EMPLOYMENT AGREEMENT



         This Employment Agreement ("Agreement") dated as of February 28, 2003

and effective as of January 1, 2003 (the "Effective Date"), is made and entered

into between Helix BioMedix, Inc., a Delaware corporation ("the Company") and

Kerry Palmer ("the Executive").



         WHEREAS, the Company wishes to enter into an agreement with the

Executive governing the terms and conditions of his employment, and the

Executive is willing to be employed on the terms and conditions set forth in

this Agreement;



         NOW THEREFORE, in consideration of the promises and the mutual

covenants hereinafter set forth, and other good and valuable consideration, the

receipt and sufficiency of which is hereby acknowledged, the parties hereby

agree as follows:



         1.       EMPLOYMENT. The Company shall employ the Executive, and the

Executive shall serve in the full-time employ of the Company, on the terms and

subject to the conditions set forth in this Agreement. The Executive shall serve

in the position of Chief Financial Officer with duties and responsibilities

customary for that position plus any additional duties and responsibilities

which may be assigned to the Executive from time to time by the Board of

Directors or the Chief Executive Officer of the Company. Executive's duties will

include, but are not limited to, preparing regulatory reports, handling

accounting functions and preparing financial projections. The Executive shall

devote his best efforts and all of his business time and attention to the

business of the Company. Executive shall not engage in any other business

activity (except the management of personal investments and charitable and civic

activities that in the aggregate do not interfere with the performance of

Executive's duties) without first obtaining the written consent of the Board or

Directors, and such consent shall not unreasonably be withheld. Executive

further agrees to abide by all by-laws, policies, practices, procedures, or

rules of the Company. The Executive shall perform his duties and

responsibilities under the direction and supervision of, and shall report

directly to, the Chief Executive Officer of the Company or such other officer as

the Chief Executive Officer determines.



         2.       TERM. The term of this Agreement shall be continuous from and

after the Effective Date for a period of two (2) years, unless extended in

writing by both the Company and the Executive or earlier terminated in

accordance with Section 4 ("the Term").



         3.       COMPENSATION. During the Term of this Agreement, the Executive

shall be compensated by the Company as follows:



                  (a)      Annual Base Salary. The Company shall pay Executive

an annual base salary for the Executive's actual period of employment at a rate

of Eighty Thousand Dollars ($80,000) per year commencing from and after the

Effective Date. Executive's annual base salary shall increase to a rate of

Ninety Thousand Dollars ($90,000) per year commencing on June 1, 2003. The

Executive's base salary shall be paid in accordance with the Company's normal

payroll policies for senior management as are from time to time in effect. The

Company agrees to reconsider compensation upon receipt of licensing revenues.



{PAGE}



Employment Agreement

Kerry Palmer/Helix BioMedix, Inc.

Page 2



                  (b)      Vacation and Fringe Benefits. During the Executive's

actual period of employment, the Executive shall be eligible for three (3)

weeks' paid vacation per year. In addition, the Executive shall be entitled to

participate in any and all group medical, dental, vision, retirement, or

disability benefit plans which are from time to time maintained by the Company

for its senior executive employees, in accordance with the terms and conditions

of such plans or programs as they may be amended from time to time. Nothing

herein contained shall be construed as requiring the Company to establish or

continue any particular benefit plan in discharge of its obligations under this

Agreement.



                  (c)      Stock Options. The Company and the Executive shall

enter into a Stock Option Agreement granting Executive options to purchase

common stock subject to the terms and conditions of the Company's Amended Stock

Option Plan. The Stock Option Agreement shall be dated February 28, 2003. The

Stock Option Agreement shall grant Executive 90,000 options to purchase common

stock at $1.00 per share. Fifteen thousand (15,000) options shall vest upon

signing this Employment Agreement. The remaining 75,000 options shall vest

pursuant to the Company's Amended Stock Option Plan.

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