Case Doc 184 Filed 10/09/12 Page 1 of 8. IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MARYLAND Greenbelt Division

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1 Case Doc 184 Filed 10/09/12 Page 1 of 8 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MARYLAND Greenbelt Division In re: Chapter 11 NEOGENIX ONCOLOGY, INC., Case No (TJC Debtor. FIRST AND FINAL FEE APPLICATION OF PIPER JAFFRAY & CO., AS INVESTMENT BANKER TO NEOGENIX ONCOLOGY, INC. FOR TRANSACTION FEE RELATED COMPENSATION COMES NOW Piper Jaffray & Co. ( PJC who hereby files this first and final fee application as investment banker to Neogenix Oncology, Inc. (the Debtor or Neogenix in connection with certain transaction fee related compensation (the Transaction Fee Application. 1 In support of this Transaction Fee Application, PJC respectfully states as follows: JURISDICTION AND VENUE 1. The Court has jurisdiction over this Transaction Fee Application pursuant to 28 U.S.C. 157 and Venue is proper in this district pursuant to 28 U.S.C This matter is core within the meaning of 28 U.S.C. 157(b(2. 2. The statutory predicates for the relief requested herein are sections 327, 328, and 1107 of the Bankruptcy Code, Bankruptcy Rule 2014(a, and Local Rule Capitalized terms used but not defined herein shall have the meanings ascribed to them in the PJC Engagement Agreement or PJC Retention Order (defined herein.

2 Case Doc 184 Filed 10/09/12 Page 2 of 8 BACKGROUND 3. On March 8, 2012, PJC and Neogenix entered into an engagement agreement pursuant to which Neogenix engaged PJC as Neogenix s investment banker and financial advisor (the PJC Engagement Agreement. 4. On July 23, 2012 (the Petition Date, the Debtor filed a voluntary petition with this Court under chapter 11 of the Bankruptcy Code. The Debtor is operating its business as a debtor in possession pursuant to sections l107(a and 1108 of the Bankruptcy Code. 5. On July 30, 2012, the Debtor filed an application to retain PJC as the Debtor s investment banker and financial advisor pursuant to the terms of the PJC Engagement Agreement (the PJC Retention Application. [Docket No. 83]. On August 21, 2012, the Court entered an order approving the retention of PJC as the Debtor s investment banker and financial advisor pursuant to the terms of the PJC Engagement Agreement effective July 23, 2012 (the PJC Retention Order. [Docket No. 126]. 6. On September 20, 2012, the Court entered an order approving the sale (the Sale Order of substantially all of the Debtor s assets to Precision Biologics, Inc. ( Precision Biologics. [Docket No. 176]. 7. On September 24, 2012 (the Sale Date, the Debtor and Precision Biologics closed on the sale as authorized by the Sale Order (the Sale. 8. Pursuant to the terms of the PJC Engagement Agreement and the PJC Retention Order, PJC is entitled to be paid a transaction fee in the amount of $750,000 less certain credits described below upon the closing of the Sale (the Transaction Fee. -2-

3 Case Doc 184 Filed 10/09/12 Page 3 of 8 9. The amount of the Transaction Fee was included in the cash component of the purchase price paid by Precision Biologics to the Debtor on the Sale Date. PROFESSIONAL COMPENSATION REQUESTED 10. PJC submits this Application pursuant to section 328(a of the Bankruptcy Code, Rule 2016 of the Federal Rules of Bankruptcy Procedure, MD. Bankr. LR , the PJC Engagement Agreement and the PJC Retention Order. All services for which compensation is requested by PJC were performed for, or on behalf of, the Debtor. 11. In connection with the professional services described below, PJC hereby seeks compensation in the amount of $650,000, representing the Transaction Fee, equal to the minimum Transaction Fee of $750,000 less the credit of the third and fourth Monthly Advisory Fees as outlined in the PJC Engagement Agreement and the PJC Retention Order. PJC is not hereby seeking any relief with respect to its Monthly Advisory Fees which Monthly Advisory Fees are governed by the Court s interim compensation order. DESCRIPTION OF SERVICES RENDERED BY APPLICANT 12. The services provided by PJC to the Debtor for which compensation is requested in this Transaction Fee Application primarily concerned the development, implementation and completion of a process for selling substantially all of the Debtor s assets. 13. Upon being retained by the Debtor prepetition, PJC conducted significant due diligence of the Debtor s operations. Specifically, PJC initially spent time with the Debtor and its management to review and analyze the Debtor s business and operations. PJC reviewed and analyzed, amongst other things, the Debtor s business plans, financial statements, operating reports, clinical relationships and contracts, liquidity and working capital reports and forecasts, -3-

4 Case Doc 184 Filed 10/09/12 Page 4 of 8 descriptions and other information concerning pre- and postpetition liabilities as well as other information concerning the Debtor s operations. 14. PJC worked with the Debtor s management and professionals to prepare a teaser document and a virtual data room containing certain financial and operating data on the Debtor s business. PJC coordinated with the Debtor to maintain and update that information so that potential buyers would have access to relevant financial and operational information while evaluating the potential opportunity to purchase the Debtor s assets. PJC worked with the Debtor and its professionals to create various materials that also were used during in person and telephonic diligence meetings with potential buyers. These materials included descriptive information, financial data and other financial and operating detail that enabled the potential buyers to evaluate the Debtor s operating business. 15. PJC further developed a list of those strategic and financial investors most likely to be interested in purchasing the Debtor s assets. PJC s restructuring and health care teams leveraged their deep industry expertise and relationships to develop a list of likely potential strategic and financial investors for Neogenix. PJC reviewed the list with the Debtor s management and professionals and focused it to target those companies and investors with the financial wherewithal and/or most compelling strategic rationales to pursue a transaction with the Debtor. 16. From March to June 2012, as directed by the Debtor s management, PJC contacted parties to determine their interest in either investing in or acquiring the assets of Neogenix. Specifically, PJC engaged in a broad and thorough prepetition marketing process, which included contacting fifty-nine (59 potentially interested parties representing both -4-

5 Case Doc 184 Filed 10/09/12 Page 5 of 8 potential financial and strategic buyers and/or investors. In addition, PJC also worked closely with the Debtor s management and the Debtor s other professionals to help negotiate the terms of Precision Biologics s stalking horse bid. 17. Ultimately, the Board of Directors, with the support of PJC, determined that the bid from Precision Biologics should be accepted as the stalking horse bid and that filing for bankruptcy and proceeding with a court supervised sale of its assets to Precision Biologics or a higher and better offeror pursuant to a public section 363 sale was the most effective way to preserve Neogenix s therapeutic and diagnostic sciences and to maximize the value of the Debtor s assets for the benefit of the Debtor s shareholders. 18. After the Petition Date, and after the Court approved certain bidding procedures for the sale of substantially all of the Debtor s assets, PJC renewed and continued its efforts to identify potential bidders in an effort to create a spirited bidding environment at a scheduled auction in order to obtain the highest and best offer for the Debtor s operational assets that the market would allow. Indeed, PJC spoke to anyone who expressed an interest in potentially purchasing the Debtor s assets. 19. Specifically, PJC re-contacted the fifty-nine (59 potential bidders from the prepetition process, as well as eleven (11 additional potential bidders identified by PJC and nine (9 additional potential bidders identified by the financial advisor to the Official Committee of Equity Security Holders. All together, seventy-nine (79 potential bidders were contacted by PJC postpetition. -5-

6 Case Doc 184 Filed 10/09/12 Page 6 of At the conclusion of the foregoing marketing process, the bid from Precision Biologics remained as the Debtor s only option to preserve its therapeutic and diagnostic sciences and to maximize the value of its assets for the benefit of its shareholders. 21. On September 20, 2012, PJC provided a Declaration to the Bankruptcy Court in support of the sale to Precision Biologics, and set forth in detail the extensive efforts taken on the Debtor s behalf both pre and postpetition. [Docket No. 174]. 22. The Bankruptcy Court entered the Sale Order on September 21, 2012 and PJC assisted with the successful closing of the Transaction on September 24, BASIS FOR RELIEF 23. Under section 328(a of the Bankruptcy Code, a professional such as PJC may be retained under an agreement to pay the professional on any reasonable terms and conditions of employment, including on a contingent fee basis. 11 U.S.C. 328(a. The Court approved these terms, on notice to creditors and other parties in interest, on August 21, At that time the fee structure that the Debtor proposed to pay PJC for its transaction advisory services was eminently reasonable as was the contingent Transaction Fee predicated on the successful Sale of the Debtor s assets. PJC s fees herein should be allowed under section 328. Not only are the fees reasonable in light of the market, but they also are supported by the value of the extensive services provided by PJC to this estate that have ultimately resulted in the successful Sale of the Debtor s assets that will preserve the Debtor s therapeutic and diagnostic science and technology and maximize the value of the Debtor s assets for the benefit of its shareholders. herein. 24. Accordingly, PJC respectfully requests approval of the Transaction Fee sought -6-

7 Case Doc 184 Filed 10/09/12 Page 7 of 8 CONCLUSION WHEREFORE, PJC respectfully requests that the Court approve on a final basis the Transaction Fee in the amount of $650,000 and authorize and direct the Debtor to immediately pay such amount to PJC. [SIGNATURE PAGE FOLLOWS] -7-

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9 Case Doc Filed 10/09/12 Page 1 of 4 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MARYLAND Greenbelt Division In re: Chapter 11 NEOGENIX ONCOLOGY, INC., Case No (TJC Debtor. ORDER GRANTING FIRST AND FINAL FEE APPLICATION OF PIPER JAFFRAY & CO., AS INVESTMENT BANKER TO NEOGENIX ONCOLOGY, INC. FOR TRANSACTION FEE RELATED COMPENSATION Upon the first and final fee application filed by Piper Jaffray & Co. ( PJC as investment banker to Neogenix Oncology, Inc. (the Debtor or Neogenix requesting payment in connection with certain transaction fee related compensation (the Transaction Fee Application 1, the Court finds that (i it has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334, (ii this is a core matter pursuant to 28 U.S.C. 157(b(2, (iii venue in this district is proper pursuant to 28 U.S.C and 1409, and (iv the legal and factual bases set forth in the Application establish just cause for the relief granted herein, 1 THEREFORE, IT IS HEREBY ORDERED THAT: 1. The Transaction Fee Application is granted. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Transaction Fee Application. TCO 359,952,461v

10 Case Doc Filed 10/09/12 Page 2 of 4 2. The Debtor is authorized and directed to immediately pay to PJC on a final basis the sum of $650,000 in full satisfaction of the Transaction Fee pursuant to the terms of the PJC Engagement Agreement and the PJC Retention Order. 3. The terms of this Order shall be immediately effective and enforceable upon its entry. 4. The Court shall retain jurisdiction to hear and determine all matters arising from the implementation of this Order. cc: Attached Service List End of Order TCO 359,952,461v

11 Case Doc Filed 10/09/12 Page 3 of 4 Service List Counsel for the Debtor Lawrence E. Rifken, Esq. Thomas J. McKee, Jr., Esq. Greenberg Traurig, LLP 1750 Tysons Boulevard, Suite 1200 McLean, Virginia Telephone: ( Facsimile: ( rifkenl@gtlaw.com mckeet@gtlaw.com - and- Maria J. DiConza, Esq. Greenberg Traurig, LLP 200 Park Avenue New York, NY Telephone: ( Facsimile: ( diconzam@gtlaw.com Office of The United States Trustee Lynn A. Kohen, Esq. Office of The United States Trustee 6305 Ivy Lane, Suite 600 Greenbelt, MD Telephone: ( Facsimile: ( lynn.a.kohen@usdoj.gov Counsel for Precision Biologics, Inc. Derek Meek, Esq. Gene T. Price, Esq. Burr & Forman LLP th Street North, Suite 3400 Birmingham, AL Telephone: ( Facsimile: ( dmeek@burr.com gprice@burr.com - and - Richard L. Costella, Esq. Miles & Stockbridge, P.C. 10 Light Street Baltimore, MD rcostell@milesstockbridge.com Facsimile: ( Counsel for Official Committee of Equity Security Holders Roy M. Terry, Esq. William A. Gray, Esq. Elizabeth L. Gunn, Esq. Sands Anderson PC 1111 East Main Street P.O. Box 1998 Richmond, VA Telephone: ( Facsimile: ( RTerry@sandsanderson.com EGunn@sandsanderson.com BGray@sandsanderson.com Counsel for Daniel J. Scher KLG Luz & Greenberg, LLP Attn: Thomas J. Luz, Esq. 370 Lexington Ave., 24 th Fl. New York, NY Telephone: ( Facsimile: ( tluz@karalaw.com TCO 359,952,461v

12 Case Doc Filed 10/09/12 Page 4 of 4 Securities & Exchange Commission Attention: Susan Sherrill, Esq. 100 F. Street NE Washington, DC Telephone: ( sherrill-beard@sec.gov - and - Securities & Exchange Commission Philadelphia Regional Office The Mellon Independence Center 701 Market Street Philadelphia, PA Telephone: ( philadelphia@sec.gov TCO 359,952,461v