Employment Agreement - Eden Bioscience Corp. and Jerry L. Butler


                              EMPLOYMENT AGREEMENT

                                (JERRY L. BUTLER)

        THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of August 16, 2000, between EDEN BIOSCIENCE CORPORATION, a Washington
corporation (the "Company"), and JERRY L. BUTLER ("Employee").

                                    RECITALS

        A. Employee has been employed by the Company as President and Chief
Executive Officer pursuant to the terms of an Employment Agreement dated as of
July 18, 1997.

        B. In order to provide Employee continued incentive to remain in its
services, the Company desires to provide Employee with compensation security
under the conditions set forth in this Agreement.

        C. The Company and the Employee wish to define their relationship and to
ensure continued employment on the terms and conditions of this Agreement.

                                    AGREEMENT

        The Company and Employee hereby agree as follows:

1.      PURPOSE OF AGREEMENT

        The purpose of this Agreement is to define the relationship between the
Company, as employer of Employee, and Employee, as an employee of the Company.


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2.      EMPLOYMENT

        During the term of this Agreement, Employee shall serve as the President
and Chief Executive Officer of the Company and perform the tasks incident to
these positions. The Employee shall report to the Board of Directors of the
Company. Employee's position is full-time and Employee shall devote as much time
as may be necessary to perform Employee's duties.

3.      TERM OF EMPLOYMENT

        Subject to prior termination pursuant to Section 11 hereof, the term of
this Agreement shall be for three (3) years and shall commence on the date
hereof (the "Employment Period").

4.      COMPENSATION

        4.1 SALARY

        The Company shall pay to Employee, and Employee shall accept from the
Company, a base annual salary for Employee's services to be determined by the
Board of Directors of the Company in its sole discretion ($), payable monthly.

        4.2 BONUS

        Employee may be entitled to receive, in addition to the annual base
salary referenced above, an annual bonus in an amount to be determined by the
Board of Directors of the Company in its sole discretion.

        4.3 STOCK OPTIONS

        Nothing contained in this Agreement shall affect the right of Employee
to receive benefits or other shares under any option plan existing or adopted by
the Company. The Options will be designated as incentive stock options to the
extent permitted under the Plan and applicable law.

5.      REIMBURSEMENT OF BUSINESS-RELATED EXPENSES INCURRED BY EMPLOYEE

        The Company shall reimburse Employee for all reasonable and necessary
expenses incurred by Employee in connection with his employment hereunder, in
accordance with the general policy of the Company regarding reimbursement of
Employee's expenses or pursuant to an applicable travel policy.



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6.      BENEFITS

        Employee shall be entitled to receive such health, dental, personal
disability, life insurance and flexible time-off benefits as are provided for
other employees of the Company with similar duties and work requirements and as
may be authorized and adopted from time to time in the future by the Company.
Employee shall be entitled to the number of weeks of paid vacation each year as
the Company grants to its senior executives. The Company currently has in place
a key-man life insurance policy in the amount of $1,000,000 on the life of
Employee and agrees to keep such policy in place for the term of this Agreement
or until its earlier rightful termination.

7.      NONCOMPETITION

        Employee agrees that during the Employment Period and for a period of
eighteen (18) months thereafter, he will not, except in furtherance of his
employment with the Company, without the prior written consent of the Company,
either directly or indirectly operate, control, advise, be engaged by, perform
any consulting services for, invest in (other than less than one percent of the
outstanding stock in a publicly held corporation which is listed on the NASDAQ
national market or traded over-the-counter or on a recognized securities
exchange) or otherwise become associated in any capacity with, any business,
company, partnership, organization, proprietorship, or other entity who or which
manufactures products or traits which use organisms or other byproducts or which
is developing products or traits, to (i) treat soil or foliar diseases of plants
or (ii) enhance growth or insect tolerance of plants (the "Company Products") in
competition with the Company in those geographical areas in which the Company
conducts or has conducted such business, or intends to conduct business,
consistent with the Company's current, written business plans, during Employee's
employment. Employee shall be paid his base annual salary during any required
noncompetition period up to a maximum of eighteen (18) months, provided he
complies with the obligations set forth in Sections 7, 8, 9 and 10 herein.

8.      NONDISCLOSURE

        Employee agrees at all times to hold as secret and confidential (unless
disclosure is required by the Company or would be in furtherance of Employee's
employment with the Company or is required pursuant to court order, subpoena in
a governmental proceeding, arbitration or pursuant to other process or
requirement of law) any and all knowledge, information, developments,
manufacturing and trade secrets, know-how and confidences of the Company or its
business of which he has knowledge during the Employment Period, to the extent
such matters have not previously been made public, are not thereafter made
public, or do not otherwise



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become available to Employee from a third party not, to Employee's best
knowledge, bound by any confidentiality agreement with the Company
("Confidential Information"). The phrase "made public" as used in this Agreement
shall apply to matters within the domain of (a) the general public or (b) the
Company's industry. Employee agrees not to use such knowledge for his own
benefit or for the benefit of others or, except as provided above, disclose any
of such Confidential Information without the prior written consent of the
Company, which consent shall make express reference to this Agreement.

9.      NONINTERFERENCE

        Employee agrees that during the Employment Period and for a period of
eighteen (18) months thereafter, he will not, except in furtherance of his
employment with the Company or as a part of his duties as an officer of the
Company, without the prior written consent of the Company, directly or
indirectly solicit, induce or attempt to solicit or induce any employee, agent
or other representative or associate of the Company to terminate its
relationship with the Company or in any way interfere with such a relationship
or a relationship between the Company and any of its suppliers or distributors.

10.     DISCLOSURE OF PROPRIETARY INTELLECTUAL PROPERTY

        10.1 Employee agrees that he will promptly disclose to the Company any
and all improvements, discoveries, ideas, developments or inventions composing
proprietary intellectual property which may be material to the operations and
business of the Company (the "Improvements") which Improvements are made or
conceived by Employee, acting alone or in conjunction with others, (a) during
the Employment Period, or (b) to the extent the Improvements are specifically
and directly related to the Company Products within three (3) years after the
Employment Period, if such Improvement results from or was suggested by such
employment. Employee shall not disclose any such Improvement to any person,
except the Company and shall use all reasonable efforts to provide the Company
written disclosure of such Improvements. Each such Improvement shall be the sole
and exclusive property of and is hereby assigned to the Company. Employee agrees
that, at the request of the Company, Employee will execute such applications,
statements, assignments or other documents, furnish such information and data
and take all such other action (including without limitation the giving of
testimony) as the Company may from time to time reasonably request in order to
obtain for the Company a registration or patent in the United States or any
foreign country covering or pertaining to any such Improvement. The Company and
Employee hereby acknowledge and agree that the obligations set forth in this
Section 10 do not apply to an Improvement for which no equipment, supplies,



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facility, copyright, patent or patent application, registration, information, or
other intellectual property or trade secret information of the Company was used
and which was developed entirely on Employee's own time, unless (a) the
Improvement relates (i) directly to the business of the Company, or (ii) to the
Company's actual or demonstrably anticipated research or development, or (b) the
Improvement results from any work performed by Employee for the Company.

        10.2 Employee agrees to execute and be bound by the terms of the
Company's Employee Confidentiality and Disclosure Agreement.

11.     TERMINATION OF EMPLOYMENT

        11.1 EVENTS OF TERMINATION

              (a)    Notwithstanding anything to the contrary contained herein,
                     this Agreement shall terminate immediately and, except for
                     the obligations of Employee set forth in Sections 7, 8, 9,
                     10 and 11.2 hereof and the payment by the Company of all
                     salary, expenses or benefits which may be earned but unpaid
                     or unreimbursed (as the case may be) as of the date of
                     termination which obligations shall survive such
                     termination, all rights and obligations of the Company and
                     Employee hereunder shall be completely null and void upon
                     the earliest to occur of the following:

                     (i)    the death of Employee;

                     (ii)   the termination of Employee's employment by the
                            Company "for cause" during the term of this
                            Agreement; or

                     (iii)  the voluntary termination by Employee of his
                            employment with the Company during the term of this
                            Agreement pursuant to Section 11.1(b) hereof.

        As used in subsection (ii) above, a termination "for cause" may include,
but shall not be limited to, the occurrence of any of the following events
during the Employment Period:

                     (A)    Employee's conviction of any felony, or conviction
                            of embezzlement, destruction or misappropriation of
                            money or other property of the Company;



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                     (B)    Employee's failure, refusal or inability to perform
                            his duties on behalf of the Company, which duties
                            are consistent with the scope and nature of
                            Employee's responsibilities as an officer of the
                            Company and which are not remedied by Employee
                            within a reasonable time period after receipt of
                            written notice of such alleged violative activities;

                     (C)    any act of gross negligence, intentional waste,
                            disloyalty or unfaithfulness by Employee to the
                            Company; or

                     (D)    a breach of any of the terms and provisions of
                            Sections 7, 8, 9, or 10 of this Agreement or any
                            breach of the fiduciary duties owed to the Company
                            by Employee.

              (b)    Employee may terminate this Agreement in the event the
                     Company fails or refuses to perform, or otherwise breaches,
                     the provisions of this Agreement and the Company fails to
                     cure such breach within thirty (30) days after receiving
                     written notice from Employee describing such breach and
                     specifically referring to this Section 11.1(b).

        11.2 EMPLOYEE'S RESPONSIBILITIES UPON TERMINATION

        Following any notice of termination, Employee shall fully cooperate with
the Company in all matters relating to the winding up of his pending work on
behalf of the Company and to the orderly transfer of any such pending work to
other employees of the Company as may be designated by the Company.

        11.3 EXCESS PARACHUTE LIMITATION

        If either the Company or the Employee receives confirmation from the
Company's independent tax counsel or its certified public accounting firm, or
such other accounting firm retained as independent certified public accountants
for the Company (the "Tax Advisor"), that any payment by the Company to the
Employee under this Agreement or otherwise would be considered to be an "excess
parachute payment" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended, or any successor statute then in effect (the "Code"),
then the aggregate payments by the Company pursuant to this Agreement shall be
reduced to the highest amount that may be paid to the Employee by the Company
under this Agreement without having any portion of any amount payable to the
Employee by the Company



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or a related entity under this Agreement or otherwise treated as such an "excess
parachute payment", and, if permitted by applicable law and without adverse tax
consequence, such reduction shall be made to the last payment due hereunder. Any
payments made by the Company to the Employee under this Agreement which are
later confirmed by the Tax Advisor to be "excess parachute payments" shall be
considered by all parties to have been a loan by the Company to the Employee,
which loan shall be repaid by the Employee upon demand together with interest
calculated at the lowest interest rate authorized for such loans under the Code
without a requirement that further interest be imputed.

        11.4 NOTICE

        The term "Notice of Termination" shall mean at least 20 working days'
written notice of termination of Employee's employment, during which period
Employee's employment and performance of services will continue; provided,
however, that the Company may, upon notice to Employee and without reducing
Employee's compensation during such period, excuse Employee from any or all of
his or her duties during such period. The effective date of the termination of
Employee's employment hereunder shall be the date on which such 20-day period
expires.

12.     TERMINATION PAYMENTS

        In the event of termination of the employment of Employee, all
compensation and benefits set forth in this Agreement shall terminate except as
specifically provided in this Section 12:

        12.1 TERMINATION BY THE COMPANY

        If the Company terminates Employee's employment prior to the end of the
term of this Agreement, Employee shall be entitled to receive (a) termination
payments equal to the amounts payable under Section 7 of the Agreement, and (b)
any unpaid annual base salary and any accrued vacation and deferred compensation
(together with accrued interest or earnings thereon, if any) payable under the
deferral plan, which has accrued for services already performed as of the date
termination of Employee's employment becomes effective.

        12.2 TERMINATION BY EMPLOYEE

        In the case of the termination of Employee's employment by Employee,
Employee shall not be entitled to any payments hereunder, other than those set
forth in clause (b) of Section 12.1 hereof.



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        12.3 EXPIRATION OF TERM

        In the case of a termination of Employee's employment as a result of the
expiration of the term of this Agreement, Employee shall not be entitled to
receive any payments hereunder, other than those set forth in clause (b) of
Section 12.1 hereof.

        12.4 TERMINATION IN CONNECTION WITH A CHANGE IN CONTROL

        Concurrent with the commencement of Employee's employment hereunder,
Employee and the Company shall enter into a Change of Control Agreement, a copy
of which is attached hereto as Exhibit A. Notwithstanding Sections 12.1 and 12.2
of this Agreement and in full substitution therefor, if Employee's employment
terminates under circumstances described in the Change of Control Agreement,
Employee's rights upon termination will be governed by terms of the Change of
Control Agreement and his right to termination payments under this Employment
Agreement shall cease.

        12.5 PAYMENT SCHEDULE

        All payments under this Section 12 shall be made to Employee at the same
interval as payments of salary were made to Employee immediately prior to
termination.

13.     INTEGRATION

        This Agreement constitutes the entire agreement between Employee and the
Company relating in any way to the employment of Employee by the Company, and
supersedes all prior discussions, understandings and agreements between them
with respect thereto.

14.     INVALID PROVISION

        The invalidity or unenforceability of any particular provision of this
Agreement shall not affect any other provision hereof, and the Agreement shall
be construed in all other respect as if such invalid or unenforceable provisions
were omitted. However, if any court should determine that the duration or any
other feature of any restriction contained in Section 7 of this Agreement is
unenforceable, it is the intention of the parties that the provisions of such
Section as set forth herein shall not thereby be terminated, but shall be deemed
amended to the extent required to render them valid and enforceable.



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15.     ATTORNEYS' FEES

        In the event of a dispute arising out of the interpretation or
enforcement of this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees and costs.

16.     BINDING EFFECT

        This Agreement shall be binding upon and shall inure to the benefit of
the respective parties hereto, their heirs, executors, successors and assigns.

17.     GOVERNING LAW

        This Agreement and the parties' performance hereunder shall be governed
by and interpreted under the laws of the State of Washington. Employee agrees to
submit to the jurisdiction of the courts of the State of Washington, and that
venue for any action arising out of this Agreement or the parties' performance
hereunder may be laid in King County, Washington.

18.     AMENDMENTS

        Any term of this Agreement may be amended and the observance of any term
may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the parties.

19.     ASSIGNMENT

        This Agreement is personal to Employee and shall not be assignable by
Employee. Subject to the provisions of Section 11.3 hereof, the Company may
assign its rights hereunder to (a) any corporation resulting from any merger,
consolidation or other reorganization to which the Company is a party or (b) any
corporation, partnership, association or other person to which the Company may
transfer all or substantially all of the assets and business of the Company
existing at such time. All of the terms and provisions of this Agreement shall
be binding upon and shall inure to the benefit of and be enforceable by the
parties hereto and their respective successors and permitted assigns.

20.     CONSENTS AND WAIVERS

        No consent or waiver, express or implied, by any party hereto to or of
any breach or default by any other party in the performance by the others of
their obligations hereunder shall be valid unless in writing, and no such
consent or waiver



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shall be deemed or construed to be a consent or waiver to or of any other breach
or default in the performance by such other party of the same or any other
obligations of such party hereunder. Failure on the part of any party to
complain of any act or failure to act of any other party or to declare the other
parties in default, irrespective of how long such failure continues, shall not
constitute a waiver by such party of its rights hereunder. The granting of any
consent or approval in any one instance by or on behalf of the Company shall not
be construed to waive or limit the need for such consent or approval in any
other subsequent instance.

21.     CONSTRUCTION

        This Agreement has been submitted to the scrutiny of, and has been
negotiated by, all parties hereto and their counsel, and shall be given a fair
and reasonable interpretation in accordance with the terms hereof, without
consideration or weight being given to its having been drafted by any party
hereto or its counsel.

22.     HEADINGS

        Titles or captions of sections contained in this Agreement are inserted
only as a matter of convenience and for reference, and in no way define, limit,
extend or describe the scope of this Agreement or the intent of any provisions
hereof.

23.     REMEDIES IN EQUITY

        The rights and remedies of the parties hereunder shall not be mutually
exclusive, i.e., the exercise of one or more of the provisions hereof shall not
preclude the exercise of any other provisions hereof. The parties confirm that
damages at law will be an inadequate remedy for a breach or threatened breach of
this Agreement and agree that their respective rights and obligations hereunder
shall be enforceable by specific performance, injunction or other equitable
remedy as well as at law or otherwise.

24.     ARBITRATION

        Any controversies or claims arising out of or relating to this Agreement
or to employee's employment with the company shall be fully and finally settled
by arbitration in the City of Seattle, Washington under Washington law and in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association then in effect (the AAA Rules), conducted by one arbitrator either
mutually agreed upon by the company and the employee or chosen in accordance
with the AAA rules.



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                             COMPANY:

                             EDEN BIOSCIENCE CORPORATION,
                             a Washington corporation

                             By /s/ Bradley S. Powell
                               ----------------------------------------

                             Its  Secretary and Chief Financial Officer
                                ---------------------------------------

                             EMPLOYEE:

                             /s/ Jerry L. Butler
                             ------------------------------------------
                             Jerry L. Butler


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