Document:

Employment Agreement with Jerry Swinford

    Exhibit
      10.7

     

    

      EXECUTIVE
        COMPENSATION AND

      RETENTION
        AGREEMENT

      

      THIS
        AGREEMENT ("Agreement"), by and between COIL TUBING TECHNOLOGY HOLDINGS,
        INC., a
        Nevada corporation, (referred to herein as the "Company"), and JERRY SWINFORD
        (referred to herein as "Swinford") is entered into this 1st day of July 2007
        (the “Effective Date"). In consideration of the mutual covenants set forth
        herein, the Company and Swinford hereby agree as follows:

      

      1. APPOINTMENT.
        The Company hereby agrees to appoint and retain Swinford as its President
        and
        Chief Executive Officer, and Swinford agrees to serve the Company, in the
        capacities described herein during the Period of Appointment (as defined
        in
        Section 2 of this Agreement), in accordance with the terms and conditions
        of
        this Agreement.

      

      2. PERIOD
        OF
        APPOINTMENT. The term “Period of Appointment” shall mean the period which
        commences on the Effective Date and, unless earlier terminated pursuant to
        Section 6, ends on December 31, 2008; provided, however, that the Period
        of
        Appointment may be extended for up to two additional years by Swinford. Each
        annual extension shall occur automatically unless Swinford provides the Company
        in writing that he will not be exercising the annual extension by December
        1 of
        each year prior to the to-be-extended year. For example, the Period of
        Appointment will automatically extend to December 31, 2009 unless Swinford
        provides notice that he will not be exercising the extension for 2009 on
        or
        before December 1, 2008.

      

      3. DUTIES
        DURING THE PERIOD OF APPOINTMENT.

      

      
        	 	
                a.

              	
                DUTIES.
                  During the Period of Appointment, Swinford shall be employed by
                  the
                  Company and serve as its “President and Chief Executive Officer.” In such
                  capacities, Swinford will perform such services as are customary
                  for a
                  president and chief executive officer. Nothing herein is intended
                  to
                  restrict the duties of Swinford or limit him from serving in such
                  other
                  executive officer positions as the Board of Directors deems appropriate.
                  

              

      

      

      
        	 	
                b.

              	
                SCOPE.
                  During the Period of Appointment, and excluding any periods of
                  vacation
                  and sick leave to which the office of President is entitled, Swinford
                  shall devote full time and attention to the affairs of the
                  Company.

              

      

      

      4. COMPENSATION
        AND OTHER PAYMENTS.

      

      
        	 	
                a.

              	
                ANNUAL
                  SALARY. Annual salary shall be set at $120,000.00 per annum payable
                  in
                  regular installments but in no event less often than monthly.
                  

              

      

      

      
        	 	
                b.

              	
                ANNUAL
                  INCREASES. If the Period of Appointment is extended beyond December
                  31,
                  2008 as provided in section 2 above, Swinford's annual salary will
                  be
                  increased in an amount to be determined by the Board of the Company
                  or a
                  Committee
                  of the Board of the Company, but in no event shall such increases
                  be in an
                  amount less than ten percent (10%).

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        	 	
                c.

              	
                BONUSES.
                  Swinford may participate in any and all bonus plans established
                  by the
                  Board or a Committee of the Board. 

              

      

      

      5. OTHER
        BENEFITS.

      

      
        	 	
                a.

              	
                INCENTIVE
                  & RETENTION SHARES. 

              

      

       

      
        	 	
                i.

              	
                RETENTION
                  SHARES. The Company will issue to Swinford one million (1,000,000)
                  shares
                  of its common stock contemporaneously with Swinford entering into
                  this
                  Agreement. 

              

      

       

      
        	 	
                ii.

              	
                INCENTIVE
                  SHARES. At the end of the initial Period of Appointment and the
                  end of
                  each subsequent year or, at Swinford's option, within thirty (30)
                  days
                  thereafter, the Company will issue to Swinford the number of shares
                  necessary to provide to Swinford five percent (5%) of the issued
                  and
                  outstanding common stock of the Company. As a result, on December
                  31, 2008
                  or, at Swinford's option, within 30 days thereafter, the Company
                  will
                  issue the number of shares necessary to provide Swinford five percent
                  (5%)
                  of the issued and outstanding common stock of the Company. Further,
                  if
                  Swinford elects to extend the Period of Appointment to December
                  31, 2009,
                  on December 31, 2009 or, at Swinford's option, within 30 days thereafter,
                  the Company will issue the number of shares necessary to provide
                  Swinford
                  an additional five percent (5%) of the issued and outstanding common
                  stock
                  of the Company. Similarly, if Swinford elects to extend the Period
                  of
                  Appointment to December 31, 2010, on December 31, 2010 or, at Swinford's
                  option, within 30 days thereafter, the Company will issue the number
                  of
                  shares necessary to provide Swinford an additional five percent
                  (5%) of
                  the issued and outstanding common stock of the Company. Such shares
                  will
                  be subject to any and all restrictions appropriate or necessary
                  to comply
                  with state or federal registration requirements.
                  

              

      

       

      

      
        	 	
                b.

              	
                REGULAR
                  REIMBURSED BUSINESS EXPENSES. The Company shall promptly reimburse
                  Swinford for all expenses and disbursements reasonably incurred
                  by
                  Swinford in the performance of his duties hereunder during the
                  Period of
                  Appointment.

              

      

      

      
        	 	
                c.

              	
                BENEFIT
                  PLANS. Swinford and his eligible family members shall be entitled
                  to
                  participate immediately (except for any Company plan which includes
                  or
                  requires a waiting period, in which event Swinford shall be entitled
                  to
                  participate as soon as he is eligible under the terms of such plan),
                  on
                  terms no less favorable to Swinford than the terms offered to other
                  employees, in any group and/or executive life, hospitalization
                  or
                  disability insurance plan, health program, vacation policy, pension,
                  profit sharing, ESOP, 401(k) and similar benefit plans (qualified,
                  non-qualified and supplemental) or other fringe benefits that may
                  be
                  offered by the Company as approved by the Board of Directors from
                  time to
                  time.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        	 	
                d.

              	
                HEALTH
                  INSURANCE. The Company shall provide Swinford and his wife, whether
                  or not
                  he remains employed by the Company, health insurance until at least
                  December 31, 2010.

              

      

      

      
        	 	
                e.

              	
                PERQUISITES.
                  The Company shall provide Swinford at least such perquisites as
                  are
                  commonly provided to other executives of the Company and are commiserate
                  with his Appointment.

              

      

      

      6. TERMINATION.

      

      
        	 	
                a.

              	
                GENERAL.
                  Swinford's employment hereunder shall commence on the Effective
                  Date and
                  continue until the end of the term specified in section 2 above,
                  except
                  that the employment of Swinford hereunder shall terminate prior
                  to such
                  time in accordance with the
                  following:

              

      

      

      
        	 	
                i.

              	
                DEATH
                  OR DISABILITY. Upon Swinford’s death during the term of his employment
                  hereunder or, at the option of the Company, in the event of Swinford’s
                  disability, upon thirty (30) days notice to
                  Swinford.

              

      

       

      
        	 	
                ii.

              	
                FOR
                  CAUSE. For “Cause” immediately upon written notice by the Company to
                  Swinford. A termination for Cause shall mean:

              

      

       

      
        	 	
                (1)

              	
                the
                  commission of an intentional act of dishonesty, fraud, misrepresentation,
                  misappropriation, or embezzlement by Swinford which has a material
                  detrimental impact on the Company;

              

      

       

      
        	 	
                (2)

              	
                Swinford’s
                  unauthorized use or disclosure of any Confidential Information
                  or trade
                  secrets of the Company which has a material detrimental impact
                  on the
                  Company;

              

      

       

      
        	 	
                (3)

              	
                a
                  significant violation by Swinford of a law or regulation applicable
                  to the
                  Company’s business, which has a material detrimental impact on the Company
                  and which the Board of the Company reasonably determines does or
                  is
                  reasonably likely to cause material injury to the Company;
                  

              

      

       

      
        	 	
                (4)

              	
                Swinford’s
                  indictment of, or conviction of, or plea of nolo
                  contendere
                  or
                  guilty to a felony or any other crime which involves moral
                  turpitude;

              

      

       

      
        	 	
                (5)

              	
                Swinford’s
                  continued failure, in the reasonable discretion of the Board, to
                  perform
                  the principal duties, functions and responsibilities of his position
                  (other than any such failure resulting from Swinford’s disability) or to
                  follow the directives of the Board after written notice from the
                  Company
                  identifying the deficiencies
                  in performance and a reasonable cure period of not less than thirty
                  (30)
                  days of any breach capable of cure; gross negligence or willful
                  misconduct
                  in the performance of Swinford’s duties;
                  or

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	 	
                (6)

              	
                a
                  material and willful breach of Swinford’s fiduciary duties to the Company.
                  

              

      

      

      
        	 	
                iii.

              	
                WITHOUT
                  CAUSE. Without Cause upon thirty (30) days written notice by the
                  Board of
                  Directors to Swinford or upon Swinford to the Board of Directors.
                  If
                  Swinford terminates the Agreement for any reason, he shall have
                  no
                  liability to the Company or its subsidiaries or affiliates as a
                  result
                  thereof. 

              

      

      

      
        	 	
                iv.

              	
                CONSTRUCTIVE
                  TERMINATION. Upon Swinford’s Constructive Termination. Constructive
                  Termination of Swinford’s employment with the Company will be deemed to
                  have occurred if Swinford terminates his employment with the Company
                  within six (6) months following the date on which:
                  

              

      

       

      
        	 	
                (1)

              	
                the
                  Company demotes Swinford to a lesser position, either in title
                  or
                  responsibility; 

              

      

       

      
        	 	
                (2)

              	
                the
                  Company decreases Swinford’s pay below the highest level in effect at any
                  time Swinford’s employment with the Company or reduces Swinford’s benefits
                  below the levels in effect during Swinford’s employment with the Company
                  (other than as a result of any amendment or termination of any
                  group or
                  other executive benefit plan, which amendment or termination is
                  applicable
                  to all executives of the Company or any inadvertent reduction in
                  benefits
                  that Company cures within thirty (30) days after receiving written
                  notice
                  of such reduction);

              

      

       

      
        	 	
                (3)

              	
                the
                  Company requires Swinford to relocate to a principal place of business
                  more than fifty (50) miles from the principal place of business
                  occupied
                  by Company as of the date hereof; 

              

      

       

      
        	 	
                (4)

              	
                the
                  Company is subject to a Change in Control, unless Swinford accepts
                  an
                  appointment or employment with a successor to the Company; or
                  

              

      

       

      
        	 	
                (5)

              	
                the
                  Company breaches any material term of this Agreement which is not
                  cured by
                  the Company within ten (10) days after receiving written notice
                  of such
                  breach.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        	 	
                b.

              	
                
                   OBLIGATIONS
                    OF THE COMPANY UPON TERMINATION. The following provisions describe
                    the
                    obligations of the Company to Swinford under this Agreement upon
                    termination of his Appointment. However, except as explicitly
                    provided in
                    this Agreement, nothing in this Agreement shall limit or otherwise
                    adversely affect any rights which Swinford may have under applicable
                    law,
                    under any other agreement with the Company, or under any compensation
                    or
                    benefit plan, program, policy or practice of the
                    Company.

                

              

      

       

      
        	 	
                i.

              	
                TERMINATION
                  BY THE COMPANY FOR CAUSE OR RESIGNATION WITHOUT CAUSE. In the event
                  this
                  Agreement terminates by reason of the Company’s termination of Swinford’s
                  Appointment as President and Chief Executive Officer of the Company
                  for
                  Cause or because of Swinford’s resignation Without Cause, the Company
                  shall:

              

      

       

      
        	 	
                (1)

              	
                Pay
                  to Swinford within ten (10) days any amount of Compensation (as
                  enumerated
                  in section 4 above) earned but not yet
                  paid;

              

      

       

      
        	 	
                (2)

              	
                Provide
                  Swinford’s health insurance as obligated in section 5(d) above, until
                  December 31, 2010; and 

              

      

       

      
        	 	
                (3)

              	
                If
                  such termination occurs during the initial term of the Period of
                  Appointment, issue to Swinford the Incentive Shares provided for
                  in
                  section 5 above. 

              

      

       

      
        	 	
                ii.

              	
                TERMINATION
                  BY THE COMPANY WITHOUT CAUSE, OR CONSTRUCTIVE TERMINATION. In the
                  event
                  this Agreement terminates by reason of the Company’s termination of
                  Swinford’s Appointment as President and Chief Executive Officer of the
                  Company Without Cause or Swinford is Constructively Terminated,
                  the
                  Company shall:

              

      

       

      
        	 	
                (1)

              	
                Pay
                  to Swinford in a lump sum within ten (10) days the remaining amount
                  of
                  Compensation provided for in section 4 above through December 31,
                  2010
                  including any minimum annual increases and bonuses and an additional
                  one
                  hundred thousand dollars
                  ($100,000);

              

      

       

      
        	 	
                (2)

              	
                Provide
                  Swinford’s health insurance as obligated in section 5(d) above, until
                  December 31, 2010; and

              

      

       

      
        	 	
                (3)

              	
                Issue
                  to Swinford the Incentive Shares provided for in section 5 above
                  for any
                  periods (2008, 2009 or 2010) on December 31 (or at Swinford’s election,
                  within thirty (30) days thereafter) the appropriate number of shares
                  for
                  such period.

              

      

       

      
        	 	
                iii.

              	
                TERMINATION
                  BY DEATH OR DISABILITY OR SWINFORD’S TERMINATION FOR CAUSE. In the event
                  this Agreement terminates by reason of Swinford’s Death or Disability or
                  because of Swinford’s resignation For Cause, the Company
                  shall:

              

      

       

      
        	 	
                (1)

              	
                Pay
                  to Swinford within ten (10) days any amount of Compensation (as
                  enumerated
                  in section 4 above) earned but not yet
                  paid;

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	 	
                (2)

              	
                Provide
                  Swinford’s health insurance as obligated in section 5(d) above, until
                  December 31, 2010; and

              

      

       

      
        	 	
                (3)

              	
                Issue
                  to Swinford the Incentive Shares provided for in section 5 above
                  for any
                  periods (2008, 2009 or 2010) on December 31 (or at Swinford’s election,
                  within thirty (30) days thereafter) the appropriate number of shares
                  for
                  such period.

              

      

       

      
        	 	
                c.

              	
                MITIGATION.
                  In no event shall Swinford be obligated to seek another appointment
                  or
                  employment or take any other action by way of mitigation of the
                  amounts
                  payable to the Swinford under any of the provisions of this Agreement.
                  Any
                  severance benefits payable to Swinford shall not be subject to
                  reduction
                  for any compensation received from another appointment or
                  employment.

              

      

       

      7. INDEMNIFICATION.
        To the extent practical, the Company shall maintain, for the benefit of Swinford
        and other executives directors and/or officers liability insurance. In addition,
        Swinford shall be indemnified by the Company against liability as an officer
        and
        President and Chief Executive Officer of the Company and any subsidiary or
        affiliate of the Company to the maximum extent permitted by applicable law.
        Swinford’s rights under this Section shall continue so long as he may be subject
        to such liability, whether or not this Agreement may have
        terminated.

       

      8. INVENTIONS;
        ROYALTY FREE LICENSE. 

       

      
        	 	
                a.

              	
                INVENTIONS
                  DEFINED. “Inventions” includes all rights to discoveries, inventions,
                  improvements, designs and innovations (including all data and records
                  pertaining thereto) that relate to the business of the Company,
                  whether or
                  not patentable, copyrightable or reduced to writing, that Swinford
                  may
                  discover, invent or originate during the term of his employment
                  hereunder,
                  either alone or with others and whether or not during working hours
                  or by
                  use of the facilities of the
                  Company.

              

      

       

      
        	 	
                b.

              	
                SWINFORD
                  TO RETAIN RIGHTS. Swinford is to retain or maintain any and all
                  rights to
                  Inventions.

              

      

       

      
        	 	
                c.

              	
                COMPANY
                  TO LICENSE. Swinford will grant to the Company a license on substantially
                  the terms of the licensing agreement attached hereto as Exhibit
                  A.

              

      

       

      
        	 	
                d.

              	
                WAIVER
                  OF ROYALTIES. Throughout his Appointment under this Agreement,
                  Swinford
                  will waive any and all royalties due to him by the Company under
                  a Waiver
                  of Royalties Agreement on substantially the terms of the agreement
                  attached hereto as Exhibit B.

              

      

       

      9. CONFIDENTIAL
        INFORMATION. 

       

      
        	 	
                a.

              	
                ACKNOWLEDGMENT
                  OF PROPRIETARY INTEREST. Swinford agrees that all Confidential
                  Information
                  learned by him during his employment with the Company, whether
                  developed
                  by Swinford or in conjunction with others or otherwise, is and
                  shall
                  remain the exclusive property of the Company.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	 	
                b.

              	
                CONFIDENTIAL
                  INFORMATION DEFINED. “Confidential Information” means all confidential and
                  proprietary information of the Company, to the extent such property
                  is the
                  property of the Company and not the property of Swinford or another,
                  and that is not otherwise publicly available. “Confidential Information”
                  does not include the “Inventions” referenced in section 8. Without limited
                  the foregoing, Confidential Information includes the
                  following:

              

      

       

      
        	 	
                i.

              	
                Information
                  derived from reports, investigations, experiments, research and
                  work in
                  progress, 

              

      

       

      
        	 	
                ii.

              	
                Methods
                  of operation,

              

      

       

      
        	 	
                iii.

              	
                Marketing
                  data,

              

      

       

      
        	 	
                iv.

              	
                Proprietary
                  computer programs and codes,

              

      

       

      
        	 	
                v.

              	
                Drawings
                  designs, plans and proposals,

              

      

       

      
        	 	
                vi.

              	
                Marketing
                  and sales programs,

              

      

       

      
        	 	
                vii.

              	
                Client
                  lists,

              

      

       

      
        	 	
                viii.

              	
                Historical
                  financial information and financial projections,
                  

              

      

       

      
        	 	
                ix.

              	
                Pricing
                  formulae and policies,

              

      

       

      
        	 	
                x.

              	
                All
                  other concepts, ideas, materials and information prepared or performed
                  for
                  or by the Company, and

              

      

       

      
        	 	
                xi.

              	
                All
                  information related to the business, products, purchases or sales
                  of the
                  Company and any of its suppliers and
                  customers.

              

      

       

      
        	 	
                c.

              	
                COVENANT
                  NOT TO DIVULGE CONFIDENTIAL INFORMATION. The Company is entitled
                  to
                  prevent the disclosure of Confidential Information. The Company
                  agrees to
                  and will provide Confidential Information to Swinford at the inception
                  of
                  his employment and Swinford acknowledges and agrees that, during
                  the
                  course of his employment he will be exposed to, have access to,
                  and gain
                  knowledge of Confidential Information. As a portion of the consideration
                  for the employment of Swinford and for the compensation being paid
                  to him
                  hereunder and thereafter to hold in strict confidence and not to
                  disclose
                  or allow to be disclosed or made available to any person, firm
                  or
                  corporation, other than to his professional advisors (who have
                  the
                  obligation to maintain the confidentiality of such information)
                  and to
                  persons engaged by the Company to further the business of the Company,
                  and
                  not to use except in the pursuit of the business of the Company,
                  the
                  Confidential Information, without the prior written consent of
                  the
                  Company.

              

      

       

      
        	 	
                d.

              	
                RETURN
                  OF MATERIALS. In the event of any termination or cessation of his
                  employment with the Company for any reason, or request by the Company
                  at
                  anytime, Swinford shall promptly deliver to the Company all documents,
                  data and other information derived from or otherwise pertaining
                  to
                  Confidential Information. Swinford shall not take or retain any
                  documents
                  or other information, or any reproduction or excerpt thereof, containing
                  or pertaining to any Confidential
                  Information.

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      10. GENERAL

       

      
        	 	
                a.

              	
                NOTICES.
                  All notices and other communications hereunder shall be in writing
                  or by
                  written telecommunication, and shall be deemed to have been duly
                  given
                  upon
                  delivery if delivered personally or via written telecommunication,
                  or five
                  days after mailing if mailed by certified mail, return receipt
                  requested
                  or by written telecommunication, to the relevant address set forth
                  below,
                  or to such other address as either of the parties shall have furnished
                  to
                  the other in writing in accordance
                  herewith:

              

      

       

       

      
        	If to the Company,
                addressed
                to:	 

                
                  If
                  to the Jerry Swinford addressed to:

              
	
                Coil
                  Tubing Technology Holdings, Inc.

                19511
                  Wied Road, Suite E

                Spring,
                  TX 77388 

              	Jerry
                Swinford 
                19511
                  Wied Road, Suite E

                Spring,
                  TX 77388 

              

      

       

      Notice
        and communications shall be effective when actually received by the
        addressee.

      

      
        	 	
                b.

              	
                WITHHOLDING.
                  All payments required to be made to Swinford by the Company under
                  this
                  Agreement shall be subject to withholding, at the time payments
                  are
                  actually made to Swinford and received by him, of such amounts,
                  if any,
                  relating to federal, state and local taxes as may required by
                  law.

              

      

       

      
        	 	
                c.

              	
                TAXES.
                  In the event that the aggregate of all payments or benefits made
                  or
                  provided to, or that may be made or provided to, Swinford under
                  this
                  Agreement and under all other plans, programs and arrangements
                  of the
                  Company (the "Aggregate Payment") are determined to constitute
                  a
                  "parachute payment" or some other category of payment which results
                  in
                  special tax treatment, Swinford and the Company shall cooperate
                  with each
                  other in connection with any proceeding or claim relating to the
                  existence
                  or amount of liability for the payment, and all expenses incurred
                  by
                  Swinford in connection therewith shall be paid by the Company promptly
                  upon notice of demand from
                  Swinford.

              

      

       

      
        	 	
                d.

              	
                REIMBURSEMENT
                  OF LEGAL EXPENSES. In the event that Swinford is successful, whether
                  in
                  mediation, arbitration or litigation, in pursuing any claim or
                  dispute
                  involving Swinford’s Appointment with the Company, including any claim or
                  dispute relating to (a) this Agreement, (b) termination of Swinford’s
                  Appointment with the Company or (c) the failure or refusal of the
                  Company
                  to perform fully in accordance with the terms hereof, the Company
                  shall
                  promptly reimburse Swinford for all costs and expenses (including,
                  without
                  limitation, attorneys' fees) relating solely, or allocable, to
                  such
                  successful claim. 

              

      

       

      
        	 	
                e.

              	
                LAW
                  GOVERNING. This Agreement shall be governed under the laws of the
                  State of
                  Texas. 

              

      

       

      
        	 	
                f.

              	
                SEVERABILITY.
                  If any provision hereof is held invalid or unenforceable by a court
                  of
                  competent jurisdiction, such invalidity shall not affect the validity
                  or
                  operation of any other provision and such invalid provision shall
                  be
                  deemed to be severed from the
                  Agreement.

              

      

       

      
        	 	
                g.

              	
                WAIVERS.
                  No delay or omission by either party in exercising any right, power
                  or
                  privilege hereunder shall impair such right, power or privilege,
                  nor shall
                  any single or partial exercise such right, power or privilege preclude
                  any
                  further exercise thereof or the exercise of any other right, power
                  or
                  privilege.

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	 	
                h.

              	
                COUNTERPARTS.
                  This Agreement may be executed in multiple counterparts, each of
                  which
                  shall be deemed an original, and all of which together shall constitute
                  one and the same document.

              

      

       

      
        	 	
                i.

              	
                CAPTIONS.
                  The captions in this Agreement are for convenience of reference
                  only and
                  shall not limit or otherwise affect any of the terms of provisions
                  hereof.
                  

              

      

       

      
        	 	
                j.

              	
                REFERENCE
                  TO AGREEMENT. Use of the words “herein, “hereof,” “hereto,” “hereunder”
                  and the like in this Agreement refer to this Agreement only as
                  a whole and
                  not to any particular section or subsection of this Agreement,
                  unless
                  otherwise noted.

              

      

       

      
        	 	
                k.

              	
                SUCCESSORS.
                  This Agreement shall be binding on and shall inure to the benefit
                  of the
                  parties hereto, their heirs, administrators, successors, and
                  assigns.

              

      

       

      
        	 	
                l.

              	
                ASSIGNABILITY.
                  This Agreement and the rights and obligations thereunder may not
                  be
                  assigned by any act of either party or by operation of law without
                  the
                  prior written consent of each party. However, the Company may fulfill
                  its
                  obligation to compensate Swinford through one or more of its wholly
                  owned
                  subsidiaires. 

              

      

       

      
        	 	
                m.

              	
                GENDER
                  AND NUMBER. The masculine gender shall be deemed to denote the
                  feminine or
                  neuter genders, the singular to denote the plural, and the plural
                  to
                  denote the singular, where the context so permits.
                  

              

      

       

      

       

      

      
        	 

                COIL
                  TUBING TECHNOLOGY HOLDINGS,
                  INC. 

              	JERRY SWINFORD
	 

                By:
                  /s/
                  Jerry Swinford

                Jerry
                  Swinford, President and Chief Executive Officer 

              	 

                By:
                  /s/
                  Jerry Swinford

                Jerry
                  Swinford

              

      

       

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      A

    

     

     

    LICENSING
      AGREEMENT

     

    This
      Agreement is made and entered into this 1st day
      of
      July, 2007, by and between Jerry L. Swinford ("GRANTOR"), a natural person
      residing in Houston, Harris County Texas, and Coil Tubing Technology Holdings,
      Inc. (“GRANTEE”), a Nevada corporation with a mailing address of 19511 Wied
      Road, Suite E, Spring, Texas 77388.

    

    Whereas,
      GRANTOR
      has invented, designed, and built a device and method for inducing relative
      rotation in a remote location of an upper portion and a lower portion in
      response to relative axial movement (the Subterranean Rotation-Inducing Device
      and Method). GRANTOR has invented and designed various devices and methods
      which
      utilize similar techniques and are intended to serve similar or related
      functions. Furthermore, GRANTOR has invested and designed various other devices
      and methods, and anticipates inventing and designing various other devices
      and
      methods, which can be utilized by GRANTEE or its subsidiaries, but which may
      or
      may not utilize techniques similar to the Subterranean Rotation-Inducing Device
      and Method. Some, but not all, of such devices have been built (as prototypes)
      and have or will be tested. The Parties intend for all such devises and methods,
      including devises and methods developed, invented or designed while GRANTOR
      is
      employed by GRANTEE or its subsidiaries, to be provided for an governed by
      this
      Licensing Agreement. Thus, collectively, all such devices and methods described
      above are referred to herein as the “Invention.”

    

    Whereas,
      GRANTOR
      filed a United States Patent Application, Serial Number 08/471,774, for the
      device and method known as "Subterranean Rotation-Inducing Device and Method"
      on
      June 6, 1995. The United State Patent and Trademark Office granted a Patent
      on
      such Application by issuance of Patent Number 5,584,342. GRANTOR has also filed
      provisional patent application 60/787,906 and and a non-provisional patent
      application filing 11/693,568 for certain jet powered down hold driven tools.
      GRANTOR anticipates that such additional devices and methods referred to above,
      will require prosecution of U.S. and/or international Patent Applications.
      Collectively, Patent Number 5,584,342 and provisional patent  application
      60/787,906 and patent application 11/693,568 and any and all additional Patent
      Applications or Letters of Patent are referred to herein as the
“Application.”

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Whereas,
      GRANTEE
      is desirous of obtaining and GRANTOR is willing to grant an exclusive license
      to
      manufacture, use, sell, rent, and otherwise similarly exploit GRANTOR'S interest
      in the Invention, the Application, and any and all Letters Patent of the United
      States or other jurisdiction which may be granted therefor.

    

    NOW,
      THEREFORE, in consideration of the payment by each party to the other of the
      sum
      of One Dollar ($1.00) and other good and valuable consideration, the receipt
      of
      which is hereby acknowledged, and in consideration of the covenants and
      obligations hereinafter set forth to be well and truly performed, the Parties
      hereby agree as follows:

    

    I.
      DEFINITIONS

     

    1.01 
      "Sold,"
      "sales," and "sell" shall include sales, rentals, leases, transfers,
      consignments, and the like as well as any other commercial exploitation of
      the
      subject Invention Property Products. One example of such other commercial
      exploitation is the use of the Invention Property Products without directly
      charging for the Invention Property Products, but charging for services or
      other
      equipment related to the same job or the same customer.

     

    1.02 
      The
      "Invention Property" is the Invention, the Application, and any and all Letters
      Patent of the United States or other jurisdiction which may be granted therefor
      as well as all reissues, divisionals, continuations, extensions and renewals
      thereof.

     

    1.03
      "Invention Property Products" shall mean the devices, methods, improvements
      to
      known devices, or improvements to known methods that incorporate the
      Invention.

     

    1.04 An
      "Affiliate" is (1) any entity in which GRANTEE or any of its stockholders,
      directors, or officers has a direct or indirect ownership interest (other than
      insubstantial interests in publicly held companies) or (2) any entity which
      directly or indirectly through one or more intermediaries, control, is
      controlled by, or is under common control with GRANTEE.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    II.
      LICENSE GRANT

     

    2.01 
      GRANTOR
      hereby grants to GRANTEE the sole and exclusive right and license to
      manufacture, use, sell, and otherwise similarly exploit the Invention Property
      until the expiration of the Invention Property or any reissue thereof unless
      sooner terminated in accordance with any provision hereof.

    

    III.
      ROYALTIES

     

    3.01
      As
      compensation and as royalties for the transfer of rights in the Invention
      Property including the disclosure of information not currently available to
      the
      public, and the know-how and trade secrets associated with the Invention,
      GRANTEE agrees to pay GRANTOR as follows:

    
      	
              a.

            	 	
              A
                Royalty of ten percent (10%) of the gross receipts derived by GRANTEE
                from
                all sales of Invention Property
                Products.

            

    

    
      	
              b.

            	 	
              In
                no event shall the amount of the Royalty referred to in paragraph
“a” be
                less than $100,000 per year for each devise or method invented, designed
                or built for which no Letter of Patent has been issued by the United
                States or other jurisdiction.

            

    

    
      	
              c.

            	 	
              In
                no event shall the amount of the Royalty referred to in paragraph
“a” be
                less than $200,000 per year for each devise or method invented, designed
                or built for which a Letter of Patent has
                been
                issued by the United States or other
                jurisdiction.

            

    

    
      	
              d.

            	 	
              The
                minimum annual royalties described in paragraphs “b” and “c” above are
                measured at the end of each year, the year beginning on the anniversary
                of
                the Effective Date of this Agreement.

            

    

    
      	
              e.

            	 	
              Furthermore,
                the minimum annual royalties described in paragraphs “b” and “c” shall be
                prorated in any year in which Letters of Patent issue.
                

            

    

    

    3.02
      GRANTEE shall pay interest to GRANTOR upon any and all amounts of royalties
      that
      are at any time overdue and payable to GRANTOR at the maximum legal interest
      rate permitted under Texas law. This provision does not constitute a waiver
      or
      authorization for late payment or, in any way, negate GRANTOR's right to
      terminate the agreement for non-performance by GRANTEE.

     

    3.03
      Anything herein to the contrary notwithstanding, royalties with respect to
      all
      sales, transfers or consignments made by GRANTEE to an Affiliate (as herein
      defined) or to any purchaser which
      does not otherwise deal at arms-length with it, shall be computed on an amount
      equal to the price at which GRANTEE, at the time of such sales, transfers or
      consignments, would invoice the same or similar items to purchasers dealing
      at
      arms-length with GRANTEE.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.04
      Anything herein to the contrary notwithstanding, royalties with respect to
      all
      sales, transfers or consignments made by GRANTEE that amounts to other
      commercial exploitation of the Invention Property Products wherein the gross
      receipts or any portion thereof are not directly attributable to the Invention
      Property Products shall be computed on an amount equal to the price at which
      GRANTEE, at the time of such sales, transfers or consignments, would invoice
      the
      same or similar items.

     

    3.05
      GRANTEE shall have the right to conduct sales and services through a subsidiary
      or related entity provided that each of GRANTEE and such subsidiary or related
      entity shall be jointly and severally responsible for the payment of royalties
      and for other obligations under this Agreement, and the gross selling price
      subject to royalty shall be deemed the price at which Invention Property
      Products are sold or resold by GRANTEE or by its subsidiary or related company,
      whichever be the highest.

     

    3.06
      GRANTEE agrees to pay GRANTOR the full royalty set forth in paragraph 3.01
      for
      as long as the license is in effect.

     

    3.07
      GRANTEE agrees to use good faith and fair dealing in all dealings with GRANTOR.
      This good faith requirement includes the covenant to use fair market value
      in
      all sales and in calculating all royalties.

     

    3.08
      On
      Invention Property Products sold by another (not including Affiliates of
      GRANTEE), royalties are calculated and reported on Invention Property Products
      with the same conditions as if sold by GRANTEE.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IV.
      TIME FOR ROYALTY PAYMENTS; ACCOUNTING RECORDS;
      EXAMINATION

    4.01
      GRANTEE agrees to keep complete and correct account of the number of Invention
      Property Products which have been sold, and the number of Invention Property
      Products which have been ordered and manufactured, and also showing invoice
      number, customer name and address, gross selling price for each Invention
      Property Products sold, the total Gross Sales, and the amount of royalty
      due.

     

    4.02
      Where GRANTEE contracts with another for the manufacture of Invention Property
      Products, GRANTEE agrees to require the manufacturer to keep complete and
      correct account of the number of Invention Property Products which have been
      ordered and manufactured, and also showing the date and destination of each
      shipment of Invention Property Products.

     

    4.03
      Within twenty (20) days after the end of each month, reports shall be made
      by
      the GRANTEE to the GRANTOR setting forth the number of Invention Property
      Products which have been sold, and the number of Invention Property Products
      which have been ordered and manufactured, and also showing the invoice number,
      customer name and address, gross selling price for each Invention Property
      Product sold, the total Gross Sales, and the amount of royalty due.

     

    4.04
      GRANTEE's remittance for the full amount of royalties due for such month, with
      interest from the end of the month to the date of payment, shall accompany
      such
      reports.

     

    4.05
      GRANTOR or its representative shall have the right, not more often than once
      each quarter, to examine GRANTEE's books of account at all reasonable times,
      during normal business hours, to the extent and insofar as is necessary to
      verify the accuracy of the above-mentioned reports. It is agreed that GRANTOR
      shall have the privilege of having a certified public accountant audit all
      statements of account, reports, etc. provided for in this Agreement to be made
      by GRANTEE to GRANTOR and that GRANTEE shall place at the disposal of said
      certified public accountant for the purposes of this paragraph any and all
      records essential to the verification of such reports. The expense of such
      audits and verifications shall be borne by GRANTOR, except that if any audit
      shows a deficiency of more than five percent (5%) in the royalties reported
      and
      paid, then GRANTEE shall bear the cost of the audit.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.06
      GRANTOR agrees to hold strictly confidential all information concerning royalty
      payments and reports and all information learned in the course of any audit
      hereunder, except when it is necessary for GRANTOR to reveal such information
      in
      order to enforce its rights under this Agreement.

     

    4.07
      In
      the event of termination of this Agreement for any reason whatsoever, GRANTEE
      agrees to permit GRANTOR, its auditors, accountants or agents to inspect all
      said records and books of GRANTEE and to investigate generally all transactions
      of business carried on by GRANTEE pursuant to this Agreement and the license
      hereby granted, for a period of six (6) months after such
      termination.

    

    V.
      WARRANTIES BY GRANTOR

     

    5.01
      GRANTOR represents and warrants that it is the owner of the entire right, title
      and interest in the licensed Invention Property, and that it has the sole right
      to grant the licenses under the licensed Invention Property of the scope herein
      granted.

     

    5.02
      GRANTOR represents and warrants that it has the right to enter into this
      Agreement, and that there are no outstanding assignments, grants, licenses,
      encumbrances, obligations or agreements, whether written, oral or implied,
      inconsistent with this Agreement. 

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    VI.
      ENFORCEMENT OF LICENSED PATENTS

     

    6.01
      The
      Parties hereto agree to keep a diligent watch for infringement of the Invention
      Property and notify the other Party of any such infringement. The Parties will
      use reasonable attempts to halt any such infringement. However, neither Party
      shall be required to pursue an infringement action that the Party believes
      is
      frivolous or without merit under the circumstances. Thus, the parties will,
      by
      agreement based upon the circumstances at the time, pursue legal action against
      alleged infringers of the Invention Property against whom both of the Parties
      have a good faith, reasonable belief they will prevail. Based upon these
      guidelines, should one of the Parties elect not to pursue the alleged infringer,
      the other Party may pursue the alleged infringer at their own expense and for
      their own benefit and shall have the right to retain the benefit of any and
      all
      judgments for themselves. If the Parties pursue an alleged infringer together,
      the Parties will share in any expense and recovery from such lawsuit as agreed
      in advance of commencing any legal action and based on the circumstances of
      the
      particular infringement. In the event that GRANTEE commences litigation on
      its
      own, without GRANTOR, GRANTEE has the right to join GRANTOR as a necessary
      party
      and to gain his cooperation in exchange for reasonable compensation of GRANTOR’S
      costs. GRANTOR shall be entitled to be represented at any such proceedings,
      commenced solely by GRANTEE, by GRANTOR’S own counsel, at GRANTOR’S own expense.
      Should all patent(s) on the Invention be invalidated during an infringement
      suit, the royalty rate shall be reduced as provided for herein. GRANTEE is
      obligated to continue to make reports, payments, and accountings through this
      period. A reduced rate, if appropriate, begins on the date any judgment
      invalidating the patent(s) becomes final.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.02
      GRANTOR shall not be obligated to defend or save harmless GRANTEE in any suit,
      damage claim, or demand based on actual or alleged infringement of any patent
      or
      any unfair trade practice resulting from the exercise or use of any right or
      license granted hereunder. In the event that the GRANTEE’S right to use the
      devices, methods, processes, and techniques shall be challenged by any person
      or
      company claiming patent infringement by use thereof, GRANTOR shall provide
      such
      information as GRANTOR may possess which GRANTOR deem necessary to show the
      date
      or dates of discovery of the devices, methods, processes, and techniques,
      provided that GRANTOR will be compensated for any expense incurred in connection
      therewith.

    

    VII.
      ASSUMPTION OF THE RISK BY GRANTEE

     

    7.01
      GRANTEE agrees to assume full responsibility for product liability claims
      resulting from the sale or use of the Invention Property Products and hold
      GRANTOR harmless from any liability therefor, to indemnify GRANTOR, and to
      obtain sufficient liability insurance to cover any such claims.

    

    VIII.
      PATENT MARKING

     

    8.01
      GRANTEE agrees to mark permanently and legibly all Invention Property Products
      sold by it under this Agreement with the notation "Patent Pending" or
“International Patent Pending” during the prosecution of any Patent
      application.

     

    8.02
      Upon
      issuance of a patent and thereafter during the patent term, GRANTEE agrees
      to
      mark permanently and legibly all Invention Property Products sold by it under
      this Agreement with the notation "U.S. Patent No." or similar mark for patents
      issued by another jurisdiction, followed by the patent number.

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IX.
      TERMINATION RIGHTS

     

    9.01
      The
      rights granted to GRANTEE shall remain with GRANTEE throughout the life of
      the
      Invention Property or during the period of GRANTEE’S exploitation of any devise
      or method of the Invention Property whichever is longer. At the end of the
      term,
      all rights immediately and automatically revert to GRANTOR, regardless of any
      outstanding sublicenses. The obligation on the part of GRANTEE to make the
      payments required shall continue regardless of the issuance, non-issuance,
      or
      invalidation of a patent for the Invention in accordance with the compensation
      terms of this Agreement.

     

    9.02
      In
      the event of any adjudication of bankruptcy, appointment of receiver by a court
      of competent jurisdiction, assignment for the benefit of creditors, or levy
      of
      execution directly involving GRANTEE, GRANTOR may, at his option, terminate
      this
      Agreement upon not less than twenty (20) days notice to GRANTEE, provided,
      however, that such termination shall not impair or prejudice any right or remedy
      that GRANTOR might otherwise have under this Agreement.

     

    9.03
      GRANTOR may terminate this Agreement on ninety (90) days written notice to
      GRANTEE if the quality of the Inventory Property Products is substandard as
      reasonably determined by GRANTOR.

     

    9.04
      If
      GRANTEE shall at any time commit any breach of any covenant, warranty or
      agreement herein contained, including the obligation to pay royalties, or shall
      misrepresent the product or misrepresent the applications of the product and
      shall fail to remedy any such breach or misrepresentation of the product or
      the
      applications of the product within thirty (30) days after written notice thereof
      by the GRANTOR, then GRANTOR may at his option, and in addition to any other
      remedies that he may be entitled to, cancel this Agreement by notice in writing
      to such effect or, alternatively, convert this license to a non-exclusive
      license. If an initiated program does not remedy the breach within three (3)
      months after the aforementioned written notice by the GRANTOR, then GRANTOR
      may
      at his option, and in addition to any other remedies that he may be entitled
      to,
      cancel this Agreement by notice in writing to such effect or, alternatively,
      convert this license to a non-exclusive license.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9.05
      If
      GRANTEE is not doing its best to satisfy demands for the devices incorporating
      the Invention Property as determined by the good faith belief of GRANTOR,
      GRANTOR may elect to convert the license to a non-exclusive license with sixty
      (60) day written notice given to GRANTEE. If GRANTOR does subsequently grant
      any
      other licenses, GRANTEE may terminate this Agreement by ninety (90) day written
      notice to GRANTOR.

     

    9.06
      If
      GRANTEE does not meet or exceed the minimum royalties requirement, GRANTOR
      may
      elect to terminate this Agreement or, alternatively, convert the license to
      a
      non-exclusive license with sixty (60) day written notice given to GRANTEE,
      unless GRANTEE shall pay to GRANTOR by the end of that time the amount required
      to meet the minimum royalties. If GRANTOR does subsequently grant any other
      licenses, GRANTEE may terminate this Agreement by ninety (90) day written notice
      to GRANTOR.

     

    9.07
      In
      the event of termination of this Agreement for any reason, GRANTEE shall not
      thereby be discharged from any liability or obligation to GRANTOR that accrued
      on or prior to the date of the termination. All unpaid sums shall become due
      and
      payable immediately.

     

    9.08
      On
      the termination of this Agreement for any reason, GRANTEE shall deliver to
      GRANTOR all books, notes, drawings, writings, and other documents, samples
      and
      models relating to any improvements, trade secrets, or inventions that are
      the
      subject of this Agreement. On termination of this Agreement, if any patents
      on
      the Invention have not expired, then GRANTEE shall cease to exploit, use,
      manufacture, or sell the Invention in any way. All confidential material shall
      remain confidential.

    

    X.
      PAYMENT OF COSTS ASSOCIATED WITH THE INVENTION PROPERTY

     

    10.01
      GRANTEE agrees to pay all costs, including attorney’s fees and governmental
      fees, associated with the prosecution, issuance, and maintenance of the
      Invention Property.

     

    10.02
      GRANTEE shall pay the costs to GRANTOR or to an agent designated by GRANTOR
      within twenty (20) days from written request by GRANTOR.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    10.03
      The
      request for payment of costs shall include sufficient information to allow
      GRANTEE to verify the cost. Information such as invoices and citations of
      statutory provisions along with an explanation of why the statute applies are
      examples of sufficient information but other information may
      suffice.

     

    XI.
      FORCE MAJEURE

     

    11.01
      Neither of the parties hereto shall be liable in damages or have the right
      to
      cancel this Agreement for any delay or default in performing hereunder (other
      than the non-payment of royalties or other payments due under the Agreement)
      if
      such delay or default is caused by conditions beyond its control including,
      but
      not limited to acts of God, government restrictions, wars or insurrections,
      strikes, fires, floods, work stoppages, and/or lack of materials.

    

    XII.
      SEVERABILITY

     

    12.01
      Should any part or provision of the Agreement be held unenforceable or in
      conflict with the law of any jurisdiction, the validity of the remaining parts
      or provisions shall not be affected by such holding.

     

    12.02
      In
      any litigation involving this Agreement, any court having jurisdiction thereof
      is authorized to reform the agreement to conform as closely as possible to
      the
      original intent of the parties with respect to any subject matter found to
      be
      unenforceable or in conflict with any law.

    

    XIII.
      LIMITATION ON EFFECT OF WAIVER

     

    13.01
      A
      waiver of any breach of any provision of this Agreement shall not be construed
      as a continuing waiver of other breaches of the same or other provisions of
      this
      Agreement. 

    

    XIV.
      NEGATION OF AGENCY

     

    14.01
      Nothing herein contained shall be deemed to create an agency, joint venture
      or
      partnership relation between the parties hereto. It is understood and agreed
      that GRANTEE is not, by this Agreement or anything herein contained, constituted
      or appointed the agent or representative
      of GRANTOR for any purpose whatsoever, nor shall anything herein contained
      be
      deemed or construed as granting to GRANTEE any right or authority to assume
      or
      to create any obligation or responsibility, express or implied, for or on behalf
      of or in the name of GRANTOR, or to bind GRANTOR in any way or manner
      whatsoever.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    XV.
      ENTIRE AGREEMENT

     

    15.01
      This Agreement sets forth the entire agreement and understanding of the parties
      relating to subject matter contained herein and merges all prior discussions
      between them, and neither party shall be bound by a definition, condition,
      warranty, or representation other than as expressly stated in this Agreement
      or
      as subsequently set forth in a writing signed by the party to be bound
      thereby.

    

    XVI.
      NEGATION OF CERTAIN WARRANTIES

     

    16.01
      No
      warranty or representation is given or made by GRANTOR (a) that Licensed Devices
      are free from infringement of the patent rights of third parties; or (b) as
      to
      scope or validity of the Licensed Patent, other than the that described in
      Section V of this Agreement.

    

    XVII.
      ASSIGNABILITY

     

    17.01
      GRANTEE agrees not to assign or transfer, by operation of law or otherwise,
      its
      interest in the Invention Property or its interest in this agreement to any
      person, firm, or corporation without the written consent of the GRANTOR so
      to
      do. GRANTOR may require submission of any relevant information from GRANTEE
      in
      making such evaluation.

     

    17.02
      GRANTOR may assign or transfer, by operation of law or otherwise, its interest
      his the Invention Property or its interest in this agreement to any person,
      firm, or corporation without the associated obligations contained in this
      Agreement.

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    XVIII.
      SUBLICENSING

     

    18.01
      Should GRANTEE desire to sublicense all or any portion of the Invention
      Property, GRANTEE shall submit to GRANTOR the name of the proposed sublicensee
      financial, historical, and other information concerning the proposed sublicense
      sufficient to allow GRANTOR to determine the business, financial, technological,
      and other capabilities and stability of the proposed sublicensee, and true
      copies of the agreement or agreements to be entered into with the
      sublicensee.

     

    18.02
      GRANTOR shall within a reasonable time after submission of all of the foregoing,
      approve or disapprove the proposed sublicensee. GRANTOR is under no obligation
      to approve of any proposed sublicensee. GRANTOR may unreasonably withhold
      approval of any sublicensee and his approval or disapproval shall be subject
      to
      his complete discretion and fiat. 

     

    18.03
      Any
      sublicense agreement shall incorporate the terms of this Agreement and shall,
      inter
      alia,
      require
      that the sublicensee acknowledge the primacy and validity of this Agreement,
      require the sublicensee upon written notice from GRANTOR to make payments
      required hereunder directly to GRANTOR, and provide for audit rights of the
      sublicensee by GRANTOR equivalent to those provided in this
      Agreement.

    

    XIX.
      GOVERNING LAW

     

    19.01
      This Agreement shall be interpreted and construed, and the legal relations
      created herein shall be determined, in accordance with the laws of the State
      of
      Texas.

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    XX.
      NOTICES

     

    20.01
      Notices, reports, statements, payments, etc. required or permitted under this
      Agreement shall be in writing and shall for all purposes deemed to be fully
      given and received upon deposit with the United States Post Office if sent
      by
      certified mail, postage prepaid, to the respective parties at the following
      addresses:

     

     

    
 

    
      
        	to
                GRANTEE:
                	
                Coil Tubing Technology Holdings, Inc.

                
                  19515
                    Wied Road, Suite E

                  Spring,
                    Texas 77388 

                   

                   

                

              
	to
                GRANTOR:	
                Jerry
                  L. Swinford

                19515
                  Wied Road, Suite E

                Spring,
                  Texas 77388

                 

              

      

    

    

    

    20.02
      Either party hereto may change its address for the purposes of this Agreement
      by
      giving to the other party written notice of its new address.

    

    XXI.
      GENERAL ASSURANCES

     

    21.01
      The
      parties agree to execute, acknowledge and deliver all such further instruments,
      and do all such other acts, as may be necessary or appropriate in order to
      carry
      out the intent and purposes of this Agreement.

    

    XXII.
      COUNTERPARTS

     

    22.01
      This Agreement may be executed in one or more counterparts, each of which shall
      be treated and deemed an original, but all of which together shall constitute
      one and the same document.

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    XXIII.
      EFFECTIVE DATE

     

    23.01
      This Agreement, regardless of the date of its execution shall be effective
      as of
      July 1, 2007.  Such date is referred to herein as the “Effective Date.”

    

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement this 1st day
      of
      July, 2007.

     

     

    
      	GRANTEE:	
              Coil
                Tubing Technology Holdings, Inc.

               

              
                /s/
                  Jerry
                  Swinford                                    
                  

              

              Jerry
                L. Swinford, President

            
	
              GRANTOR:

            	
               

              
                /s/
                  Jerry
                  Swinford                                    
                  

              

              
                Jerry
                  L. Swinford

              

            

    

    

     

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      B

     

    WAIVER
      OF ROYALTIES

    This
      Agreement is made and entered into this 1st day of July, 2007, by and between
      Jerry L. Swinford ("Swinford"), a natural person residing in Houston, Harris
      County Texas, and Coil Tubing Technology Holdings, Inc. (“CTT Holdings”), a
      Nevada corporation with a mailing address of 19511 Wied Road, Suite E, Spring,
      Texas 77388.

     

    Whereas,
      Swinford and CTT Holdings entered into a Licensing Agreement dated the 1st
      day
      of July, 2007, which granted CTT Holdings an exclusive license in various
      devices and methods described therein.

     

    Whereas,
      the
      Licensing Agreement required CTT Holdings to make various Royalty payments
      to
      Swinford in exchange for and in consideration of his grant of an exclusive
      license to CTT Holdings. 

     

    Whereas,
      Swinford and CTT Holdings have entered into an “Executive Compensation and
      Retention Agreement” (“Employment Agreement”). Pursuant to the Employment
      Agreement, Swinford has agreed to waive any royalties due to him during his
      employment.

     

    Whereas,
      it is
      anticipated that Swinford will continue to develop intellectual property which
      will be exploited by CTT Holdings and its subsidiaries. Such intellectual
      property is the subject matter of a Licensing Agreement between CTT Holdings
      and
      Swinford.

     

    Whereas,
      it is
      in the Parties best interest to clarify the ownership of such intellectual
      property and their rights, obligations and responsibilities related thereto.
      

     

    Whereas,
      CTT
      Holdings is desirous of obtaining a waiver of its royalty payment requirements
      under the Licensing Agreement it has with Swinford and Swinford is desirous
      of
      retaining ownership of the intellectual property he develops while in the employ
      of CTT Holdings.

     

    NOW,
      THEREFORE,
      in
      consideration of the payment by each party to the other of the sum of One Dollar
      ($1.00) and other good and valuable consideration, the receipt of which is
hereby
      acknowledged, and in consideration of the covenants and obligations hereinafter
      set forth to be well and truly performed, the Parties hereby agree as
      follows:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    I.
      WAIVER OF ROYALTIES

     

    1.01
      Swinford hereby waives all royalties required to be paid under the Licensing
      Agreement between him and CTT Holdings dated July 1, 2007.

    

    II.
      EFFECT OF WAIVER OR TERMINATION OF WAIVER

     

    2.01
      For
      so long as the waiver provided for herein is in effect, CTT Holdings will not
      be
      obligated to make any of the Royalty payments provided for in the Licensing
      Agreement between CTT Holdings and Swinford. 

     

    2.02
      Immediately upon the occurrence of one of the events of termination described
      below, the waiver of royalty payments provided for in the Licensing Agreement
      between CTT Holdings and Swinford shall become due from such termination date
      and in subsequent periods as provided in such Licensing Agreement. 

     

    III.
      TERMINATION

     

    3.01
      Swinford’s waiver of royalty payments shall automatically cease in the event
      that CTT Holdings, its subsidiaries, or any other affiliated or related
      companies are adjudicated bankrupt, or upon the appointment of a receiver by
      a
      court of competent jurisdiction, assignment for the benefit of creditors, or
      levy of execution directly involving CTT Holdings, its subsidiaries, or any
      other affiliated or related companies. 

     

    3.02
      If
      CTT Holdings, its subsidiaries, or any other affiliated or related company
      shall
      at any time commit any breach of any covenant, warranty or agreement herein
      contained, then Swinford may at his option, and in addition to any other
      remedies that he may be entitled to, terminate his waiver of royalty payments
      by
      notice in writing to such effect. 

     

    3.03
      If,
      pursuant to the Employment Agreement, Swinford is no longer employed by CTT
      Holdings, regardless of the reason for such termination (death, disability,
      termination for cause
      or
      termination without cause), Swinford’s waiver of royalty payments shall
      automatically cease.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.04
      If
      Swinford ceases to be a member of the Board of Directors of CTT Holdings,
      Swinford’s waiver of royalty payments shall automatically cease. 

     

    3.05
      Any
      termination of Swinford’s waiver of royalties shall not impair or prejudice any
      right or remedy that Swinford might otherwise have.

     

    3.06
      Notwithstanding any other provisions in this Agreement, subsequent to any
      termination event, Swinford may elect to continue his waiver of royalty payments
      in writing and after having been fully informed of the nature of the termination
      event. 

     

    IV.
      OWNERSHIP OF INTELLECTUAL PROPERTY

     

    4.01
      Subject to the Licensing Agreement between CTT Holdings and Swinford, any
      inventions, improvements, designs, notes, references incorporating or reflecting
      any of the intellectual property developed by Swinford as a result of him being
      employed by CTT Holdings, shall belong exclusively to Swinford. 

     

    4.02
      Upon
      Swinford’s termination as an employee of CTT Holdings (or its subsidiaries) CTT
      Holdings shall provide Swinford with a complete list of any intellectual
      property in which it asserts an ownership interest. In making this
      determination, there will be a rebuttable presumption that any intellectual
      property developed during by Swinford as an employee, was the result of his
      effort, and therefore, his intellectual property pursuant to paragraph 4.01.
      Furthermore, such presumption will be conclusive as to any intellectual property
      wherein Swinford is indicated as the “inventor,” “designer,” “developer” or the
      like on a document, filing or application to the United States Patent Office
      or
      similar governmental agency in another jurisdiction. 

     

    4.03
      Nothing within this agreement shall abrogate CTT Holdings’, or its subsidiaries,
      obligations to pay fees or expenses as described in the Licensing Agreement
      between Swinford and CTT Holdings.

     

    V.
      NON ASSIGNABILITY

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.01
      Swinford cannot assign any of the rights he has under the Licensing Agreement
      between him and CTT Holdings without the prior written consent of the Board
      of
      Directors of CTT Holdings. Such written consent may not be unreasonable
      withheld.

     

    VI.
      SEVERABILITY

     

    6.01
      Should any part or provision of the Agreement be held unenforceable or in
      conflict with the law of any jurisdiction, the validity of the remaining parts
      or provisions shall not be affected by such holding.

     

    6.02
      In
      any litigation involving this Agreement, any court having jurisdiction thereof
      is authorized to reform the agreement to conform as closely as possible to
      the
      original intent of the parties with respect to any subject matter found to
      be
      unenforceable or in conflict with any law.

     

    VII.
      LIMITATION ON EFFECT OF WAIVER

     

    7.01
      A
      waiver of any breach of any provision of this Agreement shall not be construed
      as a continuing waiver of other breaches of the same or other provisions of
      this
      Agreement. 

     

    VIII.
      ENTIRE AGREEMENT

     

    8.01
      This
      Agreement sets forth the entire agreement and understanding of the parties
      relating to subject matter contained herein and merges all prior discussions
      between them, and neither party shall be bound by a definition, condition,
      warranty, or representation other than as expressly stated in this Agreement
      or
      as subsequently set forth in a writing signed by the party to be bound
      thereby.

     

    IX.
      GOVERNING LAW

     

    9.01
      This
      Agreement shall be interpreted and construed, and the legal relations created
      herein shall be determined, in accordance with the laws of the State of
      Texas.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    X.
      NOTICES

    10.01
      Notices, reports, statements, payments, etc. required or permitted under this
      Agreement shall be in writing and shall for all purposes deemed to be fully
      given and received upon deposit with the United States Post Office if sent
      by
      certified mail, postage prepaid, to the respective parties at the following
      addresses:

     

    

    

      
        	
                to
                  CTT Holdings:

              	
                CTT
                  Holdings, Inc.

              
	 	
                19511
                  Wied Road, Suite E

              
	 	
                Spring,
                  Texas 77388

              

      

    

    

    

    
      	
              to
                Swinford:

            	
              Jerry
                L. Swinford

            
	 	
              19511
                Wied Road, Suite E

            
	 	
              Spring,
                Texas 77388

            

    

    

    10.02
      Either party hereto may change its address for the purposes of this Agreement
      by
      giving to the other party written notice of its new address.

     

    XI.
      GENERAL ASSURANCES

     

    11.01
      The
      parties agree to execute, acknowledge and deliver all such further instruments,
      and do all such other acts, as may be necessary or appropriate in order to
      carry
      out the intent and purposes of this Agreement.

     

    XII.
      COUNTERPARTS

     

    12.01
      This Agreement may be executed in one or more counterparts, each of which shall
      be treated and deemed an original, but all of which together shall constitute
      one and the same document.

     

    XIII.
      EFFECTIVE DATE

     

    13.01
      This Agreement, regardless of the date of its execution, shall be effective
      as
      of ______________, 2007. Such date is referred to herein as the “Effective
      Date.” 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement this 1st day
      of
      July, 2007.

    

    
      	 	
              Coil
                Tubing Technology Holdings, Inc.

            
	 	 
	 	 
	 	
              BY:
                /s/
                Jerry
                Swinford                                    
                

            
	 	
              Jerry
                Swinford, President

            
	 	 
	 	 
	 	 
	 	
              /s/
                Jerry
                Swinford                                    
                

            
	 	
              Jerry
                L. Swinfordexh101.htm

    

    Exhibit
      10.1

     

    Execution
      Copy

    

    MASTER
      INNOVATION AND SUPPLY AGREEMENT

     

    

    between

     

    

    THE
      HERSHEY COMPANY

     

     

    and

     

     

    BARRY
      CALLEBAUT, AG

     

     

     

     

    

    

    _____________________________

     

    Dated
      this 13th day
      of July, 2007

    _____________________________

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      TABLE
        OF CONTENTS

      

      

      
        	 	 	
                Page

              
	 	 	 
	
                1.

              	
                DEFINITIONS

              	
                1

              
	 	 	 
	
                2.

              	
                SUPPLY
                  AGREEMENTS

              	
                2

              
	 	 	 
	
                3.

              	
                STEERING
                  COMMITTEE

              	
                13

              
	 	 	 
	
                4.

              	
                STANDARDS
                  FOR PERFORMANCE

              	
                13

              
	 	 	 
	
                5.

              	
                NON-COMPETE
                  AGREEMENT

              	
                14

              
	 	 	 
	
                6.

              	
                NON-SOLICITATION

              	
                14

              
	 	 	 
	
                7.

              	
                CONFIDENTIALITY

              	
                14

              
	 	 	 
	
                8.

              	
                TERM

              	
                17

              
	 	 	 
	
                9.

              	
                TERMINATION

              	
                17

              
	 	 	 
	
                10.

              	
                INDEPENDENT
                  CONTRACTORS

              	
                18

              
	 	 	 
	
                11.

              	
                REPRESENTATIONS
                  AND WARRANTIES

              	
                18

              
	 	 	 
	
                12.

              	
                INDEMNIFICATION

              	
                19

              
	 	 	 
	
                13.

              	
                FORCE
                  MAJEURE

              	
                20

              
	 	 	 
	
                14.

              	
                NOTICE

              	
                20

              
	 	 	 
	
                15.

              	
                NO
                  WAIVER

              	
                21

              
	 	 	 
	
                16.

              	
                ASSIGNMENTS

              	
                21

              
	 	 	 
	
                17.

              	
                GOVERNING
                  LAW

              	
                21

              
	 	 	 
	
                18.

              	
                REAL
                  ESTATE AGREEMENTS

              	
                21

              
	 	 	 
	
                19.

              	
                ENTIRE
                  AGREEMENT AND HEADINGS

              	
                21

              
	 	 	 
	
                20.

              	
                CONFLICTING
                  TERMS

              	
                21

              
	 	 	 
	
                21.

              	
                PREPRINTED
                  TERMS

              	
                22

              
	 	 	 
	
                22.

              	
                BINDING
                  EFFECT

              	
                22

              

      

      
 

    

    
      
        i

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBITS

     

    Exhibit
      A:          Hershey
      Specifications

     

    Exhibit
      B:          Form of Open Book
      Costing Data

     

    Exhibit
      C:          Insurance

     

    Exhibit
      D:         
Competitors

     

    Exhibit
      E:          Product Guaranty and
      Indemnity

    

    Exhibit
      F:          Global Volume Increment
      Examples

    
      
        ii

      

      
        
        

        
          

        

      

      
        
        

      

    

    MASTER
      INNOVATION AND SUPPLY AGREEMENT

    

    

    MASTER
      INNOVATION AND SUPPLY AGREEMENT (this “Agreement”) is entered into this
      13th day of
      July, 2007.

     

     

    BETWEEN:

     

    THE
      HERSHEY COMPANY, a corporation organized and existing under the laws of
      the State of Delaware, with a principal place of business at 100 Crystal A
      Drive, Hershey, Pennsylvania 17033 (hereinafter individually referred to as
      "Hershey" or a “Party”),

     

    and

     

    BARRY
      CALLEBAUT, AG, a corporation organized and existing under the laws of
      Switzerland, with a principal place of business at Westpark Pfingstweidstrasse
      60, 8500 Zurich, Switzerland (hereinafter individually referred to as
“Callebaut” or a “Party”).

     

    Hershey
      and Callebaut may collectively be referred to herein as the
“Parties”.

     

     

    BACKGROUND:

     

    Hershey
      and Callebaut are manufacturers of chocolate and confectionery products and
      have
      experience in the design, development, manufacture and marketing of such
      products.  Simultaneous with the signing of this Agreement, Hershey
      and Callebaut have entered into a Product Development and Innovation Agreement
      (together with any exhibits thereto, the “Innovation Agreement”) under which
      Hershey will utilize Callebaut’s product development, innovation and
      manufacturing expertise and Hershey and Callebaut will collaborate on joint
      development of new technologies and products. Hershey and Callebaut now wish
      to
      enter into this Agreement and the related Supply Agreements, pursuant to which
      Callebaut will manufacture certain products and ingredients for
      Hershey.

     

     

    
      	
              1.

            	
              DEFINITIONS

            

    

     

    In
      addition to the terms defined elsewhere in this Agreement, whenever used in
      this
      Agreement the following terms shall have the respective meanings set out
      below:

     

    “Affiliate”
      means a wholly owned subsidiary of a Party.

     

    “Bulk
      Chocolate Product” means chocolate in solid and/or liquid form, including
      chocolate chips and chocolate chunks in any form.

     

    “Cocoa
      Ingredient” means cocoa liquor, cocoa butter and/or cocoa
      powder.

     

    “Finished
      Consumer Chocolate Confectionery Product” means any product in any form that
      does not require further processing prior to retail sale to a
      consumer.

     

    “Global
      Supply Agreement” means the Supply Agreement of even date herewith for
      Products sourced between the Parties other than those Products sourced under
      the
      Supply Agreement for Mexico, the Supply Agreement for Robinson or a Subsequent
      Supply Agreement, together with any exhibits thereto.

     

    “Hershey
      Specifications” means the product specifications, technical procedures and
      quality requirements provided from time to time by Hershey.

     

    
      
        1

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Losses”
      means damages, losses, liabilities, obligations and claims of any kind
      (including, without limitations, reasonable attorney’s fees and
      expenses).

     

    “North
      America” means the United States, Canada, Mexico, Puerto Rico and the U.S.
      Virgin Islands.

     

    “Products”
      means any and all products defined as such in a Supply Agreement.

     

     “Real
      Estate Agreements” means the Lease Agreement for the Monterrey, Mexico land
      and the Lease Agreement for the Robinson, Illinois premises, together in each
      instance with any exhibits thereto.

     

    “Related
      Agreements” mean, collectively, each Supply Agreement, the Real Estate
      Agreements and the Innovation Agreement.

     

    “Subsequent
      Supply Agreement” means any separate supply agreement entered into by the
      Parties or Affiliates thereof subsequent to the date of this Agreement and
      designated as such therein.

     

    “Supply
      Agreement” means any of the Supply Agreement for Mexico, the Supply
      Agreement for Robinson, the Global Supply Agreement or any subsequent Supply
      Agreement.

     

    “Supply
      Agreement for Mexico” means the Supply Agreement for chocolate products to
      be produced in Monterrey, Mexico, together with any exhibits thereto, of even
      date herewith.

     

    “Supply
      Agreement for Robinson” means the Supply Agreement for chocolate products to
      be produced in Robinson, Illinois, together with any exhibits thereto, of even
      date herewith.

     

     

    
      	
              2.

            	
              SUPPLY
                AGREEMENTS

            

    

     

    Simultaneous
      with the signing of this Agreement the Parties will execute each of the Supply
      Agreements.  The Supply Agreements provide that Callebaut will,
      through the use of its own technical information and equipment, and through
      the
      use of certain technical information provided by Hershey, manufacture, package
      and deliver the Products defined therein to Hershey in exchange for the
      consideration referenced in the respective Supply Agreement. The following
      terms
      and conditions shall apply to each of the Supply Agreements:

     

     

    A.         Production
      of Products

     

    1.         Callebaut
      will produce, package and deliver Products for Hershey in accordance with the
      Hershey Specifications.  The Hershey Specifications are attached
      hereto as Exhibit A.  Callebaut agrees to abide by Hershey’s Supplier
      Code of Conduct. Callebaut acknowledges that the Hershey Specifications may
      be
      revised upon prior written notice by Hershey, in its sole discretion, at any
      time during the term of this Agreement.  In the event that revisions
      to the Hershey Specifications result in a change in cost to Callebaut, including
      a change in cost due to any required capital addition or expenditure on the
      part
      of Callebaut, following good-faith negotiations between the Parties, the amount
      paid to Callebaut under the applicable Supply Agreement will be adjusted to
      reflect the new cost.  If such revisions render unmarketable any of
      the Products or inventories of ingredients or packaging materials, Hershey
      shall
      purchase, up to the quantity authorized in accordance with the provisions of
      Section 2(B)(2), all such items from Callebaut at Callebaut's cost or other
      agreed upon price.

     

    
      
        2

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.         Callebaut
      agrees to pay for any and all capital required to manufacture the Products
      unless specified otherwise in this Agreement or in a Supply
      Agreement.

     

     

    B.         Operations
      Planning

     

    The
      Parties agree to plan the
      production under each Supply Agreement in accordance with the following
      principles:

     

    1.         On
      October 1 of each year during the term of each Supply Agreement, Hershey will
      provide to Callebaut an estimate of the twelve (12) month demand for the
      upcoming calendar year (January to December) by Product (the “Annual
      Estimate”).

     

    2.         Thirty
      (30) days before each calendar quarter during the term of each Supply Agreement
      Hershey will provide Callebaut with a scheduling agreement which will be used
      to
      track product shipments and subsequent invoices (the “Scheduling
      Agreement”).  This Scheduling Agreement will provide a more current
      estimate of Product demand for the upcoming quarter at the Product level and
      will identify Product cost in accordance with the terms of the applicable Supply
      Agreement.  It is understood by the Parties that when production is
      terminated, and possibly during the term of this Agreement, some materials
      will
      either become obsolete due to changes in the Hershey's Specifications or there
      will be extra material due to incorrect forecasting.  While Hershey
      will be financially responsible for these obsolete and/or extra
      materials:

     

    
      	
               

            	
              a)

            	
              Callebaut
                shall use all prudent means to minimize the financial impact to Hershey
                of
                these material losses, and

            

    

     

    
      	
               

            	
              b)

            	
              under
                no circumstances will Hershey be responsible under the provisions
                of this
                section for ingredients and packaging materials which, when ordered
                by
                Callebaut, represented more than a three (3) month supply (based
                on the
                then current production plan) of the item in question (except with
                regard
                to production of promotion or “one time” products which will be mutually
                agreed to), and

            

    

     

    
      	
               

            	
              c)

            	
              notwithstanding
                (b) above, Callebaut may enter into supply contracts for a period
                of
                longer than three (3) months with the prior written approval from
                Hershey.

            

    

     

    3.         Each
      week during the term of this Agreement Hershey will provide Callebaut a shipment
      plan by facility for the Products showing estimated required shipments of
      Products on a twelve (12) week rolling basis (the “Shipment
      Plan”).  Additionally, for Monterrey and Robinson
      Hershey  will further identify the first two weeks of the Shipment
      Plan into daily shipments, inclusive of Saturdays, Sundays and non-business
      days
      if Hershey requires shipments on such days.

     

    4.         Except
      as set forth in the volume and pricing provisions of Section
      2(B)(7)  and any obligation that exists under Section 2(B)(2)
      above  with respect to the Supply Agreement for Mexico and the Supply
      Agreement for Robinson Hershey shall be obligated to purchase from Callebaut
      only the three day production reflected in the relevant Shipment Plan for the
      day after such Shipment Plan was received and the next two days, and with
      respect to the Global Supply Agreement Hershey shall be obligated to purchase
      from Callebaut only the first two-weeks’ production reflected in the
      then-current Shipment Plan.

    
      
        3

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.         Designated
      representatives within the plants will plan the shipments outlined in an
      applicable Shipment Plan on a daily and/or shift basis.

     

    6.         Callebaut
      will supply all of Hershey’s actual demands. In the event Hershey’s daily
      production demand exceeds Callebaut’s daily capacity, Callebaut will make the
      Product that exceeded its capacity on the next available production run.
      Callebaut will undertake commercially reasonable efforts to ensure that
      commitments to third party customers do not limit or interfere with any
      production for Hershey, provided, however, that nothing contained in this
      Agreement or any Supply Agreement shall be interpreted as requiring Callebaut
      to
      cancel service commitments to third-party customers as a result of any error
      or
      omission in a Scheduling Agreement or Shipment Plan.  For planning
      purposes in the Monterrey facility, Callebaut will provide Hershey with
      information pertaining to the facility’s estimated daily production capacity no
      later than May 1, 2008.

     

    7.         In
      the event that Hershey’s actual order volume of Products in any given calendar
      year under the applicable Supply Agreement is less than the amounts set forth
      on
      Exhibit F from Callebaut’s Monterrey facility and Callebaut’s Robinson facility,
      respectively, and provided the shortfall is not due to Callebaut’s action or
      inaction,  the consequences shall be limited to:

     

    
      	
               

            	
              a)

            	
              The
                continued application of the cost tiers in the Conversion Cost Grids
                of
                the respective Supply Agreements as may be adjusted in accordance
                with the
                Global Volume Increment set forth below;
                and

            

    

     

    
      	
               

            	
              b)

            	
              With
                respect to Callebaut’s Monterrey facility, Callebaut may exercise the Put
                Option set forth in the Supply Agreement for
                Mexico.

            

    

     

    
      	
               

            	
              8.

            	
              Global
                Volume Increment

            

    

     

    
      	
               

            	
              a)

            	
              To
                potentially reduce or eliminate the incremental absorption charge
                resulting from the application of the cost tiers where the respective
                annual purchase volumes are below the Base Tiers, volume shortfalls
                in
                products sourced from Callebaut’s Monterrey facility and from Callebaut’s
                Robinson facility may be offset by other volume sourced by Hershey
                from
                Callebaut as set forth in this
                Section.

            

    

     

    
      	
               

            	
              b)

            	
              Reference
                is made to the Base Tier volume ranges set forth in the Conversion
                Cost
                Grids of the Supply Agreements:

            

    

     

    
      	
               

            	
              i.

            	
              The
                Base Tier volume range for the Supply Agreement for Mexico is the
                amount
                set forth in Exhibit F.

            

    

     

    
      	
               

            	
              ii.

            	
              The
                Base Tier volume range for the Supply Agreement for Robinson is the
                amount
                set forth in Exhibit F.

            

    

     

    
      	
               

            	
              iii.

            	
              The
                Global Supply Agreement does not include a Base Tier Volume
                range.  Solely for the purposes of this Section, the Base Tier
                volume range for the Global Supply Agreement shall be the amount
                set forth
                in Exhibit F.

            

    

     

    
      	
               

            	
              iv.

            	
              As
                per Section (2)(B)(1), Hershey’s shall deliver to Callebaut the Annual
                Estimate for the following calendar year detailing production requirements
                for each of Callebaut’s Monterrey
                facility

            

    

     

    
      
        4

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               

            	
               

            	
              and
                Callebaut’s Robinson facility, production requirements under the Global
                Supply Agreement and production requirements for any Subsequent Supply
                Agreement.  The sum of these Annual Estimates shall be
                collectively referred to as the Global Volume Estimate.  For
                purposes of clarity, volumes to be included in the Global Volume
                Estimate
                shall include all volumes sourced by Hershey from any Callebaut facility,
                including all chocolate bulk products, all chocolate fillings to
                be used
                in a Callebaut, Hershey facility or co-manufacturer facility, all
                chocolate chips and chocolate eggs production, and all new products
                sourced from Callebaut by Hershey, but shall not include Cocoa
                Ingredients.

            

    

     

    
      	
               

            	
              c)

            	
              The
                Global Volume Increment shall be calculated
                as:

            

    

     

    66%
      x
      [the sum of the amount by which the Annual Estimates exceed the Base Tiers,
      plus
      the Estimated Subsequent Supply Agreement Volume]

     

    
      	
               

            	
              i.

            	
              Where
                the resulting Global Volume Increment is a number greater than zero,
                it
                shall be first added to the Annual Estimate for Callebaut’s Monterrey
                facility in an amount necessary to reach the amount set forth in
                Exhibit F
                (which is the lowest volume of the Base Tier range) to determine
                the cost
                tier to be used for the January – December conversion cost to be
                determined in accordance with Section (2)(D).  After deducting
                any amount applied to determine the cost tier for product sourced
                from
                Callebaut’s Monterrey facility, any remaining Global Volume Increment may
                be similarly applied to determine the cost tier for Callebaut’s Robinson
                facility.  In no instance shall the Global Volume Increment
                result in conversion costs lower than that reflected in the Base
                Tier of
                the Conversion Cost Grids.

            

    

     

    
      	
               

            	
              ii.

            	
              With
                respect to the application of the Global Volume Increment, each calendar
                year must be viewed on a stand-alone basis.  Volume from one
                calendar year may not be applied to any preceding or succeeding calendar
                year.

            

    

     

    
      	
               

            	
              iii.

            	
              The
                calculation of the Global Volume Increment shall commence with the
                calendar year starting on January 1,
                2009.

            

    

     

    
      	
               

            	
              iv.

            	
              Annually
                at each November Steering Committee Meeting, the Parties will review
                actual annual purchase volumes as compared to the Annual Estimate
                used to
                calculate the Global Volume Increment and to establish the cost tiers
                used
                in the January – December conversion costs.  If such actual
                annual purchase volumes indicates that a different cost tier should
                have
                been used for the then current calendar year, the Parties shall calculate
                and agree upon any necessary year-end adjustment to be applied to
                all
                volume for the full calendar year and apply such year-end adjustment
                as
                per Section (2)(D)(2)(b).

            

    

     

    
      
        5

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              v.

            	
              Examples
                of the calculation of the global increment methodology are attached
                as
                part of Exhibit F.

            

    

     

     

    
      	
               

            	
              C.

            	
              Contingency
                and Business
                Interruption

            

    

     

    If
      during the term of a Supply
      Agreement, through no fault of Hershey, Callebaut is delayed or unable to
      deliver Products in accordance with the terms of this Agreement or any Supply
      Agreement, other than as a result of a force majeure event, then in addition
      to
      any other remedies available to Hershey, Callebaut will, at Hershey’s option,
      either reimburse Hershey for incremental costs it incurs in obtaining alternate
      supplies of Products or Callebaut will supply Products from its facilities
      at
      the same delivered cost as specified in the current applicable Scheduling
      Agreement.  Products can only be sourced in a form and/or from a
      country which allows Hershey’s country of origin labeling to remain correct, and
      which does not subject the finished goods Hershey makes with the Products to
      additional duties or taxes upon export, unless Callebaut reimburses Hershey
      for
      any such additional duties or taxes.

     

     

    D.         Product
      Costing and Procurement

     

    1.         Hershey
      shall reimburse Callebaut for the ingredients and packaging materials used
      to
      produce Products, at costs to be established in accordance with the provisions
      of Section 2(D)(2), shall pay Callebaut a conversion cost specified in the
      Pricing Grid of the applicable Supply Agreement (which conversion cost shall
      include Callebaut's cost of labor, overhead and profit and, where applicable,
      the incremental absorption charge), and shall pay Callebaut’s agreed upon
      working capital financing costs.  Product costs will be developed and
      communicated with full detail to include at minimum ingredient component costs
      and yields, packaging component costs and yields and conversion
      costs.  Product costs will be established no later than
      December 31 for the following full calendar year (January to December),
      subject to the provisions of Section 2(D)(4).

     

    2.         Hershey
      and Callebaut agree to establish Product costs as follows:

     

    
      	
               

            	
              a)

            	
              As
                part of the August Steering Committee meeting, Hershey and Callebaut
                will
                review the estimated volumes of ingredients and components which
                will be
                required to produce Hershey’s estimated demand of Products for the
                upcoming calendar year. The Parties will discuss the method by which
                ingredients and packaging components will be purchased.  The
                Parties agree that at Hershey’s option one of the following methods will
                be used to procure each component:

            

    

     

    
      	
               

            	
              i)

            	
              Hershey
                sells the ingredient or component directly to
                Callebaut;

            

    

     

    
      	
               

            	
              ii)

            	
              Callebaut
                places orders or releases for ingredients or components with Hershey’s
                suppliers under Hershey’s contracts; provided however, that any supplier
                must be approved by Callebaut, such approval not to be unreasonably
                withheld; or

            

    

     

    
      	
               

            	
              iii)

            	
              Callebaut
                purchases directly from its suppliers (which are approved by
                Hershey).

            

    

     

    
      	
               

            	
              Any
                ingredients or components sourced pursuant to clause (i) or (ii)
                shall be
                referred to herein as “Hershey Raw Materials”, and any ingredients
                or

            

    

     

    
      
        6

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              components
                sourced pursuant to clause (iii) shall be referred to herein as “Callebaut
                Raw Materials”.  With regard to any ingredients or components
                sourced pursuant to clause (i), Hershey shall be liable to Callebaut
                for
                the quality and suitability of use of such ingredients or components,
                unless quality or suitability fails due to the action or inaction
                of
                Callebaut.   At any time during production Hershey may
                require Callebaut to change one or more of the methods of procurement
                that
                have been selected, subject to fulfillment of any pre-existing commitments
                Callebaut may have made to suppliers, provided, however, that such
                commitments, other than with respect to any ingredients or components
                sourced pursuant to clause (i), do not exceed the amount authorized
                to be
                purchased under Section 2(B)(2).

            

    

     

    
      	
               

            	
              b)

            	
              During
                the November Steering Committee meeting, Hershey will provide Callebaut
                with the costs for Hershey Raw Materials and Callebaut will present
                Hershey with the proposed costs for the Callebaut Raw Materials,
                inclusive
                of any carry or forward cover costs necessary to establish yearlong
                pricing, for each Product. Callebaut will also provide substantiation
                and
                documentation showing current costs and the methodology Callebaut
                used to
                calculate the proposed annual cost for each Callebaut Raw Material
                and the
                then current estimate of any year-end adjustments, as provided for
                under
                the Supply Agreements, including adjustments resulting from the
                application of the fineness grid and from tiered pricing based on
                actual
                calendar year volume.  In the event the Parties cannot agree on
                a cost for a Callebaut Raw Material, Hershey shall have the right
                to
                purchase this component itself and sell it to Callebaut or to require
                that
                Callebaut purchase it under one of Hershey’s established contracts with a
                supplier. If the Parties reach an agreement on the annual cost for
                Callebaut Raw Materials, Callebaut will use that cost in its calculation
                of Product costing to Hershey for the next calendar year
                period.  In addition, nothing in this Agreement or any Related
                Agreement shall be construed as allowing Hershey access to Callebaut’s
                financial records, including, but not limited to, operating costs
                and
                suppliers’ invoices.  Callebaut will provide open-book costing
                data for the Products in form substantially similar to that shown
                on
                Exhibit B.

            

    

     

    3.         During
      November of each year hereunder Callebaut will have entered all agreed upon
      input costs and variables into the product pricing model and will provide
      Hershey with costs for each Product by appropriate unit of measure (case, pound,
      other).

     

    4.         Product
      costs will be calculated in accordance with this Agreement for a period of
      one
      year (January – December).  These costs will be used in the Scheduling
      Agreements and will be subject to change only at the start of each calendar
      year, except in the case of an event of Force Majeure or for exceptional
      inflationary events in areas such as energy costs or currency
      rates.  The Parties agree to jointly work towards minimizing the
      impact of any such fluctuations.

     

    5.         Should
      Product(s) be added throughout the year, Hershey and Callebaut will create
      Product costs by unit of measure following the above methodology (to include
      all

     

    
      
        7

      

      
        
        

        
          

        

      

      
        
        

      

    

             
        ingredients, packaging, conversion costs and
      yields/waste/overweight) 30 days before the first production.

     

    6.         In
      the event that a change in Hershey Specifications results in an increase or
      decrease in actual conversion costs, Hershey and Callebaut will review
      documented changes and negotiate a new conversion cost that reflects such change
      which will take effect from the date of the change.

     

    7.         All
      Callebaut orders under Hershey supply contracts will be reported to Hershey
      in a
      manner established by Hershey and Callebaut.

     

    8.        
      Product costs will include a financing fee on the Callebaut Raw Materials,
      the
      conversion fee charged by Callebaut and the incremental absorption charge where
      applicable.  For purposes of the financing fee, cocoa based products
      involving forward contracts shall be considered Callebaut Raw
      Materials.  The agreed to financing fee for the subsequent calendar
      year will be fixed at each November Steering Committee Meeting and will reflect
      Callebaut’s estimated cost of  borrowing.

     

    9.         Hershey
      and Callebaut will each designate one contact for all pricing questions and
      other operating issues arising under this agreement or any Supply
      Agreement.

     

     

    E.         Product
      Yields

     

    1.         Each
      Supply Agreement will set forth a waste, loss, and/or overweight allowance
      for
      each ingredient and packaging component used to produce a Product (the
“Established Yields”). Callebaut shall be responsible for all additional
      ingredients and packaging components required as a result of Callebaut’s failure
      to comply with Established Yields.

     

    2.         Hershey
      and Callebaut will review any issues with Established Yields where
      applicable.  Should Hershey and Callebaut agree to adjust the
      Established Yield, the new Established Yield will apply for the following year’s
      production (January-December).  Any adjustment will not be
      retroactive, except as otherwise mutually agreed to by the Parties.

     

     

    F.         Currency

     

    1.         Unless
      otherwise agreed by the Parties, Hershey will pay for Products produced under
      the Monterrey and Robinson Supply Agreements in United States
      Dollars.  Any reference to “Dollars” or “$” in this Agreement or any
      Related Agreement shall be a reference to United States Dollars.

     

    2.         For
      all other production Hershey and Callebaut will agree to the payment currency
      and exchange rates at minimum thirty (30) days before such production under
      the
      Global Supply Agreement or a Subsequent Agreement begins.

     

    3.         Any
      and all currency and exchange rate agreements will be reviewed annually by
      the
      Parties.

     

    4.         Callebaut
      and Hershey will agree on currency exchange rates for use in calendar year
      pricing for those Callebaut Raw Materials that involve currencies other than
      the
      currency used to invoice Hershey for Products.  Callebaut shall be
      responsible for any variances in such currency exchange rates as part of the
      calendar year pricing, except for cases of

     

    
      
        8

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    exceptional
      inflationary events that may affect calendar year pricing.  The
      Parties agree to jointly work towards minimizing the impact of any such
      exceptional inflationary events.

     

     

    G.         Payments
      for Products

     

    1.         Callebaut
      shall issue its invoice for Products produced in accordance with this Agreement
      at the time such Products are shipped or delivered to Hershey in accordance
      with
      the delivery terms.  Hershey shall pay any amount due under this
      Agreement following receipt of Callebaut's invoice on terms of net twenty-three
      (23) days from date of receipt of invoice plus a seven day grace period to
      enable weekly grouping of payments, except in the case of a good faith
      dispute.

     

    2.         To
      ensure prompt payment of all invoices, Callebaut shall include on each invoice
      the information requested by Hershey in a form agreed in advance.

     

    3.         Invoices
      shall be electronically submitted. The date of receipt of electronic invoices
      will be the date following the date upon which it is transmitted.

     

    4.         All
      payments shall be electronically transferred to the designated bank account
      of
      the Party to which such payments are due.

     

    5.         A
      Party may only set off amounts it is owed by the other Party if permitted by
      applicable law and against amounts it owes the other Party in the event the
      Party seeking to offset payments has a credible concern about the other Party’s
      creditworthiness.

     

     

    H.         Productivity

     

    1.         Hershey
      and Callebaut recognize the need to provide the highest quality product at
      the
      lowest possible cost.  To accomplish this objective, Hershey and
      Callebaut agree to cooperate in a continuing effort to improve the productivity
      of all operations.

     

    2.         These
      productivity efforts should target but are not limited to, (i) improved yields
      for packaging and ingredient utilization; (ii) optimization of output in all
      phases of the production process; (iii) obtaining the lowest possible cost
      per
      unit on packaging and ingredients; (iv) labor reductions through effective
      utilization; (v) reduction of overweights; and (vi) minimization of
      sampling/testing of the Products.

     

    3.         It
      is recognized that Callebaut’s ability to share conversion cost productivity for
      its Robinson and Monterrey facilities will be dependent on Callebaut’s ability
      to fill available capacity with third party volume. Hershey and Callebaut agree
      to share in all productivity improvements related to production output, labor
      reductions, etc.  Notwithstanding the above, Hershey shall receive
      100% of all cost improvements resulting from reductions in unit costs for
      ingredients and packaging, minimization of all sampling/testing, as well as
      savings from Hershey funded capital investments of the Products, except where
      such Hershey funded capital investments improve the overall efficiency of the
      Callebaut facility whereby Callebaut third-party volume may also benefit from
      such investments.  Hershey's share of the resulting productivity
      efforts shall be in the form of conversion cost reductions or Established Yield
      improvements.

     

     

    I.         Supply
      of Ingredients and Packaging

     

    
      
        9

      

      
        
        

        
          

        

      

      
        
        

      

    

                           
          1.        For Callebaut
      Raw Materials, Callebaut will issue its purchase orders directly with suppliers,
      and will honor all payment terms of the suppliers on a timely basis, except
      in
      the case of a good faith dispute. Callebaut will use only suppliers that have
      been previously approved in writing by Hershey for the
      Products.  Hershey shall in no way be a party to or responsible for
      Callebaut’s contracts for Callebaut Raw Materials.

     

    2.         For
      Hershey Raw Materials, Hershey shall, at its option, either invoice Callebaut
      or
      direct the supplier to invoice Callebaut directly, and Callebaut shall pay
      any
      amount due Hershey hereunder following receipt of Hershey’s invoice on terms of
      net twenty-three (23) days from date of receipt of invoice plus a seven day
      grace period to enable weekly groupings of payments or shall pay within the
      supplier’s stated terms, except, in each instance, in the case of a good faith
      dispute.

     

    3.         With
      Hershey’s prior approval, such approval not to be unreasonably withheld,
      Callebaut may source ingredients and packaging from other Callebaut divisions
      at
      prevailing market rates.  The Parties recognize that Hershey has
      existing contractual obligations for the procurement of Cocoa Ingredients at
      the
      date of this Agreement.  Upon the expiration of these contractual
      commitments, Hershey will source Cocoa Ingredients from Callebaut for the
      Robinson Facility as long as Callebaut meets Hershey’s product specifications,
      quality requirements, time requirements, commercial cost assumptions, capacity
      and volume requirements, and geographic need.  Hershey will source
      Cocoa Ingredients from Callebaut for the Monterrey facility from the start
      of
      production as long as Callebaut meets Hershey’s product specifications, quality
      requirements, time requirements, commercial cost assumptions, capacity and
      volume requirements, and geographic need.

     

    4.         Where
      commercially reasonable, the Hershey Raw Materials volumes shall only be used
      in
      the Products and Callebaut agrees not to use Hershey Raw Materials volumes
      in
      any other product it may produce.  Should it not be commercially
      reasonable to ensure that Hershey Raw Materials are used solely in the Products
      (e.g. due to common silos, manufacturing processes, etc.), Hershey shall
      nonetheless receive the benefit of use of raw materials of equal quality and
      specification in the manufacture of the Products and in pricing on invoices
      received from Callebaut.

     

    5.         Callebaut
      shall inspect and sample all Hershey Raw Materials and Callebaut Raw Materials
      for conformance with Hershey's Specifications and shall reject and withhold
      from
      use in the manufacture of the Products any Hershey Raw Materials or Callebaut
      Raw Materials determined by Callebaut not to be in conformity with such Hershey
      Specifications.  Callebaut will maintain available line capacity and
      inventories of ingredients and packaging materials in sufficient amounts to
      support the production requirements of the Products set forth on the Shipment
      Plan issued by Hershey to Callebaut. Callebaut acknowledges that certain
      ingredients used in the products have a limited shelf life.  Callebaut
      agrees to utilize the ingredients in such a manner as to utilize first those
      ingredients which have been in inventory the longest.

     

     

    J.         Quality
      Assurance

     

    1.         Without
      limiting its warranties herein, Callebaut shall manufacture the Products and
      perform the sampling and testing procedures for the Products in accordance
      with
      the Hershey Specifications.

     

    
      
        10

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.         All
      Products delivered by Callebaut to Hershey under the terms of this Agreement
      shall conform to the Hershey Specifications, applicable laws and regulations
      of
      the United States Food and Drug Administration, the United States Public Health
      Service, Mexico’s Ministry of Health, Canadian Regulatory Agency Requirements,
      and any and all other applicable United States, Canadian and Mexican federal,
      state and local laws and regulations.  All water used in connection
      with the Products, whether it be for processing or cleaning, shall meet the
      United States Environmental Protection Agency and applicable Canadian and
      Mexican safe drinking water standards.  All required testing will be
      done at Callebaut's expense, which expense shall be included as part of the
      conversion fee charged by Callebaut, however, Hershey shall reimburse Callebaut
      separate and apart from the conversion cost for all third-party testing expense,
      if any, incurred by Callebaut between the date of this Agreement and December
      31, 2007 while the Parties work towards the certification of the Callebaut-owned
      labs.  Should such certification be delayed beyond December 31, 2007
      due to the action or inaction of Hershey, the final reimbursement date will
      be
      extended until such date as the Callebaut-owned labs are so
      certified.  Should, however, such certification be delayed because of
      Callebaut failing to provide Hershey with necessary information or Callebaut’s
      failure to implement remedial actions, if any, validly identified by Hershey,
      Callebaut will be responsible for any third-party testing expense incurred
      after
      December 31, 2007.  Should Hershey change the Hershey Specifications
      at any time during the term of this Agreement, the Parties will negotiate in
      good faith any required adjustment to conversion costs.

     

    3.         Callebaut
      warrants that (i) it will perform under this Agreement in accordance with all
      the terms hereof, (ii) that its processing of the Products hereunder shall
      be in
      accordance with the highest standards prescribed by the Good Manufacturing
      Practices regulations promulgated by the United States Food and Drug
      Administration, all applicable United States, Canadian and Mexican laws and
      regulations and Hershey's Specifications, and (iii) that all Products, when
      delivered to Hershey, will comply with Hershey’s Specifications, shall not be
      adulterated or misbranded within the meaning of the United States Federal Food,
      Drug and Cosmetic Act (the “Act”), applicable Canadian and Mexican law, and
      regulations promulgated thereunder, and shall not be articles which may not,
      under the provisions of Section 404 or 505 of the Act, be introduced into
      interstate commerce.

     

    4.         Callebaut
      shall reimburse Hershey for any costs or losses incurred by Hershey as a result
      of any Product rejected by Hershey for failure to conform to the requirements
      of
      this Agreement.  Callebaut's obligation under the prior sentence shall
      include reimbursing Hershey for all reasonable cleaning, transportation,
      retrieval, storage and destruction costs caused by the defective
      Product.  The above remedies are not exclusive and, subject to the
      provisions of Section 10(F), Hershey shall be entitled to all remedies hereunder
      and allowed by law.  Callebaut shall not be required to remedy any
      defects or discrepancies caused substantially by inherent defects in Hershey's
      Specifications.  All major incidents shall be reported to the Steering
      Committee at the quarterly meeting following the incident.

     

    
      
        11

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.         Callebaut
      shall remove any Product rejected by Hershey or not otherwise meeting the
      requirements of this Agreement in accordance with Hershey's reasonable
      instructions.  Rejected Product sourced under any Supply Agreement
      that has already been packaged by Hershey into finished product shall be
      disposed of in accordance with Hershey’s reasonable instructions.  The
      method of disposition of rejected Products sourced under either the Mexico
      Supply Agreement or the Robinson Supply Agreement that has not already been
      packaged by Hershey into finished product shall be at Callebaut’s
      discretion.  With Hershey’s prior approval, and provided that
      Callebaut can meet Hershey Specifications and in compliance with applicable
      laws
      and regulations, rejected Products may be blended into future Products sold
      to
      Hershey.  Callebaut may also blend any such rejected Product into any
      other products for third-party volume at a rate of 5%, or such greater rate
      as
      may be approved by Hershey.   Callebaut will be responsible for
      the cost of normal disposal of Product rejected for failure to satisfy the
      requirements of this Agreement.

     

    6.         Upon
      reasonable notice, and during Callebaut's normal operations, Callebaut shall
      permit Hershey or its designees access to Callebaut's facilities utilized in
      the
      receiving, handling, packaging and storage of packaging, ingredients and
      Products for the purpose of ascertaining Callebaut's compliance with Good
      Manufacturing Practices and Hershey Specifications and quality assurance
      requirements, provided however, that unless permitted under another agreement
      between the Parties, Hershey shall not have access to any part of Callebaut's
      facilities which are not used directly in the manufacture of Products or the
      receiving, storage, handling or packaging of any Products or ingredients or
      which are subject to limited access by agreement of the
      Parties.  Notwithstanding the foregoing, Callebaut shall have the
      final responsibility for complying with all requirements of this Agreement,
      the
      Hershey Specifications, Good Manufacturing Practices and other legal
      requirements.  Callebaut shall promptly notify Hershey of any material
      discrepancies noted during any inspection of Callebaut's production facilities
      by the United States Food and Drug Administration, the United States Public
      Health Service, Canadian Regulatory Authority, Mexico’s Ministry of Health, any
      state or any other legally authorized federal, state or local regulatory agency
      and shall also provide Hershey a list of any discrepancies noted by any
      authorities relating to the manufacture, packaging and storage by Callebaut
      of
      the Products, the ingredients and the packaging materials.

     

    7.         Callebaut
      shall keep complete, true and accurate records with respect to compliance with
      the requirements of the Hershey Specifications set forth on Exhibit
      A.  Callebaut shall allow Hershey or its designees reasonable access
      to these records insofar as they relate to the Products, potential product
      recalls, potential product claims and government inquiries.  These
      records will be maintained for a period of not less than 6 years.

     

    8.         Callebaut
      represents that it has registered its facilities as required under the United
      States Food and Drug Administration Bioterrorism Act.  Callebaut will
      remain in compliance with such Act through the term of this
      Agreement.  Callebaut agrees to contact Hershey promptly (but in no
      event later than one hour after Callebaut knows or should have known of the
      incident) if any of the Callebaut facilities used for the production of any
      Product are affected by security violation, theft or other incident that is
      reasonably likely to impair Product integrity.

     

    
      
        12

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    9.         The
      Parties incorporate the Product Guaranty and Indemnity Agreement attached as
      Exhibit E into this Agreement.

     

     

    K.         Delivery,
      Title Transfer, Risk of Loss and Insurance

     

    1.         Delivery
      terms, transfer of title to and risk of loss of the Products are addressed
      in
      each of the Supply Agreements.

     

    2.         Callebaut
      shall carry and maintain Insurance coverage as defined in Exhibit
      C.  The limits specified in Exhibit C are based upon factors existing
      at the commencement of this Agreement.  The Parties agree that these
      limits may be increased or decreased, by mutual agreement, throughout the term
      of this Agreement.  Should an increase in insurance coverage be
      required, the Parties agree to negotiate in good faith any required adjustments
      to the calendar year pricing for the Products, effective for the January to
      December period following the increase in coverage.  Hershey shall be
      named as additional named insured on each of the foregoing
      policies.  Callebaut shall pay all premiums when due and within such
      period of time as is necessary to keep such insurance in full force and
      effect.  Current certificates of insurance shall be provided to
      Hershey to evidence the coverage required by this Section
      2(K)(2).  Such certificates shall provide for thirty (30) days advance
      written notice to Hershey of any cancellation of the relevant policy and
      Callebaut shall provide thirty (30) days advance written notice of any material
      change to the relevant policy.

     

     

    
      	
              3.

            	
              STEERING
                COMMITTEE

            

    

     

    A
      Steering Committee shall be established to assess performance and address issues
      arising under this Agreement and the Related Agreements.  Each Party
      shall assign representatives from their management teams to guide the
      relationship between the Parties, ensure compliance with this Agreement and
      the
      Related Agreements, resolve issues and disputes, measure and assess performance,
      and evaluate proposals from either side.  At least one senior
      executive or officer of each Party shall participate on the Steering
      Committee.  The respective individuals from each Party responsible for
      production, quality, logistics and pricing are expected to attend Steering
      Committee meetings.  The Steering Committee will meet quarterly. A
      Party wishing to modify or amend any provision of any agreement between the
      Parties may submit the proposed change to the Steering Committee for its
      consideration along with the basis for the proposal, any adjustment in costs
      or
      schedules of delivery of Products resulting from the change, and any other
      impact of the change, to the other Party.  No change will be accepted
      until agreed upon by both Parties in writing and signed by each
      Party.

     

     

    
      	
              4.

            	
              STANDARDS
                FOR PERFORMANCE

            

    

     

    A.         Both
      Parties agree to develop two-way performance metrics by which performance under
      this Agreement will be evaluated.  A scorecard with key performance
      indicators and metrics will be jointly developed by September 30, 2007 (the
      “Performance Scorecard”).  Performance bands will be set forth as follows
      on the Performance Scorecard for the determination of aggregate average
      quarterly scores: (i) Acceptable; (ii) Immediate action; and (iii)
      Unacceptable.   For purposes of clarity, the Parties both
      acknowledge that an “Unacceptable” rating will result in the event of a
      significant disruption in the supply of Products arising from Callebaut’s action
      or inaction under this Agreement.

     

    
      
        13

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    B.         Prior
      to each Steering Committee meeting, each Party will complete their respective
      Performance Scorecard for both their and the other Party’s performance over the
      past three, six and twelve months.  Performance Scorecard reports will
      be reviewed at the quarterly Steering Committee meeting.  If the
      Steering Committee identifies issues that need improvement, the responsible
      Party will provide corrective action plans and results within a reasonable
      amount of time commensurate with the severity of the issue.  The
      Performance Scorecard shall be developed in sufficient form and content to
      clearly define those key performance indicators which, if not achieved, would
      constitute a breach under the terms of this Agreement or the Supply
      Agreements.

     

     

    
      	
              5.

            	
              NON-COMPETE
                AGREEMENT

            

    

     

    A.         The
      parties agree to the Non-Compete provisions set forth in Exhibit F.

     

     

    
      	
              6.

            	
              NON-SOLICITATION

            

    

     

    Except
      as expressly permitted in any
      related agreement the Parties agree not to solicit the other Party’s employees
      for employment. The Parties further agree that public advertisements or postings
      of job openings in the ordinary course of a Party’s business are not considered
      solicitation hereunder.

     

     

    
      	
              7.

            	
              CONFIDENTIALITY

            

    

     

    A.         “Confidential
      Information” shall mean Proprietary Information and Trade Secret
      Information.  With respect to information disclosed by Hershey to
      Callebaut, Confidential Information shall mean non-public information,
      including, without limitation, all information Callebaut may receive, or has
      received since September 1, 2006, from Hershey concerning the processing of,
      production of, marketing of, distribution of, selling of, strategic plans of,
      recipes for and quantities of the Products Hershey requests Callebaut to process
      and package and any recipes, ingredients, suppliers, product specifications,
      production output, sales volume, consumer insights, costing/financial
      information, productivity, research/developmental activities, location of
      manufacturing or Hershey manufacturing processes used in the production of
      the
      Products.  With respect to information disclosed by Callebaut to
      Hershey, Confidential Information shall mean non-public information, including,
      without limitation,  all information Hershey may receive, or has
      received since September 1, 2006, from Callebaut concerning Callebaut’s
      facilities, financial and production capabilities, processing of, production
      of,
      marketing of, distribution of selling of and strategic plans of Callebaut
      products and any recipes, ingredients, suppliers, product specifications,
      production output, sales volume, costing/financial information, productivity
      and
      research/developmental activities.

     

    B.         “Proprietary
      Information” shall mean that Confidential Information of a Party that is not
      included in Trade Secret Information.

     

    C.         “Trade
      Secret Information” shall mean that information of a Party which that Party
      considers to be confidential and proprietary in nature which relates to the
      product and ingredient formulas and production processes which are critical
      to
      the ongoing and future business of such Party, the unauthorized disclosure
      or
      use of which could result in materially adverse technical and/or commercial
      results to that Party whether disclosed in writing, orally or by observation
      (including without limitation by e-mail or other electronic
      communication).

     

    
      
        14

      

      
        
        

        
          

        

      

      
        
        

      

    

    D.         Any
      Confidential Information disclosed or otherwise disseminated from one Party
      (hereafter, the “Disclosing Party”) to the other Party (hereafter, the
“Receiving Party”) whether such information is conveyed orally or in written
      form (including without limitation by e-mail or other electronic communication)
      or by observation or in any other manner, shall be treated and regarded as
      confidential and proprietary information, which is the exclusive and sole
      property of the Disclosing Party in accordance with the following
      provisions:

     

    1.           Each
      Party’s obligations with respect to the Confidential Information of the other
      Party shall apply with respect to any Confidential Information covered by and
      disclosed in accordance with the terms of this Agreement, the Innovation
      Agreement and the Mutual Non-Disclosure Agreements between the Parties dated
      April 10, 2007, March 16, 2006 and December 21, 2005, which Mutual
      Non-Disclosure Agreements are hereby superseded.

     

    2.           All
      Trade Secret Information disclosed or otherwise provided to a Receiving Party
      hereunder after the date of this Agreement shall either (i) be disclosed in
      writing (including electronic documents) bearing a legend or other statement
      that the disclosed information is classified as “Confidential” by the Disclosing
      Party; or (ii) with respect to information provided orally or by providing
      access to restricted areas for observation purposes, subsequently identified
      as
“Confidential” by the Disclosing Party in a written document and provided to the
      Receiving Party within thirty (30) days of disclosure.  All product
      and ingredient formulas and production processes of one Party received by the
      other Party relating to the Products shall be deemed Trade Secrets unless
      otherwise explicitly specified by the Disclosing Party at the time of the
      disclosure.  The Parties agree to work through the Research Committee
      with respect to disclosure of Trade Secrets pertaining to the Innovation
      Agreement in accordance with the terms of the Innovation
      Agreement.  If the Receiving Party disagrees with the identification
      of a Trade Secret set forth in any Disclosing Party documentation, it shall
      raise such issue with the Research Committee as defined in the Innovation
      Agreement and the Research Committee shall revise the identification as may
      be
      necessary to satisfy both the Disclosing Party and the Receiving Party
      consistent with the collaborative spirit of the Innovation
      Agreement.  Proprietary Information may also bear a legend or other
      statement classifying the information as “CONFIDENTIAL” but such designation
      will not cause such Proprietary Information to be treated as Trade Secret
      Information.

     

    3.           In
      addition to the foregoing obligations with respect to treatment of Confidential
      Information, the Parties shall also comply with any protocols, conditions and
      other restrictions imposed by the Research Committee with respect to handling,
      retention and dissemination of Confidential Information of a Party, including
      any procedures intended to facilitate return of such Confidential Information
      to
      the Disclosing Party.

     

    4.           A
      Receiving Party shall keep all Confidential Information received from a
      Disclosing Party strictly confidential and secret and shall not divulge,
      communicate or transmit such Confidential Information to any other
      Persons.  A Receiving Party shall permit disclosure of such
      Confidential Information only to such of its directors, officers, employees,
      contractors (other than competitors of the Disclosing Party), and advisors
      who
      need such information for the purpose of implementing this Agreement and the
      agreements which are exhibits hereto, provided that such Persons are subject
      to
      confidentiality and use restrictions equivalent to those contained
      herein.  If a Receiving Party desires to share Confidential
      Information with a Person outside of the scope of this Agreement, it shall
      first
      obtain the consent of the Disclosing Party.  A Receiving Party shall
      use at least such efforts to maintain the confidentiality of such
      Confidential

     

    
      
        15

      

      
        
        

        
          

        

      

      
        
        

      

    

    Information
      as it uses to protect the confidentiality of its own Confidential Information,
      but in no event shall a Receiving Party use less than commercially reasonable
      efforts to maintain such confidentiality.  Callebaut agrees that
      Hershey’s proprietary flavors and essences disclosed pursuant to the April 10,
      2007 Mutual Non-Disclosure Agreement shall be considered to be Trade Secret
      Information and it will not chemically analyze, reverse engineer and disassemble
      such flavors and essences.  Callebaut acknowledges that the formulas
      and non-public processes disclosed in connection with Callebaut’s production of
      semi-sweet chocolate chips for sale to Hershey are Hershey Trade
      Secrets.

     

    5.           A
      Receiving Party shall not utilize Trade Secret Information it has received
      from
      a Disclosing Party in any manner, except for the limited purposes authorized
      in
      this Agreement or the agreements which are Exhibits hereto, provided that
      Confidential Information that is an Innovation shall be treated in accordance
      with the provisions of the Innovation Agreement.  Otherwise,
      Proprietary Information, which is not an Innovation, may be freely used but
      not
      disclosed except as otherwise permitted hereunder by the Parties.

     

    6.           These
      obligations of confidentiality and restrictions on use of Confidential
      Information shall survive the termination or expiration of this Agreement for
      a
      period of five (5) years, except for Trade Secret Information which shall remain
      subject to obligations of confidentiality and restrictions on use
      indefinitely.  Upon the later of (i) the termination or expiration of
      this Agreement and (ii) the termination or expiration of a Receiving Party’s
      authorization to use specific Confidential Information, the Receiving Party
      shall return all documents and other materials containing Confidential
      Information that were disclosed by the Disclosing Party to the Disclosing Party
      together with all copies and other embodiments thereof or otherwise dispose
      of
      such documents and materials (including without limitation deletion or
      destruction of electronic data) in accordance with the Disclosing Party’s
      written direction.  In the event of inadvertent disclosure of Trade
      Secret Information, the Disclosing Party shall have the right and obligation
      to
      promptly request return of such Trade Secret Information and the Receiving
      Party
      shall use reasonable efforts to promptly collect and return all such Trade
      Secret Information.

     

    7.           The
      obligations herein concerning Confidential information of the Parties under
      this
      Agreement shall not pertain to information which: (i) is generally known to
      the
      public at the time of its disclosure or becomes generally available to the
      public at any time thereafter, (ii) is disclosed to the Receiving Party by
      a
      third party who has the right to disclose such information, (iii) was known
      to
      the Receiving Party prior to its disclosure under this Agreement, or (iv) is
      independently developed by the Receiving Party without use of the Disclosing
      Party's Confidential Information.

     

    8.           In
      the event of a breach or threatened breach of the provisions of this Section
      7,
      the non-breaching Party shall be entitled to an injunction restraining the
      breaching Party from disclosing, in whole or in part, any of the
      above-referenced information or from rendering any service to any person, firm,
      corporation, association, or other entity to whom such information has been
      disclosed or is threatened to be disclosed.  Except as otherwise
      stated in Section 7(D)(9), nothing herein shall be construed as prohibiting
      the
      non-breaching Party from pursuing any other remedies available at law or in
      equity for such breach or threatened breach, including the recovery of
      damages.

     

    
      
        16

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    9.           Notwithstanding
      anything else herein, the Parties acknowledge that certain Residual Information
      disclosed as part of the Parties’ collaborative efforts under the Innovation
      Agreement may be retained within their respective companies, including, without
      limitation the minds of employees and data systems, and subsequently used by
      a
      Receiving Party even though the Receiving Party has used its commercially
      reasonable efforts to refrain from using and to destroy or return such Residual
      Information to the Disclosing Party and complied with any protocols, conditions
      and other restrictions imposed by the Research Committee with respect to
      handling, retention and dissemination of Confidential
      Information.   The Parties agree that they will not bring any
      legal actions or proceedings against one another arising from such use of
      Residual Information exchanged under the operation of the Innovation
      Agreement.  “Residual Information” shall mean such Confidential
      Information provided from a Disclosing Party which in documentary form
      (including, without limitation, written, graphic or electronic form), is
      retained in the files of a Party after it has used reasonable efforts to locate
      any and all copies and disseminations thereof and which do not on their face
      indicate that they are the Confidential Information of the Disclosing Party,
      and
      such Confidential Information retained in the minds/memories of employees and
      other permissible Persons which Confidential Information has not been
      specifically and intentionally committed to memory.

     

     

    
      	
              8.

            	
              TERM

            

    

     

    A.         The
      term of this Agreement shall commence on the date noted on the first page of
      this Agreement and shall expire, unless earlier terminated, on December 31,
      2022.  The term of this Agreement may be extended or renewed at any
      time as agreed in writing by the Parties.

     

    B.         Terms
      for each of the Related Agreements are defined therein and may vary from the
      term of this Agreement.

     

     

    
      	
              9.

            	
              TERMINATION

            

    

     

    A.         Either
      Party shall be entitled to terminate this Agreement at any time within 60 days
      of the occurrence of any of the following: (i) if the other Party files a
      voluntary petition in bankruptcy, is declared bankrupt, makes an assignment
      for
      the benefit of creditors or suffers the appointment of a receiver or a trustee
      of its assets, (ii) if the other Party breaches the conditions of Section 7
      in a
      material manner which results in Losses for the non-breaching Party or (iii)
      as
      set forth in Section 16.

     

    B.         In
      addition, Hershey shall be entitled to terminate this Agreement at any time
      within 60 days of the occurrence of any of the following:

     

    1.         a
      material breach by Callebaut of the conditions of Section 5A;

     

    2.         Callebaut’s
      failure to address a significant disruption in the supply or quality of
      Products;

     

    3.         the
      disposition by Callebaut, in whole or in part, of its business (other than
      to
      its one or more of Affiliates) and such disposal materially affects the ability
      of Callebaut to duly perform under this Agreement or any Related Agreement;
      or

     

    4.         a
      direct or indirect change of control in the legal or beneficial ownership of
      Callebaut and such change of control is in favor of:

     

     

    
      
        17

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              (a)

            	
              one
                of Hershey’s direct competitors as set forth on Exhibit D, or those
                successors or assigns to those competitive
                businesses;

            

    

     

    
      	
               

            	
              (b)

            	
              a
                person or entity that might reasonably bring Hershey into disrepute;
                or

            

    

     

    
      	
               

            	
              (c)

            	
              a
                person or entity whose financial standing and/or past and/or present
                business practices presents Hershey, based on Hershey's reasonable
                determination, with significant risk in connection with this
                Agreement.

            

    

     

    C.         Upon
      any termination of this Agreement, each Related Agreement shall also terminate,
      unless the Parties otherwise agree in writing.

     

     

    
      	
              10.

            	
              INDEPENDENT
                CONTRACTORS

            

    

     

    Nothing
      in this Agreement or any Related Agreement is intended or shall be deemed to
      constitute a partnership, agency, employer/employee or joint venture
      relationship between the Parties.  Neither Party shall be deemed to be
      or to have been acting on the behalf of the other Party by reason of any action
      hereunder or under any Related Agreement.  All activities by the
      Parties hereunder or under any Related Agreement shall be preformed by them
      as
      independent contractors.  Neither Party shall incur any debt or make
      any commitment for or on behalf of the other Party, except to the extent
      specifically required hereby or by the provisions of a Related
      Agreement.

     

     

    
      	
              11.

            	
              REPRESENTATIONS
                AND WARRANTIES

            

    

     

    A.         Callebaut's
      Representations.  Callebaut hereby represents and warrants to
      Hershey that the following are true and correct as of the effective date of
      this
      Agreement.

     

    1.         Callebaut
      has full power to execute and perform its obligations under this Agreement,
      to
      perform the covenants and transactions contemplated hereby, and, without
      limitation, to grant Hershey the rights defined in the Product Development
      and
      Innovation Agreement of even date herewith;

     

    2.         Callebaut
      is not a party to, nor will it become a party to during the Term, any agreement
      which restricts or otherwise is in conflict with the terms of this
      Agreement;

     

    3.         all
      corporate action on the part of Callebaut, its officers and directors necessary
      for the authorization, execution and delivery of this Agreement and the
      performance of all obligations of Callebaut hereunder have been taken;
      and

     

    4.         this
      Agreement constitutes a valid and legally binding obligation of Callebaut
      enforceable in accordance with its terms.

     

     

    B.         Hershey's
      Representations.  Hershey hereby represents and warrants to
      Callebaut that the following are true and correct as of the effective date
      of
      this Agreement:

     

    1.         Hershey
      has full power to execute and perform its obligations under this Agreement
      and
      to perform the covenants and transactions contemplated hereby;

     

    2.         Hershey
      is not a party to, nor will it become a party to during the Term, any agreement
      which restricts or otherwise is in conflict with the terms of this
      Agreement;

     

     

    
      
        18

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.         all
      corporate action on the part of Hershey, its officers and directors, necessary
      for the authorization, execution and delivery of this Agreement and the
      performance of all obligations of Hershey hereunder have been taken;
      and

     

    4.         this
      Agreement constitutes a valid and legally binding obligation of Hershey
      enforceable in accordance with its terms.

     

     

    
      	
              12.

            	
              INDEMNIFICATION

            

    

     

    A.         Callebaut
      shall defend and indemnify Hershey and its Affiliates, and their respective
      officers, directors, employees, agents, successors and permitted assigns (each
      a
“Hershey Indemnitee”; it being understood that Hershey constitutes a Hershey
      Indemnitee), against all Losses arising out of, caused by, happening in
      connection with or otherwise related to this Agreement or any Related Agreement
      and the work performed by Callebaut or any of its Affiliates hereunder or
      thereunder, including, but not limited to, Callebaut's manufacture, loading,
      transportation, unloading, storage, handling, packaging or use of the Hershey
      Raw Materials, the Callebaut Raw Materials and/or any Products except, however,
      when caused:

     

    1.         by
      the action or inaction of any Hershey Indemnitee;

     

    2.         by
      Callebaut's reliance on and adherence to the Hershey Specifications or written
      directions provided by Hershey; or

     

    3.         by
      the use of Hershey Raw Materials which were defective at the time of delivery
      to
      Callebaut.

     

    B.           Callebaut
      further acknowledges and agrees, to the maximum extent permitted by applicable
      law, to indemnify and defend each Hershey Indemnitee against losses in the
      form
      of fines, penalties and assessments resulting from Callebaut’s breach of the
      terms of this Agreement or any Related Agreement, or the violation of any law,
      regulation and/or ordinance directly or indirectly relating to Callebaut's
      performance of this Agreement or any Related Agreement.

     

    C.           Hershey
      shall have the right, but not the duty, to participate, at its own cost, in
      the
      defense of any relevant claim or litigation with attorneys of Hershey's
      selection.

     

    D.           Hershey
      shall defend and indemnify Callebaut and its Affiliates, and their respective
      officers, directors, employees, agents, successors and permitted assigns (each
      a
“Callebaut Indemnitee”; it being understood that Callebaut constitutes a
      Callebaut Indemnitee), against all Losses arising out of, caused by, happening
      in connection with or otherwise related to:

     

    1.         the
      action or inaction of any Hershey Indemnitee;

     

    2.         Callebaut's
      reliance on and adherence to the Hershey Specifications or written directions
      provided by any Hershey Indemnitee;

     

    3.         the
      use of Hershey Raw Materials ingredients which were defective when made
      available to Callebaut; or

     

    4.         any
      breach by Hershey or any Affiliate of Hershey of this Agreement or any Related
      Agreement.

     

    E.           Callebaut
      shall have the right, but not the duty, to participate, at its own cost, in
      the
      defense of any claim or litigation with attorneys of Callebaut's
      selection.

     

    
      
        19

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    F.           Anything
      contained in this Agreement or any Related Agreement to the contrary
      notwithstanding, neither Party hereto shall have any liability under any
      provision of this Agreement or any Related Agreement (whether pursuant to this
      Section 12 or pursuant to any cause of action or complaint initiated by or
      on
      behalf of any Party) for any punitive or special damages, loss of business
      reputation, or 50% of lost future profit,  regardless of whether the
      relevant claim is based on warranty, contract, tort (including negligence or
      strict liability) or otherwise.  Each Party hereto agrees to take all
      reasonable action to mitigate any Losses it may suffer or incur upon and after
      becoming aware of any event which could reasonably be expected to give rise
      to
      any Losses.

     

    G.           Callebaut’s
      and Hershey’s indemnification obligations shall survive the termination or
      expiration of this Agreement and any Related Agreement.

     

     

    
      	
              13.

            	
              FORCE
                MAJEURE

            

    

     

    In
      the
      event that either Party shall be totally or partially unable to fulfill one
      or
      more of its obligations hereunder or under any Related Agreement as a result
      of
      acts or occurrences beyond the control of the Party affected, such as, but
      not
      limited to, actions, omissions or impositions by local, state, provincial,
      federal or national government authorities, fire, flood, earthquake, or other
      natural disaster, acts of God, act of terrorism or revolution or labor unrest,
      the Party so affected shall be totally or partially relieved from fulfilling
      its
      contract obligations during the period of such force majeure.  In
      connection with any such force majeure event, the affected Party shall notify
      the other Party of the circumstances thereof as soon as reasonably possible
      and
      shall propose alternatives to the Steering Committee.  In addition, if
      such force majeure event shall continue for a period of 90 days or longer,
      then
      the other Party shall be entitled to terminate this Agreement or the relevant
      Related Agreement, as applicable, at any time thereafter during which such
      event
      is continuing.

     

     

    
      	
              14.

            	
              NOTICE

            

    

     

    Any
      notice or other writing required or permitted to be given under this Agreement
      or any Related Agreement, except for the separate notice provisions set forth
      in
      the Innovation Agreement, (referred to in this Section 14 as a “notice”) shall
      be deemed duly given if delivered personally (including by recognized delivery
      device), or sent by prepaid, registered mail, or transmitted by fax or other
      form of recorded communication tested prior to transmission to the address
      of
      the applicable Party set out above, if to Hershey to the attention of Senior
      Director, Global Manufacturing Alliances, fax no. 717-534-8232 with a copy
      to
      Legal Counsel, fax no. 717-534-7549, and if to Callebaut to the attention of
      the
      President, North America, fax no. 312-329-7643, with a copy to the Chief
      Financial Officer, North America, fax no. 312-329-7643.  Either Party
      may change the address for notice by notifying the other Party in the manner
      provided in this Section 14.  Any notice which is personally delivered
      shall be deemed to have been given and received on the day it is so delivered,
      unless such day is not a business day, in which case it will be deemed delivered
      on the next business day.  Any notice which is mailed in the manner
      provided for in this Section 14 shall be deemed to have been given and received
      on the 5th
      business day following the date of its mailing.  Any notice
      transmitted by fax or other form of recorded communications shall be deemed
      given and received on the 1st business
      day after
      its transmission.

     

    
      
        20

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              15.

            	
               NO
                WAIVER

            

    

     

    The
      failure of either Party to assert a right hereunder or any Related Agreement
      or
      to insist upon compliance with any terms or conditions of this Agreement or
      any
      Related Agreement shall not constitute a waiver of that right or excuse the
      subsequent performance or nonperformance of any term or condition by the other
      Party.

     

     

    
      	
              16.

            	
              ASSIGNMENTS

            

    

     

    A.           This
      Agreement will be assignable to a successor in interest of substantially all
      of
      a Party’s assets, subject to Hershey’s termination rights set forth in Section
      9.  All other assignments will be subject to the prior written consent
      of the non-assigning Party hereto.

     

    B.           Callebaut
      shall not subcontract the performance of its obligations hereunder or under
      any
      Related Agreement, or permit any other arrangement having similar effect, in
      any
      event other than to an Affiliate of Callebaut, without obtaining the prior
      written consent of Hershey.

     

     

    
      	
              17.

            	
              GOVERNING
                LAW

            

    

     

    This
      Agreement shall be governed and construed in accordance with the laws (excluding
      the conflict of laws rules thereof) of the State of New York.  Each
      Party hereto agrees to submit to the exclusive jurisdiction of the Courts of
      the
      Southern District of New York with respect to this Agreement.

     

     

    
      	
              18.

            	
              REAL
                ESTATE AGREEMENTS

            

    

     

    The
      Parties agree to negotiate in good faith with respect to the Real Estate
      Agreements, such negotiation to begin as soon as practical following execution
      of this Agreement.  In the event the Parties fail to execute the Real
      Estate Agreements before August 31, 2007 either Party may terminate this
      Agreement (which will also result in the termination of all previously executed
      Related Agreements) and upon any such termination neither Party shall have
      any
      further liability to the other with respect to this Agreement or any Related
      Agreement.

     

     

    
      	
              19.

            	
              ENTIRE
                AGREEMENT AND HEADINGS

            

    

     

    This
      Agreement and the Related Agreements constitute the entire agreement between
      the
      Parties with respect to the subject matter hereof and thereof, and any prior
      or
      contemporaneous agreements or understandings related thereto (including the
      Product Purchase and Supply Agreement between the Parties dated December 4,
      2006
      and any letters of intent or confidentiality agreements) are deemed superseded
      hereby.  Neither this Agreement nor any Related Agreement may be
      amended except by an instrument in writing duly executed on behalf of the Party
      against which such amendment is sought to be enforced.  All headings
      utilized herein are inserted for reference only and shall have no effect on
      the
      meaning or construction of any terms of this Agreement.

     

     

    
      	
              20.

            	
              CONFLICTING
                TERMS

            

    

     

    The
      terms
      of this Agreement shall supersede and take precedence over any conflicting
      terms
      found in any Related Agreement or any purchase order or invoice issued by either
      Party.

    
 

    
      
        21

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              21.           
                

            	
               PREPRINTED
                TERMS

            

    

     

    In
      no
      event shall any preprinted terms or conditions found on either Party’s purchase
      orders, invoices or other preprinted forms be considered an amendment or
      modification of this Agreement or any Related Agreement. Such preprinted terms
      or conditions, to the extent in conflict with this Agreement or any Related
      Agreement, shall be considered null and of no effect.

     

     

    
      	
              22.

            	
              BINDING
                EFFECT

            

    

     

    The
      rights created by this Agreement shall inure to the benefit of, and the
      obligations created hereby shall be binding upon, the Parties and their
      respective successors and permitted assigns.

     

    IN
      WITNESS WHEREOF, each of the Parties hereto has executed this Agreement by
      its
      duly authorized representatives as of the date and year first above
      written.

     

    

     

    
      	 	
              BARRY
                CALLEBAUT, AG

            
	 	 
	 	
              By /s/
                Patrick De Maeseneire

               

              Name:
                Patrick De Maeseneire

               

              Title:  Chief
                Executive Officer

            
	 	 
	 	
              THE
                HERSHEY COMPANY

            
	 	 
	 	
              By 
                /s/ Burton H. Snyder   

                                                                     

              Name:
                Burton H. Snyder

               

              Title:  Senior
                Vice President,

                        General
                Counsel & Secretary

            

    

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    
      
        22

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}]]