Exhibit 10.1


    
      

    


    EXHIBIT
      10.1

    


    W-1002006-4

    


    THE
      WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
      EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
      AS
      AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO
      AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
      PURSUANT TO RULES 701 AND 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH
      ACT
      RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE
      HOLDER TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO
      COUNSEL FOR THE ISSUER, STATING THAT~ AN EXEMPTION FROM REGISTRATION UNDER
      SUCH
      ACT IS A V AILABLE. THE HOLDER HEREOF MAY NOT ENGAGE IN HEDGING TRANSACTIONS
      WITH REGARD TO SUCH SECURITIES UNLESS IN COMPLIANCE WITH THE ACT. THE TRANSFER
      OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE
      IS RESTRICTED IN ACCORDANCE HEREWITH.

    


    Warrant
      to Purchase up to 100,000

    Shares
      of
      Common Stock of NutraCea

    


    WHEREAS,
      NutraCea, a California corporation (the "Company"), offered to Steven Saunders
      (the "Investor") the option to purchase up to one hundred thousand (100,000)
      Shares of Common Stock in consideration for consulting services related to
      engineering and construction of the expansion of the Dillon Montana Facility
      and
      the Construction of the new Stabilized Rice Bran Plan in Louisiana,
      and

    


    WHEREAS,
      this Warrant shall represent the Warrant ("Warrant") to be granted to Steven
      Saunders pursuant to the terms of its option to purchase.

    


    NOW,
      THEREFORE, the Company and Steven Saunders agree as follows:

    


    
      	 	
              1.

            	
              Grant.

            


    

    


    On
      the
      terms and subject to the conditions set forth herein, Investor is hereby granted
      the right to purchase, at any time during the Exercise Period (as hereinafter
      defmed), up to one hundred thousand (100,000) Common Stock (the "Warrant
      Shares") of the Company at the Exercise Price (as defined below and as subject
      to adjustment as provided in Article 5 hereof). The effective date ofthis grant
      is February 27, 2006.

    


    
      	 	
              2.

            	
              Exercise
                of Warrant.

            


    

    


    (a)
      Exercise Period. This Warrant is exercisable at any time during the five (5)
      year period commencing on the date hereof (the "Exercise Period").

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    


    (b)
      Expiration Date: March 3, 2011.

    


    (c)
      Cash
      Exercise. The Warrant is exercisable at a price of per Warrant Share equal
      to
      the Exercise Price (as hereinafter defmed) payable in cash or by check to the
      order of the Company, or any combination of cash or check, subject to adjustment
      as provided in Article 5 hereof. Upon surrender of this Warrant with the annexed
      Form of Election to Purchase duly executed, together with payment of the
      Exercise Price for the Warrant Shares purchased, at the Company's principal
      offices, Investor (or other registered holder of this Warrant (the "Holder")
      shall be entitled to receive a certificate or certificates for the Warrant
      Shares so purchased. The purchase rights represented by this Warrant are
      exercisable at the option of the Holder, in whole or in part (but not as to
      fractional Warrant Shares). In the case of'the purchase of less than all the
      Warrant Shares purchasable under this Warrant, the Company shall cancel said
      Warrant upon the surrender thereof and shall execute and deliver a new Warrant
      of like tenor for the balance of the Warrant Shares purchasable
      thereunder.

    


    (d)
      Issuance of Certificates. Upon the exercise of this Warrant pursuant to Section
      2.b above, the issuance of certificates representing the Warrant Shares
      purchased shall be made forthwith without charge to the Holder thereof
      including, without limitation, any tax which may be payable in respect of the
      issuance thereof, and such certificates shall (subject to the provisions of
      Article 3 hereof) be issued in the name of, or in such names as may be directed
      by, the Holder thereof; provided, however, that the Company shall not be
      required to pay any tax which may be payable in respect of any transfer involved
      in the issuance and delivery of any such certificates in a name other than
      that
      of the Holder and the Company 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 Company the amount of such tax or shall have
      established to the satisfaction of the Company that such tax has been
      paid.

    


    (e)
      Upon
      exercise, in whole or in part, of this Warrant, certificates representing the
      Warrant Shares shall bear a legend substantially similar to the
      following:

    


    "THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MA Y NOT BE OFFERED OR
      SOLD
      EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (II)
      TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER THE ACT (OR ANY SIMILAR
      RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (III) UPON
      THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY
      SATISFACTORY TO THE ISSUER, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER
      SUCH ACT IS AVAILABLE."

    


    
      	 	
              3.

            	
              Securities
                Act Restrictions.

            


    

    


    Investor,
      by his acceptance hereof, covenants and agrees that this Warrant is being
      acquired as an investment and not with a view to the distribution thereof,
      and
      that neither this Warrant nor, if exercised, any Warrant Shares, may be offered
      or sold except (i) pursuant to an effective registration statement under the
      Act, (ii) to the extent applicable, pursuant to Rule 144 under the Act (or
      any
      similar rule under such Act relating to the disposition of securities), or
      (iii)
      upon the delivery by the holder to the Company of an opinion of counsel,
      reasonably satisfactory to the issuer, stating that an exemption from
      registration under such Act is available.


    
      
        
        

      

      
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              4.

            	
              Exercise
                Price and Adjusted Exercise Price.

            


    

    


    Subject
      to adjustment as set forth in Section 5, the exercise price of the Warrant
      Shares (the "Exercise Price") shall be equal to $1.00
      per
      Warrant Share.

    


    
      	 	
              5.

            	
              Adjustments
                of Exercise Price and Number of Warrant
                Shares.

            


    

    


    (a)
      Stock
      Split, Stock Dividend, Subdivision and Combination. In case the Company shall
      at
      any time subdivide or combine the outstanding shares of Common Stock (including
      by way of a stock dividend), the Exercise Price shall forthwith be
      proportionately decreased in the case of subdivision or increased in the case
      of
      combination. Upon each

    adjustment
      of the Exercise Price pursuant to the provisions of this Section 5. 1, the
      number of

    Warrant
      Shares issuable upon the exercise of this Warrant shall be adjusted to the
      nearest full Warrant Share by multiplying a number equal to the Exercise Price
      in effect immediately prior to such adjustment by the number of Warrant Shares
      issuable upon exercise of the Warrant immediately prior to such adjustment
      and
      dividing the product so obtained by the adjusted Exercise Price.

    


    (b)
      Reclassification, Consolidation, Merger, etc. In case of any reclassification
      or
      change of the outstanding shares of Common Stock (other than a change in par
      value to no par value, or from no par value to par value, or as a result of
      a
      subdivision or combination), or in the case of any consolidation of the Company
      with, or merger of the Company into, another corporation (other than a
      consolidation or merger in which the Company is the surviving corporation and
      which does not result in any reclassification or change of the outstanding
      shares of Common Stock, except a change as a result of a subdivision or
      combination of such shares or a change in par value, as aforesaid), or in the
      case of a sale or conveyance to another corporation of the property of the
      Company as an entirety, the Holder shall thereafter have the right to purchase
      the kind and number of shares of stock and other securities and property
      receivable upon such reclassification, change, consolidation, merger, sale
      or
      conveyance as if the Holder

    were
      the
      owners of the Warrant Shares underlying the Warrant at a price equal to the
      product of (i) the number of shares of Common Stock issuable upon conversion
      of
      the Warrant Shares and (ii) the Exercise Price prior to the record date for
      such
      reclassification, change, consolidation, merger, sale or conveyance as if such
      Holder had exercised the Warrant.

    


    (c)
      Redemption of Warrant; Redemption of Warrant Shares. Notwithstanding anything
      to
      the contrary contained in the Warrant or elsewhere, the Warrant cannot be
      redeemed by the Company under any circumstances.

    


    6.
      Exchange and Replacement of Warrant Certificates. This Warrant is exchangeable
      without expense, upon the surrender hereof by the registered Holder at the
      principal executive office of the Company, for a new Warrant Certificate of
      like
      tenor and date representing in the aggregate the right to purchase the same
      number of Warrant Shares in such denominations as shall be designated by the
      Holder thereof at the time of such surrender. Upon receipt by the Company of
      evidence reasonably satisfactory to it of the loss, theft, destruction or
      mutilation of the Warrant Certificate, and, in case of loss, theft or
      destruction, of indemnity or security reasonably satisfactory to it, and
      reimbursement to the Company of all reasonable expenses incidental thereto,
      and
      upon surrender and cancellation of the Warrant, if mutilated, the Company will
      make and deliver a new Warrant Certificate of like tenor, in lieu
      thereof.


    
      
        
        

      

      
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    7.
      Elimination of Fractional Interests. The Company shall not be required to issue
      certificates representing fractions of Warrant Shares upon the exercise of
      this
      Warrant, nor shall it be required to issue scrip or pay cash in lieu of
      fractional interests, it being the intent of the parties that all fractional
      interests shall be eliminated by rounding any fraction up to the nearest whole
      number of Warrant Shares.

    


    8.
      Reservation of Securities. The Company shall at all times reserve and keep
      available out of its authorized shares of Common Stock, solely for the purpose
      of issuance upon the exercise of the Warrant, such number of shares of Common
      Stock (or other securities) as shall be issuable upon such exercise. The Company
      covenants and agrees that, upon exercise of the Warrant and payment of the
      Exercise Price therefore, all shares of Common Stock issuable upon such exercise
      shall be duly and validly issued, fully paid, non-assessable and not subject
      to
      the preemptive rights of any shareholder.

    


    9.
      Notices to Warrant Holder. If, at any time prior to the expiration or exercise
      of this Warrant, any of the following events shall occur:

    


    (a)
      the
      Company shall take a record of the holders of its shares of Common Stock for
      the
      purpose of entitling them to receive a dividend or distribution payable
      otherwise than in cash, or a cash dividend or distribution payable otherwise
      than out of current or retained earnings, as indicated by the accounting
      treatment of such dividend or distribution on the books of the Company;
      or

    


    (b)
      the
      Company shall offer to all the holders of its Common Stock any additional shares
      of capital stock of the Company or securities convertible into or exchangeable
      for shares of capital stock of the Company, or any option, right or warrant
      to
      subscribe therefore; or

    


    (c)
      a
      dissolution, liquidation or winding up of the Company( other than in connection
      with a consolidation or merger) or a sale of all or substantially all of its
      property, assets and business as an entirety shall be proposed; then, in anyone
      or more of said events, the Company shall give written notice to the Holder
      of
      such event at least fifteen (15) days prior to the date fixed as a record date
      or the date of closing the transfer books for the determination of the
      shareholders entitled to such dividend, distribution, convertible or
      exchangeable securities or subscription rights, options or warrants, or entitled
      to vote on such proposed dissolution, liquidation, winding up or sale. Such
      notice shall specify such record date or the date of closing the transfer books,
      as the case may be. Failure to give such notice or any defect therein shall
      not
      affect the validity of any action taken in connection with the declaration
      or
      payment of any such dividend or distribution, or the issuance of any convertible
      or exchangeable securities or subscription rights, options or warrants, or
      any
      proposed dissolution, liquidation, winding up or sale.


    
      
        
        

      

      
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    10.
      Notices. All notices, requests, consents and other communications hereunder
      shall be in writing and shall be deemed to have been duly made when delivered,
      or mailed by registered or certified mail, return receipt
      requested:

    


    (a)
      If to
      the registered Holder of the Warrant, to the address of such Holder as shown
      on
      the books of the Company; or

    


    (b)
      If to
      the Company, to the address set forth on the signature page of this Warrant
      or
      to such other address as the Company may designate by notice to the
      Holder.

    


    11.
      Successors. All the covenants and provisions of this Agreement by or for the
      benefit of the Company and the Holder inure to the benefit of their respective
      successors and assigns hereunder.

    


    12.
      Governing Law. This Warrant shall be deemed to be a contract made under the
      laws
      of the State of California and for all purposes shall be construed in accordance
      with the laws of said State.

    


    13.
      Counterparts. This Warrant may be executed in any number of counterparts and
      each of such counterparts shall for all purposes be deemed to be an original,
      and such counterparts shall together constitute but one and the same
      instrument.

    


    [SIGNATURE
      PAGE ON FOLLOWING PAGE]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be duly
      executed.

    


    


    Dated:
      February 27, 2006

    


    NutraCea

    


    By:
      /s/
      Bradley D. Edson

    Chief
      Executive Officer

    


    


    ACCEPTED
      AND AGREED TO:

    


    /s/
      Steven S. Saunders

    Director