-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 MqNi5dYI8+BACJURBsMX9Y71fjYmzSIaVT0A9RybCJlLfsKrg1zoNY7psY9MjkHf
 kNn+Mq15nywhK7PEgGb4Ww==

<SEC-DOCUMENT>0000950129-01-504054.txt : 20020410
<SEC-HEADER>0000950129-01-504054.hdr.sgml : 20020410
ACCESSION NUMBER:		0000950129-01-504054
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20010930
FILED AS OF DATE:		20011114

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			LEXICON GENETICS INC/TX
		CENTRAL INDEX KEY:			0001062822
		STANDARD INDUSTRIAL CLASSIFICATION:	IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835]
		IRS NUMBER:				760474169
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-30111
		FILM NUMBER:		1786910

	BUSINESS ADDRESS:	
		STREET 1:		4000 RESEARCH FOREST DRIVE
		STREET 2:		281-364-0100
		CITY:			THE WOODLANDS
		STATE:			TX
		ZIP:			77381
		BUSINESS PHONE:		2813640100

	MAIL ADDRESS:	
		STREET 1:		4000 RESEARCH FOREST DR
		CITY:			THE WOODLANDS
		STATE:			TX
		ZIP:			77381
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>h92253e10-q.txt
<DESCRIPTION>LEXICON GENETICS INCORPORATED - 9/30/2001
<TEXT>
<PAGE>
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(MARK ONE)

   [X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

         FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001

                                       OR

   [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

         FOR THE TRANSITION PERIOD FROM _____________ TO _____________

                        COMMISSION FILE NUMBER: 000-30111

                          LEXICON GENETICS INCORPORATED
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


                DELAWARE                                      76-0474169
     (STATE OR OTHER JURISDICTION OF                       (I.R.S. EMPLOYER
     INCORPORATION OR ORGANIZATION)                     IDENTIFICATION NUMBER)

                           4000 RESEARCH FOREST DRIVE
                           THE WOODLANDS, TEXAS 77381
                         (ADDRESS OF PRINCIPAL EXECUTIVE
                              OFFICES AND ZIP CODE)

                                 (281) 364-0100
                         (REGISTRANT'S TELEPHONE NUMBER,
                              INCLUDING AREA CODE)

       Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.

                                 Yes     X      No
                                     ---------     ---------

       As of November 9, 2001, 51,917,049 shares of the registrant's common
stock, par value $0.001 per share, were outstanding.

================================================================================
<PAGE>
                          LEXICON GENETICS INCORPORATED

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
FACTORS AFFECTING FORWARD-LOOKING STATEMENTS ..............................   2

PART I -- FINANCIAL INFORMATION

Item 1.   Financial Statements
          Consolidated Balance Sheets -- September 30, 2001 (unaudited)
            and December 31, 2000..........................................   3
          Consolidated Statements of Operations (unaudited) --
            Three and Nine Months Ended September 30, 2001 and 2000........   4
          Consolidated Statements of Cash Flows (unaudited) --
            Nine Months Ended September 30, 2001 and 2000..................   5
          Notes to Consolidated Financial Statements (unaudited)...........   6

Item 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations............................................  10

Item 3.   Quantitative and Qualitative Disclosures About Market Risk.......  17

PART II -- OTHER INFORMATION

Item 1.   Legal Proceedings................................................  17

Item 5.   Other Information................................................  18

Item 6.   Exhibits and Reports on Form 8-K.................................  18

SIGNATURES ................................................................  19
</Table>

         The Lexicon name and logo and OmniBank(R) are registered trademarks and
LexVision(TM), Lexgen.com(TM), Internet Universal(TM) and e-Biology(TM) are
trademarks of Lexicon Genetics Incorporated.

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

                  FACTORS AFFECTING FORWARD LOOKING STATEMENTS

         This quarterly report on Form 10-Q contains forward-looking statements.
These statements relate to future events or our future financial performance. We
have attempted to identify forward-looking statements by terminology including
"anticipate," "believe," "can," "continue," "could," "estimate," "expect,"
"intend," "may," "plan," "potential," "predict," "should" or "will" or the
negative of these terms or other comparable terminology. These statements are
only predictions and involve known and unknown risks, uncertainties and other
factors, including the risks outlined under "Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Risk Factors," that
may cause our or our industry's actual results, levels of activity, performance
or achievements to be materially different from any future results, levels or
activity, performance or achievements expressed or implied by these
forward-looking statements.

         Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. We are not under any duty to
update any of the forward-looking statements after the date of this quarterly
report on Form 10-Q to conform these statements to actual results, unless
required by law.


                                       2
<PAGE>


PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                         LEXICON GENETICS INCORPORATED

                           CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                                             AS OF SEPTEMBER 30,      AS OF DECEMBER 31,
                                                                                    2001                     2000
                                                                             -------------------      ------------------
                                                                                 (UNAUDITED)
<S>                                                                           <C>                     <C>
                                   ASSETS
                                   ------
Current assets:
    Cash and cash equivalents............................................     $     23,066,925        $      37,811,039
    Marketable securities................................................          153,360,767              164,869,291
    Accounts receivable, net of allowance for doubtful accounts
       of $135,863 and $100,000, respectively............................            7,996,613                2,814,707
    Prepaid expenses and other current assets............................            5,862,415                  536,480
                                                                              ----------------        -----------------
       Total current assets..............................................          190,286,720              206,031,517
Property and equipment, net of accumulated depreciation of
    $8,959,647 and $5,708,366, respectively..............................           22,725,595               14,477,235
Goodwill.................................................................           25,780,581                       --
Other intangible assets, net of amortization of $260,000 and $0,
    respectively.........................................................            5,740,000                       --
Other assets.............................................................            5,147,211                  184,200
                                                                              ----------------        -----------------
       Total assets......................................................     $    249,680,107        $     220,692,952
                                                                              ================        =================

                    LIABILITIES AND STOCKHOLDERS' EQUITY
                    ------------------------------------
Current liabilities:
    Accounts payable.....................................................     $      4,126,426        $       2,522,722
    Accrued liabilities..................................................            3,605,791                3,023,725
    Current portion of deferred revenue..................................           10,714,959                4,671,818
    Current portion of long-term debt....................................              363,985                1,012,246
    Current portion of capital lease obligations.........................              103,910                       --
                                                                              ----------------        -----------------
       Total current liabilities.........................................           18,915,071               11,230,511
Deferred revenue, net of current portion.................................            3,750,000                       --
Long-term debt, net of current portion...................................                   --                1,833,982
Capital lease obligations, net of current portion........................               58,907                       --
                                                                              ----------------        -----------------
       Total liabilities.................................................           22,723,978               13,064,493

Commitments and contingencies

Stockholders' equity:
    Common stock, $.001 par value; 120,000,000 shares authorized,
       51,915,268 and 48,271,735 shares issued and outstanding...........               51,915                   48,272
    Additional paid-in capital...........................................          330,910,604              296,119,625
    Deferred stock compensation..........................................          (24,937,305)             (33,636,725)
    Accumulated deficit..................................................          (79,069,085)             (54,902,713)
                                                                              ----------------        -----------------
       Total stockholders' equity........................................          226,956,129              207,628,459
                                                                              ----------------        -----------------
       Total liabilities and stockholders' equity........................     $    249,680,107        $     220,692,952
                                                                              ================        =================
</Table>


        The accompanying notes are an integral part of these consolidated
                             financial statements.


                                       3
<PAGE>


                          LEXICON GENETICS INCORPORATED

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<Table>
<Caption>
                                                           THREE MONTHS ENDED SEPTEMBER 30,        NINE MONTHS ENDED SEPTEMBER 30,
                                                          ---------------------------------      ---------------------------------
                                                               2001                2000                 2001               2000
                                                          -------------       -------------      -------------       -------------
<S>                                                       <C>                 <C>                <C>                 <C>
Revenues:
   Subscription and license fees........................  $   8,638,072       $     435,419      $  11,667,892       $   2,493,471
   Collaborative research...............................      3,684,821           5,117,862          7,408,147           8,751,919
   Compound libraries...................................      1,166,522                  --          1,166,522                  --
   Other revenue........................................          3,354              60,879             63,603             290,299
                                                          -------------       -------------      -------------       -------------
     Total revenues.....................................     13,492,769           5,614,160         20,306,164          11,535,689
Operating expenses:
   Research and development, including stock-based
     compensation of $1,338,090, $1,394,971, $4,147,698
     and $9,555,862, respectively.......................     15,008,510           6,916,083         35,564,017          22,774,725
   General and administrative, including stock-based
     compensation of $1,308,277, $1,654,328, $3,960,660
     and $8,636,050, respectively.......................      6,438,995           3,588,612         15,755,967          13,397,400
                                                          -------------       -------------      -------------       -------------
       Total operating expenses.........................     21,447,505          10,504,695         51,319,984          36,172,125
                                                          -------------       -------------      -------------       -------------
Loss from operations....................................     (7,954,736)         (4,890,535)       (31,013,820)        (24,636,436)
Interest income.........................................      1,820,147           3,450,352          7,142,957           6,500,510
Interest expense........................................        (85,477)            (99,697)          (295,509)           (338,757)
                                                          -------------       -------------      -------------       -------------
Net loss  ..............................................     (6,220,066)         (1,539,880)       (24,166,372)        (18,474,683)
Accretion on redeemable convertible preferred stock.....             --                  --                 --            (133,854)
                                                          -------------       -------------      -------------       -------------
Net loss attributable to common stockholders............  $  (6,220,066)      $  (1,539,880)     $ (24,166,372)      $ (18,608,537)
                                                          =============       =============      =============       ==============
Net loss per common share, basic and diluted............  $       (0.12)      $       (0.03)     $       (0.49)      $       (0.47)
Shares used in computing net loss per common share,
   basic and diluted....................................     51,499,610          47,780,441         49,626,214          39,433,920
</Table>


        The accompanying notes are an integral part of these consolidated
                             financial statements.



                                       4
<PAGE>



                          LEXICON GENETICS INCORPORATED

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


<Table>
<Caption>
                                                                             NINE MONTHS ENDED SEPTEMBER 30,
                                                                            ---------------------------------
                                                                                 2001                2000
                                                                            -------------       -------------
<S>                                                                         <C>                 <C>
Cash flows from operating activities:
   Net loss..............................................................   $ (24,166,372)      $ (18,474,683)
   Adjustments to reconcile net loss to net cash provided by (used in)
   operating activities:
     Depreciation........................................................       3,409,086           1,854,447
     Amortization of other intangible assets.............................         260,000                  --
     Amortization of deferred stock compensation.........................       8,108,358          18,191,912
     Changes in operating assets and liabilities
       (Increase) decrease in accounts receivable........................      (4,861,695)          1,028,000
       (Increase) decrease in prepaid expenses and other current assets..      (2,936,793)             26,856
       (Increase) decrease in other assets...............................      (4,860,764)           (394,127)
       Increase (decrease) in accounts payable and accrued liabilities...         465,432           1,136,119
       Increase (decrease) in deferred revenue...........................       9,771,238          (4,703,235)
                                                                            -------------       -------------
         Net cash provided by (used in) operating activities.............     (14,811,510)         (1,334,711)
Cash flows from investing activities:
   Purchases of property and equipment...................................      (7,679,299)         (4,165,548)
   Purchases of marketable securities....................................    (141,024,332)       (305,533,921)
   Maturities of marketable securities...................................     152,532,856         130,283,887
   Payment of transaction costs, net of cash acquired of $422,957........        (734,605)                 --
                                                                            -------------       -------------
         Net cash provided by (used in) investing activities.............       3,094,620        (179,415,582)
Cash flows from financing activities:
   Principal payments on capital lease obligations.......................          (3,310)           (133,398)
   Proceeds from issuance of common stock................................         520,242         204,023,639
   Repayment of debt borrowings..........................................      (3,544,156)         (1,223,882)
                                                                            -------------       -------------
         Net cash provided by (used in) financing activities.............      (3,027,224)        202,666,359
                                                                            -------------       -------------
Net increase (decrease) in cash and cash equivalents.....................     (14,744,114)         21,916,066
Cash and cash equivalents at beginning of period.........................      37,811,039           2,025,585
                                                                            -------------       -------------
Cash and cash equivalents at end of period...............................   $  23,066,925       $  23,941,651
                                                                            =============       =============

Supplemental disclosure of cash flow information:
   Cash paid for interest................................................   $     290,563       $     338,757

Supplemental disclosure of non-cash financing activities:

   Conversion of redeemable convertible preferred stock into common stock   $          --       $  30,184,090
   Conversion of related party note payable into common stock............   $          --       $     337,500
   Issuance of equity securities in connection with acquisition..........   $  34,865,442       $          --
</Table>


        The accompanying notes are an integral part of these consolidated
                             financial statements.



                                       5
<PAGE>


                          LEXICON GENETICS INCORPORATED

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.       BASIS OF PRESENTATION

         The accompanying unaudited consolidated financial statements of Lexicon
Genetics Incorporated (Lexicon or the Company) have been prepared in accordance
with generally accepted accounting principles for interim financial information
and pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC). Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.

         In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. Operating results for the three and nine month periods ended September
30, 2001 are not necessarily indicative of the results that may be expected for
the year ended December 31, 2001.

         For further information, refer to the financial statements and
footnotes thereto included in Lexicon's annual report on Form 10-K for the year
ended December 31, 2000, as filed with the SEC.

         In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations," and No. 142, "Goodwill and Other Intangible Assets." These
statements, which Lexicon adopted in the third quarter of 2001, generally
require that all business combinations initiated after June 30, 2001 be
accounted for using the purchase method. Additionally, any resulting goodwill
will not be amortized, rather it will be subject to at least an annual
impairment test. Acquired intangible assets must be separately recognized and
amortized over their useful lives.

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This new standard on asset
impairment supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," and will be effective for
the fiscal year beginning January 1, 2002. The Company believes that the
adoption of this standard will not have a material impact on its financial
statements.

2.       NET LOSS PER SHARE

         Net loss per share is computed using the weighted average number of
shares of common stock outstanding during the applicable period. Shares
associated with stock options and warrants are not included because they are
antidilutive. There are no differences between basic and diluted net loss per
share for all periods presented.

3.       DEFERRED STOCK COMPENSATION

         Deferred stock compensation represents the difference between the
exercise price of stock options and the fair value of Lexicon's common stock at
the date of grant. Deferred stock compensation is amortized over the vesting
periods of the individual stock options for which it was recorded, generally
four years. For the nine months ended September 30, 2001 and 2000, Lexicon
amortized $8.1 million and $18.2 million, respectively, of deferred stock
compensation. If vesting continues in accordance with the


                                       6
<PAGE>
outstanding individual stock options, Lexicon expects to record amortization
expense for deferred stock compensation as follows: $2.7 million during the last
three months of 2001, $10.7 million during 2002, $10.6 million during 2003 and
$947,000 during 2004. The amount of stock based compensation expense to be
recorded in future periods may decrease if unvested options for which deferred
stock compensation expense has been recorded are subsequently canceled or
forfeited or may increase if additional options are granted to individuals other
than employees or directors.

4.       INITIAL PUBLIC OFFERING AND CONVERSION OF PREFERRED STOCK

         In April 2000, Lexicon completed an initial public offering of
10,000,000 newly-issued shares of its common stock at a price of $22.00 per
share. Lexicon received $203.2 million in cash, net of underwriting discounts,
commissions and other offering costs.

         Simultaneously with the closing of the initial public offering, the
4,244,664 shares of Redeemable Convertible Series A Preferred Stock then
outstanding were automatically converted into 12,733,992 shares of common stock.

5.       RESTRICTED CASH AND INVESTMENTS

         The Company is required to maintain restricted cash or investments to
the extent of borrowings made under the synthetic lease agreement under which it
leases its office and laboratory facilities in The Woodlands, Texas. As of
September 30, 2001, borrowings were $26.3 million as compared to $13.4 million
as of December 31, 2000.

6.       FINANCING AND DEBT OBLIGATIONS

         In June 1999, the Company entered into a $5.0 million financing
agreement for the purchase of property and equipment. As of September 30, 2001,
the Company had drawn down a total of approximately $4.2 million under this
arrangement. As of September 30, 2001, $364,000 was outstanding under this
arrangement. This facility accrues interest at a rate of 12.2% and principal and
interest is due in monthly installments through 2003. The Company intends to
retire this debt obligation by December 31, 2001; therefore, the total
obligation has been classified as current debt. A 3% prepayment premium is
required upon early extinguishment of the debt and is being accrued as interest
expense using the effective interest rate method until the debt is retired.

7.       COELACANTH ACQUISITION

         On July 12, 2001, the Company completed the acquisition of Coelacanth
Corporation (Coelacanth) in a merger, under an Agreement and Plan of Merger
entered into on June 13, 2001. Coelacanth uses proprietary chemistry
technologies to create compound libraries for drug discovery screening and
innovative compound sets that shorten lead discovery and lead optimization time
for drug development. Coelacanth forms the core of Lexicon Pharmaceuticals, a
new division of the Company, responsible for small molecule compound discovery.
The results of Lexicon Pharmaceuticals are included in the Company's results of
operations for the period from July 12 to September 30, 2001.

         Under the terms of the merger agreement, the Company issued an
aggregate of 2,918,991 shares of common stock in exchange for 100% of
Coelacanth's outstanding capital stock. An aggregate of 10% of the shares of
common stock issued in the merger have been placed in escrow for one year to
satisfy claims, if any, that the Company may have for breaches of Coelacanth's
representations, warranties and covenants in the merger agreement. The Company
also assumed Coelacanth's outstanding options and warrants in the merger,
resulting in the issuance of options and warrants to purchase 122,650 and 25,169


                                       7
<PAGE>

shares, respectively, of its common stock. The Company has allocated a portion
of the intrinsic value of the options that remained unvested as of July 12, 2001
to deferred compensation and expects to recognize the expense as the options
vest. The Company recorded goodwill and other intangible assets of approximately
$25.8 million and $6.0 million, respectively, in connection with the acquisition
of Coelacanth.

         The Coelacanth acquisition was accounted for as a purchase. The cost to
acquire Coelacanth has been allocated to the assets acquired and liabilities
assumed according to their respective fair values on July 12, 2001, with the
excess purchase price being allocated to goodwill. The fair value of common
stock issued in connection with the acquisition of Coelacanth was determined in
accordance with EITF Issue No. 99-12. The Company used the Black-Scholes option
pricing model to value the securities issued in exchange for Coelacanth's
outstanding options and warrants. The allocation of the purchase price is based
on a formal valuation analysis which was completed by an independent appraisal
firm.

         The purchase price for the acquisition consisted of the following:

<Table>
        <S>                                                     <C>
        Value of common stock issued.........................   $ 33,731,860
        Assumption of Coelacanth's options and warrants......      1,133,582
        Transaction costs....................................      1,157,562
                                                                ------------
            Total purchase price.............................   $ 36,023,004
                                                                ============
</Table>

         The purchase price for the acquisition was allocated as follows:

<Table>
        <S>                                                     <C>
        Fair value of net assets purchased...................   $  4,242,423
        Goodwill.............................................     25,780,581
        Other intangible assets..............................      6,000,000
                                                                ------------
            Total purchase price.............................   $ 36,023,004
                                                                ============
</Table>

         Goodwill, which represents the excess of the purchase price over the
fair value of the underlying net identifiable assets, is not subject to
amortization. The Company expects to perform an annual impairment assessment of
the value assigned to goodwill. Other intangible assets represent Coelacanth's
technology platform, which consists of its proprietary ClickChem(TM) reactions,
novel building blocks and compound sets, automated production systems, high
throughput ADMET (Absorption, Distribution, Metabolism, Excretion and Toxicity)
capabilities and its know-how and trade secrets. The Company expects to amortize
the value assigned to other intangible assets on a straight-line basis over an
estimated life of five years.

         The following unaudited pro forma results of operations of the Company
for the three and nine months ended September 30, 2001 and 2000, respectively,
assumes the acquisition of Coelacanth occurred on January 1, 2001 and 2000,
respectively, and assumes the purchase price has been allocated to the assets
purchased and the liabilities assumed based on fair values at the date of
acquisition. Pro forma net loss includes amortization of other intangible
assets; however, it does not include any amortization of goodwill.

<Table>
<Caption>
                                               THREE MONTHS ENDED SEPTEMBER 30,
                                               --------------------------------
                                                  2001                2000
                                                -----------       -------------
<S>                                             <C>               <C>
Total revenue.................................  $13,547,535       $ 6,412,088
Total operating expenses......................   21,628,214        12,918,639
Net loss attributable to common stockholders..   (6,357,049)       (3,152,354)
Net loss per share............................  $     (0.12)      $     (0.06)
</Table>


                                       8
<PAGE>
<Table>
<Caption>
                                                 NINE MONTHS ENDED SEPTEMBER 30,
                                               ---------------------------------
                                                    2001             2000
                                               ------------       --------------
<S>                                            <C>                <C>
Total revenue................................  $ 20,760,749       $ 15,467,186
Total operating expenses.....................    56,987,553         43,627,522
Net loss attributable to common stockholders.   (29,413,141)       (22,128,483)
Net loss per share...........................  $      (0.57)      $      (0.52)
</Table>

         The foregoing unaudited pro forma results of operations are presented
for illustrative purposes only and are not necessarily indicative of the
operating results that would have occurred if the transaction had been
consummated at the dates indicated. Furthermore, such unaudited pro forma
results of operations are not necessarily indicative of future operating results
of the combined companies, due to changes in operating activities following the
merger, and should not be construed as representative of the operating results
of the combined companies for any future dates or periods.


                                       9
<PAGE>


ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
            AND RESULTS OF OPERATIONS

OVERVIEW

         We are defining the functions of genes for drug discovery using mice
whose DNA has been altered to disrupt, or "knock out," the function of the
altered gene. Our proprietary gene trapping and gene targeting technologies
enable us to rapidly generate these knockout mice by altering the DNA of genes
in a special variety of mouse cells, called embryonic stem (ES) cells, which can
be cloned and used to generate mice with the altered gene. We employ an
integrated platform of advanced medical technologies to systematically analyze
the functions and pharmaceutical relevance of the genes we have knocked out. We
capture the information resulting from this analysis for our use, and use by our
collaborators, to discover pharmaceutical products based on genomics - the study
of genes and their function.

         With our acquisition of Coelacanth Corporation on July 12, 2001, we
added capabilities in the development of chemical compounds for small molecule
drug discovery. We are using these capabilities in internal drug discovery
programs and in drug discovery collaborations. We also sell certain compounds
from our chemical libraries to third parties for their internal use.

         We derive substantially all of our revenues from subscriptions to our
databases, drug discovery alliances, functional genomics collaborations for the
development and, in some cases, analysis of the physiological effects of genes
altered in knockout mice, technology licenses and compound sales. To date, we
have generated a substantial portion of our revenues from a limited number of
sources.

         Since our inception, we have incurred significant losses and, as of
September 30, 2001, we had an accumulated deficit of $79.1 million. Our losses
have resulted principally from costs incurred in research and development,
general and administrative costs associated with our operations, and non-cash
stock-based compensation expense associated with stock options granted to
employees and consultants prior to our April 2000 initial public offering.
Research and development expenses consist primarily of salaries and related
personnel costs, material costs, legal expenses resulting from intellectual
property prosecution and other expenses related to our drug discovery and
LexVision programs, the expansion of our OmniBank library, the development and
analysis of knockout mice and our other functional genomics research efforts,
and the development of chemical libraries. We expense our research and
development costs as they are incurred. General and administrative expenses
consist primarily of salaries and related expenses for executive, finance and
other administrative personnel, professional fees and other corporate expenses,
including business development and general legal activities as well as expenses
related to our patent infringement litigation against Deltagen, Inc. In
connection with the expansion of our drug discovery and LexVision programs, our
OmniBank database and library and our functional genomics research efforts, we
expect to incur increasing research and development and general and
administrative costs. As a result, we will need to generate significantly higher
revenues to achieve profitability.

         Deferred stock-based compensation represents the difference between the
exercise price of stock options granted and the fair value of our common stock
at the applicable date of grant. Stock-based compensation is amortized over the
vesting period of the individual stock options for which it was recorded,
generally four years. Assuming continued vesting of all outstanding stock
options in accordance with their terms, we expect to record amortization expense
for deferred stock-based compensation as follows: $2.7 million during the last
three months of 2001, $10.7 million during 2002, $10.6 million during 2003 and
$947,000 during 2004. The amount of stock-based compensation expense to be
recorded in future periods may decrease if unvested options for which deferred
stock compensation expense has


                                       10
<PAGE>

been recorded are subsequently canceled or forfeited or may increase if
additional options are granted to non-employee consultants or advisors.

         Our quarterly operating results will depend upon many factors,
including our success in establishing new database subscription and research
contracts with collaborators, expirations of such contracts, the success rate of
our discovery efforts leading to milestones and royalties, the timing and
willingness of collaborators to commercialize products which may result in
royalties, and general and industry-specific economic conditions which may
affect research and development expenditures. As a consequence, our quarterly
operating results have fluctuated in the past and are likely to do so in the
future.

RECENT DEVELOPMENTS

         On July 12, 2001, we completed the acquisition of Coelacanth
Corporation in a merger, under an Agreement and Plan of Merger entered into on
June 13, 2001. Coelacanth, which uses proprietary chemistry technologies to
rapidly discover new chemical entities for drug development, forms the core for
our new Lexicon Pharmaceuticals division, based in Princeton, New Jersey. In
Lexicon Pharmaceuticals, we are combining our drug target discoveries with
Coelacanth's high performance chemistry technologies to discover potential new
drugs.

         Under the terms of the merger agreement, the Company issued an
aggregate of 2,918,991 shares of common stock in exchange for all of
Coelacanth's outstanding capital stock. An aggregate of 10% of the shares of
common stock issued in the merger have been placed in escrow for one year to
satisfy claims, if any, that the Company may have for breaches of Coelacanth's
representations, warranties and covenants in the merger agreement. The Company
assumed Coelacanth's outstanding options and warrants in the merger.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2001 and 2000

         Revenues. Total revenues increased 140% to $13.5 million in the three
months ended September 30, 2001 from $5.6 million in the corresponding period in
2000. Of the $7.9 million increase, $8.2 million was derived from increased
database subscription and technology license fees and $1.2 million was derived
from revenues from compound library sales. These increases were partially offset
by a $1.4 million decrease in revenues from collaborative research and a $58,000
decrease in other revenue.

         We had several new sources of revenues in the three months ended
September 30, 2001. During the quarter:

         o    we began to recognize revenues under our drug discovery alliance
              and LexVision agreements with Incyte Genomics, Inc.;

         o    we entered into, and recognized revenue for technology license
              fees under, sublicense agreements with GlaxoSmithKline plc, Merck
              & Co., Inc. and Pfizer Inc; and

         o    we began to recognize revenues under agreements with
              pharmaceutical and biotechnology companies for access to chemical
              libraries and optimization services, as a result of our
              acquisition of Coelacanth in July 2001.



                                       11
<PAGE>

Our revenues for the three months ended September 30, 2000 included $4.1 million
of collaborative research revenues recognized in connection with the conclusion
of our 1997 agreement with the Merck Genome Research Institute. Our quarterly
operating results have fluctuated in the past and are likely to do so in the
future, and we believe that quarter-to-quarter comparisons of our operating
results are not a good indication of our future performance.

         Research and Development Expenses. Research and development expenses,
including stock-based compensation expense, increased 117% to $15.0 million in
the three months ended September 30, 2001 from $6.9 million in the corresponding
period in 2000. Research and development expenses for the three months ended
September 30, 2001 and 2000 included $1.3 million and $1.4 million,
respectively, of stock-based compensation primarily relating to option grants
made prior to our April 2000 initial public offering. The increase of $8.1
million in research and development expenses exclusive of stock-based
compensation was primarily attributable to increased personnel costs to support
the expansion of our drug discovery and LexVision programs, our OmniBank
database and library, and our development and analysis of knockout mice and
other functional genomics research efforts, as well as increased costs resulting
from our acquisition of Coelacanth.

         General and Administrative Expenses. General and administrative
expenses, including stock-based compensation expense, increased 79% to $6.4
million in the three months ended September 30, 2001 from $3.6 million in the
corresponding period in 2000. General and administrative expenses for the three
months ended September 30, 2001 and 2000 included $1.3 million and $1.7 million,
respectively, of stock-based compensation primarily relating to option grants
made prior to our April 2000 initial public offering. The increase of $3.2
million in general and administrative expenses exclusive of stock-based
compensation was due primarily to additional personnel costs for business
development and finance and administration and expenses associated with our
patent infringement litigation against Deltagen, Inc., as well as increased
costs resulting from our acquisition of Coelacanth.

         Interest Income and Interest Expense. Interest income decreased to $1.8
million in the three months ended September 30, 2001 from $3.5 million in the
corresponding period in 2000. The decrease resulted from lower interest rates
and decreased average cash and investment balances during the 2001 period.
Interest expense was $85,000 and $100,000 in the three months ended September
30, 2001 and 2000, respectively.

         Net Loss and Net Loss Per Common Share. Net loss attributable to common
stockholders increased to $6.2 million in the three months ended September 30,
2001 from $1.5 million in the corresponding period in 2000. Net loss per common
share increased to $0.12 in the three months ended September 30, 2001 from $0.03
in the corresponding period of 2000. A portion of the net loss for the three
months ended September 30, 2001 and all of the net loss for the corresponding
period in 2000 were attributable to stock-based compensation expense. Excluding
stock-based compensation expense, we would have had a net loss of $3.6 million
and net loss per common share of $0.07 in the three months ended September 30,
2001, as compared to net income of $1.5 million and net income per common share
of $0.03 in the corresponding period in 2000.

Nine Months Ended September 30, 2001 and 2000

         Revenues. Total revenues increased 76% to $20.3 million in the nine
months ended September 30, 2001 from $11.5 million in the corresponding period
in 2000. Of the $8.8 million increase, $9.2 million was derived from increased
database subscription and technology license fees and $1.2 million was derived
from revenues from compound library sales. These increases were partially offset
by a $1.3 million decrease in revenues from collaborative research and a
$227,000 decrease in other revenue.


                                       12
<PAGE>

         Research and Development Expenses. Research and development expenses,
including stock-based compensation expense, increased 56% to $35.6 million in
the nine months ended September 30, 2001 from $22.8 million in the corresponding
period in 2000. Research and development expenses for the nine months ended
September 30, 2001 and 2000 included $4.1 million and $9.6 million,
respectively, of stock-based compensation primarily relating to option grants
made prior to our April 2000 initial public offering. The increase of $18.2
million in research and development expenses exclusive of stock-based
compensation was primarily attributable to increased personnel costs to support
the expansion of our drug discovery and LexVision programs, our OmniBank
database and library, and our development and analysis of knockout mice and
other functional genomics research efforts, as well as increased costs resulting
from our acquisition of Coelacanth.

         General and Administrative Expenses. General and administrative
expenses, including stock-based compensation expense, increased 18% to $15.8
million in the nine months ended September 30, 2001 from $13.4 million in the
corresponding period in 2000. General and administrative expenses for the nine
months ended September 30, 2001 and 2000 included $4.0 million and $8.6 million,
respectively, of stock-based compensation primarily relating to option grants
made prior to our April 2000 initial public offering. The increase of $7.0
million in general and administrative expenses exclusive of stock-based
compensation was due primarily to additional personnel costs for business
development and finance and administration and expenses associated with our
patent infringement litigation against Deltagen, Inc., as well as increased
costs resulting from our acquisition of Coelacanth.

         Interest Income and Interest Expense. Interest income increased to $7.1
million in the nine months ended September 30, 2001 from $6.5 million in the
corresponding period in 2000. The increase resulted from increased average cash
and investment balances during the 2001 period as a result of our initial public
offering in April 2000. Interest expense was $296,000 and $339,000 in the nine
months ended September 30, 2001 and 2000, respectively.

         Net Loss and Net Loss Per Common Share. Net loss attributable to common
stockholders increased to $24.2 million in the nine months ended September 30,
2001 from $18.6 million in the corresponding period in 2000. Net loss per common
share increased to $0.49 in the nine months ended September 30, 2001 from $0.47
in the corresponding period of 2000. A portion of the net loss for the nine
months ended September 30, 2001 and most of the net loss for the corresponding
period in 2000 were attributable to stock-based compensation expense. Excluding
stock-based compensation expense, and assuming the conversion of the redeemable
convertible preferred stock into common stock occurred on the date of original
issuance (May 1998), we would have had a net loss of $16.1 million and $283,000
in the nine months ended September 30, 2001 and 2000, respectively, and net loss
per common share of $0.32 and $0.01 in the nine months ended September 30, 2001
and 2000, respectively.

RECENT ACCOUNTING PRONOUNCEMENTS

         In June 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 141, "Business Combinations," and No. 142,
"Goodwill and Other Intangible Assets." These statements, which Lexicon adopted
in the third quarter of 2001, generally require that all business combinations
initiated after June 30, 2001, be accounted for using the purchase method.
Additionally, any resulting goodwill will not be amortized, but rather will be
subject to at least an annual impairment test. Acquired intangible assets will
be separately recognized and amortized over their useful lives.

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This new standard on asset
impairment supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," and will be


                                       13
<PAGE>

effective for the fiscal year beginning January 1, 2002. The Company believes
that the adoption of this standard will not have a material impact on its
financial statements.

LIQUIDITY AND CAPITAL RESOURCES

         We have financed our operations from inception primarily through sales
of common and preferred stock, contract and milestone payments to us under our
database subscription and collaboration agreements and equipment financing
arrangements. From our inception through September 30, 2001, we had received net
proceeds of $241.9 million from issuances of common and preferred stock,
including $203.2 million of net proceeds from the initial public offering of our
common stock in April 2000. In addition, from our inception through September
30, 2001, we received $49.5 million in cash payments from database subscription
and technology license fees, drug discovery alliances, functional genomics
collaborations for the development and analysis of knockout mice, sales of
reagents and compound libraries, and government grants, and have recognized
revenues of $43.0 million through September 30, 2001.

         As of September 30, 2001, we had $176.4 million in cash, cash
equivalents and marketable securities, as compared to $202.7 million as of
December 31, 2000. We used $14.8 million in operations in the nine months ended
September 30, 2001. This consisted of the net loss for the nine months ended
September 30, 2001 of $24.2 million offset by non-cash charges of $8.1 million
related to stock-based compensation expense, $260,000 related to amortization of
other intangible assets and $3.4 million related to depreciation expense, which
in turn was offset by a $2.4 million net increase in other working capital
accounts and long-term deferred revenue. Investing activities provided $3.1
million in the nine months ended September 30, 2001, principally as a result of
maturities of marketable securities.

         In June 1999, we entered into a $5.0 million financing arrangement for
the purchase of property and equipment which is secured by the equipment
financed. We borrowed a total of approximately $4.2 million under this
arrangement, of which $364,000 remained outstanding at September 30, 2001. This
facility accrues interest at a rate of 12.2%, and principal and interest is due
in monthly installments through 2003. The Company intends to retire this debt by
December 31, 2001.

         In October 2000, we entered into a synthetic lease agreement under
which the lessor purchased our current laboratory and office space and animal
facility and agreed to fund the construction of additional laboratory and office
space and a second animal facility. Including the purchase price for our
existing facilities, the synthetic lease provides for funding of up to $50.0
million in property and improvements. The term of the agreement is six years,
which includes the construction period and a lease period. Lease payments for
the new facilities will begin upon completion of construction, which is expected
in the fourth quarter of 2001. Lease payments are subject to fluctuation based
on LIBOR rates. At the end of the lease term, the lease may be extended for
one-year terms, up to seven additional terms, or we may purchase the properties
for a price including the outstanding lease balance. If we elect not to renew
the lease or purchase the properties, we must arrange for the sale of the
properties to a third party. Under the sale option, we have guaranteed a
percentage of the total original cost as the residual fair value of the
properties. The Company is required to maintain restricted cash or investments
to the extent of borrowings made under the synthetic lease agreement. As of
September 30, 2001, borrowings were $26.3 million as compared to $13.4 million
as of December 31, 2000.

         Our capital requirements depend on numerous factors, including our
ability to obtain database subscription, drug discovery alliance and
collaboration agreements, the amount and timing of payments under such
agreements, the level and timing of our research and development expenditures,
market acceptance of our products, the resources we devote to developing and
supporting our products and other factors. We expect to devote substantial
capital resources to continue our research and development



                                       14
<PAGE>

efforts, to expand our support and product development activities, and for other
general corporate activities. We believe that our current cash balances,
together with revenues to be derived from subscriptions to our databases, drug
discovery alliances and functional genomics collaborations will be sufficient to
fund our operations for at least the next several years. During or after this
period, if cash generated by operations is insufficient to satisfy our liquidity
requirements, we may need to sell additional equity or debt securities or obtain
additional credit arrangements. Additional financing may not be available on
terms acceptable to us or at all. The sale of additional equity or convertible
debt securities may result in additional dilution to our stockholders.

IMPACT OF INFLATION

         The effect of inflation and changing prices on our operations was not
significant during the periods presented.

DISCLOSURE ABOUT MARKET RISK

         Our exposure to market risk is confined to our cash and cash
equivalents which have maturities of less than three months. We maintain an
investment portfolio which consists of U.S. government debt obligations and
investment grade commercial paper that mature one to twelve months after
September 30, 2001, which we believe are subject to limited credit risk. We
currently do not hedge interest rate exposure. Because of the short-term
maturities of our investments, we believe that changes in market rates would not
have any negative impact on the realized value of our investment portfolio.

         We have operated primarily in the United States and substantially all
sales to date have been made in U.S. dollars. Accordingly, we have not had any
material exposure to foreign currency rate fluctuations.

RISK FACTORS

         Our business is subject to certain risks and uncertainties, including
those referenced below:

Risks Related to Our Business

         o    we have a history of net losses, and we expect to continue to
              incur net losses and may not achieve or maintain profitability

         o    our quarterly operating results have been and likely will continue
              to fluctuate, and we believe that quarter-to-quarter comparisons
              of our operating results are not a good indication of our future
              performance

         o    we are an early-stage company with an unproven business strategy

         o    we face substantial competition in the discovery of the DNA
              sequences of genes and their functions and in our drug discovery
              and product development efforts

         o    we rely heavily on collaborators to develop and commercialize
              pharmaceutical products based on genes that we identify as
              promising candidates for development as drug targets

         o    any cancellation by or conflicts with our collaborators could harm
              our business



                                       15
<PAGE>

         o    we have no experience in developing and commercializing
              pharmaceutical products on our own

         o    we may engage in future acquisitions, which may be expensive and
              time consuming and from which we may not realize anticipated
              benefits

         o    if we lose our key personnel or are unable to attract and retain
              additional personnel, we may be unable to pursue collaborations or
              develop our own products

         o    we may encounter difficulties in managing our growth, which could
              increase our losses

         o    because our entire OmniBank mouse clone library is located at a
              single facility, the occurrence of a disaster could significantly
              disrupt our business

         o    we may need additional capital in the future and, if it is not
              available, we may have to curtail or cease operations

Risks Related to Our Industry

         o    our ability to patent our discoveries is uncertain because patent
              laws and their interpretation are highly uncertain and subject to
              change

         o    our patent applications may not result in enforceable patent
              rights

         o    if other companies and institutions obtain patents claiming the
              functional uses of genes and gene products based upon gene
              sequence information and predictions of gene function, we may be
              unable to obtain patents for our discoveries of biological
              function in knockout mice

         o    we may become involved in patent litigation and other disputes
              regarding intellectual property rights, and can give no assurance
              that we will prevail in any such litigation or other dispute

         o    issued patents may not fully protect our discoveries, and our
              competitors may be able to commercialize products similar to those
              covered by our issued patents

         o    our rights to the use of technologies licensed by third parties
              are not within our control

         o    we may be unable to protect our trade secrets

         o    we may become subject to regulation under the Animal Welfare Act,
              which could subject us to additional costs and permit requirements

         o    we and our collaborators are subject to extensive and uncertain
              government regulatory requirements, which could increase our
              operating costs or adversely affect our ability to obtain
              government approval of products based on genes that we identify in
              a timely manner or at all

         o    security risks in electronic commerce or unfavorable internet
              regulation may deter future use of our products and services

         o    we use hazardous chemicals and radioactive and biological
              materials in our business; any disputes relating to improper
              handling, storage or disposal of these materials could be time
              consuming and costly


                                       16
<PAGE>

         o    we may be sued for product liability

         o    public perception of ethical and social issues may limit or
              discourage the use of our technologies, which could reduce our
              revenues

         For additional discussion of the risks and uncertainties that affect
our business, see "Item 1. Business - Risk Factors" included in our annual
report on Form 10-K for the year ended December 31, 2000, as filed with the
Securities and Exchange Commission.

ITEM 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         See "Disclosure about Market Risk" under "Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations for
quantitative and qualitative disclosures about market risk.

PART II - OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS

         On May 24, 2000, we filed a complaint against Deltagen, Inc. in U.S.
District Court for the District of Delaware alleging that Deltagen was willfully
infringing the claims of United States Patent No. 5,789,215, under which we hold
an exclusive license from GenPharm International, Inc. This patent covers
methods of engineering the animal genome, including methods for the production
of knockout mice by homologous recombination, using isogenic DNA technology. In
the complaint, we sought unspecified damages from Deltagen, as well as
injunctive relief. Deltagen counterclaimed for a declaratory judgment that the
patent was invalid and unenforceable and was not infringed by Deltagen. On
November 14, 2000, Deltagen filed an amended counterclaim alleging antitrust
claims against us and GenPharm, for which Deltagen sought unspecified damages.

         On October 13, 2000, we filed a second complaint against Deltagen, Inc.
in U.S. District Court for the Northern District of California alleging that
Deltagen was willfully infringing the claims of United States Patents Nos.
5,464,764, 5,487,992, 5,627,059, and 5,631,153, under which also we hold
exclusive licenses from GenPharm International. These patents cover methods and
vectors for using positive-negative selection for producing gene targeted, or
"knockout," cells and animals, including the production of knockout mice by
homologous recombination. In the complaint, we sought unspecified damages from
Deltagen, as well as injunctive relief. Deltagen counterclaimed for a
declaratory judgment that the patents were invalid and unenforceable and were
not infringed by Deltagen.

       On September 19, 2001, we entered into a settlement of our patent
infringement litigation against Deltagen. Under the terms of the settlement,
Deltagen obtained a license under the patents covering our gene targeting
technologies, Lexicon obtained access to Deltagen's DeltaBase(TM) database of
mammalian genes and their in vivo functions, and all of the claims and
counterclaims in our litigation against Deltagen were dismissed with prejudice.
Our access to DeltaBase includes non-exclusive, perpetual licenses to the 250
drug targets currently represented in DeltaBase and the 1,000 additional drug
targets that are to be added to DeltaBase over the next four years. We will have
the opportunity to receive payments for Deltagen's fee-for-service generation of
knockout mice, and Deltagen will have the opportunity to receive milestone and
royalty payments for potential therapeutic and diagnostic products we may
develop from drug targets in DeltaBase. Neither party will pay access or license
fees. We believe the terms of the


                                       17
<PAGE>


settlement are favorable to us, and consider the settlement to be a successful
resolution of our patent infringement litigation against Deltagen.

         We are not presently a party to any material legal proceedings.

ITEM 5.           OTHER INFORMATION

         Certain of our corporate officers have adopted Rule 10b5-1 plans for
the regular, monthly sale of a specified number of shares of common stock
underlying stock options, subject to minimum sales prices that vary by
individual. The purpose of the plans is to permit such individuals to exercise a
portion of their options over time, in advance of the expiration dates of such
options, which range from 2005 to 2011. The plans collectively cover the sale of
up to 29,500 shares per month. The actual number of shares to be sold in any
month under such plans will depend on the market price of the common stock
during such month. Collectively, the maximum number of shares to be sold in any
month under such plans represents less than 0.5% of the total number of shares
subject to options held by such individuals as of October 31, 2001.

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

<Table>
<Caption>
     EXHIBIT NO.                  DESCRIPTION
     -----------                  -----------
<S>                <C>
      10.1         -- Employment Agreement with Alan Main, Ph.D.

      10.2         -- Employment Agreement with Hartmuth Kolb, Ph.D.

      10.3         -- Employment Agreement with David Boulton.
</Table>

         (b)      Reports on Form 8-K:

         None.




                                       18
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                                LEXICON GENETICS INCORPORATED


Date:   November 14, 2001                       By:    /s/ ARTHUR T. SANDS
                                                   ----------------------------
                                                   Arthur T. Sands, M.D., Ph.D.
                                                   President and Chief
                                                   Executive Officer


Date:   November 14, 2001                       By:    /s/ JULIA P. GREGORY
                                                   ----------------------------
                                                   Julia P. Gregory
                                                   Executive Vice President and
                                                   Chief Financial Officer




                                       19
<PAGE>
                                INDEX TO EXHIBITS


<Table>
<Caption>
     EXHIBIT NO.                  DESCRIPTION
     -----------                  -----------
<S>                <C>
      10.1         -- Employment Agreement with Alan Main, Ph.D.

      10.2         -- Employment Agreement with Hartmuth Kolb, Ph.D.

      10.3         -- Employment Agreement with David Boulton.
</Table>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>h92253ex10-1.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT - ALAN MAIN, PH.D.
<TEXT>
<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

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>4
<FILENAME>h92253ex10-2.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT - HARTMUTH KOLB, PH.D.
<TEXT>
<PAGE>

                                                                    Exhibit 10.2


                              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 Hartmuth Kolb, 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 Vice President of Chemistry of the Company and the Subsidiary
with responsibility for overall management of chemistry related work, including
but not limited to managing the chemistry related aspects of drug discovery.
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,


                                       1
<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 $180,000 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
         25% 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 $150,000. 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 170,000 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 April 6, 1998 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

                                       19
<PAGE>

and obligations of said parties, including, but not limited to, the rights 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:
                                                  ------------------------------
                                                      Hartmuth Kolb, Ph.D.

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

                                        Address for Notices:

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

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


                                        LEXICON GENETICS INCORPORATED



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


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



                                       22





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>5
<FILENAME>h92253ex10-3.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT - DAVID BOULTON
<TEXT>
<PAGE>
                                                                    Exhibit 10.3


                              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 David Boulton (hereafter "EXECUTIVE"), an
individual and resident of Monmouth 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 Vice President of Technology Operations of the Company and the
Subsidiary with responsibility for the overall management of technology related
work at the Subsidiary including but not limited to lab robotics and automation,
automated chemistry platforms, information systems, and facilities. 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

                                       1
<PAGE>

         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,
         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 $165,000 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
         20% 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 $75,000. 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 150,000 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 August 15, 2000 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:
                                                 -------------------------------
                                                        David Boulton

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

                                        Address for Notices:

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

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


                                        LEXICON GENETICS INCORPORATED



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


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




                                       22
<PAGE>


                                    EXHIBIT A

INVENTION EXCLUSIONS:

         All prior "inventions", which includes all improvements, inventions,
formulas, ideas, devices, circuits, equipment modifications, mask works, works
of authorship, processes, computer programs, algorithms, techniques, schematics,
know-how and data, whether or not patentable, made or conceived or reduced to
practice or developed by me, either alone or jointly with others and
improvements while employed by Merck, Inc. and ArQule, Inc.

         All inventions related to microplate assemblies and systems, covered by
provisional patent or patent applications filed by Texperts, Inc. as of the date
of this agreement, and any patent applications, PCT filings, continuations,
divisionals, continuation in parts, continued prosecution, and reissue
applications.



                                       23




</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
