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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">UNITED
      STATES</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
      AND EXCHANGE COMMISSION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WASHINGTON,
      D.C. 20549</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>FORM
      8-K</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CURRENT
      REPORT</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PURSUANT
      TO SECTION 13 OR 15(</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">d</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
      OF</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">THE
      SECURITIES EXCHANGE ACT OF 1934</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
      of
      Report (Date of earliest event reported): June 30, 2006</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman"><strong>Hana
      Biosciences, Inc.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
      name of registrant as specified in its charter)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">

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            <td valign="bottom" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Delaware</strong></font></div>
            </td>
            <td valign="bottom" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>000-50782</strong></font></div>
            </td>
            <td valign="bottom" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>32-0064979</strong></font></div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
                or other jurisdiction of</font></div>
            </td>
            <td valign="bottom" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Commission
                File Number)</font></div>
            </td>
            <td valign="bottom" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(IRS
                Employer</font></div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">incorporation)</font></div>
            </td>
            <td valign="bottom" width="30%">&#160;</td>
            <td valign="bottom" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Identification
                No.)</font></div>
            </td>
          </tr>
          <tr>
            <td colspan="2" valign="bottom" width="60%">&#160;</td>
            <td valign="bottom" width="30%">&#160;</td>
          </tr>
          <tr>
            <td colspan="2" valign="bottom" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>400
                Oyster Point Blvd., Ste. 215, South San Francisco,
                CA</strong></font></div>
            </td>
            <td valign="bottom" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>94080</strong></font></div>
            </td>
          </tr>
          <tr>
            <td colspan="2" valign="bottom" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
                of principal executive offices)</font></div>
            </td>
            <td valign="bottom" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Zip
                Code)</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(650)
      588-6404</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Registrant's
      telephone number, including area code)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Not
      applicable</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Former
      name or former address, if changed since last report)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (see</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>&#160;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">General
      Instruction A.2. below):</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">o</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">o</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Soliciting
      material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">o</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b))</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">o</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pre-commencement
      communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c))</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: -54pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      1.01. Entry into Material Definitive Agreement. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 54pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)</font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amendment
                to Employment Agreement with Chief Executive
                Officer.</font></div>
            </td>
          </tr>

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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 54pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June
      30, 2006, Hana Biosciences, Inc. (the &#8220;Company&#8221;) and Mark J. Ahn, the Company&#8217;s
      president and chief executive officer, entered into Amendment No. 3 (the
&#8220;Amendment&#8221;) to the Employment Agreement originally dated November 1, 2003, as
      amended October 21, 2004 and December 19, 2005 (the &#8220;Employment Agreement&#8221;). The
      purpose of the Amendment was to amend Section 5(f) of the Employment Agreement,
      which provided that Dr. Ahn was entitled to receive additional stock option
      grants (the &#8220;Anti-Dilution Options&#8221;) in order to maintain the percentage of
      stock option grants issuable under the Employment Agreement to be equal to
      at
      least 5 percent of the Company&#8217;s issued and outstanding shares of common stock
      until such time as the Company raised $50 million in aggregate gross proceeds.
      In accordance with the terms of the Employment Agreement, the Anti-Dilution
      Options were to have an exercise price of $0.167 per share, the exercise price
      of Dr. Ahn&#8217;s original stock option grant in November 2003 under the Employment
      Agreement. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      accordance with Section 5(f) of the Employment Agreement, Dr. Ahn was entitled
      to receive Anti-Dilution Options to purchase&#160;87,950 and 331,312
      shares&#160;following the Company&#8217;s completion of its October 2005 private
      placement of 3,686,716 shares of common stock and its May 2006 registered direct
      offering of 4,701,100 shares of common stock, respectively. The Company and
      Dr.
      Ahn agreed to defer the Anti-Dilution Option following the October 2005 private
      placement because the listing standards of the American Stock Exchange, to
      which
      the Company was then subject, prohibited granting equity compensation to
      executive officers unless such issuance had been approved by the Company&#8217;s
      stockholders or was made pursuant to a stockholder-approved equity compensation
      plan. None of the Company&#8217;s equity compensation plans had been previously
      approved by its stockholders&#160;until the Company&#8217;s May 9, 2006 Annual
      Meeting. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      lieu
      of issuing the Anti-Dilution Options triggered by the October 2005 and May
      2006
      financings, the Amendment provides for the Company to instead issue 85,000
      and
      325,000 restricted shares of common stock, respectively. The restricted shares
      relating to the October 2005 financing vest in two annual installments in
      October 2006 and October 2007, and the restricted shares relating to the May
      2006 financing vest in two equal installments in May 2007 and May 2008,
      respectively. The purpose for issuing restricted shares in lieu of Anti-Dilution
      Options was to avoid issuing options that might be deemed &#8220;non-qualified
      deferred compensation&#8221; under Section 409A of the Internal Revenue Code of 1986,
      as amended (the &#8220;Code&#8221;), which was signed into law in November 2004, following
      the date of the original Employment Agreement. Under Section 409A, a taxpayer
      receiving &#8220;in-the-money&#8221; stock options is taxed on the difference between the
      exercise price of the option and the fair market value at the grant date at
      the
      time such options (or portions thereof) vest, regardless of when the option
      is
      exercised, plus a 20 percent excise tax. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following
      the completion of the Company&#8217;s May 2006 financing, the Company exceeded $50
      million in aggregate gross proceeds raised and Dr. Ahn is no longer entitled
      to
      receive any Anti-Dilution Options pursuant to the Employment
      Agreement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition, the Amendment also provides that (1) each of Dr. Ahn&#8217;s previously
      granted Anti-Dilution Options, as well as the original stock option granted
      at
      the time of the Employment Agreement, would be amended so that the exercise
      price of each such option would be increased to an amount equal to the fair
      market value of the common stock at the date of such issuance, and (2) the
      Company will issue to Dr. Ahn 74,887 restricted shares of common stock in
      exchange for the aggregate increased exercise price of the Amended Options.
      The
      additional restricted shares of common stock were valued at $9.50 per share,
      the
      closing price of the common stock on the Nasdaq National Market on June 29,
      2006. The sole purpose for increasing the option exercise prices and issuing
      the
      additional restricted shares is to conform such options to comply with Section
      409A. According to Section 409A transition regulations adopted by the Internal
      Revenue Service, taxpayers may avoid the implications of Section 409A with
      respect to in-the-money options that were granted prior to Section 409A by
      amending the options so that the exercise price equals to the fair market value
      of the underlying common stock at the date the option was originally granted.
      The taxpayer may receive restricted shares as consideration for the amount
      of&#160; increased exercise price payable under the options, as amended,
      provided, that such amendment is completed prior to December 31, 2006. The
      following table summarizes Dr. Ahn&#8217;s stock options that are affected by the
      Amendment, including the amended exercise price and the number of restricted
      shares of common stock issuable: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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          <tr>
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            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td valign="bottom" width="6%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>A</strong></font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>B</strong></font></div>
            </td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>C</strong></font></div>
            </td>
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            <td valign="bottom" width="7%">&#160;</td>
            <td valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="9%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td valign="bottom" width="6%">&#160;</td>
            <td valign="bottom" width="7%">&#160;</td>
            <td valign="bottom" width="8%">
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            <td valign="bottom" width="8%">&#160;</td>
            <td valign="bottom" width="9%">
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            </td>
            <td valign="bottom" width="6%">&#160;</td>
            <td valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Shares
                to</strong></font></div>
            </td>
            <td valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="9%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td valign="bottom" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Option</strong></font></div>
            </td>
            <td valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Original</strong></font></div>
            </td>
            <td valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>FMV</strong></font></div>
            </td>
            <td valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Difference</strong></font></div>
            </td>
            <td valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Value
                ($)</strong></font></div>
            </td>
            <td valign="bottom" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Current</strong></font></div>
            </td>
            <td valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>be
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            <td valign="bottom" width="2%">&#160;</td>
            <td valign="bottom" width="9%">&#160;</td>
            <td valign="bottom" width="8%">&#160;</td>
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          <tr>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td valign="bottom" width="6%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Shares</strong></font></div>
            </td>
            <td valign="bottom" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Ex.
                Price</strong></font></div>
            </td>
            <td valign="bottom" width="8%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>at
                Grant</strong></font></div>
            </td>
            <td valign="bottom" width="8%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>(C
                - B)</strong></font></div>
            </td>
            <td valign="bottom" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>(A
                x D)</strong></font></div>
            </td>
            <td valign="bottom" width="6%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>FMV(1)</strong></font></div>
            </td>
            <td valign="bottom" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>(E
                / F)</strong></font></div>
            </td>
            <td valign="bottom" width="2%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
            </td>
            <td colspan="2" valign="bottom" width="17%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Vesting
                of Shares</strong></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="7%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="9%">&#160;</td>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="7%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td valign="bottom" width="9%">&#160;</td>
            <td valign="bottom" width="8%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" colspan="3" valign="bottom" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>11/1/03
                Option Grant:</strong></font></div>
            </td>
            <td align="right" valign="bottom" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">329,016</font></div>
            </td>
            <td align="right" valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">0.167</font></div>
            </td>
            <td align="right" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">0.833</font></div>
            </td>
            <td align="right" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">0.666
                &#160;&#160; </font></div>
            </td>
            <td align="right" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">$219,124.66</font></div>
            </td>
            <td align="right" valign="bottom" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">9.50&#160;&#160;&#160;
                </font></div>
            </td>
            <td align="right" valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">23,066</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" colspan="3" valign="bottom" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">All
                shares vest Jan 1, 2007</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="7%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="9%">&#160;</td>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="7%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="9%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" colspan="2" valign="bottom" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>2/15/04
                Option Grant:</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="right" valign="bottom" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">184,555</font></div>
            </td>
            <td align="right" valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">0.167</font></div>
            </td>
            <td align="right" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">0.833</font></div>
            </td>
            <td align="right" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">0.666&#160;&#160;&#160;
                </font></div>
            </td>
            <td align="right" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">122,913.63</font></div>
            </td>
            <td align="right" valign="bottom" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">9.50&#160;&#160;&#160;
                </font></div>
            </td>
            <td align="right" valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">12,938</font></div>
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            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" colspan="3" valign="bottom" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">2/3
                vest 1/1/07; 1/3 vest 2/15/07</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="7%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="9%">&#160;</td>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="7%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="9%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" colspan="2" valign="bottom" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>2/26/04
                Option Grant:</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="right" valign="bottom" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">79,658</font></div>
            </td>
            <td align="right" valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">0.337</font></div>
            </td>
            <td align="right" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">1.684</font></div>
            </td>
            <td align="right" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">1.347&#160;&#160;&#160;
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            </td>
            <td align="right" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">107,299.33</font></div>
            </td>
            <td align="right" valign="bottom" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">9.50&#160;&#160;&#160;
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            </td>
            <td align="right" valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">11,295</font></div>
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            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" colspan="3" valign="bottom" width="20%">
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                vest 1/1/07; 1/3 vest 2/15/07</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="7%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="9%">&#160;</td>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="7%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="9%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" colspan="2" valign="bottom" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>7/20/04
                Option Grant:</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="right" valign="bottom" width="6%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">194,568</font></div>
            </td>
            <td align="right" valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">0.337</font></div>
            </td>
            <td align="right" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">1.684</font></div>
            </td>
            <td align="right" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">1.347&#160;&#160;&#160;
                </font></div>
            </td>
            <td align="right" valign="bottom" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">262,083.10</font></div>
            </td>
            <td align="right" valign="bottom" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">9.50&#160;&#160;&#160;
                </font></div>
            </td>
            <td align="right" valign="bottom" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">27,588</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" colspan="3" valign="bottom" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">2/3
                vest 1/1/07; 1/3 vest 7/20/07</font></div>
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          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="7%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="9%">&#160;</td>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="7%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="9%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="right" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>&#160;&#160;Totals:</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="right" valign="bottom" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>787,797</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="7%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="right" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>$711,420.71</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="right" valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>74,887</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="9%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">____________</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)
      Based
      on the last closing sale price as reported on the Nasdaq National Market on
      June
      29, 2006, the date prior to the Amendment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 54pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)</font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amendment
                of Stock Option Agreement with Fred L.
                Vitale.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 54pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June
      30, 2006, the Company and Fred L. Vitale, its Vice President, Chief Business
      Officer, entered into an amendment to Mr. Vitale&#8217;s Stock Option Agreement with
      the Company dated February 1, 2004. Similar to the amendments to Dr. Ahn&#8217;s stock
      options described above, the sole purpose of the amendment was to amend the
      exercise price of a stock option granted to Mr. Vitale in order to comply with
      Section 409A of the Code. The original option granted under Mr. Vitale&#8217;s
      employment agreement was to purchase 141,007 shares of common stock (as adjusted
      for stock splits, etc.) at an exercise price of $0.336 per share. The option,
      all of which is currently vested and exercisable, was amended to provide for
      an
      exercise price of $0.833 per share and, in order to compensate Mr. Vitale for
      the increased exercise price, the Company also agreed to issue to Mr. Vitale
      7,377 shares of restricted common stock, all of which vests on January 1, 2007.
      The amendment to Mr. Vitale&#8217;s stock option, including the amended exercise price
      and number of restricted shares of common stock issuable, is summarized
      below:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td valign="bottom" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>A</strong></font></div>
            </td>
            <td valign="bottom" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>B</strong></font></div>
            </td>
            <td valign="bottom" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>C</strong></font></div>
            </td>
            <td valign="bottom" width="8%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>D</strong></font></div>
            </td>
            <td valign="bottom" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>E</strong></font></div>
            </td>
            <td valign="bottom" width="8%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>F</strong></font></div>
            </td>
            <td valign="bottom" width="8%">&#160;</td>
            <td valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="4%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td valign="bottom" width="7%">&#160;</td>
            <td valign="bottom" width="7%">&#160;</td>
            <td valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Amended
                Ex. Price -</strong></font></div>
            </td>
            <td valign="bottom" width="8%">&#160;</td>
            <td valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Aggregate</strong></font></div>
            </td>
            <td valign="bottom" width="8%">&#160;</td>
            <td valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Shares
                to</strong></font></div>
            </td>
            <td valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="4%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Option</strong></font></div>
            </td>
            <td valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Original</strong></font></div>
            </td>
            <td valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>FMV</strong></font></div>
            </td>
            <td valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Difference</strong></font></div>
            </td>
            <td valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Value
                ($)</strong></font></div>
            </td>
            <td valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Current</strong></font></div>
            </td>
            <td valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>be
                Issued</strong></font></div>
            </td>
            <td valign="bottom" width="2%">&#160;</td>
            <td valign="bottom" width="8%">&#160;</td>
            <td valign="bottom" width="4%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td valign="bottom" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Shares</strong></font></div>
            </td>
            <td valign="bottom" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Ex.
                Price</strong></font></div>
            </td>
            <td valign="bottom" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>at
                Grant</strong></font></div>
            </td>
            <td valign="bottom" width="8%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>(C
                - B)</strong></font></div>
            </td>
            <td valign="bottom" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>(A
                x D)</strong></font></div>
            </td>
            <td valign="bottom" width="8%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>FMV(1)</strong></font></div>
            </td>
            <td valign="bottom" width="8%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>(E
                / F)</strong></font></div>
            </td>
            <td valign="bottom" width="2%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
            </td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Vesting
                  of Shares</strong></font></div>
              </div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="7%">&#160;</td>
            <td align="left" valign="bottom" width="7%">&#160;</td>
            <td align="left" valign="bottom" width="9%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="9%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="8%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td valign="bottom" width="8%">&#160;</td>
            <td valign="bottom" width="4%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" colspan="2" valign="bottom" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>2/1/04
                Option Grant:</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="right" valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">141,007</font></div>
            </td>
            <td align="right" valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">0.336</font></div>
            </td>
            <td align="right" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">0.833</font></div>
            </td>
            <td align="right" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">0.497</font></div>
            </td>
            <td align="right" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">70,080.48</font></div>
            </td>
            <td align="right" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">9.50</font></div>
            </td>
            <td align="right" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">7,377</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">100%
                vests 1/1/07</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">_______</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)
      Based
      on the last closing sale price as reported on the Nasdaq National Market on
      June
      29, 2006, the date prior to the Amendment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">2</font></div>
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          <hr style="COLOR: black" noshade size="2">
        </div>
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      <div id="HDR">
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      </div>
    </div><br>
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      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.</font></div>
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                Biosciences, Inc.</strong></font></div>
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                July 7, 2006</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/
                John P. Iparraguirre</font></div>
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                P. Iparraguirre</font></div>
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                Financial Officer</font></div>
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{"company-data": {"conformed-name": "Hana Biosciences Inc", "cik": "0001140028", "assigned-sic": "2834", "irs-number": "841588441", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-32626", "film-number": "06951429"}, "business-address": {"street1": "400 OYSTER POINT BOULEVARD", "street2": "SUITE 215", "city": "SOUTH SAN FRANCISCO", "state": "CA", "zip": "94080", "phone": "6505886404"}, "mail-address": {"street1": "400 OYSTER POINT BOULEVARD", "street2": "SUITE 215", "city": "SOUTH SAN FRANCISCO", "state": "CA", "zip": "94080"}, "former-company": {"former-conformed-name": "EMAIL REAL ESTATE COM INC", "date-changed": "20010504"}}
Unassociated Document
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
WASHINGTON,
      D.C. 20549
FORM
      8-K
CURRENT
      REPORT
PURSUANT
      TO SECTION 13 OR 15(
d
)
      OF
THE
      SECURITIES EXCHANGE ACT OF 1934
Date
      of
      Report (Date of earliest event reported): June 30, 2006
Hana
      Biosciences, Inc.
(Exact
      name of registrant as specified in its charter)
Delaware
000-50782
32-0064979
(State
                or other jurisdiction of
(Commission
                File Number)
(IRS
                Employer
incorporation)
Identification
                No.)
400
                Oyster Point Blvd., Ste. 215, South San Francisco,
                CA
94080
(Address
                of principal executive offices)
(Zip
                Code)
(650)
      588-6404
(Registrant's
      telephone number, including area code)
Not
      applicable
(Former
      name or former address, if changed since last report)
Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (see
General
      Instruction A.2. below):
o
Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)
o
Soliciting
      material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)
o
Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b))
o
Pre-commencement
      communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c))
Item
      1.01. Entry into Material Definitive Agreement.
(a)
Amendment
                to Employment Agreement with Chief Executive
                Officer.
On
      June
      30, 2006, Hana Biosciences, Inc. (the "Company") and Mark J. Ahn, the Company's
      president and chief executive officer, entered into Amendment No. 3 (the
"Amendment") to the Employment Agreement originally dated November 1, 2003, as
      amended October 21, 2004 and December 19, 2005 (the "Employment Agreement"). The
      purpose of the Amendment was to amend Section 5(f) of the Employment Agreement,
      which provided that Dr. Ahn was entitled to receive additional stock option
      grants (the "Anti-Dilution Options") in order to maintain the percentage of
      stock option grants issuable under the Employment Agreement to be equal to
      at
      least 5 percent of the Company's issued and outstanding shares of common stock
      until such time as the Company raised $50 million in aggregate gross proceeds.
      In accordance with the terms of the Employment Agreement, the Anti-Dilution
      Options were to have an exercise price of $0.167 per share, the exercise price
      of Dr. Ahn's original stock option grant in November 2003 under the Employment
      Agreement.
In
      accordance with Section 5(f) of the Employment Agreement, Dr. Ahn was entitled
      to receive Anti-Dilution Options to purchase 87,950 and 331,312
      shares following the Company's completion of its October 2005 private
      placement of 3,686,716 shares of common stock and its May 2006 registered direct
      offering of 4,701,100 shares of common stock, respectively. The Company and
      Dr.
      Ahn agreed to defer the Anti-Dilution Option following the October 2005 private
      placement because the listing standards of the American Stock Exchange, to
      which
      the Company was then subject, prohibited granting equity compensation to
      executive officers unless such issuance had been approved by the Company's
      stockholders or was made pursuant to a stockholder-approved equity compensation
      plan. None of the Company's equity compensation plans had been previously
      approved by its stockholders until the Company's May 9, 2006 Annual
      Meeting.
In
      lieu
      of issuing the Anti-Dilution Options triggered by the October 2005 and May
      2006
      financings, the Amendment provides for the Company to instead issue 85,000
      and
      325,000 restricted shares of common stock, respectively. The restricted shares
      relating to the October 2005 financing vest in two annual installments in
      October 2006 and October 2007, and the restricted shares relating to the May
      2006 financing vest in two equal installments in May 2007 and May 2008,
      respectively. The purpose for issuing restricted shares in lieu of Anti-Dilution
      Options was to avoid issuing options that might be deemed "non-qualified
      deferred compensation" under Section 409A of the Internal Revenue Code of 1986,
      as amended (the "Code"), which was signed into law in November 2004, following
      the date of the original Employment Agreement. Under Section 409A, a taxpayer
      receiving "in-the-money" stock options is taxed on the difference between the
      exercise price of the option and the fair market value at the grant date at
      the
      time such options (or portions thereof) vest, regardless of when the option
      is
      exercised, plus a 20 percent excise tax.
Following
      the completion of the Company's May 2006 financing, the Company exceeded $50
      million in aggregate gross proceeds raised and Dr. Ahn is no longer entitled
      to
      receive any Anti-Dilution Options pursuant to the Employment
      Agreement.
In
      addition, the Amendment also provides that (1) each of Dr. Ahn's previously
      granted Anti-Dilution Options, as well as the original stock option granted
      at
      the time of the Employment Agreement, would be amended so that the exercise
      price of each such option would be increased to an amount equal to the fair
      market value of the common stock at the date of such issuance, and (2) the
      Company will issue to Dr. Ahn 74,887 restricted shares of common stock in
      exchange for the aggregate increased exercise price of the Amended Options.
      The
      additional restricted shares of common stock were valued at $9.50 per share,
      the
      closing price of the common stock on the Nasdaq National Market on June 29,
      2006. The sole purpose for increasing the option exercise prices and issuing
      the
      additional restricted shares is to conform such options to comply with Section
      409A. According to Section 409A transition regulations adopted by the Internal
      Revenue Service, taxpayers may avoid the implications of Section 409A with
      respect to in-the-money options that were granted prior to Section 409A by
      amending the options so that the exercise price equals to the fair market value
      of the underlying common stock at the date the option was originally granted.
      The taxpayer may receive restricted shares as consideration for the amount
      of  increased exercise price payable under the options, as amended,
      provided, that such amendment is completed prior to December 31, 2006. The
      following table summarizes Dr. Ahn's stock options that are affected by the
      Amendment, including the amended exercise price and the number of restricted
      shares of common stock issuable:
1
A
B
C
D
E
F
Amended
                Ex. Price -
Aggregate
Shares
                to
Option
Original
FMV
Difference
Value
                ($)
Current
be
                Issued
Shares
Ex.
                Price
at
                Grant
(C
                - B)
(A
                x D)
FMV(1)
(E
                / F)
Vesting
                of Shares
11/1/03
                Option Grant:
329,016
0.167
0.833
0.666
$219,124.66
9.50
23,066
All
                shares vest Jan 1, 2007
2/15/04
                Option Grant:
184,555
0.167
0.833
0.666
122,913.63
9.50
12,938
2/3
                vest 1/1/07; 1/3 vest 2/15/07
2/26/04
                Option Grant:
79,658
0.337
1.684
1.347
107,299.33
9.50
11,295
2/3
                vest 1/1/07; 1/3 vest 2/15/07
7/20/04
                Option Grant:
194,568
0.337
1.684
1.347
262,083.10
9.50
27,588
2/3
                vest 1/1/07; 1/3 vest 7/20/07
Totals:
787,797
$711,420.71
74,887
____________
(1)
      Based
      on the last closing sale price as reported on the Nasdaq National Market on
      June
      29, 2006, the date prior to the Amendment.
(b)
Amendment
                of Stock Option Agreement with Fred L.
                Vitale.
On
      June
      30, 2006, the Company and Fred L. Vitale, its Vice President, Chief Business
      Officer, entered into an amendment to Mr. Vitale's Stock Option Agreement with
      the Company dated February 1, 2004. Similar to the amendments to Dr. Ahn's stock
      options described above, the sole purpose of the amendment was to amend the
      exercise price of a stock option granted to Mr. Vitale in order to comply with
      Section 409A of the Code. The original option granted under Mr. Vitale's
      employment agreement was to purchase 141,007 shares of common stock (as adjusted
      for stock splits, etc.) at an exercise price of $0.336 per share. The option,
      all of which is currently vested and exercisable, was amended to provide for
      an
      exercise price of $0.833 per share and, in order to compensate Mr. Vitale for
      the increased exercise price, the Company also agreed to issue to Mr. Vitale
      7,377 shares of restricted common stock, all of which vests on January 1, 2007.
      The amendment to Mr. Vitale's stock option, including the amended exercise price
      and number of restricted shares of common stock issuable, is summarized
      below:
A
B
C
D
E
F
Amended
                Ex. Price -
Aggregate
Shares
                to
Option
Original
FMV
Difference
Value
                ($)
Current
be
                Issued
Shares
Ex.
                Price
at
                Grant
(C
                - B)
(A
                x D)
FMV(1)
(E
                / F)
Vesting
                  of Shares
2/1/04
                Option Grant:
141,007
0.336
0.833
0.497
70,080.48
9.50
7,377
100%
                vests 1/1/07
_______
(1)
      Based
      on the last closing sale price as reported on the Nasdaq National Market on
      June
      29, 2006, the date prior to the Amendment.
2
SIGNATURE
Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.
Hana
                Biosciences, Inc.
Date:
                July 7, 2006
By:
/s/
                John P. Iparraguirre
John
                P. Iparraguirre
Chief
                Financial Officer
3