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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (the Agreement ) is made and entered into effective as of September 19, 2014 (the Effective Date ), by and between
REGULUS THERAPEUTICS INC., a Delaware corporation (the Company ), and KLEANTHIS G. XANTHOPOULOS, PH.D.
(the Executive ). The Company and the Executive are hereinafter collectively referred to as the Parties , and individually referred to as a
Party . From and following the Effective Date, this Agreement shall replace and supersede that certain Employment Agreement between Executive and Regulus Therapeutics Inc. entered into as of June 15, 2012
(the Prior Agreement ).
WHEREAS, Executive and the Company are currently parties to the Prior Agreement that is superseded and
replaced in its entirety by this Agreement;
WHEREAS, the Company desires to continue to employ
Executive to provide personal services to the Company in that capacity, and wishes to provide Executive with certain compensation and benefits in return for his services, and Executive wishes to be so employed and to receive such benefits; and
WHEREAS, the Company and Executive wish to enter into this Agreement to define their mutual rights and
duties with respect to Executive s compensation and benefits.
NOW, THEREFORE, in consideration
of the mutual promises and covenants contained herein, and for other good and valuable consideration, the Parties, intending to be legally bound, agree as follows:
1.1 Term. The term of this Agreement shall begin on
the Effective Date, and shall continue until terminated in accordance with Section 5 herein.
1.2 Title. The Executive
shall continue in the role of President and CEO of the Company ( CEO ) and shall serve in such other capacity or capacities as the Board of Directors of the Company (the Board ) may from time to time
prescribe, but only as consistent with the customary duties of a CEO. During the term of this Agreement, unless otherwise agreed by the Parties, the Executive shall also continue to serve as a member of the Board. Upon termination of the
Executive s employment with the Company, for any reason or no reason, the Executive shall immediately resign as a member of the Board, unless the Board requests that the Executive continue to serve as a member of the Board.
1.3 Duties. The Executive shall report to the Board and shall do and perform all
reasonable services, acts or things necessary or advisable to manage and conduct the business of the Company and which are normally associated with the position of CEO, consistent with the bylaws of the Company and as required by the Board.
1.4 Location. The Executive shall perform services pursuant to this Agreement at the Company s offices located in San
Diego, California, or at any other place at which the Company maintains an office; provided, however, that the Company may from time to time require the Executive to travel temporarily to other locations in connection with the Company s
2.1 Loyalty. During the Executive s employment by the Company the Executive shall devote the Executive s full business
energies, interest, abilities and productive time to the proper and efficient performance of the Executive s duties under this Agreement.
2.2 Non-Company Business. While employed by the Company, Executive shall not, without the Company s prior written consent,
(i) render to others, services of any kind for compensation, or engage in any other business activity that would materially interfere with the performance of Executive s duties under this Agreement, or (ii) directly or indirectly,
whether as a partner, employee, creditor, shareholder, or otherwise, promote, participate or engage in any activity or other business competitive with the Company s business. Executive shall not invest in any company or business which competes
in any manner with the Company; provided that, Executive may, without violating this section, own, as a passive investment, shares of capital stock of a publicly-held corporation that engages in competition if (i) such shares are
actively traded on an established national securities market in the United States, (ii) the number of shares of such corporation s capital stock that are owned beneficially (directly or indirectly) by the Executive represents less than one
percent of the total number of shares of such corporation s outstanding capital stock, and (iii) Executive is not otherwise associated directly or indirectly with such corporation or with any affiliate of such corporation.
3.1 Base Salary. The Company shall pay the Executive a base salary at the rate of $600,000 per year (the Base
Salary ), less payroll deductions and all required withholdings, payable in regular bi-weekly payments or otherwise in accordance with Company policy. Such Base Salary shall be prorated for any partial year of employment on the basis of
a 365-day fiscal year.
3.2 Discretionary Bonuses. In addition to the Base Salary, the Executive will be eligible to receive a
yearly discretionary merit bonus pursuant to the Company s annual performance bonus plan, with a target amount of such bonus equal to up to 60% of Executive s Base Salary (the Annual Bonus ). The target percentage
for the Annual Bonus is subject to modification from time to time in the discretion of the Board. Whether Executive receives an Annual Bonus for any given year, and the amount of any such Annual Bonus, will be determined by the Board in its sole
discretion based upon the Company s and Executive s achievement of
objectives and milestones to be determined on an annual basis by the Board. Executive must remain an active employee through the end of the applicable performance period in order to earn an
Annual Bonus for that year and any such bonus will be paid in a lump sum prior to March 15 of the year following the year in which Executive s right to such amount became vested.
3.3 Equity Compensation. Any stock, stock options, or other equity awards that Executive has already been granted by the Company shall
continue to be governed in all respects by the terms of the applicable grant agreements, grant notices, plan documents and stock restriction agreements. Notwithstanding the foregoing or the provisions of any such grant agreements, all outstanding
stock options subject to vesting based on Company performance, that are held by the Executive as of immediately before a Change in Control, shall become fully vested and exercisable as of immediately before, and contingent upon the occurrence of,
the Change in Control provided that the Executive is employed with the Company as of such date. The Board may grant additional stock, stock options, or other equity awards to Executive in its sole discretion.
3.4 Changes to Compensation. It is anticipated that the Executive will be considered on an annual basis for merit increases in base
compensation consistent with performance and market trends but subject to Board approval in its sole discretion. Subject to Section 5.3 below, the Executive s compensation may be changed from time to time in the Company s sole
discretion based upon Board approved changes to the Company s operating plan after considering relevant business conditions.
Employment Taxes. All of the Executive s compensation and payments under this Agreement shall be subject to customary withholding taxes and any other employment taxes as are commonly required to be collected or withheld by the
3.6 Benefits. The Executive shall, in accordance with Company policy and the terms of the applicable plan
documents, be eligible to participate in benefits under any executive benefit plan or arrangement which may be in effect from time to time and made available to the Company s executive or key management employees.
3.7 Vacations and Holidays. In accordance with Company policies, Executive shall be entitled to accrue three weeks of paid vacation
during each calendar year, subject to applicable maximum accrual caps; and Executive shall also be entitled to certain paid holidays. The Company may modify any of its benefit plans or policies, including its vacation and holiday policies, from time
to time in its sole discretion.
3.8 Expenses. The Company will reimburse Executive for reasonable travel, entertainment or other
expenses incurred by Executive in furtherance or in connection with the performance of Executive s duties hereunder, in accordance with the Company s expense reimbursement policy as in effect from time to time. For the avoidance of doubt,
to the extent that any reimbursements payable to Executive are subject to the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the Code ): (a) to be eligible to obtain reimbursement for
such expenses Executive must submit expense reports within 45 days after the expense is incurred, (b) any such reimbursements will be paid no later than December 31 of the year following the year in which the expense was incurred,
(c) the amount of expenses
reimbursed in one year will not affect the amount eligible for reimbursement in any subsequent year, and (d) the right to reimbursement under this Agreement will not be subject to
liquidation or exchange for another benefit.
For purposes of this Agreement, the following terms shall
have the following meanings:
4.1 Cause. At any time other than during the Change in Control Protection Period,
Cause for the Company to terminate Executive s employment hereunder means the occurrence of any of the following events: (i) Executive s commission of any felony or any crime involving fraud, dishonesty or
moral turpitude under the laws of the United States or any state thereof; (ii) Executive s attempted commission of, or participation in, a fraud or act of dishonesty against the Company; (iii) Executive s intentional, material
violation of any contract or agreement between the Participant and the Company (including this Agreement) or of any statutory duty owed to the Company; (iv) Executive s unauthorized use or disclosure of the Company s confidential
information or trade secrets; or (v) Executive s gross misconduct. During the Change in Control Protection Period, and notwithstanding the foregoing, Cause for the Company to terminate Executive s employment
hereunder means the occurrence of any of the following events: (I) Executive s conviction of any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States or any state thereof;
(II) commission of an intentional act of fraud, embezzlement or theft by the Executive in the course of Executive s employment by the Company; (III) Executive s intentional, material violation of any contract or agreement between the
Participant and the Company (including this Agreement) or of any statutory duty owed to the Company which is not remedied within a thirty (30) days written notice from the Company specifying such failure; (IV) Executive s intentional
and unauthorized use or disclosure of the Company s confidential information or trade secrets which is materially and demonstrably injurious to the Company; or (V) Executive s gross misconduct. For purposes of item (III) of this Cause
definition, the Executive will have the opportunity to remedy this failure only the first time that the Company provides notice that Cause exists pursuant to item (III).
4.2 Change in Control. For purposes of this Agreement, Change in Control means: the occurrence of any
one or more of the following events: (i) any person (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended), other than Isis Pharmaceuticals, Inc. or Alnylam Pharmaceuticals, becomes the owner,
directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company s then outstanding securities (other than in connection with a transaction involving the issuance of securities by the
Company the principal purpose of which is to raise capital for the Company); (ii) there is consummated a merger, consolidation or similar transaction to which the Company is a party and the stockholders of the Company immediately prior thereto
do not own outstanding voting securities representing more than 50% of the combined outstanding voting power of the surviving entity immediately following such merger, consolidation or similar transaction or more than 50% of the combined outstanding
voting power of the parent of the surviving entity immediately following such merger, consolidation or similar transaction; or (iii) there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the
consolidated assets of the Company and its
subsidiaries, other than a sale, lease or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries to an entity more than 50% of the combined
voting power of which is owned immediately following such disposition by the stockholders of the Company immediately prior thereto.
4.3 Complete Disability. Complete Disability shall mean the inability of the Executive to perform the
Executive s duties under this Agreement because the Executive has become permanently disabled within the meaning of any policy of disability income insurance covering employees of the Company then in force. In the event the Company has no
policy of disability income insurance covering employees of the Company in force when the Executive becomes disabled, the term Complete Disability shall mean the inability of the Executive to perform the Executive s duties under this Agreement
by reason of any incapacity, physical or mental, which the Board, based upon medical advice or an opinion provided by a licensed physician acceptable to the Board, determines can be expected to result in death or expected to last for a continuous
period of more than 12 months. Based upon such medical advice or opinion, the determination of the Board shall be final and binding and the date such determination is made shall be the date of such Complete Disability for purposes of this Agreement.
The Company shall act upon this Section in compliance with the Family Medical Leave Act (if applicable to the Company), the Americans with Disabilities Act (as amended), and applicable state and local laws.
4.4 Good Reason. At any time other than during the Change in Control Protection Period, Good
Reason means the occurrence of any of the following events without the Executive s consent; provided however, that any resignation by the Executive due to any of the following conditions shall only be deemed for Good Reason
if: (i) the Executive gives the Company written notice of the intent to terminate for Good Reason within 90 days following the first occurrence of the condition(s) that the Executive believes constitutes Good Reason, which notice shall describe
such condition(s); (ii) the Company fails to remedy, if remediable, such condition(s) within 30 days following receipt of the written notice (the Cure Period ) of such condition(s) from the Executive; and
(iii) Executive actually resigns his employment within the first 15 days after expiration of the Cure Period: (a) a material breach of this Agreement by the Company; (b) a material reduction by the Company of the Executive s Base
Salary as initially set forth herein or as the same may be increased from time to time; (c) a material reduction in the Executive s authority, duties or responsibilities; or (d) the Company relocates the facility that is the
Executive s principal place of business with the Company to a location that requires an increase in the Executive s one-way driving distance by more than 35 miles. For purposes of the foregoing Good Reason definition, the Company will have
the opportunity to remedy the Good Reason condition only the first time that the Executive provides notice that Good Reason exists. During the Change in Control Protection Period, and notwithstanding the foregoing, Good
Reason means the occurrence of one of the following without Executive s express, written consent: (I) a significant reduction of Executive s duties, position or responsibilities (including, without limitation, any
negative change in reporting hierarchy involving the Executive or the person to whom Executive directly reports), or Executive s removal from such position and responsibilities; (II) a reduction by the Company in Executive s (A) Base