EXHIBIT 10.56

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is entered into by and between NutraCea,
a California corporation with principal address at 1261 Hawk’s Flight Court, El
Dorado Hills, CA 95762 (“NutraCea”) and Kody Newland, an individual residing at
______________________________ (“Employee”) effective as of __________________,
2006 (“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 act as the Senior Vice
President of Sales of NutraCea. The duties of Employee shall include but not be
limited those duties set forth on the job description attached hereto as Exhibit
A. NutraCea reserves the exclusive right to modify and designate Employee’s
specific duties from time to time in any manner consistent with Employee’s
status as Senior Vice President of Sales. In the event of a merger or
acquisition of substantially all of the assets of NutraCea, a change of
Employee’s title or supervisor shall not be deemed a material alteration to this
Agreement.

2.1 Best Efforts; Full Working Time. Employee agrees to devote his best efforts,
attention, skill and experience to the performance of Employee’s duties all in
accordance with the provisions of this Agreement. Employee shall apply his
entire full working time to performing these services.

2.2 Supervision and Direction of Services. All of Employee’s services shall be
under the supervision and direction of the Chief Executive Officer and President
of NutraCea and the Board of Directors of NutraCea.

2.3 Rules. Employee shall be bound by all the policies, rules and regulations of
NutraCea now in force and by all such other policies, rules and regulations in
the normal course of business as may be hereafter implemented and shall
faithfully observe and abide by the same.

2.4 Exclusive Services. During the term of this Agreement and any extension of
this Agreement, Employee shall not, directly or indirectly, whether as a
partner, employee, creditor, five percent (5%) shareholder, independent
contractor or otherwise, promote, participate or engage in any activity or other
business which NutraCea deems in its sole reasonable discretion to be
competitive in any way with NutraCea’s current or future business operations.
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.

 
 

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2.5 Non-Solicitation/Non-Compete.

2.5.1 Non-Solicitation. To the fullest extent permissible under applicable law,
Employee agrees that both during the term of this Agreement 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 and accept an employment or an independent
contractor relationship with any other business.

2.5.2 Non-Compete. To the fullest extent permissible under applicable law,
Employee agrees to refrain from, unless first obtaining NutraCea’s prior written
consent, directly or indirectly, engaging in, being employed by, being
associated with, being under contract with, owning, managing, operating,
joining, controlling, or participating in the ownership, management, operation,
or control of, being connected in any manner with, or having any interest in,
any business, firm, sole proprietorship, partnership or corporation that engages
in substantially the same business as NutraCea in the United States for a period
of two (2) years after termination of this Agreement.

2.5.3 Separate Covenants. Employee acknowledges that the nature and periods of
restrictions imposed by the covenants contained herein are fair, reasonable, and
that the Company would sustain great and irreparable loss and damage if Employee
in any manner were to breach any of such covenants. Accordingly, in the event of
an actual or threatened breach of the covenants by Employee, in addition to all
other remedies which NutraCea may have, NutraCea shall be entitled to enforce
the specific performance of this Agreement and to seek both immediate, temporary
and permanent injunctive relief (to the extent permitted by law) restraining
such actual or threatened breach. Employee waives any requirement that NutraCea
post any bond or other security in order to obtain such injunctive relief. It is
understood by and between the parties hereto that the covenants contained in
this Agreement shall be deemed to be a series of separate covenants, one for
each line of business engaged in by NutraCea. Each separate covenant shall
hereinafter be referred to as “separate covenant.” If any court or tribunal of
competent jurisdiction shall refuse to enforce one or more of the separate
covenants because the time limit applicable thereto is deemed unreasonable, it
is expressly understood and agreed that such separate covenant or separate
covenants shall not be void but that for the purpose of such proceedings and
such time limitation shall be deemed to be reduced to the extent necessary to
permit the enforcement of such separate covenant or separate covenants. If any
court or tribunal of competent jurisdiction shall refuse to enforce any or all
of the separate covenants because, taken together, they are more extensive
(whether as to geographic area, scope of business or otherwise) than is deemed
to be reasonable, it is expressly understood and agreed between the parties
hereto that such separate covenant or separate covenants shall not be void but
that for the purposes of such proceedings, the restrictions contained therein
(whether as to geographic area, scope of business or otherwise) shall be deemed
to be reduced to the extent necessary to permit the enforcement of such separate
covenant or separate covenants.
 
 
 

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2.6 Office Location. Employee shall be based out of the Phoenix Metropolitan
area, but it is understood and acknowledged that the position entails
substantial travel, primarily throughout the United States of America including
travel to and from the corporate headquarters in El Dorado Hills, California.

3.   Term and Termination; Payments upon Termination.

3.1 Term and Termination. Unless earlier terminated for Cause (as defined
below), NutraCea hereby employs the Employee for a period commencing upon the
Effective Date and ending twenty-four (24) months following the Effective Date,
unless earlier terminated pursuant hereto (the “Term”). The term may be extended
by mutual agreement of the parties on a month to month basis.

3.1.1 Termination for Cause. For purposes of this Section 3, “Cause” shall be
defined as the following:

 
a.
NutraCea may immediately terminate Employee’s employment pursuant to the terms
of this Agreement for the following reasons by giving written notice of the
termination to Employee:

 
i.
Employee, in the reasonable determination of the Board of Directors of NutraCea,
has found the Employee to be grossly negligent or engaged in material willful or
gross misconduct in the performance of her duties; and only if the Board has
filed a civil lawsuit for the same claim, or

 
ii.
Employee has been convicted by a court of law of fraud, moral turpitude,
embezzlement, theft, or dishonesty or other criminal conduct; or

 
iii.
Employee has taken other actions or omitted to take any actions such that such
action or omissions constitute legal cause for termination under California or
Arizona law, as then in effect,

 
b.
NutraCea may terminate Employee’s employment pursuant to the terms of this
Agreement upon Employee’s failure to cure the deficiency within ten (10) days of
receipt of written notice from NutraCea for the following reasons:

 
i.
Employee has materially breached the terms hereof; or

 
ii.
Employee has failed to meet written standards (including but not limited for
sales performance standards) established by NutraCea for the performance of
duties hereunder;

 
 
 

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3.2 Payments Upon Termination.
 
3.2.1Termination for Cause or Termination by Employee. Following any termination
by NutraCea for Cause or by Employee for any reason, Employee shall be entitled
to receive in cash payment an amount equal to all previously accrued but unpaid
or unused compensation through the date of termination, including but not
limited to, salary and vacation pay and Employee may retain the vested portion
of any stock and options properly and duly granted to Employee as of such date,
subject and pursuant to the terms of any option agreements or stock purchase
agreements entered into between NutraCea and Employee;

3.2.2 Termination without Cause by NutraCea. Following any termination by
NutraCea without Cause, Employee shall be entitled to receive in cash payment an
amount equal to all previously accrued but unpaid or unused compensation,
including but not limited to, salary and vacation pay and a lump sum payment
equal to Employee’s salary for the balance remaining of the term of this
Agreement pursuant to Section 3.1. up to a maximum of twelve (12) months. In
addition, Employee may retain the vested portion of any stock and options
properly and duly granted to Employee as of such date, subject and pursuant to
the terms of any option agreements or stock purchase agreements entered into
between NutraCea and Employee;

3.2.3 Death or Disability. Upon the death or disability of Employee, Employee or
Employee’s estate shall be entitled to and NutraCea shall pay Employee or
Employee’s estate any accrued but unpaid amounts due to Employee under the terms
of this Agreement through the date of death or disability (For purposes of this
Section, “disability” shall mean that for a period of three (3) months in any
12-month period the Employee is incapable of substantially fulfilling her duties
because of physical, mental or emotional incapacity from injury, sickness or
disease.

Employee’s Initials __________ NutraCea’s Initials ___________

 
4.   Compensation; Benefits.

4.1 Salary. Employee shall be paid at a rate, which if annualized, equals one
hundred fifty thousand dollars ($150,000) per year subject to normal payroll
withholdings and NutraCea’s standard payroll practices. On a yearly basis,
Employee’s salary shall be adjusted to compensate for cost of living adjustments
in the Sacramento metropolitan area.

4.2 Options.

4.2.1 Option Grant. Subject to approval by the Board of Directors of NutraCea,
NutraCea shall grant to Employee options to purchase up to Five Hundred Thousand
(500,000) shares of NutraCea’s restricted common stock (the “Option”). Such
Option shall be subject to the terms and conditions of a stock option agreement
(“Stock Option Agreement”) between NutraCea and Employee. The Exercise Price (as
defined in the Stock Option Agreement) shall be equal to the greater of (i) one
dollar ($1.00) per share; or (ii) the closing bid price of NutraCea’s common
stock on the date of grant as reported on the over-the-counter bulletin board. 
 
 
 

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[4.2.2 Acceleration of Vesting. Subject to the Stock Option Agreement, upon any
Change of Control (as defined below) of NutraCea, one hundred percent (100%) of
the shares subject to the Option shall vest and become exercisable. Thereafter,
the Option will continue to be subject to the terms and provisions of the Stock
Option Agreement. For purposes of this Agreement, “Change of Control” of
NutraCea is defined as the date of the consummation of a merger or consolidation
of NutraCea with any other corporation 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 the date of the
consummation of the sale or disposition by NutraCea of all or substantially all
of NutraCea's assets.]

4.2.3 Lock-Up. In addition to the terms set forth in this Section 4.2 and the
standard provisions set forth in the Stock Option Agreement, Employee agrees to
a lock-up provision prohibiting Employee from selling the common stock obtained
by Employee upon exercise of the Option until after December 31, 2007, unless
the express written consent of NutraCea is first obtained. Employee’s Stock
Option Agreement shall contain restrictions upon Employee selling such common
stock in accordance with the terms of this Section.

4.3 Vacation and other Standard Benefits. Employee shall initially be entitled
to three (3) weeks of paid vacation time per year for the first year of
employment and four (4) weeks of paid vacation time during Employees second year
of employment and thereafter. Employee may not accrue vacation time in excess of
such four (4) week maximum. Accrual of vacation time shall be subject to the
terms and conditions of NutraCea’s vacation policy. Employee and Employee’s
immediate family shall be entitled to health benefits in accordance with
NutraCea’s standard policies. In addition, Employee shall be entitled to paid
holidays, sick leave and other benefits in accordance with NutraCea’s standard
policies. Employee shall be reimbursed for reasonable business expenses, subject
to prior approval by NutraCea in accordance with NutraCea’s standard policies
for employees and conditioned upon Employee’s prior presentation to NutraCea’s
accounting department of appropriate receipts or such other verification of
expenses as NutraCea may require from time to time. Any air travel that is
business-related domestically will be booked at economy class, but can be
upgraded to a higher class at Employee’s option and Employee’s sole expense. Any
international travel will be booked in business class. Hotel accommodations will
be booked in reasonable accommodations, as deemed appropriate in the sole
discretion of NutraCea. Employee shall also be entitled to participate in
NutraCea’s 401(k) program pursuant to the eligibility conditions of the
Company’s plan.
 
 
 

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4.4 Bonuses. Employee from time to time may receive bonuses at the sole
discretion of the CEO/President of NutraCea and on such terms and conditions as
the CEO/President may establish. Any such bonus shall be subject to approval and
ratification by the Compensation Committee of the Board of Directors of
NutraCea.

4.5 Car Allowance. Employer shall provide Employee with an automobile allowance
in the amount of $600.00 per month. Notwithstanding the foregoing, Employer
shall not be obligated to make any down payments for the purchase of any
automobile by or on behalf of Employee.

5.   Employment Information. Employee represents and warrants to NutraCea that
information provided by Employee in connection with Employee’s employment and
any supplemental information provided to NutraCea is complete, true and
materially correct in all respects. Employee has not omitted any information
that is or may reasonably be considered necessary or useful to evaluate the
information provided by Employee to NutraCea. Employee shall immediately notify
NutraCea in writing of any change in the accuracy or completeness of all such
information.
 
6.   Trade Secrets and Confidential Information. Employee acknowledges that
NutraCea has gone to great time and expense to develop customers and to develop
procedures and processes for development of products and services and the sales
of products and services. Such procedures and processes in addition to various
other types of proprietary information are included as part of the “confidential
information” described in the “Proprietary Information Agreement” attached
hereto as Exhibit B. Employee has previously executed the Proprietary
Information Agreement or agrees to execute NutraCea’s Proprietary Information
Agreement contemporaneously with the execution of this Agreement and employment.
Employee further agrees to execute, deliver and perform, during the Term of
Employee’s employment with Employer and thereafter, any other reasonable
confidentiality and non-disclosure agreements concerning Employer and any of its
affiliates and its business and products, which Employer promulgates for other
key employees and executives. 

7.   Remedies for Breach of Covenant Regarding Confidentiality. The parties
agree that the breach by Employee of any covenants contained in Sections 2.4,
2.5, 5 and 6 will result in immediate and irreparable injury to NutraCea. In the
event of any breach by Employee of the covenants contained in Sections 2.4, 2.5,
5 or 6, NutraCea shall be entitled to seek recourse through all available legal
and equitable remedies necessary or useful to prevent any likelihood of
immediate or irreparable injury to NutraCea. The parties agree that, in the case
of such a breach or threat of breach by Employee of any of the provisions of
such Sections, NutraCea may take any appropriate legal action, including without
limitation action for injunctive relief, consisting of orders temporarily
restraining and preliminarily and permanently enjoining such actual or
threatened breach.
 
 
 

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8.   Miscellaneous.

8.1 Choice of Law, Jurisdiction, Venue. The rights and obligations of the
parties and the interpretation and performance of this Agreement shall be
governed by the laws of California, excluding its conflict of laws rules. The
exclusive jurisdiction and venue of any legal action brought by either party
under this Agreement shall be in the County of Sacramento, California.

8.2. Entire Agreement. This Agreement, the Proprietary Information Agreement
described in Section 6 and the Stock Option Agreement referenced in Section 4.2
contain the entire Agreement among the parties and supersede all prior and
contemporaneous oral and written agreements, understandings and representations
among the parties, including without limitation any offer letter. There are no
representations, agreements, arrangements, or understandings, whether oral or
written, between or among the parties relating to the subject matter of this
Agreement that are not fully expressed herein and therein.

8.3 Notices. Any notice under this Agreement shall be in writing, and any
written notice or other document shall be deemed to have been duly given (i) on
the date of personal service on the parties, (ii) on the third business day
after mailing, if the document is mailed by registered or certified mail, (iii)
one (1) day after being sent by professional or overnight courier or messenger
service guaranteeing one-day delivery, with receipt confirmed by the courier, or
(iv) on the date of transmission if sent by telegram, telex, telecopy or other
means of electronic transmission resulting in written copies, with receipt
confirmed. Any such notice shall be delivered or addressed to the parties at the
addresses set forth above or at the most recent address specified by the
addressee through written notice under this provision. Failure to conform to the
requirement that mailings be done by registered or certified mail shall not
defeat the effectiveness of notice actually received by the addressee.
 
8.4 Severability. NutraCea and Employee agree that should any provision of this
Agreement be declared or be determined by any court of competent jurisdiction to
be illegal, invalid or unenforceable, the legality, validity and enforceability
of the remaining parts, terms and provisions shall not be affected thereby, and
said illegal, unenforceable or invalid part, term or provision shall be deemed
not to be part of this Agreement.
 
8.5 Legal Fees. Each party will bear its own legal fees relating to the
negotiation of this Agreement and related documents.

8.6 Amendment. The provisions of this Agreement may be modified at any time by
agreement of the parties. Any such agreement hereafter made shall be ineffective
to modify this Agreement in any respect unless in writing and signed by the
party against whom enforcement of the modification or discharge is sought.
 
8.7 No Transfer or Assignment; No Third-Party Beneficiaries. The rights of
Employee hereunder have been granted by NutraCea with the understanding that
this Agreement is personal to, and shall be performed by Employee individually.
This Agreement is not transferable or assignable by Employee in any manner. No
person or entity other than NutraCea and Employee shall have any rights
whatsoever under this Agreement. No person or entity other than NutraCea or
Employee shall have any right to enforce any provision of this Agreement, or to
recover damages on account of the breach of this Agreement. No heir, successor
or assign of Employee, whether voluntarily or by operation of law, shall have or
succeed to any rights of Employee hereunder. NutraCea may assign this Agreement
in the event of a merger or acquisition.
 
 
 

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8.8 Waiver. Any of the terms or conditions of this Agreement may be waived at
any time by the party entitled to the benefit thereof, but no such waiver shall
affect or impair the right of the waiving party to require observance,
performance or satisfaction of that term or condition as it applies on a
subsequent occasion or of any other term or condition.
 
8.9 Resolution of Disputes.
 
8.9.1 Resolution of Disputes. NutraCea and Employee agree that any claim or
controversy arising out of or pertaining to this Agreement or the termination of
Employee's employment, including but not limited to, claims of wrongful
treatment or termination allegedly resulting from discrimination, harassment or
retaliation on the basis of race, sex, age, national origin, ancestry, color,
religion, marital status, status as a veteran of the Vietnam era, physical or
mental disability, medical condition, or any other basis prohibited by law
("Dispute") shall be resolved by binding arbitration as provided in this
paragraph. The parties agree that no party shall have the right to sue any other
party regarding a Dispute except as provided in this paragraph.

8.9.2  Binding Arbitration.  Any Dispute between the parties shall be submitted
to, and conclusively determined by, binding arbitration in accordance with this
paragraph. The provisions of this paragraph shall not preclude any party from
seeking injunctive or other provisional or equitable relief in order to preserve
the status quo of the parties pending resolution of the Dispute, and the filing
of an action seeking injunctive or other provisional relief shall not be
construed as a waiver of that party's arbitration rights. The arbitration of any
Dispute between the parties to this Agreement shall be governed by the
provisions of the California Arbitration Act. (California Code of Civil
Procedure section 1280, et seq., including the provision of California Code of
Civil Procedure section 1283.05.)

8.9.3 Appointment of Arbitrator. The arbitrator shall be a neutral arbitrator
mutually selected by NutraCea and Employee from the American Arbitration
Association and will be governed by the rules of the Association. Within thirty
(30) days of service of a demand for arbitration by either party to this
Agreement, the parties shall endeavor in good faith to select a single
arbitrator. If they fail to do so within that time period, each party shall have
an additional period of fifteen (15) days in which to appoint an arbitrator and
those arbitrators within fifteen (15) days shall select an additional
arbitrator. If any party fails to appoint an arbitrator or if the arbitrators
initially selected by the parties fail to appoint an additional arbitrator
within the time specified herein, any party may apply to have an arbitrator
appointed for the party who has failed to appoint, or to have the additional
arbitrator appointed, by the presiding judge for the Superior Court, Sacramento
County, California. If the presiding judge, acting in his or her personal
capacity, is unable or unwilling to appoint the additional arbitrator, that
arbitrator shall be selected in accordance with California Code of Civil
Procedure section 1281.6.

 
 

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8.9.4 Initiation of Arbitration. In the case of any Dispute between the parties
to this Agreement, either party shall have the right to initiate the binding
arbitration process provided for in this paragraph by serving upon the other
party a demand for arbitration within the statutory time period from the date
the Dispute first arose.

8.9.5  Location of Arbitration. Any arbitration hearing shall be conducted in
Sacramento County, California.

8.9.6  Applicable Law. The law applicable to the arbitration of any Dispute
shall be the law of the State of California, excluding its conflicts of law
rules.

8.9.7  Arbitration Procedures. Except as otherwise provided in this paragraph,
the arbitration shall be governed by the California Arbitration Act (Code Civ.
Proc., § 1280 et seq.). The parties shall be entitled to conduct discovery
sufficient to adequately arbitrate their claims or defenses, including access to
essential documents and witnesses, as determined by the arbitrator and subject
to limited judicial review. In addition, either party may choose, at that
party’s discretion, to request that the arbitrators resolve any dispositive
motions prior to the taking of evidence on the merits of the Dispute. By way of
example, such dispositive motions would include, but not be limited to, those
which would entitle a party to summary judgment or summary adjudication of
issues pursuant to Code of Civil Procedure section 437c or resolution of a
special defense as provided for at Code of Civil Procedure section 597. In the
event a party to the arbitration requests that the arbitrators resolve a
dispositive motion, the arbitrators shall receive and consider any written or
oral arguments regarding the dispositive motion, and shall receive and consider
any evidence specifically relating thereto, and shall render a decision thereon,
before hearing any evidence on the merits of the Dispute.

8.9.8  Scope of Arbitrators' Award or Decision. NutraCea and Employee agree that
if the arbitrators find any Disputed claim to be meritorious, the arbitrators
shall have the authority to order all forms of legal and/or equitable relief
that would otherwise be available in court and that is appropriate to the claim.
Any decision or award by the arbitrators shall be in writing and shall be
specific enough to permit limited judicial review if necessary.

8.9.9 Costs of Arbitration; Attorneys’ Fees. NutraCea shall bear any costs of
arbitration that are over and above costs that would be incurred by Employee had
he not been required to arbitrate the Dispute, but instead had been free to
bring the action in court. Each party shall bear its own attorneys’ fees.
However, NutraCea and Employee agree that the arbitrators, in their discretion
and consistent with applicable law, may award to the prevailing party the costs
and attorneys’ fees incurred by that party in participating in the arbitration
process as long as they do not exceed those that would be incurred by Employee
in a court action.

 
 

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8.9.10  Acknowledgment of Consent to Arbitration. NOTICE: BY EXECUTING THIS
AGREEMENT EMPLOYEE AGREES TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS
INCLUDED IN THE "RESOLUTION OF DISPUTES" PROVISION DECIDED BY NEUTRAL
ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND EMPLOYEE WAIVES ANY RIGHTS
EMPLOYEE MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL.
BY EXECUTING THIS AGREEMENT EMPLOYEE WAIVES EMPLOYEE’S JUDICIAL RIGHTS TO
APPEAL. IF EMPLOYEE REFUSES TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS
PROVISION, EMPLOYEE MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE
CALIFORNIA CODE OF CIVIL PROCEDURE. EMPLOYEES AGREEMENT TO THIS ARBITRATION
PROVISION IS VOLUNTARY. BY EXECUTING THIS AGREEMENT EMPLOYEE IS INDICATING THAT
EMPLOYEE HAS READ AND UNDERSTOOD THE FOREGOING AND AGREES TO SUBMIT DISPUTES
ARISING OUT OF THE MATTERS INCLUDED IN THIS ARBITRATION OF DISPUTES PROVISION TO
NEUTRAL ARBITRATION.
 
8.10 Exhibits. All exhibits to which reference is made are deemed incorporated
in this Agreement whether or not actually attached.

       
   
   
NutraCea               

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Print Name:
  Title:       
Employee: Kody Newland      
         

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[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]

 
 

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EXHIBIT A

JOB DESCRIPTION

 
 

 
 
 

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EXHIBIT B

PROPRIETARY RIGHTS AGREEMENT
 
 
 

 
 
 

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