Exhibit 10.52


 


INVESTMENT
AGREEMENT


 


THIS INVESTMENT AGREEMENT (this “Agreement”) is made and entered into
effective the 10th day of March, 2006 (the “Effective Date”) by between AVI
BIOPHARMA, INC. (“AVI”), an Oregon corporation, and Cook Group Incorporated
(“Investor”), an Indiana corporation.


 


RECITALS:


 


WHEREAS, AVI desires to issue and sell to Investor, and Investor
desires to purchase on the terms and subject to the conditions set forth in
this Agreement, certain shares of AVI Common Stock, $0.0001 par value (“Common
Stock”);


 


WHEREAS, Investor and AVI are entering into a License and Development
Agreement (the “License and Development Agreement”) and a Supply Agreement (the
“Supply Agreement”) both of even date herewith; and


 


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:


 


AGREEMENT


 


1.      DEFINITIONS


 


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


 


“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 defined in the recitals hereto.


 


“AVI Subsidiaries” means all subsidiaries of AVI, including but
not limited to the subsidiaries identified in the Disclosure Schedule.


 


“Change of Control” with respect to AVI means the occurrence of
any of the following:


 


(i)                                     a
sale of assets representing fifty percent (50%) or more of the net book value
and of the fair market value of AVI’s consolidated assets (in a single
transaction or in a series of related transactions);


 

















 


(ii)                                  a
liquidation or dissolution of AVI;


 


(iii)                               a
merger or consolidation involving AVI or any subsidiary of AVI after the
completion of which:  (i) in the case of a merger (other than a
triangular merger) or a consolidation involving AVI, the shareholders of AVI
immediately prior to the completion of such merger or consolidation
beneficially own (within the meaning of Rule 13d-3 promulgated under the
Exchange Act or comparable successor rules), directly or indirectly,
outstanding voting securities representing less than fifty percent (50%) of the
combined voting power of the surviving entity in such merger or consolidation,
and (ii) in the case of a triangular merger involving AVI or a subsidiary
of AVI, the shareholders of AVI immediately prior to the completion of such
merger beneficially own (within the meaning of Rule 13d-3 promulgated
under the Exchange Act, or comparable successor rules), directly or indirectly,
outstanding voting securities representing less than fifty percent (50%) of the
combined voting power of the surviving entity in such merger and less than
fifty percent (50%) of the combined voting power of the parent of the surviving
entity in such merger;


 


(iv)                              an
acquisition by any person, entity or “group” (within the meaning of Section 13(d) or
14(d) of the Exchange Act or any comparable successor provisions), other
than any employee benefit plan, or related trust, sponsored or maintained by
AVI or an affiliate of AVI and other than in a merger or consolidation of the
type referred to in clause “(c)” of this definition of Change of Control, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act, or comparable successor rules) of outstanding voting
securities of AVI representing more than thirty-three and 1/3 percent (33-1/3%)
of the combined voting power of AVI (in a single transaction or series of
related transactions); or


 


(v)                                 individuals
who, as of the date hereof or replacements therefore who have been initially
nominated by the then current members of the AVI Board of Directors, are
members of the AVI Board of Directors (the “Incumbent Board”), cease for any
reason to constitute at least sixty percent (60%) of the AVI Board of
Directors, provided that if election, or nomination for election by AVI’s
shareholders, of any new member of the AVI Board of Directors is approved by a
vote of at least sixty percent (60%) of the Incumbent Board, such new member of
the Board shall be considered as a member of the Incumbent Board.


 


“Closing” means the later to occur of the payment for Purchased
Shares by Investor and the delivery by AVI to Investor of a stock certificate
for Purchased Shares as provided in Section 2. “Closing Date” shall
be the date on which the stock certificate for Purchased Shares is delivered to
Investor.


 


“Code” means the United States Internal Revenue Code of 1986, as
amended.


 


“Common Stock” means shares of Common Stock of AVI, par value
$0.0001 per share.


 


“Confidential Information” means know-how, trade secrets,
unpublished information, scientific and technical information, inventions,
methods, plans, processes, characteristics, data, business plans and the like
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 or the other Transaction Documents, excluding
information which: (i) was


 


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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 ); (ii) is or becomes part of
the public domain by reason of acts not attributable to the receiving
party;  (iii) 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 (iv) has been independently developed by the receiving party without
breach of this Agreement or use of any Confidential Information of the other
party.


 


“Disclosure Schedule” has the meaning given in Section 3.


 


“Drug” has the meaning defined in the License and Development
Agreement.


 


“Environmental Laws or Regulations” means any one or more of the
following:  the Comprehensive Environmental Response Compensation and Liability
Act (“CERCLA”) as amended by the Superfund Amendments and Reauthorization Act
of 1986 (“SARA”), 42 U.S.C. § 9601 et seq.; the Federal Resource
Conservation and Recovery Act of 1976 (“RCRA”), 42 U.S.C. § 6921 et seq.;
the Clean Water Act, 33 U.S.C. § 1321 et seq.; the Clean Air Act, 42
U.S.C. § 7401 et seq.; any other federal, state, county, municipal, local,
foreign or other statute, law, ordinance or regulation which may relate to
pesticides, agricultural or industrial chemicals, wastes, Hazardous Substances,
or the environment; and all regulations promulgated by a regulatory body
pursuant to any of the foregoing statutes, laws, regulations, or ordinances.


 


“Exchange Act” means the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated thereunder.


 


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


 


“Field” has the meaning defined in the License and Development
Agreement.


 


“Financial Statements” means AVI’s financial statements included
in SEC Documents.


 


“Hazardous Substance” means asbestos, urea formaldehyde,
polychlorinated biphenyls, nuclear fuel or materials, chemical waste,
radioactive materials, explosives, known carcinogens, petroleum products,
pesticides, fertilizers, or other substance which is dangerous, toxic, or
hazardous, or which is a pollutant, contaminant, chemical, material or
substance defined as hazardous or as a pollutant or contaminant in, or the use,
transportation, storage, release or disposal of which is regulated by, any
Environmental Laws or Regulations.


 


“Initial Market Price” means the average (rounded to the nearest
full cent, with the cents rounded up if the third decimal place is 5 or more)
of the volume weighted closing sale prices of a share of Common Stock as
reported on the Nasdaq Stock Market as of the end of the regular trading
session, as reported in The Wall Street Journal, for the twenty (20)
consecutive Nasdaq trading days ending on and including the Nasdaq trading day
immediately preceding the Effective Date of this Agreement.


 


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“Intellectual Property” means letters patent and patent
applications; trademarks, service marks and registrations thereof and
applications therefor; copyrights and copyright registrations and applications;
all discoveries, ideas, technology, know–how, trade secrets, processes,
formulas, drawings and designs, computer programs or software; and all
amendments, modifications, and improvements to any of the foregoing.


 


“Investor” has the meaning defined in the recitals hereto.


 


“Knowledge” or “knowledge” means actual knowledge of a
fact or the knowledge which such person could reasonably be expected to have
based on reasonable inquiry and consistent with such person’s duties and
responsibilities. The knowledge of AVI shall include only the knowledge of AVI’s
directors and/or officers.


 


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


 


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


 


“Material Adverse Effect” means a material adverse effect on (a) the
business, operations, results of operations, assets (including intangible
assets), liabilities, prospects, or condition (financial or otherwise) of AVI
and the AVI Subsidiaries, taken as a whole, or (b) the ability of AVI to
perform its obligations under this Agreement or any of the Transaction
Documents or any other agreement or instrument to be entered into in connection
with this Agreement.


 


“Purchase Election” has the meaning defined in the License and
Development Agreement.


 


“Purchased Shares” means the shares of Common Stock purchased by
Investor pursuant to Section 2.


 


“SEC” means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act or the Exchange
Act.


 


“SEC Documents” means all documents filed by AVI with the SEC
after December 31, 2000.


 


“Securities Act” means the Securities Act of 1933, as amended,
and all rules and regulations promulgated thereunder.


 


“Supply Agreement” has the meaning defined in the recitals
hereto.


 


“Transaction Documents” means the License and Development
Agreement and the Supply Agreement.


 


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(b)                                 Definitional
Provisions.


 


(i)                                     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.


 


(ii)                                  Terms
defined in the singular shall have a comparable meaning when used in the
plural, and vice–versa.


 


(iii)                               Reference
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 a “Section” are, unless otherwise specified, to one of the
Sections of this Agreement.


 


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


 


2.      PURCHASE
OF COMMON STOCK


 


AVI shall sell, issue and deliver to
Investor, and Investor shall purchase from AVI, such number of shares of Common
Stock (rounded to the nearest whole share) which shall equal five million
dollars ($5,000,000) divided by the Initial Market Price (the “Purchased Shares”).
The purchase price for the Purchased Shares shall be payable by wire transfer
of funds to AVI’s account within one (1) day of the Effective Date as
follows:


 


AVI BioPharma, Inc.


4575 SW Research Way, Suite 200


Corvallis, OR 
97333


Account # 153591259962


US Bank


1607 Main Street


Vancouver, WA 
98660-2975


US Bank contact:  Erik Bjorvik (503) 275-5879


Transmit No. 125000105


 


A certificate representing Purchased Shares
shall be issued by AVI in a form acceptable to Investor and its counsel
within one (1) day of receipt by AVI of payment for the Purchased Shares.


 


3.      REPRESENTATIONS
AND WARRANTIES OF AVI


 


Except as set forth in the Disclosure Schedule attached
hereto as Schedule A, AVI hereby makes the following
representations and warranties to the Investor:


 


(a)                                  Authorization;
Enforcement; No Conflicts.  AVI is duly organized and validly
exists under the laws of the State of Oregon and has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated hereby and otherwise to carry out


 


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its
obligations hereunder. The execution and delivery of this Agreement by AVI and
the consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of AVI and no further
consent or action is required by AVI, its Board of Directors or its
stockholders. This Agreement has been (or upon delivery will be) duly executed
by AVI and is, or when delivered in accordance with the terms hereof, will
constitute, the valid and binding obligation of AVI enforceable against AVI in
accordance with its terms, subject to bankruptcy, insolvency, and other similar
laws affecting the rights of creditors generally and subject to the exercise of
judicial discretion in accordance with principles of equity. The execution,
delivery and performance of this Agreement by AVI and the consummation by AVI
of the transactions contemplated hereby do not and will not: (i) conflict
with or violate any provision of AVI’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii) subject
to obtaining the Required Approvals (as defined below), conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing an AVI debt or otherwise) or other understanding to which AVI is a
party or by which any property or asset of AVI is bound or affected, or (iii) result
in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which AVI
is subject (including federal and state securities laws and regulations), or by
which any property or asset of AVI is bound or affected; except in the case of
each of clauses (i), (ii) and (iii), such as could not, individually or in
the aggregate: (x) materially and adversely affect the legality, validity or
enforceability of this Agreement, (y) have or result in a materially
detrimental effect on the results of operations, assets, business or financial
condition of AVI, or (z) adversely impair AVI’s ability to perform fully
on a timely basis its obligations under the Agreement (any of (x), (y) or (z),
a “Material Adverse Effect”).


 


(b)                                 Filings,
Consents and Approvals; Issuance of Securities.  AVI is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by AVI of this Agreement, other than (i) the
filings of a Form 8-K disclosing the transaction contemplated hereby, (ii) the
application(s) to The Nasdaq National Market (the “Principal
Market”) for the listing of the Purchased Shares for trading thereon
in the time and manner required thereby, and (iii) applicable filings
under federal and applicable state blue sky laws (collectively, the “Required Approvals”). “Person” means an individual or corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind. The Purchased Shares are duly
authorized and, when issued and paid for in accordance with this Agreement will
be duly and validly issued, fully paid and nonassessable, and free and clear of
all Liens. The issuance by AVI of the Purchased Shares has not been registered
under the Securities Act and, accordingly, the Purchased Shares may not
be, sold, assigned or transferred without registration unless the Purchased
Shares are subsequently registered or are exempt under applicable exemptions from
registration under the Securities Act.


 


(c)                                  SEC
Reports; Financial Statements.  AVI
has filed all reports required to be filed by it under the Securities Act and
the Securities Exchange Act of 1934, as amended (the “1934


 


6

















 


Act”),
including pursuant to Section 13(a) or 15(d) thereof, for the
two (2) years preceding the date hereof (the foregoing materials being
collectively referred to herein as the “SEC
Reports”) on a timely basis or has received a valid extension of
such time of filing and has filed any such SEC Reports prior to the expiration
of any such extension. As of their respective dates, the SEC Reports complied
in all material respects with the requirements of the Securities Act and the
1934 Act and the rules and regulations of the SEC promulgated thereunder,
and none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The financial
statements of AVI included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and regulations of
the SEC with respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise
specified in such financial statements or the notes thereto, and fairly present
in all material respects the financial position of AVI as of and for the dates
thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.


 


(d)                                 Material
Changes.  Since the date of the
latest audited financial statements included within the SEC Reports, except as
specifically disclosed in the SEC Reports: (i) there has been no event,
occurrence or development that, individually or in the aggregate, has had or
that could reasonably be expected to result in a Material Adverse Effect, (ii) AVI
has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be
reflected in AVI’s financial statements pursuant to GAAP or required to be
disclosed in filings made with the SEC, (iii) AVI has not altered its
method of accounting or the identity of its auditors, (iv) AVI has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or
redeem any shares of its capital stock, and (v) AVI has not issued any
equity securities to any officer, director or Affiliate, except pursuant to
existing AVI stock option and purchase plans.


 


(e)                                  Disclosure.
 All disclosures provided to the Investor
regarding AVI, its business and the transactions contemplated hereby, furnished
by or on behalf of AVI are true and correct and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. None of the statements, documents,
certificates or other items prepared or supplied by AVI with respect to the
transactions contemplated hereby, including, without limitation, reports, data,
analyses and correspondence relating to the Drug, contains an untrue statement
of a material fact or omits a material fact necessary to make the statements
contained therein not misleading. There is no fact which AVI has not disclosed
to Investor and its counsel in writing and of which AVI is aware which could
have a Material Adverse Effect.


 


(f)                                    Nasdaq;
Etc.  AVI is in compliance with all
applicable Nasdaq continued listing requirements for the Nasdaq Stock Market
and is listed in good standing on the Nasdaq Stock Market. There are no
proceedings pending or, to AVI’s knowledge, threatened against AVI


 


7

















 


relating to
the continued listing of AVI’s Common Stock on the Nasdaq National Market and
AVI has not received any notice of, nor to the knowledge of AVI is there any
basis for, the delisting of the Common Stock from the Nasdaq National Market.


 


4.      REPRESENTATIONS
AND WARRANTIES OF INVESTOR


 


(a)                                  Investor
hereby makes the following representations and warranties to AVI:


 


(i)                                     Investor
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Indiana.


 


(ii)                                  Investor
has the requisite corporate (or other entity) power and authority to enter into
and perform this Agreement and to purchase the Common Stock in accordance
with the terms hereof.


 


(iii)                               In
making its investment decision in this offering, Investor and its advisors, if
any, have relied solely on AVI’s public filings as filed with the Securities
and Exchange Commission and on the representations and warranties of AVI in
this Agreement.


 


(iv)                              Investor
is an accredited investor as such term is defined under the Securities Act and
Investor is purchasing the Purchased Shares for its own account as principal,
and not with a view towards distribution of such securities.


 


(v)                                 Investor
understands that the Purchased Shares have not been registered under the
Securities Act or applicable state securities laws. Investor also understands
that the Purchased Shares are being offered and sold pursuant to exemptions
from registration contained in the Securities Act and applicable state
securities laws in part upon Investor’s representations contained in this
Agreement.


 


5.      COVENANTS


 


(a)                                  Best
Efforts.  AVI will use its best
efforts to satisfy in a timely fashion each of the conditions to be satisfied
under Section 6 of this Agreement.


 


(b)                                 Compliance
With Nasdaq Listing Requirements.  AVI
will comply with all applicable Nasdaq continued listing requirements for the
Nasdaq Stock Market and shall remain in good standing on the Nasdaq Stock
Market so long as the Investor holds any of the Purchased Shares.


 


(c)                                  Regulatory
Approvals.


 


(i)                                     Cooperation. AVI and Investor shall each use
commercially reasonable efforts to take, or cause to be taken, all appropriate
action, and do, or cause to be done, all things as may be necessary or
appropriate under any applicable law, and will file and, if appropriate, use
commercially reasonable efforts to have declared effective or approved all
documents and notifications with any governmental or regulatory bodies that
they deem necessary or appropriate for, the issuance of the Purchased Shares
and each party shall give the other information


 


8

















 


reasonably
requested by such other party pertaining to it and its Affiliates to enable
such other party to take such actions. The parties agree to make any such
required filing a reasonable period of time prior to the anticipated date of
the occurrence of any closing hereunder that gives rise to such required filing.
It shall be a condition to the occurrence of any closing hereunder that any
such actions or approvals required under any such law be declared effective or
approved, or that any waiting periods (or extensions thereof) expire or
terminate.


 


(ii)                                  No
Divestiture Required of Investor.  Notwithstanding
the foregoing or anything herein to the contrary, nothing shall require
Investor to make or agree to make, any divestiture of any portion of any
business or assets of Investor or its Affiliates to make arrangements for or to
effect the cessation, sale, or other disposition of particular assets or
categories of assets or businesses of Investor or its Affiliates in order to
obtain any waiver, consent or approval, and neither Investor nor its Affiliate
shall be required to take or commit to take any action that limits its freedom
of action or rights with respect to AVI or the Purchased Shares.


 


(d)                                 Exclusivity.
 AVI agrees that for a period commencing
upon execution of this Agreement until the earlier of the Closing or
termination of this Agreement in accordance with Section 8, AVI will not
directly or indirectly encourage or solicit the submission of, or entertain
inquiries, proposals or offers from any person or entity (other than Investor
or its Affiliates), or otherwise provide information to or engage in
discussions with any other Person, in any way relating to the sale, licensing,
distribution or other disposition of the Drug in the Field, except as may otherwise
be required under applicable fiduciary duties applicable to the AVI Board of
Directors.


 


(e)                                  Registration
of Purchased Shares.  AVI agrees to
file a registration statement for the Purchased Shares under the Securities Act
(the “Registration Statement”) within thirty (30) days of the Closing
Date and to use its best efforts to cause the registration statement to become
effective as soon as practicable thereafter. Once the Registration Statement is
declared effective by the SEC, AVI will cause the Registration Statement to
remain continuously effective until the earlier of (i) the date on which
all of the Purchased Shares have been sold by Investor or (ii) the first
date on which all the Purchased Shares (in the opinion of AVI’s counsel, which
opinion is reasonably acceptable to Investor and its counsel) may be
immediately sold by Investor without registration and without restriction
(including without limitation as to volume by each holder thereof) as to the
number of Purchased Shares to be sold, pursuant to Rule 144(k) under the
Securities Act or any successor rule, or (iii) March       ,
2009. AVI will also use its best efforts to register and qualify the Purchased
Shares under such other securities or blue sky laws of such jurisdictions as
Investor reasonably requests and to cause such registrations and qualifications
to remain effective for the same period of time that the registration with the
SEC remains effective. AVI will bear all expenses, other than underwriting
discounts and commissions and transfer taxes, if any, incurred in connection
with the registration or qualification of the Purchased Shares as provided
herein. AVI shall indemnify and hold harmless Investor and its officers,
directors, shareholders, and “controlling persons” within the meaning of the
Securities Act and the Exchange Act, from and against any loss damage, claim,
expense or liability arising or alleged to arise under the Securities Act or
the Exchange Act or otherwise as a result of any untrue statement or alleged
untrue statement of material fact contained in the Registration Statement or
any document filed with any state securities administrator in connection with
the registration or


 


9

















 


qualification
of the Purchased Shares or any amendment or supplement to the Registration
Statement or any such document or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided however, AVI shall have no
obligation or liability under the foregoing with respect to any claims made
with respect to information contained in the Registration Statement that is
provided by Investor and, further, AVI’s liability hereunder shall be limited
to $5 million.


 


6.      CONDITIONS
TO CLOSING


 


(a)                                  Conditions
to Investor’s Obligations.  The
obligations of Investor to purchase and pay for the Purchased Shares pursuant
to Section 2 at the Closing are subject to the satisfaction or waiver of
the conditions set forth below:


 


(i)                                     Representations
and Warranties to be True and Correct.  The representations and warranties contained
in Section 3 shall be true, complete and correct in all material respects
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date, and the
President and Chief Financial Officer of AVI shall have certified to such
effect to Investor in writing.


 


(ii)                                  Performance.
 AVI shall have performed and complied
with all terms and conditions contained in this Agreement and the Transaction
Documents which are required to be performed or complied with by AVI prior to
or at such Closing Date, and the President and Chief Financial Officer of AVI
shall have certified to Investor in writing to such effect and to the further
effect that all of the conditions set forth in this Section 6 have been
satisfied.


 


(iii)                               Execution
and Delivery of Transaction Documents.  AVI shall have executed and delivered the
Transaction Documents.


 


(iv)                              All
Proceedings to be Satisfactory.  All
corporate and other proceedings to be taken by AVI in connection with the
transactions contemplated hereby and all documents incident thereto shall be
satisfactory in form and substance to Investor and its counsel, and
Investor and its counsel shall have received all such counterpart originals
or certified or other copies of such documents as they reasonably may request.


 


(v)                                 Required
Consents.  AVI shall have obtained the
written consent or approval of each Person whose consent or approval is
required in connection with this Agreement and the Transaction Documents,
including but not limited to expiration or termination of any waiting periods
(and any extension thereof) under all applicable laws and all applicable
consents and approvals, in form and content satisfactory to Investor, from
the National Institute of Health with respect to the assignment of the NIH
License (as defined in the License and Development Agreement) to AVI, the grant
of a sublicense by AVI to Investor with respect thereto and the modification of
the benchmarks set forth in the NIH License in a manner acceptable to Investor.


 


(vi)                              Litigation
Affecting Closing.  No suit, action
or other proceeding shall be pending or threatened by any third party or by or
before any court or governmental agency in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this Agreement
or the Transaction Documents, or the consummation of the transactions


 


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contemplated
hereby or thereby, and no investigation that might result in any such suit,
action or other proceeding shall be pending or threatened.


 


(vii)                           Legislation.
 No statute, rule, regulation, order, or
interpretation shall have been proposed, enacted, entered or deemed applicable
by any domestic or foreign government or governmental or administrative agency
or court which would make the transactions contemplated by this Agreement or
the Transaction Documents illegal.


 


(viii)                        No
Change of Control.  Since the date
hereof, there shall not have been any Change of Control.


 


(ix)                                No
Material Adverse Changes.  Since the
date hereof, no event shall have occurred which may be reasonably expected
to result in a Material Adverse Effect.


 


(x)                                   No
Default.  Since the date hereof, no
default (or event which, with the passage of time and/or the giving of notice,
would constitute a default) of AVI shall have occurred under this Agreement or
the Transaction Documents.


 


(xi)                                Opinion
of AVI’s Counsel.  Investor shall
have received from Davis Wright Tremaine LLP, counsel for AVI, an opinion dated
as of such Closing Date in form and scope satisfactory to Investor and its
counsel, substantially as set for in Exhibit A.


 


(b)                                 Conditions
to AVI’s Obligations.  The
obligations of AVI to issue, sell and deliver certificates representing the
Purchased Shares pursuant to Section 2 are subject to the satisfaction or
waiver, on or before the Closing Date of the conditions set forth below:


 


(i)                                     Execution
of Transaction Documents.  Investor
shall have executed and delivered the Transaction Documents.


 


(ii)                                  Representations
and Warranties to be True and Correct.  The representations and warranties contained
in Section 4 shall be true, complete and correct in all material respects
on and as of the Closing Date.


 


(iii)                               Performance.
 Investor shall have performed and
complied with all terms and conditions contained in this Agreement and the
Transaction Documents which are required to be performed or complied with by
Investor prior to or at such Closing Date.


 


(iv)                              Proceedings
to be Satisfactory.  All corporate
and other proceedings to be taken by Investor in connection with the
transactions contemplated hereby and all documents incident thereto shall be
satisfactory in form and substance to AVI and its counsel, and AVI and its
counsel shall have received all such counterpart originals or certified or
other copies of such documents as they reasonably may request.


 


(v)                                 Required
Consents.  Investor shall have
obtained the written consent or approval of each Person whose consent or
approval is required in connection with this Agreement and the Transaction
Documents.


 


11

















 


(vi)                              Litigation
Affecting Closing.  No suit, action
or other proceeding shall be pending or threatened by any third party or by or
before any court or governmental agency in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this Agreement
or the Transaction Documents, or the consummation of the transactions
contemplated hereby or thereby, and no investigation that might result in any
such suit, action or other proceeding shall be pending or threatened.


 


(vii)                           Legislation.
 No statute, rule, regulation, order, or
interpretation shall have been proposed, enacted, entered or deemed applicable
by any domestic or foreign government or governmental or administrative agency
or court which would make the transactions contemplated by this Agreement or
the Transaction Documents illegal.


 


(viii)                        No
Change of Control.  Since the date
hereof, there shall not have been any Change of Control of Investor.


 


(ix)                                No
Default.  Since the date hereof, no
default (or event which, with the passage of time and/or the giving of notice,
would constitute a default) of Investor shall have occurred under this
Agreement or the Transaction Documents.


 


7.      INDEMNIFICATION


 


(a)                                  Indemnification
of Investor.  AVI shall indemnify,
defend and hold harmless Investor and each of its Affiliates, and their
respective officers, directors and shareholders 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) (“Indemnifiable
Losses”), resulting from, arising out of, or imposed upon or incurred by any
Person to be indemnified hereunder by reason of any breach of any
representation, warranty, covenant or agreement of AVI contained in this
Agreement or any agreement, certificate or document executed and delivered by
AVI pursuant hereto.


 


(b)                                 Indemnification
of AVI.  Investor shall indemnify,
defend and hold harmless AVI and each of its Affiliates, and their respective
officers, directors and shareholders 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 any breach of
any representation, warranty, covenant or agreement of Investor contained in
this Agreement or any agreement, certificate or document executed and delivered
by Investor pursuant hereto.


 


(c)                                Third-Party
Claims.  If a claim by a third party
is made against Investor or AVI as the case may be and such claim does or may constitute
an Indemnifiable Loss (an “Indemnified Party”)and if the other party (the “Indemnifying
Party”) intends to seek indemnity with respect thereto under this Section 7,
the Indemnified Party shall promptly notify 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 materially and adversely affect the Indemnifying Party’s ability to
defend such claim against a third party. The


 


12

















 


Indemnified
Party shall not settle such claim without the consent of the Indemnifying Party.
If the Indemnifying Party acknowledges in writing its indemnity obligations for
Indemnifiable Losses resulting therefrom, the Indemnifying Party shall control
all settlement discussions and litigation proceedings and the Indemnified Party
may participate at its own cost and expense in such discussions or
proceedings so long as such participation does not interfere with the
reasonable judgment of the Indemnifying Party with respect to such discussions
and proceedings.


 


(d)                                 Cooperation
as to Indemnified Liability.  Each
party hereto shall cooperate fully with the other party with respect to access
to books, records, or other documentation within such party’s control, if
deemed reasonably necessary or appropriate by either party in the defense of
any claim which may give rise to indemnification hereunder.


 


(e)                                  Brokerage.
 AVI will indemnify and hold harmless
Investor against and in respect of any claim for brokerage or other commissions
relative to this Agreement or to the transactions contemplated hereby, based in
any way on agreements, arrangements or understandings made or claimed to have
been made by AVI with any third party.


 


(f)                                    Limitation
on Certain Claims.  To the extent any
Indemnified Party wishes to make a claim for indemnification under Section 7
with respect to the breach of an Indemnifying Party’s representations and
warranties deemed made as of the Closing Date, such claim for indemnification
shall be made within one hundred and eighty (180) days after the Closing Date. However,
the foregoing one hundred and eighty (180) day limitation shall not apply to
any claim for indemnification arising out of any third party claim made against
an Indemnified Party.


 


8.      TERMINATION
AND DEFAULT


 


(a)                                  Termination.
 The obligation of the parties hereto to
consummate the remaining transactions contemplated hereby may be
terminated and abandoned at any time at or before the Closing if any of the
following events occurs:


 


(i)                                 by
and at the option of Investor or AVI, if the Closing does not occur within five
(5) days from the date hereof, provided that Investor or AVI, as the case may be,
is not then in material default under this Agreement; or


 


(ii)                              by
and at the option of Investor, if the Investor terminates the License and
Development Agreement pursuant to Section 9.2(b) thereof; or


 


(iii)                           by
and at the option of Investor, if AVI is in default under this Agreement or the
Transaction Documents, and does not cure such default within thirty (30) days
after having received a written notice from Investor regarding such default; or


 


(iv)                          by
and at the option of AVI, if Investor is in default under this Agreement or the
Transaction Documents, and does not cure such default within thirty (30) days
after having received a written notice from AVI regarding such default; or


 


(v)                             by
and at the option of Investor, if any event or circumstance occurs or exists
that renders any condition to Investor’s obligations set forth in Section 6
incapable of being satisfied; or


 


13

















 


(vi)                          by
and at the option of Investor if a Material Adverse Effect with respect to AVI
shall have occurred; or


 


(vii)                       by
the mutual written consent of the parties; or


 


(viii)                    by
and at the option of either Investor or AVI if any governmental authority shall
have issued an order, decree, or ruling or taken any other action restraining,
enjoining or otherwise prohibiting in any material respects the transactions
contemplated hereby and such order, decree, ruling or other action shall have
become final and nonappealable.


 


(b)                                 Effect.
 Termination of this Agreement by a party
shall not relieve the other parties hereto of any liability for breach of
representation, warranty, covenant or agreement by such other parties including
liability for monetary damages and/or specific performance. Investor’s rights
pursuant to the Transaction Documents shall survive any termination of this
Agreement.


 


9.      OTHER
PROVISIONS


 


(a)                                  Further
Assurances.  At such time and from
time to time on and after the Closing Date, upon request by the other party,
Investor and AVI will execute, acknowledge and deliver, or will cause to be
done, executed, acknowledged and delivered, all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney and assurances that may be
required for the better conveying, transferring, assigning, delivering,
assuring and confirming to Investor, or to its respective successors and
assigns, all of the Purchased Shares or to otherwise carry out the purposes of
this Agreement.


 


(b)                                 Complete
Agreement.  This Agreement and the
Transaction Documents (including all schedules and exhibits hereto and thereto)
constitute 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.


 


(c)                                  Survival
of Representations, Warranties and Agreements.  The representations, warranties, covenants and
agreements contained in Sections 3 and 4 of this Agreement shall survive the
Closing and remain in full force and effect. No independent investigation of
AVI by Investor, 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.


 


(d)                                 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. This
Agreement may be amended by AVI and Investor, by mutual action approved by
their respective Boards of Directors or their respective officers authorized by
such Board of


 


14

















 


Directors, at
any time. Any amendment to this Agreement shall be in writing and signed by AVI
and Investor.


 


(e)                                  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
  Investor to:

  	
   

  	
  Cook Group
  Incorporated

  
	
   

  	
   

  	
  750 Daniels Way

  
	
   

  	
   

  	
  Bloomington, Indiana 47402

  
	
   

  	
   

  	
  Attn: Pete Yonkman

  
	
   

  	
   

  	
  Facsimile: (812) 339-5369

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Stephen J. Hackman

  
	
   

  	
   

  	
  Ice Miller LLP

  
	
   

  	
   

  	
  One American Square, Suite 3100

  
	
   

  	
   

  	
  Indianapolis, Indiana 46282

  
	
   

  	
   

  	
  Facsimile: (317) 592-4666

  
	
   

  	
   

  	
   

  
	
  if to AVI to:

  	
   

  	
  AVI BioPharma Inc.

  
	
   

  	
   

  	
  One SW Columbia, Suite 1105

  
	
   

  	
   

  	
  Portland OR 97258

  
	
   

  	
   

  	
  Attn: Alan Timmins

  
	
   

  	
   

  	
  Facsimile: (503) 227-0554

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Michael Phillips

  
	
   

  	
   

  	
  Davis Wright Tremaine LLP

  
	
   

  	
   

  	
  1300 SW Fifth Avenue, Suite 2300

  
	
   

  	
   

  	
  Portland OR 97201-5682

  
	
   

  	
   

  	
  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 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).


 


(f)                                    Public
Announcement.  In the event either
party proposes to issue any press release or public announcement concerning the
existence of the terms and conditions of or the negotiations of the parties
with respect to this Agreement or any of the Transaction Documents, 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; provided that neither party shall issue any such press release or
public announcement if AVI notifies the Investor that it has been advised by
counsel that the issuance of the proposed press release or the making of the proposed
public announcement, under the circumstances existing at the time of the
proposed disclosure, would result in a violation of applicable federal
securities laws or require AVI to disclose material non-public information
involving AVI that, in the good faith judgment of AVI’s


 


15

















 


Board of
Directors, would be inadvisable or would be likely to materially and adversely
affect AVI’s business. If any press release or other public announcement is
delayed under this Section 9(f), AVI shall notify the Investor as soon as
the condition entitling AVI to delay disclosure is resolved and Investor shall
thereafter be entitled to make such press release or public announcement in a form that
is mutually agreeable to the parties.


 


(g)                                 Expenses.
 AVI and Investor shall each pay their
own expenses incident to this Agreement and the preparation for, and
consummation of, the transactions provided for herein.


 


(h)                                 Governing
Law.  This Agreement shall be
governed by and construed in accordance with the Laws of the State of Oregon
applicable to a contract executed and performed in such State, without giving
effect to the conflicts of laws principles thereof.


 


(i)                                     Titles
and Headings; Construction.  The
titles and headings to the 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.


 


(j)                                     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.


 


(k)                                  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.


 


(l)                                     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
Investor may assign any or all of its rights, interests and obligations
hereunder without the AVI’s consent (i) to Investor’s direct or indirect
parent, (ii) to any subsidiary of Investor at least 50% of the voting
power of which is owned, directly or indirectly, by Investor or its Affiliates,
(iii) to a wholly-owned, direct or indirect subsidiary of Investor, (iv) to
an entity that acquires the entire equity interest or substantially all of the
assets of Investor or Investor’s parent, or (v) to any person who acquires
the product line to which this Agreement and the Transaction Documents pertain,
(c) that Investor may collaterally assign its rights under this
Agreement to parties providing financing in connection with the transactions
contemplated hereby. This Agreement is binding upon, inures to the benefit of
and is enforceable by the parties hereto and their respective successors and
assigns. Notwithstanding and in addition to the foregoing, Investor may separately
assign its rights and indemnities under Section 5(d) to any Person
who acquires at least 10,000 Purchased Shares from Investor.


 


(m)                               Jurisdiction;
Venue.  AVI consents to the
jurisdiction of, and venue in, any state or federal court located within Marion
County, Indiana, and waives personal service of any and all process made upon
AVI. AVI waives any objection, which it may have to any proceeding
commenced in a federal or state court located within Marion County, Indiana. Any
judicial


 


16

















 


proceeding by
AVI against Investor involving, directly or indirectly, any matter or claim in
any way arising out of, related to or connected herewith shall be brought only
in the federal or state courts of the State of Indiana, situated in Marion
County, Indiana.


 


(n)                                 Non-Disclosure. 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 or under the
Transaction Documents) any Confidential Information of the other party obtained
during the term of this Agreement until the expiration of three (3) years
after the earlier of the Closing or the termination 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 such term.


 


[SIGNATURE PAGE FOLLOWS]


 


17

















 


IN WITNESS WHEREOF, each of the parties has caused this Investment
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: 

  	
  Alan P. Timmins

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title: 

  	
  President

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
																



 


18

















 


EXHIBITS AND SCHEDULES:


 


Schedule A – Disclosure Schedule


 


19

















 


EXHIBIT A


LEGAL OPINION OF AVI’S COUNSEL


 


(a)                                  AVI
is a corporation duly incorporated and validly existing under the laws of the
state of Oregon. AVI has the corporate power and authority to execute, deliver
and perform this Agreement and the Transaction Documents and to issue,
sell and deliver the Purchased Shares.


 


(b)                                 All
necessary corporate action on the part of AVI and of its officers,
directors and shareholders has been taken for the valid execution and delivery
of this Agreement, the Transaction Documents, and the performance of the
obligations of AVI hereunder and thereunder. This Agreement and the Transaction
Documents have been validly executed and delivered and are legal, valid and
binding obligations of AVI, enforceable against AVI in accordance with their respective
terms, subject in each case to bankruptcy, insolvency, and other similar laws
affecting the rights of creditors generally and subject to the exercise of
judicial discretion in accordance with principles of equity. The execution and
delivery of this Agreement and the Transaction Documents and the performance by
AVI of its obligations hereunder and thereunder do not conflict with or result
in the violation of AVI’s Articles of Incorporation or Bylaws; or order, writ,
judgment or decree known to such counsel to which AVI is a party or by which it
is bound, or to such counsel’s knowledge, violate any existing law or
regulation.


 


(c)                                  The
Purchased Shares have been duly authorized by all necessary corporate action on
the part of AVI and, upon delivery by AVI in accordance with the terms of
this Agreement, will be duly and validly issued, fully paid and nonassessable.


 


(d)                                 All
consents, approvals, orders, authorizations or registrations, qualifications,
designations, declarations or filings of or with any federal or state
governmental authority on the part of AVI required in connection with the
consummation of the transactions contemplated by this Agreement and the
Transaction Documents have been made, obtained or effected (provided, however,
that filings under applicable state securities laws may be made promptly
after the Closing to the extent such filings are permitted to be made after the
sale of the Purchased Shares). Based in part on the representations of
Investor in Section 4 of this Agreement, the offer, sale and issuance by
AVI of the Purchased Shares, all in conformity with the terms of this
Agreement, do not require registration under Section 5 of the Securities
Act of 1933, as amended.


 


20