Document:

Exhibit 10.51

 

NOTE:  Portions of this document marked “***” have
been omitted and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment of the omitted and separately
filed portions.

 

LICENSE
AND DEVELOPMENT AGREEMENT

 

THIS LICENSE AND DEVELOPMENT AGREEMENT (this “Agreement”) is made and
entered into as of March 10, 2006 between AVI BIOPHARMA, INC. (“AVI”),
an Oregon corporation, and COOK GROUP INCORPORATED (“Company”), an Indiana
corporation.

 

RECITALS

 

WHEREAS, AVI has developed technology relating to antisense compounds
which may have applications in the treatment of coronary artery and
peripheral vascular disease;

 

WHEREAS, Company makes and sells medical devices relating to the
treatment of vascular disease;

 

WHEREAS, AVI desires to grant, and Company desires to obtain, the
rights set forth herein;

 

WHEREAS, AVI and Company are entering into a Supply Agreement (the “Supply
Agreement”) and an Investment Agreement (the “Investment Agreement”) both of even
date herewith regarding AVI’s supplying Company’s requirements for the Drug (as
defined below); and

 

WHEREAS, the parties desire that Company attempt to develop products
using the Technology (as defined below) for the treatment of coronary artery
and peripheral vascular disease through certain systemic and non-systemic
applications.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements contained herein, and for other valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:

 

ARTICLE 1.

DEFINITIONS

 

1.1.                              Specific
Definitions.  As used in this
Agreement, the following terms shall have the meanings set forth or as
referenced below:

 

 

“Actual Cost” means the cost of
activities performed by AVI personnel pursuant to this Agreement, including
direct labor and materials and allocated overhead costs.

 

“Affiliate” of a specified person (natural or juridical) means a
person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the person
specified. “Control” shall mean ownership of more than 50% of the shares of
stock entitled to vote for the election of directors in the case of a
corporation, and more than 50% of the voting power in the case of a business
entity other than a corporation.

 

“Agreement” means this Agreement and
all Exhibits and Schedules hereto.

 

“AVI” has the meaning set forth in the
recitals hereto. 

 

“Company” has the meaning set forth in
the recitals hereto.

 

“Drug” means any phosphorodiamidate
morpholino oligomers, with or without attachments to enhance efficacy, that
inhibit translation of the human protein, c-myc. Included in this definition
are the compounds known as AVI-4126 and AVI-5126. 

 

“Expiration” or “Expired”
means, with respect to a particular patent, the patent’s expiration,
abandonment, cancellation, disclaimer, award to another party other than AVI in
an interference proceeding, or declaration of invalidity or unenforceability by
a court or other authority of competent jurisdiction (including final rejection
in a re-examination or re-issue proceeding).

 

“FDA” means the U.S. Food and Drug
Administration.

 

“Field” means the treatment of coronary
artery and peripheral vascular diseases and conditions by administration of a
drug or drug-containing device that inhibits the production or function of the
human protein, c-myc. Specifically excluded from the Field are treatment of
coronary artery bypass grafts, congestive heart failure, and malignancies. 

 

“Intellectual Property” means U.S. and
foreign patents and patent applications, trademarks, service marks and
registrations thereof and applications therefor, copyrights and copyright
registrations and applications, mask works and registrations thereof, know-how,
trade secrets, inventions, discoveries, ideas, technology, data, information,
processes, drawings, designs, licenses, computer programs and software, and
technical information including but not limited to information embodied in
material specifications, processing instructions, equipment specifications,
product specifications, confidential data, electronic files, research
notebooks, invention disclosures, research and development reports and the like
related thereto, and all amendments, modifications, and improvements to any of
the foregoing.

 

“Invention” means any invention,
discovery, know-how, trade secret, data, information, technology, process or
concept, whether or not patented or patentable, and whether or not memorialized
in writing.

 

“Investment Agreement” means the
Investment Agreement of even date herewith by

 

2

 

and between AVI and Company.

 

“Joint Inventions” is defined in Section 6.3.

 

“Know-How” means all know-how, trade
secrets, expertise, Inventions, discoveries and technical information other
than Patents (as defined below) now or hereafter owned by, licensed to,
possessed by, or under the control of, AVI which are necessary, appropriate or
useful for designing, developing, processing, manufacturing, using, selling or
delivering the Drug within the Field, including but not limited to information
embodied in drawings, designs, copyrights, copyright registrations and applications,
trademarks, service marks and registrations thereof and applications therefor,
material specifications, processing instructions, formulas, equipment
specifications, product specifications, confidential data, computer software,
electronic files, research notebooks, invention disclosures, research and
development reports and the like related thereto, and all amendments,
modifications, upgrades and improvements to any of the foregoing, occurring
before or during the term of this Agreement.

 

“Liens” means liens, mortgages,
charges, security interests, claims, voting trusts, pledges, encumbrances,
options, assessments, restrictions, licenses, sublicenses, or third party or
spousal interests of any nature.

 

“Milestone Event” has the meaning set
forth in Section 3.2.

 

“Milestone Payment” has the meaning
set forth in Section 3.2. 

 

“Net Sales” of Products with respect
to a particular period means the gross amount billed with respect to Products
sold by Company, its Affiliates and sublicensees, less (to the extent included
in the gross amount and to the extent not for promotional purposes):

 

(a)                                  cash
discounts actually given;

 

(b)                                 credits
or allowances actually given or made on account of price adjustments, rebates
(including Medicaid or other government programs, chargebacks, and contractual
agreements), or volume reimbursements;

 

(c)                                  separately
stated (on customer invoice) taxes on sales (such as sales and use taxes); and

 

(d)                                 separately
stated (on customer invoice) delivery charges actually paid to third party carriers
(including transportation and insurance costs); all as determined in accordance
with generally accepted accounting principles; provided, however, that bona
fide sample units and clinical trial units of Products will not be included in
any calculation of Net Sales.

 

“NIH
License” means the exclusive license granted by the NIH Public Health
Service to Lynx Therapeutics, Inc. on September 17, 1996 and assigned
to AVI on May 18, 2001 to patents covering “Inhibition of Cell
Proliferation Using Antisense Oligonucleotides.”

 

“Patents”
means (a) the patents and patent applications, together with any patents
that

 

3

 

may issue based thereon, set forth on Exhibit A; (b) any
other patents or patent applications now or hereafter owned by or licensed to
AVI that are necessary, appropriate or useful for designing, developing,
processing, manufacturing, using, selling or delivering the Drug within the
Field; including but not limited to, any patents or patent applications
covering any sole or joint Inventions of AVI made or conceived during the Term
of this Agreement and any improvements thereof; (c) all continuation,
divisional, re-issue, re-examination and substitution applications that may be
filed, before or during the term of this Agreement, by or for the benefit of
AVI based on the foregoing referenced patents or patent application, together
with any patents that may issue based thereon; and (d) all foreign
applications that may be filed, before or during the term of this
Agreement, by or for the benefit of AVI based on the foregoing referenced
patents and patent applications, together with all patents which may issue
based thereon.

 

“Performance
Standards” has the meaning set forth in Section 10.13.

 

“ Product”
means the Drug and any product or device sold by Company or its Affiliate that
incorporates or includes the Drug. No more than one (1) payment calculated
in accordance with Section 3.1 shall be paid on any single product
covered by the Patents even though such product, including its manufacture,
sale or use may be covered by Valid Claims of more than one patent
included in the Patents.

 

“Resten-MPTM”
means the product candidate currently in Phase II clinical development by AVI
for prevention of coronary artery restenosis which consists of AVI-4126
formulated in a microbubble formulation for systemic administration to
patients.

 

“Summerton
Agreement” means the Technology Transfer Agreement between AVI and Dr. James
Summerton (on behalf of Anti-Gene Development Group, an Oregon limited
partnership) dated February 9, 1992, as amended.

 

“Supply
Agreement” means the Supply Agreement of even date herewith by and between
AVI and Company.

 

“Technology”
means the Patents and the Know-How.

 

“Term”
has the meaning set forth in Section 9.1. 

 

“Unexpired”
shall mean a patent that has not Expired.

 

“Valid
Claim” means a claim in an Unexpired patent included with the Patents which
has not been held unenforceable, unpatentable or invalid by a decision of a
court or other governmental agency of competent jurisdiction, unappealable or
unappealed within the time allowed for appeal and which has not been admitted to
be invalid or unenforceable through reissue or disclaimer.

 

“UNeMed
License” means the license obtained by AVI from UNeMed Corporation pursuant
to an agreement dated June 1, 1998 to microbubble technology for use in
the delivery of therapeutic compounds. 

 

4

 

1.2.                              Definitional
Provisions.

 

(a)                                  The
words “hereof,” “herein,” and “hereunder” and words of similar import, when
used in this Agreement, shall refer to this Agreement as a whole and not to any
particular provisions of this Agreement.

 

(b)                                 Terms
defined in the singular shall have a comparable meaning when used in the
plural, and vice-versa.

 

(c)                                  References
to an “Exhibit” or to a “Schedule” are, unless otherwise specified, to one of
the Exhibits or Schedules attached to or referenced in this Agreement, and
references to an “Article” or a “Section” are, unless otherwise specified, to
one of the Articles or Sections of this Agreement.

 

(d)                                 The
term “person” includes any individual, partnership, joint venture, corporation,
trust, unincorporated organization or government or any department or agency
thereof.

 

(e)                                  The
terms “including” and “includes” and words of similar import mean including,
but not limited to.

 

ARTICLE 2.

LICENSE TO COMPANY

 

2.1.                              Grant
of License.  In consideration for the
payments set forth in the Investment Agreement and this Agreement and subject
to the terms and conditions of this Agreement, AVI hereby grants to Company a
worldwide, sublicensable, exclusive license to the Technology to use, import,
export, sell, and offer to sell the Drug in the Field and to make, have made,
use, import, sell and offer to sell Products incorporating or utilizing the
Drug and/or the Technology in the Field, practice methods covered thereby, and
otherwise to commercialize and exploit, the Drug and/or the Technology in the
Field. For clarity, AVI grants the foregoing exclusive license to the fullest
extent of AVI’s rights in the Technology within the Field, retaining only
rights in the Technology outside the Field.

 

2.2.                              Technology
Transfer.  AVI shall, upon Company’s
reasonable request from time to time, provide to Company at AVI’s Actual Cost
available drawings, specifications, processes, materials, and any manufacturing
procedures and such other documentation and Know-How as is reasonably necessary
or useful to enable Company to fully utilize the license granted to Company
under this Agreement. In addition, AVI will make available personnel as
requested by Company, to provide such individual training to Company technical
and manufacturing personnel as is necessary to enable Company to fully utilize
the license granted to Company under this Agreement, at such reasonable times
and places as Company may request from time to time, including, without
limitation, to complete any development of the Technology in the Field, and to
assist in the transfer of any manufacturing and regulatory submissions
(including raw and compiled clinical data), certificates or other documents or
approvals.

 

5

 

ARTICLE 3.

FEES, ROYALTIES AND REPORTS

 

3.1.                              Royalty
Payments.

 

(a)                                  Subject
to the terms of this Agreement, Company shall pay to AVI a royalty equal to ***
of (i) Net Sales of Products by Company, Affiliates, and sublicensees; and
(ii) any other payments or consideration paid to Company by sublicensees
who are not Affiliates of the Company in consideration of the grant of such
sublicense, including but not limited to upfront payments, stock payments, and
milestone payments.

 

3.2.                              Milestone
Payment.  Company shall pay AVI a
one-time milestone payment of *** (the “Milestone Payment”) within
thirty (30) days after the date upon which Company’s cumulative Net Sales of
Products reaches *** (the “Milestone Event”).

 

3.3.                              Third
Party Patent Rights.  Notwithstanding
any other provision of this Agreement to the contrary, Company shall not be
liable for any royalties, payments or other amount due or to become due to
third parties under any license or other agreement with respect to the Drug or
the Technology that is in effect as of the date of this Agreement (including
any such royalties, payments or other amounts payable under the NIH License,
the Summerton Agreement or the UNeMed License), all of which royalties,
payments and other amounts shall be borne by AVI. After the date hereof, if the
parties agree that AVI needs to obtain rights to a third party patent that it
does not have rights to on the date hereof to commercialize the Drug within the
Field, then the parties shall agree on the allocation between the parties of
the cost of obtaining such rights (including any royalties that may be
payable).

 

3.4.                              Reports
and Payments.  Within thirty (30)
days after the end of each calendar quarter, Company shall provide AVI with a
written report indicating the amount of Net Sales of Products during such
preceding period and the amount of the royalties due for such period. Simultaneous
with making such report, Company shall pay to AVI the amount of royalties then
due. With respect to sales of Products outside the United States on which any
earned royalties are payable hereunder, conversions to U.S. dollars, shall be
made by based on interbank (official) rates as reported on www.oanda.com as of
the first Business Day of the month in which the payment is to be made. Notwithstanding
anything to the contrary contained in this Agreement, Company shall be entitled
to withhold, from earned royalties payable hereunder, all taxes thereon
required, by competent governmental authorities, to be withheld.

 

3.5.                              Records. Company agrees to keep accurate written
records sufficient in detail to enable the royalties payable under this
Agreement by Company to be determined and verified for a period of one (1) year after the delivery of any royalty report.

 

3.6.                              Audit
of Records.  Upon reasonable notice
and during regular business hours, Company shall from time to time, but no more
frequently than once annually, make available the records referred to in Section 3.5
for audit at AVI’s expense by independent representatives selected by AVI and
reasonably acceptable to Company to verify the accuracy of the reports provided
to AVI. Such representatives shall execute a suitable confidentiality agreement

 

6

 

reasonably
acceptable to Company prior to conducting such audit. Such representatives may disclose
to AVI only their conclusions regarding the accuracy of royalty payments and of
records related thereto, and shall not disclose Company’s information to AVI
without the prior written consent of Company. No claim may be asserted by
AVI against Company for any errors unless made within thirty (30) days following completion of
such examination or audit made pursuant to this Section 3.6. The
right to audit shall extend through one (1) year following the delivery of
the last royalty report of a calendar year and thereafter any royalty report
shall be deemed complete and accurate. Each royalty report shall be subject to
only one such examination and audit. The party benefiting from any discrepancy
will promptly pay the amount of such discrepancy to the other.

 

ARTICLE 4.

DEVELOPMENT PROJECT

 

4.1.                              Development
Efforts.

 

(a)                                  During
the Term of this Agreement, Company will control any regulatory and clinical
programs for the Drug in the Field as Company deems appropriate (including the
clinical trials set forth in the Article 4) and obtain in Company’s
name any necessary device or medical regulatory approvals from the FDA, and any
applicable regulatory agencies of such other countries as Company deems
appropriate, prerequisite to the commercial sale of products for their intended
uses. AVI will supply Company with all available documents, instruments,
information and reports reasonably necessary or convenient as requested by
Company in connection with such regulatory approval efforts and in connection
with pre-clinical efforts. During the Term of this Agreement, AVI will assist
and cooperate with the development of the Drug in the Field, including, without
limitation, supplying the Drug to Company and advising and participating in
product scientific research and development proceedings and all governmental
actions, including filings, proceedings and meetings, as requested by Company.
AVI will also assist and cooperate with Company in Company’s development of
coating technology and processes necessary or convenient for the use of the
Drug in the Field. In connection with the foregoing and at Company’s reasonable
request, AVI shall make available senior AVI personnel responsible for and
knowledgeable about the Drug and the Technology. AVI grants to Company the
right of reference to AVI’s regulatory files with the FDA or other appropriate
government agencies as necessary or helpful for support of Company’s regulatory
submissions with respect to the Drug in the Field. All regulatory approvals
funded by Company and all related studies, documents, instruments, information
and reports, will be in Company name and owned by Company. Company grants to
AVI the right of reference to Company’s regulatory files relating to the Drug
with the FDA or other appropriate governmental agencies as necessary for
support of AVI’s current or future regulatory submissions outside the Field;
provided that AVI shall not be entitled to utilize such right in connection
with any commercialization efforts involving a medical device company for use
in the Field. AVI shall provide prior written notice to Company of any exercise
of such right of reference specifying the time of such exercise, the type of
filing, the regulatory files to be referenced and such other circumstances as may be
appropriate for Company to determine AVI’s compliance with the exercise of such
right. AVI’s sole remedy for any breach of Company’s obligations under this Section 4.1
shall be as set forth in Section 9.2.

 

7

 

(b)                                 Payments
to AVI for Development Support.  Except
for the supply of clinical and commercial supplies of Drug, the terms of which
are included in the Supply Agreement, Company will reimburse AVI’s Actual Costs
in providing all services and support provided by AVI pursuant to this
Agreement. Within thirty (30) days of the end of each calendar quarter, AVI
will send Company an invoice specifying the Actual Cost of services and support
provided in the just-ended quarter and the payment due. Within thirty (30) days
of receiving each such invoice, Company will make a payment to AVI for the full
amount due.

 

(c)                                  AVI
shall supply to Company on payment terms specified in the Supply Agreement such
quantities of the Drug as are reasonably required by Company in connection with
pre-clinical and clinical trials and in connection with obtaining regulatory
approvals. AVI represents and warrants to Company that all Drugs supplied to
Company hereunder will have been manufactured, labeled and packaged in
accordance with all applicable laws and regulations, including (as applicable)
FDA GMP requirements and all other manufacturing requirements that are
applicable for the intended uses of Drug that have been communicated to AVI by
Company.

 

4.2.                              Non-Compete.
 AVI shall not directly or indirectly
market or sell, or directly or indirectly encourage or solicit the submission
of, or entertain inquiries, proposals or offers from any person or entity
(other than Company or its Affiliates), or otherwise provide information to or
engage in discussions with any other person or entity, in any way relating to
the sale, licensing, distribution or other disposition of any compound for use
or application in the Field or any Intellectual Property relating to the
compound for use or application in the Field.

 

4.3.                              Resten-MP.
 Company agrees to complete the
multicenter Phase II clinical trial of Resten-MP currently underway in Germany
to assess the safety and efficacy of Resten-MP in preventing coronary artery
restenosis (“German Study”). Company may elect to have AVI complete the
German Study and in such case will pay AVI’s Actual Costs incurred in doing so.
Completion of the German Study is defined as completing 6-month follow-up
assessments, per the study protocol, of at least thirty-five (35) evaluable
patients. Within sixty (60) days of obtaining the final data from the German
Study, Company will inform AVI of its decision whether or not to continue
product development of Resten-MP. In the event that Company decides to continue
development, it will share with AVI its plans for development of the final
commercial formulation of drug and its Phase III clinical strategy for
Resten-MP. If Company decides not to continue development of Resten-MP or a
similar microparticle delivery Product (for example based on AVI-5126)
following completion of the German study, AVI may on thirty (30) days
written notice reacquire all rights specific to microparticle delivery
Products. AVI may also reacquire all rights specific to microparticle delivery
Products, on thirty (30) days written notice if at any time in the further
development program for Resten MP or a similar microparticle delivery
Product: a) Company informs AVI that it has decided to discontinue development
of Resten-MP or a similar microparticle delivery Product; or b) six (6) months
elapse during which no development work on Resten-MP or a similar microparticle delivery
Product is ongoing by Company, in which case the development program will be
deemed to be discontinued. In any such case, upon written notice by AVI to
Company, the definition of Field will be amended to exclude all rights specific
to microparticle delivery of Drugs.

 

4.4.                              Product
Development Committee.  Company
agrees to use commercially reasonable efforts to commercialize the Technology
in the Field. AVI and Company

 

8

 

acknowledge
that the development process for new technologies is uncertain and that
unforeseen issues may arise. In order to ensure that Company is pursuing
the Technology and to accommodate the uncertainty of product development, the
parties agree to the following:

 

(a)                                  Company
and AVI shall each appoint a representative to a Product Development Committee.
The Product Development Committee will be primarily responsible for monitoring
Company’s efforts to develop and commercialize the Technology in the Field and
for monitoring and promoting cooperation in those efforts between and among the
parties and their representatives. The Product Development Committee shall meet
no less frequently than every other month during the Term at times and places
to be determined by agreement of the members thereof.

 

(b)                                 If
either member of the Product Development Committee is dissatisfied with the
nature or extent of the progress being made with respect to the
commercialization of the Technology, that member may request a meeting of
one or more members of senior management of each party to discuss and attempt
to resolve the issue. The first such meeting of the parties’ representatives
shall take place within thirty (30) days of the request. Each party shall cause
its representatives to negotiate in good faith to attempt to reach a mutually
acceptable resolution of any issue referred to its senior management.

 

ARTICLE 5.

AVI’S OBLIGATIONS

 

5.1.                              Maintain
Licenses in Force.  AVI shall comply
with all of the provisions of, and shall maintain in full force and effect
(including the timely payment of all royalties, payments and other amounts due
thereunder), all license agreements with third parties, including,
specifically, the NIH License and UNeMed License, pursuant to which AVI is
licensee of Intellectual Property included in the Technology. AVI shall
promptly notify Company if any such third party alleges any breach, default, or
event that, with the passage of time or giving of notice could become a
default, by AVI of any such license agreement. Company shall be entitled, but
not obligated, to cure any alleged breach or default by AVI of such license
agreement and set-off the cost of such cure against amounts otherwise owed to
AVI hereunder.

 

5.2.                              Company
Exclusivity.  AVI will not, without
the prior written consent of Company, supply, sell, transfer or otherwise
dispose of the Drug or any products or components utilizing the Drug or the
Technology or any Joint Invention to any third party if AVI should have known
after making reasonable inquiry or has actual knowledge (including the actual
knowledge of any of AVI’s executive officers) that such third party intends or
is likely to use, sell, supply, transfer or otherwise dispose of the Drug or
any such products, components, Technology or any Joint Inventions in the Field.
Prior to any sale, supply, transfer or other disposition to any third party of the
Drug or any products or components utilizing the Drug or any such products,
components, Technology or any Joint Invention, AVI shall obtain the agreement
of such third party that it will not use, sell, supply, transfer or otherwise
dispose of the Drug or any such products, components, Technology or any Joint
Inventions in the Field. AVI shall obtain the agreement of such third party
that Company will be an express third party beneficiary of such agreement. The
restrictions set forth in this Section 5.2 shall not apply to
transfers of the Drug to

 

9

 

consultants or
agents of AVI who are performing research or consulting services on behalf of
AVI in connection with such transfer.

 

5.3.                              No
Amendments With Adverse Effects to Company.  AVI agrees not to modify, waive or amend any
provision of any agreement in effect as of the date hereof that would adversely
affect Company’s obligations under Article 3 without the prior
written consent of Company, including any modification, waiver or amendment to
any agreement in effect as of the date hereof that could have the effect of
increasing the amount payable to the licensor.

 

ARTICLE 6.

INTELLECTUAL PROPERTY

 

6.1.                              Protect
Know-How.  AVI and Company agree to
maintain the confidentiality of all Confidential Information (as such term is
defined in the Investment Agreement), including but not limited to the status
of any patent applications included in the Patents, to the extent such patent
applications relate solely to the Field. Each party agrees not to disclose or
use (except as permitted or required for performance by the party receiving
such Confidential Information of its rights or duties hereunder) any
Confidential Information of the other party obtained during the term of this
Agreement. Each party further agrees to take appropriate measures to prevent
any such prohibited disclosure by its present and future employees, officers,
agents, subsidiaries, or consultants during the term of this Agreement and
shall be liable for any breach of this Article 6 by and such
person.

 

6.2.                              Protection
of Technology.  During the term of
this Agreement, each party shall promptly inform the other of any
Invention, improvement, amendment, upgrading or modification relating to the
Drug or the Technology which may be applicable or useful in the Field. AVI
agrees to protect the Technology by obtaining and maintaining appropriate
patent rights as recommended by reputable patent counsel; provided, however,
that Company shall have the right to review and approve any filings or other
correspondence with the appropriate patenting authority relating to the
Technology or the Drug in the Field. Company shall not unreasonably withhold
such approval. If Company determines, in its sole discretion, that any
Technology conceived, reduced to practice or otherwise made, developed or
acquired by one or more employees or agents of AVI is not being adequately
protected by patents, Company may so inform AVI. If Company decides
that AVI’s response has been inadequate, Company may take whatever action
it deems necessary at its expense to protect such Technology. All patents and
copyright registrations shall be applied for in the names of the actual
inventors or authors and shall be assigned to AVI, subject to Company’s rights
and license therein; each party shall execute and deliver such forms of
assignment, power of attorney and other documents which are necessary to give
effect to the provisions hereof.

 

6.3.                              Ownership
of Intellectual Property.  Subject to
the rights and licenses granted to Company by this Agreement, (a) any
Intellectual Property conceived, reduced to practice or otherwise made,
developed or acquired by one or more employees or agents of AVI shall be the
property of AVI, (b) any Intellectual Property conceived, reduced to
practice or otherwise made, developed or acquired by one or more employees or
agents of Company shall be the property of

 

10

 

Company, and (c) AVI
and Company shall each have an undivided one-half interest in any Intellectual
Property jointly conceived, reduced to practice or otherwise made, developed or
acquired by one or more employees or agents of AVI and one or more employees or
agents of Company (“Joint Inventions”). For purposes of this Section 6.3,
Intellectual Property which is the subject of a patent application shall be
deemed to have been developed jointly by employees or agents of Company and
AVI, and thus be a Joint Invention, if at least one employee or agent of each
of Company and AVI is required to be named as an inventor in such application
in order for such patent to be valid.

 

6.4.                              Prosecution
of Patents on Joint Inventions.  If
either AVI or Company proposes to file an application for any U.S or foreign
patents, copyright registration, or any continuation or modification thereof,
with respect to any Joint Invention, then such party proposing such
registration (“the first party”) shall notify the other party (“the second
party”) in writing and the second party shall have option of joining in such
action. If the second party elects to join in such action, the second party
shall pay one-half of the total expenses incurred by Company and AVI therein
and be entitled to participate in all material steps in such action. If the second
party elects not to join in such action, the first party shall be entitled to
control such action, but such failure to participate shall not affect the
second party’s ownership interest in the Joint Inventions or in any
Intellectual Property rights therein. Whether or not the second party elects to
join in such action, the second party shall, upon the request of the first
party, cooperate with and assist the first party in such action to the extent
required by statute, regulation or government agency, including without
limitation, executing and delivering all documents in connection therewith and
using its reasonable efforts to obtain such executions from all appropriate
employees and agents of the second party at the second party’s cost. Each party
will treat Joint Inventions as Confidential Information.

 

6.5.                              License
Grant to AVI.  Company hereby grants
AVI (for all applications outside the Field) a worldwide, royalty-free,
nonexclusive license, with the right to sublicense, to any Intellectual Property
that is based upon AVI’s Technology and is invented by employees of Company
working on the development of Products pursuant to this Agreement.

 

6.6.                              Prosecution
of Infringement of Technology.

 

(a)                                  Each
of Company and AVI shall promptly notify the other if it knows or has reason to
believe that any of the rights to the Technology in the Field are being
infringed or misappropriated by a third party or that such infringement or
misappropriation is threatened. The parties shall consult with each other as promptly
as reasonably practicable to review actions to be taken in connection with such
alleged infringement or misappropriation. The parties acknowledge that many of
the patents licensed by Company hereunder contain claims that bear on other
therapeutic fields and applications in addition to the Field. Company shall
have the right to institute and control the prosecution of any alleged
infringement or misappropriation of the Technology in the Field, provided
however, that Company shall not enter into any settlement without AVI’s written
consent that could impact AVI’s or AVI’s licensees’ ability to develop or
commercialize products outside the Field.

 

(b)                                 Company
shall be solely responsible for payment of all costs and expenses it incurs in
the prosecution and/or a negotiation of a settlement. Company shall have the
right to

 

11

 

act in the name of, or on behalf of AVI, and
join AVI as a party plaintiff to any such proceeding if Company believes it is
necessary or advisable to successfully prosecute such infringement or
misappropriation. AVI shall cooperate in connection with the initiation and
prosecution by Company of such suit or action. The proceeds from any judgment,
decision or settlement shall first be used to reimburse Company for all costs
and expenses it incurred relating to prosecution and settlement of any action;
second, be allocated equally between Company and AVI.

 

(c)                                  If
Company fails to initiate the prosecution of any alleged infringement or misappropriation
of the Technology in the Field within six (6) months of receiving written
notice from AVI or providing notice to AVI of any commercially significant
infringement or misappropriation, AVI shall have the right to institute and
control the prosecution of any such alleged infringement or misappropriation. AVI
shall be solely responsible for the payment of all costs and expenses it incurs
in the prosecution and/or a negotiation of a settlement. AVI may request
from Company the right to act in the name of, or on behalf of Company, and to
join Company as a party plaintiff to any such proceeding that AVI believes it
is necessary or advisable to successfully prosecute such infringement or
misappropriation, such request not to be unreasonably withheld or delayed by
Company. If such right is granted to AVI, Company shall cooperate in connection
with the initiation and prosecution by AVI of such suit or action. The proceeds
from any judgment, decision or settlement shall first be used to reimburse AVI
for all costs and expenses it incurred relating to prosecution and settlement
of any action; second, be allocated on an equal basis between Company and AVI.

 

ARTICLE 7.

REPRESENTATIONS AND WARRANTIES

 

7.1.                              Representations
of AVI.  AVI represents, warrants and
covenants to Company that:

 

(a)                                  AVI
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Oregon and has full corporate power to conduct the
business in which it is presently engaged and to enter into and perform its
obligations under this Agreement.

 

(b)                                 AVI
has taken all necessary corporate action under the laws of the state of its
incorporation and its certificate of incorporation and by-laws to authorize the
execution and consummation of this Agreement and, when executed and delivered
by AVI, this Agreement shall constitute the valid and legally binding agreement
of AVI enforceable against AVI in accordance with the terms hereof, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’
rights and to general equity principles.

 

(c)                                  Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein will violate any provision of the certificate
of incorporation or bylaws of AVI or any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any court or
governmental agency or instrumentality, domestic or foreign, or conflict with
or result in any breach of any of the terms of or constitute a default under or
result in termination of or the creation or imposition of any Lien pursuant to
the terms

 

12

 

of any contract or agreement to which AVI is
a party or by which AVI or any of its assets is bound.

 

(d)                                 AVI
exclusively owns, or has valid and subsisting exclusive license rights (with
the right to sublicense) to, all of the Technology within the Field, subject to
no Lien whatsoever. Other than payment obligations under the NIH License, the
UNeMed License, and the Summerton Agreement, AVI is not subject to any
obligation to any person or entity for royalties, fees or commissions in
respect of the Technology within the Field. No current or former stockholder,
employee, officer, agent or consultant of AVI has any rights in or to any of
the Technology for use within the Field. The Technology is valid and
enforceable and has not been challenged in any judicial or administrative
proceeding and AVI has not received and is not aware of any claim or notice of
any person that such person is contemplating such action. AVI’s execution and
performance of this Agreement, the transactions contemplated herein and Company’s
use of the Technology within the Field will not infringe, misappropriate,
misuse or conflict with the rights, including patent and other Intellectual
Property or contractual rights, of third parties. AVI has the right and
authority to enter into this Agreement and to grant the license granted herein.
To AVI’s knowledge, no person or entity nor such person’s or entity’s business
or products has infringed, misused, misappropriated or conflicted with the
Technology within the Field or currently is infringing, misusing,
misappropriating or conflicting with such Technology within the Field.

 

(e)                                  There
are no actions, suits, claims, disputes or proceedings or governmental
investigations pending or, to AVI’s knowledge, threatened against AVI or any of
its Affiliates with respect to the Technology or the use thereof by AVI, either
at law or in equity, before any court or administrative agency or before any
governmental department, commission, board, bureau, agency or instrumentality,
or before any arbitration board or panel whether located in the United States
or a foreign country. AVI has not failed to comply with any law, rule,
regulation, writ, judgment, injunction, decree, determination, award or other
order of any court or other governmental department, commission, board, bureau,
agency or instrumentality, or before any arbitration board or panel whether
located in the United States or a foreign country, which failure in any case
would in any material respect impair any rights of Company under this
Agreement.

 

(f)                                    All
Patents identified in Exhibit A have the status indicated therein and all
applications are still pending in good standing and have not been withdrawn or
abandoned. The Patents identified in Exhibit A constitute all of the
current patents and patent applications of AVI having applicability to the
Technology or the Drug within the Field. AVI has made all statutorily required
filings, if any, to record its interest in the Patents.

 

(g)                                 No
representation or warranty made by AVI herein and no information disclosed by
AVI to Company contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statement made herein or therein
not misleading.

 

(h)                                 The
NIH License and the UNeMed License are in full force and effect and there are
no existing defaults, or events, which, with the passage of time or giving of
notice, would become defaults thereunder. AVI is the sole and exclusive owner
of the licensee’s interest in the NIH License and the UNeMed License, free and
clear of any Liens. The execution and delivery by AVI of this Agreement and its
performance hereunder will not constitute a default (or an

 

13

 

event which, with the passage of time or
giving of notice, would constitute a default) under the NIH License or the
UNeMed License. AVI has not received notice, nor is AVI otherwise aware, that
the licensor under the NIH License or the UNeMed License intends to cancel or
terminate the corresponding license or provide notice of a default (or an event
which, with the passage of time or giving of notice, would constitute a
default) thereunder. None of the terms of the NIH License or the UNeMed License
has been impaired, waived, altered, amended or modified in any respect) prior
to the date hereof. AVI has previously delivered to Company true and correct
copies of the NIH License and the UNeMed License.

 

(i)                                     AVI
has made no public disclosure of any non-patented Technology in the Field and
shall make no public disclosure of any such Technology in the Field or any such
Technology in the Field which may come into existence during the term of
this Agreement, except to the extent required by law or to obtain patent
protection therefore. AVI has otherwise taken reasonable steps to protect its
rights in the Technology.

 

(j)                                     As
of the date hereof, the protein referred to in the definition of “Drug” set
forth in Section 1.1 constitutes ***.

 

7.2.                              Representations
of Company.  Company represents,
warrants and covenants to AVI that:

 

(a)                                  Company
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Indiana and has full corporate power to conduct the
business in which it is presently engaged and to enter into and perform its
obligations under this Agreement.

 

(b)                                 Company
has taken all necessary corporate action under the laws of the state of its
incorporation and its Articles of Incorporation and bylaws to authorize the
execution and consummation of this Agreement and, when executed and delivered
by Company, this Agreement shall constitute the valid and legally binding
agreement of Company enforceable against Company in accordance with the terms
hereof, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles.

 

(c)                                  Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein will violate any provision of the Articles of
Incorporation and bylaws of Company or any law, rule, regulation, writ,
judgment, injunction, decree, determination, award or other order of any court
or governmental agency or instrumentality, domestic or foreign, or conflict
with or result in any breach of any of the terms of or constitute a default
under or result in termination of or the creation or imposition of any Lien
pursuant to the terms of any contract or agreement to which Company is a party
or by which Company or any of its assets is bound.

 

ARTICLE 8.

INDEMNIFICATION

 

8.1.                              Indemnification
by AVI.  AVI shall indemnify, defend
and hold harmless Company and each of its subsidiaries, officers, directors,
shareholder, employees, agents and

 

14

 

affiliates
(collectively, all such indemnities are referred to in this Section as “Company”)
against and in respect of any and all claims, demands, losses, obligations,
liabilities, damages (and including without limitation, compensatory and
punitive damages), deficiencies, actions, settlements, judgments, costs and
expenses which Company may incur or suffer or with which it may be
faced (including reasonable costs and legal fees incident thereto or in seeking
indemnification therefor), (referred to as “Costs”) arising out of or based
upon the breach by AVI of any of its representations, warranties, covenants or
agreements contained or incorporated in this Agreement or any agreement,
certificate or document executed and delivered to Company by AVI in connection
with the transactions hereunder. An amount for which Company is entitled to
indemnification pursuant hereto is referred to as an “Indemnified Amount.” 
During the term of this Agreement, AVI shall maintain, at its expense, a policy
of comprehensive general liability insurance sufficient to honor the indemnity
made herein, with products liability endorsement, but in no event less than
Seven Million Five Hundred Thousand U.S. Dollars ($7,500,000) in the aggregate
with a maximum deductible per occurrence of not more than One Million U.S.
Dollars ($1,000,000). Such policy shall name Company and its Affiliates as
additional insureds. AVI shall furnish Company with a certificate of insurance
evidencing such coverage within thirty (30) days of the execution of this
Agreement, which certificate shall provide for not less than thirty (30) days
notice to Company prior to material change in coverage or policy cancellation.

 

8.2.                              Indemnification
by Company.  Company shall indemnify,
defend and hold harmless AVI and each of its subsidiaries, officers, directors,
shareholder, employees, agents and affiliates (collectively, all such
indemnities are referred to in this Section as “AVI”) against and in
respect of any and all claims, demands, losses, obligations, liabilities,
damages (and including without limitation, compensatory and punitive damages),
deficiencies, actions, settlements, judgments, costs and expenses which AVI may incur
or suffer or with which it may be faced (including reasonable costs and
legal fees incident thereto or in seeking indemnification therefor), (referred
to as “Costs”) arising out of or based upon the breach by Company of any of its
representations, warranties, covenants or agreements contained or incorporated
in this Agreement or any agreement, certificate or document executed and
delivered to AVI by Company in connection with the transactions hereunder. An
amount for which AVI is entitled to indemnification pursuant hereto is referred
to as an “Indemnified Amount.”  During the term of this Agreement, Company
shall maintain, at its expense, a policy of comprehensive general liability
insurance sufficient to honor the indemnity made herein, with products
liability endorsement, but in no event less than Seven Million Five Hundred
Thousand U.S. Dollars ($7,500,000) in the aggregate with a maximum deductible
per occurrence of not more than One Million U.S. Dollars ($1,000,000)). Such
policy shall name AVI and its Affiliates as additional insureds. Company shall
furnish AVI with a certificate of insurance (or a self-insurance letter (if
Company is self-insured)) evidencing such coverage within thirty (30) days of
the execution of this Agreement, which certificate shall provide for not less
than thirty (30) days notice to Company prior to material change in coverage or
policy cancellation.

 

8.3.                              Third
Party Claims.  If a claim by a third
party is made against any indemnified party, and if the indemnified party
intends to seek indemnity with respect thereto under this Article 8,
such indemnified party shall promptly notify the indemnifying party of such
claim; provided, however, that failure to give timely notice shall not affect
the rights of the indemnified party so long as the failure to give timely
notice does not adversely affect the indemnifying party’s ability to defend such
claim against a third party. The indemnifying party shall be entitled

 

15

 

to settle or
assume the defense of such claim, including the employment of counsel
reasonably satisfactory to the indemnified party. If the indemnifying party
elects to settle or defend such claim, the indemnifying party shall notify the
indemnified party within thirty (30) days (but in no event less than twenty
(20) days before any pleading, filing or response on behalf of the indemnified
party is due) of the indemnifying party’s intent to do so. If the indemnifying
party elects not to settle or defend such claim or fails to notify the
indemnified party of the election within thirty (30) days (or such shorter
period provided above) after receipt of the indemnified party’s notice of a
claim of indemnity hereunder, the indemnified party shall have the right to
contest, settle or compromise the claim without prejudice to any rights to
indemnification hereunder. Regardless of which party is controlling the
settlement of defense of any claim, (a) both the indemnified party and
indemnifying party shall act in good faith, (b) the indemnifying party
shall not thereby permit to exist any Lien, encumbrance or other adverse charge
upon any asset of any indemnified party or of its subsidiaries, (c) the
indemnifying party shall permit the indemnified party to participate in such
settlement or defense through counsel chosen by the indemnified party, with all
fees, costs and expenses of such counsel borne by the indemnified party, (d) no
entry of judgment or settlement of a claim may be agreed to without the
written consent of the indemnified party, and (e) the indemnifying party
shall promptly reimburse the indemnified party for the full amount of such
claim and the related expenses as incurred by the indemnified party pursuant to
this Article 8. So long as the indemnifying party is reasonably
contesting any such third party claim in good faith and the foregoing clause (b) is
being complied with, the indemnified party shall not pay or settle any such
claim. The controlling party shall upon request deliver, or cause to be
delivered, to the other party copies of all correspondence, pleadings, motions,
briefs, appeals or other written statements relating to or submitted in
connection with the settlement or defense of any such claim, and timely notices
of any hearing or other court proceeding relating to such claim.

 

8.4.                              Set-Off.
 In the event Company is entitled to
indemnification under this Article 8, Company shall be entitled in
its discretion, without limitation of any other rights or remedies of Company,
to set-off all or any part of the Indemnified Amount against any amounts
which are then owed or thereafter become owed by Company to AVI. Company shall
be entitled to set-off an Indemnified Amount when such Costs are threatened,
whether or not yet incurred and whether or not the amount thereof has been
finally determined. If Company defers payment of any amount to AVI past the
scheduled payment date because there exists a pending indemnification claim by
Company pursuant to this Article 8 the amount of which has not then
been finally determined, the excess, if any, of such deferred amount over the
finally determined amount of the indemnification claim shall be promptly paid
upon such final determination, together with simple interest at the rate of
eight percent (8%) per annum on such excess accrued from the originally
scheduled payment date for such deferred amount.

 

ARTICLE 9.

TERM AND TERMINATION

 

9.1.                              Term
of License.  Unless otherwise
terminated under provisions of Section 9.2, Section 10.13 or
extended by mutual agreement of the parties, this Agreement and the license
granted under Section 2.1 shall terminate upon the expiration of
the last to expire Valid Claim (“Term”).

 

16

 

9.2.                              Termination.

 

(a)                                  If
either party is in material breach of the terms, conditions or agreements of
this Agreement, then the other party may terminate this Agreement, at its
option and without prejudice to any of its other legal and equitable rights and
remedies, by giving the breaching party thirty (30) days notice in writing,
particularly specifying the breach. Such notice of termination shall not be
effective if the breaching party cures the specified breach within such thirty
(30) days period. Each party shall have the
right to suspend payment of any amount due to the other hereunder during the
time that the breach of the other party remains uncured.

 

(b)                                 Company
shall have the right, in its sole discretion, to terminate this Agreement at
any time on ninety (90) days written notice to AVI.

 

(c)                                  AVI
shall have the right to terminate this Agreement upon sixty (60) days prior
written notice if, following an assignment of Company’s rights under this
Agreement pursuant to Section 10.13(b)(iv) or (v), the permitted
assignee terminates its development efforts under this Agreement.

 

9.3.                              Effect
of Termination.

 

(a)                                  In
the event of termination of this Agreement, Company shall be entitled to
complete all work-in-process and sell its remaining inventory of Products,
subject to the payment of royalties pursuant to Section 3.1 on such
Net Sales.

 

Upon
termination of this Agreement, each party will within thirty (30) days return
to the other all tangible Confidential Information of the other party (except
one copy which may be retained by legal counsel solely for evidentiary
purposes in the event of a dispute), and each party will deliver to the other a
copy of any documentation in its possession or control specifically relating to
the Joint Inventions.

 

ARTICLE 10.

MISCELLANEOUS

 

10.1.                        Further
Assurances.  Each party agrees to
execute and deliver without further consideration any further applications,
licenses, assignments or other documents, and to perform such other lawful
acts as the other party may reasonably request to fully secure and/or
evidence the rights or interests herein.

 

10.2.                        Complete
Agreement.  This Agreement, the
Investment Agreement and the Supply Agreement (including all schedules and
exhibits hereto and thereto for such agreements) constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof
and thereof. There are no restrictions, promises, warranties or undertakings,
other than those set forth or referred to herein or therein, with respect to
the subject matter hereof and thereof. This Agreement supersedes all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof.

 

17

 

10.3.                        Survival
of Representations, Warranties and Agreements.  The representations, warranties, covenants and
agreements contained in and Articles 7 and 8 of this Agreement
shall survive termination of this Agreement and remain in full force and effect.
No independent investigation of AVI by Company, its counsel, or any of its
agents or employees shall in any way limit or restrict the scope of the
representations and warranties made by AVI in this Agreement.

 

10.4.                        Waiver,
Discharge, Amendment, Etc.  The
failure of any party hereto to enforce at any time any of the provisions of
this Agreement shall not, absent an express written waiver signed by the party
making such waiver specifying the provision being waived, be construed to be a
waiver of any such provision, nor in any way to affect the validity of this
Agreement or any part thereof or the right of the party thereafter to
enforce each and every such provision. No waiver of any breach of this
Agreement shall be held to be a waiver of any other or subsequent breach. Any
amendment to this Agreement shall be in writing and signed by AVI and Company.

 

10.5.                        Notices. All notices or other communications to a
party required or permitted hereunder shall be in writing and shall be delivered
personally or by telecopy (receipt confirmed) to an executive officer of such
party or shall be sent by a reputable express delivery service or by certified
mail, postage prepaid with return receipt requested, addressed as follows:

 

	
  if to
  Company to:

  	
   

  	
  Cook Group
  Incorporated

  
	
   

  	
   

  	
  750 Daniels Way

  
	
   

  	
   

  	
  Bloomington, Indiana 47204

  
	
   

  	
   

  	
  Attn: Pete Yonkman

  
	
   

  	
   

  	
  Facsimile: (812) 339-5369

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Ice Miller LLP

  
	
   

  	
   

  	
  One American Square, Suite 3100

  
	
   

  	
   

  	
  Indianapolis, Indiana 46282

  
	
   

  	
   

  	
  Attention: Stephen J. Hackman

  
	
   

  	
   

  	
  Facsimile: (317) 592-4666

  
	
   

  	
   

  	
   

  
	
  if to AVI to:

  	
   

  	
  AVI BioPharma, Inc.

  
	
   

  	
   

  	
  One SW Columbia Street, Suite 1105

  
	
   

  	
   

  	
  Portland, OR 97225

  
	
   

  	
   

  	
  Attn: 
  Alan Timmins

  
	
   

  	
   

  	
  Facsimile: (503) 227-0751

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Davis Wright Tremaine LLP

  
	
   

  	
   

  	
  1300 SW Fifth Avenue, Suite 2300

  
	
   

  	
   

  	
  Portland, OR 97201-5682

  
	
   

  	
   

  	
  Attn: Michael Phillips

  
	
   

  	
   

  	
  Facsimile: (503 778-5299)

  

 

Any party may change the above-specified recipient and/or mailing
address by notice to the other party given in the manner herein prescribed. All
notices shall be deemed given on the day when

 

18

 

actually delivered as provided above (if delivered personally or by
telecopy) or on the day shown on the return receipt (if delivered by mail or
delivery service).

 

10.6.                        Public
Announcement.  In the event any party
proposes to issue any press release or public announcement concerning any
provisions of this Agreement or the transactions contemplated hereby, such
party shall so advise the other party hereto, and the parties shall thereafter
use their best efforts to cause a mutually agreeable release or announcement to
be issued. Neither party will publicly or privately disclose or divulge any
provisions of this Agreement or the transactions contemplated hereby without
the other parties’ written consent, except as may be required by
applicable law, rule, regulation, order or stock exchange regulation, and
except for communications to employees; provided that, prior to disclosure of
any provision of this Agreement that either party considers particularly
sensitive or confidential to any governmental agency or stock exchange, the
parties shall cooperate to seek confidential treatment or other applicable
limitations on the public availability of such information. In particular,
prior to such disclosure, each party shall use its best efforts to redact the
royalty rates and payment terms specified herein and each party shall provide
the other the opportunity to redact other information and seek confidential
treatment of any such disclosure.

 

10.7.                        Expenses.
 Except as expressly provided herein, AVI
and Company shall each pay their own expenses incident to this Agreement and
the preparation for, and consummation of, the transactions provided for herein.

 

10.8.                        Governing
Law.  This Agreement shall be
governed by and construed in accordance with the Laws of the State of Indiana
applicable to a contract executed and performed in such State, without giving
effect to the conflicts of laws principles thereof.

 

10.9.                        Titles
and Headings; Construction.  The
titles and headings to the Articles and Sections herein are inserted for the
convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement. This Agreement shall be
construed without regard to any presumption or other rule requiring
construction hereof against the party causing this Agreement to be drafted.

 

10.10.                  Benefit.
 Nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto or
their respective successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.

 

10.11.                  Counterparts.
 This Agreement may be executed in
any number of counterparts, each of which shall be deemed as original and all
of which together shall constitute one instrument.

 

10.12.                  Force
Majeure.  Neither party shall be in
default because of any failure to perform this Agreement if such failure
arises from causes beyond the control of such party (“the first party”) and
without the fault or negligence of such first party, including without
limitation, acts of God or of the public enemy, acts of the Government in
either its sovereign or contractual capacity, fires, floods, earthquakes,
epidemics, quarantine restrictions, strikes, freight embargoes or unusually
severe weather. In each instance, the failure to perform must be beyond
the reasonable control and without the fault or negligence of the first party. If
it appears that

 

19

 

performance
under this Agreement may be delayed by an event of Force Majeure, the
first party will immediately notify the other party as soon as practicable in
writing at the address specified in this Agreement. During the period that the
performance by one of the parties of its obligations under this Agreement has
been suspended by reason of an event of Force Majeure, the other party may likewise
suspend the performance of all or part of its obligations hereunder to the
extent that such suspension is commercially reasonable.

 

10.13.                  Assignment. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void, except (a) for assignments and transfers by operation
of Law; (b) that Company may assign any or all of its rights,
interests and obligations hereunder without AVI’s consent (i) to Company’s
direct or indirect parent, (ii) to any subsidiary of Company at least 50%
of the voting power of which is owned, directly or indirectly, by Company or
its Affiliates, (iii) to a wholly-owned, direct or indirect subsidiary of
Company, (iv) to an entity (other than an Affiliate of the Company) that
acquires the entire equity interest or substantially all of the assets of
Company or Company’s parent, or (v) to any entity (other than an Affiliate
of the Company) that acquires the product line to which this Agreement
pertains; provided that any assignee under this clause (b) shall expressly
agree to be bound by all of the provisions of this Agreement, including Section 4.3,
(c) that Company may collaterally assign its rights under this
Agreement to parties providing financing in connection with the transactions
contemplated hereby. In the case of any assignment under Subsections 10.13 (b) (iv) or
(v), the acquiring party will also be bound by the performance standards listed
in Exhibit C (“Performance Standards”). Should such acquiring
entity fail to meet any of the Performance Standards, AVI may, on thirty (30)
days written notice, terminate this Agreement. This Agreement is otherwise
binding upon, inures to the benefit of and is enforceable by the parties hereto
and their respective successors and assigns.

 

10.14.                  NIH
License.  Company agrees to be bound
by the provisions of paragraphs 5.01-5.04, 8.01, 10.01, 10.02, 12.05, and
13.07-13.09 of the NIH License (a copy of which is attached hereto as Exhibit B)
as if Company were a party to the NIH License.

 

 

[SIGNATURE PAGE FOLLOWS]

 

20

 

IN WITNESS WHEREOF, each of the parties has
caused this License and Development Agreement to be executed in the manner
appropriate for each, and to be dated as of the date first above-written.

 

	
  COOK GROUP INCORPORATED

  	
  AVI BIOPHARMA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Printed:

  	
   

  	
   

  	
  Printed:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
														

 

21

 

EXHIBIT A

 

AVI
BioPharma Intellectual Property

 

Morpholino Backbone Patents

 

1. Attorney Docket No. 50450-8003.US02 (.23) entitled UNCHARGED
POLYNUCLEOTIDE-BINDING POLYMERS - U.S. Patent No. 5142047

 

2. Attorney Docket No. 50450-8003.US04 (.28) entitled UNCHARGED
MORPHOLINO-BASED POLYMERS HAVING PHOSPHOROUS LINKED CHIRAL INTERSUBUNIT
LINKAGES – U.S. Patent No. 5185444

 

3. Attorney Docket No. 50450-8003.US05 (.29) entitled
ALPHA-MORPHOLINO RIBONUCLEOSIDE DERIVATIVES AND POLYMERS THEREOF –  U.S. Patent No. 5235033

 

4. Attorney Docket No. 50450-8009 entitled ALPHA-MORPHOLINO
RIBONUCLEOSIDE DERIVATIVES AND POLYMERS THEREOF – U.S. Patent No. 5378841

 

5. Attorney Docket No. 50450-8015 entitled POLYNUCLEOTIDE REAGENT
CONTAINING CHIRAL SUBUNITS AND METHOD OF USE – CA 2069869, JP 3398378, AU
655164, EP 962463, KR 167574

 

6. Attorney Docket No. 50450-8015 (.43) entitled POLYNUCLEOTIDE
REAGENT CONTAINING CHIRAL SUBUNITS AND METHOD OF USE –EP 0506830

 

Resten-NG Patents

 

7. Attorney Docket No. 50450-8025.US00 entitled ANTISENSE
RESTENOSIS COMPOSITION AND METHOD – U.S. application pending; corresponding CA,
JP, AU, EP, KR applications

 

8-9. Attorney Docket Nos. 50450-8318 and -8318.US00 entitled DELIVERY
OF MICROPARTICLE-CONJUGATED DRUGS FOR INHIBITION OF STENOSIS – U.S.
applications pending; corresponding CA, JP, AU, EP, KR applications

 

10.  Attorney Docket No. 50450.8060
entitled DELIVERY OF THERAPEUTIC COMPOUNDS VIA MICROPARTICLES OR MICROBUBBLES -
U.S. application pending; corresponding PCT application

 

11.  Attorney Docket No. 50450.8067
entitled PEPTIDE CONJUGATED, INOSINE SUBSTITUED ANTISENSE OLIGOMER COMPOUND AND
METHOD – U.S. application pending; corresponding PCT application

 

22

 

12. Attorney Docket No. 50450.8050 entitled COMPOSITIONS FOR
ENHANCING TRANSPORT OF MOLECULES INTO CELLS – U.S. application pending;
corresponding CA, AU, EP applications

 

Licensed
Intellectual Property

 

13-14. Attorney Docket No. 50450-8302 entitled COMPOSITION AND
METHODS FOR ALTERING THE BIODISTRIBUTION OF BIOLOGICAL AGENTS – U.S. Patent
Nos. 5,849,727, 6,117,858 and 6,537,814; EP Patent No. 938341;
corresponding CA, JP applications (Licensed from UNeMed)

 

15. Attorney Docket No. 50450-8302.US02 (.31) MICROBUBBLE
COMPOSITIONS AND METHODS FOR OLIGONUCLEOTIDE DELIVERY – U.S. application
pending (UNeMed)

 

16. Attorney Docket No. 50450-8310.US00 (.31) entitled TARGETED
SITE SPECIFIC ANTISENSE OLIGODEOXYNUCLEOTIDE DELIVERY METHOD - U.S. Patent No. 6,245,747;
AU Patent No. 743695; EP Patent No. 1094843 (UNeMed)

 

17. Attorney Docket No. 50450-8305.30 entitled ULTRASOUND CONTRAST
AGENT AND METHODS FOR THEIR MANUFACTURE AND USE – U.S. Patent No. 5,567,415
(UNeMed)

 

18. Attorney Docket No. 50450-8305.31 entitled PERFLUOROBUTANE
ULTRASOUND CONTRAST AGENT COMPRISING MICROBUBBLES CONTAINING A FILMOGENIC
PROTEIN AND A CACCHARIDE – U.S. Patent No. 5,695,740 (UNeMed)

 

19. INHIBITION OF CELL PROLIFERATION USING ANTISENSE OLIGONUCLEOTIDES –
U.S. Patent No. 5,756,476 (Licensed from The U.S. Department of
Health and Human Services, National Institutes of Health)

 

23

 

EXHIBIT B

 

NIH License Agreement

 

24

 

EXHIBIT C

 

Performance
Standards for Acquiring Entity

 

	
  For Drug-Eluting Stents:

  	
   

  	
  No Later Than

  
	
   

  	
   

  	
   

  
	
  Complete
  Product Design/Preclinical testing

  	
   

  	
  ***

  
	
  Commence
  First in Man Pilot Study

  	
   

  	
  ***

  
	
  Commence
  European Clinical Trial

  	
   

  	
  ***

  
	
  Apply for CE
  Mark Approval

  	
   

  	
  ***

  
	
  Apply for
  IDE in U.S.

  	
   

  	
  ***

  
	
  Complete
  enrollment of first patients approved by FDA in IDE

  	
   

  	
  *** from
  approval of IDE

  
	
  Complete enrollment
  of remaining approved patients in IDE

  	
   

  	
  *** from
  approval by FDA to begin enrolling remaining patients

  
	
  First U.S.
  Commercial Sale

  	
   

  	
  Within ***
  of FDA approval

  

 

	
  For Infusion Catheter:

  	
   

  	
  No Later Than

  
	
   

  	
   

  	
   

  
	
  Complete
  Product Development

  	
   

  	
  ***

  
	
  Complete Preclinical
  Testing

  	
   

  	
  ***

  
	
  Submission
  for U.S. Clinical Trial (Phase III)

  	
   

  	
  ***

  
	
  First U.S.
  Commercial Sale

  	
   

  	
  Within *** of FDA approval

  

 

	
  For Microbubbles:

  	
   

  	
  No Later Than

  
	
   

  	
   

  	
   

  
	
  Complete
  Enrollment of European (Phase II) Clinical Trial

  	
   

  	
  ***

  
	
  Complete
  Preclinical Testing (U.S.)

  	
   

  	
  ***

  
	
  Commence
  U.S. Pilot Study (Phase I)

  	
   

  	
  ***

  
	
  Commence
  U.S. Clinical Trial (Phase II)

  	
   

  	
  *** from the date of completion of FIM
  Pilot Study

  
	
  Commence
  U.S. Clinical Trial (Phase III)

  	
   

  	
  *** from the date of completion of Phase II
  Clinical Trial

  
	
  First U.S.
  Commercial Sale

  	
   

  	
  Within *** of FDA approval

  

 

So long as the Acquiring Entity is using commercially reasonable
efforts to pursue the development of a Product, each of the foregoing
Performance Standards for the relevant category of Product shall be
automatically extended if, during any phase of the development process for that
particular Product, the Acquiring Entity determines, based on clinical or other
data, that it is necessary to suspend work on that phase in the development
process (the “Suspended Phase”)

 

25

 

and return to or repeat one or more previous phases in the development
process (each, a “Prior Phase”) in order to enhance the likelihood of producing
a commercially-viable Product. In the case of any such determination, the
Acquiring Entity will promptly provide AVI with documentation, including Gantt
charts (or similar project management tools), budgets, spending records
(subject to audit by AVI), and the like, that shows that the necessary
development, as agreed by the Product Development Committee, in each of the
specific product applications is moving forward.

 

The applicable Performance Standard for the Suspended Phase and for
phases following the Suspended Phase for the relevant category of Product shall
be extended by the number of days that the Acquiring Entity works in any Prior
Phase(s) to resolve the issue(s) that resulted in the suspension of work in the
Suspended Phase. Once a Performance Standard for a particular phase of the
development process has been achieved, it shall be deemed achieved for all
purposes of this Agreement.

 

The parties acknowledge the necessity for the Acquiring Entity to meet
all applicable regulatory requirements in the major markets of the world (e.g.
U.S. and Europe). The parties also acknowledge the uncertain regulatory
requirements for a combination device product. If regulatory requirements
create significantly longer timelines than currently anticipated to receive
regulatory approval for Products, the Performance Standards for the relevant
category of Product will be extended by the time required to complete the
additional regulatory requirements, so long as the delay in obtaining
regulatory approval is not the result of the Acquiring Entity failing to adhere
to relevant regulatory guidelines or to use commercially reasonable diligence
in the development of the particular Product.

 

26Exhibit 10.52

 

INVESTMENT
AGREEMENT

 

THIS INVESTMENT AGREEMENT (this “Agreement”) is made and entered into
effective the 10th day of March, 2006 (the “Effective Date”) by between AVI
BIOPHARMA, INC. (“AVI”), an Oregon corporation, and Cook Group Incorporated
(“Investor”), an Indiana corporation.

 

RECITALS:

 

WHEREAS, AVI desires to issue and sell to Investor, and Investor
desires to purchase on the terms and subject to the conditions set forth in
this Agreement, certain shares of AVI Common Stock, $0.0001 par value (“Common
Stock”);

 

WHEREAS, Investor and AVI are entering into a License and Development
Agreement (the “License and Development Agreement”) and a Supply Agreement (the
“Supply Agreement”) both of even date herewith; and

 

NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements contained herein, and for other valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:

 

AGREEMENT

 

1.      DEFINITIONS

 

(a)                                  Specific
Definitions.  As used in this
Agreement, the following terms shall have the meanings set forth or as
referenced below:

 

“Affiliate” of a specified person (natural or juridical) means a
person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the person
specified. “Control” shall mean ownership of more than 50% of the shares of
stock entitled to vote for the election of directors in the case of a
corporation, and more than 50% of the voting power in the case of a business
entity other than a corporation.

 

“Agreement” means this Agreement and all Exhibits and Schedules
hereto.

 

“AVI” has the meaning defined in the recitals hereto.

 

“AVI Subsidiaries” means all subsidiaries of AVI, including but
not limited to the subsidiaries identified in the Disclosure Schedule.

 

“Change of Control” with respect to AVI means the occurrence of
any of the following:

 

(i)                                     a
sale of assets representing fifty percent (50%) or more of the net book value
and of the fair market value of AVI’s consolidated assets (in a single
transaction or in a series of related transactions);

 

 

(ii)                                  a
liquidation or dissolution of AVI;

 

(iii)                               a
merger or consolidation involving AVI or any subsidiary of AVI after the
completion of which:  (i) in the case of a merger (other than a
triangular merger) or a consolidation involving AVI, the shareholders of AVI
immediately prior to the completion of such merger or consolidation
beneficially own (within the meaning of Rule 13d-3 promulgated under the
Exchange Act or comparable successor rules), directly or indirectly,
outstanding voting securities representing less than fifty percent (50%) of the
combined voting power of the surviving entity in such merger or consolidation,
and (ii) in the case of a triangular merger involving AVI or a subsidiary
of AVI, the shareholders of AVI immediately prior to the completion of such
merger beneficially own (within the meaning of Rule 13d-3 promulgated
under the Exchange Act, or comparable successor rules), directly or indirectly,
outstanding voting securities representing less than fifty percent (50%) of the
combined voting power of the surviving entity in such merger and less than
fifty percent (50%) of the combined voting power of the parent of the surviving
entity in such merger;

 

(iv)                              an
acquisition by any person, entity or “group” (within the meaning of Section 13(d) or
14(d) of the Exchange Act or any comparable successor provisions), other
than any employee benefit plan, or related trust, sponsored or maintained by
AVI or an affiliate of AVI and other than in a merger or consolidation of the
type referred to in clause “(c)” of this definition of Change of Control, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act, or comparable successor rules) of outstanding voting
securities of AVI representing more than thirty-three and 1/3 percent (33-1/3%)
of the combined voting power of AVI (in a single transaction or series of
related transactions); or

 

(v)                                 individuals
who, as of the date hereof or replacements therefore who have been initially
nominated by the then current members of the AVI Board of Directors, are
members of the AVI Board of Directors (the “Incumbent Board”), cease for any
reason to constitute at least sixty percent (60%) of the AVI Board of
Directors, provided that if election, or nomination for election by AVI’s
shareholders, of any new member of the AVI Board of Directors is approved by a
vote of at least sixty percent (60%) of the Incumbent Board, such new member of
the Board shall be considered as a member of the Incumbent Board.

 

“Closing” means the later to occur of the payment for Purchased
Shares by Investor and the delivery by AVI to Investor of a stock certificate
for Purchased Shares as provided in Section 2. “Closing Date” shall
be the date on which the stock certificate for Purchased Shares is delivered to
Investor.

 

“Code” means the United States Internal Revenue Code of 1986, as
amended.

 

“Common Stock” means shares of Common Stock of AVI, par value
$0.0001 per share.

 

“Confidential Information” means know-how, trade secrets,
unpublished information, scientific and technical information, inventions,
methods, plans, processes, characteristics, data, business plans and the like
disclosed (whether before or during the term of this Agreement) by one of the
parties (the “disclosing party”) to the other party (the “receiving party”) or
generated under this Agreement or the other Transaction Documents, excluding
information which: (i) was

 

2

 

already in the possession of receiving party
prior to its receipt from the disclosing party (provided that the receiving
party is able to provide the disclosing party with reasonable documentary proof
thereof and, if received from a third party, that such information was acquired
without any party’s breach of a confidentiality or non-disclosure obligation to
the disclosing party related to such information ); (ii) is or becomes part of
the public domain by reason of acts not attributable to the receiving
party;  (iii) is or becomes
available to receiving party from a source other than the disclosing party
which source, has rightfully obtained such information and has no obligation of
non-disclosure or confidentiality to the disclosing party with respect thereto;
or (iv) has been independently developed by the receiving party without
breach of this Agreement or use of any Confidential Information of the other
party.

 

“Disclosure Schedule” has the meaning given in Section 3.

 

“Drug” has the meaning defined in the License and Development
Agreement.

 

“Environmental Laws or Regulations” means any one or more of the
following:  the Comprehensive Environmental Response Compensation and Liability
Act (“CERCLA”) as amended by the Superfund Amendments and Reauthorization Act
of 1986 (“SARA”), 42 U.S.C. § 9601 et seq.; the Federal Resource
Conservation and Recovery Act of 1976 (“RCRA”), 42 U.S.C. § 6921 et seq.;
the Clean Water Act, 33 U.S.C. § 1321 et seq.; the Clean Air Act, 42
U.S.C. § 7401 et seq.; any other federal, state, county, municipal, local,
foreign or other statute, law, ordinance or regulation which may relate to
pesticides, agricultural or industrial chemicals, wastes, Hazardous Substances,
or the environment; and all regulations promulgated by a regulatory body
pursuant to any of the foregoing statutes, laws, regulations, or ordinances.

 

“Exchange Act” means the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated thereunder.

 

“FDA” means the U.S. Food and Drug Administration.

 

“Field” has the meaning defined in the License and Development
Agreement.

 

“Financial Statements” means AVI’s financial statements included
in SEC Documents.

 

“Hazardous Substance” means asbestos, urea formaldehyde,
polychlorinated biphenyls, nuclear fuel or materials, chemical waste,
radioactive materials, explosives, known carcinogens, petroleum products,
pesticides, fertilizers, or other substance which is dangerous, toxic, or
hazardous, or which is a pollutant, contaminant, chemical, material or
substance defined as hazardous or as a pollutant or contaminant in, or the use,
transportation, storage, release or disposal of which is regulated by, any
Environmental Laws or Regulations.

 

“Initial Market Price” means the average (rounded to the nearest
full cent, with the cents rounded up if the third decimal place is 5 or more)
of the volume weighted closing sale prices of a share of Common Stock as
reported on the Nasdaq Stock Market as of the end of the regular trading
session, as reported in The Wall Street Journal, for the twenty (20)
consecutive Nasdaq trading days ending on and including the Nasdaq trading day
immediately preceding the Effective Date of this Agreement.

 

3

 

“Intellectual Property” means letters patent and patent
applications; trademarks, service marks and registrations thereof and
applications therefor; copyrights and copyright registrations and applications;
all discoveries, ideas, technology, know–how, trade secrets, processes,
formulas, drawings and designs, computer programs or software; and all
amendments, modifications, and improvements to any of the foregoing.

 

“Investor” has the meaning defined in the recitals hereto.

 

“Knowledge” or “knowledge” means actual knowledge of a
fact or the knowledge which such person could reasonably be expected to have
based on reasonable inquiry and consistent with such person’s duties and
responsibilities. The knowledge of AVI shall include only the knowledge of AVI’s
directors and/or officers.

 

“License and Development Agreement” has the meaning defined in
the recitals hereto.

 

“Liens” means liens, mortgages, charges, security interests,
claims, voting trusts, pledges, encumbrances, options, assessments,
restrictions, or third-party or spousal interests of any nature.

 

“Material Adverse Effect” means a material adverse effect on (a) the
business, operations, results of operations, assets (including intangible
assets), liabilities, prospects, or condition (financial or otherwise) of AVI
and the AVI Subsidiaries, taken as a whole, or (b) the ability of AVI to
perform its obligations under this Agreement or any of the Transaction
Documents or any other agreement or instrument to be entered into in connection
with this Agreement.

 

“Purchase Election” has the meaning defined in the License and
Development Agreement.

 

“Purchased Shares” means the shares of Common Stock purchased by
Investor pursuant to Section 2.

 

“SEC” means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act or the Exchange
Act.

 

“SEC Documents” means all documents filed by AVI with the SEC
after December 31, 2000.

 

“Securities Act” means the Securities Act of 1933, as amended,
and all rules and regulations promulgated thereunder.

 

“Supply Agreement” has the meaning defined in the recitals
hereto.

 

“Transaction Documents” means the License and Development
Agreement and the Supply Agreement.

 

4

 

(b)                                 Definitional
Provisions.

 

(i)                                     The
words “hereof,” “herein,” and “hereunder” and words of similar import, when
used in this Agreement, shall refer to this Agreement as a whole and not to any
particular provisions of this Agreement.

 

(ii)                                  Terms
defined in the singular shall have a comparable meaning when used in the
plural, and vice–versa.

 

(iii)                               Reference
to an “Exhibit” or to a “Schedule” are, unless otherwise specified, to one of
the Exhibits or Schedules attached to or referenced in this Agreement, and
references to a “Section” are, unless otherwise specified, to one of the
Sections of this Agreement.

 

(iv)                              The
term “person” includes any individual, partnership, joint venture, corporation,
trust, unincorporated organization or government or any department or agency
thereof.

 

2.      PURCHASE
OF COMMON STOCK

 

AVI shall sell, issue and deliver to
Investor, and Investor shall purchase from AVI, such number of shares of Common
Stock (rounded to the nearest whole share) which shall equal five million
dollars ($5,000,000) divided by the Initial Market Price (the “Purchased Shares”).
The purchase price for the Purchased Shares shall be payable by wire transfer
of funds to AVI’s account within one (1) day of the Effective Date as
follows:

 

AVI BioPharma, Inc.

4575 SW Research Way, Suite 200

Corvallis, OR 
97333

Account # 153591259962

US Bank

1607 Main Street

Vancouver, WA 
98660-2975

US Bank contact:  Erik Bjorvik (503) 275-5879

Transmit No. 125000105

 

A certificate representing Purchased Shares
shall be issued by AVI in a form acceptable to Investor and its counsel
within one (1) day of receipt by AVI of payment for the Purchased Shares.

 

3.      REPRESENTATIONS
AND WARRANTIES OF AVI

 

Except as set forth in the Disclosure Schedule attached
hereto as Schedule A, AVI hereby makes the following
representations and warranties to the Investor:

 

(a)                                  Authorization;
Enforcement; No Conflicts.  AVI is duly organized and validly
exists under the laws of the State of Oregon and has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated hereby and otherwise to carry out

 

5

 

its
obligations hereunder. The execution and delivery of this Agreement by AVI and
the consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of AVI and no further
consent or action is required by AVI, its Board of Directors or its
stockholders. This Agreement has been (or upon delivery will be) duly executed
by AVI and is, or when delivered in accordance with the terms hereof, will
constitute, the valid and binding obligation of AVI enforceable against AVI in
accordance with its terms, subject to bankruptcy, insolvency, and other similar
laws affecting the rights of creditors generally and subject to the exercise of
judicial discretion in accordance with principles of equity. The execution,
delivery and performance of this Agreement by AVI and the consummation by AVI
of the transactions contemplated hereby do not and will not: (i) conflict
with or violate any provision of AVI’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii) subject
to obtaining the Required Approvals (as defined below), conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing an AVI debt or otherwise) or other understanding to which AVI is a
party or by which any property or asset of AVI is bound or affected, or (iii) result
in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which AVI
is subject (including federal and state securities laws and regulations), or by
which any property or asset of AVI is bound or affected; except in the case of
each of clauses (i), (ii) and (iii), such as could not, individually or in
the aggregate: (x) materially and adversely affect the legality, validity or
enforceability of this Agreement, (y) have or result in a materially
detrimental effect on the results of operations, assets, business or financial
condition of AVI, or (z) adversely impair AVI’s ability to perform fully
on a timely basis its obligations under the Agreement (any of (x), (y) or (z),
a “Material Adverse Effect”).

 

(b)                                 Filings,
Consents and Approvals; Issuance of Securities.  AVI is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by AVI of this Agreement, other than (i) the
filings of a Form 8-K disclosing the transaction contemplated hereby, (ii) the
application(s) to The Nasdaq National Market (the “Principal
Market”) for the listing of the Purchased Shares for trading thereon
in the time and manner required thereby, and (iii) applicable filings
under federal and applicable state blue sky laws (collectively, the “Required Approvals”). “Person” means an individual or corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind. The Purchased Shares are duly
authorized and, when issued and paid for in accordance with this Agreement will
be duly and validly issued, fully paid and nonassessable, and free and clear of
all Liens. The issuance by AVI of the Purchased Shares has not been registered
under the Securities Act and, accordingly, the Purchased Shares may not
be, sold, assigned or transferred without registration unless the Purchased
Shares are subsequently registered or are exempt under applicable exemptions from
registration under the Securities Act.

 

(c)                                  SEC
Reports; Financial Statements.  AVI
has filed all reports required to be filed by it under the Securities Act and
the Securities Exchange Act of 1934, as amended (the “1934

 

6

 

Act”),
including pursuant to Section 13(a) or 15(d) thereof, for the
two (2) years preceding the date hereof (the foregoing materials being
collectively referred to herein as the “SEC
Reports”) on a timely basis or has received a valid extension of
such time of filing and has filed any such SEC Reports prior to the expiration
of any such extension. As of their respective dates, the SEC Reports complied
in all material respects with the requirements of the Securities Act and the
1934 Act and the rules and regulations of the SEC promulgated thereunder,
and none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The financial
statements of AVI included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and regulations of
the SEC with respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise
specified in such financial statements or the notes thereto, and fairly present
in all material respects the financial position of AVI as of and for the dates
thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.

 

(d)                                 Material
Changes.  Since the date of the
latest audited financial statements included within the SEC Reports, except as
specifically disclosed in the SEC Reports: (i) there has been no event,
occurrence or development that, individually or in the aggregate, has had or
that could reasonably be expected to result in a Material Adverse Effect, (ii) AVI
has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be
reflected in AVI’s financial statements pursuant to GAAP or required to be
disclosed in filings made with the SEC, (iii) AVI has not altered its
method of accounting or the identity of its auditors, (iv) AVI has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or
redeem any shares of its capital stock, and (v) AVI has not issued any
equity securities to any officer, director or Affiliate, except pursuant to
existing AVI stock option and purchase plans.

 

(e)                                  Disclosure.
 All disclosures provided to the Investor
regarding AVI, its business and the transactions contemplated hereby, furnished
by or on behalf of AVI are true and correct and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. None of the statements, documents,
certificates or other items prepared or supplied by AVI with respect to the
transactions contemplated hereby, including, without limitation, reports, data,
analyses and correspondence relating to the Drug, contains an untrue statement
of a material fact or omits a material fact necessary to make the statements
contained therein not misleading. There is no fact which AVI has not disclosed
to Investor and its counsel in writing and of which AVI is aware which could
have a Material Adverse Effect.

 

(f)                                    Nasdaq;
Etc.  AVI is in compliance with all
applicable Nasdaq continued listing requirements for the Nasdaq Stock Market
and is listed in good standing on the Nasdaq Stock Market. There are no
proceedings pending or, to AVI’s knowledge, threatened against AVI

 

7

 

relating to
the continued listing of AVI’s Common Stock on the Nasdaq National Market and
AVI has not received any notice of, nor to the knowledge of AVI is there any
basis for, the delisting of the Common Stock from the Nasdaq National Market.

 

4.      REPRESENTATIONS
AND WARRANTIES OF INVESTOR

 

(a)                                  Investor
hereby makes the following representations and warranties to AVI:

 

(i)                                     Investor
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Indiana.

 

(ii)                                  Investor
has the requisite corporate (or other entity) power and authority to enter into
and perform this Agreement and to purchase the Common Stock in accordance
with the terms hereof.

 

(iii)                               In
making its investment decision in this offering, Investor and its advisors, if
any, have relied solely on AVI’s public filings as filed with the Securities
and Exchange Commission and on the representations and warranties of AVI in
this Agreement.

 

(iv)                              Investor
is an accredited investor as such term is defined under the Securities Act and
Investor is purchasing the Purchased Shares for its own account as principal,
and not with a view towards distribution of such securities.

 

(v)                                 Investor
understands that the Purchased Shares have not been registered under the
Securities Act or applicable state securities laws. Investor also understands
that the Purchased Shares are being offered and sold pursuant to exemptions
from registration contained in the Securities Act and applicable state
securities laws in part upon Investor’s representations contained in this
Agreement.

 

5.      COVENANTS

 

(a)                                  Best
Efforts.  AVI will use its best
efforts to satisfy in a timely fashion each of the conditions to be satisfied
under Section 6 of this Agreement.

 

(b)                                 Compliance
With Nasdaq Listing Requirements.  AVI
will comply with all applicable Nasdaq continued listing requirements for the
Nasdaq Stock Market and shall remain in good standing on the Nasdaq Stock
Market so long as the Investor holds any of the Purchased Shares.

 

(c)                                  Regulatory
Approvals.

 

(i)                                     Cooperation. AVI and Investor shall each use
commercially reasonable efforts to take, or cause to be taken, all appropriate
action, and do, or cause to be done, all things as may be necessary or
appropriate under any applicable law, and will file and, if appropriate, use
commercially reasonable efforts to have declared effective or approved all
documents and notifications with any governmental or regulatory bodies that
they deem necessary or appropriate for, the issuance of the Purchased Shares
and each party shall give the other information

 

8

 

reasonably
requested by such other party pertaining to it and its Affiliates to enable
such other party to take such actions. The parties agree to make any such
required filing a reasonable period of time prior to the anticipated date of
the occurrence of any closing hereunder that gives rise to such required filing.
It shall be a condition to the occurrence of any closing hereunder that any
such actions or approvals required under any such law be declared effective or
approved, or that any waiting periods (or extensions thereof) expire or
terminate.

 

(ii)                                  No
Divestiture Required of Investor.  Notwithstanding
the foregoing or anything herein to the contrary, nothing shall require
Investor to make or agree to make, any divestiture of any portion of any
business or assets of Investor or its Affiliates to make arrangements for or to
effect the cessation, sale, or other disposition of particular assets or
categories of assets or businesses of Investor or its Affiliates in order to
obtain any waiver, consent or approval, and neither Investor nor its Affiliate
shall be required to take or commit to take any action that limits its freedom
of action or rights with respect to AVI or the Purchased Shares.

 

(d)                                 Exclusivity.
 AVI agrees that for a period commencing
upon execution of this Agreement until the earlier of the Closing or
termination of this Agreement in accordance with Section 8, AVI will not
directly or indirectly encourage or solicit the submission of, or entertain
inquiries, proposals or offers from any person or entity (other than Investor
or its Affiliates), or otherwise provide information to or engage in
discussions with any other Person, in any way relating to the sale, licensing,
distribution or other disposition of the Drug in the Field, except as may otherwise
be required under applicable fiduciary duties applicable to the AVI Board of
Directors.

 

(e)                                  Registration
of Purchased Shares.  AVI agrees to
file a registration statement for the Purchased Shares under the Securities Act
(the “Registration Statement”) within thirty (30) days of the Closing
Date and to use its best efforts to cause the registration statement to become
effective as soon as practicable thereafter. Once the Registration Statement is
declared effective by the SEC, AVI will cause the Registration Statement to
remain continuously effective until the earlier of (i) the date on which
all of the Purchased Shares have been sold by Investor or (ii) the first
date on which all the Purchased Shares (in the opinion of AVI’s counsel, which
opinion is reasonably acceptable to Investor and its counsel) may be
immediately sold by Investor without registration and without restriction
(including without limitation as to volume by each holder thereof) as to the
number of Purchased Shares to be sold, pursuant to Rule 144(k) under the
Securities Act or any successor rule, or (iii) March       ,
2009. AVI will also use its best efforts to register and qualify the Purchased
Shares under such other securities or blue sky laws of such jurisdictions as
Investor reasonably requests and to cause such registrations and qualifications
to remain effective for the same period of time that the registration with the
SEC remains effective. AVI will bear all expenses, other than underwriting
discounts and commissions and transfer taxes, if any, incurred in connection
with the registration or qualification of the Purchased Shares as provided
herein. AVI shall indemnify and hold harmless Investor and its officers,
directors, shareholders, and “controlling persons” within the meaning of the
Securities Act and the Exchange Act, from and against any loss damage, claim,
expense or liability arising or alleged to arise under the Securities Act or
the Exchange Act or otherwise as a result of any untrue statement or alleged
untrue statement of material fact contained in the Registration Statement or
any document filed with any state securities administrator in connection with
the registration or

 

9

 

qualification
of the Purchased Shares or any amendment or supplement to the Registration
Statement or any such document or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided however, AVI shall have no
obligation or liability under the foregoing with respect to any claims made
with respect to information contained in the Registration Statement that is
provided by Investor and, further, AVI’s liability hereunder shall be limited
to $5 million.

 

6.      CONDITIONS
TO CLOSING

 

(a)                                  Conditions
to Investor’s Obligations.  The
obligations of Investor to purchase and pay for the Purchased Shares pursuant
to Section 2 at the Closing are subject to the satisfaction or waiver of
the conditions set forth below:

 

(i)                                     Representations
and Warranties to be True and Correct.  The representations and warranties contained
in Section 3 shall be true, complete and correct in all material respects
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date, and the
President and Chief Financial Officer of AVI shall have certified to such
effect to Investor in writing.

 

(ii)                                  Performance.
 AVI shall have performed and complied
with all terms and conditions contained in this Agreement and the Transaction
Documents which are required to be performed or complied with by AVI prior to
or at such Closing Date, and the President and Chief Financial Officer of AVI
shall have certified to Investor in writing to such effect and to the further
effect that all of the conditions set forth in this Section 6 have been
satisfied.

 

(iii)                               Execution
and Delivery of Transaction Documents.  AVI shall have executed and delivered the
Transaction Documents.

 

(iv)                              All
Proceedings to be Satisfactory.  All
corporate and other proceedings to be taken by AVI in connection with the
transactions contemplated hereby and all documents incident thereto shall be
satisfactory in form and substance to Investor and its counsel, and
Investor and its counsel shall have received all such counterpart originals
or certified or other copies of such documents as they reasonably may request.

 

(v)                                 Required
Consents.  AVI shall have obtained the
written consent or approval of each Person whose consent or approval is
required in connection with this Agreement and the Transaction Documents,
including but not limited to expiration or termination of any waiting periods
(and any extension thereof) under all applicable laws and all applicable
consents and approvals, in form and content satisfactory to Investor, from
the National Institute of Health with respect to the assignment of the NIH
License (as defined in the License and Development Agreement) to AVI, the grant
of a sublicense by AVI to Investor with respect thereto and the modification of
the benchmarks set forth in the NIH License in a manner acceptable to Investor.

 

(vi)                              Litigation
Affecting Closing.  No suit, action
or other proceeding shall be pending or threatened by any third party or by or
before any court or governmental agency in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this Agreement
or the Transaction Documents, or the consummation of the transactions

 

10

 

contemplated
hereby or thereby, and no investigation that might result in any such suit,
action or other proceeding shall be pending or threatened.

 

(vii)                           Legislation.
 No statute, rule, regulation, order, or
interpretation shall have been proposed, enacted, entered or deemed applicable
by any domestic or foreign government or governmental or administrative agency
or court which would make the transactions contemplated by this Agreement or
the Transaction Documents illegal.

 

(viii)                        No
Change of Control.  Since the date
hereof, there shall not have been any Change of Control.

 

(ix)                                No
Material Adverse Changes.  Since the
date hereof, no event shall have occurred which may be reasonably expected
to result in a Material Adverse Effect.

 

(x)                                   No
Default.  Since the date hereof, no
default (or event which, with the passage of time and/or the giving of notice,
would constitute a default) of AVI shall have occurred under this Agreement or
the Transaction Documents.

 

(xi)                                Opinion
of AVI’s Counsel.  Investor shall
have received from Davis Wright Tremaine LLP, counsel for AVI, an opinion dated
as of such Closing Date in form and scope satisfactory to Investor and its
counsel, substantially as set for in Exhibit A.

 

(b)                                 Conditions
to AVI’s Obligations.  The
obligations of AVI to issue, sell and deliver certificates representing the
Purchased Shares pursuant to Section 2 are subject to the satisfaction or
waiver, on or before the Closing Date of the conditions set forth below:

 

(i)                                     Execution
of Transaction Documents.  Investor
shall have executed and delivered the Transaction Documents.

 

(ii)                                  Representations
and Warranties to be True and Correct.  The representations and warranties contained
in Section 4 shall be true, complete and correct in all material respects
on and as of the Closing Date.

 

(iii)                               Performance.
 Investor shall have performed and
complied with all terms and conditions contained in this Agreement and the
Transaction Documents which are required to be performed or complied with by
Investor prior to or at such Closing Date.

 

(iv)                              Proceedings
to be Satisfactory.  All corporate
and other proceedings to be taken by Investor in connection with the
transactions contemplated hereby and all documents incident thereto shall be
satisfactory in form and substance to AVI and its counsel, and AVI and its
counsel shall have received all such counterpart originals or certified or
other copies of such documents as they reasonably may request.

 

(v)                                 Required
Consents.  Investor shall have
obtained the written consent or approval of each Person whose consent or
approval is required in connection with this Agreement and the Transaction
Documents.

 

11

 

(vi)                              Litigation
Affecting Closing.  No suit, action
or other proceeding shall be pending or threatened by any third party or by or
before any court or governmental agency in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this Agreement
or the Transaction Documents, or the consummation of the transactions
contemplated hereby or thereby, and no investigation that might result in any
such suit, action or other proceeding shall be pending or threatened.

 

(vii)                           Legislation.
 No statute, rule, regulation, order, or
interpretation shall have been proposed, enacted, entered or deemed applicable
by any domestic or foreign government or governmental or administrative agency
or court which would make the transactions contemplated by this Agreement or
the Transaction Documents illegal.

 

(viii)                        No
Change of Control.  Since the date
hereof, there shall not have been any Change of Control of Investor.

 

(ix)                                No
Default.  Since the date hereof, no
default (or event which, with the passage of time and/or the giving of notice,
would constitute a default) of Investor shall have occurred under this
Agreement or the Transaction Documents.

 

7.      INDEMNIFICATION

 

(a)                                  Indemnification
of Investor.  AVI shall indemnify,
defend and hold harmless Investor and each of its Affiliates, and their
respective officers, directors and shareholders from and against and in respect
of any and all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, interest and penalties, costs and expenses
(including, without limitation, reasonable legal fees and disbursements
incurred in connection therewith and in seeking indemnification therefor, and
any amounts or expenses required to be paid or incurred in connection with any action,
suit, proceeding, claim, appeal, demand, assessment or judgment) (“Indemnifiable
Losses”), resulting from, arising out of, or imposed upon or incurred by any
Person to be indemnified hereunder by reason of any breach of any
representation, warranty, covenant or agreement of AVI contained in this
Agreement or any agreement, certificate or document executed and delivered by
AVI pursuant hereto.

 

(b)                                 Indemnification
of AVI.  Investor shall indemnify,
defend and hold harmless AVI and each of its Affiliates, and their respective
officers, directors and shareholders from and against and in respect of any and
all Indemnifiable Losses resulting from, arising out of, or imposed upon or
incurred by any Person to be indemnified hereunder by reason of any breach of
any representation, warranty, covenant or agreement of Investor contained in
this Agreement or any agreement, certificate or document executed and delivered
by Investor pursuant hereto.

 

(c)                                Third-Party
Claims.  If a claim by a third party
is made against Investor or AVI as the case may be and such claim does or may constitute
an Indemnifiable Loss (an “Indemnified Party”)and if the other party (the “Indemnifying
Party”) intends to seek indemnity with respect thereto under this Section 7,
the Indemnified Party shall promptly notify Indemnifying Party of such claim;
provided, however, that failure to give timely notice shall not affect the
rights of the Indemnified Party so long as the failure to give timely notice
does not materially and adversely affect the Indemnifying Party’s ability to
defend such claim against a third party. The

 

12

 

Indemnified
Party shall not settle such claim without the consent of the Indemnifying Party.
If the Indemnifying Party acknowledges in writing its indemnity obligations for
Indemnifiable Losses resulting therefrom, the Indemnifying Party shall control
all settlement discussions and litigation proceedings and the Indemnified Party
may participate at its own cost and expense in such discussions or
proceedings so long as such participation does not interfere with the
reasonable judgment of the Indemnifying Party with respect to such discussions
and proceedings.

 

(d)                                 Cooperation
as to Indemnified Liability.  Each
party hereto shall cooperate fully with the other party with respect to access
to books, records, or other documentation within such party’s control, if
deemed reasonably necessary or appropriate by either party in the defense of
any claim which may give rise to indemnification hereunder.

 

(e)                                  Brokerage.
 AVI will indemnify and hold harmless
Investor against and in respect of any claim for brokerage or other commissions
relative to this Agreement or to the transactions contemplated hereby, based in
any way on agreements, arrangements or understandings made or claimed to have
been made by AVI with any third party.

 

(f)                                    Limitation
on Certain Claims.  To the extent any
Indemnified Party wishes to make a claim for indemnification under Section 7
with respect to the breach of an Indemnifying Party’s representations and
warranties deemed made as of the Closing Date, such claim for indemnification
shall be made within one hundred and eighty (180) days after the Closing Date. However,
the foregoing one hundred and eighty (180) day limitation shall not apply to
any claim for indemnification arising out of any third party claim made against
an Indemnified Party.

 

8.      TERMINATION
AND DEFAULT

 

(a)                                  Termination.
 The obligation of the parties hereto to
consummate the remaining transactions contemplated hereby may be
terminated and abandoned at any time at or before the Closing if any of the
following events occurs:

 

(i)                                 by
and at the option of Investor or AVI, if the Closing does not occur within five
(5) days from the date hereof, provided that Investor or AVI, as the case may be,
is not then in material default under this Agreement; or

 

(ii)                              by
and at the option of Investor, if the Investor terminates the License and
Development Agreement pursuant to Section 9.2(b) thereof; or

 

(iii)                           by
and at the option of Investor, if AVI is in default under this Agreement or the
Transaction Documents, and does not cure such default within thirty (30) days
after having received a written notice from Investor regarding such default; or

 

(iv)                          by
and at the option of AVI, if Investor is in default under this Agreement or the
Transaction Documents, and does not cure such default within thirty (30) days
after having received a written notice from AVI regarding such default; or

 

(v)                             by
and at the option of Investor, if any event or circumstance occurs or exists
that renders any condition to Investor’s obligations set forth in Section 6
incapable of being satisfied; or

 

13

 

(vi)                          by
and at the option of Investor if a Material Adverse Effect with respect to AVI
shall have occurred; or

 

(vii)                       by
the mutual written consent of the parties; or

 

(viii)                    by
and at the option of either Investor or AVI if any governmental authority shall
have issued an order, decree, or ruling or taken any other action restraining,
enjoining or otherwise prohibiting in any material respects the transactions
contemplated hereby and such order, decree, ruling or other action shall have
become final and nonappealable.

 

(b)                                 Effect.
 Termination of this Agreement by a party
shall not relieve the other parties hereto of any liability for breach of
representation, warranty, covenant or agreement by such other parties including
liability for monetary damages and/or specific performance. Investor’s rights
pursuant to the Transaction Documents shall survive any termination of this
Agreement.

 

9.      OTHER
PROVISIONS

 

(a)                                  Further
Assurances.  At such time and from
time to time on and after the Closing Date, upon request by the other party,
Investor and AVI will execute, acknowledge and deliver, or will cause to be
done, executed, acknowledged and delivered, all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney and assurances that may be
required for the better conveying, transferring, assigning, delivering,
assuring and confirming to Investor, or to its respective successors and
assigns, all of the Purchased Shares or to otherwise carry out the purposes of
this Agreement.

 

(b)                                 Complete
Agreement.  This Agreement and the
Transaction Documents (including all schedules and exhibits hereto and thereto)
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein or
therein, with respect to the subject matter hereof and thereof. This Agreement
supersedes all prior agreements and understandings among the parties hereto
with respect to the subject matter hereof.

 

(c)                                  Survival
of Representations, Warranties and Agreements.  The representations, warranties, covenants and
agreements contained in Sections 3 and 4 of this Agreement shall survive the
Closing and remain in full force and effect. No independent investigation of
AVI by Investor, its counsel, or any of its agents or employees shall in any
way limit or restrict the scope of the representations and warranties made by
AVI in this Agreement.

 

(d)                                 Waiver,
Discharge, Amendment, Etc.  The
failure of any party hereto to enforce at any time any of the provisions of
this Agreement shall not, absent an express written waiver signed by the party
making such waiver specifying the provision being waived, be construed to be a
waiver of any such provision, nor in any way to affect the validity of this
Agreement or any part thereof or the right of the party thereafter to
enforce each and every such provision. No waiver of any breach of this
Agreement shall be held to be a waiver of any other or subsequent breach. This
Agreement may be amended by AVI and Investor, by mutual action approved by
their respective Boards of Directors or their respective officers authorized by
such Board of

 

14

 

Directors, at
any time. Any amendment to this Agreement shall be in writing and signed by AVI
and Investor.

 

(e)                                  Notices. All notices or other communications to a
party required or permitted hereunder shall be in writing and shall be
delivered personally or by telecopy (receipt confirmed) to an executive officer
of such party or shall be sent by a reputable express delivery service or by
certified mail, postage prepaid with return receipt requested, addressed as
follows:

 

	
  if to
  Investor to:

  	
   

  	
  Cook Group
  Incorporated

  
	
   

  	
   

  	
  750 Daniels Way

  
	
   

  	
   

  	
  Bloomington, Indiana 47402

  
	
   

  	
   

  	
  Attn: Pete Yonkman

  
	
   

  	
   

  	
  Facsimile: (812) 339-5369

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Stephen J. Hackman

  
	
   

  	
   

  	
  Ice Miller LLP

  
	
   

  	
   

  	
  One American Square, Suite 3100

  
	
   

  	
   

  	
  Indianapolis, Indiana 46282

  
	
   

  	
   

  	
  Facsimile: (317) 592-4666

  
	
   

  	
   

  	
   

  
	
  if to AVI to:

  	
   

  	
  AVI BioPharma Inc.

  
	
   

  	
   

  	
  One SW Columbia, Suite 1105

  
	
   

  	
   

  	
  Portland OR 97258

  
	
   

  	
   

  	
  Attn: Alan Timmins

  
	
   

  	
   

  	
  Facsimile: (503) 227-0554

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Michael Phillips

  
	
   

  	
   

  	
  Davis Wright Tremaine LLP

  
	
   

  	
   

  	
  1300 SW Fifth Avenue, Suite 2300

  
	
   

  	
   

  	
  Portland OR 97201-5682

  
	
   

  	
   

  	
  Facsimile: (503) 778-5299

  

 

Any party may change the above–specified recipient and/or mailing
address by notice to the other party given in the manner herein prescribed. All
notices shall be deemed given on the day when actually delivered as provided
above (if delivered personally or by telecopy) or on the day shown on the
return receipt (if delivered by mail or delivery service).

 

(f)                                    Public
Announcement.  In the event either
party proposes to issue any press release or public announcement concerning the
existence of the terms and conditions of or the negotiations of the parties
with respect to this Agreement or any of the Transaction Documents, such party
shall so advise the other party hereto, and the parties shall thereafter use
their best efforts to cause a mutually agreeable release or announcement to be
issued; provided that neither party shall issue any such press release or
public announcement if AVI notifies the Investor that it has been advised by
counsel that the issuance of the proposed press release or the making of the proposed
public announcement, under the circumstances existing at the time of the
proposed disclosure, would result in a violation of applicable federal
securities laws or require AVI to disclose material non-public information
involving AVI that, in the good faith judgment of AVI’s

 

15

 

Board of
Directors, would be inadvisable or would be likely to materially and adversely
affect AVI’s business. If any press release or other public announcement is
delayed under this Section 9(f), AVI shall notify the Investor as soon as
the condition entitling AVI to delay disclosure is resolved and Investor shall
thereafter be entitled to make such press release or public announcement in a form that
is mutually agreeable to the parties.

 

(g)                                 Expenses.
 AVI and Investor shall each pay their
own expenses incident to this Agreement and the preparation for, and
consummation of, the transactions provided for herein.

 

(h)                                 Governing
Law.  This Agreement shall be
governed by and construed in accordance with the Laws of the State of Oregon
applicable to a contract executed and performed in such State, without giving
effect to the conflicts of laws principles thereof.

 

(i)                                     Titles
and Headings; Construction.  The
titles and headings to the Sections herein are inserted for the convenience of
reference only and are not intended to be a part of or to affect the
meaning or interpretation of this Agreement. This Agreement shall be construed
without regard to any presumption or other rule requiring construction
hereof against the party causing this Agreement to be drafted.

 

(j)                                     Benefit.
 Nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto or
their respective successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.

 

(k)                                  Counterparts.
 This Agreement may be executed in
any number of counterparts, each of which shall be deemed as original and all
of which together shall constitute one instrument.

 

(l)                                     Assignment. Neither this Agreement nor any right, interest
or obligation hereunder may be assigned by any party hereto without the
prior written consent of the other party hereto and any attempt to do so will
be void, except (a) for assignments and transfers by operation of Law; (b) that
Investor may assign any or all of its rights, interests and obligations
hereunder without the AVI’s consent (i) to Investor’s direct or indirect
parent, (ii) to any subsidiary of Investor at least 50% of the voting
power of which is owned, directly or indirectly, by Investor or its Affiliates,
(iii) to a wholly-owned, direct or indirect subsidiary of Investor, (iv) to
an entity that acquires the entire equity interest or substantially all of the
assets of Investor or Investor’s parent, or (v) to any person who acquires
the product line to which this Agreement and the Transaction Documents pertain,
(c) that Investor may collaterally assign its rights under this
Agreement to parties providing financing in connection with the transactions
contemplated hereby. This Agreement is binding upon, inures to the benefit of
and is enforceable by the parties hereto and their respective successors and
assigns. Notwithstanding and in addition to the foregoing, Investor may separately
assign its rights and indemnities under Section 5(d) to any Person
who acquires at least 10,000 Purchased Shares from Investor.

 

(m)                               Jurisdiction;
Venue.  AVI consents to the
jurisdiction of, and venue in, any state or federal court located within Marion
County, Indiana, and waives personal service of any and all process made upon
AVI. AVI waives any objection, which it may have to any proceeding
commenced in a federal or state court located within Marion County, Indiana. Any
judicial

 

16

 

proceeding by
AVI against Investor involving, directly or indirectly, any matter or claim in
any way arising out of, related to or connected herewith shall be brought only
in the federal or state courts of the State of Indiana, situated in Marion
County, Indiana.

 

(n)                                 Non-Disclosure. Each party agrees not to disclose or use
(except as permitted or required for performance by the party receiving such
Confidential Information of its rights or duties hereunder or under the
Transaction Documents) any Confidential Information of the other party obtained
during the term of this Agreement until the expiration of three (3) years
after the earlier of the Closing or the termination of this Agreement. Each
party further agrees to take appropriate measures to prevent any such
prohibited disclosure by its present and future employees, officers, agents,
subsidiaries, or consultants during such term.

 

[SIGNATURE PAGE FOLLOWS]

 

17

 

IN WITNESS WHEREOF, each of the parties has caused this Investment
Agreement to be executed in the manner appropriate for each, and to be dated as
of the date first above-written.

 

 

	
  COOK GROUP INCORPORATED

  	
  AVI BIOPHARMA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Printed:

  	
   

  	
   

  	
  Printed: 

  	
  Alan P. Timmins

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title: 

  	
  President

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
																

 

18

 

EXHIBITS AND SCHEDULES:

 

Schedule A – Disclosure Schedule

 

19

 

EXHIBIT A

LEGAL OPINION OF AVI’S COUNSEL

 

(a)                                  AVI
is a corporation duly incorporated and validly existing under the laws of the
state of Oregon. AVI has the corporate power and authority to execute, deliver
and perform this Agreement and the Transaction Documents and to issue,
sell and deliver the Purchased Shares.

 

(b)                                 All
necessary corporate action on the part of AVI and of its officers,
directors and shareholders has been taken for the valid execution and delivery
of this Agreement, the Transaction Documents, and the performance of the
obligations of AVI hereunder and thereunder. This Agreement and the Transaction
Documents have been validly executed and delivered and are legal, valid and
binding obligations of AVI, enforceable against AVI in accordance with their respective
terms, subject in each case to bankruptcy, insolvency, and other similar laws
affecting the rights of creditors generally and subject to the exercise of
judicial discretion in accordance with principles of equity. The execution and
delivery of this Agreement and the Transaction Documents and the performance by
AVI of its obligations hereunder and thereunder do not conflict with or result
in the violation of AVI’s Articles of Incorporation or Bylaws; or order, writ,
judgment or decree known to such counsel to which AVI is a party or by which it
is bound, or to such counsel’s knowledge, violate any existing law or
regulation.

 

(c)                                  The
Purchased Shares have been duly authorized by all necessary corporate action on
the part of AVI and, upon delivery by AVI in accordance with the terms of
this Agreement, will be duly and validly issued, fully paid and nonassessable.

 

(d)                                 All
consents, approvals, orders, authorizations or registrations, qualifications,
designations, declarations or filings of or with any federal or state
governmental authority on the part of AVI required in connection with the
consummation of the transactions contemplated by this Agreement and the
Transaction Documents have been made, obtained or effected (provided, however,
that filings under applicable state securities laws may be made promptly
after the Closing to the extent such filings are permitted to be made after the
sale of the Purchased Shares). Based in part on the representations of
Investor in Section 4 of this Agreement, the offer, sale and issuance by
AVI of the Purchased Shares, all in conformity with the terms of this
Agreement, do not require registration under Section 5 of the Securities
Act of 1933, as amended.

 

20

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