Exhibit 10.11

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 the Company
closes an equity financing transaction on or before December 31, 2008 in which
the Company raises gross proceeds of not less than $15.00MM with an implied
equity value of the Company pre-closing of not less than $2.50 per share (a
“Qualified Financing”). Notwithstanding anything to the contrary

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EXECUTION

 

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 Agreement would
constitute deferred compensation subject to Section 409A of the

 

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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.

 

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  (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 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 15th day of August, 2008.     DATED the 6th day of August, 2008. AVI
BioPharma, Inc.     By:   /s/ Leslie Hudson     /s/ J. David Boyle II Name:  
Leslie Hudson, PhD     J. David Boyle II Title:   Chief Executive Officer