Filed by Bowne Pure Compliance

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BDbflHvv+KM6lfF5qGBwgZ0ucEp8Sa5Y8228c6/0pt40dPocAIeUCIBjJNNSZMYo IpSSxSjSlQ0qkgFf5b1vUg== 0001362310-08-004444.txt : 20080811 0001362310-08-004444.hdr.sgml : 20080811 20080811165133 ACCESSION NUMBER: 0001362310-08-004444 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20080630 FILED AS OF DATE: 20080811 DATE AS OF CHANGE: 20080811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPECTRUM PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000831547 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 930979187 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-28782 FILM NUMBER: 081006963 BUSINESS ADDRESS: STREET 1: 157 TECHNOLOGY DR CITY: IRVINE STATE: CA ZIP: 92618 BUSINESS PHONE: 9497886700 MAIL ADDRESS: STREET 1: 157 TECHNOLOGY DR CITY: IRVINE STATE: CA ZIP: 92618 FORMER COMPANY: FORMER CONFORMED NAME: NEOTHERAPEUTICS INC DATE OF NAME CHANGE: 19960819 FORMER COMPANY: FORMER CONFORMED NAME: AMERICUS FUNDING CORP DATE OF NAME CHANGE: 19920703 10-Q 1 c74310e10vq.htm FORM 10-Q Filed by Bowne Pure Compliance

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-28782

SPECTRUM PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware		93-0979187
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

157 Technology Drive
Irvine, California		92618
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (949) 788-6700

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No o

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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


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

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock as of the latest practicable date:


Class		Outstanding at August 1, 2008
Common Stock, $.001 par value		31,511,777

SPECTRUM PHARMACEUTICALS, INC.

TABLE OF CONTENTS


	Page No.
PART I. FINANCIAL INFORMATION		3

ITEM 1. Financial Statements		3

Statement Regarding Financial Information		3

Condensed Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007 (unaudited)		4

Condensed Consolidated Statements of Operations for the three-month and six-month periods ended June 30, 2008 and 2007 (unaudited)		5

Condensed Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2008 and 2007 (unaudited)		6

Notes to Condensed Consolidated Financial Statements (unaudited)		7

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk		24

ITEM 4. Controls and Procedures		25

PART II. OTHER INFORMATION		25

ITEM 4. Submission of Matters to a Vote of Security Holders		25

ITEM 6. Exhibits		26

SIGNATURES		27

Exhibit 2.1
Exhibit 4.1
Exhibit 10.2
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

SPECTRUM PHARMACEUTICALS, INC.

FORM 10-Q

For the Three-month and Six-month periods ended June 30, 2008

(Unaudited)

PART I — FINANCIAL INFORMATION

ITEM 1. Financial Statements

Statement Regarding Financial Information

The unaudited condensed consolidated financial statements of Spectrum Pharmaceuticals, Inc. included herein have been prepared by management pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States has been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures are adequate to make the information presented not misleading.

We recommend that you read the unaudited condensed consolidated financial statements included herein in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007, filed with the SEC on March 14, 2008.

SPECTRUM PHARMACEUTICALS, INC.

Condensed Consolidated Balance Sheets
(Unaudited)


	June 30,			December 31,
	2008			2007
	(In Thousands, Except Share and Per
	Share Data)
Assets
Current Assets:
Cash and cash equivalents	$	1,725		$	1,141
Marketable securities		57,825			54,518
Accounts receivable, net of allowance for doubtful accounts		379			191
Inventory		1,197			—
Prepaid expenses and other current assets		781			762

Total current assets		61,907			56,612
Property and equipment, net		1,217			716
Other Assets		112			212

Total assets	$	63,236		$	57,540

Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable and other accrued liabilities	$	2,910		$	1,598
Accrued compensation		1,062			1,111
Accrued drug development costs		3,782			5,090

Total current liabilities		7,754			7,799
Deferred revenue and other credits		966			992

Total liabilities		8,720			8,791

Commitments and Contingencies (Note 3)
Stockholders’ Equity:
Preferred Stock, par value $0.001 per share, 5,000,000 shares authorized:
Series B Junior Participating Preferred Stock, 1,000,000 shares authorized, no shares issued and outstanding		—			—
Series E Convertible Voting Preferred Stock, 2,000 shares authorized, stated value $10,000 per share, $2.0 million aggregate liquidation value, issued and outstanding, 170 shares at June 30, 2008 and December 31, 2007		1,048			1,048
Common stock, par value $0.001 per share, 100,000,000 shares authorized:
Issued and outstanding, 31,518,603 and 31,233,798 shares at June 30, 2008 and December 31, 2007, respectively		32			31
Additional paid-in capital		292,332			288,927
Accumulated other comprehensive income		843			493
Accumulated deficit		(239,739	)		(241,750	)

Total stockholders’ equity		54,516			48,749

Total liabilities and stockholders’ equity	$	63,236		$	57,540

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

SPECTRUM PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Operations
(Unaudited)


	Three Months			Three Months			Six Months		Six Months
	Ended			Ended			Ended		Ended
	June 30, 2008			June 30, 2007			June 30, 2008		June 30, 2007
	(In Thousands, Except Share and Per Share Data)
Revenues
Licensing and milestone revenues	$	20,676		$	4,032		$	20,676	$	4,375

Total Revenues	$	20,676		$	4,032		$	20,676	$	4,375


Operating expenses:
Research and development		6,747			7,643		$	13,129		13,518
Selling, General and administrative		3,230			3,417		$	5,815		6,359


Total operating expenses		9,977			11,060			18,944		19,877


Income (loss) from operations		10,699			(7,028	)		1,732		(15,502	)

Other income (expense), net		(21	)		750			280		1,332


Net income (loss) before minority interest in consolidated subsidiary		10,678			(6,278	)		2,012		(14,170	)
Minority interest in net loss of consolidated subsidiary		—			20					20


Net income (loss)	$	10,678		$	(6,258	)	$	2,012	$	(14,150	)


Net income (loss) per share
Basic	$	0.34		$	(0.22	)	$	0.06	$	(0.53	)

Diluted	$	0.34		$	(0.22	)	$	0.06	$	(0.53	)


Weighted average common shares:
Basic		31,462,522			28,442,904			31,366,902		26,875,518

Diluted		31,869,079			28,442,904			31,822,132		26,875,518

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

SPECTRUM PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Cash Flows
(Unaudited)


	Six Months			Six Months
	Ended			Ended
	June 30, 2008			June 30, 2007
	(In Thousands, Except Share and Per Share Data)
Cash Flows From Operating Activities:
Net Income (Loss)	$	2,012		$	(14,150	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		185			123
Stock-based compensation		3,117			2,228
Fair value of common stock issued in connection with drug license		305			—
Minority interest in subsidiary		—			(20	)
Changes in operating assets and liabilities:
Decrease (Increase) in Accounts Receivable		(188	)		1,056
Increase in Inventory		(1,197	)		—
Decrease (Increase) in other assets		190			(176	)
Increase in accounts payable and accrued expenses		4			850
Decrease in accrued compensation and related taxes		(49	)		(190	)
Decrease in deferred revenue and other credits		(43	)		(16	)

Net cash provided by (used in) operating activities		4,336			(10,295	)

Cash Flows From Investing Activities:
Purchases of marketable securities		(3,065	)		(19,718	)
Purchases of property and equipment		(687	)		(175	)

Net cash provided by (used in) investing activities		(3,752	)		(19,893	)

Cash Flows From Financing Activities:
Proceeds from issuance of common stock and warrants, net of related offering costs and expenses		—			30,012
Proceeds from exercise of warrants		—			519
Proceeds from exercise of stock options		—			95

Net cash provided by financing activities		—			30,626

Net increase in cash and cash equivalents		584			438
Cash and cash equivalents, beginning of period		1,141			519

Cash and cash equivalents, end of period	$	1,725		$	957

Supplemental Cash Flow Information:
Interest paid	$	—		$	—

Income taxes paid	$	—		$	—

Schedule of Non-Cash Investing and Financing Activities:
Fair value of common stock issued in connection with drug license	$	305		$	—

Fair value of restricted stock granted employees and directors	$	223		$	—

Fair value of stock issued to match employee 401k contributions	$	129		$	85

Fair value of warrants issued to consultants	$	69		$	—

Preferred stock dividends paid with common stock	$	—		$	12

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

SPECTRUM PHARMACEUTICALS, INC.

1. Business and Basis of Presentation

Business

Spectrum Pharmaceuticals, Inc. (the “Company,” “we,” “our,” or “us”) is a biopharmaceutical company with a focus on oncology, urology and other critical health challenges for which there are few other treatment options.

The following is a brief update of the most advanced products under development as of June 30, 2008:

Fusilev™ (levoleucovorin) for injection (“FUSILEV”) (after high-dose methotraxate therapy in osteosarcoma, the most common form of bone cancer): In March 2008, our first New Drug Application (NDA) for our proprietary oncology drug FUSILEV, was approved by the U.S. Food and Drug Administration, or FDA. FUSILEV rescue is indicated after high-dose methotrexate therapy in patients with osteosarcoma, and is also indicated to diminish the toxicity and counteract the effects of impaired methotrexate elimination or inadvertent overdose of folic acid antagonists. During the first half of 2008, we built a commercial organization in preparation for the launch of FUSILEV, expected during the third quarter of 2008. In June 2008, we filed an NDA amendment for a tablet formulation. Also, we plan to file a supplemental NDA for its use in colorectal cancer in 5-fluorouracil containing regimens.

EOquin ^{^®} (in bladder cancer): Pursuant to a special protocol assessment procedure, in 2007, we initiated two Phase 3 clinical studies in the United States and Canada for EOquin in non-muscle invasive bladder cancer. We have received scientific advice from the European Medicines Agency, or EMEA, the European equivalent to the FDA, whereby the EMEA agreed that the two Phase 3 studies being conducted at this time should be sufficient for a regulatory decision regarding European registration. We continue to enroll patients into the two trials at sites in the United States and Canada and expect enrollment in both trials to be completed by the end of 2009. We are also seeking strategic partners in some markets for the future development and commercialization of EOquin.

Ozarelix (in benign prostatic hypertrophy): In April 2008, we announced the completion of a 9-month, randomized, double-blind, placebo-controlled, Phase 2b study of the safety and efficacy of ozarelix, the Company’s drug candidate for the treatment of benign prostatic hypertrophy, or BPH. Based on the results of that study, we have designed and submitted to the FDA the protocol for the next study of ozarelix in BPH and we should shortly start the clinical trial.

Sumatriptan and other generic injectibles (non-dilutive funding): During the three-month period ended June 30, 2008, we entered into an agreement with Par Pharmaceutical, Inc., or Par, our marketing partner for sumatriptan injection, pursuant to which received a non-refundable $20 million cash payment from Par for the sale of our share of the profits from the commercialization of sumatriptan injection. Also, during the three-month period ended June 30, 2008, we entered into an agreement with Sagent Pharmaceuticals, Inc. (“Sagent”) to sell to Sagent rights to certain of our abbreviated new drug applications ANDAs, for $660,000. These payments have been recorded as revenues during the three-month period ended June 30, 2008, since we had no remaining future obligations related to such transfer of rights.

For a more detailed description of these and our other drugs in development, refer to our Annual Report on Form 10-K for the year ended December 31, 2007.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements are prepared on a consistent basis in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and consolidation and elimination entries) considered necessary for a fair presentation have been included. Operating results for the three-month and six-month periods ended June 30, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008. The balance sheet at December 31, 2007 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2007.

SPECTRUM PHARMACEUTICALS, INC.

2. Summary of Significant Accounting Policies and Estimates

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and of its wholly-owned and majority-owned subsidiaries. As of June 30, 2008, we had one subsidiary: Spectrum Pharmaceuticals GmbH, a wholly-owned inactive subsidiary incorporated in Switzerland in April 1997. In June 2008, we dissolved NeoJB, LLC (NeoJB), an 80% owned inactive subsidiary that was organized in Delaware in April 2002. We have eliminated all significant intercompany accounts and transactions.

Reclassification of Accounts

Certain reclassifications have been made to prior-year comparative financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or financial position.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent obligations in the financial statements and accompanying notes. Our most significant assumptions are employed in estimates used in determining values of financial instruments and accrued obligations, as well as in estimates used in applying the revenue recognition policy and estimating share-based compensation. The estimation process requires assumptions to be made about future events and conditions, and as such, is inherently subjective and uncertain. Actual results could differ materially from our estimates.

Fair Value of Financial Instruments

Effective January 1, 2008, we adopted Statement of Financial Accounting Standards No. 157, “Fair Value Measurements,” or FAS 157. In February 2008, the Financial Accounting Standards Board, or FASB, issued FASB Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157,” which provides a one year deferral of the effective date of FAS 157 for non-financial assets and non-financial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least annually. Therefore, we adopted the provisions of FAS 157 with respect to our financial assets and liabilities only. FAS 157 defines fair value, establishes a framework for measuring fair value under GAAP and enhances disclosures about fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under FAS 157 must maximize the use of observable inputs and minimize the use of unobservable inputs.

We utilize the market approach to measure fair value for our financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:


		Level 1:		Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

		Level 2:		Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

		Level 3:		Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

SPECTRUM PHARMACEUTICALS, INC.

In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

The adoption of this statement did not have a material impact on our consolidated results of operations and financial condition. The carrying values of our cash, cash equivalents and marketable securities, carried at fair value as of June 30, 2008, are classified in the table below in one of the three categories described above:


	Fair Value Measurements at June 30, 2008
	Level 1		Level 2		Level 3		Total

Cash & Equivalents	$	1,725		—		—	$	1,725
U.S. Treasury T-Bills		23,591		—		—		23,591
Money Market Currency Funds		—	$	4,240		—		4,240
Medium Term Corporate Notes		—		1,973		—		1,973
U.S. Treasury Backed Securities		—		28,021		—		28,021

	$	25,316	$	34,234		—	$	59,550

Cash, Cash Equivalents and Marketable Securities

Cash, cash equivalents and marketable securities primarily consist of bank checking deposits, short-term treasury securities, institutional money market funds, corporate debt and equity, municipal obligations, including market auction debt securities, government agency notes, and certificates of deposit. We classify highly liquid short-term investments, with insignificant interest rate risk and maturities of 90 days or less at the time of acquisition, as cash and cash equivalents. Other investments, which do not meet the above definition of cash equivalents, are classified as either “held-to-maturity” or “available-for-sale” marketable securities, in accordance with the provisions of Financial Accounting Standards Board (FASB) Statement (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities. Investments that lack immediate liquidity, or which we intend to hold for more than one year are classified as long-term investments, and included in other assets.

Concentrations of Credit Risk

All of our cash, cash equivalents and marketable securities are invested at major financial institutions. These institutions are required to invest our cash in accordance with our investment policy with the principal objectives being preservation of capital, fulfillment of liquidity needs and above market returns commensurate with preservation of capital. Our investment policy also requires that investments in marketable securities be in only highly rated instruments, with limitations on investing in securities of any single issuer. To a limited degree these investments are insured by the Federal Deposit Insurance Corporation and by third party insurance. However, these investments are not insured against the possibility of a complete loss of earnings or principal and are inherently subject to the credit risk related to the continued credit worthiness of the underlying issuer and general credit market risks as existed during late 2007 and early 2008. We manage such risks on our portfolio by matching scheduled investment maturities with our cash requirements and investing in highly rated instruments.

Inventory

Inventory is stated at the lower of cost (first-in, first-out method) or market. As of June 30, 2008, inventory consisted of raw materials and work-in-process of FUSILEV in preparation for its commercial launch in the third quarter of 2008. The lower of cost or market is determined based on net estimated realizable value after appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors.

SPECTRUM PHARMACEUTICALS, INC.

Patents and Licenses

We own or license all the intellectual property that forms the basis of our business model. We expense all licensing and patent application costs as they are incurred.

Revenue Recognition

We follow the provisions as set forth by current accounting rules, which primarily include Staff Accounting Bulletin (SAB) 104, Revenue Recognition, and Emerging Issues Task Force (EITF) No. 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables.” Generally, revenue is recognized when evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed and determinable, and collectibility is reasonably assured.

Upfront monies representing non-refundable fees received upon the execution of licensing or other agreements are recognized as revenue upon execution of the agreements where we have no significant future performance obligations and collectibility of the fees is reasonably assured. Milestone payments, which are generally based on developmental or regulatory events, are recognized as revenue when the milestones are achieved, collectibility is reasonably assured, and we have no significant future performance obligations in connection with the milestone. In those instances where we have collected fees or milestone payments but have significant future performance obligations related to the development of the drug product, we record deferred revenue and recognize it over the period of our future obligations.

Revenue from sales of product is recognized upon shipment of product, when title and risk of loss have transferred to the customer, and provisions for estimates, including promotional adjustments, price adjustments, returns, and other potential adjustments are reasonably determinable. Such revenue is recorded, net of such estimated provisions, at the minimum amount of the customer’s obligation to us. We state the related accounts receivable at net realizable value, with any allowance for doubtful accounts charged to general operating expenses.

Research and Development

Research and development expenses are comprised of the following types of costs incurred in performing research and development activities: personnel expenses, facility costs, contract services, license fees and milestone payments, costs of clinical trials, laboratory supplies and drug products, and allocations of corporate costs. We expense all research and development activity costs in the period incurred. We review and accrue drug development expenses based on factors such as estimates of work performed, patient enrollment, completion of patient studies and other events. Accrued clinical study costs are subject to revisions as trials progress to completion. Revisions are recorded in the period in which the facts that give rise to the revision become known.

Basic and Diluted Net Income (Loss) per Share

In accordance with FASB Statement No. 128, “Earnings Per Share,” we calculate basic net income (loss) per share by using the weighted average number of common shares outstanding during the periods presented. Diluted net income (loss) per share is calculated by using the weighted average number of common shares outstanding during the periods presented, increased to include all additional dilutive common shares issuable pursuant to outstanding common stock equivalents, determined using the treasury-stock method.

Potentially dilutive common stock equivalents include the common stock issuable upon the conversion of preferred stock and the exercise of warrants and stock options. These are included in the calculation of diluted net income (loss) per share only when their effect is dilutive. Of the approximately 16 million and 15 million total shares issuable pursuant to the potential conversion of preferred stock and the exercise of warrants and stock options in the respective periods of 2008 and 2007, approximately 407,000 and 455,000 dilutive shares were included in the calculation of diluted net income for the three-month and six-month periods ended June 30, 2008; and none were included in the diluted net income computation for the three-month and six-month periods ended June 30, 2007, because to do so would be anti-dilutive.

SPECTRUM PHARMACEUTICALS, INC.

The following table presents the data used in the calculations of basic and diluted net income (loss) per share for the three-month and six-month periods ended June 30, 2008 and 2007.


	Three-Months		Three-Months			Six-Months		Six-Months
	Ended		Ended			Ended		Ended
	June 30, 2008		June 30, 2007			June 30, 2008		June 30, 2007
	(In Thousands, Except Share and Per Share Data)

Net income (loss)	$	10,678	$	(6,258	)	$	2,012	$	(14,150	)
Less:
Preferred dividends paid in cash or stock		0		(10	)		0		(12	)

Income (loss) attributable to common stockholders	$	10,678	$	(6,268	)	$	2,012	$	(14,162	)


Weighted average shares:
Basic		31,462,522		28,442,904			31,366,902		26,875,518
Dilutive preferred shares		340,000					340,000
Dilutive options		66,557					115,230
Dilutive warrants		—					—

Diluted		31,869,079		28,442,904			31,822,132		26,875,518


Net income (loss) per share:
Basic	$	0.34	$	(0.22	)	$	0.06	$	(0.53	)

Diluted	$	0.34	$	(0.22	)	$	0.06	$	(0.53	)

Accounting for Share-Based Employee Compensation

Effective January 1, 2006, we adopted SFAS No. 123(R), “Share-Based Payment.” We measure compensation cost for all share-based awards at fair value on the date of grant and recognize compensation expense in our consolidated statements of operations over the service period that the awards are expected to vest. As permitted under SFAS No. 123(R), we have elected to recognize compensation cost for all options with graded vesting on a straight-line basis over the vesting period of the entire option.

In estimating the fair value of share-based compensation, we use the closing market price of our common stock for stock awards, and the Black-Scholes Option Pricing Model for stock options and warrants. We estimate future volatility based on past volatility of our common stock, and we estimate the expected length of options based on several criteria, including the vesting period of the grant and the expected volatility.

We recorded share-based compensation expense during the three-month and six-month periods ended June 30, 2008 and 2007, as follows:


	Three-Months		Three-Months		Six-Months		Six-Months
	Ended		Ended		Ended		Ended
	June 30, 2008		June 30, 2007		June 30, 2008		June 30, 2007
	(In Thousands)
Research and development	$	892	$	483	$	2,000	$	1,317
General and administrative		494		460		1,116		911

Total stock based charges	$	1,385	$	943	$	3,116	$	2,228

SPECTRUM PHARMACEUTICALS, INC.

Income Taxes

We recorded no tax provision for the three-month and six-month periods ended June 30, 2008, based on the anticipated operating loss for the full calendar year.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company has determined that the deferred tax asset does not meet the “more likely than not” criteria under SFAS No. 109, Accounting for Income Taxes, and, accordingly, a valuation allowance has been recorded to reduce the net deferred tax asset to zero.

Comprehensive Income

Comprehensive income is calculated in accordance with SFAS No. 130, Reporting Comprehensive Income. SFAS No. 130 requires the disclosure of all components of comprehensive income, including net income and changes in equity during a period from transactions and other events and circumstances generated from non-owner sources. The Company’s accumulated other comprehensive income at June 30, 2008 consisted primarily of net unrealized gains on investments in marketable securities as of that date.

Recent Accounting Pronouncements

In February 2007, the FASB issued SFAS 159. SFAS 159 permits entities to elect to measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be recognized in earnings at each subsequent reporting date. SFAS 159 was effective for the Company on January 1, 2008. The adoption of SFAS 159 did not have a material impact on our consolidated financial statements.

In September 2006, the FASB issued SFAS 157, which defines fair value, establishes a framework for measuring fair value and expands disclosure requirements about fair value measurements. SFAS 157 was effective for the Company on January 1, 2008. However, in February 2008, the FASB released FSP FAS 157-2, which delayed the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The adoption of SFAS 157 for our financial assets and liabilities did not have a material impact on our consolidated financial statements. We do not believe the adoption of SFAS 157 for our non-financial assets and liabilities, effective January 1, 2009, will have a material impact on our consolidated financial statements.

Effective January 2008, we adopted the provisions of EITF Issue No. 07-3, “Accounting for Nonrefundable Advance Payments for Goods or Services to Be Used in Future Research and Development Activities,” or Issue 07-3, which addresses the accounting for nonrefundable advance payments. The EITF concluded that nonrefundable advance payments for goods or services to be received in the future for use in research and development activities should be deferred and capitalized. The capitalized amounts should be expensed as the related goods are delivered or the services are performed. If an entity’s expectations change such that it does not expect it will need the goods to be delivered or the services to be rendered, capitalized nonrefundable advance payments should be charged to expense. The adoption of Issue No. 07-3 did not have a material impact on our results of operations or financial position.

In December 2007, the FASB ratified the final consensuses in Emerging Issues Task Force, or EITF, Issue No. 07-1, “Accounting for Collaborative Arrangements,” or Issue 07-1, which requires certain income statement presentation of transactions with third parties and of payments between parties to the collaborative arrangement, along with disclosure about the nature and purpose of the arrangement. Issue 07-1 is effective for us beginning January 1, 2009. We are currently evaluating the impact of this statement on our financial statements, but we do not expect this will have a significant impact on our financial statements.

SPECTRUM PHARMACEUTICALS, INC.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (SFAS No. 141(R)), which replaces SFAS No. 141, Business Combinations SFAS No. 141(R), requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions. This Statement also requires the acquirer in a business combination achieved in stages to recognize the identifiable assets and liabilities, as well as the non-controlling interest in the acquiree, at the full amounts of their fair values. SFAS No. 141(R) makes various other amendments to authoritative literature intended to provide additional guidance or to confirm the guidance in that literature to that provided in this Statement. This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We are currently evaluating the impact of this statement on our financial statements, but we do not expect this will have a significant impact on our financial statements.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements (SFAS No. 160), which amends Accounting Research Bulletin No. 51, Consolidated Financial Statements, to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements. SFAS No. 160 establishes accounting and reporting standards that require the ownership interests in subsidiaries not held by the parent to be clearly identified, labeled and presented in the consolidated statement of financial position within equity, but separate from the parent’s equity. This statement also requires the amount of consolidated net income attributable to the parent and to the non-controlling interest to be clearly identified and presented on the face of the consolidated statement of income. Changes in a parent’s ownership interest while the parent retains its controlling financial interest must be accounted for consistently, and when a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary must be initially measured at fair value. The gain or loss on the deconsolidation of the subsidiary is measured using the fair value of any non-controlling equity investment. The Statement also requires entities to provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the non-controlling owners. This Statement applies prospectively to all entities that prepare consolidated financial statements and applies prospectively for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We are currently evaluating the impact of this statement on our financial statements, but we do not expect this will have a significant impact on our financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (SFAS No. 161). SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133 with the intent to provide users of financial statements with an enhanced understanding of: (i) How and why an entity uses derivative instruments; (ii) How derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations and (iii) How derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We are currently evaluating the impact of this Statement on our financial statements, but we do not expect this will have a significant impact on our financial statements.

In May 2008, the FASB issued SFAS No. 162 “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”), which is effective 60 days following the SEC’s approval of the Public Company Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). The Company does not anticipate any impact on its financial condition or results of operations from the adoption of SFAS 162.

3. Commitments and Contingencies

Facility and Equipment Leases

As of June 30, 2008, we were obligated under a facility lease and several operating equipment leases.

Minimum lease requirements for each of the next five years and thereafter, under the property and equipment operating leases, are as follows:


	Amounts In
	Thousands

2008 (Remainder of year)	$	526
2009		104
2010		76
2011		—
2012		—
Thereafter		—

	$	704

SPECTRUM PHARMACEUTICALS, INC.

Licensing Agreements

Almost all of our drug candidates are being developed pursuant to license agreements that provide us with rights in certain territories to, among other things, develop, sublicense, manufacture and sell the drugs. We have out-licensed development and commercialization rights to satraplatin, one of our drug product candidates, to GPC Biotech AG, or GPC, in exchange for upfront and milestone payments and royalties on sales of product. We are required to use commercially reasonable efforts to develop the drugs, are generally responsible for all development, patent filing and maintenance costs, sales, marketing and liability insurance costs, and are generally contingently obligated to make milestone payments to the licensors if we successfully reach development and regulatory milestones specified in the license agreements. In addition, we are obligated to pay royalties and, in some cases, milestone payments based on net sales, if any, after marketing approval is obtained from regulatory authorities.

The potential contingent development and regulatory milestone obligations under all our licensing agreements are generally tied to progress through the FDA approval process, which approval significantly depends on positive clinical trial results. The following items are typical of milestone events: conclusion of Phase 2 or commencement of Phase 3 clinical trials; filing of new drug applications in each of the United States, Europe and Japan; and approvals from each of the regulatory agencies in those jurisdictions.

Given the uncertainty of the drug development process, we are unable to predict with any certainty when any of the milestones will occur, if at all. Accordingly, the milestone payments represent contingent obligations that will be recorded as expense when the milestone is achieved. While it is difficult to predict when milestones will be achieved, we estimate that if all of our contingent milestones were successfully achieved within our anticipated timelines, our potential contingent cash development and regulatory milestone obligations, aggregating approximately $65 million as of June 30, 2008, would be due approximately as follows: $0.2 million within 12 months; $7.1 million in 2 to 3 years; $11.2 million in 4 to 5 years; and $46.8 million after 5 years. In the event these milestones are achieved, we believe it is likely that the increase in the potential value of the related drug product will significantly exceed the amount of the milestone obligation.

Service Agreements

In connection with the research and development of our drug products, we have entered into contracts with numerous third party service providers, such as clinical trial centers, clinical research organizations, data monitoring centers, and with drug formulation, development and testing laboratories. The financial terms of these contracts are varied and generally obligate us to pay in stages, depending on the occurrence of certain events specified in the contracts, such as contract execution, reservation of service or production capacity, actual performance of service, or the successful accrual and dosing of patients.

At each period end, we accrue for all costs of goods and services received, with such accruals based on factors such as estimates of work performed, patient enrollment, completion of patient studies and other events. As of June 30, 2008, we were committed under such contracts for up to approximately $12.6 million, for future goods and services, including approximately $6.9 million due within one year. We are in a position to accelerate, slow-down or discontinue any or all of the projects that we are working on at any given point in time. Should we decide to discontinue and/or slow-down the work on any project, the associated costs for those projects would get limited to the extent of the work completed. Generally, we are able to terminate these contracts due to the discontinuance of the related project(s) and thus avoid paying for the services that have not yet been rendered and our future purchase obligations would reduce accordingly.

4. Stockholders’ Equity

Common Stock

In March 2008, we issued to Targent, LLC 125,000 shares of the Company’s common stock for payment of a milestone pursuant to the asset purchase agreement with Targent in connection with the approval of FUSILEV by the FDA. The fair value of the stock, $305,000, was recorded as a stock-based research and development charge for the six-month period ended June 30, 2008.

SPECTRUM PHARMACEUTICALS, INC.

Common Stock Reserved for Future Issuance

As of June 30, 2008, approximately 16.6 million shares of common stock were issuable upon conversion or exercise of rights granted under prior financing arrangements and stock options and warrants, as follows:


Conversion of Series E preferred shares			340,000
Exercise of stock options			7,741,208
Exercise of warrants			8,554,625


Total shares of common stock reserved for future issuances			16,635,833

Warrants to acquire 2,952,620 shares of common stock, with exercise prices ranging between $4.75 and $6.50, will expire during the third quarter of 2008, unless they are exercised.

Share-Based Compensation

As of June 30, 2008, approximately 790,000 incentive award shares were available for grant under our share-based incentive award plan. Share-based awards generally vest over periods of up to four years and have a ten-year life.

Presented below is a summary of activity, for our entire share-based incentive award plans, during the three-month period ended June 30, 2008:

Stock Options:

During the six-month period ended June 30, 2008, the Compensation Committee granted stock options at exercise prices equal to or greater than the quoted price of our common stock as of the grant dates. The weighted average grant date fair value of stock options granted during the six-month period ended June 30, 2008 was estimated at approximately $1.38, using the Black-Scholes option pricing model with the following assumptions: dividend yield of 0%; expected volatility (based on the historical volatility of our common stock) of 65.9%; risk free interest rate of 2.8%; and an expected life of 5 years.


				Weighted		Weighted		Aggregate
	Common			Average		Average		Intrinsic
	Stock			Exercise		Remaining Term		Value
	Options			Price		(In Years)		(In Thousands)

Outstanding at beginning of year		6,482,260		$	5.91

Granted		1,566,000		$	2.43

Expired		(98,302	)	$	5.53

Forfeited		(208,750	)	$	3.83

Exercised		—

Outstanding, at the end of period		7,741,208		$	5.27		7.23	$	50


Vested and expected to vest, at end of period		7,495,264		$	5.29		7.19	$	50


Exercisable, at the end of period		5,281,766		$	5.54		6.71	$	50

SPECTRUM PHARMACEUTICALS, INC.

The aggregate intrinsic value in the table above represents the total difference between the Company’s closing common stock price of $1.39 on June 30, 2008 and the exercise price, multiplied by the number of all in-the-money options, that would have been received by the option holders had all option holders exercised their options on June 30, 2008. This amount changes based on the fair market value of the Company’s common stock.

During the six-month period ended June 30, 2008, the share-based charge in connection with the expensing of stock options was approximately $2.5 million. As of June 30, 2008, there was approximately $6.4 million of unrecognized stock-based compensation cost related to stock options which is expected to be recognized over a weighted average period of 1.5 years.

Restricted Stock:


				Weighted
	Restricted			Average
	Stock			Grant date
	Awards			Fair Value
Nonvested at beginning of period		277,500		$	5.03

Granted		97,500			2.46

Vested		(129,750	)		3.18
Forfeited		—


Nonvested at the end of period		245,250		$	4.98

The fair value of restricted stock awards is the grant date closing market price of our stock, and is charged to expense over the period of vesting. These awards are subject to forfeiture to the extent that the recipient’s service is terminated prior to the shares becoming vested.

During the six-month period ended June 30, 2008, the share-based charge in connection with the expensing of restricted stock awards was approximately $0.5 million. As of June 30, 2008, there was approximately $0.8 million of unrecognized share-based compensation cost related to nonvested restricted stock awards, which is expected to be recognized over a weighted average period of 1.5 years.

401(k) Plan Matching Contribution:

During the six-month period ended June 30, 2008, we issued 72,717 shares of common stock as the Company’s match of approximately $129,000 on the 401(k) contributions of our employees.

Warrants Activity

We have issued warrants to purchase shares of our common stock to investors as part of financing transactions, or in connection with services rendered by placement agents and consultants. Our outstanding warrants expire on varying dates through September 2013. Below is a summary of warrant activity during the three-month period ended June 30, 2008:


	Common Stock			Weighted Average
	Warrants			Exercise Price
Outstanding at beginning of period		9,652,051		$	6.51
Granted		50,000			1.79
Exercised		—			—
Forfeited		—			—
Expired		(1,147,426	)		3.23

Outstanding, at the end of period		8,554,625			6.92

Exercisable, at the end of period		8,437,125		$	6.96

Warrants to acquire 2,952,620 shares of common stock, with exercise prices ranging between $4.75 and $6.50, will expire during the third quarter of 2008, unless they are exercised.

SPECTRUM PHARMACEUTICALS, INC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements regarding our future product development activities and costs, the revenue potential (licensing, royalty and sales) of our product candidates, the safety and efficacy of our drug products, the regulatory success of our products, the timing and likelihood of achieving regulatory development milestones and product revenues, the sufficiency of our capital resources, and other statements containing forward-looking words, such as, “believes,” “may,” “could,” “will,” “expects,” “intends,” “estimates,” “anticipates,” “plans,” “seeks,” or “continues.” Such forward-looking statements are based on the beliefs of the Company’s management as well as assumptions made by and information currently available to the Company’s management. Readers should not put undue reliance on these forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified; therefore, our actual results may differ materially from those described in any forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in our periodic reports filed with the Securities and Exchange Commission including our Annual Report on Form 10-K for the fiscal year ended December 31, 2007 and our Quarterly Report on Form 10-Q for the period ended March 31, 2008. These factors include, but are not limited to:

	•		our ability to successfully develop, obtain regulatory approvals for and market our products;

	•		our ability to generate and maintain sufficient cash resources to fund our business;

	•		our ability to enter into strategic alliances with partners for manufacturing, development and commercialization;

	•		efforts of our development partners;

	•		the ability of our manufacturing partners to meet our timelines;

	•		our ability to identify new product candidates;

	•		the timing and/or results of pending or future clinical trials;

	•		competition in the marketplace for our generic drugs;

	•		actions by the FDA and other regulatory agencies;

	•		demand and market acceptance for our approved products; and

	•		the effect of changing economic conditions.

We do not plan to update any such forward-looking statements and expressly disclaim any duty to update the information contained in this report except as required by law.

You should read the following discussion of the financial condition and results of our operations in conjunction with the condensed consolidated financial statements and the notes to those financial statements included in Item I of Part 1 of this report.

SPECTRUM PHARMACEUTICALS, INC.

Business Outlook

We are a biopharmaceutical company with a focus primarily on oncology and urology. Our primary business focus for the remainder of 2008, and beyond, will be to continue to acquire, develop and commercialize a portfolio of prescription drug products with a mix of near-term and long-term revenue potential. Key developments anticipated in the next 12 to 18 months are:

•

Fusilev™ (levoleucovorin) for injection (after high-dose methotraxate therapy in osteosarcoma, the most common form of bone cancer): In March 2008, our first NDA for our proprietary oncology drug FUSILEV, was approved by the FDA. FUSILEV rescue is indicated after high-dose methotrexate therapy in patients with osteosarcoma, and is also indicated to diminish the toxicity and counteract the effects of impaired methotrexate elimination or inadvertent overdose of folic acid antagonists. During the first half of 2008, we built a commercial organization in preparation for the launch of FUSILEV, expected during the third quarter of 2008. In June 2008, we filed an NDA amendment for a tablet formulation. Also, we plan to file a supplemental NDA for its use in colorectal cancer in 5-fluorouracil containing regimens.

•

EOquin^{^®} (in bladder cancer): Pursuant to a special protocol assessment procedure, in 2007, we initiated two Phase 3 clinical studies in the United States and Canada for EOquin in non-muscle invasive bladder cancer. We have received scientific advice from EMEA, whereby the EMEA agreed that the two Phase 3 studies being conducted at this time should be sufficient for a regulatory decision regarding European registration. We continue to enroll patients into the two trials at sites in the United States and Canada and expect enrollment in both trials to be completed by the end of 2009. We are also seeking strategic partners in some markets for the future development and commercialization of EOquin.

•

SPI-1620 (adjunct to chemotherapy): We are continuing to enroll patients in a Phase 1, open label, dose-escalation study assessing the safety, tolerability, pharmacokinetics and pharmacodynamics of SPI-1620 in patients with recurrent or progressive carcinoma.

•

We plan to continue to fund the development of our other products.

•

We expect to continue to evaluate additional promising drug product candidates for opportunistic acquisition or license.

Financial Condition

Liquidity and Capital Resources

Our current business operations do not generate sufficient operating cash to finance the clinical development of our drug product candidates. Our cumulative losses, since inception in 1987 through June 30, 2008, have exceeded $239 million. We expect to continue to incur significant additional losses as we implement our growth strategy of developing marketable drug products for at least the next several years, unless they are offset, if at all, by the out-license or product sales of any of our drugs.

We believe that the approximately $60 million in cash, cash equivalents and marketable securities that we had on hand as of June 30, 2008, will allow us to fund our current planned operations for at least the next eighteen to twenty-four months. Our long-term strategy, though, is to generate profits from the sale and licensing of our drug products. Accordingly, in the next several years, we expect to supplement our cash position with sales of FUSILEV and licensing revenues from out-licensing our other drug products.

SPECTRUM PHARMACEUTICALS, INC.

Nevertheless, while we are not currently planning on obtaining additional capital through the sale of debt or equity securities, we may do so if necessary. In this regard, in April 2008, we filed a shelf registration statement with the SEC to give us the ability, from time to time, to offer any combination of our securities described in the registration statement in one or more offerings for up to $150 million. There can be no assurance that we will be able to obtain such additional capital when needed, or, if available, that it will be on terms favorable to us or to our stockholders. If additional funds are raised by issuing equity securities, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution or such equity securities may provide for rights, preferences or privileges senior to those of the holders of our common stock.

As described elsewhere in this report, as well as the risk factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007 and our Quarterly Report on Form 10-Q for the period ended March 31, 2008, our drug development efforts are subject to the considerable uncertainty inherent in any new drug development. Due to the uncertainties involved in progressing through clinical trials, and the time and cost involved in obtaining regulatory approval and in establishing collaborative arrangements, among other factors, we cannot reasonably estimate the timing, completion dates, and ultimate aggregate cost of developing each of our drug product candidates. In addition, while we expect revenues in 2008 from sales of FUSILEV, we are unable to reasonably estimate when, if ever, we will realize material net profit from sales of FUSILEV or of our other drug products, if they are approved by the FDA. Accordingly, the following discussion of our current assessment of the need for cash to fund our operations may prove too optimistic and our assessment of expenditures may prove inadequate.

Our expenditures for research and development consist of direct product specific costs, including, but not limited to, upfront license fees, milestone payments, active pharmaceutical ingredients, clinical trials, and patent related costs, and non-product specific, or indirect, costs. During the six-month period ended June 30, 2008, our total research and development expenditure, excluding stock-based charges of $2.3 million, was approximately $10.8 million, of which approximately $5.6 million was in direct costs. The principal components of such direct expenses for that period were direct costs related to the development of EOquin^® — approximately $2.1 million; ozarelix — approximately $1.5 million; and FUSILEV oral and liquid finished product development – approximately $1.0 million.

While we are currently focused on advancing our key product development programs, we anticipate that we will make regular determinations as to which other programs, if any, to pursue and how much funding to direct to each program on an ongoing basis in response to the scientific and clinical success of each product candidate, as well as an ongoing assessment as to the product candidate’s commercial potential.

Our anticipated net use of cash for operations in the second half of 2008, excluding the cost of in-licensing additional drugs, if any, is expected to range between approximately $8 and $9 million per quarter. Our primary focuses for the rest of 2008, and the programs that are expected to represent a significant part of our expenditures, are the on-going clinical studies of EOquin and the commercial launch of FUSILEV. Key factors that we will monitor as we determine the funding of other development projects are:

	•		the success of the commercial launch of FUSILEV;

	•		continued patient enrollment in our EOquin clinical trials at anticipated rates; and

	•		continued positive results from our preclinical studies and clinical trials.

Further, while we do not receive any funding from third parties for research and development that we conduct, co-development and out-licensing agreements with other companies for any of our drug products may reduce our expenses. In this regard, we are seeking strategic partners for the future development and commercialization of EOquin. The success of such efforts could mitigate the use of cash or enable accelerated development of other drug development projects.

SPECTRUM PHARMACEUTICALS, INC.

In addition to our present portfolio of drug product candidates, we continually evaluate proprietary products for acquisition. If we are successful in acquiring rights to additional products, we may pay up-front licensing fees in cash and/or common stock and our research and development expenditures would likely increase.

Net Cash provided by / used in Operating Activities

During the six-month period ended June 30, 2008, net cash provided by operations was approximately $4.3 million compared to net cash used in operations of approximately $10.3 million in the comparative period of 2007. The change of approximately $14.6 million is primarily due to an increase in revenues of approximately $16.3 million during the six-month period ended June 30, 2008 compared to 2007, partially offset by an increase in inventory of approximately $1.2 million at June 30, 2008, in preparation for the launch of FUSILEV in the third quarter of 2008.

Net Cash Used for Investing Activities

Net cash used for investing activities, approximately $3.8 million, represented the investing of our cash resources into interest bearing investments commensurate with safety and liquidity of principal and for capital expenditures related to our R&D activities.

Results of Operations

Results of Operations for the three-month period ended June 30, 2008 compared to the three-month period ended June 30, 2007

For the three-month period ended June 30, 2008 we recorded net income of approximately $10.7 million, compared to a net loss of approximately $6.3 million for the three-month period ended June 30, 2007. The principal components of the year-to-year changes in line items are discussed below.

During the three-month period ended June 30, 2008, we entered into an asset purchase agreement with Par, our marketing partner for sumatriptan injection, pursuant to which we received a non-refundable $20 million cash payment from Par for the transfer of our share of the profits from the commercialization of sumatriptan injection. During this period, we also recorded revenue from the transfer of rights to certain of our ANDAs to Sagent for $660,000. During the comparative three-month period ended June 30, 2007, we recognized approximately $4 million in licensing milestone and related revenues, pursuant to our agreement with GPC. We did not earn similar revenues from GPC during the three-month period ended June 30, 2008, and we do not anticipate any similar significant revenues from GPC at this time. We plan to launch FUSILEV in the third quarter of 2008 and therefore, we may begin receiving revenues from its sales thereafter.

Research and development expenses decreased by approximately $0.9 million, from approximately $7.6 million in the three-month period ended June 30, 2007 to approximately $6.7 million in the three-month period ended June 30, 2008, primarily due to the following: during the comparative period in 2007, we made a milestone payment of approximately $0.5 million upon the acceptance of the NDA for satraplatin. We expect research and development expense going forward to continue at a pace similar to the quarter ended June 30, 2008.

Selling, general and administrative expenses decreased by approximately $0.2 million, from approximately $3.4 million in the three-month period ended June 30, 2007 to approximately $3.2 million in the three-month period ended June 30, 2008, primarily due to a reduction in legal expenses from that which were incurred in 2007 in connection with the GPC arbitration; offset by increased sales and marketing expenses of approximately $1.4 million incurred in connection with the commercial launch activities associated with FUSILEV which is scheduled for the third quarter of 2008. We estimate the commercial launch expenses for FUSILEV to be approximately $6 million for 2008.

SPECTRUM PHARMACEUTICALS, INC.

Other income (expense) consisted of net interest income of approximately $229,000 and $750,000 for the three-month periods ended June 30, 2008 and June 30, 2007, offset in 2008 by approximately $250,000 realized investment loss. The decrease in interest income was primarily due to lower investment yields in 2008 due to the shift in our investment strategy in light of the current volatile credit markets. We expect similar yields going forward till such time as the credit markets stabilize.

Results of Operations for the six-month period ended June 30, 2008 compared to the six-month period ended June 30, 2007

For the six-month period ended June 30, 2008 we recorded net income of $2.0 million, compared to a net loss of approximately $14.2 million for the six-month period ended June 30, 2007. The principal components of the year-to-year changes in line items are discussed below.

During the six-month period ended June 30, 2008, we entered into an asset purchase agreement with Par, our marketing partner for sumatriptan injection, pursuant to which we received a non-refundable $20 million cash payment from Par for the transfer of our share of the profits from the commercialization of sumatriptan injection. During this period, we also recorded revenue from the transfer of rights to certain of our ANDAs to Sagent for $660,000. During the comparative six-month period ended June 30, 2007, we recognized approximately $4.4 million in licensing milestone and related revenues, pursuant to our agreement with GPC. We did not earn similar revenues from GPC during the six-month period ended June 30, 2008.

Research and development expenses decreased approximately $0.4 million, from approximately $13.5 million in the six-month period ended June 30, 2007 to approximately $13.1 million in the six-month period ended June 30, 2008, primarily due to the following: during the comparative period in 2007, we made a milestone payment of approximately $1.0 million upon the filing and acceptance of the NDA for satraplatin.

Selling, general and administrative expenses decreased by approximately $0.6 million, from approximately $6.4 million in the six-month period ended June 30, 2007 to approximately $5.8 million in the six-month period ended June 30, 2008, primarily due to a reduction in legal expenses from that which were incurred in 2007 in connection with the GPC arbitration; offset by increased sales and marketing expenses of approximately $1.9 million incurred in connection with the commercial launch activities associated with FUSILEV which is scheduled for the third quarter of 2008.

Other income consisted of net interest income of approximately $530,000 and $1.3 million for the six-month periods ended June 30, 2008 and June 30, 2007, offset in 2008 by approximately $250,000 realized investment loss. The decrease in interest income was primarily due to lower investment yields in 2008 due to the shift in our investment strategy. We expect similar yields going forward until such time the credit markets improve.

Off-Balance Sheet Arrangements

None.

SPECTRUM PHARMACEUTICALS, INC.

Contractual and Commercial Obligations

The following table summarizes our contractual and other commitments, including obligations under facility and equipment leases, as of June 30, 2008 (in thousands):


			Less than						After
	Total		1 Year		1–3 Years		3–5 Years		5 Years
Contractual Obligations (1)
Capital Lease Obligations (2)		0		0		0		0		0
Operating Lease Obligations (3)	$	706	$	526	$	104	$	76		0
Purchase Obligations (4)		12,590		6,932		4,126		1,532		0
Contingent Milestone Obligations (5)		65,271		200		7,099		11,223	$	46,749

Total	$	78,567	$	7,658	$	11,329	$	12,831	$	46,749


(1)		The table of contractual and commercial obligations excludes contingent payments that we may become obligated to pay upon the occurrence of future events whose outcome is not readily predictable, such as obligations pursuant to employment agreements.

(2)		As of June 30, 2008, we had no capital lease obligations.

(3)		The operating lease obligations are primarily for the facility lease for our corporate office, which extends through June 2009.

(4)		Purchase obligations represent the amount of open purchase orders and contractual commitments to vendors for products and services that have not been delivered, or rendered, as of June 30, 2008. Over 80% of the purchase obligations consist of expenses associated with clinical trials and related costs for EOquin^{^®} and ozarelix for each of the periods presented. Please see “Service Agreements” below for further information.

(5)		Milestone obligations are payable contingent upon successfully reaching certain development and regulatory milestones as further described below under “Licensing Agreements”. While the amounts included in the table above represent all of our potential cash development and regulatory milestone obligations as of June 30, 2008, given the unpredictability of the drug development process, and the impossibility of predicting the success of current and future clinical trials, the timelines estimated above do not represent a forecast of when payment milestones will actually be reached, if at all. Rather, they assume that all development and regulatory milestones under all of our license agreements are successfully met, and represent our best estimates of the timelines. In the event that the milestones are met, we believe it is likely that the increase in the potential value of the related drug product will significantly exceed the amount of the milestone obligation.

Licensing Agreements

Almost all of our drug candidates are being developed pursuant to license agreements that provide us with rights to certain territories to, among other things, develop, sublicense, manufacture and sell the drugs. We have out-licensed development and commercialization rights to satraplatin, one of our drug product candidates, to GPC, in exchange for upfront and milestone payments and royalties on sales of product. We are required to use commercially reasonable efforts to develop the drugs, are generally responsible for all development, patent filing and maintenance costs, sales, marketing and liability insurance costs, and are generally contingently obligated to make milestone payments to the licensors if we successfully reach development and regulatory milestones specified in the license agreements. In addition, we are obligated to pay royalties and, in some cases, milestone payments based on net sales, if any, after marketing approval is obtained from regulatory authorities.

SPECTRUM PHARMACEUTICALS, INC.

Service Agreements

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The estimation process requires assumptions to be made about future events and conditions, and is consequently inherently subjective and uncertain. Actual results could differ materially from our estimates. On an on-going basis, we evaluate our estimates, including cash requirements, by assessing: planned research and development activities and general and administrative requirements; required clinical trial activity; market need for our drug candidates; and other major business assumptions.

The SEC defines critical accounting policies as those that are, in management’s view, most important to the portrayal of our financial condition and results of operations and most demanding of our judgment. We consider the following policies to be critical to an understanding of our consolidated financial statements and the uncertainties associated with the complex judgments made by us that could impact our results of operations, financial position and cash flows.

Cash, Cash Equivalents and Marketable Securities

Cash, cash equivalents and marketable securities primarily consist of bank checking deposits, short-term treasury securities, and institutional money market funds, corporate debt and equity, municipal obligations, including market auction debt securities, government agency notes, and certificates of deposit. We classify highly liquid short-term investments, with insignificant interest rate risk and maturities of 90 days or less at the time of acquisition, as cash and cash equivalents. Other investments, which do not meet the above definition of cash equivalents, are classified as either “held-to-maturity” or “available-for-sale” marketable securities, in accordance with the provisions of Financial Accounting Standards Board, or FASB, Statement, or SFAS, No. 115, Accounting for Certain Investments in Debt and Equity Securities. Investments that we intend to hold for more than one year are classified as long-term investments.

SPECTRUM PHARMACEUTICALS, INC.

Revenue Recognition

We follow the provisions as set forth by current accounting rules, which primarily include Staff Accounting Bulletin (“SAB”) 104, Revenue Recognition, and Emerging Issues Task Force (“EITF”) No. 00-21, Accounting for Revenue Arrangements with Multiple Deliverables. Generally, revenue is recognized when evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed and determinable, and collectibility is reasonably assured.

Up-front fees representing non-refundable payments received upon the execution of licensing or other agreements are recognized as revenue upon execution of the agreements where we have no significant future performance obligations and collectibility of the fees is reasonably assured. Milestone payments, which are generally based on developmental or regulatory events, are recognized as revenue when the milestones are achieved, collectibility is reasonably assured, and we have no significant future performance obligations in connection with the milestone. In those instances where we have collected fees or milestone payments but have significant future performance obligations related to the development of the drug product, we record deferred revenue and recognize it over the period of our future obligations.

Research and Development

Research and development expenses are comprised of the following types of costs incurred in performing research and development activities: personnel expenses, facility costs, contract services, license fees and milestone payments, costs of clinical trials, laboratory supplies and drug products, and allocations of corporate costs. We expense all research and development activity costs in the period incurred. We review and accrue clinical study expenses based on factors such as estimates of work performed, patient enrollment, completion of patient studies and other events. Accrued clinical study costs are subject to revisions as trials progress to completion. Revisions are charged to expense in the period in which the facts that give rise to the revision become known.

Accounting for Share-Based Employee Compensation

In estimating the fair value of share-based compensation, we use the quoted market price of our common stock for stock awards and the Black-Scholes Option Pricing Model for stock options and warrants. We estimate future volatility based on past volatility of our common stock, and we estimate the expected length of options based on several criteria, including the vesting period of the grant and the expected volatility.

Recent Accounting Pronouncements

See Note 2: Recent Accounting Pronouncements of our accompanying consolidated financial statements for a full description of recent accounting pronouncements and our expectations of their impact on our results of operations and financial condition.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

The primary objective of our investment activities is to preserve principal, while at the same time maximizing yields without significantly increasing risk. We do not utilize hedging contracts or similar instruments.

We are exposed to certain market risks. Our primary exposures relate to (1) interest rate risk on our investment portfolio, (2) credit risk of the companies’ bonds in which we invest, and (3) general credit market risks as existed during late 2007 and early 2008. We manage such risks on our investment portfolio by matching scheduled investment maturities with our cash requirements and investing in highly rated instruments.

SPECTRUM PHARMACEUTICALS, INC.

In response to the recent dislocation in the credit markets, in early 2008 we converted substantially all of our investments, including all of our market auction debt securities, into highly liquid and safe instruments. Our investments, as of June 30, 2008, were primarily in money market accounts, short-term corporate bonds, U.S. Treasury bills and U.S. Treasury-backed securities. Because of our ability to generally redeem these investments at par with short notice, changes in interest rates would have an immaterial effect on the fair value of these investments. If a 10% change in interest rates were to have occurred on June 30, 2008, any decline in the fair value of our investments would not be material in the context of our financial statements. In addition, we are exposed to certain market risks associated with credit ratings of corporations whose corporate bonds we may purchase from time to time. If these companies were to experience a significant detrimental change in their credit ratings, the fair market value of such corporate bonds may significantly decrease. If these companies were to default on these corporate bonds, we may lose part or all of our principal. We believe that we effectively manage this market risk by diversifying our investments, and investing in highly rated securities.

In addition, we are exposed to foreign currency exchange rate fluctuations relating to payments we make to vendors, suppliers and license partners using foreign currencies. In particular, some of our obligations are incurred in Euros. We mitigate such risk by maintaining a limited portion of our cash in Euros. Although fluctuations in exchange rates have an effect on our payment obligations, such fluctuations have not had a material impact on our reported financial condition.

ITEM 4. Controls and Procedures

We have established disclosure controls and procedures (as such terms are defined in Rules 13a-15(e) and 15d-15(e)) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (our principal executive officer) and Vice President-Finance (our principal financial officer), as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching our desired disclosure control objectives.

As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of our disclosure controls and procedures as of June 30, 2008, the end of the period covered by this report. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2008.

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 4. Submission of Matters to a Vote of Security Holders

We held our Annual Meeting of Stockholders on June 20, 2008, at which meeting there were present in person or by proxy 27,417,685 votes representing 88% of the total outstanding eligible votes. The sole matter voted upon at the Annual Meeting was the election of our directors:

The following persons were elected as directors to serve a one-year term expiring at the Annual Meeting of Stockholder to be held in 2009, or until their successors are elected or qualified:


	VOTES CAST
			Authority
	For		Withheld
Mitchell P. Cybulski, MBA		24,736,648		2,681,037
Richard D. Fulmer, MBA		24,325,855		3,091,830
Stuart M. Krassner, Sc.D., Psy.D.		24,167,226		3,250,459
Anthony E. Maida, III, MA, MBA		25,026,464		2,391,221
Rajesh C. Shrotriya, M.D.		24,933,908		2,483,777
Julius A. Vida, Ph.D.		24,734,168		2,683,517

SPECTRUM PHARMACEUTICALS, INC.

ITEM 6. Exhibits


Exhibit No.			Description

	2.1	+	Asset Purchase Agreement by and between the Company and Par Pharmaceutical, Inc. dated as of May 6, 2008.

	4.1	+	Warrant issued by the Company to a Consultant, dated as of April 28, 2008.

	10.1	*	Executive Employment Agreement by and between the Company and Rajesh C. Shrotriya, M.D., entered into June 20, 2008 and effective as of January 2, 2008. (Filed as Exhibit 10.1 to Form 8-K, as filed with the Securities and Exchange Commission on June 26, 2008, and incorporated herein by reference.)

	10.2	*+	Consulting Agreement by and between the Company and Luigi Lenaz, M.D., effective as of July 1, 2008.

	31.1	+	Certification of Principal Executive Officer, pursuant to Rule 13a-14 promulgated under the Exchange Act, as created by Section 302 of the Sarbanes-Oxley Act of 2002.

	31.2	+	Certification of Principal Financial Officer, pursuant to Rule 13a-14 promulgated under the Exchange Act, as created by Section 302 of the Sarbanes-Oxley Act of 2002.

	32.1	+	Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.

	32.2	+	Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.


*		Indicates a management contract or compensatory plan or arrangement.

+		Filed herewith.

SPECTRUM PHARMACEUTICALS, INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	SPECTRUM PHARMACEUTICALS, INC.
Date: August 11, 2008	By:	/s/ Shyam K. Kumaria
		Shyam K. Kumaria,
		Vice President, Finance (Authorized Signatory and Principal Financial and Accounting Officer)

EXHIBIT INDEX


Exhibit No.			Description

	2.1	+	Asset Purchase Agreement by and between the Company and Par Pharmaceutical, Inc., dated as of May 6, 2008.

	4.1	+	Warrant issued by the Company to a Consultant, dated as of April 28, 2008.

	10.1	*	Executive Employment Agreement by and between the Company and Rajesh C. Shrotriya, M.D., entered into June 20, 2008 and effective as of January 2, 2008. (Filed as Exhibit 10.1 to Form 8-K, as filed with the Securities and Exchange Commission on June 26, 2008, and incorporated herein by reference.)

	10.2	*+	Consulting Agreement by and between the Company and Luigi Lenaz, M.D., effective as of July 1, 2008.

	31.1	+	Certification of Principal Executive Officer, pursuant to Rule 13a-14 promulgated under the Exchange Act, as created by Section 302 of the Sarbanes-Oxley Act of 2002.

	31.2	+	Certification of Principal Financial Officer, pursuant to Rule 13a-14 promulgated under the Exchange Act, as created by Section 302 of the Sarbanes-Oxley Act of 2002.

	32.1	+	Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.

	32.2	+	Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.


*		Indicates a management contract or compensatory plan or arrangement.

+		Filed herewith.

EX-2.1 2 c74310exv2w1.htm EXHIBIT 2.1 Filed by Bowne Pure Compliance

Exhibit 2.1

EXECUTION COPY

ASSET PURCHASE AGREEMENT

between

SPECTRUM PHARMACEUTICALS, INC.

and

PAR PHARMACEUTICAL, INC.

dated as of May 6, 2008

EXECUTION COPY

THIS ASSET PURCHASE AGREEMENT (this “Agreement”), is hereby entered into as of May 6, 2008 (the “Execution Date”), by and between Spectrum Pharmaceuticals, Inc., a Delaware corporation, with offices located at 157 Technology Drive, Irvine, California 92618 (the “Spectrum”), and Par Pharmaceutical, Inc., a Delaware corporation having its office at 300 Tice Boulevard, 3rd Floor, Woodcliff Lake, NJ 07677 (the “Par”). Spectrum and Par may each be referred to herein individually as a “Party” and collectively as the “Parties.”

W I T N E S S E T H:

WHEREAS, the Parties have previously entered into a certain Development and Marketing Agreement dated February 22, 2006 (as amended on November 10, 2006 and as further defined below, the “Original Agreement”) related to certain generic products including products containing sumatriptan as the active ingredient (as further defined below, the “Products”);

WHEREAS, the Parties settled a litigation related to the Products with Glaxo Group Limited (“GSK”) pursuant to which Spectrum entered into an Agreement with GSK dated November 10, 2006 (as further defined below, the “GSK Settlement Agreement”) and Par entered into a Supply and Distribution Agreement with GSK dated November 10, 2006 (as further defined below, the “GSK Supply and Distribution Agreement”, and collectively with the GSK Settlement Agreement, the “GSK Agreements”); and

WHEREAS, Spectrum currently owns or possesses certain assets and rights related to the Products and the GSK Agreements, and otherwise related to the drug substance sumatriptan and wishes to sell those assets and rights to Par, and Par desires to so acquire those assets and rights; and Spectrum desires to transfer and assign to Par, and Par desires to assume, certain obligations, relating to such assets and rights; all upon the terms of this Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and of the representations, warranties, covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Parties hereto, intending to be legally bound, agree as follows:

ARTICLE 1
DEFINITIONS

Whenever used in this Agreement, unless otherwise clearly indicated by the context, the terms defined below shall have the indicated meanings. Other terms may be defined elsewhere in the text of this Agreement and, unless otherwise indicated, shall have such meaning throughout this Agreement.

1.1. “Affiliate” shall mean with respect to a Party, a Person that controls, is controlled by or is under common control with a Party. For the purposes of this definition, the word “control” (including, with correlative meaning, the terms “controlled by” or “under common control with”) means the actual power, either directly or indirectly through one or more intermediaries, to direct the management and policies of such Person, whether by the ownership of fifty percent (50%) or more of the voting stock of such Person (it being understood that the direct or indirect ownership of a lesser percentage of such stock shall not necessarily preclude the existence of control), or by contract or otherwise.

EXECUTION COPY

1.2. “Aggrieved Party” shall have the meaning set forth in Section 6.2(a).

1.3. “Agreement” shall have the meaning set forth in the Preamble.

1.4. “Applicable Laws” shall mean all laws, statutes, regulations, ordinances or the like of any Governmental Authority having jurisdiction over the Purchased Assets or the Products or a Party in connection with its obligations under this Agreement.

1.5. “Assumed Contracts” shall mean the contracts and agreements set forth on Schedule 1.5. Such contracts that do not relate exclusively to Assets are so indicated on Schedule 1.5.

1.6. “Assumed Liabilities” shall mean the obligations of Spectrum or their Affiliates, as applicable, under the Assumed Contracts and the Product Regulatory Files and all liabilities associated with Purchased Assets that arise on or after the Closing Date, provided, however, that “Assumed Liabilities” shall not include any Excluded Liabilities. Assumed Liabilities shall specifically include any and all liabilities arising out of (i) breach by Par and/or its Affiliates of any GSK Agreements prior to the Closing Date, and/or (ii) the gross negligence or willful misconduct of Par and/or its Affiliates related to the Purchased Assets prior to the Closing Date.

1.7. “Books and Records” shall mean all material books and records of Spectrum and its Affiliates necessary to Manufacture, test, use or sell the Products and/or Drug Substance.

1.8. “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banks in New York City, New York are authorized or obligated by law or executive order to not open or remain closed.

1.9. “cGMP Rules” shall mean the quality systems and current good manufacturing practices set forth in 21 C.F.R. (Parts 210 and 211 and Parts 600 and 610 (as applicable)), and applicable FDA rules and regulations, promulgated thereunder.

1.10. “Claim” shall have the meaning set forth in Section 6.2(a).

1.11. “Closing Date” shall mean May 6, 2008.

1.12. “Confidential Information” means with respect to a Party (as the “Disclosing Party”), all non-public information of any kind whatsoever (including without limitation, data, materials, compilations, formulae, models, patent disclosures, procedures, processes, projections, protocols, results of experimentation and testing, specifications, strategies, techniques and all non-public intellectual property and know-how), and all tangible and intangible embodiments thereof of any kind whatsoever (including without limitation, materials, samples, apparatus, compositions, documents, drawings, machinery, patent applications, records and reports), which are disclosed by the Disclosing Party to the other Party (as the “Receiving Party”) including any and all copies, replication or embodiments thereof. The Confidential Information of Par shall also include all non-public information associated with the Purchased Assets as acquired by Par pursuant to this Agreement.

EXECUTION COPY

Notwithstanding the foregoing, Confidential Information of a Disclosing Party shall not include information which the Receiving Party can establish by competent proof (a) to have been publicly known prior to disclosure of such information by the Disclosing Party to the Receiving Party, (b) to have become publicly known, without fault on the part of the Receiving Party, subsequent to disclosure of such information by the Disclosing Party to the Receiving Party, (c) to have been received by the Receiving Party free of an obligation of confidentiality from a source rightfully having possession of and the right to disclose such information free of an obligation of confidentiality, (d) to have been otherwise known by the Receiving Party free of an obligation of confidentiality prior to disclosure of such information by the Disclosing Party to the Receiving Party, or (e) to have been independently developed by employees or agents of the Receiving Party without the use of Confidential Information of the Disclosing Party. The terms, conditions and provisions of this Agreement shall be the Confidential Information of both Parties.

1.13. “Drug Substance” shall mean sumatriptan in all forms including all salts thereof.

1.14. “Encumbrances” shall mean all encumbrances of any kind, including security interests, liens, pledges, claims, charges, equitable interests, hypothecations, mortgages, options, licenses, assignments, powers of sale, retentions of title, rights of pre-emption, rights of first refusal, restrictions on transferability, or defects of title.

1.15. “Excluded Liabilities” shall mean all liabilities or obligations of Spectrum that are not specifically assumed by Par pursuant to this Agreement, and Excluded Liabilities shall specifically include any and all liabilities arising out of (i) breach by Spectrum or its Affiliates of any Assumed Contracts (including the breach by Spectrum of its obligations under the GSK Settlement Agreement before and after the Closing Date, whether or not the GSK Settlement Agreement is assigned to Par in accordance with Section 2.6), (ii) any financial obligations under the SL Pharma Agreement as set forth therein on the Closing Date which are due or become due in the future and/or (iii) the gross negligence or willful misconduct of Spectrum or its Affiliates.

1.16. “FDA” shall mean the United States Food and Drug Administration, and any successor agency thereto.

1.17. “FDA Letter” shall mean the letter attached hereto as Exhibit B duly executed by an authorized officer of Spectrum notifying the FDA of the transfer of the Product Regulatory Files to Par.

1.18. “General Assignment and Bill of Sale” shall mean the General Assignment and Bill of Sale attached hereto as Exhibit A.

1.19. “Governmental Authority” or “Governmental Authorities” shall mean any national, foreign, federal, state or local judicial, legislative, executive, administrative or regulatory body or authority, or its equivalent, including the FDA.

1.20. “GSK Agreements” shall have the meaning set forth in the Recitals.

EXECUTION COPY

1.21. “GSK Settlement Agreement” shall mean the Agreement between Glaxo Group Limited and Spectrum, dated November 10, 2006, including as may be amended from time to time.

1.22. “GSK Supply Agreement” shall mean the Supply and Distribution Agreement between Glaxo Group Limited and Glaxo Wellcome Manufacturing PTE Limited on the one hand and Par on the other, dated November 10, 2006, including as may be amended from time to time.

1.23. “Indemnifying Party” shall have the meaning set forth in Section 6.2(a).

1.24. “Intellectual Property” means all (a) Patents, (b) copyrightable works, copyrights in works of authorship of any type, including computer software and industrial designs, registrations and applications for registration thereof, (c) trade secrets, Know-How and other material confidential or proprietary technical, business and other information necessary to Manufacture, test, use or sell the Product, and all rights in any jurisdiction to limit the use or disclosure thereof, (d) any and all rights of application regarding any of the foregoing including with respect to extensions and the like, and (e) rights to sue and recover damages or obtain injunctive relief for past and future infringement, dilution, misappropriation, violation or breach thereof.

1.25. “Inventory” shall mean the quantities and dosage forms of the Products listed on Schedule 1.25.

1.26. “Know-How” shall mean any and all product specifications (including the Specifications), processes, product designs, manufacturing information, engineering and other manuals and drawings, standard operating procedures, flow diagrams, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, safety, quality assurance, quality control and clinical data, technical information, data, research records, supplier lists and similar data and information.

1.27. “Losses” shall mean any liability, loss, judgment, assessment paid or payable to a third party in connection with a Claim and reasonable related costs and expenses, including reasonable attorneys’ fees and costs of defending against lawsuits, complaints, actions or other litigation; provided, however, that payments in settlement of a Claim shall only be included to the extent approval of the settlement was provided in accordance with Section 6 of this Agreement.

1.28. “Manufacture/Manufacturing/Manufactured” shall mean all operations in the acquisition of materials for, and the production, packaging, labeling and quality control and release testing or other analysis of Product and the associate ingredients and components.

1.29. “Original Agreement” shall mean the Development and Marketing Agreement dated February 22, 2006 (as amended on November 10, 2006, the “Original Agreement”) between Par and Spectrum related to products containing sumatriptan as the active ingredient.

1.30. “Party” or “Parties” shall have the meaning set forth in the Preamble.

EXECUTION COPY

1.31. “Patents” means all patents, patent applications including provisional applications and statutory invention registrations, including reissues, divisions, continuations, continuations-in-part, and reexaminations, all inventions disclosed therein, all rights therein provided by international treaties and conventions, together with all applicable foreign counterpart patents and patent applications, and all rights to obtain patents and registrations thereto, as well as any extensions, supplementary protection certificates or the like applicable to any and all of the foregoing.

1.32. “Person” shall mean an individual, a corporation, a limited liability company, a partnership, an association, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

1.33. “Product” shall mean individually and collectively, the dosage forms, strengths and package forms containing the Drug Substance owned or controlled by Spectrum and/or its Affiliates as of the Closing Date, including as set forth on Schedule 1.33.

1.34. “Product Intellectual Property” shall mean all Intellectual Property owned or controlled by Spectrum and/or its Affiliates as of the Closing Date that relates to the Products or Drug Substance and the Manufacture, testing, use or sale thereof, including as set forth on Schedule 1.34.

1.35. “Product Regulatory Files” means all Regulatory Files, as applicable, owned or controlled by Spectrum and/or its Affiliates as of the Closing Date related to Products or Drug Substance and the Manufacture, testing, use or sale thereof, including as set forth on Schedule 1.35.

1.36. “Purchase Price” shall have the meaning set forth in Section 2.1(b).

1.37. “Purchased Assets” shall have the meaning set forth in Section 2.1(a).

1.38. “Regulatory Files” shall mean:

(a) means the technical, medical and scientific licenses, permits, waivers, exemptions, registrations, authorizations and approvals (including applications therefore, supplements and amendments, pre- and post- approvals, pricing and third party reimbursement approvals, and labeling approvals) of any Governmental Authority necessary for the development (including the conduct of clinical trials), manufacture, distribution, marketing, promotion, offer for sale, use, import, export or sale of a drug product or a drug substance.

(b) all technical, scientific, chemical, biological, pharmacological, and toxicological data as well as all clinical and preclinical reports (together with clinical data sets associated with such reports), and all validation documents and data.

EXECUTION COPY

1.39. “SL Pharma Agreement” shall mean the Master Services Agreement between Spectrum and SL Pharma Labs, Inc. dated July 31, 2007 as it relates to the Products or Drug Substance and the associated Project Proposals numbered P-06-031,
P-07-010 and P-05-SP-01, and Purchase Orders numbered 10868, 9758 and 9758-A.

1.40. “Spectrum’s Deliverables” shall have the meaning set forth in Section 2.4.

1.41. “Specifications” shall mean, collectively, as applicable, (i) all material applicable formulae, production and packaging specifications with respect to the Products and (ii) all material applicable quality control specifications with respect to the Products.

1.42. “Transaction Agreements” shall mean this Agreement and the General Assignment and Bill of Sale, and each individually a “Transaction Agreement.”

1.43. “United States/U.S.” shall mean the United States of America, its territories, possessions, protectorates and the Commonwealth of Puerto Rico and any installation, territory, location or jurisdiction under the purview of the FDA or control of the United States government.

ARTICLE 2
PURCHASE AND SALE; ALLOCATION

2.1. Purchase and Sale.

(a) On the Closing Date, and subject to payment of the Purchase Price by Par, Spectrum will, and will cause its Affiliates to, sell, assign, convey, license, transfer and deliver to Par, and Par will purchase and accept from Spectrum and its Affiliates, sole and exclusive (even as to Spectrum and its Affiliates) right, title and interest in and to all of the following assets (collectively, the “Purchased Assets”) free and clear of all Encumbrances:

(i) all Product Intellectual Property;

(ii) all Product Regulatory Files;

(iii) the Assumed Contracts, provided, however, that, with respect to any such contract or agreement which relates to the Purchased Assets and one or more other products of Spectrum or their Affiliates, such contract or agreement shall only be assigned to, and assumed by, Par or its designees in part and solely to the extent it relates to the Products; and

(iv) all Inventory.

For purposes of clarity, the Purchased Assets shall not include such confidential and proprietary manufacturing information for the Drug Substance provided to the FDA by the manufacturer of the Drug Substance that is owned and controlled by the third party Drug Substance supplier.

(b) On the Closing Date, and subject to the terms and conditions set forth herein, in consideration of the sale, assignment, conveyance, transfer and delivery of the Purchased Assets, Par shall make a non-refundable, non-creditable payment to Spectrum, in the manner described in Section 2.3, an aggregate purchase price of Twenty Million Dollars ($20,000,000) (the “Purchase Price”).

EXECUTION COPY

2.2. Assumption of Assumed Liabilities. With respect to the purchase and sale of the Purchased Assets, in addition to payment of the Purchase Price, Par shall assume the Assumed Liabilities on the Closing Date, and subsequently, in due course in accordance with the terms applicable thereto, pay, honor and discharge the Assumed Liabilities including the financial and related obligations to GSK under the GSK Settlement Agreement. Par assumes no Excluded Liabilities, and the Parties hereto agree that all such Excluded Liabilities shall remain the sole responsibility of Spectrum.

2.3. Deliveries by Par. On the Closing Date, Par shall deliver, or cause to be delivered, to Spectrum cash in the aggregate amount of the Purchase Price, payable by wire transfer in immediately available funds to Spectrum’s U.S. bank account in U.S. dollars in accordance with the following instructions:

2.4. Deliveries by Spectrum. On or before the Closing Date, Spectrum shall deliver to Par the following (collectively, the “Spectrum Deliverables”):

(a) copies of the Product Regulatory Files;

(b) copies of the Assumed Contracts;

(d) a duly executed General Assignment and Bill of Sale; and

(e) all Inventory; provided that such inventory that is not delivered on or before the Closing Date shall be delivered to Par as soon as reasonably practicable.

2.5. GSK Supply Agreement. Spectrum hereby forever disclaims, disowns, resigns and surrenders any rights and interest it has in and under the GSK Supply Agreement.

2.6. GSK Settlement Agreement. The Parties shall use commercially reasonable efforts to obtain GSK’s consent for Spectrum to assign the GSK Settlement Agreement to Par (the “Consent”). Upon the receipt of the Consent the GSK Settlement Agreement shall be deemed an Assumed Contract. Until receipt of the Consent or if GSK does not grant the Consent, the GSK Settlement Agreement shall not be considered an Assumed Contract and shall not be assigned to Par under this Agreement. The Parties hereby agree and acknowledge that Par is the current and only Spectrum Assignee as set forth in Section 9(b)(iii) of the GSK Settlement Agreement and Spectrum hereby covenants not to take any action which would remove or forfeit such designation with respect to Par (or to confer such designation on another party) and Par hereby agrees as a Spectrum Assignee (under the terms of the GSK Settlement Agreement) to be bound by the terms of the GSK Settlement Agreement. In addition to the Parties’ other obligations with the respect to the GSK Settlement Agreement set forth herein, Spectrum agrees to (a) not breach the GSK Settlement Agreement, (b) promptly provide Par with notice and a copy of any communication with GSK regarding the GSK Settlement Agreement and (c) promptly cooperate with Par to the extent necessary to meet all of Spectrum’s and Par’s (as a Spectrum Assignee under the GSK Settlement Agreement) obligations under the GSK Settlement Agreement and afford Par the benefit of any of Spectrum’s rights under the GSK Settlement Agreement, at Par’s reasonable request and direction. Par hereby agrees to (as between Par and Spectrum) be responsible for and indemnify Spectrum for any obligations of Spectrum under Section 9(d) or 9(e) of the GSK Settlement Agreement and any actions or inactions of Par as a Spectrum Assignee under the GSK Settlement Agreement.

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2.7. Original Agreement. The Parties hereby mutually agree that the Original Agreement is terminated in its entirety, and further each Party hereby forever disclaims, disowns, resigns and surrenders any rights and interest it has in and under the Original Agreement including any and all rights or interests it may have or otherwise had following any expiration or termination of the Original Agreement.

2.8. Non-Compete. Spectrum hereby covenants and agrees that neither it nor its Affiliates shall, directly, or indirectly, in the United States, for a period of five (5) years from the Execution Date, make, have made, use, develop, import/export, register, file, promote, market, Manufacture, distribute, offer to sell, sell or otherwise commercialize any of the Products or any pharmaceutical product containing the Drug Substance or assist any third party in the forgoing.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SPECTRUM

Spectrum, on behalf of itself and its Affiliates, hereby represents and warrants to Par that as of the Execution Date and as of the Closing Date:

3.1. Organization, Good Standing, Power, etc. Spectrum is duly organized, validly existing and in good standing under the laws of the State of Delaware. Spectrum has the requisite organizational power and authority to execute and deliver this Agreement, the other Transaction Agreements and Spectrum’s Deliverables, and to consummate the transactions contemplated hereby and thereby, as applicable. The execution and delivery of this Agreement by Spectrum, the execution and delivery by Spectrum of the other Transaction Agreements and Spectrum’s Deliverables, as applicable, and the consummation by Spectrum of the transactions contemplated hereby and thereby, as applicable, have been duly authorized by all necessary organizational action on the part of Spectrum and no other or further organizational actions will be necessary for the execution and delivery of such agreements, as applicable, by Spectrum, the performance by Spectrum of its obligations hereunder and thereunder, as applicable, and the consummation by Spectrum of the transactions contemplated hereby or thereby, as applicable. Each Transaction Agreement, at the time such agreement is delivered, will have been duly executed and delivered by Spectrum and constitutes legal, valid and binding obligations of Spectrum, enforceable against Spectrum in accordance with its terms.

3.2. No Conflict. The execution, delivery and performance by Spectrum of this Agreement, the other Transaction Agreements and Spectrum’s Deliverables, and the consummation by Spectrum of the transactions contemplated hereby and thereby will not require any material notice to, material filing with, or the material consent (except for the Consent in the event the GSK Settlement Agreement is assigned to Par in accordance with Section 2.6), approval or authorization of, any Person or Governmental Authority, except for the transfer of the Product Regulatory Files, as provided for in the FDA Letter. The execution, delivery and performance of this Agreement the other Transaction Agreements and Spectrum’s Deliverables and the consummation of the transactions contemplated hereby and thereby will not (i) conflict with or result in a breach of any of the provisions of the organizational documents of Spectrum or (ii) contravene in any material respect any Applicable Law. Neither the execution, delivery and performance by Spectrum of this Agreement, the other Transaction Agreements or Spectrum’s Deliverables nor the consummation of the transactions contemplated hereby or thereby by Spectrum will result in a material breach or result in the acceleration or termination of, or the creation in any third party of the right to accelerate, terminate, modify or cancel, any Assumed Contract.

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3.3. Assets.

(a) Schedule 1.33 sets forth a true and complete list and/or description of all products containing the Drug Substance which Spectrum and/or its Affiliates have developed (or have in development) or Spectrum and/or its Affiliates have rights to by way of the GSK Agreements as of the Closing Date.

(b) Spectrum and its Affiliates do not own or control (including by joint ownership) any Intellectual Property related to a Product or Drug Substance, or the manufacture, use or testing thereof that is not being sold, assigned, conveyed, transferred and delivered to Par pursuant to this Agreement. Schedule 1.34 sets forth a true and complete list and/or description of the Product Intellectual Property as of the Closing Date.

(c) Spectrum and its Affiliates do not own or control (including by joint ownership) any Registration Files or other Books and Records related to a Product or Drug Substance, or the manufacture, use or testing thereof that is not being sold, assigned, conveyed, transferred and delivered to Par pursuant to this Agreement. Schedule 1.35 sets forth a true and complete list and/or description of all Product Regulatory Files owned or controlled by Spectrum as of the Closing Date.

(d) Other than the GSK Supply Agreement to which Spectrum was a third party beneficiary prior to the Closing Date, Spectrum and/or its Affiliates are not party to any agreement with a third party relating to a Product or Drug Substance, or the manufacture, use or testing thereof or any of the Purchased Assets, that is not being sold, assigned, conveyed, transferred and delivered to Par pursuant to this Agreement. Other than the GSK Supply Agreement to which Spectrum was a third party beneficiary prior to the Closing Date, Schedule 1.5 sets forth a true and complete list and/or description of all third party agreements to which Spectrum and/or any Spectrum Affiliate is a party as of the Closing Date which relates to Product or Drug Substance, or the manufacture, use or testing thereof or any of the Purchased Assets.

(e) Spectrum and/or its Affiliates do not own or posses any drug product, drug substance or other materials or components necessary or useful for the Manufacture of the Product that is not being sold, assigned, conveyed, transferred and delivered to Par pursuant to this Agreement as the Inventory.

(f) Spectrum and/or its Affiliates, except as to any rights Par may have in the Purchased Assets, have the sole and exclusive right, title and interest in and to all the Purchased Assets and the Purchased Assets are free and clear of all Encumbrances.

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3.4. Litigation. There is no civil, criminal or administrative action, suit, hearing, or proceeding pending or, to the knowledge of Spectrum, threatened against Spectrum or any Spectrum Affiliate relating directly to any of the Products or the Purchased Assets or the transactions contemplated hereby.

3.5. Compliance with Laws. The Purchased Assets have been used in compliance, in all material respects, with Applicable Laws. Spectrum has not received any written notice from any Governmental Authority that Spectrum or its Affiliates, with respect to the any of the Products or the Purchased Assets, were or are in violation of any Applicable Laws. Notwithstanding the foregoing, Spectrum makes no representations or warranties regarding what future actions any Governmental Authorities may take with regard to the Products or Purchased Assets or how future Applicable Laws may affect the Products or Purchased Assets. Neither Spectrum nor any of its Affiliates have sold, offered for sale, marketed or promoted any products containing the Drug Substance.

3.6. Regulatory and FDA Matters.

(a) There is no action or proceeding by the FDA or any other Governmental Authority pending or, to the knowledge of Spectrum, threatened against Spectrum relating to safety or efficacy of any of the Products or the FDA’s approval of any Product Regulatory Files (as applicable), other than the ordinary prosecution of ANDA #s 077-332 and 078-294. Spectrum has made available to Par true and accurate copies of all (i) material reports of inspection observations by Governmental Authorities relating in any respect to any and all of the Products or Product Regulatory Files that are or were in the possession of Spectrum for the three (3) years prior to the Execution Date, (ii) material establishment inspection reports by Governmental Authorities relating in any respect to the any of the Products or Product Regulatory Files for the three (3) years prior to the Closing Date provided to Spectrum, its Affiliates or their respective suppliers or otherwise in the possession of Spectrum; (iii) warning letters from the FDA or any other Governmental Authority relating in any respect to any of the Products for the three (3) years prior to the Closing Date addressed to Spectrum or provided to Spectrum by its suppliers or otherwise in the possession of Spectrum, as well as any other material documents or material correspondence received by Spectrum from the FDA or any other Governmental Authority relating to any of the Products or any Product Regulatory Files that assert or allege: (1) material lack of compliance with any Applicable Laws or regulatory requirements of the United States (including those of the FDA or any other Governmental Authority), or (2) any material events, circumstances or matters regarding the safety or efficacy of any of the Products in the United States, and (iv) the results of all internal quality audits prepared by or for Spectrum or their Affiliates or suppliers relating to any of the Products prepared at any time during the three (3) years prior to the Closing Date.

(b) Schedule 1.33 sets forth (i) the name of each of the Products, (ii) the entity holding any Regulatory Files for any of the Product, (iii) the reference number, and (iv) the date on which the Regulatory Files has been applied for and, if applicable, granted.

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3.7. Assumed Contracts.

(a) Each Assumed Contract is in full force and effect, and no breach or default or event which would (with the passage of time, notice or both) constitute a breach or default thereunder by Spectrum or, to the knowledge of Spectrum, any other party or obligor with respect thereto, exists as of the date hereof which in each case would reasonably be expected to result in a material liability thereunder.

(b) Spectrum has obtained all consent necessary (except for the Consent in the event the GSK Settlement Agreement is assigned to Par in accordance with Section 2.6), including any prior written authorizations, for Spectrum to assign the Assumed Contracts to Par, including all of Spectrum and/ Affiliates its rights, duties and obligations thereunder.

(c) Spectrum has delivered to Par a true and complete copy of each Assumed Contract (including any and all existing amendments, modifications and the like).

3.8. Broker’s Fees. Spectrum has not employed any broker, finder or investment banker or incurred any liability for any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Agreement.

3.9. Jointly Owned Assets. None of the Purchased Assets are jointly owned by Spectrum and its Affiliates with any other Person other than Par.

3.10. Other Claims. Spectrum and its Affiliates have no claims or causes of action (including claims for past infringement or misappropriation of Product Intellectual Property) against any Third Party (regardless of whether or not such claims or causes of action have been asserted by Spectrum) related to the Product and the Purchased Assets and Spectrum and its Affiliates possess no rights of indemnity, warranty rights, rights of contribution, rights to refund or reimbursements and other rights of recovery possessed (regardless of whether such rights are currently exercisable) related to Product and the Purchased Assets as of the Closing Date.

3.11. No Other Representations or Warranties. Except for the representations and warranties of Spectrum expressly set forth in this Agreement and the other Transaction Agreements, neither Spectrum nor any other Person makes any other express or implied representation or warranty on behalf of Spectrum.

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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PAR

Par, on behalf of itself and its Affiliates, hereby represents and warrants to Spectrum that as of the Execution Date and as of the Closing Date:

4.1. Corporate Organization, Good Standing, Power. Par is duly organized, validly existing and in good standing under the laws of the State of Delaware. Par has the requisite corporate power and authority to execute and deliver this Agreement and the other Transaction Agreements contemplated hereby to which it is to be a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement by Par, the execution and delivery by Par of the other Transaction Agreements to which it is to be a party, and the consummation by Par of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Par and no other or further corporate actions or proceedings will be necessary for the execution and delivery of such agreements by Par, the performance by Par of its obligations hereunder and thereunder and the consummation by Par of the transactions contemplated hereby or thereby. Each of the Transaction Agreements to which it is to be a party, at the time such agreement is delivered by Par, will have been duly executed and delivered by Par and will constitute a legal, valid and binding obligation of Par enforceable against Par in accordance with its terms.

4.2. Consents and Approvals; No Conflict. No material filing with, and no material permit, authorization, consent or approval of, any Person or Government Authority is necessary for the execution, delivery and performance by Par of this Agreement or any other Transaction Agreement, and the consummation by Par of the transactions contemplated hereby and thereby, except for the transfer of the Product Regulatory Files, as provided for in the FDA Letter. The execution and delivery of this Agreement and the other Transaction Agreements to which it is a party, and the consummation of the transactions contemplated hereby and thereby will not (i) conflict with or result in a breach of any of the provisions of the certificate or articles of incorporation or by-laws of Par, or (ii) contravene in any material respect any Applicable Law.

4.3. Financial Capability. Par has sufficient funds available to purchase the Purchased Assets and to perform and consummate the transactions contemplated by this Agreement or the other Transaction Agreements on the terms and subject to the conditions hereunder and thereunder as applicable.

4.4. Broker’s Fees. Par has not employed any broker, finder or investment banker or incurred any liability for any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Agreement.

4.5. No Other Representations or Warranties. Except for the representations and warranties of Par expressly set forth in this Agreement and the other Transaction Agreements, neither Par nor any other Person makes any other express or implied representation or warranty on behalf of Par.

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ARTICLE 5
ADDITIONAL AGREEMENTS

The Parties agree that:

5.1. Expenses. All expenses, including the fees of any attorneys, accountants, investment bankers or others engaged by a Party, incurred in connection with this Agreement and the other Transaction Agreements and the transactions contemplated hereby and thereby shall be paid by the Party incurring such expenses, whether or not the transactions contemplated by this Agreement and the other Transaction Agreements are consummated.

5.2. Additional Agreements of Spectrum. Subject to the terms and conditions herein provided, Spectrum agrees (i) to do, or cause to be done, all things necessary or proper to consummate the transactions contemplated by this Agreement and the other Transaction Agreements and to cooperate with Par in connection with the foregoing, (ii) to obtain all necessary consents and approvals (or effective waiver thereof) from other parties to material agreements, contracts, instruments and other contracts to consummate the transactions contemplated by this Agreement and the other Transaction Agreements (except for the Consent in the event the GSK Settlement Agreement is assigned to Par in accordance with Section 2.6), (iii) to defend all lawsuits or other legal proceedings challenging this Agreement or the other Transaction Agreements or the consummation of the transactions contemplated hereby or thereby, (iv) to effect all necessary registrations and filings and submissions of information required or requested by Governmental Authorities with respect to the transactions contemplated by this Agreement or the other Transaction Agreements, and (v) to take such actions and further assurances reasonably required for Par to vest more fully in possession of the Purchased Assets, or Spectrum to retain the Excluded Liabilities, respectively, including but not limited to the assignment or reassignment, or granting of rights, in relation to assets contemplated by this Agreement to transferred to Par and inadvertently transferred retained by Spectrum, as the case may be. To the extent that Spectrum becomes aware of any Product Intellectual Property or Product Regulatory Files not listed in a schedule to this Agreement, Spectrum shall promptly notify Par of such and promptly deliver same to Par and such Product Intellectual Property and Product Registration Files shall be deemed to have listed on their corresponding schedules to this Agreement and otherwise included in this Agreement as of the Execution Date. Spectrum and its Affiliates hereby assigns all rights and interests in any such Product Registration Files and/or Product Intellectual Property that Spectrum becomes aware of after the Execution Date. If it is impossible for Spectrum and its Affiliates to assign such Product Intellectual Property or Product Registration Files to Par, Spectrum hereby grants to Par a perpetual fully paid-up license under such Product Intellectual Property and/or Product Registration Files for all purposes in connection with the Purchased Assets.

5.3. Additional Agreements of Par. Subject to the terms and conditions herein provided, Par agrees as applicable to it (i) to do, or cause to be done, all things necessary or proper to consummate the transactions contemplated by this Agreement and the other Transaction Agreements and to cooperate with Spectrum in connection with the foregoing, (ii) to defend all lawsuits or other legal proceedings challenging this Agreement or the other Transaction Agreements or the consummation of the transactions contemplated hereby or thereby, (iii) to effect all necessary registrations and filings and submissions of information required or requested by Governmental Authorities with respect to the transactions contemplated by this Agreement or the other Transaction Agreements, and (iv) to take such actions and further assurances reasonably required for Par to assume the Assumed Liabilities, respectively, including reassigning any Assumed Liabilities inadvertently retained by Spectrum, as the case may be.

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5.4. Access to Information. From and after the Closing Date, each Party agrees to cooperate with and to grant to each other Party and their respective officers, employees, attorneys, accountants, representatives and agents, during normal business hours, reasonable access to the other Party’s material information and records relating to the Product and the Product Regulatory Files (including any information underlying the Product Regulatory Files or data cross-referenced with any pre-clinical, clinical or chemistry, manufacturing and control information or data with regard to the Product or the Drug Substance contained in any other related Regulatory Files or other regulatory filings or applications of Spectrum or its Affiliates filed with and/or approved by the FDA) in their possession after the Closing Date for the purposes of (i) any financial reporting or Tax matters (including without limitation any financial and Tax audits, Tax contests, Tax examination, preparation for any Tax returns or preparation of financial records); (ii) defending against any claims or litigation involving the Product, other than in the case of litigation between Parties or (iii) any investigation or inquiry being conducted by any federal, state, local or foreign Governmental Authority involving the Product. Each Party shall ensure that its access to and requests for records and documents pursuant to this Section 5.4 are conducted so as not to interfere with the normal and ordinary operation of the other Parties’ businesses. If any Party shall desire to dispose of any of such information and records prior to the expiration of a six (6) year period following the Closing Date, such disposing Party shall, prior to such disposition, give the other Parties a reasonable opportunity, at such Parties’ expense, to segregate and remove such information and records as such Parties may elect; provided, however, Spectrum shall retain such information and records to comply with its obligations under this Agreement and the other Transaction Agreements.

5.5. From and after the Closing Date, except as required by Applicable Law, Par shall be responsible for all contacts with the FDA and other Governmental Authorities with respect to the Purchased Assets.

5.6. Par shall maintain product liability insurance coverage for a period of three (3) years after the Closing Date and Par shall provide to Spectrum, upon Spectrum’s written request, a certificate evidencing such coverage and naming Spectrum as an additional insured. The insurance policy will be an annual policy with aggregate limits each year and the insurance carrier shall be “A” rated.

5.7. Par shall comply with the terms and conditions of the GSK Settlement Agreement.

ARTICLE 6
INDEMNIFICATION

6.1. Indemnification.

(a) Subject to the provisions of this Article 6, Spectrum shall indemnify, defend and hold harmless Par and its officers, directors and employees, from any Losses, incurred by such persons arising from or attributable to:

(i) the breach of any representation or warranty made by Spectrum in this Agreement;

(ii) any failure of Spectrum to duly perform or observe any covenant or agreement to be performed or observed by Spectrum pursuant to this Agreement;

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(iii) the Products or Purchased Assets prior to the Closing Date, except to the extent the Losses are due to the negligence or willful misconduct by Par and/or its officers, directors and employees; or

(iv) the Excluded Liabilities.

Notwithstanding the foregoing, Spectrum shall not indemnify Par and its officers, directors and employees from any Losses incurred by such persons due to any actions Governmental Authorities may take after the Closing Date with regard to the GSK Agreements failing to comply with Applicable Laws.

(b) Subject to the provisions of this Article 6, Par shall indemnify, defend and hold harmless Spectrum and its respective officers, directors and employees, from any Losses incurred by such persons arising from or attributable to:

(i) the breach of any representation or warranty made by Par in this Agreement;

(ii) the Products or Purchased Assets on and after the Closing Date;

(iii) any failure of Par duly to perform or observe any covenant or agreement to be performed or observed by Par pursuant to this Agreement;

(iv) the Assumed Liabilities;

(v) any breach by Par of the terms of the GSK Settlement Agreement; or

(vi) any breach by Par of the terms of the GSK Supply and Distribution Agreement.

6.2. Procedures.

(a) Promptly after the receipt by any Person entitled to indemnity hereunder of notice or otherwise becoming aware of any third-party claim reasonably expected to be formally made against a Party or the commencement of any third-party action or proceeding, in each case which may give rise to indemnification hereunder, such Person (the “Aggrieved Party”) shall, if an indemnity claim with respect thereto is to be made against any Party obligated to provide indemnification pursuant to this Article 6 (the “Indemnifying Party”), give such Indemnifying Party written notice of such claim or the commencement of such action or proceeding any of the foregoing, a “Claim”; provided, however, that failure to give such notification will not affect the indemnification provided hereunder except to the extent the Indemnifying Party shall have been actually prejudiced as a result of such failure. The Indemnifying Party may elect to assume the defense of any such Claim, or any litigation resulting from such Claim. Upon such assumption, the Aggrieved Party shall cooperate fully with the Indemnifying Party in the conduct of such defense. This duty on Part of the Aggrieved Party to cooperate in such defense shall include, but not be limited to,

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(i) providing assistance in compiling and verifying responses to discovery requests, (ii) providing reasonable access to its employees for purposes of consulting, performing laboratory testing, providing deposition and trial testimony and expert opinions and (iii) making available to the Indemnifying Party all books and records as may have relevance to the defense. The Aggrieved Party may participate, at its expense (not subject to indemnification hereunder), in the defense of such Claim; provided that the Indemnifying Party shall direct and control the defense of such Claim. The Indemnifying Party shall not, in the defense of such Claim, consent to entry of any judgment, except with the written consent of the Aggrieved Party, or enter into any settlement, except with the written consent of the Aggrieved Party which, in either case, may not be unreasonably withheld. In addition, all awards and costs payable by a third party to the Aggrieved Party or the Indemnifying Party shall belong to the Indemnifying Party. The Aggrieved Party shall not be entitled to control, and the Aggrieved Party shall be entitled to have sole control over, the defense or settlement of any claim to the extent that claim seeks any order, injunction or other equitable relief against the Aggrieved Party.

(b) If the Indemnifying Party shall fail to assume the defense of a Claim, the Aggrieved Party may defend against such Claim in such reasonable manner as it may deem appropriate and the Aggrieved Party may settle such Claim (but only with the consent of the Indemnifying Party, which consent shall not be unreasonably withheld) on such terms as it may deem appropriate, and the Indemnifying Party shall promptly reimburse the Aggrieved Party for the amount of any indemnifiable Losses incurred by the Aggrieved Party in connection with the defense against or settlement of such Claim as well as for the reasonable attorneys fees and costs incurred by the Aggrieved Party in defense of such Claim.

6.3. Losses. The amount of any Loss for which indemnification is provided under Sections 6.1 shall be net of (i) any amounts recovered by the Aggrieved Party or any of its Affiliates pursuant to any indemnification by or indemnification agreement with any third party, (ii) any insurance proceeds or other cash receipts or sources of reimbursement received as an offset against such Loss, and (iii) any tax benefit to the extent such benefit was actually taken. Parties shall take and shall cause their Affiliates to take all reasonable steps to mitigate any Losses upon becoming aware of any event that would reasonably be expected to, or does, give rise thereto, including incurring costs only to the minimum extent necessary to remedy a breach that gives rise to the Loss. If the amount to be netted hereunder from any payment required under Section 6.1 is determined after payment by the Indemnifying Party of any amount otherwise required to be paid to an Aggrieved Party pursuant to this Article 6, the Aggrieved Party shall repay to the Indemnifying Party, promptly after such determination, any amount that the Indemnifying Party would not have had to pay pursuant to this Article 6 had such determination been made at the time of such payment.

6.4. Except with regard to each Party’s obligation of indemnification of the other Party as expressed in this Section 6, neither Party shall be liable for any consequential, special or punitive damages arising under or as a result of this Agreement, including, but not limited to the loss of prospective profits.

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ARTICLE 7
CONFIDENTIALITY AND PUBLIC DISCLOSURE

7.1. Neither Party shall disclose to any third party (other than an Affiliate company) any Confidential Information received by it hereunder or in connection with the Original Agreement or use any such Confidential Information for its own benefit or that of any third party without the written consent of the Party that disclosed such Confidential Information. Each Party agrees to protect Confidential Information received from the other Party at least as well as it would its own proprietary and confidential information.

7.2. Each Party shall bind all persons having access through it to any Confidential Information to take no steps inconsistent with or preventing such Party from carrying out the terms of this Agreement. Each Party hereby represents to the other that the receiving Party will be responsible for the acts of any director, officer, employee and/or agent receiving the Confidential Information.

7.3. Each Party, at the request of the other, shall return or destroy all Confidential Information disclosed to it hereunder, in whatever form contained, including any listing which identifies the documents which were provided, except that one copy of the Confidential Information may be retained at the office of each Party’s counsel, to maintain a record of the same.

7.4. Notwithstanding anything to the contrary in this Agreement, the Parties understand and agree that either Party, as the Receiving Party of Confidential Information from the Disclosing Party, may, if so required, disclose some or all of the information included in this Agreement or other Confidential Information of the other Party (i) in order to comply with its obligations under law, (ii) to respond to an inquiry of a Governmental Authority, or (iii) in a judicial, administrative or arbitration proceeding. In any such event the Receiving Party making such disclosure shall (A) provide the Disclosing Party with as much advance notice as reasonably practicable of the required disclosure, (B) cooperate with the Disclosing Party in any attempt to prevent or limit the disclosure, and (C) reasonably limit any disclosure to the specific purpose at issue. Additionally, each Party shall be free to make comments consistent with any press release issued in conformance with Section 8.1 below.

ARTICLE 8
GENERAL PROVISIONS

8.1. Public Statements. Except as agreed to by the Parties, neither Party shall make any publicity releases, interviews or other dissemination of information concerning this Agreement or its terms, or the transactions contemplated hereby, to communication media, financial analysts or others without the prior written approval of the other Party, which approval shall not be unreasonably withheld, delayed or conditioned. The Parties shall mutually agree (such agreement not unreasonably withheld, delayed or conditioned) on the wording of each of their respective press releases announcing the execution of this Agreement. The Parties shall have the right to issue a press release pursuant, and to make public comments consistent with, any press release that was previously issued pursuant to the terms of this Section 8.1. Notwithstanding the foregoing, the Parties understand and agree that either Party, may, if so required, disclose some or all of the information included in this Agreement (i) in order to comply with its obligations under the law, including the United States Securities Act of 1933, the United States Securities Exchange Act of 1934 (“SEC”), or (ii) the listing standards or agreements of any national or international securities exchange. In any such event the Party making such disclosure shall provide the other Party with a copy of the required disclosure prior to dissemination.

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8.2. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, mailed by reputable overnight courier or certified mail (return receipt requested) or sent by fax (confirmed thereafter by such certified mail), to Parties at the following addresses or at such other addresses as shall be specified by Parties by like notice:

(a)

if to Spectrum:

Spectrum Pharmaceuticals, Inc.
Attn: General Counsel
157 Technology Drive
Irvine, CA 92618
Fax: (949) 788-6706

(b)

if to Par:

Par Pharmaceutical, Inc.
Attention: General Counsel
300 Tice Boulevard
Woodcliff Lake, NJ 07677
Fax: (201) 802-4600

Notice so given shall (i) in the case of notice so given by personal delivery, be deemed to be given and received on the date of such personal delivery, (ii) in the case of notice so given by certified mail, be deemed to be given and received on the third (3^rd) calendar day after mailing, (iii) in the case of notice so given by a reputable overnight courier, be deemed to be given and received on the next Business Day after delivery to such courier and (iv) in the case of notice so given by fax, be deemed to be given and received on the date of actual transmission.

8.3. Amendment. This Agreement may not be amended except by an instrument in writing signed on behalf of each of Parties hereto.

8.4. Waiver. Any term, provision or condition of this Agreement may only be waived if in writing (or the time for performance of any of the obligations or other acts of Parties hereto may be extended) by Party that is entitled to the benefits thereof.

8.5. Parties in Interest. No Party may delegate its duties under this Agreement without the consent of the other Parties hereto. No Party may assign its rights under this Agreement without the consent of the other Parties hereto, other than in connection with a merger, consolidation, or sale of all or substantially all of its assets. This Agreement shall not run to the benefit of or be enforceable by any Person other than a Party to this Agreement and, subject to this Section 8.5, its successors and permitted assigns.

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8.6. Entire Agreement. This Agreement (including the documents and instruments referred to herein) and the other Transaction Agreement, constitutes the entire agreement and supersedes all other prior agreements and undertakings, both written and oral, among Parties, or any of them, with respect to the subject matter hereof.

8.7. Governing Law; Jurisdiction. This Agreement (including the documents and instruments referred to herein) shall be governed in all respects, including validity, interpretation and effect, by the internal laws of the State of New York, without regard to the conflicts of law provisions thereof with the exception of Sections 5-1401 and 5-1402 of the New York General Obligations Law. Parties agree that the U.S. District Court for the Southern District of New York shall have exclusive jurisdiction over any dispute or controversy arising out of or relating to this Agreement and any judgment, determination, arbitration award, finding or conclusion reached or rendered in any other jurisdiction shall be null and void between Parties. Each of Parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement, the transactions contemplated hereby or the actions of Parties in the negotiation, administration, performance and enforcement hereof.

8.8. Counterparts. This Agreement may be executed in one or more counterparts, including by transmission of facsimile or PDF copies of signature pages, each of which shall for all purposes are deemed to be an original and all of which shall constitute on instrument.

8.9. Third Party Beneficiaries. No term or provision of this Agreement is intended to be, or shall be, for the benefit of any Person not a party hereto, and no such other Person shall have any right or cause of action hereunder.

8.10. Validity. If any provisions of this Agreement shall be held to be illegal, invalid or unenforceable under any Applicable Law, then such contravention or invalidity shall not invalidate the entire Agreement. Such provision shall be deemed to be modified to the extent necessary to render it legal, valid and enforceable, and if no such modification shall render it legal, valid and enforceable, then this Agreement shall be construed as if not containing the provision held to be invalid, and the rights and obligations of Parties shall be construed and enforced accordingly.

8.11. Interpretation and Construction. Unless the context of this Agreement otherwise requires, (i) the terms “include,” “includes,” or “including” shall be deemed to be followed by the words “without limitation” unless otherwise indicated; (ii) words using the singular or plural number also include the other; (ii) the terms “hereof,” “herein,” “hereby,” and derivative or similar words refer to this entire Agreement; (iv) the terms “Article,” “Section” and “Exhibit” refer to the specified Article, Section and Exhibit of this Agreement, and (v) words of any gender include each other gender . Whenever this Agreement refers to a number of days, unless otherwise specified, such number shall refer to calendar days. The headings and paragraph captions in this Agreement are for reference and convenience purposes only and shall not affect the meaning or interpretation of this Agreement. This Agreement shall not be interpreted or constructed in favor of or against either Party because of its effort in preparing it.

EXECUTION COPY

[Signature Page Follows]

EXECUTION COPY

IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound, have caused this Asset Purchase Agreement to be executed as of the date first written above.


SPECTRUM PHARMACEUTICALS, INC.
By:	/s/ Rajesh C. Shrotriya, M.D.
	Name:	Rajesh C. Shrotriya, M.D.
	Title:	Chief Executive Officer and President

PAR PHARMACEUTICAL, INC.
By:	/s/ Gerald Martino
	Name:	Gerard Martino
	Title:	Chief Operating Officer

EXECUTION COPY

SCHEDULE 1.5
ASSUMED CONTRACTS

1. GSK Settlement Agreement, to the extent GSK consents to its assignment as set forth in Section 2.6.

2. SL Pharma Agreement

EXECUTION COPY

SCHEDULE 1.25
INVENTORY

10,640 (EQ 6mg BASE/0.5mL) vials (registration batch)

10,200 (EQ 6mg BASE/0.5mL) pre-filled syringes (registration batch)

EXECUTION COPY

SCHEDULE 1.33
PRODUCTS

Dosage
Form;

Package

NDA/

Drug Substance

Route

Strength

Form

ANDA #

Entity

Status

Sumatriptan succinate

Injectable; vial

EQ 6MG BASE/0.5ML

2ml single dose
glass vial

077-332

Spectrum

Filed Oct. 22,
2004; tentative
approval on October
16, 2006

Sumatriptan succinate

Injectable;
pre-filled syringe

EQ 6MG BASE/0.5ML

1ml glass syringe

078-294

Spectrum

Filed May 8, 2006;
still pending

Sumatriptan succinate

Injectable; device

EQ 6MG BASE/0.5ML

2 x 1ml syringe in
single use
autoinjector device

020080

GSK

Granted

Sumatriptan succinate

Injectable; device

EQ 4MG BASE/0.5ML

2 x 1ml syringe in
single use
autoinjector device

020080

GSK

Granted

EXECUTION COPY

SCHEDULE 1.34
PRODUCT INTELLECTUAL PROPERTY

All Know-How and other material confidential or proprietary technical, business and other information owned or controlled by Spectrum and/or its Affiliates as of the Closing Date necessary to Manufacture, test, use or sell the Product is included in the Product Regulatory Files.

EXECUTION COPY

SCHEDULE 1.35
PRODUCT REGULATORY FILES

All submissions under ANDA # 077-332
All submissions under ANDA # 078-294
All FDA correspondence relating to the above ANDAs

EX-4.1 3 c74310exv4w1.htm EXHIBIT 4.1 Filed by Bowne Pure Compliance

Exhibit 4.1

THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY OR ACQUIRABLE UPON EXERCISE HEREOF HAVE NOT REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, ASSIGNED OR TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER SAID ACT IS NOT REQUIRED.

SPECTRUM PHARMACEUTICALS, INC.

WARRANT



Dated: April 28, 2008		Number: SPPI 429

Spectrum Pharmaceuticals, Inc., a Delaware corporation (the “Company”), hereby certifies that, for value received, John T. Moore or his registered assigns (“Holder”), is entitled, subject to the terms set forth below, to purchase from the Company up to a total of 50,000 shares of Common Stock, $.001 par value per share (the “Common Stock”), of the Company (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at an exercise price equal to $1.79 per share (as adjusted from time to time as provided in Section 7, the “Exercise Price”), at any time from and including April 28, 2008 (the “Effective Date”) through and including April 27, 2013 (the “Expiration Date”), in accordance with the vesting schedule set forth in Section 3 (b), subject to the following terms and conditions:

1. Registration of Warrant. The Company shall register this Warrant upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, and the Company shall not be affected by notice to the contrary.

2. Registration of Transfers and Exchanges.

(a) This Warrant may not be sold, transferred, assigned, pledged, hypothecated or otherwise disposed, directly or indirectly, in whole or in part, without the prior written consent of the Company. Any attempted sale, transfer, assignment, pledge, hypothecation or other disposition of this Warrant, or any portion thereof, shall be void and without any force or effect; provided, however, that, subject to compliance with any applicable securities laws, the Holder may transfer this Warrant, or any portion thereof, without the prior written consent of the Company, if such transfer is to (i) a spouse, child, grandchild, parent, sibling or custodian or trustee for the benefit of any such relatives, or (ii) any shareholder or affiliate entity.

(b) The Company shall register the transfer of any portion of this Warrant in conformance with Section 2(a) in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Company at the office specified in or pursuant to Section 10. Upon any such registration or transfer, a new warrant to purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance of such transferee of all of the rights and obligations of a holder of this Warrant.

(c) This Warrant is exchangeable, upon the surrender hereof by the Holder to the office of the Company specified in or pursuant to Section 10 for one or more New Warrants, evidencing in the aggregate the right to purchase the number of Warrant Shares which may then be purchased hereunder.

(d) Unless the resale of the Warrant Shares has been registered under the Securities Act of 1933, as amended, each certificate for Warrant Shares initially issued upon the exercise of this Warrant, and each certificate for Warrant Shares issued to any subsequent transferee of any such certificate, shall be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED, AND MAY NOT BE OFFERED, SOLD, ASSIGNED OR TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER SAID ACT IS NOT REQUIRED.”

3. Duration and Exercise of Warrant.

(a) This Warrant shall be exercisable by the then registered Holder on any business day before 5:00 P.M., California time, at any time and from time to time on or after the Effective Date to and including the Expiration Date. At 5:00 P.M., California time on the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and become void and of no value.

(b) This Warrant shall vest in accordance with the following schedule:

	a.		Twenty-five (25%) percent of the shares shall vest and become exercisable upon the Effective Date of the warrant; and

	b.		The remaining shares shall vest in equal twenty-five (25%) percent increments every six months from the Effective Date of the warrant thereafter.

			In the event that the Consulting Agreement dated September 20, 2005, as amended, by and between the Company and JTM Consulting, Inc., expires or is terminated by either party prior to any vesting date, no further vesting will occur following such termination.

(c ) Upon surrender of this Warrant, with the Form of Election to Purchase attached hereto duly completed and signed, to the Company at its address for notice set forth in Section 10 and upon payment of the Exercise Price multiplied by the number of Warrant Shares that the Holder intends to purchase hereunder, in the manner provided hereunder, all as specified by the Holder in the Form of Election to Purchase, the Company shall promptly (and in any event, within four business days) issue or cause to be issued and cause to be delivered to or upon the written order of the Holder and in such name or names as the Holder may designate, a certificate for the Warrant Shares issuable upon such exercise. Any person so designated by the Holder to receive Warrant Shares shall be deemed to have become holder of record of such Warrant Shares as of the Date of Exercise of this Warrant.

A. “Date of Exercise” means the date on which the Company shall have received (i) this Warrant (or any New Warrant, as applicable), with the Form of Election to Purchase attached hereto (or attached to such New Warrant) appropriately completed and duly signed, and (ii) payment of the Exercise Price for the number of Warrant Shares so indicated by the holder hereof to be purchased.

(c) This Warrant shall be exercisable, either in its entirety or, from time to time, for a portion of the number of Warrant Shares. If less than all of the Warrant Shares which may be purchased under this Warrant are exercised at any time, the Company shall issue or cause to be issued, at its expense, a New Warrant evidencing the right to purchase the remaining number of Warrant Shares for which no exercise has been evidenced by this Warrant.

(d) Prior to the exercise of this Warrant, the Holder shall not be entitled to any rights as a stockholder of the Company with respect to the Warrant Shares, including (without limitation) the right to vote such shares, receive dividends or other distributions thereon or be notified of stockholder meetings (except as otherwise set forth in Section 7(f) herein).

(e) If by the tenth business day after a Date of Exercise the Company fails to deliver the required number of Warrant Shares in the manner required pursuant to Section 3(b), then the Holder will have the right to rescind such exercise.

4. Payment of Taxes. The Company will pay any documentary stamp taxes attributable to the issuance of Warrant Shares upon the exercise of this Warrant; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

5. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and indemnity, if requested, satisfactory to it. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable charges as the Company may prescribe.

6. Reservation of Warrant Shares. The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder. The Company covenants that all Warrant Shares that shall be so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly authorized, validly issued and fully paid and nonassessable.

7. Certain Adjustments. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 7. Upon each such adjustment of the Exercise Price pursuant to this Section 7, the Holder shall thereafter prior to the Expiration Date be entitled to purchase, at the Exercise Price resulting from such adjustment, the number of Warrant Shares obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment.

(a) If the Company, at any time while this Warrant is outstanding, (i) shall pay a stock dividend (except scheduled dividends paid on outstanding preferred stock which contain a stated dividend rate) or otherwise make a distribution or distributions on shares of its Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock into a larger number of shares, or (iii) combine outstanding shares of Common Stock into a smaller number of shares, the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and the denominator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination, and shall apply to successive subdivisions and combinations.

(b) In case of any reclassification of the Common Stock, any consolidation or merger of the Company with or into another person, the sale or transfer of all or substantially all of the assets of the Company or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, then the Holder shall have the right thereafter to exercise this Warrant only into the shares of stock and other securities and property receivable upon or deemed to be held by holders of Common Stock following such reclassification, consolidation, merger, sale, transfer or share exchange, and the Holder shall be entitled upon such event to receive such amount of securities or property equal to the amount of Warrant Shares such Holder would have been entitled to had such Holder exercised this Warrant immediately prior to such reclassification, consolidation, merger, sale, transfer or share exchange. The terms of any such consolidation, merger, sale, transfer or share exchange shall include such terms so as to continue to give to the Holder the right to receive the securities or property set forth in this Section 7(b) upon any exercise following any such reclassification, consolidation, merger, sale, transfer or share exchange.

(c) If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common Stock (and not to holders of this Warrant) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security (excluding those referred to in Sections 7(a), and (b)), other than as part of its dissolution or liquidation or the winding up of its affairs, then in each such case the Exercise Price shall be determined by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the fair market value of a share of Common Stock determined as of the record date mentioned above, and of which the numerator shall be the fair market value of a share of Common Stock determined as of such record date less the fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of Common Stock as determined by the Company’s independent certified public accountants that regularly examines the financial statements of the Company (an “Appraiser”).

(d) For the purposes of this Section 7, the following clauses shall also be applicable:

	(i)		Record Date. In case the Company shall take a record of the holders of its Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock or in securities convertible or exchangeable into shares of Common Stock, or (B) to subscribe for or purchase Common Stock or securities convertible or exchangeable into shares of Common Stock, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

	(ii)		Treasury Shares. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

(e) All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.

(f) If:

	(i)		the Company shall declare a dividend (or any other distribution) on its Common Stock; or

	(ii)		the Company shall declare a special nonrecurring cash dividend on or a redemption of its Common Stock; or

	(iii)		the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; or

	(iv)		the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock of the Company, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; or

	(v)		the Company shall authorize the voluntary dissolution, liquidation or winding up of the affairs of the Company,

then the Company shall cause to be mailed to each Holder at their last addresses as they shall appear upon the Warrant Register, at least 30 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding up; provided, however, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.

8. Payment of Exercise Price. The Holder shall pay the Exercise Price in immediately available funds by certified check or bank draft payable to the order of the Company or by wire transfer to an account designated by the Company.

9. Fractional Shares. The Company shall not be required to issue or cause to be issued fractional Warrant Shares on the exercise of this Warrant. The number of full Warrant Shares which shall be issuable upon the exercise of this Warrant shall be computed on the basis of the aggregate number of Warrant Shares purchasable on exercise of this Warrant so presented. If any fraction of a Warrant Share would, except for the provisions of this Section 9, be issuable on the exercise of this Warrant, the Company shall pay an amount in cash equal to the Exercise Price multiplied by such fraction.

10. Notices. Any and all notices or other communications or deliveries hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 5:00 p.m. (California time) on a business day, (ii) the business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section later than 5:00 p.m. (California time) on any date and earlier than 11:59 p.m. (California time) on such date, (iii) the business day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The addresses for such communications shall be: (i) if to the Company, to 157 Technology Drive, Irvine, CA 92618, Attention: CEO, or to facsimile no. (949) 788-6706, or (ii) if to the Holder, to the Holder at the address or facsimile number appearing on the Warrant Register or such other address or facsimile number as the Holder may provide to the Company in accordance with this Section 10.

11. Warrant Agent. The Company shall serve as warrant agent under this Warrant. The Company may appoint a new warrant agent upon notice to the Holder in accordance with Section 10. Any corporation into which the Company may be merged or any corporation resulting from any consolidation to which the Company shall be a party or any corporation to which the Company transfers substantially all of its corporate assets shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register.

12. Representations and Warranties of Holder. By accepting this Warrant, Holder represents and warrants to the Company that the statements contained in this Section 12 are correct and complete as of the date first written above.

(a) Business or Financial Expertise. Holder has either (i) a pre-existing personal or business relationship with the Company or any of its officers, directors or controlling persons that is of a nature and duration which enables Holder to be aware of the character, business acumen and general business and financial circumstances of the Company or (ii) by reason of Holder’s business or financial expertise or the business or financial experience of his professional advisors who are unaffiliated with and who are not compensated by the Company or any affiliate or selling agent of the Company, directly or indirectly, the capacity to protect his own interests in connection with his acquisition of the Warrant and the underlying Warrant Shares. Holder is an “accredited investor” as defined in Rule 501 of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”).

(b) Awareness; No Distribution. Holder has had the opportunity to ask questions about the Company’s business affairs and financial condition, and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Warrant and underlying Warrant Shares. Holder is acquiring the Warrant and underlying Warrant Shares for his own account for investment purposes only and not with a view to, or for the resale in connection with, any “distribution” thereof for purposes of the Securities Act. Holder recognizes that the Warrant and underlying Warrant Shares are a speculative investment involving a high degree of risk of loss and that Holder could lose the entire amount of its investment. Holder is able to bear the economic risk of this investment and at the present time could afford a complete loss of this investment.

(c) No Registration. Holder understands that the Warrant and underlying Warrant Shares will be issued without registration under the Securities Act and without qualification and/or registration under applicable state securities laws (“Blue Sky Laws”) in reliance upon specific exemptions therefrom, which exemptions depend upon, among other things, the bona fide nature of its investment intent as expressed herein. In this connection, Holder understands that, in the view of the SEC, the statutory basis for such exemption may be unavailable if its representations were predicated solely upon a present intention to hold the Warrant and underlying Warrant Shares for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Warrant Shares, or for a period of one year or any other fixed period in the future.

(d) Legend. Holder further understands that the Warrant Shares must be held indefinitely unless subsequently registered and/or qualified under the Securities Act and under the Blue Sky Laws or unless an exemption from registration and/or qualification is otherwise available. Moreover, John Moore understands that the Company is under no obligation to register and/or qualify the Warrant Shares. In addition, Holder understands that the certificate evidencing the Warrant Shares will be imprinted with a legend in substantially the form as follows which prohibits the transfer of the Warrant Shares unless they are registered and/or qualified or such registration and/or qualification is not required in the opinion of counsel for Holder.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED, AND MAY NOT BE OFFERED, SOLD, ASSIGNED OR TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER SAID ACT IS NOT REQUIRED.

(e) Rule 144. Holder is aware of the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer thereof (or from an affiliate of such issuer), in a non-public offering subject to the satisfaction of certain conditions. Holder understands that the Warrant Shares constitute “restricted securities” for the purposes of Rule 144.

(f) No Public Market. Holder further understands that at the time it wishes to sell the Warrant Shares there may be no public market upon which to make such a sale.

(g) Risk. Holder further understands that in the event all of the requirements of Rule 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the SEC has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.

13. Miscellaneous.

(a) This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Warrant may be amended only in writing signed by the Company and the Holder and their successors and assigns.

(b) Subject to Section 13(a), above, nothing in this Warrant shall be construed to give to any person or corporation other than the Company and the Holder any legal or equitable right, remedy or cause under this Warrant. This Warrant shall inure to the sole and exclusive benefit of the Company and the Holder.

(c) This Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of California without regard to the principles of conflicts of law thereof. The Company and the Holder hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts sitting in Orange County, California, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, or that such suit, action or proceeding is improper. Each of the Company and the Holder hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by receiving a copy thereof sent to it at the address in effect for notices to it under this instrument and in the manner set forth in Section 10 above, and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

(d) The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

(e) In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above.


SPECTRUM PHARMACEUTICALS, INC.
By:	/S/ Rajesh C. Shrotriya, M.D.
	Name:	Rajesh C. Shrotriya, M.D.
	Title:	Chief Executive Officer and President

FORM OF ELECTION TO PURCHASE

(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)

To Spectrum Pharmaceuticals, Inc.:

In accordance with the Warrant enclosed with this Form of Election to Purchase, the undersigned hereby irrevocably elects to purchase shares of Common Stock (“Common Stock”), $.001 par value per share, of Spectrum Pharmaceuticals, Inc. (the “Company”) encloses herewith $ in cash, certified or official bank check or checks, which sum represents the aggregate Exercise Price (as defined in the Warrant) for the number of shares of Common Stock to which this Form of Election to Purchase relates, together with any applicable taxes payable by the undersigned pursuant to the Warrant.

The undersigned requests that certificates for the shares of Common Stock issuable upon this exercise be issued in the name of:


PLEASE INSERT SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER:




(Please print name and address)

If the number of shares of Common Stock issuable upon this exercise shall not be all of the shares of Common Stock which the undersigned is entitled to purchase in accordance with the enclosed Warrant, the undersigned requests that a New Warrant (as defined in the Warrant) evidencing the right to purchase the shares of Common Stock not issuable pursuant to the exercise evidenced hereby be issued in the name of and delivered to:




(Please print name and address)

By signing below, the Holder represents and warrants to the Company that the statements contained in Section 12 are true and correct as of the date hereof, as if given on the date hereof.


Dated: ,		Name of Holder:

		(Print)

		(By:)

		(Name:)

		(Title:)

		(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

FORM OF ASSIGNMENT

[To be completed and signed only upon transfer of Warrant]

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto the right represented by the Warrant enclosed with this Form of Assignment to purchase shares of Common Stock of Spectrum Pharmaceuticals, Inc. to which the Warrant relates and appoints attorney to transfer said right on the books of Spectrum Pharmaceuticals, Inc. with full power of substitution in the premises.


Dated: ,

		(Signature must conform in all respects to name of holder as specified on the face of the Warrant)



		Address of Transferee







In the presence of:

EX-10.2 4 c74310exv10w2.htm EXHIBIT 10.2 Filed by Bowne Pure Compliance

Exhibit 10.2

CONSULTING AGREEMENT

This Consulting Agreement (the “Agreement”) is effective as of this 1st day of July, 2008 (the “Effective Date”), by and between Spectrum Pharmaceuticals, Inc. (“Spectrum”) located at 157 Technology Dr., Irvine California 92618, USA, and Luigi Lenaz, M.D. (“Consultant”), residing at .

AGREEMENT

In consideration of the covenants set forth below, the parties agree as follows:

1.		Consulting Services. Consultant will assist Spectrum by providing strategic advice on clinical development and on drug candidates. From the Effective Date through December 31, 2008, Consultant will provide up to 10 days per month of service; and effective January 1, 2009 through December 31, 2009, up to 5 days per month of service.

2.		Compensation. Spectrum will compensate Consultant as follows:

	•		Spectrum will pay Consultant $10,000 per month from the Effective date through December 31, 2008; $5,000 per month through December 31, 2009; and thereafter at a rate of $400 per hour. Any services provided by Consultant to Spectrum in excess of the maximum number of days per month for each year described in Section 1 above will be compensated at a rate of $400 per hour. 50% of Consultant’s travel time during any travel assignment hereunder, including visits to Spectrum’s office, will be deemed to be time incurred in the performance of services hereunder.

	•		Spectrum will also reimburse Consultant for all travel and other out of pocket expenses reasonably incurred by Consultant in connection with his consultation services, so long as, in the case of a travel assignment, the assignment is undertaken at the Spectrum’s request or otherwise preapproved by Spectrum in advance. Appropriate documentation should be forwarded to Spectrum showing expenses, substantially in accordance with Spectrum documentation requirements applicable to its employees in the ordinary course.

Term. The term of this Agreement is through December 31, 2010. Thereafter, the Agreement may be renewed for additional periods by mutual agreement of the parties. Notwithstanding the foregoing, either party has the right to terminate the relationship at any time on fifteen (15) days advance notice specifying the effective date of such termination. In the event of any such termination, compensation will be paid for the services rendered and expenses incurred by Consultant for the period up to and including the date of such termination. During the term of the Agreement, Consultant’s restricted stock grants will continue to vest in accordance with their original scheduled terms. In addition, if Spectrum terminates this Agreement prior to December 31, 2010, all of the Consultant’s unvested shares of restricted stock shall fully vest on the date of termination. Consultant acknowledges that such vesting with trigger a tax event which will be reported to the IRS on a Form W-2. Any tax withholding required will be paid to Spectrum.

Spectrum Pharmaceuticals Inc. 157 Technology Drive Irvine, CA 92618
Tel (949) 788-6700 Fax (949) 788-6706

Spectrum Pharmaceuticals, Inc.
Consulting Agreement

4.		Independent Contractor Status and Compliance with Laws. Consultant will be an independent contractor and will have sole control of the manner and means of performing Consultant obligations under this Agreement. Consultant will not be considered an agent or legal representative of Spectrum. Consultant shall have no authority to commit or bind Spectrum in any way. Consultant will be solely responsible for paying all applicable taxes of any manner, including social security and other social welfare taxes or contributions that may be due on amounts received by Consultant hereunder, not including, for the avoidance of doubt, any taxes or other levies that may be imposed on Spectrum with respect to its payment of such amounts to consultant.

5.		Immigration Status. As Consultant is an independent contractor, the parties agree that Spectrum is not responsible for verification of the work authorization of the Consultant and/or the Consultant’s employees, if any. Consultant represents and warrants that the Consultant and any employees of the Consultant used by Consultant to perform the services hereunder, are authorized to work and are not acting and will not act during the terms of the Agreement in violation of the Immigration Reform and Control Act of 1986 and its amendments and the regulations there under. Consultant will indemnify and hold Spectrum harmless against all liabilities, including any fines, penalties, and or attorney’s fees incurred because Consultant and/or Consultant’s employees are not authorized for employment in the United States.

6.		Absence of Conflicts. Consultant warrants that Consultant is free to provide consulting services in accordance with the terms of this Agreement without violation of obligation to any third party, and by providing consultation services to Spectrum Consultant will have no conflict of interest with any third party. For the avoidance of doubt, Consultant may, in the capacity of an independent contractor, provide services to a third party in the oncology or other medical/pharmaceutical area, which shall not, in and of itself, be deemed a conflict of interest.

7.		Rights in Work Product. Spectrum will own all right, title and interest in all data, inventions, discoveries, drug product, formulations, product designs, know-how, formulas, ideas, studies, reports, documents, publications and the like or other information created, by Consultant in the course of, or otherwise arising from, his consulting services hereunder. For the purpose of implementing the foregoing provision, Consultant agrees, as necessary, to assign and hereby assigns to Spectrum his rights, if any, in all copyrights, patents, trademarks, or other intellectual property of any kind referred to by such provision. If applicable, Consultant shall assist Spectrum in applying for, maintaining, or otherwise securing legal protection for the same, and Consultant agrees to execute any papers, documents or letters necessary to vest title in the intellectual property in Spectrum.

8.		Non-compete. Consultant represents that it has disclosed, and will disclose, to Spectrum any agreements that it has, or will have, to work on products that are, or will be, in direct competition with products being developed or marketed by Spectrum.

9.		Hiring of Spectrum Employees. During the term of this Agreement and for a period of one (1) year from the termination of this Agreement, Consultant will not, directly or indirectly, solicit for employment or hire for employment any employee of Company with whom Consultant has had contact or who becomes known to Consultant, whether before or after the date hereof, in connection with providing the consulting services set forth herein.

Spectrum Pharmaceuticals Inc. 157 Technology Drive Irvine, CA 92618
Tel (949) 788-6700 Fax (949) 788-6706

Page 2

Spectrum Pharmaceuticals, Inc.
Consulting Agreement

10.		Severability. Should any part of this Agreement be unenforceable or in conflict with the applicable laws or regulations of any jurisdiction, the invalid or unenforceable part or provision will be replaced with a provision that accomplishes, to the extent possible, the original business purpose of such part or provision in a valid and enforceable manner, and the remainder of this Agreement will remain binding upon the parties.

11.		Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California without giving effect to the principles of conflict of laws.

12.		Entire Agreement, Survival of Certain Provisions and Amendments. This Agreement represents the entire understanding between the parties as of the date of this Agreement with respect to the subject matter described, other than the confidentiality agreement dated April 28, 2008, by and between Consultant and Spectrum, and supersedes all prior agreements, negotiations, understandings, representations, statements, and writings between the parties. Sections 6, 7, 8, 10, 11 and this section 12 will survive any expiration or termination of this Agreement. No modification, alteration, waiver or change in any of the terms of this Agreement will be valid or binding upon the parties unless made in writing and specifically referring to this Agreement and signed by each of the parties listed.

13.		Assignment. Consultant shall not assign, transfer, or subcontract this Agreement or any of his obligations hereunder without the prior written consent of Spectrum.

14.		Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same instrument. This Agreement may also be executed by exchange of facsimile transmissions between the parties.

[SIGNATURE PAGE TO FOLLOW]

Spectrum Pharmaceuticals Inc. 157 Technology Drive Irvine, CA 92618
Tel (949) 788-6700 Fax (949) 788-6706

Page 3

Spectrum Pharmaceuticals, Inc.
Consulting Agreement

Agreed and Accepted as of the date set forth below:


SPECTRUM PHARMACEUTICALS, INC.		LUIGI LENAZ, M.D.

By:	/S/ Rajesh C. Shrotriya, M.D.	By:	/S/ Luigi Lenaz, M.D.

	Rajesh C. Shrotriya, M.D.		Signature
	CEO and President

Date:	April 28, 2008	Date:	April 28, 2008

Spectrum Pharmaceuticals Inc. 157 Technology Drive Irvine, CA 92618
Tel (949) 788-6700 Fax (949) 788-6706

Page 4

EX-31.1 5 c74310exv31w1.htm EXHIBIT 31.1 Filed by Bowne Pure Compliance

EXHIBIT 31.1

Certification of Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Rajesh C. Shrotriya, certify that:

I have reviewed this quarterly report on Form 10-Q of Spectrum Pharmaceuticals, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 11, 2008	/s/ RAJESH C. SHROTRIYA
	Rajesh C. Shrotriya
	Chairman, Chief Executive Officer and President

EX-31.2 6 c74310exv31w2.htm EXHIBIT 31.2 Filed by Bowne Pure Compliance

EXHIBIT 31.2

Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Shyam K. Kumaria, certify that:

I have reviewed this quarterly report on Form 10-Q of Spectrum Pharmaceuticals, Inc.;

(a)

(b)

Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 11, 2008	/s/ SHYAM K. KUMARIA
	Shyam K. Kumaria
	Vice President, Finance

EX-32.1 7 c74310exv32w1.htm EXHIBIT 32.1 Filed by Bowne Pure Compliance

EXHIBIT 32.1

Certification of Principal Executive Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Spectrum Pharmaceuticals, Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2008 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Dated: August 11, 2008	/s/ RAJESH C. SHROTRIYA
	Rajesh C. Shrotriya
	Chairman, Chief Executive Officer and President

EX-32.2 8 c74310exv32w2.htm EXHIBIT 32.2 Filed by Bowne Pure Compliance

EXHIBIT 32.2

Certification of Principal Financial Officer

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Dated: August 11, 2008	/s/ SHYAM K. KUMARIA
	Shyam K. Kumaria
	Vice President, Finance

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