DECODE GENETICS INC
EX-10.2
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<TYPE>EX-10.2
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<DESCRIPTION>EX-10.2
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<p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:5.0in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Exhibit 10.2</font></b></p>

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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Sturlugata 8<br>
  IS-101 Reykjavik<br>
  ICELAND<br>
  Phone: +354 570 1900<br>
  Fax: +354 570 1981<br>
  E-mail: info@decode.is<br>
  Web Page: www.decode.com</font></p>
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">18 August, 2003</font></p>
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">J. Neal Armstrong</font></b></p>

<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">141 Needham Street</font></b></p>

<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Newton, MA 02464</font></b></p>

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<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Dear Neal,</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We are delighted that you have agreed to
serve as a member of the Board of Directors of deCODE genetics, Inc. (the
&#147;Company&#148;).&#160; This letter will confirm
our understanding regarding your service.&#160;
You have agreed to serve as a member of the Board of Directors of the
Company (the &#147;Board&#148;) and as the Chairman and financial expert of the Audit
Committee of the Board and will perform the duties of those positions in
accordance with the Company&#146;s Amended and Restated Articles of Incorporation
and Bylaws and all applicable laws and regulations.&#160;&#160; We understand that you will dedicate such time as is necessary
or appropriate to the performance of these services.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In consideration of your services the
Company shall pay you (a) an annual retainer of $12,000 which shall be paid on
the Commencement Date&#160; (as defined
below) and on each anniversary of the Commencement Date (subject to pro ration
in the final year of the term of this agreement if you resign from the Board
prior to an anniversary of the Commencement Date) and (b)&#160; $3,000 per day for each Board or committee
meeting that you attend whether personally or by telephone participation and
for each other day on which you provides services to the Company at the
Company&#146;s request.&#160; The Company will
also reimburse you for first class travel and accommodations and incidental
expenses you incur on behalf of or for the benefit of the Company, including
travelling to and from Board and committee meetings, upon receipt of a request
from you supported by appropriate receipts and other relevant documentation.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In addition, on the Commencement Date the
Company will grant you a non-qualified stock option under its 2002 Equity
Incentive Plan to purchase up to 60,000 shares of the Company&#146;s common stock at
a price equal to the closing price of the stock as reported on the Nasdaq
National Market on the day prior to the Commencement Date on the terms and
conditions contained in the stock option grant agreement attached as an exhibit
to this letter.</font></p>

<p style="margin:0in 0in .0001pt 45.0pt;text-indent:-45.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The
agreement contained in this letter shall become effective upon your election as
a member of the Board (the &#147;Commencement Date&#148;) and shall continue until the
close of business on the third anniversary of the date of this Agreement or
such earlier date, if any, that you resign from the Board and thereafter until
terminated by either party upon 90 days&#146; written notice to each other.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">If the terms set forth in this letter are
satisfactory to you, please indicate by signing the enclosed copy of this
letter and returning it to me.</font></p>

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<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Very truly yours,</font></p>
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/&#160; K&#225;ri
  Stef&#225;nsson</font></p>
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">K&#225;ri Stef&#225;nsson</font></p>
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chairman of the Board of Directors</font></p>
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ J. Neal Armstrong</font></p>
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">J. Neal Armstrong</font></p>
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2</font></p>


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