Document:

Document

Exhibit 10.3
[Lexicon Pharmaceuticals, Inc. Letterhead]

July 26, 2021 

Dr. Craig Granowitz, M.D., Ph.D. 
[Address] 

Dear Craig: 

Lexicon Pharmaceuticals, Inc. is pleased to offer you the position of Senior Vice President and Chief Medical Officer. 

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

Start Date 
We hope that you will begin employment on Monday, August 2, 2021. 

Salary 
You will receive a salary at the rate of $38,333.33 per month ($460,000 per year), paid in accordance with our standard payroll policies. We currently pay employees on the 15th and last day of each month. You will be eligible for a salary review in the first quarter of 2022 based on your start date with the Company.

Bonus Arrangements 
You will be eligible for an annual bonus, with a bonus target (i.e. the amount payable if all objectives are achieved) of 40% of your annual base salary, with an opportunity to earn a greater bonus for over-achievement. The actual amount of your bonus will be determined by the compensation committee of the board of directors, based upon achievement of corporate objectives established at the beginning of each year. As is the case with all Lexicon officers, decisions regarding the payment of bonuses are subject to the discretion of the compensation committee of the board of directors. For 2021, your bonus will be prorated based on your start date with the Company. Bonuses for 2021 are expected to be determined and paid in the first quarter of 2022. You must be employed on the date an annual bonus is paid in order to earn that bonus.

Stock Options 
You will receive an option under our Equity Incentive Plan (the ''Plan") giving you the right to purchase 250,000 shares of common stock at an exercise price equal to the fair market value of the common stock, as defined in the Plan, on the date the option is granted (which will be on or as soon as administratively practicable following the date your employment with the Company commences). The option will vest and become exercisable according to the following schedule: (a) twenty-five percent (25%) of the total after twelve months of continuous employment and (b) one forty-eighth (1148th) of the total after each subsequent month of employment thereafter. The option will have a ten-year term. and will be subject to the terms and conditions of the Plan and our standard form of stock option agreement for company officers ( which includes acceleration of vesting in the event of a change in control, as defined in that agreement), which you will receive after the option is granted.

Benefits                      
Subject to the terms of the applicable plans, you will be eligible to participate in the employee benefits plans we make available to our employees generally, which currently include health, dental, vision, life and disability insurance, as well as a 40l(k) retirement plan. We currently make matching contributions under our 40l(k) plan in an amount equal to 100% of an employee's contributions up to four percent of eligible compensation.

Severance 
In the event your employment is terminated without "cause" by the company, you will be eligible to receive (subject to your satisfaction of the release requirement described below), and the company shall be obligated to pay, salary continuation payments (pursuant to the company's normal payroll procedures) in an amount equal to your then

current base salary for a period of six months following such termination (the "Severance Payments"). Notwithstanding the foregoing, in the event your employment is terminated without "cause" by the company in connection with a "change in control," the term of your salary continuation payments will be extended for an additional six months to a total of one year following termination. For purposes of the foregoing,

•termination for "cause" shall mean termination of employment directly resulting from (a) intentional misconduct causing a material violation by the company of any state or federal laws, (b) a theft of corporate funds or corporate assets or in a material act of fraud upon the company, (c) an act of personal dishonesty that was intended to result in personal enrichment at the expense of the company or (d) conviction of a felony;

•a "change in control" of 1110 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")) 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 50% 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 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 substantially the same proportion as their ownership of the company's outstanding voting securities prior to such reorganization, merger or consolidation; or ( c) a liquidation or dissolution of the company or the sale of all or substantially all of the company's assets. For the avoidance of doubt, Invus, LP being a majority owner or dropping below majority ownership does not by itself constitute a "change in control;" and

•if you are a "specified employee" within the meaning of Treasury Regulation Section l.409A-l(i) as of the date of your "separation from service" (within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code''), and any payment or benefit pursuant to this "Severance" section constitutes a "deferral of compensation" within the meaning of Treasury Regulation Section 1. 409A-l (b ), you will not be entitled to such payment or benefit until the earlier of ( a) the date which is six months after your separation from service for any reason other than death, or (b) the date of your death. The provisions of this sub-paragraph shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409 A of the Code. Any amounts otherwise payable to you upon or in the six-month period following your separation from service that are not so paid by reason of this paragraph shall be paid (without interest) as soon as practicable (and in all events within twenty (20) days) after the date that is six months after your separation from service (or, if earlier, as soon as practicable, and in all events within 30 days, after the date of your death). Each payment under this "Severance" section shall be treated as one of a series of separate payments for purposes of Section 409 A of the Code. It is intended that any amounts payable under this letter and our or your exercise of authority or discretion hereunder shall comply with and avoid the imputation of any tax, penalty or interest under Section 409A of the Code. 111.is letter shall be construed and interpreted consistent with that intent.

The Severance Payments will be paid in substantially equal installments paid over the six-month period following the date on which your employment terminates (the "Termination Date") or, in the event that your employment terminates in connection with a change of control, over the twelve-month period following the Termination Date. On the company's first regularly scheduled pay date. that is on or after the date that is sixty (60) days after the Termination Date (the "First Payment Date"), the company shall pay to you, without interest, a number of such installments equal to the number of such installments that would have been paid during the period beginning on the Termination Date and ending on the First Payment Date had the installments been paid on the company's regularly scheduled pay dates on or following the Termination Date, and each of the remaining installments shall be paid on the company's regularly scheduled pay dates during the remainder of such six-month or twelve-month period, as applicable.

In order to receive the Severance Payments (and any portion thereof), you will be required to execute, on or before the expiration date specified therein, and not revoke within any time provided by the company to do so, a release of all claims in a form acceptable to the Company (the "Release"), which Release shall release the company and its 

affiliates, and the foregoing entities' respective shareholders, members, partners, officers, managers, directors, predecessors, successors, fiduciaries, employees, representatives, agents and benefit plans (and fiduciaries of such plans) from any and all claims, including any and all causes of action arising out of your employment, engagement, or affiliation with the company and any of its affiliates or the termination of such employment, engagement or affiliation, but excluding all claims to severance payments you may have. 

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

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

If you have any questions regarding this offer, please contact Mary McKinney, Executive Director, Human Resources. If you have any questions regarding our employee benefit plans, please contact Saturday Siekman, Senior Director, Compensation and Benefits. 

We believe that this offer represents an excellent opportunity for you and us, and that you have the capabilities to add significantly to our efforts. If you find this offer to be acceptable, please indicate your acceptance by signing and returning a copy of this letter within 48 hours of receiving your verbal offer.

                                                                                       Sincerely,

                                                                                       Lonnel Coats
                                                                                      President and Chief Executive Officer

Accepted and agreed:

Craig Granowitz, M.D., Ph.D.

Date:Document

Exhibit 10.10

                                         RESTRICTED STOCK UNIT AGREEMENT

                                                      (Officer Restricted Stock Unit)

            THIS RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”), effective as of _________ (the “Grant Date”), is by and between Lexicon Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and ___________ (“Employee”).

To carry out the purposes of the Company’s 2017 Equity Incentive Plan (the “Plan”) and the determination of the compensation committee (the “Compensation Committee”) of the Company’s board of directors (the “Board”) to grant Employee a Restricted Stock Unit Award (as defined in the Plan) under the Plan, subject to the terms and conditions of this Agreement, of shares of the Company’s Common Stock, par value $0.001 per share (“Stock”), in order to provide Employee with incentives to exert maximum efforts for the Company’s success by providing Employee the opportunity to benefit from increases in the value of the Stock, and in consideration of the mutual agreements and other matters set forth herein and in the Plan, the Company and Employee hereby agree as follows:

1.Grant of Restricted Stock Unit Award.  The Company hereby grants to Employee a Restricted Stock Unit Award, on the terms and conditions set forth in this Agreement and in the Plan, consisting of the right to receive an aggregate of ________ shares of Stock (the “Shares”).  

2.Vesting.  (a) Subject to the terms and conditions set forth in this Agreement and the Plan, the right of Employee to receive the Shares shall vest with respect to one third of the total number of Shares on February 28 of each of the three years following the year of grant; provided that, if not already vested in accordance with the foregoing, the right of Employee to receive the Shares shall become vested upon (i) a termination of Employee’s Continuous Service (as defined in the Plan) by the Company without Cause (as defined below) or by Employee for Good Reason (as defined below) that occurs after the occurrence of a Change in Control (as defined below) or (ii) the termination of Employee’s Continuous Service as a result of Employee’s death or Disability (as defined in the Plan).

            (b)        For purposes of the foregoing:

(i)    A “Change in Control” 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 Invus, L.P. and its affiliates (collectively, “Invus”) 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 35% or more of the combined voting power of the Company’s then-outstanding voting securities; (B) Invus 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 50% or more of the combined voting power of the Company’s then-outstanding voting securities; (C) the consummation 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 50% of the combined voting power of the reorganized, merged or consolidated Company’s then-outstanding securities entitled to vote generally in the election of directors in substantially the same proportions as their ownership of the Company’s outstanding voting securities prior to such reorganization, merger or consolidation; (D) a liquidation or dissolution of the Company or the sale of all or substantially all of the Company’s assets; 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 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; provided, that notwithstanding the foregoing, neither the execution by the Company of the Securities Purchase Agreement and Stockholders’ Agreement with Invus, L.P., each dated June 15, 2007 (as amended, supplemented or otherwise modified, the “Invus Transaction Agreements”), nor the consummation of the transactions contemplated in the Invus Transaction Agreements, including, without limitation, the acquisition by Invus of the Initial Shares and the Rights Shares (as defined in the Invus Transaction Agreements), the election of any representatives of Invus to the board of directors of the Company, or the acquisition by Invus of additional shares of Stock, as permitted or contemplated under the Invus Transaction Agreements, will constitute a “Change in Control.”  The Compensation Committee, in its discretion, may deem any other corporate event affecting the Company to be a “Change in Control” hereunder.

(ii)    “Cause” means a termination of Employee’s employment directly resulting from (A) Employee having engaged in intentional misconduct causing a material violation by the Company of any state or federal laws, (B) Employee having engaged in a theft of Company funds or Company assets or in a material act of fraud upon the Company, (C) an act of personal dishonesty taken by Employee that was intended to result in personal enrichment of Employee at the expense of the Company, (D) Employee’s final conviction (or the entry of any plea other than not guilty) in a court of competent jurisdiction of a felony, or (E) a breach by Employee of any contractual or fiduciary obligation to the Company, if such breach results in a material injury to the Company.

(iii)    “Good Reason” means the occurrence of any of the following events without Employee’s express written consent: (A) a material diminution in Employee’s base salary, (B) a material diminution in Employee’s authority, duties, or responsibilities, or (C) any other action or inaction that constitutes a material breach by the Company of any contractual obligation to Employee.

3.    Forfeiture upon Termination of Service.  Simultaneously with termination of Employee’s Continuous Service for any reason other than as a result of Employee’s death or Disability (as defined in the Plan) prior to the vesting of Employee’s rights to receive the Shares in accordance with Section 2 of this Agreement, Employee shall automatically forfeit all rights to receive the Shares, unless and except to the extent otherwise agreed by the Company, in its sole discretion.  

4.    Issuance of Shares upon Vesting.  Subject to the provisions of Sections 3 and 6 of this Agreement, upon vesting of the Shares in accordance with Section 2 of this Agreement, the Company shall (a) provide Employee with prompt notice of such vesting event and (b) issue the Shares to Employee for no additional consideration.

5.    Non-Transferability.  Employee’s rights under this Agreement, including with respect to any Shares as to which the interest of Employee has not vested in accordance with Section 2 of this Agreement, may not be transferred by Employee otherwise than by will or the laws of descent and distribution or pursuant to a qualified domestic relations order (as defined in Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder).

6.    Withholding of Tax.   Employee shall be liable for any and all federal, state or local taxes, including withholding taxes, arising out of the grant or vesting of Shares hereunder.  Unless Employee elects otherwise as provided below, Employee shall satisfy such withholding tax obligation by forfeiting to the Company that number of Shares having a Fair Market Value (as defined in the Plan) equal to the Company’s withholding obligation relating to such grant or vesting of Shares hereunder.  Employee may alternatively elect to satisfy such withholding tax obligation by making a cash payment to 

the Company equal to the Company’s minimum withholding obligation, in which case Employee shall (a) provide the Company with written notice of such election and (b) pay to the Company in immediately available funds an amount equal to the Company’s minimum withholding obligation, in each case by no later than the date giving rise to such withholding tax obligation.  No Shares shall be issued to Employee unless and until Employee shall have paid or otherwise satisfied the withholding tax obligations with respect thereto.

7.    Dividend Equivalents; Voting.  If the Board declares any dividends with respect to the Stock prior to the vesting of Employee’s rights to receive the Shares in accordance with Section 2 of this Agreement, dividend equivalents shall be credited to Employee in respect of the Shares and shall be converted into additional shares of Stock covered by this Agreement and such additional shares shall be subject to all of the terms and conditions of the underlying Shares.  Employee shall have no voting rights with respect to the Restricted Stock Unit Award or the Shares subject thereto until such time as the Shares are issued to Employee pursuant to Section 4 of this Agreement.

8.    No Right to Continued Employment. Nothing in this Agreement or the Plan shall confer upon Employee any right to continue in the employ of the Company or shall interfere with or restrict in any way the right of the Company, which is hereby expressly reserved, to terminate Employee’s employment at any time for any reason whatsoever, with or without cause and with or without advance notice.

9.    2017 Equity Incentive Plan.  The Plan, a copy of which is available for inspection by Employee at the Company’s principal executive office during business hours, is incorporated by reference in this Agreement.  This Agreement is subject to, and the Company and Employee agree to be bound by, all of the terms and conditions of the Plan. In the event of a conflict between this Agreement and the Plan, the terms of the Plan shall control.  Subject to the terms of the Plan, the administrator of the Plan shall have authority to construe the terms of this Agreement, and the determinations of the administrator of the Plan shall be final and binding on Employee and the Company.  

10.    Binding Agreement.  This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under Employee. 

11.    Governing Law.  This Agreement and all actions taken hereunder shall be governed by and construed in accordance with the laws of the State of Delaware. 

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed and Employee has executed this Agreement effective for all purposes as of the Grant Date.

Lexicon Pharmaceuticals, Inc.

By:                                                                               
            Lonnel Coats
President and Chief Executive Officer

EMPLOYEE

___________________________________________

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