Document:

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                                                                   Exhibit 10.26

                              EMPLOYMENT AGREEMENT

      THIS AGREEMENT is made and effective this 12th day of August, 2002, by and
between Assisted Living Concepts, Inc., a Nevada corporation with a principal
address at 11835 NE Glenn Widing Drive, Building E, Portland, Oregon 97220-9057
(together with its successors and assigns, the "Corporation") and Linda L.
Martin, an individual residing at W4794 River Road, Fredonia, WI, 53021 (the
"Employee").

                                   WITNESSETH:

      WHEREAS, the Corporation desires to employ the Employee as the Chief
Operating Officer of the Corporation; and

      WHEREAS, the Employee desires to be so employed by the Corporation; and

      WHEREAS, the Corporation and the Employee desire to set forth in writing
their agreements regarding the employment and compensation of the Employee;

      NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Corporation and the Employee
agree as follows:

      1.    Employment. The Corporation hereby employs the Employee as Chief
Operating Officer of the Corporation, for the Term (as defined in Section 7) of
this Agreement, and the Employee hereby accepts such employment, upon the terms
and conditions hereinafter set forth.

      2.    Duties; Location. In her capacity as the Chief Operating Officer of
the Corporation, the Employee shall timely and faithfully perform and discharge
the duties of such position set forth in the by-laws of the Corporation, as
amended and in effect from time to time, as well as such other duties
commensurate with such position as shall be prescribed from time to time by the
President and Chief Executive Officer and/or Board of Directors of the
Corporation. The Employee shall report to, and be subject to the supervision and
control of the President and Chief Executive Officer and/or Board of Directors
of the Corporation. The Employee shall devote her full time to the business of
the Corporation and shall faithfully perform the duties assigned to her to the
best of her ability, provided however, Employee may serve on civic or charitable
boards or committees, fulfill speaking engagements, and manage a financial
portfolio of personal investments so long as such activities do not interfere
with the performance of Employee's duties hereunder.

      Employee's location of employment shall be at the Company's executive
offices in Dallas, Texas. The Corporation may not transfer Employee to any other
location without Employee's prior written consent unless the transfer is at the
Corporation's expense and results from the relocation of the Company's executive
offices and the relocation thereto of other executive officers of the
Corporation.

      3.    Compensation. As compensation for the services to be rendered by the
Employee to the Corporation pursuant to this Agreement during the Term:
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            (a)   Salary. The Corporation shall pay the Employee a base salary
at the annualized rate of One Hundred Seventy-Five Thousand Dollars
($175,000.00), payable in accordance with the Corporation's usual payroll
practices, and subject to withholding therefrom of federal and state income
taxes, any other employment taxes required to be collected or withheld by the
Corporation, and other amounts required or requested by Employee to be withheld.
Such salary shall be subject to annual review but not reduction by the Board of
Directors and Compensation Committee of the Corporation.

            (b)   Signing Bonus. The Corporation shall pay the Employee, as a
signing bonus for fiscal year 2002, twenty-five thousand dollars ($25,000.00)
less applicable taxes and withholding within ten (10) days of the execution of
this Agreement by the parties.

            (c)   Bonus. The Employee shall be eligible for a bonus calculated
as follows: (i) if Pro Rata Earnings (as defined below) are less than Target
Earnings (as defined below), then there shall not be any bonus; (ii) if Pro Rata
Earnings exceed Target Earnings, but are less than double Target Earnings, then
the bonus shall be in the amount of twenty-five thousand dollars ($25,000); and
(iii) if Pro Rata Earnings are greater than or equal to double Target Earnings,
then the bonus shall be in the amount of twenty-five thousand dollars ($25,000)
for each integral multiple of Target Earnings that is less than Pro Rata
Earnings (for example, if Pro Rata Earnings are 3.5 times greater than Target
Earnings, then the Bonus would be ($25,000*3) = $75,000). For purposes of this
Section 3(c), "Pro Rata Earnings" means the earnings of the Corporation, for the
period from August 1, 2002 through December 31, 2002, before depreciation,
amortization (excluding the pro rata portion of amortization on loan fees and
other finance costs shown in the other expense section of the projected income
statement for 2002, as presented to the Board of Directors on January 3, 2002)
and taxes, excluding the pro rata portion of the five-hundred thousand dollar
($500,000.00) restructuring charge of the Corporation for the year 2002, and
excluding any one-time gain from the sale of assets and any one-time charge
during such period, and "Target Earnings" means $416,666.67. The bonus shall be
calculated after the Corporation's audit for the year 2002 and paid within a
reasonable amount of time thereafter. The Employee's total compensation for the
years 2003 and 2004 shall be determined by the Board of Directors and
Compensation Committee of the Corporation.

            (d)   Other Benefits Subject to the Employee's meeting the
eligibility requirements of the provider(s) (including without limitation any
waiting periods), the Employee shall be eligible to participate in any health
care plan, dental care plan, life insurance plan, long-term disability insurance
plan, retirement plan, 401(k) plan and any other employee benefit plan sponsored
or maintained by the Corporation from time to time, on the same basis as other
employees of the Corporation similarly situated. Nothing in this Agreement shall
obligate the Corporation to sponsor, maintain or provide access to any such plan
generally or limit the discretion of the Corporation to terminate or modify the
terms of any such plan or change providers thereof.

            (e)   Vacation. The Employee shall be entitled to four (4) weeks of
vacation per calendar year. Fifty percent (50%) of any unused vacation time
shall expire at the close of business on December 31 of each year. The Employee
shall not be entitled to any payment or other compensation in lieu of unused
vacation time.

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            (f)   Expenses. The Corporation shall reimburse the Employee's
documented, reasonable and necessary out-of-pocket business expenses incurred by
the Employee in the performance and discharge of her duties on behalf of the
Corporation in accordance with and subject to the Corporation's policies and
procedures regarding expense reimbursement in effect from time to time.

            (g)   Moving Expenses. The Corporation shall pay directly or
reimburse the Employee, at the Employee's option, for all reasonable, itemized
allocable moving expenses, up to fifty thousand ($50,000.00) dollars, incurred
in connection with the Employee relocating to the Dallas, Texas area.

            (h)   Apartment. In connection with the Employee relocating to the
Dallas, Texas area, the Corporation shall reimburse the Employee for all rental
and related payments for an apartment in Dallas, Texas for up to six months,
provided that the cost of the apartment shall not be unreasonable in the
reasonable opinion of the Board of Directors of the Corporation.

            (i)   Stock Options. Pursuant to a separate stock option agreement
to be entered into between the Corporation and the Employee, the Employee shall
receive options for the purchase of thirty two thousand five hundred (32,500)
shares of the Corporation's common stock, par value $.0l per share (the "Common
Stock"). The options shall vest over three years at the rate of 29.65328 shares
per calendar day. The exercise price for each share of Common Stock shall be the
lower of (i) $4.85 ($31,500,000 equity valuation divided by 6,500,000 shares
outstanding) or (ii) the average closing price of a share of Common Stock as
quoted on the OTC Bulletin Board, for the thirty (30) trading days commencing on
the later of (x) the next trading day after the day this Agreement is executed
by all parties, and (y) the first day that the Common Stock is publicly traded.
The Employee acknowledges that all options shall be governed by the
Corporation's stock option plan, which is currently being developed, and that
any inconsistencies between this section and said stock option plan shall be
controlled by the stock option plan, provided that the exercise price, number of
shares and vesting schedule shall not be adversely affected thereby.

      4.    "Key Man" Life Insurance. The Corporation, in its discretion, may
apply for and procure in its own name and for its own benefit, life insurance on
the life of the Employee in any amount or amounts considered advisable by the
Corporation, and the Employee shall submit to any medical or other examination,
and shall execute and deliver any application or other instrument in writing,
reasonably necessary to effectuate such insurance.

      5.    Restrictions on the Disclosure of Proprietary Information.

            (a)   Proprietary Information. For purposes of this Agreement, the
term "Proprietary Information" shall mean all confidential knowledge and
information in any form or medium which the Employee acquires, learns or becomes
aware of as a result of or in connection with her employment with the
Corporation concerning (i) the Corporation's business, financial condition,
operations, strategic planning, research and development activities, current or
proposed products, product designs, trade secrets, competitive business
information, patents, patent rights, inventions, technology, copyrights,
software (including without limitation, source code, object code and firmware),
improvements, applications, processes, services, cost and

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pricing policies, client lists, vendor relationships and contact lists, and (ii)
information of the kind, type or nature described in the foregoing clause (i) of
or with respect to each third party with whom the Corporation at any time and
from time to time enters a confidentiality or non-disclosure agreement pursuant
to which the Corporation is obligated to keep such third party's information
confidential. Notwithstanding the foregoing, Proprietary Information does not
include information (1) which is or becomes part of the public domain through no
fault of the Employee, or (2) which the Employee can demonstrate was
independently developed by him without use of or reference to any Proprietary
Information.

            (b)   Non-disclosure and Non-use Obligations. The Employee agrees
that she will not at any time, without the prior written consent of the
Corporation (which shall be evidenced by a writing signed by a majority of the
Corporation's Board of Directors or by action taken by the Board of Directors at
a meeting), either during or after any termination of this Agreement, divulge or
disclose to anyone outside the Corporation or its professional advisers, or use
or permit any third party to use for its own benefit, any such Proprietary
Information. The Employee will not, during her engagement by the Corporation
hereunder or at any time thereafter, use or attempt to use any such Proprietary
Information for any purpose other than the Employee's provision of services to
the Corporation, and in no event in any manner which may injure or cause loss or
may be calculated or reasonably expected to injure or cause loss to the
Corporation. Notwithstanding the provisions of this paragraph, Employee may
divulge or disclose Proprietary Information to Employee's legal advisers,
provided that such advisors agree to keep such Proprietary Information
confidential, or in response to a court or arbitration order.

      The Employee further agrees not to make any notes, memoranda, flow charts,
logic diagrams, specifications, reports, compilations, analyses, sketches,
drawings, technical data, source code, object code, models or other physical
manifestations (or copies thereof) relating to any matter within the scope of
the Proprietary Information at any time otherwise than for the benefit of the
Corporation, or, either during or after the termination of this Agreement, to
use or permit to be used any such information (or copies thereof) otherwise than
for the benefit of the Corporation. Upon termination of this Agreement, the
Employee shall deliver to the Corporation at its address set forth above all
such notes, memoranda, flow charts, logic diagrams, specifications,' reports,
compilations, analyses, sketches, drawings, technical data, source code, object
code, models and other physical manifestations and any other related information
and all copies thereof made during the term of this Agreement. Notwithstanding
the provisions of this paragraph, Employee may retain, for a reasonable time,
such copies as Employee reasonably believes may be necessary for legal reasons
or upon advice of legal counsel for the purpose of defending Employee in any
pending or threatened litigation.

      6.    Certain Covenants of the Employee.

            (a)   Property and Non-Solicitation.

                  (i)   Non-Compete. During the time Employee is employed under
                        this Agreement (the "Restricted Period"), the Employee
                        shall not, in the United States of America or in any
                        foreign country, directly or indirectly, (i) engage in
                        the Corporation Business for her own account; (ii) enter
                        the employ of or render any services to, any

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                        persons engaged in such activities; or (iii) become
                        interested in any person engaged in the Corporation
                        Business, directly or indirectly, as an individual,
                        partner, shareholder, officer, director, principal,
                        agent, employee, trustee, consultant or in any other
                        relationship or capacity; provided, however, that the
                        Employee may own, directly or indirectly, solely as an
                        investment, securities of any person which are traded on
                        any national securities exchange or NASDAQ if the
                        Employee (a) is not a controlling person of, or a member
                        of a group which controls such person or (b) does not,
                        directly or indirectly, own 4% or more of any class of
                        securities of such person.

                  (ii)  Property of the Corporation. Subject to Section 5(b),
                        all memoranda, notes, lists, records and other documents
                        (and all copies thereof) made or compiled by the
                        Employee or made available to the Employee concerning
                        the business of the Corporation or any of its affiliates
                        shall be the Corporation's property and shall be
                        delivered to the Corporation promptly upon the
                        termination of the Employee's employment with the
                        Corporation or any of its affiliates or at any other
                        time on request.

                  (iii) Employees of the Corporation. During the Restricted
                        Period and for a period of six months following the
                        termination (whether for cause of otherwise) of the
                        Employee's employment with the Corporation or any of its
                        affiliates, the Employee shall not, directly or
                        indirectly, hire, solicit or encourage to leave the
                        employment of the Corporation or any of its affiliates,
                        any employee of the Corporation or its affiliates or
                        hire any such employee who has left the employment of
                        the Corporation or any of its affiliates within six (6)
                        months of the termination of such employee's employment
                        with the Corporation or any of its affiliates.

                  (iv)  Consultants and Independent Contractors of the
                        Corporation. During the Restricted Period and for a
                        period of six months following the termination (whether
                        for cause of otherwise) of the Employee's employment
                        with the Corporation or any of its affiliates, the
                        Employee shall not, directly or indirectly, hire,
                        solicit or encourage to cease to work with the
                        Corporation or any of its affiliates, any consultant,
                        sales representative or other person then under contract
                        with the Corporation or any of its affiliates.

            (b)   Rights and Remedies Upon Breach. If the Employee breaches, or
threatens to commit a breach of, any of the provisions of Section 6(a) (the
"Restrictive Covenants"), the Corporation shall have the following rights and
remedies, each of which rights and remedies shall be independent of the other
and severally enforceable, and all of which rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Corporation under law or in equity.

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                  (i)   Specific Performance. The right and remedy to have the
                        Restrictive Covenants specifically enforced by any court
                        having equity jurisdiction, it being acknowledged and
                        agreed that any such breach or threatened breach will
                        cause irreparable injury to the Corporation and its
                        affiliates and that money damages will not provide an
                        adequate remedy to the Corporation.

                  (ii)  Accounting. The right and remedy to require the Employee
                        to account for and pay over to the Corporation all
                        compensation, profits, monies, accruals, increments or
                        other benefits (collectively, "Benefits") derived or
                        received by the Employee as a result of any transactions
                        constituting a breach of any of the Restrictive
                        Covenants, and the Employee shall account for and pay
                        over such Benefits to the Corporation.

            (c)   Severability of Covenants. If any court determines that any of
the Restrictive Covenants, or any parts thereof are invalid or unenforceable,
the remainder of the Restrictive Covenants shall not thereby be affected and
shall be given full effect, without regard to the invalid portions.

            (d)   "Blue-Penciling". If any court construes any of the
Restrictive Covenants, or any part thereof, to be unenforceable because of the
duration of such provision or the area covered thereby, such court shall have
the power to reduce the duration or area of such provision and, in its reduced
form, such provision shall then be enforceable and shall be enforced.

            (e)   Enforceability in Jurisdictions. The parties intend to and
hereby confer jurisdiction to enforce the Restrictive Covenants upon the courts
of any jurisdiction within the geographical scope of such Restrictive Covenants.
If the courts of any one or more of such jurisdictions hold the Restrictive
Covenants wholly unenforceable under the law of that jurisdiction by reason of
the breadth of such scope or otherwise, it is the intention of the parties that
such determination not bar or in any way affect the Corporation's right to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of such Restrictive Covenants, as to breaches of such
Restrictive Covenants in such other respective jurisdictions, such Restrictive
Covenants as they relate to each jurisdiction being, for this purpose, severable
into diverse and independent covenants.

      7.    Termination.

            (a)   Term. This Agreement shall commence as of the date first above
written and shall continue in effect for three (3) years unless earlier
terminated in one of the following manners, or upon the occurrence of one of the
following events (with the period from the date hereof until the date of such
expiration or earlier termination being referred to herein as the ("Term");

                  (i)   upon the Employee's death.

                  (ii)  if the Employee becomes "Disabled." As used herein, the
                        term "Disabled" shall mean the inability of the Employee
                        to

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                        substantially perform the Employee's duties under this
                        Agreement for a period in excess of either three (3)
                        consecutive months or a total of one hundred eighty
                        (180) days in any twelve (12) month period by reason of
                        any incapacity, physical or mental, which the
                        Corporation's Board of Directors, based upon medical
                        advice or an opinion provided by Employee's treating
                        physician, determines to have incapacitated the Employee
                        from satisfactorily performing all of the Employee's
                        usual services for the Corporation during the
                        foreseeable future. The Board of Directors may elect to
                        have Employee examined by a duly licensed independent
                        physician, and Employee agrees to submit to such
                        examination. In the event Employee's treating physician
                        and any such independent physician are unable to agree
                        as to whether Employee is Disabled, then the two
                        physicians shall select a third physician and the
                        opinion of any two of the three physicians shall be
                        determinative.

                  (iii) by mutual agreement of the Employee and the Corporation.

                  (iv)  by the Corporation for "Cause." As used herein, "Cause"
                        shall mean the failure by the Employee to observe any
                        material provision of this Agreement or any other
                        agreement, or any breach of any of the Employee's
                        covenants, agreements, representations or warranties in
                        any agreement between the Corporation and the Employee
                        which default or breach continues ten (10) days after
                        Employee receives notice thereof specifying each claimed
                        breach or default, or any act committed by the Employee
                        involving fraud, gross negligence or willful disregard
                        of duty, insubordination (after written notice of the
                        particulars and a reasonable --under the circumstances
                        -- opportunity to correct the conduct constituting the
                        basis for such alleged insubordination), or other
                        willful misconduct, the Employee's indictment or
                        arraignment on any felony charges, or any conduct
                        involving moral turpitude.

            (b)   Termination of Obligations. Upon the termination of the
Employee's employment hereunder, all benefits hereunder shall thereupon
terminate as of the date of termination, and the Employee shall return to the
Corporation all of the Corporation's property in her possession or under her
control, including all files, keys, reports and other tangible and intangible
property of any kind, nature or description. The provisions of Sections 5
through 19 shall survive any expiration or earlier termination of this
Agreement. The Employee shall receive all salary, bonuses and stock options pro
rata to the extent earned as of the date of termination, as well as any other
compensation to which she may be entitled under Section 7(d).

            (c)   Repayment of Moving Expenses. If, within one year of the date
of this Agreement, (i) the Employee voluntarily (excluding death and disability)
terminates her Employment with the Corporation, or (ii) the Corporation
terminates the Employee's employment for Cause, then the Employee shall
reimburse the Corporation for all moving expenses previously paid to the
Employee or on the Employee's behalf within thirty (30) days.

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            (d)   Severance. If, within two years of the date of this Agreement,
the Corporation terminates the Employee's employment without Cause, then the
Corporation shall continue to pay the Employee her then current salary, bonuses
and stock options pro rata, and other benefits (to the extent eligible), as of
the date of termination, for six months following the date of the termination.
Upon the termination of Employee's employment hereunder due to Employee's death
or due to Employee becoming Disabled, Employee's salary, bonuses and stock
options pro rata, and other benefits (to the extent eligible) hereunder shall
continue for a period of six months following such termination.

      8.    Prior Agreements. The Employee represents and warrants that she is
not a party to or bound by an agreement which in any way prevents, limits,
impairs or otherwise affects her ability to enter into and/or fully and timely
perform her obligations under this Agreement, other than the terms of a
Separation Agreement between Employee and her current employer, which terms have
been furnished to the Corporation.

      9.    Waiver. A party's failure to insist on compliance or enforcement of
any provision of this Agreement, shall not affect the validity or enforceability
or constitute a waiver of future enforcement of that provision or of any other
provision of this Agreement by that party or any other party.

      10.   Governing Law; Arbitration. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas as applied to
agreements between Texas residents entered and to be performed entirely within
Texas. Any dispute between the Employee and the Corporation arising under or
related to this Agreement or otherwise concerning the employment of Employee by
the Corporation or the termination of such employment shall be resolved by
submitting the matter to binding arbitration in accordance with this Section 11.
Arbitration shall be conducted in Dallas, Texas pursuant to the procedural rules
then in effect of the American Arbitration Association and shall be heard by a
single arbitrator, reasonably agreed to by the parties, who shall be an
attorney-at-law licensed to practice and in good standing in the State of Texas
and knowledgeable in employment matters. The decision of such arbitrator shall
be final and binding on the parties and may be entered for enforcement in any
court or tribunal of competent jurisdiction and authority. The arbitrator shall
award such damages or other relief, as she deems appropriate and may, but shall
not be required to, award legal fees and costs to the prevailing party. All
costs of such arbitration (excluding fees, disbursements and expenses of
counsel, advisors, witnesses and experts) shall be borne equally by the parties,
subject to the arbitrator's award of costs and legal fees, if any. This Section
10 shall not prevent the Corporation from seeking or obtaining injunctive relief
where such remedy is the appropriate form of remedy under the circumstances,
including, without limitation, for any breach of Section 6 or 7 above.

      11.   Severability. The invalidity or unenforceability of any provision in
the Agreement shall not in any way affect the validity or enforceability of any
other provision of this Agreement and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision had never been in the
Agreement.

      12.   Notice. Any and all notices required or permitted herein shall be
deemed given if hand delivered or if mailed by registered or certified mail,
return receipt requested, or by

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nationally recognized overnight courier, to the Corporation at its principal
place of business, addressed to the attention of the Chief Executive Officer,
and to the Employee at the address specified in the preamble of this Agreement,
or at such other address or addresses as either party may hereafter designate in
writing to the other.

      13.   Assignment. This Agreement, together with any amendments hereto,
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors, assigns, heirs and personal representatives, except
that the rights and benefits of either of the parties under this Agreement may
not be assigned without the prior written consent of the other party.

      14.   Amendments. This Agreement may be amended at any time, but only by
mutual consent of the parties hereto in writing, signed by the Corporation and
the Employee.

      15.   Right to Advice of Counsel. The Employee acknowledges that she has
consulted with counsel and is fully aware of her rights and obligations under
this Agreement.

      16.   Counterparts. This Agreement may be executed in one or more
counterparts, none of which need contain the signature of more than one party
hereto, and each of which shall be deemed to be an original, and all of which
together shall constitute a single agreement.

      17.   Entire Agreement. This Agreement represents the final and entire
agreement between the parties respecting its subject matter, and merges and
supersedes any and all prior and contemporaneous agreements, promises,
commitments, statements and communications, written and oral, between them
relating to such subject matter.

      18.   Approval of Board of Directors. This Agreement shall be effective
upon execution by both parties.

      19.   Headings. The various headings in this Agreement are inserted for
convenience only and are not part of this Agreement.

      IN WITNESS WHEREOF, the Corporation and the Employee have duly executed
this Employment Agreement as a sealed instrument as of the day and year first
above written.

                                          CORPORATION:

                                          By:  /s/ Steven Vick
                                              ----------------------------------
                                          Name:  Steven Vick
                                          Title: Chief Executive Officer

                                          EMPLOYEE:

                                               /s/ Linda L. Martin
                                          --------------------------------------
                                          Linda L. Martin

                                       9<PAGE>
                                                                   EXHIBIT 10.15

                       EXCLUSIVE PATENT LICENSE AGREEMENT

                               NUTRACEUTIX, INC.

                                      AND

                         ARCHER-DANIELS-MIDLAND COMPANY

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                               TABLE OF CONTENTS

PREAMBLE

1.   Definitions

2.   Grant of License

3.   Consideration

4.   Infringement

5.   Limited Warranty and Indemnification

6.   Term and Termination

7.   Reasonable efforts

8.   Packaging, Labels and Promotional Items

9.   Protection of Proprietary Rights

10.  Assignment

11.  Disputes; Arbitration

12.  Governing Law

13.  Force Majeure

14.  Notices

15.  Miscellaneous

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                       EXCLUSIVE PATENT LICENSE AGREEMENT

     THIS AGREEMENT ("Agreement") made as of the 8th day of March, 2002 by and
between Nutraceutix, Inc., a Delaware corporation (hereinafter referred to as
"Nutraceutix") and Archer-Daniels-Midland Company, a Delaware corporation
(hereinafter referred to as "ADM").

                                  WITNESSETH:

     WHEREAS, Nutraceutix holds an exclusive license to certain patents and
patent applications and is the owner of certain patents and patent applications
in the United States and in other countries in the world relating to controlled
delivery technology;

     WHEREAS, ADM desires that Nutraceutix grant ADM a license in the Territory
(as defined below) to manufacture, use, sell and offer to sell the Licensed
Products (as defined below) in the Licensed Field of Use (as defined below)
pursuant to the terms and conditions set forth in this Agreement; and

     NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, and intending to be legally bound hereby, the Parties agree
as follows:

ARTICLE 1. DEFINITIONS

For the purposes of this Agreement, unless the context clearly or necessarily
requires otherwise, the following terms shall have the meanings set forth below:

1.1  "Parties" shall mean both Nutraceutix and ADM, and the "Party" shall mean
either of them.

1.2  "Affiliate" of a Party shall mean any company, corporation, partnership,
syndicate or other entity that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
such Party. "Control" shall mean ownership of fifty-one percent (51%) or more
of the voting rights or equity in the specified entity.

1.3  "Contract Year" shall mean any of the following occurring during the term
hereof: (i) the period that begins on the Effective Date and ends on the
following December 31; (ii) any calender year thereafter; or (iii) the period
that ends on the date on which this Agreement expires or terminates and that
begins on the prior January 1. Provided, however, if this Agreement expires or
terminates on January 1, the Contract Year referred to in (ii) above shall be
one day in length.

1.4  "Contract Quarter" shall mean any of the following occurring during the
term hereof: (i) the period that begins on the Effective Date and ends on the
first to occur of the following; March 31, June 30, September 30, or December
31; (ii) any calender quarter thereafter; or (iii) the period that ends on the
date on which this Agreement expires or terminates and that begins with the
last to occur prior thereto of the preceding January 1, April 1, July 1 or
October 1. Provided, however, that if this Agreement expires or

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     terminates on the first day of a calendar quarter, the Contract Quarter
     referred to in (iii) above shall be one day in length.

1.5  "Effective Date" shall mean the date when this agreement is fully executed
     by the Parties.

1.6  "Intellectual Property" shall mean all forms of intellectual property
     existing on or after the date of this Agreement under the laws of any state
     or country including, but not limited to, patentable inventions, patentable
     designs, patentable plants, copyrightable works, mask works, novel plan
     varieties, trademarks, service marks, trade secrets, and trade dress.

1.7  "Inventions" shall mean any discovery, concept, trade secret, art, clinical
     data, idea or other information, whether or not patentable, that relates to
     or arises out of the subject matters disclosed in the Licensed Patents, as
     well as any foreign patents or foreign patent applications corresponding
     thereto, and any continuations, continuations-in-part, divisionals,
     reissues, reexaminations, extensions or additions thereof for use in the
     Licensed Field of Use.

1.8  "Exclusive Licensed Field of Use" shall mean any legal use of the
     Inventions and/or Licensed Products constituting one of the following
     nutraceuticals and/or dietary supplements: (i) phytoestrogens, including
     but not limited to isoflavones; (ii) vitamin C and its derivatives (subject
     to cancellation pursuant to Section 3.1(b)); and (iii) such other
     nutraceuticals and dietary supplements that become the subject of this
     License as a result of ADM exercising its right of refusal set forth in
     Section 2.3.

1.9  "Non-Exclusive Licensed Field of Use" shall mean any legal use of the
     Inventions and/or Licensed Products constituting one of the following
     nutraceuticals and/or dietary supplements: (i) glucosamine; and (ii)
     glucosamine and chondroitin.

1.10 "Licensed Patents" shall mean United States Patent Number 6,090,411 and
     pending United States Patent Application Number 60/339,887, as well as
     rights to any foreign patents or foreign patent applications corresponding
     thereto, any continuations, continuations-in-part, divisionals, reissues,
     reexaminations, extensions or additions thereof.

1.11 "Licensed Products" shall mean any product or part thereof in the Licensed
     Field of Use, the manufacture, use, sale, offer for sale, or importation of
     which is covered by one or more valid claims of the issued, unexpired
     Licensed Patents. A claim of the issued, unexpired Licensed Patents shall
     be presumed to be valid unless and until it has been held to be invalid by
     a final judgment of a court of competent jurisdiction from which no appeal
     can be or is taken.

1.12 "Net Sales" shall mean ADM's invoiced sales price billed to third parties
     for Licensed Products, and received, less (a) credits, allowances,
     discounts and rebates to, and charge backs from the account of, such
     customers for spoiled, damaged, out-dated, rejected or returned Licensed
     Products; (b) (to the extent included in the invoiced sales price) actual
     freight and insurance costs incurred in transporting such product in final
     form to such customers; (c) cash, quantity and promotional discounts, to
     the extent the same reduce the

                                       4
<PAGE>
      invoiced sales price at issue; and (d) sale, use, value-added and other
      taxes or governmental charges incurred in connection with the exportation
      or importation of such Licensed Products in final form.

1.13  "Territory" shall mean worldwide.

ARTICLE 2. GRANT OF LICENSE

2.1   Nutraceutix Licensed Patents.
      For the term of this Agreement and subject to the terms and conditions
      hereof, Nutraceutix hereby grants to ADM (i) the sole and exclusive right
      and license, with the right to sublicense, to manufacture, have
      manufactured on its behalf, use, sell and offer to sell the Licensed
      Products and the Inventions in the Territory for the Exclusive Licensed
      Field of Use; and (ii) the non-exclusive right and license, with the right
      to sublicense, to manufacture, have manufactured on its behalf, use, sell
      and offer to sell the Licensed Products and the Inventions in the
      Territory for the Non-exclusive Licensed Field of Use. Nutraceutix shall
      not grant other licenses under the Licensed Patents in the Territory for
      the Exclusive Licensed Field of Use. Further, subject to the provisions of
      Section 2.4, Nutraceutix does not retain any rights to manufacture, have
      manufactured, use, sell, market, offer for sale or import Licensed
      Products and/or Inventions in the Territory for the Exclusive Licensed
      Field of Use.

2.2   Improvements.
      Nutraceutix shall promptly disclose to ADM any improvements to the
      Inventions that are invented, conceived, made, developed, discovered,
      first reduced to practice or created by Nutraceutix, its employees or
      agents, during the term of this Agreement and that apply to Licensed
      Products. ADM shall have the option to license any such improvements and
      any patents or patent applications therefor, and if ADM so exercises its
      option then the same shall come under this Agreement and be subject to the
      terms and provisions hereof. Nutraceutix may file for patent protection
      for any such improvements as it sees fit at its cost. If Nutraceutix fails
      to pursue patent protection to the extent desired by ADM, and ADM
      exercises its option hereunder, then ADM may pursue such patent
      protection, at its cost, in the name of Nutraceutix after providing
      Nutraceutix with thirty (30) days advance written notice thereof and
      Nutraceutix failing to take such action itself during such period of time.
      Each party shall provide cooperation to the other party to execute any
      documents necessary to effectuate such patent protection.

2.3   Right of Refusal.

      (a)   Notice of Offer. If Nutraceutix makes or receives a bona fide offer
            ("Offer") to sell, assign, license or otherwise transfer any
            interest in the Inventions or Licensed Patents outside the Licensed
            Field of Use but with respect to any nutraceutical or dietary
            supplement (the "Option Intellectual Property") to a third-party,
            Nutraceutix shall promptly, but no later than ten (10) days after
            the Offer is made or received, as the case may be, give written
            notice thereof to ADM (the "Notice"). Notwithstanding any provision
            hereof to the contrary, if the Offer is rejected by Nutraceutix,
            Nutraceutix shall not be required to give the Notice to ADM and ADM

                                       5
<PAGE>
            shall not have an Option (as hereinafter defined) with respect to
            the rejected Offer.

      (b)   Form of Notice. The Notice, in addition to disclosing the existence
            of the Offer, shall state: (i) the name, business and residence
            address of the proposed purchaser or licensee; (ii) the aggregate
            amount of the proposed consideration, including royalties; and (iii)
            all other material terms of the Offer, including a detailed
            description of the subject intellectual property, the products
            derived from the intellectual property and their applications. If
            the Offer is written, a copy of the Offer shall accompany the
            Notice.

      (c)   Grant of Option. Nutraceutix hereby grants ADM a right of last
            refusal and option (the "Option") to either, at ADM's option, (i)
            consummate the transaction proposed by the Offer upon the terms
            contained in the Notice; or (ii) elect to have the Option
            Intellectual Property come under this Agreement and be subject to
            the terms and provisions hereof. ADM shall have the longer of the
            thirty-day period beginning on the day ADM receives the Notice and
            the period, if any, in which the proposed purchaser must consummate
            the transaction proposed by the Offer (the "Option Period") to make
            its election. During the Option Period, Nutraceutix shall not enter
            into any agreement or contract with respect to an Offer with any
            party other than ADM, unless ADM has notified Nutraceutix in writing
            that it does not intend to exercise the Option or the Option has
            been deemed waived.

      (d)   Non-Exercise of Option. If, within the Option Period, ADM does not
            exercise the Option, Nutraceutix shall be free to consummate the
            proposed transaction with the purchaser or licensee identified in
            the Notice on the same terms and conditions set forth in the Notice.
            If any material change is made in the terms of the Offer, the Offer,
            as changed or amended, shall be deemed a new Offer for the purposes
            of this Agreement and shall be presented to ADM as set forth above.

2.4   Manufacture of Licensed Products.
      If so requested by ADM in writing, Nutraceutix shall either manufacture
            for ADM, or arrange to have a subcontractor of Nutraceutix
            manufacture for ADM, Licensed Products in blend, bulk tablet or
            finished good form. ADM shall pay Nutraceutix for such Licensed
            Products an amount equal to Nutraceutix's or its contractor's
            fully-burdened manufacturing cost therefor plus nine percent (9%).
            ADM shall coordinate such manufacturing with Nutraceutix in such a
            way that Nutraceutix's resources are not unduly burdened thereby.

ARTICLE 3. CONSIDERATION

3.1   Reimbursement of Development Costs.

      (a)   In consideration of the rights and licenses granted to ADM by
            Nutraceutix under this Agreement, ADM shall reimburse Nutraceutix
            for the costs Nutraceutix has incurred in developing and formulating
            Novasoy(R) isoflavones utilizing the Inventions, in the amount of
            US$50,000, such amount to be paid upon Nutraceutix presenting
            support and verification for such costs.

                                       6
<PAGE>
      (b)   In further consideration of the rights and licenses granted to ADM
            by Nutraceutix under this Agreement, ADM may at its option reimburse
            Nutraceutix for the costs Nutraceutix has incurred in developing and
            formulating Vitamin C utilizing the Inventions, in the amount of
            US$150,000, such amount, if paid, to be paid on or before nine (9)
            months from the Effective Date or Nutraceutix presenting ADM with
            support and verification for such costs, whichever is later. If ADM
            fails to remit such amount within such period of time, then the
            Exclusive Licensed Field of Use shall be deemed to not include
            Vitamin C.

3.2   Running Royalties.
      In further consideration of the rights and licenses granted to ADM by
      Nutraceutix under this Agreement, ADM shall further pay Nutraceutix a
      running royalty ("Running Royalty") in United States dollars for each
      Contract Quarter equal to ___% of the Net Sales for Licensed Products
      sold by ADM during such Contract Quarter.

3.3   Payment of Royalties.
      All Running Royalties shall be paid by ADM to Nutraceutix within
      forty-five (45) days after the close of the Contract Quarter.

3.4   Books and Records.
      ADM shall keep and retain for not less than three (3) years after each
      Contract Year in question full, complete and accurate books of account and
      records relating to the manufacture, use and sale or other disposition of
      the Licensed Products by or for ADM in such detail as will enable
      Nutraceutix to ascertain what royalties are due under this Agreement. Such
      books and records shall be consistent with ADM's overall financial
      statements and in compliance with generally accepted accounting principles
      and practices in the United States, consistently applied. ADM shall,
      during business hours and upon reasonable notice, permit an independent
      accounting firm (retained by Nutraceutix) that has entered into a secrecy
      agreement reasonably acceptable to the parties access to such books and
      records for the sole purpose of verifying the royalty accrued as herein
      provided. The verification will take place at Nutraceutix's expense,
      unless the verification indicates that additional amounts are owed to
      Nutraceutix in excess of three percent (3%) of the total amounts due
      during the period of time verified and in that event ADM shall bear the
      expense of the verification.

ARTICLE 4. INFRINGEMENT

4.1   Notification.
      In the event that ADM or Nutraceutix has reason to believe that a third
      party is infringing upon the Licensed Patents, such party shall promptly
      notify the other party in writing of such alleged infringement.

4.2   Infringement Actions.
      Upon notification of potential infringement pursuant to Section 4.1, ADM
      shall have the option to enforce the Licensed Patents in the Licensed
      Field of Use itself or request

                                       7
<PAGE>
     Nutraceutix to enforce the Licensed Patents in the Licenced Field of Use.
     In the event ADM elects to enforce the Licenced Patents, the reasonable
     costs of such action shall be borne by ADM. In the event ADM elects to have
     Nutraceutix enforce the Licenced Patents, ADM shall provide Nutraceutix
     with written notice thereof, and to the extent deemed reasonably necessary
     by ADM, Nutraceutix shall commence an infringement action, in which event
     the reasonable costs of such action shall be borne equally by the Parties.
     In either event, the benefits of any damages recovered (after each party
     recovers any share of its costs of such action) shall be divided in a
     manner that provides Nutraceutix with its Running Royalty and ADM with all
     remaining amounts. In any such infringement action, the party commencing
     the action (the "Participating Party") shall keep the other party (the
     "Non-participating Party") advised of the progress of the litigation and
     shall provide the Non-participating Party with drafts of the pleadings,
     discovery, motions, and briefs prior to filing for the Non-participating
     Party's review and comment. In addition, the Participating Party shall
     consult with the Non-participating Party with regard to every material
     decision required to be made during the litigation. The Participating Party
     shall adopt the Non-participating Party's comments and recommendations
     during the litigation except to the extent they may materially impact the
     Participating Party's commercial best interests, as determined by the
     Participating Party. In any such infringement action or claim brought, the
     Non-participating Party shall upon the Participating Party's request,
     cooperate with the Participating Party in all respects, and make available
     to the Participating Party all relevant information and witnesses who are
     employees or within the control of the Non-participating Party. To the
     extent necessary, each Party agrees to be joined as a party in any
     litigation where it is an indispensable party.

ARTICLE 5. LIMITED WARRANTY AND INDEMNIFICATION

5.1  Limited Warranty.
     Nutraceutix represents and warrants that (a) Nutraceutix possesses the full
     legal right, authority and power to enter into this Agreement and to grant
     the licenses to ADM set forth herein; (b) Nutraceutix is not aware of any
     existing or threatened litigation concerning the Licensed Patents or
     Inventions; (c) Nutraceutix's rights in the Licensed Patents are genuine
     and valid; (d) Nutraceutix has not granted any licenses to the Licensed
     Patents in the Licensed Field of Use; (e) the Licensed Patents are all of
     Nutraceutix's patents and patent applications, or Nutraceutix is the
     exclusive licensee or owner of patents and patent applications, relating to
     the Licensed Products and Inventions; (f) Nutraceutix has no actual
     knowledge of any material safety concerns with respect to the Licensed
     Products. NUTRACEUTIX DOES NOT MAKE ANY OTHER REPRESENTATION OR WARRANTY
     WHATSOEVER CONCERNING THE LICENSED PRODUCTS, THE INVENTIONS, OR THE
     LICENSED PATENTS. NUTRACEUTIX HEREBY SPECIFICALLY DISCLAIMS ALL WARRANTIES,
     EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, IMPLIED WARRANTIES OF
     MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

                                       8
<PAGE>
5.2   Indemnification by Nutraceutix.
      Nutraceutix shall defend, indemnify and hold harmless ADM and its
      Affiliates and their respective directors, officers, employees, agents,
      successors and assigns (each an "Indemnitee") from and against any and all
      claims, damages, losses and expenses (including but not limited to
      reasonable attorneys' fees) suffered or incurred by, any such Indemnitee
      arising from, relating to or otherwise in respect of (i) any breach of, or
      inaccuracy in, any representation or warranty of Nutraceutix contained in
      Section 5.1 hereof; or (ii) the negligence or willful misconduct of
      Nutraceutix, its directors, officers, employees and agents.

5.3   Indemnification by ADM.
      ADM shall defend, indemnify and hold harmless Nutraceutix and its
      Affiliates and their respective directors, officers, employees, agents,
      successors and assigns (each an "Indemnitee") from and against any and all
      claims, damages, losses and expenses (including but not limited to
      reasonable attorneys' fees) suffered or incurred by any such Indemnitee
      arising from, relating to or otherwise in respect of the negligence or
      willful misconduct of ADM, its directors, officers, employees and agents;
      or (ii) manufacturing, marketing, sale or use of a Licensed Product,
      except to the extent attributable to the acts, omissions, breach of
      contract, negligence or willful misconduct of Nutraceutix, its directors,
      officers, employees or agents.

5.4   Notification.
      If a claim by a third party is made against an Indemnitee hereunder, and
      if such Indemnitee intends to seek indemnity with respect thereto under
      Article 5 hereof, such Indemnitee shall promptly notify the indemnifying
      Party in writing of such claims setting forth such claims in reasonable
      detail. At its option, the indemnifying Party may undertake, through
      counsel of its own choice, the settlement or defense thereof, and the
      Indemnitee shall cooperate with it in connection therewith.

ARTICLE 6. TERM; TERMINATION; RENEGOTIATION

6.1   Term.
      Unless otherwise terminated earlier as provided herein, the term of this
      Agreement shall commence on the Effective Date of this Agreement and
      extend for the life of the last to expire of the Licensed Patents.

6.2   Termination. Notwithstanding any other provision herein to the contrary,
      this Agreement may be terminated as follows:

      (a)   By either Party upon written notice to the other Party (i) in the
            event that the other Party breaches any of the terms of this
            Agreement and such breach is not remedied within a period of sixty
            (60) days after written notice is given by the non-breaching Party;
            provided, however that if the breach may not be remedied within such
            cure period, this Agreement shall not terminate if the Party has
            diligently commenced efforts to cure the breach as soon as
            reasonably practicable and diligently pursues such efforts and this
            Agreement shall terminate if such breach is not remedied within
            one-hundred twenty (120) days thereafter; or (ii) in

                                       9

<PAGE>
            the event that the other Party being for more than sixty (60) days
            the subject of any voluntary or involuntary proceeding relating to
            bankruptcy, insolvency, liquidation, receivership, composition of
            or assignment for the benefit of creditors.

      (b)   By ADM upon written notice to Nutraceutix on or before six (6)
            months from the Effective Date.

      In the event ADM at any time ceases manufacturing and/or marketing
      Licensed Products, ADM shall furnish Nutraceutix such assistance as
      Nutraceutix may reasonably request to enable Nutraceutix to continue
      supplying Licensed Products to ADM's former customers of Licensed
      Products, and to otherwise support such customers' needs with respect to
      Licensed Products for a period not to exceed six (6) months and at
      Nutraceutix's expense.

6.3   Renegotiation. At any time on or before six (6) months from the Effective
      Date, ADM may, upon written notice to Nutraceutix, request the terms of
      this Agreement be renegotiated, in which case ADM and Nutraceutix shall in
      good faith attempt to renegotiate the terms of this Agreement in a manner
      mutually acceptable to the parties. If within thirty (30) days from ADM's
      notice requesting renegotiation the parties are unable to reach a mutually
      acceptable resolution, then ADM may terminate this Agreement upon written
      notice thereof to Nutraceutix.

ARTICLE 7. REASONABLE EFFORTS AND DILIGENCE

7.1   Reasonable Efforts and Diligence

      ADM shall use commercially reasonable efforts and diligence to proceed
      with the development, manufacture and distribution of the Licensed
      Products in the Licensed Field of Use ("Reasonable Efforts"). Nutraceutix
      acknowledges that ADM may promote products similar in function to the
      Licensed Products, and that while ADM shall use Reasonable Efforts,
      ultimately ADM's customers and the end consumer will decide which products
      are preferred. If ADM fails to use Reasonable Efforts with respect to one
      or more Licensed Products, Nutraceutix shall provide ADM with written
      notice thereof, indicating in detail (i) the reasons Nutraceutix believes
      ADM has not used Reasonable Efforts; and (ii) the steps Nutraceutix
      believes are necessary for ADM to use Reasonable Efforts. Within thirty
      (30) days of receiving Nutraceutix's notice, ADM shall send a written
      reply to Nutraceutix indicating whether ADM agrees or disagrees. If ADM
      agrees with Nutraceutix's assessment, ADM at its option shall elect to
      either (i) take the additional steps Nutraceutix set forth as soon as
      reasonably possible; or (ii) elect to convert the license granted in
      Section 2.1 to a non-exclusive license with respect to the Licensed
      Products in issue, in which case ADM has no obligation to take the
      additional steps set forth by Nutraceutix. If ADM disagrees with
      Nutraceutix's assessment, ADM shall provide Nutraceutix with detailed
      reasons therefor and shall propose a meeting time and place to discuss the
      matter. The parties shall meet to discuss the matter within thirty (30)
      days of Nutraceutix's receipt of ADM's reply at a mutually agreeable time
      and place. If the parties fail to reach an agreement at such meeting, the
      matter shall be treated as a Dispute and handled pursuant to Article 11.
      If the finding from an arbitration is that

                                       10
<PAGE>
      ADM has not used Reasonable Efforts, ADM shall elect within thirty (30)
      days of receiving such arbitration award to either (i) take the additional
      steps Nutraceutix set forth in its original notice as soon as reasonably
      possible; or (ii) elect to convert the license granted in Section 2.1 to a
      non-exclusive license with respect to the Licensed Products in issue, in
      which case ADM has no obligation to take the additional steps set forth by
      Nutraceutix.

ARTICLE 8. PACKAGING, LABELS AND PROMOTIONAL ITEMS
--------------------------------------------------

      All packaging, labels and promotional items used or associated with the
      Licensed Products shall be marked prominently with all marks required by
      the laws and regulations of each country in the Territory in which the
      same will be marketed, sold or used for marketing of patented items and
      which are necessary or appropriate to maintain the patent protection of
      the Licensed Patents or other Intellectual Property rights licensed
      pursuant to this Agreement. ADM shall obtain Nutraceutix's written
      approval of all such packaging, labels and promotional items which include
      any trademark or logo owned by Nutraceutix prior to using the same in
      commerce, which approval shall not be unreasonably withheld or delayed.
      Subject to the foregoing, Company shall be solely responsible for all
      packaging, labels and promotional items for the Licensed Products.

ARTICLE 9. PROTECTION OF PROPRIETARY RIGHTS
-------------------------------------------

      ADM acknowledges that the Licensed Products, the Inventions and the
      Licensed Patents involve valuable Intellectual Property rights of
      Nutraceutix and its licensor. Nutraceutix and its licensor reserve all
      such Intellectual Property. ADM shall not infringe or violate, and shall
      take appropriate precautions for the protection of, such Intellectual
      Property. Without limiting the generality of the foregoing, ADM shall not
      apply for or attempt to obtain any Intellectual Property or other
      proprietary rights in the Licensed Products, the Inventions, the Licensed
      Patents, or any other item licensed pursuant to this Agreement. No title
      to or ownership of the Licensed Products, the Inventions, the Licensed
      Patents, or any other item licensed pursuant to this Agreement is
      transferred pursuant to or by virtue of this Agreement or any use by ADM
      of the Licensed Products, the Inventions, the Licensed Patents, or any
      other item licensed pursuant to this Agreement.

ARTICLE 10. ASSIGNMENT
----------------------

10.1  Permitted Assignment Only.
      --------------------------
      Neither this Agreement nor the licenses granted herein may be assigned by
      either of the Parties without the prior written consent of the other
      Party, except, however, (i) Nutraceutix may assign this Agreement to a
      third party acquiring the entire business or substantially all of the
      assets of Nutraceutix provided Nutraceutix also assigns to that party all
      of its rights to the inventions and Licensed Patents within the Licensed
      Field of Use and Nutraceutix provides ADM with written notice thereof on
      or before the effective date of such assignment; (ii) ADM may assign this
      Agreement and the licenses granted herein to an Affiliate or to a third
      party acquiring the entire business or substantially all of the assets of
      ADM to which this Agreement pertains, provided that at the time of the

                                       11

<PAGE>
assignment, the assignability of this License Agreement will not adversely
affect Nutraceutix's rights under the terms of this agreement including its
royalties, and provided ADM provides Nutraceutix with written notice thereof on
or before the effective date of such assignment. Any purported assignment or
transfer in violation of this provision shall be null and void.

10.2 Successors and Assigns.

     In the event of a permitted assignment, this Agreement shall be binding
     upon, and inure to the benefit of, all the Parties and their respective
     successors and legal assigns.

ARTICLE 11.  DISPUTES; ARBITRATION

Any dispute, questions, or differences relating to this Agreement, (collectively
"Disagreements") shall be settled, if possible, amicably between the Parties.
Any Disagreements, if not settled by the parties within fifteen (15) days from
the date the disagreement arises, shall be considered a dispute ("Dispute"), and
shall be referred to an executive from each of ADM and Nutraceutix who have
authority to settle the Dispute. If any such Dispute which has not been resolved
by such executives within thirty (30) days after the date it was first referred
to them, ADM and Nutraceutix shall proceed to binding arbitration in accordance
with this Article.

(1)  The arbitration shall be held in Chicago, Illinois if either Party demands
     arbitration.

(2)  The arbitration shall be conducted by three (3) arbitrators in accordance
     with the Rules of the American Arbitration Association, except as
     expressly set forth herein. Each Party shall promptly select an
     arbitrator, and those two arbitrators shall select the third arbitrator.

(3)  The arbitration shall be conducted in English, and all written submissions
     shall be in English.

(4)  The Parties agree that the decision of the arbitrators shall be final and
     binding on the Parties and judgment upon the award rendered by the
     arbitrators my be entered in any court having jurisdiction thereof.

(5)  The Parties agree that the prevailing party in any arbitration shall be
     entitled to recover its costs of the arbitration including its reasonable
     attorneys' fees from the losing party and that such recovery will be part
     of the arbitration award.

(6)  The Parties agree that all discovery and all arbitration hearings
     associated with a particular Dispute shall be completed within six (6)
     months from the date the Dispute was first referred to arbitration.

Notwithstanding the foregoing, the provisions of this paragraph shall apply to
any Dispute regarding the amount of money payable by one Party to the other. In
the case of such a Dispute, the Party desiring to invoke arbitration shall,
prior to invoking the arbitration procedure of this Article 11, tender to the
other Party a figure which is

                                       12

<PAGE>
designated as that Party's offer for agreement ("Offer of Agreement"). The
other Party shall, within thirty (30) days thereafter, tender its own Offer of
Agreement. Within fifteen (15) days following such second tender of an Offer of
Agreement each Party shall tender to the other a figure which is designated as
the Party's final offer ("Final Offer"). Each tender of an Offer of Agreement
or Final Offer shall be accompanied by supporting documents. If the Parties
fail to reach agreement within ten (10) days following tender of the Final
Offers, then either Party may invoke the arbitration procedure of this
paragraph; provided that in that event (i) the matter at issue shall be
submitted for determination to a single arbitrator having demonstrated
expertise in establishing the monetary amount at issue, (ii) each Party shall
deliver to the arbitrator a copy of that Party's Final Offer and supporting
documents, and (iii) the arbitrator shall choose one of the Final Offers as the
resolution of the Dispute.

Except for (i) an action to enforce payment of an amount that is not in dispute
by either Party, or (ii) an action to seek injunctive relief to prevent or stay
a breach of this Agreement, or (ii) any action necessary to enforce the award
of the arbitrators, the Parties agree that the provisions of this Article 11
shall be a complete defense to any suit, action or other proceeding instituted
in any court or before any administrative tribunal with respect to any Dispute.

ARTICLE 12. GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the
substantive laws of the state of Illinois, U.S.A., without regard to choice of
law principles.

ARTICLE 13. FORCE MAJEURE

In the event of the intervention of a Force Majeure, which term shall include,
without limitation, strikes, labor disturbances, lockouts, riots, epidemics,
quarantines, wars or conditions of war, actions, inaction or regulations of any
government, fires, acts of terrorists, insurrections, embargoes or trade
restrictions, or any other reasons beyond a Party's control, the Party affected
by the Force Majeure shall use commercially reasonable efforts to comply with
the Agreement. In the case that such commercially reasonable efforts fail or are
futile, such Party shall not be responsible for delays or a failure to perform
under this Agreement caused by a Force Majeure. Provided, however, that any
payment obligations of ADM shall not be affected or excused by such Force
Majeure.

In the event that either Party shall incur a delay in delivery or performance
for a reason permitted by this Article, that Party shall notify the other Party
within fifteen (15) days from the date of the actual occurrence of the cause
for such delay.

ARTICLE 14. NOTICES

All notices, requests and other communication hereunder shall be in writing and
sent by facsimile with confirmation sent by courier requiring acknowledgment of
receipt by the respective Parties as follows:

                                       13

<PAGE>
     To Nutraceutix:     Nutraceutix, Inc.
                         8340 154th Ave. N.E.
                         Redmond, WA 98052
                         Attn: David Howard
                         Telephone: 425-883-9518
                         Facsimile: 425-869-1020

     To ADM:             Archer-Daniels-Midland Company
                         4666 Faries Parkway
                         Decatur, Illinois 62526
                         Attn: President, ADM Natural Health & Nutrition
                         Telephone: 217-451-4019
                         Facsimile: 217-362-8166

     With copy to:       Archer-Daniels-Midland Company
                         4666 Faries Parkway
                         Decatur, Illinois 62526
                         Attn: General Counsel
                         Telephone: 217-424-5200
                         Facsimile: 217-451-6196

     Either Party may change the registered address to which such notice should
     be sent by giving written notice to the other Party.

ARTICLE 15. MISCELLANEOUS

15.1 Integration: Entire Agreement.

     This Agreement contains the entire agreement of the Parties concerning the
     subject matter hereof and supersedes all prior written and oral agreements,
     understandings and negotiations, with regard to the subject matter
     contained herein.

15.2 Amendments.

     This Agreement, including this provision, may not be amended without a
     written instrument signed by duly authorized representatives of both
     Parties.

15.3 Severability.

     In the event that any part of this Agreement is adjudicated to be invalid
     or unenforceable because it contravenes any applicable law or regulation,
     the parties shall perform this Agreement in accordance with their original
     intentions as set forth herein, corresponding as closely as possible to
     the invalid or unenforceable part insofar as it is still valid under such
     law or regulation and reflects the original intention of the Parties.  The
     validity of the remaining permissible portions of this Agreement shall
     remain unaffected thereby.

15.4 Waiver/Cumulative Rights.

     No failure by any party to insist upon the strict performance of any
     covenant, duty, agreement or condition of this Agreement or to exercise
     any right or remedy upon a breach thereof shall constitute a waiver of any
     such breach or any other covenant duty,

                                       14

<PAGE>
      agreement or condition. All rights and remedies which a Party may have
      hereunder or by operation of law are cumulative, and the pursuit of one
      right or remedy shall not be deemed an election to waive or renounce any
      other right or remedy.

15.5  SURVIVAL.
      ---------
      The provisions of Article 5 shall survive expiration or termination of
      this Agreement with respect to any action already commenced prior to the
      expiration or termination of this Agreement. The provisions of Article 11
      shall survive expiration or termination of this Agreement indefinitely.

15.6  NO JOINT VENTURE OR PARTNERSHIP RELATIONSHIP.
      ---------------------------------------------
      Nothing contained in or relating to this Agreement is or shall be deemed
      to constitute a joint venture, partnership or agency relationship between
      any of the Parties hereto and no Party shall have any authority to act for
      or to assume any obligation or responsibility on behalf of the other
      Party.

15.7  ATTORNEYS FEES AND COSTS.
      -------------------------
      The prevailing party in any dispute under this Agreement shall be entitled
      to recover from other party its reasonable attorney's fees and costs.

15.8  AUTHORIZED EXECUTION.
      ---------------------
      The individuals signing below each represent and warrant that (a) they are
      authorized to execute this Agreement for and on behalf of the party for
      whom they are signing, (b) such party shall be bound in all respects
      hereby, and (c) such execution presents no conflict with any other
      agreement of such party.

15.9 COUNTERPARTS.
     -------------
      This Agreement may be executed in two or more counterparts, all of which
      shall constitute one and the same Agreement.

                                       15
<PAGE>
          IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed by their duly authorized representative as of the day and year
above written.

                                 NUTRACEUTIX, INC.

                                      /s/ David G. Howard
                                 By:________________________

                                 Name: President & CEO
                                       ______________________

                                 Title: ____________________

                                 Date:  3-25-2002
                                       _____________________

                                 ARCHER DANIELS MIDLAND COMPANY

                                      /s/ Anthony P. DeLio
                                 By: _________________________________________

                                         Anthony P. DeLio
                                 Name: _______________________________________

                                        President, Natural Health & Nutrition
                                 Title: ______________________________________

                                        3-25-02
                                 Date: ______________________

                                       16

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