Exhibit 10.2

THIS NOTE AND ANY SHARES ACQUIRED UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN OPINION
OF COUNSEL SATISFACTORY TO REGULUS THERAPEUTICS INC.

CONVERTIBLE PROMISSORY NOTE

 

$5,426,952.05

 

Issuance Date: October 10, 2012

 

No. 3

 

FOR VALUE RECEIVED, Regulus Therapeutics Inc., a Delaware corporation (the
“Maker”), promises to pay to Glaxo Group Limited or its assigns (the “Holder”)
the principal sum of $5,426,952.05, together with interest on the unpaid
principal balance of this Note from time to time outstanding at the rate per
annum equal to the Interest Rate (as defined below) until paid in full. Subject
to the provisions of Sections 2 and 4, all of the outstanding principal
hereunder and accrued and unpaid interest thereon (such amount, subject to any
reduction pursuant to Section 3(c), the “Outstanding Amount”) shall be due and
payable on October 9, 2015 (the “Maturity Date”). This Note replaces and
supersedes the Amended and Restated Convertible Promissory Note dated July 27,
2012.

Interest on this Note shall be computed on the basis of a year of 360 days for
the actual number of days elapsed and shall accrue and compound daily from the
Issuance Date to (and including) the Maturity Date. All payments by the Maker
under this Note shall be in immediately available funds.

1. Definitions. For purposes of this Note:

(a) “Affiliates” shall mean, with respect to any Person, each Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person.

(b) “Business Day” shall mean any day other than a (x) Saturday, (y) Sunday or
(z) day on which state or federally chartered banking institutions in New York,
New York or London, England are not required to be open.

(c) “Change of Control” shall mean (i) any “person” or “group” (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act), other than Alnylam
Pharmaceuticals, Inc. and Isis Pharmaceuticals, Inc., that becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act)
of 20% or more of the outstanding voting power of the Maker (assuming the
exercise or conversion of all securities owned by such person or group that are
exercisable for or convertible into securities of the Maker with voting power),
(ii) the consummation of any consolidation or merger of the Maker or similar
transaction, in one or a series of transactions, involving any Person other than
one of the Maker’s subsidiaries, pursuant to which the Common Stock will be
converted into, or receive a distribution of the proceeds in, cash, securities
or other property, other than a transaction or series of transactions, taken as

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whole, in which (A) the Persons that “beneficially own” (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, common stock of the Maker
immediately prior to such transaction beneficially own, directly or indirectly,
voting shares representing a majority of the total voting power of all
outstanding classes of voting shares of the continuing or surviving Person
immediately after the transaction or series of transactions and (B) the Persons
that “beneficially own” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, common stock of the Maker immediately prior to such
transaction beneficially own, directly or indirectly, the voting shares of the
continuing or surviving Person necessary to elect a majority of the members of
the board of directors (or their equivalent if other than a corporation) of such
continuing or surviving Person immediately after the transaction or series of
transactions , (iii) the sale of all or substantially all the assets of the
Maker (determined on a consolidated basis) to another Person or (iv) the
approval by the stockholders of the Maker of a plan of liquidation or
dissolution or other insolvency event.

(d) “Collaboration Agreement” shall mean the Product Development and
Commercialization Agreement dated April 17, 2008 between Maker and Holder, as
amended.

(e) “Common Stock” shall mean the common stock of the Maker, par value $0.001
per share, whether or not registered.

(f) “Conversion Price” shall mean, as of any Conversion Date or other date of
determination, and subject to adjustment as provided herein, $4.00.

(g) “Conversion Date” shall mean the date, which shall be prior to the
Conversion Deadline, on which this Note is converted in accordance with
Section 2.

(h) “Convertible Securities” shall mean any stock or securities (other than
Options) directly or indirectly convertible into or exercisable or exchangeable
for shares of Common Stock.

(i) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, regulations promulgated thereunder and any successor
thereto.

(j) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(k) “Fundamental Change” shall mean a Change of Control or a Termination of
Trading on or prior to the Maturity Date.

(l) “GAAP” shall mean generally accepted accounting principles in the United
States of America in effect from time to time.

(m) “Indebtedness” shall mean, with respect to any Person, without duplication,
(a) all indebtedness, obligations and other liabilities (contingent or
otherwise) of such Person (i) for borrowed money (including obligations of such
Person in respect of overdrafts, foreign exchange contracts, currency exchange
agreements, interest rate protection agreements and any loans or advances from
banks, whether or not evidenced by notes or similar instruments) or
(ii) evidenced

 

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by credit or loan agreements, bonds, debentures, notes or similar instruments
(whether or not the recourse of the lender is to the whole of the assets of such
Person or to only a portion thereof) (other than any account payable or other
accrued current liability or obligation incurred in the ordinary course of
business in connection with the obtaining of materials or services), (b) all
reimbursement obligations and other liabilities (contingent or otherwise) of
such Person with respect to letters of credit, bank guarantees or bankers’
acceptances, (c) all obligations and liabilities (contingent or otherwise) of
such Person (i) in respect of leases of such Person required, in conformity with
GAAP, to be accounted for as capitalized lease obligations on the balance sheet
of such Person (as determined by such Person, or the Maker in the case of any
subsidiary of the Maker), or (ii) under any lease or related document (including
a purchase agreement, conditional sale or other title retention agreement) in
connection with the lease of real property or improvements thereon (or any
personal property included as part of any such lease) which provides that such
Person is contractually obligated to purchase or cause a third party to purchase
the leased property or pay an agreed upon residual value of the leased property
to the lessor (whether or not such lease transaction is characterized as an
operating lease or a capitalized lease in accordance with GAAP), (d) all
obligations (contingent or otherwise) of such Person with respect to any
interest rate or other swap, cap, floor or collar agreement, hedge agreement,
forward contract or other similar instrument or agreement or foreign currency
hedge, exchange, purchase or similar instrument or agreement; (e) all direct or
indirect guaranties, agreements to be jointly liable or similar agreements by
such Person in respect of, and obligations or liabilities of such Person to
purchase or otherwise acquire or otherwise assure a creditor against loss in
respect of, indebtedness, obligations or liabilities of another Person of the
kind described in clauses (a) through (d), and (f) any and all deferrals,
renewals, extensions, refinancings and refundings of, or amendments,
modifications or supplements to, any indebtedness, obligation or liability of
the kind described in clauses (a) through (e).

(n) “Interest Rate” shall mean 3.297%.

(o) “Issuance Date” shall mean the Issuance Date first above written.

(p) “Options” shall mean any rights, warrants or options to subscribe for or
purchase shares of Common Stock or Convertible Securities.

(q) “Person” shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

(r) “Permitted Liens” shall mean (i) any Lien for taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, (ii) any
statutory Lien arising in the ordinary course of business by operation of law
with respect to a liability that is not yet due or delinquent, other than any
Lien imposed by ERISA, (iii) any Lien created by operation of law, such as
materialmen’s liens, mechanics’ liens and other similar liens, arising in the
ordinary course of business with respect to a liability that is not yet due or
delinquent and for which adequate reserves have been established in accordance
with GAAP, (iv) any Lien relating to any Purchase

 

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Money Indebtedness upon or in any equipment acquired or held by the Maker or any
of its subsidiaries to secure the purchase price of such equipment or
indebtedness incurred solely for the purpose of financing the acquisition or
lease of such equipment and (v) Liens arising out of pledges or deposits under
workmen’s compensation laws, unemployment insurance, old age pensions, or other
social security benefits other than any Lien imposed by ERISA.

(s) “Permitted Senior Indebtedness” shall mean (i) Purchase Money Indebtedness
of the Maker and (ii) any other Indebtedness of the Maker issued, assumed or
otherwise incurred after the Issuance Date with respect to which the Holder has
provided prior written consent to have such Indebtedness rank senior to, or pari
passu with, the obligations hereunder, which consent shall not be unreasonably
withheld, conditioned or delayed.

(t) “Purchase Money Indebtedness” shall mean Indebtedness (including capital
lease obligations) with respect to equipment required by the Maker and used in
the ordinary course of business, consisting of the deferred purchase price of
such equipment, conditional sale obligations or obligations under any title
retention agreement, in each case, where the maturity of such Indebtedness does
not exceed the anticipated useful life of the equipment being financed, in the
ordinary course of business; provided, however, that any lien or other
encumbrance arising in connection with any such Indebtedness shall be limited to
the specific equipment being financed; provided further, however, that such
Indebtedness is Incurred at the time of acquisition of such equipment.

(u) “Termination of Trading” shall mean the termination or suspension for a
period of more than five consecutive Business Days of trading of the Common
Stock into which this Note may be converted on The Nasdaq Stock Market or any
such other U.S. principal national securities exchange on which the Common Stock
is then listed.

2. Conversion.

(a) At the option of the Holder, this Note shall be convertible into shares of
Common Stock of the Maker on the terms and conditions set forth in this
Section 2. Notwithstanding the foregoing, if the conversion of this Note
pursuant to this Section 2 would otherwise result in the Holder, together with
its Affiliates, owning more than 9.99% of the outstanding Common Stock
calculated on an as-converted, fully-diluted basis (including as outstanding
shares of capital stock issuable upon exercise or conversion of all outstanding
Options, Purchase Rights or other Convertible Securities of the Maker),
immediately following the conversion of the Note (the “9.99% Threshold”), the
Outstanding Amount shall be converted into (i) that number of shares of Common
Stock that would result in the Maker reaching, but not exceeding, the 9.99%
Threshold (the “9.99% Shares”), and (ii) an amount in cash equal to the
difference between (A) the product of (1) the number of 9.99% Shares issued upon
conversion, multiplied by (2) the Conversion Price and (B) the Outstanding
Amount.

(b) Subject to Sections 2(a), 2(c) and 2(d) hereof, at any time between the
Issuance Date and 11:59 p.m. New York City time on the Business Day immediately
preceding the Maturity Date (the “Conversion Deadline”), the Holder shall be
entitled to convert all, but not less than all,

 

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of the then Outstanding Amount into shares of Common Stock based on the
Conversion Rate described in Section 2(c) below. All shares of Common Stock
issued upon conversion of this Note (i) shall be duly issued, fully paid and
non-assessable and (ii) shall not be subject to any Liens, preemptive rights or
other transfer restrictions. The Maker shall pay any and all transfer, stamp and
similar taxes that may be payable with respect to the issuance and delivery of
shares of Common Stock upon conversion of this Note; provided, that the Maker
shall not be responsible for the payment of any income taxes that may be
incurred by the Holder as a result of such conversion.

(c) Conversion Rate, Adjustment to the Conversion Price.

 

  (i) The number of shares of Common Stock issuable upon conversion of this Note
pursuant to this Section 2 shall be equal to (i) the Outstanding Amount as of
the Conversion Date (defined below) divided by (ii) the Conversion Price;
provided that if the conversion would result in the issuance of a fraction of a
share of Common Stock, the Maker shall round such fraction of a share of Common
Stock up to the nearest whole share.

 

  (ii) Adjustment of Conversion Price upon Subdivision or Combination of shares
of Common Stock. If the Maker at any time on or after the Issuance Date
subdivides (by any stock split, stock dividend, recapitalization or otherwise)
its outstanding shares of Common Stock into a greater number of shares, the
Conversion Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Maker at any time on or after the Issuance Date
combines (by combination, reverse stock split or otherwise) its outstanding
shares of Common Stock into a smaller number of shares, the Conversion Price in
effect immediately prior to such combination will be proportionately increased.

 

  (iii)

Rights upon a Corporate Event. In addition to and not in substitution for any
other rights hereunder (but not in duplication of any adjustment made pursuant
to Section 2(c)(ii)), prior to the consummation of any transaction pursuant to
which all holders of outstanding shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for shares of Common
Stock (a “Corporate Event”), the Maker shall make appropriate provision to
insure that the Holder will thereafter have the right to receive upon a
conversion of this Note for shares of Common Stock, (i) in addition to the
shares of Common Stock receivable upon such conversion, such securities or other
assets to which the Holder would have been entitled with respect to such shares
of Common Stock had such shares of Common Stock been held by the Holder upon the
consummation of such Corporate Event (without taking into account any
limitations or restrictions on the convertibility of this Note) or (ii) in lieu
of the shares of Common Stock otherwise receivable upon such conversion, such
securities or other assets received by the holders of shares of Common Stock in
connection with the

 

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  consummation of such Corporate Event in such amounts as the Holder would have
been entitled to receive had this Note initially been issued with conversion
rights for the form of such consideration (as opposed to shares of Common Stock)
at a conversion rate for such consideration commensurate with the terms of
conversion set forth in Section 2(c)(i). The provisions of this
Section 2(c)(iii) shall apply similarly and equally to successive Corporate
Events and shall be applied without regard to any limitations on the conversion
of this Note.

 

  (iv) Purchase Rights. If at any time the Holder grants, issues or sells any
rights to purchase stock, warrants, securities or other property pro rata to all
record holders of shares of Common Stock (the “Purchase Rights”), then the
Holder will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which the Holder could have acquired if
the Holder had held the shares of Common Stock acquirable upon complete
conversion of this Note (without taking into account any limitations or
restrictions on the convertibility of this Note) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of
shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.

(d) Mechanics of Conversion.

 

  (v) Share Conversion Notice. To convert this Note into shares of Common Stock
on any Conversion Date, the Holder shall (A) transmit by facsimile (or otherwise
deliver), for receipt on or prior to 11:59 p.m., New York City time, on the
Conversion Date, a copy of an executed notice of conversion in the form attached
hereto as Exhibit I (the “Conversion Notice”)

to the Maker:

Regulus Therapeutics Inc.

3545 John Hopkins Court, Suite 210

San Diego, CA 92121

Attn: President and CEO

Facsimile: (858) 202-6363

With a copy to:

Cooley LLP

4401 Eastgate Mall

San Diego, CA 92121

Attn: Thomas A. Coll, Esq.

Facsimile: (858) 550-6420

 

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and (B) physically surrender the Note to the Maker for cancellation in
connection with such conversion.

 

  (vi) Share Delivery. On or before the third Business Day following the date of
receipt of a Conversion Notice and the Maker’s receipt of the Note from the
Holder, the Maker shall issue and deliver to such address of the Holder as is
set forth in the Conversion Notice, a certificate, registered in the name of the
Holder or its designee, for the number of shares of Common Stock to which the
Holder shall be entitled. The Person entitled to receive the shares of Common
Stock issuable upon a conversion of this Note shall be treated for all purposes
as the record holder or holders of such shares of Common Stock on the Conversion
Date.

(e) Availability of Authorized Shares. The Maker covenants and agrees that at
all times from the Issuance Date to the earlier of (i) a Conversion Date and
(ii) the Maturity Date, the Maker shall reserve and keep available out of its
authorized but unissued shares of capital stock such number of shares of Common
Stock, as shall from time to time be sufficient to effect the conversion of this
Note.

3. Repayment and Setoff.

(a) Subject to the provisions in Sections 2 and 4, the Outstanding Amount, if
any, will be repaid in cash on the Maturity Date.

(b) In the event the Holder terminates the Collaboration Agreement without cause
or the Maker terminates the Collaboration Agreement as a result of a material
breach by the Holder, in each case, prior to the Maturity Date, this Note may be
prepaid in cash, in whole but not in part and without any pre-payment penalty,
prior to the Maturity Date at the election of the Maker and without the prior
written consent of the Holder. Except as provided in Section 2(a) and in this
Section 3(b), the Maker shall not have the right to repay in cash, in whole or
in part, any Outstanding Amount prior to the Maturity Date.

(c) On or prior to the Maturity Date, the Holder, at its option, by delivery of
written notice to the Maker, may setoff any Outstanding Amount against any
amount due and payable by the Holder or its Affiliates to the Maker under the
Collaboration Agreement, including any milestone payment, and upon delivery of
such written notice the Outstanding Amount shall be reduced by the amount that
is setoff, with such setoff first being applied to reduce any accrued and unpaid
interest outstanding hereunder and then to reduce the principal amount of this
Note.

4. Fundamental Change. At least 20 days prior to the occurrence of any
Fundamental Change (the effective date of the Fundamental Change, the
“Fundamental Change Date”), the Maker shall deliver written notice to the Holder
describing in reasonable detail the terms of the

 

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Fundamental Change. Upon receipt of such notice, the Holder may (but is not
obligated to) by written notice to the Maker declare due and payable in cash on
the Fundamental Change Date (i) the Outstanding Amount under this Note as of the
Fundamental Change Date and (ii) a fee (the “Make-Whole Premium”) in the amount
equal to the projected interest that would have accrued pursuant to this Note
from the Fundamental Change Date to the Maturity Date assuming that no
Outstanding Amount were prepaid, repaid, converted or offset pursuant to the
terms hereof on or after the Fundamental Change Date.

5. Events of Default. The Outstanding Amount under this Note shall become
immediately due and payable without notice or demand upon the occurrence at any
time of any of the following events of default (individually, an “Event of
Default” and collectively, “Events of Default”):

(a) the Maker fails to pay any of the principal or interest under this Note
within 10 days of Maker’s receipt of written notice that such amount is due and
payable;

(b) the Maker or any of its Affiliates shall fail to make any payment due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) on any other Indebtedness in excess of $10,000,000 and such failure
shall continue after the applicable grace period, if any, specified in the
agreement or instrument relating to Indebtedness;

(c) any material default by the Maker in the due performance or observance of
any covenant or agreement contained in this Note that remains uncured for 10
days after the date the Holder notifies the Maker of such default;

(d) any default by the Maker in due performance or observance of the covenants
and agreements set forth in Section 6 of this Note;

(e) the Maker files any petition or action for relief under any bankruptcy,
reorganization, insolvency or moratorium law or any other law for the relief of,
or relating to, debtors, now or hereafter in effect, or seeks the appointment of
a custodian, receiver, trustee (or other similar official) of the Maker or all
or any substantial portion of the Maker’s assets, or makes any assignment for
the benefit of creditors or takes any action in furtherance of any of the
foregoing, or fails to generally pay its debts as they become due;

(f) an involuntary petition is filed, or any proceeding or case is commenced,
against the Maker (unless such proceeding or case is dismissed or discharged
within 60 days of the filing or commencement thereof) under any bankruptcy,
reorganization, arrangement, insolvency, adjustment of debt, liquidation or
moratorium statute now or hereafter in effect, or a custodian, receiver,
trustee, assignee for the benefit of creditors (or other similar official) is
applied or appointed for the Maker or to take possession, custody or control of
any property of the Maker, or an order for relief is entered against the Maker
in any of the foregoing;

(g) with respect to any consolidated financial statements included in the
Maker’s annual report on Form 10-K filed pursuant to the Exchange Act, the
failure of the Maker to obtain a report thereon that is unqualified as to going
concern and scope of audit and issued by independent certified public
accountants of recognized national standing; or

 

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(h) termination of the Collaboration Agreement by the Holder (or its assignee or
successor under the Collaboration Agreement) in accordance with the terms
thereof by reason of material breach of the Collaboration Agreement by the
Maker.

Upon the occurrence of an Event of Default, the Holder shall have then, or at
any time thereafter, all of the rights and remedies afforded creditors generally
by the applicable federal laws or the laws of the State of Delaware.

6. Subordination, Permitted Liens. This Note (including, but not limited to, the
obligations with respect to payment of the Outstanding Amount and the Make-Whole
Premium) shall rank senior to all Indebtedness of the Maker and its
subsidiaries, if any, whether issued, assumed or otherwise incurred prior to, on
or after the Issuance Date, except for Permitted Senior Indebtedness. So long as
this Note is outstanding, without the prior written consent of the Holder, the
Maker shall not and the Maker shall not permit any of its subsidiaries to,
directly or indirectly, allow or suffer to exist any mortgage, lien, pledge,
charge, security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by the Maker or any of its
subsidiaries (collectively, “Liens”) other than Permitted Liens.

7. Miscellaneous.

(a) All payments by the Maker under this Note shall be made without set-off
(except as provided in Section 3(c)) or counterclaim and be free and clear and
without any deduction or withholding for any taxes or fees of any nature
whatever, unless the obligation to make such deduction or withholding is imposed
by law.

(b) No delay or omission on the part of the Holder in exercising any right under
this Note shall operate as a waiver of such right or of any other right of the
Holder, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion.

(c) The Maker hereby waives presentment, demand, protest and notices of every
kind and assents to any permitted extension of the time of payment and to the
addition or release of any other party primarily or secondarily liable
hereunder.

(d) Any notices, requests and other communications hereunder shall be in writing
and shall be personally delivered or sent by express delivery service,
registered or certified air mail, return receipt requested, postage prepaid, or
by facsimile (confirmed by prepaid registered or certified air mail letter or by
international express delivery mail) (e.g., FedEx), and shall be deemed to have
been properly served to the addressee upon receipt of such written
communication, to the following addresses of the parties, or such other address
as may be specified in writing to the other parties hereto:

 

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if to Holder:   

Glaxo Group Limited

980 Great West Road

Brentford, Middlesex TW8 9GS

United Kingdom

Facsimile:         44-20 8049 6904

Attention:         Company Secretary

            with a copy to:   

GlaxoSmithKline

200 N 16th Street

Mail Code FP2355

Philadelphia, PA 19002

Facsimile:         215-751-5349

Attention:         Vice President Legal Operations

       Corporate Functions - US

if to Maker:   

Regulus Therapeutics Inc.

3545 John Hopkins Court, Suite 210

Facsimile:

Attention:         President and CEO

(e) The Holder agrees that no director or officer of the Maker shall have any
personal liability for the repayment of this Note.

(f) This Note may not be amended or modified except by an instrument executed by
the Maker and the Holder.

(g) Until the conversion of this Note, the Holder shall not have or exercise any
rights by virtue hereof as a member or stockholder of the Maker.

(h) All rights and obligations hereunder shall be governed by the laws of the
State of Delaware (without giving effect to principles of conflicts or choices
of law) and this Note is executed as an instrument under seal.

(i) Upon receipt by the Maker of evidence reasonably satisfactory to the Maker
of the loss, theft, destruction or mutilation of this Note, and, in the case of
loss, theft or destruction, of any indemnification undertaking by the Holder to
the Maker in customary form and, in the case of mutilation, upon surrender and
cancellation of this Note, the Maker shall execute and deliver to the Holder a
new Note (in accordance with Section 7(j)) representing the then outstanding
principal amount hereof.

 

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(j) If the Maker is required to issue a new Note pursuant to the terms of this
Note, such new Note (i) shall be of like tenor with this Note, (ii) shall
represent, as indicated on the face of such new Note, the principal remaining
outstanding, (iii) shall have an issuance date, as indicated on the face of such
new Note, which is the same as the Issuance Date of this Note, (iv) shall have
the same rights and conditions as this Note and (v) shall represent accrued
Interest from the Issuance Date.

(k) The remedies provided in this Note shall be cumulative and in addition to
all other remedies available under this Note at law or in equity (including a
decree of specific performance and/or other injunctive relief), and nothing
herein shall limit the Holder’s right to pursue actual and consequential damages
for any failure by the Maker to comply with the terms of this Note. Amounts set
forth or provided for herein with respect to payments, conversion and the like
(and the computation thereof) shall be the amounts to be received by the Holder
and shall not, except as expressly provided herein, be subject to any other
obligation of the Maker (or the performance thereof). The Maker acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the Holder and that the remedy at law for any such breach may be inadequate. The
Maker therefore agrees that, in the event of any such breach or threatened
breach, the Holder shall be entitled, in addition to all other available
remedies, to seek an injunction restraining any breach, without any bond or
other security being required.

(l) If (i) this Note is placed in the hands of an attorney for collection or
enforcement or is collected or enforced through any legal proceeding or the
Holder otherwise takes action to collect amounts due under this Note or to
enforce the provisions of this Note or (ii) there occurs any bankruptcy,
reorganization, receivership of the Maker or other proceedings affecting the
Maker’s creditors’ rights and involving a claim under this Note, then the Maker
shall pay the documented costs incurred by the Holder for such collection,
enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, but not limited to, attorneys’ fees
and disbursements.

(m) The Holder shall be entitled to transfer or assign this Note to any of its
Affiliates without the Maker’s consent.

 

MAKER:

 

REGULUS THERAPEUTICS INC.

By:   /s/ Kleanthis G. Xanthopoulos Title:  

President and CEO

[Signature Page to Convertible Promissory Note]

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HOLDER:

 

GLAXO GROUP LIMITED

By:   /s/ Catherine Springett Title:  

Authorized Signatory

[Signature Page to Convertible Promissory Note]