Exhibit 10.73


 


Portions of this document
have been redacted pursuant to a confidential treatment request and filed
separately with the Securities and Exchange Commission.  Redacted portions have been replaced with
“*****”.


 


EMPLOYMENT AGREEMENT


 


THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made on this 15th day of May, 2009, by
and between AVI BioPharma, Inc., an Oregon corporation, with its principal
office at 4575 SW Research Way, Suite 200, Corvallis, Oregon, (“Company”),
and Paul Medeiros, 700 Mixsell Street, Easton, Pennsylvania 18042 (“Employee”).


 


RECITALS:


 


The
Company desires to hire the Employee as Senior Vice President Business
Development and Chief Business Officer and the Employee desires to accept such
position under the terms and conditions stated herein.


 


NOW,
THEREFORE, in consideration of the mutual benefits contained herein, the
sufficiency of which the parties acknowledge, the parties hereby agree as
follows:


 


AGREEMENT:


 


1.                     Employment
Term.


 


The
term of employment (“Term”) shall commence on the
Effective Date and shall continue until the first anniversary of the Effective
Date, unless extended as provided below or terminated in accordance with Section 12 below. This
Agreement establishes an “at will” employment relationship, as such term is defined
and used under Oregon law, between the Company and the Employee. Employee shall
commence employment not later than May 19, 2009 (the “Effective
Date”). Failure to do so shall be grounds for immediate
termination for Cause, as such term is
defined in Section 12 hereof. Notwithstanding
anything to the contrary herein, unless sooner terminated in accordance with
the terms hereof, this Agreement shall annually automatically renew for
additional one-year terms unless one party notifies the other party in
accordance with Section 13 hereof of its intention not
to renew, such notice to be delivered not less than 90 days before the term
ends. For purposes of this Agreement, the non-renewal of the Agreement by the
Company shall constitute a termination of Employee’s employment by the Company
other than for Cause.


 


2.                     Duties.


 


Employee
shall be employed as Senior Vice President Business development and Chief
Business Officer and shall have such duties as are customarily associated with
that position, including overall responsibility for development and execution
of strategies and tactics for transactions, alliances, mergers and acquisitions
that are agreed with the Corporate Executive Team and CEO, and such other
duties as may be assigned to him from time to time by the Company’s Chief
Executive Officer (“CEO”). Employee shall be a direct
report of the CEO. Employee shall devote substantially all of his business time
to the service of the Company throughout the Term. Employee and


 

















 


Company
acknowledge and agree that (i) Employee may hold certain offices within certain
entities as agreed by the CEO and set forth on Exhibit A to this
Agreement, (ii) Employee’s devotion of reasonable amounts of time in such
capacities, so long as it does not interfere with his performance of services
hereunder, shall not conflict with the terms of this Agreement, and (iii) Exhibit
A may be amended from time to time by agreement of the parties rendered in
writing.


 


3.                     Compensation.


 


(a)             Base
Compensation. During the Term the Company shall compensate the Employee at
an initial annual salary of Three Hundred Fifteen Thousand Dollars ($315,000.00),
payable in accordance with the Company’s payroll practices in effect from time
to time, and less amounts required to be withheld under applicable law and
requested to be withheld by the Employee (as increased from time to time, “Base
Compensation”). The Employee’s Base Compensation shall be subject to review for
potential increase (but not decrease) on an annual basis. Except as otherwise
provided in this Agreement, the Base Compensation shall be prorated for any
period of service less than a full month.


 


(b)             Bonus. For
each fiscal year of the Company that ends during the Term, the Employee shall
be eligible for an annual bonus of up to 25% of Employee’s Base Compensation, which
bonus shall be paid in the normal cycle of payment of executive bonuses (which
bonus payment shall occur in the first quarter of the fiscal year following the
fiscal year with respect to which the bonus is earned) and upon achievement and
satisfaction of goals and objectives (“Goals and Objectives”) established upon
mutual agreement of the CEO, Employee and the Compensation Committee of the
Company’s Board. Such goals shall be established concurrently with the goals
and objectives of the Company’s other senior executives. Notwithstanding
anything to the contrary herein, Employee’s bonus for 2009 will be a guaranteed
$50,000 and in order to receive any bonus under this Section 3(b) Employee
must be an employee of the Company at the time of the bonus payout.


 


(c)             Equity
Compensation.


 


(i)          On
the Effective Date, the Employee will be granted options to purchase Four
Hundred Thousand (400,000) shares of the Company’s common stock (the “Options”)
under the Company’s 2002 Equity Incentive Plan (the “Plan”) (a copy of which is
attached as Exhibit B), with an exercise price at the fair market value
of the Company common stock on the date Effective Date. Subject to accelerated
vesting or termination as set forth herein, the Standard Options shall vest in
equal annual installments over three (3) years measured from the Effective
Date.


 


(ii)         In
addition, on the Effective Date, Employee will be issued One Hundred Thousand (100,000)
shares of restricted stock under the Plan (the “Restricted Shares”). The
Restricted Shares shall vest as follows:


 


2

















 


through
the first anniversary of the Effective Date (a) in a pro rata basis *****; and
(b) 100% upon any Change of Control. By way of illustration and not limitation,
*****


 


(iii)         The exercise price of the Options and all other terms and
conditions associated with the Options and Restricted Shares shall be
determined in accordance with the Plan and grants (the forms of which are
annexed hereto as Exhibit C and Exhibit D, respectively). To the
maximum extent possible, the Options shall be Incentive Stock Options.


 


(d)                   Additional
Compensation. Within 10 business days of the Effective Date, the Company
will pay the Employee a $100,000 sign-on bonus. Should the Employee separate
from the Company prior to the one year anniversary of the Effective Date for
reasons of termination for Cause or voluntary termination by the Employee other
than for Good Reason, this sign-on bonus is refundable to Company in full.


 


4.                     Expenses.


 


The
Company will reimburse Employee for all expenses reasonably incurred by him in
discharging his duties for the Company, conditioned upon Employee’s submission
of written documentation in support of claimed reimbursement of such expenses, and
consistent with the Company’s expense reimbursement policies in effect from
time to time. The Company will reimburse the Employee in 2010 up to One Hundred
Twenty Thousand Dollars ($120,000) for reasonable expenses incurred in 2009 and
2010 to relocate Employee, Employee’s spouse and parts of Employee’s and
Employee’s Spouse’s household in a manner compatible with Employee’s duties
hereunder to the Company’s headquarters location (“Facility Location”), including
the reasonable and customary costs of selling his Pennsylvania residence (but
not vacant home carrying costs), shipment of personal effects to the Facility
Location, and the customary closing costs associated with the purchase of a
residence in the Facility Location. In addition, Company shall reimburse
Employee (or pay on Employee’s behalf) rent and related living expenses, not to
exceed $2,500 per month in the aggregate and up to six (6) months in duration, for
temporary living arrangements and up to $5,000 for reasonable attorneys’ fees
incurred in negotiation of this Agreement.


 


3

















 


5.                     Benefits.


 


Subject
to eligibility requirements, Employee shall be entitled to participate in such
benefits plans and programs as adopted by the Company from time to time and
shall be eligible for paid vacation of four (4) business weeks (20 business
days) annually; provided, however, if Employee does not use all available
vacation in any given year, Employee may roll-over up to one business week (5
business days) to the following year, the parties intending that Employee shall
have a maximum of five (5) business weeks (25 business days) of paid vacation
in any calendar year following 2009. Notwithstanding anything to the contrary
herein, Employee shall receive 15 days paid vacation in 2009, available as of
the Effective Date. Without limiting the foregoing, subject to eligibility
requirements, Employee shall be covered by any “directors and officers”
insurance and “errors and omissions” insurance policies obtained by the
Company.


 


6.                     Confidentiality.


 


As
a condition to employment under this Agreement, Employee and the Company shall
enter into the Non-Disclosure Agreement in the form attached hereto as Exhibit E. The provisions
of this Section 6 shall survive termination of this Agreement and
term of employment.


 


7.                     Non-competition and Non-solicitation.


 


(a)           For a period of one
(1) year in the case of the payment of severance equal to 12 months Base
Compensation and for a period of two (2) years in the case of the payment of
severance equal to 24 months Base Compensation, in both instances as provided
in Section 12 below, Employee shall not directly or indirectly
engage in or have any ownership interest in, or participate in the financing, operation,
management or control of, any person, firm, corporation or business listed on Exhibit F (as such shall
be amended in the event that the Company enters into a material transaction
with an entity not listed on Exhibit F and as shall
be amended from time to time by mutual consent of Employee and the Company); provided, however, that this provision
shall not prohibit Employee from owning up to five percent (5%) of any class of
outstanding bonds, preferred stock or shares of common stock of any such entity
or from employment with any institute of higher learning.


 


(b)           For a period of two
(2) years following termination of employment with the Company for any reason, except
with the express written consent of the Company, Employee agrees to refrain
from directly or indirectly recruiting, hiring or assisting anyone else to hire,
or otherwise counseling to discontinue employment with the Company, any person
then employed by the Company or its subsidiaries or affiliates; provided, however, nothing herein shall
prevent Employee from providing, in accordance with Company policy, details
regarding the employment history of any such person or providing an employment
reference with respect to such person.


 


4

















 


(c)           In the event that
the provisions of this Section 7 should ever be deemed to exceed the
duration or geographic limitations or scope permitted by applicable law, then
such provisions shall be reformed to the maximum time or geographic limitations
or scope, as the case may be, permitted by applicable laws.


 


(d)           The provisions of
this Section 7 shall survive termination of this Agreement and the term
of employment.


 


8.                     Covered Work.


 


(a)            All rights, title
and interest to any Covered Work that Employee makes or conceives (whether
alone or with others) while employed by the Company, belong to the Company. This
Agreement operates as an actual assignment of all rights in Covered Work to the
Company. “Covered Work” means products and Inventions that relate to the actual
or anticipated business of the Company or any of its subsidiaries or affiliates,
or that result from or are suggested by a task assigned to Employee or work
performed by Employee on behalf of the Company or any of its subsidiaries or
affiliates, or that were developed in whole or in part on the Company time or
using the Company’s equipment, supplies or facilities. “Inventions” mean ideas,
improvements, designs, computer software, technologies, techniques, processes, products,
chemicals, compounds, materials, concepts, drawings, authored works or
discoveries, whether or not patentable or copyrightable, as well as other newly
discovered or newly applied information or concepts. Attached hereto as Exhibit
G is a description of any product or Invention in which Employee had or has
any right, title or interest, which is not included within the definition of
Covered Work or which is otherwise excluded from the restrictions set forth in
this Section 8.


 


(b)           Employee shall
promptly reveal all information relating to Covered Work and Confidential Information
to an appropriate officer of the Company and shall cooperate with the Company, and
execute such documents as may be necessary, in the event that the Company
desires to seek copyright, patent or trademark protection thereafter relating
to same.


 


(c)           In the event that
the Company requests that Employee assist in efforts to defend any legal claims
to patents or other right, the Company agrees to reimburse Employee for any
reasonable expenses Employee may incur in connection with such assistance. This
obligation to reimburse shall survive termination of this Agreement and the
term of employment.


 


(d)           The provisions of
this Section 8 shall survive termination of this Agreement and the term
of employment.


 


5

















 


9.                     Return of Inventions,
Products and Documents.


 


Employee
acknowledges and agrees that all Inventions, all products of the Company and
all originals and copies of records, reports, documents, lists, drawings, memoranda,
notes, proposals, contracts and other documentation related to the business of
the Company or containing any information described in this Section 9
shall be the sole and exclusive property of the Company and shall be returned
to the Company immediately upon termination of Employee’s employment with the
Company or upon the written request of the Company. The provisions of this Section
9 shall survive termination of this Agreement and the term of employment


 


10.                  Injunction.


 


Employee
agrees that it would be difficult to measure damages to the Company from any
breach by Employee of Sections 6, 7, 8 and/or 9 of this Agreement,
and that monetary damages would be an inadequate remedy for any such breach. Accordingly,
Employee agrees that if Employee shall breach Sections 6, 7, 8 and/or 9
of this Agreement, the Company shall be entitled, in addition to all other
remedies it may have at law or in equity, to an injunction or other appropriate
orders to restrain any demonstrated breach without showing or proving any
actual damage sustained by the Company. The provisions of this Section 10
shall survive termination of this Agreement and the term of employment.


 


11.                  Obligations
to Others.


 


Except
for items fully disclosed in writing to the Company (including with respect to
the entities and agreements listed on Exhibit H), Employee represents and
warrants to the Company that (i) Employee’s employment by the Company does not
violate any agreement with any prior employer or other person or entity, and
(ii) Employee is not subject to any existing confidentiality or non-competition
agreement or obligation, or any agreement relating to the assignment of
Inventions except as has been fully disclosed in writing to the Company. Notwithstanding
anything to the contrary, if any agreement listed on Exhibit H shall
interfere or limit in any material manner the performance of Employee’s duties
hereunder, prior to commencement of employment Employee shall disclose the
material terms of such agreements to Company.


 


12.                  Termination
and Termination Compensation


 


(a)           Employee may
voluntarily terminate his employment with the Company upon giving the Company
sixty (60) days written notice.


 


(b)           The Company may
terminate Employee’s employment without Cause (as defined below) upon giving
Employee thirty (30) days written notice of termination.


 


6

















 


(c)                         Employee’s employment
with the Company shall terminate upon the occurrence of any one of the
following:


 


(i)            Employee’s death;


 


(ii)           The effective date
of a notice sent to Employee stating the Board’s determination made in good
faith and after consultation with a qualified physician selected by the Board, that
Employee is incapable of performing his duties under this Agreement, with
reasonable accommodation, because of a physical or mental incapacity that has
prevented Employee from performing such full-time duties for a period of ninety
(90) consecutive calendar days and the determination that such incapacity is
likely to continue for at least another ninety (90) days; provided, however, termination under this Section 12 (c)(ii)  shall not
affect Employee’s eligibility nor modify the terms and conditions under the
Company’s long term disability policies, if any, existing at the time of such
termination; or


 


(iii)          The effective date
of a notice sent to Employee terminating Employee’s employment for Cause.


 


(iv)          “Cause” means the
occurrence of one or more of the following events:


 


(A)          Employee’s willful and repeated failure or refusal to
comply in any material respect with the reasonable lawful policies, standards
or regulations from time to time established by the Company, or to perform his
duties in accordance with this Agreement after notice to Employee of such
failure and after Employee has been given a reasonable period of time to cure
such failure to comply; or


 


(B)           Employee is convicted of, or pleads guilty or nolo
contendere to, a felony or demonstrably engages in misconduct that is
materially detrimental to the reputation, character or standing of the Company.


 


(v)            Following any termination of the Employee’s
employment hereunder (by the Employee or by the Company), the Employee will be
entitled to receive (i) any earned but unpaid Base Compensation through the
date of termination, (ii) any unreimbursed business expenses, (iii) any benefits
under the Company’s compensation plan that by their terms provide for cash
payments of accrued but unused benefits and under applicable law (collectively,
the “Accrued Obligations”).


 


(vi)          Upon Employee’s
voluntary termination of employment, other than voluntary termination with Good
Reason (as defined below), or upon termination of employment by the Company for
Cause, the Company shall pay to Employee the Accrued Obligations, but shall
have no further


 


 


7

















 


obligation
to Employee hereunder in respect of any period following termination.


 


(vii)         Upon the death of
Employee, the Company shall pay to Employee’s estate or such other party who
shall be legally entitled thereto, the Accrued Obligations and an additional
amount equal to compensation at the rate set forth in this Agreement or then
current annual salary rate, whichever is greater, from the date of death to the
final day of the month following the month in which the death occurs.


 


(viii)        (A) Upon termination
of Employee’s employment by the Company other than for Cause and other than in
connection with or after a Change in Control, in addition to the Accrued
Obligations, the Company shall pay to Employee twelve (12) months of Base
Compensation, with such payment to be made in a lump sum payment within sixty (60)
days of such termination of employment. In addition, all nonvested Options, Restricted
Stock Units and other long term compensation benefits then in effect shall
immediately vest and be exercisable for a period of 180-days following the
effective date of termination.


 


(B) Upon termination by the Company other than for
Cause in connection with or after a Change in Control or upon Employee’s
voluntary termination of employment for Good Reason in connection with or
within twenty-four (24) months after a Change of Control, in addition to the
Accrued Obligations, the Company shall pay to Employee twenty-four (24) months
of Base Compensation, with such payment to be made in a lump sum payment within
sixty (60) days of such termination of employment. In addition, all nonvested
Options, Restricted Stock Units and other long term compensation benefits then
in effect shall immediately vest and be exercisable for a period of 180-days
following the effective date of termination.


 


(ix)           Any amounts payable
under this Section 12 shall be net of amounts
required to be withheld under applicable law and amounts requested to be
withheld by Employee.


 


(x)            As used herein, “Good
Reason” shall mean, following a Change of Control (as such term is defined
below), the termination by Employee upon the occurrence of any of the below
described events. The Employee must provide notice to the Company of the
existence of such event within ninety (90) days of the first occurrence of such
event, and the Company will have thirty (30) days to remedy the condition, in
which case no Good Reason shall exist. If the Company fails to remedy the
condition within such thirty (30) day period, the Employee must terminate
employment within two (2) years of the first occurrence of such event. The
events which constitute a Good Reason termination are:


 


8
















 


(A)        The assignment of a different title or change that results in
a material reduction in Employees duties or responsibilities;


 


(B)         A reduction by the Company in Employee’s Base Compensation, other
than a salary reduction that is part of a general salary reduction affecting
employees generally and provided the reduction is not greater, percentage-wise,
than the reduction affecting other employees generally or failure to provide an
annual increase in Base Compensation commensurate with other Employees; provided,
however, in determining whether to provide an annual increase in Base
Compensation commensurate with an annual increase provided to other Employees, the
Company may take into account factors such as market levels of compensation, Employee’s
overall performance, and other factors reasonably considered by the Company’s
compensation committee and/or Board of Directors, so long as such determination
is not made in bad faith with the intent to discriminate against Employee; or


 


(C)         Relocation of Employee’s principal place of business of
greater than seventy-five (75) miles from its then location; provided, however, the current relocation
of the Company’s headquarters to the Seattle, Washington metropolitan area
shall not constitute Good Reason hereunder.


 


(xi)           As a condition of
payment of the amounts set forth in this Section 12, if requested by
Company with five (5) business days of the Employee’s termination of employment,
Employee agrees to enter into a Separation and Release Agreement substantially
in the form attached hereto as Exhibit I. By way of
clarification and not limitation, if no separation payments are made under this
Section 12, Employee shall not be required to execute a
Separation and Release Agreement


 


(xii)          As used herein, “Change
of Control” means the occurrence of any one of the following events: (i) any
person becomes the beneficial owner of twenty-five percent (25%) or more of the
total number of voting shares of the Company; (ii) any person (other than the
persons named as proxies solicited on behalf of the Board of Directors of the
Company) holds revocable or irrevocable proxies representing twenty-five
percent (25%) or more of the total number of voting shares of the Company;
(iii) any person has commenced a tender or exchange offer, or entered into an
agreement or received an option, to acquire beneficial ownership of twenty-five
percent (25%) or more of the total number of voting shares of the Company; and
(iv) as the result of, or in connection with, any cash tender or exchange offer,
merger, or other business combination, sale of assets, or any combination of
the foregoing transactions, the persons who were directors of the Company
before such transactions shall cease to


 


9

















 


constitute
at least two-thirds (2/3) of the Board of Directors of the Company or any
successor entity.


 


13.                 Notice.


 


Unless
otherwise provided herein, any notice, request, certificate or instrument
required or permitted under this Agreement shall be in writing and shall be
deemed “given” upon personal delivery to the party to be notified or two
business days after deposit for next day delivery with Federal Express or
similar courier service, addressed to the party to receive notice at the
address set forth above, postage prepaid. Either party may change its address
by notice to the other party given in the manner set forth in this Section.


 


14.                 Entire
Agreement.


 


This
Agreement constitutes the entire agreement between the parties and contains all
the agreements between them with respect to the subject matter hereof. It also
supersedes any and all other agreements or contracts, either oral or written, between
the parties with respect to the subject matter hereof; provided, however, in the event any of Sections 6, 7, 8,
9, or 10 of this Agreement is found unenforceable in any way, then
such section shall be amended to the extent necessary to conform to applicable
law.


 


15.                 Modification.


 


Except
as otherwise specifically provided, the terms and conditions of this Agreement
may be amended at any time by mutual agreement of the parties, provided that
before any amendment shall be valid or effective, it shall have been reduced to
writing and signed by an authorized representative of the Company and Employee.


 


16.                 No
Waiver.


 


The
failure of any party hereto to exercise any right, power or remedy provided
under this Agreement or otherwise available in respect hereof at law or in
equity, or to insist upon compliance by any other party hereto with its
obligations, shall not be a waiver by such party of its right to exercise any
such or other right, power or remedy or to demand compliance.


 


17.                  Severability.


 


In
the event that any section or provision of this Agreement shall be held to be
illegal or unenforceable, such section or provision shall be severed from this
Agreement and the entire Agreement shall not fail as a result, but shall
otherwise remain in full force and effect.


 


10

















 


18.                 Assignment


 


This
Agreement shall be binding upon and inure to the benefit of the Company and its
successors and assigns, and shall be binding upon Employee, his administrators,
executors, legatees, and heirs. In that this Agreement is a personal services
contract, it shall not be assigned by Employee.


 


19.                 Dispute
Resolution.


 


Except
as otherwise provided in Section 10, the Company and Employee agree that
any dispute relating to the rights and obligations under this Agreement between
Employee and the Company or its officers, directors, employees, or agents in
their individual or Company capacity of this Agreement, shall be submitted to a
mediator mutually acceptable to both parties for nonbinding, confidential
mediation. If the matter cannot be resolved with the aid of the mediator within
30 days, the Company and Employee mutually agree to arbitration of the dispute.
The arbitration shall be in accordance with the then-current Employment Dispute
Resolution Rules of the American Arbitration Association before an arbitrator
who is licensed to practice law in the State of Washington. The arbitration
shall take place in or near Seattle, Washington. Employee and the Company will
share bear the cost of the arbitration equally, but each party will bear their
own costs and legal fees associated with the arbitration; provided,
however, if any party prevails on a statutory claim, which
affords the prevailing party attorneys’ fees, or if there is a written
agreement providing for attorneys’ fees, the arbitrator may award reasonable
attorneys’ fees. The Company and Employee agree that the procedures outlined in
this provision are the exclusive method of dispute resolution.


 


20.                 Attorneys
Fees.


 


In
the event suit or action is instituted pursuant to Section 10 or Section
19 of this Agreement, the prevailing party in such proceeding, including
any appeals thereon, shall be awarded reasonable attorneys fees and costs; provided,
however, except with respect to claims found to be friviolous
or entirely without merit, the amount of such fees to be paid by the
non-prevailing party shall not exceed $50,000.


 


21.                 Applicable
Law.


 


This
Agreement shall be construed and enforced under and in accordance with the laws
of the State of Washington.


 


22.                 Section
409A; Section 280G.


 


(a)           It is the intention
of the parties to this Agreement that no payment or entitlement pursuant to
this Agreement will give rise to any adverse tax consequences to Employee or
the Company with regard to Section 409A of the Internal Revenue Code of 1986, as
amended (“Section 409A”). This Agreement shall be interpreted to that
end and consistent with that objective. The Company and the Employee shall, to
the extent


 


11

















 


necessary
to comply with Section 409A and permitted thereunder, agree to act reasonably
and in good faith to mutually reform the provisions of this Agreement to avoid
the application of the additional tax and interest under Section 409A(a)(1)(B),
provided that any such reformation shall not negatively impact the economics of
the Company or the Employee hereunder. Notwithstanding any other provision
herein, if Employee is a “specified employee,” as defined in, and pursuant to, Treasury
Regulation Section 1.409A-1 (i) or any successor regulation, on the date of
termination, no payment of any “deferred compensation”, as defined under
Treasury Regulation Section 1.409A or any successor regulation, shall be made
to Employee during the period lasting until the earlier of six (6) months from
the date of termination or upon Employee’s death. If any payment to Employee is
delayed pursuant to the foregoing sentence, such payment instead shall be made
on the first business day following the expiration of the six (6) month period
referred to in the prior sentence or, if in the case of Employee’s death, promptly
thereafter.


 


Except
as otherwise specifically provided in this Agreement, if any reimbursement to
which the Employee is entitled under this Agreement would constitute deferred
compensation subject to Section 409A of the Code, the following additional rules
shall apply: (i) the reimbursable expense must have been incurred, except as
otherwise expressly provided in this Agreement, during the term of this
Agreement; (ii) the amount of expenses eligible for reimbursement during any
calendar year will not affect the amount of expenses eligible for reimbursement
in any other calendar year; (iii) the reimbursement shall be made not later
than December 31 of the calendar year following the calendar year in which the
expense was incurred; and (iv) the Employee’s entitlement to reimbursement
shall not be subject to liquidation or exchange for another benefit.


 


With
regard to any installment payment, each installment thereof shall be deemed a
separate payment for purposes of Section 409A of the Code.


 


(b)                                 Section 280G


 


(i)            Notwithstanding any
provision of this Agreement to the contrary, except as provided below, if it is
determined that the payments or benefits to which Employee will be entitled
under Section 12 of the Agreement or otherwise under any other
agreement, policy, plan, program or arrangement (a “Payment”), would be subject
to an excise tax (“Excise Tax”) under Section 4999 of the Internal Revenue Code
of 1986, as amended (the “Code”), but for the application of this sentence, then
the Payments will be reduced to the minimum extent necessary (but in no event
below zero) so that no portion of any such Payment, as so reduced, constitutes
an “excess parachute payment” within the meaning of Section 280G of the Code.


 


ii)             The limitation
above will not apply if:


 


12

















 


the
difference between


 


(1)  the present value of all payments to which Employee is
entitled under Section 12 of the Agreement determined
without regard to the limitation above, less


 


(2)  the present value of all federal, state, and other
income and excise taxes for which Employee is liable as a result of such
payments; exceeds


 


the
difference between


 


(1)  the present value of all payments to which Employee is
entitled under Section 12 of the Agreement calculated
as if the limitation above applies, less


 


(2)  the present value of all federal, state, and other
income and excise taxes for which Employee is liable as a result of such
reduced payments.


 


(iii)         All determinations required to be made under this Section 21, including
whether an Excise Tax is payable by the Employee and the amount of such Excise
Tax, shall be made by a nationally recognized accounting firm designated by the
Company (the “Accounting Firm”). The Company shall direct the Accounting Firm
to submit its determination and detailed supporting calculations to the Company
and the Employee within fifteen (15) calendar days after the date of the
Employee’s termination of employment, and other such time or times as may be
requested by the Company or the Employee. If the Accounting Firm determines
that no Excise Tax is payable by the Employee, it shall, at the same time as it
makes such determination, furnish the Employee with an opinion that the
Employee has substantial authority not to report any Excise Tax on the Employee’s
federal, state, local income or other tax return. The Company and the Employee
shall each provide the Accounting Firm access to and copies of any books, records
and documents in the possession of the Company or the Employee, as the case may
be, reasonably requested by the Accounting Firm in connection with the
preparation and issuance of the determination contemplated by this Section 22. Any reasonable
determination made by the Accounting Firm under this Section 22 shall be
binding upon the Company and the Employee. All fees and expenses of the
Accounting Firm shall be borne solely by the Company.


 


(iv)        The reduction of the amounts payable hereunder shall be made
in a manner consistent with the requirements of Section 409A of the Code. The
reduction of the amounts payable hereunder, if applicable, shall be made by
first reducing, but not below zero, any amounts due to the


 


13

















 


Employee
pursuant to the Company’s equity plans shall be reduced on a pro-rata basis. In
the event that following the reduction of the amounts set forth in the
preceding sentence, additional amounts payable to the participant must be
reduced, the cash payments under Section 12 shall be
reduced on a pro-rata basis, but not below zero.


 


23.                  Counterparts.


 


This
Agreement may be signed in two counterparts, each of which shall be deemed an
original and both of which shall together constitute one agreement.


 


[SIGNATURE PAGE FOLLOWS]


 


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IN
WITNESS WHEREOF, AVI BioPharma, Inc. has caused this Agreement to be signed by
its duly authorized representative, and Employee has hereunder set his name as
of the date of this Agreement.


 


 


	
   

  	
  COMPANY: AVI BioPharma, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Leslie Hudson

  
	
   

  	
  Leslie
  Hudson, PhD, Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
  /s/
  Paul Medeiros

  
	
   

  	
  Paul Medeiros

  



 


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