Document:

Exhibit
10.2

     

    SEVERANCE
BENEFITS AGREEMENT

     

    This SEVERANCE BENEFITS AGREEMENT (the
“Agreement”) is made as
of July 24, 2010, by and between NILE THERAPEUTICS, INC., a Delaware corporation
with principal executive offices at 4 West 4th Ave., Suite 400, San Mateo, CA
94402 (the “Company”),
and DARON EVANS, residing at [ADDRESS] (the “Executive”).

    

    WITNESSETH:

     

    WHEREAS,
the Executive currently serves as the Company’s Chief Financial Officer, and the
Company desires to continue to employ the Executive, and has determined that it
is in the best interest of the Company to assure that the Company will have the
continued dedication of the Executive.

     

    WHEREAS,
this Agreement describes certain benefits that will be available to the
Executive in the event the Executive’s employment is terminated by the Company
other than for Cause (as defined below).

     

    NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein, the parties hereto hereby agree as follows:

     

    1.     At-Will Employment.
The Company and the Executive acknowledge that the Executive’s employment is
at-will. If the Executive’s employment terminates for any reason, including the
death or disability of the Executive, the Executive shall not be entitled to any
payments, benefits, damages, awards or compensation other than as provided by
this Agreement, or, to the extent not modified by this agreement, as may
otherwise be established under the Company’s then existing employee benefit
plans or policies at the time of termination.

     

    2.     Confidentiality; Invention
Assignment; Non-Solicitation.  Notwithstanding anything to the
contrary contained herein, Executive hereby acknowledges that Section 5 and
paragraphs (b) through (g) of Section 6 of that certain Employment Agreement
dated January 19, 2007, as amended, between Executive and the Company, are
hereby incorporated into this Agreement as if the complete text of such
provisions were set forth herein, provided, however, that for purposes of this
Agreement, “Term” as used in such employment agreement shall mean the period of
Executive’s employment with the Company.

     

    3.     Severance
Benefits.  If the Executive’s employment is terminated by the
Company other than for Cause (as defined below), the Company shall continue to
pay to the Executive his base salary (as in effect immediately prior to such
termination) pursuant to the Company’s normal payroll practices and procedures
for a period of six (6) months thereafter.  Executive acknowledges
that, upon the termination of his employment, he shall not be entitled to any
payments or benefits which are not explicitly provided in this
Agreement.  Further, notwithstanding anything to the contrary
contained herein, the Company shall have no obligation to pay, and Executive
shall have no obligation to receive, any compensation, benefits or other
consideration provided for in this Agreement following termination of
Executive’s employment unless Executive executes a separate agreement, in the
form attached hereto as Exhibit A (the “Release Agreement”), releasing
the Company from any and all liability in connection with the termination of
Executive’s employment; provided, however, that the
failure to execute the Release Agreement shall not relieve the Company of its
obligation to pay to Executive, and Executive shall be entitled to receive, the
amount of any earned but unpaid Base Salary or other compensation to which the
Executive is then entitled through the date of such termination.

     

    4.     Definition of
Cause.  As used in this Agreement, any of the following actions
by the Executive shall constitute “Cause”:

     

    (i)           Willful
failure to perform the duties or obligations as the Company’s chief financial
officer or willful misconduct by the Executive in respect of such duties or
obligations, including, without limitation, willful failure, disregard or
refusal by the Executive to abide by lawful specific directions received by the
Executive from the Chief Executive Officer or the Board of Directors (including
a committee thereof);

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (ii)          Any
willful, intentional or grossly negligent act by the Executive having the effect
of injuring, in a material way, whether financial or otherwise, the business or
reputation of the Company or its affiliates;

     

    (iii)         Any
material violation of Executive’s obligations under Section 2 of this Agreement
or the material provisions of the Company’s Personnel Policies and Procedures
Manual, Insider Trading Compliance Program, and Code of Business Conduct and
Ethics, copies of which has been provided to the Executive, as well as such
other Company policies and procedures in effect from time to time;

     

    (iv)        The
Executive’s indictment of any felony or a misdemeanor involving moral turpitude;
and

     

    (v)         
Any misappropriation or embezzlement of the property of the Company (whether or
not a misdemeanor or felony).

     

    In any
case where the Executive’s action or inaction that may constitute Cause is
capable of being cured, such action or inaction shall not constitute Cause if
such action or inaction is cured by the Executive within 30 days following
receipt of written notice from the Company of the action or
inaction.

     

    5.    Certain Tax
Provisions.

     

    (a)          Section
409A.  Any payment otherwise required under this Agreement or
any other plan or arrangement of the Company to be made to the Executive after a
termination of  the Executive’s employment that the Company reasonably
determines is subject to Section 409A(a)(2)(B)(i) of the Internal Revenue Code
of 1986, as amended (the “Code”) shall not be paid or
payment commenced until the later of (a) six months after the date of the
Executive’s “separation from service” (within the meaning of Section 409A of the
Code) and (b) the payment date or commencement date specified in this Agreement
for such payment(s).  On the earliest date on which such payment(s)
can be made or commenced without violating the requirements of Section
409A(a)(2)(B)(i) of the Code, the Company shall pay the Executive, in a single
lump sum, an amount equal to the aggregate amount of all payments delayed
pursuant to the preceding sentence.  Such delay will not affect the
timing of any installments or other payments otherwise payable after the delay
period imposed under Section 409A.  In addition, other provisions of
this Agreement or any other such plan or arrangement notwithstanding, the
Company shall have no right to accelerate or delay any such payment or to make
any such payment as the result of any specific event except to the extent
permitted under Section 409A.

     

    (b)          Section
280G.  Notwithstanding anything to the contrary contained in
this Agreement, to the extent that any of the payments and benefits provided for
under this Agreement or any other agreement or arrangement between the Executive
and the Company  (collectively, the “Payments”)  constitute
a “parachute payment” within the meaning of Section 280G of the Code and (ii)
but for this Section 5(b), would be subject to the excise tax imposed by Section
4999 of the Code, then the Payments shall be payable either (i) in full or (ii)
as to such lesser amount which would result in no portion of such Payments being
subject to excise tax under Section 4999 of the Code; whichever of the foregoing
amounts, taking into account the applicable federal, state and local income
taxes and the excise tax imposed by Section 4999, results in the Executive’s
receipt on an after-tax basis, of the greatest amount of economic benefits under
this Agreement, notwithstanding that all or some portion of such benefits may be
taxable under Section 4999 of the Code.  Unless the Executive and the
Company otherwise agree in writing, any determination required under this
Section 5(b) shall be made in writing by the Company’s independent public
accountants (the “Accountants”), whose
reasonable determination shall be conclusive and binding upon the Executive and
the Company for all purposes.  For purposes of making the calculations
required by this Section 5(b), the Accountants may make reasonable assumptions
and approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of  the Sections 280G
and 4999 of the Code.  The Executive and the Company shall furnish to
the Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section 5(b).  If
this Section 5(b) is applied to reduce an amount payable to the Executive, and
the Internal Revenue Service successfully asserts that, despite the reduction,
the Executive has nonetheless received payments which are in excess of the
maximum amount that could have been paid to him without being subjected to any
excise tax, then, unless it would be unlawful for the Company make such a loan
or similar extension of credit to the Executive, the Executive may repay such
excess amount to the Company though such amount constitutes a loan to you made
at the date of payment of such excess amount, bearing interest at 120% of the
applicable federal rate (as determined under section 1274(d) of the Code in
respect of such loan).

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    6.     Miscellaneous.

     

    (a)         This
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of California, without giving effect to its
principles of conflicts of laws. Any dispute arising out of, or relating to,
this Agreement or the breach thereof or regarding the interpretation thereof,
shall be exclusively decided by binding arbitration conducted in California in
accordance with the rules of the American Arbitration Association then in effect
before a single arbitrator appointed in accordance with such
rules.  Judgment upon any award rendered therein may be entered and
enforcement obtained thereon in any court having jurisdiction.  The
arbitrator shall have authority to grant any form of appropriate relief, whether
legal or equitable in nature, including specific performance.  Each of
the parties agrees that service of process in such arbitration proceedings shall
be satisfactorily made upon it if sent by registered mail addressed to it at the
address referred to in paragraph (c) below.  The costs of such
arbitration shall be borne proportionate to the finding of fault as determined
by the arbitrator.  Judgment on the arbitration award may be entered
by any court of competent jurisdiction.

     

    (b)         This
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their respective heirs, legal representatives, successors and
assigns.  This Agreement, and the Executive’s rights and obligations
hereunder, may not be assigned by the Executive.  This Agreement
cannot be amended orally, or by any course of conduct or dealing, but only by a
written agreement signed by the parties hereto.  The failure of either
party to insist upon the strict performance of any of the terms, conditions and
provisions of this Agreement shall not be construed as a waiver or
relinquishment of future compliance therewith, and such terms, conditions and
provisions shall remain in full force and effect.  No waiver of any
term or condition of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by such party.

     

    (c)         All
notices, requests, consents and other communications, required or permitted to
be given hereunder, shall be in writing and shall be delivered personally or by
an overnight courier service or sent by registered or certified mail, postage
prepaid, return receipt requested, to the parties at the addresses set forth on
the first page of this Agreement, and shall be deemed given when so delivered
personally or by overnight courier, or, if mailed, five (5) days after the date
of deposit in the United States mails.  Either party may designate
another address, for receipt of notices hereunder by giving notice to the other
party in accordance with this clause (c).

     

    (d)         This
Agreement sets forth the entire agreement and understanding of the parties
relating to the subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the subject matter
hereof.  No representation, promise or inducement has been made by
either party that is not embodied in this Agreement, and neither party shall be
bound by or liable for any alleged representation, promise or inducement not so
set forth.  The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.  This Agreement may be executed in any number of
counterparts, each of which shall constitute an original, but all of which
together shall constitute one and the same instrument.

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.

     

    
      
        
          
            	
                    NILE
      THERAPEUTICS, INC.

                  	 
	 
      	 
      	 
	
                    By:

                  	
                    /s/ Joshua Kazam

                  	 
	 
      	
                    Name:

                  	
                    Joshua
      Kazam

                  	 
	 
      	
                    Title:

                  	
                    President
      and CEO

                  	 

          

        

      

    

    

    
      
        
          	
                  EXECUTIVE

                	 
	 
      	 
      	 
	
                  By:

                	
                   /s/ Daron Evans

                	 
	 
      	
                  Name:    Daron
      Evans

                	 

        

      

    

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    Exhibit
A

    [Form
of]

    Release
Agreement

    

    THIS RELEASE AGREEMENT (the
“Agreement”) is entered into as of [DATE] by and between Daron Evans (the
“Executive”) and Nile Therapeutics, Inc., a Delaware corporation (the
“Company”).

    

    WHEREAS, Executive and the Company are
parties to that certain Severance Benefits Agreement dated July 24, 2010 (the
“Severance Benefits Agreement”), which set forth certain compensation and other
benefits payable to Executive in certain circumstances upon the termination of
his employment with the Company;

    

    WHEREAS, Section 3 of the Severance
Benefits Agreement provides that the Company’s obligation to pay to Executive
the compensation described in such agreement is conditioned upon the Executive’s
execution of a Release Agreement (as defined therein); and

    

    WHEREAS, the parties intend that this
Agreement shall constitute the Release Agreement described in Section 3 of the
Severance Benefits Agreement.

    

    NOW, THEREFORE, in consideration of the
foregoing, the parties hereby agree as follows:

    

    1.           Separation of
Employment.  Executive’s employment with the Company terminated
effective as of [DATE] under the circumstances described in Section 3 of the
Severance Benefits Agreement.  As a result of such termination,
Executive is entitled to the payments and benefits described in Section 3,
subject to his entry into this Agreement.  Executive acknowledges that
he has been paid his final salary, any earned but unpaid bonuses, any expense
reimbursement amounts and the cash value of any accrued but unused vacation time
through his last day of employment.

    

    2.           Release of
Claims.  In consideration for the payments and other benefits
described in Section 3 of the Severance Benefits Agreement, Executive hereby
fully and finally releases, waives, and discharges any and all legal claims
against the Company that he has through the date on which he signs this
Agreement. This full and final release, waiver, and discharge extends to legal
and equitable claims of any kind or nature whatsoever including, without
limitation, the following:

    

    (a)           All
claims that Executive has now, whether or not he now knows about the
claims;

    

    (b)           All
claims for attorney's fees and costs;

    

    (c)           All
claims for alleged discrimination against him under any applicable federal,
state, and local law including, without limitation, rights and claims of age
discrimination under the federal Age Discrimination in Employment Act (“ADEA”)
and federal Older Workers Benefits Protection Act (“OWBPA”); and discrimination
claims under the California Fair Employment and Housing Act (“CFEHA”), Title VII
of the Civil Rights Act of 1964 (“Title VII”), and the Americans With
Disabilities Act (“ADA”);

    

    (d)           All
claims arising out of his employment and the termination of his employment and
service as an officer with the Company, including, but not limited to, any
alleged breach of contract, wrongful termination, termination in violation of
public policy, defamation, invasion of privacy, fraud, negligence, infliction of
emotional distress, breach of implied contract and breach of the covenant of
good faith and fair dealing;

    

    (e)           All
claims for any other alleged unlawful employment practices arising out of or
relating to his employment or separation from employment and service as an
officer with the Company; and

    

    (f)           All
claims for any other form of pay, for example bonus pay, incentive pay, holiday
pay, and sick pay.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Provided, however, that the
foregoing does not constitute a release or waiver of Executive’s rights, if any,
to (a) indemnification under any applicable directors & officers liability
insurance policy, applicable state and federal law, and the Company’s
certificate of incorporation and bylaws, (b) any vested interest he may have in
any 401(k) plan by virtue of his employment with the Company, (c) any rights or
claims that may arise after it this Agreement is signed, (d) any rights to any
unemployment compensation benefits to which he is entitled taking into
consideration all payments he receives, (e) the payments and benefits
specifically promised to Executive under this Agreement, or (f) the right to
institute legal action for the purpose of enforcing the provisions of this
Agreement.

    

    Executive
also hereby waives any right to reinstatement to employment with the
Company.

    

    For
purposes of this Section 2, “Executive” includes anyone who has or obtains any
legal rights or claims through Executive, and the term “Company” means Nile
Therapeutics Inc., and its past and present parents and subsidiaries, if any,
and each of them; and past and present agents, officers, directors, employees,
insurers, indemnitors, attorneys, successors or assigns of any or all of the
foregoing entities.

    

    3.         
 Rights to
Counsel, Consider, and Revoke and Rescind.

    

    (a)           Executive
acknowledges that he consulted with an attorney prior to signing
the Severance Benefits Agreement.  The Company hereby
advises Executive to consult with an attorney prior to signing this
Agreement.

     

    (b)           Executive
understands that he has the right to take up to 21 days to consider his waiver
of age discrimination rights and claims under the ADEA and OWBPA, beginning the
date on which he received this Agreement. He further understands that, if he
signs this Agreement, he may revoke his waiver of age discrimination rights and
claims under the ADEA and OWBPA within seven days thereafter, and his waiver
will not be effective or enforceable until this seven-day period has
expired.

     

    4.          
Charges.
This Agreement does not prohibit Executive from filing an administrative charge
of discrimination with, or cooperating or participating in an investigation or
proceeding conducted by, the Equal Employment Opportunity Commission or other
federal or state regulatory or law enforcement agency.

     

    5.          
Notice of
Section 1542 Rights.
The Company and Executive expressly agree that this Agreement extends to
all claims of every nature and kind, known or unknown, suspected or unsuspected,
vested or contingent, past, present, or future, whether arising from or
attributable to Executive, or to the Company’s officers, directors, employees,
and agents, acting within or beyond the scope of their employment; whether
relating to his employment by the Company or performance of services for the
Company occurring before the execution of this Agreement. They also expressly
agree that any and all rights granted under § 1542 of the California Civil Code
or any analogous state law or federal law or regulation are hereby expressly
waived. Section 1542 of the California Civil Code reads as follows:

     

    §1542. A
general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of the executing the release, which if
known to him must have materially affected his settlement with the
debtor.

     

    6.          
Notice of
Section 1541 Rights. This Agreement is in full accord, satisfaction and
discharge of doubtful and disputed claims that the Company and Executive have
against each other, and they have signed this Agreement with the express
intention of releasing and extinguishing all claims they may have against each
other, in accordance with Section 1541 of the California Civil Code, which
section reads as follows:

     

    §1541. An
obligation is extinguished by a release therefrom given to the debtor by the
creditor, upon a new consideration, or in writing, with or without new
consideration.

    
      
         

      

      
        A-2

        
          

        

      

      
         

      

    

    7.           Survival
of Certain Obligations.  Executive’s obligations under Section
2 of the Severance Benefits Agreement shall remain in full force and effect and
will survive the termination of Executive’s employment with the Company in
accordance with the terms provided therein.  Nothing in this Agreement
shall be construed to supersede or otherwise relieve Executive of such
obligations.  The Company agrees that no amendment or modification of
its certificate of incorporation or bylaws adopted after the date hereof that
reduces Executive’s rights to seek and obtain indemnification from the Company
in his capacity as officer and/or director shall be effective against
Executive.

    

    8.           Miscellaneous.  This Agreement
states the entire agreement between Executive and the Company with respect to
the subject matter hereof and supersedes and merges all prior negotiations,
agreements, and understandings, if any.  No modification, release,
discharge, or waiver, of any provision of this Agreement shall be of any force
or effect unless made in writing and signed by Executive and the Company, and
specifically identified as a modification, release, or discharge, of this
Agreement.  If any term, clause, or provision of this Agreement shall
for any reason be adjudged invalid, unenforceable, or void, the same shall not
impair or invalidate any of the other provisions of the Agreement, all of which
shall be performed in accordance with their respective terms.  This
Agreement shall inure to the benefit of the successors and assigns of the
Company.

    

    Executive represents that this
Agreement, and the release contained in this Agreement, have been given
voluntarily and free from duress or undue influence on the part of any person or
entity released by this Agreement, or by any third party.  Executive
acknowledges and understands that he has no obligation to enter into this
Agreement, but that the Company has no obligation to provide to Executive the
payments and benefits described under Section 3 of the Severance Benefits
Agreement if he does not enter into this Agreement.

     

    Executive has read this Agreement
carefully and understands all of its terms. He acknowledges that he has had the
opportunity to discuss this Agreement with his own attorneys prior to signing
it, and to make certain that he understands the meaning of the terms and
conditions contained in this Agreement and fully understands the content and
effect of this Agreement. In agreeing to sign this Agreement, Executive
acknowledges that he has not relied on any representations or statements,
whether oral or written, other than the express statements of this
Agreement.

    

    IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the date(s) set forth below.

    

    
      
        
          
            
              
                
                  
                    	
                            EXECUTIVE:

                          	 	
                            NILE
      THERAPEUTICS, INC.

                          
	 
      	 
      	 	 
      	 
      
	 
      	 
      	 	 
      	 
      
	 
      	 	
                            By:

                          	 
      
	
                            Daron
      Evans

                          	 	
                            Its:

                          	 
      
	 
      	 
      	 	 
      	 
      
	
                            Dated:

                          	 
      	 	
                            Dated:

                          	 
      
	 
      	 
      	 	 
      	 
      

                  

                

              

            

          

        

      

    

    
      
         

      

      
        A-3Exhibit
10.3

    

    NILE
THERAPEUTICS, INC.

    

    DIRECTOR
COMPENSATION PLAN SUMMARY

    

    Adopted:
July 21, 2009

    Amended:
July 27, 2010

     

    The
following is a summary of the compensation plan for directors of Nile
Therapeutics, Inc. (the “Company”) who are not compensated employees of the
Company. Directors who are compensated employees of the Company do not receive
compensation for their service on the Board, but shall receive compensation only
in their capacities as employees.

     

    
      	
              1.

            	
              Initial Equity
      Grant.  As an inducement to accept service as a director,
      upon initial appointment to the Board, a director shall receive a stock
      option to purchase 130,000 shares of the Company’s common stock, which
      option shall vest in three equal annual installments commencing on the
      first anniversary of the date of
grant.

            

    

    

    
      	
              2.

            	
              Annual Equity
      Grant.  Following a director’s initial appointment, on an
      annual basis, (i) each non-employee director shall receive a stock option
      to purchase 80,000 shares of the Company’s common stock, and (ii) the
      Chair of the Board and the Chair of each of the Board’s Audit and
      Compensation Committees (to the extent such persons are non-employee
      directors) shall receive an additional stock option to purchase 20,000
      shares of common stock.  All such stock options shall be awarded
      as of each director’s re-election at the Company’s annual meeting of
      stockholders and shall vest in their entirety on the first anniversary of
      the date of grant.

            

    

    

    
      	
              3.

            	
              Other Terms of Equity
      Grants.  The stock options described in Paragraphs 1 and
      2, above, shall be issued pursuant to the Company’s Amended & Restated
      2005 Stock Option Plan (the “2005 Plan”) and each shall have a term of 10
      years.  The per share exercise price applicable to such stock
      options shall be equal to the fair market value of the Company’s common
      stock on the grant date, as determined in accordance with the Company’s
      then current stock option pricing policies.  Without limiting
      the effect of any other provision of the 2005 Plan, all such stock options
      shall vest in full and be immediately exercisable upon a “Change of
      Control” (as defined in the 2005 Plan) or the death of the
      director.

            

    

    

    
      	
              4.

            	
              Expenses.  Directors
      shall also be reimbursed for their reasonable out of pocket expenses
      incurred in connection with attending meetings of the Board or any
      committee thereof or otherwise in furtherance of their duties as
      directors.

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