As filed with the Securities and Exchange Commission on September 2, 2011
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
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(I.R.S. Employer
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incorporation or organization)
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Identification Number)
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11500 S. Eastern Ave., Ste. 240
Henderson, Nevada 89052
(Address of Principal Executive Offices; Zip Code)
Spectrum Pharmaceuticals, Inc. Deferred Compensation Plan
(Full title of the plan)
Rajesh C. Shrotriya, M.D.
Chairman of the Board, Chief Executive Officer and President
11500 S. Eastern Ave., Ste. 240
Henderson, Nevada 89052
(Name and address of agent for service)
(702) 835-6300
(Telephone number, including area code, of agent for service)
Copies to:
Shivbir S. Grewal, Esq.
Marc G. Alcser, 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.
(Check one):
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Large accelerated filer
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Accelerated filer
þ
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Non-accelerated filer
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Smaller reporting company
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CALCULATION OF REGISTRATION FEE
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Proposed
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Proposed
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Maximum
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Maximum
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Amount of
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Amount to be
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Offering Price
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Aggregate
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Registration Fee
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Title of Each Class of Securities to
be Registered
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Registered
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Per Share
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Offering Price
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(2)
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Deferred
Compensation
Obligations(1)
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$8,706,298
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N/A___
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$8,706,298
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$1,010.80
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(1)
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The deferred compensation obligations being registered hereunder are unsecured obligations of
Spectrum Pharmaceuticals, Inc. (the Registrant) to pay deferred compensation in the future
in accordance with the terms and conditions of the Spectrum Pharmaceuticals, Inc. Deferred
Compensation Plan (the Plan). Pursuant to Rule 416(c) under the Securities Act of 1933, as
amended, this registration statement also covers an indeterminate amount of interests to be
offered or sold pursuant to the Plan.
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(2)
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Solely for purposes of calculating the registration fee pursuant to Rule 457(h) under the
Securities Act of 1933, as amended, the amount of deferred compensation obligations registered
hereunder is based on an estimate of the amount of compensation participants may defer, and
the amount of discretionary contributions the Registrant may make to participants, under the
Plan.
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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 employees in accordance with Rule 428(b)(1) under the Securities Act of 1933, as amended (the
Securities Act). Such documents are not required to be, and are not, filed with the Securities
and Exchange Commission (the Commission), either as part of this registration statement or as a
prospectus or prospectus supplement pursuant to Rule 424 under the Securities Act. These documents
and the documents incorporated by reference in this registration statement pursuant to Item 3 of
Part II of Form S-8, taken together, constitute a prospectus that meets the requirements of Section
10(a) of the Securities Act.
2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The documents listed below have been filed by Spectrum Pharmaceuticals, Inc. (the
Registrant) with the Commission and are incorporated herein by reference (except as to any
portion of any document listed below that is deemed furnished and not filed):
(a) The Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 2010,
filed with the Commission on March 10, 2011.
(b) All other reports filed by the Registrant pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the Annual Report on Form 10-K referred to
in (a) above.
All documents subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all of such securities then remaining
unsold, shall be deemed to be incorporated herein by reference and to be a part hereof from the
date of filing of such documents, except as to any portion of any future periodic or current report
or other document that is deemed furnished and not filed under such provisions. For the purposes
of this registration statement, any statement in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded to the extent that a
statement contained in this registration statement modifies or supersedes a statement in such
document. Any statement so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this registration statement.
Item 4. Description of Securities.
The deferred compensation obligations being registered under this registration statement (the
Obligations) are issuable under the terms of the Spectrum Pharmaceuticals, Inc. Deferred
Compensation Plan (the Plan). The Plan is intended to be an unfunded, unsecured plan maintained
primarily for the purpose of providing income deferral and investment opportunities to a select
group of management and other highly compensated employees designated by the Registrant to
participate in the Plan.
Eligible employees may enroll in the Plan by entering into enrollment agreements with the Plan
administrator pursuant to which they irrevocably elect to defer a percentage or dollar amount of
their base salary and incentive compensation, and a refund of their 401(k) contributions, for a
given Plan year. The Plan administrator may establish maximum and/or minimum amounts and/or
percentages that may be deferred by participants pursuant to the Plan. A participant is one hundred
percent (100%) vested in all deferrals made by him or her. The Registrant may also make
discretionary contributions to the Plan on behalf of participants. Such contributions, if any, will
be subject to vesting in accordance with vesting schedules established for a participant by the
Plan administrator at the time a contribution is made. The contributions made by the Registrant on
behalf of a participant will become fully vested upon such participants retirement, death or
disability or upon a change of control of the Registrant.
Each participants deferred compensation will be credited to an account maintained on the
books of the Registrant. Deferred compensation held in a participants distribution account will be
indexed to one or more deemed investment options selected by such participant from time to time
pursuant to which deemed earnings or losses will be credited or debited to such participants
distribution account. The deemed rate of return, positive or negative, credited or debited, as the
case may be, under each investment option is based upon the actual investment performance of the
investment fund or funds as the Plan administrator may designate from time to time, and shall equal
the total return of such investment fund net of asset based charges. Notwithstanding that the rates
of return credited or debited to a participants distribution account is based upon the actual
performance of the specified investment options, the Registrant will not be obligated to invest any
deferred compensation in such portfolios or in any other investment funds. Participants may from
time to time change the deemed investment option to which their distribution accounts are deemed to
be allocated. The value of a participants distribution account will equal the
amounts credited or debited to such distribution account, including any earnings (positive or
negative) deemed to be earned on such distribution account.
3
A participant may elect to designate a payment date in his or her enrollment agreement with
respect to his or her deferrals and earnings thereon for a given Plan year. The payment date may be
no earlier than the first month of the third Plan year after the Plan year for which such
participants distribution account was established. A participants distribution account will be
distributed to such participant upon his or her retirement, separation from service with the
Registrant, death or disability as set forth in the Plan.
Upon a finding that a participant has suffered an unforeseeable emergency, the Plan
administrator may, in its sole discretion, pay to such participant from his or her distribution
account an amount necessary to meet such unforeseeable emergency, after deduction of taxes.
Emergency benefits will be paid first from such participants deferrals and earnings thereon, to
the extent sufficient to meet the emergency, and thereafter such participant may access the
remainder of his or her distribution account (to the extent vested). Within the 30 days preceding
or the twelve (12) months following a change of control of the Registrant, the Registrant may
terminate the Plan and distribute to each participant all of his or her distribution account. A
Participant will receive all of his or her distribution account in a single lump sum payment equal
to the unpaid balance of all of his or her distribution account if a separation from service occurs
within twenty-four (24) months following a change of control of the Registrant. A participant who
is receiving installment payments at the time of a change of control of the Registrant will receive
the unpaid balance of his or her distribution account in a single lump sum within ninety (90) days
after such change of control.
The Registrant may amend, suspend, discontinue or terminate the Plan at any time. However, no
amendment, suspension, discontinuance or termination will reduce or otherwise adversely affect the
rights of any participant with respect to benefits that are payable or may become payable under the
Plan based upon the vested balance of the participants distribution account as of the effective
date of such amendment, suspension, discontinuance or termination.
There is no trading market for the Obligations. No participant may transfer (otherwise than by
will or the laws of descent and distribution), alienate, or otherwise encumber his or her interest
under the Plan. The Obligations are not convertible into any other security of the Registrant. Each
participant in the Plan will be responsible for enforcing his or her own rights with respect to the
Obligations. The Registrant may establish a grantor, or rabbi, trust to serve as a source of
funds from which it can satisfy the Obligations. Participants in the Plan will have no rights to
any assets held by a rabbi trust, except as general creditors of the Registrant. Assets of any
rabbi trust will at all times be subject to the claims of the Registrants general creditors.
The foregoing description of the Plan does not purport to be complete and is qualified in its
entirety by reference to the full text of the Plan, a copy of which is filed as Exhibit 4.1 to this
registration statement and incorporated herein by reference.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Registrant is a Delaware corporation. Section 145(a) of the Delaware General Corporation
Law (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 the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorney fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by the person in connection with such action, suit or
proceeding if the person acted in good faith and in a manner the person 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 reasonable cause to believe his
or her conduct was unlawful.
4
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 the person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the corporation, except that no
indemnification shall 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 indemnity for such expenses which the court shall deem proper.
Further subsections of DGCL Section 145 provide that:
(1) to the extent a present or former director or officer of a corporation has been successful
on the merits or otherwise in the defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145 or in the defense of any claim, issue or matter therein,
such person shall be indemnified against expenses, including attorneys fees, actually and
reasonably incurred by such person in connection therewith;
(2) the indemnification and advancement of expenses provided for pursuant to Section 145 shall
not be deemed exclusive of any other rights to which those seeking indemnification or advancement
of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise; and
(3) the corporation shall have the power to purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against any liability asserted
against such person and incurred by such person in any such capacity, or arising out of such
persons status as such, whether or not the corporation would have the power to indemnify such
person against such liability under Section 145.
Section 145 of the DGCL makes provision for the indemnification of officers and directors in
terms sufficiently broad to indemnify the Registrants officers and directors under certain
circumstances from liabilities (including reimbursement for expenses incurred) arising under the
Securities Act of 1933. The Registrants amended certificate of incorporation and amended and
restated bylaws provide, in effect, that, to the fullest extent and under the circumstances
permitted by Section 145 of the DGCL, the Registrant will indemnify any person (and the estate of
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, by
reason of the fact that he or she is or was a director or officer of the Registrant or is or was
serving at the Registrants request as a director or officer of another corporation or enterprise.
The Registrant may, in its discretion, similarly indemnify its employees and agents.
The Registrant has entered into indemnification agreements with its officers and directors.
The Registrants amended and restated bylaws relieve the Registrants directors from monetary
damages to the Registrant or its stockholders for breach of such directors fiduciary duty as a
director to the fullest extent permitted by the DGCL. Under Section 102(b)(7) of the DGCL, a
corporation may relieve its directors from personal liability to such corporation or its
stockholders for monetary damages for any breach of their fiduciary duty as directors except (i)
for a breach of the duty of loyalty, (ii) for acts or omissions not in good faith, or which involve
intentional misconduct or a knowing violation of law, (iii) for willful or negligent violations of
certain provisions in the DGCL imposing certain requirements with respect to stock repurchases,
redemptions and dividends, or (iv) for any transactions from which the director derived an improper
personal benefit.
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The Registrant currently maintains an insurance policy which, within the limits and subject to
the terms and conditions thereof, covers certain expenses and liabilities that may be incurred by
directors and officers in connection with proceedings that may be brought against them as a result
of an act or omission committed or suffered while acting as a director or officer of the
Registrant.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The following exhibits are filed as part of this registration statement:
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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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Spectrum Pharmaceuticals, Inc. Deferred Compensation Plan.
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4.2
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Amended Certificate of Incorporation, as filed. (Filed as Exhibit 3.1 to
Form 10-K, as filed with the Securities and Exchange Commission on March
10, 2011, and incorporated herein by reference.)
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4.3
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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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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 Ernst & Young LLP, Independent Registered Public Accounting Firm.
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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-1 of this registration statement).
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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;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this 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;
(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.
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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 reports
filed with or furnished to the Commission 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 (and, where applicable, each filing of an
employee benefit plans annual report pursuant to 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.
(c) 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.
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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 New York, State of New York, on this 2nd day of September,
2011.
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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 Brett L. Scott 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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September 2, 2011
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/s/ Brett L. Scott
Brett L. Scott
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Senior Vice President and Acting Chief
Financial Officer (Principal
Financial and Accounting Officer)
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September 2, 2011
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/s/ Krishan K. Arora, Ph.D.
Krishan K. Arora, Ph.D.
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Director
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September 2, 2011
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/s/ Luigi Lenaz, M.D.
Luigi Lenaz, M.D.
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Director
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September 2, 2011
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/s/ Stuart M. Krassner, Sc.D., Psy.D.
Stuart M. Krassner, Sc.D., Psy.D.
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Director
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September 2, 2011
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/s/ Anthony E. Maida, III, M.A.,
M.B.A., Ph.D
Anthony E. Maida, III, M.A., M.B.A.,
Ph.D
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Director
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September 2, 2011
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/s/ Dilip J. Mehta, M.D., Ph.D.
Dilip J. Mehta, M.D., Ph.D.
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Director
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September 2, 2011
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II-1
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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Spectrum Pharmaceuticals, Inc. Deferred Compensation Plan.
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4.2
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Amended Certificate of Incorporation, as filed. (Filed as Exhibit 3.1 to Form 10-K, as filed with
the Securities and Exchange Commission on March 10, 2011, and incorporated herein by reference.)
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4.3
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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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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 Ernst & Young LLP, Independent Registered Public Accounting Firm.
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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-1 of this registration statement).
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Exhibit 4.1
SPECTRUM PHARMACEUTICALS, INC.
DEFERRED COMPENSATION PLAN
ARTICLE 1
PURPOSE
In recognition of the services provided by certain key employees, Spectrum Pharmaceuticals,
Inc. a Delaware corporation, has adopted the Spectrum Pharmaceuticals, Inc. Deferred Compensation
Plan as of September 2, 2011 to make additional retirement benefits and increased financial
security available on a tax-favored basis to those individuals. The Plan is intended to be a
nonqualified deferred compensation plan that complies with the provisions of Code Section 409A.
The Plan is intended to be an unfunded plan maintained primarily for the purpose of providing
deferred compensation benefits for a select group of management or highly compensated employees.
ARTICLE 2
DEFINITIONS
Affiliate
means: (a) any firm, partnership, or corporation that directly or
indirectly through one or more intermediaries, controls, is controlled by, or is under common
control with the Company; (b) any other organization similarly related to the Company that is
designated as such by the Company; and (c) any other entity 50% or more of the economic interests
in which are owned, directly or indirectly, by the Company.
Beneficiary
means the person or persons designated as such in accordance with
Section 7.3
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Board
means the Board of Directors of Spectrum Pharmaceuticals, Inc.
Change of Control
means a change in the ownership or effective control of the
Company, or in the ownership of a substantial portion of the assets of the Company, within the
meaning of Code Section 409A and the regulations and Internal Revenue Service guidance issued
thereunder. For purposes of this Section, a change in ownership of the Company occurs on the date
on which any one person or more than one person acting as a group acquires ownership of stock of
the Company that, together with stock held by such person or group constitutes more than 50% of the
total fair market value or total voting power of the stock of the Company. A change in the
effective control of the Company occurs on the date on which either (i) a person or more than one
person acting as a group acquires ownership of stock of the Company possessing 51% or more of the
total voting power of the stock of the Company or (ii) a majority of members of the Companys board
of directors is replaced during any 12-month period by directors whose appointment or election is
not endorsed by a majority of the members of the Companys board of directors prior to the date of
the appointment or election. A change in the ownership of a substantial portion of assets of the
Company occurs on the date on which any one person or more than one person acting as a group
acquires assets from the Company that have a total gross fair market value equal to or more than
51% of the total gross fair market value of all of the assets of the Company immediately prior to
such acquisition or acquisitions. With respect to a Participating Employer other than the Company,
a Change of Control shall occur on the date that the Company or its affiliates (or any combination
of the foregoing) shall cease to be the beneficial owners of at least 50% of the total fair market
value or total voting power of the outstanding voting securities of the Participating Employer or a
sale of substantially all of the
assets of a Participating Employer to a party other than the Company or one of its affiliates,
provided that in either case, the transaction will constitute a change in the ownership or
effective control or a change in the ownership of a substantial portion of the assets, as described
in Treasury Regulation Section 1.409A-3(i)(5).
Class Year Distribution Account(s)
means, with respect to a Participant for each
Plan Year, the Class Year Distribution Account established on the books of account of the Company,
pursuant to
Section 5.1
, for that Participant.
Code
means the Internal Revenue Code of 1986, as amended.
Committee
means the Spectrum Pharmaceuticals, Inc. Compensation Committee appointed
by the Board of Directors of the Company.
Company
means Spectrum Pharmaceuticals, Inc. a Delaware corporation.
Compensation
means, for any Eligible Employee, the cash remuneration for services
payable by the Participating Employer with respect to a Plan Year, but excluding (even if
includible in gross income) reimbursements or other expense allowances, fringe benefits, moving
expenses and welfare benefits, as determined by the Company from time to time and communicated to
Eligible Employees.
Disability
means that a Participant (a) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less than 12
months, or (b) is, by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous period of not less than
12 months, receiving income replacement benefits for a period of not less than 3 months under an
accident and health plan covering employees of the Participants employer. The determination of
the existence of a Disability shall be made by the Plan Administrator in accordance with Section
409A(a)(2)(C) of the Code and the regulations and guidance promulgated thereunder.
Disabled
means having a Disability. The determination of whether a Participant is
Disabled shall be made by the Plan Administrator, whose determination shall be conclusive.
Discretionary Company Contribution
means a contribution credited to the
Participants Class Year Distribution Account by the Company pursuant to
Section 4.4
of the
Plan.
Earnings Crediting Options
means the deemed investment options selected by the
Participant from time to time pursuant to which deemed earnings or losses are credited or debited,
as the case may be, to the Participants Class Year Distribution Accounts.
Elective Deferral Limit
means the limit stated in Code Section 402(g)(1)(B), as
adjusted in accordance with Code Section 402(g)(4).
Eligible Employee
means an Employee who has been determined by the Company to be
eligible to participate in the Plan.
2
Employee
means any individual employed by the Participating Employer on a regular,
full-time basis (in accordance with the personnel policies and practices of the Participating
Employer), including citizens of the United States employed outside of their home country and
resident aliens employed in the United States;
provided, however
, that to qualify as an Employee
for purposes of the Plan, the individual must be a member of a select group of management or
highly compensated employees within the meaning of Sections 201, 301 and 401 of ERISA;
provided
further
, that the following individuals shall not be eligible to participate in the Plan: (a)
individuals who are not classified by the Participating Employer as its employees, even if they are
retroactively recharacterized as employees by a third party or the Participating Employer, (b)
individuals for whom the Participating Employer does not report wages on Form W-2 or who are not on
an employee payroll of the Participating Employer, and (c) individuals who have entered into an
agreement with the Participating Employer which excludes them from participation in employee
benefit plans of the Participating Employer (whether or not they are treated or classified as
employees for certain specified purposes that do not include eligibility in the Plan).
Enrollment Agreement
means the authorization form which an Eligible Employee files
with the Plan Administrator or its designee to participate in the Plan, including, without
limitation, one that is completed and/or sent electronically in a manner specified by the Plan
Administrator.
ERISA
means the Employee Retirement Income Security Act of 1974, as amended.
Key Employee
means a specified employee within the meaning of Code Section
409A(a)(2)(B)(i) and the regulations issued thereunder.
Participant
means an Eligible Employee who has filed a completed and executed
Enrollment Agreement with the Plan Administrator or its designee and is participating in the Plan
in accordance with the provisions of
Article 4
. In the event of the death or incompetency
of a Participant, the term shall mean his or her personal representative or guardian. An
individual shall remain a Participant until that individual has received full distribution of any
vested amount credited to the Participants Class Year Distribution Account(s).
Participating Employer
means the Company, as well as each Affiliate identified in
Appendix A as may from time to time participate in the Plan by or pursuant to authorization of the
Company.
Performance-Based Compensation
means Compensation based on services performed over a
period of not less than twelve months and which meets the following requirements: (a) the payment
of the Compensation or the amount of the Compensation is contingent upon the satisfaction of
pre-established organizational or individual performance criteria and (b) the performance criteria
are not substantially certain to be met at the time a Enrollment Agreement is submitted to the Plan
Administrator. For purposes hereof, pre-established organizational or individual performance
criteria shall mean criteria which are established in writing by not later than ninety (90) days
after the commencement of the period of service to which the criteria relates, provided that the
outcome is substantially uncertain at the time the criteria are established. Performance criteria
may be subjective but must relate to the performance of the
Participant, a group of Employees that includes the Participant or a business unit (which may
include the Company) for which the Participant provides services. The determination that any
subjective performance criteria have been met shall not be made by the Participant or by a family
member of the Participant. Performance-Based Compensation does not include any amount or portion
of any amount that will be paid regardless of performance or which is based on a level of
performance that is substantially certain to be met at the time the criteria is established.
3
Plan
means the Spectrum Pharmaceuticals, Inc. Deferred Compensation Plan, as amended
from time to time.
Plan Administrator
means the Committee or any person(s) or entity appointed by the
Committee to perform the duties of Plan Administrator hereunder.
Plan Year
means the 12-month period beginning on each January 1 and ending on the
following December 31. Initial Plan Year, August 15, 2011 to December 31, 2011.
Retirement
means a Participants separation from Service with the Participating
Employer after attaining age 55 and completing at least 5 years of Service.
Retirement Savings Plan
means the Companys Retirement Savings Plan, or any other
defined contribution plan designated by the Company which is maintained by the Participating
Employer and intended to be qualified under Code Section 401(a).
Separation from Service
means the termination of a Participants employment or
Service with a Participating Employer for any reason which constitutes a separation from service
within the meaning of Section 409A of the Code and the regulations promulgated thereunder,
including Treasury Regulation Section 1.409A-1(h).
Service
means the period of time during which an employment relationship exists
between an Employee and the Participating Employer, including any period during which the Employee
is on an approved Leave of Absence, whether paid or unpaid. Service shall not be deemed to have
ceased if an Employee transfers directly between the Participating Employer and an Affiliate.
Subsequent Election
means an election made by a Participant in accordance with
Section 4.1(d)
.
Unforeseeable Emergency
means a severe financial hardship to the Participant
resulting from an illness or accident of the Participant, the Participants spouse, or a dependent
(as defined in Code Section 152(a)) of the Participant, loss of the Participants property due to
casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant.
Valuation Date
shall mean each business day except as specified below.
(a) The Valuation Date for benefits upon Retirement and for benefits upon Separation from
Service shall be the last day of the month in which the Participants Separation from Service
occurs. In the case of a benefits upon Retirement or Separation from
Service payable to a Key Employee, the Valuation Date shall be the last day of the month
following the date which is six months following such Participants Separation from Service.
4
(b) The Valuation Date for an in Service distribution shall be the last day of the month in
which the in Service distribution date occurs.
(c) The Valuation Date for benefits upon Disability shall be the last business day of the
month in which the Plan Administrator determines that the Participant is Disabled.
(d) The Valuation Date for benefits upon death is the last day of the month in which the
Participants death occurs.
ARTICLE 3
ADMINISTRATION OF THE PLAN AND DISCRETION
3.1. The Committee, as Plan Administrator, shall have full power and authority to interpret
the Plan, to prescribe, amend and rescind any rules, forms and procedures as it deems necessary or
appropriate for the proper administration of the Plan and to make any other determinations and to
take any other such actions as it deems necessary or advisable in carrying out its duties under the
Plan; including, without limitation, the investment direction of Plan assets. All action taken by
the Plan Administrator arising out of, or in connection with, the administration of the Plan or any
rules adopted thereunder, shall, in each case, lie within its sole discretion, and shall be final,
conclusive and binding upon the Company, the Board, all Participating Employers, all Employees, all
Participants, all Beneficiaries and all persons and entities having an interest therein. The
Committee, may, however, delegate to any person or entity any of its powers or duties under the
Plan. To the extent of any such delegation, the delegate shall become the Plan Administrator
responsible for administration of the Plan, and references to the Plan Administrator shall apply
instead to the delegate. Any action by the Committee assigning any of its responsibilities to
specific persons who are directors, officers, or employees of the Company shall not constitute
delegation of the Committees responsibility but rather shall be treated as the manner in which the
Committee has determined internally to discharge such responsibility.
3.2. The Plan Administrator shall serve without compensation for its services unless otherwise
determined by the Board. All expenses of administering the Plan shall be paid by the Company.
3.3. The Company shall indemnify and hold harmless the Plan Administrator and the members
thereof from any and all claims, losses, damages, expenses (including counsel fees) and liability
(including any amounts paid in settlement of any claim or any other matter with the consent of the
Board) arising from any act or omission of such member, except when the same is due to gross
negligence or willful misconduct.
3.4. Any decisions, actions or interpretations to be made under the Plan by the Company, the
Board, any Participating Employer or the Plan Administrator shall be made in its respective sole
discretion, not as a fiduciary, and need not be uniformly applied to similarly
situated individuals and shall be final, binding and conclusive on all persons interested in
the Plan.
5
3.5. Upon a Change of Control, the Committee, as constituted immediately prior to such Change
of Control, shall continue to act as the Committee. However, the individual who was the Chief
Executive Officer of the Company (or if such person is unable or unwilling to act, the next highest
ranking officer) prior to the Change of Control shall have the authority (but shall not be
obligated) to appoint an independent third party to act as the Committee.
Upon such Change of Control, the Company may not remove the Committee or, if different, the
Plan Administrator in existence prior to such Change of Control, unless 2/3rds of the members of
the Board of Directors of the Company and a majority of Participants and Beneficiaries with account
balances consent to such removal and replacement. With respect to directing the investment of Plan
assets, the trustee of any rabbi trust shall follow the instructions in place prior to such Change
of Control, as amended at any time from the Committee that was in existence prior to such Change of
Control or from the duly authorized Plan Administrator appointed prior to such Change of Control or
from any duly appointed independent third party appointed under this Section.
The Participating Employer shall, with respect to the Committee identified under this Section:
(i) pay all reasonable expenses and fees of the Committee; (ii) indemnify the Committee (including
individuals serving as Committee or Plan Administrator) against any costs, expenses and liabilities
including, without limitation, reasonable attorneys fees and expenses arising in connection with
the performance of the Committee hereunder, except with respect to matters resulting from the
Committees gross negligence or willful misconduct; and (iii) supply full and timely information to
the Committee on all matters related to the Plan, any rabbi trust, Participants, Beneficiaries and
accounts as the Committee may reasonably require.
ARTICLE 4
PARTICIPATION
4.1.
Election to Participate
.
(a)
Eligibility and Timing of Election to Participate
. Any Eligible Employee may
enroll in the Plan effective as of the first day of a Plan Year by filing a completed and fully
executed Enrollment Agreement with the Plan Administrator by a date set by the Plan Administrator.
(i)
Filing of Enrollment Agreement
. Subject to clause (iii) below, an executed
Enrollment Agreement must be filed by December 31 of the Plan Year preceding the Plan Year in which
such Compensation is to be earned, or such other time as may be established by the Plan
Administrator;
provided, however
, that all deferral elections under the Plan must be made at a time
that is permitted under applicable law, including, without limitation, Code Section 409A.
(ii)
Revocation of Election
. Except as otherwise provided in
Section 6.7(a)
,
deferral elections for a Plan Year are irrevocable.
6
(iii)
Evergreen Enrollment Agreement
. The Plan Administrator, in its discretion,
may provide in the Enrollment Agreement that such Enrollment Agreement will continue in effect for
each subsequent year or performance period. Such evergreen Enrollment Agreements will become
effective with respect to an item of Compensation on the date such election becomes irrevocable
under this
Section 4.1
. An evergreen Enrollment Agreement may be terminated or modified
prospectively with respect to Compensation for which such election remains revocable under this
Section 4.1
.
(b)
Amount of Deferral
. Pursuant to the Enrollment Agreement, the Eligible Employee
shall irrevocably elect the percentage or dollar amount by which (as a result of payroll deduction)
the Participants Compensation will be deferred for the Plan Year. Each Participants Enrollment
Agreement shall designate separately the percentage of Compensation to be taken from the
Participants base salary for the Plan Year; the percentage or dollar amount to be taken from the
Participants short term incentive compensation, long term incentive compensation and any other
incentive compensation approved by the Company for the Plan Year; and whether to defer any refund
to the Participant of 401(k) contributions made to the Retirement Savings Plan. Subject to the
following sentence, the amount that may be deferred is any whole percentage or dollar amount of the
Participants Compensation;
provided, however
, that deferrals will be made after required payroll
tax deductions and any deductions elected by the Participant (including, but not limited to,
deductions for payment for medical and other benefit coverages). The Plan Administrator may
establish maximum and/or minimum amounts and/or percentages that may be deferred under this
Section 4.1
and may change such standards from time to time. Any such maximum or minimum
shall be communicated by the Plan Administrator to the Participants prior to the date by which
Participants must submit an Enrollment Agreement with respect to the Plan Year or type of
Compensation to which the maximum or minimum applies.
(c)
Timing and Form of Payment of Distribution from Accounts
. At the time that a
Participant makes a deferral election with respect to a Plan Year, the Participant shall designate
the time and form in which such deferral and any Discretionary Company Contribution made for such
Plan Year (and notional earnings thereon) shall be distributed;
provided, however
, that all
Enrollment Agreements filed by an Eligible Employee must provide for distribution to be made at a
time and in a form that is consistent with the distribution options made available under the Plan
and permitted under applicable law, including, without limitation, Code Section 409A. In
accordance with the foregoing, a Participant may only designate one or more of the following events
as the time for which a distribution will be made:
(i) Pursuant to a fixed schedule in accordance with Treasury Regulation Section
1.409A-3(i)(1);
(ii) Upon a Separation from Service;
(iii) Upon a Change of Control;
(iv) Upon a Disability; or
(v) Upon death;
7
An election with respect to the time and form of benefit distributions may not be changed, except
as expressly provided for herein. In the event the Participant fails to make a valid election of
the form of payment, the distribution will be made in a lump sum upon the first to occur of (ii)
through (v) above.
(d)
Subsequent Elections
. Each Participant who has made an election to defer
Compensation may make a Subsequent Election to further defer the time of payment and/or change the
form of payment for one or more of such Participants Class Year Distribution Accounts. No such
Subsequent Election shall be valid unless it is made 12 months prior to the previously scheduled
payment date applicable to such distribution account and the payment commencement date is deferred
for not less than five (5) years from the previously scheduled payment date. In the event of the
Participants separation from Service with the Company prior to the expiration of 12 months from
the date the Subsequent Election is made, the Subsequent Election shall be of no effect. For
purposes of this subsection, a series of installment payments shall be considered a single payment.
(e)
Performance Based Compensation
. An Enrollment Agreement containing an election to
defer Performance-Based Compensation must be submitted to the Plan Administrator no later than six
(6) months prior to the end of the period in which the services are performed and in accordance
with the Section 409A of the Code and Treasury Regulation Section 1.409A-2(a)(8). An Enrollment
Agreement submitted pursuant to this Section 4.2(e) shall become irrevocable as of the day
immediately following the latest date for filing such election.
(f)
Vesting
. All Compensation deferred by Participants under this
Section
4.1
, and any deemed earnings thereon, shall be fully and immediately vested and nonforfeitable.
4.2.
Leave of Absence
.
(a)
Paid Leave of Absence
. If a Participant is authorized by his or her Participating
Employer for any reason to take a paid leave of absence from the employment or service of the
Participating Employer, and such leave of absence does not constitute a Separation from Service,
the Participant shall continue to be considered actively employed by or in the service of the
Participating Employer for purposes hereof and the Enrollment Agreement continue to apply to any
Compensation paid during such leave of absence.
(b)
Unpaid Leave of Absence
. If a Participant is authorized by the his or her
Participating Employer for any reason to take an unpaid leave of absence from the employment of or
service with the Participating Employer, the Participant shall continue to be considered actively
employed by the Participating Employer for purposes hereof. Upon the earlier of the date the leave
of absence expires or the date the Participant returns to paid employment or service, deferrals
shall resume for the remaining portion of the Plan Year in which the expiration or return occurs,
based on the Enrollment Agreement, if any, in effect for that Plan Year. If no deferral election
was made for that Plan Year, no Plan deferrals shall be withheld from Compensation for the
remainder of the Plan Year.
8
4.3.
Filing of Elections by New Eligible Employees
. The Plan Administrator may, in
its discretion, permit an Employee who first becomes an Eligible Employee after the beginning of a
Plan Year to enroll in the Plan for that Plan Year by filing a completed and fully executed
Enrollment Agreement, in accordance with
Section 4.1
, as soon as practicable following the
date the Employee becomes an Eligible Employee but, in any event, not later than 30 days after such
date. Notwithstanding the foregoing, however, any election by an Eligible Employee to defer
Compensation pursuant to this
Section 4.3
shall apply only to such amounts as are earned by
the Eligible Employee after the date on which such Enrollment Agreement is filed.
4.4.
Discretionary Company Contributions
. The Company may credit a discretionary
Company contribution under the Plan for a Plan Year (each, a
Discretionary Company
Contribution
). Such Discretionary Company Contribution, if any, and the amount thereof, will
be credited in the sole and absolute discretion of the Company, and to such Participants or
group(s) or category(ies) of Participants as shall be determined in the sole and absolute
discretion of the Company. Discretionary Company Contributions under this
Section 4.4
, if
any, and any deemed earnings thereon, shall become vested and nonforfeitable in accordance with
Section 6.2
.
ARTICLE 5
ALLOCATION TO ACCOUNTS
5.1.
Accounts
. For each Participant, the Plan Administrator shall establish and
maintain a Class Year Distribution Account for each Plan Year. The amount of Compensation deferred
for a Plan Year pursuant to
Section 4.1
shall be credited by the Company to the
Participants Class Year Distribution Account, in accordance with the Participants Enrollment
Agreement, as soon as reasonably practicable following the close of the payroll period or incentive
compensation payment date for which the deferred Compensation would otherwise be payable, as
determined by the Plan Administrator in its sole discretion. Any amount once taken into account as
Compensation for purposes of the Plan shall not be taken into account thereafter. Discretionary
Company Contributions, if applicable, pursuant to
Section 4.4
for a Plan Year shall be
credited by the Company to each eligible Participants Class Year Distribution Account, in
accordance with such Participants Enrollment Agreement, at such time(s) as determined by the Plan
Administrator in its sole discretion. The Participants Class Year Distribution Account(s) shall
be reduced by the amount of payments made by the Company to the Participant or the Participants
Beneficiary pursuant to the Plan.
5.2.
Earnings on Accounts
.
(a)
General
. A Participants Class Year Distribution Account(s) shall be credited
with earnings in accordance with the Earnings Crediting Options elected by the Participant from
time to time. Participants may allocate their Class Year Distribution Accounts among the Earnings
Crediting Options available under the Plan only in whole percentages of not less than 1%.
9
(b)
Investment Options
. The deemed rate of return, positive or negative, credited or
debited, as the case may be, under each Earnings Crediting Option is based upon the actual
investment performance of the investment fund(s) as the Plan Administrator may
designate from time to time, and shall equal the total return of such investment fund net of
asset based charges, including, without limitation and as the Plan Administrator determines from
time to time, money management fees, and fund expenses. The amount of such deemed investment rate
of return shall be determined by the Plan Administrator and such determination shall be final and
conclusive upon all concerned. The Plan Administrator reserves the right, on a prospective basis,
to add or delete Earnings Crediting Options. If a Participant does not make an election of an
Earnings Crediting Option, the Participants Class Year Distribution Account will be allocated to
such Earnings Crediting Option(s) as determined by the Plan Administrator in its sole discretion,
and the Plan Administrator shall be absolved of any liability or responsibility for such action.
5.3.
Earnings Crediting Options
. Notwithstanding that the rates of return credited or
debited to Participants Class Year Distribution Accounts under the Earnings Crediting Options are
based upon the actual performance of the investment options specified in
Section 5.2
, or
such other investment funds as the Plan Administrator may designate, the Company shall not be
obligated to invest any Compensation deferred by Participants under this Plan, or any other
amounts, in such portfolios or in any other investment funds.
5.4.
Changes in Earnings Crediting Options
. A Participant may change the Earnings
Crediting Options to which the Participants Class Year Distribution Accounts are deemed to be
allocated, subject to such rules and limitations as may be determined by the Plan Administrator.
Each such change may include (a) reallocation of the Participants existing Class Year Distribution
Account(s) in whole percentages of not less than 1%, and/or (b) change in investment allocation of
amounts to be credited to the Participants Class Year Distribution Account(s) in the future, as
the Participant may elect. The effect of a Participants change in Earnings Crediting Options
shall be reflected in the Participants Class Year Distribution Account(s) at such time following
the Plan Administrators receipt of notice of such change as shall be determined by the Plan
Administrator in its sole discretion.
5.5.
Valuation of Accounts
. The value of a Participants Class Year Distribution
Account(s) as of any Valuation Date shall equal the amounts theretofore credited or debited to such
Distribution Account(s), including any earnings (positive or negative) deemed to be earned on such
Distribution Account(s) in accordance with
Section 5.2
through the day preceding such date,
less the amounts theretofore deducted from such Distribution Account(s).
5.6.
Statement of Accounts
. The Plan Administrator shall provide to each Participant,
not less frequently than annually, a statement in such form as the Plan Administrator deems
appropriate setting forth the balance standing to the credit of each Participant in each of his or
her Class Year Distribution Accounts.
5.7.
Distributions from Accounts
.
(a) For purposes of any provision of the Plan relating to distribution of benefits to
Participants or Beneficiaries, the value of a Participants Class Year Distribution Account(s)
shall be determined as of any Valuation Date as soon as reasonably practicable preceding the
distribution date, as determined by the Plan Administrator in its sole discretion. In the case of
any benefit payable in the form of a single lump-sum payment, the value of a
Participants Class Year Distribution Account(s), as determined pursuant to this
Article
5
, shall be distributed. In the case of any benefit payable in the form of annual
installments, as of any payment date, the amount of each installment payment shall be determined as
the quotient of (x) the value of the Participants Class Year Distribution Account subject to
distribution, as determined pursuant to this
Article 5
, divided by (y) the number of
remaining annual installments immediately preceding the payment date.
10
(b) In the case of any benefit payable in the form of annual installments, the initial
installment will be paid within 90 days after the event giving rise to the distribution
(Retirement, Separation from Service, Disability or death, as applicable), and subsequent
installments will be valued each December 31
st
and paid as soon as administratively
feasible thereafter.
(c) Any distribution made to or on behalf of a Participant from such Participants Class Year
Distribution Account in an amount which is less than the entire balance of any such Distribution
Account shall be made pro rata from each of the Earnings Crediting Options to which such
Distribution Account is then allocated.
(d) Any and all distributions from the Plan shall be made in cash.
ARTICLE 6
BENEFITS TO PARTICIPANTS
6.1.
Benefits From the Class Year Distribution Account(s)
. Benefits from a
Participants Class Year Distribution Account shall be paid to the Participant as follows:
(a)
In-Service Distributions
. In the case of a Participant who continues in Service,
the portion of the Participants Class Year Distribution Account consisting solely of the
Participants deferrals under
Section 4.1
and earnings thereon under
Section 5.2
shall be paid or commence to be paid to the Participant by the payment date elected by the
Participant in the Enrollment Agreement pursuant to which such Class Year Distribution Account was
established (which payment date may be no earlier than the first month of the third Plan Year after
the Plan Year for which such Class Year Distribution Account was established, e.g., January 2014
for the 2011 Class Year Distribution Account), in a lump sum or in up to five (5) annual
installments, as elected by the Participant in the Enrollment Agreement or in a Subsequent
Election.
(b)
Continuation of Service Condition
. In the case of a Participant whose Service
with the Company ceases, the Participants elections in an Enrollment Agreement or in a Subsequent
Election with respect to the time and form of distribution of such Participants Class Year
Distribution Account(s) applicable when a Participant is in Service shall be void and of no effect,
and distribution of such Distribution Account(s) shall be governed by the Participants elections
in an Enrollment Agreement or in a Subsequent Election applicable to distribution upon Retirement,
Separation from Service, Disability or death, as applicable.
11
6.2.
Vesting
.
(a) Discretionary Company Contributions described in Section 4.4, above, and the earnings
thereon, shall vest in accordance with the vesting schedule(s) established by the Plan
Administrator at the time that the Discretionary Company Contribution is made. The foregoing
provisions concerning vesting of Discretionary Company Contributions notwithstanding, and subject
to the requirements of Treasury regulations promulgated under Section 409A of the Code, all
Discretionary Company Contributions shall become 100% vested upon the occurrence of the earliest
of: (i) Retirement; (ii) death of the Participant; (iii) Disability of the Participant; and (iv)
Change of Control of the Company (or with respect to a Participant who is employed by a
Participating Employer, a Change of Control of such Participating Employer). The Company may, at
any time, in its sole discretion, accelerate the vesting of a Participants interest in
Discretionary Company Contributions.
(b) Notwithstanding anything contained in this Plan to the contrary, in the event that any
payment or benefit to a Participant or for a participants benefit paid or payable or distributed
or distributable pursuant to the terms of this Plan or otherwise in connection with, or arising out
of, a Change of Control, or any other event which constitutes a Change in Control within the
meaning of Section 280G of the Code (a
Payment
or
Payments
), would be subject
to the excise tax imposed by Section 4999 of the Code (the
Excise Tax
), then the benefits
payable under this Plan shall be reduced (but not below zero), but only to the extent necessary so
that no portion of the Payments shall be subject to the excise tax imposed by Section 4999 of the
Code (the
Section 4999 Limit
). Unless otherwise determined by the Plan Administrator in
its discretion, the Company shall reduce or eliminate the benefits payable under this Plan by first
reducing or eliminating those benefits beginning with benefits which are to be paid the farthest in
time from the Determination (as defined below).
(i) All determinations required to be made under this Section 6.2 (each, a
Determination
) shall be made by the Plan Administrator. The calculations shall be
provided to the Participant upon request (provided that the Plan Administrator or the Participant
believe in good faith that the any of the Payments may be subject to the Excise Tax); provided,
however, that if the Plan Administrator determines that no Excise tax is payable by the Participant
with respect to a Payment or Payments, Participant may request that a nationally recognized
accounting firm designated by the Company and reasonable acceptable to the Participant (the
Accounting Firm
) furnish the Participant with an opinion reasonably acceptable to the
Participant that no Excise Tax will be imposed with respect to any such Payment or Payments.
Within ten (10) calendar days of delivery of the Determination to the Participant, the Participant
shall have the right to dispute the Determination (the
Dispute
). The existence of any
Dispute shall not in any way affect the Participants right to receive the benefits under this Plan
in accordance with the Determination. If there is no Dispute, the Determination by the Accounting
Firm shall be final, binding, and conclusive upon the Company, the Plan Administrator and the
Participant, subject to the application of Section 6.2(a)(ii).
12
(ii) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code,
it is possible that the Payments either will have been made or will not have been made by the
Company, in either case in a manner inconsistent with the limitations provided in this Section
6.2(a) (an
Excess Payment
or
Underpayment
, respectively). If it is
established pursuant to (i) a final determination of a court for which all appeals have been
taken and finally resolved or the time for all appeals has expired, or (ii) an Internal Revenue
Service (the
IRS
) proceeding which has been finally and conclusively resolved, that an
Excess Payment has been made, such Excess Payment shall be deemed for all purposes to be a loan to
the Participant made on the date the Participant received the Excess Payment and the Participant
shall repay the Excess payment to the Company on demand, together with interest on the Excess
Payment to the Company on demand at one hundred twenty percent (120%) of the applicable federal
rate (as defined in Section 1274(d) of the Code) compounded semi-annually from the date of the
Participants receipt of such Excess Payment until the date of such repayment. If it is determined
(i) by the Accounting Firm, the Company (which shall include the position taken by the Company,
together with its consolidated group, on its federal income tax return) or the IRS, (ii) pursuant
to a determination by a court, or (iii) upon the resolution to the Participants satisfaction of
the Dispute, that an Underpayment has occurred, the Company shall pay an amount equal to the
Underpayment to the Participant within ten (10) calendar days of such determination or resolution,
together with interest on such amount at one hundred twenty percent (120%) of the applicable
federal rate compounded semi-annually from the date such amount should have been paid to the
Participant pursuant to the terms of this Plan or otherwise, but for the operation of this Section
6.2(b), until the date of Payment.
6.3.
Benefits Upon Retirement
. Upon Retirement, each Class Year Distribution Account
of the Participant shall be distributed in one of the following methods, as elected by the
Participant in the Enrollment Agreement pursuant to which such Class Year Distribution Account was
established or in a Subsequent Election: (a) in a lump sum; or (b) in up to twenty (20) annual
installments;
provided, however
, that the Distribution Account(s) of Participants who are Key
Employees shall not be distributed prior to the expiration of six (6) months from the date of such
Retirement, as determined by the Plan Administrator in its sole discretion. Prior to distribution,
such Participants Distribution Account(s) shall continue to be credited with earnings and/or
losses in accordance with
Section 5.2
until fully distributed.
6.4.
Benefits Upon Separation from Service
. In the case of a Participant whose
Service with the Company ceases prior to Retirement, the vested portion of all of the Participants
Class Year Distribution Accounts shall be distributed in a lump sum;
provided, however
, that the
Distribution Account(s) of Participants who are Key Employees shall not be distributed prior to the
expiration of six (6) months from the date of such separation from Service, as determined by the
Plan Administrator in its sole discretion. Prior to distribution, such Participants Distribution
Account(s) shall continue to be credited with earnings and/or losses in accordance with
Section
5.2
until fully distributed.
6.5.
Benefits Upon Death
. In the event of a Participants death before the complete
distribution of his or her Class Year Distribution Accounts, such Participants Beneficiary, named
on the most recently filed Designation of Beneficiary form, shall be paid a lump sum. Prior to
distribution, such Participants Distribution Account(s) shall continue to be credited with
earnings and/or losses in accordance with
Section 5.2
until fully distributed. If the
Company owns a corporate-owned life insurance policy on the life of the Participant and the
Participant was in Service prior to death, the Beneficiary will receive an additional taxable
survivor benefit equal to $500,000.
13
6.6.
Benefits Upon Disability
. In the case of a Participant who becomes Disabled,
all of the Participants Class Year Distribution Accounts shall be distributed in a lump sum.
Prior to distribution, such Participants Distribution Account(s) shall continue to be credited
with earnings and/or losses in accordance with
Section 5.2
until fully distributed.
6.7.
Acceleration of Payment
.
(a)
Unforeseeable Emergency
. In the event that the Plan Administrator, upon written
request of a Participant, determines, in its sole discretion, that the Participant has suffered an
Unforeseeable Emergency, the Company shall pay to the Participant from his or her Class Year
Distribution Account(s), as soon as practicable following such determination, an amount necessary
to meet such Unforeseeable Emergency, in a manner consistent with Code Section 409A and the
regulations issued thereunder, after deduction of any and all taxes as may be required pursuant to
Section 7.9
(the
Emergency Benefit
). Emergency Benefits shall be paid first from
the portion of the Participants Class Year Distribution Accounts consisting solely of the
Participants deferrals under
Section 4.1
and earnings thereon, to the extent such portion
of one or more of such Class Year Distribution Accounts is sufficient to meet the emergency, in the
order in which such Accounts would otherwise be distributed to the Participant. If the
distribution exhausts the portion of the Class Year Distribution Accounts consisting solely of the
Participants deferrals under
Section 4.1
and earnings thereon, the remainder of the
Participants Class Year Distribution Accounts may be accessed (to the extent vested). With
respect to that portion of any Class Year Distribution Account which is distributed to a
Participant as an Emergency Benefit in accordance with this
Section 6.7(a)
, no further
benefit shall be payable to the Participant under this Plan. To the extent required by the
regulations under Code Section 409A, upon receipt of Emergency Benefits, the Participants deferral
election under
Section 4.1
shall be cancelled for the rest of the Plan Year in which the
Emergency Benefits are paid.
(b)
Change of Control
.
(i) To the extent permitted by the regulations under Code Section 409A, within the 30 days
preceding or the twelve (12) months following a Change of Control, the Company may exercise its
discretion to terminate this Plan and, notwithstanding any other provision of the Plan or the terms
of any Enrollment Agreement or Subsequent Election, distribute to or with respect to each
Participant all of his or her Class Year Distribution Accounts.
(ii) A Participant will receive all his or her Class Year Distribution Accounts in a single
lump sum payment equal to the unpaid balance of all of his or her Accounts within ninety (90) days
from his or her Separation from Service if such Separation from Service occurs within twenty-four
(24) months following a Change of Control.
(iii) A Participant who is receiving installment payments at the time of a Change of Control
will receive the unpaid balance of his or her Accounts in a single lump sum within ninety (90) days
after such Change of Control regardless of any election otherwise made in his or her Enrollment
Agreement or Subsequent Election.
14
(c)
Other Acceleration Event
. To the extent permitted by Code Section 409A and the
regulations issued thereunder, notwithstanding the terms of an Enrollment Agreement or Subsequent
Election, distribution of all or part of a Participants Class Year Distribution Account(s) may be
made at any time the Plan fails to meet the requirements of Code Section 409A and the regulations
thereunder, with such payment not to exceed the amount required to be included in the Participants
income as a result of the failure.
6.8.
Limited Benefit Cash-Out
. If a Participant becomes eligible for a distribution
in accordance with the provisions of this
Article 6
, the Plan Administrator shall,
notwithstanding any election of the time and form of payment by the Participant, distribute to the
Participant the Participants Class Year Distribution Account(s) in a lump sum, if the total value
of the Participants Class Year Distribution Account(s) on the date that payment is to commence
does not exceed the maximum amount permitted to be automatically distributed under the regulations
promulgated under Code Section 409A, with such payment made on or before the later of (a) December
31 of the calendar year in which the Participants Retirement, separation from Service, Disability
or death occurs, or (b) the fifteenth day of the third month following the Participants
Retirement, Separation from Service, Disability or death.
6.9.
Deduction Limitation on Benefit Payments
. Notwithstanding the foregoing, if a
Participating Employer reasonably anticipates that the Participating Employers deduction with
respect to any distribution from the Plan would be limited or eliminated by application of Code
Section 162(m), then to the extent permitted by Treasury Regulation Section 1.409A-2(b)(7)(i),
payment shall be delayed as deemed necessary to ensure that the entire amount of any distribution
from this Plan is deductible. Any amounts for which distribution is delayed pursuant to this
Section shall continue to be credited with earnings and/or losses in accordance with
Section
5.2
until fully distributed. The delayed amounts (and any amounts credited thereon) shall be
distributed to the Participant (or his or her Beneficiary in the event of the Participants death)
at the earliest date the Participating Employer reasonably anticipates that the deduction of the
payment of the amount will not be limited or eliminated by application of Code Section 162(m). In
the event that such date is determined to be after a Participants Separation from Service and the
Participant to whom the payment relates is determined to be a Key Employee, then to the extent
deemed necessary to comply with Treasury Regulation Section 1.409A-3(i)(2), the delayed payment
shall not be made before the end of the six-month period following such Participants Separation
from Service.
ARTICLE 7
MISCELLANEOUS
7.1.
Amendment and Termination
. The Plan may be amended, suspended, discontinued or
terminated at any time by the Company;
provided, however
, that no such amendment, suspension,
discontinuance or termination shall reduce or in any manner adversely affect the rights of any
Participant with respect to benefits that are payable or may become payable under the Plan based
upon the vested balance of the Participants Class Year Distribution Account(s) as of the effective
date of such amendment, suspension, discontinuance or termination. Notwithstanding the preceding
provisions of this
Section 7.1
, the Company reserves the right to amend the Plan, either
retroactively or prospectively, in whatever manner is required to achieve compliance with the
requirements of Code Section 409A.
15
7.2.
Claims Procedure
. It is intended that the claims procedures of this Plan be
administered in accordance with the claims procedure regulations of the Department of Labor set
forth in 29 CFR §2560.503-1.
(a)
Claim
. A person who believes that he is being denied a benefit to which he is
entitled under the Plan (hereinafter referred to as a
Claimant
) may file a written
request for such benefit with the Plan Administrator, setting forth the claim.
(b)
Claim Decision
. Upon receipt of a claim, the Plan Administrator shall advise the
Claimant within ninety (90) days of receipt of the claim whether the claim is denied. If special
circumstances require more than ninety (90) days for processing, the Claimant will be notified in
writing within ninety (90) days of filing the claim that the Plan Administrator requires up to an
additional ninety (90) days to reply. The notice will explain what special circumstances make an
extension necessary and indicate the date a final decision is expected to be made.
If the claim is denied in whole or in part, the Claimant shall be provided a written opinion,
using language calculated to be understood by the Claimant, setting forth:
(i) The specific reason or reasons for such denial;
(ii) The specific reference to pertinent provisions of this Plan on which such denial is
based;
(iii) A description of any additional material or information necessary for the Claimant to
perfect his or her claim and an explanation why such material or such information is necessary;
(iv) Appropriate information as to the steps to be taken if the Claimant wishes to submit the
claim for review;
(v) The time limits for requesting a review under subsection (c) and for review under
subsection (d) hereof; and
(vi) The Claimants right to bring a civil action under Section 502(a) of ERISA following an
adverse benefit determination.
(c)
Request for Review
. Within sixty (60) days after the receipt by the Claimant of
the written opinion described above, the Claimant may request in writing that the Plan
Administrator review its determination. The Claimant or his or her duly authorized representative
may, but need not, review the pertinent documents and submit issues and comments in writing for
consideration by the Plan Administrator. If the Claimant does not request a review of the initial
determination within such sixty (60) day period, the Claimant shall be barred and estopped from
challenging the determination.
16
(d)
Review of Decision
. Within sixty (60) days after the Plan Administrators receipt
of a request for review, it will review the initial determination. After considering all materials
presented by the Claimant, the Plan Administrator will render a written
opinion, written in a manner calculated to be understood by the Claimant, setting forth the
specific reasons for the decision and containing specific references to the pertinent provisions of
the Plan on which the decision is based. If special circumstances require that the sixty (60) day
time period be extended, the Plan Administrator will so notify the Claimant and will render the
decision as soon as possible, but no later than one hundred twenty (120) days after receipt of the
request for review.
7.3.
Designation of Beneficiary
. Each Participant may designate a Beneficiary or
Beneficiaries (which Beneficiary may be an entity other than a natural person) to receive any
payments which may be made following the Participants death. Such designation may be changed or
canceled at any time without the consent of any such Beneficiary. Any such designation, change or
cancellation must be made in a form approved by the Plan Administrator and shall not be effective
until received by the Plan Administrator, or its designee. If no Beneficiary has been named, or
the designated Beneficiary or Beneficiaries shall have predeceased the Participant, the Beneficiary
shall be the Participants estate. If a Participant designates more than one Beneficiary, the
interests of such Beneficiaries shall be paid in equal shares, unless the Participant has
specifically designated otherwise.
7.4.
Limitation of Participants Right
. Nothing in this Plan shall be construed as
conferring upon any Participant any right to continue in Service, nor shall it interfere with the
rights of the Employer to terminate the employment of any Participant and/or to take any personnel
action affecting any Participant without regard to the effect which such action may have upon such
Participant as a recipient or prospective recipient of benefits under the Plan. Any amounts
payable hereunder shall not be deemed salary or other compensation to a Participant for the
purposes of computing benefits to which the Participant may be entitled under any other arrangement
established by the Company or its Affiliates for the benefit of its employees.
7.5.
No Limitation on Company Actions
. Nothing contained in the Plan shall be
construed to prevent the Company from taking any action which is deemed by it to be appropriate or
in its best interest.
7.6.
Obligations to Participating Employer
. If a Participant becomes entitled to a
distribution of benefits under the Plan, and if at such time the Participant has outstanding any
debt, obligation, or other liability representing an amount owing to the Participating Employer,
then the Participating Employer may offset such amount owed to it against the amount of benefits
otherwise distributable. Such determination shall be made by the Plan Administrator in its sole
discretion.
7.7.
Nonalienation of Benefits
. Except as expressly provided herein, no Participant
or Beneficiary shall have the power or right to transfer (otherwise than by will or the laws of
descent and distribution), alienate, or otherwise encumber the Participants or Beneficiarys
interest under the Plan. The Participating Employers obligations under this Plan are not
assignable or transferable, except to (a) any corporation or other entity which acquires all or
substantially all of the Participating Employers assets or (b) any corporation or other entity
into which the Participating Employer may be merged or consolidated. The provisions of the Plan
shall inure to the benefit of each Participant and the Participants Beneficiaries, heirs,
executors, administrators or successors in interest.
17
7.8.
Protective Provisions
. Each Participant shall cooperate with the Company by
furnishing any and all information requested by the Company in order to facilitate the payment of
benefits hereunder, taking such physical examinations as the Company may deem necessary and taking
such other relevant action as may be requested by the Company. If a Participant refuses to
cooperate, the Company shall have no further obligation to the Participant under the Plan, other
than payment to such Participant of the then current vested balance of the Participants Class Year
Distribution Account(s) in accordance with his or her applicable Enrollment Agreement and/or
Subsequent Election.
7.9.
Taxes
. The Participating Employer may make such provisions and take such action
as it may deem appropriate for the withholding of any taxes which the Participating Employer is
required by any law or regulation of any governmental authority, whether Federal, state or local,
to withhold in connection with any benefits under the Plan, including, but not limited to, the
withholding of appropriate sums from any amount otherwise payable to the Participant (or his or her
Beneficiary). Each Participant, however, shall be responsible for the payment of all individual
tax liabilities relating to any such benefits.
7.10.
Unfunded Status of Plan
. The Plan is an unfunded plan for tax and ERISA
purposes. This means that the value of each Class Year Distribution Account of a Participant is
based on the value assigned to a hypothetical bookkeeping account, which is invested in
hypothetical shares or units of investments funds available under the Plan. As the nature of the
investment fund which forms the index or meter for the valuation of the bookkeeping account
changes, the valuation of the bookkeeping account changes as well. The amount owed to a
Participant is based on the value assigned to the bookkeeping account. The Company may decide to
use a rabbi trust to anticipate its potential Plan liabilities, and it may attempt to have Plan
investments mirror the hypothetical investments deemed credited to the bookkeeping accounts.
However, the liability to pay the benefits is the Companys, and the assets of the rabbi trust are
potentially available to satisfy the claims of non-participant creditors of the Company. Each
Class Year Distribution Account of a Participant shall at all times represent a general obligation
of the Company. The Participant shall be a general creditor of the Company with respect to this
obligation, and shall not have a secured or preferred position with respect to the Participants
Class Year Distribution Account(s). Nothing contained herein shall be deemed to create an escrow,
trust, custodial account or fiduciary relationship of any kind.
7.11.
Severability
. If any provision of this Plan is held unenforceable, the
remainder of the Plan shall continue in full force and effect without regard to such unenforceable
provision and shall be applied as though the unenforceable provision were not contained in the
Plan.
7.12.
Governing Law
. The Plan shall be construed in accordance with and governed by
the laws of the State of California, without reference to the principles of conflict of laws.
7.13.
Headings
. Headings are inserted in this Plan for convenience of reference only
and are to be ignored in the construction of the provisions of the Plan.
18
7.14.
Gender, Singular and Plural
. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may
require. As the context may require, the singular may read as the plural and the plural as the
singular.
7.15.
Notice
. Any notice or filing required or permitted to be given to the Plan
Administrator under the Plan shall be sufficient if in writing and hand delivered, or sent by
registered or certified mail, to Spectrum Pharmaceuticals, Inc. ADDRESS: 11500 South Eastern
Avenue, Suite 240, Henderson, NV 89052 Attention: Chief Financial Officer, or to such other entity
as the Plan Administrator may designate from time to time. Such notice shall be deemed given as of
the date of delivery, or, if delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
19
IN WITNESS WHEREOF, Spectrum Pharmaceuticals, Inc. has caused this Plan to be executed by its
officer thereunto duly authorized, on this 2
nd
day of September 2011.
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SPECTRUM PHARMACEUTICALS, INC.
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By:
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/s/ Brett L. Scott
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Name:
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Brett L. Scott
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Title:
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Acting Chief Financial Officer
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20