reasonable opportunity to determine the
Proposed Borrowing Base in accordance with Section 2.07(c)(i), and in any event
within fifteen (15) days after the Administrative Agent has received the
required Engineering Reports; and
                    (B) in the case of an Interim Redetermination, promptly, and
in any event, within fifteen (15) days after the Administrative Agent has
received the required Engineering Reports.
               (iii) Any Proposed Borrowing Base that would increase the
Borrowing Base then in effect must be approved or deemed to have been approved
by all of the Lenders as provided in this Section 2.07(c)(iii); and any Proposed
Borrowing Base that would decrease or maintain the Borrowing Base then in effect
must be approved or be deemed to have been approved by the Required Lenders as
provided in this Section 2.07(c)(iii). Upon receipt of the Proposed Borrowing
Base Notice, each Lender shall have fifteen (15) days to agree with the Proposed
Borrowing Base or disagree with the Proposed Borrowing Base by proposing an
alternate Borrowing Base. If at the end of such fifteen (15) days, any Lender
has not communicated its approval or disapproval in writing to the
Administrative Agent, such silence shall be deemed to be an approval of the
Proposed Borrowing Base. If, at the end of such 15-day period, all of the
Lenders, in the case of a Proposed Borrowing Base that would increase the
Borrowing Base then in effect, or the Required Lenders, in the case of a
Proposed Borrowing Base that would decrease or maintain the Borrowing Base then
in effect, have approved or deemed to have approved, as aforesaid, then the
Proposed Borrowing Base shall become the new Borrowing Base, effective on the
date specified in Section 2.07(d). If, however, at the end of such 15-day
period, all of the Lenders or the Required Lenders, as applicable, have not
approved
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

30

--------------------------------------------------------------------------------

 

or deemed to have approved, as aforesaid, then the Administrative Agent shall
(A) notify the Borrower of the Proposed Borrowing Base and which Lenders have
not approved or been deemed to have approved of the Proposed Borrowing Base and
(B) poll the Lenders to ascertain the highest Borrowing Base then acceptable to
a number of Lenders sufficient to constitute the Required Lenders for purposes
of this Section 2.07 and, so long as such amount does not increase the Borrowing
Base then in effect, such amount shall become the new Borrowing Base, effective
on the date specified in Section 2.07(d).
          (d) Effectiveness of a Redetermined Borrowing Base. After a
redetermined Borrowing Base is approved or is deemed to have been approved by
all of the Lenders or the Required Lenders, as applicable, pursuant to
Section 2.07(c)(iii), the Administrative Agent shall notify the Borrower and the
Lenders of the amount of the redetermined Borrowing Base (the “New Borrowing
Base Notice”), and such amount shall become the new Borrowing Base, effective
and applicable to the Borrower, the Agents, each Issuing Bank and the Lenders:
               (i) in the case of a Scheduled Redetermination, (A) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then on the April 1st or October 1st, as applicable, following
such notice, or (B) if the Administrative Agent shall not have received the
Engineering Reports required to be delivered by the Borrower pursuant to
Section 8.12(a) and (c) in a timely and complete manner, then on the Business
Day next succeeding delivery of such notice; and
               (ii) in the case of an Interim Redetermination, on the Business
Day next succeeding delivery of such notice.
Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination Date or the next
adjustment to the Borrowing Base under Section 8.13(d) or Section 9.12,
whichever occurs first. Notwithstanding the foregoing, no Scheduled
Redetermination or Interim Redetermination shall become effective until the New
Borrowing Base Notice related thereto is received by the Borrower.
     Section 2.08 Letters of Credit.
          (a) General. The Loan Parties, the Administrative Agent, the Issuing
Bank and the Lenders agree that all Existing Letters of Credit shall be deemed
to be issued under this Agreement as of the Effective Date and shall constitute
Letters of Credit hereunder for all purposes (except that the Issuing Bank’s
standard issuance fee shall not be payable on such deemed issuance). Subject to
the terms and conditions set forth herein, the Borrower may request any Issuing
Bank to issue Letters of Credit in dollars for its own account or for the
account of any Loan Party, in a form reasonably acceptable to the Administrative
Agent and such Issuing Bank, at any time and from time to time during the
Availability Period. In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of any form of letter
of credit application or other agreement submitted by the Borrower to, or
entered into by the Borrower with, an Issuing Bank relating to any Letter of
Credit, the terms and conditions of this Agreement shall control.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

31

--------------------------------------------------------------------------------

 

          (b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to any Issuing
Bank and the Administrative Agent (not less than three (3) Business Days in
advance of the requested date of issuance, amendment, renewal or extension) a
notice: (i) requesting the issuance of a Letter of Credit or identifying the
outstanding Letter of Credit issued by such Issuing Bank to be amended, renewed
or extended; (ii) specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day); (iii) specifying the date on which
such Letter of Credit is to expire (which shall comply with Section 2.08(c));
(iv) specifying the amount of such Letter of Credit; (v) specifying the name and
address of the beneficiary thereof and such other information as shall be
necessary to prepare, amend, renew or extend such Letter of Credit; and
(vi) specifying the amount of the then effective Borrowing Base, the current
total Credit Exposures (without regard to the requested Letter of Credit or the
requested amendment, renewal or extension of an outstanding Letter of Credit)
and the pro forma total Credit Exposures (giving effect to the requested Letter
of Credit or the requested amendment, renewal or extension of an outstanding
Letter of Credit). If requested by any Issuing Bank, the Borrower shall submit a
letter of credit application on such Issuing Bank’s standard form in connection
with any request for a Letter of Credit. A Letter of Credit shall be issued,
amended, renewed or extended only if (and with respect to each notice provided
by the Borrower above and any issuance, amendment, renewal or extension of each
Letter of Credit, the Borrower shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension (A) the LC
Exposure shall not exceed the LC Commitment and (vii) the total Credit Exposures
shall not exceed the total Commitments (i.e. the lesser of the Aggregate Maximum
Credit Amounts and the then effective Borrowing Base).
          (c) Expiration Date. Each Letter of Credit shall expire at or prior to
the close of business on the earliest of (i) the date requested by the Borrower,
(ii) the date one year after the date of the issuance of such Letter of Credit
(or, in the case of any renewal, which renewal may be provided for in the
initial Letter of Credit, or extension thereof, one year after such renewal or
extension) and (iii) the date that is five (5) Business Days prior to the
Maturity Date.
          (d) Participations. By the issuance of a Letter of Credit (or an
amendment to an existing Letter of Credit increasing the amount thereof) and
without any further action on the part of the Issuing Bank that issues such
Letter of Credit or the Lenders, each Issuing Bank that issues a Letter of
Credit hereunder hereby grants to each Lender, and each Lender hereby acquires
from such Issuing Bank, a participation in such Letter of Credit equal to such
Lender’s Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
the Administrative Agent, for the account of any Issuing Bank that issues a
Letter of Credit hereunder, such Lender’s Applicable Percentage of each LC
Disbursement made by such Issuing Bank and not reimbursed by the Borrower on the
date due as provided in Section 2.08(e), or of any reimbursement payment
required to be refunded to the Borrower for any reason. Each Lender acknowledges
and agrees that its obligation to acquire participations pursuant to this
Section 2.08(d) in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

32

--------------------------------------------------------------------------------

 

amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever.
          (e) Reimbursement. If any Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit issued by such Issuing Bank, the Borrower shall
reimburse such LC Disbursement by paying to the Administrative Agent an amount
equal to such LC Disbursement not later than 2:00 p.m., New York, New York time,
on the date that such LC Disbursement is made, if the Borrower shall have
received notice of such LC Disbursement prior to 12:00 noon, New York, New York
time, on such date, or, if such notice has not been received by the Borrower
prior to such time on such date, then not later than 2:00 p.m., New York, New
York time, on the Business Day immediately following the day that the Borrower
receives such notice; provided that if such LC Disbursement is not paid by such
time, the Borrower shall, subject to the conditions to Borrowing set forth
herein, be deemed to have requested, and the Borrower does hereby request under
such circumstances, that such payment be financed with an ABR Borrowing (or, if
such amount is less than $1,000,000, a Swingline Loan) in an equivalent amount
and, to the extent so financed, the Borrower’s obligation to make such payment
shall be discharged and replaced by the resulting ABR Borrowing (or Swingline
Loan). If the Borrower fails to make such payment when due, the Administrative
Agent shall notify each Lender of the applicable LC Disbursement, the payment
then due from the Borrower in respect thereof and such Lender’s Applicable
Percentage thereof. Promptly following receipt of such notice, each Lender shall
pay to the Administrative Agent its Applicable Percentage of the payment then
due from the Borrower, in the same manner as provided in Section 2.05 with
respect to Loans made by such Lender (and Section 2.05 shall apply, mutatis
mutandis, to the payment obligations of the Lenders), and the Administrative
Agent shall promptly pay to the Issuing Bank that issued such Letter of Credit
the amounts so received by it from the Lenders. Promptly following receipt by
the Administrative Agent of any payment from the Borrower pursuant to this
Section 2.08(e), the Administrative Agent shall distribute such payment to the
Issuing Bank that issued such Letter of Credit or, to the extent that Lenders
have made payments pursuant to this Section 2.08(e) to reimburse such Issuing
Bank, then to such Lenders and such Issuing Bank as their interests may appear.
Any payment made by a Lender pursuant to this Section 2.08(e) to reimburse any
Issuing Bank for any LC Disbursement (other than the funding of ABR Loans or
Swingline Loans as contemplated above) shall not constitute a Loan and shall not
relieve the Borrower of its obligation to reimburse such LC Disbursement.
          (f) Obligations Absolute. The Borrower’s obligation to reimburse LC
Disbursements as provided in Section 2.08(e) shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of any Letter of Credit, any Letter
of Credit Agreement or this Agreement, or any term or provision therein,
(ii) any draft or other document presented under a Letter of Credit proving to
be forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by any Issuing Bank under a
Letter of Credit issued by such Issuing Bank against presentation of a draft or
other document that does not comply with the terms of such Letter of Credit or
any Letter of Credit Agreement, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

33

--------------------------------------------------------------------------------

 

this Section 2.08(f), constitute a legal or equitable discharge of, or provide a
right of setoff against, the Borrower’s obligations hereunder. Neither the
Administrative Agent, the Lenders nor any Issuing Bank, nor any of their Related
Parties shall have any liability or responsibility by reason of or in connection
with the issuance or transfer of any Letter of Credit or any payment or failure
to make any payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission, interruption,
loss or delay in transmission or delivery of any draft, notice or other
communication under or relating to any Letter of Credit (including any document
required to make a drawing thereunder), any error in interpretation of technical
terms or any consequence arising from causes beyond the control of any Issuing
Bank; provided that the foregoing shall not be construed to excuse any Issuing
Bank from liability to the Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by the Borrower to the extent permitted by applicable law) suffered by the
Borrower that are caused by such Issuing Bank’s failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of any
Issuing Bank (as finally determined by a court of competent jurisdiction), such
Issuing Bank shall be deemed to have exercised all requisite care in each such
determination. In furtherance of the foregoing and without limiting the
generality thereof, the parties agree that, with respect to documents presented
which appear on their face to be in substantial compliance with the terms of a
Letter of Credit, the Issuing Bank that issued such Letter of Credit may, in its
sole discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
          (g) Disbursement Procedures. Each Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit issued by such Issuing Bank. Such
Issuing Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether such
Issuing Bank has made or will make an LC Disbursement thereunder; provided that
any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse such Issuing Bank and the Lenders with
respect to any such LC Disbursement.
          (h) Interim Interest. If any Issuing Bank shall make any LC
Disbursement, then, until the Borrower shall have reimbursed such Issuing Bank
for such LC Disbursement (either with its own funds or a Borrowing under
Section 2.08(e)), the unpaid amount thereof shall bear interest, for each day
from and including the date such LC Disbursement is made to but excluding the
date that the Borrower reimburses such LC Disbursement, at the rate per annum
then applicable to ABR Loans. Interest accrued pursuant to this Section 2.08(h)
shall be for the account of such Issuing Bank, except that interest accrued on
and after the date of payment by any Lender pursuant to Section 2.08(e) to
reimburse such Issuing Bank shall be for the account of such Lender to the
extent of such payment.
          (i) Replacement of an Issuing Bank. Any Issuing Bank may be replaced
or resign at any time by written agreement among the Borrower, the
Administrative Agent, such
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

34

--------------------------------------------------------------------------------

 

resigning or replaced Issuing Bank and, in the case of a replacement, the
successor Issuing Bank. The Administrative Agent shall notify the Lenders of any
such resignation or replacement of an Issuing Bank. At the time any such
resignation or replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the resigning or replaced Issuing Bank
pursuant to Section 3.05(b). In the case of the replacement of an Issuing Bank,
from and after the effective date of such replacement, (i) the successor Issuing
Bank shall have all the rights and obligations of the replaced Issuing Bank
under this Agreement with respect to Letters of Credit to be issued thereafter
and (ii) references herein to the term “Issuing Bank” shall be deemed to refer
to such successor or to any previous Issuing Bank, or to such successor and all
previous Issuing Banks, as the context shall require. After the resignation or
replacement of an Issuing Bank hereunder, the resigning or replaced Issuing Bank
shall remain a party hereto and shall continue to have all the rights and
obligations of an Issuing Bank under this Agreement with respect to Letters of
Credit issued by it prior to such resignation or replacement, but shall not be
required to issue additional Letters of Credit.
          (j) Cash Collateralization. If (i) any Event of Default shall occur
and be continuing and the Borrower receives notice from the Administrative Agent
or the Majority Lenders demanding the deposit of cash collateral pursuant to
this Section 2.08(i), or (ii) the Borrower is required to pay to the
Administrative Agent the excess attributable to an LC Exposure in connection
with any prepayment pursuant to Section 3.04(c), then the Borrower shall
deposit, in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders, an amount in cash equal
to, in the case of an Event of Default, the LC Exposure, and in the case of a
payment required by Section 3.04(c), the amount of such excess as provided in
Section 3.04(c), as of such date plus any accrued and unpaid interest thereon;
provided that the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower or any Restricted Subsidiary of
the Borrower described in Section 10.01(h) or Section 10.01(i). The Borrower
hereby grants to the Administrative Agent, for the benefit of each Issuing Bank
and the Lenders, an exclusive first priority and continuing perfected security
interest in and Lien on such account and all cash, checks, drafts, certificates
and instruments, if any, from time to time deposited or held in such account,
all deposits or wire transfers made thereto, any and all investments purchased
with funds deposited in such account, all interest, dividends, cash,
instruments, financial assets and other Property from time to time received,
receivable or otherwise payable in respect of, or in exchange for, any or all of
the foregoing, and all proceeds, products, accessions, rents, profits, income
and benefits therefrom, and any substitutions and replacements therefor. The
Borrower’s obligation to deposit amounts pursuant to this Section 2.08(i) shall
be absolute and unconditional, without regard to whether any beneficiary of any
such Letter of Credit has attempted to draw down all or a portion of such amount
under the terms of a Letter of Credit, and, to the fullest extent permitted by
applicable law, shall not be subject to any defense or be affected by a right of
set-off, counterclaim or recoupment which the Borrower or any of its
Subsidiaries may now or hereafter have against any such beneficiary, any Issuing
Bank, the Administrative Agent, the Lenders or any other Person for any reason
whatsoever. Such deposit shall be held as collateral securing the payment and
performance of the Borrower’s and the Guarantor’s obligations under this
Agreement and the other Loan Documents in a “securities account” (within the
meaning of Article 8 of the Uniform
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

35

--------------------------------------------------------------------------------

 

Commercial Code in effect from time to time in the State of New York, the “UCC”)
over which the Administrative Agent shall have “control” (within the meaning of
the UCC). Notwithstanding the foregoing, the Borrower may direct the
Administrative Agent and the “securities intermediary” (within the meaning of
the UCC) to invest amounts credited to the securities account, at the Borrower’s
risk and expense, in Investments described in Section 9.05(c) through (g).
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by the Administrative Agent to
reimburse the Swingline Lender for Swingline Loans for which it has not been
repaid, and reimburse, on a pro rata basis, each Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrower for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated, be applied to satisfy other obligations of the Borrower
and the Guarantors under this Agreement or the other Loan Documents. If the
Borrower is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, and the Borrower is not
otherwise required to pay to the Administrative Agent the excess attributable to
an LC Exposure in connection with any prepayment pursuant to Section 3.04(c),
then such amount (to the extent not applied as aforesaid) shall be returned to
the Borrower within three (3) Business Days after all Events of Default have
been cured or waived.
          (k) Existing Letters of Credit. If Wells Fargo ceases to be a Lender
during a time when it has one or more Letters of Credit outstanding that it has
issued hereunder, each such Letter of Credit shall continue to be a Letter of
Credit hereunder and Wells Fargo shall have all the rights, remedies, powers and
privileges of an Issuing Bank hereunder (including, without limitation, the
right to be reimbursed for any drawing hereunder) with respect to each such
existing Letter of Credit until such time as each such Letter of Credit expires,
is drawn and fully reimbursed or is renewed by another Letter of Credit issued
hereunder by another Issuing Bank.
     Section 2.09 Swingline Loans
          (a) Subject to the terms and conditions set forth herein, the
Swingline Lender agrees to make Swingline Loans to the Borrower from time to
time during the Availability Period, in an aggregate principal amount at any
time outstanding that will not result in (i) the aggregate principal amount of
outstanding Swingline Loans exceeding $15,000,000 or (ii) the total Credit
Exposures exceeding the total Commitments; provided that the Swingline Lender
shall not be required to make a Swingline Loan to refinance an outstanding
Swingline Loan. The Borrower shall pay to the Swingline Lender, for the account
of each Lender, the outstanding aggregate principal and accrued and unpaid
interest under each Swingline Loan no later than five (5) Business Days
following such Swingline Borrowing. Within the foregoing limits and subject to
the terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Swingline Loans.
          (b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 2:00 p.m., New York, New York time, on the day of a proposed
Swingline Loan. Each such notice shall be irrevocable and shall specify the
requested date (which shall be a Business Day) and amount of the requested
Swingline Loan. The Administrative Agent will promptly advise the Swingline
Lender of any such notice received from the Borrower. The Swingline Lender shall
make each Swingline Loan
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

36

--------------------------------------------------------------------------------

 

available to the Borrower by means of a credit to the general deposit account of
the Borrower with the Swingline Lender by 3:00 p.m., New York, New York time, on
the requested date of such Swingline Loan.
          (c) The Swingline Lender may by written notice given to the
Administrative Agent not later than 2:00 p.m., New York, New York time, on any
Business Day require the Lenders to acquire participations on such Business Day
in all or a portion of the Swingline Loans outstanding. Such notice shall
specify the aggregate amount of Swingline Loans in which Lenders will
participate. Promptly upon receipt of such notice, the Administrative Agent will
give notice thereof to each Lender, specifying in such notice such Lender’s
Applicable Percentage of such Swingline Loan or Loans. Each Lender hereby
absolutely and unconditionally agrees, upon receipt of notice as provided above,
to promptly pay to the Administrative Agent, for the account of the Swingline
Lender, such Lender’s Applicable Percentage of such Swingline Loan or Loans.
Each Lender acknowledges and agrees that its obligation to acquire
participations in Swingline Loans pursuant to this paragraph is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever. Each Lender shall
comply with its obligation under this paragraph by wire transfer of immediately
available funds by 3:00 p.m. New York, New York time, in the same manner as
provided in Section 2.05 with respect to Loans made by such Lender (and
Section 2.05 shall apply, mutatis mutandis, to the payment obligations of the
Lenders), and the Administrative Agent shall promptly pay to the Swingline
Lender the amounts so received by it from the Lenders. The Administrative Agent
shall notify the Borrower of any participation in any Swingline Loan acquired
pursuant to this paragraph, and thereafter payments in respect of such Swingline
Loan shall be made to the Administrative Agent and not to the Swingline Lender.
Any amounts received by the Swingline Lender from the Borrower (or other party
on behalf of the Borrower) in respect of a Swingline Loan after receipt by the
Swingline Lender of the proceeds of a sale of participations therein shall be
promptly remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Lenders that shall have made their payments pursuant to this paragraph and
to the Swingline Lender, as their interests may appear; provided that any such
payment so remitted shall be repaid to the Swingline Lender or to the
Administrative Agent, as applicable, if and to the extent such payment is
required to be refunded to the Borrower for any reason. The purchase of
participations in a Swingline Loan pursuant to this paragraph shall not relieve
the Borrower of any default in the payment thereof. Notwithstanding the
foregoing, a Lender shall not have any obligation to acquire a participation in
a Swingline Loan pursuant to this paragraph if an Event of Default shall have
occurred and be continuing at the time such Swingline Loan was made and such
Lender shall have notified the Swingline Lender in writing, at least one
(1) Business Day prior to the time such Swingline Loan was made, that such Event
of Default has occurred and that such Lender will not acquire participations in
Swingline Loans made while such Event of Default is continuing.
     Section 2.10 Defaulting Lenders. Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the
following provisions shall apply for so long as such Lender is a Defaulting
Lender:
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

37

--------------------------------------------------------------------------------

 

          (a) fees pursuant to Section 3.05(a) shall cease to accrue on the
unused portion of the Commitment of such Defaulting Lender;
          (b) the Commitment and the principal amount of the Loans and
participation interests in Letters of Credit and Swingline Loans of such
Defaulting Lender shall not be included in determining whether all Lenders, the
Required Lenders or the Majority Lenders have taken or may take any action
hereunder (including any consent to any amendment or waiver pursuant to Section
12.02), provided that any waiver, amendment or modification (i) that would
increase the Commitment or the Maximum Credit Amount of such Defaulting Lender
or (ii) requiring the consent of all Lenders or each adversely affected Lender
which affects such Defaulting Lender differently than all other Lenders or all
other adversely affected Lenders, as the case may be, shall require the consent
of such Defaulting Lender;
          (c) if any Swingline Exposure or LC Exposure exists at the time a
Lender becomes a Defaulting Lender then:
               (i) all or any part of such Swingline Exposure and LC Exposure
shall be reallocated among the non-Defaulting Lenders in accordance with their
respective Commitments but only to the extent (A) the sum of all non-Defaulting
Lenders’ Credit Exposure plus such Defaulting Lender’s Swingline Exposure and LC
Exposure does not exceed the total of all non-Defaulting Lenders’ Commitments
and (B) the conditions set forth in Section 6.02 are satisfied at such time; and
               (ii) if the reallocation described in clause (i) above cannot, or
can only partially, be effected, the Borrower shall within two (2) Business Days
following notice by the Administrative Agent cash collateralize such Defaulting
Lender’s LC Exposure and Swingline Exposure (after giving effect to any partial
reallocation pursuant to clause (i) above) for so long as such LC Exposure and
Swingline Exposure are outstanding and the relevant Defaulting Lender continues
to be a Defaulting Lender in accordance with the procedures set forth in
Section 2.08(j);
               (iii) if the Borrower cash collateralizes any portion of such
Defaulting Lender’s LC Exposure pursuant to this Section 4.04(c), the Borrower
shall not be required to pay any fees to such Defaulting Lender pursuant to
Section 3.05(b) with respect to such Defaulting Lender’s LC Exposure during the
period such Defaulting Lender’s LC Exposure is cash collateralized;
               (iv) if the applicable LC Exposure of the non-Defaulting Lenders
is reallocated pursuant to this Section 4.04(c), then the fees payable to the
Lenders pursuant to Section 3.05(a) and Section 3.05(b) shall be adjusted in
accordance with such non-Defaulting Lenders’ reallocated Commitment and LC
Exposure; or
               (v) if any Defaulting Lender’s LC Exposure is neither cash
collateralized nor reallocated pursuant to this Section 4.04(c), then, without
prejudice to any rights or remedies of any Issuing Bank or any Lender hereunder,
all commitment fees that otherwise would have been payable to such Defaulting
Lender (solely with respect to the portion of such Defaulting Lender’s
Commitment that was utilized by such LC Exposure) under Section
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

38

--------------------------------------------------------------------------------

 

3.05(a) and letter of credit fees payable under Section 3.05(b) with respect to
such Defaulting Lender’s LC Exposure shall be payable to the applicable Issuing
Bank until such LC Exposure is cash collateralized and/or reallocated; and
          (d) so long as any Lender is a Defaulting Lender, the Swingline Lender
shall not be required to fund any Swingline Loan and no Issuing Bank shall be
required to issue, amend or increase any Letter of Credit, unless it is
satisfied that the related exposure will be one hundred percent (100%) covered
by the Commitments of the non-Defaulting Lenders and/or cash collateral will be
provided by the Borrower in accordance with Section 4.04(c), and participating
interests in any such newly issued or increased Letter of Credit or newly made
Swingline Loan shall be allocated among non-Defaulting Lenders in a manner
consistent with Section 4.04(c)(i) (and any Defaulting Lender shall not
participate therein).
     In the event that the Administrative Agent, the Borrower, the Swingline
Lender, and each Issuing Bank each agrees that a Defaulting Lender has
adequately remedied all matters that caused such Defaulting Lender to be a
Defaulting Lender, then the LC Exposure and Swingline Exposure of the
non-Defaulting Lenders shall be readjusted to reflect the inclusion of such
Defaulting Lender’s Commitment and on such date such Defaulting Lender shall
purchase at par such of the Loans of the other Lenders as the Administrative
Agent shall determine may be necessary in order for such Defaulting Lender to
hold such Loans in accordance with its Commitment.
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES
     Section 3.01 Repayment of Loans. The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Loan on the Termination Date.
     Section 3.02 Interest.
          (a) ABR Loans. The Loans comprising each ABR Borrowing shall bear
interest at the Alternate Base Rate plus the Applicable Margin, but in no event
to exceed the Highest Lawful Rate.
          (b) Eurodollar Loans. The Loans comprising each Eurodollar Borrowing
shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect
for such Borrowing plus the Applicable Margin, but in no event to exceed the
Highest Lawful Rate.
          (c) Swingline Loans. Swingline Loans shall bear interest at the
Alternate Base Rate plus the Applicable Margin, but in no event to exceed the
Highest Lawful Rate.
          (d) Post-Default Rate. Notwithstanding the foregoing, if any principal
of or interest on any Loan or any fee or other amount payable by the Loan
Parties hereunder or under any other Loan Document is not paid when due, whether
at stated maturity, upon acceleration or otherwise, such overdue amount shall
bear interest, after as well as before judgment, at a rate per
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

39

--------------------------------------------------------------------------------

 

annum equal to two percent (2%) plus the rate applicable to ABR Loans as
provided in Section 3.02(a), but in no event to exceed the Highest Lawful Rate.
          (e) Interest Payment Dates. Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan and on the
Termination Date; provided that (i) interest accrued pursuant to Section 3.02(d)
shall be payable on demand, (ii) in the event of any repayment or prepayment of
any Loan (other than an optional prepayment of an ABR Loan prior to the
Termination Date), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment, and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.
          (f) Interest Rate Computations. All interest hereunder shall be
computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), except that interest
computed by reference to the Alternate Base Rate at times when the Alternate
Base Rate is based on the Prime Rate shall be computed on the basis of a year of
365 days (or 366 days in a leap year), and in each case shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall
be determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error, and be binding upon the parties hereto.
     Section 3.03 Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
          (a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate for such Interest
Period; or
          (b) the Administrative Agent is advised by the Majority Lenders that
the Adjusted LIBO Rate or LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders of making or
maintaining their Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
     Section 3.04 Prepayments.
          (a) Optional Prepayments. The Borrower shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, subject
to prior notice in accordance with Section 3.04(b).
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

40

--------------------------------------------------------------------------------

 

          (b) Notice and Terms of Optional Prepayment. The Borrower shall notify
the Administrative Agent by telephone (confirmed by telecopy) of any prepayment
hereunder not later than 2:00 p.m., New York, New York time, on the Business Day
of prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid. Promptly following receipt of any such notice relating to a
Borrowing, the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02. Each prepayment of a Borrowing shall be applied
ratably to the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 3.02.
          (c) Mandatory Prepayments.
               (i) If, after giving effect to any termination or reduction of
the Aggregate Maximum Credit Amounts pursuant to Section 2.06(b), the total
Credit Exposures exceeds the total Commitments, then the Borrower shall
(A) prepay the Borrowings on the date of such termination or reduction in an
aggregate principal amount equal to such excess, and (B) if any excess remains
after prepaying all of the Borrowings as a result of an LC Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount equal to such excess to
be held as cash collateral as provided in Section 2.08(i).
               (ii) Upon any redetermination of or adjustment to the amount of
the Borrowing Base in accordance with Section 2.07 or Section 8.13(d), if the
total Credit Exposures exceeds the redetermined or adjusted Borrowing Base, then
the Borrower shall, within thirty (30) days of such redetermination or
adjustment of the Borrowing Base, elect: (A) (1) to prepay the Loans in an
aggregate principal amount equal to such excess and (2) if any excess remains
after prepaying all of the Borrowings as a result of an LC Exposure, to pay to
the Administrative Agent on behalf of the Lenders an amount equal to such excess
to be held as cash collateral as provided in Section 2.08(i); (B) to pay such
excess in four (4) equal installments, the first (1st) such installment being
due and payable by the first (1st) Business Day after such election has been
made by the Borrower and the three (3) remaining installments due monthly
thereafter until such excess is paid in full; (C) to grant first-priority Liens
in favor of the Administrative Agent in accordance with Section 8.14(a) on
additional proved Oil and Gas Properties of the Loan Parties not previously
evaluated in determining the Borrowing Base that are satisfactory to the
Administrative Agent and are determined by the Administrative Agent to have a
value equal to or greater than the amount of such excess; or (D) to make partial
payments under the preceding clauses (A) or (B) and also to provide Collateral
under the preceding clause (C) that together are effective to deal with such
excess. In the case of an election by the Borrower of the option set forth in
clause (A) above, the Borrower shall be obligated to pay such prepayment and/or
deposit of cash collateral amount within forty-five (45) days following its
receipt of the New Borrowing Base Notice in accordance with Section 2.07(d) or
the date the adjustment occurs; provided that all payments required to be made
pursuant to this Section 3.04(c)(ii) must be made on or prior to the Termination
Date; provided further that if a sale of Property containing proved reserves
constituting a portion of the Borrowing Base occurs pursuant to Section 9.12
during such period when the total Credit Exposures exceeds the redetermined or
adjusted Borrowing Base, then the
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

41

--------------------------------------------------------------------------------

 

proceeds of such sale of Property, to the extent thereof and after deducting
taxes and costs of sale, shall be used first to prepay the Borrowings in an
aggregate principal amount equal to such excess.
               (iii) Upon any adjustments to the Borrowing Base pursuant to
Section 9.02(f), Section 9.12 or Section 9.19, if the total Credit Exposures
exceeds the Borrowing Base as adjusted, then the Borrower shall (A) prepay the
Borrowings in an aggregate principal amount equal to such excess, and (B) if any
excess remains after prepaying all of the Borrowings as a result of an LC
Exposure, pay to the Administrative Agent on behalf of the Lenders an amount
equal to such excess to be held as cash collateral as provided in
Section 2.08(i). The Borrower shall be obligated to make such prepayment and/or
deposit of cash collateral on or before the first (1st) Business Day after it
receives cash proceeds as a result of such Debt incurrence, disposition or
Unwind; provided that all payments required to be made pursuant to this
Section 3.04(c)(iii) must be made on or prior to the Termination Date.
               (iv) Each prepayment of Borrowings pursuant to this
Section 3.04(c) shall be applied, first, to any Swingline Loans then
outstanding, second, ratably to any ABR Borrowings then outstanding, and, third,
to any Eurodollar Borrowings then outstanding, and if more than one Eurodollar
Borrowing is then outstanding, to each such Eurodollar Borrowing in order of
priority beginning with the Eurodollar Borrowing with the least number of days
remaining in the Interest Period applicable thereto and ending with the
Eurodollar Borrowing with the most number of days remaining in the Interest
Period applicable thereto.
               (v) Each prepayment of Borrowings pursuant to this
Section 3.04(c) shall be applied ratably to the Loans included in the prepaid
Borrowings. Prepayments pursuant to this Section 3.04(c) shall be accompanied by
accrued interest to the extent required by Section 3.02.
          (d) No Premium or Penalty. Prepayments permitted or required under
this Section 3.04 shall be without premium or penalty, except as required under
Section 5.02.
     Section 3.05 Fees.
          (a) Commitment Fees. The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee, which shall accrue at the
applicable Commitment Fee Rate on the average daily amount of the unused amount
of the Commitment of such Lender during the period from and including the date
of this Agreement to but excluding the Termination Date; provided that for
purposes of calculating commitment fees pursuant to this Section 3.05(a),
Swingline Loans shall not be deemed to be a utilization of Commitments. Accrued
commitment fees shall be payable in arrears on the last day of March, June,
September and December of each year and on the Termination Date, commencing on
the first such date to occur after the date hereof. All commitment fees shall be
computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day).
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

42

--------------------------------------------------------------------------------

 

          (b) Letter of Credit Fees. The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at the
same Applicable Margin used to determine the interest rate applicable to
Eurodollar Loans on the average daily amount of such Lender’s LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the date of this Agreement to but excluding
the later of the date on which such Lender’s Commitment terminates and the date
on which such Lender ceases to have any LC Exposure, (ii) to each Issuing Bank,
for its own account, a fronting fee, which shall accrue at the rate of 0.200%
per annum on the average daily amount of the LC Exposure (excluding any portion
thereof attributable to unreimbursed LC Disbursements) during the period from
and including the date of this Agreement to but excluding the later of the date
of termination of the Commitments and the date on which there ceases to be any
LC Exposure, provided that in no event shall such fee be less than $500 during
any quarter, and (iii) to each Issuing Bank, for its own account, its standard
and customary fees with respect to the issuance, amendment, renewal or extension
of any Letter of Credit issued, amended, renewed or extended by such Issuing
Bank or processing of drawings thereunder. Participation fees and fronting fees
accrued through and including the last day of March, June, September and
December of each year shall be payable on the third (3rd) Business Day following
such last day, commencing on the first such date to occur after the date of this
Agreement and issuance, amendment, renewal and extension fees with respect to
any Letter of Credit shall be payable at the time of issuance, amendment,
renewal or extension of such Letter of Credit; provided that all such fees shall
be payable on the Termination Date and any such fees accruing after the
Termination Date shall be payable on demand. Any other fees payable to an
Issuing Bank pursuant to this Section 3.05(b) shall be payable within ten
(10) days after demand. All participation fees and fronting fees shall be
computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day).
          (c) Administrative Agent Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent, including the fees set forth in the Fee Letters.
          (d) Arrangers Fees. The Borrower agrees to pay to the Arrangers, for
their own accounts, fees payable in the amounts and at the times separately
agreed upon between the Borrower and the Arrangers, including the fees set forth
in the Fee Letters.
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS
     Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of Set-offs
          (a) Payments by the Borrower. The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 5.01,
Section 5.02, Section 5.03 or otherwise) prior to 2:00 p.m., New York, New York
time, on the date when due, in dollars that
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

43

--------------------------------------------------------------------------------

 

constitute immediately available funds, without defense, deduction, recoupment,
set-off or counterclaim. Fees, once paid, shall not be refundable under any
circumstances absent manifest error (e.g., as a result of a clerical mistake).
Any amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices specified in
Section 12.01, except payments to be made directly to an Issuing Bank or the
Swingline Lender as expressly provided herein and except that payments pursuant
to Section 5.01, Section 5.02, Section 5.03 and Section 12.03 shall be made
directly to the Persons entitled thereto. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in dollars.
          (b) Application of Insufficient Payments. If at any time insufficient
funds are received by and available to the Administrative Agent to pay fully all
amounts of principal, unreimbursed LC Disbursements, interest and fees then due
hereunder, such funds shall be applied (i) first, towards payment of interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and
(ii) second, towards payment of principal and unreimbursed LC Disbursements then
due hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal and unreimbursed LC Disbursements then due to such parties.
          (c) Sharing of Payments by Lenders. If any Lender shall, by exercising
any right of set-off or counterclaim or otherwise, obtain payment in respect of
any principal of or interest on any of its Loans or participations in LC
Disbursements or Swingline Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Loans and participations in LC
Disbursements or Swingline Loans and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
and participations in LC Disbursements of other Lenders to the extent necessary
so that the benefit of all such payments shall be shared by the Lenders ratably
in accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and participations in LC Disbursements and Swingline
Loans; provided that (i) if any such participations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price restored to the extent of such
recovery, without interest, and (ii) the provisions of this Section 4.01(c)
shall not be construed to apply to any payment made by the Borrower pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in LC Disbursements or
Swingline Loans to any assignee or participant, other than to the Borrower or
any Subsidiary or Affiliate thereof (as to which the provisions of this Section
4.01(c) shall apply). The Borrower consents to the foregoing and agrees, to the
extent it may effectively do so under applicable law, that any Lender acquiring
a participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

44

--------------------------------------------------------------------------------

 

with respect to such participation as fully as if such Lender were a direct
creditor of the Borrower in the amount of such participation.
     Section 4.02 Presumption of Payment by the Borrower. Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or any Issuing Bank that the Borrower will not make such payment,
the Administrative Agent may assume that the Borrower has made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or such Issuing Bank, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders or such Issuing Bank, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or such Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
     Section 4.03 Certain Deductions by the Administrative Agent. If any Lender
shall fail to make any payment required to be made by it pursuant to
Section 2.05(b), Section 2.08(d), Section 2.08(e), Section 2.09(c) or
Section 4.02 then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for the account of such Lender to satisfy
such Lender’s obligations under such Sections until all such unsatisfied
obligations are fully paid.
     Section 4.04 Disposition of Proceeds. The Security Instruments contain an
assignment by the Loan Parties unto and in favor of the Administrative Agent for
the benefit of the Lenders, the Secured Hedging Providers and the Secured
Treasury Management Counterparties of all of the Loan Parties’ interest in and
to production and all proceeds attributable thereto that may be produced from or
allocated to the Mortgaged Property. The Security Instruments further provide in
general for the application of such proceeds to the satisfaction of the
Indebtedness and other obligations described therein and secured thereby.
Notwithstanding the assignment contained in such Security Instruments, unless an
Event of Default has occurred and is continuing (a) the Administrative Agent and
the Lenders agree that they will neither notify the purchaser or purchasers of
such production nor take any other action to cause such proceeds to be remitted
to the Administrative Agent or the Lenders, but the Lenders will instead permit
such proceeds to be paid to the Borrower and its Restricted Subsidiaries and
(b) the Lenders hereby authorize the Administrative Agent to take such actions
as may be necessary to cause such proceeds to be paid to the Borrower and/or
such Restricted Subsidiaries.
ARTICLE V
INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY
     Section 5.01 Increased Costs.
          (a) Eurodollar Changes in Law. If any Change in Law shall:
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

45

--------------------------------------------------------------------------------

 

               (i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate); or
               (ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by such
Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by such Lender (whether of principal, interest or otherwise), then
the Loan Parties will pay to such Lender such additional amount or amounts as
will compensate such Lender for such additional costs incurred or reduction
suffered.
          (b) Capital Requirements. If any Lender or any Issuing Bank determines
that any Change in Law regarding capital requirements has or would have the
effect of reducing the rate of return on such Lender’s or such Issuing Bank’s
capital or on the capital of such Lender’s or such Issuing Bank’s holding
company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by such Issuing Bank, to a level below that which such Lender or
such Issuing Bank or such Lender’s or such Issuing Bank’s holding company could
have achieved but for such Change in Law (taking into consideration such
Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or
such Issuing Bank’s holding company with respect to capital adequacy), then from
time to time the Loan Parties will pay to such Lender or such Issuing Bank, as
the case may be, such additional amount or amounts as will compensate such
Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding
company for any such reduction suffered.
          (c) Certificates. A certificate of a Lender or any Issuing Bank
setting forth the amount or amounts necessary to compensate such Lender or such
Issuing Bank or its holding company, as the case may be, as specified in
Section 5.01(a) or (b) and reasonably detailed calculations therefor shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Loan Parties shall pay such Lender or such Issuing Bank, as the case may be, the
amount shown as due on any such certificate within ten (10) days after receipt
thereof.
          (d) Effect of Failure or Delay in Requesting Compensation. Failure or
delay on the part of any Lender or any Issuing Bank to demand compensation
pursuant to this Section 5.01 shall not constitute a waiver of such Lender’s or
such Issuing Bank’s right to demand such compensation; provided that the Loan
Parties shall not be required to compensate a Lender or an Issuing Bank pursuant
to this Section 5.01 for any increased costs or reductions incurred more than
one hundred eighty (180) days prior to the date that such Lender or such Issuing
Bank, as the case may be, notifies the Borrower of the Change in Law giving rise
to such increased costs or reductions and of such Lender’s or such Issuing
Bank’s intention to claim compensation therefor; provided further that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the one hundred eighty (180) day period referred to above shall be extended
to include the period of retroactive effect thereof.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

46

--------------------------------------------------------------------------------

 

     Section 5.02 Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default),
(b) the conversion of any Eurodollar Loan into an ABR Loan other than on the
last day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto, or (d) the assignment of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto as a result
of a request by the Borrower pursuant to Section 5.04(b), then, in any such
event, the Loan Parties shall compensate each Lender upon request for the loss,
cost and expense attributable to such event. In the case of a Eurodollar Loan,
such loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the prepaid or otherwise affected principal
amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that
would have been applicable to such Loan, for the period from the date of such
event to the last day of the then current Interest Period therefor (or, in the
case of a failure to borrow, convert or continue, for the period that would have
been the Interest Period for such Loan), over (ii) the amount of interest which
would accrue on such principal amount for such period at the interest rate which
such Lender would bid were it to bid, at the commencement of such period, for
dollar deposits of a comparable amount and period from other banks in the
eurodollar market. A certificate of any Lender setting forth any amount or
amounts that such Lender is entitled to receive pursuant to this Section 5.02
and reasonably detailed calculations therefor shall be delivered to the Borrower
and shall be conclusive absent manifest error. The Loan Parties shall pay such
Lender the amount shown as due on any such certificate within ten (10) days
after receipt thereof.
     Section 5.03 Taxes.
          (a) Payments Free of Taxes. Any and all payments by or on account of
any obligation of the Loan Parties under any Loan Document shall be made free
and clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if a Loan Party shall be required to deduct any Indemnified Taxes
or Other Taxes from such payments, then (i) the sum payable shall be increased
as necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 5.03(a)), the Agent,
Lender or Issuing Bank (as the case may be) receives an amount equal to the sum
it would have received had no such deductions been made, (ii) the Loan Parties
shall make such deductions and (iii) the Loan Parties shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.
          (b) Payment of Other Taxes by the Borrower. The Loan Parties shall pay
any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.
          (c) Indemnification by the Borrower. The Loan Parties shall indemnify
each Agent, each Lender and each Issuing Bank, within ten (10) days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by such Agent, such Lender or such Issuing Bank, as the case may be,
on or with respect to any payment by or on account of any obligation of a Loan
Party hereunder (including Indemnified Taxes or Other Taxes imposed or asserted
on or attributable to amounts payable under this Section 5.03) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

47

--------------------------------------------------------------------------------

 

Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate of such Agent, a Lender or
an Issuing Bank as to the amount of such payment or liability under this
Section 5.03 shall be delivered to the Borrower and shall be conclusive absent
manifest error.
          (d) Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by a Loan Party to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
          (e) Foreign Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement or any other Loan Document
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.
          (f) Tax Refunds. If an Agent or a Lender determines, in its reasonable
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Loan Parties or with respect to which the
Loan Parties have paid additional amounts pursuant to this Section 5.03, it
shall pay over such refund to such Loan Party (but only to the extent of
indemnity payments made, or additional amounts paid, by such Loan Party under
this Section 5.03 with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of such Agent or such Lender and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided, that the Loan Parties, upon
the request of such Agent or such Lender, agree to repay the amount paid over to
the Loan Party (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to such Agent or such Lender in the event such
Agent or such Lender is required to repay such refund to such Governmental
Authority. This Section 5.03 shall not be construed to require any Agent or any
Lender to make available its tax returns (or any other information relating to
its taxes which it deems confidential) to any Loan Party or any other Person.
     Section 5.04 Mitigation Obligations.
          (a) Designation of Different Lending Office. If any Lender requests
compensation under Section 5.01, or if a Loan Party is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 5.03, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 5.01 or Section 5.03, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. The
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

48

--------------------------------------------------------------------------------

 

Loan Parties hereby agree to pay all reasonable costs and expenses incurred by
any Lender in connection with any such designation or assignment.
          (b) Replacement of Lenders. If (i) any Lender requests compensation
under Section 5.01 or gives notice of “Affected Loans” under Section 5.05,
(ii) the Loan Parties are required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to
Section 5.03, (iii) any Lender becomes a Defaulting Lender hereunder, or
(iv) any Lender has not approved (or is not deemed to have approved) an increase
in the Borrowing Base proposed by the Administrative Agent pursuant to Section
2.07(c)(iii), then the Borrower may, at its sole expense and effort, upon notice
to such Lender and the Administrative Agent, (A) require such Lender to assign
and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 12.04(b)), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment) or (B) require such Lender to be removed as a Lender under this
Agreement and the other Loan Documents with a corresponding reduction in the
Aggregate Maximum Credit Amount equal to the Maximum Credit Amount of such
Lender; provided that (1) if a Lender is removed as a Lender hereunder, the Loan
Parties have paid such Lender all amounts due and owing under this Agreement and
the other Loan Documents, including, without limitation, all principal, accrued
interest, fees and breakage costs, (2) in the case of a required assignment of
interest, the Borrower shall have received the prior written consent of the
Administrative Agent, which consent shall not unreasonably be withheld, (3) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in LC Disbursements, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or a Loan Party (in the case of all other amounts) and (4) in the case of
any such assignment resulting from a claim for compensation under Section 5.01
or payments required to be made pursuant to Section 5.03, 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.
     Section 5.05 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
applicable lending office to honor its obligation to make or maintain Eurodollar
Loans either generally or having a particular Interest Period hereunder, then
(a) such Lender shall promptly notify the Borrower and the Administrative Agent
thereof and such Lender’s obligation to make such Eurodollar Loans shall be
suspended (the "Affected Loans”) until such time as such Lender may again make
and maintain such Eurodollar Loans and (b) all Affected Loans which would
otherwise be made by such Lender shall be made instead as ABR Loans (and, if
such Lender so requests by notice to the Borrower and the Administrative Agent,
all Affected Loans of such Lender then outstanding shall be automatically
converted into ABR Loans on the date specified by such Lender in such notice)
and, to the extent that Affected Loans are so made as (or converted into) ABR
Loans, all payments of principal which would otherwise be applied to such
Lender’s Affected Loans shall be applied instead to its ABR Loans.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

49

--------------------------------------------------------------------------------

 

ARTICLE VI
CONDITIONS PRECEDENT
     Section 6.01 Effective Date. This Agreement shall not become effective
until the date on which each of the following conditions is satisfied (or waived
in accordance with Section 12.02) to the satisfaction of the Administrative
Agent in form and substance:
          (a) The Administrative Agent, the Arrangers and the Lenders shall have
received all fees and other amounts due and payable on or prior to the Effective
Date, including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder.
          (b) The Administrative Agent shall have received a certificate of the
Secretary or an Assistant Secretary of each Loan Party setting forth
(i) resolutions of its board of directors (or its equivalent) with respect to
the authorization of such party to execute and deliver the Loan Documents to
which it is a party and to enter into the transactions contemplated in those
documents, (ii) the officers (or its equivalent) of it (x) who are authorized to
sign the Loan Documents to which it is a party and (y) who will, until replaced
by another officer or officers (or its equivalent) duly authorized for that
purpose, act as its representative for the purposes of signing documents and
giving notices and other communications in connection with this Agreement and
the transactions contemplated hereby, (z) specimen signatures of such authorized
officers (or its equivalent), and (iii) the Organizational Documents of it,
certified as being true and complete. The Administrative Agent and the Lenders
may conclusively rely on such certificate until the Administrative Agent
receives notice in writing from the applicable Loan Party to the contrary.
          (c) The Administrative Agent shall have received certificates of the
appropriate State agencies with respect to the existence, qualification and good
standing of each Loan Party.
          (d) The Administrative Agent shall have received a compliance
certificate which shall be substantially in the form of Exhibit D, duly and
properly executed by a Responsible Officer of the Borrower and dated as of the
date of Effective Date.
          (e) The Administrative Agent shall have received from each party
hereto counterparts (in such number as may be requested by the Administrative
Agent) of this Agreement signed on behalf of such party.
          (f) The Administrative Agent shall have received a certificate of
insurance coverage of the Borrower evidencing that the Loan Parties are carrying
insurance in accordance with Section 7.13.
          (g) The Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower certifying that the Loan Parties have
received all consents and approvals required by Section 7.03, and such consents
and approvals shall be in full force and effect.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

50

--------------------------------------------------------------------------------

 

          (h) The Administrative Agent shall have received duly executed Notes
payable to each Lender that has requested a Note in a principal amount equal to
its Maximum Credit Amount dated as of the date hereof.
          (i) The Administrative Agent shall have received from each party
thereto duly executed counterparts (in such number as may be requested by the
Administrative Agent) of the Resolute Assignment and Assumption Agreement and of
the Security Instruments and applicable amendments thereto, including the
Guaranty and Collateral Agreement and the other Security Instruments described
on Exhibit G. In connection with the execution and delivery of the Security
Instruments and applicable amendments, the Administrative Agent shall:
               (i) be reasonably satisfied that the Security Instruments create
first priority, perfected Liens (subject only to Excepted Liens, but subject to
the proviso at the end of such definition) on proved Oil and Gas Properties
constituting (A) one hundred percent (100%) of the Loan Parties’ proved Oil and
Gas Properties located in San Juan County, Utah and (B) in the aggregate, at
least eighty percent (80%) of the total value of the proved Oil and Gas
Properties evaluated in the Initial Reserve Report;
               (ii) have received any notes or instruments to be pledged duly
endorsed to the Administrative Agent; and
               (iii) have received certificates, together with undated, blank
stock powers for each such certificate, representing all of the issued and
outstanding Equity Interests of each of the Loan Parties (if certificated) other
than the Borrower.
          (j) The Administrative Agent (acting on behalf of the Lenders),
Resolute Aneth and NNOG, shall have executed and delivered a Ratification to the
Subordination Agreement, in form and substance reasonably satisfactory to the
Administrative Agent.
          (k) The Administrative Agent shall be reasonably satisfied with
(i) title to the proved Oil and Gas Properties of the Loan Parties and (ii) the
environmental condition of the Oil and Gas Properties of the Loan Parties.
          (l) The Administrative Agent shall have received, and be reasonably
satisfied with, the Initial Reserve Report, accompanied by a certificate signed
by a Responsible Officer of the Borrower covering the matters described in
Section 8.12(c).
          (m) The Administrative Agent shall have received appropriate UCC
search certificates reflecting no prior Liens encumbering the Properties of the
Loan Parties for all jurisdictions requested by the Administrative Agent, other
than those being assigned or released on or prior to the Effective Date or Liens
permitted by Section 9.03.
          (n) The Administrative Agent shall have received (i) an opinion
addressed to the Administrative Agent and the Lenders from (A) Thompson &
Knight, LLP, special counsel to the Loan Parties, (B) James M. Piccone, general
counsel of the Loan Parties, (C) R. Dennis Ickes, special counsel to the Loan
Parties, and (D) Wyoming counsel to the Loan Parties; and (ii)
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

51

--------------------------------------------------------------------------------

 

a memo addressed to the Administrative Agent and the Lenders from R. Dennis
Ickes addressing certain legal issues concerning Navajo lands.
          (o) The Administrative Agent shall have received acceptable evidence
of the appointment of National Corporate Research, Ltd. as authorized agent for
service of process on each Loan Party under each Loan Document to which it is a
party.
          (p) The Administrative Agent shall have received such other documents
as the Administrative Agent or its special counsel may reasonably request.
          (q) The Administrative Agent shall have received an executed
counterpart of the Account Designation Letter.
          (r) The Administrative Agent shall have received all information and
instructions requested for the flow of funds memorandum.
The Administrative Agent shall notify the Lenders of the Effective Date, and
such notice shall be conclusive and binding.
     Section 6.02 Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing (including the initial funding), and of
each Issuing Bank to issue, amend, renew or extend any Letter of Credit, is
subject to the satisfaction of the following conditions:
          (a) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.
          (b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no event, development or condition that has had or could
reasonably be expected to have a Material Adverse Effect shall have occurred.
          (c) The representations and warranties of the Loan Parties set forth
in this Agreement and in the other Loan Documents shall be true and correct on
and as of the date of such Borrowing or the date of issuance, amendment, renewal
or extension of such Letter of Credit, as applicable, except to the extent any
such representations and warranties are expressly limited to an earlier date, in
which case, on and as of the date of such Borrowing or the date of issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, such
representations and warranties shall continue to be true and correct as of such
specified earlier date.
          (d) The making of such Loan or the issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, would not conflict with, or
cause any Lender or any Issuing Bank to violate or exceed, any applicable
Governmental Requirement, and no Change in Law shall have occurred, and no
litigation shall be pending or, to the knowledge of the Borrower, threatened in
writing, which does or, with respect to any litigation, seeks to,
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

52

--------------------------------------------------------------------------------

 

enjoin, prohibit or restrain, the making or repayment of any Loan, the issuance,
amendment, renewal, extension or repayment of any Letter of Credit or any
participations therein or the consummation of the transactions contemplated by
this Agreement or any other Loan Document.
          (e) The receipt by the Administrative Agent of a Borrowing Request in
accordance with Section 2.03 or a request for a Letter of Credit in accordance
with Section 2.08(b), as applicable.
Each request for a Borrowing and each issuance, amendment, renewal or extension
of any Letter of Credit shall be deemed to constitute a representation and
warranty by the Borrower on the date thereof as to the matters specified in
Section 6.02(a) through (e).
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
     Each Loan Party represents and warrants to the Lenders that:
     Section 7.01 Organization; Powers. Each Loan Party is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority, and has all material
governmental licenses, authorizations, consents and approvals necessary, to own
its assets and to carry on its business as now conducted, and is qualified to do
business in, and is in good standing in, every jurisdiction where such
qualification is required, except where failure to have such power, authority,
licenses, authorizations, consents, approvals and qualifications could not
reasonably be expected to have a Material Adverse Effect.
     Section 7.02 Authority; Enforceability. The Transactions are within each
Loan Party’s corporate, partnership or LLC powers and have been duly authorized
by all necessary action (including, without limitation, any action required to
be taken by any class of directors (or its equivalent) or owners or other
Person, whether interested or disinterested, in order to ensure the due
authorization of the Transactions). Each Loan Document to which a Loan Party is
a party has been duly executed and delivered by such Loan Party and constitutes
a legal, valid and binding obligation of such Loan Party, as applicable,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
     Section 7.03 Approvals; No Conflicts. The Transactions (a) do not require
any consent or approval of, registration or filing with, or any other action by,
any Governmental Authority or any other third Person (including shareholders or
any class of directors, whether interested or disinterested, of any Loan Party
or any other Person), nor is any such consent, approval, registration, filing or
other action necessary for the validity or enforceability of any Loan Document
or the consummation of the transactions contemplated thereby, except such as
have been obtained or made and are in full force and effect other than (i) the
recording and filing of the Security Instruments as required by this Agreement,
(ii) those third party approvals or consents which, if not made or obtained,
would not cause a Default hereunder and could not reasonably be expected to have
a Material Adverse Effect and (iii) those consents of Governmental Authorities
that are customarily obtained after the Effective Date, including
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

53

--------------------------------------------------------------------------------

 

without limitation those consents set forth on Schedule 7.03, (b) will not
violate any applicable law or regulation of any Loan Party or any order of any
Governmental Authority in any way that could reasonably be expected to have a
Material Adverse Effect, (c) will not violate or result in a default under any
Organizational Document of any Loan Party or any indenture or other agreement
regarding Debt of $1,000,000 or more binding upon any Loan Party or its
Properties, or give rise to a right thereunder to require any payment to be made
by any Loan Party, (d) will not violate or result in a default under any other
agreement or instrument binding upon any Loan Party or its Properties, or give
rise to a right thereunder to require any payment to be made by any Loan Party,
in any way that could reasonably be expected to have a Material Adverse Effect,
and (e) will not result in the creation or imposition of any Lien on any
Property of any Loan Party (other than the Liens created by the Loan Documents).
     Section 7.04 Financial Condition; No Material Adverse Change.
          (a) The Borrower has heretofore furnished to the Lenders (i) audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries for the fiscal year ended December 31, 2008, and (ii) unaudited
combined financial statements of the Borrower and its Consolidated Subsidiaries
for the fiscal quarter ending September 30, 2009, all in form and substance
reasonably satisfactory to the Administrative Agent. Such financial statements
described in clauses (i) and (ii) above present fairly, in all material
respects, the financial position and results of operations and cash flows of
such Persons as of such dates and for such periods in accordance with GAAP,
subject to year-end audit adjustments and the absence of footnotes in the case
of the unaudited quarterly financial statements.
          (b) Since the date of the last delivery of financial statements
pursuant to Section 7.04(a) or Section 8.01, (i) there has been no event,
development or circumstance that has had or could reasonably be expected to have
a Material Adverse Effect and (ii) the business of each Loan Party and each
Restricted Subsidiary has been conducted in the ordinary course consistent with
past business practices.
          (c) Except as set forth on Schedule 7.21, on the most recent financial
statement delivered pursuant to Section 7.04(a) or Section 8.01(a) or (b), or in
a certificate delivered pursuant to Section 8.01(e), no Loan Party has any Debt
(including Disqualified Capital Stock) not permitted under Section 9.02, or any
material contingent liabilities, material off-balance sheet liabilities,
material and unusual forward or long-term commitments, or unrealized or
anticipated material losses from any unfavorable commitments.
     Section 7.05 Litigation.
          (a) Except as set forth on Schedule 7.05, there are no actions, suits,
investigations or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of any Loan Party, threatened in
writing against or affecting any Loan Party or any Subsidiary (i) as to which
there is a reasonable possibility of an adverse determination that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect or (ii) that involve any Loan Document or
the Transactions.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

54

--------------------------------------------------------------------------------

 

          (b) Since the date of this Agreement, there has been no change in the
status of the matters disclosed in Schedule 7.05 that, individually or in the
aggregate, has resulted in a Material Adverse Effect or has resulted in a
reasonable possibility of an adverse determination that, if adversely
determined, could reasonably be expected, individually, or in the aggregate, to
result in a Material Adverse Effect.
     Section 7.06 Environmental Matters. Except as could not reasonably be
expected to have a Material Adverse Effect (or with respect to (c), (d) and
(e) below, where the failure to take such actions could not be reasonably
expected to have a Material Adverse Effect):
          (a) neither any Property of a Loan Party or any Subsidiary nor the
operations conducted thereon violate any order or requirement of any court or
Governmental Authority or any Environmental Laws.
          (b) no Property of a Loan Party or any Subsidiary nor the operations
currently conducted thereon or, to the knowledge of any Loan Party, by any prior
owner or operator of such Property or operation, are in violation of or subject
to any existing, pending or threatened action, suit, investigation, inquiry or
proceeding by or before any court or Governmental Authority or to any remedial
obligations under Environmental Laws.
          (c) all notices, permits, licenses, exemptions, approvals or similar
authorizations, if any, required to be obtained or filed in connection with the
operation or use of any and all Property of each Loan Party and each Subsidiary,
including, without limitation, past or present treatment, storage, disposal or
release of a hazardous substance, oil and gas waste or solid waste into the
environment, have been duly obtained or filed, and each Loan Party and each
Subsidiary are in compliance with the terms and conditions of all such notices,
permits, licenses and similar authorizations.
          (d) to the knowledge of each Loan Party, all hazardous substances,
solid waste and oil and gas waste, if any, generated at any and all Property of
each Loan Party or any Subsidiary have in the past been transported, treated and
disposed of in accordance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the
environment, and in transporting, treating or disposing of the same all such
transport carriers and treatment and disposal facilities have been and are
operating in compliance with Environmental Laws so as not to pose an imminent
and substantial endangerment to public health or welfare or the environment, and
are not the subject of any existing, pending or threatened action, investigation
or inquiry by any Governmental Authority in connection with any Environmental
Laws.
          (e) each Loan Party has taken all steps reasonably necessary to
determine and has determined that no oil, hazardous substances, solid waste or
oil and gas waste, have been disposed of or otherwise released and there has
been no threatened release of any oil, hazardous substances, solid waste or oil
and gas waste on or to any Property of each Loan Party or any Subsidiary except
in compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

55

--------------------------------------------------------------------------------

 

          (f) to the extent applicable, all Property of each Loan Party and each
Subsidiary currently satisfies all design, operation, and equipment requirements
imposed by the OPA, and each Loan Party does not have any reason to believe that
such Property, to the extent subject to the OPA, will not be able to maintain
compliance with the OPA requirements during the term of this Agreement.
          (g) no Loan Party nor any Subsidiary has any known contingent
liability or Remedial Work in connection with any release or threatened release
of any oil, hazardous substance, solid waste or oil and gas waste into the
environment.
     Section 7.07 Compliance with the Laws and Agreements; No Defaults.
          (a) Each Loan Party and each Restricted Subsidiary is in compliance
with all Governmental Requirements applicable to it or its Property and all
agreements and other instruments binding upon it or its Property, and possesses
all licenses, permits, franchises, exemptions, approvals and other governmental
authorizations necessary for the ownership of its Property and the conduct of
its business, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
          (b) No Loan Party is in default nor has any event or circumstance
occurred which, but for the expiration of any applicable grace period or the
giving of notice, or both, would constitute a default or would require any Loan
Party to Redeem or make any offer to Redeem under any indenture, note, credit
agreement or instrument pursuant to which any Material Debt is outstanding or by
which the Loan Party or any of their Properties is bound.
          (c) No Default has occurred and is continuing.
     Section 7.08 Investment Company Act. No Loan Party nor any Subsidiary is an
“investment company” or a company “controlled” by an “investment company,”
within the meaning of, or subject to regulation under, the Investment Company
Act of 1940, as amended.
     Section 7.09 [Reserved].
     Section 7.10 Taxes. Each Loan Party and each Subsidiary has timely filed or
caused to be filed all Tax returns and reports required to have been filed and
has paid or caused to be paid all Taxes required to have been paid by it, except
(a) Taxes that are being contested in good faith by appropriate proceedings and
for which each Loan Party or such Subsidiary, as applicable, has set aside on
its books adequate reserves in accordance with GAAP or (b) to the extent that
the failure to do so could not reasonably be expected to result in a Material
Adverse Effect. The charges, accruals and reserves on the books of each Loan
Party and each Subsidiary in respect of Taxes and other governmental charges
are, in the reasonable opinion of such Loan Party, adequate. No Tax Lien has
been filed and, to the knowledge of each Loan Party, no claim is being asserted
with respect to any such Tax or other such governmental charge.
     Section 7.11 ERISA.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

56

--------------------------------------------------------------------------------

 

          (a) Each Loan Party, each Subsidiary and each ERISA Affiliate have
complied in all material respects with ERISA and, where applicable, the Code
regarding each Plan.
          (b) Each Plan is, and has been, maintained in substantial compliance
with ERISA and, where applicable, the Code.
          (c) Except as could not reasonably be expected to result in liability
in excess of $500,000, no act, omission or transaction has occurred which could
result in imposition on each Loan Party, any Subsidiary or any ERISA Affiliate
(whether directly or indirectly) of (i) either a civil penalty assessed pursuant
to subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed pursuant
to Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty
liability damages under section 409 of ERISA.
          (d) No Plan (other than a defined contribution plan) or trust created
under any such Plan has been terminated since September 2, 1974. No liability to
the PBGC (other than for the payment of current premiums which are not past due)
by any Loan Party, any Subsidiary or any ERISA Affiliate has been or is expected
by any Loan Party, any Subsidiary or any ERISA Affiliate to be incurred with
respect to any Plan. No ERISA Event with respect to any Plan has occurred.
          (e) Full payment when due has been made of all amounts which each Loan
Party, each Subsidiary or each ERISA Affiliate is required under the terms of
each Plan or applicable law to have paid as contributions to such Plan as of the
date hereof, and no funding deficiency (as defined in section 302 of ERISA and
section 412 of the Code), whether or not waived, exists with respect to any
Plan.
          (f) The actuarial present value of the benefit liabilities under each
Plan does not, as of the end of each Loan Party’s most recently ended fiscal
year, exceed the current value of the assets (computed on a plan termination
basis in accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities. The term “actuarial present value of the benefit
liabilities” shall have the meaning specified in section 4041 of ERISA.
          (g) No Loan Party, no Subsidiary and no ERISA Affiliate sponsors,
maintains, or contributes to an employee welfare benefit plan, as defined in
section 3(1) of ERISA, including, without limitation, any such plan maintained
to provide benefits to former employees of such entities, that may not be
terminated by a Loan Party, a Subsidiary or an ERISA Affiliate in its sole
discretion at any time without any material liability to any Loan Party.
          (h) No Loan Party, no Subsidiary and no ERISA Affiliate sponsors,
maintains or contributes to, or has at any time in the six-year period preceding
the date hereof sponsored, maintained or contributed to, any Multiemployer Plan.
          (i) No Loan Party, no Subsidiary and no ERISA Affiliate has provided
security under section 436 of the Code that has not been released with respect
to a Plan.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

57

--------------------------------------------------------------------------------

 

     Section 7.12 Disclosure; No Material Misstatements. Each Loan Party has
disclosed to the Administrative Agent and the Lenders all agreements,
instruments and corporate or other restrictions to which it or any Restricted
Subsidiary is subject, and all other matters peculiar to it and known to it,
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. Taken as a whole, none of the other reports,
financial statements, certificates or other information furnished by or on
behalf of any Loan Party to the Administrative Agent or any Lender or any of
their Affiliates in connection with the negotiation of this Agreement or any
other Loan Document or delivered hereunder or under any other Loan Document (as
modified or supplemented by other information so furnished) contain material
misstatements of fact or omit to state material facts necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, prospect information, geological and geophysical data and
engineering projections, each Loan Party represents only that such information
was prepared in good faith based upon assumptions believed to be reasonable at
the time. To the knowledge of each Loan Party, there is no fact peculiar to such
party or any Subsidiary which could reasonably be expected to have a Material
Adverse Effect or in the future is reasonably likely to have a Material Adverse
Effect and which has not been set forth in this Agreement or the Loan Documents
or the other documents, certificates and statements furnished to the
Administrative Agent or the Lenders by or on behalf of each Loan Party or any
Subsidiary in connection with the transactions contemplated hereby. There are no
statements or conclusions known to any Loan Party in any Reserve Report which
are based upon or include misleading information or fail to take into account
material information regarding the matters reported therein, it being understood
that projections concerning volumes attributable to the Oil and Gas Properties
and production and cost estimates contained in each Reserve Report are
necessarily based upon professional opinions, estimates and projections and that
each Loan Party and each Subsidiary do not warrant that such opinions, estimates
and projections will ultimately prove to have been accurate.
     Section 7.13 Insurance. Each Loan Party has (a) all insurance policies
sufficient for the compliance by each of them with all material Governmental
Requirements and all material agreements and (b) insurance coverage in at least
amounts and against such risk (including, without limitation, public liability)
that are usually insured against by companies similarly situated and engaged in
the same or a similar business for the assets and operations of each Loan Party.
The Administrative Agent and the Lenders have been named as additional insureds
in respect of such liability insurance policies and the Administrative Agent has
been named as loss payee with respect to Property loss insurance.
     Section 7.14 Restriction on Liens. No Loan Party is a party to any material
agreement or arrangement (other than leases creating Liens permitted by
Section 9.03(b) or (c), but then only on the Property subject of such lease), or
subject to any order, judgment, writ or decree, which either restricts or
purports to restrict its ability to grant Liens to the Administrative Agent and
the Lenders on or in respect of their Properties to secure the Indebtedness and
the Loan Documents.
     Section 7.15 Subsidiaries. Except as set forth on Schedule 7.15 or as
disclosed in writing to the Administrative Agent (which shall promptly furnish a
copy to the Lenders), which shall be a supplement to Schedule 7.15, (a) each
Loan Party has no Subsidiaries, (b) each
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

58

--------------------------------------------------------------------------------

 

Subsidiary is a Wholly-Owned Subsidiary and (c) no Loan Party nor any Subsidiary
of the Borrower has any Foreign Subsidiaries. Schedule 7.15 indentifies each
Subsidiary as either a Restricted Subsidiary or an Unrestricted Subsidiary.
     Section 7.16 Location of Business and Offices. The jurisdiction of
organization, the name as listed in the public records of the state of
organization and the organizational identification number of each Loan Party is
set forth on Schedule 7.16 (or, in each case, as set forth in a notice delivered
to the Administrative Agent pursuant to Section 8.01(m) in accordance with
Section 12.01). Each Loan Party’s principal place of business is located at the
address specified in Section 12.01 (or as set forth in a notice delivered
pursuant to Section 8.01(m) and Section 12.01(c)).
     Section 7.17 Properties; Titles, Etc.
          (a) Except as disclosed in Schedule 7.17, the Loan Parties have good
and defensible title in all material respects to the proved Oil and Gas
Properties evaluated in the most recently delivered Reserve Report (excluding,
to the extent this representation and warranty is deemed to be made after the
Effective Date, any such Oil and Gas Properties sold or transferred in
compliance with Section 9.12) and good title in all material respects to all
their personal Properties, in each case, free and clear of all Liens except
Liens permitted by Section 9.03. After giving full effect to the Excepted Liens,
each Loan Party specified as the owner owns the net interests in production
attributable to the Hydrocarbon Interests as reflected in the most recently
delivered Reserve Report, and the ownership of such Properties shall not in any
material respect obligate any Loan Party to bear the costs and expenses relating
to the maintenance, development and operations of each such Property in an
amount in excess of the working interest of each Property set forth in the most
recently delivered Reserve Report that is not offset by a corresponding
proportionate increase in the Loan Party’s net revenue interest in such
Property.
          (b) All material leases and agreements necessary for the conduct of
the business of each Loan Party are valid and subsisting, in full force and
effect, and there exists no default or event or circumstance which with the
giving of notice or the passage of time or both would give rise to a default
under any such lease or leases, which could reasonably be expected to result in
a Material Adverse Effect.
          (c) The rights and Properties presently owned, leased or licensed by
each Loan Party including, without limitation, all easements and rights of way,
include all rights and Properties necessary to permit each Loan Party to conduct
its business in all material respects in the same manner as such business has
been conducted prior to the date hereof.
          (d) All of the material Properties of each Loan Party which are
reasonably necessary for the operation of their businesses are in good working
condition and are maintained in accordance with prudent business standards.
          (e) Each Loan Party owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual Property material to its
business, and the use thereof by each Loan Party does not infringe upon the
rights of any other Person, except for any such infringements that, individually
or in the aggregate, could not reasonably be expected to result in
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

59

--------------------------------------------------------------------------------

 

a Material Adverse Effect. Each Loan Party either owns or has valid licenses or
other rights to use all databases, geological data, geophysical data,
engineering data, seismic data, maps, interpretations and other technical
information used in their businesses as presently conducted, subject to the
limitations contained in the agreements governing the use of the same, which
limitations are customary for companies engaged in the business of the
exploration and production of Hydrocarbons, with such exceptions as could not
reasonably be expected to have a Material Adverse Effect.
     Section 7.18 Maintenance of Properties. Except for such acts or failures to
act as could not be reasonably expected to have a Material Adverse Effect,
(a) the proved Oil and Gas Properties of the Loan Properties (and Properties
unitized therewith) have been maintained, operated and developed in a good and
workmanlike manner and in conformity with all Government Requirements and in
conformity with the provisions of all leases, subleases or other contracts
comprising a part of the Hydrocarbon Interests and other contracts and
agreements forming a part of the Oil and Gas Properties of the Loan Parties, and
(b) the other Oil and Gas Properties of the Loan Parties (and Properties
unitized therewith) have been held by the Loan Parties in conformity with all
Government Requirements and in conformity with the provisions of all leases,
subleases and other contracts and agreements forming a part of the Oil and Gas
Properties of the Loan Parties. Specifically in connection with the foregoing,
except for those as could not be reasonably expected to have a Material Adverse
Effect, (i) no proved Oil and Gas Property of the Loan Parties is subject to
having allowable production reduced below the full and regular allowable
(including the maximum permissible tolerance) because of any overproduction
(whether or not the same was permissible at the time) and (ii) to the knowledge
of each Loan Party, none of the wells comprising a part of the proved Oil and
Gas Properties (or Properties unitized therewith) of the Loan Parties is
deviated from the vertical more than the maximum permitted by Government
Requirements, and such wells are, in fact, bottomed under and are producing
from, and the well bores are wholly within, the proved Oil and Gas Properties
(or in the case of wells located on Properties unitized therewith, such unitized
Properties) of the Loan Parties. All pipelines, wells, gas processing plants,
platforms and other material improvements, fixtures and equipment owned in whole
or in part by each Loan Party that are necessary to conduct normal operations
are being maintained in a state adequate to conduct normal operations, and with
respect to such of the foregoing that are operated by each Loan Party, in a
manner consistent with each Loan Party’s past practices (other than those the
failure of which to maintain in accordance with this Section 7.18 could not
reasonably be expect to have a Material Adverse Effect).
     Section 7.19 Gas Imbalances, Prepayments. Except as set forth on
Schedule 7.19 or as set forth on the most recent certificate delivered pursuant
to Section 8.12(c), on a net basis there are no gas imbalances, take or pay or
other prepayments which would require any Loan Party to deliver Hydrocarbons
produced from the proved Oil and Gas Properties at some future time without then
or thereafter receiving full payment therefor exceeding 500 mmcf equivalent in
the aggregate for all Loan Parties.
     Section 7.20 Marketing of Production. Except for contracts listed and in
effect on the date hereof on Schedule 7.20 or thereafter either disclosed in
writing to the Administrative Agent or included in the most recently delivered
Reserve Report (with respect to all of which contracts
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

60

--------------------------------------------------------------------------------

 

each Loan Party represents that it is receiving a price for all production sold
thereunder which is computed substantially in accordance with the terms of the
relevant contract and is not having deliveries curtailed substantially below the
subject Property’s delivery capacity), no material agreements exist which are
not cancelable on sixty (60) days notice or less without penalty or detriment
for the sale of production from its Hydrocarbons (including, without limitation,
calls on or other rights to purchase, production, whether or not the same are
currently being exercised) that (a) pertain to the sale of production at a fixed
price and (b) have a maturity or expiry date of longer than six (6) months.
     Section 7.21 Hedging Agreements. Schedule 7.21 sets forth, as of the date
hereof, a true and complete list of all Hedging Agreements of the Loan Parties,
the material terms thereof (including the type, term, effective date,
termination date and notional amounts or volumes), all credit support agreements
relating thereto other than the Loan Documents (including any margin required or
supplied) and the counterparty to each such agreement. After the date hereof,
each report that has been delivered by the Borrower pursuant to Section 8.01(e)
sets forth the same information, as well as any additional information required
by Section 8.01(e), as of the date(s) specified therein.
     Section 7.22 Use of Loans and Letters of Credit. The proceeds of the Loans
and the Letters of Credit shall be used to refinance the loans outstanding under
the Existing Credit Agreement, to pay fees, commissions and expenses in
connection with the transactions contemplated hereby, and to finance ongoing
working capital and for other general corporate purposes of the Borrower and its
Restricted Subsidiaries, including the acquisition of exploration and production
and midstream properties and to benefit the Unrestricted Subsidiaries as allowed
by Section 9.05. The Loan Parties and the Subsidiaries are not engaged
principally, or as one of its or their important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying margin stock (within the meaning of Regulation T, U or X of
the Board). No part of the proceeds of any Loan or Letter of Credit will be used
for any purpose which violates the provisions of Regulations T, U or X of the
Board.
     Section 7.23 Solvency. Before and after giving effect to the transactions
contemplated hereby, (a) the aggregate assets, at a fair valuation, of the Loan
Parties, taken as a whole, will exceed the aggregate Debt of the Loan Parties on
a consolidated basis, as the Debt becomes absolute and matures, (b) each of the
Loan Parties will not have incurred or intended to incur, and will not believe
that it will incur, Debt beyond its ability to pay such Debt as such Debt
becomes absolute and matures and (c) each of the Loan Parties will not have (and
will have no reason to believe that it will have thereafter) unreasonably small
capital for the conduct of its business.
ARTICLE VIII
AFFIRMATIVE COVENANTS
     Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents shall have been paid in full and all Letters of
Credit shall have expired or terminated and all LC Disbursements shall have been
reimbursed, each Loan Party covenants and agrees with the Lenders that:
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

61

--------------------------------------------------------------------------------

 

     Section 8.01 Financial Statements; Ratings Change; Other Information. The
Borrower will furnish to the Administrative Agent for further distribution to
each Lender:
          (a) Annual Financial Statements. As soon as available, but in any
event in accordance with then applicable law and not later than the earlier to
occur of (i) the fifth (5th) Business Day after the Borrower has filed its
annual financial statements with the SEC and (ii) the date that is one hundred
twenty (120) days after the end of each fiscal year of the Borrower, its audited
consolidated (and unaudited consolidating) financial statements including the
balance sheet and related statements of operations, equity and cash flows as of
the end of and for such year, setting forth in each case in comparative form,
the figures for the previous fiscal year, (i) all (other than any such
consolidating financial statements) reported on by KPMG, LLP or another firm of
independent public accountants proposed by the Borrower and approved by the
Administrative Agent (without a “going concern” or like qualification or
exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations of
the Borrower and its Consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied and (ii) in the case of such unaudited
consolidating financial statements, certified by a Financial Officer as
presenting fairly in all material respects the financial condition of each such
Person reported.
          (b) Quarterly Financial Statements. As soon as available, but in any
event in accordance with then applicable law and not later than the earlier to
occur of (i) the fifth (5th) Business Day after the Borrower files its quarterly
financial statements with the SEC and (ii) sixty (60) days after the end of each
of the first three fiscal quarters of each fiscal year of the Borrower, its
consolidated financial statements including the balance sheet and related
statements of operations, equity and cash flows as of the end of and for such
fiscal quarter and the then elapsed portion of the fiscal year, setting forth in
each case in comparative form, the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by a Financial Officer as presenting fairly in all
material respects the financial condition and results of operations of the
Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes.
          (c) Certificate of Financial Officer – Compliance. Concurrently with
any delivery of financial statements under Section 8.01(a) or Section 8.01(b), a
certificate of a Financial Officer in substantially the form of Exhibit D hereto
(i) certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Section 8.13(b) and Section 9.01, (iii) stating
whether any change in GAAP or in the application thereof has occurred since
December 31, 2008 and, if any such change has occurred, specifying the effect of
such change on the financial statements accompanying such certificate, and
(iv) giving notice of any change in the location of any Loan Party’s chief
executive office or principal place of business, in any Loan Party’s federal
taxpayer identification number, or in any Loan Party’s Organizational Documents.
          (d) Certificate of Financial Officer — Consolidating Information. If,
at any time, all of the Consolidated Subsidiaries of the Borrower are not
Consolidated Restricted
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

62

--------------------------------------------------------------------------------

 

Subsidiaries, then concurrently with any delivery of financial statements under
Section 8.01(a) or Section 8.01(b), a certificate of a Financial Officer setting
forth consolidating spreadsheets that show all Unrestricted Subsidiaries that
are Consolidated Subsidiaries and the eliminating entries, in such form as would
be presentable to the auditors of the Borrower.
          (e) Certificate of Financial Officer – Hedging Agreements.
Concurrently with the delivery of each Reserve Report hereunder, a certificate
of a Financial Officer, in form and substance reasonably satisfactory to the
Administrative Agent, setting forth as of a recent date, a true and complete
list of all Hedging Agreements of the Loan Parties, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net mark-to-market value therefor, any new credit support
agreements (other than the Loan Documents) relating thereto not listed on
Schedule 7.21, any margin required or supplied under any credit support
document, and the counterparty to each such agreement.
          (f) Certificate of Insurer – Insurance Coverage. Concurrently with any
delivery of financial statements under Section 8.01(a), a certificate of
insurance coverage from each insurer with respect to the insurance required by
Section 8.07, in form and substance satisfactory to the Administrative Agent,
and, if requested by the Administrative Agent, copies of all of the applicable
policies.
          (g) Other Accounting Reports. Promptly upon receipt thereof, a copy of
each other report or letter (except standard and customary correspondence)
submitted to any Loan Party by independent accountants in connection with any
annual, interim or special audit made by them of the books of a Loan Party or
any Subsidiary, and a copy of any response by any Loan Party or any Subsidiary,
or the board of directors (or its equivalent) of any Loan Party or any
Subsidiary, to such letter or report.
          (h) SEC and Other Filings; Reports to Shareholders. Promptly after the
same become publicly available, copies of all periodic and other reports, proxy
statements and other materials filed by any Loan Party or any Subsidiary with
the SEC, or with any national securities exchange, or distributed by any Loan
Party to its shareholders generally, as the case may be.
          (i) Notices Under Material Instruments. Promptly after the furnishing
thereof, copies of any financial statement, report or notice furnished to or by
any Person pursuant to the terms of any preferred stock designation, indenture,
loan or credit or other similar agreement, other than this Agreement and not
otherwise required to be furnished to the Lenders pursuant to any other
provision of this Section 8.01.
          (j) Lists of Purchasers. Concurrently with the delivery of any Reserve
Report to the Administrative Agent pursuant to Section 8.12, a list of Persons
purchasing Hydrocarbons from any Loan Party accounting for at least ninety-five
percent (95%) of the revenues resulting from the sale of all Hydrocarbons of all
the Loan Parties in the one-year period prior to the “as of” date of such
Reserve Report.
          (k) Notice of Sales of Oil and Gas Properties. In the event any Loan
Party intends to sell, transfer, assign or otherwise dispose of any Borrowing
Base Properties or any Equity Interests in any Loan Party that owns Borrowing
Base Properties for consideration in
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

63

--------------------------------------------------------------------------------

 

excess of $15,000,000, prior written notice of such disposition, the price
thereof and the anticipated date of closing.
          (l) Notice of Casualty Events. Prompt written notice, and in any event
within five (5) Business Days, of the occurrence of any Casualty Event or the
commencement of any action or proceeding that could reasonably be expected to
result in a Casualty Event.
          (m) Information Regarding Loan Parties. (i) Prompt written notice of
(and in any event within ten (10) Business Days after) any change in (A) any
Loan Party’s name or (B) any Loan Party’s identity or corporate structure or
jurisdiction of organization, and (ii) prompt written notice of (and in any
event within thirty (30) days after) any change in (A) any trade name used to
identify any Loan Party in the conduct of its business or in the ownership of
its Properties, (B) the location of any Loan Party’s chief executive office or
principal place of business, or (C) any Loan Party’s federal taxpayer
identification number.
          (n) Production Report and Lease Operating Statements. Within ninety
(90) days after the end of each fiscal quarter, a report setting forth, for each
calendar month during the then current fiscal year to date, the volume of
production and sales attributable to production (and the prices at which such
sales were made and the revenues derived from such sales) for each such calendar
month from the proved Oil and Gas Properties of the Loan Parties, and setting
forth the related ad valorem, severance and production taxes and lease operating
expenses attributable thereto and incurred for each such calendar month.
          (o) Notices of Certain Changes. Promptly, but in any event within five
(5) Business Days after the execution thereof, copies of any material amendment,
modification or supplement to the Organizational Documents of any Loan Party.
          (p) Other Requested Information. Promptly following any request
therefor, such other information regarding the operations, business affairs and
financial condition of any Loan Party (including, without limitation, any Plan
or Multiemployer Plan and any reports or other information required to be filed
under ERISA), or compliance with the terms of this Agreement or any other Loan
Document, as the Administrative Agent may reasonably request.
     Section 8.02 Notices of Material Events. The Loan Parties will furnish to
the Administrative Agent written notice of the following promptly after any
Responsible Officer becomes aware of the following (a copy of which notice the
Administrative Agent will forward to the Lenders):
          (a) the occurrence of any Default;
          (b) the filing or commencement of, or the threat in writing of, any
action, suit, proceeding, investigation or arbitration by or before any
arbitrator or Governmental Authority against any Loan Party or any of its
Subsidiaries not previously disclosed in writing to the Administrative Agent or
any material adverse development in any action, suit, proceeding, investigation
or arbitration previously disclosed to the Administrative Agent that, if
adversely determined, could reasonably be expected to result in liability of a
Loan Party in excess of $3,000,000;
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

64

--------------------------------------------------------------------------------

 

          (c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of a Loan Party in an aggregate amount exceeding $3,000,000; and
          (d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer of such Loan Party setting forth the details
of the event or development requiring such notice and any action taken or
proposed to be taken with respect thereto.
     Section 8.03 Existence; Conduct of Business. Each Loan Party will do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges and
franchises material to the conduct of its business and maintain, if necessary,
its qualification to do business in each other jurisdiction in which its Oil and
Gas Properties are located or the ownership of its Properties requires such
qualification, except where the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect; provided that the foregoing shall
not prohibit any merger, consolidation, liquidation or dissolution permitted
under Section 9.11.
     Section 8.04 Payment of Obligations. Each Loan Party will pay its
obligations, including Tax liabilities of such Loan Party, before the same shall
become delinquent or in default, except where (a) the validity or amount thereof
is being contested in good faith by appropriate proceedings and the Loan Party
has set aside on its books adequate reserves with respect thereto in accordance
with GAAP or (b) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect or result in the
seizure or levy of any material Property of such Loan Party.
     Section 8.05 Performance of Obligations under Loan Documents. The Borrower
will pay the Loans and the Notes according to the reading, tenor and effect
thereof, and each Loan Party will do and perform every act and discharge all of
the obligations to be performed and discharged by them under the Loan Documents,
including, without limitation, this Agreement, at the time or times and in the
manner specified.
     Section 8.06 Operation and Maintenance of Properties. Except, in each case,
where the failure to comply could not reasonably be expected to have a Material
Adverse Effect, each Loan Party, at its own expense, will:
          (a) (i) operate its proved Oil and Gas Properties and other material
Properties or cause such proved Oil and Gas Properties and other material
Properties to be operated in a careful and efficient manner in accordance with
the practices of the industry, (ii) with respect to its Oil and Gas Properties
and other material Properties, comply with all applicable contracts and
agreements and with all Governmental Requirements, including, without
limitation, applicable proration requirements and Environmental Laws, and all
applicable laws, rules and regulations of every other Governmental Authority
from time to time constituted to regulate the development and operation of its
proved Oil and Gas Properties and the production and sale of Hydrocarbons and
other minerals therefrom.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

65

--------------------------------------------------------------------------------

 

          (b) keep and maintain all Property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted
preserve and maintain and keep in good repair, working order and efficiency
(ordinary wear and tear excepted) all of its material producing Oil and Gas
Properties and other material Properties, including, without limitation, all
equipment, machinery and facilities.
          (c) promptly pay and discharge, or make reasonable and customary
efforts to cause to be paid and discharged, all delay rentals, royalties,
expenses and indebtedness accruing under the leases or other agreements
affecting or pertaining to its proved Oil and Gas Properties and will do all
other things necessary to keep unimpaired their rights with respect thereto and
prevent any forfeiture thereof or default thereunder.
          (d) promptly perform or make reasonable and customary efforts to cause
to be performed, in accordance with industry standards, the obligations required
by each and all of the assignments, deeds, leases, sub-leases, contracts and
agreements affecting its interests in its proved Oil and Gas Properties and
other material Properties.
          (e) to the extent such Loan Party is not the operator of any Property,
such Loan Party shall use reasonable efforts to cause the operator to comply
with this Section 8.06.
     Section 8.07 Insurance. Each Loan Party will maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations. The loss payable
clauses or provisions in said insurance policy or policies insuring any of the
Collateral for the Loans shall be endorsed in favor of and made payable to the
Administrative Agent as its interests may appear and such policies shall name
the Administrative Agent and the Lenders as “additional insureds” and provide
that the insurer will endeavor to give at least thirty (30) days prior notice of
any cancellation to the Administrative Agent.
     Section 8.08 Books and Records; Inspection Rights. Each Loan Party will
keep proper books of record and account in which full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities. Each Loan Party will permit any representatives designated by the
Administrative Agent or any Lender, upon reasonable prior notice, to visit and
inspect its Properties, to examine and make extracts from its books and records,
and to discuss its affairs, finances and condition with its officers and
independent accountants, all at such reasonable times during normal business
hours and as often as reasonably requested on an individual and aggregate basis.
     Section 8.09 Compliance with Laws. Each Loan Party will comply with all
laws, rules, regulations and orders of any Governmental Authority applicable to
it or its Property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
     Section 8.10 Environmental Matters.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

66

--------------------------------------------------------------------------------

 

          (a) Each Loan Party shall at its sole expense: (i) comply, and shall
cause its Properties and operations and each Subsidiary and each Subsidiary’s
Properties and operations to comply, with all applicable Environmental Laws, the
breach of which could be reasonably expected to have a Material Adverse Effect;
(ii) not dispose of or otherwise release, and shall cause each Subsidiary not to
dispose of or otherwise release, any oil, oil and gas waste, hazardous
substance, or solid waste on, under, about or from any of its or any
Subsidiaries’ Properties or any other Property to the extent caused by such Loan
Party or any Subsidiary’s operations except in compliance with applicable
Environmental Laws, the disposal or release of which could reasonably be
expected to have a Material Adverse Effect; (iii) timely obtain or file, and
shall cause each of the Subsidiaries to timely obtain or file, all notices,
permits, licenses, exemptions, approvals, registrations or other authorizations,
if any, required under applicable Environmental Laws to be obtained or filed in
connection with the operation or use of its or any Subsidiary’s Properties,
which failure to obtain or file could reasonably be expected to have a Material
Adverse Effect; (iv) promptly commence and diligently prosecute to completion,
and shall cause each Subsidiary to promptly commence and diligently prosecute to
completion, any assessment, evaluation, investigation, monitoring, containment,
cleanup, removal, repair, restoration, remediation or other remedial obligations
(collectively, the “Remedial Work”) in the event any Remedial Work is required
or reasonably necessary under applicable Environmental Laws because of or in
connection with the actual or suspected past, present or future disposal or
other release of any oil, oil and gas waste, hazardous substance or solid waste
on, under, about or from any of its or any Subsidiary’s Properties, which
failure to commence and diligently prosecute to completion could reasonably be
expected to have a Material Adverse Effect; and (v) establish and implement, and
shall cause each Subsidiary to establish and implement, such procedures as may
be necessary to continuously determine and assure that the Loan Parties’ and the
Subsidiaries’ obligations under this Section 8.10(a) are timely and fully
satisfied, which failure to establish and implement could reasonably be expected
to have a Material Adverse Effect
          (b) Each Loan Party will promptly, but in no event later than five
(5) Business Days of the occurrence of a triggering event, notify the
Administrative Agent in writing of any threatened action, investigation or
inquiry by any Governmental Authority or any threatened demand or lawsuit by any
landowner or other third party against such Loan Party or any Subsidiary or
their Properties of which such Loan Party has knowledge in connection with any
applicable Environmental Laws (excluding routine testing and corrective action)
if such Loan Party reasonably anticipates that such action will result in
liability (whether individually or in the aggregate for all Loan Parties and the
Subsidiaries) in excess of $3,000,000, not fully covered by insurance, subject
to normal deductibles.
          (c) Each Loan Party will, and will cause each Subsidiary to, undertake
reasonable environmental audits and tests upon reasonable request by the
Administrative Agent no more than once per year in the absence of any Event of
Default (or as otherwise required to be obtained by the Administrative Agent or
the Lenders by any Governmental Authority), in connection with any future
acquisitions of Oil and Gas Properties or other Properties.
     Section 8.11 Further Assurances.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

67

--------------------------------------------------------------------------------

 

          (a) Each Loan Party at its expense will promptly execute and deliver
to the Administrative Agent all such other documents, agreements and instruments
reasonably requested by the Administrative Agent to comply with, cure any
defects or accomplish the conditions precedent, covenants and agreements of such
Loan Party, as the case may be, in the Loan Documents, including the Notes, or
to further evidence and more fully describe the Collateral intended as security
for the Indebtedness, or to correct any omissions in this Agreement or the
Security Instruments, or to state more fully the obligations secured therein, or
to perfect, protect or preserve any Liens created pursuant to this Agreement or
any of the Security Instruments or the priority thereof, or to make any
recordings, file any notices or obtain any consents, all as may be reasonably
necessary or appropriate, in the sole discretion of the Administrative Agent, in
connection therewith.
          (b) Each Loan Party hereby authorizes the Administrative Agent to file
one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral without the signature of such Loan
Party where permitted by law. A carbon, photographic or other reproduction of
the Security Instruments or any financing statement covering the Collateral or
any part thereof shall be sufficient as a financing statement where permitted by
law.
     Section 8.12 Reserve Reports.
          (a) On or before March 1st and September 1st of each year, commencing
March 1, 2010, the Borrower shall furnish to the Administrative Agent and the
Lenders a Reserve Report. The Reserve Report as of January 1 to be delivered on
March 1 of each year shall be prepared by the Loan Parties and reviewed or
audited by one or more Approved Petroleum Engineers, and the July 1 Reserve
Report to be delivered on September 1 of each year shall be prepared by or under
the supervision of the chief engineer of the Loan Parties.
          (b) In the event of an Interim Redetermination, the Borrower shall
furnish to the Administrative Agent and the Lenders a Reserve Report prepared by
or under the supervision of the chief engineer of the Loan Parties, except that
the Properties covered by such report may, in the discretion of the Borrower, be
limited to the proved Oil and Gas Properties acquired since the last
redetermination of the Borrowing Base. For any Interim Redetermination requested
by the Administrative Agent or the Borrower pursuant to Section 2.07(b)(ii), the
Borrower shall provide such Reserve Report with an “as of” date as required by
the Administrative Agent as soon as possible, but in any event no later than
forty-five (45) days following the receipt of such request.
          (c) With the delivery of each Reserve Report, the Borrower shall
provide to the Administrative Agent and the Lenders a certificate from a
Responsible Officer certifying that to his knowledge, after reasonable inquiry,
in all material respects: (i) the information contained in the Reserve Report
and any other information delivered in connection therewith is based on
information that was prepared in good faith based upon assumptions believed to
be reasonable at the time, (ii) with respect to each July 1 Reserve Report, such
Reserve Report has been prepared in accordance with the procedures used in the
immediately preceding Reserve Report (after taking into account any required
changes to such procedures), (iii) the Loan Parties own good and defensible
title to the proved producing Oil and Gas Properties and good title to the other
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

68

--------------------------------------------------------------------------------

 

proved Oil and Gas Properties, in each case, evaluated in such Reserve Report
and such Properties are free of all Liens except for Liens permitted by
Section 9.03, (iv) except as set forth on an exhibit to the certificate, on a
net basis there are no gas imbalances, take or pay or other prepayments in
excess of the volume specified in Section 7.19 with respect to its proved Oil
and Gas Properties evaluated in such Reserve Report which would require any Loan
Party to deliver Hydrocarbons either generally or produced from such Oil and Gas
Properties at some future time without then or thereafter receiving full payment
therefor, (v) none of their proved Oil and Gas Properties have been sold since
the date of the last Borrowing Base determination except as set forth on an
exhibit to the certificate, which certificate shall list all proved Oil and Gas
Properties sold and in such detail as reasonably required by the Administrative
Agent, (vi) attached to the certificate is a list of all marketing agreements
with a term of more than one month that have been entered into subsequent to the
later of the date hereof or the most recently delivered Reserve Report which the
Borrower could reasonably be expected to have been obligated to list on
Schedule 7.20 had such agreement been in effect on the date hereof and
(vii) attached thereto is a schedule of the proved Oil and Gas Properties of
each Loan Party evaluated by such Reserve Report that are Mortgaged Properties
and demonstrating the percentage of the Borrowing Base that the value of such
Mortgaged Properties represent.
     Section 8.13 Title Information.
          (a) On or before the delivery to the Administrative Agent and the
Lenders of each Reserve Report required by Section 8.12(a), the Borrower will
deliver title information in form and substance acceptable to the Administrative
Agent covering enough of the proved Oil and Gas Properties evaluated by such
Reserve Report that were not included in the immediately preceding Reserve
Report, so that the Administrative Agent shall have received together with title
information previously delivered, satisfactory title information on at least
eighty percent (80%) of the total value of the proved Oil and Gas Properties
evaluated by such Reserve Report.
          (b) If the Borrower has provided title information for additional
Properties under Section 8.13(a), the Borrower shall, within sixty (60) days of
notice from the Administrative Agent that title defects or exceptions exist with
respect to such additional Properties, either (i) cure any such title defects or
exceptions (including defects or exceptions as to priority) which are not
permitted by Section 9.03, (ii) substitute Mortgaged Properties acceptable to
the Administrative Agent with no title defects or exceptions except for Excepted
Liens (other than Excepted Liens described in clauses (e), (g) and (h) of such
definition) having an equivalent value or (iii) deliver title information in
form and substance acceptable to the Administrative Agent so that it shall have
received, together with title information previously delivered, reasonably
satisfactory title information on at least eighty percent (80%) of the total
value of the proved Oil and Gas Properties evaluated by such Reserve Report.
          (c) [Reserved.]
          (d) If the Borrower is unable to cure any title defect requested to be
cured within the 60-day period or the Borrower does not comply with the
requirements to provide acceptable title information covering eighty percent
(80%) of the total value of the proved Oil and Gas Properties evaluated in the
most recent Reserve Report, such default shall not be a Default, but instead the
Administrative Agent and/or the Required Lenders shall have the right to
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

69

--------------------------------------------------------------------------------

 

exercise the following remedy in their sole discretion from time to time, and
any failure to so exercise this remedy at any time shall not be a waiver as to
future exercise of the remedy by any Agent or the Lenders. To the extent that
the Administrative Agent or the Required Lenders are not reasonably satisfied
with title to any Mortgaged Property after the 60-day period has elapsed, such
unacceptable Mortgaged Property shall not count towards the eighty percent (80%)
requirement, and the Administrative Agent may send a notice to the Borrower and
the Lenders that the then outstanding Borrowing Base shall be reduced by an
amount as determined by the Required Lenders to cause the Borrower to be in
compliance with the requirement to provide acceptable title information on
eighty percent (80%) of the total value of the proved Oil and Gas Properties of
the Loan Parties. This new Borrowing Base shall become effective immediately
after receipt of such notice.
     Section 8.14 Additional Collateral; Additional Guarantors.
          (a) In connection with each redetermination of the Borrowing Base, the
Borrower shall review the Reserve Report and the list of current Mortgaged
Properties (as described in Section 8.12(c)(vi)) to ascertain whether the proved
Oil and Gas Properties that constitute Mortgaged Properties represent (i) one
hundred percent (100%) of the proved Oil and Gas Properties held by the Loan
Parties in San Juan County, Utah and (ii) in the aggregate, at least eighty
percent (80%) of the total value of the proved Oil and Gas Properties evaluated
in the most recently completed Reserve Report after giving effect to exploration
and production activities, acquisitions, dispositions and production. In the
event that the proved Oil and Gas Properties that constitute Mortgaged
Properties do not represent (i) one hundred percent (100%) of the proved Oil and
Gas Properties held by the Loan Parties in San Juan County, Utah and (ii) in the
aggregate, at least eighty percent (80%) of the total value of the proved Oil
and Gas Properties evaluated in the most recently completed Reserve Report, then
each Loan Party shall grant to the Administrative Agent as security for the
Indebtedness a first-priority Lien interest (subject only to Excepted Liens of
the type described in clauses (a) to (d) and (f) of the definition thereof, but
subject to the provisos at the end of such definition) on additional proved Oil
and Gas Properties not already subject to a Lien of the Security Instruments
such that after giving effect thereto, the proved Oil and Gas Properties that
constitute Mortgaged Properties will represent (i) one hundred percent (100%) of
the proved Oil and Gas Properties held by the Loan Parties in San Juan County,
Utah and (ii) otherwise, at least eighty percent (80%) of such total value. All
such Liens will be created and perfected by and in accordance with the
provisions of mortgages, deeds of trust, security agreements and financing
statements or other Security Instruments, all in form and substance satisfactory
to the Administrative Agent and in sufficient executed (and acknowledged where
necessary or appropriate) counterparts for recording purposes.
          (b) The Borrower shall promptly cause each Domestic Subsidiary (other
than any Subsidiary classified as such based on any Loan Party or any other
Subsidiary being a general partner thereof, unless such Subsidiary is a
Wholly-Owned Subsidiary) now existing or hereafter created or acquired that is
not an Unrestricted Subsidiary to guarantee the Indebtedness pursuant to the
Guaranty and Collateral Agreement. In connection with any such guaranty, the
Borrower shall, or shall cause each such Domestic Subsidiary to, (A) assume the
obligations under the Guaranty and Collateral Agreement and this Agreement
applicable to a Guarantor, by
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

70

--------------------------------------------------------------------------------

 

executing and delivering a supplement or joinder to the Guaranty and Collateral
Agreement, in form and substance satisfactory to the Administrative Agent,
(B) pledge all of the Equity Interests that it owns in any Loan Party
(including, without limitation, delivery of any original stock certificates or
other certificates evidencing the Equity Interests of such Loan Party, together
with an appropriate undated stock powers for each certificate duly executed in
blank by the registered owner thereof) and (C) execute and deliver such other
additional closing documents, certificates and legal opinions as shall
reasonably be requested by the Administrative Agent.
          (c) The Loan Parties will at all times cause the other material
Property of the Loan Parties of the types not addressed by clauses (a) and
(b) above to be subject to a perfected first priority Lien (subject only to
Liens permitted by Section 9.03) pursuant to the Security Instruments to the
extent that such Lien can be granted and perfected under applicable law and
subject to any exceptions set forth in the Security Instruments; provided, that
the Administrative Agent may waive the requirements of this Section 8.14(c), in
its sole discretion, with respect to (i) certain Property if the Administrative
Agent determines that the cost of obtaining a Lien on such Property is excessive
in relation to the value afforded thereby, (ii) Property with respect to which a
Lien cannot be perfected under the Uniform Commercial Code and (iii) deposit
account control agreements and security account control agreements.
     Section 8.15 ERISA Compliance. Except as could not reasonably be expected
to result in liability of any Loan Party and any Subsidiary of more than
$1,000,000 individually or in the aggregate for all Loan Parties and the
Subsidiaries, the Borrower will promptly furnish and will cause the Subsidiaries
and any ERISA Affiliate to promptly furnish to the Administrative Agent
(i) promptly after the filing thereof with the United States Secretary of Labor,
the Internal Revenue Service or the PBGC, copies of each annual and other report
with respect to each Plan or any trust created thereunder, (ii) promptly upon
becoming aware of the occurrence of any ERISA Event or of any “prohibited
transaction,” as described in section 406 of ERISA or in section 4975 of the
Code, in connection with any Plan or any trust created thereunder, a written
notice signed by the President or the principal Financial Officer, the
Subsidiary or the ERISA Affiliate, as the case may be, specifying the nature
thereof, what action such Loan Party, the Subsidiary or the ERISA Affiliate is
taking or proposes to take with respect thereto, and, when known, any action
taken or proposed by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto, and (iii) promptly upon receipt thereof, copies
of any notice of the PBGC’s intention to terminate or to have a trustee
appointed to administer any Plan. With respect to each Plan (other than a
Multiemployer Plan) except as could not reasonably be expected to result in
liability to any Loan Party and any Subsidiary of less than $1,000,000
individually or in the aggregate for all Loan Parties and all Subsidiaries, such
Loan Party will, and will cause each Subsidiary and ERISA Affiliate to,
(i) satisfy in full and in a timely manner, without incurring any late payment
or underpayment charge or penalty and without giving rise to any lien, all of
the contribution and funding requirements of section 412 of the Code (determined
without regard to subsections (d), (e), (f) and (k) thereof) and of section 302
of ERISA (determined without regard to sections 303, 304 and 306 of ERISA), and
(ii) pay, or cause to be paid, to the PBGC in a timely manner, without incurring
any late payment or underpayment change or penalty, all premiums required
pursuant to sections 4006 and 4007 of ERISA.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

71

--------------------------------------------------------------------------------

 

     Section 8.16 Unrestricted Subsidiaries. Each Loan Party:
          (a) will conduct its management, business and affairs in such a manner
(including, without limitation, by keeping separate books of account, furnishing
separate financial statements of Unrestricted Subsidiaries to creditors and
potential creditors thereof and by not permitting its Properties and that of its
respective Restricted Subsidiaries to be commingled) so that each Unrestricted
Subsidiary that is a corporation will be treated as a corporate entity separate
and distinct from the Loan Parties.
          (b) will not incur, assume, guarantee or be or become liable for any
Debt of any of the Unrestricted Subsidiaries.
          (c) will not permit any Unrestricted Subsidiary to hold any Equity
Interest in, or any Debt of, any Loan Party.
     Section 8.17 Patriot Act. Each Loan Party shall promptly, following a
request by the Administrative Agent or any Lender, provide all documentation and
other information that the Administrative Agent or such Lender reasonably
requests in order to comply with its ongoing obligations under applicable “know
your customer” and anti-money laundering rules and regulations, including the
Patriot Act.
ARTICLE IX
NEGATIVE COVENANTS
     Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, each Loan Party covenants and agrees with the Lenders that:
     Section 9.01 Financial Covenants.
          (a) Current Ratio. The Loan Parties will not, as of the last day of
any fiscal quarter, permit the ratio of (i) consolidated current assets of the
Borrower and its Consolidated Restricted Subsidiaries (including the unused
amount of the total Commitments, but excluding non-cash assets under FAS 133) to
(ii) consolidated current liabilities of the Borrower and its Consolidated
Restricted Subsidiaries (excluding total outstanding Loans and non-cash
obligations under FAS 133) to be less than 1.0 to 1.0.
          (b) Maximum Leverage Ratio. The Loan Parties will not, at any time,
permit the ratio of Funded Debt as of such time to EBITDA of the Borrower and
its Consolidated Restricted Subsidiaries for the four (4) quarter period ending
on the last day of the immediately preceding fiscal quarter for which financial
statements have been provided pursuant to Section 8.01(a) or (b) to be greater
than 4.00:1.00.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

72

--------------------------------------------------------------------------------

 

     Section 9.02 Debt. Each Loan Party will not incur, create, assume or suffer
to exist any Debt, except:
          (a) The Notes or other Indebtedness arising under the Loan Documents
or any guaranty of or suretyship arrangement for the Notes or other Indebtedness
arising under the Loan Documents.
          (b) Debt of the Loan Parties existing on the date hereof that is
reflected in the Financial Statements.
          (c) Debt under Capital Leases for compressors or other oil field
equipment (excluding drilling rigs but not work-over rigs) in aggregate
principal amount not to exceed ten percent (10%) of the Borrowing Base at the
time of the incurrence of such Debt.
          (d) Intercompany Debt between any Loan Party and any other Loan Party
or between any Loan Party and any Subsidiary to the extent permitted by
Section 9.05(h); provided that any such Debt owed by any Loan Party shall be
subordinated to the Indebtedness on terms set forth in the Guaranty and
Collateral Agreement.
          (e) Endorsements of negotiable instruments for collection in the
ordinary course of business.
          (f) Unsecured Debt with a maturity date that is at least six
(6) months after the Maturity Date; provided that for each $1.00 of such
unsecured Debt incurred by any Loan Party, the Borrowing Base shall be reduced,
effective immediately upon the incurrence of such unsecured Debt, by $0.25 and
any mandatory prepayments required by Section 3.04(c)(iii) shall be made
concurrently therewith.
          (g) Debt under Synthetic Leases for compressors or other oil field
equipment (excluding drilling rigs but not work-over rigs) to the extent
permitted by Section 9.07.
          (h) Other Debt not to exceed $5,000,000 in the aggregate at any one
time outstanding.
     Section 9.03 Liens. Each Loan Party will not create, incur, assume or
permit to exist any Lien on any of its Properties (now owned or hereafter
acquired), except:
          (a) Liens securing the payment of any Indebtedness.
          (b) Excepted Liens.
          (c) Liens securing Capital Leases for compressors or other oil field
equipment (excluding drilling rigs but not work-over rigs) permitted by
Section 9.02(c) but only on the Property under lease.
          (d) any Lien existing on Property of a Person immediately prior to its
being consolidated with or merged into a Loan Party or its becoming a Restricted
Subsidiary, or any Lien existing on any Property acquired by a Loan Party at the
time such Property is so acquired,
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

73

--------------------------------------------------------------------------------

 

provided that (i) no such Lien shall have been created or assumed in
contemplation of such consolidation or merger or such Person’s becoming a
Restricted Subsidiary or such acquisition of Property, and (ii) each such Lien
shall extend solely to the item or items of Property so acquired and any other
Property which is an improvement or accession to such acquired Property.
          (e) Liens on Property not constituting Collateral for the Indebtedness
and not otherwise permitted by the foregoing clauses of this Section 9.03;
provided that the principal or face amount of all Debt secured under this
Section 9.03(d) shall not exceed $1,000,000 in the aggregate for all Loan
Parties.
     Section 9.04 Restricted Payments. Each Loan Party will not declare or make,
or agree to pay or make, directly or indirectly, any Restricted Payment except
(a) the Loan Parties may make Restricted Payments to each other, and (b) the
Borrower may make other Restricted Payments not to exceed $5,000,000 in the
aggregate during any fiscal year (other than (i) upon the occurrence and during
the continuance of any Event of Default with respect to matters specified in
Sections 10.01(a), (b), (f), (g), (h), (i), (j), (k) or (n) or in
Section 10.01(d) to the extent it relates to a breach of Section 9.01, or
(ii) when the Borrowing Base Utilization Percentage exceeds ninety percent
(90%)).
     Section 9.05 Investments. Each Loan Party will not make or permit to remain
outstanding any Investments in or to any Person, except that the foregoing
restriction shall not apply to:
          (a) Investments reflected in the Financial Statements or which are
disclosed to the Lenders in Schedule 9.05.
          (b) accounts receivable arising in the ordinary course of business.
          (c) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, in each case
maturing within one year from the date of acquisition thereof.
          (d) commercial paper maturing within one year from the date of
acquisition thereof rated in the highest grade by S&P or Moody’s.
          (e) deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by, any Lender or any
office located in the United States of any other bank or trust company which is
organized under the laws of the United States or any state thereof, has capital,
surplus and undivided profits aggregating at least $100,000,000 (as of the date
of such bank or trust company’s most recent financial reports) and has a short
term deposit rating of no lower than A2 or P2, as such rating is set forth from
time to time, by S&P or Moody’s, respectively or, in the case of any Foreign
Subsidiary, a bank organized in a jurisdiction in which the Foreign Subsidiary
conducts operations having assets in excess of $500,000,000 (or its equivalent
in another currency).
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

74

--------------------------------------------------------------------------------

 

          (f) deposits in money market funds investing exclusively in
Investments described in Section 9.05(c), Section 9.05(d), Section 9.05(e), or
Section 9.05(g).
          (g) Repurchase agreements of a commercial bank in the United States or
Canada if the commercial paper of such bank or of the bank holding company of
which such bank is a wholly owned subsidiary is rated in the highest rating
categories of S&P, Moody’s, or any other rating agency satisfactory to the
Majority Lenders, that are fully secured by securities described in Section
9.05(c).
          (h) Investments (i) made by a Loan Party in or to any other Loan Party
or (ii) made by a Loan Party or any Restricted Subsidiary in or to any
Unrestricted Subsidiary that is a Domestic Subsidiary; provided that the amounts
invested by a Loan Party and all Restricted Subsidiaries in the aggregate at any
one time outstanding in all such Unrestricted Subsidiaries shall not exceed
$3,000,000.
          (i) subject to the limits in Section 9.06, Investments in business
units resulting in direct ownership interests in, or Investments to acquire new
Restricted Subsidiaries that own, additional Oil and Gas Properties, gas
gathering, processing and transportation systems and all other assets related to
the business permitted under Section 9.06 located within the geographic
boundaries of the United States of America including the outer continental shelf
thereof.
          (j) loans and advances to directors, officers and employees of the
Borrower or any Restricted Subsidiary permitted by applicable law not to exceed
$250,000 in the aggregate at any time.
          (k) other Investments not to exceed $2,500,000 in the aggregate at any
time.
          (l) Investments arising from the endorsement of financial instruments
in the ordinary course of business.
     Section 9.06 Nature of Business; International Operations. Each Loan Party
will not allow any material change to be made in the character of its business
as an independent oil and gas exploration and production company with midstream
assets. Each Loan Party will not engage in the business of trading Hydrocarbons.
From and after the date hereof, each Loan Party and each Subsidiary will not
acquire or make any other expenditure (whether such expenditure is capital,
operating or otherwise) in or related to any Oil and Gas Properties not located
within the geographical boundaries of the United States including the outer
continental shelf thereof.
     Section 9.07 Limitation on Operating Leases. Each Loan Party will not
create, incur, assume or suffer to exist any obligation for the payment of rent
or hire of Property of any kind whatsoever (real or personal but excluding
Capital Leases and leases of Hydrocarbon Interests), under operating leases or
lease agreements which would cause the aggregate amount of all payments made by
all Loan Parties pursuant to all such operating leases or lease agreements
(including, without limitation, any residual payments at the end of any such
lease but excluding any payments not to exceed $2,500,000 in the aggregate per
fiscal year due on termination of any such lease at a Loan Party’s option), to
exceed $10,000,000 in any fiscal year.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

75

--------------------------------------------------------------------------------

 

     Section 9.08 Proceeds of Notes/Loans. Each Loan Party will not permit the
Loans or the proceeds of the Notes to be used for any purpose other than those
permitted by Section 7.22. Neither a Loan Party nor any Person acting on behalf
of a Loan Party has taken or will take any action which might cause any of the
Loan Documents to violate Regulations T, U or X or any other regulation of the
Board or to violate Section 7 of the Securities Exchange Act of 1934 or any rule
or regulation thereunder, in each case as now in effect or as the same may
hereinafter be in effect. If requested by the Administrative Agent, such Loan
Party will furnish to the Administrative Agent and each Lender a statement to
the foregoing effect in conformity with the requirements of FR Form U-1 or such
other form referred to in Regulation U, Regulation T or Regulation X of the
Board, as the case may be.
     Section 9.09 ERISA Compliance. Except as could not reasonably be expected
to result in liability to the Loan Parties and the Subsidiaries of more than
$500,000 individually or in the aggregate, each Loan Party and the Subsidiaries
will not at any time:
          (a) engage in, or permit any ERISA Affiliate to engage in, any
transaction in connection with which a Loan Party, a Subsidiary or any ERISA
Affiliate could be subjected to either a civil penalty assessed pursuant to
subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed by
Chapter 43 of Subtitle D of the Code, if either of which would have a Material
Adverse Effect.
          (b) terminate, or permit any ERISA Affiliate to terminate, any Plan in
a manner, or take any other action with respect to any Plan, which could
reasonably be expected to result in any liability of a Loan Party, a Subsidiary
or any ERISA Affiliate to the PBGC.
          (c) fail to make, or permit any ERISA Affiliate to fail to make, full
payment when due of all amounts which, under the provisions of any Plan,
agreement relating thereto or applicable law, a Loan Party, a Subsidiary or any
ERISA Affiliate is required to pay as contributions thereto if such failure
could reasonably be expected to have a Material Adverse Effect.
          (d) permit to exist, or allow any ERISA Affiliate to permit to exist,
any accumulated funding deficiency within the meaning of section 302 of ERISA or
section 412 of the Code, whether or not waived, with respect to any Plan which
exceeds $500,000.
          (e) Permit, or allow any ERISA Affiliate to permit, the actuarial
present value of the benefit liabilities under any Plan maintained by a Loan
Party, a Subsidiary or any ERISA Affiliate which is regulated under Title IV of
ERISA to exceed the current value of the assets (computed on a plan termination
basis in accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities. The term “actuarial present value of the benefit
liabilities” shall have the meaning specified in section 4041 of ERISA.
          (f) contribute to or assume an obligation to contribute to, or permit
any ERISA Affiliate to contribute to or assume an obligation to contribute to,
any Multiemployer Plan.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

76

--------------------------------------------------------------------------------

 

          (g) acquire, or permit any ERISA Affiliate to acquire, an interest in
any Person that causes such Person to become an ERISA Affiliate with respect to
a Loan Party or a Subsidiary or with respect to any ERISA Affiliate of a Loan
Party or a Subsidiary if such Person sponsors, maintains or contributes to, or
at any time in the six-year period preceding such acquisition has sponsored,
maintained, or contributed to, (i) any Multiemployer Plan, or (ii) any other
Plan under which the actuarial present value of the benefit liabilities under
such Plan exceeds the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan allocable
to such benefit liabilities by any amount in excess of $500,000.
          (h) incur, or permit any ERISA Affiliate to incur, a liability to or
on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA.
          (i) contribute to or assume an obligation to contribute to, or permit
any ERISA Affiliate to contribute to or assume an obligation to contribute to,
any employee welfare benefit plan, as defined in section 3(1) of ERISA,
including, without limitation, any such plan maintained to provide benefits to
former employees of such entities, that may not be terminated by such entities
in their sole discretion at any time without any material liability to any Loan
Party.
          (j) provide or permit any ERISA Affiliate to provide security with
respect to a Plan under section 436 of the Code.
     Section 9.10 Sale or Discount of Receivables. Except for receivables
obtained by a Loan Party out of the ordinary course of business or the
settlement of joint interest billing accounts in the ordinary course of business
or discounts granted to settle collection of accounts receivable or the sale of
defaulted accounts arising in the ordinary course of business in connection with
the compromise or collection thereof and not in connection with any financing
transaction, no Loan Party will discount or sell (with or without recourse) to
any other Person that is not a Loan Party any of its notes receivable or
accounts receivable.
     Section 9.11 Mergers, Etc. No Loan Party will merge into or with or
consolidate with any other Person, or sell, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its Property to any other Person (any such transaction, a
“consolidation”); provided that any Restricted Subsidiary may participate in a
consolidation with any Loan Party (provided that a Loan Party shall be the
continuing or surviving corporation) or any other Restricted Subsidiary that is
a Domestic Subsidiary (provided that if one of such parties to the consolidation
is a Foreign Subsidiary, such Domestic Subsidiary shall be the continuing or
surviving Person) and if one of such Restricted Subsidiaries is a Wholly-Owned
Subsidiary, then the surviving Person shall be a Wholly-Owned Subsidiary.
     Section 9.12 Sale of Properties. As used herein, “Transfer” means to sell,
assign, farm-out, convey or otherwise transfer any Property containing proved
reserves constituting a portion of the Borrowing Base or any equipment, plants
or facilities used in the production, gathering, processing or transportation of
any such proved reserves (collectively, the “Borrowing Base Properties”) or any
Restricted Subsidiary that owns any Borrowing Base Property. Each Loan
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

77

--------------------------------------------------------------------------------

 

Party will not Transfer any Borrowing Base Property or any Restricted Subsidiary
that owns any Borrowing Base Property except for
          (a) the sale of Hydrocarbons in the ordinary course of business;
          (b) the Transfer of equipment in the ordinary course of business or
that is no longer necessary for the business of such Loan Party or is replaced
by equipment of at least comparable value and use;
          (c) the Transfer of any Borrowing Base Property or any interest
therein or any Restricted Subsidiary owning Borrowing Base Properties; provided
that
               (i) one hundred percent (100%) of the consideration (after
assumption of liabilities) received in respect of such Transfer shall be cash or
Oil and Gas Properties,
               (ii) the consideration received in respect of such Transfer shall
be equal to or greater than the fair market value of the Borrowing Base
Property, interest therein or Restricted Subsidiary that is the subject of such
Transfer (as reasonably determined by the board of directors (or its equivalent)
of such Loan Party or, in the case of a Transfer for consideration of $5,000,000
or less, a Responsible Officer of the Borrower or such Loan Party and, if
requested by the Administrative Agent, the Borrower or such Loan Party shall
deliver a certificate of a Responsible Officer of such Loan Party certifying to
that effect),
               (iii) if such Transfer of any Borrowing Base Property or
Restricted Subsidiary owning Borrowing Base Properties included in the most
recently delivered Reserve Report during any period between two successive
Scheduled Redetermination Dates has a fair market value (together with all other
Transfers of Borrowing Base Properties or Restricted Subsidiaries owning
Borrowing Base Properties included in the most recently delivered Reserve Report
during such period) in excess of ten percent (10%) of the Borrowing Base then in
effect as determined by the Required Lenders, the Borrowing Base shall be
reduced, effective immediately upon such Transfer, by an amount equal to the
value, if any, assigned such Borrowing Base Property (or Borrowing Base
Properties) in the most recently delivered Reserve Report and any mandatory
prepayments required by Section 3.04(c)(iii) shall be made concurrently and
               (iv) if any such Transfer is of a Restricted Subsidiary owning
Borrowing Base Properties, such sale or other disposition shall include all the
Equity Interests of such Restricted Subsidiary;
          (d) the sale, trade or other disposition of seismic, geologic or other
data, licenses and similar rights;
provided that the cash proceeds (net of costs of sale) of any Transfer of any
Borrowing Base Property (A) when any Event of Default exists shall be used to
prepay the Borrowings and (B) when the total Credit Exposures exceeds the
redetermined or adjusted Borrowing Base shall be used to prepay the Borrowings
in accordance with Section 3.04(c)(ii).
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

78

--------------------------------------------------------------------------------

 

The Administrative Agent will, upon request and at the expense of the Borrower,
release its Liens on (x) any Borrowing Base Property (and release any
transferred Guarantor from the Guaranty and Collateral Agreement) permitted to
be sold or otherwise transferred under this Section 9.12, or (y) any other
Collateral not subject to this Section 9.12 upon the sale or transfer thereof,
in each case effective as of the time of the sale or transfer thereof. Casualty
Events shall not be considered transfers restricted by or subject to this
Section 9.12.
     Section 9.13 Environmental Matters. Each Loan Party will not, and will not
permit any Subsidiary to, cause or permit any of its Property to be in violation
of, or do anything or permit anything to be done which will subject any such
Property to any Remedial Work under any applicable Environmental Laws, assuming
disclosure to the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to such Property where such
violations or remedial obligations could reasonably be expected to have a
Material Adverse Effect.
     Section 9.14 Transactions with Affiliates. Each Loan Party will not enter
into any transaction, including, without limitation, any purchase, sale, lease
or exchange of Property or the rendering of any service, with any Affiliate
(other than the Loan Parties) unless such transactions are otherwise permitted
under this Agreement or are upon fair and reasonable terms no less favorable to
it than it would obtain in a comparable arm’s length transaction with a Person
not an Affiliate.
     Section 9.15 Subsidiaries. Each Loan Party shall not create or acquire any
additional Subsidiaries, except that the Borrower and any of its Restricted
Subsidiaries may create or acquire any additional Subsidiaries if the Borrower
or such Restricted Subsidiary gives prior written notice to the Administrative
Agent of such creation or acquisition and, if such additional Subsidiary is a
Restricted Subsidiary, complies with Section 8.14(b). The Borrower shall not,
and shall not permit any of its Restricted Subsidiaries to, sell, assign or
otherwise dispose of any Equity Interests in any Restricted Subsidiary except in
compliance with Section 9.12. No Loan Party nor any Subsidiary shall have any
Foreign Subsidiaries.
     Section 9.16 [Reserved].
     Section 9.17 Negative Pledge Agreements; Dividend Restrictions. Each Loan
Party will not create, incur, assume or suffer to exist any contract, agreement
or understanding which in any way prohibits or restricts the granting,
conveying, creation or imposition of any Lien on any of its Property in favor of
the Administrative Agent and the Lenders or restricts any Restricted Subsidiary
from paying dividends or making distributions to any Loan Party, or which
requires the consent of or notice to other Persons in connection therewith;
provided, however, that the preceding restrictions will not apply to
encumbrances or restrictions arising under or by reason of (a) the Loan
Documents, (b) any leases or licenses or similar contracts as they affect any
Property or Lien subject to such lease, license or similar contract, (c) any
contract, agreement or understanding creating Liens on Capital Leases or to
secure purchase money Debt permitted by Section 9.03(c) (but only to the extent
related to the Property on which such Liens were created), or (d) any
restriction with respect to a Restricted Subsidiary imposed pursuant to an
agreement entered into for the direct or indirect sale or disposition of all or
substantially all
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

79

--------------------------------------------------------------------------------

 

the equity or Property of such Restricted Subsidiary (or the Property that is
subject to such restriction) pending the closing of such sale or disposition.
     Section 9.18 Take-or-Pay or Other Prepayments. Each Loan Party will not
receive prepayments in excess of $500,000 outstanding in the aggregate at any
time (whether under take-or-pay contracts or otherwise) with respect to the sale
or exchange of Hydrocarbons from Oil and Gas Properties of a Loan Party or any
Restricted Subsidiary.
     Section 9.19 Hedging Agreements. Each Loan Party will not enter into any
Hedging Agreements with any Person other than:
          (a) Hedging Agreements in respect of commodities (i) with an Approved
Counterparty and (ii) which, when aggregated with all other commodity Hedging
Agreements of the Loan Parties then in effect (but excluding all basis
differential swaps on volumes already hedged pursuant to other Hedging
Agreements), do not have the net effect of constituting a call (whether under
physical or derivative Hedging Agreements) on more than eighty-five (85%) of the
reasonably anticipated projected production from proved, developed, producing
Oil and Gas Properties of the Loan Parties for each year during the period
during which such Hedging Agreements are in effect for each of crude oil and
natural gas, calculated separately, and
          (b) Hedging Agreements in respect of interest rates with an Approved
Counterparty, as follows: (i) Hedging Agreements effectively converting interest
rates from fixed to floating, the notional amounts of which (when aggregated and
netted with all other Hedging Agreements of the Borrower and its Restricted
Subsidiaries then in effect) do not exceed the then outstanding principal amount
of the Borrower’s Debt for borrowed money which bears interest at a fixed rate
and (ii) Hedging Agreements effectively converting interest rates from floating
to fixed, the notional amounts of which (when aggregated and netted with all
other Hedging Agreements of the Borrower and its Restricted Subsidiaries then in
effect) do not exceed (A) for revolving loans, seventy-five (75%) of the then
outstanding principal amount of the Borrower’s Debt for revolving loans which
bear interest at a floating rate and (B) for term loans, one hundred percent
(100%) of the then outstanding principal amount of the Borrower’s Debt for term
loans which bear interest at a floating rate.
In no event shall any Hedging Agreement to which the Borrower or any of its
Restricted Subsidiaries is a party contain any requirement, agreement or
covenant for the Borrower or any Restricted Subsidiary to post cash or other
collateral or margin (except for Letters of Credit not exceeding $2,500,000 in
the aggregate at any time and collateral subject to Liens allowed under Section
9.03(d)), other than pursuant to the Security Instruments for the benefit of the
Secured Hedging Providers, to secure their obligations under such Hedging
Agreement or to cover market exposures. The Loan Parties will not unwind, sell,
terminate, restructure, modify or otherwise affect (“Unwind”) any Hedging
Agreement in respect of commodities that was in effect at the time of the most
recent Borrowing Base determination (the “Borrowing Base Hedging Contracts”)
where the net marked to market economic effect of such Hedging Agreement
Restructuring on the date thereof is negative (which, if such Hedging Agreement
Restructuring is settled for cash only, shall equal the net amount of cash such
Loan Parties receive), unless (a) the net marked to market economic effect of
such Hedging Agreement Restructuring on the date thereof, when combined with the
net marked to market economic effect of all other Hedging
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

80

--------------------------------------------------------------------------------

 

Agreement Restructurings consummated during the period since the last
Redetermination Date, is less than or equal to five percent (5%) of the value of
the Borrowing Base then in effect, or (b) if the net marked to market economic
effect of such Hedging Agreement Restructuring on the date thereof, when
combined with the net marked to market economic effect of all other Hedging
Agreement Restructurings consummated during the period since the last
Redetermination Date, is greater than five percent (5%) of the Borrowing Base
then in effect, the Borrowing Base is reduced in accordance with the following
sentence. The Administrative Agent shall recommend, if it determines in its
judgment that it is appropriate to do so, a reduction of the Borrowing Base by
the portion of the Borrowing Base attributable to such net economic effect of
the Hedging Agreement Restructuring (based on the economic assumptions
consistent with the Administrative Agent’s lending requirements at that time).
Such recommendation by the Administrative Agent shall not become effective until
it is approved by the Required Lenders pursuant to the mechanisms for decreases
in the Borrowing Base set forth in Section 2.07(c)(iii).
     Section 9.20 Designation and Conversion of Restricted and Unrestricted
Subsidiaries.
          (a) Unless designated as an Unrestricted Subsidiary on Schedule 7.15
as of the date hereof or thereafter, assuming compliance with Section 9.20(b),
any Person that becomes a Subsidiary of a Loan Party shall be classified as a
Restricted Subsidiary.
          (b) The Borrower may designate by written notification thereof to the
Administrative Agent, any Restricted Subsidiary, including a newly formed or
newly acquired Subsidiary, as an Unrestricted Subsidiary if (i) neither such
Subsidiary nor any of its Subsidiaries owns any Equity Interests or Debt of, or
owns or holds any Lien on any Property of, a Loan Party or any other Subsidiary
of a Loan Party that is not a Subsidiary of the Subsidiary to be so designated,
(ii) prior, and after giving effect, to such designation, (A) no Default or
Event of Default shall have occurred and be continuing and (B) the total Credit
Exposures shall not exceed the Borrowing Base, (iii) such designation is deemed
to be an Investment in an Unrestricted Subsidiary in an amount equal to the fair
market value as of the date of such designation of the Borrower’s direct and
indirect ownership interest in such Subsidiary and such Investment would be
permitted to be made at the time of such designation under Section 9.05(h).
Except as provided in this Section 9.20(b), no Restricted Subsidiary may be
redesignated as an Unrestricted Subsidiary.
          (c) The Borrower may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary if after giving effect to such designation, (i) the
representations and warranties of the Loan Parties contained in each of the Loan
Documents are true and correct on and as of such date as if made on and as of
the date of such redesignation (or, if stated to have been made expressly as of
an earlier date, were true and correct as of such date), (ii) after giving
effect to such designation, no Default or Event of Default shall have occurred
and be continuing, (iii) any Debt of such Subsidiary shall not be secured by
Liens at the time of such designation except for Liens permitted by
Section 9.03, and (iv) such Loan Party complies with the requirements of Section
8.14, Section 8.16 and Section 9.15.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

81

--------------------------------------------------------------------------------

 

ARTICLE X
EVENTS OF DEFAULT; REMEDIES
     Section 10.01 Events of Default. One or more of the following events shall
constitute an “Event of Default”:
          (a) The Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof, by acceleration or otherwise.
          (b) Any Loan Party shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in Section 10.01(a))
payable under any Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three
(3) Business Days.
          (c) Any representation or warranty made or deemed made by or on behalf
of a Loan Party or any Subsidiary in or in connection with any Loan Document or
any amendment or modification of any Loan Document or waiver under such Loan
Document, or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with any Loan Document or any amendment
or modification thereof or waiver thereunder, shall prove to have been incorrect
in any material respect when made or deemed made.
          (d) Any Loan Party or any Restricted Subsidiary shall fail to observe
or perform any covenant, condition or agreement contained in Section 8.01(i),
Section 8.01(m)(i), Section 8.02, Section 8.03, Section 8.15 or in ARTICLE IX
(other than Section 9.19).
          (e) Any Loan Party or any Restricted Subsidiary shall fail to observe
or perform any covenant, condition or agreement contained in this Agreement
(other than those specified in Section 10.01(a), Section 10.01(b) or
Section 10.01(d)) or any other Loan Document, and such failure shall continue
unremedied for a period of thirty (30) days after notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of the Majority Lenders).
          (f) Any Loan Party shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material Debt,
when and as the same shall become due and payable, and if there is any
applicable cure or grace period, such failure shall continue unremedied beyond
the expiration of such cure or grace period.
          (g) Any event or condition occurs that results in any Material Debt
becoming due prior to its scheduled maturity or that enables or permits the
holder or holders of any Material Debt or any trustee or agent on its or their
behalf to cause any Material Debt to become due, or to require the Redemption
thereof or any offer to Redeem to be made in respect thereof, prior to its
scheduled maturity, or require a Loan Party to make an offer in respect thereof.
          (h) An involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of a Loan Party or
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

82

--------------------------------------------------------------------------------

 

its debts, or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for a Loan Party or for a substantial part of
its assets, and, in any such case, such proceeding or petition shall continue
undismissed for sixty (60) days or an order or decree approving or ordering any
of the foregoing shall be entered.
          (i) A Loan Party shall (i) voluntarily commence any proceeding or file
any petition seeking liquidation, reorganization or other relief under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition described
in Section 10.01(h), (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
a Loan Party or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or
(vi) take any action for the purpose of effecting any of the foregoing.
          (j) A Loan Party shall become unable, admit in writing its inability,
or fail generally to pay its debts as they become due.
          (k) One or more judgments for the payment of money in an aggregate
amount in excess of $2,500,000 (to the extent not covered by independent third
party insurance provided by insurers acceptable to the Administrative Agent as
to which the insurer does not dispute coverage and is not subject to an
insolvency proceeding) shall be rendered against a Loan Party or any combination
thereof and the same shall remain undischarged for a period of sixty
(60) consecutive days during which execution shall not be effectively stayed, or
any action shall be legally taken by a judgment creditor to attach or levy upon
any assets of a Loan Party to enforce any such judgment.
          (l) The Loan Documents after delivery thereof shall for any reason,
except to the extent permitted by the terms thereof, cease to be in full force
and effect and valid, binding and enforceable in accordance with their terms
against a Loan Party or the collateral agent, administrative agent or any lender
or shall be repudiated, or cease to create a valid and perfected Lien of the
priority required thereby on any of the collateral purported to be covered
thereby, except to the extent permitted by the terms of this Agreement, or a
Loan Party or any of its Affiliates shall so state in writing.
          (m) An ERISA Event shall have occurred that, in the opinion of the
Majority Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of a Loan Party
and any Subsidiary in an aggregate amount exceeding $3,000,000 in any year.
          (n) A Change in Control shall occur.
     Section 10.02 Remedies.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

83

--------------------------------------------------------------------------------

 

          (a) In the case of an Event of Default other than one described in
Section 10.01(h) or Section 10.01(i), at any time thereafter during the
continuance of such Event of Default, the Administrative Agent may, and at the
request of the Majority Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Notes and the Loans then outstanding to be due and payable in whole
(or in part, in which case any principal not so declared to be due and payable
may thereafter be declared to be due and payable), and thereupon the principal
of the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Loan Parties accrued hereunder
and under the Notes and the other Loan Documents (including, without limitation,
the payment of cash collateral to secure the LC Exposure as provided in
Section 2.08(i)), shall become due and payable immediately, without presentment,
demand, protest, notice of intent to accelerate, notice of acceleration or other
notice of any kind, all of which are hereby waived by each Loan Party; and in
case of an Event of Default described in Section 10.01(h) or Section 10.01(i),
the Commitments shall automatically terminate and the Notes and the principal of
the Loans then outstanding, together with accrued interest thereon and all fees
and the other obligations of the Loan Parties accrued hereunder and under the
Notes and the other Loan Documents (including, without limitation, the payment
of cash collateral to secure the LC Exposure as provided in Section 2.08(i)),
shall automatically become due and payable, without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other notice
of any kind, all of which are hereby waived by each Loan Party.
          (b) In the case of the occurrence of an Event of Default, the
Administrative Agent and the Lenders will have all other rights and remedies
available at law and equity.
          (c) All proceeds realized from the liquidation or other disposition of
Collateral or otherwise received after maturity of the Loans or the Notes,
whether by acceleration or otherwise, shall be applied to the Indebtedness as
follows:
               (i) first, to reimbursement of expenses and indemnities provided
for in this Agreement and the Security Instruments;
               (ii) second, to accrued interest on the Loans;
               (iii) third, to fees;
               (iv) fourth, pro rata to (A) principal outstanding on the Loans,
(B) outstanding Indebtedness referred to in clause (b) of the definition of
Indebtedness owing to a Lender or an Affiliate of a Lender, and (C) outstanding
Indebtedness referred to in clause (c) of the definition of Indebtedness owing
to a Secured Treasury Management Counterparty;
               (v) fifth, to any other Indebtedness that is then owing;
               (vi) sixth, to serve as cash collateral to be held by the
Administrative Agent to secure the LC Exposure;
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

84

--------------------------------------------------------------------------------

 

and any excess shall be paid to the Borrower or as otherwise required by any
Governmental Requirement.
ARTICLE XI
THE AGENTS
     Section 11.01 Appointment; Powers. Each of the Lenders and each Issuing
Bank hereby irrevocably (subject to Section 11.06) appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms hereof and the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto.
     Section 11.02 Duties and Obligations of Administrative Agent. The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, the Administrative Agent (a) shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) shall not have any duty to take any discretionary action
or exercise any discretionary powers, except as provided in Section 11.03, and
(c) except as expressly set forth herein, shall not have any duty to disclose,
and shall not be liable for the failure to disclose, any information relating to
the Loan Parties or any Subsidiary that is communicated to or obtained by the
bank serving as an Agent or any of its Affiliates in any capacity. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to it by a Loan Party or a Lender, and
shall not be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection with this
Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or under any other Loan Document or
in connection herewith or therewith, (iii) the performance or observance of any
of the covenants, agreements or other terms or conditions set forth herein or in
any other Loan Document, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement, any other Loan Document or any other agreement,
instrument or document, (v) the satisfaction of any condition set forth in
ARTICLE VI or elsewhere herein, other than to confirm receipt of items expressly
required to be delivered to it or as to those conditions precedent specifically
required to be to its satisfaction, (vi) the existence, value, perfection or
priority of any collateral security or the financial or other condition of the
Loan Parties and the Subsidiaries or any other obligor or guarantor, or
(vii) any failure by any Loan Party or any other Person (other than itself) to
perform any of its obligations hereunder or under any other Loan Document or the
performance or observance of any covenants, agreements or other terms or
conditions set forth herein or therein.
     Section 11.03 Action by Administrative Agent. The Administrative Agent
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that it is required to exercise in writing as directed by
the Majority Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 12.02) and in all
cases it shall be fully justified in failing or refusing to act hereunder or
under any other Loan Documents unless it shall (a) receive written instructions
from the Majority Lenders or the Lenders, as applicable, (or such other number
or percentage of the Lenders as shall be necessary under the
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

85

--------------------------------------------------------------------------------

 

circumstances as provided in Section 12.02) specifying the action to be taken
and (b) be indemnified to its satisfaction by the Lenders against any and all
liability and expenses which may be incurred by it by reason of taking or
continuing to take any such action. The instructions as aforesaid and any action
taken or failure to act pursuant thereto shall be binding on all of the Lenders.
If a Default has occurred and is continuing, then the Administrative Agent shall
take such action with respect to such Default as shall be directed by the
requisite Lenders in the written instructions (with indemnities) described in
this Section 11.03, provided that, unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default as it shall deem advisable in the best interests of the
Lenders. In no event, however, shall the Administrative Agent be required to
take any action which exposes the Administrative Agent to personal liability or
which is contrary to this Agreement, the Loan Documents or applicable law. If a
Default has occurred and is continuing, neither the Arrangers, the Syndication
Agent nor any Co-Documentation Agent shall have any obligation to perform any
act in respect thereof. No Agent shall be liable for any action taken or not
taken by it with the consent or at the request of the Majority Lenders or the
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 12.02), and otherwise no Agent
shall be liable for any action taken or not taken by it hereunder or under any
other Loan Document or under any other document or instrument referred to or
provided for herein or therein or in connection herewith or therewith INCLUDING
ITS OWN ORDINARY NEGLIGENCE, except for its own gross negligence or willful
misconduct.
     Section 11.04 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument, document
or other writing believed by it to be genuine and to have been signed or sent by
the proper Person. The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon and each of the
Loan Parties, the Lenders and each Issuing Bank hereby waives the right to
dispute the Administrative Agent’s record of such statement, except in the case
of gross negligence or willful misconduct by such Agent. The Administrative
Agent may consult with legal counsel (who may be counsel for the Loan Parties),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts. The Agents may deem and treat the
payee of any Note as the holder thereof for all purposes hereof unless and until
a written notice of the assignment or transfer thereof permitted hereunder shall
have been filed with the Administrative Agent.
     Section 11.05 Subagents. The Administrative Agent may perform any and all
its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by it. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding Sections
of this ARTICLE XI shall apply to any such sub-agent and to the Related Parties
of each Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

86

--------------------------------------------------------------------------------

 

     Section 11.06 Resignation or Removal of Agents. Subject to the appointment
and acceptance of a successor Agent as provided in this Section 11.06, any Agent
may resign at any time by notifying the Lenders, each Issuing Bank and the
Borrower, and any Agent may be removed at any time with or without cause by the
Majority Lenders. Upon any such resignation or removal, the Majority Lenders
shall have the right, in consultation with and upon the approval of the Borrower
(so long as no Event of Default has occurred and is continuing), which approval
shall not be unreasonably withheld, to appoint a successor. If no successor
shall have been so appointed by the Majority Lenders and shall have accepted
such appointment within thirty (30) days after the retiring Administrative Agent
gives notice of its resignation or removal of the retiring Administrative Agent,
then the retiring Administrative Agent may, on behalf of the Lenders and the
Issuing Bank, appoint a successor Administrative Agent, which shall be a bank
with an office in New York, New York or an Affiliate of any such bank. Upon the
acceptance of its appointment as Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations hereunder. The fees payable by the Borrower to a
successor Agent shall be the same as those payable to its predecessor unless
otherwise agreed between the Borrower and such successor. After the Agent’s
resignation hereunder, the provisions of this ARTICLE XI and Section 12.03 shall
continue in effect for the benefit of such retiring Agent, its sub-agents and
their respective Related Parties in respect of any actions taken or omitted to
be taken by any of them while it was acting as Agent.
     Section 11.07 Agents as Lenders. Each bank serving as an Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not an Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Loan Parties or any Subsidiary or other
Affiliate thereof as if it were not an Agent hereunder.
     Section 11.08 No Reliance. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, any other
Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and each other Loan Document to which it is a party. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent, any other Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document, any related agreement or any
document furnished hereunder or thereunder. The Agents shall not be required to
keep themselves informed as to the performance or observance by the Loan Parties
or any Subsidiary of this Agreement, the Loan Documents or any other document
referred to or provided for herein or to inspect the Properties or books of the
Loan Parties or any Subsidiary. Except for notices, reports and other documents
and information expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, neither the Agents nor the Arrangers shall have
any duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or business of the Loan
Parties (or any of their Affiliates) which may come into the possession of such
Agent or any of its Affiliates. Each Lender hereby acknowledges and, by becoming
a party hereto, consents to the fact that Vinson & Elkins L.L.P. is acting as
special counsel to the Administrative Agent in connection with this
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

87

--------------------------------------------------------------------------------

 

transaction. Each other party hereto will consult with its own legal counsel to
the extent it deems necessary in connection with the Loan Documents and the
matters contemplated therein.
     Section 11.09 Authority to Release Guarantors, Collateral and Liens. Each
Lender and each Issuing Bank hereby authorizes the Administrative Agent to
release any Collateral that the Administrative Agent is permitted or required to
release pursuant to Section 9.12 or that is otherwise permitted to be sold or
released pursuant to the terms of the Loan Documents and to release from the
Guaranty and Collateral Agreements any Guarantor that is permitted to be sold or
disposed of, or converted into an Unrestricted Subsidiary, pursuant to the terms
of the Loan Documents. Each Lender and each Issuing Bank hereby authorizes the
Administrative Agent to execute and deliver to a Loan Party, at such Loan
Party’s sole cost and expense, any and all releases of Guaranty and Collateral
Agreements, Liens, termination statements, assignments or other documents
reasonably requested by such Loan Party in connection with any sale or other
disposition of Property to the extent such sale or other disposition or the
release of such Collateral is permitted by the terms of Section 9.12 or is
otherwise authorized by the terms of the Loan Documents.
     Section 11.10 The Arrangers and Agents. Neither the Arrangers, the
Syndication Agent, nor any Co-Documentation Agent shall have any duties,
responsibilities or liabilities under this Agreement and the other Loan
Documents other than their duties, responsibilities and liabilities in their
capacity as Lenders hereunder.
     Section 11.11 Filing of Proofs of Claim. In case of any Default or Event of
Default under Section 10.01(g), Section 10.01(h) or Section 10.01(i), the
Administrative Agent (regardless of whether the principal of any Loan or LC
Exposure shall then be due and payable and regardless of whether the
Administrative Agent has made any demand on the Loan Parties) shall be entitled
and empowered, by intervention in such proceeding or otherwise:
          (a) to (i) file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the Loans, LC Exposure and
all other Indebtedness that is owing and unpaid and (ii) file such other
documents as may be necessary or advisable in order to have the claims of the
Lenders and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders, the
Administrative Agent and their respective agents and counsel and all other
amounts due the Lenders, the Administrative Agent under Section 3.05 and
Section 12.03) allowed in such judicial proceeding; and
          (b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same.
Each Lender hereby authorizes any custodian, receiver, assignee, trustee,
conservator, sequestrator or other similar official in any such judicial
proceeding: (i) to make such payments to the Administrative Agent; and (ii) if
the Administrative Agent shall consent to the making of such payments directly
to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 3.05 and Section 12.03. Nothing contained
herein shall be deemed to authorize the
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

88

--------------------------------------------------------------------------------

 

Administrative Agent to authorize or consent to or accept or adopt on behalf of
any Lender any plan of reorganization, arrangement, adjustment or composition
affecting the Indebtedness or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding. Each Lender retains its right to file and prove a claim separately.
ARTICLE XII
MISCELLANEOUS
     Section 12.01 Notices.
          (a) Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to Section 12.01(b)), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
               (i) if to a Loan Party, to it at Resolute Energy Corporation, 80
East Sir Francis Drake Blvd., Suite 2C, Larkspur, California, 94939, Attention
Theodore Gazulis (Telecopy No. (415) 461-5045); with a copy to Resolute Energy
Corporation, 1675 Broadway, Suite 1950, Denver, Colorado 80202, Attention James
M. Piccone (Telecopy No. (303) 623-3628);
               (ii) if to the Administrative Agent, to it at Wells Fargo Bank,
National Association, 1525 W. WT Harris Blvd., Charlotte, NC 28262, Attention:
Agency Services Department (Telecopy No. (704) 590-2790); with a copy to: Wells
Fargo Bank, National Association, 1700 Lincoln St., Suite 600, Denver, CO 80203
Attention: Oleg Kogan (Telecopy No. (303) 863-5196);
               (iii) if to the Swingline Lender, to it at Wells Fargo Bank,
National Association, 1525 W. WT Harris Blvd., Charlotte, NC 28262, Attention:
Agency Services Department (Telecopy No. (704) 590-2790); with a copy to: Wells
Fargo Bank, National Association, 1700 Lincoln St., Suite 600, Denver, CO 80203
Attention: Oleg Kogan (Telecopy No. (303) 863-5196); and
               (iv) if to any other Lender, in its capacity as such, or any
other Lender in its capacity as an Issuing Bank, to it at its address (or
telecopy number) set forth in its Administrative Questionnaire.
          (b) Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to ARTICLE II, ARTICLE III, ARTICLE IV and ARTICLE V
unless otherwise agreed by the Administrative Agent and the applicable Lender.
The Administrative Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

89

--------------------------------------------------------------------------------

 

          (c) Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
     Section 12.02 Waivers; Amendments.
          (a) No failure on the part of any Agent, any Issuing Bank or any
Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege, or any abandonment or discontinuance
of steps to enforce such right, power or privilege, under any of the Loan
Documents shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under any of the Loan Documents
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies of the Agents, each Issuing
Bank and the Lenders hereunder and under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or any other Loan Document or
consent to any departure by any Loan Party therefrom shall in any event be
effective unless the same shall be permitted by Section 12.02(b), and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. Without limiting the generality of the foregoing, the
making of a Loan or issuance of a Letter of Credit shall not be construed as a
waiver of any Default, regardless of whether any Agent, any Lender or any
Issuing Bank may have had notice or knowledge of such Default at the time.
          (b) Neither this Agreement nor any provision hereof nor any Security
Instrument nor any provision thereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrower
and the Majority Lenders or by the Borrower and the Administrative Agent with
the consent of the Majority Lenders; provided that no such agreement shall
(i) increase the Commitment or the Maximum Credit Amount of any Lender without
the written consent of such Lender, (ii) increase the Borrowing Base without the
written consent of each Lender, decrease or maintain the Borrowing Base without
the consent of the Required Lenders, or modify Section 2.07 without the consent
of each Lender, (iii) reduce the principal amount of any Loan or LC Disbursement
or reduce the rate of interest thereon, or reduce any fees payable hereunder, or
reduce any other Indebtedness hereunder or under any other Loan Document,
without the written consent of each Lender directly, adversely affected thereby,
(iv) postpone the scheduled date of payment of the principal amount of any Loan
or LC Disbursement, or any interest thereon, or any fees payable hereunder, or
any other Indebtedness hereunder or under any other Loan Document, or reduce the
amount of, waive or excuse any such payment, or postpone or extend the
Termination Date without the written consent of each Lender directly, adversely
affected thereby, (v) change Section 4.01(b) or Section 4.01(c) in a manner that
would alter the pro rata sharing of payments required thereby, without the
written consent of each Lender, (vi) release all or substantially all of the
Guarantors, release all or substantially all of the Collateral, or reduce the
percentage set forth in Section 8.14(a) to less than eighty percent (80%) (or,
with respect to the proved Oil and Gas Properties located in San Juan County,
Utah, to less than one hundred percent (100%) of the Loan Parties’ proved Oil
and Gas Properties located in San Juan County, Utah), without the written
consent of each Lender, (vii) change any of the provisions of Section 10.02(c),
this Section 12.02(b) or the definitions of
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

90

--------------------------------------------------------------------------------

 

“Majority Lenders” or “Required Lenders” or any other provision hereof
specifying the number or percentage of Lenders required to waive, amend or
modify any rights hereunder or under any other Loan Documents or to make any
determination or grant any consent hereunder or any other Loan Documents,
without the written consent of each Lender, or (viii) change the description of
the obligations secured or guaranteed by the Security Instruments or the
priority of payments set forth in Section 10.02(c) without the written consent
of each Lender directly, adversely affected thereby, provided that the addition
of a new secured obligation shall not be deemed to adversely, directly affect
any other secured party; provided further that no such agreement shall amend,
modify or otherwise affect the rights or duties of any Agent, any Issuing Bank
or the Swingline Lender hereunder or under any other Loan Document without the
prior written consent of such Agent, such Issuing Bank or the Swingline Lender
as the case may be. Notwithstanding the foregoing, any supplement to
Schedule 7.15 (Subsidiaries) shall be effective simply by delivering to the
Administrative Agent a supplemental schedule clearly marked as such and, upon
receipt, the Administrative Agent will promptly deliver a copy thereof to the
Lenders.
     Section 12.03 Expenses, Indemnity; Damage Waiver.
          (a) The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent, the Arrangers and their Affiliates,
including, without limitation, the reasonable fees, charges and disbursements of
counsel and other outside consultants for the Administrative Agent, the
reasonable travel, photocopy, mailing, courier, telephone and other similar
expenses, and the cost of environmental audits and surveys and appraisals, in
connection with the arrangement, syndication of the credit facilities provided
for herein, the preparation, negotiation, execution, delivery and administration
(both before and after the execution hereof and including advice of counsel to
the Administrative Agent as to the rights and duties of the Administrative
Agent, the Arrangers and the Lenders with respect thereto) of this Agreement and
the other Loan Documents and any amendments, modifications or waivers of or
consents related to the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
costs, expenses, Taxes, assessments and other charges incurred by the
Administrative Agent in connection with any filing, registration, recording or
perfection of any security interest contemplated by this Agreement or any
Security Instrument or any other document referred to therein, (iii) all
reasonable out-of-pocket expenses incurred by each Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit
issued by such Issuing Bank or any demand for payment thereunder, (iv) all
out-of-pocket expenses incurred by any Agent, any Issuing Bank or any Lender
(including any Swingline Lender), including the fees, charges and disbursements
of any counsel for any Agent, any Issuing Bank or any Lender, in connection with
the enforcement or protection of its rights during the continuance of an Event
of Default in connection with this Agreement or any other Loan Document,
including its rights under this Section 12.03, or in connection with the Loans
made or Letters of Credit issued hereunder, including, without limitation, all
such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.
          (b) THE LOAN PARTIES SHALL INDEMNIFY EACH ARRANGER, EACH AGENT, EACH
ISSUING BANK AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING
PERSONS (EACH SUCH PERSON BEING
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

91

--------------------------------------------------------------------------------

 

CALLED AN “INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND
ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES, INCLUDING THE
FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY
OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS A
RESULT OF (i) THE EXECUTION OR DELIVERY OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE
PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF
THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER LOAN DOCUMENT, (ii) THE FAILURE
OF THE LOAN PARTIES OR ANY SUBSIDIARY TO COMPLY WITH THE TERMS OF ANY LOAN
DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT,
(iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR
COVENANT OF THE LOAN PARTIES SET FORTH IN ANY OF THE LOAN DOCUMENTS OR ANY
INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN CONNECTION THEREWITH,
(iv) ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREFROM,
INCLUDING, WITHOUT LIMITATION, (A) ANY REFUSAL BY ANY ISSUING BANK TO HONOR A
DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT ISSUED BY SUCH ISSUING BANK IF THE
DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH
THE TERMS OF SUCH LETTER OF CREDIT, OR (B) THE PAYMENT OF A DRAWING UNDER ANY
LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY OR OTHER
IMPROPER PRESENTATION OF THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH, (v)
THE OPERATIONS OF THE BUSINESS OF THE LOAN PARTIES AND THE SUBSIDIARIES,
(vi) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS
RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (vii) ANY ENVIRONMENTAL LAW
APPLICABLE TO THE LOAN PARTIES OR ANY SUBSIDIARY OR ANY OF THEIR PROPERTIES,
INCLUDING WITHOUT LIMITATION, THE PRESENCE, GENERATION, STORAGE, RELEASE,
THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL OR
TREATMENT OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON
ANY OF THEIR PROPERTIES, (viii) THE BREACH OR NON-COMPLIANCE BY THE LOAN PARTIES
OR ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE LOAN PARTIES OR
ANY SUBSIDIARY, (ix) THE PAST OWNERSHIP BY THE LOAN PARTIES OR ANY SUBSIDIARY OF
ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH,
THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT
LIABILITY, (x) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL,
GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT OR
ARRANGEMENT FOR DISPOSAL OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS
SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

92

--------------------------------------------------------------------------------

 

THE LOAN PARTIES OR ANY SUBSIDIARY OR ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE
OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE LOAN
PARTIES OR ANY OF ITS SUBSIDIARIES, (xi) ANY ENVIRONMENTAL LIABILITY RELATED IN
ANY WAY TO THE LOAN PARTIES OR ANY SUBSIDIARY, OR (xii) ANY OTHER ENVIRONMENTAL,
HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR (xiii) ANY
ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO
ANY OF THE FOREGOING, WHETHER BROUGHT BY A THIRD PARTY OR A LOAN PARTY OR
AFFILIATE THEREOF, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND
REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY
SHALL EXTEND TO EACH INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT
NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE,
WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL
TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF
ONE OR MORE OF THE INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT
FAULT ON ANY ONE OR MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL
NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS,
DAMAGES, LIABILITIES OR RELATED EXPENSES (A) ARE DETERMINED BY A COURT OF
COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE, (B) RELATE TO
CLAIMS BETWEEN OR AMONG ANY OF THE LENDERS, THE AGENT, ARRANGERS OR ANY OF THEIR
SHAREHOLDERS, PARTNERS OR MEMBERS OR (C) IN RESPECT OF ANY PROPERTY FOR ANY
OCCURRENCE ARISING FROM THE ACTS OR OMISSIONS OF THE AGENT OR ANY LENDER DURING
THE PERIOD AFTER WHICH SUCH PERSON, ITS SUCCESSORS OR ASSIGNS SHALL HAVE
OBTAINED POSSESSION OF SUCH PROPERTY (WHETHER BY FORECLOSURE OR DEED IN LIEU OF
FORECLOSURE, AS MORTGAGEE-IN-POSSESSION OR OTHERWISE).
          (c) To the extent that the Borrower or the Loan Parties fail to pay
any amount required to be paid by them to any Agent, any Issuing Bank or the
Swingline Lender under Section 12.03(a) or (b), as applicable, each Lender
severally agrees to pay to such Agent, such Issuing Bank or the Swingline
Lender, as the case may be, such Lender’s Applicable Percentage (determined as
of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against such Agent, such Issuing Bank or the
Swingline Lender in its capacity as such.
          (d) To the extent permitted by applicable law, the Loan Parties shall
not assert, and hereby waive, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement, any other Loan Document or
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

93

--------------------------------------------------------------------------------

 

any agreement or instrument contemplated hereby or thereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof.
          (e) All amounts due under this Section 12.03 shall be payable promptly
after written demand therefor.
     Section 12.04 Successors and Assigns.
          (a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of any Issuing Bank that issues any
Letter of Credit), except that (i) the Loan Parties may not assign or otherwise
transfer (except as permitted under Section 9.11) any of their rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Loan Parties without such consent shall
be null and void) and (ii) no Lender may assign or otherwise transfer its rights
or obligations hereunder except in accordance with this Section 12.04. Nothing
in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of any Issuing Bank that issues any
Letter of Credit), Participants (to the extent provided in Section 12.04(c))
and, to the extent expressly contemplated hereby, the Related Parties of each of
the Administrative Agent, each Issuing Bank and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
          (b) (i) Subject to the conditions set forth in Section 12.04(b)(ii),
any Lender may assign to one or more assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld or delayed) of: (A) the Borrower,
provided that no consent of the Borrower shall be required for an assignment to
a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default
has occurred and is continuing, any other assignee; and (B) the Administrative
Agent, provided that no such consent shall be required for an assignment to an
assignee that is a Lender immediately prior to giving effect to such assignment.
               (ii) Assignments shall be subject to the following additional
conditions: (A) except in the case of an assignment to a Lender or an Affiliate
of a Lender or an assignment of the entire remaining amount of the assigning
Lender’s Commitment, the amount of the Commitment of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $10,000,000, and the Commitments of any assigning
Lender remaining a party hereto after giving effect to the assignment shall be
at least $10,000,000, unless, in each case, each of the Borrower, the
Administrative Agent otherwise consents, provided that no such consent of the
Borrower shall be required if an Event of Default has occurred and is
continuing; (B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement; (C) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500; (D) the assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

94

--------------------------------------------------------------------------------

 

Questionnaire and shall deliver notice of the Assignment and Assumption to the
Borrower; (E) in the case of an assignment to a CLO, the assigning Lender shall
retain the sole right to approve any amendment, modification or waiver of any
provision of this Agreement, provided that the Assignment and Assumption between
such Lender and such CLO may provide that such Lender will not, without the
consent of such CLO, agree to any amendment, modification or waiver described in
the first proviso to Section 12.02(b) that affects such CLO; and (F) no such
assignment shall be made to the Borrower or any of the Borrower’s Subsidiaries
or other Affiliates.
               (iii) Subject to Section 12.04(b)(iv) and the acceptance and
recording thereof, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of
Section 5.01, Section 5.02, Section 5.03 and Section 12.03). Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not
comply with this Section 12.04 shall be treated for purposes of this Agreement
as a sale by such Lender of a participation in such rights and obligations in
accordance with Section 12.04(c).
               (iv) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Maximum Credit Amount of, and
principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent,
each Issuing Bank and the Lenders may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. The Register
shall be available for inspection by the Borrower, any Issuing Bank and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.
               (v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an assignee, the assignee’s
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in Section
12.04(b) and any written consent to such assignment required by
Section 12.04(b), the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this Section 12.04(b).
          (c) (i) Any Lender may, without the consent of the Borrower, the
Administrative Agent or any Issuing Bank, sell participations to one or more
banks or other financial investors (a “Participant”) in all or a portion of such
Lender’s rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans owing to it);
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

95

--------------------------------------------------------------------------------

 

provided that (A) such Lender’s obligations under this Agreement shall remain
unchanged, (B) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (C) the Borrower, the
Administrative Agent, each Issuing Bank and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement and (D) such Participant agrees to
be bound by Section 12.11. Any agreement or instrument pursuant to which a
Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver of
the Loan Documents described in the proviso to Section 12.02(b) that affects
such Participant. In addition such agreement must provide that the Participant
be bound by the provisions of Section 12.03 and Section 12.11. Subject to
Section 12.04(c)(ii), the Borrower agrees that each Participant shall be
entitled to the benefits of Section 5.01, Section 5.02 and Section 5.03 to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to Section 12.04(b). To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 12.08 as though it were a
Lender, provided such Participant agrees to be subject to Section 4.01(c) as
though it were a Lender.
               (ii) A Participant shall not be entitled to receive any greater
payment under Section 5.01 or Section 5.03 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower’s prior written consent hereafter given. A Participant that
would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 5.03 unless the Borrower is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 5.03(e) as though it were a Lender.
          (d) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section 12.04(d) shall not apply to any such
pledge or assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
          (e) Notwithstanding any other provisions of this Section 12.04, no
transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would require the Loan Parties to file a registration statement with
the SEC or to qualify the Loans under the “Blue Sky” laws of any state.
     Section 12.05 Survival; Revival; Reinstatement.
          (a) All covenants, agreements, representations and warranties made by
the Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

96

--------------------------------------------------------------------------------

 

and the making of any Loans and issuance of any Letters of Credit, regardless of
any investigation made by any such other party or on its behalf and
notwithstanding that the Administrative Agent, any other Agent, any Issuing Bank
or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Section 5.01, Section 5.02, Section 5.03 and Section 12.03 and ARTICLE XI shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, the expiration
or termination of the Letters of Credit and the Commitments or the termination
of this Agreement, any other Loan Document or any provision hereof or thereof.
Subject to the foregoing sentence, upon (i) repayment in full of the Loans and
all interest thereon and other amounts due and owing under this Agreement and
all other Obligations (as defined in the Guaranty and Collateral Agreement) then
due and owing, (ii) the expiration or termination of the Commitments, (iii) the
expiration or termination of all Letters of Credit (or upon the providing of
collateral therefor satisfactory to the Issuing Bank in its absolute
discretion), (iii) the termination of the Hedging Agreements with the Secured
Hedging Providers to the extent such Hedging Agreements require any Loan
Document or the Collateral to remain in effect, and (iv) the compliance by the
Loan Parties with the covenants and agreements set forth in the Guaranty and
Collateral Agreement, upon the written request of the Borrower and at the
expense of the Borrower, (A) this Agreement and the other Loan Documents shall
terminate, (B) the Collateral thereunder shall be released, and (C) the
Administrative Agent shall provide to the Borrower reasonable releases of the
Collateral in recordable form (as necessary) and other reasonably requested
confirmations or evidence of termination and release.
          (b) To the extent that any payments on the Indebtedness or proceeds of
any collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent, the Indebtedness so satisfied shall be
revived and continue as if such payment or proceeds had not been received and
the Administrative Agent’s, and the Lenders’ Liens, security interests, rights,
powers and remedies under this Agreement and each Loan Document shall continue
in full force and effect. In such event, each Loan Document shall be
automatically reinstated and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent or the Lenders to effect such
reinstatement.
     Section 12.06 Counterparts; Integration; Effectiveness.
          (a) This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract.
          (b) This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Arrangers and the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and thereof and supersede any and all previous agreements and
understandings, oral or written, relating to the
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

97

--------------------------------------------------------------------------------

 

subject matter hereof and thereof. This Agreement and the other Loan Documents
represent the final agreement among the parties hereto and thereto and may not
be contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties. There are no unwritten oral agreements between the
parties.
          (c) Except as provided in Section 6.01(a), this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
     Section 12.07 Severability. Any provision of this Agreement or any other
Loan Document held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof or thereof; and the invalidity
of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
     Section 12.08 Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations (of whatsoever
kind, including, without limitations obligations under Hedging Agreements) at
any time owing by such Lender or Affiliate to or for the credit or the account
of the Loan Parties or any Restricted Subsidiary against any of and all the
obligations of the Loan Parties or any Restricted Subsidiary owed to such Lender
now or hereafter existing under this Agreement or any other Loan Document,
irrespective of whether or not such Lender shall have made any demand under this
Agreement or any other Loan Document and although such obligations may be
unmatured. The rights of each Lender under this Section 12.08 are in addition to
other rights and remedies (including other rights of setoff) which such Lender
or its Affiliates may have.
     Section 12.09 Governing Law; Jurisdiction; Consent to Service of Process.
          (a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
          (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK LOCATED IN THE BOROUGH OF
MANHATTAN, NEW YORK, NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS.
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

98

--------------------------------------------------------------------------------

 

EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO
JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM OBTAINING
JURISDICTION OVER ANOTHER PARTY IN ANY COURT OTHERWISE HAVING JURISDICTION.
          (c) EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE
ADDRESS SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS SPECIFIED
PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), AND TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW SUCH SERVICE SHALL BECOME EFFECTIVE THIRTY
(30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY
OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTY IN ANY
OTHER JURISDICTION.
          (d) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS; AND
(iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE
LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION
12.09.
     Section 12.10 Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
     Section 12.11 Confidentiality. Each of the Agents, each Issuing Bank and
the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

99

--------------------------------------------------------------------------------

 

agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority or self-regulatory body, (c) to the extent required by applicable laws
or regulations or by any subpoena or similar legal process, (d) to any other
party to this Agreement or any other Loan Document, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section 12.11, to
(i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any Hedging
Agreement relating to the Borrower and its obligations, (g) with the consent of
the Borrower or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section 12.11 or
(ii) becomes available to any Agent, any Issuing Bank or any Lender on a
nonconfidential basis from a source other than a Loan Party. For the purposes of
this Section 12.11, “Information” means all information received from a Loan
Party or any Subsidiary relating to a Loan Party or any Subsidiary and their
businesses, other than any such information that is available to the
Administrative Agent, any Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by a Loan Party or a Subsidiary. Any Person required to
maintain the confidentiality of Information as provided in this Section 12.11
shall be considered to have complied with its obligation to do so if such Person
has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Notwithstanding anything herein to the contrary, any party hereto (and each
employee, representative or other agent of such party) may disclose without
limitation of any kind, any information with respect to the “tax treatment” and
“tax structure” (in each case, within the meaning of Treasury
Regulation Section 1.6011-4) of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that are
provided to that party relating to such tax treatment or tax structure; provided
that with respect to any document or similar item that in either case contains
information concerning the tax treatment or tax structure of the transactions,
as well as other information, this sentence shall only apply to such portions of
the document or similar item that relate to the tax treatment or tax structure
of the transactions contemplated hereby.
     Section 12.12 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS
AND CONDITIONS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT
LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF
ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND
THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS MAY RESULT, SUBJECT TO THE TERMS HEREOF
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

100

--------------------------------------------------------------------------------

 

AND THEREOF AND APPLICABLE LAW, IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN
SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS
RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT
IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
“CONSPICUOUS.”
     Section 12.13 No Third Party Beneficiaries. The agreement of the Lenders to
make Loans and each Issuing Bank to issue, amend, renew or extend Letters of
Credit hereunder are solely for the benefit of the Borrower, and no other Person
(including, without limitation, any Subsidiary of the Borrower, any obligor,
contractor, subcontractor, supplier or materialsman) shall have any rights,
claims, remedies or privileges hereunder or under any other Loan Document
against the Administrative Agent, any other Agent, any Issuing Bank or any
Lender for any reason whatsoever. There are no third party beneficiaries of the
rights of the Borrower under the Loan Documents.
     Section 12.14 Collateral Matters; Hedging Agreements; Treasury Management
Agreements. The benefit of the Security Instruments and of the provisions of
this Agreement relating to any Collateral securing the Indebtedness shall also
extend to and be available to Secured Hedging Providers and the Secured Treasury
Management Counterparties on a pro rata basis (subject to the priorities set out
in Section 10.02(c)) in respect of any Indebtedness of the Borrower or any of
its Restricted Subsidiaries which arises under any such Hedging Agreement or
Treasury Management Agreement. No Lender or any Affiliate of a Lender shall have
any voting rights under any Loan Document as a result of the existence of
obligations owed to it under any such Hedging Agreements or Treasury Management
Agreements. Each Lender, on behalf of itself and its Affiliates who are Secured
Hedging Providers, and each Secured Hedging Provider, by accepting the benefits
of the Collateral, hereby agrees that the Loan Parties may grant security
interests, covering all rights of the Loan Parties in Hedging Agreements with
any Lender or Secured Hedging Provider, to the Administrative Agent under the
Security Instruments to secure the Indebtedness, notwithstanding any restriction
on such security interests under any Hedging Agreement.
     Section 12.15 US Patriot Act Notice. Each Lender hereby notifies the Loan
Parties that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is
required to obtain, verify and record information that identifies each Loan
Party, which information includes the name and address of each Loan Party and
other information that will allow such Lender to identify each Loan Party in
accordance with the Patriot Act.
     Section 12.16 Existing Credit Agreement; Existing Facility Termination.
          (a) Pursuant to the Resolute Assignment and Assumption Agreement,
Resolute Aneth assigned to the Borrower, and the Borrower assumed from Resolute
Aneth, all of Resolute Aneth’s rights, interests, liabilities and obligations as
borrower under the Existing
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

101

--------------------------------------------------------------------------------

 

Credit Agreement, and pursuant to an amendment to the Guaranty and Collateral
Agreement dated as of the date hereof, Resolute Aneth confirms that it is a
Guarantor.
          (b) This Agreement amends and restates the Existing Credit Agreement
in its entirety. On the date of the initial funding of Loans hereunder, (i) each
“Loan” (as defined in the Existing Credit Agreement) outstanding under the
Existing Credit Agreement shall be repaid in full with the proceeds of such
Loans, (ii) all other amounts outstanding under the Existing Credit Agreement
(including breakage costs due under Section 5.02 of the Existing Credit
Agreement) shall be paid in full with the proceeds of such Loans to the extent
not otherwise paid by the Borrower on such date, (iii) the “Commitments” (as
defined in the Existing Credit Agreement) shall be terminated (except as
otherwise expressly provided in Section 12.05 of the Existing Credit Agreement
with respect to the survival of certain covenants and agreements made by the
Borrower and/or its Affiliates in the Existing Credit Agreement) and replaced
with the Commitments hereunder, and (iv) the Existing Letters of Credit shall be
deemed to be issued under this Agreement. It is the intent of the parties hereto
that this Agreement neither constitute a novation of the obligations and
liabilities existing under the Existing Credit Agreement nor evidence
termination of any such obligations and liabilities and that this Agreement
amend and restate in its entirety the Existing Credit Agreement and hereafter
evidence the obligations of the Borrower outstanding thereunder. The undersigned
waive any right to receive any notice of the termination of the “Commitments”
(as defined in the Existing Credit Agreement) and any right to receive any
notice of prepayment of amounts owed under the Existing Credit Agreement. Each
“Lender” (as defined in the Existing Credit Agreement) hereby agrees to return
to the Borrower, with reasonable promptness, any note delivered by Resolute
Aneth to such Lender in connection with the Existing Credit Agreement.
     Section 12.17 No Fiduciary Duty. Each Lender and its respective Affiliates
(collectively, solely for purposes of this Section 12.17, the “Lenders”) may
have economic interests that conflict with those of the Loan Parties. Each Loan
Party agrees that nothing in any Loan Document, any Hedging Agreement with any
Secured Hedging Provider or any Treasury Management Agreement will be deemed to
create an advisory, fiduciary or agency relationship between Lenders and the
Loan Parties, their partners or their Affiliates. Each Loan Party acknowledges
and agrees that (a) the transactions with Lenders contemplated by the Loan
Documents, the Hedging Agreements with Secured Hedging Providers and the
Treasury Management Agreements are arm’s-length commercial transactions between
Lenders, on the one hand, and the applicable Loan Parties, on the other, (b) in
connection therewith and with the process leading to such transactions each
Lender is acting solely as a principal and not the agent or fiduciary of any
Loan Party, or of any Loan Party’s management, partners, creditors or other
Affiliates, (c) no Lender has assumed a fiduciary responsibility in favor of any
Loan Party with respect to the transactions with Lenders contemplated by the
Financing Documents, any Hedging Agreement or any Treasury Management Agreements
or the process leading thereto (irrespective of whether any Lender or any of its
Affiliates has advised or is currently advising any Loan Party on other matters)
and (d) such Loan Party has consulted its own legal and financial advisors to
the extent it deemed appropriate. Each Loan Party further acknowledges and
agrees that it is responsible for making its own independent judgment with
respect to such transactions and the process leading thereto. Each Loan Party
agrees that it will not claim that any Lender owes a
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

102

--------------------------------------------------------------------------------

 

fiduciary duty to such Loan Party in connection with the Financing Documents,
any Hedging Agreement or any Treasury Management Agreement or the process
leading thereto.
[SIGNATURES BEGIN NEXT PAGE]
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

103

--------------------------------------------------------------------------------

 

The parties hereto have caused this Agreement to be duly executed as of the day
and year first above written.

          BORROWER:   RESOLUTE ENERGY CORPORATION
      By:           Theodore Gazulis,        Senior Vice President - Finance and
Chief Financial Officer     

Signature Page
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

 

--------------------------------------------------------------------------------

 

          GUARANTORS:   HICKS ACQUISITION COMPANY I, INC.

RESOLUTE ANETH, LLC

RNRC HOLDINGS, INC.

RESOLUTE WYOMING, INC. (f/k/a Primary Natural Resources, Inc.)

RESOLUTE NATURAL RESOURCES COMPANY, LLC (f/k/a Resolute Natural Resources
Company)

BWNR, LLC

WYNR, LLC

RESOLUTE NORTHERN ROCKIES, LLC
      By:           Theodore Gazulis,        Senior Vice President - Finance and
Chief Financial Officer     

Signature Page
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

 

--------------------------------------------------------------------------------

 

          ADMINISTRATIVE AGENT AND LENDER: WELLS FARGO BANK, NATIONAL
ASSOCIATION, successor-by-merger to Wachovia Bank, National Association, as
Administrative Agent and a Lender
      By:           Oleg Kogan        Vice President        LENDER:   WELLS
FARGO BANK, NATIONAL ASSOCIATION
      By:           Oleg Kogan        Vice President     

Signature Page
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

 

--------------------------------------------------------------------------------

 

          LENDER:   BANK OF MONTREAL
      By:           Name:           Title:        

Signature Page
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

 

--------------------------------------------------------------------------------

 

          LENDER:   DEUTSCHE BANK TRUST COMPANY
AMERICAS
      By:           Name:           Title:                 By:           Name:  
        Title:        

Signature Page
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

 

--------------------------------------------------------------------------------

 

          LENDER:   UBS LOAN FINANCE LLC
      By:           Name:           Title:                 By:           Name:  
        Title:        

Signature Page
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

 

--------------------------------------------------------------------------------

 

          LENDER:   UNION BANK, N.A.
      By:           Name:           Title:        

Signature Page
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

 

--------------------------------------------------------------------------------

 

          LENDER:   BNP PARIBAS
      By:           Name:           Title:                 By:           Name:  
        Title:        

Signature Page
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

 

--------------------------------------------------------------------------------

 

          LENDER: U.S. BANK NATIONAL ASSOCIATION
      By:           Name:           Title:        

Signature Page
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

 

--------------------------------------------------------------------------------

 

          LENDER:   BARCLAYS BANK PLC
      By:           Name:           Title:        

Signature Page
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

 

--------------------------------------------------------------------------------

 

          LENDER:   COMERICA BANK
      By:           Name:           Title:        

Signature Page
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

 

--------------------------------------------------------------------------------

 

          LENDER:   CAPITAL ONE, N.A.
      By:           Name:           Title:        

Signature Page
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

 

--------------------------------------------------------------------------------

 

          LENDER:   CITIBANK, N.A.
      By:           Name:           Title:        

Signature Page
Resolute Energy Corporation
Second Amended & Restated Credit Agreement

 

--------------------------------------------------------------------------------

 

          LENDER:   GUARANTY BANK AND TRUST COMPANY
      By:           Name:           Title:        

Signature Page
Resolute Energy Corporation
Second Amended & Restated Credit Agreement