ex10_29.htm


    
      

    

    Exhibit
10.29

    
      
        
           

          [*]
- Designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the commission.

           

          ASSET
PURCHASE AGREEMENT

           

           

        

        
           
This Asset Purchase Agreement (this "Agreement"), is dated as of
December 1, 2008, is by and between Farmers' Rice Cooperative, a cooperative
association organized under the California Food and Agricultural Code ("FRC" or "Seller"), with principal
offices at 2525 Natomas Park Drive, Sacramento, California 95851, and NutraCea,
a California corporation with principal offices at 5090 40th
North Street, Suite 400, Phoenix, Arizona 85018 ("Buyer"). Seller and Buyer
agree as follows:

        

        


        
          1.           Sale and
Purchase.

           

           
1.1           Agreement. Seller
agrees to sell, convey and transfer to Buyer and Buyer agrees to purchase and
assume from Seller certain assets of Seller's business identified in Section 1.2
(the "Assets"), for the Purchase Price (as defined below) and on the terms and
conditions set forth herein. The sale of the Assets is entire and inseverable,
and Buyer shall have no obligation to purchase any of the Assets unless all
Assets shall be simultaneously sold.

        

        
          


           
1.2           The Assets. The
Assets to be sold and purchased under this Agreement are as
follows:

          


        

         

        
           
(a)           All rights
and interest in and to all of the accounts (the "Customer Accounts") of the
customers (the "Customers")
of Seller identified in that certain Stabilized Rice Bran Processing,
Sales and Marketing Agreement, dated September 1, 2005 (the "Prior Marketing Agreement"),
between the Seller and The RiceX Company (as predecessor-in-interest to
the Buyer) and listed on Schedule A attached
hereto; and

          


        

        
           
(b)           All rights
in and title to the "Fiberice" trademark, and any associated trade names, logos,
common law trademarks and service mark registrations and applications
registrations and applications therefore and all goodwill associated therewith
throughout the world identified on Schedule B attached
hereto (collectively, the "Trademarks").

          


        

        
          The
Customer Accounts and the Trademarks are referred to collectively as the "Assets".

          


        

        
          For
avoidance of doubt, all rights and claims of Seller to collect accounts
receivable from Customers for shipments completed by Seller to such Customers
prior to the Closing (as defined below) and all obligations and liabilities of
Seller with regard to the Customer Accounts and Trademarks arising with regard
to any shipments, acts, omissions, or obligations for the period prior to the
Closing ("Retained
Liabilities") are not part of the sale and purchase contemplated
hereunder, are excluded from the Assets and assumed obligations and shall remain
the property and liabilities of Seller after the Closing.

          


        

        
           
1.3           Restated Stabilized Rice
Bran Agreement. At the Closing, the parties hereto further agree to enter
into a Restated and Amended Stabilized Rice Bran Processing, Sales and Marketing
Agreement in the form attached hereto as Exhibit B (the "Restated Marketing Agreement"),
to extend and amend the Prior Marketing
Agreement.

        

      

       

      
        
          
            
               


            

            
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          2.           Purchase Price and
Payment.

          


        

        
           
2.1           Purchase Price. In
consideration of the transfer of the Assets and the covenant not to compete
described in Section 7.2, Buyer shall pay to Seller the aggregate purchase price
of Three Million One Hundred Thousand Dollars ($3,100,000) in cash (the "Purchase
Price").

          


        

        
           
2.2           Payment of Purchase
Price. The Purchase Price shall be delivered by Buyer to Seller as
follows:

           

        

        
           
(a)           At the
Closing, Buyer shall deliver to Seller One Million Dollars ($1,000,000) (the
"Initial Payment") by
wire transfer of immediately available funds to the account specified by the
Seller.

          


        

        
           
(b)           The balance
of the Purchase Price (i.e. $2,100,000) shall be payable in twelve (12) equal
quarterly installments of One Hundred and Seventy-Five Thousand Dollars
($175,000) each, commencing on March 1, 2009 and continuing on each following
June 1, September 1, December 1, and March 1 thereafter until paid in full, such
that the entire Purchase Price shall be paid in full by December 1, 2011. Such
payments shall be made by wire transfer of good and valuable funds to the
account specified by Seller.

           

        

        
           
2.3           Security Interest. As
security for the prompt, complete and indefeasible payment when due (whether on
the payment dates or otherwise) of the Purchase Price, Buyer grants to Seller a
security interest in the following personal property of Buyer (collectively, the
"Collateral"): (a) the
Assets, and (b) to the extent not otherwise included, all proceeds (as defined
in the Uniform Commercial Code as the same is, from time to time, in effect in
the State of California (the "UCC")) of the foregoing.

          


        

        
           
2.4           Events of Default.
The occurrence of any one or more of the following events shall be an "Event of Default" " with
respect to Buyer or Seller, as applicable:

           

        

        
           
(a)           Buyer fails
to pay Seller any portion or installments of the Purchase Price and such failure
continues for more than ten (10) days after written notice of default from
Seller to Buyer specifying the amounts past due in sufficient detail to allow
Buyer the reasonable opportunity to cure within such ten (10) day
period;

          


           
(b)           Buyer or
Seller breaches or defaults in the performance of any covenant or obligation
under this Agreement or the Restated Marketing Agreement, and such breach or
default continues for more than thirty (30) days after written notice of such
default from Seller to Buyer, or Buyer to Seller, as applicable, specifying the
breach or default in sufficient detail to allow Buyer or Seller, as applicable,
the reasonable opportunity to cure within such thirty (30) day period;
or

          


        

        
            (c)           Buyer
or Seller (A) (i) shall file a voluntary petition in bankruptcy; or (ii) shall
seek or consent to or acquiesce in the appointment of any trustee, receiver, or
liquidator of Buyer or Seller, as applicable, or of all or substantially all of
the assets or property of Buyer or Seller, as applicable; or (iii) ninety (90)
days shall have expired after the commencement of an involuntary action against
Buyer or Seller, as applicable, seeking reorganization, liquidation, dissolution
or similar relief in bankruptcy without such action being dismissed; or (iv)
Buyer or Seller, as applicable, shall file any answer admitting or not
contesting the material allegations of a petition filed against Buyer or Seller,
as applicable, in any such proceedings; or (v) the court in which such
proceedings are pending shall enter a decree or order granting the relief sought
in any such proceedings.

        

        


        
          
            
               


            

            
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2.5           Remedies Upon an Event of
Default.

        

        
          


        

        
           
2.5.1.       Event of Default of
Buyer.

          


        

        
           
(a)           General. Upon the
occurrence and during the continuance of any one or more Events of Default of
Buyer, Seller may, at its option, accelerate and demand payment of all or any
part of the Purchase Price and declare it to be immediately due and payable.
Seller may exercise all rights and remedies with respect to the Collateral
available to it under the UCC and other applicable law, including the right to
release, hold, sell, lease, liquidate, collect, realize upon, or otherwise
dispose of all or any part of the Collateral and the right to occupy, utilize,
process and commingle the Collateral. All Seller's rights and remedies shall be
cumulative and not exclusive.

          


           
(b)           Collection;
Foreclosure. Upon the occurrence and during the continuance of any Event
of Default of Buyer, Seller may, at any time or from time to time, apply,
collect, liquidate, sell in one or more sales, lease or otherwise dispose of,
any or all of the Collateral, in its then condition or following any
commercially reasonable preparation or processing, in such order as Seller may
elect. Any such sale may be made either at public or private sale at its place
of business or elsewhere. Buyer agrees that any such public or private sale may
occur upon ten (10) calendar days' prior written notice to Buyer. The proceeds
of any sale, disposition or other realization upon all or any part of the
Collateral shall be applied by Seller in the following order of
priorities:

          


        

        
           
First, to Seller in an amount sufficient to pay in full Seller's reasonable
attorneys' fees and expenses;

          


           
Second, to Seller in an amount equal to the then unpaid amount of the Purchase
Price; and

          


           
Finally, to Buyer or its representatives.

          


        

        
          Seller
shall be deemed to have acted reasonably in the custody, preservation and
disposition of any of the Collateral if it complies with the obligations of a
secured party under the UCC.

          


        

        
           
(c)           Termination of Covenant Not
to Compete. Upon the occurrence of any Event of Default of Buyer, the
covenant not to compete set forth in Section 7.2 shall immediately terminate and
be suspended until Seller shall have received the full amount of the Purchase
Price, after which it shall again apply as set forth in Section 7.2; provided
that if Buyer cures all existing Events of Default later than six months after
the first event giving rise to any existing Event of Default, Buyer's covenant
not to compete shall be reinstated and once again take effect only if Buyer also
reimburses Seller for all costs and expenditures expended in good faith in an
effort to obtain an alternate source of stabilized rice bran for distribution to
the Customers.

        

        


        
          
            
               


            

            
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(d)           No Waiver. Seller
shall be under no obligation to marshal any of the Collateral for the benefit of
Buyer or any other person, and Buyer expressly waives all rights, if any, to
require Seller to marshal any Collateral.

        

        
           

           
(e)           Cumulative Remedies.
The rights, powers and remedies of Seller hereunder shall be in addition to all
rights, powers and remedies given by statute or rule of law and are cumulative.
The exercise of any one or more of the rights, powers and remedies provided
herein shall not be construed as a waiver of or election of remedies with
respect to any other rights, powers and remedies of Seller.

          


        

        
           
2.5.2.       Event of Default of
Seller.

        

        
          


        

        
           
(a)           Offset Against or
Satisfaction of Purchase Price. In addition to any other rights at
law or in equity, upon the occurrence of any one or more Events of Default of
Seller, Buyer's payment obligations under Section 2.2(b) shall be reduced by the
greater of (i) Buyer's actual damages resulting from such Event of Default or
(ii) if Seller's breach consists in whole or in part of a breach of the covenant
not to compete, two times the amount of Seller's net profits earned in violation
of the covenant not to compete; provided, if Seller breaches this Agreement a
third time after two prior breaches for which Buyer has given notice of default
and such third breach is not cured within the applicable cure period and a third
Event of Default occurs, the Purchase Price shall be deemed satisfied and paid
in full, and all obligations of Seller under this Agreement shall continue in
full force and effect.

        

        


        
           
(b)           Cumulative Remedies.
The rights, powers and remedies of Buyer hereunder shall be in addition to all
rights, powers and remedies given by statute or rule of law and are cumulative.
The exercise of any one or more of the rights, powers and remedies provided
herein shall not be construed as a waiver of or election of remedies with
respect to any other rights, powers and remedies of Buyer.

          


        

        
           
2.6           Assumed Liabilities.
At the Closing, Buyer assumes and agrees to discharge all obligations under the
Customer Accounts arising with regard to any shipments, acts, omissions, or
obligations for the period on and after the Closing (the "Assumed
Liabilities").

          


        

        
           
2.7           Allocation of Purchase
Price. The Purchase Price shall be allocated as provided on Schedule C. Buyer
shall provide Seller with an allocation of the Purchase Price among the Assets,
which shall be determined in accordance with Treasury Regulation Section
1.1060-1T and which, absent manifest error, shall apply for purposes of
completing IRS Form 8594 (as provided for below). Except in the event of a
subsequent adjustment to the Purchase Price which adjustment shall be reflected
in the allocation hereunder in a manner consistent with the Treasury
Regulations, neither Seller nor Buyer shall file any return or take a position
with any taxing authority that is inconsistent with any allocation pursuant
hereto. "Treasury Regulations"
means the Treasury Regulations (including Temporary Regulations)
promulgated by the United States Department of Treasury with respect to the
Internal Revenue Code of 1986, as amended to the date hereof (the "Code"), or other federal tax
statutes.

        

        
          


           
2.8           Payments Received After
Closing; Pending Shipments. In the event that, after the Closing, (a)
Buyer shall receive any payment of any amount from a Customer that is not an
Asset acquired hereunder or (b) Seller shall receive any payment from a Customer
that is included in the Assets or shall hold a deposit for shipments not
completed prior to the Closing, the party receiving such payment (or deposit
amount) shall promptly deliver it to Seller (in the case of any such amounts
received by Buyer) or Buyer (in the case of any such amounts received by
Seller), endorsed where necessary, without recourse in favor of such other
party, provided, however, that Seller's obligations under this Section 2.8 shall
automatically cease and terminate upon an Event of Default. In addition, if all
or any portion of any Customer orders are pending as of the Closing, then for
the product shipments that are not completed as of the Closing Buyer shall
reimburse Seller for Seller's third-party expenses (excluding items of salary
and other overhead) with respect to such pending shipments and Buyer shall be
entitled to all Customer payments for such shipments.

        

        


        
          
            
               


            

            
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          3.           Closing. The closing
of the purchase and sale contemplated by this Agreement and transfer of
possession of the Assets shall be given to Buyer (the "Closing") at the offices of
Weintraub Genshlea Chediak Law Corporation, 400 Capitol Mall, 11th
Floor, Sacramento, California, on the date hereof (the "Closing Date"). At the
Closing:

          


        

        
           
3.1           Seller. At the
Closing, Seller shall deliver to Buyer:

          


        

        
           
(a)           All
documents and instruments necessary to carry out the terms and provisions of
this Agreement and to effectuate the purpose of the transactions, including,
without limitation, properly executed assignments of Seller's rights to the
Customer Accounts, a list of the following information related to the Customer
Accounts: names, titles, addresses, e-mail addresses, phone numbers, and
complete account history for each such client and customer, conveyances of all
of its right, title and interest in and to the Trademarks, including without
limitation, the Assignment of Trademark instrument attached hereto as Exhibit A, and the
duly executed Restated Marketing Agreement; and

          


        

        
           
(b)           Resolutions
of the Board of Directors of Seller authorizing the execution and delivery of
this Agreement and the performance of the transactions contemplated hereby,
certified by its Secretary.

          


        

        


        
           
3.2           Buyer. Buyer shall
deliver to Seller the Initial Payment by wire transfer to an account specified
by Seller.

          


        

        
           
3.3           Other Documents. Each
of Seller and Buyer shall execute and deliver each of the agreements and
documents required to be executed and delivered by such party pursuant to
Section 8.

          


           
3.4           Form and Content.
Unless otherwise provided herein, all such instruments so delivered shall be
dated the Closing Date and be satisfactory as to form and content to each party
and their respective counsel; provided however that neither party shall
disapprove any instrument that gives that party the substance of what the party
is entitled to receive hereunder.

        

        


        
          
            
               


            

            
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          4.           Representations,
Undertakings and Warranties by Seller. The Seller makes the following
representations and warranties, each of which shall be true and correct as of
the Effective Date of this Agreement and as of the Closing:

          


        

        
           
4.1           Power and Authority.
Seller has full requisite power to own and use the Assets as currently used, and
to convey the Assets to Seller.

          


        

        
           
4.2           Binding Agreement.
This Agreement has been duly executed and delivered by Seller and constitutes
the valid and binding agreement of Seller enforceable in accordance with its
terms subject, as to the enforcement of remedies, to general equitable
principles and to bankruptcy, insolvency and similar laws affecting creditors'
rights generally.

          


           
4.3           Absence of Conflicts and
Consent Requirements. Seller's execution and delivery of this Agreement
and performance of its obligations hereunder do not: (a) conflict with or
violate Seller's Articles of Incorporation or Bylaws; (b) violate or, alone or
with notice or the passage of time, result in the breach or the termination of,
or otherwise give any contracting party the right to terminate or declare a
default under, the terms of any written agreement relating to the Assets to
which Seller is a party, or (c) violate any judgment, order, decree, law,
statute, regulation or other judicial or governmental restriction to which
Seller is subject. There is no requirement applicable to Seller to make any
filing with, or to obtain any permit, authorization, consent or approval of, any
governmental or regulatory authority as a condition to the lawful performance by
Seller and of its obligations hereunder. No person has any power of attorney to
act on behalf of Seller in connection with its Assets. The parties acknowledge
that the consents set forth on Schedule 4.3 are required in connection with the
transactions contemplated herein. Seller shall obtain all such consents prior to
Closing.

          


        

        
           
4.4           Title to Assets.
Seller has good and marketable fee simple title to the Assets, and the Assets
are (or as of the Closing shall be) free and clear of all liens, charges,
pledges, claims, security interests, mortgages, adverse claims of ownership or
use, restrictions on transfer, defect of title or other encumbrance of any kind
or character. After the date hereof and prior to the Closing, Seller will not,
without Buyer's written permission, sell or otherwise dispose of any of the
Assets to be acquired hereunder.

          


        

        
           
4.5           Litigation. There are
no actions, suits, arbitrations or proceedings filed or commenced by or before
any court, arbitrator or any governmental or administrative agency with respect
to the Assets and there are no orders, injunctions, awards, judgments or decrees
outstanding against, affecting or relating to the Assets.

          


           
4.6           Customer Accounts.
The list of the Customer Accounts on Exhibit A includes a
true, correct and complete list of the Customers and all Customer deposits and
advance payments for orders not shipped to the Customers prior to the Closing
(which Exhibit shall be updated by Seller immediately prior to the
Closing).

          


        

        
           
4.7           Disclosure. The
representations and warranties of Seller set forth in this Agreement or any
exhibit, schedule, list or other document delivered by Seller to Buyer pursuant
hereto, do not contain any untrue statement of material fact or omit to state
any material fact necessary in light of the circumstances under which they were
made to make the statements contained herein not misleading.

        

        


        
          
            
               


            

            
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4.8           No Omissions. No
representation or warranty of Seller, nor any statement, certificate, schedule
or exhibit, schedule, list or other document furnished or to be furnished by or
on behalf of Seller or pursuant hereto contains or will contain any untrue
statement of a material fact or will omit to state a material fact necessary to
make the statements herein or therein not misleading under the circumstances. No
investigation by or on behalf of Buyer or information revealed as a consequence
thereof shall absolve Seller from any liability for any such untrue statement or
omission.

          


        

        
          5.           Representations and
Warranties by Buyer.   Buyer makes the following
representations and warranties:

        

        
          


           
5.1           Organization. Buyer
is a corporation duly organized, validly existing and in good standing under the
laws of the State of California.

        

        
          


           
5.2           Authority; Binding
Agreement. Buyer has duly approved and ratified the execution and
delivery of this Agreement and the consummation of the transactions provided for
herein. This Agreement has been duly executed and delivered by Buyer and
constitutes the valid and binding agreement of Buyer enforceable in accordance
with its terms subject, as to the enforcement of remedies, to general equitable
principles and to bankruptcy, insolvency and similar laws affecting creditors'
rights generally.

        

        
          


           
5.3           No Violation. Buyer
is not subject to, and is not a party to any charter or by-law, or any mortgage,
lien, lease, agreement, contract, instrument, law, rule, regulation, order,
judgment or decree, or any other restriction of any kind or character, which (i)
would prevent consummation of the transactions contemplated by this Agreement or
would be violated or breached in any material respects by consummation of such
transactions, or (ii) would prevent Buyer from complying in any material
respects with the terms, conditions and provisions of this Agreement, or (iii)
would require the consent of any third party to the transactions contemplated
herein.

        

        
          


          6.           Indemnity.

        

        
          


           
6.1           Seller Indemnity.
Seller agrees to indemnify, defend, save and hold Buyer and Buyer's agents,
affiliates, employees and representatives ("Buyer Indemnitees") harmless
from and against any and all damage, liability, loss, expense, assessment,
judgment or deficiency of any nature whatsoever (including and without
limitation, reasonable attorneys' fees and other costs and expenses incident to
any suit, action or proceeding) (collectively, "Damages") incurred or
sustained by a Buyer Indemnitee that arises out of or in connection with (i) a
breach of any representation, warranty or covenant of this Agreement, or
non-fulfillment of any obligation of Seller under this Agreement or any
certificate furnished in connection herewith, or (ii) the use of the Assets by
Seller prior to the Closing, or (iii) the Retained Liabilities, whether
disclosed or undisclosed, known or unknown, fixed or
contingent.

        

        
          


           
6.2           Buyer Indemnity.
Buyer hereby agrees to indemnify, defend, save and hold Seller and Seller's
agents, affiliates, employees and representatives harmless from and against any
Damages incurred or sustained by Seller that arises out of or in connection with
(i) a breach of any representation, warranty or covenant of this Agreement, or
non-fulfillment of any obligation of Buyer under this Agreement or any
certificate furnished in connection herewith, (ii) the use of the Assets by
Buyer following the Closing, but not resulting from any misconduct of Seller, or
(iii) the Assumed Liabilities.

        

        


        
          
            
               


            

            
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6.3           Claims Procedure. A
party seeking indemnification hereunder (the "Indemnitee") will give prompt
written notice to the party from which indemnification is sought (the "Indemnitor") of any claim
which it discovers or of which it receives notice after the Closing and which
might give rise to a right of indemnification by it against Indemnitor under
this Agreement (a "Claim"),
stating the nature, basis and (to the extent known) amount thereof;
provided that failure to give prompt notice of such Claims shall not jeopardize
Indemnitee's right to indemnification unless such failure shall have materially
prejudiced the ability of Indemnitor to defend such Claim. In the case of any
Claim by any third party with respect to which Indemnitor may have liability
under this Agreement, Indemnitor shall be entitled to participate in the defense
thereof and, to the extent desired by Indemnitor, to assume the defense thereof,
and after written notice from Indemnitor to Indemnitee of its election to assume
such defense, Indemnitor will not be liable to any Indemnitee for any legal or
other expenses subsequently incurred by such Indemnitee in connection with its
participation in the defense of the Claim, other than reasonable costs of
investigation, unless Indemnitor does not actually assume the defense of the
Claim following Indemnitor's notice of such election. The parties will render to
each other such assistance as may reasonably be required of each other in order
to insure proper and adequate defense of any such Claim. Indemnitor will not
agree to a compromise or settlement of any such suit, Claim or proceeding that
would require the payment of any amounts by Indemnitee without the written
consent of Indemnitee; provided that if Indemnitee shall fail or refuse to
provide such written consent, then Indemnitor's liability under this Agreement
with respect to such Claim shall be limited to the amount so offered in
compromise or settlement, together with all legal and other expenses which may
have been incurred prior to the date on which Indemnitee has refused to consent
to such compromise or settlement.

          


        

        
           
6.4           Damages.
Notwithstanding anything to the contrary elsewhere in this Agreement, no
Indemnitor will be liable to any Indemnitee for any Damages other than direct,
compensatory Damages. Each party agrees that it is not entitled to recover and
hereby waives any claim with respect to, and will not seek, indirect, lost
profit, lost opportunity, diminution-in-value, consequential, punitive or any
other special Damages as to any matter under, relating to or arising out of the
transactions contemplated by this Agreement.

          


        

        
           
6.5           No Double Recovery.
Notwithstanding the fact that any party may have the right to assert claims for
indemnification under or in respect of more than one provision of this Agreement
in respect of any fact, event, condition or circumstance, no party shall be
entitled to recover the amount of any Damages suffered by such party more than
once, regardless of whether such Damages may be as a result of a breach of more
than one representation or warranty or covenant

          


        

        
           
6.6           Adjustments to Purchase
Price. Any payments made pursuant to this Section 6 shall be consistently
treated as adjustments to Purchase Price for all tax purposes by the
parties.

        

        


        
          
            
               


            

            
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          7.           Additional
Covenants.

          


        

        
           
7.1           Goodwill
Preservation. Except as otherwise requested by Buyer, and without making
any commitments on Buyer's behalf, Seller shall use commercially reasonable
efforts in the normal course of business to preserve for Buyer the goodwill of
the Customer Accounts. Seller will use commercially reasonable efforts to
preserve the Assets intact. Seller shall notify Buyer of any event or
transaction of which they become aware prior to Closing which could materially
affect the Assets in an adverse manner.

          


        

        
           
7.2           Covenant Not to
Compete. In consideration of payment of the Purchase Price to Seller as
set forth in Section 2, a portion of which shall be allocated to this covenant
not to compete, Seller agrees that, for a period of three (3) years from and
after the Closing Date, Seller shall refrain from, unless first obtaining the
Buyer's prior written consent, in any county in California, any state in the
United States of America and any other country in which Buyer has conducted the
Business, directly or indirectly, engaging in, being employed by, being
associated with, being under contract with, owning, managing, operating,
joining, controlling, or participating in the ownership, management, operation,
or control of, being connected in any manner with, or having any interest in,
any business, firm, sole proprietorship, partnership or corporation that engages
in the Business. As used in this Section 7.2, "Business" means the business of
selling stabilized rice bran and/or enhanced stabilized rice bran to third-party
end consumers, and for avoidance of doubt, "Business" shall not include the sale
or processing of raw rice bran.

          


        

        
           
7.3           Further Assurances.
Seller and Buyer agree that, from time to time, at or after the Closing Date,
each of them will execute and deliver such further instruments of conveyance and
transfer and take such other action as may be reasonably necessary to carry out
the purpose and intent of this Agreement.

          


        

        
          8.           Conditions to
Close.

          


        

        
           
8.1          Conditions of Buyer.
The obligations of Buyer to consummate the transactions herein contemplated are
subject to the satisfaction on or prior to the Closing of the following
conditions, and if Buyer shall not consummate the transactions herein
contemplated by reason of the failure of such conditions to have been satisfied
as herein provided, then Buyer shall have no liability to Seller:

          


        

        
           
(a)           The
representations and warranties of Seller contained in this Agreement and in any
exhibit, schedule, instrument, agreement or other document delivered to Buyer
pursuant thereto, shall be true and correct in all respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date, and the covenants and agreements of Seller
to be performed on or before the Closing Date in accordance with this Agreement
shall have been duly performed in all respects;

          


        

        
           
(b)           No
litigation or order shall have been instituted by a court or other governmental
body or any public authority restraining or prohibiting the transaction
contemplated herein;

        

        


        
          
            
              
                 


              

              
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(c)           Each of the
required consents identified on Schedule 4.3 shall
have been obtained and shall be in full force and effect;

          


        

        
           
(d)           Seller
shall have delivered to Buyer the Restated Marketing Agreement, duly executed by
Seller; and

          


        

        
           
(e)           Buyer shall
have received from Seller such other and further certificates, assurances and
documents as may reasonably be required by Buyer in connection with the
consummation of the transactions contemplated hereby.

          


        

        
           
8.2           Conditions of Seller.
The obligations of Seller to consummate the transactions herein contemplated are
subject to the satisfaction on or prior to the Closing of the conditions set
forth herein below, and if Seller shall not consummate the transactions herein
contemplated by reason of the failure of such conditions to have been satisfied
as herein provided, then Seller shall have no liability to Buyer:

          


        

        
           
(a)           The
representations and warranties of Buyer contained in this Agreement and in any
exhibit, schedule, instrument, agreement or other document delivered to Seller
pursuant thereto, shall be true and correct on and as of the Closing with the
same effect as though such representations and warranties had been made on and
as of such Closing, or such schedules and instruments had been delivered on such
date, and the covenants and agreements of Buyer to be performed on or before the
Closing Date in accordance with this Agreement shall have been duly performed in
all respects;

          


        

        
           
(b)           No
litigation or order shall have been instituted by a court or other governmental
body or any public authority restraining or prohibiting the transaction
contemplated herein;

          


        

        
           
(c)           Each of the
required consents identified on Schedule 4.3 shall
have been obtained and shall be in full force and effect;

          


        

        
           
(d)           Buyer shall
have delivered to Seller the Restated Marketing Agreement, duly executed by
Buyer; and

          


        

        
           
(e)           Seller
shall have received from Buyer such other and further certificates, assurances
and documents as may reasonably be required by Seller in connection with the
consummation of the transactions contemplated hereby.

          


        

        
          9.           Miscellaneous.

        

        


        
           
9.1           Survival of Representations,
Warranties and Covenants. Each representation and warranty and covenant
contained herein or made pursuant hereto shall be deemed to be material and to
have been relied upon, and shall survive the execution and delivery of this
Agreement, the Closing, any investigation at any time made by or on behalf of
any party hereto, and the transfer of and payment for the Assets. Every schedule
or other document referred to herein and every certificate delivered pursuant
hereto shall be deemed to constitute a representation and warranty made pursuant
hereto. This Agreement creates continuing obligations and it is binding and
active until all undertakings, direct and indirect, are
fulfilled.

        

        


        
          
            
               


            

            
              10

              
                

              

            

            
               


            

          

        

        


        
           
9.2           Successors and
Assigns. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto. Neither this Agreement nor
any of the rights, interests, or obligations hereunder shall be assigned by any
party hereto by operation of law or otherwise without the prior written consent
of Buyer; provided, that Buyer,
in its sole discretion, may assign all or any portion of its rights, interests
and obligations hereunder to any affiliate of Buyer, and provided, further, that such
assignee assumes and agrees in writing to perform all of Buyer's obligations
hereunder. This Agreement shall be binding upon and inure to the benefit of
successors and assigns of the parties hereto.

          


        

        
           
9.3           Governing Law. This
Agreement shall be governed by and construed under the laws of the State of
California.

          


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

          


           
9.5           Titles and Subtitles.
The titles and subtitles used in this Agreement are used for convenience only
and are not to be considered in construing or interpreting this
Agreement.

          


        

        
           
9.6           Notices. Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effective upon personal delivery to the
party to be notified, upon deposit with an overnight delivery service, by
facsimile upon receipt of confirmation of transmission, or upon deposit with the
United States Post Office, by registered or certified mail, postage prepaid and
addressed to the party to be notified at the address indicated for such party
above, or at such other address as such party may designate by ten (10) days'
advance written notice to the other parties.

          


        

        
           
9.7           Expenses.
Irrespective of whether any closing is effected, each party shall pay all costs
and expenses that it incurs with respect to the negotiation, execution, delivery
and performance of this Agreement.

          


        

        
           
9.8           Amendments and
Waivers. Any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of Seller.

          


        

        
           
9.9           Severability. If one
or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.

          


           
9.10         Entire Agreement.
This Agreement and the documents referred to herein constitute the entire
agreement among the parties and no party shall be liable or bound to any other
party in any manner by any warranties, representations, or covenants except as
specifically set forth herein or therein.

          


        

        
            9.11       
Attorneys'
Fees. If the services of an attorney are used by any party to secure the
performance of this Agreement or otherwise upon the breach or default of another
party to this Agreement, or if any judicial remedy or arbitration is sought to
enforce or interpret any provision of this Agreement or the rights and duties if
any person in relation thereto, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and other expenses, in addition to any other
relief to which such party may be entitled in accordance with applicable
law.

        

        


        
          
            
               


            

            
              11

              
                

              

            

            
               


            

          

        

        


        
           
9.12        Remedies. In the
event of breach of any of the representations, warranties, promises or covenants
of any party hereto or the non-fulfillment of any obligation on the part of such
party under this Agreement, the other party's remedies following the Closing
shall be cumulative and not exclusive, and the exercise by such other party of
any of its remedies at law or in equity to recover any damages shall not affect
any other remedy such other party may have.

          


        

        
           
9.13         Publicity. No notices
to third parties or other publicity, including press releases, prior to Closing
concerning any of the transactions provided for herein shall be made by any
party hereto unless planned and coordinated jointly among the parties hereto,
except to the extent otherwise required by law.

          


          


        

        
          [REMAINDER
OF PAGE LEFT BLANK]

        

        


        
          
            
               


            

            
              12

              
                

              

            

            
               


            

          

        

         

        
           
Farmers' Rice Cooperative and NutraCea have executed and delivered this
Agreement as of the date first set forth above.

           

          Seller:


           

          Farmers'
Rice Cooperative

           

           

          
            	
                    /s/
      Kirk Messick

                  	 
      


          

          Kirk
Messick

          Senior
Vice President

          


           

          Buyer:


           

          NutraCea

           

           

          
            	
                    /s/
      Bradley Edson

                  	 
      


          

          Bradley
Edson

          Chief
Executive Officer

           

           

          Signature
Page to Asset Purchase Agreement

        

         

        
          
            
               


            

            
              13

              
                

              

            

            
               


            

          

        

        


        
          Schedule
A

           

          Customer
Accounts

        

        
          
[*]

        

        
          

            
              
                 


              

              
                14

                
                  

                

              

              
                 


              

            

          

           

        

        
          Schedule
B

           

        

        
          Trademarks

        

        
          
 

        

        
          FIBERICE

        

        


        
          
            
               


            

            
              15

              
                

              

            

            
               


            

          

        

        


        
          Schedule
C

        

        
          


        

        
          Allocation
of Purchase Price

        

        
          


        

        
          Allocation
will be subject to a fair market analysis to be conducted after
Closing.

        

        


        
          
            
               


            

            
              16

              
                

              

            

            
               


            

          

        

        


        
          Exhibit
A

          


        

        
          ASSIGNMENT
AGREEMENT

          


        

        
          This
Trademark Assignment Agreement ("Agreement") is entered into
by and between NutraCea, a California corporation ("NutraCea") with principal
offices at 5090 North 40th
Street, Suite 400, Phoenix, Arizona, 85018, and Farmers' Rice Cooperative, a
cooperative association organized under the California Food and Agricultural
Code ("FRC"), with principal offices at 2525 Natomas Park Drive, Sacramento,
California, 95851. The parties agree as follows, effective as of December 1,
2008:

          


        

        
          1.           Assignment.

        

        
          


          1.1         Trademarks. For
valuable consideration, FRC hereby grants, transfers and assigns to NutraCea all
of FRC's right, title and interest in and to the "FIBERICE" trademark and any
associated trade names, logos, common law trademarks and service marks,
trademark and service mark registrations and applications therefore and all
goodwill associated therewith throughout the world.

        

        
          


          2.           Miscellaneous. This
Agreement shall (i) be binding on the successors and assigns of NutraCea
and FRC, (ii) inure to the benefit of the successors and assigns of the
aforementioned properties,
and (iii) be governed by and construed in accordance with the laws of the State
of California.

          


        

        
            IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Trademark
Assignment Agreement as of the date first written above.

        

        
          


          
             

            
              	 	Farmers' Rice
      Cooperative
	 	 	 	 	 
	 	 	 	 	 
	 	By:	 	/s/ H. Kirk
      Messick	 
	 	Its:	 	SR Vice
      President	 
	 	 	 	 	 
	 	 	 	 	 
	 	NutraCea
	 	 	 	 	 
	 	 	 	 	 
	 	
                      By:

                    	 	/s/ Brad
    Edson	 
	 	Brad Edson,
      CEO	 


            

            

              
                
                   


                

                
                  17

                  
                    

                  

                

                
                   


                

              

            

             

          

        

        
          Exhibit
B

          


          RESTATED
MARKETING AGREEMENT

        

        


        
          
            
               


            

            
              18

              
                

              

            

            
               


            

          

        

        


        
          Schedule
4.3

          


        

        
          Consents

          


        

        
          1.           [*]

          


          2.           National
Rice Company

        

        
           
Confirmation of sale No. 270454 Dated September 28, 2007

           
Seller: Farmers' Rice Cooperative Buyer: Dainty Foods

        

        
          


          3.           Bank
of America

          


          4.           Co
Bank

           

        

      

    

     

    19