Document:

Exhibit 4.9

SECOND
AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (herein called this "Amendment")
made as of the 30 day of March, 2005 by and between Comerica Bank ("Bank") and
Citadel Security Software, Inc., a Delaware corporation
("Borrower").

RECITALS

1.  Borrower
and Bank have entered into that certain Loan and Security Agreement dated as of
April 15, 2004 (as from time to time amended, modified or supplemented, the
"Original Agreement") for the purposes and consideration therein expressed,
pursuant to which Bank made loans to Borrower as therein provided. 

2.  Borrower
and Bank desire to amend the Original Agreement to amend the financial
covenants.

3.  In
consideration of the premises and the mutual covenants and agreements contained
herein and in the Original Agreement, in consideration of the loans that may
hereafter be made by Bank to Borrower, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

ARTICLE
I

Definitions
and References

§ 1.1.
Terms
Defined in the Original Agreement. Unless
the context otherwise requires or unless otherwise expressly defined herein, the
terms defined in the Original Agreement shall have the same meanings whenever
used in this Amendment.

§ 1.2.
Other
Defined Terms. Unless
the context otherwise requires, the following terms when used in this Amendment
shall have the meanings assigned to them in this Section 1.2.

"Amendment"
means this Second Amendment to Loan and Security Agreement.

"Loan and
Security Agreement" means the Original Agreement as amended hereby.

 

ARTICLE
II

Amendment
to Original Agreement

§ 2.1.
Financial
Covenants. Section
6.7 of the Original Agreement is hereby amended in its entirety to read as
follows:

6.7
Financial
Covenants.
Borrower shall at all times maintain the following financial ratios and
covenants, to be measured as of the last day of each calendar month until
December 31, 2005, and at all times thereafter, as of the last day of each
fiscal quarter of Borrower, unless stated otherwise:

(a)
Liquidity
Ratio. A ratio
of Liquidity to all Indebtedness of at least 1.5 to 1.0.

(b)
Minimum
Cash. At all
times, a balance of Cash at Bank and its Affiliates covered by a control
agreement of not less than $2,000,000.

(c)
Minimum
Adjusted EBITDA.
Borrower’s negative Adjusted EBITDA for the periods set forth below may not
exceed the following amounts for the applicable period:

	
      Period
	
      Maximum
      Negative Adjusted EBITDA

	
      3
      month period ending 3/31/05
	
      ($4,000,000)

	
      6
      month period ending 6/30/05
	
      ($2,300,000)

Borrower’s
Adjusted EBITDA for the periods set forth below shall not be less than the
following amounts for the applicable period:

	
      Period
	
      Adjusted
      EBITDA

	
      9
      month period ending 9/30/05
	
      $750,000

	
      12
      month period ending 12/31/05
	
      $1,500,000

§ 2.2.
Definitions. The
following definitions are hereby added to Exhibit A to the Original Agreement in
the correct alphabetical order:

“Adjusted
EBITDA” means, with respect to any fiscal period, EBITDA plus deferred revenue
for such period.

“Liquidity”
means the balance of Cash held with Bank and its Affiliates plus 80% of Eligible
Accounts.

§ 2.3.
Exhibits. Exhibit
E to the Original Agreement is hereby amended in its entirety to read as set
forth in Exhibit E attached hereto.

 

2

§ 2.4.
Address.
Borrower’s address set forth in Section 10 of the Original Agreement is replaced
with the following:

5420
Lyndon B Johnson Fwy (I-635) 

2 Lincoln
Centre 

Suite
1600 

Dallas,
TX 75240

§ 2.5.
Waiver. Bank
hereby waives any Event of Default caused by Borrower’s failure to comply with
the covenants set forth in Section 6.7 of the Original Agreement for any period
ending prior to the date of this Amendment.

ARTICLE
III

Conditions
of Effectiveness

§ 3.1.
Effective
Date. This
Amendment is effective as of the date first above written if and only if Bank
has received, at Bank's
office:

(a)    a duly
executed original of this Amendment; and

 

(b)    a Warrant
to purchase 18,050 shares of Borrower’s Common Stock at an exercise price of
$1.79 per share on Bank’s form, with a 7-year maturity, inclusive of certain
provisions to include but not be limited to assignability to Bank’s affiliates,
and a net exercise provision.

§ 3.2.
Bank
Expenses. Borrower
shall pay to Bank all unpaid Bank Expenses incurred through the date of this
Amendment. Bank acknowledges it has received the non-refundable $15,000.00
restructure fee.

ARTICLE
IV

Representations
and Warranties

§ 4.1.
Representations
and Warranties of Borrower. In
order to induce Bank to enter into this Amendment, except as set forth on Annex
A hereto, Borrower represents and warrants that:

(a)    The
representations and warranties contained in Section 5 of the Original Agreement
are true and correct at and as of the time of the effectiveness
hereof.

(b)    Borrower
is duly authorized to execute and deliver this Amendment and is and will
continue to be duly authorized to borrow and to perform its obligations under
the Loan and Security Agreement. Borrower has duly taken all corporate action
necessary to authorize the execution and delivery of this Amendment and to
authorize the performance of the obligations of Borrower
hereunder.

3

(c)    The execution
and delivery by Borrower of this Amendment, the performance by Borrower of its
obligations hereunder and the consummation of the transactions contemplated
hereby do not and will not conflict with any provision of law, statute, rule or
regulation or of the articles of incorporation and bylaws of Borrower, or of any
material agreement, judgment, license, order or permit applicable to or binding
upon Borrower, or result in the creation of any lien, charge or encumbrance upon
any assets or properties of Borrower. Except for those which have been duly
obtained, no consent, approval, authorization or order of any court or
governmental authority or third party is required in connection with the
execution and delivery by Borrower of this Amendment or to consummate the
transactions contemplated hereby.

(d)    When duly
executed and delivered, each of this Amendment and the Loan and Security
Agreement will be a legal and binding instrument and agreement of Borrower,
enforceable in accordance with its terms, except as limited by bankruptcy,
insolvency and similar laws applying to creditors' rights generally and by
principles of equity applying to creditors' rights generally.

ARTICLE
V

Miscellaneous

§ 5.1.
Ratification
of Agreements. The
Original Agreement as hereby amended is hereby ratified and confirmed in all
respects. Any reference to the Loan and Security Agreement in any Loan Document
is now a reference to the Original Agreement as hereby amended. The execution,
delivery and effectiveness of this Amendment does not, except as expressly
provided herein, operate as a waiver of any right, power or remedy of Bank under
the Loan and Security Agreement or any other Loan Document, or constitute a
waiver of any provision of the Loan and Security Agreement or any other Loan
Document.

§ 5.2.
Survival
of Agreements. All
representations, warranties, covenants and agreements of Borrower in this
Amendment survive the execution and delivery of this Amendment and the
performance hereof, including without limitation the making or granting of the
Credit Extensions, and will survive until all of the Obligations are paid in
full. All statements and agreements contained in any certificate or instrument
delivered by Borrower under this Amendment or under the Loan and Security
Agreement to Bank constitute representations and warranties by, or agreements
and covenants of, Borrower under this Amendment and under the Loan and Security
Agreement.

§ 5.3.
Loan
Documents. This
Amendment is a Loan Document, and all provisions in the Loan and Security
Agreement pertaining to Loan Documents apply hereto.

§ 5.4.
Governing
Law. This
Amendment is governed by and construed in accordance with the laws of the State
of California and any applicable laws of the United States of America in all
respects, including construction, validity and performance.

4

§ 5.5.
Counterparts. This
Amendment may be separately executed in counterparts and by the different
parties hereto in separate counterparts, each of which when so executed
constitutes one and the same Amendment.

THIS
AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS OF THE PARTIES.

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

5

IN
WITNESS WHEREOF, this Amendment is executed as of the date first above
written.

	 	
      CITADEL
      SECURITY SOFTWARE, INC.

	 	 
	 	 
	
      By:
	
       
      /s/ Steven B. Solomon

	 	
      Name:
      Steven B. Solomon

	 	
      Title:
      Chairman and CEO

	 	 
	 	 
	 	
      COMERICA
      BANK

	 	 
	 	 
	
      By:
	
       
      /s/ David Whiting

	 	
      Name:
      David Whiting

	 	
      Title:
      SVP

 

6

EXHIBIT
E

COMPLIANCE
CERTIFICATE

	
      TO:
	
      COMERICA
      BANK

	
      FROM:
	
      CITADEL
      SECURITY SOFTWARE INC.

The
undersigned authorized officer of Citadel Security Software Inc. ("Borrower")
hereby certifies that in accordance with the terms and conditions of the Loan
and Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower
is in complete compliance for the period ending _______________ with all
required covenants, including without limitation the ongoing registration of
intellectual property rights in accordance with Section 6.8, except as noted
below and (ii) all representations and warranties of Borrower stated in the
Agreement are true and correct in all material respects as of the date hereof.
Attached herewith are the required documents supporting the above certification.
The Officer further certifies that these are prepared in accordance with
Generally Accepted Accounting Principles (GAAP) and are consistently applied
from one period to the next except as explained in an accompanying letter or
footnotes.

Please
indicate compliance status by circling Yes/No under "Complies"
column.

	
      Reporting
      Covenant
	Required
	
      Complies

	
       
	 	 	 
	
      10KSB
      and 10QSB
	
      (as
      applicable)
	
      Yes
	
      No

	
      A/R
      & A/P Agings, Borrowing Base Cert.
	
      Monthly
      within 10 days
	
      Yes
	
      No

	
      A/R
      Audit
	
      As
      Required
	
      Yes
	
      No

	
      IP
      Report
	
      Quarterly
      within 30 days
	
      Yes
	
      No

	
      Financial
      Projections
	
      By
      November 30
	
      Yes
	
      No

	
      Financial
      Covenant
	Required
	Actual
	
      Complies

	
       
	 	 	 	 
	
      Liquidity
      Ratio
	
      1.50
      to 1.0
	
      ____
      to 1.0
	
      Yes
	
      No

	
      Minimum
      Cash
	
      $2,000,000
	
      $____________
	
      Yes
	
      No

	
      Adjusted
      EBITDA
	
      3
      months ended 3/31/05
	
      $____________
	
      Yes
	
      No

	 	
      Loss
      not to exceed ($4,000,000)
	 	 	 
	 	
      6
      months ended 6/30/05
	
      $____________
	
      Yes
	
      No

	 	
      Loss
      not to exceed ($2,300,000)
	 	 	 
	
       
	
      9
      months ended 9/30/05
	
      $____________
	
      Yes
	
      No

	
       
	
      ≥
      $750,000
	 	 	 
	
       
	
      12
      months ended 12/31/05
	
      $____________
	
      Yes
	
      No

	
       
	
      ≥
      $1,500,000
	 	 	 

 

	
      Comments
      Regarding Exceptions:
      See Attached.
	
      BANK
      USE ONLY

	
       
	 
	
       
	
      Received
      by: _____________________________________

	
      Sincerely,
	
      Authorized
      Signer

	
       
	 
	
       
	
      Date:____________________________________________

	
       
	 
	
      __________________________________________
	
      Verified:_______________________________

	
      SIGNATURE
	
      Authorized
      Signer

	
       
	 
	
       
	 
	
      __________________________________________
	
      Date:____________________________________________

	
      TITLE
	 
	
       
	
      Compliance
      Status:
	
      Yes
	
      No

	
      __________________________________________
	 
	
      DATE
	 

 

Annex
A

Section
5.6 of Original Agreement

In
January 2005, six putative securities class action lawsuits were filed against
us and our chief executive officer and chief financial officer in the United
States District Court, Northern District of Texas: (1) Ruth R. Lentz,
Individually and On Behalf of All Others Similarly Situated, Plaintiff, v.
Citadel Security Software Inc., Steven B. Solomon and Richard Connelly,
Defendants, Civil Action No. 3:05-CV-0100-D, filed January 14, 2005; (2) John
Heller, Individually and On Behalf of All Others Similarly Situated, Plaintiff,
v. Citadel Security Software Inc., Steven B. Solomon and Richard Connelly,
Defendants, Civil Action No. 3:05-CV-0142-D, filed January 24, 2005; (3) Adam
Cheyney, Individually and On Behalf of All Others Similarly Situated, Plaintiff,
v. Citadel Security Software Inc., Steven B. Solomon and Richard Connelly,
Defendants, Civil Action No. 3:05-CV-0157-D, filed January 25, 2004; (4) Richard
Holland, Individually and On Behalf of All Others Similarly Situated, Plaintiff,
v. Citadel Security Software Inc., Steven B. Solomon and Richard Connelly,
Defendants, Civil Action No. 3:05-CV-0184-H, filed January 26, 2004; (5) Philip
Crawford, Jr., Individually and On Behalf of All Others Similarly Situated,
Plaintiff, v. Citadel Security Software Inc., Steven B. Solomon and Richard
Connelly, Defendants, Civil Action No. 3:05-CV-0203-D, filed January 28, 2004;
and (6) Leonard Wald, Individually and On Behalf of All Others Similarly
Situated, Plaintiff, v. Citadel Security Software Inc., Steven B. Solomon and
Richard Connelly, Defendants, Civil Action No. 3:05-CV-0297-D, filed January 2_,
2004. Any of these lawsuits could have a Material Adverse Effect on
Borrower.EXHIBIT 10.4

                              EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of the
                                 ---------
17th day of December 2004, by and between NutraCea, a California corporation

("Employer") and Brad Edson ("Employee").
  --------                    --------

  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 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  to  employ  Employee  and  Employee
          -----------
          hereby  accepts  such  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 17, 2004 and expires 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.  Employer  shall  pay  Employee  a base annual salary of
          -------------
          Fifty  thousand  Dollars  ($50,000)  for the first year of employment,
          payable  $4,157  per  month.  In  accordance  with  Employer's  normal
          policies  but in no event less often than semi-monthly (the "Salary").
          Effective  December  1,  2005, Employee's salary shall be increased to
          one hundred fifty thousand dollars ($150,000) for the second year of

                                        1
<PAGE>
          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  $20,833 per month for the third year of
          employment, and adjust upwards 10% annually thereafter.

          3.2  WARRANTS:  Employer  shall  issue  to  Employee  Warrant
               ---------
               Certificates  to  purchase 6,000,000 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 contract being executed by all
               parties.  A copy of the Warrant Agreement is attached as Addendum
               C.

          3.3  STOCK  OPTION  PLAN/STOCK  PURCHASE  PLAN:  Employee  shall  be
               ------------------------------------------
               eligible  to participate in Company's Stock Option Plan and Stock
               Purchase Plan during the term of employment.

     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,
               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, economy travel for domestic travel within the
               United  States,  and business Class travel for travel outside the
               country,  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.

          4.3  AUTOMOBILE  EXPENSES:  Employer  shall  provide  Employee with an
               ---------------------
               automobile allowance in the amount of $600.00 per month.

                                        2
<PAGE>
          4.4  CELLULAR  TELEPHONE:  Employer  shall  reimburse  employee  for
               --------------------
               the use of his cellular telephone.

          4.5  ASSISTANCE:  Employer  shall  furnish  Employee  with  an office,
               -----------
               and  personal  assistant,  together  with a portable computer and
               office  equipment  and  such other facilities and services as are
               deemed  by  the Board of Directors of Employer to be suitable for
               his  position  and adequate for the performance of his duties and

               obligations under this Agreement.

          4.6  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.

     5.   DUTIES/SERVICE
          --------------

          5.1  POSITION:  Employee  is  employed  as  President  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. The Employee will be made a
               member  of  the  Board of Directors of the Company effective upon
               the contract being executed.

          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  Phoenix,  Arizona  Metropolitan area. Employee
               agrees  to make himself available for travel from time to time to
               Employer's corporate headquarters in Sacramento.

          5.3  EXTENT  OF  SERVICES:  Employee  shall  at  all  times and to the
               ---------------------
               best of his ability perform his 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 Phoenix area

                                        3
<PAGE>
               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  his  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;  or  (iv)  in  the  event that the current Chief
               Executive  Officer of the Employer for any reason no longer holds
               such

                                        4
<PAGE>
               position,  the  failure  of  the  Board  of Directors of Employer
               to  appoint  Employee  as Chief Executive Officer of Employer; or
               (v)  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 safe, 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.

          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.

                                        5
<PAGE>
          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 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, a fraud against the Company.

          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:
               -----------------------

                                        6
<PAGE>
               Termination  of  Employee  by  Employer,  pursuant  to  the terms
          hereof,  shall  only  occur by decision of the Board of Directors at a
          duly  noticed  and  convened  meeting  of  the  Board  of Directors of
          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  and  thereafter,  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.

     8.   RETURN  OF  EMPLOYER  PROPERTY:  Employee  agrees  that  upon  any
          -------------------------------
          termination  of  his  employment,  Employee  shall  return to Employer
          within  a  reasonable  time  not  to  exceed  two  (2)  weeks,  any of
          Employer's property in his possession or under his 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:
                              Attn: Chairman of the Board
                              1261 Hawks Flight Court,
                              El Dorado Hills, CA

          AS TO EMPLOYEE:
                              Brad Edson
                              5080 N. 40th Street, Suite 106
                              Phoenix, Arizona, 85018

                                        7
<PAGE>
          ADDRESS  CHANGE:  Any  party  may  change  the  address(es)  at  which
          notices to it or him, 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 Bylaws 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 Bylaws 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 he 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 his 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.

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

                                        8
<PAGE>
the  foregoing,  Employee  shall have the right to employ his 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.

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

          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.

                                        9
<PAGE>
          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,
                         California  before  Judicial  Arbitration  Mediation
                         Services ("JAMS") in accordance with JAMS' then-current
                                    ----
                         policies  and  procedures for arbitration of employment
                         disputes.

               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.

                                       10
<PAGE>
          12.9 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

         12.10 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.

     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/ Patricia McPeak
                                                       ------------------------
                                                          (Signature)

                                                       ------------------------
                                                          (Type/Print name)

                                                        CHIEF EXECUTIVE OFFICER
                                                       ------------------------
                                                          (Office held)

Employee:                                           By: /s/ Brad Edson
                                                       ------------------------

                                                        Brad Edson
                                                       ------------------------
                                                          (Type/Print name)

                                       11
<PAGE>
                                   ADDENDUM A
                                  -----------
                      EMPLOYEE INCENTIVE COMPENSATION PLAN

This  Employee  Incentive  Compensation  Agreement (this "Agreement") is entered
                                                          ---------
into  this  17th  day  of  December, 2004, by and between NutraCea, a California
corporation (the "Employer"), and Brad Edson ("Employee"), as follows:
                  --------                     --------

WHEREAS,  It  is  in  the best interest of Employer and Employee to enter into a
contracting 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  FOR:  If  a  combination  occurs  between  the  RiceX
     --------------------------
     Corporation  and  NutraCea,  (including  but  not  limited  to  a  merger,
     acquisition,  asset  purchases)  concurrent  with  the  closing  of  that
     transaction  a  cash  fee  equal  to 2.25% of the value placed on the RiceX
     Corporation, as determined by the total amount of compensation paid for the
     company by NutraCea, shall be paid to Brad Edson as a success bonus.

3.   EMPLOYEE  INCENTIVE  BONUSES:  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)  percent  of  Employer's  "Gross  Sales  over
                                                             ------------------
     $25,000,000."  However,  in  no  event  shall such bonus be paid unless 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 $750,00 in
     any calendar year.

5.   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.

                                       12
<PAGE>
     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.

Employer:                               NutraCea Corporation,
                                        a California corporation

                                        By: /s/ Patricia McPeak
                                           -------------------------------------
                                               (Signature)

                                        ----------------------------------------
                                               (Type/Print name)

                                          Chairman and CHIEF EXECUTIVE OFFICER
                                        ----------------------------------------
                                               (Office held)

Employee:                               By: /s/ Brad Edson
                                          --------------------------------------

                                          Brad Edson
                                        ----------------------------------------
                                               (Type/Print name)

                                       13

<PAGE>
                                   ADDENDUM B
                                   ----------

                         JOB DESCRIPTION FOR BRAD EDSON

JOB TITLE:       President
Other Title:     Member of the Board of Directors
DEPARTMENT:      Executive
REPORTS TO:      Board of Directors

SUMMARY
The President has primary responsibility for planning, organizing, staffing, and
operating  the  Corporation ("NutraCea") toward its primary objectives, based on
profit  and return on capital, and is accountable only to the Board of Directors
for the results of performance of all employees.

The  President's  written  approval  is  required  for  all  corporate legal and
fiduciary activities.

The  President  establishes  and  communicates  the  management style, corporate
culture,  business  philosophy  and  ethical  values  by  which the Company will
operate.

The President manages and directs all employees except for the CEO by performing
the following duties personally or through subordinate managers.

ESSENTIAL DUTIES AND RESPONSIBILITIES include the following. Other duties may be
assigned

Plans  the overall business strategy and goals of the Company that will assure a
defined  rate of return on stockholder investment and establishes objectives for
each  function  to  meet  those  goals,  with  the  cooperation  of the Board of
Directors.

Plans, coordinates, and controls the daily operation of the Company through its
managers.

Establishes current and long range goals, objectives, plans and policies.

Determines  the appropriate organization structure and staffing responsibilities
required  to  meet  the  Company's  objectives.  Dispenses  advice,  guidance,
direction, and authorization to carry out major plans, standards and procedures,
consistent with established policies.

Oversees the adequacy and soundness of the company's financial structure.

Reviews  operating  results  of  the  Company,  compares  them  to  established
objectives,  and  takes  steps  to ensure that appropriate measures are taken to
correct unsatisfactory results.
Plans  and  directs  all  investigations and negotiations pertaining to mergers,
joint ventures, the acquisition of businesses, or the sale of major assets.

                                       14
<PAGE>
Fulfills responsibility to the Board of Directors to inform or seek approval for
significant matters such as financing, , and appointment of officers.

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

Reviews  and  determines  approval  of  all  recommendations for compensation of
officers, managers and employees.

Presides over stockholders meetings.

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

                                       15
<PAGE>
                                   ADDENDUM C

THE  WARRANTS  REPRESENTED  BY  THIS  CERTIFICATE AND THE SHARES USABLE 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 Purchases of Common Stock,
                           par value $0.001 per Share

No. WC-[__]
Issuance Date:  December 17, 2004                               6,000,000 Shares

          THIS CERTIFIES that, for values received, Brad Edson (the "Holder") is
entitled  to  subscribe for and purchase from NutraCea, a California corporation
(the  "Company"),  upon  the  terms  and  conditions set forth herein, 6,000,000
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 exercise 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 16, 2014 (the "Exercise Period").

     2.   PROCEDURE FOR EXERCISE EFFECT OF EXERCISE
          -----------------------------------------

          (a)  CASH  PURCHASE.  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, (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,

                                        1
<PAGE>
transfer  of  immediately  available  funds  to  a bank account specified by the
Company,  or  by  certified  or  bank  cashier's  check.

          (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.

                                        2
<PAGE>
          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 purposes and shall not be bound to
recognize  any  equitable  or  other claim to or interest 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 authority 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.

                                        3
<PAGE>
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
on  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.

          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.

                                        4
<PAGE>
     6.   Adjustments. The number of shares of Common Stock issuable upon
          ------------
exercise of the Warrants shall be adjusted from time to time as follows:

          (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 Stuck 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

                                        5
<PAGE>
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.

          (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;

                                        6
<PAGE>
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).

          (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.

                                        7
<PAGE>
          (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.

     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 construed 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.

     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

                                        8
<PAGE>
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 1O-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.

                                        9
<PAGE>
Dated: December [_], 2004

                                                  NUTRACEA,
                                                  a California Corporation

                                                  By: /s/ Patricia McPeak
                                                     ---------------------------
                                                      Signature
                                                      President

                          [Signature Page to Warrant]

<PAGE>
                               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  docs  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
enlargement or any change whatsoever.

<PAGE>
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  undersigned  at  the  address  stated  below.

                                          Dated:
                                                ------------------------

                                          By:
                                             ---------------------------
                                             Print Name

                                          ------------------------------
                                          Signature

Address:

------------------------------------

------------------------------------

------------------------------------

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