Exhibit 10.1
EMPLOYMENT
AGREEMENT
This employment
agreement (“ Agreement ”) sets forth the terms
upon which Daniel Hartman (“ you ”) will be
employed by deCODE genetics, Inc. (the “ Company
,” or “ we ” or “ us
”).
1.
Employment
Period . Subject to the terms and
provisions of this Agreement, we agree to employ you, and you agree
to be employed by us commencing on July 15, 2005 (the “
Effective Date ”). You will be an at-will employee of
the Company. The period of your employment under this
Agreement is referred to as the “ Employment Period
.”
2.
Employment Terms
and Conditions .
a.
Position and Duties;
Extent of Services . During the Employment
Period, you will serve as Senior Vice President, Product
Development and from time to time will serve in such other
positions as the Chief Executive Officer (the “ CEO
”), the Board of Directors of the Company (the “
Board ”) or such other executive officer to whom
either the CEO or the Board shall delegate such authority (an
“ Other Officer ”) may from time to time
determine. In so doing, you will have such powers and duties
(including holding officer positions with one or more Subsidiaries
of the Company) as may be assigned from time to time by the CEO,
the Board or an Other Officer and as are generally associated with
the position of Senior Vice President, Product Development and such
Other Officer positions. During the Employment Period, you
will devote your full business time, energy, and best efforts to
the business and affairs of the Company. You agree not to
engage, directly or indirectly, in any other business, investment,
or activity that interferes with your performance of your duties
under this Agreement, is contrary to the interests of the Company,
or requires any portion of your business time. “
Subsidiary ” means any entity 50% or more owned,
directly or indirectly, by the Company.
b.
Compensation . During the Employment
Period, you will: (i) receive an annual base salary
(“ Annual Base Salary ”) in an amount of
$360,000, payable in accordance with the customary payroll
practices of the Company for executive officers. The Board,
in its sole discretion based upon performance targets or otherwise,
may at any time adjust the amount of the Annual Base Salary as it
may deem appropriate, and the term “ Annual Base
Salary ” will refer to the Annual Base Salary upwards as
it may be so adjusted; (ii) be eligible to receive an annual
bonus, 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 (each an “
Annual Bonus ”), it being understood that for purposes
of any Annual Bonus paid with respect to 2005, you will be deemed
to have been employed for all of 2005; (iii) for 2005 and
2006 be eligible to receive annual stock or stock option bonuses,
payable in the following year, based upon performance targets
agreed upon between you and the Board or its Compensation
Committee, subject to the terms and conditions of the
Company’s 2002 Equity Incentive Plan and any terms or
conditions as may be established by the Board or its Compensation
Committee (each an “ Equity Bonus ”), it being
understood that for purposes of any Equity Bonus paid with respect
to 2005, you will be deemed to have been employed for all of 2005
and it being further agreed that if the Company adopts a
comprehensive compensation plan applicable to senior management
providing for performance stock or stock option grants for 2005 or
2006 in which you are entitled to
participate, the provisions of this
Section 2b(iii) will expire and be superseded by such
plan; (iv) be entitled to participate in all incentive,
savings, stock option, profit sharing retirement, welfare and other
employee benefit plans, practices, policies and programs (including
without limitation health club memberships and meals at work)
applicable generally to other employees of the Company based in the
United States, subject to all of the terms and conditions of such
plans, practices, polices and programs; and (v) be entitled to
the greater of four (4) weeks or such number of weeks of
vacation as may from time to time be awarded in accordance with our
policies for executives based in the United States.
c.
Sign-on
Bonus . Within ten days after
the Effective Date, the Company will pay you a one-time lump sum
cash payment in the amount of $100,000 (the “Sign-On
Bonus”). In the event your employment with the Company
terminates as a result of a termination by the Company for Cause
(as defined in Section 3(c)) or by you other than pursuant to
Section 3(e), at any time during the 24-month period
commencing on the Effective Date, you will return a portion of the
Sign-On Bonus equal to the net after-tax amount of the Sign-On
Bonus (after application of all refunds and credits as a result of
such repayment) multiplied by the difference of one minus a
fraction, the numerator of which is the number of completed
calendar months since the Effective Date and the denominator of
which is 24. You shall return such amount to the Company no
later than 30 days following the date of such termination of your
employment.
d.
Stock
Option . On the first day of
the Employment Period, the Company shall grant you two incentive
stock options (or to the extent that such options do not qualify as
an incentive stock options, non-qualified stock options), pursuant
to the Company’s 2002 Equity Incentive Plan, to purchase
150,000 and 50,000 shares, respectively, of Common Stock of the
Company (“Common Stock”) with an exercise price equal
to the closing price of the Company’s Common Stock on the
last trading day prior to the first day of the Employment Period as
reported on the Nasdaq National Market. Such options shall be
in the form of, and on such terms and conditions as provided in,
the Company’s standard form of Stock Option Grant Agreement
in effect as of the date of this Agreement and shall include such
further terms as are described in this Agreement. The Stock Option
Grant Agreement for the option for 150,000 shares of Common Stock
shall provide, on condition that the Employment Period is in effect
on the relevant vesting dates, that such option shall vest as to
37,500 shares on the first anniversary of the Employment Period 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 3(e) below), and that, in the event that your
employment is otherwise terminated other than for
“Cause” (as defined in Section 3(c) below),
the lesser of (i) 75,000 shares or (ii) the remaining
unvested shares, shall become immediately vested. The Stock
Option Grant Agreement for the option for 50,000 shares of Common
Stock shall provide that the option is fully vested.
e.
Restricted
Stock .
On the first day of the Employment Period, you will receive 50,000
shares of Restricted Stock pursuant to the Company’s 2002
Equity Incentive Plan, subject to the terms and conditions of such
Plan and the Company’s standard form of Restricted Stock
Agreement in effect as of the date of this Agreement and shall
include such further terms as are described in this
Agreement. The Restricted Stock will vest on the third
anniversary of the Effective Date provided that the Employment
Period is then in effect. The Restricted Stock
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Agreement shall provide that the
Restricted Stock shall become 100% vested immediately upon a Change
in Control, and that, in the event that your employment is
otherwise terminated other than for “Cause,” a portion
of the Restricted Stock equal to the product of the total number of
shares of Restricted Stock then subject to the Restricted Stock
Agreement multiplied by a fraction, the numerator of which is the
number of months then-elapsed in the Employment Period (rounded up
to the next whole month) and the denominator of which is 36, shall
immediately vest
f.
Location;
Travel . Your initial place of
employment will be in Washtenaw, Livingston, Genesee or Oakland
County, Michigan (“Southeast Michigan”). The
foregoing notwithstanding, you acknowledge and agree that
(i) your job duties will require you to travel from time to
time both in and out of the United States, provided that such
travel shall not constitute a majority of your working time, and
(ii) at any time following the fifth anniversary of the
Effective Date, the Company may require that you relocate to the
Company’s offices located in Chicago,
Illinois. To the extent that the Company
requires, without your consent, that you relocate to such place or
at such time not otherwise contemplated by this Section, such
relocation shall be an Adverse Change (as defined in
Section 3(e) below) and you shall have the same rights
and benefits of termination as set forth in
Section 3(e).
3.
Termination of
Employment .
a.
Death
. Your employment
and the Employment Period hereunder will terminate automatically
upon your death. In the event of your death during the
Employment Period, we will continue to pay your Annual Base Salary,
as in effect at the time of your death, to your personal
representative or trustee (as designated by you) for twelve (12)
months.
b.
Disability
. If you
become “disabled” (as such term is defined in the
Company’s disability insurance policy in effect from time to
time), for a period in excess of 180 days (whether or not
consecutive) or 90 days consecutively, as the case may be, during a
12-month period during the Employment Period, we may give you a
written notice of termination and your employment and the
Employment Period will terminate effective upon such
notice.
c.
Termination by Us for
Cause .
We may terminate your employment and the Employment Period
hereunder at any time either for Cause. “ Cause
” means (i) your continued failure to substantially
perform your obligations and duties, as determined in good faith by
the Board; (ii) commission of an act of fraud, embezzlement,
misappropriation, willful misconduct or breach of fiduciary duty
against the Company or other conduct that causes or is likely to
cause material harm to the Company’s best interest, as
determined in good faith by the Board; (iii) material breach
of the agreement referenced in Section 5 of this Agreement;
(iv) conviction, plea of no contest or nolo contendere,
deferred adjudication or unadjudicated probation for any felony or
any crime involving moral turpitude; (v) failure to carry out,
or comply with, in any material respect, any lawful directive of
the CEO, the Board or an Other Officer consistent with the terms of
this Agreement; or (vi) possession of illegal drugs or
unlawful use (including being under the influence) of drugs or
alcohol on Company premises or at a Company sponsored
function.
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d.
Termination by Us Without
Cause . We may
terminate your employment and the Employment Period hereunder for
any reason upon 10 days’ notice. If we terminate your
employment without Cause during the Employment Period, in addition
to any compensation earned prior to the date of termination, we
will continue to pay you your Annual Base Salary, as in effect at
on the date of termination of your employment and the Employment
Period, for eighteen (18) months in accordance with our normal
payroll practices, provided, however, that the Company will defer
the payment of any such amounts for six months from the date of
termination to the extent the Company reasonably determines such
deferral is necessary to avoid the imposition of a tax penalty on
you pursuant to the American Jobs Creation Act of 2004 or
Section 409A of the Internal Revenue Code.
e.
Termination following
Change in Control . If following the
occurrence of a Change in Control of the Company (as defined
below), (i) (A) you cease to serve in a senior executive
position with the Company, (B) your compensation (including
the material benefits of your employment) is decreased, or
(C) your duties are inconsistent with those customarily
performed by a company’s senior executive officer (each an
“ Adverse Change ”), other than as a result of
your voluntary action, and (ii) within sixty (60) days of such
Change in Control, you terminate your employment and the Employment
Period hereunder by giving the Company 10 days’ notice, then
we will pay you, in addition to any compensation earned prior to
the date of termination, a lump sum cash payment in an amount equal
to eighteen (18) months of your Annual Base Salary at the time of
your termination, plus one and one-half (1 ½) times the
average Annual Bonus paid to you during the last two (2) years
of your employment. Such payment will be made within
thirty (30) days of termination. A Change in Control of the
Company shall be deemed to occur if (i) the Company is merged
with or into or consolidated with another corporation or other
entity under circumstances where the stockholders of the Company
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 Company or the surviving
or resulting corporation or other entity, as the case may be, or
(ii) if the Company 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 Company, in all cases other than
pursuant to a plan or arrangement entered into by such person and
the Company or otherwise approved by the Board of Directors of the
Company.
4.
Other Provisions
Relating to Termination
a.
Effect of
Termination . Except as expressly provided
in this Agreement or in any other agreement entered into pursuant
hereto, upon termination of your employment hereunder, we will have
no further liability or obligation to you from and after the date
of such termination (other than liabilities or obligations accrued
but unsatisfied on date of such termination).
b.
Full Settlement;
Mitigation . In no
event will you be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to you
under this Agreement. Such amounts will not be reduced
whether or not you obtain other employment.
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c.
Release and Other
Agreements . Notwithstanding any other
provision in this Agreement to the contrary, as a condition to
receiving the benefits described in Sections 3(a), (d) and
(e) of this Agreement and in any other agreement entered into
pursuant hereto, you hereby agree to execute (and not revoke) a
release in substantially the form attached hereto as
Exhibit A (the “ Release ”) and such
other documents and agreements as required by the Company, in the
form and pursuant to the procedures reasonably established by the
Company.
5.
Ownership and
Protection of Ideas, Information and Copyrights
. In further
consideration of this Agreement, contemporaneously with the
execution of this Agreement you shall execute the Confidentiality,
Invention Assignment and Non-Compete Agreement attached hereto as
Exhibit B (“ Noncompetition Agreement
”). Any material breach by you of the Noncompetition
Agreement after your employment has terminated shall, in addition
to all remedies provided therein, entitle the Company to terminate
any further payment obligations it may have to you under this
Agreement.
6.
Successors;
Binding Agreement . This Agreement may not be
assigned by you. This Agreement may be assigned by the
Company without your consent to any of its Subsidiaries or
affiliates and will inure to the benefit of and be binding upon the
Company and its successors and assigns. To the extent such
assignment results in a Change in Control, you will have the rights
and benefits as set forth in Section 3(e).
7.
Miscellaneous
.
a.
Construction . This Agreement will be
deemed drafted equally by both the parties. Any presumption
or principle that the language is to be construed against any party
will not apply.
b.
Notices
. For purposes of
this Agreement, notices and all other communications provided for
in this Agreement will be in writing and will be deemed to have
been duly given when (i) delivered personally; (ii) sent
by facsimile or similar electronic device and confirmed;
(iii) delivered by overnight express; or (iv) if sent by
any other means, upon receipt.
c.
Severability . If any provision of this
Agreement is held to be illegal, invalid or unenforceable, such
provision will be fully severable; this Agreement will be construed
and enforced as if such illegal, invalid or unenfo
