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EXHIBIT 10.3
 SIRNA THERAPEUTICS, INC.
2005 PERFORMANCE INCENTIVE PLAN
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTION
 1.
    
    General.
   2.
    
    Vesting; Limits on Exercise; Incentive Stock Option Status.
  
    
    Cumulative Exercisability. To the extent that the Option is vested and
exercisable, the Grantee has the right to exercise the Option (to the extent not
previously exercised), and such right shall continue, until the expiration or earlier
termination of the Option.
    
    No Fractional Shares. Fractional share interests shall be disregarded, but
may be cumulated.
    
    Minimum Exercise. No fewer than 100 (subject to adjustment under Section
7.1 of the Plan) shares of Common Stock may be purchased at any one time, unless the
number purchased is the total number at the time exercisable under the Option.
    
    Nonqualified Stock Option. The Option is a nonqualified stock option and is
not, and shall not be, an incentive stock option within the meaning of Section 422 of
the Code.




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3.
    
    Continuance of Employment/Service Required; No Employment/Service Commitment.
   4.
    
    Method of Exercise of Option.
  
    
    a written notice stating the number of shares of Common Stock to be purchased
pursuant to the Option or by the completion of such other administrative exercise
procedures as the Administrator may require from time to time,
    
    payment in full for the Exercise Price of the shares to be purchased in cash, check
or by electronic funds transfer to the Corporation, or (subject to compliance with all
applicable laws, rules, regulations and listing requirements and further subject to
such rules as the Administrator may adopt as to any non-cash payment) in shares of
Common Stock already owned by the Grantee, valued at their Fair Market Value on the
exercise date, provided, however, that any shares initially acquired
upon exercise of a stock option or otherwise from the Corporation must have been owned
by the Grantee for at least six (6) months before the date of such exercise;
    
    any written statements or agreements required pursuant to Section 8.1 of the Plan;
and
    
    satisfaction of the tax withholding provisions of Section 8.5 of the Plan.




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5.
    
    Early Termination of Option.
 5.1 Expiration Date th
 5.2 Possible Termination of Option upon Certain Corporate Events.
 5.3 Termination of Option upon a Termination of Grantees Employment or Services. Severance Date
 
    
    other than as expressly provided below in this Section 5.3, (a) the Grantee will
have until the date that is 3 months after his or her Severance Date to exercise the
Option (or portion thereof) to the extent that it was vested on the Severance Date, (b)
the Option, to the extent not vested on the Severance Date, shall terminate on the
Severance Date, and (c) the Option, to the extent exercisable for the 3-month period
following the Severance Date and not exercised during such period, shall terminate at
the close of business on the last day of the 3-month period;
    
    if the termination of the Grantees employment or services is the result of the
Grantees death or Total Disability (as defined below), (a) the Grantee (or his
beneficiary or personal representative, as the case may be) will have until the date
that is 12 months after the Grantees Severance Date to exercise the Option, (b) the
Option, to the extent not vested on the Severance Date, shall terminate on the
Severance Date, and (c) the Option, to the extent exercisable for the 12-month period
following the Severance Date and not exercised during such period, shall terminate at
the close of business on the last day of the 12-month period;
    
    if the Grantees employment or services are terminated by the Corporation or a
Subsidiary for Cause (as defined below), the Option (whether vested or not) shall
terminate on the Severance Date.
 Total Disability
 Cause
 (1)
    
    has been negligent in the discharge of his or her duties to the Corporation or
any of its Subsidiaries, has refused to perform stated or assigned duties or is
incompetent in or (other than by reason of a disability or analogous condition)
incapable of performing those duties;




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(2)
    
    has been dishonest or committed or engaged in an act of theft, embezzlement or
fraud, a breach of confidentiality, an unauthorized disclosure or use of inside
information, customer lists, trade secrets or other confidential information; has
breached a fiduciary duty, or willfully and materially violated any other duty, law,
rule, regulation or policy of the Corporation, any of its Subsidiaries or any affiliate
of the Corporation or any of its Subsidiaries; or has been convicted of a felony or
misdemeanor (other than minor traffic violations or similar offenses);(3)
    
    has materially breached any of the provisions of any agreement with the
Corporation, any of its Subsidiaries or any affiliate of the Corporation or any of its
Subsidiaries; or(4)
    
    has engaged in unfair competition with, or otherwise acted intentionally in a
manner injurious to the reputation, business or assets of, the Corporation, any of its
Subsidiaries or any affiliate of the Corporation or any of its Subsidiaries; has
improperly induced a vendor or customer to break or terminate any contract with the
Corporation, any of its Subsidiaries or any affiliate of the Corporation or any of its
Subsidiaries; or has induced a principal for whom the Corporation, any of its
Subsidiaries or any affiliate of the Corporation or any of its Subsidiaries acts as
agent to terminate such agency relationship.
  6.
    
    Non-Transferability.
  7.
    
    Notices.
  8.
    
    Plan.




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after
 9.
    
    Entire Agreement.
  10.
    
    Governing Law.
  11.
    
    Effect of this Agreement.
  12.
    
    Counterparts.
  13.
    
    Section Headings.