EMPLOYMENT AGREEMENT



         This Employment Agreement (this "Agreement"), dated as of September 24,

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

entered into by and between Helix BioMedix, Inc., a Delaware corporation, (the

"Company"), and R. Stephen Beatty (the "Executive").



         The Company and Executive hereby agree as follows:



1.       EMPLOYMENT



The Company will employ Executive and Executive will accept employment by the

Company as President and Chief Executive Officer. During Executive's employment,

Executive shall serve the Company faithfully and to the best of his ability,

devoting substantially all his working time, attention and energies to the

business of the Company, unless otherwise approved in writing by the Board of

Directors of the Company (the "Board"). Subject to the direction of the Board,

Executive will have such reasonable duties, responsibilities, powers and

authority as are prescribed by the Board or the bylaws 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, and such consent shall not

unreasonably be withheld.



2.       TERM OF AGREEMENT



The term of this Agreement ("Term") shall commence on July 1, 2003 and will

continue in effect until June 30, 2006, unless otherwise terminated as set forth

herein.



3.       COMPENSATION



         (a)      BASE SALARY. Company shall pay Executive a base salary at an

annual rate of Two Hundred Eighty Five Thousand Dollars ($285,000) payable in

accordance with Company's regular pay schedule for senior management. The Board

shall review Executive's salary and performance annually, and Executive shall be

eligible for an increase in his base salary based on such review.



         (b)      STOCK OPTIONS. The Company shall issue options to Executive to

acquire shares of the Company's common stock ("Shares"), under the following

terms and conditions:



                  (1)      Pursuant to the Company's 2000 Stock Option Plan,

Executive shall be granted an option to purchase Three Hundred Twenty Four

Thousand (324,000) shares of company common stock at an exercise price of $1.00

per share which is $0.07 above the per share reported closing price on the

Effective Date. These options will vest in six equal installments of Fifty Four

Thousand (54,000) shares on January 1, 2004, July 1, 2004, January 1, 2005, July

1, 2005, January 1, 2006 and July 1, 2006. Any unexercised options issued

pursuant to this Section 3(b)(2) shall expire on June 30, 2013.



                  (2)      Executive may, at his or the Company's option, pay

for all or any portion of the aggregate exercise price by delivering a

combination of any or all of the following:



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                           (i)      By delivering shares of the Company's common

         stock previously held by Executive which have a fair market value at

         the date of exercise equal to the aggregate exercise price to be paid

         by Executive upon such exercise;



                           (ii)     By delivering a properly executed exercise

         notice together with irrevocable instructions to a broker to promptly

         deliver to the Company the amount of sale or loan proceeds to pay the

         exercise price; or



                           (iii)    By delivering a full recourse promissory

         note for all or part of the aggregate exercise price, payable on such

         terms and bearing such interest rate as determined by the Board (but in

         no event less than the minimum interest rate specified under the

         Internal Revenue Code at which no additional interest would be imputed

         and in no event more than the maximum interest rate allowed under

         applicable usury laws), which promissory note may be either secured or

         unsecured in such manner as the Board shall approve (including, without

         limitation, by a security interest in shares of the Company's stock).



                  (4)      The Board will qualify the options for an exemption

from registration under the applicable federal and any applicable state

securities laws.



         (d)      INCENTIVE COMPENSATION. Executive shall be entitled to

participate in a manner consistent with all other senior management

participation in any incentive compensation plan which may be adopted by the

Company.



         (e)      BENEFITS.



                  (1)      Executive shall be entitled to receive three weeks

paid vacation and all benefits (such as medical, dental, sick leave, disability,

and retirement benefits) as are generally available from time to time to

employed senior executives of Company.



                  (2)      Company will maintain a policy of insurance for

directors' and officers' liability with such coverage as may be determined by

the Board. Executive will be included within that policy of insurance with the

premiums paid by Company.



                  (3)      Company shall grant to Executive an annual personal

travel allowance of up to Ten Thousand Dollars ($10,000), for travel related to

Executive's duties under this Agreement.



                  (4)      Company shall allow Executive periodic use of a

corporate apartment in Seattle, Washington, until such time as the Executive has

established a residence in the Seattle metropolitan area.



                  (5)      Company shall reimburse Executive for all reasonable

expenses incurred in connection with Executive's relocation to Seattle,

Washington.



                  (6)      Company shall allow Executive periodic use of a

Company vehicle for matters relating to his duties under this Agreement.

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