EMPLOYMENT AGREEMENT



AGREEMENT dated 1st July 2001 (the "Effective Date") by and between VIRAGEN

(SCOTLAND) LIMITED, a company registered in Scotland with registered number

155387 and having a place of business at Pentlands Science Park, Bush Loan,

Penicuik, Midlothian EH26 0PZ ("Employer"), and DR. DONALD MAGNUS NICOLSON,

Drumbeg Lodge, Gartness Road, Drymen G63 0DW ("Employee").



WITNESSETH:



WHEREAS, Employer desires to employ the Employee upon the terms and conditions

hereinafter set forth and Employee desires to accept employment upon such terms

and conditions; and



WHEREAS, Employer and Employee desire to set forth in writing the terms and

conditions of their agreements and understandings with respect to Employee's

employment by Employer.



NOW, THEREFORE, Employer hereby employs Employee and Employee hereby accepts

employment under the following terms and conditions:



1.     DEFINITIONS



       In this Agreement unless the context otherwise requires, the following

       expressions have the following meanings:



       "THE BOARD"          means the Board of Directors for the time being of

                            Employer or any committee duly appointed by the

                            Board of Directors;



       "THE EMPLOYMENT"     means the Employee's employment under this

                            Agreement;



       "GROUP COMPANY"      means any holding company for the time being of

                            Employer or any subsidiary for the time being of

                            Employer or of any such holding company (other than

                            Employer) (for which purpose the expressions

                            "holding company" and "subsidiary" shall have the

                            meaning ascribed thereto by Section 736 of the

                            Companies Act 1985).





2.     EMPLOYMENT



       Employer hereby employs Employee, and Employee hereby accepts employment

       by Employer, upon all the terms and conditions hereinafter set forth.



3.     TERM



       Subject to the provisions for earlier termination set forth in clause 15

       hereof this Agreement commenced on 1 July 2001 and shall continue until

       the close of business on 30 June 2003 (the "Employment Term"). Subject to

       the provisions for earlier







{PAGE}   2



       termination set forth in clause 15 hereof, from 1 July 2003, and annually

       on the 1st July thereafter, the Employment Term of this Agreement shall

       automatically be renewed for one additional year until and unless

       Employee or Employer has given to the other at least 90 days notice prior

       to the relevant 1 July date that the Employment Term of this Agreement is

       not to be renewed.



4.     CONTINUOUS EMPLOYMENT



       Employee's employment with Employer in terms of this Agreement is

       continuous with his previous employment with Employer which commenced on

       1st April 1996.



5.     EMPLOYEE'S REPRESENTATIONS AND WARRANTIES



       Employee represents and warrants to Employer that he is free to accept

       employment with Employer as contemplated herein and has no other written

       or oral obligations or commitments of any kind or nature which would in

       any way interfere with his acceptance of employment pursuant to the terms

       hereof or the full performance of his obligations hereunder or the

       exercise of his best efforts in his employment hereunder.



6.     DUTIES AND EXTENT OF SERVICES



       Employee shall be employed as Employer's Managing Director and Chief

       Operating Officer of the Group Companies Viragen (Europe) Limited and

       Viragen Inc. As such, Employee shall, subject to the direction of the

       Board, supervise and conduct the Employer's operations and affairs as

       assigned by the Board, and perform such other duties and responsibilities

       as may be assigned to Employee from time to time consistent with such

       title by the Board including where such duties require Employee to work

       for any Group Company. Employee accepts that he may be required to

       perform other tasks or duties outwith the scope of his normal duties.

       Employee agrees to devote sufficient time, skill, attention and energy

       diligently and competently to perform the duties and responsibilities

       reasonably assigned to him hereunder or pursuant hereto to the best of

       his abilities. Employee shall use his best efforts to be loyal and

       faithful at all times and constantly endeavor to improve his ability and

       his knowledge of the business of Employer in an effort to increase the

       value of his services for the mutual benefit of Employer and Employee.

       Employer may at its sole discretion transfer this Agreement or second

       Employee to any Group Company at any time.



       Employer reserves the right to suspend all or any of Employee's duties

       and powers on such terms as it considers expedient (including a term that

       Employee shall not attend at Employer's premises) or to require Employee

       to carry out the duties of another position of equivalent status either

       in addition to or instead of his duties as Managing Director of Employer

       and Chief Operating Officer of the Group Company, Viragen Inc. During any

       period of suspension, Employee will not be entitled to work either on his

       own account or on behalf of any other person, business or company.



7.     OTHER INTERESTS



       Employee shall not (except with the prior written consent of the Board)

       accept any appointment to any office in relation to any body, whether

       corporate or not, or be directly or indirectly employed, engaged,

       concerned or interested in any other business or undertaking, provided

       that this shall not prohibit the holding (directly or









                                       2

{PAGE}   3



       through nominees) of investments listed on the London Stock Exchange or

       in respect of which dealing takes place in the Alternative Investment

       Market on the London Stock Exchange or any recognised stock exchange

       provided that not more than 5 per cent of the issued shares or other

       securities of any class of any one company shall be so held without the

       prior sanction of a resolution of the Board. Employee shall immediately

       notify Employer of any actual or potential conflict of interest with the

       Employment including without limitation to the foregoing generality any

       transaction or dealing which involves, or might involve, a relative of

       Employee or any employee of such relative.



       Subject to any regulations issued by Employer, Employee shall not be

       entitled to receive or obtain directly or indirectly any discount, rebate

       or commission in respect of any sale or purchase of goods effected or

       other business transacted (whether or not by him) or by or on behalf of

       Employer and if he (or any firm or company in which he is interested)

       shall obtain any such discount, rebate or commission he shall account to

       Employer for the amount received by him (or a due proportion of the

       amount received by such company or firm having regard to the extent of

       his interest therein).



8.     HOURS AND PLACE OF WORK



       Employee agrees that he shall work such hours as are necessary for the

       proper performance of his duties, including any such hours which exceed

       the maximum weekly working time limit of 48 hours imposed by the Working

       Time Regulations 1998 or any re-enactment thereof. Employee shall work a

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