exv10w3



 







EXHIBIT 10.3




SIRNA THERAPEUTICS, INC.

2005 PERFORMANCE INCENTIVE PLAN

TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTION





	1.	 	General.





     These Terms and Conditions of Nonqualified Stock Option (these “Terms”) apply to a particular
stock option (the “Option”) if incorporated by reference in the Notice of Grant of Stock Options
(the “Grant Notice”) corresponding to that particular grant. The recipient of the Option
identified in the Grant Notice is referred to as the “Grantee.” The per share exercise price of
the Option as set forth in the Grant Notice is referred to as the “Exercise Price.” The effective
date of grant of the Option as set forth in the Grant Notice is referred to as the “Award Date.”
The exercise price and the number of shares covered by the Option are subject to adjustment under
Section 7.1 of the Plan.



     The Option was granted under and subject to the Sirna Therapeutics, Inc. 2005 Performance
Incentive Plan (the “Plan”). Capitalized terms are defined in the Plan if not defined herein. The
Option has been granted to the Grantee in addition to, and not in lieu of, any other form of
compensation otherwise payable or to be paid to the Grantee. The Grant Notice and these Terms are
collectively referred to as the “Option Agreement” applicable to the Option.




	2.	 	Vesting; Limits on Exercise; Incentive Stock Option Status.





     The Option shall vest and become exercisable in percentage installments of the aggregate
number of shares subject to the Option as set forth on the Grant Notice. The Option may be
exercised only to the extent the Option is vested and exercisable.




	 	•	 	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.




 









 












	3.	 	Continuance of Employment/Service Required; No Employment/Service Commitment.





     The vesting schedule applicable to the Option requires continued employment or service through
each applicable vesting date as a condition to the vesting of the applicable installment of the
Option and the rights and benefits under this Option Agreement. Employment or service for only a
portion of the vesting period, even if a substantial portion, will not entitle the Grantee to any
proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a
termination of employment or services as provided in Section 5 below or under the Plan.



     Nothing contained in this Option Agreement or the Plan constitutes a continued employment or
service commitment by the Corporation or any of its Subsidiaries, affects the Grantee’s status, if
he or she is an employee, as an employee at will who is subject to termination without cause,
confers upon the Grantee any right to remain employed by or in service to the Corporation or any
Subsidiary, interferes in any way with the right of the Corporation or any Subsidiary at any time
to terminate such employment or service, or affects the right of the Corporation or any Subsidiary
to increase or decrease the Grantee’s other compensation.




	4.	 	Method of Exercise of Option.





     The Option shall be exercisable by the delivery to the Secretary of the Corporation (or such
other person as the Administrator may require pursuant to such administrative exercise procedures
as the Administrator may implement from time to time) of:




	 	•	 	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.




The Administrator also may, but is not required to, authorize a non-cash payment alternative by
notice and third party payment in such manner as may be authorized by the Administrator.




 









 









	5.	 	Early Termination of Option.





     5.1 Expiration Date. Subject to earlier termination as provided below in this Section 5, the
Option will terminate on the tenth (10th) anniversary of the Award Date.



     5.2 Possible Termination of Option upon Certain Corporate Events. The Option is subject to
termination in connection with certain corporate events as provided in Section 7.3 of the Plan.



     5.3 Termination of Option upon a Termination of Grantee’s Employment or Services. Subject to
earlier termination on the Expiration Date of the Option or pursuant to Section 5.2 above, if the
Grantee ceases to be employed by or ceases to provide services to the Corporation or a Subsidiary,
the following rules shall apply (the last day that the Grantee is employed by or provides services
to the Corporation or a Subsidiary is referred to as the Grantee’s “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.





     For purposes of the Option, “Total Disability” means a “permanent and total disability”
(within the meaning of Section 22(e)(3) of the Code or as otherwise determined by the
Administrator).



     For purposes of the Option, “Cause” means that the Grantee:




	 	(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;




 









 






	 	(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.





     In all events the Option is subject to earlier termination on the Expiration Date of the
Option or as contemplated by Section 5.2. The Administrator shall be the sole judge of whether the
Grantee continues to render employment or services for purposes of this Option Agreement.




	6.	 	Non-Transferability.





     The Option and any other rights of the Grantee under this Option Agreement or the Plan are
nontransferable and exercisable only by the Grantee, except as set forth in Section 5.7 of the
Plan.




	7.	 	Notices.





     Any notice to be given under the terms of this Option Agreement shall be in writing and
addressed to the Corporation at its principal office to the attention of the Secretary, and to the
Grantee at the address last reflected on the Corporation’s payroll records, or at such other
address as either party may hereafter designate in writing to the other. Any such notice shall be
delivered in person or shall be enclosed in a properly sealed envelope addressed as aforesaid,
registered or certified, and deposited (postage and registry or certification fee prepaid) in a
post office or branch post office regularly maintained by the United States Government. Any such
notice shall be given only when received, but if the Grantee is no longer employed by the
Corporation or a Subsidiary, shall be deemed to have been duly given five business days after the
date mailed in accordance with the foregoing provisions of this Section 7.




	8.	 	Plan.





     The Option and all rights of the Grantee under this Option Agreement are subject to the terms
and conditions of the Plan, incorporated herein by this reference. The Grantee agrees to be



 









 




bound by the terms of the Plan and this Option Agreement. The Grantee acknowledges having
read and understanding the Plan, the Prospectus for the Plan, and this Option Agreement. Unless
otherwise expressly provided in other sections of this Option Agreement, provisions of the Plan
that confer discretionary authority on the Board or the Administrator do not and shall not be
deemed to create any rights in the Grantee unless such rights are expressly set forth herein or are
otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate
action of the Board or the Administrator under the Plan after the date hereof.





	9.	 	Entire Agreement.





     This Option Agreement and the Plan together constitute the entire agreement and supersede all
prior understandings and agreements, written or oral, of the parties hereto with respect to the
subject matter hereof. The Plan and this Option Agreement may be amended pursuant to Section 8.6
of the Plan. Such amendment must be in writing and signed by the Corporation. The Corporation
may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not
adversely affect the interests of the Grantee hereunder, but no such waiver shall operate as or be
construed to be a subsequent waiver of the same provision or a waiver of any other provision
hereof.




	10.	 	Governing Law.





     This Option Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Delaware without regard to conflict of law principles thereunder.




	11.	 	Effect of this Agreement.





     Subject to the Corporation’s right to terminate the Option pursuant to Section 7.3 of the
Plan, this Option Agreement shall be assumed by, be binding upon and inure to the benefit of any
successor or successors to the Corporation.




	12.	 	Counterparts.





     This Option Agreement may be executed simultaneously in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same
instrument.




	13.	 	Section Headings.





     The section headings of this Option Agreement are for convenience of reference only and shall
not be deemed to alter or affect any provision hereof.