Document:

<PAGE>

                                                                   EXHIBIT 10.14

                                  ZYMOGENETICS

                  DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES

                  AMENDED AND RESTATED AS OF NOVEMBER 1, 1997

                                                                  Execution Copy
                                                                  --------------
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                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                       Page No.
<S>                                                                    <C>
ARTICLE I PURPOSE....................................................         1
          -------

ARTICLE II DEFINITIONS...............................................         1
           -----------

ARTICLE III ELIGIBILITY AND PARTICIPATION............................         2
            -----------------------------

 1. Eligibility......................................................         2
    -----------
 2. Participation....................................................         2
    -------------

ARTICLE IV BENEFITS..................................................         5
           --------
 1. Deemed Investments...............................................         5
    ------------------
 2. Account Balance Adjustments......................................         5
    ---------------------------
 3. Date for Payment of Account Balance..............................         5
    -----------------------------------
 4. Early Distribution...............................................         6
    ------------------
 5. Hardship Withdrawal..............................................         6
    -------------------
 6. Beneficiary Designation..........................................         6
    -----------------------

ARTICLE V WITHHOLDING TAXES..........................................         7
          -----------------

ARTICLE VI AMENDMENT AND TERMINATION.................................         7
           -------------------------

ARTICLE VII ADMINISTRATION...........................................         7
            --------------

 1. The Administrator................................................         7
    -----------------
 2. Books and Records................................................         7
    -----------------

ARTICLE VIII CLAIMS PROCEDURE........................................         8
             ----------------
 1. Claim............................................................         8
    -----
 2. Denial of Claim..................................................         8
    ---------------
 3. Review of Claim..................................................         8
    ---------------
 4. Venue............................................................         8
    -----

ARTICLE IX MISCELLANEOUS.............................................         8
           -------------
 1. Unsecured General Creditor.......................................         8
    --------------------------
 2. Payment of Account Balances......................................         9
    ---------------------------
 3. Unfunded Top-Hat Plan............................................         9
    ---------------------
 4. Not a Contract of Employment.....................................         9
    ----------------------------
 5. Successors.......................................................         9
    ----------
 6. No Assignment....................................................         9
    -------------
 7. Expenses.........................................................        10
    --------
 8. Tax Effects......................................................        10
    -----------
 9. Notice...........................................................        10
    ------
 10. Terms...........................................................        10
     -----
 11. Incompetence....................................................        10
     ------------
 12. Governing Law...................................................        11
     -------------
</TABLE>

                                      -i-
<PAGE>

                                  ZYMOGENETICS

                  DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES

                  AMENDED AND RESTATED AS OF NOVEMBER 1, 1997

                                   ARTICLE I

                                    Purpose
                                    -------

          This Deferred Compensation Plan was adopted to promote the interests
of ZymoGenetics, Inc. by stimulating the efforts of a select group of management
or highly compensated employees.  The Plan was originally adopted on November 1,
1992 and amended on December 23, 1993.  The Plan is hereby amended and
completely restated effective November 1, 1997, to provide more flexibility to
Participants with respect to the timing and form of payment of amounts deferred
under the Plan, and to permit Participants to elect to have their Account
Balances adjusted as if they were invested in various investments identified by
the Administrator.

                                   ARTICLE II

                                  Definitions
                                  -----------

          1.  "Administrator" means the Board, or such other person or committee
               -------------
appointed by the Board to administer the Plan.

          2.  "Account Balance" means a Company internal bookkeeping account in
               ---------------
the name of a Participant to which shall be allocated amounts deferred by or
otherwise allocated to the Participant under this Plan together with investment
earnings, gains and losses.

          3.  "Beneficiary" shall mean the person or persons designated as such
               -----------
by the Participant.  Each such designation shall be filed with the Administrator
in a form acceptable to the Administrator and shall become effective only when
received by the Administrator.

          4.  "Board" shall mean the Board of Directors of the Company.
               -----

          5.  "Company" shall mean ZymoGenetics, Inc., a Washington corporation,
               -------
or any successor corporation.

          6.  "Participant" shall mean any employee of the Company who has been
               -----------
designated by the Company as eligible to participate in the Plan and who has
executed a Participation Agreement and returned it to the Administrator.

          7.  "Participation Agreement" shall mean the agreement executed by a
               -----------------------
Participant whereby a Participant elects to defer a portion of his salary and/or
bonus (or acknowledges a Special Allocation), and contains such other
information as is required by the Administrator.

                                      -1-
<PAGE>

          8.  "Plan" shall mean the Deferred Compensation Plan set forth herein
               ----
and as may be amended from time to time.

          9.  "Plan Year" shall mean the period beginning on January 1 and
               ---------
ending on the following December 31.

          10. "Permanent Disability" is a condition, whether physical or
               --------------------
mental, that results in a Participant being unable to work for the Company in a
position utilizing intelligence, education, training, and experience equivalent
to that required in his work immediately before his disability.  Such permanent
disability shall be established by the certificate of a physician selected by
the Participant and approved by the Administrator, or if the physician selected
by the Participant shall not be approved by the Administrator, by a majority of
three (3) physicians, one selected by the Participant (or his spouse, child,
parent, or legal representative in the event of his inability to select a
physician), one by the Administrator, and a third by the two physicians selected
by the Participant and the Administrator; provided, however, a Participant who
officially established his eligibility to receive social security disability
benefits shall be deemed to be permanently disabled as provided herein without
further proof.

          11. "Trust" means any trust which the Company may establish and
               -----
maintain for purposes of holding assets to pay benefits under this Plan, subject
to the provisions of Article IX, Section 1.  The Board shall appoint one or more
individuals or financial institutions (subject to their acceptance) to be the
trustee of the Trust.

                                  ARTICLE III

                         Eligibility and Participation
                         -----------------------------

          1.  Eligibility.
              -----------

          The Company will designate from time to time certain of its key
employees to be eligible to participate in the Plan.  In selecting eligible
employees, the Company shall consider the position and responsibilities of such
individuals, the value of their services to the Company, and such other factors
as the Company deems pertinent.  After the Company has designated an employee as
eligible to participate in the Plan, the Company will notify the Administrator,
and the Administrator will notify such employee and present him with a
Participation Agreement to be executed and returned to the Administrator.

          2.  Participation.
              -------------

              (a)  Participation Agreement.  An eligible employee will become a
                   -----------------------
Participant upon executing and returning to the Administrator a Participation
Agreement pursuant to which he authorizes the Company to withhold from his
salary and/or bonus, elects a deemed investment return for his Account Balance,
and elects the date upon which he will receive or begin to receive a
distribution of the amounts deducted and withheld pursuant to that Participation
Agreement, as provided below.  An employee to whom a Special Allocation is made
pursuant to this Article III, section 2(d), will become a Participant upon
completing such forms and taking such actions as may be required by the
Administrator in connection with such allocation.

                                      -2-
<PAGE>

                    (1) Payroll Deductions.  Each Participation Agreement will
                        ------------------
               authorize the Company to withhold from 1% to 15% (in whole
               numbers) (but not less than $1,000 in any Plan Year) of a
               Participant's salary (prior to 40 l(k) and flexible benefit
               deductions) which would otherwise be payable to him in the Plan
               Year and/or from 1% to 100% of any bonus which would otherwise be
               payable to him in the Plan Year and which is not ascertainable
               prior to the Plan Year (all such compensation amounts referred to
               hereafter as "Deferrable Compensation").  Amounts withheld by the
               Company shall be credited to the Participant's Account Balance
               and an amount equal to the amount withheld will be contributed by
               the Company to the Trust.

                    (2) Investment Election.   A Participant's Account Balance
                        -------------------
               will be adjusted for earnings, gains and losses as if it were
               invested in the  investment options selected by the Participant
               on the Participation Agreement for that Plan Year.

                    (3) Date of Payment.  Each Participation Agreement will
                        ---------------
               indicate the date for the payment of amounts withheld pursuant
               thereto, which date shall not be less than three (3) years from
               the date such Participation Agreement is executed, and shall not
               be later than the Participant's 65th birthday; provided that, if
               a Participant's Account Balance is payable on three different
               dates pursuant to prior Participation Agreements, Special
               Allocation Elections, or as specified in the first sentence of
               Article IV, Section 3, such Participant may only choose one of
               such dates on any future Participation Agreements or Special
               Allocation Elections.  If, however, a Participant is age 62 or
               older, he may only indicate a date for payment which is three (3)
               years from the date he executes his Participation Agreement,
               subject to the limitation in the preceding sentence on the number
               of different payment dates.  If a Participant does not indicate a
               date for payment on a Participation Agreement, the amounts
               withheld pursuant thereto will be paid to him in one lump-sum
               within sixty (60) days after his termination of employment with
               the Company.

                    (4) Form of Payment.  Distribution of amounts withheld
                        ---------------
               pursuant to a Participation Agreement will be made either in one
               lump-sum or in annual installments over a period of up to ten
               (10) years, as selected by the Participant on the Participation
               Agreement.  If distributions are made in annual installments over
               a period of years, the amount of each annual installment will be
               determined by the Administrator, by dividing the portion of
               Participant's Account Balance which is payable in installments,
               measured immediately before an installment payment, by the number
               of installments remaining to be paid.  There may only be one form
               of payment elected for any payment date determined under this
               Section 2.

The Participation Agreement must be submitted to the Administrator by December
31st of the calendar year immediately preceding the calendar year in which the
Deferrable Compensation would otherwise be payable to the Participant.

                                      -3-
<PAGE>

          (b) Part-Year Participation.  In the event an employee first becomes
              -----------------------
eligible to participate during a calendar year and wishes to defer a portion of
his Deferrable Compensation for such calendar year, a Participation Agreement
must be submitted to the Administrator no later than thirty (30) days following
notification to the employee of his eligibility to participate.  Such
Participation Agreement will be effective only with respect to Deferrable
Compensation which would otherwise be payable to the Participant following the
submission of the Participation Agreement to the Administrator.

          (c) Special Election for 1997.  Notwithstanding the foregoing, each
              -------------------------
Participant will be entitled to make a special election with respect to
Deferrable Compensation earned during the period beginning November 1, 1997 and
ending December 31, 1997, to indicate the date on which such Deferrable
Compensation will be paid and the form of payment.  The date selected must be no
earlier than January 1, 2001 and no later than the Participant's 65th birthday.
The Special Election for 1997 must be made by completing and executing the
Special Election Form provided by the Administrator, and returning it to the
Administrator on or before October 31, 1997.  If a Participant does not make a
Special Election for 1997, his Deferrable Compensation for 1997 (including for
November and December) will be paid to him in one lump sum within sixty (60)
days following his termination of employment with the Company.

          (d) Special Allocation.  The Company may make an allocation (a
              ------------------
"Special Allocation") on behalf of one or more Participants in such amounts and
at such times as it shall determine.  If the Company elects to make one or more
Special Allocations to a Participant during a Plan Year, prior to the date the
first such Special Allocation is made, the Participant will be given the
opportunity to elect (a "Special Allocation Election") to receive a distribution
of all Special Allocations made during that Plan Year on a date no less than
three (3) years from the date the Participant makes such election and no later
than his 65th birthday, either in a lump-sum or in installments over a period of
up to ten (10) years, subject to the limitations in Article III (2)(a)(3) and
(4) on the number of different payment dates and form of payment.  Any Special
Allocation Election must be made on such forms as may be provided by the
Administrator and will apply to all Special Allocations made in the Plan Year
for which such election is made.  If the Participant does not make a Special
Allocation Election as to when he will receive a distribution of a Special
Allocation, it will be paid to him within sixty (60) days of his termination of
employment.  Special Allocations will be allocated to the Participant's Account
Balance and an amount equal to the Special Allocation will be contributed by the
Company to the Trust.  For periods after 1997, Special Allocations made to a
Participant shall be subject to the Investment Election made by the Participant
on his Participation Agreement in effect for the year in which the Special
Allocation is made.  If no such Election is in effect, then the Administrator
may permit the Participant to make an Investment Election as described in
Article III(2)(a)(2).

          (e) Termination of Employment.  Upon termination of employment with
              -------------------------
the Company, a Participant will no longer be entitled to participate in the
Plan, but will continue to be entitled to direct that his Account Balance be
adjusted for earnings, gains and losses as if it were invested in the various
investment options identified by the Administrator.  Any such election shall be
made by completing and returning such forms as are provided by the
Administrator.  If no such election is made, then a terminated Participant's
Account Balance will be adjusted as determined by the Administrator in its sole
and absolute discretion.

                                   ARTICLE IV
                                   ----------

                                    Benefits
                                    --------

                                      -4-
<PAGE>

          1.  Deemed Investments.
              ------------------

          From time to time, the Administrator will designate the deemed
investment options available under the Plan.  As of November 1, 1997, such
options will include the same investments as are available for actual investment
direction under the ZymoGenetics, Inc. 401(k) Retirement Plan.

          2.  Account Balance Adjustments.
              ---------------------------

          Allocations of payroll deductions and Special Allocations shall be
credited to a Participant's Account Balance as of the date determined by the
Administrator as if such Allocations were contributions of elective deferrals
made under the ZymoGenetics, Inc 401 (k) Retirement Plan for the applicable pay
period.  Each Participant's Account Balance will be adjusted on a daily basis as
if the Account Balance held actual assets and such assets were invested among
such investment funds as the Participant elected pursuant to Article III
(2)(a)(2).  The market value of the assets which would have been held in each of
the funds shall be determined by the Administrator in accordance with generally
accepted valuation principles, consistently applied.  In making adjustments to a
Participant's Account Balance and determining the value of assets for purposes
of such adjustments, the Administrator shall use methods which are comparable to
those used in adjusting accounts and the valuation of assets under the
ZymoGenetics, Inc. 401(k) Retirement Plan, including the extent to which
expenses and other charges are taken into account in making such valuations.  In
the absence of an applicable Investment Election for a given year, a
Participant's Account Balance will be adjusted as determined by the
Administrator in its sole discretion.  The amount payable to a Participant or
his Beneficiary pursuant to Article IV(3), (4) or (5) shall be equal to the
Participant's Account Balance determined as of a date selected by the
Administrator and within a reasonable period of time prior to the date such
amount is paid.

          3.  Date for Payment of Account Balance.
              -----------------------------------

          The Company will pay the following amounts in one lump sum within
sixty (60) days following a Participant's termination of employment with the
Company: (i) that portion of the Participant's Account Balance attributable to
amounts deferred before November 1, 1997 (as adjusted pursuant to Article IV,
Section 2), (ii) amounts deferred after November 1, 1997 (as adjusted pursuant
to Article IV, Section 2) for which the Participant did not indicate a date for
payment on the applicable Participation Agreement, and (iii) any Special
Allocations made pursuant to Article III, Section 2(d) (as adjusted pursuant to
Article IV, Section 2) for which the Participant did not indicate a date for
payment on the applicable Special Allocation Election.  Other amounts will be
paid or begin to be paid to the Participant on the date(s) specified on his
Participation Agreements in accordance with Article III, Section 2(a)(3) or
2(c), or his Special Allocation Elections in accordance with Article III,
Section 2(d).  In the event of the Participant's death before the date(s)
specified, his Account Balance will be paid to his Beneficiary(ies) as soon as
administratively feasible following the Participant's death.

                                      -5-
<PAGE>

          4.  Early Distribution.
              ------------------

          Notwithstanding any other provision of the Plan, any Participant may,
at any time, elect to receive an early payment of his Account Balance, reduced
by a penalty equal to ten percent (10%) of the Participant's Account Balance as
of the date of such election.  The ten percent (10%) penalty shall be
permanently forfeited and shall not be paid to, or in respect of, the
Participant.  Any early payment under this Article IV, Section 4 will be made as
soon as administratively feasible after the Participant's election.  If the
Administrator maintains sub-accounts pursuant to Article IV, Section 6, the
Administrator will reduce each such sub-account proportionately to reflect a
distribution made under this Article IV, Section 4, unless the Participant
directs otherwise and the Administrator consents to such direction.  Whenever a
Participant receives an early payment under this Article IV, Section 4, the
Participant's participation under the Plan will terminate effective as of the
date of such early payment and the Participant shall not be eligible to
participate in the Plan until the third Plan Year beginning after the date of
such early payment.

          5.  Hardship Withdrawal.
              -------------------

          If a Participant suffers an unforeseeable emergency, as defined
herein, the Company may pay to the Participant that portion, if any, of his
Account Balance which the Administrator determines, in its sole discretion, is
necessary to satisfy the emergency need, including any amounts necessary to pay
federal, state or local income taxes reasonably anticipated to result from the
payment.  For purposes of this Article IV, Section 5, "unforeseeable emergency"
means a severe financial hardship to the Participant resulting from a sudden and
unexpected illness or accident of the Participant or a dependent of the
Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the Participant's control.  Notwithstanding the foregoing, payment
by reason of "unforeseeable emergency" may not be made to the extent such
hardship is, or may be, relieved through reimbursement or compensation by
insurance or otherwise, or by liquidation of the Participant's assets, to the
extent the liquidation of such assets would not itself cause severe financial
hardship.  If the Administrator maintains sub-accounts pursuant to Article IV,
Section 6, the Administrator will reduce each such sub-account proportionately
to reflect a distribution made under this Article IV, Section, 5, unless the
Participant directs otherwise and the Administrator consents to such direction.

          6.  Beneficiary Designation.
              -----------------------

          A Participant shall have the right to designate a Beneficiary to
receive his Account Balance upon his death; provided that no such designation by
a married participant with respect to more than 50% of the Participant's Account
Balance shall be effective to name a Beneficiary other than the Participant's
spouse, unless such spouse has consented in writing to such designation.  If a
Beneficiary Designation is not on file at the time of a Participant's death, or
if no designated Beneficiary survives the Participant, then the Participant's
Account Balance shall be paid to the personal representative, executor, or
administrator of his estate.  A Participant may, by completing the appropriate
sections of the Beneficiary Designation Form, identify sub-accounts for purposes
of designating one or more Beneficiaries to receive amounts allocated to the
Participant's Account Balance as of any date on or after November 1, 1997, as
adjusted under Article III, Section 2(a), and one or more Beneficiaries for
amounts allocated after such date, as adjusted under Article III, Section 2(a).
The Plan Administrator shall maintain any such sub-accounts identified by a
Participant, solely for purposes of identifying the amounts payable to each of
the Participant's Beneficiaries.

                                   ARTICLE V

                                      -6-
<PAGE>

                               Withholding Taxes
                               -----------------

          The Company may withhold from a Participant's non-deferred
compensation or any payment to be made to a Participant or a Beneficiary, as
appropriate, any taxes required to be withheld under state, local or federal law
with respect to the amounts deferred or payable hereunder.

                                   ARTICLE VI

                           Amendment and Termination
                           -------------------------

          The Plan may be amended or terminated at any time through action by
the Board, or by any of the Company's officers authorized by the Board;
provided, however, that no amendment, discontinuance or termination of the Plan
will, without the consent of any persons affected thereby, alter or impair the
rights of any Participant or beneficiary accrued prior to such amendment,
discontinuance, or termination.  Upon termination, each Participant or
Beneficiary as, the case may be, will receive an amount equal to such
Participant's Account Balance, less any withholding obligations, as soon as
practical following the date the Plan is terminated.  Distribution of each
Participant's Account Balance shall be made in the manner determined by the
Company in its sole and absolute discretion.

                                  ARTICLE VII

                                 Administration
                                 --------------

          1.  The Administrator.
              -----------------

          The Plan shall be administered by the Administrator.  The
Administrator will have full discretionary authority and all powers necessary to
carry out the provisions of the Plan.  These powers include but are not limited
to, construing and interpreting the provisions of the Plan documents and
documents relating to the Plan's operation, adopting any rules and regulations
consistent with the terms of the Plan as it deems necessary, determining the
amount due to and the rights of any Participant or Beneficiary under the Plan,
determining the amounts allocated to the Participants' Account Balances and
adjustments for earnings, gains and/or losses, and any other activities deemed
necessary or helpful.  Determinations by the Administrator shall be final and
binding on all parties with respect to all matters relating to the Plan unless
overridden by action of the Board.

          2.  Books and Records.
              -----------------

          The Administrator shall maintain records of each Participant's Account
Balance.  A Participant shall not be entitled to examine, audit or otherwise
have access to any financial statements, bookkeeping records or other records of
account pertaining to the Company or the Plan under any circumstances
whatsoever.

                                      -7-
<PAGE>

                                  ARTICLE VIII

                                Claims Procedure
                                ----------------

          1.  Claim.
              -----

          Any person claiming a benefit, requesting an interpretation or ruling
under this Plan or requesting information under this Plan shall present the
claim or request in writing to the Administrator, which shall respond in writing
within ninety (90) days.

          2.  Denial of Claim.
              ---------------

          If the claim or request is denied, the written notice of denial shall
include the reasons for denial, with specific reference to the Plan provisions
on which the denial is based, a description of any additional material or
information required and an explanation of why it is necessary and an
explanation of the Plan's claim review procedure.  A claim or request shall be
deemed denied if the Administrator does not take any action within ninety (90)
days of receipt of a written claim or request.

          3.  Review of Claim.
              ---------------

          Any person whose claim or request is denied may request review by
notice given in writing to the Administrator within sixty (60) days of such
denial.  The claim or request shall be reviewed by the Administrator, who may,
but shall not be required to, grant the claimant a hearing.  On review, the
claimant may have representation, examine pertinent documents and submit issues
and comments in writing.  The decision on review shall normally be made within
sixty (60) days.  If an extension of time is required for a hearing or other
special circumstance, the claimant shall be notified and the time limit shall be
120 days.  The decision shall be in writing and shall state the reasons and the
relevant Plan provisions.  All decisions on review shall be final and bind all
parties concerned.

          4.  Venue.
              -----

          Venue of any dispute under this Plan shall be in a court of competent
jurisdiction in King County, Washington.

                                   ARTICLE IX

                                 Miscellaneous
                                 -------------

          1.  Unsecured General Creditor.
              --------------------------

          Any amount allocated to a Participant's Account Balance under this
Plan shall be an unfunded, unsecured promise of the Company to make payments in
the future.  Participants and their beneficiaries, heirs, successors and assigns
shall have no legal or equitable rights, interest or claims in any property or
assets of the Company.  Any and all of the Company's assets shall be, and
remain, the general, unpledged, unrestricted assets of the Company.  The Company
may, but shall not be required to, establish a reserve of assets to provide
funds for payments under this Plan.  Such reserve may be through a trust fund,
which it is intended will be established on such terms and conditions as shall
prevent

                                      -8-
<PAGE>

taxation to Participants and Beneficiaries of any amounts held in the reserve or
credited to Account Balances prior to the time payments are made.  Establishing
a reserve shall have no effect on the operation of this Plan or upon the status
of Participants as unsecured general creditors of the Company.  Rights to
payments will not be limited to assets held in any reserve.

          2.  Payment of Account Balances.
              ---------------------------

          Notwithstanding the fact that the Company may establish a Trust, the
Company shall remain liable for paying benefits to Participants under this Plan.
However, any payment made to a Participant or Beneficiary from the Trust shall
satisfy the Company's obligation to make such payment to such person.

          3.  Unfunded Top-Hat Plan.
              ---------------------

          This Plan is intended to be an unfunded plan maintained primarily to
provide deferred compensation benefits for a select group of "management or
highly-compensated employees" (a "top-hat group") within the meaning of sections
201, 301 and 401 of the Employee Retirement Income Security Act of 1974
("ERISA"), and therefore to be exempt from the provisions of Parts 2, 3 and 4 of
Title I of ERISA.  Accordingly, in the event that it is determined by a court of
competent jurisdiction or by an opinion of counsel that the Plan constitutes an
employee pension benefit plan within the meaning of Section 3(2) of ERISA which
is not exempt, the Plan will immediately terminate as to all Participants and
amounts credited to each Participant's Account Balance shall be distributed at
such time and in such manner as determined by the Company in its sole and
absolute discretion.  In the event that it is determined by a court of competent
jurisdiction or by an opinion of counsel that a Participant is not a member of
the top-hat group, this Plan shall immediately terminate as to such Participant
and all amounts credited to such Participant's Account Balance shall be
distributed to such Participant at such time and in such manner as determined by
the Company in its sole and absolute discretion.

          4.  Not a Contract of Employment.
              ----------------------------

          The terms and conditions of the Plan will not be deemed to constitute
a contract of employment between the Company and any Participant, and the
Participant (and his beneficiary) shall have no rights against the Company
except as specifically provided herein.  Moreover, nothing in the Plan shall be
deemed to give a Participant the right to be retained in the employ of the
Company or to interfere with the right of the Company to discipline or discharge
the Participant at any time.

          5.  Successors.
              ----------

          The provisions of the Plan shall bind and inure to the benefit of the
Company and its successors and assigns.  The term "successors" as used herein
shall include any corporation or other business entity which shall, whether by
merger, consolidation, purchase or otherwise, acquire all or substantially all
of the business or assets of the Company.

          6.  No Assignment.
              -------------

          Neither a Participant nor any other person shall have any right
(except the right to designate a Beneficiary) to commute, sell, assign,
transfer, pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate or convey in advance of actual receipt the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to which are, hereby
expressly declared to be unassignable and non-transferable.  No part of the
amounts payable shall, prior to actual payment, be

                                      -9-
<PAGE>

subject to seizure or sequestration for the payment of any debts, judgments,
alimony or separate maintenance owed by a Participant or any other person, nor
be transferable by operation of law upon a Participant's or any other person's
bankruptcy.

          7.  Expenses.
              --------

          All expenses and costs in connection with the adoption and
administration of the Plan and the Trust will be borne by the Company.

          8.  Tax Effects.
              -----------

          Neither the Company nor any other person or entity represents or
guarantees that any particular federal, state or local tax consequences will
occur as a result of any Participant's participation in this Plan.  Each
Participant must consult with his own advisers regarding the tax consequences of
participation in this Plan.

          9.  Notice.
              ------

          Any notice or other communication required or permitted hereunder
shall be in writing and shall be deemed given when personally delivered to the
addressee or deposited in the United States mail, postage prepaid and properly
addressed to the addressee's last known address.

          10. Terms.
              -----

          Whenever any words are used herein in the masculine they shall be
construed as though they were used in the feminine in all cases where they would
so apply and wherever any words are used herein in the singular or in the
plural, they shall be construed as though they were used in the plural or the
singular, as the case may be, in all cases where they would so apply.

          11. Incompetence.
              ------------

          If the Administrator determines that a Participant is unable to care
for his affairs because of illness, accident, or otherwise, any payment due the
Participant shall be made only to a duly authorized guardian or other legal
representative or, upon appropriate indemnification of the Administrator, to his
spouse. Any such payment shall be a payment for the account of the Participant
and shall be in complete discharge of any liability of the Company and the
Trust.

                                      -10-
<PAGE>

          12.  Governing Law.
               -------------

          The provisions of the Plan shall be governed by and construed in
accordance with the laws of the State of Washington.  Invalidation of any one of
the provisions of the Plan for any reason shall in no way affect the other
provisions hereof, and all such other provisions shall remain in full force and
effect.

                                      ZYMOGENETICS, INC.

                                      By
                                        ----------------------------------------
                                        Claus Kuhl, M.D., Ph.D.

                                      -11-<PAGE>

                                                                   EXHIBIT 10.15

                               LICENSE AGREEMENT

THIS AGREEMENT, effective as of December 31, 1998 ("Effective Date"), by and
between St. Jude Children's Research Hospital ("SJCRH"), a corporation located
at 332 North Lauderdale, Memphis, Tennessee 38105 and ZymoGenetics, Inc., a
corporation located at 1201 Eastlake Avenue East, Seattle, WA 98102, which is a
wholly owned subsidiary of Novo Nordisk of North America, which, in turn, is a
wholly owned subsidiary of Novo Nordisk A/S (collectively, "Company").

                                   RECITALS

WHEREAS, SJCRH is the owner by assignment from Drs. Richard J. Bram and Gotz-
Ulrich von Bulow("Inventors") of their entire right, title and interest in
Patent Rights (as later defined herein) and in the inventions described and
claimed therein; and

WHEREAS, SJCRH wishes to have the Patent Rights further developed and marketed
at the earliest possible time in order that products resulting therefrom may be
available for public use and benefit; and

WHEREAS, Company wishes to enter into an agreement to obtain an exclusive
license to the Patent Rights from SJCRH in order to practice the inventions
claimed therein and to make, use and sell in the commercial market the products
as described herein; and

WHEREAS, SJCRH is willing to grant such a license to Company under the terms and
conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises contained herein and
other good and valuable consideration, the parties do hereby agree as follows:

1.   Definitions

     1.1. "Affiliate" shall mean any legal entity (such as corporation,
partnership or limited liability company) that controls, is controlled by, or is
placed under the same control as, Company.  For the purposes of this definition,
the term "control" means beneficial ownership of at least fifty percent (50%) of
the voting or income interest of a legal entity.

     1.2. "Confidential Information" shall mean any confidential or proprietary
information furnished by one party (the "Disclosing Party") to the other party
(the "Receiving Party") in connection with this Agreement.

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       1
<PAGE>

     1.3. "Field" shall mean use of Patent Rights to research, develop,
commercialize, and sell products for [ * ].

     1.4. "Licensed Product" shall mean a drug or other product:
          (a) which is claimed in a Valid Claim; or
          (b) which was manufactured in accordance with one or more Valid
     Claims; or
          (c) which does not satisfy either of the definitions in (a) or (b)
     above, but which incorporates Hospital Materials; or
          (d) which does not satisfy either of the definitions of (a) or (b)
     above but satisfies all of the following criteria:
               (i)   [*] the TACI receptor claimed in the Valid Claims; and
               (ii)  [*] such TACI receptor was made known to Company through
          Company's use of the Valid Claims; and
               (iii) [*] the TACI receptor had not been previously identified
          or discovered prior to Company's use of the Valid Claims.

     1.5. "Net Sales" shall mean the gross amount billed or invoiced on sales by
Company, its Affiliates and Sublicensees of Licensed Product, less the
following: (i) customary trade, quantity, or cash discounts and commissions to
non-affiliated brokers or agents to the extent actually allowed and taken; (ii)
amounts repaid or credited by reason of rejection or return; (iii) to the extent
separately stated on purchase orders, invoices, or other documents of sale, any
taxes or other governmental charges levied on the production, sale,
transportation, delivery, or use of a Licensed Product which is paid by or on
behalf of Company; (iv) duties; and (v) outbound transportation costs prepaid or
allowed and costs of insurance in transit.

     In any transfers of Licensed Product between Company and an Affiliate or
Sublicensee, Net Sales shall be calculated based on the final sale of the
Licensed Product to an independent third party.  In the event that Company or an
Affiliate or Sublicensee receives non-monetary consideration for any Licensed
Product, Net Sales shall be calculated based on the fair market value of such
consideration.  In the event that Company or its Affiliates or Sublicensees use
or dispose of a Licensed Product in the provision of a commercial service, the
Licensed Product shall be considered sold and the Net Sales shall be calculated
based on the sales price of the Licensed Product to an independent third party
during the same Royalty Period or, in the absence of such sales, on the fair
market value of the Licensed Product as determined by the parties in good faith.

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       2
<PAGE>

       1.6.  "Patent Rights" shall mean the patent applications listed on
Appendix A, the inventions described and claimed therein, and all divisional,
continuation, or continuation-in-part applications of such patent applications
to the extent that the claims are directed to subject matter specifically
described therein, as well as all patents issued thereon and all reissues and
extensions of such patents, and all foreign counterparts to such patents and
patent applications.

       1.7.  "Hospital Materials" shall mean any tangible biological material,
or a portion thereof having equivalent biological activity, useful or necessary
for the effective exercise of the Patent Rights that are transferred by SJCRH to
Company under this Agreement, including [*].

       1.8.  "Royalty Period" shall mean the calendar half year commencing on
the date on which the first Licensed Product is sold or used in the provision of
commercial services and every calendar half year thereafter during which either
(i) this Agreement remains in effect or (ii) Company has the right to complete
and sell work-in-progress and inventory of Licensed Product pursuant to Section
8.5.

       1.9.  "Sublicensee" shall mean any permitted sublicensee of the rights
granted Company under this Agreement, as further described in Section 2.1.

1.10.  "Valid Claim" shall mean a claim of any pending patent application within
the Patent Rights, and any claim of any unexpired granted patent within the
Patent Rights, which claim has not (i) been disclaimed, abandoned, withdrawn, or
canceled (provided that claims that have been withdrawn or canceled solely in
response to a restriction requirement shall not cease to be Valid Claims); (ii)
been finally rejected or held invalid by a decision of a patent-granting
authority beyond right of review or appeal; or (iii) been held invalid or
unenforceable in an unappealable decision of a court or competent body having
jurisdiction (including a decision which as appealable, but which was not timely
appealed).

       2.    Grant

       2.1.  License Grant.

             a.   SJCRH hereby grants to Company and Company accepts, subject to
the terms and conditions herein, a worldwide exclusive license in the Field
under Patent Rights, to make and have made, to use and have used, to import, to
offer for sale, and to sell and have sold Licensed Product, for the term of this
Agreement. Such license shall include the right to grant sublicenses.

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       3
<PAGE>

             b.   The license granted pursuant to Section 2.1.a. is subject to
the rights, conditions and limitations imposed by U.S. law on inventions and
discoveries conceived or first actually reduced to practice during the course of
research funded by a U.S. federal agency. The words "exclusive license" as used
herein shall mean exclusive except for any royalty-free non-exclusive license
granted to the U.S. government by SJCRH pursuant to 35 USC Section 202 (c) (4)
for any Patent Rights claiming any invention subject to 35 USC Section 201 and
any other federal laws and applicable regulations.

             c.   Company acknowledges that SJCRH has retained certain rights to
use the subject matter claimed in the Patent Rights for academic research and
educational purposes. SJCRH shall retain the right to make and to use, for
academic research and educational purposes only and not for any commercial
purpose, the subject matter described and claimed in Patent Rights and Hospital
Materials. If SJCRH licenses or permits any researcher outside of SJCRH to use
the subject matter claimed in the Patent Rights, SJCRH shall secure each such
researcher's agreement to limit his/her use of such subject matter to academic
research and educational purposes, and to refrain from using such subject matter
to perform research for or with any commercial entity other than Company.

       2.2.  Transfer of Hospital Materials.  Promptly after request by Company,
SJCRH agrees to transfer to Company any Hospital Materials necessary to permit
Company to fully exploit the License granted herein. Hospital Materials shall be
treated as Confidential Information pursuant to Section 7, and shall not be
transferred to any third party without prior written consent by SJCRH.  Title to
Hospital Materials shall remain with SJCRH; however title to Licensed Product
that incorporates Hospital Materials shall remain with Company.  SJCRH may
transfer Hospital Materials to researchers outside of SJCRH, provided SJCRH
shall secure each such researcher's agreement to limit his/her use of the
Hospital Materials to academic research and educational purposes, and to refrain
from using such Hospital Materials  to perform research for or with any
commercial entity other than Company. Furthermore, SJCRH shall prevent outside
researchers from transferring Hospital Materials to any third party.

       2.3.  Transfer of Materials Covered by the Patent Rights.  SJCRH may
transfer tangible materials covered by the Patent Rights (e.g., [ * ] to
researchers outside of SJCRH, provided SJCRH shall secure each such researcher's
agreement to limit his/her use of such materials to academic research and
educational purposes, and to refrain from using such materials  to perform
research for or with any commercial entity other than Company. Furthermore,
SJCRH shall

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       4
<PAGE>

prevent outside researchers from transferring materials covered by the Patent
Rights to any third party.

3.     Company Obligations Relating to Commercialization

       3.1.  Diligence Requirements.  Company shall use commercially reasonable
efforts, or shall cause its Affiliates and Sublicensees to use commercially
reasonable efforts, to develop Licensed Product and to introduce Licensed
Product into the commercial market; thereafter, Company or its Affiliates or
Sublicensees shall make Licensed Product reasonably available to the public.
Company agrees to the following:

             a.   Within ninety (90) days after the Effective Date, Company
shall furnish SJCRH with a written research plan under which Company intends to
conduct research to evaluate opportunities to exploit Patent Rights (the
"Research Plan"). The parties acknowledge that, from time to time, and depending
on outcome of such research, the Research Plan may merit revision, in which
case, the parties agree to confer in good faith to negotiate such revision(s) to
the Research Plan.

             b.   No later [*], Company shall furnish SJCRH with a written plan
(the "Development Plan") under which Company intends to develop Licensed
Product. Thereafter, Company may revise the Development Plan to SJCRH's
reasonable satisfaction to accommodate uncertainties inherent in the drug
development process, including but not limited to, regulatory delay or
unexpected regulatory requirements, additional or unexpected scientific or
clinical data, and delays in patient recruitment.

             c.   Within sixty (60) days after each anniversary of the Effective
Date, Company shall furnish SJCRH with a brief written report on the progress of
its efforts during the prior year to research, develop and commercialize
Licensed Product.

In the event that SJCRH reasonably determines that Company, or an Affiliate or
Sublicensee, has not fulfilled its material  obligations under the Sections 3.1.
(a) or (b), SJCRH shall furnish Company with written notice of such
determination. Upon Company's receipt of such written notice, Company shall use
good faith efforts to: (i) prove to SJCRH's reasonable satisfaction that Company
has fulfilled its obligations under Sections 3.1. (a) or (b); (ii) fulfill the
relevant obligation; or (iii) negotiate with SJCRH mutually acceptable revisions
to the Research Plan, Development Plan, or Section 3.1. (a) or (b), as
applicable. If Company has not complied with (i), (ii) or (iii) within ninety
(90) days after Company's receipt of SJCRH's written notice, SJCRH shall have
the right, immediately upon written

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       5
<PAGE>

notice to Company and subject to Section 9 of this Agreement, to terminate this
Agreement or to convert Company's license into a non-exclusive license and grant
additional licenses under the Patent Rights in the Field. If SJCRH converts
Company's license into a non-exclusive license, the amounts payable under
Sections 4.2 and 4.3 shall be reduced [*].

       3.2.  Indemnifications.

             a.   Indemnity. Company shall indemnify, defend and hold harmless
SJCRH and SJCRH's fundraising organization (the American Lebanese Syrian
Associated Charities, or "ALSAC"), and their respective Boards of Governors,
officers, faculty, students, employees and agents and their respective
successors, heirs and assigns (the "Indemnitees"), against any liability,
damage, loss, or exposure (including reasonable attorney's fees and expenses of
litigation) incurred by or imposed upon any of the Indemnitees in connection
with any claims, suits, actions, demands or judgments arising out of any theory
of liability (including without limitation actions in the form of tort,
warranty, or strict liability and regardless of whether such action has any
factual basis) concerning any product, process, or service that is made, used,
or sold pursuant to any right or license granted under this Agreement; provided,
however, that such indemnification shall not apply to any liability, damage,
loss, or expense to the extent attributed to (i) the negligent activities or
intentional misconduct of the Indemnitees or (ii) the settlement of a claim,
suit, action, or demand by Indemnitees without the prior written approval of
Company.

             b.   Procedures. The Indemnitees agree to provide Company with
prompt written notice of any claim, suit, action, demand, or judgment for which
indemnification is sought under this Agreement. Company agrees, at its own
expense, to provide attorneys reasonably acceptable to SJCRH to defend against
any such claim. If the Indemnitees so desire, they may be represented by
separate legal counsel, at their own expense. The Indemnitees shall cooperate
fully with Company in such defense and will permit Company to conduct and
control such defense and the disposition of such claim, suit, or action
(including all decisions relative to litigation, appeal, and settlement).
Company agrees to keep SJCRH informed of the progress in the defense and
disposition of such claim and to consult with SJCRH with regard to any proposed
settlement.

             c.   Insurance. Company shall maintain insurance or self-insurance
that is reasonably adequate to fulfill its obligation to the Indemnitees.
Company shall provide SJCRH, upon request, with written evidence of such
insurance or self-insurance. Company shall continue to maintain such insurance
or self-insurance after the expiration or termination of this Agreement during

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       6
<PAGE>

any period in which Company or any Affiliate or Sublicensee continues to make,
use, or sell a Licensed Product developed under this Agreement.

       3.3.  Use of SJCRH Name. Company and its Affiliates and Sublicensees
shall not use the name "St. Jude Children's Research Hospital" or any variation
of that name, or any of SJCRH's trustees, officers, faculty, students,
employees, or agents, or any adaptation of such names, or any term of this
Agreement in any promotional material or other public announcement or disclosure
or in connection with the marketing or sale of any Licensed Product without the
prior written approval of SJCRH. SJCRH hereby gives its written approval that
Company may use the name of SJCRH's and the Inventors for information purposes
only in communicating with patent and regulatory authorities, and in seeking,
negotiating or securing agreements with Sublicensees.

       3.4.  Marking of Licensed Product. To the extent commercially feasible
and consistent with prevailing business practices, Company shall mark, and shall
cause its Affiliates and Sublicensees to mark, all Licensed Product that are
manufactured or sold under this Agreement with the number of each issued patent
under the Patent Rights that applies to such Licensed Product.

       3.5   Clinical Trials.  In the event that Company elects to proceed with
human clinical trials on a Licensed Product, Company agrees to so notify SJCRH.
The parties shall jointly determine the feasibility of conducting one or more
such trials at SJCRH.  Company agrees to give preference to SJCRH for conducting
one or more such trials should SJCRH so request, provided SJCRH is able and
willing to conduct such trials under terms and conditions no less favorable to
Company than any other institution able and willing to conduct such trials.

4.     Royalties and Payments

       4.1   License Fee. In partial consideration of the rights granted Company
under this Agreement, Company shall pay to SJCRH, within ten (10) business days
after the Effective Date, a license fee [*] This license fee payment is
nonrefundable and is not creditable against any other payments due to SJCRH
under this Agreement.

       4.2.  Milestone Payments. Company shall pay SJCRH the following milestone
payments within thirty (30) days after the occurrence of each event related to
the first Licensed Product sold by Company, its Affiliate or Sublicensee:

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       7
<PAGE>

             Milestone                                Payment
             ---------                                -------

             First IND approval                       [*]
             of such first Licensed Product

             First successful completion of
             Phase II or pivotal clinical trial       [*]
             demonstrating efficacy of such first
             Licensed Product

             First Market Approval                    [*]
             of such first Licensed Product

       4.3.  Royalties.   In partial consideration of the rights granted to
Company under this Agreement, Company shall pay to SJCRH a percentage royalty on
Net Sales of Licensed Product by Company, its Affiliates and Sublicensees.
Unless the Agreement is terminated earlier as provided herein, the royalty shall
be paid on a country by country basis.  The abandonment of a patent application,
and/or the holding of a patent to be invalid or unenforceable by a Court or in
arbitration from which no appeal can be or is taken, shall be deemed to be
"expiration" of the patent.  No multiple royalties shall be payable because a
particular Licensed Product or its manufacture, use, importation, offer for
sale, or sale are or shall be covered by more than one patent application or
patent included within the Patent Rights.  The applicable royalty rates are set
forth below.

a.     For Licensed Products that satisfy either of the definitions of Section
1.4. (a) or (b), the royalty rate shall be:

             Annual Net Sales                     Royalty Rate
             ----------------                     ------------

             [*]

b.     For Licensed Products that do not satisfy either of the definitions of
Section 1.4. (a) or (b), but do satisfy the definition of Section 1.4(c), the
royalty rate shall [*] of the rates shown in Subsection 4.3.a. above.

c.     For Licensed Products that do not satisfy either of the definitions of
Section 1.4(a) or (b), but do satisfy the definition of Section 1.4. (d), the
royalty rate shall be:  (i)  [*] rates shown in Subsection 4.3.a. above if the
active component in such Licensed Product is [*] and (ii) [*] rates shown in
Subsection 4.3.a. above if the active component in such Licensed Product is [*]

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       8
<PAGE>

       4.4.  Credits for Royalties Paid to Third Parties.  If Company makes a
payment to one or more third parties for a license(s) under such third party's
patent rights, biological materials or know-how, which license Company
reasonably believes is necessary or proper for commercialization of a Licensed
Product in a given country, Company may deduct [*] of the payments made to
such third parties relevant to such Licensed Product in such country from the
royalties payable to SJCRH under Subsection 4.3 for sales and uses of such
Licensed Product by Company, its Affiliates and Sublicensees in such country;
provided, however, that the royalties payable to SJCRH shall not be reduced by
such deduction to less [*] of the royalties that would have been due in any
Royalty Period in the absence of such payments to said third parties.

5.     Royalty Reports; Payments; Records

       5.1.  First Sale. Company shall report to SJCRH the date of first
commercial sale of any Licensed Product within thirty (30) days after
occurrence.

       5.2.  Reports and Payments. Within sixty (60) days after the conclusion
of each Royalty Period, Company shall deliver to SJCRH a report containing the
following information:

             a.   the gross invoiced amount for all Licensed Products sold or
commercially used by Company and its Affiliates and Sublicensees during the
applicable Royalty Period in each country;

             b.   the calculation of Net Sales for the applicable Royalty Period
in each country, including a listing of applicable deductions and applicable
royalty rate; and

             c.   the total royalty payable on Net Sales in U.S. dollars,
together with the exchange rates used for conversion and any credits taken under
Section 4.4 and Section 6.3.

All such reports shall be considered Company Confidential Information.  If no
royalties are due to SJCRH for any Royalty Period, the report shall so state.
Concurrent with this report, Company shall remit to SJCRH any payment due for
the applicable Royalty Period.  SJCRH shall timely instruct Company as to method
of payment.

       5.3.  Records. Company shall maintain, and shall cause its Affiliates and
Sublicensees to maintain, complete and accurate records necessary to determine
amounts payable to SJCRH by Company under this Agreement, which records shall
contain sufficient information to permit SJCRH to confirm the accuracy of

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       9
<PAGE>

any reports delivered to SJCRH under Section 5.2. The relevant party shall
retain such records relating to a given Royalty Period for at least three (3)
years after the conclusion of that Royalty Period, during which time SJCRH shall
have the right, at its expense, to cause an independent, certified public
accountant reasonably acceptable to Company to inspect such records during
normal business hours for the sole purpose of verifying any reports and payments
delivered under this Agreement. Such accountants shall not disclose to SJCRH any
information other than information relating to accuracy of reports and payments
delivered under this Agreement. The parties shall reconcile any underpayment or
overpayment within thirty (30) days after the accountant delivers the results of
the audit. SJCRH may exercise its rights under this Section only once every year
and only with reasonable prior notice to Company.

6.     Patent Prosecution and Infringement

       6.1   Responsibility for Patent Rights.  SJCRH shall have primary
responsibility, at the expense of Company as described in Section 6.2, for the
preparation, filing, prosecution, and maintenance of all Patent Rights.  In
furtherance of its obligations under this Section, SJCRH shall use the services
of  law firm of Klauber and Jackson of Hackensack, New Jersey, or, if that is
not possible, another law firm acceptable to Company.  SJCRH shall consult with
Company regarding the prosecution of all patent applications within the Patent
Rights and shall afford Company adequate opportunity to review and comment on
any responses, new patent application(s) or submissions to the relevant patent
authorities.

6.2.  Communications.  SJCRH shall require its outside patent counsel to deliver
to Company copies of all communications regarding the Patent Rights from the
U.S. Patent and Trademark Office, foreign patent offices, and its foreign
associates at the same time it sends such documents to SJCRH.  SJCRH shall
require its outside patent counsel to deliver to Company copies of proposed
substantive communications which it intends to send to such patent offices or
foreign associates in sufficient time before the due date in order to provide
Company adequate opportunity to comment on the content thereof.  SJCRH shall
require its outside patent counsel or foreign associates to send reminder
notices to Company of any annuity or maintenance fees payable in any country for
any of the Patent Rights in a manner to allow timely payment of such fees.  Upon
Company's written request, SJCRH shall permit Company to pay annuity or
maintenance fees payable in any country for any of the Patent Rights directly to
SJCRH's outside counsel or foreign associates.  The contact at Company for such
communications shall be Susan Lingenfelter, or such other person later
designated by Company.

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       10
<PAGE>

       6.3.  Reimbursement for Patent Expenses. Within thirty (30) days after
the Effective Date of this Agreement Company agrees to reimburse SJCRH for all
amounts expended prior to the date hereof for the preparation, filing,
prosecution and maintenance of the Patent Rights licensed to Company, said
amount being $18,362 as of the execution of this Agreement. Company shall
reimburse SJCRH for all reasonable patent-related out-of-pocket expenses
thereafter incurred by SJCRH pursuant to Section 6.1 within thirty (30) days
after Company's receipt of each reasonably-itemized invoice for such expense.
Company may elect, upon sixty (60) days written notice to SJCRH, to cease
reimbursement of the expenses associated with obtaining or maintaining patent
protection for one or more Patent Rights in one or more countries, and such
decision shall not be a default under this Agreement. In such event, Company
shall lose all rights under this Agreement with respect to such Patent Rights in
such countries. Company shall be entitled to credit [*] of all such reimbursed
amounts in each country (or region in the case of the EPO) against royalties
payable to SJCRH under this Agreement for such country or region.

       6.4.  Abandonment by SJCRH. In the event that SJCRH desires to abandon
any patent or patent application within the Patent Rights, SJCRH shall provide
Company with reasonable prior written notice of such intended abandonment, but
in any event not less than sixty (60) days prior to the effective date of such
abandonment, and Company shall have the right, at its expense, to prepare, file,
prosecute, and maintain the relevant Patent Rights. Upon such election by SJCRH,
SJCRH shall cooperate, and instruct its outside patent counsel and foreign
associates to cooperate, with Company to ensure a smooth transfer of such
responsibility to Company. As of the date of SJCRH's election to abandon any
patent application or patent within the Patent Rights and continuing until
expiration or termination of this Agreement, Company shall have no obligation
under Section 4.3 to pay royalties to SJCRH for use or sale of Licensed Products
that satisfy the definition of "Licensed Products" solely under Section 1.4(a)
or (b) for such elected patent application or patent.

       6.5.  Other Licensees.  In the event that SJCRH grants one or more
licenses under the Patent Rights to other licensees (e.g., in other fields),
SJCRH shall endeavor to secure from each other licensee permission to disclose
to Company the identity of such licensee and their licensed field.  If such
other licensee is not willing to so identify itself and its licensed field to
Company, SJCRH shall not grant to such licensee any right to participate in
filing,  prosecution or maintenance of the Patent Rights, or in any
interference, opposition or litigation proceeding involving the Patent Rights.
SJCRH, Company and such other licensee(s) shall negotiate in good faith to
modify Company's reimbursement obligations under Section 6.3 so that all
licensees are liable for reimbursement of patent expenses to an extent
commensurate with their licensed field.

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       11
<PAGE>

       6.6.  Infringement, Interferences and Oppositions.

             a.   Notification of Infringement. Each party agrees to provide
written notice to the other party promptly after becoming aware of any
infringement or potential infringement of the Patent Rights, or of any
initiation of interference or opposition proceedings regarding the Patent
Rights.

             b.   Company Right to Prosecute.  So long as the license granted
Company under Section 2.1. remains exclusive in the Field, Company shall have
the right, under its own control and at its own expense, to prosecute any and
all interference and opposition proceedings involving the Patent Rights, and
third party infringement of the Patent Rights in the Field, to send "cease and
desist" letters to suspected infringers of the Patent Rights in the Field, and,
to defend the Patent Rights in any declaratory judgment action brought by a
third party which alleges invalidity, unenforceability, or non-infringement of
the Patent Rights.  Prior to commencing any such action, Company shall consult
with SJCRH and shall consider the views of SJCRH regarding the advisability of
the proposed action and its effect on the public interest.  Company shall not
enter into any settlement, consent judgment, or other voluntary final
disposition of any infringement action under this Subsection without the prior
written consent of SJCRH, which consent shall not be unreasonably withheld or
delayed.  Any recovery obtained in an action under this Subsection shall be
distributed as follows:  (i) each party shall be reimbursed for all out-of-
pocket expenses incurred in the action, including attorneys fees, expert fees,
and court costs; (ii) out of any award and recovery of ordinary damages to
Company, Company shall pay to SJCRH the amount approximately equal to the
royalties that Company would have paid to SJCRH if Company had sold the
infringing products and services rather than the infringer, and (iii) as to
special or punitive damages, the parties shall share equally in any award.

             c.   SJCRH as Indispensable Party. SJCRH shall permit any action
under this Section to be brought in its name if required by law, provided that
Company shall hold SJCRH harmless from, and if necessary indemnify SJCRH
against, any costs, expenses or liability that SJCRH may incur in connection
with such action, except to the extent such costs, expenses or liability are
attributable to the actions of SJCRH.

             d.   SJCRH Right to Prosecute.  In the event that Company fails to
initiate an infringement action within a reasonable time after it first becomes
aware of the basis for such action, or to answer a declaratory judgment action
within a reasonable time after such action is filed, SJCRH shall have the right
to prosecute such infringement or answer such declaratory judgment action, under

[*] designated portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       12
<PAGE>

its sole control and at its sole expense, and any recovery obtained shall be
given to SJCRH.

             e.   Cooperation. Each party agrees to cooperate fully in any
action under this Section 6.6, which is controlled by the other party, provided
that the controlling party reimburses the cooperating party promptly for any
reasonable out-of-pocket costs and expenses incurred by the cooperating party in
connection with providing such assistance.

7.     Confidential Information; Publicity

       7.1.  Confidential Information.

             a.   Obligations. For a period of five (5) years after disclosure
of any portion of Confidential Information, the Receiving Party shall (i)
maintain such Confidential Information in strict confidence, except that the
Receiving Party may disclose or permit the disclosure of any Confidential
Information to its directors, officers, employees, consultants, and advisors,
and those of its affiliates and Sublicensees, who are obligated to maintain the
confidential nature of such Confidential Information and who need to know such
Confidential Information for the purpose of this Agreement; the Company may also
disclose to the appropriate patent office(s) and legal counsel any Confidential
Information necessary for filing, prosecuting, maintaining, defending and
enforceing the Patent Rights; (ii) use such Confidential Information solely for
the purposes of this Agreement; and (iii) allow its trustees or director,
officers, employees, consultants, and advisors, and those of its affiliates and
Sublicensees, to reproduce the Confidential Information only to the extent
necessary for the purposes of this Agreement, with all such reproductions being
considered Confidential Information.

             b.   Exceptions.  The obligations of the Receiving party under
Subsection 7.1.a above shall not apply to the extent that the Receiving Party
can demonstrate that certain Confidential Information (i) was in the public
domain prior to the time of its disclosure under this Agreement; (ii) entered
the public domain after the time of its disclosure under the Agreement through
means other than an unauthorized disclosure resulting from an act or omission by
the Receiving Party; (iii) was independently developed or discovered by the
Receiving Party without use of the Confidential Information; (iv) is or was
disclosed to the Receiving Party at any time, whether prior to or after the time
of its disclosure under this Agreement, by a third party having no fiduciary
relationship with the Disclosing Party and having no obligation to
confidentiality with respect to such Confidential Information; or (v) is
required to be disclosed to comply with applicable laws or regulations, or with
a court or administrative

[*] designated portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       13
<PAGE>

order, provided that the Disclosing Party receives reasonable prior written
notice of such disclosure in a timely manner so that the Disclosing Party may
take steps to prevent or limit disclosure.

8.     Term and Termination

       8.1.  Term. This Agreement shall commence on the Effective Date and shall
remain in effect until the expiration in all countries of Company's royalty
obligations under Section 4.3. Company's royalty obligations under Section 4.3
shall expire on a country-by-country basis as described below. For products that
are "Licensed Products" under Sections 1.4 (a) or (b), Company's royalty
obligation shall expire on the expiration date of the last-to-expire patent
within the Patent Rights in each country. For each product that is not "Licensed
Product" under Section 1.4(a) or (b) but is "Licensed Product" under either
Section 1.4 (c) or (d), provided that "License Product" under Section 1.4(d) is
[*], Company's royalty obligation shall expire on the date ten (10) years after
the date of first commercial sale of such Licensed Product, after which date,
Company shall have a worldwide, paid-up, royalty-free exclusive license to
Licensed Product. For each product that is not "Licensed Product" under Section
1.4(a) or (b) but is "Licensed Product" under Section 1.4(d) and is [*],
Company's royalty obligation shall expire on the date ten (10) years after the
date of first commercial sale of such Licensed Product in such country, after
which date, Company shall have a paid-up, royalty-free exclusive license to
Licensed Product for such country.

       8.2.  Voluntary Termination by Company. Company shall have the right to
terminate this Agreement, for any reason, upon ninety (90) days prior written
notice to SJCRH. Upon termination, a final report shall be submitted and any
royalty payments and unreimbursed patent expenses due to SJCRH shall become
immediately payable upon invoice to Company from SJCRH.

       8.3.  Termination for Default. In the event that either party commits a
material breach of its obligation under this Agreement and fails to cure that
breach within sixty (60) days after receiving written notice thereof, the other
party may terminate this Agreement immediately upon written notice to the party
in breach, subject to Section 9.

       8.4.  Force Majeure.  Neither party will be responsible for delays
resulting from causes beyond the reasonable control of such party, including
without limitation fires, explosion, flood, war, strike, or riot, provided that
the nonperforming party uses commercially reasonable efforts to avoid or remove
such causes of nonperformance and continues performance under this Agreement
with reasonable dispatch whenever such causes are removed.

[*] designated portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       14
<PAGE>

       8.5.  Effect of Termination. The following provisions shall survive the
expiration or termination of this Agreement: Sections 1 and 9 and 10; Sections
3.2., 3.3, 5.2. (obligation to provide final report and payment), 6.2., 7.1.,
and 8.5. Upon the early termination of this Agreement, Company and its
Affiliates and Sublicensees may complete and sell any work-in-progress and
inventory of Licensed Product that exists as of the effective date of
termination, provided that (i) Company is current in payment of all amounts due
SJCRH under this Agreement, (ii) Company pays SJCRH the applicable royalty on
such sales of Licensed Product in accordance with the terms and conditions of
this Agreement, and (iii) Company and its Affiliates and Sublicensees shall use
reasonable efforts to complete and sell all work-in-progress and inventory of
Licensed Product within six (6) months after the effective date of termination.

8.6.   Sublicenses.  Upon termination of this Agreement, SJCRH shall elect to
either:  (i) convert all sublicenses under the Patent Rights granted by Company
into direct licenses from SJCRH, with all material terms remaining the same; or
(ii) terminate all such sublicenses and promptly offer each Sublicensee a new
license with financial terms at least as favorable to such Sublicensee as those
in the Sublicensee's sublicense from Company.

9.     Dispute Resolution. In the event of any controversy or claim arising out
of or relating to any provision of this Agreement, the breach thereof, SJCRH's
election under Section 3.1 to terminate Company's license or to convert
Company's license to a non-exclusive license; or SJCRH's notice of termination
under Section 8.3, the parties shall try to settle such conflicts amicably
between themselves. If the parties are unable to resolve such controversy or
claim informally, they shall submit the issue to alternative dispute resolution.
If alternative dispute resolution fails to resolve the issue, the parties shall
submit the issue to arbitration conducted in accordance with the rules of the
American Arbitration Association.  The demand for arbitration shall be filed
within a reasonable time after the parties' informal efforts and alternative
dispute resolution have failed, and in no event after the date upon which
institution of legal proceedings based on such controversy or claim would be
barred by the applicable statute of limitation.  Such arbitration shall be held
in Memphis, Tennessee if initiated by Company and in Seattle, Washington if
initiated by SJCRH.  The award through arbitration shall be final and binding.
Either party may enter any such award in a court having jurisdiction or may make
application to such court for judicial acceptance of the award and an order of
enforcement, as the case may be.  Notwithstanding the foregoing, either party
may, without recourse to arbitration, assert against the other party a third-
party claim or cross-claim in any action brought by a third-party, to which the
subject matter of this Agreement may be relevant.

[*] designated portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       15
<PAGE>

10.    Miscellaneous

       10.1. Representation and Warranties. SJCRH represents and warrants that
the Inventors have assigned to SJCRH their entire right, title, and interest in
the Patent Rights and that SJCRH has authority to grant the rights and licenses
set forth in this Agreement. SJCRH MAKES NO OTHER WARRANTIES CONCERNING THE
PATENT RIGHTS AND RELATED TECHNOLOGY, INCLUDING WITHOUT LIMITATION ANY EXPRESS
OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Specifically, SJCRH makes no warranty or representation (i) regarding the
validity or scope of the Patent Rights, (ii) that the exploitation the Patent
Rights or any Licensed Product will not infringe any patents or other
intellectual property rights of a third party, and (iii) that any third party is
not currently infringing or will not infringe the Patent Rights. Without making
a warranty or representation, SJCRH states that as of the Effective Date, it has
no present knowledge (1) that practice of the inventions claimed in the Patent
Rights would necessarily infringe a patent or patents of any third party, or (2)
of any third party infringers.

       10.2. Headings. All headings are for convenience only and shall not
affect the meaning of any provision of this Agreement.

       10.3. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective permitted successors and
assigns.

       10.4  Assignment.  This Agreement may not be assigned by either party
without the prior written consent of the other party, except that Company may
assign this Agreement to an Affiliate or to a successor in connection with the
merger, consolidation, or sale of all or substantially all of its assets or that
portion of its business to which this Agreement relates.

       10.5  Amendment and Waiver. This Agreement may be amended, supplemented,
or otherwise modified only by means of a written instrument signed by both
parties. Any waiver of any rights or failure to act in a specific instance shall
relate only to such instance and shall not be construed as an agreement to waive
any rights or fail to act in any other instance, whether or not similar.

       10.6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Tennessee.

[*] designated portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       16
<PAGE>

       10.7. Notice.  Any notices required or permitted under this Agreement
shall be in writing, shall specifically refer to this Agreement, and shall be
sent by hand, recognized national overnight courier, confirmed facsimile
transmission, confirmed electronic mail, or registered or certified mail,
postage prepaid, return receipt requested, to the following address or facsimile
numbers of the parties:

       If to SJCRH:

             Office of Technology Licensing
             St. Jude Children's Research Hospital
             332 North Lauderdale
             Memphis, Tennessee 38105
             Attn:  Barbara S. Conta, PhD
             VP, Technology Development and Transfer
             TEL: (901) 495-2342
             FAX: (901) 495-3148

       If to Company:

             ZymoGenetics, Inc.
             1201 Eastlake Avenue East
             Seattle, WA 98102
             Attn:  Director, Business Development
             TEL: (206) 442-6600
             FAX: (206) 442-6697

All notices under this Agreement shall be deemed effective upon receipt.  A
party may change its contact information immediately upon written notice to the
other party in the manner provided in this Section.

       10.8  Severability.  In the event that any provision of this Agreement
shall be held invalid or unenforceable for any reason, such invalidity or
unenforceability shall not affect any other provision of this Agreement, and the
parties shall negotiate in good faith to modify the Agreement to preserve (to
the extent possible) their original intent.  If the parties fail to reach a
modified agreement within sixty (60) days after the relevant provision is held
invalid or unenforceable, then the dispute shall be resolved in accordance with
the procedures set forth in Section 9.  While the dispute is pending resolution,
this Agreement shall be construed as if such provision were deleted by agreement
of the parties.

[*] designated portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       17
<PAGE>

       10.9  Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to its subject matter and supersedes all prior
agreements or understandings between the parties relating to its subject matter.

       IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first written above.

ST. JUDE CHILDREN'S                              ZYMOGENETICS, INC
RESEARCH HOSPITAL

By: /s/ Barbara S. Conta                         By: /s/ Claus Kuhl
--------------------------------------           ----------------------
        Barbara S. Conta, Ph.D.                          Claus Kuhl
        VP, Technology Development & Transfer            President

[*] designated portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       18
<PAGE>

                                  APPENDIX A

                 Patent Applications Within the Patent Rights
                           As of the Effective Date

--------------------------------------------------------------------------------
    Country       Number       Filing Date and       Title          Inventors
                                Priority Date
--------------------------------------------------------------------------------
 [*]
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

[*] designated portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
<PAGE>

                        AMENDMENT TO LICENSE AGREEMENT

This is an Amendment dated February 4, 1999 to a License Agreement dated
December 31,1998 entered into by and between St. Jude Children's Research
Hospital ("SJCRH") and ZymoGenetics, Inc.

                               WITNESSETH THAT:

IN CONSIDERATION of the mutual covenants herein contained and other good and
valuable consideration, the parties agree as follows:
To replace Article 1.7 of the License Agreement with the following:

1.7.  "Hospital Materials" shall mean any tangible biological material, or a
      -------------------
portion thereof having equivalent biological activity, useful or necessary for
the effective exercise of the Patent Rights that are transferred by SJCRH to
Company under this Agreement, including, [*].

ALL OTHER PROVISIONS OF THE LICENSE AGREEMENT REMAIN UNCHANGED.

IN WITNESS whereof, the parties have executed this Amendment to the License
Agreement through duly authorized representatives as of the date set forth
below.

St. Jude Children's Research Hospital       ZymoGenetics, Inc.

By: /s/ Barbara S. Conta                    By: /s/ Bruce L.A. Carter
    -------------------------------------       --------------------------------
        Barbara S. Conta, Ph.D.                     Bruce L.A. Carter, Ph.D.
        Vice President, Technology                  President
        Development and Licensing

Date: 2/4/99                                Date: 2/9/99
      -----------------------------------         ------------------------------

[*] designated portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
<PAGE>

                              AMENDMENT No. 2 TO
                               LICENSE AGREEMENT

BETWEEN:            ZymoGenetics, Inc.
                    1201 Eastlake Avenue East
                    Seattle, WA 98102

AND:                St. Jude Children's Research Hospital
                    332 North Lauderdale
                    Memphis, TN 38105

THIS AMENDMENT is made effective as of October 23, 2000.  The parties hereby
agree that  the License Agreement on TACI (Dr. Bram), dated December 31, 1998,
amended on February 4, 1999 by Amendment No. 1, shall be further amended as
follows:

IN THE PREAMBLE

Replace the preamble in its entirety with the following:

     THIS AGREEMENT, effective as of December 31, 1998 ("Effective Date"), by
     and between St. Jude Children's Research Hospital ("SJCRH"), a corporation
     located at 332 North Lauderdale, Memphis, Tennessee 38105 and ZymoGenetics,
     Inc. ("Company"), a corporation located at 1201 Eastlake Avenue East,
     Seattle, WA 98102.

IN ARTICLE 1  DEFINITIONS

In Section 1.1, replace the existing definition for "Affiliate" in its entirety
with the following:

     1.1  "Affiliate" shall mean any legal entity (such as corporation,
           ---------
     partnership or limited liability company) that controls, is controlled by,
     or is placed under the same control as, Company.  For the purposes of this
     definition, the term "control" means ownership of at least fifty percent
     (50%) of the voting interest of a legal entity.

The remainder of Article 1 is unchanged.

[*] designated portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
<PAGE>

Agreement of SJCRH and ZGI in the terms stated above is indicated by signatures
affixed below.

                              St. Jude Children's
Research Hospital                              ZymoGenetics, Inc.

/s/ John Scott Elmer                           /s/ Bruce L. A. Carter
-----------------------------------            ---------------------------------
Signature

Director, Office of Technology Licensing       Bruce L. A. Carter
----------------------------------------
Name and Title                                 President and CEO

[*] designated portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

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