# **Exhibit10.1**

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# **[English Translation of OriginalIcelandic Language Document]**

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# **Agreement on Termination of Employment**

**and StockOption Arrangements**

 

The undersigned parties

 

Íslensk erfðagreining ehf.

State Reg. No. 691295-3549, Sturlugata 8

(hereinafter referred to as the “Employer”),

**deCODE genetics, Inc**., the parent companyof the Employer,

and the seller of shares, which is a listed company inthe United States,

(hereinafter referred to as “deCODE”)

for the first part,

 

and Hannes Þór Smárason, Id. No. 251167-3389,

(hereinafter referred to as the “Employee”)

hereby enter into the following

 

**Agreement**

 

**1.Wages during period of notice and earned vacation rights**

The Employee and ÍE have reached an agreementon the Employee’s termination of work. The Employee’s last day of work istoday. The Employee ceases to be an “Officer” and “Executive Officer” at deCODEgenetics as of the present date.  It isagreed that the Employee will be paid his fixed wages during the agreed noticeperiod until 31 December 2004, for which the Employer does not require afull time work contribution. The parties agree, however, that the Employer mayseek advice from the Employee without remuneration beyond the fixed wages paidto him, as further provided in Article 3. Earned vacation pay will be paidout with the final wage payment on 31 December of this year.

 

**2.Telephone and computer**

The Employer has had in his possession  a laptop computer and a mobile telephone inconnection with his work. It is agreed that the Employee will keep in hisownership these devices as of the termination of his employment. ÍE will paythe subscription fees in respect of the mobile telephone until 31December 2004. In addition, the Employee has had the use of ADSL equipmentlocated in his home. It is agreed that the employee will have the continued useof the equipment and that ÍE will pay the subscription fees in respect of theADSL connection until 31 December 2004. After that it is agreed that theEmployee will have the ownership of this ADSL equipment.

 

**3.Continued consultancy work**

The Employee agrees to provide advice to theEmployee until 31 December 2004 and also after that time if requested bythe Employer. Following the end of wage payments on 31 December 2004, aseparate agreement will be made concerning

 

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consultancy, which will be paid for based oninvoices submitted indicating number of hours.

 

**4. Confidentiality**

The Employee shall maintain in fullconfidence all information relating to the affairs of deCODE and itssubsidiaries, the substance of this severance agreement and all otherinformation to which he had access in the course of his work.

 

**5. Stockoptions**

 
| **Time of  granting of  option**                                                                    | ** ** | **Number of  Shares** | ** ** | **Price per  share in USD** | ** ** | **Position:**                                                                                                                                                                                                                         | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|-----------------------|------------|-----------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| (a) January 1998 (option early  exercised by issuing a promissory note and pledging of shares) |       | 300,000               |       | 0.20                        |       | Contract performed in full.  Shares held by holding company owned by  employee.                                                                                                                                                  |       |
|                                                                                                |       |                  |       |                        |       |                                                                                                                                                                                                                                  |       |
| (b) November 1999  (option early exercised bye issuing a note  and pledging of shares)    |       | 260,000               |       | 5.625                       |       | Contract   ended on 1 November 2003.  Note became due and the Company redeemed 240,096 of the pledged shares  as a payment for the note.  Balance  of 19,904 shares accrued to the Employee and are his property. |       |
|                                                                                                |       |                  |       |                        |       |                                                                                                                                                                                                                                  |       |
| (c) 5 November 2003                                                                            |       | 260,000               |       | 5.625                       |       | Contract in effect.  Option earned in full, but unexercised.                                                                                                                                                                     |       |
|                                                                                                |       |                  |       |                        |       |                                                                                                                                                                                                                                  |       |
| (d) 5 November 2003                                                                            |       | 140,000               |       | 7.06                        |       | Contract in effect.  Three-year vesting period began in  November 2003. (At the time of signature, 1/6 has been earned, i.e.  23,333 shares)                                                                                |       |

 

Pursuant to Article 3 hereof, theEmployee holds the position of consultant to deCODE and subsidiaries. Duringthe term of effect of the consultancy relationship it is agreed that theEmployee will remain within the deCODE option plan for his options pursuant to(c) and (d) above.

 

Specifically, the agreement is as follows:

 

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•                  The 260,000 stock options of 5November 2003 (see item (c) above) will not automatically terminate 90days from 31 December, but will continue to be exercisable for 90 daysfollowing the end of the consultancy relationship.

•                  The 140,000 stock options of 5November 2003 (see item (d) above) will continue to accrue until the endof the consultancy relationship and will be exercisable on the conclusion ofthe consultancy relationship.

 

Íslensk erfðagreining and deCODE undertakethe obligation to inform the Employee by a written notice to his legal domicilewhen the consultancy relationship is ended in the understanding of thecompany’s stock option plan.

 

**6. Announcement oftermination of employment**

The Employee is an “Executive Officer” ofdeCODE genetics to this day.

 

The termination of employment will beannounced with  a press release to bereleased today after the close of the markets in the US. The parties agree thatthe termination is taking place in full amicability.

 

##### **7. Final Settlement**

This Agreement provides for afinal settlement in relation to the Employee’s termination of work, and, onfulfilment of the terms hereof, the parties shall have no further claimsagainst each other.

 

 
|                                          | Reykjavík, 18 June 2004. |
|-----------------------------------------------|------------------------------------|
|                                          |                               |
|                                          |                               |
| **For*Íslensk erfðagreining ehf.*** |                               |
|                                          |                               |
|                                          |                               |
| /s/ Kári Stefánsson                 |                               |   |
| Kári Stefánsson /sign/              |                               |
|                                          |                               |
|                                          |                               |
| **For deCODE  genetics, Inc.**                |                               |
|                                          |                               |
|                                          |                               |
| /s/ Kári Stefánsson                 |                               |   |
| Kári Stefánsson /sign/              |                               |
|                                          |                               |
|                                          |                               |
| /s/ Hannes Smárason                      |                               |   |
| Hannes Smárason /sign/                   |                               |

 

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