EMPLOYMENT AGREEMENT



     This Employment  Agreement (this  "Agreement"),  dated as of May ___, 2001,

and  effective as of June 15 2001 (the  "Effective  Date"),  is made and entered

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

"Company"), and Tim Falla (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 Chief Scientific 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 June 15, 2001 and will

continue in effect until June 14, 2003, unless otherwise terminated as set forth

herein.



3.   COMPENSATION



     (a) Base  Salary.  Company  shall pay  Executive a base salary at an annual

rate  of One  Hundred  Seventy  Five  Thousand  Dollars  ($175,000)  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 One Hundred  Thousand  (100,000) shares of

     company common stock at an exercise price of $1.50 per share. These options

     will vest in four  equal  installments  of Twenty  Five  Thousand  (25,000)

     shares on December 15, 2001, June 15, 2002, December 15, 2002, and June 15,

     2003. Any unexercised options issued pursuant to this Section 3(b)(1) shall

     expire on June 15, 2011.



          (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.



     (c) 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.



     (d) 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.  For  purposes  of this  section,

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