• an annual base salary of $200,000;

• an annual bonus target of 25% of base salary;

• a stock option grant of 140,000 shares, which option was granted on January 27, 2009 at an exercise price of $0.16 per share, the closing price of the Company's stock on the grant date;

• six months severance payment upon the termination of the Employment Agreement due to death, disability, termination without "cause" or if Ms. Davis resigns for "good reason"; and

• an agreement not to compete with the company for twelve months following resignation for good reason and for six months in the event of termination for any other reason.

Additionally, the Compensation Committee also authorized the Company to enter into its customary change-in-control agreement for executive officers (the "CIC Agreement") with Ms. Davis, the form of which was previously filed as an exhibit to the Current Report on 8-K filed by the Company on April 17, 2007. Pursuant to the terms of the CIC Agreement, Ms. Davis shall receive twelve months salary upon her termination following a change in control and the occurrence of a Triggering Event (as such term is defined in the CIC Agreement), and a pro rata portion of the annual bonus and continuation of health benefits for twelve months following the date of termination.

2009 Base Salaries and Stock Option Awards On January 27, 2009, the Compensation Committee of the Board set the base salaries for the 2009 fiscal year for the Chief Operating Officer, General Counsel & Secretary, the Principal Accounting Officer and the Vice President & Chief Medical Officer. The salary adjustments, as applicable, were based on peer review information presented to the Compensation Committee by the independent compensation consultant and the reallocation of responsibilities of senior management. The Compensation Committee also determined that no bonus awards for the 2008 fiscal year would be paid to the Executive Officers, and maintained the target bonus percentages for 2009 bonuses, if any, at the same level as 2008 bonuses for senior management.
Additionally, the Compensation Committee granted options to purchase the Company's common stock to senior management under the Company's 2001 Long-Term Incentive Plan, as amended. The options each have an exercise price per share of $0.16, representing the closing price of the Company's common stock on January 27, 2009, the grant date. The options will vest as to 25% of the underlying shares on the date of grant, and the balance vests in successive equal annual installments through the third anniversary of the date of grant, subject to such individual's continuous service with the Company through each applicable vesting date.
The approved 2009 base salaries and stock option grants for the designated executive officers are as follows:

Name and Title                                                     2009 Base Salaries         Stock Options (#)
Cynthia W. Hu                                                      $      300,000                      165,000
Chief Operating Officer, General Counsel & Secretary
Kathy Wehmeir-Davis                                                $      200,000                      140,000
Principal Accounting Officer
Carolyn F. Sidor, M.D.                                             $      300,000 (1)                  200,000
Vice President & Chief Medical Officer

(1) No change from 2008 base salary.

• Michael Tarnow was named Executive Chairman of the Board. Mr. Tarnow also serves as the Chairman of the Executive Committee, the three-member committee of the Board formed to assist senior management with the day-to-day operations of the Company. Accordingly, Mr. Tarnow's annual retainer fee was increased from $60,000 to $180,000.

• In light of the market price of the common stock and to preserve shares available under the Company's plans for employees, each director will be paid $25,000 in cash in lieu of the annual grant of $25,000 worth of restricted stock on the date of the annual meeting.

• Each director received the annual stock option award to purchase 30,000 shares of the Company's common stock. Additionally, each director that serves as the chairman of a Board committee received an option grant to purchase an additional 5,000 shares, and each member of the Executive Committee received an option grant to purchase an additional 15,000 shares. All option grant awards were granted at the closing price of the Company's stock on February 2, 2009. All such options immediately vested and are exercisable.

• Annual cash retainer payments for Committee service, which are paid after the Company's annual stockholder meeting, remain unchanged with the exception of an increase from $7,500 to $10,000 for Dwight Bush, in recognition of his role as the chairman of the Audit Committee.

• Meeting fees for regular Board meetings remain unchanged, with the exception that the Executive Chairman will receive $2,500 per Board meeting instead of $1,500 per meeting. Fees for committee meetings remain unchanged , except that the Executive Chairman will receive $2,500 per committee meeting.