LEXICON GENETICS INC/TX
CONSULTING AGREEMENT
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<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>h14908exv10w1.txt
<DESCRIPTION>CONSULTING AGREEMENT
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                                                                    EXHIBIT 10.1

                          [LEXICON GENETICS LETTERHEAD]

                                February 19, 2003

Dr. Alan S. Nies

Dear Alan:

         We are pleased to invite you to become the Chairman of the Medical
Advisory Board of, and a special consultant to, Lexicon Genetics Incorporated
(which, together with its subsidiaries and affiliates, is referred to as the
"Company" or "Lexicon"). The purpose of this letter agreement (this "Agreement")
is to set forth our mutual understanding of the terms and conditions under which
you would provide consulting services in those capacities, as set forth below.

         1.       Consulting Services. As the Chairman of the Medical Advisory
Board of, and a special consultant to, Lexicon, you will provide such consulting
and advisory services as may be requested by Arthur T. Sands, M.D., Ph.D., the
Company's President and Chief Executive Officer, relating to: (i) evaluation of
the Company's drug discovery programs; (ii) establishment of strategies for
clinical development of potential products arising from such programs; (iii)
identification and, as appropriate, recruitment or engagement of key personnel,
consultants and service providers to oversee and conduct the Company's clinical
development efforts; (iv) evaluation of the clinical development potential of
in-licensing and acquisition candidates; (v) provision of assistance and advice
relating to the establishment of drug discovery collaborations and alliances;
and (vi) such other consulting and advisory services relating to the Company's
clinical development efforts as you and the Company may agree. You will devote
up to 24 days annually (approximately two days a month on average) to providing
such services to the Company under this Agreement, on a schedule and at times
reasonably agreed upon by you and Dr. Sands.

         2.       Compensation. As full consideration for your services as
Chairman of the Medical Advisory Board of, and a special consultant to, the
Company and your obligations under this Agreement, you will receive fees of
$75,000 per year, payable in 12 monthly installments. In addition, you will be
reimbursed for your reasonable, ordinary and necessary travel expenses incurred
by you at the Company's prior request in connection with your performance of
your services under this Agreement.

         3.       Stock Option. In further consideration for your services as
Chairman of the Medical Advisory Board of, and a special consultant to, the
Company and your obligations under this Agreement, the Company will grant you an
option under its 2000 Equity Incentive Plan (the "Plan") to purchase 2,500
shares of the Company's common stock at a purchase price per share equal to the
fair market value of the common stock, determined in accordance with the Plan,
on the date your service in such capacities commences, such options vesting at a
rate of one-fourth of the total amount for each year of service to the Company
hereunder. Such option grant shall be evidenced by a separate stock option
agreement and governed by the terms of such agreement and the Plan.

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Dr. Alan S. Nies
February 19, 2003
Page 2

         4.       Confidential Information.

                  (a)      In the course of your service as Chairman of the
         Medical Advisory Board of, and a special consultant to, the Company,
         you may learn or be exposed, orally, visually, electronically or in
         writing, to inventions, discoveries, improvements, materials, data,
         technology, processes, formulas, know-how, trade secrets, ideas and
         other information which we consider proprietary or confidential
         ("Confidential Information"). You agree to hold any Confidential
         Information disclosed to you by the Company or learned by you from the
         Company in conjunction with your services under this Agreement in
         strict confidence and to take all reasonable precautions to protect
         such Confidential Information, not to disclose any such Confidential
         Information to any third party, and to use such Confidential
         Information only in furtherance of your services under this Agreement;
         provided that your nondisclosure obligation shall not apply to the
         extent such Confidential Information (i) is already in the public
         domain or hereafter enters the public domain other than through your
         acts or omissions in violation of this Agreement; (ii) is already known
         to you, as may be shown by competent written records; (iii) is
         hereafter received by you without restriction as to confidentiality or
         use from a third party lawfully entitled so to disclose same in such
         manner; or (iv) is hereafter generated by you, other than in
         performance of your services under this Agreement, without the use of
         any Confidential Information, facilities or personnel of the Company.
         Information shall not be deemed to be within the foregoing exceptions
         merely because such information is embraced by more general information
         in the public domain or in your possession. All Confidential
         Information (and any copies and notes thereof) shall remain the sole
         property of the Company.

                  (b)      You agree not to disclose or otherwise make available
         to the Company any information that you possess under an obligation of
         confidentiality to a third party. You may disclose to the Company any
         information made available generally to the scientific community at
         large through published reports or public presentations prior to
         disclosure to the Company.

         5.       Inventions and Discoveries.

                  (a)      You hereby assign and transfer to the Company all of
         your right, title and interest throughout the world in all inventions,
         discoveries, improvements, materials, data, works of authorship and
         other intellectual property, whether or not patentable or subject to
         copyright, which may be made, written or conceived by you in the course
         of, or arising as a result of, your performance of your services as
         Chairman of the Medical Advisory Board of, and a special consultant to,
         the Company, in whole or in part and whether alone or in conjunction
         with others (collectively, "Intellectual Property"). All such
         Intellectual Property shall be the sole property of the Company or its
         nominee.

                  (b)      You shall promptly disclose any Intellectual Property
         in writing to the Company in order to permit the Company to claim
         rights to which it may be entitled under this Agreement. The Company
         shall have full power and authority to file and prosecute patent
         applications and copyright registrations throughout the world with
         respect to all Intellectual Property, and to procure and maintain
         patents and copyrights with respect thereto. You agree, at the
         Company's reasonable request and expense, to

<PAGE>

Dr. Alan S. Nies
February 19, 2003
Page 3

         sign, execute and acknowledge, or cause to be signed, executed and
         acknowledged, any applications, assignments, instruments and other
         documents, and to perform such other acts, as the Company may deem
         necessary, useful or convenient to confirm and vest in the Company or
         its nominee all right, title and interest throughout the world in and
         to any Intellectual Property and all patent, copyright and other
         intellectual property rights and protections therein, and to assist the
         Company in procuring, maintaining, enforcing and defending such patent,
         copyright and other intellectual property rights and protections
         throughout the world. You agree to treat all such Intellectual Property
         as Confidential Information under this Agreement.

         6.       Conflicting Engagements.

                  (a)      During your service as Chairman of the Medical
         Advisory Board of, and a special consultant to, the Company, you agree
         that you will not, without previously notifying the Company in writing,
         directly or indirectly, whether alone or in association with others, in
         the United States of America or in any foreign nation, state or
         jurisdiction, become associated with, render advisory, consulting or
         other services to, or become employed by any other person or entity
         (collectively referred to as "Third Party Competitors") engaging in
         clinical development of a drug in direct conflict or competition with a
         drug development program being conducted by the Company. You agree to
         disclose to the Company any proposed relationship with a Third Party
         Competitor (a "Proposed Relationship") at least 60 days prior to the
         establishment of a confidential relationship between you and such Third
         Party Competitor. Upon such disclosure, the Company may consent to the
         Proposed Relationship in writing, may proffer written consent subject
         to condition precedent regarding certain restrictions on the scope
         and/or field of the Proposed Relationship, or may terminate this
         Agreement.

                  (b)      Subject to your obligations with respect to
         Confidentiality and Intellectual Property under Sections 4 and 5 of
         this Agreement, nothing in this Agreement shall prohibit you from
         continuing your duties under any consulting or advisory agreement that
         predates this Agreement, and which has been disclosed to the Company in
         writing prior to the effective date of this Agreement.

         7.       Term and Termination. You will render your advisory and
consulting services to the Company and serve as Chairman of the Company's
Medical Advisory Board for an initial period of one year commencing upon the
date of your signature accepting the provisions of this Agreement on the
signature page. The term of this Agreement shall be automatically renewed for
additional one-year terms on each anniversary unless either party gives 30 days'
advance written notice of non-renewal. This Agreement may be terminated (i) at
any time by either party, with or without cause, upon 30 days' advance written
notice to the other party and (ii) by either party for breach of this Agreement
by the other party that, where curable, is not cured within 10 business days
after written notice of such breach is delivered to the breaching party.

         8.       Independent Contractor. For purposes of this Agreement, you
will be deemed an independent contractor and not an employee or agent of
Lexicon. In this connection, you will not be eligible for, nor entitled to, any
employee benefits that we normally extend to our employees, and we will not
withhold any taxes from the compensation paid to you, all of which shall be your
responsibility. The manner in which you render your services under this
Agreement will be

<PAGE>

Dr. Alan S. Nies
February 19, 2003
Page 4

within your reasonable control and discretion. You have no express or implied
authority to incur any liability, or to make any decision or to create any
binding obligation, on our behalf.

         9.       Reference to Affiliation. The Company may reference your
service as Chairman of the Company's Medical Advisory Board, but will not
otherwise use your name without your prior written consent.

         10.      Compliance with Laws and Procedures. To the extent you provide
services under this Agreement on our premises, you agree to observe our business
hours, as well as our rules, policies and security procedures concerning conduct
and the health, safety and protection of persons and property. You will comply
with all applicable governmental laws, ordinances, rules and regulations
applicable to the performance of your services under this Agreement.

         11.      Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Texas as
they apply to contracts entered into and wholly to be performed in Texas.

         12.      Enforcement. You agree that a breach of any of the
restrictions set forth in the provisions of this Agreement would cause the
Company irreparable injury and damage, and that, in the event of any breach or
threatened breach, the Company, in addition to all other rights and remedies at
law or in equity, shall have the right to enforce the specific performance of
such restrictions and to apply for injunctive relief against their violation.

         13.      Survival of Terms. The provisions of Sections 4, 5 and 11
through 19 hereof shall survive termination of this Agreement.

         14.      Successors and Assigns. You may not assign this Agreement
without the written consent of the Company. This Agreement shall be binding on
your heirs, executors, administrators and legal representatives and the
Company's successors and assigns.

         15.      Severability. The invalidity or unenforceability of any
provision of this Agreement (or portion thereof) shall not affect the validity
or enforceability of any other provision of this Agreement, and if such
provision (or portion thereof) is so broad as to be unenforceable, it shall be
interpreted to be only as broad as is enforceable.

         16.      Entire Agreement. This Agreement constitutes the sole and
complete agreement of the parties with respect to the matters included herein,
and supersedes any previous oral or written agreement, if any, relating to the
subject matters included herein.

         17.      Amendment and Waiver. This Agreement may not be amended or
supplemented in any way, nor may the benefit of any provision hereof be waived,
except by a written agreement duly executed by both you and the Company.

         18.      No Conflict. You represent that the performance of your
obligations and duties under this Agreement does not conflict with any
obligations or duties, express or implied, that you may have to third parties.

<PAGE>

Dr. Alan S. Nies
February 19, 2003
Page 5

         19.      Construction. Each party to this Agreement has had the
opportunity to review this Agreement with legal counsel. This Agreement shall
not be construed or interpreted against any party on the basis that such party
drafted or authored a particular provision, parts of or the entirety of this
Agreement.

         If the foregoing correctly sets forth our mutual understanding, please
so indicate by signing this letter in the space provided below and return it to
the Company at the above address, whereupon this Agreement shall constitute a
binding contract between us and our legal representatives, successors, and
assigns.

                                       Very truly yours,

                                       LEXICON GENETICS INCORPORATED

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

ACCEPTED AND AGREED TO ON THE DATE SET FORTH BELOW:

By: /s/ Alan S. Nies
    --------------------------------
    Alan S. Nies, M.D.

Date: February 24, 2003

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                          [LEXICON GENETICS LETTERHEAD]

                                  June 24, 2003

Dr. Alan S. Nies

Dear Alan:

         This letter serves as the consent of Lexicon Genetics Incorporated (the
"Company") to the assignment of your rights and obligations under that certain
letter agreement dated February 19, 2003 between you and Lexicon (the
"Agreement") to Nies Consulting LP (the "Partnership").

         As a condition to the foregoing assignment, you agree that you will
personally provide all consulting and advisory services on behalf of the
Partnership and that you remain individually bound by Sections 4
(Confidentiality), 5 (Inventions and Discoveries) and 6 (Conflicting
Engagements) of the Agreement.

         If the foregoing correctly sets forth our mutual understanding, please
so indicate by signing this letter in the space provided below and return it to
the Company at the above address.

                                     Very truly yours,

                                     LEXICON GENETICS INCORPORATED

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

ACCEPTED AND AGREED TO ON THE DATE SET FORTH BELOW:

By: /s/ Alan S. Nies
    -------------------------
    Alan S. Nies, M.D.

Date: June 25, 2003


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