Document:

EXHIBIT 10.1
                                  ------------

       Advisory Agreements for John J. Majnarich and Michael C. Maloney,
               Seymour Froman, Luiz Bermudez, and Tyler Kokjohn.

<PAGE>

                               ADVISORY AGREEMENT

Phage  Therapeutics,  Inc.  ("PhageTx" or the  "Company")  desires to engage the
advisory  services  ("Services")  of  John  J.  Majnarich,  PhD,  as an  advisor
("Advisor")  in the general field of  Preclinical  Testing.  Advisor  desires to
provide such Services to PhageTx.  By execution of this Advisory  Agreement (the
"Agreement"), and Advisor agrees to provide such Services in accordance with the
following terms and conditions:

1.  Services - At times  mutually  agreeable  to  Advisor  and  PhageTx,  and as
requested by PhageTX, Advisor will undertake the designated Services for one (1)
year,  commencing on the effective date of this Agreement (See Section 4 below).
It is expected  that Advisor  will  provide at least six (6) days of  cumulative
Services  during  the one (1)  year  period  of this  Agreement,  consisting  of
periodic  teleconferences,   electronic  mail,  written  communications,  direct
meetings, and the like, upon the prior agreement of Advisor and PhageTx.

2.  Compensation - In recognition  of Advisor's  contributions  to the Company's
product  development  efforts,  PhageTx  wishes  Advisor to  participate  int eh
Company's  future success by granting to Advisor an option to purchase shares of
stock in the Company in accord with the legal terms and  conditions of the Phage
Therapeutics, Inc. Stock Option Plan. The grant of options will be determined by
the Board of Directors,  which  functions as  Administrator  of the Stock Option
Plan, and will be executed through a separate Stock Option Agreement.

3. Independent Contractor - It is agreed that Advisor will have complete freedom
of action as to the details,  methods, and means of performing the Services.  It
is further  understood  that Advisor is retained and has contracted with PhageTx
only for the  purposes and to the extent set forth in this  Agreement,  and that
Advisor's  relation to PhageTx during the period of this Agreement shall be that
of an independent contractor,  and that Advisor shall be free to dispose of such
portion of his entire time, energy and skill as he is not obligated to devote to
PhageTx in such manner as he sees fit and to such person, firms, or corporations
as he deems  necessary,  so long as same does not create a conflict  of interest
between PhageTx and such other persons, firms or corporations. Advisor shall not
be considered  under the provisions of this Agreement or otherwise as having the
status of an employee of PhageTx,  nor shall  Advisor be entitled  hereafter  to
participate in any plans,  arrangements or  distributions by PhageTx relating to
any  pension,  deferred  compensation,   bonus,  stock  bonus,  hospitalization,
insurance  or  other  benefits  extended  to its  employees,  since  Advisor  is
performing the Services as an independent contractor.

4. Effective  Date,  Term,  Termination  and Extension - This Agreement  becomes
effective on January 1, 2001,  and will  continue in effect  until  December 31,
2001 (the first  twelve-month-period).  It is  provided,  however,  that  either
Advisor or PhageTx may terminate  this  Agreement at any time during its term by
giving at least one (1) month written notice to the other. At the sole option of
PhageTx,  this Agreement may be extended for one (1) or more consecutive  twelve
(12)-month  period(s),  under similar terms as are provided herein, by PhageTx's
providing to Advisor  written notice of its desire to continue the Agreement for
an  additional  term by at least two (2)  months  prior to the end of the twelve
(12)-month period in question.  However, certain of the terms may be modified by
mutual agreement of the parties.

5.  Inventions  - During  Advisor's  Service to PhageTx,  PhageTx  may  disclose
certain  confidential  information to Advisor and may ask Advisor to participate
in activities that may result in inventions  related to PhageTx's  technology or
business.  To the  extent  that  Advisor  is not  precluded  from  doing so by a
pre-existing employment contract or another agreement, where, as a direct result
of such  Services  to PhageTx,  Advisor  receives or is made aware of techn ical
information by a PhageTx employee, consultant, advisor or contractor that causes
Advisor to  conceive,  make or develop  any  inventions  relating  to  PhageTx's
bacteriophage  technology or products,  Advisor's  signature hereon notices that
Advisor agrees to: a) give notice of any such invention to PhageTx; b) assign to
PhagTx  all of  Advisor's  rights  therein,  in-so-far  as those  rights are not
subject to conditions of Advisor's current employment or another agreement; and,
c) execute any  documents  and otherwise  reasonably  cooperate  with PhageTx in
securing patents on such inventions.

6. Security - Advisor  shall,  during and  subsequent  to providing  Services to
PhageTx,  keep confidential and shall not use any technical or other proprietary
information  provided  by  PhageTx,  including  knowledge  of PhageTx  projects,
general  activities and proprietary  information not publicly disclosed relating
to PhageTx's  technology,  products and business  which Advisor may acquire as a
result of the Services or otherwise.  Advisor shall hold all such information in
strict  confidence and shall not use or disclose such information in any manner,
or cause same to be published  without  PhageTx's  prior written  consent.  This
obligation of confidence has been agreed to and is provided for between  Advisor
and PhageTx in a separate  Confidential  Disclosure  Agreement  executed by both
parties on 9 Feb. 2001.

<PAGE>

PhageTx  shall be free to utilize the results of the  Services  described  under
this Agreement without any further payment or obligation to Advisor. Thus, it is
also  essential  that  Advisor  shall  undertake  not to disclose to PhageTx any
information  which is secret or  confidential  or  belonging  to Advisor or to a
third party,  or with respect to which Advisor is under an obligation to a third
party to maintain  confidentiality.  Similarly, if during this Agreement Advisor
discloses any  inventions to PhageTx which were  conceived  prior to the term or
are outside the scope of the Services under this  Agreement,  PhageTx shall have
no liability to Advisor because of its use of such ideas, except that this shall
not be  construed as a license  under any valid  patent now or hereafter  issued
thereon.

7.  Publicity - Advisor shall not originate any  publicity,  news  releases,  or
other  public  announcement,  written or oral,  whether  to the public  press or
otherwise,   relating  to  this  Agreement,  to  any  amendment  hereto,  or  to
performance hereunder without PhageTx's prior written consent.

8.  Conflict  of Interest - Advisor  represents  that he is  presently  under no
obligation  to  any  third  party   (including  a  prior  employer,   government
organization,  and others  with whom he may now  consult  or may have  consulted
previously)  which would  prevent his  carrying  out his duties and  obligations
under this  Agreement or which is  inconsistent  with the  provisions  contained
herein. To avoid any potential  conflict of interest,  Advisor agrees to provide
written notice to PhageTx  within one (1) week of entering into any  consulting,
advisory or  research  agreement  with a  corporate  third party in the field of
bacteriophage  technology  or products  during the period  Advisor is  providing
Services to PhageTx.  The term  "Corporate" is intended to mean any organization
operating  in the  United  States of  America  or in a foreign  country  with an
expressed  intent  to make  profits  and  includes  organizations  like  limited
partnerships, joint ventures, corporations, and the like.

9. Freedom of Action - It is agreed that  Advisor's  rendering of services under
this  Agreement  shall  in no  way  conflict  or  interfere  with  his  existing
professional responsibilities. In that Advisor is an independent contractor, and
not an employee of PhageTx,  PhageTx shall not be responsible for Advisor's acts
while  Advisor is  performing  the  Services  hereunder,  whether  on  PhageTx's
premises  or  elsewhere,  and  Advisor  shall not have  authority  to speak for,
represent,  or obligate  PhageTx in any way without the explicit  prior  written
authority from PhageTx.

If any part of this Agreement shall be held as  unenforceable,  the remainder of
the  Agreement  shall  nevertheless  remain  in full  force and  effect  and the
unenforceable  provision  shall be construed by the court in such a manner as to
be held enforceable while giving maximum effect to the intended meaning.

Please indicate  Advisor's  acceptance  of the  foregoing  by  returning a fully
executed copy of this Agreement to PhageTx.

Phage Therapeutics, Inc.:                            Advisor:

19017 - 120th Avenue Ne, Suite 102                   John J. Majnarich, PhD

Bothell, WA 98011                                    4785 - 308th Avenue SE

                                                     Preston, WA 98050

By: /s/ Richard C. Honour /s/                    By: /s/ John J. Majnarich /s/
    -------------------------                        -------------------------
Richard C. Honour, PhD                           John J. Majnarich, PhD

President & CEO                                  Advisor

Date: 02.09.01                                    Date:  2/08/01
      --------                                          ---------

<PAGE>

                               ADVISORY AGREEMENT

Phage  Therapeutics,  Inc.  ("PhageTx" or the  "Company")  desires to engage the
advisory  services  ("Services")  of  Michael  C.  Maloney,  RAC,  as an advisor
("Advisor")  in the general  field of  Regulatory  Affairs.  Advisor  desires to
provide such Services to PhageTx.  By execution of this Advisory  Agreement (the
"Agreement"), and Advisor agrees to provide such Services in accordance with the
following terms and conditions:

1.  Services - At times  mutually  agreeable  to  Advisor  and  PhageTx,  and as
requested by PhageTX, Advisor will undertake the designated Services for one (1)
year,  commencing on the effective date of this Agreement (See Section 4 below).
It is expected that Advisor will provide at least twelve (12) days of cumulative
Services  during  the one (1)  year  period  of this  Agreement,  consisting  of
periodic  teleconferences,   electronic  mail,  written  communications,  direct
meetings, and the like, upon the prior agreement of Advisor and PhageTx.

2.  Compensation - In recognition  of Advisor's  contributions  to the Company's
product  development  efforts,  PhageTx  wishes  Advisor to  participate  int eh
Company's  future success by granting to Advisor an option to purchase shares of
stock in the Company in accord with the legal terms and  conditions of the Phage
Therapeutics, Inc. Stock Option Plan. The grant of options will be determined by
the Board of Directors,  which  functions as  Administrator  of the Stock Option
Plan, and will be executed through a separate Stock Option Agreement.

3. Independent Contractor - It is agreed that Advisor will have complete freedom
of action as to the details,  methods, and means of performing the Services.  It
is further  understood  that Advisor is retained and has contracted with PhageTx
only for the  purposes and to the extent set forth in this  Agreement,  and that
Advisor's  relation to PhageTx during the period of this Agreement shall be that
of an independent contractor,  and that Advisor shall be free to dispose of such
portion of his entire time, energy and skill as he is not obligated to devote to
PhageTx in such manner as he sees fit and to such person, firms, or corporations
as he deems  necessary,  so long as same does not create a conflict  of interest
between PhageTx and such other persons, firms or corporations. Advisor shall not
be considered  under the provisions of this Agreement or otherwise as having the
status of an employee of PhageTx,  nor shall  Advisor be entitled  hereafter  to
participate in any plans,  arrangements or  distributions by PhageTx relating to
any  pension,  deferred  compensation,   bonus,  stock  bonus,  hospitalization,
insurance  or  other  benefits  extended  to its  employees,  since  Advisor  is
performing the Services as an independent contractor.

4. Effective  Date,  Term,  Termination  and Extension - This Agreement  becomes
effective on January 1, 2001,  and will  continue in effect  until  December 31,
2001 (the first  twelve-month-period).  It is  provided,  however,  that  either
Advisor or PhageTx may terminate  this  Agreement at any time during its term by
giving at least one (1) month written notice to the other. At the sole option of
PhageTx,  this Agreement may be extended for one (1) or more consecutive  twelve
(12)-month  period(s),  under similar terms as are provided herein, by PhageTx's
providing to Advisor  written notice of its desire to continue the Agreement for
an  additional  term by at least two (2)  months  prior to the end of the twelve
(12)-month period in question.  However, certain of the terms may be modified by
mutual agreement of the parties.

5.  Inventions  - During  Advisor's  Service to PhageTx,  PhageTx  may  disclose
certain  confidential  information to Advisor and may ask Advisor to participate
in activities that may result in inventions  related to PhageTx's  technology or
business.  To the  extent  that  Advisor  is not  precluded  from  doing so by a
pre-existing employment contract or another agreement, where, as a direct result
of such  Services  to PhageTx,  Advisor  receives or is made aware of techn ical
information by a PhageTx employee, consultant, advisor or contractor that causes
Advisor to  conceive,  make or develop  any  inventions  relating  to  PhageTx's
bacteriophage  technology or products,  Advisor's  signature hereon notices that
Advisor agrees to: a) give notice of any such invention to PhageTx; b) assign to
PhagTx  all of  Advisor's  rights  therein,  in-so-far  as those  rights are not
subject to conditions of Advisor's current employment or another agreement; and,
c) execute any  documents  and otherwise  reasonably  cooperate  with PhageTx in
securing patents on such inventions.

6. Security - Advisor  shall,  during and  subsequent  to providing  Services to
PhageTx,  keep confidential and shall not use any technical or other proprietary
information  provided  by  PhageTx,  including  knowledge  of PhageTx  projects,
general  activities and proprietary  information not publicly disclosed relating
to PhageTx's  technology,  products and business  which Advisor may acquire as a
result of the Services or otherwise.  Advisor shall hold all such information in
strict  confidence and shall not use or disclose such information in any manner,
or cause same to be published  without  PhageTx's  prior written  consent.  This
obligation of confidence has been agreed to and is provided for between  Advisor
and PhageTx in a separate  Confidential  Disclosure  Agreement  executed by both
parties on October 16, 2000
           -----------------

<PAGE>

PhageTx  shall be free to utilize the results of the  Services  described  under
this Agreement without any further payment or obligation to Advisor. Thus, it is
also  essential  that  Advisor  shall  undertake  not to disclose to PhageTx any
information  which is secret or  confidential  or  belonging  to Advisor or to a
third party,  or with respect to which Advisor is under an obligation to a third
party to maintain  confidentiality.  Similarly, if during this Agreement Advisor
discloses any  inventions to PhageTx which were  conceived  prior to the term or
are outside the scope of the Services under this  Agreement,  PhageTx shall have
no liability to Advisor because of its use of such ideas, except that this shall
not be  construed as a license  under any valid  patent now or hereafter  issued
thereon.

7.  Publicity - Advisor shall not originate any  publicity,  news  releases,  or
other  public  announcement,  written or oral,  whether  to the public  press or
otherwise,   relating  to  this  Agreement,  to  any  amendment  hereto,  or  to
performance hereunder without PhageTx's prior written consent.

8.  Conflict  of Interest - Advisor  represents  that he is  presently  under no
obligation  to  any  third  party   (including  a  prior  employer,   government
organization,  and others  with whom he may now  consult  or may have  consulted
previously)  which would  prevent his  carrying  out his duties and  obligations
under this  Agreement or which is  inconsistent  with the  provisions  contained
herein. To avoid any potential  conflict of interest,  Advisor agrees to provide
written notice to PhageTx  within one (1) week of entering into any  consulting,
advisory or  research  agreement  with a  corporate  third party in the field of
bacteriophage  technology  or products  during the period  Advisor is  providing
Services to PhageTx.  The term  "Corporate" is intended to mean any organization
operating  in the  United  States of  America  or in a foreign  country  with an
expressed  intent  to make  profits  and  includes  organizations  like  limited
partnerships, joint ventures, corporations, and the like.

9. Freedom of Action - It is agreed that  Advisor's  rendering of services under
this  Agreement  shall  in no  way  conflict  or  interfere  with  his  existing
professional responsibilities. In that Advisor is an independent contractor, and
not an employee of PhageTx,  PhageTx shall not be responsible for Advisor's acts
while  Advisor is  performing  the  Services  hereunder,  whether  on  PhageTx's
premises  or  elsewhere,  and  Advisor  shall not have  authority  to speak for,
represent,  or obligate  PhageTx in any way without the explicit  prior  written
authority from PhageTx.

If any part of this Agreement shall be held as  unenforceable,  the remainder of
the  Agreement  shall  nevertheless  remain  in full  force and  effect  and the
unenforceable  provision  shall be construed by the court in such a manner as to
be held enforceable while giving maximum effect to the intended meaning.

Pleas  indicate  Advisor's  acceptance  of the  foregoing  by  returning a fully
executed copy of this Agreement to PhageTx.

Phage Therapeutics, Inc.:                            Advisor:

19017 - 120th Avenue Ne, Suite 102                   Michael C. Maloney

Bothell, WA 98011                                    16050 NE 165th St.

                                                     Woodinville, WA 98072

By: /s/ Richard C. Honour /s/                      By: /s/ Michael Maloney /s/
    -------------------------                          -----------------------
Richard C. Honour, PhD                             Michael Maloney

President & CEO                                    Advisor

Date: 02.09.01                                     Date:  2/09/01
      --------                                           ---------

<PAGE>

<PAGE>

                               ADVISORY AGREEMENT

Phage  Therapeutics  International  Inc., and its wholly owned  subsidiary Phage
Therapeutics,  Inc.,  ("PhageTx" or the "Company") desire to engage the advisory
services  ("Service") of Seymour Froman, PhD, as an advisory  ("Advisor") in the
general  fields  of  microbiology,   mycobacteriology,   bacteriophage  biology,
mycobacteriophage,  and bacteriophage  therapeutics.  Advisor desires to provide
such  Service  to  PhageTx.   By  execution  of  this  Advisory  Agreement  (the
"Agreement"),  Advisor  agrees to provide  such Service in  accordance  with the
following terms and conditions:

1. Service - At time mutually agreeable to Advisor and PhageTx, and as requested
by PhageTx,  Advisor will  undertake  the  designated  Service for one (1) year,
commencing on the effective date of this Agreement (See Section 4 below).  It is
expected that Advisor will provide at least  seventy-two (72) days of cumulative
Service during the one (1) year period of this Agreement, consisting of periodic
teleconferences,  electronic mail, written communications,  direct meetings, and
the like, upon the prior agreement of Advisor and PhageTx.

2.  Compensation  - As  compensation  for  Advisor's  Service,  PhageTx will pay
Advisor  three  thousand  dollars  ($3,000)  per month for each month of Service
provided  during the one (1) year period of this  Agreement  as an advisory  fee
("Fee").  In addition,  should Advisor incur other expenses,  such as for office
supplies,  clerical work, shipping,  materials or project-related travel, and in
the event such expenses are previously determined to be agreeable to Advisor and
acceptable  to  PhageTx,  Advisor  shall be  reimbursed  for all such  expenses.
PhageTx shall make payment to Advisor in accordance  with this paragraph  within
thirty (30) days of recepts of an invoice with  attached  receipts  from Advisor
itemizing such  expenses.  Invoices  should be directed to: Phage  Therapeutics,
Inc., 19017 - 120th Avenue NE, Suite 102, Bothell,  WA. 98011.  Attn: Kenneth E.
Lehman, Controller.

In recognition and  consideration  of Advisor's  potential  contributions to the
Company's technology and product development efforts,  PhageTx wishes Advisor to
participate in the Company's  future success by granting to Advisor an option to
purchase  shares  of stock in the  Company  in accord  with the legal  terms and
conditions of the PhagTx Stock Option Plan.  The actual grant of options will be
determined  by  the  PhageTx  Board  of  Direcotrs,   which   functions  as  the
Administrator of the Stock Option Plan.

3. Independent Contractor - It is agreed that Advisor will have complete freedom
of action as to the details,  methods, and means of performing th Service. It is
further  understood  that Advisor is retained by and has contracted with PhageTx
only for the  purposes and to the extent set forth in this  Agreement,  and that
Advisor's  relation to PhageTx during the period of this Agreement shall be that
of  an  independent  contractor.  Advisor  shall  not  e  considered  under  the
provisions of this Agreement or otherwise as having the status of an employee of
PhageTx.

4. Effective  Date,  Term,  Termination  and Extension - This Agreement  becomes
effective on January 1, 2001,  and will  continue in effect  until  December 31,
2001 (the first  twelve-month-period).  It is  provided,  however,  that  either
Advisor or Phage Tx may terminate  this Agreement at any time during its term by
giving at least one (1) month written notice to the other. At the sole option of
PhageTx,  this Agreement may be extended for one (1) or more consecutive  twelve
period(s),  under similar terms as are provided  herein,  except that certain of
the terms may be modified  by mutual  agreement  of the  parties,  by  PhageTx's
providing to Advisor  written notice of its desire to continue the Agreement for
an  additional  term by at least two (2)  months  prior to the end of the twelve
(12)-month period in question.

5.  Inventions  - During  Advisor's  Service to PhageTx,  PhageTx  may  disclose
certain  confidential  information to Advisor and may ask Advisor to participate
in activities that may result in inventions  related to PhageTx's  technology or
business.  To the  extent  that  Advisor  is not  precluded  from  doing so by a
pre-existing employment contract or another agreement, where, as a direct result
of such  Services to  PhageTx,  Advisor  receives or is made aware of  technical
information by a PhageTx employee, consultant, advisor or contractor that causes
Advisor to  conceive,  make or develop  any  inventions  relating  to  PhageTx's
bacteriophage  technology or products,  Advisor's  signature hereon notices that
Advisor agrees to: a) give notice of any such invention to PhageTx; b) assign to
PhagTx  all of  Advisor's  rights  therein,  in-so-far  as those  rights are not
subject to conditions of Advisor's current employment or another agreement; and,
c) execute any  documents  and otherwise  reasonably  cooperate  with PhageTx in
securing patents on such inventions.

6. Security - Advisor  shall,  during and  subsequent  to providing  Services to
PhageTx,  keep confidential and shall not use any technical or other proprietary
information  provided  by  PhageTx,  including  knowledge  of PhageTx  projects,
general  activities and proprietary  information not publicly disclosed relating
to PhageTx's  technology,  products and business  which Advisor may acquire as a
result of the Services or otherwise.  Advisor shall hold all such information in
strict  confidence and shall not use or disclose such information in any manner,
or cause same to be published  without  PhageTx's  prior written  consent.  This
obligation of confidence has been agreed to and is provided for between  Advisor
and PhageTx in a separate  Confidential  Disclosure  Agreement  executed by both
parties on November 25, 1998.

Title to all property  involved  shall remain  exclusively  with  PhageTx.  Upon
termination  of the  Service  or this  Agreement,  or upon  request at any time,
Advisor  shall  account  for and  return to PhageTx  all  papers  and  materials
containing any such confidential

<PAGE>

information.

PhageTx  shall be free to utilize the results of the  Services  described  under
this Agreement without any further payment or obligation to Advisor. Thus, it is
also  essential  that  Advisor  shall  undertake  not to disclose to PhageTx any
information  which is secret or  confidential  or  belonging  to Advisor or to a
third party,  or with respect to which Advisor is under an obligation to a third
party to maintain  confidentiality.  Similarly, if during this Agreement Advisor
discloses any  inventions to PhageTx which were  conceived  prior to the term or
are outside the scope of the Services under this  Agreement,  PhageTx shall have
no liability to Advisor because of its use of such ideas, except that this shall
not be  construed as a license  under any valid  patent now or hereafter  issued
thereon.

7.  Publicity - Advisor shall not originate any  publicity,  news  releases,  or
other  public  announcement,  written or oral,  whether  to the public  press or
otherwise,   relating  to  this  Agreement,  to  any  amendment  hereto,  or  to
performance hereunder without PhageTx's prior written consent.

8.  Conflict  of Interest - Advisor  represents  that he is  presently  under no
obligation  to  any  third  party   (including  a  prior  employer,   government
organization,  and others  with whom he may now  consult  or may have  consulted
previously)  which would  prevent his  carrying  out his duties and  obligations
under this  Agreement or which is  inconsistent  with the  provisions  contained
herein. To avoid any potential  conflict of interest,  Advisor agrees to provide
written notice to PhageTx  within one (1) week of entering into any  consulting,
advisory or  research  agreement  with a  corporate  third party in the field of
bacteriophage  technology  or products  during the period  Advisor is  providing
Services to PhageTx.  The term  "Corporate" is intended to mean any organization
operating  in the  United  States of  America  or in a foreign  country  with an
expressed  intent  to make  profits  and  includes  organizations  like  limited
partnerships, joint ventures, corporations, and the like.

9. Freedom of Action - It is agreed that  Advisor's  rendering of services under
this  Agreement  shall  in no  way  conflict  or  interfere  with  his  existing
professional responsibilities. In that Advisor is an independent contractor, and
not an employee of PhageTx,  PhageTx shall not be responsible for Advisor's acts
while  Advisor is  performing  the  Services  hereunder,  whether  on  PhageTx's
premises  or  elsewhere,  and  Advisor  shall not have  authority  to speak for,
represent,  or obligate  PhageTx in any way without the explicit  prior  written
authority from PhageTx.

If any part of this Agreement shall be held as  unenforceable,  the remainder of
the  Agreement  shall  nevertheless  remain  in full  force and  effect  and the
unenforceable  provision  shall be construed by the court in such a manner as to
be held enforceable while giving maximum effect to the intended meaning.

Please  indicate  Advisor's  acceptance  of the  foregoing  by returning a fully
executed copy of this Agreement to PhageTx.

Phage Therapeutics, Inc.:                    Advisor:
19017 - 120th Avenue Ne, Suite 102           Seymour Froman, PhD
Bothell, WA 98011                            20415 Wintergreen Drive
                                             Sun City West, AZ 85375

By: /s/ Richard C. Honour /s/                By: /s/ Seymour Froman PhD /s/
    --------------------------------             --------------------------
Richard C. Honour, PhD                       Seymour Froman, PhD
President & CEO                                       Advisor

Date: 01.05.01                               Date:  2/04/01
      --------                                    ---------

<PAGE>

                               ADVISORY AGREEMENT

Phage  Therapeutics  International  Inc., and its wholly owned  subsidiary Phage
Therapeutics,  Inc.,  ("PhageTx" or the "Company") desire to engage the advisory
services  ("Service")  of Luiz E.  Bermudez,  MD, having  offices and laboratory
operations  located at Kuzell  Institute for Arthritis and Infectious  Diseases,
California Pacific Medical Center Research Institute, 2200 Webster Street, Suite
305, San Francisco,  CA 94115-1821  ("Kuzell") as an advisor  ("Advisor") in the
general  fields of  bacterial  infectious  diseases,  bacteriophage  biology and
bacteriophage therapeutics.  Advisor desires to provide such Service to PhageTx.
By execution of this Advisory  Agreement  (the  "Agreement"),  Advisor agrees to
provide such Service in accordance with the following terms and conditions:

1. Service - At time mutually agreeable to Advisor and PhageTx, and as requested
by PhageTx,  Advisor will  undertake  the  designated  Service for one (1) year,
commencing on the effective date of this Agreement (See Section 4 below).  It is
expected that Advisor will provide at least  seventy-two (72) days of cumulative
Service during the one (1) year period of this Agreement, consisting of periodic
teleconferences,  electronic mail, written communications,  direct meetings, and
the like, upon the prior agreement of Advisor and PhageTx.

2.  Compensation  - As  compensation  for  Advisor's  Service,  PhageTx will pay
Advisor a minimum of one thousand  dollars ($1,000) per day for each full day of
Service provided during the one (1) year period of this Agreement as an advisory
fee ("Fee").  As compensation  for any Service rendered in excess of twenty four
(24) days per year, PhageTX shall also pay Advisor one thousand dollars ($1,000)
per day for each full day of work. Partial days of work on which Advisor renders
Service  shall be  compensated  by PhageTx on a fractional  basis  determined by
dividing  the actual  number of hours worked by either (8) and  multiplying  the
fractional  result  obtained by the  applicable  per day rate.  In addition,  at
certain times PhageTx may request that Advisor travel away from his home, and in
the event that this is agreeable to Advisor, Advisor shall be reimbursed for air
travel (economy class),  as well as all reasonable  living expenses,  including,
but not limited to, car rental,  meals,  and  lodging.  For both the Fee and the
reimbursement  of  expenses,  PhageTx  shall  make all  payments  to  Advisor in
accordance with this paragraph  within thirty (30) days of recepts of an invoice
with attached receipts from Advisor itemizing such expenses.  Invoices should be
directed  to:  Phage  Therapeutics,  Inc.,  19017 - 120th  Avenue NE, Suite 102,
Bothell, WA. 98011. Attn: Kenneth E. Lehman, Controller.

In recognition and  consideration  of Advisor's  potential  contributions to the
Company's technology and product development efforts,  PhageTx wishes Advisor to
participate in the Company's  future success by granting to Advisor an option to
purchase  shares  of stock in the  Company  in accord  with the legal  terms and
conditions of the PhagTx Stock Option Plan.  The actual grant of options will be
determined  by  the  PhageTx  Board  of  Direcotrs,   which   functions  as  the
Administrator  of the Stock Option Plan,  and will be provided  under a separate
Stock Option Agreement.

3. Independent Contractor - It is agreed that Advisor will have complete freedom
of action as to the details, methods, and means of performing the Service. It is
further  understood  that Advisor is retained by and has contracted with PhageTx
only for the  purposes and to the extent set forth in this  Agreement,  and that
Advisor's  relation to PhageTx during the period of this Agreement shall be that
of an independent contractor,  and that Advisor shall be free to dispose of such
portion of his entire time, energy and skill as he is not obligated to devote to
PhageTx in such manner as he sees fit to such persons, firms, or corporations as
he deems  necessary,  so long as same does not  create a  conflict  of  interest
between PhageTx and such other persons, firms or corporations.

Advisor  shall not be  considered  under the  provisions  of this  Agreement  or
otherwise as having the status of an employee of PhageTx,  nor shall  Advisor be
entitled hereafter to participate in any plans, arrangements or distributions by
PhageTx  relating to any pension,  deferred  compensation,  bonus,  stock bonus,
hospitalization,  insurance or other benefits  extended to its employees,  since
Advisor is performing the Service as and independent contractor.

4. Effective  Date,  Term,  Termination  and Extension - This Agreement  becomes
effective on January 1, 2001,  and will  continue in effect  until  December 31,
2001 (the first  twelve-month-period).  It is  provided,  however,  that  either
Advisor or Phage Tx may terminate  this Agreement at any time during its term by
giving at least one (1) month written notice to the other. At the sole option of
PhageTx,  this Agreement may be extended for one (1) or more consecutive  twelve
period(s),  under similar terms as are provided  herein,  except that certain of
the terms may be modified  by mutual  agreement  of the  parties,  by  PhageTx's
providing to Advisor  written notice of its desire to continue the Agreement for
an  additional  term by at least two (2)  months  prior to the end of the twelve
(12)-month period in question.

5.  Inventions  - During  Advisor's  Service to PhageTx,  PhageTx  may  disclose
certain  confidential  information to Advisor and may ask Advisor to participate
in activities that may result in inventions  related to PhageTx's  technology or
business.  To the  extent  that  Advisor  is not  precluded  from  doing so by a
pre-existing employment contract or another agreement, where, as a direct result
of such  Services to  PhageTx,  Advisor  receives or is made aware of  technical
information by a PhageTx employee, consultant, advisor or contractor that causes
Advisor to  conceive,  make or develop  any  inventions  relating  to  PhageTx's
bacteriophage  technology or products,  Advisor's  signature hereon notices that
Advisor agrees to: a) give notice of any such invention to PhageTx; b) assign to

<PAGE>

PhagTx  all of  Advisor's  rights  therein,  in-so-far  as those  rights are not
subject to conditions of Advisor's current employment or another agreement; and,
c) execute any  documents  and otherwise  reasonably  cooperate  with PhageTx in
securing patents on such inventions.

6. Security - Advisor  shall,  during and  subsequent  to providing  Services to
PhageTx,  keep confidential and shall not use any technical or other proprietary
information  provided  by  PhageTx,  including  knowledge  of PhageTx  projects,
general  activities and proprietary  information not publicly disclosed relating
to PhageTx's  technology,  products and business  which Advisor may acquire as a
result of the Services or otherwise.  Advisor shall hold all such information in
strict  confidence and shall not use or disclose such information in any manner,
or cause same to be published  without  PhageTx's  prior written  consent.  This
obligation of confidence has been agreed to and is provided for between  Advisor
and PhageTx in a separate  Confidential  Disclosure  Agreement  executed by both
parties on 01-01-2001

Title to all property  involved  shall remain  exclusively  with  PhageTx.  Upon
termination  of the  Service  or this  Agreement,  or upon  request at any time,
Advisor  shall  account  for and  return to PhageTx  all  papers  and  materials
containing any such confidential information.

PhageTx  shall be free to utilize the results of the  Services  described  under
this Agreement without any further payment or obligation to Advisor. Thus, it is
also  essential  that  Advisor  shall  undertake  not to disclose to PhageTx any
information  which is secret or  confidential  or  belonging  to Advisor or to a
third party,  or with respect to which Advisor is under an obligation to a third
party to maintain  confidentiality.  Similarly, if during this Agreement Advisor
discloses any  inventions to PhageTx which were  conceived  prior to the term or
are outside the scope of the Services under this  Agreement,  PhageTx shall have
no liability to Advisor because of its use of such ideas, except that this shall
not be  construed as a license  under any valid  patent now or hereafter  issued
thereon.

7.  Publicity - Advisor shall not originate any  publicity,  news  releases,  or
other  public  announcement,  written or oral,  whether  to the public  press or
otherwise,   relating  to  this  Agreement,  to  any  amendment  hereto,  or  to
performance hereunder without PhageTx's prior written consent.

8.  Conflict  of Interest - Advisor  represents  that he is  presently  under no
obligation  to  any  third  party   (including  a  prior  employer,   government
organization,  and others  with whom he may now  consult  or may have  consulted
previously)  which would  prevent his  carrying  out his duties and  obligations
under this  Agreement or which is  inconsistent  with the  provisions  contained
herein. To avoid any potential  conflict of interest,  Advisor agrees to provide
written notice to PhageTx  within one (1) week of entering into any  consulting,
advisory or  research  agreement  with a  corporate  third party in the field of
bacteriophage  technology  or products  during the period  Advisor is  providing
Services to PhageTx.  The term  "Corporate" is intended to mean any organization
operating  in the  United  States of  America  or in a foreign  country  with an
expressed  intent  to make  profits  and  includes  organizations  like  limited
partnerships, joint ventures, corporations, and the like.

9. Freedom of Action - It is agreed that  Advisor's  rendering of services under
this  Agreement  shall  in no  way  conflict  or  interfere  with  his  existing
professional responsibilities. In that Advisor is an independent contractor, and
not an employee of PhageTx,  PhageTx shall not be responsible for Advisor's acts
while  Advisor is  performing  the  Services  hereunder,  whether  on  PhageTx's
premises  or  elsewhere,  and  Advisor  shall not have  authority  to speak for,
represent,  or obligate  PhageTx in any way without the explicit  prior  written
authority from PhageTx.

If any part of this Agreement shall be held as  unenforceable,  the remainder of
the  Agreement  shall  nevertheless  remain  in full  force and  effect  and the
unenforceable  provision  shall be construed by the court in such a manner as to
be held enforceable while giving maximum effect to the intended meaning.

Please  indicate  Advisor's  acceptance  of the  foregoing  by returning a fully
executed copy of this Agreement to PhageTx.

Phage Therapeutics, Inc.:                   Advisor:
19017 - 120th Avenue Ne, Suite 102          Luiz E. Bermudez, MD
Bothell, WA 98011                           Kuzell Institute for Arthiritis and
                                               Infectious Diseases
                                            California Pacific Medical Center
                                               Research Institute
                                            2200 Webster Street, Suite 305
                                            San Francisco, CA 94115-1821
By: /s/ Richard C. Honour /s/               By: /s/ Luiz Bermudez /s/
    --------------------------------            ---------------------
Richard C. Honour, PhD                      Luiz E. Bermudez, MD
President & CEO                             Advisor
Date: 01.02.01                              Date: 12/22/00
      --------                                    --------

<PAGE>

                               ADVISORY AGREEMENT

Phage  Therapeutics  International  Inc., and its wholly owned  subsidiary Phage
Therapeutics,  Inc.,  ("PhageTx" or the "Company") desire to engage the advisory
services ("Service") of Tyler A. Kokjohn,  PhD, as an advisor ("Advisor") in the
general  fields  of  microbiology,   bacteriophage   biology  and  bacteriophage
therapeutics.  Advisor desires to provide such Service to PhageTx.  By execution
of this Advisory  Agreement  (the  "Agreement"),  Advisor agrees to provide such
Service in accordance with the following terms and conditions:

1. Service - At time mutually agreeable to Advisor and PhageTx, and as requested
by PhageTx,  Advisor will  undertake  the  designated  Service for one (1) year,
commencing on the effective date of this Agreement (See Section 4 below).  It is
expected  that  Advisor  will  provide at least  twelve (12) days of  cumulative
Service during the one (1) year period of this Agreement, consisting of periodic
teleconferences,  electronic mail, written communications,  direct meetings, and
the like, upon the prior agreement of Advisor and PhageTx.

2.  Compensation  - As  compensation  for  Advisor's  Service,  PhageTx will pay
Advisor a minimum of one thousand  dollars ($1,000) per day for each full day of
Service provided during the one (1) year period of this Agreement as an advisory
fee ("Fee").  As compensation  for any Service rendered in excess of twelve (12)
days per year,  PhageTX shall also pay Advisor one thousand dollars ($1,000) per
day for each full day of work.  Partial  days of work on which  Advisor  renders
Service  shall be  compensated  by PhageTx on a fractional  basis  determined by
dividing  the actual  number of hours worked by either (8) and  multiplying  the
fractional  result  obtained by the  applicable  per day rate.  In addition,  at
certain times PhageTx may request that Advisor travel away from his home, and in
the event that this is agreeable to Advisor, Advisor shall be reimbursed for air
travel (economy class),  as well as all reasonable  living expenses,  including,
but not limited to, car rental,  meals,  and  lodging.  For both the Fee and the
reimbursement  of  expenses,  PhageTx  shall  make all  payments  to  Advisor in
accordance with this paragraph  within thirty (30) days of recepts of an invoice
with attached receipts from Advisor itemizing such expenses.  Invoices should be
directed  to:  Phage  Therapeutics,  Inc.,  19017 - 120th  Avenue NE, Suite 102,
Bothell, WA. 98011. Attn: Kenneth E. Lehman, Controller.

In recognition and  consideration  of Advisor's  potential  contributions to the
Company's technology and product development efforts,  PhageTx wishes Advisor to
participate in the Company's  future success by granting to Advisor an option to
purchase  shares  of stock in the  Company  in accord  with the legal  terms and
conditions of the PhagTx Stock Option Plan.  The actual grant of options will be
determined  by  the  PhageTx  Board  of  Direcotrs,   which   functions  as  the
Administrator  of the Stock Option Plan,  and will be provided  under a separate
Stock Option Agreement.

3. Independent Contractor - It is agreed that Advisor will have complete freedom
of action as to the details, methods, and means of performing the Service. It is
further  understood  that Advisor is retained by and has contracted with PhageTx
only for the  purposes and to the extent set forth in this  Agreement,  and that
Advisor's  relation to PhageTx during the period of this Agreement shall be that
of an independent contractor,  and that Advisor shall be free to dispose of such
portion of his entire time, energy and skill as he is not obligated to devote to
PhageTx in such manner as he sees fit to such persons, firms, or corporations as
he deems  necessary,  so long as same does not  create a  conflict  of  interest
between PhageTx and such other persons, firms or corporations.

Advisor  shall not be  considered  under the  provisions  of this  Agreement  or
otherwise as having the status of an employee of PhageTx,  nor shall  Advisor be
entitled hereafter to participate in any plans, arrangements or distributions by
PhageTx  relating to any pension,  deferred  compensation,  bonus,  stock bonus,
hospitalization,  insurance or other benefits  extended to its employees,  since
Advisor is performing the Service as and independent contractor.

4. Effective  Date,  Term,  Termination  and Extension - This Agreement  becomes
effective on December 1, 2001,  and will  continue in effect until  November 30,
2001 (the first  twelve-month-period).  It is  provided,  however,  that  either
Advisor or Phage Tx may terminate  this Agreement at any time during its term by
giving at least one (1) month written notice to the other. At the sole option of
PhageTx,  this Agreement may be extended for one (1) or more consecutive  twelve
period(s),  under similar terms as are provided  herein,  except that certain of
the terms may be modified  by mutual  agreement  of the  parties,  by  PhageTx's
providing to Advisor  written notice of its desire to continue the Agreement for
an  additional  term by at least two (2)  months  prior to the end of the twelve
(12)-month period in question.

5.  Inventions  - During  Advisor's  Service to PhageTx,  PhageTx  may  disclose
certain  confidential  information to Advisor and may ask Advisor to participate
in activities that may result in inventions  related to PhageTx's  technology or
business.  To the  extent  that  Advisor  is not  precluded  from  doing so by a
pre-existing employment contract or another agreement, where, as a direct result
of such  Services to  PhageTx,  Advisor  receives or is made aware of  technical
information by a PhageTx employee, consultant, advisor or contractor that causes
Advisor to  conceive,  make or develop  any  inventions  relating  to  PhageTx's
bacteriophage  technology or products,  Advisor's  signature hereon notices that
Advisor agrees to: a) give notice of any such invention to PhageTx; b) assign to
PhagTx  all of  Advisor's  rights  therein,  in-so-far  as those  rights are not
subject to conditions of Advisor's current employment or another agreement; and,
c) execute any  documents  and otherwise  reasonably  cooperate  with PhageTx in
securing patents on such

<PAGE>

inventions.

6. Security - Advisor  shall,  during and  subsequent  to providing  Services to
PhageTx,  keep confidential and shall not use any technical or other proprietary
information  provided  by  PhageTx,  including  knowledge  of PhageTx  projects,
general  activities and proprietary  information not publicly disclosed relating
to PhageTx's  technology,  products and business  which Advisor may acquire as a
result of the Services or otherwise.  Advisor shall hold all such information in
strict  confidence and shall not use or disclose such information in any manner,
or cause same to be published  without  PhageTx's  prior written  consent.  This
obligation of confidence has been agreed to and is provided for between  Advisor
and PhageTx in a separate  Confidential  Disclosure  Agreement  executed by both
parties on December 3, 2000.

Title to all property  involved  shall remain  exclusively  with  PhageTx.  Upon
termination  of the  Service  or this  Agreement,  or upon  request at any time,
Advisor  shall  account  for and  return to PhageTx  all  papers  and  materials
containing any such confidential information.

PhageTx  shall be free to utilize the results of the  Services  described  under
this Agreement without any further payment or obligation to Advisor. Thus, it is
also  essential  that  Advisor  shall  undertake  not to disclose to PhageTx any
information  which is secret or  confidential  or  belonging  to Advisor or to a
third party,  or with respect to which Advisor is under an obligation to a third
party to maintain  confidentiality.  Similarly, if during this Agreement Advisor
discloses any  inventions to PhageTx which were  conceived  prior to the term or
are outside the scope of the Services under this  Agreement,  PhageTx shall have
no liability to Advisor because of its use of such ideas, except that this shall
not be  construed as a license  under any valid  patent now or hereafter  issued
thereon.

7.  Publicity - Advisor shall not originate any  publicity,  news  releases,  or
other  public  announcement,  written or oral,  whether  to the public  press or
otherwise,   relating  to  this  Agreement,  to  any  amendment  hereto,  or  to
performance hereunder without PhageTx's prior written consent.

8.  Conflict  of Interest - Advisor  represents  that he is  presently  under no
obligation  to  any  third  party   (including  a  prior  employer,   government
organization,  and others  with whom he may now  consult  or may have  consulted
previously)  which would  prevent his  carrying  out his duties and  obligations
under this  Agreement or which is  inconsistent  with the  provisions  contained
herein. To avoid any potential  conflict of interest,  Advisor agrees to provide
written notice to PhageTx  within one (1) week of entering into any  consulting,
advisory or  research  agreement  with a  corporate  third party in the field of
bacteriophage  technology  or products  during the period  Advisor is  providing
Services to PhageTx.  The term  "Corporate" is intended to mean any organization
operating  in the  United  States of  America  or in a foreign  country  with an
expressed  intent  to make  profits  and  includes  organizations  like  limited
partnerships, joint ventures, corporations, and the like.

9. Freedom of Action - It is agreed that  Advisor's  rendering of services under
this  Agreement  shall  in no  way  conflict  or  interfere  with  his  existing
professional responsibilities. In that Advisor is an independent contractor, and
not an employee of PhageTx,  PhageTx shall not be responsible for Advisor's acts
while  Advisor is  performing  the  Services  hereunder,  whether  on  PhageTx's
premises  or  elsewhere,  and  Advisor  shall not have  authority  to speak for,
represent,  or obligate  PhageTx in any way without the explicit  prior  written
authority from PhageTx.

If any part of this Agreement shall be held as  unenforceable,  the remainder of
the  Agreement  shall  nevertheless  remain  in full  force and  effect  and the
unenforceable  provision  shall be construed by the court in such a manner as to
be held enforceable while giving maximum effect to the intended meaning.

Please  indicate  Advisor's  acceptance  of the  foregoing  by returning a fully
executed copy of this Agreement to PhageTx.

Phage Therapeutics, Inc.:                        Consultant:
19017 - 120th Avenue Ne, Suite 102               Tyler A. Kokjohn, PhD
Bothell, WA 98011

By: /s/ Richard C. Honour /s/                    By: /s/ Tyler A. Kokjohn /s/
    --------------------------------                 ------------------------
Richard C. Honour, PhD                           Tyler A. Kokjohn, PhD
President & CEO                                           Advisor

Date: 12.26.00                                   Date: 12/20/00
      --------                                        ---------EXHIBIT 10.3

                              EMPLOYMENT AGREEMENTS

Attached are the employee agreements for the following persons:

Richard Herman

Richard Honour

Tracy Honour

Doug Lee

Kenneth Lehman (2 agreements)

Larry Stylebo

Lisa Goodrich

<PAGE>

                              EMPLOYMENT AGREEMENT

EMPLOYMENT  AGREEMENT  dated  November  1,  2000  ("Agreement")   between  Phage
Therapeutics,  Inc., a Washington corporation ("Company") and Richard E. Herman,
PhD, a resident of Redmond, WA ("Employee").

                                   WITNESSETH

WHEREAS,  the  Company  wishes  to  employ  Employee  in the  position  of  Vice
President, Pharmaceutical Development; and

WHEREAS,  the Employee wishes to enter into the employ of the Company to fulfill
the   responsibilities  of  the  position  of  Vice  President,   Pharmaceutical
Development;

NOW  THEREFORE,  in  consideration  of  the  foregoing  and  of  the  respective
covenants,   obligations  and  agreements  of  the  parties  contained  in  this
Agreement, the parties, intending to be legally bound, hereby agree as follows:

1.       EMPLOYMENT

The Company shall employ  Employee,  and Employee shall accept such  employment,
upon the terms and conditions set forth in Agreement. Employee's employment with
the Company shall be subject to the Company's  general  employment  policies and
practices.  The Company reserves the right to modify such policies and practices
from time to time.

2.       DUTIES

Employee shall be employed as Vice President, Pharmaceutical Development. During
the term of this Agreement,  Employee shall devote his full time,  attention and
efforts to the conduct of the business of the Company and the performance of his
duties under this  Agreement.  Employee  shall not engage in any other  business
activity,  whether or not such  activity  is pursued  for gain,  profit or other
pecuniary  advantage;  provided  that  Employee  shall  not  be  prevented  from
investing  his  personal  assets in such form or manner as will not  require any
services on the part of Employee in the operation of the affairs of the entities
in which such investments are made.

3.     TERM

<PAGE>

Subject to the terms and conditions set forth in this  Agreement,  Company shall
employ  Employee  and  Employee  shall serve the Company in the position of Vice
President,  Pharmaceutical  Development for a period commencing November 1, 2000
("Commencement  Date")  and  continuing  through  the first  anniversary  of the
Commencement  Date,  unless such  employment  is sooner  terminated  as provided
herein.  During  this one (1) year  period,  Employee's  compensation  and other
benefits may be adjusted  annually,  or more often,  without the necessity of an
amendment of this Agreement. The Employee's term of employment shall be extended
for  additional  one (1) year  periods  and on such terms and at such  levels of
compensation  as shall be mutually agreed to in writing by Company and Employee,
unless otherwise terminated under this Agreement.

4.       COMPENSATION

For all services  rendered by Employee under this Agreement,  the Company agrees
to pay Employee and Employee agrees to accept the following:

4.1 Salary.  An annual salary of $84,000  ("Salary"),  which shall be payable at
the times and in the manner set by the Company's  standard payroll policy.  Such
Salary  shall  be  reviewed  one  (1)  month  prior  to the  anniversary  of the
Commencement Date each year, and any increase in the amount under this Agreement
for the twelve (12) month period  following the  Commencement  Date  anniversary
date shall be  determined at such time by the Board of Directors of the Company,
or a compensation committee formed by the Board of Directors.

4.2 Bonuses.  Employee shall  additionally be entitled to such cash and/or stock
bonuses  and  stock  options  as  determined  from  time to time by the Board of
Directors of the Company, or their designated representatives(s).  Cash bonuses,
if any, shall be paid subject to achievement of specific performance  milestones
agreed to by both the Company and Employee.

5.       CONTINUING EDUCATION

In the event that performance of Employee's  responsibilities  and duties within
the Company shall require or recommend  certification,  licensure, or continuing
education  to maintain  licensure,  then Company  shall upon notice,  allow time
during business hours for the required activity and shall reimburse Employee for
reasonable  expenses  associated  therewith  including at least any registration
fees, license fees, travel, lodging and per diem fees.

6.       WORKING FACILITIES

Employee shall be furnished with such facilities,  services, and supplies as are
suitable and adequate for the performance of this duties under this Agreement.

7.       EXPENSES

Employee shall be reimbursed by the Company for his reasonable expenses incurred
in connection with his employment and which are related to and in furtherance of
the Company's  business,  in accordance  with the general  policy of the Company
regarding reimbursement of expenses.

8.       BENEFITS

Employee  shall be entitled  to all rights and  benefits  for which  Employee is
eligible under any  employee-benefits  plan,  including pension,  stock or stock
option,  profit sharing,  health  (including  medical and dental),  and life and
disability  insurance  plan,  which  the  Company  provides  for  its  employees
generally.  The Company  reserves  the right to change the  benefits  offered to
employees at any time.

<PAGE>

9.       TERMINATION

Employee's  employment  with the Company shall be terminated upon the occurrence
of any of the following events:

9.1 Death of Employee. In lieu of any other benefits which may be payable by the
Company with respect to death,  in the event of such death,  the Salary  payable
hereunder  shall  continue  to be paid at the then  current  rate for  three (3)
months after the  termination  of  employment.  In the event of the death of the
Employee during the term of this Agreement,  the sums payable hereunder shall be
paid to his personal representative;

9.2 Mutual agreement of termination in writing between the Company and Employee;

9.3  Disability of Employee that prevents him from  performing  the material and
substantial  duties  of his  position  for a period of two (2)  months.  In such
event, at the Company's option, the Company shall give Employee not less than 30
days' written notice of  termination  of employment.  Employee shall continue to
render  services to the  Company  (unless  disabled)  and shall be paid his full
salary as in effect at such time up to the date of termination.  Nothing in this
Agreement,  however,  shall limit or diminish the Company's  obligations towards
Employee  with  respect  to the  Americans  with  Disabilities  Act of 1990,  as
amended,  the Family and Medical Leave Act of 1993,  as amended,  or any similar
state laws.

9.4 Written  notice by either party to the other  terminating  the employment of
Employee as follows:

          a.   Notice of  resignation  by Employee to the  Company,  at least 30
               days in advance;

          b.   Notice of  termination  of  employment by the Company to Employee
               with cause.  For purposes of this  Agreement,  the Company  shall
               have  "Cause"  to  terminate  Employee's  employment  under  this
               Agreement  upon   Employee's:   (a)  willful  breach  of  any  of
               Employee's  material  obligations  under  this  Agreement,  which
               breach shall not have been  remedied by Employee  within ten (10)
               days  after  the  Company  shall  have  given  written  notice to
               Employee of such  breach,  or which such  breach  shall have been
               repeated  after  lapse  of  such  ten-day   notice  period;   (b)
               commission  of an act which the Board of Directors of the Company
               shall reasonably have found to have involved  willful  misconduct
               or gross negligence on the part of Employee in the conduct of his
               duties under this Agreement which materially  injures the Company
               or any of its  subsidiaries or affiliates;  (c) conviction of (or
               pleading  nolo  contendere  to) any  felony  or any  misdemeanour
               involving moral turpitude which might, in the reasonable judgment
               of the Board of Directors of the Company,  cause embarrassment to
               the  Company  or any  of  its  subsidiaries  or  affiliates;  (d)
               commission of a material act of personal  dishonesty or breach of
               fiduciary duty involving  personal  profit in connection with the
               Employee's   employment   by  the   Company;   or  (e)   habitual
               absenteeism,  chronic  alcoholism,  drug  abuse or other  form of
               addiction  which,  in the  reasonable  judgment  of the  Board of
               Directors,  impairs  Employee's  ability to perform his duties or
               injures the Company.

<PAGE>

          c.   Notice of  termination  of  employment by the Company to Employee
               without cause or for good reason. For purposes of this Agreement,
               the  Company  will have  terminated  Employee's  employment  with
               Company  under the  Agreement  without cause or for "Good Reason"
               upon  Company's:  (a)  financial  inability to meet its financial
               obligations;  (b) desire to terminate  Employee's  employment for
               reasons other than for Cause as defined  above in Section  9.4.c;
               (c)  contemplation,  consideration or execution of a financial or
               business  agreement  or  transaction  that  obligates  Company to
               reduce costs or staff or Employee's  employment;  (d) termination
               of Employee's  employment within 120 days of the date of a Change
               of  Control of the  Company;  or (e)  failure to comply  with the
               terms  fo  this  Agreement.   In  the  event  of  termination  of
               Employee's  employment  under this Agreement by Employer  without
               cause or for Good Reason, Employer shall pay within ten (10) days
               of such termination a severance payment equal to the compensation
               that would have been paid to Employee for an additional three (3)
               month period,  at the same rate of pay per month as if Employee's
               employment  would not have  been  terminated.  Employee's  fringe
               benefits and other  benefits  that were provided  Employee  under
               Section 8 of this  Agreement  will be continued to the benefit of
               Employee  during the three  month  period of  compensation  after
               termination without cause or for Good Reason.

Notwithstanding  any  termination  of this  Agreement  pursuant  to  Section  9,
Employee shall remain bound by the provisions of Sections 10 and 11 below.

10.      INVENTIONS

"Inventions" made or conceived  entirely or partially by Employee while employed
by the Company shall be the exclusive property of the Company.  For the purposes
of this Agreement,  the term,  "Inventions"  includes,  without limitation,  all
creations,  whether or not patentable or copyrightable,  and all ideas, reports,
or other  creative  works  including,  without  limitation,  therapies,  genetic
engineering  tools and methods,  gene  expression  systems and  diagnostics  and
therapeutic  products  derived  therefrom,  which  related  to the  existing  or
proposed  business  of the  Company  or to any other  business  or  research  or
development  effort  conducted by the  Company.  All of  Employee's  Inventions,
whether or not  copyrightable  or patentable,  will be works for hire.  Employee
will promptly  disclose each  Inventions to the Company in writing and cooperate
with the  Company  to  patent or  copyright  all  Inventions  by  executing  all
documents  tendered by the Company for the purpose of patenting or  copyrighting
Employee's  Inventions.  This  provision  shall be construed in conformity  with
Chapter 49.44 of the Revised Code of  Washington.  This provision does not apply
to an Invention for which no equipment,  supplies,  facilities,  or trade secret
information  of the  Company  was used  and  which  was  developed  entirely  on
Employee's own time unless (i) the Invention relates directly to the business of
the Company, or to the Company's actual or demonstrably  anticipated research or
development,  or (ii) the Invention  results from any work performed by Employee
for the Company.

11.      NON-DISCLOSURE OF CONFIDENTIAL INFORMATION AND RESTRICTIVE COVENANTS

11.1  Confidential  Information.  During the course of his employment,  Employee
will acquire knowledge of trade secrets and other proprietary information of the
Company   ("Confidential   Information")  and  may  contribute  to  Confidential
Information through inventions, discoveries,  improvements or some other manner.
Confidential  Information includes, but is not limited to, nonpublic information
relating  to  the  Company's  business,  operations,  customers  or  technology,
including  customer  lists,  vendor  lists,  pricing  or  financial  information
concerning  the  Company and its vendors and  customers,  trade  secrets,  data,
documentation,  concepts techniques, processes, know-how, marketing information,
designs,  customer  information,  cost data, price lists, and pricing  policies.
Confidential  Information  does not include  information  that is already public
knowledge  or which can be obtained by  reference  to public  sources.  Employee
recognizes that all Confidential  Information is the property of the Company and
agrees that, except as required by the duties of Employee's  employment with the
Company, Employee shall never, directly or indirectly, use, publish, disseminate
or otherwise  disclose any Confidential  Information  obtained during Employee's
employment  with the Company  without the prior written  consent of the Company.
Employee  acknowledges  and agrees that the terms of this Section  shall survive
the termination of his employment with the Company.

<PAGE>

11.2  Non-Competition.  Employee further acknowledges that his position with the
Company  will give him a close  knowledge  of its  policies,  business and trade
secrets,  and that  Employee's  continued and  exclusive  service to the Company
under this  Agreement  is of a high degree of  importance  and  confidentiality.
Employee  agrees  that  for a  period  of one  year  after  the  termination  of
Employee's  employment  with  the  Company,   Employee  will  not,  directly  or
indirectly,  be employed by, engage in, consult with, or own an equity  interest
in any entity or  activities  competitive  with the  business  engaged in by the
Company during Employee's  employment under this Agreement,  without the written
consent of the Company.

11.3  Solicitation.  During the term of his employment  with the Company and for
the period of one year  thereafter,  Employee  shall not:  (i) seek to persuade,
directly  or  indirectly,  any  employee  of the  Company  to  discontinue  that
individual's  employment with the Company, or seek to persuade any such employee
to become employed in any activity similar to or competitive with the activities
of the Company, or (ii) directly or indirectly solicit from any person or entity
who was a customer of the Company and with whom  Employee had business  dealings
on behalf of the Company during the one-year  period prior to the termination of
Employee's  employment  any  business  which is  competitive  with the  business
activities of the Company,  or cause or authorize such  solicitation,  for or on
behalf of Employee or any third party.

11.4 Unfair  Competition.  Employee agrees that the provisions of Section 10 and
11 of this  Agreement  are  reasonably  necessary  to protect  the rights of the
Company and to prevent unfair competition.  The provisions of Sections 10 and 11
shall apply if  Employee's  employment  is  terminated at the end of the term of
this Agreement or otherwise.  The period of the covenants  contained in Sections
10 and 11 shall be extended by any period of time  during  which  Employee is in
violation of said covenants, if any.

11.5 Severability. The parties agree that the covenants set forth in Sections 10
and 11 of this Agreement,  including,  without limitation,  the scope, duration,
and geographic extent of such  restrictions,  are fair and reasonably  necessary
for the protection of the Company's legitimate business interest. In the event a
court or arbitrator should decline to enforce any of such provisions, they shall
be deemed to be modified to restrict  Employee to the maximum  extent  which the
court or arbitrator shall find enforceable.

11.6 Records. Upon termination of this Agreement, all documents, records, files,
notebooks,  and similar  repositories  containing the  information  described in
Sections 10 and 11 of this Agreement,  including all copies,  then in Employee's
possession,  whether  prepared  by  Employee  or  others,  shall be  immediately
returned to the Company by Employee.

12.      INJUNCTIVE RELIEF

Employee acknowledges that the breach or threatened breach of the nondisclosure,
non-competition or other agreements  contained in this Agreement would give rise
to  irreparable  injury  to the  Company,  which  injury  would be  inadequately
compensable  in money  damages.  The Company may,  therefore,  seek and obtain a
restraining  order or injunction  prohibiting the breach or threatened breach of
any provision, requirement or covenant of this Agreement, in addition to and not
in limitation of any other legal remedies that may be available.

13.      MISCELLANEOUS

13.1 Entire Agreement.  This Agreement contains the entire agreement between the
Company  and  Employee  relating  to the subject  matter of this  Agreement.  No
modification  of this Agreement shall be valid unless made in writing and signed
by both parties.

<PAGE>

13.2 Notice.  Any notice  required or permitted to be give under this  Agreement
shall be sufficient if in writing and delivered personally or sent by registered
or certified mail, receipt return requested,  to Employee at his residence or to
the Company at its principal office.

13.3  Waiver.  No waiver by the  Company or Employee of any default or breach of
any term, condition or covenant of this Agreement shall be deemed to be a wavier
of any subsequent default or breach of the same or any other term,  condition or
covenant contained in this Agreement.

13.4  Assignment and  Successors.  The rights and  obligations of Employee under
this  Agreement are personal and may not be assigned to any other  person.  This
Agreement will bind and benefit any successor of the Company, whether by merger,
sale of assets,  reorganization  or other form of  acquisition,  disposition  or
business  reorganization.  In the event of Employee's death, any benefits due or
to become due under this Agreement shall become a part of Employee's  estate and
shall be distributed to his personal representative.

13.5 Attorney's Fees. In the event of any dispute relating to  interpretation or
enforcement of this Agreement, the prevailing party shall be entitled to recover
its reasonable attorneys' fees and costs, whether or not a lawsuit,  arbitration
or other legal action is commenced.

13.6  Applicable  Law.  This  Agreement  shall be governed by and  construed  in
accordance with the laws of the State of Washington.

This Agreement is effective as of the date first above written.

PHAGE THERAPEUTICS, INC.  (COMPANY):

         By: /s/ Richard C. Honour/s/
         ----------------------------

         Its: President & CEO
         --------------------

EMPLOYEE (EMPLOYEE):

         /s/ Richard E. Herman /s/
         -------------------------
         Signature

         Feb. 21, 2001
         -------------
         Date

<PAGE>

                              EMPLOYMENT AGREEMENT

EMPLOYMENT  AGREEMENT  dated  November  1,  2000  ("Agreement")   between  Phage
Therapeutics,  Inc., a Washington corporation ("Company") and Richard C. Honour,
PhD, a resident of Kenmore, WA ("Employee").

                                   WITNESSETH

WHEREAS,  the Company  wishes to employ  Employee in the position of President &
CEO; and

WHEREAS,  the Employee wishes to enter into the employ of the Company to fulfill
the responsibilities of the position of President & CEO;

NOW  THEREFORE,  in  consideration  of  the  foregoing  and  of  the  respective
covenants,   obligations  and  agreements  of  the  parties  contained  in  this
Agreement, the parties, intending to be legally bound, hereby agree as follows:

1.       EMPLOYMENT

The Company shall employ  Employee,  and Employee shall accept such  employment,
upon the terms and conditions set forth in Agreement. Employee's employment with
the Company shall be subject to the Company's  general  employment  policies and
practices.  The Company reserves the right to modify such policies and practices
from time to time.

2.       DUTIES

Employee  shall  be  employed  as  President  & CEO.  During  the  term  of this
Agreement,  Employee  shall devote his full time,  attention  and efforts to the
conduct of the business of the Company and the  performance  of his duties under
this  Agreement.  Employee  shall not  engage in any  other  business  activity,
whether or not such  activity  is pursued  for gain,  profit or other  pecuniary
advantage;  provided that  Employee  shall not be prevented  from  investing his
personal  assets in such form or manner as will not require any  services on the
part of Employee in the  operation  of the affairs of the entities in which such
investments are made.

3.     TERM

Subject to the terms and conditions set forth in this  Agreement,  Company shall
employ  Employee  and  Employee  shall  serve the  Company  in the  position  of
President & CEO for a period commencing November 1, 2000  ("Commencement  Date")
and continuing  through the first  anniversary of the Commencement  Date, unless
such  employment is sooner  terminated as provided  herein.  During this one (1)
year  period,  Employee's  compensation  and  other  benefits  may  be  adjusted
annually,  or  more  often,  without  the  necessity  of an  amendment  of  this
Agreement.  The Employee's  term of employment  shall be extended for additional
one (1) year  periods  and on such terms and at such levels of  compensation  as
shall be mutually agreed to in writing by Company and Employee, unless otherwise
terminated under this Agreement.

<PAGE>

4.       COMPENSATION

For all services  rendered by Employee under this Agreement,  the Company agrees
to pay Employee and Employee agrees to accept the following:

4.1 Salary. An annual salary of $120,000  ("Salary"),  which shall be payable at
the times and in the manner set by the Company's  standard payroll policy.  Such
Salary  shall  be  reviewed  one  (1)  month  prior  to the  anniversary  of the
Commencement Date each year, and any increase in the amount under this Agreement
for the twelve (12) month period  following the  Commencement  Date  anniversary
date shall be  determined at such time by the Board of Directors of the Company,
or a compensation committee formed by the Board of Directors.

4.2 Bonuses.  Employee shall  additionally be entitled to such cash and/or stock
bonuses  and  stock  options  as  determined  from  time to time by the Board of
Directors of the Company, or their designated representatives(s).  Cash bonuses,
if any, shall be paid subject to achievement of specific performance  milestones
agreed to by both the Company and Employee.

5.       CONTINUING EDUCATION

In the event that performance of Employee's  responsibilities  and duties within
the Company shall require or recommend  certification,  licensure, or continuing
education  to maintain  licensure,  then Company  shall upon notice,  allow time
during business hours for the required activity and shall reimburse Employee for
reasonable  expenses  associated  therewith  including at least any registration
fees, license fees, travel, lodging and per diem fees.

6.       WORKING FACILITIES

Employee shall be furnished with such facilities,  services, and supplies as are
suitable and adequate for the performance of this duties under this Agreement.

7.       EXPENSES

Employee shall be reimbursed by the Company for his reasonable expenses incurred
in connection with his employment and which are related to and in furtherance of
the Company's  business,  in accordance  with the general  policy of the Company
regarding reimbursement of expenses.

8.       BENEFITS

Employee  shall be entitled  to all rights and  benefits  for which  Employee is
eligible under any  employee-benefits  plan,  including pension,  stock or stock
option,  profit sharing,  health  (including  medical and dental),  and life and
disability  insurance  plan,  which  the  Company  provides  for  its  employees
generally.  The Company  reserves  the right to change the  benefits  offered to
employees at any time.

<PAGE>

9.       TERMINATION

Employee's  employment  with the Company shall be terminated upon the occurrence
of any of the following events:

9.1 Death of Employee. In lieu of any other benefits which may be payable by the
Company with respect to death,  in the event of such death,  the Salary  payable
hereunder  shall  continue  to be paid at the then  current  rate for  three (3)
months after the  termination  of  employment.  In the event of the death of the
Employee during the term of this Agreement,  the sums payable hereunder shall be
paid to his personal representative;

9.2 Mutual agreement of termination in writing between the Company and Employee;

9.3  Disability of Employee that prevents him from  performing  the material and
substantial  duties  of his  position  for a period of two (2)  months.  In such
event, at the Company's option, the Company shall give Employee not less than 30
days' written notice of  termination  of employment.  Employee shall continue to
render  services to the  Company  (unless  disabled)  and shall be paid his full
salary as in effect at such time up to the date of termination.  Nothing in this
Agreement,  however,  shall limit or diminish the Company's  obligations towards
Employee  with  respect  to the  Americans  with  Disabilities  Act of 1990,  as
amended,  the Family and Medical Leave Act of 1993,  as amended,  or any similar
state laws.

9.4 Written  notice by either party to the other  terminating  the employment of
Employee as follows:

          a.   Notice of  resignation  by Employee to the  Company,  at least 30
               days in advance;

          b.   Notice of  termination  of  employment by the Company to Employee
               with cause.  For purposes of this  Agreement,  the Company  shall
               have  "Cause"  to  terminate  Employee's  employment  under  this
               Agreement  upon   Employee's:   (a)  willful  breach  of  any  of
               Employee's  material  obligations  under  this  Agreement,  which
               breach shall not have been  remedied by Employee  within ten (10)
               days  after  the  Company  shall  have  given  written  notice to
               Employee of such  breach,  or which such  breach  shall have been
               repeated  after  lapse  of  such  ten-day   notice  period;   (b)
               commission  of an act which the Board of Directors of the Company
               shall reasonably have found to have involved  willful  misconduct
               or gross negligence on the part of Employee in the conduct of his
               duties under this Agreement which materially  injures the Company
               or any of its  subsidiaries or affiliates;  (c) conviction of (or
               pleading  nolo  contendere  to) any  felony  or any  misdemeanour
               involving moral turpitude which might, in the reasonable judgment
               of the Board of Directors of the Company,  cause embarrassment to
               the  Company  or any  of  its  subsidiaries  or  affiliates;  (d)
               commission of a material act of personal  dishonesty or breach of
               fiduciary duty involving  personal  profit in connection with the
               Employee's   employment   by  the   Company;   or  (e)   habitual
               absenteeism,  chronic  alcoholism,  drug  abuse or other  form of
               addiction  which,  in the  reasonable  judgment  of the  Board of
               Directors,  impairs  Employee's  ability to perform his duties or
               injures the Company.

<PAGE>

          c.   Notice of  termination  of  employment by the Company to Employee
               without cause or for good reason. For purposes of this Agreement,
               the  Company  will have  terminated  Employee's  employment  with
               Company  under the  Agreement  without cause or for "Good Reason"
               upon  Company's:  (a)  financial  inability to meet its financial
               obligations;  (b) desire to terminate  Employee's  employment for
               reasons other than for Cause as defined  above in Section  9.4.c;
               (c)  contemplation,  consideration or execution of a financial or
               business  agreement  or  transaction  that  obligates  Company to
               reduce costs or staff or Employee's  employment;  (d) termination
               of Employee's  employment within 120 days of the date of a Change
               of  Control of the  Company;  or (e)  failure to comply  with the
               terms  fo  this  Agreement.   In  the  event  of  termination  of
               Employee's  employment  under this Agreement by Employer  without
               cause or for Good Reason, Employer shall pay within ten (10) days
               of such termination a severance payment equal to the compensation
               that would have been paid to Employee for an additional three (3)
               month period,  at the same rate of pay per month as if Employee's
               employment  would not have  been  terminated.  Employee's  fringe
               benefits and other  benefits  that were provided  Employee  under
               Section 8 of this  Agreement  will be continued to the benefit of
               Employee  during the three  month  period of  compensation  after
               termination without cause or for Good Reason.

Notwithstanding  any  termination  of this  Agreement  pursuant  to  Section  9,
Employee shall remain bound by the provisions of Sections 10 and 11 below.

10.      INVENTIONS

"Inventions" made or conceived  entirely or partially by Employee while employed
by the Company shall be the exclusive property of the Company.  For the purposes
of this Agreement,  the term,  "Inventions"  includes,  without limitation,  all
creations,  whether or not patentable or copyrightable,  and all ideas, reports,
or other  creative  works  including,  without  limitation,  therapies,  genetic
engineering  tools and methods,  gene  expression  systems and  diagnostics  and
therapeutic  products  derived  therefrom,  which  related  to the  existing  or
proposed  business  of the  Company  or to any other  business  or  research  or
development  effort  conducted by the  Company.  All of  Employee's  Inventions,
whether or not  copyrightable  or patentable,  will be works for hire.  Employee
will promptly  disclose each  Inventions to the Company in writing and cooperate
with the  Company  to  patent or  copyright  all  Inventions  by  executing  all
documents  tendered by the Company for the purpose of patenting or  copyrighting
Employee's  Inventions.  This  provision  shall be construed in conformity  with
Chapter 49.44 of the Revised Code of  Washington.  This provision does not apply
to an Invention for which no equipment,  supplies,  facilities,  or trade secret
information  of the  Company  was used  and  which  was  developed  entirely  on
Employee's own time unless (i) the Invention relates directly to the business of
the Company, or to the Company's actual or demonstrably  anticipated research or
development,  or (ii) the Invention  results from any work performed by Employee
for the Company.

11.      NON-DISCLOSURE OF CONFIDENTIAL INFORMATION AND RESTRICTIVE COVENANTS

11.1  Confidential  Information.  During the course of his employment,  Employee
will acquire knowledge of trade secrets and other proprietary information of the
Company   ("Confidential   Information")  and  may  contribute  to  Confidential
Information through inventions, discoveries,  improvements or some other manner.
Confidential  Information includes, but is not limited to, nonpublic information
relating  to  the  Company's  business,  operations,  customers  or  technology,
including  customer  lists,  vendor  lists,  pricing  or  financial  information
concerning  the  Company and its vendors and  customers,  trade  secrets,  data,
documentation,  concepts techniques, processes, know-how, marketing information,
designs,  customer  information,  cost data, price lists, and pricing  policies.
Confidential  Information  does not include  information  that is already public
knowledge  or which can be obtained by  reference  to public  sources.  Employee
recognizes that all Confidential  Information is the property of the Company and
agrees that, except as required by the duties of Employee's  employment with the
Company, Employee shall never, directly or indirectly, use, publish, disseminate
or otherwise  disclose any Confidential  Information  obtained during Employee's
employment  with the Company  without the prior written  consent of the Company.
Employee  acknowledges  and agrees that the terms of this Section  shall survive
the termination of his employment with the Company.

<PAGE>

11.2  Non-Competition.  Employee further acknowledges that his position with the
Company  will give him a close  knowledge  of its  policies,  business and trade
secrets,  and that  Employee's  continued and  exclusive  service to the Company
under this  Agreement  is of a high degree of  importance  and  confidentiality.
Employee  agrees  that  for a  period  of one  year  after  the  termination  of
Employee's  employment  with  the  Company,   Employee  will  not,  directly  or
indirectly,  be employed by, engage in, consult with, or own an equity  interest
in any entity or  activities  competitive  with the  business  engaged in by the
Company during Employee's  employment under this Agreement,  without the written
consent of the Company.

11.3  Solicitation.  During the term of his employment  with the Company and for
the period of one year  thereafter,  Employee  shall not:  (i) seek to persuade,
directly  or  indirectly,  any  employee  of the  Company  to  discontinue  that
individual's  employment with the Company, or seek to persuade any such employee
to become employed in any activity similar to or competitive with the activities
of the Company, or (ii) directly or indirectly solicit from any person or entity
who was a customer of the Company and with whom  Employee had business  dealings
on behalf of the Company during the one-year  period prior to the termination of
Employee's  employment  any  business  which is  competitive  with the  business
activities of the Company,  or cause or authorize such  solicitation,  for or on
behalf of Employee or any third party.

11.4 Unfair  Competition.  Employee agrees that the provisions of Section 10 and
11 of this  Agreement  are  reasonably  necessary  to protect  the rights of the
Company and to prevent unfair competition.  The provisions of Sections 10 and 11
shall apply if  Employee's  employment  is  terminated at the end of the term of
this Agreement or otherwise.  The period of the covenants  contained in Sections
10 and 11 shall be extended by any period of time  during  which  Employee is in
violation of said covenants, if any.

11.5 Severability. The parties agree that the covenants set forth in Sections 10
and 11 of this Agreement,  including,  without limitation,  the scope, duration,
and geographic extent of such  restrictions,  are fair and reasonably  necessary
for the protection of the Company's legitimate business interest. In the event a
court or arbitrator should decline to enforce any of such provisions, they shall
be deemed to be modified to restrict  Employee to the maximum  extent  which the
court or arbitrator shall find enforceable.

11.6 Records. Upon termination of this Agreement, all documents, records, files,
notebooks,  and similar  repositories  containing the  information  described in
Sections 10 and 11 of this Agreement,  including all copies,  then in Employee's
possession,  whether  prepared  by  Employee  or  others,  shall be  immediately
returned to the Company by Employee.

12.      INJUNCTIVE RELIEF

Employee acknowledges that the breach or threatened breach of the nondisclosure,
non-competition or other agreements  contained in this Agreement would give rise
to  irreparable  injury  to the  Company,  which  injury  would be  inadequately
compensable  in money  damages.  The Company may,  therefore,  seek and obtain a
restraining  order or injunction  prohibiting the breach or threatened breach of
any provision, requirement or covenant of this Agreement, in addition to and not
in limitation of any other legal remedies that may be available.

13.      MISCELLANEOUS

13.1 Entire Agreement.  This Agreement contains the entire agreement between the
Company  and  Employee  relating  to the subject  matter of this  Agreement.  No
modification  of this Agreement shall be valid unless made in writing and signed
by both parties.

<PAGE>

13.2 Notice.  Any notice  required or permitted to be give under this  Agreement
shall be sufficient if in writing and delivered personally or sent by registered
or certified mail, receipt return requested,  to Employee at his residence or to
the Company at its principal office.

13.3  Waiver.  No waiver by the  Company or Employee of any default or breach of
any term, condition or covenant of this Agreement shall be deemed to be a wavier
of any subsequent default or breach of the same or any other term,  condition or
covenant contained in this Agreement.

13.4  Assignment and  Successors.  The rights and  obligations of Employee under
this  Agreement are personal and may not be assigned to any other  person.  This
Agreement will bind and benefit any successor of the Company, whether by merger,
sale of assets,  reorganization  or other form of  acquisition,  disposition  or
business  reorganization.  In the event of Employee's death, any benefits due or
to become due under this Agreement shall become a part of Employee's  estate and
shall be distributed to his personal representative.

13.5 Attorney's Fees. In the event of any dispute relating to  interpretation or
enforcement of this Agreement, the prevailing party shall be entitled to recover
its reasonable attorneys' fees and costs, whether or not a lawsuit,  arbitration
or other legal action is commenced.

13.6  Applicable  Law.  This  Agreement  shall be governed by and  construed  in
accordance with the laws of the State of Washington.

This Agreement is effective as of the date first above written.

PHAGE THERAPEUTICS, INC.  (COMPANY):

         By: /s/ Darren Pylot/s/
         -----------------------

         Its: Director
         -------------

EMPLOYEE (EMPLOYEE):

         /s/ Richard Honour /s/
         ----------------------

         Signature

         Feb. 21, 2001
         -------------

         Date

<PAGE>

                              EMPLOYMENT AGREEMENT

EMPLOYMENT  AGREEMENT  dated  November  1,  2000  ("Agreement")   between  Phage
Therapeutics,  Inc., a Washington corporation  ("Company") and Tracy Honour, MS,
LAC, a resident of Seattle, WA ("Employee").

                                   WITNESSETH

WHEREAS, the Company wishes to employ Employee in the position of Manager,  Data
Base Management Systems; and

WHEREAS,  the Employee wishes to enter into the employ of the Company to fulfill
the responsibilities of the position of Manager, Data Base Management Systems;

NOW  THEREFORE,  in  consideration  of  the  foregoing  and  of  the  respective
covenants,   obligations  and  agreements  of  the  parties  contained  in  this
Agreement, the parties, intending to be legally bound, hereby agree as follows:

1.       EMPLOYMENT

The Company shall employ  Employee,  and Employee shall accept such  employment,
upon the terms and conditions set forth in Agreement. Employee's employment with
the Company shall be subject to the Company's  general  employment  policies and
practices.  The Company reserves the right to modify such policies and practices
from time to time.

2.       DUTIES

Employee shall be employed as Manager, Data Base Management Systems.  During the
term of this  Agreement,  Employee  shall  devote his full time,  attention  and
efforts to the conduct of the business of the Company and the performance of his
duties under this  Agreement.  Employee  shall not engage in any other  business
activity,  whether or not such  activity  is pursued  for gain,  profit or other
pecuniary  advantage;  provided  that  Employee  shall  not  be  prevented  from
investing  his  personal  assets in such form or manner as will not  require any
services on the part of Employee in the operation of the affairs of the entities
in which such investments are made.

3.     TERM

<PAGE>

Subject to the terms and conditions set forth in this  Agreement,  Company shall
employ Employee and Employee shall serve the Company in the position of Manager,
Data  Base  Management  Systems  for  a  period  commencing   November  1,  2000
("Commencement  Date")  and  continuing  through  the first  anniversary  of the
Commencement  Date,  unless such  employment  is sooner  terminated  as provided
herein.  During  this one (1) year  period,  Employee's  compensation  and other
benefits may be adjusted  annually,  or more often,  without the necessity of an
amendment of this Agreement. The Employee's term of employment shall be extended
for  additional  one (1) year  periods  and on such terms and at such  levels of
compensation  as shall be mutually agreed to in writing by Company and Employee,
unless otherwise terminated under this Agreement.

4.       COMPENSATION

For all services  rendered by Employee under this Agreement,  the Company agrees
to pay Employee and Employee agrees to accept the following:

4.1 Wage. An hourly wage of $25.00 ("Wage"), which shall be payable at the times
and in the manner set by the  Company's  standard  payroll  policy.  Such Salary
shall be reviewed  one (1) month prior to the  anniversary  of the  Commencement
Date each year,  and any  increase in the amount  under this  Agreement  for the
twelve (12) month period following the Commencement  Date anniversary date shall
be  determined  at such  time by the Board of  Directors  of the  Company,  or a
compensation committee formed by the Board of Directors.

4.2 Bonuses.  Employee shall  additionally be entitled to such cash and/or stock
bonuses  and  stock  options  as  determined  from  time to time by the Board of
Directors of the Company, or their designated representatives(s).  Cash bonuses,
if any, shall be paid subject to achievement of specific performance  milestones
agreed to by both the Company and Employee.

5.       CONTINUING EDUCATION

In the event that performance of Employee's  responsibilities  and duties within
the Company shall require or recommend  certification,  licensure, or continuing
education  to maintain  licensure,  then Company  shall upon notice,  allow time
during business hours for the required activity and shall reimburse Employee for
reasonable  expenses  associated  therewith  including at least any registration
fees, license fees, travel, lodging and per diem fees.

6.       WORKING FACILITIES

Employee shall be furnished with such facilities,  services, and supplies as are
suitable and adequate for the performance of this duties under this Agreement.

7.       EXPENSES

Employee shall be reimbursed by the Company for his reasonable expenses incurred
in connection with his employment and which are related to and in furtherance of
the Company's  business,  in accordance  with the general  policy of the Company
regarding reimbursement of expenses.

8.       BENEFITS

Employee  shall be entitled  to all rights and  benefits  for which  Employee is
eligible under any  employee-benefits  plan,  including pension,  stock or stock
option,  profit sharing,  health  (including  medical and dental),  and life and
disability  insurance  plan,  which  the  Company  provides  for  its  employees
generally.  The Company  reserves  the right to change the  benefits  offered to
employees at any time.

<PAGE>

9.       TERMINATION

Employee's  employment  with the Company shall be terminated upon the occurrence
of any of the following events:

9.1 Death of Employee. In lieu of any other benefits which may be payable by the
Company with respect to death,  in the event of such death,  the Salary  payable
hereunder  shall  continue  to be paid at the then  current  rate for  three (3)
months after the  termination  of  employment.  In the event of the death of the
Employee during the term of this Agreement,  the sums payable hereunder shall be
paid to his personal representative;

9.2 Mutual agreement of termination in writing between the Company and Employee;

9.3  Disability of Employee that prevents him from  performing  the material and
substantial  duties  of his  position  for a period of two (2)  months.  In such
event, at the Company's option, the Company shall give Employee not less than 30
days' written notice of  termination  of employment.  Employee shall continue to
render  services to the  Company  (unless  disabled)  and shall be paid his full
salary as in effect at such time up to the date of termination.  Nothing in this
Agreement,  however,  shall limit or diminish the Company's  obligations towards
Employee  with  respect  to the  Americans  with  Disabilities  Act of 1990,  as
amended,  the Family and Medical Leave Act of 1993,  as amended,  or any similar
state laws.

9.4 Written  notice by either party to the other  terminating  the employment of
Employee as follows:

          a.   Notice of  resignation  by Employee to the  Company,  at least 30
               days in advance;

          b.   Notice of  termination  of  employment by the Company to Employee
               with cause.  For purposes of this  Agreement,  the Company  shall
               have  "Cause"  to  terminate  Employee's  employment  under  this
               Agreement  upon   Employee's:   (a)  willful  breach  of  any  of
               Employee's  material  obligations  under  this  Agreement,  which
               breach shall not have been  remedied by Employee  within ten (10)
               days  after  the  Company  shall  have  given  written  notice to
               Employee of such  breach,  or which such  breach  shall have been
               repeated  after  lapse  of  such  ten-day   notice  period;   (b)
               commission  of an act which the Board of Directors of the Company
               shall reasonably have found to have involved  willful  misconduct
               or gross negligence on the part of Employee in the conduct of his
               duties under this Agreement which materially  injures the Company
               or any of its  subsidiaries or affiliates;  (c) conviction of (or
               pleading  nolo  contendere  to) any  felony  or any  misdemeanour
               involving moral turpitude which might, in the reasonable judgment
               of the Board of Directors of the Company,  cause embarrassment to
               the  Company  or any  of  its  subsidiaries  or  affiliates;  (d)
               commission of a material act of personal  dishonesty or breach of
               fiduciary duty involving  personal  profit in connection with the
               Employee's   employment   by  the   Company;   or  (e)   habitual
               absenteeism,  chronic  alcoholism,  drug  abuse or other  form of
               addiction  which,  in the  reasonable  judgment  of the  Board of
               Directors,  impairs  Employee's  ability to perform his duties or
               injures the Company.

<PAGE>

          c.   Notice of  termination  of  employment by the Company to Employee
               without cause or for good reason. For purposes of this Agreement,
               the  Company  will have  terminated  Employee's  employment  with
               Company  under the  Agreement  without cause or for "Good Reason"
               upon  Company's:  (a)  financial  inability to meet its financial
               obligations;  (b) desire to terminate  Employee's  employment for
               reasons other than for Cause as defined  above in Section  9.4.c;
               (c)  contemplation,  consideration or execution of a financial or
               business  agreement  or  transaction  that  obligates  Company to
               reduce costs or staff or Employee's  employment;  (d) termination
               of Employee's  employment within 120 days of the date of a Change
               of  Control of the  Company;  or (e)  failure to comply  with the
               terms  fo  this  Agreement.   In  the  event  of  termination  of
               Employee's  employment  under this Agreement by Employer  without
               cause or for Good Reason, Employer shall pay within ten (10) days
               of such termination a severance payment equal to the compensation
               that would have been paid to Employee for an additional three (3)
               month period,  at the same rate of pay per month as if Employee's
               employment  would not have  been  terminated.  Employee's  fringe
               benefits and other  benefits  that were provided  Employee  under
               Section 8 of this  Agreement  will be continued to the benefit of
               Employee  during the three  month  period of  compensation  after
               termination without cause or for Good Reason.

Notwithstanding  any  termination  of this  Agreement  pursuant  to  Section  9,
Employee shall remain bound by the provisions of Sections 10 and 11 below.

10.      INVENTIONS

"Inventions" made or conceived  entirely or partially by Employee while employed
by the Company shall be the exclusive property of the Company.  For the purposes
of this Agreement,  the term,  "Inventions"  includes,  without limitation,  all
creations,  whether or not patentable or copyrightable,  and all ideas, reports,
or other  creative  works  including,  without  limitation,  therapies,  genetic
engineering  tools and methods,  gene  expression  systems and  diagnostics  and
therapeutic  products  derived  therefrom,  which  related  to the  existing  or
proposed  business  of the  Company  or to any other  business  or  research  or
development  effort  conducted by the  Company.  All of  Employee's  Inventions,
whether or not  copyrightable  or patentable,  will be works for hire.  Employee
will promptly  disclose each  Inventions to the Company in writing and cooperate
with the  Company  to  patent or  copyright  all  Inventions  by  executing  all
documents  tendered by the Company for the purpose of patenting or  copyrighting
Employee's  Inventions.  This  provision  shall be construed in conformity  with
Chapter 49.44 of the Revised Code of  Washington.  This provision does not apply
to an Invention for which no equipment,  supplies,  facilities,  or trade secret
information  of the  Company  was used  and  which  was  developed  entirely  on
Employee's own time unless (i) the Invention relates directly to the business of
the Company, or to the Company's actual or demonstrably  anticipated research or
development,  or (ii) the Invention  results from any work performed by Employee
for the Company.

11.      NON-DISCLOSURE OF CONFIDENTIAL INFORMATION AND RESTRICTIVE COVENANTS

11.1  Confidential  Information.  During the course of his employment,  Employee
will acquire knowledge of trade secrets and other proprietary information of the
Company   ("Confidential   Information")  and  may  contribute  to  Confidential
Information through inventions, discoveries,  improvements or some other manner.
Confidential  Information includes, but is not limited to, nonpublic information
relating  to  the  Company's  business,  operations,  customers  or  technology,
including  customer  lists,  vendor  lists,  pricing  or  financial  information
concerning  the  Company and its vendors and  customers,  trade  secrets,  data,
documentation,  concepts techniques, processes, know-how, marketing information,
designs,  customer  information,  cost data, price lists, and pricing  policies.
Confidential  Information  does not include  information  that is already public
knowledge  or which can be obtained by  reference  to public  sources.  Employee
recognizes that all Confidential  Information is the property of the Company and
agrees that, except as required by the duties of Employee's  employment with the
Company, Employee shall never, directly or indirectly, use, publish, disseminate
or otherwise  disclose any Confidential  Information  obtained during Employee's
employment  with the Company  without the prior written  consent of the Company.
Employee  acknowledges  and agrees that the terms of this Section  shall survive
the termination of his employment with the Company.

<PAGE>

11.2  Non-Competition.  Employee further acknowledges that his position with the
Company  will give him a close  knowledge  of its  policies,  business and trade
secrets,  and that  Employee's  continued and  exclusive  service to the Company
under this  Agreement  is of a high degree of  importance  and  confidentiality.
Employee  agrees  that  for a  period  of one  year  after  the  termination  of
Employee's  employment  with  the  Company,   Employee  will  not,  directly  or
indirectly,  be employed by, engage in, consult with, or own an equity  interest
in any entity or  activities  competitive  with the  business  engaged in by the
Company during Employee's  employment under this Agreement,  without the written
consent of the Company.

11.3  Solicitation.  During the term of his employment  with the Company and for
the period of one year  thereafter,  Employee  shall not:  (i) seek to persuade,
directly  or  indirectly,  any  employee  of the  Company  to  discontinue  that
individual's  employment with the Company, or seek to persuade any such employee
to become employed in any activity similar to or competitive with the activities
of the Company, or (ii) directly or indirectly solicit from any person or entity
who was a customer of the Company and with whom  Employee had business  dealings
on behalf of the Company during the one-year  period prior to the termination of
Employee's  employment  any  business  which is  competitive  with the  business
activities of the Company,  or cause or authorize such  solicitation,  for or on
behalf of Employee or any third party.

11.4 Unfair  Competition.  Employee agrees that the provisions of Section 10 and
11 of this  Agreement  are  reasonably  necessary  to protect  the rights of the
Company and to prevent unfair competition.  The provisions of Sections 10 and 11
shall apply if  Employee's  employment  is  terminated at the end of the term of
this Agreement or otherwise.  The period of the covenants  contained in Sections
10 and 11 shall be extended by any period of time  during  which  Employee is in
violation of said covenants, if any.

11.5 Severability. The parties agree that the covenants set forth in Sections 10
and 11 of this Agreement,  including,  without limitation,  the scope, duration,
and geographic extent of such  restrictions,  are fair and reasonably  necessary
for the protection of the Company's legitimate business interest. In the event a
court or arbitrator should decline to enforce any of such provisions, they shall
be deemed to be modified to restrict  Employee to the maximum  extent  which the
court or arbitrator shall find enforceable.

11.6 Records. Upon termination of this Agreement, all documents, records, files,
notebooks,  and similar  repositories  containing the  information  described in
Sections 10 and 11 of this Agreement,  including all copies,  then in Employee's
possession,  whether  prepared  by  Employee  or  others,  shall be  immediately
returned to the Company by Employee.

12.      INJUNCTIVE RELIEF

Employee acknowledges that the breach or threatened breach of the nondisclosure,
non-competition or other agreements  contained in this Agreement would give rise
to  irreparable  injury  to the  Company,  which  injury  would be  inadequately
compensable  in money  damages.  The Company may,  therefore,  seek and obtain a
restraining  order or injunction  prohibiting the breach or threatened breach of
any provision, requirement or covenant of this Agreement, in addition to and not
in limitation of any other legal remedies that may be available.

13.      MISCELLANEOUS

13.1 Entire Agreement.  This Agreement contains the entire agreement between the
Company  and  Employee  relating  to the subject  matter of this  Agreement.  No
modification  of this Agreement shall be valid unless made in writing and signed
by both parties.

<PAGE>

13.2 Notice.  Any notice  required or permitted to be give under this  Agreement
shall be sufficient if in writing and delivered personally or sent by registered
or certified mail, receipt return requested,  to Employee at his residence or to
the Company at its principal office.

13.3  Waiver.  No waiver by the  Company or Employee of any default or breach of
any term, condition or covenant of this Agreement shall be deemed to be a wavier
of any subsequent default or breach of the same or any other term,  condition or
covenant contained in this Agreement.

13.4  Assignment and  Successors.  The rights and  obligations of Employee under
this  Agreement are personal and may not be assigned to any other  person.  This
Agreement will bind and benefit any successor of the Company, whether by merger,
sale of assets,  reorganization  or other form of  acquisition,  disposition  or
business  reorganization.  In the event of Employee's death, any benefits due or
to become due under this Agreement shall become a part of Employee's  estate and
shall be distributed to his personal representative.

13.5 Attorney's Fees. In the event of any dispute relating to  interpretation or
enforcement of this Agreement, the prevailing party shall be entitled to recover
its reasonable attorneys' fees and costs, whether or not a lawsuit,  arbitration
or other legal action is commenced.

13.6  Applicable  Law.  This  Agreement  shall be governed by and  construed  in
accordance with the laws of the State of Washington.

This Agreement is effective as of the date first above written.

PHAGE THERAPEUTICS, INC.  (COMPANY):

         By: /s/ Richard C. Honour/s/
         ----------------------------

         Its: President & CEO
         --------------------

EMPLOYEE (EMPLOYEE):

         /s/ Tracy Honour /s/
         --------------------
         Signature

         Feb. 21, 2001
         -------------

         Date

<PAGE>

                              EMPLOYMENT AGREEMENT

EMPLOYMENT  AGREEMENT  dated  November  1,  2000  ("Agreement")   between  Phage
Therapeutics,  Inc., a Washington  corporation  ("Company") and Douglas Lee, MS,
MBA, a resident of Seattle, WA ("Employee").

                                   WITNESSETH

WHEREAS,  the  Company  wishes  to employ  Employee  in the  position  of Senior
Scientist; and

WHEREAS,  the Employee wishes to enter into the employ of the Company to fulfill
the responsibilities of the position of Senior Scientist;

NOW  THEREFORE,  in  consideration  of  the  foregoing  and  of  the  respective
covenants,   obligations  and  agreements  of  the  parties  contained  in  this
Agreement, the parties, intending to be legally bound, hereby agree as follows:

1.       EMPLOYMENT

The Company shall employ  Employee,  and Employee shall accept such  employment,
upon the terms and conditions set forth in Agreement. Employee's employment with
the Company shall be subject to the Company's  general  employment  policies and
practices.  The Company reserves the right to modify such policies and practices
from time to time.

2.       DUTIES

Employee  shall  be  employed  as  Senior  Scientist.  During  the  term of this
Agreement,  Employee  shall devote his full time,  attention  and efforts to the
conduct of the business of the Company and the  performance  of his duties under
this  Agreement.  Employee  shall not  engage in any  other  business  activity,
whether or not such  activity  is pursued  for gain,  profit or other  pecuniary
advantage;  provided that  Employee  shall not be prevented  from  investing his
personal  assets in such form or manner as will not require any  services on the
part of Employee in the  operation  of the affairs of the entities in which such
investments are made.

3.     TERM

Subject to the terms and conditions set forth in this  Agreement,  Company shall
employ  Employee and Employee  shall serve the Company in the position of Senior
Scientist for a period  commencing  November 1, 2000  ("Commencement  Date") and
continuing  through the first anniversary of the Commencement  Date, unless such
employment  is sooner  terminated as provided  herein.  During this one (1) year
period,  Employee's compensation and other benefits may be adjusted annually, or
more  often,  without the  necessity  of an  amendment  of this  Agreement.  The
Employee's  term of  employment  shall be extended for  additional  one (1) year
periods  and on such  terms  and at such  levels  of  compensation  as  shall be
mutually  agreed  to in  writing  by  Company  and  Employee,  unless  otherwise
terminated under this Agreement.

<PAGE>

4.       COMPENSATION

For all services  rendered by Employee under this Agreement,  the Company agrees
to pay Employee and Employee agrees to accept the following:

4.1 Salary.  An annual salary of $60,000  ("Salary"),  which shall be payable at
the times and in the manner set by the Company's  standard payroll policy.  Such
Salary  shall  be  reviewed  one  (1)  month  prior  to the  anniversary  of the
Commencement Date each year, and any increase in the amount under this Agreement
for the twelve (12) month period  following the  Commencement  Date  anniversary
date shall be  determined at such time by the Board of Directors of the Company,
or a compensation committee formed by the Board of Directors.

4.2 Bonuses.  Employee shall  additionally be entitled to such cash and/or stock
bonuses  and  stock  options  as  determined  from  time to time by the Board of
Directors of the Company, or their designated representatives(s).  Cash bonuses,
if any, shall be paid subject to achievement of specific performance  milestones
agreed to by both the Company and Employee.

5.       CONTINUING EDUCATION

In the event that performance of Employee's  responsibilities  and duties within
the Company shall require or recommend  certification,  licensure, or continuing
education  to maintain  licensure,  then Company  shall upon notice,  allow time
during business hours for the required activity and shall reimburse Employee for
reasonable  expenses  associated  therewith  including at least any registration
fees, license fees, travel, lodging and per diem fees.

6.       WORKING FACILITIES

Employee shall be furnished with such facilities,  services, and supplies as are
suitable and adequate for the performance of this duties under this Agreement.

7.       EXPENSES

Employee shall be reimbursed by the Company for his reasonable expenses incurred
in connection with his employment and which are related to and in furtherance of
the Company's  business,  in accordance  with the general  policy of the Company
regarding reimbursement of expenses.

8.       BENEFITS

Employee  shall be entitled  to all rights and  benefits  for which  Employee is
eligible under any  employee-benefits  plan,  including pension,  stock or stock
option,  profit sharing,  health  (including  medical and dental),  and life and
disability  insurance  plan,  which  the  Company  provides  for  its  employees
generally.  The Company  reserves  the right to change the  benefits  offered to
employees at any time.

<PAGE>

9.       TERMINATION

Employee's  employment  with the Company shall be terminated upon the occurrence
of any of the following events:

9.1 Death of Employee. In lieu of any other benefits which may be payable by the
Company with respect to death,  in the event of such death,  the Salary  payable
hereunder  shall  continue  to be paid at the then  current  rate for  three (3)
months after the  termination  of  employment.  In the event of the death of the
Employee during the term of this Agreement,  the sums payable hereunder shall be
paid to his personal representative;

9.2 Mutual agreement of termination in writing between the Company and Employee;

9.3  Disability of Employee that prevents him from  performing  the material and
substantial  duties  of his  position  for a period of two (2)  months.  In such
event, at the Company's option, the Company shall give Employee not less than 30
days' written notice of  termination  of employment.  Employee shall continue to
render  services to the  Company  (unless  disabled)  and shall be paid his full
salary as in effect at such time up to the date of termination.  Nothing in this
Agreement,  however,  shall limit or diminish the Company's  obligations towards
Employee  with  respect  to the  Americans  with  Disabilities  Act of 1990,  as
amended,  the Family and Medical Leave Act of 1993,  as amended,  or any similar
state laws.

9.4 Written  notice by either party to the other  terminating  the employment of
Employee as follows:

          a.   Notice of  resignation  by Employee to the  Company,  at least 30
               days in advance;

          b.   Notice of  termination  of  employment by the Company to Employee
               with cause.  For purposes of this  Agreement,  the Company  shall
               have  "Cause"  to  terminate  Employee's  employment  under  this
               Agreement  upon   Employee's:   (a)  willful  breach  of  any  of
               Employee's  material  obligations  under  this  Agreement,  which
               breach shall not have been  remedied by Employee  within ten (10)
               days  after  the  Company  shall  have  given  written  notice to
               Employee of such  breach,  or which such  breach  shall have been
               repeated  after  lapse  of  such  ten-day   notice  period;   (b)
               commission  of an act which the Board of Directors of the Company
               shall reasonably have found to have involved  willful  misconduct
               or gross negligence on the part of Employee in the conduct of his
               duties under this Agreement which materially  injures the Company
               or any of its  subsidiaries or affiliates;  (c) conviction of (or
               pleading  nolo  contendere  to) any  felony  or any  misdemeanour
               involving moral turpitude which might, in the reasonable judgment
               of the Board of Directors of the Company,  cause embarrassment to
               the  Company  or any  of  its  subsidiaries  or  affiliates;  (d)
               commission of a material act of personal  dishonesty or breach of
               fiduciary duty involving  personal  profit in connection with the
               Employee's   employment   by  the   Company;   or  (e)   habitual
               absenteeism,  chronic  alcoholism,  drug  abuse or other  form of
               addiction  which,  in the  reasonable  judgment  of the  Board of
               Directors,  impairs  Employee's  ability to perform his duties or
               injures the Company.

<PAGE>

          c.   Notice of  termination  of  employment by the Company to Employee
               without cause or for good reason. For purposes of this Agreement,
               the  Company  will have  terminated  Employee's  employment  with
               Company  under the  Agreement  without cause or for "Good Reason"
               upon  Company's:  (a)  financial  inability to meet its financial
               obligations;  (b) desire to terminate  Employee's  employment for
               reasons other than for Cause as defined  above in Section  9.4.c;
               (c)  contemplation,  consideration or execution of a financial or
               business  agreement  or  transaction  that  obligates  Company to
               reduce costs or staff or Employee's  employment;  (d) termination
               of Employee's  employment within 120 days of the date of a Change
               of  Control of the  Company;  or (e)  failure to comply  with the
               terms  fo  this  Agreement.   In  the  event  of  termination  of
               Employee's  employment  under this Agreement by Employer  without
               cause or for Good Reason, Employer shall pay within ten (10) days
               of such termination a severance payment equal to the compensation
               that would have been paid to Employee for an additional three (3)
               month period,  at the same rate of pay per month as if Employee's
               employment  would not have  been  terminated.  Employee's  fringe
               benefits and other  benefits  that were provided  Employee  under
               Section 8 of this  Agreement  will be continued to the benefit of
               Employee  during the three  month  period of  compensation  after
               termination without cause or for Good Reason.

Notwithstanding  any  termination  of this  Agreement  pursuant  to  Section  9,
Employee shall remain bound by the provisions of Sections 10 and 11 below.

10.      INVENTIONS

"Inventions" made or conceived  entirely or partially by Employee while employed
by the Company shall be the exclusive property of the Company.  For the purposes
of this Agreement,  the term,  "Inventions"  includes,  without limitation,  all
creations,  whether or not patentable or copyrightable,  and all ideas, reports,
or other  creative  works  including,  without  limitation,  therapies,  genetic
engineering  tools and methods,  gene  expression  systems and  diagnostics  and
therapeutic  products  derived  therefrom,  which  related  to the  existing  or
proposed  business  of the  Company  or to any other  business  or  research  or
development  effort  conducted by the  Company.  All of  Employee's  Inventions,
whether or not  copyrightable  or patentable,  will be works for hire.  Employee
will promptly  disclose each  Inventions to the Company in writing and cooperate
with the  Company  to  patent or  copyright  all  Inventions  by  executing  all
documents  tendered by the Company for the purpose of patenting or  copyrighting
Employee's  Inventions.  This  provision  shall be construed in conformity  with
Chapter 49.44 of the Revised Code of  Washington.  This provision does not apply
to an Invention for which no equipment,  supplies,  facilities,  or trade secret
information  of the  Company  was used  and  which  was  developed  entirely  on
Employee's own time unless (i) the Invention relates directly to the business of
the Company, or to the Company's actual or demonstrably  anticipated research or
development,  or (ii) the Invention  results from any work performed by Employee
for the Company.

11.      NON-DISCLOSURE OF CONFIDENTIAL INFORMATION AND RESTRICTIVE COVENANTS

11.1  Confidential  Information.  During the course of his employment,  Employee
will acquire knowledge of trade secrets and other proprietary information of the
Company   ("Confidential   Information")  and  may  contribute  to  Confidential
Information through inventions, discoveries,  improvements or some other manner.
Confidential  Information includes, but is not limited to, nonpublic information
relating  to  the  Company's  business,  operations,  customers  or  technology,
including  customer  lists,  vendor  lists,  pricing  or  financial  information
concerning  the  Company and its vendors and  customers,  trade  secrets,  data,
documentation,  concepts techniques, processes, know-how, marketing information,
designs,  customer  information,  cost data, price lists, and pricing  policies.
Confidential  Information  does not include  information  that is already public
knowledge  or which can be obtained by  reference  to public  sources.  Employee
recognizes that all Confidential  Information is the property of the Company and
agrees that, except as required by the duties of Employee's  employment with the
Company, Employee shall never, directly or indirectly, use, publish, disseminate
or otherwise  disclose any Confidential  Information  obtained during Employee's
employment  with the Company  without the prior written  consent of the Company.
Employee  acknowledges  and agrees that the terms of this Section  shall survive
the termination of his employment with the Company.

<PAGE>

11.2  Non-Competition.  Employee further acknowledges that his position with the
Company  will give him a close  knowledge  of its  policies,  business and trade
secrets,  and that  Employee's  continued and  exclusive  service to the Company
under this  Agreement  is of a high degree of  importance  and  confidentiality.
Employee  agrees  that  for a  period  of one  year  after  the  termination  of
Employee's  employment  with  the  Company,   Employee  will  not,  directly  or
indirectly,  be employed by, engage in, consult with, or own an equity  interest
in any entity or  activities  competitive  with the  business  engaged in by the
Company during Employee's  employment under this Agreement,  without the written
consent of the Company.

11.3  Solicitation.  During the term of his employment  with the Company and for
the period of one year  thereafter,  Employee  shall not:  (i) seek to persuade,
directly  or  indirectly,  any  employee  of the  Company  to  discontinue  that
individual's  employment with the Company, or seek to persuade any such employee
to become employed in any activity similar to or competitive with the activities
of the Company, or (ii) directly or indirectly solicit from any person or entity
who was a customer of the Company and with whom  Employee had business  dealings
on behalf of the Company during the one-year  period prior to the termination of
Employee's  employment  any  business  which is  competitive  with the  business
activities of the Company,  or cause or authorize such  solicitation,  for or on
behalf of Employee or any third party.

11.4 Unfair  Competition.  Employee agrees that the provisions of Section 10 and
11 of this  Agreement  are  reasonably  necessary  to protect  the rights of the
Company and to prevent unfair competition.  The provisions of Sections 10 and 11
shall apply if  Employee's  employment  is  terminated at the end of the term of
this Agreement or otherwise.  The period of the covenants  contained in Sections
10 and 11 shall be extended by any period of time  during  which  Employee is in
violation of said covenants, if any.

11.5 Severability. The parties agree that the covenants set forth in Sections 10
and 11 of this Agreement,  including,  without limitation,  the scope, duration,
and geographic extent of such  restrictions,  are fair and reasonably  necessary
for the protection of the Company's legitimate business interest. In the event a
court or arbitrator should decline to enforce any of such provisions, they shall
be deemed to be modified to restrict  Employee to the maximum  extent  which the
court or arbitrator shall find enforceable.

11.6 Records. Upon termination of this Agreement, all documents, records, files,
notebooks,  and similar  repositories  containing the  information  described in
Sections 10 and 11 of this Agreement,  including all copies,  then in Employee's
possession,  whether  prepared  by  Employee  or  others,  shall be  immediately
returned to the Company by Employee.

12.      INJUNCTIVE RELIEF

Employee acknowledges that the breach or threatened breach of the nondisclosure,
non-competition or other agreements  contained in this Agreement would give rise
to  irreparable  injury  to the  Company,  which  injury  would be  inadequately
compensable  in money  damages.  The Company may,  therefore,  seek and obtain a
restraining  order or injunction  prohibiting the breach or threatened breach of
any provision, requirement or covenant of this Agreement, in addition to and not
in limitation of any other legal remedies that may be available.

13.      MISCELLANEOUS

13.1 Entire Agreement.  This Agreement contains the entire agreement between the
Company  and  Employee  relating  to the subject  matter of this  Agreement.  No
modification  of this Agreement shall be valid unless made in writing and signed
by both parties.

<PAGE>

13.2 Notice.  Any notice  required or permitted to be give under this  Agreement
shall be sufficient if in writing and delivered personally or sent by registered
or certified mail, receipt return requested,  to Employee at his residence or to
the Company at its principal office.

13.3  Waiver.  No waiver by the  Company or Employee of any default or breach of
any term, condition or covenant of this Agreement shall be deemed to be a wavier
of any subsequent default or breach of the same or any other term,  condition or
covenant contained in this Agreement.

13.4  Assignment and  Successors.  The rights and  obligations of Employee under
this  Agreement are personal and may not be assigned to any other  person.  This
Agreement will bind and benefit any successor of the Company, whether by merger,
sale of assets,  reorganization  or other form of  acquisition,  disposition  or
business  reorganization.  In the event of Employee's death, any benefits due or
to become due under this Agreement shall become a part of Employee's  estate and
shall be distributed to his personal representative.

13.5 Attorney's Fees. In the event of any dispute relating to  interpretation or
enforcement of this Agreement, the prevailing party shall be entitled to recover
its reasonable attorneys' fees and costs, whether or not a lawsuit,  arbitration
or other legal action is commenced.

13.6  Applicable  Law.  This  Agreement  shall be governed by and  construed  in
accordance with the laws of the State of Washington.

This Agreement is effective as of the date first above written.

PHAGE THERAPEUTICS, INC.  (COMPANY):

         By: /s/ Richard C. Honour/s/
         ----------------------------

         Its: President & CEO
         --------------------

EMPLOYEE (EMPLOYEE):

         /s/ Doug Lee /s/
         ----------------

         Signature

         Feb. 21, 2001
         -------------

         Date

<PAGE>

                              EMPLOYMENT AGREEMENT

EMPLOYMENT  AGREEMENT  dated  November  1,  2000  ("Agreement")   between  Phage
Therapeutics,  Inc., a Washington corporation ("Company") and Kenneth E. Lehman,
MBA, a resident of Kenmore, WA ("Employee").

                                   WITNESSETH

WHEREAS,  the Company  wishes to employ  Employee in the position of Controller;
and

WHEREAS,  the Employee wishes to enter into the employ of the Company to fulfill
the responsibilities of the position of Controller;

NOW  THEREFORE,  in  consideration  of  the  foregoing  and  of  the  respective
covenants,   obligations  and  agreements  of  the  parties  contained  in  this
Agreement, the parties, intending to be legally bound, hereby agree as follows:

1.       EMPLOYMENT

The Company shall employ  Employee,  and Employee shall accept such  employment,
upon the terms and conditions set forth in Agreement. Employee's employment with
the Company shall be subject to the Company's  general  employment  policies and
practices.  The Company reserves the right to modify such policies and practices
from time to time.

2.       DUTIES

Employee  shall be employed as  Controller.  During the term of this  Agreement,
Employee shall devote his full time, attention and efforts to the conduct of the
business of the Company and the  performance of his duties under this Agreement.
Employee  shall not engage in any other business  activity,  whether or not such
activity is pursued for gain, profit or other pecuniary advantage; provided that
Employee shall not be prevented from investing his personal  assets in such form
or  manner as will not  require  any  services  on the part of  Employee  in the
operation of the affairs of the entities in which such investments are made.

3.     TERM

Subject to the terms and conditions set forth in this  Agreement,  Company shall
employ  Employee  and  Employee  shall  serve the  Company  in the  position  of
Controller for a period commencing  November 1, 2000  ("Commencement  Date") and
continuing  through the first anniversary of the Commencement  Date, unless such
employment  is sooner  terminated as provided  herein.  During this one (1) year
period,  Employee's compensation and other benefits may be adjusted annually, or
more  often,  without the  necessity  of an  amendment  of this  Agreement.  The
Employee's  term of  employment  shall be extended for  additional  one (1) year
periods  and on such  terms  and at such  levels  of  compensation  as  shall be
mutually  agreed  to in  writing  by  Company  and  Employee,  unless  otherwise
terminated under this Agreement.

<PAGE>

4.       COMPENSATION

For all services  rendered by Employee under this Agreement,  the Company agrees
to pay Employee and Employee agrees to accept the following:

4.1 Salary.  An annual salary of $84,000  ("Salary"),  which shall be payable at
the times and in the manner set by the Company's  standard payroll policy.  Such
Salary  shall  be  reviewed  one  (1)  month  prior  to the  anniversary  of the
Commencement Date each year, and any increase in the amount under this Agreement
for the twelve (12) month period  following the  Commencement  Date  anniversary
date shall be  determined at such time by the Board of Directors of the Company,
or a compensation committee formed by the Board of Directors.

4.2 Bonuses.  Employee shall  additionally be entitled to such cash and/or stock
bonuses  and  stock  options  as  determined  from  time to time by the Board of
Directors of the Company, or their designated representatives(s).  Cash bonuses,
if any, shall be paid subject to achievement of specific performance  milestones
agreed to by both the Company and Employee.

5.       CONTINUING EDUCATION

In the event that performance of Employee's  responsibilities  and duties within
the Company shall require or recommend  certification,  licensure, or continuing
education  to maintain  licensure,  then Company  shall upon notice,  allow time
during business hours for the required activity and shall reimburse Employee for
reasonable  expenses  associated  therewith  including at least any registration
fees, license fees, travel, lodging and per diem fees.

6.       WORKING FACILITIES

Employee shall be furnished with such facilities,  services, and supplies as are
suitable and adequate for the performance of this duties under this Agreement.

7.       EXPENSES

Employee shall be reimbursed by the Company for his reasonable expenses incurred
in connection with his employment and which are related to and in furtherance of
the Company's  business,  in accordance  with the general  policy of the Company
regarding reimbursement of expenses.

8.       BENEFITS

Employee  shall be entitled  to all rights and  benefits  for which  Employee is
eligible under any  employee-benefits  plan,  including pension,  stock or stock
option,  profit sharing,  health  (including  medical and dental),  and life and
disability  insurance  plan,  which  the  Company  provides  for  its  employees
generally.  The Company  reserves  the right to change the  benefits  offered to
employees at any time.

<PAGE>

9.       TERMINATION

Employee's  employment  with the Company shall be terminated upon the occurrence
of any of the following events:

9.1 Death of Employee. In lieu of any other benefits which may be payable by the
Company with respect to death,  in the event of such death,  the Salary  payable
hereunder  shall  continue  to be paid at the then  current  rate for  three (3)
months after the  termination  of  employment.  In the event of the death of the
Employee during the term of this Agreement,  the sums payable hereunder shall be
paid to his personal representative;

9.2 Mutual agreement of termination in writing between the Company and Employee;

9.3  Disability of Employee that prevents him from  performing  the material and
substantial  duties  of his  position  for a period of two (2)  months.  In such
event, at the Company's option, the Company shall give Employee not less than 30
days' written notice of  termination  of employment.  Employee shall continue to
render  services to the  Company  (unless  disabled)  and shall be paid his full
salary as in effect at such time up to the date of termination.  Nothing in this
Agreement,  however,  shall limit or diminish the Company's  obligations towards
Employee  with  respect  to the  Americans  with  Disabilities  Act of 1990,  as
amended,  the Family and Medical Leave Act of 1993,  as amended,  or any similar
state laws.

9.4 Written  notice by either party to the other  terminating  the employment of
Employee as follows:

          a.   Notice of  resignation  by Employee to the  Company,  at least 30
               days in advance;

          b.   Notice of  termination  of  employment by the Company to Employee
               with cause.  For purposes of this  Agreement,  the Company  shall
               have  "Cause"  to  terminate  Employee's  employment  under  this
               Agreement  upon   Employee's:   (a)  willful  breach  of  any  of
               Employee's  material  obligations  under  this  Agreement,  which
               breach shall not have been  remedied by Employee  within ten (10)
               days  after  the  Company  shall  have  given  written  notice to
               Employee of such  breach,  or which such  breach  shall have been
               repeated  after  lapse  of  such  ten-day   notice  period;   (b)
               commission  of an act which the Board of Directors of the Company
               shall reasonably have found to have involved  willful  misconduct
               or gross negligence on the part of Employee in the conduct of his
               duties under this Agreement which materially  injures the Company
               or any of its  subsidiaries or affiliates;  (c) conviction of (or
               pleading  nolo  contendere  to) any  felony  or any  misdemeanour
               involving moral turpitude which might, in the reasonable judgment
               of the Board of Directors of the Company,  cause embarrassment to
               the  Company  or any  of  its  subsidiaries  or  affiliates;  (d)
               commission of a material act of personal  dishonesty or breach of
               fiduciary duty involving  personal  profit in connection with the
               Employee's   employment   by  the   Company;   or  (e)   habitual
               absenteeism,  chronic  alcoholism,  drug  abuse or other  form of
               addiction  which,  in the  reasonable  judgment  of the  Board of
               Directors,  impairs  Employee's  ability to perform his duties or
               injures the Company.

<PAGE>

          c.   Notice of  termination  of  employment by the Company to Employee
               without cause or for good reason. For purposes of this Agreement,
               the  Company  will have  terminated  Employee's  employment  with
               Company  under the  Agreement  without cause or for "Good Reason"
               upon  Company's:  (a)  financial  inability to meet its financial
               obligations;  (b) desire to terminate  Employee's  employment for
               reasons other than for Cause as defined  above in Section  9.4.c;
               (c)  contemplation,  consideration or execution of a financial or
               business  agreement  or  transaction  that  obligates  Company to
               reduce costs or staff or Employee's  employment;  (d) termination
               of Employee's  employment within 120 days of the date of a Change
               of  Control of the  Company;  or (e)  failure to comply  with the
               terms  fo  this  Agreement.   In  the  event  of  termination  of
               Employee's  employment  under this Agreement by Employer  without
               cause or for Good Reason, Employer shall pay within ten (10) days
               of such termination a severance payment equal to the compensation
               that would have been paid to Employee for an additional three (3)
               month period,  at the same rate of pay per month as if Employee's
               employment  would not have  been  terminated.  Employee's  fringe
               benefits and other  benefits  that were provided  Employee  under
               Section 8 of this  Agreement  will be continued to the benefit of
               Employee  during the three  month  period of  compensation  after
               termination without cause or for Good Reason.

Notwithstanding  any  termination  of this  Agreement  pursuant  to  Section  9,
Employee shall remain bound by the provisions of Sections 10 and 11 below.

10.      INVENTIONS

"Inventions" made or conceived  entirely or partially by Employee while employed
by the Company shall be the exclusive property of the Company.  For the purposes
of this Agreement,  the term,  "Inventions"  includes,  without limitation,  all
creations,  whether or not patentable or copyrightable,  and all ideas, reports,
or other  creative  works  including,  without  limitation,  therapies,  genetic
engineering  tools and methods,  gene  expression  systems and  diagnostics  and
therapeutic  products  derived  therefrom,  which  related  to the  existing  or
proposed  business  of the  Company  or to any other  business  or  research  or
development  effort  conducted by the  Company.  All of  Employee's  Inventions,
whether or not  copyrightable  or patentable,  will be works for hire.  Employee
will promptly  disclose each  Inventions to the Company in writing and cooperate
with the  Company  to  patent or  copyright  all  Inventions  by  executing  all
documents  tendered by the Company for the purpose of patenting or  copyrighting
Employee's  Inventions.  This  provision  shall be construed in conformity  with
Chapter 49.44 of the Revised Code of  Washington.  This provision does not apply
to an Invention for which no equipment,  supplies,  facilities,  or trade secret
information  of the  Company  was used  and  which  was  developed  entirely  on
Employee's own time unless (i) the Invention relates directly to the business of
the Company, or to the Company's actual or demonstrably  anticipated research or
development,  or (ii) the Invention  results from any work performed by Employee
for the Company.

11.      NON-DISCLOSURE OF CONFIDENTIAL INFORMATION AND RESTRICTIVE COVENANTS

11.1  Confidential  Information.  During the course of his employment,  Employee
will acquire knowledge of trade secrets and other proprietary information of the
Company   ("Confidential   Information")  and  may  contribute  to  Confidential
Information through inventions, discoveries,  improvements or some other manner.
Confidential  Information includes, but is not limited to, nonpublic information
relating  to  the  Company's  business,  operations,  customers  or  technology,
including  customer  lists,  vendor  lists,  pricing  or  financial  information
concerning  the  Company and its vendors and  customers,  trade  secrets,  data,
documentation,  concepts techniques, processes, know-how, marketing information,
designs,  customer  information,  cost data, price lists, and pricing  policies.
Confidential  Information  does not include  information  that is already public
knowledge  or which can be obtained by  reference  to public  sources.  Employee
recognizes that all Confidential  Information is the property of the Company and
agrees that, except as required by the duties of Employee's  employment with the
Company, Employee shall never, directly or indirectly, use, publish, disseminate
or otherwise  disclose any Confidential  Information  obtained during Employee's
employment  with the Company  without the prior written  consent of the Company.
Employee  acknowledges  and agrees that the terms of this Section  shall survive
the termination of his employment with the Company.

<PAGE>

11.2  Non-Competition.  Employee further acknowledges that his position with the
Company  will give him a close  knowledge  of its  policies,  business and trade
secrets,  and that  Employee's  continued and  exclusive  service to the Company
under this  Agreement  is of a high degree of  importance  and  confidentiality.
Employee  agrees  that  for a  period  of one  year  after  the  termination  of
Employee's  employment  with  the  Company,   Employee  will  not,  directly  or
indirectly,  be employed by, engage in, consult with, or own an equity  interest
in any entity or  activities  competitive  with the  business  engaged in by the
Company during Employee's  employment under this Agreement,  without the written
consent of the Company.

11.3  Solicitation.  During the term of his employment  with the Company and for
the period of one year  thereafter,  Employee  shall not:  (i) seek to persuade,
directly  or  indirectly,  any  employee  of the  Company  to  discontinue  that
individual's  employment with the Company, or seek to persuade any such employee
to become employed in any activity similar to or competitive with the activities
of the Company, or (ii) directly or indirectly solicit from any person or entity
who was a customer of the Company and with whom  Employee had business  dealings
on behalf of the Company during the one-year  period prior to the termination of
Employee's  employment  any  business  which is  competitive  with the  business
activities of the Company,  or cause or authorize such  solicitation,  for or on
behalf of Employee or any third party.

11.4 Unfair  Competition.  Employee agrees that the provisions of Section 10 and
11 of this  Agreement  are  reasonably  necessary  to protect  the rights of the
Company and to prevent unfair competition.  The provisions of Sections 10 and 11
shall apply if  Employee's  employment  is  terminated at the end of the term of
this Agreement or otherwise.  The period of the covenants  contained in Sections
10 and 11 shall be extended by any period of time  during  which  Employee is in
violation of said covenants, if any.

11.5 Severability. The parties agree that the covenants set forth in Sections 10
and 11 of this Agreement,  including,  without limitation,  the scope, duration,
and geographic extent of such  restrictions,  are fair and reasonably  necessary
for the protection of the Company's legitimate business interest. In the event a
court or arbitrator should decline to enforce any of such provisions, they shall
be deemed to be modified to restrict  Employee to the maximum  extent  which the
court or arbitrator shall find enforceable.

11.6 Records. Upon termination of this Agreement, all documents, records, files,
notebooks,  and similar  repositories  containing the  information  described in
Sections 10 and 11 of this Agreement,  including all copies,  then in Employee's
possession,  whether  prepared  by  Employee  or  others,  shall be  immediately
returned to the Company by Employee.

12.      INJUNCTIVE RELIEF

Employee acknowledges that the breach or threatened breach of the nondisclosure,
non-competition or other agreements  contained in this Agreement would give rise
to  irreparable  injury  to the  Company,  which  injury  would be  inadequately
compensable  in money  damages.  The Company may,  therefore,  seek and obtain a
restraining  order or injunction  prohibiting the breach or threatened breach of
any provision, requirement or covenant of this Agreement, in addition to and not
in limitation of any other legal remedies that may be available.

13.      MISCELLANEOUS

13.1 Entire Agreement.  This Agreement contains the entire agreement between the
Company  and  Employee  relating  to the subject  matter of this  Agreement.  No
modification  of this Agreement shall be valid unless made in writing and signed
by both parties.

<PAGE>

13.2 Notice.  Any notice  required or permitted to be give under this  Agreement
shall be sufficient if in writing and delivered personally or sent by registered
or certified mail, receipt return requested,  to Employee at his residence or to
the Company at its principal office.

13.3  Waiver.  No waiver by the  Company or Employee of any default or breach of
any term, condition or covenant of this Agreement shall be deemed to be a wavier
of any subsequent default or breach of the same or any other term,  condition or
covenant contained in this Agreement.

13.4  Assignment and  Successors.  The rights and  obligations of Employee under
this  Agreement are personal and may not be assigned to any other  person.  This
Agreement will bind and benefit any successor of the Company, whether by merger,
sale of assets,  reorganization  or other form of  acquisition,  disposition  or
business  reorganization.  In the event of Employee's death, any benefits due or
to become due under this Agreement shall become a part of Employee's  estate and
shall be distributed to his personal representative.

13.5 Attorney's Fees. In the event of any dispute relating to  interpretation or
enforcement of this Agreement, the prevailing party shall be entitled to recover
its reasonable attorneys' fees and costs, whether or not a lawsuit,  arbitration
or other legal action is commenced.

13.6  Applicable  Law.  This  Agreement  shall be governed by and  construed  in
accordance with the laws of the State of Washington.

This Agreement is effective as of the date first above written.

PHAGE THERAPEUTICS, INC.  (COMPANY):

         By: /s/ Richard C. Honour/s/
         ----------------------------

         Its: President & CEO
         --------------------

EMPLOYEE (EMPLOYEE):

         /s/ Kenneth E. Lehman /s/
         -------------------------
         Signature

         Feb. 21, 2001
         -------------

         Date

<PAGE>

                              EMPLOYMENT AGREEMENT

EMPLOYMENT  AGREEMENT  dated  November  1,  2000  ("Agreement")   between  Phage
Therapeutics,  Inc., a Washington corporation ("Company") and Kenneth M. Lehman,
a resident of Kenmore, WA ("Employee").

                                   WITNESSETH

WHEREAS,  the Company  wishes to employ  Employee in the position of  Facilities
Manager; and

WHEREAS,  the Employee wishes to enter into the employ of the Company to fulfill
the responsibilities of the position of Facilities Manager;

NOW  THEREFORE,  in  consideration  of  the  foregoing  and  of  the  respective
covenants,   obligations  and  agreements  of  the  parties  contained  in  this
Agreement, the parties, intending to be legally bound, hereby agree as follows:

1.       EMPLOYMENT

The Company shall employ  Employee,  and Employee shall accept such  employment,
upon the terms and conditions set forth in Agreement. Employee's employment with
the Company shall be subject to the Company's  general  employment  policies and
practices.  The Company reserves the right to modify such policies and practices
from time to time.

2.       DUTIES

Employee  shall be  employed  as  Facilities  Manager.  During  the term of this
Agreement,  Employee  shall devote his full time,  attention  and efforts to the
conduct of the business of the Company and the  performance  of his duties under
this  Agreement.  Employee  shall not  engage in any  other  business  activity,
whether or not such  activity  is pursued  for gain,  profit or other  pecuniary
advantage;  provided that  Employee  shall not be prevented  from  investing his
personal  assets in such form or manner as will not require any  services on the
part of Employee in the  operation  of the affairs of the entities in which such
investments are made.

3.     TERM

Subject to the terms and conditions set forth in this  Agreement,  Company shall
employ  Employee  and  Employee  shall  serve the  Company  in the  position  of
Facilities  Manager  for a period  commencing  November  1, 2000  ("Commencement
Date") and continuing  through the first  anniversary of the Commencement  Date,
unless such employment is sooner terminated as provided herein.  During this one
(1) year  period,  Employee's  compensation  and other  benefits may be adjusted
annually,  or  more  often,  without  the  necessity  of an  amendment  of  this
Agreement.  The Employee's  term of employment  shall be extended for additional
one (1) year  periods  and on such terms and at such levels of  compensation  as
shall be mutually agreed to in writing by Company and Employee, unless otherwise
terminated under this Agreement.

<PAGE>

4.       COMPENSATION

For all services  rendered by Employee under this Agreement,  the Company agrees
to pay Employee and Employee agrees to accept the following:

4.1 Wage. An hourly wage of $17.00 ("Wage"), which shall be payable at the times
and in the manner set by the  Company's  standard  payroll  policy.  Such Salary
shall be reviewed  one (1) month prior to the  anniversary  of the  Commencement
Date each year,  and any  increase in the amount  under this  Agreement  for the
twelve (12) month period following the Commencement  Date anniversary date shall
be  determined  at such  time by the Board of  Directors  of the  Company,  or a
compensation committee formed by the Board of Directors.

4.2 Bonuses.  Employee shall  additionally be entitled to such cash and/or stock
bonuses  and  stock  options  as  determined  from  time to time by the Board of
Directors of the Company, or their designated representatives(s).  Cash bonuses,
if any, shall be paid subject to achievement of specific performance  milestones
agreed to by both the Company and Employee.

5.       CONTINUING EDUCATION

In the event that performance of Employee's  responsibilities  and duties within
the Company shall require or recommend  certification,  licensure, or continuing
education  to maintain  licensure,  then Company  shall upon notice,  allow time
during business hours for the required activity and shall reimburse Employee for
reasonable  expenses  associated  therewith  including at least any registration
fees, license fees, travel, lodging and per diem fees.

6.       WORKING FACILITIES

Employee shall be furnished with such facilities,  services, and supplies as are
suitable and adequate for the performance of this duties under this Agreement.

7.       EXPENSES

Employee shall be reimbursed by the Company for his reasonable expenses incurred
in connection with his employment and which are related to and in furtherance of
the Company's  business,  in accordance  with the general  policy of the Company
regarding reimbursement of expenses.

8.       BENEFITS

Employee  shall be entitled  to all rights and  benefits  for which  Employee is
eligible under any  employee-benefits  plan,  including pension,  stock or stock
option,  profit sharing,  health  (including  medical and dental),  and life and
disability  insurance  plan,  which  the  Company  provides  for  its  employees
generally.  The Company  reserves  the right to change the  benefits  offered to
employees at any time.

<PAGE>

9.       TERMINATION

Employee's  employment  with the Company shall be terminated upon the occurrence
of any of the following events:

9.1 Death of Employee. In lieu of any other benefits which may be payable by the
Company with respect to death,  in the event of such death,  the Salary  payable
hereunder  shall  continue  to be paid at the then  current  rate for  three (3)
months after the  termination  of  employment.  In the event of the death of the
Employee during the term of this Agreement,  the sums payable hereunder shall be
paid to his personal representative;

9.2 Mutual agreement of termination in writing between the Company and Employee;

9.3  Disability of Employee that prevents him from  performing  the material and
substantial  duties  of his  position  for a period of two (2)  months.  In such
event, at the Company's option, the Company shall give Employee not less than 30
days' written notice of  termination  of employment.  Employee shall continue to
render  services to the  Company  (unless  disabled)  and shall be paid his full
salary as in effect at such time up to the date of termination.  Nothing in this
Agreement,  however,  shall limit or diminish the Company's  obligations towards
Employee  with  respect  to the  Americans  with  Disabilities  Act of 1990,  as
amended,  the Family and Medical Leave Act of 1993,  as amended,  or any similar
state laws.

9.4 Written  notice by either party to the other  terminating  the employment of
Employee as follows:

          a.   Notice of  resignation  by Employee to the  Company,  at least 30
               days in advance;

          b.   Notice of  termination  of  employment by the Company to Employee
               with cause.  For purposes of this  Agreement,  the Company  shall
               have  "Cause"  to  terminate  Employee's  employment  under  this
               Agreement  upon   Employee's:   (a)  willful  breach  of  any  of
               Employee's  material  obligations  under  this  Agreement,  which
               breach shall not have been  remedied by Employee  within ten (10)
               days  after  the  Company  shall  have  given  written  notice to
               Employee of such  breach,  or which such  breach  shall have been
               repeated  after  lapse  of  such  ten-day   notice  period;   (b)
               commission  of an act which the Board of Directors of the Company
               shall reasonably have found to have involved  willful  misconduct
               or gross negligence on the part of Employee in the conduct of his
               duties under this Agreement which materially  injures the Company
               or any of its  subsidiaries or affiliates;  (c) conviction of (or
               pleading  nolo  contendere  to) any  felony  or any  misdemeanour
               involving moral turpitude which might, in the reasonable judgment
               of the Board of Directors of the Company,  cause embarrassment to
               the  Company  or any  of  its  subsidiaries  or  affiliates;  (d)
               commission of a material act of personal  dishonesty or breach of
               fiduciary duty involving  personal  profit in connection with the
               Employee's   employment   by  the   Company;   or  (e)   habitual
               absenteeism,  chronic  alcoholism,  drug  abuse or other  form of
               addiction  which,  in the  reasonable  judgment  of the  Board of
               Directors,  impairs  Employee's  ability to perform his duties or
               injures the Company.

<PAGE>

          c.   Notice of  termination  of  employment by the Company to Employee
               without cause or for good reason. For purposes of this Agreement,
               the  Company  will have  terminated  Employee's  employment  with
               Company  under the  Agreement  without cause or for "Good Reason"
               upon  Company's:  (a)  financial  inability to meet its financial
               obligations;  (b) desire to terminate  Employee's  employment for
               reasons other than for Cause as defined  above in Section  9.4.c;
               (c)  contemplation,  consideration or execution of a financial or
               business  agreement  or  transaction  that  obligates  Company to
               reduce costs or staff or Employee's  employment;  (d) termination
               of Employee's  employment within 120 days of the date of a Change
               of  Control of the  Company;  or (e)  failure to comply  with the
               terms  fo  this  Agreement.   In  the  event  of  termination  of
               Employee's  employment  under this Agreement by Employer  without
               cause or for Good Reason, Employer shall pay within ten (10) days
               of such termination a severance payment equal to the compensation
               that would have been paid to Employee for an additional three (3)
               month period,  at the same rate of pay per month as if Employee's
               employment  would not have  been  terminated.  Employee's  fringe
               benefits and other  benefits  that were provided  Employee  under
               Section 8 of this  Agreement  will be continued to the benefit of
               Employee  during the three  month  period of  compensation  after
               termination without cause or for Good Reason.

Notwithstanding  any  termination  of this  Agreement  pursuant  to  Section  9,
Employee shall remain bound by the provisions of Sections 10 and 11 below.

10.      INVENTIONS

"Inventions" made or conceived  entirely or partially by Employee while employed
by the Company shall be the exclusive property of the Company.  For the purposes
of this Agreement,  the term,  "Inventions"  includes,  without limitation,  all
creations,  whether or not patentable or copyrightable,  and all ideas, reports,
or other  creative  works  including,  without  limitation,  therapies,  genetic
engineering  tools and methods,  gene  expression  systems and  diagnostics  and
therapeutic  products  derived  therefrom,  which  related  to the  existing  or
proposed  business  of the  Company  or to any other  business  or  research  or
development  effort  conducted by the  Company.  All of  Employee's  Inventions,
whether or not  copyrightable  or patentable,  will be works for hire.  Employee
will promptly  disclose each  Inventions to the Company in writing and cooperate
with the  Company  to  patent or  copyright  all  Inventions  by  executing  all
documents  tendered by the Company for the purpose of patenting or  copyrighting
Employee's  Inventions.  This  provision  shall be construed in conformity  with
Chapter 49.44 of the Revised Code of  Washington.  This provision does not apply
to an Invention for which no equipment,  supplies,  facilities,  or trade secret
information  of the  Company  was used  and  which  was  developed  entirely  on
Employee's own time unless (i) the Invention relates directly to the business of
the Company, or to the Company's actual or demonstrably  anticipated research or
development,  or (ii) the Invention  results from any work performed by Employee
for the Company.

11.      NON-DISCLOSURE OF CONFIDENTIAL INFORMATION AND RESTRICTIVE COVENANTS

11.1  Confidential  Information.  During the course of his employment,  Employee
will acquire knowledge of trade secrets and other proprietary information of the
Company   ("Confidential   Information")  and  may  contribute  to  Confidential
Information through inventions, discoveries,  improvements or some other manner.
Confidential  Information includes, but is not limited to, nonpublic information
relating  to  the  Company's  business,  operations,  customers  or  technology,
including  customer  lists,  vendor  lists,  pricing  or  financial  information
concerning  the  Company and its vendors and  customers,  trade  secrets,  data,
documentation,  concepts techniques, processes, know-how, marketing information,
designs,  customer  information,  cost data, price lists, and pricing  policies.
Confidential  Information  does not include  information  that is already public
knowledge  or which can be obtained by  reference  to public  sources.  Employee
recognizes that all Confidential  Information is the property of the Company and
agrees that, except as required by the duties of Employee's  employment with the
Company, Employee shall never, directly or indirectly, use, publish, disseminate
or otherwise  disclose any Confidential  Information  obtained during Employee's
employment  with the Company  without the prior written  consent of the Company.
Employee  acknowledges  and agrees that the terms of this Section  shall survive
the termination of his employment with the Company.

<PAGE>

11.2  Non-Competition.  Employee further acknowledges that his position with the
Company  will give him a close  knowledge  of its  policies,  business and trade
secrets,  and that  Employee's  continued and  exclusive  service to the Company
under this  Agreement  is of a high degree of  importance  and  confidentiality.
Employee  agrees  that  for a  period  of one  year  after  the  termination  of
Employee's  employment  with  the  Company,   Employee  will  not,  directly  or
indirectly,  be employed by, engage in, consult with, or own an equity  interest
in any entity or  activities  competitive  with the  business  engaged in by the
Company during Employee's  employment under this Agreement,  without the written
consent of the Company.

11.3  Solicitation.  During the term of his employment  with the Company and for
the period of one year  thereafter,  Employee  shall not:  (i) seek to persuade,
directly  or  indirectly,  any  employee  of the  Company  to  discontinue  that
individual's  employment with the Company, or seek to persuade any such employee
to become employed in any activity similar to or competitive with the activities
of the Company, or (ii) directly or indirectly solicit from any person or entity
who was a customer of the Company and with whom  Employee had business  dealings
on behalf of the Company during the one-year  period prior to the termination of
Employee's  employment  any  business  which is  competitive  with the  business
activities of the Company,  or cause or authorize such  solicitation,  for or on
behalf of Employee or any third party.

11.4 Unfair  Competition.  Employee agrees that the provisions of Section 10 and
11 of this  Agreement  are  reasonably  necessary  to protect  the rights of the
Company and to prevent unfair competition.  The provisions of Sections 10 and 11
shall apply if  Employee's  employment  is  terminated at the end of the term of
this Agreement or otherwise.  The period of the covenants  contained in Sections
10 and 11 shall be extended by any period of time  during  which  Employee is in
violation of said covenants, if any.

11.5 Severability. The parties agree that the covenants set forth in Sections 10
and 11 of this Agreement,  including,  without limitation,  the scope, duration,
and geographic extent of such  restrictions,  are fair and reasonably  necessary
for the protection of the Company's legitimate business interest. In the event a
court or arbitrator should decline to enforce any of such provisions, they shall
be deemed to be modified to restrict  Employee to the maximum  extent  which the
court or arbitrator shall find enforceable.

11.6 Records. Upon termination of this Agreement, all documents, records, files,
notebooks,  and similar  repositories  containing the  information  described in
Sections 10 and 11 of this Agreement,  including all copies,  then in Employee's
possession,  whether  prepared  by  Employee  or  others,  shall be  immediately
returned to the Company by Employee.

12.      INJUNCTIVE RELIEF

Employee acknowledges that the breach or threatened breach of the nondisclosure,
non-competition or other agreements  contained in this Agreement would give rise
to  irreparable  injury  to the  Company,  which  injury  would be  inadequately
compensable  in money  damages.  The Company may,  therefore,  seek and obtain a
restraining  order or injunction  prohibiting the breach or threatened breach of
any provision, requirement or covenant of this Agreement, in addition to and not
in limitation of any other legal remedies that may be available.

13.      MISCELLANEOUS

13.1 Entire Agreement.  This Agreement contains the entire agreement between the
Company  and  Employee  relating  to the subject  matter of this  Agreement.  No
modification  of this Agreement shall be valid unless made in writing and signed
by both parties.

<PAGE>

13.2 Notice.  Any notice  required or permitted to be give under this  Agreement
shall be sufficient if in writing and delivered personally or sent by registered
or certified mail, receipt return requested,  to Employee at his residence or to
the Company at its principal office.

13.3  Waiver.  No waiver by the  Company or Employee of any default or breach of
any term, condition or covenant of this Agreement shall be deemed to be a wavier
of any subsequent default or breach of the same or any other term,  condition or
covenant contained in this Agreement.

13.4  Assignment and  Successors.  The rights and  obligations of Employee under
this  Agreement are personal and may not be assigned to any other  person.  This
Agreement will bind and benefit any successor of the Company, whether by merger,
sale of assets,  reorganization  or other form of  acquisition,  disposition  or
business  reorganization.  In the event of Employee's death, any benefits due or
to become due under this Agreement shall become a part of Employee's  estate and
shall be distributed to his personal representative.

13.5 Attorney's Fees. In the event of any dispute relating to  interpretation or
enforcement of this Agreement, the prevailing party shall be entitled to recover
its reasonable attorneys' fees and costs, whether or not a lawsuit,  arbitration
or other legal action is commenced.

13.6  Applicable  Law.  This  Agreement  shall be governed by and  construed  in
accordance with the laws of the State of Washington.

This Agreement is effective as of the date first above written.

PHAGE THERAPEUTICS, INC.  (COMPANY):

         By: /s/ Richard C. Honour/s/
         ----------------------------
         Its: President & CEO
         ----------------------------

EMPLOYEE (EMPLOYEE):

         /s/ Kenneth Lehman /s/
         ----------------------
         Signature

         Feb. 21, 2001
         -------------

         Date

<PAGE>

                              EMPLOYMENT AGREEMENT

EMPLOYMENT  AGREEMENT  dated  December  6,  2000  ("Agreement")   between  Phage
Therapeutics,  Inc., a Washington corporation ("Company") and Larry Syltebo, BS,
MT (ASCP), a resident of Everett, WA ("Employee").

                                   WITNESSETH

WHEREAS,  the  Company  wishes to employ  Employee  in the  position of Manager,
Quality Assurance & Quality Control; and

WHEREAS,  the Employee wishes to enter into the employ of the Company to fulfill
the  responsibilities  of the position of Manager,  Quality  Assurance & Quality
Control;

NOW  THEREFORE,  in  consideration  of  the  foregoing  and  of  the  respective
covenants,   obligations  and  agreements  of  the  parties  contained  in  this
Agreement, the parties, intending to be legally bound, hereby agree as follows:

1.       EMPLOYMENT

The Company shall employ  Employee,  and Employee shall accept such  employment,
upon the terms and conditions set forth in Agreement. Employee's employment with
the Company shall be subject to the Company's  general  employment  policies and
practices.  The Company reserves the right to modify such policies and practices
from time to time.

2.       DUTIES

Employee  shall be  employed as Manager,  Quality  Assurance & Quality  Control.
During  the  term of this  Agreement,  Employee  shall  devote  his  full  time,
attention  and  efforts to the  conduct of the  business  of the Company and the
performance of his duties under this Agreement. Employee shall not engage in any
other  business  activity,  whether or not such  activity  is pursued  for gain,
profit  or other  pecuniary  advantage;  provided  that  Employee  shall  not be
prevented from investing his personal  assets in such form or manner as will not
require any services on the part of Employee in the  operation of the affairs of
the entities in which such investments are made.

3.     TERM

<PAGE>

Subject to the terms and conditions set forth in this  Agreement,  Company shall
employ Employee and Employee shall serve the Company in the position of Manager,
Quality  Assurance & Quality  Control for a period  commencing  December 6, 2000
("Commencement  Date")  and  continuing  through  the first  anniversary  of the
Commencement  Date,  unless such  employment  is sooner  terminated  as provided
herein.  During  this one (1) year  period,  Employee's  compensation  and other
benefits may be adjusted  annually,  or more often,  without the necessity of an
amendment of this Agreement. The Employee's term of employment shall be extended
for  additional  one (1) year  periods  and on such terms and at such  levels of
compensation  as shall be mutually agreed to in writing by Company and Employee,
unless otherwise terminated under this Agreement.

4.       COMPENSATION

For all services  rendered by Employee under this Agreement,  the Company agrees
to pay Employee and Employee agrees to accept the following:

4.1 Salary.  An annual salary of $60,000  ("Salary"),  which shall be payable at
the times and in the manner set by the Company's  standard payroll policy.  Such
Salary  shall  be  reviewed  one  (1)  month  prior  to the  anniversary  of the
Commencement Date each year, and any increase in the amount under this Agreement
for the twelve (12) month period  following the  Commencement  Date  anniversary
date shall be  determined at such time by the Board of Directors of the Company,
or a compensation committee formed by the Board of Directors.

4.2 Bonuses.  Employee shall  additionally be entitled to such cash and/or stock
bonuses  and  stock  options  as  determined  from  time to time by the Board of
Directors of the Company, or their designated representatives(s).  Cash bonuses,
if any, shall be paid subject to achievement of specific performance  milestones
agreed to by both the Company and Employee.

5.       CONTINUING EDUCATION

In the event that performance of Employee's  responsibilities  and duties within
the Company shall require or recommend  certification,  licensure, or continuing
education  to maintain  licensure,  then Company  shall upon notice,  allow time
during business hours for the required activity and shall reimburse Employee for
reasonable  expenses  associated  therewith  including at least any registration
fees, license fees, travel, lodging and per diem fees.

6.       WORKING FACILITIES

Employee shall be furnished with such facilities,  services, and supplies as are
suitable and adequate for the performance of this duties under this Agreement.

7.       EXPENSES

Employee shall be reimbursed by the Company for his reasonable expenses incurred
in connection with his employment and which are related to and in furtherance of
the Company's  business,  in accordance  with the general  policy of the Company
regarding reimbursement of expenses.

8.       BENEFITS

Employee  shall be entitled  to all rights and  benefits  for which  Employee is
eligible under any  employee-benefits  plan,  including pension,  stock or stock
option,  profit sharing,  health  (including  medical and dental),  and life and
disability  insurance  plan,  which  the  Company  provides  for  its  employees
generally.  The Company  reserves  the right to change the  benefits  offered to
employees at any time.

<PAGE>

9.       TERMINATION

Employee's  employment  with the Company shall be terminated upon the occurrence
of any of the following events:

9.1 Death of Employee. In lieu of any other benefits which may be payable by the
Company with respect to death,  in the event of such death,  the Salary  payable
hereunder  shall  continue  to be paid at the then  current  rate for  three (3)
months after the  termination  of  employment.  In the event of the death of the
Employee during the term of this Agreement,  the sums payable hereunder shall be
paid to his personal representative;

9.2 Mutual agreement of termination in writing between the Company and Employee;

9.3  Disability of Employee that prevents him from  performing  the material and
substantial  duties  of his  position  for a period of two (2)  months.  In such
event, at the Company's option, the Company shall give Employee not less than 30
days' written notice of  termination  of employment.  Employee shall continue to
render  services to the  Company  (unless  disabled)  and shall be paid his full
salary as in effect at such time up to the date of termination.  Nothing in this
Agreement,  however,  shall limit or diminish the Company's  obligations towards
Employee  with  respect  to the  Americans  with  Disabilities  Act of 1990,  as
amended,  the Family and Medical Leave Act of 1993,  as amended,  or any similar
state laws.

9.4 Written  notice by either party to the other  terminating  the employment of
Employee as follows:

          a.   Notice of  resignation  by Employee to the  Company,  at least 30
               days in advance;

          b.   Notice of  termination  of  employment by the Company to Employee
               with cause.  For purposes of this  Agreement,  the Company  shall
               have  "Cause"  to  terminate  Employee's  employment  under  this
               Agreement  upon   Employee's:   (a)  willful  breach  of  any  of
               Employee's  material  obligations  under  this  Agreement,  which
               breach shall not have been  remedied by Employee  within ten (10)
               days  after  the  Company  shall  have  given  written  notice to
               Employee of such  breach,  or which such  breach  shall have been
               repeated  after  lapse  of  such  ten-day   notice  period;   (b)
               commission  of an act which the Board of Directors of the Company
               shall reasonably have found to have involved  willful  misconduct
               or gross negligence on the part of Employee in the conduct of his
               duties under this Agreement which materially  injures the Company
               or any of its  subsidiaries or affiliates;  (c) conviction of (or
               pleading  nolo  contendere  to) any  felony  or any  misdemeanour
               involving moral turpitude which might, in the reasonable judgment
               of the Board of Directors of the Company,  cause embarrassment to
               the  Company  or any  of  its  subsidiaries  or  affiliates;  (d)
               commission of a material act of personal  dishonesty or breach of
               fiduciary duty involving  personal  profit in connection with the
               Employee's   employment   by  the   Company;   or  (e)   habitual
               absenteeism,  chronic  alcoholism,  drug  abuse or other  form of
               addiction  which,  in the  reasonable  judgment  of the  Board of
               Directors,  impairs  Employee's  ability to perform his duties or
               injures the Company.

<PAGE>

          c.   Notice of  termination  of  employment by the Company to Employee
               without cause or for good reason. For purposes of this Agreement,
               the  Company  will have  terminated  Employee's  employment  with
               Company  under the  Agreement  without cause or for "Good Reason"
               upon  Company's:  (a)  financial  inability to meet its financial
               obligations;  (b) desire to terminate  Employee's  employment for
               reasons other than for Cause as defined  above in Section  9.4.c;
               (c)  contemplation,  consideration or execution of a financial or
               business  agreement  or  transaction  that  obligates  Company to
               reduce costs or staff or Employee's  employment;  (d) termination
               of Employee's  employment within 120 days of the date of a Change
               of  Control of the  Company;  or (e)  failure to comply  with the
               terms  fo  this  Agreement.   In  the  event  of  termination  of
               Employee's  employment  under this Agreement by Employer  without
               cause or for Good Reason, Employer shall pay within ten (10) days
               of such termination a severance payment equal to the compensation
               that would have been paid to Employee for an additional three (3)
               month period,  at the same rate of pay per month as if Employee's
               employment  would not have  been  terminated.  Employee's  fringe
               benefits and other  benefits  that were provided  Employee  under
               Section 8 of this  Agreement  will be continued to the benefit of
               Employee  during the three  month  period of  compensation  after
               termination without cause or for Good Reason.

Notwithstanding  any  termination  of this  Agreement  pursuant  to  Section  9,
Employee shall remain bound by the provisions of Sections 10 and 11 below.

10.      INVENTIONS

"Inventions" made or conceived  entirely or partially by Employee while employed
by the Company shall be the exclusive property of the Company.  For the purposes
of this Agreement,  the term,  "Inventions"  includes,  without limitation,  all
creations,  whether or not patentable or copyrightable,  and all ideas, reports,
or other  creative  works  including,  without  limitation,  therapies,  genetic
engineering  tools and methods,  gene  expression  systems and  diagnostics  and
therapeutic  products  derived  therefrom,  which  related  to the  existing  or
proposed  business  of the  Company  or to any other  business  or  research  or
development  effort  conducted by the  Company.  All of  Employee's  Inventions,
whether or not  copyrightable  or patentable,  will be works for hire.  Employee
will promptly  disclose each  Inventions to the Company in writing and cooperate
with the  Company  to  patent or  copyright  all  Inventions  by  executing  all
documents  tendered by the Company for the purpose of patenting or  copyrighting
Employee's  Inventions.  This  provision  shall be construed in conformity  with
Chapter 49.44 of the Revised Code of  Washington.  This provision does not apply
to an Invention for which no equipment,  supplies,  facilities,  or trade secret
information  of the  Company  was used  and  which  was  developed  entirely  on
Employee's own time unless (i) the Invention relates directly to the business of
the Company, or to the Company's actual or demonstrably  anticipated research or
development,  or (ii) the Invention  results from any work performed by Employee
for the Company.

11.      NON-DISCLOSURE OF CONFIDENTIAL INFORMATION AND RESTRICTIVE COVENANTS

11.1  Confidential  Information.  During the course of his employment,  Employee
will acquire knowledge of trade secrets and other proprietary information of the
Company   ("Confidential   Information")  and  may  contribute  to  Confidential
Information through inventions, discoveries,  improvements or some other manner.
Confidential  Information includes, but is not limited to, nonpublic information
relating  to  the  Company's  business,  operations,  customers  or  technology,
including  customer  lists,  vendor  lists,  pricing  or  financial  information
concerning  the  Company and its vendors and  customers,  trade  secrets,  data,
documentation,  concepts techniques, processes, know-how, marketing information,
designs,  customer  information,  cost data, price lists, and pricing  policies.
Confidential  Information  does not include  information  that is already public
knowledge  or which can be obtained by  reference  to public  sources.  Employee
recognizes that all Confidential  Information is the property of the Company and
agrees that, except as required by the duties of Employee's  employment with the
Company, Employee shall never, directly or indirectly, use, publish, disseminate
or otherwise  disclose any Confidential  Information  obtained during Employee's
employment  with the Company  without the prior written  consent of the Company.
Employee  acknowledges  and agrees that the terms of this Section  shall survive
the termination of his employment with the Company.

<PAGE>

11.2  Non-Competition.  Employee further acknowledges that his position with the
Company  will give him a close  knowledge  of its  policies,  business and trade
secrets,  and that  Employee's  continued and  exclusive  service to the Company
under this  Agreement  is of a high degree of  importance  and  confidentiality.
Employee  agrees  that  for a  period  of one  year  after  the  termination  of
Employee's  employment  with  the  Company,   Employee  will  not,  directly  or
indirectly,  be employed by, engage in, consult with, or own an equity  interest
in any entity or  activities  competitive  with the  business  engaged in by the
Company during Employee's  employment under this Agreement,  without the written
consent of the Company.

11.3  Solicitation.  During the term of his employment  with the Company and for
the period of one year  thereafter,  Employee  shall not:  (i) seek to persuade,
directly  or  indirectly,  any  employee  of the  Company  to  discontinue  that
individual's  employment with the Company, or seek to persuade any such employee
to become employed in any activity similar to or competitive with the activities
of the Company, or (ii) directly or indirectly solicit from any person or entity
who was a customer of the Company and with whom  Employee had business  dealings
on behalf of the Company during the one-year  period prior to the termination of
Employee's  employment  any  business  which is  competitive  with the  business
activities of the Company,  or cause or authorize such  solicitation,  for or on
behalf of Employee or any third party.

11.4 Unfair  Competition.  Employee agrees that the provisions of Section 10 and
11 of this  Agreement  are  reasonably  necessary  to protect  the rights of the
Company and to prevent unfair competition.  The provisions of Sections 10 and 11
shall apply if  Employee's  employment  is  terminated at the end of the term of
this Agreement or otherwise.  The period of the covenants  contained in Sections
10 and 11 shall be extended by any period of time  during  which  Employee is in
violation of said covenants, if any.

11.5 Severability. The parties agree that the covenants set forth in Sections 10
and 11 of this Agreement,  including,  without limitation,  the scope, duration,
and geographic extent of such  restrictions,  are fair and reasonably  necessary
for the protection of the Company's legitimate business interest. In the event a
court or arbitrator should decline to enforce any of such provisions, they shall
be deemed to be modified to restrict  Employee to the maximum  extent  which the
court or arbitrator shall find enforceable.

11.6 Records. Upon termination of this Agreement, all documents, records, files,
notebooks,  and similar  repositories  containing the  information  described in
Sections 10 and 11 of this Agreement,  including all copies,  then in Employee's
possession,  whether  prepared  by  Employee  or  others,  shall be  immediately
returned to the Company by Employee.

12.      INJUNCTIVE RELIEF

Employee acknowledges that the breach or threatened breach of the nondisclosure,
non-competition or other agreements  contained in this Agreement would give rise
to  irreparable  injury  to the  Company,  which  injury  would be  inadequately
compensable  in money  damages.  The Company may,  therefore,  seek and obtain a
restraining  order or injunction  prohibiting the breach or threatened breach of
any provision, requirement or covenant of this Agreement, in addition to and not
in limitation of any other legal remedies that may be available.

13.      MISCELLANEOUS

13.1 Entire Agreement.  This Agreement contains the entire agreement between the
Company  and  Employee  relating  to the subject  matter of this  Agreement.  No
modification  of this Agreement shall be valid unless made in writing and signed
by both parties.

<PAGE>

13.2 Notice.  Any notice  required or permitted to be give under this  Agreement
shall be sufficient if in writing and delivered personally or sent by registered
or certified mail, receipt return requested,  to Employee at his residence or to
the Company at its principal office.

13.3  Waiver.  No waiver by the  Company or Employee of any default or breach of
any term, condition or covenant of this Agreement shall be deemed to be a wavier
of any subsequent default or breach of the same or any other term,  condition or
covenant contained in this Agreement.

13.4  Assignment and  Successors.  The rights and  obligations of Employee under
this  Agreement are personal and may not be assigned to any other  person.  This
Agreement will bind and benefit any successor of the Company, whether by merger,
sale of assets,  reorganization  or other form of  acquisition,  disposition  or
business  reorganization.  In the event of Employee's death, any benefits due or
to become due under this Agreement shall become a part of Employee's  estate and
shall be distributed to his personal representative.

13.5 Attorney's Fees. In the event of any dispute relating to  interpretation or
enforcement of this Agreement, the prevailing party shall be entitled to recover
its reasonable attorneys' fees and costs, whether or not a lawsuit,  arbitration
or other legal action is commenced.

13.6  Applicable  Law.  This  Agreement  shall be governed by and  construed  in
accordance with the laws of the State of Washington.

This Agreement is effective as of the date first above written.

PHAGE THERAPEUTICS, INC.  (COMPANY):

         By: /s/ Richard C. Honour/s/
         ----------------------------
         Its: President & CEO
         --------------------

EMPLOYEE (EMPLOYEE):

         /s/ Larry Sytlebo /s/
         ---------------------
         Signature

         Feb. 21, 2001
         -------------

         Date

<PAGE>

                              EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT dated May 1, 2001 ("Agreement") between Phage Therapeutics,
Inc., a Washington corporation  ("Company") and Lisa M. Goodrich, BS, a resident
of Bothellt, WA ("Employee").

                                   WITNESSETH

WHEREAS,  the  Company  wishes to employ  Employee  in the  position of Manager,
Microbiology; and

WHEREAS,  the Employee wishes to enter into the employ of the Company to fulfill
the responsibilities of the position of Manager, Microbiology;

NOW  THEREFORE,  in  consideration  of  the  foregoing  and  of  the  respective
covenants,   obligations  and  agreements  of  the  parties  contained  in  this
Agreement, the parties, intending to be legally bound, hereby agree as follows:

1.       EMPLOYMENT

The Company shall employ  Employee,  and Employee shall accept such  employment,
upon the terms and conditions set forth in Agreement. Employee's employment with
the Company shall be subject to the Company's  general  employment  policies and
practices.  The Company reserves the right to modify such policies and practices
from time to time.

2.       DUTIES

Employee  shall be employed as  Manager,  Microbiology.  During the term of this
Agreement,  Employee  shall devote her full time,  attention  and efforts to the
conduct of the business of the Company and the  performance  of her duties under
this  Agreement.  Employee  shall not  engage in any  other  business  activity,
whether or not such  activity  is pursued  for gain,  profit or other  pecuniary
advantage;  provided that  Employee  shall not be prevented  from  investing her
personal  assets in such form or manner as will not require any  services on the
part of Employee in the  operation  of the affairs of the entities in which such
investments are made.

(3)      TERM

Subject to the terms and conditions set forth in this  Agreement,  Company shall
employ Employee and Employee shall serve the Company in the position of Manager,
Microbiology  for a period  commencing  May 1, 2001  ("Commencement  Date")  and
continuing  through the first anniversary of the Commencement  Date, unless such
employment  is sooner  terminated as provided  herein.  During this one (1) year
period,  Employee's compensation and other benefits may be adjusted annually, or
more  often,  without the  necessity  of an  amendment  of this  Agreement.  The
Employee's  term of  employment  shall be extended for  additional  one (1) year
periods  and on such  terms  and at such  levels  of  compensation  as  shall be
mutually  agreed  to in  writing  by  Company  and  Employee,  unless  otherwise
terminated under this Agreement.

4.       COMPENSATION

For all services  rendered by Employee under this Agreement,  the Company agrees
to pay Employee and Employee agrees to accept the following:

4.1 Salary.  An annual salary of $40,000  ("Salary"),  which shall be payable at
the times and in the manner set by the Company's  standard payroll policy.  Such
Salary  shall  be  reviewed  one  (1)  month  prior  to the  anniversary  of the
Commencement Date each year, and any increase in the amount under this Agreement
for the twelve (12) month period  following the  Commencement  Date  anniversary
date shall be  determined at such time by the Board of Directors of the Company,
or a compensation committee formed by the Board of Directors.

4.2 Bonuses.  Employee shall  additionally be entitled to such cash and/or stock
bonuses  and  stock  options  as  determined  from  time to time by the Board of
Directors of the Company, or their designated representatives(s).  Cash bonuses,
if any, shall be paid subject to achievement of specific performance  milestones
agreed to by both the Company and Employee.

5.       CONTINUING EDUCATION

In the event that performance of Employee's  responsibilities  and duties within
the Company shall require or recommend  certification,  licensure, or continuing
education  to maintain  licensure,  then Company  shall upon notice,  allow time
during business hours for the required activity and shall reimburse Employee for
reasonable  expenses  associated  therewith  including at least any registration
fees, license fees, travel, lodging and per diem fees.

6.       WORKING FACILITIES

Employee shall be furnished with such facilities,  services, and supplies as are
suitable and adequate for the performance of her duties under this Agreement.

7.       EXPENSES

Employee shall be reimbursed by the Company for her reasonable expenses incurred
in connection with her employment and which are

<PAGE>

related to and in furtherance of the Company's business,  in accordance with the
general policy of the Company regarding reimbursement of expenses.

8.       BENEFITS

Employee  shall be entitled  to all rights and  benefits  for which  Employee is
eligible under any  employee-benefits  plan,  including pension,  stock or stock
option,  profit sharing,  health  (including  medical and dental),  and life and
disability  insurance  plan,  which  the  Company  provides  for  its  employees
generally.  The Company  reserves  the right to change the  benefits  offered to
employees at any time.

9.       TERMINATION

Employee's  employment  with the Company shall be terminated upon the occurrence
of any of the following events:

9.1 Death of Employee. In lieu of any other benefits which may be payable by the
Company with respect to death,  in the event of such death,  the Salary  payable
hereunder  shall  continue  to be paid at the then  current  rate for  three (3)
months after the  termination  of  employment.  In the event of the death of the
Employee during the term of this Agreement,  the sums payable hereunder shall be
paid to her personal representative;

9.2 Mutual agreement of termination in writing between the Company and Employee;

9.3  Disability of Employee that prevents her from  performing  the material and
substantial  duties  of her  position  for a period of two (2)  months.  In such
event, at the Company's option, the Company shall give Employee not less than 30
days' written notice of  termination  of employment.  Employee shall continue to
render  services to the  Company  (unless  disabled)  and shall be paid her full
salary as in effect at such time up to the date of termination.  Nothing in this
Agreement,  however,  shall limit or diminish the Company's  obligations towards
Employee  with  respect  to the  Americans  with  Disabilities  Act of 1990,  as
amended,  the Family and Medical Leave Act of 1993,  as amended,  or any similar
state laws.

9.4 Written  notice by either party to the other  terminating  the employment of
Employee as follows:

     a.   Notice of resignation by Employee to the Company,  at least 30 days in
          advance;

     b.   Notice of  termination  of  employment by the Company to Employee with
          cause. For purposes of this Agreement,  the Company shall have "Cause"
          to  terminate   Employee's   employment   under  this  Agreement  upon
          Employee's:   (a)  willful  breach  of  any  of  Employee's   material
          obligations  under this  Agreement,  which  breach shall not have been
          remedied by Employee within ten (10) days after the Company shall have
          given written notice to Employee of such breach,  or which such breach
          shall have been repeated  after lapse of such ten-day  notice  period;
          (b)  commission  of an act which the Board of Directors of the Company
          shall  reasonably  have found to have involved  willful  misconduct or
          gross  negligence on the part of Employee in the conduct of her duties
          under this Agreement  which  materially  injures the Company or any of
          its  subsidiaries  or affiliates;  (c) conviction of (or pleading nolo
          contendere  to)  any  felony  or  any  misdemeanour   involving  moral
          turpitude  which  might,  in the  reasonable  judgment of the Board of
          Directors of the Company, cause embarrassment to the Company or any of
          its  subsidiaries  or affiliates;  (d) commission of a material act of
          personal  dishonesty or breach of fiduciary  duty  involving  personal
          profit in connection with the Employee's employment by the Company; or
          (e) habitual absenteeism, chronic alcoholism, drug abuse or other form
          of  addiction  which,  in the  reasonable  judgment  of the  Board  of
          Directors, impairs Employee's ability to perform her duties or injures
          the Company.

     c.   Notice of termination of employment by the Company to Employee without
          cause or for good reason. For purposes of this Agreement,  the Company
          will have  terminated  Employee's  employment  with Company  under the
          Agreement  without  cause or for "Good  Reason"  upon  Company's:  (a)
          financial inability to meet its financial  obligations;  (b) desire to
          terminate  Employee's  employment  for reasons other than for Cause as
          defined above in Section 9.4.c;  (c)  contemplation,  consideration or
          execution of a financial or business  agreement  or  transaction  that
          obligates  Company to reduce costs or staff or Employee's  employment;
          (d) termination of Employee's  employment  within 120 days of the date
          of a Change of Control of the  Company;  or (e) failure to comply with
          the terms fo this Agreement. In the event of termination of Employee's
          employment  under this Agreement by Employer without cause or for Good
          Reason,  Employer shall pay within ten (10) days of such termination a
          severance  payment equal to the compensation that would have been paid
          to Employee for an additional three (3) month period, at the same rate
          of pay per  month as if  Employee's  employment  would  not have  been
          terminated.  Employee's  fringe  benefits and other benefits that were
          provided  Employee under Section 8 of this Agreement will be continued
          to  the  benefit  of  Employee   during  the  three  month  period  of
          compensation after termination without cause or for Good Reason.

Notwithstanding  any  termination  of this  Agreement  pursuant  to  Section  9,
Employee shall remain bound by the provisions of Sections 10 and 11 below.

10)      INVENTIONS

"Inventions" made or conceived  entirely or partially by Employee while employed
by the Company shall be the exclusive property of the Company.  For the purposes
of this Agreement,  the term,  "Inventions"  includes,  without limitation,  all
creations,  whether or not patentable or copyrightable,  and all ideas, reports,
or other  creative  works  including,  without  limitation,  therapies,  genetic
engineering  tools and methods,  gene  expression  systems and  diagnostics  and
therapeutic  products  derived  therefrom,  which  related  to the  existing  or
proposed

<PAGE>

business  of the Company or to any other  business  or  research or  development
effort conducted by the Company.  All of Employee's  Inventions,  whether or not
copyrightable  or  patentable,  will be works for hire.  Employee  will promptly
disclose  each  Inventions  to the  Company in writing  and  cooperate  with the
Company  to patent or  copyright  all  Inventions  by  executing  all  documents
tendered by the Company for the purpose of patenting or copyrighting  Employee's
Inventions.  This provision  shall be construed in conformity with Chapter 49.44
of the Revised Code of Washington. This provision does not apply to an Invention
for which no equipment, supplies, facilities, or trade secret information of the
Company was used and which was developed  entirely on Employee's own time unless
(i) the  Invention  relates  directly to the business of the Company,  or to the
Company's actual or demonstrably  anticipated  research or development,  or (ii)
the Invention results from any work performed by Employee for the Company.

11)      NON-DISCLOSURE OF CONFIDENTIAL INFORMATION AND RESTRICTIVE COVENANTS

11.1  Confidential  Information.  During the course of her employment,  Employee
will acquire knowledge of trade secrets and other proprietary information of the
Company   ("Confidential   Information")  and  may  contribute  to  Confidential
Information through inventions, discoveries,  improvements or some other manner.
Confidential  Information includes, but is not limited to, nonpublic information
relating  to  the  Company's  business,  operations,  customers  or  technology,
including  customer  lists,  vendor  lists,  pricing  or  financial  information
concerning  the  Company and its vendors and  customers,  trade  secrets,  data,
documentation,  concepts techniques, processes, know-how, marketing information,
designs,  customer  information,  cost data, price lists, and pricing  policies.
Confidential  Information  does not include  information  that is already public
knowledge  or which can be obtained by  reference  to public  sources.  Employee
recognizes that all Confidential  Information is the property of the Company and
agrees that, except as required by the duties of Employee's  employment with the
Company, Employee shall never, directly or indirectly, use, publish, disseminate
or otherwise  disclose any Confidential  Information  obtained during Employee's
employment  with the Company  without the prior written  consent of the Company.
Employee  acknowledges  and agrees that the terms of this Section  shall survive
the termination of her employment with the Company.

11.2  Non-Competition.  Employee further acknowledges that her position with the
Company  will give her  close  knowledge  of its  policies,  business  and trade
secrets,  and that  Employee's  continued and  exclusive  service to the Company
under this  Agreement  is of a high degree of  importance  and  confidentiality.
Employee  agrees  that  for a  period  of one  year  after  the  termination  of
Employee's  employment  with  the  Company,   Employee  will  not,  directly  or
indirectly,  be employed by, engage in, consult with, or own an equity  interest
in any entity or  activities  competitive  with the  business  engaged in by the
Company during Employee's  employment under this Agreement,  without the written
consent of the Company.

11.3  Solicitation.  During the term of her employment  with the Company and for
the period of one year  thereafter,  Employee  shall not:  (i) seek to persuade,
directly  or  indirectly,  any  employee  of the  Company  to  discontinue  that
individual's  employment with the Company, or seek to persuade any such employee
to become employed in any activity similar to or competitive with the activities
of the Company, or (ii) directly or indirectly solicit from any person or entity
who was a customer of the Company and with whom  Employee had business  dealings
on behalf of the Company during the one-year  period prior to the termination of
Employee's  employment  any  business  which is  competitive  with the  business
activities of the Company,  or cause or authorize such  solicitation,  for or on
behalf of Employee or any third party.

11.4 Unfair  Competition.  Employee agrees that the provisions of Section 10 and
11 of this  Agreement  are  reasonably  necessary  to protect  the rights of the
Company and to prevent unfair competition.  The provisions of Sections 10 and 11
shall apply if  Employee's  employment  is  terminated at the end of the term of
this Agreement or otherwise.  The period of the covenants  contained in Sections
10 and 11 shall be extended by any period of time  during  which  Employee is in
violation of said covenants, if any.

11.5 Severability. The parties agree that the covenants set forth in Sections 10
and 11 of this Agreement,  including,  without limitation,  the scope, duration,
and geographic extent of such  restrictions,  are fair and reasonably  necessary
for the protection of the Company's legitimate business interest. In the event a
court or arbitrator should decline to enforce any of such provisions, they shall
be deemed to be modified to restrict  Employee to the maximum  extent  which the
court or arbitrator shall find enforceable.

11.6 Records. Upon termination of this Agreement, all documents, records, files,
notebooks,  and similar  repositories  containing the  information  described in
Sections 10 and 11 of this Agreement,  including all copies,  then in Employee's
possession,  whether  prepared  by  Employee  or  others,  shall be  immediately
returned to the Company by Employee.

12.      INJUNCTIVE RELIEF

Employee acknowledges that the breach or threatened breach of the nondisclosure,
non-competition or other agreements  contained in this Agreement would give rise
to  irreparable  injury  to the  Company,  which  injury  would be  inadequately
compensable  in money  damages.  The Company may,  therefore,  seek and obtain a
restraining  order or injunction  prohibiting the breach or threatened breach of
any provision, requirement or covenant of this Agreement, in addition to and not
in limitation of any other legal remedies that may be available.

13.      MISCELLANEOUS

13.1 Entire Agreement.  This Agreement contains the entire agreement between the
Company  and  Employee  relating  to the subject  matter of this  Agreement.  No
modification  of this Agreement shall be valid unless made in writing and signed
by both parties.

13.2 Notice.  Any notice  required or permitted to be give under this  Agreement
shall be sufficient if in writing and delivered personally or sent by registered
or certified mail, receipt return requested,  to Employee at her residence or to
the Company at its principal office.

13.3  Waiver.  No waiver by the  Company or Employee of any default or breach of
any term, condition or covenant of this Agreement shall

<PAGE>

be deemed to be a wavier of any subsequent  default or breach of the same or any
other term, condition or covenant contained in this Agreement.

13.4  Assignment and  Successors.  The rights and  obligations of Employee under
this  Agreement are personal and may not be assigned to any other  person.  This
Agreement will bind and benefit any successor of the Company, whether by merger,
sale of assets,  reorganization  or other form of  acquisition,  disposition  or
business  reorganization.  In the event of Employee's death, any benefits due or
to become due under this Agreement shall become a part of Employee's  estate and
shall be distributed to her personal representative.

13.5 Attorney's Fees. In the event of any dispute relating to  interpretation or
enforcement of this Agreement, the prevailing party shall be entitled to recover
its reasonable attorneys' fees and costs, whether or not a lawsuit,  arbitration
or other legal action is commenced.

13.6  Applicable  Law.  This  Agreement  shall be governed by and  construed  in
accordance with the laws of the State of Washington.

This Agreement is effective as of the date first above written.

PHAGE THERAPEUTICS, INC.  (COMPANY):

         By: /s/ Richard C. Honour/s/
         Its: President & CEO
         May 4, 2001

EMPLOYEE (EMPLOYEE):

         /s/ Lisa Goodrich /s/
         Signature

         May 4, 2001
         Date

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