Document:

Exhibit 10.33

 

CHANGE IN
CONTROL AGREEMENT

 

 

[Date]

 

 

Dear                   :

 

You are presently the                                                                                                         
of Vital Images, Inc., a Minnesota corporation (the “Company”).  The Company considers the establishment and
maintenance of a sound and vital management to be essential to protecting and
enhancing the best interests of the Company and its shareholders.  In this connection, the Company recognizes
that, as is the case with many publicly held corporations, the possibility of a
Change in Control may arise and that such possibility and the uncertainty and
questions which it may raise among management may result in the departure or
distraction of management personnel to the detriment of the Company and its
shareholders.

 

Accordingly, the Board
has determined that appropriate steps should be taken to minimize the risk that
Company management will depart prior to a Change in Control, thereby leaving
the Company without adequate management personnel during such a critical
period, and that appropriate steps also be taken to reinforce and encourage the
continued attention and dedication of members of the Company’s management to
their assigned duties without distraction in circumstances arising from the
possibility of a Change in Control.  In
particular, the Board believes it important, should the Company or its
shareholders receive a proposal for transfer of control, that you be able to
continue your management responsibilities without being influenced by the
uncertainties of your own personal situation.

 

The Board recognizes that
continuance of your position with the Company involves a substantial commitment
to the Company in terms of your personal life and professional career and the
possibility of foregoing present and future career opportunities, for which the
Company receives substantial benefits. 
Therefore, to induce you to remain in the employ of the Company, this
Agreement, which has been approved by the Board, sets forth the benefits which
the Company agrees will be provided to you in the event your employment with
the Company is terminated in connection with a Change in Control under the
circumstances described below.

 

The following terms will
have the meaning set forth below unless the context clearly requires
otherwise.  Terms defined elsewhere in
this Agreement will have the same meaning throughout this Agreement.

 

ARTICLE I.

DEFINITIONS

 

1.                                       “Affiliate”
means (i) any corporation at least a majority of whose outstanding
securities ordinarily having the right to vote at elections of directors is
owned directly or indirectly by the Company or (ii) any other form of
business entity in which the Company, by virtue of a direct or indirect
ownership interest, has the right to elect a majority of the members of such
entity’s governing body.

 

2.                                       “Agreement”
means this letter agreement as amended, extended or renewed from time to time
in accordance with its terms.

 

3.                                       “Board”
means the board of directors of the Company duly qualified and acting at the
time in question.  On and after the date
of a Change in Control, any duty of the Board in connection with this Agreement
is nondelegable and any attempt by the Board to delegate any such duty is
ineffective.

 

4.                                       “Cause”
means:

 

a.                                       your
gross misconduct;

 

 

b.                                      your
willful and continued failure to perform substantially your duties with the
Company (other than any such failure (1) resulting from your Disability or
incapacity due to bodily injury or physical or mental illness or (2) relating
to changes in your duties after a Change in Control which constitute Good
Reason) after a demand for substantial performance is delivered to you by the
chair of the Board which specifically identifies the manner in which you have
not substantially performed your duties and provides for a reasonable period of
time within which you may take corrective actions; or

 

c.                                       your
conviction (including a plea of nolo contendere) of willfully engaging in
illegal conduct constituting a felony or gross misdemeanor under federal or
state law which is materially and demonstrably injurious to the Company or
which impairs your ability to perform substantially your duties for the
Company.

 

An act or failure to act
will be considered “gross” or “willful” for this purpose only if done, or
omitted to be done, by you in bad faith and without reasonable belief that it
was in, or not opposed to, the best interests of the Company.  Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Company’s board of
directors (or a committee thereof) or based upon the advice of counsel for the
Company will be conclusively presumed to be done, or omitted to be done, by you
in good faith and in the best interests of the Company.  It is also expressly understood that your
attention to matters not directly related to the business of the Company will
not provide a basis for termination for Cause so long as the Board did not
expressly disapprove in writing of your engagement in such activities either
before or within a reasonable period of time after the Board knew or could
reasonably have known that you engaged in those activities.  Notwithstanding the foregoing, you may not be
terminated for Cause unless and until there has been delivered to you a copy of
a resolution duly adopted by the affirmative vote of not less than a majority
of the entire membership of the Board at a meeting of the Board called and held
for the purpose (after reasonable notice to you and an opportunity for you,
together with your counsel, to be heard before the Board), finding that in the
good faith opinion of the Board you were guilty of the conduct set forth above
in clauses a., b. or c. of this definition and specifying the particulars
thereof in detail.

 

5.                                       “Change
in Control” means any of the following:

 

a.                                       the
sale, lease, exchange or other transfer, directly or indirectly, of all or
substantially all of the assets of the Company in one transaction or in a
series of related transactions, to any Person;

 

b.                                      except
in the case of the liquidation or dissolution of the Company in connection with
the bankruptcy or insolvency of the Company or similar arrangement for the
benefit of the Company’s creditors, the approval by the shareholders of the
Company of any plan or proposal for the liquidation or dissolution of the
Company, as the case may be;

 

c.                                       any
Person is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of (1) 20 percent or
more, but not more than 50 percent, of the combined voting power of the
outstanding securities of the Company ordinarily having the right to vote at
elections of directors, unless the transaction resulting in such ownership has
been approved in advance by the “continuing directors” or (2) more than 50
percent of the combined voting power of the outstanding securities of the
Company ordinarily having the right to vote at elections of directors
(regardless of any approval by the continuing directors);

 

d.                                      a
merger or consolidation to which the Company is a party if the shareholders of
the Company immediately prior to the effective date of such merger or
consolidation have, solely on account of ownership of securities of the Company
at such time, “beneficial ownership” (as defined in Rule 13d-3 under the
Exchange Act) immediately following the effective date of such merger or
consolidation of securities of the surviving company representing (1) 50
percent or more, but not more than 80 percent, of the combined voting power of
the surviving corporation’s then outstanding securities ordinarily having the
right to vote at elections of directors, unless such merger or consolidation
has been approved in advance by the continuing directors, or (2) less than
50 percent of the combined voting power of the surviving corporation’s then
outstanding securities ordinarily having the right to vote at elections of
directors (regardless of any approval by the continuing directors);

 

 

e.                                       the
continuing directors cease for any reason to constitute at least a majority of
the Board; or

 

f.                                         a
change in control of a nature that is determined by outside legal counsel to
the Company, in a written opinion specifically referencing this provision of
the Agreement, to be required to be reported (assuming such event has not been “previously
reported”) pursuant to section 13 or 15(d) of the Exchange Act,
whether or not the Company is then subject to such reporting requirement, as of
the effective date of such change in control.

 

For purposes of this Section 1(e),
a “continuing director” means any individual who is a member of the Board on September 8,
2005, while he or she is a member of the Board, and any individual who
subsequently becomes a member of the Board whose election or nomination for
election by the Company’s shareholders was approved by a vote of at least a
majority of the directors who are continuing directors (either by a specific
vote or by approval of the proxy statement of the Company in which such
individual is named as a nominee for director without objection to such
nomination).

 

6.                                       “Code”
means the Internal Revenue Code of 1986, as amended.  Any reference to a specific provision of the
Code includes a reference to such provision as it may be amended from time to
time and to any successor provision.

 

7.                                       “Company”
means Vital Images, Inc. and/or any Affiliate.

 

8.                                       “Confidential
Information” means information which is proprietary to the Company or
proprietary to others and entrusted to the Company, whether or not trade
secrets. It includes information relating to business plans and to business as
conducted or anticipated to be conducted, and to past or current or anticipated
products or services.  It also includes,
without limitation, information concerning research, development, purchasing,
accounting, marketing and selling.  All
information which you have a reasonable basis to consider confidential is
Confidential Information, whether or not originated by you and without regard
to the manner in which you obtain access to that and any other proprietary
information.

 

9.                                       “Date
of Termination” following a Change in Control (or prior to a Change in
Control if your termination was either a condition of the Change in Control or
was at the request or insistence of any Person related to the Change in
Control) means:

 

a.                                       if
your employment is to be terminated for Disability, 30 days after Notice of
Termination is given (provided that you have not returned to the performance of
your duties on a full-time basis during such 30-day period);

 

b.                                      if
your employment is to be terminated by the Company for Cause or by you for Good
Reason, the date specified in the Notice of Termination, which date may not be
less than 30 days or more than 60 days after the date on which the Notice of
Termination is given unless you and the Company otherwise expressly agree;

 

c.                                       if
your employment is to be terminated by the Company for any reason other than
Cause, Disability, death or Retirement, the date specified in the Notice of
Termination, which in no event may be a date earlier than 90 days after the
date on which a Notice of Termination is given, unless an earlier date has been
expressly agreed to by you in writing either in advance of, or after; receiving
such Notice of Termination; or

 

d.                                      if
your employment is terminated by reason of death or Retirement, the date of
death or Retirement, respectively.

 

In the case of
termination by the Company of your employment for Cause, if you have not
previously expressly agreed in writing to the termination, then within 30 days
after receipt by you of the Notice of Termination with respect thereto, you may
notify the Company that a dispute exists concerning the termination, in which
event the Date of Termination will be the date set either by mutual written
agreement of the parties or by the judge or arbitrators in a proceeding as
provided in Article VII Section 6 of this Agreement.  During the pendency of any such dispute, you
will continue to make yourself available to provide services to the Company and
the 

 

 

Company will continue to
pay you your full compensation and benefits in effect immediately prior to the
date on which the Notice of Termination is given (without regard to any changes
to such compensation or benefits which constitute Good Reason) and until the
dispute is resolved in accordance with Article VII Section 6 of this
Agreement.  You will be entitled to
retain the full amount of any such compensation and benefits without regard to
the resolution of the dispute unless the judge or arbitrators decide(s) that
your claim of a dispute was frivolous or advanced by you in bad faith.

 

10.                                 “Disability”
means a disability as defined in the Company’s long-term disability plan as in
effect immediately prior to the Change in Control or; in the absence of such a
plan, means permanent and total disability as defined in section 22(e)(3) of
the Code.

 

11.                                 “Exchange
Act” means the Securities Exchange Act of 1934, as amended.  Any reference to a specific provision of the
Exchange Act or to any rule or regulation thereunder includes a reference
to such provision as it may be amended from time to time and to any successor
provision.

 

12.                                 “Good
Reason” means:

 

a.                                       change in your status,
position(s), duties or responsibilities as an executive of the Company as in
effect immediately prior to the Change in Control which, in your reasonable
judgment, is an adverse change (other than, if applicable, any such change
directly attributable to the fact that the Company is no longer publicly owned)
except in connection with the termination of your employment for Cause, Disability
or Retirement or as a result of your death or by you other than for Good
Reason;

 

b.                                      a reduction by the
Company in your base salary (or an adverse change in the form or timing of the
payment thereof) as in effect immediately prior to the Change in Control or as
thereafter increased;

 

c.                                       the
failure by the Company to continue in effect any Plan in which you (and/or your
family) are eligible to participate at any time during the 90-day period
immediately preceding the Change in Control (or Plans providing you (and/or
your family) with at least substantially similar benefits) other than as a
result of the normal expiration of any such Plan in accordance with its terms
as in effect immediately prior to the 90-day period immediately preceding the
time of the Change in Control, or the taking of any action, or the failure to
act, by the Company which would adversely affect your (and/or your family’s)
continued eligibility to participate in any of such Plans on at least as
favorable a basis to you (and/or your family) as is the case on the date of the
Change in Control or which would materially reduce your (and/or your family’s)
benefits in the future under any of such Plans or deprive you (and/or your
family) of any material benefit enjoyed by you (and/or your family) at the time
of the Change in Control;

 

d.                                      the
Company’s requiring you to be based more than 30 miles from where your office
is located immediately prior to the Change in Control, except for required
travel on the Company’s business, and then only to the extent substantially
consistent with the business travel obligations which you undertook on behalf
of the Company during the 90-day period immediately preceding the Change in
Control (without regard to travel related to or in anticipation of the Change in
Control);

 

e.                                       the
failure by the Company to obtain from any Successor the assent to this
Agreement contemplated by Article VI of this Agreement;

 

f.                                         any
purported termination by the Company of your employment which is not properly
effected pursuant to a Notice of Termination and pursuant to any other
requirements of this Agreement, and for purposes of this Agreement, no such
purported termination will be effective;

 

g.                                      any
refusal by the Company to continue to allow you to attend to matters or engage
in activities not directly related to the business of the Company which, at any
time prior to the Change in Control, you were not expressly prohibited in
writing by the Board from attending to or engaging in; or

 

h.                                      the
termination of your employment by the Company for any reason other than death,
Disability or Retirement during the twelve (12) months following the month in
which a Change in Control occurs.

 

 

13.                                 “Notice
of Termination” means a written notice given on or after the date of a
Change in Control (unless your termination before the date of the Change in
Control was either a condition of the Change in Control or was at the request
or insistence of any Person related to the Change in Control) which indicates
the specific termination provision in this Agreement pursuant to which the
notice is given.  Any purported
termination by the Company or by you for Good Reason on or after the date of a
Change in Control (or before the date of a Change in Control if your termination
was either a condition of the Change in Control or was at the request or
insistence of any Person related to the Change in Control) must be communicated
by written Notice of Termination to be effective; provided, that your failure
to provide Notice of Termination will not limit any of your rights under this
Agreement except to the extent the Company demonstrates that it suffered
material actual damages by reason of such failure.

 

14.                                 “Person”
means any individual, corporation, partnership, group, association or other “person,”
as such term is used in section 14(d) of the Exchange Act, other than
the Company, any Affiliate or any employee benefit plan(s) sponsored by the
Company or an Affiliate.

 

15.                                 “Plan”
means any compensation plan, program, policy or agreement (such as a stock
option, restricted stock plan or other equity-based plan), any bonus or
incentive compensation plan, program, policy or agreement, any employee benefit
plan, program, policy or agreement (such as a thrift, pension, profit sharing,
medical, dental, disability, accident, life insurance, relocation, salary
continuation, expense reimbursements, vacation or fringe benefits plan or
policy) or any other plan, program, policy or agreement of the Company intended
to benefit employees (and/or their families) generally, management employees
(and/or their families) as a group or you (and/or your family) in particular.

 

16.                                 “Retirement”
means termination of employment on or after the day on which you attain the age
of 65.

 

17.                                 “Successor”
means any Person that succeeds to, or has the practical ability to control
(either immediately or solely with the passage of time), the Company’s business
directly, by merger, consolidation or other form of business combination, or
indirectly, by purchase of the Company’s outstanding securities ordinarily
having the right to vote at the election of directors or, all or substantially
all of its assets or otherwise.

 

ARTICLE II.

TERM OF
AGREEMENT

 

This Agreement is effective
immediately and will continue in effect until September 8, 2006; provided,
however; that commencing on September 8, 2006 and each September 8 thereafter,
the term of this Agreement will automatically be extended for 12 additional
months beyond the expiration date otherwise then in effect, unless at least 90
calendar days prior to any such September 8, the Company or you has given
notice that this Agreement will not be extended; and, provided, further; that
if a Change in Control has occurred during the term of this Agreement, this
Agreement will continue in effect beyond the termination date then in effect
for a period of 12 months following the month during which the Change in
Control occurs or, if later, until the date on which the Company’s obligations
to you arising under or in connection with this Agreement have been satisfied
in full.

 

ARTICLE III.

CHANGE IN
CONTROL BENEFITS

 

1.                                       Benefits
upon a Change in Control Termination. 
You will become entitled to the payments and benefits described in
clauses (a) and (b) of this Section 1 of Article III,
subject to the limitations described in clause (c) of this Section 1
of Article III, and to the benefit of the provisions described in clause
(c), if and only if (i) your employment with the Company is terminated by
the Company for any reason other than death, Cause, Disability or Retirement,
or if you terminate your employment with the Company for Good Reason; and (ii) the
termination occurs either within the period beginning on the date of a Change
in Control and ending on the last day of the twelfth month that begins after
the month during which the Change in Control occurs or prior to a Change in
Control if your termination was either a condition of the Change in Control or
was at the request or insistence of a Person related to the Change in Control.

 

 

a.                                       Cash
Payment.  Within ten (10) business
days following the Date of Termination or, if later, within ten (10) business
days following the date of the Change in Control, the Company will make a
lump-sum cash payment to you in an amount equal to the product of (i) your
annual base salary in effect on the date of the Change in Control multiplied by
(ii) 2.

 

b.                                      Welfare
Plans. The Company will maintain in full force and effect, for the
continued benefit of you and your dependents for a period terminating 24 months
after the Date of Termination, all insured and self-insured employee welfare
benefit Plans (including, without limitation, medical, life, dental, vision and
disability plans) in which you were eligible to participate at any time during
the 90-day period immediately preceding the Change in Control, provided that
your continued participation is possible under the general terms and provisions
of such Plans and any applicable funding media and without regard to any
discretionary amendments to such Plans by the Company following the Change in
Control (or prior to the Change in Control if amended as a condition or at the
request or insistence of a Person (other than the Company) related to the
Change in Control) and provided that you continue to pay an amount equal to
your regular contribution under such Plans for such participation (based upon
your level of benefits and employment status most favorable to you at any time
during the 90-day period immediately preceding the Change in Control).  The continuation period under federal and
state continuation laws, to the extent applicable, will begin to run from the
date on which coverage pursuant to this clause (b) ends.  If, at the end of the 24-month period, you
have not previously received or are not then receiving equivalent benefits from
a new employer (including coverage for any pre-existing conditions), the
Company, pursuant to federal and state law, will provide, for a period of
eighteen (18) months (the “COBRA Period”), a continuation of your and your
dependents’ coverage under such Plans (the “COBRA Coverage”), provided that you
will be required to pay for such benefits during the COBRA Period, should you
elect to receive COBRA Coverage. .

 

c.                                       Limitation
on Payments and Benefits. 
Notwithstanding anything in this Agreement to the contrary, if any of
the payments or benefits to be made or provided in connection with this
Agreement, together with any other payments, benefits or awards which you have
the right to receive from the Company, or any corporation which is a member of
an “affiliated group” (as defined in section 1504(a) of the Code
without regard to section 1504(b) of the Code) of which the Company
is a member (“Affiliate”), constitute an “excess parachute payment” (as defined
in section 280G(b) of the Code), two calculations will be
performed.  In the first calculation, the
payments, benefits or awards will be reduced by the amount the Company deems
necessary so that none of the payments or benefits under the Agreement
(including from the existing Stock Option and Incentive Plan) are excess
parachute payments.  In the second
calculation, the payments will not be reduced so as to eliminate an excess
parachute payment, but will be reduced by the amount of the applicable excise
tax as imposed by section 4999 of the Code.  The two calculations will be compared and the
calculation providing the largest net payment to the employee will be
utilized.  The calculations must be made
in good faith by legal counsel or a certified public accountant selected by the
Company, and such determination will be conclusive and binding upon you and the
Company.  If a reduction in payments or
benefits is required by the comparison above, the payments or benefits under
the Agreement shall be reduced in the order that minimizes the amount of total
reduction in payments and benefits under the Agreement as a result of this
provision.

 

2.                                       Disposition.  If, on or after the date of a Change in
Control, an Affiliate is sold, merged, transferred or in any other manner or
for any other reason ceases to be an Affiliate or all or any portion of the
business or assets of an Affiliate are sold, transferred or otherwise disposed
of and the acquiror is not the Company or an Affiliate (a “Disposition”), and
you remain or become employed by the acquiror or an affiliate of the acquiror
(as defined in this Agreement but substituting “acquiror” for “Company”) in
connection with the Disposition, you will be deemed to have terminated
employment on the effective date of the Disposition for purposes of this section unless
(a) the acquiror and its affiliates jointly and severally expressly assume
and agree, in a manner that is enforceable by you, to perform the obligations
of this Agreement to the same extent that the Company would be required to
perform if the Disposition had not occurred and (b) the Successor
guarantees, in a manner that is enforceable by you, payment and performance by
the acquiror.

 

 

ARTICLE IV.

INDEMNIFICATION

 

Following a Change in
Control, the Company will indemnify and reimburse you to the full extent
permitted by law and the Company’s articles of incorporation and bylaws for
damages, costs and expenses (including, without limitation, judgments, fines,
penalties, settlements and reasonable fees and expenses of your counsel)
incurred in connection with all matters, events and transactions relating to
your service to or status with the Company or any other corporation, employee
benefit plan or other entity with whom you served at the request of the
Company.

 

ARTICLE V.

CONFIDENTIALITY

 

You will not use, other
than in connection with your employment with the Company, or disclose any
Confidential Information to any person not employed by the Company or not
authorized by the Company to receive such Confidential Information, without the
prior written consent of the Company; and you will use reasonable and prudent
care to safeguard and protect and prevent the unauthorized disclosure of
Confidential Information. Nothing in this Agreement will prevent you from
using, disclosing or authorizing the disclosure of any Confidential
Information: (a) which is or hereafter becomes part of the public domain
or otherwise becomes generally available to the public through no fault of
yours; (b) to the extent and upon the terms and conditions that the
Company may have previously made the Confidential Information available to
certain persons; or (c) to the extent that you are required to disclose
such Confidential Information by law or judicial or administrative process.

 

ARTICLE VI.

SUCCESSORS

 

The Company will seek to
have any Successor, by agreement in form and substance satisfactory to you,
assent to the fulfillment by the Company of the Company’s obligations under
this Agreement. Failure of the Company to obtain such assent at least three
business days prior to the time a Person becomes a Successor (or where the
Company does not have at least three business days’ advance notice that a
Person may become a Successor, within one business day after having notice that
such Person may become or has become a Successor) will constitute Good Reason
for termination by you of your employment. 
The date on which any such succession becomes effective will be deemed
the Date of Termination and Notice of Termination will be deemed to have been
given on that date.  A Successor has no
rights, authority or power with respect to this Agreement prior to a Change in
Control.

 

ARTICLE VII.

OTHER
PROVISIONS

 

1.                                       Binding
Agreement.  This Agreement inures to
the benefit of, and is enforceable by, you, your personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If you die while any amount would still be payable to
you under this Agreement if you had continued to live, all such amounts, unless
otherwise provided in this Agreement, will be paid in accordance with the terms
of this Agreement to your devisee, legatee or other designee or; if there be no
such designee, to your estate.

 

2.                                       No
Mitigation.  You will not be required
to mitigate the amount of any payments or benefits the Company becomes
obligated to make or provide to you in connection with this Agreement by
seeking other employment or otherwise. The payments or benefits to be made or
provided to you in connection with this Agreement may not be reduced, offset or
subject to recovery by the Company by any payments or benefits you may receive
from other employment or otherwise.

 

3.                                       No
Setoff.  The Company has no right to
delay or setoff payments or benefits owed to you under this Agreement against
amounts owed or claimed to be owed by you to the Company under this Agreement
or otherwise.

 

4.                                       Taxes.  All payments and benefits to be made or
provided to you in connection with this Agreement will be subject to required
withholding of federal, state and local income, excise and employment-related
taxes.

 

 

5.                                       Notices.  For the purposes of this Agreement, notices
and all other communications provided for in, or required under, this Agreement
must be in writing and will be deemed to have been duly given when personally
delivered or when mailed by United States registered or certified mail, return
receipt requested, postage prepaid and addressed to each party’s respective
address set forth on the first page of this Agreement (provided that all
notices to the Company must be directed to the attention of the chair of the
Board), or to such other address as either party may have furnished to the
other in writing in accordance with these provisions, except that notice of
change of address will be effective only upon receipt.

 

6.                                       Disputes.  If you so elect, any dispute, controversy or
claim arising under or in connection with this Agreement will be settled
exclusively by binding arbitration administered by the American Arbitration
Association in Minneapolis, Minnesota in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in
effect.  Judgment may be entered on the
arbitrator’s award in any court having jurisdiction; provided, that you may
seek specific performance of your right to receive payment or benefits until
the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.  The Company will be entitled to seek an
injunction or restraining order in a court of competent jurisdiction (within or
without the State of Minnesota) to enforce the provisions of Article V of
this Agreement.

 

7.                                       Jurisdiction.  Except as specifically provided otherwise in
this Agreement, the parties agree that any action or proceeding arising under
or in connection with this Agreement must be brought in a court of competent
jurisdiction in the State of Minnesota, and hereby consent to the exclusive
jurisdiction of said courts for this purpose and agree not to assert that such
courts are an inconvenient forum

 

8.                                       Related
Agreements.  To the extent that any
provision of any other Plan or agreement between the Company and you limits,
qualifies or is inconsistent with any provision of this Agreement, then for
purposes of this Agreement, while such other Plan or agreement remains in
force, the provision of this Agreement will control and such provision of such
other Plan or agreement will be deemed to have been superseded, and to be of no
force or effect, as if such other agreement had been formally amended to the
extent necessary to accomplish such purpose. 
Nothing in this Agreement prevents or limits your continuing or future
participation in any Plan provided by the Company and for which you may
qualify, and nothing in this Agreement limits or otherwise affects the rights
you may have under any Plans or other agreements with the Company.  Amounts which are vested benefits or which
you are otherwise entitled to receive under any Plan or other agreement with
the Company at or subsequent to the Date of Termination will be payable in
accordance with such Plan or other agreement.

 

9.                                       No
Employment or Service Contract. 
Nothing in this Agreement is intended to provide you with any right to
continue in the employ of the Company for any period of specific duration or
interfere with or otherwise restrict in any way your rights or the rights of
the Company, which rights are hereby expressly reserved by each, to terminate
your employment at any time for any reason or no reason whatsoever, with or
without cause.

 

10.                                 Funding
and Payment.  Benefits payable under
this Agreement will be paid only from the general assets of the Company.  No person has any right to or interest in any
specific assets of the Company by reason of this Agreement.  To the extent benefits under this Agreement
are not paid when due to any individual, he or she is a general unsecured
creditor of the Company with respect to any amounts due.  The Company with whom you were employed
immediately before your Date of Termination has primary responsibility for benefits
to which you or any other person are entitled pursuant to this Agreement but to
the extent such Company is unable or unwilling to provide such benefits, the
Company and each other Affiliate are jointly and severally responsible therefor
to the extent permitted by applicable law. 
If you were simultaneously employed by more than one Company immediately
before your Date of Termination, each such Company has primary responsibility
for a portion of the benefits to which you or any other person are entitled
pursuant to this Agreement that bears the same ratio to the total benefits to
which you or such other person are entitled pursuant to this Agreement as your
base pay from the Company immediately before your Date of Termination bears to
your aggregate base pay from all such Companies.

 

11.                                 Survival.  The respective obligations of, and benefits
afforded to, the Company and you which by their express terms or clear intent
survive termination of your employment with the Company or termination of this
Agreement, as the case may be, including without limitation the provisions of
Articles III, IV, V and VI and Sections 3, 4, 5 and 6 of Article VII of
this Agreement, will survive termination of your employment with the 

 

 

Company or termination of
this Agreement, as the case may be, and will remain in full force and effect
according to their terms.

 

ARTICLE VIII.

MISCELLANEOUS

 

1.                                       Modification
and Waiver.  No provision of this
Agreement may be modified, waived or discharged unless such modification,
waiver or discharge is agreed to in a writing signed by you and the chair of
the Board. No waiver by any party to this Agreement at any time of any breach
by another party to this Agreement of, or of compliance with, any condition or
provision of this Agreement to be performed by such party will be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.

 

2.                                       Entire
Agreement.  No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter to this Agreement have been made by any party which are not
expressly set forth in this Agreement.

 

3.                                       Governing
Law.  This Agreement and the legal
relations among the parties as to all matters, including, without limitation,
matters of validity, interpretation, construction, performance and remedies,
will be governed by and construed exclusively in accordance with the internal
laws of the State of Minnesota (without regard to the conflict of laws
principles of any jurisdiction).

 

4.                                       Headings.  Headings are for purposes of convenience only
and do not constitute a part of this Agreement.

 

5.                                       Further
Acts.  The parties to this Agreement
agree to perform, or cause to be performed, such further acts and deeds and to
execute and deliver or cause to be executed and delivered, such additional or
supplemental documents or instruments as may be reasonably required by the
other party to carry into effect the intent and purpose of this Agreement.

 

6.                                       Severability.  The invalidity or unenforceability of all or
any part of any provision of this Agreement will not affect the validity or
enforceability of the remainder of such provision or of any other provision of
this Agreement, which will remain in full force and effect.

 

7.                                       Counterparts.  This Agreement may be executed in several
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same instrument.

 

If this letter correctly
sets forth our agreement on the subject matter discussed above, kindly sign and
return to the Company the enclosed copy of this letter which will then
constitute our agreement on this subject.

 

	
  Sincerely,

  	
  VITAL IMAGES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Agreed to this    
  day of        , 200  .

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EmployeeExhibit 4.7

 

COMMON STOCK PURCHASE WARRANT

 

To Purchase 485,920 Shares of Common Stock of

 

AVI BioPharma, Inc.

 

THIS STOCK PURCHASE
WARRANT CERTIFIES that, for value received, Rodman & Renshaw, LLC (the
“Holder”), is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on or after May 14,
2006 (the “Initial Exercise Date”) and on or prior to the close of
business on May 14, 2010 (the “Termination Date”) but not
thereafter, to subscribe for and purchase from AVI BioPharma, Inc., a
corporation incorporated in the State of Oregon (the “Company”), up to 485,920
shares (the “Warrant Shares”) of Common Stock, $0.0001 par value per
share, of the Company (the “Common Stock”). The purchase price of one
share of Common Stock (the “Exercise Price”) under this Warrant shall be
$5.00, subject to adjustment hereunder. The Exercise Price and the
number of Warrant Shares for which the Warrant is exercisable shall be subject
to adjustment as provided herein. All capitalized terms used but not defined
herein shall have the meanings set forth in that certain Securities Purchase
Agreement dated November 14, 2005 pursuant to which this Warrant was
issued.

 

1.                                       Title
to Warrant. Prior to the Termination Date and subject to compliance with
applicable laws and Section 7 of this Warrant, this Warrant and all rights
hereunder are transferable, in whole or in part, at the office or agency of the
Company by the Holder in person or by duly authorized attorney, upon surrender
of this Warrant together with the Assignment Form annexed hereto properly
endorsed.

 

2.                                       Authorization
of Shares. The Company covenants that all Warrant Shares which may be
issued upon the exercise of the purchase rights represented by this Warrant
will, upon exercise of the purchase rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).

 

3.                                       Exercise
of Warrant.

 

(a)                  Except
as provided in Section 4 herein, exercise of the purchase rights
represented by this Warrant may be made at any time or times on or after
the Initial Exercise Date and on or before the Termination Date by the
surrender of this Warrant and the Notice of Exercise Form annexed hereto
duly executed, at the office of the Company (or such other office or agency of
the Company as it may designate by notice in writing to the registered
Holder at the address of such Holder appearing on the books of the Company) and
upon payment of the Exercise Price of the shares thereby purchased by wire
transfer or cashier’s check drawn on a United States bank or, if then
available, by means of a cashless exercise pursuant to Section 3(d), the
Holder shall be

 

1

 

entitled to receive a certificate for the number of
Warrant Shares so purchased. Certificates for shares purchased hereunder shall
be delivered to the Holder within three (3) Trading Days (a day on which
the Nasdaq Stock Market is open for trading) after the date on which this
Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to
have been exercised and such certificate or certificates shall be deemed to
have been issued, and Holder or any other person so designated to be named
therein shall be deemed to have become a holder of record of such shares for
all purposes, as of the date the Warrant has been exercised by payment to the
Company of the Exercise Price and all taxes required to be paid by the Holder,
if any, pursuant to Section 5 prior to the issuance of such shares, have
been paid. In addition to such Holder’s other available remedies, the Company
shall pay to the Holder, in cash, as a penalty, for each $1,000 of Warrant
Shares (based on the closing price of the Common Stock on the date this Warrant
is submitted to the Company for exercise), $10 per Trading Day (increasing to
$20 per Trading Day five (5) Trading Days after such damages have begun to
accrue) for each Trading Day after the fifth Trading Day until such certificate
is delivered. Nothing herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock upon exercise of the Warrant as required pursuant to the
terms hereof.

 

(b)                  If
this Warrant shall have been exercised in part, the Company shall, at the time
of delivery of the certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.

 

(c)                  Notwithstanding
anything herein to the contrary, in no event shall the Holder be permitted to
exercise this Warrant for Warrant Shares to the extent that (i) the number
of shares of Common Stock beneficially owned by such Holder, together with any
Affiliate (as defined in Rule 405 under the Securities Act of 1933)
thereof (other than Warrant Shares issuable upon exercise of this Warrant) plus
(ii) the number of Warrant Shares issuable upon exercise of this Warrant,
would be equal to or exceed 4.9999% of the number of shares of Common Stock
then issued and outstanding, including
shares issuable upon exercise of this Warrant held by such Holder after
application of this Section 3(c). As used herein, beneficial ownership
shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules promulgated thereunder. To the extent that the
limitation contained in this Section 3(c) applies, the determination
of whether this Warrant is exercisable (in relation to other securities owned
by the Holder) and of which a portion of this Warrant is exercisable shall be
in the sole discretion of such Holder, and the submission of a Notice of
Exercise shall be deemed to be such Holder’s determination of whether this
Warrant is exercisable (in relation to other securities owned by such Holder)
and of which portion of this Warrant is exercisable, in each case subject to
such aggregate percentage limitation, and the Company shall have no obligation
to verify or confirm the accuracy of such determination. Nothing contained
herein shall be deemed to restrict the right of a Holder to exercise this Warrant
into Warrant Shares at such time as such exercise will not violate

 

2

 

the provisions of this Section 3(c). The provisions of this Section 3(c) may be
waived by the Holder upon, at the election of the Holder, not less than 61 days’
prior notice to the Company, and the provisions of this Section 3(c) shall
continue to apply until such 61st day (or such later date, as
determined by the Holder, as may be specified in such notice of waiver). No
exercise of this Warrant in violation of this Section 3(c) but
otherwise in accordance with this Warrant shall affect the status of the
Warrant Shares as validly issued, fully-paid and nonassessable.

 

(d)                  If
at any time after one year from the date of the issuance of this Warrant there
is no effective registration statement registering, or no current prospectus available
for, the issuance of the Warrant Shares to the holder, then, and only then, this
Warrant may also be exercised at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a certificate for
the number of Warrant Shares equal to the quotient obtained by dividing [(A-B)
(X)] by (A), where:

 

	
  (A)  =

  	
  the volume weighted average price (as reported by
  Bloomberg L.P. using the VAP function) on the Trading Day preceding the date
  of such election, as reported by Bloomberg Financial, L.P.;

  
	
   

  	
   

  
	
  (B)  =

  	
  the Exercise Price of the Warrants, as adjusted; and

  
	
   

  	
   

  
	
  (X)  =

  	
  the number of Warrant Shares issuable upon exercise
  of the Warrants in accordance with the terms of this Warrant by means of a
  cash exercise rather than a cashless exercise.

  

 

4.                                       No
Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the Exercise Price.

 

5.                                       Charges,
Taxes and Expenses. Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder or in such name or names as may be
directed by the Holder; provided, however, that in the event
certificates for Warrant Shares are to be issued in a name other than the name
of the Holder, this Warrant when surrendered for exercise shall be accompanied
by the Assignment Form attached hereto duly executed by the Holder; and
the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.

 

6.                                       Closing
of Books. The Company will not close its stockholder books or records in
any manner which prevents the timely exercise of this Warrant, pursuant to the
terms hereof.

 

3

 

7.                                       Transfer,
Division and Combination.

 

(a)                  Subject
to compliance with any applicable securities laws and the conditions set forth
in Sections 1 and 7(e) hereof, this Warrant and all rights hereunder are
transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by the
Holder or its agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and, if required,
such payment, the Company shall execute and deliver a new Warrant or Warrants
in the name of the assignee or assignees and in the denomination or
denominations specified in such instrument of assignment, and shall issue to
the assignor a new Warrant evidencing the portion of this Warrant not so
assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly
assigned, may be exercised by a new holder for the purchase of Warrant
Shares without having a new Warrant issued.

 

(b)                  This
Warrant may be divided or combined with other Warrants upon presentation
hereof at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with Section 7(a),
as to any transfer which may be involved in such division or combination,
the Company shall execute and deliver a new Warrant or Warrants in exchange for
the Warrant or Warrants to be divided or combined in accordance with such
notice.

 

(c)                  The
Company shall prepare, issue and deliver at its own expense (other than
transfer taxes) the new Warrant or Warrants under this Section 7.

 

(d)                  The
Company agrees to maintain, at its aforesaid office, books for the registration
and the registration of transfer of the Warrants.

 

(e)                  If,
at the time of the surrender of this Warrant in connection with any transfer of
this Warrant, the transfer of this Warrant shall not be registered pursuant to
an effective registration statement under the Securities Act and under
applicable state securities or blue sky laws, the Company may require, as
a condition of allowing such transfer (i) that the Holder or transferee of
this Warrant, as the case may be, furnish to the Company a written opinion
of counsel (which opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions) to the effect that such
transfer may be made without registration under the Securities Act and
under applicable state securities or blue sky laws, (ii) that the holder
or transferee execute and deliver to the Company an investment letter in form and
substance acceptable to the Company and (iii) that the transferee be an “accredited
investor” as defined in Rule 501(a) promulgated under the Securities
Act.

 

8.                                       No
Rights as Shareholder until Exercise. This Warrant does not entitle the
Holder to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price (or by means of a cashless exercise, if
available), the Warrant Shares so purchased shall be and be

 

4

 

deemed to be issued to
such Holder as the record owner of such shares as of the close of business on
the later of the date of such surrender or payment.

 

9.                                       Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that
upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant or any stock certificate
relating to the Warrant Shares, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it (which, in the case of the
Warrant, shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate of like tenor and
dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

10.                                 Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein shall be a
Saturday, Sunday or a legal holiday, then such action may be taken or such
right may be exercised on the next succeeding day not a Saturday, Sunday
or legal holiday.

 

11.                                 Adjustments
of Exercise Price and Number of Warrant Shares. The number and kind of
securities purchasable upon the exercise of this Warrant and the Exercise Price
shall be subject to adjustment from time to time upon the happening of any of
the following. In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common
Stock into a greater number of shares, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue
any shares of its capital stock in a reclassification of the Common Stock, then
the number of Warrant Shares purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder shall be
entitled to receive the kind and number of Warrant Shares or other securities
of the Company which it would have owned or have been entitled to receive had
such Warrant been exercised in advance thereof. Upon each such adjustment of
the kind and number of Warrant Shares or other securities of the Company which
are purchasable hereunder, the Holder shall thereafter be entitled to purchase
the number of Warrant Shares or other securities resulting from such adjustment
at an Exercise Price per Warrant Share or other security obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment
by the number of Warrant Shares purchasable pursuant hereto immediately prior
to such adjustment and dividing by the number of Warrant Shares or other
securities of the Company resulting from such adjustment. An adjustment made
pursuant to this paragraph shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event.

 

12.                                 Reorganization,
Reclassification, Merger, Consolidation or Disposition of Assets. In case
the Company shall reorganize its capital, reclassify its capital stock,
consolidate or merge with or into another corporation (where the Company is not
the surviving corporation or where there is a change in or distribution with
respect to the Common Stock of the Company), or sell, transfer or otherwise
dispose of all or substantially all its property, assets or business to another
corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring corporation, or any cash, shares of
stock or other securities or property of any nature whatsoever

 

5

 

(including warrants or
other subscription or purchase rights) in addition to or in lieu of common
stock of the successor or acquiring corporation (“Other Property”), are to be received by or distributed to the holders
of Common Stock of the Company, then the Holder shall have the right thereafter
to receive upon exercise of this Warrant, the number of shares of Common Stock
of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and Other Property receivable upon or as a result of
such reorganization, reclassification, merger, consolidation or disposition of
assets by a Holder of the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such event. In case of any such
reorganization, reclassification, merger, consolidation or disposition of
assets, the successor or acquiring corporation (if other than the Company)
shall expressly assume the due and punctual observance and performance of each
and every covenant and condition of this Warrant to be performed and observed
by the Company and all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined in good faith by
resolution of the Board of Directors of the Company) in order to provide for
adjustments of Warrant Shares for which this Warrant is exercisable which shall
be as nearly equivalent as practicable to the adjustments provided for in this Section 12.
For purposes of this Section 12, “common stock of the successor or
acquiring corporation” shall include stock of such corporation of any class which
is not preferred as to dividends or assets over any other class of stock
of such corporation and which is not subject to redemption and shall also
include any evidences of indebtedness, shares of stock or other securities
which are convertible into or exchangeable for any such stock, either immediately
or upon the arrival of a specified date or the happening of a specified event
and any warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 12 shall similarly apply to
successive reorganizations, reclassifications, mergers, consolidations or
disposition of assets.

 

13.                                 Voluntary
Adjustment by the Company. The Company may at any time during the term
of this Warrant reduce the then current Exercise Price to any amount and for
any period of time deemed appropriate by the Board of Directors of the Company.

 

14.                                 Notice
of Adjustment. Whenever the number of Warrant Shares or number or kind of
securities or other property purchasable upon the exercise of this Warrant or
the Exercise Price is adjusted, as herein provided, the Company shall give
notice thereof to the Holder, which notice shall state the number of Warrant
Shares (and other securities or property) purchasable upon the exercise of this
Warrant and the Exercise Price of such Warrant Shares (and other securities or
property) after such adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which such
adjustment was made.

 

15.                                 Notice
of Corporate Action. If at any time:

 

(a)                  the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend or other distribution, or any right to
subscribe for or purchase any evidences of its indebtedness, any shares of stock
of any class or any other securities or property, or to receive any other
right, or

 

(b)                  there
shall be any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any

 

6

 

consolidation or merger
of the Company with, or any sale, transfer or other disposition of all or
substantially all the property, assets or business of the Company to, another
corporation or,

 

(c)                  there
shall be a voluntary or involuntary dissolution, liquidation or winding up of
the Company;

 

then, in any one or more of such cases, the Company shall give to
Holder (i) at least 20 days’ prior written notice of the date on which a
record date shall be selected for such dividend, distribution or right or for
determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 20 days’ prior
written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify (i) the date on
which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their Warrant Shares for securities or other property
deliverable upon such disposition, dissolution, liquidation or winding up. Each
such written notice shall be sufficiently given if addressed to Holder at the
last address of Holder appearing on the books of the Company and delivered in
accordance with Section 17(d).

 

16.                                 Authorized
Shares. The Company covenants that during the period the Warrant is
outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares
upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that
such Warrant Shares may be issued as provided herein without violation of
any applicable law or regulation, or of any requirements of the Principal
Market upon which the Common Stock may be listed.

 

Except and to the extent as waived or consented to by
the Holder, the Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of
Holder as set forth in this Warrant against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the par
value of any Warrant Shares above the amount payable therefor upon such
exercise immediately prior to such increase in par value, (b) take all
such action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable

 

7

 

Warrant Shares upon the exercise of this Warrant, and (c) use
commercially reasonable efforts to obtain all such authorizations, exemptions
or consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this
Warrant.

 

Before taking any action which would result in an
adjustment in the number of Warrant Shares for which this Warrant is
exercisable or in the Exercise Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies having jurisdiction
thereof.

 

17.                                 Miscellaneous.

 

(a)                  Jurisdiction.
This Warrant shall constitute a contract under the laws of Oregon, without
regard to its conflict of law, principles or rules.

 

(b)                  Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any
right hereunder on the part of Holder shall operate as a waiver of such
right or otherwise prejudice Holder’s rights, powers or remedies,
notwithstanding all rights hereunder terminate on the Termination Date. If the
Company willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the Holder, the Company shall
pay to Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys’ fees, including
those of appellate proceedings, incurred by Holder in collecting any amounts
due pursuant hereto or in otherwise enforcing any of its rights, powers or
remedies hereunder.

 

(c)                  Notices.
Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile number specified
on the signature pages attached hereto prior to 6:30 p.m. (New York
City time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number on the signature pages attached hereto on a day that is
not a Trading Day or later than 6:30 p.m. (New York City time) on any
Trading Day, (iii) the Trading Day following the date of mailing, if sent
by U.S. nationally recognized overnight courier service, or (iv) upon
actual receipt by the party to whom such notice is required to be given. The
address for such notices and communications shall be as set forth on the
signature pages attached hereto or to the Purchase Agreement pursuant to
which this Warrant was purchased.

 

(d)                  Limitation
of Liability. No provision hereof, in the absence of any affirmative action
by Holder to exercise this Warrant or purchase Warrant Shares, and no
enumeration herein of the rights or privileges of Holder, shall give rise to
any liability of Holder for the purchase price of any Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.

 

8

 

(e)                  Remedies.
Holder, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Warrant. The Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
the provisions of this Warrant and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.

 

(f)                  Successors
and Assigns. Subject to applicable securities laws, this Warrant and the
rights and obligations evidenced hereby shall inure to the benefit of and be
binding upon the successors of the Company and the successors and permitted
assigns of Holder. The provisions of this Warrant are intended to be for the
benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.

 

(g)                  Amendment.
This Warrant may be modified or amended or the provisions hereof waived
with the written consent of the Company and the Holder.

 

(h)                  Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.

 

(i)                  Headings.
The headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

9

 

IN WITNESS
WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized.

 

 

	
  Dated: November 14, 2005

  	
   

  
	
   

  	
   

  
	
   

  	
  AVI BIOPHARMA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Alan P. Timmins

  
	
   

  	
   

  	
  Title: President and Chief Operating Officer

  

 

10

 

NOTICE OF EXERCISE

 

To:                              AVI
BioPharma, Inc.

 

(1)                                  The
undersigned hereby elects to purchase 485,920 Warrant Shares of AVI BioPharma, Inc.
pursuant to the terms of the attached Warrant (only if exercised in full), and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.

 

(2)                                  Payment
shall take the form of (check applicable box):

 

o
in lawful money of the United States; or

 

o
if permitted pursuant to subsection 3(d) of the Warrant, by the cancellation
of such number of Warrant Shares as is necessary, in accordance with the
formula set forth in subsection 3(d), to exercise this Warrant with
respect to the maximum number of Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in subsection 3(d).

 

(3)                                  Please
issue a certificate or certificates representing said Warrant Shares in the
name of the undersigned or in such other name as is specified below:

 

	
   

  	
   

  
	
  Rodman & Renshaw, LLC

  

 

The Warrant Shares shall be delivered to the following:

 

Rodman & Renshaw, LLC

Attn: Noam Rubinstein

330 Madison Avenue, 27th Floor

New York, NY 10017

 

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated:

  	
   

  	
   

  
						

 

11

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute

this form and supply required information. 

Do not use this form to exercise the warrant.)

 

FOR VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to                                                                     ,
whose address is

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 

	
   

  	
  Dated:

  	
                      ,              

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Holder’s Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Holder’s Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  
							

 

NOTE:  The signature to this
Assignment Form must correspond with the name as it appears on the face of
the Warrant, without alteration or enlargement or any change whatsoever, and
must be guaranteed by a bank or trust company. Officers of corporations and
those acting in a fiduciary or other representative capacity should file proper
evidence of authority to assign the foregoing Warrant.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}]]