Unassociated Document


    Term
Sheet

    for
Exchange of Series D Convertible Preferred Stock

    March
29, 2009

    


    
      
        
          
            
              
                
                  	
                          Issuer:

                        	
                          NutraCea
      (the “Company”)

                        
	 
      	 
      
	
                          Holder:

                        	
                          Cranshire
      Capital, L.P. (“Holder”)

                        
	 
      	 
      
	
                          Exchange:

                        	
                          Holder will exchange all of
      its Series D Convertible Preferred Stock
      (“Series D Preferred Stock”) in a valid 3(a)(9) exchange for a newly
      created series of preferred stock of the Company that is senior to all
      other series of preferred stock of the Company and which will have terms
      substantially similar to those of the Series D Preferred Stock, except as
      follows:

                        
	 
      	 
      
	 
      	
                          (i)  Conversion
      price will be $0.30;

                        
	 	 
	 
      	
                          (ii)  Maturity
      date will be 3 months from issuance date;

                        
	 	 
	 
      	
                          (iii)
      The new series of preferred stock will be redeemed by the Company over 3
      months in 3 equal monthly installments (each a “Redemption”) commencing
      with the one month anniversary of the initial issuance date thereof;
      and

                        
	 	 
	 
      	
                          (iv)  At
      the Company’s option, each Redemption may effected using cash or freely
      tradable shares of the Company’s common stock, provided that if the
      Company elects to effect any Redemption using common stock, such stock
      will be valued at a 10% discount to the average of the daily volume
      weighted average price of the Company’s common stock for the 20 trading
      days immediately preceding the applicable Redemption
  date.

                        
	 
      	 
      
	 
      	
                          Holder
      will also exchange its warrant in a valid 3(a)(9) exchange for a new
      warrant with the same terms, except that such new warrant shall have an
      exercise price equal to $0.30 and the term will be 5 years from the date
      the exchange is consummated.

                        
	 
      	 
      
	 
      	
                          Simultaneously
      with the consummation of the proposed exchange, the Holder will agree to
      waive all existing Triggering Events (as defined in the Series D Preferred
      Certificate of Designation) and related put rights with respect
      thereto.

                        
	 
      	 
      
	
                          Closing
      Date:

                        	
                          As
      soon as practicable upon the execution of written definitive legal
      documentation acceptable to Holder in its sole
  discretion

                        
	 
      	 
      
	
                          Expenses:

                        	
                          The
      Company shall reimburse the Holder for all costs and expenses associated
      with the exchange (including, without limitation, all legal fees)
      regardless of whether the exchange contemplated hereby is consummated so
      long as the Holder proceeds in good
faith.

                        


                

              

            

          

        

      

    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      
        
          
            	
                    Counterparts:

                  	
                    This
      Term Sheet may be executed in multiple counterparts and by facsimile
      signature, each of which shall be deemed to be an original, and all such
      counterparts shall constitute but one instrument.

                  
	 
      	 
      
	
                    Disclosure:

                  	
                    The
      Company shall, on or before 8:30 a.m., New York time, on the first (1st)
      business day after the date of this Term Sheet file a Current Report on
      Form 8-K describing all the material terms of the proposed exchange
      contemplated by this Term Sheet in the form required by the Securities
      Exchange Act of 1934, as amended, and attach this Term Sheet as an exhibit
      thereto.

                  
	 
      	 
      
	
                    Nature of Term
      Sheet:

                  	
                    Except
      for “Expenses,” “Counterparts,” “Disclosure” above and this provision
      (collectively, the “Binding Provisions”), this Term Sheet represents an
      expression of intent only. Accordingly, none of the parties hereto will be
      bound by any terms of this Term Sheet other than the Binding Provisions.
      This Term Sheet and all rights and remedies hereunder or with respect
      hereto (including, without limitation, specific performance, injunctions
      or temporary restraining orders or other similar equitable relief, all of
      which may be sought and obtained without the necessity of posting any bond
      or other security) are personal to the parties and neither this Term Sheet
      nor any such rights or remedies (all of which are cumulative) may be
      assigned without the consent of the other party hereto. Nothing contained
      in this Term Sheet shall limit or reduce any rights or remedies that any
      party may have hereunder at law or in equity. Nothing contained in this
      Term Sheet shall be, or shall be construed to constitute, a waiver,
      amendment, modification or forbearance of, or have any effect on, any of
      the terms or conditions or any rights or remedies that the Holder may have
      under the Holder’s Series D Preferred Stock. Should the Holder determine
      not to proceed with the contemplated exchange, the Holder shall have no
      obligation or liability related thereto to the Company or any other person
      or entity.

                  


          

        

      

    

    


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    If the
foregoing is acceptable, please so indicate by executing and delivering a copy
of this Term Sheet in the space provided below.

    


    
      
        	
                NUTRACEA

              	
                CRANSHIRE
      CAPITAL, L.P.

              
	 
      	 
      
	
                By:
      /s/
      Olga Hernandez Longan

              	
                By:  Downsview
      Capital, Inc.

              
	 
      	
                Its:  General
      Partner

              
	 
      	 
      
	
                Title:
      Chief
      Financial Officer

              	
                By:
      /s/
      Keith A. Goodman

              
	 
      	 
      
	 
      	
                Title:
      Chief
      Operating Officer

              


      

    

    


    
      
        
        

      

      
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