EXCHANGE
AGREEMENT

       

      This
EXCHANGE AGREEMENT (the
“Agreement”), dated as
of May ___, 2009, 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 “Holder”).

      


      RECITALS

      


      A.           The
Company, the Holder and various others entered into that certain Securities
Purchase Agreement, dated as October 16, 2008 (as amended and modified by this
Agreement and the Other Exchange Agreements (as defined below), the “Purchase
Agreement”).

       

      B.Simultaneously with the consummation
of the transactions contemplated by the Purchase Agreement, the Company issued
and sold to the Holder pursuant to the Registration Statement (as defined in the
Purchase Agreement) (i) 3,000 shares of Series D Convertible Preferred Stock
(the “Series D Preferred
Stock”) and (ii) a Series A Warrant (as defined in the Purchase
Agreement) initially exercisable for 2,727,273 shares of Common Stock (as
defined below).

      


      C.           Since
the issuance of the Series D Preferred Stock, one or more Triggering Events (as
defined in the Certificate of Determination, Preferences and Rights of Series D
Convertible Preferred Stock) may have occurred thereunder.

      


      D.           The
Company has authorized a series of preferred stock entitled the “Series E
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 E 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.

      


      E.           In
exchange for all of the Holder’s shares of Series D Preferred Stock, the Company
has authorized the issuance to the Holder of _____ shares of Preferred
Stock.

      


      F.           In
exchange for the Holder’s Series A Warrant, the Company has authorized the
issuance to the Holder of a warrant, in the form attached hereto as Exhibit
B (including all warrants issued in exchange therefor or replacement
thereof, the “Warrant”),
which Warrant shall initially be exercisable for __________ shares of Common
Stock (as exercised, the “Warrant Shares”), in
accordance with the terms thereof.

      


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


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      H.           The
exchange of the Holder’s Series D Preferred Stock and Series A Warrant for the
Preferred Stock and the Warrant will be made in reliance upon the exemption from
registration provided by Section 3(a)(9) of the Securities Act of 1933, as
amended (the “1933
Act”).

      


      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 the Holder hereby
agree as follows:

       

      
        	
                1.

              	
                EXCHANGE
      OF SERIES D PREFERRED STOCK AND SERIES A
  WARRANT.

              


      

       

      (a)           Series D Preferred Stock and
Series A Warrant. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 6 and 7 below, the Company shall, pursuant to
Section 3(a)(9) of the 1933 Act, exchange (i) all of the Holder’s shares of
Series D Preferred Stock for ____ shares of Preferred Stock and (ii) the
Holder’s Series A Warrant for the Warrant.

       

      (b)           Closing. The closing
(the “Closing”) of the
exchange of the Holder’s Series D Preferred Stock and the Holder’s Series A
Warrant shall occur at the offices of Greenberg Traurig, LLP, 77 W. Wacker
Drive, Suite 3100, 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 the Holder). 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)           Delivery. On the
Closing Date, (i) the Holder shall deliver all of its shares of Series D
Preferred Stock and its Series A Warrant to the Company and (ii) the
Company shall exchange, issue and deliver to the Holder (A) _______ shares of
Preferred Stock for such shares of Series D Preferred Stock and (B) the Warrant
for such Series A Warrant, in all cases duly executed on behalf of the Company
and registered in the name of the Holder.

       

      
        	
                2.

              	
                HOLDER’S
      REPRESENTATIONS AND WARRANTIES.

              


      

       

      Holder
represents and warrants to the Company that:

       

      (a)           Organization;
Authority. The Holder 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 Exchange 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 the Holder and constitutes the legal, valid
and binding obligations of the Holder enforceable against the Holder 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.


      
        
           


        

        
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      (c)           No Conflicts. The
execution, delivery and performance by the Holder of this Agreement and the
consummation by the Holder of the transactions contemplated hereby and thereby
will not (i) result in a violation of the organizational documents of the Holder
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 the Holder 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 the Holder, 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 the Holder to perform its obligations hereunder.

       

      (d)           Residency. The Holder
is a resident of that jurisdiction specified below its address on the Schedule
of Buyers attached to the Purchase Agreement.

       

      (e)           Own Account. The
Holder 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 1933 Act or any applicable state securities law, has no
present intention of distributing any of such Securities in violation of the
1933 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 1933 Act or any
applicable state securities law (this representation and warranty shall not
limit the Holder’s right to sell the Securities in compliance with applicable
federal and state securities laws); provided, however, that by
making the representations herein, the Holder 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. The Holder
is acquiring the Securities hereunder in the ordinary course of its business.
The Holder shall notify the Company in writing of any transfers by the Holder of
any of the Preferred Stock or the Warrant and such notification shall contain
the name and address of the transferee.

       

      (f)           Experience of the
Holder. The Holder, 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 acquisition of the Securities, and has so evaluated the merits
and risks of such acquisition. The Holder is able to bear the economic risk of
an acquisition of the Securities and, at the present time, is able to afford a
complete loss of such acquisition. The representations contained in this Section
2(f), however, shall not modify, amend or affect the Holder’s right to rely on
the Company’s representations and warranties contained herein or any
representations and warranties contained in any other Exchange 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)           Holder Status. At the
time the Holder 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 the Holder is
located. The Holder is not required to be registered as a broker-dealer under
Section 15 of the 1934 Act.


      
        
           


        

        
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      (h)           Ownership. The Holder
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 in the
Purchase Agreement) owned by the Holder, 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 the Holder 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 Exchange Documents or (iii) the authority or
ability of the Company to perform any of its obligations under any of the
Exchange Documents. 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 Holder 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 Exchange Documents and to issue
the Securities in accordance with the terms hereof and thereof. The execution
and delivery of this Agreement and the other Exchange 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
Warrant and the reservation for issuance and issuance of the Warrant Shares
issuable upon exercise of the Warrant) have been duly authorized by the
Company’s board of directors and 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 Exchange
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. “Exchange Documents” means,
collectively, this Agreement, the Warrant, the Certificate of Determination, the
Irrevocable Transfer Agent Instructions (as defined below) and each of the other
agreements and instruments entered into by the parties hereto in connection with
the transactions contemplated hereby and thereby. Except as set forth in Section
3(b) of the Disclosure Letter, the Company has no reason to believe that it will
be unable to comply with any of its obligations under any of the Exchange
Documents (including, without limitation, as a result of application of Section
500 or Section 501 of the California Corporations Code).

       

      (c)           Issuance of
Securities. The issuance of the Preferred Stock and the Warrant is duly
authorized and, when issued in accordance with the terms of the Exchange
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 (ii) the maximum number of Warrant Shares
issuable upon exercise of the Warrant (without regard to any limitations on the
exercise of the Warrant 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 Warrant in accordance with the Warrant
(as the case may be), the Conversion Shares and the Warrant Shares, as
applicable, when issued, will be validly issued, fully paid and non-assessable
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 offer, exchange and issuance of
the Securities is exempt from registration under the 1933 Act pursuant to the
exemption provided by Section 3(a)(9) thereof.  Upon issuance in
accordance with the terms of the Exchange Documents, the Securities will be
freely tradable without restriction.  Notwithstanding the preceding
sentence, the Warrant Shares will be freely tradable without restriction so long
as such Warrant Shares are exercised pursuant to a cashless exercise as provided
in the Warrant.


      
        
           


        

        
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      (d)           No Conflicts. Except
as set forth in Section 3(d) of the Disclosure Letter, the execution, delivery
and performance of the Exchange 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 Warrant, 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 below) or other organizational documents
of the Company or any of its Subsidiaries or Bylaws (as defined below) 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
(as defined below) 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.

       

      (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 (as defined below)
(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 Exchange Documents, in each case, in accordance with the
terms hereof or thereof, other than (i) the filing with the SEC of the 8-K
Filing (as defined below), (ii) such filings as are required to be made under
applicable state securities laws (clauses (i) and (ii) are collectively referred
to as the “Required
Filings”) and (iii) 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. Except as set forth in Section 3(e) of the Disclosure Letter, 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
Holder’s Exchange of Securities. The Company acknowledges and agrees that
the Holder is acting solely in the capacity of an arm’s length purchaser with
respect to the Exchange Documents and the transactions contemplated hereby and
thereby and that the Holder is not (i) an officer or director of the Company or
any of its Subsidiaries, (ii) an “affiliate” (as defined in Rule 144 promulgated
under the 1933 Act) 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 the Holder is not acting as
a financial advisor or fiduciary of the Company or any of its Subsidiaries (or
in any similar capacity) with respect to the Exchange Documents and the
transactions contemplated hereby and thereby, and any advice given by the Holder
or any of its representatives or agents in connection with the Exchange
Documents and the transactions contemplated hereby and thereby is merely
incidental to the Holder’s acquisition of the Securities. The Company further
represents to the Holder that the Company’s decision to enter into the Exchange
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 or other agent in connection with the transactions contemplated
by this Agreement. The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees or broker’s commissions owed to
any Person pursuant to any other agreements entered into by the Company relating
to or arising out of the transactions contemplated hereby. The Holder shall have
no obligation with respect to any fees or with respect to any claims (other than
such fees or commissions owed by the Holder pursuant to agreements entered into
by the Holder, which fees or commissions shall be the sole responsibility of the
Holder) 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 Exchange 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
(together with any other offering pursuant to the Other Exchange Agreements) 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 Warrant in
accordance with this Agreement, the Certificate of Determination and the Warrant
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 the Holder as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company’s issuance of the
Securities and the Holder’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. Except as set forth in Section 3(k) of the Disclosure Letter,
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 Holder or its representatives true, correct and complete
copies of each of the SEC Documents not available on the EDGAR system. Except as
set forth in Section 3(k) of the Disclosure Letter, 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. Except as set forth in Section 3(k) of the
Disclosure Letter, 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. Except as set forth in Section 3(k) of the Disclosure Letter, 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
Holder 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 Agreement, “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 below), (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, 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) except as set forth in Section 3(m) of
the Disclosure Letter, could reasonably result in a Material Adverse Effect or a
material adverse effect on the Holder’s investment hereunder.


      
        
           


        

        
          9

          
            

          

        

        
           


        

      

       

      (n)          Conduct of Business;
Regulatory Permits. Except as set forth in Section 3(e) of the Disclosure
Letter, 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, except as set forth in Section 3(n) of
the Disclosure Letter, 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. Except as
set forth in Section 3(n) of the Disclosure Letter, 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.


      
        
           


        

        
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      (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.

       

      (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. __________ 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
the Purchase Areement); (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 Holder 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, (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. Except as disclosed in Section 3(t) of the Disclosure Letter,
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. Except as disclosed in Section 3(t) of the Disclosure Letter,
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.


      
        
           


        

        
          12

          
            

          

        

        
           


        

      


      (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 believes 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.

       

      (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.


      
        
           


        

        
          13

          
            

          

        

        
           


        

      

       

      (y)         Environmental Laws.
The Company and its Subsidiaries (i) are in compliance with all Environmental
Laws (as defined below), (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.

       

      (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.


      
        
           


        

        
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      (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.

       

      (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 issuance and
exchange 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
the Holder’s Trading Activity. It is understood and acknowledged by the
Company (i) the Holder has not been asked by the Company or any of its
Subsidiaries to agree, nor has the Holder 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 the
Holder, and counter parties in “derivative” transactions to which the Holder is
a party, directly or indirectly, presently may have a “short” position in the
Common Stock, and (iii) that the Holder 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
the Holder 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
Exchange Document or any of the documents executed in connection herewith or
therewith.


      
        
           


        

        
          15

          
            

          

        

        
           


        

      

       

      (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, 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  (other than the Placement Agent
(as defined in the Purchase Agreement) in connection with the transactions
contemplated by the Purchase Agreement).

       

      (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 the Holder, 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 the Holder’s request.

       

      (hh)       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 issuance and
exchange of the Securities to be issued to the Holder 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.

       

      (ii)          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.

       

      (jj)          Disclosure.  The
Company confirms that neither it nor any other Person acting on its behalf has
provided the Holder or its 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. The Company
understands and confirms that the Holder will rely on the foregoing
representations in effecting transactions in securities of the
Company.  All written materials provided to the Holder 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 the Holder does not make or has not 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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      (kk)        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.

       

      
        	
                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.


      
        
           


        

        
          17

          
            

          

        

        
           


        

      

       

      (b)           Securities
Compliance. The Company shall take all 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 to the Holder 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 issuance to the Holder 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 Holder 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)           Reporting Status.
Until the date on which the Holder shall have sold all of the Securities (the
“Reporting Period”),
except as set forth in Section 4(c) of the Disclosure Letter, the Company shall
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.

       

      (d)           Financial
Information. The Company agrees to send the following to the Holder
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.

       

      (e)           Listing.  The
Company shall promptly secure the listing of all of the Conversion Shares and
Warrant Shares issuable upon exercise of the Warrant 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 Exchange 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, the Nasdaq Global Select Market or the “pink
sheets” over-the-counter 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(e).


      
        
           


        

        
          18

          
            

          

        

        
           


        

      


      (f)           Fees.  The
Company shall reimburse the Holder or its designee(s) for all costs and expenses
incurred by it or its affiliates in connection with the transactions
contemplated by the Exchange Documents (including, without limitation, all legal
fees and disbursements in connection therewith, documentation and implementation
of the transactions contemplated by the Exchange Documents and due diligence in
connection therewith), which amount shall be paid by the Company by wire
transfer of immediately available funds at the Closing or paid by the Company on
demand by the Holder upon termination of this Agreement so long as such
termination did not occur as a result of a material breach by the Holder 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 the Holder)
relating to or arising out of the transactions contemplated
hereby  incurred by the Company. The Company shall pay, and hold the
Holder harmless against, any liability, loss or expense (including, without
limitation, attorneys’ fees and out-of-pocket expenses) arising in connection
with any claim relating to any such payment.

       

      (g)           Pledge of Securities.
The Company acknowledges and agrees that the Securities may be pledged by the
Holder in connection with a bona fide margin agreement or other loan or
financing arrangement that is secured by the Securities. If the Holder effects a
pledge of Securities, the Holder shall not 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 Exchange 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 the Holder. Notwithstanding the foregoing, if the Securities so pledged are
Preferred Stock or the Warrant, and such Securities are subsequently acquired by
the pledgee upon default, then the Holder 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
Exchange Documents if the transferee will obtain any rights under the Exchange
Documents.

       

      (h)           Disclosure of Transactions
and Other Material Information. On or before 8:30 a.m., New York
time, on the first (1st)
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 Exchange Documents in the form required by the 1934 Act and
attaching this Agreement, the Certificate of Determination and the form of the
Warrant (including all attachments, the “8-K Filing”). 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
the Holder with any material, nonpublic information regarding the Company or any
of its Subsidiaries without the express prior written consent of the Holder,
except as expressly contemplated by Section 4(n)(viii) of the Purchase
Agreement. If the Holder 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, the Holder 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 the Holder), in addition to
any other remedy provided herein or in the Exchange Documents, the Holder 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. The Holder
shall not 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 the Holder 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 the Holder, 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) the Holder 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 the Holder, the
Company shall not (and shall cause each of its Subsidiaries and affiliates to
not) disclose the name of the Holder 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 Exchange 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 Holder with prior notice of such disclosure permitted
hereunder.


      
        
           


        

        
          19

          
            

          

        

        
           


        

      

      


      (i)           Reservation of
Shares. So long as any shares of Preferred Stock or any portion of the
Warrant 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 is convertible at the Conversion Price (as defined in the
Certificate of Determination) 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 of the Warrant (without regard to any limitations on the exercise of the
Warrant set forth therein).

       

      (j)           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.

       

      (k)           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 (as
defined in the Purchase Agreement) 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). The Holder 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.


      
        
           


        

        
          20

          
            

          

        

        
           


        

      

       

      (l)           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.

       

      (m)         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).

       

      (n)          Amendment of Purchase
Agreement. From and after the Closing:

       

      (i)           The
second sentence of Section 4(j) of the Purchase Agreement is hereby replaced
with the following:

       

      “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 warrants issued in exchange for 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 shares of Common Stock issuable upon conversion of
the shares of Series E Convertible Preferred Stock of the Company (the “Series E Preferred Stock”);
(D) the shares of Common Stock issuable upon exercise of the warrants issued in
exchange for the Series A Warrants; (E) shares of Common Stock issued or
issuable as a dividend on the Series E Preferred Stock; (F) up to 545,455 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 warrants issued in exchange for 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”).”


      
        
           


        

        
          21

          
            

          

        

        
           


        

      

      


      (ii)           The
last sentence of Section 4(j) of the Purchase Agreement is hereby
deleted.

       

      (iii)          The
first sentence of Section 4(n) of the Purchase Agreement is hereby replaced with
the following:

       

      “Until
all of the shares of Series E Preferred Stock have been converted or redeemed in
accordance with the terms of the Certificate of Determination, Preferences and
Rights of Series E Convertible Preferred Stock, 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).”


      (iv)          Except
as otherwise expressly provided herein, (i) the Purchase Agreement and each
other Transaction Document (as defined in the Purchase Agreement) is, and shall
continue to be, in full force and effect and is hereby ratified and confirmed in
all respects, except that on and after the Closing Date (A) all references
in the Purchase Agreement to the “Purchase Agreement,” “hereto,” “hereof,” “this
Agreement,” “hereunder” or words of like import referring to the Purchase
Agreement shall mean the Purchase Agreement as amended by this Agreement and the
Other Exchange Agreements, and (B) all references in the other Transaction
Documents to the “Purchase Agreement,” “thereto,” “thereof,” “thereunder” or
words of like import referring to the Purchase Agreement shall mean the Purchase
Agreement as amended by this Agreement and the Other Exchange Agreements, and
(ii) the execution, delivery and effectiveness of this Agreement shall not
operate as an amendment of any right, power or remedy of the Holder under any
Transaction Document, nor constitute an amendment of any provision of any
Transaction Document and all of them shall continue in full force and effect, as
amended or modified by this Agreement and the Other Exchange
Agreements.


      
        
           


        

        
          22

          
            

          

        

        
           


        

      

       

      
        (o)         
 Issuance of Preferred Stock
and Other Warrants.
Effective simultaneously with the Closing, the Holder hereby consents, under
Sections 4(m) and 4(n) of the Purchase Agreement and Sections 13 and 15 of the
Certificate of Determination, Preferences and Rights of Series D Convertible
Preferred Stock, to the issuance to the Other Series D Holders under the Other
Exchange Agreements of an aggregate to all of them of (i) _______ shares of
Preferred Stock in exchange for all of their shares of Series D Preferred Stock
and (ii) warrants to purchase up to _________ shares of Common Stock in exchange
for all of their Other Series A Warrants.

      

       

      (q)           Miscellaneous
Definitions. For purposes of this Agreement, (1) “Other Series D Holders” means,
collectively, the holders (other than the Holder) of one or more shares of
Series D Preferred Stock; (2) “Other Exchange Agreements”
means, collectively, the separate exchange agreements, each dated as of May ___,
2009, entered into between the Company and each of the Other Series D Holders;
(3) “Other Warrants”
means, collectively, the warrants issued pursuant to the Other Exchange
Agreements; (4) “Other Series
A Warrants”
means, collectively, all the Series A Warrants issued pursuant to the Purchase
Agreement (other than to the Holder); and (5) “Other Exchange Documents”
means, collectively, the Other Exchange Agreements, the Other Warrants and all
other agreements, documents and instruments executed and delivered in connection
with the transactions contemplated thereby.

       

      
        	
                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 Warrant in which the
Company shall record the name and address of the Person in whose name the
Preferred Stock and the Warrant 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 Warrant held by such Person. The Company shall keep the
register open and available at all times during business hours for inspection of
the Holder or its legal representatives.


      
        
           


        

        
          23

          
            

          

        

        
           


        

      


      (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
Holder (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 the Holder or its respective nominee(s), for the Conversion Shares and the
Warrant Shares issuable upon exercise of the Warrant in such amounts as
specified from time to time by the Holder to the Company upon conversion of the
Preferred Stock, issuance of Common Stock as dividends on the Preferred Stock or
the exercise of the Warrant (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 the Holder
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 the Holder to effect such sale, transfer or assignment. The
Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder. 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 the Holder 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.

       

      (c)           Legends. The
certificates or other instruments representing the Securities shall not bear any
restrictive or other legends, except as otherwise expressly contemplated in the
Warrant.

       

      
        	
                6.

              	
                CONDITIONS
      TO THE COMPANY’S OBLIGATION TO EXCHANGE AND
  ISSUE.

              


      

       

      (a)           The
obligation of the Company hereunder to exchange and issue the Preferred
Stock and the
Warrant to the Holder 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 the Holder with prior written
notice thereof:

       

      (i) 
          The Holder shall
have executed each of the Exchange Documents to which it is a party and
delivered the same to the Company.

       

      (ii)           The
Holder shall have delivered to the Company all of its shares of Series D
Preferred Stock and its Series A Warrant.


      
        
           


        

        
          24

          
            

          

        

        
           


        

      


      (iii)           Each
and every representation and warranty of the Holder 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 Holder 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 Holder at or prior to the Closing Date.

       

      
        	
                7.

              	
                CONDITIONS
      TO THE HOLDER’S OBLIGATION TO
EXCHANGE.

              


      

       

      (a)           The
obligation of the Holder hereunder to exchange its shares of Series D Preferred
Stock and its
Series A Warrant 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 Holder’s sole benefit and may be waived by the Holder 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 the Holder each of the
Exchange Documents and the Company shall have duly executed and delivered to the
Holder a certificate representing __________ shares of Preferred Stock and the
Warrant.

       

      (ii)           The
Holder shall have received the opinion of (i) Weintraub Genshlea Chediak Law
Corporation, the Company’s counsel and (ii) Hogan & Hartson, LLP, the
Company’s special counsel, each dated as of the Closing Date, each in the form
reasonably acceptable to the Holder.

       

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

       

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

       

      (v)          The
Company shall have delivered to the Holder a certificate evidencing the
Company’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 is so qualified, as of a date within ten (10) days of the Closing
Date.

       

      (vi)         The
Company shall have delivered to the Holder 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 the Holder 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 the Holder, (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 the
Holder.


      
        
           


        

        
          25

          
            

          

        

        
           


        

      

       

      (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. The Holder 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 the Holder in the form acceptable to
the Holder.

       

      (ix)          The
Common Stock (I) shall be designated for quotation or listed on at least one
Eligible Market and (II) shall not have been suspended, as of the Closing Date,
by the SEC or such Eligible Market from trading on such Eligible Market nor,
except as set forth  in Section 7(a)(ix) of the Disclosure Letter,
shall suspension by the SEC or such Eligible Market have been threatened, as of
the Closing Date, either (A) in writing by the SEC or such Eligible Market or
(B) by falling below the minimum maintenance requirements of such Eligible
Market.

       

      (x)           The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the issuance 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 Exchange 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 Warrant
to the extent such approval is required by the Principal Market.

       

      (xiv)        All
Other Series D Holders shall have (i) executed the Other Exchange
Agreements, (ii) satisfied or waived all conditions to the closings
contemplated by such agreements and (iii) surrendered all their shares of
Series D Preferred Stock and all their Other Series A Warrants being exchanged
by it pursuant thereto.

       

      
        	
                8.

              	
                TERMINATION.

              


      

       

      In the
event that the Closing shall not have occurred on or before ten (10) days from
the date hereof due to the Company’s or the Holder’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,
notwithstanding any such termination the Company shall remain obligated to
reimburse the Holder for the expenses described in Section 4(f) 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 Exchange 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 Exchange Documents.


      
        
           


        

        
          26

          
            

          

        

        
           


        

      

       

      
        	
                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 TO, 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.


      
        
           


        

        
          27

          
            

          

        

        
           


        

      


      (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.

       

      (e)           Entire Agreement;
Amendments. This
Agreement, the other Exchange 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 Holder, the Company,
their affiliates and Persons acting on their behalf with respect to the matters
contained herein and therein (provided that, except as expressly contemplated
elsewhere in this Agreement, the foregoing shall not have any effect on any
agreements the Holder has entered into with the Company or any of its
Subsidiaries prior to the date hereof with respect to any prior investment made
by the Holder in the Company, including, without limitation, the Purchase
Agreement), and this Agreement, the other Exchange 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 the Holder 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 Holder, provided that any
party may give a waiver in writing as to itself. 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 Other Exchange Documents unless the same
consideration also is offered to the Holder. The Company has not, directly or
indirectly, made any agreements with any other Person relating to the terms or
conditions of the transactions contemplated by the Other Exchange Documents
which differs in any respect from the terms and conditions set forth in the
Exchange Documents. Without limiting the foregoing, the Company confirms that
the Holder has not 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

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

       

      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 the
Holder, to its address and facsimile number set forth on the Schedule of Buyers
attached to the Purchase Agreement, with copies (for informational purposes
only) to:

       

      Greenberg
Traurig, LLP

      77 W.
Wacker Drive, Suite 3100

      Chicago,
Illinois 60601

      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. 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 Exchange
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 the Warrant). The Holder 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 Exchange Documents that apply to the “Holder.” After such
assignment, the assignee shall be deemed to be a Holder hereunder with respect
to such assigned rights.

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

       

      (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.

       

      (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 the Holder’s execution and delivery of the Exchange Documents
and acquiring the Securities thereunder and in addition to all of the Company’s
other obligations under the Exchange Documents, the Company shall defend,
protect, indemnify and hold harmless the Holder 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 Exchange Documents, (b) any breach of any covenant,
agreement or obligation of the Company contained in any of the Exchange
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 Exchange
Documents, (ii) any transaction financed or to be financed in whole or in part,
directly or indirectly, with any proceeds of the exercise of any of the
Securities, (iii) any disclosure properly made by the Holder pursuant to Section
4(h), or (iv) the status of the Holder or holder of the Securities as an
investor in the Company pursuant to the transactions contemplated by the
Exchange 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.


      
        
           


        

        
          30

          
            

          

        

        
           


        

      

       

      (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.


      
        
           


        

        
          31

          
            

          

        

        
           


        

      

       

      (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.  The
Holder and each holder of any Securities shall have all rights and remedies set
forth in the Exchange 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 Exchange Documents, any remedy at law may prove to be
inadequate relief to the Holder. The Company therefore agrees that the Holder
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 Exchange Documents, whenever the Holder exercises a
right, election, demand or option under an Exchange Document and the Company
does not timely perform its related obligations within the periods therein
provided, then the Holder 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 the Holder hereunder or pursuant to any of the other Exchange Documents or
the Holder enforces or exercises its 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.

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

       

      (p)           Independent Nature of the
Holder’s Obligations and Rights.  The
obligations of the Holder under the Exchange Documents are several and not joint
with the obligations of any Other Series D Holder under the Other Exchange
Documents, and the Holder shall not be responsible in any way for the
performance of the obligations of any Other Series D Holder under any Other
Exchange Documents. Nothing contained herein or in any other Exchange Document,
and no action taken by the Holder pursuant hereto or any Other Series D Holder
pursuant to any Other Exchange Documents, shall be deemed to constitute the
Holder or any Other Series D Holder as, and the Company acknowledges that the
Holder and the Other Series D Holders 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 Holder and any Other Series D Holder are in any way acting
in concert or as a group or entity with respect to such obligations or the
transactions contemplated by the Exchange Documents, the Other Exchange
Documents or any matters, and the Company acknowledges that the Holder and the
Other Series D Holders are not acting in concert or as a group or entity, and
the Company shall not assert any such claim, with respect to such obligations or
the transactions contemplated by the Exchange Documents and the Other Exchange
Documents. The decision of the Holder to acquire the Securities pursuant to the
Exchange Documents has been made by the Holder independently of any Other Series
D Holder. The Holder acknowledges that no Other Series D Holder has acted as
agent for the Holder in connection with the Holder making its acquisition
hereunder and that no Other Series D Holder will be acting as agent of the
Holder in connection with monitoring the Holder’s Securities or enforcing its
rights under the Exchange Documents. The Company and the Holder confirms that
the Holder has independently participated with the Company in the negotiation of
the transaction contemplated hereby with the advice of its own counsel and
advisors. The Holder shall be entitled to independently protect and enforce its
rights, including, without limitation, the rights arising out of this Agreement
or out of any of the other Exchange Documents, and it shall not be necessary for
any Other Series D Holder to be joined as an additional party in any proceeding
for such purpose. To the extent that any of the Other Series D Holders and the
Company enter into the same or similar documents, all such matters are solely in
the control of the Company, not the action or decision of the Holder, and would
be solely for the convenience of the Company and not because it was required or
requested to do so by the Holder or any Other Series D Holder. For clarification
purposes only and without implication that the contrary would otherwise be true,
the transactions contemplated by the Exchange Documents include only the
transaction between the Company and the Holder and do not include any other
transaction between the Company and any Other Series D Holder.

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

       

      (q)           Most Favored Nation.
The Company hereby represents and warrants as of the date hereof and covenants
and agrees from and after the date hereof that none of the terms offered to any
Person with respect to any amendment, settlement or waiver (each a “Settlement Document”) relating
to the terms, conditions and transactions contemplated by any Exchange Document
or any Other Exchange Document, is or will be more favorable to such Person than
those of the Holder and this Agreement and the other Exchange Documents shall
be, at the election of the Holder, without any further action by the Holder or
the Company, deemed amended and modified in an economically and legally
equivalent manner such that the Holder shall receive the benefit of the more
favorable terms contained in such Settlement Document. Notwithstanding the
foregoing, the Company agrees, at its expense, to take such other actions (such
as entering into amendments to the Exchange Documents and the Transaction
Documents) as the Holder may reasonably request to further effectuate the
foregoing.

       

      [signature pages
follow]


      
        
           


        

        
          34

          
            

          

        

        
           


        

      


      IN WITNESS WHEREOF, the Holder
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:  Olga
      Hernandez-Longan

                          Title:  Chief
      Financial
Officer

                        


                

              

            

          

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

      


      
        
          	 
      	
                  HOLDER:

                   

                
	 
      	 
      


        

      


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      EXHIBITS

       

      Exhibit
A            Form of
Certificate of Determination

      Exhibit
B             Form
of Warrant