Document:

Exhibit
      4.2

    

    CERTIFICATE
      OF AMENDMENT

    OF
      THE

    CERTIFICATE
      OF INCORPORATION

    OF

    NUTRITION
      21, INC.

    

    (Pursuant
      to 805 of the Business Corporation Law)

    

    1.
      The
      name of the corporation is NUTRITION 21, INC. (the "Corporation"), a corporation
      organized and existing under the Business Corporation Law of the State of New
      York. The name under which it was formed is Applied Micro Biology,
      Inc.

     

    2.
      The
      date its certificate of incorporation was filed by the Department of State
      is
      June 29, 1983.

     

    3.
      There
      is hereby created a series of the Preferred Stock of this Corporation to consist
      of 20,000 shares of the 5,000,000 shares of Preferred Stock, par value $.01
      per
      share, which this Corporation now has the authority to issue, and as fixed
      by
      the board of directors before the issuance of such series pursuant to the
      authority contained in Article Fourth of the Certificate or Incorporation,
      and
      in accordance with the provisions of Section 502 of the Business Corporation
      Law
      of the State of New York. The designation of this series, which consists of
      20,000 shares of Preferred Stock, is the Series J 8% Convertible Preferred
      Stock
      (the "Preferred Stock”). The terms of the Preferred Stock are as
      follows:

    

    TERMS
      OF PREFERRED STOCK

    

    Section
      1.
      Definitions.
      Capitalized terms used and not otherwise defined herein that are defined in
      the
      Purchase Agreement shall have the meanings given such terms in the Purchase
      Agreement. For the purposes hereof, the following terms shall have the following
      meanings:

    

    “Alternate
      Consideration”
shall
      have the meaning set forth in Section 7(e).

     

    “Bankruptcy
      Event”
means
      any of the following events: (a) the Corporation or any Significant Subsidiary
      (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences
      a
      case or other proceeding under any bankruptcy, reorganization, arrangement,
      adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
      or
      similar law of any jurisdiction relating to the Corporation or any Significant
      Subsidiary thereof; (b) there is commenced against the Corporation or any
      Significant Subsidiary thereof any such case or proceeding that is not dismissed
      within 60 days after commencement; (c) the Corporation or any Significant
      Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief
      or other order approving any such case or proceeding is entered; (d) the
      Corporation or any Significant Subsidiary thereof suffers any appointment of
      any
      custodian or the like for it or any substantial part of its property that is
      not
      discharged or stayed within 60 calendar days after such appointment; (e) the
      Corporation or any Significant Subsidiary thereof makes a general assignment
      for
      the benefit of creditors; (f) the Corporation or any Significant Subsidiary
      thereof calls a meeting of its creditors with a view to arranging a composition,
      adjustment or restructuring of its debts; or (g) the Corporation or any
      Significant Subsidiary thereof, by any act or failure to act, expressly
      indicates its consent to, approval of or acquiescence in any of the foregoing
      or
      takes any corporate or other action for the purpose of effecting any of the
      foregoing.

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Base
      Conversion Price”
shall
      have the meaning set forth in Section 7(b).

    

    “Business
      Day”
means
      any day except Saturday, Sunday, any day which shall be a federal legal holiday
      in the United States or any day on which banking institutions in the State
      of
      New York are authorized or required by law or other governmental action to
      close.

    

    “Buy-In”
shall
      have the meaning set forth in Section 6(e)(iii).

    

    “Change
      of Control Transaction”
means
      the occurrence after the date hereof of any of (i) an acquisition after the
      date
      hereof by an individual, legal entity or “group” (as described in Rule
      13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
      through legal or beneficial ownership of capital stock of the Corporation,
      by
      contract or otherwise) of in excess of 33% of the voting securities of the
      Corporation (other than by means of conversion or exercise of Preferred Stock
      and the Securities issued together with the Preferred Stock), or (ii) the
      Corporation merges into or consolidates with any other Person, or any Person
      merges into or consolidates with the Corporation and, after giving effect to
      such transaction, the stockholders of the Corporation immediately prior to
      such
      transaction own less than 66% of the aggregate voting power of the Corporation
      or the successor entity of such transaction, or (iii) the Corporation sells
      or
      transfers all or substantially all of its assets to another Person and the
      stockholders of the Corporation immediately prior to such transaction own less
      than 66% of the aggregate voting power of the acquiring entity immediately
      after
      the transaction, or (iv) a replacement at one time or within a one year period
      of more than one-half of the members of the Corporation’s board of directors
      which is not approved by a majority of those individuals who are members of
      the
      board of directors on the date hereof (or by those individuals who are serving
      as members of the board of directors on any date whose nomination to the board
      of directors was approved by a majority of the members of the board of directors
      who are members on the date hereof), or (v) the execution by the Corporation
      of
      an agreement to which the Corporation is a party or by which it is bound,
      providing for any of the events set forth in clauses (i) through (iv)
      above.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Closing
      Date”
means
      the Trading Day when all of the Transaction Documents have been executed and
      delivered by the applicable parties thereto and all conditions precedent to
      (i)
      each Holder’s obligations to pay the Subscription Amount and (ii) the
      Corporation’s obligations to deliver the Securities have been satisfied or
      waived.

    

    “Commission”
means
      the Securities and Exchange Commission.

    

    “Common
      Stock”
means
      the Corporation’s common stock, par value $0.005 per share, and stock of any
      other class of securities into which such securities may hereafter be
      reclassified or changed into.

    

    “Common
      Stock Equivalents”
means
      any securities of the Corporation or the Subsidiaries which would entitle the
      holder thereof to acquire at any time Common Stock, 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.

    

    “Conversion
      Amount”
means
      the sum of the Stated Value at issue.

    

    “Conversion
      Date”
shall
      have the meaning set forth in Section 6(a).

    

    “Conversion
      Price”
shall
      have the meaning set forth in Section 6(b). 

    

    “Conversion
      Shares”
means,
      collectively, the shares of Common Stock issuable upon conversion of the shares
      of Preferred Stock in accordance with the terms hereof.

    

    “Conversion
      Shares Registration Statement”
means
      a
      registration statement that registers the resale of all Conversion Shares of
      the
      Holders, who shall be named as a “selling stockholder” therein and meets the
      requirements of the Registration Rights Agreement.

     

    “Dilutive
      Issuance”
shall
      have the meaning set forth in Section 7(b).

    

    “Dilutive
      Issuance Notice”
shall
      have the meaning set forth in Section 7(b).

    

    “Dividend
      Payment Date”
shall
      have the meaning set forth in Section 3(a).

     

    “Dividend
      Share Amount”
shall
      have the meaning set forth in Section 3(a).

    

    “Effective
      Date”
means
      the date that the Conversion Shares Registration Statement is declared effective
      by the Commission.

    

    
      
        
        

      

      
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    “Equity
      Conditions”
means,
      during the period in question, (i)
      the
      Corporation shall have duly honored all conversions scheduled to occur or
      occurring by virtue of one or more Notices of Conversion of the applicable
      Holder on or prior to the dates so requested or required, if any, (ii) the
      Corporation shall have paid all liquidated damages and other amounts owing
      to
      the applicable Holder in respect of the Preferred Stock, (iii)
      there is an effective Conversion Shares Registration Statement pursuant to
      which
      the Holders are permitted to utilize the prospectus thereunder to resell all
      of
      the shares of Common Stock issuable pursuant to the Transaction Documents (and
      the Corporation believes, in good faith, that such effectiveness will continue
      uninterrupted for the foreseeable future), (iv) the Common Stock is trading
      on a
      Trading Market and all of the shares issuable pursuant to the Transaction
      Documents are listed for trading on such Trading Market (and the Corporation
      believes, in good faith, that trading of the Common Stock on a Trading Market
      will continue uninterrupted for the foreseeable future), (v) there is a
      sufficient number of authorized, but unissued and otherwise unreserved, shares
      of Common Stock for the issuance of all of the shares of Common Stock issuable
      pursuant to the Transaction Documents, (vi) there is no existing Triggering
      Event or no existing event which, with the passage of time or the giving of
      notice, would constitute a Triggering Event, (vii) the issuance of the shares
      in
      question (or, in the case of a redemption, the shares issuable upon conversion
      in full of the redemption amount) to the applicable Holder would not violate
      the
      limitations set forth in Section 6(c) and, if still applicable, Section 6(d)
      herein, (viii)
      there has been no public announcement of a pending or proposed Fundamental
      Transaction or Change of Control Transaction that has not been consummated
      and
      (ix) the applicable Holder is not in possession of any information that
      constitutes, or may constitute, material non-public information that was
      provided by the Corporation.

    

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      promulgated thereunder.

    

    “Exempt
      Issuance”
means
      the issuance of (a) shares of Common Stock or options to employees, officers
      or
      directors of the Corporation pursuant to any stock or option plan duly adopted
      by a majority of the non-employee members of the Board of Directors of the
      Corporation or a majority of the members of a committee of non-employee
      directors established for such purpose, (b) securities upon the exercise of
      or
      conversion of any securities issued hereunder and/or other securities
      exercisable or exchangeable for or convertible into shares of Common Stock
      issued and outstanding on the date of the Purchase Agreement, provided that
      such
      securities have not been amended since the date of the Purchase Agreement to
      increase the number of such securities or to decrease the exercise or conversion
      price of any such securities, and (c) securities issued pursuant to acquisitions
      or strategic transactions approved by a majority of the disinterested directors,
      provided that any such issuance shall only be to a Person which is, itself
      or
      through its subsidiaries, an operating company in a business synergistic with
      the business of the Corporation and shall provide to the Corporation additional
      benefits in addition to the investment of funds, but shall not include a
      transaction in which the Corporation is issuing securities primarily for the
      purpose of raising capital or to an entity whose primary business is investing
      in securities.

     

    
      
        
        

      

      
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    “Forced
      Conversion Amount”
means
      the sum of (i) 100% of the aggregate Stated Value then outstanding, (ii) accrued
      but unpaid dividends and (iii) all liquidated damages and other amounts due
      in
      respect of the Preferred Stock.

    

    “Forced
      Conversion Date”
shall
      have the meaning set forth in Section 8(a).

    

    “Forced
      Conversion Notice”
shall
      have the meaning set forth in Section 8(a).

    

    “Forced
      Conversion Notice Date”
shall
      have the meaning set forth in Section 8(a).

    

    “Four
      Year Redemption”
shall
      have the meaning set forth in Section 8(c).

    

    “Four
      Year Redemption Date”
shall
      have the meaning set forth in Section 8(c).

    

    “Four
      Year Redemption Amount”
means
      the sum of (i) 100% of the aggregate Stated Value then outstanding, (ii) accrued
      but unpaid dividends and (iii) all liquidated damages and other amounts due
      in
      respect of the Preferred Stock 

    

    “Fundamental
      Transaction”
shall
      have the meaning set forth in Section 7(e).

    

    “Holder”
shall
      have the meaning given such term in Section 2.

    

    “Junior
      Securities”
means
      the Common Stock and all other Common Stock Equivalents of the Corporation
      other
      than those securities which are explicitly senior or pari passu
      to the
      Preferred Stock in dividend rights or liquidation preference.

    

    “Liquidation”
shall
      have the meaning set forth in Section 5.

    

    “New
      York Courts”
shall
      have the meaning set forth in Section 11(d).

    

    “Notice
      of Conversion”
shall
      have the meaning set forth in Section 6(a).

    

    “Original
      Issue Date”
means
      the date of the first issuance of any shares of the Preferred Stock regardless
      of the number of transfers of any particular shares of Preferred Stock and
      regardless of the number of certificates which may be issued to evidence such
      Preferred Stock.

    

    “Permitted
      Indebtedness”
      means (a) the
      Indebtedness existing on the Original Issue Date and set forth on Schedule
      3.1(aa)
      attached
      to the Purchase Agreement; (b) Indebtedness of up to $5 million (including
      any
      Indebtedness incurred as of the Original Issue Date thereunder) incurred
      pursuant to the revolving line of credit pursuant to that certain Loan and
      Security Agreement, dated as of June 30, 2007, by and among the Corporation,
      Nutrition 21, LLC and Iceland Health, LLC and Gerber Finance Inc. and any
      replacement financing thereof with a licensed commercial lender not primarily
      in
      the business of purchasing securities nor on terms less favorable to the
      Corporation than the existing financing; and (c) lease obligations and purchase
      money indebtedness of up to $100,000, in the aggregate, incurred in connection
      with the acquisition of capital assets and lease obligations with respect to
      newly acquired or leased assets.

    

    
      
        
        

      

      
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    “Permitted
      Lien”
means
      the individual and collective reference to the following: (a) Liens for taxes,
      assessments and other governmental charges or levies not yet due or Liens for
      taxes, assessments and other governmental charges or levies being contested
      in
      good faith and by appropriate proceedings for which adequate reserves (in the
      good faith judgment of the management of the Corporation) have been established
      in accordance with GAAP; (b) Liens imposed by law which were incurred in the
      ordinary course of the Corporation’s business, such as carriers’, warehousemen’s
      and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens
      arising in the ordinary course of the Corporation’s business, and which (x) do
      not individually or in the aggregate materially detract from the value of such
      property or assets or materially impair the use thereof in the operation of
      the
      business of the Corporation and its consolidated Subsidiaries or (y) which
      are
      being contested in good faith by appropriate proceedings, which proceedings
      have
      the effect of preventing for the foreseeable future the forfeiture or sale
      of
      the property or asset subject to such Lien; (c) Liens incurred in connection
      with Permitted Indebtedness under clause (a) and (b) thereunder; and (d) Liens
      incurred in connection with Permitted Indebtedness under clause (c) thereunder,
      provided that such Liens are not secured by assets of the Corporation or its
      Subsidiaries other than the assets so acquired or leased.

    

    “Preferred
      Stock”
shall
      have the meaning set forth in Section 2.

    

    “Purchase
      Agreement”
means
      the Securities Purchase Agreement, dated as of the Original Issue Date, to
      which
      the Corporation and the original Holders are parties, as amended, modified
      or
      supplemented from time to time in accordance with its terms.

    

    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement, dated as of the date of the Purchase
      Agreement, to which the Corporation and the original Holder are parties, as
      amended, modified or supplemented from time to time in accordance with its
      terms.

    

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder.

    

    “Share
      Delivery Date”
shall
      have the meaning set forth in Section 6(e).

    

    “Stated
      Value”
shall
      have the meaning set forth in Section 2, as the same may be increased pursuant
      to Section 3.

    

    “Subscription
      Amount”
means,
      as to each Purchaser, the amount in United States Dollars and in immediately
      available funds to be paid for the Preferred Stock purchased pursuant to the
      Purchase Agreement as specified below such Purchaser’s name on the signature
      page of the Purchase Agreement and next to the heading “Subscription
      Amount.”

    

    
      
        
        

      

      
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    “Subsidiary”
shall
      have the meaning set forth in the Purchase Agreement.

    

    “Threshold
      Period”
shall
      have the meaning set forth in Section 8(a). 

    

    “Trading
      Day”
means
      a
      day on which the principal Trading Market is open for business.

    

    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: the American Stock Exchange, the Nasdaq
      Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
      the
      New York Stock Exchange or the OTC Bulletin Board.

    

    “Transaction
      Documents”
shall
      have the meaning set forth in the Purchase Agreement.

    

    “Triggering
      Event”
shall
      have the meaning set forth in Section 9(a).

    

    “Triggering
      Redemption Amount”
means,
      for each share of Preferred Stock, the sum of (i) the greater of (A) 130% of
      the
      Stated Value and (B) the product of (a) the VWAP on the Trading Day immediately
      preceding the date of the Triggering Event and (b) the Stated Value divided
      by
      the then Conversion Price, (ii) all accrued but unpaid dividends thereon and
      (iii) all liquidated damages and other costs, expenses or amounts due in respect
      of the Preferred Stock.

    

    “Triggering
      Redemption Payment Date”
shall
      have the meaning set forth in Section 9(b).

    

    “VWAP”
means,
      for any date, the price determined by the first of the following clauses that
      applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
      the daily volume weighted average price of the Common Stock for such date (or
      the nearest preceding date) on the Trading Market on which the Common Stock
      is
      then listed or quoted for trading as reported by Bloomberg Financial L.P. (based
      on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York
      City
      time)); (b) if the OTC Bulletin Board is not a Trading Market, the volume
      weighted average price of the Common Stock for such date (or the nearest
      preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
      quoted for trading on the OTC Bulletin Board and if prices for the Common Stock
      are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a
      similar organization or agency succeeding to its functions of reporting prices),
      the most recent bid price per share of the Common Stock so reported; or (d)
      in
      all other cases, the fair market value of a share of Common Stock as determined
      by an independent appraiser selected in good faith by the Holders and reasonably
      acceptable to the Corporation, the fees and expenses of which shall be paid
      by
      the Corporation. 

    

    
      
        
        

      

      
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    Section
      2.
      Designation,
      Amount, Par Value and Ranking.
      The
      series of preferred stock shall be designated as its Series J 8% Convertible
      Preferred Stock (the “Preferred
      Stock”)
      and
      the number of shares so designated shall be up to 20,000 (which shall not be
      subject to increase without the written consent of all of the holders of the
      Preferred Stock (each, a “Holder”
and
      collectively, the “Holders”)).
      Each
      share of Preferred Stock shall have a par value of $0.01 per share and a stated
      value equal to $1,000, subject to increase set forth in Section 3(a) below
      (the
“Stated
      Value”).
      The
      Preferred Stock shall rank junior to the Corporation’s Series I 6% Convertible
      Preferred Stock with respect to the right to receive dividends or distributions
      of assets upon any liquidation of the Corporation.

     

    Section
      3.
      Dividends.

    

    a) Dividends
      in Cash or in Kind.
      Holders
      shall be entitled to receive, and the Corporation shall pay, cumulative
      dividends at the rate per share (as a percentage of the Stated Value per share)
      of 8% per annum (subject to increase pursuant to Section 9(b)),
      payable
      quarterly on January 1, April 1, July 1 and October 1, beginning on the first
      such date after the Original Issue Date and on each Conversion Date (with
      respect only to Preferred Stock being converted) (each such date, a
“Dividend
      Payment Date”)
      (if
      any Dividend Payment Date is not a Trading Day, the applicable payment shall
      be
      due on the next succeeding Trading Day) in cash, or at the Corporation’s option,
      in duly authorized, validly issued, fully paid and non-assessable shares of
      Common Stock as set forth in this Section 3(a), or a combination thereof (the
      amount to be paid in shares of Common Stock, the “Dividend
      Share Amount”).
      The
      form of dividend payments to each Holder shall be determined in the following
      order of priority: (i) if funds are legally available for the payment of
      dividends and the Equity Conditions have not been met during the 20 consecutive
      Trading Days immediately prior to the applicable Dividend Payment Date, in
      cash
      only; (ii) if funds are legally available for the payment of dividends and
      the
      Equity Conditions have been met during the 20 consecutive Trading Days
      immediately prior to the applicable Dividend Payment Date, at the sole election
      of the Corporation, in cash or shares of Common Stock which shall be valued
      solely for such purpose at 90% of the average of the VWAPs for the 20
      consecutive Trading Days ending on the Trading Day that is immediately prior
      to
      the Dividend Payment Date; (iii) if funds are not legally available for the
      payment of dividends and the Equity Conditions have been met during the 20
      consecutive Trading Days immediately prior to the applicable Dividend Payment
      Date, in shares of Common Stock which shall be valued solely for such purpose
      at
      90% of the average of the VWAPs for the 20 consecutive Trading Days ending
      on
      the Trading Day that is immediately prior to the Dividend Payment Date; (iv)
      if
      funds are not legally available for the payment of dividends and the Equity
      Condition relating to an effective Conversion Shares Registration Statement
      has
      been waived by such Holder, as to such Holder only, in unregistered shares
      of
      Common Stock which shall be valued solely for such purpose at 90% of the average
      of the VWAPs for the 20 consecutive Trading Days ending on the Trading Day
      that
      is immediately prior to the Dividend Payment Date; and (v) if funds are not
      legally available for the payment of dividends and the Equity Conditions have
      not been met during the 20 consecutive Trading Days immediately prior to the
      applicable Dividend Payment Date, then, at the election of such Holder, such
      dividends shall accrue to the next Dividend Payment Date or shall be accreted
      to, and increase, the outstanding Stated Value. The Holders shall have the
      same
      rights and remedies with respect to the delivery of any such shares as if such
      shares were being issued pursuant to Section 6. On the Closing Date the
      Corporation shall have notified the Holders whether or not it may legally pay
      cash dividends as of the Closing Date. The Corporation shall promptly notify
      the
      Holders at any time the Corporation shall become able or unable, as the case
      may
      be, to legally pay cash dividends. If at any time the Corporation has the right
      to pay dividends in cash or Common Stock, the Corporation must provide the
      Holders with at least 20 Trading Days’ notice of its election to pay a regularly
      scheduled dividend in Common Stock (the Corporation may indicate in such notice
      that the election contained in such notice shall continue for later periods
      until revised by a subsequent notice). Dividends on the Preferred Stock shall
      be
      calculated on the basis of a 360-day year, consisting of twelve 30 calendar
      day
      periods, shall accrue daily commencing on the Original Issue Date, and shall
      be
      deemed to accrue from such date whether or not earned or declared and whether
      or
      not there are profits, surplus or other funds of the Corporation legally
      available for the payment of dividends. Except as otherwise provided herein,
      if
      at any time the Corporation pays dividends partially in cash and partially
      in
      shares, then such payment shall be distributed ratably among the Holders based
      upon the number of shares of Preferred Stock held by each Holder on such
      Dividend Payment Date. Any dividends, whether paid in cash or shares of Common
      Stock, that are not paid within three Trading Days following a Dividend Payment
      Date shall continue to accrue and shall entail a late fee, which must be paid
      in
      cash, at the rate of 18% per annum or the lesser rate permitted by applicable
      law (such fees to accrue daily, from the Dividend Payment Date through and
      including the date of payment). If at any time the Corporation delivers a notice
      to the Holders of its election to pay the dividends in shares of Common Stock,
      the Corporation shall timely file a prospectus supplement pursuant to Rule
      424
      disclosing such election.

     

    
      
        
        

      

      
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    b) So
      long
      as any Preferred Stock shall remain outstanding, neither the Corporation nor
      any
      Subsidiary thereof shall redeem, purchase or otherwise acquire directly or
      indirectly any Junior Securities except as expressly permitted by Section
      9(a)(ix). So long as any Preferred Stock shall remain outstanding, neither
      the
      Corporation nor any Subsidiary thereof shall directly or indirectly pay or
      declare any dividend or make any distribution upon (other than a dividend or
      distribution described in Section 6 or dividends due and paid in the ordinary
      course on preferred stock of the Corporation at such times when the Corporation
      is in compliance with its payment and other obligations hereunder), nor shall
      any distribution be made in respect of, any Junior Securities as long as any
      dividends due on the Preferred Stock remain unpaid, nor shall any monies be
      set
      aside for or applied to the purchase or redemption (through a sinking fund
      or
      otherwise) of any Junior Securities or shares pari passu
      with the
      Preferred Stock.

    

    
      
        
        

      

      
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    c) The
      Corporation acknowledges and agrees that the capital of the Corporation (as
      such
      term is used in Section 102(a)(12) of the New York Business Corporation Law)
      in
      respect of the Preferred Stock and any future issuances of the Corporation’s
      capital stock shall be equal to the aggregate par value of such Preferred Stock
      or capital stock, as the case may be, and that, on or after the date of the
      Purchase Agreement, it shall not increase the capital of the Corporation with
      respect to any shares of the Corporation’s capital stock issued and outstanding
      on such date.

    

    Section
      4.
      Voting
      Rights.
      Except
      as otherwise provided herein or as otherwise required by law, the Preferred
      Stock shall have no voting rights. However, as long as any shares of Preferred
      Stock are outstanding, the Corporation shall not, without the affirmative vote
      of the Holders of a 75% majority of the then outstanding shares of the Preferred
      Stock, (a) alter or change adversely the powers, preferences or rights given
      to
      the Preferred Stock or alter or amend this Certificate of Designation, (b)
      authorize or create any class of stock ranking as to dividends, redemption
      or
      distribution of assets upon a Liquidation (as defined in Section 5) senior
      to or
      otherwise pari passu
      with the
      Preferred Stock, (c) amend its certificate of incorporation or other charter
      documents in any manner that adversely affects any rights of the Holders, (d)
      increase the number of authorized shares of Preferred Stock, or (e) enter into
      any agreement with respect to any of the foregoing.

     

    Section
      5.
      Liquidation.
      Upon
      any liquidation, dissolution or winding-up of the Corporation, whether voluntary
      or involuntary (a “Liquidation”),
      the
      Holders shall be entitled to receive out of the assets, whether capital or
      surplus, of the Corporation an amount equal to the Stated Value, plus any
      accrued and unpaid dividends thereon and any other fees or liquidated damages
      owing thereon, for each share of Preferred Stock before any distribution or
      payment shall be made to the holders of any Junior Securities, and if the assets
      of the Corporation shall be insufficient to pay in full such amounts, then
      the
      entire assets to be distributed to the Holders shall be ratably distributed
      among the Holders in accordance with the respective amounts that would be
      payable on such shares if all amounts payable thereon were paid in full. A
      Fundamental Transaction or Change of Control Transaction shall not be deemed
      a
      Liquidation. The Corporation shall mail written notice of any such Liquidation,
      not less than 45 days prior to the payment date stated therein, to each
      Holder.

    

    Section
      6.
      Conversion.

    

    a) Conversions
      at Option of Holder.
      Each
      share of Preferred Stock shall be convertible, at any time and from time to
      time
      from and after the Original Issue Date at the option of the Holder thereof,
      into
      that number of shares of Common Stock (subject to the limitations set forth
      in
      Section 6(c) and Section 6(d)) determined by dividing the Stated Value of such
      share of Preferred Stock by the Conversion Price. Holders shall effect
      conversions by providing the Corporation with the form of conversion notice
      attached hereto as Annex
      A
      (a
“Notice
      of Conversion”).
      Each
      Notice of Conversion shall specify the number of shares of Preferred Stock
      to be
      converted, the number of shares of Preferred Stock owned prior to the conversion
      at issue, the number of shares of Preferred Stock owned subsequent to the
      conversion at issue and the date on which such conversion is to be effected,
      which date may not be prior to the date the applicable Holder delivers by
      facsimile such Notice of Conversion to the Corporation (such date, the
“Conversion
      Date”).
      If no
      Conversion Date is specified in a Notice of Conversion, the Conversion Date
      shall be the date that such Notice of Conversion to the Corporation is deemed
      delivered hereunder. The calculations and entries set forth in the Notice of
      Conversion shall control in the absence of manifest or mathematical error.
      To
      effect conversions of shares of Preferred Stock, a Holder shall not be required
      to surrender the certificate(s) representing such shares of Preferred Stock
      to
      the Corporation unless all of the shares of Preferred Stock represented thereby
      are so converted, in which case such Holder shall deliver the certificate
      representing such shares of Preferred Stock promptly following the Conversion
      Date at issue. Shares of Preferred Stock converted into Common Stock or redeemed
      in accordance with the terms hereof shall be canceled and shall not be
      reissued.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    b) Conversion
      Price.
      The
      conversion price for the Preferred Stock shall equal
      $1.2158,
      subject
      to adjustment herein (the “Conversion
      Price”).

     

    c) Beneficial
      Ownership Limitation. The Corporation shall not effect any conversion of the
      Preferred Stock, and a Holder shall not have the right to convert any portion
      of
      the Preferred Stock, to the extent that, after giving effect to the conversion
      set forth on the applicable Notice of Conversion, such Holder (together with
      such Holder’s Affiliates, and any other person or entity acting as a group
      together with such Holder or any of such Holder’s Affiliates) would beneficially
      own in excess of the Beneficial Ownership Limitation (as defined below). For
      purposes of the foregoing sentence, the number of shares of Common Stock
      beneficially owned by such Holder and its Affiliates shall include the number
      of
      shares of Common Stock issuable upon conversion of the Preferred Stock with
      respect to which such determination is being made, but shall exclude the number
      of shares of Common Stock which are issuable upon (A) conversion of the
      remaining, unconverted Stated Value of Preferred Stock beneficially owned by
      such Holder or any of its Affiliates and (B) exercise or conversion of the
      unexercised or unconverted portion of any other securities of the Corporation
      subject to a limitation on conversion or exercise analogous to the limitation
      contained herein (including the Warrants) beneficially owned by such Holder
      or
      any of its Affiliates. Except as set forth in the preceding sentence, for
      purposes of this Section 6(c), beneficial ownership shall be calculated in
      accordance with Section 13(d) of the Exchange Act and the rules and regulations
      promulgated thereunder. To the extent that the limitation contained in this
      Section 6(c) applies, the determination of whether the Preferred Stock is
      convertible (in relation to other securities owned by such Holder together
      with
      any Affiliates) and of how many shares of Preferred Stock are convertible shall
      be in the sole discretion of such Holder, and the submission of a Notice of
      Conversion shall be deemed to be such Holder’s determination of whether the
      shares of Preferred Stock may be converted (in relation to other securities
      owned by such Holder together with any Affiliates) and how many shares of the
      Preferred Stock are convertible, in each case subject to the Beneficial
      Ownership Limitation. To ensure compliance with this restriction, each Holder
      will be deemed to represent to the Corporation each time it delivers a Notice
      of
      Conversion that such Notice of Conversion has not violated the restrictions
      set
      forth in this paragraph and the Corporation shall have no obligation to verify
      or confirm the accuracy of such determination. In addition, a determination
      as
      to any group status as contemplated above shall be determined in accordance
      with
      Section 13(d) of the Exchange Act and the rules and regulations promulgated
      thereunder. For purposes of this Section 6(c), in determining the number of
      outstanding shares of Common Stock, a Holder may rely on the number of
      outstanding shares of Common Stock as stated in the most recent of the
      following: (A) the Corporation’s most recent Form 10-QSB or Form 10-KSB, as the
      case may be, (B) a more recent public announcement by the Corporation or (C)
      a
      more recent notice by the Corporation or the Corporation’s transfer agent
      setting forth the number of shares of Common Stock outstanding. Upon the written
      or oral request of a Holder, the Corporation shall within two Trading Days
      confirm orally and in writing to such Holder the number of shares of Common
      Stock then outstanding. In any case, the number of outstanding shares of Common
      Stock shall be determined after giving effect to the conversion or exercise
      of
      securities of the Corporation, including the Preferred Stock, by such Holder
      or
      its Affiliates since the date as of which such number of outstanding shares
      of
      Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99%
      of the number of shares of the Common Stock outstanding immediately after giving
      effect to the issuance of shares of Common Stock issuable upon conversion of
      Preferred Stock held by the applicable Holder. The Beneficial Ownership
      Limitation provisions of this Section 6(c) may be waived by such Holder, at
      the
      election of such Holder, upon not less than 61 days’ prior notice to the
      Corporation, to change the Beneficial Ownership Limitation to 9.99% of the
      number of shares of the Common Stock outstanding immediately after giving effect
      to the issuance of shares of Common Stock upon conversion of Preferred Stock
      held by the applicable Holder and the provisions of this Section 6(c) shall
      continue to apply. Upon such a change by a Holder of the Beneficial Ownership
      Limitation from such 4.99% limitation to such 9.99% limitation, the Beneficial
      Ownership Limitation shall not be further waived by such Holder. The provisions
      of this paragraph shall be construed and implemented in a manner otherwise
      than
      in strict conformity with the terms of this Section 6(c) to correct this
      paragraph (or any portion hereof) which may be defective or inconsistent with
      the intended Beneficial Ownership Limitation herein contained or to make changes
      or supplements necessary or desirable to properly give effect to such
      limitation. The limitations contained in this paragraph shall apply to a
      successor holder of Preferred Stock.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    d) Issuance
      Limitations. Notwithstanding anything herein to the contrary, if the
      Corporation has not obtained Shareholder Approval, then the Corporation may
      not
      issue, upon conversion of the Preferred Stock and as dividends on the Preferred
      Stock, a total number of shares of Common Stock which, when aggregated with
      any
      shares of Common Stock issued on or after the Original Issue Date and prior
      to
      such Conversion Date in connection with any conversion of Preferred Stock issued
      pursuant to the Purchase Agreement would exceed
_________1 shares of Common Stock (subject to adjustment
      for forward and reverse stock splits, recapitalizations and the like) (such
      number of shares, the “Issuable Maximum”). Each Holder shall be entitled
      to a portion of the Issuable Maximum equal to the quotient obtained by dividing
      (x) the original Stated Value of such Holder’s Preferred Stock by (y) the
      aggregate Stated Value of all Preferred Stock issued on the Original Issue
      Date
      to all Holders. Such portion shall be adjusted upward ratably in the event
      a
      Holder no longer holds any Preferred Stock and the amount of shares issued
      to
      such Holder pursuant to such Holder’s Preferred Stock was less than such
      Holder’s pro-rata share of the Issuable Maximum. For avoidance of doubt, unless
      and until any required Shareholder Approval is obtained and effective, warrants
      issued to any registered broker-dealer as a fee in connection with the
      Securities issued pursuant to the Purchase Agreement as described above, if
      determined to apply against the Issuable Maximum, shall provide that such
      warrants shall not be allocated any portion of the Issuable Maximum and shall
      be
      unexercisable unless and until such Shareholder Approval is obtained and
      effective.

     

    
      
        

      

    

    1 19.99%
      of the number of
      shares of Common Stock outstanding on the Trading Day immediately preceding
      the
      date of the Purchase Agreement.

    

    
      
        
        

      

      
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    e) Mechanics
      of Conversion

    

    i. Delivery
      of Certificate Upon Conversion.
      Not
      later than three Trading Days after each Conversion Date (the “Share
      Delivery Date”),
      the
      Corporation shall deliver, or cause to be delivered, to the converting Holder
      (A) a certificate or certificates which, on or after the Effective Date, shall
      be free of restrictive legends and trading restrictions (other than those which
      may then be required by the Purchase Agreement) representing the number of
      Conversion Shares being acquired upon the conversion of shares of Preferred
      Stock, and (B) a bank check in the amount of accrued and unpaid dividends (if
      the Corporation has elected or is required to pay accrued dividends in cash).
      On
      or after the Effective Date, the Corporation shall, upon request of such Holder,
      use its best efforts to deliver any certificate or certificates required to
      be
      delivered by the Corporation under this Section 6 electronically through the
      Depository Trust Company or another established clearing corporation performing
      similar functions. If in the case of any Notice of Conversion such certificate
      or certificates are not delivered to or as directed by the applicable Holder
      by
      the third Trading Day after the Conversion Date, the applicable Holder shall
      be
      entitled to elect to rescind such Conversion Notice by written notice to the
      Corporation at any time on or before its receipt of such certificate or
      certificates, in which event the Corporation shall promptly return to such
      Holder any original Preferred Stock certificate delivered to the Corporation
      and
      such Holder shall promptly return to the Corporation any Common Stock
      certificates representing the shares of Preferred Stock unsuccessfully tendered
      for conversion to the Corporation.

    

    ii. Obligation
      Absolute; Partial Liquidated Damages.
      The
      Corporation’s obligation to issue and deliver the Conversion Shares upon
      conversion of Preferred Stock in accordance with the terms hereof are absolute
      and unconditional, irrespective of any action or inaction by a Holder to enforce
      the same, any waiver or consent with respect to any provision hereof, the
      recovery of any judgment against any Person or any action to enforce the same,
      or any setoff, counterclaim, recoupment, limitation or termination, or any
      breach or alleged breach by such Holder or any other Person of any obligation
      to
      the Corporation or any violation or alleged violation of law by such Holder
      or
      any other person, and irrespective of any other circumstance which might
      otherwise limit such obligation of the Corporation to such Holder in connection
      with the issuance of such Conversion Shares; provided,
      however,
      that
      such delivery shall not operate as a waiver by the Corporation of any such
      action that the Corporation may have against such Holder. In the event a Holder
      shall elect to convert any or all of the Stated Value of its Preferred Stock,
      the Corporation may not refuse conversion based on any claim that such Holder
      or
      any one associated or affiliated with such Holder has been engaged in any
      violation of law, agreement or for any other reason, unless an injunction from
      a
      court, on notice to Holder, restraining and/or enjoining conversion of all
      or
      part of the Preferred Stock of such Holder shall have been sought and obtained,
      and the Corporation posts a surety bond for the benefit of such Holder in the
      amount of 100% of the Stated Value of Preferred Stock which is subject to the
      injunction, which bond shall remain in effect until the completion of
      arbitration/litigation of the underlying dispute and the proceeds of which
      shall
      be payable to such Holder to the extent it obtains judgment. In the absence
      of
      such injunction, the Corporation shall issue Conversion Shares and, if
      applicable, cash, upon a properly noticed conversion. If the Corporation fails
      to deliver to a Holder such certificate or certificates pursuant to Section
      6(e)(i) on the second Trading Day after the Share Delivery Date applicable
      to
      such conversion, the Corporation shall pay to such Holder, in cash, as
      liquidated damages and not as a penalty, for each $5,000 of Stated Value of
      Preferred Stock being converted, $50 per Trading Day (increasing to $100 per
      Trading Day on the fifth Trading Day and increasing to $200 per Trading Day
      on
      the eighth Trading Day after such damages begin to accrue) for each Trading
      Day
      after such second Trading Day after the Share Delivery Date until such
      certificates are delivered. Nothing herein shall limit a Holder’s right to
      pursue actual damages or declare a Triggering Event pursuant to Section 9 for
      the Corporation’s failure to deliver Conversion Shares within the period
      specified herein and such Holder shall have the right to pursue all remedies
      available to it hereunder, at law or in equity including, without limitation,
      a
      decree of specific performance and/or injunctive relief. The Exercise of any
      such rights shall not prohibit a Holder from seeking to enforce damages pursuant
      to any other Section hereof or under applicable law.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    iii. Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Conversion.
      If the
      Corporation fails to deliver to a Holder the applicable certificate or
      certificates by the second Trading Day following the Share Delivery Date
      pursuant to Section 6(e)(i), and if after such Share Delivery Date such Holder
      is required by its brokerage firm to purchase (in an open market transaction
      or
      otherwise), or the Holder’s brokerage firm purchases, shares of Common Stock to
      deliver in satisfaction of a sale by such Holder of the Conversion Shares which
      such Holder was entitled to receive upon the conversion relating to such Share
      Delivery Date (a “Buy-In”),
      then
      the Corporation shall (A) pay in cash to such Holder (in addition to any other
      remedies available to or elected by such Holder) the amount by which (x) such
      Holder’s total purchase price (including any brokerage commissions) for the
      shares of Common Stock so purchased exceeds (y) the product of (1) the aggregate
      number of shares of Common Stock that such Holder was entitled to receive from
      the conversion at issue multiplied by (2) the actual sale price at which the
      sell order giving rise to such purchase obligation was executed (including
      any
      brokerage commissions) and (B) at the option of such Holder, either reissue
      (if
      surrendered) the shares of Preferred Stock equal to the number of shares of
      Preferred Stock submitted for conversion or deliver to such Holder the number
      of
      shares of Common Stock that would have been issued if the Corporation had timely
      complied with its delivery requirements under Section 6(e)(i). For example,
      if a
      Holder purchases shares of Common Stock having a total purchase price of $11,000
      to cover a Buy-In with respect to an attempted conversion of shares of Preferred
      Stock with respect to which the actual sale price (including any brokerage
      commissions) giving rise to such purchase obligation was a total of $10,000
      under clause (A) of the immediately preceding sentence, the Corporation shall
      be
      required to pay such Holder $1,000. The Holder shall provide the Corporation
      written notice indicating the amounts payable to such Holder in respect of
      the
      Buy-In and, upon request of the Corporation, evidence of the amount of such
      loss. Nothing herein shall limit a Holder’s right to pursue any other remedies
      available to it hereunder, at law or in equity including, without limitation,
      a
      decree of specific performance and/or injunctive relief with respect to the
      Corporation’s failure to timely deliver certificates representing shares of
      Common Stock upon conversion of the shares of Preferred Stock as required
      pursuant to the terms hereof.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    iv. Reservation
      of Shares Issuable Upon Conversion.
      The
      Corporation covenants that it will at all times reserve and keep available
      out
      of its authorized and unissued shares of Common Stock for the sole purpose
      of
      issuance upon conversion of the Preferred Stock and payment of dividends on
      the
      Preferred Stock, each as herein provided, free from preemptive rights or any
      other actual contingent purchase rights of Persons other than the Holders of
      the
      Preferred Stock, not less than such aggregate number of shares of the Common
      Stock as shall (subject to the terms and conditions in the Purchase Agreement)
      be issuable (taking into account the adjustments of Section 7) upon the
      conversion of all outstanding shares of Preferred Stock and payment of dividends
      hereunder. The Corporation covenants that all shares of Common Stock that shall
      be so issuable shall, upon issue, be duly authorized, validly issued, fully
      paid
      and nonassessable and, if the Conversion Shares Registration Statement is then
      effective under the Securities Act, shall be registered for public sale in
      accordance with such Conversion Shares Registration Statement.

    

    v. Fractional
      Shares.
      No
      fractional shares or scrip representing fractional shares shall be issued upon
      the conversion of the Preferred Stock. As to any fraction of a share which
      a
      Holder would otherwise be entitled to purchase upon such conversion, the
      Corporation shall at its election, either pay a cash adjustment in respect
      of
      such final fraction in an amount equal to such fraction multiplied by the
      Conversion Price or round up to the next whole share.

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    vi. Transfer
      Taxes.
      The
      issuance of certificates for shares of the Common Stock on conversion of this
      Preferred Stock shall be made without charge to any Holder for any documentary
      stamp or similar taxes that may be payable in respect of the issue or delivery
      of such certificates, provided that the Corporation shall not be required to
      pay
      any tax that may be payable in respect of any transfer involved in the issuance
      and delivery of any such certificate upon conversion in a name other than that
      of the Holders of such shares of Preferred Stock and the Corporation shall
      not
      be required to issue or deliver such certificates unless or until the Person
      or
      Persons requesting the issuance thereof shall have paid to the Corporation
      the
      amount of such tax or shall have established to the satisfaction of the
      Corporation that such tax has been paid.

    

    vii. Form
      of Conversion Notice.

    

    NOTICE
      OF
      CONVERSION

    

    (TO
      BE
      EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES

    OF
      PREFERRED STOCK)

    

    The
      undersigned hereby elects to convert the number of shares of 8% Series J
      Convertible Preferred Stock indicated below into shares of common stock, par
      value $0.005 per share (the “Common
      Stock”),
      of
      Nutrition 21, Inc. (the “Corporation”),
      according to the conditions hereof, as of the date written below. If shares
      of
      Common Stock are to be issued in the name of a Person other than the
      undersigned, the undersigned will pay all transfer taxes payable with respect
      thereto and is delivering herewith such certificates and opinions as may be
      required by the Corporation in accordance with the Purchase Agreement. No fee
      will be charged to the Holders for any conversion, except for any such transfer
      taxes.

    

    Conversion
      calculations:

    

    
      	
              Date
                to Effect Conversion:
                _____________________________________________

            
	 
	
              Number
                of shares of Preferred Stock owned prior to Conversion:
                _______________

            
	 
	
              Number
                of shares of Preferred Stock to be Converted:
                ________________________

            
	 
	
              Stated
                Value of shares of Preferred Stock to be Converted:
                ____________________

            
	 
	
              Number
                of shares of Common Stock to be Issued:
                ___________________________

            
	 
	
              Applicable
                Conversion
                Price:____________________________________________

            
	 
	
              Number
                of shares of Preferred Stock subsequent to Conversion:
                ________________

            
	 
	
              Address
                for Delivery: ______________________

              or

              DWAC
                Instructions:

              Broker
                no: _________

              Account
                no: ___________

            

    

     

    
      	 	[HOLDER]
	 
 	 
 	 
 
	 	By:  	 
	 	
              Name:

              Title:

            

    

     

     [END
      OF
      FORM OF NOTICE OF CONVERSION]

    

    Section
      7.
      Certain
      Adjustments.

    

    a) Stock
      Dividends and Stock Splits.
      If the
      Corporation, at any time while this Preferred Stock is outstanding: (A) pays
      a
      stock dividend or otherwise makes a distribution or distributions payable in
      shares of Common Stock on shares of Common Stock or any other Common Stock
      Equivalents (which, for avoidance of doubt, shall not include any shares of
      Common Stock issued by the Corporation upon conversion of, or payment of a
      dividend on, this Preferred Stock); (B) subdivides outstanding shares of Common
      Stock into a larger number of shares; (C) combines (including by way of a
      reverse stock split) outstanding shares of Common Stock into a smaller number
      of
      shares; or (D) issues, in the event of a reclassification of shares of the
      Common Stock, any shares of capital stock of the Corporation, then the
      Conversion Price shall be multiplied by a fraction of which the numerator shall
      be the number of shares of Common Stock (excluding any treasury shares of the
      Corporation) outstanding immediately before such event and of which the
      denominator shall be the number of shares of Common Stock outstanding
      immediately after such event. Any adjustment made pursuant to this Section
      7(a)
      shall become effective immediately after the record date for the determination
      of stockholders entitled to receive such dividend or distribution and shall
      become effective immediately after the effective date in the case of a
      subdivision, combination or re-classification.

     

    
      
        
        

      

      
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    b) Subsequent
      Equity Sales.
      If, at
      any time while this Preferred Stock is outstanding, the Corporation or any
      Subsidiary sells or grants any option to purchase or sells or grants any right
      to reprice its securities, or otherwise disposes of or issues (or announces
      any
      sale, grant or any option to purchase or other disposition) any Common Stock
      or
      Common Stock Equivalents entitling any Person to acquire shares of Common Stock
      at an effective price per share that is lower than the then Conversion Price
      (such lower price, the “Base
      Conversion Price”
and
      such issuances collectively, a “Dilutive
      Issuance”)
      (if
      the holder of the Common Stock or Common Stock Equivalents so issued shall
      at
      any time, whether by operation of purchase price adjustments, reset provisions,
      floating conversion, exercise or exchange prices or otherwise, or due to
      warrants, options or rights per share which are issued in connection with such
      issuance, be entitled to receive shares of Common Stock at an effective price
      per share that is lower than the Conversion Price, such issuance shall be deemed
      to have occurred for less than the Conversion Price on such date of the Dilutive
      Issuance), then the Conversion Price shall be reduced to equal the Base
      Conversion Price. Notwithstanding
      the foregoing, no adjustment will be made under this Section 7(b) in respect
      of
      an Exempt Issuance.
      If the
      Corporation enters into a Variable Rate Transaction, despite the prohibition
      set
      forth in the Purchase Agreement, the Corporation shall be deemed to have issued
      Common Stock or Common Stock Equivalents at the lowest possible conversion
      price
      at which such securities may be converted or exercised. The Corporation shall
      notify the Holders in writing, no later than the Business Day following the
      issuance of any Common Stock or Common Stock Equivalents subject to this Section
      7(b), indicating therein the applicable issuance price, or applicable reset
      price, exchange price, conversion price and other pricing terms (such notice,
      the “Dilutive
      Issuance Notice”).
      For
      purposes of clarification, whether or not the Corporation provides a Dilutive
      Issuance Notice pursuant to this Section 7(b), upon the occurrence of any
      Dilutive Issuance, the Holders are entitled to receive a number of Conversion
      Shares based upon the Base Conversion Price on or after the date of such
      Dilutive Issuance, regardless of whether a Holder accurately refers to the
      Base
      Conversion Price in the Notice of Conversion. 

     

    c) Subsequent
      Rights Offerings.
      If the
      Corporation, at any time while this Preferred Stock is outstanding, shall issue
      rights, options or warrants to all holders of Common Stock (and not to Holders)
      entitling them to subscribe for or purchase shares of Common Stock at a price
      per share that is lower than the VWAP on the record date referenced below,
      then
      the Conversion Price shall be multiplied by a fraction of which the denominator
      shall be the number of shares of the Common Stock outstanding on the date of
      issuance of such rights or warrants plus the number of additional shares of
      Common Stock offered for subscription or purchase, and of which the numerator
      shall be the number of shares of the Common Stock outstanding on the date of
      issuance of such rights or warrants plus the number of shares which the
      aggregate offering price of the total number of shares so offered (assuming
      delivery to the Corporation in full of all consideration payable upon exercise
      of such rights, options or warrants) would purchase at such VWAP. Such
      adjustment shall be made whenever such rights or warrants are issued, and shall
      become effective immediately after the record date for the determination of
      stockholders entitled to receive such rights, options or warrants.

     

    d) Pro
      Rata Distributions.
      If the
      Corporation, at any time while this Preferred Stock is outstanding, distributes
      to all holders of Common Stock (and not to Holders) evidences of its
      indebtedness or assets (including cash and cash dividends) or rights or warrants
      to subscribe for or purchase any security (other than Common Stock, which shall
      be subject to Section 7(b)), then in each such case the Conversion Price shall
      be adjusted by multiplying such Conversion Price in effect immediately prior
      to
      the record date fixed for determination of stockholders entitled to receive
      such
      distribution by a fraction of which the denominator shall be the VWAP determined
      as of the record date mentioned above, and of which the numerator shall be
      such
      VWAP on such record date less the then fair market value at such record date
      of
      the portion of such assets, evidence of indebtedness or rights or warrants
      so
      distributed applicable to one outstanding share of the Common Stock as
      determined by the Board of Directors of the Corporation in good faith. In either
      case the adjustments shall be described in a statement delivered to the Holders
      describing the portion of assets or evidences of indebtedness so distributed
      or
      such subscription rights applicable to one share of Common Stock. Such
      adjustment shall be made whenever any such distribution is made and shall become
      effective immediately after the record date mentioned above.

    

    
      
        
        

      

      
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    e) Fundamental
      Transaction.
      If, at
      any time while this Preferred Stock is outstanding, (A) the Corporation effects
      any merger or consolidation of the Corporation with or into another Person,
      (B)
      the Corporation effects any sale of all or substantially all of its assets
      in
      one transaction or a series of related transactions, (C) any tender offer or
      exchange offer (whether by the Corporation or another Person) is completed
      pursuant to which holders of Common Stock are permitted to tender or exchange
      their shares for other securities, cash or property, or (D) the Corporation
      effects any reclassification of the Common Stock or any compulsory share
      exchange pursuant to which the Common Stock is effectively converted into or
      exchanged for other securities, cash or property (in any such case, a
“Fundamental
      Transaction”),
      then,
      upon any subsequent conversion of this Preferred Stock, the Holders shall have
      the right to receive, for each Conversion Share that would have been issuable
      upon such conversion immediately prior to the occurrence of such Fundamental
      Transaction, the same kind and amount of securities, cash or property as it
      would have been entitled to receive upon the occurrence of such Fundamental
      Transaction if it had been, immediately prior to such Fundamental Transaction,
      the holder of one share of Common Stock (the “Alternate
      Consideration”).
      For
      purposes of any such conversion, the determination of the Conversion Price
      shall
      be appropriately adjusted to apply to such Alternate Consideration based on
      the
      amount of Alternate Consideration issuable in respect of one share of Common
      Stock in such Fundamental Transaction, and the Corporation shall apportion
      the
      Conversion Price among the Alternate Consideration in a reasonable manner
      reflecting the relative value of any different components of the Alternate
      Consideration. If holders of Common Stock are given any choice as to the
      securities, cash or property to be received in a Fundamental Transaction, then
      the Holders shall be given the same choice as to the Alternate Consideration
      it
      receives upon any conversion of this Preferred Stock following such Fundamental
      Transaction. To the extent necessary to effectuate the foregoing provisions,
      any
      successor to the Corporation or surviving entity in such Fundamental Transaction
      shall file a new Certificate of Designation with the same terms and conditions
      and issue to the Holders new preferred stock consistent with the foregoing
      provisions and evidencing the Holders’ right to convert such preferred stock
      into Alternate Consideration. The terms of any agreement pursuant to which
      a
      Fundamental Transaction is effected shall include terms requiring any such
      successor or surviving entity to comply with the provisions of this Section
      7(e)
      and insuring that this Preferred Stock (or any such replacement security) will
      be similarly adjusted upon any subsequent transaction analogous to a Fundamental
      Transaction.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    f) Calculations.
      All
      calculations under this Section 7 shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be. For purposes of this Section
      7,
      the number of shares of Common Stock deemed to be issued and outstanding as
      of a
      given date shall be the sum of the number of shares of Common Stock (excluding
      any treasury shares of the Corporation) issued and outstanding.

    

    g) Notice
      to the Holders.

    

    i. Adjustment
      to Conversion Price.
      Whenever the Conversion Price is adjusted pursuant to any provision of this
      Section 7, the Corporation shall promptly deliver to each Holder a notice
      setting forth the Conversion Price after such adjustment and setting forth
      a
      brief statement of the facts requiring such adjustment.

     

    ii. Notice
      to Allow Conversion by Holder. If (A) the Corporation shall declare a
      dividend (or any other distribution in whatever form) on the Common Stock,
      (B)
      the Corporation shall declare a special nonrecurring cash dividend on or a
      redemption of the Common Stock, (C) the Corporation shall authorize the granting
      to all holders of the Common Stock of rights or warrants to subscribe for or
      purchase any shares of capital stock of any class or of any rights, (D) the
      approval of any stockholders of the Corporation shall be required in connection
      with any reclassification of the Common Stock, any consolidation or merger
      to
      which the Corporation is a party, any sale or transfer of all or substantially
      all of the assets of the Corporation, of any compulsory share exchange whereby
      the Common Stock is converted into other securities, cash or property or (E)
      the
      Corporation shall authorize the voluntary or involuntary dissolution,
      liquidation or winding up of the affairs of the Corporation, then, in each
      case,
      the Corporation shall cause to be filed at each office or agency maintained
      for
      the purpose of conversion of this Preferred Stock, and shall cause to be
      delivered to each Holder at its last address as it shall appear upon the stock
      books of the Corporation, at least 20 calendar days prior to the applicable
      record or effective date hereinafter specified, a notice stating (x) the date
      on
      which a record is to be taken for the purpose of such dividend, distribution,
      redemption, rights or warrants, or if a record is not to be taken, the date
      as
      of which the holders of the Common Stock of record to be entitled to such
      dividend, distributions, redemption, rights or warrants are to be determined
      or
      (y) the date on which such reclassification, consolidation, merger, sale,
      transfer or share exchange is expected to become effective or close, and the
      date as of which it is expected that holders of the Common Stock of record
      shall
      be entitled to exchange their shares of the Common Stock for securities, cash
      or
      other property deliverable upon such reclassification, consolidation, merger,
      sale, transfer or share exchange, provided that the failure to deliver such
      notice or any defect therein or in the delivery thereof shall not affect the
      validity of the corporate action required to be specified in such notice. The
      Holder is entitled to convert the Conversion Amount of this Preferred Stock
      (or
      any part hereof) during the 20-day period commencing on the date of such notice
      through the effective date of the event triggering such
      notice.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    Section
      8.
      Forced
      Conversion and Four Year Redemption.

    

    a) Forced
      Conversion.
      Notwithstanding anything herein to the contrary, if after the later of the
      Shareholder Approval Date (as defined in the Purchase Agreement) and the
      Effective Date the VWAP for each of any 20 consecutive Trading Day period,
      which
      20 consecutive Trading Day period shall have commenced only after the later
      of
      the Shareholder Approval Date and the Effective Date (“Threshold
      Period”),
      exceeds 300% of the then effective Conversion Price, the Corporation may, within
      1 Trading Day after the end of any such Threshold Period, deliver a written
      notice to all Holders (a “Forced
      Conversion Notice”
and
      the
      date such notice is delivered to all Holders, the “Forced
      Conversion Notice Date”)
      to
      cause each Holder to convert all or part of such Holder’s Preferred Stock (as
      specified in such Forced Conversion Notice) plus all accrued but unpaid
      dividends thereon and all liquidated damages and other amounts due in respect
      of
      the Preferred Stock pursuant to Section 6, it being agreed that the “Conversion
      Date” for purposes of Section 6 shall be deemed to occur on the third Trading
      Day following the Forced Conversion Notice Date (such third Trading Day, the
      “Forced
      Conversion Date”).
      The
      Corporation may not deliver a Forced Conversion Notice, and any Forced
      Conversion Notice delivered by the Corporation shall not be effective, unless
      all of the Equity Conditions have been met on each Trading Day during the
      applicable Threshold Period through and including the later of the Forced
      Conversion Date and the Trading Day after the date that the Conversion Shares
      issuable pursuant to such conversion are actually delivered to the Holders
      pursuant to the Forced Conversion Notice
      and, for
      each Trading Day in the periods of 20 consecutive Trading Days prior to each
      of
      the Forced Conversion Notice Date and the Forced Conversion Date, the daily
      trading volume for the Common Stock on the principal Trading Market exceeds
      $200,000 per Trading Day for 18 out of each 20 Trading Day period.
      Any
      Forced Conversion Notices shall be applied ratably to all of the Holders based
      on each Holder’s initial purchases of Preferred Stock hereunder, provided that
      any voluntary conversions by a Holder shall be applied against such Holder’s
pro rata
      allocation, thereby decreasing the aggregate amount forcibly converted hereunder
      if less than all shares of the Preferred Stock are forcibly converted. For
      purposes of clarification, a Forced Conversion shall be subject to all of the
      provisions of Section 6, including, without limitation, the provisions requiring
      payment of liquidated damages and limitations on conversions.

     

    b) Four
      Year Redemption.
      On the
      fourth anniversary of the Original Issue Date (the “Four
      Year Redemption Date”),
      the
      Corporation shall redeem all of the then outstanding Preferred Stock, for an
      amount in cash equal to the Four Year Redemption Amount (such redemption, the
      “Four
      Year Redemption”).
      The
      Corporation covenants and agrees that it will honor all Conversion Notices
      tendered up until the Four Year Redemption Amount paid in full.

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    c) Redemption
      Procedure.
      The
      payment of cash pursuant to a Four Year Redemption shall be made on the Four
      Year Redemption Date. If any portion of the cash payment for a Four Year
      Redemption has not been paid by the Corporation on the Four Year Redemption
      Date, interest shall accrue thereon until such amount is paid in full at a
      rate
      equal to the lesser of 18% per annum or the maximum rate permitted by applicable
      law.

    

    Section
      9.
      Redemption
      Upon Triggering Events.

     

    a) “Triggering
      Event”
means
      any one or more of the following events (whatever the reason and whether it
      shall be voluntary or involuntary or effected by operation of law or pursuant
      to
      any judgment, decree or order of any court, or any order, rule or regulation
      of
      any administrative or governmental body):

    

    i. the
      failure of the initial Conversion Shares Registration Statement to be declared
      effective by the Commission on or prior to the 210th
      day
      after the Original Issue Date;

     

    ii. if,
      during the Effectiveness Period, the effectiveness of the Conversion Shares
      Registration Statement lapses for more than an aggregate of 90 calendar days
      (which need not be consecutive calendar days) during any 12 month period, or
      the
      Holders shall not otherwise be permitted to resell Registrable Securities under
      the Conversion Shares Registration Statement for more than an aggregate of
      90
      calendar days (which need not be consecutive calendar days) during any 12 month
      period;

    

    iii. the
      Corporation shall fail to deliver certificates representing Conversion Shares
      issuable upon a conversion hereunder that comply with the provisions hereof
      prior to the seventh Trading Day after such shares are required to be delivered
      hereunder, or the Corporation shall provide written notice to any Holder,
      including by way of public announcement, at any time, of its intention not
      to
      comply with requests for conversion of any shares of Preferred Stock in
      accordance with the terms hereof;

    

    iv. one
      of
      the Events (as defined in the Registration Rights Agreement) described in
      subsections (i), (ii) or (iii) of Section 2(b) of the Registration Rights
      Agreement shall not have been cured to the satisfaction of the Holders prior
      to
      the expiration of 30 calendar days from the Event Date (as defined in the
      Registration Rights Agreement) relating thereto (other than an Event resulting
      from a failure of a Conversion Shares Registration Statement to be declared
      effective by the Commission on or prior to the 210th day after the Original
      Issue Date, which shall be covered by Section 9(a)(i));

    

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    v. the
      Corporation shall fail for any reason to pay in full the amount of cash due
      pursuant to a Buy-In within seven calendar days after notice therefor is
      delivered hereunder or shall fail to pay all amounts owed on account of any
      Event (as defined in the Registration Rights Agreement) within five days of
      the
      date due;

    

    vi. the
      Corporation shall fail to have available a sufficient number of authorized
      and
      unreserved shares of Common Stock to issue to such Holder upon a conversion
      hereunder;

    

    vii. unless
      specifically addressed elsewhere in this Certificate of Designation as a
      Triggering Event, the Corporation shall fail to observe or perform any other
      covenant, agreement or warranty contained in, or otherwise commit any breach
      of
      the Transaction Documents, and such failure or breach shall not, if subject
      to
      the possibility of a cure by the Corporation, have been cured within 30 calendar
      days after the date on which written notice of such failure or breach shall
      have
      been delivered;

    

    viii. any
      breach of the agreements delivered to the initial Holders at the Closing
      pursuant to Section 2.2(a)(iv) of the Purchase Agreement;

    

    ix. the
      Corporation shall redeem more than a de minimis
      number
      of Junior Securities other than as to repurchases of Common Stock or Common
      Stock Equivalents from departing officers and directors of the Corporation,
      provided that, while any of the Preferred Stock remains outstanding, such
      repurchases shall not exceed an aggregate of $100,000 from all officers and
      directors;

    

    x. the
      Corporation shall be party to a Change of Control Transaction; 

    

    xi. there
      shall have occurred a Bankruptcy Event; 

    

    xii. the
      Common Stock shall fail to be listed or quoted for trading on a Trading Market
      for more than five Trading Days, which need not be consecutive Trading Days;
      or

    

    xiii. any
      monetary judgment, writ or similar final process shall be entered or filed
      against the Corporation, any subsidiary or any of their respective property
      or
      other assets for greater than $50,000, and such judgment, writ or similar final
      process shall remain unvacated, unbonded or unstayed for a period of 45 calendar
      days.

    

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    b) Upon
      the
      occurrence of a Triggering Event, each Holder shall (in addition to all other
      rights it may have hereunder or under applicable law) have the right,
      exercisable at the sole option of such Holder, to require the Corporation to,
      (A) with respect to the Triggering Events set forth in Sections 9(a)(iii),
      (v),
      (vi), (vii), (viii), (ix), (x) (as to Changes of Control approved by the Board
      of Directors of the Corporation) and (xi) (as to voluntary filings only), redeem
      all of the Preferred Stock then held by such Holder for a redemption price,
      in
      cash, equal to the Triggering Redemption Amount or (B) at the option of each
      Holder and with respect to the Triggering Events set forth in Sections 9(a)(i),
      (ii), (iv), (x) (as to Changes of Control not approved by the Board of Directors
      of the Corporation), (xi) (as to involuntary filings only), (xii) and (xiii),
      either (a) redeem all of the Preferred Stock then held by such Holder for a
      redemption price, in shares of Common Stock, equal to a number of shares of
      Common Stock equal to the Triggering Redemption Amount divided by 75% of the
      average of the 10 VWAPs immediately prior to the date of election hereunder
      or
      (b) increase the dividend rate on all of the outstanding Preferred Stock held
      by
      such Holder to 18% per annum thereafter. The Triggering Redemption Amount,
      in
      cash or in shares, shall be due and payable or issuable, as the case may be,
      within five Trading Days of the date on which the notice for the payment
      therefor is provided by a Holder (the “Triggering
      Redemption Payment Date”).
      If
      the Corporation fails to pay in full the Triggering Redemption Amount hereunder
      on the date such amount is due in accordance with this Section (whether in
      cash
      or shares of Common Stock), the Corporation will pay interest thereon at a
      rate
      equal to the lesser of 18% per annum or the maximum rate permitted by applicable
      law, accruing daily from such date until the Triggering Redemption Amount,
      plus
      all such interest thereon, is paid in full. For purposes of this Section, a
      share of Preferred Stock is outstanding until such date as the applicable Holder
      shall have received Conversion Shares upon a conversion (or attempted
      conversion) thereof that meets the requirements hereof or has been paid the
      Triggering Redemption Amount in cash.

    

    Section
      10.
       Negative
      Covenants.
      So long
      as any shares of Preferred Stock are outstanding, unless the holders of at
      least
      67% in Stated Value of the then outstanding shares of Preferred Stock shall
      have
      otherwise given prior written consent, the Corporation shall not, and shall
      not
      permit any of its subsidiaries (whether or not a Subsidiary on the Original
      Issue Date) to, directly or indirectly:

    

    a) other
      than Permitted Indebtedness, enter into, create, incur, assume, guarantee or
      suffer to exist any indebtedness for borrowed money of any kind, including
      but
      not limited to, a guarantee, on or with respect to any of its property or assets
      now owned or hereafter acquired or any interest therein or any income or profits
      therefrom;

     

    b) other
      than Permitted Liens, enter into, create, incur, assume or suffer to exist
      any
      Liens of any kind, on or with respect to any of its property or assets now
      owned
      or hereafter acquired or any interest therein or any income or profits
      therefrom;

    

    c) amend
      its
      certificate of incorporation, bylaws or other charter documents so as to
      materially and adversely affect any rights of any Holder;

    

    d) repay,
      repurchase or offer to repay, repurchase or otherwise acquire more than a
de minimis
      number
      of shares of its Common Stock, Common Stock Equivalents or Junior Securities,
      except for the Conversion Shares to the extent permitted or required under
      the
      Transaction Documents or as otherwise permitted by the Transaction Documents;
      

    

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    e) pay
      cash
      dividends or distributions on Junior Securities of the Corporation;
      or

    

    f) enter
      into any agreement or understanding with respect to any of the
      foregoing.

    

    Section
      11. Miscellaneous.
      

    

    a) Notices.
      Any and
      all notices or other communications or deliveries to be provided by the Holders
      hereunder including, without limitation, any Notice of Conversion, shall be
      in
      writing and delivered personally, by facsimile, or sent by a nationally
      recognized overnight courier service, addressed to the Corporation, at the
      address set forth above, facsimile number (914) 696 0862, Attn: President,
      with
      a copy to Oscar D. Folger, facsimile number (212) 697 7833 or such other
      facsimile number or address as the Corporation may specify for such purposes
      by
      notice to the Holders delivered in accordance with this Section 11. Any and
      all
      notices or other communications or deliveries to be provided by the Corporation
      hereunder shall be in writing and delivered personally, by facsimile, or sent
      by
      a nationally recognized overnight courier service addressed to each Holder
      at
      the facsimile number or address of such Holder appearing on the books of the
      Corporation, or if no such facsimile number or address appears on the books
      of
      the Corporation, at the principal place of business of the Holders. Any notice
      or other communication or deliveries hereunder shall be deemed given and
      effective on the earliest of (i) the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number specified
      in
      this Section 11 prior to 5:30 p.m. (New York City time) on any date, (ii) the
      date immediately following the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number specified
      in
      this Section 11 between 5:30 p.m. and 11:59 p.m. (New York City time) on any
      date, (iii) the second Business Day following the date of mailing, if sent
      by
      nationally recognized overnight courier service, or (iv) upon actual receipt
      by
      the party to whom such notice is required to be given.

     

    b) Absolute
      Obligation.
      Except
      as expressly provided herein, no provision of this Certificate of Designation
      shall alter or impair the obligation of the Corporation, which is absolute
      and
      unconditional, to pay liquidated damages, accrued dividends and accrued
      interest, as applicable, on the shares of Preferred Stock at the time, place,
      and rate, and in the coin or currency, herein prescribed. 

     

    c) Lost
      or Mutilated Preferred Stock Certificate.
      If a
      Holder’s Preferred Stock certificate shall be mutilated, lost, stolen or
      destroyed, the Corporation shall execute and deliver, in exchange and
      substitution for and upon cancellation of a mutilated certificate, or in lieu
      of
      or in substitution for a lost, stolen or destroyed certificate, a new
      certificate for the shares of Preferred Stock so mutilated, lost, stolen or
      destroyed, but only upon receipt of evidence of such loss, theft or destruction
      of such certificate, and of the ownership hereof reasonably satisfactory to
      the
      Corporation.

    

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    d) Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Certificate of Designation shall be governed by and construed and
      enforced in accordance with the internal laws of the State of New York, without
      regard to the principles of conflict of laws thereof. Each party agrees that
      all
      legal proceedings concerning the interpretation, enforcement and defense of
      the
      transactions contemplated by any of the Transaction Documents (whether brought
      against a party hereto or its respective Affiliates, directors, officers,
      shareholders, employees or agents) shall be commenced in the state and federal
      courts sitting in the City of New York, Borough of Manhattan (the “New
      York Courts”).
      Each
      party hereto hereby irrevocably submits to the exclusive jurisdiction of the
      New
      York Courts for the adjudication of any dispute hereunder or in connection
      herewith or with any transaction contemplated hereby or discussed herein
      (including with respect to the enforcement of any of the Transaction Documents),
      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
      such New York Courts, or such New York Courts are improper or inconvenient
      venue
      for such proceeding. 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 via registered or certified mail or
      overnight delivery (with evidence of delivery) to such party at the address
      in
      effect for notices to it under this Certificate of Designation 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 other manner permitted by applicable law. Each party
      hereto hereby irrevocably waives, to the fullest extent permitted by applicable
      law, any and all right to trial by jury in any legal proceeding arising out
      of
      or relating to this Certificate of Designation or the transactions contemplated
      hereby. If either party shall commence an action or proceeding to enforce any
      provisions of this Certificate of Designation, then the prevailing party in
      such
      action or proceeding shall be reimbursed by the other party for its attorneys’
fees and other costs and expenses incurred in the investigation, preparation
      and
      prosecution of such action or proceeding.

     

    e) Waiver.
      Any
      waiver by the Corporation or a Holder of a breach of any provision of this
      Certificate of Designation shall not operate as or be construed to be a waiver
      of any other breach of such provision or of any breach of any other provision
      of
      this Certificate of Designation or a waiver by any other Holders. The failure
      of
      the Corporation or a Holder to insist upon strict adherence to any term of
      this
      Certificate of Designation on one or more occasions shall not be considered
      a
      waiver or deprive that party (or any other Holder) of the right thereafter
      to
      insist upon strict adherence to that term or any other term of this Certificate
      of Designation. Any waiver by the Corporation or a Holder must be in
      writing.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    f) Severability.
      If any
      provision of this Certificate of Designation is invalid, illegal or
      unenforceable, the balance of this Certificate of Designation shall remain
      in
      effect, and if any provision is inapplicable to any Person or circumstance,
      it
      shall nevertheless remain applicable to all other Persons and circumstances.
      If
      it shall be found that any interest or other amount deemed interest due
      hereunder violates the applicable law governing usury, the applicable rate
      of
      interest due hereunder shall automatically be lowered to equal the maximum
      rate
      of interest permitted under applicable law. 

    

    g) Next
      Business Day.
      Whenever any payment or other obligation hereunder shall be due on a day other
      than a Business Day, such payment shall be made on the next succeeding Business
      Day.

    

    h) Headings.
      The
      headings contained herein are for convenience only, do not constitute a part
      of
      this Certificate of Designation and shall not be deemed to limit or affect
      any
      of the provisions hereof.

    

    i) Status
      of Converted or Redeemed Preferred Stock.
      Shares
      of Preferred Stock may only be issued pursuant to the Purchase Agreement. If
      any
      shares of Preferred Stock shall be converted, redeemed or reacquired by the
      Corporation, such shares shall resume the status of authorized but unissued
      shares of preferred stock and shall no longer be designated as Series J 8%
      Convertible Preferred Stock.

     

    *********************

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    
This
      amendment has been adopted by the Board of Directors of the Corporation pursuant
      to Section 502 of the Business Corporation Law.

    

    IN
      WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to
      be
      signed by _______________, its President, as of ________________,
      2007.

    

    
      	 	NUTRITION
              21, INC.	 
	 
 	 
 	 
 	 
	 	By:  	 	 
	 	Name:	 
	 	Its:	 

    

     

    
      	 	By: 	 	 
	 	Name:
              Benjamin T. Sporn	
            
	 	
              Its:
                Secretary

            	
            

    

     

    
      
        
        

      

      
        27Exhibit
      4.3

    

    REGISTRATION
      RIGHTS AGREEMENT

    

    This
      Registration Rights Agreement (this “Agreement”)
      is
      made and entered into as of September 11, 2007, between Nutrition 21, Inc.,
      a
      New York corporation (the “Company”)
      and
      each of the several purchasers signatory hereto (each such purchaser, a
“Purchaser”
and,
      collectively, the “Purchasers”).

    

    This
      Agreement is made pursuant to the Securities Purchase Agreement, dated as of
      the
      date hereof, between the Company and each Purchaser (the “Purchase
      Agreement”).

    

    The
      Company and each Purchaser hereby agrees as follows:

    

    1.
       Definitions

    

    Capitalized
      terms used and not otherwise defined herein that are defined in the Purchase
      Agreement shall have the meanings given such terms in the Purchase
      Agreement.
      As used
      in this Agreement, the following terms shall have the following
      meanings:

    

    “Advice”
shall
      have the meaning set forth in Section 6(d).

    

    “Effectiveness
      Date”
means,
      with respect to the Initial Registration Statement required to be filed
      hereunder, the 90th
      calendar
      day following the date hereof (or, in the event of a “full review” by the
      Commission, the 120th
      calendar
      day following the date hereof) and with respect to any additional Registration
      Statements which may be required pursuant to Section 3(c), the 90th
      calendar
      day following the date on which an additional Registration Statement is required
      to be filed hereunder; provided,
      however,
      that in
      the event the Company is notified by the Commission that one or more of the
      above Registration Statements will not be reviewed or is no longer subject
      to
      further review and comments, the Effectiveness Date as to such Registration
      Statement shall be the fifth Trading Day following the date on which the Company
      is so notified if such date precedes the dates otherwise required
      above.

    

    “Effectiveness
      Period”
shall
      have the meaning set forth in Section 2(a).

    

    “Event”
shall
      have the meaning set forth in Section 2(b).

    

    “Event
      Date”
shall
      have the meaning set forth in Section 2(b).

    

    “Filing
      Date”
means,
      with respect to the Initial Registration Statement required hereunder, the
      5th
      calendar
      day following the actual date of filing of the Company’s Annual Report on Form
      10-K for the year ended June 30, 2007, but in no event later than October 31,
      2007 and, with respect to any additional Registration Statements which may
      be
      required pursuant to Section 3(c), the earliest practical date on which the
      Company is permitted by SEC Guidance to file such additional Registration
      Statement related to the Registrable Securities.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Holder”
or
      “Holders”
means
      the holder or holders, as the case may be, from time to time of Registrable
      Securities.

    

    “Indemnified
      Party”
shall
      have the meaning set forth in Section 5(c).

    

    “Indemnifying
      Party”
shall
      have the meaning set forth in Section 5(c).

    

    “Initial
      Registration Statement”
means
      the initial Registration Statement filed pursuant to this
      Agreement.

    

    “Initial
      Shares”
means
      a
      number of Registrable Securities equal to the lesser of (i) the total number
      of
      Registrable Securities and (ii) one-third of the number of issued and
      outstanding shares of Common Stock that are held by non-affiliates of the
      Company on the day immediately prior to the filing date of the Initial
      Registration Statement.

    

    “Losses”
shall
      have the meaning set forth in Section 5(a).

    

    “Plan
      of Distribution”
shall
      have the meaning set forth in Section 2(a). 

    

    “Prospectus”
means
      the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated by the Commission pursuant to the Securities Act), as
      amended or supplemented by any prospectus supplement, with respect to the terms
      of the offering of any portion of the Registrable Securities covered by a
      Registration Statement, and all other amendments and supplements to the
      Prospectus, including post-effective amendments, and all material incorporated
      by reference or deemed to be incorporated by reference in such
      Prospectus.

    

    “Registrable
      Securities”
means
      (i) all of the shares of Common Stock issuable upon conversion in full of the
      Preferred Stock (assuming on the date of determination the shares of Preferred
      Stock are converted in full without regard to any conversion limitations
      therein), (ii) all shares of Common Stock issuable as dividends on the Preferred
      Stock assuming all dividend payments are made in shares of Common Stock and
      the
      Preferred Stock is held for at least 3 years, (iii) all Warrant Shares (assuming
      on the date of determination the Warrants are exercised in full without regard
      to any exercise limitations therein), (iv) any additional shares of Common
      Stock
      issuable in connection with any anti-dilution provisions in the Preferred Stock
      or the Warrants (in each case, without giving effect to any limitations on
      conversion set forth in the Certificate of Designation or limitations on
      exercise set forth in the Warrant) and (v) any securities issued or issuable
      upon any stock split, dividend or other distribution, recapitalization or
      similar event with respect to the foregoing. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    “Registration
      Statement”
means
      the registration statement required to be filed hereunder and any additional
      registration statements contemplated by Section 3(c), including (in each case)
      the Prospectus, amendments and supplements to such registration statement or
      Prospectus, including pre- and post-effective amendments, all exhibits thereto,
      and all material incorporated by reference or deemed to be incorporated by
      reference in such registration statement.

    

    “Rule
      415”
means
      Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended or interpreted from time to time, or any similar rule or
      regulation hereafter adopted by the Commission having substantially the same
      purpose and effect as such Rule.

    

    “Rule
      424”
means
      Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended or interpreted from time to time, or any similar rule or
      regulation hereafter adopted by the Commission having substantially the same
      purpose and effect as such Rule.

    

    “Selling
      Shareholder Questionnaire”
shall
      have the meaning set forth in Section 3(a).

    

    “SEC
      Guidance”
means
      (i) any publicly-available written or oral guidance, comments, requirements
      or
      requests of the Commission staff and (ii) the Securities Act.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    2.
       Shelf
      Registration.

    

    (a) On
      or
      prior to each Filing Date, the Company shall prepare and file with the
      Commission a Registration Statement covering the resale of all or such maximum
      portion of the Registrable Securities as permitted by SEC Guidance (provided
      that the Company shall use diligent efforts to advocate with the Commission
      for
      the registration of all of the Registrable Securities in accordance with the
      SEC
      Guidance, including without limitation, the Manual of Publicly Available
      Telephone Interpretations D.29) that are not then registered on an effective
      Registration Statement for an offering to be made on a continuous basis pursuant
      to Rule 415. The Registration Statement shall be on Form S-3 (except if the
      Company is not then eligible to register for resale the Registrable Securities
      on Form S-3, in which case such registration shall be on another appropriate
      form in accordance herewith) and shall contain (unless otherwise directed by
      at
      least an 75% majority in interest of the Holders) substantially the
“Plan
      of Distribution”
      attached hereto as Annex
      A.
      Subject
      to the terms of this Agreement, the Company shall use its best efforts to cause
      a Registration Statement to be declared effective under the Securities Act
      as
      promptly as possible after the filing thereof, but in any event prior to the
      applicable Effectiveness Date, and shall use its best efforts to keep such
      Registration Statement continuously effective under the Securities Act until
      all
      Registrable Securities covered by such Registration Statement have been sold,
      or
      may be sold without volume restrictions pursuant to Rule 144(k), as determined
      by the counsel to the Company pursuant to a written opinion letter to such
      effect, addressed and acceptable to the Transfer Agent and the affected Holders
      (the “Effectiveness
      Period”).
      The
      Company shall
      telephonically request effectiveness of a Registration Statement as of 5:00
      p.m.
      New York City time on a Trading Day. The Company shall immediately notify the
      Holders via facsimile or by e-mail of the effectiveness of a Registration
      Statement on the same Trading Day that the Company telephonically confirms
      effectiveness with the Commission, which shall be the date requested for
      effectiveness of such Registration Statement. The Company shall, by 9:30 a.m.
      New York City time on the Trading Day after the effective date of such
      Registration Statement, file a final Prospectus with the Commission as required
      by Rule 424. Failure to so notify the Holder within 1 Trading Day of such
      notification of effectiveness or failure to file a final Prospectus as foresaid
      shall be deemed an Event under Section 2(b). Notwithstanding
      any other provision of this Agreement and subject to the payment of liquidated
      damages pursuant to Section 2(b), if any SEC Guidance sets forth a limitation
      on
      the number of Registrable Securities permitted to be registered on a particular
      Registration Statement (and notwithstanding that the Company used diligent
      efforts to advocate with the Commission for the registration of all or a greater
      portion of Registrable Securities), unless otherwise directed in writing by
      a
      Holder as to its Registrable Securities, the number of Registrable Securities
      to
      be registered on such Registration Statement will first be reduced by
      Registrable Securities represented by
      shares
      of Common Stock issuable as dividends on the Preferred Stock after the second
      year anniversary of the Original Issue Date (applied,
      in the case that some such shares may be registered, to the Holders on a pro
      rata basis based on the total number of unregistered Registrable Securities
      held
      by such Holders),
      second
      by Registrable Securities represented by the
      Warrant
      Shares (applied, in the case that some Warrant Shares may be registered, to
      the
      Holders on a pro rata basis based on the total number of unregistered Warrant
      Shares held by such Holders), third by Registrable Securities represented by
      Conversion Shares (applied, in the case that some Conversion Shares may be
      registered, to the Holders on a pro rata basis based on the total number of
      unregistered Conversion Shares held by such Holders), fourth by Registrable
      Securities represented by shares
      of
      Common Stock issuable as dividends on the Preferred Stock on and prior to the
      second anniversary of the Original Issue Date (applied,
      in the case that some such shares may be registered, to the Holders on a pro
      rata basis based on the total number of unregistered Registrable Securities
      held
      by such Holders); provided,
      however,
      that,
      prior to any reduction in the number of Registrable Securities included in
      a
      Registration Statement as set forth in this sentence, the number of shares
      of
      Common Stock set forth on Schedule 6(b) hereto which shall have been included
      on
      such Registration Statement shall be reduced by up to 100%.

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      (b) If:
        (i)
        the Initial Registration Statement is not filed on or prior to its Filing
        Date
        (if the Company files the Initial Registration Statement without affording
        the
        Holders the opportunity to review and comment on the same as required by
        Section
        3(a) herein, the Company shall be deemed to have not satisfied this clause
        (i)),
        or (ii) the Company fails to file with the Commission a request for acceleration
        of a Registration Statement in accordance with Rule 461 promulgated by the
        Commission pursuant to the Securities Act, within five Trading Days of the
        date
        that the Company is notified (orally or in writing, whichever is earlier)
        by the
        Commission that such Registration Statement will not be “reviewed” or will not
        be subject to further review, or (iii) prior to the effective date of a
        Registration Statement, the Company fails to file a pre-effective

amendment and otherwise respond in writing to comments made
      by the
      Commission in respect of such Registration Statement within 10 Trading Days
      after the receipt of comments by or notice from the Commission that such
      amendment is required in order for such Registration Statement to be declared
      effective, or (iv) as to, in the aggregate among all Holders on a pro-rata
      basis
      based on their purchase of the Securities pursuant to the Purchase Agreement,
      a
      Registration Statement registering for resale all of the Initial Shares is
      not
      declared effective by the Commission by the Effectiveness Date of the Initial
      Registration Statement, or (v) all of the Registrable Securities are not
      registered for resale pursuant to one or more effective Registration Statements
      on or before October 1, 2008, or (vi) after the effective date of a Registration
      Statement, such Registration Statement ceases for any reason to remain
      continuously effective as to all Registrable Securities included in such
      Registration Statement, or the Holders are otherwise not permitted to utilize
      the Prospectus therein to resell such Registrable Securities, for more than
      10
      consecutive calendar days or more than an aggregate of 15 calendar days (which
      need not be consecutive calendar days) during any 12-month period (any such
      failure or breach being referred to as an “Event”,
      and
      for purposes of clause (i), (iv) and (v) the date on which such Event occurs,
      and for purpose of clause (ii) the date on which such five Trading Day period
      is
      exceeded, and for purpose of clause (iii) the date which such 10 calendar day
      period is exceeded, and for purpose of clause (vi) the date on which such 10
      or
      15 calendar day period, as applicable, is exceeded being referred to as
“Event
      Date”),
      then,
      in addition to any other rights the Holders may have hereunder or under
      applicable law, on each such Event Date and on each monthly anniversary of
      each
      such Event Date (if the applicable Event shall not have been cured by such
      date)
      until the applicable Event is cured, the Company shall pay to each Holder an
      amount in cash, as partial liquidated damages and not as a penalty, equal to
      1.5% of the aggregate purchase price paid by such Holder pursuant to the
      Purchase Agreement for any unregistered Registrable Securities then held by
      such
      Holder. The parties agree that (1) the Company shall not be liable for
      liquidated damages under this Agreement with respect to any Warrants or Warrant
      Shares and (2) the maximum aggregate liquidated damages payable to a Holder
      under this Agreement shall be 18% of the aggregate Subscription Amount paid
      by
      such Holder pursuant to the Purchase Agreement. If the Company fails to pay
      any
      partial liquidated damages pursuant to this Section in full within seven days
      after the date payable, the Company will pay interest thereon at a rate of
      18%
      per annum (or such lesser maximum amount that is permitted to be paid by
      applicable law) to the Holder, accruing daily from the date such partial
      liquidated damages are due until such amounts, plus all such interest thereon,
      are paid in full. The partial liquidated damages pursuant to the terms hereof
      shall apply on a daily pro rata basis for any portion of a month prior to the
      cure of an Event.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    3.
       Registration
      Procedures.

    

    In
      connection with the Company’s registration obligations hereunder, the Company
      shall:

    

    (a) Not
      less
      than 5 Trading Days prior to the filing of each Registration Statement and
      not
      less than one Trading Day prior to the filing of any related Prospectus or
      any
      amendment or supplement thereto (including any document that would be
      incorporated or deemed to be incorporated therein by reference), the Company
      shall (i) furnish to each Holder copies of all such documents proposed to be
      filed, which documents (other than those incorporated or deemed to be
      incorporated by reference) will be subject to the review of such Holders and
      (ii) cause its officers and directors, counsel and independent certified public
      accountants to respond to such inquiries as shall be necessary, in the
      reasonable opinion of respective counsel to each Holder, to conduct a reasonable
      investigation within the meaning of the Securities Act. The Company shall not
      file a Registration Statement or any such Prospectus or any amendments or
      supplements thereto to which the Holders of a majority of the Registrable
      Securities shall reasonably object in good faith, provided that the Company
      is
      notified of such objection in writing no later than 5 Trading Days after the
      Holders have been so furnished copies of a Registration Statement or 1 Trading
      Day after the Holders have been so furnished copies of any related Prospectus
      or
      amendments or supplements thereto. Each Holder agrees to furnish to the Company
      a completed questionnaire in the form attached to this Agreement as Annex
      B
      (a
“Selling
      Shareholder Questionnaire”)
      not
      less than two Trading Days prior to the Filing Date or by the end of the fourth
      Trading Day following the date on which such Holder receives draft materials
      in
      accordance with this Section. 

    

    (b) (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to a Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep a Registration Statement continuously
      effective as to the applicable Registrable Securities for the Effectiveness
      Period and prepare and file with the Commission such additional Registration
      Statements in order to register for resale under the Securities Act all of
      the
      Registrable Securities; (ii) cause the related Prospectus to be amended or
      supplemented by any required Prospectus supplement (subject to the terms of
      this
      Agreement), and, as so supplemented or amended, to be filed pursuant to Rule
      424; (iii) respond as promptly as reasonably possible to any comments received
      from the Commission with respect to a Registration Statement or any amendment
      thereto and provide as promptly as reasonably possible to the Holders true
      and
      complete copies of all correspondence from and to the Commission relating to
      a
      Registration Statement (provided that the Company may excise any information
      contained therein which would constitute material non-public information as
      to
      any Holder which has not executed a confidentiality agreement with the Company);
      and (iv) comply in all material respects with the provisions of the Securities
      Act and the Exchange Act with respect to the disposition of all Registrable
      Securities covered by a Registration Statement during the applicable period
      in
      accordance (subject to the terms of this Agreement) with the intended methods
      of
      disposition by the Holders thereof set forth in such Registration Statement
      as
      so amended or in such Prospectus as so supplemented.

    

    (c) If
      during
      the Effectiveness Period, the number of Registrable Securities at any time
      exceeds 100% of the number of shares of Common Stock then registered in a
      Registration Statement, then the Company shall file as soon as reasonably
      practicable, but in any case prior to the applicable Filing Date, an additional
      Registration Statement covering the resale by the Holders of not less than
      the
      number of such Registrable Securities. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    (d) Notify
      the Holders of Registrable Securities to be sold (which notice shall, pursuant
      to clauses (iii) through (vi) hereof, be accompanied by an instruction to
      suspend the use of the Prospectus until the requisite changes have been made)
      as
      promptly as reasonably possible (and, in the case of (i)(A) below, not less
      than
      one Trading Day prior to such filing) and (if requested by any such Person)
      confirm such notice in writing no later than one Trading Day following the
      day
      (i)(A) when a Prospectus or any Prospectus supplement or post-effective
      amendment to a Registration Statement is proposed to be filed; (B) when the
      Commission notifies the Company whether there will be a “review” of such
      Registration Statement and whenever the Commission comments in writing on such
      Registration Statement; and (C) with respect to a Registration Statement or
      any
      post-effective amendment, when the same has become effective; (ii) of any
      request by the Commission or any other federal or state governmental authority
      for amendments or supplements to a Registration Statement or Prospectus or
      for
      additional information; (iii) of the issuance by the Commission or any other
      federal or state governmental authority of any stop order suspending the
      effectiveness of a Registration Statement covering any or all of the Registrable
      Securities or the initiation of any Proceedings for that purpose; (iv) of the
      receipt by the Company of any notification with respect to the suspension of
      the
      qualification or exemption from qualification of any of the Registrable
      Securities for sale in any jurisdiction, or the initiation or threatening of
      any
      Proceeding for such purpose; (v) of the occurrence of any event or passage
      of
      time that makes the financial statements included in a Registration Statement
      ineligible for inclusion therein or any statement made in a Registration
      Statement or Prospectus or any document incorporated or deemed to be
      incorporated therein by reference untrue in any material respect or that
      requires any revisions to a Registration Statement, Prospectus or other
      documents so that, in the case of a Registration Statement or the Prospectus,
      as
      the case may be, it 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, in light of the circumstances under which they
      were
      made, not misleading; and (vi) of the occurrence or existence of any pending
      corporate development with respect to the Company that the Company believes
      may
      be material and that, in the determination of the Company, makes it not in
      the
      best interest of the Company to allow continued availability of a Registration
      Statement or Prospectus, provided that any and all of such information shall
      remain confidential to each Holder until such information otherwise becomes
      public, unless disclosure by a Holder is required by law; provided,
      further,
      that
      notwithstanding each Holder’s agreement to keep such information confidential,
      each such Holder makes no acknowledgement that any such information is material,
      non-public information.

    

    (e) Use
      its
      best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
      of
      (i) any order stopping or suspending the effectiveness of a Registration
      Statement, or (ii) any suspension of the qualification (or exemption from
      qualification) of any of the Registrable Securities for sale in any
      jurisdiction, at the earliest practicable moment.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    (f) Furnish
      to each Holder, without charge, at least one conformed copy of each such
      Registration Statement and each amendment thereto, including financial
      statements and schedules, all documents incorporated or deemed to be
      incorporated therein by reference to the extent requested by such Person, and
      all exhibits to the extent requested by such Person (including those previously
      furnished or incorporated by reference) promptly after the filing of such
      documents with the Commission; provided, that any such item which is available
      on the EDGAR system need not be furnished in physical form.

    

    (g) Subject
      to the terms of this Agreement, the Company hereby consents to the use of such
      Prospectus and each amendment or supplement thereto by each of the selling
      Holders in connection with the offering and sale of the Registrable Securities
      covered by such Prospectus and any amendment or supplement thereto, except
      after
      the giving of any notice pursuant to Section 3(d).

    

    (h) 
      The
      Company shall cooperate with any broker-dealer through which a Holder proposes
      to resell its Registrable Securities in effecting a filing with the FINRA
      Corporate Financing Department pursuant to NASD Rule 2710, as requested by
      any
      such Holder, and the Company shall pay the filing fee required by such filing
      within 2 Business Days of request therefor.

    

    (i) Prior
      to
      any resale of Registrable Securities by a Holder, use its commercially
      reasonable efforts to register or qualify or cooperate with the selling Holders
      in connection with the registration or qualification (or exemption from the
      Registration or qualification) of such Registrable Securities for the resale
      by
      the Holder under the securities or Blue Sky laws of such jurisdictions within
      the United States as any Holder reasonably requests in writing, to keep each
      registration or qualification (or exemption therefrom) effective during the
      Effectiveness Period and to do any and all other acts or things reasonably
      necessary to enable the disposition in such jurisdictions of the Registrable
      Securities covered by each Registration Statement; provided, that the Company
      shall not be required to qualify generally to do business in any jurisdiction
      where it is not then so qualified, subject the Company to any material tax
      in
      any such jurisdiction where it is not then so subject or file a general consent
      to service of process in any such jurisdiction.

    

    (j) If
      requested by a Holder, cooperate with such Holders to facilitate the timely
      preparation and delivery of certificates representing Registrable Securities
      to
      be delivered to a transferee pursuant to a Registration Statement, which
      certificates shall be free, to the extent permitted by the Purchase Agreement,
      of all restrictive legends, and to enable such Registrable Securities to be
      in
      such denominations and registered in such names as any such Holder may
      request.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    (k) Upon
      the
      occurrence of any event contemplated by Section 3(d), as promptly as reasonably
      possible under the circumstances taking into account the Company’s good faith
      assessment of any adverse consequences to the Company and its stockholders
      of
      the premature disclosure of such event, prepare a supplement or amendment,
      including a post-effective amendment, to a Registration Statement or a
      supplement to the related Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference, and file any other required document
      so
      that, as thereafter delivered, neither a Registration Statement nor such
      Prospectus will contain an untrue statement of a material fact or omit to state
      a material fact required to be stated therein or necessary to make the
      statements therein, in light of the circumstances under which they were made,
      not misleading. If
      the
      Company notifies the Holders in accordance with clauses (iii) through (vi)
      of
      Section 3(d) above to suspend the use of any Prospectus until the requisite
      changes to such Prospectus have been made, then the Holders shall suspend use
      of
      such Prospectus. The Company will use its best efforts to ensure that the use
      of
      the Prospectus may be resumed as promptly as is practicable. The Company shall
      be entitled to exercise its right under this Section 3(k) to suspend the
      availability of a Registration Statement and Prospectus, subject to the payment
      of partial liquidated damages otherwise required pursuant to Section 2(b),
      for a
      period not to exceed 60 calendar days (which need not be consecutive days)
      in
      any 12 month period.

    

    (l) Comply
      with all applicable rules and regulations of the Commission.

    

    (m) The
      Company may require each selling Holder to furnish to the Company a certified
      statement as to the number of shares of Common Stock beneficially owned by
      such
      Holder and, if required by the Commission, the natural persons thereof that
      have
      voting and dispositive control over the shares. During any periods that the
      Company is unable to meet its obligations hereunder with respect to the
      registration of the Registrable Securities solely because any Holder fails
      to
      furnish such information within three Trading Days of the Company’s request, any
      liquidated damages that are accruing at such time as to such Holder only shall
      be tolled and any Event that may otherwise occur solely because of such delay
      shall be suspended as to such Holder only, until such information is delivered
      to the Company.

    

    4.
       Registration
      Expenses.
      All
      fees and expenses incident to the performance of or compliance with this
      Agreement by the Company shall be borne by the Company whether or not any
      Registrable Securities are sold pursuant to a Registration Statement. The fees
      and expenses referred to in the foregoing sentence shall include, without
      limitation, (i) all registration and filing fees (including, without limitation,
      fees and expenses of the Company’s counsel and auditors) (A) with respect to
      filings made with the Commission, (B) with respect to filings required to be
      made with any Trading Market on which the Common Stock is then listed for
      trading, (C) in compliance with applicable state securities or Blue Sky laws
      reasonably agreed to by the Company in writing (including, without limitation,
      fees and disbursements of counsel for the Company in connection with Blue Sky
      qualifications or exemptions of the Registrable Securities) and (D) if not
      previously paid by the Company in connection with an Issuer Filing, with respect
      to any filing that may be required to be made by any broker through which a
      Holder intends to make sales of Registrable Securities with the NASD pursuant
      to
      NASD Rule 2710, so long as the broker is receiving no more than a customary
      brokerage commission in connection with such sale, (ii) printing expenses
      (including, without limitation, expenses of printing certificates for
      Registrable Securities), (iii) messenger, telephone and delivery expenses,
      (iv)
      fees and disbursements of counsel for the Company, (v) Securities Act liability
      insurance, if the Company so desires such insurance, and (vi) fees and expenses
      of all other Persons retained by the Company in connection with the consummation
      of the transactions contemplated by this Agreement. In addition, the Company
      shall be responsible for all of its internal expenses incurred in connection
      with the consummation of the transactions contemplated by this Agreement
      (including, without limitation, all salaries and expenses of its officers and
      employees performing legal or accounting duties), the expense of any annual
      audit and the fees and expenses incurred in connection with the listing of
      the
      Registrable Securities on any securities exchange as required hereunder. In
      no
      event shall the Company be responsible for any broker or similar commissions
      of
      any Holder or, except to the extent provided for in the Transaction Documents,
      any legal fees or other costs of the Holders.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    5.
       Indemnification.

    

    (a) Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless each Holder, the officers, directors, members, partners, agents,
      brokers (including brokers who offer and sell Registrable Securities as
      principal as a result of a pledge or any failure to perform under a margin
      call
      of Common Stock), investment advisors and employees (and any other Persons
      with
      a functionally equivalent role of a Person holding such titles, notwithstanding
      a lack of such title or any other title) of each of them, each Person who
      controls any such Holder (within the meaning of Section 15 of the Securities
      Act
      or Section 20 of the Exchange Act) and the officers, directors, members,
      shareholders, partners, agents and employees (and any other Persons with a
      functionally equivalent role of a Person holding such titles, notwithstanding
      a
      lack of such title or any other title) of each such controlling Person, to
      the
      fullest extent permitted by applicable law, from and against any and all losses,
      claims, damages, liabilities, costs (including, without limitation, reasonable
      attorneys’ fees) and expenses (collectively, “Losses”),
      as
      incurred, arising out of or relating to (1) any untrue or alleged untrue
      statement of a material fact contained in a Registration Statement, any
      Prospectus or any form of prospectus or in any amendment or supplement thereto
      or in any preliminary prospectus, or arising out of or relating to any omission
      or alleged omission of a material fact required to be stated therein or
      necessary to make the statements therein (in the case of any Prospectus or
      supplement thereto, in light of the circumstances under which they were made)
      not misleading or (2) any violation or alleged violation by the Company of
      the
      Securities Act, the Exchange Act or any state securities law, or any rule or
      regulation thereunder, in connection with the performance of its obligations
      under this Agreement, except to the extent, but only to the extent, that (i)
      such untrue statements or omissions are based solely upon information regarding
      such Holder furnished in writing to the Company by such Holder expressly for
      use
      therein, or to the extent that such information relates to such Holder or such
      Holder’s proposed method of distribution of Registrable Securities and was
      reviewed and expressly approved in writing by such Holder expressly for use
      in a
      Registration Statement, such Prospectus or in any amendment or supplement
      thereto (it being understood that the Holder has approved Annex A hereto for
      this purpose) or (ii) in the case of an occurrence of an event of the type
      specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated
      or
      defective Prospectus after the Company has notified such Holder in writing
      that
      the Prospectus is outdated or defective and prior to the receipt by such Holder
      of the Advice contemplated in Section 6(d). The Company shall notify the Holders
      promptly of the institution, threat or assertion of any Proceeding arising
      from
      or in connection with the transactions contemplated by this Agreement of which
      the Company is aware.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    (b) Indemnification
      by Holders.
      Each
      Holder shall, severally and not jointly, indemnify and hold harmless the
      Company, its directors, officers, agents and employees, each Person who controls
      the Company (within the meaning of Section 15 of the Securities Act and Section
      20 of the Exchange Act), and the directors, officers, agents or employees of
      such controlling Persons, to the fullest extent permitted by applicable law,
      from and against all Losses, as incurred, to the extent arising out of or based
      solely upon: (x) such Holder’s failure to comply with the prospectus delivery
      requirements of the Securities Act or (y) any untrue or alleged untrue statement
      of a material fact contained in any Registration Statement, any Prospectus,
      or
      in any amendment or supplement thereto or in any preliminary prospectus, or
      arising out of or relating to any omission or alleged omission of a material
      fact required to be stated therein or necessary to make the statements therein
      not misleading (i) to the extent, but only to the extent, that such untrue
      statement or omission is contained in any information so furnished in writing
      by
      such Holder to the Company specifically for inclusion in such Registration
      Statement or such Prospectus or (ii) to the extent that such information relates
      to such Holder’s proposed method of distribution of Registrable Securities and
      was reviewed and expressly approved in writing by such Holder expressly for
      use
      in a Registration Statement (it being understood that the Holder has approved
      Annex A hereto for this purpose), such Prospectus or in any amendment or
      supplement thereto or (ii) in the case of an occurrence of an event of the
      type
      specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated
      or
      defective Prospectus after the Company has notified such Holder in writing
      that
      the Prospectus is outdated or defective and prior to the receipt by such Holder
      of the Advice contemplated in Section 6(d). In no event shall the liability
      of
      any selling Holder hereunder be greater in amount than the dollar amount of
      the
      net proceeds received by such Holder upon the sale of the Registrable Securities
      giving rise to such indemnification obligation.

    

    (c) Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party shall promptly notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall have the right to assume the defense
      thereof, including the employment of counsel reasonably satisfactory to the
      Indemnified Party and the payment of all fees and expenses incurred in
      connection with defense thereof; provided, that the failure of any Indemnified
      Party to give such notice shall not relieve the Indemnifying Party of its
      obligations or liabilities pursuant to this Agreement, except (and only) to
      the
      extent that it shall be finally determined by a court of competent jurisdiction
      (which determination is not subject to appeal or further review) that such
      failure shall have prejudiced the Indemnifying Party.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
      expenses; (2) the Indemnifying Party shall have failed promptly to assume the
      defense of such Proceeding and to employ counsel reasonably satisfactory to
      such
      Indemnified Party in any such Proceeding; or (3) the named parties to any such
      Proceeding (including any impleaded parties) include both such Indemnified
      Party
      and the Indemnifying Party, and counsel to the Indemnified Party shall
      reasonably believe that a material conflict of interest is likely to exist
      if
      the same counsel were to represent such Indemnified Party and the Indemnifying
      Party (in which case, if such Indemnified Party notifies the Indemnifying Party
      in writing that it elects to employ separate counsel at the expense of the
      Indemnifying Party, the Indemnifying Party shall not have the right to assume
      the defense thereof and the reasonable fees and expenses of no more than one
      separate counsel shall be at the expense of the Indemnifying Party). The
      Indemnifying Party shall not be liable for any settlement of any such Proceeding
      effected without its written consent, which consent shall not be unreasonably
      withheld or delayed. No Indemnifying Party shall, without the prior written
      consent of the Indemnified Party, effect any settlement of any pending
      Proceeding in respect of which any Indemnified Party is a party, unless such
      settlement includes an unconditional release of such Indemnified Party from
      all
      liability on claims that are the subject matter of such Proceeding.

    

    Subject
      to the terms of this Agreement, all reasonable fees and expenses of the
      Indemnified Party (including reasonable fees and expenses to the extent incurred
      in connection with investigating or preparing to defend such Proceeding in
      a
      manner not inconsistent with this Section) shall be paid to the Indemnified
      Party, as incurred, within ten Trading Days of written notice thereof to the
      Indemnifying Party; provided, that the Indemnified Party shall promptly
      reimburse the Indemnifying Party for that portion of such fees and expenses
      applicable to such actions for which such Indemnified Party is judicially
      determined to be not entitled to indemnification hereunder.

    

    (d) Contribution.
      If the
      indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
      Party or insufficient to hold an Indemnified Party harmless for any Losses,
      then
      each Indemnifying Party shall contribute to the amount paid or payable by such
      Indemnified Party, in such proportion as is appropriate to reflect the relative
      fault of the Indemnifying Party and Indemnified Party in connection with the
      actions, statements or omissions that resulted in such Losses as well as any
      other relevant equitable considerations. The relative fault of such Indemnifying
      Party and Indemnified Party shall be determined by reference to, among other
      things, whether any action in question, including any untrue or alleged untrue
      statement of a material fact or omission or alleged omission of a material
      fact,
      has been taken or made by, or relates to information supplied by, such
      Indemnifying Party or Indemnified Party, and the parties’ relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      action, statement or omission. The amount paid or payable by a party as a result
      of any Losses shall be deemed to include, subject to the limitations set forth
      in this Agreement, any reasonable attorneys’ or other fees or expenses incurred
      by such party in connection with any Proceeding to the extent such party would
      have been indemnified for such fees or expenses if the indemnification provided
      for in this Section was available to such party in accordance with its
      terms.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding paragraph.
      Notwithstanding the provisions of this Section 5(d), no Holder shall be required
      to contribute, in the aggregate, any amount in excess of the amount by which
      the
      net proceeds actually received by such Holder from the sale of the Registrable
      Securities subject to the Proceeding exceeds the amount of any damages that
      such
      Holder has otherwise been required to pay by reason of such untrue or alleged
      untrue statement or omission or alleged omission.

    

    The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the Indemnifying Parties may have to the Indemnified
      Parties.

    

    6.
       Miscellaneous.

    

    (a) Remedies.
      In the
      event of a breach by the Company or by a Holder of any of their respective
      obligations under this Agreement, each Holder or the Company, as the case may
      be, in addition to being entitled to exercise all rights granted by law and
      under this Agreement, including recovery of damages, shall be entitled to
      specific performance of its rights under this Agreement. The Company and each
      Holder agree that monetary damages would not provide adequate compensation
      for
      any losses incurred by reason of a breach by it of any of the provisions of
      this
      Agreement and hereby further agrees that, in the event of any action for
      specific performance in respect of such breach, it shall not assert or shall
      waive the defense that a remedy at law would be adequate.

    

    (b) No
      Piggyback on Registrations; Prohibition on Filing Other Registration
      Statements.
      Except
      as set forth on Schedule
      6(b)
      attached
      hereto, neither the Company nor any of its security holders (other than the
      Holders in such capacity pursuant hereto) may include securities of the Company
      in any Registration Statements other than the Registrable Securities. The
      Company shall not file any other registration statements until all Registrable
      Securities are registered pursuant to a Registration Statement that is declared
      effective by the Commission, provided that this Section 6(b) shall not prohibit
      the Company from filing amendments to registration statements filed prior to
      the
      date of this Agreement.

    

    (c) Compliance.
      Each
      Holder covenants and agrees that it will comply with the prospectus delivery
      requirements of the Securities Act as applicable to it in connection with sales
      of Registrable Securities pursuant to a Registration Statement.

    

    (d) Discontinued
      Disposition.
      By its
      acquisition of Registrable Securities, each Holder agrees that, upon receipt
      of
      a notice from the Company of the occurrence of any event of the kind described
      in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue
      disposition of such Registrable Securities under a Registration Statement until
      it is advised in writing (the “Advice”)
      by the
      Company that the use of the applicable Prospectus (as it may have been
      supplemented or amended) may be resumed. The Company will use its best efforts
      to ensure that the use of the Prospectus may be resumed as promptly as is
      practicable. The Company agrees and acknowledges that any periods during which
      the Holder is required to discontinue the disposition of the Registrable
      Securities hereunder shall be subject to the provisions of Section
      2(b).

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    (e) Piggy-Back
      Registrations.
      If, at
      any time during the Effectiveness Period, there is not an effective Registration
      Statement covering all of the Registrable Securities and the Company shall
      determine to prepare and file with the Commission a registration statement
      relating to an offering for its own account or the account of others under
      the
      Securities Act of any of its equity securities, other than on Form S-4 or Form
      S-8 (each as promulgated under the Securities Act) or their then equivalents
      relating to equity securities to be issued solely in connection with any
      acquisition of any entity or business or equity securities issuable in
      connection with the Company’s stock option or other employee benefit plans, then
      the Company shall deliver to each Holder a written notice of such determination
      and, if within fifteen days after the date of the delivery of such notice,
      any
      such Holder shall so request in writing, the Company shall include in such
      registration statement all or any part of such Registrable Securities such
      Holder requests to be registered; provided,
      however,
      that
      the Company shall not be required to register any Registrable Securities
      pursuant to this Section 6(e) that are eligible for resale pursuant to Rule
      144(k) promulgated by the Commission pursuant to the Securities Act or that
      are
      the subject of a then effective Registration Statement.

    

    (f) Amendments
      and Waivers.
      The
      provisions of this Agreement, including the provisions of this sentence, may
      not
      be amended, modified or supplemented, and waivers or consents to departures
      from
      the provisions hereof may not be given, unless the same shall be in writing
      and
      signed by the Company and the Holders of 75% of the then outstanding Registrable
      Securities (including, for this purpose any Registrable Securities issuable
      upon
      exercise or conversion of any Security). If a Registration Statement does not
      register all of the Registrable Securities pursuant to a waiver or amendment
      done in compliance with the previous sentence, then the number of Registrable
      Securities to be registered for each Holder shall be reduced pro rata among
      all
      Holders and each Holder shall have the right to designate which of its
      Registrable Securities shall be omitted from such Registration Statement.
      Notwithstanding the foregoing, a waiver or consent to depart from the provisions
      hereof with respect to a matter that relates exclusively to the rights of a
      Holder or some Holders and that does not directly or indirectly affect the
      rights of other Holders may be given by such Holder or Holders of all of the
      Registrable Securities to which such waiver or consent relates; provided,
      however,
      that
      the provisions of this sentence may not be amended, modified, or supplemented
      except in accordance with the provisions of the first sentence of this Section
      6(f). 

    

    (g) Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be delivered as set forth in the Purchase Agreement.
      

    

    (h) Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      permitted assigns of each of the parties and shall inure to the benefit of
      each
      Holder. The Company may not assign (except by merger) its rights or obligations
      hereunder without the prior written consent of all of the Holders of the then
      outstanding Registrable Securities. Each Holder may assign their respective
      rights hereunder in the manner and to the Persons as permitted under the
      Purchase Agreement.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    (i) No
      Inconsistent Agreements.
      Neither
      the Company nor any of its Subsidiaries has entered, as of the date hereof,
      nor
      shall the Company or any of its Subsidiaries, on or after the date of this
      Agreement, enter into any agreement with respect to its securities, that would
      have the effect of impairing the rights granted to the Holders in this Agreement
      or otherwise conflicts with the provisions hereof. Except as set forth on
Schedule
      6(i),
      neither
      the Company nor any of its Subsidiaries has previously entered into any
      agreement granting any registration rights with respect to any of its securities
      to any Person that have not been satisfied in full.

    

    (j) Execution
      and Counterparts.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together 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, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission or by e-mail delivery of a “.pdf” format data file, such signature
      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
      facsimile or “.pdf” signature page were an original thereof.

    

    (k) Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be determined in accordance with the provisions of
      the
      Purchase Agreement.

    

    (l) Cumulative
      Remedies.
      The
      remedies provided herein are cumulative and not exclusive of any other remedies
      provided by law.

    

    (m) Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their commercially reasonable
      efforts to find and employ an alternative means to achieve the same or
      substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

    

    (n) Headings.
      The
      headings in this Agreement are for convenience only, do not constitute a part
      of
      the Agreement and shall not be deemed to limit or affect any of the provisions
      hereof.

    

    (o) Independent
      Nature of Holders’ Obligations and Rights.
      The
      obligations of each Holder hereunder are several and not joint with the
      obligations of any other Holder hereunder, and no Holder shall be responsible
      in
      any way for the performance of the obligations of any other Holder hereunder.
      Nothing contained herein or in any other agreement or document delivered at
      any
      closing, and no action taken by any Holder pursuant hereto or thereto, shall
      be
      deemed to constitute the Holders as a partnership, an association, a joint
      venture or any other kind of entity, or create a presumption that the Holders
      are in any way acting in concert with respect to such obligations or the
      transactions contemplated by this Agreement. Each Holder shall be entitled
      to
      protect and enforce its rights, including without limitation the rights arising
      out of this Agreement, and it shall not be necessary for any other Holder to
      be
      joined as an additional party in any proceeding for such purpose.

    

    ********************

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
      as
      of the date first written above.

    

    
      	NUTRITION
              21, INC.
	 
	
              By:

            	 
	 	
              Name:

            
	 	
              Title:

            

    

     

    

    [SIGNATURE
      PAGE OF HOLDERS FOLLOWS]

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    [SIGNATURE
      PAGE OF HOLDERS TO NXXI RRA]

    

     

    Name
      of
      Holder: __________________________

    

    Signature
      of Authorized Signatory of Holder:
      __________________________

    

    Name
      of
      Authorized Signatory: _________________________

    

    Title
      of
      Authorized Signatory: __________________________

    

    

    [SIGNATURE
      PAGES CONTINUE]

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    Annex
      A

    

    Plan
      of Distribution

    

    Each
      Selling Stockholder (the “Selling
      Stockholders”)
      of the
      common stock and any of their pledgees, assignees and successors-in-interest
      may, from time to time, sell any or all of their shares of common stock on
      the
      Nasdaq Capital Market or any other stock exchange, market or trading facility
      on
      which the shares are traded or in private transactions. These sales may be
      at
      fixed or negotiated prices. A Selling Stockholder may use any one or more of
      the
      following methods when selling shares:

     

    
      	 	
              ·

            	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            

    

     

    
      	 	
              ·

            	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            

    

     

    
      	 	
              ·

            	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            

    

     

    
      	 	
              ·

            	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            

    

     

    
      	 	
              ·

            	
              privately
                negotiated transactions;

            

    

     

    
      	 	
              ·

            	
              settlement
                of short sales entered into after the effective date of the registration
                statement of which this prospectus is a part;

            

    

     

    
      	 	
              ·

            	
              broker-dealers
                may agree with the Selling Stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            

    

     

    
      	 	
              ·

            	
              through
                the writing or settlement of options or other hedging transactions,
                whether through an options exchange or
                otherwise;

            

    

     

    
      	 	
              ·

            	
              a
                combination of any such methods of sale;
                or

            

    

     

    
      	 	
              ·

            	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act of 1933, as amended (the “Securities
      Act”),
      if
      available, rather than under this prospectus.

     

    Broker-dealers
      engaged by the Selling Stockholders may arrange for other brokers-dealers to
      participate in sales. Broker-dealers may receive commissions or discounts from
      the Selling Stockholders (or, if any broker-dealer acts as agent for the
      purchaser of shares, from the purchaser) in amounts to be negotiated, but,
      except as set forth in a supplement to this Prospectus, in the case of an agency
      transaction not in excess of a customary brokerage commission in compliance
      with
      FINRA NASD Rule 2440; and in the case of a principal transaction a markup or
      markdown in compliance with NASD IM-2440. 

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    In
      connection with the sale of the common stock or interests therein, the Selling
      Stockholders may enter into hedging transactions with broker-dealers or other
      financial institutions, which may in turn engage in short sales of the common
      stock in the course of hedging the positions they assume. The Selling
      Stockholders may also sell shares of the common stock short and deliver these
      securities to close out their short positions, or loan or pledge the common
      stock to broker-dealers that in turn may sell these securities. The Selling
      Stockholders may also enter into option or other transactions with
      broker-dealers or other financial institutions or the creation of one or more
      derivative securities which require the delivery to such broker-dealer or other
      financial institution of shares offered by this prospectus, which shares such
      broker-dealer or other financial institution may resell pursuant to this
      prospectus (as supplemented or amended to reflect such
      transaction).

     

    The
      Selling Stockholders and any broker-dealers or agents that are involved in
      selling the shares may be deemed to be “underwriters” within the meaning of the
      Securities Act in connection with such sales. In such event, any commissions
      received by such broker-dealers or agents and any profit on the resale of the
      shares purchased by them may be deemed to be underwriting commissions or
      discounts under the Securities Act. Each Selling Stockholder has informed the
      Company that it does not have any written or oral agreement or understanding,
      directly or indirectly, with any person to distribute the Common Stock. In
      no
      event shall any broker-dealer receive fees, commissions and markups which,
      in
      the aggregate, would exceed eight percent (8%).

     

    The
      Company is required to pay certain fees and expenses incurred by the Company
      incident to the registration of the shares. The Company has agreed to indemnify
      the Selling Stockholders against certain losses, claims, damages and
      liabilities, including liabilities under the Securities Act. 

     

    Because
      Selling Stockholders may be deemed to be “underwriters” within the meaning of
      the Securities Act, they will be subject to the prospectus delivery requirements
      of the Securities Act including Rule 172 thereunder. In addition, any securities
      covered by this prospectus which qualify for sale pursuant to Rule 144 under
      the
      Securities Act may be sold under Rule 144 rather than under this prospectus.
      There is no underwriter or coordinating broker acting in connection with the
      proposed sale of the resale shares by the Selling Stockholders.

     

    We
      agreed
      to keep this prospectus effective until the earlier of (i) the date on which
      the
      shares may be resold by the Selling Stockholders without registration and
      without regard to any volume limitations by reason of Rule 144(k) under the
      Securities Act or any other rule of similar effect or (ii) all of the shares
      have been sold pursuant to this prospectus or Rule 144 under the Securities
      Act
      or any other rule of similar effect. The resale shares will be sold only through
      registered or licensed brokers or dealers if required under applicable state
      securities laws. In addition, in certain states, the resale shares may not
      be
      sold unless they have been registered or qualified for sale in the applicable
      state or an exemption from the registration or qualification requirement is
      available and is complied with.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    Under
      applicable rules and regulations under the Exchange Act, any person engaged
      in
      the distribution of the resale shares may not simultaneously engage in market
      making activities with respect to the common stock for the applicable restricted
      period, as defined in Regulation M, prior to the commencement of the
      distribution. In addition, the Selling Stockholders will be subject to
      applicable provisions of the Exchange Act and the rules and regulations
      thereunder, including Regulation M, which may limit the timing of purchases
      and
      sales of shares of the common stock by the Selling Stockholders or any other
      person. We will make copies of this prospectus available to the Selling
      Stockholders and have informed them of the need to deliver a copy of this
      prospectus to each purchaser at or prior to the time of the sale (including
      by
      compliance with Rule 172 under the Securities Act).

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    Annex
      B

     

    NUTRITION
      21, INC.

     

    Selling
      Securityholder Notice and Questionnaire

     

    The
      undersigned beneficial owner of common stock (the “Registrable
      Securities”)
      of
      Nutrition 21, Inc., a New York corporation (the “Company”),
      understands that the Company has filed or intends to file with the Securities
      and Exchange Commission (the “Commission”)
      a
      registration statement (the “Registration
      Statement”)
      for
      the registration and resale under Rule 415 of the Securities Act of 1933, as
      amended (the “Securities
      Act”),
      of
      the Registrable Securities, in accordance with the terms of the Registration
      Rights Agreement (the “Registration
      Rights Agreement”)
      to
      which this document is annexed. A copy of the Registration Rights Agreement
      is
      available from the Company upon request at the address set forth below. All
      capitalized terms not otherwise defined herein shall have the meanings ascribed
      thereto in the Registration Rights Agreement.

     

    Certain
      legal consequences arise from being named as a selling securityholder in the
      Registration Statement and the related prospectus. Accordingly, holders and
      beneficial owners of Registrable Securities are advised to consult their own
      securities law counsel regarding the consequences of being named or not being
      named as a selling securityholder in the Registration Statement and the related
      prospectus.

     

    NOTICE

     

    The
      undersigned beneficial owner (the “Selling
      Securityholder”)
      of
      Registrable Securities hereby elects to include the Registrable Securities
      owned
      by it in the Registration Statement.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    The
      undersigned hereby provides the following information to the Company and
      represents and warrants that such information is accurate:

     

    QUESTIONNAIRE

     

    1. Name.

     

    
      	 	
              (a) 

            	
              Full
                Legal Name of Selling Securityholder 

            
	 	 	 
	 	 	 

    

     

    
      	 	
              (b) 

            	
              Full
                Legal Name of Registered Holder (if not the same as (a) above) through
                which Registrable Securities are held: 

            
	 	 	 
	 	 	 

    

     

    
      	 	
              (c)
 	
              Full
                Legal Name of Natural Control Person (which means a natural person
                who
                directly or indirectly alone or with others has power to vote or
                dispose
                of the securities covered by this Questionnaire): 

            
	 	 	 
	 	 	 

    

     

    2.
      Address for Notices to Selling Securityholder:

     

    
      	 
	 
	 
	Telephone: 	
               

            
	Fax: 	
               

            
	Contact
              Person: 	
               

            

    

    

    3.
      Broker-Dealer Status:

     

    
      	 	
              (a)

            	
              Are
                you a broker-dealer?

            

    

     

    Yes        No
      

     

    
      	 	
              (b)

            	
              If
                “yes” to Section 3(a), did you receive your Registrable Securities as
                compensation for investment banking services to the
                Company?

            

    

     

    Yes        No
      

     

    
      	 	
              Note:

            	
              If
                “no” to Section 3(b), the Commission’s staff has indicated that you should
                be identified as an underwriter in the Registration
                Statement.

            

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (c)

            	
              Are
                you an affiliate of a
                broker-dealer?

            

    

     

    Yes        No
      

     

    
      	 	
              (d)

            	
              If
                you are an affiliate of a broker-dealer, do you certify that you
                purchased
                the Registrable Securities in the ordinary course of business, and
                at the
                time of the purchase of the Registrable Securities to be resold,
                you had
                no agreements or understandings, directly or indirectly, with any
                person
                to distribute the Registrable
                Securities?

            

    

     

    Yes        No
      

     

    
      	 	
              Note:

            	
              If
                “no” to Section 3(d), the Commission’s staff has indicated that you should
                be identified as an underwriter in the Registration
                Statement.

            

    

     

    4.
      Beneficial Ownership of Securities of the Company Owned by the Selling
      Securityholder.

     

    Except
      as set forth below in this Item 4, the undersigned is not the beneficial or
      registered owner of any securities of the Company other than the securities
      issuable pursuant to the Purchase Agreement.

     

    
      	 	
              (a) 

            	
              Type
                and Amount of other securities beneficially owned by the Selling
                Securityholder: 

            
	 	 	 
	 	 	 
	 	 	 

    

    

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    5.
      Relationships with the Company:

     

    Except
      as set forth below, neither the undersigned nor any of its affiliates, officers,
      directors or principal equity holders (owners of 5% of more of the equity
      securities of the undersigned) has held any position or office or has had any
      other material relationship with the Company (or its predecessors or affiliates)
      during the past three years.

     

    
      	 	State
              any exceptions here: 
	 	 
	 	 
	 	 

    

     

    The
      undersigned agrees to promptly notify the Company of any inaccuracies or changes
      in the information provided herein that may occur subsequent to the date hereof
      at any time while the Registration Statement remains effective.

     

    By
      signing below, the undersigned consents to the disclosure of the information
      contained herein in its answers to Items 1 through 5 and the inclusion of such
      information in the Registration Statement and the related prospectus
and
      any
      amendments or supplements thereto.
      The
      undersigned understands that such information will be relied upon by the Company
      in connection with the preparation or amendment of the Registration Statement
      and the related prospectus.

     

    IN
      WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
      and Questionnaire to be executed and delivered either in person or by its duly
      authorized agent.

     

    
      	
              Date:                             

            	 	
              Beneficial
                Owner:                       

            
	 	 	 
	
               

            	 	
              By:                                

            
	
               

            	 	
              Name: 

            
	
               

            	 	
              Title: 

            

    

    

    PLEASE
      FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
      THE ORIGINAL BY OVERNIGHT MAIL, TO:

     

    
      
        
        

      

      
        24

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