Exhibit 10.1


    
      

    

    EXHIBIT
      10.1

    


    SOP06004

    


    THIS
      OPTION HAS BEEN ISSUED PURSUANT TO EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS
      OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND THE QUALIFICATION
      REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS (THE "LAWS"). IT IS UNLAWFUL
      TO
      EXERCISE, SELL, PLEDGE OR OTHERWISE DISPOSE OF THIS OPTION, OR ANY INTEREST
      THEREIN, OR RECEIVE ANY CONSIDERATION THEREFOR, IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE ACT AND QUALIFICATION UNDER THE LAWS, UNLESS
      EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENTS ARE
      AVAILABLE.

    


    THIS
      OPTION MAY BE EXERCISED ONLY
      IN
      ACCORDANCE WITH THE TERMS OF THIS STOCK OPTION AGREEMENT.

    


    


    NUTRACEA

    


    BOARD
      MEMBER - NONSTATUTORY STOCK OPTION AGREEMENT

    


    


    NutraCea,
      a Delaware corporation (the "Company"), hereby grants to KENNETH SHROPSHIRE
      (the
      "Optionee"), an option (the "Option") to purchase a total of 35,000 shares
      of
      common stock, par value $.001, of the Company
      (the "Common Stock") at an exercise price (the "Exercise Price") equal to $1.14
      per share, which is equal to the fair market value of the Company's Common
      Stock
      on the date of the grant, in all respects subject to the terms, definitions
      and
      provisions of this Nonstatutory Stock Option Agreement
      (the "Agreement").

    


    1.    Nature
      of the Option.
      The
      Option is intended to be a nonstatutory option and not
      an
      incentive stock option within the meaning of Section 422 of the Internal Revenue
      Code of 1986, as amended (the "Code").

     

    2.    Payment
      of Exercise Price.

     

    (a)    Method
      of Payment.
      Payment
      of the Exercise Price for shares purchased upon exercise of the Option shall
      be
      made (i) by delivery to the Company of cash or a check to the order of the
      Company in an amount equal to the purchase price of such shares;
      (ii) subject to the consent of the Company, by delivery to the Company of
      shares of Common Stock of the Company then owned by the Optionee having a fair
      market value equal in amount to the purchase price of such shares in accordance
      with Section 2(b); or, (iii) by any other means approved by the Board of
      Directors and which is consistent with applicable laws and regulations
      (including, without limitation, the provisions of Rule 16b-3 under the
      Securities Exchange Act of 1934 and Regulation T promulgated by the Federal
      Reserve Board); or (iv) by any combination of such methods of
      payment.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)    Method
      of Payment - Public Market.
      In the
      event there exists a public market for the Company's Common Stock on the date
      of
      exercise, payment of the exercise price may be made by surrender of shares
      of
      the Company's Common Stock. In this case payment shall be made as
      follows:

     

    (i)    Optionee
      shall deliver to the Secretary of the Company a written notice which shall
      set
      forth the portion of the purchase price the Optionee wishes to pay with Common
      Stock, and the number of shares of such Common Stock the Optionee intends to
      surrender pursuant to the exercise of this Option, which shall be determined
      by
      dividing the aforementioned portion of the purchase price by the average of
      the
      last reported bid and asked prices per share of Common Stock of the Company,
      as
      reported in The
      Wall Street Journal
      (or, if
      not so reported, as otherwise reported by the National Association of Securities
      Dealers Automated Quotation (NASDAQ) System or, in the event the Common Stock
      is
      listed on a national securities exchange, or on the NASDAQ Small-Cap Market
      of
      any successor national market system, the closing price of Common Stock of
      the
      Company on such exchange as reported in The
      Wall Street Journal)
      for the
      day on which the notice of exercise is sent or delivered;

     

    (ii)    Fractional
      shares shall be disregarded and the Optionee shall pay in cash an amount equal
      to such fraction multiplied by the price determined under subparagraph
      (i);

     

    (iii)   The
      written notice shall be accompanied by a duly endorsed blank stock power with
      respect to the number of Shares set forth in the notice, and the certificate(s)
      representing said Shares shall be delivered to the Company at its principal
      offices within three (3) working days from the date of the notice of
      exercise;

     

    (iv)   The
      Optionee hereby authorizes and directs the Secretary of the Company to transfer
      so many of the Shares represented by such certificate(s) as are necessary to
      pay
      the purchase price in accordance with the provisions herein;

     

    (v)    If
      any
      such transfer of Shares requires the consent of the California Commissioner
      of
      Corporations or of some other agency under the securities laws of any other
      state, or an opinion of counsel for the Company or Optionee that such transfer
      may be effected under applicable federal and state securities laws, the time
      periods specified herein shall be extended for such periods as the necessary
      request for consent to transfer is pending before said commissioner or other
      agency, or until counsel renders such an opinion, as the case may be. All
      parties agree to cooperate in making such request for transfer, or in obtaining
      such opinion of counsel, and no transfer shall be effected without such consent
      or opinion if required by law; and

     

    (vi)   Notwithstanding
      any other provisions herein, the Optionee shall only be permitted to pay the
      purchase price with shares of the Company's Common Stock owned by him as of
      the
      exercise date in the manner and within the time periods allowed under Rule
      16b-3
      promulgated under the Securities Exchange Act of 1934 as such regulation is
      presently constituted, as it is amended from time to time, and as it is
      interpreted now or hereafter by the Securities and Exchange Commission and
      any
      such shares have been held by the Optionee for not less than six (6)
      months.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.    Exercise
      of Option.
      The
      Option shall vest and become exercisable during its term, subject to the
      provisions of Section 5 below, as follows:

     

    (a)    Vesting
      and Right to Exercise.

     

    (i)    The
      Option hereby granted shall vest and become exercisable on a prorated basis
      over
      a twelve-month period beginning May 23, 2006. The option will be fully vested
      on
      May 23, 2007.

     

    Subject
      to the provisions of subparagraph (ii) and (iii) below, the Optionee can
      exercise any portion of the Option, which has vested until the expiration of
      the
      Option term.

    


    If
      a
      "change of control" of the Company should occur, as defined below, then the
      Option shall immediately vest and become exercisable in full. For purposes
      of
      the foregoing provision, a "change in control" means the occurrence of any
      of
      the following:

    


    (A)    any
      "person," as such term is used in Sections 13(d) and 14(d) of the
      Securities Exchange Act of 1934, as emended (the "Exchange Act") (other than
      the
      Company or its existing shareholders) is or becomes the "beneficial owner"
      (as
      defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
      securities of the Company (or a successor to the Company) representing 50%
      or
      more of the combined voting power of the then outstanding securities of the
      Company or such successor;

    


    (B)    the
      dissolution of the Company or liquidation of more than 50% or more in value
      of
      the assets of the Company, (ii) or any merger or reorganization of the Company
      whether or not another entity is the survivor, (iii) a transaction (other than
      the initial public offering of the Company's shares) pursuant to which holders,
      as a group, of all of the shares of the Company outstanding before the
      transaction, hold, as a group, less than 50% of the combined voting power of
      the
      Company or any successor company outstanding after the transaction, or (iv)
      any
      other event or series of events which the Optionee determines, in his
      discretion, would materially alter the structure of the Company or its
      ownership.

    


    (ii)    In
      the
      event of the Optionee's death, disability, other termination of employment
      or
      ceases to be a member of the Board prior to exercise, the exercisability of
      the
      Option shall be governed by Section 5 below.

     

    (iii)   The
      Option may be exercised in whole or in part but may not be exercised as to
      fractional shares.

     

    (b)    Method
      of Exercise.
      In
      order to exercise any portion of the Option, the Optionee shall execute and
      deliver to the Chief Financial Officer of the Company the Notice of Exercise
      of
      Stock Option in the form attached hereto as Exhibit "A," together with the
      Consent of Spouse. The Notice of Exercise must be accompanied by payment in
      full
      of the aggregate purchase price for the Shares to be purchased in the type
      of
      consideration set forth in Section 2. The Notice of Exercise may be delivered
      to
      the Company at any time. The certificate(s) for the Shares as to which the
      Option has been exercised shall be registered in the name of Optionee or his
      designee.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)    Restrictions
      on Exercise.
      This
      Option may not be exercised if the issuance of the shares upon such exercise
      or
      the method of payment of consideration for such shares would constitute a
      violation of any applicable federal or state securities law or any other law
      or
      regulation. As a condition to the exercise of the Option, the Company may
      require the Optionee to make any representation or warranty to the Company
      at
      the time of exercise of the Option as in the opinion of legal counsel for the
      Company may be required by any applicable law or regulation, including the
      execution and delivery of an appropriate representation statement. The stock
      certificate(s) for the Shares issued upon exercise of the Option may bear
      appropriate legends restricting transfer.

     

    (d)    Delivery
      of Certificates.
      The
      Company shall deliver the certificate(s) for the Shares issued upon exercise
      of
      the Option to the Optionee as soon as is practicable; provided, however, that
      if
      any law or regulation requires the Company to take action with respect to such
      shares before the issuance thereof, including, without limitation, actions
      taken
      pursuant to Section 6 below, then the date of delivery of such Shares shall
      be
      extended for a period necessary to take such action.

     

    4.    Non-Transferability
      of Option.
      This
      Option may be exercised during the lifetime of the Optionee only by the Optionee
      and may not be transferred in any manner other than by will or by the laws
      of
      descent and distribution. The terms of this Option shall be binding upon the
      executors, administrators, heirs and successors of the Optionee.

     

    5.    Term
      of the Option.
      Except
      as otherwise provided in this Agreement, to the extent not previously exercised,
      the right to exercise the Option shall terminate on the tenth (10th) anniversary
      of the date of grant. Notwithstanding the foregoing, if an Optionee ceases
      to be
      a Board Member of the Company for any reason, except death and disability,
      he or
      she may, but only within ninety (90) days after the date he or she ceases to
      be
      a Board Member of the Company, exercise his or her Option to the extent that
      he
      or she was entitled to exercise it at the date of such termination, and in
      the
      case of the Optionee's death or disability, the Optionee (or the Administrator
      or Executor or other Representative of the Optionee's estate) may, but only
      within one (1) year after the date he or she ceases to be a Board Member of
      the
      Company due to death or disability, exercise his or her Option to the extent
      that he or she was entitled to exercise it at the date of such termination;
      provided, however that in no event may the Option be exercised after the ten
      (10) year term has expired. To the extent that the Optionee was not entitled
      to
      exercise an Option at the date of such termination, or if he or she does not
      exercise such Option (which he or she was entitled to exercise) within the
      time
      specified herein, the Option shall terminate.

     

    6.    Adjustments
      Upon /Changes in Capitalization; Other Adjustments.
      Subject
      to any required action by the shareholders of the Company, the number of Shares
      and the Exercise Price shall be proportionately adjusted for any increase or
      decrease in the number of issued shares of Common Stock resulting from a stock
      split, reverse stock split, combination, reclassification, the payment of a
      stock dividend on the Common Stock or any other increase or decrease in the
      number of shares of Common Stock of the Company effected without receipt of
      consideration by the Company; provided, however, that conversion of any
      convertible securities of the Company shall not be deemed to have been "effected
      without receipt of consideration." Such adjustment shall be made by the Board,
      whose determination in that respect shall be final, binding and conclusive.
      Except as expressly provided herein, no issue by the Company of shares of stock
      of any class, or securities convertible into shares of stock of any class,
      shall
      affect and no adjustment by reason thereof shall be made with respect to, the
      number of shares subject to, or the Exercise Price of, this Option.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
      Board
      may, if it so determines in the exercise of its sole discretion, also make
      provision for adjusting the number of shares, as well as the Exercise Price,
      in
      the event that the Company effects one or more reorganizations,
      recapitalizations, rights offerings, or other increases or reductions of shares
      of its outstanding common stock, and in the event of the Company being
      consolidated with or merged into any other corporation; provided, however,
      that
      in no event shall the Optionee be adversely affected by such
      adjustment.

     

    The
      Board
      may, if it so determines in the exercise of its sole discretion, also make
      provision for changing, modifying, amending or adjusting any of the terms of
      this Option solely in order for the Company to perfect a significant financing;
      provided, however, that in no event shall the Optionee be adversely affected
      by
      such adjustment.

     

    7.    Rights
      of Shareholder.
      Optionee shall have no rights as a shareholder with respect to the shares until
      the date of the issuance or the transfer to the Optionee of the certificate(s)
      for such shares and only after the Exercise Price for such shares has been
      paid
      in full.

     

    8.    Amendment.
      Except
      as set forth in Section 6, this Agreement may not be amended without the written
      consent of the Optionee.

     

    9.    Income
      Tax Withholding.
      The
      Optionee authorizes the Company to withhold, in accordance with applicable
      law
      from any compensation payable to him or her, any taxes required to be withheld
      by federal, state or local laws as a result of the exercise of this Option.
      Furthermore, in the event of any determination that the Company has failed
      to
      withhold a sum sufficient to pay all withholding taxes due in connection with
      the exercise of this Option, the Optionee agrees to pay the Company the amount
      of such deficiency in cash within five (5) days after receiving a written demand
      from the Company to do so, whether or not Optionee is an employee or director
      of
      the Company at that time.

     

    10.    Investment
      Representations; Legends.

     

    (a)    Representations.
      The
      Optionee represents, warrants and covenants that:

     

    (i)    Any
      shares purchased upon exercise of this Option shall be acquired for the
      Optionee's account for investment only, and not with a view to, or for sale
      in
      connection with, any distribution of the shares in violation of the Securities
      Act of 1933 (the "Securities Act"), or any rule or regulation under the
      Securities Act.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (ii)    The
      Optionee has had such opportunity as he or she has deemed adequate to obtain
      from representatives of the Company such information as is necessary to permit
      the Optionee to evaluate the merits and risks of his or her investment in the
      Company.

     

    (iii)   The
      Optionee is able to bear the economic risk of the holding of such shares
      acquired pursuant to the exercise of this Option for an indefinite
      period.

     

    (iv)   The
      Optionee understands that the Shares acquired pursuant to the exercise of this
      Option are not registered under the Securities Act and are "restricted
      securities" within the meaning of Rule 144 under the Securities Act and may
      not
      be transferred, sold or otherwise disposed of in the absence of an effective
      registration statement with respect to the Shares filed and made effective
      under
      the Securities Act of 1933, or an opinion of counsel satisfactory to the Company
      to the effect that registration under such Act is not required.

     

    By
      making
      payment upon exercise of this Option, the Optionee shall be deemed to have
      reaffirmed, as of the date of such payment, the representations made in this
      Section 10.

    


    (b)    Legends
      of Stock Certificate.
      All
      stock certificates representing share of Common Stock issued to the Optionee
      upon exercise of this Option shall have affixed thereto legend(s) substantially
      in the following forms, in addition to any other legends required by applicable
      state law:

    


    "THE
      SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
      THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
      DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT
      TO THE SHARES EVIDENCED BY THIS CERTIFICATE, FILED AND MADE EFFECTIVE UNDER
      THE
      SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
      TO
      THE EFFECT THAT REGISTRATION UNDER SUCH ACT IS NOT REQUIRED."

     

    DATE
      OF
      GRANT: May 23, 2006

     

    
      	 	
              NUTRACEA

            
	 	 	 
	 	
              By:
                

            	 
	 	 	
              Bradley
                D. Edson, Chief Executive Officer

            
	 	 	 
	 	
              By:

            	 
	 	 	
              Todd
                C. Crow, Chief Financial
                Officer

            


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    The
      Optionee acknowledges receipt of a copy of the Plan, and represents that he
      or
      she is familiar with the terms and provisions thereof, and hereby accepts this
      Option subject to all of the terms and provisions thereof. The Optionee hereby
      agrees to accept as binding, conclusive and final all decisions or
      interpretations of the Board of Directors of NutraCea upon any questions arising
      under such Agreement.

    


    
      	
              Dated:

            	
               

            


    

    


    


    
      	 	 	 
	 	 	
              KENNETH
                SHROPSHIRE

            
	 	 	
              7100
                WAYNE AVENUE

            
	 	 	
              PHILADELPHIA,
                PA 19119

            
	 	 	 	 
	 	 	
              Phone:
                215-898-3017

            
	 	 	 	 
	 	 	
              SSN:

            	 


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    CONSENT
      OF SPOUSE

     

    I,
      ________________________, spouse of the Optionee who executed the foregoing
      Agreement attached hereto, hereby agree that my spouse's interest in the shares
      of Common Stock of NutraCea subject to said Agreement shall be irrevocably
      bound
      by the Agreement's terms. I agree to accept as binding, conclusive and final
      all
      decisions or interpretations of the Board of Directors of NutraCea upon any
      questions arising under such Agreement. I further agree that my community
      property interest in such Shares, if any, shall similarly be bound by said
      Agreement and that such consent is binding upon my executors, administrators,
      heirs and assigns. I agree to execute and deliver such documents as may be
      necessary to carry out the intent of said Agreement and this
      consent.

    


    
      	
              Dated:

            	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	
              Signature

            
	 	 	 	 
	 	 	 	
               

            
	 	 	 	
              Print
                Name

            


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      A

    


    
      	
              TO:

            	
              NutraCea

            


    

    1241
      Hawks Flight Court, Suite 103

    El
      Dorado
      Hills, CA 95762

    


    
      	
              SUBJECT:

            	
              NOTICE
                OF EXERCISE OF STOCK OPTIONS

            


    

    


    


    With
      respect to the stock option granted to the undersigned by NutraCea, (the
“Company”) on (grant date) _______________________, to purchase an aggregate of
      ________________________ shares of the Company’s Common Stock, this is official
      notice that the undersigned hereby elects to exercise such option to purchase
      shares as follows:

    


    
      	 	
              Number
                of Shares

            	 	 	 
	 	 	 	 	 
	 	
              Date
                of Purchase:

            	 	 	 
	 	 	 	 	 
	 	
              Mode
                of Payment:

            	 	 	
              (certified
                check or cash)

            


    

     

    The
      shares should be issued as follows:

    


    
      	 	
              Name:

            	 	
               

            	 
	 	 	 	 	 
	 	
              Address:

            	 	
               

            	 
	 	 	 	 	 
	 	 	 	 	 


    

    


    


    
      	 	
              Signed
                by (print name):

            	
               

            	 
	 	 	 	 
	 	
              Signature:

            	
               

            	 
	 	 	 	 
	 	
              Dated:

            	
               

            	 


    

     

    Please
      send this notice of exercise to:

    


    NutraCea

    1241
      Hawks Flight Court, Suite 103

    El
      Dorado
      Hills, CA 95762

    


    Phone:
      916-933-3000