Document:

Exhibit
      10.12

    SUBSCRIPTION
      AGREEMENT

    

    This
      Subscription Agreement (this “Agreement”) is made as of the date set forth on
      the signature page of this Agreement by and between Nile Therapeutics, Inc.,
      a
      Delaware corporation (the “Company”), and each party who is a signatory hereto
      (individually, a “Subscriber” and collectively with other signatories of similar
      subscription agreements entered into in connection with the Offering described
      below, the “Subscribers”).

    

    RECITALS:

    

    WHEREAS,
      the Company is offering to sell shares (the “Shares” or the “Securities”) of the
      Company’s common stock, $0.001 par value per share (the “Common Stock”) in a
      private offering (the “Offering”) to qualified investors as a price per share
      equal to $7.92 (the “Offering Price”);

    

    WHEREAS,
      the Company desires to raise in the Offering a minimum of Fifteen Million
      Dollars ($15,000,000.00) (the “Minimum Offering”) and a maximum of and a maximum
      of Twenty Million Dollars ($20,000,000.00) (the “Maximum Offering”). The minimum
      investment per Subscriber is $500,000.00, although the Company, in its sole
      discretion, may accept subscriptions for lesser amounts;

    

    WHEREAS,
      the terms of the Offering are summarized in that certain Confidential Term
      Sheet
      dated August 16, 2007 (the “Memorandum”) that has been previously provided to
      the Subscriber;

    

    WHEREAS,
      simultaneously with the Closing (as defined below), the Company intends to
      complete a “reverse merger” (the “Merger”) with the wholly-owned subsidiary
      (“Merger Sub”) of a publicly reporting company (“Pubco”) pursuant to the merger
      agreement (the “Merger Agreement”) attached as an exhibit to the Memorandum. The
      Company expects that such Merger Sub will be Nile Merger Sub, Inc., a Delaware
      corporation, a wholly-owned subsidiary of SMI Products, Inc., a Delaware
      corporation;

    

    WHEREAS,
      the Company has retained Riverbank Capital Securities, Inc., a National
      Association of Securities Dealers, Inc. (“NASD”) member broker dealer to act as
      its placement agent in connection with the sale of the securities pursuant
      to
      this Agreement (the “Placement Agent”); and 

    

    WHEREAS,
      the Company desires to enter into this Agreement to issue and sell the
      Securities and the Subscriber desires to purchase that number of Securities
      set
      forth on the signature page hereto on the terms and conditions set forth
      herein.

    

    NOW,
      THEREFORE, in consideration of the promises and the mutual representations
      and
      covenants hereinafter set forth, the parties hereto do hereby agree as
      follows:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      I SUBSCRIPTION
      OF SECURITIES

    

    1.1. Subject
      to the terms set forth herein and in the Memorandum, the Subscriber hereby
      irrevocably subscribes for and agrees to purchase from the Company that number
      of Securities as is set forth on the signature page hereto at the Offering
      Price; the total purchase price is set forth on the signature page attached
      hereto (the “Purchase Price”). The aggregate Purchase Price is payable by wire
      transfer of immediately available funds pursuant to the wire instructions
      attached as Exhibit
      B.

    

    1.2. The
      minimum purchase that may be made by any prospective investor shall be
      $500,000.00. Subscriptions for investment below the minimum investment may
      be
      accepted at the discretion of the Company. The Company reserves the right to
      reject any subscription made hereby, in whole or in part, in its sole
      discretion. The Company’s agreement with each Subscriber is a separate agreement
      and the sale of the Securities to each Subscriber is a separate sale.

    

    1.3. Pending
      the sale of the Securities, all funds paid hereunder shall be deposited by
      the
      Subscriber in escrow with US Bank National Association Corporation Trust (the
      “Escrow Agent”). The Offering shall expire on August 31, 2007, subject to
      extension for up to 30 days (the “Termination Date”) at the discretion of the
      Company, and upon written notice by the Company to Pubco. The Subscriber hereby
      authorizes and directs the Company and the Placement Agent to direct the Escrow
      Agent to return any funds for unaccepted subscriptions to the same account
      from
      which the funds were drawn, without interest. 

    

    1.4. On
      or prior to Termination Date, the Company shall conduct a closing of the
      purchase and sale of Securities (the “Closing”). The Closing shall occur at the
      offices of the Placement Agent at 689 5th Avenue, 14th
      Floor, New York, New York, 10022. Certificates evidencing the Common Stock
      purchased by the Subscriber pursuant to this Agreement will be prepared for
      delivery to the Subscriber within ten (10) business days following the Closing.
      The Subscriber hereby authorizes and directs the Company to deliver the
      certificates representing the Common Stock purchased by the Subscriber pursuant
      to this Agreement directly to the residential or business address indicated
      on
      the signature page hereto. In the event the Company shall not have accepted
      subscriptions (including the subscription accepted by its execution and delivery
      of this Agreement in accordance with the terms and conditions herein) for
      purchases of the Minimum Amount on or before the Termination Date, then this
      subscription shall be void an all purchases hereunder by the Subscriber shall
      be
      returned to the Subscriber, without interest. 

    

    1.5. The
      Subscriber hereby authorizes and directs the Company to return, without
      interest, any funds for unaccepted subscriptions (including any subscriptions
      that were not accepted as a result of the termination of the Offering) to the
      same account from which the funds were drawn.

     

    1.6. At
      Closing, the Company shall pay to the Placement Agent a non-accountable expense
      allowance of $100,000 for introductions to investors and other services related
      to the Offering.

    
      
        
        

      

      
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    ARTICLE
      II REPRESENTATIONS
      BY SUBSCRIBER

    

    The
      Subscriber agrees, represents and warrants to the Company and the Placement
      Agent, severally and solely with respect to itself and its purchase hereunder
      and not with respect to any of the other Subscribers, that:

    

    2.1. Organization
      and Qualification.
      If an
      entity, the Subscriber is duly incorporated, organized or otherwise formed,
      validly existing and in good standing under the laws of the jurisdiction in
      which it is incorporated, organized or otherwise formed.

    

    2.2.  Authorization.
      

    

    (a) If
      an
      entity: 

    

    (i) The
      Subscriber has the requisite corporate or other requisite power and authority
      to
      enter into and to perform its obligations under this agreement and to consummate
      the transactions contemplated hereby in accordance with the terms hereof; and
      

    

    (ii) the
      execution, delivery and performance of this Agreement by the Subscriber and
      the
      consummation by it of the transactions contemplated hereby have been duly
      authorized by the Subscriber’s Board of Directors or other governing body and no
      further consent or authorization of the Subscriber, its Board of Directors
      or
      its shareholders, members or other interest holders is required.

    

    (b) If
      an
      individual:

    

    (i) The
      undersigned has reached the age of 21 and has the legal capacity, power and
      authority to execute, deliver and perform the undersigned’s obligations under
      this Agreement and all other related agreements or certificates. 

    

    2.3. Enforcement.
      This
      Agreement has been duly executed by the Subscriber and constitutes a legal,
      valid and binding obligation of the Subscriber enforceable against the
      Subscriber in accordance with its terms, subject to the effect of any applicable
      bankruptcy, insolvency, reorganization or moratorium or similar laws affecting
      the rights of creditors generally and the application of general principles
      of
      equity.

    

    2.4. Consents.
      The
      Subscriber is not required to give any notice to, make any filing, application
      or registration with, obtain any authorization, consent, order or approval
      of or
      obtain any waiver from any person or entity in order to execute and deliver
      this
      Agreement or to consummate the transactions contemplated hereby, except for
      such
      notices, filings, applications, registrations, authorizations, consents, orders,
      approvals and waivers (if any) as have been obtained and the filing of a Form
      D
      with the Securities and Exchange Commission (the “SEC”) and other similar
      filings required by applicable state securities or “blue sky” laws and
      regulations in connection with offerings of securities under Rule 506 (“Rule
      506”) promulgated under the Securities Act of 1933, as amended (the “Securities
      Act”).

    
      
        
        

      

      
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    2.5. Non-contravention.
      Neither
      the execution and the delivery by the Subscriber of this Agreement, nor the
      consummation by the Subscriber of the transactions contemplated hereby, will
      (a)
      violate any law, rule, injunction, or judgment of any governmental agency or
      court to which the Subscriber is subject or any provision of its charter,
      bylaws, trust agreement, or other governing documents or (b) conflict with,
      result in a breach of, or constitute a default under, any agreement, contract,
      lease, license, instrument, or other arrangement to which the Subscriber is
      a
      party or by which the Subscriber is bound or to which any of its assets is
      subject. 

    

    2.6. Investment
      Purpose.
      The
      Subscriber is purchasing the Securities for its own account and not with a
      present view toward the public sale or distribution thereof. 

    

    2.7. Accredited
      Subscriber Status.
      The
      Subscriber is an “accredited investor” as defined in Regulation D under the
      Securities Act and has delivered to the Company a Confidential Investor
      Questionnaire substantially in the form of Exhibit
      A
      attached
      hereto. The Subscriber hereby represents and warrants that, either by reason
      of
      the Subscriber’s business or financial experience or the business or financial
      experience of the Subscriber’s advisors (including, but not limited to, a
“purchaser representative” (as defined in Rule 501(h) promulgated under
      Regulation D), attorney and/or an accountant each as engaged by the Subscriber
      at its sole risk and expense, the Subscriber (a) has the capacity to protect
      its
      own interests in connection with the transaction contemplated hereby and/or
      (b)
      the Subscriber has prior investment experience, including investments in
      securities of privately-held companies or companies whose securities are not
      listed, registered, quoted and/or traded on a national securities exchange,
      including the Nasdaq Global Select Market, the Nasdaq Global Market, and the
      Nasdaq Capital Market (together, the “NASDAQ”) and/or (c) to the extent
      necessary, the Subscriber has retained, at its sole risk and expense, and relied
      upon appropriate professional advice regarding the investment, tax and legal
      merits and consequences of this Agreement and the purchase of the Securities
      hereunder, and/or (d), if an entity, the Subscriber was not formed for the
      sole
      purpose of purchasing the Securities.

    

    2.8. Reliance
      on Exemptions.
      The
      Subscriber agrees, acknowledges and understands that the Securities are being
      offered and sold to it in reliance upon specific exemptions from the
      registration requirements of United States federal and applicable state
      securities or “blue sky” laws and that the Company and its counsel are relying
      upon the truth and accuracy of, and the Subscriber’s compliance with, the
      representations, warranties, covenants, agreements, acknowledgments and
      understandings of the Subscriber set forth herein in order to determine the
      availability of such exemptions and the eligibility of the Subscriber to acquire
      the Securities.

    

    2.9. No
      General Solicitation.
      The
      Subscriber (a) was contacted regarding the sale of the Securities by the Company
      or the Placement Agent (or their respective authorized agents or
      representatives) with whom the Subscriber had a prior substantial pre-existing
      relationship and (b) no Securities were offered or sold to it by means of any
      form of general solicitation or general advertising, and in connection
      therewith, the Subscriber did not receive any general solicitation or general
      advertising including, but not limited to, the Subscriber’s: (i) receipt or
      review of any advertisement, article, notice or other communication published
      in
      any newspaper, magazine or similar media or broadcast over television or radio,
      whether closed circuit, or generally available; or (ii) attendance at any
      seminar meeting or industry investor conference whose attendees were invited
      by
      any general solicitation or general advertising. 

    
      
        
        

      

      
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    2.10. Information.

    

    (a) The
      Subscriber agrees, acknowledges and understands that the Subscriber and its
      advisors, if any, have been furnished with all materials relating to the
      business, finances and operations of the Company, and materials relating to
      the
      offer and sale of the Securities that have been requested by the Subscriber
      or
      its advisors, if any, including, without limitation, the Memorandum, the risk
      factors set forth therein, and all exhibits and appendices to the Memorandum
      (collectively with this Subscription Agreement, the “Offering Documents”). The
      Subscriber represents and warrants that the Subscriber and its advisors, if
      any,
      have been afforded the opportunity to ask questions of the Company. The
      Subscriber agrees, acknowledges and understands that neither such inquiries
      nor
      any other due diligence investigation conducted by the Subscriber or any of
      its
      advisors or representatives modify, amend or affect the Subscriber’s right to
      rely on the Company’s representations and warranties contained in ARTICLE III
      below.

    

    (b) The
      Subscriber agrees, acknowledges and understands that the Placement Agent has
      not
      supplied any information for inclusion in the Memorandum other than information
      furnished in writing to the Company by the Placement Agent specifically for
      inclusion in the Memorandum relating to the Placement Agent, that the Placement
      Agent has no responsibility for the accuracy or completeness of the Memorandum
      and that the Subscriber has not relied upon the independent investigation or
      verification, if any, which may have been undertaken by the Placement
      Agent.

    

    2.11. Acknowledgement
      of Risk.
      The
      Subscriber agrees, acknowledges and understands that the Subscriber’s investment
      in the Securities involves a significant degree of risk, including, without
      limitation that: (a) the Company is a development stage business with limited
      operating history and requires substantial funds in addition to the proceeds
      from the sale of the Securities; (b) an investment in the Company is highly
      speculative and only subscribers who can afford the loss of their entire
      investment should consider investing in the Company and the Securities; (c)
      the
      Subscriber may not be able to liquidate its investment; (d) transferability
      of
      the Common Stock is extremely limited; and (e) in the event of a disposition
      of
      the Common Stock, the Subscriber can sustain the loss of its entire investment.
      The Subscriber agrees, acknowledges and understands that such risks are set
      forth in greater detail in the Memorandum.

    

    2.12. Governmental
      Review.
      The
      Subscriber agrees, acknowledges and understands that no United States federal
      or
      state agency or any other government or governmental agency has passed upon
      or
      made any recommendation or endorsement of the Securities or an investment
      therein. 

    

    2.13. Transfer
      or Resale.
      The
      Subscriber agrees, acknowledges and understands that:

    
      
        
        

      

      
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    (a) the
      Common Stock has not been and, except as set forth in ARTICLE IV, will not
      be
      registered under the Securities Act or any applicable state securities or “blue
      sky” laws. Consequently, the Subscriber may have to bear the risk of holding the
      Common Stock for an indefinite period of time because the Common Stock may
      not
      be transferred unless: (i) the resale of the Common Stock is registered pursuant
      to an effective registration statement under the Securities Act; (ii) the
      Subscriber has delivered to the Company an opinion of counsel reasonably
      acceptable to the Company and its counsel (in form, substance and scope
      customary for opinions of counsel in comparable transactions) to the effect
      that
      the Common Stock to be sold or transferred may be sold or transferred pursuant
      to an exemption from such registration including, without limitation, Common
      Stock sold or transferred pursuant to Rule 144 promulgated under the Securities
      Act (“Rule 144”); and

    

    (b) any
      sale
      of the Common Stock made in reliance on Rule 144 may be made only in accordance
      with the terms of Rule 144 and, if Rule 144 is not applicable, any resale of
      the
      Common Stock under circumstances in which the seller (or the person through
      whom
      the sale is made) may be deemed to be an underwriter (as that term is defined
      in
      the Securities Act) may require compliance with some other exemption under
      the
      Securities Act or the rules and regulations of the SEC promulgated
      thereunder.

    

    2.14. No
      Shorting.
      The
      Subscriber agrees, acknowledges and understands that during the period
      commencing on the date hereof through the last date upon which the Subscriber
      holds any Securities or Registrable Securities (as defined below), the
      Subscriber may not directly or indirectly, through related parties, affiliates
      or otherwise, sell “short” or “short against the box” (as those terms are
      generally understood) any equity security of the Company.

    

    2.15. Legends.
      The
      Subscriber agrees, acknowledges and understands that the certificates
      representing the Common Stock (the “Restricted Securities”) will bear
      restrictive legends in substantially the following form (and a stop-transfer
      order may be placed against transfer of the certificates for such Restricted
      Securities):

    

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR THE SECURITIES OR “BLUE SKY”
LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD,
      TRANSFERRED OR ASSIGNED UNLESS (I)
      THE
      RESALE OF THE COMMON STOCK IS REGISTERED PURSUANT TO AN EFFECTIVE REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT; (II) THE SUBSCRIBER HAS DELIVERED TO THE
      COMPANY AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY AND ITS
      COUNSEL (IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN
      COMPARABLE TRANSACTIONS) TO THE EFFECT THAT THE COMMON STOCK TO BE SOLD OR
      TRANSFERRED MAY BE SOLD OR TRANSFERRED PURSUANT TO AN EXEMPTION FROM SUCH
      REGISTRATION, INCLUDING, WITHOUT LIMITATION, COMMON STOCK SOLD OR TRANSFERRED
      PURSUANT TO RULE 144 PROMULGATED UNDER THE SECURITIES ACT (“RULE
      144”).

    
      
        
        

      

      
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    2.16. The
      Subscriber agrees, acknowledges and understands that the Company will make
      a
      notation in the appropriate records with respect to the foregoing restrictions
      on the transferability of the Restricted Securities. Certificates evidencing
      the
      Restricted Securities shall not be required to contain such legend or any other
      legend (a) following any sale of the Restricted Securities to a non-affiliate
      of
      the Company pursuant to Rule 144, or (b) if the Restricted Securities are being
      sold under Rule 144(k) or have been sold pursuant to a registration statement
      and in compliance with the Subscriber’s obligations set forth in this Agreement,
      or (c) such legend is not required under applicable requirements of the
      Securities Act (including judicial interpretations and pronouncements issued
      by
      the Staff of the SEC), in each such case (a) through (c) to the extent
      reasonably determined by the Company’s legal counsel. 

    

    2.17. Residency.
      The
      Subscriber is a resident of the jurisdiction set forth immediately below the
      Subscriber’s name on the signature pages hereto.

    

    2.18. Acknowledgements
      Regarding Placement Agent.

    

    (a) The
      Subscriber agrees, acknowledges and understands that the Placement Agent is
      acting as placement agent for the Securities being offered hereby but will
      not
      be compensated for acting in such capacity, other than that the Company will
      pay
      the Placement Agent a non-accountable expense allowance of $100,000 for
      introductions to investors and other services. The Subscriber further agrees,
      acknowledges and understands that the Placement Agent has acted solely as an
      agent of the Company in connection with the Offering, that the information
      and
      data provided to the Subscriber in connection with the transactions contemplated
      hereby have not been subjected to independent verification by the Placement
      Agent and that the Placement Agent makes no representation or warranty with
      respect to the accuracy or completeness of such information, data or other
      related disclosure material. The Subscriber further agrees and acknowledges
      that
      in making its decision to enter into this Agreement and purchase the Securities,
      it has relied on its own examination of the Company and the terms and
      consequences of holding the Securities. The Subscriber further agrees,
      acknowledges and understands that the provisions of this Section 2.18 are for
      the benefit of, and may be enforced by, the Placement Agent. 

    

    (b) The
      Subscriber agrees, acknowledges and understands that the Placement Agent may
      engage other persons, selected by it in the Placement Agent’s discretion and
      with the consent of the Company, which consent will not unreasonably be
      withheld, who are members of the NASD, or who are located outside the United
      States, to assist the Placement Agent in connection with this Offering and
      that
      the Placement Agent shall be responsible for the compensation of any selected
      dealer so engaged.

    

    2.19. Not
      a
      Registered Representative.
      The
      Subscriber agrees, acknowledges and understands that if it is a Registered
      Representative of a NASD member firm, he or she must give such firm the notice
      required by the NASD’s Rules of Fair Practice, receipt of which must be
      acknowledged by such firm in the Confidential Investor Questionnaire attached
      hereto as Exhibit
      A.

    

    2.20. No
      Brokers.
      The
      Subscriber has not engaged, consented to or authorized any broker, finder or
      intermediary to act on its behalf, directly or indirectly, as a broker, finder
      or intermediary in connection with the transactions contemplated by this
      Agreement. The Subscriber hereby agrees to indemnify and hold harmless the
      Company and the Placement Agent from and against all fees, commissions or other
      payments owing to any such person or firm acting on behalf of the Subscriber
      hereunder.

    
      
        
        

      

      
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    2.21. Reliance
      on Representations.
      The
      Subscriber agrees, acknowledges and understands that the Company and its
      counsel, as well as the Placement Agent, are entitled to rely on the
      representations, warranties and covenants made by the Subscriber
      herein.

    

    2.22. No
      Representations by Placement Agent.
      The
      Subscriber acknowledges that the Placement Agent (including any of its members,
      managers, employees, agents or representatives) has not made any representations
      or warranties to the Subscriber concerning the Company, Merger Sub, Pubco,
      their
      respective businesses, condition (financial or otherwise) or prospects, or
      the
      Merger.

    

    ARTICLE
      III 
      REPRESENTATIONS BY THE COMPANY

    

    The
      Company hereby represents and warrants to each Subscriber and the Placement
      Agent that:

    

    3.1. Organization
      and Qualification.
      The
      Company is duly incorporated, validly existing and in good standing under the
      laws of the jurisdiction in which it is incorporated, with full power and
      authority (corporate and other) to own, lease, use and operate its properties
      and to carry on its business as and where now owned, leased, used, operated
      and
      conducted. The Company is duly qualified to do business and is in good standing
      in every jurisdiction in which the nature of the business conducted by it makes
      such qualification necessary, except where the failure to be so qualified or
      in
      good standing would not have a material adverse effect on (a) the business,
      operations assets or condition (financial or otherwise) of the Company or (b)
      the ability of the Company to perform its obligations pursuant to the
      transactions contemplated by this Agreement or under any instruments to be
      entered into or filed in connection herewith (collectively, a “Material Adverse
      Effect”). 

    

    3.2. Authorization;
      Enforcement.
      The
      Company has the requisite corporate power and authority to enter into and to
      perform its obligations under this Agreement, to consummate the transactions
      contemplated hereby and to issue the Securities in accordance with the terms
      hereof. The execution, delivery and performance of this Agreement by the Company
      and the consummation by it of the transactions contemplated hereby (including
      without limitation the issuance of the Common Stock) have been duly authorized
      by the Company’s Board of Directors (the “Board”) and no further consent or
      authorization of the Company, its Company or its shareholders is required that
      has not or will not be obtained prior to the Closing. This Agreement has been
      duly executed by the Company and constitutes a legal, valid and binding
      obligation of the Company enforceable against the Company in accordance with
      its
      terms, subject to the effect of any applicable bankruptcy, insolvency,
      reorganization or moratorium or similar laws affecting the rights of creditors
      generally and the application of general principles of equity. 

    
      
        
        

      

      
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    3.3. Capitalization.
      The
      authorized capital stock of the Company is as set forth in the Memorandum.
      Except as set forth in the Memorandum, there are not issued, reserved for
      issuance or outstanding: (a) any Securities of capital stock or other voting
      securities of the Company; (b) any securities of the Company convertible into
      or
      exchangeable or exercisable for Securities of capital stock or voting securities
      of the Company; or (c) any warrants, calls, options or other rights to acquire
      from the Company, or and any obligation of the Company to issue, any capital
      stock, voting securities or securities convertible into or exchangeable or
      exercisable for capital stock or voting securities of the Company.

    

    3.4. Issuance
      of Securities.
      The
      Securities purchased under this Agreement are duly authorized and, upon issuance
      in accordance with the terms of this Agreement, will be validly issued, fully
      paid and non-assessable, free and clear from all taxes, liens, claims,
      encumbrances and charges with respect to the issue thereof, will not be subject
      to preemptive rights or other similar rights of stockholders of the Company,
      and
      will not impose personal liability on the holders thereof.

    

    3.5. No
      Conflicts; No Violation.

    

    (a) The
      execution, delivery and performance of this Agreement by the Company and the
      consummation by the Company of the transactions contemplated hereby (including,
      without limitation, the issuance of the Securities) will not: (i) conflict
      with
      or result in a violation of any provision of its Certificate of Incorporation
      or
      Bylaws; (ii) violate or conflict with, result in a breach of any provision
      of,
      constitute a default (or an event which with notice or lapse of time, or both,
      could become a default) under or give to others any rights of termination,
      amendment, acceleration or cancellation of any material agreement, indenture,
      patent, patent license or instrument to which the Company is a party; or (iii)
      to the best of the Company’s knowledge, result in a material violation of any
      law, rule, regulation, order, judgment or decree (including United States
      federal and state securities or “blue sky” laws and regulations and regulations
      of any self-regulatory organizations to which the Company or its securities
      are
      subject) applicable to the Company or by which any property or asset of the
      Company is bound or affected (except for such conflicts, breaches, defaults,
      terminations, amendments, accelerations, cancellations and violations as would
      not, individually or in the aggregate, have a Material Adverse
      Effect).

    

    (b) Except
      as
      specifically contemplated by this Agreement and as required under the Securities
      Act and any applicable state securities or “blue sky” laws or any listing
      agreement with any securities exchange or automated quotation system, the
      Company is not required to obtain any consent, authorization or order of, or
      make any filing or registration with, any court or governmental agency or any
      regulatory or self regulatory agency in order for it to execute, deliver or
      perform any of its obligations under this Agreement in accordance with the
      terms
      hereof, or to issue and sell the Securities in accordance with the terms hereof.
      All consents, authorizations, orders, filings and registrations which the
      Company is required to obtain pursuant to the preceding sentence have been
      obtained or effected on or prior to the date hereof.

    

    3.6. Absence
      of Certain Changes.
      Except
      as disclosed in the Memorandum, since the date of the Memorandum (including
      any
      subsequent amendments or supplements thereto) there has been no material adverse
      change in the assets, liabilities, business, properties, operations, financial
      condition, prospects or results of operations of the Company, except that the
      Company has continued losses from operations.

    
      
        
        

      

      
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    3.7. Absence
      of Litigation.
      Other
      than as described in the Memorandum, to the Company’s there is no action, suit,
      claim, proceeding, inquiry or investigation before or by any court, public
      board, government agency, self-regulatory organization or body pending or,
      to
      the knowledge of the Company, threatened, against or affecting the Company
      or
      any of its officers or directors acting as such that could, individually or
      in
      the aggregate, have a Material Adverse Effect.

    

    3.8. Intellectual
      Property Rights.
      The
      Company owns or possesses licenses or rights to use all patents, patent
      applications, patent rights, inventions, know-how, trade secrets, trademarks,
      trademark applications, service marks, service names, trade names and copyrights
      that it believes are necessary to enable it to conduct its business as now
      operated (the “Intellectual Property”). Except as set forth in the Memorandum,
      there are no material options, licenses or agreements relating to the
      Intellectual Property, nor is the Company bound by, or a party to, any material
      options, licenses or agreements relating to the patents, patent applications,
      patent rights, inventions, know-how, trade secrets, trademarks, trademark
      applications, service marks, service names, trade names or copyrights of any
      other person or entity. Except as disclosed in the Memorandum, there is no
      claim
      or action or proceeding pending or, to the Company’s knowledge, threatened, that
      challenges the right of the Company with respect to any Intellectual
      Property.

    

    3.9. Tax
      Status.
      The
      Company has timely made or filed all federal, state and foreign income and
      all
      other tax returns, reports and declarations required by any jurisdiction to
      which it is subject (unless and only to the extent that the Company has set
      aside on its books provisions reasonably adequate for the payment of all unpaid
      and unreported taxes) and has timely paid all taxes and other governmental
      assessments and charges that are material in amount, shown or determined to
      be
      due on such returns, reports and declarations, except those being contested
      in
      good faith, and has set aside on its books provisions reasonably adequate for
      the payment of all taxes for periods subsequent to the periods to which such
      returns, reports or declarations apply. To the knowledge of the Company, there
      are no unpaid taxes in any material amount claimed to be due by the taxing
      authority of any jurisdiction, and the officers of the Company know of no basis
      for any such claim. The Company has not executed a waiver with respect to the
      statute of limitations relating to the assessment or collection of any foreign,
      federal, state or local tax. To the Company’s knowledge, none of the Company’s
      tax returns are presently being audited by any taxing authority.

    

    3.10. No
      Brokers.
      Except
      as disclosed in the Memorandum, the Company has taken no action which would
      give
      rise to any claim by any person for brokerage commissions, finder’s fees or
      similar payments relating to this Agreement or the transactions contemplated
      hereby, except for dealings with the Placement Agent, whose commissions and
      fees
      will be paid by the Company. 

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    3.11. Investment
      Company Status.
      The
      Company is not, and upon consummation of the sale of the Securities will not
      be,
      an “investment company,” a company controlled by an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for, an
“investment company” as such terms are defined in the Investment Company Act of
      1940, as amended. 

    

    3.12. Placement
      Agent.
      The
      Company has engaged, consented to and authorized the Placement Agent to act
      as
      agent of the Company in connection with the transactions contemplated by this
      Agreement. The Company will pay the Placement Agent a non-accountable expense
      allowance of $100,000 for introduction to investors and other services and
      the
      Company agrees to indemnify and hold harmless the Subscribers from and against
      all fees, commissions or other payments owing by the Company to the Placement
      Agent or any other person or firm acting on behalf of the Company
      hereunder.

    

    3.13. Financial
      Statements.
      The
      financial statements of the Company included in the Memorandum (the “Financial
      Statements”) (a) fairly present in all material respects the financial
      condition and position of the Company at the dates and for the periods
      indicated; (b) have been prepared in conformity with generally accepted
      accounting principles in the United States (“GAAP”) consistently applied
      throughout the periods covered thereby, except as may be otherwise specified
      in
      such Financial Statements or the notes thereto and except that any unaudited
      financial statements may not contain all footnotes required by GAAP; and
      (c) fairly present in all material respects the financial position of the
      Company as of and for the dates thereof and the results of operations and cash
      flows for the periods then ended, subject, in the case of any unaudited
      statements, to normal, immaterial, year-end audit adjustments. Since the date
      of
      the most recent balance sheet included as part of the Financial Statements,
      and
      except as set forth in the Memorandum, there has not been to the Company’s
      knowledge (a) any change in the assets, liabilities, financial condition or
      operations of the Company from that reflected in the Financial Statements,
      other
      than changes in the ordinary course of business, including ongoing losses,
      none
      of which individually or in the aggregate would reasonably be expected to have
      a
      Material Adverse Effect; or (b) any other event or condition of any character
      that, either individually or cumulatively, would reasonably be expected to
      have
      a Material Adverse Effect, except for the expenses incurred in connection with
      the transactions contemplated by this Agreement.

    

    3.14. Title
      to Properties and Assets; Liens, Etc.
      The
      Company has good and marketable title to its properties and assets, including
      the properties and assets reflected in the most recent balance sheet included
      in
      the Financial Statements, and good title to its leasehold estates, in each
      case
      subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than
      (a) those resulting from taxes which have not yet become delinquent; (b) liens
      and encumbrances which do not materially detract from the value of the property
      subject thereto or materially impair the operations of the Company; (c) those
      that have otherwise arisen in the ordinary course of business; and (d) those
      that would not reasonably be expected to have a Material Adverse Effect. The
      Company is in compliance with all material terms of each lease to which it
      is a
      party or is otherwise bound. 

    
      
        
        

      

      
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    3.15. Obligations
      to Related Parties.
      Except
      as disclosed in the Memorandum or as would not reasonably be expected to have
      a
      Material Adverse Effect, there are no obligations of the Company to officers,
      directors, stockholders, or employees of the Company other than (a) for payment
      of salary or other compensation for services rendered; (b) reimbursement for
      reasonable expenses incurred on behalf of the Company; (c) standard
      indemnification provisions in the certificate of incorporation and by-laws;
      and
      (d) for other standard employee benefits made generally available to all
      employees (including stock option agreements outstanding under any stock option
      plan approved by the Board). Except as may be disclosed in the Memorandum or
      Financial Statements, the Company is not a guarantor or indemnitor of any
      indebtedness of any other person, firm or corporation.

    

    3.16. Employee
      Relations; Employee Benefit Plans.
      The
      Company is not a party to any collective bargaining agreement or a union
      contract. The Company believes that its relations with its employees are good.
      No executive officer (as defined in Rule 501(f) of the Securities Act) of the
      Company has notified the Company that such officer intends to leave the Company
      or otherwise terminate such officer’s employment with the Company. The Company
      is in compliance with all federal, state, local and foreign laws and regulations
      respecting employment and employment practices, terms and conditions of
      employment and wages and hours, except where failure to be in compliance would
      not, either individually or in the aggregate, reasonably be expected to result
      in a Material Adverse Effect. Except as disclosed in the Memorandum, the Company
      does not maintain any compensation or benefit plan, agreement, arrangement
      or
      commitment (including, but not limited to, “employee benefit plans”, as defined
      in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
      amended (“ERISA”) for any present or former employees, officers or directors of
      the Company or with respect to which the Company has liability or makes or
      has
      an obligation to make contributions, other than any such plans, agreements,
      arrangements or commitments made generally available to the Company’s
      employees.

    

    3.17. Environmental
      Laws.
      To the
      knowledge of the Company (a) is in compliance with any and all Environmental
      Laws (as hereinafter defined); (b) has received all permits, licenses or other
      approvals required of it under applicable Environmental Laws to conduct its
      business; and (c) are in compliance with all terms and conditions of any such
      permit, license or approval where, in each of the foregoing clauses (a), (b)
      and
      (c), the failure to so comply would reasonably be expected to have, individually
      or in the aggregate, a Material Adverse Effect. The term “Environmental Laws”
means all federal, state, local or foreign laws relating to pollution or
      protection of human health or the environment (including, without limitation,
      ambient air, surface water, groundwater, land surface or subsurface strata),
      including, without limitation, laws relating to emissions, discharges, releases
      or threatened releases of chemicals, pollutants, contaminants, or toxic or
      hazardous substances or wastes (collectively, “Hazardous Materials”) into the
      environment, or otherwise relating to the manufacture, processing, distribution,
      use, treatment, storage, disposal, transport or handling of Hazardous Materials,
      as well as all authorizations, codes, decrees, demands or demand letters,
      injunctions, judgments, licenses, notices or notice letters, orders, permits,
      plans or regulations issued, entered, promulgated or approved thereunder.

    

    3.18. Disclosure.
      The
      Offering Documents and all other documents delivered to the Subscriber in
      connection herewith at the Closing, do not, as of their respective dates,
      contain any untrue statement of a material fact, or omit to state a material
      fact necessary to make the statements therein, in light of the circumstances
      under which they were made, not misleading. There are no facts that,
      individually or in the aggregate, would have a Material Adverse Effect that
      have
      not been disclosed in the Offering
      Documents (including
      the Schedules and Exhibits thereto) or any other documents delivered to the
      Subscriber in connection herewith or therewith at the Closing.

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

    3.19. Securities
      Law Exemption.
      Assuming the truth and accuracy of the Subscriber’s representations and
      warranties in this Agreement and the truth and accuracy of each of the other
      Subscribers’ representations and warranties set forth in the subscription
      agreements executed by such other Subscribers, the offer, sale and issuance
      of
      the Securities as contemplated by this Agreement and the other subscription
      agreements are exempt from the registration requirements of the Act and
      applicable state securities laws, and neither the Company nor any authorized
      agent acting on its behalf has taken or will take any action hereafter that
      would cause the loss of such exemption.

    

    3.20. Licenses
      and Permits.

    

    (a) Except
      as
      set forth in the Offering
      Documents,
      the
      Company has obtained and maintains all federal, state, local and foreign
      licenses, permits, consents, approvals, registrations, authorizations and
      qualifications required to be maintained in connection with its operations
      as
      presently conducted and as proposed to be conducted, except where the failure
      to
      obtain or maintain such licenses, permits, consents, approvals, registrations,
      authorizations and qualifications could not have a Material Adverse Effect.
      The
      Company is not in default in any material respect under any of such licenses,
      permits, consents, approvals, registrations, memberships, authorizations and
      qualifications.

    

    (b) To
      the
      Company’s knowledge, the conduct of its business as presently and proposed to be
      conducted is not presently subject to continuing oversight, supervision,
      regulation or examination by any governmental official or body of the United
      States or any other jurisdiction wherein the Company conducts or proposes to
      conduct business, except as described in the Offering
      Documents and
      except such regulation as is applicable to commercial enterprises
      generally.

    

    3.21. No
      Integrated Offering.
      Neither
      the Company nor any of its affiliates, nor any person acting on its or their
      behalf, has directly or indirectly made any offers or sales in any security
      or
      solicited any offers to buy any security under circumstances that would require
      registration under the Securities Act. Except as disclosed in the Offering
      Documents,
      the
      Company has not sold or issued any shares of Common Stock, convertible notes
      or
      warrants during the past six months, including sales pursuant to Rule 144A,
      Regulation D or Regulation S under the Act, other than shares issued pursuant
      to
      employee benefit plans, if any. 

    

    3.22. Related
      Party Transactions.
      No
      transaction has occurred between or among the Company and any of its affiliates,
      officers or directors or any affiliate of any such officer or director that
      is
      required to be described in the Offering
      Documents that
      is
      not so described. 

    

    3.23. Books
      and Records.
      The
      books, records and accounts of the Company accurately and fairly reflect, in
      reasonable detail, the transactions in, and dispositions of, the assets of,
      and
      the results of operations of, the Company, all to the extent required by
      generally accepted accounting principles. 

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IV 
      COVENANTS OF THE COMPANY AND SUBSCRIBER

    

    4.1. Form
      D; Blue Sky Laws.
      The
      Company shall timely file with the SEC a Notice of Sale of Securities on Form
      D
      with respect to the Offering, as required under Regulation D. The Company will,
      on or before the Closing Date, take such action as it reasonably determines
      to
      be necessary to qualify the Securities for sale to the Subscriber under this
      Agreement under applicable securities (or “blue sky”) laws or regulations of the
      states of the United States (or to obtain an exemption from such qualification).
      

    

    4.2. Expenses.
      The
      Company and the Subscriber are liable for, and shall pay, their own expenses
      incurred in connection with the negotiation, preparation, execution and delivery
      of this Agreement, including, without limitation, attorneys’ and consultants’
fees and expenses. 

     

    ARTICLE
      V  
      CONDITIONS TO OBLIGATIONS OF THE SUBSCRIBER

    

    The
      Subscriber’s obligation to purchase Securities at the Closing is subject to the
      fulfillment on or prior to the Closing of the following conditions, which
      conditions may be waived at the option of the Subscriber to the extent permitted
      by law:

    

    5.1. Representations
      and Warranties Correct.
      The
      representations and warranties made by the Company in ARTICLE III hereof shall
      be true and correct in all material respects when made, and, except for any
      representations and warranties made by the Company as of a specific date, shall
      be true and correct in all material respects on the Closing Date with the same
      force and effect as if they had been made on and as of said date. 

    

    5.2. Covenants.
      All
      covenants, agreements and conditions contained in this Agreement to be performed
      by the Company on or prior to such purchase shall have been performed or
      complied with in all material respects. 

    

    5.3. No
      Legal Order Pending.
      There
      shall not then be in effect any legal or other order enjoining or materially
      restraining the transactions contemplated by this Agreement.

    

    5.4. No
      Law
      Prohibiting or Restricting Such Sale.
      There
      shall not be in effect any law, rule or regulation prohibiting or materially
      restricting such sale or requiring any consent or approval of any person which
      shall not have been obtained to issue the Common Stock (except as otherwise
      provided in this Agreement).

    

    5.5. Legal
      Opinion.
      The
      Placement Agent shall have received a legal opinion from the Company’s outside
      counsel covering such matters as reasonably requested by the Placement
      Agent.

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    5.6. Officer’s
      Certificates.
      The
      Company shall have delivered a Certificate, executed on behalf of the Company
      by
      its Chief Executive Officer, dated as of the Closing Date, certifying to the
      fulfillment of the conditions specified in Sections 5.1, 5.2, 5.3, and 5.4
      of
      this ARTICLE V, and (ii) Pubco and Merger Sub shall have delivered a
      Certificate, executed by their respective Chief Executive Officers or Chief
      Financial Officers, dated as of the Closing Date, certifying to the
      representations and warranties and conditions set forth in the Merger Agreement.
      

    

    5.7. Secretary
      Certificates.
      The
      Company shall have delivered a Certificate, executed on behalf of the Company
      by
      its Secretary, dated as of the Closing Date, certifying the resolutions adopted
      by the Board of Directors of the Company approving, as applicable, the
      transactions contemplated by this Agreement and the issuance of the Common
      Stock, certifying the current versions of its Articles of Incorporation and
      Bylaws or other organizational documents and certifying as to the signatures
      and
      authority of persons signing this Agreement and related documents on its
      behalf.

    

    ARTICLE
      VI REGISTRATION
      RIGHTS.

    

    6.1. Registration;
      Definitions.

    

    (a) No
      later
      than sixty (60) days following the Merger (as defined in the Memorandum) (the
      “Registration Due Date”), the Company shall prepare and file with the SEC a
      registration statement covering the resale of all of the Registrable Securities
      (the “Registration Statement”). The Registration Statement required hereunder
      shall be on Form S-1, SB-2, or any another appropriate form in accordance
      herewith, in the sole discretion of the Company. Subject to the terms of this
      Agreement, the Company shall use its commercially reasonable efforts to cause
      the Registration Statement to be declared effective under the Securities Act
      as
      promptly as possible after the filing thereof and shall use its commercially
      reasonable efforts to keep the Registration Statement continuously effective
      under the Securities Act until the date when all Registrable Securities covered
      by the Registration Statement have been sold or may be sold without volume
      restrictions pursuant to Rule 144(k), as determined by the counsel to the Holder
      (as defined below) pursuant to a written opinion letter to such effect,
      addressed and acceptable to the Company’s counsel, the Company’s transfer agent
      and the affected Holders (the “Effectiveness Period”).

    

    (b) In
      the
      event the Company fails to file the Registration Statement with the SEC on
      or
      before Registration Due Date, the Company shall pay to each Subscriber, as
      liquidated damages and not as a penalty, an amount, for each month (or portion
      of a month) in which such delay shall occur, equal to one percent (1%) of the
      Purchase Price paid by each such Subscriber, until the point in time when the
      Company has filed the Registration Statement with the SEC. 

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    (c) The
      term
“Registrable Securities” shall mean (i) the Common Stock sold in the Offering,
      or (ii) the securities received by a Holder (as defined below) in connection
      with the Merger; provided, however, that securities shall only be treated as
      Registrable Securities if and only for so long as they (i) have not been sold
      (A) pursuant to a registration statement; (B) to or through a broker, dealer
      or
      underwriter in a public distribution or a public securities transaction; and/or
      (C) in a transaction exempt from the registration and prospectus delivery
      requirements of the Securities Act under Section 4(1) thereof so that all
      transfer restrictions and restrictive legends with respect thereto, if any,
      are
      removed upon the consummation of such sale; (ii) are not held by a Holder (as
      defined below) or a permitted transferee; and (iii) are not eligible for sale
      pursuant to Rule 144(k) (or any successor thereto) under the Securities Act.
      

    

    (d) The
      term
“Holder” shall mean any person owning or having the right to acquire Registrable
      Securities or any permitted transferee of a Holder.

    

    6.2. Registration
      Procedures; Company.
      In
      connection with the Company’s registration obligations set forth in Section 6.1
      above, the Company shall:

    

    (a) Not
      less
      than five (5) business days prior to the filing of the Registration Statement
      or
      any related prospectus or any amendment or supplement thereto (i) furnish to
      the
      Holders copies of all such documents proposed to be filed (including documents
      incorporated or deemed incorporated by reference to the extent requested by
      such
      Person) which documents will be subject to the review of such Holders and (ii)
      cause its officers, directors, counsel and independent certified public
      accountants to respond to such inquiries as shall be necessary, in the
      reasonable opinion of respective counsel, to conduct a reasonable investigation
      within the meaning of the Securities Act. The Company shall not file the
      Registration Statement or any such prospectus or any amendments or supplements
      thereto to which the Holders of a majority of the Registrable Securities shall
      reasonably object in good faith, provided that the Company is notified of such
      objection in writing no later than three (3) business days after the Holders
      have been so furnished copies of such documents. 

    

    (b) Prepare
      and file with the SEC such amendments, including post-effective amendments,
      to
      the Registration Statement and the prospectus used in connection therewith
      as
      may be necessary to keep the Registration Statement continuously effective
      as to
      the applicable Registrable Securities for the Effectiveness Period and prepare
      and file with the SEC such additional Registration Statements in order to
      register for resale under the Securities Act all of the Registrable
      Securities.

    

    (c) Use
      commercially reasonable efforts to avoid the issuance of, or, if issued, obtain
      the withdrawal of (i) any order suspending the effectiveness of the Registration
      Statement or (ii) any suspension of the qualification (or exemption from
      qualification) of any of the Registrable Securities for sale in any
      jurisdiction, at the earliest practicable moment. 

    

    (d) Comply
      with all applicable rules and regulations of the SEC. 

     

    (e) Furnish
      to any Holder, so long as the Holder owns any Registrable Securities, forthwith
      upon request (i) a copy of the most recent annual or quarterly report of the
      Company and such other reports and documents so filed by the Company, and (ii)
      such other information as may be reasonably requested in availing any Holder
      of
      any rule or regulation of the SEC which permits the selling of any such
      securities without registration or pursuant to such form. 

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    6.3. Registration
      Procedures; Subscriber.
      In
      connection with the Company’s registration obligations set forth in Section 6.1
      above:

    

    (a) The
      Subscriber shall cooperate with the Company, as requested by the Company, in
      connection with the preparation and filing of any Registration Statement
      hereunder. The Company may require the Subscriber to promptly furnish in writing
      to the Company such information as may be required in connection with such
      registration including, without limitation, all such information as may be
      requested by the SEC or the NASD or any state securities commission and all
      such
      information regarding the Subscriber, the Registrable Securities held by the
      Subscriber and the intended method of disposition of the Registrable Securities.
      The Subscriber agrees to provide such information requested in connection with
      such registration within five (5) business days after receiving such written
      request, and the Company shall not be responsible for any delays in obtaining
      or
      maintaining the effectiveness of the Registration Statement caused by any
      Subscriber’s failure to timely provide such information.

    

    (b) If,
      in
      the good faith judgment of the Company, it would be detrimental to the Company
      or its stockholders for the Registration Statement to be filed or for resales
      of
      Registrable Securities to be made pursuant to the Registration Statement due
      to
      (i) the existence of a material development or potential material development
      involving the Company that the Company would be obligated to disclose in the
      Registration Statement, which disclosure would be premature or otherwise
      inadvisable at such time or would have a material adverse effect on the Company
      or its stockholders or (ii) a proposed filing of or use of an existing
      registration statement in connection with a Company-initiated registration
      of
      any class of its equity securities, which, in the good faith judgment of the
      Company, would adversely effect or require premature disclosure of the filing
      or
      use of such Company-initiated registration (notice thereof, a “Blackout
      Notice”),
      upon
      receipt of a Blackout Notice from the Company, the Subscriber shall immediately
      discontinue disposition of Registrable Securities pursuant to the Registration
      Statement (the period during which such disposition is discontinued, the
“Blackout Period”) covering such Registrable Securities until (i) the Company
      advises the Subscriber that the Blackout Period has terminated and (ii) the
      Subscriber receives copies of a supplemented or amended prospectus, if
      necessary. If so directed by the Company, the Subscriber will deliver to the
      Company (at the expense of the Company) or destroy (and deliver to the Company
      a
      certificate of destruction) all copies in the Subscriber’s possession (other
      than a limited number of file copies) of the prospectus covering such
      Registrable Securities that is current at the time of receipt of such
      notice.

    

    (c) If
      the
      Subscriber determines to engage an underwriter (other than the Subscriber)
      in
      connection with the offering of any Registrable Securities (an “Underwritten
      Offering”),
      the
      Subscriber will enter into and perform its obligations under an underwriting
      agreement, in usual and customary form, including, without limitation, customary
      indemnification and contribution obligations, with the managing underwriter
      of
      such offering, and will take such other actions as are reasonably required
      in
      order to expedite or facilitate the disposition of the Registrable Securities.
      The Subscriber shall consult with the Company prior to any Underwritten Offering
      and shall defer such Underwritten Offering for a reasonable period upon the
      request of the Company.

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    

    (d) The
      Subscriber shall not take any action with respect to any distribution deemed
      to
      be made pursuant to the Registration Statement, which would constitute a
      violation of Regulation M under the Exchange Act or any other applicable rule,
      regulation or law.

    

    6.4. Registration
      Expenses.
      All
      fees and expenses of the Company incident to the performance of or compliance
      with Section 6.1 and Section 6.2 hereof by the Company shall be borne by the
      Company. In addition, the Company shall pay, on a one-time basis, the reasonable
      fees and expenses of counsel to the Holders of up to $10,000 in the aggregate
      with respect to the review of any registration statement filed pursuant to
      Section 6.1 hereof, as directed by the then Holders of a majority of the
      Registrable Securities.

    

    6.5. Indemnification.
      In the
      event that any Registrable Securities are included in a Registration Statement
      under this ARTICLE VI:

    

    (a) To
      the
      extent permitted by law, the Company will indemnify and hold harmless each
      Holder, any underwriter (as defined in the Securities Act) for such Holder
      and
      each person, if any, who controls such Holder or underwriter within the meaning
      of the Securities Act or the Exchange Act, against any losses, claims, damages,
      or liabilities (joint or several) to which they may become subject under the
      Securities Act, or the Exchange Act, insofar as such losses, claims, damages,
      or
      liabilities (or actions in respect thereof) arise out of or are based upon
      any
      of the following statements, omissions or violations (collectively a
“Violation”): (i) any untrue statement or alleged untrue statement of a material
      fact contained in such registration statement, including any preliminary
      prospectus or final prospectus contained therein or any amendments or
      supplements thereto, (ii) the omission or alleged omission to state therein
      a
      material fact required to be stated therein, or necessary to make the statements
      therein not misleading, or (iii) any violation or alleged violation by the
      Company of the Securities Act, the Securities Exchange Act of 1934, as amended
      (the “Exchange Act”), or any rule or regulation promulgated under the Securities
      Act, or the Exchange Act, and the Company will pay to each such Holder,
      underwriter or controlling person, as incurred, any legal or other expenses
      reasonably incurred by them in connection with investigating or defending any
      such loss, claim, damage, liability, or action; provided, however, that the
      indemnity agreement contained in this Section 6.5(a) shall not apply to amounts
      paid in settlement of any such loss, claim, damage, liability, or action if
      such
      settlement is effected without the consent of the Company (which consent shall
      not be unreasonably withheld), nor shall the Company be liable in any such
      case
      for any such loss, claim, damage, liability, or action to the extent that it
      arises out of or is based upon a Violation which occurs in reliance upon and
      in
      conformity with written information furnished expressly for use in connection
      with such registration by any such Holder, underwriter or controlling
      person. 

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

    (b) To
      the
      extent permitted by law, each Holder will indemnify and hold harmless the
      Company, each of its directors, each of its officers, each person, if any,
      who
      controls the Company within the meaning of the Securities Act, any underwriter,
      any other Holder selling securities in such registration statement and any
      controlling person of any such underwriter or other Holder, against any losses,
      claims, damages, or liabilities (joint or several) to which any of the foregoing
      persons may become subject, under the Securities Act, or the Exchange Act,
      insofar as such losses, claims, damages, or liabilities (or actions in respect
      thereto) arise out of or are based upon any Violation, in each case to the
      extent (and only to the extent) that such Violation occurs in reliance upon
      and
      in conformity with written information furnished or omitted by such Holder
      for
      use in connection with such registration; and each such Holder will pay, as
      incurred, any legal or other expenses incurred by any person intended to be
      indemnified pursuant to this Section 6.5(b), in connection with investigating
      or
      defending any such loss, claim, damage, liability, or action; provided, however,
      that the indemnity agreement contained in this Section 6.5(b) shall not apply
      to
      amounts paid in settlement of any such loss, claim, damage, liability or action
      if such settlement is effected without the consent of the Holder, which consent
      shall not be unreasonably withheld; provided, further, that, in no event shall
      any indemnity under this Section 6.5(b) exceed the greater of the cash value
      of
      the (i) gross proceeds from the offering received by such Holder or (ii) such
      Holder’s investment pursuant to this Agreement as set forth on the signature
      page attached hereto.

    

    (c) Promptly
      after receipt by an indemnified party under this Section 6.5 of notice of the
      commencement of any action (including any governmental action), such indemnified
      party shall, if a claim in respect thereof is to be made against any
      indemnifying party under this Section 6.5, deliver to the indemnifying party
      a
      written notice of the commencement thereof and the indemnifying party shall
      have
      the right to participate in, and, to the extent the indemnifying party so
      desires, jointly with any other indemnifying party similarly notified, to assume
      the defense thereof with counsel selected by the indemnifying party and approved
      by the indemnified party (whose approval shall not be unreasonably withheld);
      provided, however, that an indemnified party (together with all other
      indemnified parties which may be represented without conflict by one counsel)
      shall have the right to retain one separate counsel, with the fees and expenses
      to be paid by the indemnifying party, if representation of such indemnified
      party by the counsel retained by the indemnifying party would be inappropriate
      due to actual or potential differing interests between such indemnified party
      and any other party represented by such counsel in such proceeding. The failure
      to deliver written notice to the indemnifying party within a reasonable time
      of
      the commencement of any such action, if prejudicial to its ability to defend
      such action, shall relieve such indemnifying party of any liability to the
      indemnified party under this Section 6.5, but the omission so to deliver written
      notice to the indemnifying party will not relieve it of any liability that
      it
      may have to any indemnified party otherwise than under this Section 6.5.

    

    (d) If
      the
      indemnification provided for in this Section 6.5 is held by a court of competent
      jurisdiction to be unavailable to an indemnified party with respect to any
      loss,
      liability, claim, damage, or expense referred to therein, then the indemnifying
      party, in lieu of indemnifying such indemnified party hereunder, shall
      contribute to the amount paid or payable by such indemnified party as a result
      of such loss, liability, claim, damage, or expense in such proportion as is
      appropriate to reflect the relative fault of the indemnifying party on the
      one
      hand and of the indemnified party on the other in connection with the statements
      or omissions that resulted in such loss, liability, claim, damage, or expense
      as
      well as any other relevant equitable considerations. The relative fault of
      the
      indemnifying party and of the indemnified party shall be determined by reference
      to, among other things, whether the untrue or alleged untrue statement of a
      material fact or the alleged omission to state a material fact relates to
      information supplied by the indemnifying party or by the indemnified party
      and
      the parties’ relative intent, knowledge, access to information, and opportunity
      to correct or prevent such statement or omission. 

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

    (e) The
      obligations of the Company and Holders under this Section 6.5 shall survive
      the
      completion of any offering of Registrable Securities in a Registration Statement
      under this ARTICLE VI, and otherwise. 

    

    6.6. Cutback.
      In
      connection with filing the Registration Statement pursuant to Section 6.1
      hereof, the obligations of the Company set forth in this ARTICLE VI are subject
      to any limitations on the Company’s ability to register the full complement of
      such shares in accordance with Rule 415 under the Securities Act or other
      regulatory limitations. To the extent the number of such shares that can be
      registered is limited, the Company shall file a subsequent registration
      agreement which will provide, among other things, that the Company will use
      its
      commercially reasonable efforts to register additional changes of Registrable
      Securities as soon as permissible thereafter under applicable laws, rules and
      regulations so that all of such Registrable Securities are registered as soon
      as
      reasonably practicable.

    

    6.7. Sales
      by Subscribers.
      The
      Subscriber shall sell any and all Registrable Securities (as defined below)
      purchased hereby in compliance with applicable prospectus delivery requirements,
      if any, or otherwise in compliance with the requirements for an exemption from
      registration under the Securities Act and the rules and regulations promulgated
      thereunder. The Subscriber will not make any sale, transfer or other disposition
      of the Securities in violation of federal or state securities or “blue sky” laws
      and regulations.

    

    6.8. Piggy-Back
      Registrations.
      If at
      any time during the Effectiveness Period there is not an effective Registration
      Statement covering all of the Registrable Securities and the Company shall
      determine to prepare and file with the SEC a registration statement relating
      to
      an offering for its own account or the account of others under the Securities
      Act of any of its equity securities, other than on Form S-4 or Form S-8 (each
      as
      promulgated under the Securities Act) or their then equivalents relating to
      equity securities to be issued solely in connection with any acquisition of
      any
      entity or business or equity securities issuable in connection with the stock
      option or other employee benefit plans, then the Company shall send to each
      Holder a written notice of such determination and, if within fifteen (15) days
      after the date of such notice, any such Holder shall so request in writing,
      the
      Company shall include in such registration statement all or any part of such
      Registrable Securities such Holder requests to be registered, subject to
      customary underwriter cutbacks applicable to all holders of registration rights.
      

    

    6.9. Waivers.
      With
      the written consent of the Company and the Holders holding at least a majority
      of the Registrable Securities that are then outstanding, any provision of this
      ARTICLE VI may be waived (either generally or in a particular instance, either
      retroactively or prospectively and either for a specified period of time or
      indefinitely) or amended, which waiver shall be applicable to all Holders,
      and
      shall be deemed to have been consented to by all Holders. Upon the effectuation
      of each such waiver or amendment, the Company shall promptly give written notice
      thereof to the Holders, if any, who have not previously received notice thereof
      or consented thereto in writing.

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    

    ARTICLE
      VII MISCELLANEOUS

    

    7.1. Governing
      Law; Jurisdiction.
      This
      Agreement will be governed by and interpreted in accordance with the laws of
      the
      State of Delaware without regard to the principles of conflict of laws. The
      parties hereto hereby submit to the exclusive jurisdiction of the United States
      federal and state courts located in the Borough of Manhattan, in the State
      of
      New York with respect to any dispute arising under this Agreement or the
      transactions contemplated hereby or thereby. 

    

    7.2. Counterparts;
      Signatures by Facsimile.
      This
      Agreement may be executed in two or more counterparts, all of which are
      considered one and the same agreement and will become effective when
      counterparts have been signed by each party and delivered to the other parties.
      This Agreement, once executed by a party, may be delivered to the other parties
      hereto by facsimile transmission of a copy of this Agreement bearing the
      signature of the party so delivering this Agreement. 

    

    7.3. Headings.
      The
      headings of this Agreement are for convenience of reference only, are not part
      of this Agreement and do not affect its interpretation. 

    

    7.4. Severability.
      If any
      provision of this Agreement is invalid or unenforceable under any applicable
      statute or rule of law, then such provision will be deemed modified in order
      to
      conform to such statute or rule of law. Any provision hereof that may prove
      invalid or unenforceable under any law will not affect the validity or
      enforceability of any other provision hereof. 

    

    7.5. Entire
      Agreement; Amendments.
      This
      Agreement (including all schedules and exhibits hereto) constitutes the entire
      agreement among the parties hereto with respect to the subject matter hereof
      and
      thereof. There are no restrictions, promises, warranties or undertakings, other
      than those set forth or referred to herein or therein. This Agreement supersedes
      all prior agreements and understandings among the parties hereto with respect
      to
      the subject matter hereof. Except as set forth in ARTICLE VI, no provision
      of
      this Agreement may be waived or amended other than by an instrument in writing
      signed by the party to be charged with enforcement.

    

    7.6. Notices.
      Any
      notices required or permitted to be given under the terms of this Agreement
      must
      be sent by certified or registered mail (return receipt requested) or delivered
      personally or by courier (including a recognized overnight delivery service)
      and
      will be effective five days after being placed in the mail, if mailed by regular
      United States mail, or upon receipt, if delivered personally, or by courier
      (including a recognized overnight delivery service), in each case addressed
      to a
      party. The addresses for such communications are:

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    

    If
      to the
      Company: 

    

    Mr.
      Peter
      M. Strumph

    2850
      Telegraph Avenue, Suite 310

    Berkeley,
      CA 94705

    Tel:
      (510) 281-7701

    Fax:
      (510) 288-1310

    

    With
      a
      copy to:

     

    Ira
      L.
      Kotel, Esq.

    Dickstein
      Shapiro LLP

    1177
      Avenue of the Americas

    New
      York,
      NY 10036

    

    If
      to the
      Subscriber: To the address set forth immediately below the Subscriber’s name on
      the signature pages hereto.

    

    Each
      party will provide written notice to the other parties of any change in its
      address.

    

    7.7. Successors
      and Assigns.
      This
      Agreement is binding upon and inures to the benefit of the parties and their
      successors and assigns. The Company will not assign this Agreement or any rights
      or obligations hereunder without the prior written consent of the Subscriber
      and
      the Subscriber may not assign this Agreement or any rights or obligations
      hereunder without the prior written consent of the Company, and any such
      assignment without the prior written consent of the Company shall be void
ab
      initio.
      Notwithstanding the foregoing, the Subscriber may assign all or part of its
      rights and obligations hereunder to any of its “affiliates,” as that term is
      defined under the Securities Act, without the consent of the Company so long
      as
      the affiliate is an accredited investor (within the meaning of Regulation D)
      and
      agrees in writing to be bound by this Agreement. This provision does not limit
      the Subscriber’s right to transfer the Common Stock pursuant to the terms of
      this Agreement or to assign the Subscriber’s rights hereunder to any such
      transferee pursuant to the terms of this Agreement. 

    

    7.8. Third
      Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other person. 

    

    7.9. Further
      Assurances.
      Each
      party will do and perform, or cause to be done and performed, all such further
      acts and things, and will execute and deliver all other agreements,
      certificates, instruments and documents, as another party may reasonably request
      in order to carry out the intent and accomplish the purposes of this Agreement
      and the consummation of the transactions contemplated hereby. 

    

    7.10. No
      Strict Construction.
      The
      language used in this Agreement is deemed to be the language chosen by the
      parties to express their mutual intent, and no rules of strict construction
      will
      be applied against any party.

    

    7.11. Acceptance.
      Upon
      the execution and delivery of this Agreement by the Subscriber, this Agreement
      shall become a binding obligation of the Subscriber with respect to the purchase
      of Securities as herein provided, subject to acceptance by the Company; subject,
      however, to the right hereby reserved to the Company to enter into the same
      agreements with other Subscribers and to add and/or delete other persons as
      Subscribers.

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    

    7.12. Waiver.
      It is
      agreed that a waiver by either party of a breach of any provision of this
      Agreement shall not operate, or be construed, as a waiver of any subsequent
      breach by that same party. 

    

    7.13. Other
      Documents.
      The
      parties agree to execute and deliver all such further documents, agreements
      and
      instruments and take such other and further action as may be necessary or
      appropriate to carry out the purposes and intent of this Agreement.

    

    7.14. Public
      Statements.
      The
      Subscriber agrees not to issue any public statement with respect to the
      Subscriber’s investment or proposed investment in the Company or the terms of
      any agreement or covenant between them and the Company without the Company’s
      prior written consent, except such disclosures as may be required under
      applicable law or under any applicable order, rule or regulation. 

    

    7.15. Exculpation
      Among Subscribers.
      The
      Subscriber agrees, acknowledges and understands that it is not relying on any
      of
      the other Subscribers in making its investment or decision to invest in the
      Company. The Subscriber agrees, acknowledges and understands that none of the
      other Subscribers nor their respective controlling persons, officers, directors,
      partners, agents or employees shall be liable to the Subscriber for any action
      heretofore or hereafter taken or omitted to be taken by any of them in
      connection with the purchase of the Securities or the execution of or
      performance under this Agreement, nor shall the Subscriber be liable to the
      other Subscribers for any action heretofore or hereafter taken or omitted to
      be
      taken by the Subscriber in connection with the purchase of the Securities or
      the
      execution of or performance under this Agreement.

    

    7.16. Several
      Obligations.
      The
      obligations of each Subscriber under any Subscription Agreements are several
      and
      not joint with the obligations of any other Subscriber, and no Subscriber shall
      be responsible in any way for the performance of the obligations of any other
      Subscriber under any Subscription Agreement. Nothing contained herein or in
      any
      other Subscription Agreement, and no action taken by any Subscriber pursuant
      hereto or thereto, shall be deemed to constitute the Subscribers as a
      partnership, an association, a joint venture or any other kind of entity, or
      create a presumption that the Subscribers are in any way acting in concert
      or as
      a group with respect to such obligations or the transactions contemplated by
      the
      Subscription Agreements. Each Subscriber confirms that it has independently
      participated in the negotiation of the transaction contemplated hereby with
      the
      advice of its own counsel and advisors. Each Subscriber shall be entitled to
      independently protect and enforce its rights, including, without limitation,
      the
      rights arising out of this Agreement or out of any other Subscription
      Agreements, and it shall not be necessary for any other Subscriber to be joined
      as an additional party in any proceeding for such purpose. The Company
      acknowledges that each of the Subscribers has been provided with the same
      Subscription Agreements for the purpose of closing a transaction with multiple
      Subscribers and not because it was required or requested to do so by any
      Subscriber.

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    

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

    

    [Signature
      Page to Follow]

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      
        	
                NUMBER
                  OF SHARES

              	 	
                x

              	
                $

              	 	
                =

              	
                $

              	 	 
	 	 	 	 	
                (Offering
                  Price) 

              	 	 	
                (Investment
                  Amount) 

              	 

      

    

     

    
      	 	 	 	 
	
              Signature

            	 	
              Signature
                (if purchasing jointly)

            	 
	 	 	 	 
	 	 	 	 
	
              Name
                Typed or Printed

            	 	
              Name
                Typed or Printed

            	 
	 	 	 	 
	 	 	 	 
	
              Entity
                Name

            	 	
              Entity
                Name

            	 
	 	 	 	 
	 	 	 	 
	
              Address

            	 	
              Address

            	 
	 	 	 	 
	 	 	 	 
	
              City,
                State and Zip Code

            	 	
              City,
                State and Zip Code

            	 
	 	 	 	 
	 	 	 	 
	
              Telephone-Business

            	 	
              Telephone—Business

            	 
	 	 	 	 
	 	 	 	 
	
              Telephone-Residence

            	 	
              Telephone—Residence

            	 
	 	 	 	 
	 	 	 	 
	
              Facsimile-Business

            	 	
              Facsimile—Business

            	 
	 	 	 	 
	 	 	 	 
	
              Facsimile-Residence

            	 	
              Facsimile—Residence

            	 

    

    

    
      	
              Tax
                ID # or Social Security #

            	
               

            	 

    

    

    
      	
              Name
                in which securities should be issued:

            	
               

            	 

    

    

    
      	
              Dated:

            	 	
              ,
                2007

            

    

    

    
      	 	
              This
                Subscription Agreement is agreed to and accepted as of _________________,
                2007.

            
	 	                                                                               (Date)

    

    

    
      	 	
              NILE
                THERAPEUTICS, INC.

            
	 	 
	 	 
	 	
              By:

            	 

              

            
	 	
              Name: 
                Mr. Peter M. Strumph

            
	 	
              Title:   
                Chief Executive Officer

            

    

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    

    CERTIFICATE
      OF SIGNATORY

    

    (To
      be completed if Securities are

    being
      subscribed for by an entity)

    

    I,____________________________,
      am the____________________________ of __________________________________________
      (the “Entity”).

    

    I
      certify
      that I am empowered and duly authorized by the Entity to execute and carry
      out
      the terms of the Subscription Agreement and to purchase and hold the Securities,
      and certify further that the Subscription Agreement has been duly and validly
      executed on behalf of the Entity and constitutes a legal and binding obligation
      of the Entity.

    

    IN
      WITNESS WHEREOF, I have set my hand this ________ day of
      _________________,_2007

     

    
      	 	 

              

            
	 	
              (Signature)

            

    

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    CONFIDENTIAL
      INVESTOR QUESTIONAIRRE

     

    1. The
      Subscriber represents and warrants that he, she or it comes within one category
      marked below, and that for any category marked, he, she or it has truthfully
      set
      forth, where applicable, the factual basis or reason the Subscriber comes within
      that category. ALL INFORMATION IN RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY
      CONFIDENTIAL. The undersigned agrees to furnish any additional information
      which
      the Company deems necessary in order to verify the answers set forth
      below.

     

    
      	Category
              A __	
              The
                undersigned is an individual (not a partnership, corporation, etc.)
                whose
                individual net worth, or joint net worth with his or her spouse,
                presently
                exceeds $1,000,000.

            

      	 	 

      	 	Explanation.
              In calculating net worth you may include equity in personal property
              and
              real estate, including your principal residence, cash, short-term
              investments, stock and securities. Equity in personal property and
              real
              estate should be based on the fair market value of such property less
              debt
              secured by such property.

    

     

    
      	Category
              B __	
              The
                undersigned is an individual (not a partnership, corporation, etc.)
                who
                had an income in excess of $200,000 in each of the two most recent
                years,
                or joint income with his or her spouse in excess of $300,000 in each
                of
                those years (in each case including foreign income, tax exempt income
                and
                full amount of capital gains and losses but excluding any income
                of other
                family members and any unrealized capital appreciation) and has a
                reasonable expectation of reaching the same income level in the current
                year.

            

    

    

    
      	Category
              C __	
              The
                undersigned is a director or executive officer of the Company which
                is
                issuing and selling the Preferred
                Stock.

            

    

     

    
      	
              Category
                D __

            	
              
                The
                  undersigned is a bank; a savings and loan association; insurance
                  company;
                  registered investment company; registered business development
                  company;
                  licensed small business investment company (“SBIC”); or employee benefit
                  plan within the meaning of Title 1 of ERISA and (a) the investment
                  decision is made by a plan fiduciary which is either a bank, savings
                  and
                  loan association, insurance company or registered investment advisor,
                  or
                  (b) the plan has total assets in excess of $5,000,000 or (c) is
                  a self
                  directed plan with investment decisions made solely by persons
                  that are
                  accredited investors. (describe
                  entity)

              

            

      	 	 

      	 	____________________________________________________________

      	 	____________________________________________________________

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

    

    
      

        
          	Category
                  E __	
                  The
                    undersigned is a private business development company as defined
                    in
                    section 202(a)(22) of the Investment Advisors Act of 1940. (describe
                    entity) 

                

          	 	 

          	 	____________________________________________________________  

          	 	____________________________________________________________  

        

      

    

     

    
      	Category
              F __	
              The
                undersigned is either a corporation, partnership, Massachusetts business
                trust, or non-profit organization within the meaning of Section 501(c)(3)
                of the Internal Revenue Code, in each case not formed for the specific
                purpose of acquiring the Preferred Stock and with total assets in
                excess
                of $5,000,000. (describe entity)

            

      	 	 

      	 	____________________________________________________________ 

      	 	____________________________________________________________ 

    

     

    
      	Category
              G __	
              The
                undersigned is a trust with total assets in excess of $5,000,000,
                not
                formed for the specific purpose of acquiring the Preferred Stock,
                where
                the purchase is directed by a “sophisticated investor“ as defined in
                Regulation 506(b)(2)(ii) under the
                Act.

            

    

    

    
      	Category
              H __	
              The
                undersigned is an entity (other than a trust) in which all of the
                equity
                owners are “accredited investors” within one or more of the above
                categories. If relying upon this Category alone, each equity owner
                must
                complete a separate copy of this Agreement. (describe
                entity)

            

      	 	 

      	 	____________________________________________________________ 

    

    

    
      	Category
              I __	
              The
                undersigned is not within any of the categories above and is therefore
                not
                an accredited investor.

            

      	 	 

      	 	The
              undersigned agrees that the undersigned will notify the Company at
              any
              time on or prior to the Closing Date in the event that the representations
              and warranties in this Agreement shall cease to be true, accurate and
              complete. 

    

     

    2. SUITABILITY
      (please
      answer each question)

     

    
      	
              (a)
                For an individual Subscriber, please describe your current employment,
                including the company by which you are employed and its principal
                business:

            
	 
	___________________________________________________________________________________________________  
	___________________________________________________________________________________________________  
	___________________________________________________________________________________________________  
	___________________________________________________________________________________________________  

    

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    
      	
              (b)
                For an individual Subscriber, please describe any college or graduate
                degrees held by you:

            
	 
	___________________________________________________________________________________________________  
	___________________________________________________________________________________________________  
	___________________________________________________________________________________________________  
	___________________________________________________________________________________________________  
	 
	
              (c)
                For all Subscribers, please list types of prior
                investments:

            
	 
	___________________________________________________________________________________________________  
	___________________________________________________________________________________________________  
	___________________________________________________________________________________________________  
	___________________________________________________________________________________________________  
	 
	
              (d)
                For all Subscribers, please state whether you have you participated
                in
                other private placements
                before:

            

    

     

    
      	
            	
              YES
                r

            	
              NO
                r

            

    

    

    (e)
      If
      your answer to question (d) above was “YES”, please indicate frequency of such
      prior participation in private
      placements
      of:

    

    
      	 	
              Public
                

            	 	
              Private

            	 	
              Public
                or Private

            
	 	
              Companies

            	 	
              Companies

            	 	
              Biotechnology
                Companies

            
	 	 	 	 	 	 
	
              Frequently

            	_________________________ 	 	_________________________ 	 	_________________________ 
	
              Occasionally

            	_________________________ 	 	_________________________	 	_________________________ 
	
              Never

            	_________________________	 	_________________________ 	 	_________________________ 

    

    

    (f)
      For
      individual Subscribers, do you expect your current level of income to
      significantly decrease in the foreseeable future:

    

    
      	 	
              YES
                r

            	
              NO
                r

            

    

    

    (g)
      For
      trust, corporate, partnership and other institutional Subscribers, do you expect
      your total assets to significantly decrease in the foreseeable future:

    

    
      	 	
              YES
                r

            	
              NO
                r

            

    

    

    (h)
      For
      all Subscribers, do you have any other investments or contingent liabilities
      which you reasonably anticipate could cause you to need sudden cash requirements
      in excess of cash readily available to you: 

    

    
      	 	
              YES
                r

            	
              NO
                r

            

    

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    

    (i)
      For
      all Subscribers, are you familiar with the risk aspects and the non-liquidity
      of
      investments such as the securities for which you seek to subscribe?

    

    
      	 	
              YES
                r

            	
              NO
                r

            

    

    

    (j)
      For
      all Subscribers, do you understand that there is no guarantee of financial
      return on this investment and that you run the risk of losing your entire
      investment?

    

    
      	 	
              YES
                r

            	
              NO
                r

            

    

    

    3. MANNER
      IN WHICH TITLE IS TO BE HELD.
      (circle
      one)

    

    
      	 	
              (a)

            	
              Individual
                Ownership

            
	 	
              (b)

            	
              Community
                Property

            
	 	
              (c)

            	
              Joint
                Tenant with Right of

            
	 	 	
              Survivorship
                (both parties

            
	 	 	
              must
                sign)

            
	 	
              (d)

            	
              Partnership*

            
	 	
              (e)

            	
              Tenants
                in Common

            
	 	
              (f)

            	
              Company*

            
	 	
              (g)

            	
              Trust*

            
	 	
              (h)

            	
              Other

            

    

    

    *If
      Preferred Stock are being subscribed for by an entity, the attached Certificate
      of Signatory must also be completed.

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    4. NASD
      AFFILIATION.

    

    Are
      you
      affiliated or associated with an NASD member firm (please check
      one):

    

    
      	
              Yes
                r

            	
              No
                r

            

    

    

    If
      Yes,
      please describe:

    

    
      	____________________________________________________________   	 
	____________________________________________________________    	 
	____________________________________________________________    	 

    

    

    *If
      Subscriber is a Registered Representative with an NASD member firm, have the
      following acknowledgment signed by the appropriate party:

    

    The
      undersigned NASD member firm acknowledges receipt of the notice required by
      NASD
      Conduct Rule 3040 (a) and (b).

    

    
      
        

      

    

    Name
      of
      NASD Member Firm

    

    
      	
              By:

            	
               

              
                

              

            

    

    Authorized
      Officer

    

    
      	
              Date:

            	
               

              
                

              

            

    

    

    The
      undersigned is informed of the significance to the Company of the foregoing
      representations and answers contained in the Confidential Investor Questionnaire
      and such answers have been provided under the assumption that the Company will
      rely on them.

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    WIRE
      INSTRUCTIONS

    

    US
      BANK
      NATIONAL ASSOCIATION

    COPORATION
      TRUST, ST. PAUL MINNESOTA

    

    ABA#:
      [
      ]

    BNF:
      U.S.
      BANK, NA

    ACCOUNT
      #: [ ]

    Further
      Credit to: Nile Therapeutics, Inc.

    SEI#:
      117882000

    Attention:
      Stefan Ronchetti

    Tel:
      651-495-2148

    Fax:
      651-495-8087

    Ref:
      [Investor Name] *

    

    *
      It is
      imperative that the investing entity is listed on the wire

    
      
        
        

      

      
        32Exhibit
      10.13

    SEPARATION
      AGREEMENT AND GENERAL RELEASE

     

    This
      Separation Agreement and General Release (this "Agreement") is entered into
      on
      August 10, 2007, between NILE THERAPEUTICS, INC. (the "Company"), and ALLAN
      GORDON, M.D. (the "Executive").

     

    WHEREAS,
      the Executive was employed by the Company pursuant to an Employment Agreement,
      dated December 12, 2006 (the "Employment Agreement");

     

    WHEREAS,
      the Executive resigned from the Company, effective May 21, 2007;
      and

     

    WHEREAS,
      for the purposes of avoiding the uncertainty, expense and burden associated
      with
      any dispute, the Executive and the Company desire to resolve all issues that
      may
      arise by virtue of the previously existing employment relationship between
      the
      Executive and the Company, the termination of the employment relationship or
      the
      parties' respective rights under the Employment Agreement.

     

    NOW,
      THEREFORE, in consideration of the mutual promises, covenants, conditions and
      provisions set forth below, it is agreed as follows:

     

    1. The
      Executive hereby confirms his resignation as an officer, director and employee
      of the Company effective as of May 21, 2007 (the "Separation Date"). The
      Executive shall be entitled to receive within five days of the execution of
      this
      Agreement (i) his Base Salary (as defined in the Employment Agreement) through
      the Separation Date and (ii) $9,565, representing his accrued and unused
      vacation through the Separation Date. The Executive acknowledges and agrees
      that
      he will receive no additional compensation, payments or benefits from the
      Company except as specifically set forth herein.

     

    2. In
      addition to the payments described in Section 1, the Company agrees to provide
      the Executive with the following benefits:

     

    (a)
      The
      Executive shall be entitled to receive: (i) $300,000, representing his Base
      Salary; (ii) $120,000, representing his annual Performance Bonus; and (iii)
      $46,356.16, representing a pro
      rata
      portion
      of his annual Performance Bonus. All amounts payable representing Base Salary
      under this Section 2(a) shall be paid in accordance with the Company's regular
      payroll practices over a period of one year following the Separation Date and
      all amounts payable representing Performance Bonuses shall be paid in a
      single-lump sum in January 2008.

     

    (b)
      The
      Company shall, upon presentation of appropriate vouchers therefor, reimburse
      the
      Executive for all unclaimed business expenses incurred by him in the performance
      of his duties for the Company through the Separation Date, in accordance with
      the Company's standard practices and procedures, but all such reimbursements
      shall be paid no later than December 31, 2008.

     

    (c)
      The
      Company shall pay the Executive 12 monthly payments of $1,360.38 representing
      the cost of COBRA (Consolidated Omnibus Budget Reconciliation Act) premiums
      associated with his continued health insurance coverage on the same terms as
      existed prior to this Agreement. The Company shall make such payments whether
      or
      not the Executive elects or continues COBRA coverage.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d)
      For a
      period of one-year following the Separation Date, the Company will continue
      to
      pay the premiums relating to personal life insurance coverage for the Executive
      in an amount equal to $1,000,000.

     

    (e)
      The
      Company shall grant to the Executive, immediately after the closing of the
      next
      round of equity financing (the “Financing”), five-year stock options to purchase
      that number of shares representing two and one-half percent (2.5%) of the
      outstanding common stock of the Company, par value $.001 per share (the “Common
      Stock”) on a fully diluted basis as of the closing of the Financing. The options
      shall be 100% vested and immediately exercisable and have an exercise price
      equal to the fair market value of a share of Common Stock on the date of grant.
      For purposes of this Agreement, “fully diluted basis” shall mean the number of
      shares of Common Stock that would be outstanding upon the conversion of all
      outstanding shares of preferred stock of the Company (the “Preferred Stock”)
      outstanding on the date of the Financing, plus the shares of Common Stock
      issuable upon conversion or exercise, as the case may be, of all securities
      of
      the Company convertible into, exercisable for, or exchangeable for, directly
      or
      indirectly, shares of Common Stock, that are currently exercisable by the holder
      thereof or which will become exercisable within 90 days of the date of the
      Financing. The Executive shall have the right (the “Executive’s Right”) to
      include for resale the shares of Common Stock issuable upon exercise of the
      options granted pursuant to this Section 2(e) in a registration statement filed
      by the Company under the Securities Act of 1933, as amended, if and to the
      same
      extent as any such right to registration may in the future first be given to
      the
      persons that on the date hereof are holders of Common Stock (the “Other
      Registration Right”); provided, however, that the shares of Common Stock
      underlying the options granted pursuant to this Section 2(e) shall not be
      entitled to be included in any registration statement that may be filed by
      the
      Company with respect to securities issued in the Financing. The Executive’s
      Right is conditioned upon the Executive’s compliance with the terms and
      conditions of the Other Registration Right as if he was a party to any agreement
      which memorialized the terms and conditions thereof. The Executive’s Right is
      personal to the Executive and shall not run with the shares of Common Stock
      issuable upon exercise of the options granted pursuant to this Section 2(e).
      If,
      as currently contemplated, the Financing consists of two steps, an equity
      capital raise followed by a merger with a subsidiary of a public shell
      corporation, the exercise price and number of fully diluted shares will be
      determined as of the close of the equity capital raise, without regard to the
      subsequent merger.

     

    (f)
      The
      Company shall reimburse the Executive for up to $12,500 for legal fees he
      incurred in connection with the negotiation of this Agreement within 30 days
      after he submits appropriate documentation related to such fees provided that
      the Executive submits such documentation by November 30, 2008.

     

    3. The
      Executive hereby ratifies and confirms, and agrees to continue to be bound
      by,
      the provisions of Section 6 (Confidential Information and Inventions) of the
      Employment Agreement (a copy of which is attached hereto as Exhibit
      A).
      In
      connection therewith, the Executive acknowledges that the Company would not
      make
      the payments and provide the benefits specified in Sections 1 and 2 hereof
      (other than the payment of the Executive's base salary through the Separation
      Date) without the Executive's agreement to continue to be bound by the
      provisions set forth in Section 6 of the Employment Agreement and, therefore,
      that in the event of a breach by the Executive of such provisions, the Company
      shall be entitled to cease making further payments under Sections 1 and 2 of
      this Agreement and to recover all amounts (other than the Executive's base
      salary through the Separation Date) previously paid to the Executive under
      such
      Sections 1 and 2. The Executive agrees, whether or not requested, to promptly
      return any and all copies of Confidential Information (as defined in the
      Employment Agreement), in whatever medium and form. In addition, the Executive
      agrees to refrain forever from using or disclosing the Company's Confidential
      Information for any reason unless he is required to do so by law or legal
      process. The Executive's obligations under this Section 3 will survive the
      expiration of this Agreement.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    4. (a)
      The
      Executive agrees that he fully, finally and unconditionally and forever
      releases, discharges and forgives the Company, Two River Group Holdings, LLC
      and
      Riverbank Capital Securities, Inc., a member of the National Association of
      Broker Dealers (collectively, the "Nile Companies"), all of the Nile Companies'
      successors and assigns, and any and all of the Nile Companies' past and present
      members, partners, shareholders, officers, directors, managers, agents,
      representatives and employees in their capacity as such (the "Releasees"),
      from
      any and all claims, allegations, complaints, proceedings, charges, actions,
      causes of action, demands, debts, covenants, contracts, liabilities or damages
      of any nature whatsoever, whether now known or claimed, to whomever made, which
      the Executive had, has or may have against any or all of the Releasees for
      or by
      reason of any cause, nature or thing whatsoever, up to the effective date of
      this Agreement, known or unknown, including, by way of example and without
      limiting the broadest application of the foregoing, any actions, causes of
      action or claims under the Employment Agreement or any other contract or any
      federal, state or local decisional law, statutes, regulations or constitutions,
      any claims for notice or pay in lieu of notice, or for wrongful dismissal,
      discrimination, or harassment on the basis of any factor (including, without
      limitation, any claim pursuant to or arising under Title VII of the Civil Rights
      Act of 1964, as amended, the Employee Retirement Income and Security Act of
      1974, as amended, the Americans with Disabilities Act, as amended, the Age
      Discrimination in Employment Act, as amended, the Family and Medical Leave
      Act,
      the New York State and City Human Rights Laws, the California Fair Employment
      and Housing Act and any other federal, state or local legislation concerning
      employment or employment discrimination), and any claims, asserted benefits
      or
      rights arising by or under contract or implied contract, any alleged oral or
      written contract or agreement for employment or services, any claims arising
      by
      or under promissory estoppel, detrimental reliance, or under any asserted
      covenant of good faith and fair dealing, and any claims for defamation, fraud,
      fraudulent inducement, intentional infliction of emotional distress, or any
      other tortious conduct, including personal injury of any nature and arising
      from
      any source or condition, or pursuant to any other applicable employment
      standards or human rights legislation, or for severance pay, salary, bonus,
      commission, incentive, equity or additional compensation, vacation pay,
      insurance or benefits. The Executive agrees that all prior agreements relating
      to the Executive's employment or service with the Company or any of its
      affiliates or the termination of such employment or service, including, without
      limitation, the Employment Agreement (other than Section 6 thereof), are hereby
      terminated as of the effective date of this Agreement and shall thereafter
      be of
      no further force or effect. Notwithstanding the foregoing, the Executive does
      not waive his rights under this Agreement, any rights to indemnification he
      may
      have and /or his rights to accrued benefits under the Company’s welfare
      plan.

     

    (b)
      As of
      the date of, and upon execution of this Agreement and his waiver and release
      of
      all claims, the Executive covenants, represents and warrants that the Executive
      has not asserted and will not assert, threaten or commence any claim,
      allegation, action, complaint or proceeding against the Releasees or any of
      them
      by reason of any matter or thing existing up to the effective date of this
      Agreement specified in Section 14 hereof which is waived under the provisions
      of
      Section 4(a). If the Executive should, after the execution of the Agreement
      make, pursue, prosecute, or threaten to make any such claim or allegation,
      or
      pursue or commence or threaten to commence any such claim, action, complaint
      or
      proceeding against the Releasees, or any of them, for or by reason of any cause,
      matter or thing existing up to the effective date of this Agreement which is
      waived under the provisions of Section 4(a), this Agreement may be raised as,
      and shall constitute, a complete bar to any such claim, allegation, action,
      complaint or proceeding, and the Releasees shall be entitled to recover from
      the
      Executive all reasonable costs incurred by virtue of defending same, including
      reasonable attorneys' fees and expenses, without altering or diminishing the
      effectiveness of the release provisions provided under this subparagraph (b)
      and
      the preceding subparagraph (a). The Executive represents that, as of the date
      hereof, he has no knowledge of any basis for claims by him against any
      Releasee.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    5. (a)
      The
      Executive shall not disparage the Nile Companies and any of their current or
      past officers, directors, members and shareholders (collectively, the
“Nondisparagement Group”) in any manner whether to the media, or otherwise, and
      the Executive shall not publish or make any statement which is reasonably
      foreseeable to become public with respect to any of the Nondisparagement Group.
      If the Executive shall violate the provisions of this Section 5(a), members
      of
      the Nondisparagement Group may appropriately publicly respond to such violation
      without being deemed to have violated the provisions of Section 5(b) hereof.
      The
      Executive agrees to keep the terms of this Agreement confidential except as
      required by law or as needed to enforce the terms of this
      Agreement.

     

    (b)
      None
      of the Nondisparagement Group shall disparage the Executive in any manner
      whether to the media, or otherwise, and none of the Nondisparagement Group
      shall
      publish or make any statement which is reasonably foreseeable to become public
      with respect to the Executive. If any of the Nondisparagement Group should
      violate the provisions of this Section 5(b), Executive may appropriately
      publicly respond to such violation without being deemed to have violated the
      provisions of Section 5(a) hereof.

     

    6. The
      Executive shall promptly return to the Company all files, records, keys,
      computers, credit cards or other Firm property still in the Executive's
      possession or under the Executive's control. 

     

    7. The
      Executive acknowledges that he has been advised, and been afforded an
      opportunity, to consult with an attorney prior to signing this Agreement and
      understands that any decision to consult or not to consult with an attorney
      was
      solely within the Executive's discretion. The Executive further acknowledges
      and
      agrees that by signing and returning this Agreement, he will be deemed to have
      consulted with an attorney for the purposes herein. 

     

    8. This
      Agreement shall not constitute an admission of any wrongdoing by the Releasees
      or any of them, or of having caused any injury to the Executive by any acts
      or
      omissions on the part of the Releasees or any of them, or a violation of any
      statutory, regulatory or common law obligation owed to the Executive by any
      of
      the Releasees.

     

    9. This
      Agreement embodies the entire agreement between the parties hereto with respect
      to the subject matter hereof and supersedes the Employment Agreement in its
      entirety, other than with respect to Section 6 thereof. If any provision of
      this
      Agreement is found to be invalid, unenforceable or void for any reason, such
      provision shall be severed from the Agreement and shall not affect the validity
      or enforceability of the remaining provisions. This Agreement may not be
      amended, modified or terminated except by express written agreement between
      the
      parties. This Agreement shall be construed and governed by the laws of the
      State
      of New York.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    10. This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective successors, heirs (in the case of the Executive) and assigns.
      No rights or obligations of the Company under this Agreement may be assigned
      or
      transferred by the Company except that such rights or obligations may be
      assigned or transferred pursuant to a merger or consolidation in which the
      Company is not the continuing entity, or the sale or liquidation of all or
      substantially all of the assets of the Company, provided that the assignee
      or
      transferee is the successor to all or substantially all of the assets of the
      Company and such assignee or transferee assumes the liabilities, obligations
      and
      duties of the Company, as contained in this Agreement, either contractually
      or
      as a matter of law. No rights or obligations of the Executive under this
      Agreement may be assigned or transferred by the Executive other than his rights
      to compensation and benefits, which may be transferred only by will or the
      laws
      of descent and distribution.

     

    11. The
      Company shall be entitled to withhold from the benefits and payments described
      herein all income and employment taxes required to be withheld by applicable
      law. 

     

    12. Following
      the Separation Date, the Executive agrees to reasonably cooperate consistent
      with his other business and personal commitments in the Company's handling
      or
      resolution of any matter in which he was involved in the course of his
      employment. Promptly following submission of satisfactory documentation by
      the
      Executive, the Company shall reimburse the Executive for his out-of-pocket
      costs
      incurred in connection with his cooperation pursuant to this Section
      12.

     

    13. This
      Agreement may be executed in any number of separate counterparts, all of which
      taken together shall be deemed to constitute one and the same
      instrument.

     

    14. The
      Executive acknowledges that he has been offered the opportunity to consider
      this
      Agreement for 21 days before executing it, although the Executive may accept
      it
      by execution at any time within such 21-day period. The Executive may revoke
      this Agreement in writing by sending notice of revocation to the Company at
      c/o
      Two River Group Holdings, LLC 689 Fifth Avenue, 12th Floor, New York, New York
      10022, Attention: David Tanen, Secretary, within seven calendar days following
      its execution. This Agreement shall become effective seven days after its
      execution. The Executive's revocation of this Agreement shall not be considered
      a revocation of his resignation as an employee of the Company. 

     

    15. The
      Executive expressly waives and relinquishes all rights and benefits afforded
      by
      Section 1542 of the Civil Code of the State of California, and does so
      understanding and acknowledging the significance of such specific waiver of
      Section 1542, which states 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
      debtor."

     

    Thus,
      notwithstanding the provisions of Section 1542, and for the purpose of
      implementing a full and complete release and discharge of the Releasees, the
      Executive expressly acknowledges that this Agreement is intended to include
      in
      its effect, without limitation, all claims which the Executive does not know
      or
      suspect to exist in his favor at the time of execution hereof, and that this
      Agreement contemplates the extinguishment of any such claim or
      claims.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties have caused this Separation Agreement and General
      Release to be duly executed as set forth below.

     

    
      	 	NILE
              THERAPEUTICS, INC.	 
	 	 	 
	 	By:	/s/
              Peter M. Strumph	 
	 	Name:
              Mr. Peter M. Strumph	 
	 	Title:
              Chief Executive Officer	 
	 	 	 	 
	 	EXECUTIVE	 
	 	 	 
	 	/s/
              Allan Gordon	 
	 	Name:
              Allan Gordon, M.D.	 

    

     

    
      
        
        

      

      
        6

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