**Exhibit 10.14**

[NOTE:CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT CONFIDENTIALTREATMENT HAS BEEN REQUESTED FOR CONFIDENTIAL INFORMATION CONTAINED IN THISDOCUMENT. THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITHTHE SECURITIES AND EXCHANGE COMMISSION.]

LICENSEAND RESEARCH COLLABORATION AGREEMENT

BETWEEN

MERCK& CO., INC.

AND

DECODEGENETICS, EHF.

LICENSEAND RESEARCH COLLABORATION AGREEMENT

THISRESEARCH COLLABORATION AND LICENSE AGREEMENT (this “Agreement”), which shall beeffective as of February 25, 2004 (the “Effective Date”), is entered into byand between deCODE genetics, Ehf., a corporation organized under the laws ofIceland (“deCODE”) and Merck & Co., Inc., a corporation organized under thelaws of the State of New Jersey, having an office located at One Merck Drive,Whitehouse Station, New Jersey 08889 (“MERCK”).

PRELIMINARYSTATEMENTS

A.                                   deCODE hasexpertise in conducting research in the field of human genetics and genomicsand in the conduct of clinical trials.

B.                                     MERCK hascertain expertise in drug development and in the design and conduct of clinicaltrials to demonstrate the safety and efficacy of its pharmaceutical products.

C.                                     deCODE andMERCK wish to collaborate on the design and conduct of Information RichClinical Trials (terms with initial capitals as hereafter defined) on selectedMERCK compounds in specified Disease Areas in accordance with the attached WorkPlan.

D.                                    deCODEParent (as hereinafter defined) and MERCK are simultaneously entering into aseparate Stock and Warrant Purchase Agreement whereby MERCK shall purchaseshares of stock of deCODE Parent pursuant to the terms and conditions set forthin that agreement.

NOW,THEREFORE, in consideration of the foregoing Preliminary Statements and the mutualagreements and covenants set forth herein, the Parties hereby agree as follows:

1.                                       DEFINITIONS

Unlessspecifically set forth to the contrary herein, the following terms, whetherused in the singular or plural, shall have the respective meanings set forthbelow:

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1.1                                 “AFFILIATE”shall mean as to deCODE or MERCK, as the case may be (i) any corporation orbusiness entity of which fifty percent (50%) or more of the securities or otherownership interests representing the equity, the voting stock or generalpartnership interest are owned, controlled or held, directly or indirectly, byMERCK or deCODE; or (ii) any corporation or business entity which, directly orindirectly, owns, controls or holds fifty percent (50%) (or the maximumownership interest permitted by law) or more of the securities or otherownership interests representing the equity, the voting stock or, ifapplicable, the general partnership interest, of MERCK or deCODE.

1.2                                 “ASSOCIATEDINFORMATION” shall mean information about [CONFIDENTIAL TREATMENT REQUESTED] inan IRCT performed as part of the Research Program which [CONFIDENTIAL TREATMENTREQUESTED] in an Exclusive Disease Area or a Non-exclusive Disease Area wherethe [CONFIDENTIAL TREATMENT REQUESTED] is associated with the [CONFIDENTIALTREATMENT REQUESTED] within the Disease Area being studied in that IRCT.

1.3                                 “BUDGET”shall mean the projected expenditures for the upcoming year set out in Schedule2.6

andmore fully described in Section 2.6.

1.4                                 “CALENDARQUARTER” shall mean the respective periods of three (3) consecutive calendarmonths ending on March 31, June 30, September 30 and December 31.

1.5                                 “CALENDARYEAR” shall mean each successive period of twelve (12) months commencing onJanuary 1 and ending on December 31.

1.6A                    “CHANGE INCONTROL” shall mean the occurrence of any of the following:

(a) An acquisition ofany voting securities of deCODE Parent (the “Voting Securities”) by any “Person”(as the term “person” is used for purposes of Section 13(d) or 14(d) of theSecurities Exchange Act of 1934, as amended (the “Exchange Act”)), immediatelyafter which such Person has “Beneficial Ownership” (within the meaning of Rule13d-3 promulgated under the Exchange Act) of more than fifty percent (50%) of (1)the then-outstanding shares of common stock of deCODE Parent (or any othersecurities into which such shares of common stock are changed or for which suchshares of common stock are exchanged) (the “Shares”) or (2) the combined votingpower of deCODE Parent’s then-outstanding Voting Securities;

(b) The individuals who,as of Effective Date, are members of the board of directors of deCODE Parent(the “Incumbent Board”), following a Merger (as hereinafter defined), do notfor any reason constitute at least a majority of the members of the board ofdirectors of (x) the corporation resulting from such Merger (the “SurvivingCorporation”), if fifty percent (50%) or more of the combined voting power ofthe then-outstanding voting securities of the Surviving Corporation is not BeneficiallyOwned, directly or indirectly, by another Person (a “Parent Corporation”) or(y) if there is one or more than one Parent Corporation, the ultimate ParentCorporation; PROVIDED, HOWEVER, that, any individual becoming a directorsubsequent to the date hereof whose

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election, or nominationfor election by such company’s shareholders, was approved by a vote of at leasta majority of the directors then comprising the Incumbent Board shall beconsidered as though such individual were a member of the Incumbent Board, butexcluding, for this purpose, any such individual whose initial assumption ofoffice occurs as a result of an actual or threatened election contest with respectto the election or removal of directors or other actual or threatenedsolicitation of proxies or consents by or on behalf of a Person other than theboard of directors of deCODE Parent (a “Proxy Contest”), including by reason ofany agreement intended to avoid or settle any Proxy Contest;

(c) At least eighty(80%) percent of voting securities of deCODE are no longer owned directly orindirectly by deCODE Parent; or

(d) The consummation of:

(i)                                     A merger,consolidation or reorganization (1) with or into deCODE Parent or a direct orindirect subsidiary of deCODE Parent or (2) in which securities of deCODEParent are issued (both 1.5(c)(i)(1) and (2) are defined as a “Merger”), unlesssuch Merger is a “Non-Control Transaction.” A “Non-Control Transaction” shallmean a Merger in which:

(A)the stockholders of deCODE Parent immediately before such Merger own directlyor indirectly immediately following such Merger at least fifty percent (50%) ofthe combined voting power of the outstanding voting securities of (x) theSurviving Corporation, if there is no Parent Corporation or (y) if there is oneor more than one Parent Corporation, the

ultimate ParentCorporation;

(B)the individuals who were members of the Incumbent Board immediately prior tothe execution of the agreement providing for such Merger constitute at least amajority of the members of the board of directors of (x) the SurvivingCorporation, if there is no Parent Corporation, or (y) if there is one or morethan one Parent Corporation, the ultimate Parent Corporation; and

(C)no Person other than (1) deCODE Parent, or (2) any Person who, immediatelyprior to the Merger had Beneficial Ownership of fifty percent (50%) or more ofthe then outstanding Shares or Voting Securities, has Beneficial Ownership,directly or indirectly, of fifty percent (50%) or more of the combined votingpower of the outstanding voting securities or common stock of (x) the SurvivingCorporation, if fifty percent (50%) or more of the combined voting power of thethen outstanding voting securities of the Surviving Corporation is notBeneficially Owned, directly or indirectly by a Parent Corporation, or (y) ifthere is one or more than one Parent Corporation, the ultimate ParentCorporation; PROVIDED, HOWEVER, that any Person described in clause (2) of thissubsection (C) may not, immediately following the Merger, Beneficially Own morethan thirty percent (30%) of the combined voting power of the outstandingvoting securities of the Surviving Corporation or the Parent Corporation, as applicable,for the Merger to constitute a Non-Control Transaction.

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(ii)A complete liquidation or dissolution of deCODE Parent; or

(iii)The sale or other disposition of all or substantially all of the assets ofdeCODE Parent and its Subsidiaries taken as a whole to any Person (other than(x) a transfer under conditions that would constitute a Non-ControlTransaction, with the disposition of assets being regarded as a Merger for thispurpose or (y) the distribution to deCODE Parent’s stockholders of any other assets).

Notwithstanding theforegoing, a Change in Control shall not be deemed to occur solely because anyPerson (the “Subject Person”) acquired Beneficial Ownership of more than thepermitted amount of the then outstanding Shares or Voting Securities as aresult of the acquisition of Shares or Voting Securities by deCODE Parentwhich, by reducing the number of Shares or Voting Securities then outstanding,increases the proportional number of shares Beneficially Owned by the Subject Persons;provided that if a Change in Control would occur (but for the operation of thissentence) as a result of the acquisition of Shares or Voting Securities bydeCODE Parent and, after such share acquisition by deCODE Parent, the SubjectPerson becomes the Beneficial Owner of any additional Shares or VotingSecurities and such Beneficial Ownership increases the percentage of the thenoutstanding Shares or Voting Securities Beneficially Owned by the SubjectPerson, then a Change in Control shall occur.

1.7                                 “COLLABORATIONDATE” shall be February 25, 2004.

1.8                                 “COLLABORATIONINFORMATION AND INVENTION” shall mean any discoveries, Improvements, processes,methods, protocols, formulas, data, inventions, know-how and trade secrets,patentable or otherwise, that arise from the Research Program.

1.9                                 “COLLABORATIONPATENTS” shall mean any and all patents and patent applications in theTerritory (which for the purposes of this Agreement shall be deemed to includecertificates of invention

and applications forcertificates of invention) that a Party or its Affiliates owns, Controls orthrough license or otherwise acquires rights during the term of this Agreementwhich claim, cover or relate to Collaboration Information and Inventions or aredivisions, continuations, continuations-in-part, reissues, renewals,extensions, supplementary protection certificates, utility, models and the likeof any such patents and patent applications and foreign equivalents thereof.

1.10                           “COMBINATIONPRODUCT” shall mean a Product which includes one or more active ingredientsother than IRCT Compound or Related IRCT Compound in combination with IRCTCompound or Related IRCT Compound. All references to Product in this Agreementshall be deemed to include Combination Product.

1.11                           “COMPETITIVEPRODUCT” shall mean a product containing the IRCT Compound or Related IRCTCompound which has or attains on a Calendar Year basis

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a market share of[CONFIDENTIAL TREATMENT REQUESTED] or more in a country of sale as measured byprescriptions or other similar information in the country of sale.

1.12                           “COMPETITOR”shall mean a company in the pharmaceutical business sector with reported annualgross revenues from the sale of pharmaceuticals in excess [CONFIDENTIALTREATMENT REQUESTED] for each of its [CONFIDENTIAL TREATMENT REQUESTED].

1.13                           “CONTROL”, “CONTROLS”OR “CONTROLLED BY” shall mean either (a) being an Affiliate of either MERCK ordeCODE; or (b) with respect to any item of or right under CollaborationPatents, Patents or Know-How, the possession of (whether by ownership orlicense, other than pursuant to this Agreement) or the ability of a Party togrant access to, or a license or sublicense of, such items or right as providedfor herein without violating the terms of any agreement or other arrangementwith any Third Party existing at the time such Party would be required hereunderto grant the other Party such access or license or sublicense.

1.14                           “deCODEINFORMATION AND INVENTIONS” shall mean all Collaboration Information andInventions developed or invented solely by employees of deCODE or other personsnot employed by MERCK acting on behalf of deCODE.

1.15                           “deCODEKNOW-HOW” shall mean all secret, substantial and identified information andmaterials, including, but not limited to, discoveries, Improvements, processes,formulas, data, inventions(including without limitation deCODE’s Informationand Inventions and deCODE’s rights in Joint Information and Inventions),know-how and trade secrets, patentable or otherwise, which arise from theResearch Program and during the term of this Agreement (i) are in deCODE’spossession or control, (ii) are not generally known and (iii) are necessary oruseful to MERCK in connection with the Research Program or the research, development,manufacture, marketing, use or sale of IRCT Compound, Related IRCT Compound,Tests or Product in the

Territory.

1.16                           “deCODECOLLABORATION PATENTS” shall mean Collaboration Patents that claim, cover orrelate to deCODE Information and Inventions excluding deCODE Information andInventions relating to deCODE Generalized Technology.

1.17                           “deCODECOMPOUNDS” shall mean compounds[CONFIDENTIAL TREATMENT REQUESTED].

1.18                           “deCODEGENERALIZED TECHNOLOGY” shall mean any Technical Information relating togeneralized methods for conducting genomics research and characterizing thefunction of genes or any raw data useful in generalized genomics research toolswhich at any time is owned or controlled by deCODE or its Affiliates (provideddeCODE or its Affiliates have the right to license or otherwise make availablesuch Technical Information to MERCK).

1.19                           “deCODEGENOMICS DATA” shall mean (a) [CONFIDENTIAL TREATMENT

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REQUESTED] as may becreated, developed or acquired by deCODE from time to time during the term ofthis Agreement or as may be existing or have been created as of the EffectiveDate, and (b) deCODE’s proprietary inventions, processes and other assetsdirectly relating to the use, creation, maintenance, development, operation,access, analysis, reporting, storage, protection, and/or transmission of suchproprietary databases, including proprietary methods, procedures andtechniques, procedure manuals, personal and scientific data, computer technicalexpertise and software, in each case independently developed by or on behalf ofdeCODE and such software useful for the analysis of the information included insuch databases.

1.20                           “deCODEPARENT” shall mean deCODE genetics, Inc., a corporation organized and existingunder the laws of the State of Delaware.

1.21                           “deCODEPATENTS” shall mean Patents, that deCODE or its Affiliates Control prior to theEffective Date or during the term of this Agreement, including but not limitedto those listed on Schedule 1.21, that are necessary or useful to MERCK inconnection with the Research Program or the research, development, manufacture,marketing, use or sale of IRCT Compound, Tests or Product in the Territory includingPatents claiming deCODE Genomics Data but excluding any part of Patents claimingdeCODE Generalized Technology.

1.22                           “deCODEPRIOR KNOW-HOW” shall mean all secret, substantial and identified informationand materials, including, but not limited to, discoveries, Improvements,processes, formulas, data, inventions, know-how and trade secrets, patentableor otherwise, which existed prior to the Effective Date and during the term ofthis Agreement (i) are in deCODE’s possession or control, (ii) are notgenerally known and (iii) are necessary or useful to MERCK in connection withthe

Research Program or theresearch, development, manufacture, marketing, use or sale of IRCT Compound,Tests or Product in the Territory including deCODE Genomics Data but excludingdeCODE Generalized Technology and deCODE Know-How.

1.23                           “DISEASEAREAS” shall mean Exclusive Disease Areas and Non-exclusive Disease Areas.

1.24                           “EXCLUSIVEDISEASE AREAS” shall mean at least one of the following:

[CONFIDENTIAL TREATMENTREQUESTED].

1.25                           [CONFIDENTIALTREATMENT REQUESTED]

1.26                           [CONFIDENTIALTREATMENT REQUESTED]

1.27                           [CONFIDENTIALTREATMENT REQUESTED]

1.28                           “NON-EXCLUSIVEDISEASE AREAS” shall mean [CONFIDENTIAL TREATMENT

REQUESTED].

1.29                           [CONFIDENTIALTREATMENT REQUESTED]

1.30                           “ELECTED DISEASE”shall have the meaning set out in Section 3.1(d).

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1.31                           “EXCLUSIVELICENSE FEE” shall have the meaning set out in Section 3.1(d).

1.32                           “EXECUTIVECOMMITTEE” shall mean the committee made up of one senior

executive of each Partyas more fully described in Section 2.5.1.

1.33         “FILING” ofan NDA shall mean the acceptance by a Regulatory Authority of an NDA forfiling.

1.34                           “FIRSTCOMMERCIAL SALE” shall mean, with respect to any Product or Test, the firstsale for end use or consumption of such Product or Test in a country after allrequired approvals, including Marketing Authorization, have been granted by theRegulatory Authority of such country.

1.35                           “FULL TIMEEQUIVALENT” or “FTE” shall mean the equivalent of a full-time scientist’s worktime over a twelve-month period (including normal vacations, sick days andholidays). The portion of an FTE year devoted by a scientist to the ResearchProgram shall be determined by dividing the number of full days during anytwelve-month period devoted by such employee to the Research Program by thetotal number of working days during such twelve-month period.

1.36                           “IMPROVEMENT”shall mean any enhancement, whether or not patentable, in the manufacture,formulation, ingredients, preparation, presentation, means of delivery, dosageor packaging of IRCT Compound, Related IRCT Compound, Tests or Product.

1.37                           “INFORMATION”shall mean any and all information and data, including without limitation allMERCK Know-How, deCODE Know-How, and all other scientific, pre-clinical,clinical, regulatory, manufacturing, marketing, financial and commercialinformation or data, whether communicated in writing or orally or by any othermethod, which is provided by one Party to the other Party in connection withthis Agreement.

1.38                           “INFORMATIONRICH CLINICAL TRIAL OR IRCT” shall mean a clinical trial which includes thefollowing, as specified in the protocol for such clinical trial: [CONFIDENTIALTREATMENT REQUESTED]

1.39                           “INVENTION”means any process, method, composition of matter, article of manufacture,discovery or finding that is conceived and reduced to practice.

1.40                           “IRCTCOMPOUND” shall mean a Selected Compound that has [CONFIDENTIAL TREATMENTREQUESTED] in accordance with the Agreement.

1.41                           “JOINTINFORMATION AND INVENTIONS” shall mean all discoveries, Improvements,processes, methods, protocols, formulas, data, Inventions, know-how and tradesecrets, patentable or otherwise, arising from the Research Program developedor invented jointly by employees of MERCK and deCODE or others acting on behalfof MERCK and deCODE.

1.42                           “JOINTCOLLABORATION PATENTS” shall mean Collaboration Patents that claim, cover orrelate to Joint Information and Inventions.

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1.43                           “MARKETINGAUTHORIZATION” shall mean any approval (including without limitation allapplicable pricing and governmental reimbursement approvals) necessary toreceive permission from the relevant Regulatory Authority to market and sell aProduct or Test in any country.

1.44                           “MERCKCOMPOUND OPTION” shall have the meaning set out in Section 3.1(e) (i).

1.45                           “MERCKCOMPOUND PATENT” shall mean any Patent that claims, covers or relates to anIRCT Compound, Related IRCT Compound, Test or Product Controlled by MERCK.

1.46                           “MERCKEXERCISE NOTICE” shall have the meaning set out in Section 3.1(e) (iii).

1.47                           “MERCKINFORMATION AND INVENTIONS” shall mean all discoveries, Improvements,processes,

methods, protocols,formulas, data, Inventions, know-how and trade secrets, patentable orotherwise, arising from the Research Program developed or invented solely byemployees of MERCK or other persons not employed by deCODE acting on behalf ofMERCK.

1.48                           “MERCKKNOW-HOW” shall mean any information and materials, including but not limitedto, discoveries, Improvements, processes, methods, protocols, formulas, data,inventions (including without limitation MERCK’s Information and Inventions andMERCK’s rights in Joint Information and Inventions), know-how and tradesecrets, patentable or otherwise, which arise from the Research Program andduring the term of this Agreement, (i) are in MERCK’s possession or control,(ii) are not generally known and (iii) are in MERCK’s opinion necessary todeCODE in the performance of its obligations under the Research Program.

1.49                           “MERCKCOLLABORATION PATENTS” shall mean Collaboration Patents that claim, cover orrelate to MERCK Information and Inventions.

1.50                           “MERCKPATENTS” shall mean Patents Controlled by MERCK prior to the Effective Date orduring the term of this Agreement (provided MERCK has the right to license or otherwisemake available such Patents to deCODE) and are necessary or useful to deCODE inconnection with the Research Program.

1.51                           “MERCK PRIORKNOW-HOW” shall mean any information and materials, including but not limitedto, discoveries, Improvements, processes, methods, protocols, formulas, data,inventions, know-how and trade secrets, patentable or otherwise, which existedprior to the Effective Date and during the term of this Agreement, (i) are inMERCK’s possession or control, (ii) are not generally known and (iii) are in MERCK’sopinion necessary to deCODE in the performance of its obligations under theResearch Program excluding MERCK Know-How.

1.52                           “MERCK SHARE”[CONFIDENTIAL TREATMENT REQUESTED].

1.53                           “NET SALES”shall mean the gross invoice price of Product or Tests sold by MERCK or itsRelated Parties to the first Third Party after

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deducting, if notpreviously deducted, from the amount invoiced or received:

(a)                                  trade andquantity discounts other than early pay cash discounts;

(b)                                 returns,rebates, chargebacks and other allowances;

(c)                                  retroactiveprice reductions that are actually allowed or granted;

(d)                                 salescommissions paid to Third Party distributors and/or selling agents;

(e)                                  a fixedamount equal to [CONFIDENTIAL TREATMENT REQUESTED] of the amount invoiced tocover bad debt, sales or excise taxes, early payment cash discounts,transportation and insurance, custom duties, and other governmental charges;and

(f)                                    the standardinventory cost of devices or delivery systems used for dispensing or administeringProduct or Tests, as applicable. With respect to sales of Combination Products,Net Sales shall be calculated on the basis of the gross invoice price ofProduct(s) containing the same strength of IRCT Compound or Related IRCTCompound sold without other active ingredients. In the event that Product issold only as a Combination Product, Net Sales shall be calculated on the basisof the gross invoice price of the

Combination Productmultiplied by a fraction, the numerator of which shall be the inventory cost ofIRCT Compound or Related IRCT Compound in the Product and the denominator ofwhich shall be the inventory cost of all of the active ingredients in theCombination Product. Inventory cost shall be determined in accordance withMERCK’s regular accounting methods, consistently applied. The deductions setforth in paragraphs (a) through (f) above will be applied in calculating NetSales for a Combination Product. In the event that Product is sold only as a CombinationProduct and either Party reasonably believes that the calculation set forth inthis Paragraph does not fairly reflect the value of the Product relative to theother active ingredients in the Combination Product, the Parties shallnegotiate, in good faith, other means of calculating Net Sales with respect toCombination Products.

1.54                           “PARTY ORPARTIES” shall mean either MERCK or deCODE or both as the context requires.

1.55                           “PATENTRIGHTS” shall mean deCODE Collaboration Patents, and deCODE’s interest in JointCollaboration Patents.

1.56                           “PATENTS”shall mean any and all patents and patent applications in the Territory (whichfor the purposes of this Agreement shall be deemed to include certificates ofinvention and applications for certificates of invention) that a Party owns,Controls or through license or otherwise acquires rights prior to the EffectiveDate or during the term of this Agreement which: (i) claim, cover or relate toa Selected Compound, Test and/or Product; or (ii) claim, cover or relate toInventions; or (iii) are divisions, continuations, continuations-in-part,reissues,

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renewals, extensions,supplementary protection certificates, utility, models and the like of any suchpatents and patent applications and foreign equivalents thereof.

1.57                           “PRODUCT(s)”shall mean any therapeutic preparation in final form containing (a) an IRCTCompound for sale by prescription, over-the-counter or any other method for anyand all uses that arise from the [CONFIDENTIAL TREATMENT REQUESTED] in theDisease Area or (b) a Related IRCT Compound, including without limitation inthe case of either 1.57(a) or (b) any Combination Product.

1.58                           “RELATEDPARTIES” shall mean a Party’s Affiliates or sublicensees, but shall not mean aParty’s distributors.

1.59                           “REGULATORYAUTHORITY” shall mean any applicable government regulatory authority involvedin granting approvals for the manufacturing, marketing, reimbursement and/orpricing of a Product or Test, as applicable, in the Territory, including, inthe United States, the United States Food and Drug Administration and anysuccessor governmental authority having substantially the same function.

1.60                           “RELATEDIRCT COMPOUND” shall mean a compound Controlled by MERCK that [CONFIDENTIALTREATMENT REQUESTED].

1.61                           “RESEARCHPROGRAM TERM” shall mean the duration of the Research Program and “ExtendedResearch Program Term” shall mean any period of the Research Program as it maybe extended by mutual agreement of the Parties, as described more fully inSection 2.10.

1.62                           “RESEARCHPROGRAM” shall mean the research activities undertaken by the Parties hereto asset forth in Article 2 and Attachment 2.1.

1.63                           “SELECTEDCOMPOUND” shall mean any compound proposed by MERCK and accepted by the

Operating Committee tobe evaluated in Information Rich Clinical Trials.

1.64                           “OPERATINGCOMMITTEE” shall mean the joint research committee established to facilitatethe Research Program as more fully described in Section 2.5.1.

1.65                           “SUCCESSFULCLINICAL RESULT” shall mean result(s) [CONFIDENTIAL TREATMENT REQUESTED].

1.66                           “TECHNICALINFORMATION” shall mean information, data or know-how (whether patentable orunpatentable), including without limitation, formulas, manufacturing methods,procedures, designs, compositions of matter, plans, applications,specifications, drawings, techniques, materials (including without limitationbiological materials such as tissue samples, plasma samples, cell lines, RNA,DNA, DNA fragments, organisms, proteins, polypeptides, plasmids, vectors andthe like), compounds, samples, inventions, discoveries, and the like, as wellas improvements related thereto.

1.67         “TERRITORY” shall mean all of thecountries in the world, and their

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territories andpossessions.

1.68                           “THERAPEUTICFIELD” shall mean any and all application of technology to [CONFIDENTIAL TREATMENTREQUESTED].

1.69                           “TESTS”shall mean pharmacogenomic tests aimed at predicting the response ornon-response and side-effects to an IRCT Compound that are developed,discovered or identified through the Research Program.

1.70                           “THIRD PARTY”shall mean an entity other than MERCK and its Affiliates, and deCODE and itsAffiliates.

1.71                           “VALIDPATENT CLAIM” shall mean a claim of an issued and unexpired patent includedwithin the MERCK Compound Patent which claims IRCT Compound, Related IRCTCompound, Tests or Product as a composition of matter, which has not beenrevoked or held unenforceable or invalid by a decision of a court or othergovernmental agency of competent jurisdiction, and which is not appealable orhas not been appealed within the time allowed for appeal, and which has notbeen disclaimed, denied or admitted to be invalid or unenforceable throughreissue, re-examination or disclaimer or otherwise.

1.72                           “WORK PLAN”shall mean Schedule 2.1-X describing the tasks to be performed by each of theParties in furtherance of the Research Program. It is anticipated that therewill be separate work plans relating to each IRCT conducted by the Partieswhich shall be appended to the Agreement in sequential order.

2.                                       RESEARCHPROGRAM

2.1                                 GENERAL

deCODE and MERCK shallengage in the Research Program upon the terms and conditions set forth in thisAgreement. The activities to be undertaken in the course of each IRCT pursuantto the Research Program will be set forth in a Work Plan (Schedule 2.1-X)wherein X shall begin with 1 continue in succession. Prior to the initiation ofany IRCT herein the Parties shall agree in writing signed by members of the ExecutiveCommittee or their designees on what is a Successful Clinical Result and thesigned writing shall become part of the corresponding Work

Plan for that IRCT. TheWork Plan may be amended from time to time upon the mutual written agreement byauthorized representatives of the Parties. All Work Plans including Schedule2.1-0 attached hereto are part of the Agreement. Notwithstanding any provisionof the Agreement to the contrary, neither Party shall be obligated to conductany activities which it reasonably believes would be in violation of any statute,regulation, law, or terms of any ongoing deCODE project in a Non-exclusiveDisease Area.

2.2                                 CONDUCT OFRESEARCH

deCODE and MERCK eachshall conduct the Research Program in good scientific manner, and in compliancein all material respects with all requirements of applicable laws, rules andregulations and all

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applicable goodlaboratory practices to attempt to achieve their objectives efficiently andexpeditiously. deCODE and MERCK each shall proceed diligently with the work setout in the Work Plan by using their respective good faith efforts to allocatesufficient time, effort, equipment and facilities to the Research Program andto use personnel with sufficient skills and experience as are required to accomplishthe Research Program in accordance with the terms of this Agreement and WorkPlan.

deCODE and MERCK shallbe entitled to utilize the services of their Affiliates to perform theirrespective Research Program activities. Each Party shall also be entitled toutilized the services of Third Parties to perform their respective ResearchProgram activities only upon the prior written consent of the other Party or asspecifically set forth in Work Plan. Notwithstanding any such consent, bothParties shall remain at all times fully liable for its respective responsibilitiesunder the Research Program.

2.3                                 INFORMATION RICHCLINICAL TRIALS

Each IRCT shall beconducted in accordance with the Work Plan and a detailed protocol. A proposedprotocol and a draft proposal for what a Successful Clinical Result will be,shall be prepared initially by the Operating Committee. These draft proposalsshall be further reviewed internally by the appropriate committees within MERCKand deCODE. The draft proposals, with any changes or revisions made by MERCK ordeCODE, shall then be considered and revised by the Operating Committee for submissionto the Executive Committee. deCODE shall be obligated to provide support neededto conduct no more than five (5) IRCTs concurrently at any time during theResearch Program. Each IRCT shall be conducted under the direction and controlof the Operating Committee in accordance with the terms and conditions setforth in Schedule 2.3 and a Study Protocol for that Selected Compound. In anygiven IRCT that is conducted under this Agreement the Parties may modify and/orsupplement the terms and conditions set forth in Schedule 2.3 in accordancewith Section 10.7 herein. All data and results pertaining to any SelectedCompound may be used by MERCK in filings with Regulatory Authorities and allother rights to any intellectual property that are embodied by those data andresults shall be governed by Article 3.

2.4                                 COMPOUNDSELECTION

MERCK shall nominateMERCK compounds during the Research Program for which Information Rich ClinicalTrials shall be conducted by the Parties according to the Work Plan. deCODE shallbe given the opportunity to review each proposed compound to confirm thatdeCODE’s conduct of one or more IRCTs on such compound under this Agreement wouldnot

conflict with any otherongoing deCODE project(s). The Operating Committee shall select which MERCKnominated compounds will become Selected Compounds; PROVIDED, HOWEVER, thatsolely with respect to compounds in the Non-exclusive Disease Area, deCODEshall not be obligated to perform development efforts with respect to any such compoundsif it reasonably believes that the performance of such efforts will conflictwith any ongoing deCODE project(s).

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2.5                                 GOVERNANCEOF THE COLLABORATION.

The Parties herebyestablish process to govern the conduct of the Research Program and each party’scontribution to the Research Program as follows:

2.5.1                        MANAGERIALOVERSIGHT.

There will be two levelsof managerial oversight of the Research Program. There will be an ExecutiveCommittee and an Operating Committee. In addition each Party shall designateProject Leaders for the Research Program.

(a)                                  EXECUTIVECOMMITTEE

The Executive Committeeshall consist of one senior executive from each of MERCK and deCODE. TheExecutive Committee shall have the ultimate authority for decisions regardingthe Research Program. The matters that require approval by the ExecutiveCommittee shall include approval of financial statements such as the Budget andapproval of the Work Plan.

(i)                                     Any disputeswhere the Executive Committee cannot reach a mutually acceptable decisionwithin thirty (30) days after the matter was referred to them shall be decidedby the President of MERCK Research Laboratories and the final determination ofthe issue that shall be binding on the Parties and the Research Program; PROVIDED,HOWEVER, as set forth below in Section 2.5.1 (a)(ii) regarding implementationof such decisions and in all cases that to the extent such disputes materially affectthe rights or obligations of the Parties under this Agreement, MERCK shallconsult with deCODE and the Parties shall agree on a course of action tolawfully avoid or minimize such effects upon the rights or obligations of theParties, to the extent practicable.

(ii)                                  Any disputesarising with respect to the manner in which decisions of the OperatingCommittee, the Executive Committee or the President of Merck ResearchLaboratories will be implemented that will affect relations with patientsparticipating in the Research Program, research sites, consultants,investigators or vendors all of which are in Iceland, or any governmentalauthority in Iceland (“Implementation Disputes”), shall be decided by the ChiefExecutive Officer of deCODE (or his designee) and the final determination ofthe issue that shall be binding on the Parties and the Research Program, who shallgive good faith consideration to the comments of MERCK’s Executive Committeemember (or their respective designees) in resolving such matter; PROVIDED,HOWEVER, that to the extent such disputes materially affect the rights orobligations of the Parties under this Agreement, deCODE shall consult withMERCK and the Parties shall agree on a course of action to lawfully avoid orminimize such effects upon the rights or

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obligations of theParties, to the extent practicable.

(b)                                 OPERATINGCOMMITTEE

The Operating Committeeshall be based in Iceland and composed of MERCK representatives and deCODE representativesand shall exist for [**] after termination or expiration of the ResearchProgram Term. The Operating Committee shall perform the following functions (i)approve and, as the need arises, determine the necessity to remove personnelworking on the Research Program, (ii) prepare the Budget, (iii) formulate and adjustWork Plans, (iv) select Compounds; (v) oversee progress of the Research Programand exchange of data between the Parties; and (vi) appoint sub-committees of equalrepresentation to fulfill any of the enumerated tasks set forth in this Section2.5.1(b). Each Party shall have 1 vote. Each Party shall appoint its representativesto the Operating Committee from time to time, and may substitute one or more ofits representatives, in its sole discretion, effective upon notice to the otherParty of such change. These representatives shall have, individually orcollectively, appropriate technical credentials, experience and knowledge, andongoing familiarity with the Research Program. Additional representatives orconsultants may from time to time, by mutual consent of the Parties, be invitedto attend Operating Committee meetings, in the case of consultants subject tosuch consultant’s written agreement to comply with the requirements of Section4.1. Any member of the Operating Committee may designate a substitute to attendand perform the functions of that member at any meeting of the OperatingCommittee. A chairperson and secretary of the Operating Committee shall serveco-terminus one (1) year terms, commencing on the Collaboration Date or ananniversary thereof, as the case may be. deCODE shall have the right to namethe chairperson and MERCK shall have the right to name the secretary of theOperating Committee. Decisions of the Operating Committee shall be madeunanimously by the members. In the event that the Operating Committee cannot ordoes not, after good faith efforts, reach agreement on an issue, the resolutionand/or course of conduct shall be referred to the Executive Committee. EachParty shall bear its own expenses related to the attendance of such meetings byits representatives and invitees.

2.5.2                        MEETINGS ANDMINUTES.

Meetings of theOperating Committee require the participation of at least one member of theOperating Committee from each Party. During the Research Program Term, theOperating Committee shall meet in person at least once during every CalendarYear. From time to time, a Party may give the other Party reasonable notice ofits desire to hold a meeting of the Operating Committee. Unless otherwiseagreed by the Parties, meetings of the Operating Committee shall be held inperson and shall

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alternate between theoffices of the Parties, or meet in such other place as agreed by the Parties.Instead of meeting in person, the members of the Operating Committee may, forpurposes of holding a Operating Committee meeting, convene or be polled orconsulted from time to time by means of telecommunications, video conferences, electronicmail or correspondence, as deemed necessary or appropriate by the Parties.

With the sole exceptionof specific items of the meeting minutes to which the chairperson and thesecretary cannot agree and which are escalated as provided below, definitiveminutes of all Operating Committee meetings shall be finalized promptly afterthe meeting to which the minutes pertain, as follows:

Promptly after eachOperating Committee meeting, the secretary shall prepare and distribute to allmembers of the Operating Committee draft minutes of the meeting. Such minutesshall provide a description, in reasonable detail, of the discussions at themeeting and a list of any actions,

decisions ordeterminations approved by the Operating Committee and a list of any issues tobe resolved by the Executive Officers.

The chairperson shallthen promptly after receiving such draft minutes collect comments thereon fromthe members of his or her Party and provide them to the secretary.

The chairperson and thesecretary of the Operating Committee shall then discuss each other’s commentsand finalize the minutes. The secretary and chairperson shall each sign anddate the final minutes. The signature of the chairperson and the secretary uponthe final minutes shall indicate each Party’s assent to the minutes.

If at any time duringthe preparation and finalization of the Operating Committee meeting minutes,the secretary and the chairperson do not agree on any issue with respect to theminutes, such issue shall be resolved by the decision making process asprovided in Section 2.5.1(a). The decision resulting from the decision makingprocess shall be recorded by the secretary in amended finalized minutes forsaid meeting.

2.5.3                        PROJECTLEADERS.

MERCK and deCODE eachshall appoint a person (a “Project Leader”) from the Operating Committee tocoordinate its part of the Research Program. The Project Leaders shall be theprimary contact between the Parties and the Operating Committee with respect tothe Research Program. Each Party shall notify the other within thirty (30) daysof the date of the Agreement of the appointment of its Project Leader and shallnotify the other Party as soon as practicable upon changing this appointment.

2.6                                 ANNUALBUDGET .

All costs in personnel time,expenses, goods and Third Party services shall be estimated in advance for thesubsequent Calendar Year according to the Budget to be set forth in Schedule2.6. The Budget

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shall be prepared by theProject Leaders under the direction and control of the Operating Committee bySeptember 30th of the year preceding the Calendar Year of the Budget.

2.7                                 RECORDS ANDREPORTS

2.7.1                        RECORDS.

Each Party shallmaintain records, in sufficient detail and in good scientific mannerappropriate for patent and regulatory purposes, which shall fully and properlyreflect all work done and results achieved in the performance of the ResearchProgram by that Party.

2.7.2                        COPIES ANDINSPECTION OF RECORDS.

(a) MERCK shall have theright, during normal business hours and upon reasonable notice, to inspect andcopy all such records of deCODE referred to in Section 2.7.1. MERCK shallmaintain such records and the information disclosed therein in confidence inaccordance with Section 4.1. MERCK shall have the right to arrange for itsemployees and/or consultants involved in the activities contemplated hereunderto visit the offices and laboratories of deCODE and any of its Third Party contractorsas permitted under Section 2.2 during normal business hours and upon reasonablenotice, and to discuss the Research Program work and its results in

detail with thetechnical personnel and consultants of deCODE. Upon request, deCODE shallprovide copies of the records described in Section 2.7.1 above.

(b) At least once perCalendar Year during the term of the Agreement, MERCK shall provide deCODE withinformation about the status of any IRCT Compounds in development at MERCKincluding a review of any significant developmental milestones achieved orsetbacks encountered since the previous year’s review and such otherinformation as may be reasonably requested by deCODE so as to enable deCODE tomonitor or confirm MERCK’s compliance with the provisions of Section 3.4 hereof.deCODE shall have the right, during normal business hours and upon reasonablenotice, to inspect and copy all such records of MERCK referred to in Section2.7.1 that are necessary to deCODE to perform its obligations under thisAgreement. deCODE shall maintain such records and the information disclosedtherein in confidence in accordance with Section 4.1.

2.8                                 COMPLIANCE

deCODE shall conduct theResearch in accordance with all applicable laws, rules and regulations,including, without limitation, all current governmental regulatory requirementsconcerning Good Laboratory Practices. In addition, if animals are used inresearch hereunder, deCODE will comply with the Animal Welfare Act or any otherapplicable local, state, national and international laws or regulationsrelating to the care and use of laboratory animals. MERCK encourages deCODE to usethe highest standards, such as those set forth in the Guide for the Care andUse of Laboratory Animals (NRC, 1996), for the humane handling, care andtreatment of such research animals. Any animals

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which are used in thecourse of the Research, or products derived from those animals, such as eggs ormilk, will not be used for food purposes, nor will these animals be used forcommercial breeding purposes. deCODE shall notify MERCK in writing of anydeviations from applicable regulatory or legal requirements. deCODE herebycertifies that it will not and has not employed or otherwise used in anycapacity the services of any person debarred under Section 21 USC 335a in performingany services hereunder.

2.9                                 RESEARCHPROGRAM TERM

Except as otherwiseprovided herein, the term of the Research Program shall commence on theCollaboration Date and continue for a period of seven (7) years. Following theinitial seven (7) year term, the Research Program will renew annually forsuccessive one (1) year terms (“Extended Research Term”) unless either Partysends a written notice of termination at any time to the other Party PROVIDED,HOWEVER, that MERCK may send such written notice of termination at any timebeginning five (5) years after the Collaboration Date. Such notice oftermination shall be sent at least [**] prior to the date of termination. Inthe event that deCODE exercises its right to terminate under this Section 2.9,such termination shall not affect any ongoing IRCTs which shall be completed atMERCK’s discretion, PROVIDED HOWEVER that deCODE shall not be obligated tobegin any new IRCT which has been approved by the Operating Committee but notyet begun. From time-to-time, the Parties shall amend the Work Plan asapplicable. In the event of a Change of Control pursuant to which a CompetitorControls deCODE, MERCK shall have the right to terminate the Research Programat any time on written notice to deCODE. In the event that the term of theResearch Program expires or the Research Program is terminated during thependency of an IRCT or in the event that the Parties elect to abandon orterminate any IRCT during the course of the Research Program, the Parties shallarrange for orderly completion or

early termination ofsuch IRCT over a reasonable period of at least 90 days, including makingprovision for payment for all non-cancelable expenses associated therewith.

2.10                           EXCLUSIVEEFFORTS

(a) During the ResearchProgram Term, deCODE shall work exclusively with MERCK in efforts to conductIRCT [CONFIDENTIAL TREATMENT REQUESTED] and shall not otherwise facilitate orassist any Third Party to conduct IRCT [CONFIDENTIAL TREATMENT REQUESTED] byproviding rights to, either through license or any agreement to forgoenforcement of, deCODE Patents or deCODE Prior Know-How. This Agreement doesnot prohibit deCODE from (i) conducting IRCT [CONFIDENTIAL TREATMENT REQUESTED];or (ii) conducting clinical trials [CONFIDENTIAL TREATMENT REQUESTED]. In theevent that MERCK and deCODE begin an IRCT with a Selected Compound in aNon-exclusive Disease Area, deCODE shall not commence any IRCT with[CONFIDENTIAL TREATMENT REQUESTED].

(b) Beginning after thefirst anniversary of the Effective Date, if during any [**] period the Partiesdo not commence or continue an IRCT in any one of the Exclusive Disease Areas,and if during such two-year period the Operating Committee neither plans norconducts at least five

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concurrent IRCT’s duringat least [**] of such [**] period, then such specific Disease Area shallthereafter become a Non-Exclusive Disease Area for all purposes under thisAgreement. Notwithstanding the preceding sentence, the Parties may agree tocreate exceptions to, or the tolling of, the foregoing for specialcircumstances.

2.11                           EXCHANGE OFINFORMATION

During the ResearchTerm, deCODE promptly shall disclose on an ongoing basis to MERCK in Englishand in writing all deCODE Know-How. MERCK shall promptly disclose to deCODEduring the Research Program Term all MERCK Know-How.

2.12                           USE OF HUMANMATERIALS

With respect to anyhuman cell lines, tissue, human clinical isolates or similar human-derivedmaterials that have been or are to be collected and/or used in the ResearchProgram (“Human Materials”), each Party represents and warrants (i) that it hascomplied, or shall comply, with all applicable laws, guidelines and regulationsrelating to the collection and/or use of the Human Materials and (ii) that it hasobtained, or shall obtain, all necessary approvals and appropriate informedconsents, in writing, for the collection and/or use of such Human Materials.deCODE shall provide documentation of such approvals and consents upon MERCK’srequest. Each Party further represents and warrants that such Human Materialsmay be used as contemplated in this Agreement without any obligations to theindividuals or entities (“Providers”) who contributed the Human Materials,including, without limitation, any obligations of compensation to suchProviders or any other Third Party for the intellectual property associatedwith, or commercial use of, the Human Materials for any purposes.

2.13                           PHARMACOGENOMICSTESTS.

(a) TESTS FOR USE INCLINICAL TRIALS. MERCK shall have the sole and exclusive right to direct and controlthe development and commercialization of Tests for use with Selected Compounds.deCODE shall have the first right to perform the work needed to develop such Testsfor use in the

conduct of IRCT’s underthis Agreement as set forth below. MERCK shall identify and prioritize theTests it wishes to have developed and Merck shall have the right to solicitbids from Third Parties including deadlines for the achievement of definedevents in the development of such Tests (“Test Milestones”). Prior to acceptingany specific bid from a Third Party, MERCK shall inform deCODE about the bid byproviding deCODE with a written notice including sufficient information aboutthe Test Milestones in the Third Party bid. deCODE shall have thirty days fromMERCK’s notice to agree to the Test Milestones set forth in the Third Party bidfor a particular Test or MERCK may enter into an agreement for the developmentof that Test with the Third Party.

(b) TESTS FOR USE WITHMARKETED COMPOUNDS. In the event that MERCK desires to have developed andmarketed a Test for use with a Product, MERCK shall have the right to solicitbids including Test Milestones

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from Third Parties. If aTest has not been previously developed under Section 2.13(a) for the IRCTCompound in the Product by a Third Party, then prior to accepting any specificbid from a Third Party, MERCK shall inform deCODE about the bid by providingdeCODE with a written notice including sufficient information about the TestMilestones in the Third Party bid. deCODE shall have thirty days from MERCK’snotice to agree to the Test Milestones set forth in the Third Party bid for a particularTest or MERCK may enter into an agreement for the development of that Test withthe Third Party.

(c) REVERSION OF RIGHTSTO TEST DEVELOPMENT. In the event that deCODE exercises its rights under eitherSection 2.13 (a) or 2.13 (b) to develop a Test and deCODE at any time fails toachieve a Test Milestone, then the Parties shall meet within [**] to discussthe reasons for failure to achieve the Test Milestone and any proposals for revisedTest Milestones provided, however, MERCK shall have the right in its solediscretion to continue on in the development of such Test either with deCODE,by itself or to enter into an agreement with a Third Party for such Test.deCODE shall cooperate with MERCK in providing reasonable assistance necessaryto insure a rapid and efficient transfer of technology related to the Test toallow the continued development of the Test by MERCK or its contractor.

(d) RETAINED RIGHTS.MERCK’s rights to develop pharmacogenomic tests set forth in this Section 2.13and Article 3 are limited to Tests and no license under Article 3 shall beconstrued to grant to MERCK or any sublicensee any rights under deCODE Patents,deCODE Generalized Technology, deCODE Collaboration Patents, deCODE Know-How,deCODE Genomics Data with respect to research and development of pharmacogenomictests or diagnostics generally.

3.                                       LICENSE;EXCHANGE OF INFORMATION; DEVELOPMENT AND COMMERCIALIZATION

3.1                                 LICENSEGRANT

(a)                                  COMMERCIALIZATIONGRANTS. deCODE hereby grants to MERCK an exclusive license in the Territoryunder deCODE Collaboration Patents, Joint Collaboration Patents, and deCODEKnow-How, with a right to sublicense (i) to make, have made, use, offer to sell,sell or import IRCT Compound and Product(s) and related Tests and (ii) topractice any other invention claimed in the foregoing patents solely with IRCTCompounds and Products or use any licensed Know-How solely with IRCT Compoundsand Products and related Tests.

(b)                                 COMPOUNDDEVELOPMENT GRANTS.

(i)                                     deCODEhereby grants to MERCK an exclusive license in the Territory under deCODECollaboration Patents, Joint Collaboration Patents and deCODE Know-How with aright to sublicense for the development of compounds Controlled by MERCK andrelated Tests in the Therapeutic Field for (1) Disease Areas and (2) AssociatedInformation.

(ii)                                  deCODEhereby grants to MERCK an non-exclusive license in the Territory under deCODEPrior Know-How and deCODE

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Patents with a right tosublicense for the development of compounds Controlled by MERCK and relatedTests in the Therapeutic Field for (1) Disease Areas and (2) AssociatedInformation.

(iii)                               Subject toSection 3.1 (d), upon expiration or termination of the Research Program underSection 2.9, the licenses granted in this Section 3.1(b)(ii) under the deCODECollaboration Patents, Joint Collaboration Patents, and deCODE Know-How, shallbecome non-exclusive.

(c)                                  MUTUALCOVENANTS. Subject to Section 3.1(d), each Party covenants that for theResearch Program Term neither it nor its Affiliates shall practice anyinvention covered by the deCODE Collaboration Patents, the MERCK CollaborationPatents and the Joint Collaboration Patents nor will it or its Affiliates use deCODEKnow-How or MERCK Know-How for any purposes other than in furtherance of theResearch Program. The covenants made in this Section 3.1(c) are intended toinclude each Party’s promise not to use its Collaboration Patents or itsKnow-How for purposes other than the Research Program and in the case of MERCKadditionally to include a right to develop and market Products.

(d)                                 MERCK OPTION- INTELLECTUAL PROPERTY.

At any time but no laterthen the expiration or termination of the Research Program under Section 2.9, MERCKmay (1) retain exclusive rights granted in Section 3.1(b)(i) and (2) deCODE willrelease MERCK from its covenant under Section 3.1 (c) by payment of anexclusive license fee of [CONFIDENTIAL TREATMENT REQUESTED] for which MERCKelects to retain exclusivity. MERCK may exercise this option by providingnotice and payment to deCODE at any time prior to or concurrently with theexpiration or termination of the Research Program. Upon payment of the ExclusiveLicense Fee, deCODE hereby releases MERCK from the covenant made in Section 3.1(c) with respect to the Elected Disease.

(e)                                  MERCK OPTION- DECODE COMPOUNDS.

(i)                                     RIGHTSGRANTED. In the Non-exclusive Disease Areas deCODE may research and developdeCODE Compounds. During the Research Term, for each deCODE Compound in a Non-exclusiveDisease Area that deCODE Controls, deCODE grants to MERCK an exclusive optionto negotiate for an exclusive license to that deCODE Compound in the Territory(“MERCK Compound Option”), subject only to any conflicting or supercedingrights of Third Parties with respect to that deCODE Compound that were grantedprior to the Effective Date or as a condition of deCODE obtaining rights tosuch deCODE Compound. As to deCODE Compounds in a Non-Exclusive Disease Areathat are not subject to conflicting or superceding rights of Third Parties,deCODE agrees it will not engage in any discussions with a Third Party forcommercial rights of any kind to

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a deCODE Compound beforefirst offering such rights to MERCK as set forth in the succeeding provisionsof this Section 3 1(e).

(ii)                                  deCODENOTICE. From time to time and prior to discussions with any Third Partyconcerning the sale, licensing or commercial relationship involving a deCODECompound, at deCODE’s sole discretion it may provide MERCK with notice that itintends to license rights to commercialize a deCODE Compound(“deCODE Notice”).The deCODE Notice shall contain a commercially reasonable offer in writing containingthe financial terms under which deCODE is willing to license the deCODE Compoundto MERCK and will include relevant information about the deCODE Compound includingbut not limited to any chemical, biological and clinical data. deCODE willprovide MERCK an opportunity to review any and all relevant information aboutthe deCODE Compound including but not limited to the foregoing chemical,biological and clinical data.

(iii)                               CONDITIONSTO OPTION EXERCISE; OPTION TERM. The MERCK Compound Option may be exercised atany time but no later then the earlier of [**] after the deCODE Notice or the endof the Term. MERCK may exercise the MERCK Compound Option by sending writtennotice (“MERCK Exercise Notice”) to deCODE that MERCK wishes to engage in negotiationsfor an exclusive license to the deCODE Compound. MERCK shall have [**] to negotiatein good faith principal business terms to be enumerated in a non-binding termsheet and [**] thereafter (“Negotiation Period”) to negotiate in good faith andexecute a definitive agreement for an exclusive license to the deCODE Compoundin the Territory, which may be extended by the Parties on mutual consent.

(iv)                              OPTION LAPSEAND REVIVAL. In the event that the Parties fail to reach agreement on the termsand conditions of an exclusive license during the Negotiation Period, deCODE shallhave the right to negotiate with Third Parties for rights to that deCODECompound; PROVIDED, HOWEVER, that if deCODE has not licensed rights to thatdeCODE Compound within [**] after the end of the Negotiation Period, and if theTerm has not yet expired or been terminated, deCODE grants to MERCK anotherMERCK Compound Option for that deCODE Compound exercisable in accordance with Sections3.1(e) et seq.

(f)                                    deCODELICENSES.

(i)                                     During theResearch Program, MERCK grants to deCODE a non-exclusive license under MERCKCollaboration Patents, MERCK Know-How, MERCK Prior Know-How and MERCK Patents solelyto perform its obligations under the Research Program.

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(ii)                                  In the eventthe Research Program expires or terminates and (1) MERCK has not made at leastone payment under Section 3.1(d)(i) or (2) a Change of Control pursuant to whicha Competitor obtains Control of deCODE has not occurred, MERCK grants to deCODEa non-exclusive, royalty-free license to practice any and all inventions coveredby MERCK Collaboration Patents.

3.2                                 NON-EXCLUSIVELICENSE GRANT

In the event the making,having made, use, offer for sale, sale or import by MERCK, its Affiliates orpermitted sublicensees of IRCT Compound(s), Test(s) or Product(s) wouldinfringe during the term of this Agreement a claim of issued letters patentwhich deCODE owns or has the rights to license and which patents are notcovered by the grant in Section 3.1, deCODE hereby grants to MERCK, to theextent deCODE is legally able to do so, a non-exclusive, sublicensable, royalty-freelicense in the Territory under such issued letters patent solely for MERCK todevelop, make, have made, use, sell, offer for sale or import IRCT Compound(s),Test(s) and Product(s) in the Territory.

3.3                                 NO IMPLIEDLICENSES.

The Parties do notintend to grant rights under patents or know-how except as expressly set forthherein and the grant of rights herein does not imply a grant of rights topatents and know-how Controlled by a Party that may be necessary to practicethe full scope of any right granted herein. Except as otherwise expresslyqualified herein all exclusive licenses granted herein are exclusive even as tothe grantor and no implied rights are retained.

3.4                                 DEVELOPMENTAND COMMERCIALIZATION.

MERCK shall usereasonable efforts, consistent with the usual practice followed by MERCK inpursuing the commercialization and marketing of its other pharmaceuticalproducts of a similar commercial value, at its own expense, to develop andcommercialize a Product or Test on a commercially reasonable basis in suchcountries in the Territory where in MERCK’s opinion it is commercially viableto do so.

3.5                                 EXCUSEDPERFORMANCE.

In addition to theprovisions of Article 7 hereof, the obligation of MERCK with respect to anyProduct or Test under Section 3.4 are expressly conditioned upon the continuingabsence of any adverse condition or event relating to the safety or efficacy ofthe Product or Test, and the obligation of MERCK to develop or market any suchProduct or Test shall be delayed or suspended so long as in MERCK’s opinion anysuch condition or event exists.

3.6                                 RIGHT OFFIRST NEGOTIATION.

In the event that MERCKdetermines that neither it nor its Affiliates will commercialize an IRCTCompound and in its sole discretion determines that it will license the commercialrights to a Third Party, it shall notify deCODE of such decision and shallnegotiate exclusively

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with deCODE in goodfaith on the terms and conditions on which it is willing to license commercialrights to such IRCT Compound for a period of [**]. In the event that deCODEdoes not agree upon principal business terms to be enumerated in a non-bindingterm sheet within [**] or the Parties do not execute a definitive agreement onsuch terms and conditions within [**] thereafter, MERCK shall have the right tonegotiate with Third Parties for the commercial rights to that IRCT Compound;PROVIDED, HOWEVER, that if MERCK has not licensed commercial rights to suchIRCT Compound to a Third Party within [**] after the end of the [**] period andif the Term has

not yet expired or beenterminated, MERCK grants to deCODE another right of first negotiationexercisable in accordance with this Section 3.6. In connection with the rightsgranted under this Section 3.6, MERCK will provide deCODE with reasonableopportunity to review any and all relevant information about the IRCT Compoundincluding but not limited to chemical, biological and clinical data. deCODE’srights under this Section 3.6 shall be subject only to any conflicting or supercedingrights of Third Parties with respect to a particular IRCT Compound that weregranted prior to the compound’s selection under Section 2.4.

4.                                       CONFIDENTIALITYAND PUBLICATION

4.1                                 NONDISCLOSUREOBLIGATION.

All Informationdisclosed by one Party to the other Party hereunder shall be maintained inconfidence by the receiving Party and shall not be disclosed to non-Party orused for any purpose except as set forth herein without the prior writtenconsent of the disclosing Party, except to the extent that such Information:

(a)                                  is known byreceiving Party at the time of its receipt, and not through a prior disclosureby the disclosing Party, as documented by the receiving Party’s businessrecords;

(b)                                 is properlyin the public domain;

(c)                                  issubsequently disclosed to the receiving Party by a Third Party who may lawfullydo so and is not under an obligation of confidentiality to the disclosingParty;

(d)                                 is developedby the receiving Party independently of Information received from thedisclosing Party, as documented by the receiving Party’s business records;

(e)                                  is disclosedto governmental or other regulatory agencies in order to obtain patents or togain or maintain approval to conduct clinical trials or to market Product orTests, but such disclosure may be only to the extent reasonably necessary to obtainpatents or authorizations.

Any combination offeatures or disclosures shall not be deemed to fall within the foregoingexclusions merely because individual features are published or available to thegeneral public or in the rightful possession of the receiving Party unless thecombination itself and

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principle of operationare published or available to the general public or in the rightful possessionof the receiving party.

4.1.2                        Notwithstandingthe obligations of confidentiality and prohibitions on use, it shall not be abreach of a Party’s obligations under this Section 4.1 to disclose ProprietaryInformation:

(a)                                  to ThirdParties under confidentiality provisions at least as stringent as those in thisAgreement, for consulting, manufacturing development, manufacturing, externaltesting, marketing trials and to Third Parties who are sublicensees or otherdevelopment/marketing partners of the Parties with respect to any of thesubject matter of this Agreement; or

(b)                                 incompliance with applicable laws or regulations (including the disclosurerequirements of the U.S. Securities and Exchange Commission, NASDAQ or anystock exchange on which securities issued by such Party or its Affiliates aretraded) or order by a court or other regulatory

body having competentjurisdiction; provided that if a Party is so required to disclose Informationthat is subject to the non-disclosure provisions of this Section 4.1 or 4.2,such Party shall promptly inform the other Party of the disclosure that isbeing sought in order to provide the other Party an opportunity to challenge orlimit the disclosure obligations except where impracticable for necessary disclosures(for example, to physicians conducting studies or to health authorities).Information that is disclosed by judicial or administrative process shallremain otherwise subject to the confidentiality and non-use provisions of thisSection 4.1 and Section 4.2, and the Party disclosing Information pursuant tolaw or court order shall take all steps reasonably necessary, including withoutlimitation obtaining an order of confidentiality, to ensure the continuedconfidential treatment of such Information.

4.2                                 deCODEKNOW-HOW.

deCODE agrees to use itsbest efforts to keep all deCODE Know-How and deCODE Prior Know-How confidentialexcept as may be agreed by the Parties under Section 4.3. deCODE agrees that tothe extent deCODE Prior Know-how will be disclosed to Third Parties for useoutside of the Disease Areas that such disclosure to a Third Party will be subjectto obligations of non-disclosure similar to those in Section 4.1 above.

4.3                                 PUBLICATION.

MERCK and deCODE eachacknowledge the other Party’s interest in publishing the results of itsresearch in order to obtain recognition within the scientific community and toadvance the state of scientific knowledge. Each Party also recognizes themutual interest in obtaining valid patent protection and in protecting businessinterests and trade secret information. Consequently, except for disclosurespermitted pursuant to Section 4.1, either Party, its employees or consultants wishingto make a publication shall deliver to the other Party a copy of the proposedwritten publication or an outline of an oral disclosure at least sixty (60)days prior to submission for publication or

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presentation. Thereviewing Party shall have the right (a) to propose modifications to thepublication or presentation for patent reasons, trade secret reasons orbusiness reasons or (b) to request a reasonable delay in publication or presentationin order to protect patentable information. If the reviewing Party requests adelay, the publishing Party shall delay submission or presentation for a periodof ninety (90) days to enable patent applications protecting each Party’srights in such information to be filed in accordance with Article 7 below. Uponexpiration of such ninety (90) days, the publishing Party shall be free toproceed with the publication or presentation. If the reviewing Party requestsmodifications to the publication or presentation, the publishing Party shalledit such publication to prevent disclosure of trade secret or proprietarybusiness information prior to submission of the publication or presentation.

4.4                                 PUBLICITY/USEOF NAMES.

No disclosure of theexistence of, or the terms of, this Agreement may be made by either Party, andno Party shall use the name, trademark, trade name or logo of the other Partyor its employees in any publicity, news release or disclosure relating to thisAgreement or its subject matter, without the prior express written permissionof the other Party. Nothing in this Agreement shall prevent either Party from issuingstatements that such Party determines to be necessary to comply with applicablelaw (including the disclosure requirements of the U.S. Securities and ExchangeCommission, NASDAQ or any other stock exchange on which securities issued bysuch Party are traded); provided, HOWEVER, that, the disclosing Party shallprovide the other Party with a copy of

the proposed text ofsuch statements sufficiently in advance of the scheduled release thereof toafford such other Party a reasonable opportunity to review and comment upon theproposed text and the disclosing Party shall take all reasonable steps to limitsuch disclosure solely to fulfill its legal obligations.

4.5                                 IMPROPERDISCLOSURES.

In the event that eitherParty discloses Information other than in accordance with Sections 4.3 and 4.4,the non-breaching Party shall have the right to seek compensation from thebreaching Party in addition to and not in place of any other non-monetaryremedies available for such breach of Sections 4.3 and 4.4. Entitlement to compensationand the amount of the compensation shall be submitted to dispute resolution inaccordance with Section 10.6.

5.                                       PAYMENTS; ROYALTIESAND REPORTS

5.1                                 RESEARCHPROGRAM FUNDING

(a) PARTY CONTRIBUTIONS.As set forth herein each Party has an ongoing financial obligation to supportthe Research Program. Neither Party shall be obligated to provide a higherlevel of support than agreed upon in the Budget for any Calendar Year. Inaccordance with the Budget and with funding process set out in Schedule 5.1,MERCK shall be responsible for [**] of the operational expenses of the Research

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Program and deCODE shallbe responsible for [**] of the operational expenses. These shared operationalexpenses shall be limited solely to [CONFIDENTIAL TREATMENT REQUESTED], asreflected in Schedule 5.1, and the Parties contemplate that deCODE shallprovide approximately [CONFIDENTIAL TREATMENT REQUESTED] provided by MERCK.Without its consent, deCODE shall not be obligated to share responsibility for operationalexpenses that result from aggregate [CONFIDENTIAL TREATMENT REQUESTED]. Subjectto the methodology set forth in Schedule 5.1, such other methodologies as theOperating Committee may expressly approve and in accordance with the Budget,operational expenses incurred by either Party shall be determined in accordancewith that Party’s regular accounting methods, consistently applied.

(b) BUDGET PREPARATION.The estimated expenditures for that portion of the first Calendar Yearbeginning on the Effective Date and ending on December 31st shall be set forthin the Budget which will be attached hereto as Schedule 2.6 following itspreparation by the Operating Committee and approval by the Executive Committee.By the initial September 15th following the Effective Date of the Agreement andfor each subsequent September 15th, the Operating Committee shall prepare a Budgetfor the upcoming Calendar Year for approval by the Executive Committee.

(c) RESEARCH PAYMENTS.MERCK shall pay to deCODE, in advance on a quarterly basis at the beginning ofeach Calendar Quarter its estimated MERCK Share for that Calendar Quarter. Theinitial payment shall be made within thirty days of approval of the initialBudget by the Executive Committee. Within sixty (60) days following the end ofa Calendar Quarter, the Parties shall meet and determine actual expenditures inemployee time and expenses properly attributable to the Research Program forthat Calendar Quarter. The combined total of expenditures shall be the ResearchProgram Expenditures for that Calendar Quarter. The MERCK Share shall bedetermined in accordance with Schedule 5.1 and the Parties shall reconcile the

differences betweencontribution obligations and expenditures by payment of the appropriate amountof money from one Party to the other Party in accordance with Schedule 5.1.

(d) ANCILLARY PAYMENTSBY MERCK. Certain expenditures directly associated with the conduct of the IRCTin accordance with Section 2.3 shall be borne solely by MERCK and shall not beconsidered part of the Research Program funding subject to the definedcontributions of the Parties. These expenditures shall include [**] and onlythose costs of a similar nature agreed to in writing by the parties.

(e) PAYMENT FORABANDONED IRCT COMPOUNDS. If MERCK in its sole discretion for reasons otherthan safety or efficacy elects to abandon development of an IRCT Compound, andprovided that (i) MERCK has elected not to offer commercialization rights todeCODE pursuant to Section 3.6, and (ii) there is or will be no Product in thesame Disease Area as the abandoned IRCT Compound for which deCODE has receivedor may receive payments under either Section 5.3 or 5.4, THEN MERCK shall beobligated to pay deCODE [**] of its costs and expenses incurred to provide theFTEs dedicated to the development of that IRCT Compound under the ResearchProgram PROVIDED, HOWEVER, that MERCK shall

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not be obligated to paydeCODE until the later of the end of the Research Program Term including anyExtended Research Program Term or the date on which no other IRCT Compounds inthe same Disease Area as the abandoned IRCT Compound are being developed byMERCK.

5.2                                 CONSIDERATIONFOR LICENSE

In partial considerationfor the licenses granted herein under the Patent Rights and deCODE Know-How,upon the terms and conditions contained herein, MERCK shall pay to deCODE atotal of ten million ($10,000,000) dollars as a non-refundable exclusivity licenseand technology access signature fee for all of the diseases within the DiseaseArea within thirty (30) days of the Effective Date. This payment is comprisedof four equal payments of two million five hundred thousand ($2,500,000)dollars.

If deCODE rejects theinitial [**] MERCK nominated compounds from [CONFIDENTIAL TREATMENT REQUESTED]for an Information Rich Clinical Trial pursuant to Section 2.4, THEN at anytime prior to deCODE’s acceptance of a subsequent MERCK nominated compound inthe [CONFIDENTIAL TREATMENT REQUESTED], MERCK may demand by written notice todeCODE the payment of [**] dollars. deCODE shall make such payment to MERCKwithin thirty (30) days of the notice. Effective when MERCK gives such notice,this Agreement shall be deemed terminated with respect to such Non-ExclusiveDisease Areas, after which time neither MERCK nor deCODE shall have furtherrights or obligations with respect to the conduct of the Research Program insuch Non-Exclusive Disease Area under Section 2, and all licenses, options andother rights granted to either Party under Section 3 with respect to such Non-ExclusiveDisease Area shall terminate.

5.3                                 MILESTONEPAYMENTS

Subjectto the terms and conditions in this Agreement, MERCK shall pay to deCODE thefollowing milestone payments:

(a)                                  MERCK willpay a milestone of [CONFIDENTIAL TREATMENT

REQUESTED].

(b)                                 MERCK willpay a milestone of [CONFIDENTIAL TREATMENT

REQUESTED].

MERCK shall notifydeCODE in writing within thirty (30) days upon the achievement of the milestonefor each Product or Test, and shall make the appropriate milestone paymentwithin thirty (30) days of the achievement of such milestone. The milestonepayment shall be payable only upon the [**] achievement of such milestone forany Test or Product containing a unique IRCT Compound and no amounts shall bedue hereunder for [**] achievement of such milestone with other Tests or Productscontaining that IRCT Compound. No milestone payment shall be due under 5.3 (a)for any Product containing a Related IRCT Compound if a milestone under Section5.3(a) has been paid for a Product containing an IRCT Compound that the RelatedIRCT Compound was derived from or that the Related IRCT Compound is[CONFIDENTIAL TREATMENT REQUESTED] unless the Product also contains an IRCTCompound that would otherwise qualify for the milestone under this Section 5.3.In the event that MERCK makes a payment under Section 5.3(a) for a Productcontaining a Related IRCT Compound, it shall have no further obligation to make

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milestone payments underSection 5.3(a) for (i) any other Product containing that Related IRCT Compound;(ii) the IRCT Compound that it is a [CONFIDENTIAL TREATMENT REQUESTED] of underSection 1.60(a); or (iii) any other compound that is a Related IRCT Compoundbecause it is a [CONFIDENTIAL TREATMENT REQUESTED] of the IRCT Compound of(ii).

5.4                                 ROYALTIES

5.4.1                        ROYALTIESPAYABLE BY MERCK.

(a) Subject to the termsand conditions of this Agreement, MERCK shall pay to deCODE royalties on acountry-by-country basis in an amount equal to:

(i) MERCK will pay aroyalty of [**] to deCODE on MERCK’s Net Sales of Product.

(ii)                                  In the eventthere is no Valid Patent Claim of a MERCK Compound Patent in a country, theroyalty due for Net Sales in that country shall be [**] percent of thoseroyalty rates set forth in Section 5.4.1 (a)(i).

(iii)                               Royalties oneach Product at the rate set forth above shall be effective as of the date ofFirst Commercial Sale of Product in a country and shall continue until thelater of (A) the expiration of the last Valid Patent Claim of a MERCK CompoundPatent in that country or (B) until the tenth (10th) anniversary of the FirstCommercial Sale in such country, subject to the following conditions:

(1)                                  that onlyone royalty shall be due with respect to the same unit of Product;

(2)                                  that noroyalties shall be due upon the sale or other transfer among MERCK or itsAffiliates or sublicensees, but in such cases the royalty shall be due andcalculated upon MERCK’s or its Affiliate’s or sublicensee’s Net Sales to thefirst independent Third Party; and

(3)                                  no royaltiesshall accrue on the disposition of Product in reasonable quantities by MERCK orits Related Parties as samples (promotion or otherwise) or as donations (forexample, to non-profit institutions or government agencies for a non-commercialpurpose).

(b)                                 Subject tothe terms and conditions of this Agreement, MERCK shall pay to deCODE royaltieson a Test-by-Test and a country-by-country basis of [**] of MERCK’s Net Salesof Tests.

5.4.2                        CHANGE INSALES PRACTICES.

The Parties acknowledgethat during the term of this Agreement, MERCK’s sales practices for themarketing and distribution of Product or Tests may change to the extent towhich the calculation of the payment for royalties on Net Sales may become impracticalor even impossible. In such event the Parties agree to meet and discuss in goodfaith new ways of compensating deCODE to the extent currently contemplatedunder

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Section 5.4.1.

5.4.3                        ROYALTIESFOR BULK COMPOUND.

In those cases whereMERCK sells bulk IRCT Compound or Related IRCT Compound rather than Product inpackaged form to an independent Third Party, the royalty obligations of thisSection 5.4 shall be applicable to the bulk IRCT Compound or Related IRCTCompound.

5.4.4                        COMPETITIVEPRODUCT.

In the event aCompetitive Product is sold in a country, then the royalty term set out inSection 5.4.1.(a)(iii) for the corresponding Product shall be [**] from FirstCommercial Sale without regard to the existence of a Valid Patent Claim androyalties shall be reduced in accordance Section 5.4.1(a)(ii) .

5.5                                 REPORTS;PAYMENT OF ROYALTY

During the term of theAgreement following the First Commercial Sale of a Product or Test, MERCK shallfurnish to deCODE a quarterly written report for the Calendar Quarter showingthe Net Sales of all Products or Tests subject to royalty payments sold byMERCK and its Related Parties in the Territory during the reporting period andthe royalties payable under this Agreement. Reports shall be due on thesixtieth (60) day following the close of each Calendar Quarter. Royalties shownto have accrued by each royalty report shall be due and payable on the datesuch royally report is due. MERCK shall keep complete and accurate records insufficient detail to enable the royalties payable hereunder to be determined.

5.6.                              AUDITS

5.6.1                        Upon thewritten request of deCODE and not more than once in each Calendar Year, MERCKshall permit an independent certified public accounting firm of nationallyrecognized standing selected by deCODE and reasonably acceptable to MERCK, atdeCODE’s expense, to have access during normal business hours to such of therecords of MERCK as may be reasonably necessary to verify the accuracy of theroyalty reports hereunder for any year ending not more than twenty-four (24)months prior to the date of such request. The accounting firm shall disclose todeCODE only whether the royalty reports are correct or incorrect and thespecific details concerning any discrepancies. No other information shall beprovided to deCODE.

5.6.2                        If suchaccounting firm correctly identifies a discrepancy made during such period, theappropriate Party shall pay the other Party the amount of the discrepancywithin thirty (30) days of the date deCODE delivers to MERCK such accountingfirm’s written report so correctly concluding, or as otherwise agreed upon bythe Parties. The fees charged by such accounting firm shall be paid by deCODE,PROVIDED, HOWEVER, if the payments made or payable were at least

[**] dollars below andless than [**] of the amount that should have been paid during the period inquestion, MERCK shall also reimburse deCODE for the reasonable costs of suchaudit.

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5.6.3                        MERCK shallinclude in each sublicense granted by it pursuant to this Agreement a provisionrequiring the sublicensee to make reports to MERCK, to keep and maintainrecords of sales made pursuant to such sublicense and to grant access to suchrecords by deCODE’s independent accountant to the same extent required of MERCKunder this Agreement. Upon the expiration of twenty-four (24) months followingthe end of any year, the calculation of royalties payable with respect to suchyear shall be binding and conclusive upon deCODE, and MERCK and its sublicenseesshall be released from any liability or accountability with respect toroyalties for such year.

5.6.4                        Upon theexpiration of twenty-four (24) months following the end of any year, thecalculation of royalties payable with respect to such year shall be binding andconclusive upon deCODE, and MERCK and its Related Parties shall be releasedfrom any liability or accountability with respect to royalties for such year.

5.6.5                        deCODE shalltreat all financial information subject to review under this Section 5.6 orunder any sublicense agreement in accordance with the confidentiality andnon-use provisions of this Agreement, and shall cause its accounting firm toenter into an acceptable confidentiality agreement with MERCK and/or itsRelated Parties obligating it to retain all such information in confidencepursuant to such confidentiality agreement.

5.7                                 PAYMENTEXCHANGE RATE

All payments to be madeby MERCK to deCODE under this Agreement shall be made in United States dollarsand may be paid by check made to the order of deCODE or bank wire transfer inimmediately available funds to such bank account in the United Statesdesignated in writing by deCODE from time to time. In the case of sales outsidethe United States, the rate of exchange to be used in computing the amount ofcurrency equivalent in United States dollars due deCODE shall be made at the rateof exchange and on the periodic schedule used by MERCK for its own financialreporting purposes at such time.

5.8                                 INCOME TAXWITHHOLDING

If laws, rules orregulations require withholding of income taxes or other taxes imposed uponpayments set forth in this Article 5, MERCK shall make such withholdingpayments as required and subtract such withholding payments from the paymentsset forth in this Article 5. MERCK promptly shall notify deCODE of suchwithholding and shall submit appropriate proof of payment of the withholdingtaxes to deCODE within a reasonable period of time.

6.                                       REPRESENTATIONSAND WARRANTIES

6.1                                 REPRESENTATIONAND WARRANTY

(a)                                  deCODErepresents and warrants to MERCK that as of the date of this Agreement:

(i)                                     it has thefull right, power and authority to enter into this Agreement, to perform theResearch Program and to grant the

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licenses granted underArticle 3 hereof;

(ii)                                  it has notpreviously assigned, transferred, conveyed or otherwise encumbered its right,title and interest in Patent Rights, deCODE Know-How or deCODE Prior Know-How;

(iii)                               to the bestof deCODE’s knowledge, it is the sole and exclusive owner of the Patent Rightsand deCODE Know-How(excluding those rights included in the foregoing on basisthat deCODE has Control solely through license rights from a Third Party), all ofwhich are (and shall be, in the case of deCODE Information and Invention) freeand clear of any liens, charges and encumbrances, and no other person,corporate or other private entity, or governmental entity or subdivisionthereof, has or shall have any claim of ownership whatsoever with respect to thePatent Rights and deCODE Know-How;

(iv)                              there are noclaims, judgments or settlements against or owed by deCODE or pending orthreatened claims or litigation relating to the Patent Rights, deCODE Know-Howand deCODE Prior Know-How(excluding those rights included in the foregoing on basisthat deCODE has Control solely through license rights from a Third Party); and

(v)                                 deCODE hasdisclosed to MERCK all reasonably relevant information regarding the PatentRights and deCODE Know-How licensed under this Agreement, including withoutlimitation the existence of any patent opinions obtained by deCODE related thereto.

(b) MERCK represents andwarrants to deCODE that as of the date of this Agreement:

(i)                                     it has thefull right, power and authority to enter into this Agreement, to perform theResearch Program and to grant the licenses granted under Article 3 hereof;

(ii)                                  it has notpreviously assigned, transferred, conveyed or otherwise encumbered its right,title and interest in MERCK Patents, MERCK Collaboration Patents, JointCollaboration Patents, MERCK Know-How or MERCK Prior Know-How;

(iii)                               to the bestof MERCK’s knowledge, it is the sole and exclusive owner of MERCK Patents,MERCK Collaboration Patents, MERCK Know-How or MERCK Prior Know-How(excludingthose rights included in the foregoing on basis that MERCK has Control solelythrough license rights from a Third Party), all of which are (and shall be, inthe case of MERCK Information and Invention) free and clear of any liens,charges and encumbrances, and no other person, corporate or other private entity,or governmental entity or subdivision thereof, has or shall have any claim ofownership whatsoever with respect to MERCK Patents, MERCK CollaborationPatents, Joint Collaboration Patents, MERCK Know-How or MERCK Prior Know-How;

(iv)                              there are noclaims, judgments or settlements against or owed

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by MERCK or pending orthreatened claims or litigation relating to the MERCK Patents, MERCKCollaboration Patents, Joint Collaboration Patents, MERCK Know-How or MERCKPrior Know-How(excluding those rights included in the foregoing on basis thatMERCK has Control solely through license rights from a Third Party).

7.                                       PATENTPROVISIONS

7.1                                 OWNERSHIP,FILING, PROSECUTION AND MAINTENANCE OF PATENTS

7.1.1                        deCODE shallretain all right, title and interest in and to deCODE Generalized Technology,deCODE Genomics Data, deCODE Know-How, deCODE Prior Know-How, deCODECollaboration Patents and deCODE Patents, subject to the licenses granted toMERCK pursuant to Section 3.1.

7.1.2                        MERCK shallretain all right, title and interest in and to the MERCK Know-How, MERCKCollaboration Patents and MERCK Patents, subject to the licenses granted todeCODE pursuant to Section 3.1.

7.1.3                        Subject tothe licenses granted hereunder:

(i)                                     rights todeCODE Information and Inventions shall belong to deCODE;

(ii)                                  rights toMERCK Information and Inventions shall belong to MERCK; and

(iii)                               rights toJoint Information and Inventions shall belong jointly to deCODE and to MERCK.

Except as expressly setforth in this Agreement, the Parties shall follow United States laws ofinventorship, ownership, and patenting rights including a Party’s ability toexploit joint inventions without accounting to each other.

7.1.4                        deCODEagrees to file, prosecute and maintain in the Territory, upon appropriateconsultation with MERCK, the Patent Rights licensed to MERCK under thisAgreement; PROVIDED, HOWEVER, with respect to Joint Information and Inventions,MERCK shall have the first right to file patent applications for such JointInformation and Inventions. With respect to deCODE Information and Inventions,deCODE may elect not to file and if so MERCK shall have the right to filepatent applications. In such event, deCODE shall execute such documents andperform such acts at deCODE’s expense as may be reasonably necessary to effectan assignment of such Patent Rights to MERCK in a timely manner to allow MERCKto continue such prosecution or maintenance. In each case, the filing Partyshall give the non-filing Party an opportunity to review the text of theapplication before filing, shall consult with the non-filing Party with respectthereto, and shall supply the non-filing Party with a copy of the applicationas filed, together with notice of its filing date and serial number. deCODEshall keep MERCK advised of the status of the actual and prospective patentfilings and upon the request of MERCK, provide advance copies of any papersrelated to the filing, prosecution and maintenance of such patent filings.deCODE shall promptly give notice to MERCK of the grant, lapse, revocation,

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surrender, invalidationor abandonment of any Patent Rights licensed to MERCK for which deCODE isresponsible for the filing, prosecution and maintenance. With respect to allfilings hereunder, the filing Party shall be responsible for payment of allcosts and expenses related to such filings, except with respect to filingsrelated to Joint Collaboration Patents, the costs and expenses of which shallbe borne equally by the Parties.

In the event that aParty elects not to contribute to the costs and expenses incurred in connectionwith a filing related to a Joint Collaboration Patent in any country, suchParty shall be deemed to have abandoned its rights with respect to such JointCollaboration Patent in such country.

7.2                                 OPTION OFMERCK TO PROSECUTE AND MAINTAIN PATENTS

deCODE shall give noticeto MERCK of any desire to cease prosecution and/or maintenance of Patent Rightson a country by country basis in the Territory and, in such case, shall permitMERCK, at its sole discretion, to continue prosecution or maintenance of suchPatent Rights at its own expense. If MERCK elects to continue prosecution or maintenanceor to file based on deCODE’s election not to file pursuant to Section 7.1above, deCODE shall execute such documents and perform such acts at deCODE’sexpense as may be reasonably necessary to effect an assignment of such PatentRights to MERCK in a timely manner to allow MERCK to continue such prosecutionor maintenance.

7.3                                 INTERFERENCE,OPPOSITION, REEXAMINATION AND REISSUE

(a)                                  deCODEshall, within ten (10) days of learning of such event, inform MERCK of anyrequest for, or filing or declaration of, any interference, opposition, orreexamination relating to Patent Rights. MERCK and deCODE shall thereafterconsult and cooperate fully to determine a course of action with respect to anysuch proceeding. MERCK shall have the right to review and approve anysubmission to be made in connection with such proceeding.

(b)                                 deCODE shallnot initiate any reexamination, interference or reissue proceeding relating toPatent Rights without the prior written consent to MERCK, which consent shallnot be unreasonably withheld.

(c)                                  Inconnection with any interference, opposition, reissue, or reexamination proceedingrelating to Patent Rights, MERCK and deCODE will cooperate fully and willprovide each other with any information or assistance that either mayreasonably request. deCODE shall keep MERCK informed of developments in anysuch action or proceeding, including, to the extent permissible by law,consultation and approval of any settlement, the status of any settlementnegotiations and the terms of any offer related thereto.

(d)                                 deCODE shallbear the expense of any interference, opposition, reexamination, or reissueproceeding relating to Patent Rights, except with respect to proceedingsrelated to Joint Collaboration Patents, the costs and expenses of which shallbe borne equally by the Parties. In the event that a Party elects not tocontribute to the costs and expenses incurred in connection with a proceedingin a country related

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to a Joint CollaborationPatent, such Party shall be deemed to have abandoned its rights with respect tosuch Joint Collaboration Patent in that country.

7.4                                 ENFORCEMENTAND DEFENSE

(a)                                  deCODE shallgive MERCK notice of either (i) any infringement of Patent Rights, or (ii) anymisappropriation or misuse of deCODE Know-How, that may come to deCODE’sattention. MERCK and deCODE shall thereafter consult and cooperate fully todetermine a course of action, including but not limited to the commencement oflegal action by either or both MERCK and deCODE, to terminate any infringementof Patent Rights or any misappropriation or misuse

of deCODE Know-How.However, deCODE, upon notice to MERCK, shall have the first right to initiateand prosecute such legal action in the name of deCODE and MERCK, or to controlthe defense of any declaratory judgment action relating to Patent Rights ordeCODE Know-How. deCODE shall promptly inform MERCK if it elects not toexercise such first right and MERCK shall thereafter have the right to eitherinitiate and prosecute such action or to control the defense of suchdeclaratory judgment action in the name of MERCK and, if necessary, deCODE.Each Party shall have the right to be represented by counsel of its own choice.The Party initiating a prosecution relating to Patent Rights shall bear theexpense of such prosecution, except with respect to prosecutions related toJoint Collaboration Patents, the costs and expenses of which shall be borneequally by the Parties. In the event that a Party elects not to contribute tothe costs and expenses incurred in connection with a prosecution related to aJoint Collaboration Patent in a country, such Party shall be deemed to have abandonedits rights with respect to such Joint Collaboration Patent in that country.

(b)                                 In the eventthat deCODE elects not to initiate and prosecute an action as provided inparagraph (a), and MERCK elects to do so, the costs of any agreed-upon courseof action to terminate infringement of Patent Rights or misappropriation ormisuse of deCODE Know-How, including without limitation the costs of any legalaction commenced or the defense of any declaratory judgment, shall be sharedequally by deCODE and MERCK.

(c)                                  For anyaction to terminate any infringement of Patent Rights or any misappropriationor misuse of deCODE Know-How, in the event that MERCK is unable to initiate orprosecute such action solely in its own name, deCODE will join such actionvoluntarily and will execute and cause its Affiliates to execute all documentsnecessary for MERCK to initiate litigation to prosecute and maintain suchaction. In connection with any action, MERCK and deCODE will cooperate fullyand will provide each other with any information or assistance that either mayreasonably request. Each Party shall keep the other informed of developments inany action or proceeding, including, to the extent permissible by law, theconsultation and approval of any settlement negotiations and the terms of anyoffer related thereto.

(d)                                 Any recoveryobtained by either or both MERCK and deCODE in connection with or as a resultof any action contemplated by this

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section, whether bysettlement or otherwise, shall be shared in order as follows:

(i)                                     the Partywhich initiated and prosecuted the action shall recoup all of its costs andexpenses incurred in connection with the action;

(ii)                                  the otherParty shall then, to the extent possible, recover its costs and expensesincurred in connection with the action; and

(iii)                               the amountof any recovery remaining shall then be allocated between the Parties on a PRORATA basis taking into consideration the relative economic losses suffered byeach Party. By way of example and not limitation, MERCK may suffer lost profitfrom the loss of sales of Product or Tests and deCODE may suffer lost royalty incomeon the loss of sales.

(e)                                  deCODE shallinform MERCK of any certification regarding any Patent Rights it has receivedpursuant to either 21 U.S.C. Sections 355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) orit successor provisions or any similar provisions in a country in the Territoryother than the United States and shall provide MERCK with a copy of suchcertification within five (5) days of receipt. deCODE’s and MERCK’s rights withrespect to the initiation and prosecution of any legal action as a result

of such certification orany recovery obtained as a result of such legal action shall be as defined inparagraphs 7.4(a)-(d) hereof; PROVIDED, HOWEVER, deCODE shall exercise itsfirst right to initiate and prosecute any action and shall inform MERCK of suchdecision within ten (10) days of receipt of the certification, after which timeMERCK shall have the right to initiate and prosecute such action.

7.5                                 PATENT TERMRESTORATION

The Parties hereto shallcooperate with each other in obtaining patent term restoration or supplementalprotection certificates or their equivalents in any country in the Territorywhere applicable to Patent Rights. In the event that elections with respect toobtaining such patent term restoration are to be made, MERCK shall have theright to make the election and deCODE agrees to abide by such election.

8.                                       TERM ANDTERMINATION

8.1                                 TERM ANDEXPIRATION.

This Agreement shall beeffective as of the Effective Date and unless terminated earlier pursuant toSections 8.2 or 8.3 below, this Agreement shall continue in effect untilexpiration of all payment obligations hereunder. Upon expiration of thisAgreement due to the expiration of all payment obligations, MERCK’s licensespursuant to Section 3.1 and 3.2 shall become fully paid-up, perpetual licenses.

8.2                                 TERMINATIONBY A PARTY.

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Notwithstanding anythingcontained herein to the contrary, after the Research Program has ended or beenterminated and if no IRCT Compounds are being sold as Products and no IRCTCompounds are in development, MERCK shall have the right to terminate thisAgreement at any time in its sole discretion by giving ninety (90) days’advance written notice to deCODE. Not later than thirty (30) days after thedate of such termination, each Party shall return or cause to be returned tothe other Party all Information in tangible form received from the other partyand all copies thereof, except that each party may retain one copy in itsconfidential files for records purposes. In the event of termination under thisSection 8.2: (i) each Party shall pay all amounts then due and owing as of thetermination date; and (ii) except for the surviving provisions set forth inSection 8.4 hereof, the rights and obligations of the parties hereunder shallterminate as of the date of such termination; PROVIDED, HOWEVER, that MERCKretain all licenses granted under Section 3.1 in the scope that existed immediatelyprior to termination.

8.3                                 TERMINATIONFOR CAUSE

8.3.1                        CAUSE FORTERMINATION.

This Agreement may beterminated at any time during the term of this Agreement upon written notice byeither Party if the other Party is in breach of its material obligationshereunder by causes and reasons within its control and has not cured suchbreach within ninety (90) days after notice requesting cure of the breach;PROVIDED, HOWEVER, in the event of a good faith dispute with

respect to the existenceof a material breach, the ninety (90) day cure period shall be tolled untilsuch time as the dispute is resolved pursuant to Section 10.6 hereof.

8.3.2                        EFFECT OFTERMINATION FOR CAUSE ON LICENSE.

(a)                                  If MERCKterminates this Agreement under Section 8.3.1, MERCK’s licenses pursuant toSections 3.1 and 3.2 shall be subject only to MERCK’s continuing obligations ofcompensation, reporting and confidentiality to deCODE under Sections 2.7.2(a),4, 5.3 and 5.4 and otherwise may not be terminated nor circumscribed for anyother reason. In addition, deCODE shall at MERCK’s request promptly return orcause to be returned to MERCK all Products and Tests, IRCT Compounds, Related IRCTCompounds, Information in tangible form, and all substances or compositionsdelivered or provided by MERCK, as well as any other material provided by MERCKin any medium. If deCODE terminates this Agreement under Section 8.3.1, (1) ifMERCK has not paid any Exclusive License Fees prior to termination then MERCK’slicenses under Section 3.1(b) and (d) become non-exclusive; (2) if MERCK paysan Exclusive License Fee at any time prior to the date of termination, then itslicense rights under Section 3.1 (b) and (d) to the corresponding ElectedDisease become exclusive licenses; (3) MERCK’s licenses under Section 3.1(a)survive any termination of the Agreement by deCODE and to the extent that anyIRCT Compounds, Related IRCT Compounds, Tests or Products exist, subject toMERCK’s continuing obligations of compensation, reporting and confidentialityto deCODE under Sections

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2.7.2, 4, 5.3 and 5.4.

(b)                                 If thisAgreement is rejected by or on behalf of deCODE under Section 365 of the UnitedStates Bankruptcy Code (the “Code”), all licenses and rights to licensesgranted under or pursuant to this Agreement by deCODE to MERCK are, and shallotherwise be deemed to be, for purposes of Section 365(n) of the Code, licensesof rights to “intellectual property” as defined under Section 101(35A) of theCode. The Parties agree that MERCK, as a licensee of such rights under this Agreement,shall retain and may fully exercise all of its rights and elections under theCode, and that upon commencement of a bankruptcy proceeding by or againstdeCODE under the Code, MERCK shall be entitled to a complete duplicate of orcomplete access to (as MERCK deems appropriate), any such intellectual propertyand all embodiments of such intellectual property. Such intellectual propertyand all embodiments thereof shall be promptly delivered to MERCK (i) upon any suchcommencement of a bankruptcy proceeding upon written request therefore byMERCK, unless deCODE elects to continue to perform all of its obligations underthis Agreement or (ii) if not delivered under (i) above, upon the rejection ofthis Agreement by or on behalf of deCODE upon written request therefore byMERCK. If the Agreement is rejected by or on behalf of deCODE under anyprovisions of bankruptcy or insolvency law of any other country, it is theParties intent that the licenses of rights of intellectual property shall notbe subject to termination and that MERCK shall be entitled to a completeduplicate of or complete access to (as MERCK deems appropriate), any such intellectualproperty and all embodiments of such intellectual property or to the maximumprotections afforded to licensees under the applicable law.

The foregoing provisionsof Subsection 8.3.2(a) are without prejudice to any rights MERCK may havearising under the Code or other applicable law.

8.4                                 EFFECT OFEXPIRATION OR TERMINATION; SURVIVAL

Expiration ortermination of the Agreement shall not relieve the Parties of any obligationaccruing prior to such expiration or termination. Any expiration or terminationof this Agreement shall be

without prejudice to therights of either Party against the other accrued or accruing under thisAgreement prior to expiration or termination, including without limitation theobligation to pay royalties for Product(s), Tests, Related IRCT Compounds orIRCT Compound sold prior to such expiration termination. In the event this Agreementexpires or is terminated during the pendency of an IRCT, the Parties shallarrange for orderly completion or early termination of such IRCT, includingmaking provision for payment for all non-cancelable expenses associatedtherewith. The provisions of Article 4 shall survive the expiration or terminationof the Agreement and shall continue in effect for ten (10) years. In addition,the provisions of Articles 1, 4, 5, 6 and 7, and Sections 2.7, 8.4 and 10.6 shallsurvive any expiration or termination of this Agreement.

9.                                       INDEMNIFICATION;INSURANCE; LIABILITY

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9.1                                 INDEMNIFICATION

9.1.1                        INDEMNIFICATIONBY MERCK.

MERCK shall indemnifyand hold harmless deCODE, its Affiliates, any present or future parent orsubsidiary of them, and their respective officers, directors, employees, agentsand Affiliates (collectively in this Section 9.1 referred to as “deCODE”) fromand against any and all losses, liabilities, damages including, but not limitedto, reasonable counsel fees, actually incurred by deCODE in defending againstany litigation or any claim whatsoever by a Third Party and any and all amountsreasonably paid in settlement of any claim or litigation, any settlementpayments (which shall first be subject to MERCK’s prior written consent, not tobe unreasonably withheld) (collectively in this section referred to as “deCODELosses”), PROVIDED such deCODE Losses arise solely out of (i) the promotion,marketing, distribution and sale, whether directly or through distributors, ofthe Products or Tests, or (ii) the negligence, recklessness or wrongfulintentional acts or omissions of MERCK, its Affiliates or its sublicensees, ifany, or their respective directors, officers, employees or agents, in connectionwith the performance by MERCK under this Agreement; and PROVIDED further, thatthis obligation by MERCK shall not apply in the event that such deCODE Lossesare attributable in any manner to any intentional act or negligence, willful orotherwise, of deCODE.

9.1.2                        INDEMNIFICATIONBY deCODE.

deCODE shall indemnifyand hold harmless MERCK, its Affiliates, any present or future parent orsubsidiary of them, and their respective officers, directors, employees, agentsand Affiliates (collectively in this Section 9.1.2 referred to as “MERCK”) fromand against any and all losses, liabilities, damages including, but not limitedto, reasonable counsel fees, actually incurred by MERCK in defending againstany litigation or any claim whatsoever by a Third Party and any and all amountsreasonably paid in settlement of any claim or litigation, any settlementpayments (which shall first be subject to deCODE’ prior written consent, not tobe unreasonably withheld) (collectively in this section referred to as “MERCKLosses”), PROVIDED such MERCK Losses arise solely out of (i) the promotion,marketing, distribution and sale, whether directly or through distributors, ofthe Products or Tests by deCODE or (ii) the negligence, recklessness orwrongful intentional acts or omissions of deCODE, its Affiliates or its sublicensees,if any, or their respective directors, officers, employees or agents, inconnection with the performance by deCODE under this Agreement; and PROVIDEDfurther, that this obligation by deCODE shall not apply in the event that suchMERCK Losses are attributable in any manner to any intentional act ornegligence, willful or otherwise, of MERCK.

9.1.3                        NOTICE OFCLAIM OF INDEMNIFICATION - THIRD PARTY CLAIMS

(a)                                  A Party (the“Indemnified Party”) seeking indemnification under this Agreement for a claimmade against it by a Third Party (“Third Party Claim”) shall notify the otherParty (the “Indemnifying Party”) in writing of the Third Party Claim withinthirty (30) days after receipt by the Indemnified Party of written notice ofthe Third Party

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Claim; however, failureto give such notification shall not affect the indemnification provided underthis Agreement, except to the extent the Indemnifying Party shall actually in amaterial manner have been prejudiced by the failure. Thereafter, theIndemnified Party shall deliver to the Indemnifying Party, promptly after theIndemnified Party’s receipt thereof, copies of all notices and documents(including court papers) received by the Indemnified Party relating to theThird Party Claim.

(b)                                 TheIndemnifying Party shall have the right, within thirty (30) days after being sonotified, to assume the defense of such Third Party Claim with counselreasonably satisfactory to the Indemnified Party. In any such proceeding thedefense of which the Indemnifying Party shall have so assumed, the IndemnifiedParty shall have the right to participate therein and retain its own counsel(without otherwise affecting the rights of the Parties under Section 9.1) atits own expense unless (i) the Indemnified Party and the Indemnifying Party shallhave mutually agreed to the retention of such counsel, (ii) the IndemnifiedParty shall have reasonably concluded that there may be one or more legaldefenses available to it which are different from or additional to thoseavailable to the Indemnifying Party, or (iii) the named parties to any suchproceeding (including the impleaded parties) include both the IndemnifyingParty and the Indemnified Party, and representation of both Parties by the samecounsel would be inappropriate in the opinion of the Indemnified Party’scounsel due to actual or potential differing interests between them; in anysuch case, one firm of attorneys separate from the Indemnifying Party’s counselmay be retained to represent the Indemnified Parties at the Indemnifying Party’sexpense. Any settlement of such a Third Party Claim, the defense of which hasbeen assumed by the Indemnifying Party, shall not be entered into by theIndemnifying Party without prior written consent of the Indemnified Party,which consent shall not be unreasonably withheld.

(c)                                  With respectto all Third Party Claims, the Indemnified Party shall cooperate in allreasonable respects with the Indemnifying Party in connection with any ThirdParty Claims and the defense or compromise thereof. Such cooperation shallinclude the retention and (upon the Indemnifying Party’s request) the provisionto the Indemnifying Party of records and information reasonably relevant to theThird Party Claim, making employees available on a mutually convenient basis toprovide additional information, and explanation of any material provided underthis Agreement. If the Indemnifying Party shall have assumed the defense of aThird Party Claim, the Indemnified Party shall not, without first waiving theindemnity as to such claim, admit any liability with respect to, or settle,compromise, or discharge, the Third Party Claim, without the Indemnifying Party’sprior written consent; PROVIDED that admissions of facts which a Party mayreasonably be required to make shall not be deemed to be admissions ofliability.

9.1.4                        COOPERATION.

The Parties shallcooperate with each other with respect to resolving any claim or liability withrespect to which one Party is obligated to indemnify the other Party under thisAgreement, including, without limitation, by taking reasonable efforts tomitigate or resolve any such claim or liability.

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9.2                                 INSURANCE.

Each Party shallmaintain adequate insurance against liability and other risks associated withits activities contemplated by this Agreement, including but not limited to itsindemnification obligations herein, in such amounts and on such terms as arecustomary in the industry for the activities to be conducted by it under thisAgreement. Each Party shall furnish to the other Party evidence of suchinsurance, upon request.

10.                                 MISCELLANEOUS

10.1                           FORCE MAJEURE

Neither Party shall beheld liable to the other Party nor be deemed to have defaulted under orbreached the Agreement for failure or delay in performing any obligation underthe Agreement when such failure or delay is caused by or results from causesbeyond the reasonable control of the affected Party including, but not limitedto, embargoes, war, acts of war (whether war be declared or not),insurrections, riots, civil commotions, strikes, lockouts or other labordisturbances, fire, floods, or other acts of God, or acts, omissions or delaysin acting by any governmental authority or the other Party. The affected Partyshall notify the other Party of such force majeure circumstances as soon as reasonablypractical, and shall promptly undertake all reasonable efforts necessary tocure such force majeure circumstances. The Party giving such notice shallthereupon be excused from such of its obligations under this Agreement as it isthereby disabled from performing for so long as it is so disabled and the thirty(30) days thereafter. To the extent possible, each Party shall use reasonable effortsto minimize the duration of any force majeure.

10.2                           ASSIGNMENT/CHANGE OF CONTROL

(a) Neither Party shallbe entitled to assign its rights or delegate its obligations hereunder withoutthe express written consent of the other Party hereto, except that (i) MERCKmay assign its rights and transfer its duties hereunder to an Affiliate or toany assignee of all or substantially all of its business (or that portionthereof to which this Agreement relates) or in the event of MERCK’s merger, consolidationor involvement in a similar transaction and (ii) deCODE may assign its rightsand transfer its duties hereunder to an Affiliate or to any assignee of all orsubstantially all of its business (or that portion thereof to which thisAgreement relates) or in the event of deCODE’s merger, consolidation orinvolvement in a similar transaction, PROVIDED HOWEVER, during the ResearchProgram Term deCODE may not assign its rights and obligations under theAgreement without MERCK’s written consent which shall not be unreasonablywithheld. It shall be reasonable for MERCK to withhold consent of an assignmentto a Competitor. No assignment and transfer shall be valid or effective unlessdone in accordance with this Section 9.2 and unless and until theassignee/transferee shall agree in writing to be bound by the provisions ofthis Agreement.

(b) In the event thatdeCODE enters into an agreement resulting in a

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Change of Controlpursuant to which a Competitor obtains Control of deCODE, then (1) MERCK shallhave the right to terminate the Agreement under Section 8.3.1 and; (2) deCODEshall adopt procedures to be agreed upon in writing by MERCK to prevent thedisclosure of deCODE Know-How, deCODE Information and Inventions, MERCKInformation and Inventions, Joint Information and Inventions and MERCK Know-How(collectively, “Sensitive Information”) beyond the deCODE personnel havingaccess to and knowledge of Sensitive Information prior to the Change of

Control and deCODE shalladopt procedures approved in writing by MERCK to control the dissemination ofSensitive Information disclosed after the Change of Control. The purposes ofall such procedures shall be to strictly limit such disclosures to only thosepersonnel having a need to know Sensitive Information in order for deCODE toperform its obligations.

10.3                           SEVERABILITY

If any one or more ofthe provisions contained in this Agreement is held invalid, illegal orunenforceable in any respect, the validity, legality and enforceability of theremaining provisions contained herein shall not in any way be affected orimpaired thereby, unless the absence of the invalidated provision(s) adverselyaffects the substantive rights of the Parties. The Parties shall in such an instanceuse their best efforts to replace the invalid, illegal or unenforceableprovision(s) with valid, legal and enforceable provision(s) which, insofar aspractical, implement the purposes of this Agreement.

10.4                           NOTICES

All notices which arerequired or permitted hereunder shall be in writing and sufficient if deliveredpersonally, sent by facsimile (and promptly confirmed by personal delivery,registered or certified mail or overnight courier), sent bynationally-recognized overnight courier or sent by registered or certifiedmail, postage prepaid, return receipt requested, addressed as follows:
|        | if to deCODE,  to: | deCODE genetics,  Ehf.             |
|--------|--------------------|------------------------------------|
|   |               | Sturlugata 8,  IS-101              |
|   |               | Reykjavik,  Iceland                |
|   |               | Attention:  President              |
|   |               | Facsimile No.:  +354 570 1901      |
|   |               |                               |
|   | and:               | Attention: Legal  Department       |
|   |               | Facsimile No.:  +354 570 1981      |
|   |               |                               |
|   |               |                               |
|   | if to MERCK, to:   | Merck & Co.,  Inc.             |
|   |               | One Merck Drive                    |
|   |               | P.O. Box 100,  WS3A-65             |
|   |               | Whitehouse  Station, NJ 08889-0100 |
|   |               | Attention:  Office of Secretary    |
|   |               | Facsimile No.:  (908) 735-1246     |

 

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|        | And    | Merck & Co.,  Inc.              |
|--------|--------|-------------------------------------|
|   |   | One Merck Drive                     |
|   |   | Attention: Chief  Licensing Officer |
|   |   | P.O. Box 100,  WS2A-30              |
|   |   | Whitehouse  Station, NJ 08889-0100  |
|   |   | Facsimile: (908)  735-1214          |

 

or to such other addressas the Party to whom notice is to be given may have furnished to the otherParty in writing in accordance herewith. Any such notice shall be deemed tohave been given: (a) when delivered if personally delivered or sent byfacsimile on a business day; (b) on the business day after dispatch if sent bynationally-recognized overnight courier; and/or (c) on the fifth business dayfollowing the date of mailing if sent by mail.

10.5                           APPLICABLELAW

The Agreement shall begoverned by and construed in accordance with the laws of the State of NewJersey and the patent laws of the United States without reference to any rulesof conflict of laws or renvoi. The United Nations Convention on the Sale ofGoods shall not apply.

10.6                           DISPUTERESOLUTION

(a) The Parties shallnegotiate in good faith and use reasonable efforts to settle any dispute,controversy or claim arising from or related to this Agreement or the breachthereof. If the Parties do not fully settle, and a Party wishes to pursue thematter, each such dispute, controversy

or claim that is not an “ExcludedClaim” shall be finally resolved by binding arbitration in accordance with theCommercial Arbitration Rules and Supplementary Procedures for Large ComplexDisputes of the American Arbitration Association (“AAA”), and judgment on thearbitration award may be entered in any court having jurisdiction thereof.

(b) The arbitrationshall be conducted by a panel of three persons experienced in thepharmaceutical business: within 30 days after initiation of arbitration, eachParty shall select one person to act as arbitrator and the two Party-selectedarbitrators shall select a third arbitrator within 30 days of theirappointment. If the arbitrators selected by the Parties are unable or fail toagree upon the third arbitrator, the third arbitrator shall be appointed by theAAA. The place of arbitration shall be New York, New York, and all proceedings andcommunications shall be in English.

(c) Either Party mayapply to the arbitrators for interim injunctive relief until the arbitrationaward is rendered or the controversy is otherwise resolved. Either Party alsomay, without waiving any remedy under this Agreement, seek from any courthaving jurisdiction any injunctive or provisional relief necessary to protect therights or property of that Party pending the arbitration award. The arbitratorsshall have no authority to award punitive or any other type of damages notmeasured by a Party’s compensatory damages. Each Party shall bear its own costsand expenses and attorneys’ fees and an equal share of the arbitrators’ and anyadministrative fees of arbitration.

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(d) Except to the extentnecessary to confirm an award or as may be required by law, neither a Party noran arbitrator may disclose the existence, content, or results of an arbitrationwithout the prior written consent of both Parties. In no event shall anarbitration be initiated after the date when commencement of a legal orequitable proceeding based on the dispute, controversy or claim would be barredby the applicable New York statute of limitations.

(e) The parties agreethat, in the event of a dispute over the nature or quality of performance underthis Agreement, neither party may terminate the Agreement until finalresolution of the dispute through arbitration or other judicial determination.The parties further agree that any payments made pursuant to this Agreementpending resolution of the dispute shall be refunded if an arbitrator or courtdetermines that such payments are not due.

(f) As used in this Section,the term “Excluded Claim” shall mean a dispute, controversy or claim thatconcerns (i) the validity or infringement of a patent, trademark or copyright;or (ii) any antitrust, anti-monopoly or competition law or regulation, whetheror not statutory.

10.7                           ENTIREAGREEMENT; AMENDMENTS

The Agreement containsthe entire understanding of the Parties with respect to the Research Programand licenses granted hereunder. All express or implied agreements andunderstandings, either oral or written, with regard to the Research Program andthe licenses granted hereunder are superseded by the terms of this Agreement.The Agreement may be amended, or any term hereof modified, only by a written instrumentduly executed by authorized representatives of both Parties hereto.

10.8                           HEADINGS

The captions to theseveral Articles and Sections hereof are not a part of the Agreement, but aremerely for convenience to assist in locating and reading the several Articlesand Sections hereof.

10.9                           INDEPENDENTCONTRACTORS

It is expressly agreedthat deCODE and MERCK shall be independent contractors and that therelationship between the two Parties shall not constitute a partnership, jointventure or agency. Neither deCODE nor MERCK shall have the authority to makeany statements, representations or commitments of any kind, or to take anyaction, which shall be binding on the other Party, without the prior writtenconsent of the other Party.

10.10                     WAIVER

A waiver (whetherexpress or implied) by one of the Parties of any of the provisions of thisAgreement or of any breach of or default by the other Party in performing anyof those provisions shall not constitute a continuing waiver and that waivershall not prevent the waiving Party

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from subsequentlyenforcing any of the provisions of this Agreement not waived or from acting onany subsequent breach of or default by the other Party under any of theprovisions of this Agreement.

10.11                     CUMULATIVEREMEDIES

No remedy referred to inthis Agreement is intended to be exclusive, but each shall be cumulative and inaddition to any other remedy referred to in this Agreement or otherwiseavailable under law.

10.12                     WAIVER OFRULE OF CONSTRUCTION

Each Party has had theopportunity to consult with counsel in connection with the review, drafting andnegotiation of this Agreement. Accordingly, the rule of construction that anyambiguity in this Agreement shall be construed against the drafting Party shallnot apply.

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10.13                     COUNTERPARTS

The Agreement may beexecuted in two or more counterparts, each of which shall be deemed anoriginal, but all of which together shall constitute one and the sameinstrument.

IN WITNESS WHEREOF, theParties have executed this Agreement as of the date first set forth above.
| MERCK & CO., INC.                 | DECODE GENETICS,  EHF.    |
|---------------------------------------|---------------------------|
|                                  |                      |
|                                  |                      |
| BY:                                   | /s/ Raymond V.  Gilmartin |   | BY: | /s/ Kari  Stefansson |   |
|                                  | Raymond V.  Gilmartin     |   | Kari Stefansson |
|                                  |                      |
| TITLE: Chairman,  President and Chief | TITLE:                    |
| Executive  Officer                    |                      |
|                                  |                      |
| DATE:                                 |                      | DATE: |   |
|                                       |                           |  |  |  |  |  |  |

 

SCHEDULES

SCHEDULE1.21 DECODE PATENTS

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[CONFIDENTIALTREATMENT REQUESTED]

SCHEDULE2.1-0 INITIAL WORK PLAN

[CONFIDENTIALTREATMENT REQUESTED]

Schedule2.3[CONFIDENTIAL TREATMENT REQUESTED]

APPENDIX1.3.1.b: [CONFIDENTIAL TREATMENT REQUESTED]

APPENDIX3.5 [CONFIDENTIAL TREATMENT REQUESTED]

SCHEDULE2.6 BUDGET

SCHEDULE5.1 Research Program Funding[CONFIDENTIAL TREATMENT REQUESTED]

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