EMPLOYMENT AGREEMENT



        THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into

this 7th day of January, 2002, by and between EPOCH BIOSCIENCES, INC., a

Delaware corporation (the "Employer"), and Dr. Walter Mahoney, an individual

(the "Employee").



                                   WITNESSETH:



        WHEREAS Employer desires to employ Employee in the capacity hereinafter

stated, and the Employee desires to enter into the employ of the Employer in

that capacity for the period and pursuant to the terms and conditions set forth

herein.



        NOW, THEREFORE, in consideration of the foregoing and the mutual

covenants and agreements set forth herein, the Employer and the Employee,

intending to be legally bound, hereby agree as follows:



        1. EMPLOYMENT/POSITION AND DUTIES. Effective upon the date of this

Agreement Employer shall employ Employee as the Senior Vice President of

Research and Development of Employer and Employee shall accept such employment.

During the term of this Agreement, Employee agrees to devote substantially all

of Employee's skills and efforts to the performance of, and to perform

diligently and on a timely basis, such duties as shall be assigned to Employee

from time to time by the Employer's Chief Executive Officer. Employee shall

perform his duties principally at Employer's headquarters in Bothell,

Washington.



        2. TERM. The term of the Employee's employment hereunder shall commence

on the date hereof. The Employer is an at-will employer, and does not guarantee

employment for any specific duration. Employee's employment can be terminated at

any time by Employer or the Employee, as hereinafter specified in Section 4.



        3. COMPENSATION.



                3.1 Base Salary. As compensation for all services to be rendered

by the Employee, the Employee shall accrue a base salary at the rate of Two

Hundred Fifty Thousand Dollars ($250,000) per year, which shall be payable by

Employer to Employee on a regular basis in accordance with Employer's normal

payroll procedures and policies. Such amount, as may be increased from time to

time, is hereinafter "Base Salary."



                3.2 Bonus Compensation. During the Term of this Agreement

Employee shall be eligible to receive annual incentive compensation of up to

thirty percent (30%) of Employee's Base Salary upon the achievement of certain

performance goals set by the Board of Directors and participate in any other

incentive compensation or bonus program adopted for management employees of the

Employer. The terms on which Employee shall be eligible to participate in any

such incentive compensation or bonus program shall be comparable to the terms

that shall apply to other management employees of the Employer or its

subsidiaries that are employed in positions that are comparable to the position

in which Employee is employed by the Employer. Employee understands that

adoption of any management incentive compensation or bonus program by the

Employer requires the prior approval of the Board of Directors of the Employer.

Employee's





<PAGE>



participation in any such program that is approved by the Board of Directors of

the Employer shall be subject to the provisions, rules and regulations of any

such program.



                3.3 Stock Option. Concurrent herewith, Employer shall grant

Employee a stock option to purchase One Hundred Fifty Thousand (150,000) shares

of Employer's Common Stock (the "Employee Options") pursuant to the terms and

conditions of that certain Stock Option Agreement of even date herewith, at the

exercise price set forth in such Stock Option Agreement (which shall be the

closing price of Employer's Common Stock on the date hereof), which shall vest

according to the Employer's standard vesting program and schedule as determined

by the Employer's Board of Directors. Such options shall be incentive stock

options under the Internal Revenue Code to the maximum extent possible and the

balance shall be non-qualified stock options.



                3.4 Participation in Benefit Plans. The Employee shall be

entitled to participate in all employee benefit plans or programs (including

vacation time, sick leave and holidays) generally available to all employees of

the Employer, to the extent that Employee's position, title, tenure, salary,

age, health and other qualifications make Employee eligible to participate

therein. The Employee's participation in any such plan or program shall be

subject to the provisions, rules and regulations thereof that are generally

applicable to all participants therein.

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