Exhibit 10.37

THIS WARRANT, AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF, HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE REOFFERED OR SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO (1) REGISTRATION OR
(2) AN OPINION OF COUNSEL FOR THE COMPANY OR OTHER COUNSEL REASONABLY ACCEPTABLE
TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.  THIS
WARRANT IS ALSO SUBJECT TO THE TERMS OF AN INVESTMENT AGREEMENT DATED MAY 22,
2001.

WARRANT

To Purchase Shares of Common Stock of

AVI BIOPHARMA, INC.

June 20, 2001

 

             AVI BioPharma, Inc., an Oregon corporation (the “Company”), for
value received, hereby certifies that Medtronic Asset Management, Inc., a
Minnesota corporation, or its registered assigns (the “Holder”) is entitled,
subject to the terms set forth below, upon exercise of this Warrant to purchase
from the Company 3,000,000 shares of Common Stock, $0.0001 par value, of the
Company (as further defined in Section 5 below, “Common Stock”). Until adjusted
as provided by the terms of this Warrant, the exercise price per share (the
“Exercise Price”) shall be $10.  The shares issuable upon exercise of this
Warrant, as adjusted from time to time pursuant to the provisions of this
Warrant, are hereinafter referred to as the “Warrant Shares.”

             This Warrant is further subject to the following provisions, terms
and conditions:

             1.          Term. Subject to Section 13 below, this Warrant may be
exercised by the Holder, in whole or in part, at any time before the close of
business on the date five years after the date hereof.

             2.          Manner of Exercise.  This Warrant may be exercised by
the Holder, in whole or in part (but not as to any fraction of a share of Common
Stock), by surrendering this Warrant, with the Exercise Form attached hereto as
Exhibit A filled in and duly executed by such Holder or by such Holder’s duly
authorized attorney, to the Company at its principal office accompanied by
payment of the Exercise Price in the amount of the Exercise Price multiplied by
the number of shares as to which the Warrant is being exercised.  The Exercise
Price may be paid in the form of a check or wire transfer of funds.

             3.          Effective Date of Exercise.  Each exercise of this
Warrant shall be deemed effective as of the close of business on the day on
which this Warrant is surrendered to the Company as provided in Section 2 or
Section 3(a) above.  At such time, the person or persons in whose name or names
any certificates for Warrant Shares shall be issuable upon such exercise shall
be deemed to have become the holder or holders of record of the Warrant Shares
represented by such certificates.  Within 10 days after the exercise of this
Warrant in full or in part, the Company will, at its expense, cause to be issued
in the name of and delivered to the Holder or such other person as the Holder
may (upon payment by such Holder of any applicable transfer taxes) direct:  (i)
a certificate or certificates for the number of full Warrant Shares to which
such Holder is entitled upon such exercise, and (ii) unless this Warrant has
expired, a new Warrant or Warrants (dated the date hereof and in form identical
hereto) representing the right to purchase the remaining number of shares of
Common Stock, if any, with respect to which this Warrant has not then been
exercised.

             4.          Adjustments to Exercise Price.  The above provisions
are, however, subject to the following:

(a)         (i)          If the Company shall at any time after the date of this
Warrant subdivide or combine the outstanding shares of Common Stock or declare a
dividend payable in Common Stock, then the number of shares of Common Stock for
which this Warrant may be exercised as of immediately prior to the subdivision,
combination or record date for such dividend payable in Common Stock shall
forthwith be proportionately decreased, in the case of combination, or
increased, in the case of subdivision or dividend payable in Common Stock.

             (ii)         If the Company shall at any time after the date of
this Warrant subdivide or combine the outstanding shares of Common Stock or
declare a dividend payable in Common Stock, the Exercise Price in effect
immediately prior to the subdivision, combination or record date for such
dividend payable in Common Stock shall forthwith be proportionately increased,
in the case of combination, or decreased, in the case of subdivision or dividend
payable in Common Stock.

             (b)        If any capital reorganization or reclassification of the
capital stock of the Company, or share exchange, combination, consolidation or
merger of the Company with another corporation, or the sale of all or
substantially all of its assets to another corporation shall be effected in such
a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization, reclassification, share exchange, combination,
consolidation, merger or sale, lawful and adequate provision shall be made
whereby the Holder shall thereafter have the right to receive upon exercise of
this Warrant, upon the basis and upon the terms and conditions specified in this
Warrant and in lieu of the shares of the Common Stock of the Company into which
this Warrant could be exercisable or convertible, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for a number of outstanding shares of such Common Stock equal to the maximum
number of shares of such stock issuable upon exercise of this Warrant, and in
any such case appropriate provisions shall be made with respect to the rights
and interests of Holder to the end that the provisions hereof (including without
limitation provisions for adjustments of the Exercise Price and of the number of
shares purchasable upon exercise of this Warrant) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise hereof.  The Company shall
not effect any such share exchange, combination, consolidation, merger or sale,
unless prior to the consummation thereof the successor corporation (if other
than the Company) resulting from such share exchange, combination, consolidation
or merger or the corporation purchasing such assets shall assume by written
instrument executed and mailed to the Holder, at the last address of such Holder
appearing on the books of the Company, the obligation to deliver to such Holder
such shares of stock, securities or assets that, in accordance with the
foregoing provisions, such Holder may thereafter be entitled to receive upon
exercise of this Warrant.

             (c)         If at any time after the date of this Warrant the
Company distributes to all holders of Common Stock any assets (excluding
ordinary cash dividends), debt securities, or any rights or warrants to purchase
debt securities, assets or other securities (excluding Common Stock covered by
Sections 5(a) or (b)), the Exercise Price shall be adjusted in accordance with
the formula:

                                        E1 = E x (O x M) - F
                                                         O x M

where:

  E1 = the adjusted Exercise Price.   E  = the current Exercise Price.   M = the
average market price of Common Stock for the 30 consecutive trading days
commencing 45 trading days before the record date mentioned below.   O  = the
number of shares of Common Stock outstanding on the record date mentioned below.
  F  = the fair market value on the record date of the aggregate of all assets,
securities, rights or warrants distributed.  The Company’s Board of Directors
shall determine the fair market value in the exercise of its reasonable
judgment.

The adjustment shall be made successively whenever any such distribution is made
and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution.

             (d)        Upon any adjustment of the Exercise Price, then and in
each such case, the Company shall give written notice thereof, by first class
mail or equivalent, postage prepaid, addressed to the Holder of this Warrant at
the address of such Holder as shown on the books of the Company, which notice
shall state the Exercise Price resulting from such adjustment and the increase
or decrease, if any, in the number of shares for which this Warrant may be
exercised, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.

             5.          Common Stock.  As used herein, the term “Common Stock”
shall mean and include the Company’s presently authorized shares of common stock
and shall also include any capital stock of any class of the Company hereafter
authorized that is not limited to a fixed sum or percentage in respect of the
rights of the holders thereof to participate in dividends or in the
distribution, dissolution or winding up of the Company.

             6.          No Voting Rights.  This Warrant shall not entitle the
Holder to any voting rights or other rights as a shareholder of the Company
unless and until exercised or converted pursuant to the provisions hereof.

             7.          Exercise or Transfer of Warrant or Resale of Common
Stock.  The Holder, by acceptance hereof, agrees to give written notice to the
Company before exercising this Warrant, or transferring this Warrant, in whole
or in part, or transferring any shares of Common Stock issued upon the exercise
hereof, of such Holder’s intention to do so, describing briefly the manner of
any proposed transfer.  Such notice shall include an opinion of counsel
reasonably satisfactory to the Company that (i) the proposed exercise or
transfer may be effected without registration or qualification under the
Securities Act of 1933, as amended (the “Act”), and any applicable state
securities or blue sky laws, or (ii) the proposed exercise or transfer has been
registered under such laws.  Upon delivering such notice, such Holder shall be
entitled to exercise or transfer this Warrant or such Warrant Shares, all in
accordance with the terms of the notice delivered by such Holder to the Company;
provided, that an appropriate legend may be endorsed on the certificates for
such shares respecting restrictions upon transfer thereof necessary or advisable
in the opinion of counsel to the Company to prevent further transfer that would
be in violation of Section 5 of the Act and applicable state securities or blue
sky laws.

             If in the opinion of counsel to the Company or other counsel
reasonably acceptable to the Company the proposed exercise, transfer or
disposition of this Warrant or the Warrant Shares described in the written
notice given pursuant to this Section 8 may not be effected without registration
of this Warrant or the Warrant Shares, the Company shall promptly give written
notice thereof to the Holder within 10 days after the Company receives such
notice, and such holder will limit its activities in respect to such as, in the
opinion of such counsel, is permitted by law.

             Further, notwithstanding anything above to the contrary, this
Warrant may not be transferred by the Holder hereof in warrant form except to a
subsidiary of the Holder.

             8.          Covenants of the Company.  The Company covenants and
agrees that all shares that may be issued upon exercise of this Warrant will,
upon issuance, be duly authorized and issued, fully paid, nonassessable and free
from all taxes, liens and charges with respect to the issuance thereof.  The
Company further covenants and agrees that the Company will at all times have
authorized, and reserved for the purpose of issuance upon exercise hereof, a
sufficient number of shares of its Common Stock to provide for the exercise of
this Warrant.

             9.          Certain Notices.  The Holder shall be entitled to
receive from the Company immediately upon declaration thereof and at least 20
days prior to the record date for determination of shareholders entitled thereto
or to vote thereon (or, if no record date is set, prior to the event), written
notice of any event that could require an adjustment pursuant to Section 5
hereof or of the dissolution or liquidation of the Company.  All notices under
this Warrant shall be in writing and shall be delivered personally or by
telecopy (receipt confirmed) to such party (or, in the case of an entity, to an
executive officer of such party) or shall be sent by a reputable express
delivery service or by certified mail, postage prepaid with return receipt
requested, addressed as follows:

if to the Holder, to:

             Medtronic, Inc.
             710 Medtronic Parkway NE
             Minneapolis, MN 55432-5604

             with separate copies thereof addressed to

Attention: General Counsel     Mail Stop LC400     Telecopier No.:  (763)
572-5459         and           Attention: Vice President and Chief Development
Officer     Mail Stop LC390     Telecopier No.:  (763) 505-2542  

if to the Company to:

             AVI BioPharma, Inc.
             One SW Columbia
             Portland, OR 97258
             Attn: President

With separate copies to:

             Robert A. Stout, Esq.
             HURLEY, LYNCH & RE, P,.C.
             747 SW Industrial Way
             Bend, OR  97702

             Any party may change the above–specified recipient and/or mailing
address by notice to all other parties given in the manner herein prescribed. 
All notices shall be deemed given on the day when actually delivered as provided
above (if delivered personally or by telecopy) or on the day shown on the return
receipt (if delivered by mail or delivery service).

             10.        Registration Rights.  The Holders of this Warrant and
the Warrant Shares are entitled to the rights and benefits of all of the terms,
provisions and conditions of that certain  Registration Rights Agreement dated
of even date herewith between the Company and Medtronic Asset Management, Inc.,
provided an express sharing or assignment of such rights and benefits is made to
each such Holder by such Holder’s transferor.  Notwithstanding the foregoing or
any provisions of the Registration Rights Agreement to the contrary, the Holder
agrees not to sell or transfer any Warrant Shares for at least thirty-two (32)
days after conversion or exercise of this Warrant which resulted in the issuance
of such Warrant Shares.

             11.        Miscellaneous.

             (a)         No amendment, modification or waiver of any provision
of this Warrant shall be effective unless the same shall be in writing and
signed by the holder hereof.

             (b)        This Warrant shall be governed by and construed in
accordance with the laws of the State of Oregon.

             12.        Cancellation Rights.  The Company may cancel this
Warrant, to the extent it remains unexercised, at any time if the Daily Price
has exceeded $20.00 for 20 consecutive trading days immediately preceding the
date of notice of such cancellation, upon 190 days' notice given in accordance
with Section 10 and Holder’s failure to exercise this Warrant within such notice
period.  No consideration or price shall be payable by the Company for such
cancellation.  For the purpose of the foregoing sentence, the term "Daily Price"
shall mean, for any relevant day, the closing bid price on that day as reported
by the principal exchange or quotation system on which prices for the Common
Stock are reported, and such $20.00 shall be subject to adjustment in the same
manner in which the Exercise Price is subject to adjustment under Section 4 and
the Holder is entitled to notice thereof under Section 4(d).  The Holder may
exercise this Warrant in whole or in part at any time during such 190-day notice
period.  This Warrant shall no longer be exercisable in whole or in part from
and after the 191st day after such notice.

             IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its authorized officer and dated as of the date stated above.

 

  AVI BIOPHARMA, INC.       By:    Denis Burger    

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  Its:           CEO           

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Exhibit A

 

NOTICE OF EXERCISE OF WARRANT —    To Be Executed by the Registered Holder in
Order to Exercise the Warrant

 

             The undersigned hereby irrevocably elects to exercise the attached
Warrant to purchase, for cash pursuant to Section 2 thereof, ________________
shares of Common Stock issuable upon the exercise of such Warrant.  The
undersigned requests that certificates for such shares be issued in the name of
__________________________________.  If this Warrant is not fully exercised, the
undersigned requests that a new Warrant to purchase the balance of shares
remaining purchasable hereunder be issued in the name of
______________________________.

 

Date:  ___________, 20__          

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