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**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-K/A**

** **

**AmendmentNo. 1**

 

**x**** ****ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934.**

** **

**For the fiscal year ended December 31, 2009.**

** **

**o****  ****TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934.**

** **

**For the transition period from              to             .**

 

**Commission File Number 00029815**

 

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**AllosTherapeutics, Inc.**

(Exactname of Registrant as specified in its charter)

 

| **Delaware**                                                     | ** ** | **54-1655029**                              |
|------------------------------------------------------------------|------------|---------------------------------------------|
| (State  or other jurisdiction of  incorporation or organization) |       | (I.R.S.  Employer  Identification No.) |

 

**11080 CirclePoint Road, Suite 200**

**Westminster, Colorado 80020**

**(303) 426-6262**

(Address,including zip code, and telephone number, including area code, of principalexecutive offices)

 

Securitiesregistered pursuant to Section 12(b) of the Act:

 
| **Common Stock $.001 Par Value** | ** ** | **NASDAQ Stock Market LLC  (NASDAQ Global Market)** |
|----------------------------------|------------|-----------------------------------------------------|
| (Title of class)                 |       | (Name of each exchange on which registered)         |

 

Securities registered pursuant to Section 12(g) of the Act: **None**

 

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Indicate by check mark if theregistrant is a well-known seasoned issuer, as defined in Rule 405 of theSecurities Act.  Yes o  No x

 

Indicate by check mark if theregistrant is not required to file reports pursuant to Section 13 orSection 15(d) of the Act.  Yes o No x

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes x No o

 

Indicate by check markwhether the registrant has submitted electronically and posted on its corporateWeb site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T during the preceding 12months (or for such shorter period that the registrant was required to submitand post such files).  Yes o No o

 

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to thebest of registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K.  x

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, or a smaller reporting company. Seedefinitions of “large accelerated filer,” “accelerated filer” and “smallerreporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

| Large accelerated filer o                |   | Accelerated filer x         |
|-----------------------------------------------|--------|----------------------------------|
|                                          |   |                             |
| Non-accelerated filer o                  |   | Smaller reporting company o |
| (Do not check if a smaller reporting company) |   |                             |

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).  Yes o No x

 

The aggregate market value ofcommon stock held by nonaffiliates of the registrant (based upon the closingsale price of such shares on the NASDAQ Global Market on June 30, 2009)was $517,871,691. Shares of the registrant’s common stock held by each currentexecutive officer and director and by each stockholder who is known by theregistrant to own 10% or more of the outstanding common stock have beenexcluded from this computation in that such persons may be deemed to beaffiliates of the registrant. Share ownership information of certain personsknown by the registrant to own greater than 10% of the outstanding common stockfor purposes of the preceding calculation is based solely on information onSchedules 13D and 13G, if any, filed with the Commission. Thisdetermination of affiliate status is not necessarily a conclusive determinationfor other purposes.

 

As of February 25, 2010,there were 104,724,779 shares of the registrant’s common stock outstanding.

 

 

 

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**EXPLANATORYNOTE: **ThisAmendment No. 1 on Form 10-K/A (“Amendment No. 1”) amends theregistrant’s Annual Report on Form 10-K for the year ended December 31,2009, as filed by the registrant on March 1, 2010 (the “Report”), and isbeing filed solely to replace Part III, Item 11.  In addition, we are alsoincluding Exhibits 31.01, 31.02 and 32.01 required by the filing of this Amendment No. 1.  Except as otherwise stated herein, no other informationcontained in the Report has been updated by this Amendment No. 1.  Unlessthe context requires otherwise, references in this Amendment No. 1 to “Allos,”the “Company, “ “we, “ “us, “ and “our” refer to Allos Therapeutics, Inc.

 

**ALLOS THERAPEUTICS, INC.**

**ANNUAL REPORT ON FORM 10-K/A**

**FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009**

**Amendment No. 1**

 

**TABLE OF CONTENTS**

 
| ** **        | ** **              | **Page** |
|-------------------|-------------------------|----------|
| **PART III** |                    |     |
| ** **        |                    |     |
| ITEM 11.     | EXECUTIVE  COMPENSATION | 1        |

 

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**PART III**

 

**ITEM 11.EXECUTIVE COMPENSATION**

 

**CompensationDiscussion & Analysis**

 

This compensation discussionand analysis provides information regarding the compensation program in placefor the executive officers named in the Summary Compensation Table onpage 15 of this Amendment No. 1 (collectively, the “named executiveofficers”). It includes information regarding the objectives of ourcompensation program, our compensation processes and procedures, each elementof compensation that we provide, why we choose these elements, how we determinethe amount of each component to pay, and our compensation decisions for 2009and the first quarter of 2010. This compensation discussion and analysis shouldbe read in conjunction with the tables and related discussion beginning onpage 15 of this Amendment No. 1.

 

***Objectives of our Executive Compensation Program***

 

Our executive compensationprogram is designed to attract, retain and motivate talented executives capableof providing the leadership, vision and execution necessary to achieve ourbusiness objectives and create long-term stockholder value. We believe there isa direct correlation between company performance and leadership talent, andthat executive officers with the requisite experience, qualifications andvalues are essential to our success and the success of our stockholders. Wealso believe the successful execution of our strategic business objectivesnecessitates the retention of our management team and keeping managementfocused on business goals. We actively seek to foster a pay-for-performanceenvironment that aligns the interests of our executive officers with thecreation of stockholder value. To this end, our executive compensation programis strongly linked to the delivery of long-term returns to our stockholders,the achievement of short- and long-term strategic business objectives,individual performance, and the demonstration of competencies that are alignedwith our culture and values and that will contribute to our long-term success.

 

***Role of our Compensation Committee***

 

The Compensation Committeeis responsible for overseeing our compensation policies, plans and programs,and reviewing and determining the salary, bonuses, equity incentives,perquisites, severance arrangements and other related benefits paid to ourdirectors and executive officers. The Compensation Committee also oversees theadministration of our employee benefit plans. The Compensation Committee’scharter reflects these various responsibilities, and the Compensation Committeereviews the charter annually and recommends any appropriate changes orrevisions to the Board for its consideration.

 

The Compensation Committee,with the input of management and its outside advisors, develops ourcompensation policies, plans and programs by utilizing publicly availablecompensation data and subscription compensation survey data for national andregional companies in the biopharmaceutical industry, with a particular focuson companies of comparable sizes and stages of development as Allos. TheCompensation Committee believes these companies provide appropriate benchmarksfor our executive compensation program because they have similar organizationalstructures and tend to compete with us for executives and other employees.

 

Based on these data, theCompensation Committee has implemented a pay-for-performance compensationprogram, which ties a substantial portion of executives’ overall compensation,in the form of short- and long-term cash and equity incentives, to theachievement of measurable corporate and individual performance objectives andthe creation of stockholder value. As described in more detail below, ourexecutive compensation program consists of the following key components:

 

·                  Base salary;

 

·                  Performance-based cashbonuses;

 

·                  Equity incentives; and

 

·                  Severance andchange-in-control benefits.

 

The Compensation Committeehas not established any formal policies or guidelines for allocatingcompensation between current and long-term incentive compensation, or betweencash and non-cash compensation. However, commensurate with the Company’sphilosophy of establishing a link between compensation and corporateperformance, the

 

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Compensation Committeebelieves that a significant portion of each executive officer’s totalcompensation opportunity should be performance-based, reflecting both upsidepotential and down-side risk.

 

***Compensation Committee Processes and Procedures***

 

Typically, the CompensationCommittee meets at least four times a year, and it also considers and takesaction by written consent. The Compensation Committee meets regularly inexecutive session. The agenda for each meeting is usually developed by ourChief Executive Officer, in consultation with the Chair of the CompensationCommittee. From time to time, various members of management and other employeesas well as outside advisors or consultants may be invited by the CompensationCommittee to make presentations, provide financial or other backgroundinformation or advice or otherwise participate in Compensation Committeemeetings. The Chair of the Compensation Committee reports on committee actionsand recommendations at each regularly scheduled meeting of the Board.

 

Historically, theCompensation Committee has reviewed and determined any base salary increases,cash bonuses and equity incentives to be awarded to the Company’s executiveofficers, and established annual corporate and individual performanceobjectives, at one or more meetings held during the first quarter of the year.However, the Compensation Committee also considers matters related toindividual compensation from time-to-time upon an executive’s promotion orother change in job responsibility that occurs outside the Company’s annualperformance review and appraisal process, as well as in connection with thehiring of a new executive officer.

 

Generally, the CompensationCommittee’s executive compensation process comprises two related elements: theestablishment of performance objectives and the determination of executivecompensation levels. At the beginning of each year, the Compensation Committeeapproves annual performance objectives for the corporation as a whole and foreach individual executive officer (other than the Chief Executive Officer,whose bonus is tied entirely to the achievement of corporate objectives). Thecorporate objectives generally target the achievement of specific sales andmarketing, manufacturing, research and development and corporate developmentmilestones. The individual objectives focus on contributions that areconsistent with and support the corporate objectives or are otherwise intendedto contribute to the success of the Company. The annual corporate andindividual performance objectives are proposed by management and reviewed andapproved by the Compensation Committee, usually during the first quarter of theyear. The corporate objectives are also subject to review and approval by thefull Board. The Compensation Committee typically performs an interim assessmentof the annual performance objectives in the middle of each year to reviewcorporate and individual progress, and may, on occasion, make certainadjustments to the objectives that the committee deems appropriate based onchanging circumstances.

 

At the conclusion of eachyear, the Chief Executive Officer prepares a written performance appraisal andassigns each executive officer (other than himself) a performance rating forthe year. The performance appraisal evaluates each executive officer’s level ofperformance of his or her core job responsibilities, as well as various skills,behaviors and competencies that are viewed as important to our ability to buildand maintain a high performance operating culture. The Chief Executive Officeralso evaluates the degree of achievement of the annual corporate and individualperformance objectives and submits his recommendations to the CompensationCommittee for any base salary increases, cash bonuses and/or equity incentiveawards for each executive officer (other than himself). The Chief ExecutiveOfficer’s recommendations and Compensation Committee’s determinations aregenerally based upon a mix of the following factors:

 

·                  The executive’s individualperformance for the year;

 

·                  The degree of achievement ofannual corporate and individual performance objectives, as well as anycontributions made with regard to objectives or strategic initiatives notcovered by the formal goal-setting process;

 

·                  Comparisons with market datafor compensation paid to comparable executives of other biopharmaceutical orbiotechnology companies, with a particular focus on companies of similar sizesand stages of development and/or with which we compete for talented executives;

 

·                  The executive’s compensationrelative to other executive officers at Allos; and

 

·                  The importance of theexecutive’s continued service with the Company.

 

In the case of the ChiefExecutive Officer, his individual performance appraisal is conducted by theCompensation Committee, which determines his compensation adjustments andawards, if any, based on these same factors. The Chief Executive Officer maynot participate in or be present during any deliberations or determinations ofthe Compensation

 

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Committee regarding hiscompensation. To the extent approved, any base salary increases, cash bonusesand/or equity incentive awards for the executives, including the ChiefExecutive Officer, are implemented during the first calendar quarter of theyear.

 

With respect to newly hiredexecutive officers, the Compensation Committee, in consultation with the ChiefExecutive Officer, determines the executive’s compensation package, includingthe terms of any employment agreement, relocation arrangements, severancearrangements or change-in-control protections, based on a variety of subjectiveand objective factors, including:

 

·                  The executive’s particularqualifications and experience;

 

·                  The competitive recruitingenvironment for the executive’s services;

 

·                  Comparisons to market dataregarding compensation levels for comparable executives of otherbiopharmaceutical or biotechnology companies of similar sizes and stages ofdevelopment and/or with which we compete for talented executives;

 

·                  The executive’s anticipatedrole and responsibilities with the Company; and

 

·                  The executive’s pastcompensation history.

 

For all executives, as partof its deliberations, the Compensation Committee reviews a tally sheet settingforth each component of the executive’s proposed compensation package,including base salary, bonus potential, the value to the executive and cost tothe Company of all equity incentives, perquisites and other personal benefits,the executive’s realized and unrealized equity gains, and the Company’sprojected payout obligations under several severance and change-in-controlscenarios, to ensure that each executive’s total compensation remains in linewith the Company’s overall compensation philosophy. The Compensation Committeemay also review and consider, as appropriate, materials such as financialreports and projections, operational data, tax and accounting information,company stock performance data, analyses of historical executive compensationlevels and current company-wide compensation levels, and recommendations of theCompensation Committee’s compensation consultant.

 

Under its charter, theCompensation Committee may form and delegate authority to subcommittees, asappropriate, including, but not limited to, a subcommittee composed of one ormore members of the Board, to grant stock awards under the Company’s equityincentive plans to persons who are not executive officers of the Company. In February 2007,the Compensation Committee adopted an Equity Compensation Awards Policy todefine the specific practices and procedures to be followed in connection withthe granting of equity awards. Pursuant to the Equity Compensation AwardsPolicy, as amended in February 2009, the Compensation Committee delegatedauthority to the Chief Executive Officer to grant stock options and restrictedstock units to newly hired employees who are not executive officers inconnection with such employee’s commencement of employment, within specificguidelines and limitations approved by the Compensation Committee. Theauthority to approve all other stock awards, including all stock options orother equity grants to the Company’s executive officers, and all annual orpromotional grants to the Company’s other employees, remains vested in theCompensation Committee.

 

***Role of our Compensation Consultant***

 

The Compensation Committeebelieves that it is important when making compensation decisions to be informedas to the compensation practices of comparable publicly-held companies. To thisend, in connection with the 2009 review process, the Compensation Committeeengaged Compensia, Inc., an independent compensation consulting firm, toreview the structure and effectiveness of the Company’s executive compensationprogram. As part of its engagement, Compensia was requested by the CompensationCommittee to develop a peer group of comparable companies in the life sciencesindustry, with a focus on late-stage and commercial oncology companies, andprovide an assessment of the competitiveness of our 2008 executive compensationprogram relative to that peer group.

 

The 2009 peer group, whichwas reviewed and approved by the Compensation Committee, was comprised of eight“development-stage” companies of similar size and scope to Allos and eight “next-stage”companies that had brought at least one product to market and were generatingrevenue based on the sale of that product. The Compensation Committee felt thatthe use of a blended peer group that was comprised of one-halfdevelopment-stage companies and one-half next-stage companies was appropriategiven the then-current status of the FOLOTYN development program and because thecompetitive recruiting environment for Messrs. Berns and Caruso andDr. Cagnoni (our former Senior Vice President, Chief

 

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Medical Officer) wascomposed largely of next-stage companies. The blended peer group was alsointended to allow Compensia to benchmark our executive compensation practicesagainst a broad spectrum of the competitive markets for executive talent.Compensia compared all elements of total direct compensation (i.e., basesalary, annual bonus and equity incentives) for our executive officers tocompensation data compiled from the most recent proxy statements for the peergroup. Compensia also reviewed and provided guidance to the CompensationCommittee regarding the Company’s equity compensation strategy, including theuse of restricted stock units in the Company’s 2009 annual grant program, andthe Company’s non-executive equity grant guidelines.

 

The peer group for 2009included the following companies:

 
|   | · | Ariad  Pharmaceuticals, Inc.   | · | Dendreon Corporation             | · | OSI  Pharmaceuticals, Inc.       |
|--------|--------|-------------------------------------|--------|----------------------------------|--------|---------------------------------------|
|   | · | Array BioPharma Inc.           | · | Geron Corporation                | · | Regeneron  Pharmaceuticals, Inc. |
|   | · | Alexion  Pharmaceuticals, Inc. | · | Incyte Corporation               | · | Rigel  Pharmaceuticals, Inc.     |
|   | · | BioMarin  Pharmaceutical Inc.  | · | Maxygen, Inc.               | · | Seattle  Genetics, Inc.          |
|   | · | Cubist  Pharmaceuticals, Inc.  | · | Onyx  Pharmaceuticals, Inc. | · | ZymoGenetics, Inc.               |
|   | · | CV Therapeutics, Inc.          |   |                             |   |                                  |

 

Compensia’s findings,observations and recommendations were presented to the Compensation Committeein December 2008 and February 2009 and were considered by theCompensation Committee, among other factors, in setting 2009 executivecompensation.

 

For 2010, the CompensationCommittee retained Compensia to update our peer group and provide an assessmentof the competitiveness of our 2009 executive compensation program relative tothe updated peer group. The updated peer group, which was reviewed and approvedby the Compensation Committee, was comprised of nine development-stagecompanies and nine next-stage companies, and was intended to allow Compensia tobenchmark our executive compensation practices against a broad spectrum of thecompetitive markets for executive talent. The Compensation Committee felt thatthe use of a blended peer group that was comprised of one-halfdevelopment-stage companies and one-half next-stage companies was appropriategiven the recent approval by the U.S. Food and Drug Administration of FOLOTYN forthe treatment of patients with relapsed or refractory peripheral T-celllymphoma and because the competitive recruiting environment forMessrs. Berns and Caruso, as well as the expected successor toDr. Cagnoni as Chief Medical Officer, is composed primarily of next-stagecompanies. Once again, Compensia compared all elements of total directcompensation (i.e., base salary, annual bonus and equity incentives) forour executive officers to compensation data compiled from the most recent proxystatements for the updated peer group. As part of its assessment, Compensiaalso reviewed and provided guidance regarding the Company’s equity compensationstrategy, including increasing the value of restricted stock units in theCompany’s 2010 annual grant program to increase retention incentives for theCompany’s executives and other officers.

 

The updated peer group for2010 included the following companies:

 
|   | · | Ariad  Pharmaceuticals, Inc.  | · | Exelixis, Inc.       | · | Onyx  Pharmaceuticals, Inc.      |
|--------|--------|------------------------------------|--------|---------------------------|--------|---------------------------------------|
|   | · | Acorda  Therapeutics Inc.     | · | Facet Biotech Corporation | · | OSI  Pharmaceuticals, Inc.       |
|   | · | BioMarin  Pharmaceutical Inc. | · | Genomic Health, Inc. | · | Regeneron  Pharmaceuticals, Inc. |
|   | · | Cytokinetics, Inc.            | · | Immunomedics, Inc.   | · | Seattle  Genetics, Inc.          |
|   | · | Dendreon Corporation               | · | Incyte Corporation        | · | Spectrum  Pharmaceuticals, Inc.  |
|   | · | Dyax Corporation                   | · | Intermune, Inc.      | · | ZymoGenetics, Inc.               |

 

Changes from the Company’s2009 peer group were as follows:

 
| **Companies  added for 2010**                           | ** ** | **Companies dropped for 2010**                        |
|---------------------------------------------------------|------------|-------------------------------------------------------|
| ·  Acorda  Therapeutics Inc.        |       | ·  Array  BioPharma Inc.          |
| ·  Cytokinetics, Inc.               |       | ·  Alexion  Pharmaceuticals, Inc. |
| ·  Dyax  Corporation                     |       | ·  Cubist  Pharmaceuticals, Inc.  |
| ·  Exelixis, Inc.                   |       | ·  CV  Therapeutics, Inc.         |
| ·  Facet  Biotech Corporation            |       | ·  Geron  Corporation                  |
| ·  Genomic  Health, Inc.            |       | ·  Maxygen, Inc.                  |
| ·  Immunomedics, Inc.               |       | ·  Rigel  Pharmaceuticals, Inc.   |
| ·  Intermune, Inc.                  |       |                                                  |
| ·  Spectrum  Pharmaceuticals,  Inc. |       |                                                  |

 

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Compensia’s findings,observations and recommendations were presented to the Compensation Committeein February 2010 and were considered by the Compensation Committee, amongother factors, in setting 2010 executive compensation.

 

***Compensation Benchmarking***

 

The Compensation Committeerecognizes that biopharmaceutical companies, such as Allos, often have seniormanagement teams that are differentiated significantly by industry experience,leadership skills and performance. As a result, the point of reference formarket practices can vary for individual members of the executive team withinthe same company. The Compensation Committee believes that the use of a blendedpeer group as described above allows us to benchmark our executive officersagainst appropriate reference points in the market.

 

For each element ofcompensation, our strategy has been to examine peer group compensationpractices and target our executive compensation between the 25 th  and 75 th  percentile of the relevant blended peergroup based on the specific industry experience, leadership skills andperformance of our executive officers. In addition, under our pay forperformance philosophy, the Compensation Committee places a great emphasis onvariable, or at-risk compensation, which helps calibrate actual compensation toperformance since executives do not receive value if the Company is notperforming well.

 

The Compensation Committeerealizes that benchmarking our executive compensation program againstcompensation earned at comparable companies may not always be appropriate as astand-alone tool for setting compensation due to some aspects of our businessand objectives that may be unique to Allos. However, the Compensation Committeegenerally believes that gathering this information is an important part of itsdecision-making process with respect to our executive compensation program. Inaddition to the compensation benchmarking data provided by its consultants, theCompensation Committee has historically taken into account input from othersources, including input from other members of the Board of Directors andcommercially available survey data relating to compensation practices for thepharmaceutical and biotechnology sectors.

 

***Elements of Executive Compensation Program***

 

Our executive compensationprogram consists of the following key components:

 

·                  Base salary;

 

·                  Performance-based cashbonuses;

 

·                  Equity incentives; and

 

·                  Severance andchange-in-control benefits.

 

The Compensation Committeebelieves that these four components are the most effective combination inmotivating and retaining talented executive officers at this stage in ourdevelopment. The Compensation Committee does not have any specific targets forthe percentage of compensation represented by each component, although it seeksto maintain an appropriate balance between fixed and performance-basedcompensation, with a significant percentage of total compensation allocated tolong-term equity incentives. Cash bonuses and equity incentives are consideredperformance-based compensation, while base salary is considered “fixed”,although performance is considered when determining annual increases. For 2009,the named executive officers’ average compensation was approximately 30% fixedand 70% performance based, with approximately 55% of total compensationallocated to long-term equity incentives. As a general matter, subject only tolimited exceptions relating to the relocation of executive officers, we do notprovide perquisites or benefits for our named executive officers on a basisthat is different from other eligible employees.

 

*Base Salary*

 

Base salary is the primaryfixed component of our executive compensation program. We use base salary tocompensate executives for services rendered during the fiscal year, and toensure that we remain competitive in attracting and retaining executive talent.Base salaries are generally set within a range of salaries paid to industrypeers with comparable qualifications, experience, responsibilities andperformance at similar companies.

 

For each newly hiredexecutive, the Compensation Committee determines base salary on a case-by-casebasis by evaluating a number of factors, including the executive’squalifications and experience, the competitive recruiting environment for hisor her services, the executive’s anticipated role and responsibilities with theCompany, the executive’s

 

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past compensation history,and comparisons to market data regarding compensation levels for comparableexecutives of other biotechnology companies of similar sizes and stages ofdevelopment or with which we compete for talented executives.

 

For continuing executives,the Compensation Committee reviews base salaries annually as part of ourperformance review and appraisal process. Base salary increases, if any, arebased primarily on each executive’s job performance for the prior year, as wellas a review of competitive market data, the executive’s compensation relativeto other executive officers, and the importance of retaining the executive’sservices with the Company. Annual salary adjustments are effective March 1of each year. The Compensation Committee may also review an executive’s basesalary from time-to-time upon a promotion or other change in job responsibilitythat occurs outside of our annual performance review and appraisal process.

 

*Performance-BasedCash Bonuses*

 

Our performance-based cashbonus program is designed to promote the interests of the Company and itsstockholders by providing executive officers with the opportunity to earnannual cash bonuses based upon the achievement of pre-specified corporate andindividual performance objectives, and to assist the Company in attracting andretaining executive talent.

 

At the beginning of eachyear, we establish annual performance objectives for the corporation as a wholeand for each executive officer (other than our Chief Executive Officer, whosebonus is tied entirely to the achievement of corporate objectives). The corporateobjectives generally target the achievement of specific sales and marketing,manufacturing, research and development and corporate development milestonesthat are considered to be critical to the achievement of our long-termstrategic goals. Each category of corporate objectives is assigned a weightednumber so that the sum of all the weighted objectives equals 100%. Theindividual objectives for each executive officer focus on contributions thatare consistent with and support the corporate objectives or are otherwiseintended to contribute to the success of the Company. As with the corporateobjectives, each category of individual objectives is assigned a weightednumber so that the sum of all the weighted objectives equals 100%. The annualcorporate and individual performance objectives are proposed by management andreviewed and approved by the Compensation Committee, typically during the firstquarter of the year. The corporate objectives are also subject to review andapproval by the full Board. At this time, the Compensation Committee alsoapproves each executive officer’s bonus target for the year based on itsanalysis of relevant market data, and determines the relative weighting of eachexecutive’s bonus between corporate and individual objectives.

 

The Compensation Committeetypically performs an interim assessment of the annual performance objectivesin the middle of each year to review corporate and individual progress, andmay, on occasion, make certain adjustments to the objectives that the Committeedeems appropriate based on changing circumstances. At the conclusion of eachyear, the Chief Executive Officer evaluates the degree of achievement of eachcategory of corporate and individual performance objectives and assigns aperformance multiplier which may range from 0% to 150%. The performancemultipliers are then applied to the weighting assigned to each category ofobjectives to determine the category’s contribution to the overall corporate orindividual bonus percentages, as applicable. For example, for 2009, thecorporate research and development objectives were assigned a 30% weighting anda 116% performance multiplier, resulting in a 34.75% contribution to theoverall corporate bonus percentage. Then, all the contributions to the overallcorporate and individual bonus percentages are added together to determine thefinal corporate bonus percentage, which applies to all employees including theexecutive officers, and each executive officer’s individual bonus percentage.The final bonus percentages are then applied to the relative weighting betweencorporate and individual objectives for each executive officer and multipliedby the executive’s bonus target to determine his or her final bonusrecommendation. For illustration purposes, the following table demonstrates the2009 bonus award calculation for Mr. Bennett based on the followingassumptions: $234,865 in actual base salary earned; 25% bonus target weighted60% to the achievement of corporate objectives and 40% to the achievement ofindividual objectives; and corporate and individual performance multipliers of113.50% and 115.00%, respectively.

 
| **Bonus  Component** | ** ** | **Target Bonus  Weighting (%)** | ** ** | **Target Bonus  Opportunity ($)(1)** | ** ** | **Actual Bonus  Percentage  Attained (%)** | ** ** | **Actual Bonus  Payment ($)** | ** ** |
|----------------------|------------|---------------------------------|------------|--------------------------------------|------------|--------------------------------------------|------------|-------------------------------|------------|
| Corporate            |       | 60                              | %          | $                                    | 35,230     |                                       | 113.50     | %                             | $          | 39,986 |   |
| Individual           |       | 40                              | %          | $                                    | 23,487     |                                       | 115.00     | %                             | $          | 27,009 |   |
| Total                |       | 100                             | %          | $                                    | 58,716     |                                       |       |                          | $          | 66,995 |   |

 

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(1)         Bonus awards are calculatedbased on actual base salary earned during the applicable bonus year.  Annual salary adjustments are effective March 1of each year.

 

After the Chief ExecutiveOfficer formulates his bonus recommendations, he submits them to theCompensation Committee, which determines the final performance multipliers andbonus payments, if any, for each executive officer. The Company 

 

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must generally achieve atleast 75% of its weighed corporate objectives for the year in order for anybonuses to be paid, although the Compensation Committee may determine to granta bonus even though certain corporate or individual performance objectives arenot met. If the Compensation Committee determines that corporate or individualperformance for the year exceeded objectives or was excellent in view ofprevailing conditions, the Compensation Committee may approve corporate orindividual performance multipliers, as the case may be, up to 150%. TheCompensation Committee also retains the authority, in its discretion, toidentify any unplanned achievements that have been accomplished and to approveadjustments to an executive officer’s bonus award. Bonuses are generally paidin March of each year for services rendered during the prior fiscal year.

 

*EquityIncentives*

 

Equity incentives representthe largest at-risk component of our executive compensation program. Our equityincentives are designed to (i) align the interests of our executiveofficers with those of our stockholders by creating an incentive for ourexecutive officers to maximize stockholder value through the grant of stockoptions and (ii) to encourage our executive officers to remain employedwith us despite a competitive labor market through the grant of time-vestingrestricted stock.

 

Historically, we havegranted stock options and shares of restricted stock or restricted stock unitsto newly-hired executive officers on their first day of employment with us. Wehave also granted stock options and, beginning in 2009, restricted stock unitsto continuing executive officers once a year as part of our annual performancereview and appraisal process. The annual stock options and restricted stockunit awards are granted as a reward for past individual and corporateperformance and as an incentive for future performance. The restricted stockunits are also intended to promote employee retention as the CompensationCommittee believes that the successful execution of our business strategynecessitates keeping our management team in place and focused on businessgoals. In addition, there is a trend among our peer group and thebiopharmaceutical industry in general toward the use of full value shares, andthe Compensation Committee believes the use of restricted stock units areappropriate to maintain a competitive compensation program.

 

All stock options aregranted with a 10-year term and an exercise price equal to 100% of the fairmarket value of our common stock on the date of grant. The stock optionsgenerally vest over a four-year period, with 25% of the options vesting oneyear after the date of grant, and the remaining 75% of the options vesting inequal monthly installments thereafter over the next three years, subject to theexecutive’s continued employment with us through such vesting dates. The sharesof restricted stock and restricted stock units vest in equal installments oneach of the first four anniversaries of the date of grant, subject to theexecutive’s continued employment with us through such vesting dates.

 

The Compensation Committeeapproves all equity incentive awards for our executive officers. New-hireequity awards are either approved by the Compensation Committee, at regularlyscheduled meetings or by unanimous written consent, or by our Chief ExecutiveOfficer in accordance with our Equity Compensation Awards Policy. TheCompensation Committee approves annual equity grants at its February meeting,the date of which is generally set approximately one year in advance. TheCompensation Committee selected the February meeting as the date toapprove annual equity grants because it coincides with the CompensationCommittee’s review of prior year corporate and individual performance and theapproval of other executive compensation decisions (e.g., base salaryincreases and bonus determinations). Grants approved during scheduled meetingsbecome effective and are priced as of the date of approval or a predeterminedfuture date (for example, new hire grants are effective as of the later of thedate of approval or the newly-hired executive’s start date). Grants approved byunanimous written consent become effective and are priced as of the date thelast signature is obtained or as of a predetermined future date. TheCompensation Committee has not granted, nor does it intend to grant, equitycompensation awards to executive officers in anticipation of the release ofmaterial nonpublic information that is likely to result in changes to the priceof our common stock, such as a significant positive or negative clinical trialresult. Similarly, the Compensation Committee has not timed, nor does it intendin the future to time, the release of material nonpublic information based onequity award grant dates. Also, because equity compensation awards typicallyvest over a four-year period (and, with respect to options, with a one-year “cliff”followed by monthly vesting thereafter), the value to recipients of anyimmediate increase in the price of our common stock following a grant will beattenuated.

 

The Compensation Committeedetermines the number of stock options, shares of restricted stock and/orrestricted stock units to award to a newly-hired executive officer using thesame factors described above that are considered in determining the basesalaries of newly-hired executive officers. The Compensation Committee determines the number of stock options andrestricted stock units to be awarded to continuing executives based on avariety of factors, including its review of competitive market data, itsassessment of each executive officer’s individual performance and expectedfuture contribution, a review of each executive’s existing equity incentiveawards, and the importance of the executive’s continued service with theCompany.

 

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*Severanceand Change-in-Control Benefits*

 

We enter into employmentagreements with our executives in select cases, generally when it is necessaryto secure the services of a newly hired executive. We have entered intoemployment agreements with each of Messrs. Berns, Caruso and Graboyes andDr. Cagnoni, each of which were amended and restated in December 2007,as well as certain other officers, in connection with their commencement ofemployment with the Company. In addition, we entered into an employmentagreement with Mr. Clark in June 2009 in order to retain and assurethe Company of his continued services as Vice President, Finance and Treasurer.These agreements provide for severance compensation to be paid if the officersare terminated under certain conditions, such as in connection with achange-in-control of the Company or a termination without cause by us, each asdefined in the agreements. In addition, the employment agreements with each ofMessrs. Berns and Caruso and Dr. Cagnoni provide that if it isdetermined that any payment or distribution by the Company to such person to bemade in connection with a change-in-control of the Company would be subject tothe excise tax imposed by Section 4999 of the Code, such person will beentitled to receive an additional payment or “gross up” to offset the economicimpact of such excise tax. The terms of such employment agreements, as amended,including the severance compensation payable thereunder, are described in moredetail beginning on page 20 of this Amendment No. 1 under the heading“Employment, Severance and Change-in-Control Agreements.”

 

In our experience,post-termination protection for executive officers is common among our peergroup, and the Compensation Committee believes that providing this protectionis essential to our ability to attract and retain talented executives capableof providing the leadership, vision and execution necessary to achieve ourbusiness objectives. In addition, the employment agreements and the relatedpost-termination compensation provisions are designed to meet the followingobjectives:

 

·                  *Change-in-control:*  Aspart of our normal course of business, we engage in discussions with otherpharmaceutical companies about possible collaborations, licensing and/or otherways in which the companies may work together to further our respective long-termobjectives. In addition, many larger established pharmaceutical companiesconsider companies at similar stages of development to ours as potentialacquisition targets. In certain scenarios, the potential for a merger or beingacquired may be in the best interests of our stockholders. We providepost-termination compensation if an officer is terminated as a result of achange-in-control transaction to promote the ability of our officers to act inthe best interests of our stockholders even though they could be terminated asa result of the transaction.

 

·                  *Terminationwithout Cause:*  In certain instances, if we terminatethe employment of an officer “without cause” or the officer resigns for “goodreason”, each as defined in the applicable agreement, we are obligated to paythe officers certain severance benefits under their employment agreements. Webelieve this is appropriate because the terminated officer is bound byconfidentiality and non-competition provisions covering one year aftertermination and because we and the officer have a mutually agreed-to severancepackage that is in place prior to any termination event. This provides us withmore flexibility to make a change in senior management if such a change is inour and our stockholders’ best interest.

 

We have also adopted abroad-based Severance Benefit Plan and related Change of Control SeveranceBenefit Schedule that provides for severance compensation to all officers andemployees of the Company with whom we do not have employment agreements, includingMr. Bennett, in the event such individuals are terminated in connectionwith a change-in-control. The Severance Benefit Plan and related Change ofControl Severance Benefit Schedule is designed to meet the same objectivesdiscussed above with respect to the change-in-control protection provided toMessrs. Berns, Caruso, Clark and Graboyes and Dr. Cagnoni under theiremployment agreements with the Company. The Severance Benefit Plan and relatedChange of Control Severance Benefit Schedule is described in more detail onpage 23 of this Amendment No. 1 under the heading “Severance andChange-in-Control Arrangements.”

 

In addition, our equityincentive plans have provisions regarding vesting following achange-in-control, as defined in those plans.

 

*Perquisites*

 

Perquisites and otherpersonal benefits are not factored into our executive compensation program. Weprefer to compensate executive officers using a mix of current, short- andlong-term compensation with an emphasis on performance and do not believe thatproviding an executive perquisite program is consistent with our overallcompensation philosophy. We typically provide perquisites and other personalbenefits to executive officers on an exception-only basis, and they aregenerally limited to executive relocation assistance and temporary commutingand living expenses.

 

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*EmployeeStock Purchase Plan*

 

We have an Employee StockPurchase Plan, or ESPP, in which all eligible employees, including ourexecutive officers, may elect to participate. Under the ESPP, eligibleemployees can choose to have up to 10% of their annual base earnings withheldto purchase shares of our common stock during each offering period. Thepurchase price of the common stock is 85% percent of the lower of the fairmarket value of a share of common stock on the first day of the offering or thefair market value of a share of common stock on the last day of the offeringperiod. Each offering is for a period of six months beginning on January 1and July 1 of each year.

 

*IndemnificationAgreements*

 

We enter intoindemnification agreements with each of our directors and executive officers.These indemnification agreements provide, among other things, that we willindemnify our directors and executive officers for certain expenses, includingattorneys’ fees, judgments, fines and settlement amounts, incurred by any suchperson in any action or proceeding by reason of their position as a director,officer, employee, agent or fiduciary of the Company, any subsidiary of theCompany or any other company or enterprise that such executive officer ordirector serves at the Company’s request. We believe that indemnificationagreements are necessary to attract and retain qualified persons as directorsand officers.

 

*OtherBenefits*

 

We maintain health, dentaland vision insurance plans for the benefit of all eligible employees, includingour executive officers. Each of these benefit plans requires the employee topay a portion of the premium, and we pay the remainder of the premiums. Thesebenefits are offered on the same basis to all employees. We also maintain a 401(k) retirementsavings plan that is available to all eligible employees. Under the 401(k) plan,we match 50% of each employee’s contribution up to a maximum of $5,000 peryear. Executives are eligible to participate in the 401(k) plan up toERISA limits. No supplementary participation is available to the executives.Life, accidental death and dismemberment, short- and long-term disabilityinsurance coverage, and wellness programs are also offered to all eligibleemployees and premiums are paid in full by the Company. Other voluntarybenefits, such as supplemental long-term disability insurance coverage andsupplemental life insurance, are also made available and paid for by theemployees. The above benefits are available to our executive officers on thesame basis as all other eligible employees.

 

***2009 and 2010 Executive Compensation Determinations***

 

The key compensationdeterminations for Mr. Berns and the other named executive officers during2009 and through March 31, 2010 were as follows:

 

*Paul L.Berns—President and Chief Executive Officer*

 

For fiscal 2009,Mr. Berns volunteered to forego any increases to his base salary or bonustarget as a result of the prevailing economic environment. As a result, his2009 base salary remained at $500,800 and his 2009 bonus target remained at 60%of base salary, weighted 100% to the achievement of corporate objectives. For2009, the Compensation Committee determined that the Company successfullyachieved or exceeded its Board-approved corporate objectives.  As a result, the Compensation Committeeapproved a corporate bonus percentage of 113.375% of target for the Company’scorporate objectives. Accordingly, Mr. Berns was awarded a cash bonus of$340,700 (which was determined and paid in 2010), representing a total payoutof 113.375% of his 2009 bonus target. The table below summarizes the Company’scorporate objective categories and target performance for 2009, as well as therelative weightings and performance multipliers approved by the CompensationCommittee for each category:

 

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| **Corporate Objective Category**  | ** ** | **Target Performance**                                                                         | ** ** | **2009  Weighting  (A)** | ** ** | **2009  Acheivement  (B)** | ** ** | **Contribution  to Overall  Corporate  Bonus  Percentage  (A x B)** | ** ** |
|-----------------------------------|------------|------------------------------------------------------------------------------------------------|------------|--------------------------|------------|----------------------------|------------|---------------------------------------------------------------------|------------|
| Research & Development   |       | Complete  PROPEL and obtain FDA approval                                                       |       | 30                       | %          | 116                        | %          | 34.750                                                              | %          |
|                              |       | Develop  hematologic malignancies portfolio                                                    |       |                     |       |                       |       |                                                                |       |
|                              |       | Develop  solid tumor portfolio                                                                 |       |                     |       |                       |       |                                                                |       |
|                              |       | Medical  affairs initatives                                                                    |       |                     |       |                       |       |                                                                |       |
|                              |       |                                                                                           |       |                     |       |                       |       |                                                                |       |
| Commercial                        |       | Complete  priority market research                                                             |       | 25                       | %          | 125                        | %          | 31.250                                                              | %          |
|                              |       | Implement  FOLOTYN launch plan                                                                 |       |                     |       |                       |       |                                                                |       |
|                              |       |                                                                                           |       |                     |       |                       |       |                                                                |       |
| Manufacturing                     |       | Ensure  US commercial product availability                                                     |       | 15                       | %          | 117                        | %          | 17.500                                                              | %          |
|                              |       | Qualify  global commercial drug product supplier                                               |       |                     |       |                       |       |                                                                |       |
|                              |       |                                                                                           |       |                     |       |                       |       |                                                                |       |
| Corporate resourcing and controls |       | Raise  capital per strategic financing plan                                                    |       | 15                       | %          | 103                        | %          | 15.500                                                              | %          |
|                              |       | Execute  staffing plan                                                                         |       |                     |       |                       |       |                                                                |       |
|                              |       | Develop  and implement corporate compliance program                                            |       |                     |       |                       |       |                                                                |       |
|                              |       |                                                                                           |       |                     |       |                       |       |                                                                |       |
| Corporate development             |       | Establish  global registration strategies and commercial positioning                           |       | 15                       | %          | 96                         | %          | 14.375                                                              | %          |
|                              |       | Establish  ex-US partnering opportunities for Board review                                     |       |                     |       |                       |       |                                                                |       |
|                              |       | Develop  and evaluate in-licensing and M&A opportunities to support 5-year  strategic plan |       |                     |       |                       |       |                                                                |       |
|                              |       | Execute  IP lifecycle development opportunities                                                |       |                     |       |                       |       |                                                                |       |
|                              |       |                                                                                           |       |                     |       |                       |       |                                                                |       |
|                              | ** ** | **CORPORATE BONUS PERCENTAGE (1):**                                                            |       |                     |       |                       | ** ** | **113.375**                                                         | **%**      |

 

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(1)         The Corporate BonusPercentage approved by the Compensation Committee applies to all of ouremployees (including the named executive officers), except that the weightingof corporate and individual performance varies by employee level.

 

Highlights of our 2009corporate achievements considered by the Compensation Committee include thefollowing:

 

·                  *Researchand development:*In determining that we exceeded our research anddevelopment objectives, the Compensation Committee considered the successfulcompletion of our pivotal PROPEL trial, the preparation and submission of ournew drug application for FOLOTYN, our receipt of a positive recommendation fromthe Oncologic Drugs Advisory Committee, and our receipt of accelerated approvalfrom the U.S. Food and Drug Administration to market FOLOTYN for the treatmentof patients with relapsed or refractory peripheral T-cell lymphoma, or PTCL.The Compensation Committee also noted our progress with our research anddevelopment program for FOLOTYN in other hematologic malignancies and solidtumors, including the completion of certain patient enrollment and studyconduct objectives relating to our Phase 1 study of FOLOTYN in patientswith cutaneous T-cell lymphoma, our Phase 1/2a study of FOLOTYN plusgemcitabine in patients with non-Hodgkin’s lymphoma, our Phase 2b study ofFOLOTYN in patients with non-small cell lung cancer, and our Phase 2 studyof FOLOTYN in patients with advanced or metastatic relapsed transitional cellcarcinoma of the urinary bladder. With respect to our medical affairs objectives,we established a PTCL medical information call center and web portal andlaunched COMPLETE, a global observational study designed to enroll patientswith newly-diagnosed PTCL and obtain data regarding longitudinal treatmentpatterns and outcomes. We also published or presented clinical data fromseveral studies and established a research agreement with the NationalComprehensive Cancer Network to support the development, initiation,administration and completion of an NCCN-sponsored research program involving FOLOTYN.  Based on these accomplishments, theCompensation Committee determined that we achieved 116% of the 30% weightingassigned to our research and development objectives, resulting in a 34.750% 

 

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contribution to the overallcorporate bonus percentage.

 

·                  *Commercial:*We achieved or exceeded our commercial objectives by completingpriority market research and executing our brand launch plan in support of thecommercialization of FOLOTYN for patients with relapsed or refractory PTCL. Wecompleted qualitative and quantitative market research in the areas of pricing,reimbursement and key opinion leadership. With respect to our brand launchplan, we completed customer segmentation, targeting and sales force alignment,developed and implemented our sales training program, and established ourcommercial supply chain. We also established our FOLOTYN brand positioning, keymessages and pricing, and secured approval of our initial educational andpromotional materials from the FDA’s Division of Drug Marketing, Advertisingand Communications. In addition, we established the Allos Support for AssistingPatients, or ASAP program, to facilitate access to FOLOTYN by providingreimbursement resources and support to patients and their healthcare provides,and we submitted applications to the Centers for Medicare and Medicaid Servicesfor permanent reimbursement codes. FOLOTYN was also added to the NationalComprehensive Cancer Network’s Clinical Practice Guidelines in Oncology, whichis recognized by the Centers for Medicare and Medicaid Services and privatepayers as a mandated reference for oncology coverage policies. The CompensationCommittee also noted that we executed our trade launch and generated $4.9million in gross product sales of FOLOTYN to distributors in the fourth quarterof 2009.  Based on these accomplishments,the Compensation Committee determined that we achieved 125% of the 25%weighting assigned to our commercial objectives, resulting in a 31.250%contribution to the overall corporate bonus percentage.

 

·                  *Manufacturing:*We achieved or exceeded our manufacturing objectives by successfullyvalidating one of our third-party drug product suppliers, releasing our drugsubstance and drug product validation lots to commercial supply, establishingsupply agreements with additional third-party suppliers of drug substance anddrug product, and extending our commercial drug product shelf life to 24months. We also successfully qualified our new world-wide drug product supplierand completed the required validation runs. Based on these accomplishments, theCompensation Committee determined that we achieved 117% of the 15% weightingassigned to our manufacturing objectives, resulting in a 17.500% contributionto the overall corporate bonus percentage.

 

·                  *Corporateresourcing and controls.*We achieved or exceeded our corporateresourcing and controls objectives. We executed our strategic financing plan bycompleting two public offerings of common stock in April and October 2009,which resulted in aggregate net proceeds of approximately $140 million tofund the commercialization of FOLOTYN for patients with relapsed or refractoryPTCL and the continued preclinical research and clinical development of FOLOTYNfor other indications. We also executed our staffing plan by hiring a vicepresident of sales, vice president of marketing, senior director of managedcare, five regional business directors, over 40 clinical sales specialists, adirector of medical affairs, and five medical science liaisons, while achievingover $2.1 million in recruiting cost savings relative to our 2009 budget. Inaddition, we developed and implemented a comprehensive corporate complianceprogram, including a revised code of business conduct and ethics, an employeecompliance manual, federal government price reporting policies, and othercommercial and medical affairs policies and procedures. Based on theseaccomplishments, the Compensation Committee determined that we achieved 103% ofthe 15% weighting assigned to our corporate resourcing and controls objectives,resulting in a 15.500% contribution to the overall corporate bonus percentage.

 

·                  *Corporatedevelopment:*We achieved substantially all of our corporatedevelopment objectives, including the completion of various objectives relatingto the development, implementation and execution of our corporate growthstrategy and ex-U.S. partnering strategy for FOLOTYN. We establishedregistration strategies and commercial positioning for FOLOTYN in Europe andJapan, and entered into an agreement with Idis, a U.K.-based global company, tomanage a named patient program for FOLOTYN outside the United States. We alsoadvanced our intellectual property estate for FOLOTYN, including the issuanceof a U.S. patent for the use of FOLOTYN for the treatment T-cell lymphoma.Based on these accomplishments, the Compensation Committee determined that weachieved 96% of the 15% weighting assigned to our corporate developmentobjectives, resulting in a 14.375% contribution to the overall corporate bonuspercentage.

 

In February 2009,Mr. Berns was awarded a stock option to purchase 280,000 shares of commonstock at an exercise price of $6.40 per share, the fair market value of ourcommon stock on the date of grant, and 46,667 restricted stock units. As wasthe case for all named executive officers, the 2009 stock option and restrictedstock unit grants were awarded both as a reward for 2008 individual andcorporate performance and as an incentive for future performance. Additionally,the restricted stock units were intended to promote employee retention in lightof the current macroeconomic environment, where successful Company performancemay not necessarily be reflected in the Company’s stock price.

 

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For fiscal 2010,Mr. Berns’ base salary was set at $550,000, representing a 10% increasefrom his 2009 base salary. Mr. Berns’ 2010 bonus target was increased from60% of base salary to 75% of base salary, weighted 100% to the achievement ofcorporate objectives. Based on its review of cash compensation practices forchief executive officers at companies included in the Company’s 2010 peergroup, it was determined that Mr. Berns’ annual cash compensation wasinconsistent with the market data. Thus, the increase in Mr. Berns’ basesalary and bonus target were intended to address Mr. Berns’ below-marketcash compensation relative to the Company’s 2010 peer group as well as hisexcellent performance in 2009. As was the case for all named executiveofficers, the increase in Mr. Berns’ 2010 bonus target was also intendedto enhance the Company’s focus on performance-based cash compensation as aresult of the Company’s transition from a development-stage to commercial-stagepharmaceutical company. This decision was based, in part, on the CompensationCommittee’s review of short-term incentive practices for the Company’s 2010peer group, which demonstrated that commercial-stage pharmaceutical companiesgenerally have higher target bonus percentages and a greater focus on financialperformance metrics than development-stage companies. In February 2010,Mr. Berns was awarded a stock option to purchase 170,000 shares of commonstock at an exercise price of $7.56 per share, the fair market value of ourcommon stock on the date of grant, and 100,000 restricted stock units. Aswas the case in 2009, all named executive officers were awarded the 2010 stockoption and restricted stock unit grants as a reward for 2009 individual andcorporate performance and as an incentive for future performance. Additionally,as in 2009, the restricted stock units were intended to promote employeeretention in light of the current macroeconomic environment, where successfulCompany performance may not necessarily be reflected in the Company’s stockprice.

 

Mr. Berns does notreceive separate compensation for serving as a member of the Board.

 

*Bruce K.Bennett—Vice President, Pharmaceutical Operations*

 

For fiscal 2009,Mr. Bennett’s base salary was set at $235,800, representing a meritincrease of 2.5% from his 2008 base salary. Mr. Bennett’s 2009 bonustarget was set at 25% of base salary, weighted 60% to the achievement ofcorporate objectives and 40% to the achievement of individual objectives. For2009, the Compensation Committee approved a corporate bonus percentage of113.375% of target for the Company’s corporate objectives (as described abovefor Mr. Berns) and an individual bonus percentage of 115.000% of targetfor Mr. Bennett’s individual objectives. Accordingly, Mr. Bennett wasawarded a cash bonus of $67,000 (which was determined and paid in 2010),representing a total payout of 114% of his 2009 bonus target. The followingtable summarizes Mr. Bennett’s 2009 bonus award calculation:

 
| **Bonus  Component** | ** ** | **Target Bonus  Weighting (%)** | ** ** | **Target Bonus  Opportunity ($)(1)** | ** ** | **Actual Bonus  Percentage  Attained (%)** | ** ** | **Actual Bonus  Payment ($)** | ** ** |
|----------------------|------------|---------------------------------|------------|--------------------------------------|------------|--------------------------------------------|------------|-------------------------------|------------|
| Corporate            |       | 60                              | %          | $                                    | 35,230     |                                       | 113.375    | %                             | $          |       39,942 |   |
| Individual           |       | 40                              | %          | $                                    | 23,487     |                                       | 115.000    | %                             | $          |       27,009 |   |
| Total                |       | 100                             | %          | $                                    | 58,716     |                                       |       |                          | $          |       66,951 |   |

 

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(1)         Bonus awards are calculatedbased on actual base salary earned during the applicable bonus year. Annualsalary adjustments are effective March 1 of each year. As a result, Mr. Bennettearned $234,865 in actual base salary during 2009 and his 25% bonus target was$58,716.

 

As noted above, theCompensation Committee determined that Mr. Bennett had performed at 115%of target with respect to his individual objectives, which included thecompletion of key regulatory and manufacturing initiatives in support of ournew drug application for FOLOTYN, the establishment of a global commercialproduct plan and related supply agreements for FOLOTYN, the management of ourworldwide clinical supply requirements for FOLOTYN, and the advancement of ourpatent portfolio. In February 2009, Mr. Bennett was awarded a stockoption to purchase 35,000 shares of common stock at an exercise price of $6.40per share, the fair market value of our common stock on the date of grant, and5,875 restricted stock units.

 

For fiscal 2010,Mr. Bennett’s base salary was set at $245,200, representing a meritincrease of 4% from his 2009 base salary. Mr. Bennett’s 2010 bonus targetwas increased from 25% of base salary to 30% of base salary, weighted 60% tothe achievement of corporate objectives and 40% to the achievement ofindividual objectives. In addition, Mr. Bennett was awarded a stock optionto purchase 31,500 shares of common stock at an exercise price of $7.56 per share,the fair market value of our common stock on the date of grant, and 17,937restricted stock units.

 

*James V.Caruso—Executive Vice President, Chief Commercial Officer*

 

For fiscal 2009,Mr. Caruso’s base salary was set at $408,500, representing a meritincrease of 2.5% from his 2008 base salary. Mr. Caruso’s 2009 bonus targetwas set at 40% of base salary, weighted 60% to the achievement of corporate 

 

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objectives and 40% to theachievement of individual objectives. For 2009, the Compensation Committeeapproved a corporate bonus percentage of 113.375% of target for the Company’scorporate objectives  (as described abovefor Mr. Berns) and an individual bonus percentage of 111.750% of targetfor Mr. Caruso’s individual objectives. Accordingly, Mr. Caruso wasawarded a cash bonus of $183,500 (which was determined and paid in 2010),representing a total payout of 113% of his 2009 bonus target. The followingtable summarizes Mr. Caruso’s 2009 bonus award calculation:

 
| **Bonus  Component** | ** ** | **Target Bonus  Weighting (%)** | ** ** | **Target Bonus  Opportunity ($)(1)** | ** ** | **Actual Bonus  Percentage  Attained (%)** | ** ** | **Actual Bonus  Payment ($)** | ** ** |
|----------------------|------------|---------------------------------|------------|--------------------------------------|------------|--------------------------------------------|------------|-------------------------------|------------|
| Corporate            |       | 60                              | %          | $                                    | 97,680     |                                       | 113.375    | %                             | $          | 110,745 |   |
| Individual           |       | 40                              | %          | $                                    | 65,120     |                                       | 111.750    | %                             | $          | 72,772 |   |
| Total                |       | 100                             | %          | $                                    | 162,800    |                                       |       |                          | $          | 183,516 |   |

 

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(1)         Bonus awards are calculatedbased on actual base salary earned during the applicable bonus year. Annualsalary adjustments are effective March 1 of each year. As a result, Mr. Carusoearned $407,012 in actual base salary during 2009 and his 40% bonus target was$162,800.

 

As noted above, theCompensation Committee determined that Mr. Caruso had performed at111.750% of target with respect to his individual objectives, which includedthe completion of key objectives relating to the planned commercialization ofFOLOTYN for patients with relapsed or refractory PTCL, the completion ofvarious objectives relating to the development, implementation and execution ofour corporate growth strategy and ex-U.S. partnering strategy for FOLOTYN, theadvancement of our corporate operations and information technologyinfrastructure, and Mr. Caruso’s leadership role in the areas of corporatecommunications and investor relations. In February 2009, Mr. Carusowas awarded a stock option to purchase 143,452 shares of common stock atan exercise price of $6.40 per share, the fair market value of our common stockon the date of grant, and 23,873 restricted stock units.

 

For fiscal 2010,Mr. Caruso’s base salary was set at $426,900, representing a meritincrease of 4.5% from his 2009 base salary. Mr. Caruso’s 2010 bonus targetwas increased from 40% of base salary to 50% of base salary, weighted 60% tothe achievement of corporate objectives and 40% to the achievement ofindividual objectives. In addition, Mr. Caruso was awarded a stock optionto purchase 102,300 shares of common stock at an exercise price of $7.56 pershare, the fair market value of our common stock on the date of grant, and58,254 restricted stock units.

 

*David C.Clark—Vice President, Finance, Treasurer and Assistant Secretary*

 

For fiscal 2009,Mr. Clark’s base salary was set at $215,300, representing a merit increaseof 2.5% from his 2008 base salary. Mr. Clark’s 2009 bonus target was setat 25% of base salary, weighted 60% to the achievement of corporate objectivesand 40% to the achievement of individual objectives. For 2009, the CompensationCommittee approved a corporate bonus percentage of 113.375% of target for theCompany’s corporate objectives  (asdescribed above for Mr. Berns) and an individual bonus percentage of108.750% of target for Mr. Clark’s individual objectives. Accordingly,Mr. Clark was awarded a cash bonus of $59,800 (which was determined andpaid in 2010), representing a total payout of 112% of his 2009 bonus target.The following table summarizes Mr. Clark’s 2009 bonus award calculation:

 
| **Bonus  Component** | ** ** | **Target Bonus  Weighting (%)** | ** ** | **Target Bonus  Opportunity ($)(1)** | ** ** | **Actual Bonus  Percentage  Attained (%)** | ** ** | **Actual Bonus  Payment ($)** | ** ** |
|----------------------|------------|---------------------------------|------------|--------------------------------------|------------|--------------------------------------------|------------|-------------------------------|------------|
| Corporate            |       | 60                              | %          | $                                    | 32,166     |                                       | 113.375    | %                             | $          | 36,469 |   |
| Individual           |       | 40                              | %          | $                                    | 21,444     |                                       | 108.750    | %                             | $          | 23,321 |   |
| Total                |       | 100                             | %          | $                                    | 53,611     |                                       |       |                          | $          | 59,789 |   |

 

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(1)         Bonus awards are calculatedbased on actual base salary earned during the applicable bonus year. Annualsalary adjustments are effective March 1 of each year. As a result, Mr. Clarkearned $214,443 in actual base salary during 2009 and his 25% bonus target was$53,611.

 

As noted above, theCompensation Committee determined that Mr. Clark had performed at 108.750%of target with respect to his individual objectives, which included thedevelopment and execution of our corporate financing plan (including thecompletion of two public offerings which resulted in aggregate net proceeds ofapproximately $140 million), the advancement of our finance and accountinginfrastructure to support the planned commercialization of FOLOTYN, theeffectiveness of our internal control over financial reporting, and Mr. Clark’sleadership role in the areas of financial planning, corporate communicationsand investor relations. In February 2009, Mr. Clark was awarded astock option to purchase 35,000 shares of common stock at an exercise price of$6.40 per share, the fair market value of our common stock 

 

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on the date of grant, and5,875 restricted stock units.

 

For fiscal 2010,Mr. Clark’s base salary was set at $236,800, representing a 10% increasefrom his 2009 base salary. This included a 4% merit increase and a 6% marketadjustment based on the Compensation Committee’s review of competitive marketdata. Mr. Clark’s 2010 bonus target was increased from 25% of base salaryto 30% of base salary, weighted 60% to the achievement of corporate objectivesand 40% to the achievement of individual objectives. In addition,Mr. Clark was awarded a stock option to purchase 26,250 shares of commonstock at an exercise price of $7.56 per share, the fair market value of ourcommon stock on the date of grant, and 14,948 restricted stock units.

 

*Marc H.Graboyes—Senior Vice President, General Counsel and Secretary*

 

For fiscal 2009,Mr. Graboyes’ base salary was set at $308,100, representing a meritincrease of 2.5% from his 2008 base salary. Mr. Graboyes’ 2008 bonustarget was set at 40% of base salary, weighted 60% to the achievement ofcorporate objectives and 40% to the achievement of individual objectives. For2009, the Compensation Committee approved a corporate bonus percentage of113.375% of target for the Company’s corporate objectives (as described abovefor Mr. Berns) and an individual bonus percentage of 109.750% of targetfor Mr. Graboyes’ individual objectives. Accordingly, Mr. Graboyeswas awarded a cash bonus of $137,400 (which was determined and paid in 2010),representing a total payout of 112% of his 2009 bonus target. The followingtable summarizes Mr. Graboyes’ 2009 bonus award calculation:

 
| **Bonus  Component** | ** ** | **Target Bonus  Weighting (%)** | ** ** | **Target Bonus  Opportunity ($)(1)** | ** ** | **Actual Bonus  Percentage  Attained (%)** | ** ** | **Actual Bonus  Payment ($)** | ** ** |
|----------------------|------------|---------------------------------|------------|--------------------------------------|------------|--------------------------------------------|------------|-------------------------------|------------|
| Corporate            |       | 60                              | %          | $                                    | 73,666     |                                       | 113.375    | %                             | $          | 83,519 |   |
| Individual           |       | 40                              | %          | $                                    | 49,111     |                                       | 109.750    | %                             | $          | 53,899 |   |
| Total                |       | 100                             | %          | $                                    | 122,777    |                                       |       |                          | $          | 137,418 |   |

 

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(1)         Bonus awards are calculatedbased on actual base salary earned during the applicable bonus year. Annualsalary adjustments are effective March 1 of each year. As a result, Mr.Graboyes earned $306,942 in actual base salary during 2009 and his 40% bonustarget was $122,777.

 

As noted above, theCompensation Committee determined that Mr. Graboyes had performed at109.750% of target with respect to his individual objectives, which includedthe advancement of our patent portfolio, the execution of our corporatefinancing plan (including the completion of two public offerings which resultedin aggregate net proceeds of approximately $140 million), the completionof various objectives relating to the development, implementation and executionof our corporate growth strategy and ex-U.S. partnering strategy for FOLOTYN,the development and implementation of our comprehensive corporate complianceprogram, and Mr. Graboyes’ leadership role in the areas of humanresources, executive compensation and corporate communications. In February 2009,Mr. Graboyes was awarded a stock option to purchase 90,496 shares ofcommon stock at an exercise price of $6.40 per share, the fair market value ofour common stock on the date of grant, and 15,060 restricted stock units.

 

For fiscal 2010,Mr. Graboyes’ base salary was set at $321,200, representing a meritincrease of 4.25% increase from his 2009 base salary. Mr. Graboyes’ 2009bonus target was increased from 40% of base salary to 50% of base salary, weighted60% to the achievement of corporate objectives and 40% to the achievement ofindividual objectives. In addition, Mr. Graboyes was awarded a stockoption to purchase 73,083 shares of common stock at an exercise price of $7.56per share, the fair market value of our common stock on the date of grant, and41,617 restricted stock units.

 

*Pablo J.Cagnoni, M.D—Former Senior Vice President, Chief Medical Officer*

 

For fiscal 2009,Dr. Cagnoni’s base salary was set at $414,400, representing a meritincrease of 2.5% from his 2008 base salary. Dr. Cagnoni’s 2009 bonustarget was set at 40% of base salary, weighted 60% to the achievement ofcorporate objectives and 40% to the achievement of individual objectives. Inaddition, Dr. Cagnoni was awarded a stock option to purchase 143,452shares of common stock at an exercise price of $6.40 per share, the fair marketvalue of our common stock on the date of grant, and 23,873 restricted stockunits.

 

Dr. Cagnoni resigned asSenior Vice President, Chief Medical Officer of the Company, effectiveSeptember 30, 2009. As a result, Dr. Cagononi did not receive a cashbonus for 2009.

 

***Accounting and Tax Considerations***

 

We follow the fair valuerecognition provisions of Financial Accounting Standards Board (“FASB”)Accounting 

 

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Standard Codification (“ASC”)Topic 718 (formerly, FASB Statement 123R). Under FASB ASC Topic 718 we arerequired to estimate and record an expense for each award of equitycompensation over the vesting period of the award. Until we achieve sustainedprofitability, the availability to us of a tax deduction for compensationexpense is not material to our financial position. We structure cash incentivebonus compensation so that it is taxable to our employees at the time itbecomes available to them.

 

Section 162(m) ofthe Code limits us to a deduction for federal income tax purposes of up to$1 million of compensation paid to certain named executive officers in ataxable year. It is possible that compensation attributable to awards, whencombined with all other types of compensation received by a covered employeefrom us, may cause this limitation to be exceeded in any particular year.Certain kinds of compensation, including qualified “performance-basedcompensation,” are disregarded for purposes of the deduction limitation. Inaccordance with Treasury Regulations issued under Section 162(m) ofthe Code, compensation attributable to stock options and stock appreciationrights will qualify as performance-based compensation if (a) such awardsare granted by a compensation committee comprised solely of “outside directors,”(b) the plan contains a per-employee limitation on the number of sharesfor which such awards may be granted during a specified period, (c) theper-employee limitation is approved by the stockholders, and (d) theexercise or strike price of the award is no less than the fair market value ofthe stock on the date of grant. Compensation attributable to stock purchaseawards, stock bonus awards, stock unit awards, performance stock awards, andperformance cash awards will qualify as performance-based compensation,provided that: (i) the award is granted by a compensation committeecomprised solely of “outside directors”; (ii) the award is granted (orexercisable) only upon the achievement of an objective performance goalestablished in writing by the compensation committee while the outcome issubstantially uncertain; (iii) the compensation committee certifies inwriting prior to the grant, vesting or exercise of the award that theperformance goal has been satisfied; and (iv) prior to the grant of theaward, stockholders have approved the material terms of the award (includingthe class of employees eligible for such award, the business criteria on whichthe performance goal is based, and the maximum amount, or formula used tocalculate the amount, payable upon attainment of the performance goal).

 

OurCompensation Committee intends for all stock options and stock appreciationrights granted under our 2008 Equity Incentive Plan to qualify asperformance-based compensation within the meaning of Section 162(m) ofthe Code. In addition, under our 2008 Equity Incentive Plan our CompensationCommittee has the discretion to grant other types of awards that may qualify asperformance-based compensation within the meaning of Section 162(m) ofthe Code. Except as noted below, stock options granted under our 2000 Stock IncentiveCompensation Plan are performance-based compensation within the meaning ofSection 162(m) of the Code and, as such, the spread between the fairmarket value of the underlying stock and the exercise price of such options isfully deductible upon exercise, as long as our Board of Directors or thecommittee of our Board of Directors granting such stock options was composedsolely of “outside directors.” However, stock options previously granted underour 2002 Broad Based Equity Incentive Plan and our 2006 Inducement Award Planare not considered performance-based compensation within the meaning ofSection 162(m) of the Code because such plans were not approved byour stockholders, and options granted under the 2000 Stock IncentiveCompensation Plan from May 12, 2004 to December 20, 2005 are notconsidered performance-based compensation because that plan was not re-approvedby stockholders until December 20, 2005. Accordingly, our compensationdeduction, if any, resulting from the exercise of such options may not be fullydeductible, depending on whether the optionee is a named executive officer atthe time of exercise and on whether the total non-exempt compensation paid tosuch optionee exceeds $1 million in the year of such option exercise. Tomaintain flexibility in compensating executive officers in a manner designed topromote varying corporate goals, our Compensation Committee has not adopted apolicy requiring all compensation to be deductible. Our Compensation Committeeintends to continue to evaluate the effects of the compensation limits ofSection 162(m) of the Code and to grant compensation awards in thefuture in a manner consistent with the best interests of the Company and ourstockholders.

 

**Compensation Risk Assessment**

 

Withthe assistance of the Company’s management, the Compensation Committee reviewedthe Company’s material compensation policies and practices for all employees,including its executive officers, and concluded that these policies andpractices do not create risks that are reasonably likely to have a materialadverse effect on the Company.

 

**Summary Compensation Table**

 

The following table showsfor the fiscal years ended December 31, 2009, 2008 and 2007, compensationawarded or paid to, or earned by, the Company’s President and Chief ExecutiveOfficer (Principal Executive Officer), Vice President, Finance and Treasurer(Principal Financial Officer), our three other most highly compensatedexecutive officers at 

 

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December 31, 2009 and aformer executive officer who was no longer serving in the capacity of anexecutive officer at the end of the fiscal year (as previously defined, the “namedexecutive officers”).

 
| **Name and Principal Position** | ** ** | **Year**   | ** ** | **Salary  ($)**     | ** ** | **Bonus  ($)** | ** ** | **Stock  Awards  ($)(1)** | ** ** | **Option********Awards********($)(2)** | ** ** | **Non-Equity********Incentive Plan********Compensation********($)(3)** | ** ** | **All  Other********Compensation********($)(4)** | ** ** | **Total  ($)**  | ** ** |
|---------------------------------|------------|------------|------------|---------------------|------------|----------------|------------|---------------------------|------------|----------------------------------------|------------|------------------------------------------------------------------------|------------|--------------------------------------------------|------------|-----------------|------------|
| Paul L. Berns                   |       | 2009       |       | 500,800             |       | —         |       | 298,700                   |       | 1,091,200                              |       | 340,700                                                                |       | 18,700                                           | (5)        | 2,250,100       |       |
| President and Chief             |       | 2008       |       | 497,200             |       | —         |       | —                    |       | 1,073,700                              |       | 298,300                                                                |       | 12,800                                           | (6)        | 1,882,000       |       |
| Executive Officer               |       | 2007       |       | 472,800             |       | —         |       | —                    |       | 1,283,900                              |       | 280,800                                                                |       | 156,100                                          | (7)        | 2,193,600       |       |
|                            |       |       |       |                |       |           |       |                      |       |                                   |       |                                                                   |       |                                             |       |            |       |
| Bruce K. Bennett (8)            |       |  2009 |       |  234,900       |       |  —   |       |  37,600              |       |  136,400                          |       |  67,000                                                           |       |  5,000                                      |       |  480,900   |       |
| Vice President,                 |       | 2008       |       | 215,000             |       | —         |       | —                    |       | 459,400                                |       | 57,100                                                                 |       | 5,000                                            |       | 736,500         |       |
| Pharmaceutical  Operations      |       |  2007 |       | —              |       | —         |       | —                    |       | —                                 |       | —                                                                 |       | —                                           |       | —          |       |
|                            |       |       |       |                |       |           |       |                      |       |                                   |       |                                                                   |       |                                             |       |            |       |
| James V. Caruso                 |       |  2009 |       |  407,000       |       |  —   |       |  152,800             |       |  559,000                          |       |  183,500                                                          |       |  5,000                                      |       |  1,307,300 |       |
| Executive Vice  President,      |       | 2008       |       | 395,600             |       | —         |       | —                    |       | 585,700                                |       | 168,900                                                                |       | 5,000                                            |       | 1,155,200       |       |
| Chief Commercial Officer        |       | 2007       |       | 377,400             |       | —         |       | —                    |       | 700,300                                |       | 154,900                                                                |       | 3,700                                            | (9)        | 1,236,300       |       |
|                            |       |       |       |                |       |           |       |                      |       |                                   |       |                                                                   |       |                                             |       |            |       |
| David C. Clark                  |       |  2009 |       |  214,400       |       |  —   |       |  37,600              |       |  136,400                          |       |  59,800                                                           |       |  5,000                                      |       |  453,200   |       |
| Vice President, Finance         |       | 2008       |       | 206,200             |       | —         |       | —                    |       | 224,500                                |       | 53,600                                                                 |       | 5,000                                            |       | 489,300         |       |
| and Treasurer                   |       | 2007       |       | 183,900             |       | 5,600          | (10)       | —                    |       | 233,400                                |       | 53,200                                                                 |       | 5,000                                            |       | 481,100         |       |
|                            |       |       |       |                |       |           |       |                      |       |                                   |       |                                                                   |       |                                             |       |            |       |
| Marc H. Graboyes                |       |  2009 |       |  306,900       |       |  —   |       |  96,400              |       |  352,700                          |       |  137,400                                                          |       |  5,000                                      |       |  898,400   |       |
| Senior Vice President,          |       | 2008       |       | 293,600             |       | —         |       | —                    |       | 390,500                                |       | 91,600                                                                 |       | 5,000                                            |       | 780,700         |       |
| General Counsel and  Secretary  |       | 2007       |       | 252,600             |       | —         |       | —                    |       | 350,200                                |       | 73,200                                                                 |       | 5,000                                            |       | 681,000         |       |
|                            |       |       |       |                |       |           |       |                      |       |                                   |       |                                                                   |       |                                             |       |            |       |
| Pablo J. Cagnoni (11)           |       |  2009 |       |  314,200  |       |  —   |       |  152,800             |       |  559,000                          |       |  —                                                           |       | 60,000                                           | (12)       |  1,086,000 |       |
| Senior Vice President,          |       | 2008       |       | 401,300             |       | —         |       | —                    |       | 585,700                                |       | 170,100                                                                |       | 5,000                                            |       | 1,162,100       |       |
| Chief Medical Officer           |       | 2007       |       | 303,600             |       | 50,000         | (13)       | 462,800                   |       | 1,149,800                              |       | 175,000                                                                | (14)       | 4,700                                            |       | 2,145,900       |       |

 

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(1)         The amounts shown in thiscolumn represent the aggregate full grant date fair value calculated inaccordance with Financial Accounting Standards Board (FASB) AccountingStandards Codification (ASC) Topic 718, Stock Compensation (formerly, FASBStatement 123R) for stock awards granted during the fiscal year to the namedexecutive officers. Pursuant to SEC rules, the amounts shown exclude the impactof estimated forfeitures related to service-based vesting conditions. Foradditional information, see Note 5 to the Financial Statements included inthe Company’s Annual Report on Form 10-K for the year endedDecember 31, 2009.

 

(2)         The amounts shown in this column represent theaggregate full grant date fair value calculated in accordance with FASB ASCTopic 718 for stock options granted during the fiscal year to the namedexecutive officers. Pursuant to SEC rules, the amounts shown exclude the impactof estimated forfeitures related to service-based vesting conditions. For additionalinformation on the valuation assumptions used to calculate these amounts, seeNote 5 to the Financial Statements included in the Company’s Annual Reporton Form 10-K for the year ended December 31, 2009.

 

(3)         The amounts shown in this column represent the cashbonuses earned by the named executive officers with respect to the fiscal yearunder the Company’s performance-based cash bonus program. Amounts earned withrespect to the fiscal year are generally paid in March of the followingyear. For example, the amounts shown for 2009 were paid in March 2010. Foradditional information, see the Compensation Discussion and Analysis beginningon page 1 of this Amendment No. 1.

 

(4)         Unless otherwise indicated, the amounts shown inthis column represent Company contributions under the Company’s 401(k) plan.

 

(5)         This amount for Mr. Berns consists of thefollowing: (i) $7,800 in supplemental disability insurance premiums,(ii) a $5,900 tax reimbursement with respect to such disability insurance,and (iii) a $5,000 Company contribution under the Company’s 401(k) plan.

 

(6)         This amount for Mr. Berns consists of thefollowing: (i) $7,800 in supplemental disability insurance premiums and(ii) a $5,000 Company contribution under the Company’s 401(k) plan.

 

(7)         This amount for Mr. Berns consists of thefollowing: (i) executive relocation expenses totaling $96,200, which totalincludes closing costs on the sale of his residence of $64,000, temporaryliving expenses of $18,900, travel between home and office of $7,600 and carrental costs; (ii) a $5,000 Company contribution under the Company’s 401(k) plan;(iii) $7,700 in supplemental disability insurance premiums; and(iv) $47,200 in tax reimbursement in connection with the relocationexpenses and supplemental disability insurance premiums described in(i) and (iii) above.

 

(8)         Mr. Bennett was hired to serve as the Company’sVice President, Manufacturing on January 24, 2008. Mr. Bennett wasnot employed by the Company prior to that date.

 

(9)         This amount for Mr. Caruso consists of a $5,000Company contribution under the Company’s 401(k) plan, offset by $1,300 inpayments received from Mr. Caruso as reimbursement for certain benefitsprovided by the Company during 2006.

 

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(10)  This amount for Mr. Clark represents a cashpayment made in connection with the increase in the exercise price of an optiongranted to Mr. Clark in April 2004 in order to avoid the adverse taxconsequences of Section 409A of the Code. During 2007, the Companydetermined that the actual date on which the option was granted toMr. Clark was April 28, 2004, when the closing market price of theCompany’s common stock was $4.78, rather than April 19, 2004, when theclosing market price of the Company’s common stock was $4.50. In order to avoidthe adverse tax consequences of Section 409A of the Code resulting fromthe vesting of a “discounted option” after December 31, 2004,Mr. Clark and the Company agreed to amend the option to provide that, withrespect to the portion of the option vesting after December 31, 2004(20,000 shares), the option will have an exercise price of $4.78 per share. Inconnection with such amendment, in January 2008, the Company awardedMr. Clark a cash payment of $5,600, which is equal to the aggregateincrease in the exercise price of the option.

 

(11)  Dr. Cagnoni resigned as Senior Vice President,Chief Medical Officer of the Company, effective September 30, 2009.

 

(12)  This amount for Dr. Cagnoni consists of(i) a $5,000 Company contribution under the Company’s 401(k) plan and(ii) $55,000 of accrued but unused vacation and sick leave he receivedafter his resignation as Senior Vice President, Chief Medical Officer of theCompany became effective on September 30, 2009.

 

(13)  This amount for Dr. Cagnoni represents asigning bonus paid in connection with his commencement of employment with theCompany in March 2007.

 

(14)  This amount for Dr. Cagnoni consists of thefollowing: (i) a $125,000 cash bonus earned under the Company’sperformance-based cash bonus program (which was determined and paid in 2008);and (ii) an additional $50,000 bonus paid in January 2008 under theterms of his employment agreement with the Company based on his achievement ofcertain clinical development milestones.

 

**Grantsof Plan-Based Awards**

 

The following table setsforth certain information regarding grants of plan-based awards to the namedexecutive officers during the year ended December 31, 2009:

 
| ** **        | ** ** | ** **      | ** ** | **Estimated  Possible Payouts  Under Non-Equity Incentive  Plan Awards(1)** | ** ** | **All  Other  Stock Awards:  Number of  Shares or** | ** ** | **All  Other  Option  Awards:  Number  of Securities  Underlying** | ** ** | **Exercise  or  Base Price of  Option** | ** ** | **Grant  Date  Fair Value of  Stock and  Option** | ** ** |
|-------------------|------------|-----------------|------------|-----------------------------------------------------------------------------|------------|-----------------------------------------------------|------------|--------------------------------------------------------------------|------------|-----------------------------------------|------------|---------------------------------------------------|------------|
| **Name**          | ** ** | **Grant  Date** | ** ** | **Threshold  ($)**                                                          | ** ** | **Target  ($)**                                     | ** ** | **Maximum  ($)**                                                   | ** ** | **Units  of Stock  (#)(2) **       | ** ** | **Options  (#)(3)**                               | ** ** | **Awards  ($/Sh)(4)** | ** ** | **Awards  ($)(5)** | ** ** |
| Paul  L. Berns    |       | 1/1/2009        |       | 225,400                                                                     |       | 300,500                                             |       | 450,700                                                            |       |                                    |       | —                                            |       | — |   | — |   |
|              |       | 2/23/2009       |       | —                                                                      |       | —                                              |       | —                                                             |       | 46,667                                  |       | 280,000                                           |       | 6.40 |   | 1,389,900 |   |
|              |       |            |       |                                                                        |       |                                                |       |                                                               |       |                                    |       |                                              |       |   |   |   |   |
| Bruce  K. Bennett |       |  1/1/2009  |       | 44,000                                                                      |       |  58,700                                        |       | 88,100                                                             |       |                                    |       | —                                            |       | — |   | — |   |
|              |       | 2/23/2009       |       | —                                                                      |       | —                                              |       | —                                                             |       | 5,875                                   |       | 35,000                                            |       | 6.40 |   | 174,000 |   |
|              |       |            |       |                                                                        |       |                                                |       |                                                               |       |                                    |       |                                              |       |   |   |   |   |
| James  V. Caruso  |       |  1/1/2009  |       | 122,100                                                                     |       |  162,800                                       |       | 244,200                                                            |       |                                    |       | —                                            |       | — |   | — |   |
|              |       | 2/23/2009       |       | —                                                                      |       | —                                              |       | —                                                             |       | 23,873                                  |       | 143,452                                           |       | 6.40 |   | 711,800 |   |
|              |       |            |       |                                                                        |       |                                                |       |                                                               |       |                                    |       |                                              |       |   |   |   |   |
| David  C. Clark   |       |  1/1/2009  |       | 40,200                                                                      |       |  53,600                                        |       | 80,400                                                             |       |                                    |       | —                                            |       | — |   | — |   |
|              |       | 2/23/2009       |       | —                                                                      |       | —                                              |       | —                                                             |       | 5,875                                   |       | 35,000                                            |       | 6.40 |   | 174,000 |   |
|              |       |            |       |                                                                        |       |                                                |       |                                                               |       |                                    |       |                                              |       |   |   |   |   |
| Marc  H. Graboyes |       |  1/1/2009  |       | 92,100                                                                      |       |  122,800                                       |       | 184,100                                                            |       |                                    |       | —                                            |       | — |   | — |   |
|              |       | 2/23/2009       |       | —                                                                      |       | —                                              |       | —                                                             |       | 15,060                                  |       | 90,496                                            |       | 6.40 |   | 449,100 |   |
|              |       |            |       |                                                                        |       |                                                |       |                                                               |       |                                    |       |                                              |       |   |   |   |   |
| Pablo  J. Cagnoni |       |  1/1/2009  |       | 124,300                                                                     | (6)        |  165,800                                       | (6)        | 248,600                                                            | (6)        |                                    |       | —                                            |       | — |   | — |   |
|              |       | 2/23/2009       |       | —                                                                      |       | —                                              |       | —                                                             |       | 23,873                                  |       | 143,452                                           |       | 6.40 |   | 711,800 |   |

 

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(1)         These columns show the possible threshold, targetand maximum cash bonus payments to the named executive officers for the yearended December 31, 2009 under the Company’s performance-based cash bonusprogram, which is described in more detail in the Compensation Discussion andAnalysis beginning on page 1 of this Amendment No. 1. The actual cashbonus awards earned by the named executive officers for the year endedDecember 31, 2009 are set forth in the Summary Compensation Table aboveunder the column entitled “Non-Equity Incentive Plan Compensation,” and theamounts set forth in these columns do not represent additional compensationpaid to or earned by the named executive officers for the year endedDecember 31, 2009. The Company’s performance-based cash bonus programprovides that the Company must generally achieve at least 75% of its weightedcorporate objectives for the year in order for any bonuses to be paid, althoughthe Compensation Committee may determine to grant a bonus even though certaincorporate or individual performance objectives are not met. If the CompensationCommittee determines that corporate or individual performance for the yearexceeded objectives or was excellent in view of prevailing conditions, theCompensation Committee may approve corporate or individual multipliers, as thecase may be, up to 150% of target. The possible threshold, target and maximumcash bonus payments for the named executive officers for the year endedDecember 31, 2009 under the Company’s performance-based cash bonus programare calculated as follows:

 

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| **Name**         | ** ** | **Actual Base  Salary  Earned  ($)** | ** ** | **Bonus  Target  as % of  Base** | ** ** | **Threshold  ($)** | ** ** | **Target  ($)** | ** ** | **Maximum  ($)** | ** ** |
|------------------|------------|--------------------------------------|------------|----------------------------------|------------|--------------------|------------|-----------------|------------|------------------|------------|
| Paul L. Berns    |       | 500,800                              |       | 60                               | %          | 225,400            |       | 300,500         |       | 450,700          |       |
| Bruce K. Bennett |       | 234,900                              |       | 25                               | %          | 44,000             |       | 58,700          |       | 88,100           |       |
| James V. Caruso  |       | 407,000                              |       | 40                               | %          | 122,100            |       | 162,800         |       | 244,200          |       |
| David C. Clark   |       | 214,400                              |       | 25                               | %          | 40,200             |       | 53,600          |       | 80,400           |       |
| Marc H. Graboyes |       | 306,900                              |       | 40                               | %          | 92,100             |       | 122,800         |       | 184,100          |       |
| Pablo J. Cagnoni |       | 314,200                              |       | 40                               | %          | 124,300            | (6)        | 165,800         | (6)        | 248,600          | (6)        |

 

(2)         This column shows the number of shares or units ofcommon stock awarded to the named executive officers during the year ended December 31,2009. The stock awards vest over a four-year period, with 25% of the optionsvesting yearly on each of the first, second, third, and forth anniversaries ofthe date of grant, subject to the recipient’s continued employment with theCompany through such vesting dates.

 

(3)         This column shows the number of shares of commonstock underlying stock options granted to the named executive officers duringthe year ended December 31, 2009. The stock options have a 10-year termand vest over a four-year period, with 25% of the options vesting on the firstanniversary of the date of grant and the remaining 75% of the options vestingin equal monthly installments thereafter over the next three years, subject tothe recipient’s continued employment with the Company through such vestingdates.

 

(4)         This column shows the exercise price for the stockoptions granted to the named executive officers during the year endedDecember 31, 2009, which equals the fair market value of the Company’scommon stock on the date of grant.

 

(5)         This column shows the full grant date fair value ofthe stock and option awards granted to the named executive officers during theyear ended December 31, 2009, calculated under FASB ASC Topic 718. Thefull grant date fair value is the amount that the Company recognizes asstock-based compensation expense in its financial statements over the requiredservice period of the award. For additional information, see Note 5 to theFinancial Statements included in the Company’s Annual Report on Form 10-Kfor the year ended December 31, 2009.

 

(6)         Dr. Cagnoni resigned as Senior Vice President,Chief Medical Officer of the Company, effective September 30, 2009. As aresult, Dr. Cagnoni was ineligible to receive a cash bonus payment for theyear ended December 31, 2009 under the Company’s performance-based cashbonus program. These numbers represent his bonus Threshold, Target and Maximumas of January 1, 2009 based on his base salary of $414,400.

 

**OutstandingEquity Awards at Fiscal Year End**

 

The following table setsforth certain information regarding equity awards granted to the namedexecutive officers that were outstanding as of December 31, 2009:

 
| ** **           | ** ** | **Option Awards**          | ** ** | **Stock Awards**  | ** ** |
|----------------------|------------|----------------------------|------------|-------------------|------------|
| ** **           | ** ** | ** **                 | ** ** | ** **        | ** ** | ** ** | ** ** | ** ** | ** ** | **Number of** | ** ** | **Market Value** | ** ** |
| ** **           | ** ** | ** **                 | ** ** | ** **        | ** ** | ** ** | ** ** | ** ** | ** ** | **Shares or** | ** ** | **of Shares** | ** ** |
| ** **           | ** ** | **Number of Securities**   | ** ** | ** **        | ** ** | ** ** | ** ** | **Units of** | ** ** | **or Units of** | ** ** |
| ** **           | ** ** | **Underlying Unexercised** | ** ** | **Option**        | ** ** | ** ** | ** ** | **Stock That** | ** ** | **Stock That** | ** ** |
| ** **           | ** ** | **Options(1)**             | ** ** | **Exercise**      | ** ** | **Option** | ** ** | **Have Not** | ** ** | **Have Not** | ** ** |
| ** **           | ** ** | **Exercisable**            | ** ** | **Unexercisable** | ** ** | **Price** | ** ** | **Expiration** | ** ** | **Vested** | ** ** | **Vested** | ** ** |
| **Name**             | ** ** | **(#)**                    | ** ** | **(#)**           | ** ** | **($)** | ** ** | **Date** | ** ** | **(#)** | ** ** | **($)(2)** | ** ** |
| Paul L. Berns        |       | 306,242                    |       | 43,758            |       | 3.14 |   | 3/9/2016 |   | — |   | — |   |
|                 |       | —                     |       | —            |       | — |   | — |   | 75,000 | (3) | 493,500 |   |
|                 |       | 194,789                    |       | 80,211            |       | 7.47 |   | 2/16/2017 |   | — |   | — |   |
|                 |       | 126,040                    |       | 148,960           |       | 6.12 |   | 2/25/2018 |   | — |   | — |   |
|                 |       | —                     |       | 280,000           |       | 6.40 |   | 2/23/2019 |   | — |   | — |   |
|                 |       | —                     |       | —            |       | — |   | — |   | 46,667 | (4) | 307,100 |   |
|                 |       |                       |       |              |       |   |   |   |   |   |   |   |   |
| Bruce K. Bennett     |       | 47,916                     |       | 52,084            |       | 7.20 |   | 1/23/2018 |   | — |   | — |   |
|                 |       | —                     |       | 35,000            |       | 6.40 |   | 2/23/2019 |   | — |   | — |   |
|                 |       | —                     |       | —            |       | — |   | — |   | 5,875 | (5) | 38,700 |   |
|                 |       |                       |       |              |       |   |   |   |   |   |   |   |   |
| James V. Caruso      |       | 56,246                     |       | 43,754            |       | 3.13 |   | 6/5/2016 |   | — |   | — |   |
|                 |       | —                     |       | —            |       | — |   | — |   | 27,500 | (6) | 181,000 |   |
|                 |       | 106,248                    |       | 43,752            |       | 7.47 |   | 2/16/2017 |   | — |   | — |   |
|                 |       | 68,749                     |       | 81,251            |       | 6.12 |   | 2/25/2018 |   | — |   | — |   |
|                 |       | —                     |       | 143,452           |       | 6.40 |   | 2/23/2019 |   | — |   | — |   |
|                 |       | —                     |       | —            |       | — |   | — |   | 23,873 | (7) | 157,100 |   |
|                 |       |                       |       |              |       |   |   |   |   |   |   |   |   |
| David C. Clark       |       | 20,000                     |       | —            |       | 4.78 | (8) | 4/19/2014 |   | — |   | — |   |
|                 |       | 7,499                      |       | 1,668             |       | 2.70 |   | 2/10/2016 |   | — |   | — |   |
|                 |       | 5,741                      |       | 2,813             |       | 2.93 |   | 5/9/2016 |   | — |   | — |   |
|                 |       | 4,279                      |       | —            |       | 2.93 |   | 5/9/2016 |   | — |   | — |   |
|                 |       | 35,416                     |       | 14,584            |       | 7.47 |   | 2/16/2017 |   | — |   | — |   |
|                 |       | 26,353                     |       | 31,147            |       | 6.12 |   | 2/25/2018 |   | — |   | — |   |
|                 |       | —                     |       | 35,000            |       | 6.40 |   | 2/23/2019 |   |   |   |   |   |
|                 |       | —                     |       | —            |       | — |   | — |   | 5,875 | (9) | 38,700 |   |
|                 |       |                       |       |              |       |   |   |   |   |   |   |   |   |
| Marc H. Graboyes     |       | 37,800                     |       | 4,168             |       | 2.70 |   | 2/10/2016 |   | — |   | — |   |
|                 |       | 33,032                     |       | —            |       | 2.70 |   | 2/10/2016 |   | — |   | — |   |
|                 |       | 53,124                     |       | 21,876            |       | 7.47 |   | 2/16/2017 |   | — |   | — |   |
|                 |       | 45,832                     |       | 54,168            |       | 6.12 |   | 2/25/2018 |   | — |   | — |   |
|                 |       | —                     |       | 90,496            |       | 6.40 |   | 2/23/2019 |   |   |   |   |   |
|                 |       | —                     |       | —            |       | — |   | — |   | 15,060 | (10) | 99,100 |   |
|                 |       |                       |       |              |       |   |   |   |   |   |   |   |   |
| Pablo J. Cagnoni(11) |       | —                     |       | —            |       | — |   | — |   | — |   | — |   |

 

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(1)   Unless otherwise indicated, these options have a10-year term and vest over a four-year period, with 25% of the options vestingon the first anniversary of the date of grant and the remaining 75% of theoptions vesting in equal monthly installments thereafter over the next threeyears, subject to the recipient’s continued employment with the Company throughsuch vesting dates.

 

(2)   The market value of the shares of restricted stockthat have not vested as of December 31, 2009 is based on $6.58 per share,which equaled the closing price of the Company’s common stock onDecember 31, 2009, the last business day of the 2009 fiscal year.

 

(3)   Three hundred thousand shares of restricted stockwere granted to Mr. Berns on March 9, 2006 in connection with hiscommencement of employment with the Company. Twenty-five percent of the shares(75,000 shares) vested on each of March 9, 2007, 2008 and 2009. Theremaining 25% of the shares (75,000 shares) vested on March 9, 2010.

 

(4)   Forty-six thousand six hundred and sixty-sevenrestricted stock units were granted to Mr. Berns on February 23,2009. 11,666 units vested on February 23, 2010 and 11,667 units vest oneach of February 23, 2011, 2012 and 2013, subject to Mr. Berns’continued employment with the Company through such vesting dates.

 

(5)   Five thousand eight hundred and seventy-fiverestricted stock units were granted to Mr. Bennett on February 23,2009. 1,468 units vested on February 23, 2010 and 1,469 units vest on eachof February 23, 2011, 2012 and 2013, subject to Mr. Bennett’scontinued employment with the Company through such vesting dates.

 

(6)   One hundred and ten thousand shares of restrictedstock were granted to Mr. Caruso on June 5, 2006 in connection withhis commencement of employment with the Company. Twenty-five percent of theshares (27,500 shares) vested on each of June 5, 2007, 2008 and 2009. Theremaining 25% of the shares (27,500 shares) will vest on June 5, 2010,subject to Mr. Caruso’s continued employment with the Company through suchvesting date.

 

(7)   Twenty-three thousand eight hundred andseventy-three restricted stock units were granted to Mr. Caruso onFebruary 23, 2009. 5,968 units vested on February 23, 2010, 5,968units vest on each of February 23, 2011 and 2012 and 5,969 units vest onFebruary 23, 2013, subject to Mr. Caruso’s continued employment withthe Company through such vesting dates.

 

(8)   The exercise price of this option was previouslyreported as $4.50 per share, which equaled the closing price of the Company’scommon stock on April 19, 2004. During 2007, the Company determined thatthe actual date on which the option was granted to Mr. Clark wasApril 28, 2004, when the closing price of the Company’s common stock was$4.78, rather than April 19, 2004. In order to avoid the adverse taxconsequences of Section 409A of the Code resulting from the vesting of a “discountedoption” after December 31, 2004, Mr. Clark and the Company agreed toamend the option to provide that, with respect to the portion of the optionvesting after December 31, 2004 (20,000 shares), the option will have anexercise price of $4.78 per share.

 

(9)   Five thousand eight hundred and seventy-fiverestricted stock units were granted to Mr. Clark on February 23,2009. 1,468 units vested on February 23, 2010 and 1,469 units vest on eachof February 23, 2011, 2012 and 2013, subject to Mr. Clark’s continuedemployment with the Company through such vesting dates.

 

(10)Fifteen thousand and sixty restricted stock units were granted toMr. Graboyes on February 23, 2009. 3,765 units vested onFebruary 23, 2010 and 3,765 units vest on each of February 23, 2011,2012 and 2013, subject to Mr. Graboyes’ continued employment with theCompany through such vesting dates.

 

(11)Dr. Cagnoni resigned as Senior Vice President, Chief MedicalOfficer of the Company, effective September 30, 2009. Dr. Cagnoni hadno outstanding equity awards as of December 31, 2009.

 

**Option Exercises And Stock Vested**

 

The following table setsforth certain information regarding option exercises and shares of restrictedstock that vested during the year ended December 31, 2009 with respect tothe named executive officers:

 
| ** **       | ** ** | **Option Awards**                                      | ** ** | **Stock Awards**                         | ** ** |
|------------------|------------|-------------------------------------------------------------|------------|-----------------------------------------------|------------|
| **Name**         | ** ** | **Number of  Shares  Acquired on  Exercise  (#)** | ** ** | **Value  Realized  on Exercise  ($)(1)** | ** ** | **Number of  Shares  Acquired on  Vesting  (#)** | ** ** | **Value  Realized  on Vesting  ($)(2)** | ** ** |
| Paul L. Berns    |       | 350,000                                                     |       | 1,785,500                                     |       | 75,000 |   | 480,000 |   |
| Bruce K. Bennett |       | —                                                      |       | —                                        |       | — |   | — |   |
| James V. Caruso  |       | 250,000                                                     |       | 1,142,600                                     |       | 27,500 |   | 198,300 |   |
| David C. Clark   |       | 70,000                                                      |       | 306,500                                       |       | — |   | — |   |
| Marc H. Graboyes |       | 125,000                                                     |       | 649,400                                       |       | — |   | — |   |
| Pablo J. Cagnoni |       | 246,872                                                     |       | 50,700                                        |       | 18,750 |   | 126,600 |   |

 

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(1)   The value realized onexercise of the options equals the difference between the market price of theunderlying stock at exercise and the exercise or base price of the options,multiplied by the number of shares acquired on exercise.

 

(2)   The value realized on vesting of shares ofrestricted stock equals the market value of the Company’s common stock on thevesting date, multiplied by the number of shares that vested.

 

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**Retirement Payments and Benefits**

 

Noneof the named executive officers participate in or have account balances inqualified or non-qualified deferred benefit plans sponsored by the Company.

 

**Nonqualified Deferred Compensation**

 

Noneof the named executive officers participate in or have account balances innon-qualified defined contribution plans or other deferred compensation plansmaintained by the Company. In the future, the Compensation Committee may electto provide the named executive officers and other employees with non-qualifieddefined contribution or deferred compensation benefits if the CompensationCommittee determines that doing so is in the Company’s best interests.

 

**Employment, Severance and Change-in-Control Agreements**

 

TheCompany has entered into employment agreements with each of the named executiveofficers other than Mr. Bennett. The material terms of such agreements aresummarized below.

 

***Employment Agreement with Mr. Berns***

 

OnMarch 9, 2006, the Company entered into an employment agreement withMr. Berns in connection with his appointment to serve as the Company’sPresident and Chief Executive Officer. On December 12, 2006, the Companyand Mr. Berns amended and restated the employment agreement to extend thetime during which the Company was obligated to reimburse certain commuting andtemporary living expenses to June 30, 2007. On December 13, 2007, theCompany and Mr. Berns entered into a second amended and restatedemployment agreement to, among other things, bring the employment agreementinto compliance with Section 409A of the Code and clarify Mr. Berns’change-in-control termination benefits regarding the acceleration of stockoptions and restricted stock upon a change-in-control termination.

 

Pursuantto the second amended and restated employment agreement, Mr. Berns earnsan annual base salary, which amount may be increased annually at the discretionof the Board. Currently, Mr. Berns earns an annual base salary of$550,000. Mr. Berns is also eligible to participate in the Company’sperformance-based cash bonus plan, pursuant to which he is eligible for anannual bonus award determined in accordance with the terms of the plan.Currently, Mr. Berns’ target bonus is set at 75% of his annual basesalary.

 

Thesecond amended and restated employment agreement with Mr. Berns alsoprovides that his employment with the Company is at-will and may be terminatedby either Mr. Berns or the Company at any time. However, if the Companyterminates Mr. Berns’ employment without just cause or if he resigns forgood reason (other than in connection with a change-in-control of the Company),provided that Mr. Berns executes a general release in favor of the Companyat the election of the Company, he will be entitled to receive certain paymentsand other benefits, which are described in more detail under the heading “PotentialPayments Upon Termination or Change-in-Control” beginning on 24 of thisAmendment No. 1.

 

Thesecond amended and restated employment agreement with Mr. Berns furtherprovides that if the Company (or any surviving or acquiring corporation)terminates Mr. Berns’ employment without cause or if he resigns for goodreason within one month prior to or two years following the effective date of achange-in-control of the Company, provided that Mr. Berns executes ageneral release in favor of the Company (or any surviving or acquiringcorporation) at the election thereof, he will be entitled to receive certainpayments and other benefits, which are described in more detail under theheading “Potential Payments Upon Termination or Change-in-Control” beginning onpage 24 of this Amendment No. 1.

 

Thesecond amended and restated employment agreement also imposes on Mr. Bernscertain confidentiality, non-compete and non-solicitation obligations. Thenon-compete and non-solicit obligations are in effect for the term of hisemployment and will continue for 12 months after termination of hisemployment for any reason, provided that such non-compete obligations willterminate upon a change-in-control of the Company. In the event thatMr. Berns violates his confidentiality, non-compete or non-solicitationobligations or the terms of his confidentiality and inventions assignmentagreement with the Company, his right to most of the severance benefits that hewould have otherwise been entitled to pursuant to the second amended andrestated employment agreement (other than in connection with achange-in-control of the Company) will cease on the date of such violation.

 

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InMay 2009, the Company and Mr. Berns agreed to amend his secondamended and restated employment agreement in order to, among other things,provide for the acceleration of vesting of all stock awards held byMr. Berns if he is terminated in connection with a change-in-control ofthe Company, as described above. Prior to such amendment, Mr. Berns’second amended and restated employment agreement only provided for accelerationof vesting of stock options and restricted stock grants under suchcircumstances.

 

***Offer Letter with Mr. Bennett***

 

Ina letter dated January 21, 2008, the Company offered Mr. Bennett aposition as the Company’s Vice President, Manufacturing. Pursuant to the offerletter, Mr. Bennett earns an annual base salary, which is subject toannual review and adjustment by the Compensation Committee. Currently,Mr. Bennett earns an annual base salary of $245,200. Mr. Bennett isalso eligible to participate in the Company’s performance-based cash bonusplan, pursuant to which he is eligible for an annual bonus award determined inaccordance with the terms of the plan. Currently, Mr. Bennett’s targetbonus is set at 30% of his annual base salary.

 

Pursuant to the offerletter, Mr. Bennett is eligible for all Allos benefits, includingparticipation in the Company’s 401(k) retirement plan. Mr. Bennett isalso entitled to reimbursement for relocation expenses up to $125,000. Suchexpenses will be reimbursed once the Company requests Mr. Bennett relocatehis residence within a reasonable distance of the Company’s corporateheadquarters. To date, no such request has been made.

 

***Employment Agreement with Mr. Caruso***

 

OnJune 5, 2006, the Company entered into an employment agreement withMr. Caruso in connection with his appointment to serve as the Company’sExecutive Vice President, Chief Commercial Officer. On December 13, 2007,the Company and Mr. Caruso entered into an amended and restated employmentagreement to, among other things, bring the employment agreement intocompliance with Section 409A of the Code and implement certain changesrecommended by the Company’s outside compensation consultant regardingMr. Caruso’s change-in-control severance benefits.

 

Pursuantto the amended and restated employment agreement, Mr. Caruso earns anannual base salary, which is subject to annual review and adjustment by theCompensation Committee. Currently, Mr. Caruso earns an annual base salaryof $426,900. Mr. Caruso is also eligible to participate in the Company’sperformance-based cash bonus plan, pursuant to which he is eligible for anannual bonus award determined in accordance with the terms of the plan.Currently, Mr. Caruso’s target bonus is set at 50% of his annual basesalary.

 

Theamended and restated employment agreement with Mr. Caruso also providesthat his employment with the Company is at-will and may be altered orterminated by either Mr. Caruso or the Company at any time. However, ifthe Company terminates Mr. Caruso’s employment without just cause or if heresigns for good reason (other than in connection with a change-in-control ofthe Company), provided that Mr. Caruso executes a general release in favorof the Company, he will be entitled to receive certain payments and otherbenefits, which are described in more detail under the heading “PotentialPayments Upon Termination or Change-in-Control” beginning on page 24 ofthis Amendment No. 1.

 

Theamended and restated employment agreement with Mr. Caruso further providesthat if the Company (or any surviving or acquiring corporation) terminatesMr. Caruso’s employment without just cause or if he resigns for goodreason within one month prior to or 12 months following the effective dateof a change-in-control of the Company, provided that Mr. Caruso executes ageneral release in favor of the Company (or any surviving or acquiringcorporation), he will be entitled to receive certain payments and otherbenefits, which are described in more detail under the heading “PotentialPayments Upon Termination or Change-in-Control” beginning on page 24 ofthis Amendment No. 1.

 

InMay 2009, the Company and Mr. Caruso agreed to amend his amended andrestated employment agreement in order to, among other things, provide for theacceleration of vesting of all stock awards held by Mr. Caruso if he isterminated in connection with a change-in-control of the Company, as describedabove. Prior to such amendment, Mr. Caruso’s amended and restatedemployment agreement only provided for acceleration of vesting of stock optionsand restricted stock grants under such circumstances.

 

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***Employment Agreement with Mr. Clark***

 

OnJune 25, 2009, the Company entered into an employment agreement withMr. Clark in connection with his appointment to serve as the Company’sVice President, Finance.

 

Pursuantto the employment agreement, Mr. Clark earns an annual base salary, whichis subject to annual review and adjustment by the Compensation Committee.Currently, Mr. Clark earns an annual base salary of $236,800.Mr. Clark is also eligible to participate in the Company’sperformance-based cash bonus plan, pursuant to which he is eligible for anannual bonus award determined in accordance with the terms of the plan.Currently, Mr. Clark’s target bonus is set at 30% of his annual basesalary.

 

Theemployment agreement with Mr. Clark also provides that his employment withthe Company is at-will and may be altered or terminated by eitherMr. Clark or the Company at any time. However, if the Company terminatesMr. Clark’s employment without just cause or if he resigns for good reason(other than in connection with a change-in-control of the Company), providedthat Mr. Clark executes a general release in favor of the Company, he willbe entitled to receive certain payments and other benefits, which are describedin more detail under the heading “Potential Payments Upon Termination orChange-in-Control” beginning on page 24 of this Amendment No. 1.

 

Theemployment agreement with Mr. Clark further provides that if the Company(or any surviving or acquiring corporation) terminates Mr. Clark’semployment without just cause or if he resigns for good reason within one monthprior to or 12 months following the effective date of a change-in-controlof the Company, provided that Mr. Clark executes a general release infavor of the Company (or any surviving or acquiring corporation), he will beentitled to receive certain payments and other benefits, which are described inmore detail under the heading “Potential Payments Upon Termination orChange-in-Control” beginning on page 24 of this Amendment No. 1.

 

***Employment Agreement with Mr. Graboyes***

 

OnOctober 11, 2004, the Company entered into an employment agreement withMr. Graboyes in connection with his appointment as Vice President, GeneralCounsel. On December 13, 2007, the Company and Mr. Graboyes enteredinto an amended and restated employment agreement to, among other things, bringthe employment agreement into compliance with Section 409A of the Code andimplement certain changes recommended by the Company’s outside compensationconsultant.

 

Pursuantto the amended and restated employment agreement, Mr. Graboyes earns anannual base salary, which is subject to annual review and adjustment by theCompensation Committee. Currently, Mr. Graboyes earns an annual basesalary of $321,200. Mr. Graboyes is also eligible to participate in theCompany’s performance-based cash bonus plan, pursuant to which he is eligiblefor an annual bonus award determined in accordance with the terms of the plan.Currently, Mr. Graboyes’ target bonus is set at 50% of his annual basesalary.

 

Theamended and restated employment agreement with Mr. Graboyes also providesthat his employment with the Company is at-will and may be altered orterminated by either Mr. Graboyes or the Company at any time. However, ifthe Company terminates Mr. Graboyes’ employment without just cause or ifhe resigns for good reason (other than in connection with a change-in-controlof the Company), provided that Mr. Graboyes executes a general release infavor of the Company, he will be entitled to receive certain payments and otherbenefits, which are described in more detail under the heading “PotentialPayments Upon Termination or Change-in-Control” beginning on page 24 ofthis Amendment No. 1.

 

Theamended and restated employment agreement with Mr. Graboyes furtherprovides that if the Company (or any surviving or acquiring corporation)terminates Mr. Graboyes’ employment without just cause or if he resignsfor good reason within one month prior to or 12 months following theeffective date of a change-in-control, provided that Mr. Graboyes executesa general release in favor of the Company (or any surviving or acquiringcorporation), he will be entitled to receive certain payments and otherbenefits, which are described in more detail under the heading “PotentialPayments Upon Termination or Change-in-Control” beginning on page 24 ofthis Amendment No. 1.

 

InMay 2009, the Company and Mr. Graboyes agreed to amend his amendedand restated employment agreement in order to, among other things, provide forthe acceleration of vesting of all stock awards held by Mr. Graboyes if heis terminated in connection with a change-in-control of the Company, asdescribed above. Prior to such amendment, Mr. Graboyes’ amended andrestated employment agreement only provided for acceleration of vesting ofstock options and restricted stock grants under such circumstances.

 

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***Employment Agreement with Dr. Cagnoni***

 

OnMarch 19, 2007, the Company entered into an employment agreement withDr. Cagnoni in connection with his appointment to serve as the Company’sSenior Vice President, Chief Medical Officer. On December 13, 2007, theCompany and Dr. Cagnoni entered into an amended and restated employmentagreement to, among other things, bring the employment agreement intocompliance with Section 409A of the Code and implement certain changesrecommended by the Company’s outside compensation consultant regardingDr. Cagnoni’s change-in-control severance benefits.

 

Pursuantto the amended and restated employment agreement, Dr. Cagnoni earned anannual base salary, which was subject to annual review and adjustment by theCompensation Committee. Prior to his resignation on September 30, 2009,Dr. Cagnoni’s annual base salary was $414,400. Dr. Cagnoni was alsoeligible to participate in the Company’s performance-based cash bonus plan,pursuant to which he was eligible for an annual bonus award determined inaccordance with the terms of the plan. Prior to his resignation onSeptember 30, 2009, Dr. Cagnoni’s target bonus was set at 40% of hisannual base salary.

 

Pursuantto the amended and restated employment agreement, on the date Dr. Cagnonistarted employment with the Company, he received a signing bonus of $50,000less applicable employment tax withholdings and deductions. Upon satisfactionof certain milestones and pursuant to the amended and restated employmentagreement, Dr. Cagnoni received an additional bonus of $50,000 less applicableemployment tax withholdings and deductions on January 11, 2008.

 

Theamended and restated employment agreement with Dr. Cagnoni also providedthat his employment with the Company was at-will and may be altered orterminated by either Dr. Cagnoni or the Company at any time. However, ifthe Company terminated Dr. Cagnoni’s employment without just cause or ifhe resigned for good reason (other than in connection with a change-in-controlof the Company), provided that Dr. Cagnoni executed a general release infavor of the Company, he would have been entitled to receive certain paymentsand other benefits, which are described in more detail under the heading “PotentialPayments Upon Termination or Change-in-Control” beginning on page 24 ofthis Amendment No. 1.

 

Theamended and restated employment agreement with Dr. Cagnoni furtherprovided that if the Company (or any surviving or acquiring corporation)terminated Dr. Cagnoni’s employment without just cause or if he resignedfor good reason within one month prior to or 12 months following theeffective date of a change-in-control of the Company, provided thatDr. Cagnoni executed a general release in favor of the Company (or anysurviving or acquiring corporation), he would have been entitled to receivecertain payments and other benefits, which are described in more detail underthe heading “Potential Payments Upon Termination or Change-in-Control”beginning on page 24 of this Amendment No. 1.

 

InMay 2009, the Company and Dr. Cagnoni agreed to amend his amended andrestated employment agreement in order to, among other things, provide for theacceleration of vesting of all stock awards held by Dr. Cagnoni if he isterminated in connection with a change-in-control of the Company, as describedabove. Prior to such amendment, Dr. Cagnoni’s amended and restated employmentagreement only provided for acceleration of vesting of stock options andrestricted stock grants under such circumstances.

 

Dr. Cagnoniresigned as Senior Vice President, Chief Medical Officer of the Company,effective September 30, 2009.

 

***Severance andChange-in-Control Arrangements***

 

The Company has establisheda Severance Benefit Plan to provide for the payment of severance benefits toall full-time employees, including the named executive officers, who do nototherwise have separate employment agreements with the Company and whoseemployment is involuntarily terminated due to a change-in-control of theCompany.

 

The Change of ControlSeverance Benefit Schedule under the Severance Benefit Plan provides that ifthe Company terminates an eligible employee’s employment without just cause orif the eligible employee resigns for good reason within two months prior to orsix months following the effective date of a change-in-control of the Company,and upon the eligible employee’s execution of a general release releasing theCompany from all claims known or unknown that the eligible employee may haveagainst the Company, the eligible employee will be entitled to receive thefollowing severance benefits:

 

·      If the eligible employee holds a position with theCompany of director or above, the Company will pay the employee a lump-sum cashpayment equal to (i) six months of the employee’s base salary then ineffect plus an additional two weeks base salary for each 12 months ofcontinuous service with the Company, up to a maximum of

 

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52 weeks, plus(ii) the employee’s target bonus award for the year in which the employee’semployment terminates, prorated through the date of termination. Eligibleemployees who are entitled to severance under this paragraph with more thanfive but fewer than 12 full months of continuous service with the Company willbe deemed to be in continuous service with the Company for 12 full months.

 

·      If the eligible employee holds a position with theCompany below director, the Company will pay the employee a lump-sum cashpayment equal to (i) three months of the employee’s base salary then ineffect plus an additional two weeks base salary for each 12 months ofcontinuous service with the Company, up to a maximum of 52 weeks, plus(ii) the employee’s target bonus award for the year in which the employee’semployment terminates, prorated through the date of termination. Eligibleemployees who are entitled to severance under this paragraph with more thanfive but fewer than 12 full months of continuous service with the Company willbe deemed to be in continuous service with the Company for 12 full months.

 

·      Full acceleration of vesting of any outstandingstock options and other stock awards issued to the eligible employee.

 

·      Payment of premiums for the eligible employee’sgroup health insurance COBRA continuation coverage after the date oftermination for the number of weeks that are used to determine the amount ofthe eligible employee’s cash severance as described above.

 

·      Outplacement assistance through an outsideorganization as a resource to aid in the eligible employee’s career transition.

 

**Potential Payments UponTermination or Change-in-Control**

 

The following tables reflectthe estimated potential payments upon termination or change-in-control of theCompany that would be payable to each of the named executive officers. Forpurposes of calculating the potential payments set forth in the tables below,we have assumed that (i) the date of termination was December 31,2009 and (ii) the stock price was $6.58, the closing market price of theCompany’s common stock on December 31, 2009, the last business day of the2009 fiscal year.

 

***Paul L. Berns — Presidentand Chief Executive Officer***

 

Underthe terms of Mr. Berns’ second amended and restated employment agreement,as amended, if the Company terminates Mr. Berns’ employment for just causeor Mr. Berns resigns without good reason, Mr. Berns is entitled tothe following: (i) any base salary and annual bonus earned but unpaidprior to the date of termination; (ii) all accrued but unused personaltime; and (iii) any unreimbursed business expenses (collectively, the “AccruedObligations”). Such amounts are to be paid within 30 days after the dateof termination. Following such termination, Mr. Berns’ then outstandingstock options and other stock awards will remain subject to the terms of theirrespective governing documents.

 

Underthe terms of Mr. Berns’ second amended and restated employment agreement,as amended, if the Company terminates Mr. Berns’ employment without justcause or Mr. Berns resigns with good reason (other than in connection witha change-in-control of the Company), provided that Mr. Berns executes ageneral release in favor of the Company at the election of the Company,Mr. Berns is entitled to the following: (i) payment of the Accrued Obligationswithin 30 days after the date of termination; (ii) an amount equal tohis target bonus for the year in which the termination occurs, pro ratedthrough the date of termination; (iii) an amount equal to 1.5 times hisbase salary then in effect, payable in monthly installments over the 18-monthperiod following the date of termination; (iv) an amount equal to 1.5times his annual bonus for the year preceding the year in which the terminationoccurs, payable in a lump sum within 30 days after the date oftermination; (v) treatment of his then outstanding stock options and otherstock awards in accordance with the terms of their respective governingdocuments; (vi) payment of premiums for his group health insurance COBRAcontinuation coverage for up to 12 months following the date oftermination; and (vii) outplacement assistance for up to 12 monthsfollowing the date of termination with an aggregate cost of up to $15,000.Except for the Accrued Obligations, the payments described above shall cease,and the Company shall have no further obligations to Mr. Berns withrespect thereto, in the event that Mr. Berns breaches his confidentiality,non-compete or non-solicitation obligations under the second amended andrestated employment agreement, as amended, or the terms of his confidentialityand inventions assignment agreement with the Company. The Company’s obligationto pay Mr. Berns’ COBRA premiums ceases upon Mr. Berns’ eligibilityfor comparable coverage provided by a new employer.

 

Underthe terms of Mr. Berns’ second amended and restated employment agreement,as amended, if the Company (or any surviving or acquiring corporation)terminates Mr. Berns’ employment without just cause or Mr. Bernsresigns with

 

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good reason within one month prior to or twoyears following the effective date of a change-in-control of the Company,provided that Mr. Berns executes a general release in favor of the Company(or any surviving or acquiring corporation) at the election thereof,Mr. Berns is entitled to the following: (i) payment of the AccruedObligations within 30 days after the date of termination; (ii) anamount equal to his target bonus for the year in which the termination occurs,pro rated through the date of termination; (iii) a lump-sum cash paymentin an amount equal to (x) two times his highest annual base salary ineffect during the 12 months prior to such termination, plus (y) twotimes his highest annualized bonus paid or payable in respect of the five yearspreceding the year in which the change-in-control occurs; (iv) immediatevesting of all outstanding stock options and other stock awards granted to Mr. Bernsand the extension of the option exercise period for 24 months after thedate of termination; (v) continued coverage for 18 months under allpolicies of medical, accident, disability and life insurance for Mr. Bernsand his dependents; and (vi) outplacement assistance for up to12 months following the date of termination with an aggregate cost of upto $15,000. In addition, Mr. Berns’ second amended and restated employmentagreement, as amended, provides that, in certain circumstances, he will beentitled to a gross-up payment for payments that result in an excise taximposed by Section 4999 of the Code.

 

Thefollowing table reflects the estimated potential payments that would be payableto Mr. Berns upon a termination or change-in-control of the Company under theterms of his second amended and restated employment agreement, as amended. Theamounts shown reflect only the additional payments or benefits thatMr. Berns would have received upon the occurrence of the respectivetriggering events listed below; they do not include the value of payments orbenefits that would have been earned, or any amounts associated with equityawards that would have vested, absent the triggering event.

 
| ** **                                  | ** **   | **Termination  For Just  Cause or  Resignation  Without Good  Reason  Termination** | ** **   | **Termination  Without Just  Cause or  Resignation  With Good  Reason  Termination** | ** ** | **Termination  Without Just  Cause or  Resignation With  Good Reason (in  connection with a  Change-in-Control)** | ** **   |
|---------------------------------------------|--------------|----------------------------------------------------------------------------------------------------|--------------|-----------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|
| **Paul L. Berns**                           |         |                                                                                               |         |                                                                                                |       |                                                                                                                                                 |         |
| *Cash Payments*                             |         |                                                                                               |         |                                                                                                |       |                                                                                                                                                 |         |
| Cash Severance                              |         | $                                                                                                  | —       |                                                                                                | $          | 1,198,700                                                                                                                                            | (1)          | $ | 1,598,300 | (2) |
| Target Bonus for Year of Separation         |         | $                                                                                                  | —       |                                                                                                | $          | 300,500                                                                                                                                              |         | $ | 300,500 |   |
| *Long-Term Incentives*                      |         |                                                                                               |         |                                                                                                |       |                                                                                                                                                 |         |
| Stock Options (Unvested and Accelerated)    |         | $                                                                                                  | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 269,400 | (3) |
| Restricted Stock (Unvested and Accelerated) |         | $                                                                                                  | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 800,600 | (4) |
| *Benefits and Perquisites*                  |         |                                                                                               |         |                                                                                                |       |                                                                                                                                                 |         |
| Accrued Sick Leave                          |         | $                                                                                                  | 30,800       |                                                                                                | $          | 30,800                                                                                                                                               |         | $ | 30,800 |   |
| Benefits Continuation                       |         | $                                                                                                  | —       |                                                                                                | $          | 19,900                                                                                                                                               |         | $ | 32,400 |   |
| Outplacement Assistance                     |         | $                                                                                                  | —       |                                                                                                | $          | 15,000                                                                                                                                               |         | $ | 15,000 |   |
| *Excise Tax Gross-Up (Estimated)*           |         | $                                                                                                  | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | — |   |
| ***Total Payments  Upon Termination***      | *** *** | ***$***                                                                                            | ***30,800*** | *** ***                                                                                        | ***$***    | ***1,564,900***                                                                                                                                      | *** *** | ***$*** | ***3,047,000*** | *** *** |

 

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(1)   Amount represents (i) 1.5 times base salarythen in effect, payable in monthly installments over the 18-month periodfollowing the date of termination, plus (ii) 1.5 times the annual bonusfor the year preceding the year in which the termination occurs, payable in alump sum within 30 days after the date of termination.

 

(2)   Amount represents a lump sum payment equal to(i) two times base salary, plus (ii) two times highest annualizedbonus, paid or payable, in respect of the five fiscal years preceding the yearof termination.

 

(3)   Amount represents the in-the-money value of unvestedstock options as of December 31, 2009, using the closing market price ofthe Company’s common stock on December 31, 2009. The number of sharesunderlying such stock options and the exercise price thereof are reflected inthe columns entitled “Number of Securities Underlying UnexercisedOptions—Unexercisable” and “Option Exercise Price,” respectively, in theOutstanding Equity Awards at Fiscal Year End table set forth on page 18 ofthis Amendment No. 1.

 

(4)   Amount represents the in-the-money value of unvestedrestricted stock as of December 31, 2009, using the closing market priceof the Company’s common stock on December 31, 2009. The number of sharesof restricted stock are reflected in the column entitled “Number of Shares orUnits of Stock that Have Not Vested” in the Outstanding Equity Awards at FiscalYear End table set forth on page 18 of this Amendment No. 1.

 

***Bruce K. Bennett, Vice President, Pharmaceutical Operations***

 

Mr. Bennettis not party to an employment agreement with the Company. Accordingly, hisentitlement to any termination payment or payments upon a change-in-control ofthe Company is subject to and pursuant to the Company’s Severance Benefit Planand the Change of Control Severance Benefit Schedule thereto.

 

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Underthe terms of the Change of Control Severance Benefit Schedule, if the Companyterminates Mr. Bennett’s employment without just cause or Mr. Bennettresigns for good reason within two months prior to or six months following theeffective date of a change-in-control of the Company, provided thatMr. Bennett executes a general release in favor of the Company,Mr. Bennett is entitled to receive the following: (i) any base salaryearned but unpaid prior to the date of termination; (ii) all accrued butunused vacation; (iii) any unreimbursed business expenses; (iv) sixmonths base pay plus an additional two weeks base pay for each 12 monthsof continuous service, up to a maximum of 52 weeks base pay;(v) payment of Mr. Bennett’s target bonus award for the year in whichMr. Bennett’s employment terminates, prorated through the date oftermination; (vi) payment of premiums for his group health insurance COBRAcontinuation coverage for the same duration as to which he is entitled to basepay; and (vii) immediate vesting of all outstanding options and otherstock awards granted to him. In addition, Mr. Bennett is eligible toparticipate in an outplacement assistance program to be selected by theCompany. The Company’s obligation to pay Mr. Bennett’s COBRA premiumsceases upon Mr. Bennett’s eligibility for comparable coverage provided bya new employer. The amount of the foregoing benefits are capped at two timesMr. Bennett’s annual compensation earned during the calendar yearimmediately preceding his termination of employment (calculated on anannualized basis).

 

Thefollowing table reflects the estimated potential payments that would be payableto Mr. Bennett upon a termination or change-in-control of the Companyunder the Company’s Severance Benefit Plan and the Change of Control SeveranceBenefit Schedule thereto. The amounts shown reflect only the additionalpayments or benefits that Mr. Bennett would have received upon theoccurrence of the respective triggering events listed below; they do notinclude the value of payments or benefits that would have been earned, or anyamounts associated with equity awards that would have vested absent thetriggering event.

 
| ** **                                  | ** **   | **Termination  For Just  Cause or  Resignation  Without  Good  Reason  Termination** | ** **   | **Termination  Without Just  Cause or  Resignation  With Good  Reason  Termination** | ** ** | **Termination  Without Just  Cause or  Resignation With  Good Reason (in  connection with a  Change-in-Control)** | ** **   |
|---------------------------------------------|--------------|------------------------------------------------------------------------------------------------|--------------|-----------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|
| **Bruce K. Bennett**                        |         |                                                                                           |         |                                                                                                |       |                                                                                                                                                 |         |
| *Cash Payments*                             |         |                                                                                           |         |                                                                                                |       |                                                                                                                                                 |         |
| Cash Severance                              |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 136,000 | (1) |
| Target Bonus for Year of Separation         |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 58,700 |   |
| *Long-Term Incentives*                      |         |                                                                                           |         |                                                                                                |       |                                                                                                                                                 |         |
| Stock Options (Unvested and Accelerated)    |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 6,300 | (2) |
| Restricted Stock (Unvested and Accelerated) |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 38,700 | (3) |
| *Benefits and Perquisites*                  |         |                                                                                           |         |                                                                                                |       |                                                                                                                                                 |         |
| Accrued Sick Leave                          |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | — |   |
| Benefits Continuation                       |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 11,600 |   |
| Outplacement Assistance                     |         | $                                                                                              | —       |                                                                                                |       |                                                                                                                                                 | $            | — |   |
| ***Total Payments  Upon Termination***      | *** *** | ***$***                                                                                        | ***—*** | *** ***                                                                                        | ***$***    | ***—***                                                                                                                                         | *** *** | ***$*** | ***251,300*** | *** *** |

 

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(1)   Amount represents 0.5 times base salary then ineffect, plus an additional 4 weeks base pay.

 

(2)   Amount represents the in-the-money value of unvestedstock options as of December 31, 2009, using the closing market price ofthe Company’s common stock on December 31, 2009. The number of sharesunderlying such stock options and the exercise price thereof are reflected inthe columns entitled “Number of Securities Underlying UnexercisedOptions—Unexercisable” and “Option Exercise Price,” respectively, in theOutstanding Equity Awards at Fiscal Year End table set forth on page 18 ofthis Amendment No. 1.

 

(3)   Amount represents the in-the-money value of unvestedrestricted stock as of December 31, 2009, using the closing market priceof the Company’s common stock on December 31, 2009. The number of sharesof restricted stock are reflected in the column entitled “Number of Shares orUnits of Stock that Have Not Vested” in the Outstanding Equity Awards at FiscalYear End table set forth on page 18 of this Amendment No. 1.

 

***James V. Caruso—Executive VicePresident, Chief Commercial Officer***

 

Underthe terms of Mr. Caruso’s amended and restated employment agreement, asamended, if the Company terminates Mr. Caruso’s employment for just causeor Mr. Caruso resigns without good reason, Mr. Caruso is entitled tothe following: (i) any salary earned but unpaid prior to the date oftermination; (ii) all accrued but unused vacation; and (iii) anyunreimbursed business expenses.

 

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Underthe terms of Mr. Caruso’s amended and restated employment agreement, asamended, if the Company terminates Mr. Caruso’s employment without justcause or Mr. Caruso resigns with good reason (other than in connectionwith a change-in-control of the Company), provided that Mr. Carusoexecutes a general release in favor of the Company, Mr. Caruso is entitledto the following: (i) continuation of Mr. Caruso’s then current basesalary for a period of 12 months following the date of termination, paidon the same basis and at the same time as previously paid; (ii) payment ofany accrued but unused vacation and sick leave; and (iii) payment ofpremiums for his group health insurance COBRA continuation coverage for up to12 months following the date of termination. The Company’s obligation topay Mr. Caruso’s COBRA premiums ceases upon Mr. Caruso’s eligibilityfor comparable coverage provided by a new employer. Except for the payment ofany accrued but unused vacation and sick leave, the payments described aboveshall cease, and the Company shall have no further obligations toMr. Caruso with respect thereto, in the event that Mr. Carusobreaches the confidentiality, non-compete or non-solicitation provisions underhis confidentiality and inventions assignment agreement with the Company.

 

Underthe terms of Mr. Caruso’s amended and restated employment agreement, asamended, if the Company (or any surviving or acquiring corporation) terminatesMr. Caruso’s employment without just cause or Mr. Caruso resigns withgood reason within one month prior to or 12 months following the effectivedate of a change-in-control of the Company, provided that Mr. Carusoexecutes a general release in favor of the Company, Mr. Caruso is entitledto the following: (i) a lump-sum cash payment in an amount equal to(A) 1.5 times Mr. Caruso’s annual base salary then in effect, plus(B) 1.5 times the greater of (1) Mr. Caruso’s annualized targetbonus award for the year in which Mr. Caruso’s employment terminates or(2) the annual bonus amount paid to Mr. Caruso in the immediatelyprior year; (ii) payment of any accrued but unused vacation and sickleave; (iii) payment of Mr. Caruso’s target bonus award for the yearin which Mr. Caruso’s employment terminates, prorated through the date oftermination; (iv) payment of premiums for his group health insurance COBRAcontinuation coverage for up to 18 months following the date oftermination; (v) outplacement assistance for up to nine months followingthe date of termination with an aggregate cost of up to $11,250; and(vi) immediate vesting of all outstanding stock options and other stockawards granted to Mr. Caruso and the extension of the option exerciseperiod for 12 months after the date of termination. The Company’sobligation to pay Mr. Caruso’s COBRA premiums ceases upon Mr. Caruso’seligibility for comparable coverage provided by a new employer. Certain of thepayments described above shall cease, and the Company shall have no furtherobligations to Mr. Caruso with respect thereto, in the event thatMr. Caruso breaches the confidentiality, non-compete or non-solicitationprovisions under his confidentiality and inventions assignment agreement with theCompany. In addition, Mr. Caruso’s amended and restated employmentagreement, as amended, provides that, in certain circumstances, he will beentitled to a gross-up payment for payments that result in an excise taximposed by Section 4999 of the Code.

 

Thefollowing table reflects the estimated potential payments that would be payableto Mr. Caruso upon a termination or change-in-control of the Company underthe terms of his amended and restated employment agreement, as amended. Theamounts shown reflect only the additional payments or benefits thatMr. Caruso would have received upon the occurrence of the respectivetriggering events listed below; they do not include the value of payments orbenefits that would have been earned, or any amounts associated with equityawards that would have vested, absent the triggering event.

 
| ** **                                  | ** **   | **Termination  For Just  Cause or  Resignation  Without  Good  Reason  Termination** | ** **   | **Termination  Without Just  Cause or  Resignation  With Good  Reason  Termination** | ** ** | **Termination  Without Just  Cause or  Resignation With  Good Reason (in  connection with a  Change-in-Control)** | ** **   |
|---------------------------------------------|--------------|------------------------------------------------------------------------------------------------|--------------|-----------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|
| **James V. Caruso**                         |         |                                                                                           |         |                                                                                                |       |                                                                                                                                                 |         |
| *Cash Payments*                             |         |                                                                                           |         |                                                                                                |       |                                                                                                                                                 |         |
| Cash Severance                              |         | $                                                                                              | —       |                                                                                                | $          | 408,500                                                                                                                                              | (1)          | $ | 857,900 | (2) |
| Target Bonus for Year of Separation         |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 163,400 |   |
| *Long-Term Incentives*                      |         |                                                                                           |         |                                                                                                |       |                                                                                                                                                 |         |
| Stock Options (Unvested and Accelerated)    |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 214,100 | (3) |
| Restricted Stock (Unvested and Accelerated) |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 338,100 | (4) |
| *Benefits and Perquisites*                  |         |                                                                                           |         |                                                                                                |       |                                                                                                                                                 |         |
| Accrued Sick Leave                          |         | $                                                                                              | —       |                                                                                                | $          | 25,100                                                                                                                                               |         | $ | 25,100 |   |
| Benefits Continuation                       |         | $                                                                                              | —       |                                                                                                | $          | 19,900                                                                                                                                               |         | $ | 29,800 |   |
| Outplacement Assistance                     |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 11,250 |   |
| *Excise Tax Gross-Up (Estimated)*           |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | — |   |
| ***Total Payments  Upon Termination***      | *** *** | ***$***                                                                                        | ***—*** | *** ***                                                                                        | ***$***    | ***453,500***                                                                                                                                        | *** *** | ***$*** | ***1,639,650*** | *** *** |

 

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(1)          Amount represents 1.0 times base salary then ineffect, payable on the same basis and at the same time as paid at the time oftermination.

 

(2)          Amount represents a lump sum payment equal to(i) 1.5 times base salary then in effect, plus (ii) 1.5 timesannualized target bonus award for the year of termination.

 

(3)          Amount represents the in-the-money value of unvestedstock options as of December 31, 2009, using the closing market price ofthe Company’s common stock on December 31, 2009. The number of sharesunderlying such stock options and the exercise price thereof are reflected inthe columns entitled “Number of Securities Underlying UnexercisedOptions—Unexercisable” and “Option Exercise Price,” respectively, in theOutstanding Equity Awards at Fiscal Year End table set forth on page 18 ofthis Amendment No. 1.

 

(4)          Amount represents the in-the-money value of unvestedrestricted stock as of December 31, 2009, using the closing market priceof the Company’s common stock on December 31, 2009. The number of sharesof restricted stock are reflected in the column entitled “Number of Shares orUnits of Stock that Have Not Vested” in the Outstanding Equity Awards at FiscalYear End table set forth on page 18 of this Amendment No. 1.

 

***David C. Clark, Vice President,Finance***

 

Underthe terms of Mr. Clark’s employment agreement if the Company terminatesMr. Clark’s employment for just cause or Mr. Clark resigns withoutgood reason, Mr. Clark is entitled to the following: (i) any basesalary earned but unpaid prior to the date of termination; (ii) allaccrued but unused vacation; and (iii) any unreimbursed business expenses.

 

Underthe terms of Mr. Clark’s employment agreement, if the Company terminatesMr. Clark’s employment without just cause or Mr. Clark resigns withgood reason (other than in connection with a change-in-control of the Company),provided that Mr. Clark executes a general release in favor of theCompany, Mr. Clark is entitled to the following: (i) continuation ofMr. Clark’s then current base salary for a period of six months followingthe date of termination, paid on the same basis and at the same time aspreviously paid; (ii) payment of any accrued but unused vacation and sickleave; and (iii) payment of premiums for his group health insurance COBRAcontinuation coverage for up to six months following the date of termination.The Company’s obligation to pay Mr. Clark’s COBRA premiums ceases uponMr. Clark’s eligibility for comparable coverage provided by a newemployer. Except for the payment of any accrued but unused vacation and sickleave, the payments described above shall cease, and the Company shall have nofurther obligations to Mr. Clark with respect thereto, in the event thatMr. Clark breaches the confidentiality, non-compete or non-solicitationprovisions under his confidentiality and inventions assignment agreement withthe Company.

 

Underthe terms of Mr. Clark’s employment agreement, if the Company (or anysurviving or acquiring corporation) terminates Mr. Clark’s employmentwithout just cause or Mr. Clark resigns with good reason within one monthprior to or 12 months following the effective date of a change-in-controlof the Company, provided that Mr. Clark executes a general release infavor of the Company, Mr. Clark is entitled to the following: (i) alump-sum cash payment in an amount equal to (A) Mr. Clark’s annualbase salary then in effect, plus (B) the greater of(1) Mr. Clark’s annualized target bonus award for the year in whichMr. Clark’s employment terminates or (2) the annual bonus amount paidto Mr. Clark in the immediately prior year; (ii) payment of anyaccrued but unused vacation and sick leave; (iii) payment ofMr. Clark’s target bonus award for the year in which Mr. Clark’semployment terminates, prorated through the date of termination;(iv) payment of premiums for his group health insurance COBRA continuationcoverage for up to 12 months following the date of termination;(v) outplacement assistance for up to six months following the date oftermination with an aggregate cost of up to $7,500; and (vi) immediatevesting of all outstanding stock options and other stock awards granted toMr. Clark and the extension of the option exercise period for 12 monthsafter the date of termination. The Company’s obligation to pay Mr. Clark’sCOBRA premiums ceases upon Mr. Clark’s eligibility for comparable coverageprovided by a new employer. Certain of the payments described above shallcease, and the Company shall have no further obligations to Mr. Clark withrespect thereto, in the event that Mr. Clark breaches the confidentiality,non-compete or non-solicitation provisions under his confidentiality andinventions assignment agreement with the Company.

 

Thefollowing table reflects the estimated potential payments that would be payableto Mr. Clark upon a termination or change-in-control of the Company underthe terms of his employment agreement. The amounts shown reflect only theadditional payments or benefits that Mr. Clark would have received uponthe occurrence of the respective triggering events listed below; they do notinclude the value of payments or benefits that would have been earned, or anyamounts associated with equity awards that would have vested absent thetriggering event.

 

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| ** **                                  | ** **   | **Termination  For Just  Cause or  Resignation  Without  Good  Reason  Termination** | ** **   | **Termination  Without Just  Cause or  Resignation  With Good  Reason  Termination** | ** ** | **Termination  Without Just  Cause or  Resignation With  Good Reason (in  connection with a  Change-in-Control)** | ** **   |
|---------------------------------------------|--------------|------------------------------------------------------------------------------------------------|--------------|-----------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|
| **David C. Clark**                          |         |                                                                                           |         |                                                                                                |       |                                                                                                                                                 |         |
| *Cash Payments*                             |         |                                                                                           |         |                                                                                                |       |                                                                                                                                                 |         |
| Cash Severance                              |         | $                                                                                              | —       |                                                                                                | $          | 107,600                                                                                                                                              | (1)          | $ | 269,100 | (2) |
| Target Bonus for Year of Separation         |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 53,800 |   |
| *Long-Term Incentives*                      |         |                                                                                           |         |                                                                                                |       |                                                                                                                                                 |         |
| Stock Options (Unvested and Accelerated)    |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 37,400 | (3) |
| Restricted Stock (Unvested and Accelerated) |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 38,700 | (4) |
| *Benefits and Perquisites*                  |         |                                                                                           |         |                                                                                                |       |                                                                                                                                                 |         |
| Accrued Sick Leave                          |         | $                                                                                              | —       |                                                                                                | $          | 11,600                                                                                                                                               |         | $ | 11,600 |   |
| Benefits Continuation                       |         | $                                                                                              | —       |                                                                                                | $          | 9,900                                                                                                                                                |         | $ | 19,900 |   |
| Outplacement Assistance                     |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 7,500 |   |
| ***Total Payments  Upon Termination***      | *** *** | ***$***                                                                                        | ***—*** | *** ***                                                                                        | ***$***    | ***129,100***                                                                                                                                        | *** *** | ***$*** | ***438,000*** | *** *** |

 

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(1)          Amount represents 0.5 times base salary then ineffect, payable on the same basis and at the same time as paid at the time oftermination.

 

(2)          Amount represents a lump sum payment equal to(i) 1.0 times base salary then in effect, plus (ii) 1.0 timesannualized target bonus award for the year of termination.

 

(3)          Amount represents the in-the-money value of unvestedstock options as of December 31, 2009, using the closing market price ofthe Company’s common stock on December 31, 2009. The number of sharesunderlying such stock options and the exercise price thereof are reflected inthe columns entitled “Number of Securities Underlying UnexercisedOptions—Unexercisable” and “Option Exercise Price,” respectively, in theOutstanding Equity Awards at Fiscal Year End table set forth on page 18 ofthis Amendment No. 1.

 

(4)          Amount represents the in-the-money value of unvestedrestricted stock as of December 31, 2009, using the closing market priceof the Company’s common stock on December 31, 2009. The number of sharesof restricted stock are reflected in the column entitled “Number of Shares orUnits of Stock that Have Not Vested” in the Outstanding Equity Awards at FiscalYear End table set forth on page 18 of this Amendment No. 1.

 

***Marc H. Graboyes—Senior Vice President,General Counsel and Secretary***

 

Underthe terms of Mr. Graboyes’ amended and restated employment agreement, asamended, if the Company terminates Mr. Graboyes’ employment for just causeor Mr. Graboyes resigns without good reason, Mr. Graboyes is entitledto the following: (i) any base salary earned but unpaid prior to the dateof termination; (ii) all accrued but unused vacation; and (iii) anyunreimbursed business expenses.

 

Underthe terms of Mr. Graboyes’ amended and restated employment agreement, asamended, if the Company terminates Mr. Graboyes’ employment without justcause or Mr. Graboyes resigns with good reason (other than in connectionwith a change-in-control of the Company), provided that Mr. Graboyesexecutes a general release in favor of the Company, Mr. Graboyes isentitled to the following: (i) continuation of Mr. Graboyes’ thencurrent base salary for a period of six months following the date oftermination, paid on the same basis and at the same time as previously paid;(ii) payment of any accrued but unused vacation and sick leave; and(iii) payment of premiums for his group health insurance COBRAcontinuation coverage for up to six months following the date of termination.The Company’s obligation to pay Mr. Graboyes’ COBRA premiums ceases uponMr. Graboyes’ eligibility for comparable coverage provided by a newemployer. Except for the payment of any accrued but unused vacation and sickleave, the payments described above shall cease, and the Company shall have nofurther obligations to Mr. Graboyes with respect thereto, in the eventthat Mr. Graboyes breaches the confidentiality, non-compete ornon-solicitation provisions under his confidentiality and inventions assignmentagreement with the Company.

 

Underthe terms of Mr. Graboyes’ amended and restated employment agreement, asamended, if the Company (or any surviving or acquiring corporation) terminatesMr. Graboyes’ employment without just cause or Mr. Graboyes resignswith good reason within one month prior to or 12 months following theeffective date of a change-in-control of the Company, provided thatMr. Graboyes executes a general release in favor of the Company,Mr. Graboyes is entitled to the following: (i) a lump-sum cashpayment in an amount equal to (A) Mr. Graboyes’ annual base salarythen in effect, plus (B) the greater of (1) Mr. Graboyes’annualized target bonus award for the year in which Mr. Graboyes’employment terminates or (2) the annual bonus amount paid toMr. Graboyes in the immediately prior year; (ii) payment of anyaccrued but unused vacation and sick leave; (iii) payment ofMr. Graboyes’ target bonus award for the year in which Mr. Graboyes’employment terminates, prorated through the date of termination;(iv) payment of premiums for his group health insurance COBRA continuationcoverage for up to 12 months following the date of termination;(v) outplacement assistance for up to six months following the date oftermination with an aggregate cost of up to $7,500; and (vi) immediatevesting of all outstanding stock options and other stock awards granted toMr. Graboyes and the extension of the option exercise period for12 months after the date of termination. The Company’s obligation to payMr. Graboyes’ COBRA premiums ceases upon Mr. Graboyes’

 

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eligibility for comparable coverage providedby a new employer. Certain of the payments described above shall cease, and theCompany shall have no further obligations to Mr. Graboyes with respectthereto, in the event that Mr. Graboyes breaches the confidentiality,non-compete or non-solicitation provisions under his confidentiality andinventions assignment agreement with the Company.

 

Thefollowing table reflects the estimated potential payments that would be payableto Mr. Graboyes upon a termination or change-in-control of the Companyunder the terms of his amended and restated employment agreement, as amended.The amounts shown reflect only the additional payments or benefits thatMr. Graboyes would have received upon the occurrence of the respectivetriggering events listed below; they do not include the value of payments orbenefits that would have been earned, or any amounts associated with equity awardsthat would have vested absent the triggering event.

 
| ** **                                  | ** **   | **Termination  For Just  Cause or  Resignation  Without  Good  Reason  Termination** | ** **   | **Termination  Without Just  Cause or  Resignation  With Good  Reason  Termination** | ** ** | **Termination  Without Just  Cause or  Resignation With  Good Reason (in  connection with a  Change-in-Control)** | ** **   |
|---------------------------------------------|--------------|------------------------------------------------------------------------------------------------|--------------|-----------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|
| **Marc H. Graboyes**                        |         |                                                                                           |         |                                                                                                |       |                                                                                                                                                 |         |
| *Cash Payments*                             |         |                                                                                           |         |                                                                                                |       |                                                                                                                                                 |         |
| Cash Severance                              |         | $                                                                                              | —       |                                                                                                | $          | 154,000                                                                                                                                              | (1)          | $ | 431,300 | (2) |
| Target Bonus for Year of Separation         |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 123,200 |   |
| *Long-Term Incentives*                      |         |                                                                                           |         |                                                                                                |       |                                                                                                                                                 |         |
| Stock Options (Unvested and Accelerated)    |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 57,400 | (3) |
| Restricted Stock (Unvested and Accelerated) |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 99,100 | (4) |
| *Benefits and Perquisites*                  |         |                                                                                           |         |                                                                                                |       |                                                                                                                                                 |         |
| Accrued Sick Leave                          |         | $                                                                                              | —       |                                                                                                | $          | 19,000                                                                                                                                               |         | $ | 19,000 |   |
| Benefits Continuation                       |         | $                                                                                              | —       |                                                                                                | $          | 6,600                                                                                                                                                |         | $ | 13,300 |   |
| Outplacement Assistance                     |         | $                                                                                              | —       |                                                                                                | $          | —                                                                                                                                               |         | $ | 7,500 |   |
| ***Total Payments  Upon Termination***      | *** *** | ***$***                                                                                        | ***—*** | *** ***                                                                                        | ***$***    | ***179,600***                                                                                                                                        | *** *** | ***$*** | ***750,800*** | *** *** |

 

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(1)          Amount represents 0.5 times base salary then ineffect, payable on the same basis and at the same time as paid at the time oftermination.

 

(2)          Amount represents a lump sum payment equal to(i) 1.0 times base salary then in effect, plus (ii) 1.0 timesannualized target bonus award for the year of termination.

 

(3)          Amount represents the in-the-money value of unvestedstock options as of December 31, 2009, using the closing market price ofthe Company’s common stock on December 31, 2009. The number of sharesunderlying such stock options and the exercise price thereof are reflected inthe columns entitled “Number of Securities Underlying UnexercisedOptions—Unexercisable” and “Option Exercise Price,” respectively, in theOutstanding Equity Awards at Fiscal Year End table set forth on page 18 ofthis Amendment No. 1.

 

(4)          Amount represents the in-the-money value of unvestedrestricted stock as of December 31, 2009, using the closing market priceof the Company’s common stock on December 31, 2009. The number of sharesof restricted stock are reflected in the column entitled “Number of Shares orUnits of Stock that Have Not Vested” in the Outstanding Equity Awards at FiscalYear End table set forth on page 18 of this Amendment No. 1.

 

***Pablo J. Cagnoni—Former Senior VicePresident, Chief Medical Officer***

 

Dr. Cagnoniresigned as Senior Vice President, Chief Medical Officer of the Company,effective September 30, 2009. At the time of his resignation,Dr. Cagnoni received $55,000 of accrued, but unused vacation.Dr. Cagnoni had received $314,200 in annual salary as of the date of hisresignation. Dr. Cagnoni also received $152,800 in stock awards (aggregatefull grant date value) and $559,000 in option awards (aggregate full grant datevalue) during 2009.

 

**DirectorCompensation**

 

The following table showscertain information with respect to the compensation of all non-employeedirectors of the Company for the fiscal year ended December 31, 2009:

 

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**Director Compensation for Fiscal 2009**

 
| **Name**              | ** ** | **Fees Earned or  Paid in Cash  ($)** | ** ** | **Option Awards  ($)(1)** | ** ** | **Total  ($)** | ** ** |
|-----------------------|------------|-----------------------------------------------------------|------------|--------------------------------|------------|----------------|------------|
| Stephen J. Hoffman(2) |       | 77,500                                                    |       | 139,300                        |       | 216,800        |       |
| Michael D. Casey(3)   |       | 65,000                                                    |       | 92,900                         |       | 157,900        |       |
| Stewart Hen(4)        |       | 47,500                                                    |       | 92,900                         |       | 140,900        |       |
| Jonathan S. Leff(5)   |       | 45,000                                                    |       | 92,900                         |       | 137,900        |       |
| Timothy P. Lynch(6)   |       | 61,300                                                    |       | 92,900                         |       | 154,200        |       |
| Jeffrey R. Latts(7)   |       | 45,000                                                    |       | 92,900                         |       | 137,900        |       |
| David M. Stout(8)     |       | 37,500                                                    |       | 97,500                         |       | 135,000        |       |

 

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(1)          The amounts shown in this column represent theaggregate full grant date fair value calculated in accordance with FASB ASCTopic 718 for stock options granted during the fiscal year to the non-employeedirectors. Pursuant to SEC rules, the amounts shown exclude the impact ofestimated forfeitures related to service-based vesting conditions. Foradditional information on the valuation assumptions used to calculate theseamounts, see Note 5 to the Financial Statements included in the Company’sAnnual Report on Form 10-K for the year ended December 31, 2008.

 

(2)          Grant date fair value of 30,000 options granted in2009: $139,300. Total number of shares subject to stock options outstanding atDecember 31, 2009: 577,571.

 

(3)          Grant date fair value of 20,000 options granted in2009: $92,900. Total number of shares subject to stock options outstanding atDecember 31, 2009: 140,000.

 

(4)          Grant date fair value of 20,000 options granted in2009: $92,900. Total number of shares subject to stock options outstanding atDecember 31, 2009: 100,000.

 

(5)          Grant date fair value of 20,000 options granted in2009: $92,900. Total number of shares subject to stock options outstanding atDecember 31, 2009: 100,000.

 

(6)          Grant date fair value of 20,000 options granted in2009: $92,900. Total number of shares subject to stock options outstanding atDecember 31, 2009: 105,000.

 

(7)          Grant date fair value of 20,000 options granted in2009: $92,900. Total number of shares subject to stock options outstanding atDecember 31, 2009: 65,000.

 

(8)          Grant date fair value of 45,000 options granted in2009: $97,500. Total number of shares subject to stock options outstanding atDecember 31, 2009: 45,000.

 

***Cash Compensation***

 

Effectiveas of June 22, 2009, the Board of Directors approved the followingcompensation arrangements for the Company’s non-employee directors. Eachnon-employee director of the Company receives an annual retainer of $40,000,except that the Chairman of the Board receives an annual retainer of $60,000.Each non-employee director that serves as Chairman of the Audit Committee ofthe Board (the “Audit Committee”) also receives an additional annual retainerof $20,000. Each non-employee director that serves as Chairman of theCompensation Committee of the Board also receives an additional annual retainerof $12,500. Each non-employee director that serves as chairman of any othercommittee of the Board also receives an additional annual retainer of $7,500.Each non-employee director who serves on the Audit Committee (other than theChairman) receives an additional retainer of $10,000. Each non-employeedirector who serves on any other committee of the Board (other than the Chairman)receives an additional retainer of $5,000. Annual retainers are paid in equalquarterly installments on the first day of each calendar quarter.

 

Inaddition, each non-employee director, including the Chairman of the Board, isreimbursed for all reasonable out-of-pocket expenses incurred by such directorin connection with attending any regular or special meeting of the Board or anyregular or special meeting of any committee of the Board.

 

***Stock Options***

 

TheCompany grants stock options to its non-employee directors under a stock optiongrant program for non-employee directors (the “Directors’ Program”)administered under the 2008 Plan.

 

Underthe Directors’ Program, each person who becomes a non-employee director of theCompany is automatically granted a non-qualified stock option to purchase25,000 shares of common stock on the date of his or her initial election,except that any person who becomes the Company’s Chairman of the Board (otherthan an employee of the Company) is automatically granted a nonqualified stockoption to purchase 50,000 shares of common stock on the date of his or herinitial election (each, an “Initial Grant”). Initial Grants vest in equalinstallments on each of the first, second and third anniversaries.

 

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Inaddition, under the Directors’ Program, each non-employee director isautomatically granted a non-qualified stock option to purchase 20,000 shares ofcommon stock immediately following each year’s annual meeting of stockholders,except that the Chairman of the Board is automatically granted a non-qualifiedstock option to purchase 30,000 shares of common stock immediately followingeach year’s annual meeting of stockholders (each, an “Annual Grant”). AnnualGrants fully vest on the date of the next year’s annual meeting ofstockholders, assuming continued service as a director during such period.However, any non-employee director who received an Initial Grant within threemonths prior to an annual meeting is not eligible to receive an Annual Grantuntil the second annual meeting after his or her Initial Grant.

 

Allstock options granted under the Directors’ Program have a term of 10 yearsand an exercise price equal to the closing price of a share of the Company’scommon stock on the date of grant.

 

**Compensation Committee Interlocksand Insider Participation**

 

As noted above, the Company’sCompensation Committee consists of Messrs. Leff and Stout andDr. Latts. Michael D. Casey, who resigned as a director of the Companyeffective January 25, 2010, also served as Chairperson of the CompensationCommittee during the fiscal year ended December 31, 2009. None of the Company’sexecutive officers serve as a member of the board of directors or compensationcommittee of any entity that has one or more executive officers who serve onthe Company’s Board of Directors or Compensation Committee.

 

**Compensation Committee Report(1)**

 

TheCompensation Committee has reviewed and discussed with management theCompensation Discussion and Analysis contained in this Amendment No. 1.Based on this review and discussion, the Compensation Committee has recommendedto the Board of Directors that such Compensation Discussion and Analysis beincluded in this Amendment No. 1.

 
|   | Dr. Jeffrey  R. Latts |
|--------|----------------------------|
|   | Mr. Jonathan  S. Leff |
|   | Mr. David  M. Stout   |

 

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(1)           The material in this report is not “soliciting material,”is not deemed “filed” with the SEC, and is not to be incorporated by referenceinto any filing of the Company under the Securities Act or the Exchange Actwhether made before or after the date hereof and irrespective of any generalincorporation language in any such filing.

 

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**SIGNATURES**

 

Pursuant to the requirementsof Section 13 or 15(d) of the Securities Exchange Act of 1934, theregistrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

 
| ** **                    | **ALLOS THERAPEUTICS, INC.** |
|-------------------------------|-----------------------------------|
| ** **                    | ** **                        |
| Date:  September 1, 2010 | By:                               | /s/  PAUL L. BERNS |
|                          |                              | Paul  L. Berns |
|                          | * *                          | *President and Chief Executive Officer* |
|                          |                              |   |

 

**Pursuant tothe requirements of the Securities Exchange Act of 1934, as amended, thisAmendment No. 1 to the report has been signed by the following persons onbehalf of the registrant on September 1****, 2010****, and in the capacities indicated:**

 
| **Name**                                | ** ** | **Title**                                                                      |
|-----------------------------------------|------------|--------------------------------------------------------------------------------|
|                                    |       |                                                                           |
| *                                       |       | Chairman of Board of  Directors and Director                                   |
| Stephen J. Hoffman                      |       |                                                                           |
|                                    |       |                                                                           |
| /s/ PAUL L. BERNS                       |       | President, Chief Executive  Officer and Director (Principal Executive Officer) |
| Paul L. Berns                           |       |                                                                           |
|                                    |       |                                                                           |
| /s/ DAVID C. CLARK                      |       | Vice President, Finance  and Treasurer                                         |
| David C. Clark                          |       | (Principal Financial Officer  and Principal Accounting Officer)                |
|                                    |       |                                                                           |
|                                    |       | Director                                                                       |
| Nishan de Silva                         |       |                                                                           |
|                                    |       |                                                                           |
| *                                       |       | Director                                                                       |
| Jeffrey R. Latts                        |       |                                                                           |
|                                    |       |                                                                           |
| *                                       |       | Director                                                                       |
| Jonathan S. Leff                        |       |                                                                           |
|                                    |       |                                                                           |
| *                                       |       | Director                                                                       |
| Timothy P. Lynch                        |       |                                                                           |
|                                    |       |                                                                           |
| *                                       |       | Director                                                                       |
| David M. Stout                          |       |                                                                           |
|                                    |       |                                                                           |
| *By:   /s/ PAUL L. BERNS |       |                                                                           |
| Paul L. Berns, Attorney-in-Fact         |       |                                                                           |

 

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**EXHIBIT INDEX**

 
| **Exhibit  No.** | ** ** | **Description**                                   |
|------------------|------------|---------------------------------------------------|
| 31.01            |       | Rule 13a-14(a)/15d-14(a) Certification. |
| 31.02            |       | Rule 13a-14(a)/15d-14(a) Certification. |
| 32.01#           |       | Section 1350  Certification.                 |

 

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#                 The certifications attached as Exhibit 32.01 that accompany this Amendment No. 1to the Annual Report on Form 10-K/Aare not deemed filed with the Securities and Exchange Commission and are not tobe incorporated by reference into any filing of Allos Therapeutics, Inc.under the Securities Act of 1933, as amended, or the Securities Exchange Act of1934, as amended, whether made before or after the date of this AmendmentNo. 1 to the Annual Report on Form 10-K/A, irrespective of any general incorporation language contained in suchfiling.

 

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