Document:

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                                                                    EXHIBIT 10.3

                           NON-STATUTORY STOCK OPTION

                         , Optionee:

      deCODE genetics, Inc., a Delaware corporation (the "Company"), has granted
to you, the optionee named above, an option to purchase shares of the common
stock of the Company ("Common Stock"). This option is not intended to qualify as
an "incentive stock option" within the meaning of Section 422 of the United
States Internal Revenue Code of 1986, as amended (the "Code"). The grant
hereunder is intended to comply with the provisions of the United States
Securities Act of 1933, as amended (the "Act") and the regulations promulgated
thereunder by the United States Securities and Exchange Commission.

      This Option is granted under, and is subject to, the provisions of the
Company's 1996 Equity Incentive Plan, as amended from time to time (the "Plan")
and shall be exercisable only on the following terms and conditions:

      The details of your option are as follows:

      1.    DEFINITIONS.

            (a) "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

            (b) "BOARD" means the Board of Directors of the Company.

            (c) "CAUSE" means (a) gross or habitual failure to perform the
person's assigned duties, that is not corrected within thirty (30) days after
written notice to the person thereof or (b) misconduct, including, but not
limited to: (i) conviction of a crime, or entry of a plea of nolo contendere
with regard to a crime, involving moral turpitude or dishonesty, (ii) illegal
drug use or alcohol abuse on Company premises or at a Company sponsored event,
(iii) conduct by the person which in the good faith and reasonable determination
of the Board demonstrates gross unfitness to serve, (iv) participation in a
fraud or act of dishonesty against the Company, or (v) intentional, material
violation by the person of any contract between the person and the Company or of
any statutory duty of the person to the Company. Neither mental nor physical
disability shall constitute "Cause."

            (d) "CONSULTANT" means any person, including an advisor, engaged by
the Company or an Affiliate to render consulting services and who is compensated
for such services, provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.

            (e) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means
the person's service with the Company, whether as an Employee, Director or
Consultant, is not interrupted or terminated. The Board or the chief executive
officer of the Company may determine, in that party's sole discretion, whether
Continuous Status as an Employee, Director or Consultant shall be considered
interrupted in the case of: (i) any leave of absence approved by

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the Board or the chief executive officer of the Company, including sick leave,
military leave, or any other personal leave; or (ii) transfers between the
Company, Affiliates or their successors.

            (f) "DIRECTOR" means a member of the Board.

            (g) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.

            (h) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

      2.    TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION.  The total number
of shares of Common Stock subject to this option is                (----------).

      3.    VESTING. Subject to the limitations contained herein, twenty-five
percent (25%) of the shares will vest (become exercisable) on , and 1/48th of
the shares will then vest on the last day of each month thereafter until either:
(i) you cease to provide services to the Company for any reason; or (ii) this
option becomes fully vested. Additionally, vesting will be suspended for the
duration of any leave of absence that does not constitute a termination of your
Continuous Status as an Employee, Director or Consultant.

      4.    EXERCISE PRICE AND METHOD OF PAYMENT.

            (a) EXERCISE PRICE.  The exercise price of this option is
$_______ per share.

            (b) METHOD OF PAYMENT. Payment of the exercise price per share is
due in full upon exercise of all or any part of this option. You may elect, to
the extent permitted by applicable statutes and regulations, to make payment of
the exercise price under one of the following alternatives:

                  (i) Payment of the exercise price per share in cash
(including check) at the time of exercise;

                  (ii) Delivery of a copy of irrevocable instructions to a
broker to sell the shares to be issued on exercise of the option and to deliver
promptly to the Company from the sales proceeds an amount of cash equal to the
aggregate exercise price; or

                   (iii) Payment by a combination of the methods of payment
permitted by subparagraphs 4(b)(i) and 4(b)(ii) above.

      5.    WHOLE SHARES.  This option may not be exercised for any number of
shares which would require the issuance of anything other than whole shares.

      6.    SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, this option may not be exercised unless the shares issuable
upon exercise of this option are then registered under the Act or, if such
shares are not then so registered, the

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Company has determined that such exercise and issuance would be exempt from the
registration requirements of the Act.

      7.    TERM. The term of this option commences on _________________, the
date of grant, and expires on ____________________ (the "Expiration Date," which
date shall be no more than ten (10) years from date this option is granted),
unless this option expires sooner as set forth herein. In no event may this
option be exercised on or after the Expiration Date. This option shall expire on
the date of your termination of Continuing Status as an Employee, Director or
Consultant if: (a) such termination is for Cause; or (b) after such termination
you provide services for or acquire an ownership interest in any business which
competes with the Company. If not previously terminated, this option shall
expire on the date that is three (3) months after the Optionee's termination of
Continuing Status as an Employee, Director or Consultant. However, this option
may be exercised following termination of Continuous Status as an Employee,
Director or Consultant only as to that number of shares as to which it was
exercisable on the date of termination of Continuous Status as an Employee,
Director or Consultant under the provisions of Paragraph 3.

      8.    EXERCISE.

            (a) Optionee may exercise this option, to the extent specified
above, by delivering an exercise notice (in a then form designated by the
Company) together with the exercise price to the Secretary of the Company, or to
such other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require for
purposes of compliance with any applicable law, rule or regulation.

            (b) By exercising this option, you agree that:

                  (i) as a precondition to the completion of any exercise of
this option, the Company may require you to enter an arrangement providing for
the payment by you to the Company of any tax withholding obligation of the
Company arising by reason of: (A) the exercise of this option; (B) the lapse of
any substantial risk of forfeiture to which the shares are subject at the time
of exercise; or (C) the disposition of shares acquired upon such exercise; and

                   (ii) at the request of the Company, you will execute and
become a party to any voting agreement then in effect between the Company and
any of its common stockholders.

      9.    TRANSFERABILITY. This option is not transferable, except (i) by will
or by the laws of descent and distribution, (ii) to your spouse, children,
lineal ancestors and lineal descendants (or to a trust created solely for your
benefit and that of the foregoing persons), (iii) to an organization exempt from
taxation pursuant to Section 501(c)(3) of the Code or to which tax deductible
contributions may be made under Section 170 of the Code (excluding such
organizations classified as private foundations under applicable regulations and
rulings), or (iv) to your Affiliate. Notwithstanding the foregoing, by
delivering written notice to the Company, in a form satisfactory to the Company,
you may designate a third party who, in the event of your death, shall
thereafter be entitled to exercise this option.

      10.   OPTION NOT A SERVICE NOR EMPLOYMENT CONTRACT. This option is neither
a service nor an employment contract. Nothing in this option shall be deemed to:
(i) create in any way

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whatsoever any obligation on your part to continue in the employ of the Company,
or of the Company to continue your employment with the Company; or (ii) obligate
the Company or any Affiliate of the Company, or their respective stockholders,
boards of directors, officers or employees to continue any relationship which
you might have as a Director or Consultant for the Company or Affiliate of the
Company.

      11.   NOTICES. Any notices provided for in this option shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
mail, postage prepaid, addressed to you at the address specified below or at
such other address as you hereafter designate by written notice to the Company.

      12.   GENDER.  Whenever the context requires, words denoting gender in
this option shall include the masculine, feminine and neuter.

Dated:                                    Very truly yours,

                                          deCODE genetics, Inc.

                                          By:
                                             ----------------------------------
                                                Kari Stefansson, President

ATTACHMENTS:

Form of Exercise Notice
deCODE genetics, Inc. 1996 Equity Incentive Plan

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The undersigned:

            (a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option; and

            (b) Acknowledges that as of the date of grant of this option, it
sets forth the entire understanding between the undersigned optionee and the
Company and its Affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:

      NONE
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             (Initial)

      OTHER
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                                                       (signature)

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                                                      (print name)

                              Address:
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                                                                    EXHIBIT 10.6

THIS CONSULTANCY CONTRACT is made on the 30th day of August 2002

BETWEEN

(1)     deCODE genetics, Inc., a Delaware
        Corporation with its principal place of business at
        Sturlugata 8
        IS-101 Reykjavik
        Iceland ("Company")

(2)     Vane Associates, a partnership,
        "White Angles"
        7 Beech Dell
        Keston Park
        Keston
        Kent  BR2 6EP
        Great Britain ("Consultant")

IT IS AGREED:-

1     ENGAGEMENT OF SERVICES

      Consultant shall procure that Professor Sir John Vane ("Sir John Vane")
      acts as director and will serve as a member of the Company's Board of
      Directors (the "Board") and perform the duties of a director, in
      accordance with the Company's Amended and Restated Articles of
      Incorporation, Bylaws, and the General Corporation Law of Delaware (the
      "Services"). The Services will take place from time to time as reasonably
      requested by the Company at times mutually acceptable to Consultant and
      the Company at meetings in either Reykjavik or, occasionally, in Boston,
      Massachusetts. Sir John Vane may participate in such meetings by
      teleconference. It is anticipated that the Board will meet approximately
      five times per year and that Sir John Vane's time commitment per year to
      the Company shall not materially exceed that number of days.
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2     COMMENCEMENT

      This Agreement shall be deemed to commence with effect from August 30,
      2002 ("Commencement Date") and shall continue until the close of business
      on the third anniversary of the date of this Agreement and thereafter
      until terminated by either party upon 90 days' written notice to each
      other.

3     COMPENSATION

      In consideration of the Consultant's Services and subject to approval by
      the Company's Board of Directors, which shall be confirmed to Consultant
      prior to commencement, the Company shall pay to Vane Associates:

3.1   an annual retainer of US$12,000 per annum paid in advance on the
      Commencement Date and on each anniversary of the Commencement Date during
      the continuation of this Agreement, pro-rated for part quarters worked at
      the end of the Agreement (if applicable).

3.2   US$3,000 per day for each Board Meeting that Sir John Vane attends whether
      personally or by telephone participation and for each other day on which
      Sir John Vane provides services to the Company at the Company's request
      and

3.3   In addition the Company shall grant Sir John Vane non statutory stock
      options ("Options") to purchase up to 60,000 Company shares of common
      stock of the Company at closing market price on the day prior to the
      Commencement Date on the terms and conditions contained in the stock
      option grant agreement attached as an exhibit hereto The Options shall be
      deemed granted upon signature of this Agreement and the Company shall
      forthwith take such steps and execute such documents necessary to give
      effect to this obligation forthwith upon your signature of this Agreement.

4     FEES

4.1   The Consultant will be entitled to receive the fee referred to above
      payable to its account at
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      HSBC Bank International

      Sort Code :  40-47-79
      Account No : 20295930
      For further credit to First Direct:  SWIFT CODE:  MIDLGB22

      payable in full without deduction for bank transfer charges within 28 days
      of each meeting;

5     EXPENSES

5.1   Company will reimburse the Consultant's first class travel and
      out-of-pocket expenses incurred on behalf of Sir John Vane for travel,
      accommodation and incidental expenses made on behalf of or for the benefit
      of the Company including travelling to and from Company meetings which
      shall be billed to the Company at cost as incurred and shall be supported
      by appropriate receipts and other relevant documentation.

5.2   The Company agrees to reimburse the Consultant all its legal expenses in
      reviewing, negotiating and amending this Agreement and the associated
      Indemnity Agreement.

6     COPYRIGHT

6.1   All copyrights and/or design rights in any work created in the course of
      or under this Agreement shall belong to Company save for papers the
      Consultant and/or Sir John Vane publishes and lectures or delivers where
      the copyright and right to copyright become a moral right and a right to
      use, deliver and exploit which shall belong to the Consultant and/or Sir
      John Vane.

6.2   For the avoidance of doubt Company acquires no rights to any copyright,
      design rights, moral right, patents or similar intellectual property
      rights arising in the course of the Consultant's or Sir John Vane's work
      under any other consultancies or appointments held from time to time.

7     ACKNOWLEDGEMENT AND ASSIGNMENT

7.1   It is agreed that this Agreement shall enure for the benefit of and be
      enforceable by the Consultant and its successors in title.
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7.2   This Agreement is not assignable by either party without the prior written
      approval of the other.

8     AMENDMENTS

      Changes, amendments and supplements to this Agreement must be made in
      writing and signed by the parties.

9     GOVERNING LAW

9.1   This Agreement shall be governed by the laws of England

9.2   By their execution of this agreement the parties hereby irrevocably agree
      to submit to the exclusive jurisdiction of the English Courts.

10    TERMINATION

10.1  This Agreement may be terminated by either party without liability to the
      other on 90 days written notice to expire no earlier than the close of
      business on the third anniversary of this Agreement.

10.2  If either party is in breach of any provision of this Agreement, the
      non-breaching party may in writing give the allegedly breaching party
      written notice to cure or remedy such breach within 28 days of receipt of
      such written notice. If the allegedly breaching party has not cured or
      remedied the alleged breach within that period, then this Agreement may be
      terminated forthwith upon further written notice.

10.3  The Company shall ensure that the Consultant is reimbursed for the
      Consultant's fees and expenses down to the date of termination howsoever
      arising without set-off or deduction.

11    PRE-EXISTING AGREEMENTS

      This Agreement supersedes and replaces in all respects the Consultancy
      Contract dated as of December 1, 1997 between the parties, which
      Consultancy Contract shall be of no further force or effect. This
      Agreement is subject to the understanding that the Consultant and/or Sir
      John Vane are contracted to and affiliated with various organisations and
      other companies and may from time to time become contracted to
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      and affiliated with other similar organisations and other companies,
      including but without limitation on an equity investment basis
      (collectively, the "Affiliated Entities"). It is particularly understood
      that the Consultant and/or Sir John Vane are required to fulfil certain
      obligations to the Affiliated Entities pursuant to the guidelines or the
      policies if any, adopted by the Affiliated Entities or pursuant to a
      contract entered into with such Affiliated Entities.

12    INDEMNITY AGREEMENT

      In connection with this Agreement, Sir John Vane and the Company have
      executed a certain Indemnity Agreement dated as 1 December 1997, which
      agreement shall continue in full force and effect.

13    NOTICES

      Any notice required or permitted to be given under this Agreement shall be
      in writing and shall be deemed effectively served upon personal delivery
      or upon delivery by courier or 7 days after posting by certified mail if
      sent from the USA or by registered post if sent from England, in either
      case sent by express pre-paid air, addressed to the other party at its
      address as shown above or to such other address as such party may
      designate in writing for the purpose of this Agreement from time to time.

<TABLE>
<S>                                          <C>
/s/Kari Stefansson.                          /s/ John Vane

COMPANY                                      THE CONSULTANT
</TABLE>

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