Document:

Exhibit 10.14

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

LICENSE
AND RESEARCH COLLABORATION AGREEMENT

BETWEEN

MERCK
& CO., INC.

AND

DECODE
GENETICS, EHF.

LICENSE
AND RESEARCH COLLABORATION AGREEMENT

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

PRELIMINARY
STATEMENTS

A.                                   deCODE has
expertise in conducting research in the field of human genetics and genomics
and in the conduct of clinical trials.

B.                                     MERCK has
certain expertise in drug development and in the design and conduct of clinical
trials to demonstrate the safety and efficacy of its pharmaceutical products.

C.                                     deCODE and
MERCK wish to collaborate on the design and conduct of Information Rich
Clinical Trials (terms with initial capitals as hereafter defined) on selected
MERCK compounds in specified Disease Areas in accordance with the attached Work
Plan.

D.                                    deCODE
Parent (as hereinafter defined) and MERCK are simultaneously entering into a
separate Stock and Warrant Purchase Agreement whereby MERCK shall purchase
shares of stock of deCODE Parent pursuant to the terms and conditions set forth
in that agreement.

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

1.                                       DEFINITIONS

Unless
specifically set forth to the contrary herein, the following terms, whether
used in the singular or plural, shall have the respective meanings set forth
below:

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

1.2                                 “ASSOCIATED
INFORMATION” shall mean information about [CONFIDENTIAL TREATMENT REQUESTED] in
an IRCT performed as part of the Research Program which [CONFIDENTIAL TREATMENT
REQUESTED] in an Exclusive Disease Area or a Non-exclusive Disease Area where
the [CONFIDENTIAL TREATMENT REQUESTED] is associated with the [CONFIDENTIAL
TREATMENT 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 Schedule
2.6

and
more fully described in Section 2.6.

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

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

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

(a) An acquisition of
any 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 the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), immediately
after which such Person has “Beneficial Ownership” (within the meaning of Rule
13d-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 other
securities into which such shares of common stock are changed or for which such
shares of common stock are exchanged) (the “Shares”) or (2) the combined voting
power 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 not
for any reason constitute at least a majority of the members of the board of
directors of (x) the corporation resulting from such Merger (the “Surviving
Corporation”), if fifty percent (50%) or more of the combined voting power of
the then-outstanding voting securities of the Surviving Corporation is not Beneficially
Owned, directly or indirectly, by another Person (a “Parent Corporation”) or
(y) if there is one or more than one Parent Corporation, the ultimate Parent
Corporation; PROVIDED, HOWEVER, that, any individual becoming a director
subsequent to the date hereof whose

election, or nomination
for election by such company’s shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
board of directors of deCODE Parent (a “Proxy Contest”), including by reason of
any 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 or
indirectly by deCODE Parent; or

(d) The consummation of:

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

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

ultimate Parent
Corporation;

(B)
the individuals who were members of the Incumbent Board immediately prior to
the execution of the agreement providing for such Merger constitute at least a
majority of the members of the board of directors of (x) the Surviving
Corporation, if there is no Parent Corporation, or (y) if there is one or more
than one Parent Corporation, the ultimate Parent Corporation; and

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

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

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

Notwithstanding the
foregoing, a Change in Control shall not be deemed to occur solely because any
Person (the “Subject Person”) acquired Beneficial Ownership of more than the
permitted amount of the then outstanding Shares or Voting Securities as a
result of the acquisition of Shares or Voting Securities by deCODE Parent
which, 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 this
sentence) as a result of the acquisition of Shares or Voting Securities by
deCODE Parent and, after such share acquisition by deCODE Parent, the Subject
Person becomes the Beneficial Owner of any additional Shares or Voting
Securities and such Beneficial Ownership increases the percentage of the then
outstanding Shares or Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur.

1.7                                 “COLLABORATION
DATE” shall be February 25, 2004.

1.8                                 “COLLABORATION
INFORMATION 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                                 “COLLABORATION
PATENTS” shall mean any and all patents and patent applications in the
Territory (which for the purposes of this Agreement shall be deemed to include
certificates of invention

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

1.10                           “COMBINATION
PRODUCT” shall mean a Product which includes one or more active ingredients
other than IRCT Compound or Related IRCT Compound in combination with IRCT
Compound or Related IRCT Compound. All references to Product in this Agreement
shall be deemed to include Combination Product.

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

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

1.12                           “COMPETITOR”
shall mean a company in the pharmaceutical business sector with reported annual
gross revenues from the sale of pharmaceuticals in excess [CONFIDENTIAL
TREATMENT 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 or
deCODE; or (b) with respect to any item of or right under Collaboration
Patents, Patents or Know-How, the possession of (whether by ownership or
license, other than pursuant to this Agreement) or the ability of a Party to
grant access to, or a license or sublicense of, such items or right as provided
for herein without violating the terms of any agreement or other arrangement
with any Third Party existing at the time such Party would be required hereunder
to grant the other Party such access or license or sublicense.

1.14                           “deCODE
INFORMATION AND INVENTIONS” shall mean all Collaboration Information and
Inventions developed or invented solely by employees of deCODE or other persons
not employed by MERCK acting on behalf of deCODE.

1.15                           “deCODE
KNOW-HOW” shall mean all secret, substantial and identified information and
materials, including, but not limited to, discoveries, Improvements, processes,
formulas, data, inventions(including without limitation deCODE’s Information
and Inventions and deCODE’s rights in Joint Information and Inventions),
know-how and trade secrets, patentable or otherwise, which arise from the
Research Program and during the term of this Agreement (i) are in deCODE’s
possession or control, (ii) are not generally known and (iii) are necessary or
useful 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                           “deCODE
COLLABORATION PATENTS” shall mean Collaboration Patents that claim, cover or
relate to deCODE Information and Inventions excluding deCODE Information and
Inventions relating to deCODE Generalized Technology.

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

1.18                           “deCODE
GENERALIZED TECHNOLOGY” shall mean any Technical Information relating to
generalized methods for conducting genomics research and characterizing the
function of genes or any raw data useful in generalized genomics research tools
which at any time is owned or controlled by deCODE or its Affiliates (provided
deCODE or its Affiliates have the right to license or otherwise make available
such Technical Information to MERCK).

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

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

1.20                           “deCODE
PARENT” shall mean deCODE genetics, Inc., a corporation organized and existing
under the laws of the State of Delaware.

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

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

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

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

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

[CONFIDENTIAL TREATMENT
REQUESTED].

1.25                           [CONFIDENTIAL
TREATMENT REQUESTED]

1.26                           [CONFIDENTIAL
TREATMENT REQUESTED]

1.27                           [CONFIDENTIAL
TREATMENT REQUESTED]

1.28                           “NON-EXCLUSIVE
DISEASE AREAS” shall mean [CONFIDENTIAL TREATMENT

REQUESTED].

1.29                           [CONFIDENTIAL
TREATMENT REQUESTED]

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

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

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

executive of each Party
as more fully described in Section 2.5.1.

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

1.34                           “FIRST
COMMERCIAL SALE” shall mean, with respect to any Product or Test, the first
sale for end use or consumption of such Product or Test in a country after all
required approvals, including Marketing Authorization, have been granted by the
Regulatory Authority of such country.

1.35                           “FULL TIME
EQUIVALENT” or “FTE” shall mean the equivalent of a full-time scientist’s work
time over a twelve-month period (including normal vacations, sick days and
holidays). The portion of an FTE year devoted by a scientist to the Research
Program shall be determined by dividing the number of full days during any
twelve-month period devoted by such employee to the Research Program by the
total 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, dosage
or packaging of IRCT Compound, Related IRCT Compound, Tests or Product.

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

1.38                           “INFORMATION
RICH CLINICAL TRIAL OR IRCT” shall mean a clinical trial which includes the
following, as specified in the protocol for such clinical trial: [CONFIDENTIAL
TREATMENT 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                           “IRCT
COMPOUND” shall mean a Selected Compound that has [CONFIDENTIAL TREATMENT
REQUESTED] in accordance with the Agreement.

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

1.42                           “JOINT
COLLABORATION PATENTS” shall mean Collaboration Patents that claim, cover or
relate to Joint Information and Inventions.

1.43                           “MARKETING
AUTHORIZATION” shall mean any approval (including without limitation all
applicable pricing and governmental reimbursement approvals) necessary to
receive permission from the relevant Regulatory Authority to market and sell a
Product or Test in any country.

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

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

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

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

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

1.48                           “MERCK
KNOW-HOW” shall mean any information and materials, including but not limited
to, discoveries, Improvements, processes, methods, protocols, formulas, data,
inventions (including without limitation MERCK’s Information and Inventions and
MERCK’s rights in Joint Information and Inventions), know-how and trade
secrets, patentable or otherwise, which arise from the Research Program and
during 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 to
deCODE in the performance of its obligations under the Research Program.

1.49                           “MERCK
COLLABORATION PATENTS” shall mean Collaboration Patents that claim, cover or
relate to MERCK Information and Inventions.

1.50                           “MERCK
PATENTS” shall mean Patents Controlled by MERCK prior to the Effective Date or
during the term of this Agreement (provided MERCK has the right to license or otherwise
make available such Patents to deCODE) and are necessary or useful to deCODE in
connection with the Research Program.

1.51                           “MERCK PRIOR
KNOW-HOW” shall mean any information and materials, including but not limited
to, discoveries, Improvements, processes, methods, protocols, formulas, data,
inventions, know-how and trade secrets, patentable or otherwise, which existed
prior to the Effective Date and during 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 to deCODE in the performance of its obligations under the
Research 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 its
Related Parties to the first Third Party after

deducting, if not
previously deducted, from the amount invoiced or received:

(a)                                  trade and
quantity discounts other than early pay cash discounts;

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

(c)                                  retroactive
price reductions that are actually allowed or granted;

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

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

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

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

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

1.55                           “PATENT
RIGHTS” shall mean deCODE Collaboration Patents, and deCODE’s interest in Joint
Collaboration Patents.

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

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

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

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

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

1.60                           “RELATED
IRCT COMPOUND” shall mean a compound Controlled by MERCK that [CONFIDENTIAL
TREATMENT REQUESTED].

1.61                           “RESEARCH
PROGRAM TERM” shall mean the duration of the Research Program and “Extended
Research Program Term” shall mean any period of the Research Program as it may
be extended by mutual agreement of the Parties, as described more fully in
Section 2.10.

1.62                           “RESEARCH
PROGRAM” shall mean the research activities undertaken by the Parties hereto as
set forth in Article 2 and Attachment 2.1.

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

Operating Committee to
be evaluated in Information Rich Clinical Trials.

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

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

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

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

territories and
possessions.

1.68                           “THERAPEUTIC
FIELD” shall mean any and all application of technology to [CONFIDENTIAL TREATMENT
REQUESTED].

1.69                           “TESTS”
shall mean pharmacogenomic tests aimed at predicting the response or
non-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 its
Affiliates.

1.71                           “VALID
PATENT CLAIM” shall mean a claim of an issued and unexpired patent included
within the MERCK Compound Patent which claims IRCT Compound, Related IRCT
Compound, Tests or Product as a composition of matter, which has not been
revoked or held unenforceable or invalid by a decision of a court or other
governmental agency of competent jurisdiction, and which is not appealable or
has not been appealed within the time allowed for appeal, and which has not
been disclaimed, denied or admitted to be invalid or unenforceable through
reissue, 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 the
Parties in furtherance of the Research Program. It is anticipated that there
will be separate work plans relating to each IRCT conducted by the Parties
which shall be appended to the Agreement in sequential order.

2.                                       RESEARCH
PROGRAM

2.1                                 GENERAL

deCODE and MERCK shall
engage in the Research Program upon the terms and conditions set forth in this
Agreement. The activities to be undertaken in the course of each IRCT pursuant
to 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 of
any IRCT herein the Parties shall agree in writing signed by members of the Executive
Committee or their designees on what is a Successful Clinical Result and the
signed writing shall become part of the corresponding Work

Plan for that IRCT. The
Work Plan may be amended from time to time upon the mutual written agreement by
authorized representatives of the Parties. All Work Plans including Schedule
2.1-0 attached hereto are part of the Agreement. Notwithstanding any provision
of the Agreement to the contrary, neither Party shall be obligated to conduct
any activities which it reasonably believes would be in violation of any statute,
regulation, law, or terms of any ongoing deCODE project in a Non-exclusive
Disease Area.

2.2                                 CONDUCT OF
RESEARCH

deCODE and MERCK each
shall conduct the Research Program in good scientific manner, and in compliance
in all material respects with all requirements of applicable laws, rules and
regulations and all

applicable good
laboratory practices to attempt to achieve their objectives efficiently and
expeditiously. deCODE and MERCK each shall proceed diligently with the work set
out in the Work Plan by using their respective good faith efforts to allocate
sufficient time, effort, equipment and facilities to the Research Program and
to use personnel with sufficient skills and experience as are required to accomplish
the Research Program in accordance with the terms of this Agreement and Work
Plan.

deCODE and MERCK shall
be entitled to utilize the services of their Affiliates to perform their
respective Research Program activities. Each Party shall also be entitled to
utilized the services of Third Parties to perform their respective Research
Program activities only upon the prior written consent of the other Party or as
specifically set forth in Work Plan. Notwithstanding any such consent, both
Parties shall remain at all times fully liable for its respective responsibilities
under the Research Program.

2.3                                 INFORMATION RICH
CLINICAL TRIALS

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

2.4                                 COMPOUND
SELECTION

MERCK shall nominate
MERCK compounds during the Research Program for which Information Rich Clinical
Trials shall be conducted by the Parties according to the Work Plan. deCODE shall
be given the opportunity to review each proposed compound to confirm that
deCODE’s conduct of one or more IRCTs on such compound under this Agreement would
not

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

2.5                                 GOVERNANCE
OF THE COLLABORATION.

The Parties hereby
establish process to govern the conduct of the Research Program and each party’s
contribution to the Research Program as follows:

2.5.1                        MANAGERIAL
OVERSIGHT.

There will be two levels
of managerial oversight of the Research Program. There will be an Executive
Committee and an Operating Committee. In addition each Party shall designate
Project Leaders for the Research Program.

(a)                                  EXECUTIVE
COMMITTEE

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

(i)                                     Any disputes
where the Executive Committee cannot reach a mutually acceptable decision
within thirty (30) days after the matter was referred to them shall be decided
by the President of MERCK Research Laboratories and the final determination of
the 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 implementation
of such decisions and in all cases that to the extent such disputes materially affect
the rights or obligations of the Parties under this Agreement, MERCK shall
consult with deCODE and the Parties shall agree on a course of action to
lawfully avoid or minimize such effects upon the rights or obligations of the
Parties, to the extent practicable.

(ii)                                  Any disputes
arising with respect to the manner in which decisions of the Operating
Committee, the Executive Committee or the President of Merck Research
Laboratories will be implemented that will affect relations with patients
participating in the Research Program, research sites, consultants,
investigators or vendors all of which are in Iceland, or any governmental
authority in Iceland (“Implementation Disputes”), shall be decided by the Chief
Executive Officer of deCODE (or his designee) and the final determination of
the issue that shall be binding on the Parties and the Research Program, who shall
give good faith consideration to the comments of MERCK’s Executive Committee
member (or their respective designees) in resolving such matter; PROVIDED,
HOWEVER, that to the extent such disputes materially affect the rights or
obligations of the Parties under this Agreement, deCODE shall consult with
MERCK and the Parties shall agree on a course of action to lawfully avoid or
minimize such effects upon the rights or

obligations of the
Parties, to the extent practicable.

(b)                                 OPERATING
COMMITTEE

The Operating Committee
shall be based in Iceland and composed of MERCK representatives and deCODE representatives
and shall exist for [**] after termination or expiration of the Research
Program Term. The Operating Committee shall perform the following functions (i)
approve and, as the need arises, determine the necessity to remove personnel
working on the Research Program, (ii) prepare the Budget, (iii) formulate and adjust
Work Plans, (iv) select Compounds; (v) oversee progress of the Research Program
and exchange of data between the Parties; and (vi) appoint sub-committees of equal
representation to fulfill any of the enumerated tasks set forth in this Section
2.5.1(b). Each Party shall have 1 vote. Each Party shall appoint its representatives
to the Operating Committee from time to time, and may substitute one or more of
its representatives, in its sole discretion, effective upon notice to the other
Party of such change. These representatives shall have, individually or
collectively, appropriate technical credentials, experience and knowledge, and
ongoing familiarity with the Research Program. Additional representatives or
consultants may from time to time, by mutual consent of the Parties, be invited
to attend Operating Committee meetings, in the case of consultants subject to
such consultant’s written agreement to comply with the requirements of Section
4.1. Any member of the Operating Committee may designate a substitute to attend
and perform the functions of that member at any meeting of the Operating
Committee. A chairperson and secretary of the Operating Committee shall serve
co-terminus one (1) year terms, commencing on the Collaboration Date or an
anniversary thereof, as the case may be. deCODE shall have the right to name
the chairperson and MERCK shall have the right to name the secretary of the
Operating Committee. Decisions of the Operating Committee shall be made
unanimously by the members. In the event that the Operating Committee cannot or
does not, after good faith efforts, reach agreement on an issue, the resolution
and/or course of conduct shall be referred to the Executive Committee. Each
Party shall bear its own expenses related to the attendance of such meetings by
its representatives and invitees.

2.5.2                        MEETINGS AND
MINUTES.

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

alternate between the
offices 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, for
purposes of holding a Operating Committee meeting, convene or be polled or
consulted from time to time by means of telecommunications, video conferences, electronic
mail or correspondence, as deemed necessary or appropriate by the Parties.

With the sole exception
of specific items of the meeting minutes to which the chairperson and the
secretary cannot agree and which are escalated as provided below, definitive
minutes of all Operating Committee meetings shall be finalized promptly after
the meeting to which the minutes pertain, as follows:

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

decisions or
determinations approved by the Operating Committee and a list of any issues to
be resolved by the Executive Officers.

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

The chairperson and the
secretary of the Operating Committee shall then discuss each other’s comments
and finalize the minutes. The secretary and chairperson shall each sign and
date the final minutes. The signature of the chairperson and the secretary upon
the final minutes shall indicate each Party’s assent to the minutes.

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

2.5.3                        PROJECT
LEADERS.

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

2.6                                 ANNUAL
BUDGET .

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

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

2.7                                 RECORDS AND
REPORTS

2.7.1                        RECORDS.

Each Party shall
maintain records, in sufficient detail and in good scientific manner
appropriate for patent and regulatory purposes, which shall fully and properly
reflect all work done and results achieved in the performance of the Research
Program by that Party.

2.7.2                        COPIES AND
INSPECTION OF RECORDS.

(a) MERCK shall have the
right, during normal business hours and upon reasonable notice, to inspect and
copy all such records of deCODE referred to in Section 2.7.1. MERCK shall
maintain such records and the information disclosed therein in confidence in
accordance with Section 4.1. MERCK shall have the right to arrange for its
employees and/or consultants involved in the activities contemplated hereunder
to visit the offices and laboratories of deCODE and any of its Third Party contractors
as permitted under Section 2.2 during normal business hours and upon reasonable
notice, and to discuss the Research Program work and its results in

detail with the
technical personnel and consultants of deCODE. Upon request, deCODE shall
provide copies of the records described in Section 2.7.1 above.

(b) At least once per
Calendar Year during the term of the Agreement, MERCK shall provide deCODE with
information about the status of any IRCT Compounds in development at MERCK
including a review of any significant developmental milestones achieved or
setbacks encountered since the previous year’s review and such other
information as may be reasonably requested by deCODE so as to enable deCODE to
monitor or confirm MERCK’s compliance with the provisions of Section 3.4 hereof.
deCODE shall have the right, during normal business hours and upon reasonable
notice, to inspect and copy all such records of MERCK referred to in Section
2.7.1 that are necessary to deCODE to perform its obligations under this
Agreement. deCODE shall maintain such records and the information disclosed
therein in confidence in accordance with Section 4.1.

2.8                                 COMPLIANCE

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

which are used in the
course of the Research, or products derived from those animals, such as eggs or
milk, will not be used for food purposes, nor will these animals be used for
commercial breeding purposes. deCODE shall notify MERCK in writing of any
deviations from applicable regulatory or legal requirements. deCODE hereby
certifies that it will not and has not employed or otherwise used in any
capacity the services of any person debarred under Section 21 USC 335a in performing
any services hereunder.

2.9                                 RESEARCH
PROGRAM TERM

Except as otherwise
provided herein, the term of the Research Program shall commence on the
Collaboration Date and continue for a period of seven (7) years. Following the
initial seven (7) year term, the Research Program will renew annually for
successive one (1) year terms (“Extended Research Term”) unless either Party
sends 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 time
beginning five (5) years after the Collaboration Date. Such notice of
termination shall be sent at least [**] prior to the date of termination. In
the 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 at
MERCK’s discretion, PROVIDED HOWEVER that deCODE shall not be obligated to
begin any new IRCT which has been approved by the Operating Committee but not
yet begun. From time-to-time, the Parties shall amend the Work Plan as
applicable. In the event of a Change of Control pursuant to which a Competitor
Controls deCODE, MERCK shall have the right to terminate the Research Program
at any time on written notice to deCODE. In the event that the term of the
Research Program expires or the Research Program is terminated during the
pendency of an IRCT or in the event that the Parties elect to abandon or
terminate any IRCT during the course of the Research Program, the Parties shall
arrange for orderly completion or

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

2.10                           EXCLUSIVE
EFFORTS

(a) During the Research
Program Term, deCODE shall work exclusively with MERCK in efforts to conduct
IRCT [CONFIDENTIAL TREATMENT REQUESTED] and shall not otherwise facilitate or
assist any Third Party to conduct IRCT [CONFIDENTIAL TREATMENT REQUESTED] by
providing rights to, either through license or any agreement to forgo
enforcement of, deCODE Patents or deCODE Prior Know-How. This Agreement does
not prohibit deCODE from (i) conducting IRCT [CONFIDENTIAL TREATMENT REQUESTED];
or (ii) conducting clinical trials [CONFIDENTIAL TREATMENT REQUESTED]. In the
event that MERCK and deCODE begin an IRCT with a Selected Compound in a
Non-exclusive Disease Area, deCODE shall not commence any IRCT with
[CONFIDENTIAL TREATMENT REQUESTED].

(b) Beginning after the
first anniversary of the Effective Date, if during any [**] period the Parties
do 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 nor
conducts at least five

concurrent IRCT’s during
at least [**] of such [**] period, then such specific Disease Area shall
thereafter become a Non-Exclusive Disease Area for all purposes under this
Agreement. Notwithstanding the preceding sentence, the Parties may agree to
create exceptions to, or the tolling of, the foregoing for special
circumstances.

2.11                           EXCHANGE OF
INFORMATION

During the Research
Term, deCODE promptly shall disclose on an ongoing basis to MERCK in English
and in writing all deCODE Know-How. MERCK shall promptly disclose to deCODE
during the Research Program Term all MERCK Know-How.

2.12                           USE OF HUMAN
MATERIALS

With respect to any
human cell lines, tissue, human clinical isolates or similar human-derived
materials that have been or are to be collected and/or used in the Research
Program (“Human Materials”), each Party represents and warrants (i) that it has
complied, or shall comply, with all applicable laws, guidelines and regulations
relating to the collection and/or use of the Human Materials and (ii) that it has
obtained, or shall obtain, all necessary approvals and appropriate informed
consents, in writing, for the collection and/or use of such Human Materials.
deCODE shall provide documentation of such approvals and consents upon MERCK’s
request. Each Party further represents and warrants that such Human Materials
may be used as contemplated in this Agreement without any obligations to the
individuals or entities (“Providers”) who contributed the Human Materials,
including, without limitation, any obligations of compensation to such
Providers or any other Third Party for the intellectual property associated
with, or commercial use of, the Human Materials for any purposes.

2.13                           PHARMACOGENOMICS
TESTS.

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

conduct of IRCT’s under
this Agreement as set forth below. MERCK shall identify and prioritize the
Tests it wishes to have developed and Merck shall have the right to solicit
bids from Third Parties including deadlines for the achievement of defined
events in the development of such Tests (“Test Milestones”). Prior to accepting
any specific bid from a Third Party, MERCK shall inform deCODE about the bid by
providing deCODE with a written notice including sufficient information about
the Test Milestones in the Third Party bid. deCODE shall have thirty days from
MERCK’s notice to agree to the Test Milestones set forth in the Third Party bid
for a particular Test or MERCK may enter into an agreement for the development
of that Test with the Third Party.

(b) TESTS FOR USE WITH
MARKETED COMPOUNDS. In the event that MERCK desires to have developed and
marketed a Test for use with a Product, MERCK shall have the right to solicit
bids including Test Milestones

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

(c) REVERSION OF RIGHTS
TO TEST DEVELOPMENT. In the event that deCODE exercises its rights under either
Section 2.13 (a) or 2.13 (b) to develop a Test and deCODE at any time fails to
achieve a Test Milestone, then the Parties shall meet within [**] to discuss
the reasons for failure to achieve the Test Milestone and any proposals for revised
Test Milestones provided, however, MERCK shall have the right in its sole
discretion 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 necessary
to insure a rapid and efficient transfer of technology related to the Test to
allow 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 2.13
and Article 3 are limited to Tests and no license under Article 3 shall be
construed 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 pharmacogenomic
tests or diagnostics generally.

3.                                       LICENSE;
EXCHANGE OF INFORMATION; DEVELOPMENT AND COMMERCIALIZATION

3.1                                 LICENSE
GRANT

(a)                                  COMMERCIALIZATION
GRANTS. deCODE hereby grants to MERCK an exclusive license in the Territory
under deCODE Collaboration Patents, Joint Collaboration Patents, and deCODE
Know-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) to
practice any other invention claimed in the foregoing patents solely with IRCT
Compounds and Products or use any licensed Know-How solely with IRCT Compounds
and Products and related Tests.

(b)                                 COMPOUND
DEVELOPMENT GRANTS.

(i)                                     deCODE
hereby grants to MERCK an exclusive license in the Territory under deCODE
Collaboration Patents, Joint Collaboration Patents and deCODE Know-How with a
right to sublicense for the development of compounds Controlled by MERCK and
related Tests in the Therapeutic Field for (1) Disease Areas and (2) Associated
Information.

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

Patents with a right to
sublicense for the development of compounds Controlled by MERCK and related
Tests in the Therapeutic Field for (1) Disease Areas and (2) Associated
Information.

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

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

(d)                                 MERCK OPTION
- INTELLECTUAL PROPERTY.

At any time but no later
then the expiration or termination of the Research Program under Section 2.9, MERCK
may (1) retain exclusive rights granted in Section 3.1(b)(i) and (2) deCODE will
release MERCK from its covenant under Section 3.1 (c) by payment of an
exclusive license fee of [CONFIDENTIAL TREATMENT REQUESTED] for which MERCK
elects to retain exclusivity. MERCK may exercise this option by providing
notice and payment to deCODE at any time prior to or concurrently with the
expiration or termination of the Research Program. Upon payment of the Exclusive
License 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)                                     RIGHTS
GRANTED. In the Non-exclusive Disease Areas deCODE may research and develop
deCODE Compounds. During the Research Term, for each deCODE Compound in a Non-exclusive
Disease Area that deCODE Controls, deCODE grants to MERCK an exclusive option
to negotiate for an exclusive license to that deCODE Compound in the Territory
(“MERCK Compound Option”), subject only to any conflicting or superceding
rights of Third Parties with respect to that deCODE Compound that were granted
prior to the Effective Date or as a condition of deCODE obtaining rights to
such deCODE Compound. As to deCODE Compounds in a Non-Exclusive Disease Area
that are not subject to conflicting or superceding rights of Third Parties,
deCODE agrees it will not engage in any discussions with a Third Party for
commercial rights of any kind to

a deCODE Compound before
first offering such rights to MERCK as set forth in the succeeding provisions
of this Section 3 1(e).

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

(iii)                               CONDITIONS
TO OPTION EXERCISE; OPTION TERM. The MERCK Compound Option may be exercised at
any time but no later then the earlier of [**] after the deCODE Notice or the end
of the Term. MERCK may exercise the MERCK Compound Option by sending written
notice (“MERCK Exercise Notice”) to deCODE that MERCK wishes to engage in negotiations
for an exclusive license to the deCODE Compound. MERCK shall have [**] to negotiate
in good faith principal business terms to be enumerated in a non-binding term
sheet and [**] thereafter (“Negotiation Period”) to negotiate in good faith and
execute a definitive agreement for an exclusive license to the deCODE Compound
in the Territory, which may be extended by the Parties on mutual consent.

(iv)                              OPTION LAPSE
AND REVIVAL. In the event that the Parties fail to reach agreement on the terms
and conditions of an exclusive license during the Negotiation Period, deCODE shall
have the right to negotiate with Third Parties for rights to that deCODE
Compound; PROVIDED, HOWEVER, that if deCODE has not licensed rights to that
deCODE Compound within [**] after the end of the Negotiation Period, and if the
Term has not yet expired or been terminated, deCODE grants to MERCK another
MERCK Compound Option for that deCODE Compound exercisable in accordance with Sections
3.1(e) et seq.

(f)                                    deCODE
LICENSES.

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

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

3.2                                 NON-EXCLUSIVE
LICENSE GRANT

In the event the making,
having made, use, offer for sale, sale or import by MERCK, its Affiliates or
permitted sublicensees of IRCT Compound(s), Test(s) or Product(s) would
infringe during the term of this Agreement a claim of issued letters patent
which deCODE owns or has the rights to license and which patents are not
covered by the grant in Section 3.1, deCODE hereby grants to MERCK, to the
extent deCODE is legally able to do so, a non-exclusive, sublicensable, royalty-free
license in the Territory under such issued letters patent solely for MERCK to
develop, make, have made, use, sell, offer for sale or import IRCT Compound(s),
Test(s) and Product(s) in the Territory.

3.3                                 NO IMPLIED
LICENSES.

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

3.4                                 DEVELOPMENT
AND COMMERCIALIZATION.

MERCK shall use
reasonable efforts, consistent with the usual practice followed by MERCK in
pursuing the commercialization and marketing of its other pharmaceutical
products of a similar commercial value, at its own expense, to develop and
commercialize a Product or Test on a commercially reasonable basis in such
countries in the Territory where in MERCK’s opinion it is commercially viable
to do so.

3.5                                 EXCUSED
PERFORMANCE.

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

3.6                                 RIGHT OF
FIRST NEGOTIATION.

In the event that MERCK
determines that neither it nor its Affiliates will commercialize an IRCT
Compound and in its sole discretion determines that it will license the commercial
rights to a Third Party, it shall notify deCODE of such decision and shall
negotiate exclusively

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

not yet expired or been
terminated, MERCK grants to deCODE another right of first negotiation
exercisable in accordance with this Section 3.6. In connection with the rights
granted under this Section 3.6, MERCK will provide deCODE with reasonable
opportunity to review any and all relevant information about the IRCT Compound
including but not limited to chemical, biological and clinical data. deCODE’s
rights under this Section 3.6 shall be subject only to any conflicting or superceding
rights of Third Parties with respect to a particular IRCT Compound that were
granted prior to the compound’s selection under Section 2.4.

4.                                       CONFIDENTIALITY
AND PUBLICATION

4.1                                 NONDISCLOSURE
OBLIGATION.

All Information
disclosed by one Party to the other Party hereunder shall be maintained in
confidence by the receiving Party and shall not be disclosed to non-Party or
used for any purpose except as set forth herein without the prior written
consent of the disclosing Party, except to the extent that such Information:

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

(b)                                 is properly
in the public domain;

(c)                                  is
subsequently disclosed to the receiving Party by a Third Party who may lawfully
do so and is not under an obligation of confidentiality to the disclosing
Party;

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

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

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

principle of operation
are published or available to the general public or in the rightful possession
of the receiving party.

4.1.2                        Notwithstanding
the obligations of confidentiality and prohibitions on use, it shall not be a
breach of a Party’s obligations under this Section 4.1 to disclose Proprietary
Information:

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

(b)                                 in
compliance with applicable laws or regulations (including the disclosure
requirements of the U.S. Securities and Exchange Commission, NASDAQ or any
stock exchange on which securities issued by such Party or its Affiliates are
traded) or order by a court or other regulatory

body having competent
jurisdiction; provided that if a Party is so required to disclose Information
that 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 is
being sought in order to provide the other Party an opportunity to challenge or
limit 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 shall
remain otherwise subject to the confidentiality and non-use provisions of this
Section 4.1 and Section 4.2, and the Party disclosing Information pursuant to
law or court order shall take all steps reasonably necessary, including without
limitation obtaining an order of confidentiality, to ensure the continued
confidential treatment of such Information.

4.2                                 deCODE
KNOW-HOW.

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

4.3                                 PUBLICATION.

MERCK and deCODE each
acknowledge the other Party’s interest in publishing the results of its
research in order to obtain recognition within the scientific community and to
advance the state of scientific knowledge. Each Party also recognizes the
mutual interest in obtaining valid patent protection and in protecting business
interests and trade secret information. Consequently, except for disclosures
permitted pursuant to Section 4.1, either Party, its employees or consultants wishing
to make a publication shall deliver to the other Party a copy of the proposed
written publication or an outline of an oral disclosure at least sixty (60)
days prior to submission for publication or

presentation. The
reviewing Party shall have the right (a) to propose modifications to the
publication or presentation for patent reasons, trade secret reasons or
business reasons or (b) to request a reasonable delay in publication or presentation
in order to protect patentable information. If the reviewing Party requests a
delay, the publishing Party shall delay submission or presentation for a period
of ninety (90) days to enable patent applications protecting each Party’s
rights in such information to be filed in accordance with Article 7 below. Upon
expiration of such ninety (90) days, the publishing Party shall be free to
proceed with the publication or presentation. If the reviewing Party requests
modifications to the publication or presentation, the publishing Party shall
edit such publication to prevent disclosure of trade secret or proprietary
business information prior to submission of the publication or presentation.

4.4                                 PUBLICITY/USE
OF NAMES.

No disclosure of the
existence of, or the terms of, this Agreement may be made by either Party, and
no Party shall use the name, trademark, trade name or logo of the other Party
or its employees in any publicity, news release or disclosure relating to this
Agreement or its subject matter, without the prior express written permission
of the other Party. Nothing in this Agreement shall prevent either Party from issuing
statements that such Party determines to be necessary to comply with applicable
law (including the disclosure requirements of the U.S. Securities and Exchange
Commission, NASDAQ or any other stock exchange on which securities issued by
such Party are traded); provided, HOWEVER, that, the disclosing Party shall
provide the other Party with a copy of

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

4.5                                 IMPROPER
DISCLOSURES.

In the event that either
Party 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 the
breaching Party in addition to and not in place of any other non-monetary
remedies available for such breach of Sections 4.3 and 4.4. Entitlement to compensation
and the amount of the compensation shall be submitted to dispute resolution in
accordance with Section 10.6.

5.                                       PAYMENTS; ROYALTIES
AND REPORTS

5.1                                 RESEARCH
PROGRAM FUNDING

(a) PARTY CONTRIBUTIONS.
As set forth herein each Party has an ongoing financial obligation to support
the Research Program. Neither Party shall be obligated to provide a higher
level of support than agreed upon in the Budget for any Calendar Year. In
accordance 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

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

(b) BUDGET PREPARATION.
The estimated expenditures for that portion of the first Calendar Year
beginning on the Effective Date and ending on December 31st shall be set forth
in the Budget which will be attached hereto as Schedule 2.6 following its
preparation by the Operating Committee and approval by the Executive Committee.
By the initial September 15th following the Effective Date of the Agreement and
for each subsequent September 15th, the Operating Committee shall prepare a Budget
for 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 of
each Calendar Quarter its estimated MERCK Share for that Calendar Quarter. The
initial payment shall be made within thirty days of approval of the initial
Budget by the Executive Committee. Within sixty (60) days following the end of
a Calendar Quarter, the Parties shall meet and determine actual expenditures in
employee time and expenses properly attributable to the Research Program for
that Calendar Quarter. The combined total of expenditures shall be the Research
Program Expenditures for that Calendar Quarter. The MERCK Share shall be
determined in accordance with Schedule 5.1 and the Parties shall reconcile the

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

(d) ANCILLARY PAYMENTS
BY MERCK. Certain expenditures directly associated with the conduct of the IRCT
in accordance with Section 2.3 shall be borne solely by MERCK and shall not be
considered part of the Research Program funding subject to the defined
contributions of the Parties. These expenditures shall include [**] and only
those costs of a similar nature agreed to in writing by the parties.

(e) PAYMENT FOR
ABANDONED IRCT COMPOUNDS. If MERCK in its sole discretion for reasons other
than safety or efficacy elects to abandon development of an IRCT Compound, and
provided that (i) MERCK has elected not to offer commercialization rights to
deCODE pursuant to Section 3.6, and (ii) there is or will be no Product in the
same Disease Area as the abandoned IRCT Compound for which deCODE has received
or may receive payments under either Section 5.3 or 5.4, THEN MERCK shall be
obligated to pay deCODE [**] of its costs and expenses incurred to provide the
FTEs dedicated to the development of that IRCT Compound under the Research
Program PROVIDED, HOWEVER, that MERCK shall

not be obligated to pay
deCODE until the later of the end of the Research Program Term including any
Extended Research Program Term or the date on which no other IRCT Compounds in
the same Disease Area as the abandoned IRCT Compound are being developed by
MERCK.

5.2                                 CONSIDERATION
FOR LICENSE

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

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

5.3                                 MILESTONE
PAYMENTS

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

(a)                                  MERCK will
pay a milestone of [CONFIDENTIAL TREATMENT

REQUESTED].

(b)                                 MERCK will
pay a milestone of [CONFIDENTIAL TREATMENT

REQUESTED].

MERCK shall notify
deCODE in writing within thirty (30) days upon the achievement of the milestone
for each Product or Test, and shall make the appropriate milestone payment
within thirty (30) days of the achievement of such milestone. The milestone
payment shall be payable only upon the [**] achievement of such milestone for
any Test or Product containing a unique IRCT Compound and no amounts shall be
due hereunder for [**] achievement of such milestone with other Tests or Products
containing 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 Section
5.3(a) has been paid for a Product containing an IRCT Compound that the Related
IRCT Compound was derived from or that the Related IRCT Compound is
[CONFIDENTIAL TREATMENT REQUESTED] unless the Product also contains an IRCT
Compound 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 Product
containing a Related IRCT Compound, it shall have no further obligation to make

milestone payments under
Section 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 under
Section 1.60(a); or (iii) any other compound that is a Related IRCT Compound
because it is a [CONFIDENTIAL TREATMENT REQUESTED] of the IRCT Compound of
(ii).

5.4                                 ROYALTIES

5.4.1                        ROYALTIES
PAYABLE BY MERCK.

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

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

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

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

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

(2)                                  that no
royalties shall be due upon the sale or other transfer among MERCK or its
Affiliates or sublicensees, but in such cases the royalty shall be due and
calculated upon MERCK’s or its Affiliate’s or sublicensee’s Net Sales to the
first independent Third Party; and

(3)                                  no royalties
shall accrue on the disposition of Product in reasonable quantities by MERCK or
its Related Parties as samples (promotion or otherwise) or as donations (for
example, to non-profit institutions or government agencies for a non-commercial
purpose).

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

5.4.2                        CHANGE IN
SALES PRACTICES.

The Parties acknowledge
that during the term of this Agreement, MERCK’s sales practices for the
marketing and distribution of Product or Tests may change to the extent to
which the calculation of the payment for royalties on Net Sales may become impractical
or even impossible. In such event the Parties agree to meet and discuss in good
faith new ways of compensating deCODE to the extent currently contemplated
under

Section 5.4.1.

5.4.3                        ROYALTIES
FOR BULK COMPOUND.

In those cases where
MERCK sells bulk IRCT Compound or Related IRCT Compound rather than Product in
packaged form to an independent Third Party, the royalty obligations of this
Section 5.4 shall be applicable to the bulk IRCT Compound or Related IRCT
Compound.

5.4.4                        COMPETITIVE
PRODUCT.

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

5.5                                 REPORTS;
PAYMENT OF ROYALTY

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

5.6.                              AUDITS

5.6.1                        Upon the
written request of deCODE and not more than once in each Calendar Year, MERCK
shall permit an independent certified public accounting firm of nationally
recognized standing selected by deCODE and reasonably acceptable to MERCK, at
deCODE’s expense, to have access during normal business hours to such of the
records of MERCK as may be reasonably necessary to verify the accuracy of the
royalty 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 to
deCODE only whether the royalty reports are correct or incorrect and the
specific details concerning any discrepancies. No other information shall be
provided to deCODE.

5.6.2                        If such
accounting firm correctly identifies a discrepancy made during such period, the
appropriate Party shall pay the other Party the amount of the discrepancy
within thirty (30) days of the date deCODE delivers to MERCK such accounting
firm’s written report so correctly concluding, or as otherwise agreed upon by
the 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 and
less than [**] of the amount that should have been paid during the period in
question, MERCK shall also reimburse deCODE for the reasonable costs of such
audit.

5.6.3                        MERCK shall
include in each sublicense granted by it pursuant to this Agreement a provision
requiring the sublicensee to make reports to MERCK, to keep and maintain
records of sales made pursuant to such sublicense and to grant access to such
records by deCODE’s independent accountant to the same extent required of MERCK
under this Agreement. Upon the expiration of twenty-four (24) months following
the end of any year, the calculation of royalties payable with respect to such
year shall be binding and conclusive upon deCODE, and MERCK and its sublicensees
shall be released from any liability or accountability with respect to
royalties for such year.

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

5.6.5                        deCODE shall
treat all financial information subject to review under this Section 5.6 or
under any sublicense agreement in accordance with the confidentiality and
non-use provisions of this Agreement, and shall cause its accounting firm to
enter into an acceptable confidentiality agreement with MERCK and/or its
Related Parties obligating it to retain all such information in confidence
pursuant to such confidentiality agreement.

5.7                                 PAYMENT
EXCHANGE RATE

All payments to be made
by MERCK to deCODE under this Agreement shall be made in United States dollars
and may be paid by check made to the order of deCODE or bank wire transfer in
immediately available funds to such bank account in the United States
designated in writing by deCODE from time to time. In the case of sales outside
the United States, the rate of exchange to be used in computing the amount of
currency equivalent in United States dollars due deCODE shall be made at the rate
of exchange and on the periodic schedule used by MERCK for its own financial
reporting purposes at such time.

5.8                                 INCOME TAX
WITHHOLDING

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

6.                                       REPRESENTATIONS
AND WARRANTIES

6.1                                 REPRESENTATION
AND WARRANTY

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

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

licenses granted under
Article 3 hereof;

(ii)                                  it has not
previously 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 best
of deCODE’s knowledge, it is the sole and exclusive owner of the Patent Rights
and deCODE Know-How(excluding those rights included in the foregoing on basis
that deCODE has Control solely through license rights from a Third Party), all of
which are (and shall be, in the case of deCODE 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 of ownership whatsoever with respect to the
Patent Rights and deCODE Know-How;

(iv)                              there are no
claims, judgments or settlements against or owed by deCODE or pending or
threatened claims or litigation relating to the Patent Rights, deCODE Know-How
and deCODE Prior Know-How(excluding those rights included in the foregoing on basis
that deCODE has Control solely through license rights from a Third Party); and

(v)                                 deCODE has
disclosed to MERCK all reasonably relevant information regarding the Patent
Rights and deCODE Know-How licensed under this Agreement, including without
limitation the existence of any patent opinions obtained by deCODE related thereto.

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

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

(ii)                                  it has not
previously assigned, transferred, conveyed or otherwise encumbered its right,
title and interest in MERCK Patents, MERCK Collaboration Patents, Joint
Collaboration Patents, MERCK Know-How or MERCK Prior Know-How;

(iii)                               to the best
of MERCK’s knowledge, it is the sole and exclusive owner of MERCK Patents,
MERCK Collaboration Patents, MERCK Know-How or MERCK Prior Know-How(excluding
those rights included in the foregoing on basis that MERCK has Control solely
through license rights from a Third Party), all of which are (and shall be, in
the 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 of
ownership whatsoever with respect to MERCK Patents, MERCK Collaboration
Patents, Joint Collaboration Patents, MERCK Know-How or MERCK Prior Know-How;

(iv)                              there are no
claims, judgments or settlements against or owed

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

7.                                       PATENT
PROVISIONS

7.1                                 OWNERSHIP,
FILING, PROSECUTION AND MAINTENANCE OF PATENTS

7.1.1                        deCODE shall
retain all right, title and interest in and to deCODE Generalized Technology,
deCODE Genomics Data, deCODE Know-How, deCODE Prior Know-How, deCODE
Collaboration Patents and deCODE Patents, subject to the licenses granted to
MERCK pursuant to Section 3.1.

7.1.2                        MERCK shall
retain all right, title and interest in and to the MERCK Know-How, MERCK
Collaboration Patents and MERCK Patents, subject to the licenses granted to
deCODE pursuant to Section 3.1.

7.1.3                        Subject to
the licenses granted hereunder:

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

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

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

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

7.1.4                        deCODE
agrees to file, prosecute and maintain in the Territory, upon appropriate
consultation with MERCK, the Patent Rights licensed to MERCK under this
Agreement; PROVIDED, HOWEVER, with respect to Joint Information and Inventions,
MERCK shall have the first right to file patent applications for such Joint
Information and Inventions. With respect to deCODE Information and Inventions,
deCODE may elect not to file and if so MERCK shall have the right to file
patent applications. In such event, deCODE shall execute such documents and
perform such acts at deCODE’s expense as may be reasonably necessary to effect
an assignment of such Patent Rights to MERCK in a timely manner to allow MERCK
to continue such prosecution or maintenance. In each case, the filing Party
shall give the non-filing Party an opportunity to review the text of the
application before filing, shall consult with the non-filing Party with respect
thereto, and shall supply the non-filing Party with a copy of the application
as filed, together with notice of its filing date and serial number. deCODE
shall keep MERCK advised of the status of the actual and prospective patent
filings and upon the request of MERCK, provide advance copies of any papers
related to the filing, prosecution and maintenance of such patent filings.
deCODE shall promptly give notice to MERCK of the grant, lapse, revocation,

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

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

7.2                                 OPTION OF
MERCK TO PROSECUTE AND MAINTAIN PATENTS

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

7.3                                 INTERFERENCE,
OPPOSITION, REEXAMINATION AND REISSUE

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

(b)                                 deCODE shall
not initiate any reexamination, interference or reissue proceeding relating to
Patent Rights without the prior written consent to MERCK, which consent shall
not be unreasonably withheld.

(c)                                  In
connection with any interference, opposition, reissue, or reexamination proceeding
relating to Patent Rights, MERCK and deCODE will cooperate fully and will
provide each other with any information or assistance that either may
reasonably request. deCODE shall keep MERCK informed of developments in any
such action or proceeding, including, to the extent permissible by law,
consultation and approval of any settlement, the status of any settlement
negotiations and the terms of any offer related thereto.

(d)                                 deCODE shall
bear the expense of any interference, opposition, reexamination, or reissue
proceeding relating to Patent Rights, except with respect to proceedings
related to Joint Collaboration Patents, the costs and expenses of which shall
be borne equally by the Parties. In the event that a Party elects not to
contribute to the costs and expenses incurred in connection with a proceeding
in a country related

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

7.4                                 ENFORCEMENT
AND DEFENSE

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

of deCODE Know-How.
However, deCODE, upon notice to MERCK, shall have the first right to initiate
and prosecute such legal action in the name of deCODE and MERCK, or to control
the defense of any declaratory judgment action relating to Patent Rights or
deCODE Know-How. deCODE shall promptly inform MERCK if it elects not to
exercise such first right and MERCK shall thereafter have the right to either
initiate and prosecute such action or to control the defense of such
declaratory 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 the
expense of such prosecution, except with respect to prosecutions related to
Joint Collaboration Patents, the costs and expenses of which shall be borne
equally by the Parties. In the event that a Party elects not to contribute to
the costs and expenses incurred in connection with a prosecution related to a
Joint Collaboration Patent in a country, such Party shall be deemed to have abandoned
its rights with respect to such Joint Collaboration Patent in that country.

(b)                                 In the event
that deCODE elects not to initiate and prosecute an action as provided in
paragraph (a), and MERCK elects to do so, the costs of any agreed-upon course
of action to terminate infringement of Patent Rights or misappropriation or
misuse of deCODE Know-How, including without limitation the costs of any legal
action commenced or the defense of any declaratory judgment, shall be shared
equally by deCODE and MERCK.

(c)                                  For any
action to terminate any infringement of Patent Rights or any misappropriation
or misuse of deCODE Know-How, in the event that MERCK is unable to initiate or
prosecute such action solely in its own name, deCODE will join such action
voluntarily and will execute and cause its Affiliates to execute all documents
necessary for MERCK to initiate litigation to prosecute and maintain such
action. In connection with any action, MERCK and deCODE will cooperate fully
and will provide each other with any information or assistance that either may
reasonably request. Each Party shall keep the other informed of developments in
any action or proceeding, including, to the extent permissible by law, the
consultation and approval of any settlement negotiations and the terms of any
offer related thereto.

(d)                                 Any recovery
obtained by either or both MERCK and deCODE in connection with or as a result
of any action contemplated by this

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

(i)                                     the Party
which initiated and prosecuted the action shall recoup all of its costs and
expenses incurred in connection with the action;

(ii)                                  the other
Party shall then, to the extent possible, recover its costs and expenses
incurred in connection with the action; and

(iii)                               the amount
of any recovery remaining shall then be allocated between the Parties on a PRO
RATA basis taking into consideration the relative economic losses suffered by
each Party. By way of example and not limitation, MERCK may suffer lost profit
from the loss of sales of Product or Tests and deCODE may suffer lost royalty income
on the loss of sales.

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

of such certification or
any recovery obtained as a result of such legal action shall be as defined in
paragraphs 7.4(a)-(d) hereof; PROVIDED, HOWEVER, deCODE shall exercise its
first right to initiate and prosecute any action and shall inform MERCK of such
decision within ten (10) days of receipt of the certification, after which time
MERCK shall have the right to initiate and prosecute such action.

7.5                                 PATENT TERM
RESTORATION

The Parties hereto shall
cooperate with each other in obtaining patent term restoration or supplemental
protection certificates or their equivalents in any country in the Territory
where applicable to Patent Rights. In the event that elections with respect to
obtaining such patent term restoration are to be made, MERCK shall have the
right to make the election and deCODE agrees to abide by such election.

8.                                       TERM AND
TERMINATION

8.1                                 TERM AND
EXPIRATION.

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

8.2                                 TERMINATION
BY A PARTY.

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

8.3                                 TERMINATION
FOR CAUSE

8.3.1                        CAUSE FOR
TERMINATION.

This Agreement may be
terminated at any time during the term of this Agreement upon written notice by
either Party if the other Party is in breach of its material obligations
hereunder by causes and reasons within its control and has not cured such
breach 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 existence
of a material breach, the ninety (90) day cure period shall be tolled until
such time as the dispute is resolved pursuant to Section 10.6 hereof.

8.3.2                        EFFECT OF
TERMINATION FOR CAUSE ON LICENSE.

(a)                                  If MERCK
terminates this Agreement under Section 8.3.1, MERCK’s licenses pursuant to
Sections 3.1 and 3.2 shall be subject only to MERCK’s continuing obligations of
compensation, 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 any
other reason. In addition, deCODE shall at MERCK’s request promptly return or
cause to be returned to MERCK all Products and Tests, IRCT Compounds, Related IRCT
Compounds, Information in tangible form, and all substances or compositions
delivered or provided by MERCK, as well as any other material provided by MERCK
in any medium. If deCODE terminates this Agreement under Section 8.3.1, (1) if
MERCK has not paid any Exclusive License Fees prior to termination then MERCK’s
licenses under Section 3.1(b) and (d) become non-exclusive; (2) if MERCK pays
an Exclusive License Fee at any time prior to the date of termination, then its
license rights under Section 3.1 (b) and (d) to the corresponding Elected
Disease 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 any
IRCT Compounds, Related IRCT Compounds, Tests or Products exist, subject to
MERCK’s continuing obligations of compensation, reporting and confidentiality
to deCODE under Sections

2.7.2, 4, 5.3 and 5.4.

(b)                                 If this
Agreement is rejected by or on behalf of deCODE under Section 365 of the United
States Bankruptcy Code (the “Code”), all licenses and rights to licenses
granted under or pursuant to this Agreement by deCODE to MERCK are, and shall
otherwise be deemed to be, for purposes of Section 365(n) of the Code, licenses
of rights to “intellectual property” as defined under Section 101(35A) of the
Code. 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 the
Code, and that upon commencement of a bankruptcy proceeding by or against
deCODE under the Code, MERCK shall be entitled to a complete duplicate of or
complete access to (as MERCK deems appropriate), any such intellectual property
and all embodiments of such intellectual property. Such intellectual property
and all embodiments thereof shall be promptly delivered to MERCK (i) upon any such
commencement of a bankruptcy proceeding upon written request therefore by
MERCK, unless deCODE elects to continue to perform all of its obligations under
this Agreement or (ii) if not delivered under (i) above, upon the rejection of
this Agreement by or on behalf of deCODE upon written request therefore by
MERCK. If the Agreement is rejected by or on behalf of deCODE under any
provisions of bankruptcy or insolvency law of any other country, it is the
Parties intent that the licenses of rights of intellectual property shall not
be subject to termination and that MERCK shall be entitled to a complete
duplicate of or complete access to (as MERCK deems appropriate), any such intellectual
property and all embodiments of such intellectual property or to the maximum
protections afforded to licensees under the applicable law.

The foregoing provisions
of Subsection 8.3.2(a) are without prejudice to any rights MERCK may have
arising under the Code or other applicable law.

8.4                                 EFFECT OF
EXPIRATION OR TERMINATION; SURVIVAL

Expiration or
termination of the Agreement shall not relieve the Parties of any obligation
accruing prior to such expiration or termination. Any expiration or termination
of this Agreement shall be

without prejudice to the
rights of either Party against the other accrued or accruing under this
Agreement prior to expiration or termination, including without limitation the
obligation to pay royalties for Product(s), Tests, Related IRCT Compounds or
IRCT Compound sold prior to such expiration termination. In the event this Agreement
expires or is terminated during the pendency of an IRCT, the Parties shall
arrange for orderly completion or early termination of such IRCT, including
making provision for payment for all non-cancelable expenses associated
therewith. The provisions of Article 4 shall survive the expiration or termination
of 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 shall
survive any expiration or termination of this Agreement.

9.                                       INDEMNIFICATION;
INSURANCE; LIABILITY

9.1                                 INDEMNIFICATION

9.1.1                        INDEMNIFICATION
BY MERCK.

MERCK shall indemnify
and hold harmless deCODE, its Affiliates, any present or future parent or
subsidiary of them, and their respective officers, directors, employees, agents
and Affiliates (collectively in this Section 9.1 referred to as “deCODE”) from
and against any and all losses, liabilities, damages including, but not limited
to, reasonable counsel fees, actually incurred by deCODE in defending against
any litigation or any claim whatsoever by a Third Party and any and all amounts
reasonably paid in settlement of any claim or litigation, any settlement
payments (which shall first be subject to MERCK’s prior written consent, not to
be unreasonably withheld) (collectively in this section referred to as “deCODE
Losses”), PROVIDED such deCODE Losses arise solely out of (i) the promotion,
marketing, distribution and sale, whether directly or through distributors, of
the Products or Tests, or (ii) the negligence, recklessness or wrongful
intentional acts or omissions of MERCK, its Affiliates or its sublicensees, if
any, or their respective directors, officers, employees or agents, in connection
with the performance by MERCK under this Agreement; and PROVIDED further, that
this obligation by MERCK shall not apply in the event that such deCODE Losses
are attributable in any manner to any intentional act or negligence, willful or
otherwise, of deCODE.

9.1.2                        INDEMNIFICATION
BY deCODE.

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

9.1.3                        NOTICE OF
CLAIM OF INDEMNIFICATION - THIRD PARTY CLAIMS

(a)                                  A Party (the
“Indemnified Party”) seeking indemnification under this Agreement for a claim
made against it by a Third Party (“Third Party Claim”) shall notify the other
Party (the “Indemnifying Party”) in writing of the Third Party Claim within
thirty (30) days after receipt by the Indemnified Party of written notice of
the Third Party

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

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

(c)                                  With respect
to all Third Party Claims, the Indemnified Party shall cooperate in all
reasonable respects with the Indemnifying Party in connection with any Third
Party Claims and the defense or compromise thereof. Such cooperation shall
include the retention and (upon the Indemnifying Party’s request) the provision
to the Indemnifying Party of records and information reasonably relevant to the
Third Party Claim, making employees available on a mutually convenient basis to
provide additional information, and explanation of any material provided under
this Agreement. If the Indemnifying Party shall have assumed the defense of a
Third Party Claim, the Indemnified Party shall not, without first waiving the
indemnity as to such claim, admit any liability with respect to, or settle,
compromise, or discharge, the Third Party Claim, without the Indemnifying Party’s
prior written consent; PROVIDED that admissions of facts which a Party may
reasonably be required to make shall not be deemed to be admissions of
liability.

9.1.4                        COOPERATION.

The Parties shall
cooperate with each other with respect to resolving any claim or liability with
respect to which one Party is obligated to indemnify the other Party under this
Agreement, including, without limitation, by taking reasonable efforts to
mitigate or resolve any such claim or liability.

9.2                                 INSURANCE.

Each Party shall
maintain adequate insurance against liability and other risks associated with
its activities contemplated by this Agreement, including but not limited to its
indemnification obligations herein, in such amounts and on such terms as are
customary in the industry for the activities to be conducted by it under this
Agreement. Each Party shall furnish to the other Party evidence of such
insurance, upon request.

10.                                 MISCELLANEOUS

10.1                           FORCE MAJEURE

Neither Party shall be
held liable to the other Party nor be deemed to have defaulted under or
breached the Agreement for failure or delay in performing any obligation under
the Agreement when such failure or delay is caused by or results from causes
beyond the reasonable control of the affected Party including, but not limited
to, embargoes, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, fire, floods, or other acts of God, or acts, omissions or delays
in acting by any governmental authority or the other Party. The affected Party
shall notify the other Party of such force majeure circumstances as soon as reasonably
practical, and shall promptly undertake all reasonable efforts necessary to
cure such force majeure circumstances. The Party giving such notice shall
thereupon be excused from such of its obligations under this Agreement as it is
thereby 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 efforts
to minimize the duration of any force majeure.

10.2                           ASSIGNMENT/
CHANGE OF CONTROL

(a) Neither Party shall
be entitled to assign its rights or delegate its obligations hereunder without
the express written consent of the other Party hereto, except that (i) MERCK
may assign its rights and transfer its duties hereunder to an Affiliate or to
any assignee of all or substantially all of its business (or that portion
thereof to which this Agreement relates) or in the event of MERCK’s merger, consolidation
or involvement in a similar transaction and (ii) deCODE may assign its rights
and transfer its duties hereunder to an Affiliate or to any assignee of all or
substantially all of its business (or that portion thereof to which this
Agreement relates) or in the event of deCODE’s merger, consolidation or
involvement in a similar transaction, PROVIDED HOWEVER, during the Research
Program Term deCODE may not assign its rights and obligations under the
Agreement without MERCK’s written consent which shall not be unreasonably
withheld. It shall be reasonable for MERCK to withhold consent of an assignment
to a Competitor. No assignment and transfer shall be valid or effective unless
done in accordance with this Section 9.2 and unless and until the
assignee/transferee shall agree in writing to be bound by the provisions of
this Agreement.

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

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

Control and deCODE shall
adopt procedures approved in writing by MERCK to control the dissemination of
Sensitive Information disclosed after the Change of Control. The purposes of
all such procedures shall be to strictly limit such disclosures to only those
personnel having a need to know Sensitive Information in order for deCODE to
perform its obligations.

10.3                           SEVERABILITY

If any one or more of
the provisions contained in this Agreement is held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby, unless the absence of the invalidated provision(s) adversely
affects the substantive rights of the Parties. The Parties shall in such an instance
use their best efforts to replace the invalid, illegal or unenforceable
provision(s) with valid, legal and enforceable provision(s) which, insofar as
practical, implement the purposes of this Agreement.

10.4                           NOTICES

All notices which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally, sent by facsimile (and promptly confirmed by personal delivery,
registered or certified mail or overnight courier), sent by
nationally-recognized overnight courier or sent by registered or certified
mail, 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

  

 

 

	
  

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

10.5                           APPLICABLE
LAW

The Agreement shall be
governed by and construed in accordance with the laws of the State of New
Jersey and the patent laws of the United States without reference to any rules
of conflict of laws or renvoi. The United Nations Convention on the Sale of
Goods shall not apply.

10.6                           DISPUTE
RESOLUTION

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

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

(b) The arbitration
shall be conducted by a panel of three persons experienced in the
pharmaceutical business: within 30 days after initiation of arbitration, each
Party shall select one person to act as arbitrator and the two Party-selected
arbitrators shall select a third arbitrator within 30 days of their
appointment. If the arbitrators selected by the Parties are unable or fail to
agree upon the third arbitrator, the third arbitrator shall be appointed by the
AAA. The place of arbitration shall be New York, New York, and all proceedings and
communications shall be in English.

(c) Either Party may
apply to the arbitrators for interim injunctive relief until the arbitration
award is rendered or the controversy is otherwise resolved. Either Party also
may, without waiving any remedy under this Agreement, seek from any court
having jurisdiction any injunctive or provisional relief necessary to protect the
rights or property of that Party pending the arbitration award. The arbitrators
shall have no authority to award punitive or any other type of damages not
measured by a Party’s compensatory damages. Each Party shall bear its own costs
and expenses and attorneys’ fees and an equal share of the arbitrators’ and any
administrative fees of arbitration.

(d) Except to the extent
necessary to confirm an award or as may be required by law, neither a Party nor
an arbitrator may disclose the existence, content, or results of an arbitration
without the prior written consent of both Parties. In no event shall an
arbitration be initiated after the date when commencement of a legal or
equitable proceeding based on the dispute, controversy or claim would be barred
by the applicable New York statute of limitations.

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

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

10.7                           ENTIRE
AGREEMENT; AMENDMENTS

The Agreement contains
the entire understanding of the Parties with respect to the Research Program
and licenses granted hereunder. All express or implied agreements and
understandings, either oral or written, with regard to the Research Program and
the 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 instrument
duly executed by authorized representatives of both Parties hereto.

10.8                           HEADINGS

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

10.9                           INDEPENDENT
CONTRACTORS

It is expressly agreed
that deCODE and MERCK shall be independent contractors and that the
relationship between the two Parties shall not constitute a partnership, joint
venture or agency. Neither deCODE nor MERCK shall have the authority to make
any statements, representations or commitments of any kind, or to take any
action, which shall be binding on the other Party, without the prior written
consent of the other Party.

10.10                     WAIVER

A waiver (whether
express or implied) by one of the Parties of any of the provisions of this
Agreement or of any breach of or default by the other Party in performing any
of those provisions shall not constitute a continuing waiver and that waiver
shall not prevent the waiving Party

from subsequently
enforcing any of the provisions of this Agreement not waived or from acting on
any subsequent breach of or default by the other Party under any of the
provisions of this Agreement.

10.11                     CUMULATIVE
REMEDIES

No remedy referred to in
this Agreement is intended to be exclusive, but each shall be cumulative and in
addition to any other remedy referred to in this Agreement or otherwise
available under law.

10.12                     WAIVER OF
RULE OF CONSTRUCTION

Each Party has had the
opportunity to consult with counsel in connection with the review, drafting and
negotiation of this Agreement. Accordingly, the rule of construction that any
ambiguity in this Agreement shall be construed against the drafting Party shall
not apply.

*

*

*

*

*

10.13                     COUNTERPARTS

The Agreement may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

IN WITNESS WHEREOF, the
Parties 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

SCHEDULE
1.21 DECODE PATENTS

[CONFIDENTIAL
TREATMENT REQUESTED]

SCHEDULE
2.1-0 INITIAL WORK PLAN

[CONFIDENTIAL
TREATMENT REQUESTED]

Schedule
2.3

[CONFIDENTIAL TREATMENT REQUESTED]

APPENDIX
1.3.1.b: [CONFIDENTIAL TREATMENT REQUESTED]

APPENDIX
3.5 [CONFIDENTIAL TREATMENT REQUESTED]

SCHEDULE
2.6 BUDGET

SCHEDULE
5.1 Research Program Funding

[CONFIDENTIAL TREATMENT REQUESTED]Exhibit
10.19

EMPLOYMENT
CONTRACT

	
  deCODE Genetics ehf. (Íslensk erfðagreining ehf.), State Registration No. 691295-3549, of
  Sturlugata 8, Reykjavík (the “Company” or the “Employer”)

  
	
  for the first part and Jakob Sigurdsson Id. No.
  280364-2589

  
	
  for the second part, enter into the following
  Employment Contract:

  

 

1. Field of work

The Employee is hired to work in the capacity
of Senior Vice President, Corporate Development of the Employer and of deCODE
genetics, Inc., the parent company of the Employer (the “Parent”) and from time
to time will serve in such other positions as the Chief Executive Officer of
the Employer (the “CEO”) or the
Board of Directors of the Parent (the “Board”)
may from time to time determine. The Employee will have such powers and duties
(including holding officer positions with one or more Subsidiaries of the
Parent) as may be assigned from time to time by the CEO or the Board and as are
generally associated with the position of Senior Vice President, Corporate
Development and such other positions. 
The Employee will work
under the supervision of the CEO and the Board. 
“Subsidiary” means any entity 50%
or more owned, directly or indirectly, by the Parent.

The workplace is the
Employer’s base of operations at Sturlugata 8, Reykjavík. If the Employer’s
base of operations in Reykjavík changes, or the number of bases within the
greater Reykjavík area is increased, the Employee agrees to change his
workplace.

The Employer reserves the right to change the tasks of
the Employee and administrative arrangements if such changes are necessary in
the opinion of the Employer and the Employee consents, provided, however, that
such changes do not negatively affect the Employee’s compensation and level of
responsibility.

2. Term of employment

The Employee shall begin
work for the Employer on October 23, 2006.

The mutual notice period for termination as
contemplated by Act No. 19/1979 on the Right of Workers to Notice of
Termination of Employment and to Wages During Absences Caused by Illness or
Accident shall be six (6) months for the Employee and twelve (12) months for
the Employer.

3. Duties

The Employee pledges to
perform his work faithfully and conscientiously. The Employee undertakes to
observe all instructions given by supervisors regarding his work. Furthermore,
the Employee undertakes to observe any rules set by the Company or the Parent and
published in the Employees’ Handbook or in any other

Confidential

manner. The Employer
shall make available and the Employee shall acquaint himself with any such
rules and notices that the Company or the Parent may issue.

The Employee shall not engage in work for other
companies without the permission of the CEO during the term of this Employment Contract.
This applies equally to paid work and unpaid work as well as to service on the
board of directors of other companies. The Employee may serve on the board of a
non-governmental, non-profit organisation, provided that such activities are
compatible with the work of the Employee under his work contract.

On termination of his
employment, the Employee shall return all documents and identification papers
of any kind in his possession and belonging to the Employer. This applies to
all documents and computer data, originals and copies.

4. Working Hours

The Employee is appointed
to a full-term position which is a position of responsibility and
management.  Working hours are determined
by what is necessary to perform the work in an efficient and effective manner,
irrespective of whether this requires work outside regular working hours or
not.

5. Wage
Terms

The fixed annual salary of the Employee is USD 365,000, payable in
Icelandic kronas at the exchange rate in effect on the last day of the month
before the month in which payment is made. 
In addition the Employee shall eligible to receive an annual bonus of up
to 50% of his annual salary, as the Board or the Compensation Committee of the
Board may specify in its sole discretion based upon performance targets or
otherwise, subject to any terms or conditions as may be established by the
Board or its Compensation Committee.

Payment for any work carried out outside regular working hours and for
work-related projects of any kind is included in the above annual salary.

Wages are paid on the first working day of each month for the previous
month.

The
Employee shall pay 4% of his total wages as a contribution to a pension fund of
his choice and the Employer shall contribute 6% of the same amount.

Should the Employee
utilize his right to supplementary pension savings, the Employer will pay in
addition to the Employee’s total wages 2% to the supplementary fund, provided
that the Employee pays at least 2%.

In addition, the Employer
will pay 5% on top of the Employee’s total wages to either a regular pension
fund, or a supplementary fund, at the Employee’s choosing.

The Company shall provide
the Employee with an automobile for occupational and private use in accordance
with Company policy applicable from time to time. The leasing expense for the
automobile is to be agreed upon between the Employee and

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the Chief Executive Officer
of the Company (the “CEO”).  Before the
Company has entered into a lease for such an automobile, or at the time of
expiration of the term of such a lease, the Employee may elect to receive, in
lieu of an automobile, an automobile allowance in an amount agreed upon between
the Employee and the CEO.  The Company
will pay reasonable operating expenses (including gas and insurance) approved
in advance by the CEO for any automobile provided by the Company.  The parties acknowledge that this benefit is
subject to taxation under Icelandic law.

The above wages constitute full remuneration for the
work performed by the Employee, and hence no payments are required under this Employment
Contract for vacation or December bonuses.

The salary and other wage-related terms shall be
reviewed annually, taking into account external circumstances and the
performance of the Employee in his work, but shall not be reduced as a result
of such review.

The Company will pay the reasonable and customary
documented expenses  of the
relocation of the Employee and his family from the Employee’s current home in
Germany to Iceland

6. Vacation

6.1.

The Employer makes no separate vacation payments to
the Employee, as the Employee shall enjoy a full salary during the time of his vacation.

The Employee shall be entitled to such number of weeks
of vacation as may from time to time be awarded in accordance with the Employer’s
policies for executives based in Iceland.

In other respects, vacation rights shall be subject to
Act No. 30/1987 on Vacations.

6.2.

Rights of employees to
maternity/paternity leave and parental leave shall be subject to Act No.
95/2000, on Maternity/Paternity Leave and Parental Leave.

7. Occupational Accidents and
Diseases

The Employer is liable
for any injuries suffered by the Employee in his work, subject to general rules
of law on torts regarding employer liability.

In the event of the
Employee suffering an accident at work, the Employer shall pay for the transport
of the Employee to his home or to hospital and reimburse him for all reasonable
out-of-pocket medical expenses, for up to 4 weeks in each case, other than
expenses paid by the district health insurance or social security.

In each instance of an
accident at work or work-related illness caused during work or as a result of
work, or occurring during trips to and from the place of work, the Employer
shall pay the Employee full wages for up to three months in accordance

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with the terms of
employment in effect at the time of the Employee’s accident or illness,
provided that the per diem paid in respect of the Employee for these days by
the State Social Security Institute and/or insurance companies is paid to the
Employer.

8. Accidents and illness

Wage payments to
employees during absences caused by illness or accident in the first year of
employment shall correspond to two days for each month of work. When the
Employee has worked for the Employer for one year or more, wage payments during
absences caused by illness shall be as follows: After 1 year, 2 months of every
12 months, after 5 years’ employment 4 months of every 12 months and after 10
years of employment 6 months of every 12 months.

If the Employee is ill
and cannot attend work for that reason, he shall immediately notify the Company
and the CEO, who shall then decide whether a medical testimonial is required.
In the event of a medical testimonial being required, the Employee shall
provide a testimonial from a physician approved by the Employer regarding the
illness or accident and confirming that he was unable to work. The Employer
shall reimburse the Employee for the out-of-pocket expenses of obtaining a
requested testimonial, provided that the above conditions are met.

After the first month at
work the Employee shall, without any curtailment of wages, be entitled to spend
a total of 10 working days of every 12 month period in ministering to his sick family
members, provided that other care is unavailable.

9. Insurance

9.1.

The Employer shall insure
all his employees against death and chronic or temporary disability caused by
an accident at work or while travelling a normal route from the home to the
workplace and from the workplace to the home.

In the event that the
Employee, because of his work, has accommodations away from his home, the
accommodations shall replace the home and the insurance shall then also cover
normal trips between the home and the said accommodations.

The insurance shall enter into force as soon as the
Employee begins work and shall expire as soon as the Employee stops working for
the Employer.

The policy terms of the insurance shall be the general
policy terms in force for work-related accident insurance for wage earners as
established by the Association of Icelandic Insurance Companies at the time of
signature of this Contract.

In the event of the Employer becoming liable for
damages to the Employee, accident compensation and per diem paid to the
Employee under the provisions of this Employment Contract shall be fully
deductible from any damages that the Employer may otherwise be required to pay.
While the payment of wages continues, per diem payments shall be paid to the
Employer.

 4
 

9.2.

Further provisions on employee insurance, e.g. terms
and compensation amounts, are set out in the Employee’s Handbook as current at
any time. Employees are expected to acquaint themselves with such information.

10.  Stock
Option Grants

On the first day of the
Employee’s employment, the Parent shall grant him two non-qualified stock
options, pursuant to the Parent’s 2002 Equity Incentive Plan, to purchase
250,000 and 50,000 shares, respectively, of Common Stock of the Parent (“Common
Stock”) with an exercise price equal to the closing price of the Parent’s
Common Stock on the last trading day prior to the first day of the Employee’s
employment as reported on the Nasdaq Global Market.  Such options shall be in the form of, and on
such terms and conditions as provided in, the Parent’s standard form of Stock
Option Grant Agreement in effect as of the date on which the options are
granted and shall include such further
terms as are described in this Employment Contract. The Stock Option
Grant Agreement for the option for 250,000 shares of Common Stock shall
provide, on condition that the Employee is employed hereunder on the relevant
vesting dates, that such option shall vest as to 62,500 shares on the first
anniversary of the Employee’s commencement of employment hereunder and as to
1/48 of the shares on the last day of each month thereafter.   Such Stock Option Grant Agreement shall also provide that such option shall
become 100% vested immediately upon a Change in Control (as defined in Section
11 below) and upon a termination of the Employee’s employment hereunder other
than for Cause (as defined in the Parent’s 2002 Equity Incentive Plan). The Stock Option Grant Agreement for
the option for 50,000 shares of Common Stock shall provide that such option
shall vest on the full execution of a definitive Material Collaboration
Agreement which is executed primarily as the result of the Employee’s efforts,
as determined in good faith by the CEO.  “Material
Collaboration Agreement” shall mean (i) any research collaboration or similar
agreement with a third party pursuant to which the Parent or the Company
receives or is entitled to receive research funding and/or scientific or
development milestone payments or (ii) any licensing, distribution or similar
agreement pursuant to which the Parent or the Company receives or is entitled
to receive royalties or other consideration for the grant of licensing,
distribution, marketing or similar rights, which agreement is material to the
Parent as determined in good faith by the CEO.

11. 
Termination of Employment following a Change in Control.

If following the occurrence of a Change
in Control of the Parent (as defined below), (i) (A) the Employee ceases to
serve in a senior executive position with the Company, (B) his compensation
(including the material benefits of his employment) is decreased, or (C) his
duties are inconsistent with those customarily performed by a company’s senior
executive officer, other than as a result of his voluntary action, and (ii)
within sixty (60) days of such Change in Control, the Employee terminates his
employment by giving the Company 10 days’ notice, then the Company will pay
him, in addition to any compensation earned prior to the date of termination
and in addition to any compensation related to the notice period under Section
2, a lump sum

 5
 

cash payment in an amount equal to
twelve (12)  times  his monthly salary at the time of his
termination plus one and one-half (1-1/2) times the average annual bonus paid
to him during the preceding two (2) years. 
Such payment will be made within thirty (30) days of termination.  A Change in Control of the Parent shall be
deemed to occur if (i) the Parent is merged with or into or consolidated with
another corporation or other entity under circumstances where the stockholders
of the Parent immediately prior to such merger or consolidation do not own
after such merger or consolidation shares representing at least fifty percent
(50%) of the voting power of the Parent or the surviving or resulting
corporation or other entity, as the case may be, or (ii) if the Parent is
liquidated or sells or otherwise disposes of substantially all of its assets to
another corporation or entity, or (iii) if any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) shall
become the beneficial owner (within the meaning of Rule 13d-3 under such Act)
of forty (40%) percent or more of the Common Stock of the Parent, in all cases
other than pursuant to a plan or arrangement entered into by such person and
the Parent or otherwise approved by the Board.

12.  Confidentiality, Invention Assignment and Non-Compete
Agreement.

In
further consideration of this Employment Contract, contemporaneously with the
execution of this Employment Contract the Employee shall execute the
Confidentiality, Invention Assignment and Non-Compete Agreement attached hereto
as Exhibit A (“Noncompetition Agreement”). 
Any material breach by the Employee of the Noncompetition Agreement
after his employment has terminated shall, in addition to all remedies provided
therein, entitle the Company and the Parent to terminate any further payment
obligations they may have to him under this Employment Contract.

The Employee agrees and
acknowledges that the Noncompetition Agreement constitutes a prerequisite for
and an integral part of this Employment Contract.  The Employee’s compensation as laid out in
this Employment Contract does contain a fair remuneration, as understood by
laws on employees inventions # 72 from 2004, for any inventions made by, or
participated in by, Employee, while employed by Employer, as long as said
invention is a part of his job, or related to a job/project that he is assigned
to by Employer.

13.  Breach of the Employee’s Contractual
Obligations

In the event of a breach by the Employee of the
provisions of any provisions hereof (including without limitation Article 3) or
of the Noncompetition Agreement, such a breach shall be regarded as a
substantial default on the part of the Employee of the Employment Contract and
the Employer may then terminate this Contract without prior notice and without
paying a salary to the Employee during the notice period.

All earlier employment contracts and any other
contracts between the Employer and the Employee regarding wages and terms of
employment shall be superseded by this Employment Contract on its entry into
force.

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  Reykjavik,        

  	
   

  	
  25 October, 2006

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Employee

  	
   

  	
      For
  Íslensk erfðagreining ehf.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
    /s/
  Jakob Sigurdsson

  	
   

  	
      /s/
  Kari Stefansson

  	
   

  	
   

  

 

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