Exhibit 10.2


 


SECURITY AGREEMENT


 


This SECURITY AGREEMENT
(this “Agreement”) is made as of March 15, 2013, among Nile Therapeutics, Inc., a Delaware corporation (the
“Company”), and the creditors identified in Attachment A hereto, as the same may be supplemented or amended
from time to time (collectively, the “Creditors,” and each individually, a “Creditor”), which
includes all purchasers of convertible promissory notes sold by the Company pursuant to that certain Convertible Note Purchase
Agreement dated March 15, 2013 (the “Purchase Agreement”).


 


WHEREAS, the Creditors
have made loans to the Company in the respective amounts set forth opposite each Creditor’s name on Attachment A and have
received from the Company promissory notes in such amounts (the “Notes”); and


 


WHEREAS, the Company
has agreed to secure the payment of the Notes by pledging, as security therefore, certain assets owned by the Company.


 


NOW, THEREFORE, in
consideration of the mutual covenants and agreements contained in this Agreement, and for other good and valuable consideration
the receipt and adequacy of which is hereby acknowledged, the Company and each Creditor agree as follows:


 


1.     Grant
of Security Interest.


 


(a)          To
secure payment and performance of the Obligations (as defined below), the Company hereby grants to the Creditors a security interest
in all property and interests in property of the Company, whether now owned or hereafter acquired or existing, and wherever located
(together with all other collateral security for the Obligations at any time granted to or held or acquired by the Creditors, collectively,
the “Collateral”), including, without limitation, the following: (i) all Accounts; (ii) all Receivables; (iii)
all Equipment; (iv) all General Intangibles; (v) all Inventory; (vi) all Investment Property; and (vii) all proceeds and products
of (i), (ii), (iii), (iv), (v) and (vi).


 


(b)          Notwithstanding
anything to the contrary contained in Section 1(a) above, the types or items of Collateral described in such Section
1(a) shall not include any right or interest in any contract, permit or application covering real or personal property of the
Company, as such, if under the terms of such contract, permit or application or applicable law with respect thereto, the valid
grant of a security interest to the Creditors is prohibited as a matter of law or under the terms thereof and such prohibition
has not been or is not waived or the consent of the other party to such contract, permit, or application has not been or is not
otherwise obtained; provided, that, the foregoing exclusion shall in no way be construed (i) to apply if any such
prohibition is unenforceable under the UCC or other applicable law or (ii) so as to limit, impair or otherwise affect the Creditors’
unconditional continuing security interest in upon any rights or interests of the Company in or to monies due or to become due
under any such contract, permit or application.


 


(c)          Perfection
of Security Interests.


 


(i)          As
soon as practicable following the execution of this Agreement, the Company shall file UCC financing statements in all appropriate
jurisdictions to record the security interests granted to the Creditors hereunder. Without the prior written consent of the Requisite
Purchasers (as defined in the Purchase Agreement), the Company shall not at any time file, or permit or cause to be filed, any
correction statement or termination statement with respect to any financing statement (or amendment or continuation with respect
thereto) naming the Creditors or their designee(s) as secured party and the Company or any affiliate of the Company as debtor.


 




    	 



    	 



    

 


(ii)         The
Company shall take any other actions reasonably requested by the Creditors from time to time to cause the attachment and perfection
of, and the ability of the Creditors to enforce, the security interest of the Creditors in the Collateral.


 


2.     Covenants
Relating to Collateral. The Company covenants that:


 


(a)          it
shall at all times be the sole owner of each and every item of Collateral, except with respect to licensed intellectual property
or as otherwise disclosed in reports filed by the Company with the Securities and Exchange Commission prior to the date hereof;


 


(b)          it
shall defend the Collateral against the claims and demands of all persons;


 


(c)          it
will comply with the requirements of all agreements relating to premises where any Collateral is located;


 


(d)          it
will give the Creditors twenty (20) days’ prior written notice of any change to its name;


 


(e)          it
will give the Creditors twenty (20) days’ prior written notice of any change to its chief executive office or its mailing
address; and


 


(f)          it
will give the Creditors twenty (20) days’ prior written notice of any change to its type of organization, jurisdiction of
organization or other legal structure.


 


3.     Remedies.
Upon the occurrence and after the continuance of an Event of Default (as defined in the Notes), (i) the Creditors shall have the
right to exercise any right and remedy provided for herein, under the UCC and at law or equity generally, including, without limitation,
the right to foreclose the security interests granted herein and to realize upon any Collateral by any available judicial procedure
and/or to take possession of and sell any or all of the Collateral with or without judicial process; and (ii) with or without having
the Collateral at the time or place of sale, the Creditors may sell the Collateral, or any part thereof, at public or private sale,
at any time or place, in one or more sales, at such price or prices, and upon such terms, either for cash, credit or future delivery,
as the Creditors may elect.


 


4.     Pro-Rata
Payments and Forbearance. Each Creditor agrees not to accept payments with respect to the Notes other than on a pro-rata basis
as set forth in Attachment A. In the event that one or more of the Creditors shall receive preferential payments with respect to
the Notes, the recipient Creditor shall undertake to redistribute to the other Creditors any amounts of such payments as shall
be necessary to maintain pro-rata payments to all Creditors with respect to the Notes.


 


5.     Priority.
All of the Creditors agree that, notwithstanding the date, manner or order of attachment or perfection of any security interest
and regardless of any priority otherwise available by law or by agreement, the Creditors’ security interest in the Collateral
shall be of equal priority, and any recovery by any Creditor of the Collateral shall be shared ratably in proportion to the respective
amounts of the Notes then due and owing to the Creditors.


 


6.     Representations
and Warranties. The Company hereby represents and warrants to the Creditors that:


 


(a)          The
Company is a corporation duly organized and validly existing under the laws of Delaware.


 


(b)          The
exact legal name of the Company is as set forth on the signature page of this Agreement.


 




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(c)          The
chief executive office and mailing address of the Company are located at the address set forth in Section 11 and its only
other places of business and the only other locations of Collateral, if any, are at the addresses set forth on Schedule 6(c).


 


7.     Expenses
of the Company; Creditors’ Right to Perform on the Company’s Behalf. 


 


(a)          The
Company’s agreements hereunder shall be performed by it at its sole cost and expense.


 


(b)          If
the Company shall fail to do any act which it has covenanted to do hereunder, the Creditors may (but shall not be obligated to)
do the same or cause it to be done, either in their name or in the name and on behalf of the Company, and the Company hereby irrevocably
authorizes the Creditors so to act.


 


8.     No
Waivers of Rights hereunder; Rights Cumulative.


 


(a)          No
delay by the Creditors in exercising any right hereunder, or in enforcing any of the Obligations, shall operate as a waiver thereof,
nor shall any single or partial exercise of any right preclude other or further exercises thereof or the exercise of any other
right. No waiver of any of the Obligations shall be enforceable against any Creditor unless in writing and signed by such Creditor,
and unless it expressly refers to the provision affected; any such waiver shall be limited solely to the specific event waived.


 


(b)          All
rights granted to the Creditors hereunder shall be cumulative and shall be supplementary of and in addition to those granted or
available to the Creditors under any other agreement with respect to the Obligations or under applicable law and nothing herein
shall be construed as limiting any such other right.


 


9.     Termination.
This Agreement shall continue in full force and effect until all Obligations shall have been
paid and satisfied in full.


 


10.   Additional
Definitions. As used herein:


 


(a)          All
terms used herein which are defined in Article 1 or Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also mean the singular and to the singular shall also mean
the plural unless the context otherwise requires. All references to the Company and the Creditors pursuant to the definitions set
forth in the recitals hereto, or to any other person herein, shall include their respective successors and assigns. The words “hereof”,
“herein”, “hereunder”, “this Agreement” and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not any particular provision of this Agreement and as this Agreement now exists or
may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. The word “including” when
used in this Agreement shall mean “including, without limitation”. The words “it” or “its”
as used herein shall be deemed to refer to individuals and to business entities.


 




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(b)          “Obligations”
means:


 


(i)          the
full and prompt payment by the Company when due of all obligations and liabilities to the Creditors, whether now existing or hereafter
arising, under the Notes and the due performance and compliance by the Company with the terms thereof;


 


(ii)         any
and all sums advanced in accordance with applicable law by the Creditors in order to preserve the Collateral or to preserve the
Creditors’ security interest in the Collateral; and


 


(iii)        in
the event of any proceeding for the collection or enforcement of any obligations or liabilities of the Company referred to in the
immediately preceding clauses (i) and (ii), the reasonable expenses of re-taking, holding, preparing for sale, selling or otherwise
disposing of or realizing on the Collateral, or of any other exercise by the Creditors of their rights hereunder, together with
reasonable attorneys’ fees and court costs.


 


(c)          “Person”
or “person” shall mean any individual, sole proprietorship, partnership, corporation limited liability company,
limited liability partnership, business trust, unincorporated association, joint stock corporation, trust, joint venture or other
entity or any government or any agency or instrumentality or political subdivision thereof.


 


(d)          “UCC”
shall mean the Uniform Commercial Code as in effect in the State of Delaware and any successor statute, as in effect from time
to time (except that terms used herein which are defined in the Uniform Commercial Code as in effect in the State of Delaware on
the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as
the Creditors may otherwise determine).


 


11.   Notices. Any
communication required or permitted pursuant to this Agreement shall be deemed given (a) when personally delivered to any
officer of the party to whom it is addressed, (b) on the earlier of actual receipt thereof or five (5) days following posting
thereof by certified or registered mail, postage prepaid, return receipt requested, or (c) upon actual receipt thereof when
sent by a recognized overnight delivery service, or (d) upon actual receipt thereof when sent by fax to the number set forth
below with telephone communication confirming receipt and subsequently confirmed by registered or certified mail, return
receipt requested, or by recognized overnight delivery service to the address set forth below, in each case addressed to the
applicable party at its address set forth below or at such other address as has been furnished in writing by such party to
the other by like notice:


 


If to the Company:


 


Nile Therapeutics,
Inc.


4 West 4th Ave.,
Suite 400


San Mateo, CA
94402


Tel: (650) 458-2670


Fax: (415) 875-7075


Attn: Chief Executive
Officer


 


If to a Creditor, to such address as such
Creditor shall have provided to the Company in the Purchase Agreement, as may be amended hereafter by written notice by such Creditor
to the Company delivered as aforesaid; or, in any case, at such other address or addresses as shall have been furnished in writing
by such party to the other party.








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Any requirement under
applicable law of reasonable notice by the Creditors to the Company of any event shall be met if notice is given to the Company
in the manner prescribed above at least five (5) days before (a) the date of such event or (b) the date after which such event
will occur.


 


12.   Governing
Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by,
the laws of the State of Delaware, without regard to the conflicts of laws provisions thereof.


 


13.   Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together
constitute one and the same instrument.


 


14.   Successors
and Assigns. This Agreement shall be binding upon the assigns or successors of the Company and shall inure to the benefit of
and be enforceable by the Creditors and their successors, transferees and assigns.


 


15.   Severability.
Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in that jurisdiction
or affecting the validity or enforceability of such provision in any other jurisdiction.


 


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IN WITNESS WHEREOF,
the parties hereto have executed this Agreement in counterparts.


 


	 	NILE THERAPEUTICS, INC.
	 	 	 
	 	By:	 
	 	Name:	Darlene Horton, M.D.
	 	Title:	Chief Executive Officer


 


Signature Page to Security Agreement


Signature Pages Continue


  




    	 



    	 



    

 


Creditor:


 


If the undersigned is an individual
(not a partnership, corporation, etc.):


 


	 	 
	Please Print Name	 
	 	 
	 	 
	Signature	 
	 	 
	 	 
	Date	 
	 	 
	 	 
	Please Print Name of Joint Holder (if any)	 
	 	 
	 	 
	Signature	 
	 	 
	 	 
	Date	 
	 	 
	If the undersigned is a corporation, partnership or other legal entity:
	 	 
	 	 
	Please Print Name of Entity	 
	 	 
	By:	 	 
	Name:	 
	Title:	 
	 	 
	 	 
	Date	 
	 	 	 





Signature Page to Security Agreement


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Creditor:


 


If the undersigned is an individual
(not a partnership, corporation, etc.):


 


	 	 
	Please Print Name	 
	 	 
	 	 
	Signature	 
	 	 
	 	 
	Date	 
	 	 
	 	 
	Please Print Name of Joint Holder (if any)	 
	 	 
	 	 
	Signature	 
	 	 
	 	 
	Date	 
	 	 
	If the undersigned is a corporation, partnership or other legal entity:
	 	 
	 	 
	Please Print Name of Entity	 
	 	 
	By:	 	 
	Name:	 
	Title:	 
	 	 
	 	 
	Date	 
	 	 	 





Signature Page to Security Agreement


 




    	 



    	 



    

 


ATTACHMENT A


TO


SECURITY AGREEMENT


 


	Creditor Name	Principal Amount of Promissory Note
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 


  




    	 



    	 



    

 


SCHEDULE 6(c)


TO


SECURITY AGREEMENT


 


None.