Exhibit 10.50


 


NOTE:  Portions of this document marked “***” have
been omitted and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment of the omitted and separately
filed portions.


 


SUPPLY
AGREEMENT


 


THIS SUPPLY AGREEMENT (the “Agreement”) is made and
entered into as of March 10, 2006, (the “Effective Date”) between AVI
BIOPHARMA, INC. (as defined below, “Supplier”), an Oregon corporation, and
COOK GROUP INCORPORATED (as defined below, “Company”), an Indiana corporation.


 


WITNESSETH:


 


WHEREAS, Supplier is establishing manufacturing
facilities to manufacture drugs such as the Drug (as defined below);


 


WHEREAS, Company and Supplier have entered into a
License and Development Agreement of even date herewith with respect to the
Drug (the “License and Development Agreement”);


 


WHEREAS, Company and Supplier have entered into an
Investment Agreement of even date herewith with respect to the Drug (the “Investment
Agreement”);


 


WHEREAS, Supplier and Company wish to enter into this
Agreement regarding Supplier’s supplying the Drug (as defined below) to
Company;


 


AGREEMENTS:


 


NOW THEREFORE, in consideration of the
representations, warranties, covenants and agreements contained herein, and for
other valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties mutually agree as follows:


 


ARTICLE 1.


 


DEFINITIONS


 


1.1.                                                     Specific
Definitions. As used in this Agreement, the following terms shall have the
meanings set forth or as referenced below:


 


“Actual Cost” means the cost of
non-manufacturing activities performed by AVI personnel pursuant to this
Agreement, including direct labor, materials, travel, and allocated overhead
costs.


 


“Affiliate” of a
specified person (natural or juridical) means a person that directly, or


 

















 


indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the person specified. “Control” shall mean ownership of more than
50% of the shares of stock entitled to vote for the election of directors in
the case of a corporation, and more than 50% of the voting power in the case of
a business entity other than a corporation.


 


“Agreement” means
this Agreement and all Exhibits and Schedules hereto.


 


“Company” means
Cook Group Incorporated and its Affiliates.


 


“Confidential
Information” means know-how, trade secrets, and unpublished information
disclosed (whether before or during the term of this Agreement) by one of the
parties (the “disclosing party”) to the other party (the “receiving party”) or
generated under this Agreement, excluding information which:


 


(a)                       was
already in the possession of receiving party prior to its receipt from the
disclosing party (provided that the receiving party is able to provide the
disclosing party with reasonable documentary proof thereof and, if received
from a third party, that such information was acquired without any party’s
breach of a confidentiality or non-disclosure obligation to the disclosing
party related to such information);


 


(b)                      is
or becomes part of the public domain by reason of acts not attributable to
the receiving party;


 


(c)                       is
or becomes available to receiving party from a source other than the disclosing
party which source, has rightfully obtained such information and has no
obligation of non-disclosure or confidentiality to the disclosing party with
respect thereto; or


 


(d)                      has
been independently developed by the receiving party without breach of this
Agreement or use of any Confidential Information of the other party.


 


“Drug” has the
meaning given such term in the License and Development Agreement.


 


“Effective Date”
has the meaning set forth in the recitals hereto. 


 


“FDA” means the
United States Food and Drug Administration.


 


“Force Majeure”
means any event or condition, not existing as of the date of this Agreement,
not reasonably foreseeable as of such date and not reasonably within the
control of either party, which prevents in whole or in material part the
performance by one of the parties of its obligations hereunder, such as an act
of government, war or related actions, civil insurrection, act of terrorism,
riot, sabotage, strike, epidemic, fire, flood, windstorm, and similar events.


 


“GMP” means Good
Manufacturing Practices as defined in 21 CFR Parts 210 through 226 and Parts
600 through 680 and any successor provisions thereof that apply to production
of the Drug under this Agreement.


 


“Intellectual Property”
means U.S. and foreign patents and patent applications, trademarks, service
marks and registrations thereof and applications therefor, copyrights and


 


2

















 


copyright registrations
and applications, mask works and registrations thereof, know-how, trade
secrets, inventions, discoveries, ideas, technology, data, information,
processes, drawings, designs, licenses, computer programs and software, and
technical information including but not limited to information embodied in
material specifications, processing instructions, equipment specifications,
product specifications, confidential data, electronic files, research
notebooks, invention disclosures, research and development reports and the like
related thereto and all amendments, modifications, and improvements to any of
the foregoing.


 


“Indemnifiable Losses”
has the meaning set forth in Section 7.1. 


 


“Indemnitee” has
the meaning set forth in Section 7.3. 


 


“Indemnitor” has
the meaning set forth in Section 7.3.


 


“Investment Agreement”
has the meaning set forth in the recitals hereto.


 


“License and
Development Agreement” has the meaning set forth in the recitals hereto.


 


“Product Liability
Damages” means any liability, claim or expense, including but not limited
to reasonable attorneys’ fees and medical expenses, arising in whole or in part out
of claims of third parties for personal injury or loss of or damage to property
relating to or arising out of the Products, whether based on strict liability
in tort, negligent manufacture of product, or any other allegation of liability
arising from the design, testing, manufacture, packaging, labeling (including
instructions for use), or sale of the Products.


 


“Product” means
the final formulation or configuration of the Drug with or without a device or
delivery mechanism such as a stent, catheter, or microbubble formulation.


 


“Specifications”
means the specifications and formulations for the Products as agreed to by the
parties. Within sixty (60) days of the Effective Date, the parties will agree
in writing to initial Specifications for each Product to be developed. Thereafter,
Specifications for a particular Product may be amended from time to time
upon mutual agreement of the parties. Specifications specifically developed by
Company or included in any FDA approval of the Drug, but excluding in either
case Supplier Specifications (as defined herein), shall be referred to as “Company
Specifications.”  “Supplier Specifications” shall mean
specifications developed by Supplier and incorporated into the Specifications
without modification by Company.


 


“Supplier” means
AVI BioPharma, Inc. and its Affiliates.


 


“Term” has the
meaning set forth in Section 8.1. 


 


“Warranty Exclusions”
has the meaning set forth in Section 5.1.


 


1.2.                                                     Other
Terms. Other terms may be defined elsewhere in the text of this
Agreement and shall have the meaning indicated throughout this Agreement.


 


3





















 


1.3.                                                     Definitional
Provisions.


 


(a)                       The
words “hereof,” “herein,” and “hereunder” and words of similar import, when
used in this Agreement, shall refer to this Agreement as a whole and not to any
particular provisions of this Agreement.


 


(b)                      The
terms defined in the singular shall have a comparable meaning when used in the
plural, and vice versa.


 


(c)                       References
to an “Exhibit” or to a “Schedule” are, unless otherwise specified, to one of
the Exhibits or Schedules attached to or referenced in this Agreement, and
references to an “Article” or a “Section” are, unless otherwise specified, to
one of the Articles or Sections of this Agreement.


 


(d)                      The
term “person” includes any individual, partnership, joint venture, corporation,
trust, unincorporated organization or government or any department or agency
thereof.


 


ARTICLE 2.


 


SUPPLY


 


2.1.                                                     Supply
of Drug. Commencing upon the closing of transactions contemplated by the
Investment Agreement, Supplier
shall manufacture, or have manufactured, and supply to Company all of Company’s
orders for Drug made under Article 3, in accordance with the
Specifications in effect at the time of order for each Product and with Company’s
schedule for deliveries. In the event of any Drug or material shortages or
temporary or long-term production capacity restraints or Force Majeure events,
Supplier may allocate production capacity among customers, but, in all
events will supply Company on a priority basis over supplying any other
customers.


 


2.2.                                                     Promotion
and Training. Upon a reasonable request by Company and subject to staff and
support availability, Supplier will assist Company in preparing promotional,
marketing and training literature and instructions for the Products, including
any artwork,  will conduct training courses and seminars to educate
medical professionals on the use of Products and their use in connection with
Company’s medical devices and for training its marketing, sales, and
distribution groups, and will provide Company with training related to the sale
of Products. Company shall reimburse Supplier’s Actual Costs in providing all
services and support pursuant to this Section 2.2. Within thirty (30) days
of the end of each calendar quarter in which costs were incurred, Supplier will
send Company an invoice specifying the Actual Cost of services and support
provided in the just-ended quarter and the payment due. Within thirty (30) days
of receiving each such invoice, Company will make a payment to Supplier for the
full amount due.


 


2.3.                                                     Packaging
and Labeling. Supplier shall package and label the Drug in accordance with
packaging and labeling specifications to be mutually agreed upon by Company and
Supplier and approved by the FDA.


 


4





















 


2.4.                                                     Compliance
With Laws and Regulations.


 


(a)                       Supplier
shall be responsible for compliance with present and future applicable
statutes, laws, ordinances and regulations of national, federal, state and
local governments now or hereafter in effect materially relating to its
manufacture of the Drug. If required or necessary in connection with sales of
Products by Company, Supplier shall have its manufacturing facilities become
ISO 9001 certified. Without limitation of the foregoing, Supplier represents
and warrants to Company that all Drugs sold and delivered to Company under this
Agreement will have been manufactured, labeled and packaged in accordance with
applicable FDA GMP requirements and, if applicable, Supplier’s ISO 9001
certifications, and that continually during the term of this Agreement no Drugs
delivered by Supplier to Company shall be adulterated or misbranded at the time
of delivery within the meaning of the U.S. Food, Drug and Cosmetic Act and
regulations thereunder or any similar law or regulation. Supplier shall cause
Company’s regulatory personnel to be provided with reasonable access from time
to time to the facilities and records of Supplier for the purpose of confirming
Supplier’s compliance with any applicable FDA GMP and all other applicable
requirements noted in this Article 2. Supplier agrees to provide
Company with reasonable prior written notice of any FDA inspection of Supplier’s
facilities or records prior to such FDA inspection, or if such prior written
notice is not feasible, then within three business days thereafter. Supplier
also agrees to provide Company with written notice of its receipt of any claim
by the FDA or other governmental agency of any actual or alleged violation by
Supplier of any GMP or other applicable requirements as soon as practicable
following receipt of such notice (but in no event more than 5 business days
thereafter). Company shall have the right, at any time and from time-to-time
upon not less than 72 hours prior notice to the Supplier, to inspect Supplier’s
manufacturing facilities in order to examine all phases of the manufacturing
process and inspect or audit any or all of the Supplier’s data and records
related thereto and the Products compliance with the terms and conditions
hereunder or with respect to any applicable law, rule or regulation. In
the event Supplier uses a sub-contractor or third party to perform any part of
the manufacturing, Supplier shall obtain the agreement of such sub-contractor
or third party that Company shall have similar inspection rights.


 


(b)                      Company and
Supplier (except where Supplier has the responsibility under Section 2.4(a) or
elsewhere herein) shall comply with all applicable laws, rules, regulations,
codes, and standards of all federal, state, local and municipal government
agencies which affect their respective performance and activities under this
Agreement. Notwithstanding anything contained herein, Company shall be
responsible for compliance with present and future applicable statutes, laws,
ordinances and regulations of national, federal, state and local governments
now or hereafter in effect including applicable import and export laws
materially relating to its purchase, distribution or sale of the Products.


 


2.5.                                                     Exclusivity.
During the term of this Agreement, or if longer, the term of the License and
Development Agreement, (a) Supplier shall not promote, make, have made,
market or sell the Drug for use in the Field (as defined in the License and
Development Agreement) to any person or entity other than Company, and (b) Company
shall purchase 100% of its requirements for the Drug for use in the Field from
Supplier. Prior to any sale, transfer or other disposition to any third party
of Drug for use outside the Field, Supplier shall obtain the agreement of such
third party that it will not use, promote, market or sell the Drug in the Field
or resell the Drug for use in the Field.


 


5





















 


2.6.                                                     Complaints
and Adverse Events. Each party agrees to inform the other party
promptly (but in no event no later than forty-eight (48) hours after becoming
aware of same) of any information concerning any complaint involving the
Products or that might be applicable to the Products or adverse drug experience
(as defined in 21 C.F.R. § 314.80), injury, toxicity, or sensitivity
reaction associated with the use of the Products or that might be applicable to
the Products, provided that:


 


(a)                       if the
adverse drug experience is serious, as defined in 21 C.F.R. § 314.80
(including any adverse drug reaction that is fatal or life-threatening, is
permanently disabling, requires inpatient hospitalization, or is a congenital
anomaly, cancer or overdose), then each party shall notify the other party
within twenty-four (24) hours;


 


(b)                      all
notifications to Company shall be by facsimile and on Company’s designated
adverse event forms; and


 


(c)                       all
notifications to Supplier shall be by facsimile and on Supplier’s designated
adverse event forms.


 


2.7.                                                     Records
and Recall. Company shall maintain complete and accurate records of all
Products sold by Company in sufficient detail to enable Supplier to conduct an
effective recall of Drugs purchased by Company under this Agreement if Supplier
determines that such a recall is required or otherwise necessary or appropriate.
In the event of a recall of any of the Drugs by Supplier, Company will
cooperate with and assist Supplier in effecting such recall, including promptly
contacting any purchasers that Supplier reasonably desires to be contacted and
promptly communicating to such purchasers the information or instructions
Supplier reasonably desires to be transmitted relating to such recall. Company
shall be responsible for all costs of effecting such recall of Products,
including any shipping costs related to returning recalled Drugs to Supplier
and replacing such recalled Drugs with new Drugs, except, such costs shall
instead be paid by Supplier (directly or through reimbursement of Company for
costs reasonably incurred by Company) where the recall relates to a matter for
which Supplier would be required to indemnify Company under Article 7
of this Agreement. Notwithstanding the foregoing, Company shall control any
recall of any products sold by Company to third parties that may incorporate
the Drug.


 


2.8.                                                     Certain
Responsibilities. Notwithstanding anything contained herein, Supplier shall
not be responsible for any loss or damage,
including Products Liability Damages, from the use or performance of the Drugs
manufactured under this Agreement where (a) such use or performance did
not result from a breach of this Agreement by Supplier, including, without
limitation, Supplier’s warranties, (b) the Drugs complied with the
description and form described in any documents used for all governmental
approvals, applications, submissions, and approvals filed by Company with the
FDA, or given to Company by the FDA, and (c) the Drugs complied with the
packaging, shipping, and labeling for the Drugs. Company further agrees that no
Products will be released for public use or consumption until all requisite
governmental approvals therefore have been obtained for such use and
consumption.


 


6





















 


2.9.                                                     Supply.
Supplier agrees:  (i) to have in
place prior to the first regulatory approval of the commercial sale of the
Product an agreed upon reserve supply of the Drug to support the Product and
maintain during the term of this Agreement a commercially reasonable supply for
the Drug and (ii) to produce commercially reasonable quantities of the
Drug in compliance with FDA GMP requirements and other regulatory requirements.
The Company agrees to pay for the agreed upon reserve supply of Drug prior to
the first regulatory approval. Supplier agrees to store in a safe and secure
off-site location a reserve supply of the Drug and Supplier agrees to exercise
commercially reasonable efforts to replenish such supply if it is used. The
Drugs shall be stored in compliance with the Specifications and any applicable
law or regulation.


 


ARTICLE 3.


 


ORDERS
AND DELIVERY


 


3.1.                                                     Purchase
Orders. To assist the Supplier in determining the reserve supply of Drug to
be maintained, the Company will make its commercially reasonable efforts to
forecast its requirements for Drugs six (6) months in advance of ordering
Drugs and updating a rolling forecast at three (3) month intervals. Such
rolling forecasts by Company shall be used for purposes of facilitating Company’s
clinical, sales and marketing plans and meeting the lead times required by
certain of Supplier’s suppliers, but they are not legally binding on Company in
any manner. Company shall submit purchase orders for the Drugs to Supplier in
writing, whether by mail, facsimile, email or otherwise, which shall, at a
minimum, set forth the product numbers, quantities, delivery dates, and
shipping instructions and shipping addresses for all Drugs ordered. Each
purchase order shall constitute a contract between Company and Supplier for the
sale of the Drugs ordered and shall be subject to and governed by the terms of
this Agreement. The terms and conditions of this Agreement shall so govern and
supersede any additional or contrary terms set forth in Company’s purchase
order or any Supplier or Company acceptance, confirmation, invoice or other
document unless duly signed by an officer of Company and an executive officer
of Supplier and expressly stating and identifying which specific additional or
contrary terms shall supersede the terms and conditions of this Agreement. With
respect to all purchase orders submitted at least sixty (60) days in advance of
the earliest scheduled delivery date set forth in such order, Supplier shall
fill such orders in accordance with the scheduled delivery dates set forth
therein, and with respect to all other purchase orders, Supplier shall exercise
commercially reasonable efforts to fill such orders in accordance with the
scheduled delivery dates set forth therein.


 


3.2.                                                     Modification
of Orders. No purchase order shall be modified or canceled except upon the
mutual agreement of the parties; provided, however, that Company may cancel
a purchase order based upon actions of a regulatory authority and Company may make
changes to a purchase order in quantities that do not exceed ten (10) percent
of such outstanding order, provided that Company will reimburse Supplier for
costs incurred on any such cancelled orders to the extent Supplier is not able,
after reasonable effort, to recover its costs in connection therewith. Mutually
agreed change orders shall be subject to all provisions of this Agreement,
whether or not the change order so states. Notwithstanding the foregoing, any
purchase order may be cancelled by Company, without any liability to


 


7





















 


Company, as to any Drug that is not delivered within sixty (60) days
after the delivery date requested by Company, and any such cancellation shall
not limit or affect any contract remedies available to Company with respect
thereto. Any such cancellation by Company must be by written notice to Supplier
given within sixty-five (65) days after the delivery date requested by Company.


 


3.3.                                                     Delivery
Terms. All deliveries of Drugs shall be F.O.B. Supplier’s manufacturing
facility. Supplier shall have no further responsibility for risk of damage to
or loss or delay of Drugs upon delivery by Supplier at the F.O.B. location to
the common carrier specified by Company or, in the event that no carrier shall
have been specified by Company on or before the date fifteen (15) days prior to
the requested shipment date, a common carrier reasonably selected by Supplier. Company
shall be responsible for all shipping, handling, and insurance costs.


 


3.4.                                                     Product
Changes. Supplier shall not, without Company’s prior written consent,
materially alter the Specifications for Drugs. Supplier shall not, without
Company’s prior written consent, modify the manufacturing processes, methods or
procedures for the Drug in any manner that increases the manufacturing costs. Such
consent will not be unreasonably withheld by Company if specifications,
processes, methods, or procedures must be changed based upon demands by a
regulatory authority or changes in applicable law.


 


ARTICLE 4.


 


PRICES
AND PAYMENTS


 


4.1.                                                     Prices.
Unless and until otherwise mutually agreed by the parties in writing, the
purchase price for Drugs manufactured by Supplier for Company under this
Agreement shall be determined under Exhibit A.


 


4.2.                                                     Payment
Terms. Payments made by Company for Drugs purchased hereunder shall be due
and payable in full within thirty (30) days after the date the invoice is
received by Company.


 


ARTICLE 5.


 


WARRANTY
AND SERVICE


 


5.1.                                                     Warranty.


 


(a)                       Supplier
represents and warrants to Company that all Drugs sold under this Agreement
will have been manufactured, labeled and packaged in accordance with all
applicable laws and regulations, including (as applicable) FDA GMP requirements
and, if applicable, ISO 9001 certifications, or successor requirements, and all
other applicable manufacturing requirements, as well as the Specifications. Supplier
represents, warrants and covenants that it will have, or will contract for, the
facilities, equipment, licenses, permits and personnel to manufacture and
supply the Drugs in accordance with the current forecasted requirements of
Company.


 


8





















 


(b)                      Supplier
represents and warrants to Company that Drugs shall, when delivered to Company,
meet the Specifications and warranties set forth herein and shall be free from
defects in materials and workmanship. Company shall invoice Supplier for, and
Supplier shall promptly pay, all shipping, transportation, insurance and other
expenses actually incurred in replacing defective Drugs where either the defect
arises from a breach of any representation or warranty of Supplier herein or
from a matter for which Supplier would be required to indemnify Company
hereunder. Supplier will, at Company’s option, replace or credit Company’s
account for any Drug that Company reasonably determines, in accordance with Section 5.3,
was defective at the time of shipment to Company or that does not conform to
the express warranties of Supplier herein; provided, however, that Supplier
shall have no obligation under this warranty to make replacements or grant
credits necessitated in whole or in part by accidents; failure to maintain
in accordance with any transportation, storage, handling, or maintenance
instructions supplied by Supplier; damage due to Company Specifications where
Supplier followed such specifications and the damage was due to defects in such
Company Specifications; where Company is specifically liable for such damages
or defect under the terms of Article 7; damage by acts of nature,
vandalism, burglary neglect or misuse; or other fault or negligence of Company
or (except for any strict liability of Supplier) the customer or user
(collectively, “Warranty Exclusions”).


 


5.2.                                                     Limited
Warranty. THE EXPRESS WARRANTIES SET FORTH ABOVE ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE HEREBY SPECIFICALLY DISCLAIMED, INCLUDING
WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE.


 


5.3.                                                     Inspection
of Drug. In the event of any shortage, damage or discrepancy in or to a
shipment of Drug or in the event any shipment of Drug fails to comply with the
then current Specifications (excluding Warranty Exclusions) or Supplier
warranties for the Drugs, Company shall report the same to Supplier within
thirty (30) days after its discovery and in no event more than three (3) months
after receipt of the Drug after delivery thereof to Company and, if requested
in writing by Supplier, furnish such written evidence or other documentation
and such samples of the Drug deemed to be nonconforming as Supplier reasonably may deem
appropriate in connection therewith. If Supplier agrees that the shipment of
Drug is nonconforming, or if the Drug is not delivered within the time periods
required, Company may reject the Drugs and return the Drugs to Supplier,
at Supplier’s expense (including handling, insurance and shipping charges),
unless the Products’ defect results from matters that are Company’s
responsibility under Article 7 or constitute Warranty Exclusions. Should
the parties disagree as to whether or not a Drug shipment meets Specifications,
a sample of such shipment will be sent for analysis to an independent
laboratory mutually agreeable to the parties. If the independent laboratory
determines that the Drug shipment meets Specifications, Company will accept the
Drug shipment, pay Supplier pursuant to the payment terms herein, and shall pay
the cost of testing by the independent laboratory. If the independent
laboratory determines the Drug shipment to be out of Specification, Supplier
will replace the nonconforming Drug shipment at its cost as soon as practicable
and shall pay the cost of testing by the independent laboratory.  Following acceptance of a Drug shipment by
Company, the sole remedies of Company with respect to damage to or defects in
the Drugs shall be those set forth in Sections 5.1 and 7.1.


 


9





















 


Company shall not be obligated to conduct any tests or inspections of
the Drugs prior to or after its acceptance. Supplier shall promptly notify
Company in writing if it has reason to believe that any delivery of the Drug
fails to meet the Specifications, fails to satisfy the representations and
warranties made under this Article 5, or is otherwise not free from
defects in material and workmanship.


 


ARTICLE 6.


 


CERTAIN
REPRESENTATIONS AND WARRANTIES


 


6.1.                                                     Representations
and Warranties.


 


(a)                   Supplier
represents and warrants to Company that the execution and delivery by Supplier
of this Agreement and the performance by Supplier of its obligations hereunder
have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Articles of Incorporation or Bylaws of Supplier, as amended, or
any provision of any indenture, agreement or other instrument to which Supplier
or any of its properties or assets is bound, or conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument, or result in the
creation or imposition of any lien, charge, restriction, claim or encumbrance
of any nature whatsoever upon any of the properties or assets of Supplier. This
Agreement has been duly executed and delivered by Supplier and constitutes the
legal, valid and binding obligation of Supplier, enforceable in accordance with
its terms, subject, as to the enforcement of remedies, to the discretion of the
courts in awarding equitable relief and to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting the rights of
creditors generally.


 


(b)                  Company
represents and warrants to Supplier that the execution and delivery by Company
of this Agreement and the performance by Company of its obligations hereunder
have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Articles of Incorporation or Bylaws of Company, as amended, or
any provision of any indenture, agreement or other instrument to which Company
or any of its properties or assets is bound, or conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument, or result in the
creation or imposition of any lien, charge, restriction, claim or encumbrance
of any nature whatsoever upon any of the properties or assets of Company. This
Agreement has been duly executed and delivered by Company and constitutes the
legal, valid and binding obligation of Company, enforceable in accordance with
its terms, subject, as to the enforcement of remedies, to the discretion of the
courts in awarding equitable relief and to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting the rights of
creditors generally.


 


10





















 


ARTICLE 7.


 


INDEMNIFICATION


7.1.                                                     Supplier’s
Liability.


 


(a)                   Supplier shall
indemnify, defend and hold harmless Company and its subsidiaries, and their
respective officers, directors, employees, shareholders and distributors from
and against and in respect of any and all demands, claims, actions or causes of
action, assessments, losses, damages, liabilities, interest and penalties,
costs and expenses (including, without limitation, reasonable legal fees and
disbursements incurred in connection therewith and in seeking indemnification
therefor, and any amounts or expenses required to be paid or incurred in
connection with any action, suit, proceeding, claim, appeal, demand, assessment
or judgment) finally awarded (“Indemnifiable Losses”), resulting from, arising
out of, or imposed upon or incurred by any person to be indemnified hereunder
by reason of:  (i) any breach of representation, warranty or
agreement on the part of Supplier under this Agreement (collectively, “Supplier
Breach”); (ii) Product Liability Damages with respect to the Drugs arising
from or related to a Supplier Breach; (iii) any charges of patent or other
intellectual property infringement due to the manufacture of the Drugs, the sale
of the Drugs for use in the Field (as defined in the License and Development
Agreement) or the formulation of the Drug, except to the extent such
formulation is required specifically for the Company Specifications, and such
infringement would have been avoided by compliance with Supplier Specifications
(which indemnity shall be in addition to, and not in lieu of, Supplier’s
indemnity made in the License and Development Agreement), or (iv) other
negligence or intentional misconduct of Supplier; provided that in no event
shall Supplier be liable for matters for which Company is responsible under Section 7.2
below or for punitive or exemplary damages.


 


(b)                  During the term
of this Agreement, Supplier shall maintain, at its expense, a policy of
comprehensive general liability insurance sufficient to honor the indemnity
made herein, with products liability endorsement, but in no event less than
Seven Million Five Hundred Thousand U.S. Dollars ($7,500,000) in the aggregate
with a maximum deductible per occurrence of not more than One Million U.S.
Dollars ($1,000,000) per occurrence and in the annual aggregate. Said policy
shall name Company and its Affiliates as additional beneficiaries. Supplier
shall furnish Company with a certificate of insurance evidencing such coverage
within thirty (30) days of the execution of this Agreement, which certificate
shall provide for not less than thirty (30) days notice to Company prior to
material change in coverage or policy cancellation.


 


7.2.                                                     Company’s
Liability. Company shall indemnify, defend and hold harmless Supplier and
its subsidiaries and their respective officers, directors, employees,
shareholders and suppliers from and against and in respect of any and all
Indemnifiable Losses resulting from, arising out of, or imposed upon or
incurred by any person to be indemnified hereunder by reason of: (a) any
breach of representation, warranty or agreement on the part of Company
under this Agreement; (b) Product Liability Damages with respect to the
Products other than those arising from or related to a Supplier Breach;  (c) any
charges of patent or other intellectual property infringement that does not
relate to a claim described in


 


11





















 


Section 7.1(a)(iii) and
involves the marketing, distribution and sale of the Product by Company; or (d) 
negligent handling by Company of the Drugs or changes, additions or
modifications to the Drugs by Company (other than changes, additions or
modifications made to the Products by Company in connection with or related to
the incorporation of the Drugs into or onto, or the utilization of the Drugs in
connection with, a medical device, such as a balloon, catheter or stent), or (e) other
negligent or intentional misconduct of Company; provided that in no event shall
Company be liable for matters for which Supplier is responsible under Section 7.1
above or under the License and Development Agreement, or for punitive or
exemplary damages.


 


7.3.                                                     Procedure.
If a claim by a third party is made and a party (the “Indemnitee”) intends to
claim indemnification under this Article 7, the Indemnitee shall
promptly notify the other party (the “Indemnitor”) in writing of any claim in
respect of which the Indemnitee or any of its subsidiaries, directors,
officers, employees, shareholders, suppliers or distributors intends to claim
such indemnification. If the Indemnitor accepts liability for indemnifying
Indemnitee hereunder, Indemnitor shall have sole control of the defense and/or
settlement thereof; provided that the Indemnitee may participate in any
such proceeding with counsel of its choice at its own expense. The indemnity
agreement in this Article 7 shall not apply to amounts paid in
settlement of any Indemnifiable Losses if such settlement is effected without
the consent of the Indemnitor, which consent shall not be withheld unreasonably.
The failure to deliver written notice to the Indemnitor within a reasonable
time after the commencement of any such action, if adversely prejudicial to its
ability to defend such action, shall relieve such Indemnitor of any liability
to the Indemnitee under this Article 7 but the omission to so
deliver written notice to the Indemnitor shall not relieve the Indemnitor of
any liability that it may otherwise have to any Indemnitee other than
under this Article 7. If the Indemnitor fails to provide defense of
the claim, and diligently defend or settle the same after receipt of notice
from Indemnitee of, and a reasonable opportunity to cure, such failure, the
Indemnitee may defend or settle the claim without prejudice to its rights
to indemnification hereunder, provided that the Indemnitee does so diligently
and in good faith and further does not enter into any settlement or agree to
any stipulation that would adversely affect the rights of the Indemnitor or
impose any additional obligation on the Indemnitor without the Indemnitor’s
prior written consent (which consent will not be unreasonably withheld). The
Indemnitee under this Article 7, its employees and agents, shall
cooperate fully with the Indemnitor and its legal representatives and provide
full information in the investigation of any Indemnifiable Losses covered by
this indemnification.


 


ARTICLE 8.


TERM
AND TERMINATION


 


8.1.                                                     Term.
This Agreement shall take effect as of the date hereof and shall continue in
force until the earlier of (a) the date on which this Agreement is
terminated pursuant to Section 8.2, or (b) the date of termination of
the License and Development Agreement (the “Term”). Nothing contained in this
Agreement will be interpreted as


 


12





















 


requiring either party to renew or extend this Agreement beyond the
initial term or any renewal term hereof.


 


8.2.                                                     Termination.
Notwithstanding the provisions of Section 8.1 above, this Agreement
may be terminated in accordance with the following provisions:


 


(a)                   A party may terminate
this Agreement by giving notice in writing to the other party if the other
party is in material breach of any representation, warranty or covenant of this
Agreement and, except as otherwise provided herein, shall have failed to cure
such breach within thirty (30) days after receipt of written notice thereof
from the first party;


 


(b)                  Either party may terminate
this Agreement at any time by giving notice in writing to the other party,
which notice shall be effective upon dispatch, if the other party (i) becomes
insolvent; (ii) commences any action or proceeding under any bankruptcy or
insolvency law for the reorganization, arrangement, composition or similar relief,
(iii) has commenced against it any action or proceeding under any
bankruptcy or insolvency law, or (iv) makes an assignment for the benefit
of creditors, goes into liquidation or receivership or otherwise loses legal
control of its business; or


 


(c)                   Company may terminate
this Agreement upon sixty (60) days prior written notice to Supplier if
Supplier has been in material breach of any of the representations, warranties
or covenants contained herein on three or more occasions within any three
hundred sixty (360) day period. In order to exercise such termination right,
Company must provide Supplier with written notice of such termination within
sixty (60) days after the end of any applicable three hundred sixty (360) day
period.


 


(d)                  Company may terminate
this Agreement upon sixty (60) days prior written notice to Supplier if
Supplier is unable to produce sufficient quantities of Drug to fulfill Company’s
purchase orders on a timely basis.


 


(e)                   Supplier shall
have the right to terminate this Agreement upon sixty (60) days prior written
notice if, following an assignment of Company’s rights under the License and
Development Agreement pursuant to Section 10.13(b)(iv) or (v) thereof,
the permitted assignee terminates its development efforts under the License and
Development Agreement or it fails to meet the Performance Standards contained
in Exhibit C of the License and Development Agreement.


 


8.3.                                                     Rights
and Obligations on Termination. In the event of termination of this
Agreement for any reason, the parties shall have the following rights and
obligations:


 


(a)                   Termination of
this Agreement shall not release either party from the obligation to make
payment of all amounts previously due and payable.


 


(b)                  The terminating
party shall have the right, at its option, to cancel any or all purchase orders
that provide for delivery after the effective date of termination.


 


(c)                   Nothing herein
shall be construed to release either party from any obligation that matured
prior to the effective date of such termination.


 


13





















 


(d)                  The parties will
return and deliver to the other party all of such party’s materials and
documents developed during the performance of this Agreement provided that a
party may retain one copy of such materials and documents for legal
purposes.


 


(e)                   The parties’
obligations pursuant to Articles 5, 6, 7 and 8 and Sections
2.5, 2.6 and 2.7 hereof and any and all other terms and
provisions hereof intended to be observed and performed by the parties after
the termination hereof, shall survive termination of this Agreement. All other
provisions of this Agreement shall terminate upon termination of this
Agreement.


 


ARTICLE 9.


 


FORCE
MAJEURE


 


9.1.                                                     Notice
of Force Majeure. Upon giving notice to the other party, a party affected
by an event of Force Majeure shall be released without any liability on its part from
the performance of its obligations under this Agreement, except for the
obligation to pay any amounts due and owing hereunder, but only to the extent
and only for the period that its performance of such obligations is prevented
by the event of Force Majeure.


 


9.2.                                                     Suspension
of Performance. During the period that the performance by one of the
parties of its obligations under this Agreement has been suspended by reason of
an event of Force Majeure, the other party may likewise suspend the
performance of all or part of its obligations hereunder (except for the
obligation to pay any amounts due and owing hereunder) to the extent that such
suspension is commercially reasonable.


 


ARTICLE 10.


 


MISCELLANEOUS


 


10.1.                                               Nondisclosure.
The parties agree not to disclose or use (except as permitted or required for
performance by the party receiving such Confidential Information of its rights
or duties hereunder or under other agreement between the parties or their
Affiliates) any Confidential Information of the other party obtained during the
term of this Agreement until the expiration of any and all Patents. Each party
further agrees to take appropriate measures to prevent any such prohibited
disclosure of Confidential Information by its present and future employees,
officers, agents, subsidiaries, or consultants during such period.


 


10.2.                                               Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and the successors or assigns of the parties hereto;
provided, that (a) the rights and obligations of Supplier herein may not
be assigned except to any person who succeeds to substantially all of the
assets and business of Supplier to which this Agreement relates, and (b) the
rights and obligations of Company herein may not be assigned except that
Company may assign any or all of its rights, interests and obligations
hereunder without Supplier’s consent (i) to Company’s direct or indirect
parent, (ii) to any 


 


14





















 


subsidiary of
Company at least 50% of the voting power of which is owned, directly or
indirectly, by Company or its Affiliates, (iii) to a wholly-owned, direct
or indirect subsidiary of Company, (iv) to an entity that acquires the
entire equity interest or substantially all of the assets of Company or Company’s
parent, or (v) to any person who acquires the product line to which this
Agreement pertains; provided that any assignee under this clause (b) shall
expressly agree to be bound by all of the provisions of this Agreement,
including Section 4.3, and (c) the Company may collaterally
assign its rights under this Agreement to parties providing financing in
connection with the transactions contemplated hereby. The Supplier may enter
into agreements with third parties to provide for performance by third parties
of any or all of its obligations to manufacture and supply the Drugs; provided
that such agreement is consistent with this Agreement in all material respects.
Notwithstanding the provisions of any such agreement, the Supplier shall remain
obligated and liable to Company for the performance of its obligations and
duties hereunder.


 


10.3.                                               Complete
Agreement. This Agreement and the License and Development Agreement, and
the Schedules and Exhibits hereto and thereto, constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersede all prior agreements whether written or oral relating hereto.


 


10.4.                                               Governing
Law. The formation, legality, validity, enforceability and interpretation
of this Agreement shall be governed by the laws of the State of Oregon, without
giving effect to the principles of conflict of laws.


 


10.5.                                               Waiver,
Discharge, Amendment, Etc. The failure of any party hereto to enforce at
any time any of the provisions of this Agreement shall not, absent an express
written waiver signed by the party making such waiver specifying the provision
being waived, be construed to be a waiver of any such provision, nor in any way
to affect the validity of this Agreement or any part thereof or the right
of the party thereafter to enforce each and every such provision. No waiver of
any breach of this Agreement shall be held to be a waiver of any other or
subsequent breach. Any amendment to this Agreement shall be in writing and
signed by the parties hereto.


 


10.6.                                               Notices.
All notices or other communications to a party required or permitted hereunder
shall be in writing and shall be delivered personally or by facsimile (receipt
confirmed electronically) 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 Company, to:

  	
   

  	
  Cook Group Incorporated

  
	
   

  	
   

  	
  750 Daniels Way

  
	
   

  	
   

  	
  Bloomington, Indiana
  47204

  
	
   

  	
   

  	
  Attn: Pete Yonkman

  
	
   

  	
   

  	
  Facsimile:
  (812)-339-5369

  



 


15

















 


	
  with a copy to:

  	
   

  	
  Ice Miller LLP

  
	
   

  	
   

  	
  One American Square, Suite 3100

  
	
   

  	
   

  	
  Indianapolis, Indiana
  46282

  
	
   

  	
   

  	
  Attn: Stephen J.
  Hackman

  
	
   

  	
   

  	
  Facsimile: (317)
  592-4666

  
	
   

  	
   

  	
   

  
	
  If to Supplier, to:

  	
   

  	
  AVI BioPharma, Inc.

  
	
   

  	
   

  	
  One SW Columbia, Suite 1105

  
	
   

  	
   

  	
  Portland OR 97258

  
	
   

  	
   

  	
  Attn: Alan Timmins

  
	
   

  	
   

  	
  Facsimile: (503)
  227-0554

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Davis Wright Tremaine
  LLP

  
	
   

  	
   

  	
  1300 SW Fifth Avenue, Suite 2300

  
	
   

  	
   

  	
  Portland OR 97201-5682

  
	
   

  	
   

  	
  Attn: Michael Phillips

  
	
   

  	
   

  	
  Facsimile: (503)
  778-5299

  



 


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 facsimile) or on the day shown on the
return receipt (if delivered by mail or delivery service).


 


10.7.                                             Expenses.
Except as expressly provided herein, Supplier and Company shall each pay their
own expenses incident to this Agreement and the preparation for, and
consummation of, the transactions provided for herein.


 


10.8.                                             Titles
and Headings; Construction. The titles and headings to the Articles and
Sections herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of
this Agreement. This Agreement shall be construed without regard to any
presumption or other rule requiring construction hereof against the party
causing this Agreement to be drafted.


 


10.9.                                             Severability.
If any provision of this Agreement is held invalid, illegal or unenforceable,
such provision shall be enforced to the maximum extent permissible and the
remaining provisions shall nonetheless be enforceable according to their terms.


 


10.10.                                         Relationship.
This Agreement does not make either party the employee, agent or legal
representative of the other for any purpose whatsoever. Neither party is
granted any right or authority to assume or to create any obligation or
responsibility, express or implied, on behalf of or in the name of the other
party. In fulfilling its obligations pursuant to this Agreement, each party
shall be acting as an independent contractor.


 


10.11.                                         Benefit.
Nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties hereto or their respective successors or assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.


 


16





















 


10.12.                                         Survival.
All of the representations, warranties, and covenants made in this Agreement,
and all terms and provisions hereof intended to be observed and performed by
the parties after the termination hereof, shall survive such termination and
continue thereafter in full force and effect, subject to applicable statutes of
limitations.


 


10.13.                                         Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed as original and all of which together shall constitute
one instrument.


 


10.14.                                         Execution
of Further Documents. Each party agrees to execute and deliver without
further consideration any further applications, licenses, assignments or other
documents, and to perform such other lawful acts as the other party may reasonably
require to fully secure and/or evidence the rights or interests herein.


 


10.15.                                         Public
Announcement. In the event any party proposes to issue any press release or
public announcement concerning any provisions of this Agreement or the
transactions contemplated hereby, such party shall so advise the other parties
hereto, and the parties shall thereafter use their best efforts to cause a
mutually agreeable release or announcement to be issued. Neither party will
publicly disclose or divulge any provisions of this Agreement nor the
transactions contemplated hereby without the other party’s written consent,
except as may be required by applicable law or stock exchange regulation,
and except for communications to such party’s employees or customers or
investors or prospective investors (subject to appropriate confidentiality
obligations); provided that, prior to disclosure of any provision of this
Agreement that either party considers particularly sensitive or confidential to
any governmental agency or stock exchange, the parties shall cooperate to seek
confidential treatment or other applicable limitations on the public
availability of such information. In particular, prior to such disclosure, each
party shall use its best efforts to redact the payment terms specified herein
and each party shall provide the other the opportunity to redact other
information and seek confidential treatment of any such disclosure.


 


[SIGNATURE PAGE FOLLOWS]


 


17





















 


IN WITNESS WHEREOF, each of the parties has caused
this Supply Agreement to be executed in the manner appropriate to each, as of
the date first above written.


 


	
  COOK GROUP INCORPORATED

  	
  AVI BIOPHARMA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Printed:

  	
   

  	
   

  	
  Printed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
											



 


18

















 


EXHIBIT A


 


Pricing


 


For the first three grams of the Drug purchased by
Company hereunder, the price shall be:  ***
per mg.


 


For all subsequent purchases of the Drug hereunder,
the price shall be:  *** per mg.


 


As a reference point:


 


•                  It is anticipated that the weight of
drug on a stent platform will be approximately *** mg;


 


•                  For the AVAIL clinical trial, the
weight of drug used for catheter delivery was *** mg;


 


•                  For AVI’s ongoing APRAISAL trial in
Germany for systemic delivery, the weight of drug used in the microbubble
formulation is *** mg.


 


19