Exhibit 10.42

 

  

****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

FIRST SUPPLEMENTAL AND AMENDED

AGREEMENT FOR

FIRM DISPOSAL OF SALT WATER

BETWEEN

HECKMANN WATER RESOURCES CORPORATION

AND

EXCO PRODUCTION COMPANY, L.P.

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

FIRST AMENDED AND RESTATED AGREEMENT FOR

FIRM DISPOSAL OF SALT WATER

THIS document, which will become effective the 25th day of January, 2010, shall
constitute the FIRST AMENDED AND RESTATED AGREEMENT FOR FIRM DISPOSAL OF SALT
WATER (as amended and restated, this “Agreement”), by and between HECKMANN WATER
RESOURCES CORPORATION, a Texas corporation (individually and as successor to
CHARIS PARTNERS, LLC a Texas limited liability company), hereinafter referred to
as “HWR” and EXCO OPERATING COMPANY LP. (individually and as successor to EXCO
PRODUCTION COMPANY, LP) hereinafter referred to as “EXCO.” Each party to this
Agreement is hereinafter referred to individually as “Party” and collectively as
“Parties.” This document amends and restates in its entirety the original
AGREEMENT FOR FIRM DISPOSAL OF SALT WATER entered between the parties
predecessors in interest in that original Agreement the third day of September,
2008, as subsequently amended or supplemented.

WHEREAS, EXCO owns or controls salt water produced in association with oil and
gas operations in various fields in north Louisiana;

WHEREAS, HWR is the successor to all of the rights and obligations of Charis
Partners, LLC and Silversword, LP (and its affiliates) respecting the original
Agreement For Firm Disposal of Salt Water entered September 3, 2009, and this
Agreement;

WHEREAS, EXCO desires that HWR construct a salt water pipeline for the purpose
of accepting, transporting and disposing such salt water in the salt water
disposal wells in and around Joaquin, Texas, owned by HWR; and

WHEREAS, HWR has the ability and desire to construct, operate and maintain such
a pipeline and to accept and dispose of such salt water in the Disposal Wells.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the Parties hereto covenant and agree as follows:

ARTICLE I.

DEFINITIONS

Except as otherwise herein provided, the following words and/or terms as used in
this Agreement shall have the following scope and meaning:

1.1 The term “barrel” shall mean 42 U.S. gallon equivalents.

1.2 The term “day” shall mean a period of twenty-four (24) consecutive hours
beginning and ending at 9:00 a.m. Central Clock Time.

1.3 The term “month” shall mean the period beginning at 9:00 A.M. Central Clock
Time on the first day of the calendar month and ending at 9:00 A.M. Central
Clock Time on the first day of the next succeeding calendar month.

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

1.4 The term “Contract Year” shall mean one-year periods with the first such
contract year (i) beginning at 9:00 A.M. Central Clock Time, on the In Service
Date if such date is on the first of a month or (ii) beginning at 9:00 A.M.
Central Clock Time, on the first day of the month following In Service Date.

1.5 The term “Custody Transfer Point(s)” shall mean those valve assemblies
located along the Pipeline at points identified on Exhibit A, attached hereto
and made a part hereof, including additional points between the Billing Meter
Point and the Easternmost Custody Transfer Point, which may be identified by
EXCO from time to time, where EXCO may deliver water to, or, with prior written
consent of the parties, which consent shall not be unreasonably withheld or
withheld except for reasons that HWR’s downstream operations will be adversely
affected, extract Water from, the Pipeline without charge (except as to the
Billing Meter Point, defined below, for which charges are calculated as provided
in Article 3), and where the custody of and liability for the Water transfers
between HWR and EXCO, as further provided in Sections 8.2 and 8.3.

1.6 The term “Primary Term” shall mean a term commencing on the In Service Date
and ending on the earlier of (i) the date seven (7) years and zero (0) months
after the In Service Date or (ii) the date when the total amount of fees for
Water delivered by EXCO to HWR under this Agreement equals or exceeds $****.

1.7 The term “In Service Date” shall mean the first day of the month following
the date when the entire Pipeline (from Disposal Wells to the Easternmost
Custody Transfer Point (the last point listed on Exhibit A), all Custody
Transfer Points are complete and functional, and the Pipeline is commissioned so
that HWR is able to receive Water at all Custody Transfer Points.

1.8 The term “Water” shall mean any and all salt water produced in association
with oil and gas operations in and around the Custody Transfer Points.

1.9 The term “Environmental Laws” shall mean all applicable local, state, and
federal laws, rules, regulations, and orders regulating or otherwise pertaining
to (a) the use, generation, migration, storage, removal, treatment, remedy,
discharge, release, transportation, disposal, or cleanup of pollutants,
contamination, hazardous wastes, hazardous substances, hazardous materials,
toxic substances or toxic pollutants, (b) the soil, surface waters, ground
waters, land, stream sediments, surface or subsurface strata, ambient air and
any other environmental medium on or off any Property or (c) the environment or
health and safety related matters; including the following as from time to time
amended and all others whether similar or dissimilar: the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act
of 1980, the Solid Waste Disposal Act Amendments of 1980, and the Hazardous and
Solid Waste Amendments of 1984, the Hazardous Materials Transportation Act, as
amended, the Toxic Substance Control Act, as amended, the Clean Air Act, as
amended, the Clean Water Act, as amended, and all regulations promulgated
pursuant thereto.

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

1.10 The term “Billing Meter Point” shall mean the EXCO Holly Common Point 1
(or, Holly CP1), and is further identified on the maps and drawings previously
provided to Charis and HWR.

1.11 The term “Disposal Wells” shall mean the salt water disposal wells located
in and around Joaquin, Texas, currently owned by Silversword LP.

1.12 The term “Pipeline” is identified in Exhibit A.

1.13 The phrase “at or downstream of a Custody Transfer Point” shall mean the
point at each Custody Transfer Point where the Water passes out of the EXCO
meter and into the HWR meter or into the main Pipeline.

1.14 The phrase “upstream of a Custody Transfer Point” shall mean any point
before the Water reaches the HWR meter at each Custody Transfer Point, including
the points when the Water is stored in any tanks or flows through the pump
filter skid from such tanks, or, if the Water is being extracted with prior
approval of the parties, the point after the Water has passed from the HWR meter
back into EXCO’s meter.

ARTICLE 11.

FACILITIES CONSTRUCTION

2.1 Construction and Operation of Pipeline. HWR shall obtain all necessary
permits, rights of way and other approvals as may be required to construct
operate and maintain the Pipeline. Upon receipt of such permits, rights of way
and other approvals, HWR, at its sole cost risk and expense, except as otherwise
provided herein, shall install, own, operate and maintain a twelve-inch (12") or
greater main pipeline from the Disposal Wells in Joaquin, Texas, to the Billing
Meter Point and an eight-inch (8") or greater main pipeline of approximately
13.5 miles from the Billing Meter Point to the Easternmost Custody Transfer
Point as further described in Exhibit B attached hereto and made part hereof,
and the related equipment, including measurement equipment necessary to deliver,
receive and measure, and with prior written consent of the parties as otherwise
provided herein, extract, Water for EXCO’s Holly and Kingston Fields located in
DeSoto Parish, Louisiana (collectively, the “Pipeline”). The Pipeline will
connect to each of the Custody Transfer Points described on Exhibit A, and HWR
will install the measurement equipment at each Custody Transfer Point. EXCO will
provide, at no cost to HWR, a site of sufficient size, at or near each Custody
Transfer Point for HWR’s measurement equipment.

2.2 Pressure. HWR shall construct, maintain and operate the Pipeline at the
following pressure specifications:

a. Normal operating pressures of the Pipeline shall be 175 psig or less.

b. Maximum allowable operating pressure (“MAOP”) will be no greater than 200
psig.

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

EXCO agrees to install pumps at each Custody Transfer Point sufficient to
transport the water from the Custody Transfer Point to the Disposal Wells. If
the average pressure at any Custody Transfer Point exceeds the MAOP for ten
consecutive (10) days during any calendar month, then the fee per barrel set
forth in Section 5.1 below shall be reduced by **** ($****) during such month.
Nevertheless, for the purpose of determining if EXCO has met its financial
commitment in Section 3.2, the full fee (without any deduction) will be used in
calculating the total fees EXCO had paid for such deliveries.

2.3 Deadlines. HWR shall use its best efforts to commence construction of the
Pipeline on or before December 31, 2008, and complete construction as soon as
possible thereafter. If pipeline construction has not commenced by April 30,
2010, EXCO may terminate the contract.

HWR represents to EXCO that HWR is successor to the salt water disposal
agreement with Silversword, LP (“Silversword”), which agreement is attached
hereto as Exhibit “C”. Effective July 1, 2009, HWR purchased and consolidated
Charis and Silversword under HWR and owns the disposal wells and Pipeline
contemplated by this Agreement.

In the event EXCO so terminates this Agreement, all fees paid to HWR (and Charis
as predecessor) pursuant to Section 5.1 shall be promptly repaid to EXCO (and
not more than 5 business days following receipt by HWR of written notice of
termination of this Agreement by EXCO). In lieu of returning cash, HWR may elect
to assign to EXCO all right of way purchased with EXCO funds. All such right of
way assigned to EXCO shall be credited against the cash payment otherwise owed
hereby to EXCO in an amount equal to the cash payment from Escrow made upon
purchase of said right of way by HWR (including purchases from Charis as
predecessor; for example only, if on November 1, 2008 Charis delivered ‘written
evidence of the purchase of right of way tract A in the amount of $50,000 upon
which disbursement of $50,000 from Escrow was made thereafter, upon termination
pursuant to this Section 2.3, HWR may elect to assign to EXCO right of way tract
A and credit $50,000 against the monies otherwise owed in cash pursuant to a
termination under this Section 2.3).

2.4 Easements. To the extent allowed under EXCO’s lease agreements, EXCO shall
partially assign easements and rights of way to HWR to assist in constructing of
the Pipeline provided HWR indemnify EXCO from any and all claims or damages that
arise from HWR’s operations on the granted rights.

ARTICLE III.

DISPOSAL SERVICE DEDICATION & COMMITMENT

3.1 Firm Quantity.

a. EXCO may deliver or cause to be delivered to HWR for EXCO’s account at the
Billing Meter Point a total or aggregate amount of up to twenty five thousand
(25,000) barrels of Water per day (the “Firm Quantity”), and HWR shall accept,
transport and properly dispose of such Water;

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

b. HWR may accept and dispose of quantities greater than the Firm Quantity on
any day as HWR in its sole discretion determines to accept and dispose from time
to time at such points depending on HWR’s operating capabilities and
requirements; and

c. EXCO shall be entitled to use all capacity in the Pipeline in excess of the
Firm Quantity should HWR not be fully utilizing the total capacity of the
Pipeline.

d. This Section 3.1 constitutes HWR’s agreement and covenant to accept delivery
of at least the Firm Quantity of Water from EXCO and such additional quantities
of EXCO Water as provided in Section 3.1 during the Primary Term and any
extension thereof, notwithstanding any other provision of this Agreement
(including Sections 3.3 and 4.6) permitting HWR to temporarily suspend
acceptance of Water. HWR covenants to promptly remedy any situation requiring a
temporary suspension of acceptance of EXCO Water that meets the Water quality
and pressure requirements set forth in this Agreement.

3.2 Minimum Fees. In addition, EXCO agrees to guarantee that, during the Primary
Term, the total amount of fees for Water delivered by EXCO to the Billing Meter
Point under this Agreement, carried forward from prior Contract Years will not
be less than the following amounts (the “Minimum Fees”):

 

Contract Year

   Minimum Fees

Year One

   $****

Year Two

   $****

Year Three

   $****

Year Four

   $****

Year Five

   $****

Year Six

   $****

Year Seven

   $****     

Total EXCO Obligation

   $****

For the purpose of this Section 3.2, if, for any Contract Year, the fees for
Water delivered to the Billing Meter Point during such Contract Year is more
than the Minimum Fees for that Contract Year, then such excess shall be carried
forward to the next Contract Year and shall be included in the calculation of
the total fees for Water delivered to HWR for that subsequent Calendar Year. If,
for any Contract Year, the total of the fees for Water delivered to HWR during
such Contract Year is less than the Minimum Fees for such Contract Year, then
EXCO shall pay to HWR an amount equal to such shortfall. Such payments are due
within 30 days of EXCO’s receiving an invoice from HWR for such shortfall.

3.3 Failure to Accept Water. If, on any day after the In Service Date, HWR is
unable for any reason to accept EXCO’s Water at any Custody Transfer Point(s),
then, for the purpose of determining if EXCO has met its financial commitment in
Section 3.2, such undelivered and unaccepted Water up to 25,000 barrels per day
shall be counted as if such Water had been delivered by EXCO and accepted by HWR
at the Billing Meter Point, and EXCO had paid the fees for such delivery. The
amount of Water that was not accepted shall be deemed to be equal to the
difference between (i) the amount of Water actually accepted, if any, and
(ii) 25,000 barrels.

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

In addition, during the pendency of any such Pipeline outage EXCO will pay a
disposal fee of $**** per barrel for any such Water transported by EXCO through
alternative means for disposal at the Disposal Wells to which the Pipeline
normally delivers water.

3.4 Commencement of Minimum Obligations. In order to simplify the accounting
under this Agreement, the Parties have agreed to start the Primary Term on the
first day of the month. following the In Service Date. During the time period
before the commencement of the Primary Term, EXCO may deliver Water at any
Custody Transfer Point(s), but EXCO shall have no obligation to deliver or to
pay any Minimum Fees in regards to any such Water prior to the commencement of
the Primary Term. Nevertheless, the fees paid by EXCO for such Water shall be
included in the calculation of the total fees paid for Water delivered in the
first Contract Year for purposes of determining whether the Minimum Fees for the
first Contract Year have been paid.

3.5 No Minimum Obligations after Primary Term. After the Primary Term, during
any Renewal Term, there shall be no minimum fees.

ARTICLE IV.

FACILITIES & MEASUREMENT

Other than the Pipeline and related measurement equipment, HWR and EXCO
recognize that HWR has facilities and equipment currently in place (or access to
such), necessary to provide the disposal service contemplated hereunder. HWR
shall install, own, operate and maintain, or cause the same to be done, at the
Billing Meter Point and Custody Transfer Point(s) the meters, instruments, and
equipment necessary to accept delivery of the Water under this Agreement at each
Custody Transfer Point and the Billing Meter Point. Installation and operation
of additional check meters, and other related measurement equipment instruments
shall be at EXCO’s sole option, and such meters and equipment shall be operated
by, and the responsibility of, EXCO.

4.1 Meters. The meters to be installed at each Billing Meter Point shall be
Cameron’s “Nu Flo” Industrial-grade liquid turbine meters or equivalent meters
manufactured by other manufacturers, sized to operate near the mid-point of
their linear operating range. Specific meter sizes for each Custody Transfer
Point shall be determined based upon the specific pumps that EXCO installs at or
near the relevant Custody Transfer Point, to be determined at least 60 days
prior to first delivery at such Custody Transfer Point.

4.2 Installation and Operations. Each Party shall have access at all reasonable
times to the premises of the other insofar as such premises are connected with
any matter or thing covered hereby for inspections, installation, maintenance,
removal, repair and testing of their own equipment. Each Party may only operate
and test its own meters.

4.3 Testing and Repair of Equipment at Billing Meter and Custody Transfer
Points. The accuracy of HWR’s measuring equipment shall be verified by HWR at
reasonable intervals and, if requested, in the presence of EXCO’s
representatives; provided, however HWR shall not be required to verify the
accuracy of such equipment at its cost and expense more frequently than once in
any three (3) month period. Testing will be done by comparing HWR’s meter data
to

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

EXCO’s check meter data over a continuous 24-hour period, as well HWR’s meter
data to EXCO’s theoretical pump volume over a one-hour period of continuous
pumping. In the event either HWR or EXCO notifies the other Party that it
desires a special test of any measuring equipment, HWR and EXCO shall cooperate
to secure a prompt verification of the accuracy of such equipment. In the event
that a special test is requested; and after such test, the equipment is
determined to register no greater than two percent (2%) difference from EXCO’s
check meter or 5% from EXCO’s theoretical pump volumes, either high or low, the
requesting Party shall pay all costs for said test.

4.4 Correction of Metering Equipment. Any meter found, by test, to register not
more than two percent (2%) high or low shall be deemed to be correct as to past
measurements but shall be corrected to record accurately. In the event any
meter, by test, proves to be more than two percent (2%) high or low, adjustment
shall be made to fully correct the readings of such meters; provided, however,
that if the period in which the error occurred is not known or cannot be agreed
upon, then the period shall be deemed to be the last half of the time elapsed
since the last test, or forty-five (45) days, whichever is the lesser period. If
the Billing Meter Point meter is out of repair or is being tested or in the
event that HWR’s meter otherwise become inoperative, then the quantity of Water
delivered to the Billing Meter Point during the period HWR’s meter or meters
were inoperative or manifestly in error shall be determined using EXCO’s check
meter, or if that meter is also in error by two percent (2%) or more or out of
service, by estimating as nearly as possible the quantity of Water delivered to
the Billing Meter Point during like periods under similar conditions when such
meter was registering accurately or correctly within the tolerance set forth
herein. Corrective action will consist of internal inspection to ensure
integrity of the meter body, and replacing the internals with a new turbine kit,
plus re-calibration of the display/recording equipment to reflect the new kit’s
meter factor. The meter will be tagged with the new factor.

4.5 Inspection of Charts and Records. The charts and records from the measuring
equipment shall remain the property of the Party operating the measuring
equipment and shall be kept for a period of two (2) years. At any time within
such period, upon written request of the Party not in possession, the Party in
possession shall submit records and charts from the measuring equipment,
together with calculations there from, for inspection and verification subject
to return within twenty (20) days from receipt thereof.

4.6 Water Quality. EXCO shall make reasonable efforts to remove oil and other
liquid contaminants from the Water by using normal field separation methods
prior to pumping it into HWR’s system but shall not be required to remove one
hundred percent of such contaminants. EXCO shall also install filtering
equipment (with 100 micron or smaller particle removal capability) between its
pump and check meter (upstream of HWR’s meter) at each Custody Transfer Point.
EXCO shall install industry standard equipment at each Custody Transfer Point to
safe guard against over pressuring the Pipeline. HWR shall not accept Water from
third parties that will negatively affect the capacity of the Pipeline or which
would prevent HWR from accepting all of EXCO’s Water up to the Firm Quantity.
Any such constraints will be deemed to be a failure to accept EXCO’s Water under
Section 3.3 of this Agreement, if such acceptance of third party water precludes
HWR from accepting EXCO’s water in accordance with Section 3.3 of this
Agreement.

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CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

ARTICLE V.

FEES

5.1 Fees. Subject to the increases provided in Section 5.3, EXCO shall pay to
HWR each month a fee equal to **** ($****) per barrel for each barrel of water
delivered to HWR at the Billing Meter.

5.2 Construction Fees. Additionally, EXCO agrees to contribute $**** toward the
cost of construction of HWR’s pipeline, as provided in the Authorizations for
Expenditure attached as Exhibit “D.” Payments from EXCO to HWR will be due
according to the following time table and such proceeds shall be used
exclusively for the project contemplated under this agreement:

 

  (1) $**** due upon execution of the original Agreement.

 

  (2) $**** due upon the initiation of pipeline construction.

 

  (3) $**** due upon initiation of the pipeline segment connecting the El Paso
delivery point and the EXCO Billing Meter Point.

 

  (4) $**** due upon the initiation of construction of the pipeline segment
connecting the Billing Meter Point and the Easternmost Custody Transfer Point.

 

  (5) $**** due upon In Service Date.

Each of the contributions described in Items (1), (2) (3) and (4) above will be
deposited into escrow (the “Escrow”) with a mutually acceptable escrow agent.
The $**** contribution described in Item (1) shall be paid to HWR upon EXCO’s
written instruction to the escrow agent made promptly after EXCO’s receipt of
written evidence of payment for right of way for the Pipeline. All such
disbursements from Escrow to HWR shall be in an amount equal to the right of way
for which evidence was provided to EXCO. Any such monies (and any interest
thereon) shall be disbursed to HWR upon delivery to Escrow of the $****
contribution called for in Item (2) above.

The contributions called for in Items (2), (3) and (4) above, respectively,
shall likewise be held in Escrow and disbursed from Escrow to HWR upon written
instruction from EXCO after EXCO’s receipt of written evidence of payment by HWR
towards Pipeline construction costs. All such disbursements shall be in an
amount equal to the amount of pipeline costs paid by HWR and for which written
evidence was provided to EXCO. Any such monies (and any interest earned thereon)
from the Item (2), Item (3), or Item (4) payment shall be disbursed to HWR upon
payment into Escrow of the next installment of the contribution (for example,
upon the payment into Escrow of $1,200,000 called for in Item (3) above, all
monies remaining in Escrow from Item (2) shall be disbursed to HWR).

The total cost for construction of the Pipeline, as shown by the sum of the
attached AFEs, is expected to be $****. Any construction costs that exceed $****
will be considered “overages.” EXCO and HWR shall split, dollar-for-dollar, the
overages, provided however, that EXCO’s contribution towards overages is capped
at, and shall not exceed, $**** (the “overage cap”). Once EXCO has reached this
overage cap, all additional overages shall be borne and paid solely

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CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

by HWR. Under no circumstances will EXCO pay, or this Agreement be interpreted
to require EXCO to pay more than a total of $**** (which number is inclusive of
the overage cap) towards the construction cost of the Pipeline.

In the event this Agreement is terminated pursuant to Section 2.3, all monies
held in Escrow (including interest thereon) shall be disbursed to EXCO upon its
written instruction to the escrow agent.

5.3 Increase in Fees. During the Primary Term, the rates set forth in
Section 5.1 will be increased annually at the beginning of each Contract Year,
beginning with the Contract Year commencing in 2010. The rates set forth in
Section 5.1 will be increased annually at the beginning of each Contract Year
using the Consumer Price Index for all Urban Consumers U.S. City Average, All
Items, Not Seasonally Adjusted, as reported by the United States Department of
Labor, Bureau of Labor Statistics for the previous 12-month period for which
changes are reported, rounded up to the nearest penny. However, in no event will
the annual increase be less than three percent (3%) per year.

5.5 Invoices. HWR shall invoice EXCO for the Water delivered to the Billing
Meter Point by EXCO each month for the water delivered by EXCO in the prior
month with the amounts due within thirty (30) days from the date of the invoice.
The invoice shall include the amount of Water delivered at the Billing Meter
Point, the rate at the Billing Meter Point, and the total amount owed.

5.6 Payments. EXCO agrees to make payment hereunder to HWR for its account
within thirty (30) days after receipt of HWR’s invoice by (1) wire transfer or
(2) at the address indicated on the billing, or such other address as HWR may
designate in writing to EXCO from time to time.

5.7. Disputed Payments. EXCO will not be in breach of the Agreement by reason of
the withholding of any payment pursuant to any provision of this Agreement
provided EXCO in good faith and by written notice to HWR disagrees with any
invoice, or any part thereof, and such notice sets forth the reasons for such
disagreement. If EXCO disputes only a portion of any invoice, EXCO shall timely
pay the undisputed portion in accordance with Section 5.6.

ARTICLE VI.

TERM

6.1 Term. This Agreement shall become binding on the Parties hereto on the date
first hereinabove written, and shall remain in full force until the end of the
Primary Term and for successive terms of one (1) year. This Agreement may be
terminated by either Party at the end of the Primary Term or at the end of any
successive term thereafter upon ninety (90) days prior written notice to the
other Party.

6.2 Regulatory Filings. Each Party reserves the right to pursue any necessary
regulatory filings with any governmental or regulatory body having jurisdiction
which maybe necessary to implement or continue this Agreement.

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

ARTICLE VII.

NOTICES AND ADDRESSES

7.1 Notices. All notices are required to be given in writing. Any correspondence
provided for in this Agreement shall be deemed sufficiently given when deposited
in the United States mail, postage prepaid, and addressed to the respective
Parties at such address or such other addresses as the Parties respectively
shall designate by written notice; provided however, any notice to cancel this
Agreement shall be sent Certified Mail.

7.2 Addresses

a. Notices and Correspondence to HWR - Until EXCO is otherwise notified in
writing by HWR, notices and payments to HWR shall be addressed to HWR at the
addresses set forth below or at such other addresses as HWR may hereafter
designate by notifying EXCO in writing:

 

Notices and Correspondence:

  

Payments:

Heckmann Water Resources Corporation

  

210 S. Broadway, Suite 210202 CR 3267

  

Tyler, TX 75702

  

Attention: Mr. David Melton

  

Heckmann Corporation

  

Attn: Donald G. Ezzell

  

75080 Frank Sinatra Drive

  

Palm Desert, CA 92211

  

b. Notices and Correspondence to EXCO. Until HWR is otherwise notified in
writing by EXCO, notices and invoices to EXCO shall be addressed to EXCO at the
address set forth below or at such other address as EXCO may hereafter designate
by notifying HWR in writing:

 

Notices/Correspondence:

  

Invoices:

EXCO Production Company, LP    EXCO Production Company, LP Attn: Mike Chambers
   Attn: Accounts Payable/ Meredith Kruer 12377 Merit Dr., Suite 1700    12377
Merit Drive, Suite 1700 Dallas, TX 75251    Dallas, Texas 75251 Fax:
(318) 687-3236    Fax (214) 438-1403 EXCO Resources, Inc. General Counsel   
12377 Merit Dr., Suite 1700    Dallas, TX 75251   

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

ARTICLE VIII

WARRANTIES AND INDEMNITIES

8.1 Warranty of Title. EXCO warrants to HWR that EXCO has good title to, or the
unqualified right to tender, the Water gathered hereunder. EXCO hereby agrees to
indemnify HWR against all suits, actions, debts, accounts, damages, costs
(including attorney’s fees), losses and expenses arising from or out of any
adverse claim of any and all persons to or against title and possession to said
Water or any royalties, payments or taxes due thereon arising or accruing prior
to or upstream of the Custody Transfer Points. Such indemnification shall be
provided to HWR regardless whether EXCO’s liability for such suits, actions,
debts, accounts, damages, costs (including attorney’s fees), losses and expenses
arise from joint, sole, concurrent, comparative or contributory fault or
negligence, or fault impose by statute, rule or regulation or strict liability
of EXCO, its officers, agents, and/or employees.

8.2 Liability. EXCO shall have responsibility for the Water upstream of each
Custody Transfer Point including responsibility for any spills that occur
upstream of a Custody Transfer Point. Title to the Water delivered by EXCO to
HWR shall pass to HWR at each Custody Transfer Point. HWR shall have
responsibility for the Water at and down stream of the Custody Transfer Point(s)
including the responsibility for properly disposing of the Water and for any
spills that occur at or downstream of a Custody Transfer Point. Nothing herein
will be construed to make any Party liable for consequential damages, which may
occur or be asserted by reason of events or occurrences related to this
Agreement.

8.3 EXCO’s Indemnities. EXCO agrees to defend, indemnify and hold HWR harmless
from and against any and all claims, demands, losses, damages, liabilities,
judgments, causes of action, reasonable costs or expenses (including, without
limitation, any and all reasonable costs, expenses, attorneys’ fees,
consequential damages and other costs incurred in defense of any claim or
lawsuit arising therefrom), of whatsoever nature arising out of or relating to
EXCO’s ownership, operation or administration of the Water upstream of any
Custody Transfer Point including, without limitation, damages to persons or
property, fines, penalties, monetary sanctions or other amounts payable for
failure to comply with applicable Environmental Laws, securities, safety or
health, requirements of law (whether federal, state or local), except in each
case for those arising out of HWR’s gross negligence or willful misconduct.

8.4 HWR’s Indemnities. HWR agrees to defend, indemnify and hold EXCO harmless
from and against any and all claims, demands, losses, damages, liabilities,
judgments, causes of action, reasonable costs or expenses (including, without
limitation, any and all reasonable costs, expenses, attorneys’ fees,
consequential damages and other costs incurred in defense of any claim, or
lawsuit arising therefrom), of whatsoever nature arising out of or relating to
HWR’s ownership, operation or administration of the Water downstream of any
Custody Transfer Point, including, without limitation, damages to persons or
property, fines, penalties, monetary sanctions or other amounts payable for
failure to comply with applicable Environmental Laws, securities, safety or
health law (whether federal, state or local) except in each case for those
arising out of EXCO’S gross negligence or willful misconduct.

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

8.5 Notification. As soon as reasonably practical after obtaining knowledge
thereof, the indemnified party shall notify the indemnifying party of any claim
or demand which the indemnified party has determined 1: given or could give rise
to a claim for indemnification under this Article 8. Such notice shall specify
the agreement, representation or warranty with respect to which the claim is
made, the facts giving rise to the claim and the alleged basis for the claim,
and the amount (to the extent then determinable) of liability for which
indemnity is asserted. In the event any action, suit or proceeding is brought
with respect to which a party may be liable under this Article 8, the defense of
the action, suit or proceeding (including all settlement negotiations and
arbitration, trial, appeal, or other proceeding) shall be at the discretion of
and conducted by the’ indemnifying party. If an indemnified party shall settle
any such action, suit or proceeding without the written consent of the
indemnifying party (which consent shall not be unreasonably withheld), the right
of the indemnified party to make any claim against the indemnifying ,party on
account of such settlement shall be deemed conclusively denied. An indemnified
party shall have the right to be represented by its own counsel at its own
expense in any such action, suit or proceeding, and if an indemnified party is
named as the defendant in any action, suit or proceeding, it shall be entitled
to have its own counsel and defend such action, suit or proceeding with respect
to itself at its own expense. Subject to the foregoing provisions of this
Article 8 neither party shall, without the other party’s written consent,
settle, compromise, confess judgment or permit judgment by default in any
action, suit or proceeding if such action would create or attach liability or
obligation to the other party. The parties agree to make available to each
other, and to their respective counsel and accountants, all information and
documents reasonably available to them which relate to any action, suit or
proceeding, and the parties agree to render to each other such assistance as
they may reasonably require of each other in order to ensure the proper and
adequate defense of any such action, suit or proceeding.

ARTICLE IX

CHOICE OF LAW

9.1 Choice of Law: This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without giving effect to
principles of conflicts of laws.

ARTICLE X

MISCELLANEOUS

10.1 Modifications. Exhibit A may be amended as often as quarterly by EXCO on
providing notice to HWR of an amended substitute list of Custody Transfer
Points, which shall constitute an amendment to the Agreement. No other
modifications of the terms and provisions of this Agreement shall be or become a
effective except by the execution of a supplementary written agreement executed
by the parties.

10.2 Audit Rights. EXCO, upon notice in writing to HWR, shall have the right to
audit HWR’s accounts and records relating to this Agreement for any calendar
year within the twenty-four (24) month period following the end of such calendar
year HWR shall bear no portion of EXCO’s audit cost. The audits would be
conducted during the normal business hours of HWR and shall not be conducted
more than once each year without prior approval of HWR. HWR shall reply in
writing to an audit report within ninety (90) days after receipt of such report.

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

10.3 Successors and Assigns. This Agreement shall not be assignable by either
Party without the prior written consent of the other, which consent shall not be
unreasonably withheld or delayed; however, such assignment shall be subject to
the rights of the other party, and shall not be effective until consent has been
given. In the event EXCO elects to sell or assign its interest in some, but not
all of the oil and gas properties from which the Water under this Agreement is
produced said sale or assignment shall be made subject to this Agreement. EXCO’s
assignment of oil and gas properties, if any, shall not relieve EXCO of its
financial obligations under the Primary Term of this Agreement.

IN WITNESS WHEREOF, this Agreement is executed effective as of the date and year
first above written.

 

WITNESSES:      HECKMANN WATER RESOURCES CORPORATION        By: /s/ Donald G.
Ezzell                                  Name: Donald G. Ezzell        WITNESSES:
     EXCO PRODUCTION COMPANY, LP.      By: EXCO Partners OLP GP, LLC,        its
sole general Partner      By: /s/ Harold L. Hickey                              
     Name: Harold L. Hickey      Title: VP and COO

 

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

Exhibit “A”

Definition of Pipeline and Identification of

EXCO Custody Transfer Point(s)

The Pipeline includes the saltwater disposal line including the twelve inch
(12") or greater main pipeline from the Disposal Wells in Joaquin, Texas, to the
Billing Meter Point, and an eight inch (8") or greater main pipeline
approximately 13.5 miles in length from the Billing Meter Point to the
Easternmost Custody Transfer Point, as further described in Exhibit B attached
hereto and made part hereof, including all related facilities, equipment, and
measurement equipment necessary to deliver and measure, and, with prior written
agreement by the parties to which HWR shall not unreasonably withhold consent or
withhold consent except where HWR’s downstream would be adversely affected,
extract (with technology, facilities, equipment and measurement equipment
changes or additions thereto to be determined, but once determined, the costs
for any such changes or additions will be borne by EXCO), Water for EXCO’s Holly
and Kingston Fields located in DeSoto Parish, Louisiana, in accordance with this
Agreement.

The Custody Transfer Points, identified by common point name and latitude and
longitude are as follows:

 

1.        HCP-2 (K.B. FULLER 2)    32.181466/-93.74535 2.    FLOURNOY 19-1 CP   
32.192962/-93.731026 3.    HCP-1 “A” (MEANS #10)    32.18508/-93.774412 (the
Billing Meter Point) 4.    ALLEN 9-1 CP    32.220626/-93.71179 5.    JACKSON
13-1 CP    32.208025/-93.655539 6.    STILES 18-1 CP    32.208368/-93.628849 7.
   STATE LEASE 6760 #2 CP    32.2261339/-93.7149336 8.    BRAZZELL 9-1 CP   
32.2102405/-93.71171898 9.    LANE 14-1 CP    32.207285/-93.672669

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

Exhibit “B”

Pipeline Route and Size

 

1. Pipeline Route as shown on the attached map, made a part of this Exhibit B.
The Pipeline will also be built according to the schematics previously exchanged
between and approved by the parties, which are incorporated herein by reference
into this Exhibit B.

 

2. Minimum 12-inch - 14-inch main line from the Disposal Wells in Shelby Co., TX
to the Billing Meter Point located in SEC 33, 14N, 14W, Desoto Ph., LA.

 

3. Minimum 6-inch to 10-inch pipeline from the Billing Meter Point to EXCO’s
Easternmost Custody Transfer.

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

Print - Maps

Exhibit “B”

Live Search Maps

Winchester Map

 

  1. Winchester DP 1 Delivery Point

 

  2. Winchester DP 2 Delivery Point

 

  3. Winchester DP 3 Delivery Point

 

  4. Winchester DP 4 Delivery Point

 

  5. Winchester DP 5 Delivery Point

 

  6. 8" FPVC 10.5 miles

 

  7. 10" FPVC Winchester to El Paso 2.7 miles

 

  8. 14" FPVC Line 18.8 miles

 

  9.

El Paso Holly CP Sec. 33 1 14N - R14W

 

  110.  Pickering #2 Active

 

  111. Childress #1 SWD Active

 

  12. Childress #2 SWD Active

 

  13. Cook SWD Active

 

  14. Hill SWD Active

 

  15. Watson SWD Active

 

  16. Strong SWD Permitted

 

  17. Dickerson SWD Permitted

 

  18. Pickering #3 Permitted

 

  19. Beersheba SWD Permitted

 

  20. Harvco #1 Permitted

 

  21. Harvco #2 Permitted

 

  22. Harvco #,3 Contract

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

LOGO [g26807g23o32.jpg]

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

Exhibit “C”

Silverswood Disposal Agreement

SALT WATER AGREEMENT

COUNTY OF SHELBY

STATE OF TEXAS

This Agreement for Salt Water Disposal (“Agreement”) is entered into as of this
25th day of August, 2007 by and between Charis Partners, LLC (Charis). A Texas
corporation with a mailing address of 202 Cr 3267, Joaquin, TX 75954,
Silversword, L.P., a Texas Limited Partnership (“SLP”) with an office at 23750
Via Trevi Way, #504, Bonita Springs, FL 34134, and Greer Exploration,
Corporation, a Louisiana corporation (“Greer”) with an office 202 Cr 3267,
Joaquin, TX 75954.

WHEREAS, SLP (as Owner) and GREER (as Operator of Record) have put in place
certain Water Disposal Facilities (“Facilities”) in Shelby County, Texas, and

WHEREAS, “Charis” desires to dispose of Produced and Flowback Water (“Water”) in
the Facilities owned by SLP and Operated by GREER.

NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements hereinafter contained, it is agreed as follows:

 

  1. SLP grants to Charis the right and privilege of disposing of Produced Water
if the Facilities subject to the terms and conditions herein contained.

 

  2. Charis will receive from SLP a statement with paid invoices attached that
detail the actual cost and Charis will pay SLP within ten (10) days upon
receipt.

 

  3. Disposal of Water under this Agreement shall be interruptible service and
neither party shall have the obligation to the other party to dispose of a
specific volume of Produced Water or provide a specific level of service.

 

  4. SLP and GREER shall not be liable for any damages to wells, equipment,
trucks, or for the loss of income thereof for failure to accept and dispose of
water for any reason, including rejection of Winchester Produced Water, failures
or omissions due to lack of capacity of the Disposal Facility, accidents,
breakdowns, closing for repairs, remedial work, labor difficulties, strikes,
walkouts, fires, storms, acts of GOD, sabotage, interference by order of or
compliance with requests of military or civil authority, whether federal, state
or local, or appropriation. requisition, or confiscation of all or any part of
the Disposal Facility.

 

  5. SLP will charge Charis and Charis agrees to pay a **** ($****) per barrel
fee for each barrel of Produced or Trucked Water transferred to GREER’s custody
and **** ($****) per each barrel of Flowback Water transferred to GREER’s
custody. The disposal fee shall be increased at the beginning of each new
calendar year. The increase will be the greater of the rise in Consumer Price
Index for the prior year or a minimum of four percent (4.0%) per year rounded up
to the next penny.

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

  6. Water Accepted for Disposal - Charis agrees to deliver to the salt water
disposal facilities only Produced Water of Flowback water, specifically
excluding any type of pit water or hazardous water.

 

  7. This Agreement may be modified only by the written agreement of SLP, Greer
and Charis.

 

  8. This Agreement shall be binding upon and inure to the benefit of the
parties hereto. their respective representatives, successors and assigns until
terminated upon fifteen (15) days written notice by Charis, SLP, or GREER. All
notices required or permitted hereunder shall be addressed to the respective
parties at the following addresses or such other address as any party may
hereafter designate in writing, to wit:

 

Charis Partners, LLC.    Silversword, L. P. 202 Cr 3267    Greer Exploration,
Corporation Joaquin, TX 75954    23750 Via Trevi Way, #504    Bonita Springs, FL
34134-7186

Charis, SL.P and GREER agree to comply with all applicable environmental rules
and regulations, including obtaining and maintaining all required permits) and
authority to dispose of Produced and flowback water.

 

  10. This Agreement shall be governed and construed in accordance with the laws
of Texas and all disputes must be heard and settled in Shelby County, Texas.

IN WITNESS WHEREOF, the parties have executed the Agreement as of the day and
year first set forth above.

 

Charis Partners, LLC.     Greer Exploration, Corporation By:         By:      
Name:   David Melton       Name:   James Greer   Title:   President       Title:
  President

Silversword, L.P.

By: Hibiscus/GP, LLC

        By:           Name:   James Greer           Title:   Hibiscus/GP, LLC,
General Partner        

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

Attached to and made of part of

That certain Commercial Salt Water Disposal Agreement

Dated August 253 2008,

By and between Charms Partners, LLC, Silversword, L. P., and Greer Exploration,
Corporation

ACKNOWLEDGEMENTS

STATE OF TEXAS

COUNTY OF SMITH

This instrument was acknowledged before me on
                                                 , 2008, by
                                                  of Charis Partners, LLC., a
                                                 , on behalf of said company.

STATE OF TEXAS

COUNTY OF SMITH

This instrument was acknowledged before me on
                                                 , 2008, by
                                                  as
                                                  of Hibiscus/GP, LLC, the
General Partner of Silversword, L.P., a Texas limited partnership, on behalf of
said limited partnership.

STATE OF TEXAS

COUNTY OF SMITH

This instrument was acknowledged before me on
                                                 , 2008, by
                                                  as
                                                  of Greer Exploration,
Corporation, a Louisiana corporation, on behalf of said corporation.

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****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

 

Exhibit “D”

Authorizations for Expenditure

 

1. Dated September 10, 2009 for $****

 

2. Dated September 10, 2009 for $****