Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is effective as of
January 2, 2008 (the “Effective Date”) by and between Dr. Rajesh C. Shrotriya
(“Executive”), and Spectrum Pharmaceuticals, Inc. (the “Corporation”).
WHEREAS:
A. The Corporation is a corporation organized under the laws of the State of
Delaware, and is engaged in the business of developing and manufacturing
pharmaceutical products and services; and
B. Executive is a person whose skills, experience and training are required by
the Corporation; and
C. The Corporation wishes to continue to employ Executive and Executive wishes
to accept the continued employment offered by the Corporation on the terms and
conditions hereinafter set forth.
NOW THEREFORE, the parties hereto, intending to be legally bound, do hereby
agree as follows:
1. EMPLOYMENT
1.1 Position and Duties
The Corporation does hereby continue to employ Executive and Executive hereby
accepts such continuing employment as Chairman, Chief Executive Officer and
President of Corporation upon the terms and provisions set forth in this
Agreement. Executive shall report to the Board of Directors of the Corporation
(the “Board”). Executive shall devote his full working time and effort to the
business and affairs of the Corporation as necessary to faithfully discharge the
duties and responsibilities of his office.
1.2 Other Activities
Executive may participate in other business and act as a director of any profit
or nonprofit corporation, so long as such activity is not competitive with the
business of the Corporation in any material respect and does not materially
detract from the performance of his duties as a full time executive of the
Corporation.

 

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2. TERM
This Agreement shall continue in full force and effect for a period, which shall
commence as of the Effective Date and shall continue until January 2, 2011,
unless sooner terminated as hereafter provided. Thereafter, this Agreement will
automatically renew for one (1) calendar year periods, unless either party gives
to the other written notice at least ninety (90) days prior to the commencement
of the next year, of such party’s intent not to renew this Agreement. “Term”
shall mean all or any part of the initial period of employment until January 2,
2011, or all or any part of one or more renewal period(s).
3. COMPENSATION AND BENEFITS
3.1 Base Salary
As compensation for the services to be performed by Executive during the
continuance of this Agreement, the Corporation shall pay Executive an annual
base salary of $600,000, adjusted annually, based on performance of Executive
and the Corporation, as determined by the Board (Compensation Committee),
payable in accordance with Corporation practices in effect from time to time,
but not less often than monthly. “Base Salary” shall mean the initial base
salary or the then-current base salary as later approved by the Board.
3.2 Bonuses
The Executive shall also be paid a performance bonus (the “Performance Bonus”),
no later than January 31 of the year following in an amount to be determined by
the Board’s Compensation Committee according to Executive’s achievement of
annual performance objectives mutually agreed upon by Executive and the Board.
Annual performance objectives shall be adopted no later than January 31st of
each calendar year. The Performance Bonus may, in the discretion of the Board,
be paid in cash and/or in the form of annual or special grants of stock options,
restricted stock and/or other equity based awards.
3.3 Pro Rata Bonuses Notwithstanding any other provision in this Agreement to
the contrary, should Executive’s employment be terminated by the Corporation
Without Cause, as defined in Section 6.3.3, for any reason, prior to the end of
a calendar year, then in good faith the Board shall determine the amount of the
Bonus, Performance Bonus and any other bonus that would have been paid to
Executive had his employment continued through the end of the calendar year and
the Corporation shall pay Executive (or in the case of Death, his estate) the
pro rata amount of each of these bonuses (the “Pro Rata Bonuses”).

 

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3.4 Equity Compensation
Executive shall be eligible to participate in any long-term incentive plans
and/or equity based compensation plans established or maintained by Corporation
for its senior executive officers.
3.5 Additional Benefits
Executive shall be entitled to all rights and benefits for which Executive is
otherwise entitled under any pension plan, profit sharing plan, life, medical,
dental, or health benefit the Corporation may provide for senior executives
generally and for employees of the Corporation generally from time to time in
effect during the Term of this Agreement (collectively, the “Additional
Benefits”).
3.6 Vacation
Executive shall be entitled to thirty (30) working days per year of paid
vacation (six weeks) for each calendar year of employment, which shall accrue on
a pro rata basis from the date employment commences under this Agreement. Since
commencement of his employment with the Corporation on September 1, 2000,
Executive has accrued, but not used vacation time. The balance of accrued and
unused vacation, as of the Effective Date of this Agreement, shall be added to
the vacation accrued under this Agreement, and the total accrued vacation shall
be available for Executive’s use. Upon termination of employment, for whatever
reason, all accrued and unused vacation shall be paid to Executive. Executive
shall also be entitled to holidays and leave time in accordance with the plans,
policies, programs and practices in effect generally with respect to other
senior employees of the Corporation. Executive shall not forfeit or cease to
accrue any paid vacation, if he is unable to or does not use it, in any year or
period of years during the Term hereof, or any extension thereof.
3.7 Life Insurance
During the Term of this Agreement, the Corporation shall pay for life insurance
on Executive in the amount of $5 million. Executive shall be entitled to select
personal beneficiaries for fifty (50%) percent of the proceeds of the life
insurance with the other fifty (50%) percent going to the Corporation. The
Corporation and Executive shall mutually agree on the appropriate policy
structure of such life insurance, considering all options such as, but not
limited to, term life, key person, or whole life policies. The Corporation shall
provide Executive with additional cash compensation at the end of each calendar
year to fully offset taxes attributable to Executive as a result of payment of
the life insurance premiums by the Corporation.
3.8 Annual Physical Examination
Corporation shall pay all costs associated with Executive’s receiving a
comprehensive annual physical examination.
3.9 Estate Planning Expense
Corporation shall pay the fees for attorneys and financial advisors to create
and maintain a comprehensive estate plan for Executive with a maximum of thirty
thousand dollars ($30,000) in total payments or reimbursements for the first
year during the Term, and ten thousand dollars ($10,000) in total payments or
reimbursements for each subsequent year during the Term.

 

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4. PERIODIC REVIEW
The Corporation shall review Executive’s compensation and benefits, not less
frequently than every twelve (12) months.
5. REIMBURSEMENTS
5.1 Business Expenses
5.1.1 During the Term of this Agreement, Executive shall be provided with one or
more corporate credit cards to use to pay for business expenses incurred in the
course of performing duties for the Corporation. The Corporation shall be
responsible for paying the expenses charged to the card.
5.1.2 To the extent that Executive pays business expenses directly out of his
personal funds, Executive shall be promptly reimbursed by the Corporation for
amounts actually expended by Executive in the course of performing duties for
the Corporation where Executive tenders receipts or other documentation
reasonably substantiating the amounts as required by the Corporation. As a
condition of employment hereunder, Executive shall entertain business prospects,
maintain and improve Executive’s professional skills by participating in
continuing education courses and seminars, and maintain memberships in civic
groups and professional societies. Business expenses include travel,
entertainment, parking, business meetings, professional dues, the costs of and
dues associated with maintaining club memberships, expenses of education, and
other expenses related to the duties performed by Executive, made or
substantiated in accordance with policies, practices and procedures established
from time to time by the Corporation and incurred in the pursuit and furtherance
of the Corporation’s business and goodwill.
5.2 Travel
In connection with any travel by Executive in the performance of his duties
hereunder, Executive shall be entitled to travel in business class for domestic
flights up to four (4) hours duration or in first class if a business class seat
is not available or if the flight is of longer duration than four (4) hours or
is an international flight.
5.3 Automobile
During the Term of this Agreement, Corporation shall provide Executive with a
monthly vehicle allowance or buy or lease a new car every three (3) years
comparable to the make and model Executive was using as of the Effective Date of
this Agreement. In addition, Corporation shall pay or reimburse Executive for
reasonable and necessary costs of all automobile insurance (liability or
otherwise), fuel, lubricants and automobile maintenance and repair incurred by
Executive hereunder.

 

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6. TERMINATION OF EMPLOYMENT
Employment shall terminate upon the occurrence of any of the following events:
6.1 Non-Renewal Upon Expiration of Term
Upon at least ninety (90) days prior written notice of non-renewal of this
Agreement by Corporation to Executive pursuant to Section 2 hereof. Upon
expiration of the Term without renewal, Executive shall receive the Without
Cause Severance Benefits (defined in Section 6.4), as if he had been terminated
Without Cause under Section 6.4 of this Agreement.
6.2 Mutual Agreement
Executive’s employment, and this Agreement, shall terminate at such time as the
Corporation and Executive mutually agree, in writing, to such termination, and
Executive shall not be eligible for any severance benefits.
6.3 Termination for Cause
6.3.1 For purposes of this Agreement, “Cause” shall be defined only as any of
the following, provided however, that the Board, by a duly adopted resolution,
has determined the presence of such Cause in good faith: (i) Executive’s
material breach of any of his duties and responsibilities under this Agreement
(other than as a result of incapacity due to Disability, as defined in
Section 6.5); (ii) Executive’s conviction by, or entry of a plea of guilty in, a
court of competent jurisdiction for a felony that adversely affects the
Corporation or its reputation; or (iii) Executive’s commission of an act of
fraud or willful misconduct or gross negligence in the performance of his
duties.
6.3.2 Notwithstanding the foregoing, Executive shall not be terminated for Cause
pursuant to Subsection 6.3.1, unless and until Executive has received written
notice of the proposed termination for Cause, including details of the bases for
such termination, and Executive has had an opportunity to be heard before at
least a majority of the Board. Executive shall be deemed to have had such an
opportunity if written notice is given to him at least ten (10) days in advance
of a meeting and Executive has the actual opportunity to be heard, at that
meeting, by no less than a majority of the Board on the issues of his proposed
termination.
6.3.3 Termination for any other reason than one of the reasons set forth above
under Section 6.3.1 and/or without following the procedures under Subsection
6.3.2, shall be considered “Without Cause.”
6.4 Termination Without Cause
6.4.1 The Corporation shall have the right to terminate Executive’s employment
with the Corporation Without Cause at any time, but any such termination shall
be without prejudice to Executive’s rights to receive, at Corporation’s sole
expense, the following severance benefits (the “Without Cause Severance
Benefits”): (a) a lump sum payment equivalent to the aggregate of two (2) years
cash compensation (defined as actual or estimated Base Salary, Bonuses, and the
Corporation-paid automobile benefit under

 

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Section 5.3 hereunder); (b) for two (2) years, Corporation-paid continued
coverage for Executive and his eligible dependents under the Corporation’s
existing health and benefit plans); and (c) immediate vesting in all options,
restricted stock and other equity based awards granted to Executive, and
Executive shall have three (3) years to exercise all vested equity based awards,
subject to the terms of the respective Corporation equity plan and individual
agreement(s) governing such equity based awards and as otherwise set forth in
this Agreement. Unless made at a time otherwise provided for in this Agreement,
such lump sum payment shall be made not later than ten (10) days after the
Termination Without Cause becomes effective.
6.4.2 With regard to any options granted to Executive pursuant to the
Corporation’s Amended and Restated 1997 Stock Incentive Plan (the “1997 Plan”),
the following shall take place upon a Termination Without Cause and shall be
considered a Without Cause Severance Benefit:
6.4.3 For each particular option (the “1997 Plan Option”):
(a) if the Current Market Price of a share of the Corporation’s common stock is
greater than the exercise price of the 1997 Plan Option on the date of
termination, Executive shall be able to exercise such 1997 Plan Option in
accordance with the terms of the 1997 Plan and the individual stock option
agreement, and the Corporation shall grant, on the date of termination, a new
option, pursuant to the terms of the Corporation’s 2003 Amended and Restated
Incentive Award Plan (the “2003 Plan”) or other appropriate plan or arrangement,
to purchase a number of shares of the Corporation’s common stock equal to the
same number of shares exercisable under the 1997 Plan Option (after fully
vesting as required above) at an exercise price equal to the Current Market
Price on the date of termination. Such option shall be fully vested and
exercisable for three (3) years, subject to the terms of the 2003 Plan or other
appropriate plan or arrangement and individual agreement(s) governing such
option and as otherwise set forth in this Agreement, or
(b) if the Current Market Price of a share of the Corporation’s common stock is
equal to or less than the exercise price of the 1997 Plan Option on the date of
termination, such 1997 Plan Option shall be immediately cancelled, and the
Corporation shall grant, on the date of termination, a new option, pursuant to
the terms of the 2003 Plan or other appropriate plan or arrangement, to purchase
a number of shares of the Corporation’s common stock equal to the same number of
shares exercisable under the 1997 Plan Option (after fully vesting as required
above) at an exercise price equal to the exercise price of the 1997 Plan Option.
Such option shall be fully vested and exercisable for three (3) years, subject
to the terms of the 2003 Plan or other appropriate plan or arrangement and
individual agreement(s) governing such option and as otherwise set forth in this
Agreement.
(c) Notwithstanding the foregoing, the total number of shares issuable pursuant
to the new options granted by Subsections (a) and (b) above shall be subject to
the limitation on the number of shares permitted by the 2003 Plan to be issued
to one person during a calendar year, if any.

 

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6.4.4 “Current Market Price” on any given date shall be determined as follows:
(a) If the Corporation’s common stock is then listed or admitted to trading on a
NASDAQ market system or a stock exchange which reports closing sale prices, the
Current Market Price shall be the closing sale price on such date on such NASDAQ
market system or principal stock exchange on which the Corporation’s common
stock is then listed or admitted to trading, or, if no closing sale price is
quoted on such day, then the Current Market Price shall be the closing sale
price of the Corporation’s common stock on such NASDAQ market system or such
exchange on the next preceding day for which a closing sale price is reported.
(b) If the Corporation’s common stock is not then listed or admitted to trading
on a NASDAQ market system or a stock exchange which reports closing sale prices,
the Current Market Price shall be the average of the closing bid and asked
prices of the Corporation’s common stock in the over-the-counter market on such
date.
(c) If neither (a) nor (b) is applicable as of such date, then the Current
Market Price shall be determined by the Board, in consultation with Executive,
in good faith using any reasonable method of evaluation, which determination
shall be conclusive and binding on all the parties.
6.5 Disability
For the purposes of this Agreement, “Disability” shall mean the absence of
Executive performing Executive’s duties with the Corporation on a full-time
basis for a period of twelve (12) consecutive months, as a result of incapacity
due to mental or physical illness as determined by a physician selected by the
Corporation or its insurers and reasonably acceptable to Executive or
Executive’s legal representative. If Executive shall become Disabled,
Executive’s employment may be terminated by written notice to Executive. A lump
sum equal to three (3) months of Executive’s Base Salary, at the time of his
termination, shall be paid to Executive or Executive’s legal representative
within ten (10) days of his termination (the “Disability-Related Severance
Benefits”). All equity based awards, such as options and restricted stock, shall
immediately vest and shall remain exercisable in accordance with the terms of
the respective Corporation equity plan and individual agreement(s) governing
such options and as otherwise set forth in this Agreement.
6.6 Death
Executive’s employment and this Agreement will terminate automatically in the
event of the death of Executive. A lump sum equal to three (3) months of
Executive’s Base Salary, at the time of his death, shall be paid to Executive’s
estate within ten (10) days of his death (the “Death-Related Severance
Benefits”). All equity based awards, such as options and restricted stock, shall
immediately vest and shall remain exercisable in accordance with the terms of
the respective Corporation equity plan and individual agreement(s) governing
such options and as otherwise set forth in this Agreement.

 

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6.7 Resignation By Executive For No Reason
Executive may voluntary resign his employment for no reason at any time upon
sixty (60) days written notice to Corporation. If the Corporation should accept
Executive’s resignation effective in less than sixty (60) days, Corporation
shall pay Executive all of his regular and customary compensation and benefits
through the sixtieth (60th) day of notice. Executive shall not be entitled to
any severance in the event of such a resignation by Executive. However, any
stock options or other equity based awards (except for restricted stock) held by
Executive shall immediately become fully vested upon the effective date of
Executive’s resignation Without Cause, and Executive shall have three (3) years
to exercise all such vested equity based award subject to the terms of the
respective Corporation equity plan and individual agreement(s) governing such
equity based award and as otherwise set forth in this Agreement. With regard to
any 1997 Plan Options (as defined in Section 6.4), the Executive shall receive
the Without Cause Severance Benefit outlined above under Section 6.4 for such
options, as if he had been terminated Without Cause under Section 6.4.
6.8 Resignation By Executive for Good Reason
Other than pursuant to the circumstances of a Change of Control, as defined in
Section 7.4, in which case Section 7.2 shall apply, if during the Term Executive
suffers: a material diminution of base salary; a material diminution in the
employee’s authority, duties or responsibilities; a material diminution in the
authority, duties or responsibilities of the supervisor to whom the employee is
required to report, including a requirement that an employee report to a
corporate officer or employee instead of directly to the board of directors; a
material diminution in the budget over which the employee retains authority; a
material change in geographic location at which the employee must perform his
services; or any other action or inaction that constitutes a material breach of
the terms of an applicable employment agreement, then Executive shall have “Good
Reason” to voluntarily resign his employment with the Corporation. If, within
ninety (90) days of the initial existence of the condition(s) that constitute
Good Reason, Executive:(a) provides written notice to the Board of his intention
to resign his employment for Good Reason; (b) provides written notice to the
Board of the grounds that Executive believes he has to resign for Good Reason
and within thirty (30) days of receipt of such written notice, the Board has not
cured by eliminating the condition(s) that constitute Good Reason; and
(c) Executive actually terminates his employment no less than two (2) years
following the initial existence of the Good Reason condition, then Executive
shall receive all of the Without Cause Severance Benefits, as if he had been
terminated Without Cause under Section 6.4 of this Agreement.
7. CHANGE OF CONTROL
7.1 One-Time Payment to Executive
In addition to any other payment due to Executive under this Agreement, if there
should occur a Change of Control of the Corporation (or any successor),
Corporation (or any successor) shall within thirty (30) days pay Executive a
one-time payment of six hundred thousand dollars ($600,000.00). The one-time
payment shall be made in recognition of Executive’s extraordinary and unique
contributions to the development of Corporation.

 

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7.2 Executive’s Rights
If there should occur a Change of Control of the Corporation (or any successor)
and (i) Executive’s employment is terminated (other than by Executive) Without
Cause within twelve (12) months thereafter; or (ii) Executive is adversely
affected in terms of assigned duties and responsibilities, overall compensation,
benefits, title, authority, number of reports, reporting relationships or
location of employment (without his written consent, being required to regularly
report to an office located more than thirty (30) miles from his present
office), and Executive, within twelve (12) months after an event constituting a
Change of Control, elects to resign his employment with the Corporation, then in
either case, Executive shall be provided with Corporation-paid senior executive
outplacement services (at a value of no less than forty thousand dollars
($40,000)) at an outplacement or executive search firm of Executive’s selection
(and reasonably acceptable to Corporation); and he shall receive the Without
Cause Severance Benefits, as if he had been terminated Without Cause under
Section 6.4 of this Agreement. For clarity, the Without Cause Severance
Benefits, in this circumstance, include the Executive’s right to exercise his
equity based awards, including options to acquire common stock of the
Corporation or acquirer’s stock, if applicable. Collectively, the benefits
Executive is eligible to receive under this Section 7 shall be referred to as
the “Change of Control Severance Benefits.” In addition, instead of two
(2) years cash compensation (as defined under Section 6.4.1 (a)), Executive
shall receive three (3) years cash compensation pursuant to the Change of
Control Severance Benefits.
7.3 Relocation Expense
In the event Executive voluntarily resigns for Good Reason, or is terminated
Without Cause, the Corporation will pay or reimburse Executive for all
reasonable relocation expenses incurred by Executive in connection with his and
his family’s relocation to Connecticut, including, but not limited to short-term
hotel costs or apartment rental for Executive for a period not to exceed six
(6) months, house hunting, travel by Executive’s spouse and all household goods
moving costs. The total of all such amounts will not exceed seventy-five
thousand dollars ($75,000). The Corporation will provide Executive with
additional cash compensation at the end of the calendar year to fully offset
taxes attributable to Executive as a result of payment of such reasonable
relocation expenses by the Corporation. If within six (6) months of his
voluntary resignation for Good Cause, or his termination Without Cause,
Executive informs the Corporation that he does not intend to relocate,
Corporation shall pay Executive seventy-five thousand dollars ($75,000) in a
lump sum, less any relocation expenses already incurred or advanced.
7.4 Definition
For all purposes of this Agreement, “Change of Control” shall have the same
definition of Change of Control in the Corporation’s 2003 Amended and Restated
Incentive Award Plan.
8. CERTAIN ADDITIONAL PAYMENTS BY THE CORPORATION
8.1 Notwithstanding anything in this Agreement to the contrary, and except as
set forth below, in the event it shall be determined that any payment or
distribution by the Corporation to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Article 8) (a “Payment”) would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code (the “Code”) or any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise Tax”), then the Executive
shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an
amount such that after payment by the Executive of all taxes (including any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payment.

 

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8.2 Subject to the provisions of Section 8.3, all determinations required to be
made under this Article 8, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by a certified public
accounting firm as may be designated by the Executive (the “Accounting Firm”)
which shall provide detailed supporting calculations both to the Corporation and
the Executive within fifteen (15) business days of the receipt of notice from
the Executive that there has been a Payment, or such earlier time as is
requested by the Corporation. In the event that the Accounting Firm is serving
as accountant or auditor for the individual, entity or group effecting the
Change of Control, the Executive shall appoint another accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Corporation. Any Gross-Up Payments,
as determined pursuant to this Article 8, shall be paid by the Corporation to
the Executive within five days of the receipt of the Accounting Firm’s
determination. Any determination by the Accounting Firm shall be binding upon
the Corporation and the Executive.
As a result of the uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Corporation
should have been made (an “Underpayment”), consistent with the calculations
required to be made hereunder. In the event that the Corporation exhausts its
remedies pursuant to Section 8.3, and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Corporation to or for the benefit of the Executive.
8.3 The Executive shall notify the Corporation in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Corporation of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive has
been informed in writing of such claim and shall apprise the Corporation of the
nature of such claim prior to the expiration of the thirty (30) day period
following the date on which it gives such notice to the Corporation (or such
shorter period ending on the date that any payment of taxes with respect to the
claim is due). If the Corporation notifies the Executive in writing prior to the
expiration of such period that is desires to contest such claim, the Executive
shall:

  i.  
give the Corporation any information reasonably requested by the Corporation
relating to such claim,

  ii.  
take such action in connection with contesting such claim as the Corporation
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Corporation,

  iii.  
cooperate with the Corporation in good faith in order effectively to contest
such claim, and

 

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  iv.  
permit the Corporation to participate in any proceedings relating to such claim;

provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 8.3, the Corporation shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Corporation shall determine; provided, however, that if the Corporation directs
the Executive to pay such claim and sue for a refund, the Corporation shall
advance the amount of such payment to the Executive, on an interest-free basis
and shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of
the statue of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Corporation’s
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
8.4 If, after the receipt by the Executive of an amount advanced by the
Corporation pursuant to Section 8.3, the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Corporation’s complying with the requirements of Section 8.3) promptly pay to
the Corporation the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Corporation pursuant to Section 8.3, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Corporation does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
9. DEFERRED COMPENSATION
In the event that the Corporation determines that any payments hereunder fail to
satisfy the distribution requirement of Section 409A(a)(2)(A) of the Code, the
payment of such benefit shall be accelerated to the minimum extent necessary so
that the benefit is not subject to the provisions of Section 409A(a)(1) of the
Code. (It is the intention of the preceding sentence to apply the short-term
deferral provisions of Section 409A of the Code, and the regulations and other
guidance thereunder, to the payments hereunder, and the payment schedule as
revised after the application of the preceding sentence shall be referred to as
the “Revised Payment Schedule.”)

 

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However if there is no Revised Payment Schedule that would avoid application of
Section 409A(a)(1) of the Code, the payment of such benefits shall not be paid
pursuant to the Revised Payment Schedule and instead shall be delayed to the
minimum extent necessary so that such benefits are not subject to the provisions
of Section 409A(a)(1) of the Code. The Corporation may attach conditions to or
adjust the amounts paid pursuant to this Section 9 to preserve, as closely as
possible, the economic consequences that would have applied in the absence of
this Section 9; provided, however, that no such condition or adjustment shall
result in the payments being subject to Section 409A(a)(1) of the Code.
10. MISCELLANEOUS
10.1 Arbitration
Any dispute, controversy or claim arising out of or in respect of this Agreement
(or its validity, interpretation or enforcement), the employment relationship or
the subject matter hereof shall, at the request of either party, be settled by
binding arbitration before a single arbitrator in Orange County, California in
accordance with the then-current Employment Arbitration Rules of the American
Arbitration Association and judgment upon the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof. The Corporation shall
pay the filing fee, all other costs of the arbitration and the fees and costs of
the arbitrator (the “Arbitration Costs”). The Arbitrator shall award reasonable
attorneys’ fees and expenses (but in no case Arbitration Costs) to the
prevailing party.
10.2 No Third-Party Beneficiaries
This Agreement shall not confer any rights or remedies upon any person other
than the parties and their respective successors and permitted assigns.
10.3 Entire Agreement
This Agreement (including the documents referred to herein and the Employee
Proprietary Information and Inventions Agreement signed by Executive on July 15,
2004 (the “Proprietary Information Agreement”), the Indemnity Agreement signed
by Executive on September 7, 2004 (the “Indemnity Agreement”) and all agreements
and/or plans governing equity based awards granted to Executive) constitutes the
entire agreement between the parties and supersedes any prior understandings,
agreements, or representations between the parties, written or oral, to the
extent they have related in any way to the subject matter hereof.
10.4 Succession and Assignment
This Agreement shall be binding upon and inure to the benefit of the parties
named herein and their respective successors and permitted assigns. No party may
assign either this Agreement or any of his or its rights, interests, or
obligations hereunder without the prior written approval of the Corporation and
Executive; provided, however, that the Corporation may (i) assign any or all of
its rights and interests hereunder to one or more of its affiliates and
(ii) designate one or more of its affiliates to perform its obligations
hereunder (in any or all of which cases the Corporation nonetheless shall remain
responsible for the performance of all of its obligations hereunder). Any
successor or assignee of the Corporation shall be deemed substituted for
employer under the terms of this Agreement for all purposes.

 

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10.5 Counterparts
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the
same instrument.
10.6 Headings
The section headings contained in this Agreement are inserted for convenience
only and shall not affect in any way the meaning or interpretation of this
Agreement.
10.7 Notices
All notices, requests, demands, claims, and other communications required or
permitted hereunder shall be in writing. Any notice, request, demand, claim, or
other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Corporation:
Spectrum Pharmaceuticals, Inc.
157 Technology Drive
Irvine, CA 92618
If to Executive:
Rajesh Shrotriya, M.D.
 
 
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving notice in the
manner herein set forth.
10.8 Governing Law
This Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of California without giving effect to any choice or
conflict of law provision or rule (whether of the State of California or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of California.

 

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10.9 Amendments and Waivers
No amendment of any provision of this Agreement shall be valid unless the same
shall be in writing, approved by the Board, and signed by Corporation and the
Executive. No waiver by any party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
10.10 Severability
Any term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction.
10.11 Defense and Indemnification
10.11.1 The Corporation shall, to the maximum extent permitted by the laws of
Delaware and California, defend, indemnify and hold Executive harmless from and
against any expenses, including reasonable attorneys fees, judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with any proceeding arising out of, or related to, Executive’s employment by the
Corporation in any and all cases pursuant to the terms of the Indemnity
Agreement. The Corporation shall pay or reimburse Executive’s expenses,
including reasonable attorneys fees and costs of settlement, reasonably incurred
in defending against any such proceeding to the maximum extent permitted by law
in any and all cases pursuant to the terms of the Indemnity Agreement. The
Corporation shall include Executive under all directors and officers liability
insurance policies and shall use its best efforts to maintain or improve
existing coverage levels, assuming continuation of insurance availability at
commercially reasonable rates.
10.11.2 The Corporation shall defend, indemnify and hold Executive harmless from
and against any income tax assessed against him as a result of any
payment/benefit being paid to or given to him by the Corporation that is not
exempt from, or that violates, Internal Revenue Code Section 409A.
10.12 Board Acting by Committee
Any action that this Agreement requires or permits the Board or the Corporation
to take may be taken by a Compensation Committee or any other authorized
committee of the Board.
[Signature Page Follows]

 

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IN WITNESS THEREOF, the parties hereto have executed this Agreement as of the
Effective Date.

              CORPORATION   EXECUTIVE
 
           
By:
  /S/ Stuart Krassner   By:   /S/ Rajesh C. Shrotriya
 
           
 
  Stuart Krassner, Sc.D., Psy.D.       Rajesh C. Shrotriya, M.D.
 
  Chair, Compensation Committee        

 

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