Exhibit 10.85


 


AVI BIOPHARMA, INC.


 


NON-EMPLOYEE DIRECTOR COMPENSATION POLICY


 


(As adopted September 27, 2010)


 


AVI
BioPharma, Inc. (the “Company”)
believes that the granting of equity and cash compensation to its directors
represents a powerful tool to attract, retain and reward directors who are not
employees of the Company (“Outside Directors”)
and to align the interests of our Outside Directors with those of our
shareholders.  This Non-Employee Director
Compensation Policy (the “Compensation Policy”)
is intended to formalize the Company’s policy regarding grants of equity and
cash compensation to its Outside Directors. 
Unless otherwise defined herein, capitalized terms used in this
Compensation Policy will have the meaning given such term in the Company’s 2002
Equity Incentive Plan or any successor plan(s) thereto (the “Plan”).  Outside
Directors shall be solely responsible for any tax obligations they incur as a
result of the equity and cash payments received under this Plan.


 


1.  Equity Compensation


 


Outside
Directors will be entitled to receive all types of Awards (except Incentive
Options) under the Plan, including discretionary Awards not covered under this
Compensation Policy.  All grants of
Awards to Outside Directors pursuant to Sections 1(c) and 1(d) of
this Compensation Policy will be automatic and nondiscretionary, except as
otherwise provided herein, and will be made in accordance with the following
provisions:


 


(a)           Type of Option; Terms of
Plan.  Options granted pursuant to
this Compensation Policy will be Non-Qualified Options.  Except as otherwise provided herein, Awards
granted pursuant to this Compensation Policy will be subject to the other terms
and conditions of the Plan.


 


(b)           No Discretion.  No person will have any discretion to select
which Outside Directors will be granted Awards under this Compensation Policy
or to determine the number of Shares to be covered by such Awards (except as
provided in Section 1(e) below).


 


(c)           Initial Award.  Each person, upon joining the Company’s Board
of Directors (the “Board”) as an
Outside Director (whether through election by the shareholders of the Company
or by appointment by the Board to fill a vacancy), will be automatically
granted an Option to purchase 60,000 Shares (the “Initial
Award”) on the date on which such person first becomes an Outside
Director; provided, however, that a director who is an employee
(an “Inside Director”) who ceases to be an
Inside Director, but who remains a director, will not receive an Initial
Award.  Notwithstanding the foregoing,
if, on the date a person joins the Board as an Outside Director, the Company is
subject to a blackout period pursuant to the terms of the Company’s Insider
Trading Policy, then the grant of the Initial Award will be delayed until the
expiration of the blackout period.  The
term of the Initial Award will be ten (10) years and the exercise price
will be determined in accordance with the Plan on the date of the grant. The
Shares underlying the Initial Award will vest ratably over four years of continued
service to the Board, with twenty-five percent (25%) of the total amount Shares
underlying the Initial Award vesting each year on 


 

















 


the
earlier of (i) the anniversary date of the grant and (ii) the date of
the annual meeting of the Company’s shareholders in the year following the date
of grant.


 


(d)           Annual Awards.


 


(i)            Annual Option Award.  Each Outside Director who has served on the
Board for at least six months prior to the grant of the Annual Option Award
will be automatically granted an Option to purchase 30,000 Shares (an “Annual Option Award”) on the date of the first meeting of
the Board held after the annual meeting of the Company’s shareholders.  The term of the Annual Option Award will be
ten (10) years and the exercise price will be determined in accordance
with the Plan on the date of the grant. One hundred percent (100%) of the
Shares underlying the Annual Option Award will vest on the earlier of (i) the
anniversary date of the grant and (ii) the date of the annual meeting of
the Company’s shareholders in the year following the date of grant, provided
that the Outside Director continues to serve as a director through such date.


 


(ii)           Annual Stock Grant.  Each Outside Director who has served on the
Board for at least six months prior to the grant of the Annual Stock Grant will
be automatically granted a Restricted Stock Award for 5,000 Shares (an “Annual Stock Grant”) on the date of the first meeting of the
Board held after the annual meeting of the Company’s shareholders.  One hundred percent (100%) of the Shares
underlying the Annual Stock Grant will vest on the earlier of (i) the
anniversary date of the grant and (ii) the date of the annual meeting of
the Company’s shareholders in the year following the date of grant, provided
that the Outside Director continues to serve as a director through such date.


 


(e)           Revisions.  The Board or a committee of the Board in its
discretion may change and otherwise revise the terms of Awards granted under
this Compensation Policy, including, without limitation, the number of Shares
subject thereto, for Awards of the same or different type granted on or after
the date the Board or a committee of the Board determines to make any such
change or revision.


 


(f)            Adjustments.  If the Company shall at any time increase or
decrease the number of its outstanding shares of Stock or change in any way the
rights and privileges of such shares by means of the payment of a stock
dividend or any other distribution upon such shares payable in Stock, or
through a stock split, subdivision, consolidation, combination,
reclassification or recapitalization involving the Stock, then the Board or a
committee of the Board in its discretion, in order to prevent diminution or
enlargement of the benefits or potential benefits intended to be made available
under this Compensation Policy, will adjust the number of Shares issuable
pursuant to Sections 1(c) and 1(d) of this Compensation Policy.


 


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2.  Cash Compensation


 


(a)           Annual Fee.  The Company will pay each Outside Director an
annual fee of $35,000 for serving on the Board (the “Annual Fee”).  The Annual Fee will be paid to each Outside
Director in four equal installments on a quarterly basis at the end of the
applicable quarter provided the individual served as an Outside Director during
the full quarter, with the amount prorated for any Outside Director who did not
serve the full quarter.


 


(b)           Chairperson Annual Fee.  If an Outside Director is serving as the
chairperson of the Board (the “Non-Executive Chairperson”),
then, in addition to the Annual Fee, the Company will pay to the Non-Executive
Chairperson an additional annual fee of $45,000 for serving as chairperson of
the Board (the “Chairperson Fee”).  The Chairperson Fee will be paid to the
Non-Executive Chairperson in four equal installments on a quarterly basis at
the end of the applicable quarter provided the individual served as the
Non-Executive Chairperson during the full quarter, with the amount prorated in
the event the Non-Executive Chairperson did not serve in such capacity for the
full quarter.


 


(c)          Committee Chairperson Fees.  The Company will pay each Outside Director
who serves as chairperson of the Audit Committee, Compensation Committee or
Nominating and Corporate Governance Committee the applicable annual fee for
serving as the chairperson set forth in the table below (the “Annual Chairperson Fee”). 
The Annual Chairperson Fee shall be paid in four equal installments on a
quarterly basis at the end of the applicable quarter provided the individual
served as chairperson of the relevant committee during the full quarter, with
the amount prorated for any chairperson who did not serve as the chairperson of
the relevant committee for the full quarter. 
The Annual Chairperson Fee for each committee shall be:


 


	
  Committee

  	
   

  	
  Annual Chairperson Fee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Audit Committee

  	
   

  	
  $

  	
  16,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Compensation Committee

  	
   

  	
  $

  	
  12,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Nominating and Corporate Governance Committee

  	
   

  	
  $

  	
  5,000

  	
   

  



 


(d)           Committee Member Fees.  The Company will pay each Outside Director
who serves as a member of the Audit Committee, Compensation Committee or
Nominating and Corporate Governance Committee the applicable annual fee for
serving as a member set forth in the table below (the “Annual
Committee Fee”).  The Annual
Committee Fee shall be paid in four equal installments on a quarterly basis at
the end of the applicable quarter provided the individual served as a member of
the relevant committee during the full quarter, with the amount prorated for
any member who did not serve as a member of the relevant committee for the full
quarter.  For the avoidance of doubt, any
Outside Director who serves as chairperson of a committee shall not be entitled
to the Annual Committee Fee for the same committee.  The Annual Committee Fee for each committee
shall be:


 


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  Committee

  	
   

  	
  Annual Committee Fee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Audit Committee

  	
   

  	
  $

  	
  8,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Compensation Committee

  	
   

  	
  $

  	
  6,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Nominating and Corporate Governance Committee

  	
   

  	
  $

  	
  3,000

  	
   

  



 


(e)           Revisions.  The Board or a committee of the Board in its
discretion may change and otherwise revise the terms of the cash compensation
granted under this Compensation Policy, including, without limitation, the
amount of cash compensation to be paid, on or after the date the Board or a
committee of the Board determines to make any such change or revision.


 


(e)           Section 409A.  In no event shall cash compensation payable
pursuant to this Compensation Policy be paid later than March 15 following
the calendar year in which the applicable quarter ends (or if the individual
did not serve as an Outside Director for the full quarter, then March 15
following the calendar year in which the Outside Director’s service terminated
with the Company), in compliance with the “short-term deferral” exception to
Section 409A (“Section 409A”)
of the Internal Revenue Code of 1986, as amended.  The Compensation Policy is intended to comply
with the requirements of Section 409A so that none of the compensation to
be provided hereunder shall be subject to the additional tax imposed under Section 409A,
and any ambiguities herein shall be interpreted to so comply.


 


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