Exhibit 10.38

****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

AGREEMENT FOR

FIRM DISPOSAL OF SALT WATER

BETWEEN

CHARIS PARTNERS, LLC

AND

EXCO PRODUCTION COMPANY, L.P.

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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

 

AGREEMENT FOR

FIRM DISPOSAL OF SALT WATER

THIS AGREEMENT FOR FIRM DISPOSAL OF SALT WATER (this “Agreement”), made and
entered between CHARIS PARTNERS, LLC a Texas limited liability company,
hereinafter referred to as “Charis” and 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.”

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

WHEREAS, EXCO desires that Charis 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 Greer Exploration
Corp. (the “Disposal Wells”); and

WHEREAS, Charis 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.

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.

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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

 

1.5 The term “Delivery Point(s) shall mean those points identified on Exhibit
“A” hereto attached as Delivery Point(s) and to such other points as to which
the Parties hereto may mutually agree.

1.6 The term “Primary Term” shall mean a term commencing on the date of Initial
Delivery and ending on the earlier of (i) the date seven (7) years and zero
(0) months after the date of Initial Delivery or (ii) the date when the total
amount of fees for Water delivered by EXCO to HWR under this Agreement equals or
exceeds $35,659,183.37.

1.7 The term “Initial Delivery” shall mean the first day of the month following
the date when the entire Pipeline (from Joaquin to the Easternmost EXCO delivery
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 Delivery 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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CONFIDENTIAL TREATMENT REQUESTED

BY HECKMANN CORPORATION

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

200.83 AND 240.24b-2

 

ARTICLE 11.

FACILITIES CONSTRUCTION

2.1 Construction and Operation of Pipeline. Charis 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, Charis, 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 to El Paso’s
Holly CP and an eight-inch (8”) or greater main pipeline from the El Paso Holly
CP to the Westernmost EXCO delivery point as further described in Exhibit B
attached hereto and made part hereof, and the related equipment, including
measurement equipment (collectively, the “Pipeline”) necessary to receive and
measure Water from EXCO’s Holly and Kingston Fields located in DeSoto Parish,
Louisiana. The Pipeline will connect to each of the Delivery Points described on
Exhibit A, and Charis will install the measurement equipment at each Custody
Transfer Point. EXCO will provide, at no cost to Charis, a site of sufficient
size, at or near each Delivery Point for Charis’ measurement equipment.

2.2 Pressure. Charis 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.

EXCO agrees to install pumps at the delivery points sufficient to transport the
water from the collection point to greer. If the average pressure at any
Delivery Point exceeds the MAOP for ten consecutive (10) days during any
calendar month, then each fee per barrel for all Delivery Points 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.

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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

 

2.3 Deadlines. Charis 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,
2019, EXCO may terminate the contract.

Charis represents to EXCO that Charis has a salt water disposal agreement with
Silversword, LP (“Silversword”), which agreement is attached hereto as Exhibit
“C”.

In the event EXCO so terminates this Agreement, all fees paid to Charis pursuant
to Section 5.1 shall be promptly repaid to EXCO (and not more than 5 business
days following receipt by Charis of written notice of termination of this
Agreement by EXCO). In lieu of returning cash, Charis 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 Charis (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 $**,*** upon which disbursement of $**,*** from Escrow was made thereafter,
upon termination pursuant to this Section 2.3, Charis may elect to assign to
EXCO right of way tract A and credit $**,*** 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 Charis to assist in constructing
of the Pipeline provided Charis indemnify EXCO from any and all claims or
damages that arise from Charis’ 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 Charis for EXCO’s account at the
Delivery Point a total or aggregate amount of up to *************thousand
(**,000) barrels of Water per day (the “Firm Quantity”), and HWR shall accept,
transport and properly dispose of such Water;

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

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

Charis also hereby represents to EXCO that Charis and Silversword intend to
consolidate (or otherwise combine) in 2008. EXCO may terminate this Agreement in
the event Charis and Silversword have not consolidated, merged or otherwise
combined their businesses (with the effect of Charis or a sucessor to Charis and
party to this Agreement owning the disposal wells to which the Pipeline will be
disposing of water as contemplated by this Agreement) on or before December 31,
2008

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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

 

d. This Section 3.1 constitutes Charis’ 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 Charis to temporarily suspend
acceptance of Water. Charis 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 Charis 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

   $ *,***,***.00

Year Two

   $ *,***,***.00

Year Three

   $ *,***,***.00

Year Four

   $ *,***,***.00

Year Five

   $ *,***,***.00

Year Six

   $ *,***,***.00

Year Seven

   $ *,***,***.00       

Total EXCO Obligation

   $ 35,659,183.37

For the purpose of this Section 3.2, if, for any Contract Year, the fees for
Water delivered to Charis 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 Charis for that subsequent Calendar Year. If, for any
Contract Year, the total of the fees for Water delivered to Charis during such
Contract Year is less than the Minimum Fees for such Contract Year, then EXCO
shall pay to Charis an amount equal to such shortfall. Such payments are due
within 30 days of EXCO’s receiving an invoice from Charis for such shortfall.

3.3 Failure to Accept Water. If, on any day after the In Service Date, Charis is
unable for any reason to accept EXCO’s Water at any Delivery 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 **,000 barrels per day
shall be counted as if such Water had been delivered by EXCO and accepted by
Charis 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) **,000 barrels. 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 Greer 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

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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

 

Term, EXCO may deliver Water to Charis, 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, Charis and EXCO
recognize that Charis has facilities and equipment currently in place (or access
to such), necessary to provide the disposal service contemplated hereunder.
Charis shall install, own, operate and maintain, or cause the same to be done,
at the Delivery Point(s) the meters, instruments, and equipment necessary to
accept delivery of the Water under this Agreement. 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 Delivery 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 Delivery Point shall
be determined based upon the specific pumps that EXCO installs at or near the
relevant Delivery Point, to be determined at least 60 days prior to first
delivery at such Delivery 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 Charis’ measuring equipment shall be verified by Charis
at reasonable intervals and, if requested, in the presence of EXCO’s
representatives; provided, however Charis 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 Charis’ meter data
to EXCO’s check meter data over a continuous 24-hour period, as well Charis’
meter data to EXCO’s theoretical pump volume over a one-hour period of
continuous pumping. In the event either Charis or EXCO notifies the other Party
that it desires a special test of any measuring equipment, Charis 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.

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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

 

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 meter is out of repair or is being tested or in the event that Charis’ meter
otherwise become inoperative, then the quantity of Water delivered during the
period Charis’ 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 Charis’ 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 Charis’s meter) at each Delivery Point. EXCO
shall install industry standard equipment at each Delivery Point to safe guard
against over pressuring the Pipeline. Charis shall not accept Water from third
parties that will negatively affect the capacity of the Pipeline or which would
prevent Charis 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
Charis 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
Charis each month a fee equal to ($*.**) per barrel for each barrel of water
delivered to Charis.

Additionally, EXCO agrees to contribute $******* toward the cost of construction
of Charis’ pipeline Payments from EXCO to Charis will be due according to the
following time table and such proceeds shall be used exclusively for the project
contemplated under this agreement:

 

  (1)

$***,000 due upon execution of the original Agreement.

 

  (2)

$*,***,000 due upon the initiation of pipeline construction.

 

  (3)

$*,***,000 due upon initiation of the pipeline segment connecting the El Paso
and EXCO delivery points.

 

  (4)

$*,***,*** due upon initial delivery.

Each of the contributions described in Items (1), (2) and (3) above will be
deposited into escrow (the “Escrow”) with a mutually acceptable escrow agent.
The $***,*** contribution described in Item (1) shall be paid to Charis 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 Charis 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 Charis upon delivery to Escrow of the
$*,***,*** contribution called for in Item (2) above.

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

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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

 

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. Charis shall invoice EXCO for the Water delivered 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 each Delivery Point, the rate at each Delivery
Point, and the total amount owed.

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

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.

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.

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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

 

7.2 Addresses

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

  

b. Notices and Correspondence to EXCO. Until Charis 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 Charis in writing:

Notices/Correspondence/Invoices:

EXCO Production Company, LP

Attn: William D. Chaney

6000 Financial Plaza, Suite 300

Shreveport, LA 71129

Fax: (318) 687-3236

EXCO Resources, Inc. General Counsel

12377 Merit Dr., Suite 1700

Dallas, TX 75251

ARTICLE VIII

WARRANTIES AND INDEMNITIES

8.1 Warranty of Title. EXCO warrants to Charis that EXCO has good title to, or
the unqualified right to tender, the Water gathered hereunder. EXCO hereby
agrees to indemnify Charis 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

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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

 

prior to or upstream of the Delivery Points. Such indemnification shall be
provided to Charis 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
Delivery Point including responsibility for any spills that occur upstream of a
Custody Transfer Point. Title to the Water delivered by EXCO to Charis shall
pass to Charis at each Delivery Point. Charis shall have responsibility for the
Water at and down stream of the Delivery Point(s) including the responsibility
for properly disposing of the Water and for any spills that occur at or
downstream of a Delivery 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 Charis
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 Delivery 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 Charis’ Indemnities. Charis 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 Charis’ ownership, operation or administration of the Water
downstream of any Delivery 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.

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

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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

 

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 Charis of an amended substitute list of Delivery 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 Charis, shall have the right
to audit Charis’ 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 Charis shall bear no portion of EXCO’s audit cost. The audits
would be conducted during the normal business hours of Charis and shall not be
conducted more than once each year without prior approval of Charis. Charis
shall reply in writing to an audit report within ninety (90) days after receipt
of such report.

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.

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

 

WITNESSES:    

Charis Partners, LLC

      By:    /s/ David M. Melton         WITNESSES:     EXCO PRODUCTION COMPANY,
LP.     By: EXCO Partners OLP GP, LLC,       its sole general Partner     By:  
/s/ Stephen F. Smith