Document:

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                                                                    EXHIBIT 10.1
                     PARTNERSHIP INTEREST PURCHASE AGREEMENT

         THIS PARTNERSHIP INTEREST PURCHASE AGREEMENT (this "Agreement") is
effective as of September 30, 2001 at 11:59 pm CST (the "Closing Date") and is
among U.S. Physical Therapy, Inc., a Nevada corporation ("USPT"); U.S. Physical
Therapy, Ltd., a Texas limited partnership and wholly-owned subsidiary of USPT
("Purchaser"); Rehab Partners #1, Inc., a Texas corporation (the "General
Partner"); and John Cascardo, an individual resident of Dearborn, Michigan
("Seller").

                                    RECITALS

         WHEREAS, Seller owns a 35% interest, as a Class A limited partner, in
Dearborn Physical Therapy, Ltd. dba Advanced Physical Therapy, a Texas limited
partnership (the "Partnership") and wishes to sell all of his partnership
interest; and

         WHEREAS, Purchaser wishes to purchase such partnership interest;

         NOW, THEREFORE, in consideration of the recitals and of the agreements
contained herein, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

                                   ARTICLE I.
                                PURCHASE AND SALE

         Section 1.1. Purchase of Partnership Interest. Subject to and upon the
terms and conditions set forth in this Agreement, Seller hereby sells,
transfers, and delivers to Purchaser, and Purchaser hereby purchases and
acquires from Seller, all of Seller's right, title and interest in the
Partnership ("Partnership Interest").

         Section 1.2. Consent of the Partners. The General Partner, in its
capacity as general partner of the Partnership, and Purchaser, in its capacity
as a Class B limited partner of the Partnership, hereby acknowledge and consent
to the transfer of the Partnership Interest from Seller to Purchaser.

         Section 1.3. Closing. The date on which all transactions contemplated
by this Agreement are completed, such date to be mutually agreeable to the
parties, shall be the "Closing Date." The completion of such transactions may
occur at a mutually acceptable location or remotely by exchange of facsimile
signature pages and subsequent post-closing exchange of original signature
pages.

                                   ARTICLE II.
                                  CONSIDERATION

         Section 2.1. Definitions. For purposes of this Article II, the
following terms shall have the meanings set forth below:

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                  (a) Base Earnings. Net income, before federal income taxes, of
         the Partnership calculated in accordance with generally accepted
         accounting principles consistently applied and specifically after
         deducting any compensation and bonus payments to any employees of the
         Partnership, including Seller, for the twelve-month period ending on
         the last day of the calendar month preceding the Closing Date.

                  (b) Seller's Base Earnings. Thirty-five percent (35%) of Base
         Earnings.

                  (c) Future Earnings Period. Each twelve-month period ending on
         the last day of the calendar month preceding each of the first, second,
         third, fourth and fifth anniversaries of the Closing Date.

                  (d) Future Annual Earnings. With respect to any Future
         Earnings Period, the net income, before federal income taxes, of the
         Partnership calculated in accordance with generally accepted accounting
         principles consistently applied and specifically after deducting any
         compensation and bonus payments to any employees of the Partnership,
         including Seller, excluding from such calculations any revenues and
         expenses of the Partnership attributable to clinics or other operations
         opened or acquired after the Closing Date.

                  (e) Future Average Earnings. With respect to any Future
         Earnings Period, the average Future Annual Earnings per twelve-month
         period based on (a) cumulative Future Annual Earnings from the last day
         of the calendar month preceding the Closing Date through the last day
         of the applicable Future Earnings Period (b) divided by the number of
         complete Future Earnings Periods that have elapsed up to and including
         the applicable Future Earnings Period.

                  (f) Market Price. The market price per share of USPT Common
         Stock determined in the following manner: (i) the closing price (which
         shall be the last reported sales price, or, in case no such sales take
         place on such day, the average of the closing bid and the asked prices)
         per share of the USPT Common Stock on the principal national securities
         exchange on which the USPT Common Stock is then listed or admitted to
         trading; (ii) if the USPT Common Stock is not then so listed on a
         national securities exchange, the closing price of the USPT Common
         Stock in the over-the-counter market as reported by National Market of
         The National Association of Securities Dealers Automated Quotation
         System ("Nasdaq"); (iii) if the USPT Common Stock is not then quoted by
         Nasdaq, as furnished by any member of The National Association of
         Securities Dealers, Inc. ("NASD") selected by USPT for that purpose; or
         (iv) if no member of NASD furnishes quotes with respect to the USPT
         Common Stock, an amount determined in good faith by the board of
         directors of USPT.

         Section 2.2. Purchase Price. The total purchase price shall equal
$2,624,944.00 ("Purchase Price"), which the Parties agree is equal to 5.2 times
Seller's Base Earnings, consisting of the following:

                  (a) Closing Consideration. Within 30 days of closing,
         Purchaser shall deliver to Seller $629,987.00 in cash [representing 30%
         of 80% of the Purchase Price] and

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         95,205 shares of USPT common stock at the Market Price determined
         pursuant to Section 2.7 [representing 70% of 80% of the Purchase
         Price]. USPT has contributed to Purchaser the USPT common stock to be
         issued hereunder.

                  (b) Holdback. Purchaser shall retain $524,989.00 [representing
         20% of the Purchase Price] from the amounts Seller is entitled to
         receive upon the sale of the Partnership Interest (the "Holdback"). One
         fifth of the Holdback shall be scheduled to be paid (30% in cash and
         70% in USPT common stock) in each year that Future Annual Earnings are
         at least equal to Base Earnings (each a "Holdback Payment"). In the
         event that Future Annual Earnings for a Future Earnings Period equal or
         exceed Base Earnings, Purchaser shall pay to Seller the scheduled
         Holdback Payment. In the event that Future Annual Earnings for any
         Future Earnings Period are less than the Base Earnings but the Future
         Average Earnings up to and including such Future Earnings Period are
         equal to or greater than the Base Earnings, the scheduled Holdback
         Payment with respect to such Future Earnings Period and any previous
         Future Earnings Periods for which Seller did not receive a Holdback
         Payment shall be made. In the event that both the Future Annual
         Earnings and the Future Average Earnings in any Future Earnings Period
         are less than Base Earnings, then no Holdback Payment shall be made
         with respect to such Future Earnings Period or any previous Future
         Earnings Period until such time that Future Average Earnings equal or
         exceed Base Earnings.

                  (c) Distribution. Within 30 days after the Closing Date, the
         General Partner shall cause the Partnership to make a distribution to
         Seller equal to Seller's undistributed profits as of the Closing Date.

         Section 2.3. Incentive Earnout. In the event that the average of the
Future Annual Earnings for the fourth and fifth Future Earnings Periods is
greater than Base Earnings, Purchaser shall pay to Seller, an amount equal to
(A) the average Future Annual Earnings during the fourth and fifth Future
Earnings Periods, (B) minus the Base Earnings, (C) multiplied by 5.2 and (D)
multiplied by 35% (the "Incentive Earnout Payment"); provided, however, that in
no event shall the amount of the Incentive Earnout Payment exceed $500,000 under
the foregoing calculation. Notwithstanding the foregoing, in the event that the
average of the Future Annual Earnings for the fourth and fifth Earnings Periods,
when multiplied by 35%, is at least $750,000 but not greater than $1,100,000,
the Incentive Earnout Payment shall equal $700,000 and if such number is greater
than $1,100,000, the Incentive Earnout Payment shall equal $900,000. The
Incentive Earnout Payment shall be made 30% in cash and 70% in USPT common
stock.

         Section 2.4. Calculation of Earnings.

                  (a) Within forty-five (45) days following the end of each
         Future Earnings Period, the General Partner shall prepare and deliver
         to Seller a statement of Future Annual Earnings with respect to such
         Future Earnings Period (the "Earnings Statement"). During the 30 days
         immediately following receipt of the Earnings Statement by Seller, the
         Seller and his accountants shall be entitled to review the Earnings
         Statement and any working papers, trial balances and similar materials
         relating to the Earnings Statement prepared by the General Partner or
         its accountants, and the General Partner shall provide Seller and his
         accountants with reasonable access, during the General Partner's normal

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         business hours, to the Partnership's personnel, properties, books and
         records for the sole purpose of verifying the Earnings Statement.

                  (b) The Earnings Statement shall become final and binding upon
         the Seller on the day the Purchaser receives written notice from the
         Seller that the Earnings Statement is agreed to, or in the absence of
         such notice, on the 31st day following delivery of such Earnings
         Statement, unless the Seller gives written notice to the Purchaser of
         its disagreement with the Earnings Statement (a "Notice of
         Disagreement") prior to such date. Any Notice of Disagreement shall
         specify in reasonable detail the nature of any disagreement so
         asserted.

                  (c) If a timely Notice of Disagreement is received by the
         Purchaser with respect to the Earnings Statement, then the Earnings
         Statement shall become final and binding upon the parties on the
         earlier of (A) the date the Purchaser and the Seller resolve in writing
         all differences they have with respect to the matters specified in a
         Notice of Disagreement, or (B) the date the matters in dispute are
         finally resolved in writing by the Arbitrator in the manner described
         below.

                  (d) During the 30 days immediately following the delivery of
         any Notice of Disagreement, the Purchaser and the Seller shall seek in
         good faith to resolve in writing any differences which they may have
         with respect to the matters specified in such Notice of Disagreement.
         During such period, the Seller and his accountants shall each have
         reasonable access to the Partnership's records and books of account and
         may, at Seller's expense, examine, inspect, make copies and audit the
         Partnership's books and records. If such differences have not been
         resolved by the end of such 30-day period, Purchaser and Seller shall
         submit any and all matters which remain in dispute and which were
         included in any Notice of Disagreement to binding arbitration pursuant
         to Article VII hereof (it being understood that the Arbitrator shall
         act as an arbitrator to determine only those matters which remain in
         dispute).

                  (e) If a Holdback Payment or Incentive Earnout Payment is
         payable with respect to any Future Earnings Period as determined in
         accordance with this Section, such payment(s) shall be paid by the
         Purchaser to the Seller within ten (10) days following the Seller's
         agreement to or final resolution of the applicable Earnings Statement.

         Section 2.5. Conduct of Business. Until the end of the last Future
Earnings Period, (a) the General Partner shall, and shall cause the Partnership
to, maintain separate books of account for the earnings of the Partnership, for
the purposes of determining whether the Partnership has achieved the earnings
set forth in this Section; (b) the General Partner shall not, and shall not
permit the Partnership to, sell or dispose of any substantial part of the
business or the assets thereof in a manner that would otherwise materially
impair the earnings of the Partnership; and (c) the General Partner shall
continue to pay out the expenses of the Partnership, including any intracompany
payables, in accordance with past practice and policies, including those
policies relating to intracompany charges.

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         Section 2.6. Delivery of Cash in Lieu of Common Stock. Notwithstanding
anything herein to the contrary, any payment, or any portion thereof, specified
herein to be paid in USPT common stock, may, in Purchaser's sole discretion, be
paid to Seller in cash.

         Section 2.7. Issuance of Common Stock. For purposes of determining the
number of shares to be issued hereunder, shares of common stock shall be valued
at the average Market Price for the 30-day period prior to the Closing Date.

         Section 2.8. Change of Control of USPT. In the event of a merger,
consolidation or a sale of substantially all of the assets of USPT in which USPT
is not the surviving company, the surviving company shall have the option,
within 60 days from the change of ownership, to either:

                  (a) Assume the Purchaser's and USPT's obligations under this
         Agreement; or

                  (b) Discharge such obligations by:

                           (i) Paying the remaining Holdback Payments;

                           (ii) Paying the Incentive Earnout (capped at
                  $900,000) calculated as the greater of (1) the Incentive
                  Earnout under Section 2.3 above (using Future Annual Earnings
                  for the most recent 12 months in place of the average of the
                  Future Annual Earnings for the fourth and fifth Earnings
                  Periods in the calculation of the Incentive Earnout) minus the
                  Base Earnings multiplied by 5.2 multiplied by 35%; or (2)
                  $175,000; and

                           (iii) Waiving the restrictions on transfer in Section
                  3.9(a) hereof.

Should the surviving company not give notice of its decision to either assume or
discharge Purchaser's and USPT's obligations under this agreement within 60 days
from the change of ownership, then it shall be construed that the surviving
company has assumed such obligations.

In the event that the surviving company assumes the Purchaser's and USPT's
obligation under this agreement, Seller shall have a 90 day option commencing on
the date of the change of ownership to choose to terminate his Employment
Agreement and receive the benefits as set forth under 2.8(b) of this Section.

         Section 2.9. Nature of Holdback and Earnout Payments. It is expressly
understood between Purchaser and Seller that payments out of the Holdback and
the Earnout Payments contemplated herein are included as part of the
consideration paid for the Partnership Interest pursuant to this Section. The
payments out of the Holdback and the Earnout Payments described in this Section
are contractual rights only and shall not constitute any ownership interest in
the Partnership.

         Section 2.10. Amendment to Employment Agreement. General Partner (on
behalf of the Partnership) and Seller shall execute a Fifth Amendment to
Employment Agreement effective as of the Closing Date which shall provide for an
additional incentive bonus calculated

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as 1% of the monthly net revenue and 10% of the annual net income attributable
to any new clinics opened by the Partnership after the Closing Date.

         Section 2.11 Use of Name. Purchaser agrees that it will not operate any
physical therapy clinics under the name "Advanced Physical Therapy" in the State
of Michigan, other than the existing clinics that operate under such name or new
satellite clinics of such existing clinics, without obtaining consent from
Seller, which consent shall not be unreasonably withheld.

                                  ARTICLE III.
                    REPRESENTATIONS AND WARRANTIES OF SELLER

         Seller represents and warrants that the following representations and
warranties are true and correct as of the date hereof:

         Section 3.1. Ownership; No Liens. Seller is the sole and lawful owner
of all right, title and interest in and to the Partnership Interest, which
consists of a 35% ownership interest in the Partnership, free and clear of all
liens, encumbrances, pledges and claims whatsoever.

         Section 3.2. Authority and Validity. Seller has the full power,
capacity and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement and all other documents
contemplated hereby have been duly executed and delivered by Seller and
constitute the legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with their terms, subject only to (a) general
principles of equity and (b) bankruptcy and other laws of general applicability
relating to creditors' rights.

         Section 3.3. No Violation. Neither the execution, delivery or
performance by Seller of this Agreement nor the consummation of the transactions
contemplated hereby will conflict with, or result in a violation or breach of
the terms, conditions or provisions of, or constitute a default under or require
any authorizations, consent, approval or notice to a third party under any
agreement, indenture or other instrument under which Seller is bound or to which
the Partnership Interest is subject, or result in the creation or imposition of
any security interest, lien, charge or encumbrance upon any of the Partnership
Interest, or, to the best knowledge of Seller, violate or conflict with any
judgment, decree, order, statute, law, rule or regulation of any court or any
public, governmental or regulatory agency or body having jurisdiction over
Seller or the Partnership Interest.

         Section 3.4. Consents. No consent, authorization, approval, permit or
license of, or filing with, any governmental or public body or authority, any
lender or lessor or any other person or entity is required to authorize the
execution, delivery and performance of this Agreement on the part of Seller
except for (a) any filings and approvals required under the rules and
regulations of the Securities and Exchange Commission and (b) any filings and
approvals required by the Blue Sky laws of the various states.

         Section 3.5. No Undisclosed Liabilities. Seller has not entered into
any transactions or otherwise incurred any obligations or liabilities in respect
of the Partnership or the Partnership Interest that have not been disclosed to
Purchaser. Seller is not aware of any material adverse condition in the
Partnership.

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         Section 3.6. Contracts. Other than as permitted under the Partnership's
Agreement of Limited Partnership or the Employment Agreement between Seller and
the Partnership, Seller has not entered into whether or not in writing, any (a)
debt instrument, loan agreement or other obligation relating to indebtedness for
borrowed money or money lent or to be lent to another relating to the
Partnership or the Partnership Interest; (b) contracts containing noncompetition
covenants; or (c) any other agreement or commitment relating to the Partnership
not made in the ordinary course of business.

         Section 3.7. Employees. No employee has stated to or notified Seller
that he or she does not intend to remain employed by the Partnership after the
Closing Date.

         Section 3.8. Litigation. To the Seller's knowledge, there are no legal
actions or administrative proceedings or investigations pending or threatened
against Seller or the Partnership, including, without limitation, any tort
claims, employee claims, customer complaints or workers' compensation claims. To
the Seller's knowledge, neither Seller nor the Partnership is subject to any
continuing court or administrative order, writ, injunction or decree applicable
specifically to the Partnership, the Partnership Interest, or operations or
employees related thereto.

         Section 3.9. Investment Representations and Covenants of Seller.

                  (a) In addition to restrictions on transfer contained in
         applicable securities laws and in this Section 3.9, the sale of all
         shares of common stock of USPT issued under this Agreement, other than
         those shares issued as part of the Holdback or the Incentive Earnout,
         may only be sold in annual increments of 20% of the aggregate number of
         shares beginning one year from the date such shares were issuable
         pursuant to this Agreement, and the sale of all shares issued in
         connection with the Holdback or the Incentive Earnout shall be
         prohibited for 12 months from the date such shares were issuable.

                  (b) Seller understands that the shares of common stock of USPT
         to be issued pursuant to this Agreement (the "Securities") will not be
         registered under the Securities Act of 1933, as amended (the
         "Securities Act") or any state securities laws on the grounds that the
         issuance of the Securities is exempt from registration pursuant to
         Section 4(2) of the Securities Act or Regulation D promulgated under
         the Securities Act and pursuant to similar provisions of applicable
         state securities laws, and that the reliance of USPT on such exemptions
         is predicated in part on Seller's representations, warranties,
         covenants and acknowledgements set forth in this Section.

                  (c) Seller represents and warrants that he is an "accredited
         investor" as defined in Rule 501 promulgated under the Securities Act.

                  (d) Seller represents and warrants that the Securities to be
         acquired by Seller upon consummation of the transactions described in
         this Agreement will be acquired by him for his own account, not as a
         nominee or agent, and without a view to resale or other distribution
         within the meaning of the Securities Act and the rules and regulations

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         thereunder and that Seller will not distribute any of the Securities in
         violation of the Securities Act.

                  (e) Seller represents and warrants that the address set forth
         below is his principal residence:

                                 24915 Fairmount
                               Dearborn, MI 48124

                  (f) Seller (i) acknowledges that the Securities issued to
         Seller must be held indefinitely by him unless subsequently registered
         under the Securities Act or an exemption from registration is
         available, (ii) is aware that any routine sales of Securities made
         pursuant to Rule 144 under the Securities Act may be made only in
         limited amounts and in accordance with the terms and conditions of that
         Rule and that in such cases where the Rule is not applicable,
         compliance with some other registration exemption will be required, and
         (iii) is aware that Rule 144 is not currently available for use by
         Seller for resale of any of the Securities to be acquired by Seller
         upon consummation of the transactions described herein.

                  (g) Seller represents and warrants to USPT that Seller has
         such knowledge and experience in financial and business matters such
         that he is capable of evaluating the merits and risks of his investment
         in any of the Securities to be acquired by him upon consummation of the
         transactions described herein.

                  (h) Seller confirms that he has received and read (i) USPT's
         Form 10-K for 2000, (ii) USPT's Proxy Statement and Prospectus for
         USPT's 2001 Annual Meeting of Shareholders and (iii) USPT's Form 10-Q
         for the first quarter of 2001. Seller also confirms that USPT has made
         available to Seller the opportunity to ask questions of and receive
         answers from it concerning the terms and conditions of such Seller's
         investment in the Securities, and the Seller has received to such
         Seller's satisfaction, such additional information, in addition to that
         set forth herein, about USPT's operations and the terms and conditions
         of the offering as Seller has requested.

                  (i) In order to ensure compliance with the provisions of
         paragraph (d) hereof, Seller agrees that Seller will not sell or
         otherwise transfer or dispose of Securities or any interest therein
         (unless such shares have been registered under the Securities Act)
         without first complying with either of the following conditions, the
         expenses and costs of satisfaction of which shall be fully borne and
         paid for by Seller:

                           (i) USPT shall have received a written legal opinion
                  from Seller's legal counsel, which opinion and counsel shall
                  be satisfactory to USPT in the exercise of its reasonable
                  judgment, or a copy of a "no-action" or interpretive letter of
                  the Securities and Exchange Commission specifying the nature
                  and circumstances of the proposed transfer and indicating that
                  the proposed transfer will not be in violation of any of the
                  registration provisions of the Securities Act and the rules
                  and regulations promulgated thereunder; or

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                           (ii) USPT shall have received an opinion from its own
                  counsel, to the effect that the proposed transfer will not be
                  in violation of any of the registration provisions of the
                  Securities Act and the rules and regulations promulgated
                  thereunder, provided that if Seller has complied with the
                  holding period and other requirements of Rule 144 under the
                  Securities Act in connection with such sale or transfer as
                  well as the restrictions on transfer set forth in paragraph
                  (a) above (except to the extent such restrictions have been
                  waived under Section 2.8 above), such opinion shall be
                  furnished at USPT's expense.

         The Seller also agrees that the certificates or instruments
         representing the Securities to be issued to Seller pursuant to this
         Agreement may contain a restrictive legend noting the restrictions on
         transfer described in this Section and required by federal and
         applicable state securities laws, and that appropriate "stop-transfer"
         instructions will be given to USPT's transfer agent, if any, provided
         that this paragraph (i) shall no longer be applicable to any Securities
         following their transfer pursuant to a registration statement effective
         under the Securities Act or if one of the opinions of counsel referred
         to above is to the further effect that transfer restrictions and the
         legend referred to herein are no longer required in order to establish
         compliance with any provisions of the Securities Act.

         Section 3.10. Disclosure. No statement, document, representation or
warranty made or delivered by Seller in connection with the transactions
contemplated hereby contained or contains any untrue statement of material fact
or omits to state any material fact necessary to have made or make the
statement, in light of the circumstances in which made, not misleading.

                                   ARTICLE IV.
              REPRESENTATIONS AND WARRANTIES OF PURCHASER AND USPT

         Purchaser and USPT jointly and severally represent and warrant that the
following are true and correct as of the date hereof:

         Section 4.1. Organization and Good Standing. Purchaser is a limited
partnership validly existing and in good standing under the laws of the State of
Texas, with all requisite power and authority to carry on the business in which
it is engaged, to own the properties it owns, to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. USPT is a
corporation validly existing and in good standing under the laws of the State of
Nevada, with all requisite power and authority to carry on the business in which
it is engaged, to own the properties it owns, to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.

         Section 4.2. Authorization and Validity. The execution, delivery and
performance of this Agreement by Purchaser and USPT, and the consummation by
Purchaser and USPT of the transactions contemplated hereby have been duly
authorized by Purchaser and USPT. This Agreement has been duly executed and
delivered by Purchaser and USPT and constitutes the legal, valid and binding
obligations of Purchaser and USPT, enforceable against Purchaser and USPT in
accordance with its terms, subject only to (a) general principles of equity and
(b) bankruptcy and other laws of general applicability relating to creditors'
rights.

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         Section 4.3. No Violation. Neither the execution, delivery or
performance by Purchaser or USPT of this Agreement nor the consummation of the
transactions contemplated hereby will conflict with, or result in a violation or
breach of the terms, conditions and provisions of, or constitute a default
under, the organizational documents of Purchaser or USPT or any agreement,
indenture or other instrument under which Purchaser or USPT is bound or violate
or conflict with any judgment, decree, order, statute, law, rule or regulation
of any court or any public, governmental or regulatory agency or body having
jurisdiction over Purchaser or USPT or the properties or assets of either of
them.

         Section 4.4. Consents. No consent, authorization, approval, permit or
license of, or filing with, any governmental or public body or authority, any
lender or lessor or any other person or entity is required to authorize the
execution, delivery and performance of this Agreement on the part of Purchaser
or USPT except for (a) any filings and approvals required under the rules and
regulations of the Securities and Exchange Commission and (b) filings and
approvals required by the Blue Sky laws of the various states.

         Section 4.5. SEC Reports. USPT has filed in a timely manner with the
Securities and Exchange Commission all forms, financial statements, documents
and reports (collectively, the "SEC Reports") required to be filed by USPT
pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange
Act"). Such SEC Reports were prepared in all material respects in accordance
with the Exchange Act and do not contain any untrue statement of material fact
or facts or omit to state a material fact or facts necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Since USPT's Quarterly Report on Form 10-Q for the three
months ended March 31, 2001, USPT has not suffered any change, event, or
condition that alone or together with other changes, events or conditions could
have a material adverse effect.

         Section 4.6. Capitalization. The capitalization of USPT stated in the
SEC Reports (as defined in Section 4.5 above) were true and correct as of the
dates specified therein. All of the issued and outstanding shares of USPT Common
Stock are, and all shares of USPT Common Stock to be issued pursuant to the
transactions described in this Agreement will be, validly issued, fully paid and
non-assessable.

         Section 4.7. Litigation. Except as disclosed in the SEC Reports (as
defined in Section 4.5 above), there are no material claims, actions, suits,
proceedings (arbitration or otherwise) or investigations pending or, to
Purchaser's or USPT's knowledge, threatened against either Purchaser or USPT at
law or in equity in any court or before or by any Governmental Authority, and,
to Purchaser's or USPT's knowledge, there are no, and have not been any,
conditions or incidents that may result in any such actions, suits, proceedings
(arbitration or otherwise) or investigations. Neither Purchaser or USPT is in
default in respect of any judgment, order, writ, injunction or decree of any
court or other Governmental Authority.

         Section 4.8. Disclosure. To Purchaser's or USPT's knowledge, no
statement, document, representation or warranty made or delivered by Purchaser
or USPT in connection with the transactions contemplated hereby contained or
contains any untrue statement of material fact or omits to state any material
fact necessary to have made or make the statement, in light of the circumstances
in which made, not misleading.

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                                   ARTICLE V.
                                    COVENANTS

         Section 5.1. Non-Competition. For a five (5) year period following the
Closing Date, Seller shall not, directly or indirectly, either as an employee,
employer, consultant, agent, lender, principal, partner, stockholder, corporate
officer, director, or in any other individual or representative capacity, engage
or participate in the physical therapy business within a ten (10) mile radius of
any facility owned or operated by the Partnership, USPT or any affiliate of
USPT. Notwithstanding the foregoing this Section 5.1 shall not prevent Seller
from owning no more than five percent (5%) of issued and outstanding shares of
common stock of a company whose common stock is listed on a national stock
exchange or is qualified to be traded on the NASDAQ National Market System.

         Section 5.2. Solicitation.

                  (a) Non-Solicitation of Customers. During Seller's employment
         with the Partnership and for a period of five (5) years after the
         termination of employment, Seller agrees not to, directly or
         indirectly, call on, service, solicit or be employed by any person,
         firm, corporation or other entity who or which, at any time during
         which Seller was an employee of the Partnership, was or had been a
         customer, patient referral source or employee of the Partnership or any
         of its affiliates, including, without limitation, any physician who had
         referred any patients to any facility owned or operated by the
         Partnership.

                  (b) Non-Solicitation of Employees. During Seller's employment,
         and for a period of one (1) year following the termination of
         employment, Seller will not, either directly or indirectly, call on,
         solicit, or induce any other employee or officer of USPT or any
         affiliate of USPT, including Purchaser and the Partnership, to leave
         such employ, and will not assist any other person or entity in such a
         solicitation.

         Section 5.3. Confidential Information.

                  (a) Definition of Confidential Information. "Confidential
         Information" means and includes any confidential or proprietary
         information and trade secrets, and shall also include the terms and
         provisions of this Agreement and any transaction or document executed
         by the parties pursuant to this Agreement. Confidential Information
         includes, by way of example and without limitation, the following:
         information not generally known to the public regarding current and
         prospective customers, suppliers, employees, contracting parties,
         investors and business affiliates; all notes, studies, customer lists,
         information, forms, business or management methods, marketing data, fee
         schedules, strategies, methods, books, records, and documents;
         research; financial and sales data; investment analyses; evaluations,
         opinions, and interpretations of information and data; computer
         programs and other stored electronic data; technologies and methods;
         training methods and training processes; organizational structure;
         personnel information, including salaries of personnel. Seller may also
         have had access to, or knowledge of, confidential information of third
         parties, including but not limited to actual and potential

                                       11
<PAGE>

         customers, suppliers, partners, joint venturers, investors, and
         financing sources, which shall likewise be considered Confidential
         Information.

                  (b) Non-Disclosure of Confidential Information. Seller agrees
         that Seller will not, at any time make any unauthorized disclosure of
         any Confidential Information (as defined above) of USPT, Purchaser or
         the Partnership, or make any use thereof, except in the carrying out of
         his employment responsibilities under his employment agreement with the
         Partnership. Seller acknowledges that this Confidential Information
         constitutes a valuable, special, and unique asset used by USPT,
         Purchaser or the Partnership, as applicable, in their respective
         businesses to obtain a competitive advantage. Seller further
         acknowledges that protection of such Confidential Information against
         unauthorized disclosure and use is of critical importance in
         maintaining the competitive position of USPT, Purchaser and the
         Partnership. Seller shall not be prohibited from disclosing
         Confidential Information pursuant to, and to the extent required to
         comply with, a court order, a valid administrative agency subpoena, or
         a lawful request for information by an administrative agency; provided,
         however, that Seller shall give Purchaser prompt notice of any such
         court order, subpoena, or request for information.

                  (c) Property of Purchaser. All written or electronic
         materials, records, data, and other documents prepared or possessed by
         Seller during and in the course of Seller's ownership of the
         Partnership Interest or Seller's employment with the Partnership are
         the property of USPT, Purchaser or the Partnership. All information,
         ideas, concepts, improvements, discoveries, and inventions that are
         conceived, made, developed, or acquired by Seller individually or in
         conjunction with others during Seller's ownership of the Partnership
         Interest or Seller's employment with the Partnership (whether during
         business hours and whether on the Partnership's premises or otherwise)
         are the sole and exclusive property of Purchaser. All memoranda, notes,
         records, files, correspondence, drawings, manuals, models,
         specifications, computer programs, maps, and all other documents, data,
         or materials of any type embodying such information, ideas, concepts,
         improvements, discoveries, and inventions are the property of USPT,
         Purchaser or the Purchaser, as applicable.

         Section 5.4. Reasonableness of Restrictions. Seller agrees that (a) the
covenants contained in Sections 5.1, 5.2 and 5.3 hereof are necessary for the
protection of the business, goodwill and trade secrets of USPT and its
subsidiaries, including Purchaser and the Partnership, (b) a portion of the
consideration paid to Seller under this Agreement is paid in consideration of
the covenants herein contained, the sufficiency of which consideration is hereby
acknowledged, and (c) if the scope of any restriction contained in Sections 5.1,
5.2, or 5.3 is too broad to permit enforcement of such restriction to its full
extent, then such restriction shall be enforced to the maximum permitted by law,
and the Parties hereby consent that such scope may be judicially modified
accordingly in any proceeding brought to enforce such restriction. The existence
of any claim or cause of action of Seller against the Partnership, Purchaser or
USPT, whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by Purchaser or USPT of these covenants.

         Section 5.5. Enforcement. Seller acknowledges that the restrictions
contained in Sections 5.1, 5.2, and 5.3 hereof are reasonable and necessary to
protect the legitimate interests

                                       12
<PAGE>

of USPT and its subsidiaries, including Purchaser and the Partnership, that
Purchaser and USPT would not have entered into this Agreement in the absence of
such restrictions, and that any violation of any provision of those Sections
will result in irreparable injury to Purchaser and USPT. Seller further
expressly acknowledges that the damages that would result from a violation of a
covenant contained in Sections 5.1, 5.2 or 5.3 would at a minimum be not less
than $25,000 for each month that Seller is in violation of such covenant. Seller
shall pay to Purchaser liquidated damages in the amount of $25,000 in cash per
month within thirty (30) days after Purchaser notifies Seller that Seller has
breached a covenant contained in Section 5.1, 5.2 or 5.3 as determined solely by
Purchaser in the reasonable exercise of its discretion. If Seller fails to make
payment as contemplated by this Section, Purchaser shall be entitled to, in
addition to any other remedies, (i) withhold from delivery under Section 2.2 or
2.3 the number of shares of USPT Common Stock entitled to be received by Seller,
valued at the Market Price per share in accordance with Section 2.7,
representing $25,000 per month or (ii) set off all or any of such liquidated
damages against any cash amounts payable by Purchaser to Seller pursuant to this
Agreement, or each of the foregoing. The Parties acknowledge and agree that the
actual damages resulting from a breach of a covenant contained in Section 5.1,
5.2 or 5.3 would be difficult or impracticable to calculate and that, in light
of the circumstances, the foregoing are not penalties but represent a reasonable
approximation of such damages. If and to the extent that Seller pays damages to
the Purchaser under this Section, Seller shall not be required to pay damages
under Article VI hereof.

         Section 5.6. Current Public Information. USPT shall use commercially
reasonable efforts to comply with the requirements of Rule 144 under the
Securities Act, as such Rule may be amended from time to time (or any similar
rule or regulation hereafter adopted by the SEC) regarding the availability of
current public information to the extent required to enable Seller to sell the
shares of USPT Common Stock issued pursuant to this Agreement without
registration under the Securities Act pursuant to Rule 144 (or any similar rule
or regulation). Upon the request of Seller, USPT will deliver to Seller a
written statement as to whether USPT has complied with such requirements.

                                   ARTICLE VI.
                                 INDEMNIFICATION

         Section 6.1. Indemnification by Seller. Subject to the terms and
conditions of this Article and the other provisions of this Agreement, Seller
agrees to indemnify, defend and hold USPT and Purchaser and their directors,
officers, agents, and attorneys harmless from and against all losses, claims,
obligations, demands, assessments, penalties, liabilities, costs, damages,
actions, suits, proceedings, hearings, investigations, charges, complaints,
injunctions, judgments, orders, decrees, rulings, dues, fines, amounts paid in
settlement, taxes, liens, expenses and fees including attorneys' fees and
expenses (collectively, "Damages"), asserted against or incurred by such
indemnitees by reason of or resulting from a breach of any representation,
warranty or covenant of Seller contained herein. Seller specifically agrees to
indemnify USPT and Purchaser for actual (calculated in a multiple of 5.2)
Damages if any such breach of a representation, warranty or covenant of Seller
causes restatement of Base Earnings. The provisions of this Article VI shall not
apply to breaches of covenants in Sections 5.1, 5.2 and

                                       13
<PAGE>

5.3 if and to the extent that the liquidated damages provided for in Section 5.5
are paid as set forth therein.

         Section 6.2. Indemnification by USPT and Purchaser. Subject to the
terms and conditions of this Article, and the other provisions of this
Agreement, USPT and Purchaser hereby agree to indemnify, defend and hold Seller
and his agents and attorneys harmless from and against all Damages asserted
against or incurred by any of such indemnitees by reason of or resulting from a
breach of any representation, warranty or covenant of USPT or Purchaser
contained herein.

         Section 6.3. Conditions of Indemnification. The obligations and
liabilities of the indemnifying party to the party to be indemnified under
Sections 6.1 and 6.2 with respect to claims resulting from the assertion of
liability by third parties shall be subject to the following terms and
conditions:

                  (a) Within 20 days (or such earlier time as might be required
         to avoid prejudicing the indemnifying party's position) after receipt
         of notice of commencement of any action evidenced by service of process
         or other legal pleading, the party to be indemnified shall give the
         indemnifying party written notice thereof together with a copy of such
         claim, process or other legal pleading, and the indemnifying party
         shall have the right to undertake the defense thereof by
         representatives of its own choosing and at its own expense; provided
         that the party to be indemnified may participate in the defense with
         counsel of its own choice, the fees and expenses of which counsel shall
         be paid by the party to be indemnified unless (i) the indemnifying
         party has agreed to pay such fees and expenses, (ii) the indemnifying
         party has failed to assume the defense of such action or (iii) the
         named parties to any such action (including any impleaded parties)
         include both the indemnifying party and the party to be indemnified and
         the party to be indemnified has been advised by counsel that there may
         be one or more legal defenses available to it that are different from
         or additional to those available to the indemnifying party, in which
         case, if the party to be indemnified informs the indemnifying party in
         writing that it elects to employ separate counsel at the expense of the
         indemnifying party, the indemnifying party shall not have the right to
         assume the defense of such action on behalf of the party to be
         indemnified.

                  (b) In the event that the indemnifying party, by the 30th day
         after receipt of notice of any such claim (or, if earlier, by the 10th
         day preceding the day on which an answer or other pleading must be
         served in order to prevent judgment by default in favor of the person
         asserting such claim), does not elect to defend against such claim, the
         party to be indemnified will (upon notice to the indemnifying party)
         have the right to undertake the defense, compromise or settlement of
         such claim on behalf of and for the account and risk of the
         indemnifying party and at the indemnifying party's expense, subject to
         the right of the indemnifying party to assume the defense of such
         claims at any time prior to settlement, compromise or final
         determination thereof.

                  (c) Notwithstanding the foregoing, the indemnifying party
         shall not settle any claim without the prior written consent of the
         party to be indemnified, such consent not to be unreasonably withheld.

                                       14
<PAGE>

                  (d) The party to be indemnified and the indemnifying party
         will each cooperate with all reasonable requests of the other.

         Section 6.4. Set-off. If Seller fails to make payment as contemplated
by this Article VI, Purchaser shall be entitled to (i) withhold from delivery
under Section 2.2 or 2.3 the number of shares of USPT Common Stock entitled to
be received by Seller, valued at the Market Price per share, representing an
amount equal to Damages or (ii) set off all or any of Damages against any cash
amounts payable by USPT to Seller pursuant to this Agreement, or each of the
foregoing.

         Section 6.5. Remedies Not Exclusive. The remedies provided in this
Article and in Article V shall not be exclusive of any other rights or remedies
available to one party against the other.

                                  ARTICLE VII.
                                   ARBITRATION

         Section 7.1. Notice of Demand. Any controversy or claim arising out of
or relating to this Agreement or the breach thereof, except for injunctive
relief which may be obtained to enforce the provisions of Sections 5.1, 5.2 and
5.3 of this Agreement, shall be resolved by binding arbitration which shall be
commenced by the delivery by a Party to the opposing party of a notice of demand
for arbitration sufficient to explain the claim made and the remedy requested.
The notice of any demand for arbitration shall be sent to the opposing party,
with a copy also delivered to the Houston, Texas office of the American
Arbitration Association ("AAA").

         Section 7.2. Selection of Arbitrator. The arbitration shall be
conducted by a single arbitrator mutually agreed to by the parties to this
Agreement. If the parties are unable to reach agreement as to an arbitrator, the
Parties shall request the AAA to appoint an arbitrator.

         Section 7.3. Hearing. The arbitration hearing shall be held in Houston,
Texas (the place in which the books and records of USPT, Purchaser and the
Partnership are located) and shall be conducted in accordance with the
Commercial Arbitration Rules of the AAA to the extent such rules do not conflict
with the terms hereof. The decision of the arbitrator shall be reduced to
writing and shall be binding on the parties. Judgment upon the award(s) rendered
by the arbitrator may be entered and execution had in any court of competent
jurisdiction or application may be made to such court for a judicial acceptance
of the award and an order of enforcement.

         Section 7.4. Expenses. Each party shall pay its own costs and expenses
incurred in connection with such arbitration, provided that the fees and
expenses of the arbitrator shall be borne 50% by the Purchaser and 50% by the
Seller.

                                       15
<PAGE>

                                  ARTICLE VIII.
                                  MISCELLANEOUS

         Section 8.1. Costs, Expenses and Legal Fees. Each party hereto shall
bear its own costs and expenses (including attorneys' fees and expenses) except
as otherwise provided herein.

         Section 8.2. Waiver. No waiver by any party of any default or breach by
another party of any representation, warranty, covenant or condition contained
in this Agreement shall be deemed to be a waiver of any prior or subsequent
default or breach by such party of the same or any other representation,
warranty, covenant or condition. No act, delay, omission or course of dealing on
the part of any party in exercising any right, power or remedy under this
Agreement or at law or in equity shall operate as a waiver thereof or otherwise
prejudice any of such party's rights, powers and remedies. All remedies, whether
at law or in equity, shall be cumulative and the election of any one or more
shall not constitute a waiver of the right to pursue other available remedies.

         Section 8.3. Amendment. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by all the parties
hereto.

         Section 8.4. Binding Agreement. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. Subject to Section 2.5, USPT, Purchaser and
their respective subsidiaries (including, without limitation, the Partnership)
shall be entitled to merge or consolidate with or into any person or entity,
sell or transfer shares of its common stock or any other securities to any
person or entity and sell, transfer, assign or otherwise dispose of assets or
liabilities (including this Agreement) to any person or entity, provided that
its obligations under this Agreement are assumed if so required under Section
2.8. This Agreement shall not be assigned by Seller without the written consent
of Purchaser and USPT, and any attempted assignment without such consent shall
be void.

         Section 8.5. Parties In Interest: No Third Party Beneficiaries. This
Agreement shall not be deemed to confer upon any person not a party hereto any
obligations, rights or remedies hereunder.

         Section 8.6. Entire Agreement. This Agreement and the agreements
contemplated hereby constitute the entire agreement of the parties hereto
regarding the subject matter hereof, and supersedes all prior agreements and
understandings, both written and oral, among the parties hereto, or any of them,
with respect to the subject matter hereof.

         Section 8.7. Severability. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this

                                       16
<PAGE>

Agreement a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.

         Section 8.8. Governing Law. This Agreement and the rights and
obligations of the parties hereto shall be governed by, construed and enforced
in accordance with the substantive laws of the State of Texas.

         Section 8.9. Captions. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of the
terms or provisions hereof.

         Section 8.10. Notice. Any notice or communication hereunder or in any
agreement entered into in connection with the transactions contemplated hereby
must be in writing and given by depositing the same in the United States mail,
addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, or by delivering the same in person.
Such notice shall be deemed received on the date on which it is hand-delivered
or on the third business day following the date on which it is so mailed. For
purposes of notice, the addresses of the parties shall be:

                  If to USPT, Purchaser or General Partner:

                           c/o U.S. Physical Therapy, Inc.
                           3040 Post Oak Blvd., Suite 222
                           Houston, Texas  77056
                           Attention:
                                     ---------------------

                  with a copy to:

                           Mayor, Day, Caldwell & Keeton, L.L.P.
                           700 Louisiana, Suite 1900
                           Houston, Texas  77002
                           Attention:  Eddy Rogers

                  If to Seller:

                           John Cascardo
                           24915 Fairmount
                           Dearborn, MI 48124

                  with a copy to:

                           Ron Zadora
                           800 W Long Lake H200
                           Bloomfield Hills, MI 48302

Any party may change its address for notice by written notice given to the other
parties in accordance with this Section.

                                       17
<PAGE>

         Section 8.11. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.

                            [signature page follows]

                                       18
<PAGE>

         Executed as of the day first set forth above.

                                      U.S. PHYSICAL THERAPY, INC.

                                      By:     /s/ Roy Spradlin
                                         ---------------------------------------
                                      Name:   Roy Spradlin
                                           -------------------------------------
                                      Title:  President and CEO
                                            ------------------------------------

                                      REHAB PARTNERS #1, INC.

                                      By:     /s/ Roy Spradlin
                                         ---------------------------------------
                                      Name:   Roy Spradlin
                                           -------------------------------------
                                      Title:  President
                                            ------------------------------------

                                      U.S. PT, LTD.

                                      By:     /s/ Roy Spradlin
                                         ---------------------------------------
                                      Name:   Roy Spradlin
                                           -------------------------------------
                                      Title:  President
                                            ------------------------------------

                                      /s/ John Cascardo
                                      ------------------------------------------
                                      John Cascardo

                                       19<PAGE>

                                                                    Exhibit 10.1

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT, made and entered into as of July 12, 2001
(this "AGREEMENT"), by and between Lexicon Genetics Incorporated, a Delaware
corporation (hereafter "COMPANY"), and Alan Main, Ph.D. (hereafter "EXECUTIVE"),
an individual and resident of Mercer County, New Jersey.

                              W I T N E S S E T H:

         WHEREAS, subject to the completion of the merger (the "MERGER")
contemplated by the Agreement and Plan of Merger, dated June 13, 2001, among the
Company, Angler Acquisition Corp., and Coelacanth Corporation (after the Merger,
the "SUBSIDIARY"), the Company wishes to secure the services of the Executive
subject to the terms and conditions hereafter set forth; and

         WHEREAS, the Executive is willing to enter into this Agreement, which
shall become effective upon the effective time of the Merger (the "EFFECTIVE
DATE"), upon the terms and conditions hereafter set forth;

         NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the parties hereto agree as follows:

         1. EMPLOYMENT. During the Employment Period (as defined in Section 4
hereof), the Company or the Subsidiary shall employ Executive, and Executive
shall serve, as Senior Vice President of the Company and the Subsidiary with
responsibility for overall management of Lexicon Pharmaceuticals, a division of
the Company which shall include the Subsidiary. Executive's principal place of
employment shall be at the Subsidiary's principal facilities in East Windsor,
New Jersey, or at such other location for the Subsidiary's principal facilities
during the Employment Period. If the Subsidiary is Executive's employer, the
Subsidiary hereby irrevocably guarantees all of the Company's obligations under
this Agreement.

         2.       DUTIES AND RESPONSIBILITIES OF EXECUTIVE.

                  (a) During the Employment Period, Executive shall devote his
         services full time to the business of the Company and its Affiliates
         (as defined below), and perform the duties and responsibilities
         assigned to him by the Chief Executive Officer ("CEO") or Board of
         Directors (the "BOARD") of the Company to the best of his ability and
         with reasonable diligence. Executive agrees to cooperate fully with the
         Board, CEO and other executive officers of the Company, and not to
         engage in any activity which conflicts with or interferes with the
         performance of his duties hereunder. During the Employment Period,
         Executive shall devote his best efforts and skills to the business and
         interests of Company, do his utmost to further enhance and develop
         Company's best interests and welfare, and endeavor to improve his
         ability and knowledge of Company's business, in an effort to increase
         the value of his services for the mutual benefit of the parties hereto.
         During the Employment Period, it shall not be a violation of this
         Agreement for Executive to (1) serve on corporate,

<PAGE>

         civic, or charitable boards or committees (except for boards or
         committees of a Competing Business (as defined in Section 11)), (2)
         deliver lectures, fulfill teaching or speaking engagements, or (3)
         manage personal investments; provided that such activities do not
         materially interfere with performance of Executive's responsibilities
         under this Agreement.

                  For purposes of this Agreement, "AFFILIATE" means any entity
         which owns or controls, is owned or controlled by, or is under common
         ownership or control with, the Company, including, without limitation,
         the Subsidiary.

                  (b) Executive represents and covenants to Company that he is
         not subject or a party to any employment agreement, noncompetition
         covenant, nondisclosure agreement, or any similar agreement, covenant,
         understanding, or restriction that would prohibit Executive from
         executing this Agreement and fully performing his duties and
         responsibilities hereunder, or would in any manner, directly or
         indirectly, limit or affect the duties and responsibilities that may
         now or in the future be assigned to Executive hereunder.

         3.       COMPENSATION.

                  (a) During the Employment Period, the Company shall pay, or
         shall cause the Subsidiary to pay, to Executive an annual base salary
         of $287,000 in consideration for his services under this Agreement,
         payable on a pro rata basis in not less than monthly installments, in
         conformity with the Company's customary payroll practices for executive
         salaries. Executive's base salary shall be subject to review at least
         annually, and such salary may be adjusted, depending upon the
         performance of the Company and Executive, upon the recommendation of
         the Compensation Committee of the Board (the "COMPENSATION COMMITTEE").
         All salary, bonus and other compensation payments hereunder shall be
         subject to all applicable payroll and other taxes.

                  (b) As promptly as practicable after the end of each calendar
         year during the Employment Period, the Compensation Committee shall
         determine whether Executive is entitled to a bonus based on the
         attainment of performance goals during the calendar year then ended
         (the "BONUS YEAR"). For each Bonus Year during the Employment Period
         (including the Bonus Year commencing on the Effective Date and ending
         on December 31, 2001), the Compensation Committee shall establish
         certain performance goals for the Company and the Executive and a
         targeted annual bonus amount. The amount of the annual target bonus
         shall be within the sole discretion of the Compensation Committee,
         except that for the 2001 Bonus Year, the annual target bonus shall be
         30% of Executive's 2001 base salary. The target bonus shall be paid to
         Executive within 60 days after the end of the applicable Bonus Year
         based on the extent to which the performance goals and objectives for
         the Bonus Year have been achieved. The full amount of the target bonus
         shall be paid if substantially all of the designated performance goals
         and objectives have been achieved for the Bonus Year; if not, the
         Compensation Committee, in its discretion exercised in good faith, may
         award a target bonus to Executive in an amount less than the full
         target bonus for that Bonus Year. The Compensation Committee may also
         award additional bonuses or other compensation to Executive at any time
         in its complete discretion.

                                       2
<PAGE>

                  (c) On each of the Effective Date and, subject to Executive's
         continued employment with the Company or the Subsidiary at such time,
         the first anniversary of the Effective Date, the Company shall pay, or
         shall cause the Subsidiary to pay, to Executive a retention bonus in
         the amount of $125,000. In the event that Executive terminates his
         employment without Good Reason or the Company terminates Executive's
         employment with Cause within one year after the time a retention bonus
         payment is made (i.e., after the first and second anniversary of the
         Effective Date, respectively), Executive will (i) repay such retention
         bonus payment (net of FICA and other withholdings for which Executive
         will not be reimbursed) to the Company or the Subsidiary, as
         applicable, as follows: (A) 50% of such net amount within 30 days of
         the Company's request therefor and (B) 50% of such amount not later
         than June 30 of the following calendar year and (ii) forfeit the amount
         of any unpaid retention bonus.

                  (d) Options for an aggregate of 300,000 shares of the
         Company's common stock shall be granted on the Effective Date, with an
         exercise price equal to the fair market value (as defined in the
         Company's 2000 Equity Incentive Plan (the "EQUITY INCENTIVE PLAN")) of
         the Company's common stock on such date, subject to the terms of a
         stock option agreement between Executive and the Company and the letter
         from the Company to Coelacanth dated June 13, 2001.

         4. TERM OF EMPLOYMENT. Executive's initial term of employment with the
Company under this Agreement shall be for the period beginning on the Effective
Date and ending at midnight (CST) on December 31, 2002, unless Notice of
Termination pursuant to Section 7 is given by either the Company or Executive to
the other party. The Company and Executive shall each have the right to give
Notice of Termination at will, with or without cause, at any time, subject to
the terms and conditions of this Agreement regarding the rights and duties of
the parties upon termination of employment. The term of employment hereunder
ending on December 31, 2002, shall be referred to herein as the "INITIAL TERM OF
EMPLOYMENT." On December 31, 2002 and on December 31st of each succeeding year
(each such date being referred to as a "RENEWAL DATE"), this Agreement shall
automatically renew and extend for a period of one (1) additional year (a
"RENEWAL TERM") unless written notice of non-renewal is delivered from one party
to the other at least sixty (60) days prior to the relevant Renewal Date or,
alternatively, the parties may mutually agree to voluntarily enter into a new
employment agreement at any time. The period from the Effective Date through the
date of Executive's termination of employment at any time for whatever reason
shall be referred to herein as the "EMPLOYMENT PERIOD."

         5. BENEFITS. Subject to the terms and conditions of this Agreement,
during the Employment Period, Executive shall be entitled to the following:

                  (a) REIMBURSEMENT OF BUSINESS EXPENSES. The Company shall pay
         or reimburse, or shall cause the Subsidiary to pay and reimburse,
         Executive for all reasonable travel, entertainment and other expenses
         paid or incurred by Executive in performing his business obligations
         hereunder. Executive shall provide substantiating documentation for
         expense reimbursement requests as reasonably required by the Company.

                                       3
<PAGE>

                  (b) BENEFITS. Executive shall be entitled to and shall receive
         all other benefits and conditions of employment available generally to
         executives of the Company pursuant to Company or Subsidiary plans and
         programs, including, but not limited to, group health insurance
         benefits, dental benefits, life insurance benefits, disability
         benefits, and pension and retirement benefits. The Company shall not be
         obligated to institute, maintain, or refrain from changing, amending,
         or discontinuing, any such employee benefit program or plan, so long as
         such actions are similarly applicable to covered executives generally.

                  Notwithstanding the previous paragraph, the Company shall
         provide, or shall cause the Subsidiary to provide, Executive with
         long-term disability ("LTD") insurance coverage, at no cost to
         Executive, that provides income replacement benefits to Executive, if
         he should incur a long-term disability covered under such policy, in an
         amount at least equal to 60% of his base salary at the time of such
         disability, which benefits shall begin after a waiting period that does
         not exceed six months. The income replacement benefits described in the
         previous sentence shall remain payable at least until Executive attains
         the age of 65, provided that he remains unable to perform the essential
         functions of his occupation during such period. To the extent that the
         Company's or the Subsidiary's LTD policy which covers employees
         generally does not provide sufficient coverage to Executive, as
         described in the previous sentence, Company agrees to purchase, or
         cause Subsidiary to purchase, a supplemental LTD policy for Executive
         from a reputable insurer and to pay the premiums on Executive's behalf
         during the Employment Period.

                  Notwithstanding the first paragraph of this Section 5(b), the
         Company shall pay, or cause the Subsidiary to pay, for term life
         insurance coverage on Executive's life, with the beneficiary(ies)
         thereof designated by Executive, with a death benefit in an amount not
         less than twice Executive's base salary (pursuant to Section 3(a)) as
         such base salary is set on each January 1 during the Employment Period.
         Upon request, Executive agrees to take any physical exams, and to
         provide such information, which are reasonably necessary or appropriate
         to secure or maintain such term life insurance coverage.

                  (c) PAID VACATION. Executive shall be entitled to a paid
         annual vacation of three (3) weeks. Vacation time may be accumulated
         and carried over by Executive into any subsequent year(s); provided,
         however, Executive shall not be permitted to accumulate more than six
         (6) weeks of accrued and unused vacation. In addition, the Executive
         shall be allowed up to five (5) days each year to attend professional
         continuing education meetings or seminars; provided that attendance at
         such meetings or seminars shall be planned for minimum interference
         with the Company's business.

         6. RIGHTS AND PAYMENTS UPON TERMINATION. The Executive's right to
compensation and benefits for periods after the date on which his employment
with the Company and its Affiliates (as defined in Section 2) terminates for
whatever reason (the "TERMINATION DATE") shall be determined in accordance with
this Section 6.

                                       4
<PAGE>

                  (a) ACCRUED SALARY AND VACATION PAYMENTS. Executive shall be
         entitled to the following payments under this Section 6(a) regardless
         of the reason for termination, in addition to any payments or benefits
         to which the Executive is entitled under the terms of any employee
         benefit plan or the provisions of Section 6(b):

                           (1) his accrued but unpaid salary through his
                  Termination Date; and

                           (2) his accrued but unpaid vacation pay for the
                  period ending on his Termination Date in accordance with
                  Section 5(c) above.

                  (b)      SEVERANCE PAYMENTS.

                           (1) At any time prior to a Change in Control (as
                  defined below), in the event that (A) Executive's employment
                  hereunder is terminated by the Company at any time for any
                  reason except (i) for Cause (as defined below) or (ii) due to
                  Executive's death or Disability (as defined below), or (B)
                  Executive terminates his own employment hereunder for Good
                  Reason (as defined below), then, in either such event,
                  Executive shall be entitled to receive, and the Company shall
                  be obligated to pay, Executive's base salary under Section
                  3(a) (without regard to any bonuses or extraordinary
                  compensation) then being paid to him on the Termination Date
                  as salary continuation (pursuant to the Company's normal
                  payroll procedures) for a period equal to six (6) consecutive
                  months following the Termination Date. In the event of
                  Executive's death during such salary continuation period, the
                  Company shall pay the sum of the present value of all
                  remaining payments (using a 5% discount rate) in a single
                  payment to Executive's surviving spouse, if any, or if there
                  is no surviving spouse, to Executive's estate within 60 days
                  of his death. Such severance payments shall be subject to
                  Sections 10 and 11 hereof.

                           Prior to a Change in Control, in the event that
                  Executive's employment is terminated through notice of
                  non-renewal as of the end of the Initial Term of Employment
                  (pursuant to Section 4) or any one-year Renewal Term,
                  Executive shall be entitled to receive, and the Company shall
                  be obligated to pay, Executive's base salary under Section
                  3(a) (without regard to any bonuses or extraordinary
                  compensation) then being paid to him on the Termination Date
                  as salary continuation (pursuant to the Company's normal
                  payroll procedures) for each month following his Termination
                  Date, not to exceed six months, that Executive is (A) not in
                  violation of the confidential information, non-competition and
                  other covenants of Sections 10 and 11 hereof and (B) not
                  employed by another employer, as determined by the Company.

                           (2) At any time after a Change in Control (as defined
                  below), in the event that (A) Executive's employment hereunder
                  is terminated by the Company at any time for any reason except
                  (i) for Cause (as defined below) or (ii) due to Executive's
                  death or Disability (as defined below), or (B) Executive
                  terminates his own employment hereunder for Good Reason (as
                  defined below in this Section 6(c)), then, in either such
                  event, Executive shall be entitled to receive, and the Company
                  shall be obligated to pay, Executive's base salary under
                  Section 3(a) (without regard to any

                                       5
<PAGE>

                  bonuses or extraordinary compensation except as provided below
                  in this paragraph) then being paid to him on the Termination
                  Date as salary continuation (pursuant to the Company's normal
                  payroll procedures) for a period equal to twelve (12)
                  consecutive months following the Termination Date, plus an
                  additional single sum payment equal to one-half of Executive's
                  target bonus (pursuant to Section 3(b)) for the Bonus Year in
                  which the termination occurred, which bonus shall be payable
                  within 30 days from the Termination Date. In the event of
                  Executive's death during such salary continuation period, the
                  Company shall pay the sum of the present value of all
                  remaining payments in a single payment (using a 5% discount
                  rate) to Executive's surviving spouse, if any, or if there is
                  no surviving spouse, to Executive's estate within 60 days of
                  his death.

                           After a Change in Control, in the event that the
                  Company terminates Executive's employment through notice of
                  nonrenewal as of the end of the Initial Term of Employment
                  (pursuant to Section 4) or any one-year Renewal Term,
                  Executive shall be entitled to receive, and the Company shall
                  be obligated to pay, Executive's base salary under Section
                  3(a) (without regard to any bonuses or extraordinary
                  compensation) then being paid to him on the Termination Date
                  as salary continuation (pursuant to the Company's normal
                  payroll procedures) for a period of six (6) consecutive months
                  following the Termination Date.

                           (3) Except as otherwise specifically provided in this
                  Section 6(b), severance payments shall be in addition to, and
                  shall not reduce or offset, any other payments that are due to
                  Executive from the Company (or any other source) or under any
                  other agreements, except that severance payments hereunder
                  shall offset any severance benefits otherwise due to Executive
                  under any severance pay plan or program maintained by the
                  Company that covers its employees generally. The provisions of
                  this Section 6(b) shall supersede any conflicting provisions
                  of this Agreement but shall not be construed to curtail,
                  offset or limit Executive's rights to any other payments,
                  whether contingent upon a Change in Control (as defined below)
                  or otherwise, under this Agreement or any other agreement,
                  contract, plan or other source of payment.

                           (4) A "CHANGE IN CONTROL" of the Company shall be
                  deemed to have occurred if any of the following shall have
                  taken place: (A) any "person" (as such term is used in
                  Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
                  1934 (the "Exchange Act")) other than Gordon Cain and his
                  Affiliates (defined below), taken together, is or becomes the
                  "beneficial owner" (as defined in Rule 13d-3 under the
                  Exchange Act, or any successor provisions thereto), directly
                  or indirectly, of securities of the Company representing
                  thirty-five percent (35%) or more of the combined voting power
                  of the Company's then-outstanding voting securities; (B) the
                  approval by the stockholders of the Company of a
                  reorganization, merger, or consolidation, in each case with
                  respect to which persons who were stockholders of the Company
                  immediately prior to such reorganization, merger, or
                  consolidation do not, immediately thereafter, own or control
                  more than fifty percent (50%) of the combined voting power
                  entitled to vote generally in the election of directors of the
                  reorganized, merged or consolidated Company's then outstanding
                  securities in

                                       6
<PAGE>

                  substantially the same proportion as their ownership of the
                  Company's outstanding voting securities prior to such
                  reorganization, merger or consolidation; (C) a liquidation or
                  dissolution of the Company or the sale of all or substantially
                  all of the Company's assets; (D) in the event any person is
                  elected by the stockholders of the Company to the Board who
                  has not been nominated for election by a majority of the Board
                  or any duly appointed committee thereof; or (E) following the
                  election or removal of directors, a majority of the Board
                  consists of individuals who were not members of the Board two
                  (2) years before such election or removal, unless the election
                  of each director who is not a director at the beginning of
                  such two-year period has been approved in advance by directors
                  representing at least a majority of the directors then in
                  office who were directors at the beginning of the two-year
                  period. The Board, in its discretion, may deem any other
                  corporate event affecting the Company to be a "Change in
                  Control" hereunder.

                           An "AFFILIATE" of Gordon Cain shall include (1) any
                  person or entity directly or indirectly controlled by Gordon
                  Cain, (2) any spouse, immediate family member or relative of
                  Gordon Cain, (3) any trust in which Gordon Cain or any person
                  described in clause (2) above has a beneficial interest, and
                  (4) any trust established by Gordon Cain or any person
                  described in clause (2) above, whether or not such person has
                  a beneficial interest in such trust. For purposes of this
                  definition of "Affiliate," the term "control" means the power
                  to direct the management and policies of a person, directly or
                  through one or more intermediaries, whether through the
                  ownership of voting securities by contract, or otherwise.

                           (5) "DISABILITY" means a permanent and total
                  disability which entitles Executive to disability income
                  payments under the Company's long-term disability plan or
                  policy as then in effect which covers Executive pursuant to
                  Section 5(b). If Executive is not covered under the Company's
                  long-term disability plan or policy at such time for whatever
                  reason or under a supplemental LTD policy provided by the
                  Company, then the term "Disability" hereunder shall mean a
                  "permanent and total disability" as defined in Section
                  22(e)(3) of the Code and, in this case, the existence of any
                  such Disability shall be certified by a physician acceptable
                  to both the Company and Executive. In the event that the
                  parties are not able to agree on the choice of a physician,
                  each shall select a physician who, in turn, shall select a
                  third physician to render such certification. All costs
                  relating to the determination of whether Executive has
                  incurred a Disability shall be paid by the Company.

                           (6) "CODE" means the Internal Revenue Code of 1986,
                  as amended. References in this Agreement to any Section of the
                  Code shall include any successor provisions of the Code or its
                  successor.

                           (7) "CAUSE" means a termination of employment
                  directly resulting from material misconduct consisting of (1)
                  the Executive having engaged in intentional misconduct causing
                  a material violation by the Company of any state or federal
                  laws, (2) the Executive having engaged in a theft of corporate
                  funds or corporate assets or in a material act of fraud upon
                  the Company, (3) an act of personal dishonesty taken

                                       7
<PAGE>

                  by the Executive that was intended to result in personal
                  enrichment of the Executive at the expense of the Company, (4)
                  Executive's final conviction (or the entry of a plea of nolo
                  contendere or equivalent plea) in a court of competent
                  jurisdiction of a felony, or (5) a breach by the Executive
                  during the Employment Period of the provisions of Sections 9,
                  10, and 11 hereof, if such breach results in a material injury
                  to the Company. For purposes of this definition of "Cause",
                  the term "Company" shall mean the Company or any of its
                  Affiliates (as defined in Section 2).

                           (8) "GOOD REASON" means the occurrence of any of the
                  following events without Executive's express written consent:

                                    (A) (i) Before a Change in Control (as
                           defined in Section 6(b)), a five percent (5%) or
                           greater reduction in Executive's annual base salary
                           or (ii), after a Change in Control, any reduction in
                           Executive's annual base salary, unless such reduction
                           is specifically agreed to in writing by Executive,
                           provided that, in either event, Executive
                           specifically terminates his employment for Good
                           Reason hereunder within 120 days from the date that
                           he has actual notice of such reduction; or

                                    (B) Before or after a Change in Control, (i)
                           any breach by the Company of any material provision
                           of this Agreement or (ii) Executive's authority,
                           duties or responsibilities for the Company or its
                           successor are materially reduced, provided that
                           Executive specifically terminates his employment for
                           Good Reason hereunder within 120 days from the date
                           that he has actual notice of such material breach or
                           material reduction in authority, duties or
                           responsibilities; or

                                    (C) Only following a Change in Control, any
                           of the following events will constitute Good Reason,
                           provided that Executive specifically terminates his
                           employment for Good Reason hereunder within 12 months
                           following his receipt of actual notice of an event
                           listed below:

                                            (i) the failure by the Company or
                                    its successor to expressly assume and agree
                                    to continue and perform this Agreement in
                                    the same manner and to the same extent that
                                    the Company would be required to perform if
                                    such Change in Control had not occurred; or

                                            (ii) the Company or its successor
                                    fails to continue in effect any pension,
                                    medical, health-and-accident, life
                                    insurance, or disability income plan or
                                    program in which Executive was participating
                                    at the time of the Change in Control (or
                                    plans providing Executive with substantially
                                    similar benefits), or the taking of any
                                    action by the Company or its successor that
                                    would adversely affect Executive's
                                    participation in or materially reduce his
                                    benefits under any such plan that was
                                    enjoyed by him immediately prior to the
                                    Change in Control,

                                       8
<PAGE>

                                    unless the Company or its successor provides
                                    a replacement plan with substantially
                                    similar benefits.

                           Notwithstanding the preceding provisions of this
                  Section 6(b)(8), if Executive desires to terminate his
                  employment for Good Reason, he shall first give written notice
                  of the facts and circumstances providing the basis for Good
                  Reason to the Board or the Compensation Committee, and allow
                  the Company thirty (30) days from the date of such notice to
                  remedy, cure or rectify the situation giving rise to Good
                  Reason to the reasonable satisfaction of Executive.

         7. NOTICE OF TERMINATION. Any termination by the Company or Executive
shall be communicated by Notice of Termination to the other party hereto. For
purposes of this Agreement, the term "NOTICE OF Termination" means a written
notice that, in the case of a termination by the Company or by Executive for
Good Reason, indicates the specific termination provision of this Agreement
relied upon and sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.

         8. NO MITIGATION REQUIRED. Executive shall not be required to mitigate
the amount of any payment provided for under this Agreement by seeking other
employment or in any other manner.

         9. CONFLICTS OF INTEREST.

                  (a) In keeping with his fiduciary duties to Company, Executive
         hereby agrees that he shall not become involved in a conflict of
         interest, or upon discovery thereof, allow such a conflict to continue
         at any time during the Employment Period. Moreover, Executive agrees
         that he shall immediately disclose to the Board any facts which might
         involve a conflict of interest that has not been approved by the Board.

                  (b) Executive and Company recognize and acknowledge that it is
         not possible to provide an exhaustive list of actions or interests
         which may constitute a "conflict of interest." Moreover, Company and
         Executive recognize there are many borderline situations. In some
         instances, full disclosure of facts by the Executive to the Board may
         be all that is necessary to enable Company to protect its interests. In
         others, if no improper motivation appears to exist and Company's
         interests have not demonstrably suffered, prompt elimination of the
         outside interest may suffice. In other serious instances, it may be
         necessary for the Company to terminate Executive's employment for Cause
         (as defined in Section 6(b)). The Board reserves the right to take such
         action as, in its good faith judgment, will resolve the conflict of
         interest.

                  (c) Executive hereby agrees that any direct or indirect
         interest in, connection with, or benefit from any outside activities,
         particularly commercial activities, which interest might adversely
         affect the Company or any of its Affiliates (as defined in Section 2),
         involves a possible conflict of interest. Circumstances in which a
         conflict of interest on the part of Executive would or might arise, and
         which must be reported immediately to the Board, include, but are not
         limited to, any of the following:

                                       9
<PAGE>

                           (1) Ownership by the Executive and his immediate
                  family members of more than a two percent (2%) interest, on an
                  aggregated basis, in any lender, supplier, contractor,
                  customer or other entity with which Company or any of its
                  Affiliates does business; or

                           (2) Misuse of information, property or facilities to
                  which Executive has access in a manner which is demonstrably
                  and materially injurious to the interests of Company or any of
                  its Affiliates, including its business, reputation or
                  goodwill.

         10. CONFIDENTIAL INFORMATION.

                  (a) NON-DISCLOSURE OBLIGATION OF EXECUTIVE. For purposes of
         this Section 10, all references to Company shall mean and include its
         Affiliates (as defined in Section 2). Executive hereby acknowledges,
         understands and agrees that all Confidential Information, as defined in
         Section 10(b), whether developed by Executive or others employed by or
         in any way associated with Executive or Company, is the exclusive and
         confidential property of Company and shall be regarded, treated and
         protected as such in accordance with this Agreement. Executive
         acknowledges that all such Confidential Information is in the nature of
         a trade secret. Failure to mark any writing confidential shall not
         affect the confidential nature of such writing or the information
         contained therein.

                  (b) DEFINITION OF CONFIDENTIAL INFORMATION. The term
         "CONFIDENTIAL INFORMATION" shall mean information, whether or not
         originated by Executive, which is used in Company's business and (1) is
         proprietary to, about or created by Company; (2) gives Company some
         competitive business advantage or the opportunity of obtaining such
         advantage, or the disclosure of which could be detrimental to the
         interests of Company; (3) is designated as Confidential Information by
         Company, known by the Executive to be considered confidential by
         Company, or from all the relevant circumstances considered confidential
         by Company, or from all the relevant circumstances should reasonably be
         assumed by Executive to be confidential and proprietary to Company; or
         (4) is not generally known by non-Company personnel. Such Confidential
         Information includes, but is not limited to, the following types of
         information and other information of a similar nature (whether or not
         reduced to writing or designated as confidential):

                           (1) Work product resulting from or related to the
                  research, development or production of the programs of the
                  Company including, without limitation, the Human Gene Trap(TM)
                  database, OmniBank(R), homologous recombination, DNA
                  sequencing, phenotypic analysis, drug target validation and
                  drug discovery;

                           (2) Internal Company personnel and financial
                  information, vendor names and other vendor information
                  (including vendor characteristics, services and agreements),
                  purchasing and internal cost information, internal service and
                  operational manuals, and the manner and methods of conducting
                  Company's business;

                                       10
<PAGE>

                           (3) Marketing, partnering and business and
                  development plans, price and cost data, price and fee amounts,
                  pricing and billing policies, quoting procedures, marketing
                  techniques and methods of obtaining business, forecasts and
                  forecast assumptions and volumes, and future plans and
                  potential strategies of the Company which have been or are
                  being discussed; and

                           (4) Business acquisition and other business
                  opportunities.

                  (c) EXCLUSIONS FROM CONFIDENTIAL INFORMATION. The term
         "CONFIDENTIAL INFORMATION" shall not include (i) information publicly
         known other than as a result of a disclosure by Executive in breach of
         Section 10(a), (ii) the general skills and experience gained during
         Executive's work with the Company which Executive could reasonably have
         been expected to acquire in similar work with another company and (iii)
         any information excluded from Executive's Proprietary Information and
         Inventions Agreement dated October 29, 1999 with Coelacanth
         Corporation.

                  (d) COVENANTS OF EXECUTIVE. As a consequence of Executive's
         acquisition or anticipated acquisition of Confidential Information,
         Executive shall occupy a position of trust and confidence with respect
         to Company's affairs and business. In view of the foregoing and of the
         consideration to be provided to Executive, Executive agrees that it is
         reasonable and necessary that Executive make the following covenants:

                           (1) At any time during the Employment Period and
                  within ten (10) years after the Employment Period, Executive
                  shall not disclose Confidential Information to any person or
                  entity, either inside or outside of Company, other than as
                  necessary in carrying out duties on behalf of Company, without
                  obtaining Company's prior written consent (unless such
                  disclosure is compelled pursuant to law, court order or
                  subpoena or other legal process, and at which time Executive
                  gives notice of such proceedings to Company), and Executive
                  will take all reasonable precautions to prevent inadvertent
                  disclosure of such Confidential Information. This prohibition
                  against Executive's disclosure of Confidential Information
                  includes, but is not limited to, disclosing the fact that any
                  similarity exists between the Confidential Information and
                  information independently developed by another person or
                  entity, and Executive understands that such similarity does
                  not excuse Executive from abiding by his covenants or other
                  obligations under this Agreement.

                           (2) Except as otherwise required by law or legal
                  process, at any time during or after the Employment Period,
                  Executive shall not use, copy or transfer Confidential
                  Information other than as necessary in carrying out his duties
                  on behalf of Company, without first obtaining Company's prior
                  written consent, and will take all reasonable precautions to
                  prevent inadvertent use, copying or transfer of such
                  Confidential Information. This prohibition against Executive's
                  use, copying, or transfer of Confidential Information
                  includes, but is not limited to, selling, licensing or
                  otherwise exploiting, directly or indirectly, any products or
                  services (including databases, written documents and software
                  in any form) which embody or are derived from Confidential
                  Information, or exercising judgment in performing analyses
                  based upon knowledge of Confidential Information.

                                       11
<PAGE>

                  (e) RETURN OF CONFIDENTIAL MATERIAL. Executive shall promptly
         turn over to the person designated by the Board or CEO all originals
         and copies of materials containing Confidential Information in the
         Executive's possession, custody, or control upon request or upon
         termination of Executive's employment with Company. Executive agrees to
         attend a termination interview with the person or persons designated by
         the Board or CEO in the Company's offices for a reasonable time period.
         The purposes of the termination interview shall be (1) to confirm
         turnover of all Confidential Information, (2) discuss any questions
         Executive may have about his continuing obligations under this
         Agreement, (3) answer questions related to his duties and on-going
         projects to allow a temporary or permanent successor to obtain a better
         understanding of the employment position, (4) confirm the number of any
         outstanding stock options, or other long-term incentive awards, and
         their vested percentages and other terms and conditions, and (5) any
         other topics relating to the business affairs of Company or its
         Affiliates as determined by the Company.

                  (f) INVENTIONS. Any and all inventions, products, discoveries,
         improvements, copyrightable or patentable works or products,
         trademarks, service marks, ideas, processes, formulae, methods,
         designs, techniques and trade secrets (collectively hereinafter
         referred to as "INVENTIONS") made, developed, conceived or resulting
         from work performed by Executive (alone or in conjunction with others,
         during regular hours of work or otherwise) while he is employed by
         Company and which may be directly or indirectly useful in, or related
         to, the business of Company (including, without limitation, research
         and development activities of Company), or which are made using any
         equipment, facilities, Confidential Information, materials, labor,
         money, time or other resources of Company, shall be promptly disclosed
         by Executive to the person or persons designated by the Board or CEO,
         shall be deemed Confidential Information for purposes of this
         Agreement, and shall be Company's exclusive property. Executive shall,
         upon Company's reasonable request during or after the Employment
         Period, execute any documents and perform all such acts and things
         which are necessary or advisable in the opinion of Company to cause
         issuance of patents to, or otherwise obtain recorded protection of
         right to intellectual property for, Company with respect to Inventions
         that are to be Company's exclusive property under this Section 10, or
         to transfer to and vest in Company full and exclusive right, title and
         interest in and to such Inventions; provided, however, that the expense
         of securing any such protection of right to Inventions shall be borne
         by Company. In addition, during or after the Employment Period,
         Executive shall, at Company's expense, reasonably assist the Company in
         any reasonable and proper manner in enforcing any Inventions which are
         to be or become Company's exclusive property hereunder against
         infringement by others. Executive shall keep confidential and will hold
         for Company's sole use and benefit any Invention that is to be
         Company's exclusive property under this Section 10 for which full
         recorded protection of right has not been or cannot be obtained. The
         Company shall reasonably compensate Executive for any assistance
         Executive provides pursuant to this Section 10 after the Employment
         Period.

                  (g) EXCLUSIONS FROM INVENTIONS. Anything that would otherwise
         constitute an Invention for purposes of this Agreement but that was
         first made, conceived, learned or reduced to practice by Executive,
         alone or jointly with others, (i) prior to Executive's employment with
         Coelacanth Corporation, including without limitation any inventions or
         improvements set forth on Exhibit A hereto, or (ii) following the
         Employment Period are

                                       12
<PAGE>

         excluded from the term "Inventions" as defined for purposes of this
         Agreement, and the Company agrees that it has no right, title or
         interest therein or claim with respect thereto.

                  (h) PROPERTY RIGHTS. In keeping with his fiduciary duties to
         Company, Executive hereby covenants and agrees that during his
         Employment Period, and for a period of three (3) months following his
         Termination Date, Executive shall promptly disclose in writing to
         Company any and all Inventions, which are conceived, developed, made or
         acquired by Executive, either individually or jointly with others, and
         which relate to, or are useful in, the business, products or services
         of Company including, without limitation, research and development
         activities of the Company, or which are made using any equipment,
         facilities, Confidential Information, material, labor, money, time or
         other resources of the Company. In consideration for his employment
         hereunder, Executive hereby specifically sells, assigns and transfers
         to Company all of his worldwide right, title and interest in and to all
         such Inventions.

                  If during the Employment Period, Executive creates any
         original work of authorship or other property fixed in any tangible
         medium of expression which (1) is the subject matter of copyright
         (including computer programs) and (2) directly relates to Company's
         present or planned business, products, or services, whether such
         property is created solely by Executive or jointly with others, such
         property shall be deemed a work for hire, with the copyright
         automatically vesting in Company. To the extent that any such writing
         or other property is determined not to be a work for hire for whatever
         reason, Executive hereby consents and agrees to the unconditional
         waiver of "moral rights" in such writing or other property, and to
         assign to Company all of his right, title and interest, including
         copyright, in such writing or other property.

                  Executive hereby agrees to (1) assist Company or its nominee
         at all times in the protection of any property that is subject to this
         Section 10, (2) not to disclose any such property to others without the
         written consent of Company or its nominee, except as required by his
         employment hereunder, and (3) at the request of Company, to execute
         such assignments, certificates or other interests as Company or its
         nominee may from time to time deem desirable to evidence, establish,
         maintain, perfect, protect or enforce its rights, title or interests in
         or to any such property. Following the Employment Period, however, the
         Executive shall be required to provide only such assistance to the
         Company only if (i) such assistance does not unreasonably interfere
         with Executive's then-current employment and (ii) Executive shall be
         reasonably compensated for his time.

                  (i) EMPLOYEE PROPRIETARY INFORMATION AGREEMENT. The provisions
         of this Section 10 shall not supersede the Employee Proprietary
         Information Agreement (the "PROPRIETARY AGREEMENT") between Employee
         and the Company (or any other agreement of similar intent) which shall
         remain in full force and effect and, moreover, this Agreement, the
         Proprietary Agreement and any such other similar agreement between the
         parties shall be construed and applied as being mutually consistent to
         the full extent possible.

                  (j) REMEDIES. In the event of a breach or threatened breach of
         any of the provisions of this Section 10, Company shall be entitled to
         an injunction ordering the return of all such Confidential Information
         and Inventions, and restraining Executive from using

                                       13
<PAGE>

         or disclosing, for his benefit or the benefit of others, in whole or in
         part, any Confidential Information or Inventions. Executive further
         agrees that any breach or threatened breach of any of the provisions of
         this Section 10 would cause irreparable injury to Company, for which it
         would have no adequate remedy at law. Nothing herein shall be construed
         as prohibiting Company from pursuing any other remedies available to it
         for any such breach or threatened breach, including the recovery of
         damages.

         11. AGREEMENT NOT TO COMPETE. All references in this Section 11 to
"COMPANY" shall mean and include its Affiliates (as defined in Section 2).

                  (a) PROHIBITED EXECUTIVE ACTIVITIES. Executive agrees that
         except in the ordinary course and scope of his employment hereunder
         during the Employment Period, Executive shall not, while employed by
         Company and for a period of six (6) months following his Termination
         Date, within the continental United States:

                           (1) Directly or indirectly engage or invest in, own,
                  manage, operate, control or participate in the ownership,
                  management, operation or control of, be employed by,
                  associated or in any manner connected with, or render services
                  or advice to, any Competing Business (as defined below);
                  provided, however, Executive may invest in the securities of
                  any enterprise with the power to vote up to two percent (2%)
                  of the capital stock of such enterprise (but without otherwise
                  participating in the activities of such enterprise) if such
                  securities are listed on any national or regional securities
                  exchange or have been registered under Section 12(g) of the
                  Securities Exchange Act of 1934;

                           (2) Directly or indirectly, either as principal,
                  agent, independent contractor, consultant, director, officer,
                  employee, employer, advisor (whether paid or unpaid),
                  stockholder, partner or in any other individual or
                  representative capacity whatsoever, either for his own benefit
                  or for the benefit of any other person or entity, solicit,
                  divert or take away, any customers, clients, or business
                  acquisition or other business opportunities of Company; or

                           (3) Directly or indirectly, either as principal,
                  agent, independent contractor, consultant, director, officer,
                  employee, advisor (whether paid or unpaid), stockholder,
                  partner or in any other individual or representative capacity
                  whatsoever, either for his own benefit or for the benefit of
                  any other person or entity, either (A) hire, attempt to hire,
                  contact or solicit with respect to hiring any employee of
                  Company (unless such employees' employment with the Company
                  has been terminated prior to any such action), (B) induce or
                  otherwise counsel, advise or encourage any employee of Company
                  to leave the employment of Company, or (C) induce any
                  distributor, representative or agent of Company to terminate
                  or modify its relationship with Company.

                           "COMPETING BUSINESS" means any individual, business,
                  firm, company, partnership, joint venture, organization, or
                  other entity whose products or services compete in whole or in
                  part, at any time during the Employment Period with the
                  products or services (or planned products and services) of
                  Company including,

                                       14
<PAGE>

                  without limitation, genomics research, development and
                  products including, without limitation, the Human Gene
                  Trap(TM) database, OmniBank(R), homologous recombination, DNA
                  sequencing, phenotypic analysis and drug target validation.

                  (b) ESSENTIAL NATURE OF NON-COMPETE OBLIGATION. It is
         acknowledged, understood and agreed by and between the parties hereto
         that the covenants made by Executive in this Section 11 are essential
         elements of this Agreement and that, but for the agreement of the
         Executive to comply with such covenants, Company would not have entered
         into this Agreement.

                  (c) NECESSITY AND REASONABLENESS OF NON-COMPETE OBLIGATION.
         Executive hereby specifically acknowledges and agrees that:

                           (1) Company has expended and will continue to expend
                  substantial time, money and effort in developing its business;

                           (2) Executive will, in the course of his employment,
                  be personally entrusted with and exposed to Confidential
                  Information (as defined in Section 10);

                           (3) Company, during the Employment Period and
                  thereafter, will be engaged in its highly competitive business
                  in which many firms, including Company, compete;

                           (4) Executive could, after having access to Company's
                  financial records, contracts, and other Confidential
                  Information and know-how and, after receiving training by and
                  experience with the Company, become a competitor;

                           (5) Company will suffer great loss and irreparable
                  harm if Executive terminates his employment and enters,
                  directly or indirectly, into competition with Company;

                           (6) The temporal and other restrictions contained in
                  this Section 11 are in all respects reasonable and necessary
                  to protect the business goodwill, trade secrets, prospects and
                  other reasonable business interests of Company;

                           (7) The enforcement of this Agreement in general, and
                  of this Section 11 in particular, will not work an undue or
                  unfair hardship on Executive or otherwise be oppressive to
                  him; it being specifically acknowledged and agreed by
                  Executive that he has activities and other business interests
                  and opportunities which will provide him adequate means of
                  support if the provisions of this Section 11 are enforced
                  after the Termination Date; and

                           (8) the enforcement of this Agreement in general, and
                  of this Section 11 in particular, will neither deprive the
                  public of needed goods or services nor otherwise be injurious
                  to the public.

                                       15
<PAGE>

                  (d) JUDICIAL MODIFICATION. Executive agrees that if an
         arbitrator (pursuant to Section 21) or a court of competent
         jurisdiction determines that the length of time or any other
         restriction, or portion thereof, set forth in this Section 11 is overly
         restrictive and unenforceable, the arbitrator or court shall reduce or
         modify such restrictions to those which it deems reasonable and
         enforceable under the circumstances, and as so reduced or modified, the
         parties hereto agree that the restrictions of this Section 11 shall
         remain in full force and effect. Executive further agrees that if an
         arbitrator or court of competent jurisdiction determines that any
         provision of this Section 11 is invalid or against public policy, the
         remaining provisions of this Section 11 and the remainder of this
         Agreement shall not be affected thereby, and shall remain in full force
         and effect.

         12. REMEDIES. In the event of any pending, threatened or actual breach
of any of the covenants or provisions of Section 9, 10, or 11, it is understood
and agreed by Executive that the remedy at law for a breach of any of the
covenants or provisions of these Sections may be inadequate and, therefore,
Company shall be entitled to a restraining order or injunctive relief from any
court of competent jurisdiction, in addition to any other remedies at law and in
equity. In the event that Company seeks to obtain a restraining order or
injunctive relief, Executive hereby agrees that Company shall not be required to
post any bond in connection therewith. Should a court of competent jurisdiction
or an arbitrator (pursuant to Section 21) declare any provision of Section 9,
10, or 11 to be unenforceable due to an unreasonable restriction of duration or
geographical area, or for any other reason, such court or arbitrator is hereby
granted the consent of each of the Executive and Company to reform such
provision and/or to grant the Company any relief, at law or in equity,
reasonably necessary to protect the reasonable business interests of Company or
any of its affiliated entities. Executive hereby acknowledges and agrees that
all of the covenants and other provisions of Sections 9, 10, and 11 are
reasonable and necessary for the protection of the Company's reasonable business
interests. Executive hereby agrees that if the Company prevails in any action,
suit or proceeding with respect to any matter arising out of or in connection
with Section 9, 10, or 11, Company shall be entitled to all equitable and legal
remedies, including, but not limited to, injunctive relief and compensatory
damages.

         13. DEFENSE OF CLAIMS. Executive agrees that, during the Employment
Period and for a period of two (2) years after his Termination Date, upon
request from the Company, he will cooperate with the Company and its Affiliates
in the defense of any claims or actions that may be made by or against the
Company or any of its Affiliates that affect his prior areas of responsibility,
except if Executive's reasonable interests are adverse to the Company or
Affiliates in such claim or action. To the extent travel is required to comply
with the requirements of this Section 13, the Company shall, to the extent
possible, provide Executive with notice at least 10 days prior to the date on
which such travel would be required. The Company agrees to promptly pay or
reimburse Executive upon demand for all of his reasonable travel and other
direct expenses incurred, or to be reasonably incurred, to comply with his
obligations under this Section 13. Following the Employment Period, however, the
Executive shall be required to provide only such assistance to the Company only
if (i) such assistance does not unreasonably interfere with Executive's
then-current employment and (ii) Executive shall be reasonably compensated for
his time.

                                       16
<PAGE>

         14. DETERMINATIONS BY THE COMPENSATION COMMITTEE.

                  (a) TERMINATION OF EMPLOYMENT. Prior to a Change in Control
         (as defined in Section 6(b)), any question as to whether and when there
         has been a termination of Executive's employment, the cause of such
         termination, and the Termination Date, shall be determined by the
         Compensation Committee in its discretion exercised in good faith,
         subject to Executive's right to contest such determination. In the
         event the parties cannot agree on a determination under this section,
         their dispute shall be resolved in accordance with the procedures set
         forth in Section 21.

                  (b) COMPENSATION. Prior to a Change in Control (as defined in
         Section 6(b)), any question regarding salary, bonus and other
         compensation payable to Executive pursuant to this Agreement shall be
         determined by the Compensation Committee in its discretion exercised in
         good faith, subject to Executive's right to contest such determination.
         In the event the parties cannot agree on a determination under this
         section, their dispute shall be resolved in accordance with the
         procedures set forth in Section 21.

         15. WITHHOLDINGS: RIGHT OF OFFSET. Company may withhold and deduct from
any benefits and payments made or to be made pursuant to this Agreement (a) all
federal, state, local and other taxes as may be required pursuant to any law or
governmental regulation or ruling, (b) all other employee deductions made with
respect to Company's employees generally, and (c) any advances made to Executive
and owed to Company.

         16. NONALIENATION. The right to receive payments under this Agreement
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge or encumbrance by Executive, his dependents or beneficiaries,
or to any other person who is or may become entitled to receive such payments
hereunder. The right to receive payments hereunder shall not be subject to or
liable for the debts, contracts, liabilities, engagements or torts of any person
who is or may become entitled to receive such payments, nor may the same be
subject to attachment or seizure by any creditor of such person under any
circumstances, and any such attempted attachment or seizure shall be void and of
no force and effect.

         17. INCOMPETENT OR MINOR PAYEES. Should the Board determine that any
person to whom any payment is payable under this Agreement has been determined
to be legally incompetent or is a minor, any payment due hereunder may,
notwithstanding any other provision of this Agreement to the contrary, be made
in any one or more of the following ways: (a) directly to such minor or person;
(b) to the legal guardian or other duly appointed personal representative of the
person or estate of such minor or person; or (c) to such adult or adults as
have, in the good faith knowledge of the Board, assumed custody and support of
such minor or person; and any payment so made shall constitute full and complete
discharge of any liability under this Agreement in respect to the amount paid.

         18. SEVERABILITY. It is the desire of the parties hereto that this
Agreement be enforced to the maximum extent permitted by law, and should any
provision contained herein be held unenforceable by a court of competent
jurisdiction or arbitrator (pursuant to Section 21), the parties hereby agree
and consent that such provision shall be reformed to create a valid and
enforceable

                                       17
<PAGE>

provision to the maximum extent permitted by law; provided, however, if such
provision cannot be reformed, it shall be deemed ineffective and deleted
herefrom without affecting any other provision of this Agreement.

         19. TITLE AND HEADINGS; CONSTRUCTION. Titles and headings to Sections
hereof are for the purpose of reference only and shall in no way limit, define
or otherwise affect the provisions hereof. Any and all Exhibits referred to in
this Agreement are, by such reference, incorporated herein and made a part
hereof for all purposes. The words "herein", "hereof", "hereunder" and other
compounds of the word "here" shall refer to the entire Agreement and not to any
particular provision hereof.

         20. CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW.

         21. ARBITRATION.

                  (a) ARBITRABLE MATTERS. If any dispute or controversy arises
         between Executive and the Company relating to (1) this Agreement in any
         way or arising out of the parties' respective rights or obligations
         under this Agreement or (2) the employment of Executive or the
         termination of such employment, then either party may submit the
         dispute or controversy to arbitration under the then-current Commercial
         Arbitration Rules of the American Arbitration Association (AAA) (the
         "RULES"); provided, however, the Company shall retain its rights to
         seek a restraining order or injunctive relief pursuant to Section 12.
         Any arbitration hereunder shall be conducted before a single arbitrator
         unless the parties mutually agree that the arbitration shall be
         conducted before a panel of three arbitrators. The arbitrator shall be
         selected (from lists provided by the AAA) through mutual agreement of
         the parties, if possible. If the parties fail to reach agreement upon
         appointment of the arbitrator within twenty (20) days following receipt
         by one party of the other party's notice of desire to arbitrate, then
         within five (5) days following the end of such 20-day period, each
         party shall select one arbitrator who, in turn, shall within five (5)
         days select a third arbitrator who shall be the single arbitrator
         hereunder. The site for any arbitration hereunder shall be in Mercer
         County, New Jersey, unless otherwise mutually agreed by the parties,
         and the parties hereby waive any objection that the forum is
         inconvenient.

                  (b) SUBMISSION TO ARBITRATION. The party submitting any matter
         to arbitration shall do so in accordance with the Rules. Notice to the
         other party shall state the question or questions to be submitted for
         decision or award by arbitration. Notwithstanding any provision of this
         Section 21, Executive shall be entitled to seek specific performance of
         the Executive's right to be paid during the pendency of any dispute or
         controversy arising under this Agreement. In order to prevent
         irreparable harm, the arbitrator may grant temporary or permanent
         injunctive or other equitable relief for the protection of property
         rights.

                  (c) ARBITRATION PROCEDURES. The arbitrator shall set the date,
         time and place for each hearing, and shall give the parties advance
         written notice in accordance with the Rules. Any party may be
         represented by counsel or other authorized representative at any
         hearing.

                                       18
<PAGE>

         The arbitration shall be governed by the Federal Arbitration Act, 9
         U.S.C. Sections 1 et. seq. (or its successor). The arbitrator shall
         apply the substantive law (and the law of remedies, if applicable) of
         the State of New Jersey to the claims asserted to the extent that the
         arbitrator determines that federal law is not controlling.

                  (d) COMPLIANCE WITH AWARD.

                           (1) Any award of an arbitrator shall be final and
                  binding upon the parties to such arbitration, and each party
                  shall immediately make such changes in its conduct or provide
                  such monetary payment or other relief as such award requires.
                  The parties agree that the award of the arbitrator shall be
                  final and binding and shall be subject only to the judicial
                  review permitted by the Federal Arbitration Act.

                           (2) The parties hereto agree that the arbitration
                  award may be entered with any court having jurisdiction and
                  the award may then be enforced as between the parties, without
                  further evidentiary proceedings, the same as if entered by the
                  court at the conclusion of a judicial proceeding in which no
                  appeal was taken. The Company and the Executive hereby agree
                  that a judgment upon any award rendered by an arbitrator may
                  be enforced in other jurisdictions by suit on the judgment or
                  in any other manner provided by law.

                  (e) COSTS AND EXPENSES. Each party shall pay any monetary
         amount required by the arbitrator's award, and the fees, costs and
         expenses for its own counsel, witnesses and exhibits, unless otherwise
         determined by the arbitrator in the award. The compensation and costs
         and expenses assessed by the arbitrator and the AAA shall be split
         evenly between the parties unless otherwise determined by the
         arbitrator in the award. If court proceedings to stay litigation or
         compel arbitration are necessary, the party who opposes such
         proceedings to stay litigation or compel arbitration, if such party is
         unsuccessful, shall pay all associated costs, expenses, and attorney's
         fees which are reasonably incurred by the other party as determined by
         the arbitrator.

         22. BINDING EFFECT; THIRD PARTY BENEFICIARIES. This Agreement shall be
binding upon and inure to the benefit of the parties hereto, and to their
respective heirs, executors, personal representatives, successors and permitted
assigns hereunder, but otherwise this Agreement shall not be for the benefit of
any third parties.

         23. ENTIRE AGREEMENT AND AMENDMENT. This Agreement contains the entire
agreement of the parties with respect to Executive's employment and the other
matters covered herein; moreover, this Agreement supersedes all prior and
contemporaneous agreements and understandings, oral or written, between the
parties hereto concerning the subject matter hereof. This Agreement may be
amended, waived or terminated only by a written instrument executed by both
parties hereto.

         24. SURVIVAL OF CERTAIN PROVISIONS. Wherever appropriate to the
intention of the parties hereto, the respective rights and obligations of said
parties, including, but not limited to, the rights

                                       19
<PAGE>

and obligations set forth in Sections 6 through 14 and 21 hereof, shall survive
any termination or expiration of this Agreement.

         25. WAIVER OF BREACH. No waiver by either party hereto of a breach of
any provision of this Agreement by any other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
will operate or be construed as a waiver of any subsequent breach by such other
party or any similar or dissimilar provision or condition at the same or any
subsequent time. The failure of either party hereto to take any action by reason
of any breach will not deprive such party of the right to take action at any
time while such breach continues.

         26. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the Company and its Affiliates (as defined in Section
2), and upon any successor to the Company following a Change in Control (as
defined in Section 6(b)); provided, however, any such assignment by the Company
shall not relieve the Company of its obligations hereunder unless such successor
to the Company has fully and expressly assumed the obligations of the Company to
the Executive under this Agreement. Any reference herein to "Company" shall mean
the Company as first written above, as well as any successor or successors
thereto.

         This Agreement is personal to Executive, and Executive may not assign,
delegate or otherwise transfer all or any of his rights, duties or obligations
hereunder without the consent of the Board. Any attempt by the Executive to
assign, delegate or otherwise transfer this Agreement, any portion hereof, or
his rights, duties or obligations hereunder without the prior approval of the
Board shall be deemed void and of no force and effect.

         27. NOTICES. Notices provided for in this Agreement shall be in writing
and shall be deemed to have been duly received (a) when delivered in person or
sent by facsimile transmission, (b) on the first business day after it is sent
by air express overnight courier service, or (c) on the third business day
following deposit in the United States mail, registered or certified mail,
return receipt requested, postage prepaid and addressed, to the following
address, as applicable:

                  (1)  If to Company, addressed to:

                       Lexicon Genetics Incorporated
                       4000 Research Forest Drive
                       The Woodlands, Texas 77381
                       Attention:  Corporate Secretary

                  (2)  If to Executive, addressed to the address set forth below
                       his name on the execution page hereof;

or to such other address as either party may have furnished to the other party
in writing in accordance with this Section 27.

         28. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
Each counterpart may consist of a copy hereof

                                       20
<PAGE>

containing multiple signature pages, each signed by one party, but together
signed by both parties hereto.

         29. EXECUTIVE ACKNOWLEDGMENT; NO STRICT CONSTRUCTION. The Executive
represents to Company that he is knowledgeable and sophisticated as to business
matters, including the subject matter of this Agreement, that he has read the
Agreement and that he understands its terms and conditions. Executive also
represents that he is free to enter into this Agreement including, without
limitation, that he is not subject to any other contract of employment or
covenant not to compete that would conflict in any way with his duties under
this Agreement. Executive acknowledges that he has had the opportunity to
consult with counsel of his choice, independent of Employer's counsel, regarding
the terms and conditions of this Agreement and has done so to the extent that
he, in his unfettered discretion, deemed to be appropriate.

         30. SUPERSEDING AGREEMENT. This Employment Agreement shall supersede
any prior employment agreement entered into between the Company and Executive,
including Executive's agreement with Coelacanth Corporation, from and after the
Effective Date.

         31. DATE CERTAIN. This Agreement shall be of no further force and
effect as of July 31, 2001 unless the Merger is completed on or before such
date.

                                       21
<PAGE>

         IN WITNESS WHEREOF, the Executive has hereunto set his hand, and
Company has caused this Agreement to be executed in its name and on its behalf,
to be effective as of the Effective Date first above written.

                                        EXECUTIVE:

                                        Signature:
                                                  ------------------------------
                                                        Alan Main, Ph.D.

                                        Date:
                                             -----------------------------------

                                        Address for Notices:

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

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

                                        LEXICON GENETICS INCORPORATED

                                        By:
                                           -------------------------------------
                                                Arthur T. Sands, M.D., Ph.D.
                                           President and Chief Executive Officer

                                        Date:
                                             -----------------------------------

                                       22

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