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Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of October 16,
2008, is by and among NutraCea, a California corporation with offices located at
5090 N. 40th Street, Suite 400, Phoenix, Arizona 85018 (the “Company”), and the
investors listed on the Schedule of Buyers attached hereto (individually, a
“Buyer” and collectively, the “Buyers”).

RECITALS

A.          The Company has authorized a series of preferred stock entitled the
“Series D Convertible Preferred Stock” (the “Preferred Stock”), which Preferred
Stock shall be convertible into shares of the Company’s common stock, no par
value per share (the “Common Stock”), in accordance with the terms of the
Preferred Stock.  The rights, preferences and other terms and provisions of the
Preferred Stock are set forth in the Certificate of Determination, Preferences
and Rights of Series D Convertible Preferred Stock in the form attached hereto
as Exhibit A (the “Certificate of Determination”). As used herein, the term
“Conversion Shares” shall include all shares of Common Stock issuable upon
conversion of, or as dividends on, the Preferred Stock in accordance with the
Certificate of Determination.

B.          Each Buyer wishes to purchase, and the Company wishes to sell, upon
the terms and conditions stated in this Agreement, (i) the number of shares of
Preferred Stock set forth opposite such Buyer’s name in column (3) on the
Schedule of Buyers and (ii) a warrant to acquire up to that number of additional
shares of Common Stock set forth opposite such Buyer’s name in column (4) on the
Schedule of Buyers, in the form attached hereto as Exhibit B (the “Series A
Warrants”) (as exercised, collectively, the “Series A Warrant Shares”), (iii) a
warrant to acquire up to that number of additional shares of Preferred Stock set
forth opposite such Buyer’s name in column (5) on the Schedule of Buyers, in the
form attached hereto as Exhibit C (the “Series B Warrants”) (as exercised,
collectively, the “Series B Warrant Shares”) and (iv) a warrant to acquire up to
that number of additional shares of Common Stock set forth opposite such Buyer’s
name in column (6) on the Schedule of Buyers, in the form attached hereto as
Exhibit D (the “Series C Warrants”) (as exercised, collectively, the “Series C
Warrant Shares”). For purposes of this Agreement, (i) the Series A Warrants, the
Series B Warrants and the Series C Warrants are collectively referred to herein
as the “Warrants;” (ii) the Series A Warrants and the Series C Warrants are
collectively referred to herein as the “Common Stock Warrants;” and (iii) the
Series A Warrant Shares, the Series B Warrant Shares and the Series C Warrant
Shares are collectively referred to herein as the “Warrant Shares.”

C.          The Preferred Stock, the Conversion Shares, the Warrants and the
Warrant Shares are collectively referred to herein as the “Securities.”

D.          The Company has filed a Registration Statement under the Securities
Act of 1933, as amended (the “1933 Act”) on Form S-3, as amended (Registration
Number 333-148929), which was declared effective by the Securities and Exchange
Commission (the “SEC”) on April 8, 2008 (the “Registration Statement”).  The
Company shall issue the Securities pursuant to the Registration Statement.

 
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AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each Buyer hereby
agree as follows:

 
1.
PURCHASE AND SALE OF PREFERRED STOCK AND WARRANTS.

(a)         Preferred Stock and Warrants. Subject to the satisfaction (or
waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall
issue and sell to each Buyer, and each Buyer severally, but not jointly, shall
purchase from the Company on the Closing Date (as defined below), the number of
shares of Preferred Stock as is set forth opposite such Buyer’s name in column
(3) on the Schedule of Buyers, at a purchase price of $1,000 per share, along
with (i) the Series A Warrants to acquire up to that number of Series A Warrant
Shares as is set forth opposite such Buyer’s name in column (4) on the Schedule
of Buyers, (ii) the Series B Warrants to acquire up to that number of Series B
Warrant Shares as is set forth opposite such Buyer’s name in column (5) on the
Schedule of Buyers and (iii) the Series C Warrants to acquire up to that number
of Series C Warrant Shares as is set forth opposite such Buyer’s name in column
(6) on the Schedule of Buyers.

(b)         Closing. The closing (the “Closing”) of the purchase of the
Preferred Stock and the Warrants by the Buyers shall occur at the offices of
Greenberg Traurig, LLP, 77 W. Wacker Drive, Suite 2400, Chicago, Illinois 60601.
The date and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New
York time, on the first (1st) Business Day on which the conditions to the
Closing set forth in Sections 6 and 7 below are satisfied or waived (or such
later date as is mutually agreed to by the Company and each Buyer). As used
herein “Business Day” means any day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to remain closed.

(c)         Purchase Price. The aggregate purchase price for the Preferred Stock
and the Warrants to be purchased by each Buyer (the “Purchase Price”) shall be
the amount set forth opposite such Buyer’s name in column (7) on the Schedule of
Buyers. Each Buyer shall pay its respective Purchase Price for the Preferred
Stock and related Warrants to be purchased by such Buyer at the Closing.

(d)         Form of Payment. On the Closing Date, (i) each Buyer shall pay its
respective Purchase Price to the Company for the Preferred Stock and the
Warrants to be issued and sold to such Buyer at the Closing, by wire transfer of
immediately available funds in accordance with the Company’s written wire
instructions and (ii) the Company shall deliver to each Buyer (A) the number of
shares of Preferred Stock as is set forth opposite such Buyer’s name in column
(3) of the Schedule of Buyers, (B) a Series A Warrant pursuant to which such
Buyer shall have the right to acquire up to such number of Series A Warrant
Shares as is set forth opposite such Buyer’s name in column (4) of the Schedule
of Buyers, (C) a Series B Warrant pursuant to which such Buyer shall have the
right to acquire up to such number of Series B Warrant Shares as is set forth
opposite such Buyer’s name in column (5) of the Schedule of Buyers and (D) a
Series C Warrant pursuant to which such Buyer shall have the right to acquire up
to such number of Series C Warrant Shares as is set forth opposite such Buyer’s
name in column (6) of the Schedule of Buyers, in all cases, duly executed on
behalf of the Company and registered in the name of such Buyer.

 
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2.
BUYER’S REPRESENTATIONS AND WARRANTIES.

Each Buyer, severally and not jointly, represents and warrants to the Company
with respect to only itself that:

(a)         Organization; Authority. Such Buyer is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents (as
defined below) to which it is a party and otherwise to carry out its obligations
hereunder and thereunder.

(b)         Validity; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and constitutes the
legal, valid and binding obligations of such Buyer enforceable against such
Buyer in accordance with their respective terms, except as such enforceability
may be limited by general principles of equity or to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.

(c)         No Conflicts.  The execution, delivery and performance by such Buyer
of this Agreement and the consummation by such Buyer of the transactions
contemplated hereby and thereby will not (i) result in a violation of the
organizational documents of such Buyer or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
such Buyer is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment  or decree (including federal and state securities
laws) applicable to such Buyer, except in the case of clauses (ii) and (iii)
above, for such conflicts, defaults, rights or violations which would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Buyer to perform its obligations
hereunder.

(d)         Residency. Such Buyer is a resident of that jurisdiction specified
below its address on the Schedule of Buyers.

(e)         Own Account. Such Buyer is acquiring the Securities as principal for
its own account and not with a view to or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
securities law, and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such Securities
in violation of the Securities Act or any applicable state securities law (this
representation and warranty shall not limit such Buyer’s right to sell the
Securities in compliance with applicable federal and state securities laws);
provided, however, that by making the representations herein, such Buyer does
not agree, or make any representation or warranty, to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in compliance with applicable federal and state
securities laws.  Such Buyer is acquiring the Securities hereunder in the
ordinary course of its business. Buyer shall notify the Company in writing of
any transfers by the Buyer of any of the Preferred Stock or the Warrants and
such notification shall contain the name and address of the transferee.

 
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(f)          Experience of Such Buyer. Such Buyer, either alone or together with
its advisors and representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.  Such Buyer is able to bear
the economic risk of an investment in the Securities and, at the present time,
is able to afford a complete loss of such investment.  The representations
contained in this Section 2(f), however, shall not modify, amend or affect such
Buyer’s right to rely on the Company’s representations and warranties contained
herein or any representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or delivered in
connection with this Agreement or the consummation of the transaction
contemplated hereby.

(g)         Buyer Status. At the time such Buyer was offered the Securities, it
met, and as of the date hereof it meets, the definition of “institutional
investor,” “accredited investor” or other similar term forth on Exhibit 2(g)
that is applicable to it based on the state in which such Buyer is located. Such
Buyer is not required to be registered as a broker-dealer under Section 15 of
the Exchange Act.

(h)         Certain Trading Activities.  Such Buyer has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Buyer, engaged in any transactions in the securities of
the Company (including, without limitation, any Short Sales involving the
Company’s securities) from the time that such Buyer was first contacted by the
Company or the Placement Agent (as the case may be) regarding the investment in
the Company contemplated by this Agreement through the date of this Agreement.
“Short Sales” include, without limitation, all “short sales” as defined in Rule
200 promulgated under Regulation SHO under the 1934 Act (“Regulation SHO”) and
all types of direct and indirect stock pledges, forward sale contracts, options,
puts, calls, swaps and similar arrangements (including on a total return basis),
and sales and other transactions through non-U.S. broker dealers or foreign
regulated brokers (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock). Such Buyer does not as of the
date hereof, and will not immediately following the Closing, own 10% or more of
the Company’s issued and outstanding shares of Common Stock (calculated based on
the assumption that all Equivalents (as defined below) owned by such Buyer,
whether or not presently exercisable or convertible, have been fully exercised
or converted (as the case may be) but taking into account any limitations on
exercise or conversion (including “blockers”) contained therein).

 
3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to each of the Buyers that:

(a)         Organization and Qualification; Subsidiaries. Each of the Company
and each of its “Subsidiaries” (which for purposes of this Agreement means any
Person in which the Company, directly or indirectly, owns capital stock or holds
an equity or similar interest) are entities duly organized and validly existing
and in good standing under the laws of the jurisdiction in which they are
formed, and have the requisite power and authorization to own their properties
and to carry on their business as now being conducted and as presently proposed
to be conducted. Each of the Company and its Subsidiaries is duly qualified as a
foreign entity to do business and is in good standing in every jurisdiction in
which its ownership of property or the nature of the business conducted by it
makes such qualification necessary, except to the extent that the failure to be
so qualified or be in good standing would not have a Material Adverse Effect. As
used in this Agreement, “Material Adverse Effect” means any material adverse
effect on (i) the business, properties, assets, liabilities, operations
(including results thereof), condition (financial or otherwise) or prospects of
the Company or any of its Subsidiaries, taken as a whole, (ii) the legality,
validity or enforceability of the transactions contemplated hereby or in the
other Transaction Documents or (iii) the authority or ability of the Company to
perform its obligations under the Transaction Documents (as defined below).
Other than the Subsidiaries, there is no Person in which the Company, directly
or indirectly, owns capital stock or holds an equity or similar
interest.  Except as set forth in Section 3(a) of the disclosure letter
delivered by the Company to the Buyers concurrently with the execution of this
Agreement (the “Disclosure Letter”), the Company has no Subsidiaries.

 
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(b)         Authorization; Enforcement; Validity. The Company has the requisite
power and authority to enter into and, except as set forth in Section 3(b) of
the Disclosure Letter, perform its obligations under this Agreement and the
other Transaction Documents and to issue the Securities in accordance with the
terms hereof and thereof. The execution and delivery of this Agreement and the
other Transaction Documents by the Company, and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Preferred Stock and the reservation for issuance
and issuance of the Conversion Shares issuable upon conversion of, or as
dividends on, the Preferred Stock, the issuance of the Warrants and the
reservation for issuance and issuance of the Warrant Shares issuable upon
exercise of the Warrants) have been duly authorized by the Company’s board of
directors and (other than the filing with the SEC of a final prospectus
supplement relating to the transactions contemplated hereby (the “Prospectus
Supplement”)) no further filing, consent or authorization is required by the
Company, its board of directors or its stockholders or other governing body or
regulatory authority. This Agreement and the other Transaction Documents to
which the Company is a party have been (or upon delivery will have been) duly
executed and delivered by the Company and when delivered in accordance with the
terms hereof and thereof, will constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights and remedies and except as rights to
indemnification and to contribution may be limited by federal or state
securities law. “Transaction Documents” means, collectively, this Agreement, the
Warrants, the Certificate of Determination, the Irrevocable Transfer Agent
Instructions (as defined in Section 5(b)) and each of the other agreements and
instruments entered into by the parties hereto in connection with the
transactions contemplated hereby and thereby. The Company has no reason to
believe that it will be unable to comply with any of its obligations under any
of the Transaction Documents (including, without limitation, as a result of
application of Section 500 or Section 501 of the California Corporations Code).

 
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(c)         Issuance of Securities. The issuance of the Preferred Stock and the
Warrants are duly authorized and, when issued and paid for in accordance with
the terms of the Transaction Documents, shall be validly issued, fully paid and
non-assessable and free from all taxes, liens, charges and other encumbrances
imposed by the Company. As of the Closing, the Company shall have reserved from
its duly authorized capital stock not less than 133% of the sum of (i) the
maximum number of Conversion Shares issuable upon conversion of the Preferred
Stock (assuming for purposes hereof that the Preferred Stock is convertible at
the initial Conversion Price (as defined in the Certificate of Determination)
and without taking into account any limitations on the conversion of the
Preferred Stock set forth in the Certificate of Determination and assuming that
the Series B Warrant Shares are outstanding as of the Closing) and (ii) the
maximum number of Warrant Shares issuable upon exercise of the Common Stock
Warrants (without regard to any limitations on the exercise of the Common Stock
Warrants set forth therein). Upon (i) conversion of the Preferred Stock in
accordance with the Certificate of Determination, (ii) issuance as dividends on
the Preferred Stock in accordance with the Certificate of Determination or (iii)
exercise of the Warrants in accordance with the Warrants (as the case may be),
the Conversion Shares and the Warrant Shares, as applicable, when issued, will
be validly issued, fully paid and nonassessable and free from all preemptive or
similar rights, taxes, liens, charges and other encumbrances imposed by the
Company, with the holders being entitled to all rights accorded to a holder of
Common Stock.  The Preferred Stock and Warrants are being issued, and the
Conversion Shares and the Warrant Shares have been registered by the Company
under the 1933 Act. The Registration Statement is effective and available for
the issuance of the Securities thereunder and the Company has not received any
notice that the SEC has issued or intends to issue a stop-order with respect to
the Registration Statement or that the SEC otherwise has suspended or withdrawn
the effectiveness of the Registration Statement, either temporarily or
permanently, or intends or has threatened in writing to do so. The “Plan of
Distribution” section under the Registration Statement permits the issuance of
the Securities hereunder. Upon issuance in accordance with the terms of the
Transaction Documents, the Conversion Shares and the Warrant Shares issuable
upon exercise of the Common Stock Warrants will be freely tradable without
restriction. At the time the Registration Statement and any amendments thereto
became effective, at the date of this Agreement and at the Closing Date, the
Registration Statement and any amendments thereto conformed and will conform in
all material respects to the requirements of the 1933 Act and did not and will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the final prospectus included in the Registration
Statement (the “Prospectus”) and any amendments or supplements thereto, at the
time the Prospectus or any amendment or supplement thereto was issued and at the
Closing Date, conformed and will conform in all material respects to the
requirements of the 1933 Act and did not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.

(d)         No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Preferred Stock, the Warrants, the Conversion Shares and Warrant
Shares and the reservation for issuance of the Conversion Shares and Warrant
Shares) will not (i) result in a violation of the Articles of Incorporation (as
defined in Section 3(r)) or other organizational documents of the Company or any
of its Subsidiaries or Bylaws (as defined in Section 3(r)) of the Company, (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party, or (iii) subject to the making of the Required Filings by the Company,
result in a violation of any law, rule, regulation, order, judgment or decree
(including foreign, federal and state securities laws and regulations and the
rules and regulations of the OTC Bulletin Board (the “Principal Market”))
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected except, in
the case of clause (ii) or (iii) above, to the extent such violations that could
not reasonably be expected to have a Material Adverse Effect.

 
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(e)         Consents.  The Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court,
governmental agency or any regulatory or self-regulatory agency or any other
Person (including, without limitation, the Financial Industry Regulatory
Authority) in order for it to execute, deliver or perform any of its obligations
under or contemplated by the Transaction Documents, in each case, in accordance
with the terms hereof or thereof, other than (i) the filing with the SEC of the
Prospectus Supplement, (ii) the filing with the SEC of the 8-K Filing, (iii)
such filings as are required to be made under applicable state securities laws
(collectively, “Required Filings”) and (iv) as set forth in Section 3(e) of the
Disclosure Letter. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain on or before the Closing
Date pursuant to the preceding sentence have been obtained or effected on or
prior to the Closing Date, and neither the Company nor any of its Subsidiaries
are aware of any facts or circumstances which might prevent the Company from
obtaining or effecting any of the registration, application or filings pursuant
to the preceding sentence. Required Filings to be made after the Closing Date
shall be made in compliance with the terms of this Agreement and applicable
federal and state securities laws.  The Company is not in violation of the
requirements of the Principal Market and has no knowledge of any facts or
circumstances which could reasonably lead to delisting or suspension of the
Common Stock in the foreseeable future.

(f)          Acknowledgment Regarding Buyer’s Purchase of Securities. The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is (i) an officer
or director of the Company or any of its Subsidiaries, (ii) an “affiliate” (as
defined in Rule 144) of the Company or any of its Subsidiaries or (iii) to its
knowledge, a “beneficial owner” of more than 10% of the shares of Common Stock
(as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934,
as amended (the “1934 Act”)). The Company further acknowledges that no Buyer is
acting as a financial advisor or fiduciary of the Company or any of its
Subsidiaries (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated hereby and thereby, and any advice
given by a Buyer or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby is
merely incidental to such Buyer’s purchase of the Securities. The Company
further represents to each Buyer that the Company’s decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives.

 
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(g)         Placement Agent’s Fees. Neither the Company nor any of its
Subsidiaries has engaged any placement agent (other than Rodman & Renshaw LLC
(the “Placement Agent”)) or other agent in connection with the sale of the
Securities.  The Company shall be responsible for the payment of any placement
agent’s fees, financial advisory fees or broker’s commissions owed to the
Placement Agent or to any other Person pursuant to any other agreements entered
into by the Company relating to or arising out of the transactions contemplated
hereby.  Buyer shall have no obligation with respect to any fees or with respect
to any claims (other than such fees or commissions owed by such Buyer pursuant
to agreements entered into by such Buyer, which fees or commissions shall be the
sole responsibility of such Buyer) made by or on behalf of other Persons for
fees or the type contemplated in this Section that may be due in connection with
the transactions contemplated by the Transaction Documents.

(h)         No Integrated Offering. None of the Company, the Subsidiaries or any
of their affiliates, nor any Person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Securities to require approval of stockholders of the Company under any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of any exchange or automated quotation system on which
any of the securities of the Company are listed or designated. None of the
Company, its Subsidiaries, their affiliates nor any Person acting on their
behalf will take any action or steps referred to in the preceding sentence that
would cause the offering of any of the Securities to be integrated with other
offerings.

(i)          Dilutive Effect. The Company understands and acknowledges that the
number of Conversion Shares and Warrant Shares will increase in certain
circumstances. The Company further acknowledges that its obligation to issue the
Conversion Shares upon conversion of the Preferred Stock and the Warrant Shares
upon exercise of the Warrants in accordance with this Agreement, the Certificate
of Determination and the Warrants is absolute and unconditional regardless of
the dilutive effect that such issuance may have on the ownership interests of
other stockholders of the Company.

(j)          Application of Takeover Protections; Rights Agreement. The Company
and its board of directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Articles of Incorporation or other
organizational documents or the laws of the jurisdiction of its incorporation or
otherwise which is or could become applicable to any Buyer as a result of the
transactions contemplated by this Agreement, including, without limitation, the
Company’s issuance of the Securities and any Buyer’s ownership of the
Securities. The Company and its board of directors have taken all necessary
action, if any, in order to render inapplicable any stockholder rights plan or
similar arrangement relating to accumulations of beneficial ownership of shares
of Common Stock or a change in control of the Company or any of its
Subsidiaries.
 
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(k)         SEC Documents; Financial Statements. During the two (2) years prior
to the date hereof, the Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the 1934 Act (all of the foregoing filed prior
to the date hereof and all exhibits included therein and financial statements,
notes and schedules thereto and documents incorporated by reference therein
being referred to herein as the “SEC Documents”). The Company has delivered to
the Buyers or their respective representatives true, correct and complete copies
of each of the SEC Documents not available on the EDGAR system. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. As of
their respective dates, the financial statements of the Company included in the
SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto as in effect as of the time of filing. Such financial statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments which will not be material, either individually or in the
aggregate). No other information provided by or on behalf of the Company to the
Buyers which is not included in the SEC Documents contains any untrue statement
of a material fact or omits to state any material fact necessary in order to
make the statements therein not misleading, in the light of the circumstance
under which they are or were made.

 
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(l)          Absence of Certain Changes. Since the date of the Company’s most
recent audited or reviewed financial statements contained in the Form 10-K,
except as disclosed in subsequent SEC Documents filed prior to the date hereof,
there has been no material adverse change and no material adverse development in
the business, assets, liabilities, properties, operations (including results
thereof), condition (financial or otherwise) or prospects of the Company or any
of its Subsidiaries.  Since the date of the Company’s most recent audited
financial statements contained in the Form 10-K, except as disclosed in a
subsequent SEC Documents filed prior to the date hereof, neither the Company nor
any of its Subsidiaries has (i) declared or paid any dividends other than by
Subsidiaries to the Company, (ii) sold any material assets, individually or in
the aggregate, outside of the ordinary course of business or (iii) made any
material capital expenditures, individually or in the aggregate. Neither the
Company nor any of its Subsidiaries has taken any steps to seek protection
pursuant to any law or statute relating to bankruptcy, insolvency,
reorganization, liquidation or winding up, nor does the Company or any
Subsidiary have any knowledge or reason to believe that any of their respective
creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which would reasonably lead a creditor to do so. The
Company and its Subsidiaries, individually and on a consolidated basis, are not
as of the date hereof, and after giving effect to the transactions contemplated
hereby to occur at the Closing, will not be Insolvent (as defined below). For
purposes of this Section 3(l), “Insolvent” means, on a consolidated basis, (i)
the present fair saleable value of the Company’s and its Subsidiaries’ assets is
less than the amount required to pay the Company’s and its Subsidiaries’ total
Indebtedness (as defined in Section 3(s)), (ii) the Company and its Subsidiaries
are unable to pay their debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured or (iii)
the Company and its Subsidiaries intend to incur or believe that they will incur
debts that would be beyond their ability to pay as such debts mature. Neither
the Company nor any of its Subsidiaries has engaged in business or in any
transaction, and is not about to engage in business or in any transaction, for
which the Company’s or such Subsidiary’s remaining assets constitute
unreasonably small capital.  For purposes of this Agreement:  (x) “Indebtedness”
of any Person means, without duplication (A) all indebtedness for borrowed
money, (B) all obligations issued, undertaken or assumed as the deferred
purchase price of property or services (including, without limitation, “capital
leases” in accordance with generally accepted accounting principles) other than
trade payables entered into in the ordinary course of business, (C) all
reimbursement or payment obligations with respect to letters of credit, surety
bonds and other similar instruments, (D) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property, assets or businesses,
(E) all indebtedness created or arising under any conditional sale or other
title retention agreement, or incurred as financing, in either case with respect
to any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person that
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G)
above; (y) “Contingent Obligation” means, as to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto; and (z)
“Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency thereof.
 
(m)        No Undisclosed Events, Liabilities, Developments or Circumstances. No
event, liability, development or circumstance has occurred or exists, or is
reasonably expected to exist or occur with respect to the Company, any of its
Subsidiaries or their respective business, properties, liabilities, prospects,
operations (including results thereof) or condition (financial or otherwise),
that would be required to be disclosed by the Company under applicable
securities laws on a registration statement on Form S-1 filed with the SEC
relating to an issuance and sale by the Company of its Common Stock and which
either (i) except as set forth in Section 3(m) of the Disclosure Letter, has not
been publicly announced or contained in the SEC Documents or (ii) could
reasonably result in a Material Adverse Effect or a material adverse effect on
any Buyer’s investment hereunder.

 
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(n)         Conduct of Business; Regulatory Permits. Neither the Company nor any
of its Subsidiaries is in violation of any term of or in default under its
Articles of Incorporation, any certificate of determination of any other
outstanding series of preferred stock of the Company or any of its Subsidiaries
or Bylaws or their organizational charter, certificate of formation or
certificate of incorporation or bylaws, respectively. Neither the Company nor
any of its Subsidiaries is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct
its business in violation of any of the foregoing, except in all cases for
possible violations which could not, individually or in the aggregate, have a
Material Adverse Effect. Without limiting the generality of the foregoing, the
Company is not in violation of any of the rules, regulations or requirements of
the Principal Market and has no knowledge of any facts or circumstances that
could reasonably lead to delisting or suspension of the Common Stock by the
Principal Market in the foreseeable future. Since January 1, 2006, (i) the
Common Stock has been designated for quotation on the Principal Market, (ii)
trading in the Common Stock has not been suspended by the SEC or the Principal
Market and (iii) the Company has received no communication, written or oral,
from the SEC or the Principal Market regarding the suspension or delisting of
the Common Stock from the Principal Market. The Company and each of its
Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate regulatory authorities necessary to conduct their respective
businesses, except where the failure to possess such certificates,
authorizations or permits would not have, individually or in the aggregate, a
Material Adverse Effect, and neither the Company nor any such Subsidiary has
received any written notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.

(o)         Foreign Corrupt Practices.  Neither the Company nor any of the
Subsidiaries nor any director, officer, agent, employee or other Person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company or any of its Subsidiaries (i) used
any corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.

(p)         Sarbanes-Oxley Act. Except as set forth in Section 3(p) of the
Disclosure Letter, the Company and each Subsidiary is in material compliance
with all applicable requirements of the Sarbanes-Oxley Act of 2002 that are
effective as of the date hereof, and all applicable rules and regulations
promulgated by the SEC thereunder that are effective as of the date hereof.

(q)         Transactions With Affiliates. Except as set forth in the SEC
Documents, none of the officers or directors of the Company is presently a party
to any transaction with the Company or any Subsidiary (other than for services
as employees, officers or directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer or director or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner, in each case in excess
of $120,000 other than for (i) payment of salary or bonuses for services
rendered, (ii) reimbursement for expenses incurred on behalf of the Company, and
(iii) other employee benefits, including stock option agreements under any stock
option plan of the Company and restricted stock agreements under any restricted
stock plan of the Company.

 
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(r)          Equity Capitalization.  The capitalization of the Company as of the
date hereof is as described in Section 3(r)(i) of the Disclosure Letter. No
shares of Common Stock are held in treasury. All of such outstanding shares are
duly authorized and have been, or upon issuance will be, validly issued and are
fully paid and nonassessable. 3,079,853 shares of the Company’s issued and
outstanding Common Stock on the date hereof are as of the date hereof owned by
Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act and
calculated based on the assumption that only officers, directors and holders of
at least 10% of the Company’s issued and outstanding Common Stock are
“affiliates” without conceding that any such Persons are “affiliates” for
purposes of federal securities laws) of the Company or any of its Subsidiaries.
To the Company’s knowledge, as of the date hereof no Person owns 10% or more of
the Company’s issued and outstanding shares of Common Stock (calculated based on
the assumption that all Equivalents, whether or not presently exercisable or
convertible, have been fully exercised or converted (as the case may be) taking
account of any limitations on exercise or conversion (including “blockers”)
contained therein without conceding that such identified Person is a 10%
stockholder for purposes of federal securities laws). Except as disclosed in
Section 3(r)(ii) of the Disclosure Letter: (i) none of the Company’s or any
material Subsidiary’s capital stock is subject to preemptive rights or any other
similar rights or any liens suffered or permitted by the Company or any
Subsidiary; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
capital stock of the Company or any of its Subsidiaries; (iii) there are no
outstanding debt securities, notes, credit agreements, credit facilities or
other agreements, documents or instruments evidencing Indebtedness of the
Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound; (iv) there are no financing statements
securing obligations in any material amounts filed in connection with the
Company or any of its Subsidiaries; (v) there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to register the
sale of any of their securities under the 1933 Act (except as contemplated by
this Agreement); (vi) there are no outstanding securities or instruments of the
Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries; (vii)
there are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Securities; (viii)
neither the Company nor any Subsidiary has any stock appreciation rights or
“phantom stock” plans or agreements or any similar plan or agreement; and (ix)
neither the Company nor any of its Subsidiaries have any liabilities or
obligations required to be disclosed in the SEC Documents which are not so
disclosed in the SEC Documents, other than those incurred in the ordinary course
of the Company’s or its Subsidiaries’ respective businesses and which,
individually or in the aggregate, do not or could not have a Material Adverse
Effect.  The Company has furnished to the Buyers true, correct and complete
copies of the Company’s Articles of Incorporation, as amended and as in effect
on the date hereof, including, without limitation, any certificates of
determination contained therein or attached thereto (the “Articles of
Incorporation”), and the Company’s bylaws, as amended and as in effect on the
date hereof (the “Bylaws”).

 
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(s)         Indebtedness and Other Contracts. Except as disclosed in the SEC
Documents or in Section 3(s) of the Disclosure Letter, neither the Company nor
any of its Subsidiaries (i) has any outstanding Indebtedness (as defined below),
(ii) is a party to any contract, agreement or instrument, the violation of
which, or default under which, by the other party(ies) to such contract,
agreement or instrument could reasonably be expected to result in a Material
Adverse Effect, (iii) is in violation of any term of or in default under any
contract, agreement or instrument relating to any Indebtedness, except where
such violations and defaults would not result, individually or in the aggregate,
in a Material Adverse Effect, or (iv) is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which, in the
judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect.

(t)          Absence of Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by the Principal Market, any court, public
board, government agency, self-regulatory organization or body pending or, to
the knowledge of the Company, threatened against or affecting the Company or any
of its Subsidiaries, the Common Stock or any of the Company’s or its
Subsidiaries’ officers or directors which individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect.  There has not been,
and to the knowledge of the Company, there is not pending or contemplated, any
investigation by the SEC involving the Company or any current or former director
or officer of the Company.  The SEC has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company
under the 1934 Act or the 1933 Act.

(u)         Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for, and neither the Company nor any such
Subsidiary has any reason to believe that it will be unable to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.

(v)         Employee Relations.  Neither the Company nor any of its Subsidiaries
is a party to any collective bargaining agreement or employs any member of a
union. The Company believe that its and its Subsidiaries’ relations with their
respective employees are good. No executive officer (as defined in Rule 501(f)
promulgated under the 1933 Act) or other key employee of the Company or any of
its Subsidiaries has notified the Company or any such Subsidiary that such
officer intends to leave the Company or any such Subsidiary or otherwise
terminate such officer’s employment with the Company or any such Subsidiary. No
executive officer or other key employee of the Company or any of its
Subsidiaries is,  or is now expected to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each such executive
officer or other key employee (as the case may be) does not subject the Company
or any of its Subsidiaries to any liability with respect to any of the foregoing
matters.  The Company and its Subsidiaries are in compliance with all federal,
state, local and foreign laws and regulations respecting labor, employment and
employment practices and benefits, terms and conditions of employment and wages
and hours, except where failure to be in compliance would not, either
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.

 
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(w)        Title. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case, free and clear of all liens, encumbrances
and defects except such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such property
by the Company and any of its Subsidiaries. Any real property and facilities
held under lease by the Company or any of its Subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company or any of its Subsidiaries.

(x)          Intellectual Property Rights. The Company and its Subsidiaries own
or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, patents, patent
rights, copyrights, original works, inventions, licenses, approvals,
governmental authorizations, trade secrets and other intellectual property
rights and all applications and registrations therefor (“Intellectual Property
Rights”) necessary to conduct their respective businesses as now conducted and
as presently proposed to be conducted, unless failure to own or possess such
rights or licenses would not reasonably be likely to result in a Material
Adverse Effect.  None of the Company’s or its Subsidiaries’ Intellectual
Property Rights have expired, terminated or been abandoned, or are expected to
expire, terminate or be abandoned, within three years from the date of this
Agreement, unless such expiration, termination or abandonment would not
reasonably be likely to result in a Material Adverse Effect.  The Company has no
knowledge of any infringement by the Company or any of its Subsidiaries of
Intellectual Property Rights of others.  There is no claim, action or proceeding
being made or brought, or to the knowledge of the Company or any of its
Subsidiaries, being threatened, against the Company or any of the Subsidiaries
regarding their material Intellectual Property Rights.  The Company is not aware
of any facts or circumstances that reasonably could be expected to give rise to
any of the foregoing infringements or claims, actions or proceedings. The
Company and each of its Subsidiaries have taken reasonable security measures to
protect the secrecy, confidentiality and value of all of their Intellectual
Property Rights, except where failure to do so could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

(y)         Environmental Laws. The Company and its Subsidiaries (i) are in
compliance with all Environmental Laws (as defined herein), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or approval
where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so
comply could be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect.  The term “Environmental Laws” means all federal,
state, local or foreign laws relating to pollution or protection of human health
or the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.

 
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(z)          Subsidiary Rights. Except as disclosed in Section 3(z) of the
Disclosure Letter, the Company or one of its Subsidiaries has the unrestricted
right to vote, and (subject to limitations imposed by applicable law) to receive
dividends and distributions on, all capital securities of its Subsidiaries as
owned by the Company or such Subsidiary.

(aa)        Tax Status. Except for matters that would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect,
the Company and each of its Subsidiaries (i) has timely made or filed all
foreign, federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject, (ii) has
timely paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii) has set aside
on its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. To the Company’s knowledge and except as set forth in Section 3(aa) of
the Disclosure Letter, there are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company and its Subsidiaries know of no basis for any such claim.  The Company
is not operated in such a manner as to qualify as a passive foreign investment
company, as defined in Section 1297 of the U.S. Internal Revenue Code of 1986,
as amended.

(bb)       Internal Accounting and Disclosure Controls. Except as set forth in
the Company’s Form 10-K for the year ended December 31, 2007 and any of the
Company’s Form 10-Q’s covering periods in 2008, the Company maintains internal
control over financial reporting (as such term is defined in Rule 13a-15(f)
under the 1934 Act) that is effective to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles, including that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management’s
general or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect to any
difference. The Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-15(e) under the 1934 Act) that are effective in
ensuring that information required to be disclosed by the Company in the reports
that it files or submits under the 1934 Act is recorded, processed, summarized
and reported, within the time periods specified in the rules and forms of the
SEC, including, without limitation, controls and procedures designed to ensure
that information required to be disclosed by the Company in the reports that it
files or submits under the 1934 Act is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and
its principal financial officer or officers, as appropriate, to allow timely
decisions regarding required disclosure. Except as set forth in the Company’s
Form 10-K for the year ended December 31, 2007 and any of the Company’s Form
10-Qs covering periods in 2008, neither the Company nor any of its Subsidiaries
has received any notice or correspondence from any accountant or other Person
relating to any potential material weakness or significant deficiency in any
part of the Company’s internal control over financial reporting.

 
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(cc)        Off Balance Sheet Arrangements. There is no transaction,
arrangement, or other relationship between the Company or any of its
Subsidiaries and an unconsolidated or other off balance sheet entity that is
required to be disclosed by the Company in its 1934 Act filings and is not so
disclosed or that otherwise could be reasonably likely to have a Material
Adverse Effect.

(dd)       Investment Company Status. The Company is not, and upon consummation
of the sale of the Securities will not be, an “investment company,” an affiliate
of an “investment company,” a company controlled by an “investment company” or
an “affiliated person” of, or “promoter” or “principal underwriter” for, an
“investment company” as such terms are defined in the Investment Company Act
of  1940, as amended.

(ee)        Acknowledgement Regarding Buyers’ Trading Activity. It is understood
and acknowledged by the Company (i) that following the public disclosure of the
transactions contemplated by the Transaction Documents, in accordance with the
terms thereof, none of the Buyers have been asked by the Company or any of its
Subsidiaries to agree, nor has any Buyer agreed with the Company or any of its
Subsidiaries, to desist from purchasing or selling, long and/or short,
securities of the Company, or “derivative” securities based on securities issued
by the Company or to hold the Securities for any specified term; (ii) that any
Buyer, and counter parties in “derivative” transactions to which any such Buyer
is a party, directly or indirectly, presently may have a “short” position in the
Common Stock which were established prior to such Buyer’s knowledge of the
transactions contemplated by the Transaction Documents, and (iii) that each
Buyer shall not be deemed to have any affiliation with or control over any arm’s
length counter party in any “derivative” transaction. The Company further
understands and acknowledges that following the public disclosure of the
transactions contemplated by the Transaction Documents pursuant to the Press
Release (as defined below) one or more Buyers may engage in hedging and/or
trading activities at various times during the period that the Securities are
outstanding, including, without limitation, during the periods that the value of
the Warrant Shares or Conversion Shares, as applicable, deliverable with respect
to the Securities are being determined and (b) such hedging and/or trading
activities, if any, can reduce the value of the existing stockholders’ equity
interest in the Company both at and after the time the hedging and/or trading
activities are being conducted. The Company acknowledges that such
aforementioned hedging and/or trading activities do not constitute a breach of
this Agreement or any other Transaction Document or any of the documents
executed in connection herewith or therewith.

(ff)         Manipulation of Price. Neither the Company nor any of its
Subsidiaries has, and, to the knowledge of the Company, no Person acting on
their behalf has, (i) taken, directly or indirectly, any action designed to
cause or to result in the stabilization or manipulation of the price of any
security of the Company or any of its Subsidiaries to facilitate the sale or
resale of any of the Securities, (ii) sold, bid for, purchased, or paid any
compensation for soliciting purchases of, any of the Securities (other than the
Placement Agent), or (iii) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the Company or any of
its Subsidiaries.

 
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(gg)       U.S. Real Property Holding Corporation. Neither the Company nor any
of its Subsidiaries is, or has ever been, and so long as any of the Securities
are held by any of the Buyers, shall become, a U.S. real property holding
corporation within the meaning of Section 897 of the Internal Revenue Code of
1986, as amended, and the Company and each Subsidiary shall so certify upon any
Buyer’s request.

(hh)       Registration Eligibility. The Company is eligible to register the
issuance of the Securities to the Buyers using Form S-3 promulgated under the
1933 Act.

(ii)         Transfer Taxes. On the Closing Date, all stock transfer or other
taxes (other than income or similar taxes) which are required to be paid in
connection with the sale and transfer of the Securities to be sold to each Buyer
hereunder will be, or will have been, fully paid or provided for by the Company,
and all laws imposing such taxes will be or will have been complied with.

(jj)         Bank Holding Company Act.  Neither the Company nor any of its
Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended (the
“BHCA”) and to regulation by the Board of Governors of the Federal Reserve
System (the “Federal Reserve”).  Neither the Company nor any of its Subsidiaries
or affiliates owns or controls, directly or indirectly, five percent (5%) or
more of the outstanding shares of any class of voting securities or twenty-five
percent (25%) or more of the total equity of a bank or any equity that is
subject to the BHCA and to regulation by the Federal Reserve. Neither the
Company nor any of its Subsidiaries or affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.

(kk)        Disclosure.  The Company confirms that neither it nor any other
Person acting on its behalf has provided any of the Buyers or their agents or
counsel with any information that constitutes or could reasonably be expected to
constitute material, nonpublic information concerning the Company or any of its
Subsidiaries, other than the existence of the transactions contemplated by this
Agreement and the other Transaction Documents. The Company understands and
confirms that each of the Buyers will rely on the foregoing representations in
effecting transactions in securities of the Company.  All written materials
provided to the Buyers regarding the Company and its Subsidiaries, their
businesses and the transactions contemplated hereby, including the Disclosure
Letter and the Schedules to this Agreement, furnished by or on behalf of the
Company or any of its Subsidiaries is true and correct and does not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each press release issued by the
Company or any of its Subsidiaries during the twelve (12) months preceding the
date of this Agreement did not at the time of release contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading.  No event
or circumstance has occurred or information exists with respect to the Company
or any of its Subsidiaries or its or their business, properties, liabilities,
prospects, operations (including results thereof) or conditions (financial or
otherwise), which, under applicable law, rule or regulation, requires public
disclosure at or before the date hereof or announcement by the Company but which
has not been so publicly announced or disclosed, other than the transactions
contemplated hereby. The Company acknowledges and agrees that no Buyer makes or
has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 2.

 
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(ll)         FDA. As to each product subject to the jurisdiction of the U.S.
Food and Drug Administration (the “FDA”) under the Federal Food, Drug and
Cosmetic Act, as amended, and the regulations thereunder (the “FDCA”) that is
manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by
the Company or any of its Subsidiaries (each such product, a “Food Product”),
such Food Product is being manufactured, packaged, labeled, tested, distributed,
sold and/or marketed by the Company or such Subsidiary (as the case may be) in
compliance with all applicable requirements under FDCA and similar laws, rules
and regulations relating to registration, investigational use, premarket
clearance, licensure, or application approval, good manufacturing practices,
good laboratory practices, good clinical practices, product listing, quotas,
labeling, advertising, record keeping and filing of reports, except where the
failure to be in compliance would not have a Material Adverse Effect.  There is
no pending, completed or, to the Company’s knowledge, threatened, action
(including any lawsuit, arbitration, or legal or administrative or regulatory
proceeding, charge, complaint, or investigation) against the Company or any of
its Subsidiaries, and none of the Company or any of its Subsidiaries has
received any written notice, warning letter or other communication from the FDA
or any other governmental entity, which (i) contests the premarket clearance,
licensure, registration, or approval of, the uses of, the distribution of, the
manufacturing or packaging of, the testing of, the sale of, or the labeling and
promotion of any Food Product, (ii) withdraws its approval of, requests the
recall, suspension, or seizure of, or withdraws or orders the withdrawal of
advertising or sales promotional materials relating to, any Food Product, (iii)
imposes a clinical hold on any clinical investigation by the Company or any of
its Subsidiaries, (iv) enjoins production at any facility of the Company or any
of its Subsidiaries, (v) enters or proposes to enter into a consent decree of
permanent injunction with the Company or any of its Subsidiaries or (vi)
otherwise alleges any violation of any laws, rules or regulations by the Company
or any of its Subsidiaries, and which, either individually or in the aggregate,
would have a Material Adverse Effect. The properties, business and operations of
the Company subject to the jurisdiction of the FDA have been and are being
conducted in all material respects in accordance with all applicable laws, rules
and regulations of the FDA. The Company has not been informed by the FDA that
the FDA will prohibit the marketing, sale, license or use in the United States
of any product proposed to be developed, produced or marketed by the Company nor
has the FDA expressed any concern as to approving or clearing for marketing any
product being developed or proposed to be developed by the Company.

 
 
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4.
COVENANTS.

 
(a)         Commercially Reasonably Best Efforts. Each party shall use
commercially reasonable best efforts timely to satisfy each of the conditions to
be satisfied by it as provided in Sections 6 and 7 of this Agreement.

(b)         Securities Compliance.  The Prospectus Supplement, containing all
information required by SEC rules and regulations, shall be filed in accordance
with Rule 424 under the 1933 Act.  The Company shall take all other necessary
action and proceedings as may be required and permitted by applicable law, rule
and regulation, for the legal and valid issuance of the Securities (and the
issuance of the Securities pursuant to the Registration Statement) to the Buyers
or subsequent holders.  The Company shall, on or before the Closing Date, take
such action as the Company shall reasonably determine is necessary in order to
obtain an exemption for, or to, qualify the Securities for sale to the Buyers at
the Closing pursuant to this Agreement under applicable securities or “Blue Sky”
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to the
Buyers on or prior to the Closing Date.  The Company shall make all filings and
reports relating to the offer and sale of the Securities required under
applicable securities or “Blue Sky” laws of the states of the United States
following the Closing Date.

(c)         Registration Statement; Reporting Status. Until the date on which
the Buyers shall have sold all of the Securities (the “Reporting Period”), the
Company shall (i) maintain the effectiveness of the Registration Statement to
cover the issuance of all Securities and (ii) timely file all reports required
to be filed with the SEC pursuant to the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would no longer
require or otherwise permit such termination.  If at any time following the date
hereof the Registration Statement is not effective or is not otherwise available
for the issuance of the Securities, the Company shall immediately notify the
holders of Preferred Stock and/or Warrants (as the case may be) in writing that
the Registration Statement is not then effective and thereafter shall promptly
notify such holders when the Registration Statement is effective again and
available for the issuance of the Securities.

(d)         Use of Proceeds. The Company shall use the proceeds from the sale of
the Securities solely (i) to pay legal fees and expenses incurred in connection
with the transactions contemplated by this Agreement, (ii) to pay the placement
fee owed to the Placement Agent in connection with the transactions contemplated
by this Agreement, (iii) for capital improvements to the Company’s Brazilian
facilities (it being understood that $3,000,000 of such proceeds shall be used
for such capital improvements) and (iv) for general working capital purposes.

(e)         Financial Information. The Company agrees to send the following to
each Buyer during the Reporting Period (i) unless the following are filed with
the SEC through EDGAR and are available to the public through the EDGAR system,
within one (1) Business Day after the filing thereof with the SEC, a copy of its
Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, any Current
Reports on Form 8-K and any registration statements (other than on Form S-8) or
amendments filed pursuant to the 1933 Act, and (ii) unless the following are
filed with the SEC through EDGAR and are available to the public through the
EDGAR system, copies of any notices and other information made available or
given to the shareholders of the Company generally, contemporaneously with the
making available or giving thereof to the shareholders.

 
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(f)          Listing.  The Company shall promptly secure the listing of all of
the Conversion Shares and Warrant Shares issuable upon exercise of the Common
Stock Warrants upon each national securities exchange and automated quotation
system, if any, upon which the shares of Common Stock are then listed (subject
to official notice of issuance) and shall maintain such listing of all such
Securities from time to time issuable under the terms of the Transaction
Documents on such national securities exchange or automated quotation system.
The Company shall maintain the Common Stock’s authorization for quotation on the
Principal Market, the New York Stock Exchange, the Nasdaq Global Market or the
Nasdaq Global Select Market (each, an “Eligible Market”). The Company shall not
take any action which could be reasonably expected to result in the delisting or
suspension of the Common Stock on an Eligible Market. The Company shall pay all
fees and expenses in connection with satisfying its obligations under this
Section 4(f).

(g)         Fees.  The Company shall reimburse Cranshire Capital, L.P.
(“Cranshire”) or its designee(s) (in addition to any other expense amounts paid
to any Buyer prior to the date of this Agreement) for all costs and expenses
incurred by it or its affiliates in connection with the transactions
contemplated by the Transaction Documents (including, without limitation, all
legal fees and disbursements in connection therewith, documentation and
implementation of the transactions contemplated by the Transaction Documents and
due diligence in connection therewith), which amount shall be withheld by
Cranshire from its Purchase Price at the Closing or paid by the Company upon
termination of this Agreement so long as such termination did not occur as a
result of a material breach by Cranshire of any of its obligations hereunder (as
the case may be). The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, or broker’s commissions (other
than for Persons engaged by any Buyer) relating to or arising out of the
transactions contemplated hereby (including, without limitation, the Placement
Agent) incurred by the Company. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation,
attorney’s fees and out-of-pocket expenses) arising in connection with any claim
relating to any such payment. Except as otherwise set forth in the Transaction
Documents, each party to this Agreement shall bear its own expenses in
connection with the sale of the Securities to the Buyers.

(h)         Pledge of Securities. The Company acknowledges and agrees that the
Securities may be pledged by a Buyer in connection with a bona fide margin
agreement or other loan or financing arrangement that is secured by the
Securities. No Buyer effecting a pledge of Securities shall be required to
provide the Company with any notice thereof or otherwise make any delivery to
the Company pursuant to this Agreement or any other Transaction Document. The
Company hereby agrees to execute and deliver such documentation as a pledgee of
the Securities may reasonably request in connection with a pledge of the
Securities to such pledgee by a Buyer.  Notwithstanding the foregoing, if the
Securities so pledged are Preferred Stock or Warrants, and such Securities are
subsequently acquired by the pledgee upon default, then such Buyer will provide
the Company with written notice of the transfer and the names of the record
holders of such Securities within a reasonable amount of time after such
Securities are transferred. Additionally, the transferee shall agree to be bound
by the provisions of the Transaction Documents if the transferee will obtain any
rights under the Transaction Documents.

 
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(i)           Disclosure of Transactions and Other Material Information. The
Company shall, on or before 8:30 a.m., New York time, on the second (2nd)
Business Day after the date of this Agreement, issue a press release (the “Press
Release”) reasonably acceptable to each Buyer disclosing all the material terms
of the transactions contemplated by the Transaction Documents.  On or before
8:30 a.m., New York time, on the second (2nd) Business Day following the date of
this Agreement, the Company shall file a Current Report on Form 8-K describing
all the material terms of the transactions contemplated by the Transaction
Documents in the form required by the 1934 Act and attaching this Agreement, the
Certificate of Determination and the form of the Warrants (including all
attachments, the “8-K Filing”). From and after the issuance of the Press
Release, the Company shall have disclosed all material, nonpublic information
delivered to any of the Buyers by the Company or any of its Subsidiaries, or any
of their respective officers, directors, employees or agents (if any) in
connection with the transactions contemplated by the Transaction Documents. The
Company shall not, and the Company shall cause each of its Subsidiaries and each
of its and their respective officers, directors, employees and agents not to,
provide any Buyer with any material, nonpublic information regarding the Company
or any of its Subsidiaries from and after the issuance of the Press Release
without the express prior written consent of such Buyer, except as expressly
contemplated by Section 4(n)(viii). If a Buyer has, or believes it has, received
any material, nonpublic information regarding the Company or any of its
Subsidiaries in breach of the immediately preceding sentence, such Buyer shall
provide the Company with written notice thereof in which case the Company shall,
within one (1) Trading Day of the receipt of such notice, make a public
disclosure of all such material, nonpublic information so provided.  In the
event of a breach of any of the foregoing covenants by the Company, any of its
Subsidiaries, or any of its or their respective officers, directors, employees
and agents (as determined in the reasonable good faith judgment of such Buyer),
in addition to any other remedy provided herein or in the Transaction Documents,
such Buyer shall have the right to make a public disclosure, in the form of a
press release, public advertisement or otherwise, of such material, nonpublic
information without the prior approval by the Company, any of its Subsidiaries,
or any of its or their respective officers, directors, employees or agents. No
Buyer shall have any liability to the Company, any of the Subsidiaries, or any
of its or their respective officers, directors, employees, stockholders or
agents, for any such disclosure of such information. Subject to the foregoing,
neither the Company, its Subsidiaries nor any Buyer shall issue any press
releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of any Buyer, to make any press release or other
public disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing and contemporaneously therewith and (ii) as is
required by applicable law and regulations (provided that in the case of clause
(i) each Buyer shall be consulted by the Company in connection with any such
press release or other public disclosure prior to its release).  Without the
prior written consent of any applicable Buyer, the Company shall not (and shall
cause each of its Subsidiaries and affiliates to not) disclose the name of such
Buyer in any filing (other than the 8-K Filing), announcement, release or
otherwise, except (a) as required by federal securities law in connection with
the filing of final Transaction Documents (including signature pages thereto)
with the SEC and (b) to the extent such disclosure is required by law or
Principal Market regulations, in which case the Company shall provide the
applicable Buyers with prior notice of such disclosure permitted hereunder.

 
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(j)           Additional Issuance of Securities. Except as set forth on Schedule
4(j), the Company agrees that for the period commencing on the date hereof and
ending ninety (90) days after the Closing Date (the “Restricted Period”),
neither the Company nor any of its Subsidiaries shall directly or indirectly
issue, offer, sell, grant any option to purchase, or otherwise dispose of (or
announce any issuance, offer, sale, grant or any option to purchase or other
disposition of) any of their respective equity or equity equivalent securities,
including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time and under any circumstances
convertible into or exchangeable for, or otherwise entitles the holder thereof
to receive, capital stock and other securities of the Company (including,
without limitation, any securities of the Company or any Subsidiary which
entitle the holder thereof to acquire Common Stock at any time, including
without limitation, any debt, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock or other
securities that entitle the holder to receive, directly or indirectly, Common
Stock) (collectively with such capital stock or other securities of the Company,
“Equivalents”) (any such issuance, offer, sale, grant, disposition or
announcement being referred to as a “Subsequent Placement”). Notwithstanding the
foregoing, this Section 4(j) shall not apply in respect of the issuance of (A)
shares of Common Stock or standard options to purchase Common Stock issued to
directors, officers, employees or consultants of the Company in connection with
their service as directors or officers of the Company, their employment by the
Company or their retention as consultants by the Company pursuant to an equity
compensation program or other contract or arrangement approved by the board of
directors of the Company (or the compensation committee of the board of
directors of the Company), provided that all such issuances of shares of Common
Stock (including, shares of Common Stock issuable upon exercise of such standard
options) after the date hereof pursuant to this clause (A) that are not
described in clause (B) below do not, in the aggregate, exceed more than 5% of
the Common Stock issued and outstanding immediately prior to the date hereof (as
adjusted for any stock dividend, stock split, stock combination or other similar
transaction) (excluding, for purposes of the foregoing 5% calculation, shares of
Common Stock issuable upon exercise of such standard options issued after the
date hereof that have been terminated or forfeited), provided further that all
such issuances must be for consideration per share or have an exercise price (as
the case may be) (as determined pursuant to the provisions of Section 3(f)(i) of
the Series A Warrants) greater than or equal to the fair market value of the
Common Stock on the date of such issuance; (B) shares of Common Stock issued
upon the conversion or exercise of Equivalents issued prior to the date hereof,
provided that such Equivalents have not been amended since the date hereof to
increase the number of shares issuable thereunder or to lower the exercise or
conversion price thereof or otherwise materially change the terms or conditions
thereof in any manner that adversely affects any of the Buyers (it being
understood that the adjustment of the exercise or conversion price thereof
pursuant to anti-dilution provisions contained therein as of the date of this
Agreement that are triggered by the transactions contemplated hereby shall not
be deemed to be an amendment; any such adjustments, however, shall be described
in Section 3(r)(ii) of the Disclosure Letter); (C) the Conversion Shares; (D)
the Warrant Shares; (E) shares of Common Stock issued or issuable as a dividend
on Common Stock; (F) up to 1,090,910 shares of Common Stock issuable pursuant to
warrants issued to the Placement Agent in connection with the transactions
contemplated by this Agreement; (G) shares of Common Stock issued by the Company
solely as a penalty pursuant to the registration rights agreements entered into
by the Company in connection with the Company’s September 28, 2005, May 12, 2006
and February 15, 2007 private placement transactions; or (H) shares of Common
Stock issued in connection with strategic transactions or acquisitions (the
primary purpose of which is not to raise capital, and which are approved in good
faith by the board of directors of the Company), provided that (i) any such
issuance after the date hereof pursuant to this clause (H) shall only be to a
Person that is, itself or through its subsidiaries, an operating company in a
business synergistic with the business of the Company; (ii) all such issuances
after the date hereof pursuant to this clause (H) do not, in the aggregate,
exceed more than 10% of the shares of Common Stock issued and outstanding
immediately prior to the date hereof (as adjusted for any stock dividend, stock
split, stock combination or other similar transaction) and (iii) all such
issuances after the date hereof pursuant to this clause (H) must have a price
per share (as determined pursuant to the provisions of Section 3(f)(i) of the
Series A Warrants) greater than or equal to the fair market value of the Common
Stock on the date of such issuance (each of the foregoing in clauses (A) through
(H), collectively the “Excluded Securities”). Notwithstanding anything to the
contrary set forth herein or in the Certificate of Determination, with respect
to clause (F) above, as well as clause (F) of the definition of “Excluded
Securities” in the Certificate of Determination, the aggregate number of shares
of Common Stock issuable pursuant to the warrants issued to the Placement Agent
in connection with the transactions contemplated by this Agreement shall not
exceed the sum of (i) 545,455 plus (ii) an amount equal to 6% of the number of
shares of Common Stock issuable upon conversion of the shares of Preferred Stock
actually issued upon exercise of the Series B Warrants, determined on the dates
such Series B Warrants are exercised.

 
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(k)         Reservation of Shares. So long as any shares of Preferred Stock or
Warrants remain outstanding, the Company shall take all action necessary to at
all times have authorized, and reserved for the purpose of issuance, no less
than 133% of (i) the maximum number of shares of Common Stock issuable upon
conversion of all the Preferred Stock (assuming for purposes hereof, that the
Preferred Stock convertible at the Conversion Price (as defined in the
Certificate of Determination and assuming that the Series B Warrants Shares are
outstanding as of the Closing) and without regard to any limitations on the
conversion of the Preferred Stock set forth in the Certificate of Determination)
and (ii) the maximum number of shares of Common Stock issuable upon exercise of
all the Common Stock Warrants (without regard to any limitations on the exercise
of the Common Stock Warrants set forth therein).

(l)           Conduct of Business.  The business of the Company and its
Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any governmental entity, except where such violations would not
result, either individually or in the aggregate, in a Material Adverse Effect.

(m)        Variable Rate Transaction. Until all of the shares of Preferred Stock
have been converted or redeemed in accordance with the terms of the Certificate
of Determination, the Company and each Subsidiary shall be prohibited from
effecting or entering into an agreement to effect any Subsequent Placement
involving a “Variable Rate Transaction.” The term “Variable Rate Transaction”
shall mean a transaction in which the Company or any Subsidiary (i) issues or
sells any Equivalents either (A) at a conversion, exercise or exchange rate or
other price that is based upon and/or varies with the trading prices of or
quotations for the shares of Common Stock at any time after the initial issuance
of such Equivalents, or (B) with a conversion, exercise or exchange price that
is subject to being reset at some future date after the initial issuance of such
Equivalents or upon the occurrence of specified or contingent events directly or
indirectly related to the business of the Company or the market for the Common
Stock, other than pursuant to a customary price-based anti-dilution provision or
(ii) enters into any agreement (including, but not limited to, an equity line of
credit) whereby the Company or any material Subsidiary may sell securities at a
future determined price (other than standard and customary “preemptive” or
“participation” rights, or in transaction where the price of the securities is
determined at the time of closing of such transaction and such closing is
subject to customary closing conditions such as shareholder approval). Each
Buyer shall be entitled to obtain injunctive relief against the Company and its
Subsidiaries to preclude any such issuance, which remedy shall be in addition to
any right to collect damages.

 
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(n)         Participation Right. Until all of the shares of Preferred Stock have
been converted or redeemed in accordance with the terms of the Certificate of
Determination, neither the Company nor any of its Subsidiaries shall, directly
or indirectly, effect any Subsequent Placement or any issuance of debt
(excluding bona fide third-party commercial bank debt) (such issuance of debt, a
“Debt Placement”) unless the Company shall have first complied with this Section
4(n). The Company acknowledges and agrees that the right set forth in this
Section 4(n) is a right granted by the Company, separately, to each Buyer.

(i)           The Company shall deliver to each Buyer an irrevocable written
notice (the “Offer Notice”) of any proposed or intended issuance or sale or
exchange (the “Offer”) of the securities being offered (the “Offered
Securities”) in a Subsequent Placement or Debt Placement, which Offer Notice
shall (w) identify and describe the Offered Securities, (x) describe the price
and other terms upon which they are to be issued, sold or exchanged, and the
number or amount of the Offered Securities to be issued, sold or exchanged, (y)
identify the Persons (if known) to which or with which the Offered Securities
are to be offered, issued, sold or exchanged and (z) offer to issue and sell to
or exchange with such Buyer in accordance with the terms of the Offer all of the
Offered Securities if the aggregate offering price for all the Offered
Securities in such Subsequent Placement or Debt Placement (as the case may be)
is less than or equal to $25,000,000 (or 25% of the Offered Securities if the
aggregate offering price for all the Offered Securities in such Subsequent
Placement or Debt Placement (as the case may be) is greater than $25,000,000, as
applicable), provided that the number of Offered Securities which such Buyer
shall have the right to subscribe for under this Section 4(n) shall be (a) based
on such Buyer’s pro rata portion of the aggregate number of shares of Preferred
Stock purchased hereunder by all Buyers (the “Basic Amount”), and (b) with
respect to each Buyer that elects to purchase its Basic Amount, any additional
portion of the Offered Securities attributable to the Basic Amounts of other
Buyers as such Buyer shall indicate it will purchase or acquire should the other
Buyers subscribe for less than their Basic Amounts (the “Undersubscription
Amount”).

(ii)           To accept an Offer, in whole or in part, such Buyer must deliver
a written notice to the Company prior to the end of the fifth (5th) Business Day
after such Buyer’s receipt of the Offer Notice (the “Offer Period”), setting
forth the portion of such Buyer’s Basic Amount that such Buyer elects to
purchase and, if such Buyer shall elect to purchase all of its Basic Amount, the
Undersubscription Amount, if any, that such Buyer elects to purchase (in either
case, the “Notice of Acceptance”). If the Basic Amounts subscribed for by all
Buyers are less than the total of all of the Basic Amounts, then such Buyer who
has set forth an Undersubscription Amount in its Notice of Acceptance shall be
entitled to purchase, in addition to the Basic Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however, that if the
Undersubscription Amounts subscribed for exceed the difference between the total
of all the Basic Amounts and the Basic Amounts subscribed for (the “Available
Undersubscription Amount”), such Buyer who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Basic Amount of such Buyer bears to
the total Basic Amounts of all Buyers that have subscribed for Undersubscription
Amounts, subject to rounding by the Company to the extent it deems reasonably
necessary. Notwithstanding the foregoing, if the Company desires to modify or
amend the terms and conditions of the Offer prior to the expiration of the Offer
Period, the Company may deliver to each Buyer a new Offer Notice and the Offer
Period shall expire on the fifth (5th) Business Day after such Buyer’s receipt
of such new Offer Notice.

 
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(iii)          The Company shall have fifteen (15) Business Days from the
expiration of the Offer Period above to (A) offer, issue, sell or exchange all
or any part of such Offered Securities as to which a Notice of Acceptance has
not been given by a Buyer (the “Refused Securities”) pursuant to a definitive
agreement(s) (the “Subsequent Placement Agreement”), but only to the offerees
described in the Offer Notice (if so described therein) and only upon terms and
conditions (including, without limitation, unit prices and interest rates) that
are not more favorable to the acquiring Person or Persons or less favorable to
the Company than those set forth in the Offer Notice and (B) publicly announce
(a) the execution of such Subsequent Placement Agreement, and (b) either (x) the
consummation of the transactions contemplated by such Subsequent Placement
Agreement or (y) the termination of such Subsequent Placement Agreement, which
shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent
Placement Agreement and any documents contemplated therein filed as exhibits
thereto.

(iv)         In the event the Company shall propose to sell less than all the
Refused Securities (any such sale to be in the manner and on the terms specified
in Section 4(n)(iii) above), then such Buyer may, at its sole option and in its
sole discretion, reduce the number or amount of the Offered Securities specified
in its Notice of Acceptance to an amount that shall be not less than the number
or amount of the Offered Securities that such Buyer elected to purchase pursuant
to Section 4(n)(ii) above multiplied by a fraction, (i) the numerator of which
shall be the number or amount of Offered Securities the Company actually
proposes to issue, sell or exchange (including Offered Securities to be issued
or sold to Buyers pursuant to this Section 4(n) prior to such reduction) and
(ii) the denominator of which shall be the original amount of the Offered
Securities. In the event that any Buyer so elects to reduce the number or amount
of Offered Securities specified in its Notice of Acceptance, the Company may not
issue, sell or exchange more than the reduced number or amount of the Offered
Securities unless and until such securities have again been offered to the
Buyers in accordance with Section 4(n)(i) above.

(v)          Upon the closing of the issuance, sale or exchange of all or less
than all of the Refused Securities, such Buyer shall acquire from the Company,
and the Company shall issue to such Buyer, the number or amount of Offered
Securities specified in its Notice of Acceptance. The purchase by such Buyer of
any Offered Securities is subject in all cases to the preparation, execution and
delivery by the Company and such Buyer of a separate purchase agreement relating
to such Offered Securities that incorporates the terms of the Offer Notice and
that is reasonably satisfactory in form and substance to such Buyer and its
counsel.

 
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(vi)         Any Offered Securities not acquired by a Buyer or other Persons in
accordance with this Section 4(n) may not be issued, sold or exchanged until
they are again offered to such Buyer under the procedures specified in this
Agreement.

(vii)        The Company and each Buyer agree that if any Buyer elects to
participate in the Offer, neither the Subsequent Placement Agreement with
respect to such Offer nor any other transaction documents related thereto
(collectively, the “Subsequent Placement Documents”) shall include any term or
provision whereby such Buyer shall be required to agree to any restrictions on
trading as to any securities of the Company owned by such Buyer prior to such
Subsequent Placement or Debt Placement.

(viii)       Notwithstanding anything to the contrary in this Section 4(n) and
unless otherwise agreed to by such Buyer, the Company shall either confirm in
writing to such Buyer that the transaction with respect to the Subsequent
Placement or Debt Placement has been abandoned or shall publicly disclose its
intention to issue the Offered Securities, in either case in such a manner such
that such Buyer will not be in possession of any material, non-public
information, by the twelfth (12th) Business Day following delivery of the Offer
Notice. If by such twelfth (12th) Business Day, no public disclosure regarding a
transaction with respect to the Offered Securities has been made, and no notice
regarding the abandonment of such transaction has been received by such Buyer,
such transaction shall be deemed to have been abandoned and such Buyer shall not
be deemed to be in possession of any material, non-public information with
respect to the Company or any of its Subsidiaries. Should the Company decide to
pursue such transaction with respect to the Offered Securities, the Company
shall provide such Buyer with another Offer Notice and such Buyer will again
have the right of participation set forth in this Section 4(n).  The Company
shall not be permitted to deliver more than one such Offer Notice (not including
subsequent Offer Notices relating to the same transaction) to such Buyer in any
sixty (60) day period.

(ix)          The restrictions contained in this Section 4(n) shall not apply in
connection with the issuance of any Excluded Securities. The Company shall not
circumvent the provisions of this Section 4(n) by providing terms or conditions
to one Buyer that are not provided to all.

(o)         Passive Foreign Investment Company.  The Company shall conduct its
business in such a manner as will ensure that the Company will not be deemed to
constitute a passive foreign investment company within the meaning of Section
1297 of the U.S. Internal Revenue Code of 1986, as amended.

 
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(p)         Restriction on Redemption and Cash Dividends. So long as any shares
of Preferred Stock are outstanding, the Company shall not, directly or
indirectly, redeem, or declare or pay any cash dividend or distribution on, the
Common Stock without the prior express written consent of the Required Holders
(as defined in the Certificate of Determination).

(q)         DTC Eligibility. The Company shall pay all fees to DTC (as defined
below) required to be paid, and shall take all other necessary actions, so that
the Company is eligible to participate in DTC’s Fast Automated Securities
Transfer Program no later than thirty (30) days after the Closing Date.

 
5.
REGISTER; TRANSFER AGENT INSTRUCTIONS; NO LEGENDS.

(a)         Register. The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to each holder of Securities), a register for the Preferred Stock and the
Warrants in which the Company shall record the name and address of the Person in
whose name the Preferred Stock and the Warrants have been issued (including the
name and address of each transferee), the number of shares of Preferred Stock
held by such Person, the number of Conversion Shares issuable upon conversion of
the Preferred Stock and the number of Warrant Shares issuable upon exercise of
the Warrants held by such Person. The Company shall keep the register open and
available at all times during business hours for inspection of any Buyer or its
legal representatives.

(b)         Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its transfer agent and any subsequent transfer agent in the form
acceptable to the Buyers (the “Irrevocable Transfer Agent Instructions”) to
issue certificates (free of any restrictive or other legends) or credit shares
to the applicable balance accounts at The Depository Trust Company (“DTC”),
registered in the name of each Buyer or its respective nominee(s), for the
Conversion Shares and the Warrant Shares issuable upon exercise of the Common
Stock Warrants in such amounts as specified from time to time by each Buyer to
the Company upon conversion of the Preferred Stock, issuance of Common Stock as
dividends on the Preferred Stock or the exercise of the Common Stock Warrants
(as the case may be). The Company represents and warrants that no instruction
other than the Irrevocable Transfer Agent Instructions referred to in this
Section 5(b) will be given by the Company to its transfer agent with respect to
the Securities, and that the Securities shall be freely transferable on the
books and records of the Company. If a Buyer effects a sale, assignment or
transfer of the Securities, the Company shall permit the transfer and shall
promptly instruct its transfer agent to issue one or more certificates (free of
any restrictive or other legends) or credit shares to the applicable balance
accounts at DTC in such name and in such denominations as specified by such
Buyer to effect such sale, transfer or assignment. The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to a
Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach
of its obligations under this Section 5(b) will be inadequate and agrees, in the
event of a breach or threatened breach by the Company of the provisions of this
Section 5(b), that a Buyer shall be entitled, in addition to all other available
remedies, to an order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required. The Company shall cause
its counsel to issue the legal opinion referred to in the Irrevocable Transfer
Agent Instructions to the Company’s transfer agent on the Closing Date and such
other legal opinions as the transfer agent may require from time to time in
order to ensure that the Securities are issued free of any restrictive or other
legends. Any fees (with respect to the transfer agent, counsel to the Company or
otherwise) associated with the issuance of such opinions shall be borne by the
Company.

 
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(c)         Legends. The certificates or other instruments representing the
Securities shall not bear any restrictive or other legends.

 
6.
CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

(a)         The obligation of the Company hereunder to issue and sell the
Preferred Stock and the related Warrants to each Buyer at the Closing is subject
to the satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company’s sole benefit
and may be waived by the Company at any time in their sole discretion by
providing each Buyer with prior written notice thereof:

(i)            Such Buyer shall have executed each of the Transaction Documents
to which it is a party and delivered the same to the Company.

(ii)          Such Buyer shall have delivered to the Company the Purchase Price
(less, in the case of Cranshire, the amounts withheld pursuant to Section 4(g))
for the Preferred Stock and the related Warrants being purchased by such Buyer
at the Closing by wire transfer of immediately available funds pursuant to the
wire instructions provided by the Company.

(iii)         the aggregate Purchase Price hereunder for all Buyers shall be no
less than $5,000,000.

(iv)         Each and every representation and warranty of such Buyer shall be
true and correct as of the date when made and as of the Closing Date as though
originally made at that time (except for representations and warranties that
speak as of a specific date, which shall be true and correct as of such date),
and such Buyer shall have performed, satisfied and complied with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Buyer at or prior to the Closing Date.

 
7.
CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.

(a)         The obligation of each Buyer hereunder to purchase its shares of
Preferred Stock and its related Warrants at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for each Buyer’s sole benefit and
may be waived by such Buyer at any time in its sole discretion by providing the
Company with prior written notice thereof:

(i)           The Company shall have duly executed and delivered to such Buyer
each of the Transaction Documents and the Company shall have duly executed and
delivered to such Buyer a certificate representing the number of shares of
Preferred Stock set forth across from such Buyer’s name in column (3) of the
Schedule of Buyers and the related Warrants (for such number of shares of Common
Stock as is set forth across from such Buyer’s name in columns (4), (5) and (6)
of the Schedule of Buyers) being purchased by such Buyer at the Closing pursuant
to this Agreement.

 
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(ii)          Such Buyer shall have received the opinion of Weintraub Genshlea
Chediak Law Corporation, the Company’s counsel, dated as of the Closing Date, in
the form reasonably acceptable to such Buyer.

(iii)         The Company shall have delivered to such Buyer a copy of the
Irrevocable Transfer Agent Instructions, in form acceptable to such Buyer, which
instructions shall have been delivered to and acknowledged in writing by the
Company’s transfer agent.

(iv)         The Company shall have delivered to such Buyer a certificate
evidencing the formation and good standing of the Company and each of its
material Subsidiaries in each such entity’s jurisdiction of formation issued by
the Secretary of State (or comparable office) of such jurisdiction of formation
as of a date within ten (10) days of the Closing Date.

(v)          The Company shall have delivered to such Buyer a certificate
evidencing the Company’s and each material Subsidiary’s qualification as a
foreign corporation and good standing issued by the Secretary of State (or
comparable office) of each jurisdiction in which the Company and each Subsidiary
is so qualified, as of a date within ten (10) days of the Closing Date.

(vi)         The Company shall have delivered to such Buyer a certified copy of
the Articles of Incorporation as certified by the California Secretary of State
within ten (10) days of the Closing Date.

(vii)        The Company shall have delivered to such Buyer a certificate,
executed by the Secretary of the Company and dated as of the Closing Date, as to
(i) the resolutions consistent with Section 3(b) as adopted by the Company’s
board of directors in a form reasonably acceptable to such Buyer, (ii) the
Articles of Incorporation, and (iii) the Bylaws, each as in effect at the
Closing, and (iv) the number of shares of Common Stock outstanding on the day
immediately preceding the Closing Date, each in the form acceptable to such
Buyer.

(viii)       Each and every representation and warranty of the Company shall be
true and correct as of the date when made and as of the Closing Date as though
originally made at that time (except for representations and warranties that
speak as of a specific date, which shall be true and correct as of such date),
and the Company shall have performed, satisfied and complied with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date.  Such Buyer
shall have received a certificate, executed by the Chief Executive Officer of
the Company, dated as of the Closing Date, to the foregoing effect and as to
such other matters as may be reasonably requested by such Buyer in the form
acceptable to such Buyer.

(ix)          The Common Stock (I) shall be designated for quotation or listed
on the Principal Market and (II) shall not have been suspended, as of the
Closing Date, by the SEC or the Principal Market from trading on the Principal
Market nor shall suspension by the SEC or the Principal Market have been
threatened, as of the Closing Date, either (A) in writing by the SEC or the
Principal Market or (B) by falling below the minimum maintenance requirements of
the Principal Market.

 
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(x)           The Company shall have obtained all governmental, regulatory or
third party consents and approvals, if any, necessary for the sale of the
Securities, including without limitation, those required by the Principal
Market.

(xi)          No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the Transaction
Documents.

(xii)         Since the date of execution of this Agreement, no event or series
of events shall have occurred that reasonably would have or result in a Material
Adverse Effect.

(xiii)        The Company shall have obtained approval of the Principal Market
to list the Conversion Shares and the Warrant Shares issuable upon exercise of
the Common Stock Warrants to the extent such approval is required by the
Principal Market.

(xiv)       (A) The Registration Statement shall remain effective at all times
up to and including the Closing Date and the issuance of the Securities to the
Buyers may be made thereunder; (B) the Prospectus Supplement shall have been
delivered to the Buyers; (C) neither the Company nor any of the Buyers shall
have received notice that the SEC has issued or intends to issue a stop order
with respect to the Registration Statement or that the SEC otherwise has
suspended or withdrawn the effectiveness of the Registration Statement either,
temporarily or permanently, or intends or has threatened to do so; and (D) no
other suspension of the use or withdrawal of the effectiveness of the
Registration Statement or Prospectus shall exist.

(xv)         The Company shall have delivered to such buyer the Prospectus and
Prospectus Supplement (unless the conditions set forth under Rule 172 under the
1933 Act have been satisfied).

 
8.
TERMINATION.

In the event that the Closing shall not have occurred with respect to a Buyer on
or before ten (10) days from the date hereof due to the Company’s or such
Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7 above
(and a non-breaching party’s failure to waive such unsatisfied condition(s)),
any such non-breaching party at any time shall have the right to terminate its
obligations under this Agreement with respect to such breaching party on or
after the close of business on such date without liability of such non-breaching
party to any other party; provided, however, that the abandonment of the sale
and purchase of the Preferred Stock and the Warrants shall be applicable only to
such non-breaching party providing such written notice; provided further,
notwithstanding any such termination the Company shall remain obligated to
reimburse the non-breaching Buyers for the expenses described in Section 4(g)
above. Nothing contained in this Section 8 shall be deemed to release any party
from any liability for any breach by such party of the terms and provisions of
this Agreement or the other Transaction Documents or to impair the right of any
party to compel specific performance by any other party of its obligations under
this Agreement or the other Transaction Documents.

 
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9.
MISCELLANEOUS.

(a)         Governing Law; Jurisdiction; Jury Trial. All questions concerning
the construction, validity, enforcement and interpretation of this Agreement
shall be governed by the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

(b)         Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. In the event that any signature is
delivered by facsimile transmission or by an e-mail which contains a portable
document format (.pdf) file of an executed signature page, such signature page
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
signature page were an original thereof.

(c)         Headings; Gender. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Agreement. Unless the context clearly indicates otherwise, each pronoun herein
shall be deemed to include the masculine, feminine, neuter, singular and plural
forms thereof. The terms “including,” “includes,” “include” and words of like
import shall be construed broadly as if followed by the words “without
limitation.”  The terms “herein,” “hereunder,” “hereof” and words of like import
refer to this entire Agreement instead of just the provision in which they are
found.

(d)         Severability.  If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

 
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(e)         Entire Agreement; Amendments. This Agreement, the other Transaction
Documents and the schedules and exhibits attached hereto and thereto and the
instruments referenced herein and therein supersede all other prior oral or
written agreements between the Buyers, the Company, their affiliates and Persons
acting on their behalf with respect to the matters contained herein and therein
(provided that the foregoing shall not have any effect on any agreements any
Buyer has entered into with the Company or any of its Subsidiaries prior to the
date hereof with respect to any prior investment made by such Buyer in the
Company), and this Agreement, the other Transaction Documents, the schedules and
exhibits attached hereto and thereto and the instruments referenced herein and
therein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor any Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be amended or waived other than by an instrument in writing
signed by the Company and the holders of all of the then outstanding shares of
Preferred Stock, and any amendment or to, or waiver of any provision of, this
Agreement made in conformity with the provisions of this Section 9(e) shall be
binding on all Buyers and holders of Securities, as applicable, provided that
any party may give a waiver in writing as to itself. No such amendment or waiver
(unless given pursuant to the foregoing proviso) shall be effective to the
extent that it applies to less than all of the holders of the shares of
Preferred Stock then outstanding. No consideration shall be offered or paid to
any Person to amend or consent to a waiver or modification of any provision of
any of the Transaction Documents unless the same consideration also is offered
to all of the parties to the Transaction Documents, holders of the Preferred
Stock or holders of the Warrants (as the case may be). The Company has not,
directly or indirectly, made any agreements with any Buyers relating to the
terms or conditions of the transactions contemplated by the Transaction
Documents except as set forth in the Transaction Documents. Without limiting the
foregoing, the Company confirms that, except as set forth in this Agreement, no
Buyer has made any commitment or promise or has any other obligation to provide
any financing to the Company, any Subsidiary or otherwise.

(f)          Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) Business Day after deposit
with an overnight courier service with next day delivery specified, in each
case, properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:

If to the Company:

NutraCea
5090 N. 40th Street , Suite 400
Phoenix, AZ 85018
Telephone:  (602) 522-3000
Facsimile:  (602) 522-3001
Attention:  Chief Executive Officer

 
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With a copy (for informational purposes only) to:

Weintraub Genshlea Chediak Law Corporation
400 Capitol Mall
Sacramento, CA 95814
Telephone:  (916) 558-6164
Facsimile:  (916) 446-1611
Attention:  Christopher Chediak, Esq.
Michael DeAngelis, Esq.

If to the Transfer Agent:

American Stock Transfer & Trust 
59 Maiden Lane, Plaza Level - Lobby 
New York, NY  10038 
Telephone:  718 921 8143
Facsimile: 718-921-8116
Attention:  Joe Wolf, Vice President

If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers, with copies to such Buyer’s representatives as set forth on the Schedule
of Buyers,

with a copy (for informational purposes only) to:

Greenberg Traurig, LLP
77 W. Wacker Drive, Suite 2400
Chicago, Illinois 60602
Telephone:  (312) 456-8400
Facsimile:  (312) 456-8435
Attention:  Peter H. Lieberman, Esq.
Todd A. Mazur, Esq.

or to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party ten (10) days prior to the effectiveness of such change;
provided, that Greenberg Traurig, LLP shall only be provided copies of notices
sent to Cranshire. Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above,
respectively.

(g)         Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of any of the Securities. The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the holders of all of the aggregate number of shares of Common Stock
(or securities issued in exchange for Common Stock) issued and issuable under
the Transaction Documents, including, without limitation, by way of a
Fundamental Transaction (as defined in the Certificate of Determination) (unless
the Company is in compliance with the applicable provisions governing
Fundamental Transactions set forth in the Certificate of Determination and
Warrants). A Buyer may assign some or all of its rights hereunder in connection
with a transfer of any of its Securities without the consent of the Company,
provided the Company receives written notice of the rights assigned and the name
of such assignee within a reasonable amount of time after such assignment and
such transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of the Transaction Documents that apply to the
“Buyers.” After such assignment, the assignee shall be deemed to be a Buyer
hereunder with respect to such assigned rights.

 
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(h)         No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, other than the Indemnitees referred to in Section 9(k).

(i)           Survival. The representations, warranties, agreements and
covenants shall survive the Closing; provided that the survival period for the
representations and warranties of the Company shall continue only for
forty-eight (48) months following the Closing Date. Each Buyer shall be
responsible only for its own representations, warranties, agreements and
covenants hereunder.

(j)           Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

(k)         Indemnification.

(i)           In consideration of each Buyer’s execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and in addition to
all of the Company’s other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless each Buyer and each
holder of any Securities and all of their stockholders, partners, members,
officers, directors, employees and direct or indirect investors and any of the
foregoing Persons’ agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Indemnitees”) from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and disbursements
(the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in any of the Transaction
Documents, (b) any breach of any covenant, agreement or obligation of the
Company contained in any of the Transaction Documents or (c) any cause of
action, suit or claim brought or made against such Indemnitee by a third party
(including for these purposes a derivative action brought on behalf of the
Company) and arising out of or resulting from (i) the execution, delivery,
performance or enforcement of any of the Transaction Documents, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, (iii) any
disclosure properly made by such Buyer pursuant to Section 4(i), or (iv) the
status of such Buyer or holder of the Securities as an investor in the Company
pursuant to the transactions contemplated by the Transaction Documents, except,
with respect to clause (c), to the extent such Indemnified Liability arises
solely from an Indemnitee’s gross negligence or willful misconduct. The Company
shall reimburse the Indemnitees, promptly as such expenses are incurred and are
due and payable, for any legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Indemnified
Liabilities.  To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.

 
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(ii)          Promptly after receipt by an Indemnitee under this Section 9(k) of
notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving an Indemnified Liability, such
Indemnitee shall, if a claim in respect thereof is to be made against the
Company under this Section 9(k), deliver to the Company a written notice of the
commencement thereof, and the Company shall have the right to participate in,
and, to the extent the Company so desires, to assume control of the defense
thereof with counsel mutually satisfactory to the Company and the Indemnitee;
provided, however, that an Indemnitee shall have the right to retain its own
counsel with the fees and expenses of such counsel to be paid by the Company if:
(i) the Company has agreed in writing to pay such fees and expenses; (ii) the
Company shall have failed promptly to assume the defense of such Indemnified
Liability and to employ counsel reasonably satisfactory to such Indemnitee in
any such Indemnified Liability; or (iii) the named parties to any such
Indemnified Liability (including any impleaded parties) include both such
Indemnitee and the Company, and such Indemnitee shall have been advised by
counsel that a conflict of interest is likely to exist if the same counsel were
to represent such Indemnitee and the Company (in which case, if such Indemnitee
notifies the Company in writing that it elects to employ separate counsel at the
expense of the Company, then the Company shall not have the right to assume the
defense thereof and such counsel shall be at the expense of the Company),
provided further, that in the case of clause (iii) above the Company shall not
be responsible for the reasonable fees and expenses of more than one (1)
separate legal counsel for such Indemnitee. The Indemnitee shall reasonably
cooperate with the Company in connection with any negotiation or defense of any
such action or Indemnified Liability by the Company and shall furnish to the
Company all information reasonably available to the Indemnitee which relates to
such action or Indemnified Liability. The Company shall keep the Indemnitee
reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. The Company shall not be liable
for any settlement of any action, claim or proceeding effected without its prior
written consent, provided, however, that the Company shall not unreasonably
withhold, delay or condition its consent. The Company shall not, without the
prior written consent of the Indemnitee, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnitee of a release from all liability in respect to such Indemnified
Liability or litigation, and such settlement shall not include any admission as
to fault on the part of the Indemnitee. Following indemnification as provided
for hereunder, the Company shall be subrogated to all rights of the Indemnitee
with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made. The failure to deliver written notice
to the Company within a reasonable time of the commencement of any such action
shall not relieve the Company of any liability to the Indemnitee under this
Section 9(k), except to the extent that the Company is materially and adversely
prejudiced in its ability to defend such action.

 
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(iii)        The indemnification required by this Section 9(k) shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Liabilities are
incurred.

(iv)        The indemnity agreement contained herein shall be in addition to (A)
any cause of action or similar right of the Indemnitee against the Company or
others, and (B) any liabilities the Company may be subject to pursuant to the
law.

(l)          Construction. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party. For
clarification purposes, the Recitals are part of this Agreement and are hereby
incorporated by reference.

(m)        Remedies.  Each Buyer and each holder of any Securities shall have
all rights and remedies set forth in the Transaction Documents and all rights
and remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any Person having any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. Furthermore, the
Company recognizes that in the event that it fails to perform, observe, or
discharge any or all of its obligations under the Transaction Documents, any
remedy at law may prove to be inadequate relief to the Buyers. The Company
therefore agrees that the Buyers shall be entitled to seek specific performance
and/or temporary, preliminary and permanent injunctive or other equitable relief
from any court of competent jurisdiction in any such case without the necessity
of proving actual damages and without posting a bond or other security.

(n)         Withdrawal Right. Notwithstanding anything to the contrary contained
in (and without limiting any similar provisions of) the Transaction Documents,
whenever any Buyer exercises a right, election, demand or option under a
Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Buyer may rescind or
withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights

(o)         Payment Set Aside. To the extent that the Company makes a payment or
payments to any Buyer hereunder or pursuant to any of the other Transaction
Documents or any of the Buyers enforce or exercise their rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any
bankruptcy law, foreign, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.

 
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(p)         Independent Nature of Buyers’ Obligations and Rights.  The
obligations of each Buyer under the Transaction Documents are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under any
Transaction Document.  Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to constitute the Buyers as, and the Company acknowledges that the Buyers
do not so constitute, a partnership, an association, a joint venture or any
other kind of group or entity, or create a presumption that the Buyers are in
any way acting in concert or as a group or entity with respect to such
obligations or the transactions contemplated by the Transaction Documents or any
matters, and the Company acknowledges that the Buyers are not acting in concert
or as a group, and the Company shall not assert any such claim, with respect to
such obligations or the transactions contemplated by the Transaction Documents.
The decision of each Buyer to purchase Securities pursuant to the Transaction
Documents has been made by such Buyer independently of any other Buyer. Each
Buyer acknowledges that no other Buyer has acted as agent for such Buyer in
connection with such Buyer making its investment hereunder and that no other
Buyer will be acting as agent of such Buyer in connection with monitoring such
Buyer’s investment in the Securities or enforcing its rights under the
Transaction Documents. The Company and each Buyer confirms that each Buyer has
independently participated with the Company in the negotiation of the
transaction contemplated hereby with the advice of its own counsel and advisors.
Each Buyer shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement or out
of any other Transaction Documents, and it shall not be necessary for any other
Buyer to be joined as an additional party in any proceeding for such purpose.
The use of a single agreement to effectuate the purchase and sale of the
Securities contemplated hereby was solely in the control of the Company, not the
action or decision of any Buyer, and was done solely for the convenience of the
Company and not because it was required or requested to do so by any Buyer.  It
is expressly understood and agreed that each provision contained in this
Agreement and in each other Transaction Document is between the Company and a
Buyer, solely, and not between the Company and the Buyers collectively and not
between and among the Buyers.

[signature pages follow]

 
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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Agreement to be duly executed as of the date first
written above.

 
COMPANY:
         
NUTRACEA
                   
By:
       
Name:
     
Title:
 

 

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IN WITNESS WHEREOF, Buyer and the Company have caused their respective signature
page to this Agreement to be duly executed as of the date first written above.

 
BUYER:
           
 
           
 
 
   
 
 
                         
By:
 
   
Its:
 
 

 

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EXHIBITS

Exhibit A
Form of Certificate of Determination

Exhibit B
Form of Series A Warrant

Exhibit C
Form of Series B Warrant

Exhibit D
Form of Series C Warrant

 
 

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