EMPLOYMENT AGREEMENT


         This  Employment  Agreement  is  entered  into as of  5/16/99,  between
William  Block  ("Employee")  and  Epitope,  Inc.,  an Oregon  corporation  (the
"Company").

         1.   SERVICES.

              1.1  EMPLOYMENT.   The Company  agrees to employ  Employee as Vice
President of Sales and Marketing,  and Employee hereby accepts such  employment,
in accordance with the terms and conditions of this Agreement.

              1.2  DUTIES.   Employee shall have the position named in Section 1
with such powers and duties appropriate to that office (a) as may be provided by
the  bylaws of the  Company  and/or (b) as  determined  from time to time by the
President and Chief Executive  Officer or the Board of Directors of the Company.
Employee's  position and duties may be changed from time to time during the term
of this  Agreement,  and  Employee's  place of work may be relocated at the sole
discretion of the President and Chief Executive Officer, the Board of Directors,
or their designees.

              1.3  OUTSIDE ACTIVITIES.  Employee shall obtain the consent of the
President  and  Chief  Executive  Officer  or the Board of  Directors  before he
engages,  either directly or indirectly,  in any other  professional or business
activities that may require an appreciable  portion of Employee's time or effort
or which could result in detriment to the Company's business.

              1.4  DIRECTION OF SERVICES.  Employee shall at all times discharge
his duties in  consultation  with and under the supervision and direction of the
President  and Chief  Executive  Officer of the  Company or such other  designee
appointed  by  the  President  and  Chief  Executive  Officer  or the  Board  of
Directors.

         2.   COMPENSATION AND EXPENSES.

              2.1  SALARY.   As compensation  for services under this Agreement,
the Company  shall pay to Employee a regular  salary of $150,000 per year.  Such
salary may be adjusted from time to time in the  discretion of the President and
Chief  Executive  Officer or the Board of Directors.  Payment shall be made on a
bi-weekly  basis,  less all amounts  deemed by the Company as required by law or
authorized  by  Employee  to be withheld or  deducted,  in  accordance  with the
Company's usual payroll practices.

              2.2  ADDITIONAL  EMPLOYEE  BENEFITS.   To  the  extent  otherwise
eligible,  Employee  shall also be  entitled  to receive or  participate  in any
additional  benefits,  including without limitation medical,  dental,  life, and
long-term  disability  insurance programs,  medical  reimbursement  plans, and a
401(k) plan, which may from time to time be made generally

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available  by the  Company to  corporate  officers.  The  Company  may change or
discontinue such benefits at any time in its sole discretion.

              2.3  EXPENSES.   The  Company  shall  reimburse  Employee  for all
reasonable and necessary expenses incurred in carrying out his duties under this
Agreement.  Employee  shall  present to the Company an itemized  account of such
expenses in such form and at such time as may be required  by the  Company.  The
Company  shall  further pay to Employee (a) a one-time  relocation  allowance of
$30,000;  (b) the Company will also reimburse  Employee's  actual and reasonable
moving expenses for  transferring  Employee's  family and his household goods to
Portland from North Carolina.  To the extent the relocation  allowance described
in this section is  includable  in Employee's  net taxable  income,  the Company
shall pay  Employee  an  additional  amount so that the amount paid to him under
this section,  less taxes at Employee's  effective marginal tax rate, equals the
expenses to be reimbursed. The relocation allowance and the moving expenses must
be repaid by Employee on a prorated  basis if  Employee  voluntarily  leaves the
Company  pursuant  to  Section  6.2  within  two years of the date of hire or is
terminated  pursuant  to Section  6.3 within two years of the date of hire.  The
prorated basis will be based on the numbers of complete months worked during the
initial two-year period.

              2.4  FEES.  All  compensation  earned  by  Employee,   other  than
pursuant to this Agreement,  as a result of services  performed on behalf of the
Company or as a result of or arising out of any work done by Employee in any way
related to the scientific or business  activities of the Company shall belong to
the  Company.  Employee  shall pay or deliver such  compensation  to the Company
promptly upon receipt. For the purposes of this provision,  "compensation" shall
include,  but is not  limited to, all  professional  and  nonprofessional  fees,
lecture fees, expert testimony fees, publishing fees, royalties, and any related
income,  earnings,  or other  things  of  value;  and  "scientific  or  business
activities of the Company" shall include,  but not be limited to, any project or
projects  in which the  Company  is  involved  and any  subject  matter  that is
directly or indirectly researched,  tested, developed,  promoted, or marketed by
the Company.

         3.   STOCK  OPTIONS.   Subject   to   approval    by   the    Executive
Compensation  Committee  and/or the Board of Directors,  the Company shall grant
Employee  an option to  purchase  up to  100,000  shares of common  stock of the
Company  pursuant to the terms of the Epitope,  Inc. 1991 Stock Award Plan.  The
options shall be incentive stock options up to the $100,000 annual limit imposed
by law, the remainder of the options shall be nonqualified options. The exercise
price shall be equal to the fair market  value of the stock on the date of hire.
In the event of a change of control,  as defined in the option agreement,  while
Employee is employed by the Company, Employee's unvested stock options will vest
on the date of the change of control.

         4.   RESTRICTED  STOCK  GRANT.  Employee  shall also be  entitled  to a
restricted stock grant, valued at $30,000, up to a maximum of 7,500 Shares under
the terms of the 1991 Stock  Award  Plan.  The grant value shall be based on the
stock price on  Employee's  hire date (i.e.,  the mean  between the high and low
sales prices of the Common Stock). This grant is expressly  conditioned on final
approval by the Board of Directors.  Employee  understands that this grant

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comes with certain  restrictions,  including inability to sell for one year from
grant.  The  Company  encourages  Employee  to seek  advice  concerning  the tax
consequences of this grant.  Employee may elect to incur the tax expense at time
of grant or at the time the restrictions are lifted.

         5.   PROTECTION OF EMPLOYER INFORMATION.

              5.1  BUSINESS PROTECTION  AGREEMENT.  Employee   understands   and
agrees to execute the Business Protection  Agreement attached as Exhibit A. Such
Agreement is hereby incorporated herein. Employee understands that the execution
of this Business  Protection  Agreement is a pre-condition  of his employment at
the Company.

              5.2  MATERIALS  PREPARED AND INVENTIONS  MADE DURING  EMPLOYMENT.
The  Company  shall be the  exclusive  owner  of all  materials,  concepts,  and
inventions Employee prepares,  develops, or makes (whether alone or jointly with
others) within the scope of his employment, and of all related rights (including
copyrights,   trademarks,   and  patents)  and  proceeds.   Without  limitation,
materials, concepts, and inventions that (a) relate to the Company's business or
actual or demonstrably  anticipated research or development,  or (b) result from
any work performed by Employee for the Company,  shall be considered  within the
scope of  Employee's  employment.  Employee  shall  promptly  disclose  all such
materials,  concepts,  and  inventions to the Company.  Employee  shall take all
action reasonably  requested by the Company to vest ownership of such materials,
consents,  and  inventions  in the  Company  and to permit the Company to obtain
copyright, trademark, patent, or similar protection in its name.

         6.   TERMINATION.

              6.1  TERMINATION  UPON DEATH.  This  Agreement   shall   terminate
immediately upon Employee's death.

              6.2  TERMINATION  BY EMPLOYEE.  Employee   may    terminate    his
employment  under  this  Agreement  by 90 days'  advance  written  notice to the
Company.

              6.3  TERMINATION  BY THE  COMPANY  FOR CAUSE.  The    Company  may
terminate Employee's employment under this Agreement for cause at any time, with
or without advance notice. "Cause" includes, but is not limited to: (a) a breach
of this  Agreement by Employee (de minimus  violations  excluded) and Employee's
failure to promptly  cure such breach after  receipt of notice;  (b)  Employee's
refusal or failure to comply with the written/communicated policies or standards
of the Company or refusal or failure (after notice of  deficiencies)  to perform
any job duties of Employee; (c) any act of fraud,  dishonesty,  or misconduct by
Employee in  connection  with  Employee's  employment  with the  Company;  (d) a
violation of the Business Protection Agreement;  (e) the commission of an act or
omission of an act  detrimental to the best interests of the Company (de minimus
violations  excluded);  or (f) Employee's  failure to otherwise  comply with the
standards of behavior that an employer  reasonably has the right to expect of an
employee.

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              6.4  TERMINATION  BY  THE  COMPANY  WITHOUT  CAUSE.       Employee
understands that his  employment  is  at-will.  The Company  may also  terminate
Employee's employment  under this  Agreement  without cause by written  notice
to Employee.  Employee may (but shall not be required to) elect to treat any of
the  following events as a termination without cause,  provided Employee acts
within 60 days of the event:

                   6.4.1     A reduction in  Employee's  salary below the amount
being paid on the date of this Agreement (except as part of and in proportion to
a reduction in all executive officers' salaries) or a substantial  diminution in
Employee's duties or title below those or that stated in this Agreement.

                  6.4.2      A relocation by the Company of the principal  place
where  Employee's  duties are to be performed to a place outside of the Portland
metropolitan area.

                  6.4.3      A "Change of Control" of the Company.  For purposes
of this  Agreement,  a "Change of  Control"  shall mean a change of control of a
nature  that  would be  required  to be  reported  in  response  to Item 6(e) of
Schedule 14A of Regulation  14A as in effect on the date hereof  pursuant to the
Securities  Exchange Act of 1934 (the "Exchange  Act");  provided that,  without
limitation,  such a change of control  shall be deemed to have  occurred at such
time as (i) any Acquiring  Person hereafter  becomes the "beneficial  owner" (as
defined in Rule 13d-3 under the Exchange  Act),  directly or  indirectly,  of 30
percent or more of the combined voting power of Voting  Securities;  (ii) during
any period of 12 consecutive  calendar months,  individuals who at the beginning
of such  period  constitute  the  Board of  Directors  cease  for any  reason to
constitute at least a majority  thereof  unless the election,  or the nomination
for election, by the Company's shareholders of each new director was approved by
a vote of at least a  majority  of the  directors  then still in office who were
directors at the beginning of the period;  (iii) there shall be consummated  (a)
any  consolidation  or merger of the  Company  in which the  Company  is not the
continuing or surviving corporation or pursuant to which Voting Securities would
be converted into cash,  securities,  or other property,  other than a merger of
the Company in which the holders of Voting  Securities  immediately prior to the
merger have the same,  or  substantially  the same,  proportionate  ownership of
common stock of the surviving  corporation  immediately after the merger, or (b)
any sale, lease,  exchange, or other transfer (in one transaction or a series of
related  transactions)  of all,  or  substantially  all,  of the  assets  of the
Company;  or (iv)  approval  by the  shareholders  of the Company of any plan or
proposal for the liquidation or dissolution of the Company. For purposes of this
Agreement,  "Acquiring  Person"  means  any  person  or  related  persons  which
constitute  a "group"  for  purposes  of Section  13(d) and Rule 13d-5 under the
Exchange  Act,  as such  Section  and Rule are in  effect as of the date of this
Agreement;  provided, however, that the term Acquiring Person shall not include:
(i) the Company or any of its  subsidiaries;  (ii) any employee  benefit plan of
the Company or any of its subsidiaries;  (iii) any entity holding voting capital
stock of the Company for or pursuant to the terms of any such  employee  benefit
plan; or (iv) any person or group solely because such person or group has voting
power with  respect to capital  stock of the  Company  arising  from a revocable
proxy or consent  given in  response to a public  proxy or consent  solicitation
made pursuant to the

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Exchange  Act. For purposes of this  Agreement,  "Voting  Securities"  means the
Company's issued and outstanding  securities ordinarily having the right to vote
at elections for the Company's Board of Directors.

              6.5  COMPENSATION UPON TERMINATION.

                   6.5.1     TERMINATION  UNDER SECTION 6.1, 6.2, OR 6.3. In the
event of a termination of Employee's  employment under Section 6.1, 6.2, or 6.3,
Employee's  regular  compensation  pursuant to Section 2.1 shall be prorated and
payable until the date of termination.

                   6.5.2     TERMINATION  UNDER  SECTION  6.4. In the event of a
termination of Employee's employment by the Company without cause as provided in
Section 6.4,  Employee shall continue to be paid the salary  provided in Section
2.1 for 12 months from the date of notice of such termination of employment,  in
the manner and at the times at which regular  compensation  was paid to Employee
during the term of his employment under this Agreement,  except that if Employee
elects to treat an event  described  in  Sections  6.4.1,  6.4.2,  or 6.4.3 as a
termination  without  cause but  continues to work for the Company or any of its
subsidiaries,  then any amounts  Employee  receives as  compensation  during the
12-month period shall be credited  against the amounts payable to Employee under
this section.  Unless Employee elects to continue working for the Company or any
of its subsidiaries,  as a condition to receipt of the compensation described in
the preceding sentence, Employee shall sign, deliver, and abide by a Release and
Waiver of Claims  Agreement,  substantially in the form attached as Exhibit B to
this Agreement.  Moreover, the Company's obligation to pay the amounts stated in
this section  shall  terminate if Employee  breaches any aspects of the Business
Protection Agreement attached as Exhibit A.

         7.   REMEDIES. The  respective  rights  and duties of the  Company  and
Employee  under this  Agreement  are in addition  to, and not in lieu of,  those
rights  and  duties  afforded  to and  imposed  upon  them by law or at  equity.
Employee  acknowledges  that breach of the Business  Protection  Agreement  will
cause  irreparable  harm to the  Company  and agrees to the entry of a temporary
restraining   order  and   permanent   injunction  by  any  court  of  competent
jurisdiction to prevent breach or further breach of such Agreement.  Such remedy
shall be in addition to any other  remedy  available to the Company at law or in
equity. In recognition of the paramount importance of such temporary restraining
order and permanent injunction, Employee waives any right he may have had to the
posting of a bond as a precondition to entry of such orders.

         8.   SEVERABILITY OF  PROVISIONS.  The provisions of this Agreement are
severable,  and if any  provision  hereof is held invalid or  unenforceable,  it
shall  be  enforced  to  the  maximum  extent  permissible,  and  the  remaining
provisions of the Agreement shall continue in full force and effect.

         9.   ATTORNEY FEES. In the event a suit or  action is filed to  enforce
the Business Protection  Agreement,  the prevailing party shall be reimbursed by
the other party for all costs and expenses  incurred in connection with the suit
or action,  including without limitation reasonable attorney fees at trial or on
appeal.

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         10.  NONWAIVER.   Failure  of  the  Company  at  any  time  to  require
performance of any provision of this Agreement  shall not limit the right of the
Company to enforce the  provision.  No  provision  of this  Agreement  or breach
thereof may be waived by either party except by a writing  signed by that party.
A waiver of any  breach of a  provision  of this  Agreement  shall be  construed
narrowly and shall not be deemed to be a waiver of any succeeding breach of that
provision or a waiver of that provision itself or of any other provision.

         11.  ARBITRATION.

              11.1      CLAIMS  COVERED.  To the  extent  provided  by law,  the
Company  and  Employee  mutually  consent  to the  resolution  of all  claims or
controversies, except for those excluded by Section 11.2, whether or not arising
out of Employee's  employment  (or its  termination),  that the Company may have
against  Employee or that  Employee  may have against the Company or against its
officers,  directors,  employees  or  agents,  in  their  capacity  as  such  or
otherwise, by binding arbitration as provided in this Section. Claims covered by
this  Section  include,  but are not  limited  to,  claims  for  wages  or other
compensation  due;  claims for breach of any  contract or  covenant  (express or
implied); tort claims; claims for discrimination (including, but not limited to,
race, sex, sexual orientation,  religion,  national origin, age, marital status,
or disability); claims for benefits (except where an employee benefit or pension
plan  specifies  that its claims  procedure  shall  culminate in an  arbitration
procedure  different  from this one);  and claims for  violation of any federal,
state, or other  governmental law, statute,  regulation,  or ordinance except as
provided in Section 11.2

              11.2      NON-COVERED  CLAIMS.  Claims arising out of the Business
Protection  Agreement and workers'  compensation  or  unemployment  compensation
benefits are not covered by this Section 11.1.  Non-covered  claims  include but
are not limited to claims by the Company for injunctive  and/or other  equitable
relief for unfair competition and/or the use and/or  unauthorized  disclosure of
trade secrets or confidential information,  as to which Employee understands and
agrees  that the Company  may seek and obtain  relief from a court of  competent
jurisdiction.

              11.3      REQUIRED   NOTICE  OF  ALL   CLAIMS   AND   STATUTE   OF
LIMITATIONS.  Company  and  Employee  agree that the  aggrieved  party must give
written  notice of any claim to the other party  within one year of the date the
aggrieved  party  first has  knowledge  of the event  giving  rise to the claim;
otherwise  the claim shall be void and deemed  waived even if there is a federal
or state statute of  limitations  which would have given more time to pursue the
claim.  The written  notice shall identify and describe the nature of all claims
asserted and the facts upon which such claims are based.

              11.4      HEARING   OR   MEDIATION.   Prior  to  any   arbitration
proceeding  taking place  pursuant to this section,  Company or Employee may, at
its respective option, elect to submit the claim to non-binding mediation before
a mutually agreeable mediation tribunal or mediator, in

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which event both parties shall execute a suitable confidentiality  agreement and
abide by the procedures specified by the mediation tribunal or mediator.

              11.5      ARBITRATION   PROCEDURES.   Any  arbitration   shall  be
conducted in  accordance  with the  then-current  Model  Employment  Arbitration
Procedures  of  the  American  Arbitration  Association  ("AAA"),   modified  to
substitute for AAA actions,  the United States Arbitration and Mediation Service
("USA&MS"), before an arbitrator who is licensed to practice law in the state of
Oregon (the "Arbitrator"). The arbitration shall take place in or near Portland,
Oregon.

                        11.5.1  SELECTION OF  ARBITRATOR.  The USA&MS shall give
each party a list of 11  arbitrators  drawn  from its panel of  labor-management
dispute  arbitrators.  Each  party  may  strike  all  names on the list it deems
unacceptable.  If only one common name remains on the lists of all parties, that
individual  shall be designated as the Arbitrator.  If more than one common name
remains on the lists of all parties,  the parties shall strike names alternately
until only one  remains.  The party who did not  initiate the claim shall strike
first.  If no common name remains on the lists of all parties,  the USA&MS shall
furnish an additional list or lists until an Arbitrator is selected.

                        11.5.2  APPLICABLE  LAW.  The Arbitrator shall apply the
substantive  law (and the law of  remedies,  if  applicable)  specified  in this
Agreement or federal law, or both, as applicable to the claim(s)  asserted.  The
Arbitrator,  and not any federal,  state,  or local court or agency,  shall have
exclusive  authority  to resolve  any dispute  relating  to the  interpretation,
applicability,  enforceability or formation of this Agreement, including but not
limited to any claim that all or any part of this Agreement is void or voidable.
The arbitration shall be final and binding upon the parties,  except as provided
in this Agreement.

                        11.5.3  AUTHORITY.  The     Arbitrator     shall    have
jurisdiction to hear and rule on pre-hearing  disputes and is authorized to hold
pre-hearing  conferences  by  telephone  or in  person as the  Arbitrator  deems
necessary.  The  Arbitrator  shall have the  authority  to entertain a motion to
dismiss  and/or a motion for  summary  judgment by any party and shall apply the
standards governing such motions under the Federal Rules of Civil Procedure. The
Arbitrator  shall render an award and opinion in the form typically  rendered in
labor arbitrations.

                        11.5.4  REPRESENTATION.  Any party may be represented by
an attorney or other representative selected by the party.

                        11.5.5  DISCOVERY.  Each  party  shall have the right to
take the  deposition  of one  individual  and any expert  witness  designated by
another  party.  Each  party  also  shall  have the right to make  requests  for
production of documents to any party.  The subpoena right  specified below shall
be applicable to discovery pursuant to this paragraph.  Additional discovery may
be had only where the Arbitrator  selected pursuant to this Agreement so orders,
upon a showing of substantial need. At least 30 days before the arbitration, the
parties must exchange lists of witnesses,  including any experts,  and copies of
all exhibits  intended to be used at the

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arbitration. Each party shall have the right to subpoena witnesses and documents
for the arbitration.

                        11.5.6  REPORTER.  Either  party,  at its expense,  may
arrange  for and pay the cost of a court  reporter  to  provide  a  stenographic
record of proceedings.

                        11.5.7  POST-HEARING  BRIEFS.  Either    party,     upon
request at the close of  hearing,  shall be given  leave to file a  post-hearing
brief. The time for filing such a brief shall be set by the Arbitrator.

              11.6      ENFORCEMENT.  Either  party  may  bring an action in any
court of competent  jurisdiction to compel  arbitration under this Agreement and
to enforce an arbitration award. Except as otherwise provided in this Agreement,
both the Company and Employee agree that neither shall initiate or prosecute any
lawsuit  (other  than for a  non-covered  claim) in any way related to any claim
covered by this Agreement.  A party opposing  enforcement of an award may not do
so in an enforcement  proceeding,  but must bring a separate action in any court
of competent  jurisdiction to set aside the award,  where the standard of review
will be the same as that applied by an appellate court reviewing a decision of a
trial court sitting without a jury.

         12.  ARBITRATION  FEES AND COSTS.  Company and Employee  shall  equally
share the fees and costs of the  Arbitrator.  Each party will  deposit  funds or
post other  appropriate  security for its share of the  Arbitrator's  fee, in an
amount and manner determined by the Arbitrator,  10 days before the first day of
hearing.  Each party shall pay for its own costs and  attorneys'  fees,  if any,
provided that the Arbitrator, in its sole discretion,  may award reasonable fees
to the prevailing party in a proceeding.

         13.  GENERAL TERMS AND CONDITIONS. This Agreement and the  incorporated
Exhibits  constitute  the entire  understanding  of the parties  relating to the
employment of Employee by the Company,  and  supersedes and replaces all written
and oral  agreements  heretofore  made or  existing  by and  between the parties
relating thereto.  This Agreement shall be construed in accordance with the laws
of the state of Oregon,  without  regard to any conflicts of laws rules thereof.
This  Agreement  shall inure to the benefit of any  successors or assigns of the
Company.  All  captions  used  herein are  intended  solely for  convenience  of
reference  and shall in no way limit any of the  provisions  of this  Agreement.
Employee  acknowledges  that he signed this Agreement and the attached  Business
Protection Agreement upon his initial employment with the Company.

         The parties  have  executed  this  Employment  Agreement as of the date
stated above.


                                  EPITOPE, INC.


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/s/ William Block                          By:   /s/ John Morgan
---------------------------                      -------------------------------
WILLIAM BLOCK

                                           Title:  President and CEO
                                                 -------------------------------

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