8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

FORM 8-K

__________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):                                                                                     July 30, 2010

Lexicon Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

Delaware	000-30111	76-0474169
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

8800 Technology Forest Place

The Woodlands, Texas 77381

(Address of principal executive

offices and Zip Code)

(281) 863-3000

(Registrant’s telephone number,

including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

□   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

□   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

□   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

□   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

On July 30, 2010, we entered into an amended and restated purchase option agreement (the “Amended and Restated Purchase Option Agreement”) with Symphony Icon Holdings LLC (“Holdings”) and Symphony Icon, Inc. (“Symphony Icon”), amending and restating our purchase option agreement with Holdings and Symphony Icon dated June 15, 2007 (the “Original Purchase Option Agreement”).  On July 30, 2010, we also entered into an amended and restated registration rights agreement (the “Amended and Restated Registration Rights Agreement”) with Holdings, amending and restating our registration rights agreement with Holdings dated June 15, 2007 (the “Original Registration Rights Agreement”).

Concurrently with the execution of the Amended and Restated Purchase Option Agreement on July 30, 2010, we exercised our exclusive purchase option (the “Purchase Option”) thereunder to acquire all of the equity of Symphony Icon, thereby reacquiring all rights to our drug candidates for which we had previously granted Symphony Icon an exclusive license under our intellectual property rights, including LX1031, LX1032 and LX1033, along with any other pharmaceutical compositions modulating the same targets as those drug candidates.  Pursuant to our exercise of the Purchase Option, we paid Holdings $10 million and agreed to make up to $80 million in additional deferred and contingent payments.

The deferred payments will be in an amount equal to $50 million less a 50% share of the expenses we incur after our exercise of the Purchase Option for the development of LX1031, LX1032 LX1033 and other pharmaceutical compositions modulating the same target as those drug candidates (the “LG103 Programs”), subject to certain exceptions for studies currently in progress and up to an aggregate reduction of $15 million.  The deferred payments are payable in our discretion at any time before July 30, 2013.

The contingent payments will consist of a 50% share of any consideration we receive pursuant to any licensing transaction under which we grant a third party rights to commercialize a drug candidate from the LG103 Programs (a “Licensing Transaction”), subject to certain exceptions, up to a maximum of $30 million plus the amount of any reduction in the deferred payments for our development expenses for the LG103 Programs (the “Recapture Eligible Amount”).  The contingent payments will be due if and when we receive such consideration from a Licensing Transaction  In the event we receive regulatory approval in the United States for the marketing and sale of any product resulting from the LG103 Programs prior to entering into a Licensing Transaction for the commercialization of such product in the United States, in lieu of any contingent payment from a Licensing Transaction in the United States with respect to such product, we will pay Holdings the sum of $15 million and any Recapture Eligible Amount attributable to the development of such product, reduced by up to 50% of such sum for the amount of any contingent payments paid prior to such United States regulatory approval attributable to any such Licensing Transaction outside of the United States with respect to such product.  In the event we make any such payment upon United States regulatory approval, we will have no obligation to make subsequent contingent payments attributable to any such Licensing Transactions for the commercialization of such product outside the United States until the proceeds of such Licensing Transactions exceed 50% of the payment made as a result of such United States regulatory approval.

The total of the up-front payment and all deferred and contingent payments by us will not exceed the $90 million exercise price applicable under the terms of the Purchase Option that were in effect before the restructured agreements were signed.

The deferred payments and the contingent payments may be paid in cash, common stock, or a combination of cash and common stock, in our discretion, provided that at least 50% of any payment made on or prior to July 30, 2012 will be paid in common stock and no more than 50% of any payment made after such date will be paid in common stock.  We are required to register any shares of our common stock issued in payment of the deferred payments or contingent payments for resale under a resale registration statement pursuant to the terms of the Amended and Restated Registration Rights Agreement.

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Item 2.01 Completion of Acquisition or Disposition of Assets

The information set forth in Item 1.01 is incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information set forth in Item 1.01 is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

(d)           Exhibits

Exhibit No.	Description
10.1	—	Amended and Restated Purchase Option Agreement with Symphony Icon Holdings LLC and Symphony Icon, Inc. dated July 30, 2010
10.2	—	Amended and Restated Registration Rights Agreement with Symphony Icon Holdings LLC dated July 30, 2010

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Signatures

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

	Lexicon Pharmaceuticals, Inc.
Date:  August 2, 2010	By:	/s/ Brian T. Crum
		Brian T. Crum
		Vice President and General Counsel

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Index to Exhibits

Exhibit No.		Description
10.1	—	Amended and Restated Purchase Option Agreement with Symphony Icon Holdings LLC and Symphony Icon, Inc. dated July 30, 2010
10.2	—	Amended and Restated Registration Rights Agreement with Symphony Icon Holdings LLC dated July 30, 2010

EX-10.1

Exhibit 10.1

AMENDED AND RESTATED

PURCHASE OPTION AGREEMENT

by and among

LEXICON PHARMACEUTICALS, INC.

SYMPHONY ICON HOLDINGS LLC

and

SYMPHONY ICON, INC.

Dated as of July 30, 2010

TABLE OF CONTENTS

		Page
Section 1.	Grant of Purchase Option	1
Section 2.	Exercise of Purchase Option	2
Section 3.	Lexicon Representations, Warranties and Covenants	9
Section 4.	Holdings Representations and Warranties	12
Section 5.	Symphony Icon Representations, Warranties and Covenants	14
Section 6.	Notice of Material Event	22
Section 7.	Assignment; Transfers; Legend	22
Section 8.	Costs and Expenses; Payments	23
Section 9.	Expiration; Termination of Agreement	23
Section 10.	Survival; Indemnification	24
Section 11.	No Petition	27
Section 12.	Third-Party Beneficiary	27
Section 13.	Notices	27
Section 14.	Governing Law; Consent to Jurisdiction and Service of Process	29
Section 15.	Waiver of Jury Trial	29
Section 16.	Entire Agreement	29
Section 17.	Amendment; Successors; Counterparts	30
Section 18.	Specific Performance	30
Section 19.	Severability	30
Section 20.	Tax Reporting	30
Section 21.	Original Agreement	31
Section 22.	Amendment to Annex A	31

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Annex A                     Certain Definitions

Exhibit 1                      Purchase Exercise Notice

ii

AMENDED AND RESTATED

PURCHASE OPTION AGREEMENT

This AMENDED AND RESTATED PURCHASE OPTION AGREEMENT (this “Agreement”) is entered into as of July 30, 2010 (the “Closing Date”), by and among LEXICON PHARMACEUTICALS, INC., a Delaware corporation (“Lexicon”), SYMPHONY ICON HOLDINGS LLC, a Delaware limited liability company (“Holdings”), and SYMPHONY ICON, INC., a Delaware corporation (“Symphony Icon”).  Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in Annex A attached hereto.

PRELIMINARY STATEMENT

WHEREAS, Lexicon, Holdings and Symphony Icon, entered into that certain Purchase Option Agreement, dated as of June 15, 2007 (the “Original Agreement”), pursuant to which Holdings granted Lexicon an option to purchase all of the Common Stock of Symphony Icon and any other Equity Securities issued by Symphony Icon (together, the “Symphony Icon Equity Securities”) owned, or thereafter acquired, by Holdings on the terms described therein;

WHEREAS, the Parties to the Original Agreement wish to amend and restate the Original Agreement and accept the rights and covenants hereof in lieu of their rights and covenants under the Original Agreement; and

WHEREAS, Symphony Icon and Holdings have determined that it is in each of its best interest to perform and comply with certain agreements and covenants relating to each of its ongoing operations contained in this Agreement.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto (the “Parties”) agree as follows:

Section 1.                      Grant of Purchase Option.

(a)           Holdings hereby grants to Lexicon an exclusive option (the “Purchase Option”) to purchase all, but not less than all, of the outstanding Symphony Icon Equity Securities owned or hereinafter acquired by Holdings, in accordance with the terms of this Agreement.

(b)           Lexicon’s right to purchase the Symphony Icon Equity Securities is subject to the following conditions:

(i)           The Purchase Option may only be exercised for the purchase of all, and not less than all, of the Symphony Icon Equity Securities;

(ii)           The Purchase Option may only be exercised a single time; and

(iii)           The Purchase Option may be exercised only on the Closing Date.

Section 2.              Exercise of Purchase Option.

(a)           Exercise Notice.  Lexicon may exercise the Purchase Option only by delivery of a notice in the form attached hereto as Exhibit 1 (the “Purchase Option Exercise Notice”) on the Closing Date.  The Purchase Option Exercise Notice shall be delivered to Holdings and Symphony Icon and shall be irrevocable once delivered.

(b)           Purchase Price.

(i)           As complete and full consideration for the sale to Lexicon by Holdings of its Symphony Icon Equity Securities (and for the Symphony Icon Equity Securities of any other Person), Lexicon shall deliver the following to Holdings:

(A)           Ten Million Dollars ($10,000,000) in cash on the Closing Date (the “Closing Date Payment”);

(B)           Fifty Million Dollars ($50,000,000) (subject to adjustment as set forth in Section 2(b)(ii), (iii) and (v), the “Base Payment Balance”) payable at any time, or from time to time, in whole or in increments, in each case at Lexicon’s sole discretion, but in any event payable prior to July 30, 2013; and

(C)           Up to Thirty Million Dollars ($30,000,000) of contingent payments (subject to adjustment as set forth in Section 2(b)(ii), (iii) and (v), the “Contingent Payments”), in the amount of fifty percent (50%) of any upfront, milestone or royalty payments or any other consideration of any kind received at any time by Lexicon ( “Partnership Payments”) pursuant to any transaction or transactions under which Lexico n grants an unaffiliated third party rights to commercialize an LG103 Product (a “Licensing Transaction”), provided that Partnership Payments (and, therefore, the calculation of Contingent Payments for purposes of this Section 2(b)(i)(C)) shall specifically exclude payments from a third party to Lexicon pursuant to any Licensing Transaction (x) for securities of Lexicon up to (but not exceeding) the fair market value of such securities, determined, in the case of Lexicon Common Stock, in a manner consistent with the provisions of Section 2(f), with any excess over such fair market value, for clarity, being deemed Partnership Payments as contemplated by Section 2(b)(v), or (y) t hat constitute an advancement or reimbursement of expenses incurred by Lexicon for the research or development of any LG103 Product after entering into such Licensing Transaction (whether such payments are in the form of or characterized as an advance of such expenses, reimbursement of such expenses, or a payment upon the achievement of a specified milestone for which such expenses were incurred), up to (but not exceeding) the amount of LG103 Product Development Expenses (as defined in Section 22 hereof) incurred by Lexicon for the research or development of such LG103 Product after entering into such Licensing Transaction (“Allowed Reimbursed Expenses”), with any excess over such Allowed Reimbursed Expenses, for clarity, being deemed Partnership Payments.

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(ii)           The Base Payment Balance will be reduced by fifty percent (50%) of all LG103 Product Development Expenses, which reduction shall in any event be no greater in the aggregate than Fifteen Million Dollars ($15,000,000) (any such reduction, the “Base Payment Reduction”).  In the event of a Base Payment Reduction, the Maximum Contingent Payments Amount (as defined in Section 22 hereof) payable will be increased by the same amount of the Base Payment Reduction, with such increase being referred to as the “Recapture-Eligible Amount. 221;  For clarity, until the Base Payment Balance is reduced to zero (or, if earlier, July 30, 2013), the amount of the Base Payment Balance (and, in the case of the following clause (A), the corresponding Base Payment Reduction, Recapture-Eligible Amount and Maximum Contingent Payments Amount) will be determined on a continuing net basis after taking account (A) reductions in the Base Payment Balance for expenses in accordance with the foregoing provisions after taking into account any Allowed Reimbursed Expenses offsetting any such expenses and (B) any payments by Lexicon credited against the Base Payment Balance.  To the extent Lexicon receives Partnership Payments that would result in Holdings receiving Contingent Payments in excess of the Maximum Contingent Payments Amount, then Holdings shall receive such additional Contingent Payments and the Base Payment Balance shall be reduced dollar for dollar by the amount in excess above the Maximum Contingent Payment Amount.  Notwi thstanding the foregoing, in no event, other than as set forth in Section 3(b)(viii), shall the sum of the Base Payment Balance and all Contingent Payments (including for the avoidance of doubt any payments made pursuant to Section 2(b)(iii) below) exceed Eighty Million Dollars ($80,000,000), and in no event shall Holdings be required to repay to Lexicon any amounts received for the Base Payment Balance or the Contingent Payments.

(iii)           In the event that Lexicon receives regulatory approval in the United States (consisting of approval by the U.S. Food and Drug Administration of a New Drug Application) for the marketing and sale of any LG103 Product (“U.S. Regulatory Approval”) prior to entering into any Licensing Transaction under which Lexicon grants a third party rights to commercialize such LG103 Product in the United States, Lexicon shall pay Holdings, upon U.S. Regulatory Approval and in lieu of any Contingent Payments from entering into any Licensing Transaction in the United States with respect to such LG103 Product, an amount equal to the lesser of (x) the sum of (A) any Recapture-Eligible Amoun t attributable to the development of such LG103 Product plus (B) Fifteen Million Dollars ($15,000,000), with such sum being reduced by fifty percent (50%) of any Contingent Payments paid prior to U.S. Regulatory Approval attributable to any Licensing Transaction outside of the United States with respect to such LG103 Product (a “Foreign Partnership”), provided that the maximum amount of any such reduction shall in no event exceed fifty percent (50%) of the sum of (A) and (B) above, and (y) the balance of the Maximum Contingent Payment Amount.  In the event that Lexicon makes such payment upon U.S. Regulatory Approval, Lexicon will have no obligation to make subsequent Contingent Payments attributable to any Foreign Partnerships with respect to such LG103 Product until the proceeds of such Foreign Partnerships exceed fifty percent (50%) of the payment made as a result of U.S. Regulatory Approval (for illustration purposes, if the U.S. Regulatory Approval payment with respect to such LG103 Product were $20,000,000, then Contingent Payments would resume when the subsequently-received proceeds of the Foreign Partnership with respect to such LG103 Product exceeded $10,000,000).

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(iv)           Lexicon shall promptly, and in no event later than thirty (30) days, pay Holdings any Contingent Payment upon its receipt of any Partnership Payment (or, as applicable, of U.S. Regulatory Approval) giving rise to such Contingent Payment.

(v)           If Lexicon enters into a Licensing Transaction that includes, as part of its terms, the purchase of Lexicon Common Stock or other Lexicon securities at a premium to the then fair market value of such securities (in the case of Lexicon Common Stock, using the valuation methodology set forth in Section 2(f)), then the aggregate premium paid will be treated as a Partnership Payment for purposes of determining Contingent Payments.

(c)           Form of Payment.  The Base Payment Balance and the Contingent Payments may be paid in cash, Lexicon Common Stock or in a combination of cash and Lexicon Common Stock, at the sole discretion of Lexicon; provided that any payment made on or prior to July 30, 2012 shall contain a minimum value of fifty percent (50%) of Lexicon Common Stock and any payment made after July 30, 2012 shall contain a maximum value of fifty percent (50%) of Lexicon Common Stock, in each case, determined in accordance with Section 2(f) hereof.

(d)           Purchase Price.  The aggregate payments to be made to Holdings set forth in Section 2(b) shall constitute the “Purchase Price”.   For clarity, in no event other than as set forth in Section 3(b)(viii) shall the Purchase Price exceed Ninety Million Dollars ($90,000,000) in the aggregate.

(e)           Surrender of Symphony Icon Equity Securities; Symphony Icon Board; Insurance Policies.  Subject to the terms and conditions of this Agreement, on the Closing Date, Holdings shall surrender to Lexicon its certificates representing its Symphony Icon Equity Securities, and shall convey good title to such Symphony Icon Equity Securities, free from any Encumbrances and from any and all restrictions that any sale, assignment or other transfer of such Symphony Icon Equity Securities be consented to or approved by any Person.  On or prior to the Closing Date, Holdings shall remove all directors serving on the Symphony Icon Board, other than the Lexicon Director, as of the Closing Date.  On or prior to the Closing Date, Holdings shall cause Symphony Icon to deliver the Insurance Policies to Lexicon and itself in accordance with Section 5(b)(xiii) hereof.

(f)           Valuation of Lexicon Stock.  In the event that Lexicon elects to pay part of the Purchase Price through the delivery to Holdings of Lexicon Common Stock, the value per share thereof (the “Lexicon Common Stock Valuation”) shall equal the average closing price of Lexicon Common Stock, as reported by the NASDAQ Global Market, or other national exchange that is the primary exchange on which Lexicon Common Stock is listed, for the twenty (20) trading days immediately preceding (but not including) the second trading day prior to the applicable Payment Date.  If Lexicon Common Stock is not traded on a national exchange or the NASDAQ Global Market, then Lexicon shall be obligated to pay the Purchase Price solely in cash.  Lexicon shall calculate the Lexicon Common Stock Valuation in accordance with this Section 2(f), subject to review and confirmation by Holdings.

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(g)           Share Certificates. Any stock certificate(s) issued by Lexicon for Lexicon Common Stock pursuant to this Section 2 may contain a legend (the “33 Act Legend”) substantially as follows:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND THE SAME HAVE BEEN ISSUED IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. SUCH SHARES MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT AS PERMITTED UNDER SUCH SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.

This legend shall be removed by Lexicon, subject to, and in accordance with, the terms of Section 3(b)(iii) hereof.

(h)           Conditions Precedent to Lexicon Stock Issuances.  Prior to issuing, and as a condition precedent to Lexicon’s ability to issue, any Lexicon Common Stock to Holdings as payment of the Purchase Price, Lexicon shall:

(i)           in the event that Lexicon is eligible to include all of the Lexicon Common Stock to be issued to Holdings in full or partial payment of any installment of the Purchase Price in a Registration Statement that is effective under the Securities Act or that may become effective under the Securities Act upon filing with the SEC, Lexicon shall include such Lexicon Common Stock or file such Registration Statement prior to the Payment Date; or if Lexicon is not so eligible, it shall (A) be eligible to file a short form Registration Statement on Form S-3 under the Securities Act (or any successor form providing for forward incorporation by reference) permitting the immediate resale without restriction of all Lexicon Common Stock to be issued to Holdings in f ull or partial payment of any installment of the Purchase Price; (B) not have any unresolved staff comments from the SEC staff regarding any filing with the SEC; (C) not be the subject of any stop order with respect to any registration under the Securities Act; (D) be current in its reporting obligations under the Exchange Act; (E) file the Registration Statement referred to in clause (A) prior to the Payment Date immediately upon determination of the number of shares of Lexicon Common Stock to be issued to Holdings on the relevant Payment Date; and (F) use its best efforts to have such Registration Statement declared effective prior to the Payment Date or as soon thereafter as possible;

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(ii)           provide evidence reasonably acceptable to Holdings that such Lexicon Common Stock has been approved for listing on the NASDAQ Global Market or such other national market on which the Lexicon Common Stock is then listed;

(iii)           cooperate with any necessary HSR Filings by Holdings and shall pay the HSR Filing fee on behalf of Holdings and promptly reimburse Holdings for any fees, costs and expenses (including the reasonable fees of counsel) in connection with such filings;

(iv)           not make any Partial Stock Payment to Holdings or an Affiliate of Holdings to which Holdings has assigned its payment rights under the Agreement in accordance with Section 7(a) (each, a “Symphony Payment Recipient”) to the extent that, immediately prior to the time of such payment, such Symphony Payment Recipient (whether on its own account or as part of a “group” for purposes of Section 16 of the Exchange Act, such Persons, the “Symphony Reporting Persons”) is subject to the reporting and short-swing liability provision s of Section 16 of the Exchange Act (the “Section 16 Threshold”) solely as a result of the Lexicon Common Stock acquired from Lexicon under this Agreement and the transactions contemplated hereby; provided that

(A)           if, prior to the second anniversary of the Closing Date, payment by Lexicon to a Symphony Payment Recipient of any Contingent Payment (or portion thereof) in Lexicon Common Stock would result in any Symphony Reporting Person meeting or exceeding the Section 16 Threshold, Lexicon may, at its sole option, reduce the portion of such Contingent Payment otherwise payable in Lexicon Common Stock pursuant to Section 2(c) to the extent necessary for such Symphony Reporting Person to avoid meeting or exceeding the Section 16 Threshold;

(B)           on the Closing Date, Holdings shall certify to Lexicon the number of shares of Lexicon Common Stock owned by the Symphony Reporting Persons; and

(C)           within ten (10) Business Days of any change in the number of shares of Lexicon Common Stock owned by the Symphony Reporting Persons, Holdings shall certify to Lexicon the number of shares of Lexicon Common Stock owned by the Symphony Reporting Persons;

(v)           certify that Holdings has not been provided with any material non-public information that remains such at the time Lexicon issues any Lexicon Common Stock to Holdings in full or partial payment of an installment of the Purchase Price; and

(vi)           if applicable, prior to each Partial Stock Payment, the Lexicon Board shall have adopted resolutions, reasonably satisfactory to Holdings, approving the issuance of the Lexicon Common Stock to Holdings for purposes of Section 203(a)(1) of the Delaware General Corporation Law (the “DGCL”), such that the restrictions on “business combinations” set forth in Section 203 of the DGCL shall not apply to Lexicon and Holdings as a result of such issuances.

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It is hereby expressly agreed and understood that the conditions set forth in this clause (h) are for the exclusive benefit of, and may be waived only in writing by, Holdings.  If any such condition is not satisfied or waived at the time of any payment, Lexicon shall be obligated to pay the entire amount of the applicable portion of the Purchase Price in cash in lieu of Lexicon Common Stock.

(i)           Government Approvals.  On or prior to the Closing Date, each of Lexicon, Symphony Icon and Holdings shall have taken all necessary action to cause all Governmental Approvals with respect to such Party (including, without limitation, the preparing and filing of any pre-merger notification and report forms required under the HSR Filings required to be in effect in connection with the transactions contemplated by this Agreement) to be in effect; provided, however, that with respect to Government Approvals required by a Governmental Authority other th an the United States federal government and its various branches and agencies, the Parties’ obligations under this Section 2(i) shall be limited to causing to be in effect only those Government Approvals, the failure of which to be in effect would, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on any of the Parties.  Each of Symphony Icon and Lexicon shall pay its own costs associated with taking such action.  Symphony Icon shall pay any costs of Holdings associated with obtaining Government Approvals required in connection with the exercise of the Purchase Option.  All other costs and expenses of Holdings shall be paid by Holdings pursuant to Section 8(b) hereof, including any costs arising from any error in Holdings’ initial valuation of its investment in Symphony Icon.

(j)           Transfer of Title.  Transfer of title to Lexicon of all of the Symphony Icon Equity Securities shall be deemed to occur automatically on the Closing Date, subject to the payment by Lexicon of the Closing Date Payment, the commitment by Lexicon to pay the balance of the Purchase Price and its performance of its other obligations herein required to be performed, and under the Registration Rights Agreement, as applicable, to the reasonable satisfaction of Holdings, and thereafter Symphony Icon shall treat Lexicon as the sole holder of all Symphony Icon Equity Securities, notwithstanding any failure of Holdings to tender certificates representing such shares to Lexicon in accord ance with Section 2(c) hereof.  After the Closing Date, Holdings shall have no rights in connection with such Symphony Icon Equity Securities other than the right to receive the Purchase Price; provided, however, that nothing in this Section 2(j) shall affect the survivability of any indemnification provision in this Agreement upon termination of this Agreement.

(k)           Consents and Authorizations.  Lexicon has obtained all consents and authorizations necessary from stockholders and/or its board of directors for the consummation of the exercise and closing of the Purchase Option, as may be required under the organizational documents of Lexicon, any prior stockholders or board resolution, any stock exchange or similar rules or any applicable law; provided, however, that with respect to consents or authorizations required by a Governmental Authority other than the United States federal government and its various br anches and agencies, the Parties’ obligations under this Section 2(k) shall be limited to obtaining only those consents and authorizations, the failure of which to be obtained would, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on any of the Parties.

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Section 2A.                      Change of Control.  Within thirty (30) days following a Change of Control with a third party that is principally engaged in the business of developing and/or commercializing pharmaceutical products, Lexicon shall promptly (a) pay Holdings the amount of the unpaid Base Payment Balance; provided that if such Change of Control results in all outstanding shares of Lexicon Common Stock being converted into th e right to receive other consideration or otherwise being cancelled and ceasing to exist, the portion of such unpaid Base Payment Balance that may otherwise be payable in Lexicon Common Stock pursuant to Section 2(c) may be paid in a manner consistent with the form and type of the consideration received by the holders of Lexicon Common Stock in such Change of Control, and (b) notify Holdings of its good faith intention, in light of such Change of Control, to enter into Licensing Transactions for the commercialization of the LG103 Products or to commercialize the LG103 Products on its own (together with its Affiliates, including the ultimate parent of Lexicon in such Change of Control), in each case in major markets including the United States, Europe and Japan.  In the event that Lexicon fails to deliver such notice, or if it notifies Holdings of its good faith intention to commercialize the LG103 Products on its own (together with it s Affiliates, including the ultimate parent of Lexicon in such Change of Control) in the United States and either or both of Europe or Japan, then Lexicon shall pay Holdings, within thirty (30) days of such notice, the amount of the sum of the Base Payment Balance plus the Maximum Contingent Payment Amount, in each case, reduced by any amounts already paid (the “Acceleration Payment”); provided that if such Change of Control results in all outstanding shares of Lexicon Common Stock being converted into the right to receive other consideration or otherwise being cancelled and ceasing to exist, the portion of such Base Payment Balance and Maximum Contingent Payment Amount that may otherwise be payable in Lexicon Common Stock pursuant to Section 2(c) may be paid in a manner consistent with the form and type of the consideration received by the holders of Lexicon Common Stock in such Change of Control; and provided further that, in the event Lexicon shall have elected to abandon the development of any LG103 Product, the amount of such Acceleration Payment shall be reduced by the Recapture-Eligible Amount associated with such abandoned LG103 Product.

Section 3.              Lexicon Representations, Warranties and Covenants.

(a)           As of the date hereof, Lexicon hereby represents and warrants, and, except to the extent that any of the following representations and warranties are limited to the date of this Agreement or otherwise limited, on and each Payment Date, shall be deemed to have represented and warranted, to Holdings and Symphony Icon that:

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(i)           Organization.  Lexicon is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware.

(ii)           Authority and Validity.  Lexicon has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby.  The execution, delivery and performance by Lexicon of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action required on the part of Lexicon, and no other proceedings on the part of Lexicon are necessary to authorize this Agreement or for Lexicon to perform its obligations under this Agreement.  This Agreement constitutes the lawful, valid and legally binding obligation of Lexicon, enforceable in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and general equitable principles regardless of whether such enforceability is considered in a proceeding at law or in equity.

(iii)           No Violation or Conflict.  The execution, delivery and performance of this Agreement and the transactions contemplated hereby do not (A) violate, conflict with or result in the breach of any provision of the Organizational Documents of Lexicon, (B) as of the date of this Agreement and each Payment Date if Lexicon elects to pay part of the Purchase Price through the delivery of Lexicon Common Stock (a “Partial Stock Payment”), conflict with or violate any law or Governmental Order applicable to Lexicon or any of its assets, properties or businesses, or (C) conflict with, result in an y breach of, constitute a default (or event that with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the assets or properties of Lexicon, pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which Lexicon is a party except, in the case of clauses (B) and (C), to the extent that such conflicts, breaches, defaults or other matters would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Lexicon.

(iv)           Governmental Consents and Approvals.  Other than any HSR Filings which, if such HSR Filings are required pursuant to Section 2(i) hereof, will be obtained on or prior to the Closing Date, the execution, delivery and performance of this Agreement by Lexicon do not, and the consummation of the transactions contemplated hereby do not and will not, require any Governmental Approval which has not already been obtained, effected or provided, except with respect to which the failure to so obtain, effect or provide would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effe ct on Lexicon.

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(v)           Litigation.  As of (A) the date of this Agreement, except as disclosed in any Lexicon Public Filings available as of the date hereof, and (B)  each Payment Date if Lexicon elects to make a Partial Stock Payment, there are no actions by or against Lexicon pending before any Governmental Authority or, to the knowledge of Lexicon, threatened to be brought by or before any Governmental Authority, that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Lexicon.  There are no pending or, to the knowledge of Lexicon, threatened actions, to which Lexicon is a party (or is threatened to be named as a party) to set aside, restrain, enjoin or prevent the execution, delivery or performance of this Agreement or the Operative Documents or the consummation of the transactions contemplated hereby or thereby by any party hereto or thereto.  As of the date of this Agreement, and as of each Payment Date if Lexicon elects to make a Partial Stock Payment, Lexicon is not subject to any Governmental Order (nor, to the knowledge of Lexicon, is there any such Governmental Order threatened to be imposed by any Governmental Authority) that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Lexicon.

(b)           Lexicon hereby covenants and agrees with Holdings as follows:

(i)           Immediately prior to any Payment Date, Lexicon shall have sufficient amounts of cash and, if applicable, sufficient authorized but unissued and nonassessable shares of Lexicon Common Stock available to satisfy the portion of the Purchase Price to be paid in cash or Lexicon Common Stock on such Payment Date.  Lexicon shall have, on each Payment Date, complied with the requirements of Section 2(h)(i) above for the resale of any such shares of Lexicon Common Stock to be delivered in partial satisfaction of the Purchase Price on such Payment Date, accompanied by evidence reasonably acceptable to Holdings that such Lexicon Common Stock has been approved for listing on the NASDAQ Global Market or such other national market on which the Lexicon Common Stock is then listed.  Lexicon shall deliver to Holdings on or prior to any Partial Stock Payment a legal opinion from Lexicon’s general counsel, or such other counsel as Lexicon and Holdings shall mutually agree, which opinion shall be, in form and substance, reasonably acceptable to Holdings.

(ii)           If Lexicon elects to satisfy any portion of the Purchase Price in Lexicon Common Stock, Lexicon, on each Payment Date, shall convey good and marketable title to such Lexicon Common Stock, free from any Encumbrances and any and all other restrictions that any issuance, sale, assignment or other transfer of such Lexicon Common Stock be consented to or approved by any Person.

(iii)           If the share certificates representing such Lexicon Common Stock include the 33 Act Legend (as set forth in Section 2(g) hereof), Lexicon shall, within two (2) Business Days of receiving a request from Holdings or any “Investor” (as defined in the Registration Rights Agreement), remove or cause to be removed the 33 Act Legend from such share certificates as Holdings or such Investor shall designate, so long as (x) the Lexicon Common Stock represented by such share certificates has been transferred to a third party in compliance with the registration requirements of the Securities Act or an available exemption therefrom, and (y) Lexicon receives a certifica tion from Holdings, such Investor or a securities broker designated by Holdings or such Investor to the effect that the sale of such Lexicon Common Stock was made under a Registration Statement and accompanied by the delivery of a current prospectus.

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(iv)           Upon the termination of this Agreement pursuant to Section 9 hereof, or as soon thereafter as is practical, Lexicon shall (A) in accordance with and pursuant to Sections 2.7 and 2.8 of the Novated and Restated Technology License Agreement, deliver to Symphony Icon all Regulatory Files and Tangible Materials, and (B) in accordance with and pursuant to Section 2.11 of the Novated and Restated Technology License Agreement, provide and supply, or cause to be provided and supplied, finished dosage form of the Products.

(v)           Lexicon shall maintain the separate corporate existence of Symphony Icon for a minimum of one (1) year following the Closing Date, unless such maintenance would have a Material Adverse Effect on Lexicon or any of its Affiliates.

(vi)           Lexicon shall use commercially reasonable efforts to maintain the effectiveness of the Registration Statement filed in accordance with Section 2(h)(i) until the expiration of two years after the final Payment Date in which shares of Lexicon Common Stock are issued in a Partial Stock Payment, or such earlier time as all shares held by Holdings are eligible for resale under Rule 144 of the Securities Act.

(vii)           Lexicon shall use commercially reasonable efforts, as conclusively determined by Lexicon’s Board of Directors in its good faith discretion (taking into account scientific, medical, market and competitive factors, Lexicon’s financial condition, portfolio management considerations, and such other factors as it deems relevant), to develop and, following requisite regulatory approvals, commercialize one or more LG103 Products.

(viii)           In the event Lexicon’s Board of Directors shall determine, in its sole discretion, to abandon all further efforts relating to the development and/or commercialization of all LG103 Products (the “Abandoned Products”), Lexicon shall provide Holdings with written notice of such determination within ten (10) Business Days.  For a period of up to eighteen months following delivery of such notice, to the extent requested by Holdings, Lexicon shall reasonably cooperate with Holdings, at Holdings’ expense, in identifying and concluding one or more Licensing Transactions; provided, for clarity , that Lexicon shall not be obligated to enter into any Licensing Transaction that imposes any obligation on Lexicon other than the grant of a license and the customary related obligations (excluding, without limitation, indemnification, financial or monetary obligations of any kind) in connection with granting such license under the relevant Licensed Intellectual Property relating to such LG103 Products.  The consideration received for any Licensing Transaction(s) for an Abandoned Product(s) (an “Abandoned Product Partnership Payment”) shall be divided equally between Lexicon and Holdings and shall not be subject to the Purchase Price limitation set forth in Section 2(d).

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(ix)           Lexicon shall permit the representatives of Holdings (including Holdings’ members and their respective representatives) and each Symphony Fund, at each of their own expense and upon reasonable prior notice to Lexicon, to visit the principal executive office of Lexicon, to discuss the LG103 Financial Information (as defined in Section 3(b)(x)) with Lexicon’s officers and (with the consent of Lexicon, which consent will not be unreasonably withheld) its Auditors, all at such reasonable times and as often as may be reasonably requested in writing.

(x)           Lexicon will keep complete, proper and separate books of record and account for the LG103 Products, including a record of all costs and expenses incurred (recorded using a method consistent with past practices under this Agreement), all charges made, all credits made and received, the Base Payment Balance, the Recapture Eligible Amount, the calculation of any Contingent Payments, and all income derived in connection with LG103 Products, all in accordance with GAAP, in each case to the extent necessary to enable Lexicon to comply with the periodic reporting requirements of this Agreement, and will promptly notify Holdings if it adopts or changes any accounting principle pursuant to a change in GAAP or applicable Law (such information, the “LG103 Financial Information”).  Within ten (10) Business Days following each quarter, Lexicon shall provide Holdings a report setting forth in reasonable detail the financial performance for the LG103 Products, including without limitation the LG103 Product Development Expenses incurred during the prior quarter (on a product by product basis), a calculation of the Base Payment Balance, the Recapture Eligible Amount and the calculation of any Contingent Payments.

Section 4.               Holdings Representations and Warranties.

(a)           As of the date hereof, Holdings hereby represents and warrants that:

(i)           Organization.  Holdings is a limited liability company, duly formed, validly existing and in good standing under the laws of the State of Delaware.

(ii)           Authority and Validity.  Holdings has all requisite limited liability company power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby.  The execution, delivery and performance by Holdings of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action required on the part of Holdings, and no other proceedings on the part of Holdings are necessary to authorize this Agreement or for Holdings to perform its obligations under this Agreement.  This Agreement constitutes the lawful, valid and legal ly binding obligation of Holdings, enforceable in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and general equitable principles regardless of whether such enforceability is considered in a proceeding at law or in equity.

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(iii)           No Violation or Conflict.  The execution, delivery and performance of this Agreement and the transactions contemplated hereby do not (A) violate, conflict with or result in the breach of any provision of the Organizational Documents of Holdings, (B) as of the date of this Agreement, conflict with or violate any law or Governmental Order applicable to Holdings or any of its assets, properties or businesses, or (C) as of the date of this Agreement, conflict with, result in any breach of, constitute a default (or event that with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the assets or properties of Holdings, pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which Holdings is a party except, in the case of clauses (B) and (C), to the extent that such conflicts, breaches, defaults or other matters would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Holdings.

(iv)           Governmental Consents and Approvals.  The execution, delivery and performance of this Agreement by Holdings do not, and the consummation of the transactions contemplated hereby do not and will not, require any Governmental Approval which has not already been obtained, effected or provided, except with respect to which the failure to so obtain, effect or provide would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Holdings.

(v)           Litigation.  As of the date of this Agreement, there are no actions by or against Holdings pending before any Governmental Authority or, to the knowledge of Holdings, threatened to be brought by or before any Governmental Authority, that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Holdings.  There are no pending or, to the knowledge of Holdings, threatened actions to which Holdings is a party (or is threatened to be named as a party) to set aside, restrain, enjoin or prevent the execution, delivery or performance of this Agreement or the Operative Documents or the consummation of the transactions contemplated hereby or thereby by any party hereto or thereto.  As of the date of this Agreement, Holdings is not subject to any Governmental Order (nor, to the knowledge of Holdings, is there any such Governmental Order threatened to be imposed by any Governmental Authority) that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Holdings.

(vi)           Stock Ownership.  All of Symphony Icon’s issued and outstanding Symphony Icon Equity Securities are owned beneficially and of record by Holdings, free and clear of any and all encumbrances.

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(vii)           Accredited Investor.

(A)           Holdings is and will remain at all relevant times an Accredited Investor.

(B)           Holdings has relied completely on the advice of, or has consulted with or has had the opportunity to consult with, its own personal tax, investment, legal or other advisors and has not relied on Lexicon or any of its Affiliates for advice related to any offer and sale of Lexicon Common Stock in connection with the Purchase Option.  Holdings has reviewed the Investment Overview and is aware of the risks disclosed therein.  Holdings acknowledges that it has had a reasonable opportunity to conduct its own due diligence with respect to the Products, the Programs, Symphony Icon, Lexicon and the transactions contemplated by the Operative Documents.

(C)           Holdings is able to bear the economic risk of such investment for an indefinite period and to afford a complete loss thereof.

(D)           Holdings agrees that the Lexicon Common Stock may not be resold (A) without registration thereof under the Securities Act (unless an exemption from such registration is available), or (B) in violation of any law.

(E)           No person or entity acting on behalf of, or under the authority of, Holdings is or will be entitled to any broker’s, finder’s, or similar fees or commission payable by Lexicon or any of its Affiliates.

Section 5.               Symphony Icon Representations, Warranties and Covenants.

(a)           As of the date hereof, Symphony Icon hereby represents and warrants that:

(i)           Organization.  Symphony Icon is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware.

(ii)           Authority and Validity.  Symphony Icon has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby.  The execution, delivery and performance by Symphony Icon of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action required on the part of Symphony Icon, and no other proceedings on the part of Symphony Icon are necessary to authorize this Agreement or for Symphony Icon to perform its obligations under this Agreement.  This Agreement constitutes the lawful, valid and legally binding obligation of Symphony Icon, enforceable in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and general equitable principles regardless of whether such enforceability is considered in a proceeding at law or in equity.

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(iii)           No Violation or Conflict.  The execution, delivery and performance of this Agreement and the transactions contemplated hereby do not (A) violate, conflict with or result in the breach of any provision of the Organizational Documents of Symphony Icon, (B) conflict with or violate any law or Governmental Order applicable to Symphony Icon or any of its assets, properties or businesses, or (C) conflict with, result in any breach of, constitute a default (or event that with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revo cation or cancellation of, or result in the creation of any Encumbrance on any of the assets or properties of Symphony Icon, pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which Symphony Icon is a party except, in the case of clauses (B) and (C), to the extent that such conflicts, breaches, defaults or other matters would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Symphony Icon.

(iv)           Governmental Consents and Approvals.  The execution, delivery and performance of this Agreement by Symphony Icon do not, and the consummation of the transactions contemplated hereby do not and will not, require any Governmental Approval which has not already been obtained, effected or provided, except with respect to which the failure to so obtain, effect or provide would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Symphony Icon.

(v)           Litigation.  There are no actions by or against Symphony Icon pending before any Governmental Authority or, to the knowledge of Symphony Icon, threatened to be brought by or before any Governmental Authority that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Symphony Icon.  There are no pending or, to the knowledge of Symphony Icon, threatened actions to which Symphony Icon is a party (or is threatened to be named as a party) to set aside, restrain, enjoin or prevent the execution, delivery or performance of this Agreement or the Operative Documents or the consummation of the transactions contemplated hereby or thereby by any party hereto or thereto.  Symphony Icon is not subject to any Governmental Order (nor, to the knowledge of Symphony Icon, is there any such Governmental Order threatened to be imposed by any Governmental Authority) that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Symphony Icon.

(vi)           Capitalization.  Holdings is the beneficial and record owner of all issued and outstanding Symphony Icon Equity Securities.  No shares of Symphony Icon capital stock are held in treasury by Symphony Icon or any Symphony Icon Subsidiary.  All of the issued and outstanding Symphony Icon Equity Securities (A) have been duly authorized and validly issued and are fully paid and nonassessable, (B) were issued in compliance with all applicable state and federal securities laws, and (C) were not issued in violation of any preemptive rights or rights of first refusal.  No preemptive rights or rights of first refusal exist with respect to any Symphony Icon Equity Securities and no such rights will arise by virtue of or in connection with the transactions contemplated hereby (other than for the Purchase Option).  Other than the Purchase Option, there are no outstanding options, warrants, call rights, commitments or agreements of any character to acquire any Symphony Icon Equity Securities.  There are no outstanding stock appreciation, phantom stock, profit participation or other similar rights with respect to Symphony Icon.  Symphony Icon is not obligated to redeem or otherwise acquire any of its outstanding Symphony Icon Equity Securities.

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(b)           Symphony Icon covenants and agrees that:

(i)           Symphony Icon will comply with all laws, ordinances or governmental rules or regulations to which it is subject and will obtain and maintain in effect all licenses, certificates, permits, franchises and other Governmental Approvals necessary to the ownership of its properties or to the conduct of its business, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other Governmental Approvals would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Symphony Icon.

(ii)           Symphony Icon will file (or cause to be filed) all material tax returns required to be filed by it and pay all taxes shown to be due and payable on such returns and all other taxes imposed on it or its assets to the extent such taxes have become due and payable and before they have become delinquent and shall pay all claims for which sums have become due and payable that have or might become attached to the assets of Symphony Icon; provided, that Symphony Icon need not file any such tax returns or pay any such tax or claims if (A) the amount, applicability or validity thereof is contested by Symphony Icon on a timely basis in good faith and in appropriate proceedings, and Sympho ny Icon has established adequate reserves therefor in accordance with GAAP on the books of Symphony Icon or (B) the failure to file such tax returns or the nonpayment of such taxes and assessments, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on Symphony Icon.

(iii)           Symphony Icon will at all times preserve and keep in full force and effect its corporate existence.

(iv)           Symphony Icon will keep complete, proper and separate books of record and account, including a record of all costs and expenses incurred, all charges made, all credits made and received, and all income derived in connection with the operation of the business of Symphony Icon, all in accordance with GAAP (which GAAP shall be conformed to those used by Lexicon to the extent practicable), in each case to the extent necessary to enable Symphony Icon to comply with the periodic reporting requirements of this Agreement, and will promptly notify Lexicon if it adopts or changes any accounting principle pursuant to a change in GAAP or applicable Law.

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(v)           Symphony Icon will perform and observe in all material respects all of the terms and provisions of each Operative Document to be performed or observed by it, maintain each such Operative Document to which it is a party, promptly enforce in all material respects each such Operative Document in accordance with its terms, take all such action to such end as may be from time to time reasonably requested by Holdings or Lexicon and make to each other party to each such Operative Document such demands and requests for information and reports or for action as Symphony Icon is entitled to make under such Operative Document.

(vi)           Symphony Icon shall permit the representatives of Holdings (including Holdings’ members and their respective representatives), each Symphony Fund and Lexicon, at each of their own expense and upon reasonable prior notice to Symphony Icon, to visit the principal executive office of Symphony Icon, to discuss the affairs, finances and accounts of Symphony Icon with Symphony Icon’s officers and (with the consent of Symphony Icon, which consent will not be unreasonably withheld) its Auditors, all at such reasonable times and as often as may be reasonably requested in writing.

(vii)           Symphony Icon shall permit each Symphony Fund, at its own expense and upon reasonable prior notice to Symphony Icon, to inspect and copy Symphony Icon’s books and records and inspect Symphony Icon’s properties at reasonable times.

(viii)           Symphony Icon shall allow Lexicon or its designated representatives to have reasonable visitation and inspection rights with regard to the Programs and materials, documents and other information relating thereto.

(ix)           Symphony Icon shall permit each Symphony Fund to consult with and advise the management of Symphony Icon on matters relating to the research and development of the Programs in order to develop the Product in accordance with the terms or provisions of the Amended and Restated Research and Development Agreement.

(x)           On the Closing Date, or as soon thereafter as is practical, Symphony Icon shall deliver to Lexicon all materials, documents, files and other information relating to the Programs (or, where necessary, copies thereof).

(xi)           Symphony Icon shall indemnify the directors and officers of Symphony Icon against liability incurred by reason of the fact that such Person is or was a director or officer of Symphony Icon, as permitted by Article VII of the Symphony Icon Charter and Section 9.01 of the Symphony Icon By-laws, as set forth in, and on the terms of, the Indemnification Agreement and the RRD Services Agreement, respectively.

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(xii)           Symphony Icon shall comply with, and cause any Persons acting for it to comply with, the terms of the Investment Policy with respect to the investment of any funds held by it.

(xiii)           On or prior to the Closing Date, Symphony Icon shall pay for a non-cancelable clinical trial insurance policy and a non-cancelable directors and officers liability insurance policy, in each case in form and substance reasonably satisfactory to Holdings (such policies, the “Insurance Policies”), covering claims made or reported for a period of six (6) years after the Closing Date to provide insurance coverage for events, acts or omissions occurring on or prior to the Closing Date for all persons who were directors or officers of Symphony Icon on or prior to the Closing Date.

(c)           Symphony Icon covenants and agrees that it shall not, and shall cause its Subsidiaries (if any) not to, without Lexicon’s prior written consent (such consent, in the case of clause (x) below, not to be unreasonably withheld):

(i)           issue any Symphony Icon Equity Securities or any Equity Securities of any Subsidiary thereof; provided, however, that in any event any such Symphony Icon Equity Securities shall be issued subject to the Purchase Option;

(ii)           redeem, repurchase or otherwise acquire, directly or indirectly, any Symphony Icon Equity Securities or the Equity Securities of any Subsidiary of Symphony Icon;

(iii)           create, incur, assume or permit to exist (A) any Encumbrance over or on any of its assets, other than (x) statutory liens or (y) liens created in the ordinary course of Symphony Icon’s business securing obligations valued at less than $250,000 in the aggregate principal amount at any one time outstanding (unless the Development Committee shall authorize the existence of ordinary course liens securing obligations valued at greater than $250,000), or (B) Debt other than any Debt owing to parties not affiliated with Symphony Icon incurred pursuant to the Operative Documents and the Development Budget (including payables incurred in the ordinary course of business) (“Excepted Debt”); provided, however, that the aggregate outstanding principal amount of all Excepted Debt for borrowed money (including the amount of Debt secured by any Encumbrances permitted pursuant to clause (A)) shall not exceed $500,000 at any time;

(iv)           declare or pay dividends or other distributions on any Symphony Icon Equity Securities other than any dividend declared out of funds released by the Development Committee pursuant to Section 8.1 of the Amended and Restated Research and Development Agreement, from the proceeds of (x) the exercise of a Discontinuation Option, or (y) a sale or license of a discontinued Program to a third party, in each case in respect of which Symphony Icon shall be entitled to pay (subject to the existence of lawfully available funds) a dividend equal to the net amount (such net amount calculated as the gross proceeds received less amounts required to be paid in respect of any and all corpora te taxes owed by Symphony Icon as a result of the receipt of such gross amounts) of such Discontinuation Price or the amounts received from such third party, as the case may be;

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(v)           enter into any transaction of merger or consolidation, or liquidate, wind up or dissolve itself, or convey, transfer, license, lease or otherwise dispose of all, or a material portion of, its properties, assets or business;

(vi)           other than in respect of the Programs, engage in the development of products for any other company or engage or participate in the development of products or engage in any other material line of business;

(vii)           other than entering into, and performing its obligations under, the Operative Documents and participating in the Programs, engage in any action that negates or is inconsistent with any rights of Lexicon set forth herein;

(viii)           (A) other than as contemplated by the RRD Services Agreement and Section 6.2 of the Amended and Restated Research and Development Agreement, hire, retain or contract for the services of, any employees until the termination of such agreements, or (B) appoint, dismiss or change any RRD Investment Personnel;

(ix)           incur any financial commitments in respect of the development of the Programs other than those set forth in the Development Plan and the Development Budget, or those approved by the Development Committee and, if so required by the terms of Paragraph 11 of the Development Committee Charter, the Symphony Icon Board in accordance with the Operative Documents;

(x)           other than any transaction contemplated by the Operative Documents, enter into or engage in any Conflict Transactions without (x) if the Symphony Icon Board shall have less than five (5) members, the prior approval of all the members of the Symphony Icon Board, or (y) if the Board shall have five (5) members, the prior approval of a majority of the Disinterested Directors of the Symphony Icon Board; or

(xi)           waive, alter, modify, amend or supplement in any manner whatsoever any material terms and conditions of the RRD Services Agreement, the Subscription Agreement, the Research Cost Sharing, Payment and Extension Agreement, or Articles 4 and 6 of the Amended and Restated Research and Development Agreement, except in compliance with the terms of the Operative Documents.

(d)           Symphony Icon covenants and agrees to deliver, cause to be delivered, and provide access thereto, to each other Party, each Symphony Fund, and such Auditors as Lexicon may designate, so long as such Auditors shall (x) be subject to confidentiality requirements at least as stringent as the Confidentiality Agreement or (y) be the Lexicon Accounting Advisor retained pursuant to an agreement which incorporates confidentiality provisions substantially the same as the ones incorporated in the agreements in effect between Lexicon and such Lexicon Accounting Advisor as of the Closing Date:

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(i)           upon request, copies of the then current Development Plan for each quarter, on or before March 31, June 30, September 30, and December 31 of each year;

(ii)           upon request, copies of the then current Development Budget for each quarter, including a report setting forth in reasonable detail the projected expenditures by Symphony Icon pursuant to the Development Budget, on or before March 31, June 30, September 30, and December 31 of each year;

(iii)           prior to the close of each fiscal year, Symphony Icon shall cause the Manager to seek to obtain from the Symphony Icon Auditors schedules of certain financial information to be provided to Lexicon’s Auditors in connection with the Symphony Icon Auditors’ audit of Symphony Icon.  Within fifteen (15) Business Days after the close of each fiscal year, Symphony Icon (or the Manager acting on its behalf) will provide Lexicon’s Auditors with the Client Schedules.  If the Symphony Icon Auditors deliver the notice or listing of required Client Schedules after the end of the fiscal year, Symphony Icon (or the Manager acting on its behalf) will provide the completed Client Schedules to Lexicon’s Auditor s within fifteen (15) Business Days of such receipt.  Following Lexicon’s Auditors’ review of the Client Schedules, Symphony Icon (or the Manager acting on its behalf) will promptly provide Lexicon’s Auditors with any reasonably requested back-up information related to the Client Schedules.

(iv)           prior to the close of each fiscal year, Lexicon’s Chief Financial Officer, the Symphony Icon Auditors, Lexicon’s Auditors and Symphony Icon (or the Manager acting on its behalf) shall agree to a completion schedule that will include (A) the provision by Symphony Icon to Lexicon of the financial information reasonably necessary for Lexicon to consolidate the financial results of Symphony Icon and (B) the following financial statements, including the related notes thereto, audited and certified by the Symphony Icon Auditors:  (1) a balance sheet of Symphony Icon as of the close of such fiscal year, (2) a statement of net income for such fiscal year, and (3) a statement of cash flows for such fiscal year .  Such audited annual financial statements shall set forth in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and Symphony Icon (or the Manager acting on its behalf) shall, to the extent that Symphony Icon (or the Manager acting on its behalf), using commercially reasonable means, can procure such an opinion, be accompanied by an opinion thereon of the Symphony Icon Auditors to the effect that such financial statements present fairly, in all material respects, the financial position of Symphony Icon and its results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances;

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(v)           within five (5) Business Days following each calendar month and receipt from Lexicon of its monthly invoice to Symphony Icon, current accrued monthly vendor expenses and prepaid expenses, Symphony Icon (or the Manager acting on its behalf) will provide to Lexicon:  (A) the unaudited balance sheet of Symphony Icon for the previous calendar month; (B) the unaudited statement of net income for such previous calendar month; (C)  the trial balance schedule for such previous calendar month; and (D) related account reconciliations for such previous calendar month (collectively, “Unaudited Financial Information”);

(vi)           within five (5) Business Days following its filing, a copy of each income tax return so filed by Symphony Icon with any foreign, federal, state or local taxing authority (including all supporting schedules thereto);

(vii)           any other documents, materials or other information pertaining to the Programs or Symphony Icon as Lexicon may reasonably request, including preliminary financial informationand information and documentation of internal controls and reporting;

(viii)           promptly, and in any event within ten (10) days of receipt thereof, copies of any notice to Symphony Icon from any federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation that would reasonably be expected to have a Material Adverse Effect on Symphony Icon;

(ix)           promptly upon receipt thereof, notice of all actions, suits, investigations, litigation and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting Symphony Icon;

(x)           promptly upon receipt thereof, copies of any other notices, requests, reports, financial statements and other information and documents received by Symphony Icon under or pursuant to any other Operative Document, including, without limitation, any notices of breach or termination of any subcontracts or licenses entered into or permitted pursuant to the Operative Documents; and

(xi)           with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of Symphony Icon or relating to the ability of Symphony Icon to perform its obligations hereunder and under the Operative Documents as from time to time may be reasonably requested by Lexicon and/or Holdings;

provided, that neither Symphony Icon, nor the Manager acting on behalf of Symphony Icon, shall have any liability to Lexicon for the failure to deliver financial documents or other materials hereunder, if such failure was caused by a failure of Lexicon to provide, in a timely manner, data required to prepare such financial documents or other materials to Symphony Lexicon in a timely manner.

Section 6.                Notice of Material Event.  Each Party covenants and agrees that, upon its acquiring Knowledge of (a) any breach by it of any representation, warranty, covenant or any other term or condition of this Agreement or (b) any other event or development that it expects, as conclusively determined by such Party in its good faith judgment, to be materially adverse to the other Party with respect to any Program or the transactions contemplated hereby (including, without limitation, Lexicon’s efforts to develop, commercialize and/or p artner the LG103 Products), such Party shall promptly notify the other Party in writing within three (3) Business Days of acquiring such Knowledge in the case of Section 6(a) and within twenty (20) Business Days of acquiring such Knowledge in the case of Section 6(b); provided, that the failure to provide such notice shall not impair or otherwise be deemed a waiver of any rights any Party may have arising from such breach, event or development and that notice under this Section 6 shall not be deemed an admission by the Party providing such notice of any breach of any of the Operative Documents; and provided further that the failure to provide such notice pursuant to Section 6(b) shall not constitute a material default or breach of this Agreement for purposes of Section 9.

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Section 7.                Assignment; Transfers; Legend.

(a)           Assignment and Transfers.  No Party may assign, delegate, transfer, sell or otherwise dispose of (collectively, “Transfer”), in whole or in part, any or all of its rights or obligations hereunder to any Person (a “Transferee”) without the prior written approval of the other Parties; provided that neither Lexicon nor Symphony Icon shall unreasonably withhold consent to any Transfer to an unrelated third party by Holdings of its rights to receive payment(s) of t he Purchase Price hereunder; provided, further, that Holdings may Transfer without consent any or all of its rights hereunder to one or more of its Affiliates provided that such Affiliate exists and has the status of an Affiliate of Holdings as of the Closing Date.  For the avoidance of doubt, entering into a Licensing Transaction shall not be deemed a Transfer.

(b)           Legend.  Any certificates evidencing Symphony Icon Equity Securities shall bear a legend in substantially the following form:

THE SECURITIES OF SYMPHONY ICON, INC., EVIDENCED HEREBY ARE SUBJECT TO AN OPTION, HELD BY LEXICON PHARMACEUTICALS, INC., AS DESCRIBED IN AN AMENDED AND RESTATED PURCHASE OPTION AGREEMENT (THE “PURCHASE OPTION AGREEMENT”) DATED AS OF JULY 30, 2010, BY AND AMONG LEXICON PHARMACEUTICALS, INC. AND THE OTHER PARTIES THERETO, TO PURCHASE SUCH SECURITIES AT A PURCHASE PRICE DETERMINED PURSUANT TO SECTION 2 OF THE PURCHASE OPTION AGREEMENT, EXERCISABLE BY WRITTEN NOTICE AT ANY TIME DURING THE PERIOD SET FORTH THEREIN.  COPIES OF THE PURCHASE OPTION AGREEMENT ARE AVAILABLE AT THE PRINCIPAL PLACE OF BUSINESS OF SYMPHONY ICON, INC. AT 7361 CALHOUN PLACE, SUITE 325, ROCKVILLE, MAR YLAND 20855, AND WILL BE FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST WITHOUT COST.

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Section 8.                      Costs and Expenses; Payments.

(a)           Symphony Icon Costs and Expenses.  Symphony Icon shall pay any of its ongoing legal expenses with respect to the transactions described in the Operative Documents from the funds allocated for such purpose in the Development Budget.

(b)           Costs and Expenses of the Purchase Option.  Except as otherwise specified in Section 2(i) hereof, each Party shall pay its own costs and expenses incurred in connection with the exercise of the Purchase Option.

(c)           Payments to Holdings.  Payment of the Purchase Price shall (i) in the case of payments of Lexicon Common Stock, Lexicon shall provide prior written notice to Holdings of such payment (pursuant to Section 13 hereof) two (2) Business Days in advance of such payment and Holdings shall provide written instructions to Lexicon regarding where Lexicon should send the Lexicon Common Stock and (ii) in the case of cash payments, be made by wire transfer of immediately available funds to an account specified in writing by Holdings and delivered to Lexicon (pursuant to Section 13 hereof).

Section 9.              Expiration; Termination of Agreement.

(a)           Termination.  This Agreement shall terminate

(i)           Upon the mutual written consent of Lexicon and Holdings; or

(ii)           upon written notice to Lexicon if Lexicon is in material default or breach of this Agreement that has resulted in, or would reasonably be expected to result in, a material adverse effect on Holdings’ rights under this Agreement, and such material default or breach continues unremedied for a period of thirty (30) days after written notice thereof is delivered to Lexicon.

Section 10.            Survival; Indemnification.

(a)           Survival of Representations and Warranties; Expiration of Certain Covenants.

(i)           The representations and warranties of the Parties contained in this Agreement shall survive for a period of one year from the making of such representations, except for representations and warranties contained in Sections 3(a)(i) and (ii), 4(a)(i) and (ii) and 5(a)(i) and (ii) hereof which shall survive indefinitely.  The liability of the Parties related to their respective representations and warranties hereunder shall not be reduced by any investigation made at any time by or on behalf of Holdings, Symphony Icon or Lexicon, as applicable.

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(ii)           All of the covenants and agreements set forth in this Agreement shall survive indefinitely; provided that, following the Closing, the covenants and agreements of Symphony Icon set forth in Sections 5(b) and 5(d) may be waived or terminated by Lexicon, in its sole discretion, except for the covenants set forth in Sections 5(b)(xi).

(iii)           For the avoidance of doubt, Lexicon shall pay to Holdings the Contingent Payments set forth in Section 2(b) and the Abandoned Product Partnership Payments set forth in Section 3(b)(viii) when and as received, and such obligations shall survive indefinitely (including following any termination of this Agreement).

(b)           Indemnification.  To the greatest extent permitted by applicable law, Lexicon and Symphony Icon shall indemnify and hold harmless Holdings and Holdings shall indemnify and hold harmless Lexicon, and each of their respective Affiliates, officers, directors, employees, agents, partners, members, successors, assigns, representatives of, and each Person, if any (including any officers, directors, employees, agents, partners, members of such Person) who controls Holdings, Symphony Icon and Lexicon, as applicable, within the meaning of the Securities Act or the Exchange Act, (each, an “Indemnified Party”) , from and against any and all actions, causes of action, suits, claims, losses, costs, interest, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnified Party is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (hereinafter, a “Loss”), incurred by any Indemnified Party to the extent resulting from, arising out of, or relating to:  (i) in the case of Lexicon being the Indemnifying Party, (A) any breach of any representation or warranty made by Lexicon herein or in Section 5.1 of the Novated and Restated Technology License Agreement, or (B) any breach of any covenant, agreement or obligation of Lexicon contained herein, and (ii) in the case of Holdings being the Indemnifying Party, (A) any breach of any representation or warranty made by Holdings or Symphony Icon herein, or (B) any breach of any covenant, agreement or obligation of Holdings or Symphony Icon contained herein.  To the extent that the foregoing undertaking by Lexicon or Holdings may be unenforceable for any reason, such Party shall make the maximum contribution to the payment and satisfaction of any Loss that is permissible under applicable law.

(c)           Notice of Claims.  Any Indemnified Party that proposes to assert a right to be indemnified under this Section 10 shall notify Lexicon or Holdings, as applicable (the “Indemnifying Party”), promptly after receipt of notice of commencement of any action, suit or proceeding against such Indemnified Party (an “Indemnified Proceeding”) in respect of which a claim is to be made under this Section 10 , or the incurrence or realization of any Loss in respect of which a claim is to be made under this Section 10, of the commencement of such Indemnified Proceeding or of such incurrence or realization, enclosing a copy of all relevant documents, including all papers served and claims made, but the omission to so notify the applicable Indemnifying Party promptly of any such Indemnified Proceeding or incurrence or realization shall not relieve (x) such Indemnifying Party from any liability that it may have to such Indemnified Party under this Section 10 or otherwise, except, as to such Indemnifying Party’s liability under this Section 10, to the extent, but only to the extent, that such Indemnifying Party shall have been prejudiced by such omission, or (y) any other indemnitor from liability that it may have to any Indemnified Party under the Operative Documents.

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(d)           Defense of Proceedings.  In case any Indemnified Proceeding shall be brought against any Indemnified Party, it shall notify the applicable Indemnifying Party of the commencement thereof as provided in Section 10(c), and such Indemnifying Party shall be entitled to participate in, and provided such Indemnified Proceeding involves a claim solely for money damages and does not seek an injunction or other equitable relief against the Indemnified Party and is not a criminal or regulatory action, to assume the defense of, such Indemnified Proceeding with counsel reasonably satisfactory to such Indemnified Party.   After notice from such Indemnifying Party to such Indemnified Party of such Indemnifying Party’s election so to assume the defense thereof and the failure by such Indemnified Party to object to such counsel within ten (10) Business Days following its receipt of such notice, such Indemnifying Party shall not be liable to such Indemnified Party for legal or other expenses related to such Indemnified Proceedings incurred after such notice of election to assume such defense except as provided below and except for the reasonable costs of investigating, monitoring or cooperating in such defense subsequently incurred by such Indemnified Party reasonably necessary in connection with the defense thereof.  Such Indemnified Party shall have the right to employ its counsel in any such Indemnified Proceeding, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless:

(i)           the employment of counsel by such Indemnified Party at the expense of the applicable Indemnifying Party has been authorized in writing by such Indemnifying Party;

(ii)           such Indemnified Party shall have reasonably concluded in its good faith (which conclusion shall be determinative unless a court determines that such conclusion was not reached reasonably and in good faith) that there is or may be a conflict of interest between the applicable Indemnifying Party and such Indemnified Party in the conduct of the defense of such Indemnified Proceeding or that there are or may be one or more different or additional defenses, claims, counterclaims, or causes of action available to such Indemnified Party (it being agreed that in any case referred to in this clause (ii) such Indemnifying Party shall not have the right to direct the defense of such Indem nified Proceeding on behalf of the Indemnified Party);

(iii)           the applicable Indemnifying Party shall not have employed counsel reasonably acceptable to the Indemnified Party, to assume the defense of such Indemnified Proceeding within a reasonable time after notice of the commencement thereof; provided, however, that (A) this clause (iii) shall not be deemed to constitute a waiver of any conflict of interest that may arise with respect to any such counsel, and (B) an Indemnified Party may not invoke this clause (iii) if such Indemnified Part y failed to timely object to such counsel pursuant to the first paragraph of this Section 10(d) above (it being agreed that in any case referred to in this clause (iii) such Indemnifying Party shall not have the right to direct the defense of such Indemnified Proceeding on behalf of the Indemnified Party); or

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(iv)           any counsel employed by the applicable Indemnifying Party shall fail to timely commence or reasonably conduct the defense of such Indemnified Proceeding and such failure has prejudiced (or is in immediate danger of prejudicing) the outcome of such Indemnified Proceeding (it being agreed that in any case referred to in this clause (iv) such Indemnifying Party shall not have the right to direct the defense of such Indemnified Proceeding on behalf of the Indemnified Party);

in each of which cases the fees and expenses of counsel for such Indemnified Party shall be at the expense of such Indemnifying Party.  Only one counsel shall be retained by all Indemnified Parties with respect to any Indemnified Proceeding, unless counsel for any Indemnified Party reasonably concludes in good faith (which conclusion shall be determinative unless a court determines that such conclusion was not reached reasonably and in good faith) that there is or may be a conflict of interest between such Indemnified Party and one or more other Indemnified Parties in the conduct of the defense of such Indemnified Proceeding or that there are or may be one or more different or additional defenses, claims, counterclaims, or causes or action available to such Indemnified Party.

(e)           Settlement.  Without the prior written consent of such Indemnified Party, such Indemnifying Party shall not settle or compromise, or consent to the entry of any judgment in, any pending or threatened Indemnified Proceeding, unless such settlement, compromise, consent or related judgment (i) includes an unconditional release of such Indemnified Party from all liability for Losses arising out of such claim, action, investigation, suit or other legal proceeding, (ii) provides for the payment of money damages as the sole relief for the claimant (whether at law or in equity), (iii) involves no admission of fact adverse to the Indemnified Party or finding or admissi on of any violation of law or the rights of any Person by the Indemnified Party, and (iv) is not in the nature of a criminal or regulatory action.  No Indemnified Party shall settle or compromise, or consent to the entry of any judgment in, any pending or threatened Indemnified Proceeding (A) in respect of which any payment would result hereunder or under any other Operative Document, (B) which includes an injunction that will adversely affect any Indemnifying Party, (C) which involves an admission of fact adverse to the Indemnifying Party or a finding or admission of any violation of law or the rights of any Person by the Indemnifying Party, or (D) which is in the nature of a criminal or regulatory action, without the prior written consent of the Indemnifying Party, such consent not to be unreasonably conditioned, withheld or delayed.

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Section 11.              No Petition.  Each of Lexicon and Holdings covenants and agrees that, prior to the date which is one year and one day after the Closing Date, it will not institute or join in the institution of any bankruptcy, insolvency, reorganization or similar proceeding against Symphony Icon.  The provisions of this Section 11 shall survive the termination of this Agreement.

Section 12.             Third-Party Beneficiary.  Each of the Parties agrees that each Symphony Fund shall be a third-party beneficiary of this Agreement.

Section 13.              Notices.  Any notice, request, demand, waiver, consent, approval or other communication which is required or permitted to be given to any Party shall be in writing addressed to the Party at its address set forth below and shall be deemed given (i) when delivered to the Party personally, (ii) if sent to the Party by facsimile transmission (promptly followed by a hard-copy delivered in accordance with this Section 13), when the transmitting Party obtains written proof of t ransmission and receipt; provided, however, that notwithstanding the foregoing, any communication sent by facsimile transmission after 5:00 PM (receiving Party’s time) or not on a Business Day shall not be deemed received until the next Business Day, (iii) when delivered by next Business Day delivery by a nationally recognized courier service, or (iv) if sent by registered or certified mail, when received, provided postage and registration or certification fees are prepaid and delivery is confirmed by a return receipt:

Lexicon:
	Lexicon Pharmaceuticals, Inc. 8800 Technology Forest Place The Woodlands, TX 77381-1160 Attn:   Arthur T. Sands, M.D., Ph.D. Facsimile:  (281) 863-8095
with copies to:
	Lexicon Pharmaceuticals, Inc. 8800 Technology Forest Place The Woodlands, TX 77381-1160 Attn:  Jeffrey L. Wade Facsimile:  (281) 863-8010
	and
	Lexicon Pharmaceuticals, Inc. 8800 Technology Forest Place The Woodlands, TX 77381-1160 Attn:  Brian T. Crum Facsimile:  (281) 863-8010

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Symphony Icon:
	Symphony Icon, Inc. 7361 Calhoun Place, Suite 325 Rockville, MD  20855 Attn:  Charles W. Finn, Ph.D. Facsimile:  (301) 762-6154
Holdings:
	Symphony Icon Holdings LLC 7361 Calhoun Place, Suite 325 Rockville, MD  20855 Attn:  Robert L. Smith, Jr. Facsimile:  (301) 762-6154
with copies to:
	Symphony Capital Partners, L.P. 875 Third Avenue, 3rd Floor New York, NY  10022 Attn:  Mark Kessel Facsimile:  (212) 632-5401
	and
	Symphony Strategic Partners, LLC 875 Third Avenue, 3rd Floor New York, NY  10022 Attn:  Mark Kessel Facsimile:  (212) 632-5401

or to such other address as such Party may from time to time specify by notice given in the manner provided herein to each other Party entitled to receive notice hereunder.

Section 14.            Governing Law; Consent to Jurisdiction and Service of Process.

(a)           This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York; except to the extent that this Agreement pertains to the internal governance of Symphony Icon or Holdings, and to such extent this Agreement shall be governed and construed in accordance with the laws of the State of Delaware.

(b)           Each of the Parties hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court and Delaware State court or federal court of the United States of America sitting in The City of New York, Borough of Manhattan or Wilmington, Delaware, and any appellate court from any jurisdiction thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the Parties hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court, any such Delaware State court or, to the fullest extent perm itted by law, in such federal court.  Each of the Parties agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement shall affect any right that any Party may otherwise have to bring any action or proceeding relating to this Agreement.

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(c)           Each of the Parties irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or federal court, or any Delaware State or federal court.  Each of the Parties hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.  Each of the parties hereby consents to service of process by mail.

Section 15.             Waiver of Jury Trial.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT.

Section 16.             Entire Agreement.  This Agreement (including any Annexes, Schedules, Exhibits or other attachments hereto) constitutes the entire agreement between the Parties with respect to the matters covered hereby and supersedes all prior and contemporaneous agreements, correspondence, discussion, and understanding with respect to such matters between the Parties, excluding the Operative Documents.

Section 17.             Amendment; Successors; Counterparts.

(a)           The terms of this Agreement shall not be altered, modified, amended, waived or supplemented in any manner whatsoever except by a written instrument signed by each of the Parties.

(b)           Except as set forth in Section 12, nothing expressed or implied herein is intended or shall be construed to confer upon or to give to any Person, other than the Parties, any right, remedy or claim under or by reason of this Agreement or of any term, covenant or condition hereof, and all the terms, covenants, conditions, promises and agreements contained herein shall be for the sole and exclusive benefit of the Parties and their successors and permitted assigns.

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(c)           This Agreement may be executed in one or more counterparts, each of which, when executed, shall be deemed an original but all of which, taken together, shall constitute one and the same Agreement.

Section 18.              Specific Performance.  The Parties acknowledge that irreparable damage would result if this Agreement were not specifically enforced, and they therefore agree that the rights and obligations of the Parties under this Agreement may be enforced by a decree of specific performance issued by a court of competent jurisdiction.  Such a remedy shall, however, not be exclusive, and shall be in addition to any other remedies which any Party may have under this Agreement or otherwise.  The Parties further acknowledge and agree that a decree of specific performance may not be an available remedy in all circumstances.

Section 19.              Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in a manner materially adverse to either party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto sh all negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

Section 20.             Tax Reporting.  The Parties acknowledge and agree that, for all federal and state income tax purposes for the period prior to the Closing Date:

(a)           (i) Holdings shall be treated as the owner of all the Equity Securities of Symphony Icon prior to the consummation of the Purchase Option; (ii) the Purchase Option shall be treated as an option to acquire all the Equity Securities of Symphony Icon; (iii) the Option Premium Shares shall be treated as an option premium payable in respect of the grant of the Purchase Option; and (iv) Symphony Icon shall be treated as the owner of all the Licensed Intellectual Property and shall be entitled to all deductions claimed under Section 174 of the Code in respect of the Licensed Intellectual Property to the extent of the amounts funded by Symphony Icon (which, for the avoidance of doubt, shall not preclude Lexicon from claiming deduct ions under Section 174 of the Code to which Lexicon is otherwise entitled); and

(b)           No Party shall take any tax position inconsistent with any position described in Section 20(a) above, except (i) in the event of a “determination” (as defined in Section 1313 of the Code) to the contrary, or (ii) in the event either of the Parties receives an opinion of counsel to the effect that there is no reasonable basis in law for such a position or that a tax return cannot be prepared based on such a position without being subject to substantial understatement penalties; provided, however, that in the case of Lexicon, such counsel shall be reasonably satisfactory to Holdings.

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Section 21.             Original Agreement.

(a)           The Original Agreement is hereby amended and superseded in its entirety and restated herein.  Such amendment and restatement is effective upon execution of this Agreement by the Parties.  Upon such execution, all provisions of, rights granted and covenants made in the Original Agreement are hereby superseded in their entirety by the provisions hereof and shall have no further force or effect.

(b)           Defined terms in the Operative Documents (other than this Agreement) that refer to definitions in this Agreement shall be deemed to refer to the definitions in the Original Agreement, except where the context requires otherwise.

Section 22.             Amendment to Annex A.

(a)           The definition of “LG103 Product Development Expenses” shall be added to Annex A and shall read, “means the amount of the expenses for which Lexicon would have been entitled to reimbursement under the Amended and Restated Research and Development Agreement if such expenses had been incurred pursuant to the Development Plan and Development Budget for the research or development of any LG103 Product (except for expenses incurred by Lexicon prior to the Closing Date and expenses incurred by Lexicon after the Closing Date that relate to the Phase 2a studies of LX1032 and IND-enabling studies of LX1033 that are currently in progress) and that have not been reimbursed or o therwise paid by a third party as Allowed Reimbursed Expenses.  For clarity, the reference to the Development Plan and Development Budget is intended only to reference the standards and practices historically applied by the Parties in accounting for and reimbursing expenses associated with the Programs (e.g., FTE rates and matters relating to when expenses incurred by Lexicon become reimbursable), and shall not in any way be deemed to restrict expenses to those that are included in the Development Plan and Development Budget as of the Closing Date.

(b)           The definition of “Maximum Contingent Payment Amount” shall be added to Annex A and shall read, “means Thirty Million Dollars (as increased by any Recapture Eligible Amount).”

(c)           The definition of “Payment Date” shall be added to Annex A and shall read, “means each date on which an installment of the Base Payment Balance or a Contingent Payment is paid to Holdings.”

(d)           The definition of “Purchase Option Agreement” in Annex A is hereby amended to read, “means the Purchase Option Agreement dated as of the Closing Date, among Lexicon, Holdings and Symphony Icon, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.”

[SIGNATURES FOLLOW ON NEXT PAGE]

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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the day and year first above written.

LEXICON PHARMACEUTICALS, INC.
By:	/s/ Arthur T. Sands
	Name:  Arthur T. Sands, M.D., Ph.D. Title:  President and Chief Executive Officer
SYMPHONY ICON HOLDINGS LLC
By:	Symphony Capital Partners, L.P.,
	its Manager
By:	Symphony Capital GP, L.P.,
	its general partner
By:	Symphony GP, LLC,
	its general partner
By:	/s/ Mark Kessel
	Name:  Mark Kessel Title:  Managing Member
SYMPHONY ICON, INC.
By:	/s/ Mark Kessel
	Name:  Mark Kessel Title:  Chairman of the Board

EXHIBIT 1

PURCHASE OPTION EXERCISE NOTICE

July 30, 2010

Attention:  Symphony Icon Holdings, LLC and Symphony Icon, Inc.

Ladies and Gentlemen:

Reference is hereby made to that certain Amended and Restated Purchase Option Agreement dated as of July 30, 2010 (the “Purchase Option Agreement”), by and among Lexicon Pharmaceuticals, Inc., a Delaware corporation (“Lexicon”), Symphony Icon Holdings LLC, a Delaware limited liability company, and Symphony Icon, Inc., a Delaware corporation.  Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned thereto in the Purchase Option Agreement.

Pursuant to Section 2(a) of the Purchase Option Agreement, Lexicon hereby irrevocably notifies you that it hereby exercises the Purchase Option.

Subject to the terms set forth therein, Lexicon hereby affirms the representations and warranties set forth in Section 3(a) of the Purchase Option Agreement, as of the date hereof.

Very truly yours,
LEXICON PHARMACEUTICALS, INC.
By:
	Name: Title:

EX-10.2

Exhibit 10.2

AMENDED AND RESTATED

REGISTRATION RIGHTS AGREEMENT

between

LEXICON PHARMACEUTICALS, INC.

and

SYMPHONY ICON HOLDINGS LLC

_______________________________

Dated as of July 30, 2010

_______________________________

Table of Contents

Section		Page
Section 1.	Definitions	1
Section 2.	Registration	2
Section 3.	Related Obligations	4
Section 4.	Obligations of the Investor(s)	7
Section 5.	Expenses of Registration	8
Section 6.	Indemnification	8
Section 7.	Contribution	13
Section 8.	Reports Under The Exchange Act	13
Section 9.	Assignment of Registration Rights	14
Section 10.	Amendment	14
Section 11.	Miscellaneous	14
Section 12.	Original Agreement	17

Exhibit A -- Form of Selling Stockholder Questionnaire

i

AMENDED AND RESTATED

REGISTRATION RIGHTS AGREEMENT

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of July 30, 2010, by and between LEXICON PHARMACEUTICALS, INC., a Delaware corporation (“Lexicon”), and SYMPHONY ICON HOLDINGS LLC, a Delaware limited liability company (together with its permitted successors, assigns and transferees, “Holdings”).

RECITALS:

WHEREAS, in connection with the exercise by Lexicon of the Purchase Option under the Amended and Restated Purchase Option Agreement, by and among Lexicon, Holdings and Symphony Icon, Inc., a Delaware corporation (“Symphony Icon”), of even date herewith (the “Purchase Option Agreement”), Lexicon may elect to issue shares of Lexicon’s common stock, par value $0.001 per share (“Lexicon Common Stock”) (such shares of Lexicon Common Stock when and if issued, the “Purchase O ption Shares”) to Holdings in partial payment of the Purchase Price in accordance with the terms of the Purchase Option Agreement;

WHEREAS, in connection with the Share Purchase Agreement by and between the parties hereto dated as of June 15, 2007 (the “Share Purchase Agreement”), Lexicon agreed, upon the terms and subject to the conditions of the Share Purchase Agreement, to issue and sell to Holdings certain shares of Lexicon Common Stock (the “Shares”);

WHEREAS, Lexicon and Holdings are parties to that certain Registration Rights Agreement, dated as of June, 15, 2007 (the “Original Agreement”), pursuant to which Lexicon has agreed to provide certain registration rights under the Securities Act of 1933, as amended (the “Securities Act”), and applicable state securities laws with respect to the Shares and the Purchase Option Shares; and

WHEREAS, the parties to the Original Agreement desire to amend and restate the Original Agreement and accept the rights and covenants hereof in lieu of their rights and covenants under the Original Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lexicon and Holdings (the “Parties”) hereby agree as follows:

Section 1.              Definitions.

(a)           Capitalized terms used but not defined herein are used as defined in the Purchase Option Agreement (including Annex A thereto).

(b)           As used in this Agreement, the following terms shall have the following meanings:

(i)           “Effective Registration Date” means the date that the Registration Statement (as defined below) is first declared effective by the SEC.

(ii)           “Investor(s)” means Holdings, any transferee or assignee thereof to whom Holdings assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9 and any transferee or assignee thereof to whom a transferee or assignee assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9.

(iii)           “Purchase Option Related Registrable Securities” means (i) the Purchase Option Shares, and (ii) any Lexicon Common Stock issued with respect to the Purchase Option Shares as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise.

(iv)           “register,” “registered,” and “registration” refer to a registration effected by preparing and filing one or more Registration Statements in compliance with the Securities Act and pursuant to Rule 415, and the declaration or ordering of effectiveness of such Registration Statement(s) by the SEC.

(v)           “Registrable Securities” means, collectively, the Share Purchase Related Registrable Securities and the Purchase Option Related Registrable Securities; provided, however, that such securities will cease to be Registrable Securities on the earlier of (A) the date as of which the Investor(s) may sell all such securities without restriction pursuant to Rule 144(b)(1) (or successor thereto) promulgated under the Securities Act, or (B) the date on which the Investor(s) shall have sold all such securities, in each case, such date shall be the earlier to occur following the final Payment Date on which Purchase Option Related Registrable Securities are issued in full or parti al payment of the Purchase Price.

(vi)           “Registration Statement” means a registration statement or registration statements of Lexicon filed under the Securities Act covering the Registrable Securities.

(vii)           “Rule 144” has the meaning set forth in Section 8 of this Agreement.

(viii)           “Rule 415” means Rule 415 under the Securities Act or any successor rule providing for offering securities on a continuous or delayed basis.

(ix)           “Share Purchase Related Registrable Securities” means (i) the Shares; and (ii) any shares of capital stock issued or issuable with respect to the Shares as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise.

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Section 2.              Registration.

(a)           Right to Registration.

(i)           Purchase Option Related Registration.  Subject to the terms of the Purchase Option Agreement, (A) Lexicon shall include all of the Purchase Option Related Registrable Securities to be issued to Holdings in full or partial payment of any installment of the Purchase Price in a Registration Statement that is effective under the Securities Act upon its filing with the SEC on the applicable Payment Date, or (B) if Lexicon is not eligible to include all such Purchase Option Related Registrable Securities in such effective Registration Statement, Lexicon shall (1) prepare and file with the SEC a short form Registration Statement on Form S-3 under the Securities Act (or any successo r form providing for forward incorporation by reference) permitting the immediate resale without restriction of all Purchase Option Related Registrable Securities to be issued to Holdings in full or partial payment of any installment of the Purchase Price prior to the Payment Date immediately upon determination of the number of Registrable Securities to be issued to Holdings on the relevant Payment Date; and (2) use its best efforts to have such Registration Statement declared effective prior to the Payment Date or as soon thereafter as possible, subject to adjustment as provided in Sections 2(c) and 2(d).

(ii)           Share Purchase Related Registration.  Lexicon has filed with the SEC a Registration Statement on Form S-3 (Reg. No. 333-144933) covering the resale of all of the Share Purchase Related Registrable Securities.  Such Registration Statement was declared effective on July 27, 2007 and is effective as of the date hereof.  The Registration Statement prepared pursuant to this Section 2(a)(ii) registered for resale at least that number of shares of Lexicon Common Stock equal to the number of Share Purchase Related Registrable Securities as of the trading day immediately preceding the date the Regis tration Statement was initially filed with the SEC, subject to adjustment as provided in Sections 2(c) and 2(d).

(b)           Reserved.

(c)           Sufficient Number of Shares Registered.  In the event the number of shares available under a Registration Statement filed pursuant to Section 2(a) is insufficient to cover all of the Registrable Securities required to be covered by such Registration Statement, Lexicon shall amend the applicable Registration Statement, or file a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover at least 100% of the number of such Registrable Securities (in the case of Purchase Option Related Registrable Securities, to be issued on the applicable Payment Date) as of the trading day immediately preceding the date of the filing of such amendment or new Registration Statement (subject to adjustment as provided in Section 2(d)), in each case, as soon as practicable, but in any event not later than fifteen (15) days after Lexicon becomes aware of the necessity therefor.  Lexicon shall use commercially reasonable efforts to cause such amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof.  For purposes of the foregoing provision, the number of shares available under a Registration Statement shall be deemed “insufficient to cover all of the Registrable Securities” if at any time the number of shares of Lexicon Common Stock available for resale under such Registration Statement is less than the number of Registrable Securities.

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(d)           Excluded Registrable Securities.  Notwithstanding any other provision of this Agreement to the contrary, Lexicon shall have no obligation to include under any Registration Statement the sale of any Registrable Securities for which an Investor (i) fails to furnish to Lexicon a Selling Stockholder Questionnaire or other reasonably requested information or documentation as provided by Section 4(a) or (ii) otherwise elects to exclude from such Registration Statement.

Section 3.              Related Obligations.  At such time as Lexicon is obligated to file a Registration Statement with the SEC pursuant to Section 2(a), (b) or (c), Lexicon will use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto (except at such tim es as Lexicon may be required to suspend the use of a prospectus forming a part of the Registration Statement pursuant to Section 3(1), at which time Lexicon’s obligations under Sections 3(a), (b), (c), (d), (i) and (k) may also be suspended, as required), Lexicon shall have the following obligations:

(a)           Lexicon shall use commercially reasonable efforts to keep each Registration Statement effective pursuant to Rule 415 at all times until the earliest of (i) the date as of which the Investor(s) may sell all of the Registrable Securities covered by such Registration Statement without restriction pursuant to Rule 144(b)(1) (or successor thereto) promulgated under the Securities Act, (ii) the date on which the Investor(s) shall have sold all the Registrable Securities covered by such Registration Statement, or (iii) in the case of a Registration Statement covering Purchase Option Related Registrable Securities, two (2) years after the final Payment Date on which Lexicon Common Stock was issued in full or partial payment of the Purchase Price (the “Registration Period”).

(b)           Lexicon shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement as may be necessary to keep such Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of Lexicon covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement.  In the case of amendme nts and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 3(b)) by reason of Lexicon filing a report on Form 10-K, Form 10-Q or Form 8-K or any analogous report under the Exchange Act, Lexicon shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements with the SEC on the same day on which the Exchange Act report is filed which created the requirement for Lexicon to amend or supplement such Registration Statement.

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(c)           Lexicon shall furnish to each Investor whose Registrable Securities are included in any Registration Statement, without charge, (i) promptly after the same is prepared and filed with the SEC, at least one (1) copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, and each preliminary prospectus; (ii) upon the effectiveness of any Registration Statement, ten (10) copies of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as such Investor may reasonably request); and (iii) such other documents, including copies of any preliminary or final prospectus, as such Investor may reasonably request from time to time in orde r to facilitate the disposition of the Registrable Securities owned by such Investor.

(d)           Lexicon shall use commercially reasonable efforts to (i) register and qualify, unless an exemption from registration and qualification applies, the resale by Investor(s) of the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws of such jurisdictions in the United States as Investor(s) reasonably request; (ii) prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period; and (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all tim es during the Registration Period; provided, however, that Lexicon shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction.  Lexicon shall promptly notify each Investor who holds Registrable Securities of the receipt by Lexicon of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or thr eatening of any proceeding for such purpose.

(e)           Lexicon shall notify each Investor in writing of the happening of any event, as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and, subject to Section 3(l) hereof, promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission.  Lexicon shall also promptly notify each Investor in writing when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective.

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(f)           Lexicon shall use commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment.

(g)           In the event that any Investor reasonably believes that it may be deemed to be an “underwriter” with respect to the Registrable Securities, upon the written request of such Investor in connection with such Investor’s due diligence requirements, if any, Lexicon shall make available for inspection by (i) such Investor, and (ii) any legal counsel, accountants or other agents retained by the Investor (collectively, “Inspectors”), all pertinent financial and other records, and pertinent corporate documents and properties of Lexicon (collectively, “Records”), as shall be reasonably dee med necessary by each Inspector, and cause Lexicon’s officers, directors and employees to supply all information which any Inspector may reasonably request; provided, however, that each Inspector and such Investor shall agree in writing to hold in strict confidence and shall not make any disclosure (except with respect to an Inspector, to the relevant Investor) or use of any Record or other information which Lexicon determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless the release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction.  Each Investor agrees that it shall, upon learning that disclosure of such Records is required or is sought in or by a court or governmental body of competent jurisdiction or through other means , give prompt notice to Lexicon and allow Lexicon, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential.  Nothing herein (or in any other confidentiality agreement between Lexicon and any Investor) shall be deemed to limit the Investor(s)’ ability to sell Registrable Securities in a manner which is otherwise consistent with applicable laws and regulations.

(h)           Lexicon shall hold in confidence and not make any disclosure of information concerning an Investor provided to Lexicon unless (i) disclosure of such information is necessary to comply with federal or state securities laws or the rules of any securities exchange or trading market on which the Lexicon Common Stock is listed or traded, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, or (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction.  Lexicon agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

(i)           Lexicon shall use commercially reasonable efforts either to (i) cause all the Registrable Securities covered by a Registration Statement to be listed on each securities exchange on which securities of the same class or series issued by Lexicon are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (ii) secure designation and quotation of all the Registrable Securities covered by a Registration Statement on the NASDAQ Global Market.  Lexicon shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(i).

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(j)           Lexicon shall cooperate with the Investor(s) who hold Registrable Securities being offered and, to the extent applicable, facilitate the timely preparation and delivery of certificates representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Investor(s) may reasonably request and registered in such names as the Investor(s) may request.

(k)           If requested by an Investor, Lexicon shall (i) as soon as practicable incorporate in a prospectus supplement or post-effective amendment such information as an Investor reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering and (ii) as soon as practicable make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment.

(l)           Notwithstanding anything to the contrary herein, at any time after the Registration Statement has been declared effective by the SEC, Lexicon may delay or suspend the effectiveness of any Registration Statement or the use of any prospectus forming a part of the Registration Statement due to the non-disclosure of material, non-public information concerning Lexicon the disclosure of which at the time is not, in the good faith opinion of Lexicon, in the best interest of Lexicon (a “Grace Period”); provided, that Lexicon shall promptly notify the Investor(s) in writing of the existence of a Grace Period in confor mity with the provisions of this Section 3(l) and the date on which the Grace Period will begin (such notice, a “Commencement Notice”); and, provided further, that no Grace Period shall exceed thirty (30) consecutive days, and such Grace Periods shall not exceed an aggregate total of ninety (90) days during any three hundred sixty five (365) day period.  For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date specified by Lexicon in the Commencement Notice and shall end on and include the date the Investor(s) receive written notice of the termination of the Grace Period by Lexicon (which notice may be contained in the Commencement Notice).  The provisions of Section 3(f) hereof shall not be applicable during any Gra ce Period.  Upon expiration of the Grace Period, Lexicon shall again be bound by the first sentence of Section 3(e) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable.  Notwithstanding anything to the contrary, Lexicon shall cause its transfer agent to deliver unlegended shares of Lexicon Common Stock to a transferee of an Investor in accordance with the terms of the Share Purchase Agreement in connection with any sale of Registrable Securities with respect to which an Investor has entered into a contract for sale, and delivered a copy of the prospectus included as part of the applicable Registration Statement, prior to the Investor’s receipt of the notice of a Grace Period and for which the Investor has not yet settled.

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Section 4.               Obligations of the Investor(s).

(a)           At least seven (7) Business Days prior to the first anticipated filing date of a Registration Statement, Lexicon shall notify each Investor in writing of the information Lexicon requires from each such Investor if such Investor elects to have any of such Investor’s Registrable Securities included in such Registration Statement and provide each such Investor with a copy of Lexicon’s then-current selling stockholder questionnaire (a copy of which is attached as Exhibit A hereto, a “Selling Stockholder Questionnaire”).  It shall be a condition precedent to the obligations of Lexicon to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to Lexicon a completed Selling Stockholder Questionnaire, along with such other information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as may reasonably be required to effect the effectiveness of the registration of such Registrable Securities, and shall execute other such documents in connection with such registration as Lexicon may reasonably request.

(b)           Each Investor, by such Investor’s acceptance of the Registrable Securities, agrees to cooperate with Lexicon as reasonably requested by Lexicon in connection with the preparation and filing of any Registration Statement hereunder, unless such Investor has notified Lexicon in writing of such Investor’s election to exclude all of such Investor’s Registrable Securities from such Registration Statement.

(c)           Each Investor agrees that, upon receipt of any notice from Lexicon of the happening of any event of the kind described in Section 3(f) or the first sentence of Section 3(e), such Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until such Investor’s receipt of the copies of the supplemented or amended prospectus contemplated by the second sentence of Section 3(e) or receipt of notice that no supplement or amendment is required.

(d)           Each Investor covenants and agrees that it will comply with any applicable prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to a Registration Statement.

Section 5.              Expenses of Registration.  All reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3 hereof, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and disbursements of counsel for Lexicon shall be paid by Lexicon.  All underwriti ng discounts and selling commissions applicable to the sale of the Registrable Securities shall be paid by the Investor(s), provided, however, that Lexicon shall reimburse the Investor(s) for the reasonable actual fees and disbursements of one legal counsel designated by the holders of at least a majority of the Registrable Securities in connection with registration, filing or qualification pursuant to Sections 2 and 3 of this Agreement, which amount shall be limited to $25,000 in total over the term of this Agreement.

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Section 6.               Indemnification.  In the event any Registrable Securities are included in a Registration Statement under this Agreement:

(a)           To the fullest extent permitted by law, Lexicon will, and hereby does, indemnify and hold harmless each Investor, the directors, officers, partners, members, employees, agents, representatives of, and each Person, if any, who controls any Investor within the meaning of the Securities Act or the Exchange Act (each, an “Investor Indemnified Person”), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or several, (collectively, “Claims”), incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an Indemnified Person is or may be a party thereto (“Indemnified Damages”), to which any of them may become subject to the extent that such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a prospectus, a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue Sky Fili ng”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the Effective Registration Date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if Lexicon files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in the light of the circumstances under which the statements therein were made, not misleading; (iii) any violation or alleged violation by Lexicon of any federal, state or common law, rule or regulation applicable to Lexicon in connection with any Registration Statement, prospectus or any preliminary prospectus, any amendment or supplement thereto, or the issuance of any Registrable Sec urities to Holdings; or (iv) any material violation of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, “Violations”).  Subject to Section 6(c), Lexicon shall reimburse the Investor Indemnified Persons, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim.  Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a):  (A) shall not apply to a Claim by an Investor Indemnified Person arising out of or based upon a Violation that occurs in reliance upon and in conformity with information furnished in writing to Lexicon by or on behalf of any Investor Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto if such information was timely made available by Lexicon pursuant to Section 3(c); (B) with respect to any preliminary prospectus, shall not inure to the benefit of any such Person from whom the Person asserting any such Claim purchased the Registrable Securities that are the subject thereof (or to the benefit of any Person controlling such Person) if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected in the prospectus, as then amended or supplemented, if such prospectus was timely made available by Lexicon pursuant to Section 0;3(d), and the Investor Indemnified Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a violation and such Investor Indemnified Person, notwithstanding such advice, used it or failed to deliver the correct prospectus as required by the Securities Act and such correct prospectus was timely made available pursuant to Section 3(d); (C) shall not be available to the extent such Claim is based on a failure of the Investor Indemnified Person to deliver or to cause to be delivered the prospectus made available by Lexicon, including a corrected prospectus, if such prospectus or corrected prospectus was timely made available by Lexicon pursuant to Section 3(d); and (D) along with the agreement with respect to contribution contained in Section 7, shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of Lexicon, which consent shall not be unreasonably withheld or delayed.  Such indemnity shall remain full force and effect regardless of any investigation made by or on behalf of the Investor Indemnified Person and shall survive the transfer of the Registrable Securities by the Investor(s) pursuant to Section 9.  Lexicon shall also provide customary indemnities to any underwriters of the Registrable Securities in an offering or sale of such Registrable Securities by any Investor, their officers, directors and employees and each Person who controls such underwriters (within the meaning of Section 15 of the Securities Act) to the same extent as provided above with respect to the indemnification of Investor Indemnified Persons.

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(b)           In connection with any Registration Statement in which an Investor is participating, each such Investor agrees to severally and not jointly indemnify, and hold harmless, to the same extent and in the same manner as is set forth in Section 6(a), Lexicon, each of its directors, each of its officers who signs the Registration Statement, each Person, if any, who controls Lexicon within the meaning of the Securities Act or the Exchange Act, and Lexicon’s general counsel to the extent that such counsel delivers one or more legal opinions in conjunction with the preparation and filing of the Registration Statement (each, a “Company Indemnified Person”), against any Claim or Indemnified Damages to which any of them may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to Lexicon by such Investor expressly for use in connection with such Registration Statement; and, subject to Section 6(d), such Investor will reimburse, promptly as such expenses are incurred and are due and payable, any legal or other expenses reasonably incurred by a Company Indemnified Person in connection with investigating or defending any such Claim; provided, however, that the indemn ity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld or delayed; provided, further, however, that an Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Company Indemnified Person and shall survive the transfer of the Registrable Securitie s by the Investor(s) pursuant to Section 9.  Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(b) with respect to any preliminary prospectus shall not inure to the benefit of any Company Indemnified Person if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented.

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(c)           If either an Investor Indemnified Person or a Company Indemnified Person (an “Indemnified Person”) proposes to assert a right to be indemnified under this Section 6, such Indemnified Person shall notify either Lexicon or the relevant Investor(s), as applicable (the “Indemnifying Person”), promptly after receipt of notice of commencement of any action, suit or proceeding against such Indemnified Person (an “Indemnified Proceeding”) in respect of which a Claim is to be made under this Section 6, or the incurrence or realization of any Indemnified Damages in respect of which a Claim is to be made under this Section 6, of the commencement of such Indemnified Proceeding or of such incurrence or realization, enclosing a copy of all relevant documents, including all papers served and claims made, but the omission to so notify the applicable Indemnifying Person promptly of any such Indemnified Proceeding or incurrence or realization shall not relieve (x) such Indemnifying Person from any liability that it may have to such Indemnified Person under this Section 6 or otherwise, except, as to such Indemnifying Person’s liability under this Section 6, to the extent, but only to the e xtent, that such Indemnifying Person shall have been prejudiced by such omission, or (y) any other Indemnifying Person from liability that it may have to any Indemnified Person under the Operative Documents.

(d)           In case any Indemnified Proceeding shall be brought against any Indemnified Person and it shall notify the applicable Indemnifying Person of the commencement thereof as provided by Section 6(c) and such Indemnifying Person shall be entitled to participate in, and provided such Indemnified Proceeding involves a claim solely for money damages and does not seek an injunction or other equitable relief against the Indemnified Person and is not a criminal or regulatory action, to assume the defense of, such Indemnified Proceeding with counsel reasonably satisfactory to such Indemnified Person, and after notice from such Indemnifying Person to such Indemnified Person of such Indemnifyin g Person’s election so to assume the defense thereof and the failure by such Indemnified Person to object to such counsel within ten (10) Business Days following its receipt of such notice, such Indemnifying Person shall not be liable to such Indemnified Person for legal or other expenses related to such Indemnified Proceedings incurred after such notice of election to assume such defense except as provided below and except for the reasonable costs of investigating, monitoring or cooperating in such defense subsequently incurred by such Indemnified Person reasonably necessary in connection with the defense thereof.  Such Indemnified Person shall have the right to employ its counsel in any such Indemnified Proceeding, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless:

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(i)           the employment of counsel by such Indemnified Person at the expense of the applicable Indemnifying Person has been authorized in writing by such Indemnifying Person;

(ii)           such Indemnified Person shall have reasonably concluded in its good faith (which conclusion shall be determinative unless a court determines that such conclusion was not reached reasonably and in good faith) that there is or may be a conflict of interest between the applicable Indemnifying Person and such Indemnified Person in the conduct of the defense of such Indemnified Proceeding or that there are or may be one or more different or additional defenses, claims, counterclaims, or causes of action available to such Indemnified Person (it being agreed that in any case referred to in this clause (ii) such Indemnifying Person shall not have the right to direct the defense of such Indem nified Proceeding on behalf of the Indemnified Person);

(iii)           the applicable Indemnifying Person shall not have employed counsel reasonably acceptable to the Indemnified Person, to assume the defense of such Indemnified Proceeding within a reasonable time after notice of the commencement thereof; provided, however, that (A) this clause (iii) shall not be deemed to constitute a waiver of any conflict of interest that may arise with respect to any such counsel, and (B) an Indemnified Person may not invoke this clause (iii) if such Indemnified Person failed to timely object to such counsel pursuant to the first paragraph of this Section 6(d) above (it being agreed that in any case referred to in this clause (iii) such Indemnifying Party shall not have the right to direct the defense of such Indemnified Proceeding on behalf of the Indemnified Party); or

(iv)           any counsel employed by the applicable Indemnifying Person shall fail to timely commence or reasonably conduct the defense of such Indemnified Proceeding, and such failure has prejudiced (or in the reasonable judgment of the Indemnified Person, is in immediate danger of prejudicing) the outcome of such Indemnified Proceeding (it being agreed that in any case referred to in this clause (iv) such Indemnifying Party shall not have the right to direct the defense of such Indemnified Proceeding on behalf of the Indemnified Party);

in each of which cases the fees and expenses of counsel for such Indemnified Person shall be at the expense of such Indemnifying Person.  Only one counsel shall be retained by all Indemnified Persons with respect to any Indemnified Proceeding, unless counsel for any Indemnified Person reasonably concludes in good faith (which conclusion shall be determinative unless a court determines that such conclusion was not reached reasonably and in good faith) that there is or may be a conflict of interest between such Indemnified Person and one or more other Indemnified Persons in the conduct of the defense of such Indemnified Proceeding or that there are or may be one or more different or additional defenses, claims, counterclaims, or causes or action available to such Indemnified Person.

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(e)           Without the prior written consent of such Indemnified Person, such Indemnifying Person shall not settle or compromise, or consent to the entry of any judgment in, any pending or threatened Indemnified Proceeding, unless such settlement, compromise, consent or related judgment (i) includes an unconditional release of such Indemnified Person from all liability for Losses arising out of such claim, action, investigation, suit or other legal proceeding, (ii) provides for the payment of money damages as the sole relief for the claimant (whether at law or in equity), (iii) involves no admission of fact adverse to such Indemnified Person or finding or admission of any violation of law or the rights of any Person by the Indemnified Person, a nd (iv) is not in the nature of a criminal or regulatory action.  No Indemnified Person shall or compromise, or consent to the entry of any judgment in, any pending or threatened Indemnified Proceeding (A) in respect of which any payment would result hereunder or under any other Operative Document, (B) which includes an injunction that will adversely affect any Indemnifying Person, (C) which involves an admission of fact adverse to any Indemnifying Person or finding or admission of any violation of law or the rights of any Person by the Indemnifying Person, or (D) which is in the nature of a criminal or regulatory action, without the prior written consent of the Indemnifying Person, such consent not to be unreasonably conditioned, withheld or delayed.

(f)           The indemnification required by this Section 6 shall be made by periodic payments of the amount of Claims during the course of the investigation or defense, as and when Indemnified Damages are incurred.

Section 7.              Contribution.  To the extent any indemnification by an Indemnifying Person is prohibited or limited by law, such Indemnifying Person agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no Person involved in the sale o f Registrable Securities which Person is guilty of fraudulent misrepresentation (within the meaning Section 11(f) of the Securities Act) in connection with such sale shall be entitled to contribution from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) the obligation to contribute shall be several and not joint and contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities pursuant to such Registration Statement.

Section 8.             Reports Under The Exchange Act.  With a view to making available to the Investor(s) the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the Investor(s) to sell securities of Lexicon to the public without registration (“Rule 144”), Lexicon agrees to use commercially reasonable efforts to:

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(a)           make and keep public information available, as those terms are understood and defined in Rule 144;

(b)           file with the SEC in a timely manner all reports and other documents required of Lexicon under the Securities Act and the Exchange Act so long as Lexicon remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

(c)           furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by Lexicon, if true, that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of Lexicon and such other reports and documents so filed by Lexicon, and (iii) such other information as may be reasonably requested to permit the Investor(s) to sell such securities pursuant to Rule 144 without registration.

Section 9.             Assignment of Registration Rights.  The rights under this Agreement shall be automatically assignable in full or in part by the Investor(s) to any transferee of all or a portion of such Investor’s Registrable Securities if: (i) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to Lexicon within a reasonable time after such assignment; (ii) Lexicon is, within a reasonable time after such transfer or assignment, furnished with written notice of (A) the name and address of such transferee or assignee, and (B) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws; (iv) at or before the time Lexicon receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with Lexicon to be bound by all of the provisions contained herein, including the obligation to provide Lexicon with a completed Selling Stockholder Questionnaire, as applicable; and (v) in the case of Share Purchase Related Registrable Securities, such transfer shall have been made in accordance with the applicable transfer requirements set forth in Article VI of the Share Purchase Agreement.

Section 10.             Amendment.

(a)           The terms of this Agreement shall not be altered, modified, amended, waived or supplemented in any manner whatsoever except by a written instrument signed by each of (i) Lexicon and (ii) Investor(s) holding a majority of the Registrable Securities (other than in the case of any alteration, modification, amendment, waiver or supplement which affects any individual Investor in a manner that is less favorable or more detrimental to such Investor than to the other Investor(s) solely based on the face of such alteration, modification, amendment, waiver or supplement and without regard to the number of Registrable Securities held by such Investor, in which case, such alteration, modification, amendment, waiver or supplement must also be approve d by such less favorably or more detrimentally treated Investor).

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(b)           Notwithstanding Section 10(a), any party hereto may waive, solely with respect to itself, any one or more of its rights hereunder without the consent of any other party hereto; provided that no such waiver shall be effective unless set forth in a written instrument executed by the party against whom such waiver is to be effective.

Section 11.             Miscellaneous.

(a)           A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities.  If Lexicon receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, Lexicon shall act upon the basis of instructions, notice or election received from the such record owner of such Registrable Securities.

(b)           Any notice, request, demand, waiver, consent, approval or other communication which is required or permitted to be given to any Party shall be in writing addressed to the Party at its address set forth below and shall be deemed given (i) when delivered to the Party personally, (ii) if sent to the Party by facsimile transmission (promptly followed by a hard-copy delivered in accordance with this Section 11(b)), when the transmitting Party obtains written proof of transmission and receipt; provided, however, that notwithstanding the foregoing, any communication sent by facsimile transmission after 5:00 PM (receiving Party’s time) or not on a Business Day shall not be deemed r eceived until the next Business Day, (iii) when delivered by next Business Day delivery by a nationally recognized courier service, or (iv) if sent by registered or certified mail, when received, provided postage and registration or certification fees are prepaid and delivery is confirmed by return receipt:

If to Lexicon:
	Lexicon Pharmaceuticals, Inc. 8800 Technology Forest Place The Woodlands, TX 77381-1160 Attn: Arthur T. Sands, M.D., Ph.D. Facsimile:  (281) 863-8095
with copies to:
	Lexicon Pharmaceuticals, Inc. 8800 Technology Forest Place The Woodlands, TX 77381-1160 Attn:  Jeffrey L. Wade Facsimile:  (281) 863-8010
and

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	Lexicon Pharmaceuticals, Inc. 8800 Technology Forest Place The Woodlands, TX 77381-1160 Attn:  Brian T. Crum Facsimile:  (281) 863-8010
If to Holdings:
	Symphony Icon Holdings LLC 7361 Calhoun Place, Suite 325 Rockville, MD  20855 Attn:  Robert L. Smith, Jr. Facsimile:  (301) 762-6154
with a copy to:
	Symphony Capital Partners, L.P. 875 Third Avenue, 3rd Floor New York, NY  10022 Attn:  Mark Kessel Facsimile:  (212) 632-5401
and
	Symphony Strategic Partners, LLC 875 Third Avenue, 3rd Floor New York, NY  10022 Attn:  Mark Kessel Facsimile:  (212) 632-5401

or to such other address as such party may from time to time specify by notice given in the manner provided herein to each other party entitled to receive notice hereunder.

(c)           This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York; except to the extent that this Agreement pertains to the internal governance of Holdings, and to such extent this Agreement shall be governed and construed in accordance with the laws of the State of Delaware.

(d)           Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court, any Delaware State court or federal court of the United States of America sitting in the City of New York, Borough of Manhattan or Wilmington, Delaware, and any appellate court from any jurisdiction thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court, any such Delaware State court or, to the fullest extent perm itted by law, in such federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement shall affect any right that any party hereto may otherwise have to bring any action or proceeding relating to this Agreement.

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(e)           Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or federal court, or any Delaware State or Federal court.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.  Each of the parties hereby consent to service of process by mail.

(f)           WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT.

(g)           Entire Agreement.  This Agreement (including any Annexes, Schedules, Exhibits or other attachments hereto) constitutes the entire agreement between the parties hereto with respect to the matters covered hereby and supersedes all prior and contemporaneous agreements, correspondence, discussion and understandings with respect to such matters between the parties hereto, excluding the Operative Documents.

(h)           Successors; Assignment; Counterparts.

(i)           Nothing expressed or implied herein is intended or shall be construed to confer upon or to give to any Person, other than the parties hereto, any right, remedy or claim under or by reason of this Agreement or of any term, covenant or condition hereof, and all the terms, covenants, conditions, promises and agreements contained herein shall be for the sole and exclusive benefit of the parties hereto and their successors and permitted assigns provided, however, that, subject to the requirements of Section 9, this Agreement shall inure to the benefit of an d be binding upon the permitted successors and assigns of each of the parties hereto.

(ii)           This Agreement may be executed in one or more counterparts, each of which, when executed, shall be deemed an original but all of which taken together shall constitute one and the same Agreement.

(i)           Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

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(j)           All consents and other determinations required to be made by the Investor(s) pursuant to this Agreement shall be made, unless otherwise specified in this Agreement, by Investor(s) holding at least a majority of the Registrable Securities.

Section 12.           Original Agreement.  The Original Agreement is hereby amended and superseded in its entirety and restated herein.  Such amendment and restatement is effective upon execution of this Agreement by the parties hereto.  Upon such execution, all provisions of, rights granted and covenants made in the Original Agreement are hereby superseded in their entirety by the provisions hereof and shall have no further force or effect.

[SIGNATURES FOLLOW ON NEXT PAGE]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers or other representatives thereunto duly authorized, as of the date first above written.

LEXICON PHARMACEUTICALS, INC.
By:	/s/ Arthur T. Sands
Name:	Arthur T. Sands, M.D., Ph.D.
Title:	President and Chief Executive Officer

SYMPHONY ICON HOLDINGS LLC
By:	Symphony Capital Partners, L.P., its Manager
By:	Symphony Capital GP, L.P., its general partner
By:	Symphony GP, LLC, its general partner

By:	/s/ Mark Kessel
Name:	Mark Kessel
Title:	Managing Member

EXHIBIT A

FORM OF SELLING STOCKHOLDER QUESTIONNAIRE

NOTICE

The undersigned beneficial owner (the “Selling Securityholder”) of Registrable Securities hereby gives notice to Lexicon Pharmaceuticals, Inc.  (the “Company”) of its intention to sell or otherwise dispose of Registrable Securities beneficially owned by it and listed below in Item 3 (unless otherwise specified under such Item 3) pursuant to the Registration Statement, pursuant to the terms of the Amended and Restated Registration Rights Agreement (the “Registration Ri ghts Agreement”) dated as of July 30, 2010, by and between Lexicon and Symphony Icon Holdings LLC (“Holdings”).  Capitalized terms used but not defined herein are used as defined in Registration Rights Agreement.

The undersigned hereby gives notice to the Company of its intention to sell the Registrable Securities listed in Item 3 below, pursuant to the Registration Statement and, provides the following information to the Company and represents and warrants that such information is accurate and complete:

QUESTIONNAIRE

1. Full legal name of Selling Securityholder:  ___________________

(a) Full legal name of registered holder of the Registrable Securities (if not the same as (1) above) through which Registrable Securities listed in Item 3 below are held:  ___________________________

(b) Full legal name of DTC participant (if applicable and if not the same as (1) above) through which Registrable Securities listed in Item 3 below are held:  ___________________________

(c) Status (yes/no) of Selling Securityholder as a registered broker-dealer or an affiliate of a registered broker-dealer (please describe to the extent applicable):  ______________________________

2.           Address for notices to Selling Securityholder:  ______________________

Telephone: _____________________

Fax: _____________________

Contact Per:son: _____________________

3.           Beneficial Ownership of Registrable Securities:

(a) Type and number of Registrable Securities beneficially owned:   _____________________

(b) CUSIP No(s).  of such Registrable Securities beneficially owned:

4. Beneficial ownership of other securities of the Company owned by the Selling Securityholder.

Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the Registrable Securities listed above in Item 3.

(a) Type and amount of other securities beneficially owned by the Selling Securityholder:

(b) CUSIP No(s).  of such other securities beneficially owned:

5. Relationships with the Company:

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% or more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

State any exceptions here:

6.           Plan of Distribution:

Except as set forth below, the undersigned (including its donees, distributees or pledgees) intends to distribute the Registrable Securities listed above in Item 3 pursuant to the Registration Statement only as follows (if at all).  Such Registrable Securities may be sold from time to time directly by the undersigned or, alternatively, through underwriters, broker-dealers or agents.  If the Registrable Securities are sold through underwriters, broker-dealers or agents, the Selling Securityholder will be responsible for any related underwriting discounts or commissions or agents’ commissions.  Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market pri ces at the time of sale, at varying prices determined at the time of sale or at negotiated prices.  The selling stockholders may sell their shares by one or more of or a combination of the following methods: (i) purchases by a broker-dealer as principal and resale by such broker-dealer for its own account pursuant to this prospectus; (ii) ordinary brokerage transactions and transactions in which the broker solicits purchasers; (iii) block trades in which the broker-dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; (iv) an over-the-counter distribution in accordance with the rules of the Nasdaq Global Market; (v) in privately negotiated transactions; and (vi) in options transactions.  The undersigned may also sell Registrable Securities short and deliver Registrable Securities to close out short positions, or loan or pledge Registrable Securities to broker-dealers that in turn may sell s uch securities.

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State any exceptions here:

Note:  In no event will such method(s) of distribution take the form of an underwritten offering of the Registrable Securities without the prior agreement of the Company.

The undersigned acknowledges its obligation to comply with the provisions of the Exchange Act and the rules thereunder relating to stock manipulation, particularly Regulation M thereunder (or any successor rules or regulations), in connection with any offering of Registrable Securities pursuant to the Registration Rights Agreement.  The undersigned agrees that neither it nor any person acting on its behalf will engage in any transaction in violation of such provisions.

In the event that the Selling Securityholder transfers all or a portion of the Registrable Securities listed in Item 3 above after the date on which such information is provided to the Company, the Selling Securityholder agrees to notify the transferee(s) at the time of the transfer of its rights and obligations under this Questionnaire and the Registration Rights Agreement.

The Selling Securityholder hereby acknowledges its obligations under the Registration Rights Agreement to indemnify and hold harmless certain persons as set forth therein.

Pursuant to the Registration Rights Agreement, the Company has agreed under certain circumstances to indemnify the Selling Securityholder against certain liabilities.

In accordance with the undersigned’s obligation under the Registration Rights Agreement to provide such information as may be required by law for inclusion in the Registration Statement, the undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective, including, without limitation, any change in the undersigned’s beneficial ownership of Registrable Securities.

All notices hereunder and pursuant to the Registration Rights Agreement shall be made in writing to the Selling Securityholder at the address set forth in Section 2 above, and to the Company at the address set forth below.

By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 6 above and the inclusion of such information in the Registration Statement and the related prospectus.  The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus.

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Once this Questionnaire is executed by the Selling Securityholder and delivered to the Company, the terms of this Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives and assigns of the Company and the Selling Securityholder (with respect to the Registrable Securities beneficially owned by such Selling Securityholder and listed in Item 3 above).  This Agreement shall be governed in all respects by the laws of the State of New York.

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Questionnaire to be executed and delivered either in person or by its duly authorized agent.

Dated:	Beneficial Owner:
	By:
	Name:
	Title:

PLEASE RETURN THE COMPLETED AND EXECUTED QUESTIONNAIRE TO LEXICON PHARMACEUTICALS, INC.  AT:

8800 Technology Forest Place

The Woodlands, TX 77381-1160

Attn:  General Counsel

Facsimile:  (281) 863-8010

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