Exhibit 10.66

 

Portions of this document have been redacted pursuant to a confidential
treatment request and filed separately with the Securities and Exchange
Commission.  Redacted sections marked with “*****.”

 

AMENDMENT NO. 1

TO

EMPLOYMENT AGREEMENT

 

This Amendment No. 1 to Employment Agreement (the “Amendment”) is entered into
effective the 1st day of August, 2008 (the “Effective Date”) by and between AVI
BioPharma, Inc., an Oregon corporation (“Company”) and J. David Boyle II
(“Employee”).

 

RECITALS

 

A.                                   Whereas, Company and Employee are parties
to that certain Employment Agreement dated the 24th day of July, 2008, a copy of
which is attached hereto as Exhibit A (the “Employment Agreement”).

 

B.                                     Whereas, the Company and the Employee
desire to amend certain provisions of the Employment Agreement.

 

Now, therefore, in consideration of the representations, warranties and
covenants contained herein, the Company and the Employee agree as follows:

 

AGREEMENT

 

1.               Section 3(c) of the Employment Agreement shall be amended and
restated to provide as follows:

 

(c)                                  Equity Compensation.

 

(i)                                     On the date the Employee commences
employment with the Company, the Employee will be granted options to purchase
Three Hundred Fifty Thousand (350,000) shares of the Company’s common stock (the
“Standard Options”) under the Company’s 2002 Equity Incentive Plan (the “Plan”),
with an exercise price at the fair market value of the Company common stock on
the Effective Date.  Subject to accelerated vesting or termination as set forth
herein, the Standard Options shall vest in equal annual installments over three
(3) years.

 

(ii)                                  In addition, on the date the Employee
commences employment with the Company, the Employee will be granted options to
purchase an additional One Hundred Fifty Thousand (150,000) options (the
“Performance Options” and, together with the Standard Options, the “Options”)
under the Plan with an exercise price at the fair market value of the Company
common stock on the Effective Date.  The Performance Options shall vest in the
event that *****.

 

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Notwithstanding anything to the contrary herein, in the event that the effect of
an event that constitutes a Change in Control (as such term is defined in
Section 13(f) hereof) denies or would reasonably be expected to deny Employee
the opportunity to achieve the vesting milestone set forth in this
Section 3(c)(ii), the Performance Options shall fully vest upon the effective
date of the Change in Control.

 

(iii)                               The exercise price of the Options and all
other terms and conditions associated with the Options shall be determined in
accordance with the Plan and grants (the forms of which are annexed hereto as
Exhibit B and Exhibit C, respectively). To the maximum extent possible, the
Options shall be Incentive Stock Options.

 

2.               Section 23 of the Employment Agreement shall be amended and
restated to provide as follows:

 

Section 409A; Section 280G

 

(a) Section 409A

 

(i)                          It is the intention of the parties to this
Agreement that no payment or entitlement pursuant to this Agreement will give
rise to any adverse tax consequences to Employee or the Company with regard to
Section 409A (“Section 409A”) of the Internal Revenue Code of 1986 (the “Code”).
This Agreement shall be interpreted to that end and consistent with that
objective. The Company and the Employee shall, to the extent necessary to comply
with Section 409A and permitted thereunder, agree to act reasonably and in good
faith to mutually reform the provisions of this Agreement to avoid the
application of the additional tax and interest under Section 409A(a)(1)(B),
provided that any such reformation shall not negatively impact the economics of
the Company or the Employee hereunder. Notwithstanding any other provision
herein, if Employee is a “specified employee,” as defined in, and pursuant to,
Treasury Regulation Section 1.409A-1(i) or any successor regulation, on the date
of termination, no payment of any “deferred compensation”, as defined under
Treasury Regulation Section 1.409A or any successor regulation, shall be made to
Employee during the period lasting until the earlier of six (6) months from the
date of termination or upon Employee’s death.  If any payment to Employee is
delayed pursuant to the foregoing sentence, such payment instead shall be made
on the first business day following the expiration of the six (6) month period
referred to in the prior sentence or, if in the case of Employee’s death,
promptly thereafter.

 

(ii)      Except as otherwise specifically provided in this Agreement, if any
reimbursement to which the Employee is entitled under this

 

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Agreement would constitute deferred compensation subject to Section 409A of the
Code, the following additional rules shall apply:  (i) the reimbursable expense
must have been incurred, except as otherwise expressly provided in this
Agreement, during the term of this Agreement; (ii) the amount of expenses
eligible for reimbursement during any calendar year will not affect the amount
of expenses eligible for reimbursement in any other calendar year; (iii) the
reimbursement shall be made not later than December 31 of the calendar year
following the calendar year in which the expense was incurred; and (iv) the
Employee’s entitlement to reimbursement shall not be subject to liquidation or
exchange for another benefit.

 

(iii)      With regard to any installment payment, each installment thereof
shall be deemed a separate payment for purposes of Section 409A of the Code.

 

(b)                                 Section 280G

 

(i)            Except as provided below, the payments or benefits to which
Employee will be entitled under Section 13 of the Agreement will be reduced to
the extent necessary so that Employee will not be liable for the federal excise
tax levied on certain “excess parachute payments” under section 4999 of the
Internal Revenue Code of 1986, as amended (“Code”).

 

(ii)           The limitation above will not apply if:

 

(1)          the difference between

 

(A) the present value of all payments to which Employee is entitled under
Section 13 of the Agreement determined without regard to the limitation above,
less

 

(B) the present value of all federal, state, and other income and excise taxes
for which Employee is liable as a result of such payments; exceeds

 

(2)          the difference between

 

(A) the present value of all payments to which Employee is entitled under
Section 13 of the Agreement calculated as if the limitation above applies, less

 

(B) the present value of all federal, state, and other income and excise taxes
for which Employee is liable as a result of such reduced payments.

 

(iii)          Present values will be determined using the interest rate
specified in section 280G of the Code and will be the present values as of the

 

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date on which Employee’s employment terminates (unless it is necessary to use a
different date in order to avoid adverse consequences under section 280G).

 

3.               In all other respects, the Employment Agreement shall remain
unchanged and in full force and effect.

 

IN WITNESS WHEREOF, the parties have executed this Amendment effective the date
first set forth above.

 

 

DATED the      day of August, 2008.

 

DATED the     day of August, 2008.

 

 

 

 

 

 

AVI BioPharma, Inc.

 

 

 

 

 

By:

 

 

 

Name: Leslie Hudson, PhD

 

J. David Boyle II

Title: Chief Executive Officer

 

 

 

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