exv10w4



 





Exhibit 10.4




 

 






ADMINISTRATIVE SERVICES AGREEMENT




AMONG




RESOLUTE ENERGY GP, LLC,




RESOLUTE ENERGY PARTNERS LP,




RESOLUTE ENERGY OPERATING LLC,




AND




RESOLUTE NATURAL RESOURCES COMPANY




 

 






 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	ARTICLE I

	 
	 	 	 	 	 	 
	DEFINITIONS

	 
	 	 	 	 	 	 
	Section 1.1
	 	Definitions.	 	 	1	 
	Section 1.2
	 	Construction.	 	 	4	 
	 
	 	 	 	 	 	 
	ARTICLE II

	 
	 	 	 	 	 	 
	RETENTION OF RNRC; SCOPE OF SERVICES

	 
	 	 	 	 	 	 
	Section 2.1
	 	Retention of RNRC.	 	 	5	 
	Section 2.2
	 	Scope of Services.	 	 	5	 
	Section 2.3
	 	Exclusion of Services.	 	 	5	 
	Section 2.4
	 	Performance of Services by Affiliates and Third Parties.	 	 	5	 
	Section 2.5
	 	Intellectual Property.	 	 	5	 
	Section 2.6
	 	Appointment of Independent Accounting Firm and Independent Petroleum Engineer.	 	 	6	 
	 
	 	 	 	 	 	 
	ARTICLE III

	 
	 	 	 	 	 	 
	BOOKS, RECORDS AND REPORTING

	 
	 	 	 	 	 	 
	Section 3.1
	 	Books and Records.	 	 	6	 
	Section 3.2
	 	Audits.	 	 	6	 
	Section 3.3
	 	Reports.	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE IV

	 
	 	 	 	 	 	 
	PAYMENT AMOUNT

	 
	 	 	 	 	 	 
	Section 4.1
	 	Payment Amount.	 	 	7	 
	Section 4.2
	 	Payment of Payment Amount.	 	 	7	 
	Section 4.3
	 	Disputed Charges.	 	 	8	 
	Section 4.4
	 	Set Off.	 	 	8	 
	Section 4.5
	 	RNRC’s Employees.	 	 	8	 
	Section 4.6
	 	Approval of Expenses.	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE V

	 
	 	 	 	 	 	 
	FORCE MAJEURE

	 
	 	 	 	 	 	 
	Section 5.1
	 	Force Majeure.	 	 	9	 






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	ARTICLE VI

	 
	 	 	 	 	 	 
	ASSIGNMENTS AND SUBCONTRACTS

	 
	 	 	 	 	 	 
	Section 6.1
	 	Assignments.	 	 	9	 
	Section 6.2
	 	Other Requirements.	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE VII

	 
	 	 	 	 	 	 
	TERMINATION

	 
	 	 	 	 	 	 
	Section 7.1
	 	Termination by the Partnership on behalf of the Partnership Group.	 	 	10	 
	Section 7.2
	 	Termination by RNRC.	 	 	11	 
	Section 7.3
	 	Effect of Termination.	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE VIII

	 
	 	 	 	 	 	 
	CONFIDENTIAL INFORMATION

	 
	 	 	 	 	 	 
	Section 8.1
	 	Nondisclosure.	 	 	11	 
	Section 8.2
	 	Permitted Disclosure.	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE IX

	 
	 	 	 	 	 	 
	LIMITATION OF LIABILITY; INDEMNIFICATION

	 
	 	 	 	 	 	 
	Section 9.1
	 	Liabilities and Indemnification.	 	 	12	 
	 
	 	 	 	 	 	 
	ARTICLE X

	 
	 	 	 	 	 	 
	DISPUTE RESOLUTION

	 
	 	 	 	 	 	 
	ARTICLE XI

	 
	 	 	 	 	 	 
	GENERAL PROVISIONS

	 
	 	 	 	 	 	 
	Section 11.1
	 	Notices.	 	 	14	 
	Section 11.2
	 	Further Action.	 	 	15	 
	Section 11.3
	 	Binding Effect.	 	 	15	 
	Section 11.4
	 	Integration.	 	 	15	 
	Section 11.5
	 	Creditors.	 	 	15	 
	Section 11.6
	 	Waiver.	 	 	15	 
	Section 11.7
	 	Counterparts.	 	 	15	 
	Section 11.8
	 	Applicable Law.	 	 	15	 
	Section 11.9
	 	Invalidity of Provisions.	 	 	16	 






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	Section 11.10
	 	Amendment or Restatement.	 	 	16	 
	Section 11.11
	 	Directly or Indirectly.	 	 	16	 






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ADMINISTRATIVE SERVICES AGREEMENT





          
THIS ADMINISTRATIVE SERVICES AGREEMENT is entered into on, and effective as of [ ] [•],
2008 (the “Effective Date”), among Resolute Energy Partners LP, a Delaware limited partnership (the
“Partnership”), Resolute Energy GP, LLC, a Delaware limited liability company and general partner
of the Partnership (the “General Partner”), Resolute Energy Operating LLC, a Delaware limited
liability company (the “Operating Company”), and Resolute Natural Resources Company, a Delaware
corporation (“RNRC,” and collectively with the General Partner, the Partnership and the Operating
Company, the “Parties” and each, a “Party”).



RECITALS





          
A. The Partnership is the owner, directly or indirectly, of interests in the Business (as
hereinafter defined);




          
B. The Partnership Group (as hereinafter defined) requires certain services to operate the
Business and to fulfill other general and administrative functions relating to the Business; and




          
C. The Partnership Group desires that RNRC provide such services, and RNRC is willing to
undertake such engagement, subject to the terms and conditions of this Agreement;




          
NOW, THEREFORE, the Partnership and RNRC agree as follows:



ARTICLE I




DEFINITIONS




     Section 1.1 Definitions.




          
The following definitions shall be for all purposes, unless otherwise clearly indicated to the
contrary, applied to the terms used in this Agreement.




          
“Action” is defined in Section 9.2.




          
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly
through one or more intermediaries controls, is controlled by or is under common control with, the
Person in question. As used herein, the term “control” means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.




          
“Agreement” means this Administrative Services Agreement, as it may be amended, supplemented
or restated from time to time.




          
“Business” means the business of the Partnership Group.




          
“Business Day” means Monday through Friday of each week, except that a legal holiday
recognized as such by the government of the United States of America or the State of Colorado shall
not be regarded as a Business Day.




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“Bankrupt” with respect to any Person means such Person shall generally be unable to pay its
debts as such debts become due, or shall so admit in writing or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against such Person seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property and, in the case of any such proceeding instituted against
it (but not instituted by it), shall remain undismissed or unstayed for a period of 30 days; or
such Person shall take any action to authorize any of the actions set forth above.




          
“Cash Advance Notice” is defined in Section 4.2(a).




          
“Confidential Information” means non-public information about the disclosing Party’s or any of
its Affiliates’ business or activities that is proprietary and confidential, which shall include,
without limitation, all business, financial, technical and other information, including software
(source and object code) and programming code, of a Party or its Affiliates marked or designated
“confidential” or “proprietary” or by its nature or the circumstances surrounding its disclosure it
should reasonably be regarded as confidential. Confidential Information includes not only written
or other tangible information, but also information transferred orally, visually, electronically or
by any other means. Confidential Information does not include information that (i) is in or enters
the public domain without breach of this Agreement, or (ii) the receiving Party lawfully receives
from a third party without restriction on disclosure and to the receiving Party’s knowledge without
breach of a nondisclosure obligation.




          
“Damages” is defined in Section 9.1(a).




          
“Default Rate” means an interest rate (which shall in no event be higher than the rate
permitted by applicable law) equal to the prime interest rate of the Operating Company’s principal
lender.




          
“Effective Date” is defined in the introductory paragraph.




          
“Environmental Law” means current local, county, state, federal, and/or foreign law (including
common law), statute, code, ordinance, rule, order, judgment, decree, regulation or other legal
obligation relating to the protection of health, safety or the environment or natural resources,
including, without limitation, the Comprehensive Environmental Response Compensation and Liability
Act (42 U.S.C. section 9601 et seq.), as amended, the Resource Conservation and Recovery Act (42
U.S.C. section 6901 et seq.), as amended, the Federal Water Pollution Control Act (33 U.S.C.
section 1251 et seq.), as amended, the Clean Air Act (42 U.S.C. section 7401 et seq.), as amended,
the Toxic Substances Control Act (15 U.S.C. section 2601 et seq.), as amended, the Occupational
Safety and Health Act (29 U.S.C. section 651 et seq.), as amended, the Safe Drinking Water Act (42
U.S.C. section 300(f) et seq.), as amended, analogous state, tribal or local laws, and any similar,
implementing or successor law, and any amendment,



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rule, regulation, or directive issued thereunder, including any determination by, or
interpretation of any of the foregoing by any Governmental Authority that has the force of law.





          
“Force Majeure” means any cause beyond the reasonable control of a Party, including the
following causes (unless they are within such Party’s reasonable control): acts of God, strikes,
lockouts, acts of the public enemy, wars or warlike action (whether actual or impending), arrests
and other restraints of government (civil or military), blockades, embargoes, insurrections, riots,
epidemics, landslides, lightning, earthquakes, fires, sabotage, tornadoes, named tropical storms
and hurricanes, and floods, civil disturbances, terrorism, mechanical breakdown of machinery or
equipment, explosions, confiscation or seizure by any government or other public authority, any
order of any court of competent jurisdiction, regulatory agency or governmental body having
jurisdiction.




          
“General Partner” is defined in the introductory paragraph.




          
“Governmental Approval” means any material consent, authorization, certificate, permit,
right-of-way grant or approval of any Governmental Authority that is necessary for the
construction, ownership and operation of the Assets in accordance with applicable Laws.




          
“Governmental Authority” means any court or tribunal in any jurisdiction or any federal,
state, tribal, municipal or local government or other governmental body, agency, authority,
department, commission, board, bureau, instrumentality, arbitrator or arbitral body or any
quasi-governmental or private body lawfully exercising any regulatory or taxing authority.




          
“Laws” means any applicable statute, Environmental Law, common law, rule, regulation,
judgment, order, ordinance, writ, injunction or decree issued or promulgated by any Governmental
Authority.




          
“Limited Partners” is defined in the Partnership Agreement.




          
“Parties” is defined in the introductory paragraph.




          
“Partnership” is defined in the introductory paragraph.




          
“Partnership Agreement” means the First Amended and Restated Agreement of Limited Partnership
of the Partnership, as may be amended or restated from time to time.




          
“Partnership Expense” is defined in Section 4.1.




          
“Partnership Expense Reconciling Invoice” is defined in Section 4.2(b).




          
“Partnership Group” means the General Partner, the Partnership, the Operating Company and all
of their respective Subsidiaries.




          
“Partnership Group Indemnified Party” is defined in Section 9.1(c).




          
“Payment Default” means (i) the failure of the Partnership to pay any amount requested by RNRC
pursuant to a Cash Advance Notice on or before the 5th  Business Day following



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receipt of such Cash Advance Notice or (ii) the failure of the Partnership to pay any amount
set forth on a Partnership Expense Reconciling Invoice on or before the 45th day
following the receipt of such Partnership Expense Reconciling Invoice.





          
“Person” means an individual or a corporation, limited liability company, partnership, joint
venture, trust, unincorporated organization, association, government agency or political
subdivision thereof or other entity.




          
“Resolute Holdings” means Resolute Holdings, LLC, a Delaware limited liability company.




          
“RNRC” is defined in the introductory paragraph.




          
“RNRC Indemnified Party” is defined in Section 9.1(b).




          
“Services” is defined in Section 2.2.




          
“Service Standard” means, with respect to the performance of the Services, the good faith
undertaking, on a commercially reasonable basis, to perform the Services in all material respects
in compliance with applicable material Governmental Approvals and Laws and prudent industry
practices.




          
“Subsidiary” means, with respect to any Person, (a) a corporation of which more than 50% of
the voting power of shares entitled (without regard to the occurrence of any contingency) to vote
in the election of directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such
Person or a combination thereof, (b) a partnership (whether general or limited) in which such
Person or a Subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but only if more than 50% of the partnership interests of such
partnership (considering all of the partnership interests of the partnership as a single class) is
owned, directly or indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person (other than a
corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a
combination thereof, directly or indirectly, at the date of determination, has (i) at least a
majority ownership interest or (ii) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.




          
Other terms defined herein have the meanings so given them.



     Section 1.2 Construction.




          
Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include
the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa; (b) references to Articles and Sections refer to
Articles and Sections of this Agreement; (c) references to Exhibits refer to the Exhibits attached
to this Agreement, each of which is made a part hereof for all purposes; (d) the terms “include”,
“includes”, “including” and words of like import shall be deemed to be



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followed by the words “without limitation”; (e) the terms “hereof,” “herein” and “hereunder”
refer to this Agreement as a whole and not to any particular provision of this Agreement; and (f)
references to money refer to legal currency of the United States of America. The table of contents
and headings contained in this Agreement are for reference purposes only, and shall not affect in
any way the meaning or interpretation of this Agreement.




ARTICLE II




RETENTION OF RNRC; SCOPE OF SERVICES




     Section 2.1 Retention of RNRC.




          
The Partnership hereby engages RNRC to perform the Services in accordance with the Service
Standard, as directed by the General Partner, and to provide all personnel and any facilities,
goods and equipment not otherwise provided by the Partnership Group necessary to perform the
Services in accordance with the Service Standard. RNRC hereby accepts such engagement and agrees
to perform the Services requested by the General Partner and to provide any personnel, facilities,
goods and equipment not otherwise provided by the Partnership Group, and to provide all employees
as may be reasonable and necessary to perform the Services in accordance with the Service Standard.
RNRC hereby covenants and warrants that all Services will be performed in accordance with the
Service Standard.



     Section 2.2 Scope of Services.




          
The “Services” shall consist of such services the General Partner determines may be reasonable
and necessary to operate the Business, including, without limitation those services described on
Schedule I hereto.



     Section 2.3 Exclusion of Services.




          
The General Partner may temporarily or permanently exclude any particular service from the
scope of the Services upon 60 days’ notice to RNRC.



     Section 2.4 Performance of Services by Affiliates and Third Parties.




          
The Parties hereby agree that in discharging its obligations hereunder, RNRC may engage any of
its Affiliates or any qualified third party to perform the Services (or any part of the Services)
on its behalf and that the performance of the Services (or any part of the Services) by any such
Affiliate or third party shall be treated as if RNRC performed such Services itself.
Notwithstanding the foregoing, nothing contained herein shall relieve RNRC of its obligations
hereunder.



     Section 2.5 Intellectual Property.




          
          
(a) Any (i) inventions, whether patentable or not, developed or invented, or (ii)
copyrightable material (and the intangible rights of copyright therein) developed, by RNRC, its
Affiliates or its or their employees in connection with the performance of the Services shall be




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the property of RNRC; provided, however, that the Partnership Group shall be granted an
irrevocable, royalty-free, non-exclusive and non-transferable right and license to use such
inventions or material; and further provided, however, that the Partnership Group shall only be
granted such a right and license to the extent such grant does not conflict with, or result in a
breach, default, or violation of a right or license to use such inventions or material granted to
RNRC by any Person other than an Affiliate of RNRC. Notwithstanding the foregoing, RNRC will use
all commercially reasonable efforts to grant such right and license to the Partnership Group.





          
          
(b) The General Partner and the Partnership and the Operating Company hereby grant to RNRC and
its Affiliates an irrevocable, royalty-free, non-exclusive and non-transferable right and license
to use, during the term of this Agreement, any intellectual property provided by the Partnership
Group to RNRC or its Affiliates, but only to the extent such use is necessary for the performance
of the Services. RNRC agrees that it and its Affiliates will utilize such intellectual property
solely in connection with the performance of the Services.





          
Section 2.6 Appointment of Independent Accounting Firm and Independent Petroleum Engineer.




          
Notwithstanding anything to the contrary in this Agreement, the Parties hereby recognize and
agree that the General Partner shall have the exclusive authority to appoint an independent
accounting firm to audit the financial statements of the Partnership and an independent petroleum
engineer to provide reports to the Partnership relating to estimates of proved reserves for
Securities and Exchange Commission and other reporting purposes.



ARTICLE III




BOOKS, RECORDS AND REPORTING




     Section 3.1 Books and Records.




          
RNRC shall maintain accurate books and records regarding the performance of the Services and
its calculation of the Partnership Expenses, and shall maintain such books and records for the
period required by applicable accounting practices or law.



     Section 3.2 Audits.




          
The Partnership shall have the right, upon reasonable notice, and at all reasonable times
during usual business hours, to audit, examine and make copies of the books and records referred to
in Section 3.1. Such right may be exercised through any agent or employee of the Partnership Group
designated in writing by it or by an independent public accountant, engineer, attorney or other
agent so designated. The Partnership shall bear all costs and expenses incurred in any inspection,
examination or audit. RNRC shall review and respond in a timely manner to any claims or inquiries
made by the Partnership regarding matters revealed by any such inspection, examination or audit.



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     Section 3.3 Reports.




          
RNRC shall prepare and deliver to the Partnership any reports provided for in this Agreement
and such other reports as the Partnership may reasonably request from time to time regarding the
performance of the Services.



ARTICLE IV




PARTNERSHIP EXPENSES




     Section 4.1 Partnership Expenses.




          
The Partnership shall reimburse or provide a cash advance to RNRC for all direct and indirect
expenses RNRC incurs, or payments it makes on behalf of the Partnership Group or expenses allocated
to RNRC by its Affiliates, in each case in connection with the performance by RNRC or its
Affiliates of the Services (including, subject to Section 4.5, salary, bonus, incentive
compensation and other amounts paid to any Person to perform the Services) (each such expense, a
“Partnership Expense”). RNRC shall charge the Partnership for personnel related expenses based on
RNRC’s good-faith determination or reasonable estimate of the actual time or proportion of time
spent by its personnel performing the Services, plus an allocation of expenses other than personnel
related expenses based on systematic and rational allocations as determined by RNRC.
Notwithstanding the foregoing, the Partnership shall be obligated to reimburse RNRC for a portion
of the cost of the existing benefit plans and incentive compensation plans of RNRC. The amount of
the reimbursement shall be determined by RNRC on any basis that it deems to be reasonable and need
not be based on the amount of services performed for the Partnership.



     Section 4.2 Payment of Partnership Expenses.




          
          
(a) RNRC may at any time send a notice to the Partnership requesting a cash advance to provide
necessary funds to pay any Partnership Expense (each such notice, a “Cash Advance Notice”), and the
Partnership, subject to the terms and conditions hereof, shall make a payment to RNRC in the amount
requested on the Cash Advance Notice within [1] business day of receipt of such Cash Advance
Notice; provided, however, that RNRC may not send more than
two such Cash Advance Notices in any calendar month. Each Cash Advance Notice shall specify in reasonable detail the Services provided and
charges assessed in connection with the provision of such Services. RNRC shall have the authority
to withdraw any Cash Advance Notice at any time prior to the time that funding is provided
thereunder.





          
          
(b) RNRC shall invoice the Partnership on or before the end of each month for an amount equal
to the total Partnership Expenses for the preceding month (calculated on the basis of actual cost
of the Services provided hereunder), minus any amounts paid with respect to such Partnership
Expenses pursuant to a Cash Advance Notice, plus or minus any adjustment necessary to correct prior
estimated expenses as set forth on any Cash Advance Notice to actual expenses (the “Partnership
Expense Reconciling Invoice”),. RNRC will provide supporting documentation with respect to the
actual costs of Services provided hereunder for the time period to which the Partnership Expense
Reconciling Invoice relates, as agreed upon from time to time by the Parties hereto. Subject to
Section 4.3, all Partnership Expense Reconciling Invoices shall




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be due and
payable, in immediately available funds, on or before the 5th day after
receipt of such Partnership Expense Reconciling Invoice. In the event that RNRC owes the
Partnership any amount pursuant to a Partnership Expense Reconciling Invoice, RNRC will credit such
amount against the Partnership Expenses incurred after the receipt of such Partnership Expense
Reconciling Invoice.




     Section 4.3 Disputed Charges.




          
THE PARTNERSHIP MAY, WITHIN 120 DAYS AFTER RECEIPT OF A CHARGE FROM RNRC, TAKE WRITTEN
EXCEPTION TO SUCH CHARGE, ON THE GROUND THAT THE SAME WAS NOT A REASONABLE COST INCURRED BY RNRC OR
ITS AFFILIATES IN CONNECTION WITH THE SERVICES. THE PARTNERSHIP SHALL NEVERTHELESS ADVANCE OR PAY
RNRC IN FULL WHEN DUE THE FULL ADVANCE OR AMOUNT OWED TO RNRC PURSUANT TO THIS ARTICLE IV. SUCH
ADVANCE OR PAYMENT SHALL NOT BE DEEMED A WAIVER OF THE RIGHT OF THE PARTNERSHIP TO RECOUP ANY
CONTESTED PORTION OF ANY AMOUNT SO PAID. HOWEVER, IF THE AMOUNT AS TO WHICH SUCH WRITTEN EXCEPTION
IS TAKEN, OR ANY PART THEREOF, IS ULTIMATELY DETERMINED NOT TO BE A REASONABLE COST INCURRED BY
RNRC OR ITS AFFILIATES IN CONNECTION WITH ITS PROVIDING THE SERVICES HEREUNDER, SUCH AMOUNT OR
PORTION THEREOF (AS THE CASE MAY BE) SHALL BE REFUNDED BY RNRC TO THE PARTNERSHIP TOGETHER WITH
INTEREST THEREON AT THE DEFAULT RATE DURING THE PERIOD FROM THE DATE OF PAYMENT BY THE PARTNERSHIP
TO THE DATE OF REFUND BY RNRC.



     Section 4.4 Set Off.




          
In the event that RNRC or the Partnership owes the other party a sum certain in an uncontested
amount under any other agreement, then any such amounts may be aggregated and the Partnership or
RNRC may discharge their obligations by netting those amounts against any amounts owed by one party
to the other under this Agreement.



     Section 4.5 RNRC’s Employees.




          
The obligations under Sections 4.1 and 4.2, to the extent they relate to Services provided by
employees of RNRC or its Affiliates, shall be limited to payment to RNRC for expenses in connection
with its or its Affiliates’ employees engaged in the provision of Services hereunder, and the
Partnership shall not be obligated to pay to RNRC’s or its Affiliates’ employees directly any
compensation, salaries, wages, bonuses, benefits, social security taxes, workers’ compensation
insurance, retirement and insurance benefits, training and other such expenses; provided, however,
that the Partnership may, at its option, compensate such employees under one or more equity-based
or related incentive compensation plans for the provision of Services hereunder; and provided
further, however, that if RNRC fails to pay any employee, with the exception of employee claims for
amounts owed that RNRC disputes in good faith, within 30 days of the date such employee’s payment
is due:



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(a) The Partnership may pay such employee directly or employ such employee directly; and





          
          
(b) RNRC shall reimburse the Partnership, as the case may be, the amount the Partnership paid
to RNRC for employee services that RNRC did not pay to any such employee and the amount of any
expense incurred by the Partnership for employee benefits for such employee.




     Section 4.6 Approval of Expenses.




          
RNRC acknowledges that all charges for Services assessed by RNRC and included in the
Partnership Expenses must be approved by the persons authorized to approve such Partnership
Expenses pursuant to the Partnership’s governance and delegation-of-authority process.
Additionally, RNRC acknowledges that the Audit Committee of the General Partner’s Board of
Directors may at any time review the Partnership Expenses and the levels of Services and, as a
result, may direct the Partnership to decrease the level of Services pursuant to Section 2.3 or to
dispute a prior invoice pursuant to Section 4.3. In addition to the information RNRC is obligated
to provide pursuant to Section 4.2, RNRC shall provide such other information as reasonably
necessary to determine the veracity or appropriateness of any Partnership Expense hereunder.



ARTICLE V




FORCE MAJEURE




     Section 5.1 Force Majeure.




          
A Party’s obligation under this Agreement shall be excused when and to the extent its
performance of that obligation is prevented due to Force Majeure; provided, however, that a Party
shall not be excused by Force Majeure from any obligation to pay money. The Party that is
prevented from performing its obligation by reason of Force Majeure shall promptly notify the other
Parties of that fact and shall exercise due diligence to end its inability to perform as promptly
as practicable. Notwithstanding the foregoing, a Party is not required to settle any strike,
lockout or other labor dispute in which it may be involved; provided, however, that, in the event
of a strike, lockout or other labor dispute affecting RNRC, RNRC shall use reasonable efforts to
continue to perform all obligations hereunder by utilizing its management personnel and that of its
Affiliates.



ARTICLE VI




ASSIGNMENTS AND SUBCONTRACTS




     Section 6.1 Assignments.




          
          
(a) Without the prior consent of RNRC, none of the Partnership or the other members or the
Partnership Group may sell, assign, transfer or convey any of its rights, or delegate any of its
obligations, under this Agreement to any Person.




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(b) Without the prior consent of the Partnership, RNRC may not sell, assign, transfer or
convey any of its rights, or delegate any of its obligations, under this Agreement to any Person,
other than the delegation of performance of Services to an Affiliate of RNRC or a qualified third
party as permitted by Section 2.4 and the sale, assignment, transfer or conveyance of its rights
hereunder to any such Affiliate.





          
          
(c) Notwithstanding the foregoing, a merger shall not be deemed to be an assignment and a
transfer of the rights and an assumption of the obligations under this Agreement in connection with
the transfer of all or substantially all of the assets of a Party shall not be deemed an assignment
of such rights or obligations of such Party to this Agreement.




     Section 6.2 Other Requirements.




          
Subject to the other provisions hereof:




          
          
(a) All materials and workmanship used or provided in performing the Services shall be in
accordance with the Service Standard and applicable specifications and standards.





          
          
(b) RNRC shall exercise reasonable diligence to obtain the most favorable terms or warranties
available from vendors, suppliers and other third parties, and where appropriate, RNRC shall assign
such warranties to the Partnership.





          
          
(c) In rendering the Services, RNRC shall not discriminate against any employee or applicant
for employment because of race, creed, color, religion, sex, national origin, age or handicap, and
shall comply with all applicable provisions of Executive Order 11246 of September 24, 1965, and any
successor order thereto. Subject to the above, RNRC shall, to the extent practicable, engage
employees who reside in or whose businesses are located in the local area or state where the
Services are performed.





          
          
(d) RNRC agrees to exercise reasonable diligence to ensure that, during the term of this
Agreement, it shall not employ unauthorized aliens as defined in the Immigration Reform and Control
Act of 1986, or any successor law.




ARTICLE VII




TERMINATION




     Section 7.1 Termination by the Partnership on behalf of the Partnership Group.




          
          
(a) Upon the occurrence of any of the following events, the General Partner, on behalf of the
Partnership Group, may terminate this Agreement by giving written notice of such termination to
RNRC:




                              (i) RNRC becomes Bankrupt;



                              (ii) RNRC dissolves and commences liquidation or winding-up; or



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                              (iii) RNRC ceases to be an Affiliate of the Partnership.


Any termination under this Section 7.1(a) shall become effective immediately upon delivery of the
notice first described in this Section 7.1(a), or such later time (not to exceed the first
anniversary of the delivery of such notice) as may be specified by the Partnership.





          
          
(b) In addition to the rights under Section 7.1(a), if at any time the General Partner
determines that RNRC has not performed the Services in accordance with the Service Standard, the
Partnership may give written notice of termination to RNRC, which notice shall set forth in
reasonable detail the Services in question and the related deficiency in such Services as compared
to the Service Standard. RNRC shall have 90 days following the date of such notice in which to
reperform such Services in accordance with the Service Standard or otherwise cure such deficiency
to the reasonable satisfaction of the General Partner. If RNRC fails to reperform such Services or
otherwise cure such deficiency in accordance with the immediately preceding sentence, then
termination under this Section 7.1(b) shall become effective on the 90th day after the
date of such notice, or such later time (not to exceed the firth anniversary of the delivery of
such notice) as may be specified in such notice.




     Section 7.2 Termination by RNRC.




          
          
(a) RNRC may terminate this Agreement by giving written notice of such termination to the
Partnership in the event that RNRC ceases to be an Affiliate of the Partnership. Any termination
under this Section 7.2(a) shall become effective 90 days after delivery of such notice.





          
          
(b) In addition to the rights under Section 7.2(a), if at any time a Payment Default has
occurred and is continuing for a period of more than 30 days, RNRC may give written notice of
termination to the Partnership, which notice shall set forth in reasonable detail the Payment
Default. The Partnership shall have 15 days following the date of such notice in which to cure
such Payment Default. If the Partnership fails to cure such Payment Default in accordance with the
immediately preceding sentence, then termination under Section 7.1(b) shall become effective on the
30th day after the date of such notice, or such later time (not to exceed the first
anniversary of the delivery of such notice) as may be specified in such notice.




     Section 7.3 Effect of Termination.




          
If this Agreement is terminated in accordance with Section 7.1 or 7.2, all rights and
obligations under this Agreement shall cease except for (a) obligations that expressly survive
termination of this Agreement; (b) liabilities and obligations that have accrued prior to such
termination, including the obligation to pay any amounts that have become due and payable prior to
such termination, and (c) the obligation to pay any Partnership Expenses that has accrued prior to
such termination, even if such portion has not become due and payable at that time.



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ARTICLE VIII




CONFIDENTIAL INFORMATION




     Section 8.1 Nondisclosure.




          
Each of RNRC and the Partnership Group agrees that (i) it will not disclose to any third party
or use any Confidential Information disclosed to it by the other except as expressly permitted in
this Agreement, and (ii) it will take all reasonable measures to maintain the confidentiality of
all Confidential Information of the other Party in its possession or control, which will in no
event be less than the measures it uses to maintain the confidentiality of its own information of
similar type and importance.



     Section 8.2 Permitted Disclosure.




          
Notwithstanding the foregoing, each Party may disclose Confidential Information (i) to the
extent required by a court of competent jurisdiction or other governmental authority or otherwise
as required by law, including without limitation disclosure obligations imposed under the federal
securities laws, provided that such Party has given the other Party prior notice of such
requirement when legally permissible to permit the other Party to take such legal action to prevent
the disclosure as it deems reasonable, appropriate or necessary, or (ii) to its consultants, legal
counsel, Affiliates, accountants, banks and other financing sources and their advisors.



ARTICLE IX




LIMITATION OF LIABILITY; INDEMNIFICATION




     Section 9.1 Liabilities and Indemnification.




          
          
(a) IN NO EVENT, OTHER THAN FOR LIABILITY ARISING FROM THE BAD FAITH OR WILLFUL MISCONDUCT OF
RNRC, SHALL RNRC BE LIABLE TO THE PARTNERSHIP GROUP, DIRECTLY OR INDIRECTLY, FOR ANY CLAIMS,
DEMANDS, SUITS, LOSSES, LIABILITIES, OBLIGATIONS, PAYMENTS, COSTS, EXPENSES OR DAMAGES, WHETHER
DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE, OR ANY LOST REVENUES OR PROFITS
(COLLECTIVELY, “DAMAGES”), RESULTING FROM RNRC’S PERFORMANCE OR FAILURE TO PERFORM UNDER THIS
AGREEMENT, OR THE FURNISHING, PERFORMANCE OR USE OF SERVICES PROVIDED HEREUNDER, WHETHER DUE TO
BREACH OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE OR OTHERWISE, REGARDLESS OF WHETHER OR NOT RNRC
WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING IN ANY RESPECT, RNRC SHALL FURTHERMORE NOT BE RESPONSIBLE OR LIABLE TO THE PARTNERSHIP
GROUP FOR ANY DAMAGES RESULTING OR ARISING FROM ANY ACTUAL OR ALLEGED INFRINGEMENT OF ANY THIRD
PARTY INTELLECTUAL PROPERTY (INCLUDING, WITHOUT LIMITATION, SERVICES, SOFTWARE, HARDWARE OR
EQUIPMENT) USED TO PROVIDE SERVICES.




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(b) The Partnership Group shall jointly and severally indemnify and hold harmless RNRC, its
subsidiaries and affiliates and their employees, officers, directors, managers, members,
representatives and agents (each, an “RNRC Indemnified Party”) from and against any and all (i)
third party claims for Damages, as incurred by any RNRC Indemnified Party, relating to or arising
out of the provision of Services by RNRC pursuant to this Agreement, or (ii) a reasonable
allocation of Damages suffered by an RNRC Indemnified Party in the conduct of its business to the
extent such Damages are not the sole result of activity for the benefit of a party or parties other
than the Partnership Group, in either case, except to the extent that it is finally judicially
determined that such Damages resulted from the bad faith or willful misconduct of such RNRC
Indemnified Party. The Partnership shall also reimburse each RNRC Indemnified Party promptly upon
request for all reasonable expenses (including reasonable attorneys’ fees and expenses) as they are
incurred in connection with the investigation of, preparation for, defense of, or providing
evidence in, any action, claim, suit, proceeding or investigation (each and collectively, an
“Action”), directly or indirectly, arising out of, or relating to, this Agreement or the Services,
as related to any matter with respect to which indemnification applies under this Agreement,
whether or not pending or threatened and whether or not any RNRC Indemnified Party is a party to
such Action.





          
          
(c) RNRC shall indemnify and hold harmless each member of the Partnership Group, its
subsidiaries and affiliates and their employees, officers, directors , managers, members,
representatives and agents (each, a “Partnership Group Indemnified Party”) from and against any all
third party claims for Damages, as incurred by any Partnership Group Indemnified Party, relating to
or arising out of the bad faith or willful misconduct of RNRC in the provision of Services by RNRC
pursuant to this Agreement. RNRC shall also reimburse each Partnership Group Indemnified Party
promptly upon request for all reasonable expenses (including reasonable attorneys’ fees and
expenses) as they are incurred in connection with the investigation of, preparation for, defense
of, or providing evidence in, any Action, directly or indirectly, arising out of, or relating to,
the bad faith or willful misconduct of RNRC under this Agreement or the Services, as related to any
matter with respect to which indemnification applies under this Agreement, whether or not pending
or threatened and whether or not any Partnership Group Indemnified Party is a party to such Action.
The Partnership Group Indemnified Party to whom any such reasonable expenses are paid shall
reimburse RNRC for any such expenses immediately upon the settlement or final judicial
determination of the matter unless it there is a final judicial determination that the claim arose
as a result of the bad faith or willful misconduct of RNRC.




ARTICLE X




DISPUTE RESOLUTION





          
If the Parties are unable to resolve any dispute regarding the validity or terms of this
Agreement or its termination, service or performance issues, there is a material breach of this
Agreement that has not been corrected within thirty (30) days of receipt of notice of such breach
or any other dispute between the parties related to this Agreement, either party hereto may refer
the matter to an arbitrator selected in accordance with the rules of [•] as the exclusive remedy
for



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any such dispute, and in lieu of any court action, which is hereby waived. The only exception
shall be a claim by either Party for injunctive relief pending arbitration.




ARTICLE XI




GENERAL PROVISIONS




     Section 11.1 Notices.




          
All notices or other communications required or permitted under, or otherwise in connection
with, this Agreement must be in writing and must be given by depositing same in the mail, addressed
to the Person to be notified, postpaid and registered or certified with return receipt requested or
by transmitting by national overnight courier or by transmitting by national overnight courier or
by delivering such notice in person or by facsimile to such Party. Notice given by mail, national
overnight courier or personal delivery shall be effective upon actual receipt. Notice given by
facsimile shall be effective upon confirmation of receipt when transmitted by facsimile if
transmitted during the recipient’s normal business hours or at the beginning of the recipient’s
next business day after receipt if not transmitted during the recipient’s normal business hours.
All notices to be sent to a Party pursuant to this Agreement shall be sent to or made at the
address, in each case as follows:


if to the General Partner:



Resolute Energy GP, LLC

1675 Broadway, Suite 1950

Denver, Colorado 80202

Attention: James M. Piccone

Fax: (303)-623-3628



if to the Partnership:



Resolute Energy Partners LP

1675 Broadway, Suite 1950

Denver, Colorado 80202

Attention: James M. Piccone

Fax: (303)-623-3628



if to the Operating Company:



Resolute Energy Operating LLC

1675 Broadway, Suite 1950

Denver, Colorado 80202

Attention: James M. Piccone

Fax: (303)-623-3628




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if to RNRC:



Resolute Natural Resources Company

1675 Broadway, Suite 1950

Denver, Colorado 80202

Attention: James M. Piccone

Fax: (303)-623-3628




     Section 11.2 Further Action.




          
The Parties shall execute and deliver all documents, provide all information and take or
refrain from taking action as may be necessary or appropriate to achieve the purposes of this
Agreement.



     Section 11.3 Binding Effect.




          
This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their
heirs, executors, administrators, successors, legal representatives and permitted assigns.



     Section 11.4 Integration.




          
This Agreement constitutes the entire Agreement among the Parties hereto pertaining to the
subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.



     Section 11.5 Creditors.




          
None of the provisions of this Agreement shall be for the benefit of, or shall be enforceable
by, any creditor of the Partnership.



     Section 11.6 Waiver.




          
No failure by any party to insist upon the strict performance of any covenant, duty, agreement
or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute waiver of any such breach of any other covenant, duty, agreement or condition.



     Section 11.7 Counterparts.




          
This Agreement may be executed in counterparts, all of which together shall constitute an
agreement binding on all the Parties hereto, notwithstanding that all such Parties are not
signatories to the original or the same counterpart. Each Party shall become bound by this
Agreement immediately upon affixing its signature hereto.



     Section 11.8 Applicable Law.




          
This Agreement shall be construed in accordance with and governed by the laws of the State of
Delaware, without regard to the principles of conflicts of law.



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     Section 11.9 Invalidity of Provisions.




          
If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions contained herein
shall not be affected thereby.



     Section 11.10 Amendment or Restatement.




          
This Agreement may be amended or modified from time to time only by the written agreement of
all the Parties hereto; provided, however, that if at the time of such amendment or modification
the limited partner interests of the Partnership are listed or traded on an “exchange” as defined
in Section 3(a)(1) of the Securities Exchange Act of 1934, as amended, such amendment or
modification must be approved by the Conflicts Committee unless the General Partner determines in
good faith that such amendment or modification will not adversely affect the Limited Partners in
any material respect. The Parties hereto agree that, for purposes of this Section 11.10, any
material change in the nature, quantity or duration of the Services to be provided under this
Agreement shall constitute a modification of this Agreement.



     Section 11.11 Directly or Indirectly.




          
Where any provision of this Agreement refers to action to be taken by any Party, or which such
Party is prohibited from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Party, including actions taken by or on behalf of any Affiliate of
such Party.



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IN WITNESS WHEREOF, the Parties have executed this Agreement on, and effective as of, the
Effective Date.



	 	 	 	 	 
	 	RESOLUTE ENERGY GP, LLC

 	 
	 	By:  	
 	 
	 	 	Name:  	Nicholas J. Sutton 	 
	 	 	Title:  	Chief Executive Officer 	 
	 



	 	 	 	 	 	 	 
	 	RESOLUTE ENERGY PARTNERS LP

 	 
	 	By:  	Resolute Energy GP LLC, its General Partner 	 
	 	 	 	 
	 
	 	 	 	By:  	 	 
	 	 	 	 	Name:  	Nicholas J. Sutton 	 
	 	 	 	 	Title:  	Chief Executive Officer 	 
	 



	 	 	 	 	 
	 	RESOLUTE ENERGY OPERATING LLC

 	 
	 	By:  	 	 
	 	 	Name:  	Nicholas J. Sutton 	 
	 	 	Title:  	Chief Executive Officer 	 
	 



	 	 	 	 	 
	 	RESOLUTE NATURAL RESOURCES COMPANY

 	 
	 	By:  	
 	 
	 	 	Name:  	Nicholas J. Sutton 	 
	 	 	Title:  	Chief Executive Officer 	 
	 



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SCHEDULE I




Services Provided By RNRC

to Partnership





	1.	 	Accounting
	 
	2.	 	Information Technology
	 
	3.	 	Real Property, Land
	 
	4.	 	Legal
	 
	5.	 	Securities and Exchange Commission and Stock Exchange Reporting and Compliance
	 
	6.	 	Operations/Reservoir Engineering/Geology/Geophysics
	 
	7.	 	Administrative Services
	 
	8.	 	Financial Services
	 
	9.	 	Insurance Service
	 
	10.	 	Risk Management
	 
	11.	 	Corporate Development
	 
	12.	 	Commercial and Marketing
	 
	13.	 	Treasury
	 
	14.	 	Tax
	 
	15.	 	Audit
	 
	16.	 	SOX
	 
	17.	 	Investor Relations
	 
	18.	 	Environmental, Health and Safety
	 
	19.	 	Data Retention and Destruction
	 
	20.	 	Planning, Budget and Executive Function
	 
	21.	 	Hedging, Derivatives and Risk Management





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