Exhibit 10.5

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT (“Agreement”), made and entered into as of February 28, 2005, by
and between DAPLOMA INTERNATIONAL A/S, a Danish corporation (“Company”) and
TORSTEN NORDFJELD (“Executive”).

 

RECITALS

 

A.            This Agreement is being executed and delivered contemporaneously
with that certain Stock Purchase Agreement dated as of the date hereof (the
“Stock Purchase Agreement”), pursuant to which Digital Angel Corporation, a
Delaware corporation (“Digital Angel”) will purchase all of the issued and
outstanding shares of capital stock of DSD Holding A/S, a Danish corporation
that is the sole owner of the Company.

 

B.            The Executive is a founder of and a principal operating officer of
the Company. The Company has developed and acquired valuable information,
know-how and ideas relating to its business, all of which is regarded as
valuable confidential information. In the course of his employment with the
Company, Executive has had access to and has learned certain valuable and
confidential information of the Company. During such period, Executive has also
developed valuable relationships with suppliers, customers and other business
associates of the Company.

 

C.            The Company desires to assure that Executive provides services to
the Company as its employee, and Executive desires to be employed by the
Company, subject to the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and the respective
agreements of the Company and Executive set forth below, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Executive, intending to be legally bound, agree as
follows:

 

1.             Employment.  The Company hereby employs Executive, and Executive
accepts such employment and agrees to perform services for the Company, for the
period and upon the other terms and conditions set forth in this Agreement.  The
Executive shall serve in the employ of the Company as President, and shall serve
in any other capacity in the employ of the Company and its subsidiaries to which
the Executive may from time to time be elected or appointed.

 

2.             Term of Employment.  Unless terminated at an earlier date in
accordance with Section 9 of this Agreement, the term of Executive’s employment
hereunder shall commence upon the date hereof and continue until either party
terminates the Executive’s employment by providing the other party a twelve (12)
month advance written notice.

 

1

--------------------------------------------------------------------------------

 

3.             Position and Duties.

 

(a)           Service with Company.  During the term of Executive’s employment
with the Company pursuant to this Agreement, Executive agrees to perform such
reasonable employment duties as the Chief Executive and/or the Board of
Directors of the Company shall assign to him from time to time.  Executive’s
title shall be President of the Company, and he shall assume and discharge the
responsibilities of such offices as set forth in the Company’s Bylaws or as
otherwise determined by the Company’s Chief Executive Officer and/or Board of
Directors.

 

(b)           Performance of Duties; Performance Review.  Executive agrees to
serve the Company faithfully and to the best of his ability and to devote his
full time, attention and efforts to the business and affairs of the Company
during his employment by the Company.  Executive further agrees that he shall
not engage, either directly or indirectly, in any business or other activity
which is competitive with or adverse to the interest or the business of the
Company or Digital Angel. The ownership by Executive, as a passive investment,
of less than 3% of the outstanding shares of capital stock of any corporation
listed on a national securities exchange or publicly traded in the
over-the-counter market shall not constitute a breach of this Section 3.
Executive hereby confirms that he is under no contractual commitments
inconsistent with his obligations set forth in this Agreement.  While he remains
employed by the Company, Executive may participate in other business activities,
including, without limitation, reasonable charitable activities, personal
investment activities and, if the Executive received prior approval from the
Chief Executive Officer of the Company, serving on the board of an entity which
is not competitive with or adverse to the interest or business of the Company,
so long as such activities do not interfere with the performance of his
obligations under this Agreement.

 

4.             Compensation.

 

(a)           Base Salary.  The Company agrees to pay the Executive for his
services hereunder a base salary (the “Base Salary”), which Base Salary shall be
paid in accordance with the Company’s normal payroll procedures and policies. 
Effective on the date of this Agreement, the Company shall pay to the Executive
a Base Salary of 900,000 Danish Krones per annum. Executive acknowledges that
the Company will withhold and deduct from such payments such amounts as are
required under applicable law to be withheld for income tax, Social Security and
other withholding purposes.

 

(b)           Performance Bonus. As additional compensation for Executive,
Executive will be eligible to receive an annual bonus up to 30% of Executive’s
Base Salary for each fiscal year (the “Bonus”), based upon criteria determined
by mutual agreement of the Board of Directors, the Compensation Committee of the
Board and the Executive. The Bonus shall be paid annually not later than 45 days
after the completion of the Company’s fiscal year-end audit. The Bonus shall be
pro-rated for any year during which Executive is employed for less than the full
year.

 

2

--------------------------------------------------------------------------------

 

(c)           Stock Options. As additional compensation for Executive, Executive
will receive stock options to purchase 75,000 shares of the Company’s common
stock as approved by the Board of Directors of the Company or compensation
committee of the Board.

 

(d)           Benefits.  During the term of Executive’s employment with the
Company pursuant to this Agreement, Executive shall be entitled to continue to
participate in any of the employee benefit and deferred compensation plans or
programs of the Company as was available to Executive prior to the closing of
the Stock Purchase Agreement.

 

(e)           Other Perquisites.  The Executive shall be entitled to the same
vacation, car allowance, office facilities and such other facilities and
services the Company provided to the Executive prior to the closing of the Stock
Purchase Agreement.  In addition, the Company will pay or reimburse Executive
for all reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement, subject to the Company’s normal
policies for expense verification. Without his consent, Executive shall not be
relocated from Denmark.

 

5.             Confidential Information.  Except as permitted by the Company’s
Board of Directors, Executive shall not divulge, furnish or make accessible to
anyone or use in any way (other than in the ordinary course of the business of
the Company) any confidential or secret knowledge or information of the Company
that Executive previously acquired or will acquire during the period of his
employment by the Company pursuant to this Agreement, whether developed by
himself or by others, concerning any (i) trade secrets, (ii) confidential or
secret designs, processes, formulae, plans, devices or material (whether or not
patented or patentable) directly or indirectly useful in any aspect of the
business of the Company, (iii) customer or supplier lists of the Company,
(iv) confidential or secret development or research work of the Company, or
(v) other confidential information or secret aspects of the business of the
Company.  Executive acknowledges that the above-described knowledge or
information constitutes a unique and valuable asset of the Company and
represents a substantial investment of time and expense by the Company, and that
any disclosure or other use of such knowledge or information other than for the
sole benefit of the Company would be wrongful and would cause irreparable harm
to the Company.  During the term of this Agreement, Executive will refrain from
any acts or omissions that would reduce the value of such knowledge or
information to the Company.  The foregoing obligations of confidentiality shall
not apply to any knowledge or information that (x) is now or subsequently
becomes generally publicly known in the form in which it was obtained from the
Company, (y) is independently made available to Executive in good faith by a
third party who has not violated a confidential relationship with the Company,
or (z) is required to be disclosed by legal process, other than as a direct or
indirect result of the breach of this Agreement by Executive.

 

6.             Ventures.  If, during Executive’s employment, Executive is
engaged in or associated with the planning or implementing of any project,
program or venture involving the Company and a third party or parties, all
rights in such project, program or venture shall belong to the Company, as
applicable.  Except as approved by the Company’s Board of Directors, Executive
shall not be entitled to any interest in such project, program or venture or to
any commission, finder’s fee or other

 

3

--------------------------------------------------------------------------------

 

compensation in connection therewith other than the compensation to be paid to
Executive as provided in this Agreement.  Executive shall have no interest,
direct or indirect, in any vendor or customer of the Company, unless such
interest has been disclosed to and approved by the Company’s Board of
Directors.  Notwithstanding the foregoing, however, ownership by Executive, as a
passive investment, of less than 3% of the outstanding shares of capital stock
of any corporation listed on a national securities exchange or publicly traded
in the over-the counter market shall not constitute a breach of this Section 6.

 

7.             Noncompetition Covenant.

 

(a)           Agreement Not to Compete.  During the term of Executive’s
employment by the Company and for a period of 12 consecutive months from the
date of termination of such employment (whether such termination is with or
without cause, or whether such termination is occasioned by Executive or the
Company), Executive shall not, directly or indirectly, in any place in Denmark
or North America, engage in the business that the Company has engaged in at the
time of the termination of Executive’s employment or any part of such business,
including the design, development, manufacture, distribution, marketing, leasing
or selling of animal identification systems, in any manner or capacity,
including, but not limited to, as a proprietor, principal, agent, partner,
officer, director, stockholder, employee, member of any association, consultant
or otherwise.

 

(b)           Agreement Not to Hire.  During the term of Executive’s employment
by the Company and for a period of 12 consecutive months from the date of
termination of such employment, Executive shall not, directly or indirectly,
hire, engage or solicit any person who is an employee of the Company.

 

(c)           Limitation on Covenant.  The ownership by Executive, as a passive
investment, of less than 3% of the outstanding shares of capital stock of any
corporation listed on a national securities exchange or publicly traded in the
over-the-counter market shall not constitute a breach of this Section 7.

 

(d)           Acknowledgment.  Executive agrees that the restrictions and
agreements contained in this Section 7 are reasonable and necessary to protect
the legitimate interests of the Company and that any violation of this Section 7
will cause substantial and irreparable harm to the Company that would not be
quantifiable and for which no adequate remedy would exist at law and accordingly
injunctive relief shall be available for any violation of this Section 7.

 

(e)           Blue Pencil Doctrine.  If the duration or geographical extent of,
or business activities covered by, this Section 7 are in excess of what is valid
and enforceable under applicable law, then such provision shall be construed to
cover only that duration, geographical extent or activities that are valid and
enforceable.  Executive acknowledges the uncertainty of the law in this respect
and expressly stipulates that this Agreement be given the construction which
renders its provisions valid and enforceable to the maximum extent (not
exceeding its express terms) possible under applicable laws.

 

4

--------------------------------------------------------------------------------

 

8.             Work Product; Assignment of Inventions.

 

(a)           Work Product.  Executive agrees that, during the term of this
employment with the Company pursuant to this Agreement:

 

(i)            He will disclose promptly and fully to the Company all works of
authorship, inventions, discoveries, improvements, designs, processes, software
or any improvements, enhancements or documentation of or to the same that he
makes, works on or conceives, individually or jointly with others, in the course
of his employment by the Company or with the use of the Company’s time,
materials or facilities, in any way related or pertaining to or connected with
the present or anticipated business, development, work or research of the
Company or which result from or are suggested by any work he may do for the
Company and whether produced during normal business hours or on personal time
(collectively the “Work Product”);

 

(ii)           All Work Product of the Executive shall be deemed to be “work
made for hire” within the meaning of Section 101 of the Copyright Act and all
rights to copyright shall be vested entirely in the Company. If for any reason
the Work Product is deemed not to be “work made for hire” and its rights to
copyright are thereby in doubt, this Agreement shall constitute an irrevocable
assignment by the Executive to the Company of all right, title and interest in
the copyright of all Work Product created under this Agreement. The parties
intend that any and all copyright and other intellectual property rights in the
Work Product, including without limitation any and all rights of whatever kind
and nature now or hereafter to distribute and reproduce such Work Product in any
and all media throughout the world, are the sole property of the Company.  The
Executive hereby agrees to assist the Company in any manner as shall be
reasonably requested by the Company to protect the Company’s interest in such
legal instruments or documents as the Company shall request in order for the
Company to register the Company’s worldwide copyright and/or the Work Product
with the U.S. Copyright Office and to register and protect the Company’s
copyright or other intellectual property rights in the Work Product throughout
the world.  Likewise, the Executive hereby agrees to assist the Company by
executing such other documents and instruments which the Company deems necessary
to enable it to evidence, perfect and protect its rights, title and interest in
and to the Work Product.

 

(iii)          Executive shall make and maintain adequate and current written
records and evidence of all Work Product, including drawings, work papers,
graphs, computer records and any other document which shall be and remain the
property of the Company, and which shall be surrendered to the Company upon
request and upon the termination of the Executive’s employment with the Company,
regardless of cause.

 

(b)           Assignment of Inventions.  Executive agrees that, during the term
of this engagement with Company, Executive may make, develop or conceive of
inventions, original works

 

5

--------------------------------------------------------------------------------

 

of authorship, developments, concepts, improvements or trade secrets, whether or
not patentable or registrable under copyright or similar laws, which Executive
may solely or jointly conceive or develop to reduce to practice, or cause to be
conceived of developed or reduced to practice in connection with the Company’s
business, products or research and development or the services provided by the
Executive hereunder (collectively referred to as “Inventions”).  The term
“Inventions” further includes any useful process, composition of matter,
software, machine, process, discovery, document or improvement which relates to
the business activities which Company is or may become engaged.  Executive
agrees that it will promptly make full written disclosure to the Company, will
hold in trust for the sole and exclusive right and benefit of the Company and
its nominees and hereby assigns to the Company, or its designee, in perpetuity,
all of Executive’s right, title and interest in and to any and all Inventions,
including background information necessary to practice such Inventions.

 

(i)            Patent and Copyright Registrations.  Company and its nominees
shall have the right to use and apply for common law and statutory protections
of such Inventions in any and all countries and jurisdictions.  Furthermore,
Executive agrees to assist the Company, or its designee, any copyrights,
patents, mask work rights or other intellectual property rights relating thereto
in any and all countries and jurisdictions, including the disclosure to the
Company of all pertinent information and data with respect thereto, the
execution of all applications, specifications, oaths, assignments and all other
instruments which the Company shall deem necessary in order to apply for and
obtain such rights and in order to assign and convey to the Company, its
successors, assigns and nominees the sole and exclusive right, title and
interest in and to such Inventions, including all rights associated with works
of authorship throughout the world, any copyrights, patents, mask work rights,
trade secrets or other intellectual property rights relating thereto or
analogous to those set forth herein.  Executive further agrees that his
obligation to execute or cause to be executed, when it is in his power to do so,
any such instrument or papers shall continue after the termination of this
Agreement.  If the Company is unable, for any reason, to secure Executive’s
signature to apply for or to pursue any application for any United States or
foreign patents or copyright registrations covering Inventions or original works
of authorship assigned to the Company as above, then Executive hereby
irrevocably designate and appoint the Company and its duly authorized officers
and agents as Executive’s agent and attorney in fact, to act for and in
Executive’s behalf and stead to execute and file any such applications and to do
all other lawfully permitted acts to further the prosecution and issuance of
letters patent or copyright registrations thereon with the same legal force and
effect as if executed by Executive.  The foregoing rights shall also apply to
any divisions, continuations, renewals, reissues and extensions of the
foregoing, as applicable, now existing or hereafter filed, issued or acquired.

 

(ii)           Inventions Retained and Licensed.  Executive has attached hereto,
as Exhibit A, a list describing all inventions, original works of authorship,
developments, improvements and trade secrets which were made by Executive prior
to his engagement with the Company, which belong to Executive, which relate to
the Company’s business, products

 

6

--------------------------------------------------------------------------------

 

or research and development, and which are not assigned to the Company hereunder
(collectively referred to as “Prior Inventions”); or, if no such list is
attached, Executive represents that there are no such Prior Inventions.  If in
the course of Executive’s engagement with the Company, Executive incorporates
into any inventions, improvement, development, product, copyrightable material
or trade secret any invention, improvement, development, concept, discovery or
other proprietary information owned by Executive or in which Executive has an
interest, the Company is hereby granted and shall have a nonexclusive,
royalty-free, irrevocable, perpetual, worldwide license to make, have made,
modify, use and sell such item as part of or in connection with such product,
process or machine.

 

(iii)          Inventions Assigned to the United States.  Executive agrees to
assign to the United States government all of Executive’s right, title, and
interest in and to any and all Inventions whenever such full title is required
to be in the United States by a contract between the Company and the United
States or any of its agencies.

 

(iv)          Maintenance of Records.  Executive agrees to keep and maintain
adequate and current written records of all Inventions made by it (solely or
jointly with others) during the term of his engagement with the Company.  The
records will be in the form of notes, sketches, drawings and any other format
that may be specified by the Company.  The records will be available to and
remain the sole property of the Company at all times.

 

9.             Termination of Employment.

 

(a)           Grounds for Termination.  Executive’s employment shall terminate
prior to the expiration of the initial term set forth in Section 2 or any
extension thereof in the event that at any time:

 

(i)            Executive shall die;

 

(ii)           Executive:

 

(x)            has engaged in willful and material misconduct, including fraud
or embezzlement; or conviction of a felony or a gross misdemeanor; or has
engaged in gross neglect of his duties as an officer or employee of the Company;
or has committed any act or omission which materially injures the financial
condition or business reputation of the Company or any of its subsidiaries or
affiliates; or

 

(y)           has breached this Agreement in any material respect, which breach
is not cured by Executive or is not capable of being cured by Executive within
30 days after written notice of such breach is delivered to Executive.

 

7

--------------------------------------------------------------------------------

 

(iii)          The Board of Directors shall determine that Executive has failed,
by reason of illness, incapacity or disability, to render services of the
character contemplated by this Agreement for at least 180 days during any
360-day period;

 

(iv)          The Board of Directors shall terminate Executive’s employment
other than pursuant to clause (ii) above, not including delivery of a notice of
nonrenewal given by the Company pursuant to Section 2 of this Agreement; or
Executive terminates his employment for “Good Reason.”  For purposes of this
Agreement, “Good Reason” means a material breach of this Agreement by the
Company not caused by Executive (including, without limitation, a material
reduction in Executive’s duties or responsibilities without Executive’s consent,
or a material diminution in the compensation or benefits payable to Executive) 
which breach has not been cured within 15 days after written notice thereof by
the Executive to the Company; or

 

(v)           The Executive shall terminate his employment other than for Good
Reason.

 

(b)           Entitlement to Accrued Compensation.  If Executive’s employment is
terminated by the Company pursuant to Section 9(a)(ii) or by the Executive
pursuant to Section 9(a)(v), Executive’s rights to pay and benefits shall cease
on the date his employment under this Agreement terminates, and he shall be paid
all accrued Base Salary, any unpaid Bonus due under Section 4(b), any vested
deferred compensation (other than pension plan or profit-sharing plan benefits,
which will be paid in accordance with the applicable plan), any other benefits
then due under Section 4(d) of this Agreement, accrued vacation pay, and any
appropriate business expenses incurred by the Executive in connection with his
duties hereunder, all to the effective date of termination (collectively, the
“Accrued Compensation”), but no other compensation or reimbursement of any kind
shall be owed to the Executive by the Company.

 

(c)           Entitlement to Accrued Compensation Upon Death.  If Executive’s
employment is terminated pursuant to Section 9(a)(i), Executive’s rights to pay
and benefits shall cease on the last day of the month in which his death occurs,
and his personal representative shall be paid all Accrued Compensation up to and
including such date, but no other compensation or reimbursement of any kind
shall be owed to the Executive’s estate by the Company.

 

(d)           Entitlement to Accrued Compensation Upon Disability.  If
Executive’s employment is terminated by the Company pursuant to Section
9(a)(iii) upon a 90 day prior written notice to the Executive, Executive’s
rights to pay and benefits shall cease on the last day of the 90 day termination
notice, and he shall be paid all Accrued Compensation (less any payments
received by Executive from any disability income insurance policy provided to
him by the Company) up to and including such date, but no other compensation or
reimbursement of any kind shall be owed to the Executive by the Company.

 

8

--------------------------------------------------------------------------------

 

(e)           Salary Continuation.  If Executive’s employment is terminated by
the Company pursuant to Section 9(a)(iv), or by the Executive for Good Reason
pursuant to Section 9(a)(iv), the Company shall pay to the Executive all Accrued
Compensation to the effective date of termination, and the Company shall
continue to pay to Executive his then effective Base Salary and shall continue
to provide all benefits to Executive pursuant to Section 4(d) for the remainder
of the then existing term of this Agreement. No deduction shall be made by the
Corporation under this Section for any compensation earned by the Executive from
any other employment or for any other monies otherwise received by the Executive
subsequent to termination of employment hereunder.

 

(f)            Release.  The payment of any amounts to Executive under
Section 9(b) through Section 9(e) or otherwise after termination of Executive’s
employment with the Company shall be conditioned upon the Company receiving a
full and complete release from Executive of any current or future claims
Executive may have against the Company, its officers and directors and other
Company affiliates other than (i) those current and specific claims identified
on a list the Executive provides to the Company along with the signed release
(the “List”), (ii) with respect to the payment of amounts specifically provided
for herein, (iii) pursuant to rights of indemnification under the Company’s
Certificate of Incorporation or by-laws or (iv) pursuant to the terms of any
employee benefit plan of the Company in which Executive is a participant.  If
the Company requires that Executive provide the release discussed in the prior
sentence as a condition to making any payments hereunder, and if Executive
delivers such a release, then the Company shall also be required to give to
Executive a full and complete release of any current or future claims the
Company may have against Executive other than under Sections 5, 6, 7, 8 and 9(g)
of this Agreement and in connection with those claims provided on the List.

 

(g)           Surrender of Records and Property.  Upon termination of his
employment with the Company, Executive shall deliver promptly to the Company all
records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof that relate in
any way to the business, products, practices or techniques of the Company, and
all other property, trade secrets and confidential information of the Company,
including, but not limited to, all documents that in whole or in part contain
any trade secrets or confidential information of the Company, which in any of
these cases are in his possession or under his control.

 

10.           Change of Control.

 

(a)           Severance.  Notwithstanding any other provision of this Agreement,
should a Change of Control (as defined below) occur, Executive, at his sole
option and discretion, may terminate his employment under this Agreement at any
time within one year after such change of control upon 15 days notice.  In the
event of such termination, Company shall pay to Executive a severance payment
equal to three times the annual Base Salary and Bonus, averaged over the last
five taxable years of employment with the Company (“Base Period”), minus $1.00,
which shall be payable no later than one month after the effective date of the
Executive’s termination of employment. If there is a short taxable year during
the Base Period, the amount of taxable income

 

9

--------------------------------------------------------------------------------

 

Executive earned during the short taxable year will be annualized for purposes
of calculating the severance payment.

 

(b)           Options.  In the event of a Change of Control, all outstanding
stock options held by Executive shall become fully exercisable (to the extent
not already exercisable).

 

(c)           Definition.  For purposes of this Agreement, a “Change in Control”
shall be deemed to have occurred if (a) any “person” or “group” (within the
meaning of Sections 13 (d) and 14(d)(2) of the Exchange Act of 1934 (the “1934
Act”), other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation is or becomes the “beneficial owner”
(as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of more
than 33-1/3 of the then outstanding voting stock of the Corporation; or (b) at
any time during any period of three consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (and any new
director whose election by the Board or whose nomination for election by the
Corporation’s stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority thereof; or (c) the
stockholders of the Corporation approve a merger or consolidation of the
Corporation with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) at least 80% of the combined voting power of the voting securities of
the Corporation or such surviving entity outstanding immediately after such
merger or consolidation.

 

11.           Remedies.

 

(a)           Remedies.  Executive acknowledges that it would be difficult to
fully compensate the Company for damages resulting from any breach by him of the
provisions of Sections 5, 6, 7, 8 and 9(g) of this Agreement.  Accordingly, in
the event of any actual or threatened breach of such provisions, the Company
shall (in addition to any other remedies it may have) be entitled to temporary
and/or permanent injunctive and other equitable relief to enforce such
provisions, and such relief may be granted without the necessity or proving
actual damages.

 

(b)           Arbitration.  Except for disputes arising under Sections 5, 6, 7,
8 or 9(g) hereof, all disputes arising under this Agreement shall be settled in
accordance with the Rules of Procedure of the Danish Institute of Arbitration
(“Rules of Procedure”). All members of the Arbitration Tribunal shall be
appointed by the Danish Institute of Arbitration in accordance with the Rules of
Procedure, and no member shall be affiliated with either the Company, Digital
Angel or the Executive.  The decision of the Arbitration Tribunal shall be final
and binding, and any court of competent jurisdiction may enter judgment upon the
award.  All fees and expenses of the Arbitration Tribunal shall be paid by the
party whose position is not upheld by the Arbitration Tribunal.  The Arbitration
Tribunal shall have jurisdiction and authority to interpret and apply the
provisions of this Agreement and relevant Danish and United States federal,
state and local laws insofar as necessary to

 

10

--------------------------------------------------------------------------------

 

the determination of the dispute and to remedy any breaches of the Agreement
and/or applicable laws, but shall not have jurisdiction or authority to award
punitive damages or alter in any way the provisions of this Agreement.  The
Arbitration Tribunal shall have the authority to award attorneys fees and costs
to the prevailing party.  The parties agree that this arbitration provision
shall be in lieu of any claims procedure which may be required under US federal
or Danish law.

 

12.           Miscellaneous.

 

(a)           Governing Law.  All matters relating to the interpretation,
construction, validity and enforcement of this Agreement shall be governed by
the laws of Denmark.

 

(b)           Entire Agreement.  This Agreement contains the entire agreement of
the parties relating to the subject matter hereof and supersedes all prior
agreements and understandings with respect to such subject matter, and the
parties hereto have made no agreements, representations or warranties relating
to the subject matter of this Agreement which are not set forth herein.

 

(c)           Amendments.  No amendment or modification of this Agreement shall
be deemed effective unless made in writing and signed by the parties hereto.

 

(d)           No Waiver.  No term or condition of this Agreement shall be deemed
to have been waived, nor shall there be any estoppel to enforce any provisions
of this Agreement, except by a statement in writing signed by the party against
whom enforcement of the waiver or estoppel is sought.  Any written waiver shall
not be deemed a continuing waiver unless specifically stated, shall operate only
as to the specific term or condition waived, and shall not constitute a waiver
of such term or condition for the future or as to any act other than that
specifically waived.

 

(e)           Other Employment or Consulting Agreements.  Executive represents
and warrants that (i) Executive has terminated all other employment or
consulting agreements he has previously entered into and (ii) neither Executive
nor any entity which previously employed the Executive has any obligations under
such agreements following their termination.

 

(f)            Assignment.  This Agreement shall not be assignable, in whole or
in part, by either party without the written consent of the other party, except
that the Company may, without the consent of Executive, assign its rights and
obligations under this Agreement to any corporation, firm or other business
entity with or into which the Company may merge or consolidate, or to which the
Company may sell or transfer all or substantially all of its assets, or of which
50% or more of the equity investment and of the voting control is owned,
directly or indirectly, by, or is under common ownership with, the Company. 
After any such assignment by the Company, the Company shall be discharged from
all further liability hereunder, and such assignee shall thereafter be deemed to
be the Company for the purposes of all provisions of this Agreement, including
this Section.

 

11

--------------------------------------------------------------------------------

 

(g)           Counterparts.  This Agreement may be executed in any number of
counterparts, and such counterparts executed and delivered, each as an original,
shall constitute but one and the same instrument.

 

(h)           Severability.  Subject to Section 7(e), to the extent any
provision of this Agreement shall be invalid or unenforceable, it shall be
considered deleted herefrom and the remainder of such provision and of this
Agreement shall be unaffected and shall continue in full force and effect.

 

(i)            Captions and Headings. The captions and paragraph headings used
in this Agreement are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement or any of the provisions
hereof.

 

(j)            Payments to Executive. Unless otherwise specified, all amounts
payable to the Executive shall be paid in Danish Krones.

 

IN WITNESS WHEREOF, Executive and the Company have executed this Agreement as of
the date set forth in the first paragraph.

 

 

DAPLOMA INTERNATIONAL A/S

 

 

 

 

 

 

 

 

 

By

/s/ L. Nordfjeld

 

 

 

Its:

Chairman

 

 

 

 

/s/ James P. Santelli

 

 

 

 

 

By

James P. Santelli

 

 

 

Its:

Director

 

 

 

 

 

 

EXECUTIVE

 

 

 

/s/ Torsten Nordfjeld

 

 

Torsten Nordfjeld

 

12

--------------------------------------------------------------------------------