Exhibit 10.50

 

[FORM OF PURCHASE WARRANT]

 

AVI BIOPHARMA, INC.

 

WARRANT

 

Warrant No. [  ]

 

Date of Original Issuance: December 8, 2003

 

AVI BioPharma, Inc., an Oregon corporation (the “Company”), hereby certifies
that, for value received, [Name of Holder] or its registered assigns (the
“Holder”), is entitled to purchase from the Company up to a total
of         shares of common stock, $.0001 par value per share (the “Common
Stock”), of the Company (as adjusted from time to time as provided in Section 9,
each such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at
an exercise price (as adjusted from time to time as provided in Section 9, the
“Exercise Price”) per Warrant Share equal to $5.50 at any time and from time to
time from and after the date hereof and through and including December 8, 2008
(the “Expiration Date”), and subject to the following terms and conditions:

 

1.                                       DEFINITIONS.  IN ADDITION TO THE TERMS
DEFINED ELSEWHERE IN THIS WARRANT, CAPITALIZED TERMS THAT ARE NOT OTHERWISE
DEFINED HEREIN AND THAT ARE DEFINED IN THE SECURITIES PURCHASE AGREEMENT, DATED
AS OF DECEMBER 4, 2003, BY AND AMONG THE COMPANY AND THE BUYERS PARTY THERETO
INCLUDING THE ORIGINAL HOLDER (THE “PURCHASE AGREEMENT”), SHALL HAVE THE
MEANINGS GIVEN TO SUCH TERMS IN THE PURCHASE AGREEMENT.

 

2.                                       REGISTRATION OF WARRANT.  THE COMPANY
SHALL REGISTER THIS WARRANT, UPON RECORDS TO BE MAINTAINED BY THE COMPANY FOR
THAT PURPOSE (THE “WARRANT REGISTER”), IN THE NAME OF THE RECORD HOLDER HEREOF
FROM TIME TO TIME.  THE COMPANY MAY DEEM AND TREAT THE REGISTERED HOLDER OF THIS
WARRANT AS THE ABSOLUTE OWNER HEREOF FOR THE PURPOSE OF ANY EXERCISE HEREOF OR
ANY DISTRIBUTION TO THE HOLDER, AND FOR ALL OTHER PURPOSES, ABSENT ACTUAL NOTICE
TO THE CONTRARY.

 

3.                                       REGISTRATION OF TRANSFERS.  THE COMPANY
SHALL REGISTER THE TRANSFER OF ANY PORTION OF THIS WARRANT IN THE WARRANT
REGISTER, UPON SURRENDER OF THIS WARRANT, WITH THE FORM OF ASSIGNMENT ATTACHED
HERETO DULY COMPLETED AND SIGNED, TO THE TRANSFER AGENT OR TO THE COMPANY AT ITS
ADDRESS SPECIFIED HEREIN.  UPON ANY SUCH REGISTRATION OR TRANSFER, A NEW WARRANT
TO PURCHASE COMMON STOCK, IN SUBSTANTIALLY THE FORM OF THIS WARRANT (ANY SUCH
NEW WARRANT, A “NEW WARRANT”), EVIDENCING THE PORTION OF THIS WARRANT SO
TRANSFERRED SHALL BE ISSUED TO THE TRANSFEREE AND A NEW WARRANT EVIDENCING THE
REMAINING PORTION OF THIS WARRANT NOT SO TRANSFERRED, IF ANY, SHALL BE ISSUED TO
THE TRANSFERRING HOLDER.  THE ACCEPTANCE OF THE NEW WARRANT BY THE TRANSFEREE
THEREOF SHALL BE DEEMED THE ACCEPTANCE BY SUCH TRANSFEREE OF ALL OF THE RIGHTS
AND OBLIGATIONS OF A HOLDER OF A WARRANT.

 

4.                                       EXERCISE AND DURATION.  THIS WARRANT
SHALL BE EXERCISABLE BY THE REGISTERED HOLDER AT ANY TIME AND FROM TIME TO TIME
ON OR AFTER THE DATE HEREOF TO AND INCLUDING THE EXPIRATION DATE.  AT 6:30 P.M.,
NEW YORK CITY TIME, ON THE EXPIRATION DATE, THE PORTION OF THIS

 

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Warrant available for exercise and not exercised prior thereto shall be and
become void and of no value.

 

5.                                       DELIVERY OF WARRANT SHARES.

 

(A)          UPON DELIVERY OF THE FORM OF ELECTION TO PURCHASE (IN THE FORM OF
EXHIBIT A) (THE “EXERCISE NOTICE”) TO THE COMPANY (WITH THE WARRANT SHARES
EXERCISE LOG IN THE FORM OF EXHIBIT B HERETO) AT ITS ADDRESS FOR NOTICE SET
FORTH IN SECTION 13 AND (I) UPON PAYMENT OF THE EXERCISE PRICE MULTIPLIED BY THE
NUMBER OF WARRANT SHARES THAT THE HOLDER INTENDS TO PURCHASE HEREUNDER OR (II)
UPON NOTIFYING THE COMPANY THAT THIS WARRANT IS BEING EXERCISED PURSUANT TO A
CASHLESS EXERCISE (AS DEFINED IN SECTION 5(E)), THE COMPANY SHALL PROMPTLY (BUT
IN NO EVENT LATER THAN THREE (3) TRADING DAYS AFTER THE DATE OF EXERCISE (AS
DEFINED HEREIN)) ISSUE AND DELIVER TO THE HOLDER ELECTRONICALLY THROUGH THE
DEPOSITORY TRUST CORPORATION, OR IF UNABLE TO DO, DELIVER CERTIFICATES FOR, THE
WARRANT SHARES ISSUABLE UPON SUCH EXERCISE, WHICH WARRANT SHARES SHALL BE ISSUED
UNDER THE REGISTRATION STATEMENT AND SHALL BE FREELY TRADABLE ON THE PRINCIPAL
MARKET.

 

A “DATE OF EXERCISE” MEANS THE DATE ON WHICH THE HOLDER SHALL HAVE DELIVERED TO
THE COMPANY (I) THE FORM OF ELECTION TO PURCHASE (WITH THE WARRANT EXERCISE LOG
ATTACHED TO IT), APPROPRIATELY COMPLETED AND DULY SIGNED AND (II) (A) PAYMENT OF
THE EXERCISE PRICE FOR THE NUMBER OF WARRANT SHARES SO INDICATED BY THE HOLDER
TO BE PURCHASED OR (B) NOTIFICATION TO THE COMPANY THAT THIS WARRANT IS BEING
EXERCISED PURSUANT TO A CASHLESS EXERCISE.

 

(B)         IF BY THE FIFTH TRADING DAY AFTER A DATE OF EXERCISE THE COMPANY
FAILS TO DELIVER THE REQUIRED NUMBER OF WARRANT SHARES IN THE MANNER REQUIRED
PURSUANT TO SECTION 5(A), THEN THE HOLDER WILL HAVE THE RIGHT TO RESCIND SUCH
EXERCISE.

 

(C)          IF BY THE THIRD TRADING DAY AFTER A DATE OF EXERCISE THE COMPANY
FAILS TO DELIVER THE REQUIRED NUMBER OF WARRANT SHARES IN THE MANNER REQUIRED
PURSUANT TO SECTION 5(A), AND IF AFTER SUCH FIFTH TRADING DAY THE HOLDER
PURCHASES (IN AN OPEN MARKET TRANSACTION OR OTHERWISE) SHARES OF COMMON STOCK TO
DELIVER IN SATISFACTION OF A SALE BY THE HOLDER OF THE WARRANT SHARES WHICH THE
HOLDER ANTICIPATED RECEIVING UPON SUCH EXERCISE (A “BUY-IN”), THEN THE COMPANY
SHALL (1) PAY IN CASH TO THE HOLDER THE AMOUNT BY WHICH (X) THE HOLDER’S TOTAL
PURCHASE PRICE (INCLUDING BROKERAGE COMMISSIONS, IF ANY) FOR THE SHARES OF
COMMON STOCK SO PURCHASED EXCEEDS (Y) THE AMOUNT OBTAINED BY MULTIPLYING (A) THE
NUMBER OF WARRANT SHARES THAT THE COMPANY WAS REQUIRED TO DELIVER TO THE HOLDER
IN CONNECTION WITH THE EXERCISE AT ISSUE BY (B) THE CLOSING PRICE OF THE COMMON
STOCK AT THE TIME OF THE OBLIGATION GIVING RISE TO SUCH PURCHASE OBLIGATION AND
(2) AT THE OPTION OF THE HOLDER, EITHER REINSTATE THE PORTION OF THE WARRANT AND
EQUIVALENT NUMBER OF WARRANT SHARES FOR WHICH SUCH EXERCISE WAS NOT HONORED OR
DELIVER TO THE HOLDER THE NUMBER OF SHARES OF COMMON STOCK THAT WOULD HAVE BEEN
ISSUED HAD THE COMPANY TIMELY COMPLIED WITH ITS EXERCISE AND DELIVERY
OBLIGATIONS HEREUNDER.  FOR EXAMPLE, IF THE HOLDER PURCHASES COMMON STOCK HAVING
A TOTAL PURCHASE PRICE OF $11,000 TO COVER A BUY-IN WITH RESPECT TO AN ATTEMPTED
EXERCISE OF SHARES OF COMMON STOCK WITH A MARKET PRICE ON THE DATE OF EXERCISE
TOTALED $10,000, UNDER CLAUSE (1) OF THE IMMEDIATELY PRECEDING SENTENCE THE
COMPANY SHALL BE REQUIRED TO PAY THE HOLDER $1,000.  THE HOLDER SHALL PROVIDE
THE COMPANY WRITTEN NOTICE, WHICH NOTICE SHALL INCLUDE SUCH SUPPORTING
DOCUMENTATION AS REASONABLY NECESSARY TO SUBSTANTIATE THE AMOUNTS PAYABLE,
INDICATING THE AMOUNTS PAYABLE TO THE HOLDER IN RESPECT OF THE BUY-IN.

 

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(D)                                 THE COMPANY’S OBLIGATIONS TO ISSUE AND
DELIVER WARRANT SHARES IN ACCORDANCE WITH THE TERMS HEREOF ARE ABSOLUTE AND
UNCONDITIONAL, IRRESPECTIVE OF ANY ACTION OR INACTION BY THE HOLDER TO ENFORCE
THE SAME, ANY WAIVER OR CONSENT WITH RESPECT TO ANY PROVISION HEREOF, THE
RECOVERY OF ANY JUDGMENT AGAINST ANY PERSON OR ANY ACTION TO ENFORCE THE SAME,
OR ANY SETOFF, COUNTERCLAIM, RECOUPMENT, LIMITATION OR TERMINATION, OR ANY
BREACH OR ALLEGED BREACH BY THE HOLDER OR ANY OTHER PERSON OF ANY OBLIGATION TO
THE COMPANY OR ANY VIOLATION OR ALLEGED VIOLATION OF LAW BY THE HOLDER OR ANY
OTHER PERSON, AND IRRESPECTIVE OF ANY OTHER CIRCUMSTANCE WHICH MIGHT OTHERWISE
LIMIT SUCH OBLIGATION OF THE COMPANY TO THE HOLDER IN CONNECTION WITH THE
ISSUANCE OF WARRANT SHARES.  NOTHING HEREIN SHALL LIMIT A HOLDER’S RIGHT TO
PURSUE ANY OTHER REMEDIES AVAILABLE TO IT HEREUNDER, AT LAW OR IN EQUITY
INCLUDING, WITHOUT LIMITATION, A DECREE OF SPECIFIC PERFORMANCE AND/OR
INJUNCTIVE RELIEF WITH RESPECT TO THE COMPANY’S FAILURE TO TIMELY DELIVER
CERTIFICATES REPRESENTING SHARES OF COMMON STOCK UPON EXERCISE OF THE WARRANT AS
REQUIRED PURSUANT TO THE TERMS HEREOF.

 

(E)                                  IF, DESPITE THE COMPANY’S OBLIGATIONS UNDER
THE PURCHASE AGREEMENT AND THIS WARRANT, THE WARRANT SHARES TO BE ISSUED ARE NOT
REGISTERED AND AVAILABLE FOR ISSUANCE PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT, THEN, NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THE
HOLDER OF THIS WARRANT MAY, AT ITS ELECTION EXERCISED IN ITS SOLE DISCRETION,
EXERCISE THIS WARRANT IN WHOLE OR IN PART AND, IN LIEU OF PAYING THE EXERCISE
PRICE IN CASH, ELECT INSTEAD TO RECEIVE UPON SUCH EXERCISE THE “NET NUMBER” OF
SHARES OF COMMON STOCK DETERMINED ACCORDING TO THE FOLLOWING FORMULA (A
“CASHLESS EXERCISE”):

 

Net Number =

(A x B) - (A x C)

 

B

 

For purposes of the foregoing formula:

 

A= the total number of shares with respect to which this Warrant is then being
exercised;

 

B= the greater of the (i) closing price per share of the Common Stock (as
reported by Bloomberg) on the Trading day immediately preceding the date of the
Exercise Notice or (ii) the average of the closing prices per share of Common
Stock (as reported by Bloomberg) for the ten (10) Trading days immediately
preceding the date of the Exercise Notice ; and

 

C= the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.

 

6.                                       CHARGES, TAXES AND EXPENSES.  ISSUANCE
AND DELIVERY OF THE SHARES OF COMMON STOCK UPON EXERCISE OF THIS WARRANT SHALL
BE MADE WITHOUT CHARGE TO THE HOLDER FOR ANY ISSUE OR TRANSFER TAX, WITHHOLDING
TAX, TRANSFER AGENT FEE OR OTHER INCIDENTAL TAX OR EXPENSE IN RESPECT OF THE
ISSUANCE OF SUCH SHARES, ALL OF WHICH TAXES AND EXPENSES SHALL BE PAID BY THE
COMPANY; PROVIDED, HOWEVER, THAT THE COMPANY SHALL NOT BE REQUIRED TO PAY ANY
TAX WHICH MAY BE PAYABLE IN RESPECT OF ANY TRANSFER INVOLVED IN THE REGISTRATION
OF ANY WARRANT SHARES OR WARRANTS IN A NAME OTHER THAN THAT OF THE HOLDER.  THE
HOLDER SHALL BE RESPONSIBLE FOR ALL OTHER TAX LIABILITY THAT

 

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may arise as a result of holding or transferring this Warrant or receiving
Warrant Shares upon exercise hereof.

 

7.                                       REPLACEMENT OF WARRANT.  IF THIS
WARRANT IS MUTILATED, LOST, STOLEN OR DESTROYED, THE COMPANY SHALL ISSUE OR
CAUSE TO BE ISSUED IN EXCHANGE AND SUBSTITUTION FOR AND UPON CANCELLATION
HEREOF, OR IN LIEU OF AND SUBSTITUTION FOR THIS WARRANT, A NEW WARRANT, BUT ONLY
UPON RECEIPT OF EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY OF SUCH LOSS,
THEFT OR DESTRUCTION AND CUSTOMARY AND REASONABLE INDEMNITY, IF REQUESTED. 
APPLICANTS FOR A NEW WARRANT UNDER SUCH CIRCUMSTANCES SHALL ALSO COMPLY WITH
SUCH OTHER REASONABLE REGULATIONS AND PROCEDURES AND PAY SUCH OTHER REASONABLE
THIRD-PARTY COSTS AS THE COMPANY MAY PRESCRIBE.

 

8.                                       RESERVATION OF WARRANT SHARES.  THE
COMPANY COVENANTS THAT IT WILL AT ALL TIMES RESERVE AND KEEP AVAILABLE OUT OF
THE AGGREGATE OF ITS AUTHORIZED BUT UNISSUED AND OTHERWISE UNRESERVED COMMON
STOCK, SOLELY FOR THE PURPOSE OF ENABLING IT TO ISSUE WARRANT SHARES UPON
EXERCISE OF THIS WARRANT AS HEREIN PROVIDED, THE NUMBER OF WARRANT SHARES WHICH
ARE THEN ISSUABLE AND DELIVERABLE UPON THE EXERCISE OF THIS ENTIRE WARRANT. THE
COMPANY COVENANTS THAT ALL WARRANT SHARES SO ISSUABLE AND DELIVERABLE SHALL,
UPON ISSUANCE AND THE PAYMENT OF THE APPLICABLE EXERCISE PRICE IN ACCORDANCE
WITH THE TERMS HEREOF, BE DULY AND VALIDLY AUTHORIZED, ISSUED AND FULLY PAID AND
NONASSESSABLE.

 

9.                                       CERTAIN ADJUSTMENTS.  THE EXERCISE
PRICE AND NUMBER OF WARRANT SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE
SUBJECT TO ADJUSTMENT FROM TIME TO TIME AS SET FORTH IN THIS SECTION 9.

 

(A)          STOCK DIVIDENDS AND SPLITS.  IF THE COMPANY, AT ANY TIME WHILE THIS
WARRANT IS OUTSTANDING, (I) PAYS A STOCK DIVIDEND ON ITS COMMON STOCK OR
OTHERWISE MAKES A DISTRIBUTION ON ANY CLASS OF CAPITAL STOCK THAT IS PAYABLE IN
SHARES OF COMMON STOCK, (II) SUBDIVIDES OUTSTANDING SHARES OF COMMON STOCK INTO
A LARGER NUMBER OF SHARES, OR (III) COMBINES OUTSTANDING SHARES OF COMMON STOCK
INTO A SMALLER NUMBER OF SHARES, THEN IN EACH SUCH CASE THE EXERCISE PRICE SHALL
BE MULTIPLIED BY A FRACTION OF WHICH THE NUMERATOR SHALL BE THE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING IMMEDIATELY BEFORE SUCH EVENT AND OF WHICH THE
DENOMINATOR SHALL BE THE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING
IMMEDIATELY AFTER SUCH EVENT.

 

(B)         PRO RATA DISTRIBUTIONS.  IF THE COMPANY, AT ANY TIME WHILE THIS
WARRANT IS OUTSTANDING, DISTRIBUTES TO ALL HOLDERS OF COMMON STOCK (I) EVIDENCES
OF ITS INDEBTEDNESS, (II) ANY SECURITY (OTHER THAN A DISTRIBUTION OF COMMON
STOCK COVERED BY THE PRECEDING PARAGRAPH), (III) RIGHTS OR WARRANTS TO SUBSCRIBE
FOR OR PURCHASE ANY SECURITY, OR (IV) ANY OTHER ASSET (IN EACH CASE,
“DISTRIBUTED PROPERTY”), THEN, AT THE REQUEST OF ANY HOLDER DELIVERED BEFORE THE
90TH DAY AFTER THE RECORD DATE FIXED FOR DETERMINATION OF STOCKHOLDERS ENTITLED
TO RECEIVE SUCH DISTRIBUTION, THE COMPANY WILL DELIVER TO SUCH HOLDER, WITHIN
FIVE (5) TRADING DAYS AFTER SUCH REQUEST (OR, IF LATER, ON THE EFFECTIVE DATE OF
SUCH DISTRIBUTION), THE DISTRIBUTED PROPERTY THAT SUCH HOLDER WOULD HAVE BEEN
ENTITLED TO RECEIVE IN RESPECT OF THE WARRANT SHARES FOR WHICH SUCH HOLDER’S
WARRANT COULD HAVE BEEN EXERCISED IMMEDIATELY PRIOR TO SUCH RECORD DATE.  IF
SUCH DISTRIBUTED PROPERTY IS NOT DELIVERED TO A HOLDER PURSUANT TO THE PRECEDING
SENTENCE, THEN UPON ANY EXERCISE OF THE WARRANT THAT OCCURS AFTER SUCH RECORD
DATE, SUCH HOLDER SHALL BE ENTITLED TO RECEIVE, IN ADDITION TO THE WARRANT
SHARES OTHERWISE ISSUABLE UPON SUCH CONVERSION, THE DISTRIBUTED PROPERTY THAT
SUCH

 

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HOLDER WOULD HAVE BEEN ENTITLED TO RECEIVE IN RESPECT OF SUCH NUMBER OF WARRANT
SHARES HAD THE HOLDER BEEN THE RECORD HOLDER OF SUCH WARRANT SHARES IMMEDIATELY
PRIOR TO SUCH RECORD DATE.

 

(C)          FUNDAMENTAL TRANSACTIONS.  IF, AT ANY TIME WHILE THIS WARRANT IS
OUTSTANDING: (I) THE COMPANY EFFECTS ANY MERGER OR CONSOLIDATION OF THE COMPANY
WITH OR INTO ANOTHER PERSON, (II) THE COMPANY EFFECTS ANY SALE OF ALL OR
SUBSTANTIALLY ALL OF ITS ASSETS IN ONE OR A SERIES OF RELATED TRANSACTIONS,
(III) ANY TENDER OFFER OR EXCHANGE OFFER (WHETHER BY THE COMPANY OR ANOTHER
PERSON) IS COMPLETED PURSUANT TO WHICH HOLDERS OF COMMON STOCK ARE PERMITTED TO
TENDER OR EXCHANGE THEIR SHARES FOR OTHER SECURITIES, CASH OR PROPERTY, OR (IV)
THE COMPANY EFFECTS ANY RECLASSIFICATION OF THE COMMON STOCK OR ANY COMPULSORY
SHARE EXCHANGE PURSUANT TO WHICH THE COMMON STOCK IS EFFECTIVELY CONVERTED INTO
OR EXCHANGED FOR OTHER SECURITIES, CASH OR PROPERTY (IN ANY SUCH CASE, A
“FUNDAMENTAL TRANSACTION”), THEN THE HOLDER SHALL HAVE THE RIGHT THEREAFTER TO
RECEIVE, UPON EXERCISE OF THIS WARRANT, THE SAME AMOUNT AND KIND OF SECURITIES,
CASH OR PROPERTY AS IT WOULD HAVE BEEN ENTITLED TO RECEIVE UPON THE OCCURRENCE
OF SUCH FUNDAMENTAL TRANSACTION IF IT HAD BEEN, IMMEDIATELY PRIOR TO SUCH
FUNDAMENTAL TRANSACTION, THE HOLDER OF THE NUMBER OF WARRANT SHARES THEN
ISSUABLE UPON EXERCISE IN FULL OF THIS WARRANT (WITHOUT TAKING INTO ACCOUNT ANY
LIMITATIONS ON EXERCISE) (THE “ALTERNATE CONSIDERATION”).  FOR PURPOSES OF ANY
SUCH EXERCISE, THE DETERMINATION OF THE EXERCISE PRICE SHALL BE APPROPRIATELY
ADJUSTED TO APPLY TO SUCH ALTERNATE CONSIDERATION BASED ON THE AMOUNT OF
ALTERNATE CONSIDERATION ISSUABLE IN RESPECT OF ONE (1) SHARE OF COMMON STOCK IN
SUCH FUNDAMENTAL TRANSACTION, AND THE COMPANY SHALL APPORTION THE EXERCISE PRICE
AMONG THE ALTERNATE CONSIDERATION IN A REASONABLE MANNER REFLECTING THE RELATIVE
VALUE OF ANY DIFFERENT COMPONENTS OF THE ALTERNATE CONSIDERATION.  IF HOLDERS OF
COMMON STOCK ARE GIVEN ANY CHOICE AS TO THE SECURITIES, CASH OR PROPERTY TO BE
RECEIVED IN A FUNDAMENTAL TRANSACTION, THEN THE HOLDER SHALL BE GIVEN THE SAME
CHOICE AS TO THE ALTERNATE CONSIDERATION IT RECEIVES UPON ANY EXERCISE OF THIS
WARRANT FOLLOWING SUCH FUNDAMENTAL TRANSACTION.  AT THE HOLDER’S OPTION AND
REQUEST, ANY SUCCESSOR TO THE COMPANY OR SURVIVING ENTITY IN SUCH FUNDAMENTAL
TRANSACTION SHALL ISSUE TO THE HOLDER A NEW WARRANT SUBSTANTIALLY IN THE FORM OF
THIS WARRANT AND CONSISTENT WITH THE FOREGOING PROVISIONS AND EVIDENCING THE
HOLDER’S RIGHT TO PURCHASE THE ALTERNATE CONSIDERATION FOR THE AGGREGATE
EXERCISE PRICE UPON EXERCISE THEREOF.  THE TERMS OF ANY AGREEMENT PURSUANT TO
WHICH A FUNDAMENTAL TRANSACTION IS EFFECTED SHALL INCLUDE TERMS REQUIRING ANY
SUCH SUCCESSOR OR SURVIVING ENTITY TO COMPLY WITH THE PROVISIONS OF THIS
PARAGRAPH (C) AND INSURING THAT THE WARRANT (OR ANY SUCH REPLACEMENT SECURITY)
WILL BE SIMILARLY ADJUSTED UPON ANY SUBSEQUENT TRANSACTION ANALOGOUS TO A
FUNDAMENTAL TRANSACTION.

 

(D)                                 NUMBER OF WARRANT SHARES.  SIMULTANEOUSLY
WITH ANY ADJUSTMENT TO THE EXERCISE PRICE PURSUANT TO PARAGRAPHS (A) OR (B) OF
THIS SECTION, THE NUMBER OF WARRANT SHARES THAT MAY BE PURCHASED UPON EXERCISE
OF THIS WARRANT SHALL BE INCREASED OR DECREASED PROPORTIONATELY, SO THAT AFTER
SUCH ADJUSTMENT THE AGGREGATE EXERCISE PRICE PAYABLE HEREUNDER FOR THE ADJUSTED
NUMBER OF WARRANT SHARES SHALL BE THE SAME AS THE AGGREGATE EXERCISE PRICE IN
EFFECT IMMEDIATELY PRIOR TO SUCH ADJUSTMENT.

 

(E)                                  CALCULATIONS.  ALL CALCULATIONS UNDER THIS
SECTION 9 SHALL BE MADE TO THE NEAREST CENT OR THE NEAREST 1/100TH OF A SHARE,
AS APPLICABLE.  THE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AT ANY GIVEN
TIME SHALL NOT INCLUDE SHARES OWNED OR HELD BY OR FOR THE ACCOUNT OF THE
COMPANY, AND THE DISPOSITION OF ANY SUCH SHARES SHALL BE CONSIDERED AN ISSUE OR
SALE OF COMMON STOCK.

 

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(F)                                  NOTICE OF ADJUSTMENTS.  UPON THE OCCURRENCE
OF EACH ADJUSTMENT PURSUANT TO THIS SECTION 9, THE COMPANY AT ITS EXPENSE WILL
PROMPTLY COMPUTE SUCH ADJUSTMENT IN ACCORDANCE WITH THE TERMS OF THIS WARRANT
AND PREPARE A CERTIFICATE SETTING FORTH SUCH ADJUSTMENT, INCLUDING A STATEMENT
OF THE ADJUSTED EXERCISE PRICE AND ADJUSTED NUMBER OR TYPE OF WARRANT SHARES OR
OTHER SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT (AS APPLICABLE),
DESCRIBING THE TRANSACTIONS GIVING RISE TO SUCH ADJUSTMENTS AND SHOWING IN
DETAIL THE FACTS UPON WHICH SUCH ADJUSTMENT IS BASED.  UPON WRITTEN REQUEST, THE
COMPANY WILL PROMPTLY DELIVER A COPY OF EACH SUCH CERTIFICATE TO THE HOLDER AND
TO THE COMPANY’S TRANSFER AGENT.

 

(G)                               NOTICE OF CORPORATE EVENTS.  IF THE COMPANY
(I) DECLARES A DIVIDEND OR ANY OTHER DISTRIBUTION OF CASH, SECURITIES OR OTHER
PROPERTY IN RESPECT OF ITS COMMON STOCK, INCLUDING WITHOUT LIMITATION ANY
GRANTING OF RIGHTS OR WARRANTS TO SUBSCRIBE FOR OR PURCHASE ANY CAPITAL STOCK OF
THE COMPANY OR ANY SUBSIDIARY, (II) AUTHORIZES OR APPROVES, ENTERS INTO ANY
AGREEMENT CONTEMPLATING OR SOLICITS STOCKHOLDER APPROVAL FOR ANY FUNDAMENTAL
TRANSACTION OR (III) AUTHORIZES THE VOLUNTARY DISSOLUTION, LIQUIDATION OR
WINDING UP OF THE AFFAIRS OF THE COMPANY, THEN THE COMPANY SHALL DELIVER TO THE
HOLDER A NOTICE DESCRIBING THE MATERIAL TERMS AND CONDITIONS OF SUCH
TRANSACTION, AT LEAST TWENTY (20) CALENDAR DAYS PRIOR TO THE APPLICABLE RECORD
OR EFFECTIVE DATE ON WHICH A PERSON WOULD NEED TO HOLD COMMON STOCK IN ORDER TO
PARTICIPATE IN OR VOTE WITH RESPECT TO SUCH TRANSACTION, AND THE COMPANY WILL
TAKE ALL STEPS REASONABLY NECESSARY IN ORDER TO INSURE THAT THE HOLDER IS GIVEN
THE PRACTICAL OPPORTUNITY TO EXERCISE THIS WARRANT PRIOR TO SUCH TIME SO AS TO
PARTICIPATE IN OR VOTE WITH RESPECT TO SUCH TRANSACTION; PROVIDED, HOWEVER, THAT
THE FAILURE TO DELIVER SUCH NOTICE OR ANY DEFECT THEREIN SHALL NOT AFFECT THE
VALIDITY OF THE CORPORATE ACTION REQUIRED TO BE DESCRIBED IN SUCH NOTICE AND
PROVIDED THAT SUCH INFORMATION SHALL BE PUBLICLY DISCLOSED PURSUANT TO
REGULATION FD PRIOR TO OR IN CONJUNCTION WITH SUCH NOTICE BEING PROVIDED TO THE
HOLDER.

 

10.                                 PAYMENT OF EXERCISE PRICE.  THE HOLDER SHALL
PAY THE EXERCISE PRICE IN CASH BY DELIVERING IMMEDIATELY AVAILABLE FUNDS OR, IF
PERMITTED BY SECTION 5(E), THROUGH A CASHLESS EXERCISE.

 

11.                                 LIMITATION ON EXERCISE.  THE COMPANY SHALL
NOT EFFECT THE EXERCISE OF THIS WARRANT, AND THE HOLDER SHALL NOT HAVE THE RIGHT
TO EXERCISE THIS WARRANT, TO THE EXTENT THAT AFTER GIVING EFFECT TO SUCH
EXERCISE, SUCH PERSON (TOGETHER WITH SUCH PERSON’S AFFILIATES) WOULD
BENEFICIALLY OWN IN EXCESS OF 4.99% OF THE SHARES OF COMMON STOCK OUTSTANDING
IMMEDIATELY AFTER GIVING EFFECT TO SUCH EXERCISE.  FOR PURPOSES OF THE FOREGOING
SENTENCE, THE AGGREGATE NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED BY
SUCH PERSON AND ITS AFFILIATES SHALL INCLUDE THE NUMBER OF SHARES OF COMMON
STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT WITH RESPECT TO WHICH THE
DETERMINATION OF SUCH SENTENCE IS BEING MADE, BUT SHALL EXCLUDE SHARES OF COMMON
STOCK WHICH WOULD BE ISSUABLE UPON (I) EXERCISE OF THE REMAINING, UNEXERCISED
PORTION OF THIS WARRANT BENEFICIALLY OWNED BY SUCH PERSON AND ITS AFFILIATES AND
(II) EXERCISE OR CONVERSION OF THE UNEXERCISED OR UNCONVERTED PORTION OF ANY
OTHER SECURITIES OF THE COMPANY OR EXERCISABLE FOR SECURITIES OF THE COMPANY
BENEFICIALLY OWNED BY SUCH PERSON AND ITS AFFILIATES (INCLUDING, WITHOUT
LIMITATION, ANY CONVERTIBLE NOTES OR CONVERTIBLE PREFERRED STOCK OR WARRANTS)
SUBJECT TO A LIMITATION ON CONVERSION OR EXERCISE ANALOGOUS TO THE LIMITATION
CONTAINED HEREIN.  EXCEPT AS SET FORTH IN THE PRECEDING SENTENCE, FOR PURPOSES
OF THIS PARAGRAPH, BENEFICIAL OWNERSHIP SHALL BE CALCULATED IN ACCORDANCE WITH
SECTION 13(D) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.  FOR PURPOSES
OF THIS WARRANT, IN DETERMINING THE NUMBER OF OUTSTANDING

 

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shares of Common Stock, the Holder may rely on the number of outstanding shares
of Common Stock as reflected in (1) the Company’s most recent Form 10-K, Form
10-Q or other public filing with the Securities and Exchange Commission, as the
case may be, (2) a more recent public announcement by the Company or (3) any
other notice by the Company or the transfer agent of the Company setting forth
the number of shares of Common Stock outstanding.  For any reason at any time,
upon the written or oral request of the Holder, the Company shall within one
Business Day confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding.  In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the conversion or
exercise of securities of the Company, including the Warrants, by the Holder and
its affiliates since the date as of which such number of outstanding shares of
Common Stock was reported.

 

12.                                 NO FRACTIONAL SHARES.  NO FRACTIONAL SHARES
OF WARRANT SHARES WILL BE ISSUED IN CONNECTION WITH ANY EXERCISE OF THIS
WARRANT.  IN LIEU OF ANY FRACTIONAL SHARES WHICH WOULD, OTHERWISE BE ISSUABLE,
THE COMPANY SHALL PAY CASH EQUAL TO THE PRODUCT OF SUCH FRACTION MULTIPLIED BY
THE CLOSING PRICE OF ONE WARRANT SHARE AS REPORTED ON THE PRINCIPAL MARKET ON
THE DATE OF EXERCISE.

 

13.                                 NOTICES.  ANY AND ALL NOTICES OR OTHER
COMMUNICATIONS OR DELIVERIES HEREUNDER (INCLUDING WITHOUT LIMITATION ANY
EXERCISE NOTICE) SHALL BE IN WRITING AND SHALL BE DEEMED GIVEN AND EFFECTIVE ON
THE EARLIEST OF (I) THE DATE OF TRANSMISSION, IF SUCH NOTICE OR COMMUNICATION IS
DELIVERED VIA FACSIMILE AT THE FACSIMILE NUMBER SPECIFIED IN THIS SECTION PRIOR
TO 6:30 P.M. (NEW YORK CITY TIME) ON A TRADING DAY, (II) THE NEXT TRADING DAY
AFTER THE DATE OF TRANSMISSION, IF SUCH NOTICE OR COMMUNICATION IS DELIVERED VIA
FACSIMILE AT THE FACSIMILE NUMBER SPECIFIED IN THIS SECTION ON A DAY THAT IS NOT
A TRADING DAY OR LATER THAN 6:30 P.M. (NEW YORK CITY TIME) ON ANY TRADING DAY,
(III) THE TRADING DAY FOLLOWING THE DATE OF MAILING, IF SENT BY NATIONALLY
RECOGNIZED OVERNIGHT COURIER SERVICE, OR (IV) UPON ACTUAL RECEIPT BY THE PARTY
TO WHOM SUCH NOTICE IS REQUIRED TO BE GIVEN.  THE ADDRESSES FOR SUCH
COMMUNICATIONS SHALL BE:  (I) IF TO THE COMPANY, TO AVI BIOPHARMA, INC., ONE
S.W. COLUMBIA, SUITE 1105, PORTLAND, OREGON 97258, ATTENTION: ALAN P. TIMMINS
(FACSIMILE: 503-227-0751) WITH A COPY TO HURLEY, LYNCH & RE, P.C., 747 SW MILL
VIEW WAY, BEND, OR 97702, ATTENTION: ROBERT A. STOUT, ESQ. (FACSIMILE:
541-317-5507) OR (II) IF TO THE HOLDER, TO THE ADDRESS OR FACSIMILE NUMBER
APPEARING ON THE WARRANT REGISTER OR SUCH OTHER ADDRESS OR FACSIMILE NUMBER AS
THE HOLDER MAY PROVIDE TO THE COMPANY IN ACCORDANCE WITH THIS SECTION WITH A
COPY TO SCHULTE ROTH & ZABEL LLP, 919 THIRD AVENUE, NEW YORK, NEW YORK 10022,
ATTENTION: ELEAZER KLEIN, ESQ. (FACSIMILE: 212-593-5955).

 

14.                                 WARRANT AGENT.  THE COMPANY SHALL SERVE AS
WARRANT AGENT UNDER THIS WARRANT.  UPON THIRTY (30) DAYS’ NOTICE TO THE HOLDER,
THE COMPANY MAY APPOINT A NEW WARRANT AGENT.  ANY CORPORATION INTO WHICH THE
COMPANY OR ANY NEW WARRANT AGENT MAY BE MERGED OR ANY CORPORATION RESULTING FROM
ANY CONSOLIDATION TO WHICH THE COMPANY OR ANY NEW WARRANT AGENT SHALL BE A PARTY
OR ANY CORPORATION TO WHICH THE COMPANY OR ANY NEW WARRANT AGENT TRANSFERS
SUBSTANTIALLY ALL OF ITS CORPORATE TRUST OR SHAREHOLDERS SERVICES BUSINESS SHALL
BE A SUCCESSOR WARRANT AGENT UNDER THIS WARRANT WITHOUT ANY FURTHER ACT.  ANY
SUCH SUCCESSOR WARRANT AGENT SHALL PROMPTLY CAUSE NOTICE OF ITS SUCCESSION AS
WARRANT AGENT TO BE MAILED (BY FIRST CLASS MAIL, POSTAGE PREPAID) TO THE HOLDER
AT THE HOLDER’S LAST ADDRESS AS SHOWN ON THE WARRANT REGISTER.

 

7

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15.                                 MISCELLANEOUS.

 

(A)          THIS WARRANT SHALL BE BINDING ON AND INURE TO THE BENEFIT OF THE
PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.  SUBJECT TO THE
PRECEDING SENTENCE, NOTHING IN THIS WARRANT SHALL BE CONSTRUED TO GIVE TO ANY
PERSON OTHER THAN THE COMPANY AND THE HOLDER ANY LEGAL OR EQUITABLE RIGHT,
REMEDY OR CAUSE OF ACTION UNDER THIS WARRANT.  THIS WARRANT MAY BE AMENDED ONLY
IN WRITING SIGNED BY THE COMPANY AND THE HOLDER AND THEIR SUCCESSORS AND
ASSIGNS.

 

(B)         ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND
INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.  EACH PARTY AGREES THAT ALL LEGAL
PROCEEDINGS CONCERNING THE INTERPRETATIONS, ENFORCEMENT AND DEFENSE OF THE
TRANSACTIONS CONTEMPLATED BY THIS WARRANT (WHETHER BROUGHT AGAINST A PARTY
HERETO OR ITS RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, SHAREHOLDERS,
EMPLOYEES OR AGENTS) SHALL BE COMMENCED IN THE STATE AND FEDERAL COURTS SITTING
IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN.  EACH PARTY HERETO HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY
TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO
THE ENFORCEMENT OF THIS WARRANT), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT
TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR
PROCEEDING IS IMPROPER.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES PERSONAL
SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION
OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR
OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN
EFFECT FOR NOTICES TO IT UNDER THIS WARRANT AND AGREES THAT SUCH SERVICE SHALL
CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF.  NOTHING
CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS
IN ANY MANNER PERMITTED BY LAW. EACH PARTY HERETO (INCLUDING ITS AFFILIATES,
AGENTS, OFFICERS, DIRECTORS AND EMPLOYEES) HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS WARRANT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. IF EITHER PARTY SHALL COMMENCE AN ACTION OR
PROCEEDING TO ENFORCE ANY PROVISIONS OF THIS WARRANT, THEN THE PREVAILING PARTY
IN SUCH ACTION OR PROCEEDING SHALL BE REIMBURSED BY THE OTHER PARTY FOR ITS
REASONABLE ATTORNEYS FEES AND OTHER COSTS AND EXPENSES INCURRED WITH THE
INVESTIGATION, PREPARATION AND PROSECUTION OF SUCH ACTION OR PROCEEDING.

 

(C)          THE HEADINGS HEREIN ARE FOR CONVENIENCE ONLY, DO NOT CONSTITUTE A
PART OF THIS WARRANT AND SHALL NOT BE DEEMED TO LIMIT OR AFFECT ANY OF THE
PROVISIONS HEREOF.

 

(D)         IN CASE ANY ONE OR MORE OF THE PROVISIONS OF THIS WARRANT SHALL BE
INVALID OR UNENFORCEABLE IN ANY RESPECT, THE VALIDITY AND ENFORCEABILITY OF THE
REMAINING TERMS AND PROVISIONS OF THIS WARRANT SHALL NOT IN ANY WAY BE AFFECTED
OR IMPAIRED THEREBY AND THE PARTIES WILL ATTEMPT IN GOOD FAITH TO AGREE UPON A
VALID AND ENFORCEABLE PROVISION WHICH SHALL BE A COMMERCIALLY REASONABLE
SUBSTITUTE THEREFOR, AND UPON SO AGREEING, SHALL INCORPORATE SUCH SUBSTITUTE
PROVISION IN THIS WARRANT.

 

8

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IN WITNESS WHEREOF, THE COMPANY HAS CAUSED THIS WARRANT TO BE DULY EXECUTED BY
ITS AUTHORIZED OFFICER AS OF THE DATE FIRST INDICATED ABOVE.

 

 

AVI BIOPHARMA, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

Title:

 

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Exhibit A

 

FORM OF ELECTION TO PURCHASE

 

To AVI BioPharma, Inc.:

 

In accordance with Warrant No. [  ] issued to the undersigned, the undersigned
hereby elects to purchase                 shares of common stock (“Common
Stock”), $0.0001 par value per share, of AVI BioPharma, Inc.

 

1.  Form of Warrant Exercise Price.  The Holder intends that payment of the
Exercise Price shall be made as:

 

 

 

 

 

“Cash Exercise” with respect to                  Warrant Shares; and/or

 

 

 

 

 

“Cashless Exercise” with respect to                    Warrant Shares (to the
extent permitted by the terms of the Warrant).

 

2.  Payment of Exercise Price.  In the event that the holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the holder shall pay the sum of $                        to the Company
in accordance with the terms of the Warrant.

 

By its delivery of this Form of Election To Purchase, the Holder represents and
warrants to the Company that in giving effect to the exercise evidenced hereby
the Holder will not beneficially own in excess of the number of shares of Common
Stock (determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934) permitted to be owned under Section 11 of this Warrant to which
this notice relates.

 

The undersigned requests that the shares of Common Stock issuable upon this
exercise be issued in the name of

 

PLEASE INSERT SOCIAL SECURITY OR TAX IDENTIFICATION
NUMBER:                        

 

 

 

Facsimile Number:

 

Authorization:

 

Account Number:

  (if electronic book entry transfer)

 

--------------------------------------------------------------------------------

 

Transaction Code Number:

(if electronic book entry transfer)

 

Please print name and address

 

 

 

 

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Exhibit B

 

Warrant Shares Exercise Log

 

Date

 

Number of Warrant
Shares Available to
be Exercised

 

Number of Warrant
Shares Exercised

 

Number of Warrant
Shares Remaining to
be Exercised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit C

 

FORM OF ASSIGNMENT

 

[To be completed and signed only upon transfer of Warrant]

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto                         the right represented by the within Warrant to
purchase                  shares of Common Stock of AVI BioPharma, Inc. to which
the within Warrant relates and appoints                       attorney to
transfer said right on the books of AVI BioPharma, Inc. with full power of
substitution in the premises.

 

Dated:

 

,

 

 

 

 

 

 

 

(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)

 

 

 

 

 

Address of Transferee

 

 

 

 

 

 

 

 

 

 

In the presence of:

 

 

 

 

 

 

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