Exhibit
10.19





EMPLOYMENT
CONTRACT


	
  deCODE Genetics ehf. (Íslensk erfðagreining ehf.), State Registration No. 691295-3549, of
  Sturlugata 8, Reykjavík (the “Company” or the “Employer”)

  
	
  for the first part and Jakob Sigurdsson Id. No.
  280364-2589

  
	
  for the second part, enter into the following
  Employment Contract:

  



 


1. Field of work


The Employee is hired to work in the capacity
of Senior Vice President, Corporate Development of the Employer and of deCODE
genetics, Inc., the parent company of the Employer (the “Parent”) and from time
to time will serve in such other positions as the Chief Executive Officer of
the Employer (the “CEO”) or the
Board of Directors of the Parent (the “Board”)
may from time to time determine. The Employee will have such powers and duties
(including holding officer positions with one or more Subsidiaries of the
Parent) as may be assigned from time to time by the CEO or the Board and as are
generally associated with the position of Senior Vice President, Corporate
Development and such other positions. 
The Employee will work
under the supervision of the CEO and the Board. 
“Subsidiary” means any entity 50%
or more owned, directly or indirectly, by the Parent.


The workplace is the
Employer’s base of operations at Sturlugata 8, Reykjavík. If the Employer’s
base of operations in Reykjavík changes, or the number of bases within the
greater Reykjavík area is increased, the Employee agrees to change his
workplace.


The Employer reserves the right to change the tasks of
the Employee and administrative arrangements if such changes are necessary in
the opinion of the Employer and the Employee consents, provided, however, that
such changes do not negatively affect the Employee’s compensation and level of
responsibility.


2. Term of employment


The Employee shall begin
work for the Employer on October 23, 2006.


The mutual notice period for termination as
contemplated by Act No. 19/1979 on the Right of Workers to Notice of
Termination of Employment and to Wages During Absences Caused by Illness or
Accident shall be six (6) months for the Employee and twelve (12) months for
the Employer.


3. Duties


The Employee pledges to
perform his work faithfully and conscientiously. The Employee undertakes to
observe all instructions given by supervisors regarding his work. Furthermore,
the Employee undertakes to observe any rules set by the Company or the Parent and
published in the Employees’ Handbook or in any other













Confidential


manner. The Employer
shall make available and the Employee shall acquaint himself with any such
rules and notices that the Company or the Parent may issue.


The Employee shall not engage in work for other
companies without the permission of the CEO during the term of this Employment Contract.
This applies equally to paid work and unpaid work as well as to service on the
board of directors of other companies. The Employee may serve on the board of a
non-governmental, non-profit organisation, provided that such activities are
compatible with the work of the Employee under his work contract.


On termination of his
employment, the Employee shall return all documents and identification papers
of any kind in his possession and belonging to the Employer. This applies to
all documents and computer data, originals and copies.


4. Working Hours


The Employee is appointed
to a full-term position which is a position of responsibility and
management.  Working hours are determined
by what is necessary to perform the work in an efficient and effective manner,
irrespective of whether this requires work outside regular working hours or
not.


5. Wage
Terms


The fixed annual salary of the Employee is USD 365,000, payable in
Icelandic kronas at the exchange rate in effect on the last day of the month
before the month in which payment is made. 
In addition the Employee shall eligible to receive an annual bonus of up
to 50% of his annual salary, as the Board or the Compensation Committee of the
Board may specify in its sole discretion based upon performance targets or
otherwise, subject to any terms or conditions as may be established by the
Board or its Compensation Committee.


Payment for any work carried out outside regular working hours and for
work-related projects of any kind is included in the above annual salary.


Wages are paid on the first working day of each month for the previous
month.


The
Employee shall pay 4% of his total wages as a contribution to a pension fund of
his choice and the Employer shall contribute 6% of the same amount.


Should the Employee
utilize his right to supplementary pension savings, the Employer will pay in
addition to the Employee’s total wages 2% to the supplementary fund, provided
that the Employee pays at least 2%.


In addition, the Employer
will pay 5% on top of the Employee’s total wages to either a regular pension
fund, or a supplementary fund, at the Employee’s choosing.


The Company shall provide
the Employee with an automobile for occupational and private use in accordance
with Company policy applicable from time to time. The leasing expense for the
automobile is to be agreed upon between the Employee and



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the Chief Executive Officer
of the Company (the “CEO”).  Before the
Company has entered into a lease for such an automobile, or at the time of
expiration of the term of such a lease, the Employee may elect to receive, in
lieu of an automobile, an automobile allowance in an amount agreed upon between
the Employee and the CEO.  The Company
will pay reasonable operating expenses (including gas and insurance) approved
in advance by the CEO for any automobile provided by the Company.  The parties acknowledge that this benefit is
subject to taxation under Icelandic law.


The above wages constitute full remuneration for the
work performed by the Employee, and hence no payments are required under this Employment
Contract for vacation or December bonuses.


The salary and other wage-related terms shall be
reviewed annually, taking into account external circumstances and the
performance of the Employee in his work, but shall not be reduced as a result
of such review.


The Company will pay the reasonable and customary
documented expenses  of the
relocation of the Employee and his family from the Employee’s current home in
Germany to Iceland


6. Vacation


6.1.


The Employer makes no separate vacation payments to
the Employee, as the Employee shall enjoy a full salary during the time of his vacation.


The Employee shall be entitled to such number of weeks
of vacation as may from time to time be awarded in accordance with the Employer’s
policies for executives based in Iceland.


In other respects, vacation rights shall be subject to
Act No. 30/1987 on Vacations.


6.2.


Rights of employees to
maternity/paternity leave and parental leave shall be subject to Act No.
95/2000, on Maternity/Paternity Leave and Parental Leave.


7. Occupational Accidents and
Diseases


The Employer is liable
for any injuries suffered by the Employee in his work, subject to general rules
of law on torts regarding employer liability.


In the event of the
Employee suffering an accident at work, the Employer shall pay for the transport
of the Employee to his home or to hospital and reimburse him for all reasonable
out-of-pocket medical expenses, for up to 4 weeks in each case, other than
expenses paid by the district health insurance or social security.


In each instance of an
accident at work or work-related illness caused during work or as a result of
work, or occurring during trips to and from the place of work, the Employer
shall pay the Employee full wages for up to three months in accordance



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with the terms of
employment in effect at the time of the Employee’s accident or illness,
provided that the per diem paid in respect of the Employee for these days by
the State Social Security Institute and/or insurance companies is paid to the
Employer.


8. Accidents and illness


Wage payments to
employees during absences caused by illness or accident in the first year of
employment shall correspond to two days for each month of work. When the
Employee has worked for the Employer for one year or more, wage payments during
absences caused by illness shall be as follows: After 1 year, 2 months of every
12 months, after 5 years’ employment 4 months of every 12 months and after 10
years of employment 6 months of every 12 months.


If the Employee is ill
and cannot attend work for that reason, he shall immediately notify the Company
and the CEO, who shall then decide whether a medical testimonial is required.
In the event of a medical testimonial being required, the Employee shall
provide a testimonial from a physician approved by the Employer regarding the
illness or accident and confirming that he was unable to work. The Employer
shall reimburse the Employee for the out-of-pocket expenses of obtaining a
requested testimonial, provided that the above conditions are met.


After the first month at
work the Employee shall, without any curtailment of wages, be entitled to spend
a total of 10 working days of every 12 month period in ministering to his sick family
members, provided that other care is unavailable.


9. Insurance


9.1.


The Employer shall insure
all his employees against death and chronic or temporary disability caused by
an accident at work or while travelling a normal route from the home to the
workplace and from the workplace to the home.


In the event that the
Employee, because of his work, has accommodations away from his home, the
accommodations shall replace the home and the insurance shall then also cover
normal trips between the home and the said accommodations.


The insurance shall enter into force as soon as the
Employee begins work and shall expire as soon as the Employee stops working for
the Employer.


The policy terms of the insurance shall be the general
policy terms in force for work-related accident insurance for wage earners as
established by the Association of Icelandic Insurance Companies at the time of
signature of this Contract.


In the event of the Employer becoming liable for
damages to the Employee, accident compensation and per diem paid to the
Employee under the provisions of this Employment Contract shall be fully
deductible from any damages that the Employer may otherwise be required to pay.
While the payment of wages continues, per diem payments shall be paid to the
Employer.



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9.2.


Further provisions on employee insurance, e.g. terms
and compensation amounts, are set out in the Employee’s Handbook as current at
any time. Employees are expected to acquaint themselves with such information.


10.  Stock
Option Grants


On the first day of the
Employee’s employment, the Parent shall grant him two non-qualified stock
options, pursuant to the Parent’s 2002 Equity Incentive Plan, to purchase
250,000 and 50,000 shares, respectively, of Common Stock of the Parent (“Common
Stock”) with an exercise price equal to the closing price of the Parent’s
Common Stock on the last trading day prior to the first day of the Employee’s
employment as reported on the Nasdaq Global Market.  Such options shall be in the form of, and on
such terms and conditions as provided in, the Parent’s standard form of Stock
Option Grant Agreement in effect as of the date on which the options are
granted and shall include such further
terms as are described in this Employment Contract. The Stock Option
Grant Agreement for the option for 250,000 shares of Common Stock shall
provide, on condition that the Employee is employed hereunder on the relevant
vesting dates, that such option shall vest as to 62,500 shares on the first
anniversary of the Employee’s commencement of employment hereunder and as to
1/48 of the shares on the last day of each month thereafter.   Such Stock Option Grant Agreement shall also provide that such option shall
become 100% vested immediately upon a Change in Control (as defined in Section
11 below) and upon a termination of the Employee’s employment hereunder other
than for Cause (as defined in the Parent’s 2002 Equity Incentive Plan). The Stock Option Grant Agreement for
the option for 50,000 shares of Common Stock shall provide that such option
shall vest on the full execution of a definitive Material Collaboration
Agreement which is executed primarily as the result of the Employee’s efforts,
as determined in good faith by the CEO.  “Material
Collaboration Agreement” shall mean (i) any research collaboration or similar
agreement with a third party pursuant to which the Parent or the Company
receives or is entitled to receive research funding and/or scientific or
development milestone payments or (ii) any licensing, distribution or similar
agreement pursuant to which the Parent or the Company receives or is entitled
to receive royalties or other consideration for the grant of licensing,
distribution, marketing or similar rights, which agreement is material to the
Parent as determined in good faith by the CEO.


11. 
Termination of Employment following a Change in Control.


If following the occurrence of a Change
in Control of the Parent (as defined below), (i) (A) the Employee ceases to
serve in a senior executive position with the Company, (B) his compensation
(including the material benefits of his employment) is decreased, or (C) his
duties are inconsistent with those customarily performed by a company’s senior
executive officer, other than as a result of his voluntary action, and (ii)
within sixty (60) days of such Change in Control, the Employee terminates his
employment by giving the Company 10 days’ notice, then the Company will pay
him, in addition to any compensation earned prior to the date of termination
and in addition to any compensation related to the notice period under Section
2, a lump sum



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cash payment in an amount equal to
twelve (12)  times  his monthly salary at the time of his
termination plus one and one-half (1-1/2) times the average annual bonus paid
to him during the preceding two (2) years. 
Such payment will be made within thirty (30) days of termination.  A Change in Control of the Parent shall be
deemed to occur if (i) the Parent is merged with or into or consolidated with
another corporation or other entity under circumstances where the stockholders
of the Parent immediately prior to such merger or consolidation do not own
after such merger or consolidation shares representing at least fifty percent
(50%) of the voting power of the Parent or the surviving or resulting
corporation or other entity, as the case may be, or (ii) if the Parent is
liquidated or sells or otherwise disposes of substantially all of its assets to
another corporation or entity, or (iii) if any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) shall
become the beneficial owner (within the meaning of Rule 13d-3 under such Act)
of forty (40%) percent or more of the Common Stock of the Parent, in all cases
other than pursuant to a plan or arrangement entered into by such person and
the Parent or otherwise approved by the Board.


12.  Confidentiality, Invention Assignment and Non-Compete
Agreement.


In
further consideration of this Employment Contract, contemporaneously with the
execution of this Employment Contract the Employee shall execute the
Confidentiality, Invention Assignment and Non-Compete Agreement attached hereto
as Exhibit A (“Noncompetition Agreement”). 
Any material breach by the Employee of the Noncompetition Agreement
after his employment has terminated shall, in addition to all remedies provided
therein, entitle the Company and the Parent to terminate any further payment
obligations they may have to him under this Employment Contract.


The Employee agrees and
acknowledges that the Noncompetition Agreement constitutes a prerequisite for
and an integral part of this Employment Contract.  The Employee’s compensation as laid out in
this Employment Contract does contain a fair remuneration, as understood by
laws on employees inventions # 72 from 2004, for any inventions made by, or
participated in by, Employee, while employed by Employer, as long as said
invention is a part of his job, or related to a job/project that he is assigned
to by Employer.


13.  Breach of the Employee’s Contractual
Obligations


In the event of a breach by the Employee of the
provisions of any provisions hereof (including without limitation Article 3) or
of the Noncompetition Agreement, such a breach shall be regarded as a
substantial default on the part of the Employee of the Employment Contract and
the Employer may then terminate this Contract without prior notice and without
paying a salary to the Employee during the notice period.


All earlier employment contracts and any other
contracts between the Employer and the Employee regarding wages and terms of
employment shall be superseded by this Employment Contract on its entry into
force.



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  Reykjavik,        

  	
   

  	
  25 October, 2006

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Employee

  	
   

  	
      For
  Íslensk erfðagreining ehf.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
    /s/
  Jakob Sigurdsson

  	
   

  	
      /s/
  Kari Stefansson

  	
   

  	
   

  



 



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