Document:

Exhibit 10.2

                                 Execution Copy

                PROPORTIONAL EXCESS OF LOSS REINSURANCE AGREEMENT

                  (hereinafter referred to as the "Agreement")

                                     between

               GIBRALTAR CASUALTY COMPANY, a Delaware Corporation

                   (hereinafter referred to as the "Company")

                                       and

   PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY, an Indiana Corporation
                  (hereinafter referred to as the "Reinsurer")

          (Both the Company and the Reinsurer collectively are referred
                to as the "Parties" and individually as "Party")

WHEREAS,  The  Prudential  Insurance  Company  of  America ("Prudential") is the
ultimate parent of the Reinsurer;

WHEREAS  Prudential  and  Everest   Reinsurance   Holdings,   Inc.,  a  Delaware
corporation  ("Holdings"),  have executed a Stock Purchase Agreement dated as of
February  24,  2000 ("Sale  Agreement")  wherein  Holdings  will  purchase  from
Prudential  all issued and  outstanding  shares of the  Company,  a wholly owned
subsidiary of  Prudential,  effective as of the "Closing  Date" set forth in the
Sale Agreement.

WHEREAS,  as of the  "Closing  Date,"  as  this  term  is  defined  in the  Sale
Agreement,  the Company has outstanding  "Loss Reserves," as defined in the Sale
Agreement,  relating to all Policies, as defined herein, in the amount stated in
the "Closing Date Financial Statement," as defined in the Sale Agreement.

WHEREAS,  the Company  also has  potential  adverse  Loss  Reserves  development
("Adverse  Loss  Development"),  as  defined  herein,  and the  Company  desires
reinsurance coverage for such Adverse Loss Development.

NOW,   THEREFORE,   in  consideration  of  mutual  covenants,   representations,
warranties,  and  agreements  contained  herein and in the Sale  Agreement,  the
Parties agree as follows:

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ARTICLE I - CLASSES OF BUSINESS COVERED

A.            By this  Agreement  and  subject to the terms and  conditions  set
              forth below, the Reinsurer agrees to indemnify the Company for the
              Adverse Loss  Development that may accrue to the Company under all
              policies,  contracts,  and  binders of  insurance  or  reinsurance
              (hereinafter "Policies") issued or renewed by the Company prior to
              the Closing Date.

B.            Adverse Loss Development is defined as the Company's  Ultimate Net
              Loss that is in excess of the Loss Reserves carried by the Company
              at the Closing Date. Subject to the Reinsurer's Limit of Liability
              set forth in Article V hereof,  the Reinsurer  shall reimburse the
              Company  for  the  Adverse  Loss Development  paid by the Company,
              provided that the Company has paid an  amount  equal  to  the Loss
              Reserves carried by  the  Company  at the Closing Date.  Provided,
              however, that this Agreement  shall  not  apply  to the first four
              million dollars  ($4,000,000)  of any  Settlement  Concessions  on
              Gibraltar-Sourced  Business,  as those  terms  are defined  in the
              Quota Share Reinsurance  Agreement  between  the  Parties  ("Quota
              Share Reinsurance Agreement"), in excess of Settlement Concessions
              listed on Schedule A to the Quota Share Reinsurance Agreement.

C.            "Ultimate Net Loss" is defined as the Company's  determination  of
              the sum or sums (including Loss  Adjustment  Expenses,  as defined
              herein)  incurred  by the Company in  settlement  of claims and in
              satisfaction of judgments rendered on account of such claims under
              all Policies,  after  deduction of all  reinsurance  and insurance
              recoveries and  subrogation and salvage  recoveries  collected and
              received by the Company and losses paid prior to the Closing Date.
              Nothing  herein  shall be construed to mean that losses under this
              Agreement are not  recoverable  until the  Company's  Ultimate Net
              Loss has been  ascertained.  Ultimate  Net Loss shall not  include
              Loss in Excess of Policy Limits or Extra  Contractual  Obligations
              (as defined herein) incurred by the Company.

ARTICLE II - COMMENCEMENT AND TERMINATION

A.            This  Agreement  shall  become  effective on the Closing Date  and
              shall continue in force  thereafter  until two (2) years after the
              earlier of  when  (i)  the  Company  settles  all claims under all
              Policies, or (ii) the  Reinsurer  exhausts its Limits of Liability
              as set forth in Article V.

B.            Neither Party may terminate this Agreement.

ARTICLE III - TERRITORY

The  territorial  scope  of this  Agreement  shall be  identical  to that of the
Policies reinsured hereunder.

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ARTICLE IV - CONSIDERATION

The consideration for the reinsurance  coverage is deemed paid as of the Closing
Date and, with respect to the Reinsurer,  includes,  among other things, certain
operational  and other  assistance (i)  previously  provided to the Reinsurer by
Prudential, which is deemed paid as of the Closing Date, and (ii) to be provided
to the  Reinsurer in connection  with this  Agreement by  Prudential,  including
pursuant to the Keepwell  Agreement between Prudential and the Reinsurer of even
date herewith. No further consideration shall be due to the Reinsurer.

ARTICLE V - REINSURER'S LIMIT OF LIABILITY AND COMPANY'S RETENTION

The Reinsurer  shall pay to the Company an 80% quota share interest of the first
two hundred million dollars  ($200,000,000)  of Adverse Loss Development paid by
the Company, with the Reinsurer's maximum liability under this Agreement limited
to one  hundred  and sixty  million  dollars  ($160,000,000).  The  Company  may
reinsure its 20% quota share  retention in the first two hundred million dollars
($200,000,000)  of Adverse Loss  Development  only with an affiliate  within its
insurance  holding  company  system,  with  `affiliate'  and `insurance  holding
company system' having the meanings set forth under Section 5001 of the Delaware
Insurance  Code.  Such  reinsurance by the Company of any share of its 20% quota
share retention with an affiliate is permissible only if the assuming  affiliate
fully retains and does not further cede or retrocede any share of its assumption
of the 20% quota share  retention,  except to another  affiliate of the Company;
and any  affiliate of the Company  which assumes some share of the Company's 20%
quota  share  retention  under  this  provision  shall  be  subject  to the same
prohibition on ceding or retroceding  any share of the Company's 20% quota share
retention to any person or entity that is not an affiliate of the Company.

ARTICLE VI - LOSS IN EXCESS OF POLICY LIMITS/EXTRA CONTRACTUAL OBLIGATIONS

Ultimate Net Loss shall not include any amounts that the Company pays or is held
liable to pay in excess of its Policy limit,  but otherwise  within the terms of
its Policy  ("Loss in Excess of Policy  Limits"),  or any  punitive,  exemplary,
compensatory or consequential damages ("Extra Contractual Obligations"), because
of  alleged  or  actual  bad  faith or  negligence  on its part in  rejecting  a
settlement within Policy limits, or in discharging its duty to defend or prepare
the  defense  in  the  trial  of  an  action  against  its  policyholder,  or in
discharging  its duty to prepare or prosecute an appeal  consequent upon such an
action, or in otherwise handling a claim under a Policy.

ARTICLE VII - OTHER REINSURANCE

Subject  always to the retention  provision set forth in Article V above,  on or
after  the  Closing  Date,  the  Company  shall be  permitted  to  obtain  other
reinsurance,  recoveries  under which  shall inure  solely to the benefit of the
Company  and all  recoveries  under such  other  reinsurance  shall be  entirely
disregarded  in applying  all of the  provisions  of this  Agreement;  provided,
however,  that the Quota Share Reinsurance  Agreement shall inure to the benefit
of this Agreement.

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ARTICLE VIII - LOSS ADJUSTMENT EXPENSES

Loss  Adjustment  Expenses  shall include both  allocated and  unallocated  loss
expenses and shall be included in the Ultimate Net Loss,  and are defined as all
expenses of the Company,  including  expenses for declaratory  judgment actions,
monitoring of underlying  litigation or claims, and coverage opinions,  incurred
by the Company in the settlement,  investigation,  defense, or adjustment of all
claims under all Policies.

ARTICLE IX - SUBROGATION AND SALVAGE

The  Reinsurer  shall be credited  with  subrogation  and salvage  collected and
received by the Company,  less the actual cost,  excluding salaries and expenses
of  officials  and  employees  of the  Company  respecting  their  time spent on
subrogation and salvage  recoveries and also excluding sums paid to any attorney
as a retainer  in  obtaining  such  reimbursement  or making such  recovery,  on
account of claims and settlements  involving the reinsurance coverage hereunder.
Enforcement of subrogation and salvage rights shall be determined  solely by the
Company.

ARTICLE X - ORIGINAL CONDITIONS

A.            The  Reinsurer  shall  follow  the  fortunes of the Company for it
              Ultimate  Net  Loss  for  all  loss  settlements  and shall pay as
              paid by the Company.

B.            The reinsurance coverage  provided  under  this Agreement shall be
              subject  to  all  interpretations,  modifications,  waivers,   and
              alterations  of  the  Policies;   provided,   however,   that  the
              agreements set forth on Exhibit A  hereto  that are in force as of
              the   Closing   Date  shall  remain,  or  shall  for  purposes  of
              determining  the   parties'  rights  and  obligations  under  this
              Agreement be deemed to have remained,  in force during the term of
              this  Agreement  and shall not be  modified  or  altered, or shall
              for  purposes  of  determining the parties' rights and obligations
              under  this  Agreement  be  deemed  not  to have been  modified or
              altered, during the  term  of  this  Agreement,  unless  otherwise
              mutually agreed by the Parties.

C.            Nothing  herein  shall in  any manner  create any  obligations  or
              establish any rights against the Reinsurer in favor of  any  third
              party or any person not a Party to this Agreement.

ARTICLE XI - REPORTS AND REMITTANCES

A.            The first statement of account shall be due to the Reinsurer  from
              the Company forty-five  (45) days  after  the  close of the  first
              fiscal quarter that includes the Closing Date.

B.            Thereafter,  the  Company  shall  submit  quarterly  statements of
              account  ("quarterly  reports")  within forty-five (45) days after
              the end of each calendar quarter.

<PAGE>
C.            Such   quarterly   reports   shall  be  sent  by   both  facsimile
              transmission  and  United  States  Postal  Service  or  any  other
              delivery service used by the Company.

D.            Such quarterly  reports  shall be in the form  attached  hereto as
              Exhibit B, or in any other  form  mutually  agreed by the Parties.

E.            Remittances  shall  be  on  a "Net Basis," defined as amounts owed
              between the Parties under this Agreement.

F.            Remittances shall be due to the Company from the Reinsurer  within
              forty-five (45) days from the date of  receipt  of  the  facsimile
              transmission of each quarterly report.

G.            Failure  of  a  Party  to  pay  amounts  owed  when due under this
              Agreement shall result in imposition  on that Party of an interest
              penalty equal  to  the  rate of interest  announced  by  Citibank,
              N.A. as  its prime or  base  rate  as  of  the  due  date  of  any
              remittance, calculated on the basis of the  actual number of  days
              elapsed past the due date of  any  remittance  divided  by  three-
              hundred-and-sixty-five (365) days and  payment  of  other  losses,
              costs, and expenses accrued or incurred by the  other  Party as  a
              result of the late payment.

ARTICLE XII - OFFSET

The  Company  and the  Reinsurer  shall have the right to offset any  balance or
amounts due from one Party to the other under this Agreement.

ARTICLE XIII - ACCESS TO RECORDS

A.            The Company shall place at the disposal  of the  Reinsurer  at all
              reasonable  times,  and  the  Reinsurer  will  have  the  right to
              inspect,  all  books,  records,  and  papers  of  the  Company  in
              connection with any  reinsurance  coverage hereunder or any claims
              in connection herewith.

B.            All  records  reviewed  by the  Reinsurer  are deemed  proprietary
              and confidential property of the Company. Further, unless pursuant
              to the express, written  permission of the Company,  the Reinsurer
              shall not  disclose  the contents of such information to any other
              person, persons, entity, or entities; provided, that the Reinsurer
              may disclose such information  or portions  thereof in  connection
              with any arbitration hereunder or any legal or regulatory process,
              or to its directors,  officers  and  employees  and the directors,
              officers  and  employees  of  its  affiliates  and  to its agents,
              representatives,  attorneys,  accountants,  auditors,   reinsurers
              (collectively, "the Reinsurer's Representatives"), in  each  case,
              who have a  legitimate  need to know such information (which would
              include, but not be limited to the right to dispute and/or  assess
              in  furtherance  of  a  dispute) and who are informed of and agree
              to be  bound  by the  confidentiality  terms  of  this  Agreement.
              The  Reinsurer  shall  indemnify and hold harmless the Company for
              all damages  resulting  from any  unauthorized  disclosure  by the

<PAGE>
              Reinsurer or the Reinsurer's Representatives of  records  obtained
              pursuant to this  Article.  Nothing  contained  in this  Agreement
              shall be construed to prevent the Company from applying to a court
              of   competent   jurisdiction   for   equitable  relief  including
              injunction and specific performance as a remedy  if the  Reinsurer
              or any of the Reinsurer's Representatives  breach or  threaten  to
              breach any of the provisions of this Article. Without prejudice to
              the rights and remedies otherwise available at law  or  equity  to
              the Company, it is understood and agreed that  the  Company  would
              be  irreparably  injured by a breach of this Article,  that  money
              damages  would  not  be  a  sufficient  remedy  for  any actual or
              threatened breach of this Article by the  Reinsurer  or any of the
              Reinsurer's Representatives  and that the Company  shall  (without
              proof of actual damages) be entitled to equitable  relief.  In the
              event of litigation relating  to  this  Article,  if  a  court  of
              competent jurisdiction determines that the Reinsurer or any of the
              Reinsurer's Representatives  have breached this Article,  then the
              Reinsurer shall be liable and pay  to the Company  the  reasonable
              legal fees incurred by the Company in  connection with the subject
              litigation, including any appeal therefrom.

ARTICLE XIV - ERRORS AND OMISSIONS

Inadvertent delays, errors or omissions in connection with this Agreement or any
transaction  hereunder  shall not relieve  either Party of any  liability  which
would have  attached had such delay,  error or omission not  occurred,  provided
always  that such error or  omission  is  rectified  as soon as  possible  after
discovery.

ARTICLE XV - SECURITY

A.       If the  Company is or becomes  unable to take  credit in any  financial
         statement  filed  with  its  domiciliary  insurance  regulator  or with
         insurance  regulators  in New Jersey,  California or any other state in
         which it  currently  is  approved  as a surplus  lines  insurer (or any
         successors to said  regulators) for the reinsurance  coverage  provided
         hereunder,  or if Prudential's  Financial  Strength Rating published by
         A.M. Best becomes less than "A-," the  Reinsurer  agrees to fund within
         thirty (30) days from  receipt of notice from the Company  that funding
         is required  its share of Adverse  Loss  Development  (and to replenish
         such funding from time to time as necessary) by:

         1.   Clean, irrevocable and unconditional  letters of credit issued and
              confirmed, if confirmation is required by the insurance regulatory
              authorities  involved,  by  a  qualified  United  States financial
              institution  acceptable to said insurance regulatory authorities;

         2.   cash; and/or

         3.   a  Trust in compliance with the requirements of and  acceptable to
              said insurance regulatory authorities.

<PAGE>
B.       With regard to funding in whole or in part by letters of credit,  it is
         agreed  that  each  letter of  credit  will be in a form that  would be
         acceptable to the Company's domiciliary insurance regulatory authority,
         will be  issued  for a term of at least  one year and will  include  an
         "evergreen  clause," that  automatically  extends the term for at least
         one additional  year at each  expiration  date unless written notice of
         non-renewal is given to the Company not less than 30 days prior to said
         expiration date. The Company and the Reinsurer  further agree that said
         letters of credit may be drawn upon by the Company or its successors in
         interest at any time,  without  diminution because of the insolvency of
         the Company or the Reinsurer, but only for one or more of the following
         purposes:

         1.   To reimburse itself for the Reinsurer's share of paid Adverse Loss
              Development, unless paid in cash by the Reinsurer;

         2.   To reimburse itself for the Reinsurer's share of any other amounts
              claimed to be due hereunder, unless paid in cash by the Reinsurer;

         3.   To  fund  a  cash  account in an amount  equal to the  Reinsurer's
              share  of  Adverse  Loss  Development  funded by means of a letter
              of  credit  that  is  under non-renewal  notice, if said letter of
              credit  has  not  been  renewed  or replaced by the  Reinsurer  10
              days prior to its expiration date;

         4.   To  refund  to  the  Reinsurer  any  sum  in excess of the  actual
              amount  required  to  fund  the Reinsurer's  share of Adverse Loss
              Development  and  other  amounts  claimed to be due hereunder,  if
              so requested by the Reinsurer.

C.       In the event the amount drawn by the Company on any letter of credit is
         in excess of the actual  amount  required for B (1), B (3) or B (4), or
         in the case of B (2),  the  actual  amount  determined  to be due,  the
         Company  shall  promptly  return to the  Reinsurer the excess amount so
         drawn.

D.       In the event of funding through a  Trust:

         1.   The  Reinsurer  shall  establish  a  Trust Account for the benefit
              of  the   Company  to  fund   the  amounts  receivable  under  the
              Agreement  in  a  qualified  United States  financial  institution
              reasonably  acceptable  to  the  Company  and  to  said  insurance
              regulatory authorities.

         2.   The  assets  deposited  into  the Trust  Account  shall  be valued
              according  to  their  current fair  market value and shall consist
              only  of  cash  (United  States  legal  tender),  certificates  of
              deposit  (issued  by  a  United  States bank and payable in United
              States legal  tender)  and  investments of  the  type permitted by
              and  acceptable to  said insurance  regulatory authorities  or any
              combination  of the  above,  provided  that such  investments  are
              issued by  an institution that is  not the  parent, subsidiary  or
              affiliate of either the Reinsurer or the Company;

<PAGE>
         3.   The  Reinsurer,  prior  to  depositing  assets  with  the trustee,
              shall  execute  assignments,  endorsements  in  blank, or transfer
              legal  title  to  the  trustee of all shares,  obligations  or any
              other  assets  requiring  assignments,  in order that the Company,
              or  the  trustee   upon  the  Company's  direction,  may  whenever
              necessary   negotiate  any   such   assets   without  consent   or
              signature from the Reinsurer or any other entity;

         4.   All  settlements  of account between the Reinsurer and the Company
              shall be in cash or its equivalent;

         5.   The  assets  in   the  trust  account  may  be  withdrawn  by  the
              Company at  any  time,  notwithstanding  any  other  provisions in
              this  Agreement,  and  shall  be  utilized  by  the Company or any
              successor  by  operation  of  law,  including  without  limitation
              any  liquidator,  rehabilitator,  receiver  or  conservator of the
              Company,  for  the purposes  set forth  in  paragraphs  B(1) -B(4)
              above.

ARTICLE XVI - INSOLVENCY

In the  event  of  the  insolvency  of the  Company,  the  reinsurance  coverage
hereunder  shall  be  payable  directly  to the  Company  or to its  domiciliary
liquidator,  receiver,  conservator  or statutory  successor on the basis of the
amount of claim  allowed in the  insolvency  proceeding  without  diminution  by
reason of the  inability of the Company to pay all or any part of the claim.  It
is agreed,  however,  that the  liquidator,  receiver,  conservator or statutory
successor  of the Company  shall give  written  notice to the  Reinsurer  of the
pendency of a claim against the Company,  indicating  the Policy or bond covered
hereunder  which claim  would  involve a possible  liability  on the part of the
Reinsurer,   within  a  reasonable  time  after  such  claim  is  filed  in  the
conservation or liquidation  proceeding or in the receivership,  and that during
the  pendency  of such  claim,  the  Reinsurer  may  investigate  such claim and
interpose,  at its own  expense,  in the  proceeding  where  such claim is to be
adjudicated,  any defense or defenses that it may deem  available to the Company
or its liquidator,  receiver,  conservator or statutory  successor.  The expense
thus incurred by the Reinsurer  shall be chargeable,  subject to the approval of
the Court,  against  the  Company  as part of the  expense  of  conservation  or
liquidation to the extent of a pro rata share of the benefit which may accrue to
the Company solely as a result of the defense undertaken by the Reinsurer.

ARTICLE XVII - ARBITRATION

A.       Except  with  respect to  disputes  arising  solely out of or solely in
         connection with Article XIII above (Access to Records),  as a condition
         precedent to any right of action hereunder, in the event of any dispute
         or  difference  of  opinion  hereafter  arising  with  respect  to this
         Agreement,  including its formation and validity, it is hereby mutually
         agreed that such dispute or difference of opinion shall be submitted to
         arbitration.

<PAGE>
B.       Except as provided  in  subsections  A. and D. of this  Article or with
         respect to judicial proceedings instituted in aid of arbitration,  this
         Article shall constitute a waiver of the Parties' rights to commence an
         action in any court of competent  jurisdiction in the United States, to
         remove  an  action  to a United  States  District  Court,  or to seek a
         transfer of a case to another court as might  otherwise be permitted by
         the laws of the United States or of any State or other  jurisdiction in
         the United States.

C.       One Arbiter shall be chosen by the Company, the other by the Reinsurer,
         and an Umpire  shall be chosen by the two  Arbiters  before  they enter
         upon arbitration,  all of whom shall be active or retired disinterested
         executive officers of United States domiciled  insurance or reinsurance
         companies.  In the event that  either  Party  should  fail to choose an
         Arbiter within 30 days  following a written  request by the other Party
         to do so, the  requesting  Party may choose two  Arbiters  who shall in
         turn choose an Umpire  before  entering  upon  arbitration.  If the two
         Arbiters  fail to agree upon the  selection of an Umpire within 30 days
         following  their   appointment,   each  Arbiter  shall  nominate  three
         candidates  within  10 days  thereafter,  two of whom the  other  shall
         decline, and the decision shall be made by drawing lots.

D.       The Arbiters and the Umpire ("the  Arbitration  Panel") shall  consider
         this Agreement as an honorable engagement rather than merely as a legal
         obligation,  and they are relieved of all judicial  formalities and may
         abstain from  following the strict rules of law. The majority  decision
         of the  Arbitration  Panel shall be final and binding on both  Parties.
         Judgment  upon the  final  decision  of the  Arbitration  Panel  may be
         entered in any court of competent jurisdiction.

E.       Except as provided in sub-section G. of this Article,  each Party shall
         bear the expense of its own Arbiter, and shall jointly and equally bear
         with the other the expense of the Umpire and of the arbitration. In the
         event that the two Arbiters are chosen by one Party, as above provided,
         the expense of the Arbiters,  the Umpire and the  arbitration  shall be
         equally divided between the two Parties.

F.       Any  arbitration  pursuant to this  Article  shall be  conducted in New
         York,  New York  unless  otherwise  agreed  by the  parties;  provided,
         however,  that the Arbitration Panel may choose to take evidence and/or
         convene a hearing in a place other than New York for the convenience of
         the parties, the witnesses or the Arbitration Panel.

G.       The  Arbitration  Panel shall have the power to  award costs, expenses,
         and interest to the prevailing Party in an arbitration.

ARTICLE XVIII - SERVICE OF SUIT

A.       It is agreed that in the event of the failure of the  Reinsurer  to pay
         any amount  claimed to be due  hereunder  or to  otherwise  perform its
         obligations  hereunder,  the  Reinsurer  will,  at the  request  of the
         Company,   submit  to  the  jurisdiction  of  any  court  of  competent

<PAGE>
         jurisdiction  within the State of New Jersey or such other jurisdiction
         within the United States as the Company can select as a forum, and will
         comply with all requirements  necessary to give such court jurisdiction
         and all matters  arising  hereunder  shall be  determined in accordance
         with the law and practice of such court.

B.       Service of process in such suit may be made on the Reinsurer by serving
         the  Commissioner  of Insurance  of the State of New Jersey,  who shall
         forward such process to the Reinsurer in accordance  with Article XXIII
         or at such other  address as the Reinsurer  shall  advise.  In any suit
         instituted,  the  Reinsurer  will abide by the final  decision  of such
         court.

C.       Further,  pursuant to any statute of any state,  territory, or district
         of the United States of America which makes provisions  therefore,  the
         Reinsurer herein hereby designates the superintendent,  commissioner or
         director of insurance or other  officer  specified  for that purpose in
         the statute,  or his successor or successors in office, as its true and
         lawful  attorney  upon whom may be served  any  lawful  process  in any
         action, suit or proceeding instituted by or on behalf of the Company or
         any beneficiary  hereunder arising out of this Agreement of reinsurance
         and hereby designates the above-named person to whom the said office is
         authorized to mail such process or a true copy thereof.

D.       This Article is not meant to supersede  Article XVII of this  Agreement
         or override the obligation of the parties to arbitrate  their  disputes
         in accordance with Article XVII.

ARTICLE XIX - ENTIRE AGREEMENT

This  Agreement,  the Sale Agreement and the Guaranty,  and any exhibits to such
agreements,  collectively  constitute the entire  agreement  between the Parties
regarding  the subject  matter hereof and  supercede  all prior  agreements  and
understandings,  both  written and oral and do not confer any rights or remedies
to any other party or any other person.

ARTICLE XX - AMENDMENTS AND ALTERATIONS

This Agreement shall not be changed,  supplemented,  modified, or amended except
by an endorsement/addendum signed by the Parties and attached hereto.

ARTICLE XXI - NO WAIVER

No  forbearance  to enforce any provision or right  hereunder  shall be deemed a
waiver thereof, and no waiver of any breach of any term or covenant herein shall
be construed  as a waiver of any other breach of the same,  or any other term or
covenant herein.

<PAGE>
ARTICLE XXII - CONSTRUCTION

This Agreement is the result of arms-length negotiations between the Parties and
has been  prepared  jointly by the  Parties.  In applying and  interpreting  the
provisions  of this  Agreement,  there shall be no  presumption  that either the
Company or the Reinsurer  prepared this Agreement,  or that this Agreement shall
be construed in favor of or against either the Company or the Reinsurer.

ARTICLE XXIII - NOTICES

Any notice or other  communication  required or permitted  hereunder shall be in
writing  and  shall  be  delivered  personally,  telegraphed,  telexed,  sent by
facsimile  transmission,  or sent by  certified,  registered  or  express  mail,
postage prepaid, to:

         If to the Reinsurer, to:

         Richard Green,
         Vice President
         Prudential Property and Casualty Insurance Company
         23 Main St., 4th Floor
         Holmdel, NJ  07032
         Phone: 732-946-5082
         Fax:   732-946-5029

         with a copy to:

         Doreen Faga
         President, Gibraltar Operations
         The Prudential Insurance Company of America
         Eisenhower Corporate Center, Building 3
         290 West Mt. Pleasant Avenue
         Livingston, NJ  07039
         Phone: 973-548-5980
         Fax:   973-548-5950

         If to the Company, to:

         Janet J. Burak
         Senior Vice President and General Counsel
         Everest Reinsurance Holdings
         477 Martinsville Road
         P.O. Box 830
         Liberty Corner, NJ  07938
         Phone: 908-604-3170
         Fax:   908-604-3450

<PAGE>
or in each case to such  other  address as a party may  designate  for itself by
like notice to the other party.

ARTICLE XXIV - GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of
the State of New York.

IN WITNESS  WHEREOF,  the Company,  by its duly authorized  representative,  has
executed this Agreement as of the date undermentioned at:

Livingston, New Jersey, this 19th day of September 2000.

/S/  DOREEN FAGA
     ---------------------------------
     Doreen Faga
     President, Gibraltar Casualty Co.

IN WITNESS WHEREOF, the Reinsurer,  by its duly authorized  representative,  has
executed this Agreement as of the date undermentioned at:

Holmdel, New Jersey, this 19th day of September 2000.

/S/  RICHARD M. GREEN
     ---------------------------------
     Richard M. Green

<PAGE>
                                   EXHIBIT A

Aggregate  Stop  Loss  Retrocession  Agreement  between  Prudential  Reinsurance
Company and Gibraltar Casualty Company (effective 10/6/95)

Quota  Share  Reinsurance  Agreement  issued to  Gibraltar  Casualty  Company by
Prudential  Reinsurance  Company  (dated  May 1, 1985)  (Gibraltar's  cession to
Prudential Reinsurance for MUF eligible business)

Direct Excess Quota Share Reinsurance  Agreement between Prudential  Reinsurance
Company and Gibraltar Casualty Company (effective January 1, 1986)

Quota Share Reinsurance  Agreement between  Prudential  Reinsurance  Company and
Gibraltar Casualty Company ("Med Mal") effective 1/1/89

MUF  Commutation  Agreements  between  Gibraltar  Casualty  Company,  Prudential
Reinsurance Company and various MUF participants executed between 1985 and 1987,
the "MUF Buybacks"

<PAGE>SEVENTH MODIFICATION TO
                   REVOLVING CREDIT LOAN & SECURITY AGREEMENT
                            (ACCOUNTS AND INVENTORY)
                                       AND
                         FIRST AMENDMENT TO ADDENDUM TO
                   REVOLVING CREDIT LOAN & SECURITY AGREEMENT

     This  SEVENTH  MODIFICATION  TO LOAN &  SECURITY  AGREEMENT  (ACCOUNTS  AND
INVENTORY) AND FIRST  AMENDMENT TO ADDENDUM TO REVOLVING  CREDIT LOAN & SECURITY
AGREEMENT (this  "Modification") is entered into as of September 19, 2000 by and
between  HANSEN  BEVERAGE  COMPANY,  a  Delaware  corporation  ("Borrower")  and
COMERICA BANK-CALIFORNIA, a California banking corporation ("Bank").

                                    RECITALS

                  A. Borrower and Bank have previously entered into that certain
Revolving Credit Loan & Security Agreement  (Accounts and Inventory) dated as of
May 15, 1997, as amended by that certain First  Modification  to Loan & Security
Agreement  dated  May 11,  1998,  as  further  amended  by that  certain  Second
Modification  to Loan &  Security  Agreement  dated  July 27,  1998,  as further
amended by that certain Third  Modification  to Loan & Security  Agreement dated
December  1,  1998,  as further  amended by that  certain  Fourth  Amendment  to
Revolving  Credit Loan and Security  Agreement  dated March 28, 2000, as further
amended by that certain  Fifth  Amendment to Revolving  Credit Loan and Security
dated April 27, 2000, as further  amended by that certain Sixth  Modification to
Amendment  to  revolving  Credit  Loan  and  Security  Agreement  (Accounts  and
Inventory)  dated  May  23,  2000   (collectively   referred  to  as  the  "Loan
Agreement"),  together  with the  Addendum to  Revolving  Credit Loan & Security
Agreement  dated December 1, 1998 (the "LIBOR  Addendum"),  the Inventory  Rider
(Revolving  Advance)  dated May 15, 1997,  as amended by that certain  Inventory
Rider to Revolving  Credit Loan and Security  Agreement  dated  December 1, 1998
(the  "Inventory  Rider"),  the  Environmental  Rider  dated  May 15,  1997 (the
"Environmental  Rider"),  the Equipment Rider dated May 15, 1997 (the "Equipment
Rider") and UCC-1 Financing Statement (the "UCC-1").

                  B. Pursuant to the Loan Agreement,  Bank has made available to
Borrower a  revolving  line of credit  (the "Line of  Credit")  in an  aggregate
principal amount not to exceed Three Million and 00/100 Dollars  ($3,000,000.00)
at any one time, as further  provided in the terms and conditions set forth more
completely in the Loan Agreement.

                  C.  Borrower  has  previously  executed  in favor of Bank that
certain Amended and Restated  Variable Rate  Installment  Note dated as of April
20, 2000 made by Borrower payable to the order of Bank in the original principal
amount of Four Million and 00/100 Dollars ($4,000,000.00) (as amended, the "Term
Loan Note").

                  D. As additional  security for the  Obligations (as defined in
the Loan Agreement),  including the Term Loan Note, Borrower has pledged to Bank
those  certain  Trademark  Rights as defined  in and  pursuant  to that  certain
Security  Agreement in License Agreement and Other Agreements dated May 15, 1997
by and between Bank and Borrower (the "License Security Agreement").

                  E. Hansen Natural Corporation, a Delaware corporation ("Hansen
Natural"), and Hard e Beverage Company, a Delaware corporation formerly known as
CVI Ventures,  Inc. ("Hard e Beverage")  (Hansen Natural and Hard e Beverage are
collectively  referred to as the "Guarantors")  have each executed those certain
guaranty  agreements  each dated as of May 15, 1997  (respectively,  the "Hansen
Guaranty"and the "Hard e Beverage Guaranty"and collectively,  the "Guaranties"),
pursuant  to  which  Guarantors  guaranteed  the  Obligations  owing  to Bank by
Borrower, as set forth more completely in the Guaranties.

<PAGE>

                  F. Hansen Natural's  obligations under the Hansen Guaranty are
secured by the capital stock of Borrower  owned by Hansen  Natural,  which stock
has been pledged pursuant to the terms of that certain  Security  Agreement (All
Assets) dated May 15, 1997,  together with that certain  endorsement in blank of
stock  certificates,  the  Environmental  Rider  dated May 15,  1997,  and UCC-1
Financing  Statement  (collectively  referred  to as the "Hansen  Natural  Stock
Pledge Documents").

                  G. The Loan Agreement,  LIBOR Addendum,  the Inventory  Rider,
the  Environmental  Rider,  the Equipment Rider, the Term Loan Note, the License
Security  Agreement,  the  Guaranties,  and  the  Hansen  Natural  Stock  Pledge
Documents are collectively referred to as the "Loan Documents".

                  H. Blue Sky  Natural  Beverage  Co., a  Delaware  corporation,
("Blue Sky") has purchased or will purchase  certain assets (the  "Acquisition")
of Blue Sky Natural Beverage Co., a New Mexico corporation,  ("Seller") pursuant
to the terms of that certain Asset Purchase  Agreement dated as of September 19,
2000 by and  between  Blue Sky and Seller  (as the same may be further  amended,
modified  or  supplemented  from time to time the  "Acquisition  Agreement")(the
Acquisition  Agreement and each  schedule,  exhibit,  document,  instrument  and
certificate  incorporated  therein or delivered  in  connection  therewith,  are
referred to as the "Acquisition Documents").

                  I. In order to finance the  Acquisition,  payoff the Term Loan
Note,  and for  additional  working  capital,  Borrower has requested  that Bank
increase   the  Line  of  Credit   to  Twelve   Million   and   00/100   Dollars
($12,000,000.00),  and Bank has  agreed to  increase  the Line of Credit to said
amount  pursuant to certain terms and  conditions,  as set forth more completely
herein.

                                    AGREEMENT

                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
agreements, provisions and covenants herein contained, Borrower and Lender agree
as follows

1. Incorporation by Reference; Definitions. The foregoing Loan Documents and the
Recitals are  incorporated  herein by this reference as though set forth in full
herein.  Any term not defined  herein  shall have the meaning  given in the Loan
Documents.

2. Modifications to the Loan Agreement. The Loan Agreement is hereby modified as
set forth below.

2.1 Section 1 of the Loan  Agreement.  Section 1 of the Loan Agreement is hereby
amended by adding the following new subsection:

                           "1.42 "Subsidiary"means,  with respect to any Person,
                  any corporation, association or other business entity of which
                  more than fifty  percent  (50%) of the total  voting  power of
                  shares of stock entitled  (without regard to the occurrence of
                  any  contingency)  to  vote  in  the  election  of  directors,
                  managers  or  trustees   thereof  is  at  the  time  owned  or
                  controlled,  directly or indirectly,  by that Person or one or
                  more of the other Subsidiaries of that Person or a combination
                  thereof."

2.2  Modification of Section 2.1 of the Loan Agreement.  Section 2.1 of the Loan
Agreement is hereby amended by deleting it in its entirety and replacing it with
the following provision:

<PAGE>

                           "Notwithstanding any prior agreement to the contrary,
                  upon the request of  Borrower,  made at any time and from time
                  to time  during  the term  hereof,  and so long as no Event of
                  Default  has  occurred,  Bank shall lend to Borrower an amount
                  not to exceed the principal  sum of Twelve  Million and 00/100
                  ($12,000,000.00)  at any one time (the "Committed Line"), with
                  any amount in excess of the Committed  Line being  referred to
                  hereinafter  as  an   ("Overadvance").   Notwithstanding   the
                  foregoing,  the credit  limit of the  Committed  Line shall be
                  reduced  by the  following  amounts  as of the dates set forth
                  below:

                           As of September 19, 2001           $1,300,000.00
                           As of September 19, 2002           $1,400,000.00
                           As of September 19, 2003           $1,500,000.00
                           As of September 19, 2004           $1,800,000.00

                  provided  however,  that upon the Committed Line being reduced
                  to  Six  Million  and  00/100  Dollars  ($6,000,000.00)  after
                  September 19, 2004, the foregoing  annual  reductions shall no
                  longer be in effect."

2.3  Modification to Section 3.1 of the Loan Agreement.  Section 3.1 of the Loan
Agreement is hereby  modified by deleting the first sentence in its entirety and
substituting the following provision:

                           "Notwithstanding any prior agreement to the contrary,
                  this Agreement shall remain in full force and effect until the
                  earlier of (a)  acceleration of the Obligations for any reason
                  under the terms of this  Agreement;  or (b) the specific  date
                  sixty (60) months after the funding of the Acquisition."

2.4  Modification of Section 6.15 (c) of the Loan Agreement.  Section 6.15(c) of
the Loan  Agreement  is  hereby  amended  by  deleting  it in its  entirety  and
replacing it with the following:

                                    "Quarterly  A/R and A/P  Agings.  As soon as
                  available,  and in any event within thirty (30) days after the
                  end of each of  Borrower's  fiscal  quarters,  Borrower  shall
                  deliver  to Bank,  on a  quarterly  basis,  aged  listings  of
                  accounts receivable and accounts payable.

                           Quarterly Inventory Report. As soon as available, and
                  in  any  event  within  thirty  (30)  days  after  the  end of
                  Borrower's fiscal quarters, Borrower shall deliver to Bank, on
                  a quarterly  basis,  inventory  reports in form and  substance
                  acceptable to Bank."

2.5  Modification to Section  6.16(b) of the Loan Agreement.  Section 6.16(b) of
the Loan  Agreement is hereby  deleted in its  entirety  and  replaced  with the
following:
                           "b. Borrower shall maintain, on a consolidated basis,
                  as of the end of each fiscal  quarter of Borrower,  a Book Net
                  Worth of not less than Twenty One  Million and 00/100  Dollars
                  ($21,000,000.00).  As used  herein,  the term "Book Net Worth"
                  means Borrower's consolidated Net Worth, plus the net value of
                  Borrower's and Blue Sky's trademarks,  plus, commencing at the
                  start of  Borrower's  fiscal year 2002,  seventy  five percent
                  (75%) of annual consolidated Net Income."

2.6  Modification to Section  6.16(c) of the Loan Agreement.  Section 6.16(c) of
the Loan  Agreement is hereby  deleted in its  entirety  and  replaced  with the
following:

<PAGE>

                           "c. Borrower shall maintain,  as of the first quarter
                  following the Acquisition,  on a consolidated basis, as of the
                  end of each fiscal  quarter,  a ratio of senior Funded Debt to
                  EBITDA of less than  2.00:1.00,  provided,  however that as of
                  the date twelve (12) months from the date of the  Acquisition,
                  the  ratio  shall  be  1.75:1.00.  As used  herein,  the  term
                  "EBITDA"  means,  for  any  period,   Borrower's  consolidated
                  pre-tax Net Income  ("pre-tax"  being determined in accordance
                  with GAAP);  plus (a) the  aggregate of all  interest  paid or
                  accrued by Borrower and its  Subsidiaries  including,  without
                  limitation, all interest, fees, and costs payable with respect
                  to indebtedness and the interest portion of capitalized  lease
                  payments,  all as determined in accordance  with GAAP; paid or
                  accrued  during  such  period;   plus  (b)   amortization  and
                  depreciation  deducted  in  determining  Net  Income  for such
                  period;  plus (c) any non-cash  charge deducted in determining
                  Net Income for such period.  In calculating  this ratio,  Bank
                  (i) in determining EBITDA shall use the current quarter EBITDA
                  and the  previous  three  (3)  quarters  EBITDA;  and  (ii) in
                  determining  Funded Debt, shall use Funded Debt as of the date
                  of calculating this ratio."

2.7  Modification to Section  6.16(d) of the Loan Agreement.  Section 6.16(d) of
the Loan  Agreement  is  hereby  amended  by  deleting  it in its  entirety  and
replacing it with the following:

                           "d. Borrower shall maintain, on a consolidated basis,
                  as of the end of each fiscal  quarter of Borrower,  a ratio of
                  (a)  the sum of (i)  Cash  Flow  plus  (ii)  non-cash  charges
                  deducted   in   determining   Net  Income;   less   dividends,
                  distributions  and  withdrawals  to (b)  the  sum  of (i)  the
                  Current  Maturities on Long Term Debt (not  including the Line
                  of  Credit);   plus  the  current  portion  of  capital  lease
                  obligations; plus the greater of (1) One Million Three Hundred
                  Thousand and 00/100 Dollars ($1,300,000.00); or (2) the amount
                  of the credit limit  reduction set forth in Section 2.1 of the
                  Loan  Agreement  for the relevant  period,  to the extent that
                  such  reduction is then payable,  of not less than  1.30:1.00,
                  provided  however  that as of the date twenty four (24) months
                  from  the  date of  this  Modification,  the  ratio  shall  be
                  1.35:1.00.  In calculating this ratio, Bank (i) in determining
                  Cash Flow  shall  use the  current  quarter  Cash Flow and the
                  previous three (3) quarters Cash Flow; and (ii) in determining
                  the Current  Maturities  on Long Term Debt (not  including the
                  Line of Credit)  and the  current  portion  of  capital  lease
                  obligations,  shall use the  Current  Maturities  on Long Term
                  Debt  (not  including  the  Line of  Credit)  and the  current
                  portion  of  capital  lease  obligations  as of  the  date  of
                  calculating this ratio."

2.8  Modification to Section  6.16(e) of the Loan Agreement.  Section 6.16(e) of
the Loan  Agreement  is  hereby  amended  by  deleting  it in its  entirety  and
replacing it with the following:

                           "e. Commencing at the start of Borrower's fiscal year
                  2001, and for each fiscal year thereafter, Borrower shall not,
                  and shall  not  permit  any of its  Subsidiaries  directly  or
                  indirectly to, without Bank's prior written  consent,  acquire
                  or expend for or commit  itself to acquire or expend for fixed
                  assets by lease, purchase or otherwise or incur new debt in an
                  aggregate  amount that exceeds One Million and 00/100  Dollars
                  ($1,000,000.00) in any fiscal year; and"

2.9 Modification to Section 6.16 of the Loan Agreement.  Section 6.16 is amended
by adding the following new subsections:

<PAGE>

                           "f. Borrower shall maintain, on a consolidated basis,
                  and as of the end of each fiscal quarter of Borrower,  a ratio
                  of  (a)  current   assets  to  (b)  the  sum  of  (i)  current
                  liabilities;  plus the unpaid principal balance of the Line of
                  Credit of not less than 1.0:1.0.

                           g.  Borrower  shall not loan,  advance,  make capital
                  contributions  to or otherwise  transfer cash or assets in any
                  manner to any  Subsidiary,  or permit any  Subsidiary to do so
                  with respect to any other Subsidiary, except for (i) transfers
                  of working  capital by Borrower to any Subsidiary  when and as
                  necessary to meet the working capital needs of such Subsidiary
                  in the ordinary and normal  course of its business and so long
                  as such transfer would not impair Borrower's operations or its
                  ability to perform the  Obligations;  or (ii) transfers of raw
                  material  and  work-in-process  Inventory  to for  purposes of
                  completion of production of such Inventory"

3. Modifications to the LIBOR Addendum. The LIBOR Addendum is hereby modified as
set forth below.

3.1  Modification  to  Section 2 of the LIBOR  Addendum.  Section 2 of the LIBOR
Addendum is hereby  amended by deleting it in its entirety and replacing it with
the following:

                           "2.      Interest Rate Options.  Borrower  shall have
                  the  following  options  regarding the interest rate to be
                  paid by Borrower on Advances under the Note:
<TABLE>

<S>               <C>                            <C>                        <C>

                  If Borrower's ratio of Senior   Base Rate Option          LIBOR Option
                  Funded Debt to EBITDA as set    Advances shall bear       Advances shall bear
                  forth in Section 6.16(c) of     interest at a floating    interest at a fixed
                  this Loan Agreement is:         rate per annum equal to:  rate per annum equal
                                                                            to:
                  ------------------------------- ------------------------- ----------------------

                        less than 2.0:1.0                Base Rate            LIBOR plus 2.00%
                  ------------------------------- ------------------------- ----------------------

                    more than 2.0:1.0 and less      Base Rate plus .25%       LIBOR plus 2.25%
                           than 3.0:1.0
                  ------------------------------- ------------------------- ----------------------

                        more than 3.0:1.0           Base Rate plus .50%       LIBOR plus 2.50%
                  ------------------------------- ------------------------- ----------------------
</TABLE>

                  As used herein,  "Base Rate Option" means any Advance when and
                  to the extent that the interest rate therefor is determined by
                  a reference  to the Base Rate,  and "LIBOR  Option"  means any
                  Advance when and to the extent that the interest rate therefor
                  is determined by a reference to LIBOR.

4.  Conditions  Precedent.  Bank's  consent  to  this  Modification  subject  to
satisfaction of all of the conditions set forth below.

4.1  Financial  Condition.  Borrower  shall  have  delivered  to Bank (i) a fair
saleable value balance sheet and income statement reasonably  acceptable to Bank
in form and substance  satisfactory  to Bank dated the date hereof,  and setting
forth valuations of Borrower and its  Subsidiaries on a consolidated  basis; and
(ii) the unaudited  consolidated  balance sheet of Borrower and its Subsidiaries
as of  the  date  hereof  giving  effect  to  the  Acquisition  together  with a
certificate of Borrower,  executed by the chief financial officer of Borrower in
such  Person's  capacity  as an  officer  of  Borrower,  in form  and  substance
satisfactory to Bank certifying  that,  after giving effect to the  Acquisition,
the fair saleable  value of the assets of Borrower,  on a going  concern  basis,
will exceed the probable  liability on its debts,  that Borrower will be able to
pay its debts as they mature and that Borrower will not have unreasonably  small
capital to conduct its business,  together with  attachments  demonstrating  the
basis of such conclusions.

4.2 Seller  Financial  Statements.  Borrower  shall deliver to Bank, the balance
sheet  of  Seller  as of the end of  Seller's  two (2)  previous  fiscal  years,
together with the related  statements  of income and retained  earnings for such
fiscal  years,  and the  statements  of changes in  financial  position,  all in
reasonable  detail  and  standing  in  comparative  form  and  all  prepared  in
accordance with GAAP consistently  applied and as to the statements  accompanied
by an opinion thereon acceptable to Bank by independent accountants.

<PAGE>

4.3 Fee.  Borrower  shall have paid the  commitment  fee in the amount of Thirty
Thousand and 00/100 Dollars ($30,000.00).

4.4 Acquisition.  The Acquisition shall have been consummated in accordance with
the terms of the Acquisition Documents.

4.5  Acquisition  Documents.  Bank (a) shall  have  received  true and  complete
executed or conformed  copies of the  Acquisition  Documents and any  amendments
thereto; (b) the Acquisition  Documents shall be in full force and effect and no
material term or condition  thereof shall have been amended,  modified or waived
after the execution  thereof  (other than solely to extend the date by which the
Acquisition  is  required to occur);  (c) neither  Seller or Blue Sky shall have
failed  to  perform  any  material   obligation  or  covenant  required  by  the
Acquisition  Documents to be  performed or complied  with by it on or before the
date  hereof;  and (d) Bank  shall  have  received  a  certificate  of Blue Sky,
executed  by Blue  Sky's  chief  executive  or chief  financial  officer in such
Person's  capacity as an officer of Blue Sky, to the effect set forth in clauses
(a), (b) and (c) above.

4.6  Security  Interests,  UCC Filings and Stock  Certificates.  Bank shall have
received  satisfactory  evidence  that  Bank  has a valid  and  perfected  first
priority security interest as of the date hereof in the Collateral, subject only
to liens permitted under the Loan Agreement. Borrower shall have delivered to or
caused  to  be  delivered  to  Bank  executed  documents   (including  financing
statements  under the UCC and other  applicable  documents under the laws of any
jurisdiction with respect to the perfection of liens) as Bank may deem necessary
to perfect its security interests in the Collateral.  Borrower,  pursuant to the
stock pledge agreements,  shall have delivered or caused to be delivered to Bank
certificates  (which  certificates  shall be  properly  endorsed  in  blank  for
transfer or  accompanied  by  irrevocable  undated stock powers duly endorsed in
blank)  representing all of the capital stock of Borrower and each Subsidiary of
Borrower whose capital stock is subject to the stock pledge agreements.

4.7 Termination of Liens.  Bank shall have received,  duly executed,  such UCC-3
termination  statements,  mortgage releases and other  instruments,  in form and
substance  satisfactory  to Bank, as shall be necessary to terminate and satisfy
all liens except permitted encumbrances on the Collateral.

4.8 Borrower Documents.  Borrower shall deliver or cause to be delivered to Bank
the documents listed below, each, unless otherwise noted, dated the date hereof,
duly executed, in form and substance satisfactory to Bank:

4.8.1    this Modification;

4.8.2    the Security Agreement (All Assets) of Hard e Beverage;

4.8.3    the UCC-1 Financing Statement of Hard e Beverage;

4.8.4    the Security Agreement (All Assets) of Blue Sky;

4.8.5    the UCC-1 Financing Statement of Blue Sky;

4.8.6    the Guaranty of Blue Sky;

4.8.7    the Stock Pledge Agreement of Hansen Natural;

4.8.8    the Stock Pledge Agreement of Borrower;

4.8.9    the Trademark Security Agreement of Borrower;

4.8.10   the Patent Security Agreement of Borrower;

<PAGE>

4.8.11   the Trademark Security Agreement of Blue Sky;

4.8.12   the Patent Security Agreement of Blue Sky;

4.8.13  to the  extent  requested  by  Bank  on or  prior  to the  date  hereof,
agreements  with the landlords of all premises  leased by Borrower or any of its
Subsidiaries  containing  such  consents  and  waivers as  required  by Bank and
non-disturbance  agreements  with the holders of any mortgages or deeds of trust
on the real estate  which is leased by Borrower  or any of its  Subsidiaries  on
terms and conditions reasonably satisfactory to Bank;

4.8.14 to the extent requested by Bank, bailee letters from each warehouseman or
bailee,  if any,  having  possession of any Inventory with an aggregate value in
excess of Fifty Thousand and 00/100 Dollars ($50,000.00);

4.8.15  a  certificate  of  the  secretary  of  Borrower  with  respect  to  (a)
resolutions of the Board of Directors of Borrower  approving and authorizing the
execution,  delivery and  performance  of this  Modification  and the  documents
executed  pursuant  thereto  to which  Borrower  is to be a  party;  and (b) the
signature and incumbency of the officers of Borrower executing such documents;

4.8.16  a  certificate  of  the  secretary  of  Blue  Sky  with  respect  to (a)
resolutions of the Board of Directors of Blue Sky approving and  authorizing the
execution, delivery and performance of the documents executed pursuant hereto to
which Blue Sky is to be a party;  and (b) the  signature  and  incumbency of the
officers of Blue Sky executing such documents;

4.8.17 a  certificate  of the  secretary of Hard e Beverage  with respect to (a)
resolutions  of the  Board  of  Directors  of  Hard  e  Beverage  approving  and
authorizing the execution,  delivery and  performance of the documents  executed
pursuant hereto to which Hard e Beverage is to be a party; and (b) the signature
and incumbency of the officers of Hard e Beverage executing such documents;

4.8.18 a  certificate  of the  secretary  of Hansen  Natural with respect to (a)
resolutions  of  the  Board  of  Directors  of  Hansen  Natural   approving  and
authorizing the execution,  delivery and  performance of the documents  executed
pursuant hereto to which Hansen Natural is to be a party;  and (b) the signature
and incumbency of the officers of Hansen Natural executing such documents;

4.8.19 payment by Borrower of Bank's  attorneys'  fees and costs incurred in the
preparation of this  Modification and the documents  executed  pursuant thereto;
and

4.8.20  such  other and  further  documents,  and  completion  of such other and
further matters, as Bank may reasonably deem necessary or appropriate.

5. No Modification of Other Obligations;  No Effect on Collateral.  Except as is
otherwise  specifically  set  forth  herein  or  in  any  document  executed  in
connection  herewith,  the Loan  Agreement and the Loan  Documents are and shall
remain unmodified and in full force and effect.  Borrower ratifies and reaffirms
the Obligations,  without setoff, defense, or counterclaim, and agrees fully and
faithfully to pay, perform and discharge,  as and when payment,  performance and
discharge are due, all of the Obligations  under the Loan Agreement,  as amended
hereby.  Nothing herein shall be deemed to affect in anyway the Collateral  that
secures  the  obligations   under  the  Loan  Agreement  (as  modified  by  this
Modification) or under any other agreement now or in the future.

6.  Conflicts.  If any  conflict  exists  between  the  provisions  of the  Loan
Documents  and the  provisions  of this  Modification,  the  provisions  of this
Modification shall control.

<PAGE>

7.  Ratification  of the  Guaranties  and Security  Therefor.  By executing this
Modification below where indicated,  Guarantors  acknowledge and agree that they
have read and are familiar with, and consent to, all of the terms and conditions
of this Modification. In light of the foregoing, by executing this Modification,
Guarantors further confirm and agree that all of the terms and provisions of the
Guaranties are ratified and  reaffirmed,  and that the  Guaranties  shall and do
continue in full force and effect.  Although Bank has informed Guarantors of the
terms of this  Modification,  Guarantors  understand  and agree that Bank has no
duty  whatsoever  to do so,  nor to  seek  this  or any  future  acknowledgment,
consent, or reaffirmation,  and that nothing contained herein is intended to, or
shall create, such a duty on the part of Bank as to any transactions hereafter.

8. Further Assurances.  Borrower agrees to make and execute such other documents
and/or take such other action and/or  provide such further  assurances as may be
requested by Bank in connection  with the  Obligations or as may be necessary or
required to effectuate  the terms and  conditions of this  Modification  and any
documents executed in connection herewith.

9. Future  Modifications.  Neither this  Modification nor any document  executed
herein  entitles,  or implies any consent or agreement to, any further or future
modification  of,  amendment  to,  waiver  of, or  consent  with  respect to any
provision of the Modification or the Loan Documents. Any modifications hereto or
to the Loan Documents shall be in writing and signed by the parties.

10.  Integration.  This  Modification  and any documents  executed in connection
herewith  are  integrated   agreements,   and  supersede  all  negotiations  and
agreements  regarding the subject matter hereof and thereof,  and taken together
with the Loan  Documents  and any  documents  executed in  connection  herewith,
constitute the final agreement of the parties with respect to the subject matter
hereof and thereof.

11.  Severability.  In the event any one or more of the provisions  contained in
this  Modification  is held  to be  invalid,  illegal  or  unenforceable  in any
respect,  then such provision  shall be  ineffective  only to the extent of such
prohibition or invalidity, and the validity, legality, and enforceability of the
remaining  provisions  contained  herein  shall  not in any way be  affected  or
impaired thereby.

12. Interpretation. This Modification and all agreements relating to the subject
matter hereof are the product of negotiation  and  preparation by and among each
party and its  respective  attorneys,  and shall be construed  accordingly.  The
parties waive the provisions of California Civil Code ss.1654.

13. Counterparts. This Modification may be signed in any number of counterparts,
each of which shall be an  original,  with the same effect as if all  signatures
were  upon the same  instrument.  Delivery  of an  executed  counterpart  of the
signature  page to this  Modification  by  telefacsimile  shall be  effective as
delivery of a manually executed counterpart of this Modification,  and any party
delivering  such  an  executed   counterpart  of  the  signature  page  to  this
Modification by  telefacsimile to any other party shall thereafter also promptly
deliver a  manually  executed  counterpart  of this  Modification  to such other
party,  provided that the failure to deliver such manually executed  counterpart
shall  not  affect  the  validity,  enforceability,  or  binding  effect of this
Modification.

                                              [signature page follows]

<PAGE>

     IN WITNESS  WHEREOF,  the  parties  have  caused  this  Modification  to be
executed as of the day and year first written above.

                             HANSEN BEVERAGE COMPANY

                             By:    /s/ Rodney C. Sacks
                             Title: Chairman and CEO

                            COMERICA BANK-CALIFORNIA

                                      /s/ James L. Bradley
                             By:      James L. Bradley
                             Its:     Vice President

CONSENT OF GUARANTORS:

HANSEN NATURAL CORPORATION

By:    /s/ Rodney C. Sacks

Title: Chairman and CEO

HARD E BEVERAGE COMPANY
formerly known as CVI VENTURES, INC.

By:    /s/ Rodney C. Sacks

Title: Chairman and CEO

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