Document:

Exhibit
      10.3

     

    

    SOP08004A

     

    NUTRACEA

     

    STOCK
      OPTION AGREEMENT

     

     

    
      	I.	
              NOTICE
                OF STOCK OPTION GRANT

            

    

     

    Leo
      Gingras

     

    You
      have
      been granted a Nonstatutory Stock Option to purchase Common Stock of the
      Company, subject to the terms and conditions of this Agreement, as
      follows:

     

    
      	
              Date
                of Grant

            	
              January
                8, 2008

            
	 	 
	
              Exercise
                Price per Share

            	
              $1.49

            
	 	 
	
              Total
                Number of Shares Granted

            	
              350,000
                Options

            
	 	 
	
              Term/Expiration
                Date

            	
              January
                8, 2013

            

    

     

    Vesting
      Schedule:

     

    
      	 	
              (i)

            	
              1⁄4
                of the option shares vest on December 31, 2008 so long as NutraCea
                achieves for 2008 gross revenue that equals or exceeds 85 percent
                of gross
                revenue budgeted for 2008, 

            

    

     

    
      	 	
              (ii)

            	
              1⁄4
                of the option shares vest on December 31, 2009 so long as NutraCea
                achieves for 2009 gross revenue that equals or exceeds 85 percent
                of gross
                revenue budgeted for 2009, 

            

    

     

    
      	 	
              (iii)

            	
              1⁄4
                of the option shares vest on December 31, 2008 so long as NutraCea
                achieves for 2008 net income that equals or exceeds 85 percent of
                net
                income budgeted for 2008, and 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iv)

            	
              1⁄4
                of the option shares vest on December 31, 2009 so long as NutraCea
                achieves for 2009 net income that equals or exceeds 85 percent of
                net
                income budgeted for 2009. 

            

    

     

    No
      right
      to any stock is earned or accrued until such time that vesting occurs, nor
      does
      the grant confer any right to continue vesting or employment. You will have
      no
      rights to receive a stock option until (i) the Option proposal is ratified
      by
      the Company’s Board of Directors and (ii) you and the Company execute the Stock
      Option Agreement. The first date in which both these events have occurred will
      be the date of grant. 

     

    Acceleration
      of Vesting.
      If a
“change of control” of the Company should occur, as defined below, then the
      Option shall immediately vest and become exercisable in full and the performance
      criteria of this Option will be waived. For purposes of this Agreement, “Change
      of Control” shall mean (i) the consummation of a merger or consolidation of the
      Company with any other corporation which results in the voting securities of
      the
      Company outstanding immediately prior thereto failing to represent (either
      by
      remaining outstanding or by being converted into voting securities of the
      surviving entity) more than fifty percent (50%) of the total voting power
      represented by the voting securities of the Company or such surviving entity
      outstanding immediately after such merger or consolidation or (ii) the
      consummation of the sale or disposition by the Company of all or substantially
      all of the Company's assets. 

     

     

    Termination
      Period:

     

    This
      Option may be exercised for three (3) months after Optionee ceases to be a
      Service Provider in accordance with Section 8 of this Agreement. Upon the death
      or Disability of the Optionee, this Option may be exercised for one (1)
      year after
      the
      Optionee ceases to be a Service Provider in accordance with Sections 9 and
      10 of
      this Agreement. In no event shall this Option be exercised later that the
      Term/Expiration Date provided above.

     

     

    
      	II.	
              AGREEMENT

            

    

     

    1. Definitions.
      As used
      herein, the following definitions shall apply:

     

    (a) “Agreement”
means
      this stock option agreement between the Company and Optionee evidencing the
      terms and conditions of this Option.

     

    (b) “Applicable
      Laws”
means
      the requirements relating to the administration of stock options under U.S.
      state corporate laws, U.S. federal and state securities laws, the Code, any
      stock exchange or quotation system on which the Common Stock is listed or quoted
      and the applicable laws of any foreign country or jurisdiction that may apply
      to
      this Option.

     

    (c) “Board”
means
      the Board of Directors of the Company or any committee of the Board that has
      been designated by the Board to administer this Agreement.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (d) “Code”
means
      the Internal Revenue Code of 1986, as amended.

     

    (e) “Common
      Stock”
means
      the common stock of the Company.

     

    (f) “Company”
means
      NutraCea, a California corporation.

     

    (g) “Consultant”
means
      any person, including an advisor, engaged by the Company or a Parent or
      Subsidiary to render services to such entity.

     

    (h) “Director”
means
      a
      member of the Board.

     

    (i) “Disability”
means
      total and permanent disability as defined in Section 22(e)(3) of the
      Code.

     

    (j) “Employee”
means
      any person, including Officers and Directors, employed by the Company or any
      Parent or Subsidiary of the Company. A Service Provider shall not cease to
      be an
      Employee in the case of (i) any leave of absence approved by the Company or
      (ii)
      transfers between locations of the Company or between the Company, its Parent,
      any Subsidiary, or any successor. Neither service as a Director nor payment
      of a
      director’s fee by the Company shall be sufficient to constitute “employment” by
      the Company.

     

    (k) “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    (l) “Nonstatutory
      Stock Option”
means
      an Option not intended to qualify as an incentive stock option within the
      meaning of Section 422 of the Code and the regulations promulgated
      thereunder.

     

    (m) “Notice
      of Grant”
means
      a
      written notice, in Part I of this Agreement, evidencing certain the terms and
      conditions of this Option grant. The Notice of Grant is part of this Option
      Agreement.

     

    (n) “Officer”
means
      a
      person who is an officer of the Company within the meaning of Section 16 of
      the Exchange Act and the rules and regulations promulgated
      thereunder.

     

    (o) “Option”
means
      this stock option.

     

    (p) “Optioned Stock”
means
      the Common Stock subject to this Option.

     

    (q) “Optionee”
means
      the person named in the Notice of Grant or such person’s successor.

     

    (r) “Parent”
means
      a
“parent corporation,” whether now or hereafter existing, as defined in
      Section 424(e) of the Code.

     

    (s) “Securities
      Act”
means
      the Securities Act of 1933, as amended.

     

    (t) “Service
      Provider”
means
      an Employee, Director or Consultant.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (u) “Share”
means
      a
      share of the Common Stock, as adjusted in accordance with Section 11 of
      this Agreement.

     

    (v) “Subsidiary”
means
      a
“subsidiary corporation”, whether now or hereafter existing, as defined in
      Section 424(f) of the Code.

     

     

    2. Grant
      of Option.
      The
      Board of Directors of NutraCea must ratify this option. Upon ratification this
      option will be hereby granted to the Optionee named in the Notice of Grant
      attached as Part I of this Agreement the Option to purchase the number of
      Shares, as set forth in the Notice of Grant, at the exercise price per share
      set
      forth in the Notice of Grant (the “Exercise Price”), subject to the terms and
      conditions of this Agreement. 

    
 

    3. Exercise
      of Option.

     

    (a)  Right
      to Exercise.
      This
      Option is exercisable during its term in accordance with the Vesting Schedule
      set out in the Notice of Grant and the applicable provisions of this
      Agreement.

     

    (b) Method
      of Exercise.
      This
      Option is exercisable by delivery of an exercise notice, in the form attached
      as
Exhibit
      A
      (the
“Exercise Notice”), which shall state the election to exercise the Option, the
      number of Shares in respect of which the Option is being exercised (the
“Exercised Shares”), and such other representations and agreements as may be
      required by the Company. The Exercise Notice shall be completed by the Optionee
      and delivered to Secretary of the Company. The Exercise Notice shall be
      accompanied by payment of the aggregate Exercise Price as to all Exercised
      Shares together with any taxes required to be withheld. This Option shall be
      deemed to be exercised upon receipt by the Company of such fully executed
      Exercise Notice accompanied by such aggregate Exercise Price and the applicable
      amounts to be withheld by the Company for taxes.

     

    (c)
       Surrender
      of Options.
      If the
      Stock is publicly traded, by surrendering the right to purchase a certain number
      of Shares under the Option and using the appreciated value of the Shares
      surrendered, defined as the Fair Market Value less the Exercise Price of the
      Shares surrendered. By way of example, if the Optionee surrenders the right
      to
      purchase 40 shares on a date when the Fair Market Value is $8.125 per Share
      and
      the Exercise Price is $3.25 per share, then the Optionee could purchase ($8.125
      - $3.25 = $4.875 x 40 shares = $195.00 divided by $3.25 = 60 shares), and the
      number of shares purchasable under the Option would be reduced by 100
      shares.

     

    (d)  Legal
      Compliance.
      No
      Shares shall be issued pursuant to the exercise of this Option unless such
      issuance and exercise complies with Applicable Laws. Assuming such compliance,
      for income tax purposes the Exercised Shares shall be considered transferred
      to
      the Optionee on the date the Option is exercised with respect to such Exercised
      Shares.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    4. Optionee’s
      Representations.
      In the
      event that at the time this Option is exercised (i) the Shares have not been
      registered under the Securities Act or (ii) the Common Stock is not listed
      on a
      national securities exchange, the Optionee shall, if required by the Company,
      concurrently with the exercise of all or any portion of this Option, deliver
      to
      the Company his or her Investment Representation Statement in the form attached
      hereto as Exhibit B.

     

    5. Method
      of Payment.
      Payment
      of the aggregate Exercise Price shall be by any of the following, or a
      combination thereof, at the election of the Optionee:

     

    (a) cash
      or
      check; or

     

    (b) any
      other
      form of consideration allowed in writing by the Company in the Company’s sole
      discretion. 

     

    6. Term
      of Option.
      This
      Option may be exercised only within the term set out in the Notice of Grant,
      and
      may be exercised during such term only in accordance with the terms of this
      Agreement.

     

    7. Termination
      of Relationship as a Service Provider.
      If the
      Optionee ceases to be a Service Provider (other than for death or Disability),
      this Option may be exercised for a period of three (3) months after the date
      of
      such termination (but in no event later than the expiration date of this Option
      as set forth in the Notice of Grant) to the extent that the Option is vested
      on
      the date of such termination. To the extent that the Optionee does not exercise
      this Option within the time specified herein, the Option shall
      terminate.

     

    8. Disability
      of Optionee.
      If the
      Optionee ceases to be a Service Provider as a result of the Optionee’s
      Disability, this Option may be exercised for a period of twelve (12) months
      after the date of such termination (but in no event later than the expiration
      date of this Option as set forth in the Notice of Grant) to the extent that
      the
      Option is vested on the date of such termination. To the extent that Optionee
      does not exercise this Option within the time specified herein, the Option
      shall
      terminate.

     

    9. Death
      of Optionee.
      If the
      Optionee dies while a Service Provider, the Option may be exercised at any
      time
      within twelve (12) months following the date of death (but in no event later
      than the expiration date of this Option as set forth in the Notice of Grant),
      by
      the Optionee’s estate or by a person who acquired the right to exercise the
      Option by bequest or inheritance, but only to the extent that the Optionee
      was
      entitled to exercise the Option at the date of death. If, after death, the
      Optionee’s estate or a person who acquired the right to exercise the Option by
      bequest or inheritance does not exercise the Option within the time specified
      herein, the Option shall terminate.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    10. Adjustments Upon Changes in Capitalization,
      Dissolution, Merger or Asset Sale.
      

     

    (a) Changes
      in Capitalization.
      Subject
      to any required action by the stockholders of the Company, the number of shares
      of Common Stock covered by this Option, as well as the price per share of Common
      Stock covered by this Option, shall be proportionately adjusted for any increase
      or decrease in the number of issued shares of Common Stock resulting from a
      stock split, reverse stock split, stock dividend, combination or
      reclassification of the Common Stock, or any other increase or decrease in
      the
      number of issued shares of Common Stock effected without receipt of
      consideration by the Company; provided, however, that conversion of any
      convertible securities of the Company shall not be deemed to have been “effected
      without receipt of consideration.” Such adjustment shall be made by the Board,
      whose determination in that respect shall be final, binding and conclusive.
      Except as expressly provided herein, no issuance by the Company of shares of
      stock of any class, or securities convertible into shares of stock of any class,
      shall affect, and no adjustment by reason thereof shall be made with respect
      to,
      the number or price of shares of Common Stock subject to this
      Option.

     

    (b) Dissolution
      or Liquidation.
      In the
      event of the proposed dissolution or liquidation of the Company, the Board
      shall
      notify Optionee as soon as practicable prior to the effective date of such
      proposed transaction. The Board in its discretion may provide for the Optionee
      to have the right to exercise his or her Option until fifteen (15) days prior
      to
      such transaction as to all of the Optioned Stock covered thereby, including
      Shares as to which the Option would not otherwise be exercisable. To the extent
      it has not been previously exercised, the Option will terminate immediately
      prior to the consummation of such proposed action.

     

    (c) Merger
      or Asset Sale.
      In the
      event of a merger of the Company with or into another corporation, or the sale
      of substantially all of the assets of the Company, this Option shall be assumed
      or an equivalent option substituted by the successor corporation or a Parent
      or
      Subsidiary of the successor corporation. If, in such event, this Option is
      not
      assumed or substituted, the Board shall notify the Optionee in writing or
      electronically as to the number of Shares underlying this Option that are vested
      and exercisable and this Option shall be exercisable to the extent vested
      (unless the Board allows the Optionee to exercise with respect to additional
      unvested Shares) for a period of fifteen (15) days from the date of such notice,
      and this Option shall terminate upon the expiration of such period. For the
      purposes of this paragraph, the Option shall be considered assumed if, following
      the merger or sale of assets, the option confers the right to purchase or
      receive, for each Share of Optioned Stock subject to this Option immediately
      prior to the merger or sale of assets, the consideration (whether stock, cash,
      or other securities or property) received in the merger or sale of assets by
      holders of Common Stock for each Share held on the effective date of the
      transaction (and if holders were offered a choice of consideration, the type
      of
      consideration chosen by the holders of a majority of the outstanding Shares);
      provided, however, that if such consideration received in the merger or sale
      of
      assets is not solely common stock of the successor corporation or its Parent,
      the Board may, with the consent of the successor corporation, provide for the
      consideration to be received upon the exercise of the Option, for each Share
      of
      Optioned Stock subject to the Option, to be solely common stock of the successor
      corporation or its Parent equal in fair market value to the per share
      consideration received by holders of Common Stock in the merger or sale of
      assets.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    11. Notices.
      Any
      notice to be given to the Company hereunder shall be in writing and shall be
      addressed to the Company. at its then current principal executive office or
      to
      such other address as the Company may hereafter designate to the Optionee by
      notice as provided in this Section. Any notice to be given to the Optionee
      hereunder shall be addressed to the Optionee at the address set forth beneath
      Optionee’s signature hereto, or at such other address as the Optionee may
      hereafter designate to the Company by notice as provided herein. A notice shall
      be deemed to have been duly given when personally delivered or mailed by
      registered or certified mail to the party entitled to receive it.

     

    12. Withholding
      Taxes.
      The
      Optionee agrees to make appropriate arrangements with the Company (or the Parent
      or Subsidiary employing or retaining the Optionee) for the satisfaction of
      all
      federal, state, local and foreign income and employment tax withholding
      requirements applicable to the Option exercise. The Optionee acknowledges and
      agrees that the Company may refuse to honor the exercise and refuse to deliver
      the Shares if such withholding amounts are not delivered at the time of
      exercise.

     

    13. Entire
      Agreement; Governing Law.
      This
      Agreement constitute the entire agreement of the parties with respect to the
      subject matter hereof and supersede in their entirety all prior undertakings
      and
      agreements of the Company and Optionee with respect to the subject matter
      hereof, and may not be modified adversely to the Optionee’s interest except by
      means of a writing signed by the Company and Optionee. This Agreement is
      governed by the internal substantive laws, but not the choice of law rules,
      of
      California.

     

    14. Investment
      Representations.
      In
      connection with the issuance of the Option, the Optionee specifically represents
      to the Company as follows:

     

    (a) The
      Optionee is aware of the Company's business affairs and financial condition,
      and
      has acquired information about the Company sufficient to reach an informed
      and
      knowledgeable decision to acquire this Option. The holder is acquiring this
      Option for its own account for investment purposes only and not with a view
      to,
      or for the resale in connection with, any distribution thereof.

     

    (b) The
      Optionee understands that this Option has not been registered under the
      Securities Act in reliance upon a specific exemption therefrom, which exemption
      depends upon, among other things, the bona fide nature of the Optionee’s
      investment intent as expressed herein.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (c) The
      Optionee further understands that this Option must be held indefinitely unless
      subsequently registered under the Securities Act and qualified under any
      applicable state securities laws, or unless exemptions from registration and
      qualification are otherwise available. 

     

    15. Tax
      Consultation.
      The
      Optionee understands that the Optionee may suffer adverse tax consequences
      as a
      result of the Optionee’s receipt of this Option. The Optionee represents that
      the Optionee has consulted with any tax consultants the Optionee deems advisable
      in connection with the Optionee’s receipt of this Option and that the Optionee
      is not relying on the Company for any tax advice.

     

    16. No
      Lock
      Up Provision.

     

    17.  NO
      GUARANTEE OF CONTINUED SERVICE.
      THE
      OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
      VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER
      AT
      THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED
      AN OPTION OR PURCHASING SHARES HEREUNDER). THE OPTIONEE FURTHER ACKNOWLEDGES
      AND
      AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE
      VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED
      PROMISE OF CONTINUES ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD,
      FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE’S RIGHT OR THE
      COMPANY’S RIGHT TO TERMINATE THE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER
      AT ANY TIME, WITH OR WITHOUT CAUSE.

     

    

     

    

     

    

     

    

     

    {The
      remainder of this page was intentionally left blank}

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

     

    By
      the
      Optionee’s signature and the signature of the Company’s representative below,
      Optionee and the Company agree that this Option is granted under and governed
      by
      the terms and conditions of this Agreement. The Optionee has reviewed this
      Agreement in its entirety, has had an opportunity to obtain the advice of
      counsel prior to executing this Agreement and fully understands all provisions
      of this Agreement. The Optionee hereby agrees to accept as binding, conclusive
      and final all decisions or interpretations of the Board upon any questions
      relating to this Agreement. Optionee further agrees to notify the Company upon
      any change in the residence address indicated below.

     

    

    
      	
              OPTIONEE

            	 	
              NUTRACEA

            
	 	 	 
	 	 	 
	   
	 	   

	
              Signature

            	 	
              By:
                Bradley D. Edson

            
	 	 	 
	   
	 	
              Chief
                Executive Officer

            
	
              Print
                Name

            	 	
              Title

            
	 	 	 
	   
	 	 
	
              Residence
                Address, City, State and Zip Code

            	 	 
	 
   
	 	 
	    
	 	 
	
                   
                

            	 	
                  
                

            
	
              Date

            	 	
              Date

            

    

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    NUTRACEA

     

    EXERCISE
      NOTICE

     

    

     

    NutraCea

    1261
      Hawk’s Flight Court

    El
      Dorado Hills, CA 95762

    Attention:
      President 

    

     

    1. Exercise
      of Option.
      Effective as of today, ________________, 200__, the undersigned (“Purchaser”)
      hereby elects to purchase ______________ shares (the “Shares”) of the Common
      Stock of NutraCea (the “Company”) under and pursuant to the Stock Option
      Agreement dated [_____________]
      (the
      “Option Agreement”). The purchase price for the Shares shall be [$_______],
      as
      required by the Option Agreement.

     

    2. Delivery
      of Payment.
      Purchaser herewith delivers to the Company the full purchase price of the
      Shares, as set forth in the Option Agreement, and any and all taxes that must
      be
      withheld in connection with the exercise of the Option.

     

    3. Representations
      of Purchaser.
      Purchaser acknowledges that Purchaser has received, read and understood the
      Option Agreement and agrees to abide by and be bound by its terms and
      conditions.

     

    4. Rights
      as Shareholder.
      Until
      the issuance (as evidenced by the appropriate entry on the books of the Company
      or of a duly authorized transfer agent of the Company) of the Shares, no right
      to vote or receive dividends or any other rights as a stockholder shall exist
      with respect to the Shares, notwithstanding the exercise of the Option. The
      Shares so acquired shall be issued to the Purchaser as soon as practicable
      after
      exercise of the Option. No adjustment will be made for a dividend or other
      right
      for which the record date is prior to the date of issuance, except as provided
      in Section 11 of the Option Agreement.

     

    5. Tax
      Consultation.
      Purchaser understands that Purchaser may suffer adverse tax consequences as
      a
      result of Purchaser’s purchase or disposition of the Shares. Purchaser
      represents that Purchaser has consulted with any tax consultants Purchaser
      deems
      advisable in connection with the purchase or disposition of the Shares and
      that
      Purchaser is not relying on the Company for any tax advice.

     

    6. Restrictive
      Legends and Stop-Transfer Orders.

     

    (a) Legends.
      Purchaser understands and agrees that the Company shall cause the legends set
      forth below or legends substantially equivalent thereto, 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 state or federal securities
      laws:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933 (THE “ACT”) OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
      OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
      UNTIL
      REGISTERED UNDER THE ACT AND QUALIFIED UNDER THE APPROPRIATE STATE SECURITIES
      LAWS OR, IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE ISSUER OF THESE
      SECURITIES, SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPO-THECATION IS IN
      COMPLIANCE THEREWITH.

     

    THE
      SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
      ON
      TRANSFER AS SET FORTH IN A STOCK OPTION AGREEMENT BETWEEN THE ISSUER AND THE
      ORIGINAL PURCHASER OF THE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
      PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS ARE BINDING ON
      TRANSFEREES OF THESE SHARES.

     

    (b) Stop-Transfer
      Notices.
      Purchaser agrees that, in order 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 Exercise Notice 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.

     

    7. Successors
      and Assigns.
      The
      Company may assign any of its rights under this Exercise Notice to single or
      multiple assignees, and this Exercise Notice shall inure to the benefit of
      the
      successors and assigns of the Company. Subject to the restrictions on transfer
      herein set forth, this Exercise Notice shall be binding upon Purchaser and
      Purchaser’s heirs, executors, administrators, successors and
      assigns.

     

    8. Interpretation.
      Any
      dispute regarding the interpretation of this Exercise Notice shall be submitted
      by Purchaser or by the Company forthwith to the Board, which shall review such
      dispute at its next regular meeting. The resolution of such a dispute by the
      Board shall be final and binding on all parties.

     

    9. Entire
      Agreement; Governing Law.
      The
      Option Agreement is incorporated herein by reference. This Agreement, and the
      Option Agreement constitute the entire agreement of the parties with respect
      to
      the subject matter hereof and supersede in their entirety all prior undertakings
      and agreements of the Company and Purchaser with respect to the subject matter
      hereof, and may not be modified adversely to the Purchaser’s interest except by
      means of a writing signed by the Company and Purchaser. This agreement is
      governed by the internal substantive laws, but not the choice of law rules,
      of
      California.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    
      	
              Submitted
                by:

            	 	
              Accepted
                by:

            
	 	 	 
	
              OPTIONEE

            	 	
              NUTRACEA

            
	 	 	 
	   
	 	    

	
              Signature
                

            	 	 
	 	 	 
	   
	 	  

	
              Print
                Name 

            	 	 
	   
	 	
              1261
                Hawk’s Flight Court

            
	
              Address

            	 	
              Address

            
	 	 	
              El
                Dorado Hills, CA 95762

            
	 	 	 
	 	 	 
	
              SSN
                ________________________________

            	 	 
	 	 	
              Date
                Received:_________________________

            

    

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

     

    INVESTMENT
      REPRESENTATION STATEMENT

     

    
      	
              OPTIONEE:

            	  
	 
	 	 	 
	
              COMPANY:

            	
              NUTRACEA

            	 
	 	 	 
	
              SECURITY:

            	
              COMMON
                STOCK

            	 
	 	 	 
	
              AMOUNT:

            	  
	 
	 	 	 
	
              DATE:

            	  
	 

    

     

    In
      connection with the purchase of the above-listed Securities, the undersigned
      Optionee represents to the Company the following:

     

    (a) Optionee
      is aware of the Company’s business affairs and financial condition and has
      acquired sufficient information about the Company to reach an informed and
      knowledgeable decision to acquire the Securities. Optionee is acquiring these
      Securities for investment for Optionee’s own account only and not with a view
      to, or for resale in connection with, any “distribution” thereof within the
      meaning of the Securities Act of 1933, as amended (the “Securities
      Act”).

     

    (b) Optionee
      acknowledges and understands that the Securities constitute “restricted
      securities” under the Securities Act and have not been registered under the
      Securities Act in reliance upon a specific exemption therefrom, which exemption
      depends upon, among other things, the bona fide nature of Optionee’s investment
      intent as expressed herein. In this connection, Optionee understands that,
      in
      the view of the Securities and Exchange Commission, the statutory basis for
      such
      exemption may be unavailable if Optionee’s representation was predicated solely
      upon a present intention to hold these Securities for the minimum capital gains
      period specified under tax statutes, for a deferred sale, for or until an
      increase or decrease in the market price of the Securities, or for a period
      of
      one year or any other fixed period in the future. Optionee further understands
      that the Securities must be held indefinitely unless they are subsequently
      registered under the Securities Act or an exemption from such regis-tration
      is
      available. Optionee further acknowledges and understands that the Company is
      under no obligation to register the Securities. Optionee understands that the
      certificate evidencing the Securities will be imprinted with a legend which
      prohibits the transfer of the Securities unless they are registered or such
      regis-tra-tion is not required in the opinion of counsel satisfactory to the
      Company, and any other legend required under applicable state securities
      laws.

     

    (c) Subject
      to restrictions on transfer contained in the stock option agreement between
      the
      Company and Optionee, the Securities may be resold in certain limited
      circumstances subject to the provisions of Rule 144 promulgated under the
      Securities Act (“Rule 144”), which requires the resale to occur not less
      than one year after the later of the date the Securities were sold by the
      Company or the date the Securities were sold by an affiliate of the Company,
      within the meaning of Rule 144; and, in the case of acquisition of the
      Securities by an affiliate, or by a non-affiliate who subsequently holds the
      Securities less than two years, the satisfaction of the following conditions:
      (1) the resale 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); and, in the case of
      an
      affiliate, (2) the availability of certain public information about the
      Company, (3) the amount of Securities being sold during any three month period
      not exceeding the limitations specified in Rule 144(e), and (4) the timely
      filing of a Form 144, if applicable. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d) Optionee
      further understands that in the event all of the applicable requirements of
      Rule 144 is not satisfied, registration under the Securities Act,
      compliance with Regulation A, or some other registration exemption will be
      required; and that, notwithstanding the fact that Rule 144 is not exclusive,
      the
      Staff of the Securities and Exchange Commission has expressed its opinion that
      persons proposing to sell private placement securities other than in a
      registered offering and otherwise than 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.
      Optionee understands that no assurances can be given that any such other
      registration exemption will be available in such event.

     

    (e) In
      the
      event the purchase of the Securities by Optionee from the Company is not
      registered under the Securities Act, Optionee shall not sell, pledge, agree
      to
      sell or otherwise transfer the Securities (a “Transfer”) unless Optionee first
      (i) delivers to the Company a written notice to Optionor and Optionee describing
      the Transfer and (ii) provides to the Company evidence satisfactory to the
      Company that the Transfer will be made pursuant to an exemption from
      registration under federal and state securities laws, including, if requested
      by
      the Company, an opinion of counsel reasonably satisfactory to the Company that
      such exemption will allow Optionee to complete the Transfer without registration
      under federal and state securities laws.

     

    
      
        	 	
                Signature
                  of Optionee:

              
	 	  

	 	 
	 	 	 
	 	 	 
	 	
                Date:

              	    

      

       

      
 

    

    
      
        
        

      

      
        2Exhibit
      10.4

     

    

     

    SOP08005A

     

    NUTRACEA

     

    STOCK
      OPTION AGREEMENT

     

     

    
      	I.	
              NOTICE
                OF STOCK OPTION GRANT

            

    

     

    Margie
      Adelman

     

    You
      have
      been granted a Nonstatutory Stock Option to purchase Common Stock of the
      Company, subject to the terms and conditions of this Agreement, as
      follows:

     

    
      	
              Date
                of Grant

            	
              January
                8, 2008

            
	 	 
	
              Exercise
                Price per Share

            	
              $1.49

            
	 	 
	
              Total
                Number of Shares Granted

            	
              100,000
                Options

            
	 	 
	
              Term/Expiration
                Date

            	
              January
                8, 2013

            

    

     

    Vesting
      Schedule:

     

    
      	 	
              (i)

            	
              1⁄2
                of the option shares vest on December 31, 2008 so long as NutraCea
                achieves for 2008 gross revenue that equals or exceeds 85 percent
                of gross
                revenue budgeted for 2008, 

            

    

     

    
      	 	
              (ii)

            	
              1⁄2
                of the option shares vest on December 31, 2008 so long as NutraCea
                achieves for 2008 net income that equals or exceeds 85 percent of
                net
                income budgeted for 2008, and 

            

    

     

    No
      right
      to any stock is earned or accrued until such time that vesting occurs, nor
      does
      the grant confer any right to continue vesting or employment. You will have
      no
      rights to receive a stock option until (i) the Option proposal is ratified
      by
      the Company’s Board of Directors and (ii) you and the Company execute the Stock
      Option Agreement. The first date in which both these events have occurred will
      be the date of grant. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Acceleration
      of Vesting.
      If a
“change of control” of the Company should occur, as defined below, then the
      Option shall immediately vest and become exercisable in full and the performance
      criteria of this Option will be waived. For purposes of this Agreement, “Change
      of Control” shall mean (i) the consummation of a merger or consolidation of the
      Company with any other corporation which results in the voting securities of
      the
      Company outstanding immediately prior thereto failing to represent (either
      by
      remaining outstanding or by being converted into voting securities of the
      surviving entity) more than fifty percent (50%) of the total voting power
      represented by the voting securities of the Company or such surviving entity
      outstanding immediately after such merger or consolidation or (ii) the
      consummation of the sale or disposition by the Company of all or substantially
      all of the Company's assets. 

     

     

    Termination
      Period:

     

    This
      Option may be exercised for three (3) months after Optionee ceases to be a
      Service Provider in accordance with Section 7 of this Agreement. Upon the death
      or Disability of the Optionee, this Option may be exercised for one (1)
      year after
      the
      Optionee ceases to be a Service Provider in accordance with Sections 8 and
      9 of
      this Agreement. In no event shall this Option be exercised later that the
      Term/Expiration Date provided above.

     

    
      	II.	
              AGREEMENT

            

    

     

    1. Definitions.
      As used
      herein, the following definitions shall apply:

     

    (a) “Agreement”
means
      this stock option agreement between the Company and Optionee evidencing the
      terms and conditions of this Option.

     

    (b) “Applicable
      Laws”
means
      the requirements relating to the administration of stock options under U.S.
      state corporate laws, U.S. federal and state securities laws, the Code, any
      stock exchange or quotation system on which the Common Stock is listed or quoted
      and the applicable laws of any foreign country or jurisdiction that may apply
      to
      this Option.

     

    (c) “Board”
means
      the Board of Directors of the Company or any committee of the Board that has
      been designated by the Board to administer this Agreement.

     

    (d) “Code”
means
      the Internal Revenue Code of 1986, as amended.

     

    (e) “Common
      Stock”
means
      the common stock of the Company.

     

    (f) “Company”
means
      NutraCea, a California corporation.

     

    (g) “Consultant”
means
      any person, including an advisor, engaged by the Company or a Parent or
      Subsidiary to render services to such entity.

     

    (h) “Director”
means
      a
      member of the Board.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (i) “Disability”
means
      total and permanent disability as defined in Section 22(e)(3) of the
      Code.

     

    (j) “Employee”
means
      any person, including Officers and Directors, employed by the Company or any
      Parent or Subsidiary of the Company. A Service Provider shall not cease to
      be an
      Employee in the case of (i) any leave of absence approved by the Company or
      (ii)
      transfers between locations of the Company or between the Company, its Parent,
      any Subsidiary, or any successor. Neither service as a Director nor payment
      of a
      director’s fee by the Company shall be sufficient to constitute “employment” by
      the Company.

     

    (k) “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    (l) “Nonstatutory
      Stock Option”
means
      an Option not intended to qualify as an incentive stock option within the
      meaning of Section 422 of the Code and the regulations promulgated
      thereunder.

     

    (m) “Notice
      of Grant”
means
      a
      written notice, in Part I of this Agreement, evidencing certain the terms and
      conditions of this Option grant. The Notice of Grant is part of this Option
      Agreement.

     

    (n) “Officer”
means
      a
      person who is an officer of the Company within the meaning of Section 16 of
      the Exchange Act and the rules and regulations promulgated
      thereunder.

     

    (o) “Option”
means
      this stock option.

     

    (p) “Optioned Stock”
means
      the Common Stock subject to this Option.

     

    (q) “Optionee”
means
      the person named in the Notice of Grant or such person’s successor.

     

    (r) “Parent”
means
      a
“parent corporation,” whether now or hereafter existing, as defined in
      Section 424(e) of the Code.

     

    (s) “Securities
      Act”
means
      the Securities Act of 1933, as amended.

     

    (t) “Service
      Provider”
means
      an Employee, Director or Consultant.

     

    (u) “Share”
means
      a
      share of the Common Stock, as adjusted in accordance with Section 11 of
      this Agreement.

     

    (v) “Subsidiary”
means
      a
“subsidiary corporation”, whether now or hereafter existing, as defined in
      Section 424(f) of the Code.

     

    2. Grant
      of Option.
      The
      Board of Directors of NutraCea must ratify this option. Upon ratification this
      option will be hereby granted to the Optionee named in the Notice of Grant
      attached as Part I of this Agreement the Option to purchase the number of
      Shares, as set forth in the Notice of Grant, at the exercise price per share
      set
      forth in the Notice of Grant (the “Exercise Price”), subject to the terms and
      conditions of this Agreement. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    3. Exercise
      of Option.

     

    (a)  Right
      to Exercise.
      This
      Option is exercisable during its term in accordance with the Vesting Schedule
      set out in the Notice of Grant and the applicable provisions of this
      Agreement.

     

    (b) Method
      of Exercise.
      This
      Option is exercisable by delivery of an exercise notice, in the form attached
      as
Exhibit
      A
      (the
“Exercise Notice”), which shall state the election to exercise the Option, the
      number of Shares in respect of which the Option is being exercised (the
“Exercised Shares”), and such other representations and agreements as may be
      required by the Company. The Exercise Notice shall be completed by the Optionee
      and delivered to Secretary of the Company. The Exercise Notice shall be
      accompanied by payment of the aggregate Exercise Price as to all Exercised
      Shares together with any taxes required to be withheld. This Option shall be
      deemed to be exercised upon receipt by the Company of such fully executed
      Exercise Notice accompanied by such aggregate Exercise Price and the applicable
      amounts to be withheld by the Company for taxes.

     

    (c)
       Surrender
      of Options.
      If the
      Stock is publicly traded, by surrendering the right to purchase a certain number
      of Shares under the Option and using the appreciated value of the Shares
      surrendered, defined as the Fair Market Value less the Exercise Price of the
      Shares surrendered. By way of example, if the Optionee surrenders the right
      to
      purchase 40 shares on a date when the Fair Market Value is $8.125 per Share
      and
      the Exercise Price is $3.25 per share, then the Optionee could purchase ($8.125
      - $3.25 = $4.875 x 40 shares = $195.00 divided by $3.25 = 60 shares), and the
      number of shares purchasable under the Option would be reduced by 100
      shares.

     

    (d)  Legal
      Compliance.
      No
      Shares shall be issued pursuant to the exercise of this Option unless such
      issuance and exercise complies with Applicable Laws. Assuming such compliance,
      for income tax purposes the Exercised Shares shall be considered transferred
      to
      the Optionee on the date the Option is exercised with respect to such Exercised
      Shares.

     

    4. Optionee’s
      Representations.
      In the
      event that at the time this Option is exercised (i) the Shares have not been
      registered under the Securities Act or (ii) the Common Stock is not listed
      on a
      national securities exchange, the Optionee shall, if required by the Company,
      concurrently with the exercise of all or any portion of this Option, deliver
      to
      the Company his or her Investment Representation Statement in the form attached
      hereto as Exhibit B.

     

    5. Method
      of Payment.
      Payment
      of the aggregate Exercise Price shall be by any of the following, or a
      combination thereof, at the election of the Optionee:

     

    (a) cash
      or
      check; or

     

    (b) any
      other
      form of consideration allowed in writing by the Company in the Company’s sole
      discretion. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    6. Term
      of Option.
      This
      Option may be exercised only within the term set out in the Notice of Grant,
      and
      may be exercised during such term only in accordance with the terms of this
      Agreement.

     

    7. Termination
      of Relationship as a Service Provider.
      If the
      Optionee ceases to be a Service Provider (other than for death or Disability),
      this Option may be exercised for a period of three (3) months after the date
      of
      such termination (but in no event later than the expiration date of this Option
      as set forth in the Notice of Grant) to the extent that the Option is vested
      on
      the date of such termination. To the extent that the Optionee does not exercise
      this Option within the time specified herein, the Option shall
      terminate.

     

    8. Disability
      of Optionee.
      If the
      Optionee ceases to be a Service Provider as a result of the Optionee’s
      Disability, this Option may be exercised for a period of twelve (12) months
      after the date of such termination (but in no event later than the expiration
      date of this Option as set forth in the Notice of Grant) to the extent that
      the
      Option is vested on the date of such termination. To the extent that Optionee
      does not exercise this Option within the time specified herein, the Option
      shall
      terminate.

     

    9. Death
      of Optionee.
      If the
      Optionee dies while a Service Provider, the Option may be exercised at any
      time
      within twelve (12) months following the date of death (but in no event later
      than the expiration date of this Option as set forth in the Notice of Grant),
      by
      the Optionee’s estate or by a person who acquired the right to exercise the
      Option by bequest or inheritance, but only to the extent that the Optionee
      was
      entitled to exercise the Option at the date of death. If, after death, the
      Optionee’s estate or a person who acquired the right to exercise the Option by
      bequest or inheritance does not exercise the Option within the time specified
      herein, the Option shall terminate.

     

    10. Adjustments Upon Changes in Capitalization,
      Dissolution, Merger or Asset Sale.
      

     

    (a) Changes
      in Capitalization.
      Subject
      to any required action by the stockholders of the Company, the number of shares
      of Common Stock covered by this Option, as well as the price per share of Common
      Stock covered by this Option, shall be proportionately adjusted for any increase
      or decrease in the number of issued shares of Common Stock resulting from a
      stock split, reverse stock split, stock dividend, combination or
      reclassification of the Common Stock, or any other increase or decrease in
      the
      number of issued shares of Common Stock effected without receipt of
      consideration by the Company; provided, however, that conversion of any
      convertible securities of the Company shall not be deemed to have been “effected
      without receipt of consideration.” Such adjustment shall be made by the Board,
      whose determination in that respect shall be final, binding and conclusive.
      Except as expressly provided herein, no issuance by the Company of shares of
      stock of any class, or securities convertible into shares of stock of any class,
      shall affect, and no adjustment by reason thereof shall be made with respect
      to,
      the number or price of shares of Common Stock subject to this
      Option.

     

    (b) Dissolution
      or Liquidation.
      In the
      event of the proposed dissolution or liquidation of the Company, the Board
      shall
      notify Optionee as soon as practicable prior to the effective date of such
      proposed transaction. The Board in its discretion may provide for the Optionee
      to have the right to exercise his or her Option until fifteen (15) days prior
      to
      such transaction as to all of the Optioned Stock covered thereby, including
      Shares as to which the Option would not otherwise be exercisable. To the extent
      it has not been previously exercised, the Option will terminate immediately
      prior to the consummation of such proposed action.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (c) Merger
      or Asset Sale.
      In the
      event of a merger of the Company with or into another corporation, or the sale
      of substantially all of the assets of the Company, this Option shall be assumed
      or an equivalent option substituted by the successor corporation or a Parent
      or
      Subsidiary of the successor corporation. If, in such event, this Option is
      not
      assumed or substituted, the Board shall notify the Optionee in writing or
      electronically as to the number of Shares underlying this Option that are vested
      and exercisable and this Option shall be exercisable to the extent vested
      (unless the Board allows the Optionee to exercise with respect to additional
      unvested Shares) for a period of fifteen (15) days from the date of such notice,
      and this Option shall terminate upon the expiration of such period. For the
      purposes of this paragraph, the Option shall be considered assumed if, following
      the merger or sale of assets, the option confers the right to purchase or
      receive, for each Share of Optioned Stock subject to this Option immediately
      prior to the merger or sale of assets, the consideration (whether stock, cash,
      or other securities or property) received in the merger or sale of assets by
      holders of Common Stock for each Share held on the effective date of the
      transaction (and if holders were offered a choice of consideration, the type
      of
      consideration chosen by the holders of a majority of the outstanding Shares);
      provided, however, that if such consideration received in the merger or sale
      of
      assets is not solely common stock of the successor corporation or its Parent,
      the Board may, with the consent of the successor corporation, provide for the
      consideration to be received upon the exercise of the Option, for each Share
      of
      Optioned Stock subject to the Option, to be solely common stock of the successor
      corporation or its Parent equal in fair market value to the per share
      consideration received by holders of Common Stock in the merger or sale of
      assets.

     

    11. Notices.
      Any
      notice to be given to the Company hereunder shall be in writing and shall be
      addressed to the Company. at its then current principal executive office or
      to
      such other address as the Company may hereafter designate to the Optionee by
      notice as provided in this Section. Any notice to be given to the Optionee
      hereunder shall be addressed to the Optionee at the address set forth beneath
      Optionee’s signature hereto, or at such other address as the Optionee may
      hereafter designate to the Company by notice as provided herein. A notice shall
      be deemed to have been duly given when personally delivered or mailed by
      registered or certified mail to the party entitled to receive it.

     

    12. Withholding
      Taxes.
      The
      Optionee agrees to make appropriate arrangements with the Company (or the Parent
      or Subsidiary employing or retaining the Optionee) for the satisfaction of
      all
      federal, state, local and foreign income and employment tax withholding
      requirements applicable to the Option exercise. The Optionee acknowledges and
      agrees that the Company may refuse to honor the exercise and refuse to deliver
      the Shares if such withholding amounts are not delivered at the time of
      exercise.

     

    13. Entire
      Agreement; Governing Law.
      This
      Agreement constitute the entire agreement of the parties with respect to the
      subject matter hereof and supersede in their entirety all prior undertakings
      and
      agreements of the Company and Optionee with respect to the subject matter
      hereof, and may not be modified adversely to the Optionee’s interest except by
      means of a writing signed by the Company and Optionee. This Agreement is
      governed by the internal substantive laws, but not the choice of law rules,
      of
      California.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    14. Investment
      Representations.
      In
      connection with the issuance of the Option, the Optionee specifically represents
      to the Company as follows:

     

    (a) The
      Optionee is aware of the Company's business affairs and financial condition,
      and
      has acquired information about the Company sufficient to reach an informed
      and
      knowledgeable decision to acquire this Option. The holder is acquiring this
      Option for its own account for investment purposes only and not with a view
      to,
      or for the resale in connection with, any distribution thereof.

     

    (b) The
      Optionee understands that this Option has not been registered under the
      Securities Act in reliance upon a specific exemption therefrom, which exemption
      depends upon, among other things, the bona fide nature of the Optionee’s
      investment intent as expressed herein.

     

    (c) The
      Optionee further understands that this Option must be held indefinitely unless
      subsequently registered under the Securities Act and qualified under any
      applicable state securities laws, or unless exemptions from registration and
      qualification are otherwise available. 

     

    15. Tax
      Consultation.
      The
      Optionee understands that the Optionee may suffer adverse tax consequences
      as a
      result of the Optionee’s receipt of this Option. The Optionee represents that
      the Optionee has consulted with any tax consultants the Optionee deems advisable
      in connection with the Optionee’s receipt of this Option and that the Optionee
      is not relying on the Company for any tax advice.

     

    16. No
      Lock-Up Provision.

     

    

     

    
 

     

    [the
      remainder of this page was intentionally left blank]

    
 

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    17. NO
      GUARANTEE OF CONTINUED SERVICE.
      THE
      OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
      VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER
      AT
      THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED
      AN OPTION OR PURCHASING SHARES HEREUNDER). THE OPTIONEE FURTHER ACKNOWLEDGES
      AND
      AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE
      VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED
      PROMISE OF CONTINUES ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD,
      FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE’S RIGHT OR THE
      COMPANY’S RIGHT TO TERMINATE THE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER
      AT ANY TIME, WITH OR WITHOUT CAUSE.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    By
      the
      Optionee’s signature and the signature of the Company’s representative below,
      Optionee and the Company agree that this Option is granted under and governed
      by
      the terms and conditions of this Agreement. The Optionee has reviewed this
      Agreement in its entirety, has had an opportunity to obtain the advice of
      counsel prior to executing this Agreement and fully understands all provisions
      of this Agreement. The Optionee hereby agrees to accept as binding, conclusive
      and final all decisions or interpretations of the Board upon any questions
      relating to this Agreement. Optionee further agrees to notify the Company upon
      any change in the residence address indicated below.

     

    

    
      	
              OPTIONEE

            	 	
              NUTRACEA

            
	 	 	 
	 	 	 
	   
	 	  

	
              Signature

            	 	
              By:
                Bradley D. Edson

            
	 	 	 
	  
	 	
              Chief
                Executive Officer

            
	
              Print
                Name

            	 	
              Title

            
	 	 	 
	 
	 	 
	
              Residence
                Address, City, State and Zip Code

            	 	 
	  
	 	 
	  
	 	 
	
               
                

            	 	
                
                

            
	
              Date

            	 	
              Date

            

    

     

    
 

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    NUTRACEA

     

    EXERCISE
      NOTICE

     

     

    NutraCea

    1261
      Hawk’s Flight Court

    El
      Dorado Hills, CA 95762

    Attention:
      President 

     

    1. Exercise
      of Option.
      Effective as of today, ________________, 200__, the undersigned (“Purchaser”)
      hereby elects to purchase ______________ shares (the “Shares”) of the Common
      Stock of NutraCea (the “Company”) under and pursuant to the Stock Option
      Agreement dated [_____________]
      (the
      “Option Agreement”). The purchase price for the Shares shall be [$_______],
      as
      required by the Option Agreement.

     

    2. Delivery
      of Payment.
      Purchaser herewith delivers to the Company the full purchase price of the
      Shares, as set forth in the Option Agreement, and any and all taxes that must
      be
      withheld in connection with the exercise of the Option.

     

    3. Representations
      of Purchaser.
      Purchaser acknowledges that Purchaser has received, read and understood the
      Option Agreement and agrees to abide by and be bound by its terms and
      conditions.

     

    4. Rights
      as Shareholder.
      Until
      the issuance (as evidenced by the appropriate entry on the books of the Company
      or of a duly authorized transfer agent of the Company) of the Shares, no right
      to vote or receive dividends or any other rights as a stockholder shall exist
      with respect to the Shares, notwithstanding the exercise of the Option. The
      Shares so acquired shall be issued to the Purchaser as soon as practicable
      after
      exercise of the Option. No adjustment will be made for a dividend or other
      right
      for which the record date is prior to the date of issuance, except as provided
      in Section 11 of the Option Agreement.

     

    5. Tax
      Consultation.
      Purchaser understands that Purchaser may suffer adverse tax consequences as
      a
      result of Purchaser’s purchase or disposition of the Shares. Purchaser
      represents that Purchaser has consulted with any tax consultants Purchaser
      deems
      advisable in connection with the purchase or disposition of the Shares and
      that
      Purchaser is not relying on the Company for any tax advice.

     

    6. Restrictive
      Legends and Stop-Transfer Orders.

     

    (a) Legends.
      Purchaser understands and agrees that the Company shall cause the legends set
      forth below or legends substantially equivalent thereto, 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 state or federal securities
      laws:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933 (THE “ACT”) OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
      OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
      UNTIL
      REGISTERED UNDER THE ACT AND QUALIFIED UNDER THE APPROPRIATE STATE SECURITIES
      LAWS OR, IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE ISSUER OF THESE
      SECURITIES, SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPO-THECATION IS IN
      COMPLIANCE THEREWITH.

     

    THE
      SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
      ON
      TRANSFER AS SET FORTH IN A STOCK OPTION AGREEMENT BETWEEN THE ISSUER AND THE
      ORIGINAL PURCHASER OF THE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
      PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS ARE BINDING ON
      TRANSFEREES OF THESE SHARES.

     

    (b) Stop-Transfer
      Notices.
      Purchaser agrees that, in order 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 Exercise Notice 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.

     

    7. Successors
      and Assigns.
      The
      Company may assign any of its rights under this Exercise Notice to single or
      multiple assignees, and this Exercise Notice shall inure to the benefit of
      the
      successors and assigns of the Company. Subject to the restrictions on transfer
      herein set forth, this Exercise Notice shall be binding upon Purchaser and
      Purchaser’s heirs, executors, administrators, successors and
      assigns.

     

    8. Interpretation.
      Any
      dispute regarding the interpretation of this Exercise Notice shall be submitted
      by Purchaser or by the Company forthwith to the Board, which shall review such
      dispute at its next regular meeting. The resolution of such a dispute by the
      Board shall be final and binding on all parties.

     

    9. Entire
      Agreement; Governing Law.
      The
      Option Agreement is incorporated herein by reference. This Agreement, and the
      Option Agreement constitute the entire agreement of the parties with respect
      to
      the subject matter hereof and supersede in their entirety all prior undertakings
      and agreements of the Company and Purchaser with respect to the subject matter
      hereof, and may not be modified adversely to the Purchaser’s interest except by
      means of a writing signed by the Company and Purchaser. This agreement is
      governed by the internal substantive laws, but not the choice of law rules,
      of
      California.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    
      	
              Submitted
                by:

            	 	
              Accepted
                by:

            
	 	 	 
	
              OPTIONEE

            	 	
              NUTRACEA

            
	 	 	 
	  
	 	  

	
              Signature
                

            	 	 
	 	 	 
	  
	 	    

	
              Print
                Name 

            	 	 
	 	 	 
	 	 	
              1261
                Hawk’s Flight Court

            
	
              Address

            	 	
              Address

            
	  
	 	
              El
                Dorado Hills, CA 95762

            
	   
	 	  

	 	 	 
	
              SSN
                ________________________________

            	 	 
	 	 	
              Date
                Received:_________________________

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

     

    INVESTMENT
      REPRESENTATION STATEMENT

     

    
      	
              OPTIONEE:

            	   
	 
	 	 	 
	
              COMPANY:

            	
              NUTRACEA

            	 
	 	 	 
	
              SECURITY:

            	
              COMMON
                STOCK

            	 
	 	 	 
	
              AMOUNT:

            	   
	 
	 	 	 
	
              DATE:

            	   
	 

    

     

    In
      connection with the purchase of the above-listed Securities, the undersigned
      Optionee represents to the Company the following:

     

    (a) Optionee
      is aware of the Company’s business affairs and financial condition and has
      acquired sufficient information about the Company to reach an informed and
      knowledgeable decision to acquire the Securities. Optionee is acquiring these
      Securities for investment for Optionee’s own account only and not with a view
      to, or for resale in connection with, any “distribution” thereof within the
      meaning of the Securities Act of 1933, as amended (the “Securities
      Act”).

     

    (b) Optionee
      acknowledges and understands that the Securities constitute “restricted
      securities” under the Securities Act and have not been registered under the
      Securities Act in reliance upon a specific exemption therefrom, which exemption
      depends upon, among other things, the bona fide nature of Optionee’s investment
      intent as expressed herein. In this connection, Optionee understands that,
      in
      the view of the Securities and Exchange Commission, the statutory basis for
      such
      exemption may be unavailable if Optionee’s representation was predicated solely
      upon a present intention to hold these Securities for the minimum capital gains
      period specified under tax statutes, for a deferred sale, for or until an
      increase or decrease in the market price of the Securities, or for a period
      of
      one year or any other fixed period in the future. Optionee further understands
      that the Securities must be held indefinitely unless they are subsequently
      registered under the Securities Act or an exemption from such regis-tration
      is
      available. Optionee further acknowledges and understands that the Company is
      under no obligation to register the Securities. Optionee understands that the
      certificate evidencing the Securities will be imprinted with a legend which
      prohibits the transfer of the Securities unless they are registered or such
      regis-tra-tion is not required in the opinion of counsel satisfactory to the
      Company, and any other legend required under applicable state securities
      laws.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) Subject
      to restrictions on transfer contained in the stock option agreement between
      the
      Company and Optionee, the Securities may be resold in certain limited
      circumstances subject to the provisions of Rule 144 promulgated under the
      Securities Act (“Rule 144”), which requires the resale to occur not less
      than one year after the later of the date the Securities were sold by the
      Company or the date the Securities were sold by an affiliate of the Company,
      within the meaning of Rule 144; and, in the case of acquisition of the
      Securities by an affiliate, or by a non-affiliate who subsequently holds the
      Securities less than two years, the satisfaction of the following conditions:
      (1) the resale 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); and, in the case of
      an
      affiliate, (2) the availability of certain public information about the
      Company, (3) the amount of Securities being sold during any three month period
      not exceeding the limitations specified in Rule 144(e), and (4) the timely
      filing of a Form 144, if applicable. 

     

    (d) Optionee
      further understands that in the event all of the applicable requirements of
      Rule 144 is not satisfied, registration under the Securities Act,
      compliance with Regulation A, or some other registration exemption will be
      required; and that, notwithstanding the fact that Rule 144 is not exclusive,
      the
      Staff of the Securities and Exchange Commission has expressed its opinion that
      persons proposing to sell private placement securities other than in a
      registered offering and otherwise than 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.
      Optionee understands that no assurances can be given that any such other
      registration exemption will be available in such event.

     

    (e) In
      the
      event the purchase of the Securities by Optionee from the Company is not
      registered under the Securities Act, Optionee shall not sell, pledge, agree
      to
      sell or otherwise transfer the Securities (a “Transfer”) unless Optionee first
      (i) delivers to the Company a written notice to Optionor and Optionee describing
      the Transfer and (ii) provides to the Company evidence satisfactory to the
      Company that the Transfer will be made pursuant to an exemption from
      registration under federal and state securities laws, including, if requested
      by
      the Company, an opinion of counsel reasonably satisfactory to the Company that
      such exemption will allow Optionee to complete the Transfer without registration
      under federal and state securities laws.

    
 

    
      	 	
              Signature
                of Optionee:

            
	 	  

	 	 
	 	 	 
	 	 	 
	 	
              Date:

            	    

    

     

     

    
      
        
        

      

      
        2

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