Document:

Exhibit 10.37

EMPLOYMENT AND CONFIDENTIALITY AGREEMENT

Community West Bank

Executive Vice President & Chief Credit Officer

This Employment and Confidentiality Agreement (the "Agreement") is made and entered into as of July 31, 2014 (the "Effective Date") by and among Community West Bank, NA (“Bank”) a wholly owned subsidiary of Community West Bancshares, a California corporation  and Kristine Price ("Executive").

Witnesseth

Whereas the Bank is a California national banking association duly organized, validly existing, and in good standing under the laws of the United States of America, with power to own property and carry on its business as it is now being conducted, with its principal place of business located at 445 Pine Street, Goleta, California 93117;

Whereas the Bank desires to avail itself of the skill, knowledge and experience of Executive in order to insure the successful management of its business;

Whereas the parties desire to enter into this Agreement;

Whereas the parties thereto desire to specify the terms of Executive's employment by the Bank and Company as controlling Executive's employment at the Bank;

Now, therefore, in consideration of the representations, warranties, and mutual covenants set forth in this Agreement, the following terms and conditions shall apply to Executive's employment with the Bank on and after the Effective Date:

1. ARTICLE 1- EMPLOYMENT AND TERM

1.1. Employment. The Bank shall employ Executive as the Bank's Executive Vice President and Chief Credit Officer (the "Position"), and Executive accepts such employment, in accordance with the terms and conditions set forth in this Agreement. The place of Executive's employment under this Agreement shall be in Goleta, California, or at a location determined by the Board of Directors of the Bank (the "Board of Directors").

1.2. Term. The term of employment under this Agreement ("Initial Term") shall commence on the Effective Date and end on July 31, 2015, subject to early termination, provided in Article 4, below.  “Term” shall refer to the entire period of employment of Executive by Bank, commencing with the Effective Date, whether for the Initial Term, the Renewal Term as provided for in Section 1.3 below or whether terminated earlier as provided for in this Agreement.

1.3. Renewal. Upon the expiration of the Initial Term, Executive's employment under this Agreement shall automatically renew for a successive period of twelve (12) months ("Renewal Term"), and upon expiration of any subsequent Renewal Term shall automatically renew for a successive period of twelve (12) months; unless, at least three (3) months before the expiration of the Initial Term and any Renewal Term, as applicable, either (a) the Board provides written notice of non-renewal to Executive; or, (b) Executive provides written notice of non-renewal to Bank. Unless notice of non-renewal is provided, each party shall negotiate in good faith the terms and conditions for any Renewal Term of this Agreement.

1.4. Policies and Regulations. Executive shall observe, comply with and be bound by all of the policies, rules and regulations established by the Bank with respect to its executives and otherwise, all of which policies, rules and regulations are subject to change by the Bank from time to time.

2. ARTICLE 2- DUTIES OF EXECUTIVE

2.1. Powers. At all times Executive shall be empowered by and subject to the powers and authority of the Board of Directors and the Bank's shareholders. Executive shall report directly to the Bank's President and Chief Executive Officer (the "CEO").

2.2. Duties.

 

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(a) Executive Vice President and Chief Credit Officer of Bank. Executive shall have the title of Executive Vice President and Chief Credit Officer of the Bank and directly or through subordinate supervision, shall take a leadership role in building, implementing, and overseeing systems, processes, workflows, and procedures to effectively grow the organization. Working closely with the CEO, the Executive is responsible for technical and operational activities on a day-to-day basis, as well as formulation of strategies and business plans to achieve the Bank's long range objectives in accordance with the Position. CCO plays a critical role in planning, shaping, and guiding the future growth and development of the Bank. Executive agrees to render such services and perform such duties (the "Duties") in connection with all aspects of Bank's business as may be required by the Board of Directors and/or the CEO. Executive shall perform these Duties, and the Specific Duties as defined in Section 2.3, faithfully, diligently, to the best of Executive's ability and in the best interests of the Bank, consistent with the highest standards of the banking industries and in compliance with all applicable laws, rules, regulations, and policies applicable to the Bank, including, but not limited to, the Federal Deposit Insurance Act, as amended, and all regulations thereunder, and the Bank's Articles of Association and Bylaws.

2.3. Specific Duties and Essential Functions. Without limiting any of Executive's Duties and obligations under Section 2.2, above, Executive agrees to undertake and perform all duties required of the Position (the "Specific Duties"), including, but are not limited to each of the following:

		·	Work closely with the President/CEO to develop and accomplish goals and strategic plans established by the Board of Directors and company executives.

		·	Management responsibility for the strategic planning process and implementation of the plan.

		·	Provide clear directions on strategic goals, translating and prioritizing them into business and performance measures.

		·	Ensure strategic objectives are translated into tactical business plans with mechanisms for key measurements in place to monitor progress to completion.

		·	Contribute to the development of business unit strategy by providing a view on potential improvement for products or services and an assessment of the existing situation and anticipated changes in the external environment.

		·	Develop and implement plans for the operational infrastructure of credit systems, processes, and personnel designed to accommodate the growth objectives of the Bank.  Ensure that business projects are delivered in line with directions from Management.

		·	Develop and establish credit operating policies consistent with the Bank’s broad policies and objectives to insure execution.

		·	CCO will coordinate the efforts of the different credit operational areas under management to ensure minimal duplication of efforts, maximum efficiency & effectiveness, and maximum value.

		·	Ensure that a proper infrastructure (building, systems, and staff complement) is maintained and developed for the Bank.

		·	Spearhead the development, communication, and implementation of effective growth strategies and processes, driving the achievement of sales, profitability, business goals, and objectives.

		·	Maintain knowledge of market and industry trends, competitors, and all aspects of the market.

		·	Establish and monitor key performance indicators for management of the credit group.

		·	Direct the development and establishment of adequate and equitable personnel policies throughout the organization, including compensation policies, employee benefit plans, training and career-pathing.

		·	Lead, inspire and coach a team of high caliber professionals, creating succession to key roles and enhancing the Bank’s management capability.

		·	Foster a success-oriented, open, and accountable environment within the Bank.

		·	Represent the Bank with clients, prospects, investors, and business partners.

		·	Assist the CEO and the Board of Directors in accomplishing the activities to comply with the Bank's Strategic & Capital Plan.

		·	Serve as a member of the Executive Management Team

 

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2.4. Conflict of Interests. Executive shall not directly or indirectly render any services of a business, commercial or professional nature, to any other person, firm or corporation, whether for compensation or otherwise, which create an actual or apparent conflict with the Bank's interests. Any determination as to a conflict of interest will be made by the Board of Directors in good faith.  Further, Executive shall not engage in any activity that would impair Executive's ability to act and exercise independent judgment in the best interests of Bank.

2.5. Exclusive Services. During employment by the Bank, Executive shall not, without the express prior written consent of the Board of Directors, engage directly or indirectly in any outside employment or consulting of any kind, whether or not Executive receives remuneration for such services. Nothing in this Section 2.5 shall prohibit Executive from providing volunteer consulting services (the "Volunteer Services") through established non-profit or charitable organizations in furtherance of such organization's purposes, so long as such Volunteer Services do not materially interfere with Executive's performance of Executive’s Duties and obligations under this Agreement.

3. ARTICLE 3 - COMPENSATION. As the total consideration for the services that Executive renders under this Agreement, Executive shall be entitled to the following:

3.1. Base Salary. Effective July 31, 2014, the Bank shall pay Executive a Base Salary (“Base Salary”) of Two Hundred Twenty Thousand ($220,000.00) per year, less income tax and other applicable withholdings. Executive’s Base Salary will be reviewed against the market every year and adjusted as warranted in the sole discretion of the Board of Directors. Base Salary shall be paid in accordance with Bank's regular payroll practices.

3.2. Annual Bonus. Executive shall be eligible to receive an annual bonus, at an amount, if any, determined by the Board of Directors, in its sole discretion. If it is determined that a Bonus will be paid Executive for any calendar year, the Bonus (the “Bonus”) will be paid at or near the close of the calendar year, but no later than sixty (60) days after year-end. Executive acknowledges and agrees that nothing in this Agreement or the Bank's general policies shall require the Bank to pay Executive a Bonus for any year, to pay Executive a Bonus in particular amount for any year, or to pay Executive a Bonus by reason of the Bank's payment of a Bonus to any other executives of the Bank.

3.3. Equity.  Executive will be eligible to be considered for participation in the equity programs of the Company at the discretion of the Bank.

3.4. Deferred Compensation.

(a) Deferred Compensation. The Bank thereby establishes a balance sheet liability account for the benefit of Executive (the “Deferred Account”). The provisions of this Section 3.4 shall control all obligations of the Bank with respect to all amounts credited to the Deferral Account.

		(i)	Monthly Credits. Subject to the provisions of Section 3.4(b)(ii) below, beginning as of August 1, 2014 and continuing throughout the Term, including any Renewal Term, of this Agreement, the Bank shall credit to the Deferral Account on the last day of each calendar month an amount equal to the product of (A) 1% and (B) the Executive’s Base Salary in effect at the time; provided that in no event shall the Bank be obligated to credit any amount to the Deferral Account with respect to any month unless Executive is employed by the Bank under this Agreement as of the last day of such calendar month.

		(ii)	One time credit:  The bank shall credit to the Deferral Account on the first of the month following Executive’s hire date the amount of $50,000.00.

(iii) No Credit During Disability. Notwithstanding anything in this Agreement to the contrary, the Bank shall not be obligated to credit any amount to the Deferral Account under Section 3.4(a)(i) above with respect to any period during which Executive is disabled (as defined in Section 4.6 below). Notwithstanding the foregoing, interest shall accrue on the balance of the Deferral Account during any period during which Executive is disabled at the rate set forth in Section 3.4(b) below.

(iv) All provisions outlined in the deferred compensation portions of this Agreement will vest 100% at Change in Control (as defined in Section 3.4(d) below.

(b) Interest Accrual. The Bank shall credit to the Deferral Account at the end of each calendar month interest on the balance of the Deferral Account at such date at a rate equal to the then current rate offered by the Bank on a six (6) month certificate of deposit. Interest shall continue to accrue on the balance in the Deferral Account so long as any amounts remain credited to the Deferral Account and unpaid to Executive.

 

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(c) Payment of Deferral Amounts.

(i)  No Payment if Termination of Employment Prior to Age 65. Except as provided in Section 3.4(d) below, if Executive's employment under this Agreement terminates for any reason other than only Executive's death or disability prior to the date on which the she attains age 66, the Bank shall have no obligation to pay any amount to Executive with respect to any amounts credited to the Deferral Account whether pursuant to this Agreement or otherwise.

(ii)  Payment After Age 66. Subject to the provisions of Section 3.4(c)(i), above, at such time as Executive attains age 66, whether or not she is then employed with the Bank, the Bank shall make payments to Executive with respect to amounts credited to the Deferral Account as follows:

(A) Beginning on the first day of the first calendar month after Executive attains age 66, the Bank shall pay to Executive an annual amount at a rate of up to $50,000 per year.  Executive may change the amount and the time for payment of any amounts under this Section 3.4(c)(ii)(A) so long as such change is made in compliance with the election and other requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code").

(B) The parties intend that the provisions of Section 3.4(c)(ii)(A) provide for the payment of the Deferred Account balance at a specified time (or pursuant to a fixed schedule) within the meaning of Section 409A(a)(2)(A)(iv) of the Code.  Such series of payments is to be treated, at all times and for all purposes, as an entitlement to a series of separate payments.

(iii)  Payment on Executive's Disability. If the Bank terminates this Agreement by reason of Executive's Disability (as defined in Section 4.6 below), the Bank shall pay to Executive an annual amount at a rate of up to $50,000 per year.  Executive may change the amount and the time for payment of any amounts under this Section 3.4(c)(ii)(A) so long as such change is made in compliance with the election and other requirements of Section 409A of the Code until all amounts credited to the Deferral Account have been paid to or for the account of Executive.  Notwithstanding the foregoing, once Executive attains age 66, the amounts payable by the Bank to Executive shall be determined under Section 3.4(c)(ii) above and not this Section 3.4(c)(iii). If Executive dies after the Bank has commenced paying her amounts under this Section 3.4(c)(iii), the Bank shall pay to Executive's Designated heirs (as defined below) in accordance with the provisions of Section 3.4(c)(iv), below, the balance in the Deferred Account on the date of Executive's death.

Executive may change the amount and the time for payment of any amounts under this Section 3.4(c)ii)(A) so long as such change is made in compliance with the election and other requirements of Section 409A of the Code.

(iv) Payment on Executive's Death. If Executive dies prior to the Bank's payment to Executive of all amounts credited to the Deferral Account, the entire balance of the Deferral Account on the date of Executive's death shall be paid by the Bank to Executive's Designated heirs (as defined below) within thirty (30) days after the later of(A) the date of the delivery to the Bank of written notice of Executive's death or (B) the date on which the Bank receives a court order or written instructions from legal counsel for Executive or Executive's estate reasonably acceptable to the Bank authorizing and confirming the payment of the account balance to the Designated heirs. Set forth in Exhibit A thereto is a schedule of Executive's heirs (the "Designated heirs") for purposes of this Agreement. Executive may change the Designated heirs at any time and from time to time; provided that the Bank shall not be bound by any change to the Designated heirs unless and until the Bank has received written notice of the change.

(v) Termination of Payment Obligation. The Bank shall have no obligation to pay Executive any amounts under this Section 3.4(c) on or after the date on which the Bank has paid to Executive the entire amount credited to the Deferral Account.

(vi) Performance of Services. All amounts credited to the Deferral Account under this Section 3.4 are deemed credited with respect to services performed or to be performed by Executive under this Agreement after the Effective Date.

 

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(d) Vesting on Change in Control.  All provisions outlined in the deferred compensation portions of this Agreement will vest 100% at Change in Control as defined therein.

Change in Control Definition: Change in Control (the “Change in Control”) means a change in control of the Bank or Parent of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934 (the “Act”), whether or not the Bank or Parent is then subject to such reporting requirement; provided Change in Control shall be deemed to have occurred if:

(i)  any person or group (as such terms are used in connection with Sections 13(d) and 14(d) of the Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 and 13d-5 under the Act), directly or indirectly, of securities of the Bank or Parent representing 51% or more of the combined voting power of the Bank’s or Parent’s then outstanding securities; or

(ii) the Bank or Parent is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or

(iii) during any period of twelve (12) consecutive months, individuals who at the beginning of such period constituted the Board of Directors of the Bank or Parent (including for this purpose any new director whose election or nomination for election by the Bank’s or Parent’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors.

Notwithstanding the foregoing provisions of this Section, Change in Control will not be deemed to have occurred solely because of the acquisition of securities of the Bank or Parent (or any reporting requirement under the Act relating thereto) by an employee benefit plan maintained by the Bank or Parent for its employees.

(e) Tax Election. To the extent that this Agreement or the provisions of this Section 3.4 constitute a nonqualified deferred compensation plan within the meaning of Section 409A of the Code, Executive thereby makes an irrevocable election as to the payment of any deferred compensation in accordance with the provisions of this Section 3.4.

(f) Status of Deferred Account. Executive agrees that the Bank shall establish and maintain the Deferral Account only as a balance sheet liability account and that the Bank shall have no obligation to deposit or maintain any cash or other assets in a separate or segregated account for the benefit of Executive.

3.5. 401K Plan. Subject to Executive's compliance with the eligibility and other terms and conditions of the Bank’s 401(k) Plan (the “Plan”), Executive will be eligible to participate In the Bank's 401(k) Plan.

3.6. Bank Executive Benefits. Subject to Executive's satisfaction of any eligibility requirements, Executive shall be eligible to participate in other Bank employee benefit plans, for both Executive and family (including medical, dental, vision, prescription plan, life insurance, and short-term disability benefits) generally provided by the Bank to its senior executives. In all events, the Bank's liability to Executive shall be limited to the amount of premiums payable by the Bank to obtain the coverage(s) contemplated therein. Nothing in this Section 3.6 or any other provision of this Agreement shall prohibit the Bank from, or limit the right of the Bank to, changing or modifying the terms of any of the foregoing employee benefit plans or terminating any of such plans.

3.7. Vacation. Executive shall be entitled to vacation time of not more than four (4) weeks per year. Executive shall be entitled to accumulate up to six (6) weeks of accrued vacation, after which additional vacation will not accrue. The Bank shall not be obligated to pay or reimburse Executive at the end of any calendar year any amount for any unused vacation time. The Bank shall pay or reimburse Executive at the end of the Term or any Renewal Term after which there is no further Renewal Term, for any unused vacation time.

 

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3.8. Reimbursement for Expenses. The Bank shall reimburse Executive for any and all reasonable business expenses incurred by Executive on behalf of Bank in the performance of this Agreement, approved expenditures to be determined by the Board of Directors (the "Business Expenses"). A reimbursable Business Expense shall be of a nature qualifying it as a proper business expense deduction on the federal and state income tax returns of the Bank. Executive must be able to furnish adequate records and any other documentary evidence as may be required by Federal and State statues.  If such expenses are disallowed Executive agrees to reimburse Bank.

4. ARTICLE 4- TERMINATION

4.1. Termination At Will. Notwithstanding anything to the contrary therein, the Bank may terminate this Agreement at any time and for any reason, with or without cause, in accordance with the provisions of this Section 4. Except as otherwise specifically provided in this Agreement, such termination shall be effective either immediately upon receipt of notice of termination by Executive from the Bank or at such later date as the Bank may specify in the notice of termination. Notwithstanding anything in this Agreement to the contrary, the Bank shall have no obligation to continue Executive's employment under this Agreement for any period or any particular period.

4.2 Involuntary Termination or Non-Renewal; Without Cause.

(a)   If Executive’s employment is terminated under the provisions of this Agreement and such termination is not within one year following a Change in Control, Executive shall receive:

	 	
(i)

	
any incentive compensation earned but not yet paid, and

	 	
(ii)

	
reimbursement of expenses incurred  but not yet reimbursed.

	 	
(iii)

	
three months (3) months of Executive’s annual base salary as in effect on the date the Term of Employment ends.

(b)  During the twelve (12) month period commencing upon a termination of employment under the terms of this Agreement, Executive (and, there applicable, her dependents) shall be entitled to continue participation in the group insurance health plans maintained by the Bank through “ COBRA” the Consolidated Omnibus Budget Reconciliation Act of 1986 or health insurance programs with Bank contributing its portion of cost of premium to executive as if he/she were still an employee.  The foregoing notwithstanding, in the event that Executive becomes eligible for comparable group insurance coverage in connection with new employment, the coverage provided by the Bank under Section 3.6 shall terminate immediately. Any group health continuation coverage that the Bank is required to offer under the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”) shall commence when coverage under this Agreement terminates.

(c) Except as provided in this Agreement or required by law, all of Executive’s employee benefits and compensation shall cease on the last day on which Executive performs services as an employee of the Bank.

(d) Executive shall not be required to mitigate the amount of any payment or benefit contemplated by this Agreement (whether by seeking new employment or otherwise) and no such payment or benefit shall be reduced by earnings that Executive may receive from any other source.

(e) Deferred Compensation. If applicable, the Bank shall pay Executive the balance in the Deferral Account in accordance with the provisions of Section 3.4(c), above.

4.3. Termination by the Bank for Cause. The Bank may terminate this Agreement at any time for "cause" (as defined below) by giving to Executive ten (10) days prior written notice of termination.

(a) Definition of Cause. For purposes of this Section 4.3, the term "cause" means only:

(i)  conviction of or confession by Executive to theft, fraud, or embezzlement including, but not limited to, against the Bank;

(ii)   Executive's refusal or failure, after specific written notice and demand by the Bank, to diligently perform services for the Bank as required by Article 2 thereof;

 

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(iii) Executive's breach or violation of any material written policy or regulation of the Bank, including, but not limited to, any written policy or regulation dealing with sexual harassment, discrimination based on age, sex, race, religion or other protected category, illicit drugs, and environmental protection matters;

(iv) Executive's willful breach or violation of any law, rule or regulation (other than traffic violations or similar offenses);

(v)      Executive's taking of any material action which requires the prior approval of the Board of Directors without such approval; and

(vi) Executive's breach of or failure to perform any of his fiduciary duties to the Bank or Parent or to any of the Parent’s shareholders which involves personal profit to Executive or such shareholders.

(b) Notice of Termination. If the Bank proposes to terminate this Agreement under clause (a)(i) above, this Agreement shall terminate automatically at the end of such 10-day period and the Bank shall have no further obligation to give Executive any further notice of termination. If the Bank proposes to terminate this Agreement under any of Section 4.3(a) above, this Agreement shall terminate automatically at the end of such 10-day period and the Bank shall have no further obligation to give Executive any further notice of termination unless Executive has cured, to the reasonable satisfaction of the Bank, during such 10-day period the alleged cause of termination and the Bank provides Executive written notice of its acceptance of such cure. Notwithstanding anything in this Agreement to the contrary, if the Bank proposes to terminate this Agreement for cause under this Section 4.3, so long as the Bank provides Executive a reasonable opportunity to cure any alleged cause, if the Bank is required to do so, the Bank may terminate this Agreement as of the date of the initial notice of termination and pay Executive an additional ten (10) days of severance compensation.

(c) Compensation.

	 	(i)	Earned Compensation. Executive shall have the right to receive compensation which has already vested or been earned as of the date of termination of this Agreement under this Section 4.3.

	 	
(ii)

	
Deferred Compensation. If applicable, the Bank shall pay Executive the        balance in the Deferral Account in accordance with the provisions of Section 3.4(c), above.

(d) Benefits.

(i)  Earned Benefits. Executive shall have the right to receive benefits which have already vested or been earned as of the date of termination of this Agreement under this Section 4.3, unless expressly prohibited by the terms of any plan, program or agreement governing such compensation or benefits.

(ii)  Additional Benefits. Executive shall be entitled to receive only the right to participate in the Bank's medical plan in accordance with the provisions of COBRA; provided that Executive shall be responsible for paying all applicable insurance premiums and the Bank shall have no obligation to pay any such premiums.

4.4.  Termination by Executive on Other Event.

(a) Right to Terminate. Executive may terminate this Agreement at any time upon the occurrence of an Other Event (as defined below) by giving to the Bank sixty (60) days prior written notice of termination. Executive must deliver his notice of termination under this Section 4.4(a) within sixty (60) days after the occurrence of any Other Event specified below. Executive shall specify in reasonable detail in such notice of termination the basis for the claim that the Bank has breached or failed to perform any of its material obligations or covenants. This notice of termination must set forth in reasonable detail the facts and circumstances that support Executive's claim of right to terminate this Agreement under this Section 4.4.

(b) Definition. For purposes of this Agreement the term "Other Event" shall mean the Bank's breach or failure to perform any of its material obligations or covenants under this Agreement, and either the Bank's failure to cure such breach or failure of performance within the 15-day period specified in Section 4.4(c) below, or the continuation of such breach or failure of performance after such 15-day period without Executive's written consent.

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(c) Right to Cure. The Bank shall have an opportunity to cure said breach or failure of performance within fifteen (15) days of Bank's receipt of written notice specifying the material breach and the opportunity for Bank to resolve said breach.

(d) Compensation.

(i) Earned Compensation. Executive shall have the right to receive compensation which has already vested or been earned as of the date of termination of this Agreement under this Section 4.3.

(ii) Deferred Compensation. If applicable, the Bank shall pay Executive the balance in the Deferral Account in accordance with the provisions of Section 3.4(c), above.

(e) Benefits.

(i)  Earned Benefits. Executive shall have the right to receive benefits which have already vested or been earned as of the date of termination of this Agreement under this Section 4.3, unless expressly prohibited by the terms of any plan, program or agreement governing such compensation or benefits.

(ii) Additional Benefits. Executive shall be entitled to receive the Benefits specified in Section 4.2, above, in accordance with and subject to the terms of such Section.

4.5. Termination on Death of Executive. This Agreement shall terminate automatically upon Executive's death.

(a) Compensation. The Bank shall pay to Executives’ beneficiary or beneficiaries or estate, as the case may be:

(i)      the compensation which has been earned through the date of termination of this Agreement under this Section 4.5; and

(ii) the balance in the Deferral Account in accordance with the provisions of Section 3.4(c)(iv), above.

(b) Benefits. Executives’ beneficiary or beneficiaries or estate, as the case may be, shall have the right to receive benefits which have already vested or been earned as of the date of termination of this Agreement under this Section 4.6, unless expressly prohibited by the terms of any plan, program or agreement governing such compensation or benefits.

4.6. Termination on Mental or Physical Disability of Executive.

(a) Right to Terminate. If Executive is found to have a Disability (as defined in Section 4.6(b) below) that renders her incapable of performing Executive's Duties and/or Specific Duties for a period of thirty (30) consecutive days, or a cumulative period of one hundred twenty (120) days in any one (1) calendar year, the Bank, acting in good faith, may terminate this Agreement as of the termination date specified in a written notice of termination delivered to Executive, except that there is no minimum Notice Period requirement.

(b) Definition of Disability. For purposes of this Agreement only, Executive shall be considered disabled and shall be considered to have a disability (a “Disability”) if Executive (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Executive’s employer.

(c) Compensation.

(i)            Earned Compensation. Executive shall have the right to receive compensation which has already vested or been earned as of the date of termination of this Agreement under this Section 4.6.

(ii)      Deferred Compensation. If applicable, the Bank shall pay Executive the balance in the Deferral Account in accordance with the provisions of Section 3.4(c)(iii) above.

(d) Benefits.

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(i)  Earned Benefits. Executive shall have the right to receive benefits which have already vested or been earned as of the date of termination of this Agreement under this Section 4.6, unless expressly prohibited by the terms of any plan, program or agreement governing such compensation or benefits.

(ii) Additional Benefits. Executive shall be entitled to receive the Benefits specified in Section 4.2, above, in accordance with and subject to the terms of such Section.

(e) Dispute re Disability. If there should be a dispute between the Bank and Executive as to Executive's physical or mental Disability for purposes of this Agreement, the question shall be settled by the opinion of an impartial reputable physician or psychiatrist mutually agreed upon by the parties or their representatives, or if the parties cannot agree within ten (10) days after a request for designation of such party, then by a physician or psychiatrist designated by the Santa Barbara County Medical Association.  Such physician or psychiatrist shall be instructed to make the determination in accordance with the definition of Disability set forth in Section 4.6 thereof.

4.7. Termination on Change in Control.

(a)   If, within one year following a Change of Control, Executive’s employment is terminated under the provisions of this Agreement or as a result of the Bank’s election not to extend this Agreement and the Term of Employment pursuant to this Agreement, Executive shall receive:

	 	
(i)

	
The sum of twelve months (12) months of the Executive’s annual Base Salary under Section 6(a) thereof as in effect on the date the Term of Employment ends,

	 	
(ii)

	
any incentive compensation earned but not yet paid, and

	 	
(iii)

	
any expenses incurred under this Agreement but not yet reimbursed.

(b)  The payment to which Executive is entitled pursuant to this Agreement shall be paid in a single installment within forty-five (45) days of his termination with no percent value or other discount or, at Executive’s option, on a deferred basis with no premium.

(c) During the twelve months (12) month period commencing on the date her Term of Employment ends under this Agreement, Executive (and, where applicable, her dependents) shall be entitled to continue participation in the group health insurance plans maintained by the Bank the Consolidated Omnibus Budget Reconciliation Act of 1986 under “COBRA”, or health insurance programs with Bank contributing its portion of cost of premium to executive as if she were still an employee of the Bank. Where applicable, Executive’s salary for purposes of such plans shall be deemed to be equal to her annual Base Salary in effect immediately prior to her termination.  The foregoing notwithstanding, in the event that Executive becomes eligible for comparable group insurance coverage in connection with new employment, the coverage provided by the Bank under this Section 4.2 shall terminate immediately. Any group health continuation coverage that the Bank is required to offer under the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”) shall commence then coverage under this Section 4.2 terminates.

(d) Except as provided in this Agreement or required by law, all of Executive’s employee benefits and compensation shall cease on the last day on which the executive performs services as an employee of the Bank.

(e) Executive shall not be required to mitigate the amount of any payment or benefit contemplated by this Agreement (whether by seeking new employment or otherwise) and no such payment or benefit shall be reduced by earnings that Executive may receive from any other source.

(f) Notwithstanding any other provision of this Agreement, the Bank shall not be required to make any payment or property transfer to, or for the benefit of, Executive (under this Agreement or otherwise) that would be nondeductible by the Bank by reason of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), or that would subject Executive to the excise tax described in Section 4999 of the Code.

(g) Deferred Compensation. If applicable, the Bank shall pay Executive the balance in the Deferral Account in accordance with the provisions of Section 3.4(d) above.

 

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4.8. Clawback Right.

(a)  To the extent permitted under controlling state and federal law, if at any time, either before or after Executive’s resignation or termination (for any reason) of employment with the Bank under Section 4.2, above, or otherwise, it is determined that any of the circumstances described in this Section 4.8(b) apply, then the Bank shall have the following rights (the “Clawback Rights”):

(i) To deem as forfeited any and all payments and benefits or other amounts to which Executive has, may have, or may claim to have, a right to receive under this Agreement;

(ii) To recover from Executive or require Executive to reimburse the Bank for any and all payments and benefits or other amounts already paid to Executive under this Agreement, and

(iii) To recover any amount described in this Agreement.

(b)  The Bank’s Clawback Rights shall apply in the following circumstances:

(i) The Bank determines that during Executive’s employment with the Bank Executive engaged in conduct that would constitute “Cause” under the terms of this Agreement, or subsequently resulted in Executive’s felony conviction or entry of a guilty plea or plea of no lo contendere to a felony charge as a result of such conduct.

(ii) In addition to any recovery triggered under this Agreement, if the Bank is required to prepare an accounting restatement due to the material noncompliance of the Bank with any financial reporting requirement under applicable law, and such restatement results in Executive having been paid an incentive payment or bonus payment larger than that which would have been due based on the accounting restatement, then the Bank shall be entitled to recover from Executive the excess of any incentive payment or bonus payment paid to Executive during the 3-year period preceding the date on which the Bank is required to prepare the accounting restatement, over the amount of the incentive payment or bonus which should have been paid based on the restated financial reports during such 3-year period.

5. ARTICLE 5- CONFIDENTIALITY AND NON-SOLICITATION

5.1 Confidentiality and Trade Secrets. Executive acknowledges that, in the course of her employment with the Bank, Executive will acquire information about the Bank's borrowers and customers, and about the terms and conditions of Bank business plans, transactions, pricing information for the purchase or sale of assets, financing and securitization arrangements, research materials, manuals, computer programs, formulas analyzing assets portfolios, techniques, data, marketing plans and tactics, technical information, lists of asset sources, the processes and practices of the Bank and related companies, information contained in electronic or computer files, financial information, salary and wage information, and other information that is designated by the Bank or its affiliates to be confidential or that Executive knows or should know is confidential information provided by third parties and that the Bank or its affiliates are obligated to keep confidential as well as other proprietary information of the Bank or its affiliates ("Confidential Information"). Executive acknowledges that all Confidential Information is and shall continue to be the exclusive property of the Bank. Executive agrees not to disclose any Confidential Information, either during the Term or thereafter, directly or indirectly, under any circumstances or by any means, to any third person or party without the prior written consent of the Bank.

5.2. Non-Solicitation of Executives. Except as permitted by the prior written consent of either the President/CEO of the Bank or the Chairman of the Board of Directors, during the one (1) year period following the termination date, Executive shall not directly or indirectly solicit for employment or for independent contractor work any employee of the Bank, and shall not encourage any such employee to leave the employment of Bank.

5.3. Non-Solicitation of Customers. During the one (1) year period following the termination date, Executive shall not directly: (a) solicit business from any present or potential customers of the Bank; (b) encourage any such customers to stop using the facilities or services of the Bank; or (c) encourage any such customers to use the facilities or services of any competitor of the Bank.

5.4. Parent to Benefit from Provisions. To the extent any provisions of this Article 5 relate in any way to Confidential Information and trade secrets of the Bank or the Parent, then the obligations of Executive set forth therein shall also extend to the Parent and inure to its benefit.

 

10

6. ARTICLE 6- BANK'S OWNERSHIP IN EXECUTIVE'S WORK

6.1. Bank's Ownership. Executive agrees that all inventions, discoveries, improvements, trade secrets, formulas, techniques, processes, and know-how, whether or not patentable, and whether or not reduced to practice, that are conceived or developed during Executive's employment with the Bank, either alone or jointly with others, or relating to the Bank or to the banking industry ("Bank's Work"), and any written record that Executive may maintain of Bank's Work, shall be owned exclusively by the Bank. Executive thereby assigns to Bank, all of Executive's right, title, and interest, if any, in such intellectual property defined as Bank's Work. Executive shall furnish to Bank any and all such records pertaining to Bank's Work, immediately upon request. Notwithstanding anything in this Section 6.1 to the contrary, any inventions, discoveries, improvements, trade secrets, formulas, techniques, processes and know-how conceived or developed by Executive solely while providing Volunteer Services (as defined in Section 2.5, above) shall not be considered Bank’s Work.

6.2. Return of Bank's Property and Materials. Upon termination of his employment with the Bank, Executive shall deliver to the Bank all Bank property and materials that are in Executive's possession or control, including Bank's Work, within five (5) calendar days.

6.3. Bank to Benefit from Provisions. To the extent any provisions of this Article 6 relate in any way to information, property, rights, projects, ventures, or inventions of the Bank, then the obligations of Executive set forth in this Article 6 shall also extend to the Bank and inure to its benefit.

7. ARTICLE 7- ARBITRATION

7.1. Obligation to Arbitrate. If any dispute, controversy or claim arises out of or relates to this Agreement, such dispute, controversy, or claim shall be settled by binding arbitration only, in accordance with the Rules of the American Arbitration Association (“AAA”) or legal principles and damages according to California Law, and shall be selected by and agreed upon by both parties. Judgment upon the arbitrator's award shall be entered in the jurisdiction thereof. The arbitrator shall determine which party is the prevailing party and shall include in the award, the prevailing party's actual attorney's fees and costs. The arbitrator shall have no authority to grant either punitive or consequential damages to any party. Nothing in this Article 7 shall prohibit or limit the right of the Bank to commence suit or other judicial proceedings seeking injunction or other equitable relief in the event of Executive's breach or threatened breach of any of his obligations under any of Sections 5 or 6 of this Agreement.

7.2. Arbitrator. If the parties cannot agree upon the selection of the arbitrator within ten (10) days of written demand upon the other, the parties shall choose from a list to be provided by the main Los Angeles office of the AAA using the strike method, with the first to strike being determined by the flip of a coin and proceeding alternatively until one arbitrator remains.

7.3. Fee Deposit. As soon as practicable after selection of the arbitrator, the arbitrator or its designated representative shall determine a reasonable estimate of anticipated fees and costs setting forth that party's pro rata share of said fees and costs. Thereafter, each party shall, within ten (10) days of receipt of said statement, deposit said sum with the arbitrator.

7.4. Hearing Schedule. Unless the parties or the arbitrator agree otherwise, within one hundred and twenty (120) days of the selection of the arbitrator, a hearing shall be conducted at a time and a place in Santa Barbara County agreed upon by the parties.

7.5. Award. Unless the parties or the arbitrator agree otherwise, within thirty (30) days of conclusion of the arbitration hearing, the arbitrator shall issue an award, accompanied by a written decision explaining the basis for the arbitrator's award. The Award of the arbitrator shall be final, binding, and non­ appealable, except as otherwise permitted by California law, and may be enforced by obtaining a final judgment in any court of competent jurisdiction.

8. ARTICLE 8- MISCELLANEOUS

8.1. Parent as a Party. Parent is a party to this Agreement solely for purpose of receiving the benefits of Sections 5, 6 and 8 thereof. Parent shall have no liability or obligation to Executive with respect to the Bank's performance or non-performance of any of its obligations under this Agreement.

 

11

8.2. Injunctive Relief. Executive thereby acknowledges and agrees that it would be difficult to fully compensate the Bank for damages for a breach or threatened breach of any of the provisions of Sections 5 or 6 thereof. Accordingly, Executive specifically agrees that the Bank and/or Parent shall be entitled to temporary and permanent injunctive relief to enforce the provisions of Sections 5 or 6 thereof and that such relief may be granted without the necessity of proving actual damages. The foregoing provision with respect to injunctive relief shall not, however, prohibit the Bank or Parent from pursuing any other rights or remedies available to the Bank or Parent for such breach or threatened breach, including, but not limited to, the recovery of damages from Executive or any third parties.

8.3. Authorized Representative of the Bank. Although Executive is an officer of the Bank, any and all actions and decisions to be taken or made by the Bank under this Agreement or with respect to the employment relationship described in this Agreement, and any and all consents, approvals and agreements permitted or required to be given or made on the part of the Bank under this Agreement, shall be made and accomplished by the Bank only through the actions taken, in writing, of its CEO or such other person or persons as the Board of Directors may from time to time designate.

8.4. Tax Advice. Executive represents and warrants to the Bank that she has sought and received independent professional advice concerning the treatment of the transactions contemplated by this Agreement under the Code, the rules and regulations promulgated thereunder by the Internal Revenue Service (the “IRS”), and the income tax laws of any other applicable taxing jurisdictions, and that she is not relying upon any representation, warranty or other statement made by the Bank, its counsel or anyone acting on behalf of the Bank with respect to such treatment or the structuring of the compensation payable under this Agreement as assuring any particular income tax treatment. Executive understands and agrees that neither the Bank, its counsel nor anyone acting on behalf of the Bank has made or is making any representation, warranty or other statement with respect to such income tax treatment.

8.5. Notice. Any notice or other communication required or permitted under this Agreement shall be in writing and shall be deemed received (i) when personally delivered, or, (ii) if mailed, one (1) week after having been placed in the United States mail, registered, or certified, postage prepaid, addressed to the party to whom it is directed at the address listed below or (iii) if sent by facsimile, email or other form of electronic transmission, one (1) business day after the notice is transmitted to the facsimile number, email address or other address specified on the signature page of this Agreement, and the transmitting party either receives confirmation of transmission or does not receive notice of non­delivery.

8.6. Entire Agreement. This Agreement, including any documents expressly incorporated into it by the terms of this Agreement, constitutes the entire agreement between the parties. This Agreement supersedes and rescinds any and all prior oral and written agreements, understandings, negotiations, and discussions relating to the employment of Executive by Bank. This Agreement may not be modified, supplemented or amended by oral agreement, but only by an agreement in writing signed by Bank and Executive.

8.7. Amendment. This Agreement may be amended only in writing duly executed by all of the parties thereto. Notwithstanding anything in this Agreement to the contrary, any amendment to Section 3.4 of this Agreement shall be made in compliance with the requirements of Section 409A of the Code and the Treasury Regulations thereunder.  This Agreement is intended to comply with Section 409A of the Code and shall be interpreted so that it is in compliance.  To the extent necessary to such compliance, any payment due under this Agreement otherwise payable by Bank may be delayed for six (6) months or such longer period of time, following the date of Executive’s termination as is necessary to fully comply with Section 409A of the Code.

8.8. Survival of Certain Provisions. Notwithstanding anything to the contrary contained therein, in the event of any termination of this Agreement, the rights and obligations of the parties under Sections 3.4, 4.2, 4.3(c), 4.3(d), 4.4(d), 4.4(e), 4.5(a), 4.5(b), 4.6(c), 4.6(d), 4.6(e), 4.7 and 4.8 and Articles 5, 6, 7 and 8 thereof shall survive such termination and shall continue in full force and effect until fully performed.

8.9. Waivers. All rights and remedies of the parties thereto are separate and cumulative, and no one of them, whether exercised or not, shall be deemed to limit or exclude any other rights or remedies which the parties thereto may have. Neither party thereto shall be deemed to waive any rights or remedies under this Agreement unless such waiver be in writing and signed by such party. No delay or omission on the part of either party thereto in exercising any right or remedy shall operate as a waiver of such right or remedy or any other right or remedy. A waiver of any right or remedy on any one occasion shall not be construed as a bar to or waiver of any such right or remedy on any future occasion.

8.10. Successors and Assigns. The Bank shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation, or otherwise to all or substantially all of the business or assets of the Bank to expressly assume and agree to perform in writing this Agreement in the same manner and to the same extent that the Bank would be required to perform it if no such succession or assignment had taken place. This Agreement shall inure to the benefit of and be binding upon the Bank, its successors and assignees, and upon Executive and Executive's heirs, executors, administrators and legal representatives. No party to this Agreement may delegate its or their duties thereunder without the prior written consent of the other party to this Agreement.

 

12

8.11. Governing Law. This Agreement is entered into in the State of California, and California law shall in all respects govern the validity, construction, and interpretation of this Agreement.

8.12. Attorney's Fees. In any arbitration, suit or other action between the parties seeking enforcement of any of the terms and provisions of this Agreement, the prevailing party in such arbitration, suit or other action shall be awarded, in addition to damages, injunctive or other relief, its reasonable costs and expenses, not limited to taxable costs, and a reasonable attorney's fees. In order for a party to change its address or other information for the purpose of this section, the party must first provide notice of that change in the manner required by this section.

8.13.            Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

8.14.  Advice of Counsel.  Before signing this Agreement, Executive either (i) consulted with and obtained advice from her independent legal counsel in respect to the legal nature and operation of this Agreement, including its impact on her rights, privileges and obligations, or (ii) freely and voluntarily decided not to have the benefit of such consultation and advice with legal counsel.

9. ARTICLE 9- RECEIPT OF AGREEMENT

9.1. Receipt of Agreement. Each of the parties thereto acknowledges that they have read this Agreement in its entirety and does thereby acknowledge receipt of a fully executed copy thereof. A fully executed copy shall be an original for all purposes, and is a duplicate original.

IN WITNESS WTHEREOF, the parties thereto have caused this Employment and Confidentiality Agreement to be executed as of the Effective Date set forth above.

ACCEPTED AND AGREED:

EXECUTIVE

	
By:

	    	 

Name:  Kristine Price

Address for Notice:

2828 Winterwarm

Fallbrook, CA   92028

Telephone: 760-444-8416

COMMUNITY WEST BANK

A National Banking Association

	
By:

	     	 
	 	
Martin E. Plourd, President & CEO

	 

Address for Notice for Community West Bank and Community West Bancshares:

445 Pine Street

Goleta, California 93117

Attention: Martin E. Plourd, President & CEO

Telephone:  (805) 692-4382

Facsimile:   (805) 692-2897

13

EXHIBIT A

DESIGNATED HEIRS

Set forth below is a list of the names and addresses of Executive's heirs to whom the Bank shall pay the balance of the Deferred Account in the event of Executive's death.

	
NAME

	
ADDRESS

	
PERCENTAGE INTEREST

 

 

 

 

14GPOR-2014.09.30-EX10.1

CONFIDENTIAL TREATMENT REQUESTED

SAND SUPPLY AGREEMENT1 
This SAND SUPPLY AGREEMENT (this “Agreement”) is effective as of October 1, 2014 (the “Effective Date”), between Muskie Proppant LLC, a Delaware limited liability company (“Supplier”), and Gulfport Energy Corporation, a Delaware corporation (“Customer”).  Supplier and Customer are individually referred to as a “Party” and collectively as the “Parties”).
RECITALS
		
	A.
	Customer’s primary business is the exploration and production of oil and natural gas.  Customer requires high quality sand for use as a proppant in connection with its operations. 

		
	B.
	Supplier desires to sell such sand and is able to provide the proppant sand to Customer. 

		
	C.
	Customer desires to purchase 40/70 proppant sand (as described below, the “Product”) from Supplier under the terms and conditions set forth in this Agreement.

		
	D.
	Supplier is willing to undertake the supply of the Product for Customer under the terms of this Agreement.

NOW, THEREFORE, in consideration of the premises and the respective covenants and agreements contained herein, the Parties agree as follows:
ARTICLE I
TERM
1.1    Initial Term.  Unless otherwise terminated as provided herein, this Agreement shall be effective as of the Effective Date and will remain in effect through and including September 30, 2018, unless earlier terminated in accordance with the terms of this Agreement (such period, the “Initial Term”).
1.2    Extensions.  The Initial Term of this Agreement may be extended by the mutual agreement of the Parties in a written amendment of this Agreement executed by both Parties.  Neither Party shall be obligated to extend this Agreement.  The Initial Term and any extensions thereof are collectively referred to as the “Term.”
ARTICLE IISUPPLY COMMITMENTS
2.1    Sale of Product.  
(a)    Subject to the terms of this Agreement, Supplier agrees to sell and deliver to Customer, and Customer agrees to purchase and take delivery from Supplier of an aggregate of 

__________________________
1 The appearance of [*] denotes confidential information that has been omitted from this exhibit and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

1

CONFIDENTIAL TREATMENT REQUESTED

[*]1 tons of Product during each Contract Year (the “Maximum Annual Purchase Amount”).  Customer agrees to purchase and take delivery of Product on a Ratable Basis during each calendar month. 
(b)    Supplier shall be under no obligation to supply or sell, and Customer shall not have the right to buy, Product in excess of (a) the Maximum Annual Purchase Amount in any Contract Year, or (b) [*]1 tons of Product in each half of a calendar month (in each case, such excess amounts of Product, “Excess Volumes”).  Sales of Excess Volumes shall be done at Supplier’s sole discretion.  
(c)    Supplier will make commercially reasonable efforts to deliver Product in accordance with the provisions of this Section 2.1  Supplier will not contract more Product in excess of its estimated production capacity. 
2.2    Rolling Forecast.  On or before the tenth (10th) day of each month, Customer shall provide to Supplier a non-binding 120 day rolling forecast of its anticipated purchases of Product in each of month covered by such forecast (each a “Forecast”).
2.3    Orders.  
(a)    From time to time during a month, Customer will submit written orders to Supplier specifying the quantity of Product to be purchased and the requested delivery date, which delivery date shall be consistent with the Standard Order Lead Time applicable to such order.  Unless otherwise agreed by Supplier, only an order that is consistent with the then-current Forecast and that (i) does not exceed [*]1 tons of Product for deliveries in that month, (ii) is consistent with the requirement to take delivery of the Product on a Ratable Basis, and (iii) does not exceed [*]1 tons of Product for deliveries in such Contract Year, shall be effective and binding on Supplier (any such binding order is referred to as an “Order”).
(b)    The terms of this Agreement shall prevail over the terms in any Order in the event of a conflict unless specific reference and identification is made to the provision of this Agreement to be modified and the intention to modify is explicitly stated and signed by both Parties.  Such changes shall be effective for that Order only.  Printed terms and conditions contained in any order or documents issued to Customer by Supplier or from Customer to Supplier with respect to the Product shall be of no force and effect and shall be superseded by the terms and conditions contained in this Agreement.  
2.4    Minimum Purchase Requirement.  
(a)    Commencing on  November 1, 2014 and subject to Section 2.1, Supplier agrees to sell, and Customer shall be required to take delivery of, for each calendar month during each Contract Year (each calendar month is referred to as a “Supply Period”) an aggregate of [*]1  

__________________________
1 Denotes confidential information that has been omitted from this exhibit and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

2

CONFIDENTIAL TREATMENT REQUESTED

tons of Product (such amount, as adjusted pursuant to Section 2.4(b), is referred to as the “Monthly Minimum Requirement”).  
(b)    If Supplier (i) fails to deliver (or tender for delivery) any quantity of Product as required under any Order, whether as a result of Force Majeure or otherwise, or (ii) is unable or unwilling to supply any Product pursuant to a binding Order, the Monthly Minimum Requirement for the calendar month in which such failure occurred shall be reduced by such quantity of Product that was not so delivered.
2.5    Alternate Sources of Supply.  For the avoidance of doubt, Supplier may, in its discretion, source Product from third Persons so long as such Product complies with the Quality Standards and Supplier is otherwise in compliance with the other provisions of this Agreement and the applicable Order.
ARTICLE III
COMMERCIAL TERMS
3.1    Delivery Terms.  
(a)    All Product shall be delivered FOB to a transload facility located within a seventy-five (75) mile radius of St. Clairsville, Ohio, as designated by Supplier in the Pick-Up Availability Notice (each a “Designated Transload Facility”).  All risk of loss and title shall transfer to Customer upon delivery of the Product at the applicable Designated Transload Facility. 
(b)    Customer acknowledges and agrees that if Supplier’s shipment or delivery of the Product is delayed due to a shortage or inability to acquire rail cars, Supplier will not be deemed to be in default under this Agreement, and Supplier’s shipment or delivery deadlines set forth herein shall be extended accordingly. 
3.2    Product Pricing.  
(c)    The purchase price for the Product shall be the sum of (i) $[*]1 per ton (as adjusted pursuant to Section 3.1(b), the “Product Price”), plus (ii) all costs and expenses incurred by Supplier for handling and transporting from Supplier’s source of origin to the Designated Transload Facility, including all rail cost, railcar cost and destination transload fees, where “source of origin” means the origination location of Supplier’s rail shipment.  
(d)    The Product Price shall be subject to annual inflation adjustment based on changes to the Consumer Price Index (US City Average, All Items.
3.3    Shortfall Payment; Credit in Subsequent Month.
(c)    In the event that Customer fails to purchase and take delivery of the Monthly Minimum Requirement during any calendar month, or Supplier fails to supply and deliver the Monthly Minimum Requirement during any calendar month other than as a result of a Force Majeur (any such month a “Default Supply Period”), then Customer hereby agrees to pay to Supplier in the case of Customer’s failure), or Supplier agrees to pay to Customer (in the case of Supplier’s 
1 Denotes confidential information that has been omitted from this exhibit and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

3

CONFIDENTIAL TREATMENT REQUESTED

failure), as liquidated damages and not as a penalty, an amount equal to $[*]1 times the difference between the Monthly Minimum Requirement for such month and the amount of Product actually purchased by Customer during such month (in the case of Customer’s failure) or the amount of Product actually delivered by Supplier during such month (in the case of Supplier’s failure) (a “Shortfall Payment”).  Such Shortfall Payment shall be included on the invoice for Product sold during such month.  Notwithstanding the foregoing, Supplier shall have no obligation to deliver, and shall not be responsible for a Shortfall Payment as a result of a failure to deliver, any product not identified by Customer in a Forecast.
(d)    If Customer is liable for any Shortfall Payment for any month, it shall have the right, to order Excess Volumes of Product during the three calendar months immediately following any Default Supply Period (such period is referred to as a “Make-Up Supply Period”) subject to Supplier’s ability to deliver such Excess Volumes. Customer will receive, as a credit towards the purchase of such Excess Volumes, $[*]1 per ton of such Excess Volume, but in no event more than the amount of the Shortfall Payment payable by Customer for such month.  If Supplier is liable for any Shortfall Payment for any month, it shall have the right to deliver, and Customer agrees to purchase Excess Volumes of Product during the three calendar months immediately following such Default Supply Period, and Supplier shall receive, as a credit against such Shortfall Payment, $[*]1 per ton of such Excess Volume, but in no event more than the amount of the Shortfall Payment payable by Supplier for such month.  For the avoidance of doubt, Supplier shall not be obligated to deliver to Customer during such Make-Up Supply Period any quantities of Product in excess of the Monthly Minimum Requirement; and, provided further, following such Make-Up Supply Period, neither Customer nor Supplier shall be entitled to any additional credits with respect to any portion of the Shortfall Payment that was not credited during such Make-Up Supply Period.
3.4    Demurrage Expenses.  
(a)    Supplier shall provide notice to Customer when Product will be available for pick-up at the Designated Transload Facility (such notice, a “Pick-Up Availability Notice”).  Supplier is responsible for accepting delivery of the Product on the date specified in the Pick-Up Availability Notice.  
(b)    If Customer fails to pick-up the Product at the Designated Transload Facility on the date of such Pick-Up Availability Notice, then Customer shall pay to Supplier a demurrage fee equal to $[*]1 per day per rail car (the “Daily Demurrage Fee”) beginning on the fifth day following the date of such Pick-Up Availability Notice through the date on which Customer actually accepts delivery of such Product.  
3.5    Weights and Measures; Shortages.  The quantity of Product delivered shall be determined at the load point in accordance with the Supplier’s standard methods and procedures 

__________________________

1 Denotes confidential information that has been omitted from this exhibit and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

4

CONFIDENTIAL TREATMENT REQUESTED

applicable to deliveries of the Product. Supplier’s weights and quantities shall govern, absent clear and manifest error.  Claims for shortages must be reported within ten (10) days of receipt of the Product by Customer to Supplier.  Customer waives all claims therefor unless made in writing and delivered to Supplier within ten (10) days after receipt of the Product.
3.6    Title.  Supplier warrants clear title to the Product at the time title to the Product passes to Customer, free from any and all liens or other encumbrances.
3.7    Limited Warranty.  
(a)    Supplier warrants to Customer that all Product supplied by Supplier pursuant to this Agreement shall comply with the Quality Standards in all material respects.  Supplier’s product tests described in Section 3.8 shall be used to determine whether any Product meets the Quality Standards, absent manifest error.
(b)    EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SUPPLIER EXPRESSLY DISCLAIMS ANY WARRANTIES, EXPRESS OR IMPLIED, RELATED TO THE PRODUCT, INCLUDING ANY WARRANTY AS TO THE QUALITY OF THE PRODUCT, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR SUITABILITY, ANY IMPLIED WARRANTY THAT ANY OF THE PRODUCT ARE FIT FOR A PARTICULAR PURPOSE, OR ANY WARRANTY CREATED BY THE PROVISION OF ANY SAMPLES.  ANY COURSE OF DEALING OR INDUSTRY PRACTICE SHALL NOT IMPLY ANY ADDITIONAL WARRANTIES BY SUPPLIER.     
(c)    Exclusive Remedies.  In the event that any Product fails to meet the limited warranty set forth in Section 3.7(a), Supplier shall, at Supplier’s option, either (a) replace such Product at its sole cost with conforming Product, which replacement Product shall be made available to Customer at the Designated Transload Facility, or (b) refund to Customer the Product Price for such nonconforming Product.  The remedies contained in this Section 3.7(c) are the sole and exclusive remedies of Customer in connection with any breach of Supplier’s warranty in Section 3.7(a).
3.8    Inspection; Samples.  
(a)    Supplier shall permit representatives of Customer, at any reasonable time and upon reasonable prior notice, to inspect the Product manufactured by Supplier at Supplier’s facilities prior to the time of delivery of Product to Customer.  
(b)    Upon receipt of a written request by Customer, Supplier shall provide to Customer a production sample of Product for any Order.  A “production sample” is defined as [one hundred (100) grams of the actual production run and/or lot number of the delivered Product].  Such production sample shall be retained by Supplier and provided to Customer up to sixty (60) days from the date of the applicable Order.  Supplier shall also, upon receipt of a written request by Customer, provide multiple-sieve analysis of Product at Supplier’s facility for inspection/confirmation by Customer.  
(c)    Customer shall be entitled to reject any Product that does not comply with Section 3.7(a); provided that any Product not rejected prior to the time of delivery of such Product 

5

CONFIDENTIAL TREATMENT REQUESTED

to the carrier shall be deemed accepted by Customer, unless testing of the applicable production sample by an independent third party laboratory conclusively determines that Product previously accepted by Customer do not comply with Section 3.7(a) (in which case Customer may reject such previously accepted Product upon such determination by the independent third party laboratory, so long as such testing is completed by and such rejection is made within thirty (30) days of Customer’s receipt of the Product).  
ARTICLE IV
INVOICING AND PAYMENT
4.1    Invoicing and Payment Terms.  Subject to any special terms agreed in writing from time to time between Customer and Supplier:
(e)    Supplier shall invoice Customer on a monthly basis in respect of all Product purchased and delivered under this Agreement during the prior month.  Payment shall be due no later than the thirtieth (30th) day after the date of the invoice.  
(f)    Payments thirty (30) days or more past due shall bear interest at the lower of (i) the Wall Street Journal prime rate plus eight hundred basis points, or (ii) the highest interest rate permitted by applicable law, from (and including) the date on which the applicable payment was due to (but excluding) the date on which the applicable payment is paid in full.  The accrual of interest as provided in the preceding sentence shall not limit any other remedies of Supplier, which shall include the right to terminate this Agreement in accordance with Article VII.
4.2    Taxes.  Any severance, added value, manufacture, excise, or sales or use taxes that may be applicable to the sales made under this Agreement are for Customer’s account, and Customer hereby agrees to pay such taxes.  Any increase in current or new federal, state or local taxes, including but not limited to severance, added value, manufacture, excise or sales or use taxes, which shall become due by reason of the severance, manufacture, sale or delivery of the Product by Supplier to Customer shall be reimbursed to Supplier by Customer, and such taxes shall be separately listed on each monthly invoice to Customer.  All other charges, including but not limited to those relating to state and federal environmental and energy laws and regulations, assessed by any governmental entity relating to the severance, manufacture, sale or delivery of the Product shall be for Customer’s account, and Customer hereby agrees to pay such other charges.  The provisions of this Section shall continue after termination of this Agreement.
ARTICLE V
CONFIDENTIALITY; NON-SOLICITATION
5.1    Confidentiality.  
(e)    Each Party undertakes to treat as confidential all information in any medium or format (whether marked “confidential” or not) which that Party (the “Receiving Party”) receives during the term of this Agreement and for the purposes of this Agreement from the other Party (the “Disclosing Party”), either directly or from any person, firm, company or organization associated with the Disclosing Party (the “Confidential Information”).
(f)    The Receiving Party may use the Confidential Information of the Disclosing Party for the purposes of this Agreement, and the Receiving Party may provide its employees, directors, suppliers, agents, subcontractors and professional advisers with access to such 

6

CONFIDENTIAL TREATMENT REQUESTED

Confidential Information.  Each Party shall ensure that its employees, agents and subcontractors comply with its obligations of confidence.  Where such recipient is not an employee or director of the relevant Receiving Party, the Receiving Party shall provide the Confidential Information to such permitted persons subject to reasonable and appropriate obligations of confidence.  For the avoidance of doubt, the Receiving Party shall be responsible for any breach of the provisions of this Section 5.1 by its employees, directors, suppliers, agents, subcontractors or professional advisers.
(g)    The provisions of this Section 5.1 shall not apply to any information which (i) enters the public domain other than as a result of a breach of this Section 5.1, (ii) is received from a third party which is under no confidentiality obligations, (iii) is independently developed by a Party without use of the other Party’s Confidential Information or (iv) was previously known to a Party.  In addition, the Receiving Party may disclose the Confidential Information of the Disclosing Party where required to do so by law or by any competent regulatory authority; provided that the Receiving Party shall give the Disclosing Party prompt advance written notice of the disclosures (where lawful and practical to do so) so that the Disclosing Party has sufficient opportunity (where reasonably possible) to prevent or control the manner of disclosure by appropriate legal means.
(h)    Except to the extent required under this Agreement or required for purposes of complying with applicable law, including environmental, health and safety laws and reporting provisions thereunder, all Confidential Information, in written or other tangible media, shall be returned to the Disclosing Party within thirty (30) days following the expiration, termination or cancellation of this Agreement, and all electronic Confidential Information shall be deleted from the Receiving Party’s systems. 
(i)    The provisions of this Section 5.1 shall survive the expiration, termination or cancellation of this Agreement for a period of two years.
5.2    Non-Solicitation.  During the Term, Customer shall not, directly or indirectly, knowingly solicit for employment, offer employment to or employ or retain (whether as an employee, officer, agent, consultant, advisor or in any other capacity) any employee of Supplier, unless otherwise agreed by Supplier in writing; provided, however, the foregoing shall not prohibit solicitations through general public advertising or other publications of general public circulation or general solicitations by an employment agency not specifically targeting Supplier’s employees, or the hiring of any employee of Supplier who contacts Customer as a result of such general advertising, publications or solicitations.
ARTICLE VI
FORCE MAJEURE
6.1    Force Majeure.  If Supplier is affected by Force Majeure it shall promptly notify the Customer of the nature and extent of the circumstances in question.  Supplier shall not be deemed to be in breach of this Agreement, or otherwise be liable to Customer, for any delay in performance or the non-performance of any of its obligations under this Agreement or any Order, to the extent that the delay or non-performance is due to any Force Majeure, and the time for performance of that obligation shall be extended accordingly; provided that if the Force Majeure in question prevails for a continuous period in excess of sixty (60) days, the Parties shall enter into discussions with a view to alleviating its effects, or to agreeing upon such alternative arrangements as the Parties mutually agree.  

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CONFIDENTIAL TREATMENT REQUESTED

ARTICLE VII
DEFAULT AND TERMINATION
7.1    Default by Supplier.  If Supplier fails to produce and deliver Product that meets the Quality Standards during three (3) consecutive Supply Periods and Customer has timely provided notices of such failures to Supplier in accordance with Sections 3.8 and 3.9, then, Supplier shall be deemed to be in default, and, at any time during the thirty (30) day period following such third (3rd) consecutive Supply Period, Customer shall have the option, at its sole discretion, to terminate this Agreement by giving written notice of termination to Supplier; failure to exercise such termination right within such 30-day period shall constitute a waiver of such termination right.  No such termination by Customer shall constitute or be construed as a waiver or any right or remedy of Customer for breach of contract resulting from the facts and circumstances forming the basis of such termination.
7.2    Customer Payment Default.  If Customer fails to pay to Supplier any sums due under this Agreement, and the failure continues for a period of fifteen (15) days after Customer’s receipt of a written notice of such failure, then in addition to Supplier’s rights at law or in equity, Supplier may suspend deliveries hereunder until such failure has been cured, and/or terminate this Agreement in its entirety.
7.3    Other Defaults.  If either Party fails to fully perform any material obligation under this Agreement (other than obligations that are the subject of Sections 7.1 and 7.2) and (a) such failure continues for a period of forty-five (45) days after delivery to the defaulting Party of written notice of such non-performance, and (b) after such forty-five (45) day period, the defaulting Party is not undertaking commercially reasonable efforts to cure such failure to perform, then the non-defaulting Party shall have the right to specifically enforce the terms of this Agreement and seek damages for any breach, terminate this Agreement in its entirety and otherwise pursue the remedies available to the non-defaulting Party at law or in equity.
7.4    Survival of Orders.  If any Orders are outstanding on the date this Agreement terminates or expires, then such Orders will not terminate on such date but will survive and continue in full force and effect in accordance with the terms of this Agreement until such Orders terminate or expire in accordance with their terms and .  Notwithstanding the foregoing, if (a) Customer terminates this Agreement in accordance with Section 7.1, Customer may in its sole discretion terminate any or all outstanding Orders for Product not yet delivered to Customer; or (b) Supplier terminates this Agreement in accordance with Section 7.2, Supplier may in its sole discretion terminate any or all outstanding Orders for Product not yet delivered to Customer.  
7.5    Survival.  Upon expiration of this Agreement or the termination of this Agreement for any reason, all obligations of the Parties hereunder shall terminate, except for any obligations that are expressly stated to survive the expiration of the Term or termination of this Agreement and any obligations that remain executory (other than minimum purchase obligations), which obligations, to the extent they remain executory, shall remain in full force and effect until fully performed by the obligated Party as stated in this Agreement.  The respective Parties’ obligations under Section 3.7 Article IV, Section 5.1, this Section 7.5, Articles VIII and Article X shall survive the expiration of the Term or termination of this Agreement.  Neither expiration nor termination of this Agreement shall relieve any Party of liability for breaches of this Agreement prior to such expiration or termination.
ARTICLE VIIIINDEMNIFICATION; LIMITS OF LIABILITY

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CONFIDENTIAL TREATMENT REQUESTED

8.1    Indemnification by Customer.  Notwithstanding anything else contained in this Agreement, Customer shall release, defend, protect, indemnify, and hold harmless Supplier and each of its Affiliates (other than Customer), and each of its and their, officers, directors, shareholders, agents, employees, successors-in-interest, and assignees from and against any and all damages for, arising out of, resulting from or relating to any damages, injuries or other casualties of whatever kind, or by whosoever caused, to any Person or third party arising out of or resulting from the use of the Product, the suitability of the Product for use in Customer’s operations or the migration of the Product to any underground formation, strata or water table,  regardless of whether such claims are attributable to or arise from the joint or concurrent negligence, strict liability or other fault or responsibility of Customer or any other indemnified party, except where such fine, loss, damage, injury, liability or claim is the direct result of the willful misconduct or sole or gross negligence of Customer.
8.2    Waiver of Consequential Damages.  Notwithstanding any provision of this Agreement to the contrary, neither Party shall be liable to the other Party for special, indirect or consequential, punitive, incidental, or exemplary damages resulting from or arising out of this Agreement, or from any loss of use, loss of data, loss of assets, loss of business, loss of production, loss of profit or business interruptions, however same may be caused and regardless of the sole or concurrent negligence of the other Party, even if such Party has been advised of, or otherwise could have anticipated the possibility of, such damages or liabilities in advance.  The foregoing limitation is not intended and shall not limit any damages incurred by any third party and covered under any indemnity hereunder.
8.3    Limitation of Liability.  IN NO EVENT SHALL SUPPLIER’S TOTAL LIABILITY FOR ANY AND ALL LOSSES AND DAMAGES ARISING OUT OF THIS AGREEMENT OR ANY ORDER, DUE TO ANY CAUSE WHATSOEVER (WHETHER SUCH CAUSE BE BASED ON NEGLIGENCE, STRICT LIABILITY OR OTHERWISE), EXCEED THE PRODUCT PRICE OF THE PRODUCT IN RESPECT TO WHICH SUCH CAUSE ARISES. 
8.4    Compliance with Law.  Subject to the limitations of this Agreement, it is agreed that in the performance of this Agreement all matters shall be conducted in full compliance with any and all Applicable Laws.  Any performance obligation arising under this Agreement is contingent on the prior receipt of all necessary government authorizations.  If either Party is required to pay any fine or penalty or is subject to a claim from the other Party’s failure to comply with Applicable Law, the Party failing to comply shall defend, indemnify and hold harmless the other Party for all damages, fees and/or fines for such failure to comply to the extent of the indemnifying Party’s allocable share of the failure to comply.
ARTICLE IX
DEFINITIONS; CONSTRUCTION
9.1    Defined Terms.  Capitalized terms used throughout this Agreement shall have the meanings set forth below, unless otherwise specifically defined herein.
(d)    “Applicable Law” means any applicable statute, law, regulation, ordinance, rule, determination, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, requirement, or any similar form of decision of, or any provision or condition of any permit, license or other operating authorization issued by any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect.

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(e)    “Affiliate” or “affiliate” in relation to either Party means any corporation, limited liability company, partnership, proprietorship, joint venture or other entity directly or indirectly controlled by, controlling, or under common control with that Party.  
(f)    “Business Day” means any day other than a Saturday, Sunday, or other day on which commercial banks in the state of Ohio are authorized or required by law to close.
(g)    “Confidential Information” means all confidential, proprietary or non-public information of a Party, whether set forth in writing, orally or in any other manner, including all non-public information and material of such Party that another Party obtains knowledge of or access to, including non-public information regarding products, processes, business strategies and plans, customer lists, research and development programs, computer programs, hardware configuration information, technical drawings, algorithms, know-how, formulas, processes, ideas, inventions (whether patentable or not), trade secrets, schematics and other technical, business, marketing and product development plans, revenues, expenses, earnings projections, forecasts, strategies, and other non-public business, technological, and financial information.
(h)    “Contract Year” means the twelve-month period starting on the Effective Date, and each successive period of twelve (12) calendar months during the Term.
(i)    “Damages” means any and all liabilities, losses, damages, demands, assessments, claims, costs and expenses, whether known or unknown, now existing or hereafter arising, contingent or liquidated (including interest, awards, judgments, penalties, settlements, fines, out-of-pocket costs and expenses incurred in connection with investigating and defending any claims or causes of action (including, without limitation, reasonable attorneys’ fees and expenses and all reasonable fees and expenses of consultants and other professionals)).  The term “Damages” shall not include consequential, incidental, special, exemplary or punitive damages.
(j)    “Force Majeure” means any circumstances beyond the reasonable control of Supplier, including war (whether declared or undeclared), acts of God, including fire, flood, storms and earthquakes, embargoes, riots, civil disturbances, insurrections, sabotages, events or occurrences adversely impacting Supplier’s facilities, transportation interruptions, delays, strikes or capacity limitations, lock-outs or other similar acts of Supplier’s employees, or government actions such as the necessity for compliance with any court order, law, statute, ordinance, regulation, or policy having the effect of law promulgated by a governmental authority having jurisdiction.
(k)    “Governmental Authority” means any federal, state, local or foreign government or any provincial, departmental or other political subdivision thereof, or any entity, body or authority exercising executive, legislative, judicial, regulatory, administrative or other governmental functions or any court, department, commission, board, bureau, agency, instrumentality or administrative body of any of the foregoing.
(l)    “Person” or “person” means any entity, including any partnership, corporation, limited liability company or governmental entity, and any natural person.
(m)    “Product” means generally, whether singular or plural, Supplier’s standard grade of 40/70 proppant sand, as described in Exhibit A.  
(n)    “Quality Standard” means a manufacturing standard that conforms to ISO 13503-2, Proppant Specifications.

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(o)    “Ratable Basis” means the purchase by Customer of one half of the Monthly Minimum Requirement during each half of each Supply Period.
(p)    “Standard Order Lead Time” means, with respect to any Order, fourteen (14) days from the date of such Order, or such other period as Supplier may establish from time to time based on the time required to have the Product moved to the Designated Transload Facility.
9.2    Other Terms.  Other capitalized terms may be defined elsewhere in the text of this Agreement and shall have the meaning indicated throughout this Agreement.
9.3    General Terms.  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) the gender (or lack of gender) of all words used in this Agreement includes the masculine, feminine and neuter; (c) references to Articles and Sections refer to Articles and Sections of this Agreement; (d) references to Exhibits or Schedules refer to the Exhibits or Schedules attached to this Agreement, each of which is made a part hereof for all purposes; (e) references to Applicable Laws refer to such Applicable Laws as they may be amended from time to time, and references to particular provisions of a Applicable Law include any corresponding provisions of any succeeding Applicable Law; (f) the term “include”, “includes”, “including” or words of like report shall be deemed to be followed by the words “without limitation”; (g) the terms “hereof”, “herein” or “hereunder” refer to this Agreement as a whole and not to any particular provision of this Agreement; (h) references to money refer to legal currency of the United States of America; and (i) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded.  The 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 XOTHER PROVISIONS
10.1    Assignment.  Neither Party shall transfer or assign its interest in this Agreement, in whole or in part, directly or indirectly, without the prior written consent of the other Party which consent will not be unreasonably withheld; except that Supplier may assign its rights and delegate its duties under this Agreement (i) by way of merger or sale of all or substantially all of the ownership interests or assets of Supplier in one or a series of related transactions; (ii) to a subsidiary or an affiliate of Supplier upon notice to Customer together with an assumption of this Agreement by such subsidiary or affiliate; or (iii) in connection with any financing.  Supplier may also assign the right to receive any payments hereunder or under any Order to any third party, and Customer, on receiving notice of any such assignment, shall abide thereby and make payment as may therein be directed.  In the event of any permitted assignment of this Agreement by either Party, the designated assignee shall assume, in writing, the rights and obligations of the assigning Party under this Agreement; provided that the assigning Party shall not be released from any of its liabilities or obligations arising under this Agreement prior to such assignment. 
10.2    Relationship.  In connection with this Agreement, each Party is an independent contractor.  This Agreement establishes and will only be construed as establishing a contract for the provision and purchase of certain products and does not and will not be deemed to create a joint venture, partnership, fiduciary or agency relationship between the Parties for any purpose.  Each of the Parties understands and agrees that this Agreement does not create an exclusive dealings arrangement and that each of Customer and Supplier may enter into similar arrangements with 

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CONFIDENTIAL TREATMENT REQUESTED

others with respect to similar or the same products.  With respect to its own personnel, each Party is independently responsible for all obligations incumbent upon an employer..
10.3    Entire Agreement; Amendment.  This Agreement, including its appendices, exhibits and schedules, (a) constitutes the entire Agreement between the Parties with respect to the subject matter hereof, (b) supersedes any existing agreements between them whether oral or written and (c) shall control and govern all transactions between the Parties with respect to the sales and purchases of Product.  The terms of this Agreement shall only be amended, modified or supplemented as set forth herein or in a writing signed by or on behalf of both of the Parties, which writing must specifically reference and identify the provision of this Agreement to be modified and the intention to modify this Agreement must be explicitly stated.  Acceptance of an Order is insufficient to amend this Agreement unless a separate writing is duly executed by all the Parties specifically amending this Agreement.  
10.4    Reformation.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any Party.  Upon the determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible.  
10.5    Notices.  Any notice provided or permitted to be given under this Agreement shall be in writing, and may be served by personal delivery, by registered or certified U.S. mail, addressed to the party to be notified, postage prepaid, return receipt requested; or by nationally recognized delivery service.  Notice deposited in the mail in the manner hereinabove described shall be deemed to have been given and received on the date of the delivery as shown on the return receipt.  Notice served in any other manner shall be deemed to have been given and received only if and when actually received by the addressee.  All notices shall be addressed as follows:
If to Supplier: 

If to Customer:

Any party may, by written notice so delivered to the other party, change the address or individual to which delivery shall thereafter be made. 
10.6    Electronic Transmissions.  Notices sent by facsimile or email transmission will not be effective for any purpose under this Agreement; and while in the course of normal contract administration the Parties may choose to use email transmissions for convenience, all notices of a legal nature or required under the terms of this Agreement (such as, but not limited to, a notice of termination of this Agreement, dispute, claim, indemnification, default, or breach or failure to make payment) must be given in accordance with Section 10.5 above.  Except as otherwise set forth in Section 10.9, the Parties do not consent to conduct any of the transactions contemplated by this 

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Agreement by electronic means, and electronic notices and signatures shall not be effective except as provided in Section 10.9.
10.7    Waiver.  No failure or delay by either Party in exercising any of its rights under this Agreement shall be deemed to be waiver of that right, and no waiver by either Party of a breach of any provision of this Agreement shall be deemed to be a waiver of any subsequent breach of the same or any other provision. 
10.8    Governing Law; Venue; Waiver of Jury Trial.  
(a)    This Agreement and all Orders and other instruments executed in accordance herewith governed by and construed in accordance with the laws of the State of Delaware (except to the extent that mandatory provisions of federal law govern), without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Delaware.
(b)    THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURT OF CHANCERY OF THE STATE OF DELAWARE (OR, IF THE COURT OF CHANCERY OF THE STATE OF DELAWARE OR THE DELAWARE SUPREME COURT DETERMINES THAT, NOTWITHSTANDING SECTION 111 OF THE DELAWARE GENERAL CORPORATION LAW, THE COURT OF CHANCERY DOES NOT HAVE OR SHOULD NOT EXERCISE SUBJECT MATTER JURISDICTION OVER SUCH MATTER, THE SUPERIOR COURT OF THE STATE OF DELAWARE) AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE OF DELAWARE IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND ANY AND ALL ORDERS AND OTHER INSTRUMENTS EXECUTED IN ACCORDANCE HEREWITH, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN ANY PROCEEDING FOR INTERPRETATION OR ENFORCEMENT HEREOF OR ANY SUCH DOCUMENT THAT IS NOT SUBJECT THERETO OR THAT SUCH PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH PROCEEDING SHALL BE HEARD AND DETERMINED EXCLUSIVELY BY SUCH A DELAWARE STATE OR FEDERAL COURT.  THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH SUCH PROCEEDING IN THE MANNER PROVIDED IN SECTION 10.5 OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW SHALL BE VALID AND SUFFICIENT SERVICE THEREOF. 
(c)    EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR ANY ORDERS OR OTHER INSTRUMENTS EXECUTED IN ACCORDANCE HEREWITH IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY ORDERS OR ANY OTHER INSTRUMENTS EXECUTED IN ACCORDANCE HEREWITH.  EACH 

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PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (ii) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THE FOREGOING WAIVER; (iii) SUCH PARTY MAKES THE FOREGOING WAIVER VOLUNTARILY, AND (iv) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, EACH ORDER AND EACH OTHER INSTRUMENT EXECUTED IN ACCORDANCE HEREWITH BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 10.8(C).
(d)    Any Party who substantially prevails (giving due consideration to all relevant circumstances and not merely to which party obtains a judgment or recovery in its favor) in asserting or defending a claim or suit arising out of a transaction covered by this Agreement shall be awarded, in addition to all other damages allowed under law, its costs, fees and expenses, including reasonable attorneys’ fees and costs.  
10.9    Counterparts.  This Agreement, any amendment to this Agreement or any Order may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument. The exchange of copies of this Agreement, any amendment to this Agreement or any Order and of signature pages by facsimile transmission (whether directly from one facsimile device to another by means of a dial-up connection or whether otherwise transmitted via electronic transmission), by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, or by a combination of such means, shall constitute effective execution and delivery of this Agreement, such amendment to this Agreement or such Order, as applicable, as to the Parties and may be used in lieu of an original thereof for all purposes.  Signatures of the Parties transmitted by facsimile or other electronic transmission shall be deemed to be original signatures for all purposes.  Minor variations in the form of signature pages of this Agreement, any amendment to this Agreement or any Order, including footers from earlier versions thereof, shall be disregarded in determining a Party’s intent or the effectiveness of such signature.
[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. 
	
		
	MUSKIE PROPPANT LLC 

By:      /s/ Marc McCarthy            
Name:    Marc McCarthy
Title:    Vice President

	 

	
		
	GULFPORT ENERGY CORPORATION

By:      /s/ Michael G. Moore         
Name:    Michael G. Moore
Title:    Chief Executive Officer & President

	 

Signature Page to
Product Supply Agreement

CONFIDENTIAL TREATMENT REQUESTED

EXHIBIT A
MUSKIE STANDARD 40/70 GRADE PROPPANT SAND

The Proppant to be supplied under the Agreement will comply with the specification of API Recommended Practice 56 (“API RP56”) as tested in Muskie’s production facility.
Subject to confidentiality and trade secret protection assurances and protocols, Customer shall have the right to review testing procedures at Muskie’s production facility from time to time upon forty-eight (48) hours’ notice and during normal business hours.

Exhibit A

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