Document:

ex10_1.htm

    
      

    

    Exhibit
10.1

    

    SECURITIES
PURCHASE AGREEMENT

    

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

    

    RECITALS

    

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

    

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

    

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

    

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

    

    
      
        
           

        

        
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    AGREEMENT

    

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

    
      
      

    

     

    
      	
              1.

            	
              PURCHASE
      AND SALE OF PREFERRED STOCK AND
WARRANTS.

            

    

    

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

    

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

    

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

    

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

    

    
      
        
           

        

        
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              2.

            	
              BUYER’S
      REPRESENTATIONS AND WARRANTIES.

            

    

    

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

    

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

    

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

    

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

    

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

    

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

    

    
      
        
           

        

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

    

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

    

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

    
      
      

    

     

    
      	
              3.

            	
              REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

            

    

    

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

    

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

    

    
      
        
           

        

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

    

    
      
        
           

        

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

    

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

    

    
      
        
           

        

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

    

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

    

    
      
        
           

        

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

    

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

    

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

    

    (j)          Application of Takeover
Protections; Rights Agreement. The Company and its board of directors
have taken all necessary action, if any, in order to render inapplicable any
control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Articles of Incorporation or other organizational documents or the
laws of the jurisdiction of its incorporation or otherwise which is or could
become applicable to any Buyer as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company’s issuance of the
Securities and any Buyer’s ownership of the Securities. The Company and its
board of directors have taken all necessary action, if any, in order to render
inapplicable any stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of shares of Common Stock or a change in
control of the Company or any of its Subsidiaries.

     

    
      
        
        

      

      
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    (k)         SEC Documents; Financial
Statements. During the two (2) years prior to the date hereof, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements, notes and
schedules thereto and documents incorporated by reference therein being referred
to herein as the “SEC
Documents”). The Company has delivered to the Buyers or their respective
representatives true, correct and complete copies of each of the SEC Documents
not available on the EDGAR system. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto as in effect as of the
time of filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments which will not be
material, either individually or in the aggregate). No other information
provided by or on behalf of the Company to the Buyers which is not included in
the SEC Documents contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements therein not
misleading, in the light of the circumstance under which they are or were
made.

    

    
      
        
           

        

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

     

    (m)        No Undisclosed Events,
Liabilities, Developments or Circumstances. No event, liability,
development or circumstance has occurred or exists, or is reasonably expected to
exist or occur with respect to the Company, any of its Subsidiaries or their
respective business, properties, liabilities, prospects, operations (including
results thereof) or condition (financial or otherwise), that would be required
to be disclosed by the Company under applicable securities laws on a
registration statement on Form S-1 filed with the SEC relating to an issuance
and sale by the Company of its Common Stock and which either (i) except as set
forth in Section 3(m) of the Disclosure Letter, has not been publicly announced
or contained in the SEC Documents or (ii) could reasonably result in a Material
Adverse Effect or a material adverse effect on any Buyer’s investment
hereunder.

    

      
        
           

        

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

    

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

    

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

    

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

    

    
      
        
           

        

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

    

    
      
        
           

        

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

    

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

    

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

    

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

    

    
      
        
           

        

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

    

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

    

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

    

    
      
        
           

        

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

    

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

    

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

    

    
      
        
           

        

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

    

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

    

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

    

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

    

    
      
        
           

        

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

    

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

    

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

    

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

    

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

    

    
      
        
           

        

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

    
      
      

    

     

    
      
        
           

        

        
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                4.

              	
                COVENANTS.

              

      

       

    

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

    

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

    

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

    

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

    

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

    

    
      
        
           

        

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

    

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

    

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

    

    
      
        
           

        

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

    

    
      
        
           

        

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

    

    
      
        
           

        

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

    

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

    

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

    

    
      
        
           

        

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

    

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

    

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

    

    
      
        
           

        

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

    

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

    

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

    

    
      
        
           

        

        
          25

          
            

          

        

        
           

        

      

    

    

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

    

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

    

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

    

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

    

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

    

    
      
        
           

        

        
          26

          
            

          

        

        
           

        

      

    

    

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

    

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

    
      
      

    

     

    
      	
              5.

            	
              REGISTER;
      TRANSFER AGENT INSTRUCTIONS; NO
LEGENDS.

            

    

    

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

    

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

    

    
      
        
           

        

        
          27

          
            

          

        

        
           

        

      

    

    

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

    
      
      

    

     

    
      	
              6.

            	
              CONDITIONS
      TO THE COMPANY’S OBLIGATION TO
SELL.

            

    

    

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

    

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

    

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

    

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

    

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

    
      
      

    

     

    
      	
              7.

            	
              CONDITIONS
      TO EACH BUYER’S OBLIGATION TO
PURCHASE.

            

    

    

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

    

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

    

    
      
        
           

        

        
          28

          
            

          

        

        
           

        

      

    

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    
      
        
           

        

        
          29

          
            

          

        

        
           

        

      

    

    

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

    

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

    

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

    

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

    

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

    

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

    
      
      

    

     

    
      	
              8.

            	
              TERMINATION.

            

    

    

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

    

    
      
        
           

        

        
          30

          
            

          

        

        
           

        

      

    

    

    
      	
              9.

            	
              MISCELLANEOUS.

            

    

    

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

    

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

    

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

    

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

    

    
      
        
           

        

        
          31

          
            

          

        

        
           

        

      

    

    

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

    

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

    

    If to the
Company:

    

    NutraCea

    5090 N.
40th Street , Suite 400

    Phoenix,
AZ 85018

    Telephone:  (602)
522-3000

    Facsimile:  (602)
522-3001

    Attention:  Chief
Executive Officer

    

    
      
        
           

        

        
          32

          
            

          

        

        
           

        

      

    

    

    With a
copy (for informational purposes only) to:

    

    Weintraub
Genshlea Chediak Law Corporation

    400
Capitol Mall

    Sacramento,
CA 95814

    Telephone:  (916)
558-6164

    Facsimile:  (916)
446-1611

    Attention:  Christopher
Chediak, Esq.

    Michael
DeAngelis, Esq.

    

    If to the
Transfer Agent:

    

    American
Stock Transfer & Trust 

    59 Maiden
Lane, Plaza Level - Lobby 

    New York,
NY  10038 

    Telephone:
 718 921 8143

    Facsimile:
718-921-8116

    Attention: 
Joe Wolf, Vice President

    

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

    

    with a
copy (for informational purposes only) to:

    

    Greenberg
Traurig, LLP

    77 W.
Wacker Drive, Suite 2400

    Chicago,
Illinois 60602

    Telephone:  (312)
456-8400

    Facsimile:  (312)
456-8435

    Attention:  Peter
H. Lieberman, Esq.

    Todd A.
Mazur, Esq.

    

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

    

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

    

    
      
        
           

        

        
          33

          
            

          

        

        
           

        

      

    

    

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

    

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

    

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

    

    (k)         Indemnification.

    

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

    

    
      
        
           

        

        
          34

          
            

          

        

        
           

        

      

    

    

    (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.

    

    
      
        
           

        

        
          35

          
            

          

        

        
           

        

      

    

    

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

    

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

    

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

    

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

    

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

    

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

    

    
      
        
           

        

        
          36

          
            

          

        

        
           

        

      

    

    

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

    

    [signature pages
follow]

    

    
      
        
           

        

        
          37

          
            

          

        

        
           

        

      

    

    

    

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

    

    

    
      
        
          	 
      	
                  COMPANY:

                	 
      
	 
      	 
      	 
      
	 
      	
                  NUTRACEA

                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  By:

                	 
      	 
      
	 
      	 
      	
                  Name:

                	 
      
	 
      	 
      	
                  Title:

                	 
      

        

      

    

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

     

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

    

    

    
      
        
          
            
              	 
      	
                      BUYER:

                    	 
      
	 
      	 
      	 
      	 
      
	 
      	
                       

                    	 
      
	 
      	 
      	 
      	 
      
	 
      	
                       

                    	
                       

                    	 
      
	 
      	
                       

                    	
                       

                    	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                      By:

                    	
                       

                    	 
      
	 
      	
                      Its:

                    	
                       

                    	 
      

            

          

        

      

    

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

     

    EXHIBITS

    

    
      	
              Exhibit
      A

            	
              Form
      of Certificate of Determination

            

    

    
      	
              Exhibit
      B

            	
              Form
      of Series A Warrant

            

    

    
      	
              Exhibit
      C

            	
              Form
      of Series B Warrant

            

    

    
      	
              Exhibit
      D

            	
              Form
      of Series C Warrantd927958_ex10-1.htm

    
      
        
          EXHIBIT
10.1

           

          
            

          

        

        SHARE
PURCHASE AGREEMENT

      

      
        

        This
Share Purchase Agreement ("Agreement"), dated as of October 3, 2008, is made by
and among PRIMELEAD SHAREHOLDERS INC., a corporation organized under the laws of
the Republic of the Marshall Islands (the "Buyer"), and ENTREPRENEURIAL SPIRIT
HOLDINGS INC., a corporation organized under the laws of Liberia, ADVICE
INVESTMENTS S.A., a corporation organized under the laws of Liberia, MAGIC
MANAGEMENT INC., a corporation organized under the laws of Liberia and DEEP SEA
INVESTMENTS INC., a corporation organized under the laws of the Republic of the
Marshall Islands (collectively, the "Sellers").

      

      
        

        RECITALS

      

      
        

        WHEREAS,
the Sellers together own all of the issued and outstanding common shares of
DRILLSHIPS HOLDINGS INC., a corporation organized under the laws of the Republic
of the Marshall Islands ("DrillShips Holdings"), which, in turn, is the direct
owner of all of the issued and outstanding common shares of Hydra Shareholders
Inc., a corporation organized under the laws of the Republic of the Marshall
Islands ("Hydra Shareholders") and Paros Shareholders Inc., a corporation
organized under the laws of the Republic of the Marshall Islands ("Paros
Shareholders"), which, in turn, is the direct owner of all of the issued and
outstanding common shares of Drillship Hydra Owners Inc., a corporation
organized under the laws of the Republic of the Marshall Islands ("Hydra
Owners") and Drillship Paros Owners Inc., a corporation organized under the laws
of the Republic of the Marshall Islands ("Paros Owners");

      

      
        

        WHEREAS,
DrillShips Holdings, through Hydra Owners and Paros Owners, has contracted two
newbuilding ultra-deep water drillships identified as DrillShips 1837 and 1838
with Samsung heavy Industries Co., Ltd.;

      

      
        

        WHEREAS,
the Buyer is a wholly owned subsidiary of DryShips Inc. ("DRYS"), a corporation
organized under the laws of the Republic of the Marshall Islands and the shares
of which are listed on the Nasdaq Global Market;

      

      
        

        WHEREAS,
the Buyer, through a wholly-owned subsidiary, owns all of the issued and
outstanding common shares of OCEAN RIG ASA ("Ocean Rig"), a corporation
organized under the laws of Norway which, in turn, owns, through two
subsidiaries, two existing ultra-deep water drilling rigs, the Leiv Eiriksson
and the Eirik Raude;

      

      
        

        WHEREAS,
prior to the Closing Date (as defined in Section 2.2 below), the Buyer shall
have purchased all of the issued and outstanding shares of the respective owning
companies (collectively, the "DRYS Owners") of two additional newbuilding
ultra-deep water drillships, identified as Hull 1865 and Hull 1866 being
constructed by Samsung Heavy Industries Co., Ltd.;

      

      
        

        WHEREAS,
the Sellers wish to sell and the Buyer wishes to buy all of the issued
and
outstanding common shares of DrillShips Holdings (the "Shares") on the terms and
conditions contained herein;

      

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      
        NOW,
THEREFORE, in consideration of the premises and the respective representations,
warranties, covenants and agreements stated herein, the parties agree as
follows:

      

      
        

        ARTICLE
I 

         

        DEFINITIONS

      

      
        

        Capitalized
terms used in this Agreement have the meanings specified in (a) the preamble,
(b) the recitals, (c) this Article I or (d) elsewhere in this Agreement, as the
case may be:

      

      
        

        Claim means any
claim, demand, assessment, judgment, order, decree, action, cause of action,
litigation, suit, investigation or other Proceeding.

      

      
        

        Companies means
DrillShips Holdings, Hydra Shareholders, Paros Shareholders, Hydra Owners and
Paros Owners.

      

      
        

        Constitutional
Documents means all constituent documents of the Sellers and each of the
Companies, including their respective Articles of Incorporation and
By-Laws.

      

      
        

        Contract means any
loan or credit agreement, note, bond, mortgage, indenture, lease, sublease,
purchase order or other agreement, commitment, instrument, permit, concession,
franchise or license, written or oral.

      

      
        

        Corporate Records
means (a) the Constitutional Documents of the Companies; and (b) all minutes of
meetings and resolutions of stockholders and directors of the
Companies.

      

      
        

        Governmental Body
means any (a) nation, state, country, city, town, village, district, or other
jurisdiction of any nature, (b) federal, state, local, municipal, foreign, or
other government, (c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal), (d) multinational governmental organization or
body, or (e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power of any nature.

      

      
        

        Laws means all
statutes, treaties, codes, ordinances, decrees, rules, regulations, municipal
bylaws, judicial or arbitral or administrative or ministerial or departmental or
regulatory judgments, orders, decisions, rulings or awards, policies,
certificates, codes, licenses, permits, approvals, guidelines, voluntary
restraints, inspection reports, or any provisions of such laws, including
general principles of common law and equity and the requirements of all
Governmental Bodies, binding or affecting the Person referred to in the context
in which such word is used; and "Law" means any one of them.

      

      
        

        Lender Consent means,
with respect to the sale of the Shares, the written consent of DVB BANK AG, as
the representative of the syndicate of lenders to the Sellers, the receipt of
which shall be a condition precedent to the transactions contemplated
herein.

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      
        Lien means (whether
the same is consensual or nonconsensual or arises by contract, operation of law,
legal process or otherwise): (i) any mortgage, lien, security interest, pledge,
attachment, levy or other charge or encumbrance of any kind thereupon or in
respect thereof; or (ii) any other arrangement under which the same is
transferred, sequestered or otherwise identified with the intention of
subjecting the same to, or making the same available for, the payment or
performance of any liability in priority to the payment of the ordinary,
unsecured creditors, and which under applicable law has the foregoing effect,
including any adverse Claim.

      

      
        

        Newbuilding Contracts
means the (i) Contract for the Construction and Sale of Hull 1837 by and between
Hydra Owners and Samsung Heavy Industries Co., Ltd. and (ii) the Contract for
the Construction and Sale of Hull 1838 by and between Paros Owners and Samsung
Heavy Industries Co., Ltd., each dated September 17, 2007.

      

      
        

        Orders means
judgments, writs, decrees, compliance agreements, injunctions, rules, awards,
settlement agreements or orders of any Governmental Body or
arbitrator.

      

      
        

        Person means any
individual, firm, corporation, partnership, limited liability company, joint
venture, association, trust, unincorporated organization, government or agency
or subdivision thereof or any other entity.

      

      
        

        Proceeding means an
action, suit, litigation, claim, investigation, legal, administrative or
arbitration proceeding.

      

      
        

        ARTICLE
II

      

      
        

        PURCHASE
OF SHARES; CLOSING

      

      
        

        Section
2.1 Purchase of Shares.
Upon the terms and subject to the conditions of this Agreement, and on
the basis of the representations and warranties hereinafter set forth, the
Sellers, jointly and severally, agree to sell, transfer, convey, assign and
deliver to the Buyer, and the Buyer agrees to acquire and buy from the Sellers,
the Shares, free and clear of all liens, except as disclosed pursuant to Section
3.7 below.

      

      
        

        Section
2.2 Closing. The
closing of the transactions contemplated hereby (the "Closing") shall take place
on a date to be mutually agreed among the parties which shall be promptly
following the receipt of the Lender Consent, in the premises of Deverakis Law
Office, Omega Building, 80 Kifisias Avenue, Marousi, Athens, Greece, or at such
other place upon which the Buyer and the Sellers shall agree. The date on which
the Closing is to be held is referred to in this Agreement as the "Closing
Date."

      

      
        

        Section
2.3 Purchase Price. The
aggregate purchase price for the Shares that shall be paid to the Sellers on the
Closing Date shall be such number of shares of common stock of the Buyer as
represents the fair market value of Drillships 1837 and 1838, after taking into
account the debt of the Companies being assumed by the Buyer, and subject to
adjustment as provided in Section 2.4 and Section 2.5 below, in an amount equal
to twenty-five percent (25%) of all the issued and outstanding shares of the
Buyer on the Closing Date, such number of shares being referred to herein as the
Purchase Price.

      

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      
        Section
2.4 Capital Structure Purchase
Price Adjustment. The number of shares of the Buyer being issued to the
Sellers as the Purchase Price is predicated on the capital structure of the
Buyer, on a pro forma basis, including the relative equity contributions of
Ocean Rig, on the one hand, the DRYS Owners, and of the Companies, on the other,
to the capitalization of the Buyer on a consolidated pro forma basis, all as set
forth in Schedule
2.4 hereto
(the "Pro Forma Balance Sheet") with such updates and adjustments as shall be
necessary to reflect subsequent events up to and through the Closing Date.
Should the relative equity contributions of Ocean Rig, the DRYS Owners and the
Sellers to the total shareholder's equity of the Buyer change between the
signing of this Agreement and the Closing, then the percentage of the shares of
the Buyer that shall be issued to Sellers as the Purchase Price shall be
adjusted, upward or downward, as the case may be, to reflect such
change.

      

      
        

        Section
2.5 Unknown Liabilities
Readjustment. If, commencing on the date hereof and terminating twelve
(12) months from the Closing Date, the Buyer and/or any of its subsidiaries
shall be subject to any liability that is not reflected in the Pro Forma Balance
Sheet set forth on Schedule 2.4 or not
reserved for in the financial statements of Ocean Rig for any reason other than
due to the Buyer's purchase of the Shares or otherwise through no fault of the
Sellers, the percentage of shares to be allocated to the Sellers shall be
adjusted accordingly, by way of issuing additional common shares of the Buyer;
provided that in the event (i) the additional common shares are issued
subsequent to the Closing Date, and (ii) during the period since the Closing
Date, the Buyer has paid any dividends on its common shares, the Sellers shall
also be entitled to receive an amount in cash equal to such dividends promptly
following any such adjustment of the Purchase Price as provided for
herein.

      

      
        

        Such
adjustment shall be made by reducing the equity allocated to DRYS on account of
the equity contribution of OCEAN RIG.

      

      
        

        For
example:

      

      
        

        The
initial equity allocation of the Buyer is as follows:

      

      
        

        X =
equity attributed to DRYS on account of Ocean Rig + the DRYS
Owners

      

      
        

        Y =
equity attributed to the Sellers on account of DrillShips Holdings and its
subsidiaries which indirectly or directly owns DrillShips 1837 and
1838

      

      
        

        A = The
amount of the additional Ocean Rig tax liability

      

      
        

        If Ocean
Rig becomes liable during the applicable period for additional taxes in an
amount equal to A, then the revised equity allocation shall be as
follows:

      

      
        

        X' = X -
A (The reduced equity to be attributed to the Buyer (Ocean Rig + the DRYS
Owners) on account of the Ocean Rig tax liability)

      

      
        

        Y' = Y +
A (The increased equity to be attributed to Seller)

      

      
        

        The
revised percentage Seller will receive of shares of the Buyers shall
be:

      

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      
        Sellers
Percentage = Y + A / X + Y

      

      
        

        

      

      ARTICLE
III

      

      REPRESENTATIONS
AND WARRANTIES OF THE SELLERS

      
        

        The
Sellers, jointly and not severally, hereby represent and warrant to the Buyer on
the date hereof and as of the Closing Date as follows:

      

      
        

        Section
3.1 Organization of the
Sellers.  (a) Each of the Sellers is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now
conducted.

      

      
        

        Section
3.2 Organization of the
Companies.  (a) Each of the Companies is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now conducted. 
(b) The Sellers have heretofore delivered to the Buyer complete and correct
copies of the Constitutional Documents of the Companies as currently in effect
and the other Corporate Records. The Corporate Records are accurate in all
material respects and all corporate proceedings and actions reflected therein
have been conducted or taken in compliance with all applicable Laws and in
compliance with the Constitutional Documents. None of the Companies is in
default under or in violation of its Constitutional
Documents.

      

      
        

        Section
3.3 Authority of the
Sellers.  (a) Each of the Sellers has full legal capacity, right,
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby; (b) the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all requisite corporate action taken on the part
of the Sellers and no other corporate proceedings on the part of the Sellers is
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby; and (c) that this Agreement has been duly and validly
executed and delivered by the Sellers and constitutes a valid and binding
obligation of each of the Sellers, enforceable against it in accordance with its
terms.

      

      
        

        Section
3.4 Consents and Approvals; No
Violation, With Respect to the Sellers. Neither the execution and
delivery of this Agreement by the Sellers nor the consummation of the
transactions contemplated by this Agreement will (a) conflict with or result in
any breach of any provision of Constitutional Documents of the Sellers; (b)
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Body other than those that have been made or
obtained; (c) except for the requirement to obtain the Lender Consent, result in
a default (or give rise to any right of amendment, termination, cancellation,
consent, acceleration or loss of a material benefit) under the terms, conditions
or provisions of any Contract, instrument or other obligation to which the
Sellers or any of their assets may be bound, except in such cases where the
requisite waivers or consents have been obtained; (d) result in the creation of
any Lien upon any of the properties or assets of the Sellers under the terms,
conditions or provisions of any Contract, instrument or other obligation to
which the

      

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      
        Sellers
or any of their assets may be bound or affected; or (e) violate any Law or Order
applicable to the Sellers or their assets.

      

      
        

        Section
3.5 Consents and Approvals; No
Violation, With Respect to the Companies. Neither the
execution and delivery of this Agreement by the Sellers nor the consummation of
the transactions contemplated by this Agreement will (a) conflict with or result
in any breach of any provision of the Constitutional Documents of the Companies;
(b) require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Body other than those that have been made or
obtained; (c) except for the requirement to obtain the Lender Consent, result in
a default (or give rise to any right of amendment, termination, cancellation,
consent, acceleration or loss of a material benefit) under the terms, conditions
or provisions of any Contract, instrument or other obligation to which the
Companies or any of their assets may be bound, except in such cases where the
requisite waivers or consents have been obtained; (d) result in the creation of
any Lien upon any of the properties or assets of the Companies under the terms,
conditions or provisions of any Contract, instrument or other obligation to
which the Companies or any of their assets may be bound or affected; or (e)
violate any Law or Order applicable to the Companies or their
assets.

      

      
        

        Section
3.6 Capitalization. (a)
Schedule 3.6
sets forth the amount of authorized capital stock and the amount of the issued
and outstanding shares of capital stock of the Companies. The Shares constitute
all of the issued and outstanding common shares of DrillShips Holdings; all such
common shares are duly authorized, validly issued, fully paid and non-assessable
and are owned legally and beneficially by the Sellers, as set forth on Schedule 3.6. Other than this
Agreement, there is no subscription, option, warrant, preemptive right, call
right or other right, agreement or commitment of any nature relating to the
voting, issuance, sale, delivery or transfer (including any right of conversion
or exchange under any outstanding security or other instruments) by the Sellers
of the Shares, and there is no obligation on the part of the Sellers to grant,
extend or enter into any of the foregoing.

      

      
        

        (b)
DrillShips Holdings is the legal and beneficial owner of all of the issued and
outstanding shares of Hydra Shareholders and Paros Shareholders; all such common
shares are duly authorized, validly issued, fully paid and non-assessable and
are owned legally and beneficially by DrillShips Holdings, as set forth on Schedule
3.6.   There is no subscription, option, warrant,
preemptive right, call right or other right, agreement or commitment of any
nature relating to the
voting,  issuance,  sale,  delivery or transfer
(including any right of conversion or exchange under any outstanding security or
other instruments) by DrillShips Holdings of the shares of its subsidiaries,
Hydra Shareholders and Paros Shareholders, and there is no obligation on the
part of DrillShips Holdings to grant, extend or enter into any of the foregoing.
DrillShips Holdings does not, directly or indirectly, own any capital stock of
or other equity interest in any Person other than as set forth on Schedule
3.6.

      

      
        

        (c) Hydra
Shareholders is the legal and beneficial owner of all the issued and outstanding
shares of Hydra Owners; all such common shares are duly authorized, validly
issued, fully paid and non-assessable and are owned legally and beneficially by
Hydra Shareholders, as set forth on Schedule
3.6.  There is no subscription, option, warrant, preemptive
right, call right or other right, agreement or commitment of any nature relating
to the voting, issuance, sale, delivery or transfer (including any right of
conversion or exchange under any outstanding

      

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      
        security
or other instruments) by Hydra Shareholders of the shares of its subsidiary,
DrillShip Hydra Owners and there is no obligation on the part of Hydra
Shareholders to grant, extend or enter into any of the foregoing. Hydra
Shareholders does not, directly or indirectly, own any capital stock of or other
equity interest in any Person other than as set forth on Schedule
3.6.

      

      
        

        (d) Paros
Shareholders is the legal and beneficial owner of all the issued and outstanding
shares of Paros Owners; all such common shares are duly authorized, validly
issued, fully paid and non-assessable and are owned legally and beneficially by
Paros Shareholders, as set forth on Schedule 3.6. There
is no subscription, option, warrant, preemptive right, call right or other
right, agreement or commitment of any nature relating to the voting, issuance,
sale, delivery or transfer (including any right of conversion or exchange under
any outstanding security or other instruments) by Paros Shareholders of the
shares of its subsidiary, DrillShip Paros Owners Inc., and there is no
obligation on the part of Paros Shareholders to grant, extend or enter into any
of the foregoing. Paros Shareholders does not, directly or indirectly, own any
capital stock of or other equity interest in any Person other than as set forth
on Schedule
3.6.

      

      
        

        Section
3.7 Ownership of Purchased
Shares. The Sellers own and hold the Shares free and clear of all
Liens or other limitations affecting the Sellers' ability to vote such shares or
to transfer such shares to the Buyer, except as disclosed on Schedule 3.7 hereto.
At the Closing, the Sellers will transfer, assign and transmit good and
marketable title to and deliver the Shares to Buyer, free and clear of all
Liens, except as disclosed in Schedule
3.7.

      

      
        

        Section
3.8 Ownership of the Shares of
the Companies. (a) DrillShips Holdings owns and holds the shares of
Hydra Shareholders and Paros Shareholders free and clear of all Liens or other
limitations affecting DrillShips Holdings' ability to vote such shares or to
transfer such shares, except as disclosed on Schedule 3.7
hereto.

      

      
        

        (b) Hydra
Shareholders owns and holds the shares of Hydra Owners free and clear of all
Liens or other limitations affecting Hydra Shareholder's ability to vote such
shares or to transfer such shares, except as disclosed on Schedule 3.7
hereto.

      

      
        

        (c) Paros
Shareholders owns and holds the shares of Paros Owners free and clear of all
Liens or other limitations affecting Paros Shareholder's ability to vote such
shares or to transfer such shares, except as disclosed on Schedule 3.7
hereto.

      

      
        

        Section
3.9 Pro Forma Balance Sheet.
Set forth in Schedule 2.4 is a
true and correct copy of the pro forma consolidated balance sheet of the Buyer
which gives effect to the transactions contemplated hereby and is adjusted for
the equity contributions attributable to Ocean Rig and the DRYS Owners and such
Pro Forma Balance Sheet is accurate and complete.

      

      
        

        Section
3.10 Liabilities.
Except as set forth on Schedule
3.10, none of the Companies has any Liabilities,
including any tax liability, which are not fully reflected or noted in the Pro
Forma Balance Sheet, as updated and adjusted for subsequent events up to and
through the Closing Date, except those which have been incurred in the ordinary
course of business since the date thereof.

      

      
        

        Section
3.11 Contracts. 
(a) All Contracts to which the Companies, or any of them, is a party or
bound by, is set forth on Schedule 3.11 and
there is not, under any Contract,

      

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      
        any
default or event which, with notice or lapse of time, or both, would constitute
a material default on the part of any of the parties thereto, except such events
of default and other events as to which requisite waivers or consents have been
obtained, and all such Contracts are in full force and effect, constitute the
legal and binding obligations of the respective parties thereto, and have not
been modified or amended, except as set forth on Schedule 3.11, and
true and correct copies of such Contracts or are appended thereto. All Contracts
to which the Companies, or any of them, will become a party, or will be bound
by, are also set forth on Schedule 3.11 and
drafts of such Contracts are appended thereto.

      

      
        

        (b) All
amounts due under the Newbuilding Contracts and any related supervision or other
ancillary agreements have been paid.

      

      
        

        (c) To
the best knowledge of the Sellers, no counterparty to any Contract to which the
Companies, or any of them, is a party is in default under any such
Contract.

      

      
        

        Section
3.12 No Other Business.
None of the Companies has conducted any business other than (i) the
ownerships of its subsidiaries as set forth on Schedule 3.6; (ii)
the purchase by Drill Ships Holdings, through Hydra Owners, of Hull 1837; and
(iii) the purchase by DrillShips Holdings, through Paros Owners, of Hull
1838.

      

      
        

        Section
3.13 Proceedings With Respect
to the Sellers. There is no Claim or Proceeding which is pending, or to
the knowledge of the Sellers, there is no Claim or Proceeding threatened in
writing, against or relating to the Sellers, or any of them, before any
Governmental Body and none of the Sellers is subject to or bound by any
outstanding Order.

      

      
        

        Section
3.14 Proceedings With Respect
to the Companies. There is no Claim or Proceeding which is pending, or to
the knowledge of the Sellers, there is no Claim or Proceeding threatened in
writing, against or relating to the Companies, or any of them, before any
Governmental Body and none of the Companies is subject to or bound by any
outstanding Order.

      

      
        

        Section
3.15 No Unlawful Payments.
None of the Companies, nor any director, shareholder, officer, agent,
employee or other person associated with or acting on behalf of the Companies,
has: (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; or (iii) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any supplier, customer, licensor, contractor, politician, government employee or
other Person.

      

      
        

        Section
3.16 Bank Accounts.
Schedule
3.16 sets forth a complete and accurate list of all bank accounts,
savings deposits, money-market accounts, certificates of deposit, safety deposit
boxes, and similar investment accounts with banks or other financial
institutions maintained by or on behalf of the Companies showing the depository
bank or institution address, appropriate bank contact personnel, account number
and names of signatories.

      

      
        

        Section
3.17 Full Disclosure.
No representation or warranty by the Sellers in this Agreement and no
statement contained in any document or other writing furnished or to be
furnished to the Buyer pursuant to the provisions hereof, when considered with
all other such

      

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      
        documents
or writings, contain or will contain any untrue statement of material fact or
omits or will omit to state any material fact necessary in order to make the
statements made herein or therein not misleading.

      

      
        

        ARTICLE
IV

      

      
        

        REPRESENTATIONS
AND WARRANTIES OF BUYER

      

      
        

        Buyer
represents and warrants to the Sellers as of the date hereof and as of the
Closing Date as follows:

      

      
        

        Section
4.1 Organization. Buyer
is a corporation duly organized, validly existing and in good standing under the
laws of the Republic the Marshall Islands and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now conducted.

      

      
        

        Section
4.2 Authority. Buyer
represents and warrants (a) that it has the full legal capacity, right, power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby; (b) the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all requisite corporate action taken on the part
of the Buyer and no other corporate proceedings on the part of the Buyer is
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby; and (c) this Agreement has been duly and validly executed
and delivered by the Buyer and constitutes a valid and binding obligation of the
Buyer, enforceable against the Buyer in accordance with its
terms.

      

      
        

        Section
4.3 Consents and Approvals; No
Violation. Neither the execution and delivery of this Agreement by Buyer,
nor the consummation of the transactions contemplated by this Agreement, nor the
performance by Buyer of its obligations under this Agreement will (a) conflict
with or result in any breach of any provision of the corporate organizational
documents of the Buyer; (b) require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Body other than
those which have been made or obtained; or (c) result in a default (or give rise
to any right of termination, cancellation, consent or acceleration) under any of
the terms, conditions or provisions of any Contract to which Buyer is a party or
by which its assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained; or (d) violate any Order or Law applicable to Buyer
or any of its assets.

      

      
        

        Section
4.4 Validity. There is
no investigation, claim, proceeding or litigation of any type pending or,
threatened to which Buyer is a party that (i) relates, or may relate, to the
validity or enforceability of any of the Buyer's obligations under this
Agreement or (ii) seeks (or reasonably might be expected to seek) (A) to prevent
or delay the consummation by the Buyer of the transactions contemplated by this
Agreement or (B) damages in connection with any such
consummation.

      

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      
        Section
4.5  Accuracy of
Information. All of the information provided by the Buyer for inclusion
in Schedule 2.4
related to the capitalization of the Buyer is accurate and
complete.

      

      
        

        Section
4.6   Primelead
Shares. The shares of Buyer common stock that shall be issued to the
Sellers as the Purchase Price shall be issued free and clear of all
Liens.

         

      

      
        ARTICLE
V

         

        COVENANTS

      

      
        

        Section
5.1 Lender Consent. The
Sellers shall use their best efforts to obtain the Lender Consent in respect of
the transactions contemplated herein on or before December 31, 2009, or such
later date the parties hereto shall agree in writing.

      

      
        

        Section
5.2 Conduct of Business
Pending Closing. Buyer and Sellers agree that between the date of the
execution of this Agreement and the Closing Date, (i) the Sellers shall conduct
the business and maintain and preserve the assets of Sellers in the ordinary
course of business, and without limiting the foregoing, the Sellers covenant to
cause the Companies to make timely payments of all amounts due under the
Contracts to which the Companies, or any of them, is a party except that the
Sellers may receive distributions of excess cash from the Companies; (ii) the
Buyer and the Sellers shall use their reasonable efforts to cause all of the
representations and warranties in Article III hereof to continue to be true and
correct; and (iii) none of the Companies shall incur any further debt (other
than amounts drawndown under the loan agreement with DVB Bank AG specified in
Schedule 3.7) without the Buyers prior written
approval.

      

      
        

        Section
5.3 Further Assurances.
Subject to the prior written consent of DVB Bank AG, the Sellers shall
execute, acknowledge and deliver or cause to be executed, acknowledged and
delivered to the Buyer such assignments or other instruments of transfer,
assignment and conveyance, in form and substance reasonably satisfactory to
Buyer, as shall be necessary to vest in Buyer all of the right, title and
interest in and to the Shares undertaken to be sold to Buyer by the Sellers
pursuant to this Agreement, free and clear of all Liens, debts, dues and duties
of whatsoever nature (save as noted in Section 3.7 hereinabove), and any other
document reasonably requested by the Buyer in connection with this
Agreement.

      

      
        

        Section
5.4 Governmental Filings.
As promptly as practicable after the execution of this Agreement, each
party shall, in cooperation with the other, file any reports or notifications
that may be required to be filed by it under applicable law, if
any.

      

      
        

        Section
5.5 Further Consents.
After the Closing Date, the Sellers shall obtain any consents or
approvals or assist in any filings reasonably required in connection with the
transactions contemplated hereby that are requested by Buyer and that have not
been previously obtained or made.

      

      
        

        Section
5.6 Public Announcements.
Neither the Buyer on the one hand, nor the Sellers on the other hand,
shall, without the prior approval of the other party, issue,
or

      

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      
        permit
any of its partners, stockholders, directors, officers, employees, members,
managers, agents to issue, any press release or other public announcement with
respect to this Agreement or the transactions contemplated hereby, except as may
be required by Law or any Governmental Body to which the relevant party is
accountable.

         

      

      
        ARTICLE
VI

         

        INDEMNIFICATION

      

      
        

        Section
6.1 Sellers' Indemnity
Obligations. The Sellers agree to indemnify the Buyer against, and hold
the Buyer harmless from and against, any amounts that arise from, are based on
or relate or otherwise are attributable to (a) any error, inaccuracy, breach or
misrepresentation in any of the representations and warranties made by or on
behalf of the Sellers in this Agreement, (b) any violation or breach by the
Sellers of or default by the Sellers under the terms of this Agreement. Buyer
shall be entitled to recover its reasonable and necessary attorneys' fees and
litigation expenses incurred in connection with successful enforcement of its
rights under this Section 6.1.

      

      
        

        Section
6.2 Buyer's Indemnity
Obligations. Buyer shall indemnify Seller against, and hold the Sellers
harmless from and against, any and all amounts that arise from, are based on or
relate or otherwise are attributable to (a) any error, inaccuracy, breach or
misrepresentation in any of the representations and warranties made by or on
behalf of the Buyer in this Agreement, (b) any violation or breach by the Buyer
of or default by Buyer under the terms of this Agreement.  The Sellers
shall be entitled to recover its reasonable and necessary attorneys' fees and
litigation expenses incurred in connection with successful enforcement of their
rights under this Section 6.2.

      

      
        

        Section
6.3 Survival of Indemnity
Obligation. The rights and duties contained in this Article VI shall
survive the Closing.

      

      
        

        ARTICLE
VII

      

      
        

        CONDITIONS
TO CLOSING

      

      
        

        Section
7.1 Conditions to Obligations
of Buyer. The obligations of the Buyer to consummate the transactions
contemplated herein are subject, at the option of the Buyer, to satisfaction of
the following conditions:

      

      
        

        (a)           Compliance.    On
or prior to the Closing Date, the Sellers shall have complied with its covenants
and agreements contained herein, and the representations and warranties
contained in Article III hereof shall be true and correct in all material
respects (except those representations and warranties qualified by materiality
shall be true and correct in all respects) on the date hereof and as of the
Closing Date.

      

      
        

        (b)           Orders, Etc. No action, suit
or proceeding shall have been commenced or shall be pending or threatened, and
no statute, rule, regulation or order shall have been enacted, promulgated,
issued or deemed applicable to the transactions contemplated by this
Agreement,

      

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      
        by any
Governmental Body or court that reasonably may be expected to prohibit
consummation of the transactions contemplated by this
Agreement.

      

      
        

        (c)           Prior Acquisitions. The Buyer
shall have completed the lawful acquisition of the DRYS
Owners.

      

      
        

        (d)           Consents.   All
consents and approvals required in connection with the execution, delivery and
performance of this Agreement shall  have been obtained unless
otherwise agreed, including the Lender Consent.

      

      
        

        Section
7.2 Conditions to Obligations
of the Sellers. The obligations of the Sellers to consummate the
transactions contemplated herein are subject, at the option of the Sellers, to
satisfaction of the following conditions:

      

      
        

        (a)           Compliance.      Buyer   shall   have   complied   with   its   covenants   and
agreements contained herein, and the representations and warranties contained in
Article IV hereof shall be true and correct in all material respects (except
those representations and warranties qualified by materiality shall be true and
correct in all respects) on the date hereof and as of the Closing
Date.

      

      
        

        (b)           Orders, Etc. No action, suit
or proceeding shall have been commenced or shall be pending or threatened, and
no statute, rule, regulation or order shall have been enacted, promulgated,
issued or deemed applicable to the transactions contemplated by this Agreement,
by any Governmental Body or court that reasonably may be expected to prohibit
consummation of the transactions contemplated by this
Agreement.

      

      
        

        (c)           Consents.  All
consents and approvals required in connection with the execution, delivery and
performance of this Agreement shall have been obtained.

      

      
        

        ARTICLE
VIII 

         

        TERMINATION

      

      
        

        Section
8.1 Grounds for Termination.
This Agreement may be terminated at any time prior to the Closing
Date:

      

      
        

        (a)           By
the mutual written agreement of Buyer and the Sellers;

      

      
        

        (b)           By
Buyer if any of the conditions set forth in Section 7.1 hereof shall have become
incapable of fulfillment and shall not have been waived by
Buyer;

      

      
        

        (c)           By
the Sellers if any of the conditions set forth in Section 7.2 hereof shall have
become incapable of fulfillment and shall not have been waived by
Seller;

      

      
        

        (d)         
By either party by written notice thereof to the other, if the Closing
contemplated hereby shall not have been consummated on or before December 31,
2009 or such other date, if any, as Buyer and Seller shall agree upon in
writing; or

      

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      
        (e)         
By Buyer or the Sellers if the consummation of the transactions contemplated
hereby would violate any nonappealable final order, decree or judgment of any
court or Governmental Body having competent jurisdiction enjoining, restraining
or otherwise preventing, or awarding substantial damages in connection with, or
imposing a material adverse condition upon, the consummation of this Agreement
or the transactions contemplated hereby; provided, however, that a
party shall not be allowed to exercise any right of termination pursuant to this
Section 8.1 if the event giving rise to such termination right shall be due to
the negligent or willful failure of the party seeking to terminate this
Agreement to perform or observe in any material respect any of the covenants or
agreements set forth herein to be performed or observed by such
party.

      

      
        

        ARTICLE
IX

      

      
        

        GENERAL
PROVISIONS

      

      
        

        Section
9.1 Entire Agreement.
This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof. This Agreement may not be modified,
amended or terminated except by a written instrument specifically referring to
this Agreement signed by all the parties hereto.

      

      
        

        Section
9.2 Waivers and Consents.
All waivers and consents given hereunder shall be in writing. No waiver
by any party hereto of any breach or anticipated breach of any provision hereof
by any other party shall be deemed a waiver of any other contemporaneous,
preceding or succeeding breach or anticipated breach, whether or not similar.
Except as provided in this Agreement, no action taken pursuant to this
Agreement, including any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained in this
Agreement.

      

      
        

        Section
9.3 Notices. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been received only if and when (a) personally delivered, (b) on
the fifth day after mailing, by mail, first class, postage prepaid or by
certified mail return receipt requested, addressed in each case as follows (or
to such other address as may be specified by like notice), (c) at the time
receipt is acknowledged when delivered by private mail or courier service or (d)
received by facsimile at the phone number listed below:

      

      
        

        
          	
                	
                  (a)

                	
                  If
      to Buyer to:

                

        

      

      
        

        c/o
DryShips Inc. 

        Omega
Building 

        80
Kifisias Avenue 

        Marousi,
Athens, Greece 

        Attn:
George Economou 

        Telefax:
+30 210 8090505

      

      
        

        
          
            	
                  	
                    (b)

                  	
                    If
      to the Sellers to:

                  

          

        

      

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      
        c/o
CARDIFF MARINE INC. 

        Omega
Building 

        80
Kifisias Avenue 

        Marousi,
Athens, Greece 

        Attn: Mr.
A. loannidis, G.M. 

        Fax: +30
210 8090205

      

      
        

        Section
9.4 Assignments, Successors
and No Third-Party Rights. No party may assign any of its rights or
delegate any of its obligations under this Agreement without the prior written
consent of the other party. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties.

      

      
        

        Section
9.5 Choice of Law; Resolution
of Disputes. This Agreement shall be governed by and construed under the
laws of the State of New York without regard to choice of law principles. All
disputes, differences, controversies or claims arising out of or in connection
with this Agreement shall be arbitrated in New York in the following manner. One
arbitrator is to be appointed by each of the parties hereto and the two
appointed arbitrators shall appoint a third arbitrator. Their decision or that
of any two of them shall be final. The arbitrators shall be commercial persons,
conversant with shipping matters. Such arbitration is to be conducted in
accordance with the rules and on the terms current at the time when the
arbitration proceedings are commenced and in accordance with the Society of
Maritime Arbitrators, Inc.

      

      
        

        Section
9.6 Construction; Section
Headings. The language used in this Agreement shall be deemed to be the
language the parties hereto have chosen to express their mutual intent, and no
rule of strict construction will be applied against any party hereto. The
section headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this
Agreement.

      

      
        

        Section
9.7 Severability. Any
term or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only as broad as is
enforceable.

      

      
        

        Section
9.8 Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original and all of which together shall be deemed to be one and
the same instrument.

      

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      
        IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.

         

      

      
        
          	 
      	
                  For
      the Buyer

                   

                   

                
	 
      	
                  By:

                	
                  /s/
      D. Demtions

                
	 
      	
                  Name:
      D. Demtions

                
	 
      	
                  Title:
      Attorney-in-fact

                
	 
      	
                   

                  For
      the Seller

                   

                   

                
	 
      	
                  By:

                	
                  /s/
      CH. Alivizatos

                
	 
      	
                  Name:
      CH. Alivizatos

                
	 
      	
                  Title:
      Attorney-in-fact

                

        

      

      
         

         

        15

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