Exhibit 10.12


    
      

    

    
      Exhibit
        10.12

       
FIRST
      AMENDMENT TO EMPLOYMENT AGREEMENT

    


    This
      First Amendment to Employment Agreement (this “First
      Amendment”)
      is
      executed as of October 4, 2005 by and among NUTRACEA, a California corporation
      (“Employer”),
      THE
      RICEX COMPANY, a Delaware corporation (“Company”),
      and
      IKE E. LYNCH, an individual (“Employee”).

    


    A.    WHEREAS,
      Company
      and Employee are parties to that certain Employment Agreement dated as of May
      1,
      2004 (the “Agreement”).

    


    B.    WHEREAS,
      Company
      has entered into that certain Agreement and Plan of Merger and Reorganization,
      dated April 4, 2005, with Employer and Red Acquisition Corporation (the
“Merger
      Agreement”).

    


    C.    WHEREAS,
      as a
      condition to the consummation of the transactions contemplated by the Merger
      Agreement (the “Merger”),
      Company has agreed to amend the Agreement.

    


    D.    WHEREAS,
      contemporaneous to the effective time of the Merger, which shall be such time
      as
      Company files a Certificate of Merger with the Secretary of State of the State
      of Delaware (the “Effective
      Time”),
      Company desires to assign to Employer, and Employer desires to assume from
      Company, the Agreement, as amended by this First Amendment.

    


    E.    WHEREAS,
      as
      consideration for (i) entering into this First Amendment and (ii) Employee’s
      continued employment with Employer following the Merger, Company has agreed
      to,
      and Employer has consented to, the payment by Company of a bonus to Employee,
      which bonus shall be earned and payable immediately following the approval
      of
      the Merger by the stockholders of Company.

    


    F.    WHEREAS,
      Employer, Company and Employee desire to amend the Agreement as set forth in
      this First Amendment.

    


    G.    WHEREAS,
      Employer, Company and Employee desire that this First Amendment shall become
      effective only as of the Effective Time.

    


    NOW,
      THEREFORE,
      in
      consideration of the foregoing and the mutual covenants and agreements contained
      herein and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the parties hereto agree as
      follows:

    


    AMENDMENT

    


    1.    Amendment.
      The
      following paragraphs are amended and restated or added, as applicable, as
      follows:

    


    a.    Section
      2., Position;
      Scope of Employment,
      is
      amended by deleting the entire paragraph thereof and adding the following
      paragraph:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    “2.
      Position;
      Scope of Employment.
      Employee shall have the position of Chief Operating Officer for Employer and
      for
      the Company and its subsidiary, Food Extrusion Montana. Employee shall manage
      the operations of Employer by directing and coordinating activities consistent
      with established goals, objectives and policies. In performing the services
      hereunder, Employee shall follow the direction set by the Chief Executive
      Officer and Board of Directors of Employer, and shall implement such programs
      as
      he deems necessary to ensure attainment of Employer’s business plan for growth
      and profit. Employee also shall provide direction and structure for all
      operating units, shall participate in developing policy and strategic plans,
      and
      shall manage all activities associated with Employer’s production, engineering,
      construction, quality assurance, logistics and research and
      development.

    


    b.    Section
      2.1., Time
      and Effort,
      is
      amended by deleting the entire paragraph thereof and adding the following
      paragraph:

    


    “2.1.
      Entire
      Time and Effort.
      Employee shall devote Employee’s full working time, attention, abilities, skill,
      labor and efforts to the performance of Employee’s employment. Employee shall
      not directly or indirectly (i) be substantially engaged in or concerned with
      any
      other duties or pursuits, (ii) render services to any third party for
      compensation or other benefit, or (iii) engage in any other business activity
      that will in any way interfere with the performance of Employee’s duties under
      this Agreement, except with the prior written consent of Employer; provided,
      however, that Employee may engage in charitable, philanthropic, educational,
      religious, civic and similar such activities to the extent that such activities
      do not unreasonably interfere with the performance of Employee’s duties under
      this Agreement.”

    


    c.    Section
      2.2, Other
      Employment,
      is
      amended by deleting the entire paragraph thereof and adding the following
      paragraph:

    


    “2.2.
      [Intentionally Omitted.]”

    


    d.    Section
      3., Term
      of Employment,
      is
      amended by deleting the entire paragraph thereof and adding the following
      paragraph:

    


    “3.
      Term
      of Employment.
      Employee’s term of employment pursuant to this Agreement shall commence on the
      Effective Time and shall terminate three (3) years from that date, unless
      terminated earlier as provided herein. At the end of the initial three (3)-year
      term, this Agreement shall automatically renew for an additional one (1)-year
      term unless either party notifies the other party in writing ninety (90) days
      prior to the expiration of the term of his or its intention not to renew this
      Agreement.”


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    e.    Section
      4., Compensation,
      is
      amended by deleting the entire paragraph thereof and adding the following
      paragraph:

    


    “4.
      Compensation.
      Employer shall pay employee the base pay (“Base
      Salary”)
      of One
      Hundred Fifty Thousand Dollars ($150,000) per year, which shall take effect
      as
      of the Effective Time. Salary payments will be payable in periodic installments
      in accordance with Employer’s pay schedule, but not less than twice per month.
      The Base Salary shall be reviewed at least annually, and shall be adjusted
      to
      compensate for cost of living adjustments in the Sacramento metropolitan
      area.”

    


    f.    Section
      4.4, Automobile,
      is
      amended by adding the following sentence to the end of the existing
      paragraph:

    


    “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.”

    


    g.    Section
      4.8, Accrued
      Vacation Pay,
      is
      hereby added to the Agreement by adding the following paragraph:

    


    “4.8.
      Accrued
      Vacation Pay.
      Immediately prior to the Effective Time, Company shall pay to Employee all
      vacation pay due to Employee that has been accrued but unpaid up to and through
      the Effective Time.”

    


    h.    Section
      4.9, Closing
      Bonus,
      is
      hereby added to the Agreement by adding the following paragraph:

    


    “4.9.
      Closing
      Bonus.
      Immediately following the approval of the merger effected pursuant to that
      certain Agreement and Plan of Merger and Reorganization, dated as of April
      4,
      2005, by and between Employer, Red Acquisition Corporation, the wholly-owned
      subsidiary of Employer and Company by the stockholders of Company, Company
      shall
      pay to Employee a bonus of $50,000, net of any federal, state or local
      withholding or other taxes or charges.”

    


    i.    Section
      5.3(B) is amended by deleting the entire paragraph thereof and adding the
      following paragraph:

    


    “(B)
       If
      Employee is terminated by Employer without cause, Employer shall pay to Employee
      as liquidated damages, and in lieu of any and all other claims that Employee
      may
      have against Employer, an amount equal to the greater of (i) the monthly Base
      Salary multiplied by the number of months remaining on the term of this
      Agreement, and (ii) one (1) year of Base Salary, but in no event shall severance
      pay exceed three (3) years of Base Salary, regardless of the
      term.”


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    j.    Section
      5.3(C) is amended by deleting the entire paragraph thereof and adding the
      following paragraph:

    


    “(C)
       If
      Employee is terminated as the result of a Change in Control (as defined below)
      and Employee is not employed in the same capacity or being paid the same salary
      by the new entity as Employee was employed with, or paid by, Employer, then
      Employee shall receive a severance payment of one hundred eighty thousand
      dollars ($180,000). In addition, if Employee is terminated as the result of
      a
      Change in Control and Employee is not employed in the same capacity by the
      new
      entity, Employer agrees to continue Employee’s medical and dental insurance
      benefits as provided during Employee’s employment with Employer for a period of
      two (2) years from the effective date of the Change in Control, except as
      provided below in Section 5.3(C)(1) and Section 5.3(C)(2). For the purposes
      of
      this Agreement, a “Change in Control” means:

    


    (1)    a
      merger
      or acquisition in which Employer is not the surviving entity, except for (a)
      a
      transaction the principal purpose of which is to change the state of Employer’s
      incorporation, or (b) a transaction in which Employer’s stockholders immediately
      prior to such transaction hold, immediately after such transaction, at least
      50%
      of the voting power of the surviving entity;

    


    (2)    a
      stockholder approved sale, transfer or other disposition of all or substantially
      all of the assets of Employer;

    


    (3)    a
      transfer of all or substantially all of Employer’s assets pursuant to a
      partnership or joint venture agreement or similar arrangement where Employer’s
      resulting interest is less than fifty percent (50%);

    


    (4)    any
      reverse merger in which Employer is the surviving entity but in which fifty
      percent (50%) or more of Employer’s outstanding voting stock is transferred to
      holders different from those who held the stock immediately prior to such
      merger;

    


    (5)    on
      or
      after the date hereof, a change in ownership of Employer through an action
      or
      series of transactions, such that any person is or becomes the beneficial owner,
      directly or indirectly, of securities of Employer representing fifty percent
      (50%) or more of the voting power of Employer’s outstanding securities;
      or

    


    (6)    a
      majority of the members of the Board of Directors are replaced during any twelve
      (12) month period by directors whose appointment or election is not endorsed
      by
      a majority of the members of the Board of the Directors prior to the date of
      such appointment of election.


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    Notwithstanding
      the foregoing, the transactions effected pursuant to, or required by, that
      certain Agreement and Plan of Merger and Reorganization, dated as of April
      4,
      2005, by and between Employer, Red Acquisition Corporation, the wholly-owned
      subsidiary of Employer and Company, shall not constitute a Change in
      Control.”

    


    k.    Section
      6.1., Confidential
      Information,
      is
      amended by deleting the first sentence and replacing it with the following
      sentence:

    


    “Employee
      agrees not to disclose to any others, or take or use for Employee’s own purposes
      or purposes of any others, during the term of this Agreement or at any time
      thereafter, any of Employer’s Confidential Information (as defined
      below).”

    


    l.
    All
      restrictions placed upon Employee in Section 6., Proprietary
      Information; Confidentiality,
      of the
      Agreement with respect to “Confidential Information” shall be deemed to apply to
      Confidential Information of the Employer and Employer’s direct or indirect
      subsidiaries.

    


    2.    Affirmation.
      In order
      to induce each other to enter into this First Amendment, the parties hereby
      confirm that all terms and provisions of the Agreement have been and continue
      to
      be in all respects in full force and effect, and no violation of the terms
      and
      conditions of the Agreement has occurred.

    


    3.    Effective
      Date; Assignment and Assumption.
      This
      First Amendment shall become effective only upon the Effective Time. Effective
      immediately from and after the Effective Time, (i) all of Company’s right, title
      and interest in and to the Agreement, as amended by this First Amendment, shall
      be deemed to have been assigned, granted, bargained, transferred, conveyed,
      set
      over and delivered unto Employer, and (ii) Employer shall be deemed to have
      assumed the Agreement, as amended by this First Amendment, and shall faithfully
      and timely discharge and perform each and every obligation of Company arising
      under the Agreement, as amended by this First Amendment.

    


    4.    Modification;
      Interpretation.
      Except
      as expressly set forth in this First Amendment, this First Amendment shall
      not
      alter, amend, or otherwise modify the terms and provisions of the Agreement.
      From and after the Effective Time, all references in the Agreement to “the
      Agreement,” “this Agreement” or any similar reference shall refer to the
      Agreement as amended by this First Amendment. From and after the Effective
      Time,
      all references in the Agreement to “Employer,” or any similar reference shall
      refer to NutraCea, a California corporation. Capitalized terms not otherwise
      defined herein shall have the respective meanings ascribed to them in the
      Agreement or the Merger Agreement.

    


    5.    Approval
      by Company’s Board of Directors.
      Company
      hereby represents that its Board of Directors has duly approved the terms of
      this First Amendment.

    


    


    [The
      Remainder of this Page is Intentionally Left Blank -- Signature Page
      Follows]


    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the parties have executed this First Amendment as of the date
      first set forth above.

    


    
      	
              NUTRACEA

            	 	 	 
	 	 	 	 	 
	
              By:

            	
              /s/
                Brad Edson

            	 	 	 
	
              Name:

            	
              Brad
                Edson

            	 	 	 
	
              Title:

            	
              President

            	 	
              /s/Ike
                E. Lynch

            	 
	 	 	 	
              IKE
                E. LYNCH

            	 
	 	 	 	 	 
	
              THE
                RICEX COMPANY

            	 	 	 
	 	 	 	 	 
	
              By:

            	
              /s/
                Todd Crow

            	 	 	 
	
              Name:

            	
              Todd
                Crow

            	 	 	 
	
              Title:

            	
              CFO

            	 	 	 


    

     

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