**Exhibit10.6**

**EXECUTION COPY**

**LETTER OF CREDIT REIMBURSEMENT, GUARANTEE, SECURITY AND PLEDGE AGREEMENT** (this “***Agreement***”)**dated as of June 6, 2007, among **CUSTODIAL TRUSTCOMPANY** (“***Bank****”),*a bankand trust company organized and existing under the laws of the State of New Jersey, **DECODECHEMISTRY, INC.,** a corporation organized and existing underthe laws of the State of Illinois (“***Applicant***”),**and **DECODE GENETICS, INC.**, acorporation organized and existing under the laws of the State of Delaware (“***Guarantor***”)*.*

**WHEREAS,** in an application dated as of the date of this Agreement, whichapplication is attached hereto asExhibit A and made a part hereof (as the same may be amended, restated, supplemented,replaced or otherwise modified from time to time with Guarantor’s andBeneficiary’s consent, the “***Application***”),**Applicant has requested that Bank issue an irrevocablestandby letter of credit as specified in theApplication (as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time withGuarantor’s and Beneficiary’s consent, the “***Letter of******Credit*****”**);**and

**WHEREAS,** Guarantor, in consideration of the Letter of Credit, is willing toguarantee Applicant’s obligationshereunder in respect of the Letter of Credit issued hereunder and to pledge certainof its assets as collateral for such guarantee.

**WHEREAS,** Bank is willing to issue the Letter of Credit on the terms, and subjectto the conditions, set forth herein; and

**NOW, THEREFORE,** the parties hereto hereby agree as follows:

**1.****                        DEFINITIONS.** (a) The following terms,unless the context otherwise requires, shall have the following meaningsas used herein:

“***Account***”**means the securities account of Bank (as pledgeeof Guarantor) maintained at Bear,Stearns Securities Corp. pursuant to the Securities Account Control Agreement,identified as account number **945-02638**,entitled “Custodial Trust Company as Secured Party FBO deCODE Genetics, Inc.”.

“***Advance*”****or “***Advances***”**means one or more payments by Bankto Beneficiary under the Letter of Credit pursuant to the terms thereof.

“***Agreement***”**has the meaning assigned to such term in thepreamble.

“***Applicant***”**has the meaning assignedto such term in the preamble.

“***Applicant Collateral***”**hasthe meaning assigned to such term in Section 7(b).

“***Application***”**has the meaning assigned to suchterm in the recitals.

  

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“***Bank***”******has the meaning assigned to such term in thepreamble.

“***Beneficiary***”******means the beneficiary of the Letter of Creditnamed therein.

“***Business Day***”******means any day on which banks inthe States of New Jersey and New York are open for business, excludingweekends.

“***Collateral***”******means, collectively, Guarantor Collateral and ApplicantCollateral.

“***Collateral Value***”******has the meaning assigned to such term in Section7(f).

“***Credit Parties***”******means Applicant and Guarantor.

“***Documents***”******means any certificate, documentor statement (other than a Draft) which is stipulatedin the Letter of Credit and accompanies or relates to the Letter of Creditand/or Drafts.

“***Draft***”******means a demand, in the form of the draft attachedto the Letter of Credit, which is made by Beneficiary for payment underthe Letter of Credit.

“***Event of Default***”******has the meaningassigned to such term in Section 15.

“***GAAP***”******means United States generally accepted accountingprinciples applied on a consistentbasis.

“***Guarantee***”******of or by any Person means anyobligation, contingent or otherwise, of such Personguaranteeing or having the economic effect of guaranteeing any Indebtedness ofany other Person (the “***Primary Obligor***”)******in anymanner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i)to purchase (or advance or supply funds for the purchase or payment of)such Indebtedness or to purchase (or to advance or supply funds for thepurchase of) any security for the payment of such Indebtedness, (ii) topurchase property, securities or servicesfor the purpose of assuring the owner of such Indebtedness of the payment ofsuch Indebtedness or (iii) to maintainworking capital, equity capital or other financial statement condition or liquidity of the Primary Obligor soas to enable the Primary Obligor to pay such Indebtedness; provided, however,that the term Guarantee shall not include endorsements for collection ordeposit, in either case in the ordinary course of business.

“***Guarantor***”******has the meaning assigned to such term in thepreamble.

“***Guarantor Collateral***”******has the meaning assigned to such term in Section 7(a).

“***Indebtedness***”******of any Person means, withoutduplication, (i) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind,(ii) all obligations of such Person evidenced by bonds, debentures,notes or similar instruments, (iii) all obligations of such Person upon which interest charges are customarilypaid, (iv) all obligations of such Person issued or assumed as the deferred purchase price of propertyor services which under generally accepted

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accountingprinciples would be shown on a balance sheet of such Person as a liability, (v)all Indebtedness of others secured by (or for which the holder of suchIndebtedness has an existing right,contingent or otherwise, to be secured by) any Lien on property owned oracquired by such Person, whether or not the obligations secured thereby havebeen assumed, (vi) all Guarantees by suchPerson of Indebtedness of others, (vii) all obligations of such Person inrespect of interest rate protection agreements, foreign currencyexchange agreements or other interest or exchange rate hedging arrangements orsimilar agreements, and (viii) all obligations of such Person as an account party in respect of letters of credit and bankers’acceptances. The Indebtedness of any Person shall include theIndebtedness of any partnership in which such Person is a general partner.

“***Letter of******Credit***”******has the meaning assigned to such term in the recitals.

“***Lien***”******means, with respect to any asset, (i) anymortgage, deed of trust, lien, pledge, encumbrance, charge or security interestin or on such asset or any assignment, hypothecation, deposit arrangement or other preferentialarrangement of or with respect to such asset, and (ii) any purchaseoption, call or similar right of a third party with respect to such asset.

“***Market Value***”******means the value assigned to any Collateral inaccordance with Section 7(g).

“***Person***”******means any individual, sole proprietorship,partnership, joint venture, trust, unincorporated organization,association, limited liability company, corporation, government or any agency,court or political division thereof, or any other entity.

“***Prime Rate***”******means the prime rate as quoted in the *Wall Street Journal (Eastern Edition)*for the Business Day preceding the date on which suchdetermination is made. If more than one rate is so quoted, the primerate shall be the average of the rates so quoted.

“***Reimbursement Guarantee***”******means the Guarantee given by Guarantor pursuant toSection 6 below.

“***Securities Account Control Agreement***”******means that certain securities account control agreement dated as of the date of this Agreement,between Bank, Applicant and Bear, Stearns Securities Corp., acorporation organized and existing under the laws of the State of Delaware, a registered securities broker-dealer and anaffiliate of Bank, as the same may be amended, restated, supplemented orotherwise modified by its terms from time to time.

“***UCP 500***”******has the meaning assigned to such term in Section20.

(b)                       Theterms defined in Section 1(a) above shall apply equally to both the singularand plural forms of the terms defined. Whenever the context may require, anypronoun shall include the correspondingmasculine, feminine and neuter forms. The words “include”, “includes” and “including”shall be deemed to be followed by the phrase “without limitation”. The word “will”shall be construed to have the same meaning and effect as the word “shall”.All references herein to

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Articles, Sections,Exhibits and Schedules shall be deemed references to Articles and Sections of,and Exhibits and Schedules to, this Agreement unless the context shallotherwise require.

**2.****                        REIMBURSEMENT;WAIVERS.**(a) The principal amount of any Advance shall be repayable byApplicant at any time, whether or not an Event of Default has occurred and isthen continuing, either (i) in full (together with all accrued interest on suchAdvance) upon demand by Bank to Applicant for such repayment in full, or (ii)in part (together with all accrued interest on such part) upon demand by Bankto Applicant for repayment of such part.

(b)                   AnyAdvance shall also become repayable by Applicant in its entirety as provided inSection 16 below upon the occurrence of an Event of Default.

(c)                    Applicantmay repay any Advance in its entirety or in part at any time, without premiumor notice of any kind but together with all accrued interest thereon.

(d)                   EachCredit Party hereby waives presentment and protest of any instrument and noticethereof, notice of default and, to the extent permitted by applicable law, allother notices to which such Credit Party might otherwise be entitled.

**3.****                        INTERESTAND OTHER CHARGES.**(a) Applicant shall pay Bank interest, in arrears,on the outstanding amount of each Advance from the date on which such Advanceis made under the Letter of Credit until such Advance is due under thisAgreement, at a fluctuating rate per annum equal at all times to the Prime Ratein effect from time to time, with each change in such fluctuating interest rateto take effect simultaneously with the corresponding change in the Prime Rate.

(b)                   Applicantshall pay Bank interest on any amount not paid by Applicant when due under thisAgreement, from the date payment of such amount was due until the date suchamount is paid, at a fluctuating rate per annum equal at all times to the PrimeRate in effect from time to time plus two percent (200 basis points), with eachchange in such fluctuating interest rate to take effect simultaneously with thecorresponding change in the Prime Rate.

(c)                    Allinterest payable under this Agreement shall be calculated by Bank, on the basisof a 360-day year and for the actual number of days elapsed. Interest accruedon an Advance pursuant to Section 3(a) above shall be payable monthly on the10th day of each month (or, if the 10th day is not a Business Day, on the nextsucceeding Business Day), upon repayment of such Advance in full, and as otherwiseprovided in this Agreement. Interest accrued on an Advance pursuant to Section3(b) above shall be payable on demand made by Bank from time to time.

(d)                   Eachdetermination of an interest rate by Bank pursuant to this Agreement shall beconclusive and binding on Applicant in the absence of manifest error.

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(e)                    Inno event whatsoever shall the interest rate and other charges charged hereunderexceed the highest rate permissible under any law which a court of competentjurisdiction, in a final determination, deems applicable hereto. In the eventthat a court of competent jurisdiction determines, in a final determination,that Bank has received interest and other charges hereunder in excess of suchhighest rate, Bank shall promptly refund such excess amount to Applicant, andthe provisions hereof shall be deemed amended to provide for such permissiblerate.

**4.****                        ORIGINATIONFEE; COMMITMENT FEES.**Applicant shall cause a non-refundable $5,000origination fee to be paid to Bank no later than the date of the issuance ofthe Letter of Credit. Applicant shall pay to Bank non-refundable commitmentfees in respect of the Letter of Credit in the amounts and payable at the timesset forth in the Application.

**5.****                        PLACEAND MANNER OF PAYMENT.**Each Credit Party shall make all paymentsrequired to be made by it under this Agreement (whether consisting of fees,principal in respect of any Advance, interest thereon or any other amount)prior to 11:00 a.m. (New York City time) on the date such payment is due, atsuch address in the United States of America as Bank shall from time to timeindicate to Applicant, in U.S. dollars and in immediately available funds.

**6.****                        GUARANTEE.**(a) For value received, Guarantor hereby unconditionally guarantees to Bankthe due and punctual payment of the principal of and interest on each Advanceand of each other amount to be paid by Applicant under this Agreement, when andas any of the foregoing shall become due and payable, whether by declaration orotherwise, according to the terms of this Agreement. In case of the failure ofApplicant punctually to pay any such principal, interest or other amount,Guarantor hereby agrees to cause such payment to be made punctually when and asthe same shall become due and payable, whether by declaration or otherwise, asif such payment were made by Applicant. Any such payment of principal, interestor other amount shall be made by Guarantor at such place as Applicant isrequired to make it under this Agreement.

(b)                   Guarantorhereby agrees that its obligations hereunder shall be unconditional,irrespective of the validity, regularity or enforceability of, or any change inor amendment to, this Agreement, the absence of any action to enforce the same,the waiver or consent by Bank with respect to any provision hereof, therecovery of any judgment against Applicant or any action to enforce the same orany other circumstance which might otherwise constitute a legal or equitabledischarge or defense of a guarantor. Guarantor hereby waives diligence,presentment, demand of payment, any right to require a proceeding first againstApplicant, protest or notice with respect to any Advance or the indebtednessevidenced thereby and all demands whatsoever, and covenant that the guaranteegiven in this Agreement will not be discharged except by payment as hereinprovided and then only to the extent of such payment.

(c)                    Guarantorshall be subrogated to all rights of Bank against Applicant in respect of anyamounts paid by Guarantor pursuant to the provisions of this Agreement; provided,however, that Guarantor shall not be entitled to enforce, or to receiveany payments arising out of or based upon

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such right of subrogationuntil the principal of and interest on all Advances, and all other amountspayable by Applicant under this Agreement, have been paid in full.

**7.****                        GRANTOF SECURITY INTEREST AND LIEN; ACCOUNTS.**(a) As security for thepayment in full of all Advances, all interest accrued thereon and all otheramounts from time to time payable by Applicant hereunder, the performance byApplicant of all its obligations and covenants hereunder, and the performanceby Guarantor of its obligations and covenants hereunder and under theReimbursement Guarantee, Guarantor hereby grants to Bank a valid andfirst-priority, perfected and continuing security interest in and assigns toBank (i) all cash and/or securities at any time in the Account, (ii) all otherproperty of Guarantor now or at any time hereafter in Bank’s possession(including, but not limited to, all securities, monies, claims and creditbalances), (iii) all property of Guarantor now or at any time hereafter held byor through any of Bank’s affiliates (including securities credited to Guarantor’saccounts with securities broker-dealer affiliates of Bank), and (iv) allproceeds, products and profits derived from any of the foregoing (including allcash, securities, dividends and other property at any time and from time totime received, receivable or otherwise distributed in respect of or in exchangefor any or all of the foregoing, proceeds of any insurance policies, proceedsof proceeds, and claims against third parties), and all books and recordsrelated to any of the foregoing (all of the foregoing cash and other propertyset forth in (i) through (iv), together with all other property in whichApplicant may hereafter grant a Lien to Bank, being collectively referred toherein as **“*GuarantorCollateral*”**)*.*

(b)                   Assecurity for the payment in full of all Advances, all interest accrued thereonand all other amounts from time to time payable by Applicant hereunder, and theperformance by Applicant of all its obligations and covenants hereunder,Applicant hereby grants to Bank a valid and first-priority, perfected andcontinuing security interest in and assigns to Bank (i) all property ofApplicant now or at any time hereafter in Bank’s possession (including, but notlimited to, all securities, monies, claims and credit balances), (ii) allproperty of Applicant now or at any time hereafter held by or through any ofBank’s affiliates (including securities credited to Applicant’s accounts withsecurities broker-dealer affiliates of Bank), and (iii) all proceeds, productsand profits derived from any of the foregoing (including all cash, securities,dividends and other property at any time and from time to time received,receivable or otherwise distributed in respect of or in exchange for any or allof the foregoing, proceeds of any insurance policies, proceeds of proceeds, andclaims against third parties), and all books and records related to any of theforegoing (all of the foregoing cash and other property set forth in (i)through (iv), together with all other property in which Applicant may hereaftergrant a Lien to Bank, being collectively referred to herein as **“*ApplicantCollateral*”**)*.*

(c)                    Bankand Guarantor hereby agree that each item of property (whether investmentproperty, financial asset, security, instrument or cash) credited to theAccount shall be treated as a “financial asset” under Article 8 of the New YorkUniform Commercial Code.

(d)                   Atall times until (i) the expiration of the Letter of Credit, (ii) the payment infull of all Advances, all accrued interest thereon and all other amountspayable by the Credit Parties under

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this Agreement, and (iii)the performance by the Credit Parties of all their obligations and covenantsunder this Agreement, Guarantor shall maintain, in the Account, Collateralconsisting of cash and/or readily marketable securities having an aggregateCollateral Value which, in the sole and absolute determination of Bank, issufficient as security for the payment and performance of any and allobligations of the Credit Parties under this Agreement.

(e)                    Withthe prior written approval of Bank, as to any substitute securities and/orother collateral and as to the manner of substitution, Guarantor may at anytime and from time to time substitute such securities and/or other collateralfor all or some of the Collateral; provided that no Event of Default hasoccurred and is continuing and that, immediately after giving effect to suchsubstitution, the aggregate Collateral Value of all remaining securities andcash in the Account is, in the sole and absolute determination of Bank,sufficient as security for the payment and performance of any and allobligations of the Credit Parties under this Agreement.

(f)                      The“***Collateral Value***”******of any item ofCollateral shall be an amount representing a percentage of the Market Value ofsuch item and shall be determined either in accordance with Schedule A hereto(which may be supplemented or revised at any time in the sole and absolutediscretion of Bank) or from time to time by Bank in its sole and absolutediscretion if such Collateral Value is not set forth on such Schedule A.

(g)                   Ifand for so long as any securities (including securities included in theCollateral) are listed on a national securities exchange in the United Statesof America, their “***MarketValue***”******shallbe determined for all purposes under this Agreement by the last sales price forsuch securities on any such exchange on the Business Day immediately precedingthe date of determination or, if there was no sale on that Business Day, by thelast sales price for such securities on the immediately preceding Business Dayon which there was a sale thereof on any such exchange, all as quoted on the “consolidatedtape” of the New York Stock Exchange or, if not quoted on such “consolidatedtape”, then as quoted by any such exchange. The “***Market Value***”******of any other item ofCollateral, and of securities if they are not listed on any such exchange,shall be determined by Bank for all purposes (i) based upon the prices bid (onthe Business Day immediately preceding the date of determination) by banks andbroker/dealers which regularly quote prices on property of the same type as suchitem of Collateral, or (ii) if no such quotations are available for suchBusiness Day, based upon such factors as Bank, in its sole and reasonablejudgment, shall determine. The “***Market Value***”*,*****in the case of interest-bearingCollateral, shall include accrued interest to the date on which such MarketValue is determined. Each determination of Market Value by Bank shall beconclusive and binding on the Credit Parties in the absence of manifest error.

(h)                   Upon(i) the expiration of the Letter of Credit and (ii) the payment in full of allAdvances, all accrued interest thereon and all other amounts payable by theCredit Parties under this Agreement, the security interests and liens grantedpursuant to Section 7(a) above in and upon the Collateral shall terminate, andall of Bank’s rights hereunder to the Collateral shall revert to the applicableCredit Party. Upon notice from a Credit Party after such termination, Bankshall deliver to such Credit Party (or arrange to give it effective controlover) all Collateral under Bank’s control,

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and shall also deliver tosuch Credit Party all instruments and documents evidencing the Collateral andsuch other documents as such Credit Party shall reasonably request to evidencesuch termination.

**8.****                        PROTECTIONOF SECURITY INTEREST.**(a) The Credit Parties shall, at their soleexpense and from time to time, perform all steps reasonably requested by Bankat any time to perfect, maintain, protect and enforce Bank’s security interestin and lien upon the Collateral, including, without limitation, (i) executingand filing financing or continuation statements and amendments thereto, in formand substance satisfactory to Bank, and (ii) obtaining such consents andregistrations of transfer, providing such endorsements and executing anddelivering such other documents as may be required for any sale, transfer orother disposition thereof by Bank. From time to time, the Credit Parties shall,upon Bank’s written request, promptly execute and deliver confirmatory writteninstruments pledging the Collateral to Bank, but any failure by the CreditParties to do so shall not affect or limit Bank’s security interest in, lienupon or other rights in and to the Collateral. Until (i) the expiration of theLetter of Credit and (ii) the payment in full of all Advances, all accruedinterest thereon and all other amounts payable by the Credit Parties under thisAgreement, Bank’s security interest in the Collateral shall continue in fullforce and effect.

(b)                   EachCredit Party hereby irrevocably appoints Bank its true and lawfulattorney-in-fact in its name, place and stead, and at its sole expense, inconnection with the preservation and enforcement of Bank’s rights and remediesunder this Agreement (i) to receive, endorse and collect all checks and otherorders for the payment of money made payable to any Credit Party representingany dividend, interest or other distribution payable or distributable inrespect of any of the Collateral and to give full discharge for the same, (ii)to give all notices, obtain all consents, effectuate all registrations in Bank’sname or that of a proposed purchaser or other transferee and make all transfersof all or any part of the Collateral which are necessary or appropriate inconnection with any sale, transfer or other disposition thereof pursuant tothis Agreement, (iii) to execute and deliver for value all necessary orappropriate assignments and other instruments in connection with any such sale,transfer or other disposition, and (iv) to execute and deliver all otherdocuments, and do all other acts and things, which Bank deems appropriate insuch connection. Each Credit Party hereby ratifies and confirms all that Bank,as such Credit Party’s attorney-in-fact, may lawfully do hereunder and pursuanthereto, but, nevertheless, at Bank’s request or that of the purchaser or othertransferee in question, each Credit Party shall ratify and confirm any sale,transfer or other disposition of Collateral pursuant to this Agreement in suchmanner as Bank or such purchaser or other transferee may reasonably specify insuch request.

**9.****                        STRICTCOMPLIANCE.**Bank shall not (and shall not be required to) accept, or tomake any Advance against, any Draft and/or Documents which are not in strictcompliance with the Letter of Credit; provided, however, if Bankis compelled by any judgment, decree, order or award by a court or othergovernmental authority to make an Advance against any Draft and/or Documents ascomplying strictly with the Letter of Credit, the obligation of Applicant underSection 2 above (and the obligation of Guarantor in respect of theReimbursement Guarantee) shall nonetheless apply

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to such Advance, eventhough such Draft and/or Documents may not strictly comply with the Letter ofCredit and irrespective of whether such Advance is made before or after theexpiration of the Letter of Credit.

**10.****                 ACTS OFBENEFICIARY.**Beneficiary and other users of the Letter of Credit shallbe deemed to be agents of Applicant, and Applicant assumes all risks ofBeneficiary’s acts and omissions.

**11.****                 DOCUMENTEXAMINATION.** Applicant shall promptly examine the Letter of Credit andall Documents that Bank from time to time delivers to it. Applicant shallimmediately notify Bank in writing of (a) any failure of the Letter of Creditas issued to comply with the Application or of any Document to comply with theLetter of Credit, or (b) of any other irregularity. Failure to immediately givesuch notice shall constitute a waiver by Applicant of any claim against Bankfor any such failure or other irregularity.

**12.****                ****REPRESENTATIONS ANDWARRANTIES OF THE CREDIT PARTIES****.**TheCredit Parties, jointly and severally, represent and warrant to Bankthat:

(a)                              Applicant(i) is a corporation duly organized, validly existing and in good standingunder the laws of the State of Illinois, (ii) is qualified to transact businessand is in good standing in all jurisdictions in which qualification and goodstanding are necessary in order for it to conduct its business and own itsproperty, and (iii) has all requisite power and authority to conduct itsbusiness, to own its property, to execute and deliver this Agreement and toperform its obligations hereunder;

(b)                             Guarantor(i) is a corporation duly organized, validly existing and in good standingunder the laws of the State of Delaware, (ii) is qualified to transact businessand is in good standing in all jurisdictions in which qualification and goodstanding are necessary in order for it to conduct its business and own itsproperty, and (iii) has all requisite power and authority to conduct itsbusiness, to own its property, to execute and deliver this Agreement and toperform its obligations hereunder;

(c)                              thisAgreement has been duly and validly executed and delivered by each Credit Partyand constitutes a legal, valid and binding obligation of each Credit Party,enforceable against each Credit Party in accordance with its terms, subject, asto enforceability of remedies, to bankruptcy, insolvency and other lawsaffecting creditors’ rights generally;

(d)                             EachCredit Party has taken all necessary action to authorize the execution,delivery and performance of this Agreement, and such authorization,

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delivery and performancedo not and will not (i) violate any law, rule, regulation, order, judgment,injunction, decree, determination or award presently in effect and applicableto such Credit Party, (ii) require any consent or result in a material breachof or constitute a default under any agreement, lease or instrument to whichsuch Credit Party is a party or by which such Credit Party or any of its assetsmay be bound or affected, or (iii) result in or require the creation orimposition of any Lien (other than in favor of Bank pursuant to this Agreement)upon or with respect to any of the properties now owned or hereafter acquiredby such Credit Party;

(e)                              norecording, order, authorization, consent, license, registration, approval,exemption, filing, notice or other similar action by or with any governmentalbody, governmental official or other regulatory authority (except such as havebeen obtained and copies or confirmations of which have been delivered by theapplicable Credit Party to Bank) is or will be necessary (i) for the legality,validity, binding effect or enforceability of this Agreement, (ii) to permitthe performance by each Credit Party of its obligations under this Agreement inaccordance with the terms thereof, (iii) to enable Bank to enforce its rightsand remedies under this Agreement, including any sale, transfer or otherdisposition by Bank of all or any part of the Collateral or (iv) to create andperfect the Liens on the Collateral which is granted under this Agreement orany related agreement or guarantee;

(f)                                noCredit Party is in default with respect to any of its Indebtedness;

(g)                             exceptas disclosed by the Credit Parties to Bank in writing prior to the date of thisAgreement, there is no litigation or other proceeding pending or, to any CreditParty’s knowledge, threatened against or affecting any Credit Party which, ifdetermined adversely to such Credit Party, would have a material adverse effecton such Credit Party’s financial condition;

(h)                             allinformation with respect to each Credit Party heretofore delivered to Bank bysuch Credit Party is true and correct as of the date hereof, and all otherstatements and data submitted in writing in connection with the Application aretrue and correct as of the date of the Application. No Credit Party hasknowledge of any liabilities at said dates, contingent or otherwise, nototherwise notified to Bank on or prior to such dates, and no Credit Party hasentered into any commitments or contracts, or incurred any other liabilities,at such dates that have not otherwise been notified to Bank, which couldreasonably be expected to have a material adverse effect upon any Credit Party’sfinancial condition;

(i)                                 allCollateral is owned by the applicable Credit Party free and clear of all Lienswhatsoever (except for Liens in favor of Bank and, in the case of Collateralconsisting of property held by or through Bank’s affiliates, Liens in favor ofsuch affiliates);

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(j)                                 atno time shall the Collateral include any securities or other property in anamount such that (without taking any other relationships or assets of Bank intoaccount) Bank, either upon exercising its rights or remedies hereunder orotherwise, would become a holder of 10% or more of any class of any equitysecurity of any issuer or would become (or be presumed to be) an affiliate ofany issuer of securities (as such term “affiliate” is defined for purposes of theSecurities Act of 1933);

(k)                              noCredit Party is an affiliate (as such term “affiliate” is defined for purposesof the Securities Act of 1933) of the issuer of any security included in theCollateral;

(l)                                 nopart of the proceeds of any Advance will be used for the purpose of buying orcarrying Margin Stock (as defined in Regulation U promulgated by the Board ofGovernors of the Federal Reserve System of the United States of America) or forany purpose that entails a violation of, or that is inconsistent with, theprovisions of the Regulations of the Board of Governors of the Federal ReserveSystem, including Regulation T, U or X;

(m)                           noCredit Party is an “investment company” as defined in, or subject to regulationunder, the Investment Company Act of 1940; and

(n)                             ThisAgreement, upon execution and delivery thereof by the parties thereto, willcreate in favor of Bank, a legal, valid and enforceable security interest inthe Collateral and (i) upon execution and delivery of this Agreement and theSecurities Account Control Agreement by the parties thereto, the Lien createdhereunder in favor of Bank in respect of the Account shall constitute a fullyperfected first-priority Lien on, and security interest in, all right, titleand interest of Guarantor in the Account, prior and superior in right to anyother person (other than as contemplated in the Securities Account ControlAgreement), (ii) upon execution of this Agreement and the filing of a financingstatement in appropriate form with the Secretary of State of the State ofDelaware, the Lien created hereunder in favor of Bank in all other GuarantorCollateral will constitute a fully perfected first-priority Lien on, andsecurity interest in, all right, title and interest of Guarantor in all otherGuarantor Collateral, prior and superior in right to any other person, and(iii) upon execution of this Agreement and the filing of a financing statementin appropriate form with the Secretary of State of the State of Illinois, theLien created hereunder in favor of Bank in all Applicant Collateral willconstitute a fully perfected first-priority Lien on, and security interest in,all right, title and interest of Applicant in all Applicant Collateral, priorand superior in right to any other person.

**13.****                 REITERATION OFREPRESENTATIONS.**The representations set forth in Section 12 shall bedeemed to be repeated by each Credit Party when any Advance is made.

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**14.****      REPORTING.**(a) Assoon as available, and in any event within 45 days after the close of each ofthe first three fiscal quarters of Guarantor, commencing with the fiscalquarter ending June 30, 2007, Guarantor shall deliver to Bank its balance sheetat the end of such fiscal quarter and its income statement for the portion ofthe fiscal year ending on the last day of such fiscal quarter, all inreasonable detail, prepared in accordance with GAAP and certified by Guarantor’schief financial or accounting officer.

(b)      As soon asavailable, and in any event within 120 days after the close of each fiscalyear, commencing with the fiscal year ending December 31, 2007, Guarantor shalldeliver to Bank its balance sheet as of the close of such fiscal year and itsincome statement for such fiscal year, all in reasonable detail and stating incomparative form the figures as of the close of and for the previous fiscalyear, audited by certified public accountants reasonably satisfactory to Bankand accompanied by a report thereon, reasonably satisfactory to Bank, issued bysuch certified public accountants.

**15.****      COVENANTS OF THE CREDITPARTIES.**The Credit Parties, jointly and severally, covenant with Bankthat until (i) the expiration of the Letter of Credit, (ii) the payment in fullof all Advances, all accrued interest thereon and all other amounts payable bythe Credit Parties under this Agreement, and (iii) the performance by theCredit Parties of all their obligations and covenants under this Agreement,each Credit Party shall:

(a)    promptly notify Bank inwriting of any violation by such Credit Party of any law, statute, regulationor ordinance of any governmental entity, or of any agency thereof, applicableto such Credit Party which could reasonably be expected to have a materialadverse effect on the Collateral or the financial condition of such CreditParty;

(b)    promptly notify Bank inwriting of any default by such Credit Party with respect to any of such CreditParty’s Indebtedness;

(d)    promptly upon Bank’s requesttherefor, deliver to Bank such information and documents regarding such CreditParty as Bank may from time to time request from such Credit Party;

(e)    promptly execute suchStatements of Purpose (Federal Reserve Form U-1) under Regulation U of the Boardof Governors of the Federal Reserve System as Bank may request; and

(f)     not create, incur, assume orpermit to exist any Lien on the Account, other than (i) Liens in favor of Bank,and (ii) Liens in favor of Bank’s affiliates.

**16.****      EVENTS OF DEFAULT.**Itshall constitute an Event of Default hereunder (and upon the occurrence thereofthe then-outstanding principal amount of each Advance and all accrued

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interest thereon, if any,and the amount of the Letter of Credit not then drawn and remaining to be advanced against Drafts not yet issued, presentedor due, shall become immediately due and payable, without demand, presentment or notice of any kind,all of which are hereby expressly waived) if at any time:

(a)    Applicant fails to pay the principal amount of anyAdvance when and in the amount due; or

(b)    Applicant fails to make or pay when and in theamount due any interest payment,charge or other amount required to be made or paid by it under this Agreement;or

(c)    The Reimbursement Guarantee ceases at any time tobe in full force and effect; or

(d)    Guarantor fails to transfer to Bank, and/or giveto Bank effective control over, Collateral in accordance with thisAgreement upon demand therefor made by Bank in writing; or

(e)    any Credit Party fails to perform or observe anyother term, covenant or condition tobe performed or observed by such Credit Party under this Agreement, and such failure continues for a period in excessof three days after notice thereof to such Credit Party; or

(f)     any representation or warranty made by any CreditParty in Section 12 (or deemed repeated pursuant to Section 13) provesto have been incorrect in any materialrespect on any of the dates as of which made or deemed to have been repeated;or

(g)    any Credit Party defaults in the payment whendue, whether at stated maturity orotherwise, or within any applicable grace period, of any Indebtedness of such Credit Party (other than Indebtedness underthis Agreement) in a principal amount of more than $100,000 (whether nowor hereafter existing); or

(h)  anyCredit Party fails to perform any other term, covenant or agreement on its partto be performed under any agreement or instrument (other than this Agreement)evidencing or securing or relating to any Indebtedness (whether now or hereafterexisting) in a principal amount of more than $100,000, or any event occurs orcondition exists, if the effect of such failure, event or condition is tocause, or to permit the holder or holders of such Indebtedness (with or withoutthe giving of notice, lapse of time or both) to cause, such Indebtedness tobecome due prior to its stated maturity; or

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(i)     (i) any Credit Party as debtor commences a case orproceeding under any bankruptcy,insolvency, reorganization, liquidation, dissolution or similar law, or seeks the appointment of a receiver, trustee,custodian or similar official for itself or any substantial part of itsproperty, (ii) any such case or proceeding is commenced against any Credit Party, or another seeks such an appointment, which(A) is consented to or not timely contested by any Credit Party, (B)results in the entry of an order for relief, such an appointment, or the entryof an order having a similar effect, or (C)is not dismissed within 60 days, (iii) any Credit Party makes a generalassignment for the benefit of creditors, or (iv) any Credit Party admits inwriting its inability to pay its debts as they become due; or

(j)     one or more judgments or orders for the payment ofmoney in an aggregate amount inexcess of $100,000 are rendered against any Credit Party and (i) thesame remain undischarged for a period of 14 or more consecutive days duringwhich execution thereof is not effectively stayed upon appeal or otherwise, or(ii) any proceeding by a creditor to enforce the same is pending; or

(k)    any event or circumstanceoccurs which in the reasonable judgment of Bankmaterially impairs the creditworthiness of any Credit Party or its ability to performits payment or other obligations under this Agreement; or

(l)     the face amount of the Letter of Credit at any timeexceeds the aggregate Collateral Value; or

(m)   the Securities Account ControlAgreement ceases at any time and for any reason to be in full force and effect;or

(n)    Bear, Stearns Securities Corp., acting under theSecurities Account Control Agreement, fails to perform or observe any materialterm, covenant or condition to be performed or observed by itthereunder.

**17.****      BANK’S RIGHTS AND REMEDIES.**(a)So long as an Event of Default has occurred hereunder and is continuing, in additionto having the right to exercise any rights and remedies available to a secured creditor under applicable law, Bankshall have each of the following rights, which Bank may exercisesimultaneously or in such order as it may in its sole and absolute discretion determine (without being required togive any notice to any Credit Party except as may be required in clause(d) below):

(i)     the right to deliver a Notice of SoleControl/Delivery Instructions (as defined in, and contemplated by, theSecurities Account Control Agreement);

(ii)    the right to apply to the payment of any CreditParty’s obligations hereunder any cash credited to the Account; and

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(iii)   the right to sell, publicly or privately, at aplace of Bank’s choosing, any or all of any non-cash Collateral and toapply the proceeds of such sale to the paymentof any Credit Party’s obligations hereunder.

(b)      Bank shall have the right toapply the proceeds of any sale or redemption (and any other Collateralconsisting of cash) in such order as Bank in its sole and absolute discretionmay determine, to the payment of the principal of, and accrued interest on,Advances and of any other amounts payable by any Credit Party under thisAgreement.

(c)       If any securities in the Account or other items of non-cash Collateralare, in whole or in part, actually convertible into or exchangeable forsecurities or other property, then Bank shall havethe right, in its sole and absolute discretion, instead of selling suchsecurities or other items of non-cashCollateral as set forth in clause (a) above, to convert or exchange thempursuant to the terms applicablethereto, to apply any cash received by Bank in such conversion or exchange tothe payment of any Credit Party’s obligations hereunder, and to sell asprovided in clause (a) above any securities or other property itreceives in such conversion or exchange.

(d)      If any securities in theAccount or other items of non-cash Collateral are of a type customarily sold on recognized markets, then nonotification to Guarantor of any public or private sale thereof by Bank is required; provided,however, that, if notice is required by applicable law with respectto any such sale, unless a notice period is specified by such applicable lawwith respect to any such sale, one Business Day’s notice thereof shall bereasonable notification to Guarantor.

(e)       The assertion or enforcement by Bank of the security interest grantedunder this Agreement or any demandthat any Credit Party perform its obligations hereunder, or any action or proceedings brought to enforce this Agreement,shall not release any Credit Party or otherwise affect this Agreement, or the liability of the CreditParties for any of their obligations hereunder and shall not release orotherwise affect the security interest granted by the Credit Parties to Bank.

**18.****          NO WAIVER.**No failure by Bank toexercise any right, power or remedy under this Agreement, and no delay by Bank in exercising any such right, power orremedy, shall operate as a waiverthereof; nor shall any single or partial exercise of any such right, power orremedy preclude any other or further exercise thereof or the exercise byBank of any other right, power or remedy. Therights and remedies of Bank provided for in this Agreement are cumulative andnot exclusive of any rights and remedies otherwise available.

**19.****          AMENDMENTS; CONFLICTS.**(a)Except as provided in Section 3(e) above, no amendment, modification,termination or waiver of any provision of the Application, the Letter of Credit or of this Agreement, or consent by Bankto a departure therefrom by any Credit Party, shall be effective unless the same is in writing andsigned by each party to this Agreement; provided, however, that any agreement to modify the Letter of Credit shall also requirethe consent thereto in writing of the Beneficiary.

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(b)      In the eventof any conflict or inconsistency between this Agreement (or any portion hereof)and the Securities Account Control Agreement, this Agreement shall prevail.

**20.****      SUCCESSORS AND ASSIGNS;PARTICIPATIONS.** (a) This Agreement shall be binding upon and shallinure to the benefit of the parties hereto and their respectiverepresentatives, successors and assigns; provided, however, thatit may not be assigned by any Credit Party without the prior written consent ofBank, and any purported assignment in violation of this provision shall be nulland void.

(b)      Bank may fromtime to time, in its sole and absolute discretion and without any Credit Party’sfurther consent, make an assignment of all or any part of the Letter of Credit,the Reimbursement Guarantee or this Agreement and sell participations in all orany part thereof. Bank may disclose all information that it has or may acquireabout the Credit Parties to any prospective assignee of such assignment or toany prospective purchaser of such participation.

**21.****      STANDARD OF CARE.**Bankshall be without liability to the Credit Parties for any loss, damage, cost,expense (including attorneys’ fees and disbursements), liability or claim whichhas not been determined by a court of competent jurisdiction to have arisenfrom the willful misconduct or gross negligence of Bank; provided thatin no event shall Bank be liable for (a) any event or matter beyond Bank’sreasonable control, (b) the truthfulness or accuracy of any statement in anyDocument, or the validity, sufficiency or genuineness of Documents or Drafts,even if such Documents or Drafts should prove to be in any or all respectsinvalid, insufficient, fraudulent or forged, (c) the solvency of any Person issuingany Document, (d) any delay in arrival or failure to arrive of any Document,(e) any delay in giving or failure to give notice, (f) failure of any Draft orDocument to bear any reference or adequate reference to the Letter of Credit,failure of Documents to accompany any Draft at presentation to Bank, or failureof any Person to note the amount of any Draft on the Letter of Credit or tosurrender the Letter of Credit, (g) any failure to identify or locate anyPerson, (h) any consequence of any error in, or of any inadequacy of,instructions or information on the Application or otherwise relating to theLetter of Credit, (i) any matter as to which banks assume no liability orresponsibility pursuant to the Uniform Customs and Practices for Documentary Credits(1993 Revision) of the International Chamber of Commerce (Publication No.500) (“UCP500”), or (j) any special, indirect or consequential damages even if Bankwas advised of the possibility of such damages.

**22.****      INDEMNIFICATION.**Applicantshall indemnify Bank and hold it harmless from and against any loss, damage,cost, expense (including attorneys’ fees and disbursements), liability or claimarising directly or indirectly from or in connection with the Application, theLetter of Credit, this Agreement, the Securities Account Control Agreement,Bank’s issuance of the Letter of Credit or its performance of its obligationsthereunder; provided that Bank shall not be indemnified and heldharmless from and against any such loss, damage, cost, expense, liability orclaim determined by a court of competent jurisdiction or applicable arbitrationauthority as having arisen from Bank’s willful misconduct or gross negligence.

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**23.****      RULES GOVERNING LETTERSOF CREDIT.**The Letter of Credit is subject to and governed by the lawsof the State of New York, without regard to the conflict of law principlesthereof, and, to the extent not inconsistent with such laws, UCP 500.

**24.****      GOVERNING LAW.**(a)This Agreement shall be governed by and construed in accordance with the laws ofthe State of New York, without regard to the conflict of law principlesthereof.

(b)**     **Anysuit, action or proceeding with respect to this Agreement or any Advance may bebrought in the Supreme Court of the State of New York, County of New York, orin the United States District Court for the Southern District of New York, andthe parties hereto hereby submit to the non-exclusive jurisdiction of suchcourts for the purpose of any such suit, action or proceeding, and hereby waivefor such purpose any other preferential jurisdiction by reason of their presentor future domicile or otherwise. Each of the parties hereto hereby irrevocablywaives its right to trial by jury in any suit, action or proceeding withrespect to this Agreement, the Securities Account Control Agreement, the Letterof Credit, the Application, any Document or any Advance.

**25.****      NOTICES.**Unlessotherwise specified, any notice or demand hereunder shall be sent, delivered ortransmitted to the recipient at the address or relevant telephone number setforth after its name hereinbelow:

If to Bank, at:

**CUSTODIAL TRUST COMPANY**101 Carnegie CenterPrinceton, NJ 08540-6231Attention: Loan Compliance OfficerTelephone: (609) 951-2313Facsimile: (609) 951-2317

If to Applicant, at:

**DECODE CHEMISTRY, INC.**2501 Davey RoadWoodridge, IL 60517Attention: Chris TauerTelephone: (630) 783-4600Facsimile: (630) 783-4705

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If to Guarantor, at:

**DECODE GENETICS, INC.**1000 Winter Street, Suite 3100Waltham, MA 02154Attention: Lance ThibaultTelephone: (978) 902-6926Facsimile: (781) 466-8686

With a copy to:

**DECODE GENETICS, INC.**Sturlugata 8Reykjavik, Iceland 101Attention: Tanya Zharov, Corporate CounselTelephone: + 354-570-1943Facsimile: +354-570-1806

or to such other addressor telephone number as each party may designate for itself by like notice. Themeans by or through which notices, demands and other communications hereundermay be sent or transmitted include teletype, facsimile, central processing unitconnection, on-line terminal and magnetic tape, and, when so sent ortransmitted, such notices, demands and other communications shall be deemed tohave been sent or transmitted in writing.

**26.****      EXPENSES.**Applicantshall pay or, at the election of Bank, shall reimburse Bank for paying, (a) allreasonable costs, fees and expenses (including reasonable attorneys’ fees)incurred by Bank in connection with the preparation, administration orenforcement of this Agreement, the Securities Account Control Agreement, theLetter of Credit and Bank’s security interest in the Collateral, and (b) alltransfer, stamp, documentary or other similar taxes, assessments or chargeslevied by any tax or other governmental authority in respect of this Agreement,the Securities Account Control Agreement, the Letter of Credit, the Application,any Document or any Advance.

**27.****      SEVERABILITY.**Ifany provision of this Agreement is invalid, illegal or unenforceable in anyjurisdiction, the validity, legality and enforceability of the remainingprovisions****of this Agreement (andthe validity, legality and enforceability of such provision in any otherjurisdiction) shall not be affected or impaired thereby.

**28.****      RESTRICTION ONMODIFICATIONS TO THE LETTER OF CREDIT.** Bank and Applicant hereby agreethat no amendment or modification to the Letter of Credit that increases theface amount thereof shall be made without the prior written consent ofGuarantor.

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**29.****      MISCELLANEOUS.**(a) All agreements,representations and warranties contained in this Agreement shall survivethe execution and delivery of this Agreement and the making of any Advance.

(b)      Bank shall have thecontinuing and exclusive right to apply any and all payments by any Credit Party to such of the obligations of theCredit Parties under this Agreement as Bank may in its sole and absolutediscretion determine. All payments by any Credit Party to Bank pursuant to thisAgreement shall be made without set-off, and none of such payments shall besubject to any counterclaim by any CreditParty. To the extent that a Credit Party makes a payment or Bank receivesany payment for a Credit Party’s benefit, which is subsequently invalidated,declared to be fraudulent or preferential,set aside or required to be repaid to a trustee, debtor in possession, receiveror any other party under any bankruptcy, reorganization or insolvency law,common law or equitable cause, then, to such extent, the obligation hereunderof such Credit Party which was to have been satisfied by such payment shall berevived and continue as if such payment had not been received by Bank.

(c)       The headings of sections inthis Agreement are for convenience of reference only and shall not affect themeaning or construction of any provision of this Agreement.

(d)      This Agreement may beexecuted in one or more counterparts and by the parties hereto on separatecounterparts, each of which shall be deemed an original but all of whichtogether shall constitute but one and the same instrument.

**[SIGNATUREPAGE FOLLOWS]**

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**IN WITNESS WHEREOF,**each of the parties has caused this Agreement tobe executed in its name and on its behalf by its representativethereunto duly authorized, all as of the day and year first above written.
|        | ** ** | **APPLICANT:**             |
|--------|------------|----------------------------|
|   |       |                       |
|   | ** ** | **DECODE CHEMISTRY, INC.** |
|   |       |                       |
|   |       |                       |
|   |       | By:                        | /s/ Chris Tauer |   |
|   |       |                       | Name: Chris Tauer |   |
|   |       |                       | Title: US Controller |   |

 
|        | ** ** | **GUARANTOR****:**        |
|--------|------------|---------------------------|
|   |       |                      |
|   | ** ** | **DECODE GENETICS, INC.** |
|   |       |                      |
|   |       |                      |
|   |       | By:                       | /s/ Lance Thibault |   |
|   |       |                      | Name: Lance Thibault |   |
|   |       |                      | Title: CFO and Treasurer |   |

 
|        | ** ** | **BANK****:**               |
|--------|------------|-----------------------------|
|   |       |                        |
|   | ** ** | **CUSTODIAL TRUST COMPANY** |
|   |       |                        |
|   |       |                        |
|   |       | By:                         | /s/ Ben  J. Szwalbenest |   |
|   |       |                        | Name: | Ben  J. Szwalbenest |   |
|   |       |                        | Title: | President |   |

 

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**SCHEDULE A**

**Collateral Value**
| **Collateral Type**                                                  | ** ** | **Indicative  Collateral Value  (as a percentage of  Market Value)** | ** ** |
|---------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------|------------|
|                                                                      |       |                                                                                          |       |
| Cash                                                                      |       | 100                                                                                           | %          |
|                                                                      |       |                                                                                          |       |
| Cash equivalents                                                          |       | 99                                                                                            | %          |
|                                                                      |       |                                                                                          |       |
| U.S. government readily  marketable debt securities                       |       | 95                                                                                            | %          |
|                                                                      |       |                                                                                          |       |
| Investment-grade  readily marketable municipal debt securities            |       | 80                                                                                            | %          |
|                                                                      |       |                                                                                          |       |
| Investment-grade  readily marketable corporate debt securities            |       | 70                                                                                            | %          |
|                                                                      |       |                                                                                          |       |
| Readily marketable equity securities of acceptable quality and  liquidity |       | 65                                                                                            | %          |

 

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