Exhibit 10.68


 


[AVI BioPharma, Inc. letterhead]


 


January 29, 2009


 


Eastbourne Capital Management, L.L.C.


1101 Fifth Avenue, Suite 370


San Rafael, CA 94901


Attention:  Eric
Sippel


 


Re: Letter Agreement Regarding Board of Director
Representation


 


Dear
Eric,


 


This
letter will confirm our understanding and agreement regarding the appointment
of a person nominated by you (including any successors to the original person
nominated by  you, the “Nominee”) to be a
member of the Board of Directors of AVI BioPharma, Inc. (the “Company”) in
connection with the closing of the financing transactions contemplated by that
certain Securities Purchase Agreement dated as of  January 29, 2009 (the “Agreement”),


 


Pursuant
to the powers granted to it under the Bylaws and subject to the conditions set
forth below, the Company and the Board of Directors of the Company, at a duly
convened meeting of directors, shall take all actions necessary, including
increasing the size of the Board of Directors, if necessary, to appoint with immediate
effect the Nominee as a director of Company with a term expiring at the next
annual meeting of the shareholders of the Company.  In addition, subject to those same
conditions, at each meeting of shareholders of the Company, the Nominating and
Corporate Governance Committee of the Board of Directors and the Board of
Directors (unless otherwise required by the fiduciary duties of the directors)
shall (i) nominate the Nominee to stand for election as a director of the
Company for a succeeding term in accordance with the Company’s procedures for
nomination of directors as provided for in its Bylaws and the charter of the
Nominating and Corporate Governance Committee, (ii) recommend such
election and solicit proxies in respect thereof and (iii) vote the shares
of common stock represented by all proxies granted by shareholders in
connection with the solicitation of proxies by the Board of Directors in
connection with such meeting in favor of the Nominee’s election, except for
such proxies that specifically indicate a vote to withhold authority with
respect to the Nominee.  The Company
agrees that until the Nominee is appointed to the Board of Directors, the
number of directors on the Board shall be 
less than the maximum number of directors permitted by the Company’s
Bylaws.


 


While serving on the Board of Directors and any committee
thereof, the Nominee shall be entitled to all the rights and privileges of the
other directors and committee members, including, without limitation,
indemnification, compensation in connection with the Nominee’s service as a
director and committee member in accordance with the Company’s policies
applicable to all directors and access to the Company’s outside advisors; provided, however, that the Nominee shall not be entitled to
participate in or observe and upon the good faith request of the Board of
Directors or any such committee shall recuse him or herself from any meeting or
portion thereof at which the Board of Directors or any such committee is
evaluating and/or taking action with respect to (a) the ownership of
shares of common stock and warrants of the Company held by the Nominee or any
entity of which the Nominee is an affiliate or (b) any transaction
proposed by, or with the Nominee or any such affiliate. The Board of Directors
or 


 

















 


any such committee shall be entitled to take such actions
as it shall deem reasonably necessary or appropriate to carry out the
provisions of the preceding sentence.


 


The
foregoing is conditioned on the following: (1) closing of the financing transaction
as contemplated in the Agreement, (2) confirmation of the Nominee’s status
as an independent director, as such term is used under applicable rules and
regulations of the SEC and The Nasdaq Stock Market, and (3) the
Nominee’s agreement to abide by the written policies of the Board of Directors
and the committees thereof (including, without limitation, the Code of Business
Conduct and Ethics), as amended from time to time, and written policies of the
Company applicable to members of the Board of Directors (including, without
limitation, the Insider Trading Policy, as amended from time to time).


 


This
letter agreement will terminate when investment funds managed by you hold less
than 25% of the shares of common stock purchased pursuant to the Agreement,
including shares of common stock, if any, acquired upon exercise of the
warrants issued under the Agreement.


 


	
  Sincerely,

  
	
  AVI BIOPHARMA, INC.

  
	
   

  
	
  /s/ Les Hudson

  	
   

  
	
   

  
	
  Les Hudson, PhD.