Document:

Exhibit 10.65

 

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

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made on this 24th
day of July, 2008 (the “Effective Date”), by and between AVI BioPharma, Inc., an Oregon
corporation, with its principal office at 1 S.W. Columbia Street, Suite 1100,
Portland, Oregon 97258 (“Company”), and J. David Boyle II, 5329
Broadway, Oakland, CA 94618 (“Employee”).

 

RECITALS:

 

The Company desires to hire the Employee as Senior Vice President –
Chief Financial 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 or terminated in accordance
with Section 12.  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 August 18, 2008.  Failure to do
so shall be grounds for immediate termination for Cause, as such term is
defined in Section 12 hereof.

 

2.                                      Duties.  Employee shall be employed as Senior Vice
President- Chief Financial Officer  and
shall have such duties as are customarily associated with that position,
including oversight of the Company’s financial and other administrative systems
and such other duties as may be assigned to him from time to time by the
Company’s Chief Executive Officer (“CEO”) and the Board of Directors of the
Company (“Board”). Employee shall be a direct report of the Company’s Chief
Executive Officer. 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 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.

 

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3.                                      Compensation.

 

(a)                                  Base
Compensation.  During the Term the
Company shall compensate the Employee at an initial annual salary of Three
Hundred Twenty Four Thousand Dollars ($324,000.00), 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.  The Employee shall be eligible for an annual
bonus of up to 30% of Employee’s Base Compensation, which bonus shall be paid
in the normal cycle of payment of executive bonuses 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.  Employee shall be
eligible for consideration for an award of a full 12-month bonus based on
achievement of  2008 Goals and
Objectives.

 

(c)                                  Equity
Compensation.

 

(i)            On
the Effective Date, the Employee will be granted options to purchase Three
Hundred Fifty Thousand (350,000) shares of the Company’s common stock (the “Standard
Options”) under the Company’s 2002 Equity Incentive Plan (the “Plan”),
with an exercise price at the fair market value of the Company common stock on
the 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;

 

(ii)           In
addition, on the Effective Date the Employee will be granted options to
purchase an additional One Hundred Fifty Thousand (150,000) options (the “Performance
Options” and, together with the Standard Options, the “Options”)
under the Plan with an exercise price at the fair market value of the Company
common stock on the Effective Date.  The
Performance Options shall vest in the event that *****.  Notwithstanding anything to the

 

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contrary herein, in the event that the effect of an event that
constitutes a Change in Control (as such term is defined in Section 13(f) hereof)
denies or would reasonably be expected to deny Employee the opportunity to
achieve the vesting milestone set forth in this Section 3(c)(ii),
the Performance Options shall fully vest upon the effective date of the Change
in Control.

 

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

 

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 up to One Hundred Thousand Dollars ($100,000) for
reasonable expenses incurred in 2008 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 city where the Company’s
headquarters are located (“Facility Location”), including the reasonable
and customary costs of selling his California 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 $2,000 per month in the aggregate and up to six (6) months
in duration, for temporary living arrangements and up to $5,000 for reasonable
attorney’s fees incurred in negotiation of this Agreement.

 

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 an aggregate
of five (5) business weeks (25 business days) of paid vacation in any year
following 2008.

 

6.                                      Confidentiality.

 

(a)                                  In
the course of his employment with the Company, it is anticipated that Employee
may acquire knowledge (both orally and in writing) regarding confidential
affairs of the Company and confidential or proprietary information including: (i) matters
of a technical nature, such as know-how, inventions, processes, products,
designs, chemicals, compounds, materials, drawings, concepts, formulas, trade
secrets, secret processes or machines, inventions or research projects; (ii) matters
of a business nature, such as information about costs, profits and pricing
policies; (iii)  markets, sales, suppliers, customers, plans for future
development, plans 

 

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for future products, marketing plans or strategies; and (iv) other
information of a similar nature which is not generally disclosed by the Company
to the public, referred to collectively hereafter as “Confidential Information.”
“Confidential Information” shall not include information generally available to
the public. Employee agrees that during the term of this Agreement and
thereafter, he (1) will keep secret and retain in the strictest confidence
all Confidential Information, (2) not disclose Confidential Information to
anyone except employees of the Company authorized to receive it and third
parties to whom such disclosure is specifically authorized, and (3) not use
any Confidential Information for any purpose other than performance of services
under this Agreement without prior written permission from the Company.

 

(b)                                 If
Employee is served with any subpoena or other compulsory judicial or
administrative process calling for production or disclosure of Confidential
Information or if Employee is otherwise required by law or regulation to
disclose Confidential Information, Employee will immediately, and prior to
production or disclosure, notify the Company and provide it with such
information as may be necessary in order that the Company may take such action
as it deems necessary to protect its interest.

 

(c)                                  The
provisions of this Section 6 shall survive termination of this
Agreement.

 

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 13(c) 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 that engages in any activity customarily
associated with the Company’s ordinary course of business at the time of such
termination anywhere in the world; 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.

 

(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.

 

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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 D 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.

 

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

 

5

 

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 such 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, 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.

 

12.                               Termination.

 

(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.

 

(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 or without 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; or

 

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

 

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

 

(i)                                     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

 

(ii)                                  Employee
engages in criminal conduct or engages in misconduct that is materially
detrimental to the reputation, character or standing of the Company.

 

(e)                                  Notwithstanding
anything to the contrary herein, unless sooner terminated in accordance with
the terms hereof, this Agreement shall automatically renew for an additional
one-year term unless one party notifies the other party in accordance with Section 14
hereof of its intention not to renew, such notice to be delivered not less than
90 days before the term ends.

 

13.                               Termination
Compensation.

 

(a)                                  Upon
Employee’s voluntary termination of employment, other than voluntary
termination with Good Reason  (as defined
below), the Company shall pay to Employee all compensation due to the date of
termination, but shall have no further obligation to Employee hereunder in
respect of any period following termination.

 

(b)                                 Upon
the death of Employee, the Company shall pay to Employee’s estate or such other
party who shall be legally entitled thereto, all compensation due at the date
of death, 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.

 

(c)                                  (i) 
Upon termination of Employee’s employment by the Company other than for Cause
and other than in connection with a Change in Control, the Company shall pay to
Employee twelve (12) months of Base Compensation. In addition, all nonvested
Options shall immediately vest and be exercisable for a period of 180-days
following the effective date of termination.

 

(ii)  Upon termination by the Company other than for Cause in
connection with a Change in Control or upon Employee’s voluntary termination of
employment for Good Reason, the Company shall pay to Employee twenty-four (24)
months of Base Compensation.  In addition, all nonvested Options
shall immediately vest and be exercisable for a period of 180-days following
the effective date of termination.

 

(d)                                 Amounts
payable under this Section 13 shall be net of amounts required to
be withheld under applicable law and amounts requested to be withheld by
Employee.

 

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(e)                                  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:

 

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

 

(ii)                                                          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

 

(iii)                                                       Relocation
of Employee’s principal place of business of greater than seventy-five (75)
miles from its then location; provided, however, the first such relocation in
connection with the concurrent relocation of the Company’s headquarters shall
not constitute Good Reason hereunder.

 

As a condition of payment of the amounts set forth in this Section 13,
if requested by Company Employee agrees to enter into a Separation and Release
Agreement substantially in the form attached hereto as Exhibit E.

 

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

 

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14.                               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 three business days after deposit with the United
States Service, by registered or certified mail, 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.

 

15.                               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 enforceable in any way, then such section shall be amended to the
extent necessary to conform to applicable law.

 

16.                               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.

 

17.                               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.

 

18.                               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.

 

19.                               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.

 

20.                               Dispute
Resolution.  Except as otherwise
provided in Section 10, the Company and Employee agree that any
dispute 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 for nonbinding, confidential mediation. If the matter
cannot be resolved with the aid of the mediator, 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 Arbitration Service of Portland (“ASP”) before an arbitrator who is
licensed to practice law in the State of Oregon. The arbitration shall take
place in or near Portland, Oregon. Employee and the Company will share the cost
of the arbitration equally, but each will bear their own costs and legal fees
associated with the arbitration; provided, however,

 

9

 

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.

 

21.                               Attorneys’
Fees.  In the event suit or action is
instituted pursuant to Section 10 or Section 20 of this
Agreement, the prevailing party in such proceeding, including any appeals
thereon, shall be awarded reasonable attorneys’ fees and costs.

 

22.                               Applicable
Law.  This Agreement shall be
construed and enforced under and in accordance with the laws of the State of
Oregon.

 

23.                               Section 409A.

 

(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 (“Section 409A”). This Agreement shall be interpreted to that
end and consistent with that objective. The Company and the Employee shall, to
the extent 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.

 

(b)                   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.

 

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

 

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24.                               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.

 

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:

  	
   

  
	
   

  	
  Leslie Hudson, PhD, Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  J. David Boyle II

  

 

11

 

Exhibit A

 

List
of Offices Held

 

12

 

Exhibit B

 

2002
Equity Incentive Plan

 

13

 

Exhibit C

 

Form Of
Stock Option Agreement

 

14

 

Exhibit D

 

Inventions
Excluded from Covered Works

 

15

 

Exhibit 
E

 

SEPARATION AND RELEASE AGREEMENT

 

THIS SEPARATION AND RELEASE AGREEMENT (“Agreement”)
is between J. David Boyle II (“Employee”) and AVI BioPharma, Inc. (“Employer”),
and is effective eight (8) days after Employee signs this Agreement (“Effective
Date”).

 

The parties agree as follows:

 

1.                                       Resignation. Employee resigned his position as Employer’s
[Title] effective [effective date of termination] (the “Resignation Date”).  Employee has been paid his salary and other
compensation through the Resignation Date, less all lawful or required
deductions.

 

2.                                       Consideration. In consideration of  Employee’s
agreements hereunder, Employer shall pay to Employee the amounts set forth and
described in that certain Employment Agreement dated effective the
     day of
                      ,
2008.

 

3.                                       Return of Employer Property. Employee represents that he has
returned all Employer property in his possession or under his control,
including but not limited to keys, credit cards, files, laptop computer and any
and all Employer documents.

 

4.                                       Confidentiality. The parties will use reasonable efforts to
keep the terms of this Agreement confidential. 
Employee may disclose the terms of this Agreement to his immediate
family.  Employer may disclose the terms
of this Agreement to its officers and managers.  Either party may disclose the terms of this
Agreement to their respective attorneys, accountants, financial advisers,
auditors, or similar advisors, or in response to government requests.  Third persons informed of the terms of this
Agreement shall in turn be advised of this confidentiality provision and
requested to maintain such confidentiality.

 

5.                                       Release.

 

5.1                                 In exchange for the consideration paid to Employee
as set forth in this Agreement, Employee forever releases and discharges
Employer, any of Employer-sponsored employee benefit plans in which Employee
participates, or was participating in, (collectively the “Plans”) and
all of their respective officers, members, managers, partners, directors,
trustees, agents, employees, and all of their successors and assigns
(collectively “Releasees”) from any and all claims, actions, causes of
action, rights, or damages, including costs and attorneys’ fees (collectively “Claims”)
which Employee may have arising out of his employment (including Claims that
may arise out of Employee’s employment agreement), on behalf of himself, known,
unknown, or later discovered which arose prior to the date Employee signs this
Agreement.  This release includes but is
not limited to, any Claims under any local, state, or federal laws prohibiting
discrimination in employment, including without limitation the federal civil
rights acts, Oregon Revised Statutes Chapter 659A, the Americans with
Disabilities Act, the Age Discrimination in Employment Act, or Claims under the
Employee Retirement Income Security Act, or Claims alleging any legal
restriction on Employer’s right to terminate its employees, any Claims Employee
has relating to his rights to or against any of the Plans, or personal injury
Claims, including without limitation 

 

16

 

wrongful discharge, breach of
contract, defamation, tortious interference with business expectancy,
constructive discharge, or infliction of emotional distress.  Employee represents that he has not filed any
Claim against Employer or its Releasees, he has no knowledge of any facts that
would support any Claim by Employee against Employer or by a third party
against Employer, and that he will file a Claim at any time in the future
concerning Claims released in this Agreement; provided, however, that this will
not limit Employee from filing a Claim to enforce the terms of this
Agreement.  Notwithstanding the
foregoing, nothing herein shall constitute release of any of Employee’s rights
relating to vested options, vested benefits or vested entitlements under the
Company’s employee benefits plans, including equity incentive and retirement
plans.

 

5.2                                 In consideration of the promises of Employee as set
forth herein, Employer does hereby, and for its successors and assigns,
release, acquit and forever discharge Employee from any and all actions, causes
of action, obligations, costs, expenses, damages, losses, claims, liabilities,
suits, debts, and demands (including attorneys’ fees and costs actually
incurred), of whatever character in law or in equity known or unknown,
suspected or unsuspected, from the beginning of time to the date of execution
hereof.

 

6.                                       Non-disparagement. Employee and Employer each agree not to make
disparaging statements about each other, except in the case of Employer
statements that are required under applicable federal or state securities laws
or applicable rules and regulations of any exchange on which Employer’s
stock is traded.

 

7.                                       Consideration and Revocation Periods. Employee understands and acknowledges the
significance and consequences of this Agreement, that it is voluntary, that it
has not been given as a result of any coercion, and expressly confirms that it
is to be given full force and effect according to all of its terms, including
those relating to unknown Claims. 
Employee was hereby advised of his right to seek the advice of an
attorney prior to signing this Agreement. 
Employee acknowledges that he has signed this Agreement only after full
reflection and analysis. Although he is free to sign this Agreement before
then, Employee acknowledges he was given at least 21 days after receipt of this
document in which to consider it (the “Consideration Period”).  If Employee executes this Agreement prior to
the end of the Consideration Period, Employee hereby waives any rights
associated therewith. Employee may revoke this Agreement seven (7) days
after signing it and forfeit all benefits described in Section 2 of this
Agreement. Employee and Employer agree that any changes made to this Agreement
during the Consideration Period as a result of negotiations between the parties
do not restart the running of the Consideration Period.

 

8.                                       No Liability. This Agreement shall not be construed as an
admission by either party that it acted wrongfully with respect to the other.

 

9.                                       Severability. If any of the provisions of this Agreement are held
to be invalid or unenforceable, the remaining provisions will nevertheless
continue to be valid and enforceable.

 

10.                                 Entire Agreement. This Agreement represents and contains the entire
understanding between the parties in connection with its subject matter.  All other prior written or oral agreements or
understandings are merged into and superseded by this Agreement.  Employee acknowledges that in signing this
Agreement, he has not relied upon any representation or statement not set forth
in this Agreement made by Employer or any of its representatives.

 

17

 

11.                                 Attorney Fees. If any suit or action is filed by either party to
enforce this Agreement or otherwise with respect to the subject matter hereof,
the prevailing party shall be entitled to recover reasonable attorney fees
incurred in preparation or in prosecution or defense of such suit or action as
fixed by the trial court, and if any appeal is taken from the decision of the
trial court, reasonable attorney fees as fixed by the appellate court.

 

12.                                 Choice of Law. This Agreement is made and shall be construed and
performed under the laws of the State of Oregon.

 

PLEASE
READ CAREFULLY.  THIS AGREEMENT INCLUDES
A RELEASE OF CERTAIN KNOWN OR UNKNOWN CLAIMS.

 

 

	
  DATED this    day of   , 200X.

  	
   

  	
  DATED this    day of
        , 200X.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AVI BioPharma, Inc. 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  J. David Boyle II

  
	
  Title:

  	
   

  	
   

  
				

 

18Exhibit 10.66

 

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

 

AMENDMENT NO. 1

TO

EMPLOYMENT AGREEMENT

 

This Amendment No. 1 to Employment Agreement (the “Amendment”)
is entered into effective the 1st day of August, 2008 (the “Effective
Date”) by and between AVI BioPharma, Inc., an Oregon corporation (“Company”)
and J. David Boyle II (“Employee”).

 

RECITALS

 

A.                                   Whereas,
Company and Employee are parties to that certain Employment Agreement dated the
24th day of July, 2008, a copy of which is attached hereto as Exhibit A
(the “Employment Agreement”).

 

B.                                     Whereas,
the Company and the Employee desire to amend certain provisions of the
Employment Agreement.

 

Now, therefore, in consideration of the representations, warranties and
covenants contained herein, the Company and the Employee agree as follows:

 

AGREEMENT

 

1.               Section 3(c) of
the Employment Agreement shall be amended and restated to provide as follows:

 

(c)                                  Equity
Compensation.

 

(i)                                     On
the date the Employee commences employment with the Company, the Employee will
be granted options to purchase Three Hundred Fifty Thousand (350,000) shares of
the Company’s common stock (the “Standard Options”) under the Company’s
2002 Equity Incentive Plan (the “Plan”), with an exercise price at the
fair market value of the Company common stock on the 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.

 

(ii)                                  In
addition, on the date the Employee commences employment with the Company, the
Employee will be granted options to purchase an additional One Hundred Fifty
Thousand (150,000) options (the “Performance Options” and, together with
the Standard Options, the “Options”) under the Plan with an exercise
price at the fair market value of the Company common stock on the Effective
Date.  The Performance Options shall vest
in the event that *****.

 

 

Notwithstanding anything to the contrary herein, in the event that the
effect of an event that constitutes a Change in Control (as such term is
defined in Section 13(f) hereof) denies or would reasonably be
expected to deny Employee the opportunity to achieve the vesting milestone set
forth in this Section 3(c)(ii), the Performance Options shall fully vest
upon the effective date of the Change in Control.

 

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

 

2.               Section 23 of
the Employment Agreement shall be amended and restated to provide as follows:

 

Section 409A; Section 280G

 

(a) Section 409A

 

(i)                          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 (“Section 409A”)
of the Internal Revenue Code of 1986 (the “Code”). This Agreement shall
be interpreted to that end and consistent with that objective. The Company and
the Employee shall, to the extent 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.

 

(ii)      Except
as otherwise specifically provided in this Agreement, if any reimbursement to
which the Employee is entitled under this 

 

2

 

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.

 

(iii)      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)            Except
as provided below, the payments or benefits to which Employee will be entitled
under Section 13 of the Agreement will be reduced to the extent necessary
so that Employee will not be liable for the federal excise tax levied on
certain “excess parachute payments” under section 4999 of the Internal Revenue
Code of 1986, as amended (“Code”).

 

(ii)           The
limitation above will not apply if:

 

(1)          the difference between

 

(A) the
present value of all payments to which Employee is entitled under Section 13
of the Agreement determined without regard to the limitation above, less

 

(B) 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

 

(2)          the difference between

 

(A) the
present value of all payments to which Employee is entitled under Section 13
of the Agreement calculated as if the limitation above applies, less

 

(B) 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)          Present values will be
determined using the interest rate specified in section 280G of the Code and
will be the present values as of the 

 

3

 

date on which
Employee’s employment terminates (unless it is necessary to use a different
date in order to avoid adverse consequences under section 280G).

 

3.               In all other
respects, the Employment Agreement shall remain unchanged and in full force and
effect.

 

IN WITNESS WHEREOF, the parties have executed this Amendment effective
the date first set forth above.

 

 

	
  DATED the      day of August, 2008.

  	
   

  	
  DATED the     day of August, 2008.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AVI BioPharma, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name: Leslie Hudson, PhD 

  	
   

  	
  J. David Boyle II

  
	
  Title: Chief Executive Officer

  	
   

  	
   

  
				

 

4

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