Document:

ex10_7.htm

 

April 7, 2009

 

Baptist Community Services 701 Park Place Avenue

Amarillo, Texas 79101

Attn: T.H. Holloway, President

 

RE: Amendment to Subordinated Promissory Note

 

Gentlemen:

 

This letter confirms our agreement to amend the Subordinated Promissory Note, dated as of December 31, 2008 (as amended, the "Note"), issued by NaturalShrimp Holdings, Inc. (the "Company") to Baptist Community Services. As set forth in §2 of the Note, the maximum principal amount outstanding under the Note shall not exceed $70,000 and the Company could borrow amounts under the Note until March 31, 2009. This letter represents our agreement to increase the maximum Principal amount outstanding under the Note to $125,000 and to extend the date until which the Company can borrow amounts under the Note to the Maturity Date, as defined in the Note.

 

Please confirm your agreement to the foregoing by signing the enclosed copy of this letter.

 

Very truly yours,

 

NATURALSHRIMP HOLDINGS, INC.

 

By:           /s/ Bill G. Williams

Bill G. Williams, Chairman

 

AGREED TO AS OF APRIL 7, 2009 BAPTIST COMMUNITY SERVICES

 

By: /s/ T.H. Holloway, President

T. H. Holloway, President

 

BOARD/OFFICER RESIGNATION

 

I, Stephen T. Dalrymple, hereby resign, effective as of the date specified below, as a board member of the Board of Directors of NaturalShrimp Holdings, Inc., a Delaware corporation, and as an officer (the position of Secretary) of said corporation.

 

EFFECTIVE DATE: December 1 2008

 

 

/s/Stephen T. Dalrymple

 

THIS SUBORDINATED PROMISSORY NOTE AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATED IN THE MANNER AND TO THE EXTENT SET FORTH HEREIN TO THE SENIOR OBLIGATIONS (AS DEFINED HEREIN) OWED BY NATURALSHRIMP HOLDINGS, INC. THE HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, ACKNOWLEDGES THAT THE PRINCIPAL AND INTEREST ON THE INDEBTEDNESS CREATED OR EVIDENCED BY THIS SUBORDINATED PROMISSORY NOTE SHALL NOT BECOME DUE OR BE PAID OR PAYABLE EXCEPT TO THE EXTENT PERMITTED BY THE SUBORDINATION AND OTHER PROVISIONS SET FORTH HEREIN AND IRREVOCABLY AGREES TO BE BOUND BY THE SUBORDINATION AND OTHER PROVISIONS SET FORTH HEREIN.

 

SUBORDINATED PROMISSORY NOTE

 

DUE SEPTEMBER 15, 2009

 

$70,000.00 December 31, 2008

Waco, Texas

 

FOR VALUE RECEIVED, NaturalShrimp Holdings, Inc., a Delaware corporation (the "Company") promises to pay to the order of Baptist Community Services, a Texas non-profit corporation (the "Payee"), or its assigns, at 701 Park Place Avenue, Amarillo, Texas 79101, the principal sum of the lesser of (i) the outstanding principal sum of SEVENTY THOUSAND and 00/100 DOLLARS ($70,000) and (ii) the unpaid principal amount of the advances made by the Payee pursuant to the terms of this Subordinated Promissory Note (as amended, amended and restated, supplemented or otherwise modified from time to time, this "Note') on the Maturity Date (as defined below), together with Interest (as defined below) in arrears on the unpaid principal balance from time to time outstanding from the date hereof until the entire principal amount due hereunder is paid in full at the times and the rates provided in this Note.

 

1.            DefinitionsUnless the context specifically requires otherwise, capitalized terms used

in this Note shall have the meaning specified below:

 

"Business Day" means any day other than a Saturday, Sunday or Texas or Federal holiday. "Default Rate" has the meaning set forth in Section 4 of this Note.

 

"Dollars" or "$" means the lawful currency of the United States of America. "Event of Default" has the meaning set forth in Section 9 of this Note.

 

"Indebtedness" means with respect to any Person: (a) any liability, contingent or otherwise, of such Person (i) for borrowed money, (ii) evidenced by a note, debenture or similar instrument (including a purchase money obligation) given in connection with the acquisition of any property or assets, (iii) for any letter of credit or performance bond in favor of such Person, (iv) for the payment of money relating to a capitalized lease obligation, or (v) any liability, contingent or otherwise, of such Person to any other Person for any purchase price associated with any acquisition of assets, business or otherwise (including any deferred purchase price, assumption of Indebtedness, non-competition payments or other forms of consideration); (b) any liability of others of the kind described in the preceding clause (a), which the Person has guaranteed or which is otherwise its legal liability, contingent or otherwise; (c) any obligation secured by a lien to which the property or assets of such Person are subject, whether or not the obligations secured thereby shall have been assumed by or shall otherwise be such Person's legal liability; (d) all other items (except items of capital stock, capital or paid-in surplus or retained earnings) which, in accordance with generally accepted accounting principles, would be included as a liability on the balance sheet of such Person on the date of determination; and (e) any and all deferrals, renewals, extensions or refinancing of, or amendments, modifications or supplements to, any liability of the kind described in any of the preceding clauses (a), (b), (c) or (d).

 

 

"Indemnified Parties" has the meaning set forth in Section 13 of this Note. "Involuntary Petition" has the meaning set forth in Section 9(f) of this Note. "Interest" has the meaning set forth in Section 4 of this Note.

 

"Loan" has the meaning set forth in Section 2 of this Note.

 

"Maturity Date" has the meaning set forth in Section 5 of this Note.

 

"Obligations" means the unpaid principal of and interest on (including, without limitation, interest accruing after the maturity of the Loan and interest accruing on or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, related to the Company, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding and whether or not at the default rate) this Note and all other obligations and liabilities of the Company to the Payee, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Note and any other document made, delivered, or given in connection herewith or therewith, whether on account of principal, interest, indemnities, costs, expenses (including, without limitation, all reasonable fees and disbursements of counsel) or otherwise.

 

"Person" means any individual, corporation, association, partnership (general or limited), joint venture, trust, unincorporated organization, limited liability company or other entity or organization of any kind or any government or any agency or political subdivision thereof, including, without limitation, any partner, officer, director, member, manager or employee of such Person.

 

"Senior Obligations" means the obligations in respect of the Indebtedness evidenced by the Secured Promissory Note, dated September 13, 2005, issued by the Company to Amarillo National Bank in the original principal amount of $1,500,000, as modified by that certain Change In Terms Agreement, dated September 16, 2006, pursuant to which the principal amount of such Secured Promissory Note was increased to $2,000,000 and the maturity date was extended to September 13, 2008, as further modified by the Promissory Note, dated September 13, 2008, pursuant to which the maturity date of such Indebtedness was extended until September 15, 2009, together with all deferrals, renewals, extensions or refinancing of, or amendments, modifications or supplements to such Indebtedness.

 

"Senior Lender" has the meaning set forth in Section 12 of this Note.

 

2.            AdvancesThe principal amount at any time outstanding under this Note shall not

exceed $70,000.00. Within such limit, the Company may borrow amounts hereunder from the date hereof until March 31, 2009 for a permitted purpose stated in Section 3 (all such amounts borrowed are collectively referred to as the "Loans"). At the option of the Payee, each principal advance and each prepayment thereof made pursuant to this Note, if any, may be reflected by notations made by the Payee on the Schedule attached hereto by Payee, and the aggregate unpaid amounts reflected by the notations on such Schedule shall be deemed rebuttably presumptive evidence of the principal amount outstanding unpaid on this Note. All advances of amounts borrowed by the Company under this Note will be paid by Payee to the applicable third party recipient identified by the Company at the time of such payment. The Company shall provide notice and supporting documentation reasonably acceptable to the Payee no less than fifteen (15) days prior to the date on which an advance is to be made.

 

3.            Use of ProceedsThe Company agrees to use the proceeds of this Note shall be

 

used exclusively for the payment of (i) monthly payments of interest owed by the Company under the Senior Obligations, (ii) property taxes required to be paid pursuant to the terms of the Senior Obligations and (iii) insurance premiums for insurance policies required to be maintained pursuant to the terms of the Senior Obligations.

 

4.            InterestThe Loan shall bear interest ("Interest") on the unpaid principal amount

 

thereof from the date hereof at the rate of ten percent (10.00%) per annum; provided, that, from and during the continuance of an Event of Default, the unpaid principal balance of the Loan and, to the extent permitted by law, overdue Interest shall bear interest at a rate per annum equal to the rate of interest otherwise applicable thereto plus 2.00% per annum (the "Default Rate'). Interest on the Loan shall be calculated on the basis of a year of 365/366 days, as applicable for the actual days elapsed.

 

5.            Principal PrepaymentsThe outstanding principal balance of the Loan, without

 

set-off, deduction or counterclaim, together in each case with all accrued Interest thereon, shall be due and payable in full on the earlier to occur of (a) September 15, 2009 and (b) the date that this Note becomes due and payable in full in accordance with the terms hereof, whether by acceleration or otherwise (such earlier date, the "Maturity Date").

 

6.            Prepayments Subject to the subordination terms set forth in Section 12, the Company shall be entitled, at any time, upon at least thirty (30) days prior written notice to the Payee to prepay all or any part of the unpaid principal amount of the Loan without premium or penalty. Partial prepayments will be applied first to pay accrued and unpaid Interest and second, after all Interest accrued through the date of such partial prepayment has been paid in full, to reduce the principal amount outstanding hereunder.

 

7.            Place and Time of PaymentAll payments of principal and accrued Interest on this

 

Note shall be made (to the extent permitted by the subordination terms set forth in Section 12) by the Company in Dollars in immediately available funds not later than 12:00 p.m., Central time, on the date such payment is due, or, if such date is not a Business Day, on the next succeeding Business Day at the address of the Payee stated herein or at such other address of which the Company shall have received written notice or, at the Payee's election, by crediting the Payee's account at a bank designated by the Payee in writing to the Company. Subject to the subordination terms set forth in Section 12, the accrued Interest shall be payable in immediately available funds on a monthly basis commencing on April 30, 2009 and shall be due and payable in full on any payment of the principal balance of this Note, whether as a result of maturity, prepayment, acceleration or otherwise; provided, however, that Default Interest shall be payable on demand. Monthly payments of Interest on this Note shall be made (to the extent permitted by the subordination terms set forth in Section 12) on the last day of each calendar month (i.e. April 30, May 31, June 30, July 31, and August 31). To the extent that any Interest shall not be paid when due solely as a result of the subordination terms set forth in Section 12, such Interest shall accrue and shall compound monthly on the last date of each calendar month during the period this Note is outstanding.

 

8.             Representations and WarrantiesThe Company hereby represents and

 

warrants as follows: (a) the Company is a corporation duly organized and validly existing under the laws of the State of Delaware and is duly qualified to do business as a foreign corporation and is in good standing under the laws of the State of Texas; (b) the Company has all requisite corporate power and authority to execute, deliver and perform this Note, and to own and operate its properties and assets and carry on its business as presently being conducted; and (c) the execution, delivery and performance by the Company of this Note do not and will not contravene (i) its articles or bylaws, (ii) any material contract, agreement, license, permit, franchise or other document to which it is a party or by which it is bound, (iii) any judgment, decree or order by which it is bound or (iv) any statute, rule or regulation of any federal, state or local government or agency applicable to the Company.

 

9.             Events of DefaultIn each case of the happening of any of the following

 

events (each an "Event of Default"):

 

(a) if a default occurs in the payment of any amounts due under this Note,

 

whether at the due date thereof or upon acceleration thereof;

 

(b) if any representation or warranty of the Company made herein shall prove

 

to have been false or misleading in any material respect when made;

 

(c) if a default occurs in the due observance or performance of any covenant,

 

condition or agreement on the part of the Company to be observed or performed pursuant to any of the provisions of this Note and such default remains uncured for thirty (30) days after written notice of default has been given to the Company by the Payee specifying such default and requiring it to be remedied;

 

(d) if the payment of any other Indebtedness of the Company for borrowed

 

money, including, but not limited to, the Senior Obligations, is accelerated prior to the stated maturity thereof or the holders of such Indebtedness exercise rights and remedies resulting from a default in the Company's obligations with respect to such Indebtedness;

 

(e) if the Company shall: (i) discontinue its business; (ii) apply for or consent

 

to the appointment of a receiver, trustee, custodian or liquidator of it or any of its property; (iii) admit in writing its inability to pay its debt as they mature; (iv) make a general assignment for the benefit of creditors; or (v) file a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement with creditors, or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation laws or statutes, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or if corporate action shall be taken for the purpose of effecting any of the foregoing;

 

(f)  if there shall be filed against the Company an involuntary petition seeking reorganization of the Company or the appointment of a receiver, trustee, custodian or liquidator of the Company or a substantial part of its assets, or any involuntary petition under any bankruptcy, reorganization or insolvency law of any jurisdiction, whether now or hereafter in effect (any of the foregoing petitions being hereinafter referred to as an "Involuntary Petition") which is not dismissed within sixth (60) days; or

 

(g)if there occurs any attachment of all or substantially all of the property of

the Company, which shall not be discharged or bonded within sixty (60) days of the date of such attachment;

 

then, upon each and every such Event of Default and during the continuance of any such Event of Default, and, upon the action of the Payee (subject to the subordination terms set forth in Section 12), this Note shall immediately become due and payable upon written notice to the Company, both as to principal and Interest, without presentment, demand or protest, all of which are hereby expressly waived, anything contained herein to the contrary notwithstanding (except in the case of an Event of Default under subsections (e) or (f) of this Section 9, in which event this Note shall automatically become due and payable). In the event of an acceleration of this Note as a result of an Involuntary Petition as specified in clause (f) of this Section 9, such acceleration shall be rescinded, and the Company's rights hereunder reinstated, if, within sixty (60) days following the filing of such Involuntary Petition, such Involuntary Petition shall have been dismissed or stayed, and there shall exist no other Event of Default under this Note and such Event of Default shall be deemed cured.

 

10.            Remedies on Default, Etc. In the event that one or more Events of Default shall occur and be continuing, the Payee shall have the right, subject to the subordination provisions set forth in Section 12, to exercise all rights and remedies under this Note and/or under applicable law or equity, and may proceed to protect and enforce its rights by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained in this Note, or for an injunction against a violation of any of the terms hereof or in or of the exercise of any power granted hereby or by law. No right conferred upon the Payee hereby shall be exclusive of any other right referred to herein or now or hereafter available at law, in equity, by statute or otherwise.

 

11.            Waivers by the CompanyThe Company, to the extent permitted by

 

applicable law, waives presentment for payment, protest and demand, and notice of protest, demand and/or dishonor and nonpayment of this Note, notice of any Event of Default under this Note by the Company, and all other notices or demands otherwise required by law that the Company may lawfully waive.

 

12.            SubordinationThe Payee hereby agrees, for itself and its successors,

 

assigns and transferees, that all its right, title and interest in and to the Obligations, including the payment of any amount owed in respect hereof, shall be subordinate and junior in right of payment to the rights of any lender (the "Senior Lender") in respect of the Senior Obligations owed to such Senior Lender, including principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not a claim for post-filing interest is allowed or allowable in any such proceedings), fees, charges, expenses, indemnities, reimbursement obligations, guarantees and all other amounts payable thereunder or in respect thereof. The Company and the Payee agree that no payment in respect of the Obligations, whether as principal, interest or otherwise, and whether in cash, securities or property (other than the accrual of interest as provided herein) shall be made by or on behalf of the Company or received, accepted or demanded by or on behalf of the Payee, except as permitted by the Senior Obligations; provided, that nothing shall prohibit the Payee from receiving, accepting or demanding payment of all or any part of the Obligations from and after the indefeasible payment in full of the Senior Obligations. In the event that any payment by, or on behalf of, or distribution of the assets of, the Company shall be received by the Payee at a time which such payment is prohibited by this Note, such payment or distribution shall be held by the Payee in trust for the benefit of, and shall forthwith be paid over to, the applicable Senior Lender.

 

13.            Indemnification; Expenses The Company shall, subject to the subordination terms set forth in Section 12, to the fullest extent permitted by law, and in addition to any such rights which any Indemnified Party (as defined below) may have pursuant to statute or otherwise, indemnify and hold harmless the Payee (including any officers, directors, employees, agents, representatives, heirs, successors or assignees thereof, the "Indemnified Parties") from and against any and all losses, claims, damages, expenses and liabilities, joint or several, including any investigation, legal and other expenses incurred in connection with the investigation, defense, settlement or appeal of, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted, to which they, or any of them, become subject as a result of the execution and delivery of this Note or credit having been extended hereunder, or in connection with or arising out of the transactions contemplated hereunder, including any legal costs and expenses arising out of or incurred in connection with the enforcement of this Note, except to the extent such losses, claims, damages, expenses or liabilities arise from the gross negligence, willful misconduct or bad faith of any Indemnified Party. The indemnification provided for in this Section 13 will remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Parties. Subject to the subordination terms set forth in Section 12, the Company shall pay all out-of-pocket costs and expenses reasonably incurred by the Payee with respect to the negotiation, execution and delivery of, any amendments, modifications or waivers to, and performance of this Note and the agreements, documents and instruments contemplated hereby or executed pursuant hereto, including the reasonable legal fees and disbursements for the professional services of counsel to the Payee. Subject to the subordination terms set forth in Section 12, upon and after the date hereof, the Company shall pay all out-of-pocket costs incurred by the Payee in connection with the enforcement of this Note, and the agreements, documents and instruments contemplated hereby or executed pursuant hereto.

 

14.            Maximum Interest Rate                                                     No provision of this Note or of any other document

 

or agreement executed in connection herewith shall require the payment or the collection of interest in excess of the maximum amount permitted by applicable law. If any excess of interest in such respect is hereby provided for, or shall be adjudicated to be so provided, in this Note or otherwise in connection with the Loan evidenced hereby, the provisions of this Section 14 shall govern and prevail and neither the Company nor the successors or assigns of the Company shall be obligated to pay the excess amount of such interest or any other excess sum paid for the use, forbearance or detention of sums loaned pursuant hereto. In the event the Payee ever receives, collects or applies as interest any such sum, such amount which would be in excess of the maximum amount permitted by applicable law shall be applied as a payment and reduction of the principal of the Indebtedness evidenced by this Note and, if the principal of the Note has been paid in full, any remaining excess shall be paid to the Company. In determining whether or not the interest paid or payable exceeds the maximum amount permitted by applicable law, the Company and the Payee shall, to the extent permitted by applicable law (a) characterize any non-principal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof and (c) amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the entire contemplated term of the Indebtedness evidenced by this Note so that interest for the entire term does not exceed the maximum amount permitted by applicable law.

 

15.            Amendments, Waivers and ConsentsNo course of dealing between the

 

Company and the Payee and no delay on the part of any party hereto in exercising any rights hereunder shall operate as a waiver of the rights hereof. Any changes in or additions to, and any consents required by, or requests or demands made pursuant to, this Note shall be made, and compliance with any term, covenant, condition or provision set forth herein shall be omitted or waived (either generally or in a particular instance and either retroactively or prospectively) by a written instrument or instruments signed by the Payee and the Company.

 

16.            Survival of Covenants; Assignability of RightsAll covenants, agreements,

 

representations and warranties of the Company made herein and to be performed prior to or on the date hereof, and in the other written information delivered or furnished to the Payee pursuant to the terms of this Note, shall bind the Company's successors and assigns, whether so expressed or not, and, except as otherwise provided in this Note, all such covenants, agreements, representations and warranties shall insure to the benefit of the Payee's heirs, successors and assigns, whether so expressed or not. The Company may not assign its Obligations under this Note or in connection herewith without the prior written consent of the Payee. Each successor, assignee or transferee of this Note by its acceptance hereof agrees to be bound by the provisions hereof, including without limitation the subordination provisions set forth in Section 12.

 

17.            Note Replacement Upon receipt of evidence satisfactory to the Company of

 

the loss, theft, destruction or mutilation of this Note and, in the case of any such loss, theft or destruction, upon delivery of indemnity satisfactory to the Company, or in case of such mutilation, upon surrender and cancellation of this Note, the Company will issue a new note, or like tenor, in lieu, and dated the date, of such lost, stolen, destroyed or mutilated Note.

 

18.            GOVERNING LAW; JURISDICTION; VENUETHE RIGHTS AND

 

OBLIGATIONS OF THE COMPANY AND ALL PROVISIONS HEREOF SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. THE COMPANY HEREBY AGREES THAT THE STATE AND FEDERAL COURTS OF THE STATE OF TEXAS SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES PERTAINING DIRECTLY OR INDIRECTLY TO THIS NOTE, AND ALL DOCUMENTS, INSTRUMENTS AND AGREEMENTS EXECUTED PURSUANT HERETO, OR TO ANY MATTER ARISING HEREFROM. TO THE EXTENT PERMITTED BY LAW, THE COMPANY HEREBY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY THE PAYEE IN ANY OF SUCH COURTS, AND AGREES THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT THE ADDRESS SET FORTH ON THE SIGNATURE PAGE HERETO. THE COMPANY WAIVES ANY CLAIM THAT AMARILLO, TEXAS IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 18 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE JURISDICTION.

 

19.             Section Headings                                         The descriptive headings in this Note have been inserted

 

for convenience only and shall not be deemed to limit or otherwise affect construction or any provision hereof.

 

20.             No Third Party Beneficiaries The parties acknowledge and agree that there are no intended third party beneficiaries to this Note, including, without limitation, each recipient of Loan proceeds pursuant to the terms of Section 2.

 

21.             Severability Whenever possible, each provision of this Note shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Note shall be deemed prohibited or invalid under such applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, and such prohibition or invalidity shall not invalidate the remainder of such provision or the other provisions of this Note.

 

22.             Integration This Note and any other instruments, documents or agreements executed or delivered herewith on the date hereof, constitutes the entire agreement, and supersedes all other prior agreements and understandings, both written or oral, among the Company and the Payee with respect to the subject matter hereof. THIS NOTE AND ANY OTHER DOCUMENTS DELIVERED CONTEMPORANEOUSLY HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

23.             Relationship of the Parties The Company acknowledges that it has been advised to, and has had the opportunity to, obtain the advice of experienced counsel and an accountant of its own choosing in connection with the negotiation and execution of this Note and to obtain the advice of such counsel and accountant with respect to all matters contained herein. The Company further acknowledges that it is experienced with respect to financial and credit matters and has made its own independent decision to request the Loan and execute and deliver this Note.

 

[The remainder of this page in intentionally left blank]

IN WITNESS WHEREOF, the Company has caused this Note to be executed as an instrument under seal by its duly authorized representative as of the day and year first above written.

 

NATURALSHRIMP HOLDINGS, INC.

 

By:         /s/ Bill G. Williams

Name: Bill G. Williams

Title:  Chairman

 

 

 

Acknowledged and Agreed to by:

 

BAPTIST COMMUNITY SERVICES

 

By: /s/ Jared-Robert Byrd

Name: Jared-Robert Byrd

Title: Chairman of the Board

Schedule

 

to

 

Subordinated Promissory Note

 

	
DATE

	
AMOUNT OF

ADVANCE

	
AMOUNT OF

PRINCIPAL

PAID

	
AMOUNT OF

INTEREST

PAID

	
UNPAID

PRINCIPAL

BALANCE

	
UNPAID

INTEREST

BALANCE

	
NOTATION

MADE BY

(INITIALS)ex10_10.htm

 

EXCLUSIVE DISTRIBUTORSHIP

AGREEMENT

(hereinafter called Distributorship Agreement)

BETWEEN:

1. GambaNatural de Espana S.L a Spanish company duly incorporated in the public deed granted before the Public Notary of Spain Mr. Jos&-AristOnico Garcia Sanchez, with offices at Madrid on November, 8th, 2006, under number 2203 of his files, already filed and duly registered with the Mercantile Registry of Madrid, and Tax Identity Number B84903566ss (hereinafter called GAMBAS)

2. IZAMAR SA, a Spanish company duly incorporated in the public deed granted before the Public Notary of Spain Mr. Julian Maria Rubio de Villanueva, with offices at Madrid, on January, 30th, 1987, under number 242 of his files, registered with the Mercantile Registry of Madrid, under volume 7601, 6567, sheet 67760-3, and Tax Identity Number A-78418050. (hereinafter called the Distributor)

(collectively, the Parties)

	
Contact at the date of signature (the parties have an obligation of information of any change) Name, title. mobile, e-mail:

	
Contact at GAMBAS

	
Emilio Munoz Elena Garcia

	
Contact at the Distributor

	
Manuel Maria Izaguirre Gonzalez

They mutually recognise the capacity in which they appear and execute this AGREEMENT.

WHEREAS

I.- Whereas GAMBAS is going, to start up the production of live, fresh shrimp, hereinafter called the Products, at a plant in the Madrid area based on the technology of NaturalShrimp International Ltd;

II.- Whereas Izamar is a well known whole seller and distributor of first class sea food products in Spain;

III.- The Parties have decided to enter into a long term relationship covering both a joint ownership in the production of live, fresh shrimp in Spain and Portugal and the distributorship of said Products. Due to the fact that the above mentioned technology is new and unique related to the production of shrimps. the Parties will on a weekly basis convene to discuss production, marketing, sales, sales forecast, distribution, pricing and other related matters of mutual interest. Furthermore the Parties intend to increase the cooperation as new plants are set in production.

NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

DEFINITIONS

`Customers/Customer' means any customer who is willing to accept the price offered and the related commercial terms concerning delivery and payment.

`Exclusive distribution' means the duties and rights of the Distributor and GAMBAS and their exceptions as set forth in Clauses 2 and 3.

`Appreciable Effect' means an effect as defined in the European Commission's notice 2004/C 101-07 on effect on trade concept. If the turnover of GAMBAS in the Products covered by the Agreement increases and exceeds € 40 million in the European Area and the market shares of the parties on the relevant market affected by the Agreement in the European Area exceeds 5 %, the Agreement may have an Appreciable Effect on the trade between States of the European Area.

`European Area' in the Agreement means the EEA, i.e. the European Economic Area (EU members + Iceland, Liechtenstein and Norway).

`Products' means shrimp that are sold alive/fresh to Customers and harvested in a plant in Madrid according to the exclusive technology of NaturalShrimp International Ltd which is duly patented.

`Competing' Products means harvested shrimp that are sold alive/fresh to Customers, other than the above mentioned Products.

`Territory' means Spain (including the Canary Islands) and Portugal.

'Indirectly' or 'Indirect' in the Distributorship Agreement refers to any action through an intermediate such as an affiliated company, a representative or a contractor of a party, or a relative or a co-habitant of the management of a party, or any other person under the control of the Distributor.

`Sales Price' means the net price (VAT not included) at which the Products are invoiced in local currency by the Distributor.

`Active Sales' means, pursuant to the European competition rules, actively approaching Customers inside or outside the Territory by for instance direct mail or visits, advertisement in media or other promotions specifically targeted at Customers.

`Passive Sales' means, pursuant to the European competition rules, those executed without actively approaching Customers inside or outside the Territory.

OBJECT OF THIS AGREEMENT AND APPOINTMENT

GAMBAS grants the Distributor an Exclusive right to distribute its Products and therefore GAMBAS hereby appoints the Distributor as its Exclusive distributor of the Products in the Territory during the term of this Agreement and the Distributor hereby accepts such appointment, as described in the following

1.           DUTIES AND RIGHTS OF THE DISTRIBUTOR

1.1Legal status of the Distributor

The Distributor sells in the name and on behalf of GAMBAS. He acts as an independent trader in relation to both GAMBAS and the Customers. He shall effectively promote the sale of the Products and shall commercialize the Products in the Territory, acting in the name of GAMBAS. Therefore, the Distributor does not buy the Products from GAMBAS.

The Distributor is not a commercial agent or a franchisee.

The Distributor shall safeguard the interest of GAMBAS with the due diligence of a responsible businessperson.

1.2Sales organization, complaints

1.2.1 Sales organization

The Distributor has and shall at all times have an appropriate, efficient and competent sales organization. He shall be responsible for an effective marketing and distribution of the Products in the Territory.

The Distributor shall appoint one of his employees as a contact person. This person shall be in charge of the marketing and distribution of the Products.

1.2.2Packaging

Unless otherwise agreed in writing the Products shall be packed by GAMBAS, duly marked and packed under high standard sanitary conditions in boxes containing an adequate quantity for sale to Customers.

The Products shall be kept at the plant of GAMBAS until the Distributor collects the Products for delivery to Customers.

1.2.3Risk transfer

When the Distributor has taken possession of the Products at the plant the transfer of risk has taken place. The Distributor is responsible for having adequate insurance regarding the transportation of the Products to the Customers.

1.2.4 Complaints

The Distributor shall deal promptly with any complaint. He shall inform GAMBAS of any complaint. which could jeopardise the image of GAMBAS. its Products or its market position in the Territory.

In case of complaints related to defective Products due to GAMBAS, the Distributor shall immediately inform GANIBAS, give a description of the defect and its origin. Upon request of GAMBAS the Distributor shall return samples of the defective Products. In no case the Distributor shall settle a complaint for defective Products without GAMBAS's written consent.

1.3Marketing

1.3.1Use of intermediaries

The Distributor is entitled to appoint employees. agents. commercial travellers for the sale of the Products. This provision is subject to the Distributor keeping GAMBAS informed by transmitting their names and addresses. The Distributor can only appoint a sub-distributor after the prior written consent of GAMBAS.

The Distributor shall be entirely and exclusively responsible for the activities of these persons/undertakings and the consequences of a possible termination of their contractual relationships. He shall defend. indemnify and hold GAMBAS harmless in case of claims related to such contractual relationships and their termination.

The Distributor's agreements with such persons/undertakings shall be in compliance with the provisions of the Distributorship Agreement. These agreements shall in addition contain an effective cancellation clause in case such persons/undertakings would prejudice the image of GAMBAS or its Products.

Such persons/undertakings shall particularly have the same obligations as the Distributor regarding trade mark, Exclusivity and unfair trade practices. Breach of such obligations by them shall be the responsibility of the Distributor.

1.3.2Promotional activities

GAMBAS shall at his own expenses undertake appropriate advertising, participation in fairs and other promotional activities in order to secure maximum sale of the Products.

The Distributor shall support GAMBAS 's marketing of the Products as the Parties deem reasonable and acceptable.

The Distributor shall give relevant information which is available and deemed necessary for the marketing in the Territory, excluding, confidential information.

GAMBAS shall allow the Distributor to visit GAMBAS's plant along with larger customers.

1.3.3 Trade mark

The Products shall be promoted and sold under the trade marks logos designated by GAMBAS, that shall be prior registered by GAMBAS/NaturalShrimp Europe Gmbl

Any direct or Indirect use of trade marks similar to GAMBAS' trade marks, or capable of being confused therewith. is prohibited. The same prohibition shall apply to trade marks combined with any key word or key element from GAMBAS' trade marks. These obligations shall apply during the Distributorship Agreement and after its expiration.

After the expiration of the Distributorship Agreement any direct or Indirect use of GAMBAS' trade marks is prohibited.

The Distributor has a duty to pledge in writing his owners. employees, affiliate undertakings and sub­contractors to the same obligations.

1.4           Information from the Distributor

The Distributor shall:

1.4.1Keep GAMBAS informed of his activities as well as of the general market conditions within

the Territory,

1.4.2 Keep GAMBAS informed on relevant mandatory regulations and standards requested by the market.

1.5Commercial regulations

1.5.1The commercial aspects between the Parties including pricing and invoicing are set out in

Appendix 1.

1.5.2 The Distributor shall make no guarantee, express or implied, as to the quality of the Products, other than as approved by GAMBAS in writing and shall defend, indemnify and hold GAMBAS harmless with respect to any claim relating to the non-compliance with any guarantee conditions not so approved.

1.6Prohibition of competition with Competing Products

1.6.1The Distributor shall not manufacture/produce Competing Products or distribute, directly or

Indirectly. Competing Products from other suppliers or be agent for such products. He shall not undertake any action which, directly or Indirectly, competes with GAMBAS.

These obligations shall apply to the Territory and outside the Territory unless otherwise accepted in writing. by GAMBAS.

These obligations  are limited to the duration of the Distributorship Agreement.

1.6.2Breach of a provision of 1.6 is deemed a material breach.

1.7Prohibition or limitation to sell outside the Territory

1.7.1The Distributor shall not, directly or Indirectly, sell the Products to Customers outside the

Territory. All inquiries from such Customers shall be transmitted to GAMBAS.

1.7.2Pursuant to the European competition rules, special provisions shall apply in the event of an

increase of the market share of both GAMBAS and the Distributor:

If the Agreement is no longer covered by the Commission Notice on agreements of minor importance which do not appreciably restrict competition (2001/C 368/07) due to an increase of the market share of GAMBAS and of the Distributor on the relevant market, the following provisions shall automatically apply:

a) The obligations set forth in 1.6.1 shall be limited to five (5) years with the possibility for the Parties to renew this clause, requiring their explicit consent six (6) months before the end of this 5 year period.

bl The Distributor shall not undertake Active Sales or provisions set forth in 1.6.1. and 1.7.1, outside the Territory to countries which are given to exclusive distributors or which are exclusively reserved for GAMBAS. Countries which are reserved for GAMBAS are the countries where GAMBAS has not yet appointed a distributor. These provisions shall not apply to Passive Sales.

1.8           Unfair trade practices

Direct or Indirect unfair trade practices are prohibited, particularly the following:

1.8.1 The Distributor shall not infringe upon or abuse GAMBAS' intellectual property rights, irrespective of whether or not these rights are registered in the country where such infringement could take place.

1.8.2 The provisions in Article 1.8.1 shall apply during the Distributorship Agreement and after its termination.

1.8.3 The Distributor shall not use GAMBAS' secret know-how without GAMBAS' approval or disclose confidential information without GAMBAS' written approval.

This provision shall not be limited by the duration of the Distributorship Agreement. It shall be valid as long as the know-how is secret or the information is confidential. If the know-how or the confidential information becomes common knowledge due to acts, not approved by GAMBAS', of the Distributor. his employees. agents, contractors, owners, affiliated undertakings or any other person under his control, the Distributor shall not have the right to use such know-how or exploit confidential information before and after the termination of the Distributorship Agreement.

1.8.4 The Distributor shall promptly inform GAMBAS of all acts of unfair trade practices against

GAMBAS which come to his notice. He shall assist GAMBAS to the best of his abilities in protecting GAMBAS against such acts.

1.8.5 The Distributor has a duty to pledge in writing his employees, agents, owners, affiliate

undertakings, contractors, family and cohabitants to the obligations described in Articles 1.8.1 to 1.8.3 included.

Breach of this duty is a material breach. In case of a breach of the obligations by these persons and provided that the Distributor has failed to pledge them to these obligations, the Distributor shall have an obligation to defend, indemnify and hold GAMBAS harmless and give the necessary assistance. This obligation shall apply during the Distributorship Agreement and 'after its termination. In any case, the Distributor shall promptly inform GAMBAS of any breach of said persons which come to his notice, and the Distributor shall assist GAMBAS to the best of his abilities in protecting GAMBAS against such acts.

1.8.6 In case of termination of the contractual relationship, the Distributor shall return all drawings,

brochures and other technical documentation provided by GAMBAS. The Distributor shall not keep any written or computerized copy of technical documentation or information related to the Products.

2.DUTIES AND RIGHTS OF GAMBAS

2.1Exclusive distribution

2.1.1Exclusive appointment

GAMBAS appoints the Distributor to sell and distribute the Products within the Territory according to this clause and the exceptions provided for herewith.

GAMBAS shall transmit to the Distributor all orders or enquiries sent to GAMBAS by Customers in the Territory.

2.1.2           Territorial exclusivit:

2.1.2.1 Outside the European Area, GAMBAS shall not sell the Products to Customers whom it knows intend to resell in the Territory. GAMBAS shall examine with the due diligence of a responsible businessperson whether there is any danger of such Customers exporting to the Territory.

2.1.2.2 Inside the EEA, GAMBAS shall impose on the other distributors in the European Area a prohibition to sell to the Territory (cf. Art. 1.7) as longs as the distribution agreements is not capable of having an Appreciable Effect on the trade between the States in the European Area.

2.1.3Exceptions

The following exceptions to the exclusive distribution may apply, i.e. the obligations contained in/resulting of 2.1.1 and 2.1.2 are not breached when:

2.1.3.1 The Products are "parallel imported" in the Territory according to applicable mandatory competition rules.

2.1.3.2 The Products are sold to centralized purchasing departments (division of a company or joint undertaking of an association) outside the Territory when these centralized purchasing departments re­distribute the purchased Products to affiliated undertakings or members of the association in the Territory

Upon request from the Distributor, GAMBAS shall give information on such sales.

2.1.3.3 It becomes obvious that the Distributor shall be a hindrance to larger purchasing contracts from purchasers who consistently refuse to deal through intermediaries and buy only directly from the original supplier.

2.1.3.4 GAMBAS has the right to supply the Products to Customers in the Territory under one of the following conditions:

a) The Distributor refuses to deal with a customer in the Territory upon a previous request in writing from said customer, unless this refusal is based on a breach of contract by this customer, risk of non payment. insufficient quantity or any other reasonable cause, or

b) GAMBAS has lawfully exercised his right to terminate the Distributorship Agreement in accordance with Article 3.2 or

c) lithe Distributor is not doing his best efforts in selling and distributing the total, weekly production according to the terms and conditions of this Agreement, leading to not selling said total, weekly production. In this case, GAMBAS is free to sell either directly or Indirectly the remaining weekly production through any other distribution channel, without being in breach with this Distribution Agreement.

 

2.2Packaging, Quality, standard

2.2.1 GAMBAS undertakes to supply a quality which satisfies necessary requirements with respect to mandator\ official rules which are stipulated by the relevant authority at the date of signature of the Distributorship Agreement, upon information from the Distributor.

2.2.2. The Products are delivered by GAMBAS under high standard sanitary conditions in packs. GAMBAS shall, at its own expense. defend. indemnify and hold the Distributor and its respective officers, directors, employees and sub-contractors harmless from and against all third-party claims, actions, suits or proceedings in which it is alleged that GAMBAS has failed to properly pack, mark or manufacture the Products.

 

 

2.3Information from GAMBAS

 

GAMBAS shall inform the Distributor in due time of any significant reduction of production or difficulties of delivery which may have a bearing on the marketing and/or distribution of the Products in the Territory.

GAMBAS shall also provide the Distributor with all relevant information and documents necessary in order for the Distributor to comply with its obligations under this Agreement.

2.4Obligation to supply

 

In case GAMBAS has a deficiency and subsequent reduction of supply, the Distributor shall have the right to purchase the Products from GAMBAS' competitors. as long as GAMBAS is not able to deliver the ordered quantities.

2.5 Trade marks and registered rights

 

GAMBAS shall have duly reiaistered all trade marks used to sell the Products, and shall, at its own expense, defend, indemnify and hold the Distributor and its respective officers, directors, employees and sub-contractors harmless from and against all claims, liabilities, costs and expenses that could arise out of or in connection with any claim that the sale of the Products in the Territory in accordance with this Agreement infringes the patent, copyright, trade mark, trade secret or other property right of any third party, and shall pay any costs and damages finally awarded against the Distributor in any such action which are attributable to any such claim.

2.6 Proceeds and compensation

 

The Distributor shall be compensated by GAMBAS for its services rendered under this Agreement by a commission in the amount and terms provided in Annex 1.

3. DURATION

3.1 Term

3.1.1The Distributorship Agreement is concluded for an initial period of five (5) years, starting on

the date for GAMBAS' first delivery of the Products to the Distributor for distribution and sales. Unless terminated during the initial period with no less than six (6) months written notice before the end of the initial period, it shall be renewed for another period of 5 (five) years. During the second five year period the Distributorship Agreement may be terminated with no less than six (6) months\ written notice. Unless terminated during any additional period with no less than six (6) months written \ notice before the end of the additional period, the Agreement shall be renewed for an additional period of five (5) years. The end of the period of notice shall coincide with the end of a calendar month. irrespective of the date of the notice.

3.1.2           Activity before the termination date: During the period of the termination notice, GAMBAS

undertakes to fulfil their obligation according to Appendix 1 and the Distributor undertakes not to reduce his activity compared to the period before the receipt of the notice.

3.2Early termination

 

The Distributorship Agreement may be terminated earlier with immediate effect:

3.2.1By either party (the Requesting Party

3.2.1.1 If the other party has a-receiver appointed over any of his assets, becomes insolvent or enters into liquidation, or if a petition of bankruptcy is filed by or against him, or if he makes an arrangement for the benefit of his creditors

3.2.1.2 If the other party ceases doing business in the field of the Products,

3.2.1.3 In case of default in payment or a material, i.e. substantial, breach by the other Party of the obligations arising out of the Distributorship Agreement. if the other Party does not rectify such default or breach within the time period stipulated by the Requesting Party in the written request of rectification (this time period shall not be less than 15 days unless the default or breach cannot be rectified)(repeated defaults in the performance of any obligation are deemed a material breach),

3.2.1.4 If the Requesting Party's competitors should obtain, directly or Indirectly, influence over the business of the other party or an interest in the other party's company,

3.2.1.5 If the other party should obtain, directly or Indirectly, an interest in a competitor of the Requesting Party,

3.2.1.6 If the other party is responsible for a criminal offence or other breach of law, is subject to prosecution or is responsible for actions which are against the dominating moral in the requesting party's country and this breach, prosecution or actions jeopardize the image and/or the financial/commercial interests of the Requesting Party,

3.2.1.7 If the Requesting Party definitely ceases doing business in the field of the Products (in such a case the termination would immediately be effective 3 months from the receipt of the written request),

3.2.1.8 Or in any other event which gives the right to cancel the Distributorship Agreement according to the applicable law.

3.2.2By either party if the other party is in breach of the obligations set out in Appendix I.

If any of the Parties wishes to terminate this Agreement on this basis, a written notice of termination must be served. This termination shall be effective two (2) months counted from the date of the termination notice.

3.3Written notice

Termination notice shall be given by e-mail, fax, registered mail or courier. The e-mail must be confirmed by fax, registered mail or courier.

The date of receipt shall be the date of the receipt of the fax or of the letter by the post office at the place of the receiving party or of the receipt from the courier, whichever comes first.

3.4Indemnity

Neither party shall be entitled to termination indemnity, such as indemnity for goodwill or similar compensation, by reason of termination of the Distributorship Agreement.

4.APPLICABLE LAW

The Distributorship Agreement, as well as any obligation, right or breach related to the Distributorship Agreement and further agreements resulting thereof, shall be governed by the laws of Spain.

DISPUTE RESOLUTION

 

All disputes arising out of, or in connection with, the Distributorship Agreement shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules. However when the disputed amount is under € 250.000,- the dispute shall be settled by a single arbitrator.

The place shall be Madrid. Spain. The language shall be English.

6.FINAL PROVISIONS

6.1Force Majeure

The definition of the Force Majeure of the International Chamber of Commerce (ICC Publication 650) is hereby incorporated in the Distributorship Agreement.

As long as a force majeure event above 7 days should prevent the Distributor from obtaining sufficient quantities of the Products, the Distributor shall be free to purchase Competing Products from other suppliers.

As long as a force majeure event above 7 days should prevent sales and distribution of the Products by the Distributor in the Territory, GAMBAS shall be free to sell and distribute, directly or Indirectly, the Products in the Territory.

Should a force majeure event last for more than 6 months, the Distributorship Agreement shall be terminated. with immediate effect upon request from one of the two Parties.

6.2Assignability:

The Distributorship Agreement may not be assigned by one party to a third party or brought into the assets of a company without the prior written consent of the other party.

Notwithstanding the foregoing, IZAMAR is entitled to assign the rights and duties of the Distributor under this Agreement to any company fully controlled by IZAMAR, who shall inform GAMBAS accordingly. No authorization from GAMBAS shall be required in this case.

6.3Modifications and waivers

No modification of the Distributorship Agreement shall be effective unless specifically set forth in a written document signed by both Parties.

No waiver of any right or obligation shall be deemed a waiver of such a right or obligation unless specifically set forth in a written document signed by both Parties. The waiver of any right or obligation herein contained by either party shall not be construed as a waiver of the same right or obligation at a future date or as a waiver of any other right or obligation herein contained.

6.4Invalid provisions

If one or several provisions of the Distributorship Agreement are invalid, the validity of the remaining provisions of the Distributorship Agreement shall not be affected thereby. The invalid provision shall be substituted by a valid provision, which shall be as close as possible to the commercial and legal purpose of the invalid provisions.

 6.5           Entire Agreement

This Distributorship Agreement supersedes all prior agreements and understandings, whether written or oral, between the Parties, with respect to the subject matter hereof. This Agreement may be amended only by a written instrument signed by the Parties.

6.6Confidentiality, discretion

Neither party shall, even after the expiration of the Distributorship Agreement, disclose company secrets or other confidential information received from the other party to any third party without the other party's prior written approval unless this is required by Public Authorities according to mandatory rules.

Each party undertakes in relation to third parties to show all necessary discretion on all questions related to the Distributorship Agreement in accordance with good business practice. Furthermore each party shall not give a negative image of the other party or his activities and products to mass media.

6.7Pledge or lien

None of the Parties shall have pledge or lien on the property of the other.

6.8Language and contact

The working language and the language in the correspondence shall be the English language. The English text of the Distributorship Agreement shall be the original text.

6.9Enforcement (effective date)

The Distributorship Agreement shall become effective at the date of its signature by both Parties.

The Distributorship Agreement is issued in two originals, one for each party.

Madrid, February,2007

For Gamba Natural de Espana S.L.

Represented by: Emilio Munoz Garcia

Sole Director

For Izamar. SA Represented by:

Manuel Izaguirre Gonzalez

Ruth Izaguirre Gonzalez

David Izaguirre Gonzalez

APPEND 1 COMMERCIAL REGULATIONS

GAMBAS initial plant will have an average weekly production of 2'700 kg.

The Distributor is obligated to do his best effort in selling and distributing the total, weekly production according to the following procedure:

1. In meetings the Parties will discuss production. marketing. sales, distribution, pricing and other related matters of mutual interest. These meetings shall be held weekly in the start up phase. whilst they shall be held monthly in a further stage. The Parties shall jointly project sales forecast for rolling three months.

2. At least once or twice a week collect the harvested Products from the plant by his own means of transportation according to projected sales forecast. The Distributor is entitled to subcontract collection, transportation and distribution services. Such subcontractor must be approved by GAMBAS prior to the hiring of said subcontractor. GAMBAS can only reject a subcontractor on a reasonable basis.

3.Sales price to the Customers shall at all times be set to the maximum of what the market is

willing to pay including freight cost where customary. (i.e. Canary Islands).

4.After delivery of the Products to the Customers. the Distributor will invoice the Customers

in the name of GAMBAS according to the Distributors normal invoicing practices. Any credit to Customers beyond normal conditions must be accepted by GAMBAS in writing. Any default on a payment obligation shall be handled according to a policy and routine to be agreed upon by the Parties in writing.

5.There shall not be any minimum quotas of sales.

6.Any quantity collected by the Distributor not sold live or fresh. must be frozen by the

Distributor for sale at a later time. GAMBAS may request the Distributor to collect and freeze any surplus production in which case GAMBAS will cover the Distributor's cost.

7.Settling of the accounts between GAMBAS and the Distributor shall be conducted as follows:

a. Monthly and no later than on the 5 business day of the month a computed summary of all invoices issued the previous month shall be sent to GAMBAS by email.

b. Monthly and no later than the 5 business day of the month. the Distributor will send GAMBAS an invoice for commission based on sales (VAT is not included) invoiced the previous month. The Distributor's commission is 15% of the Sales Price (VAT excluded) provided that the average Sales Price per/Kg in the previous three months amounts at least to 15. In the case that the average Sales Price per/Kg in the previous three months is below IS f the parties shall agree upon a new commission for the future. Moreover any transportation expenses incurred by the Distributor due to the distribution shall be transferred and invoiced to GAMBAS

8. The above described procedure including, the Distributor's commission may need to be revised due to the new technology allowing for the supply of live, fresh shrimp to the market on a weekly basis. Therefore the Parties agree to review and if necessary change the procedure on a yearly basis. first time within 12 months from the date set in Article 3. I. unless both Parties agree otherwise.

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