As
filed with the Securities and Exchange Commission on June 29, 2009
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SPECTRUM PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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93-0979187
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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157 Technology Drive
Irvine, California 92618
(Address of Principal Executive Offices; Zip Code)
Spectrum Pharmaceuticals, Inc. 2009 Employee Stock Purchase Plan
Spectrum Pharmaceuticals, Inc. 2009 Incentive Award Plan
(Full titles of the plans)
Rajesh C. Shrotriya, M.D.
Chairman of the Board, Chief Executive
Officer and President
157 Technology Drive
Irvine, California 92618
(Name and address of agent for service)
(949) 788-6700
(Telephone number, including area code, of agent for service)
Copies to:
Shivbir Grewal, Esq.
Michael Hedge, Esq.
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660
(949) 725-4000
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
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CALCULATION OF REGISTRATION FEE
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Proposed
Maximum
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Proposed
Maximum
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Title of Each Class of
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Amount to be
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Offering Price
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Aggregate
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Amount of
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Securities to be Registered
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Registered (1)
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Per Share (2)
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Offering Price (2)
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Registration Fee (2)
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Common Stock, $0.001 par value (3)
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5,000,000 shares
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$5.97
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$29,850,000
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$1,665.63
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Common Stock, $0.001 par value (4)
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10,000,000 shares
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$5.97
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$59,700,000
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$3,331.26
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TOTAL
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15,000,000 shares
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N/A
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$89,550,000
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$4,996.89
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(1)
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In the event of a stock split, stock dividend, or similar transaction involving the
Registrants common stock, in order to prevent dilution, the number of shares registered shall
automatically be increased to cover the additional shares pursuant to the anti-dilution
adjustment provisions of the Registrants 2009 Employee Stock Purchase Plan and 2009 Incentive
Award Plan, and in accordance with Rule 416(a) under the Securities Act of 1933, as amended
(the Securities Act). Includes associated preferred stock purchase rights under the
Registrants Rights Agreement dated as of December 13, 2000, as amended. Prior to the
occurrence of certain events, the preferred stock purchase rights will not be exercisable or
evidenced separately from the Registrants common stock.
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(2)
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In accordance with Rule 457(h), the aggregate offering price of the 15,000,000 shares of
common stock registered hereby is estimated, solely for purposes of calculating the
registration fee, on the basis of the price of securities of the same class, as determined in
accordance with Rule 457(c), using the average of the high and the low prices reported by the
NASDAQ Stock Market, LLC for the common stock on June 25, 2009,
which was $5.97 per share.
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(3)
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Represents shares available for issuance under the Spectrum Pharmaceuticals, Inc. 2009
Employee Stock Purchase Plan.
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(4)
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Represents shares available for issuance under the Spectrum Pharmaceuticals, Inc. 2009
Incentive Award Plan.
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INTRODUCTION
This Registration Statement on Form S-8 is filed by Spectrum Pharmaceuticals, Inc. (the
Registrant) relating to 5,000,000 shares of the Registrants common stock, par value $0.001 per
share, issuable to eligible employees of the Registrant and its subsidiaries under the Spectrum
Pharmaceuticals, Inc. 2009 Employee Stock Purchase Plan, and an additional 10,000,000 shares of the
Registrants common stock, par value $0.001 per share, issuable to eligible employees, directors
and consultants of the Registrant and its subsidiaries under the Spectrum Pharmaceuticals, Inc.
2009 Incentive Award Plan.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I of Form S-8 will be sent or given
to participants as specified by Rule 428(b)(1) promulgated under the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The Registrant hereby incorporates by reference into this Registration Statement the following
documents previously filed with the Securities and Exchange Commission (the SEC):
(a) the Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 2008
(filed with the SEC on March 31, 2009, File No. 000-28782);
(b) the Registrants Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2009
(filed with the SEC on May 7, 2009, File No. 000-28782);
(c) the Registrants Current Reports on Form 8-K filed with the SEC on February 26, 2009,
March 3, 2009, March 19, 2009, May 7, 2009,
May 28, 2009, and June 18, 2009, as each may be amended; and
(d) the description of the Registrants common stock contained in the Registration Statement
on Form 8- B filed with the SEC on June 27, 1997, pursuant to the Securities Exchange Act of 1934,
as amended (the Exchange Act), including any subsequent amendments or reports that may be filed
for the purpose of amending such description.
All reports and definitive proxy or information statements filed pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Registration Statement and prior to
the filing of a post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded for purposes of this
Registration Statement to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Registration Statement.
No information furnished and not filed with the SEC shall be deemed
incorporated by reference into this Registration Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Section 145(a) of the General Corporation Law of the State of Delaware (the DGCL) provides
that a Delaware corporation may indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that such person is or was a director, officer, employee or
agent of a corporation, or is or was serving at the request of a corporation as a director, officer,
employee or agent of another corporation or enterprise, against expenses, judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in connection with such
action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no cause to believe his conduct was unlawful.
Section 145(b) of the DGCL provides that a Delaware corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in its favor by reason
of the fact that such person acted in any of the capacities set forth above, against expenses
actually and reasonably incurred by such person in connection with the defense or settlement of
such action or suit if he or she acted in good faith and in a manner that he or she reasonably
believed to be in or not opposed to the best interests of the corporation, except that no
indemnification may be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine that despite the
adjudication of liability, but in view of all the circumstances of the case, such person is fairly
and reasonably entitled to be indemnified for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 145 of the DGCL further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding referred to in
subsections (a) and (b) or in the defense of any claim, issue or matter therein, he shall be
indemnified against expenses actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any other rights to
which the indemnified party may be entitled; and that the corporation may purchase and maintain
insurance on behalf of a director or officer of the corporation against any liability asserted
against such officer or director and incurred by him or her in any such capacity or arising out of
his or her status as such, whether or not the corporation would have the power to indemnify him or
her against such liabilities under Section 145.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation may include a
provision which eliminates or limits the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director, except for liability
(i) for any breach of the directors duty of loyalty to the company or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL, relating to prohibited dividends or distributions or
the repurchase or redemption of stock or (iv) for any transaction from which the director derives
an improper personal benefit. The Registrants certificate of incorporation includes such a provision.
As a result of this provision, the Registrant and its stockholders may be unable to obtain monetary
damages from a director for breach of his or her duty of care.
The bylaws of the Registrant provide for indemnification of the Registrants directors and officers
to the fullest extent permitted by law. Insofar as indemnification for liabilities under the
Securities Act of 1933, as amended (the Securities Act) may be permitted to directors, officers
or controlling persons of the Registrant pursuant to the Registrants certificate of incorporation,
bylaws and the DGCL, the Registrant has been informed that in the
opinion of the SEC such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.
We have entered into indemnity agreements with each of our directors and officers. These
indemnity agreements require that the Registrant indemnify each director and officer for amounts that
he is or becomes
obligated to pay because of any claim or claims made against him by reason of the fact that he
is or was a director or officer of the Registrant, by reason of any action (or failure to act) taken
by him or any action (or failure to act) on his part while acting as a director or officer of the
Registrant, or by reason of the fact that he is or was serving at the request of the Registrant as a
director, officer, employee or agent of another corporation or enterprise. Under the DGCL, absent
such an indemnity agreement, indemnification of a director or officer is discretionary rather than
mandatory (except in the case of a proceeding in which a director or officer is successful on the
merits). The indemnity agreements require the Registrant to advance the expenses incurred by a
director or officer, upon receipt of his request. Absent the indemnity agreements, indemnification
that might be made available to directors and officers could be changed by amendments to the
Registrants certificate of incorporation and bylaws.
We have a policy of liability insurance that insures the directors and officers against the
cost of defense, settlement or payment of a judgment under certain circumstances.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits
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Exhibit
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Number
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Exhibit
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4.1
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Amended Certificate of Incorporation, as filed. (Filed as Exhibit 3.1 to
Form 10-Q, as filed with the Securities and Exchange Commission on August
8, 2006, and incorporated herein by reference.)
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4.2
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Form of Amended and Restated Bylaws of the Registrant. (Filed as Exhibit
3.1 to Form 10-Q, as filed with the Securities and Exchange Commission on
August 16, 2004, and incorporated herein by reference.)
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4.3
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Rights Agreement, dated as of December 13, 2000, between the Registrant
and ComputerShare Trust Company, N.A. (formerly U.S. Stock Transfer
Corporation), as Rights Agent, which includes as Exhibit A thereto the
form of Certificate of Designation for the Series B Junior Participating
Preferred Stock, as Exhibit B thereto the Form of Rights Certificate and
as Exhibit C thereto a Summary of Terms of Stockholder Rights Plan.
(Filed as Exhibit 4.1 to Form 8-A12G, as filed with the Securities and
Exchange Commission on December 26, 2000, and incorporated herein by
reference.)
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4.4
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Amendment No. 1 to the Rights Agreement dated as of December 13, 2000 by
and between the Registrant and ComputerShare Trust Company, N.A.
(formerly U.S. Stock Transfer Corporation). (Filed as Exhibit 4.1 to Form
10-Q, as filed with the Securities and Exchange Commission on August 14,
2003, and incorporated herein by reference.)
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4.5
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Amendment No. 2 to the Rights Agreement dated as of December 13, 2000 by
and between the Registrant and ComputerShare Trust Company, N.A.
(formerly U.S. Stock Transfer Corporation). (Filed as Exhibit 4.1 to Form
10-Q, as filed with the Securities and Exchange Commission on May 17,
2004, and incorporated herein by reference.)
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4.6
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Amendment No. 3 to the Rights Agreement dated as of December 13, 2000 by
and between the Registrant and ComputerShare Trust Company, N.A.
(formerly U.S. Stock Transfer Corporation). (Filed as Exhibit 4.2 to Form
10-Q, as filed with the Securities and Exchange Commission on May 17,
2004, and incorporated herein by reference.)
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4.7
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Fourth Amendment to Rights Agreement dated July 7, 2006. (Filed as
Exhibit 4.1 to Form 8-K, as filed with the Securities and Exchange
Commission on July 12, 2006, and incorporated herein by reference.)
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Exhibit
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Number
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Exhibit
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4.8
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Amendment No. 5 to the Rights Agreement dated as of December 13, 2000 by
and between the Registrant and ComputerShare Trust Company, N.A.
(formerly U.S. Stock Transfer Corporation). (Filed as Exhibit 4.2 to Form
10-Q, as filed with the Securities and Exchange Commission on November 3,
2006, and incorporated herein by reference.)
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5.1 +
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Opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation.
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23.1 +
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Consent of Kelly and Company.
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23.2 +
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Consent of Stradling Yocca Carlson & Rauth, a Professional Corporation
(contained in Exhibit 5.1).
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24.1 +
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Power of Attorney (contained on page II-2 of this registration statement).
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99.1 +
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Spectrum Pharmaceuticals, Inc. 2009 Employee Stock Purchase Plan.
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99.2 +
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Spectrum Pharmaceuticals, Inc. 2009 Incentive Award Plan.
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Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as
amended (the Securities Act);
(ii) To reflect in the prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the maximum aggregate offering
price set forth in the Calculation of Registration Fee table in the effective registration
statement; and
(iii) To include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to such information in
the Registration Statement.
Provided
,
however
, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply if the
information required to be included in a post-effective amendment by these paragraphs is contained
in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Registrants annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in the
Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses incurred or paid by
a director, officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it
has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and
has duly caused this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Irvine, State of
California, on this 29th day of June,
2009.
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SPECTRUM PHARMACEUTICALS, INC.
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By:
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/s/ Rajesh C. Shrotriya, M.D.
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Rajesh C. Shrotriya, M.D.
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Chairman of the Board, Chief Executive
Officer and President
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POWER OF ATTORNEY
The undersigned directors and officers of Spectrum Pharmaceuticals, Inc. hereby constitute and
appoint Rajesh C. Shrotriya, M.D. and Shyam Kumaria and each of them, as his true and lawful
attorneys-in-fact and agents, with full power to act without the other and with full power of
substitution and resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective amendments) to this
registration statement, and new registration statements relating to this Form S-8, and to file the
same with all exhibits thereto, and other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of
them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities and on the date indicated.
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Signature
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Title
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Date
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/s/ Rajesh C. Shrotriya, M.D.
Rajesh C. Shrotriya, M.D.
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Chairman of the Board,
Chief Executive Officer, and President
(Principal Executive Officer)
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June 29, 2009
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/s/ Shyam K. Kumaria
Shyam K. Kumaria
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Vice President Finance
(Principal Financial and Accounting
Officer)
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June 29, 2009
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/s/ Mitchell P. Cybulski
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Director
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June 29, 2009
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/s/ Richard D. Fulmer
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Director
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June 29, 2009
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/s/ Stuart M. Krassner, Sc.D., Psy.D.
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Director
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June 29, 2009
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Stuart M. Krassner, Sc.D., Psy.D.
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/s/ Anthony E. Maida, III
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Director
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June 29, 2009
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/s/ Julius A. Vida, Ph.D.
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Director
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June 29, 2009
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EXHIBIT INDEX
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Exhibit
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Number
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Exhibit
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4.1
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Amended Certificate of Incorporation, as filed. (Filed as Exhibit 3.1 to
Form 10-Q, as filed with the Securities and Exchange Commission on August
8, 2006, and incorporated herein by reference.)
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4.2
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Form of Amended and Restated Bylaws of the Registrant. (Filed as Exhibit
3.1 to Form 10-Q, as filed with the Securities and Exchange Commission on
August 16, 2004, and incorporated herein by reference.)
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4.3
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Rights Agreement, dated as of December 13, 2000, between the Registrant
and ComputerShare Trust Company, N.A. (formerly U.S. Stock Transfer
Corporation), as Rights Agent, which includes as Exhibit A thereto the
form of Certificate of Designation for the Series B Junior Participating
Preferred Stock, as Exhibit B thereto the Form of Rights Certificate and
as Exhibit C thereto a Summary of Terms of Stockholder Rights Plan.
(Filed as Exhibit 4.1 to Form 8-A12G, as filed with the Securities and
Exchange Commission on December 26, 2000, and incorporated herein by
reference.)
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4.4
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Amendment No. 1 to the Rights Agreement dated as of December 13, 2000 by
and between the Registrant and ComputerShare Trust Company, N.A.
(formerly U.S. Stock Transfer Corporation). (Filed as Exhibit 4.1 to Form
10-Q, as filed with the Securities and Exchange Commission on August 14,
2003, and incorporated herein by reference.)
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4.5
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Amendment No. 2 to the Rights Agreement dated as of December 13, 2000 by
and between the Registrant and ComputerShare Trust Company, N.A.
(formerly U.S. Stock Transfer Corporation). (Filed as Exhibit 4.1 to Form
10-Q, as filed with the Securities and Exchange Commission on May 17,
2004, and incorporated herein by reference.)
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4.6
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Amendment No. 3 to the Rights Agreement dated as of December 13, 2000 by
and between the Registrant and ComputerShare Trust Company, N.A.
(formerly U.S. Stock Transfer Corporation). (Filed as Exhibit 4.2 to Form
10-Q, as filed with the Securities and Exchange Commission on May 17,
2004, and incorporated herein by reference.)
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4.7
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Fourth Amendment to Rights Agreement dated July 7, 2006. (Filed as
Exhibit 4.1 to Form 8-K, as filed with the Securities and Exchange
Commission on July 12, 2006, and incorporated herein by reference.)
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4.8
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Amendment No. 5 to the Rights Agreement dated as of December 13, 2000 by
and between the Registrant and ComputerShare Trust Company, N.A.
(formerly U.S. Stock Transfer Corporation). (Filed as Exhibit 4.2 to Form
10-Q, as filed with the Securities and Exchange Commission on November 3,
2006, and incorporated herein by reference.)
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5.1 +
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Opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation.
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23.1 +
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Consent of Kelly and Company.
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23.2 +
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Consent of Stradling Yocca Carlson & Rauth, a Professional Corporation
(contained in Exhibit 5.1).
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24.1 +
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Power of Attorney (contained on page II-2 of this registration statement).
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99.1 +
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Spectrum Pharmaceuticals, Inc. 2009 Employee Stock Purchase Plan.
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99.2 +
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Spectrum Pharmaceuticals, Inc. 2009 Incentive Award Plan.
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Exhibit 99.1
SPECTRUM
PHARMACEUTICALS, INC.
2009 EMPLOYEE STOCK PURCHASE PLAN
This
EMPLOYEE STOCK PURCHASE PLAN
(the Plan)
is hereby established by
Spectrum Pharmaceuticals, Inc.
,
a Delaware corporation (the Company) as of
March 23, 2009.
ARTICLE I
PURPOSE OF THE PLAN
1.1
Purpose
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The Company has
determined that it is in its best interests to provide an
incentive to attract and retain employees and to increase
employee morale by providing a program through which employees
may acquire a proprietary interest in the Company through the
purchase of shares of the common stock of the Company
(Company Stock). The Plan is hereby established by
the Company to permit employees to subscribe for and purchase
directly from the Company shares of the Company Stock at a
discount from the market price, and to pay the purchase price in
installments by payroll deductions. The Plan is intended to
qualify as an employee stock purchase plan under
Section 423 of the Internal Revenue Code of 1986, as
amended from time to time (the Code). The provisions
of the Plan are to be construed in a manner consistent with the
requirements of Section 423 of the Code. The Plan is not
intended to be an employee benefit plan under the Employee
Retirement Income Security Act of 1974, and therefore is not
required to comply with that Act.
ARTICLE II
DEFINITIONS
2.1
Compensation
.
Compensation
means the (i) regular base salary paid to a Participant by
the Company during such individuals period of
participation in one or more Offering Periods under the Plan
before (ii) any pre-tax contributions made by the
Participant to any Code Section 401(k) salary deferral plan
or any Code Section 125 cafeteria benefit program now or
hereafter established by the Company or any of its affiliates.
The following items of compensation shall be included in
Compensation: all (i) overtime payments, commissions that
function as base salary equivalents, vacation and sick leave
compensation and bonuses. The following items of compensation
shall not be included in Compensation: (i) commissions that
do not function as base salary equivalents,
(ii) profit-sharing distributions (iii) incentive
compensation and incentive payments and (iv) any and all
contributions (other than Code Section 401(k) or Code
Section 125 contributions) made on the Participants
behalf by the Company or any of its affiliates under any
employee benefit or welfare plan now or hereafter established.
2.2
Employee
.
Employee
means each person currently employed by the Company or any of
its operating subsidiaries, any portion of whose income is
subject to withholding of income tax or for whom Social Security
retirement contributions are made by the Company or any of its
operating subsidiaries.
2.3
5% Owner
.
5%
Owner means an Employee who, immediately after the grant
of any rights under the Plan, would own Company Stock or hold
outstanding options to purchase Company Stock possessing 5% or
more of the total combined voting power of all classes of stock
of the Company. For purposes of this Section, the ownership
attribution rules of Code Section 425(d) shall apply.
2.4
Offering
Date
.
Offering Date means the
first day of each Offering Period under the Plan. For the first
Offering Period, the Offering Date shall be July 1, 2009.
2.5
Participant
.
Participant
means an Employee who has satisfied the eligibility requirements
of Section 3.1 and has become a participant in the Plan in
accordance with Section 3.2.
2.6
Plan Year
.
Plan
Year means the twelve consecutive month period ending on
December 31.
2.7
Offering
Period
.
Offering Period means
consecutive periods to be set by the Administrator. However, the
first Offering Period shall commence on July 1, 2009 and
end December 31, 2009.
2.8
Purchase
Date
.
Purchase Date means the
last day of each Offering Period.
1
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1
Eligibility
.
Each
Employee of the Company or any of its operating subsidiaries
designated from time to time by the Administrator, who may
become a Participant in the Plan on the Offering Date coincident
with or next following his satisfaction of such requirements of
employment with the Company or any of its operating
subsidiaries. The Administrator may exclude from participation
those persons allowed to be excluded pursuant to Code Section
423, provided that such exclusions shall apply to all employees
who meet the exclusion criteria. The Administrator may provide
that Employees who are highly compensated employees
within the meaning of Section 423(b)(4)(D) of the Code are
not eligible to participate in the Plan.
3.2
Participation
.
An
Employee who has satisfied the eligibility requirements of
Section 3.1 may become a Participant in the Plan upon his
or her completion and delivery to the Human Resources Department
of the Company of a subscription agreement provided by the
Company (the Subscription Agreement) authorizing
payroll deductions. Payroll deductions for a Participant shall
commence on the Offering Date coincident with or next following
the filing of the Participants Subscription Agreement and
shall remain in effect until revoked by the Participant by the
filing of a notice of withdrawal from the Plan under
Article VIII or by the filing of a new Subscription
Agreement providing for a change in the Participants
payroll deduction rate under Section 5.2.
3.3
Special Rules
.
Under no
circumstances shall:
(a) A 5% Owner be granted a right to purchase Company Stock
under the Plan; or
(b) A Participant be entitled to purchase Company Stock
under the Plan which, when aggregated with all other employee
stock purchase plans of the Company, exceeds an amount equal to
the Aggregate Maximum. Aggregate Maximum means an
amount equal to twenty-five thousand dollars ($25,000) worth of
Company Stock (determined using the fair market value of such
Company Stock at each applicable Offering Date) during each Plan
Year.
(c) The number of shares of Company Stock purchasable by a
Participant on any Purchase Date exceed 50,000 shares,
subject to necessary adjustments under Section 10.4.
ARTICLE IV
OFFERING PERIODS
The initial grant of the right to purchase Company Stock under
the Plan shall commence on July 1, 2009 and terminate on
the next Purchase Date. Thereafter, the Plan shall provide for
Offering Periods commencing on each Offering Date and
terminating on the next following Purchase Date.
ARTICLE V
PAYROLL DEDUCTIONS
5.1
Participant
Election
.
Each Participant shall designate,
in a subscription agreement, the amount of payroll deductions to
be made from his or her paycheck to purchase Company Stock under
the Plan. The amount so designated within the Subscription
Agreement shall be effective as of the next Offering Date and
shall continue until terminated or altered in accordance with
Section 5.2 below.
5.2
Changes in Election
.
A
Participant may terminate participation in the Plan at any time
prior to the close of an Offering Period as provided in
Article VIII. A Participant may decrease or increase the
rate of payroll deductions at any time during any Offering
Period by completing and delivering to the Human Resources
Department of the Company a new Subscription Agreement setting
forth the desired change. A Participant may also terminate
payroll deductions and have accumulated deductions for the
Offering Period up to the date of termination applied to the
purchase of Company Stock as of the next Purchase Date by
completing and delivering to the Human Resources Department a
new Subscription Agreement setting forth the desired change. Any
change under this Section shall become effective on the next
payroll period (to the extent practical under the Companys
payroll practices) following the delivery of the new
Subscription Agreement.
2
5.3
Participant
Accounts
.
The Company shall establish and
maintain a separate journal account (Account) for
each Participant. The amount of each Participants payroll
deductions shall be credited to his or her Account. No interest
will be paid or allowed on amounts credited to a
Participants Account. All payroll deductions received by
the Company under the Plan are general corporate assets of the
Company and may be used by the Company for any corporate
purpose. The Company is not obligated to segregate such payroll
deductions.
ARTICLE VI
GRANT OF PURCHASE RIGHTS
6.1
Right to Purchase
Shares
.
On each Offering Date, each
Participant shall be granted a right to purchase at the price
determined under Section 6.2 that number of whole shares of
Company Stock that can be purchased or issued by the Company
based upon that price with the amounts held in his or her
Account, subject to the limits set forth in Section 3.3.
6.2
Purchase Price
.
The
purchase price for any Offering Period shall be the lesser of:
(a) 85% of the Fair Market Value of Company Stock on the
Offering Date; or
(b) 85% of the Fair Market Value of Company Stock on the
Purchase Date.
6.3
Fair Market
Value
.
Fair Market Value means
the value of one share of Company Stock, determined as follows:
(a) If the Company Stock is then listed or admitted to
trading on a stock exchange which reports closing sale prices,
the Fair Market Value shall be the closing sale price on the
date of valuation on the principal stock exchange on which the
Company Stock is then listed or admitted to trading, or, if no
closing sale price is quoted or no sale takes place on such day,
then the Fair Market Value shall be the closing sale price of
the Company Stock on such exchange on the immediately preceding
day on which a sale occurred.
(b) If the Company Stock is not then listed or admitted to
trading on a stock exchange which reports closing sale prices,
the Fair Market Value shall be the average of the closing bid
and asked prices of the Company Stock in the over-the-counter
market on the date of valuation.
(c) If neither (a) nor (b) is applicable as of
the date of valuation, then the Fair Market Value shall be
determined by the Administrator (defined in Section 9.1(a)
below) in good faith using any reasonable method of valuation,
which determination shall be conclusive and binding on all
interested parties.
ARTICLE VII
PURCHASE OF STOCK
7.1
Purchase of Company
Stock
.
Absent an election by the Participant
to terminate and have his or her Account returned, on each
Purchase Date, the Plan shall purchase on behalf of each
Participant the maximum number of whole shares of Company Stock
at the purchase price determined under Section 6.2 above as
can be purchased with the amounts held in each
Participants Account. The Plan shall not be required to
purchase any fractional shares of Company Stock. In the event
that there are amounts held in a Participants Account that
are not used to purchase Company Stock, all such amounts shall
be held in the Participants Account and carried forward to
the next Offering Period, or may be returned to the Participant
at his or her election.
7.2
Delivery of Company Stock
.
(a) Company Stock acquired under the Plan may either be
issued directly to Participants or may be issued to a contract
administrator (the Agent) engaged by the
Administrator under Article IX to carry out
responsibilities under the Plan. If the Company Stock is issued
in the name of the Agent, all Company Stock so issued
(Plan Held Stock) shall be held in the name of the
Agent for the benefit of the Plan. The Agent shall maintain
accounts for the benefit of the Participants which shall reflect
each Participants interest in the Plan Held Stock. Such
accounts shall reflect the number of shares of Company Stock
that are being held by the Agent for the benefit of each
Participant.
3
(b) Any Participant may elect to have the Company Stock
purchased under the Plan from his or her Account be issued
directly to the Participant. Any election under this paragraph
shall be on the forms provided by the Company and shall be
issued in accordance with paragraph (c) below.
(c) In the event that Company Stock under the Plan is
issued directly to a Participant, the Company will deliver to
each Participant a number of shares of Company Stock purchased
promptly after the Purchase Date. Shares shall be delivered
either in certificated form, or otherwise, as elected by the
Company in the exercise of its reasonable discretion and subject
to applicable law. The time of issuance and delivery of shares
may be postponed for such period as may be necessary to comply
with the registration requirements under the Securities Act of
1933, as amended, the listing requirements of any securities
exchange on which the Company Stock may then be listed, or the
requirements under other laws or regulations applicable to the
issuance or sale of such shares.
ARTICLE VIII
WITHDRAWAL
8.1
In Service
Withdrawals
.
At any time prior to the
Purchase Date of an Offering Period, any Participant may
withdraw the amounts held in his Account by executing and
delivering to the Human Resources Department for the Company
written notice of withdrawal on the form provided by the
Company. In such a case, the entire balance of the
Participants Account shall be paid to the Participant,
without interest, as soon as is practicable. Upon such
notification, the Participant shall not participate in the Plan
for the remainder of the Offering Period in which the notice is
given, but may then be reinstated as a Participant for a
subsequent Offering Period by executing and delivering a new
Subscription Agreement to the Company.
8.2
Termination of Employment
.
(a) In the event that a Participants employment with
the Company terminates for any reason, or ceases to be eligible
under Section 3.1, the Participant shall cease to
participate in the Plan on the date of termination. As soon as
is practical following the date of termination, the entire
balance of the Participants Account shall be paid to the
Participant or his beneficiary, without interest.
(b) A Participant may file a written designation of a
beneficiary who is to receive any shares of Company Stock
purchased under the Plan or any cash from the Participants
Account in the event of his or her death subsequent to a
Purchase Date, but prior to delivery of such shares and cash. In
addition, a Participant may file a written designation of a
beneficiary who is to receive any cash from the
Participants Account under the Plan in the event of his
death prior to a Purchase Date under paragraph (a) above.
(c) Any beneficiary designation under paragraph
(b) above may be changed by the Participant at any time by
written notice. In the event of the death of a Participant, the
Company may rely upon the most recent beneficiary designation it
has on file as being the appropriate beneficiary. In the event
of the death of a Participant, and no valid beneficiary
designation exists or the beneficiary has predeceased the
Participant, the Company shall deliver any cash or shares of
Company Stock to the executor or administrator of the estate of
the Participant, or if no such executor or administrator has
been appointed to the knowledge of the Company, the Company, in
its sole discretion, may deliver such shares of Company Stock or
cash to the spouse or any one or more dependents or relatives of
the Participant, or if no spouse, dependent or relative is known
to the Company, then to such other person as the Company may
designate.
ARTICLE IX
PLAN ADMINISTRATION
9.1
Plan Administration
.
(a) Authority to control and manage the operation and
administration of the Plan shall be vested in the Board of
Directors of the Company, or a committee thereof (herein
referred to as the Administrator). The Administrator
shall have all powers necessary to supervise the administration
of the Plan and control its operations.
4
(b) In addition to any powers and authority conferred on
the Administrator elsewhere in the Plan or by law, the
Administrator shall have the following powers and authority:
(i) To determine when and how rights to purchase common
stock are granted and the terms and conditions of each offering;
(ii) To designate from time to time which of the
Companys designated subsidiaries are eligible to
participate in the Plan;
(iii) To construe and interpret the Plan and the rights
offered under the Plan;
(iv) To establish, amend and revoke rules and regulations
for the administration of the Plan;
(v) To amend, suspend or terminate the Plan; provided,
however that the Administrator may not amend the Plan to either
increase the number of shares that may be purchased under the
Plan or to change the designation or class of Employees eligible
to participate in the Plan without obtaining stockholder
approval within 12 months before or after such action if
such approval is required by applicable laws, codes, or
regulations; and
(vi) To exercise such other powers and perform such other
acts deemed necessary to carry out the intent of the Plan.
(c) Any action taken in good faith by the Administrator in
the exercise of authority conferred upon it by this Plan shall
be conclusive and binding upon a Participant and his or her
beneficiaries. All discretionary powers conferred upon the
Administrator shall be absolute.
9.2
Limitation on
Liability
.
No Employee of the Company or
member of the Administrator shall be subject to any liability
with respect to his duties under the Plan unless the person acts
fraudulently or in bad faith. To the extent permitted by law,
the Company shall indemnify each member of the Administrator,
and any other Employee of the Company with duties under the Plan
who was or is a party, or is threatened to be made a party, to
any threatened, pending or completed proceeding, whether civil,
criminal, administrative, or investigative, by reason of the
persons conduct in the performance of his duties under the
Plan.
ARTICLE X
COMPANY STOCK
10.1
Limitations on Purchase of Shares
.
The maximum number of shares of Company Stock that shall be made
available for future sale under the Plan shall be Five Million
(5,000,000) shares plus an annual increase to be added on
January 1 of each calender year beginning January 1,
2010 equal to the lesser of (i) 1,000,000 shares or (ii) an
amount determined by the Administrator. Provided however, that
in no event should the number of shares of Company Stock
available for future sale under the 2009 ESPP exceed
10,000,000. The shares of Company Stock to be sold to
Participants under the Plan will be either purchased in
brokers transactions in accordance with the requirements
of federal securities laws or issued by the Company. If the
total number of shares of Company Stock that would otherwise be
issuable or purchasable pursuant to rights granted pursuant to
Section 6.1 of the Plan at the Purchase Date exceeds the
number of shares then available under the Plan, the Company
shall make a pro rata allocation of the shares remaining
available in as uniform and equitable a manner as is
practicable. In such event, the Company shall give written
notice of such reduction of the number of shares to each
participant affected thereby and any unused payroll deductions
shall be returned to such participant if necessary.
10.2
Voting Company
Stock
.
The Participant will have no interest
or voting right in shares to be purchased under Section 6.1
of the Plan until such shares have been purchased.
10.3
Registration of Company
Stock
.
Shares to be delivered to a
Participant under the Plan will be registered in the name of the
Participant unless designated otherwise by the Participant.
10.4
Changes in Capitalization of the
Company
.
Subject to any required action by
the stockholders of the Company, the number of shares of Company
Stock covered by each right under the Plan which has not yet
been exercised and the number of shares of Company Stock which
have been authorized for issuance under the Plan but
5
have not yet been placed under rights or which have been
returned to the Plan upon the cancellation of a right, as well
as the Purchase Price per share of Company Stock covered by each
right under the Plan which has not yet been exercised, shall be
proportionately adjusted for any increase or decrease in the
number of issued shares of Company Stock resulting from a stock
split, stock dividend, spin-off, reorganization,
recapitalization, merger, consolidation, exchange of shares or
the like. Such adjustment shall be made by the Board of
Directors of the Company, whose determination in that respect
shall be final, binding and conclusive. Except as expressly
provided herein, no issue by the Company of shares of stock of
any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of
Company Stock subject to any right granted hereunder.
10.5
Merger, Liquidation or Dissolution of
Company
.
In the event of: (1) the
Companys dissolution or liquidation, (2) a merger or
consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is
the surviving corporation but the shares of common stock
outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of
securities, cash or otherwise; or (4) the acquisition by
any person, entity or group of the beneficial ownership of the
Companys securities representing at least 50% of the
combined voting power entitled to vote in the election of
directors, then, as determined by the Administrator in its sole
discretion (i) any surviving or acquiring corporation may
assume outstanding rights or substitute similar rights for those
under the Plan, (ii) such rights may continue in full force
and effect, or (iii) Participants accumulated payroll
deductions may be used to purchase common stock immediately
prior to the transaction described above (at a Purchase Date to
be chosen solely by the Administrator) and the
Participants rights under the ongoing offering period are
terminated.
ARTICLE XI
MISCELLANEOUS MATTERS
11.1
Amendment and
Termination
.
The Plan will become effective
upon the later to occur of its adoption by the Board or its
approval by the stockholders of the Company. It will continue in
effect for a term of ten (10) years, unless sooner
terminated as provided herein. Since future conditions affecting
the Company cannot be anticipated or foreseen, the Company
reserves the right to amend, modify, or terminate the Plan at
any time. Upon termination of the Plan, all benefits shall
become payable immediately. Notwithstanding the foregoing, no
such amendment or termination shall affect rights previously
granted, nor may an amendment make any change in any right
previously granted which adversely affects the rights of any
Participant. In addition, to the extent required by applicable
laws, codes or regulations, no amendment may be made without
obtaining stockholder approval within 12 months before or
after such action if such amendment would,
(a) Increase the number of shares of Company Stock that may
be issued under the Plan; or
(b) Change the designation or class of employees eligible
to participate in the Plan.
11.2
Stockholder
Approval
.
Continuance of the Plan and the
effectiveness of any right granted hereunder shall be subject to
approval by the stockholders of the Company, within twelve
months before or after the date the Plan is adopted by the Board
of Directors of the Company.
11.3
Benefits Not
Alienable
.
Rights and benefits under the Plan
may not be assigned or alienated, whether voluntarily or
involuntarily. Any attempt at assignment, transfer, pledge or
other disposition shall be without effect, except that the
Company may treat such act as an election to withdraw funds in
accordance with Article VIII.
11.4
No Enlargement of Employee
Rights
.
This Plan is strictly a voluntary
undertaking on the part of the Company and shall not be deemed
to constitute a contract between the Company and any Employee or
to be consideration for, or an inducement to, or a condition of,
the employment of any Employee. Nothing contained in the Plan
shall be deemed to give the right to any Employee to be retained
in the employ of the Company or to interfere with the right of
the Company to discharge any Employee at any time.
11.5
Governing Law
.
To the
extent not preempted by Federal law, all legal questions
pertaining to the Plan shall be determined in accordance with
the laws of the State of California without regard for conflicts
of laws principles.
6
11.6
Non-business Days
.
When
any act under the Plan is required to be performed on a day that
falls on a Saturday, Sunday or legal holiday, that act shall be
performed on the next succeeding day which is not a Saturday,
Sunday or legal holiday. Notwithstanding the above, Fair Market
Value shall be determined in accordance with Section 6.3.
11.7
Compliance With Securities
Laws
.
Notwithstanding any provision of the
Plan, the Administrator shall administer the Plan in such a way
to insure that the Plan at all times complies with any
requirements of Federal Securities Laws. For example, affiliates
may be required to make irrevocable elections in accordance with
the rules set forth under
Section 16b-3
of the Securities Exchange Act of 1934.
7
Exhibit 99.2
SPECTRUM
PHARMACEUTICALS, INC.
2009 INCENTIVE AWARD PLAN
The 2009 INCENTIVE AWARD PLAN (the Plan) is hereby
established and adopted this 23rd day of March, 2009 (the
Effective Date) by Spectrum Pharmaceuticals Inc., a
Delaware corporation (the Company).
ARTICLE 1.
PURPOSES OF THE PLAN
1.1
Purposes
. The purposes
of the Plan are (a) to enhance the Companys ability
to attract and retain the services of qualified employees,
officers, directors, consultants and other service providers
upon whose judgment, initiative and efforts the successful
conduct and development of the Companys business largely
depends, and (b) to provide additional incentives to such
persons or entities to devote their utmost effort and skill to
the advancement and betterment of the Company, by providing them
an opportunity to participate in the ownership of the Company
that is tied to the Companys performance, thereby giving
them an interest in the success and increased value of the
Company.
ARTICLE 2.
DEFINITIONS
For purposes of this Plan, the following terms shall have the
meanings indicated:
2.1
Administrator
. Administrator
means the Board or, if the Board delegates responsibility for
any matter to the Committee, the term Administrator shall mean
the Committee.
2.2
Affiliated
Company
. Affiliated Company means:
(a) with respect to Incentive Options, any parent
corporation or subsidiary corporation of the
Company, whether now existing or hereafter created or acquired,
as those terms are defined in Sections 424(e) and 424(f) of
the Code, respectively; and
(b) with respect to Nonqualified Options, Stock
Appreciation Rights and Restricted Stock Awards, any entity
described in paragraph (a) of this Section 2.2 above,
plus any other corporation, limited liability company
(LLC), partnership or joint venture, whether now
existing or hereafter created or acquired, with respect to which
the Company has or exercises control over or is controlled by.
2.3
Base Value
. Base
Value shall have the meaning as set forth in
Section 8.3 below.
2.4
Board
. Board
means the Board of Directors of the Company.
2.5
Change in
Control
. Change in Control shall
mean:
(a) The acquisition, directly or indirectly, in one
transaction or a series of related transactions, by any person
or group (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) of the beneficial
ownership of securities of the Company possessing more than
fifty percent (50%) of the total combined voting power of all
outstanding securities of the Company;
(b) A merger or consolidation in which the Company is not
the surviving entity, except for a transaction in which the
holders of the outstanding voting securities of the Company
immediately prior to such merger or consolidation hold as a
result of holding Company securities prior to such transaction,
in the aggregate, securities possessing more than fifty percent
(50%) of the total combined voting power of all outstanding
voting securities of the surviving entity (or the parent of the
surviving entity) immediately after such merger or consolidation;
(c) A reverse merger in which the Company is the surviving
entity but in which the holders of the outstanding voting
securities of the Company immediately prior to such merger hold,
in the aggregate, securities possessing less than fifty percent
(50%) of the total combined voting power of all outstanding
voting securities of the Company or of the acquiring entity
immediately after such merger;
1
(d) The sale, transfer or other disposition (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company, except for a
transaction in which the holders of the outstanding voting
securities of the Company immediately prior to such
transaction(s) receive as a distribution with respect to
securities of the Company, in the aggregate, securities
possessing more than fifty percent (50%) of the total combined
voting power of all outstanding voting securities of the
acquiring entity immediately after such transaction(s); or
2.6 The approval by the stockholders of a plan or
proposal for the liquidation or dissolution of the Company.
2.7
Code
. Code
means the Internal Revenue Code of 1986, as amended from time to
time.
2.8
Committee
. Committee
means a committee of two or more members of the Board appointed
to administer the Plan, as set forth in Section 9.1 hereof.
2.9
Common
Stock
. Common Stock means the
Common Stock of the Company, subject to adjustment pursuant to
Section 4.2 hereof.
2.10
Company
. Company
means Spectrum Pharmaceuticals, Inc., a Delaware corporation, or
any entity that is a successor to the Company.
2.11
Covered
Employee
. Covered Employee means
those persons treated as covered employees pursuant
to Section 162(m)(3) of the Code, the Treasury Regulations
hereunder and related Internal Revenue Service guidance.
2.12
Disability
. Disability
means, for purposes of this Plan, that the Participant qualifies
to receive long-term disability payments under the
Companys long-term disability insurance program, as it may
be amended from time to time.
2.13
DRO
. DRO
means a domestic relations order as defined in the Code or
Title I of the Employee Retirement Income Security Act of
1974, as amended, or the regulations thereunder.
2.14
Effective
Date
. Effective Date means the
date on which the Plan was originally adopted by the Board, as
set forth on the first page hereof.
2.15
Exchange
Act
. Exchange Act means the
Securities Exchange Act of 1934, as amended.
2.16
Exercise
Price
. Exercise Price means the
purchase price per share of Common Stock payable by the Optionee
to the Company upon exercise of an Option.
2.17
Fair Market
Value
. Fair Market Value on any
given date means the value of one share of Common Stock,
determined as follows:
(a) If the Common Stock is then listed or admitted to
trading on a stock exchange which reports closing sale prices,
the Fair Market Value shall be the closing sale price on the
date prior to the date of valuation on such principal stock
exchange on which the Common Stock is then listed or admitted to
trading, or, if no closing sale price is quoted on such day,
then the Fair Market Value shall be the closing sale price of
the Common Stock on such exchange on the next preceding day on
which a closing sale price is reported.
(b) If the Common Stock is not then listed or admitted to
trading on a stock exchange which reports closing sale prices,
the Fair Market Value shall be the average of the closing bid
and asked prices of the Common Stock in the over the counter
market on the date prior to the date of valuation.
(c) If neither (a) nor (b) is applicable as of
the date of valuation, then the Fair Market Value shall be
determined by the Administrator in good faith using any
reasonable method of evaluation, which determination shall be
conclusive and binding on all interested parties.
2.18
Incentive
Option
. Incentive Option means
any Option designated and qualified as an incentive stock
option as defined in Section 422 of the Code.
2.19
Incentive Option
Agreement
. Incentive Option
Agreement means an Option Agreement with respect to an
Incentive Option.
2
2.20
FINRA
Dealer
. FINRA Dealer means a
broker-dealer that is a member of the Financial Industry
Regulatory Authority, Inc.
2.21
Nonqualified
Option
. Nonqualified Option means
any Option that is not an Incentive Option. To the extent that
any Option designated as an Incentive Option fails in whole or
in part to qualify as an Incentive Option, including, without
limitation, for failure to meet the limitations applicable to a
10% Stockholder or because it exceeds the annual limit provided
for in Section 5.5 below, it shall to that extent
constitute a Nonqualified Option.
2.22
Nonqualified Option
Agreement
. Nonqualified Option
Agreement means an Option Agreement with respect to a
Nonqualified Option.
2.23
Option
. Option
means any option to purchase Common Stock granted pursuant to
the Plan.
2.24
Option
Agreement
. Option Agreement means
the written agreement entered into between the Company and the
Optionee with respect to an Option granted under the Plan.
2.25
Optionee
. Optionee
means any Participant who holds an Option.
2.26
Participant
. Participant
means an individual or entity that holds an Option, Stock
Appreciation Right, shares of Restricted Stock or Restricted
Stock Units under the Plan.
2.27
Performance
Criteria
. Performance Criteria
means one or more of the following as established by the
Administrator, which may be stated as a target percentage or
dollar amount, a percentage increase over a base period
percentage or dollar amount or the occurrence of a specific
event or events:
(a) Sales;
(b) Operating income;
(c) Pre-tax income;
(d) Earnings before interest, taxes, depreciation and
amortization;
(e) Earnings per share of Common Stock on a fully-diluted
basis;
(f) Consolidated net income of the Company divided by the
average consolidated common stockholders equity;
(g) Cash and cash equivalents derived from either
(i) net cash flow from operations, or (ii) net cash
flow from operations, financings and investing activities;
(h) Adjusted operating cash flow return on income;
(i) Cost containment or reduction;
(j) The percentage change in the market price of the Common
Stock over a stated period;
(k) Return on assets;
(l) Return on stockholders equity;
(m) Return on capital;
(n) Stockholder returns;
(o) Gross or net margins;
(p) Price per share of common stock;
(q) Market share;
(r) New Company product introductions;
(s) Obtaining regulatory approvals for new or existing
products;
(t) Individual business objectives;
3
(u) Company business objectives;
(v) Product acquisitions, and
(w) Product development milestones
2.28
Purchase
Price
. Purchase Price means the
purchase price payable to purchase a share of Restricted Stock,
or a Restricted Stock Unit, which, in the sole discretion of the
Administrator, may be zero, subject to limitations under
applicable law.
2.29
Repurchase
Right
. Repurchase Right means the
right of the Company to repurchase either unvested shares of
Restricted Stock pursuant to Section 6.6 or to cancel
unvested Restricted Stock Units pursuant to Section 7.6.
2.30
Restricted
Stock
. Restricted Stock means
shares of Common Stock issued pursuant to Article 6 hereof,
subject to any restrictions and conditions as are established
pursuant to such Article 6.
2.31
Restricted Stock
Award
. Restricted Stock Award
means either the issuance of Restricted Stock or the grant of
Restricted Stock Units under the Plan.
2.32
Restricted Stock Award
Agreement
. Restricted Stock Award
Agreement means the written agreement entered into between
the Company and a Participant evidencing the issuance of
Restricted Stock or the grant of Restricted Stock Units under
the Plan.
2.33
Restricted Stock
Unit
. Restricted Stock Unit means
the right to receive one share of Common Stock issued pursuant
to Article 7 hereof, subject to any restrictions and
conditions as are established pursuant to such Article 7.
2.34
Service
Provider
. Service Provider means
a consultant or other person the Administrator authorizes to
become a Participant in the Plan and who provides services to
(i) the Company, (ii) an Affiliated Company, or
(iii) any other business venture designated by the
Administrator in which the Company or an Affiliated Company has
a significant ownership interest.
2.35
Stock Appreciation
Right
. Stock Appreciation Right
means a contractual right granted to a Participant under
Section 8 hereof the exercise of which entitles the
Participant to receive shares of the Companys Common Stock
having a Fair Market Value equal to the difference between the
Base Value per share, as set forth in Section 8.3 below, of
the right and the Fair Market Value of a share of Common Stock
multiplied by the number of shares subject to the right at such
time, subject to such conditions, as are set forth in this Plan
and the applicable Stock Appreciation Rights Award Agreement.
2.36
Stock Appreciation Right
Agreement
. Stock Appreciation Right
Agreement means the written agreement entered into between
the Company and a Participant evidencing the issuance of Stock
Appreciation Rights under the Plan.
2.37
Stock Appreciation Rights
Holder
. Stock Appreciation Rights
Holder means any Participant who holds a Stock
Appreciation Right.
2.38
10%
Stockholder
. 10% Stockholder
means a person who, as of a relevant date, owns or is deemed to
own (by reason of the attribution rules applicable under
Section 424(d) of the Code) stock possessing more than 10%
of the total combined voting power of all classes of stock of
the Company or of an Affiliated Company.
ARTICLE 3.
ELIGIBILITY
3.1
Incentive Options
. Only
employees of the Company or of an Affiliated Company (including
members of the Board if they are employees of the Company or of
an Affiliated Company) are eligible to receive Incentive Options
under the Plan.
3.2
Nonqualified Options, Stock Appreciation
Rights and Restricted Stock Awards
. Employees
of the Company or of an Affiliated Company, members of the Board
(whether or not employed by the Company or an
4
Affiliated Company), and Service Providers are eligible to
receive Nonqualified Options, Stock Appreciation Rights or
Restricted Stock Awards under the Plan.
3.3
Section 162(m)
Limitation
. In no event shall any Participant
be granted Options, Stock Appreciation Rights or Restricted
Stock in any one calendar year pursuant to which the aggregate
number of shares of Common Stock that may be acquired thereunder
exceeds Five Million (5,000,000) shares, subject to adjustment
as to the number and kind of shares pursuant to Section 4.2
hereof.
ARTICLE 4.
PLAN SHARES
4.1
Shares Subject to the Plan
.
(a) The initial number of shares of Common Stock available
for issuance under the Plan shall be Ten Million (10,000,000).
Commencing on January 1, 2010, and each
January 1st thereafter, the number of shares of Common
Stock available for issuance under the Plan shall increase by
the greater of (i) Two Million Five Hundred Thousand
(2,500,000) and (ii) a number of shares such that the total
number of shares of Common Stock available for issuance under
the Plan shall equal thirty percent (30%) of the then number of
shares of the Companys Common Stock issued and outstanding.
(b) To the extent that a share of Common Stock awarded
pursuant to the terms of the Plan terminates, expires, or lapses
for any reason, any shares of Common Stock subject to the award
shall again be available for the grant of a new award pursuant
to the Plan. Additionally, any shares of Common Stock tendered
or withheld to satisfy the grant or exercise price or tax
withholding obligation pursuant to any award shall again be
available for grant or issuance pursuant to the Plan. To the
extent permitted by applicable law or any exchange rule, shares
of Common Stock issued in assumption of, or in substitution for,
any outstanding awards of any entity acquired in any form of
combination by the Company or any Subsidiary shall not be
counted against shares of Common Stock available for grant
pursuant to this Plan. If shares of Common Stock issued pursuant
to awards under the Plan are repurchased by the Company at no
less than their original purchase price, such shares of Common
Stock shall become available for future grant under the Plan
(unless the Plan has terminated).
(c) Notwithstanding the provisions of this
Section 4.1, no shares of Common Stock may again be
optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an Incentive Stock
Option under Code Section 422.
4.2
Changes in Capital
Structure
. In the event that the outstanding
shares of Common Stock are hereafter increased or decreased or
changed into or exchanged for a different number or kind of
shares or other securities of the Company by reason of a
recapitalization, stock split, reverse stock split,
reclassification, stock dividend, or other change in the capital
structure of the Company, then appropriate adjustments shall be
made by the Administrator to the aggregate number and kind of
shares subject to this Plan, the number and kind of shares and
the price per share subject to outstanding Option Agreements,
Stock Appreciation Rights Agreements and Restricted Stock Award
Agreements and the limits on the number of shares under
Sections 3.3 and 4.2 all in order to preserve, as nearly as
practical, but not to increase, the benefits to Participants.
4.3
Limitation of the Issuance of Incentive
Options
. A total number of shares of Common
Stock that may be issued as Incentive Stock Options is equal to
10,000,000 shares of Common Stock and shall increase each
January 1
st
beginning on January 1, 2010 by 2,500,000 shares per year.
ARTICLE 5.
OPTIONS
5.1
Grant of Stock
Options
. The Administrator shall have the
right to grant pursuant to this Plan, Options subject to such
terms, restrictions and conditions as the Administrator may
determine at the time of grant. Such conditions may include, but
are not limited to, continued employment or the achievement of
specified performance goals or objectives established by the
Committee with respect to one or more Performance Criteria.
5
5.2
Option Agreements
. Each
Option granted pursuant to this Plan shall be evidenced by an
Option Agreement which shall specify the number of shares
subject thereto, vesting provisions relating to such Option, the
Exercise Price per share, when such Option may be exercised, and
whether the Option is an Incentive Option or Nonqualified
Option. As soon as is practical following the grant of an
Option, an Option Agreement shall be duly executed and delivered
by or on behalf of the Company to the Optionee to whom such
Option was granted. Each Option Agreement shall be in such form
and contain such additional terms and conditions, not
inconsistent with the provisions of this Plan, as the
Administrator shall, from time to time, deem desirable.
5.3
Exercise Price
. The
Exercise Price per share of Common Stock covered by each Option
shall be determined by the Administrator, subject to the
following: (a) the Exercise Price of an Incentive Option
shall not be less than 100% of Fair Market Value on the date the
Incentive Option is granted, and (b) if the person to whom
an Incentive Option is granted is a 10% Stockholder on the date
of grant, the Exercise Price shall not be less than 110% of Fair
Market Value on the date the Incentive Option is granted.
However, an Incentive Stock Option may be granted with an
exercise price lower than that set forth in the preceding
sentence if such Incentive Stock Option is granted pursuant to
an assumption or substitution for another option in a manner
satisfying the provisions of Section 424 of the Code.
5.4
Payment of Exercise
Price
. Payment of the Exercise Price shall be
made upon exercise of an Option and may be made, in the
discretion of the Administrator, subject to any legal
restrictions, by: (a) cash; (b) check; (c) the
surrender of shares of Common Stock owned by the Optionee, which
surrendered shares shall be valued at Fair Market Value as of
the date of such exercise; (d) a Net Exercise,
which provides that, without the payment of cash, the Optionee
receives that number of shares of Common Stock otherwise
issuable upon exercise of the Option less that number of shares
having an aggregate trading price on the trading day of exercise
equal to the sum of the aggregate Exercise Price that would have
been paid by the Optionee to acquire such shares and the
combined income tax withholding and employment taxes payable by
the Optionee, (e) the surrender and cancellation of then
vested options, which shall mean the simultaneous Net Exercise
of this Option, as described in (d) of this
Section 5.4, and the surrender of the shares acquired
thereby for the purpose of exercising any additional vested
Options that the Optionee holds in accordance with the method
described in (c) of this Section 5.4, to purchase
shares of common stock, owned by the Optionee, which surrendered
and cancelled options shall be valued at the Common Stocks
Fair Market Value as of the date of such exercise minus the
exercise price of such option; (f) the cancellation of
indebtedness of the Company to the Optionee; (g) the waiver
of compensation due or accrued to the Optionee for services
rendered; (h) provided that a public market for the Common
Stock exists, a same day sale commitment from the
Optionee and an FINRA Dealer whereby the Optionee irrevocably
elects to exercise the Option and to sell a portion of the
shares so purchased to pay for the Exercise Price and whereby
the FINRA Dealer irrevocably commits upon receipt of such shares
to forward the Exercise Price directly to the Company;
(i) provided that a public market for the Common Stock
exists, a margin commitment from the Optionee and an
FINRA Dealer whereby the Optionee irrevocably elects to exercise
the Option and to pledge the shares so purchased to the FINRA
Dealer in a margin account as security for a loan from the FINRA
Dealer in the amount of the Exercise Price, and whereby the
FINRA Dealer irrevocably commits upon receipt of such shares to
forward the Exercise Price directly to the Company; or
(j) any combination of the foregoing methods of payment or
any other consideration or method of payment as shall be
permitted by applicable law.
5.5
Term and Termination of
Options
. Except for issuances of Incentive
Options to 10% Stockholders, the term and provisions for
termination of each Option shall be as fixed by the
Administrator, but no Option may be exercisable more than ten
(10) years after the date it is granted. With respect to
the issuance of Incentive Options to 10% Stockholders, the term
and provisions for termination of each such Incentive Option
shall not exceed five (5) years after the date it is
granted.
5.6
Vesting and Exercise of
Options
. Each Option shall vest and become
exercisable in one or more installments at such time or times
and subject to such conditions, including without limitation the
achievement of specified performance goals or objectives
established with respect to one or more Performance Criteria, as
shall be determined by the Administrator.
5.7
Annual Limit on Incentive
Options
. To the extent required for
incentive stock option treatment under
Section 422 of the Code, to the extent that the aggregate
Fair Market Value (determined as of the time of
6
grant) of the Common Stock with respect to which Incentive
Options granted under this Plan and any other plan of the
Company or any Affiliated Company become exercisable for the
first time by an Optionee during any calendar year is in excess
of the limit provided in Section 422(d) of the Code. Such
excess should not be treated as Incentive Stock Options.
5.8
Nontransferability of
Options
. Except as otherwise provided in this
Section 5.8, or as specifically provided in the Option
Agreement or as authorized by the Administrator, Options shall
not be assignable or transferable except by will, the laws of
descent and distribution or pursuant to a DRO entered by a court
in settlement of marital property rights, and during the life of
the Optionee, Options shall be exercisable only by the Optionee.
At the discretion of the Committee and in accordance with rules
it establishes from time to time, Optionees may be permitted to
transfer some or all of their Nonqualified Options to one or
more family members, which is not a prohibited
transfer for value, provided that (i) the Optionee
(or such Optionees estate or representative) shall remain
obligated to satisfy all income or other tax withholding
obligations associated with the exercise of such Nonqualified
Option; (ii) the Optionee shall notify the Company in
writing that such transfer has occurred and disclose to the
Company the name and address of the family member or
family members and their relationship to the
Optionee, and (iii) such transfer shall be effected
pursuant to transfer documents in a form approved by the
Committee. For purposes of the foregoing, the terms family
members and prohibited transfer for value have
the meaning ascribed to them in the General Instructions to
form S-8
(or any successor form) promulgated under the Securities Act of
1933, as amended.
5.9
Rights as a
Stockholder
. An Optionee or permitted
transferee of an Option shall have no rights or privileges as a
stockholder with respect to any shares covered by an Option
until such Option has been duly exercised and certificates
representing shares purchased upon such exercise have been
issued to such person.
5.10
Repricing of
Options
. The Administrator may cause the
cancellation, substitution, exchange or amendment of an Option
Agreement that would have the effect of reducing the exercise
price of such an Option previously granted under the Plan, or
otherwise approve any modification to such an Option that would
be treated as a repricing under the then applicable
rules, regulations or listing requirements adopted by the Nasdaq
Stock Market without approval by the Companys stockholders.
5.11
Compliance with Code
Section 409A
. Notwithstanding anything
in this Article 5 to the contrary, all Option Agreements
are intended to satisfy the requirements of Code
Section 409A, or an applicable exemption therefrom, as
determined by the Committee.
ARTICLE 6.
RESTRICTED STOCK
6.1
Issuance of Restricted
Stock
. The Administrator shall have the right
to issue pursuant to this Plan, at a Purchase Price determined
by the Administrator, if any, shares of Common Stock subject to
such terms, restrictions and conditions as the Administrator may
determine at the time of grant. Such conditions may include, but
are not limited to, continued employment or the achievement of
specified performance goals or objectives established by the
Committee with respect to one or more Performance Criteria,
which require the Committee to certify in writing whether and
the extent to which such performance goals were achieved before
such restrictions are considered to have lapsed.
6.2
Restricted Stock
Agreements
. A Participant shall have no
rights with respect to the shares of Restricted Stock covered by
a Restricted Stock Award Agreement until the Participant has
paid the full Purchase Price, if any, to the Company in the
manner set forth in Section 6.3(b) hereof and has executed
and delivered to the Company the applicable Restricted Stock
Award Agreement. Each Restricted Stock Award Agreement shall be
in such form, and shall set forth the Purchase Price, if any,
and such other terms, conditions and restrictions of the
Restricted Stock Award Agreement, not inconsistent with the
provisions of this Plan, as the Administrator shall, from time
to time, deem desirable. Each such Restricted Stock Award
Agreement may be different from each other Restricted Stock
Award Agreement.
7
6.3
Purchase Price
.
(a)
Amount.
Restricted
Stock may be issued to Participants for such consideration as is
determined by the Administrator in its sole discretion,
including no consideration or such minimum consideration as may
be required by applicable law.
(b)
Payment.
Payment of the
Purchase Price, if any, may be made, in the discretion of the
Administrator, subject to any legal restrictions, by:
(a) cash; (b) check; (c) the surrender of shares
of Common Stock owned by the Participant, which surrendered
shares shall be valued at Fair Market Value as of the date of
such acceptance; (d) the cancellation of indebtedness of
the Company to the Participant; (e) the waiver of
compensation due or accrued to the Participant for services
rendered; or (f) any combination of the foregoing methods
of payment or any other consideration or method of payment as
shall be permitted by applicable law.
6.4
Vesting of Restricted
Stock
. Each Restricted Stock Award shall vest
and become exercisable in one or more installments at such time
or times and subject to such condition, including without
limitation the achievement of specified performance goals or
objectives established with respect to one or more Performance
Criteria, as shall be determined by the Administrator.
6.5
Rights as a
Stockholder
. Upon complying with the
provisions of Section 6.2 hereof, a Participant shall have
the rights of a stockholder with respect to the Restricted Stock
acquired pursuant to a Restricted Stock Award Agreement,
including voting and dividend rights, subject to the terms,
restrictions and conditions as are set forth in such Restricted
Stock Award Agreement. Unless the Administrator shall determine
otherwise, certificates evidencing shares of Restricted Stock
shall remain in the possession of the Company until such shares
have vested in accordance with the terms of the Restricted Stock
Award Agreement.
6.6
Restrictions
. Until
vested, shares of Restricted Stock may not be sold, pledged or
otherwise encumbered or disposed of and shall not be assignable
or transferable except by will, the laws of descent and
distribution or pursuant to a DRO entered by a court in
settlement of marital property rights, except as specifically
provided in the Restricted Stock Award Agreement or as
authorized by the Administrator. In the event of termination of
a Participants employment, service as a director of the
Company or Service Provider status for any reason whatsoever
(including death or Disability), the Restricted Stock Award
Agreement may provide, in the discretion of the Administrator,
that the Company may, at the discretion of the Administrator,
exercise a Repurchase Right to repurchase at the original
Purchase Price the shares of Restricted Stock that have not
vested as of the date of termination.
However, if, with respect to such unvested Restricted Stock the
Participant paid a Purchase Price, the Administrator shall have
the right, exercisable at the discretion of the Administrator,
to exercise a Repurchase Right to cancel such unvested
Restricted Stock upon payment to the Participant of the original
Purchase Price. The Participant shall forfeit such unvested
Restricted Stock upon the Administrators exercise of such
right. However, if, with respect to such unvested Restricted
Stock the Participant paid a Purchase Price, the Administrator
shall have the right, exercisable at the discretion of the
Administrator, to exercise a Repurchase Right to cancel such
unvested Restricted Stock upon payment to the Participant of the
original Purchase Price. The Participant shall forfeit such
unvested Restricted Stock upon the Administrators exercise
of such right.
6.7
Compliance with Code
Section 409A
. Notwithstanding anything
in this Article 6 to the contrary, all Restricted Stock
Award Agreements are intended to satisfy the requirements of
Code Section 409A, or an applicable exemption therefrom, as
determined by the Committee.
ARTICLE 7.
RESTRICTED STOCK UNITS
7.1
Grants of Restricted Stock
Units
. The Administrator shall have the right
to grant Restricted Stock Units pursuant to this Plan, subject
to such terms, restrictions and conditions as the Administrator
may determine at the time of grant. Such conditions may include,
but are not limited to, continued employment or the achievement
of specified performance goals or objectives established by the
Committee with respect to one or more Performance Criteria.
8
7.2
Restricted Stock Unit
Agreements
. A Participant shall have no
rights with respect to the Restricted Stock Units covered by a
Restricted Stock Unit Award Agreement until the Participant has
executed and delivered to the Company the applicable Restricted
Stock Unit Award Agreement. Each Restricted Stock Unit Award
Agreement shall be in such form, and shall set forth the
Purchase Price, if any, and such other terms, conditions and
restrictions of the Restricted Stock Unit Award Agreement, not
inconsistent with the provisions of this Plan, as the
Administrator shall, from time to time, deem desirable. Each
such Restricted Stock Unit Award Agreement may be different from
each other Restricted Stock Unit Award Agreement.
7.3
Purchase Price
.
(a)
Amount.
Restricted
Stock Units may be issued to Participants for such consideration
as is determined by the Administrator in its sole discretion,
including no consideration or such minimum consideration as may
be required by applicable law.
(b)
Payment.
Payment of the
Purchase Price, if any, may be made, in the discretion of the
Administrator, subject to any legal restrictions, by:
(a) cash; (b) check; (c) the surrender of shares
of Common Stock owned by the Participant, which surrendered
shares shall be valued at Fair Market Value as of the date of
such acceptance; (d) the cancellation of indebtedness of
the Company to the Participant; (e) the waiver of
compensation due or accrued to the Participant for services
rendered; or (f) any combination of the foregoing methods
of payment or any other consideration or method of payment as
shall be permitted by applicable law.
7.4
Vesting of Restricted Stock
Units
. Each Restricted Stock Unity Award vest
and become exercisable in one or more installments at such time
or times and subject to such condition, including without
limitation the achievement of specified performance goals or
objectives established with respect to one or more Performance
Criteria, as shall be determined by the Administrator.
7.5
Rights as a
Stockholder
. Holders of Restricted Stock
Units shall not be entitled to vote or to receive dividends
unless or until they become owners of the shares of Common Stock
pursuant to their Restricted Stock Unit Award Agreement and the
terms and conditions of the Plan.
7.6
Restrictions
. Until
vested, Restricted Stock Units may not be sold, pledged or
otherwise encumbered or disposed of and shall not be assignable
or transferable except by will, the laws of descent and
distribution or pursuant to a DRO entered by a court in
settlement of marital property rights, except as specifically
provided in the Restricted Stock Unit Award Agreement or as
authorized by the Administrator. In the event of termination of
a Participants employment, service as a director of the
Company or Service Provider status for any reason whatsoever
(including death or Disability), the Restricted Stock Unit Award
Agreement may provide that all Restricted Stock Units that have
not vested as of such date shall be automatically forfeited by
the Participant. However, if, with respect to such unvested
Restricted Stock Units the Participant paid a Purchase Price,
the Administrator shall have the right, exercisable at the
discretion of the Administrator, to exercise a Repurchase Right
to cancel such unvested Restricted Stock Units upon payment to
the Participant of the original Purchase Price. The Participant
shall forfeit such unvested Restricted Stock Units upon the
Administrators exercise of such right.
7.7
Compliance with Code
Section 409A
. Notwithstanding anything
in this Article 7 to the contrary, all Restricted Stock
Award Agreements are intended to satisfy the requirements of
Code Section 409A, or an applicable exemption therefrom, as
determined by the Committee.
ARTICLE 8.
STOCK APPRECIATION RIGHTS
8.1
Grant of Stock Appreciation
Rights
. A Stock Appreciation Right may be
granted to any Participant selected by the Committee. Stock
Appreciation Rights may be granted on a basis that allows for
the exercise of the right by the Participant or that provides
for the automatic settlement of the right upon a specified date
or event. Stock Appreciation Rights shall be exercisable or
subject to settlement at such time or times and upon conditions
as may be approved by the Committee, provided that the Committee
may accelerate the exercisability or settlement of a Stock
Appreciation Right at any time.
9
8.2
Stock Appreciation Right
Agreements
. Each Stock Appreciation Right
granted pursuant to this Plan shall be evidenced by a Stock
Appreciation Right Agreement, which shall specify the number of
shares subject thereto, vesting provisions relating to such
Stock Appreciation Right and the Base Value per share. As soon
as is practicable following the grant of a Stock Appreciation
Right, a Stock Appreciation Right Agreement shall be duly
executed and delivered by or on behalf of the Company to the
Participant to whom such Stock Appreciation Right was granted.
Each Stock Appreciation Right Agreement shall be in such form
and contain such additional terms and conditions, not
inconsistent with the provisions of this Plan, as the
Administrator shall, from time to time, deem desirable.
8.3
Base Value
. The Base
Value per share of Common Stock covered by each Stock
Appreciation Right shall be determined by the Administrator.
8.4
Term and Termination of Stock Appreciation
Rights
. The term and provisions for
termination of each Stock Appreciation Right shall be fixed by
the Administrator, but no Stock Appreciation Right may be
exercisable or subject to settlement more than ten
(10) years after the date it is granted.
8.5
Vesting of Stock Appreciation
Rights
. Each Stock Appreciation Right shall
vest and become exercisable in one or more installments at such
time or times and subject to such conditions, including without
limitation the achievement of specified performance goals or
objectives established with respect to one or more Performance
Criteria, as shall be determined by the Administrator. A Stock
Appreciation Right will be exercisable or payable at such time
or times as determined by the Committee, provided that the
maximum term of a Stock Appreciation Right shall be ten
(10) years from the Date of Grant.
8.6
Exercise or Settlement of Stock
Appreciation Rights
. A Stock Appreciation
Right will entitle the holder, upon exercise or other settlement
of the Stock Appreciation Right, as applicable, to receive an
amount determined by multiplying: (i) the excess of the
Fair Market Value of a share of Common Stock on the date of
exercise or settlement of the Stock Appreciation Right over the
Base Value of such Stock Appreciation Right, by (ii) the
number of shares as to which such Stock Appreciation Right is
exercised or settled. Upon such exercise or settlement, the
Company shall issue to the holder of the Stock Appreciation
Right a number of shares of Common Stock determined by dividing
the amount determined under the preceding sentence by the Fair
Market Value of such shares on the date of exercise or
settlement, subject to applicable tax withholding requirements
and to such conditions, as are set forth in this Plan and the
applicable Stock Appreciation Rights Award Agreement.
8.7
Repricing of Stock Appreciation Right
Awards
. The Administrator may cause the
cancellation, substitution, exchange or amendment of a Stock
Appreciation Right Award that would have the effect of reducing
the base price of such a Stock Appreciation Right previously
granted under the Plan, or otherwise approve any modification to
such a Stock Appreciation Right Award that would be treated as a
repricing under the then applicable rules,
regulations or listing requirements adopted by the Nasdaq Stock
Market, without approval by the Companys stockholders.
8.8
Nontransferability of Stock Appreciation
Rights
. Except as otherwise provided in this
Section 8.8, or as specifically provided in the Stock
Appreciation Rights Agreement or as authorized by the
Administrator, Stock Appreciation Rights shall not be assignable
or transferable except by will, the laws of descent and
distribution or pursuant to a DRO entered by a court in
settlement of marital property rights, and during the life of
the holder of Stock Appreciation Rights, Stock Appreciation
Rights shall be exercisable only by such holder. At the
discretion of the Committee and in accordance with rules it
establishes from time to time, holders of Stock Appreciation
Rights may be permitted to transfer some or all of their Stock
Appreciation Rights to one or more family members,
which is not a prohibited transfer for value,
provided that (i) the Stock Appreciation Rights holder (or
such holders estate or representative) shall remain
obligated to satisfy all income or other tax withholding
obligations associated with the exercise of such Stock
Appreciation Right; (ii) the Stock Appreciation Rights
holder shall notify the Company in writing that such transfer
has occurred and disclose to the Company the name and address of
the family member or family members and
their relationship to the holder, and (iii) such transfer
shall be effected pursuant to transfer documents in a form
approved by the Committee. For purposes of the foregoing, the
terms family members and prohibited transfer
for value have the meaning ascribed to them in the General
Instructions to
form S-8
(or any successor form) promulgated under the Securities Act of
1933, as amended.
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8.9
Rights as a
Stockholder
. A Stock Appreciation Right
holder or permitted transferee of a Stock Appreciation Right
holder shall have no rights or privileges as a stockholder with
respect to any shares covered by a Stock Appreciation Right
until such Stock Appreciation Right has been duly exercised or
settled and certificates representing shares issued upon such
exercise or settlement have been issued to such person.
8.10
Compliance with Code
Section 409A
. Notwithstanding anything
in this Article 8 to the contrary, all Stock Appreciation
Rights Awards are intended to satisfy the requirements of Code
Section 409A, or an applicable exemption therefrom, as
determined by the Committee.
ARTICLE 9.
ADMINISTRATION OF THE PLAN
9.1
Administrator
. Authority
to control and manage the operation and administration of the
Plan shall be vested in the Board, which may delegate such
responsibilities in whole or in part to a committee consisting
of two (2) or more members of the Board (the
Committee). Members of the Committee may be
appointed from time to time by, and shall serve at the pleasure
of, the Board. The Board may limit the composition of the
Committee to those persons necessary to comply with the
requirements of Section 162(m) of the Code and
Section 16 of the Exchange Act. As used herein, the term
Administrator means the Board or, with respect to
any matter as to which responsibility has been delegated to the
Committee, the term Administrator shall mean the Committee. The
Committee may delegate, the awarding of awards to a single
officer or director with certain restrictions that it may
designate.
9.2
Powers of the
Administrator
. In addition to any other
powers or authority conferred upon the Administrator elsewhere
in the Plan or by law, the Administrator shall have full power
and authority: (a) to determine the persons to whom, and
the time or times at which, Incentive Options, Nonqualified
Options, Stock Appreciation Rights or Restricted Stock Awards
shall be granted, the number of shares to be represented by each
Option or Stock Appreciation Right and the number of shares of
Common Stock to be subject to Restricted Stock Awards, and the
consideration to be received by the Company upon the exercise of
such Options or sale of the Restricted Stock or the Restricted
Stock Units governed by such Restricted Stock Awards;
(b) to interpret the Plan; (c) to create, amend or
rescind rules and regulations relating to the Plan; (d) to
determine the terms, conditions and restrictions contained in,
and the form of, Option Agreements, Stock Appreciation Right
Agreements and Restricted Stock Award Agreements; (e) to
determine the identity or capacity of any persons who may be
entitled to exercise a Participants rights under any
Option Agreement, Stock Appreciation Right Agreement or
Restricted Stock Award Agreement under the Plan; (f) to
correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Option Agreement, Stock
Appreciation Right Agreement or Restricted Stock Award
Agreement; (g) to accelerate the vesting of any Option,
Stock Appreciation Right Agreement, or Restricted Stock Award;
(h) to extend the expiration date of any Option or Stock
Appreciation Right Agreement; (i) to amend outstanding
Option Agreements, Stock Appreciation Right Agreements and
Restricted Stock Award Agreements to provide for, among other
things, any change or modification which the Administrator could
have included in the original Agreement or in furtherance of the
powers provided for herein; and (j) to make all other
determinations necessary or advisable for the administration of
the Plan, but only to the extent not contrary to the express
provisions of the Plan. Any action, decision, interpretation or
determination made in good faith by the Administrator in the
exercise of its authority conferred upon it under the Plan shall
be final and binding on the Company and all Participants.
9.3
Limitation on
Liability
. No employee of the Company or
member of the Board or Committee shall be subject to any
liability with respect to duties under the Plan unless the
person acts fraudulently or in bad faith. To the extent
permitted by law, the Company shall indemnify each member of the
Board or Committee, and any employee of the Company with duties
under the Plan, who was or is a party, or is threatened to be
made a party, to any threatened, pending or completed
proceeding, whether civil, criminal, administrative or
investigative, by reason of such persons conduct in the
performance of duties under the Plan.
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ARTICLE 10.
CHANGE IN CONTROL
10.1
Options and Stock Appreciation
Rights
. In order to preserve a
Participants rights with respect to any outstanding
Options and Stock Appreciation Rights in the event of a Change
in Control of the Company:
(a) Vesting of all outstanding Options and Stock
Appreciation Rights shall accelerate automatically effective as
of immediately prior to the consummation of the Change in
Control unless the Options and Stock Appreciation Rights are to
be assumed by the acquiring or successor entity (or parent
thereof) or new options or new stock appreciation rights under a
new stock incentive program (New Incentives) are to
be issued in exchange therefor, as provided in
subsection (b) below.
(b) Vesting of outstanding Options and Stock Appreciation
Right Agreements shall not accelerate if and to the extent that:
(i) the Options and Stock Appreciation Rights (including
the unvested portion thereof) are to be assumed by the acquiring
or successor entity (or parent thereof) or new options and stock
appreciation rights of comparable value are to be issued in
exchange therefor pursuant to the terms of the Change in Control
transaction, or (ii) the Options and Stock Appreciation
Rights (including the unvested portions thereof) are to be
replaced by the acquiring or successor entity (or parent
thereof) with New Incentives containing such terms and
provisions as the Administrator in its discretion may consider
equitable. If outstanding Options or Stock Appreciation Rights
are assumed, or if New Incentives of comparable value are issued
in exchange therefor, then each such Option and Stock
Appreciation Right or new stock option or new stock appreciation
right shall be appropriately adjusted, concurrently with the
Change in Control, to apply to the number and class of
securities or other property that the Optionee or Stock
Appreciation Rights Holder would have received pursuant to the
Change in Control transaction in exchange for the shares
issuable upon exercise of the Option or Stock Appreciation Right
had the Option or Stock Appreciation Right been exercised
immediately prior to the Change in Control, and appropriate
adjustment also shall be made to the Exercise Price such that
the aggregate Exercise Price of each such Option or new option
and the aggregate Base Value of each such Stock Appreciation
Right or new stock appreciation right shall remain the same as
nearly as practicable.
(c) If any Option or Stock Appreciation Right is assumed by
an acquiring or successor entity (or parent thereof) or a New
Incentive is issued in exchange therefor pursuant to the terms
of a Change in Control transaction, the vesting of the Option,
the Stock Appreciation Right or the New Incentive shall
accelerate if and at such time as the Optionees or Stock
Appreciation Rights Holders service as an employee,
director, officer, consultant or other service provider to the
acquiring or successor entity (or a parent or subsidiary
thereof) is terminated for any reason whatsoever (including
death or disability) within twelve (12) months following
consummation of a Change in Control.
(d) If vesting of outstanding Options will accelerate
pursuant to subsection (a) above, the Administrator in its
discretion may provide, in connection with the Change in Control
transaction, for the purchase or exchange of each Option for an
amount of cash or other property having a value equal to the
difference (or spread) between: (x) the value
of the cash or other property that the Optionee would have
received pursuant to the Change in Control transaction in
exchange for the shares issuable upon exercise of the Option had
the Option been exercised immediately prior to the Change in
Control, and (y) the Exercise Price of the Option.
(e) The Administrator shall have the discretion to provide
in each Option Agreement and Stock Appreciation Rights Agreement
other terms and conditions that relate to (i) vesting of
such Option or Stock Appreciation Right in the event of a Change
in Control, and (ii) assumption of such Options and Stock
Appreciation Rights or issuance of comparable securities or New
Incentives in the event of a Change in Control. The
aforementioned terms and conditions may vary in each Option
Agreement and Stock Appreciation Agreement, and may be different
from and have precedence over the provisions set forth in
Sections 10.1(a)-10.1(d)
above.
(f) Outstanding Options and Stock Appreciation Rights shall
terminate and cease to be exercisable upon consummation of a
Change in Control except to the extent that the Options or Stock
Appreciation Rights are assumed by the successor entity (or
parent thereof) pursuant to the terms of the Change in Control
transaction.
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(g) If outstanding Options or Stock Appreciation Rights
will not be assumed by the acquiring or successor entity (or
parent thereof), the Administrator shall cause written notice of
a proposed Change in Control transaction to be given to
Optionees and Stock Appreciation Rights Holders not less than
fifteen (15) days prior to the anticipated effective date
of the proposed transaction.
10.2
Restricted Stock
Awards
. In order to preserve a
Participants rights with respect to any outstanding
Restricted Stock Awards in the event of a Change in Control of
the Company:
(a) All Repurchase Rights shall automatically terminate
immediately prior to the consummation of such Change in Control
and any shares of Restricted Stock or Restricted Stock Units
subject to such terminated Repurchase Rights, or Restricted
Stock Units, whether or not subject to such terminated
Repurchase Rights shall immediately vest in full, except to the
extent that in connection with such Change in Control, the
acquiring or successor entity (or parent thereof) provides for
the continuance or assumption of Restricted Stock Award
Agreements or the substitution of new agreements of comparable
value covering shares of a successor corporation, with
appropriate adjustments as to the number and kind of shares and
purchase price.
(b) If, upon a Change in Control, the acquiring or
successor entity (or parent thereof) assumes such Restricted
Stock Award Agreement or substitutes new agreements of
comparable value covering shares of a successor corporation
(with appropriate adjustments as to the number and kind of
shares and purchase price), then any Repurchase Right provided
for in such Restricted Stock Award Agreement shall terminate,
and the shares of Common Stock subject to the terminated
Repurchase Right or any substituted shares shall immediately
vest in full, if the Participants service as an employee,
director, officer, consultant or other service provider to the
acquiring or successor entity (or a parent or subsidiary
thereof) is terminated for any reason whatsoever (including
death or disability) within twelve (12) months following
consummation of a Change in Control.
(c) The Administrator shall have the discretion to provide
in each Restricted Stock Award Agreement other terms and
conditions that relate to (i) vesting of such Restricted
Stock Award in the event of a Change in Control, and
(ii) issuance of comparable securities or New Incentives in
the event of a Change in Control. The aforementioned terms and
conditions may vary in each Restricted Stock Award Agreement,
and may be different from and have precedence over the
provisions set forth in 10.2(a) 10.2(b) above.
ARTICLE 11.
AMENDMENT AND TERMINATION OF THE PLAN
11.1
Amendments
. The Board
may from time to time alter, amend, suspend or terminate the
Plan in such respects as the Board may deem advisable. No such
alteration, amendment, suspension or termination shall be made
which shall substantially affect or impair the rights of any
Participant under an outstanding Option Agreement or Restricted
Stock Award Agreement without such Participants consent.
The Board may alter or amend the Plan to comply with
requirements under the Code relating to Incentive Options or
other types of options which give Optionees more favorable tax
treatment than that applicable to Options granted under this
Plan as of the date of its adoption. Upon any such alteration or
amendment, any outstanding Option granted hereunder may, if the
Administrator so determines and if permitted by applicable law,
be subject to the more favorable tax treatment afforded to an
Optionee pursuant to such terms and conditions.
11.2
Plan
Termination
. Unless the Plan shall
theretofore have been terminated, the Plan shall terminate on
the tenth (10th) anniversary of the Effective Date and no
Options or Restricted Stock Awards may be granted under the Plan
thereafter, but Option Agreements and Restricted Stock Award
Agreements then outstanding shall continue in effect in
accordance with their respective terms.
ARTICLE 12.
TAX WITHHOLDING
12.1
Withholding
. The
Company shall have the power to withhold, or require a
Participant to remit to the Company, an amount sufficient to
satisfy any applicable Federal, state, and local tax withholding
requirements with
13
respect to any Options exercised or, with respect to the
issuance of Restricted Stock, the date that the shares are
issued, if the Purchaser makes the election set forth in Code
Section 83(b), or, if the Purchaser does not make such
election, then, then with respect to the Restricted Stock Award,
as of the date that the applicable restrictions set forth in the
Restricted Stock Award Agreement and the Plan lapse. To the
extent permissible under applicable tax, securities and other
laws, the Administrator may, in its sole discretion and upon
such terms and conditions as it may deem appropriate, permit a
Participant to satisfy his or her obligation to pay any such
tax, in whole or in part, by (a) directing the Company to
apply shares of Common Stock to which the Participant is
entitled as a result of the exercise of an Option or as a result
of the purchase of or lapse of restrictions on Restricted Stock
Awards or (b) delivering to the Company shares of Common
Stock owned by the Participant. The shares of Common Stock so
applied or delivered in satisfaction of the Participants
tax withholding obligation shall be valued at their Fair Market
Value as of the date of measurement of the amount of income
subject to withholding.
ARTICLE 13
MISCELLANEOUS
13.1
Benefits Not
Alienable
. Other than as provided above,
benefits under the Plan may not be assigned or alienated,
whether voluntarily or involuntarily. Any unauthorized attempt
at assignment, transfer, pledge or other disposition shall be
without effect.
13.2
No Enlargement of Employee
Rights
. This Plan is strictly a voluntary
undertaking on the part of the Company and shall not be deemed
to constitute a contract between the Company and any Participant
to be consideration for, or an inducement to, or a condition of,
the employment of any Participant. Nothing contained in the Plan
shall be deemed to give the right to any Participant to be
retained as an employee of the Company or any Affiliated Company
or to interfere with the right of the Company or any Affiliated
Company to discharge any Participant at any time.
13.3
Application of
Funds
. The proceeds received by the Company
from the sale of Common Stock pursuant to Option Agreements and
Restricted Stock Award Agreements, except as otherwise provided
herein, will be used for general corporate purposes.
13.4
Annual Reports
. During
the term of this Plan, if required by applicable law or the
rules and regulations of a national securities exchange, the
Company will furnish to each Participant who does not otherwise
receive such materials, copies of all reports, proxy statements
and other communications that the Company distributes generally
to its stockholders.
13.5
Governing Law
. The Plan
and all agreements thereto shall be construed in accordance with
and governed by the laws of the State of California.
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