Document:

Exhibit 10.3

Director Compensation Summary

We pay our non-management directors an annual retainer
of $150,000 per year, $60,000 of which we pay in cash and $90,000 of which we
pay in stock units or restricted stock, as described below.  A director may elect to receive up to
100 percent of his annual retainer in stock units or restricted
stock.  The Chairman of the Board
receives an additional $100,000 annual retainer, the Chairman of the Audit
Committee receives an additional $30,000 annual retainer and the Chairman of
each of the Compensation Committee, the Nominating and Governance Committee,
the Finance Committee and the Risk Oversight Committee receives an additional
$10,000 annual retainer.  Members of the
Audit Committee, other than the chairman, receive an additional $10,000 annual
retainer and members, other than the chairmen, of each of the Compensation
Committee, the Nominating and Governance Committee, the Finance Committee and
the Risk Oversight Committee receive an additional $5,000 annual retainer.  The Company will generally not pay a fee for
attendance at board or committee meetings, though the Chief Executive Officer
has the discretion to pay attendance fees of $2,000 for extraordinary or
special meetings.

We awarded an initial, one-time grant of restricted
shares with a value of $100,000 to each non-management director upon closing of
our initial public offering, which we refer to as our IPO, or, if later, upon
the director’s initial election to the Board of Directors.  These restricted shares will vest on the day
immediately prior to the third annual shareholders meeting at which directors
are elected following the grant of the shares.

We grant annual retainer awards in the form of stock
units until the share ownership guidelines have been met.  The first 10,000 stock units awarded to each
director became, or will become, non-forfeitable on the day immediately prior
to the first annual shareholders meeting at which directors are elected
following the grant of the units.  We
mandatorily defer the issuance of Common Shares for these units until six
months after termination of the director’s service on the Board of
Directors.  After directors meet the
share ownership guidelines discussed below, they may elect to receive their
annual retainer equity award in the form of either restricted shares that vest
on the day immediately prior to the first annual shareholders meeting at which
directors are elected following the grant of the shares, or stock units that
become non-forfeitable on the day immediately prior to the first annual
shareholders meeting at which directors are elected following the grant of the
units, with the issuance of Common Shares deferred to a later date chosen by
the director.  The directors that have
been in office since immediately following the IPO have satisfied our stock
ownership guidelines.  Directors cannot
sell or transfer stock units until we issue the Common Shares to them.  We credit dividend equivalents to stock units
as additional stock units.Exhibit
10.8

TAPESTRY PHARMACEUTICALS, INC.

2006 EQUITY INCENTIVE
PLAN

STOCK OPTION
AGREEMENT

(NONSTATUTORY STOCK OPTION)

Pursuant to your Stock Option
Grant Notice (“Grant Notice”) and this Stock Option Agreement, Tapestry Pharmaceuticals, Inc.  (the “Company”) has granted you an option under
its 2006 Equity Incentive Plan
(the “Plan”) to purchase the number of shares of the Company’s Common Stock
indicated in your Grant Notice at the exercise price indicated in your Grant
Notice.  Defined terms not explicitly
defined in this Stock Option Agreement but defined in the Plan shall have the
same definitions as in the Plan.

The details of your option are
as follows:

1.             VESTING.  Subject to Section 10 and to the limitations
contained herein, your option will vest as provided in your Grant Notice,
provided that vesting will cease upon the termination of your Continuous
Service.

2.             NUMBER
OF SHARES AND EXERCISE PRICE.  The number of shares of Common Stock subject
to your option and your exercise price per share referenced in your Grant
Notice may be adjusted from time to time for Capitalization Adjustments.

3.             EXERCISE
PRIOR TO VESTING (“EARLY EXERCISE”).  If permitted in your Grant Notice (i.e., the “Exercise
Schedule” indicates that “Early Exercise” of your option is permitted) and
subject to the provisions of your option, you may elect at any time that is
both (i) during the period of your Continuous Service and (ii) during the term
of your option, to exercise all or part of your option, including the nonvested
portion of your option; provided, however,
that:

(a)           a partial exercise
of your option shall be deemed to cover first vested shares of Common Stock and
then the earliest vesting installment of unvested shares of Common Stock;

(b)           any shares of
Common Stock so purchased from installments that have not vested as of the date
of exercise shall be subject to the purchase option in favor of the Company as
described in the Company’s form of Early Exercise Stock Purchase Agreement; and

(c)           you shall enter
into the Company’s form of Early Exercise Stock Purchase Agreement with a
vesting schedule that will result in the same vesting as if no early exercise
had occurred.

4.             METHOD
OF PAYMENT. 
Payment of the exercise price is due in full upon exercise of all or any
part of your option.  You may elect to
make payment of the exercise price in cash or by check or in any other manner permitted by your Grant Notice,
which may include one or more of the following:

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(a)           In the Company’s
sole discretion and provided that at the time of exercise the Common Stock is
publicly traded, pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board that, prior to the issuance of Common
Stock, results in either the receipt of cash (or check) by the Company or the
receipt of irrevocable instructions to pay the aggregate exercise price to the
Company from the sales proceeds.

(b)           In the Company’s
sole discretion and provided that at the time of exercise the Common Stock is
publicly traded, by delivery of already-owned shares of Common Stock either
that you have held for the period required to avoid a charge to the Company’s
reported earnings (generally six (6) months) or that you did not acquire,
directly or indirectly from the Company, that are owned free and clear of any
liens, claims, encumbrances or security interests, and that are valued at Fair
Market Value on the date of exercise.  “Delivery”
for these purposes, in the sole discretion of the Company at the time you
exercise your option, shall include delivery to the Company of your attestation
of ownership of such shares of Common Stock in a form approved by the
Company.  Notwithstanding the foregoing,
you may not exercise your option by tender to the Company of Common Stock to
the extent such tender would violate the provisions of any law, regulation or
agreement restricting the redemption of the Company’s stock.

(c)           In the Company’s
sole discretion and provided that at the time of exercise the Common Stock is
publicly traded, through a “net exercise” of your option, pursuant to which the
Company will not require payment of the exercise price of your option but will
reduce the number of shares of Common Stock issued to you upon the exercise by
the largest number of whole shares that has a Fair Market Value that does not
exceed the aggregate exercise price. 
With respect to any remaining balance of the aggregate exercise price,
you shall make a cash payment to the Company. 
The shares of Common Stock so used to pay the exercise price of your
option under a “net exercise” will be considered to have resulted from the
exercise of the option, and accordingly, the option will not again be
exercisable with respect to such shares, the shares actually delivered to you,
and any shares withheld for purposes of tax withholding.

(d)           In the Company’s
sole discretion and subject to compliance with applicable law (including
Section 402 of the Sarbanes Oxley Act of 2002), pursuant to the following
deferred payment alternative:

(i)            Not less than one
hundred percent (100%) of the aggregate exercise price, plus accrued interest,
shall be due four (4) years from date of exercise or, at the Company’s
election, upon termination of your Continuous Service.

(ii)           Interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid (1) the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement and (2) the treatment of the option as a
variable award for financial accounting purposes.

(iii)         At any time that the
Company is incorporated in Delaware, payment of the Common Stock’s “par value,”
as defined in the Delaware General Corporation Law, shall be made in cash and
not by deferred payment.

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(iv)          In order to elect
the deferred payment alternative, you must, as a part of your written notice of
exercise, give notice of the election of this payment alternative and, in order
to secure the payment of the deferred exercise price to the Company hereunder,
if the Company so requests, you must tender to the Company a promissory note
and a pledge agreement covering the purchased shares of Common Stock, both in
form and substance satisfactory to the Company, or such other or additional
documentation as the Company may request.

5.             WHOLE
SHARES.  You may
exercise your option only for whole shares of Common Stock.

6.             SECURITIES
LAW COMPLIANCE. 
Notwithstanding anything to the contrary contained herein, you may not
exercise your option unless the shares of Common Stock issuable upon such
exercise are then registered under the Securities Act or, if such shares of
Common Stock are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Securities Act.  The exercise of your
option also must comply with other applicable laws and regulations governing
your option, and you may not exercise your option if the Company determines
that such exercise would not be in material compliance with such laws and
regulations.

7.             TERM.  You may not exercise your option before the
commencement or after the expiration of its term.  The term of your option commences on the Date
of Grant and expires upon the earliest of the following:

(a)           one hundred eighty
(180) days after the termination of your Continuous Service for any reason
other than your Disability or death, provided that if during any part of such
period your option is not exercisable solely because of the condition set forth
in Section 6, your option shall not expire until the earlier of the Expiration
Date (as defined in your Grant Notice) or until it shall have been exercisable
for an aggregate period of three (3) months after the termination of your
Continuous Service;

(b)           twelve (12) months
after the termination of your Continuous Service due to your Disability;

(c)           eighteen (18)
months after your death if you die either during your Continuous Service or
within one hundred eighty (180) days after your Continuous Service terminates;

(d)           the Expiration Date
indicated in your Grant Notice;

(e)           in accordance with
the provisions of Section 12 of the Plan; or

(f)            the day before the
tenth (10th) anniversary of the Date of Grant (as defined in your Grant Notice).

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8.             EXERCISE.

(a)           You may exercise
the vested portion of your option (and the unvested portion of your option if
your Grant Notice so permits) during its term by delivering a Notice of
Exercise (in a form designated by the Company) together with the exercise price
to the Secretary of the Company, or to such other person as the Company may
designate, during regular business hours, together with such additional
documents as the Company may then require.

(b)           By exercising your
option you agree that, as a condition to any exercise of your option, the
Company may require you to enter into an arrangement providing for the payment
by you to the Company of any tax withholding obligation of the Company arising
by reason of (1) the exercise of your option, (2) the lapse of any substantial
risk of forfeiture to which the shares of Common Stock are subject at the time
of exercise, or (3) the disposition of shares of Common Stock acquired upon
such exercise.

9.             TRANSFERABILITY.  Your option is not transferable, except by
will or by the laws of descent and distribution, and is exercisable during your
life only by you.  Notwithstanding the
foregoing, by delivering written notice to the Company, in a form satisfactory
to the Company, you may designate a third party who, in the event of your
death, shall thereafter be entitled to exercise your option.

10.          CHANGE IN CONTROL.

(a)           If a Change in
Control occurs and as of, or within [25 months, for Named Executive
Officers][13 months, for Controller and other officers Vice President and
above] after, the effective time of such Change in Control your Continuous
Service terminates due to an involuntary termination (not including death or
Disability) without Cause or due to a voluntary termination with Good Reason,
then, as of the date of termination of Continuous Service, the vesting and
exercisability of your option shall be accelerated in full.

(b)           “Cause” means the
occurrence of any one or more of the following: (i) your commission of any
crime involving fraud, dishonesty or moral turpitude; (ii) your attempted
commission of or participation in a fraud or act of dishonesty against the
Company that results in (or might have reasonably resulted in) material harm to
the business of the Company; (iii) your intentional, material violation of
any contract or agreement between you and the Company or any statutory duty you
owe to the Company; or (iv) your conduct that constitutes gross
insubordination, incompetence or habitual neglect of duties and that results in
(or might have reasonably resulted in) material harm to the business of the
Company; provided, however, that
the action or conduct described in clauses (iii) and (iv) above will
constitute “Cause” only if such action or conduct continues after the Company
has provided you with written notice thereof and thirty (30) days to cure
the same.

(c)           “Good Reason” means
that one or more of the following are undertaken by the Company without your
express written consent: (i) the assignment to you of any duties or
responsibilities that results in a material diminution in your function as in
effect immediately prior to the effective date of the Change in Control;
(ii) a reduction by the Company in your annual base salary, as in effect
on the effective date of the Change in Control or as increased thereafter;
(iii) any failure by the Company to continue in effect any benefit plan or
program, including incentive plans or plans with respect to the receipt of
securities of the Company, in 

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which you were participating immediately prior to the
effective date of the Change in Control (hereinafter referred to as “Benefit
Plans”), or the taking of any action by the Company that would adversely affect
your participation in or reduce your benefits under the Benefit Plans or
deprive you of any fringe benefit that you enjoyed immediately prior to the
effective date of the Change in Control; provided,
however, that Good Reason shall not be deemed to have occurred if
the Company provides for your participation in benefit plans and programs that,
taken as a whole, are comparable to the Benefit Plans; (iv) a relocation
of your business office to a location more than fifty (50) miles from the
location at which you performed your duties as of the effective date of the
Change in Control, except for required travel by you on the Company’s business
to an extent substantially consistent with your business travel obligations
prior to the effective date of the Change in Control; or (v) a material
breach by the Company of any provision of the Plan or the Option Agreement or
any other material agreement between you and the Company concerning the terms
and conditions of your employment.

(d)           If any payment or
benefit you would receive pursuant to a Change in Control from the Company or
otherwise (“Payment”) would (i) constitute a “parachute payment” within
the meaning of Section 280G of the Code, and (ii) but for this
sentence, be subject to the excise tax imposed by Section 4999 of the Code
(the “Excise Tax”), then such Payment shall be equal to the Reduced Amount. The
“Reduced Amount” shall be either (x) the largest portion of the Payment
that would result in no portion of the Payment being subject to the Excise Tax
or (y) the largest portion, up to and including the total, of the Payment,
whichever amount, after taking into account all applicable federal, state and
local employment taxes, income taxes, and the Excise Tax (all computed at the
highest applicable marginal rate), results in your receipt, on an after-tax
basis, of the greater amount of the Payment notwithstanding that all or some
portion of the Payment may be subject to the Excise Tax. If a reduction in
payments or benefits constituting “parachute payments” is necessary so that the
Payment equals the Reduced Amount, reduction shall occur in the following order
unless you elect in writing a different order (provided,
however, that such election shall be subject to Company approval if
made on or after the effective date of the event that triggers the Payment):
reduction of cash payments; cancellation of accelerated vesting of Stock
Awards; reduction of employee benefits. In the event that acceleration of
vesting of Stock Award compensation is to be reduced, such acceleration of
vesting shall be cancelled in the reverse order of the date of grant of your
Stock Awards (i.e., earliest granted Stock Award cancelled last) unless you
elect in writing a different order for cancellation.

The accounting firm engaged by the Company for general audit purposes
as of the day prior to the effective date of the Change in Control shall
perform the foregoing calculations. If the accounting firm so engaged by the
Company is serving as accountant or auditor for the individual, entity or group
effecting the Change in Control, the Company shall appoint a nationally
recognized accounting firm to make the determinations required hereunder. The
Company shall bear all expenses with respect to the determinations by such
accounting firm required to be made hereunder.

The accounting firm engaged to make the determinations hereunder shall
provide its calculations, together with detailed supporting documentation, to
you and the Company within fifteen (15) calendar days after the date
on which your right to a Payment is triggered (if requested at that time by you
or the Company) or such other time as requested by you or the 

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Company. If the accounting firm determines that no Excise Tax is
payable with respect to a Payment, either before or after the application of
the Reduced Amount, it shall furnish you and the Company with an opinion
reasonably acceptable to you that no Excise Tax will be imposed with respect to
such Payment. Any good faith determinations of the accounting firm made
hereunder shall be final, binding and conclusive upon you and the Company.

11.          OPTION
NOT A SERVICE CONTRACT.  Your option is not an employment or service
contract, and nothing in your option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company
or an Affiliate, or of the Company or an Affiliate to continue your employment.  In addition, nothing in your option shall
obligate the Company or an Affiliate, their respective stockholders, Boards of
Directors, Officers or Employees to continue any relationship that you might
have as a Director or Consultant for the Company or an Affiliate.

12.          WITHHOLDING OBLIGATIONS.

(a)           At the time you
exercise your option, in whole or in part, or at any time thereafter as
requested by the Company, you hereby authorize withholding from payroll and any
other amounts payable to you, and otherwise agree to make adequate provision
for (including by means of a “cashless exercise” pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board to the
extent permitted by the Company), any sums required to satisfy the federal,
state, local and foreign tax withholding obligations of the Company or an
Affiliate, if any, which arise in connection with the exercise of your option.

(b)           Upon your request
and subject to approval by the Company, in its sole discretion, and compliance
with any applicable legal conditions or restrictions, the Company may withhold
from fully vested shares of Common Stock otherwise issuable to you upon the
exercise of your option a number of whole shares of Common Stock having a Fair
Market Value, determined by the Company as of the date of exercise, not in
excess of the minimum amount of tax required to be withheld by law (or such
lower amount as may be necessary to avoid variable award accounting).  If the date of determination of any tax withholding
obligation is deferred to a date later than the date of exercise of your
option, share withholding pursuant to the preceding sentence shall not be
permitted unless you make a proper and timely election under Section 83(b) of
the Code, covering the aggregate number of shares of Common Stock acquired upon
such exercise with respect to which such determination is otherwise deferred,
to accelerate the determination of such tax withholding obligation to the date
of exercise of your option.  Notwithstanding
the filing of such election, shares of Common Stock shall be withheld solely
from fully vested shares of Common Stock determined as of the date of exercise
of your option that are otherwise issuable to you upon such exercise.  Any adverse consequences to you arising in
connection with such share withholding procedure shall be your sole
responsibility.

(c)           You may not
exercise your option unless the tax withholding obligations of the Company
and/or any Affiliate are satisfied. 
Accordingly, you may not be able to exercise your option when desired
even though your option is vested, and the Company shall have no obligation to
issue a certificate for such shares of Common Stock or release such shares of
Common Stock from any escrow provided for herein unless such obligations are
satisfied.

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13.          NOTICES.  Any notices provided for in your option or
the Plan shall be given in writing and shall be deemed effectively given upon
receipt or, in the case of notices delivered by mail by the Company to you,
five (5) days after deposit in the United States mail, postage prepaid,
addressed to you at the last address you provided to the Company.

14.          GOVERNING
PLAN DOCUMENT. 
Your option is subject to all the provisions of the Plan, the provisions
of which are hereby made a part of your option, and is further subject to all
interpretations, amendments, rules and regulations, which may from time to time
be promulgated and adopted pursuant to the Plan.  In the event of any conflict between the
provisions of your option and those of the Plan, the provisions of the Plan
shall control.

 

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