Document:

Exhibit 10.11

 

 

SECOND AMENDED AND RESTATED EMPLOYMENT
AGREEMENT

BRITT PENCE

 

This SECOND AMENDED
AND RESTATED EMPLOYMENT AGREEMENT, effective as of August 1, 2017 (the “Effective Date”), is by and
between Vanguard Natural Resources, Inc. (“VNR”, together with its subsidiaries, the “Company”)
and Britt Pence (“Executive”).

 

WHEREAS, VNR
Holdings, LLC (“Holdings”), Vanguard Natural Resources, LLC (“Parent”) and
Executive previously entered into that certain Amended and Restated Employment Agreement dated January 1, 2016 (the “Prior
Agreement”);

 

WHEREAS, Holdings
and Parent and certain of their affiliates filed for relief under chapter 11 of title 11 of the United States Code in the Bankruptcy
Court for the Southern District of Texas, Houston Division and were proponents of the Amended Joint Plan of Reorganization of Vanguard
Natural Resources, LLC, et. al., Pursuant to Chapter 11 of the Bankruptcy Code (as amended, modified or supplemented, the “Reorganization”);

 

WHEREAS, the
parties hereby agree that the Prior Agreement is terminated as of the Effective Date and is replaced in its entirety with this
Second Amended and Restated Employment Agreement (this “Agreement”);

 

WHEREAS, VNR
desires to continue to employ Executive, and Executive desires to continue to be employed by VNR; and

 

WHEREAS, the
parties desire to set forth in writing the terms and conditions of their understandings and agreements in this Agreement.

 

NOW, THEREFORE,
in consideration of the mutual covenants and obligations contained herein, VNR hereby agrees to employ Executive and Executive
hereby accepts such employment upon the terms and conditions set forth in this Agreement:

 

1.       Employment
Period.

 

(a)       Subject
to Section 5, VNR hereby agrees to employ Executive, and Executive hereby agrees to be employed by VNR, in accordance with
the terms and provisions of this Agreement, for the period commencing as of the Effective Date and ending on January 1, 2019
(the “Employment Period”); provided, however, that the Employment Period shall automatically be renewed
and extended for an additional period of twelve (12) months commencing on January 1, 2019 and expiring on January 1,
2020, and on each successive January 1 thereafter, unless at least ninety (90) days prior to the ensuing expiration date
(but no more than twelve (12) months prior to such expiration date), VNR or Executive shall have given ninety (90) days
written notice to the other that it or he, as applicable, does not wish to extend this Agreement (a “Non-Renewal
Notice”). The term “Employment Period” as utilized in this Agreement, shall refer to the
Employment Period as so automatically extended.

 

(b)       During
the term of Executive’s employment with VNR, Executive shall serve as the Executive Vice President of Operations of VNR and
in so doing, shall report to the President and Chief Executive Officer of the Company (the “CEO”). Executive shall
have supervision and control over, and responsibility for, such management and operational functions of the Company currently assigned
to such positions, and shall have such other powers and duties (including holding officer positions with VNR and one or more subsidiaries
of VNR) as may from time to time be prescribed by the CEO, so long as such powers and duties are reasonable and customary for the
Executive Vice President of Operations of an enterprise comparable to the Company.

 

     

     

    

 

(c)       During
the term of Executive’s employment with VNR, and excluding any periods of vacation and sick leave to which Executive is entitled,
Executive agrees to devote substantially all of his business time to the business and affairs of VNR and, to the extent necessary
to discharge the responsibilities assigned to Executive hereunder or by the Board hereafter, to use Executive’s reasonable
best efforts to perform faithfully, effectively and efficiently such responsibilities. During the term of Executive’s employment
with VNR, it shall not be a violation of this Agreement for Executive to (i) serve on corporate, civic or charitable boards
or committees, provided that service on any corporate board or committee shall be subject to the prior approval of the Board, which
shall not be unreasonably withheld (ii) deliver lectures or fulfill speaking engagements and (iii) manage personal investments,
so long as such activities do not materially interfere with the performance of Executive’s responsibilities as an employee
of the Company in accordance with this Agreement.

 

(d)       The
parties expressly acknowledge that any performance of Executive’s responsibilities hereunder shall necessitate, and the Company
shall provide, access to or the disclosure of Confidential Information (as defined in Section 9(a) below) to Executive and
that Executive’s responsibilities shall include the development of the Company’s goodwill through Executive’s
contacts with the Company’s customers and suppliers.

 

2.       Compensation.

 

(a)       Base
Salary. VNR shall pay Executive an annual base salary (“Base Salary”) at the rate of $450,000 for
the period commencing on the Effective Date. The Base Salary will increase to $460,000 on January 1, 2018. The Board may at
its discretion elect to increase Executive’s Base Salary at any time if they deem an increase is warranted. Subject to Section
5(c)(ii) hereof, the Board may not decrease Executive’s annual Base Salary without his prior written approval. Base Salary
shall be payable in accordance with the ordinary payroll practices of VNR, but in no event shall the Base Salary be paid to Executive
less frequently than monthly. The term “Base Salary” as used in this Agreement shall refer to the Base Salary as it
may be so adjusted from time to time.

 

(b)       Annual
Bonus. Executive shall be eligible to receive an annual bonus (the “Annual Bonus”) in an amount to
be determined by the Board or compensation committee of the Board (“Committee”) based on performance
goals established by the Board or Committee, as applicable; provided, however, that the parties agree that Executive and other
employees shall be subject to, and receive, bonus payments through the end of the 2017 calendar year in accordance with the Company’s
2017 pre-emergence annual cash bonus program. In addition, the parties hereby acknowledge and agree that Executive is entitled
to receive the quarterly accrued bonus amounts set forth on Appendix A hereto within 5 business days of the Effective Date.

 

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(c)       MIP
Grants. Executive shall be eligible to participate in the Company’s management incentive plan (“MIP”)
in accordance with the terms thereof and as determined by the Board.

 

3.       Employee
Benefits.

 

(a)       During
the Employment Period, VNR shall provide Executive with coverage under all employee pension and welfare benefit programs, plans
and practices, which VNR makes available to its senior executives (including, without limitation, participation in health, dental,
group life, disability, retirement and all other plans and fringe benefits to the extent generally provided to such senior executives),
commensurate with his position in the Company, to the extent permitted under the employee benefit plan or program, and in accordance
with the terms of the program and/or plan.

 

(b)       Executive
shall be entitled to vacation time in accordance with the Company’s published vacation policy which currently provides Executive
with twenty five (25) business days paid vacation in each calendar year. Such vacation time shall accrue at a rate of two
(2) vacation days for each calendar month worked; provided, however, that during any given calendar year, Executive shall
be able to take vacation days that will accrue during that calendar year, even if such days have not yet accrued. A maximum of
ten (10) business days of accrued but unused vacation may be carried over from one calendar year to the next.

 

(c)       Executive
is authorized to incur reasonable expenses in carrying out his duties and responsibilities under this Agreement and promoting the
business of the Company, including, without limitation, reasonable expenses for travel, lodgings, entertainment and similar items
related to such duties and responsibilities. VNR will promptly reimburse Executive for all such expenses upon presentation by Executive
of appropriately itemized and approved (consistent with VNR’s policy) accounts of such expenditures, in accordance with the
Company’s expense reimbursement policy; provided, however, that in no event shall the expense reimbursement be made after
the last day of the taxable year following the year in which the expense was incurred by Executive, although in the event that
the reimbursement would constitute taxable income to Executive, such reimbursements will be paid no later than March 15th
of the calendar year following the calendar year in which the expense was incurred. No reimbursement or expenses eligible for reimbursement
in any taxable year shall affect the expenses eligible for reimbursement in any other taxable year, nor may the right to receive
a reimbursement of expenses be subject to liquidation or exchanged for another benefit.

 

4.       Termination
in Connection with a Change of Control.

 

(a)       Definition
of Change of Control. For purposes of this Agreement, a “Change of Control” shall mean the occurrence
of one or more of the following events:

 

(i)       Any
“person” or “group” within the meaning of those terms as used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended, other than an affiliate of VNR, shall become the beneficial owner, by
way of merger, consolidation, recapitalization, reorganization or otherwise, of fifty percent (50%) or more of the combined
voting power of the equity interests in VNR;

 

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(ii)       VNR’s
shareholders approve, in one or a series of transactions, a plan of complete liquidation of VNR; or

 

(iii)       The
sale or other disposition by VNR of all or substantially all of its assets in one or more transactions to any person other than
an affiliate of VNR.

 

Notwithstanding anything
provided herein, the Reorganization and any transactions in direct connection therewith shall not constitute a Change of Control.

 

Notwithstanding the foregoing, with respect
to a payment that is subject to section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
a “Change of Control” shall mean a “change of control event” as defined in the regulations and guidance
issued under section 409A of the Code.

 

(b)       If,
during the twelve (12) months immediately following the occurrence of a Change of Control of VNR (the “Change of Control
Period”), Executive is terminated by the Company without Cause or resigns for Good Reason (as defined below), Executive
will be entitled to receive (i) within ten (10) business days after the Date of Termination, his Accrued Compensation and
Reimbursements (as defined below) and (ii) on the 60th day following the Date of Termination, a lump sum payment of an
amount equaling two (2) times the sum of his Base Salary and the Annual Bonus paid or payable with respect to the calendar
year preceding the year in which the Change of Control occurs (the “Change of Control Payment”). Solely
for purposes of the Change of Control Payment, Executive’s Base Salary shall be valued as in effect at the time of the Change
of Control. Treatment of any awards under the MIP will be as provided under the terms and conditions of the MIP and the applicable
individual award agreement.

 

5.       Termination
of Employment.

 

(a)       Termination
without Cause or Resignation by Executive for Other than Good Reason. Unless otherwise specified in a separate provision of
this Section 5, either Executive or VNR, by action of the Board, may terminate this Agreement, and Executive’s employment
by VNR, for any reason after providing thirty (30) days written notice to the non- terminating party. If Executive terminates
this Agreement pursuant to this provision for a reason other than Good Reason, VNR will pay Executive within ten (10) business
days after the Date of Termination (as defined below) (i) all accrued but unpaid Base Salary, (ii) a prorated amount
of Executive’s Base Salary for accrued but unused vacation days, and (iii) yet unpaid reimbursements for any reasonable
and necessary business expenses incurred by Executive prior to the Date of Termination in connection with his duties hereunder
(such amounts collectively, the “Accrued Compensation and Reimbursements”). Upon termination by VNR of
this Agreement pursuant to this Section 5(a) without Cause (other than during a Change of Control Period, which shall be governed
by Section 4(b)), VNR shall pay or provide to Executive the following: (A) within ten (10) business days after the Date
of Termination, the Accrued Compensation and Reimbursements and (B) on the 60th day following the Date of Termination,
a lump sum payment (the “Severance Payment”) equal to the amount of Executive’s Base Salary (at
the rate in effect hereunder as of the Date of Termination) for thirty (30) months. Treatment of any awards under the MIP will
be as provided under the terms and conditions of the MIP and the applicable individual award agreement. Notwithstanding any other
provision of this Agreement, the non-renewal of Executive’s employment pursuant to the terms of a Non-Renewal Notice under
Section 1(a) of this Agreement shall not constitute a termination of this Agreement entitling Executive to the Severance Payment
under this Section 5(a) or any Change of Control Payment under Section 4(b).

 

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(b)       Termination
for Cause. VNR, by action of the Board may terminate this Agreement at any time for Cause. Upon termination by VNR for Cause,
Executive shall only be entitled to Accrued Compensation and Reimbursements, which amount shall be paid within ten (10) business
days after the Date of Termination. For purposes hereof, “Cause” means any of the following:

 

(i)       Executive’s
commission of theft, embezzlement, any other act of dishonesty relating to his employment with VNR or any willful violation of
any law, rules or regulation applicable to the Company, including, but not limited to, those laws, rules or regulations established
by the Securities and Exchange Commission, or any self- regulatory organization having jurisdiction or authority over Executive
or the Company; or

 

(ii)       Executive’s
conviction of, or Executive’s plea of guilty or nolo contendere to, any felony or of any other crime involving fraud,
dishonesty or moral turpitude; or

 

(iii)       A
determination by the Board that Executive has materially breached this Agreement (other than during any period of Disability, as
defined below) where such breach is not remedied within ten business (10) days after written demand by the Board for substantial
performance is actually received by Executive which specifically identifies the manner in which the Board believes Executive has
so breached; or

 

(iv)       Executive’s
willful failure to perform his reasonable and customary duties as the Executive Vice President of Operations of VNR and the Parent
which such failure is not remedied within ten business (10) days after written demand by the Board for substantial performance
is actually received by Executive which specifically identifies the nature of such failure.

 

For purposes of the definition of Cause,
no act or failure to act, on the part of Executive, shall be considered “willful” unless it is done, or omitted to
be done, by Executive in bad faith or without reasonable belief that Executive’s action or omission was in, or not opposed
to, the best interests of the Company. Any act, or failure to act, based upon authority given by the Board or based upon the advice
of counsel for VNR shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best
interests of the Company. VNR, by action of the Board, may terminate Executive’s employment for Cause only after: (i) providing
written notice to Executive, which identifies the Cause for Executive’s termination (which notice must be given within ninety
(90) days after the actual discovery of the act(s) or omission(s) constituting such Cause) and (ii) Executive has been
given an opportunity, together with his counsel, to be heard by the Board at a time and location reasonably designated by the Board.

 

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(c)       Termination
with Good Reason. Executive may terminate this Agreement for Good Reason, and thereby resign his employment, after providing
thirty (30) days’ written notice to the Company of the act(s) or omission(s) constituting Good Reason (which notice
must be given within ninety (90) days after the occurrence of such act(s) or omission(s) and describe the act(s) or omission(s)
in reasonable detail) if such act(s) or omission(s) is/are not cured by the Company within thirty (30) days after Executive
provides such written notice. For purposes hereof, “Good Reason” means any of the following reasons that
occurs without Executive’s written consent:

 

(i)       A
material reduction in Executive’s authority, duties, or responsibilities (provided, however, that any changes to the foregoing
resulting from the Reorganization, including changes resulting from VNR ceasing to be a publicly-traded company shall not be treated
as satisfying the requirements of this Section 5(c)(i)); or

 

(ii)       A
material reduction in Executive’s Base Salary, other than a reduction affecting senior management similarly and in no event
more than 10% from the Base Salary in effect on the date hereof; or

 

(iii)       Executive’s
removal from his position as Executive Vice President of Operations of VNR, other than for Cause or by death or Disability, during
the Employment Period, to a position that is not at least equivalent in authority and duties to Executive Vice President of Operations
of VNR; or

 

(iv)       Relocation
of Executive’s principal place of business to a location fifty (50) or more miles from its location as of the Effective
Date; or

 

(v)       A
material breach by VNR of this Agreement, which materially and adversely affects Executive; or

 

(vi)       VNR’s
failure to make any material payment to Executive required to be made under the terms of this Agreement; or

 

(vii)       The
Board or Committee (a) fails to make grants of initial awards under the MIP (the “Initial Grants”) within
ninety (90) days following the Effective Date or (b) fails to grant Executive an Initial Grant substantially equivalent in value,
on the award date, to the lesser of (x) Executive’s past equity awards or (y) grants made at median to similarly-situated
executives employed by other companies within the Company’s peer group selected by the Board or a committee thereof based
on the recommendation of an independent compensation consultant to the Board or a committee thereof.

 

In the event Executive terminates this
Agreement for Good Reason (other than during a Change of Control Period, which shall be governed by Section 4(b)), VNR shall pay
or provide Executive the following: (i) within ten (10) business days after the Date of Termination, his Accrued Compensation
and Reimbursements and (ii) on the 60th day following the Date of Termination, the Severance Payment. Treatment of any
awards under the MIP will be as provided under the terms and conditions of the MIP and the applicable individual award agreement.

 

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(d)       Termination
by Disability. VNR, by action of the Board, may terminate this Agreement at any time if Executive shall be deemed in the reasonable
judgment of the Board to have sustained a “Disability.” Executive shall be deemed to have sustained a
Disability if and only if he shall have been unable to substantially perform his duties as an employee of VNR as a result of sickness
or injury, and shall have remained unable to perform any such duties for a period of more than 180 consecutive days in any
twelve (12) month period. Upon termination of this Agreement for Disability, Executive shall only be entitled to (i) Accrued
Compensation and Reimbursements, which amount shall be paid within ten (10) business days after the Date of Termination and
(ii) any other amounts or benefits to which Executive may be entitled under a separate plan, policy or program maintained by the
Company.

 

(e)       Termination
by Death. This Agreement will terminate automatically upon Executive’s death. Upon termination of this Agreement because
of Executive’s death, VNR shall pay or provide Executive’s estate with the following: (i) Accrued Compensation and
Reimbursements, which amount shall be paid within ten (10) business days after the Date of Termination and (ii) any other
amounts or benefits to which Executive may be entitled under a separate plan, policy or program maintained by the Company.

 

(f)       Date
of Termination. As used in this Agreement, “Date of Termination” means (i) if Executive’s
employment is terminated by his death, the date of his death; (ii) if Executive’s employment is terminated as a result
of a Disability or by VNR for Cause or without Cause, then the date specified in a notice delivered to Executive by VNR of such
termination, (iii) if Executive’s employment is terminated by Executive for Good Reason, then the date specified in
the notice of such termination delivered to VNR by Executive, (iv) if Executive’s employment terminates due to the giving
of a Non-Renewal Notice, the last day of the Employment Period, and (v) if Executive’s employment is terminated for
any other reason, the date specified therefore in the notice of such termination.

 

6.       Employment.

 

Upon termination of
this Agreement, Executive’s employment shall also terminate and cease, and Executive shall be deemed to have voluntarily
resigned from all positions and the Board, if Executive is a member of the Board. Executive shall confirm the foregoing resignation(s)
by submitting to the Company written confirmation of Executive’s resignation(s), and the Company’s obligations to pay
the Severance Payment or the Change of Control Payment shall be subject to the Company’s receipt of such written confirmation.

 

7.       Mitigation.

 

Upon termination of
this Agreement for any reason, amounts to be paid per the express terms of this Agreement shall not be reduced whether or not Executive
obtains other employment.

 

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8.       Release.

 

Notwithstanding any
other provision in this Agreement to the contrary, as a condition precedent to receiving any change of control or severance payments
or benefits set forth in Section 4 or 5 of this Agreement (other than the Accrued Compensation and Reimbursements) in connection
with any applicable termination scenario, Executive agrees to execute (and not revoke) a customary severance and release agreement,
including a waiver of all claims, reasonably acceptable to the Company (the “Release”), within the forty-five
(45) day period immediately following the Date of Termination. All revocation rights and timing restrictions shall be set
forth in such Release. If Executive fails to execute and deliver the Release, or revokes the Release, Executive agrees that he
shall not be entitled to receive any severance payments or benefits set forth in Section 4 or 5 of this Agreement (other than
the Accrued Compensation and Reimbursements) in connection with any applicable termination scenario. For purposes of this Agreement,
the Release shall be considered to have been executed by Executive if it is signed by his legal representative in the case of legal
incompetence or on behalf of Executive’s estate in the case of his death.

 

9.       Nondisclosure.

 

(a)       It
is understood that Executive during his tenure with the Company has received and will continue to receive access to some or all
of the Company’s various trade secrets and confidential or proprietary information, including information he has not received
before, consisting of, but not limited to, information relating to (i) business operations and methods, (ii) existing
and proposed investments and investment strategies, (iii) financial performance, (iv) compensation arrangements and amounts
(whether relating to the Company or to any of its employees), (v) contractual relationships, (vi) business partners and
relationships, and (vii) marketing strategies (all of the forgoing, “Confidential Information”).
Confidential Information shall not include: (A) information that Executive may furnish to third parties regarding his obligations
under this Section 9 and under Section 10 or (B) information that (1) is general knowledge of Executive or
information that becomes generally available to the public by means other than Executive’s breach of this Section 9
(for example, not as a result of Executive’s unauthorized release of marketing materials), (2) is in Executive’s
possession, or becomes available to Executive, on a non-confidential basis, from a source other than the Company or (3) Executive
is required by law, regulation, court order or discovery demand to disclose; provided, however, that in the case of clause (3),
Executive gives the Company, to the extent permitted by law, reasonable notice prior to the disclosure of the Confidential Information
and the reasons and circumstances surrounding such disclosure to provide the Company an opportunity to seek a protective order
or other appropriate request for confidential treatment of the applicable Confidential Information.

 

(b)       Executive
agrees that all Confidential Information, whether prepared by Executive or otherwise coming into his possession, shall remain the
exclusive property of the Company during Executive’s employment with the Company. Executive further agrees that Executive
shall not, except for the benefit of the Company pursuant to the exercise of his duties in accordance with this Agreement or with
the prior written consent of the Company, use or disclose to any third party any of the Confidential Information described herein,
directly or indirectly, either during Executive’s employment with the Company or at any time following the termination of
Executive’s employment with the Company.

 

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(c)       Upon
termination of this Agreement, Executive agrees that all Confidential Information and other files, documents, materials, records,
notebooks, customer lists, business proposals, contracts, agreements and other repositories containing information concerning the
Company or the business of the Company (including all copies thereof) in Executive’s possession, custody or control, whether
prepared by Executive or others, shall remain with or be returned to the Company as soon as practicable after the Date of Termination.

 

(d)       Nothing
in this Agreement will preclude, prohibit or restrict Executive from (i) communicating with, any federal, state or local administrative
or regulatory agency or authority, including but not limited to the Securities and Exchange Commission (the “SEC”);
(ii) participating or cooperating in any investigation conducted by any governmental agency or authority; or (iii) filing a charge
of discrimination with the United States Equal Employment Opportunity Commission or any other federal state or local administrative
agency or regulatory authority. Nothing in this Agreement, or any other agreement between the parties, prohibits or is intended
in any manner to prohibit, Executive from (A) reporting a possible violation of federal or other applicable law or regulation to
any governmental agency or entity, including but not limited to the Department of Justice, the SEC, the U.S. Congress, and any
governmental agency Inspector General, or (B) making other disclosures that are protected under whistleblower provisions of federal
law or regulation. This Agreement does not limit Executive’s right to receive an award (including, without limitation, a
monetary reward) for information provided to the SEC. Executive does not need the prior authorization of anyone at the Company
to make any such reports or disclosures, and Executive is not required to notify the Company that Executive has made such reports
or disclosures. Nothing in this Agreement or any other agreement or policy of the Company is intended to interfere with or restrain
the immunity provided under 18 U.S.C. §1833(b). Executive cannot be held criminally or civilly liable under any federal or
state trade secret law for the disclosure of a trade secret that is made (i) (A) in confidence to federal, state or local government
officials, directly or indirectly, or to an attorney, and (B) for the purpose of reporting or investigating a suspected violation
of law; (ii) in a complaint or other document filed in a lawsuit or other proceeding, if filed under seal; or (iii) in connection
with a lawsuit alleging retaliation for reporting a suspected violation of law, if filed under seal and does not disclose the trade
secret, except pursuant to a court order. The foregoing provisions regarding protected disclosures are intended to comply with
all applicable laws. If any laws are adopted, amended or repealed after the execution of this Agreement, this Section 9(d) shall
be deemed to be amended to reflect the same.

  

10.       Non-Competition
and Non-solicitation.

 

(a)       As
part of the consideration for the compensation and benefits to be paid to Executive hereunder, to protect Confidential Information
of the Company and its customers and clients that have been and will be entrusted to Executive, the business goodwill of the Company
and its subsidiaries that will be developed in and through Executive and the business opportunities that will be disclosed or entrusted
to Executive by the Company and its subsidiaries, and as an additional incentive for the Company to enter into this Agreement,
from the date hereof through the first anniversary of the Date of Termination (the “Restricted Period”),
Executive will not (other than for the benefit of the Company pursuant to this Agreement), directly or indirectly:

 

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(i)       engage
in, or carry on or assist, individually or as a principal, owner, officer, director, employee, shareholder, consultant, contractor,
partner, member, joint venturer, agent, equity owner or in any other capacity whatsoever (in any such capacity, an “Investor”),
any (A) any business directly competitive with the business in which the Company is engaged from time to time (“Competing
Business”) or (B) Business Enterprise (as defined below) that is otherwise directly competitive with the Company
within the states in which the Company conducts business;

 

(ii)       perform
for any corporation, partnership, limited liability company, sole proprietorship, joint venture or other business association or
entity (a “Business Enterprise”) engaged in any Competing Business any duty Executive has performed for the Company
that involved Executive’s access to, or knowledge or application of, Confidential Information;

 

(iii)       
induce or attempt to induce any customer, supplier, licensee or other business relation of the Company to cease doing business
with the Company or in any way interfere with the relationship between any such customer, supplier, licensee or business relation
and the Company;

 

(iv)       induce
or attempt to induce any customer, supplier, licensee or other business relation of the Company with whom Executive had direct
business contact in dealings during the Employment Period in the course of his employment with the Company to cease doing business
with the Company or in any way interfere with the relationship between any such customer, supplier, licensee or business relation
and the Company; or

 

(v)       solicit
with the purpose of hiring or hire any person who is or, within 180 days after such person ceased to be an employee of
the Company, was an employee of the Company.

 

(b)       Notwithstanding
the duration of the restrictions set forth in Section 10(a) above and subject to Section 10(e) below, the restrictions set forth
under Sections 10(a)(i) and (ii) shall expire after (x) 180 days following the Date of Termination, if Executive terminates this
Agreement under Sections 5(c) or 4(b) hereof or the Company terminates Executive’s employment without Cause under Sections
5(a) or 4(b) or (y) sixty (60) days following the Date of Termination, if Executive elects to terminate this Agreement for any
other reason.

 

(c)       Notwithstanding
the foregoing restrictions of this Section 10, nothing in this Section 10 shall prohibit (i) any investment by Executive,
directly or indirectly, in securities which are issued by a Business Enterprise involved in or conducting a Competing Business,
provided that Executive, directly or indirectly, does not own more than five percent (5%) of the outstanding equity or voting
securities of such Business Enterprise or (ii) Executive, directly or indirectly, from owning any interest in any Business
Enterprise which conducts a Competing Business if such interest in such Business Enterprise is owned as of the date of this Agreement
and Executive does not have the right, in the case of (i) or (ii), through the ownership of a voting interest or otherwise,
to direct the activities of or associated with the business of such Business Enterprise.

 

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(d)       Executive
acknowledges that each of the covenants of Section 10(a) are in addition to, and shall not be construed as a limitation upon,
any other covenant provided in Section 10(a). Executive agrees that the geographic boundaries, scope of prohibited activities,
and time duration of each of the covenants set forth in Section 10(a) are reasonable in nature and are no broader than are
necessary to maintain the confidentiality and the goodwill of the Company’s proprietary and Confidential Information, plans
and services and to protect the other legitimate business interests of the Company, including without limitation the goodwill developed
by Executive with Company’s customers, suppliers, licensees and business relations.

 

(e)       If,
during any portion of the Restricted Period, Executive is not in compliance with the terms of Section 10(a), the Company shall
be entitled to, among other remedies, compliance by Executive with the terms of Section 10(a) for an additional period of
time (i.e., in addition to the Restricted Period) that shall equal the period(s) over which such noncompliance occurred.

 

(f)       The
parties hereto intend that the covenants contained in Section 10(a) be construed as a series of separate covenants, one for
each defined province in each geographic area in which Executive on behalf of the Company conducts business. Except for geographic
coverage, each such separate covenant shall be deemed identical in terms to the applicable covenant contained in Section 10(a).
Furthermore, each of the covenants in Section 9(a) shall be deemed a separate and independent covenant, each being enforceable
irrespective of the enforceability (with or without reformation) of the other covenants contained in Section 10(a).

 

11.       Notices.

 

All notices and other
communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered
personally, mailed by certified mail (return receipt requested) or sent by overnight delivery service to the parties at the following
addresses or at such other addresses as shall be specified by the parties by like notice, in order of preference of the recipient:

 

	To VNR or the Company:	To Executive:
	To the Secretary of VNR	At the most recent address on file

Notice so given shall, in the case of mail, be deemed to be given and received on the fifth calendar day after posting, and in
the case overnight delivery service, on the date of actual delivery.

 

    	11	 	 

     

    

 

12.       Severability
and Reformation.

 

If any one or more
of the terms, provisions, covenants or restrictions of this Agreement shall be determined by a court of competent jurisdiction
to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions shall remain in full force
and effect, and the invalid, void or unenforceable provisions shall be deemed severable. Moreover, if any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or
subject, it shall be reformed by limiting and reducing it to the minimum extent necessary, so as to be enforceable to the extent
compatible with the applicable law as it shall then appear.

 

13.       Assignment.

 

This Agreement shall
be binding upon and inure to the benefit of the heirs and legal representatives of Executive and the permitted assigns and successors
of VNR, but neither this Agreement nor any rights or obligations hereunder shall be assignable or otherwise subject to hypothecation
by Executive without the express written consent of VNR (except in the case of death by will or by operation of the laws of intestate
succession) or by VNR, except that VNR may assign this Agreement to any successor (whether by merger, purchase or otherwise) to
all or substantially all of the stock assets or businesses of VNR, if such successor expressly agrees to assume the obligations
of VNR hereunder.

 

14.       Amendment.

 

This Agreement may
be amended only by writing signed by both Executive and by a duly authorized representative of VNR (other than Executive).

 

15.       Assistance
in Litigation.

 

Executive shall reasonably
cooperate with the Company in the defense or prosecution of any claims or actions now in existence or that may be brought in the
future against or on behalf of the Company that relate to events or occurrences that transpired while Executive was employed by
the Company. Executive’s cooperation in connection with such claims or actions shall include, but not be limited to, being
available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient
times. Executive also shall cooperate fully with the Company in connection with any investigation or review by any Federal, state,
or local regulatory authority as any such investigation or review relates, to events or occurrences that transpired while Executive
was employed by the Company. The Company will pay Executive an agreed upon reasonably hourly rate for Executive’s cooperation
pursuant to this Section 15.

 

16.       Beneficiaries;
References.

 

Executive shall be
entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any
compensation or benefit payable hereunder following Executive’s death, and may change such election, in either case by giving
the Company written notice thereof. In the event of Executive’s death or a judicial determination of his incompetence, reference
in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative.
Any reference to the masculine gender in this Agreement shall include, where appropriate, the feminine.

 

    	12	 	 

     

    

 

17.       Use
of Name, Likeness and Biography.

 

The Company shall have
the right (but not the obligation) to use, publish and broadcast, and to authorize others to do so, the name, approved likeness
and approved biographical material of Executive to advertise, publicize and promote the business of the Company and its affiliates,
but not for the purposes of direct endorsement without Executive’s consent. This right shall terminate upon the termination
of this Agreement. An “approved likeness” and “approved biographical material” shall be, respectively,
any photograph or other depiction of Executive, or any biographical information or life story concerning the professional career
of Executive.

 

18.       Governing
Law.

 

THIS AGREEMENT SHALL
BE CONSTRUED, INTERPRETED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REFERENCE TO RULES RELATING
TO CONFLICTS OF LAW.

 

19.       Entire
Agreement.

 

This Agreement contains
the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes in all respects any
prior or other agreement (including the Prior Agreement) or understanding, written or oral, between the Company or any affiliate
of the Company and Executive with respect to such subject matter. For the avoidance of doubt, Executive acknowledges and agrees
that the Company has satisfied all obligations that it has owed, and that it ever could owe, under the Prior Agreement and that
Executive has no further rights thereunder.

 

20.       Withholding.

 

The Company shall be
entitled to withhold from payment to Executive of any amount of withholding required by law.

 

21.       Counterparts.

 

This Agreement may
be executed in two or more counterparts, each of which will be deemed an original.

 

22.       Remedies.

 

The parties recognize
and affirm that in the event of a breach of Sections 9 or 10 of this Agreement, money damages would be inadequate and
VNR would not have an adequate remedy at law. Accordingly, the parties agree that in the event of a breach or a threatened breach
of Sections 9 or 10, VNR may, in addition and supplementary to other rights and remedies existing in its favor, apply
to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to
enforce or prevent any violations of the provisions hereof (without posting a bond or other security). In addition, Executive agrees
that in the event a court of competent jurisdiction or an arbitrator finds that Executive violated Section 9 or 10, the
time periods set forth in those Sections shall be tolled until such breach or violation has been cured. Executive further agrees
that VNR shall have the right to offset the amount of any damages resulting from a breach by Executive of Section 9 or 10
against any payments due Executive under this Agreement. The parties agree that if one of the parties is found to have breached
this Agreement by a court of competent jurisdiction or arbitrator, the breaching party will be required to pay the non-breaching
party’s attorneys’ fees reasonably incurred in prosecuting the non-breaching party’s claim of breach.

 

    	13	 	 

     

    

 

23.       Non-Waiver.

 

The failure by either
party to insist upon the performance of any one or more terms, covenants or conditions of this Agreement shall not be construed
as a waiver or relinquishment of any right granted hereunder or of any future performance of any such term, covenant or condition,
and the obligation of either party with respect hereto shall continue in full force and effect, unless such waiver shall be in
writing signed by VNR (other than Executive) and Executive.

 

24.       Announcement.

 

The Company shall have
the right to make public announcements concerning the execution of this Agreement and the terms contained herein, at the Company’s
discretion.

 

25.       Construction.

 

The headings and captions
of this Agreement are provided for convenience only and are intended to have no effect in construing or interpreting this Agreement.
The language in all parts of this Agreement shall be in all cases construed in accordance to its fair meaning and not strictly
for or against the Company or Executive.

 

26.       Right
to Insure.

 

The Company shall have
the right to secure, in its own name or otherwise, and at its own expense, life, health, accident or other insurance covering Executive,
and Executive shall have no right, title or interest in and to such insurance. Executive shall assist the Company in procuring
such insurance by submitting to examinations and by signing such applications and other instruments as may be required by the insurance
carriers to which application is made for any such insurance.

 

27.       No
Inconsistent Obligations.

 

Executive represents
and warrants that to his knowledge he has no obligations, legal, in contract, or otherwise, inconsistent with the terms of this
Agreement or with his undertaking employment with the Company to perform the duties described herein. Executive will not disclose
to the Company, or use, or induce the Company to use, any confidential, proprietary, or trade secret information of others. Executive
represents and warrants that to his knowledge he has returned all property and confidential information belonging to all prior
employers, if he is obligated to do so.

 

    	14	 	 

     

    

 

28.       Binding
Agreement.

 

This Agreement shall
inure to the benefit of and be binding upon Executive, his heirs and personal representatives, and the Company, its successors
and assigns.

 

29.       Voluntary
Agreement.

 

Each party to this
Agreement has read and fully understands the terms and provisions hereof, has had an opportunity to review this Agreement with
legal counsel, has executed this Agreement based upon such party’s own judgment and advice of counsel (if any), and knowingly,
voluntarily, and without duress, agrees to all of the terms set forth in this Agreement. The parties have participated jointly
in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement
will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring
any party because of authorship of any provision of this Agreement. Except as expressly set forth in this Agreement, neither the
parties nor their affiliates, advisors and/or their attorneys have made any representation or warranty, express or implied, at
law or in equity with respect of the subject matter contained herein. Without limiting the generality of the previous sentence,
the Companies, their affiliates, advisors, and/or attorneys have made no representation or warranty to Executive concerning the
state or Federal tax consequences to Executive regarding the transactions contemplated by this Agreement.

 

30.       Section 409A
of the Code.

 

This Agreement is intended
to comply with Section 409A of the Code, and the Treasury regulations and other interpretive guidance issued thereunder (collectively,
“Section 409A”), or to be treated as exempt therefrom, and shall be construed and administered in
accordance with such intent. Any payments under this Agreement that may be excluded from Section 409A either as separation
pay due to an involuntary separation from service, as a short-term deferral, or as any other compensation that is otherwise exempt
from Section 409A shall be excluded from Section 409A to the maximum extent possible. Any payments to be made under this
Agreement upon a termination of Executive’s employment that are subject to Section 409A shall only be made if such termination
of employment constitutes a “separation from service” under Section 409A. Notwithstanding any provision in this
Agreement to the contrary, if any payment or benefit provided for herein would be subject to additional taxes and interest under
Section 409A if Executive’s receipt of such payment or benefit is not delayed until the earlier of (i) the date
of Executive’s death or (ii) the date that is six months after the Date of Termination of Executive’s employment
hereunder (such date, the “Section 409A Payment Date”), then such payment or benefit shall not be
provided to Executive (or Executive’s estate, if applicable) until the Section 409A Payment Date. Each payment under
this Agreement is intended to be a “separate payment” and not one of a series of payments for purposes of Section 409A.
Notwithstanding the foregoing, the Company does not guarantee any particular tax effect, and Executive shall be solely responsible
and liable for the satisfaction of all taxes, penalties and interest that may be imposed on or for the account of Executive in
connection with the Agreement (including any taxes, penalties and interest under Section 409A), and neither the Company, nor any
of its affiliates, shall have any obligation to indemnify or otherwise hold Executive (or any beneficiary) harmless from any or
all of such taxes, penalties or interest.

 

    	15	 	 

     

    

 

IN WITNESS WHEREOF,
the parties hereto have executed this Employment Agreement on the dates below

 

	 	EXECUTIVE
	 	 	 
	 	/s/ Britt Pence
	 	Britt Pence
	 	 	 
	 	Date:	August 1, 2017
	 	 	 
	 	VANGUARD NATURAL RESOURCES, INC.
	 	 	 
	 	By:	/s/ Scott W. Smith
	 	 	 
	 	Its:	President and Chief Executive Officer
	 	 	 
	 	Date:	August 1, 2017

 

 

    	16	 	 

     

    

 

Appendix A

Quarterly Bonus Amounts

 

Executive will receive quarterly bonuses accrued under the Executive’s
Amended and Restated Employment Agreement with Vanguard Natural Resources, LLC, which was in effect prior to the Effective Date.
The schedule below provides for the receipt of the following accrued payments within five days of the Effective Date: (i) quarterly
bonuses with respect to the fiscal quarters ended (A) December 31, 2016; (B) March 31, 2017; and (C) June 30, 2017, all of which
have accrued and are payable now; and (ii) a bonus with respect to the period from July 1, 2017 to the Effective Date.

 

	Accrual Period	 	Quarter ended

December 31, 2016	 	 	Quarter ended

March 31, 2017	 	 	Quarter ended

June 30, 2017	 	 	July 1, 2017 -

Effective Date1	 
	Bonus	 	$	116,875	 	 	$	133,594	 	 	$	133,594	 	 	$	44,532	 

  

Executive shall receive bonus payments through
the end of the year ended December 31, 2017 in accordance with the Company’s pre-emergence annual cash bonus program. Executive
will also receive future additional payments as established by the Board of Directors of Vanguard Natural Resources, Inc.

 

 

 

 

 

1
One-third of the estimate quarterly bonus payment for the quarter ended September 30, 2017.Exhibit

  Exhibit 10.1

 
AMENDED AND RESTATED EMPLOYMENT AGREEMENT 

This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into effective as of June 22, 2017 (the “Effective Date”), by and between REGULUS THERAPEUTICS INC., a Delaware corporation (the “Company”), and MARK DEEG, M.D., PH.D. (the “Executive”). The Company and the Executive are hereinafter collectively referred to as the “Parties”, and individually referred to as a “Party”. 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 April 3, 2017 (the “Prior Agreement”).
RECITALS 
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 employ Executive to provide personal services to the Company, and wishes to provide Executive with certain compensation and benefits in return for such 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: 
AGREEMENT 
		
	1.
	EMPLOYMENT.

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 serve in the role of Chief Medical Officer of the Company (“CMO”) 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 CMO.  
1.3    Duties.  The Executive shall report to the Chief Research & Development Officer 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 CMO, consistent with the bylaws of the Company and as required by the Chief Research & Development Officer.
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 business. 
		
	2.
	LOYAL AND CONSCIENTIOUS PERFORMANCE.

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.
	COMPENSATION OF THE EXECUTIVE.

3.1    Base Salary.  The Company shall pay the Executive a base salary at the rate of $360,000 per year (the “Base Salary”) retroactive to June 2, 2017, 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 40% 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, including through the date of payment, 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.  
3.2.1    Signing Bonus.  Executive acknowledges payment under the Prior Agreement of a lump-sum cash Signing Bonus in the amount of $36,000.00, less payroll deductions and all required withholdings. 
3.2.2    Relocation Benefits.  Under the Prior Agreement and this Agreement, Executive will be entitled to receive the following benefits: (i) relocation to San Diego County of Executive’s household goods and automobiles up to a total of $25,000; (ii) house hunting and final transportation to San Diego County expenses up to $4,000; (iii) two (2) months of temporary housing, up to a total of $10,000; (iv) up to four (4) economy class tickets between San Diego, CA and Carmel, IN during your relocation period; and, (v) a lump-sum cash Bonus Advance in the amount of $50,000.00 towards the down-payment of a home in San Diego County. The Bonus Advance will be an advance against any future Annual Bonus and therefore will be deducted from any such Annual Bonus(es) paid to Executive.  Executive will provide evidence of any out-of-pocket expenses incurred and for which reimbursement is sought as a Relocation Benefit.  To the extent a Relocation Benefit is taxable, Company will make all required payroll deductions and withholdings.
3.2.3    In the event of Executive’s termination of employment with the Company for Cause or Executive's resignation of employment with the Company without Good Reason (as these terms are defined below) (in either case, a “Triggering Termination”) within the three years following the effective date of the Prior Agreement, Executive shall repay the amounts of the Signing Bonus and Relocation Benefits to Company according to the following schedule.  Executive's repayment of the Signing Bonus and Relocation Benefits shall be made in cash within 30 days of the date of Executive's termination or resignation, as applicable.
	
		
	Triggering Termination occurs on or after April 3, 2017 but before April 2, 2018.
	100% of Signing Bonus and Relocation Benefits paid to Executive

	Triggering Termination occurs on or after April 3, 2018 but before April 2, 2019.
	66% of Signing Bonus and Relocation Benefits paid to Executive

	Triggering Termination occurs on or after April 3, 2019 but before April 2, 2020.
	33% of Signing Bonus and Relocation Benefits paid to Executive

	Triggering Termination occurs on or after April 3, 2020.
	$0 to be repaid

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. Upon the Effective Date of this Agreement, Executive will receive a stock option grant to purchase 100,000 shares of the Company’s common stock at a price equal to the closing price of the stock on the date the options are granted.  This stock option is expected to vest over a four-year period (25% will vest after one year, with the balance to vest in equal monthly installments over the following 36 months thereafter, subject to Executive’s Continued Service to the Company) and expire ten (10) years after the grant date.  The stock option will be subject to the terms and conditions set forth in the Regulus 2012 Equity Incentive Plan (the “Plan”), and the terms and conditions set forth in the stock option grant notices and option agreements. Executive will be provided confirmation of the vesting schedule and the applicable Plan documents once employment begins. 
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.
3.5    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 Company.
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.
		
	4.
	DEFINITIONS.  

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 Executive 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 Executive 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 thirty-five (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 Salary or target annual bonus as in effect immediately prior to such reduction, or (B) a change to the timing associated with long-term incentive awards or a reduction in the annual grant date fair value of such awards relative to the highest fair value award granted to Executive during the three (3)-year period prior to a Change in Control; (III) a material reduction by the Company in the kind or aggregate level of employee benefits to which Executive is entitled immediately prior to such reduction with the result that Executive’s overall benefits package is significantly reduced; (IV) Executive is requested to relocate (except for office relocations that would not increase Executive’s one way commute by more than thirty-five (35) miles); or (V) the failure of the Company to obtain the assumption of this Agreement pursuant to Section 7.  During the Change in Control Protection Period, any good faith determination of Good Reason by the Executive shall be binding on the Company provided the Company does not remedy the occurrence giving rise to Good Reason within thirty (30) days’ written notice thereof from the Executive.
		
	5.
	COMPENSATION UPON TERMINATION.

5.1    Death Or Complete Disability. If the Executive’s employment with the Company is terminated as a result of Executive’s death or Complete Disability, the Company shall pay to Executive, and/or Executive’s heirs, the Executive’s Base Salary and accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of termination, less standard deductions and withholdings, and the Company shall thereafter have no further obligations to the Executive and/or Executive’s heirs under this Agreement. 
5.2    With Cause or Without Good Reason. If the Executive’s employment with the Company is terminated by the Company for Cause or if the Executive terminates employment with the Company without Good Reason, the Company shall pay the Executive’s Base Salary and accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of termination, less standard deductions and withholdings, and the Company shall thereafter have no further obligations to the Executive under this Agreement. 
5.3    Without Cause or for Good Reason. If the Executive’s employment with the Company is terminated by the Company without Cause, or Executive resigns for Good Reason, and in either case Executive signs a waiver and release of claims (in substantially the form attached hereto as Exhibit A, or in such other form of release as the Company may require (the “Release”)) on or within the time period set forth therein, but in no event later than 45 days after Executive’s termination date, and allows such Release to become effective in accordance with its terms (such latest permitted date on which the Release could become effective, the “Release Deadline”), then Executive will receive the following benefits: 
5.3.1    Severance Payment.  A payment equal to the equivalent of twelve (12) months of the Executive’s Base Salary (the “Severance Payment”), less standard deductions and withholdings, which shall be paid in a single lump sum within five days after the effective date of the Release.  For the avoidance of doubt, the Severance Payment shall relate to the Base Salary at the rate in effect during the last regularly scheduled payroll period immediately preceding the date of the termination, and prior to any reduction in Base Salary that would permit the Executive to voluntarily terminate employment for Good Reason. 
5.3.2    Health Benefits Cash Payment.  On the effective date of the Release, the Company will pay to the Executive a single, lump-sum cash amount equal to (i) 229.56% multiplied by the total cost of the projected premiums for group medical, dental and vision insurance coverage (the “Health Benefits”) for a period of twelve (12) months following the date of the Executive’s termination of employment, based on the projected premium rates for such period for continuation of coverage in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) determined, in all cases, as of the date of the Executive’s termination of employment (1) based on the Company plans in which the Executive participates and the level of the Executive’s Health Benefits coverage as of immediately preceding the date of the Executive’s termination of employment or, if more favorable to the Executive, the level of the Executive’s Health Benefits coverage as in effect at any time during the ninety (90)-day period immediately preceding the date of a Change in Control, and (2) assuming, to the extent applicable, an increase of four percent (4%) in the applicable premium rates at the beginning of each calendar year during such twelve (12)-month period from those in effect as of the end of the previous calendar year.  For the avoidance of doubt, the cash amount described in this paragraph shall be in lieu of the provision of any welfare benefits following the date of the Executive’s termination of employment and the Executive’s sole right to post-termination welfare benefits shall be those required to be made available under COBRA, the cost of which (if elected) shall be borne solely by the Executive.  
5.3.3    Equity Acceleration.  Contingent on the effective date of the Release, all of the outstanding stock options, restricted stock or other equity awards that Executive holds with respect to the Company’s common stock that have time-based vesting shall accelerate and vest such that all shares shall be vested and fully exercisable as of the effective date of Executive’s termination of employment.  Equity awards that Executive holds with respect to the Company’s common stock that are subject to vesting based on Company performance will not accelerate upon Executive’s termination for any reason.  In order to give effect to the foregoing provision, notwithstanding anything to the contrary set forth in Executive’s equity award agreements, following any termination of Executive’s employment that is without Cause or for Good Reason, none of Executive’s equity awards shall terminate with respect to any vested or unvested portion subject to such award before the later of (A) the effective date of the Release, or (B) the Release Deadline.
5.4    Additional Change in Control Related Severance Benefits. In the event that Executive’s employment with the Company is terminated without Cause or Executive resigns for Good Reason within the one month period immediately preceding or the twelve month period immediately following the effective date of a Change in Control (such thirteen-month period, the “Change in Control Protection Period”), then subject to the Executive’s delivery to the Company of an effective Release as required pursuant to Section 5.3, Executive shall be entitled to all of the severance benefits described under Section 5.3 above, provided that:
5.4.1    The Executive shall additionally be entitled to a lump sum payment equivalent to the Executive’s target Annual Bonus that was in effect at the time of Executive’s termination (the “Bonus Payment”). The Bonus Payment shall be subject to all standard deductions and withholdings and shall be paid in a single lump sum within five days after the later of (A) the effective date of the Release, or (B) the effective date of the Change in Control (if Executive’s termination occurs prior to the Change in Control), but in no event later than March 15 of the year following the year in which Executive’s termination of employment occurred.  
5.5    Termination by Mutual Agreement of the Parties.  The Executive’s employment pursuant to this Agreement may be terminated at any time upon mutual agreement, in writing, of the Parties.  Any such termination of employment shall have the consequences specified in such writing. 
5.6    No Mitigation.  The Executive shall not be required to mitigate the amount of any payment or benefit provided for in this Section 5 by seeking other employment or otherwise, nor shall the amount of such payment be reduced by reason of compensation or other income the Executive receives for services rendered after the Executive’s termination of employment with the Company.
5.7    Exclusive Remedy.  In the event of the Executive’s termination of employment on account of an involuntary termination without Cause or a voluntary termination for Good Reason, the provisions of this Section 5 are intended to be and are exclusive and in lieu of any other rights or remedies to which the Executive or the Company may otherwise be entitled, whether at law, tort or contract, in equity, or under this Agreement.  Payments made to or on behalf of the Executive under any other severance plan, policy, contract or arrangement with the Company shall reduce amounts payable under this Agreement on a dollar for dollar basis.
5.8    Survival of Certain Provisions.  Sections 6 and 18 shall survive the termination of this Agreement. 
		
	6.
	CONFIDENTIAL AND PROPRIETARY INFORMATION; NONSOLICITATION.

6.1    As a condition of employment, Executive agrees to execute and to abide by the Company’s Employee Confidential Information and Inventions Agreement. 
6.2    While employed by the Company and for one year thereafter, the Executive agrees that in order to protect the Company’s trade secrets and confidential and proprietary information from unauthorized use, the Executive will not, either directly or through others, solicit or attempt to solicit any employee, consultant or independent contractor of the Company to terminate his or her relationship with the Company in order to become an employee, consultant or independent contractor to or for any other person or business entity. 
		
	7.
	ASSIGNMENT AND BINDING EFFECT.

This Agreement shall be binding upon and inure to the benefit of the Executive and the Executive’s heirs, executors, personal representatives, assigns, administrators and legal representatives.  Because of the unique and personal nature of the Executive’s duties under this Agreement, neither this Agreement nor any rights or obligations under this Agreement shall be assignable by the Executive.
The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, to expressly assume and agree to perform the obligations under this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.  As used in this Section 7, Company includes any successor to its business or assets as aforesaid which executes and delivers this Agreement or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.
		
	8.
	CHOICE OF LAW.

This Agreement shall be construed and interpreted in accordance with the internal laws of the State of California. 
		
	9.
	INTEGRATION.

This Agreement, including Exhibit A, contains the complete, final and exclusive agreement of the Parties relating to the terms and conditions of the Executive’s employment and the termination of the Executive’s employment, and supersedes all prior and contemporaneous oral and written employment agreements or arrangements between the Parties including the Prior Agreement except as indicated herein.   
		
	10.
	AMENDMENT.

Except as otherwise provided for in this Agreement, this Agreement cannot be amended or modified except by a written agreement signed by the Executive and the Company as directed by the Board. 
		
	11.
	WAIVER.

No term, covenant or condition of this Agreement or any breach thereof shall be deemed waived, except with the written consent of the Party against whom the wavier is claimed, and any waiver or any such term, covenant, condition or breach shall not be deemed to be a waiver of any preceding or succeeding breach of the same or any other term, covenant, condition or breach. 
		
	12.
	SEVERABILITY.

The finding by a court of competent jurisdiction of the unenforceability, invalidity or illegality of any provision of this Agreement shall not render any other provision of this Agreement unenforceable, invalid or illegal.  Such court shall have the authority to modify or replace the invalid or unenforceable term or provision with a valid and enforceable term or provision which most accurately represents the Parties’ intention with respect to the invalid or unenforceable term or provision. 
		
	13.
	INTERPRETATION; CONSTRUCTION.

The headings set forth in this Agreement are for convenience of reference only and shall not be used in interpreting this Agreement.  This Agreement has been drafted by legal counsel representing the Company, but the Executive has been encouraged to consult with, and have consulted with, the Executive’s own independent counsel and tax advisors with respect to the terms of this Agreement.  The Parties acknowledge that each Party and its counsel has reviewed and revised, or had an opportunity to review and revise, this Agreement, and any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.
		
	14.
	REPRESENTATIONS AND WARRANTIES.

The Executive represents and warrants that the Executive is not restricted or prohibited, contractually or otherwise, from entering into and performing each of the terms and covenants contained in this Agreement, and that the Executive’s execution and performance of this Agreement will not violate or breach any other agreements between the Executive and any other person or entity.
		
	15.
	COUNTERPARTS; FACSIMILE.

This Agreement may be executed in two counterparts, each of which shall be deemed an original, all of which together shall contribute one and the same instrument.  Facsimile signatures shall be treated the same as original signatures.
		
	16.
	DISPUTE RESOLUTION.

To ensure the timely and economical resolution of disputes that may arise in connection with Executive’s employment with the Company, Executive and the Company agree that any and all disputes, claims, or causes of action arising from or relating to the enforcement, breach, performance, negotiation, execution, or interpretation of this Agreement, Executive’s employment, or the termination of Executive’s employment, including but not limited to statutory claims, shall be resolved to the fullest extent permitted by law by final, binding and confidential arbitration, by a single arbitrator, in San Diego, California, conducted by JAMS, Inc. (“JAMS”) under the then applicable JAMS rules (which can be found at the following web address: http://www.jamsadr.com/rulesclauses).  By agreeing to this arbitration procedure, both Executive and the Company waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding.  The Company acknowledges that Executive will have the right to be represented by legal counsel at any arbitration proceeding.  The arbitrator shall:  (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (b) issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a statement of the award.  The arbitrator shall be authorized to award any or all remedies that Executive or the Company would be entitled to seek in a court of law.  The Company shall pay all JAMS’ arbitration fees in excess of the amount of court fees that would be required of the Executive if the dispute were decided in a court of law.  Nothing in this Agreement is intended to prevent either Executive or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.  Any awards or orders in such arbitrations may be entered and enforced as judgments in the federal and state courts of any competent jurisdiction. 
		
	17.
	TRADE SECRETS.

It is the understanding of both the Company and the Executive that the Executive shall not divulge to the Company and/or its subsidiaries any confidential information or trade secrets belonging to others, including the Executive’s former employers, nor shall the Company and/or its Affiliates seek to elicit from the Executive any such information.  Consistent with the foregoing, the Executive shall not provide to the Company and/or its Affiliates, and the Company and/or its Affiliates shall not request, any documents or copies of documents containing such information.
		
	18.
	ADVERTISING WAIVER.

The Executive agrees to permit the Company and/or its affiliates, subsidiaries, or joint ventures currently existing or which shall be established during Executive’s employment by the Company (collectively, “Affiliates”), and persons or other organizations authorized by the Company and/or its Affiliates, to use, publish and distribute advertising or sales promotional literature concerning the products and/or services of the Company and/or its Affiliates, or the machinery and equipment used in the provision thereof, in which the Executive’s name and/or pictures of the Executive taken in the course of the Executive’s provision of services to the Company and/or its Affiliates, appear.  The Executive hereby waives and releases any claim or right the Executive may otherwise have arising out of such use, publication or distribution.  The Company agrees that, following termination of the Executive’s employment, it will not create any new such literature containing the Executive’s name and/or pictures without the Executive’s prior written consent.
		
	19.
	APPLICATION OF SECTION 409A.

All benefits under this Agreement are intended to qualify for an exemption from application of Section 409A of the Code and the regulations and other guidance thereunder and any state law of similar effect (“Section 409A”) or to comply with its requirements to the extent necessary to avoid adverse personal tax consequences under Section 409A, and any ambiguities herein shall be interpreted accordingly.
Notwithstanding anything to the contrary set forth herein, any severance benefits that constitute “deferred compensation” within the meaning of Section 409A shall not commence in connection with the Executive’s termination of employment unless and until the Executive has also incurred a “separation from service” (as such term is defined in Treasury Regulation Section 1.409A-1(h)) (“Separation From Service”), unless the Company reasonably determines that such amounts may be provided to the Executive without causing the Executive to incur the additional 20% tax under Section 409A.
It is intended that each installment of the severance benefit payments provided for in this Agreement is a separate “payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i).  For the avoidance of doubt, it is intended that payments of the severance benefits set forth in this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Section 409A provided under Treasury Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9).  However, if the Company (or, if applicable, the successor entity thereto) determines that the severance benefits constitute “deferred compensation” under Section 409A and the Executive is, on the termination of service, a “specified employee” of the Company or any successor entity thereto, as such term is defined in Section 409A(a)(2)(B)(i) of the Code, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A, the timing of the severance benefit payments shall be delayed until the earlier to occur of: (i) the date that is six months and one day after the Executive’s Separation From Service, or (ii) the date of the Executive’s death.  If all or any portion of any amounts payable to Executive is deferred to comply with Section 409A in accordance with the foregoing, such payments shall accrue interest at the six (6)-month Libor rate, and, on or before the date of the Executive’s Separation From Service, the Company shall make an irrevocable contribution of the amount deferred to comply with  Section 409A to a grantor trust established by the Company prior to the Change in Control consistent with the terms of Rev. Proc. 92-64, 1992-33 I.R.B. 11, with irrevocable instructions to pay such amounts to Executive on the earlier to occur of: (i) the date that is six months and one day after the Executive’s Separation From Service, or (ii) the date of the Executive’s death.  Such grantor trust shall have an independent trustee and the Company shall bear all costs, expenses and fees, including legal and trustee fees, of establishing and maintaining such trust.
None of the severance benefits will be paid or otherwise delivered prior to the effective date of the Release.  If the severance benefits are not covered by one or more exemptions from the application of Section 409A and the Release could become effective in the calendar year following the calendar year in which Executive’s Separation From Service occurs, the Release will not be deemed effective any earlier than the Release Deadline.  Except to the minimum extent that payments must be delayed because Executive is a “specified employee” or until the effectiveness of the Release, all amounts will be paid as soon as practicable in accordance with the Company’s normal payroll practices. 
The severance benefits are intended to qualify for an exemption from application of Section 409A or comply with its requirements to the extent necessary to avoid adverse personal tax consequences under Section 409A, and any ambiguities herein shall be interpreted accordingly.
		
	20.
	PARACHUTE PAYMENTS.

In the event that any of the severance payments and other benefits provided by this Agreement or otherwise payable to Executive (a) constitute “parachute payments” within the meaning of Section 280G of the Code, and (b) but for this Section, would be subject to the excise tax imposed by Section 4999 of the Code (“Excise Tax”), Executive’s severance payments and benefits under this Agreement or otherwise shall be payable either in full or in such lesser amount which would result in no portion of such severance payments or benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income and employment taxes and the Excise Tax, results in the receipt by Executive, on an after-tax basis, of the greatest amount of severance payments and benefits under this Agreement or otherwise, notwithstanding that all or some portion of such severance payments or benefits may be taxable under Section 4999 of the Code.  Any reduction in the severance payments and benefits required by this Section shall be made in the following order: (i) reduction of cash payments; (ii) reduction of accelerated vesting of equity awards other than stock options; (iii) reduction of accelerated vesting of stock options; and (iv) reduction of other benefits paid or provided to Executive.
The calculations in this Section will be performed by the professional firm engaged by the Company for general tax purposes as of the day prior to the date of the event that might reasonably be anticipated to result in severance payments and benefits that would otherwise be subject to the Excise Tax. If the tax firm so engaged by the Company is serving as accountant or auditor for the acquiring company, the Company shall appoint a nationally recognized tax firm to make the determinations required by this Section.  The Company shall bear all expenses with respect to the determinations by such firm required to be made by this Section. The Company and Executive shall furnish such tax firm such information and documents as the tax firm may reasonably request in order to make its required determination. The tax firm will provide its calculations, together with detailed supporting documentation, to the Company and Executive as soon as practicable following its engagement. Any good faith determinations of the tax firm made hereunder shall be final, binding and conclusive upon the Company and Executive. However, the Executive shall have the final authority to make any good faith determination(s) associated with the assumptions used by the tax firm in providing its calculations, and such good faith determination by the Executive shall be binding on the Company.
As a result of the uncertainty in the application of Sections 409A, 280G or 4999 of the Code at the time of the initial determination by the professional tax firm described in this Section, it is possible that the Internal Revenue Service (the “IRS”) or other agency will claim that an Excise Tax greater than that amount, if any, determined by such professional firm for the purposes of this Section is due (the “Additional Excise Tax”).  Executive shall notify the Company in writing of any claim by the IRS or other agency that, if successful, would require payment of Additional Excise Tax. Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to payments made or due to Executive. The Company shall pay all reasonable fees, expenses and penalties of Executive relating to a claim by the IRS or other agency. In the event it is finally determined that a further reduction would have been required under this Section to place Executive in a better after-tax position, Executive shall repay the Company such amount within 30 days thereof in order to effect such result.  
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.
REGULUS THERAPEUTICS INC.

By:  /s/ Joseph P. Hagan        
Joseph P. Hagan
President and CEO

/s/ Mark Deeg        
MARK DEEG, M.D.,  PH.D.

EXHIBIT A

RELEASE AND WAIVER OF CLAIMS
In consideration of the payments and other benefits set forth in Section 5 of the Amended and Restated Employment Agreement dated June 22, 2017, to which this form is attached (the “Employment Agreement”), I, Mark Deeg, Ph.D., hereby furnish Regulus Therapeutics Inc. (the “Company”) with the following release and waiver (“Release and Waiver”).
In exchange for the consideration provided to me by the Amended Employment Agreement that I am not otherwise entitled to receive, I hereby generally and completely release the Company and its directors, officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, parent and subsidiary entities, insurers, affiliates, and assigns (collectively, the “Released Parties”) from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to my signing this Release and Waiver (collectively, the “Released Claims”).  The Released Claims include, but are not limited to: (1) all claims arising out of or in any way related to my employment with the Company or the termination of that employment; (2) all claims related to my compensation or benefits from the Company, including, but not limited to, salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the Company; (3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (4) all tort claims, including, but not limited to, claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (5) all federal, state, and local statutory claims, including, but not limited to, claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990 (as amended), the federal Age Discrimination in Employment Act of 1967 (as amended) (“ADEA”), the federal Family and Medical Leave Act (as amended), the California Labor Code, and the California Fair Employment and Housing Act (as amended).  Notwithstanding the foregoing, the following are not included in the Released Claims (the “Excluded Claims”): (a) any rights or claims for indemnification I may have pursuant to any written indemnification agreement with the Company to which I am a party, the charter, bylaws, or operating agreements of the Company, or under applicable law; (b) any rights or claims to unemployment compensation, funds accrued in my 401k account, or any vested equity incentives; (c) any rights or claims I may have pursuant to the Amended Employment Agreement for separation pay or benefits after a Change in Control (as defined therein); (d) any rights that are not waivable as a matter of law; and (e) any claims arising from the breach of this Release and Waiver.  Furthermore, if there is a dispute over severance pay or benefits payable to me pursuant to the Amended Employment Agreement, the Company will nevertheless pay to me all amounts that are not in dispute and my claim for such amounts that are in dispute shall also be deemed an Excluded Claim.  I hereby represent and warrant that, other than the Excluded Claims, I am not aware of any claims I have or might have against any of the Released Parties that are not included in the Released Claims.
I also acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows:  “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to any claims I may have against the Company.
I acknowledge that, among other rights, I am waiving and releasing any rights I may have under ADEA, that this Release and Waiver is knowing and voluntary, and that the consideration given for this Release and Waiver is in addition to anything of value to which I was already entitled as an executive of the Company.  If I am 40 years of age or older upon execution of this Release and Waiver, I further acknowledge that I have been advised, as required by the Older Workers Benefit Protection Act, that:  (a) the release and waiver granted herein does not relate to claims under the ADEA which may arise after this Release and Waiver is executed; (b) I should consult with an attorney prior to executing this Release and Waiver; (c) I have twenty-one (21) days in which to consider this Release and Waiver (although I may choose voluntarily to execute this Release and Waiver earlier); (d) I have seven (7) days following the execution of this Release and Waiver to revoke my consent to this Release and Waiver; and (e) this Release and Waiver shall not be effective until the seven (7) day revocation period has expired without my having previously revoked this Release and Waiver.
If I am less than 40 years of age upon execution of this Release and Waiver, I acknowledge that I have the right to consult with an attorney prior to executing this Release and Waiver (although I may choose voluntarily not to do so); and that I have ten (10) days from the date of termination of my employment with the Company in which to consider this Release and Waiver (although I may choose voluntarily to execute this Release and Waiver earlier). 
I acknowledge my continuing obligations under my Employee Confidentiality and Inventions Assignment Agreement a copy of which is attached hereto (the “CIAA”).  Pursuant to the CIAA, I understand that among other things, I must not use or disclose any confidential or proprietary information of the Company and I must immediately return all Company property and documents (including all embodiments of proprietary information) and all copies thereof in my possession or control.  I understand and agree that my right to the severance benefits  I am receiving is in exchange for my agreement to the terms of this Release and Waiver and is contingent upon my continued compliance with my CIAA.
This Release and Waiver, including the CIAA, constitutes the complete, final and exclusive embodiment of the entire agreement between the Company and me with regard to the subject matter hereof.  I am not relying on any promise or representation by the Company that is not expressly stated herein.  This Release and Waiver may only be modified by a writing signed by both me and a duly authorized officer of the Company.

Date: __________________    By:     
MARK DEEG, M.D., PH.D.

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