Exhibit 10.3

SEPARATION AND RELEASE AGREEMENT

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

The parties agree as follows:

1. Separation from Employment. Employee separated from employment with Employer
effective at the close of business on June 1, 2011 (the “Separation Date”).
Employee acknowledges and agrees that he has been paid his salary and other
compensation and/or benefits through May 31, 2011, less all lawful or required
deductions. In addition, Employer will issue a check to Employee on July 1, 2011
in accordance with Section 12(c)(v) of the Employment Agreement (defined below),
which check will include payment of amounts owed for accrued and unpaid vacation
time, less all lawful or required deductions.

2. Consideration. In consideration of Employee’s agreements hereunder,
(i) Employer shall pay to Employee the amounts set forth and described in
Section 12(c)(viii)(A) of that certain Employment Agreement dated effective the
15th day of May, 2009, as amended on October 16, 2009 (the “Employment
Agreement”) and (ii) Employer and Employee will enter into a consulting
arrangement upon terms mutually acceptable to the parties, which consulting
agreement shall become effective on the Effective Date. Employee may apply for
unemployment benefits and Employer will not oppose this application (except that
Employer may submit accurate information in response to any governmental
inquiries related to Employee’s application for unemployment). Employee
specifically acknowledges that he is not entitled to receive any additional
severance, termination payments, wages, bonus, vesting or other form of
compensation from Employer.

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

4. Confidentiality. The parties will use reasonable efforts to keep the terms of
this Agreement confidential. Employee may disclose the terms of this Agreement
to his immediate family. Employer may disclose the terms of this Agreement to
its officers and managers and as required by law (including, but not limited to,
to comply with the rules and regulations promulgated by the U.S. Securities and
Exchange Commission). Either party may disclose the terms of this Agreement to
their respective attorneys, accountants, financial advisors, auditors, or
similar advisors, or in response to government requests. Third persons informed
of the terms of this Agreement shall in turn be advised of this confidentiality
provision and requested to maintain such confidentiality.

5. Release.

 

  a.

In exchange for the consideration paid to Employee as set forth in this
Agreement, Employee forever releases and discharges Employer, any of
Employer-sponsored employee benefit plans in which Employee participates, or was
participating in, (collectively the “Plans”) and all of their respective
officers, members, managers,

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  partners, directors, trustees, agents, employees, and all of their successors
and assigns (collectively “Releasees”) from any and all claims, actions, causes
of action, rights, or damages, including costs and attorneys’ fees (collectively
“Claims”) which Employee may have arising out of his employment (including
Claims that may arise out of Employee’s employment agreement), on behalf of
himself, known, unknown, or later discovered which arose prior to the date
Employee signs this Agreement. This release includes but is not limited to, any
Claims under any local, state, or federal laws prohibiting discrimination in
employment, including without limitation the federal civil rights acts, Oregon
Revised Statutes Chapter 659A, the Americans with Disabilities Act, the Age
Discrimination in Employment Act, or Claims under the Employee Retirement Income
Security Act, or Claims alleging any legal restriction on Employer’s right to
terminate its employees, any Claims Employee has relating to his rights to or
against any of the Plans, or personal injury Claims, including without
limitation wrongful discharge, breach of contract, defamation, tortious
interference with business expectancy, constructive discharge, or infliction of
emotional distress. Employee represents that he has not filed any Claim against
Employer or its Releasees, he has no knowledge of any facts that would support
any Claim by Employee against Employer or by a third party against Employer, and
that he will not file a Claim at any time in the future concerning Claims
released in this Agreement; provided, however, that this will not limit Employee
from filing a Claim to enforce the terms of this Agreement. Notwithstanding the
foregoing, nothing herein shall constitute release of any of Employee’s rights
relating to vested options, vested benefits or vested entitlements under the
Company’s employee benefits plans, including equity incentive and retirement
plans.

 

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

6. Non-disparagement. Employee and Employer each agree not to make disparaging
statements about each other, except in the case of Employer statements that are
required under applicable federal or state securities laws or applicable rules
and regulations of any exchange on which Employer’s stock is traded; provided,
further that Employer’s obligations pursuant to this Section shall apply only
with regard to Employer’s officers and directors and only for so long as they
are employees or officers of Employer.

7. Consideration and Revocation Periods. Employee understands and acknowledges
that he is waiving and releasing any rights he may have under the Age
Discrimination in Employment Act of 1967 (“ADEA”), and that this waiver and
release is knowing and voluntary. Employee understands and agrees that this
waiver and release does not apply to any rights or claims that may arise under
the ADEA after the Effective Date of this Agreement. Employee understands and
acknowledges that the consideration given for this waiver and release is in
addition to anything

 

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of value to which Employee was already entitled. Employee further understands
and acknowledges that he has been advised by this writing that: (a) he should
consult with an attorney prior to executing this Agreement; (b) he has
twenty-one (21) days within which to consider this Agreement; (c) he has seven
(7) days following his execution of this Agreement to revoke this Agreement;
(d) this Agreement shall not be effective until after the revocation period has
expired; and (e) nothing in this Agreement prevents or precludes Employee from
challenging or seeking a determination in good faith of the validity of this
waiver under the ADEA, nor does it impose any condition precedent, penalties, or
costs for doing so, unless specifically authorized by federal law. In the event
Employee signs this Agreement and returns it to the Company in less than the
21-day period identified above, Employee hereby acknowledges that he has freely
and voluntarily chosen to waive the time period allotted for considering this
Agreement. The Parties agree that any changes made in the course of negotiating
the terms of this Agreement will not restart the running of the 21-day period.

8. Unknown Claims. Employee acknowledges that he has been advised to consult
with legal counsel and that he is familiar with the principle that a general
release does not extend to claims that the releaser does not know or suspect to
exist in his favor at the time of executing the release, which, if known by him,
must have materially affected his settlement with the Releasees. Employee, being
aware of said principle, agrees to expressly waive any rights he may have to
that effect, as well as under any other statute or common law principles of
similar effect.

9. Cooperation with Company. For a period of 1 year from the Effective Date,
Employee agrees to cooperate reasonably with Employer in the resolution of any
matters in which Employee was involved during the course of Employee’s
employment or about which Employee has knowledge, where Employee’s knowledge is
necessary for the defense or prosecution, of any claims or actions now in
existence or which may be brought or threatened in the future against or on
behalf of Employer, including any claims or actions against its officers,
directors and employees.

Employee’s cooperation in connection with such matters, actions and claims may
include, without limitation, being available to consult with Employer regarding
matters in which Employee has been involved or has knowledge; to assist Employer
preparing for any proceeding (including, without limitation, depositions,
consultation, discovery or trial); to provide affidavits reflecting truthful
written testimony; to assist with any audit, inspection, proceeding or other
inquiry; and to act as a witness to provide truthful testimony in connection
with any litigation or other legal proceeding affecting Employer. For a period
of one (1) year after the Effective Date of this Agreement, Employee agrees to
keep Employer apprised of his current contact information, including telephone
numbers, home address, and email address, and to promptly respond to
communications from Employer in connection with this Section. In connection with
providing such cooperation under this Section, Employee shall be compensated for
all documented and reasonable time spent at a rate of $200.00 per hour. Employee
shall also be reimbursed for any documented and reasonable costs and expenses
incurred in connection with providing such cooperation under this Section.

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

 

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

12. Entire Agreement. This Agreement, together with any surviving provisions of
the Confidential Proprietary Rights and Non-Disclosure Agreement Employee
entered into with the Company on September 25, 2009, any equity agreements, and
any surviving provisions of the Employment Agreement, represent and contain the
entire understanding between the parties in connection with its subject matter.
Except as referenced herein, all other prior written or oral agreements or
understandings are merged into and superseded by this Agreement. Employee
acknowledges that in signing this Agreement, he has not relied upon any
representation or statement not set forth in this Agreement made by Employer or
any of its representatives.

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

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

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

(Signature Page Follows)

 

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    PAUL MEDEIROS, an individual Dated: June 1, 2011     /s/ Paul Medeiros    
Paul Medeiros     AVI BIOPHARMA, INC. Dated: June 3, 2011     By   /s/
Christopher Garabedian     Name:   Christopher Garabedian     Title:   President
and Chief Executive Officer

 

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