EMPLOYMENT AGREEMENT

This Employment Agreement (“ Agreement ”)   is entered into by and between NutraCea, a California corporation with principal offices at 5090 40 th North Street, Suite 400, Phoenix, Arizona 85018 (“ NutraCea ”   or the “ Employer ”)   and W. John Short (“ Employee ”)   effective as of July 6, 2009 (the “ Effective Date ”),   as follows:

1.             Employment . NutraCea wishes to employ Employee and Employee agrees to provide services for NutraCea on the terms and conditions set forth below.

2.             Employment; Scope of Employment . Employee shall be employed as President of NutraCea, reporting to the interim Chief Executive Officer of NutraCea, and shall have such authorities, duties and responsibilities with regard to NutraCea as are customarily associated with the position of President for companies of the nature and size of NutraCea, as well as such other duties and responsibilities as may be reasonably assigned from time to time by the Board of Directors of NutraCea (the "Board") consistent with such position.

(a)            NutraCea may, in its discretion, during the Term (as defined below), offer to Employee in writing the appointment as NutraCea's Chief Executive Officer. Employee shall accept or reject such appointment promptly following receipt of such written notice. If Employee accepts such appointment, then commencing on the date of acceptance or such later date as   is agreed upon by the parties ("CEO Effective Date") Employee shall be the Chief Executive Officer and highest ranking executive officer of NutraCea, managing the overall operations and resources of NutraCea, subject to such limitations as are imposed by the Board consistent with his status as Chief Executive Officer. During his employment with NutraCea as the Chief Executive Officer, Employee shall report solely and directly to the Board.

(b)            Upon his appointment as Chief Executive Officer, Employee shall be nominated by NutraCea for election to the Board or shall be appointed the fill a vacancy on the Board, should a vacancy exist on the CEO Effective Date.

2.2            Efforts . Employee shall devote substantially all of his business time and attention, and use his best reasonable efforts, to the business and affairs of NutraCea. However, nothing in this Agreement shall preclude Employee from serving on the boards of a reasonable number of trade associations and charitable organizations, engaging in charitable activities and community affairs, and managing his personal investments and affairs, so long as such activities do not, either individually or in the aggregate, materially interfere with the proper performance of his duties and responsibilities hereunder. In   addition to the foregoing, NutraCea expressly agrees that Employee may serve on the Boards of Directors or Advisory Boards of up to four companies while employed by NutraCea, provided that each of such four companies are not in engaged in any activity or other business that is competitive with NutraCea's business operations and so long as such activities do not, either individually or in the aggregate, materially interfere with the proper performance of his duties and responsibilities hereunder.

2.4            Exclusive Services . During the Term, Employee shall not, directly or indirectly, whether as a partner, employee, creditor, shareholder, independent contractor or otherwise, promote, participate or engage in any activity or other business that is competitive with NutraCea's business operations; provided, however, that this provision shall not preclude or prohibit Employee from holding or obtaining an indirect and passive beneficial ownership, through a mutual fund or similar arrangement, of up to one percent of any publicly-held company which is competitive with NutraCea as long as he does not otherwise promote, participate or engage in the business operations of such company. Employee agrees that Employee shall not enter into an agreement to establish, form, contract with or become employed by a competing business of NutraCea while Employee is employed by NutraCea.

2.5            Non-Solicitation . To the fullest extent permissible under applicable law, Employee agrees that both during the Term and for a period of two (2) years following termination of this Agreement, Employee shall not take any action to induce employees or independent contractors of NutraCea to sever their relationship with NutraCea or to accept an employment or an independent contractor relationship with any other business,

3.            Term and Termination; Payments upon Termination .

3.1.1            Termination for Cause. No termination of Employee's employment hereunder for Cause shall be effective unless NutraCea shall first have given written notice to Employee (the “ Cause Notice ”)   of its intention to terminate Employee for Cause, such Cause Notice (x) to state in detail the particular circumstances that constitute the grounds on which the proposed termination for Cause is based and (y) to be given no later than ninety (90) days after NutraCea first learns of such circumstances. “ Cause ”   for termination of Employee's employment shall mean the occurrence of any of the following:

(a)            Employee breaches a material term of this Agreement, which breach remains uncured for thirty (30) days after delivery of the Cause Notice (which Cause Notice shall describe the breach in sufficient detail to allow Employee the reasonable opportunity to cure the breach, if susceptible of being cured, within such thirty (30) day period);

(b)            Employee has been grossly negligent or engaged in material willful or gross misconduct in the performance of his duties;

(c)            Employee has committed, as reasonably determined by the Board, or has been convicted by a court of law of fraud, moral turpitude, embezzlement, theft, other similar criminal conduct, or any felony;

(d)            Employee's habitual misuse of alcohol, drugs, or any controlled substance; or

(e)            Employee’s (i) breach of the Proprietary Information Agreement attached hereto as Exhibit A or (ii) failure to timely accept NutraCea's written offer to become the Chief Executive Officer of NutraCea

3.1.2          Termination for Good Reason .

(a)            Employee may terminate this Agreement for Good Reason, as defined herein, subject to and provided that Employee complies with the requirements of Section 3.1.2(b). As used herein, “ Good Reason ”   means (1) any material breach by NutraCea of any provision of this Agreement; (ii) a material diminution of Employee's duties or responsibilities, or the assignment of duties or responsibilities to Employee that are not consistent or commensurate with and his position as President or Chief Executive Officer, as applicable (not including any reduction in Employee's duties during any investigation or proceedings initiated by NutraCea in good faith pursuant to Section 3.1.1 with regard to a possible termination of Employee for Cause); (iii) any reduction of Employee's Base Salary; or (iv) the failure of NutraCea, on or before August 31, 2009, to appoint Employee as NutraCea's Chief Executive Officer, unless an event of Cause has occurred prior to such date.

(b)            In order to terminate this Agreement for Good Reason, Employee shall provide NutraCea with (i) written notice of the Good Reason (which notice must be delivered within 90 days following the date Employee first learns of the occurrence of the event constituting Good Reason and which notice shall describe the particulars of NutraCea's breach in sufficient detail to allow NutraCea the reasonable opportunity to remedy or eliminate the Good Reason(s), if susceptible of being remedied or eliminated); and (ii) 30 days within which to remedy or eliminate the Good Reason(s). In the event that Employee provides such notice and NutraCea fails to remedy or eliminate the Good Reason(s) within such 30-day period, Employee shall be entitled to provide NutraCea with written notice (of not less that thirty (30) days) that Employee is terminating this Agreement as a result of such Good Reason(s).

3.1.3            Voluntary Termination of Employment .  Employee agrees (a) to provide at least one hundred and eighty (180) days' prior written notice (a “ Voluntary Termination Notice ”)   of his intention to voluntarily terminate his employment with NutraCea for any reason other than Good Reason, death or Disability (as defined below) (a “ Voluntary Termination ”)   and (b) to specify in such notice a fixed date for the Voluntary Termination. A termination of this Agreement by reason of Employee's non-renewal shall be deemed to be a Voluntary Termination.

3.2            Payments upon Termination .

3.2.1        For Cause, Voluntary Termination, or Disability . If NutraCea terminates Employee's employment for Cause, or if Employee terminates by Voluntary Termination, or if either party terminates this Agreement due to Employee's Disability: (a) Employee shall be entitled to receive in a cash lump sum payment (less normal and customary deductions and withholdings) an amount equal to all accrued but unpaid compensation (including accrued but unused vacation leave) as of the date of such termination (such payment shall be made within the time period required by applicable law, but in no event later than thirty (30) days following the date of termination); and (b) all unvested Options (as defined below) shall terminate effective as of the date of termination, and, subject to Section 4.4, all vested Options shall remain outstanding and exercisable for twenty four (24) months following the date of termination.

3.2.2          Without Cause, for Good Reason, or Death .

(a) In the event Employee's employment is terminated (i) by NutraCea other than for Cause (including by reason of NutraCea's election not to renew this Agreement pursuant to Section 3.1), (ii) by Employee for Good Reason, or (iii) due to Employee's death, Employee (or Employee's estate or legal representative) shall be entitled to:

(A)         a cash lump sum payment an amount equal to (1) all previously accrued but unpaid compensation (including accrued but unused vacation leave) as of the date of such termination, (2) a bonus for the year in which the date of termination occurs (determined by calculating the accrued portion of the non-discretionary annual bonus, based on the specified objective criteria  of the adopted bonus plan, for the year in which the date of termination occurs), and (3) the Base Salary and annual bonuses (determined, for this purpose, at the Target bonus level, as defined in Section 4.22(a)) that Employee would have been paid had he remained employed with NutraCea for the remainder of the then-current Term or, if longer, for the 12-month period following the date of termination (the amount described in this Section 3.2.2(a)(A)(3), the “ Severance Payment ”);   and all payments due under this Section 3 .2.2(a)(A) to be made no later than ten (10) days following the effective date of a mutual general release in a reasonable form mutually agreed, and signed, by both Employee and NutraCea); and

(B)       in the event of the termination of Employee's employment (1) by Employee for Good Reason under Section 3.1.2(a)(iv), the immediate vesting of the Initial Option (but the Second Option and Third Option shall immediately lapse and be forfeited), and the Initial Option shall remain outstanding and exercisable until the second year anniversary of the termination, and (2) for any other reason set forth in the premise of this Section 3.2.2(a), the immediate vesting of all unvested Options then held by Employee, all of which shall be immediately exercisable (and all Options shall remain outstanding and exercisable until the second year anniversary of the termination).

(b) For purposes of this Agreement, “ Disability ”   shall mean that Employee, due to a physical or mental disability, has been substantially unable to perform his duties under this Agreement for a continuous period of ninety (90) days or longer, or for one hundred and twenty (120) days or more in any twelve (12)-month period.

 3.2.3       Reimbursement for Relocation Expenses Following Termination  without Cause, for Good _, Reason, _Death, Disability or NutraCea’s  Failure to Renew .  In the event Employee's employment is terminated (i) by NutraCea other than for Cause (including by reason of NutraCea's notification of its intention not to renew this Agreement pursuant to Section 3.1), (ii) by Employee for Good Reason, or (iii) due to Employee's death or Disability, Employee (or Employee's estate or legal representative) shall be entitled to receive in a cash lump sum payment an amount equal to all reasonable moving expenses actually incurred by Employee (or Employee's estate or legal representative) to relocate his family and personal possessions to Bend, Oregon, including both moving expenses and the realtor fees and closing costs incurred in the sale of his home in Phoenix, Arizona. Such payment shall be made promptly upon presentation by Employee (or his estate or legal representative) of appropriate supporting documentation in accordance with the expense reimbursement policies of NutraCea.

 3.2.4       Termination Upon a Change of Control . Within sixty (60) days prior to or ninety (90) days after the effective date of a Change of Control (as defined below), either NutraCea or Employee may, upon thirty (30) days' prior written notice to the other, terminate Employee's employment. In the event of any such termination of Employee's employment (and regardless of whether such termination occurs with or without such thirty (30) day notice), NutraCea shall pay to Employee (a) the severance and other benefits set forth in Section 3.2.2 and Section 3.2.3 and (b) an additional severance payment of an amount equal to the excess, if any, of (1) two times the sum of Employee's Base Salary and Target bonus level for the year in which the termination occurs, over (2) the amount of the Severance Payment. Such payment shall be payable in accordance with applicable law, but in no event later than thirty (30) days following the date of termination. For the purposes of this Agreement, the term “ Change of Control ”   shall mean any of the following events: (x) the consummation of a merger or consolidation of NutraCea with any other entity which results in the voting securities of NutraCea 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 NutraCea or such surviving entity outstanding immediately after such merger or consolidation, or (y) the sale, mortgage, lease or other transfer in one or more transactions not in the ordinary course of NutraCea's business of assets or earning power constituting more than fifty percent (50%) of the assets or earning power of NutraCea and its subsidiaries (taken as a whole) to any such person or group of persons.

3.2.5          Section 409A . Notwithstanding any provision of this Agreement to the contrary, if Employee is a "specified employee" as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), he shall not be entitled to any payments upon a termination of his employment under any arrangement that constitutes "nonqualified deferred compensation" under Section 409A until the earlier of (1) the date which is six months after his separation from service (as such term is defined in Section 409A of the Code and the regulations and other published guidance hereunder) for any reason other than death, or (ii) the date of Employee's death. After the Date of Termination, Employee shall have no duties or responsibilities that are inconsistent with having a separation from service as of such date. Any amounts otherwise payable to Employee following a termination of employment that are not so paid by reason of this Section 3.2.5 shall be paid promptly following, and in any event within fifteen (15) days following, the date that is six (6) months after Employee's separation from service (or, if earlier, the date of Employee's death).

4.1            Base Salary . Employee shall be paid at a rate which, on an annualized basis, equals three hundred thousand dollars ($300,000) per year, as adjusted pursuant to this Section 4.1 (“ Base Salary ”).   The Base Salary shall be subject to normal payroll withholdings and NutraCea's standard payroll practices. Employee's Base Salary shall increase to three hundred fifty thousand dollars ($350,000) per year following the first Contract Year. Thereafter, for each subsequent Contract Year, Employee's Base Salary shall be subject to increase as determined by the Board.

4.2           Relocation Consideration; Bonus Amounts.

4.2.1.         Relocation Expenses . NutraCea shall reimburse Employee's reasonable expenses for (a) travel between the Phoenix, Arizona, area and the Bend, Oregon, area, (b) temporary housing in the Phoenix area, and (c) car rental or leasing in the Phoenix area, in each case from the Effective Date until August 31, 2010, or such earlier date that Employee relocates his family and family residence to Phoenix, Arizona. Employee shall obtain prior approval from Employer for all such reimbursable rental and lease agreements, which approval Employer shall not unreasonably withhold or delay. Within thirty (30) days following the relocation of Employee's family and family residence to Phoenix, Arizona, Employer shall (1) pay to Employee a one-time cash bonus of QM hundred and fifty thousand dollars ($150,000), and (ii) reimburse Employee for the documented and reasonable expenses incurred by Employee in moving his primary residence to Phoenix, Arizona, but not including the costs of selling his current family home or purchasing a new home.

4.2.2.         Annual Bonuses .

(a) Employee shall participate in any NutraCea annual bonus program that is applicable to senior officers of NutraCea as may be adopted and in effect from time to time (subject to the terms and conditions of any such program). Such annual bonus program shall be approved by the NutraCea Compensation Committee and shall set forth objective criteria for bonus payments based on the financial performance of NutraCea. Such annual bonus program also shall set forth a target bonus objective for Employee (“ Target ”),   which Target initially shall be seventy-five percent (75%) of his Base Salary. The actual annual bonus amount, if any, shall be paid in a cash lump sum, but otherwise in accordance with the terms of such program.

4.2.3.        Initial Bonus . NutraCea shall pay Employee an initial bonus (“ Initial Bonus ”)   of one hundred thousand dollars ($100,000) to Employee, subject to and expressly contingent upon (i) NutraCea raising a minimum of seven million dollars ($7,000,000) in cash on or before December 31, 2009, from an equity or debt financing transaction, a sale of capital assets or equity in subsidiary entities, or any other transaction, but not including any operating revenues arising from operations in the ordinary course of business or any other transactions in the ordinary course of business, and (ii) Section 4.4. In the event Employee does not (a) timely accept NutraCea's written offer to become the Chief Executive Officer of NutraCea or (b) relocate his family and his family's residence to the Phoenix, Arizona, area on or before August 31, 2010, the Board may request that Employee (arid if the Board so requests, Employee shall) return the Initial Bonus to NutraCea.

4.3             Stock Options.

4.3.1.         Initial Option . NutraCea will grant to Employee, on the Effective Date, an option (“ Initial Option ”)   to purchase 1,200,000 shares of NutraCea's common stock subject to this Agreement and pursuant to the terms and conditions of the NutraCea 2005 Equity Incentive Plan (“ 2005 Platt ”)   and an associated stock option agreement (“ Initial Option Agreement ”).   Subject to the acceleration and Option termination provisions of this Agreement, the Plan and the Initial Option Agreement, the Initial Option shall vest as to (i) 400,000 shares on the earlier of August 15, 2009 or the CEO Effective Date (the “ Initial Option First Tranche ”),   and (ii) 66,666 2/3 shares on the last business day of each calendar quarter of each Contract Year during the Term. The form of the Initial Option Agreement is attached as Exhibit C.

4.3.2         Second Option . NutraCea will grant to Employee, on the Effective Date, an additional stock option to purchase 2,400,000 shares of NutraCea's common stock (“ Second Option ”)   subject to this Agreement and pursuant to the terms and conditions of the 2005 Plan and an associated stock option agreement (“ Second Option Agreement ”).   Subject to the ac