Document:

Exhibit

Exhibit 10.12

RESTRICTED STOCK UNIT AGREEMENT

(Officer Restricted Stock Unit)

THIS RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”), effective as of _____ ___, 20___ (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 (i) [25%][one third] of the total number of Shares on February 28, 20__ and (ii) an additional [25%][one third] of the total number of Shares on February 28 of each of the [three][two] succeeding years thereafter; 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 

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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).

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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. 

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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

    

4Exhibit

Exhibit 10.13

NOTICE OF STOCK OPTION GRANT

(Non-Employee Director Stock Option)

To carry out the purposes of the Lexicon Pharmaceuticals, Inc. 2017 Non-Employee Directors’ Equity Incentive Plan (the “Plan”), by providing ____________ (“Director”) the opportunity to purchase shares of Common Stock, par value $0.001 per share (“Stock”), of LEXICON PHARMACEUTICALS, INC. (the “Company”) in accordance with the Plan, the Company hereby provides notice to Director as follows:

1.    Grant of Option.  Effective as of __________, 20__ (the “Grant Date”), the Company has granted Director the right and option (the “Option”) to purchase all or any part of an aggregate of ________ shares of Stock, on the terms and conditions set forth in this Notice and in the Plan.  The Option shall be treated as a non-statutory stock option and not as an “incentive stock option” within the meaning of section 422(b) of the Internal Revenue Code of 1986, as amended (the “Code”).

2.    Exercise Price.  The price at which Director may purchase Stock upon exercise of the Option (the “Exercise Price”) shall be $______ per share, which has been determined to be the Fair Market Value (as defined in the Plan) of the Stock on the Grant Date.  The Exercise Price is subject to adjustment under certain circumstances as provided in the Plan.

3.    Term.  The Option shall expire on the 10th anniversary of the Grant Date, subject to earlier termination under the circumstances specified in Section 8 of this Notice.

4.    Exercisability and Vesting.  Subject to the terms and conditions set forth in this Notice and the Plan, the Option may be exercised, in whole or in part, at any time and from time to time during the term of the Option, to purchase the number of shares of Stock that have vested and become exercisable in accordance with this Notice.  The Option shall vest and become exercisable with respect to [1/12 of the total number of shares of Stock subject to the Option each month after grant for 12 months after the Grant Date]; provided that, such vesting schedule may be accelerated upon a change in control of the Company pursuant to the provisions of the Plan and; provided further, that, upon the termination of Director’s Continuous Service (as defined in the Plan), the Option shall cease to vest and shall terminate with respect to all shares of Stock that have not vested and become exercisable prior to such time.

5.    Procedures for Exercise.  Subject to the terms and conditions set forth in this Notice and the Plan, the Option may be exercised by delivery to the Company at its principal executive office of (i) written notice addressed to the Secretary of the Company specifying the number of shares of Stock as to which the Option is being exercised and (ii) payment in full of the Exercise Price for such shares.  The Exercise Price shall be paid in cash or in such other manner as may be authorized by the administrator of the Plan in accordance with the terms of the Plan.  If the offering, sale and delivery of the shares of Stock issuable upon exercise of the Option have not been registered under the Securities Act of 1933 (the “Securities Act”), the Company may require Director, as a condition to Director’s exercise of the Option, to enter into a stock purchase agreement containing such representations and warranties as the Company may deem necessary to permit the issuance of the Stock purchased upon exercise of the Option in compliance with the Securities Act and applicable state securities laws.  

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6.    No Rights of Ownership in Stock Before Issuance.  No person shall be entitled to the rights and privileges of stock ownership with respect to any shares of Stock issuable upon exercise of the Option until such shares have been issued in accordance with the terms of this Notice and the Plan.

7.    Non-Transferability.  The Option may not be transferred by Director otherwise than (i) by will or the laws of descent and distribution, by instrument to an inter vivos or testamentary trust or by gift to a member of Director’s immediate family, in each case in accordance with the terms of the Plan, or (ii) 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).

8.    Termination of Option.  If Director’s Continuous Service is terminated for any reason other than the Disability (as defined in the Plan) or death of Director, the Option shall remain exercisable, with respect to the shares of Stock that had vested under the terms of this Notice before the date of such termination, for a period of six months after the date of such termination (subject to extension as provided in the Plan, but in no event later than the expiration date of the Option specified in Section 3 of this Notice), following which six-month period this Notice and Director’s right to exercise the Option shall terminate.  If Director’s Continuous Service is terminated because of Disability of Director, the Option shall remain exercisable, with respect to the shares of Stock that had vested under the terms of this Notice before the date of such termination, for a period of 12 months after the date of such termination (but in no event later than the expiration date of the Option specified in Section 3 of this Notice), following which 12-month period this Notice and Director’s right to exercise the Option shall terminate.  If (i) Director’s Continuous Service is terminated because of death of Director or (ii) Director dies within the three-month period after the termination of Director’s Continuous Service for a reason other than death, the Option shall remain exercisable, with respect to the shares of Stock that had vested under the terms of this Notice before the date of death, for a period of 18 months after the date of such termination (but in no event later than the expiration date of the Option specified in Section 3 of this Notice), following which 18-month period this Notice and the right to exercise the Option shall terminate.  Notwithstanding the foregoing, if the Director is removed from the Company’s Board of Directors for cause in accordance with the Company’s Bylaws, this Notice and Director’s right to exercise any portion of the Option, whether or not vested, shall terminate at the commencement of business on the date of such removal.

9.    Withholding of Tax.   To the extent that the Company is required under applicable federal or state income tax laws to withhold any amount on account of any present or future tax imposed as a result of the exercise of the Option, Director shall pay the Company, at the time of such exercise, funds in an amount sufficient to permit the Company to satisfy such withholding obligations in full.  If Director fails to pay such amount, the Company shall be authorized (i) to withhold from any cash remuneration then or thereafter payable to Director any tax required to be withheld or (ii) to refuse to issue or transfer any shares otherwise required to be issued pursuant to the terms of this Notice.

10.    Status of Stock.  (a)  Unless the offering, sale and delivery of the shares of Stock issuable upon exercise of the Option have been registered under the Securities Act, Director agrees that any shares of Stock purchased upon exercise of the Option shall be acquired for investment without a view to distribution, within the meaning of the Securities Act, and shall not be sold, transferred, assigned, pledged or hypothecated in the absence of an effective registration statement under the Securities Act and applicable state securities laws or an applicable exemption from the registration requirements of the Act and any applicable state securities laws.  Director further agrees that the shares of Stock which Director may acquire by exercising the Option will not be sold or disposed of in any manner which would constitute a violation of any other applicable federal or state securities laws.  In addition, Director agrees (i) that the certificates representing 

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the shares of Stock issued under this Notice may bear such legend or legends as the administrator of the Plan deems appropriate in order to assure compliance with applicable securities laws, and (ii) that the Company may give instruction to its transfer agent, if any, to stop transfer of the shares of Stock issued under this Notice on the stock transfer records of the Company, if such proposed transfer would, in the opinion of counsel to the Company, constitute a violation of any applicable securities law or any such agreements.

(b)    Director further agrees that the Option granted herein shall be subject to the requirement that if at any time the administrator of the Plan shall determine, in its discretion, that the listing, registration or qualification of the shares of Stock subject to such Option upon any securities exchange or market or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the purchase or issuance of shares of Stock hereunder, such Option may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not reasonably acceptable to the  administrator of the Plan.

11.    2017 Non-Employee Directors’ Equity Incentive Plan.  The Plan, a copy of which is available for inspection by Director or other persons entitled to exercise this Option at the Company’s principal executive office during business hours, is incorporated by reference in this Notice.  The Option is subject to, and the Company and Director agree to be bound by, all of the terms and conditions of the Plan.  In the event of a conflict between this Notice 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 Notice, and the determinations of the administrator of the Plan shall be final and binding on Director and the Company.  This Notice shall constitute a Stock Award Agreement (as defined in the Plan) evidencing the terms and conditions of the Option grant for all purposes under the Plan.

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