Exhibit 10.11


    
      

    


    
      Exhibit
        10.11
EMPLOYMENT
      AGREEMENT

    


    THIS
      EMPLOYMENT AGREEMENT (this
      “Agreement”)
      is
      made and entered into as of the 10th
      day of
      December, 2004, by and between NutraCea,
      a
      California corporation (“Employer”),
      and
      Nana Patricia McPeak (“Employee”).

    


    W
      I T N E S S E T H:

    


    WHEREAS,
      the
      officers, managers and/or directors of Employer are of the opinion that Employee
      has education, experience and/or expertise which is of value to Employer and
      its
      owners, and

    


    WHEREAS,
      Employer and Employee desire to enter into this Employment Agreement, pursuant
      to which Employee shall continue to be employed by Employer, to set forth the
      respective rights, duties and obligations of the parties hereto.

    


    NOW
      THEREFORE,
      in
      consideration of the promises and covenants contained herein, and other good
      and
      valuable consideration, the receipt and sufficiency of which the parties hereto
      acknowledge, Employer and Employee agree as follows:

    


    1.    EMPLOYMENT. 
       Employer
      hereby agrees to continue to employ Employee and Employee hereby accepts such
      continued employment, upon the terms and conditions hereinafter set
      forth.

    


    2.    TERM.  
      For
      purposes of this Agreement, “Term”
shall
      mean the original term (as defined in Section
      2.1
      below)
      and the renewal term (as defined in Section
      2.2
      below),
      if applicable.

    


    2.1  Original
      Term.  
      The Term of this Agreement shall commence on December 10, 2004 and expire on
      December 31, 2007, unless sooner terminated pursuant to the terms and provisions
      herein stated.

    


    2.2  Renewal
      Term.  
      This Agreement shall automatically be extended for two additional one (1) year
      renewal terms unless either party gives written notice to terminate this
      Agreement at least one hundred eighty (180) days prior to the end of the
      preceding term.

    


    
      	 	
              3.

            	
              COMPENSATION.

            


    

    


    3.1  Salary.  
      Employer
      shall pay Employee a base annual salary of one hundred, fifty thousand dollars
      ($150,000) for the first and second year of employment, payable $12,500 per
      month. Effective December 1, 2006, Employee’s salary shall be increased to two
      hundred and fifty thousand dollars ($250,000), payable at a rate of $20,833
      per
      month for the third year of employment, and adjust upwards 10% annually
      thereafter. 

    


    
      
        
          
          

        

        
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    3.2  Stock
      Option Plan/Stock Purchase Plan.  
      Employee shall be eligible to participate in Company’s Stock Option Plan and
      Stock Purchase Plan as well as Executive Incentive Bonus Plans during the term
      of employment.

    


    3.3.  Warrants.  
      Employer shall issue to Employee Warrant Certificates to purchase 2,000,000
      common shares of the Company at an exercise price of $0.30 per share. The
      certificates shall be valid for ten years from the date of issue. The
      Certificates shall vest to Employee upon this Agreement being executed by all
      parties. A copy of the Warrant Agreement is attached as Addendum C.

    


    3.4.  Additional
      Bonus.  
      Employer shall pay Employee an additional bonus payable pursuant to Addendum
      A
      attached and incorporated herein by this reference.

    


    
      	 	
              4.

            	
              EMPLOYEE
                BENEFITS.

            


    

    


    4.1  General
      Benefits.  
      Employee shall be entitled to receive or participate in all benefit plans and
      programs of Employer currently existing or hereafter made available to
      executives or senior management of Employer, including but not limited to,
      eye
      care, dental and medical insurance, including coverage for dependents of
      Employee, pension and profit sharing plans, 401(k) plans, incentive savings
      plans, stock option plans, group life insurance, salary continuation plans,
      disability coverage and other fringe benefits.

    


    4.2  Business
      Expense.  
      Employee shall be provided with American Express and/or Visa/Master Card credit
      cards issued in the name of Employer, for purposes of paying business expenses,
      including without limitation, full business class fare for domestic travel
      of
      less than 3 hours duration within the United States, and First Class travel
      for
      domestic travel 3 hours or longer or all travel outside the Continental United
      States, entertainment, lodging and similar activities. Additionally, Employee
      shall be entitled to receive proper reimbursement for all reasonable
      out-of-pocket expenses incurred directly by Employee in performing Employee’s
      duties and obligations under this Agreement. Employer shall reimburse Employee
      for such expenses on a weekly basis, upon submission by Employee of appropriate
      receipts, vouchers or other documents in accordance with Employer’s policy.



    
      
        
        

      

      
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    4.3  Automobile
      Expenses.  
      Employer
      shall provide Employee with a monthly automobile allowance in the amount of
      $800.00 per month or at Employee’s election, shall provide an automobile of a
      type and model selected by Employee. Employer shall pay all gasoline,
      maintenance, registration and insurance costs for the automobile. As a condition
      of the use of the automobile, Employee is required to provide an enclosed,
      covered and lockable garage at Employee’s premises for the safe protection of
      this corporate asset.

    


    4.4  General
      Benefits.  
      Employee shall be entitled to receive or participate in all benefit plans and
      programs of Employer currently existing or hereafter made available to
      executives or senior management of Employer, including but not limited to,
      dental and medical insurance, including coverage for dependents of Employee,
      pension and profit sharing plans, 401(k) plans, incentive savings plans, stock
      option plans, group life insurance, salary continuation plans, disability
      coverage and other fringe benefits.

    


    4.5  Cellular
      Telephone.   
      Employer shall reimburse employee for the cost and use of Employee’s cellular
      telephones or shall provide Employee with the use of cellular phones of
      Employee’s choice. 

    


    4.6  Assistance.  
      Employer
      shall furnish Employee with an office, and personal assistant, together with
      a
      portable laptop computer and office equipment and such other facilities and
      services as determined by Employee and as are deemed by the Board of Directors
      of Employer to be suitable for Employee’s position and adequate for the
      performance of her duties and obligations under this Agreement. Employee to
      provide a home office similar to that provided at the Company’s headquarters.


    


    4.7  Vacation.  
      Employee shall be entitled during each twelve (12) month period during the
      Term
      of this Agreement to a vacation of four (4) weeks during which time Employee’s
      compensation will be paid in full. Unused days of vacation will be compensated
      in accordance with Employer’s policy as established by Employer from time to
      time. Employee may take the vacation periods at any time during the year as
      long
      as Employee schedules time off as to not create hardship on Employer. In
      addition, Employee shall have such other days off as shall be determined by
      Employer and shall be entitled to paid sick leave and paid holidays in
      accordance with Employer’s policy.


    
      
        
        

      

      
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    4.8  Laptop/Notebook
      Computer and Software.  
      Employer
      shall provide Employee with a top-quality, name-brand laptop or notebook
      computer (Sony, IBM, Toshiba, NEC, Compaq, etc.) and such other features,
      hardware (including a high-quality laser printer) and software as Employee
      may
      from time to time request for performance of her duties. Employer shall pay
      all
      costs related to the operation and maintenance of the computer and
      software.

    


    4.9  Private
      Office; Staff; Equipment; Location of Office and Headquarters;
      Relocation.  
      Employer
      shall provide Employee with a suitable office for her position at the Company,
      within the context of the space available from time to time. Employer shall
      provide a minimum of two (2) personal assistants (“Assistants”) to assist
      Employee in business and personal matters. Employer shall provide all office
      equipment reasonable required by Employee and Assistants. Employee shall not
      be
      required to relocate outside of El Dorado Hills, California. If, however,
      Employee agrees to a relocation outside of El Dorado Hills, California, then
      Employer shall pay all reasonable relocation costs of Employee, her spouse
      and
      her dependents, including without limitation all professional packing and moving
      costs, air travel, interim hotel arrangements (Hilton standard or better for
      up
      to three (3) months) and reasonable meal per diem, and vehicle shipment
      costs.

    


    4.10   
      Professional
      Association and Social Organizations.  
      Employer shall pay or reimburse Employee for all dues for continued membership
      in the AACC, AOCS and IFT organizations and any other professional organizations
      membership to which Employer and Employee agree would be beneficial to Employer.
      In the interest of business development and marketing, Employer shall reimburse
      Employee for the monthly fees of a social membership at a local country club
      to
      be mutually selected by Employer and Employee.

    


    
      	 	
              5.

            	
              DUTIES/SERVICE.

            


    

    


    5.1  Position.  
      Employee
      is employed as Chief Executive Officer and shall perform such services and
      duties as are defined in Addendum
      B,
      Job
      Description, attached hereto, and as are normally associated with such position,
      subject to the direction, supervision and rules and regulations of
      Employer.

    


    5.2  Place
      of Employment.  
      The
      permanent place of Employee’s employment and the performance of Employee’s
      duties will be at a location in the El Dorado Hills, California area. Employee
      agrees to make herself available for travel from time to time to other
      facilities of Employer’s outside of El Dorado Hills.


    
      
        
        

      

      
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    5.3  Extent
      of Services.  
      Employee shall at all times and to the best of her ability perform her duties
      and obligations under this Agreement in a reasonable manner consistent with
      the
      interests of Employer. Employer shall not alter Employee’s title, duties,
      obligations or responsibilities or transfer Employee outside of the El Dorado
      Hills area without Employee’s prior written consent, said consent to be at
      Employee’s sole discretion.

    


    5.3.1  It
      is
      understood and agreed that Employee’s employment is substantially fulltime and
      of a critical nature to the success of Employer. Employer acknowledges that
      Employee presently, or may in the future, serve on the Board of Directors of
      other companies and such action shall not be a breach of this section;
provided,
      however,
      that
      such companies do not compete with employer. 

    


    5.3.2  Additionally,
      Employer recognizes that Employee has, or may have in the future, non-passive
      equity positions in other companies, which do not compete with Employer.
      Employer recognizes that such equity positions may occasionally require some
      attention from Employee during normal business hours. However, Employee agrees
      that if such time is considered excessive by the Board of Directors, Employee
      shall be so advised and noticed by Employer and Employee shall be required
      to
      make appropriate adjustments to ensure her duties and obligations under this
      Agreement are fulfilled.

    


    6.   TERMINATION.
      The
      Term
      of this Agreement shall end upon its expiration pursuant to Section
      2
      hereof,
      provided that this Agreement shall terminate prior to such date: (a) upon the
      Employee’s resignation, death or permanent disability or incapacity; or (b) by
      Employer at any time for “Cause”
(as
      defined in Section
      6.4
      below)
      or without Cause.

    


    6.1    BY
      RESIGNATION.  
      If Employee resigns with “Good
      Reason”
(as
      defined below), this Agreement shall terminate but: (a) Employee shall receive
      the immediate payout of all salary through the end of the term of this
      agreement, but in no event less than an amount equal to the last twelve months
      of salary paid to Employee and (b) all of
      Employee’s “Options”
(as
      such term is defined in this Agreement) shall be deemed vested. For purposes
      of
      this Agreement, “Good
      Reason”
shall
      mean: (i) the assignment to Employee of duties inconsistent with the position
      and nature of Employee’s employment, the reduction of the duties of Employee
      which is inconsistent with the position and nature of Employee’s employment, or
      the change of Employee’s title indicating a change in the position and nature of
      Employee’s employment; (ii) a reduction in compensation and benefits of Employee
      without Employee’s written consent; (iii) the failure by Employer to obtain from
      any successor, an agreement to assume and perform this Agreement;
      (iv)
a
      corporate “Change
      In Control”
(as
      defined below). For purposes of this Agreement, “Change
      In Control”
shall
      mean (1) a merger or consolidation (except those detailed in Addendum A, section
      2,) in which securities possessing more than fifty percent (50%) of the total
      combined voting power of Employer’s outstanding securities are transferred to a
      person or persons different from the persons holding those securities
      immediately prior to such transaction in a transaction approved by the
      stockholders, or the sale, transfer, or other disposition of more than fifty
      percent (50%) of the total combined voting power of Employer’s outstanding
      securities to a person or persons different from the persons holding those
      securities immediately prior to such transaction; or (2) the sale, transfer
      or
      other disposition of all or substantially all of the Employer’s assets in
      complete liquidation or dissolution of Employer other than in connection with
      a
      transaction described in Section
      6.1(1)
      above.
      If Employee resigns without Good Reason, Employee shall be entitled to receive
      Employee’s Salary and Incentive Compensation only through the date of such
      resignation and Employee’s Options shall be deemed vested only through the date
      of such resignation.


    
      
        
        

      

      
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    6.2    BY
      REASON OF INCAPACITY OR DISABILITY.  
      If
      Employee becomes so incapacitated by reason of accident, illness, or other
      disability that Employee is unable to carry on substantially all of the normal
      duties and obligations of Employee under this Agreement for a continuous period
      of one-hundred-eighty (180) days (the “Incapacity
      Period”),
      this
      Agreement shall terminate but: (a) Employee shall continue to receive, through
      the end of the fiscal year, Incentive Compensation in accordance with the terms
      and conditions of this agreement (b) Employee shall receive, during the
      Incapacity Period and for the six (6) month period thereafter (the “Extended
      Period”),
      Employee’s Salary payable in periodic installments on Employer’s regular
      paydays, at the rate then in effect, reduced only by the amount of any
      payment(s) received by Employee pursuant to any disability insurance policy
      proceeds; and (c) Employee’s Options shall be deemed vested through the Extended
      Period. For
      purposes of the foregoing, Employee’s permanent disability or incapacity shall
      be determined in accordance with Employer’s disability insurance policy, if such
      a policy is then in effect, or if no such policy is then in effect, such
      permanent disability or incapacity shall be determined by Employer’s Board of
      Directors in its good faith judgment based upon Employee’s inability to perform
      normal and reasonable duties and obligations.


    
      
        
        

      

      
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    6.3    BY
      REASON OF DEATH.  
      If Employee dies during the Term of this Agreement, Employer shall: (a) pay
      to
      the estate of Employee, through the end of the fiscal year, Employee’s Incentive
      Compensation in accordance with the terms and conditions of this agreement,
      (b)
      pay to the estate of Employee, for a period of six (6) months beginning on
      the
      date of death (the “Extended
      Period”),
      Employee’s Salary payable in periodic installments on Employer’s regular
      paydays, at the rate then in effect; and (c) Employee’s Options shall be deemed
      vested through the date of the Extended Period. Other
      death benefits will be determined in accordance with the terms of Employer’s
      benefit plans and programs.

    


    6.4    FOR
      CAUSE.  
      If the Term of this Agreement is terminated by Employer for Cause: (a) Employee
      shall be entitled to receive Employee’s Salary and Incentive Compensation only
      through the date of termination; and (b) Any additionally issued Employee’s
      Options shall be deemed vested only through the date of such termination for
      Cause. However, if a dispute arises between Employer and Employee that is not
      resolved within sixty (60) days and neither party initiates arbitration
      proceedings pursuant to Section
      11.8.
      For
      purposes of this Agreement, “Cause”
shall
      mean: (i) the conviction by Employee of a felony, a crime involving moral
      turpitude causing material harm to Employer’s standing and reputation; or for
      fraud.

    


    


    6.5    WITHOUT
      CAUSE.  
      If, during the Term of this Agreement, Employer terminates the Employee’s
      employment without Cause: (a) Employee shall be entitled to receive, through
      the
      end of the Term of this Agreement, Incentive Compensation in accordance with
      the
      terms and conditions of this agreement, (b) An immediate acceleration of all
      remaining base salary owed to Employee through the end of the contract; but
      in
      no case an amount less than the previous 12 month’s of salary paid to Employee,
      and (c) all of
      Employee’s Options shall be deemed vested. 

    


    


    6.6    EFFECT
      OF TERMINATION ON UNUSED VACATION TIME.  
      Upon the termination of this Agreement for any reason whatsoever, Employee
      shall
      also have the right to receive any accrued but unused vacation time, and any
      benefits vested under the terms of any applicable benefit plans.

    


    6.7    AUTHORITY
      TO TERMINATE.  
      Termination of Employee by Employer, pursuant to the terms hereof, shall only
      occur by unanimous decision of the Board of Directors at a duly noticed and
      convened meeting of the Board of Directors of Employer.


    
      
        
        

      

      
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    6.8    Consulting
      Agreement.  
      Upon termination of this Agreement for any reason, Employer and Employee shall
      negotiate in good faith the terms of an agreement pursuant to which Employee
      shall act as a consultant to Employer.

    


    7.    NON-DISCLOSURE
      AND INVENTION AND COPYRIGHT ASSIGNMENT AGREEMENT.   Employee’s
      employment is subject to the requirement that Employee sign, observe and agree
      to be bound, both during and after Employee’s employment, by the provisions of
      Employer’s Non-Disclosure and Invention and Copyright Assignment Agreement.
      Employee further agrees to execute, deliver and perform, during the Term of
      Employee’s employment with Employer, any other reasonable confidentiality and
      non-disclosure agreements concerning Employer and any of its affiliates and
      its
      business and products, which Employer promulgates for other key employees and
      executives.

    


    It
      is
      understood and agreed that Employee is writing a number of books on rice bran
      and health issues, which Employer would like to see published. It is understood
      and agreed that Employee has the right to write such books and retain any
      proceeds therefrom and that the Copyright to any and all books written by
      Employee shall remain the exclusive property of Employee. 

    


    8.    RETURN
      OF EMPLOYER PROPERTY.  
      Employee agrees that upon any termination of her employment, Employee shall
      return to Employer within a reasonable time not to exceed two (2) weeks, any
      of
      Employer’s property in her possession or under her control.

    


    9.    RELATIONSHIP
      OF PARTIES.   
      The parties intend that this Agreement create an employee-employer relationship
      between the parties.

    


    10.    NOTICES.  
      All notices, required and demands and other communications hereunder must be
      in
      writing and shall be deemed to have been duly given when personally delivered
      or
      when placed in the United States Mail and forwarded by Registered or Certified
      Mail, Return Receipt Requested, postage prepaid, or when forwarded via reputable
      overnight carrier, addressed to the party to whom such notices is being given
      at
      the following address: 

    

      
        	 	
                As
                  to Employer:

              	
                Chairman,
                  Board of Directors

              


      

      NutraCea

      1261
        Hawks Flight Court,

      El
        Dorado
        Hills, CA 95762

    


    
      
        
        

      

      
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              As
                to Employee:

            	
              Nana
                Patricia McPeak

            


    

    100
      Rock
      Lane

    El
      Dorado
      Hills, CA 95762

     

    Address
      Change: Any
      party
      may change the address(es) at which notices to it or her, as the case may be,
      are to be sent by giving the notice of such change to the other parties in
      accordance with this Section
      10.

    


    11.  
INDEMNIFICATION.  
      The company shall maintain D&O liability coverage pursuant to which Employee
      shall be a covered insured. Employee shall receive indemnification in accordance
      with the Company’s By-laws in effect as of the date of this Agreement. Such
      indemnification shall be contractual in nature and shall remain in effect
      notwithstanding any future change to the Company’s Bylaws.

    


    To
      the extent not otherwise limited by the Company’s By-laws in effect as of the
      date of this Agreement, in the event that Employee is made a party or is
      threatened to be made a party to or is involved in any action, suit or
      proceeding (including those brought by or in the right of the Company) whether
      civil, criminal, administrative or investigative (“proceeding”), by reason of
      the fact that she is or was an officer, employee or agent of or is or was
      serving the Company or any subsidiary or the Company, or is or was serving
      at
      the request of the Company or another corporation, or of a partnership, joint
      venture, trust or other enterprise, including service with respect to employee
      benefit plans, whether the basis of such proceeding is alleged action in an
      official capacity as a director, officer, employee or agent or in any other
      capacity while serving as a director, officer, employee or agent, Employee
      shall
      be indemnified and held harmless by the Company to the fullest extent authorized
      by law against all expenses, liabilities and losses (including attorneys fee,
      judgments, fines, ERISA excise taxes or penalties and amounts paid or to be
      paid
      in settlement) reasonably incurred or suffered by Employee in connection
      therewith. Such right shall be a contract right and shall include the right
      to
      be paid by the Company expenses incurred in defending any such proceeding in
      advance of its final disposition; provided, however, that the payment of such
      expenses incurred by Employee in her capacity as a director or officer (and
      not
      in any other capacity in which service was or is rendered by Employee while
      a
      director or officer, including, without limitation, service to an employee
      benefit plan) in advance of the final disposition of such proceeding will be
      made only upon delivery to the Company of an undertaking, by or on behalf of
      the
      Employee, to repay all amounts to Company so advanced if it should be determined
      ultimately that Employee is not entitled to be indemnified under this section
      or
      otherwise. However, under no circumstance shall Employee not be entitled to
      indemnification for any action prior to Employee’s position with the Company.



    
      
        
        

      

      
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    Promptly
      after receipt by Employee if notice of the commencement of any action, suit
      or
      proceeding for which Employee may be entitled to be indemnified, Employee shall
      notify the Company in writing of the commencement thereof (but the failure
      to
      notify the Company shall not relieve it from any liability which it may have
      under Section 11 unless and to the extent that it has been prejudiced in a
      material respect by such failure or from the forfeiture of substantial rights
      and defenses). If any such action, suit or proceeding is brought against
      Employee and he notifies the Company of the commencement thereof, the Company
      will be entitled to participate therein, and, to the extent it may elect by
      written notice delivered to Employee promptly after receiving the aforesaid
      notice from Employee, to assume the defense thereof with counsel reasonably
      satisfactory to Employee, which may be the same counsel as counsel to the
      Company. Notwithstanding the foregoing, Employee shall have the right to employ
      her own counsel in any such case, but the fees and expenses of such counsel
      shall be at the expense of Employee unless (i) the employment of such counsel
      shall have been authorized in writing by the Company, (ii) the Company shall
      not
      have employed counsel reasonably satisfactory to Employee to take charge of
      the
      defense of such action within a reasonable time after notice of commencement
      of
      the action or (iii) Employee shall have reasonably concluded, after consultation
      with counsel to Employee, that a conflict of interest exists which makes
      representation by counsel chosen by the Company not advisable (in which case
      the
      Company shall not have the right to direct the defense of such action on behalf
      of Employee), in any of which events such fees and expenses of one additional
      counsel shall be borne by the Company. Anything in the Section 11 to the
      contrary notwithstanding, the Company shall not be liable for any settlement
      of
      any claim or action effected
      without its written consent. 

    


    12.   MISCELLANEOUS.

    


    12.1  
Entire
      Agreement.  
      This Agreement and the Addendums hereto contain the entire agreement of the
      parties. This Agreement may not be altered, amended or modified except in
      writing duly executed by the parties. This Agreement supercedes and replaces
      the
      existing employment agreement between Employer and Employee.

    


    12.2  
Assignment.  
      Neither party, without the written consent of the other party, can assign this
      Agreement.


    
      
        
        

      

      
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    12.3   Binding.  
      This Agreement shall be binding upon and inure to the benefit of the parties,
      their personal representative, successors and assigns.

    


    12.4   No
      Waiver.  
      The waiver of the breach of any covenant or condition herein shall in no way
      operate as a continuing or permanent waiver of the same or similar covenant
      or
      condition.

    


    12.5   Severability.  
      If any provision of this Agreement is held to be invalid or unenforceable for
      any reason, the remaining provisions will continue in full force without being
      impaired or invalidated in any way. The parties hereto agree to replace any
      invalid provision with at valid provision which most closely approximates the
      intent of the invalid provision.

    


    12.6   Interpretation.  
      This Agreement shall not be construed more strongly against any party hereto
      regardless of which party may have been more responsible for the preparation
      of
      Agreement.

    


    12.7       
      Governing
      Law.  
      This Agreement shall be governed by and construed under the laws of the State
      of
      California, without reference to the choice of law principles
      thereof.

    


    
      	 	
              12.8

            	
              Arbitration.

            


    

    


    12.8.1  Any
      controversy, dispute or claim of whatever nature in any way arising out of
      or
      relating to Employee’s employment with Employer, including, without limitation
      (except as expressly excluded below in Section
      11.8.2)
      any
      claims or disputes by Employee against Employer, or by Employer against
      Employee, concerning, arising out of or relating to the separation of that
      employment; any other adverse personnel action by Employer; any federal, state
      or local law, statute or regulation prohibiting employment discrimination or
      harassment; any public policy; any Employer disciplinary action; any Employer
      decision regarding a Employer policy or practice, including but not limited
      to
      Employee’s compensation or other benefits; and any other claim for personal,
      emotional, physical or economic injury (individually or collectively,
“Covered
      Claims”)
      shall
      be resolved, at the request of any party to this Agreement, by final and binding
      arbitration in El Dorado County, California before Judicial Arbitration
      Mediation Services (“JAMS”)
      in
      accordance with JAMS’ then-current policies and procedures for arbitration of
      employment disputes.


    
      
        
        

      

      
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    12.8.2  The
      only
      claims or disputes excluded from binding arbitration under this Agreement are
      the following: any claim by Employee for workers’ compensation benefits or for
      benefits under a Employer plan that provides its own arbitration procedure;
      and
      any claim by either party for equitable relief, including but not limited to,
      a
      temporary restraining order, preliminary injunction or permanent injunction
      against the other party.

    


    12.8.3  This
      agreement to submit all Covered Claims to binding arbitration in no way alters
      the exclusivity of Employee’s remedy under Section
      6.5
      in the
      event of any termination without Cause or the exclusivity of Employee’s remedy
      under Section
      6.4
      in the
      event of any termination with Cause, and does not require Employer to provide
      Employee with any type of progressive discipline.

    


    12.9        Legal
      Fees.   In
      the event of a dispute between Employee and Employer which results in legal
      action, the legal fees for both parties shall be assumed and paid by
      Employer.

    


    12.10  Titles. 
       Titles
      to the sections of this Agreement are solely for the convenience of the parties
      and shall not be used to explain, modify, simplify, or aid in the interpretation
      of the provisions of this Agreement.

    


    12.11     
      Counterparts. 
       This
      Agreement may be executed in counterparts, each of which shall be deemed an
      original, but together which shall constitute one and the same
      instrument.

    


    


    


    


    [SIGNATURE
      PAGE TO FOLLOW]


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the
      parties have executed this Agreement as of the day and year first written
      above.

    


    


    


    
      	
              Employer:

            	 	
              NutraCea®,

            
	 	 	a
              California corporation
	 	 	 	 
	 	 	 	 
	 	 	
              By:
                

            	
                /s/
                Edward
                Newton

            
	 	 	 	
              (signature)

            
	 	 	 	 
	 	 	 	Edward
              Newton
	 	 	 	
              (Type/Print
                name)

            
	 	 	 	 
	 	 	 	Secretary
              and Vice President
	 	 	 	
              (Office
                held)

            
	 	 	 	 
	
              Employee:

            	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	
              By:

            	
                /s/
                Nana Patricia
                McPeak

            
	 	 	 	
              (signature)

            
	 	 	 	 
	 	 	 	Nana
              Patricia McPeak
	 	 	 	
              (Type/Print
                name) 

            


    

     

    


    [SIGNATURE
      PAGE TO EMPLOYMENT AGREEMENT]

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

        
        

      

    

    


    ADDENDUM
      A

    EMPLOYEE
      INCENTIVE COMPENSATION PLAN

    


    


    This
      Employee Incentive Compensation Agreement (this “Agreement”)
      is
      entered into this 10th
      day of
      December, 2004, by and between NutraCea®, a California corporation (the
“Employer”),
      and
      Nana Patricia McPeak (“Employee”),
      as
      follows:

    


    WHEREAS,
      it
      is in
      the best interest of Employer and Employee to enter into a continuing
      arrangement to cover annual Employee Incentive bonuses, and

    


    WHEREAS,
      both
      parties to this Agreement desire to memorialize various aspects of their
      relationship:

    


    NOW,
      THEREFORE, the parties hereby agree as follows:

    


    
      	
              1.

            	
              Addendum.  
                This
                Agreement is in an addendum to that certain Employment Agreement
                effective
                of even date herewith.

            


    

     

    
      	
              2.

            	
              Transaction
                Success Fee.  
                If a combination occurs between the RiceX Corporation and NutraCea,
                (including but not limited to a merger, acquisition, asset purchase)
                concurrent with the closing of that transaction a cash fee to be
                determined by the Compensation Committee of the Board of Directors
                shall
                be paid for the Company to Nana Patricia McPeak as a success bonus.
                

            


    

    


    
      	3.	
              Employee
                Incentive Bonus.  
                Employee
                Incentive bonuses granted pursuant to this Agreement shall be paid
                annually, within ten (10) days of the completion of the annual independent
                audit of Employer. Such bonuses shall be one percent (1%) of Employer’s
                “Gross Sales over $25,000,000”
                on an annualized basis, or $6, 375,000 per quarter, and the company
                reports a positive EBITDA for the period. For the purposes of this
                section, no non-cash charges will be included in the calculation
                of
                EBITDA. The bonus amount in section 3 will be limited to a maximum
                of
                $750,000 in any calendar year and shall continue so long as Employee
                is an
                employee or consultant for
                Employer.

            


    

     

    
      	
              4.

            	
              Termination.  
                Termination
                of employment with Employer, whether voluntary or involuntary, shall
                not
                affect any bonus earned but not paid. If employment is terminated,
                a
                proportionate share of any bonus earned shall be paid to Employee
                on the
                next regular bonus payment date.


            


    


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the
      parties have executed this Agreement as of the day and year first written
      above.

     

     

    
      	
              Employer:

            	 	
              NutraCea®,
                

            
	 	 	a
              California corporation
	 	 	 	 
	 	 	 	 
	 	 	
              By:
                

            	
                /s/
                Edward
                Newton

            
	 	 	 	
              (signature)

            
	 	 	 	 
	 	 	 	Edward
              Newton
	 	 	 	
              (Type/Print
                name)

            
	 	 	 	 
	 	 	 	Secretary
              and Vice President
	 	 	 	
              (Office
                held)

            
	 	 	 	 
	
              Employee:

            	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	
              By:

            	
                /s/
                Nana Patricia
                McPeak

            
	 	 	 	
              (signature)

            
	 	 	 	 
	 	 	 	Nana
              Patricia McPeak
	 	 	 	
              (Type/Print
                name) 

            


    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    


    ADDENDUM
      B

    


    Job
      Description for Nana Patricia McPeak

     

    


    
      	
              Job
                Title: 

            	
              Chief
                Executive Officer 

            
	
              Department:
                

            	
              Executive

            
	
              Reports
                To:
                

            	
              Board
                of Directors 

            


    

    


    SUMMARY
      

     

    As
      provided in the Corporation’s bylaws, the Chief Executive Officer provides the
      primary oversight for the President in her effecting the planning, organizing,
      staffing, and operating the Corporation (“NutraCea”) toward its primary
      objectives, based on profit and return on capital, of increasing shareholder
      value and the goodwill and reputation of the Corporation. The Chief Executive
      Officer is accountable only to the Board of Directors. Employee is solely
      responsible for the hiring and conduct of the personal assistant, as well as
      the
      staffing and personnel involved in the Research, Development, Product
      Development, Patents and Intellectual Properties Departments.

    


    The
      Chief
      Executive Officer’s written approval is required for all corporate legal and
      fiduciary activities.

     

    The
      Chief
      Executive Officer in conjunction with the President establishes and communicates
      the management style, corporate culture, business philosophy and ethical values
      by which the Corporation will operate.

    


    ESSENTIAL
      DUTIES AND RESPONSIBILITIES
      include
      the following:

    


    Acts
      as
      the spokesman for the Corporation and is available for interviews during normal
      business hours.

     

    Plans,
      manages and oversees the clinical research, patent and intellectual property
      and
      product development activities for the Corporation
      through its managers.

     

    Oversees
      the President in her implementation of current and long range goals, objectives,
      plans and policies as provided in a Strategic Business Plan, a Strategic
      Marketing Plan and a Budget, approved by the Board of Directors.

     

    Oversees
      the President in ensuring the adequacy and soundness of the Corporation’s
      financial structure.


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    


    Reviews
      operating results of the Corporation, compares them to established objectives,
      and takes steps to ensure that appropriate measures are taken to correct
      unsatisfactory results.

    


    Oversees
      and reviews the planning of all investigations and negotiations pertaining
      to
      mergers, joint ventures, the acquisition of businesses, or the sale of major
      assets.

    


    


    Fulfills
      responsibility to the Shareholders and to the Board of Directors to inform
      or
      seek approval for significant matters.

    


    Ensures
      that Corporation business transactions are conducted in accordance with
      prevailing legal and regulatory requirements.

    


    Reviews
      and provides final approval for all recommendations for compensation of
      officers, retaining the right to hire, compensate and manage Employee’s personal
      assistant.

    


    Responsible
      for reviewing and evaluating with the President the performance of executives
      for compliance with established policies and objectives of firm and
      contributions in attaining objectives.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    


    ADDENDUM
      C

    


    THE
      WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON THE
      EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
      ANY
      STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED EXCEPT UPON DELIVERY TO THE
      CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO
      IT
      THAT SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED,
      OR
      ANY APPLICABLE STATE SECURITIES LAWS.

    


    THE
      TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED
      HEREIN.

    


    


    NutraCea,
      a California corporation

    


    Warrant
      for the Purchase of Shares of Common Stock,

    par
      value
      $0.001 per Share

    


    


    
      	
              No.
                WC-[___]

            	
              2,000,000 Shares

            


    

    Issuance
      Date: December [14], 2004

    


    THIS
      CERTIFIES that, for value received, Nana Patricia McPeak (the “Holder”), is
      entitled to subscribe for and purchase from NutraCea, a California corporation
      (the “Company”), upon the terms and conditions set forth herein,
      2,000,000 shares
      of
      the Company’s Common Stock, par value $0.001 per share (“Common Stock”), at a
      price of $0.30 per share (the “Exercise Price”). As used herein the term “this
      Warrant” shall mean and include this Warrant and any Common Stock or Warrants
      hereafter issued as a consequence of the exercise or transfer of this Warrant
      in
      whole or in part. The number of Warrant Shares may be adjusted from time to
      time
      as hereinafter set forth. 

    


    1.     Exercise
      Period.  
      This Warrant may be exercised at any time or from time to time during the period
      commencing on the Issuance Date and ending at 5:00 P.M. Central time on
      December 13, 2014 (the “Exercise Period”). 

    


    2.     Procedure
      for Exercise; Effect of Exercise.
      

     

      (a)     Cash
      Exercise.  
      This Warrant may be exercised, in whole or in part, by the Holder during normal
      business hours on any business day during the Exercise Period by (i) the
      presentation and surrender of this Warrant to the Company at its principal
      office along with a duly executed Notice of Exercise (in the form attached
      to
      this Warrant) specifying the number of Warrant Shares to be purchased, and
      (ii)
      delivery of payment to the Company of the Exercise Price for the number of
      Warrant Shares specified in the Notice of Exercise by cash, wire transfer of
      immediately available funds to a bank account specified by the Company, or
      by
      certified or bank cashier’s check. 


    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

     
      (b)     Cashless
      Exercise.   
      This Warrant may also be exercised by the Holder through a cashless exercise,
      as
      described in this Section 2(b).
      This
      Warrant may be exercised, in whole or in part, by the Holder during normal
      business hours on any business day during the Exercise Period by the
      presentation and surrender of this Warrant to the Company at its principal
      office along with a duly executed Notice of Exercise specifying the number
      of
      Warrant Shares to be applied to such exercise. The number of Warrant Shares
      to
      be delivered upon exercise of this Warrant pursuant to this Section 2(b) shall
      equal the value of this Warrant (or the portion thereof being canceled) computed
      as of the date of delivery of this Warrant to the Company using the following
      formula:

    


    
      	
              X
                =
                

            	 	
              Y(A-B)

                  
                A

            


    

    


    Where:

    
      	
              X
                =
                

            	 	
              the
                number of shares of Common Stock to be issued to Holder under this
                Section
                2(b);

            
	
              Y
                =
                

            	
               

            	
              the
                number of Warrant Shares identified in the Notice of Exercise as
                being
                applied to the subject exercise;

            
	
              A
                =
                

            	 	
              the
                Current Market Price on such date; and

            
	
              B
                =
                

            	 	
              the
                Exercise Price 

            


    

    


    For
      purposes of this Section 2(b) and Section 6, the “Current
      Market Price”
per
      share of Common Stock on any date shall mean the average closing price of the
      last three trading days with respect to securities listed on the principal
      national securities exchange on which such security is listed or admitted to
      trading or, if such security is not listed or admitted to trading on any
      national securities exchange, the average closing price of such security on
      the
      three (3) consecutive trading days immediately preceding such date in the
      over-the-counter market, as reported by the National Association of Securities
      Dealers, Inc. Automated Quotations System or such other system then in use
      or,
      if such security is not quoted by any such organization, the three day average
      closing price of such security as of the three (3) consecutive trading days
      immediately preceding such date furnished by a New York Stock Exchange member
      firm selected by the Company, or if such security is not quoted by any such
      organization and no such New York Stock Exchange member firm is able to provide
      such prices, such price as is determined by the Board of Directors in good
      faith.

    


    The
      Company acknowledges and agrees that this Warrant was issued on the Issuance
      Date. Consequently, the Company acknowledges and agrees that, if the Holder
      conducts a cashless exercise pursuant to this Section 2(b), the period during
      which the Holder held this Warrant may, for purposes of Rule 144 promulgated
      under the Securities Act of 1933, as amended (the “Securities
      Act”),
      be
“tacked” to the period during which the Holder holds the Warrant Shares received
      upon such cashless exercise. 


    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    


    Notwithstanding
      the foregoing, except in connection with a transaction described in the proviso
      in the first sentence of this Section 2(b), the Holder may conduct a cashless
      exercise pursuant to this Section 2(b) only after the first anniversary of
      the
      Issuance Date.

    


    (c)    Effect
      of Exercise.  
      Upon receipt by the Company of this Warrant and a Notice of Exercise, together
      with proper payment of the Exercise Price, as provided in this Section 2, the
      Company agrees that such Warrant Shares shall be deemed to be issued to the
      Holder as the record holder of such Warrant Shares as of the close of business
      on the date on which this Warrant has been surrendered and payment has been
      made
      for such Warrant Shares in accordance with this Warrant and the Holder shall
      be
      deemed to be the holder of record of the Warrant Shares, notwithstanding that
      the stock transfer books of the Company shall then be closed or that
      certificates representing such Warrant Shares shall not then be actually
      delivered to the Holder. A stock certificate or certificates for the Warrant
      Shares specified in the Notice of Exercise shall be delivered to the Holder
      as
      promptly as practicable, and in any event within seven (7) business days,
      thereafter. The stock certificate(s) so delivered shall be in any such
      denominations as may be reasonably specified by the Holder in the Notice of
      Exercise. If this Warrant should be exercised in part only, the Company shall,
      upon surrender of this Warrant for cancellation, execute and deliver within
      seven (7) business days a new Warrant evidencing the right of the Holder to
      purchase the balance of the Warrant Shares subject to purchase
      hereunder.

    


    3.    Registration
      of Warrants; Transfer of Warrants.  
      Any Warrants issued upon the transfer or exercise in part of this Warrant shall
      be numbered and shall be registered in a Warrant Register as they are issued.
      The Company shall be entitled to treat the registered holder of any Warrant
      on
      the Warrant Register as the owner in fact thereof for all pur-poses and shall
      not be bound to recognize any equitable or other claim to or inter-est in such
      Warrant on the part of any other person, and shall not be liable for any
      registration or transfer of Warrants which are registered or to be registered
      in
      the name of a fiduciary or the nominee of a fiduciary unless made with the
      actual knowledge that a fiduciary or nominee is committing a breach of trust
      in
      requesting such registration or transfer, or with the knowledge of such facts
      that its participation therein amounts to bad faith. This Warrant shall be
      transferable only on the books of the Company upon delivery thereof duly
      endorsed by the Holder or by its duly authorized attorney or representative,
      or
      accompanied by proper evidence of succession, assignment, or authority to
      transfer. In all cases of transfer by an attorney, executor, administrator,
      guardian, or other legal representative, duly authenticated evidence of his
      or
      its author-ity shall be produced. Upon any registration of transfer, the Company
      shall deliver a new Warrant or Warrants to the person entitled thereto. This
      Warrant may be exchanged, at the option of the Holder thereof, for another
      Warrant, or other Warrants of different denominations, of like tenor and
      representing in the aggregate the right to purchase a like number of Warrant
      Shares, upon surrender to the Company or its duly authorized agent.


    


    4.    Restrictions
      on Transfer.   
      (a) The Holder, as of the date of issuance hereof, represents to the Company
      that such Holder is acquiring the Warrants for its own account for investment
      purposes and not with a view to the distribution thereof or of the Warrant
      Shares. Notwithstanding any provisions contained in this Warrant to the
      contrary, this Warrant and the related Warrant Shares shall not be transferable
      except pursuant to the proviso contained in the following sentence or upon
      the
      conditions specified in this Section 4, which conditions are intended, among
      other things, to insure compliance with the provisions of the Securities Act
      and
      applicable state law in respect of the transfer of this Warrant or such Warrant
      Shares. The Holder by acceptance of this Warrant agrees that the Holder will
      not
      transfer this Warrant or the related Warrant Shares prior to delivery to the
      Company of an opinion of the Holder’s counsel or until registration of such
      Warrant Shares under the Securities Act has become effective or after a sale
      of
      such Warrant or Warrant Shares has been consummated pursuant to Rule 144 or
      Rule
      144A under the Securities Act; provided,
      however,
      that
      the Holder may freely transfer this Warrant or such Warrant Shares (without
      delivery to the Company of an opinion of Counsel) (i) to one of its nominees,
      affiliates or a nominee thereof, (ii) to a pension or profit-sharing fund
      established and maintained for its employees or for the employees of any
      affiliate, (iii) from a nominee to any of the aforementioned persons as
      beneficial owner of this Warrant or such Warrant Shares, or (iv) to a qualified
      institutional buyer, or accredited investor, so long as such transfer is
      effected in compliance with Rule 144A under the Securities Act; provided, in
      each case, that such transferee agrees to be bound by the transfer restrictions
      set forth herein.


    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    


    Holder
      shall be entitled to transfer this Warrant and/or such Warrant Shares in
      accordance with the intended method of disposition specified in the notice
      to
      the Company.

    


    (c)    Each
      stock certificate representing Warrant Shares issued upon exercise or exchange
      of this Warrant shall bear the following legend unless the opinion of counsel
      referred to in Section 4(b) states such legend is not required:

    


    “THE
      SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED
      EXCEPT UPON DELIVERY TO THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY
      IN
      FORM AND SUBSTANCE TO IT THAT SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES
      ACT
      OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.”

    


    


    5.    Reservation
      of Shares.
      The
      Company shall at all times during the Exercise Period reserve and keep available
      out of its authorized and unissued Common Stock, solely for the purpose of
      providing for the exercise of the rights to purchase all Warrant Shares granted
      pursuant to the Warrants, such number of shares of Common Stock as shall, from
      time to time, be sufficient therefor. The Company covenants that all shares
      of
      Common Stock issuable upon exercise of this Warrant, upon receipt by the Company
      of the full Exercise Price therefor, and all shares of Common Stock issuable
      upon conversion of this Warrant, shall be validly issued, fully paid,
      non-assessable, and free of preemptive rights.

    


    6.    Adjustments.
      The
      number of shares of Common Stock issuable upon exercise of the Warrants shall
      be
      adjusted from time to time as follows: 


    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    


    (a)    (i)    In
      the
      event that the Company shall (A) pay a dividend or make a distribution, in
      shares of Common Stock, on any class of capital stock of the Company or any
      subsidiary which is not directly or indirectly wholly owned by the Company,
      (B)
      split or subdivide its outstanding Common Stock into a greater number of shares,
      (C) combine its outstanding Common Stock into a smaller number of shares, then
      in each such case the number of shares issuable upon exercise of this Warrant
      shall be adjusted so that the Holder of a Warrant thereafter surrendered for
      exercise shall be entitled to receive the number of shares of Common Stock
      that
      such Holder would have owned or have been entitled to receive after the
      occurrence of any of the events described above had such Warrant been exercised
      immediately prior to the occurrence of such event. An adjustment made pursuant
      to this Section 6(a)(i) shall become effective immediately after the close
      of
      business on the record date in the case of a dividend or distribution (except
      as
      provided in Section 6(e) below) and shall become effective immediately after
      the
      close of business on the effective date in the case of such subdivision, split
      or combination, as the case may be. 

    


    (ii)    No
      adjustment in the Exercise Price shall be required unless the adjustment would
      require an increase or decrease of at least 1% in the Exercise Price then in
      effect; provided,
      however,
      that any
      adjustments that by reason of this Section 6(a) are not required to be made
      shall be carried forward and taken into account in any subsequent adjustment.
      All calculations under this Section 6(a) shall be made to the nearest cent
      or
      nearest 1/100th of a share.

    


     
      (iii)     In
      the
      event that, at any time as a result of an adjustment made pursuant to Sections
      6(a)(i) and 6(a)(ii) above, the Holder of any Warrant thereafter surrendered
      for
      exercise shall become entitled to receive any shares of the Company other than
      shares of the Common Stock, thereafter the number of such other shares so
      receivable upon exercise of any such Warrant shall be subject to adjustment
      from
      time to time in a manner and on terms as nearly equivalent as practicable to
      the
      provisions with respect to the Common Stock contained in Sections 6(a)(i) and
      6(a)(ii) above, and the other provisions of this Section 6(a) with respect
      to
      the Common Stock shall apply on like terms to any such other
      shares.

    


    (b)    In
      case
      of any reclassification of the Common Stock (other than in a transaction to
      which Section 6(a)(i) applies), any consolidation of the Company with, or merger
      of the Company into, any other entity, any merger of another entity into the
      Company (other than a merger that does not result in any reclassification,
      conversion, exchange or cancellation of outstanding shares of Common Stock
      of
      the Company), any sale or transfer of all or substantially all of the assets
      of
      the Company or any compulsory share exchange which does not result in the
      cashless exercise or cancellation of this Warrant pursuant to Section 2(b),
      pursuant to which share exchange the Common Stock is converted into other
      securities, cash or other property, then lawful provision shall be made as
      part
      of the terms of such transaction whereby the Holder of a Warrant then
      outstanding shall have the right thereafter, during the period such Warrant
      shall be exercisable, to exercise such Warrant only for the kind and amount
      of
      securities, cash and other property receivable upon the reclassification,
      consolidation, merger, sale, transfer or share exchange by a holder of the
      number of shares of Common Stock of the Company into which a Warrant might
      have
      been able to exercise for immediately prior to the reclassification,
      consolidation, merger, sale, transfer or share exchange assuming that such
      holder of Common Stock failed to exercise rights of election, if any, as to
      the
      kind or amount of securities, cash or other property receivable upon
      consummation of such transaction subject to adjustment as provided in Section
      6(a) above following the date of consummation of such transaction. The Company
      shall not effect any such reclassification, consolidation, merger, sale,
      transfer, share exchange or other disposition unless prior to or simultaneously
      with the consummation thereof the successor corporation (if other than the
      Company) resulting from such consolidation or merger, or the corporation
      purchasing or otherwise acquiring such assets or other appropriate corporation
      or entity shall assume, by written instrument executed and delivered to the
      Holder, the obligation to deliver to the Holder upon its exercise of the Warrant
      such shares of stock, securities or assets as, in accordance with the foregoing
      provisions, the Holder may be entitled to purchase and the other obligations
      under this Warrant. The provisions of this Section 6(b) shall similarly apply
      to
      successive reclassifications, consolidations, mergers, sales, transfers or
      share
      exchanges.


    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    (c)    If:

    


    
      	
            	(i)	
              the
                Company shall take any action which would require an adjustment pursuant
                to Section 6(a); or 

            


    

    


    
      
        	
              	(ii)	
                the
                  Company shall authorize the granting to the holders of its Common
                  Stock
                  generally of rights, warrants or options to subscribe for or purchase
                  any
                  shares of any class or any other rights, warrants or options; or
                  

              


      

    

    


    
      	
            	(iii)	
              there
                shall be any reclassification or change of the Common Stock (other
                than a
                subdivision or combination of its outstanding Common Stock or a change
                in
                par value) or any consolidation, merger or statutory share exchange
                to
                which the Company is a party and for which approval of any stockholders
                of
                the Company is required, or the sale or transfer of all or substantially
                all of the assets of the Company;
                or

            


    

    


    
      	
            	(iv)	
              there
                shall be a voluntary or involuntary dissolution, liquidation or winding
                up
                of the Company; 

            


    

    


    then,
      the
      Company shall cause to be filed with the transfer agent for the Warrants and
      shall cause to be mailed to each Holder at such Holder’s address as shown on the
      books of the transfer agent for the Warrants, as promptly as possible, but
      at
      least 30 days prior to the applicable date hereinafter specified, a notice
      stating (A) the date on which a record is to be taken for the purpose of such
      dividend, distribution or granting of rights, warrants or options, or, if a
      record is not to be taken, the date as of which the holders of Common Stock
      of
      record to be entitled to such dividend, distribution or rights, warrants or
      options are to be determined, or (B) the date on which such reclassification,
      change, consolidation, merger, statutory share exchange, sale, transfer,
      dissolution, liquidation or winding-up is expected to become effective or occur,
      and the date as of which it is expected that holders of Common Stock of record
      shall be entitled to exchange their shares of Common Stock for securities or
      other property deliverable upon such reclassification, change, consolidation,
      merger, statutory share exchange, sale, transfer, dissolution, liquidation
      or
      winding up. Failure to give such notice or any defect therein shall not affect
      the legality or validity of the proceedings described in this Section
      6(c).


    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    


    (d)    Whenever
      an adjustment is made as herein provided, the Company shall promptly file with
      the transfer agent for the Warrants a certificate of an officer of the Company
      setting forth the adjustment and setting forth a brief statement of the facts
      requiring such adjustment and a computation thereof. The Company shall promptly
      cause a notice of such adjustment to be mailed to each Holder.

    


    (e)    In
      any
      case in which Section 6(a) provides that an adjustment shall become effective
      immediately after a record date for an event and the date fixed for such
      adjustment pursuant to Section 6(a) occurs after such record date but before
      the
      occurrence of such event, the Company may defer until the actual occurrence
      of
      such event (i) issuing to the Holder of any Warrants exercised after such record
      date and before the occurrence of such event the additional shares of Common
      Stock issuable upon such conversion by reason of the adjustment required by
      such
      event over and above the Common Stock issuable upon such exercise before giving
      effect to such adjustment, and (ii) paying to such holder any amount in cash
      in
      lieu of any fraction pursuant to Section 6(g).

    


    (f)    Upon
      each
      adjustment of the Exercise Price, this Warrant shall thereafter evidence the
      right to purchase, at the adjusted Exercise Price, that number of shares
      (calculated to the nearest thousandth) obtained by dividing (i) the product
      obtained by multiplying the number of shares purchasable upon exercise of this
      Warrant prior to adjustment of the number of shares by the Exercise Price in
      effect prior to adjustment of the Exercise Price, by (ii) the Exercise Price
      in
      effect after such adjustment of the Exercise Price.

    


    (g)   The
      Company shall not be required to issue fractions of shares of Common Stock
      or
      other capital stock of the Company upon the exercise of this Warrant. If any
      fraction of a share would be issuable on the exercise of this Warrant (or
      specified portions thereof), the Company shall purchase such fraction for an
      amount in cash equal to the same fraction of the Current Market Price of such
      share of Common Stock on the date of exercise of this Warrant.

    


    (h)   In
      case
      the Company shall take any action affecting the Common Stock, other than actions
      described in this Section 6, which in the opinion of the Board of Directors
      would materially adversely affect the exercise right of the Holder, the Exercise
      Price may be adjusted, to the extent permitted by law, in such manner, if any,
      and at such time, as the Board of Directors may determine to be equitable in
      the
      circumstances; provided,
      however,
      that in
      no event shall the Board of Directors be required to take any such
      action.


    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    


    7.   Transfer
      Taxes. 
      The issuance of any shares or other securities upon the exercise of this
      Warrant, and the delivery of certificates or other instruments representing
      such
      shares or other securities, shall be made without charge to the Holder for
      any
      tax or other charge in respect of such issuance. The Company shall not, however,
      be required to pay any tax which may be payable in respect of any transfer
      involved in the issue and delivery of any certificate in a name other than
      that
      of the Holder and the Company shall not be required to issue or deliver any
      such
      certificate unless and until the person or persons requesting the issue 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.

    


    8.   Loss
      or Mutilation of Warrant. 
      Upon receipt of evidence satisfactory to the Company of the loss, theft,
      destruction, or mutilation of any Warrant (and upon surrender of any Warrant
      if
      mutilated), and upon reimbursement of the Company’s reasonable incidental
      expenses, the Company shall execute and deliver to the Holder thereof a new
      Warrant of like date, tenor, and denomination.

    


    9.   No
      Rights as a Stockholder. 
      The Holder of any Warrant shall not have, solely on account of such status,
      any
      rights of a stockholder of the Company, either at law or in equity, or to any
      notice of meetings of stockholders or of any other proceedings of the Company,
      except as provided in this Warrant.

    


    10.        
      Governing
      Law.  
      This Warrant shall be con-strued in accordance with the laws of the State of
      Arizona applicable to contracts made and performed within such State, without
      regard to principles of conflicts of law.

    
       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

    

     

    11.        
      Beneficial
      Ownership. 
      The Company shall not effect the exercise of this Warrant by any Holder, and
      no
      person who is a holder of this Warrant shall have the right to exercise this
      Warrant, to the extent that after giving effect to such exercise, such person
      (together with such person’s affiliates) would beneficially own in excess of 10%
      of the shares of the Common Stock outstanding immediately after giving effect
      to
      such exercise. For purposes of the foregoing sentence, the aggregate number
      of
      shares of Common Stock beneficially owned by such person and its affiliates
      shall include, without limitation, the number of shares of Common Stock issuable
      upon exercise of this Warrant with respect to which the determination of such
      sentence is being made, but shall exclude shares of Common Stock which would
      be
      issuable upon (a) exercise of the remaining, unexercised portion of this Warrant
      beneficially owned by such person and its affiliates, and (b) exercise or
      conversion of the unexercised or unconverted portion of any other securities
      of
      the Company beneficially owned by such person and its affiliates (including,
      without limitation, any debentures, convertible notes or convertible preferred
      stock or warrants) subject to a limitation on conversion or exercise analogous
      to the limitation contained herein. Except as set forth in the preceding
      sentence, for purposes of this Section 11, beneficial ownership shall be
      calculated in accordance with Section 13(d) of the Securities Exchange Act
      of
      1934, as amended. For purposes of this Warrant, in determining the number of
      outstanding shares of Common Stock, a Holder may rely on the number of
      outstanding shares of Common Stock as reflected in (i) the Company’s most recent
      Form 10-Q, Form 10-K or other public filing with the Securities and Exchange
      Commission, as the case may be, (ii) a more recent public announcement by the
      Company, or (iii) any other notice by the Company or its transfer agent setting
      forth the number of shares of Common Stock outstanding. For any reason at any
      time, upon the written or oral request of the Holder of this Warrant, the
      Company shall within two business days confirm orally and in writing to the
      Holder of this Warrant 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 Company
      by the Holder of this Warrant and its affiliates since the date as of which
      such
      number of outstanding shares of Common Stock was reported. In
      effecting the exercise of this Warrant, the Company shall be entitled to rely
      on
      a representation by the Holder of this Warrant as to the number of shares that
      it beneficially owns for purposes of the above 10% limitation
      calculation.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    Dated:
      December 14, 2004

     

    
      	 	
              NUTRACEA

            	 
	 	
              a
                California corporation

            	 
	 	 	 	 
	 	 	 	 
	 	
              By:  

            	
               /s/
                Edward Newton

            	 
	 	 	
              Signature

            	 
	 	 	
              Title:
                Secretary, Vice President

            	 
	 	 	 	 


    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    FORM
      OF
      ASSIGNMENT

    


    


    (To
      be
      executed by the registered holder if such holder desires to transfer the
      attached Warrant.)

    


    FOR
      VALUE
      RECEIVED,_________________________________________ hereby sells, assigns, and
      transfers unto __________________ a Warrant to purchase __________ shares of
      Common Stock, par value $[0.001] per share, of NUTRACEA. (the “Company”),
      together with all right, title, and interest therein, and does hereby
      irrevocably constitute and appoint _____________________________ attorney to
      transfer such Warrant on the books of the Company, with full power of
      substitution.

    


    
      	 	
              Dated:

            	 	 
	 	 	 	 
	 	
              By:  
                

            	       
	 
	 	 	Signature	 


    

    


    The
      signature on the foregoing Assignment must correspond to the name as written
      upon the face of this Warrant in every particular, without alteration or
      enlarge-ment or any change whatsoever. 

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    


    
      	
              To:
                

            	
              NutraCea.

            
	 	
              1261
                Hawks’ Flight Court

            
	 	
              El
                Dorado Hills, CA 95762

            
	 	
              Attention:
                Chief Executive Officer

            


    

     

    


    NOTICE
      OF
      EXERCISE


    


    The
      undersigned hereby exercises his or its rights to purchase _______ Warrant
      Shares covered by the within Warrant and tenders payment herewith in the amount
      of $_________ by [tendering cash or delivering a certified check or bank
      cashier’s check, payable to the order of the Company] [surrendering ______
      shares of Common Stock received upon exercise of the attached Warrant, which
      shares have a Current Market Price equal to such payment] in accordance with
      the
      terms thereof, and requests that certificates for such securities be issued
      in
      the name of, and delivered to:

    


    _______________________________________

    _______________________________________

    _______________________________________

    


    (Print
      Name, Address and Social Security

    or
      Tax
      Identification Number)

    


    and,
      if
      such number of Warrant Shares shall not be all the Warrant Shares covered by
      the
      within Warrant, that a new Warrant for the balance of the Warrant Shares covered
      by the within Warrant be registered in the name of, and delivered to, the
      under-signed at the address stated below.

     

    
      	 	
              Dated:

            	 	 
	 	 	 	 
	 	 	 	 
	 	
              By:  
                

            	    
	 
	 	 	Print
              Name	 
	 	 	 	 
	 	 	 	 
	 	     
	 
	 	
              Signature

            	 


    

    


    
      	
              Address:

            	 	 
	    
	 	 
	    
	 	 
	    
	 	 
	 	 	 


    

     

    29