Exhibit 10.51


 


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.


 


LICENSE
AND DEVELOPMENT AGREEMENT


 


THIS LICENSE AND DEVELOPMENT AGREEMENT (this “Agreement”) is made and
entered into as of March 10, 2006 between AVI BIOPHARMA, INC. (“AVI”),
an Oregon corporation, and COOK GROUP INCORPORATED (“Company”), an Indiana
corporation.


 


RECITALS


 


WHEREAS, AVI has developed technology relating to antisense compounds
which may have applications in the treatment of coronary artery and
peripheral vascular disease;


 


WHEREAS, Company makes and sells medical devices relating to the
treatment of vascular disease;


 


WHEREAS, AVI desires to grant, and Company desires to obtain, the
rights set forth herein;


 


WHEREAS, AVI and Company are entering into a Supply Agreement (the “Supply
Agreement”) and an Investment Agreement (the “Investment Agreement”) both of even
date herewith regarding AVI’s supplying Company’s requirements for the Drug (as
defined below); and


 


WHEREAS, the parties desire that Company attempt to develop products
using the Technology (as defined below) for the treatment of coronary artery
and peripheral vascular disease through certain systemic and non-systemic
applications.


 


AGREEMENT


 


NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements contained herein, and for other valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto 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
activities performed by AVI personnel pursuant to this Agreement, including
direct labor and materials 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.


 


“AVI” has the meaning set forth in the
recitals hereto. 


 


“Company” has the meaning set forth in
the recitals hereto.


 


“Drug” means any phosphorodiamidate
morpholino oligomers, with or without attachments to enhance efficacy, that
inhibit translation of the human protein, c-myc. Included in this definition
are the compounds known as AVI-4126 and AVI-5126. 


 


“Expiration” or “Expired”
means, with respect to a particular patent, the patent’s expiration,
abandonment, cancellation, disclaimer, award to another party other than AVI in
an interference proceeding, or declaration of invalidity or unenforceability by
a court or other authority of competent jurisdiction (including final rejection
in a re-examination or re-issue proceeding).


 


“FDA” means the U.S. Food and Drug
Administration.


 


“Field” means the treatment of coronary
artery and peripheral vascular diseases and conditions by administration of a
drug or drug-containing device that inhibits the production or function of the
human protein, c-myc. Specifically excluded from the Field are treatment of
coronary artery bypass grafts, congestive heart failure, and malignancies. 


 


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


 


“Invention” means any invention,
discovery, know-how, trade secret, data, information, technology, process or
concept, whether or not patented or patentable, and whether or not memorialized
in writing.


 


“Investment Agreement” means the
Investment Agreement of even date herewith by


 


2

















 


and between AVI and Company.


 


“Joint Inventions” is defined in Section 6.3.


 


“Know-How” means all know-how, trade
secrets, expertise, Inventions, discoveries and technical information other
than Patents (as defined below) now or hereafter owned by, licensed to,
possessed by, or under the control of, AVI which are necessary, appropriate or
useful for designing, developing, processing, manufacturing, using, selling or
delivering the Drug within the Field, including but not limited to information
embodied in drawings, designs, copyrights, copyright registrations and applications,
trademarks, service marks and registrations thereof and applications therefor,
material specifications, processing instructions, formulas, equipment
specifications, product specifications, confidential data, computer software,
electronic files, research notebooks, invention disclosures, research and
development reports and the like related thereto, and all amendments,
modifications, upgrades and improvements to any of the foregoing, occurring
before or during the term of this Agreement.


 


“Liens” means liens, mortgages,
charges, security interests, claims, voting trusts, pledges, encumbrances,
options, assessments, restrictions, licenses, sublicenses, or third party or
spousal interests of any nature.


 


“Milestone Event” has the meaning set
forth in Section 3.2.


 


“Milestone Payment” has the meaning
set forth in Section 3.2. 


 


“Net Sales” of Products with respect
to a particular period means the gross amount billed with respect to Products
sold by Company, its Affiliates and sublicensees, less (to the extent included
in the gross amount and to the extent not for promotional purposes):


 


(a)                                  cash
discounts actually given;


 


(b)                                 credits
or allowances actually given or made on account of price adjustments, rebates
(including Medicaid or other government programs, chargebacks, and contractual
agreements), or volume reimbursements;


 


(c)                                  separately
stated (on customer invoice) taxes on sales (such as sales and use taxes); and


 


(d)                                 separately
stated (on customer invoice) delivery charges actually paid to third party carriers
(including transportation and insurance costs); all as determined in accordance
with generally accepted accounting principles; provided, however, that bona
fide sample units and clinical trial units of Products will not be included in
any calculation of Net Sales.


 


“NIH
License” means the exclusive license granted by the NIH Public Health
Service to Lynx Therapeutics, Inc. on September 17, 1996 and assigned
to AVI on May 18, 2001 to patents covering “Inhibition of Cell
Proliferation Using Antisense Oligonucleotides.”


 


“Patents”
means (a) the patents and patent applications, together with any patents
that


 


3

















 


may issue based thereon, set forth on Exhibit A; (b) any
other patents or patent applications now or hereafter owned by or licensed to
AVI that are necessary, appropriate or useful for designing, developing,
processing, manufacturing, using, selling or delivering the Drug within the
Field; including but not limited to, any patents or patent applications
covering any sole or joint Inventions of AVI made or conceived during the Term
of this Agreement and any improvements thereof; (c) all continuation,
divisional, re-issue, re-examination and substitution applications that may be
filed, before or during the term of this Agreement, by or for the benefit of
AVI based on the foregoing referenced patents or patent application, together
with any patents that may issue based thereon; and (d) all foreign
applications that may be filed, before or during the term of this
Agreement, by or for the benefit of AVI based on the foregoing referenced
patents and patent applications, together with all patents which may issue
based thereon.


 


“Performance
Standards” has the meaning set forth in Section 10.13.


 


“ Product”
means the Drug and any product or device sold by Company or its Affiliate that
incorporates or includes the Drug. No more than one (1) payment calculated
in accordance with Section 3.1 shall be paid on any single product
covered by the Patents even though such product, including its manufacture,
sale or use may be covered by Valid Claims of more than one patent
included in the Patents.


 


“Resten-MPTM”
means the product candidate currently in Phase II clinical development by AVI
for prevention of coronary artery restenosis which consists of AVI-4126
formulated in a microbubble formulation for systemic administration to
patients.


 


“Summerton
Agreement” means the Technology Transfer Agreement between AVI and Dr. James
Summerton (on behalf of Anti-Gene Development Group, an Oregon limited
partnership) dated February 9, 1992, as amended.


 


“Supply
Agreement” means the Supply Agreement of even date herewith by and between
AVI and Company.


 


“Technology”
means the Patents and the Know-How.


 


“Term”
has the meaning set forth in Section 9.1. 


 


“Unexpired”
shall mean a patent that has not Expired.


 


“Valid
Claim” means a claim in an Unexpired patent included with the Patents which
has not been held unenforceable, unpatentable or invalid by a decision of a
court or other governmental agency of competent jurisdiction, unappealable or
unappealed within the time allowed for appeal and which has not been admitted to
be invalid or unenforceable through reissue or disclaimer.


 


“UNeMed
License” means the license obtained by AVI from UNeMed Corporation pursuant
to an agreement dated June 1, 1998 to microbubble technology for use in
the delivery of therapeutic compounds. 


 


4

















 


1.2.                              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)                                 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.


 


(e)                                  The
terms “including” and “includes” and words of similar import mean including,
but not limited to.


 


ARTICLE 2.



LICENSE TO COMPANY


 


2.1.                              Grant
of License.  In consideration for the
payments set forth in the Investment Agreement and this Agreement and subject
to the terms and conditions of this Agreement, AVI hereby grants to Company a
worldwide, sublicensable, exclusive license to the Technology to use, import,
export, sell, and offer to sell the Drug in the Field and to make, have made,
use, import, sell and offer to sell Products incorporating or utilizing the
Drug and/or the Technology in the Field, practice methods covered thereby, and
otherwise to commercialize and exploit, the Drug and/or the Technology in the
Field. For clarity, AVI grants the foregoing exclusive license to the fullest
extent of AVI’s rights in the Technology within the Field, retaining only
rights in the Technology outside the Field.


 


2.2.                              Technology
Transfer.  AVI shall, upon Company’s
reasonable request from time to time, provide to Company at AVI’s Actual Cost
available drawings, specifications, processes, materials, and any manufacturing
procedures and such other documentation and Know-How as is reasonably necessary
or useful to enable Company to fully utilize the license granted to Company
under this Agreement. In addition, AVI will make available personnel as
requested by Company, to provide such individual training to Company technical
and manufacturing personnel as is necessary to enable Company to fully utilize
the license granted to Company under this Agreement, at such reasonable times
and places as Company may request from time to time, including, without
limitation, to complete any development of the Technology in the Field, and to
assist in the transfer of any manufacturing and regulatory submissions
(including raw and compiled clinical data), certificates or other documents or
approvals.


 


5

















 


ARTICLE 3.



FEES, ROYALTIES AND REPORTS


 


3.1.                              Royalty
Payments.


 


(a)                                  Subject
to the terms of this Agreement, Company shall pay to AVI a royalty equal to ***
of (i) Net Sales of Products by Company, Affiliates, and sublicensees; and
(ii) any other payments or consideration paid to Company by sublicensees
who are not Affiliates of the Company in consideration of the grant of such
sublicense, including but not limited to upfront payments, stock payments, and
milestone payments.


 


3.2.                              Milestone
Payment.  Company shall pay AVI a
one-time milestone payment of *** (the “Milestone Payment”) within
thirty (30) days after the date upon which Company’s cumulative Net Sales of
Products reaches *** (the “Milestone Event”).


 


3.3.                              Third
Party Patent Rights.  Notwithstanding
any other provision of this Agreement to the contrary, Company shall not be
liable for any royalties, payments or other amount due or to become due to
third parties under any license or other agreement with respect to the Drug or
the Technology that is in effect as of the date of this Agreement (including
any such royalties, payments or other amounts payable under the NIH License,
the Summerton Agreement or the UNeMed License), all of which royalties,
payments and other amounts shall be borne by AVI. After the date hereof, if the
parties agree that AVI needs to obtain rights to a third party patent that it
does not have rights to on the date hereof to commercialize the Drug within the
Field, then the parties shall agree on the allocation between the parties of
the cost of obtaining such rights (including any royalties that may be
payable).


 


3.4.                              Reports
and Payments.  Within thirty (30)
days after the end of each calendar quarter, Company shall provide AVI with a
written report indicating the amount of Net Sales of Products during such
preceding period and the amount of the royalties due for such period. Simultaneous
with making such report, Company shall pay to AVI the amount of royalties then
due. With respect to sales of Products outside the United States on which any
earned royalties are payable hereunder, conversions to U.S. dollars, shall be
made by based on interbank (official) rates as reported on www.oanda.com as of
the first Business Day of the month in which the payment is to be made. Notwithstanding
anything to the contrary contained in this Agreement, Company shall be entitled
to withhold, from earned royalties payable hereunder, all taxes thereon
required, by competent governmental authorities, to be withheld.


 


3.5.                              Records. Company agrees to keep accurate written
records sufficient in detail to enable the royalties payable under this
Agreement by Company to be determined and verified for a period of one (1) year after the delivery of any royalty report.


 


3.6.                              Audit
of Records.  Upon reasonable notice
and during regular business hours, Company shall from time to time, but no more
frequently than once annually, make available the records referred to in Section 3.5
for audit at AVI’s expense by independent representatives selected by AVI and
reasonably acceptable to Company to verify the accuracy of the reports provided
to AVI. Such representatives shall execute a suitable confidentiality agreement


 


6

















 


reasonably
acceptable to Company prior to conducting such audit. Such representatives may disclose
to AVI only their conclusions regarding the accuracy of royalty payments and of
records related thereto, and shall not disclose Company’s information to AVI
without the prior written consent of Company. No claim may be asserted by
AVI against Company for any errors unless made within thirty (30) days following completion of
such examination or audit made pursuant to this Section 3.6. The
right to audit shall extend through one (1) year following the delivery of
the last royalty report of a calendar year and thereafter any royalty report
shall be deemed complete and accurate. Each royalty report shall be subject to
only one such examination and audit. The party benefiting from any discrepancy
will promptly pay the amount of such discrepancy to the other.


 


ARTICLE 4.



DEVELOPMENT PROJECT


 


4.1.                              Development
Efforts.


 


(a)                                  During
the Term of this Agreement, Company will control any regulatory and clinical
programs for the Drug in the Field as Company deems appropriate (including the
clinical trials set forth in the Article 4) and obtain in Company’s
name any necessary device or medical regulatory approvals from the FDA, and any
applicable regulatory agencies of such other countries as Company deems
appropriate, prerequisite to the commercial sale of products for their intended
uses. AVI will supply Company with all available documents, instruments,
information and reports reasonably necessary or convenient as requested by
Company in connection with such regulatory approval efforts and in connection
with pre-clinical efforts. During the Term of this Agreement, AVI will assist
and cooperate with the development of the Drug in the Field, including, without
limitation, supplying the Drug to Company and advising and participating in
product scientific research and development proceedings and all governmental
actions, including filings, proceedings and meetings, as requested by Company.
AVI will also assist and cooperate with Company in Company’s development of
coating technology and processes necessary or convenient for the use of the
Drug in the Field. In connection with the foregoing and at Company’s reasonable
request, AVI shall make available senior AVI personnel responsible for and
knowledgeable about the Drug and the Technology. AVI grants to Company the
right of reference to AVI’s regulatory files with the FDA or other appropriate
government agencies as necessary or helpful for support of Company’s regulatory
submissions with respect to the Drug in the Field. All regulatory approvals
funded by Company and all related studies, documents, instruments, information
and reports, will be in Company name and owned by Company. Company grants to
AVI the right of reference to Company’s regulatory files relating to the Drug
with the FDA or other appropriate governmental agencies as necessary for
support of AVI’s current or future regulatory submissions outside the Field;
provided that AVI shall not be entitled to utilize such right in connection
with any commercialization efforts involving a medical device company for use
in the Field. AVI shall provide prior written notice to Company of any exercise
of such right of reference specifying the time of such exercise, the type of
filing, the regulatory files to be referenced and such other circumstances as may be
appropriate for Company to determine AVI’s compliance with the exercise of such
right. AVI’s sole remedy for any breach of Company’s obligations under this Section 4.1
shall be as set forth in Section 9.2.


 


7

















 


(b)                                 Payments
to AVI for Development Support.  Except
for the supply of clinical and commercial supplies of Drug, the terms of which
are included in the Supply Agreement, Company will reimburse AVI’s Actual Costs
in providing all services and support provided by AVI pursuant to this
Agreement. Within thirty (30) days of the end of each calendar quarter, AVI
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 AVI for the full
amount due.


 


(c)                                  AVI
shall supply to Company on payment terms specified in the Supply Agreement such
quantities of the Drug as are reasonably required by Company in connection with
pre-clinical and clinical trials and in connection with obtaining regulatory
approvals. AVI represents and warrants to Company that all Drugs supplied to
Company hereunder will have been manufactured, labeled and packaged in
accordance with all applicable laws and regulations, including (as applicable)
FDA GMP requirements and all other manufacturing requirements that are
applicable for the intended uses of Drug that have been communicated to AVI by
Company.


 


4.2.                              Non-Compete.
 AVI shall not directly or indirectly
market or sell, or directly or indirectly encourage or solicit the submission
of, or entertain inquiries, proposals or offers from any person or entity
(other than Company or its Affiliates), or otherwise provide information to or
engage in discussions with any other person or entity, in any way relating to
the sale, licensing, distribution or other disposition of any compound for use
or application in the Field or any Intellectual Property relating to the
compound for use or application in the Field.


 


4.3.                              Resten-MP.
 Company agrees to complete the
multicenter Phase II clinical trial of Resten-MP currently underway in Germany
to assess the safety and efficacy of Resten-MP in preventing coronary artery
restenosis (“German Study”). Company may elect to have AVI complete the
German Study and in such case will pay AVI’s Actual Costs incurred in doing so.
Completion of the German Study is defined as completing 6-month follow-up
assessments, per the study protocol, of at least thirty-five (35) evaluable
patients. Within sixty (60) days of obtaining the final data from the German
Study, Company will inform AVI of its decision whether or not to continue
product development of Resten-MP. In the event that Company decides to continue
development, it will share with AVI its plans for development of the final
commercial formulation of drug and its Phase III clinical strategy for
Resten-MP. If Company decides not to continue development of Resten-MP or a
similar microparticle delivery Product (for example based on AVI-5126)
following completion of the German study, AVI may on thirty (30) days
written notice reacquire all rights specific to microparticle delivery
Products. AVI may also reacquire all rights specific to microparticle delivery
Products, on thirty (30) days written notice if at any time in the further
development program for Resten MP or a similar microparticle delivery
Product: a) Company informs AVI that it has decided to discontinue development
of Resten-MP or a similar microparticle delivery Product; or b) six (6) months
elapse during which no development work on Resten-MP or a similar microparticle delivery
Product is ongoing by Company, in which case the development program will be
deemed to be discontinued. In any such case, upon written notice by AVI to
Company, the definition of Field will be amended to exclude all rights specific
to microparticle delivery of Drugs.


 


4.4.                              Product
Development Committee.  Company
agrees to use commercially reasonable efforts to commercialize the Technology
in the Field. AVI and Company


 


8

















 


acknowledge
that the development process for new technologies is uncertain and that
unforeseen issues may arise. In order to ensure that Company is pursuing
the Technology and to accommodate the uncertainty of product development, the
parties agree to the following:


 


(a)                                  Company
and AVI shall each appoint a representative to a Product Development Committee.
The Product Development Committee will be primarily responsible for monitoring
Company’s efforts to develop and commercialize the Technology in the Field and
for monitoring and promoting cooperation in those efforts between and among the
parties and their representatives. The Product Development Committee shall meet
no less frequently than every other month during the Term at times and places
to be determined by agreement of the members thereof.


 


(b)                                 If
either member of the Product Development Committee is dissatisfied with the
nature or extent of the progress being made with respect to the
commercialization of the Technology, that member may request a meeting of
one or more members of senior management of each party to discuss and attempt
to resolve the issue. The first such meeting of the parties’ representatives
shall take place within thirty (30) days of the request. Each party shall cause
its representatives to negotiate in good faith to attempt to reach a mutually
acceptable resolution of any issue referred to its senior management.


 


ARTICLE 5.



AVI’S OBLIGATIONS


 


5.1.                              Maintain
Licenses in Force.  AVI shall comply
with all of the provisions of, and shall maintain in full force and effect
(including the timely payment of all royalties, payments and other amounts due
thereunder), all license agreements with third parties, including,
specifically, the NIH License and UNeMed License, pursuant to which AVI is
licensee of Intellectual Property included in the Technology. AVI shall
promptly notify Company if any such third party alleges any breach, default, or
event that, with the passage of time or giving of notice could become a
default, by AVI of any such license agreement. Company shall be entitled, but
not obligated, to cure any alleged breach or default by AVI of such license
agreement and set-off the cost of such cure against amounts otherwise owed to
AVI hereunder.


 


5.2.                              Company
Exclusivity.  AVI will not, without
the prior written consent of Company, supply, sell, transfer or otherwise
dispose of the Drug or any products or components utilizing the Drug or the
Technology or any Joint Invention to any third party if AVI should have known
after making reasonable inquiry or has actual knowledge (including the actual
knowledge of any of AVI’s executive officers) that such third party intends or
is likely to use, sell, supply, transfer or otherwise dispose of the Drug or
any such products, components, Technology or any Joint Inventions in the Field.
Prior to any sale, supply, transfer or other disposition to any third party of the
Drug or any products or components utilizing the Drug or any such products,
components, Technology or any Joint Invention, AVI shall obtain the agreement
of such third party that it will not use, sell, supply, transfer or otherwise
dispose of the Drug or any such products, components, Technology or any Joint
Inventions in the Field. AVI shall obtain the agreement of such third party
that Company will be an express third party beneficiary of such agreement. The
restrictions set forth in this Section 5.2 shall not apply to
transfers of the Drug to


 


9

















 


consultants or
agents of AVI who are performing research or consulting services on behalf of
AVI in connection with such transfer.


 


5.3.                              No
Amendments With Adverse Effects to Company.  AVI agrees not to modify, waive or amend any
provision of any agreement in effect as of the date hereof that would adversely
affect Company’s obligations under Article 3 without the prior
written consent of Company, including any modification, waiver or amendment to
any agreement in effect as of the date hereof that could have the effect of
increasing the amount payable to the licensor.


 


ARTICLE 6.



INTELLECTUAL PROPERTY


 


6.1.                              Protect
Know-How.  AVI and Company agree to
maintain the confidentiality of all Confidential Information (as such term is
defined in the Investment Agreement), including but not limited to the status
of any patent applications included in the Patents, to the extent such patent
applications relate solely to the Field. Each party agrees 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) any
Confidential Information of the other party obtained during the term of this
Agreement. Each party further agrees to take appropriate measures to prevent
any such prohibited disclosure by its present and future employees, officers,
agents, subsidiaries, or consultants during the term of this Agreement and
shall be liable for any breach of this Article 6 by and such
person.


 


6.2.                              Protection
of Technology.  During the term of
this Agreement, each party shall promptly inform the other of any
Invention, improvement, amendment, upgrading or modification relating to the
Drug or the Technology which may be applicable or useful in the Field. AVI
agrees to protect the Technology by obtaining and maintaining appropriate
patent rights as recommended by reputable patent counsel; provided, however,
that Company shall have the right to review and approve any filings or other
correspondence with the appropriate patenting authority relating to the
Technology or the Drug in the Field. Company shall not unreasonably withhold
such approval. If Company determines, in its sole discretion, that any
Technology conceived, reduced to practice or otherwise made, developed or
acquired by one or more employees or agents of AVI is not being adequately
protected by patents, Company may so inform AVI. If Company decides
that AVI’s response has been inadequate, Company may take whatever action
it deems necessary at its expense to protect such Technology. All patents and
copyright registrations shall be applied for in the names of the actual
inventors or authors and shall be assigned to AVI, subject to Company’s rights
and license therein; each party shall execute and deliver such forms of
assignment, power of attorney and other documents which are necessary to give
effect to the provisions hereof.


 


6.3.                              Ownership
of Intellectual Property.  Subject to
the rights and licenses granted to Company by this Agreement, (a) any
Intellectual Property conceived, reduced to practice or otherwise made,
developed or acquired by one or more employees or agents of AVI shall be the
property of AVI, (b) any Intellectual Property conceived, reduced to
practice or otherwise made, developed or acquired by one or more employees or
agents of Company shall be the property of


 


10

















 


Company, and (c) AVI
and Company shall each have an undivided one-half interest in any Intellectual
Property jointly conceived, reduced to practice or otherwise made, developed or
acquired by one or more employees or agents of AVI and one or more employees or
agents of Company (“Joint Inventions”). For purposes of this Section 6.3,
Intellectual Property which is the subject of a patent application shall be
deemed to have been developed jointly by employees or agents of Company and
AVI, and thus be a Joint Invention, if at least one employee or agent of each
of Company and AVI is required to be named as an inventor in such application
in order for such patent to be valid.


 


6.4.                              Prosecution
of Patents on Joint Inventions.  If
either AVI or Company proposes to file an application for any U.S or foreign
patents, copyright registration, or any continuation or modification thereof,
with respect to any Joint Invention, then such party proposing such
registration (“the first party”) shall notify the other party (“the second
party”) in writing and the second party shall have option of joining in such
action. If the second party elects to join in such action, the second party
shall pay one-half of the total expenses incurred by Company and AVI therein
and be entitled to participate in all material steps in such action. If the second
party elects not to join in such action, the first party shall be entitled to
control such action, but such failure to participate shall not affect the
second party’s ownership interest in the Joint Inventions or in any
Intellectual Property rights therein. Whether or not the second party elects to
join in such action, the second party shall, upon the request of the first
party, cooperate with and assist the first party in such action to the extent
required by statute, regulation or government agency, including without
limitation, executing and delivering all documents in connection therewith and
using its reasonable efforts to obtain such executions from all appropriate
employees and agents of the second party at the second party’s cost. Each party
will treat Joint Inventions as Confidential Information.


 


6.5.                              License
Grant to AVI.  Company hereby grants
AVI (for all applications outside the Field) a worldwide, royalty-free,
nonexclusive license, with the right to sublicense, to any Intellectual Property
that is based upon AVI’s Technology and is invented by employees of Company
working on the development of Products pursuant to this Agreement.


 


6.6.                              Prosecution
of Infringement of Technology.


 


(a)                                  Each
of Company and AVI shall promptly notify the other if it knows or has reason to
believe that any of the rights to the Technology in the Field are being
infringed or misappropriated by a third party or that such infringement or
misappropriation is threatened. The parties shall consult with each other as promptly
as reasonably practicable to review actions to be taken in connection with such
alleged infringement or misappropriation. The parties acknowledge that many of
the patents licensed by Company hereunder contain claims that bear on other
therapeutic fields and applications in addition to the Field. Company shall
have the right to institute and control the prosecution of any alleged
infringement or misappropriation of the Technology in the Field, provided
however, that Company shall not enter into any settlement without AVI’s written
consent that could impact AVI’s or AVI’s licensees’ ability to develop or
commercialize products outside the Field.


 


(b)                                 Company
shall be solely responsible for payment of all costs and expenses it incurs in
the prosecution and/or a negotiation of a settlement. Company shall have the
right to


 


11

















 


act in the name of, or on behalf of AVI, and
join AVI as a party plaintiff to any such proceeding if Company believes it is
necessary or advisable to successfully prosecute such infringement or
misappropriation. AVI shall cooperate in connection with the initiation and
prosecution by Company of such suit or action. The proceeds from any judgment,
decision or settlement shall first be used to reimburse Company for all costs
and expenses it incurred relating to prosecution and settlement of any action;
second, be allocated equally between Company and AVI.


 


(c)                                  If
Company fails to initiate the prosecution of any alleged infringement or misappropriation
of the Technology in the Field within six (6) months of receiving written
notice from AVI or providing notice to AVI of any commercially significant
infringement or misappropriation, AVI shall have the right to institute and
control the prosecution of any such alleged infringement or misappropriation. AVI
shall be solely responsible for the payment of all costs and expenses it incurs
in the prosecution and/or a negotiation of a settlement. AVI may request
from Company the right to act in the name of, or on behalf of Company, and to
join Company as a party plaintiff to any such proceeding that AVI believes it
is necessary or advisable to successfully prosecute such infringement or
misappropriation, such request not to be unreasonably withheld or delayed by
Company. If such right is granted to AVI, Company shall cooperate in connection
with the initiation and prosecution by AVI of such suit or action. The proceeds
from any judgment, decision or settlement shall first be used to reimburse AVI
for all costs and expenses it incurred relating to prosecution and settlement
of any action; second, be allocated on an equal basis between Company and AVI.


 


ARTICLE 7.



REPRESENTATIONS AND WARRANTIES


 


7.1.                              Representations
of AVI.  AVI represents, warrants and
covenants to Company that:


 


(a)                                  AVI
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Oregon and has full corporate power to conduct the
business in which it is presently engaged and to enter into and perform its
obligations under this Agreement.


 


(b)                                 AVI
has taken all necessary corporate action under the laws of the state of its
incorporation and its certificate of incorporation and by-laws to authorize the
execution and consummation of this Agreement and, when executed and delivered
by AVI, this Agreement shall constitute the valid and legally binding agreement
of AVI enforceable against AVI in accordance with the terms hereof, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’
rights and to general equity principles.


 


(c)                                  Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein will violate any provision of the certificate
of incorporation or bylaws of AVI or any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any court or
governmental agency or instrumentality, domestic or foreign, or conflict with
or result in any breach of any of the terms of or constitute a default under or
result in termination of or the creation or imposition of any Lien pursuant to
the terms


 


12

















 


of any contract or agreement to which AVI is
a party or by which AVI or any of its assets is bound.


 


(d)                                 AVI
exclusively owns, or has valid and subsisting exclusive license rights (with
the right to sublicense) to, all of the Technology within the Field, subject to
no Lien whatsoever. Other than payment obligations under the NIH License, the
UNeMed License, and the Summerton Agreement, AVI is not subject to any
obligation to any person or entity for royalties, fees or commissions in
respect of the Technology within the Field. No current or former stockholder,
employee, officer, agent or consultant of AVI has any rights in or to any of
the Technology for use within the Field. The Technology is valid and
enforceable and has not been challenged in any judicial or administrative
proceeding and AVI has not received and is not aware of any claim or notice of
any person that such person is contemplating such action. AVI’s execution and
performance of this Agreement, the transactions contemplated herein and Company’s
use of the Technology within the Field will not infringe, misappropriate,
misuse or conflict with the rights, including patent and other Intellectual
Property or contractual rights, of third parties. AVI has the right and
authority to enter into this Agreement and to grant the license granted herein.
To AVI’s knowledge, no person or entity nor such person’s or entity’s business
or products has infringed, misused, misappropriated or conflicted with the
Technology within the Field or currently is infringing, misusing,
misappropriating or conflicting with such Technology within the Field.


 


(e)                                  There
are no actions, suits, claims, disputes or proceedings or governmental
investigations pending or, to AVI’s knowledge, threatened against AVI or any of
its Affiliates with respect to the Technology or the use thereof by AVI, either
at law or in equity, before any court or administrative agency or before any
governmental department, commission, board, bureau, agency or instrumentality,
or before any arbitration board or panel whether located in the United States
or a foreign country. AVI has not failed to comply with any law, rule,
regulation, writ, judgment, injunction, decree, determination, award or other
order of any court or other governmental department, commission, board, bureau,
agency or instrumentality, or before any arbitration board or panel whether
located in the United States or a foreign country, which failure in any case
would in any material respect impair any rights of Company under this
Agreement.


 


(f)                                    All
Patents identified in Exhibit A have the status indicated therein and all
applications are still pending in good standing and have not been withdrawn or
abandoned. The Patents identified in Exhibit A constitute all of the
current patents and patent applications of AVI having applicability to the
Technology or the Drug within the Field. AVI has made all statutorily required
filings, if any, to record its interest in the Patents.


 


(g)                                 No
representation or warranty made by AVI herein and no information disclosed by
AVI to Company contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statement made herein or therein
not misleading.


 


(h)                                 The
NIH License and the UNeMed License are in full force and effect and there are
no existing defaults, or events, which, with the passage of time or giving of
notice, would become defaults thereunder. AVI is the sole and exclusive owner
of the licensee’s interest in the NIH License and the UNeMed License, free and
clear of any Liens. The execution and delivery by AVI of this Agreement and its
performance hereunder will not constitute a default (or an


 


13

















 


event which, with the passage of time or
giving of notice, would constitute a default) under the NIH License or the
UNeMed License. AVI has not received notice, nor is AVI otherwise aware, that
the licensor under the NIH License or the UNeMed License intends to cancel or
terminate the corresponding license or provide notice of a default (or an event
which, with the passage of time or giving of notice, would constitute a
default) thereunder. None of the terms of the NIH License or the UNeMed License
has been impaired, waived, altered, amended or modified in any respect) prior
to the date hereof. AVI has previously delivered to Company true and correct
copies of the NIH License and the UNeMed License.


 


(i)                                     AVI
has made no public disclosure of any non-patented Technology in the Field and
shall make no public disclosure of any such Technology in the Field or any such
Technology in the Field which may come into existence during the term of
this Agreement, except to the extent required by law or to obtain patent
protection therefore. AVI has otherwise taken reasonable steps to protect its
rights in the Technology.


 


(j)                                     As
of the date hereof, the protein referred to in the definition of “Drug” set
forth in Section 1.1 constitutes ***.


 


7.2.                              Representations
of Company.  Company represents,
warrants and covenants to AVI that:


 


(a)                                  Company
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Indiana and has full corporate power to conduct the
business in which it is presently engaged and to enter into and perform its
obligations under this Agreement.


 


(b)                                 Company
has taken all necessary corporate action under the laws of the state of its
incorporation and its Articles of Incorporation and bylaws to authorize the
execution and consummation of this Agreement and, when executed and delivered
by Company, this Agreement shall constitute the valid and legally binding
agreement of Company enforceable against Company in accordance with the terms
hereof, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles.


 


(c)                                  Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein will violate any provision of the Articles of
Incorporation and bylaws of Company or any law, rule, regulation, writ,
judgment, injunction, decree, determination, award or other order of any court
or governmental agency or instrumentality, domestic or foreign, or conflict
with or result in any breach of any of the terms of or constitute a default
under or result in termination of or the creation or imposition of any Lien
pursuant to the terms of any contract or agreement to which Company is a party
or by which Company or any of its assets is bound.


 


ARTICLE 8.



INDEMNIFICATION


 


8.1.                              Indemnification
by AVI.  AVI shall indemnify, defend
and hold harmless Company and each of its subsidiaries, officers, directors,
shareholder, employees, agents and


 


14

















 


affiliates
(collectively, all such indemnities are referred to in this Section as “Company”)
against and in respect of any and all claims, demands, losses, obligations,
liabilities, damages (and including without limitation, compensatory and
punitive damages), deficiencies, actions, settlements, judgments, costs and
expenses which Company may incur or suffer or with which it may be
faced (including reasonable costs and legal fees incident thereto or in seeking
indemnification therefor), (referred to as “Costs”) arising out of or based
upon the breach by AVI of any of its representations, warranties, covenants or
agreements contained or incorporated in this Agreement or any agreement,
certificate or document executed and delivered to Company by AVI in connection
with the transactions hereunder. An amount for which Company is entitled to
indemnification pursuant hereto is referred to as an “Indemnified Amount.” 
During the term of this Agreement, AVI 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). Such policy shall name Company and its Affiliates as
additional insureds. AVI 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.


 


8.2.                              Indemnification
by Company.  Company shall indemnify,
defend and hold harmless AVI and each of its subsidiaries, officers, directors,
shareholder, employees, agents and affiliates (collectively, all such
indemnities are referred to in this Section as “AVI”) against and in
respect of any and all claims, demands, losses, obligations, liabilities,
damages (and including without limitation, compensatory and punitive damages),
deficiencies, actions, settlements, judgments, costs and expenses which AVI may incur
or suffer or with which it may be faced (including reasonable costs and
legal fees incident thereto or in seeking indemnification therefor), (referred
to as “Costs”) arising out of or based upon the breach by Company of any of its
representations, warranties, covenants or agreements contained or incorporated
in this Agreement or any agreement, certificate or document executed and
delivered to AVI by Company in connection with the transactions hereunder. An
amount for which AVI is entitled to indemnification pursuant hereto is referred
to as an “Indemnified Amount.”  During the term of this Agreement, Company
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)). Such
policy shall name AVI and its Affiliates as additional insureds. Company shall
furnish AVI with a certificate of insurance (or a self-insurance letter (if
Company is self-insured)) 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.


 


8.3.                              Third
Party Claims.  If a claim by a third
party is made against any indemnified party, and if the indemnified party
intends to seek indemnity with respect thereto under this Article 8,
such indemnified party shall promptly notify the indemnifying party of such
claim; provided, however, that failure to give timely notice shall not affect
the rights of the indemnified party so long as the failure to give timely
notice does not adversely affect the indemnifying party’s ability to defend such
claim against a third party. The indemnifying party shall be entitled


 


15

















 


to settle or
assume the defense of such claim, including the employment of counsel
reasonably satisfactory to the indemnified party. If the indemnifying party
elects to settle or defend such claim, the indemnifying party shall notify the
indemnified party within thirty (30) days (but in no event less than twenty
(20) days before any pleading, filing or response on behalf of the indemnified
party is due) of the indemnifying party’s intent to do so. If the indemnifying
party elects not to settle or defend such claim or fails to notify the
indemnified party of the election within thirty (30) days (or such shorter
period provided above) after receipt of the indemnified party’s notice of a
claim of indemnity hereunder, the indemnified party shall have the right to
contest, settle or compromise the claim without prejudice to any rights to
indemnification hereunder. Regardless of which party is controlling the
settlement of defense of any claim, (a) both the indemnified party and
indemnifying party shall act in good faith, (b) the indemnifying party
shall not thereby permit to exist any Lien, encumbrance or other adverse charge
upon any asset of any indemnified party or of its subsidiaries, (c) the
indemnifying party shall permit the indemnified party to participate in such
settlement or defense through counsel chosen by the indemnified party, with all
fees, costs and expenses of such counsel borne by the indemnified party, (d) no
entry of judgment or settlement of a claim may be agreed to without the
written consent of the indemnified party, and (e) the indemnifying party
shall promptly reimburse the indemnified party for the full amount of such
claim and the related expenses as incurred by the indemnified party pursuant to
this Article 8. So long as the indemnifying party is reasonably
contesting any such third party claim in good faith and the foregoing clause (b) is
being complied with, the indemnified party shall not pay or settle any such
claim. The controlling party shall upon request deliver, or cause to be
delivered, to the other party copies of all correspondence, pleadings, motions,
briefs, appeals or other written statements relating to or submitted in
connection with the settlement or defense of any such claim, and timely notices
of any hearing or other court proceeding relating to such claim.


 


8.4.                              Set-Off.
 In the event Company is entitled to
indemnification under this Article 8, Company shall be entitled in
its discretion, without limitation of any other rights or remedies of Company,
to set-off all or any part of the Indemnified Amount against any amounts
which are then owed or thereafter become owed by Company to AVI. Company shall
be entitled to set-off an Indemnified Amount when such Costs are threatened,
whether or not yet incurred and whether or not the amount thereof has been
finally determined. If Company defers payment of any amount to AVI past the
scheduled payment date because there exists a pending indemnification claim by
Company pursuant to this Article 8 the amount of which has not then
been finally determined, the excess, if any, of such deferred amount over the
finally determined amount of the indemnification claim shall be promptly paid
upon such final determination, together with simple interest at the rate of
eight percent (8%) per annum on such excess accrued from the originally
scheduled payment date for such deferred amount.


 


ARTICLE 9.



TERM AND TERMINATION


 


9.1.                              Term
of License.  Unless otherwise
terminated under provisions of Section 9.2, Section 10.13 or
extended by mutual agreement of the parties, this Agreement and the license
granted under Section 2.1 shall terminate upon the expiration of
the last to expire Valid Claim (“Term”).


 


16

















 


9.2.                              Termination.


 


(a)                                  If
either party is in material breach of the terms, conditions or agreements of
this Agreement, then the other party may terminate this Agreement, at its
option and without prejudice to any of its other legal and equitable rights and
remedies, by giving the breaching party thirty (30) days notice in writing,
particularly specifying the breach. Such notice of termination shall not be
effective if the breaching party cures the specified breach within such thirty
(30) days period. Each party shall have the
right to suspend payment of any amount due to the other hereunder during the
time that the breach of the other party remains uncured.


 


(b)                                 Company
shall have the right, in its sole discretion, to terminate this Agreement at
any time on ninety (90) days written notice to AVI.


 


(c)                                  AVI
shall have the right to terminate this Agreement upon sixty (60) days prior
written notice if, following an assignment of Company’s rights under this
Agreement pursuant to Section 10.13(b)(iv) or (v), the permitted
assignee terminates its development efforts under this Agreement.


 


9.3.                              Effect
of Termination.


 


(a)                                  In
the event of termination of this Agreement, Company shall be entitled to
complete all work-in-process and sell its remaining inventory of Products,
subject to the payment of royalties pursuant to Section 3.1 on such
Net Sales.


 


Upon
termination of this Agreement, each party will within thirty (30) days return
to the other all tangible Confidential Information of the other party (except
one copy which may be retained by legal counsel solely for evidentiary
purposes in the event of a dispute), and each party will deliver to the other a
copy of any documentation in its possession or control specifically relating to
the Joint Inventions.


 


ARTICLE 10.



MISCELLANEOUS


 


10.1.                        Further
Assurances.  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 request to fully secure and/or
evidence the rights or interests herein.


 


10.2.                        Complete
Agreement.  This Agreement, the
Investment Agreement and the Supply Agreement (including all schedules and
exhibits hereto and thereto for such agreements) constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof
and thereof. There are no restrictions, promises, warranties or undertakings,
other than those set forth or referred to herein or therein, with respect to
the subject matter hereof and thereof. This Agreement supersedes all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof.


 


17

















 


10.3.                        Survival
of Representations, Warranties and Agreements.  The representations, warranties, covenants and
agreements contained in and Articles 7 and 8 of this Agreement
shall survive termination of this Agreement and remain in full force and effect.
No independent investigation of AVI by Company, its counsel, or any of its
agents or employees shall in any way limit or restrict the scope of the
representations and warranties made by AVI in this Agreement.


 


10.4.                        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 AVI and Company.


 


10.5.                        Notices. All notices or other communications to a
party required or permitted hereunder shall be in writing and shall be delivered
personally or by telecopy (receipt confirmed) 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

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Ice Miller LLP

  
	
   

  	
   

  	
  One American Square, Suite 3100

  
	
   

  	
   

  	
  Indianapolis, Indiana 46282

  
	
   

  	
   

  	
  Attention: Stephen J. Hackman

  
	
   

  	
   

  	
  Facsimile: (317) 592-4666

  
	
   

  	
   

  	
   

  
	
  if to AVI to:

  	
   

  	
  AVI BioPharma, Inc.

  
	
   

  	
   

  	
  One SW Columbia Street, Suite 1105

  
	
   

  	
   

  	
  Portland, OR 97225

  
	
   

  	
   

  	
  Attn: 
  Alan Timmins

  
	
   

  	
   

  	
  Facsimile: (503) 227-0751

  
	
   

  	
   

  	
   

  
	
  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 the other party given in the manner herein prescribed. All
notices shall be deemed given on the day when


 


18

















 


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).


 


10.6.                        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 party 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 or privately disclose or divulge any
provisions of this Agreement or the transactions contemplated hereby without
the other parties’ written consent, except as may be required by
applicable law, rule, regulation, order or stock exchange regulation, and
except for communications to employees; 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
royalty rates and 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.


 


10.7.                        Expenses.
 Except as expressly provided herein, AVI
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.                        Governing
Law.  This Agreement shall be
governed by and construed in accordance with the Laws of the State of Indiana
applicable to a contract executed and performed in such State, without giving
effect to the conflicts of laws principles thereof.


 


10.9.                        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.


 


10.10.                  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.


 


10.11.                  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.


 


10.12.                  Force
Majeure.  Neither party shall be in
default because of any failure to perform this Agreement if such failure
arises from causes beyond the control of such party (“the first party”) and
without the fault or negligence of such first party, including without
limitation, acts of God or of the public enemy, acts of the Government in
either its sovereign or contractual capacity, fires, floods, earthquakes,
epidemics, quarantine restrictions, strikes, freight embargoes or unusually
severe weather. In each instance, the failure to perform must be beyond
the reasonable control and without the fault or negligence of the first party. If
it appears that


 


19

















 


performance
under this Agreement may be delayed by an event of Force Majeure, the
first party will immediately notify the other party as soon as practicable in
writing at the address specified in this Agreement. 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 to the
extent that such suspension is commercially reasonable.


 


10.13.                  Assignment. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void, except (a) for assignments and transfers by operation
of Law; (b) that Company may assign any or all of its rights,
interests and obligations hereunder without AVI’s consent (i) to Company’s
direct or indirect parent, (ii) to any 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 (other than an Affiliate of the Company) that
acquires the entire equity interest or substantially all of the assets of
Company or Company’s parent, or (v) to any entity (other than an Affiliate
of the Company) that 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,
(c) that Company may collaterally assign its rights under this
Agreement to parties providing financing in connection with the transactions
contemplated hereby. In the case of any assignment under Subsections 10.13 (b) (iv) or
(v), the acquiring party will also be bound by the performance standards listed
in Exhibit C (“Performance Standards”). Should such acquiring
entity fail to meet any of the Performance Standards, AVI may, on thirty (30)
days written notice, terminate this Agreement. This Agreement is otherwise
binding upon, inures to the benefit of and is enforceable by the parties hereto
and their respective successors and assigns.


 


10.14.                  NIH
License.  Company agrees to be bound
by the provisions of paragraphs 5.01-5.04, 8.01, 10.01, 10.02, 12.05, and
13.07-13.09 of the NIH License (a copy of which is attached hereto as Exhibit B)
as if Company were a party to the NIH License.


 


 


[SIGNATURE PAGE FOLLOWS]


 


20

















 


IN WITNESS WHEREOF, each of the parties has
caused this License and Development Agreement to be executed in the manner
appropriate for each, and to be dated as of the date first above-written.


 


	
  COOK GROUP INCORPORATED

  	
  AVI BIOPHARMA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Printed:

  	
   

  	
   

  	
  Printed:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
														



 


21

















 


EXHIBIT A


 


AVI
BioPharma Intellectual Property


 


Morpholino Backbone Patents


 


1. Attorney Docket No. 50450-8003.US02 (.23) entitled UNCHARGED
POLYNUCLEOTIDE-BINDING POLYMERS - U.S. Patent No. 5142047


 


2. Attorney Docket No. 50450-8003.US04 (.28) entitled UNCHARGED
MORPHOLINO-BASED POLYMERS HAVING PHOSPHOROUS LINKED CHIRAL INTERSUBUNIT
LINKAGES – U.S. Patent No. 5185444


 


3. Attorney Docket No. 50450-8003.US05 (.29) entitled
ALPHA-MORPHOLINO RIBONUCLEOSIDE DERIVATIVES AND POLYMERS THEREOF –  U.S. Patent No. 5235033


 


4. Attorney Docket No. 50450-8009 entitled ALPHA-MORPHOLINO
RIBONUCLEOSIDE DERIVATIVES AND POLYMERS THEREOF – U.S. Patent No. 5378841


 


5. Attorney Docket No. 50450-8015 entitled POLYNUCLEOTIDE REAGENT
CONTAINING CHIRAL SUBUNITS AND METHOD OF USE – CA 2069869, JP 3398378, AU
655164, EP 962463, KR 167574


 


6. Attorney Docket No. 50450-8015 (.43) entitled POLYNUCLEOTIDE
REAGENT CONTAINING CHIRAL SUBUNITS AND METHOD OF USE –EP 0506830


 


Resten-NG Patents


 


7. Attorney Docket No. 50450-8025.US00 entitled ANTISENSE
RESTENOSIS COMPOSITION AND METHOD – U.S. application pending; corresponding CA,
JP, AU, EP, KR applications


 


8-9. Attorney Docket Nos. 50450-8318 and -8318.US00 entitled DELIVERY
OF MICROPARTICLE-CONJUGATED DRUGS FOR INHIBITION OF STENOSIS – U.S.
applications pending; corresponding CA, JP, AU, EP, KR applications


 


10.  Attorney Docket No. 50450.8060
entitled DELIVERY OF THERAPEUTIC COMPOUNDS VIA MICROPARTICLES OR MICROBUBBLES -
U.S. application pending; corresponding PCT application


 


11.  Attorney Docket No. 50450.8067
entitled PEPTIDE CONJUGATED, INOSINE SUBSTITUED ANTISENSE OLIGOMER COMPOUND AND
METHOD – U.S. application pending; corresponding PCT application


 


22

















 


12. Attorney Docket No. 50450.8050 entitled COMPOSITIONS FOR
ENHANCING TRANSPORT OF MOLECULES INTO CELLS – U.S. application pending;
corresponding CA, AU, EP applications


 


Licensed
Intellectual Property


 


13-14. Attorney Docket No. 50450-8302 entitled COMPOSITION AND
METHODS FOR ALTERING THE BIODISTRIBUTION OF BIOLOGICAL AGENTS – U.S. Patent
Nos. 5,849,727, 6,117,858 and 6,537,814; EP Patent No. 938341;
corresponding CA, JP applications (Licensed from UNeMed)


 


15. Attorney Docket No. 50450-8302.US02 (.31) MICROBUBBLE
COMPOSITIONS AND METHODS FOR OLIGONUCLEOTIDE DELIVERY – U.S. application
pending (UNeMed)


 


16. Attorney Docket No. 50450-8310.US00 (.31) entitled TARGETED
SITE SPECIFIC ANTISENSE OLIGODEOXYNUCLEOTIDE DELIVERY METHOD - U.S. Patent No. 6,245,747;
AU Patent No. 743695; EP Patent No. 1094843 (UNeMed)


 


17. Attorney Docket No. 50450-8305.30 entitled ULTRASOUND CONTRAST
AGENT AND METHODS FOR THEIR MANUFACTURE AND USE – U.S. Patent No. 5,567,415
(UNeMed)


 


18. Attorney Docket No. 50450-8305.31 entitled PERFLUOROBUTANE
ULTRASOUND CONTRAST AGENT COMPRISING MICROBUBBLES CONTAINING A FILMOGENIC
PROTEIN AND A CACCHARIDE – U.S. Patent No. 5,695,740 (UNeMed)


 


19. INHIBITION OF CELL PROLIFERATION USING ANTISENSE OLIGONUCLEOTIDES –
U.S. Patent No. 5,756,476 (Licensed from The U.S. Department of
Health and Human Services, National Institutes of Health)


 


23

















 


EXHIBIT B


 


NIH License Agreement


 


24

















 


EXHIBIT C


 


Performance
Standards for Acquiring Entity


 


	
  For Drug-Eluting Stents:

  	
   

  	
  No Later Than

  
	
   

  	
   

  	
   

  
	
  Complete
  Product Design/Preclinical testing

  	
   

  	
  ***

  
	
  Commence
  First in Man Pilot Study

  	
   

  	
  ***

  
	
  Commence
  European Clinical Trial

  	
   

  	
  ***

  
	
  Apply for CE
  Mark Approval

  	
   

  	
  ***

  
	
  Apply for
  IDE in U.S.

  	
   

  	
  ***

  
	
  Complete
  enrollment of first patients approved by FDA in IDE

  	
   

  	
  *** from
  approval of IDE

  
	
  Complete enrollment
  of remaining approved patients in IDE

  	
   

  	
  *** from
  approval by FDA to begin enrolling remaining patients

  
	
  First U.S.
  Commercial Sale

  	
   

  	
  Within ***
  of FDA approval

  



 


	
  For Infusion Catheter:

  	
   

  	
  No Later Than

  
	
   

  	
   

  	
   

  
	
  Complete
  Product Development

  	
   

  	
  ***

  
	
  Complete Preclinical
  Testing

  	
   

  	
  ***

  
	
  Submission
  for U.S. Clinical Trial (Phase III)

  	
   

  	
  ***

  
	
  First U.S.
  Commercial Sale

  	
   

  	
  Within *** of FDA approval

  



 


	
  For Microbubbles:

  	
   

  	
  No Later Than

  
	
   

  	
   

  	
   

  
	
  Complete
  Enrollment of European (Phase II) Clinical Trial

  	
   

  	
  ***

  
	
  Complete
  Preclinical Testing (U.S.)

  	
   

  	
  ***

  
	
  Commence
  U.S. Pilot Study (Phase I)

  	
   

  	
  ***

  
	
  Commence
  U.S. Clinical Trial (Phase II)

  	
   

  	
  *** from the date of completion of FIM
  Pilot Study

  
	
  Commence
  U.S. Clinical Trial (Phase III)

  	
   

  	
  *** from the date of completion of Phase II
  Clinical Trial

  
	
  First U.S.
  Commercial Sale

  	
   

  	
  Within *** of FDA approval

  



 


So long as the Acquiring Entity is using commercially reasonable
efforts to pursue the development of a Product, each of the foregoing
Performance Standards for the relevant category of Product shall be
automatically extended if, during any phase of the development process for that
particular Product, the Acquiring Entity determines, based on clinical or other
data, that it is necessary to suspend work on that phase in the development
process (the “Suspended Phase”)


 


25

















 


and return to or repeat one or more previous phases in the development
process (each, a “Prior Phase”) in order to enhance the likelihood of producing
a commercially-viable Product. In the case of any such determination, the
Acquiring Entity will promptly provide AVI with documentation, including Gantt
charts (or similar project management tools), budgets, spending records
(subject to audit by AVI), and the like, that shows that the necessary
development, as agreed by the Product Development Committee, in each of the
specific product applications is moving forward.


 


The applicable Performance Standard for the Suspended Phase and for
phases following the Suspended Phase for the relevant category of Product shall
be extended by the number of days that the Acquiring Entity works in any Prior
Phase(s) to resolve the issue(s) that resulted in the suspension of work in the
Suspended Phase. Once a Performance Standard for a particular phase of the
development process has been achieved, it shall be deemed achieved for all
purposes of this Agreement.


 


The parties acknowledge the necessity for the Acquiring Entity to meet
all applicable regulatory requirements in the major markets of the world (e.g.
U.S. and Europe). The parties also acknowledge the uncertain regulatory
requirements for a combination device product. If regulatory requirements
create significantly longer timelines than currently anticipated to receive
regulatory approval for Products, the Performance Standards for the relevant
category of Product will be extended by the time required to complete the
additional regulatory requirements, so long as the delay in obtaining
regulatory approval is not the result of the Acquiring Entity failing to adhere
to relevant regulatory guidelines or to use commercially reasonable diligence
in the development of the particular Product.


 


26