Document:

Unassociated Document

    
      

    

    
      Exhibit
        10.05
EMPLOYMENT
      AGREEMENT

    

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

    

    W
      I T N E S S E T H:

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    
      	 	
              3.

            	
              COMPENSATION.

            

    

    

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

    

    
      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

    

     

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

    

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

    

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

    

    
      	 	
              4.

            	
              EMPLOYEE
                BENEFITS.

            

    

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    

    
      	 	
              5.

            	
              DUTIES/SERVICE.

            

    

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    

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

    

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

    
      
        
        

      

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

    
      
        
        

      

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

    

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

    

    

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

    

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    

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

    

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

    

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

    

      
        	 	
                As
                  to Employer:

              	
                Chairman,
                  Board of Directors

              

      

      NutraCea

      1261
        Hawks Flight Court,

      El
        Dorado
        Hills, CA 95762

    

    
      
        
        

      

      
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              As
                to Employee:

            	
              Nana
                Patricia McPeak

            

    

    100
      Rock
      Lane

    El
      Dorado
      Hills, CA 95762

     

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

    

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

    

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

    
      
        
        

      

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

    

    12.   MISCELLANEOUS.

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    

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

    

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

    

    
      	 	
              12.8

            	
              Arbitration.

            

    

    

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

    
      
        
        

      

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

    

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

    

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

    

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

    

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

    

    

    

    

    [SIGNATURE
      PAGE TO FOLLOW]

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

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

    

    

    

    
      	
              Employer:

            	 	
              NutraCea®,

            
	 	 	a
              California corporation
	 	 	 	 
	 	 	 	 
	 	 	
              By:
                

            	
                /s/
                Edward
                Newton

            
	 	 	 	
              (signature)

            
	 	 	 	 
	 	 	 	Edward
              Newton
	 	 	 	
              (Type/Print
                name)

            
	 	 	 	 
	 	 	 	Secretary
              and Vice President
	 	 	 	
              (Office
                held)

            
	 	 	 	 
	
              Employee:

            	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	
              By:

            	
                /s/
                Nana Patricia
                McPeak

            
	 	 	 	
              (signature)

            
	 	 	 	 
	 	 	 	Nana
              Patricia McPeak
	 	 	 	
              (Type/Print
                name) 

            

    

     

    

    [SIGNATURE
      PAGE TO EMPLOYMENT AGREEMENT]

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

        
        

      

    

    

    ADDENDUM
      A

    EMPLOYEE
      INCENTIVE COMPENSATION PLAN

    

    

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

    

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

    

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

    

    NOW,
      THEREFORE, the parties hereby agree as follows:

    

    
      	
              1.

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

            

    

     

    
      	
              2.

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

            

    

    

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

            

    

     

    
      	
              4.

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

            

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

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

     

     

    
      	
              Employer:

            	 	
              NutraCea®,
                

            
	 	 	a
              California corporation
	 	 	 	 
	 	 	 	 
	 	 	
              By:
                

            	
                /s/
                Edward
                Newton

            
	 	 	 	
              (signature)

            
	 	 	 	 
	 	 	 	Edward
              Newton
	 	 	 	
              (Type/Print
                name)

            
	 	 	 	 
	 	 	 	Secretary
              and Vice President
	 	 	 	
              (Office
                held)

            
	 	 	 	 
	
              Employee:

            	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	
              By:

            	
                /s/
                Nana Patricia
                McPeak

            
	 	 	 	
              (signature)

            
	 	 	 	 
	 	 	 	Nana
              Patricia McPeak
	 	 	 	
              (Type/Print
                name) 

            

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    ADDENDUM
      B

    

    Job
      Description for Nana Patricia McPeak

     

    

    
      	
              Job
                Title: 

            	
              Chief
                Executive Officer 

            
	
              Department:
                

            	
              Executive

            
	
              Reports
                To:
                

            	
              Board
                of Directors 

            

    

    

    SUMMARY
      

     

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

    

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

     

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

    

    ESSENTIAL
      DUTIES AND RESPONSIBILITIES
      include
      the following:

    

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

     

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

     

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

     

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

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

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

    

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

    

    

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

    

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

    

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

    

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

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    ADDENDUM
      C

    

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

    

    THE
      TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED
      HEREIN.

    

    

    NutraCea,
      a California corporation

    

    Warrant
      for the Purchase of Shares of Common Stock,

    par
      value
      $0.001 per Share

    

    

    
      	
              No.
                WC-[___]

            	
              2,000,000 Shares

            

    

    Issuance
      Date: December [14], 2004

    

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

    

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

    

    2.     Procedure
      for Exercise; Effect of Exercise.
      

     

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

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

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

    

    
      	
              X
                =
                

            	 	
              Y(A-B)

                  
                A

            

    

    

    Where:

    
      	
              X
                =
                

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

            
	
              Y
                =
                

            	
               

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

            
	
              A
                =
                

            	 	
              the
                Current Market Price on such date; and

            
	
              B
                =
                

            	 	
              the
                Exercise Price 

            

    

    

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

    

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

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    

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

    

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

    

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

    

    

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

    

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

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    (c)    If:

    

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

            

    

    

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

              

      

    

    

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

            

    

    

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

            

    

    

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

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    

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

    

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

    

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

    

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

    
       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

    

     

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

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    Dated:
      December 14, 2004

     

    
      	 	
              NUTRACEA

            	 
	 	
              a
                California corporation

            	 
	 	 	 	 
	 	 	 	 
	 	
              By:  

            	
               /s/
                Edward Newton

            	 
	 	 	
              Signature

            	 
	 	 	
              Title:
                Secretary, Vice President

            	 
	 	 	 	 

    

     

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

     

    FORM
      OF
      ASSIGNMENT

    

    

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

    

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

    

    
      	 	
              Dated:

            	 	 
	 	 	 	 
	 	
              By:  
                

            	       
	 
	 	 	Signature	 

    

    

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

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    

    
      	
              To:
                

            	
              NutraCea.

            
	 	
              1261
                Hawks’ Flight Court

            
	 	
              El
                Dorado Hills, CA 95762

            
	 	
              Attention:
                Chief Executive Officer

            

    

     

    

    NOTICE
      OF
      EXERCISE

    

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

    

    _______________________________________

    _______________________________________

    _______________________________________

    

    (Print
      Name, Address and Social Security

    or
      Tax
      Identification Number)

    

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

     

    
      	 	
              Dated:

            	 	 
	 	 	 	 
	 	 	 	 
	 	
              By:  
                

            	    
	 
	 	 	Print
              Name	 
	 	 	 	 
	 	 	 	 
	 	     
	 
	 	
              Signature

            	 

    

    

    
      	
              Address:

            	 	 
	    
	 	 
	    
	 	 
	    
	 	 
	 	 	 

    

     

    29Exhibit 10.06

    
      

    

     

    Exhibit
      10.06

     

    NUTRACEA

    

    RESTRICTED
      STOCK AGREEMENT

    

    

    This
      Restricted Stock Agreement (the “Agreement”)
      is
      made effective as of March 19, 2004 (“Effective
      Date”)
      by and
      between NutraCea, a California corporation with principal address at 1261 Hawk’s
      Flight Court, El Dorado Hills, CA 95762 (the “Company”),
      and
      Nana Patricia McPeak, an individual with principal address at 100 Rock Lane,
      El
      Dorado Hills, CA 95762 (the “McPeak”).

    

    In
      consideration of the mutual covenants and representations set forth below,
      the
      Company and McPeak agree as follows:

    

    1.  Issuance
      of the Shares.
      Subject
      to the terms and conditions of this Agreement, the Company agrees to issue
      to
      McPeak and McPeak agrees to acquire from the Company on the Closing (as defined
      below) and subject to the restrictions set forth herein Five Million Five
      Hundred Thousand (5,500,000) shares of the Company’s Restricted Common Stock
      (the “Shares”)
      in
      exchange for services rendered and the satisfaction of certain indebtedness
      of
      Company to McPeak, the sufficiency of which is hereby acknowledged.

    

    2.  Closing.
      The
      issuance of the Shares shall occur at a closing (the “Closing”)
      to be
      held on the date first set forth above, or at any other time mutually agreed
      upon by the Company and McPeak. The Closing will take place at the principal
      office of the Company or at such other place as shall be designated by the
      Company. At the Closing, the Company will issue, as promptly thereafter as
      practicable, a stock certificate, registered in the name of McPeak, reflecting
      the Shares, subject to the restrictions set forth herein.

    

    3.  Repurchase
      Option.

    

    A.  In
      the
      event McPeak ceases to be an employee of the Company for any or no reason,
      other
      than, by reason of McPeak’s death or disability (as defined in Section 22(e)(3)
      of the Internal Revenue Code of 1986, as amended (the “Code”),
      “Disability”),
      the
      Company shall upon the date of such termination (as reasonably fixed and
      determined by the Company) have the right, but not the obligation (the
“Repurchase
      Option”),
      for a
      period of ninety (90) days from such date, to repurchase any Shares which have
      not yet been released from the Repurchase Option (the “Unreleased
      Shares)
      at a
      price equal to Five Thousand Dollars ($5,000) (the
      “Repurchase Price”).
      The
      Repurchase Option shall be exercised by the Company by delivering written notice
      to McPeak AND, at the Company’s option, by delivering to McPeak a check in the
      amount of the aggregate Repurchase Price. Upon delivery of such notice and
      the
      payment of the aggregate Repurchase Price, the Company shall become the legal
      and beneficial owner of the Unreleased Shares being repurchased and all rights
      and interests therein or relating thereto, and the Company shall have the right
      to retain and transfer to its own name the number of Unreleased Shares being
      repurchased by the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    B.  The
      Company in its sole discretion may designate and assign one or more employees,
      officers, directors or shareholders of the Company or other persons or
      organizations to exercise all or a part of the Company’s Repurchase Option to
      purchase all or a part of the Unreleased Shares.

    

    4.  Release
      of Shares From Repurchase Option; Vesting.

    

    A.  So
      long
      as McPeak’s continuous status as an employee of the Company has not yet
      terminated in each
      such
      instance, Fifty Percent (50%) of the total number of Shares shall be released
      from the Repurchase Option on January 1, 2006, and the remaining Fifty Percent
      (50%) of the Shares shall be released from the Repurchase Option on January
      1,
      2007. 

    

    Notwithstanding
      the foregoing, in the event of either (i) a Change of Control (as defined
      below); (ii) the death or Disability of McPeak; (iii) McPeak’s retirement as an
      employee of Company so long as such retirement does not occur prior to the
      Second (2nd)
      Anniversary of the Effective Date of this Agreement; (iv) Company terminates
      McPeak’s employment with Company other than for Cause (as defined below); or (v)
      at the sole discretion of the Company’s Board of Directors, One Hundred Percent
      (100%) of the total number of Shares that have not been released from the
      Repurchase Option shall be released from the Repurchase Option immediately;
      provided that McPeak’s continuous status as an employee of the Company has not
      been terminated prior to such date. 

    

    B.  For
      purposes of this Agreement, a “Change
      of Control”
means
      either: 

    

     
      (1) the
      acquisition of the Company by another entity by means of any single transaction
      (including, without limitation, any reorganization, merger or consolidation
      or
      stock transfer, but excluding any such transaction effected primarily for the
      purpose of changing the domicile of the Company), unless the Company’s
      shareholders of record immediately prior to such transaction or series of
      related transactions hold, immediately after such transaction or series of
      related transactions, at least 50% of the voting power of the surviving or
      acquiring entity (provided that the sale by the Company of its securities for
      the purposes of raising additional funds shall not constitute a Change of
      Control hereunder); or

    

     
      (2) a
      sale of
      all or substantially all of the assets of the Company. 

    

    C.  For
      purposes of this Agreement, “Cause”
means
      the
      conviction by McPeak of a felony, a crime involving moral turpitude causing
      material harm to Company’s standing and reputation; or for fraud.

    

    

    D.  Subject
      to the provisions of Section 7, the Shares which have been released from the
      Company’s Repurchase Option shall be delivered to McPeak at McPeak’s
      request.

    

    5.    
      Restrictions
      on Transfer.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    A.      
      McPeak
      hereby makes the investment representations listed on Exhibit
      A
      to the
      Company as of the date of this Agreement and as of the date of the Closing,
      and
      agrees that such representations are incorporated into this Agreement by this
      reference, such that the Company may rely on them in issuing the Shares. McPeak
      understands and agrees that the Company shall cause the legends set forth below,
      or substantially equivalent legends, to be placed upon any certificate(s)
      evidencing ownership of the Shares, together with any other legends that may
      be
      required by the Company or by applicable state or federal securities laws:
      

    

    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933 (THE “ACT”)
      AND
      MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
      UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL
      SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
      PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT. 

    

    THE
      SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
      ON
      TRANSFER, AND A REPURCHASE OPTION HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS
      SET
      FORTH IN THE RESTRICTED STOCK AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL
      HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE
      OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND REPURCHASE OPTION ARE BINDING
      ON
      TRANSFEREES OF THESE SHARES.

    

    B.       
      Stop-Transfer
      Notices.
      McPeak
      agrees that to ensure compliance with the restrictions referred to herein,
      the
      Company may issue appropriate “stop transfer” instructions to its transfer
      agent, if any, and that, if the Company transfers its own securities, it may
      make appropriate notations to the same effect in its own
      records.

    

    C.       
      Refusal
      to Transfer.
      The
      Company shall not be required (i) to transfer on its books any Shares that
      have been sold or otherwise transferred in violation of any of the provisions
      of
      this Agreement or (ii) to treat as owner of such Shares or to accord the
      right to vote or pay dividends to any purchaser or other transferee to whom
      such
      Shares shall have been so transferred.

    

    D.       
      Unreleased
      Shares.
      No
      Unreleased Shares subject to the Repurchase Option contained in Section 3
      of this Agreement, nor any beneficial interest in such Shares, shall be sold,
      gifted, transferred, encumbered or otherwise disposed of in any way (whether
      by
      operation of law or otherwise) by McPeak.

    

    6.  Tax
      Consequences.
      McPeak
      has reviewed with McPeak’s own tax advisors the federal, state, local and
      foreign tax consequences of this acquisition and the transactions contemplated
      by this Agreement. McPeak is relying solely on such advisors and not on any
      statements or representations of the Company or any of its agents. McPeak
      understands that McPeak (and not the Company) shall be responsible for any
      tax
      liability that may arise as a result of the transactions contemplated by this
      Agreement. McPeak understands that Section 83 of the Code, taxes as
      ordinary income the difference between the acquisition price for the Shares
      and
      the Fair Market Value of the Shares as of the date any restrictions on the
      Shares lapse. In this context, “restriction” includes the right of the Company
      to buy back the Shares pursuant to the Repurchase Option. McPeak understands
      that McPeak may elect to be taxed at the time the Shares are acquired rather
      than when and as the Repurchase Option expires by filing an election under
      Section 83(b) of the Code with the IRS within 30 days from the date of
      acquisition. THE
      FORM FOR MAKING THIS SECTION 83(B) ELECTION IS ATTACHED TO THIS AGREEMENT AS
      EXHIBIT B
      AND MCPEAK (AND NOT THE COMPANY OR ANY OF ITS AGENTS) SHALL BE SOLELY
      RESPONSIBLE FOR APPROPRIATELY FILING SUCH FORM, EVEN IF MCPEAK REQUESTS THE
      COMPANY OR ITS AGENTS TO MAKE THIS FILING ON MCPEAK’S
      BEHALF.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    7.  General
      Provisions.

    

    A.  Choice
      of Law.  This
      Agreement shall be
      governed by the internal substantive laws, but not the choice of law rules,
      of
      California. 

    

    B.  Integration.  This
      Agreement represents
      the entire agreement between the parties with respect to the acquisition of
      the
      Shares by McPeak and supercedes and replaces any and all prior written or oral
      agreements regarding the subject matter of this Agreement including, but not
      limited to, any representations made during any interviews, relocation
      discussions or negotiations whether written or oral.

    

    C.  Notices.  Any
      notice, demand,
      offer, request or other communication required or permitted to be given by
      either the Company or McPeak pursuant to the terms of this Agreement shall
      be in
      writing and shall be deemed effectively given the earlier of (i) when
      received, (ii) when delivered personally, (iii) 1 business day after
      being deposited with an overnight courier service or (iv) 4 days after
      being deposited in the U.S. mail, First Class with postage prepaid, and
      addressed to the parties at the addresses provided to the Company (which the
      Company agrees to disclose to the other parties upon request) or such other
      address as a party may request by notifying the other in writing.

    

    D.  Successors.  Any
      successor to the
      Company (whether direct or indirect and whether by purchase, merger,
      consolidation, liquidation or otherwise) to all or substantially all of the
      Company’s business and/or assets shall assume the obligations under this
      Agreement and agree expressly to perform the obligations under this Agreement
      in
      the same manner and to the same extent as the Company would be required to
      perform such obligations in the absence of a succession. For all purposes under
      this Agreement, the term “Company” shall include any successor to the Company’s
      business and/or assets which executes and delivers the assumption agreement
      described in this Section or which becomes bound by the terms of this
      Agreement by operation of law. Subject to the restrictions on transfer set
      forth
      in this Agreement, this Agreement shall be binding upon McPeak and his heirs,
      executors, administrators, successors and assigns.

    

    E.  Assignment.  
      The rights granted to McPeak under this Agreement are not assignable by McPeak
      under any circumstances.

    

    F.  Waiver.  
       Either party’s failure to enforce any provision of this Agreement shall
      not in any way be construed as a waiver of any such provision, nor prevent
      that
      party from thereafter enforcing any other provision of this Agreement. The
      rights granted both parties hereunder are cumulative and shall not constitute
      a
      waiver of either party’s right to assert any other legal remedy available to
      it.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    G.  McPeak
      Investment Representations and Further Documents.  
      McPeak agrees upon request to execute any further documents or instruments
      necessary or reasonably desirable in the view of the Company to carry out the
      purposes or intent of this Agreement, including (but not limited to)
Exhibits
      A and B of
      this
      Agreement 

    

    H.  Severability.  
      Should any provision of this Agreement be found to be illegal or unenforceable,
      the other provisions shall nevertheless remain effective and shall remain
      enforceable to the greatest extent permitted by law.

    

    I.  Rights
      as Stockholder.
      Subject
      to the terms and conditions of this Agreement, McPeak shall have all of the
      rights of a shareholder of the Company with respect to the Shares from and
      after
      the date that McPeak delivers a fully executed copy of this Agreement (including
      all exhibits and attachments thereto) and until such time as McPeak disposes
      of
      the Shares in accordance with this Agreement. Upon such transfer, McPeak shall
      have no further rights as a holder of the Shares except (in the case of a
      transfer to the Company) the right to receive payment for the Shares so
      purchased in accordance with the provisions of this Agreement, and McPeak shall
      forthwith cause the certificate(s) evidencing the Shares to be surrendered
      to
      the Company for transfer or cancellation.

    

    J.  Adjustment
      for Stock Split.   All
      references to the number of Shares in this Agreement shall be adjusted to
      reflect any stock split, stock dividend or other change in the Shares which
      may
      be made after the date of this Agreement.

    

    K.  Counterparts.  
      This Agreement may be executed in one or more counterparts, each of which will
      be deemed an original, but all of which together will constitute one and the
      same agreement. Facsimile copies of signed signature pages shall be binding
      originals.

    

    L.  Prevailing
      Party’s Fees.  
      If any party hereto commences an action or arbitration against another party
      to
      interpret or enforce any terms of this Agreement, or because of the other
      party's breach of any provision in this Agreement, the losing party shall pay
      to
      the prevailing party reasonable attorneys' fees, costs and expenses, court
      costs
      and other costs of action incurred in connection with the prosecution or defense
      of such action or arbitration, whether or not the action is prosecuted to a
      final judgment.

    

    [Remainder
      of page intentionally left blank]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    

    The
      parties represent that they have read this Agreement in its entirety, have
      had
      an opportunity to obtain the advice of counsel prior to executing this Agreement
      and fully understand this Agreement. McPeak agrees to notify the Company of
      any
      change in her address below.

    

    

    
      	
              MCPEAK

            	 	
              NUTRACEA

            	 
	 	 	 	 
	 	 	 	 
	
              /s/
                Nana Patricia McPeak

            	 	
              /s/
                Patricia McPeak

            	 
	
              Nana
                Patricia McPeak

            	 	
              Signature
                

            	 
	 	 	 	 
	
              Address:

            	 	 	 
	
              100
                Rock Lane

            	 	 	 
	
              El
                Dorado Hills, CA 95762

            	 	 	 

    

    

    

    

    [SIGNATURE
      PAGE TO RESTRICTED STOCK AGREEMENT]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    INVESTMENT
      REPRESENTATION STATEMENT

    

    

    
      	
              NAME

            	
              :

            	
              Nana
                Patricia McPeak

            
	 	 	 
	
              COMPANY

            	
              :

            	
              NutraCea

            
	 	 	 
	
              SECURITY

            	
              :

            	
              Restricted
                Common Stock

            
	 	 	 
	
              AMOUNT

            	
              :

            	
              5,500,000
                shares

            
	 	 	 
	
              DATE

            	
              :

            	
              March
                19, 2004

            

    

     

    
      
        

      

    In
      connection with the acquisition of the above-listed shares, I, the undersigned
      represent to the Company as follows:

    

    1. 
The
      Company May Rely on These Representations.
      I
      understand that the Company’s issuance of the shares to me has not been
      registered under the Securities Act of 1933, as amended, because the Company
      believes, relying in part on my representations in this document, that an
      exemption from such registration requirement is available for such sale. I
      understand that the availability of this exemption depends upon the
      representations I am making to the Company in this document being true and
      correct. 

    

    2. 
I
      am
      Acquiring for Investment.
      I am
      acquiring the shares solely for investment purposes, and not for further
      distribution. My entire legal and beneficial ownership interest in the shares
      is
      being acquired and shall be held solely for my account, except to the extent
      I
      intend to hold the shares jointly with my spouse. I am not a party to, and
      do
      not presently intend to enter into, any contract or other arrangement with
      any
      other person or entity involving the resale, transfer, grant of participation
      with respect to or other distribution of any of the shares. My investment intent
      is not limited to my present intention to hold the shares for the minimum
      capital gains period specified under any applicable tax law, for a deferred
      sale, for a specified increase or decrease in the market price of the shares,
      or
      for any other fixed period in the future. 

    

    3. 
I
      Can
      Protect My Own Interests.
      I can
      properly evaluate the merits and risks of an investment in the shares and can
      protect my own interests in this regard, whether by reason of my own business
      and financial expertise, the business and financial expertise of certain
      professional advisors unaffiliated with the Company with whom I have consulted,
      or my preexisting business or personal relationship with the Company or any
      of
      its officers, directors or controlling persons.

    

    4. 
I
      am
      Informed About the Company.
      I am
      sufficiently aware of the Company’s business affairs and financial condition to
      reach an informed and knowledgeable decision to acquire the shares. I have
      had
      opportunity to discuss the plans, operations and financial condition of the
      Company with its officers, directors or controlling persons, and have received
      all information I deem appropriate for assessing the risk of an investment
      in
      the shares.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    5. 
I
      Recognize My Economic Risk.
      I
      realize that the acquisition of the shares involves a high degree of risk,
      and
      that the Company’s future prospects are uncertain. I am able to hold the shares
      indefinitely if required, and am able to bear the loss of my entire investment
      in the shares.

    

    6.  I
      Know the Shares are Restricted Securities.
      I
      understand that the shares are “restricted securities” in that the Company’s
      issuance of the shares to me has not been registered under the Securities Act
      in
      reliance upon an exemption for non-public offerings. In this regard, I also
      understand and agree that:

    

    A. 
I
      must
      hold the shares indefinitely, unless any subsequent proposed resale by me is
      registered under the Securities Act, or unless an exemption from registration
      is
      otherwise available (such as Rule 144);

    

    B. 
the
      Company is under no obligation to register any subsequent proposed resale of
      the
      shares by me; and

    

    C. 
the
      certificate evidencing the shares will be imprinted with a legend which
      prohibits the transfer of the shares unless such transfer is registered or
      such
      registration is not required in the opinion of counsel for the
      Company.

    

    7. 
I
      am
      Familiar With Rule 144.
      I am
      familiar with Rule 144 adopted under the Securities Act, which in some
      circumstances permits limited public resales of “restricted securities” like the
      shares acquired from an issuer in a non-public offering. I understand that
      my
      ability to sell the shares under Rule 144 in the future is uncertain, and will
      depend upon, among other things: (i) the availability of certain current
      public information about the Company; (ii) the resale occurring more than
      one year after my acquisition and full payment (within the meaning of Rule
      144)
      for the shares; and
      (iii) if
      I am an affiliate of the Company, or a non-affiliate who has held the shares
      less than two years after my acquisition and full payment: (A) the sale
      being made through a broker in an unsolicited “broker’s transaction” or in
      transactions directly with a market maker, as said term is defined under the
      Securities Exchange Act of 1934, as amended, (B) the amount of shares being
      sold
      during any three month period not exceeding the specified limitations stated
      in
      Rule 144, and
      (C)
      timely filing of a notice of proposed sale on Form 144, if applicable.

    

    8. 
I
      Know I am Subject to Further Restrictions on Resale.
      I
      understand that in the event Rule 144 is not available to me, any future
      proposed sale of any of the shares by me will not be possible without prior
      registration under the Securities Act, compliance with some other registration
      exemption (which may or may not be available), or each
      of the
      following: (i) my written notice to the Company containing detailed information
      regarding the proposed sale, (ii) my providing an opinion of my counsel to
      the effect that such sale will not require registration, and (iii) the Company
      notifying me in writing that its counsel concurs in such opinion. I understand
      that neither the Company nor its counsel is obligated to provide me with any
      such opinion. I understand that although Rule 144 is not exclusive, the
      Staff of the SEC has stated that persons proposing to sell private placement
      securities other than in a registered offering or pursuant to Rule 144 will
      have a substantial burden of proof in establishing that an exemption from
      registration is available for such offers or sales, and that such persons and
      their respective brokers who participate in such transactions do so at their
      own
      risk.

    

    9. 
I
      Know I May Have Tax Liability Due to the Uncertain Value of the
      Shares.
      I
      understand that the Board of Directors believes its valuation of the shares
      represents a fair appraisal of their worth, but that it remains possible that,
      with the benefit of hindsight, the Internal Revenue Service may successfully
      assert that the value of the shares on the date of my acquisition is
      substantially greater than the Board’s appraisal. I understand that any
      additional value ascribed to the shares by such an IRS determination will
      constitute ordinary income to me as of the acquisition date, and that any
      additional taxes and interest due as a result will be my sole responsibility
      payable only by me, and that the Company need not and will not reimburse me
      for
      that tax liability. I understand that if such additional value represents more
      than 25% of my gross income for the year in which the value of the shares is
      taxable, the IRS will have 6 years from the due date for filing the return
      (or
      the actual filing date of the return if filed thereafter) within which to assess
      me the additional tax and interest due.

    

    10. 
Residence.
      The
      address of my principal residence is set forth on the signature page
      below.

    

    By
      signing below, I acknowledge my agreement with each of the statements contained
      in this Investment Representation Statement as of the date first set forth
      above, and my intent for the Company to rely on such statements in issuing
      the
      shares to me.

    

    

    

    

      

      
        	 	
                /s/
                  Nana Patricia McPeak

              	 
	 	
                Nana
                  Patricia McPeak

              	 

      

      
 

    

    Address
      of McPeak’s Principal Residence:

    

    100
      Rock
      Lane, El Dorado Hills, CA 95762

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    

    EXHIBIT
      B

     

    IF
      YOU WISH TO MAKE A SECTION 83(B) ELECTION, THE FILING OF SUCH ELECTION IS
YOUR
      RESPONSIBILITY.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    

    THE
      FORM FOR MAKING THIS SECTION 83(B) ELECTION IS ATTACHED TO THIS AGREEMENT AS
      EXHIBIT B. 

    

    YOU
      MUST FILE THIS FORM WITHIN 30 DAYS OF PURCHASING THE
      SHARES.

    

    YOU
      (AND NOT
      THE COMPANY OR ANY OF ITS AGENTS) SHALL BE SOLELY RESPONSIBLE FOR FILING SUCH
      FORM WITH THE IRS, EVEN IF YOU REQUEST THE COMPANY OR ITS AGENTS TO MAKE THIS
      FILING ON YOUR BEHALF AND EVEN IF THE COMPANY OR ITS AGENTS HAVE PREVIOUSLY
      MADE
      THIS FILING ON YOUR BEHALF.

    

    

    

    The
      election should be filed by mailing a signed election form by certified mail,
      return receipt requested to the IRS Service Center where you file your tax
      returns. See www.irs.gov.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      B

    

    ELECTION
      UNDER SECTION 83(b) OF THE

    INTERNAL
      REVENUE CODE OF 1986, AS AMENDED

    

    The
      undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal
      Revenue Code of 1986, as amended, to include in his or her gross income for
      the
      current taxable year, the amount of any compensation taxable to him or her
      in
      connection with his or her receipt of the property described below:

    

    1.  The
      name,
      address, taxpayer identification number and taxable year of the undersigned
      are
      as follows:

    
      

        
          	
                  NAME
                    OF TAXPAYER: [Name of Purchaser]

                	
                  SPOUSE:       
                    

                	  
	 
	 	 	 	 
	
                  TAXPAYER’S
                    ADDRESS:

                	 	 	 
	_____________________	 	 	 
	_______________	 	 	_________________	 
	
                  TAXPAYER
                    ID #:

                	 	 	
                  SPOUSE’S
                    ID #:

                	 

        

      

       

    

    2.  The
      property with respect to which the election is made is described as follows:
      [#
      of Shares] shares (the “Shares”)
      of the
      Common Stock of [Name of Company] (the “Company”).

    

    3.  The
      date
      on which the property was transferred is: [DATE].

    

    4.  The
      property is subject to the following restrictions: The Shares may be repurchased
      by the Company, or its assignee, upon the occurrence of certain events. This
      right lapses with regard to a portion of the Shares over time.

    

    5.  The
      fair
      market value at the time of transfer, determined without regard to any
      restriction other than a restriction which by its terms will never lapse, of
      such property is: $[_____].

    

    
      
        6.  The
          amount, if any, paid for such property: $[_____].

      

    

    

    The
      undersigned has submitted a copy of this statement to the person for whom the
      services were performed in connection with the undersigned’s receipt of the
      above-described property. The transferee of such property is the person
      performing the services in connection with the transfer of said
      property.

    

    The
      undersigned understand(s) that the foregoing election may not be revoked except
      with the consent of the Commissioner.

    

    
      	
              Dated:

            	
                 
                

            	 	      
	 
	 	 	 	
              [Name
                of Purchaser], Taxpayer

            	 

    

    

    The
      undersigned spouse of taxpayer joins in this election.

    

    
      	
              Dated:

            	
                 
                

            	 	    
	 
	 	 	 	
              Spouse
                of Taxpayer

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