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Exhibit 10.1

UNITED STATES DISTRICT COURT
DISTRICT OF ARIZONA

JENNIFER BURRITT, INDIVIDUALLY
)
No.  CV-09-00406-PHX-FJM
AND ON BEHALF OF ALL OTHERS
)
(Consolidated)
SIMILARLY SITUATED,
)
CLASS ACTION
 
)
 
Plaintiff,
)
   
)
 
vs.
)
   
)
 
NUTRACEA, BRADLEY
)
 
D. EDSON, TODD C. CROW,
)
 
AND DAVID BENSOL,
)
 
Defendants.
)
 

STIPULATION AND AGREEMENT OF SETTLEMENT

This stipulation and agreement of settlement dated May 17, 2010 (the “Settlement
Stipulation”) is submitted pursuant to Rule 23 of the Federal Rules of Civil
Procedure.  Subject to the approval of the District Court and Bankruptcy Court,
this Settlement Stipulation is entered into by Lead Plaintiff Harvey Pensack
(“Lead Plaintiff”) and additional named plaintiffs Jennifer Burritt and Jose
Medrano (“Named Plaintiffs”), on behalf of themselves and the Class (defined
herein), and by NutraCea, Inc. (“NutraCea” or the “Company”), Bradley D. Edson,
Todd C. Crow, and David Bensol (collectively, “Defendants”), all parties to this
litigation (the “Parties”), by and through their respective counsel.

This Settlement Stipulation is intended by the Parties to fully and finally
compromise, resolve, discharge and settle the Released Claims, as defined
herein, subject to the terms and conditions set forth below and final approval
of the District Court and the Bankruptcy Court.

WHEREAS:

A.            Beginning on February 27, 2009, a Class Action Complaint against
NutraCea, Bradley Edson, Todd Crow and David Bensol, alleging violations of
federal securities laws, Burritt v. NutraCea, Inc., et al., CV-09-00406-PHX-FJM
was filed in the United States District Court for the District of Arizona (the
“Litigation”).  On April 27, 2009, Harvey Pensack filed a Class Action Complaint
on behalf of all purchasers of NutraCea common stock from April 2, 2007 through
February 23, 2009, extending the length of the Class Period.

 
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B.             By Order dated May 29, 2009, the Court appointed: (i) Harvey
Pensack as Lead Plaintiff; (ii) The Rosen Law Firm P.A. as Lead Counsel; and
(iii) Tiffany & Bosco, P.A. as Liaison Counsel.

C.             Lead Plaintiff, Jennifer Burritt and Jose Medrano (Burritt and
Medrano hereinafter “Named Plaintiffs”) filed a Consolidated Class Action
Complaint on July 1, 2009, alleging:  (Count 1) violations of section 10(b) of
the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder
against Defendants NutraCea, Edson, Crow, and David Bensol; (Count 2) violations
of section 20(a) of the Securities Exchange Act of 1934 against Defendants
Edson, Crow and Bensol; (Count 3) violations of section 44-1991(A)(3) &
44-2003(A) of the Arizona Revised Statutes against all Defendants; and (Count 4)
violations of section 44-1999(B) of the Arizona Revised Statutes against Edson,
Crow and Bensol.   Plaintiffs subsequently voluntarily dismissed Mr. Bensol from
the Litigation.  On September 25, 2009, after discovering new facts in support
of their claims, Plaintiffs filed a Second Amended Class Action Complaint for
Violation of federal and Arizona Securities Laws (the “Complaint”) asserting the
same causes of action.

D.             Lead Counsel, on behalf of Plaintiffs, has investigated the
allegations of wrongdoing asserted and the alleged damages suffered by the
Class.  Lead Counsel has analyzed the facts and the applicable law with respect
to the claims against the Defendants and the potential defenses thereto, which
in Lead Plaintiff’s judgment has provided an adequate and satisfactory basis for
the Settlement described herein.

 
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E.             On November 10. 2009 NutraCea filed for a voluntary petition for
relief under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. § 101
et. seq.  The bankruptcy case, entitled In re NutraCea, a California
Corporation, Case No. 2:09-bk-28817-CGC (the “Bankruptcy Case”) is currently
pending before the United States Bankruptcy Court, District of Arizona – Phoenix
Division (the “Bankruptcy Court”).

F.             On or about November 18, 2009, NutraCea filed a complaint in the
Bankruptcy Court , entitled NutraCea v. Harvey Pensack and Jennifer Burritt,
Adv. No. 2:09-ap-01525 (the “Injunction Action”), seeking, among other things,
an injunction against the continued prosecution of the Litigation pending
confirmation of a plan of reorganization.  No answer has yet been filed, but the
Bankruptcy Court has denied two applications for issuance of a temporary
restraining order and preliminary injunction.

G.             On February 24, 2010, the Court granted in part and denied in
part Crow’s Motion to Dismiss, dismissing Plaintiffs’ Section 10(b) and Rule
10b-5 claim against Crow, and denied Edson’s Motion to Dismiss.

H.             On March 31, 2010 Plaintiffs filed an adversary proceeding
against NutraCea in the  Bankruptcy Court, entitled Harvey Pensack v. NutraCea,
Case No. 2-10-bk-00508-CGC (the “Adversary Proceeding”).  The complaint in the
Adversary Proceeding alleges the same claims as the Complaint.  The summons and
complaint in the Adversary Proceeding have not been served.

Settlement Negotiations

I.               The Parties, and the Defendants’ directors and officers
liability insurer, Carolina Casualty Insurance Company, engaged in an extensive
mediation process using a nationally recognized mediator, Hon. Eugene Lynch,
(Retired.), and they have conducted discussions and arm’s length negotiations
with each other with respect to a compromise and settlement of the Litigation.

 
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Defendants’ Denials of Wrongdoing and Liability

J.              Defendants have denied, and continue to deny, each and every
claim and contention alleged by Lead Plaintiff in the Litigation.  Defendants
have expressly denied, and continue to deny, all charges of wrongdoing or
liability against them arising out of any of the conduct, statements, acts or
omissions alleged, or that could have been alleged, in the
Litigation.  Defendants believe that Lead Plaintiff’s allegations of fraud have
no merit and that a class could not be certified under Rule 23.  Defendants also
have denied, and continue to deny, inter alia, the allegations that Lead
Plaintiff or the Class have suffered damage, that the price of NutraCea common
stock was artificially inflated by reasons of alleged misrepresentations,
non-disclosures or otherwise, or that Lead Plaintiffs or the Class were harmed
by the conduct alleged in the Litigation.

K.             Nonetheless, Defendants have concluded that further conduct of
the Litigation would be protracted and expensive, and that it is desirable that
the Litigation be fully and finally settled in the manner and upon the terms and
conditions set forth in this Stipulation.  Defendants also have taken into
account the uncertainty and risks inherent in any litigation, especially in
complex cases like the Litigation.  Defendants therefore have determined that it
is desirable and beneficial to them that the Litigation be settled in the manner
and upon the terms and conditions set forth in this Stipulation without in any
way acknowledging any wrongdoing, fault, liability or damage to Lead Plaintiff
or the Class.

 
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Benefits of the Settlement to the Class

L.             Lead Plaintiff and Lead Counsel believe that the Settlement
provides an excellent monetary recovery for the Class (as defined below) based
on the claims asserted, the evidence developed and the damages that might be
proven by the Class in the Litigation.

M.            Lead Counsel, on behalf of Lead Plaintiff, further recognizes and
acknowledges the expense and length of continued proceedings necessary to
prosecute the Litigation through trial and appeal.  Lead Counsel also has
considered the uncertain outcome and the risk of any litigation, including the
risk that plaintiffs might recover nothing, especially in a complex action such
as this one, as well as the difficulties and delays inherent in any such
litigation.  Lead Counsel is also mindful of the inherent problems of proof and
possible defenses to the Litigation, including being certified as a class
action, and to the federal securities law violations asserted against Defendants
and therefore believe that it is desirable that the Released Claims (as defined
below) be fully and finally compromised, settled and resolved as set forth
herein.  Lead Counsel has also considered that there are several potential
coverage defenses and exclusions that may be applicable to this Litigation,
which could materially affect the potential collectability of any judgment
entered in this Litigation.  Based upon their evaluation, Lead Counsel, on
behalf of Lead Plaintiffs, has determined that the Settlement set forth in this
Settlement Stipulation is fair, reasonable and adequate and in the best
interests of Lead Plaintiffs and the Class.

NOW THEREFORE, without any admission or concession on the part of Lead
Plaintiffs or Lead Counsel of any lack of merit of the Litigation, and without
any admission or concession of any liability or wrongdoing or lack of merit in
the defenses whatsoever by Defendants, it is hereby STIPULATED AND AGREED, by
and among the Parties to this Settlement Stipulation, through their respective
attorneys, subject to approval of the District Court pursuant to Rule 23(e) of
the Federal Rules of Civil Procedure, the Private Securities Litigation Reform
Act of 1995 (“PSLRA”) and other conditions set forth herein, and subject to
approval of the Bankruptcy Court pursuant to Rule 9019, Federal Rules of
Bankruptcy Procedure, and in consideration of the benefits flowing to the
Parties hereto from the Settlement, that the Litigation and all Released Claims
(as defined below) as against the Released Parties (as defined below) shall be
finally and fully compromised, settled, released and dismissed, on the merits
and with prejudice, in the manner and upon and subject to the terms and
conditions set forth herein.

 
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Certain Definitions

1.             The following capitalized terms used in this Settlement
Stipulation shall have the meanings specified below:

(a)           “Authorized Claimant” means any Class Member (as defined below)
whose claim for recovery has been allowed pursuant to the terms of this
Settlement Stipulation.

(b)           “Claim” means the submission to be made by Class Members, on the
Proof of Claim form attached hereto as Exhibit A-2, or as may be required by the
District Court.

(c)           “Claims Administrator” means Strategic Claims Services, the firm
which Lead Counsel requests be appointed by the District Court to administer the
Settlement and disseminate notice to the Class.

(d)           “Class” means the class that is certified by the District Court
for purposes of settlement of the Litigation.  Included in such Class are all
persons who purchased the  common stock of NutraCea during the period from April
2, 2007 through February 23, 2009, inclusive.  Excluded from the Class are the
Defendants, any members of Defendants’ immediate families, any entity in which
any Defendant has a controlling interest, directors and officers of NutraCea,
and the affiliates, legal representatives, heirs, predecessors, successors and
assigns of any such excluded party.

 
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(e)           “Class Members” means Persons (defined below) who are members of
the Class who do not timely and properly exclude themselves therefrom.

(f)            “Defendants” are NutraCea, Inc., Bradley D. Edson,  Todd C. Crow
and David Bensol.  “NutraCea” includes, without limitation, the Company, its
bankruptcy estate and any successor in interest or reorganized entity.

(g)           “Defendants’ Counsel” means the law firms of: (i) Sidley Austin
LLP, 555 California Street, San Francisco, CA 94104, Tel. 415-772-1200, counsel
for the Company and Mr. Bensol; (ii) Fennemore Craig, P.C., 3003 North Central
Avenue Suite 2600 Phoenix, AZ 85012-2913, Tel. (602) 916-5000, counsel for
Edson; and (iii) Foley & Lardner LLP, 555 South Flower Street Suite 3500 Los
Angeles, CA 90071-2411, Tel. 213-972-4500, counsel for Crow.

(h)           “District Court” means the United States District Court for the
District of Arizona.

(i)            “Effective Date” means the first day following the date on which
the Settlement contemplated by this Settlement Stipulation shall become
effective as set forth in 30 below.

(j)            “Escrow Account” means the interest-bearing account established
pursuant to 6-7 herein.

(k)           “Escrow Agent” shall mean Laurence Rosen, Esquire, of the Rosen
Law Firm, P.A., Lead Counsel of the Class.  The Escrow Agent shall perform the
duties set forth in this Settlement Stipulation.

 
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(l)            “Final Approval” means the date that the time for appeal and
review of the Order and Final Judgment (defined below) by the District Court in
the Litigation approving (i) the Settlement and (ii) the release of the Released
Claims as to the Released Parties as fair, adequate and reasonable, and
dismissing the claims of the Lead Plaintiffs and the Class against the
Defendants, with prejudice; or, if any appeal is filed and not dismissed, after
the Order and Final Judgment is upheld on appeal in all material respects and is
no longer subject to review upon appeal or review by certiorari or otherwise,
and the time for any petition for reargument, appeal or review, by certiorari or
otherwise, has expired; or, in the event that the District Court enters an order
and final judgment in a form other than that provided above (“Alternative
Judgment”) and none of the parties hereto elect to terminate this Settlement,
the date that such Alternative Judgment becomes final and no longer subject to
appeal or review by certiorari or otherwise, and the time for any petition for
reargument, appeal or review, by certiorari or otherwise, has expired.

(m)           “Lead Counsel” means The Rosen Law Firm, P.A., selected by Lead
Plaintiff Harvey Pensack and appointed by the District Court to represent the
interests of Lead Plaintiff and the Class.

(n)           “Lead Plaintiff” means Harvey Pensack, appointed by the Court
order as Lead Plaintiff for the Litigation.

(o)           “Carolina” means Defendants’ directors and officers liability
insurer, Carolina Casualty Insurance Company.

(p)           “Net Settlement Fund” shall have the meaning set forth in 5
herein.

 
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(q)           “Order and Final Judgment” means the order(s) and final
judgment(s) to be entered in the Litigation pursuant to 27 of this Settlement
Stipulation and substantially in the form of Exhibit B hereto.

(r)            “Person” and “Persons” means any individual, corporation,
partnership, association, affiliate, joint stock company, estate, trust,
unincorporated association, entity, government and any political subdivision
thereof, or any other type of business or legal entity, any legal
representative, and their spouses, heirs, predecessors, successors,
representatives, agents, or assignees.

(s)           “Plan of Allocation” means the plan for allocating the Net
Settlement Fund (as set forth in the Notice of Pendency and Proposed Settlement
of Class Action) to Authorized Claimants after payment of expenses of notice and
administration of the Settlement, Taxes and Tax Expenses and such attorneys’
fees, costs and expenses as may be awarded by the District Court.  Any Plan of
Allocation is not part of the Stipulation and the Defendants and Released
Persons shall have no liability with respect thereto.

(t)            "Policy" means the insurance policy No. 1849088 issued by
Carolina to the Company and its officers and directors.

(u)           “Preliminary Order” means the Proposed Order Preliminarily
Approving Settlement and Providing for Notice that Lead Counsel and Defendants
will seek from the District Court, substantially in the form attached as Exhibit
A and as described in ¶ 26 below.

(v)           “Publication Notice” means the summary notice of pendency and
proposed settlement for publication substantially in the form attached as
Exhibit A-3.

 
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(w)          “Released Claims” means any and all claims, debts, demands, rights,
liabilities and causes of action, known or Unknown (as defined in 1(ff) ,
asserted in the Litigation and/or the Adversary Proceeding by Lead Plaintiffs or
any Class Member against any of the Released Parties or that might have been
asserted by Lead Plaintiffs or any Class Member against any of the Released
Parties in any forum, arising out of, based upon or related to their purchase of
NutraCea stock during the Class Period or the allegations, transactions, facts,
matters, events, acts, representations or omissions asserted, set forth, or
referred to in the Complaint or the settlement or resolution of the Litigation
(including but not limited to any claims for attorneys’ fees by Lead Plaintiff
or any Class Member), or the Injunction Action.

(x)            “Released Parties” means Defendants and members of their
immediate families, and any of their current, former, or future parents,
subsidiaries, affiliates, partners, joint venturers, officers, directors,
principals, shareholders, members, employees, attorneys, accountants, advisors,
insurers (including but not limited to Carolina), reinsurers, agents (acting in
their capacity as agents), associates, and any other individual or entity in
which any Defendant has a controlling interest or which is related to or
affiliated with any of the Defendants or their current, former, and future legal
representatives, heirs, successors in interest or assigns.

(y)           “Settlement” means the settlement as set forth in this Settlement
Stipulation.

(z)           “Settlement Amount” means $1.5 million, and in addition, fifty
percent (50%) of any funds remaining in the Policy after payment of all Loss
from all Claims, Securities Claims, and notices of potential Claims submitted
under the Policy (as those terms are defined under the Policy), except that if
the amount remaining of the Policy limit after all such payments is less than
$150,000, Carolina shall have no obligation to pay the remainder into the
Settlement Fund. The Settlement Amount shall be paid entirely by Carolina.

 
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(aa)         “Settlement Fund” means the payment made pursuant to 4 herein.

(bb)         “Settlement Hearing” means the final hearing to be held by the
Court to determine: (1) whether the proposed Settlement should be approved as
fair, reasonable and adequate; (2) whether all Released Claims should be
dismissed with prejudice; (3) whether an order approving the Settlement should
be entered thereon; and (4) whether the allocation of the Settlement Fund should
be approved.

(cc)         “Settlement Notice” means the Notice of Pendency and Settlement of
Class Action which is to be sent to Class Members substantially in the form
attached hereto as Exhibit A-1.

(dd)         “Taxes” means any taxes due and payable with respect to the income
earned by the Settlement Fund, including any interest or penalties thereon.

(ee)         “Tax Expenses” means any expenses and costs incurred in connection
with the payment of Taxes (including, without limitation, expenses of tax
attorneys and/or accountants and expenses relating to the filing or failure to
file all necessary or advisable tax returns).

(ff)          “Unknown Claims” means any and all Released Claims that Lead
Plaintiffs or any Class Member does not know or suspect to exist in his, her or
its favor at the time of the release of the Released Parties.  With respect to
any and all Released Claims, the parties stipulate and agree that upon the
Effective Date, Lead Plaintiffs shall expressly, and each Class Member shall be
deemed to have, and by operation of the Order and Final Judgment shall have,
expressly waived any and all provisions, rights and benefits conferred by any
law of any state or territory of the United States, or principle of common law,
which is similar, comparable or equivalent to Cal. Civ. Code § 1542, which
provides:

 
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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

Lead Plaintiffs and Defendants acknowledge, and Class Members by operation of
law shall be deemed to have acknowledged, that the inclusion of “Unknown Claims”
in the definition of Released Claims was separately bargained for and was a key
element of the Settlement.

SCOPE AND EFFECT OF SETTLEMENT

2.             The obligations incurred pursuant to this Settlement Stipulation
shall be in full and final disposition of the Litigation as against Defendants
and any and all Released Claims as against all Released Parties.

3.             (a)           Upon the Effective Date of this Settlement, Lead
Plaintiff, Named Plaintiffs and each of the Class Members (including but not
limited to any Class Member who is a party to any other action, arbitration or
other proceeding who is asserting claims related to the Released Claims against
any of the Defendants or any of the Released Parties that are pending on the day
of Final Approval) on behalf of themselves, their heirs, joint tenants, tenants
in common, beneficiaries, executors and administrators, successors, attorneys,
insurers and assigns, and any person they represent, shall release and shall be
deemed to have released, dismissed and forever discharged the Released Claims
against each and all of the Released Parties, with prejudice and on the merits,
without costs to any party.  Further, Lead Plaintiff and all Class Members, on
behalf of themselves, their current and former heirs, executors, administrators,
successors, attorneys, insurers and assigns, expressly covenant not to assert
any claim or action against any of the Defendants, Carolina, or any of their
agents, insurers, or their re-insurers, derivatively on behalf of NutraCea that
(i) arises out of or relates to any of the allegations, transactions, facts,
matters, events, acts, representations or omissions asserted, set forth, or
referred to in the Complaint or otherwise alleged, asserted or contended in the
Litigation or (ii) that could have been alleged, asserted or contended in any
forum by the Class or any of the Class Members against any of the Released
Parties which arises out of, relates to, or is based upon the allegations,
transactions, facts, matters, events, acts, representations or omissions
asserted, set forth, or referred to in the Complaint, and shall forever be
enjoined from commencing, instituting or prosecuting any such claim.  The
foregoing is not a release by NutraCea, its bankruptcy estate or any successor
in interest or reorganized entity of any claims or action it may have against
Released Parties.

 
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(b)           Lead Plaintiff and all Class Members, whether or not any such
person submits a Proof of Claim, or otherwise shares in the Settlement Fund, on
behalf of themselves and each of their predecessors, successors, assigns,
personal representatives, heirs and any other person who purports to claim
through them, will be deemed by this Settlement to release and forever discharge
the Released Parties from any and all of the Released Claims.  As of the
Effective Date, Lead Plaintiff and all Class Members and anyone claiming through
or on behalf of any of them, are forever barred and enjoined from commencing,
instituting, prosecuting or continuing to prosecute any action or other
proceeding in any court of law or equity, arbitration tribunal, administrative
forum, or other forum of any kind, asserting against any of the Released
Parties, and each of them, any of the Released Claims.  Without limiting the
foregoing, this includes the filing of a proof of claim in the Bankruptcy Case
on the assertion of any right to payment from NutraCea or its bankruptcy estate.

 
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(c)           Defendants, including any and all of their respective successors
in interest, predecessors, representatives, trustees, executors, administrators,
heirs, assigns or transferees, immediate and remote, and any person or entity
acting for or on behalf of, or claiming under any of them, and each of them,
will be deemed by this Settlement to release and forever discharge Lead
Plaintiff, Named Plaintiffs and all Plaintiffs’ counsel in the Litigation from
any and all claims, known or unknown, arising out of or relating to their
filing, prosecution or settlement of the Litigation, except for claims to
enforce the Settlement.  As of the Effective Date, Defendants are forever barred
and enjoined from commencing, instituting, prosecuting or continuing to
prosecute any action or other proceeding in any court of law or equity,
arbitration tribunal, administrative forum, or other forum of any kind,
asserting against any such known or unknown Claims against Lead Plaintiff, Named
Plaintiffs, Class Members or any Plaintiffs’ Counsel.

(d)            In accordance with Section 21D-4(f)(7)(A) of the Private
Securities Litigation Reform Act of 1995, 15 U.S.C. see 78U-4(f)(7)(A), the
Released Parties are discharged or released from all claims for contribution
that have been or may be brought by or on behalf of any Persons relating to the
Settlement of the Released Claims.  As of the Effective Date, any and all
Parties are forever barred and enjoined from commencing, instituting,
prosecuting or continuing to prosecute any action or proceeding asserting such
claim for contribution and the Released Persons are forever barred and enjoined
from commencing, instituting, prosecuting or continuing to prosecute any action
or proceeding asserting such claim for contribution.

 
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4.              Upon the Effective Date, the parties to the Injunction Action
will file a stipulation of dismissal of that action with prejudice, with all
parties to bear their own costs and expenses for that Action.

THE SETTLEMENT CONSIDERATION

5.              In full and complete settlement of the Released Claims,
Defendants have agreed to the Settlement Amount.  Defendants shall cause
Carolina to pay $1.5 million on or before thirty (30) calendar days following
the date of the entry of the Preliminary Order, into the Escrow Account
established for the Settlement Fund by Lead Counsel for the benefit of the Class
Members.  Within 30 days following the resolution and discharge of all of
Carolina’s obligations to pay all Loss under the Policy from all Claims,
Securities Claims, and notices of potential Claims submitted under the Policy,
as those terms are defined in the Policy, Carolina shall pay fifty percent of
the amount then remaining of the Policy limit, if any, into the Escrow Account;
provided however Carolina shall not be obligated to pay fifty percent of the
remainder of the Policy limit if the amount then remaining of the Policy limit
is less than $150,000.  When Carolina has discharged its obligation to pay all
Loss in connection with all Claims, Securities Claims, and notices of potential
Claims submitted under the Policy, Carolina shall deliver a Loss Run indicating
the Loss paid from the Policy.  Carolina and Lead Plaintiff shall enter into a
supplemental agreement more fully describing the rights and obligations
governing payment of the remainder of the Policy to the Settlement Fund.  In
addition, NutraCea agrees, as consideration for the Settlement, to pay for the
mailing of Notice of the Settlement, which may be included with another mailing
in connection with the Bankruptcy Case, and to do so by _________, the date(s)
prescribed by the Court.

 
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6.              The Settlement Fund, net of any Taxes and Tax Expenses, shall be
used to pay 1) the notice and administration costs referred to in 6 hereof, 2)
the attorneys’ fee and expense award referred to in 12-15 hereof, and 3) the
remaining administration expenses referred to in 9, 17 hereof.  The balance of
the Settlement Fund after the above payments shall be the “Net Settlement Fund,”
which shall be distributed to the Authorized Claimants as provided in 16-25
hereof.  All costs and expenses incurred by or on behalf of the Lead Plaintiffs
and the Class associated with the Settlement and approved by the Court shall be
paid from the Settlement Fund and in no event shall any of the Released Parties,
except as NutraCea described by paragraph 4 above, bear any further or
additional responsibility for any such costs or expenses beyond payment of the
Settlement Amount.

7.              Within fifteen (15) business days after counsel for Carolina
receives a copy of the Preliminary Order as entered by the District Court, the
Escrow Agent shall be permitted to pay up to $50,000 of the Settlement Fund to
the Claims Administrator for reasonable out-of-pocket costs in connection with
providing notice of the Settlement to the Class (“Notice”) and for other
reasonable out-of-pocket administrative expenses (the “Notice and Administration
Fund”) without further Court order.

8.             Upon written agreement of the parties, or order of the District
Court, additional amounts may be transferred from the Settlement Fund to the
Notice and Administration Fund.  The Escrow Agent shall not disburse funds from
the Notice and Administration Fund except as provided in this Settlement
Stipulation, or by an order of the District Court, or with the written agreement
of counsel for all parties.  All funds held by the Escrow Agent shall be deemed
to be in the custody of the District Court and such funds shall remain subject
to the jurisdiction of the District Court until such time as the funds shall be
distributed or returned to Defendants or Carolina pursuant to this Stipulation
and/or further order of the District Court.  The Escrow Agent shall hold the
funds in an interest-bearing bank account insured by the FDIC and/or United
States Agency or Treasury securities or obligations.  Neither Defendants nor
Carolina shall be liable for the loss of any portion of the Settlement Fund.

 
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9.              Upon the payment of the Settlement Fund or any portion thereof,
the parties agree to treat the Settlement Fund as a Qualified Settlement Fund
within the meaning of Treasury Regulation § 1.468B-1 and the Claims
Administrator shall be responsible for timely making such elections as are
necessary or advisable to carry out the provisions of this paragraph, including
but not limited to the relation-back election (as defined in Treasury Reg.
§ 1.468B-1) to the earliest permitted date.  Such elections shall comply with
the procedures and requirements contained in such Regulations.  Additionally, it
shall be the responsibility of the Claims Administrator to prepare and deliver
the necessary documentation for signature by all necessary parties, and
thereafter to cause the appropriate filing(s) to occur.  The Claims
Administrator and Lead Counsel, as required, shall do all things that are
necessary or advisable to carry out the provisions of this paragraph and
Defendants shall reasonably cooperate with the Claims Administrator and Lead
Counsel to carry out the provisions of this paragraph.

 
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10.           All Taxes (including any interest or penalties) arising with
respect to the income earned by the Settlement Fund after the Settlement Amount
is paid into a segregated account, including any Taxes or Tax detriments that
may be imposed upon Defendants with respect to any income earned by the
Settlement Fund for any period during which the Settlement Fund does not qualify
as a “qualified settlement fund” (limited by the amount of simple interest
earned on the Settlement Fund at the LIBOR  and not any higher interest rate
that Defendants may earn on the Settlement Fund) for Federal or state income tax
purposes and all Tax Expenses shall be considered to be a cost of administration
of the Settlement and shall be paid out of the Settlement Fund.  The Released
Parties shall not have any liability or responsibility for any such Taxes or Tax
Expenses.  The Settlement Fund shall indemnify and hold each of the Released
Parties harmless for Taxes and Tax Expenses (including, without limitation,
Taxes payable by reason of any such indemnification) as well as any liability or
obligation whatsoever relating to the administration of the Settlement Fund, the
distribution of the Net Settlement Fund, the Plan of Allocation, the
determination, administration, or calculations of Claims, or any losses incurred
in connection therewith.  Lead Counsel, or their agents, shall timely and
properly file all informational and other tax returns necessary or advisable
with respect to the Settlement Fund and the distributions and payments
therefrom, including, without limitation, the tax returns described in Treas.
Reg. § 1.468B-2(k), and to the extent applicable, Treas. Reg.
§ 1.468B-2(l).  Such returns shall be consistent with the terms hereof and in
all events shall reflect that all such Taxes, including any interest or
penalties, on the income earned by the Settlement Fund shall be paid out of the
Settlement Fund, subject to the limitations set forth in this paragraph.  Lead
Counsel, or their agents, shall also timely pay Taxes and Tax Expenses, subject
to the limitations set forth in this paragraph, out of the Settlement Fund, and
are authorized to withdraw, without prior order of the District Court, from the
Settlement Fund amounts necessary to pay Taxes and Tax Expenses.  The parties
hereto agree to cooperate with the Claims Administrator, each other, and their
tax attorneys and accountants to the extent reasonably necessary to carry out
the provisions of this Stipulation.  The Released Parties shall have no
responsibility or liability for the acts or omissions of Lead Counsel or their
agents, as described herein.

11.           This is not a claims-made settlement.  As of the Effective Date,
Defendants shall have no right to the return of the Settlement Fund or any
portion thereof irrespective of the number of Claims filed, the collective
amount of losses of Authorized Claimants, the percentage of recovery of losses,
or the amounts to be paid to Authorized Claimants from the Settlement Fund.  Any
undistributed money from the Settlement Fund that cannot be distributed cost
effectively to a Class Member shall be donated to one or more non-sectarian,
not-for-profit 501(c)(3) organization(s) designated by Carolina.

 
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12.           The finality of the Settlement shall not be conditioned on any
ruling by the District Court concerning the Plan of Allocation or the award of
attorneys’ fees and expenses.  Any order or proceeding relating to a request for
approval of the Plan of Allocation, or the award of attorneys’ fees and expenses
or any appeal from any order relating thereto or reversal or modification
thereof, shall not operate to terminate the Settlement or affect or delay the
Effective Date or the effectiveness or finality of the Order and Final Judgment
and the release of the Released Claims.  There shall be no distribution of any
of the Settlement Fund to any Class Member until the Plan of Allocation is
finally approved and such order of approval is affirmed on appeal and/or is no
longer subject to review by appeal or certiorari, and the time for any petition
for rehearing, appeal, or review, by certiorari or otherwise, has expired.

ATTORNEYS’ FEES AND EXPENSES

13.           Lead Counsel will apply to the District Court for an award from
the Settlement Fund of attorneys’ fees plus reimbursement of actual
expenses.  Such amounts as are awarded by the District Court shall be payable
from the Settlement Fund to Lead Counsel pursuant to 15,17.  Lead Counsel shall
allocate the attorneys’ fees and expense awards amongst Plaintiffs’ counsel in a
manner in which Lead Counsel in good faith believes reflects the contributions
of each such counsel to the prosecution and settlement of the action.

14.           The Released Parties shall have no responsibility or liability
for, and shall take no position with respect to, Lead Counsel’s application for
an award of attorneys fees or expenses, or application for an award to Lead
Plaintiff, or the allocation of any award of fees and expenses that the District
Court may make in this action to Lead Counsel or Lead Plaintiff.  In addition,
Defendants shall take no position as to the proposed Plan of Allocation for the
Settlement Fund.

 
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15.           The procedure for and amounts of any award of attorneys’ fees and
expenses or award to Lead Plaintiff, and the allowance or disallowance by the
District Court thereof, shall not be a condition of the Settlement.  Lead
Counsel shall request that their application for an award of attorneys’ fees and
expenses and award to Lead Plaintiff be considered by the District Court
separately from the District Court’s consideration of the fairness and adequacy
of the Settlement.  Any order or proceedings relating to such request, or any
appeal from any order relating thereto or reversal or modification thereof,
shall not operate to terminate the Settlement or affect or delay the Effective
Date or the effectiveness or finality of the Order and Final Judgment and the
release of the Released Claims.  The finality of the Settlement shall not be
conditioned on any ruling by the District Court concerning Lead Counsel’s
application for attorneys’ fees and expenses.

16.           Except as otherwise provided in this paragraph, the attorneys’
fees and expenses awarded by the District Court shall be paid to Lead Counsel
from the Settlement Fund within five (5) business days of the date the District
Court enters an order awarding such fees and expenses.  In the event that the
Effective Date does not occur, or the Order and Final Judgment is reversed or
modified in any way that affects the award of attorney fees and expenses, or the
Settlement Stipulation is terminated for any other reason, then each counsel
receiving fees or expenses under this provision shall, within ten (10) business
days from receiving notice from Defendants’ Counsel or from a court of
appropriate jurisdiction, refund to the Settlement Fund or to Carolina, either
the full amount of the fees and expenses previously received by it pursuant to
these provisions or an amount consistent with any modification of the Order and
Final Judgment with respect to the fee and expense award.  Lead Counsel and any
other Plaintiffs’ counsel’s law firm that receives fees and expenses, on behalf
of itself and each partner and/or shareholder of it, agrees that the law firm
and its partners and/or shareholders are subject to jurisdiction of the District
Court for the purpose of enforcing the provisions of this paragraph, and each
shall be jointly and severally liable for repayment of all attorneys’ fees and
expenses awarded by the District Court.  Furthermore, without limitation, Lead
Counsel and any other Plaintiffs’ Counsel’s law firm that receives fees and
expenses, and each such firm's partners and/or shareholders, agree that the
District Court may, upon application of the Defendants, summarily issue orders,
including, without limitation, judgments and attachment orders and may make
appropriate findings of or sanctions for contempt against that firm or any of
its partners and/or shareholders should such law firm fail timely to repay fees
and expenses pursuant to this paragraph.

 
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DISTRIBUTION TO AUTHORIZED CLAIMANTS
AND ADMINISTRATION OF SETTLEMENT

17.           Lead Counsel or the Claims Administrator, subject to the
supervision, direction and approval of the District Court, shall administer and
calculate the Claims submitted by Class Members, oversee distribution of the
Settlement Fund and perform all claims administration procedures necessary or
appropriate in connection therewith.  The Released Parties, except NutraCea as
provided in paragraph 4 above with respect to the inclusion of Notice in another
bankruptcy mailing, shall have no liability, obligation or responsibility for
the Class notice, administration or processing of claims or disbursement of the
Net Settlement Fund, including without limitation, determinations as to the
validity of any Proof of Claim, the amounts of claims, distributions of the
Settlement Fund, or any loss incurred by the Escrow Agent or the Claims
Administrator and Defendants shall take no position in regard to such
matters.  Defendants shall cooperate in the administration of the Settlement
only to the extent reasonably necessary to effectuate its terms as requested by
Lead Counsel.

 
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18.           The Settlement Amount and Fund shall be applied as follows:

(a)         To pay all costs and expenses incurred in connection with providing
notice to the Class, locating Class Members, soliciting claims, assisting with
the filing of claims, administering and distributing the Settlement Fund to the
Class Members, processing proofs of claim, processing requests for exclusion and
costs;

(b)         To pay Taxes and Tax Expenses owed by the Settlement Fund;

(c)         Subject to the approval and further order(s) of the District Court,
for payment of all attorneys’ fees and expense reimbursement as may be awarded
by the District Court to Lead Counsel, who may make payment therefrom to other
Plaintiff’s counsel as the former deems appropriate based upon the work done by
such other Plaintiff’s counsel and such other Plaintiff’ counsel’s relative
contribution to the prosecution and settlement of the Actions;

(d)         Subject to the approval and further order(s) of the District Court,
and upon the Effective Date, to distribute the Net Settlement Fund (as defined
in ¶ 5) to Authorized Claimants as provided herein and in the manner set forth
in the notice attached hereto as Exhibit A-1 (which notice shall include a Plan
of Allocation of the Net Settlement Fund), or as otherwise ordered by the
District Court in order to participate in such distribution of the Net
Settlement Fund.

 
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19.           For purposes of determining the extent, if any, to which a Class
Member shall be entitled to be treated as an “Authorized Claimant,” the
following conditions shall apply:

(a)           Each Class Member seeking to participate in distributions from the
Net Settlement Fund shall be required to timely submit to the Claims
Administrator a separate signed Proof of Claim (in the form attached hereto as
Exhibit A-2), supported by such documents as are designated therein, including
proof of all purchases and sales of the NutraCea securities listed during the
Class Period, the Claimant’s loss, or such other documents or proof as Lead
Counsel, in their discretion, may deem acceptable;

(b)           All Proofs of Claim must be submitted by the date specified in the
Settlement Notice unless such period is extended by Order of the District
Court.  Any Class Member who fails to submit a Proof of Claim within such period
shall be forever barred from receiving any payment pursuant to this Settlement
Stipulation (unless, by Order of the District Court, a later submitted Proof of
Claim by such Class Member is approved), but in all other respects shall be
subject to and bound by the provisions of this Settlement Stipulation and the
Settlement including the terms of the Order and Final Judgment to be entered in
the Litigation and the releases of the Released Claims provided for herein, and
will be barred from bringing any action or proceeding against any of the
Released Parties concerning the Released Claims.  Provided that it is received
before the motion is made to distribute the Settlement proceeds to the Class, a
Proof of Claim shall be deemed to have been submitted when postmarked, if
received with a postmark indicated on the envelope and if mailed by first-class
mail, postage prepaid, and addressed in accordance with the instructions
thereon.  In all other cases, the Proof of Claim shall be deemed to have been
submitted when actually received by the Claims Administrator;

(c)           Each Proof of Claim shall be submitted to and reviewed by the
Claims Administrator, under the supervision of Lead Counsel, who shall determine
in accordance with this Settlement Stipulation the extent, if any, to which each
claim shall be allowed, subject to review by the District Court pursuant to
subparagraph (e) below;

 
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(d)           Proofs of Claim that do not meet the submission requirements may
be rejected.  Prior to rejection of a Proof of Claim, the Claims Administrator
shall communicate with the claimant in order to afford the claimant opportunity
to remedy any curable deficiencies in the Proof of Claims submitted.  The Claims
Administrator shall notify, in a timely fashion and in writing, all claimants
whose Proofs of Claim it proposes to reject in whole or in part, setting forth
the reasons therefor, and shall indicate in such notice that the claimant whose
claim is to be rejected has the right to a review by the District Court if the
claimant so desires and complies with the requirements of subparagraph (e)
below;

(e)           If any claimant whose claim has been rejected in whole or in part
desires to contest the rejection, the claimant must, within twenty (20) days
after the date of mailing of the notice required in subparagraph (d) above,
serve upon the Claims Administrator a notice and statement of reasons indicating
the claimant’s grounds for contesting the rejection along with any supporting
documentation, and requesting a review thereof by the District Court.  If a
dispute concerning a claim cannot be otherwise resolved, Lead Counsel shall
present the request for review to the District Court.  If a claimant fails to
serve upon the Claims Administrator the notice required in this paragraph, his,
her or its Proof of Claim, to the extent rejected, will not be allowed; and

(f)           The administrative determination of the Claims Administrator
accepting and rejecting claims shall be presented for approval to the District
Court, on notice to Defendants’ Counsel.

20.           Each claimant shall be deemed to have submitted to the
jurisdiction of the District Court with respect to his, her or its claim, and
the claim will be subject to investigation and discovery under the Federal Rules
of Civil Procedure, provided that such investigation and discovery shall be
limited to the claimant’s status as a Class Member and the validity and amount
of the claimant’s claim.  No discovery shall be allowed on the merits of the
Litigation or Settlement in connection with processing of the Proofs of Claim.

 
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21.           No Class Member or Authorized Claimant shall have any claim
against Lead Counsel, Lead Plaintiff, any other Plaintiff and Plaintiff’s
counsel in the Litigation, any of the Released Parties or their counsel, the
Claims Administrator or any employees or agents of any of the foregoing, based
on the distributions made substantially in accordance with this Settlement
Stipulation or as otherwise approved or directed by the District Court.  Payment
pursuant to this Settlement Stipulation shall be deemed final and conclusive
against all Class Members.  All Class Members whose claims are not approved by
the District Court shall be barred from participating in distributions from the
Net Settlement Fund, but otherwise shall be subject to and bound by the
provisions of this Settlement Stipulation and the Settlement, including the
terms of the Order and Final Judgment to be entered in the Litigation and the
releases provided for herein, and will be barred from bringing any action
against any of the Released Parties concerning the Released Claims.

22.           All proceedings with respect to the administration, processing and
determination of claims described by 18 of this Settlement Stipulation and the
determination of all controversies relating thereto, including disputed
questions of law and fact with respect to the validity of claims, shall be
subject to the jurisdiction of the District Court.

23.           The Net Settlement Fund shall be distributed to Authorized
Claimants by the Claims Administrator only after the Effective Date and
after:  (i) all timely Proofs of Claim have been processed and all claimants
whose claims have been rejected or disallowed, in whole or in part, have been
notified and provided the opportunity to be heard concerning such rejection or
disallowance; (ii) all objections with respect to all rejected or disallowed
claims have been resolved by the District Court, and all appeals therefrom have
been resolved or the time therefor has expired; (iii) all matters with respect
to attorneys’ fees, costs and disbursements have been resolved by the District
Court, all appeals therefrom have been resolved or the time therefor has
expired; and (iv) all costs of administration have been paid.

 
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24.           In the interests of achieving substantial justice, Lead Counsel
shall have the right, but not the obligation, to advise the Claims Administrator
to waive what they deem to be formal or technical defects in any submitted
Proofs of Claim.

25.           Following distribution of the Net Settlement Fund, the Claims
Administrator shall maintain the completed Proofs of Claim on file for three
years after the Effective Date.

26.           Each Member of the Class certified for purposes of settlement only
shall be bound by all determinations and judgments in the Litigation concerning
the Settlement unless such person shall mail, by first class mail, a written
request for exclusion from the Class.  In order to be valid, a Request for
Exclusion must state: (1) the name and address of the person requesting
exclusion; (2) written evidence of the person’s purchases and sales of NutraCea
securities made during the Class Period, including the dates, the number of
shares, and prices paid or received per share for each such purchase or sale;
and (3) that the person wishes to be excluded from the Class.  Such Person
should also state his telephone number.  All persons who submit valid and timely
Requests for Exclusion in the manner set forth in this paragraph shall have no
rights under this Stipulation, shall not share in the distribution of the Net
Settlement Fund, and shall not be bound by the Stipulation of Settlement or the
Judgment.

 
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TERMS OF PRELIMINARY ORDER IN
CONNECTION WITH SETTLEMENT PROCEEDINGS

27.           Promptly after execution of this Settlement Stipulation, Lead
Counsel and Defendants’ Counsel shall submit the Settlement Stipulation together
with its Exhibits to the District Court and shall jointly apply for entry of a
Preliminary Order in connection with settlement proceedings substantially in the
form annexed hereto as Exhibit A, providing for, among other things, preliminary
approval of the Settlement and notice to the Class of the Settlement
Hearing.  The Preliminary Order (Exhibit A) to be submitted to the Court shall
contain exhibits substantially in the form set forth in (i) the Notice of
Pendency and Settlement of Class Action (the “Settlement Notice”) (Exhibit A-1
to Preliminary Order); (ii) the Proof of Claim and Release (Exhibit A-2 to
Preliminary Order); and (iii) the Summary Notice of Proposed Class Action
Settlement and Hearing Thereon (“Publication Notice”) (Exhibit A-3 to the
Preliminary Order).  Promptly following approval of the Preliminary Order by the
District court, and in conjunction with the mailing of the Preliminary Notice,
Bankruptcy Counsel to NutraCea shall file a motion pursuant to Rule 9019,
Federal Rules of Bankruptcy Procedure, for approval of the Settlement by the
Bankruptcy Court.  Defendants and Carolina are not liable or responsible for the
method of, or representations made in, the Settlement Notice or Publication
Notice.

TERMS OF ORDER AND FINAL JUDGMENT

28.           If the Settlement contemplated by this Settlement Stipulation is
approved by the District Court, Lead Counsel and Defendants’ counsel shall
jointly request that the District Court enter an Order and Final Judgment
substantially in the form annexed hereto as Exhibit B.  The Settlement is
expressly conditioned upon, among other things, the entry of an Order and Final
Judgment substantially in the form annexed hereto as Exhibit B.

 
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SUPPLEMENTAL AGREEMENT

29.           Simultaneously herewith, Lead Counsel and Defendants are executing
a “Supplemental Agreement” setting forth certain conditions under which this
Settlement Stipulation may be withdrawn or terminated at the discretion of
Defendants if potential Class Members who purchased in excess of a certain
number of damaged shares of NutraCea securities exclude themselves from the
Class.  The Supplemental Agreement shall not be filed with the District Court
except that the substantive contents of the Supplemental Agreement may be
brought to the attention of the District Court, under seal, if so requested by
the District Court, or if a dispute arises among the Parties concerning the
Supplemental Agreement’s interpretation or application.  The Parties will keep
the terms of the Supplemental Agreement confidential, except if compelled by
judicial process to disclose the Supplemental Agreement.  In the event the
Settlement and this Settlement Stipulation are terminated, the provisions of
6-9, 31, 32, 33, 36, 37, 38 and 48 shall survive termination.

EFFECTIVE DATE OF SETTLEMENT, WAIVER OR TERMINATION

30.           The Effective Date of Settlement shall be the latest date when all
the following shall have occurred:

(a)           entry of the Preliminary Order;

(b)           approval by the District Court of the Settlement and certification
of the Class following notice to the Class and a hearing in accordance with Rule
23 of the Federal Rules of Civil Procedure;

(c)           expiration of any time for appeal or review of the District
Court’s entry of the Order and Final Judgment, or, if any appeal is filed and
not dismissed, after the Order and Final Judgment is upheld on appeal in all
material respects and is no longer subject to review upon appeal or review by
certiorari or otherwise, and the time for any petition for reargument, appeal or
review, by certiorari or otherwise, has expired, or, in the event that the
District Court enters an order and final judgment in form other than that
provided above (“Alternative Judgment”) and none of the parties hereto elect to
terminate this Settlement, the date that such Alternative Judgment becomes final
and no longer subject to appeal or review by certiorari or otherwise, and the
time for any petition for reargument, appeal or review, by certiorari or
otherwise, has expired; and

 
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(d)          approval by the Bankruptcy Court of this Settlement pursuant to
Rule 9019, Federal Rules of Bankruptcy Procedure, and the expiration of any time
for appeal or review of such order, or, if any appeal is filed and not
dismissed, after such order is upheld on appeal in all material respects and is
no longer subject to review upon appeal or review by certiorari or otherwise,
and the time for any petition for reargument, appeal or review, by certiorari or
otherwise, has expired; and

(e)            Carolina, on behalf of the Defendants shall have paid $1.5
million of the Settlement Amount, as set forth in ¶ 5 above.

 
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31.           Defendants’ Counsel or Lead Counsel shall have the right to
terminate the Settlement and this Settlement Stipulation by providing written
notice of their election to do so (“Termination Notice”) to the other within
thirty (30) days of the date on which: 1) the District Court declines to enter
the Preliminary Order; 2) the Bankruptcy Court refuses to approve this
Settlement Stipulation or any material part of it; 3) the District Court refuses
to approve this Settlement Stipulation or any material part of it, provided,
however, that the allowance or disallowance by the Court of any application for
an award of attorneys’ fees and expenses shall not be material; 4) the District
Court declines to enter the Order and Final Judgment; 5) the Order and Final
Judgment is vacated, modified or reversed in any material respect by the United
States Court of Appeals for the Ninth Circuit or the United States Supreme
Court; 6) an Alternative Judgment is vacated, modified or reversed in any
material respect by the United States Court of Appeals for the Ninth Circuit or
the United States Supreme Court; or 7) the Effective Date of Settlement
otherwise does not occur, except that if such Effective Date does not occur as a
result of Carolina failing to pay the first $1.5 million of the Settlement
Amount as required by paragraph 4 above, Defendants may not terminate the
Settlement or the Settlement Stipulation based on Carolina’s non-payment.  If
Carolina fails to pay the $1.5 million of the Settlement Amount, then Defendants
agree to take all reasonable and necessary steps (including litigation, if
necessary) to enforce Carolina’s promise to pay its agreed $1.5 million portion
of the Settlement Amount as set forth in this Settlement Stipulation.  If
Carolina fails to pay the Settlement Amount, then Lead Plaintiffs may move to
enforce the Settlement and Settlement Stipulation against Carolina and seek a
judgment against Carolina.  Neither a modification nor a reversal on appeal of
any award of fees, costs and expenses by the Court to Lead Counsel (or any
Plaintiff’s counsel) shall be deemed a material modification of the Order and
Final Judgment or this Stipulation.  Defendants may also terminate the
Settlement and this Settlement Stipulation pursuant to 28.  The foregoing list
is not intended to limit or impair the parties’ rights under the law of
contracts of the State of Arizona with respect to any breach of this Settlement
Stipulation.  In the event the Settlement and this Settlement Stipulation are
terminated, the provisions of 6-9, 31, 32, 33, 36, 37, 38 and 48 shall survive
termination.

 
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32.           In the event the Settlement and this Settlement Stipulation are
terminated or if the Effective Date fails to occur for any reason, the parties
to this Settlement Stipulation shall be deemed to have reverted nunc pro tunc to
their respective status in the Litigation as of the date and time immediately
prior to the execution of this Settlement Stipulation and, except as otherwise
expressly provided, the parties shall proceed in all respects as if this
Settlement Stipulation and any related orders had not been entered and without
any prejudice in any way from the negotiation, fact or terms of this Settlement.

33.           In the event this Settlement Stipulation is terminated or if the
Effective Date fails to occur for any reason, then within ten (10) business days
after written notice is sent by Lead Counsel or Defendants’ Counsel, the balance
of the Settlement Fund, less any expenses for Notice or administration of the
Settlement Fund paid or incurred but not yet paid, shall be refunded to
Carolina, including interest accrued thereon.  In such event, the parties to
this Settlement Stipulation shall be deemed to have reverted nunc pro tunc to
their respective status as of the date and time immediately before the execution
of this Settlement Stipulation and, except as otherwise expressly provided, they
shall proceed in all respects as if this Settlement Stipulation and related
orders had not been entered and without prejudice in any way from the
negotiation, fact or terms of this Settlement.  In the event the Settlement and
this Settlement Stipulation are terminated, the provisions of 6-9, 31, 32, 33,
36, 37, 38 and 48 shall survive termination.

NO ADMISSION OF WRONGDOING

34.           This Settlement Stipulation, whether or not consummated, and any
proceedings taken pursuant to it:

(a)           shall not be offered or received against any Defendant, any other
Released Party, Lead Plaintiffs or the Class as evidence of, or be deemed to be
evidence of, any presumption, concession or admission by any of the Defendants
or any of the other Released Parties or by any of the Lead Plaintiffs or the
Class with respect to the truth of any fact alleged by Lead Plaintiffs or the
validity, or lack thereof, of any claim that had been or could have been
asserted in the Litigation or in any litigation, or the deficiency of any
defense that has been or could have been asserted in the Litigation or in any
litigation, or of any liability, negligence, fault or wrongdoing of Defendants
or other Released Parties;

 
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(b)           shall not be offered or received against any of the Released
Parties as evidence of a presumption, concession or admission of any fault,
misrepresentation or omission with respect to any statement or written document
approved or made by any Released Party, or against Lead Plaintiff or the Class
as evidence of any infirmity in the claims of Lead Plaintiff and the Class;

(c)            shall not be offered or received against any of the Released
Parties, Lead Plaintiffs or the Class as evidence of a presumption, concession
or admission with respect to any liability, negligence, fault or wrongdoing, or
in any way referred to for any other reason as against any of the parties to
this Settlement Stipulation, in any arbitration proceeding or other civil,
criminal or administrative action or proceeding, other than such proceedings as
may be necessary to effectuate the provisions of this Settlement Stipulation;
provided, however, that if this Settlement Stipulation is approved by the
District Court, the Released Parties may refer to it to effectuate the liability
protection granted them hereunder;

(d)           shall not be construed against any of the Released Parties, Lead
Plaintiff or the Class as an admission or concession that the consideration to
be given hereunder represents the amount which could be or would have been
recovered after trial; and

(e)            shall not be construed as or received in evidence as an
admission, concession or presumption against Lead Plaintiff or the Class or any
of them that any of their claims are without merit or that damages recoverable
under the Securities Complaint would not have exceeded the Settlement Fund.

 
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35.           This Settlement Stipulation and the Settlement may be pleaded as a
full and complete defense to any action, suit or other proceeding that may be
instituted, prosecuted or attempted with respect to any of the Released
Claims.  The Released Parties may offer the Settlement Stipulation or Order and
Final Judgment from the Litigation in any other action that may be brought
against them by any Class Member or other Released Party in order to support a
defense or counterclaim based on principles of res judicata, collateral
estoppel, release, good faith settlement, judgment bar or reduction or any
similar defense or counterclaim.  The Class Members and Defendants agree that
any such proceeding would cause irreparable injury to the party against whom it
is brought and that the District Court or any court of competent jurisdiction
may enter an injunction restraining the prosecution of such proceeding.

NOTICE AND ADMINISTRATION FUND

36.           The Notice and Administration Fund shall be used by Lead Counsel
or the Escrow Agent to pay the costs of notifying the Class, soliciting the
filing of claims by Class Members, assisting them in making their claims, and
otherwise administering the Settlement on behalf of the Class.

37.           As of the Effective Date, any balance, including interest, then
remaining in the Notice and Administration Fund, less expenses incurred but not
yet paid, shall be returned to the Settlement Fund.  Thereafter, Lead Counsel
shall have the right to use such portions of the Settlement Fund as are, in
their exercise of reasonable judgment, necessary to carry out the purposes set
forth in ¶ 17 above.  Lead Counsel will establish an Escrow Account into which
the Notice and Administration Fund will be deposited.  At Defendants’ request,
such counsel shall provide Defendants with appropriate documentation of all
out-of-pocket costs incurred in connection with providing Notice to the Class
and for other administrative expenses.

 
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38.           If the Effective Date does not occur, the balance of the Notice
and Administration Fund that has not been expended, including all interest
accrued thereon, shall be returned to Carolina.

MISCELLANEOUS PROVISIONS

39.           All of the Exhibits attached hereto are hereby incorporated by
reference as though fully set forth herein.  Notwithstanding the foregoing, in
the event that there exists a conflict or inconsistency between the terms of
this Settlement Stipulation and the terms of any exhibit hereto, the terms of
this Settlement Stipulation shall prevail.

40.           This Settlement Stipulation may not be modified or amended, nor
may any of its provisions be waived except by a writing signed by all Parties
hereto and Carolina or their successors-in-interest.

41.           Neither the Settlement Stipulation nor the Settlement, nor any act
performed or document executed pursuant to or in furtherance of the Settlement
Stipulation or the Settlement: (i) is or may be deemed to be or may be used as
an admission or evidence of the validity of any Released Claim or of any
wrongdoing or liability of any of the Released Parties; or (ii) is or may be
deemed to be or may be used as an admission or evidence of any fault or omission
of any of the Released Parties in any civil, criminal or administrative
proceeding in any court, any arbitration proceeding or any administrative agency
or other tribunal, other than in such proceedings as may be necessary to
consummate or enforce the Settlement Stipulation, the Settlement or the Order
and Final Judgment.

42.           The parties to this Settlement Stipulation intend the Settlement
to be a final and complete resolution of all disputes asserted or which could be
asserted by the Class Members against any of the Released Parties with respect
to the Released Claims.  Accordingly, Lead Plaintiffs and Defendants agree not
to assert any claim under Rule 11 of the Federal Rules of Civil Procedure or any
similar law, rule or regulation, that the Litigation was brought or defended in
bad faith or without a reasonable basis and further agree not to make any public
statements that contradict such position.  The parties to this Settlement
Stipulation agree that the amount paid and the other terms of the Settlement
were negotiated at arm’s-length in good faith by the parties, and reflect a
settlement that was reached voluntarily based upon adequate information and
after consultation with experienced legal counsel.

 
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43.           The waiver by one Party of any breach of this Settlement
Stipulation by any other Party shall not be deemed a waiver of any other prior
or subsequent breach of this Settlement Stipulation.

44.           This Settlement Stipulation, its exhibits and the Supplemental
Agreement constitute the entire agreement among these parties, and no
representations, warranties or inducements have been made to any party
concerning this Settlement Stipulation, its exhibits or the Supplemental
Agreement, other than the representations, warranties and covenants contained
and memorialized in such documents.

45.           This Settlement Stipulation may be executed in one or more
counterparts, including by signature transmitted via facsimile, or by a
.pdf/.tif image of the signature transmitted via e-mail.  All executed
counterparts and each of them shall be deemed to be one and the same instrument.

46.           The parties hereto and their respective counsel of record agree
that they will use their best efforts to obtain all necessary approvals of the
District Court and the Bankruptcy Court required by this Settlement Stipulation.

 
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47.           Each counsel signing this Settlement Stipulation represents that
such counsel has authority to sign this Settlement Stipulation on behalf of each
of their respective clients.

48.           This Settlement Stipulation shall be binding upon and shall inure
to the benefit of the successors and assigns of the Parties hereto, including
any and all Released Parties and any corporation, partnership, or other entity
into or with which any Party hereto may merge, consolidate or reorganize.  No
assignment shall relieve any Party hereto of obligations hereunder.

49.           Notices required by this Settlement Stipulation shall be submitted
either by any form of overnight mail or in person to:

Laurence M. Rosen
Phillip Kim
THE ROSEN LAW FIRM, P.A.
350 Fifth Avenue, Suite 5508
Tel:  212.686.1060
Fax:  212.202-3827

Lead Plaintiff’s Counsel in the Litigation

Sara B. Brody
Sidley Austin LLP
555 California Street
San Francisco, CA 94104
Tel. 415-772-1200
Fax: 415-772-7400

Counsel for Defendants NutraCea, Inc. and David Bensol

James D. Burgess
Fennemore Craig, P.C.
3003 North Central Avenue Suite 2600
Phoenix, AZ 85012-2913
Tel. (602) 916-5000
Fax: (602) 916-5564

 
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Counsel for Defendant Bradley D. Edson

Pamela L. Johnston
Foley & Lardner LLP
555 South Flower Street Suite 3500
Los Angeles, CA 90071-2411
Tel. 213-972-4500
Fax:  (213) 486-0065

Counsel for Defendant Todd C. Crow

Notice shall be deemed effective upon receipt.

49.           The administration, consummation and enforcement of the Settlement
as embodied in this Settlement Stipulation shall be under the authority of the
District Court, and the Parties intend that the District Court retain
jurisdiction for the purpose of entering orders, providing for awards of
attorneys’ fees and expenses to Lead Counsel, and enforcing the terms of this
Settlement Stipulation and the Settlement.

50.           The construction, interpretation, operation, effect and validity
of this Settlement Stipulation, and all documents necessary to effectuate it,
shall be governed by the internal laws of the State of Arizona without regard to
conflicts of laws, except to the extent that federal law requires that federal
law governs.

51.           This Settlement Stipulation shall not be construed more strictly
against one Party than another merely by virtue of the fact that it, or any part
of it, may have been prepared by counsel for one of the Parties, it being
recognized that it is the result of arm’s-length negotiations between the
Parties and all Parties have contributed substantially and materially to the
preparation of this Settlement Stipulation.

 
Respectfully submitted,
         
Laurence M. Rosen
 
Phillip Kim
 
THE ROSEN LAW FIRM, P.A.
 
350 Fifth Avenue, Suite 5508
 
Phone:  212.686.1060
 
Fax:  212.202-3827

 
 
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TIFFANY & BOSCO, P.A.
 
Richard G. Himelrick (#004738)
 
J. James Christian (#023614)
 
Third Floor Camelback Esplanade II
 
2525 East Camelback Road
 
Phoenix, Arizona 85016-4237
 
Telephone: (602) 255-6000
 
Fax: (602) 255-0103
     
Counsel for Lead Plaintiffs
         
Sara B. Brody
 
Sidley Austin LLP
 
555 California Street
 
San Francisco, CA 94104
 
Tel. 415-772-1200
 
Fax: 415-772-7400
     
Counsel for Defendants NutraCea, Inc. and David Bensol
         
James D. Burgess
 
Fennemore Craig, P.C.
 
3003 North Central Avenue Suite 2600
 
Phoenix, AZ 85012-2913
 
Tel. (602) 916-5000
 
Fax: (602) 916-5564
     
Counsel for Defendant Bradley D. Edson
         
Pamela L. Johnston
 
Foley & Lardner LLP
 
555 South Flower Street Suite 3500
 
Los Angeles, CA 90071-2411
 
Tel. 213-972-4500
 
Fax:  (213) 486-0065

 
 
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Counsel for Defendant Todd C. Crow
         
Carolina Casualty Insurance Company
     
By:
   
Title:

 
 
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