exh10_1.htm


     

    Exhibit
10.1

     

    
      [LEXICON
PHARMACEUTICALS LETTERHEAD]

      


      May 4,
2009

       

      


      Personal
and Confidential

      Mr. Ajay
Bansal

      [Address]

      


      Dear
Ajay:

      


      The
management and board of directors of Lexicon believe you have the personal and
professional attributes required to make a significant contribution to the
future of medicine as a member of our team.   Therefore, I am
pleased to offer you the position of executive vice president,
corporate development and chief financial officer to support Lexicon in
fulfilling its mission: to discover and develop breakthrough treatments for
human disease.

       

      In this
position, you will be responsible for leading Lexicon’s finance and corporate
development efforts. You will be an executive officer reporting to the president
and chief executive officer, and will serve as a member of Lexicon’s executive
management committee.  Your place of employment will be at Lexicon’s
headquarters in The Woodlands, Texas.

       

      The terms
under which we are offering you this position are outlined below:

       

      Base
Salary

       

      You will
receive a monthly base salary of $28,333.33 ($340,000 per year), paid in
accordance with our standard payroll policies.  We currently pay
salaried employees on the 15th and
last day of each month.

       

      Bonus Arrangements

       

      You will
be eligible for an annual bonus with a bonus target (i.e., the amount payable if
all objectives are fully achieved) of 35% of your annual base
salary.  The actual amount of your bonus will be determined by the
compensation committee of the board of directors in consultation with the
president and chief executive officer, based upon achievement of individual and
corporate objectives established at the beginning of each year.  As is
the case with all Lexicon officers, decisions regarding the payment of bonuses
are subject to the discretion of the compensation committee of the board of
directors.

       

      We expect
typically to make bonus determinations following the end of the calendar year to
which the bonus relates, and to pay bonuses, if any, shortly after such
determinations are made.

       

      Stock
Options

       

      Subject
to the approval by the compensation committee of the board of directors, you
will receive options under our equity incentive plan giving you the right to
purchase 250,000 shares of Lexicon’s common stock at an exercise price equal to
the fair market value of the common stock (as fair market value is defined in
the plan) on the date you commence employment with the company.  The
options will vest and become exercisable with respect to (1) 25% of the shares
subject to the option on the first anniversary of your employment with the
company and (2) 1/48th of the
shares subject to the option each month thereafter. The options will have a
ten-year term and will be subject to the terms and conditions of the plan and
our standard form of stock option agreement for company officers, which you will
receive when the options are granted.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Benefits

       

      You will
be eligible to participate in the employee benefit plans we make available to
our employees generally, which currently include health, dental, vision, life
and disability insurance, as well as a 401(k) retirement plan.  We
currently make matching contributions under our 401(k) plan in an amount equal
to 50% of an employee’s contributions up to five percent of
salary.  We will provide you with life insurance coverage under our
group term policy that provides for a death benefit of two times your annual
salary.

       

      Paid
Time Off

       

      You will
be entitled to four weeks paid time off under our employee paid time off
policy.

       

      Severance

       

      In the
event your employment is terminated without “cause” by the company, you will be
entitled to receive, and the company shall be obligated to pay, salary
continuation payments (pursuant to the company’s normal payroll procedures) in
an amount equal to your then-current base salary for a period of 12 months
following such termination.  For purposes of the foregoing,
termination for “cause” shall mean termination of employment directly resulting
from (1) intentional misconduct causing a material violation by the company of
any state or federal laws, (2) a theft of corporate funds or corporate assets or
in a material act of fraud upon the company, (3) an act of personal
dishonesty that was intended to result in personal enrichment at the expense of
the company, (4) conviction of a felony; and

       

      Subject
to the payment obligations of the company, if any, under the preceding paragraph
of this letter, this letter does not create any term of employment, and both you
and the company will be free to terminate your employment at any time for any
reason.

       

      Start
Date

       

      We expect
that you will begin work on or about June 1, 2009, or at an earlier date to be
mutually agreed upon.

       

      Relocation
Assistance

       

      Lexicon
will provide you with a total of $75,000 to assist you in your relocation to The
Woodlands, payable promptly following your start date.  This amount
will include the company’s payment or reimbursement of your moving expenses that
may be excluded from your taxable income, with the balance, less applicable
taxes, to be used at your discretion.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      In
addition to the foregoing amounts, Lexicon will pay the expenses of two trips of
reasonable duration for you and your family to locate suitable housing in The
Woodlands.

       

      Preexisting
Business and Personal Obligations

       

      We
understand that you have an existing consulting obligation that may require you
to take a brief unpaid leave in order to make a trip in June 2009, completing
this consultancy and all associated work within the quarter.  Subject
to this exception due to a preexisting obligation, you will be subject to the
same policy that applies to all Lexicon officers which requires pre-approval for
any arrangement involving service on the board of directors (or similar
governing body) of, or as a consultant to, any third party
business.

       

      We also
understand that you expect to take approximately one week of unpaid leave in
connection with a family trip in July 2009 that is not expected to overlap with
Lexicon’s board of directors’ meeting scheduled for July 22 and 23,
2009.

       

      Proprietary
Information Agreement

       

      We
consider the protection of our confidential information and proprietary rights
to be very important.  As a result, our offer of employment is
conditioned upon your signing our standard form of Employee Proprietary
Information Agreement.

       

      If you
have any questions regarding this offer or our employee benefits plans, please
contact Steven A. Tragash, vice president of corporate affairs, at (281)
863-3787. If you find this offer to be acceptable, please indicate your
acceptance by signing and returning one of the two copies of this letter on or
before May 15, 2009.

       

      We
believe that this offer represents an excellent opportunity, and that you have
the experience, intellect, drive, engaging personality, appreciation for team
play and demonstrated effectiveness which make you a “natural” to join Lexicon
on its profound mission. Ajay, I believe you will enjoy you working with us and
that you will thrive at Lexicon. I hope you sense the same.

       

      
        	 
      	
                Sincerely,

              
	 
      	 
      
	 
      	
                /s/
      Arthur T. Sands

              
	 
      	 
      
	 
      	
                Arthur
      T. Sands, M.D., Ph.D.

                President
      and Chief Executive Officer

              


      

      


      
        
          
            	
                    Accepted
      and agreed:

                  
	 
      
	
                    /s/
      Ajay Bansal

                  
	
                    Ajay
      Bansal

                  
	 
      
	
                    Date:  May
      5, 2009