TEXAS BIOTECHNOLOGY CORP /DE/
TERMINATION AGREEMENT - STEPHEN L. MUELLER
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>6
<FILENAME>h03454exv10w7.txt
<DESCRIPTION>TERMINATION AGREEMENT - STEPHEN L. MUELLER
<TEXT>
<PAGE>
                                                                    Exhibit 10.7

                              TERMINATION AGREEMENT

      THIS TERMINATION AGREEMENT (this "Agreement") is made and entered into
this 20th day of March, 2003, by and between Texas Biotechnology Corporation, a
Delaware corporation having its principal executive office at 7000 Fannin,
Houston, Texas 77030 (hereinafter referred to as the "Company"), and Stephen L.
Mueller (hereinafter referred to as the "Executive").

                              W I T N E S S E T H:

      WHEREAS, the Company desires to employ the Executive in an executive
capacity and the Executive desires to enter the Company's employ.

      NOW, THEREFORE, for and in consideration of the mutual promises, covenants
and obligations contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and the
Executive hereby agree as follows:

1. Certain Definitions.

      As used in this Agreement, the following terms have the meanings
prescribed below:

      AAA shall have the meaning assigned thereto in Section 12.13 hereof

      Affiliate is used in this Agreement to define a relationship to a person
or entity and means a person or entity who, directly or indirectly through one
or more intermediaries, controls, is controlled by, or is under common control
with, such person or entity.

      Agreement shall have the meaning assigned thereto in the preamble.

      Annual Bonus shall have the meaning assigned thereto in Section 4.2
hereof.

      Base Salary shall have the meaning assigned thereto in Section 4.1 hereof.

      Board means the Board of Directors of the Company.

      Bonus Payment shall have the meaning assigned thereto in Section 11.2
hereof.

      Cause shall have the meaning assigned thereto in Section 5.3 hereof.

      Change in Control of the Company shall be deemed to have occurred if any
of the events set forth in any one of the following paragraphs shall occur:

      (a) any "person" (as defined in section 3(a)(9) of the Exchange Act, and
as such term is modified in sections 13(d) and 14(d) of the Exchange Act),
excluding the Company or any of
<PAGE>

its subsidiaries, a trustee or any fiduciary holding securities under an
employee benefit plan of the Company or any of its subsidiaries, an underwriter
temporarily holding securities pursuant to an offering of such securities or a
corporation owned, directly or indirectly, by stockholders of the Company in
substantially the same proportions as their ownership of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the Company's then outstanding securities;
or

      (b) during any period of not more than two consecutive years, individuals
who at the beginning of such period constitute the Board and any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (a), (c) or (d) of
this definition) whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or

      (c) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than (i) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or other fiduciary
holder of securities under an employee benefit plan of the Company, at least 50%
of the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
(ii) a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person acquires more than 50% of
the combined voting power of the Company's then outstanding securities; or

      (d) the stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets.

      Notwithstanding the foregoing, no Change in Control shall be deemed to
have occurred if there is consummated any transaction or series of integrated
transactions immediately following which, in the judgment of the Compensation
Committee of the Board, the holders of the Common Stock, immediately prior to
such transaction or series of transactions continue to have the same
proportionate ownership in an entity which owns all or substantially all of the
assets of the Company immediately prior to such transaction or series of
transactions. Except during a Potential Change in Control of the Company, the
Board may (i) deem any other corporate event affecting the Company (other than
those described in clauses (a)-(d) of this definition) to be a "Change in
Control," and (ii) may amend this definition of "Change in Control" in
connection with an identical amendment being made to termination agreements
entered into by the Company and all of its senior executive officers.

      Code means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated by the Internal Revenue Service thereunder, all as
in effect from time to time during the Employment Period.


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<PAGE>

      Common Stock means the Company's common stock, par value $.05 per share.

      Company means Texas Biotechnology Corporation, a Delaware corporation, the
principal executive office of which is located at 7000 Fannin, Houston, Texas
77030.

      Competing Business means any individual, business, firm, company,
partnership, joint venture, organization, or other entity that markets or has
entered clinical development of any product addressing the same disease target
as a product discovered by, or licensed to, the Company which is either (i) in
Phase III of clinical development, (ii) pending approval at U.S. Food & Drug
Administration or (iii) marketed by the Company or its licensee.

      Confidential Information shall have the meaning assigned thereto in
Section 8.2 hereof.

      Date of Termination means the earliest to occur of (i) the date of the
Executive's death or (ii) the date of receipt of the Notice of Termination, or
such later date as may be prescribed in the Notice of Termination in accordance
with Section 5.6 hereof.

      Disability means an illness or other disability that prevents the
Executive from discharging his responsibilities under this Agreement for a
period of 180 consecutive calendar days, or an aggregate of 180 calendar days in
any calendar year, during the Employment Period, all as determined in good faith
by the Board (or a committee thereof).

      Effective Date means the date of execution hereof.

      Employment Period shall have the meaning assigned thereto in Section 3
hereof.

      Executive means Stephen L. Mueller, an individual residing in Houston,
Texas.

      Exchange Act means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the Securities and Exchange Commission
thereunder, all as in effect from time to time during the Employment Period.

      Excise Taxes shall have the meaning assigned thereto in Section 11.1
hereof.

      Good Reason shall have the meaning assigned thereto in Section 5.5 hereof.

      Initial Term shall have the meaning assigned thereto in Section 3 hereof.

      Losses shall have the meaning assigned thereto in Section 11.8 hereof.

      Material Injury shall have the meaning assigned thereto in Section 5.3
hereof.

      Notice of Termination shall have the meaning assigned thereto in Section
5.6 hereof.

      Potential Change in Control of the Company shall be deemed to have
occurred if (a) the Company enters into an agreement the consummation of which
would result in the occurrence of a Change in Control, (b) any person (including
the Company) publicly announces an intention to take or consider taking action
which if consummated would constitute a Change in Control or (c)


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<PAGE>

the Board adopts a resolution to the effect that a potential Change in Control
of the Company has occurred.

      Proprietary Agreement shall have the meaning assigned thereto in Section
10.4 hereof.

      Rules shall have the meaning assigned thereto in Section 12.13 hereof.

      Successor Provisions shall have the meaning assigned thereto in Section
11.5 hereof.

      Tax Consultant shall have the meaning assigned thereto in Section 11.6
hereof.

      Vacation Time shall have the meaning assigned thereto in Section 4.3
hereof.

      Without Cause shall have the meaning assigned thereto in Section 5.4
hereof.

2. General Duties of the Company and the Executive.

      2.1 (a) The Company agrees to employ the Executive, and the Executive
agrees to accept employment by the Company and to serve the Company as its Vice
President of Finance and Administration, Secretary and Treasurer. The Executive
shall report to and be subject to the direction of the Chief Executive Officer
and the Board. The Executive shall have the authority, duties and
responsibilities that are normally associated with and inherent in the executive
capacity in which the Executive will be performing, and shall have such other or
additional duties which are not inconsistent with the Executive's position, as
may from time to time be reasonably assigned to the Executive by the Chief
Executive Officer or the Board (or a committee thereof). While employed
hereunder, the Executive shall devote full time and attention during normal
business hours to the affairs of the Company and use his best efforts to perform
faithfully and efficiently his duties and responsibilities. The Executive agrees
to cooperate fully with the Chief Executive Officer and the Board, and other
executive officers of the Company, and not to engage in any activity which
conflicts with or interferes with the performance of his duties hereunder.
During the Employment Period, the Executive shall devote his best efforts and
skills to the business and interests of the Company, do his utmost to further
enhance and develop the Company's best interests and welfare, and endeavor to
improve his ability and knowledge of the Company's business, in an effort to
increase the value of his services for the mutual benefit of the parties hereto.
During the Employment Period, it shall not be a violation of this Agreement for
the Executive (i) serve on any corporate board or committee thereof with the
approval of the Board, (ii) to serve on any civic, or charitable boards or
committees (except for boards or committees of a Competing Business unless
approved by the Board), (iii) deliver lectures, fulfill teaching or speaking
engagements, (iv) testify as a witness in litigation involving a former employer
or (v) manage personal investments; provided, however, any such activities must
not materially interfere with performance of the Executive's responsibilities
under this Agreement.

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


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<PAGE>

      responsibilities that may now or in the future be assigned to the
      Executive hereunder. The Executive further represents and warrants that he
      is not presently subject to any legal actions, claims or administrative
      proceedings, including bankruptcy proceedings or IRS audits or
      proceedings, which would affect his ability to perform his
      responsibilities hereunder.

      2.2 The Executive agrees and acknowledges that he owes a fiduciary duty of
loyalty, fidelity and allegiance to act at all times in the best interests of
the Company and to do no act and to make no statement, oral or written, which
would injure the Company's business, its interests or its reputation.

      2.3 The Executive agrees to execute and comply at all times during the
Employment Period with all applicable policies, rules and regulations of the
Company, including, without limitation, the Company's business ethics policy and
the Company's policy regarding trading in the Common Stock, as each is in effect
from time to time during the Employment Period.

3. Term.

      Unless sooner terminated pursuant to other provisions hereof, the
Executive's period of employment under this Agreement shall be a period of one
year beginning on the Effective Date (the "Initial Term"). The Executive's
period of employment under this Agreement shall be automatically renewed for
successive one-year terms on each anniversary of the Effective Date (the Initial
Term and any and all renewals thereof are referred to herein collectively as the
"Employment Period"), unless written notice of nonrenewal is delivered by one
party to the other at least 60 days before the end of the Initial Term or any
such one-year renewal term.

4. Compensation and Benefits.

      4.1 Base Salary. As compensation for services to the Company, the Company
shall pay to the Executive from the Effective Date until the Date of Termination
an annual base salary of $181,000 (the "Base Salary"). The Board (or a committee
thereof) will conduct an annual review of the Executive's compensation and, in
its discretion, may increase the Base Salary based upon relevant circumstances.
The Base Salary shall be payable in equal semi-monthly installments or in
accordance with the Company's established policy, subject only to such payroll
and withholding deductions as may be required by law and other deductions
(consistent with Company policy for all employees) relating to the Executive's
election to participate in the Company's insurance and other employee benefit
plans.

      4.2 Bonus. In addition to the Base Salary, the Executive shall be awarded,
for each fiscal year until the Date of Termination, an annual bonus to be
determined by the Board (or a committee thereof), in its sole discretion (the
"Annual Bonus"). Each such Annual Bonus shall be payable at a time to be
determined by the Board (or a committee thereof) in its sole discretion.

      4.3 Vacation. Until the Date of Termination, the Executive shall be
entitled to four (4) weeks paid vacation during each one-year period commencing
on the Effective Date (the "Vacation Time"). The use of any Vacation Time not
taken during the applicable one-year period will be subject to the Company's
vacation policy as in effect from time to time.


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<PAGE>

      4.4 Incentive, Savings and Retirement Plans. Until the Date of
Termination, the Executive shall be eligible to participate in and shall receive
all benefits under all executive incentive, savings and retirement plans and
programs currently maintained or hereinafter established by the Company for the
benefit of its senior executive officers and/or employees.

      4.5 Benefit Plans. Until the Date of Termination, the Executive and/or the
Executive's family, as the case may be, shall be eligible to participate in and
shall receive all benefits under each welfare benefit plan of the Company
currently maintained or hereinafter established by the Company for the benefit
of its employees. Such welfare benefit plans may include, without limitation,
medical, dental, disability, group life, accidental death and travel accident
insurance plans and programs. The Company shall not be obligated to institute,
maintain, or refrain from changing, amending, or discontinuing, any such
employee benefit program or plan, so long as such actions are similarly
applicable to covered employees generally.

      4.6 Reimbursement of Expenses. The Executive may from time to time until
the Date of Termination incur various business expenses customarily incurred by
persons holding positions of like responsibility, including, without limitation,
travel, entertainment and similar expenses incurred for the benefit of the
Company. Subject to the Executive complying with the Company's policy regarding
the reimbursement of such expenses as in effect from time to time during the
Employment Period, which does not necessarily allow reimbursement of all such
expenses, the Company shall reimburse the Executive for such expenses from time
to time, at the Executive's request, and the Executive shall account to the
Company for all such expenses.

      4.7 Stock Options. The Compensation Committee of the Board, in its sole
discretion, may grant to the Executive options to acquire shares of Common Stock
with such terms and conditions as determined by the Compensation Committee of
the Board in its sole discretion.

      4.8 Indemnification Agreements. The Company has entered into an
Indemnification Agreement regarding indemnification of the Executive. The
Company will also cause the Executive to be covered by its director and officer
insurance policies as they are in effect from time to time.

5. Termination.

      5.1 Death. This Agreement shall terminate automatically upon the death of
the Executive.

      5.2 Disability. The Company may terminate this Agreement, upon written
notice to the Executive delivered in accordance with Sections 5.6 and 12.1
hereof, upon the Disability of the Executive.

      5.3 Cause. The Company may terminate this Agreement, upon written notice
to the Executive delivered in accordance with Sections 5.6 and 12.1 hereof, for
Cause. For purposes of this definition of "Cause," the term "Company" shall mean
the Company and/or its Affiliates. For purposes of this Agreement, subject to
the notice provisions set forth below, "Cause" means (i) the conviction (or plea
of nolo contendere or equivalent plea) of the


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<PAGE>

Executive of a felony (which, through lapse of time or otherwise, is not subject
to appeal), (ii) the Executive having engaged in intentional misconduct causing
a violation by the Company of any state or federal laws which results in a
material injury to the business, condition (financial or otherwise), results of
operations or prospects of the Company as determined in good faith by the Board
or a committee thereof (a "Material Injury"), (iii) the Executive having engaged
in a theft of corporate funds or corporate assets of the Company or in an act of
fraud upon the Company, (iv) an act of personal dishonesty taken by the
Executive that was intended to result in personal enrichment of the Executive at
the expense of the Company, (v) the Executive's refusal, without proper legal
cause, to perform his duties and responsibilities as contemplated in this
Agreement or any other breach by the Executive of this Agreement, and (vi) the
Executive's engaging in activities which would constitute a breach of the
Company's business ethics policy, the Company's policies regarding trading in
the Common Stock or any other applicable policies, rules or regulations of the
Company which results in a Material Injury. If the Company desires to terminate
the Executive for Cause pursuant to the provisions of this Section 5.3, the
Executive will be given a written notice by the Board of the facts and
circumstances providing the basis for termination for Cause, and the Executive
will have 30 days from the date of such notice to remedy, cure or rectify the
situation giving rise to termination for Cause to the reasonable satisfaction of
the Board (except in the event of termination for Cause pursuant to subparagraph
(i) above as to which no cure period will be permitted).

      5.4 Without Cause. The Company may terminate this Agreement Without Cause,
upon written notice to the Executive delivered in accordance with Sections 5.6
and 12.1 hereof. For purposes of this Agreement, the Executive will be deemed to
have been terminated "Without Cause" if the Executive is terminated by the
Company for any reason other than Cause, Disability or death or if the Company
delivers a notice of nonrenewal of this Agreement pursuant to Section 3 hereof.

      5.5 Good Reason. The Executive may terminate this Agreement for Good
Reason, upon written notice to the Company delivered in accordance with Sections
5.6 and 12.1 hereof. For purposes of this definition of "Good Reason," the term
"Company" shall mean the Company and/or its Affiliates. For purposes of this
Agreement, "Good Reason" means (i) the assignment to the Executive of any duties
materially inconsistent in any respect with the Executive's duties or
responsibilities as contemplated in this Agreement, provided that the Executive
specifically terminates his employment for Good Reason hereunder within 120 days
from the date that he has actual notice of such material breach; (ii) any other
action by the Company which results in a material diminishment in the
Executive's position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities, provided that the
Executive specifically terminates his employment for Good Reason hereunder
within 120 days from the date that he has actual notice of such material breach;
(iii) any breach by the Company of any of the provisions of this Agreement,
provided that the Executive specifically terminates his employment for Good
Reason hereunder within 120 days from the date that he has actual notice of such
material breach; (iv) requiring the Executive to relocate to any office or
location other than Houston, Texas, without his consent; (v) a 5% or more
reduction, or attempted reduction, at any time during the Employment Period, of
the Base Salary of the Executive unless such reduction is also applied to all
other senior executive officers of the Company; or (vi) the taking of any action
by the Company which would adversely affect the Executive's participation in or
materially reduce the Executive's benefits provided under Section 4.5 hereof,
unless (A)


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there is substituted a comparable benefit that is at least economically
equivalent (in terms of the benefit offered to the Executive) to the benefit in
which the Executive's participation is being adversely affected or to the
Executive's benefits that are being materially reduced, or (B) the taking of
such action affects all other senior executive officers of the Company.

      Notwithstanding the preceding provisions of this Section 5.5, if the
Executive desires to terminate his employment for Good Reason, he shall first
give written notice of the facts and circumstances providing the basis for Good
Reason to the Board or the Compensation Committee thereof, and allow the Company
thirty (30) days from the date of such notice to remedy, cure or rectify the
situation giving rise to Good Reason to the reasonable satisfaction of the
Executive.

      5.6 Notice of Termination. Any termination of this Agreement by the
Company or the Executive, shall be communicated by Notice of Termination to the
other party hereto given in accordance with this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated and (iii) specifies the termination date, if such date is other than
the date of receipt of such notice (which termination date shall not be more
than 15 days after the giving of such notice, unless otherwise provided herein).
Notwithstanding the foregoing, the Company may elect to consider the Executive
as an employee after the Date of Termination for purposes of complying with the
provisions of Section 6 hereof.

6. Obligations of the Company upon Termination.

      6.1 Cause; Other Than Good Reason. If this Agreement shall be terminated
either by the Company for Cause or by the Executive for any reason other than
Good Reason (including delivery by the Executive of a notice of nonrenewal of
this Agreement pursuant to Section 3 hereof), the Company shall pay to the
Executive, in a lump sum in cash within 30 days after the Date of Termination,
the aggregate of the Executive's Base Salary (as in effect on the Date of
Termination) through the Date of Termination, if not theretofore paid, and, in
the case of compensation previously deferred by the Executive, all amounts of
such compensation previously deferred and not yet paid by the Company. All other
obligations of the Company and rights of the Executive hereunder shall terminate
effective as of the Date of Termination, except as provided for in any benefit
plans, incentive stock plans or other compensation plans and as otherwise
provided in this Agreement.

      6.2 Death or Disability. If this Agreement is terminated as a result of
the Executive's death or Disability, the Company shall pay to the Executive or
his estate, in a lump sum in cash within 30 days of the Date of Termination, the
Executive's Base Salary (as in effect on the Date of Termination) through the
Date of Termination, if not theretofore paid, and, in the case of compensation
previously deferred and bonuses previously earned by the Executive, all amounts
of such compensation previously deferred and earned and not yet paid by the
Company. The Executive or his estate shall also be entitled to receive those
death and Disability benefits to which the Executive is entitled under the
Company's benefit and insurance plans. All other obligations of the Company and
rights of the Executive hereunder shall terminate effective as of


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the Date of Termination, except as provided for in any benefit plans, incentive
stock plans or other compensation plans and as otherwise provided in this
Agreement.

      6.3 Good Reason; Without Cause; Nonrenewal. If this Agreement shall be
terminated either by the Executive for Good Reason or by the Company Without
Cause (which includes delivery by the Company of a notice of nonrenewal of this
Agreement pursuant to Section 3 hereof):

            (a) The Company shall pay to the Executive in a lump sum in cash
      within 30 days after the Date of Termination, if not theretofore paid, the
      Executive's Base Salary (as in effect on the Date of Termination) through
      the Date of Termination, and in the case of compensation previously
      deferred and bonuses previously earned by the Executive, all amounts of
      such compensation previously deferred and earned and not yet paid by the
      Company.

            (b) The Company shall, promptly upon submission by the Executive of
      supporting documentation, pay or reimburse to the Executive any costs and
      expenses paid or incurred by the Executive which would have been payable
      under Section 4.6 hereof if the Executive's employment had not terminated.

            (c) During the 12-month period commencing on the Date of
      Termination, the Company shall continue benefits (other than disability
      benefits), at the Company's expense, to the Executive and/or the
      Executive's family at least equal to those which would have been provided
      to them under Section 4.5 hereof if the Executive's employment had not
      been terminated. Benefits otherwise receivable by the Executive pursuant
      to this Section shall be reduced to the extent substantially similar
      benefits are actually received by or made available to the Executive by
      any other employer during the same time period for which such benefits
      would be provided pursuant to this Section at a cost to the Executive that
      is commensurate with the cost incurred by the Executive immediately prior
      to the Date of Termination (without giving effect to any increase in costs
      paid by the Executive after the Change in Control which constitutes or may
      constitute Good Reason); provided, however, that if the Executive becomes
      employed by a new employer which maintains a medical plan that either (i)
      does not cover the Executive or a family member or dependent with respect
      to a preexisting condition which was covered under the applicable Company
      medical plan, or (ii) does not cover the Executive or a family member or
      dependent for a designated waiting period, the Executive's coverage under
      the applicable Company medical plan shall continue (but shall be limited
      in the event of noncoverage due to a preexisting condition, to such
      preexisting condition) until the earlier of the end of the applicable
      period of noncoverage under the new employer's plan or the first
      anniversary of the Date of Termination. The Executive agrees to report to
      the Company any coverage and benefits actually received by the Executive
      or made available to the Executive from such other employer(s). The
      Executive shall be entitled to elect to change his level of coverage
      and/or his choice of coverage options (such as Executive only or family
      medical coverage) with respect to the benefits to be provided by the
      Company to the Executive to the same extent that actively employed senior
      executive officers of the Company are permitted to make such changes;
      provided, however, that in the event of any such changes the Executive
      shall pay the


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      amount of any cost increase that would actually be paid by an actively
      employed senior executive officer of the Company by reason of making the
      same change in his level of coverage or coverage options.

            (d) During the 12-month period following the Date of Termination,
      the Company shall pay to the Executive, in equal semi-monthly
      installments, the Executive's Base Salary (as in effect on the Date of
      Termination).

            (e) During the 12-month period after the Date of Termination, all
      stock options and restricted stock held by the Executive will continue to
      vest and be exercisable in accordance with their terms in effect on the
      Date of Termination. On the conclusion of said 12-month period, all
      unexpired, unexercised options will be fully vested and all restricted
      stock will be fully vested. Thereafter, all such fully vested stock
      options will be exercisable by the Executive until the earlier to occur of
      the expiration of the term of each stock option or 12 months after the
      date they become fully vested.

      Notwithstanding any of the above to the contrary, the Executive will not
be entitled to any of the benefits or payments provided in Section 6.3 (c), (d)
or (e) hereof if (i) the Executive breaches this Agreement including the
provisions of Sections 8, 9 and 10 hereof, or (ii) the Executive fails to
execute a release from liability and waiver of right to sue the Company or its
Affiliates in a form reasonably acceptable to the Company.

      6.4 Termination of Employment Following a Change in Control.

            (a) If this Agreement shall be terminated within two years after a
      Change in Control which occurs during the term of this Agreement, provided
      such termination is by the Executive for Good Reason or by the Company
      Without Cause (which includes delivery by the Company of a notice of
      nonrenewal of this Agreement pursuant to Section 3 hereof), in lieu of any
      obligation the Company may have pursuant to Section 6.3 hereof:

                  (1) The Company shall pay to the Executive in a lump sum in
            cash within five (5) days after the Date of Termination, if not
            theretofore paid, the Executive's Base Salary (as in effect on the
            Date of Termination) through the Date of Termination, and in the
            case of compensation previously deferred and bonuses previously
            earned by the Executive, all amounts of such compensation previously
            deferred and earned and not yet paid by the Company.

                  (2) The Company shall, promptly upon submission by the
            Executive of supporting documentation, pay or reimburse to the
            Executive any costs and expenses paid or incurred by the Executive
            which would have been payable under Section 4.6 hereof if the
            Executive's employment had not terminated.

                  (3) The Company shall pay to the Executive in a lump sum in
            cash within five (5) days after the Date of Termination a severance
            payment equal to one and one-half (1.5) times the sum of (i) the
            Executive's Base Salary (as in effect on Date of Termination) and
            (ii) the Executive's most recent Annual Bonus. If the most recent
            Annual Bonus was a stock option or a stock grant, the


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            value of the bonus will be deemed to be the number of option shares
            times the closing price of the Common Stock for the 20 trading days
            prior to the Date of Termination.

                  (4) During the 18-month period commencing on the Date of
            Termination, the Company shall continue benefits (other than
            disability benefits), at the Company's expense to the Executive
            and/or the Executive's family at least equal to those which would
            have been provided to them under Section 4.5 hereof if the
            Executive's employment had not been terminated (without giving
            effect to any reduction in such benefits subsequent to the Change in
            Control which reduction constitutes or may constitute Good Reason).

            (b) The Company shall pay to the Executive all legal fees and
      expenses incurred by the Executive as a result of a termination which
      entitles the Executive to any payments under Section 6.4 hereof including
      all such fees and expenses, if any, incurred in contesting or disputing
      any Notice of Termination under Section 5.3 hereof or in seeking to obtain
      or enforce any right or benefit provided by Section 6.4 hereof. Such
      payments shall be made within five (5) days after delivery of the
      Executive's respective written requests for payment accompanied by such
      evidence of fees and expenses incurred as the Company reasonably may
      require.

            (c) Any determination by the Executive pursuant to this Section 6.4
      that Good Reason exists for the Executive's termination of employment and
      that adequate remedy has not occurred shall be presumed correct and shall
      govern unless the party contesting the determination shows by a clear
      preponderance of the evidence that it was not a good faith reasonable
      determination.

            (d) Notwithstanding any dispute concerning whether Good Reason
      exists for termination of employment or whether adequate remedy has
      occurred, the Company shall immediately pay to the Executive any amounts
      otherwise due under this Section 6.4. The Executive may be required to
      repay such amounts to the Company if any such dispute is finally
      determined adversely to the Executive.

            (e) The Executive shall not be required to mitigate damages with
      respect to the amount of any payment provided under this Section 6.4 by
      seeking other employment or otherwise, nor shall the amount of any payment
      provided under this Section 6.4 be reduced by retirement benefits,
      deferred compensation or any compensation earned by the Executive as a
      result of employment by another employer.

7. Executive's Obligation to Avoid Conflicts of Interest. For purposes of this
Section 7, all references to the Company shall mean and include its Affiliates.
The Executive further agrees to comply with the Company's conflict of interest
policy, including the Company's business ethics policy, as in effect from time
to time.

8. Executive's Confidentiality Obligation.

      8.1 For purposes of this Section 8, all references to the Company shall
mean and include its Affiliates. The Executive hereby acknowledges, understands
and agrees that all


                                       11
<PAGE>

Confidential Information, as defined in Section 8.2 hereof, whether developed by
the Executive or others employed by or in any way associated with the Executive
or the Company, is the exclusive and confidential property of the Company and
shall be regarded, treated and protected as such in accordance with this
Agreement. The Executive acknowledges that all such Confidential Information is
in the nature of a trade secret. Failure to mark any writing confidential shall
not affect the confidential nature of such writing or the information contained
therein.

      8.2 For purposes of this Agreement, "Confidential Information" means
information, which is used in the business of the Company and (i) is proprietary
to, about or created by the Company, (ii) gives the Company some competitive
business advantage or the opportunity of obtaining such advantage or the
disclosure of which could be detrimental to the interests of the Company, (iii)
is designated as Confidential Information by the Company, is known by the
Executive to be considered confidential by the Company, or from all the relevant
circumstances should reasonably be assumed by the Executive to be confidential
and proprietary to the Company, or (iv) is not generally known by non-Company
personnel. Confidential Information excludes, however, any information that is
lawfully in the public domain or has been publicly disclosed by the Company.
Such Confidential Information includes, without limitation, the following types
of information and other information of a similar nature (whether or not reduced
to writing or designated as confidential):

            (a) Internal personnel and financial information of the Company,
      vendor information (including vendor characteristics, services, prices,
      lists and agreements), purchasing and internal cost information, internal
      service and operational manuals, and the manner and methods of conducting
      the business of the Company;

            (b) Marketing and development plans, price and cost data, price and
      fee amounts, pricing and billing policies, quoting procedures, marketing
      techniques, forecasts and forecast assumptions and volumes, and future
      plans and potential strategies (including, without limitation, all
      information relating to any acquisition prospect and the identity of any
      key contact within the organization of any acquisition prospect) of the
      Company which have been or are being discussed;

            (c) Names of customers and their representatives, contracts
      (including their contents and parties), customer services, and the type,
      quantity, specifications and content of products and services purchased,
      leased, licensed or received by customers of the Company;

            (d) Confidential and proprietary information provided to the Company
      by any actual or potential customer, government agency or other third
      party (including businesses, consultants and other entities and
      individuals); and

            (e) Work product resulting from or related to the research,
      development or production of the drug development programs of the Company.

      8.3 As a consequence of the Executive's acquisition or anticipated
acquisition of Confidential Information, the Executive shall occupy a position
of trust and confidence with


                                       12
<PAGE>

respect to the affairs and business of the Company. In view of the foregoing and
of the consideration to be provided to the Executive, the Executive agrees that
it is reasonable and necessary that the Executive make each of the following
covenants:

            (a) At any time during the Employment Period and thereafter, the
      Executive shall not disclose Confidential Information to any person or
      entity, either inside or outside of the Company, other than as necessary
      in carrying out his duties and responsibilities as set forth in Section 2
      hereof, without first obtaining the Company's prior written consent
      (unless such disclosure is compelled pursuant to court orders or subpoena,
      and at which time the Executive shall give prior written notice of such
      proceedings to the Company).

            (b) At any time during the Employment Period and thereafter, the
      Executive shall not use, copy or transfer Confidential Information other
      than as necessary in carrying out his duties and responsibilities as set
      forth in Section 2 hereof, without first obtaining the Company's prior
      written consent.

            (c) On the Date of Termination, the Executive shall promptly deliver
      to the Company (or its designee) all written materials, records and
      documents made by the Executive or which came into his possession prior to
      or during the Employment Period concerning the business or affairs of the
      Company, including, without limitation, all materials containing
      Confidential Information.

9. Disclosure of Information, Ideas, Concepts, Improvements, Discoveries and
   Inventions.

      As part of the Executive's fiduciary duties to the Company, the Executive
agrees that during his employment by the Company and thereafter following the
Date of Termination, the Executive shall promptly disclose in writing to the
Company all information, ideas, concepts, improvements, discoveries and
inventions, whether patentable or not, and whether or not reduced to practice,
which are conceived, developed, made or acquired by the Executive during the
Employment Period, either individually or jointly with others, and which relate
to the business, products or services of the Company or its Affiliates,
irrespective of whether the Executive used the Company's time or facilities and
irrespective of whether such information, idea, concept, improvement, discovery
or invention was conceived, developed, discovered or acquired by the Executive
on the job, at home, or elsewhere. This obligation extends to all types of
information, ideas and concepts, including information, ideas and concepts
relating to research and development of drugs, drug discovery and manufacturing
processes, new types of services, corporate opportunities, acquisition
prospects, prospective names or service marks for the Company's business
activities, and the like.

10. Ownership of Information, Ideas, Concepts, Improvements, Discoveries and
    Inventions, and all Original Works of Authorship.

      10.1 All references in this Section 10 to the Company shall mean and
include its Affiliates. All information, ideas, concepts, improvements,
discoveries and inventions, whether patentable or not, which are conceived,
made, developed or acquired by the Executive or which are disclosed or made
known to the Executive, individually or in conjunction with


                                       13
<PAGE>

others, during the Executive's employment by the Company and which relate to the
business, products or services of the Company or its Affiliates (including,
without limitation, all such information relating to research and development of
drugs, drug discovery and manufacturing processes, corporate opportunities,
research, financial and sales data, pricing and trading terms, evaluations,
opinions, interpretations, acquisition prospects, the identity of customers or
their requirements, the identity of key contacts within the customers'
organizations, marketing and merchandising techniques, and prospective names and
service marks) are and shall be the sole and exclusive property of the Company.
Furthermore, all drawings, memoranda, notes, records, files, correspondence,
manuals, models, specifications, computer programs, maps and all other writings
or materials of any type embodying any of such information, ideas, concepts,
improvements, discoveries and inventions are and shall be the sole and exclusive
property of the Company.

      10.2 In particular, the Executive hereby specifically sells, assigns,
transfers and conveys to the Company all of his worldwide right, title and
interest in and to all such information, ideas, concepts, improvements,
discoveries or inventions, and any United States or foreign applications for
patents, inventor's certificates or other industrial rights which may be filed
in respect thereof, including divisions, continuations, continuations-in-part,
reissues and/or extensions thereof, and applications for registration of such
names and service marks. The Executive shall assist the Company and its nominee
at all times, during the Employment Period and thereafter, in the protection of
such information, ideas, concepts, improvements, discoveries or inventions, both
in the United States and all foreign countries, which assistance shall include,
but shall not be limited to, the execution of all lawful oaths and all
assignment documents requested by the Company or its nominee in connection with
the preparation, prosecution, issuance or enforcement of any applications for
United States or foreign letters patent, including divisions, continuations,
continuations-in-part, reissues and/or extensions thereof, and any application
for the registration of such names and service marks.

      10.3 In the event the Executive creates, during the Employment Period, any
original work of authorship fixed in any tangible medium of expression which is
the subject matter of copyright (such as, videotapes, written presentations on
acquisitions, computer programs, drawings, maps, architectural renditions,
models, manuals, brochures or the like) relating to the Company's business,
products or services, whether such work is created solely by the Executive or
jointly with others, the Company shall be deemed the author of such work if the
work is prepared by the Executive in the scope of his employment; or, if the
work is not prepared by the Executive within the scope of his employment but is
specially ordered by the Company as a contribution to a collective work, as a
part of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation or as an instructional text, then the work
shall be considered to be work made for hire, and the Company shall be the
author of such work. If such work is neither prepared by the Executive within
the scope of his employment nor a work specially ordered and deemed to be a work
made for hire, then the Executive hereby agrees to sell, transfer, assign and
convey, and by these presents, does sell, transfer, assign and convey, to the
Company all of the Executive's worldwide right, title and interest in and to
such work and all rights of copyright therein. The Executive agrees to assist
the Company and its Affiliates, at all times, during the Employment Period and
thereafter, in the protection of the Company's worldwide right, title and
interest in and to such work and all rights of copyright therein, which
assistance shall include, but shall not be


                                       14
<PAGE>

limited to, the execution of all documents requested by the Company or its
nominee and the execution of all lawful oaths and applications for registration
of copyright in the United States and foreign countries.

      10.4 The provisions of this Section 10 shall not supersede any proprietary
information agreement (the "Proprietary Agreement") between the Executive and
the Company which shall remain in full force and effect and, moreover, this
Agreement, the Proprietary Agreement and any such other similar agreement
between the parties shall be construed and applied as being mutually consistent
to the fullest extent possible.

11. Certain Payments by the Company

      11.1 In the event that the Executive is deemed to have received an "excess
parachute payment" (as defined in Section 280G(b) of the Code) which is subject
to the excise taxes (the "Excise Taxes") imposed by Section 4999 of the Code in
respect of any payment pursuant to this Agreement or any other agreement, plan,
instrument or obligation, in whatever form, the Company shall make the Bonus
Payment (defined below) to the Executive notwithstanding any contrary provision
in this Agreement or any other agreement, plan, instrument or obligation.

      11.2 The term "Bonus Payment" means a cash payment in an amount equal to
the sum of (i) all Excise Taxes payable by the Executive, plus (ii) all
additional Excise Taxes and federal or state income taxes to the extent such
taxes are imposed in respect of the Bonus Payment, such that the Executive shall
be in the same after-tax position and shall have received the same benefits that
he would have received if the Excise Taxes had not been imposed. For purposes of
calculating any income taxes attributable to the Bonus Payment, the Executive
shall be deemed for all purposes to be paying income taxes at the highest
marginal federal income tax rate, taking into account any applicable surtaxes
and other generally applicable taxes which have the effect of increasing the
marginal federal income tax rate and, if applicable, at the highest marginal
state income tax rate, to which the Bonus Payment and the Executive are subject.
An example of the calculation of the Bonus Payment is set forth below. Assume
that the Excise Tax rate is 20%, the highest federal marginal income tax rate is
40% and the Executive is not subject to state income taxes. Further assume that
the Executive has received an excess parachute payment in the amount of
$200,000, on which $40,000 ($200,000 x 20%) in Excise Taxes are payable. The
amount of the required Bonus Payment is thus computed to be $100,000, i.e., the
Bonus Payment of $100,000, less additional Excise Taxes on the Bonus Payment of
$20,000 (i.e., 20% x $100,000) and income taxes of $40,000 (i.e., 40% x
$100,000), yields $40,000, the amount of the Excise Taxes payable in respect of
the original excess parachute payment.

      11.3 The Executive agrees to reasonably cooperate with the Company to
minimize the amount of the excess parachute payments, including, without
limitation, assisting the Company in establishing that some or all of the
payments received by the Executive that are "contingent on a change," as
described in Section 280G(b)(2)(A)(i) of the Code, are reasonable compensation
for personal services actually rendered by the Executive before the date of such
change or to be rendered by the Executive on or after the date of such change.
In the event that the Company is able to establish that the amount of the excess
parachute payments is less than originally anticipated by the Executive, the
Executive shall refund to the Company any excess Bonus Payment to the extent not
required to pay Excise Taxes or income taxes (including those incurred


                                       15
<PAGE>

in respect of receipt of the Bonus Payment). Notwithstanding the foregoing, the
Executive shall not be required to take any action which his attorney or tax
advisor advises him in writing (i) is improper or (ii) exposes the Executive to
personal liability. The Executive may require the Company to deliver to the
Executive an indemnification agreement in form and substance reasonably
satisfactory to the Executive as a condition to taking any action required by
this Section 11.3.

      11.4 The Company shall make any payment required to be made under Section
11 hereof in a cash lump sum after the date on which the Executive received or
is deemed to have received any such excess parachute payment. Any payment
required to be paid by the Company under Section 11 hereof which is not paid
within 30 days of receipt by the Company of the Executive's written demand
therefor, delivered in accordance with Section 12.1 hereof, shall thereafter be
deemed delinquent, and the Company shall pay to the Executive immediately upon
demand interest at the highest nonusurious rate per annum allowed by applicable
law from the date such payment becomes delinquent to the date of payment of such
delinquent sum with interest.

      11.5 In the event that there is any change to the Code which results in
the recodification of Section 280G or Section 4999 of the Code, or in the event
that either such section of the Code is amended, replaced or supplemented by
other provisions of the Code of similar import ("Successor Provisions"), then
this Agreement shall be applied and enforced with respect to such new Code
provisions in a manner consistent with the intent of the parties as expressed
herein, which is to assure that the Executive is in the same after-tax position
and has received the same benefits that he would have been in and received if
any taxes imposed by Section 4999 (or any Successor Provisions) had not been
imposed.

      11.6 All determinations required to be made under Section 11 hereof
including, without limitation, whether and when a Bonus Payment is required, and
the amount of such Bonus Payment and the assumptions to be utilized in arriving
at such determinations, unless otherwise expressly set forth in this Agreement,
shall be made within 30 days from the Date of Termination by the independent tax
consultant(s) selected by the Company and reasonably acceptable to the Executive
(the "Tax Consultant"). The Tax Consultant must be a qualified tax attorney or
certified public accountant. All fees and expenses of the Tax Consultant shall
be paid in full by the Company. Any Excise Taxes as determined pursuant to
Section 11 hereof shall be paid by the Company to the Internal Revenue Service
or any other appropriate taxing authority on the Executive's behalf within five
(5) business days after receipt of the Tax Consultant's final determination by
the Company and the Executive.

      11.7 If the Tax Consultant determines that there is substantial authority
(within the meaning of Section 6662 of the Code) that no Excise Taxes are
payable by the Executive, the Tax Consultant shall furnish the Executive with a
written opinion that failure to disclose or report the Excise Taxes on the
Executive's federal income tax return will not constitute a substantial
understatement of tax or be reasonably likely to result in the imposition of a
negligence or any other penalty.

      11.8 The Company shall indemnify and hold harmless the Executive, on an
after-tax basis, from any costs, expenses, penalties, fines, interest or other
liabilities ("Losses") incurred


                                       16
<PAGE>

by the Executive with respect to the exercise by the Company of any of its
rights under Section 11 hereof, including, without limitation, any Losses
related to the Company's decision to contest a claim of any imputed income to
the Executive. The Company shall pay all fees and expenses incurred under
Section 11 hereof, and shall promptly reimburse the Executive for the reasonable
expenses incurred by the Executive in connection with any actions taken by the
Company or required to be taken by the Executive hereunder. Any payments owing
to the Executive and not made within 30 days of delivery, in accordance with
Section 12.1 hereof, to the Company of evidence of the Executive's entitlement
thereto shall be paid to the Executive together with interest at the maximum
nonusurious rate permitted by law.

12. Miscellaneous.

      12.1 Notices. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when (i) delivered by hand or sent by
facsimile, or (ii) on the third business day following deposit in the United
States mail by registered or certified mail, return receipt requested, to the
addresses as follows (provided that notice of change of address shall be deemed
given only when received):

            If to the Company to:

            Texas Biotechnology Corporation
            7000 Fannin
            Houston, Texas 77030
            Attention: President and Chairman of the Board
            Facsimile No.: (713) 782-8232

            If to the Executive to:

            Stephen L. Mueller
            Texas Biotechnology Corporation
            7000 Fannin
            Houston, Texas 77030
            Facsimile No.: (713) 782-8232

or to such other names or addresses as the Company or the Executive, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section 12.1.

      12.2 Waiver of Breach. The waiver by any party hereto of a breach of any
provision of this Agreement shall neither operate nor be construed as a waiver
of any subsequent breach by any party. Except as expressly provided for herein,
the failure of either party hereto to take any action by reason of any breach
will not deprive such party of the right to take action at any time while such
breach occurs.

      12.3 Assignment. This Agreement shall be binding upon and inure to the
benefit of the Company, its successors, legal representatives and assigns, and
upon the Executive, his heirs, executors, administrators, representatives and
assigns; provided, however, the Executive agrees that his rights and obligations
hereunder are personal to him and may not be


                                       17
<PAGE>

assigned without the express written consent of the Company. Any reference to
"Company" herein shall mean the Company as well as any successors thereto.

      12.4 Entire Agreement; No Oral Amendments. This Agreement, together with
any exhibit attached hereto and any document, policy, rule or regulation
referred to herein, replaces all previous agreements and discussions relating to
the same or similar subject matter between the Executive and the Company
(including, but not limited to, that certain Termination Agreement dated July 1,
1995, as amended which is hereby terminated), and constitutes the entire
agreement between the Executive and the Company with respect to the subject
matter of this Agreement. This Agreement may not be modified in any respect by
any verbal statement, representation or agreement made by any executive,
officer, or representative of the Company or by any written agreement unless
signed by an officer of the Company who is expressly authorized by the Company
to execute such document.

      12.5 Enforceability. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.

      12.6 Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICTS OF LAW.

      12.7 Corporate Authority. The Company has all corporate power and
authority necessary to enter into this Agreement and to perform its obligations
hereunder. This Agreement has been duly authorized, executed and delivered by
the Company.

      12.8 Defense of Claims. The Executive agrees that, during the Employment
Period and for a period of two (2) years after his Termination Date, upon
request from the Company, he will reasonably cooperate with the Company and its
Affiliates in the defense of any claims or actions that may be made by or
against the Company or any of its Affiliates that affect his prior areas of
responsibility, except if the Executive's reasonable interests are adverse to
the Company or Affiliates in such claim or action. To the extent travel is
required to comply with the requirements of this Section 12.8, the Company
shall, to the extent possible, provide the Executive with notice at least 10
days prior to the date on which such travel would be required. The Company
agrees to promptly pay or reimburse the Executive upon demand for all of his
reasonable travel and other direct expenses incurred, or to be reasonably
incurred, to comply, with his obligations under this Section 12.8.

      12.9 Withholdings: Right of Offset. The Company may withhold and deduct
from any benefits and payments made or to be made pursuant to this Agreement (a)
all federal, state, local and other taxes as may be required pursuant to any law
or governmental regulation or ruling, (b) all other employee deductions made
with respect to the Company's employees generally, and (c) any advances made to
the Executive and owed to the Company.


                                       18
<PAGE>

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

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

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

      12.13 Arbitration.

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


                                       19
<PAGE>

            (b) The party submitting any matter to arbitration shall do so in
      accordance with the Rules. Notice to the other party shall state the
      question or questions to be submitted for decision or award by
      arbitration. Notwithstanding any provision of this Section 12.13, the
      Executive shall be entitled to seek specific performance of the
      Executive's right to be paid during the pendency of any dispute or
      controversy arising under this Agreement. In order to prevent irreparable
      harm, the arbitrator may grant temporary or permanent injunctive or other
      equitable relief for the protection of property rights.

            (c) The arbitrator shall set the date, time and place for each
      hearing, and shall give the parties advance written notice in accordance
      with the Rules. Any party may be represented by counsel or other
      authorized representative at any hearing. The arbitration shall be
      governed by the Federal Arbitration Act, 9 U.S.C. Sections 1 et. seq. (or
      its successor). The arbitrator shall apply the substantive law and the law
      of remedies, if applicable) of the State of Texas to the claims asserted
      to the extent that the arbitrator determines that federal law is not
      controlling.

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

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

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

      12.14 Survival of Certain Provisions. Wherever appropriate to the
intention of the parties hereto, the respective rights and obligations of said
parties, including, but not limited to, the rights and obligations set forth in
Sections 8 through 11 hereof and this Section 12, shall survive any termination
or expiration of this Agreement.


                                       20
<PAGE>

      12.15 No Strict Construction. The Executive represents to the Company that
he is knowledgeable and sophisticated as to business matters, including the
subject matter of this Agreement, that he has read the Agreement and that he
understands its terms and conditions. The parties hereto agree that the language
used in this Agreement shall be deemed to be the language chosen by them to
express their mutual intent, and no rule of strict construction shall be applied
against either party hereto. The Executive acknowledges that he has had the
opportunity to consult with counsel of his choice, independent of Employer's
counsel, regarding the terms and conditions of this Agreement and has done so to
the extent that he, in his discretion, deemed to be appropriate.

                            [SIGNATURE PAGE FOLLOWS]


                                       21
<PAGE>

      IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first written above.

                                Texas Biotechnology Corporation

                                By: /s/ Bruce D. Given, M.D.
                                    -------------------------------------
                                    Bruce D. Given, M.D.,
                                    President and Chief Executive Officer

                                Executive:

                                By: /s/ Stephen L. Mueller
                                    -------------------------------------
                                    Stephen L. Mueller


                                       22

</TEXT>
</DOCUMENT>
