EXHIBIT 10.38.6

NUTRACEA
2005 EQUITY INCENTIVE PLAN
DIRECTOR STOCK OPTION AGREEMENT
(For Non-Employee Directors)
 
This Director Stock Option Agreement (this “Agreement”) is made and entered into
as of the date of grant set forth below (the “Date of Grant”) by and between
NutraCea, a California corporation (the “Company”), and the participant named
below (“Participant”). Capitalized terms not defined herein shall have the
meaning ascribed to them in the Company’s 2005 Equity Incentive Plan, as amended
(the “2005 Plan”).
 
Participant:
Social Security Number:
Participant’s Address:
 
Total Option Shares:
Exercise Price Per Share:
Date of Grant:
Vesting Start Date:
Expiration Date:
 
1.    Grant of Option.  The Company hereby grants to Participant an option (this
“Option”) to purchase up to the total number of shares of Common Stock of the
Company set forth above (collectively, the “Shares”) at the Exercise Price Per
Share set forth above (the “Exercise Price”), subject to all of the terms and
conditions of this Agreement and the 2005 Plan, including without limitation
Section 5.11 of the 2005 Plan. This Option is granted pursuant to Section 5.11
of the 2005 Plan and is not intended to qualify as an “incentive stock option”
(“ISO”) within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the “Code”). Capitalized terms not defined in this Agreement will
have the meanings given to them in the 2005 Plan.

2.    Vesting; Exercise Period.

2.1 Vesting of Right to Exercise Option.   Subject to the terms and conditions
of the 2005 Plan and this Grant, and so long as the Optionee continuously
remains a member of the Board of Directors of the Company (a “Board Member”),
this Option shall vest and become exercisable as to one-twelfth (1/12) of the
Shares monthly following the Date of Grant.

2.2  Expiration.  This Option shall expire on the Expiration Date set forth
above and must be exercised, if at all, on or before the earlier of the
Expiration Date or the date on which this Option is earlier terminated in
accordance with the provisions of Section 3.   
 
3.    Termination.

3.1  Termination.  The Option shall cease to vest if the Participant ceases to
be a Board Member (the “Termination Date”). If Participant is terminated for any
reason, then this Option, to the extent (and only to the extent) that it would
have been exercisable by Participant on the Termination Date, may be exercised
by Participant (or the Participant’s legal representative) within ninety (90)
days after the Termination Date, but in no event later than the Expiration Date.

3.2 No Right to Remain a Director.  Nothing in the 2005 Plan or this Agreement
shall confer on Participant any right to remain a Board Member or limit in any
way the right of the Company to terminate Participant’s relationship with the
Company at any time.

 
 

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4.    Manner of Exercise.

4.1  Stock Option Exercise Agreement.  To exercise this Option, Participant (or
in the case of exercise after Participant’s death, Participant’s executor,
administrator, heir, legatee or authorized assignee, as the case may be) must
deliver to the Company an executed stock option exercise agreement in such form
as may be approved by the Company from time to time (the “Exercise Agreement”),
which shall set forth, inter alia, Participant’s election to exercise this
Option, the number of Shares being purchased, any restrictions imposed on the
Shares and any representations, warranties and agreements regarding
Participant’s investment intent and access to information as may be required by
the Company to comply with applicable securities laws. If someone other than
Participant exercises this Option, then such person must submit documentation
reasonably acceptable to the Company that such person has the right to exercise
this Option.

4.2  Limitations on Exercise.  This Option may not be exercised unless such
exercise is in compliance with all applicable federal and state securities laws,
as they are in effect on the date of exercise. This Option may not be exercised
as to fewer than 100 Shares unless it is exercised as to all Shares as to which
this Option is then exercisable.
 
4.3  Payment.  The Exercise Agreement shall be accompanied by full payment of
the Exercise Price for the Shares being purchased in cash (by check), or, if the
Company in its discretion agrees in writing and where permitted by law:

(a) by cancellation of indebtedness of the Company to the Participant;

(b) by waiver of compensation due or accrued to Participant for services
rendered;

(c) provided that a public market for the Company’s stock exists: (1) through a
“same day sale” commitment from Participant and an NASD Dealer whereby
Participant irrevocably elects to exercise this Option and to sell a portion of
the Shares so purchased to pay for the Exercise Price and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to forward the exercise
price directly to the Company; or (2) through a “margin” commitment from the
Participant and a NASD Dealer whereby the Participant irrevocably elects to
exercise this Option and to pledge the Shares so purchased to the NASD Dealer in
a margin account as security for a loan from the NASD Dealer in the amount of
the exercise price, and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the exercise price directly to the Company; or

(d) by any combination of the foregoing.
 
4.4  Tax Withholding.  Prior to the issuance of the Shares upon exercise of this
Option, Participant must pay or provide for any applicable federal or state
withholding obligations of the Company. If the Committee permits, Participant
may provide for payment of withholding taxes upon exercise of this Option by
requesting that the Company retain Shares with a Fair Market Value equal to the
minimum amount of taxes required to be withheld. In such case, the Company shall
issue the net number of Shares to the Participant by deducting the Shares
retained from the Shares issuable upon exercise.

4.5  Issuance of Shares.  Provided that the Exercise Agreement and payment are
in form and substance satisfactory to counsel for the Company, the Company shall
issue the Shares registered in the name of Participant, Participant’s authorized
assignee, or Participant’s legal representative, and shall deliver certificates
representing the Shares with the appropriate legends affixed thereto.
 
5.    Compliance with Laws and Regulations.  The exercise of this Option and the
issuance and transfer of Shares shall be subject to compliance by the Company
and Participant with all applicable requirements of federal and state securities
laws and with all applicable requirements of any stock exchange on which the
Company’s Common Stock may be listed at the time of such issuance or transfer.
Participant understands that the Company is under no obligation to register or
qualify the Shares with the Securities and Exchange Commission, any state
securities commission or any stock exchange to effect such compliance.
 
6.    Non-transferability of Option.  This Option may not be transferred or
assigned in any manner other than by will or by the laws of descent and
distribution and may be exercised during the lifetime of Participant only by
Participant. The terms of this Option shall be binding upon the executors,
administrators, successors and assigns of Participant.
 
 
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7.    Tax Consequences.  Set forth below is a brief summary as of the Date of
Grant of some of the federal tax consequences of exercise of this Option and
disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX
LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. PARTICIPANT SHOULD CONSULT A TAX
ADVISOR BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

7.1.   Exercise of Nonqualified Stock Option.  There may be a regular federal
income tax liability upon the exercise of this Option. Participant will be
treated as having received compensation income (taxable at ordinary income tax
rates) equal to the excess, if any, of the fair market value of the Shares on
the date of exercise over the Exercise Price. The Company may be required to
withhold from Participant’s compensation or collect from Participant and pay to
the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.

7.2. Disposition of Shares. If the Shares are held for more than twelve (12)
months after the date of the transfer of the Shares pursuant to the exercise of
this Option, any gain realized on disposition of the Shares will be treated as
long-term capital gain.
 
8.    Privileges of Stock Ownership.  Participant shall not have any of the
rights of a stockholder with respect to any Shares until Participant exercises
this Option and pays the Exercise Price.
 
9.    Interpretation.  Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.
 
10.    Entire Agreement.  The 2005 Plan is incorporated herein by reference.
This Agreement and the 2005 Plan and the Exercise Agreement constitute the
entire agreement and understanding of the parties hereto with respect to the
subject matter hereof and supersede all prior understandings and agreements with
respect to such subject matter.
 
11.    Notices.  Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal delivery;
three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by telecopier with confirmation of successful transmission.
 
12.    Successors and Assigns.  T he Company may assign any of its rights under
this Agreement. This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of the Company. Subject to the restrictions on
transfer set forth herein, this Agreement shall be binding upon Participant and
Participant’s heirs, executors, administrators, legal representatives,
successors and assigns.
 
13.    Governing Law.  This Agreement shall be governed by and construed in
accordance with the internal laws of the State of California, without regard to
that body of law pertaining to choice of law or conflict of law.

14.    Acceptance.  Participant hereby acknowledges receipt of a copy of the
2005 Plan and this Agreement. Participant has read and understands the terms and
provisions thereof, and accepts this Option subject to all the terms and
conditions of the 2005 Plan and this Agreement. Participant acknowledges that
there may be adverse tax consequences upon exercise of this Option or
disposition of the Shares and that the Company has advised Participant to
consult a tax advisor prior to such exercise or disposition.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized representative and Participant has executed this Agreement as of
the Date of Grant.
 
NUTRACEA
 
PARTICIPANT
 
By:
 
______________________________
 
 
 
______________________________
(Signature)
     
______________________________
(Please print name)
 
 
 
     
__________________________
(Please print name)
     
______________________________
(Please print title)
 
 
 
 

 
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